H&R Block Q1 Earnings Call Highlights

Key Points

• Fiscal Q1 revenue rose 10.2% to $224.3 million, led by growth in international and small-business services, though H&R Block’s adjusted loss per share widened to $1.40 from $1.20.
• H&R Block plans to expand its consultative client-service test from five offices to about 650 for the 2027 tax season, after the initial pilot improved client satisfaction and perceptions of the company’s expertise.
• The company reaffirmed its fiscal 2027 outlook, including adjusted diluted earnings of $6.04–$6.24 per share. It declared a $0.46 quarterly dividend and expects about $400 million in share repurchases for the year, subject to market conditions.

H&R Block NYSE: HRB reported a 10.2% increase in fiscal first-quarter revenue and reaffirmed its full-year outlook, as the tax preparer prepares to expand a test of a more consultative service model ahead of the 2027 tax season.

Revenue rose to $224.3 million in the quarter, an increase of $20.8 million from a year earlier. The company reported a net loss from continuing operations of $188.1 million, or $1.53 per share. Its adjusted loss per share widened to $1.40 from $1.20 a year earlier.

Chief Financial Officer Tiffany Mason said the results reflected the seasonal nature of the business. Historically, the first quarter accounts for about 5% of annual revenue and typically produces a net loss.

International, small business services drive growth

International services revenue rose 12.5%, or $8.3 million, during a quarter that includes much of Australia’s tax season. Mason said favorable foreign exchange rates accounted for the largest share of the increase, although Australian filing volumes and revenue per client also grew. She said the company gained market share in Australia but did not provide a constant-currency growth figure.

Tax protection and identity services revenue increased 17.6%, or $5.1 million, helped by volume growth in Peace of Mind and Tax Identity Shield and changes in amortization rates. Small business services revenue rose 12.4%, or $3.8 million, primarily because of growth in Wave offerings, particularly its Pro Tier subscription product.

U.S. tax preparation revenue increased 5%, or $2.6 million, primarily because of higher revenue per client, Mason said.

Total operating expenses rose 11.1% to $456.2 million. The increase included $8 million in severance and related costs tied to a previously announced seasonal office leadership transition, as well as higher field compensation, corporate expenses, and occupancy and equipment costs. Mason said expense growth was 9.2% excluding the severance charge.

The adjusted EBITDA loss was $185.2 million, compared with a loss of $170 million a year earlier.

Expanded client-service test

Chief Executive Officer Curtis Campbell said H&R Block plans to test a more consultative client experience across approximately 650 offices in the 2027 tax season, up from a five-office pilot last season. The approach moves information gathering and data entry ahead of client conversations, giving tax professionals more time to discuss clients’ needs.

Campbell said the initial pilot produced higher client satisfaction and stronger perceptions of the company’s expertise and value. The expanded test will examine client and tax professional experiences, consistency across offices, and potential operational and financial outcomes.

Asked whether the model could increase returns completed per tax professional, Campbell said the company intends to use time savings to add value to client interactions. Mason added that H&R Block sees an opportunity to improve productivity while balancing reinvestment with better financial flow-through. She said the company would provide more detail at its investor day.

Campbell also discussed Second Look, a service that uses artificial intelligence to review up to three years of a new client’s prior tax transcripts for potential missed opportunities or risks. A dedicated team reviews the findings and contacts clients.

New clients who received Second Look in the 2025 tax season returned this year at a rate more than 600 basis points higher than those who did not, Campbell said. The company expanded the service nationally in the 2026 tax season, reaching nearly three times the prior season’s volume. Campbell cautioned that it was too early to assess the retention impact of that broader rollout.

Full-year outlook and capital returns

H&R Block reaffirmed its fiscal 2027 forecast for revenue of $4.11 billion to $4.16 billion, adjusted EBITDA of $1.11 billion to $1.14 billion and adjusted diluted earnings of $6.04 to $6.24 per share. It continues to expect an effective tax rate of approximately 23%.

Mason said the company expects second-quarter operating expense growth to be consistent with the first-quarter rate excluding severance. The increase will include approximately $12 million of investment in strategic growth priorities, she said.

The board declared a quarterly cash dividend of $0.46 per share. During the first quarter, the company repurchased 2.2 million shares for $100 million. Its full-year outlook assumes approximately $400 million in repurchases, subject to market conditions.

Vice President of Investor Relations Jessica Hazel said the company will hold its investor day on December 3.

About H&R Block (NYSE:HRB)

H&R Block, Inc provides tax preparation and related financial services to individuals and small businesses. Its offerings include in-person tax preparation, online do-it-yourself filing, virtual tax assistance, and tax software, along with bookkeeping and other small-business services through its Block Advisors and Wave brands.

Founded in 1955 in Kansas City, Missouri, by brothers Henry and Richard Bloch, the company grew from a local tax preparation business into a provider of tax services through offices and digital channels.

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