H&R Block Tops Expectations

H&R Block (HRB) reported better-than-expected results for its key fourth-quarter period and said it will pay $405 million to acquire Wave, a financial solution platform focused on small business owners.

Revenue slowed to $2.33 billion in the fiscal fourth quarter — the period when the tax-preparation company derives most of its sales — from $2.39 billion in the same period of 2018. But that was ahead of the consensus on Capital IQ for $2.32 billion.

Earnings from continuing operations fell to $4.32 in the three months ended April 30 from $5.43 a year earlier, although that also was ahead of the Street’s views for $4.15 a share on a normalized basis.

“Our strategic investments led to numerous improvements across our tax business,” said Chief Executive Jeff Jones. “We delivered great value for our clients and took overall market share by offering upfront transparent pricing, focusing on the quality of our service, enhancing our DIY offerings, and innovating in Virtual.”

For fiscal 2019, the number of US tax returns prepared by or through H&R Block rose 1.5% to 20.3 million. But full-year revenue fell 2.1% to $3.1 billion, “driven by targeted price decreases in our US Assisted tax business,” the company said.

Shares in H&R Block were up 3.7% in early trading as the company raised its quarterly dividend by 4% to $0.26 a share and extended its stock buyback authorization to June 2022. There’s about $1 billion remaining to repurchase under the program.

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