Core Viewpoint - H&R Block has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system reflects changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - For the fiscal year ending June 2025, H&R Block is expected to earn $5.22 per share, with a 0.3% increase in the Zacks Consensus Estimate over the past three months [8]. Institutional Investor Influence - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to buying or selling actions that impact stock prices [4]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have generated an average annual return of +25% since 1988 [7]. - H&R Block's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Company Performance - H&R Block, Inc. (HRB) stock has gained 17.5% over the past year, outperforming the industry's 32% decline and the Zacks S&P 500 composite's 13.2% growth [1] - In the third quarter of fiscal 2025, H&R Block reported adjusted earnings of $5.38 per share, beating the Zacks Consensus Estimate by 5.1% and increasing 8.9% year-over-year [2] - Total revenues for the same quarter were $2.28 billion, slightly exceeding the Zacks Consensus Estimate by 1.4% and reflecting a 4.2% year-over-year increase [2] Revenue Growth Drivers - The growth in assisted tax preparation revenue is attributed to a surge in net average charges and higher company-owned tax return volumes [3] - The contribution of the assisted tax preparation segment to total revenue has increased from approximately 60% in fiscal year 2022 to 63% in fiscal year 2024, with revenue rates rising by 3.5% and 5% in fiscal 2023 and 2024, respectively [3] Mobile Banking Platform - H&R Block's mobile banking platform, Spruce, has nearly 476,000 sign-ups and is approaching $1 billion in customer deposits as of June 2024 [4] - Close to 50% of fiscal 2024 deposits came from non-tax sources, indicating strong trends in the first quarter of fiscal 2025 [4] Technological Innovations - The incorporation of AI Tax Assist, a generative AI-powered technology, has boosted DIY tax preparation revenues, contributing nearly $350 million, or about 10% of total revenue, with an 11% increase from the previous year [5] - Collaboration with OpenAI is expected to enhance AI Tax Assist, attracting more customers and further boosting revenue [5] Competitive Landscape - The company operates in a highly competitive industry, necessitating continuous innovation and differentiation while managing costs effectively [6] - The need for investment in technology and talent to maintain a competitive edge complicates the balance between growth and profitability [6] Liquidity Position - H&R Block's current ratio at the end of the third quarter of fiscal 2025 was 0.78, lower than the industry's 0.92, indicating a decline of 30.8% from the previous year due to increased current debt [7] - A current ratio below 1 signals inefficiency in meeting short-term obligations [7]

Financial Data and Key Metrics Changes - For the third quarter, the company reported revenue of $2.3 billion, an increase of 4.2% year over year [25] - EBITDA grew by 5% to $1 billion, while net income from continuing operations increased by 4.5% to $722.9 million [26] - Earnings per share from continuing operations rose by 9.2% to $5.32, with adjusted earnings per share increasing by 8.9% to $5.38 [26] Business Line Data and Key Metrics Changes - The assisted channel saw a shift in client behavior, with a 170 basis point growth compared to 90 basis points in the DIY segment [8] - DIY revenue grew by 8% year over year, with paid net average charge (NAC) at $81.55, up 9% from the previous year [12][13] - Assisted small business tax performed well, delivering high single-digit revenue growth [17] Market Data and Key Metrics Changes - The overall industry volume grew approximately 1%, with a noted shift from DIY to assisted services [7] - The company improved its volume and market share trends year over year in the assisted channel [9] - The company reported a decline of 0.8% in total assisted volumes, contrasting with the broader industry volume growth of around 1.7% [58] Company Strategy and Development Direction - The company is focused on enhancing the client experience in the assisted channel to improve conversion and retention [9] - There is a strategic emphasis on serving more complex clients with higher lifetime value [12] - The company continues to invest in its business, grow dividends, and return excess capital to shareholders through share repurchases [27] Management's Comments on Operating Environment and Future Outlook - Management noted that clients are increasingly seeking expert help during uncertain times, leading to a shift towards assisted services [6][8] - The company reiterated its fiscal 2025 outlook, expecting revenue in the range of $3.69 billion to $3.75 billion and EBITDA between $975 million and $1.02 billion [28] - The effective tax rate is expected to be approximately 13%, lower than historical levels, providing a one-time benefit to EPS [28] Other Important Information - The company has a strong capital allocation strategy, having repurchased $400 million worth of shares and acquired 123 franchise locations this fiscal year [27] - The mobile banking platform, Spruce, has seen over 700,000 sign-ups, a nearly 50% increase compared to the prior year [19] Q&A Session Summary Question: Why is the assisted segment growing faster than DIY? - Management indicated that during uncertain times, consumers seek help, leading to a shift towards assisted services [34] Question: Was there a difference in volume between early and late season? - Management confirmed that the season started slow but ended strong, with record volumes in the last two days [36] Question: What accounted for the decline in franchise operations? - Management explained that the decline was primarily due to franchise buybacks, not an absolute decline in volume [42][66] Question: How did the competitive landscape change this year? - Management noted that a major competitor spent significantly on promotions, but this did not impact their performance [60] Question: What was the impact of filing extensions on volumes? - Management acknowledged some migration of volumes from Q3 to Q4 due to extensions but did not expect a material impact on guidance [70]

Financial Data and Key Metrics Changes - The company reported revenue of $2.3 billion, an increase of 4.2% year over year, driven by higher net average charge (NAC) in the U.S. and greater company-owned assisted return volume [25][26] - EBITDA grew by 5% to $1 billion, while net income from continuing operations increased by 4.5% to $722.9 million [26][29] - Earnings per share (EPS) from continuing operations rose by 9.2% to $5.32, with adjusted EPS increasing by 8.9% to $5.38 due to higher net income and fewer shares outstanding from share repurchases [26][29] Business Line Data and Key Metrics Changes - The assisted channel saw a shift in client behavior, with a 170 basis point growth compared to 90 basis points in the DIY segment, indicating a preference for assisted services [7][8] - DIY revenue grew by 8% year over year, with a strong NAC of $81.55, up 9% from the previous year, reflecting a mix shift to more complex SKUs [13][14] - Assisted small business tax performed well, delivering high single-digit revenue growth, while year-round bookkeeping and payroll services achieved double-digit revenue growth [18][19] Market Data and Key Metrics Changes - The overall industry volume grew approximately 1%, with a notable shift from DIY to assisted services as clients sought expert help [7][8] - The company experienced record high volumes in tax offices during the final two days of the tax season, reflecting a trend of clients filing closer to deadlines [8][9] Company Strategy and Development Direction - The company is focused on enhancing the client experience through improved tax pro matching algorithms and automated services, aiming to increase client retention and conversion [9][11] - The strategic focus remains on paid filers and those free filers who have the potential to convert to paid clients, ensuring capital is used effectively to drive financial returns [15][47] - The company continues to invest in its mobile banking platform, Spruce, which has seen significant growth in sign-ups and deposits, indicating a commitment to improving financial well-being for clients [20][21] Management's Comments on Operating Environment and Future Outlook - Management noted that the current economic backdrop has led consumers to seek trusted support for their tax and financial needs, reinforcing the company's value proposition [21][24] - The company reiterated its fiscal 2025 outlook, expecting revenue in the range of $3.69 billion to $3.75 billion and EBITDA between $975 million and $1.02 billion, with a lower effective tax rate providing a one-time benefit to EPS [29][30] Other Important Information - The company completed share repurchases totaling $400 million, retiring 6.5 million shares, and has approximately $1.1 billion remaining on its share repurchase program [28][29] - The company is committed to maintaining a strong capital allocation strategy, prioritizing investments in the business, growing dividends, and returning excess capital to shareholders [24][29] Q&A Session Summary Question: Why is the assisted segment growing faster than DIY? - Management noted that during uncertain times, consumers seek expert help, leading to a shift towards assisted services [33][34] Question: Was there a difference in volume between early and late tax season? - Management confirmed that the season started slow but ended strong, with record volumes in the last two days [35][36] Question: What accounted for the decline in franchise operations? - The decline was primarily due to franchise buybacks, with franchise locations performing well overall [38][61] Question: How did the competitive landscape change this year? - Management acknowledged that a major competitor increased spending on promotions, but this did not significantly impact their performance [55][56] Question: What is the impact of filing extensions on volumes? - Extensions due to weather events caused some migration of volumes from Q3 to Q4, but overall impact was not material to guidance [64][65] Question: What is the company's policy regarding dividends? - The company has a dividend payout ratio that is reviewed annually by the board, with a focus on reinvesting in the business first [68][70]

Core Insights - H&R Block reported a revenue growth of 4% for the third quarter of fiscal 2025, with total revenue reaching $2.3 billion, an increase of $92.3 million compared to the previous year [3][4] - Net income from continuing operations rose by 4.5% to $722.9 million, while earnings per share (EPS) increased by 9.2% to $5.32 [4][5] - The company reaffirmed its full-year fiscal 2025 outlook, expecting revenue between $3.69 billion and $3.75 billion and adjusted diluted EPS in the range of $5.15 to $5.35 [9][7] Financial Performance - Total operating expenses increased by 3.4% to $1.3 billion, primarily due to higher wages and benefits for tax professionals [4][20] - The company achieved a net income growth of $31.3 million, reflecting strong financial fundamentals and consistent cash flow generation [4][3] - Adjusted earnings per share from continuing operations increased by 8.9% to $5.38, driven by higher net income and a reduction in shares outstanding due to share repurchases [5][27] Capital Allocation - Since 2016, H&R Block has returned over $4.5 billion to shareholders through dividends and share repurchases, buying back more than 43% of its outstanding shares [6][8] - A quarterly cash dividend of $0.375 per share is scheduled for payment on July 3, 2025, to shareholders of record as of June 4, 2025 [8][19] Market Trends - The company noted improved volume and market share trends in the Assisted channel, attributed to enhancements in the client experience [3][4] - The increase in revenue was partly due to higher company-owned return volumes in the U.S., despite lower international revenue and interest income [3][4]

Core Insights - Block Advisors by H&R Block has launched the 2025 Fund Her Future grant program, offering a total of $100,000 in funding and a year of small business services to six women-owned businesses focused on community improvement [1][4] - The program aims to address the challenges faced by female entrepreneurs, who often encounter difficulties in accessing capital and resources compared to their male counterparts [2][3] Grant Program Details - Applications for the 2025 program are open from April 28 to May 30, 2025, with recipients to be notified by the end of July [5] - The program will award one business a grant of $50,000 and up to five additional businesses $10,000 each, along with access to Block Advisors' small business services valued at nearly $30,000 [1][4] Challenges for Female Entrepreneurs - According to the 2024 State of Women's Small Business Report, 42% of women business owners who applied for bank loans were not approved, and nearly 90% relied on personal finances and credit cards for funding [2] - The program recognizes the need for not just financial support but also trusted expertise to help entrepreneurs manage their businesses effectively [3] Success Stories from Previous Program - The 2024 Fund Her Future program received over 6,000 applications and awarded grants to five entrepreneurs, showcasing the potential for growth with the right resources [6] - Grant recipient Heather Jiang reported a 50% increase in online traffic after receiving the grant, while Erica Cole successfully launched a new collection in Walmart due to the funding and support [7] - Ameka Coleman anticipates a 400% increase in revenue from onboarding additional hospital networks, highlighting the significant impact of the grant on business growth [7]

Group 1 - H&R Block, Inc. will report its fiscal 2025 third quarter results on May 7, 2025, after the market close [1] - A conference call for analysts, institutional investors, and shareholders is scheduled for 4:30 p.m. Eastern time on the same day to discuss the results and provide a business update [2] - The conference call will be available in a listen-only format for the media and public via a webcast, which will also be accessible for replay for 90 days [3] Group 2 - H&R Block provides global tax preparation services, financial products, and small-business solutions, combining digital innovation with human expertise [4] - The company offers a mobile banking app, Spruce, to help clients manage their finances better [4] - H&R Block supports small-business owners through services like bookkeeping, payroll, advisory, and payment processing via Block Advisors and Wave [4]

Company Announcement - H&R Block, Inc. will report its fiscal 2025 third quarter results on May 7, 2025, after the market close [1] - A conference call for analysts, institutional investors, and shareholders is scheduled for 4:30 p.m. Eastern time on the same day to discuss the results and provide a business update [2] - The conference call will be available in a listen-only format for the media and public via a webcast, which will also be accessible for replay for 90 days after the call [3] Company Overview - H&R Block provides global tax preparation services, financial products, and small-business solutions, combining digital innovation with human expertise [4] - The company offers a mobile banking app, Spruce, to help clients manage their finances better and supports small-business owners with services like bookkeeping and payroll through Block Advisors and Wave [4] Contact Information - For investor relations, Jordyn Eskijian can be contacted at (816) 854-5674 or via email [5] - Media inquiries can be directed to the Media Desk via email [5]

Core Insights - The article discusses the growing gig economy and the launch of H&R Block's "Make It Legit" contest aimed at supporting gig workers in establishing themselves as legitimate small business owners [1][3][5] Group 1: Contest Overview - The "Make It Legit" contest will accept entries until May 4, providing three winners with professional business services and marketing support [2] - Winners will receive free business formation services, year-round tax expertise, and custom marketing materials, including a commercial [5] Group 2: Gig Economy Context - There are over 70 million individuals classified as gig workers in the U.S., many of whom do not view themselves as legitimate business owners despite being taxed as such [3][4] - A recent change in the 1099-K reporting threshold now requires independent workers to report earnings of $5,000 or more, significantly lowering the previous threshold of $20,000 [3] Group 3: Awareness and Education - A study by H&R Block found that nearly half of gig workers were unaware of the 1099-K change, and 50% remained unclear on the details as tax season began [4] - Many gig workers may be missing out on tax credits and deductions available to small businesses, potentially limiting their income [4] Group 4: Brand Promotion - H&R Block is promoting the contest through creative content creators who have successfully turned their passions into legitimate businesses, showcasing their stories through commercials [6]

Core Insights - The article discusses the impact of the new 1099-K earning threshold, which has lowered the reporting requirement for gig workers and side hustlers from $20,000 to $5,000, effectively classifying many as small business owners [3][4] - H&R Block has launched the "Make It Legit" contest to encourage gig workers to recognize their status as small business owners and to provide them with essential business services and marketing support [2][5] Group 1: Contest Details - The "Make It Legit" contest will accept entries until May 4, aiming to help three gig workers by providing professional business services and marketing support [2] - Winners will receive free business formation services, year-round tax expertise from H&R Block professionals, and custom marketing materials, including a commercial [5][6] Group 2: Gig Economy Insights - A study by H&R Block found that nearly 50% of gig workers were unaware of the 1099-K threshold change, and even after learning about it, 50% remained unclear on the details [4] - Many gig workers may be missing out on tax credits and deductions available to small businesses, potentially limiting their income [4] Group 3: H&R Block's Role - H&R Block has been providing tax assistance for 70 years and aims to inspire gig workers to operate confidently as small business owners [3][6] - The company blends digital innovation with human expertise to support clients in tax preparation and financial management [9]