H&R Block, Inc. Q3 FY2026 earnings call

• Curtis noted strong results ahead of expectations across key metrics, raised full-year outlook. Tax season showed strategy of expert-led technology-enabled experiences working, with stabilized assisted channel market share. Clients with complex needs choosing H&R Block more, omnichannel model serving them. - Experience improvements like personalized pre-appointment led to stronger conversion, higher retention, better product attach rates. Second Look saw new clients who received it return at 600-plus basis points higher rate. Equipped offices with client experience monitors, saw 550 basis point increase in product attach. - Recent tax changes led to average refund amounts for H&R Block clients increasing by ~11%, 7% growth in clients who received refund, over 25% decline in clients who owed IRS. Helped enroll over 2 million 538 Trump accounts. - Rolled out Sidekiq, AI-enabled tax pro assistant, and AI TaxAssist in paid DIY filing, with positive feedback and strong adoption. - Disciplined learning mindset, running over 150 experiments, accelerating AI automation to eliminate manual data entry.

In the third quarter, revenue was $2.4 billion, up 5.3% year-over-year. Driven by higher NAC and volume in U.S. assisted tax prep, growth in international revenue, and increase in refund transfer volume. Assisted channel market share improved, with better execution in competitive environment. DIY channel focus on lifetime value, mix shifted to more complex returns. Total operating expenses $1.4 billion, up 4.8% due to higher field wages. Third quarter EBITDA increased 5.9% to $1.1 billion. Effective tax rate 16.5% vs 24.6% last year. Net income from continuing operations $848.8 million, up 17.4%. Adjusted net income $773.7 million, up 5.8%.

• Raised full-year outlook for fiscal 2026: expect revenue in range of $3.91 to $3.92 billion, EBITDA in range of $1.025 to $1.035 billion, effective tax rate ~14%, adjusted diluted earnings per share in range of $5.10 to $5.20. - Updated outlook reflects strength and consistency of execution, incorporated full season results, peak period labor costs, and planned shift in marketing expense.

Q: Kartik Mehta asked about assisted market share this tax season.

A: Curtis said had strong season, assisted gained share in three of last five tax seasons, this season tax law changes led to positive taxpayer impacts, market share flat in assisted channel.

Q: Scott Schneeberger asked about market share progression in assisted and buybacks.

A: Tiffany said improved market share performance in each of last three seasons, board approved incremental $100 million share repurchase for fourth quarter.

Q: George Tong asked about DIY dynamics and assisted franchise operations.

A: George was told focus on lifetime value in DIY, decline in franchise royalty revenue largely due to buyback strategy, company offices performing better.

Q: Alex Paris asked about franchise buybacks and raised guidance.

A: Tiffany said year to date 150 franchise buybacks vs 124 last year, guidance based on expected industry growth and healthy balance of price, volume, mix.