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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
December 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-06089

H&R Block, Inc.
(Exact name of registrant as specified in its charter)
Missouri44-0607856
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
One H&R Block Way, Kansas City, Missouri 64105
(Address of principal executive offices, including zip code)
(816) 854-3000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, without par valueHRBNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes     No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes     No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one)
Large accelerated filer            Accelerated filer         Non-accelerated filer           Smaller reporting company  Emerging growth company
    
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes     No  
The number of shares outstanding of the registrant's Common Stock, without par value, at the close of business on January 31, 2023: 152,277,089 shares.



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Form 10-Q for the Period ended December 31, 2022
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PART I    FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS:(unaudited, in 000s, except 
per share amounts)
Three months ended December 31,Six months ended December 31,
2022202120222021
REVENUES:
Service revenues$139,565 $133,725 $306,759 $310,702 
Royalty, product and other revenues26,840 25,091 39,631 40,738 
166,405 158,816 346,390 351,440 
OPERATING EXPENSES:
Costs of revenues298,345 289,323 559,007 530,855 
Selling, general and administrative151,263 146,793 279,697 272,657 
Total operating expenses449,608 436,116 838,704 803,512 
Other income (expense), net4,185 1,467 7,796 1,751 
Interest expense on borrowings(18,985)(23,085)(34,809)(45,915)
Loss from continuing operations before income tax benefit(298,003)(298,918)(519,327)(496,236)
Income tax benefit(77,140)(109,845)(131,097)(157,218)
Net loss from continuing operations(220,863)(189,073)(388,230)(339,018)
Net loss from discontinued operations, net of tax benefits of $812, $461, $1,128 and $956
(2,716)(1,532)(3,770)(3,188)
NET LOSS$(223,579)$(190,605)$(392,000)$(342,206)
BASIC AND DILUTED LOSS PER SHARE:
Continuing operations$(1.43)$(1.09)$(2.48)$(1.93)
Discontinued operations(0.02)(0.01)(0.02)(0.02)
Consolidated$(1.45)$(1.10)$(2.50)$(1.95)
DIVIDENDS DECLARED PER SHARE$0.29 $0.27 $0.58 $0.54 
COMPREHENSIVE LOSS:
Net loss$(223,579)$(190,605)$(392,000)$(342,206)
Change in foreign currency translation adjustments9,307 1,656 (23,038)(9,521)
Other comprehensive income (loss)9,307 1,656 (23,038)(9,521)
Comprehensive loss$(214,272)$(188,949)$(415,038)$(351,727)
See accompanying notes to consolidated financial statements.










H&R Block, Inc. |Q2 FY2023 Form 10-Q
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CONSOLIDATED BALANCE SHEETS(unaudited, in 000s, except 
share and per share amounts)
As ofDecember 31, 2022June 30, 2022
ASSETS
Cash and cash equivalents$264,455 $885,015 
Cash and cash equivalents - restricted27,733 165,698 
Receivables, less allowance for credit losses of $27,323 and $65,351
328,616 58,447 
Income taxes receivable46,646 202,838 
Prepaid expenses and other current assets108,405 72,460 
Total current assets775,855 1,384,458 
Property and equipment, at cost, less accumulated depreciation and amortization of $881,230 and $857,468
136,824 123,912 
Operating lease right of use assets382,723 427,783 
Intangible assets, net304,539 309,644 
Goodwill764,802 760,401 
Deferred tax assets and income taxes receivable181,721 208,948 
Other noncurrent assets46,760 54,012 
Total assets$2,593,224 $3,269,158 
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable and accrued expenses$137,118 $160,929 
Accrued salaries, wages and payroll taxes68,089 154,764 
Accrued income taxes and reserves for uncertain tax positions73,572 280,115 
Operating lease liabilities184,343 206,898 
Deferred revenue and other current liabilities182,711 196,107 
Total current liabilities645,833 998,813 
Long-term debt and line of credit borrowings2,067,937 1,486,876 
Deferred tax liabilities and reserves for uncertain tax positions231,041 226,362 
Operating lease liabilities205,409 228,820 
Deferred revenue and other noncurrent liabilities86,483 116,656 
Total liabilities3,236,703 3,057,527 
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, no par, stated value $0.01 per share, 800,000,000 shares authorized, shares issued of 185,403,081 and 193,571,309
1,854 1,936 
Additional paid-in capital767,683 772,182 
Accumulated other comprehensive loss(44,683)(21,645)
Retained earnings (deficit)(708,437)120,405 
Less treasury shares, at cost, of 33,127,313 and 33,640,988
(659,896)(661,247)
Total stockholders' equity (deficiency)(643,479)211,631 
Total liabilities and stockholders' equity$2,593,224 $3,269,158 
See accompanying notes to consolidated financial statements.
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CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited, in 000s)
Six months ended December 31,20222021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss$(392,000)$(342,206)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization66,347 71,346 
Provision16,581 14,639 
Deferred taxes41,534 16,685 
Stock-based compensation17,893 13,233 
Changes in assets and liabilities, net of acquisitions:
Receivables(262,293)(216,071)
Prepaid expenses, other current and noncurrent assets(32,983)(46,928)
Accounts payable, accrued expenses, salaries, wages and payroll taxes(121,156)(121,926)
Deferred revenue, other current and noncurrent liabilities(52,703)(50,882)
Income tax receivables, accrued income taxes and income tax reserves(60,163)(247,088)
Other, net(1,515)(4,373)
Net cash used in operating activities(780,458)(913,571)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures(41,495)(39,371)
Payments made for business acquisitions, net of cash acquired(39,757)(19,333)
Franchise loans funded(17,491)(14,480)
Payments from franchisees3,861 6,213 
Other, net(4,208)9,527 
Net cash used in investing activities(99,090)(57,444)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of line of credit borrowings(170,000)(210,000)
Proceeds from line of credit borrowings750,000 485,000 
Dividends paid(89,193)(96,938)
Repurchase of common stock, including shares surrendered(365,633)(324,589)
Proceeds from exercise of stock options1,427 4,067 
Other, net2,212 (7,423)
Net cash provided by (used in) financing activities128,813 (149,883)
Effects of exchange rate changes on cash(7,790)(3,330)
Net decrease in cash and cash equivalents, including restricted balances(758,525)(1,124,228)
Cash, cash equivalents and restricted cash, beginning of period1,050,713 1,584,164 
Cash, cash equivalents and restricted cash, end of period$292,188 $459,936 
SUPPLEMENTARY CASH FLOW DATA:
Income taxes paid (received), net$(114,385)$72,169 
Interest paid on borrowings31,812 36,539 
Accrued additions to property and equipment2,499 1,393 
New operating right of use assets and related lease liabilities79,917 73,710 
Accrued dividends payable to common shareholders44,569 46,497 
Accrued purchase of common stock 4,845 
See accompanying notes to consolidated financial statements.
H&R Block, Inc. | Q2 FY2023 Form 10-Q
3

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY(amounts in 000s, except per share amounts)
Common StockAdditional
Paid-in
Capital
Accumulated Other
Comprehensive
Income (Loss)(1)
Retained
Earnings
(Deficit)
Treasury StockTotal
Stockholders’
Equity
SharesAmountSharesAmount
Balances as of July 1, 2022193,571 $1,936 $772,182 $(21,645)$120,405 (33,641)$(661,247)$211,631 
Net loss    (168,421)  (168,421)
Other comprehensive loss   (32,345)   (32,345)
Stock-based compensation  5,630     5,630 
Stock-based awards exercised or vested  (15,276) (742)805 15,839 (179)
Acquisition of treasury shares(2)
     (341)(15,432)(15,432)
Repurchase and retirement of common shares(4,927)(49)(2,907) (216,813)  (219,769)
Cash dividends declared - $0.29 per share
    (46,100)  (46,100)
Balances as of September 30, 2022188,644 $1,887 $759,629 $(53,990)$(311,671)(33,177)$(660,840)$(264,985)
Net loss    (223,579)  (223,579)
Other comprehensive income   9,307    9,307 
Stock-based compensation  9,544     9,544 
Stock-based awards exercised or vested  421  (209)52 1,023 1,235 
Acquisition of treasury shares(2)
     (2)(79)(79)
Repurchase and retirement of common shares(3,241)(33)(1,911) (128,409)  (130,353)
Cash dividends declared - $0.29 per share
    (44,569)  (44,569)
Balances as of December 31, 2022185,403 $1,854 $767,683 $(44,683)$(708,437)(33,127)$(659,896)$(643,479)
(1) The balance of our accumulated other comprehensive income (loss) consists of foreign currency translation adjustments.
(2) Represents shares swapped or surrendered to us in connection with the vesting or exercise of stock-based awards.
See accompanying notes to consolidated financial statements.

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Q2 FY2023 Form 10-Q| H&R Block, Inc.

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(amounts in 000s, except per share amounts)
Common StockAdditional
Paid-in
Capital
Accumulated Other
Comprehensive
Income (Loss)(1)
Retained
Earnings
(Deficit)
Treasury StockTotal
Stockholders’
Equity
SharesAmountSharesAmount
Balances as of July 1, 2021216,656 $2,167 $779,465 $88 $286,694 (34,842)$(680,356)$388,058 
Net loss— — — — (151,601)— — (151,601)
Other comprehensive loss— — — (11,177)— — — (11,177)
Stock-based compensation— — 5,627 — — — — 5,627 
Stock-based awards exercised or vested— — (10,328)— (291)705 13,765 3,146 
Acquisition of treasury shares(2)
— — — — — (205)(4,817)(4,817)
Repurchase and retirement of common shares(6,802)(68)(4,081)— (161,619)— — (165,768)
Cash dividends declared - $0.27 per share
— — — — (47,940)— — (47,940)
Balances as of September 30, 2021209,854 $2,099 $770,683 $(11,089)$(74,757)(34,342)$(671,408)$15,528 
Net loss— — — — (190,605)— — (190,605)
Other comprehensive income— — — 1,656 — — — 1,656 
Stock-based compensation— — 5,640 — — — — 5,640 
Stock-based awards exercised or vested— — (1,709)— (219)122 2,400 472 
Acquisition of treasury shares(2)
— — — — — (2)(52)(52)
Repurchase and retirement of common shares(6,589)(66)(3,953)— (154,778)— — (158,797)
Cash dividends declared - $0.27 per share
— — — — (46,497)— — (46,497)
Balances as of December 31, 2021203,265 $2,033 $770,661 $(9,433)$(466,856)(34,222)$(669,060)$(372,655)
(1) The balance of our accumulated other comprehensive income (loss) consists of foreign currency translation adjustments.
(2) Represents shares swapped or surrendered to us in connection with the vesting or exercise of stock-based awards.
See accompanying notes to consolidated financial statements.

H&R Block, Inc. |Q2 FY2023 Form 10-Q
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS             (unaudited)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATIONThe consolidated balance sheets as of December 31, 2022 and June 30, 2022, the consolidated statements of operations and comprehensive loss for the three and six months ended December 31, 2022 and 2021, the consolidated statements of cash flows for the six months ended December 31, 2022 and 2021, and the consolidated statements of stockholders' equity for the three and six months ended December 31, 2022 and 2021 have been prepared by the Company, without audit. In the opinion of management, all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position, results of operations, and cash flows as of December 31, 2022 and 2021 and for all periods presented, have been made.
"H&R Block," "the Company," "we," "our," and "us" are used interchangeably to refer to H&R Block, Inc., to H&R Block, Inc. and its subsidiaries, or to H&R Block, Inc.'s operating subsidiaries, as appropriate to the context.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been condensed or omitted. These consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our June 30, 2022 Annual Report to Shareholders on Form 10-K. All amounts presented herein as of June 30, 2022 or for the year then ended are derived from our Annual Report on Form 10-K.
MANAGEMENT ESTIMATESThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates, assumptions and judgments are applied in the evaluation of contingent losses arising from our discontinued mortgage business, contingent losses associated with pending claims and litigation, reserves for uncertain tax positions, fair value of reporting units, and related matters. Estimates have been prepared based on the best information available as of each balance sheet date. As such, actual results could differ materially from those estimates.
SEASONALITY OF BUSINESS – Our operating revenues are seasonal in nature with peak revenues typically occurring in the months of February through April. Therefore, results for interim periods are not indicative of results to be expected for the full year.
DISCONTINUED OPERATIONS – Our discontinued operations include the results of operations of Sand Canyon Corporation, previously known as Option One Mortgage Corporation (including its subsidiaries, collectively, SCC), which exited its mortgage business in fiscal year 2008. See note 9 for additional information on loss contingencies related to our discontinued operations.
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Q2 FY2023 Form 10-Q| H&R Block, Inc.

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NOTE 2: REVENUE RECOGNITION
The majority of our revenues are from our U.S. tax services business. The following table disaggregates our U.S. tax services revenues by major service line, with revenues from our international tax services businesses and from Wave included as separate lines:
(in 000s)
Three months ended December 31,Six months ended December 31,
2022202120222021
Revenues:
U.S. assisted tax preparation$41,216 $30,845 $77,528 $64,452 
U.S. royalties4,946 3,404 11,174 10,762 
U.S. DIY tax preparation12,150 9,210 15,308 13,271 
Refund Transfers1,542 777 2,826 2,442 
Peace of Mind® Extended Service Plan17,320 17,315 42,090 42,151 
Tax Identity Shield®5,350 5,200 10,517 10,353 
Emerald Card® and SpruceSM
12,478 24,830 24,090 53,088 
Interest and fee income on Emerald AdvanceSM
12,903 12,424 13,517 12,903 
International28,046 27,907 86,880 86,232 
Wave21,941 19,497 44,587 38,634 
Other8,513 7,407 17,873 17,152 
Total revenues$166,405 $158,816 $346,390 $351,440 
Changes in the balances of deferred revenue and wages for our Peace of Mind® Extended Service Plan (POM) are as follows:
(in 000s)
POMDeferred RevenueDeferred Wages
Six months ended December 31,2022202120222021
Balance, beginning of the period$173,486 $172,759 $19,495 $17,867 
Amounts deferred3,262 2,961 10 10 
Amounts recognized on previous deferrals(47,811)(49,034)(5,012)(4,805)
Balance, end of the period$128,937 $126,686 $14,493 $13,072 
As of December 31, 2022, deferred revenue related to POM was $128.9 million. We expect that $94.8 million will be recognized over the next twelve months, while the remaining balance will be recognized over the following five years.
As of December 31, 2022 and 2021, Tax Identity Shield® (TIS) deferred revenue was $16.8 million and $18.5 million, respectively. Deferred revenue related to TIS was $25.8 million and $28.3 million as of June 30, 2022 and June 30, 2021, respectively. All deferred revenue related to TIS will be recognized by April 2023.
NOTE 3: EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY
EARNINGS PER SHARE – Basic and diluted earnings (loss) per share is computed using the two-class method. The two-class method is an earnings allocation formula that determines net income per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Per share amounts are computed by dividing net income (loss) from continuing operations attributable to common shareholders by the weighted average shares outstanding during each period. Diluted earnings per share excludes the impact of shares of common stock issuable upon the lapse of certain restrictions or the exercise of options to purchase 4.5 million shares for the three and six months ended December 31, 2022 and 5.1 million shares for the three and six months ended December 31, 2021, as the effect would be antidilutive due to the net loss from continuing operations during the periods.
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The computations of basic and diluted earnings (loss) per share from continuing operations are as follows:
(in 000s, except per share amounts)
Three months ended December 31,Six months ended December 31,
2022202120222021
Net loss from continuing operations attributable to shareholders$(220,863)$(189,073)$(388,230)$(339,018)
Amounts allocated to participating securities(192)(210)(371)(449)
Net loss from continuing operations attributable to common shareholders$(221,055)$(189,283)$(388,601)$(339,467)
Basic weighted average common shares154,119 173,378 156,701 175,739 
Potential dilutive shares    
Dilutive weighted average common shares154,119 173,378 156,701 175,739 
Loss per share from continuing operations attributable to common shareholders:
Basic$(1.43)$(1.09)$(2.48)$(1.93)
Diluted(1.43)(1.09)(2.48)(1.93)
The decrease in the weighted average shares outstanding is due to share repurchases completed in the current and prior fiscal years.
STOCK-BASED COMPENSATION – During the six months ended December 31, 2022, we granted 1.0 million shares under our stock-based compensation plan. We granted awards of 1.5 million shares under our stock-based compensation plans during the six months ended December 31, 2021. Stock-based compensation expense of our continuing operations totaled $10.2 million and $17.9 million for the three and six months ended December 31, 2022, respectively, and $6.4 million and $13.2 million for the three and six months ended December 31, 2021, respectively. As of December 31, 2022, unrecognized compensation cost for stock options totaled $0.3 million, and for nonvested shares and units totaled $66.9 million.
NOTE 4: RECEIVABLES
Receivables, net of their related allowance, consist of the following:
(in 000s)
As ofDecember 31, 2022June 30, 2022
Short-termLong-termShort-termLong-term
Loans to franchisees$16,304 $26,587 $6,194 $22,036 
Receivables for U.S. assisted and DIY tax preparation and related fees10,427 2,182 18,893 2,560 
H&R Block's Instant RefundSM receivables
1,193 103 3,491 198 
H&R Block Emerald Advance® lines of credit
268,623 2,923 6,691 8,825 
Software receivables from retailers2,165  3,992  
Royalties and other receivables from franchisees6,380  3,682 73 
Wave payment processing receivables1,024