10-Q

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)

Missouri	44-0607856
(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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, without par value	HRB	New 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.

Form 10-Q for the Period ended December 31, 2022

Table of Contents

	PART I
Item 1.	Consolidated Statements of Operations and Comprehensive Loss     Three and six months ended December 31, 2022 and 2021	1
	Consolidated Balance Sheets          As of December 31, 2022 and June 30, 2022	2
	Consolidated Statements of Cash Flows     Six months ended December 31, 2022 and 2021	3
	Consolidated Statements of Stockholders' Equity     Three and six months ended December 31, 2022 and 2021	4
	Notes to Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
	PART II
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	25
	Signatures	26

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,
	2022		2021		2022		2021
REVENUES:
Service revenues	$	139,565	$	133,725	$	306,759	$	310,702
Royalty, product and other revenues	26,840		25,091		39,631		40,738
	166,405		158,816		346,390		351,440
OPERATING EXPENSES:
Costs of revenues	298,345		289,323		559,007		530,855
Selling, general and administrative	151,263		146,793		279,697		272,657
Total operating expenses	449,608		436,116		838,704		803,512
Other income (expense), net	4,185		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 adjustments	9,307		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 1

CONSOLIDATED BALANCE SHEETS	(unaudited, in 000s, except  share and per share amounts)
As of	December 31, 2022		June 30, 2022
ASSETS
Cash and cash equivalents	$	264,455	$	885,015
Cash and cash equivalents - restricted	27,733		165,698
Receivables, less allowance for credit losses of $27,323 and $65,351	328,616		58,447
Income taxes receivable	46,646		202,838
Prepaid expenses and other current assets	108,405		72,460
Total current assets	775,855		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 assets	382,723		427,783
Intangible assets, net	304,539		309,644
Goodwill	764,802		760,401
Deferred tax assets and income taxes receivable	181,721		208,948
Other noncurrent assets	46,760		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 taxes	68,089		154,764
Accrued income taxes and reserves for uncertain tax positions	73,572		280,115
Operating lease liabilities	184,343		206,898
Deferred revenue and other current liabilities	182,711		196,107
Total current liabilities	645,833		998,813
Long-term debt and line of credit borrowings	2,067,937		1,486,876
Deferred tax liabilities and reserves for uncertain tax positions	231,041		226,362
Operating lease liabilities	205,409		228,820
Deferred revenue and other noncurrent liabilities	86,483		116,656
Total liabilities	3,236,703		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 capital	767,683		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.

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

CONSOLIDATED STATEMENTS OF CASH FLOWS	(unaudited, in 000s)
Six months ended December 31,	2022		2021
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 amortization	66,347		71,346
Provision	16,581		14,639
Deferred taxes	41,534		16,685
Stock-based compensation	17,893		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 franchisees	3,861		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 borrowings	750,000		485,000
Dividends paid	(89,193)		(96,938)
Repurchase of common stock, including shares surrendered	(365,633)		(324,589)
Proceeds from exercise of stock options	1,427		4,067
Other, net	2,212		(7,423)
Net cash provided by (used in) financing activities	128,813		(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 period	1,050,713		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 borrowings	31,812		36,539
Accrued additions to property and equipment	2,499		1,393
New operating right of use assets and related lease liabilities	79,917		73,710
Accrued dividends payable to common shareholders	44,569		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

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY								(amounts in 000s, except per share amounts)
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)(1)		Retained Earnings (Deficit)		Treasury Stock			Total Stockholders’ Equity
	Shares	Amount								Shares	Amount
Balances as of July 1, 2022	193,571	$	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, 2022	188,644	$	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, 2022	185,403	$	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.

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

								(amounts in 000s, except per share amounts)
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)(1)		Retained Earnings (Deficit)		Treasury Stock			Total Stockholders’ Equity
	Shares	Amount								Shares	Amount
Balances as of July 1, 2021	216,656	$	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, 2021	209,854	$	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, 2021	203,265	$	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 5

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS             (unaudited)

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION – The 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 ESTIMATES – The 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 FY2023 Form 10-Q| H&R Block, Inc.

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,
	2022		2021		2022		2021
Revenues:
U.S. assisted tax preparation	$	41,216	$	30,845	$	77,528	$	64,452
U.S. royalties	4,946		3,404		11,174		10,762
U.S. DIY tax preparation	12,150		9,210		15,308		13,271
Refund Transfers	1,542		777		2,826		2,442
Peace of Mind® Extended Service Plan	17,320		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
International	28,046		27,907		86,880		86,232
Wave	21,941		19,497		44,587		38,634
Other	8,513		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)
POM	Deferred Revenue				Deferred Wages
Six months ended December 31,	2022		2021		2022		2021
Balance, beginning of the period	$	173,486	$	172,759	$	19,495	$	17,867
Amounts deferred	3,262		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.

H&R Block, Inc. |Q2 FY2023 Form 10-Q 7

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,
	2022		2021		2022		2021
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 shares	154,119		173,378		156,701		175,739
Potential dilutive shares	—		—		—		—
Dilutive weighted average common shares	154,119		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 of	December 31, 2022				June 30, 2022
	Short-term		Long-term		Short-term		Long-term
Loans to franchisees	$	16,304	$	26,587	$	6,194	$	22,036
Receivables for U.S. assisted and DIY tax preparation and related fees	10,427		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 retailers	2,165		—		3,992		—
Royalties and other receivables from franchisees	6,380		—		3,682		73
Wave payment processing receivables	1,024		—		1,393		—
Other	22,500		1,528		14,111		1,172
Total	$	328,616	$	33,323	$	58,447	$	34,864

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

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

of December 31, 2022 and June 30, 2022, loans with a principal balance more than 90 days past due, or on non-accrual status, are not material.

H&R BLOCK'S INSTANT REFUNDSM – H&R Block's Instant RefundSM 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 to an amount we believe represents the net realizable value.

Balances and amounts on non-accrual status and classified as impaired, or more than 60 days past due, by tax return year of origination, as of December 31, 2022 are as follows:

			(in 000s)
Tax return year of origination	Current Balance		More Than 60 Days Past Due
2021	$	1,194	$	815
2020 and prior	102		102
	1,296		$	917
Allowance	—
Net balance	$	1,296

H&R BLOCK EMERALD ADVANCE® LINES OF CREDIT – We review the credit quality of our purchased participation interests in Emerald AdvanceSM (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. In December of each year, we charge-off the receivables to an amount we believe represents the net realizable value.

Balances and amounts on non-accrual status and classified as impaired, or more than 60 days past due, by fiscal year of origination, as of December 31, 2022 are as follows:

(in 000s)
Fiscal year of origination	Current Balance		Non-Accrual
2023	$	266,271	$	—
2022 and prior	8,278		8,278
Revolving loans	23,405		15,030
	297,954		$	23,308
Allowance	(26,408)
Net balance	$	271,546

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, 2022 and 2021 is as follows:

(in 000s)
	EAs		All Other		Total
Balances as of July 1, 2022	$	26,141	$	51,126	$	77,267
Provision	15,081		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
Balances as of July 1, 2021	$	27,704	$	60,272	$	87,976
Provision	12,429		2,210		14,639
Charge-offs, recoveries and other	(16,377)		(60,437)		(76,814)
Balances as of December 31, 2021	$	23,756	$	2,045	$	25,801

    

H&R Block, Inc. |Q2 FY2023 Form 10-Q 9

NOTE 5: GOODWILL AND INTANGIBLE ASSETS

Changes in the carrying amount of goodwill for the six months ended December 31, 2022 are as follows:

(in 000s)
	Goodwill		Accumulated Impairment Losses		Net
Balances as of July 1, 2022	$	898,698	$	(138,297)	$	760,401
Acquisitions	19,448		—		19,448
Disposals and foreign currency changes, net	(15,047)		—		(15,047)
Impairments	—		—		—
Balances as of December 31, 2022	$	903,099	$	(138,297)	$	764,802

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.

Components of intangible assets are as follows:

(in 000s)
	Gross Carrying Amount		Accumulated Amortization		Net
As of December 31, 2022:
Reacquired franchise rights	$	390,631	$	(204,396)	$	186,235
Customer relationships	347,333		(289,397)		57,936
Internally-developed software	139,528		(118,272)		21,256
Noncompete agreements	42,413		(38,604)		3,809
Franchise agreements	19,201		(18,028)		1,173
Purchased technology	122,700		(92,340)		30,360
Trade name	5,800		(2,030)		3,770
	$	1,067,606	$	(763,067)	$	304,539
As of June 30, 2022:
Reacquired franchise rights	$	379,114	$	(197,068)	$	182,046
Customer relationships	331,020		(278,717)		52,303
Internally-developed software	137,638		(107,111)		30,527
Noncompete agreements	41,789		(37,684)		4,105
Franchise agreements	19,201		(17,388)		1,813
Purchased technology	122,700		(87,910)		34,790
Trade name	5,800		(1,740)		4,060
	$	1,037,262	$	(727,618)	$	309,644

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

We made payments to acquire businesses totaling $39.8 million and $19.3 million during the six months ended December 31, 2022 and 2021, respectively. The amounts and weighted-average lives of intangible assets acquired during the six months ended December 31, 2022, including amounts capitalized related to internally-developed software, are as follows:

(dollars in 000s)
	Amount		Weighted-Average Life (in years)
Internally-developed software	$	2,082	2
Customer relationships	17,765		5
Reacquired franchise rights	11,659		5
Noncompete agreements	667		5
Total	$	32,173	5

Amortization of intangible assets for the three and six months ended December 31, 2022 was $18.5 million and $36.9 million, respectively, compared to $19.4 million and $39.2 million for the three and six months ended December 31, 2021, respectively. Estimated amortization of intangible assets for fiscal years ending June 30, 2023, 2024, 2025, 2026, and 2027 is $71.4 million, $53.6 million, $31.4 million, $22.7 million and $16.9 million, respectively.

NOTE 6: LONG-TERM DEBT

The components of long-term debt are as follows:

			(in 000s)
As of	December 31, 2022		June 30, 2022
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 borrowings	580,000		—
Debt issuance costs and discounts	(12,063)		(13,124)
Total long-term debt	2,067,937		1,486,876
Less: Current portion	—		—
Long-term portion	$	2,067,937	$	1,486,876
Estimated fair value of long-term debt	$	1,923,000	$	1,377,000

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

H&R Block, Inc. |Q2 FY2023 Form 10-Q 11

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, 2022.

We had an outstanding balance of $580.0 million under our CLOC and amounts available to borrow were not limited by the debt-to-EBITDA covenant as of December 31, 2022.

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. Tax returns are typically examined and either settled upon completion of the examination or through the appeals process. With respect to federal, state and local jurisdictions and countries outside of the U.S., we are typically subject to examination for three to six years after the income tax returns have been filed. On November 7, 2022, the IRS commenced their examination of our 2020 tax return and related carryback claims to tax years 2015 through 2018. Although the outcome of tax audits is always uncertain, we believe that adequate amounts of tax, interest, and penalties have been provided for in the accompanying consolidated financial statements for any adjustments that might be incurred due to federal, state, local or foreign audits.

We had gross unrecognized tax benefits of $221.3 million and $232.0 million as of December 31, 2022 and June 30, 2022, respectively. The gross unrecognized tax benefits decreased by $10.7 million during the six months ended December 31, 2022 due to expiration of statutes and settlements with state tax authorities. We believe it is reasonably possible that the balance of unrecognized tax benefits could decrease by approximately $34.0 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.

Our effective tax rate for continuing operations, including the effects of discrete tax items, was 25.2% and 31.7% for the six months ended December 31, 2022 and 2021, respectively. Discrete items increased the effective tax rate by 1.4% and 10.1% for the six months ended December 31, 2022, and 2021, respectively. A discrete income tax benefit of $7.2 million and $50.0 million were recorded in the six months ended December 31, 2022 and 2021, respectively. The discrete tax benefit recorded in the current period primarily resulted from state statute of limitations expirations and refund interest. The discrete tax benefit recorded in the prior period primarily resulted from federal and state statute of limitations expirations.

Consistent with prior years, our pretax loss for the six months ended December 31, 2022 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, 2022 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

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 IRS that a client would otherwise not have been required to pay. Our liability related to estimated losses under the 100% accuracy guarantee was $11.7 million and $14.0 million as of December 31, 2022 and June 30, 2022, 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 $21.4 million and $12.9 million as of December 31, 2022 and June 30, 2022, respectively, with amounts recorded in deferred revenue and other

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

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 revolving lines of credit. Our total obligation under these lines of credit was $21.1 million at December 31, 2022, and net of amounts drawn and outstanding, our remaining commitment to fund totaled $7.4 million.

In March 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to provide economic and other relief as a result of the COVID-19 pandemic. The CARES Act includes, among other items, provisions relating to refundable employee retention payroll tax credits. Due to the complex nature of the employee retention credit computations, any benefits we may receive are uncertain and may significantly differ from our current estimates. We plan to record any benefit related to these credits upon both the receipt of the benefit and the resolution of the uncertainties, including, but not limited to, the completion of any potential audit or examination, or the expiration of the related statute of limitations. During the six months ended December 31, 2022, we received $12.1 million related to these credits and recognized $3.2 million as an offset to related operating expenses. As of December 31, 2022 and June 30, 2022, we had deferred balances of $13.9 million and $5.1 million, respectively, which is recorded in deferred revenue and other current liabilities.

Emerald AdvanceSM lines of credit (EAs) are originated by PathwardTM N.A. (Pathward). We purchase a 90% participation interest, at par, in all EAs originated by Pathward in accordance with our participation agreement. At December 31, 2022, the principal balance of purchased participation interests for the current year totaled $270.4 million.

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 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, 2022. 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

H&R Block, Inc. |Q2 FY2023 Form 10-Q 13

operations, and cash flows. Our total accrued liabilities were $1.6 million and $1.7 million as of December 31, 2022 and June 30, 2022, 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, 2022, 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 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 –

Free File Litigation. 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 on December 1, 2022. A trial date is set for August 14, 2023. We have not concluded that a loss related to this matter is probable, nor have we accrued a liability related to this matter.

We have also received and are responding to certain governmental inquiries relating to the IRS Free File Program.

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.

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

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. An accrual related to these matters is included in our loss contingency accrual.

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, 2022, total approximately $267 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.

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 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 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.

H&R Block, Inc. |Q2 FY2023 Form 10-Q 15

Consolidated – Financial Results			(in 000s, except per share amounts)
Three months ended December 31,	2022		2021		$ Change		% Change
Revenues:
U.S. tax preparation and related services:
Assisted tax preparation	$	41,216	$	30,845	$	10,371	33.6	%
Royalties	4,946		3,404		1,542		45.3	%
DIY tax preparation	12,150		9,210		2,940		31.9	%
Refund Transfers	1,542		777		765		98.5	%
Peace of Mind® Extended Service Plan	17,320		17,315		5		—	%
Tax Identity Shield®	5,350		5,200		150		2.9	%
Other	8,513		7,407		1,106		14.9	%
Total U.S. tax preparation and related services	91,037		74,158		16,879		22.8	%
Financial services:
Emerald Card® and SpruceSM	12,478		24,830		(12,352)		(49.7)	%
Interest and fee income on Emerald AdvanceSM	12,903		12,424		479		3.9	%
Total financial services	25,381		37,254		(11,873)		(31.9)	%
International	28,046		27,907		139		0.5	%
Wave	21,941		19,497		2,444		12.5	%
Total revenues	$	166,405	$	158,816	$	7,589	4.8	%
Compensation and benefits:
Field wages	76,204		70,058		(6,146)		(8.8)	%
Other wages	70,530		64,067		(6,463)		(10.1)	%
Benefits and other compensation	34,277		30,207		(4,070)		(13.5)	%
	181,011		164,332		(16,679)		(10.1)	%
Occupancy	101,173		99,296		(1,877)		(1.9)	%
Marketing and advertising	15,142		17,141		1,999		11.7	%
Depreciation and amortization	32,723		35,631		2,908		8.2	%
Bad debt	22,416		13,666		(8,750)		(64.0)	%
Other	97,143		106,050		8,907		8.4	%
Total operating expenses	449,608		436,116		(13,492)		(3.1)	%
Other income (expense), net	4,185		1,467		2,718		185.3	%
Interest expense on borrowings	(18,985)		(23,085)		4,100		17.8	%
Pretax loss	(298,003)		(298,918)		915		0.3	%
Income tax benefit	(77,140)		(109,845)		(32,705)		(29.8)	%
Net loss from continuing operations	(220,863)		(189,073)		(31,790)		(16.8)	%
Net loss from discontinued operations	(2,716)		(1,532)		(1,184)		(77.3)	%
Net loss	$	(223,579)	$	(190,605)	$	(32,974)	(17.3)	%
BASIC AND DILUTED LOSS PER SHARE:
Continuing operations	$	(1.43)	$	(1.09)	$	(0.34)	(31.2)	%
Discontinued operations	(0.02)		(0.01)		(0.01)		(100.0)	%
Consolidated	$	(1.45)	$	(1.10)	$	(0.35)	(31.8)	%
Adjusted diluted EPS(1)	$	(1.37)	$	(1.02)	$	(0.35)	(34.3)	%
EBITDA (1)	$	(246,295)	$	(240,202)	$	(6,093)	(2.5)	%

(1)    All non-GAAP measures are results from continuing operations. See "Non-GAAP Financial Information" at the end of this item for a reconciliation of non-GAAP measures.

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

Three months ended December 31, 2022 compared to December 31, 2021

Revenues increased $7.6 million, or 4.8%, from the prior year. U.S. assisted tax preparation revenues increased $10.4 million, or 33.6%, primarily due to higher volumes and a higher net average charge in the current year. U.S. royalty revenue increased $1.5 million, or 45.3%, due to the timing of royalty incentives. U.S. DIY tax preparation revenues increased $2.9 million, or 31.9%, primarily due to higher volumes in the current year.

Emerald Card revenues decreased $12.4 million, or 49.7%, due to higher card activity in the prior year, which is a result of the IRS loading Child Tax Credits monthly to Emerald Cards®.

Wave revenues increased $2.4 million, or 12.5%, due to higher small business payments processing volumes.

Total operating expenses increased $13.5 million, or 3.1%, from the prior year. Field wages increased $6.1 million, or 8.8%, due to higher tax professional and field management wages due to increased volumes and higher hourly rates in the current period. Other wages increased $6.5 million, or 10.1%, due to higher corporate wages in the current year. Benefits and other compensation increased $4.1 million, or 13.5%, due to higher stock based compensation. Bad debt expense increased $8.8 million, or 64%, due to higher Emerald Card® losses and higher Emerald AdvanceSM volumes compared to the prior year.

Other operating expenses decreased $8.9 million, or 8.4%. The components of other expenses are as follows:

							(in 000s)
Three months ended December 31,	2022		2021		$ Change		% Change
Consulting and outsourced services	$	22,452	$	27,611	$	5,159	18.7	%
Bank partner fees	(778)		2,550		3,328		**
Client claims and refunds	5,445		6,200		755		12.2	%
Employee and travel expenses	14,701		9,417		(5,284)		(56.1)	%
Technology-related expenses	24,489		23,300		(1,189)		(5.1)	%
Credit card/bank charges	17,322		17,710		388		2.2	%
Insurance	(349)		4,350		4,699		**
Legal fees and settlements	2,184		4,060		1,876		46.2	%
Supplies	3,940		5,095		1,155		22.7	%
Other	7,737		5,757		(1,980)		(34.4)	%
	$	97,143	$	106,050	$	8,907	8.4	%

Consulting and outsourced services expense decreased $5.2 million, or 18.7%, due to lower call center expenses and lower data processing fees related to lower activity on Emerald Cards®. Employee and travel expenses increased $5.3 million, or 56.1%, due to more travel in the current year. Insurance expense decreased $4.7 million due to favorable developments in insurance loss reserves.

Interest expense on borrowings decreased $4.1 million, or 17.8%, due to the repayment of our $500 million 5.500% Senior Notes in May 2022, partially offset by higher interest expense on our CLOC borrowings in the current year.

We recorded an income tax benefit of $77.1 million in the current year compared to $109.8 million in the prior year. The effective tax rate for the three months ended December 31, 2022, and 2021 was 25.9% and 36.7%, respectively.

H&R Block, Inc. |Q2 FY2023 Form 10-Q 17

Consolidated - Financial Results			(in 000s, except per share amounts)
Six months ended December 31,	2022		2021		$ Change		% Change
Revenues:
U.S. tax preparation and related services:
Assisted tax preparation	$	77,528	$	64,452	$	13,076	20.3	%
Royalties	11,174		10,762		412		3.8	%
DIY tax preparation	15,308		13,271		2,037		15.3	%
Refund Transfers	2,826		2,442		384		15.7	%
Peace of Mind® Extended Service Plan	42,090		42,151		(61)		(0.1)	%
Tax Identity Shield®	10,517		10,353		164		1.6	%
Other	17,873		17,152		721		4.2	%
Total U.S. tax preparation and related services	177,316		160,583		16,733		10.4	%
Financial services:
Emerald Card® and SpruceSM	24,090		53,088		(28,998)		(54.6)	%
Interest and fee income on Emerald AdvanceSM	13,517		12,903		614		4.8	%
Total financial services	37,607		65,991		(28,384)		(43.0)	%
International	86,880		86,232		648		0.8	%
Wave	44,587		38,634		5,953		15.4	%
Total revenues	$	346,390	$	351,440	$	(5,050)	(1.4)	%
Compensation and benefits:
Field wages	137,877		126,137		(11,740)		(9.3)	%
Other wages	134,283		122,131		(12,152)		(9.9)	%
Benefits and other compensation	69,109		55,657		(13,452)		(24.2)	%
	341,269		303,925		(37,344)		(12.3)	%
Occupancy	198,763		195,118		(3,645)		(1.9)	%
Marketing and advertising	25,791		27,214		1,423		5.2	%
Depreciation and amortization	66,347		71,346		4,999		7.0	%
Bad debt	22,745		14,709		(8,036)		(54.6)	%
Other	183,789		191,200		7,411		3.9	%
Total operating expenses	838,704		803,512		(35,192)		(4.4)	%
Other income (expense), net	7,796		1,751		6,045		345.2	%
Interest expense on borrowings	(34,809)		(45,915)		11,106		24.2	%
Pretax loss	(519,327)		(496,236)		(23,091)		(4.7)	%
Income tax benefit	(131,097)		(157,218)		(26,121)		(16.6)	%
Net loss from continuing operations	(388,230)		(339,018)		(49,212)		(14.5)	%
Net loss from discontinued operations	(3,770)		(3,188)		(582)		(18.3)	%
Net loss	$	(392,000)	$	(342,206)	$	(49,794)	(14.6)	%
BASIC AND DILUTED LOSS PER SHARE:
Continuing operations	$	(2.48)	$	(1.93)	$	(0.55)	28.5	%
Discontinued operations	(0.02)		(0.02)		—		—	%
Consolidated	$	(2.50)	$	(1.95)	$	(0.55)	28.2	%
Adjusted diluted EPS(1)	$	(2.36)	$	(1.80)	$	(0.56)	31.1	%
EBITDA (1)	$	(418,171)	$	(378,975)	$	(39,196)	(10.3)	%

(1) All non-GAAP measures are results from continuing operations. See "Non-GAAP Financial Information" at the end of this item for a reconciliation of non-GAAP measures.

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

Six months ended December 31, 2022 compared to December 31, 2021

Revenues decreased $5.1 million, or 1.4%, from the prior year. U.S. assisted tax preparation revenues increased $13.1 million, or 20.3%, due to higher volumes and a higher net average charge in the current year.

Emerald Card® revenues decreased $29.0 million, or 54.6%, due to higher card activity in the prior year, which is a result of the IRS loading Child Tax Credits monthly to Emerald Cards®.

Wave revenues increased $6.0 million, or 15.4%, due to higher small business payments processing volumes.

Total operating expenses increased $35.2 million, or 4.4%, from the prior year period. Field wages increased $11.7 million, or 9.3%, due to higher tax professional and field management wages due to increased volumes and higher hourly rates in the current period. Other wages increased $12.2 million, or 9.9%, due to higher corporate wages in the current year. Benefits and other compensation increased $13.5 million, or 24.2%, due to higher stock based compensation, employee insurance and payroll taxes. Depreciation and amortization expense decreased $5.0 million, or 7.0%, due to lower amortization of acquired intangibles. Bad debt expense increased $8.0 million, or 54.6%, due to higher Emerald Card® losses and higher Emerald AdvanceSM volumes compared to the prior year.

Other expenses decreased $7.4 million, or 3.9%. The components of other expenses are as follows:

							(in 000s)
Six months ended December 31,	2022		2021		$ Change		% Change
Consulting and outsourced services	$	40,505	$	53,468	$	12,963	24.2	%
Bank partner fees	(797)		2,658		3,455		**
Client claims and refunds	12,215		12,215		—		—	%
Employee and travel expenses	20,769		13,707		(7,062)		(51.5)	%
Technology-related expenses	50,404		43,625		(6,779)		(15.5)	%
Credit card/bank charges	33,523		32,671		(852)		(2.6)	%
Insurance	3,369		7,681		4,312		56.1	%
Legal fees and settlements	4,470		7,102		2,632		37.1	%
Supplies	7,335		7,918		583		7.4	%
Other	11,996		10,155		(1,841)		(18.1)	%
	$	183,789	$	191,200	$	7,411	3.9	%

Consulting and outsourced services expense decreased $13.0 million, or 24.2%, due to lower call center expenses and lower data processing fees related to lower activity on Emerald Cards®. Employee and travel expenses increased $7.1 million, or 51.5%, due to more travel in the current year. Technology-related expenses increased $6.8 million, or 15.5%, due to increased investments in information technology.

Other income (expense) increased $6.0 million, or 345.2%, primarily due to higher interest income as a result of higher interest rates. Interest expense on borrowings decreased $11.1 million, or 24.2%, due to the repayment of our $500 million 5.500% Senior Notes in May 2022, partially offset by higher interest expense on our CLOC borrowings in the current year.

We recorded an income tax benefit of $131.1 million in the current year compared to $157.2 million in the prior year. The effective tax rate for the six months ended December 31, 2022, and 2021 was 25.2% and 31.7%, respectively.

FINANCIAL CONDITION

These comments should be read in conjunction with the consolidated balance sheets and consolidated statements of cash flows included in Part 1, Item 1.

CAPITAL RESOURCES AND LIQUIDITY –

OVERVIEW – Our primary sources of capital and liquidity include cash from operations (including changes in working capital), draws on our CLOC, and issuances of debt. We use our sources of liquidity primarily to fund working capital, service and repay debt, pay dividends, repurchase shares of our common stock, and acquire businesses.

H&R Block, Inc. |Q2 FY2023 Form 10-Q 19

Our operations are highly seasonal and substantially all of our revenues and cash flow are generated during the period from February through April in a typical year. Therefore, we normally require the use of cash to fund losses and working capital needs, periodically resulting in a working capital deficit, during the months of May through January. We typically have relied on available cash balances from the prior tax season and borrowings to meet liquidity needs.

Given the likely availability of a number of liquidity options discussed herein, we believe that, in the absence of any unexpected developments, our existing sources of capital as of December 31, 2022 are sufficient to meet our operating, investing and financing needs.

DISCUSSION OF CONSOLIDATED STATEMENTS OF CASH FLOWS – The following table summarizes our statements of cash flows for the six months ended December 31, 2022 and 2021. See Item 1 for the complete consolidated statements of cash flows for these periods.

	(in 000s)
Six months ended December 31,	2022		2021
Net cash provided by (used in):
Operating activities	$	(780,458)	$	(913,571)
Investing activities	(99,090)		(57,444)
Financing activities	128,813		(149,883)
Effects of exchange rates on cash	(7,790)		(3,330)
Net decrease in cash and cash equivalents, including restricted balances	$	(758,525)	$	(1,124,228)

Operating Activities. Cash used in operations totaled $780.5 million for the six months ended December 31, 2022 compared to $913.6 million in the prior year period. The change is primarily due to the receipt of income tax receivables in the current year, partially offset by an increase in our net loss in the current year.

Investing Activities. Cash used in investing activities totaled $99.1 million for the six months ended December 31, 2022 compared to $57.4 million in the prior year period. The change is primarily due to payments to acquire businesses in the current year.

Financing Activities. Cash provided by financing activities totaled $128.8 million for the six months ended December 31, 2022 compared to cash used in financing activities of $149.9 million in the prior year period. The change is primarily due to higher draws on our CLOC in the current year.

CASH REQUIREMENTS –

Dividends and Share Repurchases. Returning capital to shareholders in the form of dividends and the repurchase of outstanding shares is, and has historically been, a significant component of our capital allocation plan.

We have consistently paid quarterly dividends. Dividends paid totaled $89.2 million and $96.9 million for the six months ended December 31, 2022 and 2021, respectively. Although we have historically paid dividends and plan to continue to do so, there can be no assurances that circumstances will not change in the future that could affect our ability or decisions to pay dividends.

In August 2022, the Board of Directors approved a $1.25 billion share repurchase program, effective through fiscal year 2025. During the six months ended December 31, 2022, we repurchased $350.1 million of our common stock at an average price of $42.86 per share. In the prior year period, we repurchased $324.6 million of our common stock at an average price of $24.24 per share. Our current share repurchase program has remaining authorization of $900.0 million, which is effective through June 2025.

Share repurchases may be effectuated through open market transactions, some of which may be effectuated under SEC Rule 10b5-1. The Company may cancel, suspend, or extend the period for the purchase of shares at any time. Any repurchases will be funded primarily through available cash and cash from operations. Although we may continue to repurchase shares, there is no assurance that we will purchase up to the full Board authorization.

    Capital Investment. Capital expenditures totaled $41.5 million and $39.4 million for the six months ended December 31, 2022 and 2021, respectively. Our capital expenditures relate primarily to recurring improvements to

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

retail offices, as well as investments in computers, software and related assets. In addition to our capital expenditures, we also made payments to acquire businesses. We acquired franchisee and competitor businesses totaling $39.8 million and $19.3 million during the six months ended December 31, 2022 and 2021, respectively. See Item 1, note 5 for additional information on our acquisitions.

FINANCING RESOURCES – The CLOC has capacity up to $1.5 billion and is scheduled to expire in June 2026. Proceeds under the CLOC may be used for working capital needs or for other general corporate purposes. We had an outstanding balance of $580.0 million under our CLOC as of December 31, 2022. Amounts available to borrow were not limited by the debt-to-EBITDA covenant as of December 31, 2022.

The following table provides ratings for debt issued by Block Financial LLC (Block Financial) as of December 31, 2022 and June 30, 2022:

As of	December 31, 2022			June 30, 2022
	Short-term	Long-term	Outlook	Short-term	Long-term	Outlook
Moody's	P-3	Baa3	Positive	P-3	Baa3	Stable
S&P	A-2	BBB	Stable	A-2	BBB	Stable

Other than described above, there have been no material changes in our borrowings from those reported as of June 30, 2022 in our Annual Report to Shareholders on Form 10-K.

CASH AND OTHER ASSETS – As of December 31, 2022, we held cash and cash equivalents, excluding restricted amounts, of $264.5 million, including $113.7 million held by our foreign subsidiaries.

Foreign Operations. Seasonal borrowing needs of our Canadian operations are typically funded by our U.S. operations. To mitigate foreign currency risk, we sometimes enter into foreign exchange forward contracts. There were no forward contracts outstanding as of December 31, 2022.

We do not currently intend to repatriate non-borrowed funds held by our foreign subsidiaries in a manner that would trigger a material tax liability.

The impact of changes in foreign exchange rates during the period on our international cash balances resulted in a decrease of $7.8 million and $3.3 million during the six months ended December 31, 2022 and 2021, respectively.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS – Emerald AdvanceSM lines of credit (EAs) are originated by PathwardTM N.A. (Pathward). We purchase a 90% participation interest, at par, in all EAs originated by Pathward in accordance with our participation agreement. At December 31, 2022, the principal balance of purchased participation interests totaled $270.4 million.

There have been no other material changes in our contractual obligations and commercial commitments from those reported in our June 30, 2022 Annual Report to Shareholders on Form 10-K.

SUMMARIZED GUARANTOR FINANCIAL STATEMENTS – Block Financial is a 100% owned subsidiary of H&R Block, Inc. Block Financial is the Issuer and H&R Block, Inc. is the full and unconditional Guarantor of our Senior Notes, CLOC and other indebtedness issued from time to time.

The following table presents summarized financial information for H&R Block, Inc. (Guarantor) and Block Financial (Issuer) on a combined basis after intercompany eliminations and excludes investments in and equity earnings in non-guarantor subsidiaries.

SUMMARIZED BALANCE SHEET - GUARANTOR AND ISSUER			(in 000s)
As of	December 31, 2022		June 30, 2022
Current assets	$	312,211	$	38,922
Noncurrent assets	1,962,976		1,698,242
Current liabilities	86,510		75,855
Noncurrent liabilities	2,073,780		1,495,732

H&R Block, Inc. |Q2 FY2023 Form 10-Q 21

SUMMARIZED STATEMENTS OF OPERATIONS - GUARANTOR AND ISSUER			(in 000s)
	Six months ended December 31, 2022		Twelve months ended June 30, 2022
Total revenues	$	40,288	$	199,683
Income (loss) from continuing operations before income taxes	(53,653)		44,404
Net income (loss) from continuing operations	(53,364)		41,979
Net income (loss)	(57,134)		35,007

The table above reflects $1.9 billion and $1.6 billion of non-current intercompany receivables due to the Issuer from non-guarantor subsidiaries as of December 31, 2022 and June 30, 2022, respectively.

REGULATORY ENVIRONMENT

As previously disclosed, in 2017 the Consumer Financial Protection Bureau (CFPB) published its final rule regulating certain consumer credit products (Payday Rule), which the CFPB later limited by removing the mandatory underwriting provisions. Certain limited provisions of the Payday Rule became effective in 2018, but most provisions were scheduled to go into effect in 2019. Litigation in a federal district court in Texas had stayed that effective date, but on August 31, 2021 the judge in that litigation ruled in favor of the CFPB. The plaintiffs appealed, and, on October 14, 2021, the United States Court of Appeals for the Fifth Circuit extended the compliance deadline until after the appeal is resolved. On October 19, 2022, the appellate court found that the funding mechanism for the CFPB was unconstitutional and vacated the Payday Rule. On November 14, 2022, the CFPB filed a petition for review with the United States Supreme Court.

We are unsure whether, when, or in what form the Payday Rule will go into effect. Though we do not currently expect the Payday Rule to have a material adverse impact on Emerald AdvanceSM, our business, or our consolidated financial position, results of operations, and cash flows, we will continue to monitor and analyze the potential impact of any further developments on the Company.

There have been no other material changes in our regulatory environment from what was reported in our June 30, 2022 Annual Report to Shareholders on Form 10-K.

NON-GAAP FINANCIAL INFORMATION

Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Because these measures are not measures of financial performance under GAAP and are susceptible to varying calculations, they may not be comparable to similarly titled measures for other companies.

We consider our non-GAAP financial measures to be performance measures and a useful metric for management and investors to evaluate and compare the ongoing operating performance of our business. We make adjustments for certain non-GAAP financial measures related to amortization of intangibles from acquisitions and goodwill impairments. We may consider whether other significant items that arise in the future should be excluded from our non-GAAP financial measures.

We measure the performance of our business using a variety of metrics, including earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations, adjusted EBITDA from continuing operations, adjusted diluted earnings per share from continuing operations, free cash flow and free cash flow yield. We also use EBITDA from continuing operations and pretax income of continuing operations, each subject to permitted adjustments, as performance metrics in incentive compensation calculations for our employees.

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

The following is a reconciliation of net loss to EBITDA from continuing operations, which is a non-GAAP financial measure:

							(in 000s)
	Three months ended December 31,				Six months ended December 31,
	2022		2021		2022		2021
Net loss - as reported	$	(223,579)	$	(190,605)	$	(392,000)	$	(342,206)
Discontinued operations, net	2,716		1,532		3,770		3,188
Net loss from continuing operations - as reported	(220,863)		(189,073)		(388,230)		(339,018)
Add back:
Income tax benefit	(77,140)		(109,845)		(131,097)		(157,218)
Interest expense	18,985		23,085		34,809		45,915
Depreciation and amortization	32,723		35,631		66,347		71,346
	(25,432)		(51,129)		(29,941)		(39,957)
EBITDA from continuing operations	$	(246,295)	$	(240,202)	$	(418,171)	$	(378,975)

The following is a reconciliation of our results from continuing operations to our adjusted results from continuing operations, which is a non-GAAP financial measure:

(in 000s, except per share amounts)
	Three months ended December 31,				Six months ended December 31,
	2022		2021		2022		2021
Net loss from continuing operations - as reported	$	(220,863)	$	(189,073)	$	(388,230)	$	(339,018)
Adjustments:
Amortization of intangibles related to acquisitions (pretax)	12,839		14,292		25,535		29,162
Tax effect of adjustments (1)	(2,787)		(1,922)		(6,008)		(5,557)
Adjusted net loss from continuing operations	$	(210,811)	$	(176,703)	$	(368,703)	$	(315,413)
Diluted loss per share from continuing operations - as reported	$	(1.43)	$	(1.09)	$	(2.48)	$	(1.93)
Adjustments, net of tax	0.06		0.07		0.12		0.13
Adjusted diluted loss per share from continuing operations	$	(1.37)	$	(1.02)	$	(2.36)	$	(1.80)

(1)Tax effect of adjustments is the difference between the tax provision calculated on a GAAP basis and on an adjusted non-GAAP basis.

FORWARD-LOOKING INFORMATION

This report and other documents filed with the SEC may contain forward-looking statements. In addition, our senior management may make forward-looking statements orally to analysts, investors, the media and others. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words or variation of words such as "expects," "anticipates," "intends," "plans," "believes," "commits," "seeks," "estimates," "projects," "forecasts," "targets," "would," "will," "should," "goal," "could," "may" or other similar expressions. Forward-looking statements provide management's current expectations or predictions of future conditions, events or results. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future are forward-looking statements. They may include estimates of revenues, client trajectory, income, effective tax rate, earnings per share, cost savings, capital expenditures, dividends, share repurchases, liquidity, capital structure, market share, industry volumes or other financial items, descriptions of management's plans or objectives for future operations, services or products, or descriptions of assumptions underlying any of the above. They may also include the expected impact of the coronavirus (COVID–19) pandemic, including, without limitation, the impact on economic

H&R Block, Inc. |Q2 FY2023 Form 10-Q 23

and financial markets, the Company's capital resources and financial condition, future expenditures, potential regulatory actions, such as extensions of tax filing deadlines or other related relief, changes in consumer behaviors and modifications to the Company's operations relating thereto.

All forward-looking statements speak only as of the date they are made and reflect the Company's good faith beliefs, assumptions and expectations, but they are not guarantees of future performance or events. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions, factors, or expectations, new information, data or methods, future events or other changes, except as required by law.

By their nature, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Factors that might cause such differences include, but are not limited to, a variety of economic, competitive, operational and regulatory factors, many of which are beyond the Company's control. In addition, factors that may cause the Company’s actual effective tax rate to differ from estimates include the Company’s actual results from operations compared to current estimates, future discrete items, changes in interpretations and assumptions the Company has made, future actions of the Company, and increases in applicable tax rates in jurisdictions where the Company operates. Investors should understand that it is not possible to predict or identify all such factors and, consequently, should not consider any such list to be a complete set of all potential risks or uncertainties.

Details about risks, uncertainties and assumptions that could affect various aspects of our business are included throughout our Annual Report on Form 10-K for the fiscal year ended June 30, 2022 and are also described from time to time in other filings with the SEC. Investors should carefully consider all of these risks, and should pay particular attention to Item 1A, "Risk Factors," and Item 7 under "Critical Accounting Policies" of our Annual Report on Form 10-K for the fiscal year ended June 30, 2022.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our market risks from those reported in our June 30, 2022 Annual Report to Shareholders on Form 10-K.

ITEM 4.     CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES – As of the end of the period covered by this Form 10-Q, management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING – There were no changes during the three months ended December 31, 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II    OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

For a description of our material pending legal proceedings, see discussion in Part I, Item 1, note 9 to the consolidated financial statements.

ITEM 1A.    RISK FACTORS

There have been no material changes in our risk factors from those reported in our June 30, 2022 Annual Report to Shareholders on Form 10-K.

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

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

A summary of our purchases of H&R Block common stock during the three months ended December 31, 2022 is as follows:

(in 000s, except per share amounts)
	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans  or Programs (2)	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans  or Programs (2)
October 1 - October 31	—	$	—	—	$	1,030,304
November 1 - November 30	1,784	$	39.88	1,783	$	959,217
December 1 - December 31	1,459	$	40.60	1,458	$	900,000
	3,243	$	40.21	3,241

(1)We purchased approximately 2 thousand shares in connection with funding employee income tax withholding obligations arising upon the lapse of restrictions on restricted share units.

(2)In August 2022, we announced that our Board of Directors approved a $1.25 billion share repurchase program, effective through June 2025.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.    MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.    OTHER INFORMATION

None.

ITEM 6.     EXHIBITS

The following exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K:

22	List of Guarantor and Issuer Subsidiaries, filed as Exhibit 22 to the Company’s Annual Report on Form 10-K for the year ended June 30, 2022, file number 1-06089, is incorporated herein by reference.
31.1	Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification by Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification by Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Extension Calculation Linkbase
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

H&R Block, Inc. |Q2 FY2023 Form 10-Q 25

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

H&R BLOCK, INC.

/s/ Jeffrey J. Jones II

Jeffrey J. Jones II

President and Chief Executive Officer

February 7, 2023

/s/ Tony G. Bowen

Tony G. Bowen

Chief Financial Officer

February 7, 2023

/s/ Kellie J. Logerwell

Kellie J. Logerwell

Chief Accounting Officer

February 7, 2023

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

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey J. Jones II, Chief Executive Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of H&R Block, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	February 7, 2023	/s/ Jeffrey J. Jones II
		Jeffrey J. Jones II
		Chief Executive Officer H&R Block, Inc.

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Tony G. Bowen, Chief Financial Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of H&R Block, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	February 7, 2023	/s/ Tony G. Bowen
		Tony G. Bowen
		Chief Financial Officer H&R Block, Inc.

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

    In connection with the quarterly report of H&R Block, Inc. (the “Company”) on Form 10‑Q for the fiscal quarter ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffrey J. Jones II, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jeffrey J. Jones II

Jeffrey J. Jones II
Chief Executive Officer
H&R Block, Inc.

February 7, 2023

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

    In connection with the quarterly report of H&R Block, Inc. (the “Company”) on Form 10‑Q for the fiscal quarter ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Tony G. Bowen, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Tony G. Bowen

Tony G. Bowen
Chief Financial Officer
H&R Block, Inc.

February 7, 2023

XML

Cover - shares	6 Months Ended
	Dec. 31, 2022	Jan. 31, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Dec. 31, 2022
Document Transition Report	false
Entity File Number	1-06089
Entity Registrant Name	H&R Block, Inc.
Entity Incorporation, State or Country Code	MO
Entity Tax Identification Number	44-0607856
Entity Address, Address Line One	One H&R Block Way
Entity Address, City or Town	Kansas City
Entity Address, State or Province	MO
Entity Address, Postal Zip Code	64105
City Area Code	816
Local Phone Number	854-3000
Title of 12(b) Security	Common Stock, without par value
Trading Symbol	HRB
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Entity Central Index Key	0000012659
Current Fiscal Year End Date	--06-30
Entity Common Stock, Shares Outstanding		152,277,089

XML

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
REVENUES:
Total revenues	$ 166,405	$ 158,816	$ 346,390	$ 351,440
OPERATING EXPENSES:
Costs of revenues	298,345	289,323	559,007	530,855
Selling, general and administrative	151,263	146,793	279,697	272,657
Total operating expenses	449,608	436,116	838,704	803,512
Other income (expense), net	4,185	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 (in usd 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 adjustments	9,307	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)
Service revenues
REVENUES:
Total revenues	139,565	133,725	306,759	310,702
Royalty, product and other revenues
REVENUES:
Total revenues	$ 26,840	$ 25,091	$ 39,631	$ 40,738

XML

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Income Statement [Abstract]
Net loss from discontinued operations, tax	$ 812	$ 461	$ 1,128	$ 956

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2022	Jun. 30, 2022
ASSETS
Cash and cash equivalents	$ 264,455	$ 885,015
Cash and cash equivalents - restricted	27,733	165,698
Receivables, less allowance for credit losses of $27,323 and $65,351	328,616	58,447
Income taxes receivable	46,646	202,838
Prepaid expenses and other current assets	108,405	72,460
Total current assets	775,855	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 assets	382,723	427,783
Intangible assets, net	304,539	309,644
Goodwill	764,802	760,401
Deferred tax assets and income taxes receivable	181,721	208,948
Other noncurrent assets	46,760	54,012
Total assets	2,593,224	3,269,158
LIABILITIES:
Accounts payable and accrued expenses	137,118	160,929
Accrued salaries, wages and payroll taxes	68,089	154,764
Accrued income taxes and reserves for uncertain tax positions	73,572	280,115
Current portion of long-term debt	0	0
Operating lease liabilities	184,343	206,898
Deferred revenue and other current liabilities	182,711	196,107
Total current liabilities	645,833	998,813
Long-term debt and line of credit borrowings	2,067,937	1,486,876
Deferred tax liabilities and reserves for uncertain tax positions	231,041	226,362
Operating lease liabilities	205,409	228,820
Deferred revenue and other noncurrent liabilities	86,483	116,656
Total liabilities	3,236,703	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 capital	767,683	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

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2022	Jun. 30, 2022
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 27,323	$ 65,351
Accumulated depreciation and amortization	$ 881,230	$ 857,468
Common stock, stated value per share (in usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	800,000,000	800,000,000
Common stock, shares issued (in shares)	185,403,081	193,571,309
Treasury stock, shares (in shares)	33,127,313	33,640,988

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands	3 Months Ended	6 Months Ended
	Dec. 31, 2021 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (190,605)	$ (392,000)	$ (342,206)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		66,347	71,346
Provision		16,581	14,639
Deferred taxes		41,534	16,685
Stock-based compensation		17,893	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 franchisees		3,861	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 borrowings		750,000	485,000
Dividends paid		(89,193)	(96,938)
Repurchase of common stock, including shares surrendered		(365,633)	(324,589)
Proceeds from exercise of stock options		1,427	4,067
Other, net		2,212	(7,423)
Net cash provided by (used in) financing activities		128,813	(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 period		1,050,713	1,584,164
Cash, cash equivalents and restricted cash, end of period	459,936	292,188	459,936
SUPPLEMENTARY CASH FLOW DATA:
Income taxes paid (received), net	72,169	(114,385)
Interest paid on borrowings	36,539	31,812
Accrued purchase of common stock	4,845	0
Accrued additions to property and equipment	1,393	2,499
New operating right of use assets and related lease liabilities	73,710	79,917
Accrued dividends payable to common shareholders	$ 46,497	$ 44,569	$ 46,497

XML

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands		Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)(1)		Retained Earnings (Deficit)	Treasury Stock
Beginning Balances, (in shares) at Jun. 30, 2021			216,656,000					34,842,000
Beginning Balances, Value at Jun. 30, 2021		$ 388,058	$ 2,167	$ 779,465	$ 88	[1]	$ 286,694	$ (680,356)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss		(151,601)					(151,601)
Other comprehensive income (loss)		(11,177)			(11,177)	[1]
Stock-based compensation		5,627		5,627
Stock-based awards exercised or vested		3,146		(10,328)			(291)	$ 13,765
Stock-based awards exercised or vested (in shares)								705,000
Acquisition of treasury shares (in shares)	[2]							(205,000)
Acquisition of treasury shares(2)	[2]	(4,817)						$ (4,817)
Repurchase and retirement of common shares (in shares)			(6,802,000)
Repurchase and retirement of common shares		(165,768)	$ (68)	(4,081)			(161,619)
Cash dividends declared - $0.27 per share		(47,940)					(47,940)
Ending Balances, (in shares) at Sep. 30, 2021			209,854,000					34,342,000
Ending Balances, Value at Sep. 30, 2021		$ 15,528	$ 2,099	770,683	(11,089)	[1]	(74,757)	$ (671,408)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared per share (in usd per share)		$ 0.27
Beginning Balances, (in shares) at Jun. 30, 2021			216,656,000					34,842,000
Beginning Balances, Value at Jun. 30, 2021		$ 388,058	$ 2,167	779,465	88	[1]	286,694	$ (680,356)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss		(342,206)
Ending Balances, (in shares) at Dec. 31, 2021			203,265,000					34,222,000
Ending Balances, Value at Dec. 31, 2021		$ (372,655)	$ 2,033	770,661	(9,433)		(466,856)	$ (669,060)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared per share (in usd per share)		$ 0.54
Stock-based compensation		$ 13,200
Beginning Balances, (in shares) at Sep. 30, 2021			209,854,000					34,342,000
Beginning Balances, Value at Sep. 30, 2021		15,528	$ 2,099	770,683	(11,089)	[1]	(74,757)	$ (671,408)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss		(190,605)					(190,605)
Other comprehensive income (loss)		1,656			1,656
Stock-based compensation		5,640		5,640
Stock-based awards exercised or vested		472		(1,709)			(219)	$ 2,400
Stock-based awards exercised or vested (in shares)								122,000
Acquisition of treasury shares (in shares)								(2,000)
Acquisition of treasury shares(2)		(52)						$ (52)
Repurchase and retirement of common shares (in shares)			(6,589,000)
Repurchase and retirement of common shares		(158,797)	$ (66)	(3,953)			(154,778)
Cash dividends declared - $0.27 per share		(46,497)					(46,497)
Ending Balances, (in shares) at Dec. 31, 2021			203,265,000					34,222,000
Ending Balances, Value at Dec. 31, 2021		$ (372,655)	$ 2,033	770,661	(9,433)		(466,856)	$ (669,060)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared per share (in usd per share)		$ 0.27
Stock-based compensation		$ 6,400
Beginning Balances, (in shares) at Jun. 30, 2022			193,571,000					33,641,000
Beginning Balances, Value at Jun. 30, 2022		211,631	$ 1,936	772,182	(21,645)	[1]	120,405	$ (661,247)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss		(168,421)					(168,421)
Other comprehensive income (loss)		(32,345)			(32,345)	[1]
Stock-based compensation		5,630		5,630
Stock-based awards exercised or vested		(179)		(15,276)			(742)	$ 15,839
Stock-based awards exercised or vested (in shares)								805,000
Acquisition of treasury shares (in shares)	[2]							(341,000)
Acquisition of treasury shares(2)	[2]	(15,432)						$ (15,432)
Repurchase and retirement of common shares (in shares)			(4,927,000)
Repurchase and retirement of common shares		(219,769)	$ (49)	(2,907)			(216,813)
Cash dividends declared - $0.27 per share		(46,100)					(46,100)
Ending Balances, (in shares) at Sep. 30, 2022			188,644,000					33,177,000
Ending Balances, Value at Sep. 30, 2022		$ (264,985)	$ 1,887	759,629	(53,990)	[1]	(311,671)	$ (660,840)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared per share (in usd per share)		$ 0.29
Beginning Balances, (in shares) at Jun. 30, 2022			193,571,000					33,641,000
Beginning Balances, Value at Jun. 30, 2022		$ 211,631	$ 1,936	772,182	(21,645)	[1]	120,405	$ (661,247)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss		(392,000)
Ending Balances, (in shares) at Dec. 31, 2022			185,403,000					33,127,000
Ending Balances, Value at Dec. 31, 2022		$ (643,479)	$ 1,854	767,683	(44,683)	[1]	(708,437)	$ (659,896)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared per share (in usd per share)		$ 0.58
Stock-based compensation		$ 17,900
Beginning Balances, (in shares) at Sep. 30, 2022			188,644,000					33,177,000
Beginning Balances, Value at Sep. 30, 2022		(264,985)	$ 1,887	759,629	(53,990)	[1]	(311,671)	$ (660,840)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss		(223,579)					(223,579)
Other comprehensive income (loss)		9,307			9,307	[1]
Stock-based compensation		9,544		9,544
Stock-based awards exercised or vested		1,235		421			(209)	$ 1,023
Stock-based awards exercised or vested (in shares)								52,000
Acquisition of treasury shares (in shares)								(2,000)
Acquisition of treasury shares(2)		(79)						$ (79)
Repurchase and retirement of common shares (in shares)			(3,241,000)
Repurchase and retirement of common shares		(130,353)	$ (33)	(1,911)			(128,409)
Cash dividends declared - $0.27 per share		(44,569)					(44,569)
Ending Balances, (in shares) at Dec. 31, 2022			185,403,000					33,127,000
Ending Balances, Value at Dec. 31, 2022		$ (643,479)	$ 1,854	$ 767,683	$ (44,683)	[1]	$ (708,437)	$ (659,896)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared per share (in usd per share)		$ 0.29
Stock-based compensation		$ 10,200

[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.

XML

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended				6 Months Ended
	Dec. 31, 2022	Sep. 30, 2022	Dec. 31, 2021	Sep. 30, 2021	Dec. 31, 2022	Dec. 31, 2021
Statement of Stockholders' Equity [Abstract]
Cash dividends declared per share (in usd per share)	$ 0.29	$ 0.29	$ 0.27	$ 0.27	$ 0.58	$ 0.54

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION – The 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 ESTIMATES – The 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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REVENUE RECOGNITION

6 Months Ended

Dec. 31, 2022

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION

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,
	2022		2021		2022		2021
Revenues:
U.S. assisted tax preparation	$	41,216	$	30,845	$	77,528	$	64,452
U.S. royalties	4,946		3,404		11,174		10,762
U.S. DIY tax preparation	12,150		9,210		15,308		13,271
Refund Transfers	1,542		777		2,826		2,442
Peace of Mind® Extended Service Plan	17,320		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
International	28,046		27,907		86,880		86,232
Wave	21,941		19,497		44,587		38,634
Other	8,513		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)
POM	Deferred Revenue				Deferred Wages
Six months ended December 31,	2022		2021		2022		2021
Balance, beginning of the period	$	173,486	$	172,759	$	19,495	$	17,867
Amounts deferred	3,262		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.

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EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY

6 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY

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.

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,
	2022		2021		2022		2021
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 shares	154,119		173,378		156,701		175,739
Potential dilutive shares	—		—		—		—
Dilutive weighted average common shares	154,119		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.

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RECEIVABLES

6 Months Ended

Dec. 31, 2022

Accounts, Notes, Loans and Financing Receivable, Unclassified [Abstract]

RECEIVABLES

NOTE 4: RECEIVABLES

Receivables, net of their related allowance, consist of the following:

(in 000s)
As of	December 31, 2022				June 30, 2022
	Short-term		Long-term		Short-term		Long-term
Loans to franchisees	$	16,304	$	26,587	$	6,194	$	22,036
Receivables for U.S. assisted and DIY tax preparation and related fees	10,427		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 retailers	2,165		—		3,992		—
Royalties and other receivables from franchisees	6,380		—		3,682		73
Wave payment processing receivables	1,024		—		1,393		—
Other	22,500		1,528		14,111		1,172
Total	$	328,616	$	33,323	$	58,447	$	34,864

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, 2022 and June 30, 2022, loans with a principal balance more than 90 days past due, or on non-accrual status, are not material.

H&R BLOCK'S INSTANT REFUNDSM – H&R Block's Instant RefundSM 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 to an amount we believe represents the net realizable value.

Balances and amounts on non-accrual status and classified as impaired, or more than 60 days past due, by tax return year of origination, as of December 31, 2022 are as follows:

			(in 000s)
Tax return year of origination	Current Balance		More Than 60 Days Past Due
2021	$	1,194	$	815
2020 and prior	102		102
	1,296		$	917
Allowance	—
Net balance	$	1,296

H&R BLOCK EMERALD ADVANCE® LINES OF CREDIT – We review the credit quality of our purchased participation interests in Emerald AdvanceSM (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. In December of each year, we charge-off the receivables to an amount we believe represents the net realizable value.

Balances and amounts on non-accrual status and classified as impaired, or more than 60 days past due, by fiscal year of origination, as of December 31, 2022 are as follows:

(in 000s)
Fiscal year of origination	Current Balance		Non-Accrual
2023	$	266,271	$	—
2022 and prior	8,278		8,278
Revolving loans	23,405		15,030
	297,954		$	23,308
Allowance	(26,408)
Net balance	$	271,546

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, 2022 and 2021 is as follows:

(in 000s)
	EAs		All Other		Total
Balances as of July 1, 2022	$	26,141	$	51,126	$	77,267
Provision	15,081		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
Balances as of July 1, 2021	$	27,704	$	60,272	$	87,976
Provision	12,429		2,210		14,639
Charge-offs, recoveries and other	(16,377)		(60,437)		(76,814)
Balances as of December 31, 2021	$	23,756	$	2,045	$	25,801

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GOODWILL AND INTANGIBLE ASSETS

6 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

NOTE 5: GOODWILL AND INTANGIBLE ASSETS

Changes in the carrying amount of goodwill for the six months ended December 31, 2022 are as follows:

(in 000s)
	Goodwill		Accumulated Impairment Losses		Net
Balances as of July 1, 2022	$	898,698	$	(138,297)	$	760,401
Acquisitions	19,448		—		19,448
Disposals and foreign currency changes, net	(15,047)		—		(15,047)
Impairments	—		—		—
Balances as of December 31, 2022	$	903,099	$	(138,297)	$	764,802

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.

Components of intangible assets are as follows:

(in 000s)
	Gross Carrying Amount		Accumulated Amortization		Net
As of December 31, 2022:
Reacquired franchise rights	$	390,631	$	(204,396)	$	186,235
Customer relationships	347,333		(289,397)		57,936
Internally-developed software	139,528		(118,272)		21,256
Noncompete agreements	42,413		(38,604)		3,809
Franchise agreements	19,201		(18,028)		1,173
Purchased technology	122,700		(92,340)		30,360
Trade name	5,800		(2,030)		3,770
	$	1,067,606	$	(763,067)	$	304,539
As of June 30, 2022:
Reacquired franchise rights	$	379,114	$	(197,068)	$	182,046
Customer relationships	331,020		(278,717)		52,303
Internally-developed software	137,638		(107,111)		30,527
Noncompete agreements	41,789		(37,684)		4,105
Franchise agreements	19,201		(17,388)		1,813
Purchased technology	122,700		(87,910)		34,790
Trade name	5,800		(1,740)		4,060
	$	1,037,262	$	(727,618)	$	309,644

We made payments to acquire businesses totaling $39.8 million and $19.3 million during the six months ended December 31, 2022 and 2021, respectively. The amounts and weighted-average lives of intangible assets acquired during the six months ended December 31, 2022, including amounts capitalized related to internally-developed software, are as follows:

(dollars in 000s)
	Amount		Weighted-Average Life (in years)
Internally-developed software	$	2,082	2
Customer relationships	17,765		5
Reacquired franchise rights	11,659		5
Noncompete agreements	667		5
Total	$	32,173	5

Amortization of intangible assets for the three and six months ended December 31, 2022 was $18.5 million and $36.9 million, respectively, compared to $19.4 million and $39.2 million for the three and six months ended December 31, 2021, respectively. Estimated amortization of intangible assets for fiscal years ending June 30, 2023, 2024, 2025, 2026, and 2027 is $71.4 million, $53.6 million, $31.4 million, $22.7 million and $16.9 million, respectively.

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LONG-TERM DEBT

6 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

LONG-TERM DEBT

NOTE 6: LONG-TERM DEBT

The components of long-term debt are as follows:

			(in 000s)
As of	December 31, 2022		June 30, 2022
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 borrowings	580,000		—
Debt issuance costs and discounts	(12,063)		(13,124)
Total long-term debt	2,067,937		1,486,876
Less: Current portion	—		—
Long-term portion	$	2,067,937	$	1,486,876
Estimated fair value of long-term debt	$	1,923,000	$	1,377,000

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, 2022. We had an outstanding balance of $580.0 million under our CLOC and amounts available to borrow were not limited by the debt-to-EBITDA covenant as of December 31, 2022.

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INCOME TAXES

6 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

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. Tax returns are typically examined and either settled upon completion of the examination or through the appeals process. With respect to federal, state and local jurisdictions and countries outside of the U.S., we are typically subject to examination for three to six years after the income tax returns have been filed. On November 7, 2022, the IRS commenced their examination of our 2020 tax return and related carryback claims to tax years 2015 through 2018. Although the outcome of tax audits is always uncertain, we believe that adequate amounts of tax, interest, and penalties have been provided for in the accompanying consolidated financial statements for any adjustments that might be incurred due to federal, state, local or foreign audits.

We had gross unrecognized tax benefits of $221.3 million and $232.0 million as of December 31, 2022 and June 30, 2022, respectively. The gross unrecognized tax benefits decreased by $10.7 million during the six months ended December 31, 2022 due to expiration of statutes and settlements with state tax authorities. We believe it is reasonably possible that the balance of unrecognized tax benefits could decrease by approximately $34.0 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.

Our effective tax rate for continuing operations, including the effects of discrete tax items, was 25.2% and 31.7% for the six months ended December 31, 2022 and 2021, respectively. Discrete items increased the effective tax rate by 1.4% and 10.1% for the six months ended December 31, 2022, and 2021, respectively. A discrete income tax benefit of $7.2 million and $50.0 million were recorded in the six months ended December 31, 2022 and 2021, respectively. The discrete tax benefit recorded in the current period primarily resulted from state statute of limitations expirations and refund interest. The discrete tax benefit recorded in the prior period primarily resulted from federal and state statute of limitations expirations.

Consistent with prior years, our pretax loss for the six months ended December 31, 2022 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, 2022 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.

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 8: COMMITMENTS AND CONTINGENCIES

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 IRS that a client would otherwise not have been required to pay. Our liability related to estimated losses under the 100% accuracy guarantee was $11.7 million and $14.0 million as of December 31, 2022 and June 30, 2022, 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 $21.4 million and $12.9 million as of December 31, 2022 and June 30, 2022, 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 revolving lines of credit. Our total obligation under these lines of credit was $21.1 million at December 31, 2022, and net of amounts drawn and outstanding, our remaining commitment to fund totaled $7.4 million.

In March 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to provide economic and other relief as a result of the COVID-19 pandemic. The CARES Act includes, among other items, provisions relating to refundable employee retention payroll tax credits. Due to the complex nature of the employee retention credit computations, any benefits we may receive are uncertain and may significantly differ from our current estimates. We plan to record any benefit related to these credits upon both the receipt of the benefit and the resolution of the uncertainties, including, but not limited to, the completion of any potential audit or examination, or the expiration of the related statute of limitations. During the six months ended December 31, 2022, we received $12.1 million related to these credits and recognized $3.2 million as an offset to related operating expenses. As of December 31, 2022 and June 30, 2022, we had deferred balances of $13.9 million and $5.1 million, respectively, which is recorded in deferred revenue and other current liabilities.

Emerald AdvanceSM lines of credit (EAs) are originated by PathwardTM N.A. (Pathward). We purchase a 90% participation interest, at par, in all EAs originated by Pathward in accordance with our participation agreement. At December 31, 2022, the principal balance of purchased participation interests for the current year totaled $270.4 million.

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LITIGATION AND OTHER RELATED CONTINGENCIES

6 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

LITIGATION AND OTHER RELATED CONTINGENCIES

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 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, 2022. 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 total accrued liabilities were $1.6 million and $1.7 million as of December 31, 2022 and June 30, 2022, 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, 2022, 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 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 –

Free File Litigation. 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 on December 1, 2022. A trial date is set for August 14, 2023. We have not concluded that a loss related to this matter is probable, nor have we accrued a liability related to this matter.

We have also received and are responding to certain governmental inquiries relating to the IRS Free File Program.

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. An accrual related to these matters is included in our loss contingency accrual.

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, 2022, total approximately $267 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.

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.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policy)

6 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Basis of Presentation

The 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 Estimates

The 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.

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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REVENUE RECOGNITION (Tables)

6 Months Ended

Dec. 31, 2022

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue by Major Service Line

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,
	2022		2021		2022		2021
Revenues:
U.S. assisted tax preparation	$	41,216	$	30,845	$	77,528	$	64,452
U.S. royalties	4,946		3,404		11,174		10,762
U.S. DIY tax preparation	12,150		9,210		15,308		13,271
Refund Transfers	1,542		777		2,826		2,442
Peace of Mind® Extended Service Plan	17,320		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
International	28,046		27,907		86,880		86,232
Wave	21,941		19,497		44,587		38,634
Other	8,513		7,407		17,873		17,152
Total revenues	$	166,405	$	158,816	$	346,390	$	351,440

Schedule of Deferred Revenue Related To The Peace of Mind Program

Changes in the balances of deferred revenue and wages for our Peace of Mind® Extended Service Plan (POM) are as follows:

							(in 000s)
POM	Deferred Revenue				Deferred Wages
Six months ended December 31,	2022		2021		2022		2021
Balance, beginning of the period	$	173,486	$	172,759	$	19,495	$	17,867
Amounts deferred	3,262		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

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EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY (Tables)

6 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Computations of Basic And Diluted Earnings Per Share

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,
	2022		2021		2022		2021
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 shares	154,119		173,378		156,701		175,739
Potential dilutive shares	—		—		—		—
Dilutive weighted average common shares	154,119		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)

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RECEIVABLES (Tables)

6 Months Ended

Dec. 31, 2022

Accounts, Notes, Loans and Financing Receivable, Unclassified [Abstract]

Schedule of Short-Term Receivables

Receivables, net of their related allowance, consist of the following:

(in 000s)
As of	December 31, 2022				June 30, 2022
	Short-term		Long-term		Short-term		Long-term
Loans to franchisees	$	16,304	$	26,587	$	6,194	$	22,036
Receivables for U.S. assisted and DIY tax preparation and related fees	10,427		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 retailers	2,165		—		3,992		—
Royalties and other receivables from franchisees	6,380		—		3,682		73
Wave payment processing receivables	1,024		—		1,393		—
Other	22,500		1,528		14,111		1,172
Total	$	328,616	$	33,323	$	58,447	$	34,864

Schedule of Receivables Based On Year of Origination

alances and amounts on non-accrual status and classified as impaired, or more than 60 days past due, by tax return year of origination, as of December 31, 2022 are as follows:

			(in 000s)
Tax return year of origination	Current Balance		More Than 60 Days Past Due
2021	$	1,194	$	815
2020 and prior	102		102
	1,296		$	917
Allowance	—
Net balance	$	1,296

Balances and amounts on non-accrual status and classified as impaired, or more than 60 days past due, by fiscal year of origination, as of December 31, 2022 are as follows:

(in 000s)
Fiscal year of origination	Current Balance		Non-Accrual
2023	$	266,271	$	—
2022 and prior	8,278		8,278
Revolving loans	23,405		15,030
	297,954		$	23,308
Allowance	(26,408)
Net balance	$	271,546

Schedule of Activity in 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, 2022 and 2021 is as follows:

(in 000s)
	EAs		All Other		Total
Balances as of July 1, 2022	$	26,141	$	51,126	$	77,267
Provision	15,081		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
Balances as of July 1, 2021	$	27,704	$	60,272	$	87,976
Provision	12,429		2,210		14,639
Charge-offs, recoveries and other	(16,377)		(60,437)		(76,814)
Balances as of December 31, 2021	$	23,756	$	2,045	$	25,801

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GOODWILL AND INTANGIBLE ASSETS (Tables)

6 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

Changes in the carrying amount of goodwill for the six months ended December 31, 2022 are as follows:

(in 000s)
	Goodwill		Accumulated Impairment Losses		Net
Balances as of July 1, 2022	$	898,698	$	(138,297)	$	760,401
Acquisitions	19,448		—		19,448
Disposals and foreign currency changes, net	(15,047)		—		(15,047)
Impairments	—		—		—
Balances as of December 31, 2022	$	903,099	$	(138,297)	$	764,802

Schedule of Intangible Assets

Components of intangible assets are as follows:

(in 000s)
	Gross Carrying Amount		Accumulated Amortization		Net
As of December 31, 2022:
Reacquired franchise rights	$	390,631	$	(204,396)	$	186,235
Customer relationships	347,333		(289,397)		57,936
Internally-developed software	139,528		(118,272)		21,256
Noncompete agreements	42,413		(38,604)		3,809
Franchise agreements	19,201		(18,028)		1,173
Purchased technology	122,700		(92,340)		30,360
Trade name	5,800		(2,030)		3,770
	$	1,067,606	$	(763,067)	$	304,539
As of June 30, 2022:
Reacquired franchise rights	$	379,114	$	(197,068)	$	182,046
Customer relationships	331,020		(278,717)		52,303
Internally-developed software	137,638		(107,111)		30,527
Noncompete agreements	41,789		(37,684)		4,105
Franchise agreements	19,201		(17,388)		1,813
Purchased technology	122,700		(87,910)		34,790
Trade name	5,800		(1,740)		4,060
	$	1,037,262	$	(727,618)	$	309,644

Schedule of Acquired Finite-Lived Intangible Assets by Major Class

The amounts and weighted-average lives of intangible assets acquired during the six months ended December 31, 2022, including amounts capitalized related to internally-developed software, are as follows:

(dollars in 000s)
	Amount		Weighted-Average Life (in years)
Internally-developed software	$	2,082	2
Customer relationships	17,765		5
Reacquired franchise rights	11,659		5
Noncompete agreements	667		5
Total	$	32,173	5

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LONG-TERM DEBT LONG-TERM DEBT (Tables)

6 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Components of Long-Term Debt

The components of long-term debt are as follows:

			(in 000s)
As of	December 31, 2022		June 30, 2022
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 borrowings	580,000		—
Debt issuance costs and discounts	(12,063)		(13,124)
Total long-term debt	2,067,937		1,486,876
Less: Current portion	—		—
Long-term portion	$	2,067,937	$	1,486,876
Estimated fair value of long-term debt	$	1,923,000	$	1,377,000

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REVENUE RECOGNITION (Disaggregation of Revenue by Major Service Line) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Disaggregation of Revenue [Line Items]
Total revenues	$ 166,405	$ 158,816	$ 346,390	$ 351,440
Assisted tax preparation
Disaggregation of Revenue [Line Items]
Total revenues	41,216	30,845	77,528	64,452
Royalties
Disaggregation of Revenue [Line Items]
Total revenues	4,946	3,404	11,174	10,762
DIY tax preparation
Disaggregation of Revenue [Line Items]
Total revenues	12,150	9,210	15,308	13,271
International
Disaggregation of Revenue [Line Items]
Total revenues	28,046	27,907	86,880	86,232
Refund Transfers
Disaggregation of Revenue [Line Items]
Total revenues	1,542	777	2,826	2,442
Emerald Card® and SpruceSM
Disaggregation of Revenue [Line Items]
Total revenues	12,478	24,830	24,090	53,088
Peace of Mind® Extended Service Plan
Disaggregation of Revenue [Line Items]
Total revenues	17,320	17,315	42,090	42,151
Tax Identity Shield®
Disaggregation of Revenue [Line Items]
Total revenues	5,350	5,200	10,517	10,353
Interest and fee income on Emerald AdvanceSM
Disaggregation of Revenue [Line Items]
Total revenues	12,903	12,424	13,517	12,903
Wave
Disaggregation of Revenue [Line Items]
Total revenues	21,941	19,497	44,587	38,634
Other
Disaggregation of Revenue [Line Items]
Total revenues	$ 8,513	$ 7,407	$ 17,873	$ 17,152

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REVENUE RECOGNITION (Deferred Revenue) (Details) - POM - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Movement in Deferred Revenue [Roll Forward]
Contract with Customer, Liability	$ 128,900
Deferred Revenue
Movement in Deferred Revenue [Roll Forward]
Contract with Customer, Liability	173,486	$ 172,759
Amounts deferred	3,262	2,961
Amounts recognized on previous deferrals	(47,811)	(49,034)
Contract with Customer, Liability	128,937	126,686
Deferred Wages
Movement in Deferred Revenue [Roll Forward]
Contract with Customer, Liability	19,495	17,867
Amounts deferred	10	10
Amounts recognized on previous deferrals	(5,012)	(4,805)
Contract with Customer, Liability	$ 14,493	$ 13,072

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REVENUE RECOGNITION (Narrative) (Details) - USD ($) $ in Millions	Dec. 31, 2022	Jun. 30, 2022	Dec. 31, 2021	Jun. 30, 2021
POM
Disaggregation of Revenue [Line Items]
Deferred revenue	$ 128.9
Current deferred revenue	94.8
TIS
Disaggregation of Revenue [Line Items]
Current deferred revenue	$ 16.8	$ 25.8	$ 18.5	$ 28.3

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REVENUE RECOGNITION (Remaining Performance Obligation) (Details)	Dec. 31, 2022
POM | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-11-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, expected timing of satisfaction, period	12 months
POM | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-12-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, expected timing of satisfaction, period	5 years
TIS
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Year	2023

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EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share, amount (in shares)			4,500,000	5,100,000
Basic weighted average common shares (in shares)	154,119,000	173,378,000	156,701,000	175,739,000
Nonvested units granted (in shares)			1,000,000	1,500,000
Stock-based compensation	$ 10,200	$ 6,400	$ 17,900	$ 13,200
Unrecognized compensation costs, nonvested shares and units	66,900		66,900
Share-based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount	$ 300		$ 300

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EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY (Computations of Basic and Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Earnings Per Share [Abstract]
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 shares (in shares)	154,119	173,378	156,701	175,739
Potential dilutive shares (in shares)	0	0	0	0
Dilutive weighted average common shares (in shares)	154,119	173,378	156,701	175,739
Loss per share from continuing operations attributable to common shareholders:
Basic (in usd per share)	$ (1.43)	$ (1.09)	$ (2.48)	$ (1.93)
Continuing operations (in usd per share)	$ (1.43)	$ (1.09)	$ (2.48)	$ (1.93)

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RECEIVABLES (Schedule of Short-Term Receivables) (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Jun. 30, 2022
Accounts, Notes, Loans and Financing Receivable [Line Items]
Short-term	$ 328,616	$ 58,447
Long-term	33,323	34,864
Loans to franchisees
Accounts, Notes, Loans and Financing Receivable [Line Items]
Short-term	16,304	6,194
Long-term	26,587	22,036
Receivables for U.S. assisted and DIY tax preparation and related fees
Accounts, Notes, Loans and Financing Receivable [Line Items]
Short-term	10,427	18,893
Long-term	2,182	2,560
H&R Block's Instant RefundSM receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Short-term	1,193	3,491
Long-term	103	198
H&R Block Emerald Advance® lines of credit
Accounts, Notes, Loans and Financing Receivable [Line Items]
Short-term	268,623	6,691
Long-term	2,923	8,825
Software receivables from retailers
Accounts, Notes, Loans and Financing Receivable [Line Items]
Short-term	2,165	3,992
Long-term	0	0
Royalties and other receivables from franchisees
Accounts, Notes, Loans and Financing Receivable [Line Items]
Short-term	6,380	3,682
Long-term	0	73
Wave payment processing receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Short-term	1,024	1,393
Long-term	0	0
Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Short-term	22,500	14,111
Long-term	$ 1,528	$ 1,172

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RECEIVABLES (Narrative) (Details) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2022
H&R Block's Instant RefundSM receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Impaired, non-accrual status term	60 days
Financing receivable		$ 1,296
H&R Block Emerald Advance® lines of credit
Accounts, Notes, Loans and Financing Receivable [Line Items]
Impaired, non-accrual status term	60 days
Financing receivable		$ 297,954

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RECEIVABLES (Schedule of Receivables Based on Year of Origination) (Details) $ in Thousands	Dec. 31, 2022 USD ($)
H&R Block's Instant RefundSM receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current Balance	$ 1,296
Allowance	0
Net balance	1,296
Non-Accrual	917
H&R Block Emerald Advance® lines of credit
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current Balance	297,954
Allowance	(26,408)
Net balance	271,546
Non-Accrual	23,308
Current year of origination | H&R Block's Instant RefundSM receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current Balance	1,194
Non-Accrual	815
Current year of origination | H&R Block Emerald Advance® lines of credit
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current Balance	266,271
Non-Accrual	0
Prior year and before | H&R Block's Instant RefundSM receivables
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current Balance	102
Non-Accrual	102
Prior year and before | H&R Block Emerald Advance® lines of credit
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current Balance	8,278
Non-Accrual	8,278
Revolving loans | H&R Block Emerald Advance® lines of credit
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current Balance	23,405
Non-Accrual	$ 15,030

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RECEIVABLES (Schedule of Activity in the Allowance For Doubtful Accounts) (Details) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Allowance for Doubtful Accounts [Roll Forward]
Beginning balance	$ 77,267	$ 87,976
Provision	16,581	14,639
Charge-offs, recoveries and other	(66,243)	(76,814)
Ending balance	27,605	25,801
EAs
Allowance for Doubtful Accounts [Roll Forward]
Beginning balance	26,141	27,704
Provision	15,081	12,429
Charge-offs, recoveries and other	(14,814)	(16,377)
Ending balance	26,408	23,756
All Other
Allowance for Doubtful Accounts [Roll Forward]
Beginning balance	51,126	60,272
Provision	1,500	2,210
Charge-offs, recoveries and other	(51,429)	(60,437)
Ending balance	$ 1,197	$ 2,045

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GOODWILL AND INTANGIBLE ASSETS (Schedule of Goodwill) (Details) $ in Thousands	6 Months Ended
	Dec. 31, 2022 USD ($)
Goodwill [Roll Forward]
Goodwill before impairment losses, beginning balance	$ 898,698
Accumulated impairment losses, beginning balance	(138,297)
Goodwill, beginning balance	760,401
Acquisitions	19,448
Disposals and foreign currency changes, net	(15,047)
Impairments	0
Goodwill before impairment losses, ending balance	903,099
Accumulated impairment losses, ending balance	(138,297)
Goodwill, ending balance	$ 764,802

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GOODWILL AND INTANGIBLE ASSETS (Schedule of Intangible Assets) (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Jun. 30, 2022
Goodwill and Intangible Assets [Line Items]
Gross Carrying Amount	$ 1,067,606	$ 1,037,262
Accumulated Amortization	(763,067)	(727,618)
Net	304,539	309,644
Reacquired franchise rights
Goodwill and Intangible Assets [Line Items]
Gross Carrying Amount	390,631	379,114
Accumulated Amortization	(204,396)	(197,068)
Net	186,235	182,046
Customer relationships
Goodwill and Intangible Assets [Line Items]
Gross Carrying Amount	347,333	331,020
Accumulated Amortization	(289,397)	(278,717)
Net	57,936	52,303
Internally-developed software
Goodwill and Intangible Assets [Line Items]
Gross Carrying Amount	139,528	137,638
Accumulated Amortization	(118,272)	(107,111)
Net	21,256	30,527
Noncompete agreements
Goodwill and Intangible Assets [Line Items]
Gross Carrying Amount	42,413	41,789
Accumulated Amortization	(38,604)	(37,684)
Net	3,809	4,105
Franchise agreements
Goodwill and Intangible Assets [Line Items]
Gross Carrying Amount	19,201	19,201
Accumulated Amortization	(18,028)	(17,388)
Net	1,173	1,813
Purchased technology
Goodwill and Intangible Assets [Line Items]
Gross Carrying Amount	122,700	122,700
Accumulated Amortization	(92,340)	(87,910)
Net	30,360	34,790
Trade name
Goodwill and Intangible Assets [Line Items]
Gross Carrying Amount	5,800	5,800
Accumulated Amortization	(2,030)	(1,740)
Net	$ 3,770	$ 4,060

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GOODWILL AND INTANGIBLE ASSETS (Intangible Assets Acquired) (Details) $ in Thousands	6 Months Ended
	Dec. 31, 2022 USD ($)
Business Acquisition [Line Items]
Amount	$ 32,173
Weighted-Average Life (in years)	5 years
Capitalized software
Business Acquisition [Line Items]
Amount	$ 2,082
Weighted-Average Life (in years)	2 years
Customer Relationships
Business Acquisition [Line Items]
Amount	$ 17,765
Weighted-Average Life (in years)	5 years
Reacquired Franchise Rights
Business Acquisition [Line Items]
Amount	$ 11,659
Weighted-Average Life (in years)	5 years
Noncompete Agreements
Business Acquisition [Line Items]
Amount	$ 667
Weighted-Average Life (in years)	5 years

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GOODWILL AND INTANGIBLE ASSETS (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Business Acquisition [Line Items]
Payments made for business acquisitions, net of cash acquired			$ 39,757	$ 19,333
Amortization	$ 18,500	$ 19,400	36,900	39,200
Estimated amortization, 2022	71,400		71,400
Estimated amortization, 2023	53,600		53,600
Estimated amortization, 2024	31,400		31,400
Estimated amortization, 2025	22,700		22,700
Estimated amortization, 2026	$ 16,900		16,900
Franchisee and competitor businesses
Business Acquisition [Line Items]
Payments made for business acquisitions, net of cash acquired			$ 39,800	$ 19,300

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LONG-TERM DEBT (Components of Long-Term Debt) (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Jun. 30, 2022
Debt Instrument [Line Items]
Committed line of credit borrowings	$ 580,000	$ 0
Debt issuance costs and discounts	(12,063)	(13,124)
Total long-term debt	2,067,937	1,486,876
Less: Current portion	0	0
Long-term debt and line of credit borrowings	2,067,937	1,486,876
Estimated fair value of long-term debt	$ 1,923,000	1,377,000
Senior Notes | Senior Notes, 5.250%, due October 2025
Debt Instrument [Line Items]
Interest rate	5.25%
Senior notes	$ 350,000	350,000
Senior Notes | Senior Notes, 2.500%, due July 2028
Debt Instrument [Line Items]
Interest rate	2.50%
Senior notes	$ 500,000	500,000
Senior Notes | Senior Notes, 3.875%, due August 2030
Debt Instrument [Line Items]
Interest rate	3.875%
Senior notes	$ 650,000	$ 650,000

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LONG-TERM DEBT (Narrative) (Details)	Dec. 31, 2022 USD ($)	Jun. 30, 2022 USD ($)
Line of Credit Facility [Line Items]
Committed line of credit borrowings	$ 580,000,000	$ 0
Revolving credit facility
Line of Credit Facility [Line Items]
Aggregate principal amount	1,500,000,000
Available increase in borrowing capacity	$ 500,000,000
Maximum quarterly debt-to-EBITDA ratio	3.50
Maximum annual debt-to-EBITDA ratio	4.50
Minimum interest coverage ratio	2.50
Swingline Loans
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 175,000,000
Standby Letters of Credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 50,000,000

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INCOME TAXES (Narrative) (Details) - USD ($) $ in Millions	6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Unrecognized tax benefits	$ 221.3		$ 232.0
Change in tax benefits that are reasonably possible	$ 34.0
Effective tax rate	25.20%	31.70%
Increase in effective tax rate from discrete item, percent	(1.40%)	(10.10%)
Gross unrecognized tax benefits increase (decrease)	$ 10.7
Discrete income tax expense (benefit)	$ 7.2	$ 50.0

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COMMITMENTS AND CONTINGENCIES (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021	Jun. 30, 2022
Other Commitments [Line Items]
POM maximum per tax return			$ 10,000
Standard guarantee accrual amount	$ 11,700,000		11,700,000		$ 14,000,000
Contingent business acquisition obligations	21,400,000		21,400,000		12,900,000
Lines of credit, total obligation	21,100,000		21,100,000
Remaining franchise equity lines of credit-undrawn commitment	7,400,000		7,400,000
Costs and Expenses	449,608,000	$ 436,116,000	838,704,000	$ 803,512,000
Deferred revenue and other current liabilities	182,711,000		$ 182,711,000		196,107,000
Percentage of participation interest required to be purchased at par			90.00%
Customer advance, outstanding amount	270,400,000		$ 270,400,000
COVID19 Payroll Tax Credits
Other Commitments [Line Items]
Social Security Tax, Employer Subsidy Received, CARES Act			12,100,000
Costs and Expenses			3,200,000
Deferred revenue and other current liabilities	$ 13,900,000		$ 13,900,000		$ 5,100,000

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LITIGATION AND OTHER RELATED CONTINGENCIES (Details) - USD ($) $ in Millions	May 06, 2019	Dec. 31, 2022	Jun. 30, 2022
Loss Contingencies [Line Items]
Loss contingency accrual		$ 1.6	$ 1.7
SCC
Loss Contingencies [Line Items]
Principal assets of SCC		$ 267.0
Free File Litigation
Loss Contingencies [Line Items]
Eligibility period prior to filing complaint	4 years