H&R BLOCK INC 10-Q

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RECENT DEVELOPMENTS 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 the Fourth Amended and Restated Credit and Guarantee Agreement. See our Current Report on Form 8-K filed on July 15, 2025 for additional information. On August 7, 2025, Jeffrey J. 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. Mr. Jones retired from the Board of Directors, effective on December 31, 2025. On August 8, 2025, the Board appointed Curtis A. 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. Jones’ retirement. See our Current Report on Form 8-K filed on August 11, 2025 for more information. On August 13, 2025, Kellie J. Logerwell notified the Company of her intention to retire as the Company’s Vice President and Chief Accounting Officer, effective as of October 24, 2025. Ms. Logerwell was succeeded as principal accounting officer by April M. Wasleski, who most-recently served as the Company’s Director of Accounting and whose appointment as Vice President and Chief Accounting Officer became effective October 24, 2025. See our Current Report on Form 8-K filed on August 15, 2025 for more information. 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. RESULTS OF OPERATIONS Our subsidiaries provide assisted and do-it-yourself (DIY) tax preparation solutions through multiple channels (including in-person, online and mobile applications, virtual, and desktop software) and distribute H&R Block-branded products and services, including those of our bank partners, to the general public primarily in the United States (U.S.), Canada and Australia. Tax returns are either prepared by H&R Block tax professionals in one of our 6,802 company-owned or 1,814 franchise offices (as of March 31, 2026), virtually or via an online review or 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. 18 Q3 FY2026 Form 10-Q| H&R Block, Inc. Table of Contents Consolidated – Financial Results (in 000s, except per share amounts) Three months ended March 31, 2026 2025 $ Change % Change Revenues: U.S. tax preparation and related services: Assisted tax preparation $ 1,742,135 $ 1,635,877 $ 106,258 6.5 % Royalties 128,182 133,961 (5,779) (4.3) % DIY tax preparation 215,245 214,666 579 0.3 % Refund Transfers 119,935 113,732 6,203 5.5 % Peace of Mind® Extended Service Plan 14,347 15,625 (1,278) (8.2) % Tax Identity Shield® 8,485 7,025 1,460 20.8 % Other 15,000 14,582 418 2.9 % Total U.S. tax preparation and related services 2,243,329 2,135,468 107,861 5.1 % Financial services: Emerald Card® and Spruce SM 39,590 40,195 (605) (1.5) % Interest and fee income on Emerald Advance® 15,198 14,286 912 6.4 % Total financial services 54,788 54,481 307 0.6 % International 70,119 60,438 9,681 16.0 % Wave 29,871 26,717 3,154 11.8 % Total revenues $ 2,398,107 $ 2,277,104 $ 121,003 5.3 % Compensation and benefits: Field wages 577,513 532,916 (44,597) (8.4) % Other wages 78,703 74,621 (4,082) (5.5) % Benefits and other compensation 118,151 111,575 (6,576) (5.9) % 774,367 719,112 (55,255) (7.7) % Occupancy 127,312 119,709 (7,603) (6.4) % Marketing and advertising 185,388 196,667 11,279 5.7 % Depreciation and amortization 31,519 29,221 (2,298) (7.9) % Bad debt 39,806 40,479 673 1.7 % Other 202,891 193,603 (9,288) (4.8) % Total operating expenses 1,361,283 1,298,791 (62,492) (4.8) % Other income (expense), net 3,941 4,554 (613) (13.5) % Interest expense on borrowings (24,307) (24,686) 379 1.5 % Pretax income 1,016,458 958,181 58,277 6.1 % Income taxes 167,678 235,253 67,575 28.7 % Net income from continuing operations 848,780 722,928 125,852 17.4 % Net loss from discontinued operations (879) (598) (281) (47.0) % Net income $ 847,901 $ 722,330 $ 125,571 17.4 % DILUTED EARNINGS PER SHARE Continuing operations $ 6.61 $ 5.32 $ 1.29 24.2 % Discontinued operations (0.01) (0.01) — — % Consolidated $ 6.60 $ 5.31 $ 1.29 24.3 % Adjusted diluted EPS (1) $ 6.02 $ 5.38 $ 0.64 11.9 % EBITDA (1) $ 1,072,284 $ 1,012,088 $ 60,196 5.9 % (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. H&R Block, Inc. |Q3 FY2026 Form 10-Q 19 Table of Contents Three months ended March 31, 2026 compared to March 31, 2025 Revenues increased $121.0 million, or 5.3%, from the prior year. U.S. assisted tax preparation revenues increased $106.3 million, or 6.5%, primarily due to a 3.8% increase in net average charge combined with a 2.6% increase in company-owned tax return volumes in the current year. U.S. royalties revenue decreased $5.8 million, or 4.3%, due to lower franchise tax return volumes, which was primarily driven by franchise acquisitions. During the year we purchased franchise offices which results in increasing tax preparation revenues and decreasing royalties as the revenues and returns become company-owned after the acquisition. For the three months ended March 31, 2026 our total assisted tax return volume, which includes both company-owned and franchise offices, increased 0.4% from the prior year. U.S. DIY tax preparation revenues increased $0.6 million, or 0.3%, largely due to a 3.5% increase in online paid net average charge, offset by a 3.0% decrease in online paid volume. Refund Transfer revenues increased $6.2 million, or 5.5%, primarily due to an increase in Refund Transfer volume. International tax preparation revenues increased $9.7 million, or 16.0%, primarily due to favorable foreign currency exchange rates in Canada and Australia. Total operating expenses increased $62.5 million, or 4.8%, from the prior year. Field wages increased $44.6 million, or 8.4%, due to increased tax professional wages resulting from an increase in U.S. assisted tax preparation revenues. 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. Benefits and other compensation increased $6.6 million or 5.9% due primarily to higher payroll taxes, stock-based compensation and severance pay in the current year. Occupancy expense increased $7.6 million, or 6.4%, primarily due to higher lease expenses and facility repairs. Marketing and advertising expenses decreased $11.3 million, or 5.7%, due to lower online and TV advertising as well as lower customer incentive expenses. Other operating expenses increased $9.3 million, or 4.8%. The components of other expenses are as follows: (in 000s) Three months ended March 31, 2026 2025 $ Change % Change Consulting and outsourced services $ 39,046 $ 38,887 $ (159) (0.4) % Bank partner fees 34,030 30,836 (3,194) (10.4) % Client claims and refunds 8,655 8,420 (235) (2.8) % Employee and travel expenses 7,993 8,552 559 6.5 % Technology-related expenses 37,076 34,472 (2,604) (7.6) % Credit card/bank charges 41,856 39,605 (2,251) (5.7) % Insurance 3,664 4,644 980 21.1 % Legal fees and settlements 10,294 7,986 (2,308) (28.9) % Supplies 11,353 10,407 (946) (9.1) % Other 8,924 9,794 870 8.9 % $ 202,891 $ 193,603 $ (9,288) (4.8) % We recorded income tax expense of $167.7 million in the current year compared to $235.3 million in the prior year. The effective tax rate for the three months ended March 31, 2026, and 2025 was 16.5% and 24.6%, respectively. The decrease in the effective tax rate was primarily attributable to the settlement of an IRS examination of our 2020 U.S. federal income tax return and related carryback claims to the 2015 through 2018 tax years. The closure of the IRS examination resulted in a discrete income tax benefit of $84.1 million, which was recorded in income tax expense. See Item 1, note 7 to the consolidated financial statements for additional discussion. 20 Q3 FY2026 Form 10-Q| H&R Block, Inc. Table of Contents Consolidated - Financial Results (in 000s, except per share amounts) Nine months ended March 31, 2026 2025 $ Change % Change Revenues: U.S. tax preparation and related services: Assisted tax preparation $ 1,846,698 $ 1,727,220 $ 119,478 6.9 % Royalties 139,139 143,312 (4,173) (2.9) % DIY tax preparation 235,797 231,646 4,151 1.8 % Refund Transfers 121,416 115,229 6,187 5.4 % Peace of Mind® Extended Service Plan 54,087 54,867 (780) (1.4) % Tax Identity Shield® 16,851 14,947 1,904 12.7 % Other 41,321 40,215 1,106 2.8 % Total U.S. tax preparation and related services 2,455,309 2,327,436 127,873 5.5 % Financial services: Emerald Card® and Spruce SM 56,566 59,169 (2,603) (4.4) % Interest and fee income on Emerald Advance® 28,644 26,594 2,050 7.7 % Total financial services 85,210 85,763 (553) (0.6) % International 170,498 157,104 13,394 8.5 % Wave 89,506 79,681 9,825 12.3 % Total revenues $ 2,800,523 $ 2,649,984 $ 150,539 5.7 % Compensation and benefits: Field wages 741,405 682,575 (58,830) (8.6) % Other wages 230,987 230,687 (300) (0.1) % Benefits and other compensation 194,802 188,731 (6,071) (3.2) % 1,167,194 1,101,993 (65,201) (5.9) % Occupancy 339,700 326,026 (13,674) (4.2) % Marketing and advertising 208,725 221,502 12,777 5.8 % Depreciation and amortization 90,442 87,247 (3,195) (3.7) % Bad debt 63,827 62,625 (1,202) (1.9) % Other 399,721 393,900 (5,821) (1.5) % Total operating expenses 2,269,609 2,193,293 (76,316) (3.5) % Other income (expense), net 15,077 19,215 (4,138) (21.5) % Interest expense on borrowings (65,087) (62,285) (2,802) (4.5) % Pretax income 480,904 413,621 67,283 16.3 % Income taxes 39,058 104,580 65,522 62.7 % Net income from continuing operations 441,846 309,041 132,805 43.0 % Net loss from discontinued operations (1,930) (2,707) 777 28.7 % Net income $ 439,916 $ 306,334 $ 133,582 43.6 % DILUTED EARNINGS PER SHARE Continuing operations $ 3.40 $ 2.23 $ 1.17 52.5 % Discontinued operations (0.02) (0.02) — — % Consolidated $ 3.38 $ 2.21 $ 1.17 52.9 % Adjusted diluted EPS (1) $ 2.95 $ 2.41 $ 0.54 22.4 % EBITDA (1) $ 636,433 $ 563,153 $ 73,280 13.0 % (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. H&R Block, Inc. |Q3 FY2026 Form 10-Q 21 Table of Contents Nine months ended March 31, 2026 compared to March 31, 2025 Revenues increased $150.5 million, or 5.7%, from the prior year. U.S. assisted tax preparation revenues increased $119.5 million, or 6.9%, primarily due to a 4.0% increase in net average charge combined with a 2.7% increase in company-owned tax return volumes in the current year. U.S. royalties revenue decreased $4.2 million, or 2.9%, due to lower franchise tax return volumes, which was primarily driven by franchise acquisitions. During the year we purchased franchise offices which results in increasing tax preparation revenues and decreasing royalties as the revenues and returns become company-owned after the acquisition. Through the nine months ended March 31, 2026 our total assisted tax return volume, which includes both company-owned and franchise offices, increased 0.6% from the prior year. U.S. DIY tax preparation revenues increased $4.2 million, or 1.8%, largely due to a 3.9% increase in online paid net average charge, offset by a 2.7% decrease in online paid volume. International revenues increased $13.4 million, or 8.5%, primarily due to favorable foreign currency exchange rates in Canada and Australia. Total operating expenses increased $76.3 million, or 3.5%, from the prior year period. Field wages increased $58.8 million, or 8.6%, due to increased tax professional wages as a result of higher U.S. assisted tax preparation revenues. 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. Benefits and other compensation increased $6.1 million, or 3.2%, due to higher payroll taxes, employee insurance, and severance. Occupancy expense increased $13.7 million, or 4.2%, primarily due to higher lease expenses and facility repairs. Marketing and advertising expense decreased $12.8 million, or 5.8%, due to lower online and TV advertising as well as lower customer incentives. Other operating expenses increased $5.8 million, or 1.5%. The components of other expenses are as follows: (in 000s) Nine months ended March 31, 2026 2025 $ Change % Change Consulting and outsourced services $ 76,536 $ 72,770 $ (3,766) (5.2) % Bank partner fees 32,781 32,199 (582) (1.8) % Client claims and refunds 17,795 18,696 901 4.8 % Employee and travel expenses 26,073 27,164 1,091 4.0 % Technology-related expenses 93,197 87,035 (6,162) (7.1) % Credit card/bank charges 80,780 76,300 (4,480) (5.9) % Insurance 11,210 12,444 1,234 9.9 % Legal fees and settlements 25,273 29,640 4,367 14.7 % Supplies 19,010 16,884 (2,126) (12.6) % Other 17,066 20,768 3,702 17.8 % $ 399,721 $ 393,900 $ (5,821) (1.5) % Technology-related expenses increased $6.2 million, or 7.1%, due to higher third-party technology and software costs. We recorded income tax expense of $39.1 million in the current year compared to $104.6 million in the prior year. The effective tax rate for the nine months ended March 31, 2026, and 2025 was 8.1% and 25.3% respectively. The decrease in the effective tax rate was primarily attributable to the settlement of an IRS examination of our 2020 U.S. federal income tax return and related carryback claims to the 2015 through 2018 tax years. The closure of the IRS examination resulted in a discrete income tax benefit of $84.1 million, which was recorded in income tax expense. See Item 1, note 7 to the consolidated financial statements for additional discussion. 22 Q3 FY2026 Form 10-Q| H&R Block, Inc. Table of Contents TAX SEASON UPDATE Assisted tax return volume, which includes our company-owned and franchise operations, was flat from July 1, 2025 through April 30, 2026 compared to the prior year period. DIY online paid tax return volume from July 1, 2025 through April 30, 2026 decreased 4.2% compared to the prior year period. Our business is highly seasonal and results for the nine months ended March 31, as well as results for the period ended April 30, may not be indicative of results for the fiscal year ended June 30, 2026. FINANCIAL CONDITION These comments should be read in conjunction with the consolidated balance sheets and consolidated statements of cash flows included in Part 1, Item 1 . CAPITAL RESOURCES AND LIQUIDITY – OVERVIEW – Our primary sources of capital and liquidity include cash from operations (including changes in working capital), draws on our unsecured committed line of credit (CLOC), and issuances of debt. We use our sources of liquidity primarily to fund working capital, service and repay debt, pay dividends, repurchase shares of our common stock, and acquire businesses. Our operations are highly seasonal and substantially all of our revenues and cash flow are generated during the period from February through April in a typical year. 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 January. 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 March 31, 2026 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 nine months ended March 31, 2026 and 2025. See Item 1 for the complete consolidated statements of cash flows for these periods. (in 000s) Nine months ended March 31, 2026 2025 Net cash provided by (used in): Operating activities $ 586,717 $ 429,322 Investing activities (122,560) (110,890) Financing activities (579,481) (595,506) Effects of exchange rates on cash (1,070) (8,429) Net decrease in cash and cash equivalents, including restricted balances $ (116,394) $ (285,503) Operating Activities. Cash provided by operations totaled $586.7 million for the nine months ended March 31, 2026 compared to $429.3 million in the prior year period. The increase is primarily due to higher net income, changes in accounts payable, accrued expenses, salaries, wages and payroll taxes and accounts receivable, partially offset by taxes paid and the release of income tax reserves associated with the settlement of the IRS examination of our 2020 U.S. federal income tax return and related carryback claims to the 2015 through 2018 tax years. Investing Activities. Cash used in investing activities totaled $122.6 million for the nine months ended March 31, 2026 compared to $110.9 million in the prior year period. The increase is primarily due to higher payments made for business acquisitions in the current year. Financing Activities. Cash used in financing activities totaled $579.5 million for the nine months ended March 31, 2026 compared to $595.5 million in the prior year period. The change is primarily due to lower share repurchases for payroll taxes on stock based awards, partially offset by higher dividends. H&R Block, Inc. |Q3 FY2026 Form 10-Q 23 Table of Contents CASH REQUIREMENTS – Dividends and Share Repurchases. Returning capital to shareholders in the form of dividends and the repurchase of outstanding shares is, and has historically been, a significant component of our capital allocation plan. We have consistently paid quarterly dividends. Dividends paid totaled $157.8 million and $147.1 million for the nine months ended March 31, 2026 and 2025, 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 nine months ended March 31, 2026, 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. Our current share repurchase program has remaining authorization of $700.0 million and does not have an expiration date. Share repurchases may be effectuated through open market transactions, some of which may be effectuated under SEC Rule 10b5-1. The Company may cancel, suspend, or extend the period for the purchase of shares at any time. Any repurchases will be funded primarily through available cash and cash from operations. Although we may continue to repurchase shares, there is no assurance that we will purchase up to the full Board authorization. Capital Investment. Capital expenditures totaled $67.1 million and $71.8 million for the nine months ended March 31, 2026 and 2025, 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 totaling $55.0 million and $35.3 million during the nine months ended March 31, 2026 and 2025, respectively. See Item 1, note 5 for additional information on our acquisitions. FINANCING RESOURCES – The 2025 CLOC has capacity up to $1.5 billion and is scheduled to expire in July 2030. Proceeds under the 2025 CLOC may be used for working capital needs or for other general corporate purposes. We had no outstanding balance on our 2025 CLOC and amounts available to borrow were not limited by the debt-to-EBITDA covenant as of March 31, 2026. On August 26, 2025, we issued the 2032 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 March 31, 2026 and June 30, 2025: As of March 31, 2026 June 30, 2025 Short-term Long-term Outlook Short-term Long-term Outlook Moody's P-3 Baa3 Stable P-3 Baa3 Stable S&P A-2 BBB Stable A-2 BBB Stable 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 March 31, 2026, we held cash and cash equivalents, excluding restricted amounts, of $867.0 million, including $196.7 million held by our foreign subsidiaries. Foreign Operations. Seasonal borrowing needs of our Canadian operations are typically funded by our U.S. operations. To mitigate foreign currency risk, we sometimes enter into foreign exchange forward contracts. There were no forward contracts outstanding as of March 31, 2026. We do not currently intend to repatriate non-borrowed funds held by our foreign subsidiaries in a manner that would trigger a tax liability. 24 Q3 FY2026 Form 10-Q| H&R Block, Inc. Table of Contents 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 $8.4 million during the nine months ended March 31, 2026 and 2025, 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. For the nine months ended March 31, 2026, the principal balance of purchased participation interests for the current year totaled $283.7 million, which represents 87% of total EA volume originated by Pathward. 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. Block Financial is the Issuer and H&R Block, Inc. is the full and unconditional Guarantor of our Senior Notes, CLOC and other indebtedness issued from time to time. The following table presents summarized financial information for H&R Block, Inc. (Guarantor) and Block Financial (Issuer) on a combined basis after intercompany eliminations and excludes investments in and equity earnings in non-guarantor subsidiaries. SUMMARIZED BALANCE SHEET - GUARANTOR AND ISSUER (in 000s) As of March 31, 2026 June 30, 2025 Current assets $ 53,021 $ 38,254 Noncurrent assets 1,848,462 1,836,847 Current liabilities 82,882 432,139 Noncurrent liabilities 1,495,849 1,148,806 SUMMARIZED STATEMENTS OF OPERATIONS - GUARANTOR AND ISSUER (in 000s) Nine months ended March 31, 2026 Twelve months ended June 30, 2025 Total revenues $ 104,498 $ 126,240 Income from continuing operations before income taxes 47,726 58,596 Net income from continuing operations 36,749 45,120 Net income 34,820 41,443 The table above reflects $1.8 billion of non-current intercompany receivables due to the Issuer from non-guarantor subsidiaries as of March 31, 2026 and June 30, 2025. REGULATORY ENVIRONMENT There have been no material changes in our regulatory environment from what was reported in our June 30, 2025 Annual Report on Form 10-K. NON-GAAP FINANCIAL INFORMATION Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. generally accepted accounting principles (GAAP). Because these measures are not measures of financial performance under GAAP and are susceptible to varying calculations, they may not be comparable to similarly titled measures for other companies. We consider our non-GAAP financial measures to be performance measures and a useful metric for management and investors to evaluate and compare the ongoing operating performance of our business. We make adjustments for certain non-GAAP financial measures related to material discrete tax impacts of IRS examination settlements, amortization of intangibles from acquisitions and goodwill impairments. We may H&R Block, Inc. |Q3 FY2026 Form 10-Q 25 Table of Contents consider whether other significant items that arise in the future should be excluded from our non-GAAP financial measures. We measure the performance of our business using a variety of metrics, including earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations, adjusted EBITDA from continuing operations, adjusted net income from continuing operations, adjusted diluted earnings per share from continuing operations, free cash flow, and free cash flow yield. 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. The following is a reconciliation of net income to EBITDA from continuing operations, which is a non-GAAP financial measure: (in 000s) Three months ended March 31, Nine months ended March 31, 2026 2025 2026 2025 Net income - as reported $ 847,901 $ 722,330 $ 439,916 $ 306,334 Discontinued operations, net 879 598 1,930 2,707 Net income from continuing operations - as reported 848,780 722,928 441,846 309,041 Add back: Income taxes 167,678 235,253 39,058 104,580 Interest expense 24,307 24,686 65,087 62,285 Depreciation and amortization 31,519 29,221 90,442 87,247 223,504 289,160 194,587 254,112 EBITDA from continuing operations $ 1,072,284 $ 1,012,088 $ 636,433 $ 563,153 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 March 31, Nine months ended March 31, 2026 2025 2026 2025 Net income from continuing operations - as reported $ 848,780 $ 722,928 $ 441,846 $ 309,041 Adjustments: Amortization of intangibles related to acquisitions (pretax) 12,170 11,278 34,401 33,316 Discrete tax impact of IRS examination settlements (84,113) — (84,113) — Tax effect of pretax adjustments (1) (3,145) (2,927) (8,381) (8,111) Adjusted net income from continuing operations $ 773,692 $ 731,279 $ 383,753 $ 334,246 Diluted earnings per share from continuing operations - as reported $ 6.61 $ 5.32 $ 3.40 $ 2.23 Adjustments, net of tax (0.59) 0.06 (0.45) 0.18 Adjusted diluted earnings per share from continuing operations $ 6.02 $ 5.38 $ 2.95 $ 2.41 (1) Tax effect of adjustments is the difference between the tax provision calculated on a GAAP basis and on an adjusted non-GAAP basis. FORWARD-LOOKING INFORMATION This report and other documents filed with the Securities and Exchange Commission (SEC) may contain forward-looking statements. In addition, our senior management may make forward-looking statements orally to analysts, 26 Q3 FY2026 Form 10-Q| H&R Block, Inc. Table of Contents investors, the media and others. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words or variation of words such as "expects," "anticipates," "intends," "plans," "believes," "commits," "seeks," "estimates," "projects," "forecasts," "targets," "would," "will," "should," "could," "may" or other similar expressions. Forward-looking statements provide management's current expectations or predictions of future conditions, events or results. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future are forward-looking statements. 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. 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. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions, factors, or expectations, new information, data or methods, future events or other changes, except as required by law. By their nature, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Factors that might cause such differences include, but are not limited to, a variety of economic, competitive, operational and regulatory factors, many of which are beyond the Company's control. In addition, factors that may cause the Company’s actual effective tax rate to differ from estimates include the Company’s actual results from operations compared to current estimates, future discrete items, changes in interpretations and assumptions the Company has made, future actions of the Company, and increases in applicable tax rates in jurisdictions where the Company operates. Investors should understand that it is not possible to predict or identify all such factors and, consequently, should not consider any such list to be a complete set of all potential risks or uncertainties. 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 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. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes in our market risks from those reported in our June 30, 2025 Annual Report on Form 10-K.