What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-02-05 compared with 2025-11-06 · 140 added, 60 removed, 191 unchanged (51% of the section changed)

6 unchanged sentences

Jones II notified the Board of Directors of the Company of his intention to retire as President and Chief Executive Officer of the Company, effective as of December 31, 2025.

Jones will also retire from the Board of Directors, effective on December 31, 2025.

Jones retired from the Board of Directors, effective on December 31, 2025.

On August 8, 2025, the Board appointed Curtis A.

Campbell, currently the Company's President, Global Consumer Tax and Chief Product Officer, to succeed Mr.

Campbell, the Company's President, Global Consumer Tax and Chief Product Officer, to succeed Mr.

Jones as President and Chief Executive Officer, effective immediately upon Mr.

9 unchanged sentences

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).

The net proceeds from the 2032 Senior Notes were 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.

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

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

H&R Block, Inc.

|Q2 FY2026 Form 10-Q

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

Three months ended September 30, 2025 2024 $ Change % Change

Three months ended December 31, 2025 2024 $ Change % Change

tax preparation and related services:

42 unchanged sentences

See " Non-GAAP Financial Information " at the end of this item for a reconciliation of non-GAAP measures.

Q2 FY2026 Form 10-Q| H&R Block, Inc.

Three months ended December 31, 2025 compared to December 31, 2024

Revenues increased $19.8 million, or 11.1%, from the prior ye ar.

assisted tax preparation revenues increased $7.5 million , or 15.6%, primarily due to an increase in company-owned tax return volumes and net average charge in the current year.

DIY tax preparation revenues increased $3.1 million, or 22.3%, primarily due to higher software downloads.

Wave revenues increased $3.2 million, or 12.1%, due to higher accounting, invoicing, and receipts subscriptions and small business payment processing volumes.

Total operating expenses increased $25.4 million, or 5.4%, from the prior year.

Compensation and benefits increased $8.5 million, or 4.3%, primarily due to higher tax professional wages as a result of higher assisted revenue and higher corporate wages primarily due to salary increases.

Certain wage‑related expenses are now being reported in field wages rather than other wages to better align with how costs are managed and evaluated internally.

This change had no impact on total operating expenses, and prior period amounts have not been reclassified.

Other operating expenses increased $9.0 million, or 8.5%.

The components of other expenses are as follows:

Three months ended December 31, 2025 2024 $ Change % Change

Consulting and outsourced services $ 24,333 $ 18,439 $ (5,894) (32.0) %

Bank partner fees (915) 1,316 2,231 **

Client claims and refunds 3,695 4,332 637 14.7 %

Employee and travel expenses 12,407 12,495 88 0.7 %

Technology-related expenses 29,772 28,062 (1,710) (6.1) %

Credit card/bank charges 19,547 18,546 (1,001) (5.4) %

Insurance 4,866 4,256 (610) (14.3) %

Legal fees and settlements 11,517 7,192 (4,325) (60.1) %

Supplies 4,558 3,570 (988) (27.7) %

Other 4,389 6,982 2,593 37.1 %

$ 114,169 $ 105,190 $ (8,979) (8.5) %

Consulting and outsourced services expense increased $5.9 million, or 32.0%, due to increased spend on various strategic projects.

We recorded an income tax benefit of $77.7 million in the current year compared to $69.8 million in the prior year.

The effective tax rate for the three months ended December 31, 2025, and 2024 was 24.3% and 22.4%, respectively.

H&R Block, Inc.

|Q2 FY2026 Form 10-Q

Three months ended September 30, 2025 compared to September 30, 2024

Revenues increased $9.7 million, or 5.0%, from the prior ye ar.

assisted tax preparation revenues increased $5.7 million , or 13.2%, due to an increase in net average charge and company-owned tax return volumes in the current year.

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

Six months ended December 31, 2025 2024 $ Change % Change

tax preparation and related services:

Assisted tax preparation $ 104,563 $ 91,343 $ 13,220 14.5 %

Royalties 10,957 9,351 1,606 17.2 %

DIY tax preparation 20,552 16,980 3,572 21.0 %

Refund Transfers 1,481 1,497 (16) (1.1) %

Peace of Mind® Extended Service Plan 39,740 39,242 498 1.3 %

Tax Identity Shield® 8,366 7,922 444 5.6 %

Other 26,321 25,633 688 2.7 %

tax preparation and related services 211,980 191,968 20,012 10.4 %

Financial services:

Emerald Card® and Spruce SM

16,976 18,974 (1,998) (10.5) %

Interest and fee income on Emerald Advance® 13,446 12,308 1,138 9.2 %

Total financial services 30,422 31,282 (860) (2.7) %

International 100,379 96,666 3,713 3.8 %

Wave 59,635 52,964 6,671 12.6 %

Total revenues $ 402,416 $ 372,880 $ 29,536 7.9 %

Compensation and benefits:

Field wages 163,892 149,659 (14,233) (9.5) %

Other wages 152,284 156,066 3,782 2.4 %

Benefits and other compensation 76,651 77,156 505 0.7 %

392,827 382,881 (9,946) (2.6) %

Occupancy 212,388 206,317 (6,071) (2.9) %

Marketing and advertising 23,337 24,835 1,498 6.0 %

Depreciation and amortization 58,923 58,026 (897) (1.5) %

Bad debt 24,021 22,146 (1,875) (8.5) %

Other 196,830 200,297 3,467 1.7 %

Total operating expenses 908,326 894,502 (13,824) (1.5) %

Other income (expense), net 11,136 14,661 (3,525) (24.0) %

Interest expense on borrowings (40,780) (37,599) (3,181) (8.5) %

Pretax loss (535,554) (544,560) 9,006 1.7 %

Income tax benefit (128,620) (130,673) (2,053) (1.6) %

Net loss from continuing operations (406,934) (413,887) 6,953 1.7 %

Net loss from discontinued operations (1,051) (2,109) 1,058 50.2 %

Net loss $ (407,985) $ (415,996) $ 8,011 1.9 %

BASIC AND DILUTED LOSS PER SHARE:

Continuing operations $ (3.16) $ (3.02) $ (0.14) 4.6 %

Discontinued operations (0.01) (0.01) — — %

Consolidated $ (3.17) $ (3.03) $ (0.14) 4.6 %

Adjusted diluted EPS (1)

$ (3.03) $ (2.89) $ (0.14) 4.8 %

$ (435,851) $ (448,935) $ 13,084 2.9 %

(1) All non-GAAP measures are results from continuing operations.

See " Non-GAAP Financial Information " at the end of this item for a reconciliation of non-GAAP measures.

Q2 FY2026 Form 10-Q| H&R Block, Inc.

Six months ended December 31, 2025 compared to December 31, 2024

Revenues increased $29.5 million, or 7.9%, from the prior year.

assisted tax preparation revenues increased $13.2 million, or 14.5%, primarily due to an increase in net average charge combined with an increase in company-owned tax return volumes in the current year.

DIY tax preparation revenues increased $3.6 million, or 21.0%, primarily due to higher software downloads and higher paid online volume.

Wave revenues increased $6.7 million, or 12.6%, due to higher accounting, invoicing, and receipts subscriptions and small business payment processing volumes.

Total operating expenses decreased $11.6 million, or 2.7%, from the prior year.

Field wages increased $1.6 million, or 2.4%, due to higher preseason and tax professional wages in the current year.

Other wages increased $1.9 million, or 2.5% due to higher corporate wages due to salary increases.

Benefits and other compensation decreased $2.1 million, or 5.4% primarily due to lower stock-based compensation expense.

Total operating expenses increased $13.8 million, or 1.5%, from the prior year period.

Compensation and benefits increased $9.9 million, or 2.6%, primarily due to higher tax professional wages as a result of higher assisted revenue and higher corporate wages primarily due to salary increases.

Certain wage‑related expenses are now being reported in field wages rather than other wages to better align with how costs are managed and evaluated internally.

This change had no impact on total operating expenses, and prior period amounts have not been reclassified.

Occupancy expense increased $6.1 million, or 2.9%, primarily due to higher lease expenses.

Marketing and advertising expense decreased $1.6 million, or 16.3%, due to higher vendor refunds for expired customer incentives and lower online advertising.

Other operating expenses decreased $3.5 million, or 1.7%.

The components of other expenses are as follows:

Three months ended September 30, 2025 2024 $ Change % Change

Six months ended December 31, 2025 2024 $ Change % Change

Consulting and outsourced services $ 37,490 $ 33,883 $ (3,607) (10.6) %

9 unchanged sentences

$ 196,830 $ 200,297 $ 3,467 1.7 %

Consulting and outsourced services expense decreased $2.3 million, or 14.8%, due to lower call center expenses.

Technology-related expenses increased by $1.8 million, or 7.5%, due to higher cloud-related technology spend.

Legal expenses decreased $11.0 million primarily due to lower outside legal counsel spend in the current year.

We recorded an income tax benefit of $51.0 million in the current year compared to $60.8 million in the prior year.

The effective tax rate for the three months ended September 30, 2025, and 2024 was 23.6% and 26.2%, respectively.

Legal expense decreased $6.7 million, or 30.8%, primarily due to lower outside legal counsel spend.

We recorded income tax benefit of $128.6 million in the current year compared to $130.7 million in the prior year.

The effective tax rate for both the six months ended December 31, 2025, and 2024 was 24.0%.

See Item 1, note 7 to the consolidated financial statements for additional discussion.

FINANCIAL CONDITION

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Therefore, we normally require the use of cash to fund losses and working capital needs, periodically resulting in a working capital deficit, during the months of May through

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

H&R Block, Inc.

|Q2 FY2026 Form 10-Q

We typically have relied on available cash balances from the prior tax season and borrowings to meet liquidity needs.

Given the likely availability of a number of liquidity options discussed herein, we believe that, in the absence of any unexpected developments, our existing sources of capital as of September 30, 2025 are sufficient to meet our operating, investing and financing needs.

DISCUSSION OF CONSOLIDATED STATEMENTS OF CASH FLOWS – The following table summarizes our statements of cash flows for the three months ended September 30, 2025 and 2024.

Given the likely availability of a number of liquidity options discussed herein, we believe that, in the absence of any unexpected developments, our existing sources of capital as of December 31, 2025 are sufficient to meet our operating, investing and financing needs.

DISCUSSION OF CONSOLIDATED STATEMENTS OF CASH FLOWS – The following table summarizes our statements of cash flows for the six months ended December 31, 2025 and 2024.

See Item 1 for the complete consolidated statements of cash flows for these periods.

Three months ended September 30, 2025 2024

Six months ended December 31, 2025 2024

Net cash provided by (used in):

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Operating Activities.

Cash used in operations totaled $356.8 million for the three months ended September 30, 2025 compared to $328.6 million in the prior year period.

The increase is primarily due to changes in accrued income taxes and other current liabilities, partially offset by a lower net loss.

Cash used in operations totaled $970.8 million for the six months ended December 31, 2025 compared to $895.6 million in the prior year period.

The increase is primarily due to changes in accrued income taxes and receivables, partially offset by deferred income taxes and a lower net loss.

Investing Activities.

Cash used in investing activities totaled $20.9 million for the three months ended September 30, 2025 compared to $26.4 million in the prior year period.

The decrease is primarily due to lower capital expenditures.

Cash used in investing activities totaled $91.9 million for the six months ended December 31, 2025 compared to $87.5 million in the prior year period.

The increase is primarily due to higher payments made for business acquisitions.

Financing Activities.

Cash used in financing activities totaled $225.0 million for the three months ended September 30, 2025 compared to $284.5 million in the prior year period.

The change is primarily due to proceeds from line of credit borrowings partially offset by higher repurchases of common stock.

Cash provided by financing activities totaled $429.5 million for the six months ended December 31, 2025 compared to $258.6 million in the prior year period.

The change is primarily due to higher net proceeds from line of credit borrowings, lower share repurchases for payroll taxes on stock-based awards, partially offset by higher dividends.

CASH REQUIREMENTS –

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We have consistently paid quarterly dividends.

Dividends paid totaled $50.2 million and $44.7 million for the three months ended September 30, 2025 and 2024, respectively.

Dividends paid totaled $104.6 million and $97.0 million for the six months ended December 31, 2025 and 2024, respectively.

Although we have historically paid dividends and plan to continue to do so, there can be no assurances that circumstances will not change in the future that could affect our ability or decisions to pay dividends.

During the three months ended September 30, 2025, we repurchased $400.1 million of our common stock at an average price of $50.90 per share, excluding excise taxes in connection with such repurchases.

During the six months ended December 31, 2025, we repurchased $400.1 million of our common stock at an average price of $50.90 per share, excluding excise taxes in connection with such repurchases.

In the prior year period, we repurchased $400.1 million of our common stock at an average price of $61.10 per share, excluding excise taxes in connection with such repurchases.

5 unchanged sentences

Capital Investment.

Capital expenditures totaled $13.2 million and $18.7 million for the three months ended September 30, 2025 and 2024, respectively.

Capital expenditures totaled $48.7 million and $49.1 million for the six months ended December 31, 2025 and 2024, respectively.

Our capital expenditures relate primarily to recurring improvements to retail offices, as well as investments in computers, software and related assets.

In addition to our capital expenditures, we also made payments to acquire businesses.

We acquired franchisee and competitor businesses

H&R Block, Inc.

|Q1 FY2026 Form 10-Q

totaling $5.1 million and $5.9 million during the three months ended September 30, 2025 and 2024, respectively.

In addition to our capital

Q2 FY2026 Form 10-Q| H&R Block, Inc.

expenditures, we also made payments to acquire businesses.

We acquired franchisee and competitor businesses totaling $35.4 million and $28.0 million during the six months ended December 31, 2025 and 2024, respectively.

See Item 1, note 5 for additional information on our acquisitions.

1 unchanged sentence

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

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 had an outstanding balance of $945.0 million under our 2025 CLOC and amounts available to borrow were not limited by the debt-to-EBITDA covenant as of December 31, 2025.

On August 26, 2025, we issued the 2032 Senior Notes.

We intend to use the net proceeds from the 2032 Senior Notes for general corporate purposes, which may include, among other uses, redeeming the 2025 Senior Notes.

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

The following table provides ratings for debt issued by Block Financial LLC (Block Financial) as of September 30, 2025 and June 30, 2025:

As of September 30, 2025 June 30, 2025

The following table provides ratings for debt issued by Block Financial LLC (Block Financial) as of December 31, 2025 and June 30, 2025:

As of December 31, 2025 June 30, 2025

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

2 unchanged sentences

Other than described above, there have been no material changes in our borrowings from those reported as of June 30, 2025 in our Annual Report on Form 10-K.

CASH AND OTHER ASSETS – As of September 30, 2025, we held cash and cash equivalents, excluding restricted amounts, of $376.4 million, including $213.1 million held by our foreign subsidiaries.

CASH AND OTHER ASSETS – As of December 31, 2025, we held cash and cash equivalents, excluding restricted amounts, of $349.2 million, including $199.7 million held by our foreign subsidiaries.

Foreign Operations.

1 unchanged sentence

To mitigate foreign currency risk, we sometimes enter into foreign exchange forward contracts.

There were no forward contracts outstanding as of September 30, 2025.

There were no forward contracts outstanding as of December 31, 2025.

We do not currently intend to repatriate non-borrowed funds held by our foreign subsidiaries in a manner that would trigger a tax liability.

The impact of changes in foreign exchange rates during the period on our international cash balances resulted in a decrease of $2.9 million during the three months ended September 30, 2025 and in an increase of $3.2 million during the three months ended September 30, 2024.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS – Except as described in Recent Developments related to the 2025 CLOC, the 2032 Senior Notes issuance and the 2025 Senior Notes redemption, there have been no other material changes in our contractual obligations and commercial commitments from those reported in our June 30, 2025 Annual Report on Form 10-K.

The impact of changes in foreign exchange rates during the period on our international cash balances resulted in a decrease of $1.1 million and $9.1 million during the six months ended December 31, 2025 and 2024, respectively.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS – EAs are originated by Pathward.

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

Our participation interest varies by jurisdiction.

We purchased participation interests of $281.1 million during the six months ended December 31, 2025.

Except as described in Recent Developments related to the 2025 CLOC, the 2032 Senior Notes issuance and the 2025 Senior Notes redemption, there have been no other material changes in our contractual obligations and commercial commitments from those reported in our June 30, 2025 Annual Report on Form 10-K.

SUMMARIZED GUARANTOR FINANCIAL STATEMENTS – Block Financial is a 100% owned subsidiary of H&R Block, Inc.

1 unchanged sentence

is the full and unconditional Guarantor of our Senior Notes, CLOC and other indebtedness issued from time to time.

H&R Block, Inc.

|Q2 FY2026 Form 10-Q

The following table presents summarized financial information for H&R Block, Inc.

1 unchanged sentence

SUMMARIZED BALANCE SHEET - GUARANTOR AND ISSUER (in 000s)

As of September 30, 2025 June 30, 2025

As of December 31, 2025 June 30, 2025

Current assets $ 330,038 $ 38,254

2 unchanged sentences

Noncurrent liabilities 2,440,727 1,148,806

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

SUMMARIZED STATEMENTS OF OPERATIONS - GUARANTOR AND ISSUER (in 000s)

Three months ended September 30, 2025 Twelve months ended June 30, 2025

Six months ended December 31, 2025 Twelve months ended June 30, 2025

Total revenues $ 32,361 $ 126,240

Income from continuing operations before income taxes 8,687 58,596

Net income from continuing operations 6,672 45,120

Net income 6,221 41,443

The table above reflects $2.0 billion and $1.8 billion of non-current intercompany receivables due to the Issuer from non-guarantor subsidiaries as of September 30, 2025 and June 30, 2025, respectively.

Income (loss) from continuing operations before income taxes (7,472) 58,596

Net income (loss) from continuing operations (5,753) 45,120

Net income (loss) (6,804) 41,443

The table above reflects $2.4 billion and $1.8 billion of non-current intercompany receivables due to the Issuer from non-guarantor subsidiaries as of December 31, 2025 and June 30, 2025, respectively.

REGULATORY ENVIRONMENT

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We also use EBITDA from continuing operations and pretax income of continuing operations, each subject to permitted adjustments, as performance metrics in incentive compensation calculations for our employees.

Q2 FY2026 Form 10-Q| H&R Block, Inc.

The following is a reconciliation of net loss to EBITDA from continuing operations, which is a non-GAAP financial measure:

Three months ended September 30,

Three months ended December 31, Six months ended December 31,

2025 2024 2025 2024

Net loss - as reported $ (242,166) $ (243,420) $ (407,985) $ (415,996)

6 unchanged sentences

EBITDA from continuing operations $ (265,844) $ (261,352) $ (435,851) $ (448,935)

H&R Block, Inc.

|Q1 FY2026 Form 10-Q

The following is a reconciliation of our results from continuing operations to our adjusted results from continuing operations, which is a non-GAAP financial measure:

(in 000s, except per share amounts)

Three months ended September 30,

Three months ended December 31, Six months ended December 31,

2025 2024 2025 2024

Net loss from continuing operations - as reported $ (241,566) $ (242,466) $ (406,934) $ (413,887)

15 unchanged sentences

They may include estimates of revenues, client trajectory, income, effective tax rate, earnings per share, cost savings, capital expenditures, dividends, share repurchases, liquidity, capital structure, market share, industry volumes or other financial items, descriptions of management's plans or objectives for future operations, services or products, or descriptions of assumptions underlying any of the above.

They may also include the expected impact of external events beyond the Company's control, such as outbreaks of infectious disease, severe weather events, natural or manmade disasters, or changes in the regulatory environment in which we operate.

They may also include the expected impact of external events beyond the Company's control, such as outbreaks of infectious

H&R Block, Inc.

|Q2 FY2026 Form 10-Q

disease, severe weather events, natural or manmade disasters, or changes in the regulatory environment in which we operate.

All forward-looking statements speak only as of the date they are made and reflect the Company's good faith beliefs, assumptions and expectations, but they are not guarantees of future performance or events.

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Details about risks, uncertainties and assumptions that could affect various aspects of our business are included throughout our Annual Report on Form 10-K for the fiscal year ended June 30, 2025 and are also described from time to time in other filings with the SEC.

Investors should carefully consider all of these risks, and should pay

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

particular attention to Item 1A, "Risk Factors," and Item 7 under "Critical Accounting Estimates" of our Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

Investors should carefully consider all of these risks, and should pay particular attention to Item 1A, "Risk Factors," and Item 7 under "Critical Accounting Estimates" of our Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

1 unchanged sentence

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 2. Management’s Discussion and Analysis