H&R BLOCK INC

H&R Block provides help and inspires confidence in its clients and communities everywhere through global tax preparation services, financial products, and small business solutions. The company blends digital innovation with human expertise and care to help people get the best outcome at tax time and also be better with money by using its mobile banking app, Spruce. Through Block Advisors and Wave, the company helps small-business owners thrive with year-round bookkeeping, payroll, advisory and payment processing solutions. The industry is highly competitive, with competition based on brand recognition, product quality, price, and innovation. The company faces substantial competition from tax return preparation firms, software providers, accounting firms, independent tax preparers, certified public accountants, and governmental organizations, including the IRS, state and foreign tax authorities.

H&R Block is one of the largest providers of tax return preparation solutions and electronic filing services in the U.S., Canada, and Australia with 22.3 million ¹ returns filed by or through H&R Block in fiscal year 2026. Primary competitors include Intuit Inc. and TaxAct, among others. The company's competitive advantages include its extensive network of 6,802 ² company-owned and 1,814 ³ franchise offices (as of March 31, 2026), its strong brand recognition under the "H&R Block" brand, and its multi-channel delivery model that blends in-person, online, mobile, virtual, and desktop software solutions.

The company generates revenue through assisted and do-it-yourself (DIY) tax preparation solutions distributed through multiple channels including in-person, online and mobile applications, virtual, and desktop software. Revenue is also generated from distributing H&R Block-branded services and products, including those of bank partners, to the general public primarily in the U.S., Canada and Australia. The business is highly seasonal, with a substantial majority of revenues from income tax return preparation and related services and products earned during the period from February through April in a typical year, resulting in the company generally operating at a loss through the first two quarters of its fiscal year. The company reports a single segment that includes all of its continuing operations.

U.S. assisted tax preparation revenues were $2.560 billion ⁴ in fiscal year 2026, increasing 6.1% ⁵ from the prior year due to a 4.0% ⁶ increase in net average charge combined with a 2.0% ⁷ increase in company-owned tax return volumes. U.S. royalties revenue was $185.4 million ⁸, decreasing 3.9% ⁹ due to lower franchise tax return volumes primarily driven by franchise acquisitions. U.S. DIY tax preparation revenues were $384.6 million ¹⁰, increasing 0.2% ¹¹ due to a 4.2% ¹² increase in paid net average charge. Refund Transfers generated $145.1 million ¹³ in revenue, increasing 5.5% ¹⁴. Peace of Mind Extended Service Plan revenue was $84.6 million ¹⁵, decreasing 3.1% ¹⁶. Tax Identity Shield revenue was $34.2 million ¹⁷, increasing 14.3% ¹⁸. Other U.S. tax preparation and related services revenue was $63.0 million ¹⁹, increasing 8.0% ²⁰.

Financial services revenue from Emerald Card and Spruce was $68.8 million ²¹, decreasing 5.6% ²², while interest and fee income on Emerald Advance was $30.7 million ²³, increasing 5.9% ²⁴. International revenue was $265.4 million ²⁵, increasing 7.4% ²⁶ due to favorable foreign currency exchange rates in Canada and Australia. Wave revenue was $122.7 million ²⁷, increasing 12.3% ²⁸ as a result of higher subscription revenue and payments volume. The company also offers Refund Advance loans, which in tax season 2026 were offered in amounts of $250 ²⁹, $500 ³⁰, $750 ³¹, $1,250 ³², $2,500 ³³ and $4,000 ³⁴, based on client eligibility as determined by the bank partner. Emerald Advance term loans are offered in amounts of $350 ³⁵ to $1,500 ³⁶.

During fiscal year 2026, the company prepared 11.3 million ³⁷ U.S. assisted tax returns and clients filed 3.6 million ³⁸ DIY online paid tax returns. The company repurchased 10.5 million ³⁹ shares of its common stock and declared dividends of $1.68 ⁴⁰ per share, an increase of $0.18 ⁴¹, or 12.0% ⁴², per share from the prior year. On August 15, 2024, the Board of Directors approved a new $1.5 billion ⁴³ share repurchase program. During the year ended June 30, 2026, the company repurchased $500.3 million ⁴⁴ of its common stock at an average price of $47.48 ⁴⁵ per share. On August 26, 2025, the company issued $350.0 million ⁴⁶ of 5.375% ⁴⁷ Senior Notes due September 15, 2032. The company redeemed its 5.250% ⁴⁸ notes due October 2025 at 100% ⁴⁹ of the principal amount, plus accrued and unpaid interest, on September 19, 2025.

Total revenues for fiscal year 2026 were $3.945 billion ⁵⁰, an increase of $184.4 million ⁵¹, or 4.9% ⁵², from the prior year. Net income from continuing operations was $736.3 million ⁵³, increasing 20.8% ⁵⁴ from the prior year. Diluted EPS from continuing operations was $5.69 ⁵⁵ per share, increasing 28.7% ⁵⁶ from the prior year. EBITDA from continuing operations was $1.057 billion ⁵⁷, increasing $80.6 million ⁵⁸, or 8.3% ⁵⁹. Pretax income increased $72.5 million ⁶⁰, or 9.3% ⁶¹. Income tax expense decreased $54.4 million ⁶², or 31.6% ⁶³, primarily due to the settlement of an IRS examination of the company's 2020 U.S. federal income tax return and related carryback claims to the 2015 through 2018 tax years.

The company launched a new growth strategy in fiscal year 2026. While management believes it has identified and will continue to identify strategic objectives that are appropriate, it is possible that these objectives may not deliver projected long-term growth in revenue and profitability due to competition, inadequate execution, incorrect assumptions, sub-optimal resource allocation, or other reasons. The company expects to continue to seek growth through acquisitions, though future growth and profitability may depend upon successful execution of those acquisitions.

The company's growth strategy includes expanding its small business solutions through Block Advisors and Wave. Wave revenues increased 12.3% ⁶⁴ as a result of higher subscription revenue and payments volume. The company also continues to invest in its digital and technology capabilities, including generative AI powered technology called AI Tax Assist, which is offered to clients who prepare a paid DIY online return at no additional charge. The company may consider expansion opportunities in additional countries in the future, though there is uncertainty about the ability to generate revenues from new or emerging foreign operations.

The company's margin trajectory is influenced by several factors. Operating expenses increased $104.7 million ⁶⁵, or 3.6% ⁶⁶, due to higher compensation and benefits, occupancy, and technology costs. Field wages increased $69.3 million ⁶⁷, or 7.5% ⁶⁸, due to increased tax professional wages as a result of higher U.S. assisted tax preparation revenues. Occupancy expense increased $18.3 million ⁶⁹, or 4.2% ⁷⁰, due to an increase in number of leased offices, higher rent, and office-related expenses. Technology-related expenses increased by $10.0 million ⁷¹, or 8.4% ⁷², due to higher cloud-related technology spend.

The company had approximately 4,600 ⁷³ regular full-time associates as of June 30, 2026, and the highest number of persons employed during the fiscal year, including seasonal associates, was approximately 73,400 ⁷⁴. The company's software and computer systems utilize cloud computing services provided by Microsoft Corporation. The company's capital expenditures totaled $82.6 million ⁷⁵ and $82.0 million ⁷⁶ for the years ended June 30, 2026 and 2025, respectively, relating primarily to recurring improvements to retail offices, as well as investments in computers, software and related assets.

Capital expenditures totaled $82.6 million ⁷⁷ for the year ended June 30, 2026. The company repurchased $500.3 million ⁷⁸ of its common stock during the year, and the current share repurchase program has remaining authorization of $600.0 million ⁷⁹ and does not have an expiration date. Dividends paid totaled $211.0 million ⁸⁰ and $197.3 million ⁸¹ in the years ended June 30, 2026 and 2025, respectively. The company declared dividends of $1.68 ⁸² per share, an increase of $0.18 ⁸³, or 12.0% ⁸⁴, per share from the prior year.

The company faces structural headwinds from potential changes in tax laws that could decrease demand or the amount charged for services. Government changes in tax filing or IRS processes, including proposals for the IRS to pre-populate tax returns, could reduce demand for the company's services. The company also faces headwinds from offers of free services or products by government authorities, volunteer organizations, and competitors. The IRS offered a limited free direct tax filing system in tax seasons 2024 and 2025, and although that program has been suspended, there can be no assurance that it or similar programs will not be reinstated or expanded in the future.

The company faces constraints from the highly seasonal nature of its business, with the substantial portion of revenue earned from February through April in a typical year. This seasonality presents challenges including cash and resource management during the remainder of the fiscal year when the company generally operates at a loss. The company also faces constraints from its reliance on a single vendor or limited number of vendors for certain key services, including Fidelity National Information Services, Inc. for data processing and card production services, Pathward for the issuance of Refund Transfers, Emerald Advances, Refund Advances, Emerald Cards, and Spruce accounts, and Microsoft Corporation for enterprise technology solutions.

Changes in applicable tax laws have had, and may in the future have, a negative impact on the demand for and pricing of the company's services, and government changes in tax filing or IRS processes may adversely affect the business. The company faces substantial competition throughout its businesses, and intense competition could result in a reduction of market share, lower revenues, lower margins, and lower profitability. The company's failure to effectively address fraud, including increasingly sophisticated fraudulent activities through artificial intelligence and social engineering, could have a material adverse effect on the business. A security breach of the company's systems or third-party systems on which it relies, resulting in unauthorized access to personal information of clients or employees, may adversely affect demand for services and products, reputation, and financial performance. The company relies on a single vendor or limited number of vendors for certain key services, including Fidelity National Information Services, Inc. for data processing and card production services, Pathward for the issuance of Refund Transfers, Emerald Advances, Refund Advances, Emerald Cards, and Spruce accounts, and Microsoft Corporation for enterprise technology solutions, and the loss of such relationships could have a material adverse effect on the business.

Management's message emphasizes the company's purpose to provide help and inspire confidence in its clients and communities everywhere. The company launched a new growth strategy in fiscal year 2026. Management highlights that during fiscal year 2026, the company prepared 11.3 million ⁸⁵ U.S. assisted tax returns and clients filed 3.6 million ⁸⁶ DIY online paid tax returns, contributing to consolidated revenues of $3.95 billion ⁸⁷, net income from continuing operations of $736.3 million ⁸⁸, EBITDA from continuing operations of $1.06 billion ⁸⁹, and diluted EPS from continuing operations of $5.69 ⁹⁰ per share. The company repurchased 10.5 million ⁹¹ shares of its common stock and declared dividends of $1.68 ⁹² per share, an increase of $0.18 ⁹³, or 12.0% ⁹⁴, per share from the prior year. Management's strategic priorities include continuing to blend digital innovation with human expertise, expanding small business solutions through Block Advisors and Wave, and pursuing growth through acquisitions.