H&R Block’s third quarter results were shaped by continued momentum in its assisted tax and small business segments, with management highlighting the company’s focus on higher-value clients and expanding digital offerings. CEO Jeff Jones pointed to the success of products like Second Look and Wave’s Pro-Tier subscription as key contributors. Management also noted disciplined expense control, with lower legal costs supporting improved margins. Despite the company’s seasonally loss-making quarter, leadership emphasized robust execution across its core businesses, stating, "We are off to a strong start this fiscal year."
Is now the time to buy HRB? Find out in our full research report (it’s free for active Edge members).
H&R Block (HRB) Q3 CY2025 Highlights:
- Revenue: $203.6 million vs analyst estimates of $200.6 million (5% year-on-year growth, 1.5% beat)
- Adjusted EPS: -$1.20 vs analyst estimates of -$1.35 (11.3% beat)
- Adjusted EBITDA: -$170 million vs analyst estimates of -$202.8 million (-83.5% margin, 16.2% beat)
- The company reconfirmed its revenue guidance for the full year of $3.89 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $4.93 at the midpoint
- EBITDA guidance for the full year is $1.03 billion at the midpoint, in line with analyst expectations
- Operating Margin: -102%, up from -118% in the same quarter last year
- Market Capitalization: $5.81 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From H&R Block’s Q3 Earnings Call
- Keen Fai Tong (Goldman Sachs) asked about operational changes in assisted tax and marketing to reverse previous share losses. CEO-elect Curtis Campbell pointed to investments in services like Second Look and AI to elevate offerings.
- Keen Fai Tong (Goldman Sachs) inquired about the pricing strategy for DIY products and its impact on margins and share. CFO Tiffany Mason said pricing strategies remain consistent, focusing on low single-digit increases and value communication.
- Scott Schneeberger (Oppenheimer & Company) queried about the effect of new tax legislation and potential delays from a government shutdown. CEO Jeff Jones said no IRS delays are expected, and CFO Mason sees new tax law as a modest tailwind for assisted business.
- Scott Schneeberger (Oppenheimer & Company) asked about H&R Block’s AI differentiation and competitive threats. Campbell highlighted AI Tax Assist as a tool to improve client experience and operational efficiency.
- Scott Schneeberger (Oppenheimer & Company) wanted insight into strategies for converting free users to paying clients. Jones explained targeted marketing is being refined to reach cohorts more likely to transition to paid services.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will be closely tracking (1) the pace of adoption and monetization of new AI-powered and digital tax products, (2) execution on capturing market share in the assisted tax segment as tax law complexity increases, and (3) growth in small business services, particularly through Wave’s platform and strategic franchise acquisitions. We will also monitor how effectively H&R Block balances investments in technology with disciplined expense management.
H&R Block currently trades at $45.98, down from $51.46 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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