H&R Block Squarely Beats Estimates

KANSAS CITY, Mo. -- H&R Block(HRB Quote), the nation's largest tax preparer, reported better-than-expected profit for its fiscal fourth quarter on Monday as higher fees and more consumer financial services income offset a decline in the number of tax returns it prepared.

The news sent shares up nearly 5 percent in after-hours trading.

The Kansas City, Mo.-based company said it earned $706.9 million, or $2.09 per share, during the three months ended April 30. That's up from year-ago profit of $543.6 million, or $1.66 per share, and above the $2.05 per share expected by analysts surveyed by Thomson Reuters.

Revenue for the quarter sank 3 percent to $2.47 billion, coming in shy of Wall Street's $2.52 billion estimate.

Tax services revenue declined 3.2 percent during the quarter to $2.1 billion as the number of clients coming into H&R Block's retail offices to have their taxes prepared declined in a shift toward online filing.

H&R Block Bank saw quarterly revenue rise almost 15 percent and profit climb to $21.5 million, compared with a loss of $1.3 million during the same quarter a year ago.

For the year, the company said its retail offices prepared 5.8 percent fewer returns, which was partially offset by a 21 percent increase in returns filed through the company's online services and TaxCut software. H&R Block has ramped up its digital competition in the past year, providing a free online tax filing program for lower income customers and keeping the price of its TaxCut tax preparation software below that of industry leader Intuit Inc.'s TurboTax.