The delay in accepting tax returns by the Internal Revenue Service took a big bite out of financial results forCEO William Cobb expressed optimism in last week's earnings webcast. And his remarks contrast to Intuit's statements that it is taking share away from the tax stores. "We believe we are outperforming the market in digital and assisted categories," Cobb stated. For example, he said Intuit's online filings were down 6 percent through February 16 while Block's were down only 2 percent.
The big difference is that Intuit has more significant products to help dampen the blow, such as QuickBooks, while Block's business is overwhelmingly from tax preparation fees. U.S tax preparation fees were down $156.2 million from last year's corresponding quarter. Those lost fees are expected to hit the books in the current quarter and the Block story was similar to that at Intuit where TurboTax revenue dropped by 21 percent for its January quarter.
The net loss for the quarter just ended was $17.7 million, more than five times the $3.3 million in red ink a year ago. Block's third-quarter revenue was just under $472 million, down from $663.3 million n last year's corresponding period. The number of returns prepared for the quarter dropped to $4.5 million, of 26.3 percent from $ 6.1 million a year earlier.
Cobb said the company's results had not been materially impacted by its decision to pull its operations out of Sears stores. Block had a store-by-store plan to offer customers a way to use its services and that had worked well, he continued.