H&R BLOCK INC 10-Q

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 company-owned or franchise offices, 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. H&R Block, Inc. |Q2 FY2025 Form 10-Q 15 Table of Contents Consolidated – Financial Results (in 000s, except per share amounts) Three months ended December 31, 2024 2023 $ Change % Change Revenues: U.S. tax preparation and related services: Assisted tax preparation $ 48,380 $ 48,342 $ 38 0.1 % Royalties 3,499 5,454 (1,955) (35.8) % DIY tax preparation 13,744 13,111 633 4.8 % Refund Transfers 637 813 (176) (21.6) % Peace of Mind® Extended Service Plan 16,145 17,440 (1,295) (7.4) % Tax Identity Shield® 4,013 4,694 (681) (14.5) % Other 11,824 9,592 2,232 23.3 % Total U.S. tax preparation and related services 98,242 99,446 (1,204) (1.2) % Financial services: Emerald Card® and Spruce SM 10,148 11,700 (1,552) (13.3) % Interest and fee income on Emerald Advance® 12,308 15,235 (2,927) (19.2) % Total financial services 22,456 26,935 (4,479) (16.6) % International 31,811 29,569 2,242 7.6 % Wave 26,561 23,133 3,428 14.8 % Total revenues $ 179,070 $ 179,083 $ (13) — % Compensation and benefits: Field wages 81,565 77,795 (3,770) (4.8) % Other wages 78,731 74,671 (4,060) (5.4) % Benefits and other compensation 38,402 36,063 (2,339) (6.5) % 198,698 188,529 (10,169) (5.4) % Occupancy 104,999 101,194 (3,805) (3.8) % Marketing and advertising 14,863 11,305 (3,558) (31.5) % Depreciation and amortization 29,195 30,107 912 3.0 % Bad debt 19,416 21,754 2,338 10.7 % Other 105,190 93,626 (11,564) (12.4) % Total operating expenses 472,361 446,515 (25,846) (5.8) % Other income (expense), net 2,744 5,922 (3,178) (53.7) % Interest expense on borrowings (21,752) (21,364) (388) (1.8) % Pretax loss (312,299) (282,874) (29,425) (10.4) % Income tax benefit (69,833) (93,758) (23,925) (25.5) % Net loss from continuing operations (242,466) (189,116) (53,350) (28.2) % Net loss from discontinued operations (954) (639) (315) (49.3) % Net loss $ (243,420) $ (189,755) $ (53,665) (28.3) % BASIC AND DILUTED LOSS PER SHARE: Continuing operations $ (1.79) $ (1.33) $ (0.46) (34.6) % Discontinued operations (0.01) — (0.01) ** Consolidated $ (1.80) $ (1.33) $ (0.47) (35.3) % Adjusted diluted EPS (1) $ (1.73) $ (1.27) $ (0.46) (36.2) % EBITDA (1) $ (261,352) $ (231,403) $ (29,949) (12.9) % (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. 16 Q2 FY2025 Form 10-Q| H&R Block, Inc. Table of Contents Three months ended December 31, 2024 compared to December 31, 2023 Revenues of $179.1 million were flat compared to the prior year. Interest and fee income on Emerald Advance® revenues decreased $2.9 million, or 19.2%, primarily due to a decrease in EA loans originated in the current year. International tax preparation revenues increased $2.2 million, or 7.6%, primarily due to higher tax return volumes in Australia combined with favorable foreign currency exchange rates. Wave revenues increased $3.4 million, or 14.8%, due to higher accounting, invoicing and receipts subscriptions and small business payments processing volumes. Total operating expenses increased $25.8 million, or 5.8%, from the prior year. Field wages increased $3.8 million, or 4.8%, due to higher tax professional wages in the current year. Other wages increased $4.1 million, or 5.4%, due to higher corporate wages primarily due to salary increases. Occupancy expense increased $3.8 million, or 3.8%, primarily due to higher lease and office-related expenses. Marketing and advertising expense increased $3.6 million, or 31.5%, primarily due to the timing of advertising and lower vendor refunds for expired customer incentives in the current year. Other operating expenses increased $11.6 million, or 12.4%. The components of other expenses are as follows: (in 000s) Three months ended December 31, 2024 2023 $ Change % Change Consulting and outsourced services $ 18,439 $ 16,267 $ (2,172) (13.4) % Bank partner fees 1,316 (1,113) (2,429) ** Client claims and refunds 4,332 3,107 (1,225) (39.4) % Employee and travel expenses 12,495 12,375 (120) (1.0) % Technology-related expenses 28,062 27,261 (801) (2.9) % Credit card/bank charges 18,546 17,768 (778) (4.4) % Insurance 4,256 2,076 (2,180) (105.0) % Legal fees and settlements 7,192 5,421 (1,771) (32.7) % Supplies 3,570 4,355 785 18.0 % Other 6,982 6,109 (873) (14.3) % $ 105,190 $ 93,626 $ (11,564) (12.4) % Other income (expense), net decreased $3.2 million, or 53.7%, primarily due to higher foreign currency losses and lower interest income in the current year. We recorded an income tax benefit of $69.8 million in the current year compared to $93.8 million in the prior year. The effective tax rate for the three months ended December 31, 2024, and 2023 was 22.4% and 33.1%, respectively. H&R Block, Inc. |Q2 FY2025 Form 10-Q 17 Table of Contents Consolidated - Financial Results (in 000s, except per share amounts) Six months ended December 31, 2024 2023 $ Change % Change Revenues: U.S. tax preparation and related services: Assisted tax preparation $ 91,343 $ 87,605 $ 3,738 4.3 % Royalties 9,351 11,155 (1,804) (16.2) % DIY tax preparation 16,980 16,959 21 0.1 % Refund Transfers 1,497 1,955 (458) (23.4) % Peace of Mind® Extended Service Plan 39,242 42,287 (3,045) (7.2) % Tax Identity Shield® 7,922 9,274 (1,352) (14.6) % Other 25,633 20,572 5,061 24.6 % Total U.S. tax preparation and related services 191,968 189,807 2,161 1.1 % Financial services: Emerald Card® and Spruce SM 18,974 20,333 (1,359) (6.7) % Interest and fee income on Emerald Advance® 12,308 15,533 (3,225) (20.8) % Total financial services 31,282 35,866 (4,584) (12.8) % International 96,666 90,134 6,532 7.2 % Wave 52,964 47,076 5,888 12.5 % Total revenues $ 372,880 $ 362,883 $ 9,997 2.8 % Compensation and benefits: Field wages 149,659 140,230 (9,429) (6.7) % Other wages 156,066 146,769 (9,297) (6.3) % Benefits and other compensation 77,156 71,311 (5,845) (8.2) % 382,881 358,310 (24,571) (6.9) % Occupancy 206,317 200,479 (5,838) (2.9) % Marketing and advertising 24,835 16,786 (8,049) (48.0) % Depreciation and amortization 58,026 60,332 2,306 3.8 % Bad debt 22,146 26,552 4,406 16.6 % Other 200,297 174,182 (26,115) (15.0) % Total operating expenses 894,502 836,641 (57,861) (6.9) % Other income (expense), net 14,661 15,758 (1,097) (7.0) % Interest expense on borrowings (37,599) (37,234) (365) (1.0) % Pretax loss (544,560) (495,234) (49,326) (10.0) % Income tax benefit (130,673) (143,245) (12,572) (8.8) % Net loss from continuing operations (413,887) (351,989) (61,898) (17.6) % Net loss from discontinued operations (2,109) (1,248) (861) (69.0) % Net loss $ (415,996) $ (353,237) $ (62,759) (17.8) % BASIC AND DILUTED LOSS PER SHARE: Continuing operations $ (3.02) $ (2.44) $ (0.58) (23.8) % Discontinued operations (0.01) (0.01) — — % Consolidated $ (3.03) $ (2.45) $ (0.58) (23.7) % Adjusted diluted EPS (1) $ (2.89) $ (2.31) $ (0.58) (25.1) % EBITDA (1) $ (448,935) $ (397,668) $ (51,267) (12.9) % (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. 18 Q2 FY2025 Form 10-Q| H&R Block, Inc. Table of Contents Six months ended December 31, 2024 compared to December 31, 2023 Revenues increased $10.0 million, or 2.8%, from the prior year. U.S. assisted tax preparation revenues increased $3.7 million, or 4.3%, primarily due to an increase in net average charge. Peace of Mind® revenue decreased $3.0 million, or 7.2%, due to lower prior year sales of Peace of Mind®. Peace of Mind® revenues are initially deferred and recognized over the term of the plan. Other revenues increased $5.1 million, or 24.6%, primarily due to higher bookkeeping fees. Interest and fee income on Emerald Advance® revenues decreased $3.2 million, or 20.8%, primarily due to a decrease in EA loans originated in the current year. International revenues increased $6.5 million, or 7.2%, primarily due to higher tax return volumes in Australia combined with favorable foreign currency exchange rates. Wave revenues increased $5.9 million, or 12.5%, due to higher accounting, invoicing and receipts subscriptions and small business payments processing volumes. Total operating expenses increased $57.9 million, or 6.9%, from the prior year period. Field wages increased $9.4 million, or 6.7%, due to higher tax professional wages in the current year. Other wages increased $9.3 million, or 6.3%, primarily due to higher corporate wages due to salary increases in the current year. Benefits and other compensation increased $5.8 million, or 8.2%, due to higher employee insurance and severance pay in the current year. Occupancy expense increased $5.8 million, or 2.9%, primarily due to higher lease and office-related expenses. Marketing and advertising expense increased $8.0 million, or 48.0%, due to the timing of advertising and lower vendor refunds for expired customer incentives in the current year. Other operating expenses increased $26.1 million, or 15.0%. The components of other expenses are as follows: (in 000s) Six months ended December 31, 2024 2023 $ Change % Change Consulting and outsourced services $ 33,883 $ 29,401 $ (4,482) (15.2) % Bank partner fees 1,363 (1,065) (2,428) ** Client claims and refunds 10,276 9,346 (930) (10.0) % Employee and travel expenses 18,612 18,061 (551) (3.1) % Technology-related expenses 52,563 50,339 (2,224) (4.4) % Credit card/bank charges 36,695 34,937 (1,758) (5.0) % Insurance 7,800 5,426 (2,374) (43.8) % Legal fees and settlements 21,654 8,429 (13,225) (156.9) % Supplies 6,477 7,118 641 9.0 % Other 10,974 12,190 1,216 10.0 % $ 200,297 $ 174,182 $ (26,115) (15.0) % Legal expense increased $13.2 million primarily due to higher outside legal counsel spend. We recorded income tax expense of $130.7 million in the current year compared to $143.2 million in the prior year. The effective tax rate for the six months ended December 31, 2024, and 2023 was 24.0% and 28.9%, respectively. See Item 1, note 7 to the consolidated financial statements for additional discussion. 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. H&R Block, Inc. |Q2 FY2025 Form 10-Q 19 Table of Contents 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 December 31, 2024 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 six months ended December 31, 2024 and 2023. See Item 1 for the complete consolidated statements of cash flows for these periods. (in 000s) Six months ended December 31, 2024 2023 Net cash provided by (used in): Operating activities $ (895,638) $ (942,166) Investing activities (87,493) (71,045) Financing activities 258,598 335,448 Effects of exchange rates on cash (9,136) 671 Net decrease in cash and cash equivalents, including restricted balances $ (733,669) $ (677,092) Operating Activities. Cash used in operations totaled $895.6 million for the six months ended December 31, 2024 compared to $942.2 million in the prior year period. The change is primarily due to lower EA loans originated in the current year and changes in deferred taxes, partially offset by a higher net loss in the current year. Investing Activities. Cash used in investing activities totaled $87.5 million for the six months ended December 31, 2024 compared to $71.0 million in the prior year period. The change is primarily due to higher capital expenditures in the current year. Financing Activities. Cash provided by financing activities totaled $258.6 million for the six months ended December 31, 2024 compared to $335.4 million in the prior year period. The change is primarily due to higher repurchases of common stock in the current year. 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 $97.0 million and $89.9 million for the six months ended December 31, 2024 and 2023, 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. On August 15, 2024, the Board of Directors approved a $1.5 billion share repurchase program. The repurchase program does not have an expiration date and replaced the previously existing share repurchase program. During the six months ended December 31, 2024, 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. In the prior year period, we repurchased $350.1 million of our common stock at an average price of $43.66 per share, excluding excise taxes in connection with such repurchases. Our current share repurchase program has remaining authorization of $1.1 billion 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 20 Q2 FY2025 Form 10-Q| H&R Block, Inc. Table of Contents 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 $49.1 million and $32.7 million for the six months ended December 31, 2024 and 2023, 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 $28.0 million and $27.2 million during the six months ended December 31, 2024 and 2023, respectively. See Item 1, note 5 for additional information on our acquisitions. FINANCING RESOURCES – The CLOC has capacity up to $1.5 billion and is scheduled to expire in June 2026. Proceeds under the CLOC may be used for working capital needs or for other general corporate purposes. We had an outst anding balance of $790.0 million under our CLOC and amounts available to borrow were not limited by the debt-to-EBITDA covenant as of December 31, 2024. Our Senior Notes due in October 2025 (2025 Senior Notes) are classified as a current liability as of December 31, 2024. We are considering various financing options in regard to the maturing 2025 Senior Notes and anticipate these options will provide adequate liquidity to fund the cash requirements at or prior to maturity. The following table provides ratings for debt issued by Block Financial LLC (Block Financial) as of December 31, 2024 and June 30, 2024: As of December 31, 2024 June 30, 2024 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, 2024 in our Annual Report on Form 10-K. CASH AND OTHER ASSETS – As of December 31, 2024, we held cash and cash equivalents, excluding restricted amounts, of $320.1 million, including $158.6 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 December 31, 2024. We do not currently intend to repatriate non-borrowed funds held by our foreign subsidiaries in a manner that would trigger a tax liability. The impact of changes in foreign exchange rates during the period on our international cash balances resulted in a decrease of $9.1 million during the six months ended December 31, 2024 and in an increase of $0.7 million during the six months ended December 31, 2023. CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS – The Company entered into an agreement to purchase federal Investment tax credits (“ITC”). 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 closing payment anticipated to occur by June 30, 2025. Effective October 18, 2024, we amended our Program Management Agreement (PMA) with Pathward®, N.A to extend the term of the PMA for two years until June 30, 2027. We purchased participation interests in EAs of $257.9 million during the six months ended December 31, 2024. See Item 1 , note 8 for additional information on our commitments. There have been no other material changes in our contractual obligations and commercial commitments from those reported in our June 30, 2024 Annual Report on Form 10-K. H&R Block, Inc. |Q2 FY2025 Form 10-Q 21 Table of Contents 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 December 31, 2024 June 30, 2024 Current assets $ 304,264 $ 44,423 Noncurrent assets 2,317,461 1,778,832 Current liabilities 437,886 77,848 Noncurrent liabilities 1,938,745 1,492,211 SUMMARIZED STATEMENTS OF OPERATIONS - GUARANTOR AND ISSUER (in 000s) Six months ended December 31, 2024 Twelve months ended June 30, 2024 Total revenues $ 33,436 $ 144,206 Income (loss) from continuing operations before income taxes (3,363) 75,819 Net income (loss) from continuing operations (2,592) 57,441 Net income (loss) (4,702) 54,795 The table above reflects $2.3 billion and $1.7 billion of non-current intercompany receivables due to the Issuer from non-guarantor subsidiaries as of December 31, 2024 and June 30, 2024, respectively. REGULATORY ENVIRONMENT There have been no material changes in our regulatory environment from what was reported in our June 30, 2024 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 amortization of intangibles from acquisitions and goodwill impairments. We may 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 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. 22 Q2 FY2025 Form 10-Q| H&R Block, Inc. Table of Contents The following is a reconciliation of net loss to EBITDA from continuing operations, which is a non-GAAP financial measure: (in 000s) Three months ended December 31, Six months ended December 31, 2024 2023 2024 2023 Net loss - as reported $ (243,420) $ (189,755) $ (415,996) $ (353,237) Discontinued operations, net 954 639 2,109 1,248 Net loss from continuing operations - as reported (242,466) (189,116) (413,887) (351,989) Add back: Income tax benefit (69,833) (93,758) (130,673) (143,245) Interest expense 21,752 21,364 37,599 37,234 Depreciation and amortization 29,195 30,107 58,026 60,332 (18,886) (42,287) (35,048) (45,679) EBITDA from continuing operations $ (261,352) $ (231,403) $ (448,935) $ (397,668) 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 December 31, Six months ended December 31, 2024 2023 2024 2023 Net loss from continuing operations - as reported $ (242,466) $ (189,116) $ (413,887) $ (351,989) Adjustments: Amortization of intangibles related to acquisitions (pretax) 10,910 12,269 22,038 24,824 Tax effect of adjustments (1) (2,539) (3,087) (5,184) (6,022) Adjusted net loss from continuing operations $ (234,095) $ (179,934) $ (397,033) $ (333,187) Diluted loss per share from continuing operations - as reported $ (1.79) $ (1.33) $ (3.02) $ (2.44) Adjustments, net of tax 0.06 0.06 0.13 0.13 Adjusted diluted loss per share from continuing operations $ (1.73) $ (1.27) $ (2.89) $ (2.31) (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, 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. H&R Block, Inc. |Q2 FY2025 Form 10-Q 23 Table of Contents 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, 2024 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 Policies" of our Annual Report on Form 10-K for the fiscal year ended June 30, 2024. 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, 2024 Annual Report on Form 10-K.