What changed in this filing

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Item 1. Business

2023-08-17 compared with 2022-08-16 · 48 added, 45 removed, 153 unchanged (38% of the section changed)

1 unchanged sentence

We blend digital innovation with human expertise and care to help people get the best outcome at tax time and also be better with money by using our mobile banking app, Spruce℠.

Through Block Advisors ® and Wave ® , we help small business owners thrive with innovative products like Wave Money ® , a mobile-first, small-business bank account that manages bookkeeping automatically.

H&R Block, Inc.

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A complete list of our subsidiaries as of June 30, 2023 can be found in Exhibit 21 .

RECENT DEVELOPMENTS

On June 9, 2021, the Board of Directors approved a change of the Company's fiscal year end from April 30 to June 30.

The Company's 2022 fiscal year began on July 1, 2021 and ended on June 30, 2022.

On December 20, 2021, we entered into a First Amendment to our August 2020 Program Management Agreement (PMA) with Pathward TM , N.A., formerly known as MetaBank®, N.A.

(Pathward), which, among other things, extends the PMA through June 30, 2025, and adds Spruce℠ accounts to the program.

In January 2022, we launched the Spruce℠ mobile banking platform as a part of the Financial Products imperative of our previously-announced Block Horizons 2025 strategic plan.

The Spruce℠ platform, built by H&R Block with banking products powered by Pathward, includes a spending account with a debit card, along with a connected savings account that allows for budgeting for specific goals, and other features to help customers be good with money.

In August 2022, the Board of Directors approved a $1.25 billion share repurchase program, effective through fiscal year 2025 and increased the quarterly cash dividend by 7% to $0.29 per share.

During fiscal year 2023, we prepared

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14.6 million shares of our common stock,

and declared dividends of

$1.16 per share,

which was an increase of

$0.08, or 7.4%, per share from the prior year.

Tax returns prepared includes tax returns prepared in U.S.

company and franchise office locations, virtually, and through our DIY solutions.

(2) See " Non-GAAP Financial Information " section within this filing for a reconciliation of non-GAAP measures.

company and franchise office locations, virtually,

and through our DIY solutions.

(2) See " Non-GAAP Financial Information " in Item 7 for a reconciliation of non-GAAP measures.

2023 Form 10-K | H&R Block, Inc.

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Small Business

We are focused on growing our base of tax customers by leveraging the Block Advisors ® brand and serving more entrepreneurs through our Wave ® platform.

In small business, our strong marketing and more advanced tax pro training allowed us to grow our assisted tax clients and our net average charge as we serve more complex businesses.

In Wave, we have been successful in attracting new clients and increasing the value of existing clients, as both average revenue per user and average invoicing volume saw accelerating growth trends year over year.

During fiscal year 2023 small business assisted tax improved client satisfaction metrics, and continued to focus on helping small business clients beyond tax.

We launched an entity formation tool to allow small business customers to take advantage of benefits that may come from incorporating, and while early, our bookkeeping and payroll services are gaining traction.

Wave is our one-stop money management platform for small business owners.

Our top two priorities at Wave are accelerating revenue growth and driving long term profitability.

Financial Products

In January 2022, we launched our new mobile banking platform, Spruce SM .

We believe there is an opportunity to combine leading technology and features with our trusted brand and established financial relationships.

Throughout the year we tested multiple iterations of our sign-up offer and continued to release updates to improve the product.

We introduced clients to Spruce SM only in the DIY channel at launch to learn and gain customer insights.

During the next fiscal year, we will test customer acquisition outside the tax season and prepare for launch in the Assisted channel.

In January 2023, we introduced Spruce SM , our mobile banking platform, to our assisted clients for the first time.

Since the launch of Spruce SM through June 30, 2023, we have had 300 thousand signups and $334 million dollars in customer deposits.

Spruce SM is committed to helping clients be better with money, and we are seeing progress towards that goal.

During the year, we launched new features enabling clients to easily set up direct deposit within the app with just a few clicks and build healthy spending habits.

Thousands of clients have engaged with the tools within the app, and feedback indicates that features give them the visibility and control they have been missing in their financial lives.

From here, we are working to improve how we acquire clients both in and out of the tax season.

Block Experience

The Block Experience is all about blending technology and digital tools with human expertise.

We have been successful in driving digital adoption by leveraging MyBlock features, such as uploading documents, approving returns online, and utilizing virtual chat.

We are gaining traction as virtual uptake from our clients more than tripled in the current year.

Block Experience is all about blending technology and digital tools with human expertise and care to serve clients however they want to be served:

fully virtual to fully in person and everything in between.

We have been successful in driving digital adoption by leveraging the MyBlock app features such as uploading documents, approving returns online, and utilizing virtual chat.

This year, more than 30% of assisted clients used a virtual tool during their tax preparation experience within our company-owned offices.

We provide assisted and do-it-yourself (DIY) tax return 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.

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Major revenue sources include fees earned for tax preparation via our assisted and DIY channels, royalties from franchisees, and fees from related services and products.

H&R Block, Inc.

| 2023 Form 10-K

TAX PREPARATION SERVICES

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Clients can come into an office, digitally "drop off" their documents for their tax professional, approve their return online, have a tax professional review a return they prepared themselves through Tax Pro Review or get their questions answered as they complete their own return through Online Assist.

H&R Block, Inc.

| 2022 Form 10-K

Our online software may be accessed through our website at www.hrblock.com or in a mobile application, while our desktop software may be purchased online and through third-party retail stores.

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 tax return.

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

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 the client would otherwise not have been required to pay.

We offer franchises as a way to expand our presence in certain geographic areas.

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OTHER OFFERINGS

We also offer U.S.

clients a number of additional services, including Refund Transfers (RT), our Peace of Mind® Extended Service Plan (POM), H&R Block Emerald Prepaid Mastercard® (Emerald Card ® ), Emerald Advances (EA), Tax Identity Shield® (TIS), Refund Advances (RA), and small business financial solutions.

During fiscal year 2023, we also offered U.S.

clients a number of additional services, including Refund Transfers (RT), our Peace of Mind® Extended Service Plan (POM), H&R Block Emerald Prepaid Mastercard® (Emerald Card ® ), H&R Block Emerald Advance® Lines of Credit (EA), Tax Identity Shield® (TIS), Refund Advances (RA), and small business financial solutions.

For our Canadian clients, we also offer POM, H&R Block's Instant Refund SM , H&R Block Pay With Refund®, and small business financial solutions.

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clients and are frequently obtained by those who:

(1) do not have bank accounts into which the IRS can direct deposit their refunds;

(1) do not have bank accounts into which the Internal Revenue Service (IRS) can direct deposit their refunds;

(2) like the convenience and benefits of a temporary account for receipt of their refund;

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If the borrower meets certain criteria as agreed in the loan terms, the line of credit can be utilized year-round.

In addition to the required monthly payments, borrowers may elect to pay down balances on EAs with their tax refunds.

In addition to the required monthly payments, borrowers

2023 Form 10-K | H&R Block, Inc.

may elect to pay down balances on EAs with their tax refunds.

These lines of credit are offered by our bank partner, and we subsequently purchase a participation interest in all EAs originated by our bank partner.

Tax Identity Shield®.

Our TIS program offers clients assistance in helping protect their tax identity and access to services to help restore thei r tax identity, and if necessary, access to services to help restore their tax identity.

Our TIS program offers clients assistance in helping protect their tax identity and access to services to help restore thei r tax identity, if necessary.

Protection services include a daily scan of the dark web for personal information, a monthly scan for the client's social security number in credit header data, notifying clients if their information is detected on a tax return filed through H&R Block, and obtaining additional IRS identity protections when eligible.

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assisted clients in company-owned and participating franchise locations, including virtual clients.

In tax season

2022 Form 10-K | H&R Block, Inc.

2022, RAs were offered in amounts of $250, $500, $750, $1,250 and $3,500, based on client eligibility as determined by our bank partner.

In tax season 2023, RAs were offered in amounts of $250, $500, $750, $1,250 and $3,500, based on client eligibility as determined by our bank partner.

H&R Block's Instant Refund SM .

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Small Business Financial Solutions.

Our Block Advisor certified tax professionals provide small businesses with financial expertise in taxes, bookkeeping and payroll through our office network.

Our Block Advisors certified tax professionals provide small businesses with financial expertise in taxes, bookkeeping and payroll through our office network.

Wave provides small business owners with an online solution to manage their finances, including payment processing, payroll and bookkeeping services.

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As a result, we generally operate at a loss through the first two quarters of our fiscal year.

As a result of the COVID-19 pande mic and a delayed federal tax filing deadline in the prior year, there has been a shift in the typical seasonality of our business and the comparability of our financial results.

COMPETITIVE CONDITIONS

We provide assisted and DIY tax preparation services and products, as well as small business financial solutions, and face substantial competition in and across each category from tax return preparation firms and software providers, accounting firms, independent tax preparers, and certified public accountants.

We are one of the largest providers of tax return preparation solutions and electronic filing services in the U.S., Canada, and Australia with 23.6 million returns filed by or through H&R Block in fiscal year 2022 via 10,488 tax offices and our virtual tax pr eparation services, mobile applications, and online and desktop DIY solutions.

We are one of the largest providers of tax return preparation solutions and electronic filing services in the U.S., Canada, and Australia with 23.4 million returns filed by or through H&R Block in fiscal year 2023.

GOVERNMENT REGULATION

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The highest number of persons we employed during the fiscal year ended June 30, 2023, including seasonal associates, was approximately 74,400.

H&R Block, Inc.

| 2023 Form 10-K

Associate Engagement.

We administer an annual survey to all associates to better understand their levels of engagement and identify areas where we can improve.

We are pleased with our overall engagement score, meeting or exceeding the global benchmark in all measured categories, and will continue to explore new ways to advance our engagement efforts in the future.

In previous years, we compared our scores against a global benchmark, which is the average of thousands of companies.

This year we aspirationally changed our benchmark from the global benchmark to the top 25th percentile of the global benchmark to challenge our associates and leaders and to yield reports that are easier for leaders to identify opportunities to take action.

Across the company, over half of culture and engagement questions measured were at or above the top 25th percentile of the global benchmark.

We are pleased with our overall employee satisfaction score which continues on an upward trend.

This year, individual leaders at all levels have begun formally creating and monitoring culture and engagement-related goals to continue our upward trajectory.

Compensation and Benefits.

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Our equitable and comprehensive benefits offerings provide access to benefits to help both regular and seasonal associates plan for the health and security of their families.

H&R Block provides comprehensive medical insurance to our associates,

H&R Block, Inc.

| 2022 Form 10-K

and extends the opportunity for medical insurance to our seasonal workforce who satisfy the eligibility guidelines of the Affordable Care Act (ACA).

H&R Block provides comprehensive medical insurance to our associates, and extends the opportunity for medical insurance to our seasonal workforce who satisfy the eligibility guidelines of the Affordable Care Act.

Subject to meeting eligibility requirements, associates can also choose to participate in the H&R Block Retirement Savings Plan 401(k) and Employee Stock Purchase Plan.

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In preparation for the upcoming tax season, our tax professionals receive training on H&R Block products, soft skills and tax office best practices.

Each year, our tax professionals receive on average ov er 30 hours of Tax Education and over 16 hours of Conti nuing Professional Education.

Diversity, Inclusion and Belonging.

We continually evaluate our management approaches to improving diversity and inclusion, which includes looking at how we can provide a sense of belonging in the workplace for our associates.

We believe taking care of our associates significantly increases their job satisfaction and is instrumental to the company’s ongoing success.

We materialized these efforts through our Belonging@Block program which is a council of associates from multiple departments across the organization with the responsibility to represent and improve our diverse and inclusive culture.

We have continued to grow our membership in diversity and inclusion groups focusing on LGBTQ+, neurodiversity, young professionals, veterans, women, and Black associates.

We have also extended our diversity and inclusion efforts to support supplier diversity, enhancement of our Racial Equity Action Plan, and the development of a program that supports technology talent diversity.

We also remain committed to building a Connected Culture—one in which trust, care, and connections are how we work together as we continue to create an environment where everyone feels safe to bring their authentic self to work every day and feels like they belong as part of a larger team.

Our people are the number one enabler for living our Purpose and we value our associates by offering various talent development opportunities, tax training and support, and regularly assessing compensation policies and data to ensure pay equity.

To thank our associates and protect against heightened stress, burnout, and uncertainty, we have implemented ‘The Annual Reboot,’ a paid week of time off offered during the first week of July to disconnect and recharge.

Because of our efforts to foster a culture of belonging, we are consistently recognized as a top employer in many different categories.

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She also held various legal roles of increasing responsibility with The Coca-Cola Company from September 2001 until December 2018.

Karen Orosco , 51, became our President, Global Consumer Tax and Service Delivery in June 2021.

Prior to that she served as our Senior Vice President, U.S.

Retail beginning in May 2016, and our Vice President of Retail Operations from May 2011 until May 2016.

AVAILABILITY OF REPORTS AND OTHER INFORMATION

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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-K

Item 1. Business