Intuit Losing Market Share To Online Tax Filing

Intuit (INTU) shares sold off yesterday on concerns that the company is losing share in the tax prep software category as more consumers shift to Web-based filing from using packaged software.

Wednesday, the company announced that desktop federal tax software was down 2% for the year to date versus last year, while online returns were up 4%. Heather Bellini, an analyst with UBS , noted today that H&R Block (HRB) recently reported a 15% year-over-year increase in digital filing, while the IRS e-filing data shows an 8% increase.

As Bellini notes, the numbers suggest Intuit is losing market share. She adds that Wednesday’s report “likely disappointed investors as expectations were for unit growth to be in the mid single digits.”

Likewise, Prudential’s Bryan Keane asserted yesterday that “INTU is losing market share on the Web.” Keane noted that the company has lowered its unit growth guidance for the year to 3%-5% from 10%-15%.

Staying upbeat, Morgan Stanley’s Mary Meeker said the numbers reported Wednesday were in line, and asserted that “we are seeing a more back-end loaded tax season, which could reflect more people filing online this year.”

But the Street is clearly concerned. Intuit shares yesterday were down $2.33 at $27.67.

Comments

[markwax:]

Have you considered that Intuit is in the process of shifting their desktop presence to online editions? This is far more profitable revenue. Also, the revenue of last minute filers will only be recognized when the online return is processed. There is also a powerful late season promotion in place. I think the naysayers will be the ones who are surprised. Intuit knows this plan cold.

2007 Mar 23 07:35 PM