H&R BLOCK INC 10-Q

ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS: (unaudited, in 000s, except per share amounts) Three months ended December 31, Six months ended December 31, 2025 2024 2025 2024 REVENUES: Service revenues $ 167,779 $ 152,968 $ 359,890 $ 334,739 Royalty, product and other revenues 31,086 26,102 42,526 38,141 198,865 179,070 402,416 372,880 OPERATING EXPENSES: Costs of revenues 339,919 314,209 613,936 583,790 Selling, general and administrative 157,825 158,152 294,390 310,712 Total operating expenses 497,744 472,361 908,326 894,502 Other income (expense), net 3,034 2,744 11,136 14,661 Interest expense on borrowings ( 23,378 ) ( 21,752 ) ( 40,780 ) ( 37,599 ) Loss from continuing operations before income tax benefit ( 319,223 ) ( 312,299 ) ( 535,554 ) ( 544,560 ) Income tax benefit ( 77,657 ) ( 69,833 ) ( 128,620 ) ( 130,673 ) Net loss from continuing operations ( 241,566 ) ( 242,466 ) ( 406,934 ) ( 413,887 ) Net loss from discontinued operations, net of tax benefits of $ 178 , $ 286 , $ 313 , and $ 631 ( 600 ) ( 954 ) ( 1,051 ) ( 2,109 ) NET LOSS $ ( 242,166 ) $ ( 243,420 ) $ ( 407,985 ) $ ( 415,996 ) BASIC AND DILUTED LOSS PER SHARE: Continuing operations $ ( 1.91 ) $ ( 1.79 ) $ ( 3.16 ) $ ( 3.02 ) Discontinued operations ( 0.01 ) ( 0.01 ) ( 0.01 ) ( 0.01 ) Consolidated $ ( 1.92 ) $ ( 1.80 ) $ ( 3.17 ) $ ( 3.03 ) DIVIDENDS DECLARED PER SHARE $ 0.42 $ 0.375 $ 0.84 $ 0.75 COMPREHENSIVE LOSS: Net loss $ ( 242,166 ) $ ( 243,420 ) $ ( 407,985 ) $ ( 415,996 ) Change in foreign currency translation adjustments 5,725 ( 29,034 ) ( 3,583 ) ( 22,917 ) Other comprehensive income (loss) 5,725 ( 29,034 ) ( 3,583 ) ( 22,917 ) Comprehensive loss $ ( 236,441 ) $ ( 272,454 ) $ ( 411,568 ) $ ( 438,913 ) See accompanying notes to consolidated financial statements. H&R Block, Inc. |Q2 FY2026 Form 10-Q 1 Table of Contents CONSOLIDATED BALANCE SHEETS (unaudited, in 000s, except share and per share amounts) As of December 31, 2025 June 30, 2025 ASSETS Cash and cash equivalents $ 349,194 $ 983,277 Cash and cash equivalents - restricted 19,662 19,862 Receivables, less allowance for credit losses of $ 21,173 and $ 55,775 352,480 63,621 Prepaid expenses and other current assets 120,442 95,788 Total current assets 841,778 1,162,548 Property and equipment, at cost, less accumulated depreciation and amortization of $ 864,506 and $ 828,744 149,554 135,068 Operating lease right of use assets 488,082 521,215 Intangible assets, net 271,054 259,412 Goodwill 815,618 802,053 Deferred tax assets and income taxes receivable 300,074 317,691 Other noncurrent assets 63,850 65,911 Total assets $ 2,930,010 $ 3,263,898 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Accounts payable and accrued expenses $ 145,801 $ 144,046 Accrued salaries, wages and payroll taxes 74,262 107,375 Accrued income taxes and reserves for uncertain tax positions 44,897 296,244 Current portion of long-term debt — 349,893 Operating lease liabilities 200,653 209,203 Deferred revenue and other current liabilities 189,216 191,849 Total current liabilities 654,829 1,298,610 Long-term debt and line of credit borrowings 2,435,379 1,143,305 Deferred tax liabilities and reserves for uncertain tax positions 298,986 306,134 Operating lease liabilities 299,003 322,847 Deferred revenue and other noncurrent liabilities 64,891 104,106 Total liabilities 3,753,088 3,175,002 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common stock, no par, stated value $ 0.01 per share, 800,000,000 shares authorized, shares issued of 156,506,438 and 164,367,434 1,565 1,644 Additional paid-in capital 768,531 766,998 Accumulated other comprehensive loss ( 51,338 ) ( 47,755 ) Retained earnings (deficit) ( 904,840 ) 12,061 Less treasury shares, at cost, of 29,747,783 and 30,420,033 ( 636,996 ) ( 644,052 ) Total stockholders' equity (deficiency) ( 823,078 ) 88,896 Total liabilities and stockholders' equity $ 2,930,010 $ 3,263,898 See accompanying notes to consolidated financial statements. 2 Q2 FY2026 Form 10-Q| H&R Block, Inc. Table of Contents CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in 000s) Six months ended December 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 407,985 ) $ ( 415,996 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 58,923 58,026 Provision for credit losses 21,144 20,727 Deferred taxes 18,723 ( 1,531 ) Stock-based compensation 13,799 17,945 Changes in assets and liabilities, net of acquisitions: Receivables ( 300,004 ) ( 262,348 ) Prepaid expenses, other current and noncurrent assets ( 2,290 ) 2,588 Accounts payable, accrued expenses, salaries, wages and payroll taxes ( 44,968 ) ( 76,806 ) Deferred revenue, other current and noncurrent liabilities ( 49,863 ) ( 45,170 ) Income tax receivables, accrued income taxes and income tax reserves ( 276,943 ) ( 192,340 ) Other, net ( 1,324 ) ( 733 ) Net cash used in operating activities ( 970,788 ) ( 895,638 ) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 48,735 ) ( 49,115 ) Payments made for business acquisitions, net of cash acquired ( 35,366 ) ( 28,017 ) Franchise loans funded ( 15,051 ) ( 17,442 ) Payments from franchisees 6,016 971 Other, net 1,211 6,110 Net cash used in investing activities ( 91,925 ) ( 87,493 ) CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of line of credit borrowings ( 30,000 ) ( 100,000 ) Proceeds from line of credit borrowings 975,000 890,000 Repayments of long-term debt ( 350,000 ) — Proceeds from issuance of long-term debt 346,980 — Dividends paid ( 104,551 ) ( 96,960 ) Repurchase of common stock, including shares surrendered ( 412,645 ) ( 436,233 ) Other, net 4,752 1,791 Net cash provided by financing activities 429,536 258,598 Effects of exchange rate changes on cash ( 1,106 ) ( 9,136 ) Net decrease in cash and cash equivalents, including restricted balances ( 634,283 ) ( 733,669 ) Cash, cash equivalents and restricted cash, beginning of period 1,003,139 1,075,193 Cash, cash equivalents and restricted cash, end of period $ 368,856 $ 341,524 SUPPLEMENTARY CASH FLOW DATA: Income taxes paid, net (includes payments for purchased investment tax credits) $ 129,250 $ 62,290 Interest paid on borrowings 35,135 33,412 Accrued additions to property and equipment 3,117 3,798 New operating right of use assets and related lease liabilities 85,455 47,135 Accrued dividends payable to common shareholders 53,215 50,176 See accompanying notes to consolidated financial statements. H&R Block, Inc. | Q2 FY2026 Form 10-Q 3 Table of Contents CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (amounts in 000s, except per share amounts) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss (1) Retained Earnings (Deficit) Treasury Stock Total Stockholders’ Equity Shares Amount Shares Amount Balances as of July 1, 2025 164,367 $ 1,644 $ 766,998 $ ( 47,755 ) $ 12,061 ( 30,420 ) $ ( 644,052 ) $ 88,896 Net loss — — — — ( 165,819 ) — — ( 165,819 ) Other comprehensive loss — — — ( 9,308 ) — — — ( 9,308 ) Stock-based compensation — — 6,172 — — — — 6,172 Stock-based awards exercised or vested — — ( 10,551 ) — ( 1,797 ) 579 12,255 ( 93 ) Acquisition of treasury shares (2) — — — — — ( 244 ) ( 12,297 ) ( 12,297 ) Repurchase and retirement of common shares ( 7,861 ) ( 79 ) ( 4,638 ) — ( 399,401 ) — — ( 404,118 ) Cash dividends declared - $ 0.42 per share — — — — ( 54,343 ) — — ( 54,343 ) Balances as of September 30, 2025 156,506 $ 1,565 $ 757,981 $ ( 57,063 ) $ ( 609,299 ) ( 30,085 ) $ ( 644,094 ) $ ( 550,910 ) Net loss — — — — ( 242,166 ) — — ( 242,166 ) Other comprehensive income — — — 5,725 — — — 5,725 Stock-based compensation — — 7,625 — — — — 7,625 Stock-based awards exercised or vested — — 2,925 — ( 160 ) 342 7,328 10,093 Acquisition of treasury shares (2) — — — — — ( 5 ) ( 230 ) ( 230 ) Cash dividends declared - $ 0.42 per share — — — — ( 53,215 ) — — ( 53,215 ) Balances as of December 31, 2025 156,506 $ 1,565 $ 768,531 $ ( 51,338 ) $ ( 904,840 ) ( 29,748 ) $ ( 636,996 ) $ ( 823,078 ) 4 Q2 FY2026 Form 10-Q| H&R Block, Inc. Table of Contents (amounts in 000s, except per share amounts) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss (1) Retained Earnings (Deficit) Treasury Stock Total Stockholders’ Equity Shares Amount Shares Amount Balances as of July 1, 2024 170,916 $ 1,709 $ 762,583 $ ( 48,845 ) $ 12,654 ( 31,325 ) $ ( 637,507 ) $ 90,594 Net loss — — — — ( 172,576 ) — — ( 172,576 ) 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 — — — ( 29,034 ) — — — ( 29,034 ) Stock-based compensation — — 9,156 — — — — 9,156 Stock-based awards exercised or vested — — 810 — ( 245 ) 54 1,144 1,709 Acquisition of treasury shares (2) — — — — — ( 4 ) ( 253 ) ( 253 ) Repurchase and retirement of common shares ( 3,248 ) ( 32 ) ( 1,949 ) — ( 190,396 ) — — ( 192,377 ) Cash dividends declared - $ 0.375 per share — — — — ( 50,176 ) — — ( 50,176 ) Balances as of December 31, 2024 164,367 $ 1,644 $ 752,093 $ ( 71,762 ) $ ( 908,785 ) ( 30,523 ) $ ( 645,650 ) $ ( 872,460 ) (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. H&R Block, Inc. |Q2 FY2026 Form 10-Q 5 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION – The consolidated balance sheets as of December 31, 2025 and June 30, 2025, the consolidated statements of operations and comprehensive loss for the three and six months ended December 31, 2025 and 2024, the consolidated statements of cash flows for the six months ended December 31, 2025 and 2024, and the consolidated statements of stockholders' equity for the three and six months ended December 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 December 31, 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. and its subsidiaries, or to H&R Block, Inc.'s operating subsidiaries, as appropriate to the context. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been condensed or omitted. These consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our June 30, 2025 Annual Report on Form 10-K. All amounts presented herein as of June 30, 2025 or for the year then ended are derived from our Annual Report on Form 10-K. MANAGEMENT ESTIMATES – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates, assumptions and judgments are applied in the evaluation of contingent losses associated with pending claims and litigation, reserves for uncertain tax positions, and fair value of reporting units. Estimates have been prepared based on the best information available as of each balance sheet date. As such, actual results could differ materially from those estimates. SEASONALITY OF BUSINESS – Our operating revenues are seasonal in nature with peak revenues typically occurring in the months of February through April. Therefore, results for interim periods are not indicative of results to be expected for the full year. 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. 6 Q2 FY2026 Form 10-Q| H&R Block, Inc. Table of Contents NOTE 2: REVENUE RECOGNITION The majority of our revenues are from our United States (U.S.) tax services business. The following table disaggregates our U.S. revenues by major service line, with revenues from our international tax services businesses and from Wave included as separate lines: (in 000s) Three months ended December 31, Six months ended December 31, 2025 2024 2025 2024 Revenues: U.S. assisted tax preparation $ 55,919 $ 48,380 $ 104,563 $ 91,343 U.S. royalties 5,108 3,499 10,957 9,351 U.S. DIY tax preparation 16,807 13,744 20,552 16,980 Refund Transfers 638 637 1,481 1,497 Peace of Mind® Extended Service Plan 16,231 16,145 39,740 39,242 Tax Identity Shield® 4,244 4,013 8,366 7,922 Emerald Card® and Spruce SM 9,124 10,148 16,976 18,974 Interest and fee income on Emerald Advance® 13,446 12,308 13,446 12,308 International 34,718 31,811 100,379 96,666 Wave 29,785 26,561 59,635 52,964 Other 12,845 11,824 26,321 25,633 Total revenues $ 198,865 $ 179,070 $ 402,416 $ 372,880 Changes in the balances of deferred revenue and wages for our Peace of Mind® Extended Service Plan (POM) are as follows: (in 000s) POM Deferred Revenue Deferred Wages Six months ended December 31, 2025 2024 2025 2024 Balance, beginning of the period $ 149,302 $ 156,610 $ 19,884 $ 20,212 Amounts deferred 3,704 3,209 8 15 Amounts recognized on previous deferrals ( 45,310 ) ( 46,962 ) ( 5,789 ) ( 6,092 ) Balance, end of the period $ 107,696 $ 112,857 $ 14,103 $ 14,135 As of December 31, 2025, deferred revenue related to POM was $ 107.7 million. W e expect that $ 80.2 million will be recognized over the next twelve months , while the remaining balance will be recognized over the following five years . As of December 31, 2025 and 2024, Tax Identity Shield® (TIS) deferred revenue was $ 14.9 million and $ 14.1 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 by April 2026 . NOTE 3: EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY EARNINGS PER SHARE – Basic and diluted earnings (loss) per share is computed using the two-class method. The two-class method is an earnings allocation formula that determines net income per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. 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 2.4 million shares for the three and six months ended December 31, 2025 and 2.7 million H&R Block, Inc. |Q2 FY2026 Form 10-Q 7 Table of Contents shares for the three and six months ended December 31, 2024, as the effect would be antidilutive due to the net loss from continuing operations during the periods. 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 December 31, Six months ended December 31, 2025 2024 2025 2024 Net loss from continuing operations attributable to shareholders $ ( 241,566 ) $ ( 242,466 ) $ ( 406,934 ) $ ( 413,887 ) Amounts allocated to participating securities ( 278 ) ( 240 ) ( 540 ) ( 469 ) Net loss from continuing operations attributable to common shareholders $ ( 241,844 ) $ ( 242,706 ) $ ( 407,474 ) $ ( 414,356 ) Basic weighted average common shares 126,566 135,563 128,976 137,359 Potential dilutive shares — — — — Dilutive weighted average common shares 126,566 135,563 128,976 137,359 Loss per share from continuing operations attributable to common shareholders: Basic $ ( 1.91 ) $ ( 1.79 ) $ ( 3.16 ) $ ( 3.02 ) Diluted ( 1.91 ) ( 1.79 ) ( 3.16 ) ( 3.02 ) 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 0.9 million and 1.1 million shares, including adjustments for performance achievement and dividend equivalents, under our stock-based compensation plans during the six months ended December 31, 2025 and 2024, respectively. Stock-based compensation expense of our continuing operations totaled $ 7.6 million and $13.8 million for the three and six months ended December 31, 2025, respectively, and $ 9.2 million and $17.9 million for the three and six months ended December 31, 2024, respectively. As of December 31, 2025, unrecognized compensation cost for nonvested shares and units totaled $ 62.9 million. NOTE 4: RECEIVABLES Receivables, net of their related allowance, consist of the following: (in 000s) As of December 31, 2025 June 30, 2025 Short-term Long-term Short-term Long-term Loans to franchisees $ 19,476 $ 14,773 $ 7,386 $ 16,402 Receivables for U.S. assisted and DIY tax preparation and related fees 11,157 6,696 15,896 6,361 H&R Block's Instant Refund® receivables 442 1,097 2,243 939 Emerald Advance® 287,316 24,081 13,899 22,816 Software receivables from retailers 2,409 — 2,582 — Royalties and other receivables from franchisees 6,658 — 4,414 — Wave payment processing receivables 7,513 — 1,533 — Other 17,509 633 15,668 498 Total $ 352,480 $ 47,280 $ 63,621 $ 47,016 8 Q2 FY2026 Form 10-Q| H&R Block, Inc. Table of Contents 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 $3.0 million and $3.1 million as of December 31, 2025 and June 30, 2025, respectively. 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. We review the credit quality of our Instant Refund receivables based on pools, which are segregated by the tax return year of origination, with older years being deemed more unlikely to be repaid. We establish an allowance for credit losses at an amount that we believe reflects the receivable at net realizable value. 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 December 31, 2025 are as foll ows: (in 000s) Tax return year of origination Balance More Than 60 Days Past Due 2024 $ 978 $ 918 2023 and prior 561 561 1,539 $ 1,479 Allowance — Net balance $ 1,539 EMERALD ADVANCE ® – We review the credit quality of our purchased participation interests in Emerald Advance® (EA) receivables based on pools, which are segregated by the fiscal year of origination, with older years being deemed more unlikely to be repaid. We establish an allowance for credit losses at an amount that we believe reflects the receivable at net realizable value. 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 December 31, 2025 are as follows: (in 000s) Fiscal year of origination Balance Non-Accrual 2026 $ 294,761 $ — 2025 and prior 36,529 36,529 331,290 $ 36,529 Allowance ( 19,893 ) Net balance $ 311,397 H&R Block, Inc. |Q2 FY2026 Form 10-Q 9 Table of Contents ALLOWANCE FOR CREDIT LOSSES – Activity in the allowance for credit losses for EA and all other short-term and long-term receivables for the six months ended December 31, 2025 and 2024 is as follows: (in 000s) EAs All Other Total Balances as of July 1, 2025 $ 19,663 $ 45,156 $ 64,819 Provision for credit losses 19,893 1,251 21,144 Charge-offs, recoveries and other ( 19,663 ) ( 44,627 ) ( 64,290 ) Balances as of December 31, 2025 $ 19,893 $ 1,780 $ 21,673 Balances as of July 1, 2024 $ 33,536 $ 45,327 $ 78,863 Provision for credit losses 19,109 1,618 20,727 Charge-offs, recoveries and other ( 33,536 ) ( 45,552 ) ( 79,088 ) Balances as of December 31, 2024 $ 19,109 $ 1,393 $ 20,502 For the six months ended December 31, 2025, there were $19.7 million of gross charge-offs related to EAs which were originated in fiscal year 2025. NOTE 5: GOODWILL AND INTANGIBLE ASSETS Changes in the carrying amount of goodwill for the six months ended December 31, 2025 are as follows: (in 000s) Goodwill Accumulated Impairment Losses Net Balances as of July 1, 2025 $ 940,350 $ ( 138,297 ) $ 802,053 Acquisitions (1) 15,720 — 15,720 Disposals and foreign currency changes, net ( 2,155 ) — ( 2,155 ) Impairments — — — Balances as of December 31, 2025 $ 953,915 $ ( 138,297 ) $ 815,618 (1) All goodwill added during the period is expected to be tax-deductible for federal income tax reporting. 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. 10 Q2 FY2026 Form 10-Q| H&R Block, Inc. Table of Contents Components of intangible assets are as follows: (in 000s) Gross Carrying Amount Accumulated Amortization Net As of December 31, 2025: Reacquired franchise rights $ 429,290 $ ( 250,627 ) $ 178,663 Customer relationships 372,444 ( 298,667 ) 73,777 Internally-developed software 121,282 ( 117,768 ) 3,514 Noncompete agreements 23,774 ( 20,660 ) 3,114 Purchased technology 68,100 ( 58,144 ) 9,956 Trade name 5,800 ( 3,770 ) 2,030 $ 1,020,690 $ ( 749,636 ) $ 271,054 As of June 30, 2025: Reacquired franchise rights $ 415,700 $ ( 243,330 ) $ 172,370 Customer relationships 354,107 ( 287,067 ) 67,040 Internally-developed software 119,959 ( 117,604 ) 2,355 Noncompete agreements 23,070 ( 20,188 ) 2,882 Purchased technology 68,100 ( 55,655 ) 12,445 Trade name 5,800 ( 3,480 ) 2,320 $ 986,736 $ ( 727,324 ) $ 259,412 We made payments to acquire businesses totaling $ 35.4 million and $ 28.0 million during the six months ended December 31, 2025 and 2024, respectively. The amounts and weighted-average lives of intangible assets acquired during the six months e nded December 31, 2025, including amounts capitalized related to internally-developed software, a re as follows: (dollars in 000s) Amount Weighted-Average Life (in years) Customer relationships $ 18,426 5 Reacquired franchise rights 13,669 6 Internally-developed software 1,348 3 Noncompete agreements 712 5 Total $ 34,155 5 Amortization of intangible assets for the three and six months ended December 31, 2025 was $ 11.3 million and $22.4 million respectively, compared to $ 12.1 million and $25.0 million for the three and six months ended December 31, 2024. Estimated amortization of intangible assets for fiscal years ending June 30, 2026, 2027, 2028, 2029, and 2030 is $ 47.3 million, $ 45.0 million, $ 36.6 million, $ 27.7 million and $ 17.8 million, respectively. H&R Block, Inc. |Q2 FY2026 Form 10-Q 11 Table of Contents NOTE 6: LONG-TERM DEBT The components of long-term debt are as follows: (in 000s) As of December 31, 2025 June 30, 2025 Senior Notes, 5.250 %, due October 2025 $ — $ 350,000 Senior Notes, 2.500 %, due July 2028 500,000 500,000 Senior Notes, 3.875 %, due August 2030 650,000 650,000 Senior Notes, 5.375%, due September 2032 350,000 — Committed line of credit borrowings 945,000 — Debt issuance costs and discounts ( 9,621 ) ( 6,802 ) Total long-term debt 2,435,379 1,493,198 Less: Current portion — ( 349,893 ) Long-term portion $ 2,435,379 $ 1,143,305 Estimated fair value of long-term debt $ 2,401,000 $ 1,437,000 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 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. 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 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. The 2025 CLOC is subject to various conditions, triggers, events or occurrences that could result in earlier termination and contains customary representations, warranties, covenants and events of default, including, without limitation: (1) a covenant requiring the Company to maintain a debt-to-EBITDA ratio, as defined by the 2025 CLOC agreement, calculated on a consolidated basis of no greater than (a) 3.50 to 1.00 as of the last day of each fiscal quarter ending on March 31, June 30, and September 30 of each year and (b) 4.50 to 1.00 as of the last day of each fiscal quarter ending on December 31 of each year; (2) a covenant requiring us to maintain an interest coverage ratio (EBITDA-to-interest expense) calculated on a consolidated basis of not less than 2.50 to 1.00 as of the last date of any fiscal quarter; and (3) covenants restricting our ability to incur certain additional debt, incur liens, merge or consolidate with other companies, sell or dispose of assets (including equity interests), liquidate or dissolve, engage in certain transactions with affiliates or enter into certain restrictive agreements. The 2025 CLOC includes provisions for an equity cure which could potentially allow us to independently cure certain defaults. 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 December 31, 2025. 12 Q2 FY2026 Form 10-Q| H&R Block, Inc. Table of Contents 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 . NOTE 7: INCOME TAXES 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. 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 six months ended December 31, 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 24.0% for both the six months ended December 31, 2025 and 2024. Consistent with prior years, our pretax loss for the six months ended December 31, 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 six months ended December 31, 2025 reflects management’s estimate of the annual effective tax rate applied to year-to-date loss from continuing operations adjusted for the tax impact of discrete items for the periods presented. NOTE 8: COMMITMENTS AND CONTINGENCIES Our U.S. and Canadian businesses offer our 100% accuracy guarantee. 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. 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 $ 10.9 million and $ 11.4 million as of December 31, 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 $ 36.9 million and $ 29.6 million as of December 31, 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 $ 21.9 million at December 31, 2025, and net of amounts drawn and outstanding, our remaining commitment to fund totaled $ 5.9 million. Emerald Advance® term loans are originated by Pathward® N.A. (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. At December 31, 2025, the principal balance of purchased participation interests for the current year totaled $281.1 million, which represents 87% of total EA volume originated by Pathward. NOTE 9: LITIGATION AND OTHER RELATED CONTINGENCIES We are a defendant in numerous litigation and arbitration matters, arising both in the ordinary course of business and otherwise, including as described below. The matters described below are not all of the lawsuits or arbitrations to which we are subject. In some of the matters, very large or indeterminate amounts, including punitive damages, may be sought. U.S. 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 H&R Block, Inc. |Q2 FY2026 Form 10-Q 13 Table of Contents permit claimants to state only that the amount sought is sufficient to invoke the jurisdiction. In addition, jurisdictions may permit plaintiffs to allege monetary damages in amounts well exceeding reasonably possible verdicts in the jurisdiction for similar matters. 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. The outcome of a matter and the amount or range of potential loss at particular points in time may be difficult to ascertain. Among other things, uncertainties can include how fact finders will evaluate documentary evidence and the credibility and effectiveness of witness testimony, and how courts and arbitrators will apply the law. Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will view the relevant evidence and applicable law. In addition to litigation and arbitration matters, we are also subject to other loss contingencies arising out of our business activities, including as described below. We accrue liabilities for litigation, arbitration and other related loss contingencies and any related settlements when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. If a range of loss is estimated, and some amount within that range appears to be a better estimate than any other amount within that range, then that amount is accrued. If no amount within the range can be identified as a better estimate than any other amount, we accrue the minimum amount in the range. 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 December 31, 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 $ 10.0 million and $ 6.2 million as of December 31, 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. This aggregate range only represents those losses as to which we are currently able to estimate a reasonably possible loss or range of loss. It does not represent our maximum loss exposure. Matters for which we are not currently able to estimate the reasonably possible loss or range of loss are not included in this range. We are often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the reasonably possible loss or range of loss, such as precise information about the amount of damages or other remedies being asserted, the defenses to the claims being asserted, discovery from other parties and investigation of factual allegations, rulings by courts or arbitrators on motions or appeals, analyses by experts, or the status or terms of any settlement negotiations. The estimated range of reasonably possible loss is based upon currently available information and is subject to significant judgment and a variety of assumptions, as well as known and unknown uncertainties. The matters underlying the estimated range will change from time to time, and actual results may vary significantly from the current estimate. As of December 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. 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. Costs incurred with defending matters are expensed as incurred. Any receivable for insurance recoveries is recorded separately from the corresponding liability, and only if recovery is determined to be probable and reasonably estimable. 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. The amounts claimed in the matters are substantial, however, and there 14 Q2 FY2026 Form 10-Q| H&R Block, Inc. Table of Contents can be no assurances as to their outcomes. In the event of unfavorable outcomes, it could require modifications to our operations; 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. 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. An accrual related to these matters is included in our loss contingency accrual. We are from time to time a party to litigation, arbitration and other loss contingencies not discussed herein arising out of our business operations. These matters may include actions by state attorneys general, other state regulators, federal regulators, individual plaintiffs, and cases in which plaintiffs seek to represent others who may be similarly situated. 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. NOTE 10: 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 and six months ended December 31, 2025 and 2024. H&R Block, Inc. |Q2 FY2026 Form 10-Q 15 Table of Contents Consolidated – Financial Results (in 000s, except per share amounts) Three months ended December 31, Six months ended December 31, 2025 2024 2025 2024 Revenues: U.S. tax preparation and related services: Assisted tax preparation $ 55,919 $ 48,380 $ 104,563 $ 91,343 Royalties 5,108 3,499 10,957 9,351 DIY tax preparation 16,807 13,744 20,552 16,980 Refund Transfers 638 637 1,481 1,497 Peace of Mind® Extended Service Plan 16,231 16,145 39,740 39,242 Tax Identity Shield® 4,244 4,013 8,366 7,922 Emerald Card® and Spruce SM 9,124 10,148 16,976 18,974 Interest and fee income on Emerald Advance® 13,446 12,308 13,446 12,308 International 34,718 31,811 100,379 96,666 Wave 29,785 26,561 59,635 52,964 Other 12,845 11,824 26,321 25,633 Total revenues $ 198,865 $ 179,070 $ 402,416 $ 372,880 Compensation and benefits: Field wages 94,177 81,565 163,892 149,659 Other wages 73,005 78,731 152,284 156,066 Benefits and other compensation 39,989 38,402 76,651 77,156 207,171 198,698 392,827 382,881 Occupancy 109,592 104,999 212,388 206,317 Marketing and advertising 14,995 14,863 23,337 24,835 Depreciation and amortization 30,001 29,195 58,923 58,026 Bad debt 21,816 19,416 24,021 22,146 Other 114,169 105,190 196,830 200,297 Total operating expenses 497,744 472,361 908,326 894,502 Other income (expense), net 3,034 2,744 11,136 14,661 Interest expense on borrowings ( 23,378 ) ( 21,752 ) ( 40,780 ) ( 37,599 ) Loss from continuing operations before income taxes ( 319,223 ) ( 312,299 ) ( 535,554 ) ( 544,560 ) Income tax benefit ( 77,657 ) ( 69,833 ) ( 128,620 ) ( 130,673 ) Segment net loss from continuing operations ( 241,566 ) ( 242,466 ) ( 406,934 ) ( 413,887 ) Reconciliation of segment profit: Reconciling items: Net loss from discontinued operations ( 600 ) ( 954 ) ( 1,051 ) ( 2,109 ) Net loss $ ( 242,166 ) $ ( 243,420 ) $ ( 407,985 ) $ ( 415,996 ) 16 Q2 FY2026 Form 10-Q| H&R Block, Inc. 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