Tech

Intuit Slashes 1800 Jobs, Shifts Focus to AI Tech

Intuit to Cut 1,800 Jobs, 10% of Workforce, Amid AI Investment Shift

By Jack Wilson

7/10, 10:17 EDT
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Key Takeaway

  • Intuit (INTU) to cut 10% of its workforce, impacting 1,800 employees, as it shifts focus to AI and generative AI technologies.
  • Shares fell 1.6% premarket; layoffs expected to cost $250-$260 million, with significant charges in Q4.
  • Despite job cuts, Intuit plans to rehire in engineering and customer-facing roles and expects headcount growth by fiscal year 2025.

Intuit Announces Job Cuts

Intuit Inc. announced on Wednesday that it will be cutting approximately 1,800 employees, which represents about 10% of its global workforce. This decision comes as part of a strategic shift towards increasing investments in artificial intelligence (AI) and generative AI technologies. CEO Sasan Goodarzi communicated the news in a letter to employees, emphasizing that the layoffs are not intended to cut costs but to realign the company's focus areas. "We do not do layoffs to cut costs, and that remains true in this case," Goodarzi stated.

The company plans to rehire the same number of employees, primarily in engineering, product, and customer-facing roles such as sales and marketing. Intuit expects its overall headcount to grow in its fiscal year 2025, which begins on August 1. The layoffs will affect employees globally, with 1,050 of those being let go due to not meeting performance expectations. Additionally, Intuit is reducing the number of executives by approximately 10% and consolidating 80 technology roles to key sites including Atlanta, Bangalore, New York, Tel Aviv, and Toronto. The company will also close two sites in Edmonton, Canada, and Boise, Idaho, impacting over 250 employees.

Market Reaction and Financial Impact

Shares of Intuit fell 1.6% in premarket trading following the announcement. The company expects the layoffs to cost between $250 million and $260 million, with substantial amounts of the charge expected to be incurred in the fourth quarter. Despite the job cuts, Intuit remains optimistic about its financial health. "Intuit is in a position of strength," Goodarzi noted, highlighting the company's $14.4 billion in revenue for fiscal year 2023, a 12% increase from the previous year.

Intuit's focus on AI is part of a broader strategy to enhance its product offerings, including its GenAI-powered financial assistant, Intuit Assist. The company aims to reimagine its products from traditional workflows to AI-native experiences, focusing on areas such as money movement, mid-market expansion for small businesses, and international growth. Intuit also plans to expand into new markets, including Canada, the United Kingdom, and Australia.

Broader Market Context

The announcement comes at a time when the broader stock market is experiencing significant activity. Stocks hovered near all-time highs as traders awaited more clues on the Federal Reserve’s outlook. The S&P 500 rose for a seventh straight day, driven by gains in megacap stocks like Nvidia Corp. and Tesla Inc. Advanced Micro Devices Inc. also made headlines by agreeing to buy Silo AI for $665 million in cash.

Federal Reserve Chair Jerome Powell concluded two days of Congressional hearings, where he emphasized signs of a cooling job market but did not offer a timeline for potential rate cuts. Swap traders are pricing in about two quarter-point cuts in 2024, with a roughly 70% chance the first comes at the September Fed meeting. "We expect he will strike a similar tone to yesterday’s Senate testimony," said Will Compernolle at FHN Financial.

Management Quotes

  • Sasan Goodarzi, CEO of Intuit:

    "About 10% of the global workforce will be affected. The move is not meant to cut costs and the company expects to re-hire the same number of employees, primarily in its engineering, product and sales divisions."