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$HRB General Update: The Supreme Court decision on a provision of the Affordable Care Act affirms the ability for consumers who enrolled for health coverage via the Federal Marketplace to receive advance premium tax credits to help pay for their monthly insurance premiums.
$HRB and $WMT announced that $HRB will be the exclusive DIY desktop tax software provider available at Walmart stores nationwide, and sold directly by Walmart on walmart.com. This partnership makes the DIY products more convenient for clients to purchase, and prepare their taxes and get their maximum tax refund.
With regard to franchise repurchase opportunities, $HRB expects the volume to continue to decline. $HRB repurchased about three years ago over 300 offices and it's been on a decline. The company expects about 100 offices this year. But it's not $HRB's goal to repurchase all franchise locations at this point.
Regarding product, $HRB expects to continue moderate inflationary price increases, as it cannot be too aggressive on price and expects to improve the client trajectory at the same time. In Do-It-Yourself, $HRB sees client growth on the strength of product improvements, compelling offers in marketplace and enhanced partnerships.
As tax preparation evolves, consumers are looking for new ways to get help. For that, $HRB developed two new products. The first is called Tax Pro Review, an improved version of previously offered product called Best of Both. The second product is a unique and completely new way for clients to interact with brands called H&R Block Tax Pro Go.
$HRB expects continued improvement in client trajectory in FY18, leading to modest revenue growth and margins consistent with the prior year. Seasonal expenses increased in 2Q18, but the company expects to continue last year's improved financial performance this fiscal year.
$HRB reported a wider loss in 2Q18 due to the seasonality of its tax business. Net loss widened to $153.6MM or $0.74 per share from $146.2MM or $0.68 per share last year. Revenue grew 7% to $140.9MM on higher international tax preparation fees, positive FX fluctuations rates and favorable U.S. preseason results.
$HRB said it sees a significant migration from the Assisted business to the Do-It-Yourself (DIY) business next year, resulting in a positive momentum in the DIY side. H&R Block expects the DIY business to outpace the market this year, as it did last year. Going forward, the company will continue to repurchase franchise locations.
$HRB attributed the widening of loss in 1Q18, on a per-share basis, mainly to lower share count and a drop in income tax benefit. The company remains focused on its long-term goal of adding more clients in the Assisted and DIY channels, through promotions and product offers. As part of the strategy, it plans to invest more in innovative solutions.
Tax services provider $HRB reported a wider net loss in 1Q18, owing mainly to seasonal factors and lower income tax benefit, reversing the recovery achieved in 4Q17. Net loss widened to $0.63 per share from $0.56 per share in 1Q17. Meanwhile, revenues advanced 10% YoY to $138MM, helped primarily by an increase in US Assisted tax preparation fees.
Tax service provider $HRB has named Jeffrey Jones President and CEO, effective October 9, 2017. Jones will succeed Tom Gerke, who will remain the general counsel. Most recently, Jones served as President of Ride Sharing at Uber. Earlier, he held various leadership positions at $TGT, including EVP and Chief Marketing Officer.
$HRB will continue to look for opportunities to reduce expenses but the company does not believe it will see the same level as FY17. The business is seasonal wherein about 75% of the revenue is done in 4Q and slightly less than half of the expense comes in 4Q.
In FY17, with respect to volume and pricing in the Assisted business, $HRB expected a significant improvement in client losses along with a flat to slightly lower net average charge. The company achieved its plan to change client trajectory and delivered better-than-expected net average charge growth of about 2%.