The company normally reports a fiscal second-quarter loss due to the seasonality of its tax business and this typically represents less than 5% of annual revenues and approximately 15% of annual expenses. H&R Block could post a wider loss in the second quarter as the modest rise or decline in revenue would not overshadow the increase in expenses.
For the first quarter, H&R Block posted a 5% rise in revenue primarily due to the timing of revenues related to its Tax Plus products. Loss from continuing operations widened year-over-year due to a lower effective tax that negatively impacted those fiscal quarters with a seasonal net loss.
The company has been positioning itself to achieve its goal of sustainable growing clients, revenue and earnings by investing in pricing, technology, and operational excellence. Operating expenses for the first quarter rose 1.3% primarily due to increases in compensation and consulting expenses, partially offset by lower depreciation and amortization and bad debt expense.
For the full year 2019, the company had expected revenue in the range of $3.05 billion to $3.10 billion and EBITDA margin in the range of 24% to 26%. The effective tax rate was predicted to be in the range of 23% to 25% for the full year. CFO Tony Bowen confirmed that the company is on track to achieve its financial outlook for the fiscal year.
Shares of H&R Block ended Monday’s regular session up 3.67% at $27.98 on the NYSE. The stock has risen over 6% in the year so far and over 8% in the past year.