What changed in this filing

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Item 1. Financial Statements

2025-02-06 compared with 2024-11-07 · 111 added, 69 removed, 352 unchanged (34% of the section changed)

2 unchanged sentences

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

Three months ended September 30,

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

2024 2023 2024 2023

Service revenues $ 152,968 $ 149,081 $ 334,739 $ 320,807

28 unchanged sentences

share and per share amounts)

As of September 30, 2024 June 30, 2024

As of December 31, 2024 June 30, 2024

Cash and cash equivalents $ 320,051 $ 1,053,326

16 unchanged sentences

Accrued income taxes and reserves for uncertain tax positions 149,255 318,830

Current portion of long-term debt 349,611 —

Operating lease liabilities 170,726 206,070

1 unchanged sentence

Total current liabilities 1,059,363 977,328

Long-term debt 1,491,621 1,491,095

Long-term debt and line of credit borrowings 1,932,545 1,491,095

Deferred tax liabilities and reserves for uncertain tax positions 292,643 291,063

15 unchanged sentences

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

Three months ended September 30, 2024 2023

Six months ended December 31, 2024 2023

CASH FLOWS FROM OPERATING ACTIVITIES:

21 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Repayments of line of credit borrowings ( 100,000 ) ( 25,000 )

Proceeds from line of credit borrowings 890,000 825,000

Dividends paid ( 96,960 ) ( 89,854 )

1 unchanged sentence

Other, net 1,791 4,011

Net cash used in financing activities ( 284,450 ) ( 195,198 )

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

Effects of exchange rate changes on cash ( 9,136 ) 671

8 unchanged sentences

Accrued dividends payable to common shareholders 50,176 45,273

Accrued purchase of common stock 7,131 10,003

See accompanying notes to consolidated financial statements.

19 unchanged sentences

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.

Q2 FY2025 Form 10-Q| H&R Block, Inc.

(amounts in 000s, except per share amounts)

Common Stock Additional

15 unchanged sentences

Balances as of September 30, 2023 175,671 $ 1,757 $ 740,434 $ ( 48,013 ) $ ( 393,621 ) ( 31,742 ) $ ( 645,441 ) $ ( 344,884 )

Net loss — — — — ( 189,755 ) — — ( 189,755 )

Other comprehensive income — — — 11,559 — — — 11,559

Stock-based compensation — — 9,270 — — — — 9,270

Stock-based awards exercised or vested — — ( 165 ) — ( 46 ) 348 7,087 6,876

Acquisition of treasury shares (2)

— — — — — ( 3 ) ( 125 ) ( 125 )

Repurchase and retirement of common shares ( 4,755 ) ( 48 ) ( 2,805 ) — ( 217,467 ) — — ( 220,320 )

Cash dividends declared - $ 0.32 per share

— — — — ( 45,273 ) — — ( 45,273 )

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

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

1 unchanged sentence

See accompanying notes to consolidated financial statements.

Q1 FY2025 Form 10-Q| H&R Block, Inc.

H&R Block, Inc.

|Q2 FY2025 Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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.

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

10 unchanged sentences

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.

H&R Block, Inc.

|Q1 FY2025 Form 10-Q

Q2 FY2025 Form 10-Q| H&R Block, Inc.

REVENUE RECOGNITION

2 unchanged sentences

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

Three months ended September 30,

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

2024 2023 2024 2023

assisted tax preparation $ 48,380 $ 48,342 $ 91,343 $ 87,605

5 unchanged sentences

Emerald Card® and Spruce SM

10,148 11,700 18,974 20,333

Interest and fee income on Emerald Advance® 12,308 15,235 12,308 15,533

5 unchanged sentences

POM Deferred Revenue Deferred Wages

Three months ended September 30, 2024 2023 2024 2023

Six months ended December 31, 2024 2023 2024 2023

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

2 unchanged sentences

Balance, end of the period $ 112,857 $ 121,863 $ 14,135 $ 16,246

As of September 30, 2024, deferred revenue related to POM was $ 130.7 million.

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

We expect that $ 83.0 million will be recognized over the next twelve months , while the remaining balance will be recognized over the following five years .

As of September 30, 2024 and 2023, Tax Identity Shield® (TIS) deferred revenue was $ 17.7 million and $ 20.8 million, respectively.

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

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

4 unchanged sentences

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 and 3.5 million shares for the three months ended September 30, 2024 and 2023, respectively, as the effect would be antidilutive due to the net loss from continuing operations during the periods.

Q1 FY2025 Form 10-Q| H&R Block, Inc.

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

H&R Block, Inc.

|Q2 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:

(in 000s, except per share amounts)

Three months ended September 30,

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

2024 2023 2024 2023

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

8 unchanged sentences

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 1.0 million and 1.6 million shares, including adjustments for performance achievement and dividend equivalents, under our stock-based compensation plans during the three months ended September 30, 2024 and 2023, respectively.

Stock-based compensation expense of our continuing operations totaled $ 8.7 million and $ 7.6 million for the three months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, unrecognized compensation cost for nonvested shares and units totaled $ 67.9 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 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.

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

As of September 30, 2024 June 30, 2024

As of December 31, 2024 June 30, 2024

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

10 unchanged sentences

Total $ 321,171 $ 50,787 $ 69,075 $ 43,824

Q2 FY2025 Form 10-Q| H&R Block, Inc.

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.

As of September 30, 2024 and June 30, 2024, loans with a principal balance more than 90 days past due or on non-accrual status were $ 2.3 million and $ 1.1 million, respectively.

H&R Block, Inc.

|Q1 FY2025 Form 10-Q

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.

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.

2 unchanged sentences

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 September 30, 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 December 31, 2024 are as foll ows:

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

2 unchanged sentences

1,559 $ 1,500

Allowance ( 1,024 )

Net balance $ 1,559

EMERALD ADVANCE ® – We review the credit quality of our purchased participation interests in EA receivables based on pools, which are segregated by the fiscal year of origination, with older years being deemed more unlikely to be repaid.

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 September 30, 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 December 31, 2024 are as follows:

Fiscal year of origination Balance Non-Accrual

4 unchanged sentences

Net balance $ 289,753

Q1 FY2025 Form 10-Q| H&R Block, Inc.

ALLOWANCE FOR CREDIT LOSSES – Activity in the allowance for credit losses for our EA and all other short-term and long-term receivables for the three months ended September 30, 2024 and 2023 is as follows:

H&R Block, Inc.

|Q2 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:

EAs All Other Total

2 unchanged sentences

Charge-offs, recoveries and other ( 33,536 ) ( 45,552 ) ( 79,088 )

Balances as of September 30, 2024 $ 33,536 $ 44,889 $ 78,425

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

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

1 unchanged sentence

Charge-offs, recoveries and other ( 27,714 ) ( 37,613 ) ( 65,327 )

Balances as of September 30, 2023 $ — $ 35,469 $ 35,469

There were no gross charge-offs of EAs for the three months ended September 30, 2024.

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.

GOODWILL AND INTANGIBLE ASSETS

Changes in the carrying amount of goodwill for the three months ended September 30, 2024 are as follows:

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

Goodwill Accumulated Impairment Losses Net

4 unchanged sentences

Impairments — — —

Balances as of September 30, 2024 $ 930,492 $ ( 138,297 ) $ 792,195

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

(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.

H&R Block, Inc.

|Q1 FY2025 Form 10-Q

Q2 FY2025 Form 10-Q| H&R Block, Inc.

Components of intangible assets are as follows:

1 unchanged sentence

Amortization Net

As of September 30, 2024:

As of December 31, 2024:

Reacquired franchise rights $ 413,752 $ ( 235,650 ) $ 178,102

13 unchanged sentences

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

We made payments to acquire businesses totaling $ 5.9 million and $ 6.9 million during the three months ended September 30, 2024 and 2023, respectively.

The amounts and weighted-average lives of intangible assets acquired during the three months e nded September 30, 2024 a re as follows:

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:

(dollars in 000s)

2 unchanged sentences

Reacquired franchise rights 9,983 6

Internally-developed software 1,027 3

Noncompete agreements 871 5

Total $ 31,586 5

Amortization of intangible assets for the three months ended September 30, 2024 was $ 12.9 million compared to $ 15.8 million for the three months ended September 30, 2023.

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.

Estimated amortization of intangible assets for fiscal years ending June 30, 2025, 2026, 2027, 2028, and 2029 is $ 47.0 million, $ 39.9 million, $ 33.1 million, $ 24.9 million and $ 16.5 million, respectively.

Q1 FY2025 Form 10-Q| H&R Block, Inc.

H&R Block, Inc.

|Q2 FY2025 Form 10-Q

LONG-TERM DEBT

The components of long-term debt are as follows:

As of September 30, 2024 June 30, 2024

As of December 31, 2024 June 30, 2024

Senior Notes, 5.250 %, due October 2025

4 unchanged sentences

650,000 650,000

Committed line of credit borrowings 790,000 —

Debt issuance costs and discounts ( 7,844 ) ( 8,905 )

13 unchanged sentences

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 September 30, 2024.

We had no outst anding balance under our CLOC and amounts available to borrow were not limited by the debt-to-EBITDA covenant as of September 30, 2024.

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 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 $ 251.4 million and $ 251.8 million as of September 30, 2024 and June 30, 2024, respectively.

The gross unrecognized tax benefits decreased by $ 0.4 million during the three months ended September 30, 2024.

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

1 unchanged sentence

For such matters where a change in the balance of unrecognized tax benefits is not yet deemed reasonably possible, no estimate has been included.

Our effective tax rate for continuing operations, including the effects of discrete tax items, was 26.2 % and 23.3 % for the three months ended September 30, 2024 and 2023, respectively.

H&R Block, Inc.

|Q1 FY2025 Form 10-Q

Consistent with prior years, our pretax loss for the three months ended September 30, 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.

Q2 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.

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 three months ended September 30, 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 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.

COMMITMENTS AND CONTINGENCIES

2 unchanged sentences

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 $ 12.0 million and $ 14.1 million as of September 30, 2024 and June 30, 2024, respectively.

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.

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 $ 28.0 million and $ 26.9 million as of September 30, 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 $ 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.

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 $ 15.7 million at September 30, 2024, and net of amounts drawn and outstanding, our remaining commitment to fund totaled $ 10.0 million.

During the three months ended September 30, 2024, the Company entered into an agreement to purchase federal investment tax credits (“ITC”), if certain conditions are met.

During the three months ended September 30, 2024, we paid $ 22.9 million for ITCs.

As of September 30, 2024, the Company has a remaining commitment to purchase additional ITCs, estimated to be $ 74.0 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 $ 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.

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

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, 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.

LITIGATION AND OTHER RELATED CONTINGENCIES

1 unchanged sentence

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.

In some of the matters, very large or indeterminate amounts, including

H&R Block, Inc.

|Q2 FY2025 Form 10-Q

punitive damages, may be sought.

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

5 unchanged sentences

Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will view the relevant evidence and applicable law.

Q1 FY2025 Form 10-Q| H&R Block, Inc.

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.

3 unchanged sentences

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 September 30, 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 December 31, 2024.

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 September 30, 2024 and June 30, 2024, respectively.

Our accrued liabilities were $ 11.1 million and $ 7.2 million as of December 31, 2024 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.

5 unchanged sentences

The matters underlying the estimated range will change from time to time, and actual results may vary significantly from the current estimate.

As of September 30, 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 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.

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.

1 unchanged sentence

Any receivable for insurance recoveries is recorded separately from the corresponding liability, and only if recovery is determined to be probable and reasonably estimable.

Q2 FY2025 Form 10-Q| H&R Block, Inc.

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.

2 unchanged sentences

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.

H&R Block, Inc.

|Q1 FY2025 Form 10-Q

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.

4 unchanged sentences

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

On October 21, 2024, we entered into a proposed Consent Agreement to resolve the allegations of the complaint through a proposed Decision and Order, which is subject to final approval by the Commission.

If approved, the proposed Decision and Order will fully resolve the claims.

Proceedings before the ALJ are stayed pending a determination by the Commission.

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