What changed in this filing

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Item 1. Financial Statements

2025-11-06 compared with 2025-05-07 · 144 added, 154 removed, 327 unchanged (48% of the section changed)

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME:

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS:

(unaudited, in 000s, except per share amounts)

Three months ended March 31, Nine months ended March 31,

2025 2024 2025 2024

Three months ended September 30,

Service revenues $ 192,111 $ 181,771

7 unchanged sentences

Interest expense on borrowings ( 17,402 ) ( 15,847 )

Income from continuing operations before income taxes 958,181 907,358 413,621 412,124

Income taxes 235,253 215,772 104,580 72,527

Net income from continuing operations 722,928 691,586 309,041 339,597

Loss from continuing operations before income tax benefit ( 216,331 ) ( 232,261 )

Income tax benefit ( 50,963 ) ( 60,840 )

Net loss from continuing operations ( 165,368 ) ( 171,421 )

Net loss from discontinued operations, net of tax benefits of $ 135 and $ 345

( 451 ) ( 1,155 )

NET INCOME $ 722,330 $ 690,737 $ 306,334 $ 337,500

BASIC EARNINGS PER SHARE:

Continuing operations $ 5.38 $ 4.94 $ 2.26 $ 2.37

Discontinued operations ( 0.01 ) ( 0.01 ) ( 0.02 ) ( 0.01 )

Consolidated $ 5.37 $ 4.93 $ 2.24 $ 2.36

DILUTED EARNINGS PER SHARE:

NET LOSS $ ( 165,819 ) $ ( 172,576 )

BASIC AND DILUTED LOSS PER SHARE:

Continuing operations $ ( 1.26 ) $ ( 1.23 )

2 unchanged sentences

DIVIDENDS DECLARED PER SHARE $ 0.42 $ 0.375

COMPREHENSIVE INCOME:

Net income $ 722,330 $ 690,737 $ 306,334 $ 337,500

COMPREHENSIVE LOSS:

Net loss $ ( 165,819 ) $ ( 172,576 )

Change in foreign currency translation adjustments ( 9,308 ) 6,117

Other comprehensive income (loss) ( 9,308 ) 6,117

Comprehensive income $ 722,775 $ 680,855 $ 283,862 $ 328,263

Comprehensive loss $ ( 175,127 ) $ ( 166,459 )

See accompanying notes to consolidated financial statements.

3 unchanged sentences

share and per share amounts)

As of March 31, 2025 June 30, 2024

As of September 30, 2025 June 30, 2025

Cash and cash equivalents $ 376,410 $ 983,277

38 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in 000s)

Nine months ended March 31, 2025 2024

Three months ended September 30, 2025 2024

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 306,334 $ 337,500

Adjustments to reconcile net income to net cash provided by operating activities:

Net loss $ ( 165,819 ) $ ( 172,576 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 28,922 28,831

9 unchanged sentences

Other, net ( 236 ) ( 1,019 )

Net cash provided by operating activities 429,322 420,264

Net cash used in operating activities ( 356,838 ) ( 328,581 )

CASH FLOWS FROM INVESTING ACTIVITIES:

6 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Repayments of line of credit borrowings ( 1,950,000 ) ( 1,025,000 )

Proceeds from line of credit borrowings 245,000 —

Repayments of long-term debt ( 350,000 ) —

Proceeds from issuance of long-term debt 346,980 —

Dividends paid ( 50,208 ) ( 44,653 )

12 unchanged sentences

Accrued dividends payable to common shareholders 54,343 52,307

Accrued purchase of common stock — 7,131

See accompanying notes to consolidated financial statements.

10 unchanged sentences

Net loss — — — — ( 165,819 ) — — ( 165,819 )

Other comprehensive income — — — 6,117 — — — 6,117

Stock-based compensation — — 7,463 — — — — 7,463

Stock-based awards exercised or vested — — ( 23,990 ) — ( 2,611 ) 1,319 26,848 247

Acquisition of treasury shares (2)

— — — — — ( 567 ) ( 35,882 ) ( 35,882 )

Repurchase and retirement of common shares ( 3,301 ) ( 33 ) ( 1,980 ) — ( 209,708 ) — — ( 211,721 )

Cash dividends declared - $ 0.375 per share

— — — — ( 52,307 ) — — ( 52,307 )

Balances as of September 30, 2024 167,615 $ 1,676 $ 744,076 $ ( 42,728 ) $ ( 424,548 ) ( 30,573 ) $ ( 646,541 ) $ ( 368,065 )

Net loss — — — — ( 243,420 ) — — ( 243,420 )

Other comprehensive loss — — — ( 9,308 ) — — — ( 9,308 )

6 unchanged sentences

— — — — ( 54,343 ) — — ( 54,343 )

Balances as of December 31, 2024 164,367 $ 1,644 $ 752,093 $ ( 71,762 ) $ ( 908,785 ) ( 30,523 ) $ ( 645,650 ) $ ( 872,460 )

Net income — — — — 722,330 — — 722,330

Other comprehensive income — — — 445 — — — 445

Stock-based compensation — — 7,424 — — — — 7,424

Stock-based awards exercised or vested — — ( 696 ) — ( 260 ) 41 856 ( 100 )

Acquisition of treasury shares (2)

— — — — — ( 6 ) ( 283 ) ( 283 )

Cash dividends declared - $ 0.375 per share

— — — — ( 50,194 ) — — ( 50,194 )

Balances as of March 31, 2025 164,367 $ 1,644 $ 758,821 $ ( 71,317 ) $ ( 236,909 ) ( 30,488 ) $ ( 645,077 ) $ ( 192,838 )

(1) The balance of our accumulated other comprehensive loss consists of foreign currency translation adjustments.

(2) Represents shares swapped or surrendered to us in connection with the vesting or exercise of stock-based awards.

See accompanying notes to consolidated financial statements.

Q3 FY2025 Form 10-Q| H&R Block, Inc.

Balances as of September 30, 2025 156,506 $ 1,565 $ 757,981 $ ( 57,063 ) $ ( 609,299 ) ( 30,085 ) $ ( 644,094 ) $ ( 550,910 )

(amounts in 000s, except per share amounts)

7 unchanged sentences

Net loss — — — — ( 172,576 ) — — ( 172,576 )

Other comprehensive loss — — — ( 10,914 ) — — — ( 10,914 )

Stock-based compensation — — 6,211 — — — — 6,211

Stock-based awards exercised or vested — — ( 34,226 ) — ( 3,220 ) 1,867 37,348 ( 98 )

Acquisition of treasury shares (2)

— — — — — ( 823 ) ( 28,464 ) ( 28,464 )

Repurchase and retirement of common shares ( 3,265 ) ( 32 ) ( 1,927 ) — ( 131,341 ) — — ( 133,300 )

Cash dividends declared - $ 0.32 per share

— — — — ( 46,901 ) — — ( 46,901 )

Balances as of September 30, 2023 175,671 $ 1,757 $ 740,434 $ ( 48,013 ) $ ( 393,621 ) ( 31,742 ) $ ( 645,441 ) $ ( 344,884 )

Net loss — — — — ( 189,755 ) — — ( 189,755 )

Other comprehensive income — — — 6,117 — — — 6,117

6 unchanged sentences

— — — — ( 52,307 ) — — ( 52,307 )

Balances as of December 31, 2023 170,916 $ 1,709 $ 746,734 $ ( 36,454 ) $ ( 846,162 ) ( 31,397 ) $ ( 638,479 ) $ ( 772,652 )

Net income — — — — 690,737 — — 690,737

Other comprehensive loss — — — ( 9,882 ) — — — ( 9,882 )

Stock-based compensation — — 7,140 — — — — 7,140

Stock-based awards exercised or vested — — ( 269 ) — ( 223 ) 16 300 ( 192 )

Acquisition of treasury shares (2)

— — — — — ( 7 ) ( 309 ) ( 309 )

Cash dividends declared - $ 0.32 per share

— — — — ( 44,648 ) — — ( 44,648 )

Balances as of March 31, 2024 170,916 $ 1,709 $ 753,605 $ ( 46,336 ) $ ( 200,296 ) ( 31,388 ) $ ( 638,488 ) $ ( 129,806 )

Balances as of September 30, 2024 167,615 $ 1,676 $ 744,076 $ ( 42,728 ) $ ( 424,548 ) ( 30,573 ) $ ( 646,541 ) $ ( 368,065 )

(1) The balance of our accumulated other comprehensive loss consists of foreign currency translation adjustments.

1 unchanged sentence

See accompanying notes to consolidated financial statements.

H&R Block, Inc.

|Q3 FY2025 Form 10-Q

Q1 FY2026 Form 10-Q| H&R Block, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION – The consolidated balance sheets as of March 31, 2025 and June 30, 2024, the consolidated statements of operations and comprehensive income for the three and nine months ended March 31, 2025 and 2024, the consolidated statements of cash flows for the nine months ended March 31, 2025 and 2024, and the consolidated statements of stockholders' equity for the three and nine months ended March 31, 2025 and 2024 have been prepared by the Company, without audit.

In the opinion of management, all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position, results of operations, and cash flows as of March 31, 2025 and 2024 and for all periods presented, have been made.

BASIS OF PRESENTATION – The consolidated balance sheets as of September 30, 2025 and June 30, 2025, the consolidated statements of operations and comprehensive loss for the three months ended September 30, 2025 and 2024, the consolidated statements of cash flows for the three months ended September 30, 2025 and 2024, and the consolidated statements of stockholders' equity for the three months ended September 30, 2025 and 2024 have been prepared by the Company, without audit.

In the opinion of management, all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position, results of operations, and cash flows as of September 30, 2025 and 2024 and for all periods presented, have been made.

"H&R Block," "the Company," "we," "our," and "us" are used interchangeably to refer to H&R Block, Inc., to H&R Block, Inc.

10 unchanged sentences

DISCONTINUED OPERATIONS – Our discontinued operations include the results of operations of Sand Canyon Corporation, previously known as Option One Mortgage Corporation, which exited its mortgage business in fiscal year 2008.

Q3 FY2025 Form 10-Q| H&R Block, Inc.

H&R Block, Inc.

|Q1 FY2026 Form 10-Q

REVENUE RECOGNITION

2 unchanged sentences

revenues by major service line, with revenues from our international tax services businesses and from Wave included as separate lines:

Three months ended March 31, Nine months ended March 31,

2025 2024 2025 2024

Three months ended September 30,

assisted tax preparation $ 48,644 $ 42,963

5 unchanged sentences

Emerald Card® and Spruce SM

40,195 41,160 59,169 61,493

Interest and fee income on Emerald Advance® — —

5 unchanged sentences

POM Deferred Revenue Deferred Wages

Nine months ended March 31, 2025 2024 2025 2024

Three months ended September 30, 2025 2024 2025 2024

Balance, beginning of the period $ 149,302 $ 156,610 $ 19,884 $ 20,212

2 unchanged sentences

Balance, end of the period $ 123,881 $ 130,723 $ 16,431 $ 16,598

As of March 31, 2025, deferred revenue related to POM was $ 162.3 million.

We expect that $ 91.8 million will be recognized over the next twelve months , while the remaining balance will be recognized over the following five years .

As of March 31, 2025 and 2024, Tax Identity Shield® (TIS) deferred revenue was $ 31.2 million and $ 31.6 million, respectively.

As of September 30, 2025, deferred revenue related to POM was $ 123.9 million.

W e expect that $ 83.7 million will be recognized over the next twelve months , while the remaining balance will be recognized over the following five years .

As of September 30, 2025 and 2024, Tax Identity Shield® (TIS) deferred revenue was $ 18.7 million and $ 17.7 million, respectively.

Deferred revenue related to TIS was $ 22.6 million and $ 21.4 million as of June 30, 2025 and 2024, respectively.

All deferred revenue related to TIS will be recognized through April 2026 .

All deferred revenue related to TIS will be recognized by April 2026 .

EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY

2 unchanged sentences

Per share amounts are computed by dividing net income (loss) from continuing operations attributable to common shareholders by the weighted average shares outstanding during each period.

Diluted earnings per share excludes the impact of shares of common stock issuable upon the lapse of certain restrictions or the exercise of options to purchase 0.6 million and 0.5 million shares for the three and nine months ended March 31, 2025,

H&R Block, Inc.

|Q3 FY2025 Form 10-Q

respectively, and one thousand and 0.2 million shares for the three and nine months ended March 31, 2024, respectively, as the effect would be antidilutive.

The computations of basic and diluted earnings per share from continuing operations are as follows:

Diluted earnings per share excludes the impact of shares of common stock issuable upon the lapse of certain restrictions or the exercise of options to purchase 2.7 million shares for both the three months ended September 30, 2025 and 2024, as the effect would be antidilutive due to the net loss from continuing operations during the periods.

Q1 FY2026 Form 10-Q| H&R Block, Inc.

The computations of basic and diluted earnings (loss) per share from continuing operations are as follows:

(in 000s, except per share amounts)

Three months ended March 31, Nine months ended March 31,

2025 2024 2025 2024

Net income from continuing operations attributable to shareholders $ 722,928 $ 691,586 $ 309,041 $ 339,597

Three months ended September 30,

Net loss from continuing operations attributable to shareholders $ ( 165,368 ) $ ( 171,421 )

Amounts allocated to participating securities ( 262 ) ( 229 )

Net income from continuing operations attributable to common shareholders $ 719,486 $ 688,798 $ 307,633 $ 338,247

Net loss from continuing operations attributable to common shareholders $ ( 165,630 ) $ ( 171,650 )

Basic weighted average common shares 131,387 139,154

1 unchanged sentence

Dilutive weighted average common shares 131,387 139,154

Earnings per share from continuing operations attributable to common shareholders:

Loss per share from continuing operations attributable to common shareholders:

Basic $ ( 1.26 ) $ ( 1.23 )

1 unchanged sentence

The decrease in the weighted average shares outstanding is due to share repurchases completed in the current and prior fiscal years.

STOCK-BASED COMPENSATION – We granted 1.1 million and 1.7 million shares, including adjustments for performance achievement and dividend equivalents, under our stock-based compensation plans during the nine months ended March 31, 2025 and 2024, respectively.

Stock-based compensation expense of our continuing operations totaled $ 7.5 million and $ 25.4 million for the three and nine months ended March 31, 2025, respectively, and $ 7.8 million and $ 25.3 million for the three and nine months ended March 31, 2024, respectively.

As of March 31, 2025, unrecognized compensation cost for nonvested shares and units totaled $ 50.8 million.

STOCK-BASED COMPENSATION – We granted 0 .8 million and 1.0 million shares, including adjustments for performance achievement and dividend equivalents, under our stock-based compensation plans during the three months ended September 30, 2025 and 2024, respectively.

Stock-based compensation expense of our continuing operations totaled $ 6.2 million and $ 8.7 million for the three months ended September 30, 2025 and 2024, respectively.

As of September 30, 2025, unrecognized compensation cost for nonvested shares and units totaled $ 68.5 million.

Receivables, net of their related allowance, consist of the following:

As of March 31, 2025 June 30, 2024

As of September 30, 2025 June 30, 2025

Short-term Long-term Short-term Long-term

10 unchanged sentences

Total $ 64,145 $ 48,649 $ 63,621 $ 47,016

Q3 FY2025 Form 10-Q| H&R Block, Inc.

Balances presented above as short-term are included in receivables, while the long-term portions are included in other noncurrent assets in the consolidated balance sheets.

LOANS TO FRANCHISEES – Franchisee loan balances consist of term loans made primarily to finance the purchase of franchises and revolving lines of credit primarily for the purpose of funding working capital needs.

Loans with a principal balance more than 90 days past due or on non-accrual status were $2.2 million and $1.1 million as of March 31, 2025 and June 30, 2024, respectively.

Loans with a principal balance more than 90 days past due or on non-accrual status were $3.5 million and $3.1 million as of September 30, 2025 and June 30, 2025, respectively.

H&R Block, Inc.

|Q1 FY2026 Form 10-Q

H&R BLOCK'S INSTANT REFUND ® – H&R Block's Instant Refund® amounts are generally received from the Canada Revenue Agency within 60 days of filing the client's return, with the remaining balance collectible from the client.

2 unchanged sentences

In December of each year, we charge-off the receivables and the related allowance to an amount we believe represents the net realizable value.

B alances and amounts on non-accrual status, classified as impaired, or more than 60 days past due, by tax return year of origination, as of March 31, 2025 are as foll ows:

B alances and amounts on non-accrual status, classified as impaired, or more than 60 days past due, by tax return year of origination, as of September 30, 2025 are as foll ows:

Tax return year of origination Balance More Than 60 Days Past Due

7 unchanged sentences

Typically, in December of each year, we charge-off the receivables and the related allowance for EAs to an amount we believe represents the net realizable value.

Balances and amounts on non-accrual status, classified as impaired, or more than 60 days past due, by fiscal year of origination, as of March 31, 2025 are as follows:

Balances and amounts on non-accrual status, classified as impaired, or more than 60 days past due, by fiscal year of origination, as of September 30, 2025 are as follows:

Fiscal year of origination Balance Non-Accrual

4 unchanged sentences

Net balance $ 37,269

H&R Block, Inc.

|Q3 FY2025 Form 10-Q

ALLOWANCE FOR CREDIT LOSSES – Activity in the allowance for credit losses for EA and all other short-term and long-term receivables for the nine months ended March 31, 2025 and 2024 is as follows:

Q1 FY2026 Form 10-Q| H&R Block, Inc.

ALLOWANCE FOR CREDIT LOSSES – Activity in the allowance for credit losses for EA and all other short-term and long-term receivables for the three months ended September 30, 2025 and 2024 is as follows:

EAs All Other Total

2 unchanged sentences

Charge-offs, recoveries and other — ( 1,365 ) ( 1,365 )

Balances as of March 31, 2025 $ 19,371 $ 36,134 $ 55,505

Balances as of September 30, 2025 $ 19,663 $ 44,766 $ 64,429

Balances as of July 1, 2024 $ 33,536 $ 45,327 $ 78,863

1 unchanged sentence

Charge-offs, recoveries and other — ( 1,462 ) ( 1,462 )

Balances as of March 31, 2024 $ 20,683 $ 38,001 $ 58,684

For the nine months ended March 31, 2025, there were $ 33.5 million of gross charge-offs related to EAs which were originated in fiscal year 2024.

Balances as of September 30, 2024 $ 33,536 $ 44,889 $ 78,425

GOODWILL AND INTANGIBLE ASSETS

Changes in the carrying amount of goodwill for the nine months ended March 31, 2025 are as follows:

Changes in the carrying amount of goodwill for the three months ended September 30, 2025 are as follows:

Goodwill Accumulated Impairment Losses Net

4 unchanged sentences

Impairments — — —

Balances as of March 31, 2025 $ 924,233 $ ( 138,297 ) $ 785,936

Balances as of September 30, 2025 $ 936,036 $ ( 138,297 ) $ 797,739

(1) All goodwill added during the period is expected to be tax-deductible for federal income tax reporting.

In conjunction with our annual impairment test, we tested goodwill for impairment during the quarter and did not identify any impairment.

Q3 FY2025 Form 10-Q| H&R Block, Inc.

We test goodwill for impairment annually as of February 1, or more frequently if events occur or circumstances change which would, more likely than not, reduce the fair value of a reporting unit below its carrying value.

H&R Block, Inc.

|Q1 FY2026 Form 10-Q

Components of intangible assets are as follows:

1 unchanged sentence

Amortization Net

As of March 31, 2025:

As of September 30, 2025:

Reacquired franchise rights $ 417,736 $ ( 246,916 ) $ 170,820

13 unchanged sentences

$ 986,736 $ ( 727,324 ) $ 259,412

We made payments to acquire businesses totaling $ 35.3 million and $ 43.2 million during the nine months ended March 31, 2025 and 2024, respectively.

The amounts and weighted-average lives of intangible assets acquired during the nine months e nded March 31, 2025, including amounts capitalized related to internally-developed software, a re as follows:

We made payments to acquire businesses totaling $ 5.1 million and $ 5.9 million during the three months ended September 30, 2025 and 2024, respectively.

The amounts and weighted-average lives of intangible assets acquired during the three months e nded September 30, 2025, including amounts capitalized related to internally-developed software, a re as follows:

(dollars in 000s)

5 unchanged sentences

Total $ 5,843 6

Amortization of intangible assets for the three and nine months ended March 31, 2025 was $ 11.3 million and $ 36.3 million, respectively, compared to $ 15.0 million and $ 46.2 million for the three and nine months ended March 31, 2024, respectively.

Amortization of intangible assets for the three months ended September 30, 2025 was $ 11.1 million compared to $ 12.9 million for the three months ended September 30, 2024.

Estimated amortization of intangible assets for fiscal years ending June 30, 2026, 2027, 2028, 2029, and 2030 is $ 42.6 million, $ 36.1 million, $ 27.8 million, $ 19.1 million and $ 9.4 million, respectively.

H&R Block, Inc.

|Q3 FY2025 Form 10-Q

Q1 FY2026 Form 10-Q| H&R Block, Inc.

LONG-TERM DEBT

The components of long-term debt are as follows:

As of March 31, 2025 June 30, 2024

As of September 30, 2025 June 30, 2025

Senior Notes, 5.250 %, due October 2025

4 unchanged sentences

650,000 650,000

Senior Notes, 5.375%, due September 2032

Committed line of credit borrowings 245,000 —

Debt issuance costs and discounts ( 10,038 ) ( 6,802 )

3 unchanged sentences

Estimated fair value of long-term debt $ 1,698,000 $ 1,437,000

Our unsecured committed line of credit (CLOC) provides for an unsecured senior revolving credit facility in the aggregate principal amount of $ 1.5 billion, which includes a $ 175.0 million sublimit for swingline loans and a $ 50.0 million sublimit for standby letters of credit.

On August 26, 2025, we issued $ 350.0 million of 5.375% Senior Notes due September 15, 2032 (2032 Senior Notes).

The 2032 Senior Notes are not redeemable by the bondholders prior to maturity, although we have the right to redeem some or all of these notes at any time, at specified redemption prices.

The net proceeds from the 2032 Senior Notes will be used for general corporate purposes, which includes, among other uses, the redemption of the $ 350.0 million in principal outstanding of our 5.250% notes due October 2025 (2025 Senior Notes).

We redeemed our 2025 Senior Notes at 100% of the principal amount, plus accrued and unpaid interest, on September 19, 2025.

UNSECURED COMMITTED LINE OF CREDIT – On July 11, 2025, we entered into a Fifth Amended and Restated Credit and Guarantee Agreement (2025 CLOC), which amended and restated our Fourth Amended and Restated Credit and Guarantee Agreement, extended the scheduled maturity date to July 11, 2030, maintained the aggregate principal amount of $1.5 billion, and revised the interest rate table.

All other material terms remain substantially unchanged from our previous CLOC.

The 2025 CLOC provides for an unsecured senior revolving credit facility in the aggregate principal amount of $ 1.5 billion, which includes a $ 175.0 million sublimit for swingline loans and a $ 50.0 million sublimit for standby letters of credit.

We may request increases in the aggregate principal amount of the revolving credit facility of up to $ 500.0 million, subject to obtaining commitments from lenders and meeting certain other conditions.

The CLOC will mature on June 11, 2026, unless extended pursuant to the terms of the CLOC, at which time all outstanding amounts thereunder will be due and payable.

The 2025 CLOC will mature on July 11, 2030, unless extended pursuant to the terms of the 2025 CLOC, at which time all outstanding amounts thereunder will be due and payable.

Our 2025 CLOC includes an annual facility fee, which will vary depending on our then current credit ratings.

5 unchanged sentences

Proceeds under the 2025 CLOC may be used for working capital needs or for other general corporate pu rposes.

We were in compliance with these requirements as of March 31, 2025.

We had no outstanding balance under our CLOC and amounts available to borrow were not limited by the debt-to-EBITDA covenant as of March 31, 2025.

We were in compliance with these requirements as of September 30, 2025.

H&R Block, Inc.

|Q1 FY2026 Form 10-Q

We had an outstanding balance of $245.0 million under our 2025 CLOC and amounts available to borrow were not limited by the debt-to-EBITDA covenant as of September 30, 2025.

We file a consolidated federal income tax return in the U.S.

with the Internal Revenue Service (IRS) and file tax returns in various state, local, and foreign jurisdictions.

We had gross unrecognized tax benefits of $ 284.0 million and $ 251.8 million as of March 31, 2025 and June 30, 2024, respectively.

The gross unrecognized tax benefits increased by $ 32.2 million during the nine months ended March 31, 2025.

The increase is primarily related to various current federal and state tax positions expected to be taken in our income tax returns.

We believe it is reasonably possible that the balance of unrecognized tax benefits could decrease by approximately $ 148.4 million within the next twelve months.

The anticipated decrease is due to the expiration of statutes of limitations, anticipated closure of various tax matters currently under examination, and settlements with tax authorities.

For such matters where a change in the balance of unrecognized tax benefits is not yet deemed reasonably possible, no estimate has been included.

Q3 FY2025 Form 10-Q| H&R Block, Inc.

Our effective tax rate for continuing operations, including the effects of discrete tax items, was 25.3 % and 17.6 % for the nine months ended March 31, 2025 and 2024, respectively.

Discrete items increased the effective tax rate by 0.9 % for the nine months ended March 31, 2025 and decreased the effective tax rate by 6.3 % for the nine months ended March 31, 2024.

Discrete income tax expense of $ 3.8 million and benefit of $ 26.0 million were recorded in the nine months ended March 31, 2025, and 2024, respectively.

The discrete tax expense recorded in the current period primarily resulted from interest expense on uncertain tax positions, partially offset by benefits related to investment tax credit purchases and stock-based compensation vesting.

The discrete tax benefit recorded in the prior period primarily resulted from settlements with taxing authorities and state statute of limitations expirations.

The impact discrete tax items have on our tax rate through the third quarter are slightly exaggerated versus the impact discrete tax items have on the full fiscal year tax rate.

On July 4,2025, H.R.

1 was signed into law.

The legislation did not have a material impact on our tax benefit for the three months ended September 30, 2025, and we do not expect it to materially change our effective income tax rate for the fiscal year ending June 30, 2026.

Our effective tax rate for continuing operations, including the effects of discrete tax items, was 23.6 % and 26.2 % for the three months ended September 30, 2025 and 2024, respectively.

Consistent with prior years, our pretax loss for the three months ended September 30, 2025 is expected to be offset by income in our third and fourth quarters due to the established pattern of seasonality in our primary business operations.

As such, management has determined that it is more-likely-than-not that realization of tax benefits recorded in our financial statements will occur within our fiscal year.

The amount of tax benefit recorded for the three months ended September 30, 2025 reflects management’s estimate of the annual effective tax rate applied to year-to-date loss from continued operations adjusted for the tax impact of discrete items for the periods presented.

COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

Assisted tax returns are covered by our 100% accuracy guarantee, whereby we will reimburse a client for penalties and interest attributable to an H&R Block error on a return.

DIY tax returns are covered by our 100% accuracy guarantee, whereby we will reimburse a client up to a maximum of $ 10,000 if our software makes an arithmetic error that results in payment of penalties and/or interest to the respective taxing authority that a client would otherwise not have been required to pay.

Our liability related to estimated losses under the 100% accuracy guarantee was $ 11.3 million and $ 14.1 million as of March 31, 2025 and June 30, 2024, respectively.

Similarly, DIY tax returns are covered by our 100% accuracy guarantee, whereby we will reimburse a client (up to a maximum of $ 10,000 in the U.S.) if our software makes an arithmetic error that results in payment of penalties and/or interest to the respective taxing authority that a client would otherwise not have been required to pay.

Our liability related to estimated losses under the 100% accuracy guarantee was $ 10.4 million and $ 11.4 million as of September 30, 2025 and June 30, 2025, respectively.

The short-term and long-term portions of this liability are included in deferred revenue and other liabilities in the consolidated balance sheets.

Liabilities related to acquisitions for (1) estimated contingent consideration based on expected financial performance of the acquired business and economic conditions at the time of acquisition and (2) estimated accrued compensation related to continued employment of key employees were $ 32.4 million and $ 26.9 million as of March 31, 2025 and June 30, 2024 respectively, with amounts recorded in deferred revenue and other liabilities.

Liabilities related to acquisitions for (1) estimated contingent consideration based on expected financial performance of the acquired business and economic conditions at the time of acquisition and (2) estimated accrued compensation related to continued employment of key employees were $ 30.6 million and $ 29.6 million as of September 30, 2025 and June 30, 2025 respectively, with amounts recorded in deferred revenue and other liabilities.

Should actual results differ from our estimates, future payments made will differ from the above estimate and any differences will be recorded in results from continuing operations.

We have contractual commitments to fund certain franchises with approved short-term lines of credit for the purpose of meeting their seasonal working capital needs.

Our total obligation under these lines of credit was $ 21.0 million at March 31, 2025, and net of amounts drawn and outstanding, our remaining commitment to fund totaled $ 9.1 million.

During the nine months ended March 31, 2025, the Company entered into an agreement to purchase federal investment tax credits (ITC), if certain conditions are met.

During the nine months ended March 31, 2025, we paid $ 22.9 million for ITCs.

As of March 31, 2025, the Company has a remaining commitment to purchase additional ITCs, for approximately $ 75.1 million if certain conditions set forth in the agreement are satisfied, with the final payment anticipated to occur by June 30, 2025.

Emerald Advance® term loans are originated by Pathward®, N.A.

We purchase participation interests, at par, in all EAs originated by Pathward in accordance with our participation agreement.

Our participation interest varies by jurisdiction.

At March 31, 2025, the principal balance of purchased participation interests for the current year totaled $ 260.6 million, which represents 87% of total EA volume originated by Pathward.

Refund Advance loans are originated by Pathward and offered to certain assisted U.S.

tax preparation clients, based on client eligibility as determined by Pathward.

We pay fees primarily based on loan size and customer type.

We have provided a guarantee up to $ 18.0 million related to certain loans to clients prior to the IRS accepting electronic filing.

At March 31, 2025, we accrued an estimated liability of $ 2.4 million related to this guarantee, compared to $ 1.4 million at June 30, 2024.

Our total obligation under these lines of credit was $ 13.2 million at September 30, 2025, and net of amounts drawn and outstanding, our remaining commitment to fund totaled $ 8.1 million.

LITIGATION AND OTHER RELATED CONTINGENCIES

2 unchanged sentences

In some of the matters, very large or indeterminate amounts, including punitive damages, may be sought.

jurisdictions permit considerable variation in the assertion of monetary

H&R Block, Inc.

|Q3 FY2025 Form 10-Q

damages or other relief.

jurisdictions permit considerable variation in the assertion of monetary damages or other relief.

Jurisdictions may permit claimants not to specify the monetary damages sought or may permit claimants to state only that the amount sought is sufficient to invoke the jurisdiction.

1 unchanged sentence

We believe that the monetary relief which may be specified in a lawsuit or claim bears little relevance to its merits or disposition value due to this variability in pleadings and our experience in handling and resolving numerous claims over an extended period of time.

Q1 FY2026 Form 10-Q| H&R Block, Inc.

The outcome of a matter and the amount or range of potential loss at particular points in time may be difficult to ascertain.

6 unchanged sentences

For such matters where a loss is believed to be reasonably possible, but not probable, or the loss cannot be reasonably estimated, no accrual has been made.

It is possible that such matters could require us to pay damages or make other expenditures or accrue liabilities in amounts that could not be reasonably estimated as of March 31, 2025.

It is possible that such matters could require us to pay damages or make other expenditures or accrue liabilities in amounts that could not be reasonably estimated as of September 30, 2025.

While the potential future liabilities could be material in the particular quarterly or annual periods in which they are recorded, based on information currently known, we do not believe any such liabilities are likely to have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows.

Our accrued liabilities were $ 5.5 million and $ 7.2 million as of March 31, 2025 and June 30, 2024, respectively.

Our accrued liabilities were $ 6.8 million and $ 6.2 million as of September 30, 2025 and June 30, 2025, respectively.

Our estimate of the aggregate range of reasonably possible losses includes (1) matters where a liability has been accrued and there is a reasonably possible loss in excess of the amount accrued for that liability, and (2) matters where a liability has not been accrued but we believe a loss is reasonably possible.

5 unchanged sentences

The matters underlying the estimated range will change from time to time, and actual results may vary significantly from the current estimate.

As of March 31, 2025, we believe the estimate of the aggregate range of reasonably possible losses in excess of amounts accrued, where the range of loss can be estimated, is not material.

As of September 30, 2025, we believe the estimate of the aggregate range of reasonably possible losses in excess of amounts accrued, where the range of loss can be estimated, is not material.

At the end of each reporting period, we review relevant information with respect to litigation, arbitration and other related loss contingencies and update our accruals, disclosures, and estimates of reasonably possible loss or range of loss based on such reviews.

1 unchanged sentence

Any receivable for insurance recoveries is recorded separately from the corresponding liability, and only if recovery is determined to be probable and reasonably estimable.

Q3 FY2025 Form 10-Q| H&R Block, Inc.

We believe we have meritorious defenses to the claims asserted in the various matters described in this note, and we intend to defend them vigorously.

2 unchanged sentences

in addition, the amounts that may be required to be paid to discharge or settle the matters could be substantial and could have a material adverse impact on our business and our consolidated financial position, results of operations, and cash flows.

H&R Block, Inc.

|Q1 FY2026 Form 10-Q

We have received and are responding to certain governmental inquiries, class actions and mass arbitrations relating to the IRS Free File Program and other aspects of our DIY tax preparation services, including the use of pixels.

3 unchanged sentences

While we cannot provide assurance that we will ultimately prevail in each instance, we believe the amount, if any, we are required to pay to discharge or settle these other matters will not have a material adverse impact on our business and our consolidated financial position, results of operations, and cash flows.

SEGMENT INFORMATION

We provide assisted and DIY tax preparation solutions through multiple channels (including in-person, online and mobile applications, virtual, and desktop software) and distribute H&R Block-branded services and products, including those of our bank partners, to the general public primarily in the U.S., Canada and Australia.

Tax returns are prepared by H&R Block tax professionals in one of our company-owned or franchise offices, virtually or via an online review, or they are prepared and filed by our clients through our DIY tax solutions.

We also offer small business solutions through our company-owned and franchise offices (including in-person, online and virtual) and online through Wave.

We report a single segment that includes all of our continuing operations.

The majority of our revenues are from our U.S.

tax services business.

The Company's Chief Operating Decision Maker (CODM) is our chief executive officer, who regularly reviews consolidated financial information to evaluate financial performance and allocate resources.

Specifically, the CODM uses revenues, operating expenses, net income and EBITDA at a consolidated level, as key financial metrics in deciding how to reinvest to grow the business.

These financial metrics are used by the CODM to make operating decisions and identify growth opportunities.

The measure of segment assets is total consolidated assets as presented on the consolidated balance sheet.

The following table presents the significant revenue and expense categories included in the segment's net income from continuing operations as regularly provided to the CODM on a consolidated basis and then reconciled to net income for the three months ended September 30, 2025 and 2024.

Q1 FY2026 Form 10-Q| H&R Block, Inc.

Consolidated – Financial Results (in 000s, except per share amounts)

Three months ended September 30, 2025 2024

tax preparation and related services:

Assisted tax preparation $ 48,644 $ 42,963

Royalties 5,849 5,852

DIY tax preparation 3,745 3,236

Refund Transfers 843 860

Peace of Mind® Extended Service Plan 23,509 23,097

Tax Identity Shield® 4,122 3,909

Emerald Card® and Spruce SM

Interest and fee income on Emerald Advance® — —

International 65,661 64,855

Wave 29,850 26,403

Other 13,476 13,809

Total revenues $ 203,551 $ 193,810

Compensation and benefits:

Field wages 69,715 68,094

Other wages 79,279 77,335

Benefits and other compensation 36,662 38,754

185,656 184,183

Occupancy 102,796 101,318

Marketing and advertising 8,342 9,972

Depreciation and amortization 28,922 28,831

Bad debt 2,205 2,730

Other 82,661 95,107

Total operating expenses 410,582 422,141

Other income (expense), net 8,102 11,917

Interest expense on borrowings (17,402) (15,847)

Loss from continuing operations before income taxes (216,331) (232,261)

Income tax benefit (50,963) (60,840)

Segment net income from continuing operations ( 165,368 ) ( 171,421 )

Reconciliation of segment profit:

Reconciling items:

Net loss from discontinued operations (451) (1,155)

Net loss $ (165,819) $ (172,576)

H&R Block, Inc.

|Q1 FY2026 Form 10-Q

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements