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This statistic highlights H&R Block’s Revenue by Segment from 2016 onwards, split between royalty, product and others, and service revenue, on a quarterly basis.
|Revenue by Segment||Q1 2021||Q4 2021||Q1 2022||Contribution in Q1 2022|
|Royalty, product and other||$50.07||$217.56||$15.64||8.12%|
(All figures are in millions, except percentages)
The revenue generated fell by a massive 91.62% on a quarter-on-quarter basis, from $2,328.17 million in Q4 2021 to $192.61 million in Q1 2022. The year-on-year decline was 70.55%, from $601.02 million in Q1 2021 to $192.61 million in Q1 2022.
This is because the majority of clients submit their tax returns during the months of February through April in a typical year. This is the period when the company earns the majority of its revenue from income tax return preparation and related services and goods. As a result, during the first three quarters of the fiscal year, H&R Block usually loses money.
The corporation assigns a transaction price to the various performance obligations based on proportionate standalone selling prices for these services and goods and recognizes revenue when the appropriate performance obligations are satisfied.
Royalty, product and other
Being a minute contributor to revenue, royalties are calculated as a percentage of franchisee gross receipts and are normally reported in the period that the franchisee provides services to the consumer.
The revenue decreased by 92.8% on a quarterly basis, from Q4 2021 where the revenue generated was $217.56 million to Q1 2022 where the revenue generated is $15.64 million. When compared to Q1 2021 where the revenue generated was $50.07 million, the year-on-year decrease was 68.76%. The contribution to the revenue mix from this segment decreased from 9.34% in Q2 2021 to 8.12% in Q1 2022.
Revenues from aided and online tax preparation, electronic filing fees, RTs, Emerald Card, Peace of Mind (POM), Tax Identity Shield (TIS), and Wave are all included in service revenues. Tax preparation and electronic filing or printing of the finished tax return are included in assisted tax preparation services. When a customer accepts a completed return, revenues from tax preparation services, including printing for clients who opt to print and mail their returns, are recognized. When the return is electronically filed, revenues for electronic filing are recognized.
When the IRS filing acknowledgment is received and the bank account is established with the company’s bank partner, MetaBan, N.A. (Meta), a wholly-owned subsidiary of Meta Financial Group, Inc., Refund Transfer revenues are recorded.
The revenue generated from this segment decreased as compared to the last quarter. The revenue fell by almost 92% on a quarter-on-quarter basis, from Q4 2021 where the revenue generated was $2,110.61 million to Q1 2022 where the revenue generated is $176.97 million. When compared to Q1 2021 where the revenue generated was $550.95 million, the year-on-year decrease was 67.87%. However, the contribution to the revenue mix from this segment increased slightly from 90.66% in Q4 2021 to 91.88% in Q1 2022.
H&R Block provides assisted and do-it-yourself (DIY) tax return preparation services to the general public in the United States, Canada, and Australia through a variety of channels (including in-person, online and mobile applications, virtual, and desktop software) and distributes H&R Block-branded services and products, including those of the company’s bank partner. Small business finance solutions are also available through the company-owned or franchised offices, as well as online through Wave. Fees from aided and DIY tax preparation, royalties from franchisees, and fees from associated services and goods are all major revenue sources. Tax professionals assist with income tax return preparation and related services through a network of retail locations run by the corporation or its franchisees. The tax specialists support their clients in a variety of ways, either in person or virtually.
Franchises are available from the company as a strategy to increase its presence in specific geographic areas. Franchisees in the United States pay a franchise royalty of about 30% of gross tax return preparation and related service revenues. RTs, our Peace of Mind Extended Service Plan (POM), the H&R Block Emerald Prepaid Mastercard (Emerald Card), EAs, Tax Identity Shield (TIS), RAs, and small business finance solutions are all available to H&R Block clients in the United States. POM, H&R Block Instant RefundSM, H&R Block Pay With Refund®, and small business finance products are also available to Canadian clients.
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