H&R Block Q4 2026 Earnings Call Transcript

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Provided by Quartr
August 11, 2026

Key Takeaways

  • Positive Sentiment: H&R Block reported strong fiscal 2026 results, with revenue up 4.9%, EBITDA up 8.3% and adjusted EPS up 13.9%; EBITDA margin expanded 80 basis points.
  • Positive Sentiment: Core client metrics improved, including a 200-basis-point increase in assisted-client conversion and a 190-basis-point improvement in retention, while the company maintained share in the assisted tax-preparation category.
  • Positive Sentiment: Management highlighted progress in its expert-led, technology-enabled strategy, including broad adoption of AI tools, expanded automated “Second Look” reviews and pilots of a more consultative client experience that will expand to a full market area in fiscal 2027.
  • Neutral Sentiment: Fiscal 2027 guidance calls for revenue of $4.11 billion-$4.16 billion, adjusted EBITDA of $1.11 billion-$1.14 billion and adjusted EPS of $6.04-$6.24, assuming moderating industry growth but continued low-single-digit pricing and strategic execution.
  • Positive Sentiment: Strong cash generation supported $714 million of fiscal 2026 shareholder returns; the board approved a 10% dividend increase to $0.46 per share, and the company expects approximately $400 million of share repurchases in fiscal 2027.
AI Generated. May Contain Errors.
Earnings Conference Call
H&R Block Q4 2026
00:00 / 00:00

Transcript Sections

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Operator

Thank you for standing by, and welcome to H&R Block's fourth quarter fiscal year 2026 earnings conference call. Currently, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question from the queue, you may press star one one again. I would now like to hand the call over to Jessica Hazel, Vice President, Investor Relations. Please go ahead.

Jessica Hazel
Jessica Hazel
VP of Investor Relations at H&R Block

Thank you. Good afternoon, and welcome to H&R Block's fiscal 2026 financial results conference call. Joining me today are Curtis Campbell, our President and Chief Executive Officer, and Tiffany Mason, our Chief Financial Officer. Earlier today, we issued a press release and presentation which can be downloaded or viewed live on our website at investors.hrblock.com. Our call is being broadcast and webcast live, and a replay of the webcast will be available for 90 days. Before we begin, I'd like to remind listeners that comments made by management may include forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties, and actual results could differ from those projected in any forward-looking statement due to numerous factors.

Jessica Hazel
Jessica Hazel
VP of Investor Relations at H&R Block

For a description of these risks and uncertainties, please see H&R Block's annual report on Form 10-K and quarterly reports on Form 10-Q as updated periodically with our other SEC filings. Please note some metrics we'll discuss today are presented on a non-GAAP basis. We've reconciled the comparable GAAP and non-GAAP figures in the appendix of our presentation. Finally, the content of this call contains time-sensitive information accurate only as of today, August 11th, 2026. H&R Block undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances after the date of this call. I'll now turn it over to Curtis.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Good afternoon, everyone, and thank you for joining us. Fiscal 2026 was a meaningful year for H&R Block. We delivered strong results, made significant progress against our strategic priorities, and continued to strengthen the quality of the business. Revenue increased 4.9%, EBITDA increased 8.3%, and adjusted EPS increased 13.9%. The growth we delivered this year was meaningfully stronger than what was achieved in recent years. We also generated strong cash flow and returned $714 million to shareholders through dividends and share repurchases. What matters most is what drove those results. We converted more clients to completion, we retained more clients, we continued to improve the quality of our client base, and we made meaningful progress against the initiatives that matter most to the long-term durability of the business. Taken together, fiscal 2026 strengthened our belief that the strategy's working and that H&R Block is on the right path.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

The results we delivered this year, and the evidence behind them, give us greater confidence we can further accelerate long-term shareholder value. Over the past several quarters, we've shared elements of the long-term strategy we're executing across H&R Block. Fiscal 2026 marked our first full year executing that strategy, and over the coming quarters, you'll hear more about where we're headed and the opportunities we have in front of us. As we look back on the year, what stands out most is the evidence that our expert-led, technology-enabled strategy is showing up in stronger client outcomes and stronger business performance. One of the clearest proof points we saw this year was in the assisted category. After two consecutive years of improving trends, we maintained share in the assisted category in 2026.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

That matters because it demonstrates that the actions we're taking to bolster the client experience are helping strengthen our competitive position in our largest business. We also saw clear evidence that clients are responding to the changes we made to improve the experience. Conversion improved 200 basis points this season, which we believe is the largest single-year improvement in our recorded history. That improvement was a result of deliberate refinements across the customer journey, supported by automation and product enhancements that help create a more personalized experience with fewer friction points. We saw this same pattern in retention. The rate at which clients returned this season increased 190 basis points, and Second Look continues to be a strong proof point. New clients who received Second Look returned at a rate more than 600 basis points higher than those that did not.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

That's because Second Look delivers something clients value deeply, expertise beyond current tax year preparation, confidence that H&R Block is working on their behalf to find every dollar they deserve, and a relationship with a trusted tax pro who has their interest in mind, not only in tax season but throughout the year. We also continue to see evidence that technology's enhancing rather than replacing the expertise that differentiates H&R Block. This season, we expanded the use of AI and automation across the business to help tax pros focus more of their time on delivering advice, judgment, and client support. Sidekick, our AI tax pro assistant, launched across our offices and saw strong adoption throughout the season, while AI Tax Assist for paid DIY filers supported 4.2 million client interactions and drove nearly double the level of engagement we saw a year ago.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

We also automated and significantly expanded Second Look, allowing us to bring those benefits to more clients while helping tax pros focus on the returns with the greatest opportunity. Together, these advances reinforce an important aspect of our strategy, using technology to scale expertise and deliver better outcomes for clients. Taken together, these results reinforce our confidence that our strategy's working. We're seeing stronger client outcomes, improving business quality, and growing evidence that our expert-led, technology-enabled strategy is translating into better performance. That combination is strengthening the durability of business today while creating a stronger foundation for future growth. A major part of our strategy is continuing to win with more complex, higher lifetime value clients. We're not focused on growth for the sake of volume alone. We're focused on attracting and retaining the type of clients that strengthen both the durability and economics of our business.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

We continue to see that shift in fiscal 2026. More complex clients engage with H&R Block at higher rates, and our client mix continues to move towards the segment we've been intentionally focused on. Over the last few years, the percent of clients falling within our target household AGI range of $50,000 to $200,000 has increased from 38% of our clients to 50%. Today, we're serving a higher percentage of clients with investment income, small business and sole proprietor needs, and increasingly diverse income streams. That's important because it shows we're not only targeting these relationships, we're succeeding in attracting them. Research tells us that clients with more complex financial lives value assistance, expertise, and trusted advice. This is exactly where H&R Block stands apart. Our brand, tax expertise, omni-channel model, and growing technology capabilities allows us to serve these clients in ways that are increasingly relevant to their needs.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

We will continue to lean into these consumer groups rather than pursue lower lifetime value, transaction-oriented clients, because volume alone doesn't create durable economic value. As a result, we'll continue to improve the quality of the business. These relationships create more opportunities to serve clients over time, support stronger retention, and improve the long-term economics of our client base. Our omni-channel model is becoming an even greater competitive advantage because it's built around a simple idea. Clients don't all need the same level of assistance, and their needs change over time. Some clients want to prepare their return entirely on their own. Others want occasional guidance through tools like AI Tax Assist. Some want the assurance and accountability that comes from tax pro review, and others prefer more guided support from a tax pro through virtual or in-office experiences.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Our advantage is that we can meet clients where they are and provide the level of assistance they need when they need it. As their needs evolve, we're there every step of the way for them. We believe this flexibility is becoming increasingly important as technology changes how clients engage. Technology can simplify tasks and make assistance more accessible, while human expertise provides the judgment, advice, and confidence that technology alone cannot. We're not building separate digital and expert-led experiences. We're strengthening an integrated omni-channel model that operates at scale, where technology and human expertise work together to deliver the right level of assistance the way each client prefers. That's an important distinction. We're not trying to bolt technology onto a fragmented service model or bolt experts onto a digital model.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

We're building on a foundation that allows clients to move across DIY, virtual, and in-person experiences while receiving the level of assistance that's right for them. We believe our ability to combine expertise and technology across the different needs clients have is becoming an increasingly important differentiator and expanding our opportunity for long-term growth. We saw additional evidence of this throughout the season. Clients engage with technology-enabled assistance at scale through AI Tax Assist. At the same time, Sidekick helped tax pros navigate complex tax questions more efficiently, while client experience monitors allowed clients to explore products and services independently, contributing to a 550 basis point increase in product attachment. These are practical examples of our omni-channel model in action, using technology to make assistance more accessible for clients while allowing our tax pros to focus on the expertise, judgment, and advice that matter most.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

The progress we've discussed so far has strengthened our confidence in our strategy and helped us identify where to move faster. The greatest change happening at H&R Block isn't any single initiative. It's a different way of operating. Back in May, I shared that we ran more than 150 experiments during the season, exponentially more than in prior years. As we continue executing our strategy, we're experimenting more. We're learning faster and using those learnings to make better decisions about where to scale. That matters because it increases the velocity at which we can improve the client experience, strengthen execution, and focus resources behind the ideas showing the greatest potential. This is an important part of building a more durable growth engine and accelerating progress against our strategy. We're not guessing at what could happen. We're testing in real-world conditions, learning from the results, and scaling what works.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

That approach gives us greater confidence in the choices we're making, allows us to move faster when evidence supports it, and helps us advance our long-term strategy with greater discipline. Just as importantly, we're still in the early stages of what this approach can unlock. The progress we saw this year has increased our confidence that there are meaningful opportunities ahead, and we expect the pace of learning, experimentation, and innovation to continue accelerating. I'd like to share two examples that show how this operating model is translating learning into meaningful progress. The first example is the work that we're doing to test a more consultative, expert-led, technology-enabled client experience. In five pilot offices this past tax season, we delivered a client experience that felt less transactional and more advisory, focused on strengthening the client relationship and creating incremental value both during and beyond the annual tax filing event.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

In these pilot offices, we saw higher client satisfaction, stronger belief in our expertise and value, and increased engagement beyond tax season. These weren't data points alone. We heard it directly from clients. One client told us, "I didn't know taxes could be this easy." Another said, "This guidance will really make a difference for my business." Those comments matter because they reinforce a broader belief we have at H&R Block. As technology reduces the effort required to prepare a return, the value of expertise, judgment, and trusted advice increases. They also reinforce our belief that clients value a trusted relationship that extends beyond the tax return itself. And we can deliver this experience because, behind the scenes, technology is handling more of the administrative work, allowing our tax pros to spend less time collecting and entering information and more time providing guidance, planning, and advice.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Based on what we learned last tax season, we are expanding this model to a full designated market area for tax season 2027. This will allow us to further test and refine the operating model, technology, talent, and workflows needed to deliver this experience consistently and at scale. To enable this experience, we're transforming how work gets done inside our offices by automating away the mechanical aspects of tax prep. From using AI to eliminate manual data entry to automating the initial review of prior year returns, we're creating more capacity for tax pros to focus on delivering the personalized, trusted assistance clients value most. The second example of how we're transforming is the evolution of our field leadership model. One of our clearest learnings was the critical role year-round leadership plays in developing associates, reinforcing service standards, and delivering a more consistent client experience.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Those learnings gave us confidence to move faster on changes that will support future phases of our strategy. As part of that effort, we're making an enterprise transition from a seasonal office leadership model to a year-round office leadership model supported by area experience leaders who manage a small number of offices and focus on developing talent, coaching associates, and driving greater consistency throughout the field. We believe delivering more consistent and consultative client experiences requires full-time leaders who are present not just during tax season, but throughout the year. These leaders will also help deepen our presence in local communities, helping us compete more effectively against independent providers. We're also streamlining supporting functions to better enable our field teams, increase consistency of execution, and accelerate our ability to scale what is working across the organization. These two examples, although different in detail, reflect the same principle.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

When testing gives us strong evidence, we act on it. That discipline allows us to accelerate progress against our strategy, reduce execution risk, and build a faster-moving organization capable of compounding progress over time. Looking back at the year, what gives us confidence is not simply the results we achieved, but the evidence behind them. We're delivering stronger client outcomes, attracting higher lifetime value clients, building a more differentiated competitive position, and seeing increasing proof that our strategy is working. Just as importantly, we're becoming a faster learning organization. Our ability to test, learn, adapt, and scale what works continues to improve, giving us greater confidence in where we invest, where we accelerate, and how we create value. While we're still early in the journey, we believe H&R Block is better positioned today than it has been in many years.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

We have a clear strategy, compelling opportunities ahead, and significant runway to further strengthen the business, deepen client relationships, and create long-term shareholder value. With that, I'll turn the call over to Tiffany.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

Thank you, Curtis, and good afternoon, everyone. In fiscal 2026, we delivered our strongest financial performance of the past five years. Revenue and EBITDA growth, as well as margin expansion, all accelerated, which reflects a year of successful execution and progress against our strategy. For the fiscal year, we delivered revenue of $3.95 billion, an increase of 4.9% over the prior year. This increase was primarily driven by higher net average charge, or NAC, and company-owned volume in U.S. assisted tax preparation, growth in international revenue, and another year of small business momentum at Wave. As Curtis shared, we strengthened the quality of our business and, as a result, maintained share in our largest category. This was supported by higher conversion, better retention, and a mix shift towards more complex clients who value confidence and expert judgment.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

We also continued to benefit from our ability to make low single-digit pricing adjustments while offering a strong value proposition to our clients. In the assisted category overall, we were pleased by our progress this year toward a healthier balance of volume, price, and mix, which remains a key element of our strategy. Wave, an important component of our small business strategy, had another very productive year. This marked Wave's second consecutive year of double-digit revenue growth, driven by our paid pro tier subscriptions and higher payments volume. Taken together, we believe these top-line results reflect a healthy and improving business. Total operating expenses for the fiscal year were $3.04 billion, an increase of 3.6% over the prior year. This increase was primarily due to higher tax professional wages as a result of the better company-owned return volumes and an increase in occupancy costs and technology-related expenses.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

Fiscal 2026 EBITDA was $1.06 billion, an increase of 8.3% over the prior year, resulting in 80 basis points of EBITDA margin expansion. Our effective tax rate for the fiscal year was 14%, compared to 22% in the prior year. As a reminder, during the third quarter, we recognized an $84.1 million one-time non-cash tax benefit related to the resolution of an IRS examination, which reduced income tax expense and provided a $0.65 benefit to earnings per share. Net income from continuing operations was $736 million, and earnings per share from continuing operations were $5.69. Adjusted net income was $688 million. Adjusted earnings per share were $5.31, an increase of 13.9% over the prior year. This increase was driven by fewer shares outstanding as a result of share repurchases and higher adjusted net income.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

Turning to our capital structure and disciplined capital allocation practices, our liquidity position remains strong, supported by the significant and stable free cash flow generation of our business. This year, we generated $756 million of free cash flow, representing a meaningful increase year-over-year and reflecting the strength of our operating model and the quality of our earnings. This cash flow provided flexibility to execute against our capital allocation priorities. During the year, we repurchased and retired approximately 10.5 million shares, representing 7.9% of shares outstanding at an aggregate cost of $500 million. In fiscal 2026, we returned a total of $714 million to shareholders in the form of dividends and share repurchases. We remain committed to investing in the business, growing the dividend, and returning excess capital to shareholders through share repurchases. We believe this disciplined approach to capital allocation continues to drive meaningful long-term shareholder value.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

Now turning to our fiscal 2027 outlook. I'll begin with the key assumptions underlining our expectations for the year. We expect industry growth to moderate relative to the historical norm of approximately 1%. While unemployment rates remain stable, job growth has slowed. Historically, industry growth has correlated with job growth, so our outlook reflects that backdrop. Despite this softer industry backdrop, the meaningful progress we delivered in fiscal 2026 and the continued progress against our strategy gives us confidence in our market position heading into 2027. We remain focused on achieving a healthier balance of volume, price, and mix, supported by ongoing enhancements to the client experience and serving clients with increasingly complex needs. At the low end of our revenue outlook, we assume we will maintain assisted category market share, while at the high end, we assume assisted category market share growth.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

We will also continue to acquire franchise locations when opportunities arise at attractive EBITDA multiples. We expect growth in small business services as we continue to enhance how we bring together our expert advice, product suite, and digital capabilities to comprehensively serve small business owners. With regard to expenses, our outlook assumes continued discipline in managing our cost structure. At the same time, we expect to increase our level of investment in fiscal 2027 to support our strategic priorities. As Curtis discussed, we are scaling initiatives that have demonstrated promising results through testing and accelerating efforts where evidence has strengthened our confidence in the opportunity ahead. These investments support the next phase of our strategy and include efforts such as the expansion of our consultative client experience and technologies that enable greater automation of tax preparation and related workflows.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

Our continued focus on disciplined cost management allows us to make these investments and still maintain our long-term financial algorithm. As a result of these and other assumptions, our outlook for fiscal 2027 is revenue in the range of $4.11 billion-$4.16 billion, adjusted EBITDA in the range of $1.11 billion-$1.14 billion, an effective tax rate of approximately 23%, and adjusted diluted earnings per share in the range of $6.04-$6.24. One additional expense item to note as you review the outlook we provided today in our earnings release. The transition that Curtis discussed from a seasonal office leadership model to a year-round model and the streamlining of support functions, all to better enable our field teams, has resulted in an approximately $8.3 million severance charge in the first quarter of fiscal 2027. This amount has been excluded from our outlook.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

Durable cash flows remain one of the defining strengths of our business, and we expect fiscal 2027 to be another strong year of free cash flow generation. We will continue to use this cash flow to invest in the business, grow the dividend, and return excess capital to shareholders through share repurchases. Consistent with that commitment, today, the board approved a 10% increase in our quarterly dividend to $0.46 per share. We are proud that H&R Block has paid quarterly dividends consecutively since becoming public in 1962. Additionally, our fiscal 2027 outlook contemplates approximately $400 million of share repurchases, with a plan to execute throughout the entire year, subject to market conditions. We have approximately $600 million remaining under our current $1.5 billion share repurchase authorization. Taken together, these inputs underpin our fiscal 2027 outlook and reinforce our focus on disciplined execution of our strategy.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

We enter the new fiscal year with momentum, confidence in our strategy, and a compelling financial profile that enables us to invest in strategic priorities, grow profitability, and continue to deliver value to shareholders. With that, I'll turn it back over to Curtis for closing remarks.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Thank you, Tiffany. The results this year reflect the progress we've made executing our strategy. We exceeded financial expectations, further elevated the client experience, and continued to strengthen the durability of our business. The evidence we saw throughout the year, from stronger conversion and retention to continued improvement in the quality of our client base, reinforces our confidence that the strategy is working and that H&R Block is well-positioned for the future. We have an exciting year ahead, and I look forward to sharing our Q1 results in November and providing a deeper look at our strategy, execution priorities, and longer-term value creation framework at our Investor Day in December. Thank you for your time and your support. With that operator, we'll open up the line for questions.

Operator

Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone. To remove yourself from the queue, you may press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Scott Schneeberger of Oppenheimer & Company. Please go ahead, Scott.

Scott Schneeberger
Scott Schneeberger
Analyst at Oppenheimer & Co

Thanks very much, and congratulations. Really good-looking tax year. Curtis, we talk about obviously conversion, retention, complexity, very good for you. Can we talk about where those can go? You mentioned conversion of record. What is the opportunity in front of you? I guess we'll hear more at Investor Day in these categories, but you had a nice year. On the kind of type of guide that we're looking at this year, which is similar to what you delivered financially this year just ended on what you have coming up. Can that persist at that level or farther on these drivers? Thanks.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Thank you for the question. Hope to see you in December. I know that we've talked in the past about our Block Next strategy. That's important to us. We talked quite a bit in the prepared remarks about our transition from a transactional experience that we deliver to a consultative experience that we deliver. I'll just give everybody that's listening a little bit of history. I think this is important as we think about the H&R Block journey. When you think about the journey, it's important for us to think about, as a company, what business are we actually in? H&R Block has been around for 70 years doing tax preparation. But if you dig underneath that and spend enough time with our clients, Scott and folks, you'll really quickly discover that what clients are looking for is trust and confidence.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

That's the key currency in the space that we operate in. As a part of that, we step back as an organization and we define what we would then call our ideal state. So what does the future look like for H&R Block, where we're delivering this level of trust and confidence for every customer that engages with us? And that future is different than what it has been historically for H&R Block. As a part of that, we identify what that would look like, and then we sat down as an organization and we identified what the critical assumptions would be that would be required for us to deliver against that. That allowed us to create a strategic roadmap that takes us from today to tomorrow. That strategic roadmap, as we'll talk about in Investor Day, cuts across multiple phases.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

One of the early phases of that journey is us focused on transforming the work that our tax pros do. You heard me talk a lot about in the last earnings call and in the prepared remarks about transforming the work that our tax pros do and shifting that from transactional tax preparation, which consists of data collection and data entry, to more consultative engagement. That's really in our sweet spot when you think about the fact that we've been around for 70 years. We do almost 20 tax returns a year. There's really no other player in the U.S. that has the access to the data that we do, that's got the footprint that we do, that's got the relationship in all the communities across America. So phase 1 is that technical transformation.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

The other thing that I talked about in the prepared remarks was the transformation of our field leadership. So in order for us to deliver this consultative experience, we need to make sure that we have the support system around our tax pros to enable that. So we are shifting from having seasonal field leadership to having full-time field leadership. By doing that, we have more hands on the ground, more focus in every office where we can ensure that our tax pros are delivering the experience that we want. So all those things give us confidence that this is just the beginning of the journey. So we're really excited about the fact that we saw record results this year. But once again, this is the first phase in this transformation for H&R Block, really focused on delivering that trust and confidence that's important to our clients.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Hope to see you in December.

Scott Schneeberger
Scott Schneeberger
Analyst at Oppenheimer & Co

Thanks. I appreciate that, Curtis.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Yeah.

Scott Schneeberger
Scott Schneeberger
Analyst at Oppenheimer & Co

Following up, I am curious, the big beautiful bill, can you speak now that we are in the look-back period, what type of impact did that have on this past year and tax season, and what do you anticipate in year two of in 2027?

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Yeah, that is a great question. And once again, for everybody listening, I will just share some data points here. When you look at the tax law changes from last tax season, really three major things resulted in from those changes. Number one, the increase in the number of taxpayers for saving a refund. That went up by 6%. That is a really big number in our industry. If you also take a look at the average refund amount, that also went up almost 12%. That is a really big number as well. And then if you combine that with the fact that the balance due, so the balance dues, the IRS decreased, that gave taxpayers more confidence that they can do tax on their own. Typically, when we see that in the tax industry, DIY gets a little bit of a tailwind.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Now, what I will just remind everybody of is if you look at the assisted space, that represents over 55% of the market, and it has for many years. So at H&R Block, we remain incredibly confident in assisted, and we believe that that is going to continue to maintain its strength in the industry both this year and moving forward.

Scott Schneeberger
Scott Schneeberger
Analyst at Oppenheimer & Co

Great. Thanks. I'll turn it over.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Thank you.

Operator

Thank you. Our next question comes from the line of George Tong of Goldman Sachs. Please go ahead, George.

George Tong
George Tong
Analyst at Goldman Sachs

Hi. Thanks. Good afternoon. You mentioned your goal of maintaining market share for assisted at the low end of the guide and then outperforming at the midpoint and at the higher end of the guide. Can you share your thoughts on how you expect to perform in the DIY category for the upcoming tax season?

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Yeah. Hey, George. Nice to see you, and hopefully everything is going well on the West Coast. A couple things that I do want to emphasize to answer your question. Not all DIY market share is created equal, and at H&R Block, our focus is on attracting and retaining more complex clients with higher lifetime value rather than pursuing transactional volume. A couple additional data points around that. When you look at our DIY mix between paid and free, that improved 140 basis points. We also delivered DIY growth in AGI bands of $100,000 or more, which is important. All these things connect back to our focus on more complex filers. Now, when you take a look at that, and you also take a look at the things that are very unique to H&R Block.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

With our focus on our omni-channel engagement model, we also saw favorable migration from clients from DIY into assisted as their need for more assistance evolved. That reflects the strength of our omni-channel model. Now, I'll also share that DIY remains an important entry point within that model, but we don't manage the business to optimize for DIY volume in isolation. I think if you were to also step back and look at the DIY industry, in the DIY space at the very low end, customers often focus on the lowest price or free offerings. These customers are typically the most transient with the lowest retention and the lowest lifetime value, who often move to a new provider the moment a lower price shows up.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

When you think about our focus, as we emphasize on my prepared remarks, it's on the clients who value assistance, trust, and guidance. Those are the clients for us that have the longest and strongest lifetime value.

George Tong
George Tong
Analyst at Goldman Sachs

Got it. That's very helpful. You mentioned the need to increase investments in the upcoming year as you transform the business to be less transactional, more advisory. Can you talk about the specific buckets where you intend to spend and invest, and perhaps quantify how much is going into each of those buckets? For example, compensation, platform technology, et cetera.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

Hey, George. Thanks for the question. Just to give you a few examples, some of these were woven throughout Curtis' and my prepared remarks. We talked about our consultative client experience and some of the testing that we did in tax season 2026, and those proof of concept offices and our ability to roll those to a DMA in tax season 2027. That's one area of investment. That's primarily an investment in labor and training. That's part of what we're looking to invest in fiscal 2027. We're also investing in technology, that technology allows us to do more automation of tax preparation as well as related workflows. That's entirely a technology investment. The last example I would give you is around our small business strategy.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

We've been hard at work integrating our Wave platform into our broader small business initiative and working to make sure that we have a unified small business strategy that supports our small business customers. We know that's a great growth opportunity for us. That's again, some investment in technology and making sure that we have that unified approach. I'm not going to quantify each of those buckets of investment. I know that's something you're looking for, but that's something that we'll spend more time talking about over the next quarters. Thanks for the question, though, and I think obviously we're very proud of the fact that we can maintain our long-term algorithm, and at the same time, make the investments.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

I think that's a testament to the work that we're doing internally to drive cost out in other parts of the business and still be able to invest where we need to accelerate our strategy.

George Tong
George Tong
Analyst at Goldman Sachs

Got it. Thanks very much.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

Thanks, George.

Operator

Thank you. Our next question comes from the line of Thomas Wendler of Stephens Inc. Please go ahead, Thomas.

Thomas Wendler
Thomas Wendler
Analyst at Stephens Inc

Hey, good afternoon, everyone. Great quarter. Happy to see it. Just wanted to kick things off with a question on Second Look. It has higher retention. Could you maybe give us a little bit of color on the utilization of Second Look during this quarter?

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Tom, welcome. We're happy to have you. I hope I see you in December. Great question. Let me give you a little bit of background on Second Look. Second Look has been around for many years. But historically, we've struggled because Second Look was very manual. It required tax pros to do quite a bit of work. And because it required tax pros to do a lot of work, tax pros were not very eager to offer Second Look to new clients. For everybody listening, let me just explain again what Second Look is. Second Look is a service that we offer at H&R Block. It's unique to new clients. And for new clients, we can take a look at their last three years of tax returns to look for any untapped, missed opportunities.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

When we find those untapped, missed opportunities, our retention rate for those clients goes up significantly. For those clients, it feels like found money. That's a great service for new clients moving in. Over the last 18 months, we spent quite a bit of time automating Second Look, leveraging some of the newer AI capabilities that we have access to now. Instead of having a small population of our new assisted clients opt into Second Look, we have a much higher percentage of people opting in with the goal of every one of our assisted clients that are new, getting Second Look. We're not quite there yet, but we're getting fairly close, without me sharing the specific numbers. Does that help, Tom?

Thomas Wendler
Thomas Wendler
Analyst at Stephens Inc

Yep. That definitely helps.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

If you have a follow-up, I'm happy to address it. Okay.

Thomas Wendler
Thomas Wendler
Analyst at Stephens Inc

I appreciate the color there. For my second question here, could you maybe just speak to the success you saw on the international front this quarter? It looks a little bit better than expectations.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

Tom, I would be happy to do that. I will tell you, keep in mind that the tax seasons for Canada and Australia are different. Australia's tax season runs July through October. Canada's tax season looks more akin to the U.S., not exactly the same, but more akin to the U.S. So keep in mind those different tax seasons. Canada had a good tax season, though not as strong as we would have liked, just given some of the changes in regulation with the CRA. I would say most of the benefit that we saw in FY 2026 actually was a benefit from favorable FX rates, though the Canadian tax season was good relative to our expectation, not great. And Australia had a very nice tax season, a very nice end to their tax season overall, but that was earlier in the year.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

A little bit of color there on international performance.

Thomas Wendler
Thomas Wendler
Analyst at Stephens Inc

Perfect. Thank you for all the color, and looking forward to seeing everyone during the Investor Day.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

Thanks, Tom. Great to have you.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Thank you, Tom. See you there.

Operator

Thank you. Our next question comes from the line of Kartik Mehta of Northcoast Research. Your line is open, Kartik.

Kartik Mehta
Kartik Mehta
Analyst at Northcoast Research

Hey, good evening. Curtis, maybe if you could provide some thoughts on pricing as we go into next season. I think you said you wanted a little bit more balance on, obviously, the price and volume metrics. I am wondering if you think you would be able to achieve the same level of price, or do you think that mix will be a little bit different?

Tiffany Mason
Tiffany Mason
CFO at H&R Block

Hey, Kartik. Great to hear from you. Let me start by just saying we were really pleased with our price volume and mix performance in FY 2026. I said that in my prepared remarks. Maybe just to give you a little bit more color, if I think about the assisted channel for just a minute, volume in the assisted channel was up 2%, NAC was up 4.1% in FY 2026. NAC, you will remember, is a mix of price and mix. Price was up about 3%, mix was up 1%. When we think about price volume and mix for assisted, it was that nice, healthy balance. That is what we have been striving to with our teams for the last couple of years, and we struck that nice balance. That is a concerted effort of ours, and we continue to strike that balance and have that plan going forward.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

We continue to have pricing power in the industry. We continue to plan for low single-digit price increases as we think about fiscal 2027, and that's what's certainly baked into and inherent in our guidance that we gave today for this next upcoming year.

Kartik Mehta
Kartik Mehta
Analyst at Northcoast Research

Great. Curtis, just a follow-up. You talked about maybe 150+ tests. As you look into next fiscal year, how many of those tests do you think you'll actually implement? How many do you think you'll repeat? I'm assuming there'll be new ones as well.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Yep. Thank you, Kartik, and go Browns as you get prepared for the NFL season.

Kartik Mehta
Kartik Mehta
Analyst at Northcoast Research

Thank you.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Yes, sir. When you think about our velocity of tests, as I mentioned to you quite a bit, it was fairly low before I joined H&R Block. One of our biggest currencies as business leaders is learnings. What helps us is we've got a clear vision of what the future looks like. We've got a very clear vision of what we think the ideal state client experience looks like. Earlier on the call, I described these critical assumptions. These are the big questions that we have to answer as an organization to be able to deliver that end state client experience. That's going to focus us on running as many or more experiments in the next fiscal year.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Just like I shared in my prepared remarks, not every experiment that we're going to run is going to prove to be successful, but every experiment we run is going to 100% deliver learnings, and we leverage those learnings to refine and improve experiences. I'll give you one example. This past tax season, we ran in five pilot offices across the network, an experience that was much different than our typical experience at H&R Block. I talked quite a bit about the importance of us shifting from transactional experiences to consultative experiences. In those five offices, the focus of the engagement with clients was purely around a relational consultative experience. We leveraged improvements in workflow and capabilities and technology to remove the manual effort from our tax pros.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Think about the data entry and data collection, and then leverage other technology insights and data that allows our tax pros to show up as experts in the eyes of clients and provide guidance and advice. I visited most of these offices, Kartik, and I'll tell you, a lot of folks that are typically fairly well off, they spend thousands of dollars every year with CPAs. They spend thousands of dollars with CPAs with the hope of getting some level of trusted advice, consultation, and guidance on what the future looks like. Once again, at H&R Block, we don't think that that should reside just with wealthy people. As we think about our future, especially when it comes to our ideal state, we're looking to democratize those experiences and make them available to Main Street America.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

The amount of positive feedback that we got out of those five offices was just incredible. That gave us confidence to scale from those five offices into a full DMA for 2027. Now, when we scale into a full DMA, Kartik, I expect for us to get more learning, because what we're trying to learn there is what is it going to take for us to do this at broader scale with the goal of this eventually becoming how we do what we do at H&R Block and how we deliver the experience to every customer that engages with us. I expect the rate of experimentation not to slow down. It's probably going to increase moving forward. But all of it is in service to our ideal state in Block Next.

Kartik Mehta
Kartik Mehta
Analyst at Northcoast Research

Okay. Thank you so much. I appreciate it.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Yes, sir.

Operator

Thank you. Our next question comes from the line of Alex Paris of Barrington Research. Your line is open, Alex.

Alex Paris
Alex Paris
Analyst at Barrington Research

Hi, guys. Thanks for taking my questions, and I will add my congratulations to a nice finish to the fiscal year.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

Thanks, Alex.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Thank you.

Alex Paris
Alex Paris
Analyst at Barrington Research

I have a couple of questions about the underlying assumptions for fiscal 2027 guidance. I appreciate all the color that you give in the press release and on the prepared comments. It looks like at the midpoint, if I did my math right, revenue of about 4.8% growth, EBITDA 6.4%, adjusted EPS 15.6%. Can you remind us all, and me specifically, the long-term growth algorithm, and has there been any change to the long-term growth algorithm over the last few years?

Tiffany Mason
Tiffany Mason
CFO at H&R Block

Sure, Alex. I would be happy to. You are in the ballpark in terms of the midpoint of our outlook. The long-term growth algorithm suggests that revenue can grow 3%-6%, that EBITDA will grow at 1.5x the rate of revenue growth, and that EPS will grow double digit. That long-term algorithm is predicated on an industry that is low growth, so operating in that low growth industry, upside from strategic programs that allow us to grow higher into the range, that 3%-6% revenue range, that we can continue to take low single digit pricing, and that we can continue to get about 1% from franchise acquisitions.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

As you think about our guide for this fiscal year, and even what we were able to accomplish, frankly, in fiscal 2026, obviously we are seeing the impact of an industry that is slow growing, and we are seeing the fruits from our strategic initiatives start to pay dividends. As I answered in one of the earlier questions around opportunities for margin expansion, we are balancing taking cost out of our cost base and doing the hard work of making that a reality, while at the same time investing in strategic initiatives that help us further our roadmap relative to Block Next, the strategy that we are deploying. We are just at the beginning innings of that, but we are making good progress.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

The fact that we were able to deliver 80 basis points of margin expansion in fiscal 2026, and that we are guiding to an additional, at the midpoint, call it 50 basis points of margin expansion in fiscal 2027 is I think those are really good examples of us being on our way to delivering that algorithm over the next few years. Hopefully that helps, but happy to provide any additional color should you need it.

Alex Paris
Alex Paris
Analyst at Barrington Research

No, that is great. Going back to the assumptions, you said industry growth to moderate from the typical 1% growth rate. Do you still expect growth in the industry in fiscal 2027 given the dynamics of the employment market?

Tiffany Mason
Tiffany Mason
CFO at H&R Block

Yes, we do. Maybe just to double click on that for just a minute. Yes, we still expect growth in the industry. Moderate is the operative word for sure. The reason we say moderate is simply because unemployment rates are stable. The unemployment rate, most recent news headline is 4.1% for the current calendar year, but job growth has slowed, and we have seen non-farm payroll slow last year. The prediction is it will slow again this year. If you think about that, obviously we have a base level of filing volume because if the unemployment rate is stable, folks are working, they are filing their taxes. But if jobs growth is slowing, then the growth in the industry, growth of new filings, is where the lack of growth is stemming from. We just expect moderation. We do not expect a decline or stagnation.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

That's what underpins our outlook. We start with that, then we build on top of that expectation for industry growth, what we think we can achieve with our own execution. We had great execution last year, and we think that continues as we get deeper into our strategy and start to achieve some of the things that Curtis talked about in his prepared remarks today.

Alex Paris
Alex Paris
Analyst at Barrington Research

That's great. I'm not looking at my spreadsheet, but what are your expectations about the breakdown in industry growth between assisted and DIY? Same as it usually is, a little slower on assisted, a little faster on DIY? Then what would be your expectation at H&R Block for your own assisted versus DIY?

Tiffany Mason
Tiffany Mason
CFO at H&R Block

Yeah. It's a great question. I think I'll circle back to Curtis's earlier comment, and that's that we believe assisted is going to continue to maintain its strength as the leading category within the tax prep industry.

Alex Paris
Alex Paris
Analyst at Barrington Research

Fair enough. Then lastly, on opportunistic franchise acquisitions, which is one of the assumptions. There was an outlay of about $58 million for those acquisitions in fiscal 2026, and that was up from $36 million, $58 million versus $36 million. Do you expect a similar level of franchise acquisition activity in fiscal 2027?

Tiffany Mason
Tiffany Mason
CFO at H&R Block

Yeah. As you know, that's a core part of our long-term algorithm. In fiscal 2026, we did 160 franchise buybacks. That compares to about 124 franchise buybacks in the previous year. Those are opportunistic. We do those when we have franchisees who don't have a generational succession plan. So they ebb and flow as those opportunities arise. We will do somewhere probably in the range of 100 or so, 100-125, but again, opportunistically, and that's certainly embedded in our guide that we provided today.

Alex Paris
Alex Paris
Analyst at Barrington Research

Great. I think I have one more question, but I am forgetting it right now. I will just get it on our follow-up conversation. Thank you very much for taking my questions. I appreciate the additional color.

Tiffany Mason
Tiffany Mason
CFO at H&R Block

Okay. Thanks, Alex.

Operator

Thank you. Our next question comes from the line of Scott Schneeberger of Oppenheimer & Co. Your line is open, Scott.

Scott Schneeberger
Scott Schneeberger
Analyst at Oppenheimer & Co

Thanks very much. Just one follow-up. Curtis, I think it's a good time. Could you please speak, earlier in this year, we had issue with an AI trade that went against the tax preparation companies. Could you please outline why this should not be impacting H&R Block and some of what you're doing internally, but also just some of why it's an overdone viewpoint? Thank you.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Yeah. Happy to definitely spend some time on that. I'll give you H&R Block's perspective. We believe that we're uniquely positioned to win in an AI-driven tax industry, and our belief is that we can seamlessly blend AI capabilities with our 70 years of human expertise and accountability in ways that, frankly, others can't. We believe that we proved that in our five office test. We'll expand that as we move into a DMA. I hope everybody listening knows this, but I'll just emphasize this. When you think about tax preparation, tax preparation is incredibly high stakes. For most Americans, this is their biggest paycheck of the year. So it's high stakes.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

If you were to talk to most Americans and ask them, "What are the three things that you would want nothing to do with?" My guess would be those three answers would be, number one, going to the dentist. I had to do that the other week and getting a cavity drilled out. That's not fun. If you live in California or Texas, going to the DMV is never fun, folks. The last thing is getting audited by the IRS. Nobody wants those things. So when you think about the stakes, they're super high. When stakes are super high, especially with more complex clients, and once again, we're focused on more complex clients, they're typically seeking confidence, judgment, and accountability. In those cases, AI alone, they can't fulfill the test because the risk is too high. So AI alone is not sufficient.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Now, I know that we mentioned this a couple times. I'll just reiterate this. When you look historically at the industry that we operate in, 55% or more of taxpayers continue to seek assistance. It's not because tax preparation is a calculation. It's because the stakes are high, and it's because they're seeking judgment, confidence, and trust. As we think about AI, we think about AI at H&R Block as being a tailwind. It enables us to deliver more of that trust and confidence. As I look back on the work that we've done in this first phase of our Block Next strategy, a lot of it was focused on automating the manual tax preparation tasks. So think about data collection and data entry. For us, that's step one. We have to automate that for a tax pro to spend enough time focused on a consultative engagement.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

As we think about the future, it is our belief that H&R Block is structurally advantaged, especially in the environment that we exist in today. Once again, we go back to the 70 years that we built on trust, judgment, and accountability, and we lean into the fact that at H&R Block, we use AI to amplify expertise, not replace it. That's our position around AI. We've proved that we can leverage it multiple times during this tax season. It's going to be a core part of what we do. But we're not leveraging it to replace people. We're using it to amplify trust and confidence through our people. Is that helpful?

Scott Schneeberger
Scott Schneeberger
Analyst at Oppenheimer & Co

That's great. Thanks, Curtis, appreciate it.

Curtis Campbell
Curtis Campbell
President and CEO at H&R Block

Thank you. Good question.

Operator

Thank you. I would now like to turn the conference back to Jessica Hazel for closing remarks. Madam?

Jessica Hazel
Jessica Hazel
VP of Investor Relations at H&R Block

Thank you everyone for joining us today. We appreciate your support, and we look forward to reconnecting with you again soon.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.

Executives
    • Jessica Hazel
      Jessica Hazel
      VP of Investor Relations
    • Curtis Campbell
      Curtis Campbell
      President and CEO
    • Tiffany Mason
      Tiffany Mason
      CFO
Analysts
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