H&R Block’s first quarter results were met with a negative market reaction, despite the company surpassing Wall Street’s revenue and non-GAAP profit expectations. Management attributed revenue growth to higher net average charge (NAC) in the U.S. and increased company-owned Assisted return volumes, while acknowledging challenges in international operations and a highly competitive do-it-yourself (DIY) segment. CEO Jeffrey Jones emphasized the impact of a late-season client surge and a continued industry shift towards Assisted tax preparation, highlighting, “We experienced record-high volumes in our tax offices in the final two days of the season compared to recent history.”
Is now the time to buy HRB? Find out in our full research report (it’s free).
H&R Block (HRB) Q1 CY2025 Highlights:
- Revenue: $2.28 billion vs analyst estimates of $2.25 billion (4.2% year-on-year growth, 1.3% beat)
- Adjusted EPS: $5.38 vs analyst estimates of $5.17 (4.1% beat)
- Adjusted EBITDA: $1.01 billion vs analyst estimates of $984.2 million (44.4% margin, 2.8% beat)
- The company reconfirmed its revenue guidance for the full year of $3.72 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $5.25 at the midpoint
- EBITDA guidance for the full year is $997.5 million at the midpoint, in line with analyst expectations
- Operating Margin: 43%, in line with the same quarter last year
- Market Capitalization: $7.48 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions H&R Block’s Q1 Earnings Call
- Kartik Mehta (Northcoast Research) questioned the shift from DIY to Assisted filings and why the Assisted segment continues to outpace expectations. CEO Jeffrey Jones attributed this to consumer uncertainty and the importance of expert help during tax season.
- Scott Schneeberger (Oppenheimer & Co.) asked about the decline in franchise operations and the impact of franchise buybacks. CFO Tiffany Mason explained that most of the decline was due to buybacks, not organic weakness, and highlighted the attractive returns from this strategy.
- Scott Schneeberger (Oppenheimer & Co.) also inquired about the competitive dynamics in the DIY segment, especially around paid vs. free filers. Jones stated that H&R Block focused on paid clients rather than pursuing volume for free filers amid heavy competitor promotions.
- George Tong (Goldman Sachs) addressed the difference between H&R Block’s Assisted volume growth and the broader industry’s performance. Jones acknowledged improved conversion and retention, particularly among higher-value clients, but noted the company has more work to do to gain share.
- Alexander Paris (Barrington Research) probed the effect of tax filing deadline extensions on volumes. Mason clarified that most extensions shift some volume into the next quarter, but the overall impact is not material to full-year guidance.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) the effectiveness of H&R Block’s initiatives to drive retention and conversion among higher-value Assisted clients, (2) adoption and monetization of digital and AI-enabled services in both DIY and Assisted channels, and (3) the impact of further franchise buybacks and integration on operating performance. Shifts in consumer filing timing and regulatory developments will also be important markers for tracking strategic progress.
H&R Block currently trades at $55.90, down from $61.64 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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