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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION – The consolidated balance sheets as of March 31, 2025 and June 30, 2024, the consolidated statements of operations and comprehensive income for the three and nine months ended March 31, 2025 and 2024, the consolidated statements of cash flows for the nine months ended March 31, 2025 and 2024, and the consolidated statements of stockholders' equity for the three and nine months ended March 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 March 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, 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 March 31, 2025 and June 30, 2024, the consolidated statements of operations and comprehensive income for the three and nine months ended March 31, 2025 and 2024, the consolidated statements of cash flows for the nine months ended March 31, 2025 and 2024, and the consolidated statements of stockholders' equity for the three and nine months ended March 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 March 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, 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 March 31,Nine months ended March 31,
2025202420252024
Revenues:
U.S. assisted tax preparation$1,635,877 $1,534,825 $1,727,220 $1,622,430 
U.S. royalties133,961 141,915 143,312 153,070 
U.S. DIY tax preparation214,666 198,570 231,646 215,529 
Refund Transfers113,732 118,937 115,229 120,892 
Peace of Mind® Extended Service Plan15,625 16,813 54,867 59,100 
Tax Identity Shield®7,025 7,536 14,947 16,810 
Emerald Card® and SpruceSM
40,195 41,160 59,169 61,493 
Interest and fee income on Emerald Advance®14,286 21,169 26,594 36,702 
International60,438 68,264 157,104 158,398 
Wave26,717 23,580 79,681 70,656 
Other14,582 12,065 40,215 32,637 
Total revenues$2,277,104 $2,184,834 $2,649,984 $2,547,717 
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
Nine months ended March 31,2025202420252024
Balance, beginning of the period$156,610 $167,257 $20,212 $21,828 
Amounts deferred70,536 72,369 7,222 8,324 
Amounts recognized on previous deferrals(64,885)(68,445)(8,396)(8,324)
Balance, end of the period$162,261 $171,181 $19,038 $21,828 
As of March 31, 2025, deferred revenue related to POM was $162.3 million. We expect that $91.8 million will be recognized over the next twelve months, while the remaining balance will be recognized over the following five years.
As of March 31, 2025 and 2024, Tax Identity Shield® (TIS) deferred revenue was $31.2 million and $31.6 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 through 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 March 31,Nine months ended March 31,
2025202420252024
Revenues:
U.S. assisted tax preparation$1,635,877 $1,534,825 $1,727,220 $1,622,430 
U.S. royalties133,961 141,915 143,312 153,070 
U.S. DIY tax preparation214,666 198,570 231,646 215,529 
Refund Transfers113,732 118,937 115,229 120,892 
Peace of Mind® Extended Service Plan15,625 16,813 54,867 59,100 
Tax Identity Shield®7,025 7,536 14,947 16,810 
Emerald Card® and SpruceSM
40,195 41,160 59,169 61,493 
Interest and fee income on Emerald Advance®14,286 21,169 26,594 36,702 
International60,438 68,264 157,104 158,398 
Wave26,717 23,580 79,681 70,656 
Other14,582 12,065 40,215 32,637 
Total revenues$2,277,104 $2,184,834 $2,649,984 $2,547,717 
1635877000 1534825000 1727220000 1622430000 133961000 141915000 143312000 153070000 214666000 198570000 231646000 215529000 113732000 118937000 115229000 120892000 15625000 16813000 54867000 59100000 7025000 7536000 14947000 16810000 40195000 41160000 59169000 61493000 14286000 21169000 26594000 36702000 60438000 68264000 157104000 158398000 26717000 23580000 79681000 70656000 14582000 12065000 40215000 32637000 2277104000 2184834000 2649984000 2547717000
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
Nine months ended March 31,2025202420252024
Balance, beginning of the period$156,610 $167,257 $20,212 $21,828 
Amounts deferred70,536 72,369 7,222 8,324 
Amounts recognized on previous deferrals(64,885)(68,445)(8,396)(8,324)
Balance, end of the period$162,261 $171,181 $19,038 $21,828 
156610000 167257000 20212000 21828000 70536000 72369000 7222000 8324000 64885000 68445000 8396000 8324000 162261000 171181000 19038000 21828000 162300000 91800000 P12M P5Y 31200000 31600000 21400000 25200000 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 0.6 million and 0.5 million shares for the three and nine months ended March 31, 2025,
respectively, and one thousand and 0.2 million shares for the three and nine months ended March 31, 2024, respectively, as the effect would be antidilutive.
The computations of basic and diluted earnings per share from continuing operations are as follows:
(in 000s, except per share amounts)
Three months ended March 31,Nine months ended March 31,
2025202420252024
Net income from continuing operations attributable to shareholders$722,928 $691,586 $309,041 $339,597 
Amounts allocated to participating securities(3,442)(2,788)(1,408)(1,350)
Net income from continuing operations attributable to common shareholders$719,486 $688,798 $307,633 $338,247 
Basic weighted average common shares133,853 139,525 136,207 142,724 
Potential dilutive shares1,476 2,015 1,737 1,870 
Dilutive weighted average common shares135,329 141,540 137,944 144,594 
Earnings per share from continuing operations attributable to common shareholders:
Basic$5.38 $4.94 $2.26 $2.37 
Diluted5.32 4.87 2.23 2.34 
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 nine months ended March 31, 2025 and 2024, respectively. Stock-based compensation expense of our continuing operations totaled $7.5 million and $25.4 million for the three and nine months ended March 31, 2025, respectively, and $7.8 million and $25.3 million for the three and nine months ended March 31, 2024, respectively. As of March 31, 2025, unrecognized compensation cost for nonvested shares and units totaled $50.8 million.
The computations of basic and diluted earnings per share from continuing operations are as follows:
(in 000s, except per share amounts)
Three months ended March 31,Nine months ended March 31,
2025202420252024
Net income from continuing operations attributable to shareholders$722,928 $691,586 $309,041 $339,597 
Amounts allocated to participating securities(3,442)(2,788)(1,408)(1,350)
Net income from continuing operations attributable to common shareholders$719,486 $688,798 $307,633 $338,247 
Basic weighted average common shares133,853 139,525 136,207 142,724 
Potential dilutive shares1,476 2,015 1,737 1,870 
Dilutive weighted average common shares135,329 141,540 137,944 144,594 
Earnings per share from continuing operations attributable to common shareholders:
Basic$5.38 $4.94 $2.26 $2.37 
Diluted5.32 4.87 2.23 2.34 
722928000 691586000 309041000 339597000 3442000 2788000 1408000 1350000 719486000 688798000 307633000 338247000 133853000 139525000 136207000 142724000 1476000 2015000 1737000 1870000 135329000 141540000 137944000 144594000 5.38 4.94 2.26 2.37 5.32 4.87 2.23 2.34 1700000 7500000 25400000 7800000 25300000 50800000
NOTE 4: RECEIVABLES
Receivables, net of their related allowance, consist of the following:
(in 000s)
As ofMarch 31, 2025June 30, 2024
Short-termLong-termShort-termLong-term
Loans to franchisees$17,267 $17,979 $5,917 $16,498 
Receivables for U.S. assisted and DIY tax preparation and related fees221,510 9,282 18,440 5,332 
H&R Block's Instant Refund® receivables
24,162 808 2,947 207 
Emerald Advance®22,385 22,635 17,867 21,360 
Software receivables from retailers11,097 — 1,029 — 
Royalties and other receivables from franchisees32,394 — 5,808 — 
Wave payment processing receivables1,801 — 1,078 — 
Other21,782 612 15,989 427 
Total$352,398 $51,316 $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. Loans with a principal balance more than 90 days past due or on non-accrual status were $2.2 million and $1.1 million as of March 31, 2025 and June 30, 2024, 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 March 31, 2025 are as follows:
(in 000s)
Tax return year of originationBalanceMore Than 60 Days Past Due
2024$24,713 $— 
2023 and prior1,027 1,027 
25,740 $1,027 
Allowance(770)
Net balance$24,970 
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 March 31, 2025 are as follows:
(in 000s)
Fiscal year of originationBalanceNon-Accrual
2025$40,017 $— 
2024 and prior24,374 24,374 
64,391 $24,374 
Allowance(19,371)
Net balance$45,020 
ALLOWANCE FOR CREDIT LOSSES – Activity in the allowance for credit losses for EA and all other short-term and long-term receivables for the nine months ended March 31, 2025 and 2024 is as follows:
(in 000s)
EAsAll OtherTotal
Balances as of July 1, 2024$33,536 $45,327 $78,863 
Provision for credit losses19,371 36,671 56,042 
Charge-offs, recoveries and other(33,536)(45,864)(79,400)
Balances as of March 31, 2025$19,371 $36,134 $55,505 
Balances as of July 1, 2023$27,386 $35,108 $62,494 
Provision for credit losses21,011 40,348 61,359 
Charge-offs, recoveries and other(27,714)(37,455)(65,169)
Balances as of March 31, 2024$20,683 $38,001 $58,684 
Receivables, net of their related allowance, consist of the following:
(in 000s)
As ofMarch 31, 2025June 30, 2024
Short-termLong-termShort-termLong-term
Loans to franchisees$17,267 $17,979 $5,917 $16,498 
Receivables for U.S. assisted and DIY tax preparation and related fees221,510 9,282 18,440 5,332 
H&R Block's Instant Refund® receivables
24,162 808 2,947 207 
Emerald Advance®22,385 22,635 17,867 21,360 
Software receivables from retailers11,097 — 1,029 — 
Royalties and other receivables from franchisees32,394 — 5,808 — 
Wave payment processing receivables1,801 — 1,078 — 
Other21,782 612 15,989 427 
Total$352,398 $51,316 $69,075 $43,824 
17267000 17979000 5917000 16498000 221510000 9282000 18440000 5332000 24162000 808000 2947000 207000 22385000 22635000 17867000 21360000 11097000 0 1029000 0 32394000 0 5808000 0 1801000 0 1078000 0 21782000 612000 15989000 427000 352398000 51316000 69075000 43824000 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 March 31, 2025 are as follows:
(in 000s)
Tax return year of originationBalanceMore Than 60 Days Past Due
2024$24,713 $— 
2023 and prior1,027 1,027 
25,740 $1,027 
Allowance(770)
Net balance$24,970 
Balances and amounts on non-accrual status, classified as impaired, or more than 60 days past due, by fiscal year of origination, as of March 31, 2025 are as follows:
(in 000s)
Fiscal year of originationBalanceNon-Accrual
2025$40,017 $— 
2024 and prior24,374 24,374 
64,391 $24,374 
Allowance(19,371)
Net balance$45,020 
P60D 24713000 0 1027000 1027000 25740000 1027000 770000 24970000 P60D 40017000 0 24374000 24374000 64391000 24374000 19371000 45020000 Activity in the allowance for credit losses for EA and all other short-term and long-term receivables for the nine months ended March 31, 2025 and 2024 is as follows:
(in 000s)
EAsAll OtherTotal
Balances as of July 1, 2024$33,536 $45,327 $78,863 
Provision for credit losses19,371 36,671 56,042 
Charge-offs, recoveries and other(33,536)(45,864)(79,400)
Balances as of March 31, 2025$19,371 $36,134 $55,505 
Balances as of July 1, 2023$27,386 $35,108 $62,494 
Provision for credit losses21,011 40,348 61,359 
Charge-offs, recoveries and other(27,714)(37,455)(65,169)
Balances as of March 31, 2024$20,683 $38,001 $58,684 
33536000 45327000 78863000 19371000 36671000 56042000 33536000 45864000 79400000 19371000 36134000 55505000 27386000 35108000 62494000 21011000 40348000 61359000 27714000 37455000 65169000 20683000 38001000 58684000 33500000
NOTE 5: GOODWILL AND INTANGIBLE ASSETS
Changes in the carrying amount of goodwill for the nine months ended March 31, 2025 are as follows:
(in 000s)
GoodwillAccumulated Impairment LossesNet
Balances as of July 1, 2024$923,523 $(138,297)$785,226 
Acquisitions(1)
15,374 — 15,374 
Disposals and foreign currency changes, net(14,664)— (14,664)
Impairments— — — 
Balances as of March 31, 2025$924,233 $(138,297)$785,936 
(1)    All goodwill added during the period is expected to be tax-deductible for federal income tax reporting.
In conjunction with our annual impairment test, we tested goodwill for impairment during the quarter and did not identify any impairment.
Components of intangible assets are as follows:
(in 000s)
Gross Carrying AmountAccumulated
Amortization		Net
As of March 31, 2025:
Reacquired franchise rights$415,419 $(239,452)$175,967 
Customer relationships358,442 (286,040)72,402 
Internally-developed software124,420 (122,357)2,063 
Noncompete agreements23,190 (20,081)3,109 
Purchased technology70,100 (56,099)14,001 
Trade name5,800 (3,335)2,465 
$997,371 $(727,364)$270,007 
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 $35.3 million and $43.2 million during the nine months ended March 31, 2025 and 2024, respectively. The amounts and weighted-average lives of intangible assets acquired during the nine months ended March 31, 2025, including amounts capitalized related to internally-developed software, are as follows:
(dollars in 000s)
AmountWeighted-Average Life (in years)
Customer relationships$27,435 5
Reacquired franchise rights11,649 6
Internally-developed software1,949 3
Noncompete agreements1,254 5
Total$42,287 5
Amortization of intangible assets for the three and nine months ended March 31, 2025 was $11.3 million and $36.3 million, respectively, compared to $15.0 million and $46.2 million for the three and nine months ended March 31, 2024, respectively. Estimated amortization of intangible assets for fiscal years ending June 30, 2025, 2026, 2027, 2028, and 2029 is $47.6 million, $41.5 million, $34.7 million, $26.5 million and $18.1 million, respectively.
Changes in the carrying amount of goodwill for the nine months ended March 31, 2025 are as follows:
(in 000s)
GoodwillAccumulated Impairment LossesNet
Balances as of July 1, 2024$923,523 $(138,297)$785,226 
Acquisitions(1)
15,374 — 15,374 
Disposals and foreign currency changes, net(14,664)— (14,664)
Impairments— — — 
Balances as of March 31, 2025$924,233 $(138,297)$785,936 
(1)    All goodwill added during the period is expected to be tax-deductible for federal income tax reporting.
923523000 138297000 785226000 15374000 15374000 14664000 14664000 0 0 924233000 138297000 785936000
Components of intangible assets are as follows:
(in 000s)
Gross Carrying AmountAccumulated
Amortization		Net
As of March 31, 2025:
Reacquired franchise rights$415,419 $(239,452)$175,967 
Customer relationships358,442 (286,040)72,402 
Internally-developed software124,420 (122,357)2,063 
Noncompete agreements23,190 (20,081)3,109 
Purchased technology70,100 (56,099)14,001 
Trade name5,800 (3,335)2,465 
$997,371 $(727,364)$270,007 
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 
415419000 239452000 175967000 358442000 286040000 72402000 124420000 122357000 2063000 23190000 20081000 3109000 70100000 56099000 14001000 5800000 3335000 2465000 997371000 727364000 270007000 403955000 228157000 175798000 331435000 270245000 61190000 122673000 119610000 3063000 21977000 19494000 2483000 70100000 51432000 18668000 5800000 2900000 2900000 955940000 691838000 264102000 35300000 43200000 The amounts and weighted-average lives of intangible assets acquired during the nine months ended March 31, 2025, including amounts capitalized related to internally-developed software, are as follows:
(dollars in 000s)
AmountWeighted-Average Life (in years)
Customer relationships$27,435 5
Reacquired franchise rights11,649 6
Internally-developed software1,949 3
Noncompete agreements1,254 5
Total$42,287 5
27435000 P5Y 11649000 P6Y 1949000 P3Y 1254000 P5Y 42287000 P5Y 11300000 36300000 15000000.0 46200000 47600000 41500000 34700000 26500000 18100000
NOTE 6: LONG-TERM DEBT
The components of long-term debt are as follows:
(in 000s)
As ofMarch 31, 2025June 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 
Debt issuance costs and discounts(7,323)(8,905)
Total long-term debt1,492,677 1,491,095 
Less: Current portion(349,787)— 
Long-term portion$1,142,890 $1,491,095 
Estimated fair value of long-term debt$1,422,000 $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 March 31, 2025.
We had no outstanding balance under our CLOC and amounts available to borrow were not limited by the debt-to-EBITDA covenant as of March 31, 2025.
The components of long-term debt are as follows:
(in 000s)
As ofMarch 31, 2025June 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 
Debt issuance costs and discounts(7,323)(8,905)
Total long-term debt1,492,677 1,491,095 
Less: Current portion(349,787)— 
Long-term portion$1,142,890 $1,491,095 
Estimated fair value of long-term debt$1,422,000 $1,391,000 
0.05250 350000000 350000000 0.02500 500000000 500000000 0.03875 650000000 650000000 7323000 8905000 1492677000 1491095000 349787000 0 1142890000 1491095000 1422000000 1391000000 1500000000 175000000.0 50000000.0 500000000.0 3.50 4.50 2.50
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 $284.0 million and $251.8 million as of March 31, 2025 and June 30, 2024, respectively. The gross unrecognized tax benefits increased by $32.2 million during the nine months ended March 31, 2025. The increase is primarily related to various current federal and state tax positions expected to be taken in our income tax returns. 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 25.3% and 17.6% for the nine months ended March 31, 2025 and 2024, respectively. Discrete items increased the effective tax rate by 0.9% for the nine months ended March 31, 2025 and decreased the effective tax rate by 6.3% for the nine months ended March 31, 2024. Discrete income tax expense of $3.8 million and benefit of $26.0 million were recorded in the nine months ended March 31, 2025, and 2024, respectively. The discrete tax expense recorded in the current period primarily resulted from interest expense on uncertain tax positions, partially offset by benefits related to investment tax credit purchases and stock-based compensation vesting. The discrete tax benefit recorded in the prior period primarily resulted from settlements with taxing authorities and state statute of limitations expirations. The impact discrete tax items have on our tax rate through the third quarter are slightly exaggerated versus the impact discrete tax items have on the full fiscal year tax rate.
284000000.0 251800000 32.2 148400000 0.253 0.176 0.9 6.3 3.8 26000000
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 $11.3 million and $14.1 million as of March 31, 2025 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 $32.4 million and $26.9 million as of March 31, 2025 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 $21.0 million at March 31, 2025, and net of amounts drawn and outstanding, our remaining commitment to fund totaled $9.1 million.
10000 11300000 14100000 32400000 26900000 21000000.0 9100000 22.9 75.1 260600000 18000000 2400000 1400000
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 March 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 $5.5 million and $7.2 million as of March 31, 2025 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 March 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. 5.5 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.