It has been an unusual tax season but H&R Block appears to be coming out ahead.
H&R Block (ticker: HRB) said it increased its total market share by 0.3 percentage point when compared with last season and noted a 0.7-point jump in its assisted- tax-prep service. The gains mark a return to growth after roughly a decade of declines.
“Assisted market share growth has been a journey the company’s been on for a long time,”
chief executive at H&R Block, told Barron’s. “The fact that we grew share 70 basis points this year, really is a reflection of the pricing strategy, quality, and the digital tools that we’re enabling people to use H&R Block differently. And to do something we haven’t done in over a decade is obviously a really big moment for the team in the company.”
H&R Block also gave investors a taste of what to expect when it reports fiscal fourth quarter and full-year results on June 15. It projects full-year revenue in the range of $3.4 billion to $3.415 billion, down slightly from the $3.5 billion to $3.6 billion it told investor to expect in December. Analysts surveyed by FactSet had expected $3.48 billion..
The slight shortfall shouldn’t be a big surprise, however. This year’s tax season was extended by one month to May 17, meaning that roughly two weeks of tax returns—and revenue– will be accounted for in the next fiscal year. Were it not for the changed tax day, H&R Block’s revenue would have exceeded the December forecast, the company said.
H&R Block also said it projects net income in the range of $585 million to $591 million, amounting to earnings of $3.08 to $3.11 a share under generally accepted accounting principles.
The stock has had an incredible run this year, climbing 62%. Barron’s highlighted the company in March, noting that while there may be some noise around results due to the extended tax seasons in 2020 and 2021, the shares look like a buy. In fact, while the pandemic-induced tax delays may make it harder to compare results year over year, other factors related to Covid-19 made clients engage more with H&R Block’s platforms as they sought help understanding how PPP loans, stimulus checks, unemployment, and working from home may have affected their taxes.
“I think it was just a lot coming at people,” Jones said, referring to the 50% gain in clients looking to connect with a tax pro this season. “We saw a dramatic increase in [people] wanting help from somebody.”
In addition to tax-prep services, which are typically a one-time event for businesses and households, H&R Block is expanding its year-round offerings for payroll and other tax services for businesses. Wave, the small business software platform H&R Block acquired in 2019, saw a more than 30% jump in growth as business rebounded following a slowdown due to the pandemic.
H&R Block shares were wobbling in and out of positive territory in early trading Monday, while the S&P 500 was up 1%.
Read More: H&R Block Is Winning Market Share at Last