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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION – The consolidated balance sheets as of December 31, 2025 and June 30, 2025, the consolidated statements of operations and comprehensive loss for the three and six months ended December 31, 2025 and 2024, the consolidated statements of cash flows for the six months ended December 31, 2025 and 2024, and the consolidated statements of stockholders' equity for the three and six months ended December 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 December 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. and its subsidiaries, or to H&R Block, Inc.'s operating subsidiaries, as appropriate to the context.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been condensed or omitted. These consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our June 30, 2025 Annual Report on Form 10-K. All amounts presented herein as of June 30, 2025 or for the year then ended are derived from our Annual Report on Form 10-K.
MANAGEMENT ESTIMATES – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates, assumptions and judgments are applied in the evaluation of contingent losses associated with pending claims and litigation, reserves for uncertain tax positions, and fair value of reporting units. Estimates have been prepared based on the best information available as of each balance sheet date. As such, actual results could differ materially from those estimates.
SEASONALITY OF BUSINESS – Our operating revenues are seasonal in nature with peak revenues typically occurring in the months of February through April. Therefore, results for interim periods are not indicative of results to be expected for the full year.
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.
The consolidated balance sheets as of December 31, 2025 and June 30, 2025, the consolidated statements of operations and comprehensive loss for the three and six months ended December 31, 2025 and 2024, the consolidated statements of cash flows for the six months ended December 31, 2025 and 2024, and the consolidated statements of stockholders' equity for the three and six months ended December 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 December 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. and its subsidiaries, or to H&R Block, Inc.'s operating subsidiaries, as appropriate to the context.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been condensed or omitted. These consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our June 30, 2025 Annual Report on Form 10-K. All amounts presented herein as of June 30, 2025 or for the year then ended are derived from our Annual Report on Form 10-K.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates, assumptions and judgments are applied in the evaluation of contingent losses associated with pending claims and litigation, reserves for uncertain tax positions, and fair value of reporting units. Estimates have been prepared based on the best information available as of each balance sheet date. As such, actual results could differ materially from those estimates. 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.
NOTE 2: REVENUE RECOGNITION
The majority of our revenues are from our United States (U.S.) tax services business. The following table disaggregates our U.S. revenues by major service line, with revenues from our international tax services businesses and from Wave included as separate lines:
(in 000s)
Three months ended December 31,Six months ended December 31,
2025202420252024
Revenues:
U.S. assisted tax preparation$55,919 $48,380 $104,563 $91,343 
U.S. royalties5,108 3,499 10,957 9,351 
U.S. DIY tax preparation16,807 13,744 20,552 16,980 
Refund Transfers638 637 1,481 1,497 
Peace of Mind® Extended Service Plan16,231 16,145 39,740 39,242 
Tax Identity Shield®4,244 4,013 8,366 7,922 
Emerald Card® and SpruceSM
9,124 10,148 16,976 18,974 
Interest and fee income on Emerald Advance®13,446 12,308 13,446 12,308 
International34,718 31,811 100,379 96,666 
Wave29,785 26,561 59,635 52,964 
Other12,845 11,824 26,321 25,633 
Total revenues$198,865 $179,070 $402,416 $372,880 
Changes in the balances of deferred revenue and wages for our Peace of Mind® Extended Service Plan (POM) are as follows:
(in 000s)
POMDeferred RevenueDeferred Wages
Six months ended December 31,2025202420252024
Balance, beginning of the period$149,302 $156,610 $19,884 $20,212 
Amounts deferred3,704 3,209 8 15 
Amounts recognized on previous deferrals(45,310)(46,962)(5,789)(6,092)
Balance, end of the period$107,696 $112,857 $14,103 $14,135 
As of December 31, 2025, deferred revenue related to POM was $107.7 million. We expect that $80.2 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, 2025 and 2024, Tax Identity Shield® (TIS) deferred revenue was $14.9 million and $14.1 million, respectively. Deferred revenue related to TIS was $22.6 million and $21.4 million as of June 30, 2025 and 2024, respectively. All deferred revenue related to TIS will be recognized by April 2026.
The majority of our revenues are from our United States (U.S.) tax services business. The following table disaggregates our U.S. revenues by major service line, with revenues from our international tax services businesses and from Wave included as separate lines:
(in 000s)
Three months ended December 31,Six months ended December 31,
2025202420252024
Revenues:
U.S. assisted tax preparation$55,919 $48,380 $104,563 $91,343 
U.S. royalties5,108 3,499 10,957 9,351 
U.S. DIY tax preparation16,807 13,744 20,552 16,980 
Refund Transfers638 637 1,481 1,497 
Peace of Mind® Extended Service Plan16,231 16,145 39,740 39,242 
Tax Identity Shield®4,244 4,013 8,366 7,922 
Emerald Card® and SpruceSM
9,124 10,148 16,976 18,974 
Interest and fee income on Emerald Advance®13,446 12,308 13,446 12,308 
International34,718 31,811 100,379 96,666 
Wave29,785 26,561 59,635 52,964 
Other12,845 11,824 26,321 25,633 
Total revenues$198,865 $179,070 $402,416 $372,880 
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Changes in the balances of deferred revenue and wages for our Peace of Mind® Extended Service Plan (POM) are as follows:
(in 000s)
POMDeferred RevenueDeferred Wages
Six months ended December 31,2025202420252024
Balance, beginning of the period$149,302 $156,610 $19,884 $20,212 
Amounts deferred3,704 3,209 8 15 
Amounts recognized on previous deferrals(45,310)(46,962)(5,789)(6,092)
Balance, end of the period$107,696 $112,857 $14,103 $14,135 
149302000 156610000 19884000 20212000 3704000 3209000 8000 15000 45310000 46962000 5789000 6092000 107696000 112857000 14103000 14135000 107700000 80200000 P12M P5Y 14900000 14100000 22600000 21400000 2026
NOTE 3: EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY
EARNINGS PER SHARE – Basic and diluted earnings (loss) per share is computed using the two-class method. The two-class method is an earnings allocation formula that determines net income per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Per share amounts are computed by dividing net income (loss) from continuing operations attributable to common shareholders by the weighted average shares outstanding during each period. Diluted earnings per share excludes the impact of shares of common stock issuable upon the lapse of certain restrictions or the exercise of options to purchase 2.4 million shares for the three and six months ended December 31, 2025 and 2.7 million
shares for the three and six months ended December 31, 2024, as the effect would be antidilutive due to the net loss from continuing operations during the periods.
The computations of basic and diluted earnings (loss) per share from continuing operations are as follows:
(in 000s, except per share amounts)
Three months ended December 31,Six months ended December 31,
2025202420252024
Net loss from continuing operations attributable to shareholders$(241,566)$(242,466)$(406,934)$(413,887)
Amounts allocated to participating securities(278)(240)(540)(469)
Net loss from continuing operations attributable to common shareholders$(241,844)$(242,706)$(407,474)$(414,356)
Basic weighted average common shares126,566 135,563 128,976 137,359 
Potential dilutive shares— — — — 
Dilutive weighted average common shares126,566 135,563 128,976 137,359 
Loss per share from continuing operations attributable to common shareholders:
Basic$(1.91)$(1.79)$(3.16)$(3.02)
Diluted(1.91)(1.79)(3.16)(3.02)
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 0.9 million and 1.1 million shares, including adjustments for performance achievement and dividend equivalents, under our stock-based compensation plans during the six months ended December 31, 2025 and 2024, respectively. Stock-based compensation expense of our continuing operations totaled $7.6 million and $13.8 million for the three and six months ended December 31, 2025, respectively, and $9.2 million and $17.9 million for the three and six months ended December 31, 2024, respectively. As of December 31, 2025, unrecognized compensation cost for nonvested shares and units totaled $62.9 million. 2.4
The computations of basic and diluted earnings (loss) per share from continuing operations are as follows:
(in 000s, except per share amounts)
Three months ended December 31,Six months ended December 31,
2025202420252024
Net loss from continuing operations attributable to shareholders$(241,566)$(242,466)$(406,934)$(413,887)
Amounts allocated to participating securities(278)(240)(540)(469)
Net loss from continuing operations attributable to common shareholders$(241,844)$(242,706)$(407,474)$(414,356)
Basic weighted average common shares126,566 135,563 128,976 137,359 
Potential dilutive shares— — — — 
Dilutive weighted average common shares126,566 135,563 128,976 137,359 
Loss per share from continuing operations attributable to common shareholders:
Basic$(1.91)$(1.79)$(3.16)$(3.02)
Diluted(1.91)(1.79)(3.16)(3.02)
-241566000 -242466000 -406934000 -413887000 278000 240000 540000 469000 -241844000 -242706000 -407474000 -414356000 126566000 135563000 128976000 137359000 0 0 0 0 126566000 135563000 128976000 137359000 -1.91 -1.79 -3.16 -3.02 -1.91 -1.79 -3.16 -3.02 900000 million 7600000 9200000 62900000
NOTE 4: RECEIVABLES
Receivables, net of their related allowance, consist of the following:
(in 000s)
As ofDecember 31, 2025June 30, 2025
Short-termLong-termShort-termLong-term
Loans to franchisees$19,476 $14,773 $7,386 $16,402 
Receivables for U.S. assisted and DIY tax preparation and related fees11,157 6,696 15,896 6,361 
H&R Block's Instant Refund® receivables
442 1,097 2,243 939 
Emerald Advance®287,316 24,081 13,899 22,816 
Software receivables from retailers2,409 — 2,582 — 
Royalties and other receivables from franchisees6,658 — 4,414 — 
Wave payment processing receivables7,513 — 1,533 — 
Other17,509 633 15,668 498 
Total$352,480 $47,280 $63,621 $47,016 
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. Loans with a principal balance more than 90 days past due or on non-accrual status were $3.0 million and $3.1 million as of December 31, 2025 and June 30, 2025, 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.
We review the credit quality of our Instant Refund receivables based on pools, which are segregated by the tax return 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. In December of each year, we charge-off the receivables and the related allowance 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 tax return year of origination, as of December 31, 2025 are as follows:
(in 000s)
Tax return year of originationBalanceMore Than 60 Days Past Due
2024$978 $918 
2023 and prior561 561 
1,539 $1,479 
Allowance— 
Net balance$1,539 
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 December 31, 2025 are as follows:
(in 000s)
Fiscal year of originationBalanceNon-Accrual
2026$294,761 $— 
2025 and prior36,529 36,529 
331,290 $36,529 
Allowance(19,893)
Net balance$311,397 
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, 2025 and 2024 is as follows:
(in 000s)
EAsAll OtherTotal
Balances as of July 1, 2025$19,663 $45,156 $64,819 
Provision for credit losses19,893 1,251 21,144 
Charge-offs, recoveries and other(19,663)(44,627)(64,290)
Balances as of December 31, 2025$19,893 $1,780 $21,673 
Balances as of July 1, 2024$33,536 $45,327 $78,863 
Provision for credit losses19,109 1,618 20,727 
Charge-offs, recoveries and other(33,536)(45,552)(79,088)
Balances as of December 31, 2024$19,109 $1,393 $20,502 
For the six months ended December 31, 2025, there were $19.7 million of gross charge-offs related to EAs which were originated in fiscal year 2025.
Receivables, net of their related allowance, consist of the following:
(in 000s)
As ofDecember 31, 2025June 30, 2025
Short-termLong-termShort-termLong-term
Loans to franchisees$19,476 $14,773 $7,386 $16,402 
Receivables for U.S. assisted and DIY tax preparation and related fees11,157 6,696 15,896 6,361 
H&R Block's Instant Refund® receivables
442 1,097 2,243 939 
Emerald Advance®287,316 24,081 13,899 22,816 
Software receivables from retailers2,409 — 2,582 — 
Royalties and other receivables from franchisees6,658 — 4,414 — 
Wave payment processing receivables7,513 — 1,533 — 
Other17,509 633 15,668 498 
Total$352,480 $47,280 $63,621 $47,016 
19476000 14773000 7386000 16402000 11157000 6696000 15896000 6361000 442000 1097000 2243000 939000 287316000 24081000 13899000 22816000 2409000 0 2582000 0 6658000 0 4414000 0 7513000 0 1533000 0 17509000 633000 15668000 498000 352480000 47280000 63621000 47016000 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, 2025 are as follows:
(in 000s)
Tax return year of originationBalanceMore Than 60 Days Past Due
2024$978 $918 
2023 and prior561 561 
1,539 $1,479 
Allowance— 
Net balance$1,539 
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, 2025 are as follows:
(in 000s)
Fiscal year of originationBalanceNon-Accrual
2026$294,761 $— 
2025 and prior36,529 36,529 
331,290 $36,529 
Allowance(19,893)
Net balance$311,397 
P60D 978000 918000 561000 561000 1539000 1479000 0 1539000 P60D 294761000 0 36529000 36529000 331290000 36529000 19893000 311397000 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, 2025 and 2024 is as follows:
(in 000s)
EAsAll OtherTotal
Balances as of July 1, 2025$19,663 $45,156 $64,819 
Provision for credit losses19,893 1,251 21,144 
Charge-offs, recoveries and other(19,663)(44,627)(64,290)
Balances as of December 31, 2025$19,893 $1,780 $21,673 
Balances as of July 1, 2024$33,536 $45,327 $78,863 
Provision for credit losses19,109 1,618 20,727 
Charge-offs, recoveries and other(33,536)(45,552)(79,088)
Balances as of December 31, 2024$19,109 $1,393 $20,502 
19663000 45156000 64819000 19893000 1251000 21144000 19663000 44627000 64290000 19893000 1780000 21673000 33536000 45327000 78863000 19109000 1618000 20727000 33536000 45552000 79088000 19109000 1393000 20502000
NOTE 5: GOODWILL AND INTANGIBLE ASSETS
Changes in the carrying amount of goodwill for the six months ended December 31, 2025 are as follows:
(in 000s)
GoodwillAccumulated Impairment LossesNet
Balances as of July 1, 2025$940,350 $(138,297)$802,053 
Acquisitions(1)
15,720 — 15,720 
Disposals and foreign currency changes, net(2,155)— (2,155)
Impairments— — — 
Balances as of December 31, 2025$953,915 $(138,297)$815,618 
(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.
Components of intangible assets are as follows:
(in 000s)
Gross Carrying AmountAccumulated
Amortization		Net
As of December 31, 2025:
Reacquired franchise rights$429,290 $(250,627)$178,663 
Customer relationships372,444 (298,667)73,777 
Internally-developed software121,282 (117,768)3,514 
Noncompete agreements23,774 (20,660)3,114 
Purchased technology68,100 (58,144)9,956 
Trade name5,800 (3,770)2,030 
$1,020,690 $(749,636)$271,054 
As of June 30, 2025:
Reacquired franchise rights$415,700 $(243,330)$172,370 
Customer relationships354,107 (287,067)67,040 
Internally-developed software119,959 (117,604)2,355 
Noncompete agreements23,070 (20,188)2,882 
Purchased technology68,100 (55,655)12,445 
Trade name5,800 (3,480)2,320 
$986,736 $(727,324)$259,412 
We made payments to acquire businesses totaling $35.4 million and $28.0 million during the six months ended December 31, 2025 and 2024, respectively. The amounts and weighted-average lives of intangible assets acquired during the six months ended December 31, 2025, including amounts capitalized related to internally-developed software, are as follows:
(dollars in 000s)
AmountWeighted-Average Life (in years)
Customer relationships$18,426 5
Reacquired franchise rights13,669 6
Internally-developed software1,348 3
Noncompete agreements712 5
Total$34,155 5
Amortization of intangible assets for the three and six months ended December 31, 2025 was $11.3 million and $22.4 million respectively, compared to $12.1 million and $25.0 million for the three and six months ended December 31, 2024. Estimated amortization of intangible assets for fiscal years ending June 30, 2026, 2027, 2028, 2029, and 2030 is $47.3 million, $45.0 million, $36.6 million, $27.7 million and $17.8 million, respectively.
Changes in the carrying amount of goodwill for the six months ended December 31, 2025 are as follows:
(in 000s)
GoodwillAccumulated Impairment LossesNet
Balances as of July 1, 2025$940,350 $(138,297)$802,053 
Acquisitions(1)
15,720 — 15,720 
Disposals and foreign currency changes, net(2,155)— (2,155)
Impairments— — — 
Balances as of December 31, 2025$953,915 $(138,297)$815,618 
(1)    All goodwill added during the period is expected to be tax-deductible for federal income tax reporting.
940350000 138297000 802053000 15720000 15720000 2155000 2155000 0 0 953915000 138297000 815618000
Components of intangible assets are as follows:
(in 000s)
Gross Carrying AmountAccumulated
Amortization		Net
As of December 31, 2025:
Reacquired franchise rights$429,290 $(250,627)$178,663 
Customer relationships372,444 (298,667)73,777 
Internally-developed software121,282 (117,768)3,514 
Noncompete agreements23,774 (20,660)3,114 
Purchased technology68,100 (58,144)9,956 
Trade name5,800 (3,770)2,030 
$1,020,690 $(749,636)$271,054 
As of June 30, 2025:
Reacquired franchise rights$415,700 $(243,330)$172,370 
Customer relationships354,107 (287,067)67,040 
Internally-developed software119,959 (117,604)2,355 
Noncompete agreements23,070 (20,188)2,882 
Purchased technology68,100 (55,655)12,445 
Trade name5,800 (3,480)2,320 
$986,736 $(727,324)$259,412 
429290000 250627000 178663000 372444000 298667000 73777000 121282000 117768000 3514000 23774000 20660000 3114000 68100000 58144000 9956000 5800000 3770000 2030000 1020690000 749636000 271054000 415700000 243330000 172370000 354107000 287067000 67040000 119959000 117604000 2355000 23070000 20188000 2882000 68100000 55655000 12445000 5800000 3480000 2320000 986736000 727324000 259412000 35400000 28000000.0 The amounts and weighted-average lives of intangible assets acquired during the six months ended December 31, 2025, including amounts capitalized related to internally-developed software, are as follows:
(dollars in 000s)
AmountWeighted-Average Life (in years)
Customer relationships$18,426 5
Reacquired franchise rights13,669 6
Internally-developed software1,348 3
Noncompete agreements712 5
Total$34,155 5
18426000 P5Y 13669000 P6Y 1348000 P3Y 712000 P5Y 34155000 P5Y 11300000 12100000 47300000 45000000.0 36600000 27700000 17800000
NOTE 6: LONG-TERM DEBT
The components of long-term debt are as follows:
(in 000s)
As ofDecember 31, 2025June 30, 2025
Senior Notes, 5.250%, due October 2025
$— $350,000 
Senior Notes, 2.500%, due July 2028
500,000 500,000 
Senior Notes, 3.875%, due August 2030
650,000 650,000 
Senior Notes, 5.375%, due September 2032
350,000 — 
Committed line of credit borrowings945,000 — 
Debt issuance costs and discounts(9,621)(6,802)
Total long-term debt2,435,379 1,493,198 
Less: Current portion— (349,893)
Long-term portion$2,435,379 $1,143,305 
Estimated fair value of long-term debt$2,401,000 $1,437,000 
On August 26, 2025, we issued $350.0 million of 5.375% Senior Notes due September 15, 2032 (2032 Senior Notes). The 2032 Senior Notes are not redeemable by the bondholders prior to maturity, although we have the right to redeem some or all of these notes at any time, at specified redemption prices. The net proceeds from the 2032 Senior Notes were used for general corporate purposes, which includes, among other uses, the redemption of the $350.0 million in principal outstanding of our 5.250% notes due October 2025 (2025 Senior Notes). We redeemed our 2025 Senior Notes at 100% of the principal amount, plus accrued and unpaid interest, on September 19, 2025.
UNSECURED COMMITTED LINE OF CREDIT – On July 11, 2025, we entered into a Fifth Amended and Restated Credit and Guarantee Agreement (2025 CLOC), which amended and restated our Fourth Amended and Restated Credit and Guarantee Agreement, extended the scheduled maturity date to July 11, 2030, maintained the aggregate principal amount of $1.5 billion, and revised the interest rate table. All other material terms remain substantially unchanged from our previous CLOC.
The 2025 CLOC provides for an unsecured senior revolving credit facility in the aggregate principal amount of $1.5 billion, which includes a $175.0 million sublimit for swingline loans and a $50.0 million sublimit for standby letters of credit. We may request increases in the aggregate principal amount of the revolving credit facility of up to $500.0 million, subject to obtaining commitments from lenders and meeting certain other conditions. The 2025 CLOC will mature on July 11, 2030, unless extended pursuant to the terms of the 2025 CLOC, at which time all outstanding amounts thereunder will be due and payable. Our 2025 CLOC includes an annual facility fee, which will vary depending on our then current credit ratings.
The 2025 CLOC is subject to various conditions, triggers, events or occurrences that could result in earlier termination and contains customary representations, warranties, covenants and events of default, including, without limitation: (1) a covenant requiring the Company to maintain a debt-to-EBITDA ratio, as defined by the 2025 CLOC agreement, calculated on a consolidated basis of no greater than (a) 3.50 to 1.00 as of the last day of each fiscal quarter ending on March 31, June 30, and September 30 of each year and (b) 4.50 to 1.00 as of the last day of each fiscal quarter ending on December 31 of each year; (2) a covenant requiring us to maintain an interest coverage ratio (EBITDA-to-interest expense) calculated on a consolidated basis of not less than 2.50 to 1.00 as of the last date of any fiscal quarter; and (3) covenants restricting our ability to incur certain additional debt, incur liens, merge or consolidate with other companies, sell or dispose of assets (including equity interests), liquidate or dissolve, engage in certain transactions with affiliates or enter into certain restrictive agreements. The 2025 CLOC includes provisions for an equity cure which could potentially allow us to independently cure certain defaults. Proceeds under the 2025 CLOC may be used for working capital needs or for other general corporate purposes. We were in compliance with these requirements as of December 31, 2025.
We had an outstanding balance of $945.0 million under our 2025 CLOC and amounts available to borrow were not limited by the debt-to-EBITDA covenant as of December 31, 2025.
The components of long-term debt are as follows:
(in 000s)
As ofDecember 31, 2025June 30, 2025
Senior Notes, 5.250%, due October 2025
$— $350,000 
Senior Notes, 2.500%, due July 2028
500,000 500,000 
Senior Notes, 3.875%, due August 2030
650,000 650,000 
Senior Notes, 5.375%, due September 2032
350,000 — 
Committed line of credit borrowings945,000 — 
Debt issuance costs and discounts(9,621)(6,802)
Total long-term debt2,435,379 1,493,198 
Less: Current portion— (349,893)
Long-term portion$2,435,379 $1,143,305 
Estimated fair value of long-term debt$2,401,000 $1,437,000 
0.05250 0 350000000 0.02500 500000000 500000000 0.03875 650000000 650000000 945000000 0 9621000 6802000 2435379000 1493198000 349893000 2435379000 1143305000 2401000000 1437000000 350 350 1500000000 175000000.0 50000000.0 500000000.0 3.50 4.50 2.50 945000000.0
NOTE 7: INCOME TAXES
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.
On July 4, 2025, H.R. 1 was signed into law. The legislation did not have a material impact on our tax benefit for the six months ended December 31, 2025, and we do not expect it to materially change our effective income tax rate for the fiscal year ending June 30, 2026.
Our effective tax rate for continuing operations, including the effects of discrete tax items, was 24.0% for both the six months ended December 31, 2025 and 2024.
Consistent with prior years, our pretax loss for the six months ended December 31, 2025 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, 2025 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.
NOTE 8: COMMITMENTS AND CONTINGENCIES
Our U.S. and Canadian businesses offer our 100% accuracy guarantee. 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 return. Similarly, DIY tax returns are covered by our 100% accuracy guarantee, whereby we will reimburse a client (up to a maximum of $10,000 in the U.S.) 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 $10.9 million and $11.4 million as of December 31, 2025 and June 30, 2025, 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 $36.9 million and $29.6 million as of December 31, 2025 and June 30, 2025 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 $21.9 million at December 31, 2025, and net of amounts drawn and outstanding, our remaining commitment to fund totaled $5.9 million.
Emerald Advance® term loans are originated by Pathward® N.A. (Pathward). We purchase participation interests, at par, in all EAs originated by Pathward in accordance with our participation agreement. Our participation interest varies by jurisdiction. At December 31, 2025, the principal balance of purchased participation interests for the current year totaled $281.1 million, which represents 87% of total EA volume originated by Pathward.
10000 10900000 11400000 36900000 29600000 21900000 5900000
NOTE 9: LITIGATION AND OTHER RELATED CONTINGENCIES
We are a defendant in numerous litigation and arbitration matters, arising both in the ordinary course of business and otherwise, including as described below. 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. U.S. jurisdictions permit considerable variation in the assertion of monetary 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. In addition, jurisdictions may permit plaintiffs to allege monetary damages in amounts well exceeding reasonably possible verdicts in the jurisdiction for similar matters. We believe that the monetary relief which may be specified in a lawsuit or claim bears little relevance to its merits or disposition value due to this variability in pleadings and our experience in handling and resolving numerous claims over an extended period of time.
The outcome of a matter and the amount or range of potential loss at particular points in time may be difficult to ascertain. Among other things, uncertainties can include how fact finders will evaluate documentary evidence and the credibility and effectiveness of witness testimony, and how courts and arbitrators will apply the law. Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will view the relevant evidence and applicable law.
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.
We accrue liabilities for litigation, arbitration and other related loss contingencies and any related settlements when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. If a range of loss is estimated, and some amount within that range appears to be a better estimate than any other amount within that range, then that amount is accrued. If no amount within the range can be identified as a better estimate than any other amount, we accrue the minimum amount in the range.
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, 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 $10.0 million and $6.2 million as of December 31, 2025 and June 30, 2025, 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. This aggregate range only represents those losses as to which we are currently able to estimate a reasonably possible loss or range of loss. It does not represent our maximum loss exposure.
Matters for which we are not currently able to estimate the reasonably possible loss or range of loss are not included in this range. We are often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the reasonably possible loss or range of loss, such as precise information about the amount of damages or other remedies being asserted, the defenses to the claims being asserted, discovery from other parties and investigation of factual allegations, rulings by courts or arbitrators on motions or appeals, analyses by experts, or the status or terms of any settlement negotiations.
The estimated range of reasonably possible loss is based upon currently available information and is subject to significant judgment and a variety of assumptions, as well as known and unknown uncertainties. 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, 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. Costs incurred with defending matters are expensed as incurred. Any receivable for insurance recoveries is recorded separately from the corresponding liability, and only if recovery is determined to be probable and reasonably estimable.
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. The amounts claimed in the matters are substantial, however, and there
can be no assurances as to their outcomes. In the event of unfavorable outcomes, it could require modifications to our operations; 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.
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. An accrual related to these matters is included in our loss contingency accrual.
We are from time to time a party to litigation, arbitration and other loss contingencies not discussed herein arising out of our business operations. These matters may include actions by state attorneys general, other state regulators, federal regulators, individual plaintiffs, and cases in which plaintiffs seek to represent others who may be similarly situated.
While we cannot provide assurance that we will ultimately prevail in each instance, we believe the amount, if any, we are required to pay to discharge or settle these other matters will not have a material adverse impact on our business and our consolidated financial position, results of operations, and cash flows.
10 6200000
NOTE 10: SEGMENT INFORMATION
We provide assisted and DIY tax 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. Tax returns are prepared by H&R Block tax professionals in one of our company-owned or franchise offices, virtually or via an online review, or they are 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. The majority of our revenues are from our U.S. tax services business.
The Company's Chief Operating Decision Maker (CODM) is our chief executive officer, who regularly reviews consolidated financial information to evaluate financial performance and allocate resources. Specifically, the CODM uses revenues, operating expenses, net income and EBITDA at a consolidated level, as key financial metrics in deciding how to reinvest to grow the business. These financial metrics are used by the CODM to make operating decisions and identify growth opportunities. The measure of segment assets is total consolidated assets as presented on the consolidated balance sheet.
The following table presents the significant revenue and expense categories included in the segment's net income from continuing operations as regularly provided to the CODM on a consolidated basis and then reconciled to net income for the three and six months ended December 31, 2025 and 2024.
Consolidated – Financial Results(in 000s, except per share amounts)
Three months ended December 31,Six months ended December 31,
2025202420252024
Revenues:
U.S. tax preparation and related services:
Assisted tax preparation$55,919 $48,380 $104,563 $91,343 
Royalties5,108 3,499 10,957 9,351 
DIY tax preparation16,807 13,744 20,552 16,980 
Refund Transfers638 637 1,481 1,497 
Peace of Mind® Extended Service Plan16,231 16,145 39,740 39,242 
Tax Identity Shield®4,244 4,013 8,366 7,922 
Emerald Card® and SpruceSM
9,124 10,148 16,976 18,974 
Interest and fee income on Emerald Advance®13,446 12,308 13,446 12,308 
International34,718 31,811 100,379 96,666 
Wave29,785 26,561 59,635 52,964 
Other12,845 11,824 26,321 25,633 
Total revenues$198,865 $179,070 $402,416 $372,880 
Compensation and benefits:
Field wages94,177 81,565 163,892 149,659 
Other wages73,005 78,731 152,284 156,066 
Benefits and other compensation39,989 38,402 76,651 77,156 
207,171 198,698 392,827 382,881 
Occupancy109,592 104,999 212,388 206,317 
Marketing and advertising14,995 14,863 23,337 24,835 
Depreciation and amortization30,001 29,195 58,923 58,026 
Bad debt21,816 19,416 24,021 22,146 
Other114,169 105,190 196,830 200,297 
Total operating expenses497,744 472,361 908,326 894,502 
Other income (expense), net3,034 2,744 11,136 14,661 
Interest expense on borrowings(23,378)(21,752)(40,780)(37,599)
Loss from continuing operations before income taxes(319,223)(312,299)(535,554)(544,560)
Income tax benefit(77,657)(69,833)(128,620)(130,673)
Segment net loss from continuing operations(241,566)(242,466)(406,934)(413,887)
Reconciliation of segment profit:
Reconciling items:
Net loss from discontinued operations(600)(954)(1,051)(2,109)
Net loss$(242,166)$(243,420)$(407,985)$(415,996)
The following table presents the significant revenue and expense categories included in the segment's net income from continuing operations as regularly provided to the CODM on a consolidated basis and then reconciled to net income for the three and six months ended December 31, 2025 and 2024.
Consolidated – Financial Results(in 000s, except per share amounts)
Three months ended December 31,Six months ended December 31,
2025202420252024
Revenues:
U.S. tax preparation and related services:
Assisted tax preparation$55,919 $48,380 $104,563 $91,343 
Royalties5,108 3,499 10,957 9,351 
DIY tax preparation16,807 13,744 20,552 16,980 
Refund Transfers638 637 1,481 1,497 
Peace of Mind® Extended Service Plan16,231 16,145 39,740 39,242 
Tax Identity Shield®4,244 4,013 8,366 7,922 
Emerald Card® and SpruceSM
9,124 10,148 16,976 18,974 
Interest and fee income on Emerald Advance®13,446 12,308 13,446 12,308 
International34,718 31,811 100,379 96,666 
Wave29,785 26,561 59,635 52,964 
Other12,845 11,824 26,321 25,633 
Total revenues$198,865 $179,070 $402,416 $372,880 
Compensation and benefits:
Field wages94,177 81,565 163,892 149,659 
Other wages73,005 78,731 152,284 156,066 
Benefits and other compensation39,989 38,402 76,651 77,156 
207,171 198,698 392,827 382,881 
Occupancy109,592 104,999 212,388 206,317 
Marketing and advertising14,995 14,863 23,337 24,835 
Depreciation and amortization30,001 29,195 58,923 58,026 
Bad debt21,816 19,416 24,021 22,146 
Other114,169 105,190 196,830 200,297 
Total operating expenses497,744 472,361 908,326 894,502 
Other income (expense), net3,034 2,744 11,136 14,661 
Interest expense on borrowings(23,378)(21,752)(40,780)(37,599)
Loss from continuing operations before income taxes(319,223)(312,299)(535,554)(544,560)
Income tax benefit(77,657)(69,833)(128,620)(130,673)
Segment net loss from continuing operations(241,566)(242,466)(406,934)(413,887)
Reconciliation of segment profit:
Reconciling items:
Net loss from discontinued operations(600)(954)(1,051)(2,109)
Net loss$(242,166)$(243,420)$(407,985)$(415,996)
55919000 48380000 104563000 91343000 5108000 3499000 10957000 9351000 16807000 13744000 20552000 16980000 638000 637000 1481000 1497000 16231000 16145000 39740000 39242000 4244000 4013000 8366000 7922000 9124000 10148000 16976000 18974000 13446000 12308000 13446000 12308000 34718000 31811000 100379000 96666000 29785000 26561000 59635000 52964000 12845000 11824000 26321000 25633000 198865000 179070000 402416000 372880000 94177000 81565000 163892000 149659000 73005000 78731000 152284000 156066000 39989000 38402000 76651000 77156000 207171000 198698000 392827000 382881000 109592000 104999000 212388000 206317000 14995000 14863000 23337000 24835000 30001000 29195000 58923000 58026000 21816000 19416000 24021000 22146000 114169000 105190000 196830000 200297000 497744000 472361000 908326000 894502000 3034000 2744000 11136000 14661000 23378000 21752000 40780000 37599000 -319223000 -312299000 -535554000 -544560000 -77657000 -69833000 -128620000 -130673000 -241566000 -242466000 -406934000 -413887000 -600000 -954000 -1051000 -2109000 -242166000 -243420000 -407985000 -415996000 false false The balance of our accumulated other comprehensive loss consists of foreign currency translation adjustments. Represents shares swapped or surrendered to us in connection with the vesting or exercise of stock-based awards.