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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION – The consolidated balance sheets as of December 31, 2024 and June 30, 2024, the consolidated statements of operations and comprehensive loss for the three and six months ended December 31, 2024 and 2023, the consolidated statements of cash flows for the six months ended December 31, 2024 and 2023, and the consolidated statements of stockholders' equity for the three and six months ended December 31, 2024 and 2023 have been prepared by the Company, without audit. In the opinion of management, all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position, results of operations, and cash flows as of December 31, 2024 and 2023 and for all periods presented, have been made.
"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, 2024 Annual Report on Form 10-K. All amounts presented herein as of June 30, 2024 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, 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. 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, 2024 Annual Report on Form 10-K. All amounts presented herein as of June 30, 2024 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,
2024202320242023
Revenues:
U.S. assisted tax preparation$48,380 $48,342 $91,343 $87,605 
U.S. royalties3,499 5,454 9,351 11,155 
U.S. DIY tax preparation13,744 13,111 16,980 16,959 
Refund Transfers637 813 1,497 1,955 
Peace of Mind® Extended Service Plan16,145 17,440 39,242 42,287 
Tax Identity Shield®4,013 4,694 7,922 9,274 
Emerald Card® and SpruceSM
10,148 11,700 18,974 20,333 
Interest and fee income on Emerald Advance®12,308 15,235 12,308 15,533 
International31,811 29,569 96,666 90,134 
Wave26,561 23,133 52,964 47,076 
Other11,824 9,592 25,633 20,572 
Total revenues$179,070 $179,083 $372,880 $362,883 
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 31,2024202320242023
Balance, beginning of the period$156,610 $167,257 $20,212 $21,828 
Amounts deferred3,209 3,601 15 8 
Amounts recognized on previous deferrals(46,962)(48,995)(6,092)(5,590)
Balance, end of the period$112,857 $121,863 $14,135 $16,246 
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 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. All deferred revenue related to TIS will be recognized by April 2025.
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,
2024202320242023
Revenues:
U.S. assisted tax preparation$48,380 $48,342 $91,343 $87,605 
U.S. royalties3,499 5,454 9,351 11,155 
U.S. DIY tax preparation13,744 13,111 16,980 16,959 
Refund Transfers637 813 1,497 1,955 
Peace of Mind® Extended Service Plan16,145 17,440 39,242 42,287 
Tax Identity Shield®4,013 4,694 7,922 9,274 
Emerald Card® and SpruceSM
10,148 11,700 18,974 20,333 
Interest and fee income on Emerald Advance®12,308 15,235 12,308 15,533 
International31,811 29,569 96,666 90,134 
Wave26,561 23,133 52,964 47,076 
Other11,824 9,592 25,633 20,572 
Total revenues$179,070 $179,083 $372,880 $362,883 
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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 31,2024202320242023
Balance, beginning of the period$156,610 $167,257 $20,212 $21,828 
Amounts deferred3,209 3,601 15 8 
Amounts recognized on previous deferrals(46,962)(48,995)(6,092)(5,590)
Balance, end of the period$112,857 $121,863 $14,135 $16,246 
156610000 167257000 20212000 21828000 3209000 3601000 15000 8000 46962000 48995000 6092000 5590000 112857000 121863000 14135000 16246000 112900000 83000000.0 P12M P5Y 14100000 16500000 21400000 25200000 2025
NOTE 3: EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY
EARNINGS PER SHARE – Basic and diluted earnings (loss) per share is computed using the two-class method. The two-class method is an earnings allocation formula that determines net income per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Per share amounts are computed by dividing net income (loss) from continuing operations attributable to common shareholders by the weighted average shares outstanding during each period. Diluted earnings per share excludes the impact of shares of common stock issuable upon the lapse of certain restrictions or the exercise of options to purchase 2.7 million shares for the three and six months ended December 31, 2024 and 3.2 million
shares for the three and six months ended December 31, 2023, as the effect would be antidilutive due to the net loss from continuing operations during the periods.
The computations of basic and diluted earnings (loss) per share from continuing operations are as follows:
(in 000s, except per share amounts)
Three months ended December 31,Six months ended December 31,
2024202320242023
Net loss from continuing operations attributable to shareholders$(242,466)$(189,116)$(413,887)$(351,989)
Amounts allocated to participating securities(240)(192)(469)(369)
Net loss from continuing operations attributable to common shareholders$(242,706)$(189,308)$(414,356)$(352,358)
Basic weighted average common shares135,563 142,340 137,359 144,307 
Potential dilutive shares— — — — 
Dilutive weighted average common shares135,563 142,340 137,359 144,307 
Loss per share from continuing operations attributable to common shareholders:
Basic$(1.79)$(1.33)$(3.02)$(2.44)
Diluted(1.79)(1.33)(3.02)(2.44)
The decrease in the weighted average shares outstanding is due to share repurchases completed in the current and prior fiscal years.
STOCK-BASED COMPENSATION – We granted 1.1 million and 1.7 million shares, including adjustments for performance achievement and dividend equivalents, under our stock-based compensation plans during the six months ended December 31, 2024 and 2023, respectively. Stock-based compensation expense of our continuing operations totaled $9.2 million and $17.9 million for the three and six months ended December 31, 2024, respectively, and $9.9 million and $17.5 million for the three and six months ended December 31, 2023, respectively. As of December 31, 2024, unrecognized compensation cost for nonvested shares and units totaled $59.5 million. 2700000 3200000
The computations of basic and diluted earnings (loss) per share from continuing operations are as follows:
(in 000s, except per share amounts)
Three months ended December 31,Six months ended December 31,
2024202320242023
Net loss from continuing operations attributable to shareholders$(242,466)$(189,116)$(413,887)$(351,989)
Amounts allocated to participating securities(240)(192)(469)(369)
Net loss from continuing operations attributable to common shareholders$(242,706)$(189,308)$(414,356)$(352,358)
Basic weighted average common shares135,563 142,340 137,359 144,307 
Potential dilutive shares— — — — 
Dilutive weighted average common shares135,563 142,340 137,359 144,307 
Loss per share from continuing operations attributable to common shareholders:
Basic$(1.79)$(1.33)$(3.02)$(2.44)
Diluted(1.79)(1.33)(3.02)(2.44)
-242466000 -189116000 -413887000 -351989000 240000 192000 469000 369000 -242706000 -189308000 -414356000 -352358000 135563000 142340000 137359000 144307000 0 0 0 0 135563000 142340000 137359000 144307000 -1.79 -1.33 -3.02 -2.44 -1.79 -1.33 -3.02 -2.44 1100000 1700000 9200000 17900000 9900000 17500000 59500000
NOTE 4: RECEIVABLES
Receivables, net of their related allowance, consist of the following:
(in 000s)
As ofDecember 31, 2024June 30, 2024
Short-termLong-termShort-termLong-term
Loans to franchisees$19,764 $20,861 $5,917 $16,498 
Receivables for U.S. assisted and DIY tax preparation and related fees9,823 5,440 18,440 5,332 
H&R Block's Instant Refund® receivables
1,375 184 2,947 207 
Emerald Advance®266,110 23,643 17,867 21,360 
Software receivables from retailers2,073 — 1,029 — 
Royalties and other receivables from franchisees6,955 — 5,808 — 
Wave payment processing receivables693 — 1,078 — 
Other14,378 659 15,989 427 
Total$321,171 $50,787 $69,075 $43,824 
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 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.
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, 2024 are as follows:
(in 000s)
Tax return year of originationBalanceMore Than 60 Days Past Due
2023$375 $316 
2022 and prior1,184 1,184 
1,559 $1,500 
Allowance— 
Net balance$1,559 
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, 2024 are as follows:
(in 000s)
Fiscal year of originationBalanceNon-Accrual
2025$270,393 $— 
2024 and prior38,469 38,469 
308,862 $38,469 
Allowance(19,109)
Net balance$289,753 
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:
(in 000s)
EAsAll OtherTotal
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 
Balances as of July 1, 2023$27,386 $35,108 $62,494 
Provision for credit losses17,885 3,651 21,536 
Charge-offs, recoveries and other(27,714)(37,613)(65,327)
Balances as of December 31, 2023$17,557 $1,146 $18,703 
Receivables, net of their related allowance, consist of the following:
(in 000s)
As ofDecember 31, 2024June 30, 2024
Short-termLong-termShort-termLong-term
Loans to franchisees$19,764 $20,861 $5,917 $16,498 
Receivables for U.S. assisted and DIY tax preparation and related fees9,823 5,440 18,440 5,332 
H&R Block's Instant Refund® receivables
1,375 184 2,947 207 
Emerald Advance®266,110 23,643 17,867 21,360 
Software receivables from retailers2,073 — 1,029 — 
Royalties and other receivables from franchisees6,955 — 5,808 — 
Wave payment processing receivables693 — 1,078 — 
Other14,378 659 15,989 427 
Total$321,171 $50,787 $69,075 $43,824 
19764000 20861000 5917000 16498000 9823000 5440000 18440000 5332000 1375000 184000 2947000 207000 266110000 23643000 17867000 21360000 2073000 0 1029000 0 6955000 0 5808000 0 693000 0 1078000 0 14378000 659000 15989000 427000 321171000 50787000 69075000 43824000 2200000 1100000 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 follows:
(in 000s)
Tax return year of originationBalanceMore Than 60 Days Past Due
2023$375 $316 
2022 and prior1,184 1,184 
1,559 $1,500 
Allowance— 
Net balance$1,559 
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:
(in 000s)
Fiscal year of originationBalanceNon-Accrual
2025$270,393 $— 
2024 and prior38,469 38,469 
308,862 $38,469 
Allowance(19,109)
Net balance$289,753 
P60D 375000 316000 1184000 1184000 1559000 1500000 0 1559000 P60D 270393000 0 38469000 38469000 308862000 38469000 19109000 289753000 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:
(in 000s)
EAsAll OtherTotal
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 
Balances as of July 1, 2023$27,386 $35,108 $62,494 
Provision for credit losses17,885 3,651 21,536 
Charge-offs, recoveries and other(27,714)(37,613)(65,327)
Balances as of December 31, 2023$17,557 $1,146 $18,703 
33536000 45327000 78863000 19109000 1618000 20727000 33536000 45552000 79088000 19109000 1393000 20502000 27386000 35108000 62494000 17885000 3651000 21536000 27714000 37613000 65327000 17557000 1146000 18703000 33500000
NOTE 5: GOODWILL AND INTANGIBLE ASSETS
Changes in the carrying amount of goodwill for the six months ended December 31, 2024 are as follows:
(in 000s)
GoodwillAccumulated Impairment LossesNet
Balances as of July 1, 2024$923,523 $(138,297)$785,226 
Acquisitions(1)
12,761 — 12,761 
Disposals and foreign currency changes, net(14,701)— (14,701)
Impairments— — — 
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.
Components of intangible assets are as follows:
(in 000s)
Gross Carrying AmountAccumulated
Amortization		Net
As of December 31, 2024:
Reacquired franchise rights$413,752 $(235,650)$178,102 
Customer relationships350,700 (280,481)70,219 
Internally-developed software123,495 (122,332)1,163 
Noncompete agreements22,807 (19,857)2,950 
Purchased technology70,100 (54,543)15,557 
Trade name5,800 (3,190)2,610 
$986,654 $(716,053)$270,601 
As of June 30, 2024:
Reacquired franchise rights$403,955 $(228,157)$175,798 
Customer relationships331,435 (270,245)61,190 
Internally-developed software122,673 (119,610)3,063 
Noncompete agreements21,977 (19,494)2,483 
Purchased technology70,100 (51,432)18,668 
Trade name5,800 (2,900)2,900 
$955,940 $(691,838)$264,102 
We made payments to acquire businesses totaling $28.0 million and $27.2 million during the six months ended December 31, 2024 and 2023, respectively. The amounts and weighted-average lives of intangible assets acquired during the six months ended December 31, 2024, including amounts capitalized related to internally-developed software, are as follows:
(dollars in 000s)
AmountWeighted-Average Life (in years)
Customer relationships$19,705 5
Reacquired franchise rights9,983 6
Internally-developed software1,027 3
Noncompete agreements871 5
Total$31,586 5
Amortization of intangible assets for the three and six months ended December 31, 2024 was $12.1 million and $25.0 million, respectively, compared to $15.4 million and $31.2 million for the three and six months ended December 31, 2023. 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.
Changes in the carrying amount of goodwill for the six months ended December 31, 2024 are as follows:
(in 000s)
GoodwillAccumulated Impairment LossesNet
Balances as of July 1, 2024$923,523 $(138,297)$785,226 
Acquisitions(1)
12,761 — 12,761 
Disposals and foreign currency changes, net(14,701)— (14,701)
Impairments— — — 
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.
923523000 138297000 785226000 12761000 12761000 14701000 14701000 0 0 921583000 138297000 783286000
Components of intangible assets are as follows:
(in 000s)
Gross Carrying AmountAccumulated
Amortization		Net
As of December 31, 2024:
Reacquired franchise rights$413,752 $(235,650)$178,102 
Customer relationships350,700 (280,481)70,219 
Internally-developed software123,495 (122,332)1,163 
Noncompete agreements22,807 (19,857)2,950 
Purchased technology70,100 (54,543)15,557 
Trade name5,800 (3,190)2,610 
$986,654 $(716,053)$270,601 
As of June 30, 2024:
Reacquired franchise rights$403,955 $(228,157)$175,798 
Customer relationships331,435 (270,245)61,190 
Internally-developed software122,673 (119,610)3,063 
Noncompete agreements21,977 (19,494)2,483 
Purchased technology70,100 (51,432)18,668 
Trade name5,800 (2,900)2,900 
$955,940 $(691,838)$264,102 
413752000 235650000 178102000 350700000 280481000 70219000 123495000 122332000 1163000 22807000 19857000 2950000 70100000 54543000 15557000 5800000 3190000 2610000 986654000 716053000 270601000 403955000 228157000 175798000 331435000 270245000 61190000 122673000 119610000 3063000 21977000 19494000 2483000 70100000 51432000 18668000 5800000 2900000 2900000 955940000 691838000 264102000 28000000.0 27200000 The amounts and weighted-average lives of intangible assets acquired during the six months ended December 31, 2024, including amounts capitalized related to internally-developed software, are as follows:
(dollars in 000s)
AmountWeighted-Average Life (in years)
Customer relationships$19,705 5
Reacquired franchise rights9,983 6
Internally-developed software1,027 3
Noncompete agreements871 5
Total$31,586 5
19705000 P5Y 9983000 P6Y 1027000 P3Y 871000 P5Y 31586000 P5Y 12100000 25000000.0 15400000 31200000 47000000.0 39900000 33100000 24900000 16500000
NOTE 6: LONG-TERM DEBT
The components of long-term debt are as follows:
(in 000s)
As ofDecember 31, 2024June 30, 2024
Senior Notes, 5.250%, due October 2025
$350,000 $350,000 
Senior Notes, 2.500%, due July 2028
500,000 500,000 
Senior Notes, 3.875%, due August 2030
650,000 650,000 
Committed line of credit borrowings790,000 — 
Debt issuance costs and discounts(7,844)(8,905)
Total long-term debt2,282,156 1,491,095 
Less: Current portion(349,611)— 
Long-term portion$1,932,545 $1,491,095 
Estimated fair value of long-term debt$2,193,000 $1,391,000 
Our unsecured committed line of credit (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 CLOC will mature on June 11, 2026, unless extended pursuant to the terms of the CLOC, at which time all outstanding amounts thereunder will be due and payable. Our CLOC includes an annual facility fee, which will vary depending on our then current credit ratings.
The 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 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 CLOC includes provisions for an equity cure which could potentially allow us to independently cure certain defaults. Proceeds under the 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, 2024.
We had an outstanding 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.
The components of long-term debt are as follows:
(in 000s)
As ofDecember 31, 2024June 30, 2024
Senior Notes, 5.250%, due October 2025
$350,000 $350,000 
Senior Notes, 2.500%, due July 2028
500,000 500,000 
Senior Notes, 3.875%, due August 2030
650,000 650,000 
Committed line of credit borrowings790,000 — 
Debt issuance costs and discounts(7,844)(8,905)
Total long-term debt2,282,156 1,491,095 
Less: Current portion(349,611)— 
Long-term portion$1,932,545 $1,491,095 
Estimated fair value of long-term debt$2,193,000 $1,391,000 
0.05250 350000000 350000000 0.02500 500000000 500000000 0.03875 650000000 650000000 790000000 0 7844000 8905000 2282156000 1491095000 349611000 0 1932545000 1491095000 2193000000 1391000000 1500000000 175000000.0 50000000.0 500000000.0 3.50 4.50 2.50 790000000.0
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.
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. The anticipated decrease is due to the expiration of statutes of limitations, anticipated closure of various tax matters currently under examination, and settlements with tax authorities. 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 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.
244100000 251800000 7700000 148400000 0.240 0.289 0.003 0.054 1500000 26600000
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. DIY tax returns are covered by our 100% accuracy guarantee, whereby we will reimburse a client up to a maximum of $10,000 if our software makes an arithmetic error that results in payment of penalties and/or interest to the respective taxing authority that a client would otherwise not have been required to pay. Our liability related to estimated losses under the 100% accuracy guarantee was $9.7 million and $14.1 million as of December 31, 2024 and June 30, 2024, respectively. The short-term and long-term portions of this liability are included in deferred revenue and other liabilities in the consolidated balance sheets.
Liabilities related to acquisitions for (1) estimated contingent consideration based on expected financial performance of the acquired business and economic conditions at the time of acquisition and (2) estimated accrued compensation related to continued employment of key employees were $38.3 million and $26.9 million as of December 31, 2024 and June 30, 2024 respectively, with amounts recorded in deferred revenue and other liabilities. Should actual results differ from our estimates, future payments made will differ from the above estimate and any differences will be recorded in results from continuing operations.
We have contractual commitments to fund certain franchises with approved short-term lines of credit for the purpose of meeting their seasonal working capital needs. Our total obligation under these lines of credit was $20.9 million at December 31, 2024, and net of amounts drawn and outstanding, our remaining commitment to fund totaled $5.8 million.
10000 9700000 14100000 38300000 26900000 20900000 5800000 22900000 80000000 257900000
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, 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 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. 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, 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. 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. Related to one of these matters, on February 23, 2024, the Federal Trade Commission (FTC) filed an administrative complaint before the FTC alleging unfair or deceptive business acts or practices in connection with certain aspects of our DIY tax preparation services. A hearing before an administrative law judge (ALJ) of the FTC was scheduled to begin on October 23, 2024. We filed a complaint in federal court in the Western District of Missouri challenging the constitutionality of the ALJ’s removal protections and seeking to enjoin the ALJ’s participation in the adjudication of the matter. The federal court denied our motion for a preliminary injunction on August 1, 2024. We filed an appeal with the Eighth Circuit Court of Appeals. On October 21, 2024, we entered into a Consent Agreement to resolve the allegations of the complaint through a Decision and Order, which became final and effective on January 8, 2025. The complaint filed in the Missouri federal court and the corresponding appeal were subsequently dismissed by consent of the parties. An accrual related to these matters is included in our loss contingency accrual.
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. 11100000 7200000 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.