H&R Block’s top revenue forecast for the first quarter

Tax Preparation Specialist H&R block (HRB -6.19%) reported mixed results for the first quarter of fiscal 2025 on Thursday, November 7. Revenue rose 5% year over year and beat analysts’ consensus expectations, reaching $193.8 million. However, the company reported an earnings per share (EPS) loss of $1.23, slightly worse than analysts’ estimate for a loss in $1.21.

While revenue growth was good, it was not enough to support areas needing improvement, especially operating cost control (up 8% year-on-year).

Source: H&R Block Note. Analyst consensus estimates for the quarter are courtesy of FactSet. YY = Year after year.

Business overview

H&R Block is known for its comprehensive tax preparation services, serving a diverse clientele both in person and through digital channels. The company’s core business is to help individuals file their taxes efficiently, using a combination of assisted and do-it-yourself (DIY) solutions. The firm also offers a wide range of financial products and advisory services, providing year-round client engagement. Recently, the focus has been on expanding its digital presence and introducing innovative solutions such as AI Tax Assist, improving both service efficiency and customer satisfaction.

Understanding and adapting to the seasonality of your business is critical for H&R Block. Most income is typically generated during the tax season from February to April. The company’s strategy is based on optimizing service delivery during this peak period and expanding year-round offerings such as small business accounting services to mitigate seasonal impacts. Its ability to maintain and grow market share despite intense competition from both traditional and software-based tax service providers remains a key success factor.

Quarterly indicators

Revenue growth in the first quarter of fiscal 2025 was primarily driven by international tax preparation services and increased office-based sales volumes. The better-than-analyst results reflect the positive impact of H&R Block’s continued digital and international expansion.

However, the company faced challenges, especially in cost management. Total operating expenses increased to $422.1 million, up 8% from the prior year. This $32 million increase was driven by increases in professional salaries and legal expenses, highlighting an area requiring vigilance in controlling costs. Consequently, pre-tax loss widened to $232.3 million, an increase from $212.4 million in the prior year.

H&R Block continues to affirm the importance of digital innovation and customer engagement strategies. While revenue from tax preparation services rose to $42.96 million from $39.26 million, DIY tax preparation services experienced a decline, declining from $3.85 million to $3.24 million. The shift underscores the competitive landscape in the DIY segment , emphasizing the need to continually improve H&R Block’s offerings.

On the positive side, the company’s ongoing efforts in artificial intelligence (AI) and digital integration have shown promising momentum. AI Tax Assist and platforms such as Wave are helping to expand the portfolio of services. These innovations are essential to maintaining a competitive advantage and attracting customers, especially as competition from software providers and government alternatives increases.

Prospects and thoughts for the future

H&R Block confirms its fiscal year Prospects for 2025revenue guidance of $3.69 billion to $3.75 billion. The company’s EBITDA guidance remains stable at $975 million to $1.02 billion. These guidance underscore management’s confidence in its strategic direction despite increased pricing pressures noted in this quarter’s results .

Looking ahead, investors should watch how H&R Block navigates the challenges of rising costs and competition in the tax preparation market. The company’s efforts to strengthen its digital capabilities and expand its product offerings will be critical to maintaining growth amid competitive pressures. Ensuring effective integration of AI-powered services and improving customer experience in both the assisted and do-it-yourself categories will remain strategic focus throughout the financial year.