H&R Block Q3 FY25 slides: Revenue up 4.2%, EPS jumps 9.2% as tax season delivers

Introduction & Market Context

H&R Block (NYSE:HRB) reported strong third-quarter fiscal year 2025 results during its conference call on May 7, 2025, with shares rising 2.29% to $63.05 in after-hours trading. The tax preparation company demonstrated solid performance during its critical tax season, showing growth across all key financial metrics while reaffirming its full-year outlook.

The company’s results reflect a notable shift in consumer behavior, with more taxpayers seeking professional assistance rather than using do-it-yourself options, and many waiting until closer to the filing deadline to complete their returns.

Quarterly Performance Highlights

H&R Block delivered impressive financial results for Q3 FY25, with revenue increasing 4.2% to $2,277.1 million compared to $2,184.8 million in the same period last year. The company’s EBITDA grew 5.0% to $1,012.1 million, while net income rose 4.5% to $722.9 million.

Earnings per share showed even stronger growth, increasing 9.2% to $5.32 compared to $4.87 in Q3 FY24, while adjusted EPS grew 8.9% to $5.38. The company’s effective tax rate was 24.6%, slightly higher than the 23.8% rate in the prior year.

As shown in the following financial results table:

This performance represents a significant improvement from the company’s second quarter results, which is typical of H&R Block’s seasonal business model where the majority of revenue and earnings are generated during tax season in the third and fourth quarters.

Tax Industry Trends

The tax preparation industry experienced approximately 1% overall volume growth, with the Assisted category showing stronger growth at +170 basis points compared to +90 basis points for DIY options. This shift toward assisted preparation underscores consumers’ increasing preference for expert help with their taxes.

H&R Block noted that more clients are waiting until closer to the filing deadline to complete their returns, with the company experiencing record high volumes in the final two days of tax season—the highest in recent history.

The following slide illustrates these industry trends:

Segment Performance

Assisted Tax Preparation

H&R Block reported improved volume and market share trends in its Assisted category, where the company is the industry leader. The company has redesigned its client experience to improve conversion and retention rates through enhanced tax professional matching algorithms and better expectation management.

The company’s Second Look program, which is unique among nationwide tax preparers and free to new clients, saw a tenfold increase in new client participation. This program helps identify missed deductions and credits while demonstrating tax professional expertise.

H&R Block is also seeing success in attracting higher-value clients, with growth for the third consecutive year being stronger in income segments above $80,000, which typically represent higher lifetime value customers.

DIY Tax Preparation

Despite a challenging competitive environment, H&R Block maintained discipline in its DIY segment, focusing on paid clients rather than free filings. This strategy resulted in an 8% increase in Q3 DIY revenue and a 9% increase in paid net average charge through April 30.

The company expanded its AI Tax Assist tool with an enhanced knowledge base, achieving a 13% conversion rate among clients who used the feature. Tax Pro Review services continued to grow, reaffirming demand for expertise even among DIY users. Additionally, the MyBlock Mobile App saw a 24% increase in usage, reflecting growing consumer preference for convenience.

Strategic Initiatives

Small Business Focus

H&R Block continues to expand its small business offerings through both Block Advisors and Wave platforms. Block Advisors achieved high single-digit revenue growth in Assisted Small Business tax preparation and doubled its custom DIY experiences from 5 to 20, improving conversion rates. The division also reported double-digit revenue growth in bookkeeping and payroll services.

Wave, the company’s financial software platform for small businesses, maintained its focus on accelerating revenue growth and driving profitability, with high-margin subscriptions growing 13% in revenue.

Financial Products

H&R Block’s financial products, including the Spruce banking platform, continue to gain traction with consumers. Through April 30, 2025, the company reported 700,000 sign-ups, representing approximately a 50% increase from the prior year. Notably, about 50% of deposits are non-tax related, and around 90% of new clients completed a tax return with Block.

These financial products are designed to improve clients’ financial well-being year-round, extending beyond the traditional tax season relationship. The company’s Smart Tax offering has delivered an average savings of 26% for participating clients.

Capital Allocation and Outlook

H&R Block continues to demonstrate disciplined capital allocation, focusing on funding business operations while supporting shareholder returns. During the first and second quarters of FY25, the company repurchased $400 million in shares, representing approximately 5% of its float. Approximately $1.1 billion remains on the company’s $1.5 billion share repurchase authorization.

The company reaffirmed its full-year FY25 outlook, projecting:

• Revenue of $3.69 - $3.75 billion
• EBITDA of $975 million - $1.02 billion
• Adjusted EPS of $5.15 - $5.35 (including an anticipated one-time benefit of approximately $0.50)
• Effective tax rate of 13%

This guidance is based on assumptions of typical industry growth of about 1%, maintaining market share in the overall tax category, low single-digit price increases, and contributions from Wave and Small Business segments.

Investment Thesis

H&R Block presented a compelling investment thesis based on three key pillars: a stable industry tied to essential tax preparation services, national scale with strong brand recognition, and a compelling financial profile.

The company highlighted its extensive network of approximately 9,000 company and franchise offices, 60,000 expert tax professionals, and robust DIY offerings. H&R Block also emphasized its consistent, strong free cash flow, solid balance sheet, and disciplined capital allocation strategy.

Forward-Looking Statements

Looking ahead, H&R Block appears well-positioned to capitalize on the ongoing shift toward assisted tax preparation services and the growing demand for expertise. The company’s strategic investments in Block Horizons initiatives, including small business services and financial products, provide additional avenues for growth beyond its core tax preparation business.

With a strong Q3 performance and reaffirmed full-year guidance, H&R Block continues to demonstrate resilience and adaptability in an evolving tax preparation landscape. The company’s focus on higher-value clients, technological innovation, and expanded service offerings should support its long-term growth strategy while maintaining its position as a leader in tax preparation services.

Full presentation:

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