hrb-20231231
false2024Q200000126596/3000000126592023-07-012023-12-3100000126592024-01-31xbrli:shares0000012659us-gaap:ServiceMember2023-10-012023-12-31iso4217:USD0000012659us-gaap:ServiceMember2022-10-012022-12-310000012659us-gaap:ServiceMember2023-07-012023-12-310000012659us-gaap:ServiceMember2022-07-012022-12-310000012659us-gaap:RoyaltyMember2023-10-012023-12-310000012659us-gaap:RoyaltyMember2022-10-012022-12-310000012659us-gaap:RoyaltyMember2023-07-012023-12-310000012659us-gaap:RoyaltyMember2022-07-012022-12-3100000126592023-10-012023-12-3100000126592022-10-012022-12-3100000126592022-07-012022-12-31iso4217:USDxbrli:shares00000126592023-12-3100000126592023-06-3000000126592022-06-3000000126592022-12-310000012659us-gaap:CommonStockMember2023-06-300000012659us-gaap:AdditionalPaidInCapitalMember2023-06-300000012659us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300000012659us-gaap:RetainedEarningsMember2023-06-300000012659us-gaap:TreasuryStockCommonMember2023-06-300000012659us-gaap:RetainedEarningsMember2023-07-012023-09-3000000126592023-07-012023-09-300000012659us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300000012659us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300000012659us-gaap:TreasuryStockCommonMember2023-07-012023-09-300000012659us-gaap:CommonStockMember2023-07-012023-09-300000012659us-gaap:CommonStockMember2023-09-300000012659us-gaap:AdditionalPaidInCapitalMember2023-09-300000012659us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300000012659us-gaap:RetainedEarningsMember2023-09-300000012659us-gaap:TreasuryStockCommonMember2023-09-3000000126592023-09-300000012659us-gaap:RetainedEarningsMember2023-10-012023-12-310000012659us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-10-012023-12-310000012659us-gaap:AdditionalPaidInCapitalMember2023-10-012023-12-310000012659us-gaap:TreasuryStockCommonMember2023-10-012023-12-310000012659us-gaap:CommonStockMember2023-10-012023-12-310000012659us-gaap:CommonStockMember2023-12-310000012659us-gaap:AdditionalPaidInCapitalMember2023-12-310000012659us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310000012659us-gaap:RetainedEarningsMember2023-12-310000012659us-gaap:TreasuryStockCommonMember2023-12-310000012659us-gaap:CommonStockMember2022-06-300000012659us-gaap:AdditionalPaidInCapitalMember2022-06-300000012659us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300000012659us-gaap:RetainedEarningsMember2022-06-300000012659us-gaap:TreasuryStockCommonMember2022-06-300000012659us-gaap:RetainedEarningsMember2022-07-012022-09-3000000126592022-07-012022-09-300000012659us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300000012659us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300000012659us-gaap:TreasuryStockCommonMember2022-07-012022-09-300000012659us-gaap:CommonStockMember2022-07-012022-09-300000012659us-gaap:CommonStockMember2022-09-300000012659us-gaap:AdditionalPaidInCapitalMember2022-09-300000012659us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300000012659us-gaap:RetainedEarningsMember2022-09-300000012659us-gaap:TreasuryStockCommonMember2022-09-3000000126592022-09-300000012659us-gaap:RetainedEarningsMember2022-10-012022-12-310000012659us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-10-012022-12-310000012659us-gaap:AdditionalPaidInCapitalMember2022-10-012022-12-310000012659us-gaap:TreasuryStockCommonMember2022-10-012022-12-310000012659us-gaap:CommonStockMember2022-10-012022-12-310000012659us-gaap:CommonStockMember2022-12-310000012659us-gaap:AdditionalPaidInCapitalMember2022-12-310000012659us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310000012659us-gaap:RetainedEarningsMember2022-12-310000012659us-gaap:TreasuryStockCommonMember2022-12-310000012659hrb:TaxPreparationFeesMember2023-10-012023-12-310000012659hrb:TaxPreparationFeesMember2022-10-012022-12-310000012659hrb:TaxPreparationFeesMember2023-07-012023-12-310000012659hrb:TaxPreparationFeesMember2022-07-012022-12-310000012659hrb:RoyaltiesMember2023-10-012023-12-310000012659hrb:RoyaltiesMember2022-10-012022-12-310000012659hrb:RoyaltiesMember2023-07-012023-12-310000012659hrb:RoyaltiesMember2022-07-012022-12-310000012659hrb:DIYTaxPreparationFeesMember2023-10-012023-12-310000012659hrb:DIYTaxPreparationFeesMember2022-10-012022-12-310000012659hrb:DIYTaxPreparationFeesMember2023-07-012023-12-310000012659hrb:DIYTaxPreparationFeesMember2022-07-012022-12-310000012659hrb:RefundTransferRevenuesMember2023-10-012023-12-310000012659hrb:RefundTransferRevenuesMember2022-10-012022-12-310000012659hrb:RefundTransferRevenuesMember2023-07-012023-12-310000012659hrb:RefundTransferRevenuesMember2022-07-012022-12-310000012659hrb:PeaceofMindRevenuesMember2023-10-012023-12-310000012659hrb:PeaceofMindRevenuesMember2022-10-012022-12-310000012659hrb:PeaceofMindRevenuesMember2023-07-012023-12-310000012659hrb:PeaceofMindRevenuesMember2022-07-012022-12-310000012659hrb:TaxIdentityShieldMember2023-10-012023-12-310000012659hrb:TaxIdentityShieldMember2022-10-012022-12-310000012659hrb:TaxIdentityShieldMember2023-07-012023-12-310000012659hrb:TaxIdentityShieldMember2022-07-012022-12-310000012659hrb:FeesfromEmeraldCardMember2023-10-012023-12-310000012659hrb:FeesfromEmeraldCardMember2022-10-012022-12-310000012659hrb:FeesfromEmeraldCardMember2023-07-012023-12-310000012659hrb:FeesfromEmeraldCardMember2022-07-012022-12-310000012659hrb:InterestandFeeIncomeonEmeraldAdvanceMember2023-10-012023-12-310000012659hrb:InterestandFeeIncomeonEmeraldAdvanceMember2022-10-012022-12-310000012659hrb:InterestandFeeIncomeonEmeraldAdvanceMember2023-07-012023-12-310000012659hrb:InterestandFeeIncomeonEmeraldAdvanceMember2022-07-012022-12-310000012659hrb:InternationalMember2023-10-012023-12-310000012659hrb:InternationalMember2022-10-012022-12-310000012659hrb:InternationalMember2023-07-012023-12-310000012659hrb:InternationalMember2022-07-012022-12-310000012659hrb:WaveHQInc.Member2023-10-012023-12-310000012659hrb:WaveHQInc.Member2022-10-012022-12-310000012659hrb:WaveHQInc.Member2023-07-012023-12-310000012659hrb:WaveHQInc.Member2022-07-012022-12-310000012659hrb:OtherrevenueMember2023-10-012023-12-310000012659hrb:OtherrevenueMember2022-10-012022-12-310000012659hrb:OtherrevenueMember2023-07-012023-12-310000012659hrb:OtherrevenueMember2022-07-012022-12-310000012659hrb:PeaceofMindRevenuesMemberhrb:DeferredRevenueMember2023-06-300000012659hrb:PeaceofMindRevenuesMemberhrb:DeferredRevenueMember2022-06-300000012659hrb:PeaceofMindRevenuesMemberhrb:DeferredWagesMember2023-06-300000012659hrb:PeaceofMindRevenuesMemberhrb:DeferredWagesMember2022-06-300000012659hrb:PeaceofMindRevenuesMemberhrb:DeferredRevenueMember2023-07-012023-12-310000012659hrb:PeaceofMindRevenuesMemberhrb:DeferredRevenueMember2022-07-012022-12-310000012659hrb:PeaceofMindRevenuesMemberhrb:DeferredWagesMember2023-07-012023-12-310000012659hrb:PeaceofMindRevenuesMemberhrb:DeferredWagesMember2022-07-012022-12-310000012659hrb:PeaceofMindRevenuesMemberhrb:DeferredRevenueMember2023-12-310000012659hrb:PeaceofMindRevenuesMemberhrb:DeferredRevenueMember2022-12-310000012659hrb:PeaceofMindRevenuesMemberhrb:DeferredWagesMember2023-12-310000012659hrb:PeaceofMindRevenuesMemberhrb:DeferredWagesMember2022-12-310000012659hrb:PeaceofMindRevenuesMember2023-12-3100000126592020-11-01hrb:PeaceofMindRevenuesMember2023-12-3100000126592021-12-01hrb:PeaceofMindRevenuesMember2023-12-310000012659hrb:TaxIdentityShieldMember2023-12-310000012659hrb:TaxIdentityShieldMember2022-12-310000012659hrb:TaxIdentityShieldMember2023-06-300000012659hrb:TaxIdentityShieldMember2022-06-300000012659hrb:LoansToFranchiseesMember2023-12-310000012659hrb:LoansToFranchiseesMember2023-06-300000012659hrb:ReceivablesForTaxPreparationAndRelatedFeesMember2023-12-310000012659hrb:ReceivablesForTaxPreparationAndRelatedFeesMember2023-06-300000012659hrb:HRBlockInstantRefundMember2023-12-310000012659hrb:HRBlockInstantRefundMember2023-06-300000012659hrb:EmeraldAdvanceLinesOfCreditMember2023-12-310000012659hrb:EmeraldAdvanceLinesOfCreditMember2023-06-300000012659hrb:SoftwareReceivablefromRetailersMember2023-12-310000012659hrb:SoftwareReceivablefromRetailersMember2023-06-300000012659hrb:RoyaltiesFromFranchiseesMember2023-12-310000012659hrb:RoyaltiesFromFranchiseesMember2023-06-300000012659hrb:WavePaymentProcessingReceivablesMember2023-12-310000012659hrb:WavePaymentProcessingReceivablesMember2023-06-300000012659hrb:OtherReceivablesMember2023-12-310000012659hrb:OtherReceivablesMember2023-06-300000012659hrb:HRBlockInstantRefundMember2022-07-012023-06-300000012659hrb:CurrentYearOfOriginationMemberhrb:HRBlockInstantRefundMember2023-12-310000012659hrb:HRBlockInstantRefundMemberhrb:PriorYearOfOriginationandBeforeMember2023-12-310000012659hrb:EmeraldAdvanceLinesOfCreditMember2022-07-012023-06-300000012659hrb:CurrentYearOfOriginationMemberhrb:EmeraldAdvanceLinesOfCreditMember2023-12-310000012659hrb:EmeraldAdvanceLinesOfCreditMemberhrb:PriorYearOfOriginationandBeforeMember2023-12-310000012659hrb:AllOtherReceivablesMember2023-06-300000012659hrb:EmeraldAdvanceLinesOfCreditMember2023-07-012023-12-310000012659hrb:AllOtherReceivablesMember2023-07-012023-12-310000012659hrb:AllOtherReceivablesMember2023-12-310000012659hrb:EmeraldAdvanceLinesOfCreditMember2022-06-300000012659hrb:AllOtherReceivablesMember2022-06-300000012659hrb:EmeraldAdvanceLinesOfCreditMember2022-07-012022-12-310000012659hrb:AllOtherReceivablesMember2022-07-012022-12-310000012659hrb:EmeraldAdvanceLinesOfCreditMember2022-12-310000012659hrb:AllOtherReceivablesMember2022-12-310000012659hrb:EmeraldAdvanceLinesOfCreditWriteOffsMember2023-07-012023-12-310000012659hrb:EmeraldAdvanceLineOfCreditOriginatedInFY23Member2023-07-012023-12-310000012659hrb:EmeraldAdvanceRevolvingLoansMember2023-07-012023-12-310000012659hrb:ReacquiredFranchiseRightsMember2023-12-310000012659us-gaap:CustomerRelationshipsMember2023-12-310000012659us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2023-12-310000012659us-gaap:NoncompeteAgreementsMember2023-12-310000012659us-gaap:FranchiseRightsMember2023-12-310000012659hrb:PurchasedTechnologyMember2023-12-310000012659us-gaap:TradeNamesMember2023-12-310000012659hrb:ReacquiredFranchiseRightsMember2023-06-300000012659us-gaap:CustomerRelationshipsMember2023-06-300000012659us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2023-06-300000012659us-gaap:NoncompeteAgreementsMember2023-06-300000012659us-gaap:FranchiseRightsMember2023-06-300000012659hrb:PurchasedTechnologyMember2023-06-300000012659us-gaap:TradeNamesMember2023-06-300000012659hrb:FranchiseeandCompetitorBusinessesMember2023-07-012023-12-310000012659hrb:FranchiseeandCompetitorBusinessesMember2022-07-012022-12-310000012659us-gaap:CustomerRelationshipsMember2023-07-012023-12-310000012659hrb:ReacquiredFranchiseRightsMember2023-07-012023-12-310000012659us-gaap:NoncompeteAgreementsMember2023-07-012023-12-310000012659hrb:SeniorNotesdue2025Memberus-gaap:SeniorNotesMember2023-12-31xbrli:pure0000012659hrb:SeniorNotesdue2025Memberus-gaap:SeniorNotesMember2023-06-300000012659us-gaap:SeniorNotesMemberhrb:SeniorNotesDue2028Member2023-12-310000012659us-gaap:SeniorNotesMemberhrb:SeniorNotesDue2028Member2023-06-300000012659hrb:A2030SeniorNotesMemberus-gaap:SeniorNotesMember2023-12-310000012659hrb:A2030SeniorNotesMemberus-gaap:SeniorNotesMember2023-06-300000012659us-gaap:RevolvingCreditFacilityMember2023-12-310000012659hrb:SwinglineCreditFacilityMember2023-12-310000012659us-gaap:StandbyLettersOfCreditMember2023-12-310000012659hrb:FreeFileLitigationMember2019-05-062019-05-060000012659hrb:SccMember2023-12-31
Table of Contents
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, 2023
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, 2024: 139,520,675 shares.



Table of Contents

Form 10-Q for the Period ended December 31, 2023
Table of Contents



Table of Contents
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,
2023202220232022
REVENUES:
Service revenues$149,081 $139,565 $320,807 $306,759 
Royalty, product and other revenues30,002 26,840 42,076 39,631 
179,083 166,405 362,883 346,390 
OPERATING EXPENSES:
Costs of revenues299,827 298,345 559,185 559,007 
Selling, general and administrative146,688 151,263 277,456 279,697 
Total operating expenses446,515 449,608 836,641 838,704 
Other income (expense), net5,922 4,185 15,758 7,796 
Interest expense on borrowings(21,364)(18,985)(37,234)(34,809)
Loss from continuing operations before income tax benefit(282,874)(298,003)(495,234)(519,327)
Income tax benefit(93,758)(77,140)(143,245)(131,097)
Net loss from continuing operations(189,116)(220,863)(351,989)(388,230)
Net loss from discontinued operations, net of tax benefits of $191, $812, $373 and $1,128
(639)(2,716)(1,248)(3,770)
NET LOSS$(189,755)$(223,579)$(353,237)$(392,000)
BASIC AND DILUTED LOSS PER SHARE:
Continuing operations$(1.33)$(1.43)$(2.44)$(2.48)
Discontinued operations (0.02)(0.01)(0.02)
Consolidated$(1.33)$(1.45)$(2.45)$(2.50)
DIVIDENDS DECLARED PER SHARE$0.32 $0.29 $0.64 $0.58 
COMPREHENSIVE LOSS:
Net loss$(189,755)$(223,579)$(353,237)$(392,000)
Change in foreign currency translation adjustments11,559 9,307 645 (23,038)
Other comprehensive income (loss)11,559 9,307 645 (23,038)
Comprehensive loss$(178,196)$(214,272)$(352,592)$(415,038)
See accompanying notes to consolidated financial statements.










H&R Block, Inc. |Q2 FY2024 Form 10-Q
1

Table of Contents
CONSOLIDATED BALANCE SHEETS(unaudited, in 000s, except 
share and per share amounts)
As ofDecember 31, 2023June 30, 2023
ASSETS
Cash and cash equivalents$321,014 $986,975 
Cash and cash equivalents - restricted17,210 28,341 
Receivables, less allowance for credit losses of $18,579 and $55,502
397,453 59,987 
Income taxes receivable74,415 35,910 
Prepaid expenses and other current assets88,793 76,273 
Total current assets898,885 1,187,486 
Property and equipment, at cost, less accumulated depreciation and amortization of $872,950 and $846,177
137,153 130,015 
Operating lease right of use assets385,288 438,299 
Intangible assets, net275,230 277,043 
Goodwill789,068 775,453 
Deferred tax assets and income taxes receivable239,300 211,391 
Other noncurrent assets51,371 52,571 
Total assets$2,776,295 $3,072,258 
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable and accrued expenses$143,339 $159,901 
Accrued salaries, wages and payroll taxes65,774 95,154 
Accrued income taxes and reserves for uncertain tax positions151,332 271,800 
Operating lease liabilities185,424 205,391 
Deferred revenue and other current liabilities199,718 206,536 
Total current liabilities745,587 938,782 
Long-term debt and line of credit borrowings2,290,044 1,488,974 
Deferred tax liabilities and reserves for uncertain tax positions235,303 264,567 
Operating lease liabilities208,734 240,543 
Deferred revenue and other noncurrent liabilities69,279 107,328 
Total liabilities3,548,947 3,040,194 
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, no par, stated value $0.01 per share, 800,000,000 shares authorized, shares issued of 170,915,771 and 178,935,578
1,709 1,789 
Additional paid-in capital746,734 770,376 
Accumulated other comprehensive loss(36,454)(37,099)
Retained deficit(846,162)(48,677)
Less treasury shares, at cost, of 31,396,591 and 32,785,658
(638,479)(654,325)
Total stockholders' equity (deficiency)(772,652)32,064 
Total liabilities and stockholders' equity$2,776,295 $3,072,258 
See accompanying notes to consolidated financial statements.
2
Q2 FY2024 Form 10-Q| H&R Block, Inc.

Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited, in 000s)
Six months ended December 31,20232022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss$(353,237)$(392,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization60,331 66,347 
Provision for credit losses21,536 16,581 
Deferred taxes(35,525)41,534 
Stock-based compensation17,525 17,893 
Changes in assets and liabilities, net of acquisitions:
Receivables(348,833)(262,293)
Prepaid expenses, other current and noncurrent assets(7,395)(32,983)
Accounts payable, accrued expenses, salaries, wages and payroll taxes(58,543)(121,156)
Deferred revenue, other current and noncurrent liabilities(58,520)(52,703)
Income tax receivables, accrued income taxes and income tax reserves(180,706)(60,163)
Other, net1,201 (1,515)
Net cash used in operating activities(942,166)(780,458)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures(32,708)(41,495)
Payments made for business acquisitions, net of cash acquired(27,158)(39,757)
Franchise loans funded(15,491)(17,491)
Payments from franchisees2,747 3,861 
Other, net1,565 (4,208)
Net cash used in investing activities(71,045)(99,090)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of line of credit borrowings(25,000)(170,000)
Proceeds from line of credit borrowings825,000 750,000 
Dividends paid(89,854)(89,193)
Repurchase of common stock, including shares surrendered(378,709)(365,633)
Other, net4,011 3,639 
Net cash provided by financing activities335,448 128,813 
Effects of exchange rate changes on cash671 (7,790)
Net decrease in cash and cash equivalents, including restricted balances(677,092)(758,525)
Cash, cash equivalents and restricted cash, beginning of period1,015,316 1,050,713 
Cash, cash equivalents and restricted cash, end of period$338,224 $292,188 
SUPPLEMENTARY CASH FLOW DATA:
Income taxes paid (received), net$72,160 $(114,385)
Interest paid on borrowings35,496 31,812 
Accrued additions to property and equipment4,036 2,499 
New operating right of use assets and related lease liabilities70,532 79,917 
Accrued dividends payable to common shareholders45,273 44,569 
See accompanying notes to consolidated financial statements.
H&R Block, Inc. | Q2 FY2024 Form 10-Q
3

Table of Contents
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY(amounts in 000s, except per share amounts)
Common StockAdditional
Paid-in
Capital
Accumulated Other
Comprehensive
Loss(1)
Retained
Deficit
Treasury StockTotal
Stockholders’
Equity
SharesAmountSharesAmount
Balances as of July 1, 2023178,936 $1,789 $770,376 $(37,099)$(48,677)(32,786)$(654,325)$32,064 
Net loss    (163,482)  (163,482)
Other comprehensive loss   (10,914)   (10,914)
Stock-based compensation  6,211     6,211 
Stock-based awards exercised or vested  (34,226) (3,220)1,867 37,348 (98)
Acquisition of treasury shares(2)
     (823)(28,464)(28,464)
Repurchase and retirement of common shares(3,265)(32)(1,927) (131,341)  (133,300)
Cash dividends declared - $0.32 per share
    (46,901)  (46,901)
Balances as of September 30, 2023175,671 $1,757 $740,434 $(48,013)$(393,621)(31,742)$(645,441)$(344,884)
Net loss    (189,755)  (189,755)
Other comprehensive income   11,559    11,559 
Stock-based compensation  9,270     9,270 
Stock-based awards exercised or vested  (165) (46)348 7,087 6,876 
Acquisition of treasury shares(2)
     (3)(125)(125)
Repurchase and retirement of common shares(4,755)(48)(2,805) (217,467)  (220,320)
Cash dividends declared - $0.32 per share
    (45,273)  (45,273)
Balances as of December 31, 2023170,916 $1,709 $746,734 $(36,454)$(846,162)(31,397)$(638,479)$(772,652)
(1) The balance of our accumulated other comprehensive 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.


4
Q2 FY2024 Form 10-Q| H&R Block, Inc.

Table of Contents
Common StockAdditional
Paid-in
Capital
Accumulated Other
Comprehensive
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 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 FY2024 Form 10-Q
5

Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS             (unaudited)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATIONThe consolidated balance sheets as of December 31, 2023 and June 30, 2023, the consolidated statements of operations and comprehensive loss for the three and six months ended December 31, 2023 and 2022, the consolidated statements of cash flows for the six months ended December 31, 2023 and 2022, and the consolidated statements of stockholders' equity for the three and six months ended December 31, 2023 and 2022 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, 2023 and 2022 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, 2023 Annual Report on Form 10-K. All amounts presented herein as of June 30, 2023 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.
6
Q2 FY2024 Form 10-Q| H&R Block, Inc.

Table of Contents
NOTE 2: REVENUE RECOGNITION
The majority of our revenues are from our United States (U.S.) tax services business. The following table disaggregates our U.S. 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,
2023202220232022
Revenues:
U.S. assisted tax preparation$48,342 $41,216 $87,605 $77,528 
U.S. royalties5,454 4,946 11,155 11,174 
U.S. DIY tax preparation13,111 12,150 16,959 15,308 
Refund Transfers813 1,542 1,955 2,826 
Peace of Mind® Extended Service Plan17,440 17,320 42,287 42,090 
Tax Identity Shield®4,694 5,350 9,274 10,517 
Emerald Card® and SpruceSM
11,700 12,478 20,333 24,090 
Interest and fee income on Emerald AdvanceSM
15,235 12,903 15,533 13,517 
International29,569 28,046 90,134 86,880 
Wave23,133 21,941 47,076 44,587 
Other9,592 8,513 20,572 17,873 
Total revenues$179,083 $166,405 $362,883 $346,390 
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 31,2023202220232022
Balance, beginning of the period$167,257 $173,486 $21,828 $19,495 
Amounts deferred3,601 3,262 8 10 
Amounts recognized on previous deferrals(48,995)(47,811)(5,590)(5,012)
Balance, end of the period$121,863 $128,937 $16,246 $14,493 
As of December 31, 2023, deferred revenue related to POM was $121.9 million. We expect that $89.9 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, 2023 and 2022, Tax Identity Shield® (TIS) deferred revenue was $16.5 million and $16.8 million, respectively. Deferred revenue related to TIS was $25.2 million and $25.8 million as of June 30, 2023 and 2022, respectively. All deferred revenue related to TIS will be recognized by April 2024.
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 3.2 million shares for the three and six months ended December 31, 2023 and 4.5 million
H&R Block, Inc. |Q2 FY2024 Form 10-Q
7

Table of Contents
shares for the three and six months ended December 31, 2022, as the effect would be antidilutive due to the net loss from continuing operations during the periods.
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,
2023202220232022
Net loss from continuing operations attributable to shareholders$(189,116)$(220,863)$(351,989)$(388,230)
Amounts allocated to participating securities(192)(192)(369)(371)
Net loss from continuing operations attributable to common shareholders$(189,308)$(221,055)$(352,358)$(388,601)
Basic weighted average common shares142,340 154,119 144,307 156,701 
Potential dilutive shares    
Dilutive weighted average common shares142,340 154,119 144,307 156,701 
Loss per share from continuing operations attributable to common shareholders:
Basic$(1.33)$(1.43)$(2.44)$(2.48)
Diluted(1.33)(1.43)(2.44)(2.48)
The decrease in the weighted average shares outstanding is due to share repurchases completed in the current and prior fiscal years.
STOCK-BASED COMPENSATION – We granted 1.7 million and 1.0 million shares, including adjustments for performance achievement and dividend equivalents, under our stock-based compensation plans during the six months ended December 31, 2023 and 2022, respectively. Stock-based compensation expense of our continuing operations totaled $9.9 million and $17.5 million for the three and six months ended December 31, 2023, respectively, and $10.2 million and $17.9 million for the three and six months ended December 31, 2022, respectively. As of December 31, 2023, unrecognized compensation cost for nonvested shares and units totaled $59.2 million.
NOTE 4: RECEIVABLES
Receivables, net of their related allowance, consist of the following:
(in 000s)
As ofDecember 31, 2023June 30, 2023
Short-termLong-termShort-termLong-term
Loans to franchisees$19,743 $20,303 $6,344 $19,206 
Receivables for U.S. assisted and DIY tax preparation and related fees6,901 6,925 11,061 6,824 
H&R Block's Instant Refund® receivables
3,460 305 8,499 414 
Emerald AdvanceSM
347,025 9,410 10,834 7,089 
Software receivables from retailers2,669  1,650  
Royalties and other receivables from franchisees5,553  3,416  
Wave payment processing receivables1,758  964  
Other10,344 1,631 17,219 1,108 
Total$397,453 $38,574 $59,987 $34,641 
8
Q2 FY2024 Form 10-Q| H&R Block, Inc.

Table of Contents
Balances presented above as short-term are included in receivables, while the long-term portions are included in other noncurrent assets in the consolidated balance sheets.
LOANS TO FRANCHISEES Franchisee loan balances consist of term loans made primarily to finance the purchase of franchises and revolving lines of credit primarily for the purpose of funding working capital needs. As of December 31, 2023 and June 30, 2023, loans with a principal balance more than 90 days past due, or on non-accrual status, are not material.
H&R BLOCK'S INSTANT REFUND® H&R Block's Instant Refund® amounts are generally received from the Canada Revenue Agency within 60 days of filing the client's return, with the remaining balance collectible from the client.
We review the credit quality of our Instant Refund receivables based on pools, which are segregated by the tax return year of origination, with older years being deemed more unlikely to be repaid. We establish an allowance for credit losses at an amount that we believe reflects the receivable at net realizable value. In December of each year, we charge-off the receivables and the related allowance to an amount we believe represents the net realizable value.
Balances and amounts on non-accrual status, classified as impaired, or more than 60 days past due, by tax return year of origination, as of December 31, 2023 are as follows:
(in 000s)
Tax return year of originationBalanceMore Than 60 Days Past Due
2022$3,593 $3,471 
2021 and prior172 172 
3,765 $3,643 
Allowance 
Net balance$3,765 
EMERALD ADVANCESM Historically, Emerald AdvanceSM lines of credit (EA LOCs) have been offered to clients in our offices from mid-November through mid-January. If the borrower met certain criteria as agreed in the loan terms, the line of credit could be utilized year-round (Revolving Loan). In fiscal year 2024, EAs are being offered as term loans (EA TLs), and we discontinued EA LOCs, including the Revolving Loans. See note 8 for discussion of the new EA TL.
We review the credit quality of our purchased participation interests in EA receivables based on pools, which are segregated by the fiscal year of origination, with older years being deemed more unlikely to be repaid. We establish an allowance for credit losses at an amount that we believe reflects the receivable at net realizable value. Typically, in December of each year, we charge-off the receivables and the related allowance for EA LOCs, excluding Revolving Loans, to an amount we believe represents the net realizable value. However, due to the discontinuation of EA LOCs, we charged-off the receivables and the related allowance of EA LOCs and Revolving Loans during the quarter ended September 30, 2023 to an amount that we believe represents net realizable value.
Balances and amounts on non-accrual status, classified as impaired, or more than 60 days past due, by fiscal year of origination, as of December 31, 2023 are as follows:
(in 000s)
Fiscal year of originationBalanceNon-Accrual
2024 – Term loans$358,084 $ 
2023 and prior – Lines of credit and Revolving Loans15,908 15,908 
373,992 $15,908 
Allowance(17,557)
Net balance$356,435 
H&R Block, Inc. |Q2 FY2024 Form 10-Q
9

Table of Contents
ALLOWANCE FOR CREDIT LOSSES Activity in the allowance for credit losses for our EA and all other short-term and long-term receivables for the six months ended December 31, 2023 and 2022 is as follows:
(in 000s)
EAsAll OtherTotal
Balances as of July 1, 2023$27,386 $35,108 $62,494 
Provision for credit losses17,885 3,651 21,536 
Charge-offs, recoveries and other(27,714)(37,613)(65,327)
Balances as of December 31, 2023$17,557 $1,146 $18,703 
Balances as of July 1, 2022$26,141 $51,126 $77,267 
Provision for credit losses15,081 1,500 16,581 
Charge-offs, recoveries and other(14,814)(51,429)(66,243)
Balances as of December 31, 2022$26,408 $1,197 $27,605 
Gross charge-offs of EAs were $27.7 million for the six months ended December 31, 2023, of which $15.4 million related to EA LOCs originated in fiscal year 2023 and $12.3 million related to Revolving Loans.
NOTE 5: GOODWILL AND INTANGIBLE ASSETS
Changes in the carrying amount of goodwill for the six months ended December 31, 2023 are as follows:
(in 000s)
GoodwillAccumulated Impairment LossesNet
Balances as of July 1, 2023$913,750 $(138,297)$775,453 
Acquisitions(1)
13,514  13,514 
Disposals and foreign currency changes, net101  101 
Impairments   
Balances as of December 31, 2023$927,365 $(138,297)$789,068 
(1)    All goodwill added during the period is expected to be tax-deductible for federal income tax reporting.
We test goodwill for impairment annually as of February 1, or more frequently if events occur or circumstances change which would, more likely than not, reduce the fair value of a reporting unit below its carrying value.
10
Q2 FY2024 Form 10-Q| H&R Block, Inc.

Table of Contents
Components of intangible assets are as follows:
(in 000s)
Gross Carrying AmountAccumulated
Amortization
Net
As of December 31, 2023:
Reacquired franchise rights$400,059 $(220,263)$179,796 
Customer relationships372,328 (312,360)59,968 
Internally-developed software133,388 (126,427)6,961 
Noncompete agreements43,536 (40,623)2,913 
Franchise agreements19,201 (19,201) 
Purchased technology122,700 (100,298)22,402 
Trade name5,800 (2,610)3,190 
$1,097,012 $(821,782)$275,230 
As of June 30, 2023:
Reacquired franchise rights$392,452 $(212,495)$179,957 
Customer relationships351,695 (301,062)50,633 
Internally-developed software133,380 (120,054)13,326 
Noncompete agreements42,596 (39,617)2,979 
Franchise agreements19,201 (18,668)533 
Purchased technology122,700 (96,565)26,135 
Trade name5,800 (2,320)3,480 
$1,067,824 $(790,781)$277,043 
We made payments to acquire businesses totaling $27.2 million and $39.8 million during the six months ended December 31, 2023 and 2022, respectively. The amounts and weighted-average lives of intangible assets acquired during the six months ended December 31, 2023 are as follows:
(dollars in 000s)
AmountWeighted-Average Life (in years)
Customer relationships$20,933 5
Reacquired franchise rights7,604 5
Noncompete agreements942 5
Total$29,479 5
Amortization of intangible assets for the three and six months ended December 31, 2023 was $15.4 million and $31.2 million, respectively, compared to $18.5 million and $36.9 million for the three and six months ended December 31, 2022, respectively. Estimated amortization of intangible assets for fiscal years ending June 30, 2024, 2025, 2026, 2027, and 2028 is $59.9 million, $39.9 million, $30.2 million, $23.9 million and $16.3 million, respectively.
H&R Block, Inc. |Q2 FY2024 Form 10-Q
11

Table of Contents
NOTE 6: LONG-TERM DEBT
The components of long-term debt are as follows:
(in 000s)
As ofDecember 31, 2023June 30, 2023
Senior Notes, 5.250%, due October 2025
$350,000 $350,000 
Senior Notes, 2.500%, due July 2028
500,000 500,000 
Senior Notes, 3.875%, due August 2030
650,000 650,000 
Committed line of credit borrowings800,000  
Debt issuance costs and discounts(9,956)(11,025)
Total long-term debt2,290,044 1,488,975 
Less: Current portion  
Long-term portion$2,290,044 $1,488,975 
Estimated fair value of long-term debt$2,188,000 $1,339,000 
Our unsecured committed line of credit (CLOC) provides for an unsecured senior revolving credit facility in the aggregate principal amount of $1.5 billion, which includes a $175.0 million sublimit for swingline loans and a $50.0 million sublimit for standby letters of credit. We may request increases in the aggregate principal amount of the revolving credit facility of up to $500.0 million, subject to obtaining commitments from lenders and meeting certain other conditions. The CLOC will mature on June 11, 2026, unless extended pursuant to the terms of the CLOC, at which time all outstanding amounts thereunder will be due and payable. Our CLOC includes an annual facility fee, which will vary depending on our then current credit ratings.
The CLOC is subject to various conditions, triggers, events or occurrences that could result in earlier termination and contains customary representations, warranties, covenants and events of default, including, without limitation: (1) a covenant requiring the Company to maintain a debt-to-EBITDA ratio, as defined by the CLOC agreement, calculated on a consolidated basis of no greater than (a) 3.50 to 1.00 as of the last day of each fiscal quarter ending on March 31, June 30, and September 30 of each year and (b) 4.50 to 1.00 as of the last day of each fiscal quarter ending on December 31 of each year; (2) a covenant requiring us to maintain an interest coverage ratio (EBITDA-to-interest expense) calculated on a consolidated basis of not less than 2.50 to 1.00 as of the last date of any fiscal quarter; and (3) covenants restricting our ability to incur certain additional debt, incur liens, merge or consolidate with other companies, sell or dispose of assets (including equity interests), liquidate or dissolve, engage in certain transactions with affiliates or enter into certain restrictive agreements. The CLOC includes provisions for an equity cure which could potentially allow us to independently cure certain defaults. Proceeds under the CLOC may be used for working capital needs or for other general corporate purposes. We were in compliance with these requirements as of December 31, 2023.
We had an outstanding balance of $800.0 million under our CLOC and amounts available to borrow were not limited by the debt-to-EBITDA covenant as of December 31, 2023.
NOTE 7: INCOME TAXES
We file a consolidated federal income tax return in the U.S. with the Internal Revenue Service (IRS) and file tax returns in various state, local, and foreign jurisdictions.
We had gross unrecognized tax benefits of $208.4 million and $240.1 million as of December 31, 2023 and June 30, 2023, respectively. The gross unrecognized tax benefits decreased by $31.7 million during the six months ended December 31, 2023 due to expiration of statutes of limitations and settlements with state tax authorities. We believe it is reasonably possible that the balance of unrecognized tax benefits could decrease by approximately $117.4 million within the next twelve months. The anticipated decrease is due to the expiration of statutes of limitations and anticipated closure of various matters currently under examination or in appeals. For such matters where a change in the balance of unrecognized tax benefits is not yet deemed reasonably possible, no estimate has been included.
12
Q2 FY2024 Form 10-Q| H&R Block, Inc.

Table of Contents
Our effective tax rate for continuing operations, including the effects of discrete tax items, was 28.9% and 25.2% for the six months ended December 31, 2023 and 2022, respectively. Discrete items increased the effective tax rate by 5.4% and 1.4% for the six months ended December 31, 2023, and 2022, respectively. A discrete income tax benefit of $26.6 million and $7.2 million were recorded in the six months ended December 31, 2023 and 2022, respectively. The discrete tax benefit recorded in the current period primarily resulted from settlements with tax authorities and state statute of limitations expirations. The discrete tax benefit recorded in the prior period primarily resulted from state statute of limitations expirations and refund interest. The impact of discrete tax items combined with the seasonal nature of our business can cause the effective tax rate in our second quarter to be significantly different than the rate for our full fiscal year.
Consistent with prior years, our pretax loss for the six months ended December 31, 2023 is expected to be offset by income in our third and fourth quarters due to the established pattern of seasonality in our primary business operations. As such, management has determined that it is more-likely-than-not that realization of tax benefits recorded in our financial statements will occur within our fiscal year. The amount of tax benefit recorded for the six months ended December 31, 2023 reflects management’s estimate of the annual effective tax rate applied to year-to-date loss from continuing operations adjusted for the tax impact of discrete items for the periods presented.
NOTE 8: COMMITMENTS AND CONTINGENCIES
Our U.S. and Canadian businesses offer our 100% accuracy guarantee. Assisted tax returns are covered by our 100% accuracy guarantee, whereby we will reimburse a client for penalties and interest attributable to an H&R Block error on a return. DIY tax returns are covered by our 100% accuracy guarantee, whereby we will reimburse a client up to a maximum of $10,000 if our software makes an arithmetic error that results in payment of penalties and/or interest to the respective taxing authority that a client would otherwise not have been required to pay. Our liability related to estimated losses under the 100% accuracy guarantee was $11.9 million and $15.8 million as of December 31, 2023 and June 30, 2023, respectively. The short-term and long-term portions of this liability are included in deferred revenue and other liabilities in the consolidated balance sheets.
Liabilities related to acquisitions for (1) estimated contingent consideration based on expected financial performance of the acquired business and economic conditions at the time of acquisition and (2) estimated accrued compensation related to continued employment of key employees were $31.7 million and $18.3 million as of December 31, 2023 and June 30, 2023 respectively, with amounts recorded in deferred revenue and other liabilities. Should actual results differ from our estimates, future payments made will differ from the above estimate and any differences will be recorded in results from continuing operations.
We have contractual commitments to fund certain franchises with approved short-term lines of credit for the purpose of meeting their seasonal working capital needs. Our total obligation under these lines of credit was $20.8 million at December 31, 2023, and net of amounts drawn and outstanding, our remaining commitment to fund totaled $6.2 million.
Effective October 20, 2023, we amended the Program Management Agreement and entered into a new participation agreement related to EA TLs originated by Pathward®, N.A. (Pathward). In fiscal year 2024, EAs are being offered as term loans and we discontinued EA LOCs. EA TLs are interest bearing with principal and interest due in full on March 31, and there are no annual fees or required monthly payments. EA TLs are offered to clients in our offices, in November and December, in amounts of $350 to $1,300. We continue to purchase a 90% participation interest in each loan made by Pathward in accordance with the participation agreement. We purchased participation interests of $341.8 million during the six months ended December 31, 2023.
NOTE 9: LITIGATION AND OTHER RELATED CONTINGENCIES
We are a defendant in numerous litigation and arbitration matters, arising both in the ordinary course of business and otherwise, including as described below. The matters described below are not all of the lawsuits or arbitrations to which we are subject. In some of the matters, very large or indeterminate amounts, including punitive damages, may be sought. U.S. jurisdictions permit considerable variation in the assertion of monetary damages or other relief. Jurisdictions may permit claimants not to specify the monetary damages sought or may permit claimants to state only that the amount sought is sufficient to invoke the jurisdiction. In addition, jurisdictions may permit plaintiffs to allege monetary damages in amounts well exceeding reasonably possible
H&R Block, Inc. |Q2 FY2024 Form 10-Q
13

Table of Contents
verdicts in the jurisdiction for similar matters. We believe that the monetary relief which may be specified in a lawsuit or claim bears little relevance to its merits or disposition value due to this variability in pleadings and our experience in handling and resolving numerous claims over an extended period of time.
The outcome of a matter and the amount or range of potential loss at particular points in time may be difficult to ascertain. Among other things, uncertainties can include how fact finders will evaluate documentary evidence and the credibility and effectiveness of witness testimony, and how courts and arbitrators will apply the law. Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will view the relevant evidence and applicable law.
In addition to litigation and arbitration matters, we are also subject to other loss contingencies arising out of our business activities, including as described below.
We accrue liabilities for litigation, arbitration and other related loss contingencies and any related settlements when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. If a range of loss is estimated, and some amount within that range appears to be a better estimate than any other amount within that range, then that amount is accrued. If no amount within the range can be identified as a better estimate than any other amount, we accrue the minimum amount in the range.
For such matters where a loss is believed to be reasonably possible, but not probable, or the loss cannot be reasonably estimated, no accrual has been made. It is possible that such matters could require us to pay damages or make other expenditures or accrue liabilities in amounts that could not be reasonably estimated as of December 31, 2023. While the potential future liabilities could be material in the particular quarterly or annual periods in which they are recorded, based on information currently known, we do not believe any such liabilities are likely to have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows. Our accrued liabilities were $1.8 million and $0.2 million as of December 31, 2023 and June 30, 2023, respectively.
Our estimate of the aggregate range of reasonably possible losses includes (1) matters where a liability has been accrued and there is a reasonably possible loss in excess of the amount accrued for that liability, and (2) matters where a liability has not been accrued but we believe a loss is reasonably possible. This aggregate range only represents those losses as to which we are currently able to estimate a reasonably possible loss or range of loss. It does not represent our maximum loss exposure.
Matters for which we are not currently able to estimate the reasonably possible loss or range of loss are not included in this range. We are often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the reasonably possible loss or range of loss, such as precise information about the amount of damages or other remedies being asserted, the defenses to the claims being asserted, discovery from other parties and investigation of factual allegations, rulings by courts or arbitrators on motions or appeals, analyses by experts, or the status or terms of any settlement negotiations.
The estimated range of reasonably possible loss is based upon currently available information and is subject to significant judgment and a variety of assumptions, as well as known and unknown uncertainties. The matters underlying the estimated range will change from time to time, and actual results may vary significantly from the current estimate. As of December 31, 2023, we believe the estimate of the aggregate range of reasonably possible losses in excess of amounts accrued, where the range of loss can be estimated, is not material.
At the end of each reporting period, we review relevant information with respect to litigation, arbitration and other related loss contingencies and update our accruals, disclosures, and estimates of reasonably possible loss or range of loss based on such reviews. Costs incurred with defending matters are expensed as incurred. Any receivable for insurance recoveries is recorded separately from the corresponding liability, and only if recovery is determined to be probable and reasonably estimable.
We believe we have meritorious defenses to the claims asserted in the various matters described in this note, and we intend to defend them vigorously. The amounts claimed in the matters are substantial, however, and there can be no assurances as to their outcomes. In the event of unfavorable outcomes, it could require modifications to our operations; in addition, the amounts that may be required to be paid to discharge or settle the matters could
14
Q2 FY2024 Form 10-Q| H&R Block, Inc.

Table of Contents
be substantial and could have a material adverse impact on our business and our consolidated financial position, results of operations, and cash flows.
LITIGATION, CLAIMS OR OTHER LOSS CONTINGENCIES PERTAINING TO CONTINUING OPERATIONS
On May 6, 2019, the Los Angeles City Attorney filed a lawsuit on behalf of the People of the State of California in the Superior Court of California, County of Los Angeles (Case No. 19STCV15742). The case is styled The People of the State of California v. HRB Digital LLC, et al. The complaint alleges that H&R Block, Inc. and HRB Digital LLC engaged in unfair, fraudulent and deceptive business practices and acts in connection with the IRS Free File Program in violation of the California Unfair Competition Law, California Business and Professions Code §§17200 et seq. The complaint seeks injunctive relief, restitution of monies paid to H&R Block by persons in the State of California who were eligible to file under the IRS Free File Program for the time period starting 4 years prior to the date of the filing of the complaint, pre-judgment interest, civil penalties and costs. The City Attorney subsequently dismissed H&R Block, Inc. from the case and amended its complaint to add HRB Tax Group, Inc. We filed a motion for summary judgment, which was denied. The parties have reached an agreement to settle this matter. An accrual related to this matter is included in our loss contingency accrual.
In January 2024, we received a revised demand and draft complaint from the Federal Trade Commission (FTC) relating to certain aspects of our DIY tax preparation services. If the parties are not able to reach amicable resolution, the FTC may seek resolution through litigation. We have also received and are responding to certain governmental inquiries and other matters relating to the IRS Free File Program and other aspects of our DIY tax preparation services, including the use of pixels. We have not concluded that a loss related to these matters is probable, nor have we accrued a liability related to these matters.
DISCONTINUED MORTGAGE OPERATIONS – Although SCC ceased its mortgage loan origination activities in December 2007 and sold its loan servicing business in April 2008, SCC or the Company has been and may in the future be, subject to litigation and other loss contingencies, including indemnification and contribution claims, pertaining to SCC's mortgage business activities that occurred prior to such termination and sale.
Parties, including underwriters, depositors, and securitization trustees, have been, remain, or may in the future be, involved in lawsuits, threatened lawsuits, or settlements related to securitization transactions in which SCC participated. A variety of claims are alleged in these matters, including violations of federal and state securities laws and common law fraud, breaches of representations and warranties, or violations of statutory requirements. SCC has received notices of potential indemnification or contribution obligations relating to such matters. Additional lawsuits against the parties to the securitization transactions may be filed in the future, and SCC may receive additional notices of potential indemnification, contribution or similar obligations with respect to existing or new lawsuits or settlements of such lawsuits or other claims. We have not concluded that a loss related to any of these potential indemnification or contribution claims is probable, nor have we accrued a liability related to any of these claims.
It is difficult to predict either the likelihood of new matters being initiated or the outcome of existing matters. In many of these matters it is not possible to estimate a reasonably possible loss or range of loss due to, among other things, the inherent uncertainties involved in these matters and the indeterminate damages sought. If the amount that SCC is ultimately required to pay with respect to loss contingencies, together with payment of SCC's related administration and legal expense, exceeds SCC's net assets, the creditors of SCC, other potential claimants, or a bankruptcy trustee if SCC were to file or be forced into bankruptcy, may attempt to assert claims against us for payment of SCC's obligations. Claimants also may attempt to assert claims against or seek payment directly from the Company even if SCC's assets exceed its liabilities. SCC's principal assets, as of December 31, 2023, total approximately $268 million and consist of an intercompany note receivable. We believe our legal position is strong on any potential corporate veil-piercing arguments; however, if this position is challenged and not upheld, it could have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows.
OTHER – We are from time to time a party to litigation, arbitration and other loss contingencies not discussed herein arising out of our business operations. These matters may include actions by state attorneys general, other state regulators, federal regulators, individual plaintiffs, and cases in which plaintiffs seek to represent others who may be similarly situated.
H&R Block, Inc. |Q2 FY2024 Form 10-Q
15

Table of Contents
While we cannot provide assurance that we will ultimately prevail in each instance, we believe the amount, if any, we are required to pay to discharge or settle these other matters will not have a material adverse impact on our business and our consolidated financial position, results of operations, and cash flows.
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Our subsidiaries provide assisted and do-it-yourself (DIY) tax preparation solutions through multiple channels (including in-person, online and mobile applications, virtual, and desktop software) and distribute H&R Block-branded products and services, including those of our bank partners, to the general public primarily in the United States (U.S.), Canada and Australia. Tax returns are either prepared by H&R Block tax professionals (in company-owned or franchise offices, virtually or via an internet review) or prepared and filed by our clients through our DIY tax solutions. We also offer small business solutions through our company-owned and franchise offices and online through Wave. We report a single segment that includes all of our continuing operations.
16
Q2 FY2024 Form 10-Q| H&R Block, Inc.

Table of Contents
Consolidated – Financial Results(in 000s, except per share amounts)
Three months ended December 31,20232022$ Change% Change
Revenues:
U.S. tax preparation and related services:
Assisted tax preparation$48,342 $41,216 $7,126 17.3 %
Royalties5,454 4,946 508 10.3 %
DIY tax preparation13,111 12,150 961 7.9 %
Refund Transfers813 1,542 (729)(47.3)%
Peace of Mind® Extended Service Plan17,440 17,320 120 0.7 %
Tax Identity Shield®4,694 5,350 (656)(12.3)%
Other9,592 8,513 1,079 12.7 %
Total U.S. tax preparation and related services99,446 91,037 8,409 9.2 %
Financial services:
Emerald Card® and SpruceSM
11,700 12,478 (778)(6.2)%
Interest and fee income on Emerald AdvanceSM
15,235 12,903 2,332 18.1 %
Total financial services26,935 25,381 1,554 6.1 %
International29,569 28,046 1,523 5.4 %
Wave23,133 21,941 1,192 5.4 %
Total revenues$179,083 $166,405 $12,678 7.6 %
Compensation and benefits:
Field wages77,795 76,204 (1,591)(2.1)%
Other wages74,671 70,530 (4,141)(5.9)%
Benefits and other compensation36,063 34,277 (1,786)(5.2)%
188,529 181,011 (7,518)(4.2)%
Occupancy101,194 101,173 (21)— %
Marketing and advertising11,305 15,142 3,837 25.3 %
Depreciation and amortization30,107 32,723 2,616 8.0 %