H&R Block NYSE: HRB raised its fiscal 2026 outlook after reporting stronger-than-expected third-quarter results, with management pointing to improved assisted tax preparation trends, higher client retention and broader use of artificial intelligence tools across its tax platform.
On the company’s earnings call, President and CEO Curtis Campbell said the quarter came in “ahead of expectations across all key metrics” and showed that H&R Block’s strategy of delivering “expert-led, technology-enabled experiences” is beginning to translate into measurable financial and operating gains.
Chief Financial Officer Tiffany Mason said third-quarter revenue rose 5.3% year over year to $2.4 billion. EBITDA increased 5.9% to $1.1 billion, while adjusted earnings per share rose 11.9% to $6.02. Net income from continuing operations was $848.8 million, up 17.4%, and earnings per share from continuing operations increased 24.2% to $6.61.
Assisted Tax Prep Stabilizes Market Share
Campbell said one of the key takeaways from the tax season was that H&R Block stabilized its assisted channel market share after two years of improving trends.
“A key question surrounding H&R Block’s performance has been when we’d stabilize assisted channel market share. Well, this season we did,” Campbell said. He added that the company’s assisted market share performance was favorable each week throughout the season, reflecting stronger execution from the beginning of the season through the peak period.
Mason said the company maintained its assisted market share relative to industry growth during the 2026 tax season, calling it “great performance” after declines in prior years and improvement in tax season 2025. She clarified during the question-and-answer session that the company’s market share commentary was based on IRS e-file data from Jan. 1 through the end of the season, consistent with how the IRS reports the market.
Management said assisted tax preparation benefited from higher net average charge and volume in U.S. assisted tax prep. Mason said assisted volume was up 2.1%, while net average charge rose 3.9%, reflecting low single-digit pricing increases and favorable mix.
Guidance Raised After Strong Tax Season
Based on year-to-date performance, H&R Block raised its full-year fiscal 2026 guidance. The company now expects:
- Revenue of $3.91 billion to $3.92 billion;
- EBITDA of $1.025 billion to $1.035 billion;
- An effective tax rate of approximately 14%;
- Adjusted diluted earnings per share of $5.10 to $5.20.
Mason said the updated outlook reflects the strength and consistency of execution across fiscal 2026, as well as completed tax season results, peak period labor costs and a planned shift in marketing expense tied to later-season filing dynamics.
Total operating expenses for the third quarter increased 4.8% to $1.4 billion, primarily because of higher field wages tied to higher assisted revenue. Mason said a significant amount of volume continues to be processed in the final weeks of tax season, which pressures labor capacity and results in overtime.
The company also recorded a one-time, non-cash tax benefit of $84.1 million related to the resolution of an IRS examination. Mason said the benefit reduced income tax expense and contributed $0.65 to earnings per share.
AI Tools and Client Experience Drive Strategy
Campbell said H&R Block is using AI to scale tax expertise rather than replace it. He highlighted several tools and initiatives the company deployed during the season, including Sidekick, an AI-enabled assistant for tax professionals developed through a collaboration with OpenAI and grounded in the expertise of H&R Block’s Tax Institute.
Sidekick allows tax professionals to research and query complex tax topics, and Campbell said it received positive feedback and saw strong adoption throughout the season. In the company’s paid DIY filing experience, AI Tax Assist supported 4.1 million client messages and responses, an 88% increase from the prior year.
Campbell also discussed the company’s use of AI to scale Second Look, a service that reviews prior tax returns. He said new clients who received Second Look last tax season returned at a rate more than 600 basis points higher than new clients who did not receive it. H&R Block is now using AI-based technology to automate the initial review of prior tax transcripts and focus tax professionals’ time on returns with the greatest opportunity.
The company also introduced client experience monitors in offices, allowing clients to explore add-on products in a self-guided way. Campbell said that initiative helped drive a 550 basis point increase in product attach and improved client comfort with the process.
Mix Shifts Toward More Complex Clients
Management emphasized that H&R Block is prioritizing clients with higher lifetime value, particularly those with more complex tax situations. Campbell said clients with more complex needs are engaging with the company at higher rates, reinforcing the value of its omnichannel model.
In the DIY channel, Campbell said the company is not focused on volume in isolation, particularly where free or lower-value paid customers may not generate attractive lifetime economics. He said H&R Block’s DIY mix between free and paid improved by 140 basis points, while the company saw “strong year-over-year growth” among clients with adjusted gross income above $100,000.
“Not all DIY market share is created equal,” Campbell said. “Our focus is on attracting and retaining more complex clients with higher lifetime value rather than pursuing transactional low lifetime value clients.”
Recent tax law changes also affected client outcomes during the season. Campbell said average refunds for H&R Block clients increased about 11%, the number of clients receiving a refund rose about 7%, and the number of clients who owed the IRS declined by more than 25%. He also said the company helped enroll more than 2 million 529 accounts, representing more than 90% of eligible clients whose children qualified for a $1,000 seed contribution.
Capital Returns Continue
H&R Block generated $586.7 million in operating cash flow during the first nine months of the fiscal year, Mason said. Over that period, the company returned $560.9 million to shareholders through dividends and share repurchases.
Mason said the board approved an additional $100 million of share repurchases in the fourth quarter under the company’s previously disclosed $1.5 billion repurchase program. Approximately $700 million remains under that authorization. If completed, the fourth-quarter repurchases would bring fiscal 2026 share repurchases to $500 million, following $400 million in the first half of the year.
Asked about the company’s long-term financial framework, Mason said there were no changes to H&R Block’s long-term growth algorithm, which includes 3% to 6% revenue growth, adjusted EBITDA growth at 1.5 times that rate and double-digit EPS growth. She said the company has “even more conviction” in that framework as it sees proof points from its strategy.
Campbell closed the call by saying the quarter reflected progress in execution, client experience and retention. “At the core of what we do, H&R Block is in the business of trust,” he said.
About H&R Block NYSE: HRB
H&R Block NYSE: HRB is a leading provider of tax preparation services and software solutions, serving individual and small-business clients through a combination of retail offices, online platforms and mobile applications. The company offers assisted tax preparation at its network of retail offices, where clients work with trained tax professionals, as well as do-it-yourself (DIY) software and online filing services designed to guide users through the complexities of federal and state tax returns.
Founded in 1955 by brothers Henry W.
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