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H&R BLOCK INC (HRB)·Q1 2026 Earnings Summary

Executive Summary

  • Fiscal Q1 2026 revenue rose 5.0% to $203.551M, with Assisted tax prep volume and net average charge (NAC) gains, plus strong Wave subscription and payments; operating expenses fell 2.7% y/y to $410.582M, improving EBITDA loss to $(170.007)M and net loss from continuing ops to $(165.368)M .
  • Versus Wall Street consensus, revenue beat by 1.7% ($203.551M vs $200.130M*), EPS beat as the Primary EPS came in at $(1.20)* vs $(1.3525), and EBITDA outperformed consensus (actual $(170.007)M vs $(202.807)M) — notable positive surprise despite seasonal losses .
  • FY26 guidance was reaffirmed: revenue $3.875–$3.895B, EBITDA $1.015–$1.035B, ETR ~25%, adjusted diluted EPS $4.85–$5.00; company returned $455M via dividends and buybacks (7.9M shares, $400M) and has ~$700M remaining on its $1.5B program .
  • Management highlighted execution on Assisted conversion, AI-enabled productivity (AI Tax Assist), Second Look differentiation, and small-business momentum; CEO transition to Curtis Campbell (effective Jan 1) underscores strategic continuity and product/technology acceleration .

What Went Well and What Went Wrong

What Went Well

  • Assisted tax prep revenue increased to $48.644M (from $42.963M) on higher NAC and volume; Wave revenue rose to $29.850M and International held at $65.661M, supporting 5.0% total revenue growth .
  • Operating expenses decreased 2.7% y/y to $410.582M primarily from lower legal fees/settlements, improving EBITDA loss to $(170.007)M vs $(187.583)M y/y .
  • Capital return remained robust: $455M returned via dividends and buybacks (7.9M shares at $50.90; ~$700M repurchase capacity remaining), reinforcing shareholder-friendly allocation .
  • “Fiscal 2026 is off to a strong start…our team is excited to build on our momentum” — Jeff Jones, CEO .
  • “We were pleased with our first quarter results and returned $455 million to shareholders…reaffirming our 2026 outlook” — Tiffany Mason, CFO .

What Went Wrong

  • Seasonal pattern produced a net loss from continuing operations of $(165.368)M and GAAP diluted loss per share of $(1.26), with adjusted diluted loss per share at $(1.20) .
  • Financial services revenue declined to $7.852M (from $8.826M), and Emerald Advance interest/fee income was zero in the quarter .
  • Management noted continued caution on industry dynamics and legal/healthcare cost pressures seen last year; while legal expense normalized this quarter, multi-period costs had impacted FY25 and are embedded in the FY26 bridge .

Financial Results

YoY Comparison (Q1 2026 vs Q1 2025)

MetricQ1 2025Q1 2026
Revenue ($USD Millions)$193.810 $203.551
Operating Expenses ($USD Millions)$422.141 $410.582
EBITDA ($USD Millions)$(187.583) $(170.007)
EBITDA Margin %(96.8%) (83.6%)
Net Loss from Continuing Ops ($USD Millions)$(171.421) $(165.368)
Diluted EPS (GAAP) ($USD)$(1.23) $(1.26)
Adjusted Diluted EPS ($USD)$(1.17) $(1.20)
Weighted Avg Diluted Shares (Millions)139.154 131.387

QoQ Comparison (Q4 2025 vs Q1 2026) – Seasonality Context

MetricQ4 2025Q1 2026
Revenue ($USD Millions)$1,111.011 $203.551
Operating Expenses ($USD Millions)$739.732 $410.582
EBITDA ($USD Millions)$413.190 $(170.007)
Diluted EPS (GAAP) ($USD)$2.21 $(1.26)
Adjusted Diluted EPS ($USD)$2.27 $(1.20)

Vs S&P Global Consensus (Q1 2026)

MetricConsensus*ActualSurprise
Revenue ($USD Millions)$200.130*$203.551 +$3.421M (+1.7%)
Primary EPS ($USD)$(1.3525)*$(1.20)*+$0.1525
EBITDA ($USD Millions)$(202.807)*$(170.007) +$32.800M

Values marked with * retrieved from S&P Global.

Segment/Category Revenue Breakdown (Q1)

CategoryQ1 2025 ($USD Thousands)Q1 2026 ($USD Thousands)
Assisted Tax Preparation42,963 48,644
Royalties5,852 5,849
DIY Tax Preparation3,236 3,745
Refund Transfers860 843
Peace of Mind®23,097 23,509
Tax Identity Shield®3,909 4,122
Other (U.S. Tax Prep & related)13,809 13,476
Financial Services (Emerald Card & Spruce)8,826 7,852
International64,855 65,661
Wave26,403 29,850
Total Revenues193,810 203,551

KPIs and Other

KPIQ1 2025Q1 2026
Effective Tax Rate (%)26.2% (from call) 23.6% (from call)
Cash, cash equivalents & restricted at quarter-end ($USD Thousands)439,017 397,401
Shares Repurchased (Millions)—7.9; $400M at $50.90 avg
Dividend per share (next payment)—$0.42 (payable Jan 6, 2026)
Repurchase Authorization Remaining ($USD Millions)—~700

Guidance Changes

MetricPeriodPrevious Guidance (Aug 12, 2025)Current Guidance (Nov 6, 2025)Change
Revenue ($USD Billions)FY 2026$3.875–$3.895 $3.875–$3.895 Maintained
EBITDA ($USD Billions)FY 2026$1.015–$1.035 $1.015–$1.035 Maintained
Adjusted Diluted EPS ($USD)FY 2026$4.85–$5.00 $4.85–$5.00 Maintained
Effective Tax Rate (%)FY 2026~25% ~25% Maintained
Share RepurchasesFY 2026Assume ~$400M in 1H FY26 Completed $400M in Q1 Executed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q4 FY25)Previous Mentions (Q-1: Q3 FY25)Current Period (Q1 FY26)Trend
AI/Technology InitiativesEmbracing AI, improving efficiency; AI Tax Assist conversion up; multi-channel service via MyBlock Continued product innovation and enhanced client experience Accelerate product design/engineering; leverage AI to improve tax pro productivity and client experience; AI Tax Assist highlighted Strengthening
Assisted vs DIY MixAim to cut share losses; retail ops to improve conversion; mix shift proxy considered for FY26 Improved volume and market share trends in Assisted; balanced price/volume/mix Assisted gains y/y; marketing ops focus; expect assisted share tailwind with new tax bill Improving
Pricing StrategyLow single-digit price in Assisted; mid single-digit in DIY; focus on mix and volume Healthy balance of price/volume/mix Low single-digit price across Assisted/DIY reiterated Stable discipline
Small BusinessDouble-digit growth; Wave +13% in FY25; Block Advisors conversion to services Continued contribution; momentum Wave Pro Tier momentum; small business more meaningful revenue driver Positive
Regulatory/LegalElevated healthcare/legal costs in FY25; embedded in FY26 guide —Q1 legal fees normalized; opex down y/y Easing vs FY25 peak
Capital AllocationDividend up 12%; continued buybacks, franchise acquisitions Reaffirmed shareholder returns $455M returned; 7.9M shares retired; $700M capacity remaining Strong continuation
CEO SuccessionJeff Jones retiring 12/31; Curtis Campbell CEO 1/1/26 —Strategic continuity, tech/product focus under incoming CEO Transition underway

Management Commentary

  • “Fiscal 2026 is off to a strong start…our team is excited to build on our momentum for the remainder of the year.” — Jeff Jones, CEO .
  • “We were pleased with our first quarter results and returned $455 million to shareholders…we are reaffirming our 2026 outlook.” — Tiffany Mason, CFO .
  • “We’ll accelerate product design and engineering…leveraging technology and AI to improve the customer experience, increase the efficiency of our tax professionals, and drive productivity.” — Curtis Campbell, CEO-elect .
  • “Assisted continues to show strength…projected to gain further share in 2026…importance customers place on expertise, confidence, and trust…especially with numerous tax law changes.” — Curtis Campbell .

Q&A Highlights

  • Assisted strategy: Investments in Second Look, AI to boost tax pro productivity, and operational conversion improvements to reduce share losses; proxy for assisted tailwind tied to new tax bill (~20 bps shift observed prior year) .
  • DIY pricing: Low single-digit price increases expected across channels; focus on value perception and client experience .
  • Season timing: No indication of late start despite government shutdown concerns; contingency plans exist from prior years .
  • Free cohort targeting: Cohort-based personalization to convert “free temporarily” into paid over time without visible external changes (behind-the-scenes funnel optimization) .

Estimates Context

  • Q1 2026: Revenue beat consensus ($203.551M vs $200.130M*), Primary EPS beat ($(1.20)* vs $(1.3525)), and EBITDA outperformed ($(170.007)M vs $(202.807)M) .
  • Estimate counts: EPS (4 estimates), Revenue (3 estimates)*.
  • Implication: Consensus may need upward adjustments for EBITDA trajectory and recognition of Assisted/Wave momentum into tax season.
    Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Strong start to FY26 with a clean reaffirm of full-year guidance and multi-channel execution; early demand indicators in Assisted and Wave support revenue quality .
  • Material capital return (7.9M shares retired, $455M total) and remaining $700M authorization create EPS leverage and downside cushion into seasonally stronger quarters .
  • Operational expense control (legal normalization) and AI-driven productivity initiatives support margin trajectory; EBITDA loss improved despite seasonal headwinds .
  • Assisted differentiation via Second Look and “one big bill” complexity tailwind positions Block to narrow share losses, supporting the volume/mix ambition articulated in FY26 .
  • Small-business and Wave subscriptions/payments are durable secular levers that diversify revenue and underpin valuation resilience .
  • CEO transition to Curtis Campbell emphasizes continuity and acceleration in technology/product, a likely narrative driver into tax season .
  • Near-term trading: Reaffirmed guide and consensus beats in a seasonally loss-making quarter can sustain positive sentiment; monitor Assisted conversion metrics, legal/healthcare cost normalization, and any updates on the tax bill’s client behavior impacts in subsequent updates .

Additional Relevant Press Releases (Q1 Context)

  • Dividend declared: $0.42 per share, payable Jan 6, 2026 (record date Dec 4, 2025) .
  • Emerald Advance® loan program open Nov 3–Dec 31, 2025 (APR 35.9%; repay by Mar 31, 2026), with disbursement via Emerald Card® or Spruce accounts, supporting pre-season engagement .