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H&R BLOCK INC (HRB)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 2025 delivered solid top-line performance but mixed bottom-line outcomes: revenue rose 4.6% year over year to $1.111B, while adjusted EPS was $2.27; management reiterated strong cash generation and raised the dividend 12% to $0.42 per share .
  • Results vs consensus: revenue beat Wall Street ($1.111B vs $1.075B), but EPS missed ($2.27 vs $2.83) primarily due to a delayed one-time tax benefit expected in Q4, pushing the effective tax rate higher in FY25 and deferring ~$0.50 EPS tailwind beyond FY25 (Values retrieved from S&P Global)* .
  • FY2026 outlook introduced: revenue $3.875–$3.895B, EBITDA $1.015–$1.035B, ETR ~25%, adjusted EPS $4.85–$5.00; share repurchases of ~$400M contemplated in H1 FY26 subject to conditions .
  • Strategic traction continued: Assisted conversion improved again, DIY AI Tax Assist conversion uplift sustained, small-business/Wave growth strong; catalysts include dividend hike, revenue beat, and multi-year transformation progress .

What Went Well and What Went Wrong

What Went Well

  • Assisted and DIY both grew in FY25: “assisted revenue grew by 6.1% and DIY revenue grew by 9.7%,” supported by higher complexity mix and improved conversion for a second consecutive year .
  • Small business delivered a “record revenue year” with double-digit growth and Wave revenue up 13% for FY25; Wave’s paid products (e.g., ProTier) helped drive monetization .
  • Capital returns and dividend: $600M returned via dividends and buybacks in FY25; quarterly dividend increased 12% to $0.42, marking eight consecutive annual increases .

What Went Wrong

  • EPS miss vs consensus due to delayed one-time tax benefit in Q4 FY25; effective tax rate landed ~22% for FY25 vs prior guidance of ~13% that had contemplated ~$0.50 EPS tailwind (Values retrieved from S&P Global for consensus)* .
  • Elevated costs: healthcare, legal (fees/settlements), and severance pressured FY25 EBITDA vs original expectations; FY26 guidance incorporates higher exit rates for healthcare and legal .
  • Emerald Advance interest/fee income declined year over year on lower originations and tighter underwriting to improve credit outcomes .

Financial Results

Quarterly Performance vs Prior Periods and Estimates

MetricQ4 2024Q2 2025Q3 2025Q4 2025
Revenue ($USD Millions)1,062.6 179.1 2,277.1 1,111.0
Diluted EPS – Continuing Ops ($)1.82 -1.79 5.32 2.21
Adjusted diluted EPS ($)1.89 -1.73 5.38 2.27
EBITDA ($USD Millions)396.8 -261.4 1,012.1 413.2
Net income – Continuing Ops ($USD Millions)258.4 -242.5 722.9 300.4
EBITDA Margin (%)35.91*-147.48*44.25*36.08*

Note: Asterisks denote values retrieved from S&P Global. Values retrieved from S&P Global.*

Actual vs Wall Street Consensus (Q4 2025)

MetricConsensusActualResult vs Consensus
Revenue ($USD Millions)1,074.8*1,111.0 Beat
Primary EPS ($)2.83*2.27 Miss
EPS – # of Estimates4*——
Revenue – # of Estimates3*——

Note: Asterisks denote values retrieved from S&P Global. Values retrieved from S&P Global.*

Segment Breakdown (Q4 2025 vs Q4 2024)

Segment Revenue ($USD Millions)Q4 2024Q4 2025
Assisted tax preparation652.4 686.0
Royalties51.7 49.6
DIY tax preparation134.3 152.1
Refund Transfers21.4 22.3
Peace of Mind®34.0 32.5
Tax Identity Shield®16.6 15.0
Other (U.S. tax & related)18.9 18.1
Total U.S. tax & related929.3 975.5
Financial services (Emerald Card & Spruce)14.6 13.7
Interest & fee income (Emerald Advance®)4.2 2.4
Total financial services18.8 16.1
International88.7 89.9
Wave25.8 29.5
Total Revenue1,062.6 1,111.0

KPIs

KPIQ4 2024Q2 2025Q3 2025Q4 2025
Weighted Avg Diluted Shares (Millions)141.8 135.6 135.3 135.3
Adjusted diluted EPS ($)1.89 -1.73 5.38 2.27
EBITDA ($USD Millions)396.8 -261.4 1,012.1 413.2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($B)FY2026—$3.875–$3.895 New
EBITDA ($B)FY2026—$1.015–$1.035 New
Effective Tax RateFY2026—~25% New
Adjusted diluted EPS ($)FY2026—$4.85–$5.00 New
Share repurchasesFY2026 (H1)—~$400M contemplated, subject to market New
Quarterly dividend ($/sh)Ongoing$0.375 (Q3 PR) $0.42 (Q4 PR) Raised
FY2025 ETR / EPS tailwindFY2025~13% ETR; ~$0.50 EPS one-time benefit expected Benefit delayed beyond FY25; FY25 ETR ~22% Withdrawn/Delayed

Earnings Call Themes & Trends

TopicQ2 2025 (Feb)Q3 2025 (May)Q4 2025 (Aug)Trend
AI/Technology (AI Tax Assist)Expanded coverage, GenAI improvements; offered free in paid SKUs +13-point conversion among users; sustained engagement AI cited as driver of efficiencies and personalization Strengthening
Assisted vs DIY mix & conversionReimagined assisted experience; price match, Second Look; late-season filing trend Assisted conversion improved 2nd straight year; higher complexity mix Assisted share losses expected to be halved at midpoint FY26; focus on conversion and qualified traffic Improving conversion
Small business & WaveWave +15% revenue; strong subscription uptake Wave +13% revenue; bookkeeping/payroll double-digit growth Record small business revenue; continued Wave monetization Accelerating
Costs & margin bridgeElevated healthcare, occupancy; expected in outlook Legal fees/settlements slightly below midpoint EBITDA FY26 guide includes higher healthcare/legal exit rates; cost actions and savings in FY26 Stabilizing with offsets
Financial products (Spruce, Emerald Advance)Spruce users +55%; >50% deposits non-tax; refund advance raised to $4,000 Continued Spruce engagement; Emerald Advance underwriting tightened Spruce: deposits since launch $1.75B; Emerald Advance interest/fee down YoY Spruce steady; Emerald Advance cautious
Regulatory/macroIRS direct file commentary; 1099-K threshold changes Disaster-related filing extensions timing impact “OB3” tax bill tailwind to assisted; cautious assumptions in guide Mixed tailwinds

Management Commentary

  • CEO: “We are pleased to report total revenue growth of 4.2%… delivered $976 million of EBITDA… announced a 12% increase to our quarterly dividend” .
  • CFO: “Total operating expenses… increased 4.6%… elevated healthcare costs and legal fees and settlements were meaningful contributors… we incurred severance charges in Q4” .
  • CFO on FY26: “Revenue $3,875–$3,895B; EBITDA $1,015–$1,035B; ETR ~25%; adjusted EPS $4.85–$5.00… assumes ~$400M of repurchases in H1 FY26” .
  • CEO succession: Jeff Jones to retire 12/31/2025; Curtis appointed CEO effective 1/1/2026; continuity of strategy emphasized .

Q&A Highlights

  • Assisted vs DIY outlook: Management assumes a similar assisted mix shift as seen in the 2025 tax season; aim to halve share losses at FY26 midpoint via better qualified traffic and conversion .
  • Margin bridge and costs: FY26 guidance includes higher healthcare/legal exit rates; cost savings from FY25 realignment plus ongoing belt-tightening and cost-out opportunities expected to improve flow-through .
  • Bank products: Potential for higher refunds; specifics of early-season tactics held for competitive reasons; Emerald Advance underwriting balanced approval vs repayment, no plan to discontinue .
  • Competitive landscape & direct file: Independents remain primary assisted competitors; direct file impact remains limited to free users; continued emphasis on transparent pricing and avoiding upsell pain points .

Estimates Context

  • For Q4 2025, HRB beat revenue consensus but missed EPS: $1.111B actual vs $1.075B consensus; $2.27 EPS actual vs $2.83 consensus (Values retrieved from S&P Global)*. The EPS miss was driven by the delay of an anticipated one-time tax benefit in Q4, lifting the FY25 effective tax rate to ~22% rather than ~13% previously guided .
  • Implications: Near-term EPS expectations may be revised lower to reflect timing of tax benefit recognition; FY26 EPS guide ($4.85–$5.00) positions for growth via cost actions, mix improvements, and buybacks .

Key Takeaways for Investors

  • Revenue resilience with improving mix and conversion supports the topline; dividend raised and buyback capacity intact—a supportive capital return backdrop .
  • Near-term EPS pressure from delayed tax benefit timing, but structural cost actions and FY26 guide suggest improving flow-through; monitor FY26 margin execution .
  • Small-business and Wave growth are durable levers; continued traction can diversify beyond seasonal consumer tax cycles .
  • Assisted channel momentum persists with enhanced client experience; strategy focuses on higher-value, complex filers and conversion—key to sustained share stabilization .
  • Financial products: Spruce engagement is healthy; Emerald Advance remains a managed risk-return product—expect conservative underwriting and lower fee income until bad debt trends normalize .
  • Leadership transition planned and internal; strategy continuity reduces execution risk—focus on November Q1 call for tax season specifics .
  • Trading setup: Topline beat and dividend hike are positives; EPS miss from tax timing is transitory; watch estimate revisions and FY26 cost-out delivery for medium-term multiple support .

Notes: Asterisks in tables indicate values retrieved from S&P Global. Values retrieved from S&P Global.