H&R Block(HRB) - 2025 Q3 - Quarterly Results

Fiscal 2025 Third Quarter Financial Highlights H&R Block reported strong third-quarter results with revenue and EPS growth, reaffirmed its full-year outlook, and continued its capital allocation strategy through dividends and share repurchases Performance Summary H&R Block reported strong Q3 FY2025 results with revenue up 4.2% to $2.3 billion and diluted EPS up 9.2% to $5.32, driven by higher charges and U.S. return volumes Q3 FY2025 Key Financial Metrics (vs. Q3 FY2024) | Metric | Q3 FY2025 | Q3 FY2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $2.3 billion | $2.2 billion | +4.2% | | Net Income (cont. ops) | $722.9 million | $691.6 million | +4.5% | | Diluted EPS (cont. ops) | $5.32 | $4.87 | +9.2% | | Adjusted Diluted EPS (cont. ops) | $5.38 | $4.94 | +8.9% | - Revenue growth was primarily driven by an increase in the overall net average charge (NAC) and higher company-owned return volumes in the U.S[3] - Growth was partially offset by lower international revenue and decreased interest and fee income from the Emerald Advance® financial product[3] - The company successfully improved volume and market share trends in the Assisted channel by enhancing the new client experience, leading to higher client satisfaction[2] - Total operating expenses increased by 3.4% to $1.3 billion, mainly due to higher wages and benefits for tax professionals corresponding with the increase in return volume[4] Capital Allocation H&R Block continued its capital allocation strategy, declaring a $0.375 per share dividend and repurchasing $400 million in shares - A quarterly cash dividend of $0.375 per share will be paid on July 3, 2025[5] - In the first and second quarters of fiscal 2025, the company repurchased 6.5 million shares at an aggregate price of $400 million[11] - Approximately $1.1 billion remains on the company's $1.5 billion share repurchase program[11] - Since 2016, H&R Block has returned over $4.5 billion to shareholders through dividends and share buybacks, repurchasing over 43% of its shares outstanding[6] Fiscal Year 2025 Outlook H&R Block reaffirmed its FY2025 outlook, projecting revenues between $3.69 billion and $3.75 billion and Adjusted Diluted EPS of $5.15 to $5.35 Reaffirmed Fiscal Year 2025 Outlook | Metric | Outlook Range | | :--- | :--- | | Revenue | $3.69 billion to $3.75 billion | | EBITDA | $975 million to $1.02 billion | | Adjusted Diluted EPS | $5.15 to $5.35 | | Effective Tax Rate | Approx. 13% | Consolidated Financial Statements The consolidated financial statements detail H&R Block's income, balance sheet, and cash flow performance for the period, showing revenue growth and changes in equity Financial Results (Income Statement) Total revenues for Q3 FY2025 increased to $2.28 billion, with net income from continuing operations growing to $722.9 million Income Statement Highlights - Three Months Ended March 31 (in thousands) | Line Item | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenues | $2,277,104 | $2,184,834 | | Total Operating Expenses | $1,298,791 | $1,256,630 | | Net Income from Continuing Ops | $722,928 | $691,586 | | Diluted EPS from Continuing Ops | $5.32 | $4.87 | Income Statement Highlights - Nine Months Ended March 31 (in thousands) | Line Item | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenues | $2,649,984 | $2,547,717 | | Net Income from Continuing Ops | $309,041 | $339,597 | | Diluted EPS from Continuing Ops | $2.23 | $2.34 | Consolidated Balance Sheets As of March 31, 2025, total assets were $3.25 billion, with total liabilities at $3.44 billion, resulting in a stockholders' deficiency of $192.8 million Balance Sheet Summary (in thousands) | Account | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $772,946 | $1,053,326 | | Total Assets | $3,245,011 | $3,218,810 | | Total Liabilities | $3,437,849 | $3,128,216 | | Total Stockholders' Equity (Deficiency) | ($192,838) | $90,594 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities for the nine months ended March 31, 2025, was $429.3 million, with a net decrease in cash of $285.5 million Cash Flow Summary - Nine Months Ended March 31 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $429,322 | $420,264 | | Net Cash used in Investing Activities | ($110,890) | ($99,643) | | Net Cash used in Financing Activities | ($595,506) | ($520,503) | | Net Decrease in Cash | ($285,503) | ($202,621) | - The primary uses of cash in financing activities were repurchases of common stock ($436.5 million) and dividends paid ($147.1 million)[16] Non-GAAP Financial Measures The company provides reconciliations for non-GAAP measures like EBITDA and Adjusted EPS, explaining their utility for performance evaluation Reconciliation of Non-GAAP Measures Reconciliations are provided for non-GAAP measures, showing how Net Income of $722.9 million reconciles to EBITDA of $1.01 billion and GAAP Diluted EPS to Adjusted Diluted EPS EBITDA Reconciliation - Q3 (in thousands) | Line Item | 2025 | 2024 | | :--- | :--- | :--- | | Net income from continuing ops | $722,928 | $691,586 | | Add: Taxes, Interest, D&A | $289,160 | $272,514 | | EBITDA from continuing ops | $1,012,088 | $964,100 | Adjusted Diluted EPS Reconciliation - Q3 | Line Item | 2025 | 2024 | | :--- | :--- | :--- | | Diluted EPS from continuing ops | $5.32 | $4.87 | | Adjustments, net of tax | $0.06 | $0.07 | | Adjusted diluted EPS | $5.38 | $4.94 | Explanation of Non-GAAP Measures H&R Block uses non-GAAP measures like EBITDA and Adjusted EPS for performance evaluation, adjusting for non-core items, while cautioning they are not GAAP substitutes - The company considers non-GAAP financial measures like EBITDA and adjusted diluted EPS to be useful metrics for management and investors to evaluate ongoing operating performance[19][20] - Adjustments are made for certain items, such as the amortization of intangibles from acquisitions, to better reflect core business performance[19] - These non-GAAP measures should not be considered a substitute for, or superior to, financial performance measures prepared in accordance with GAAP[18]