H&R Block NYSE: HRB reported fiscal 2026 revenue growth of 4.9% and adjusted earnings-per-share growth of 13.9%, as the tax-preparation company cited improved client conversion, retention and demand from more complex filers.
For the fiscal year, revenue totaled $3.95 billion, while EBITDA increased 8.3% to $1.06 billion. Adjusted diluted EPS rose to $5.31, compared with the prior year, and adjusted net income was $688 million. Net income from continuing operations was $736 million, or $5.69 per share.
Chief Financial Officer Tiffany Mason said revenue growth was led by higher net average charge and company-owned volume in U.S. assisted tax preparation, international revenue growth and continued momentum at small-business platform Wave. Wave posted its second consecutive year of double-digit revenue growth, supported by paid professional-tier subscriptions and higher payments volume.
Operating expenses increased 3.6% to $3.04 billion, primarily reflecting higher tax-professional wages, occupancy costs and technology-related expenses. EBITDA margin expanded by 80 basis points during the year.
Client Trends and Technology Initiatives
President and Chief Executive Officer Curtis Campbell said the company maintained share in the assisted tax-preparation category after two years of improving trends. Conversion improved by 200 basis points, which Campbell described as the largest single-year improvement in H&R Block’s recorded history, while client retention increased 190 basis points.
Campbell said the company is emphasizing clients with more complex financial needs and higher lifetime value rather than pursuing transaction-oriented volume. The share of H&R Block clients within its target household adjusted gross income range of $50,000 to $200,000 increased to 50% from 38% over the past several years, according to the company.
The company also highlighted its “Second Look” offering, which reviews up to three prior years of returns for new clients to identify potential missed opportunities. New clients receiving Second Look returned at a rate more than 600 basis points above clients who did not receive the service, Campbell said. H&R Block has automated the process using newer artificial-intelligence capabilities and is working toward offering it to nearly all new assisted clients.
Technology initiatives included the rollout of Sidekick, an AI assistant for tax professionals, and AI Tax Assist for paid do-it-yourself filers. AI Tax Assist supported 4.2 million client interactions during the season and drove nearly twice the engagement recorded a year earlier, Campbell said.
Management said it views AI as a tool to enhance professional expertise rather than replace tax professionals. Campbell said higher-stakes and more complex tax situations require “confidence, judgment, and accountability,” and that the company’s strategy is to automate data collection, data entry and other mechanical tasks so tax professionals can focus more on client advice.
Advisory Model Expansion
H&R Block conducted more than 150 experiments during the tax season, Campbell said, including a pilot in five offices designed to provide a more consultative and advisory client experience. The pilot offices generated higher client satisfaction, greater client belief in the company’s expertise and value, and increased engagement beyond tax season, according to management.
Based on those results, the company plans to expand the model to a full designated market area for the 2027 tax season. Investments will include labor and training, tax-preparation and workflow automation, and integration of Wave into the company’s broader small-business strategy, Mason said.
The company is also transitioning from seasonal office leadership to a year-round leadership model. Area experience leaders will oversee a small number of offices, develop talent, coach associates and seek to improve consistency in the field. The transition and streamlining of support functions resulted in an approximately $8.3 million severance charge in the first quarter of fiscal 2027, which is excluded from the company’s outlook.
Cash Flow, Capital Returns and Outlook
H&R Block generated $756 million of free cash flow in fiscal 2026 and returned $714 million to shareholders through dividends and share repurchases. During the year, the company repurchased and retired about 10.5 million shares, or 7.9% of shares outstanding, for $500 million.
The board approved a 10% increase in the quarterly dividend to $0.46 per share. The company expects to repurchase about $400 million in stock during fiscal 2027, subject to market conditions, and had approximately $600 million remaining under its $1.5 billion repurchase authorization.
For fiscal 2027, H&R Block forecast:
- Revenue of $4.11 billion to $4.16 billion.
- Adjusted EBITDA of $1.11 billion to $1.14 billion.
- An effective tax rate of approximately 23%.
- Adjusted diluted EPS of $6.04 to $6.24.
Mason said the outlook assumes tax-industry growth will moderate but remain positive, as stable unemployment supports tax filings while slower job growth limits new filings. At the low end of its forecast, H&R Block expects to maintain its assisted-category market share; at the high end, it assumes market-share growth.
The company expects to continue taking low-single-digit pricing increases. In fiscal 2026, assisted-channel volume rose 2%, net average charge increased 4.1%, price increased about 3%, and mix contributed about 1%, Mason said. H&R Block also expects to make approximately 100 to 125 opportunistic franchise buybacks during fiscal 2027, compared with 160 in fiscal 2026.
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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