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The tax-preparation company recently unveiled Spruce, a mobile-banking app.
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As tax season gets under way,
H&R Block is continuing its push to offer year-round financial solutions for its customers. Investors will get a look at how the process is going when the company reports its quarterly results on Tuesday.
Just two weeks ago,
H&R Block (ticker: HRB) unveiled Spruce, a mobile-banking app that offers a debit card and savings account for users. The timing couldn’t be better given that millions of households are starting to prepare their 2021 taxes, and many of them both lack access to the banking system and see their annual refund checks as a critical infusion of cash. H&R Block hopes that the full banking capabilities Spruce offers will allow customers to think of their refund as more than a one-time event and instead as a basis for planning and progress toward longer-term financial goals.
H&R Block, which partnered with FDIC-insured Metabank for the Spruce product, is targeting its existing tax clients first. “Our front row seat on American life provides a unique understanding of how to help people get better with money, and we’ve applied those learnings to Spruce,” Jeff Jones, chief executive of H&R Block, said in a statement when Spruce was rolled out.
H&R Block also offers an Emerald debit card that allows customers to receive their tax refund and other direct deposits, as well as paying bills. In an interview with Barron’s Jones explained that Emerald offers a “quick mechanism” to receive a tax refund, whereas Spruce will offer services to help with setting and meeting financial goals.
Spruce is the latest effort of H&R Block to offer more than just tax-planning services. In many ways, banking is a natural fit for the company, given its annual visibility into the finances of households and small businesses.
While H&R Block has an online service for doing taxes, it also operates bricks-and-mortar locations for customers who either want to pop in for quick help or full tax planning. Offering Spruce is yet another way for H&R Block to leverage those physical locations.
H&R Block isn’t the only company looking to get into banking. Even
Walmart (WMT) has made moves in fintech, hiring former
Goldman Sachs (GS) bankers and announcing plans to launch a fintech company last year.
Barron’s highlighted H&R Block as a stock pick last year, soon after it unveiled its strategy to move beyond tax prep, which has accounted for more than 80% of revenue.
Shares are up roughly 30% over the last 12 months, a gain that is even more remarkable considering that the last two tax seasons were shaken up by the pandemic. As tax filing dates were shifted, so were the company’s revenues, making it difficult for investors to draw year-over-year comparisons and have clarity on the company’s multiyear strategy.
After the closing bell on Tuesday, Wall Street will get more of a chance to hear what H&R Block is working on when it reports earnings for its second fiscal quarter, ended in December.
It is common for the company to post quarterly losses outside of tax season. For its 2022 fiscal year, the company has said it expects to see revenue in the range of $3.25 billion to $3.35 billion and that earnings before interest, taxes, depreciation, and amortization will be between $765 million and $815 million. Shares were up 0.9% in midday trading Monday.
