What changed in this filing

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Item 1. Financial Statements

2025-05-07 compared with 2025-02-06 · 100 added, 82 removed, 381 unchanged (32% of the section changed)

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS:

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME:

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

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

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

2025 2024 2025 2024

8 unchanged sentences

Interest expense on borrowings ( 24,686 ) ( 26,070 ) ( 62,285 ) ( 63,304 )

Loss from continuing operations before income tax benefit ( 312,299 ) ( 282,874 ) ( 544,560 ) ( 495,234 )

Income tax benefit ( 69,833 ) ( 93,758 ) ( 130,673 ) ( 143,245 )

Net loss from continuing operations ( 242,466 ) ( 189,116 ) ( 413,887 ) ( 351,989 )

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

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

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

Net loss from discontinued operations, net of tax benefits of $ 180 , $ 254 , $ 811 and $ 627

( 598 ) ( 849 ) ( 2,707 ) ( 2,097 )

NET LOSS $ ( 243,420 ) $ ( 189,755 ) $ ( 415,996 ) $ ( 353,237 )

BASIC AND DILUTED LOSS PER SHARE:

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

BASIC EARNINGS PER SHARE:

Continuing operations $ 5.38 $ 4.94 $ 2.26 $ 2.37

1 unchanged sentence

Consolidated $ 5.37 $ 4.93 $ 2.24 $ 2.36

DILUTED EARNINGS PER SHARE:

Continuing operations $ 5.32 $ 4.87 $ 2.23 $ 2.34

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

Consolidated $ 5.31 $ 4.86 $ 2.21 $ 2.32

DIVIDENDS DECLARED PER SHARE $ 0.375 $ 0.32 $ 1.125 $ 0.96

COMPREHENSIVE LOSS:

Net loss $ ( 243,420 ) $ ( 189,755 ) $ ( 415,996 ) $ ( 353,237 )

COMPREHENSIVE INCOME:

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

Change in foreign currency translation adjustments 445 ( 9,882 ) ( 22,472 ) ( 9,237 )

Other comprehensive income (loss) 445 ( 9,882 ) ( 22,472 ) ( 9,237 )

Comprehensive loss $ ( 272,454 ) $ ( 178,196 ) $ ( 438,913 ) $ ( 352,592 )

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

See accompanying notes to consolidated financial statements.

3 unchanged sentences

share and per share amounts)

As of December 31, 2024 June 30, 2024

As of March 31, 2025 June 30, 2024

Cash and cash equivalents $ 772,946 $ 1,053,326

38 unchanged sentences

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

Six months ended December 31, 2024 2023

Nine months ended March 31, 2025 2024

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ ( 415,996 ) $ ( 353,237 )

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

Net income $ 306,334 $ 337,500

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

Depreciation and amortization 87,247 91,004

9 unchanged sentences

Other, net ( 1,088 ) ( 32 )

Net cash used in operating activities ( 895,638 ) ( 942,166 )

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

CASH FLOWS FROM INVESTING ACTIVITIES:

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Other, net ( 11,854 ) ( 6,358 )

Net cash provided by financing activities 258,598 335,448

Net cash used in financing activities ( 595,506 ) ( 520,503 )

Effects of exchange rate changes on cash ( 8,429 ) ( 2,739 )

39 unchanged sentences

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

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

Other comprehensive income — — — 445 — — — 445

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

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

Acquisition of treasury shares (2)

— — — — — ( 6 ) ( 283 ) ( 283 )

Cash dividends declared - $ 0.375 per share

— — — — ( 50,194 ) — — ( 50,194 )

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

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

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

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

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

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

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

Acquisition of treasury shares (2)

— — — — — ( 7 ) ( 309 ) ( 309 )

Cash dividends declared - $ 0.32 per share

— — — — ( 44,648 ) — — ( 44,648 )

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

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

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION – The consolidated balance sheets as of December 31, 2024 and June 30, 2024, the consolidated statements of operations and comprehensive loss for the three and six months ended December 31, 2024 and 2023, the consolidated statements of cash flows for the six months ended December 31, 2024 and 2023, and the consolidated statements of stockholders' equity for the three and six months ended December 31, 2024 and 2023 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, 2024 and 2023 and for all periods presented, have been made.

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

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

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

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

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

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

2025 2024 2025 2024

14 unchanged sentences

POM Deferred Revenue Deferred Wages

Six months ended December 31, 2024 2023 2024 2023

Nine months ended March 31, 2025 2024 2025 2024

Balance, beginning of the period $ 156,610 $ 167,257 $ 20,212 $ 21,828

2 unchanged sentences

Balance, end of the period $ 162,261 $ 171,181 $ 19,038 $ 21,828

As of December 31, 2024, deferred revenue related to POM was $ 112.9 million.

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

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

As of December 31, 2024 and 2023, Tax Identity Shield® (TIS) deferred revenue was $ 14.1 million and $ 16.5 million, respectively.

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

Deferred revenue related to TIS was $ 21.4 million and $ 25.2 million as of June 30, 2024 and 2023, respectively.

All deferred revenue related to TIS will be recognized by April 2025 .

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

EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY

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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 2.7 million shares for the three and six months ended December 31, 2024 and 3.2 million

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

H&R Block, Inc.

|Q3 FY2025 Form 10-Q

shares for the three and six months ended December 31, 2023, 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:

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

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

(in 000s, except per share amounts)

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

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

2025 2024 2025 2024

Net loss from continuing operations attributable to shareholders $ ( 242,466 ) $ ( 189,116 ) $ ( 413,887 ) $ ( 351,989 )

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

Amounts allocated to participating securities ( 3,442 ) ( 2,788 ) ( 1,408 ) ( 1,350 )

Net loss from continuing operations attributable to common shareholders $ ( 242,706 ) $ ( 189,308 ) $ ( 414,356 ) $ ( 352,358 )

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

Basic weighted average common shares 133,853 139,525 136,207 142,724

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Dilutive weighted average common shares 135,329 141,540 137,944 144,594

Loss per share from continuing operations attributable to common shareholders:

Earnings per share from continuing operations attributable to common shareholders:

Basic $ 5.38 $ 4.94 $ 2.26 $ 2.37

1 unchanged sentence

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

STOCK-BASED COMPENSATION – We granted 1.1 million and 1.7 million shares, including adjustments for performance achievement and dividend equivalents, under our stock-based compensation plans during the six months ended December 31, 2024 and 2023, respectively.

Stock-based compensation expense of our continuing operations totaled $ 9.2 million and $ 17.9 million for the three and six months ended December 31, 2024, respectively, and $ 9.9 million and $ 17.5 million for the three and six months ended December 31, 2023, respectively.

As of December 31, 2024, unrecognized compensation cost for nonvested shares and units totaled $ 59.5 million.

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

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

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

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

As of December 31, 2024 June 30, 2024

As of March 31, 2025 June 30, 2024

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

13 unchanged sentences

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.

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

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

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.

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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, 2024 are as foll ows:

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

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

2 unchanged sentences

25,740 $ 1,027

Allowance ( 770 )

Net balance $ 24,970

2 unchanged sentences

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

Balances and amounts on non-accrual status, classified as impaired, or more than 60 days past due, by fiscal year of origination, as of December 31, 2024 are as follows:

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

Fiscal year of origination Balance Non-Accrual

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|Q3 FY2025 Form 10-Q

ALLOWANCE FOR CREDIT LOSSES – Activity in the allowance for credit losses for EA and all other short-term and long-term receivables for the six months ended December 31, 2024 and 2023 is as follows:

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

EAs All Other Total

2 unchanged sentences

Charge-offs, recoveries and other ( 33,536 ) ( 45,864 ) ( 79,400 )

Balances as of December 31, 2024 $ 19,109 $ 1,393 $ 20,502

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

Balances as of July 1, 2023 $ 27,386 $ 35,108 $ 62,494

1 unchanged sentence

Charge-offs, recoveries and other ( 27,714 ) ( 37,455 ) ( 65,169 )

Balances as of December 31, 2023 $ 17,557 $ 1,146 $ 18,703

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

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

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

GOODWILL AND INTANGIBLE ASSETS

Changes in the carrying amount of goodwill for the six months ended December 31, 2024 are as follows:

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

Goodwill Accumulated Impairment Losses Net

4 unchanged sentences

Impairments — — —

Balances as of December 31, 2024 $ 921,583 $ ( 138,297 ) $ 783,286

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

(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.

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

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

2 unchanged sentences

Amortization Net

As of December 31, 2024:

As of March 31, 2025:

Reacquired franchise rights $ 415,419 $ ( 239,452 ) $ 175,967

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$ 955,940 $ ( 691,838 ) $ 264,102

We made payments to acquire businesses totaling $ 28.0 million and $ 27.2 million during the six months ended December 31, 2024 and 2023, respectively.

The amounts and weighted-average lives of intangible assets acquired during the six months e nded December 31, 2024, including amounts capitalized related to internally-developed software, a re as follows:

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

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

(dollars in 000s)

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Total $ 42,287 5

Amortization of intangible assets for the three and six months ended December 31, 2024 was $ 12.1 million and $ 25.0 million, respectively, compared to $ 15.4 million and $ 31.2 million for the three and six months ended December 31, 2023.

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

Estimated amortization of intangible assets for fiscal years ending June 30, 2025, 2026, 2027, 2028, and 2029 is $ 47.6 million, $ 41.5 million, $ 34.7 million, $ 26.5 million and $ 18.1 million, respectively.

3 unchanged sentences

The components of long-term debt are as follows:

As of December 31, 2024 June 30, 2024

As of March 31, 2025 June 30, 2024

Senior Notes, 5.250 %, due October 2025

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650,000 650,000

Committed line of credit borrowings 790,000 —

Debt issuance costs and discounts ( 7,323 ) ( 8,905 )

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Proceeds under the 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, 2024.

We had an outst anding balance of $ 790.0 million u nder our CLOC and amounts available to borrow were not limited by the debt-to-EBITDA covenant as of December 31, 2024.

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

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

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

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

We had gross unrecognized tax benefits of $ 244.1 million and $ 251.8 million as of December 31, 2024 and June 30, 2024, respectively.

The gross unrecognized tax benefits decreased by $ 7.7 million during the six months ended December 31, 2024.

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

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

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

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

2 unchanged sentences

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

Our effective tax rate for continuing operations, including the effects of discrete tax items, was 24.0 % and 28.9 % for the six months ended December 31, 2024 and 2023, respectively.

Discrete items increased the effective tax rate by 0.3 % and 5.4 % for the six months ended December 31, 2024, and 2023, respectively.

Discrete income tax benefits of $ 1.5 million and $ 26.6 million were recorded in the six months ended December 31, 2024 and 2023, respectively.

The discrete tax benefit recorded in the current period primarily resulted from investment tax credit purchases.

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

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

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

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

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

The impact of discrete tax items combined with the seasonal nature of our business can cause the effective tax rate in our second quarter to be significantly different than the rate for our full fiscal year.

Consistent with prior years, our pretax loss for the six months ended December 31, 2024 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, 2024 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.

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

COMMITMENTS AND CONTINGENCIES

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

Our liability related to estimated losses under the 100% accuracy guarantee was $ 9.7 million and $ 14.1 million as of December 31, 2024 and June 30, 2024, respectively.

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

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 $ 38.3 million and $ 26.9 million as of December 31, 2024 and June 30, 2024 respectively, with amounts recorded in deferred revenue and other liabilities.

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

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 $ 20.9 million at December 31, 2024, and net of amounts drawn and outstanding, our remaining commitment to fund totaled $ 5.8 million.

During the six months ended December 31, 2024, the Company entered into an agreement to purchase federal investment tax credits (“ITC”), if certain conditions are met.

During the six months ended December 31, 2024, we paid $ 22.9 million for ITCs.

As of December 31, 2024, the Company has a remaining commitment to purchase additional ITCs, for approximately $ 80.0 million if certain conditions set forth in the agreement are satisfied, with the final payment anticipated to occur by June 30, 2025.

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

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

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

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

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

1 unchanged sentence

Our participation interest varies by jurisdiction.

At December 31, 2024, the principal balance of purchased participation interests for the current year totaled $ 257.9 million, which represents 87% of total EA volume originated by Pathward.

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

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

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

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

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

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

LITIGATION AND OTHER RELATED CONTINGENCIES

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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

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

jurisdictions permit considerable variation in the assertion of monetary

H&R Block, Inc.

|Q3 FY2025 Form 10-Q

punitive damages, may be sought.

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

damages or other relief.

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

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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, 2024.

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

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 $ 11.1 million and $ 7.2 million as of December 31, 2024 and June 30, 2024, respectively.

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

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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, 2024, we believe the estimate of the aggregate range of reasonably possible losses in excess of amounts accrued, where the range of loss can be estimated, is not material.

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

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.

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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.

Related to one of these matters, on February 23, 2024, the Federal Trade Commission (FTC) filed an administrative complaint before the FTC alleging unfair or deceptive business acts or practices in connection with certain aspects of our DIY tax preparation services.

A hearing before an administrative law judge (ALJ) of the FTC was scheduled to begin on October 23, 2024.

We filed a complaint in federal court in the Western District of Missouri challenging the constitutionality of the ALJ’s removal protections and seeking to enjoin the ALJ’s participation in the adjudication of the matter.

The federal court denied our motion for a preliminary injunction on August 1, 2024.

We filed an appeal with the Eighth Circuit Court of Appeals.

On October 21, 2024, we entered into a Consent Agreement to resolve the allegations of the complaint through a Decision and Order, which became final and effective on January 8, 2025.

The complaint filed in the Missouri federal court and the corresponding appeal were subsequently dismissed by consent of the parties.

An accrual related to these matters is included in our loss contingency accrual.

3 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements