H&R Block outlines $3.875B-$3.895B revenue target for 2026 amid CEO transition and small business expansion

Earnings Call Insights: H&R Block (HRB) Q4 2025

MANAGEMENT VIEW

* CEO Jeffrey J. Jones reported total revenue growth of 4.2% for fiscal 2025 and $976 million of EBITDA, which was within the outlook range. He emphasized, “we have more than doubled our dividend since 2016. Combined with share repurchases, we have returned over $4.5 billion to shareholders during this period.”
* Jones highlighted assisted revenue growth of 6.1% and DIY revenue growth of 9.7%, stating that “our assisted offering highlights H&R Block's expertise and continues to resonate well, particularly among higher income earners.” He also noted increased company-owned assisted filing volume and year-over-year market share improvement.
* The small business segment delivered double-digit top line growth, with Wave contributing a 13% annual revenue increase. Jones said, “the combination of Block Advisors and Wave enables us to offer a broad range of products and to deliver significant value to small business owners.”
* The Spruce mobile banking platform saw a nearly 40% increase in new accounts and total deposits reaching $1.75 billion since launch.
* Franchise acquisitions remained a capital priority, with 124 franchise locations acquired during the year. Jones confirmed his retirement as President and CEO effective December 31, 2025, and the appointment of Curtis as his successor, stating “he is not only a leader with more than a decade of deep tax industry expertise, but also a tremendous fit for Block's culture.”
* CFO Tiffany L. Mason stated, “we delivered $3.8 billion of total revenue in fiscal 2025, an increase of 4.2%.” She explained operating expenses rose 4.6%, primarily due to higher tax professional wages, marketing, consulting, technology expenses, elevated health care costs, legal fees, settlements, and severance-related charges from an organizational realignment.

OUTLOOK

* Mason outlined the fiscal 2026 outlook: revenue in the range of $3.875 billion to $3.895 billion, EBITDA of $1.015 billion to $1.035 billion, effective tax rate approximately 25%, and adjusted EPS of $4.85 to $5, assuming roughly $400 million of share repurchases in the first half of the fiscal year. She stated, “we believe we can leverage our cost structure such that EBITDA growth outpaces revenue while utilizing share repurchases to grow EPS even faster.”
* Management expects industry growth to align with historical trends, around 1%, and plans to balance volume, price, and mix, with small business increasing as a revenue driver.

FINANCIAL RESULTS

* Mason reported $3.8 billion of total revenue for fiscal 2025 and approximately $600 million in free cash flow generated during the year.
* Total operating expenses were $2.9 billion, up 4.6% year-over-year. Net income from continuing operations was $609 million, with earnings per share from continuing operations of $4.42 and adjusted earnings per share from continuing operations of $4.66.
* The company announced a 12% increase in its quarterly dividend to $0.42 per share.
* H&R Block extended its credit facility for five years at $1.5 billion, securing favorable pricing expected to improve interest expense by more than $1 million annually.

Q&A

* Kartik Mehta, Northcoast Research: Asked about market growth assumptions for assisted and DIY next year. Jones responded that they assume “a similar level of shift to the assisted business that we saw this year.” Mason added that “at the midpoint of our guidance range...we cut those share losses in half. So at the top end of the range, we're really growing with the market.”
* Mehta: Asked about changes to bank products to drive early season filers. Jones stated, “I want to save commentary on that and what we plan to do until November just for competitive reasons.”
* Scott Schneeberger, Oppenheimer: Inquired about strategic direction given the CEO change. Jones stated, “our strategy is locked, and we will continue to execute the strategy that Curtis has been part of building.”
* Schneeberger: Asked about cost bridges and margin guidance. Mason explained, “all of those things from fiscal '25 have been adequately adjusted for in fiscal '26 guidance,” and highlighted “cost savings opportunities for us in fiscal '26.”
* Schneeberger: Sought clarification on the impact of the "One Big Beautiful Bill". Mason replied, “we do believe it's a tailwind. We are being cautiously optimistic.”
* Keen Fai Tong, Goldman Sachs: Asked about balancing volume, price, and mix. Mason elaborated, “when we say mix, what we mean is complexity of client...we like the way that, that mix of revenue...progressed. We want to continue to see that progression.”
* Tong: Asked about determinants for guidance range achievement. Jones stated, “our ability to continue to improve our share loss midpoint or upper end of the range really comes down to our effectiveness at driving more qualified traffic...and then continuing to do a better job of converting the people that start with us.”

SENTIMENT ANALYSIS

* Analysts displayed a neutral to slightly positive tone, focusing on strategic execution, guidance clarity, and the CEO transition, with questions centered on growth levers, cost management, and competitive positioning.
* Management maintained a confident and measured tone, using phrases like “we are well positioned for fiscal 2026 and beyond” and “we feel really good about the guide that we shared today.”
* Compared to the previous quarter, there was increased attention to expense management and the CEO transition, but the management’s tone remained confident and steady.

QUARTER-OVER-QUARTER COMPARISON

* Current quarter guidance is higher, with a new revenue range of $3.875 billion to $3.895 billion for fiscal 2026 versus the previous year’s range of $3.69 billion to $3.75 billion.
* Management elevated the quarterly dividend by 12% and discussed a more intense focus on balancing volume, price, and mix.
* The CEO succession plan was formalized this quarter, with Jones announcing his retirement and Curtis set to take over.
* Analysts continued to focus on market share, competitive dynamics, and client conversion, while management reiterated its strategic priorities and disciplined capital allocation.
* Management’s confidence in cost control and operational efficiency was more pronounced than in the prior quarter, addressing the impact of one-time expenses and outlining cost-saving measures for fiscal 2026.

RISKS AND CONCERNS

* Elevated health care costs, legal fees, and settlements contributed to higher operating expenses.
* The company incurred severance-related charges due to organizational realignment.
* There was a delay in recognizing a one-time tax benefit, as Mason noted, “due to external factors beyond our control, the completion of these matters was delayed beyond fiscal 2025.”
* Management acknowledged the need to further cut share losses, especially in the assisted segment, and cited ongoing plans to improve conversion and client acquisition.

FINAL TAKEAWAY

H&R Block reported consistent revenue and earnings growth for fiscal 2025, increased its dividend, and outlined a solid outlook for fiscal 2026, projecting revenue of $3.875 billion to $3.895 billion and adjusted EPS of $4.85 to $5. The company is navigating a CEO transition to an internal successor and plans to intensify efforts on balancing volume, price, and mix, with small business and franchise acquisitions as key growth drivers. Management addressed higher operating costs and affirmed its commitment to disciplined capital allocation, positioning H&R Block for continued value creation for shareholders.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/hrb/earnings/transcripts]

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