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Introduction & Market Context
H&R Block (NYSE:HRB) presented its fiscal year 2025 financial results on August 12, 2025, highlighting solid performance across its tax preparation, small business, and financial services segments. Despite a challenging day in the markets that saw the company’s stock decline 5.42% to close at $54.45, management outlined achievements in revenue growth, profitability, and shareholder returns.
The tax preparation giant reported a 4.2% increase in total revenue for fiscal year 2025, with particularly strong performance in its DIY tax preparation and small business segments. The company continues to execute on its strategy of serving higher-value clients while expanding its digital offerings and financial services.
FY25 Financial Performance Highlights
H&R Block delivered solid financial results for fiscal year 2025, with revenue reaching $3.76 billion, a 4.2% increase from $3.61 billion in FY24. Net income rose 1.9% to $609.5 million, while earnings per share grew 6.8% to $4.42, benefiting from the company’s ongoing share repurchase program. Adjusted earnings per share, which excludes certain non-recurring items, increased 5.7% to $4.66.
As shown in the following comprehensive financial summary from the presentation:
EBITDA for the fiscal year reached $976.3 million, a modest 1.4% increase from the previous year. The company maintained disciplined expense management, with operating expenses increasing by 4.6% to $2.93 billion. The effective tax rate ticked up slightly to 22.0% from 21.6% in the prior year.
These results align with the company’s third-quarter performance reported earlier, where H&R Block exceeded analyst expectations with quarterly revenue of $2.3 billion and EPS of $5.38.
Segment Performance
Tax Preparation
H&R Block’s core tax preparation business showed strong revenue growth in FY25, with assisted revenue increasing 6.1% and DIY revenue growing by an impressive 9.7%. The company focused on client conversion, particularly targeting higher-income earners and more complex tax situations.
Management highlighted several key drivers for the tax segment’s performance, including improved in-office conversion through better client onboarding and tax professional matching, enhanced DIY conversion among new online clients, and leveraging digital tools like the MyBlock mobile app and AI Tax Assist.
The following operating statistics provide insight into the company’s tax preparation volume:
Despite a 4.3% decline in total U.S. tax returns prepared, H&R Block increased revenue through higher net average charges. Company-owned operations commanded an average charge of $271.94, while franchise operations averaged $258.50 per return. The DIY online paid segment generated an average of $82.38 per return.
Small Business Services
H&R Block reported a record revenue year for its small business segment, which includes Block Advisors and Wave financial services.
As illustrated in the company’s small business performance summary:
Block Advisors achieved double-digit revenue growth, driven by custom DIY experiences and successful conversion of tax clients to bookkeeping and payroll services. Wave, the company’s financial software platform for small businesses, saw revenue increase by 13% year-over-year, with growth driven by paid subscription products like Pro Tier.
Spruce Financial Services
The company’s banking and financial services platform, Spruce, continued to gain traction in FY25, with approximately 40% increase in newly created accounts during the fiscal year. Notably, about 50% of FY25 deposit transactions came from non-tax sources, indicating the platform’s growing utility beyond tax season.
The following image highlights Spruce’s growth metrics:
Since its inception, Spruce has accumulated $1.75 billion in customer deposits, representing a significant achievement for H&R Block’s expansion into financial services beyond its traditional tax preparation business.
Capital Allocation and Shareholder Returns
H&R Block maintained its commitment to returning capital to shareholders in FY25, generating approximately $600 million in free cash flow and returning an equivalent amount to shareholders through dividends and share repurchases.
The company’s capital allocation strategy is illustrated in the following slide:
Since 2016, H&R Block has more than doubled its dividend and repurchased over 43% of its outstanding shares. In FY25, the company increased its quarterly dividend by 12%, demonstrating confidence in its financial position and future prospects.
The following summary highlights the company’s capital return achievements:
FY26 Outlook and Strategic Initiatives
Looking ahead to fiscal year 2026, H&R Block provided an optimistic outlook, projecting revenue between $3.875 billion and $3.895 billion, and EBITDA between $1.015 billion and $1.035 billion. The company expects adjusted earnings per share to range from $4.85 to $5.00, representing growth of approximately 4-7% from FY25.
The detailed FY26 outlook is presented in the following slide:
Key assumptions underlying this guidance include approximately 1% industry growth in line with historical trends, a healthier balance of volume, price, and mix, continued growth in the small business segment, opportunistic franchise acquisitions, and approximately $400 million in share repurchases.
Management outlined several strategic initiatives to drive future growth, including:
1. Continuing to offer a broad product range and value proposition for small business owners
2. Building on multi-year success with complex assisted and DIY clients
3. Leveraging unique advantages to serve clients through their preferred channels
4. Further enhancing client experience and business efficiency with AI
5. Continuing opportunistic franchise acquisitions
The company’s investment thesis remains centered on operating in a stable industry with national scale and strong brand recognition, while maintaining a compelling financial profile characterized by consistent growth, strong free cash flow, and significant capital returns to shareholders.
Full presentation:
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