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What changed in H&R BLOCK INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of H&R BLOCK INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+197 added−209 removedSource: 10-K (2023-08-17) vs 10-K (2022-08-16)

Top changes in H&R BLOCK INC's 2023 10-K

197 paragraphs added · 209 removed · 152 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur tax professionals receive extensive annual tax training on topics including recent tax code changes and filing practices, and we offer additional education opportunities for tax professionals to enhance their knowledge and skills. In preparation for the upcoming tax season, our tax professionals receive training on H&R Block products, soft skills and tax office best practices.
Biggest changeWe offer a variety of development opportunities for our associates, including in-person classes, online courses, assessments, and a learning library. Our tax professionals receive extensive annual tax training on topics including recent tax code changes and filing practices, and we offer additional education opportunities for tax professionals to enhance their knowledge and skills.
Our TIS program offers clients assistance in helping protect their tax identity and access to services to help restore thei r tax identity, and if necessary, access to services to help restore their tax identity.
Our TIS program offers clients assistance in helping protect their tax identity and access to services to help restore thei r tax identity, if necessary.
Our compensation programs are designed to attract and retain top talent that act boldly, demand high standards, crave tough problems and value winning as a team. Our equitable and comprehensive benefits offerings provide access to benefits to help both regular and seasonal associates plan for the health and security of their families.
Compensation and Benefits. Our compensation programs are designed to attract and retain top talent that act boldly, demand high standards, crave tough problems and value winning as a team. Our equitable and comprehensive benefits offerings provide access to benefits to help both regular and seasonal associates plan for the health and security of their families.
If you would like a printed copy of any of these corporate governance documents, please send your request to H&R Block, Inc., One H&R Block Way, Kansas City, Missouri 64105, Attention: Corporate Secretary. Information contained on our website does not constitute any part of this report. H&R Block, Inc. | 2022 Form 10-K 7
If you would like a printed copy of any of these corporate governance documents, please send your request to H&R Block, Inc., One H&R Block Way, Kansas City, Missouri 64105, Attention: Corporate Secretary. Information contained on our website does not constitute any part of this report. H&R Block, Inc. | 2023 Form 10-K 7
He also served as the Executive Vice President and Chief Marketing Officer of Target Corporation from April 2012 until September 2016. Tony G. Bowen , 47, became our Chief Financial Officer in May 2016. Prior to that, he served as our Vice President, U.S. Tax Services Finance from May 2013 through April 2016. Kellie J.
He also served as the Executive Vice President and Chief Marketing Officer of Target Corporation from April 2012 until September 2016. Tony G. Bowen , 48, became our Chief Financial Officer in May 2016. Prior to that, he served as our Vice President, U.S. Tax Services Finance from May 2013 through April 2016. Kellie J.
The client assigns to us the full amount of the tax refund to be issued by the CRA and the refund amount is then sent by the CRA directly to us. Small Business Financial Solutions. Our Block Advisor certified tax professionals provide small businesses with financial expertise in taxes, bookkeeping and payroll through our office network.
The client assigns to us the full amount of the tax refund to be issued by the CRA and the refund amount is then sent by the CRA directly to us. Small Business Financial Solutions. Our Block Advisors certified tax professionals provide small businesses with financial expertise in taxes, bookkeeping and payroll through our office network.
Most U.S. federal registrations can be renewed perpetually at 10-year intervals and remain enforceable so long as the marks continue to be used. 6 2022 Form 10-K | H&R Block, Inc. INFORMATION ABOUT OUR EXECUTIVE OFFICERS Jeffrey J.
Most U.S. federal registrations can be renewed perpetually at 10-year intervals and remain enforceable so long as the marks continue to be used. 6 2023 Form 10-K | H&R Block, Inc. INFORMATION ABOUT OUR EXECUTIVE OFFICERS Jeffrey J.
Jones II , 54, became our President and Chief Executive Officer in October 2017 and was our President and Chief Executive Officer-Designate from August 2017 to October 2017. Before joining the Company, he served as the President of Ridesharing at Uber Technologies, Inc. from October 2016 until March 2017.
Jones II , 55, became our President and Chief Executive Officer in October 2017 and was our President and Chief Executive Officer-Designate from August 2017 to October 2017. Before joining the Company, he served as the President of Ridesharing at Uber Technologies, Inc. from October 2016 until March 2017.
RTs are available to U.S. clients and are frequently obtained by those who: (1) do not have bank accounts into which the IRS can direct deposit their refunds; (2) like the convenience and benefits of a temporary account for receipt of their refund; and/or (3) prefer to have their tax preparation fees paid directly out of their refunds.
RTs are available to U.S. clients and are frequently obtained by those who: (1) do not have bank accounts into which the Internal Revenue Service (IRS) can direct deposit their refunds; (2) like the convenience and benefits of a temporary account for receipt of their refund; and/or (3) prefer to have their tax preparation fees paid directly out of their refunds.
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 the client would otherwise not have been required to pay.
DIY tax returns are covered by our 100% accuracy guarantee, whereby we will reimburse a client up to a maximum of $10,000 if our software makes an arithmetic error that results in payment of penalties and/or interest to the respective taxing authority that the client would otherwise not have been required to pay.
Logerwell , 52, became our Chief Accounting Officer in July 2016. Prior to that, she served as our Vice President of Corporate and Field Accounting from December 2014 until July 2016 and as our Assistant Controller from December 2010 until December 2014. Dara S. Redler , 55, became our Chief Legal Officer in January 2022.
Logerwell , 53, became our Chief Accounting Officer in July 2016. Prior to that, she served as our Vice President of Corporate and Field Accounting from December 2014 until July 2016 and as our Assistant Controller from December 2010 until December 2014. Dara S. Redler , 56, became our Chief Legal Officer in January 2022.
OTHER OFFERINGS We also offer U.S. clients a number of additional services, including Refund Transfers (RT), our Peace of Mind® Extended Service Plan (POM), H&R Block Emerald Prepaid Mastercard® (Emerald Card ® ), Emerald Advances (EA), Tax Identity Shield® (TIS), Refund Advances (RA), and small business financial solutions.
OTHER OFFERINGS During fiscal year 2023, we also offered U.S. clients a number of additional services, including Refund Transfers (RT), our Peace of Mind® Extended Service Plan (POM), H&R Block Emerald Prepaid Mastercard® (Emerald Card ® ), H&R Block Emerald Advance® Lines of Credit (EA), Tax Identity Shield® (TIS), Refund Advances (RA), and small business financial solutions.
H&R Block's Instant Refund SM . Our Canadian operations advance refunds due to certain clients from the Canada Revenue Agency (CRA), for a fee. The fee charged for this service is mandated by federal legislation which is administered by the CRA.
Our Canadian operations advance refunds due to certain clients from the Canada Revenue Agency (CRA), for a fee. The fee charged for this service is mandated by federal legislation which is administered by the CRA.
TAX PREPARATION SERVICES Assist ed income tax return preparation and related services are provided by tax professionals via a system of retail offices operated directly by us or our franchisees. These tax professionals provide assistance to our clients either in person or virtually in a number of ways.
H&R Block, Inc. | 2023 Form 10-K 3 TAX PREPARATION SERVICES Assist ed income tax return preparation and related services are provided by tax professionals via a system of retail offices operated directly by us or our franchisees. These tax professionals provide assistance to our clients either in person or virtually in a number of ways.
RAs are interest-free loans offered by our bank partner, which are available to eligible U.S. assisted clients in company-owned and participating franchise locations, including virtual clients. In tax season 4 2022 Form 10-K | H&R Block, Inc. 2022, RAs were offered in amounts of $250, $500, $750, $1,250 and $3,500, based on client eligibility as determined by our bank partner.
RAs are interest-free loans offered by our bank partner, which are available to eligible U.S. assisted clients in company-owned and participating franchise locations, including virtual clients. In tax season 2023, RAs were offered in amounts of $250, $500, $750, $1,250 and $3,500, based on client eligibility as determined by our bank partner. H&R Block's Instant Refund SM .
Prior to joining the Company, she served as General Counsel and Corporate Secretary for Tilray, Inc. from January 2019 until September 2021. She also held various legal roles of increasing responsibility with The Coca-Cola Company from September 2001 until December 2018. Karen Orosco , 51, became our President, Global Consumer Tax and Service Delivery in June 2021.
Prior to joining the Company, she served as General Counsel and Corporate Secretary for Tilray, Inc. from January 2019 until September 2021. She also held various legal roles of increasing responsibility with The Coca-Cola Company from September 2001 until December 2018.
EAs are lines of credit offered to clients in our offices, from mid-November through mid-January, in amounts up to $1,000. If the borrower meets certain criteria as agreed in the loan terms, the line of credit can be utilized year-round. In addition to the required monthly payments, borrowers may elect to pay down balances on EAs with their tax refunds.
EAs are lines of credit offered to clients in our offices, from mid-November through mid-January, in amounts up to $1,000. If the borrower meets certain criteria as agreed in the loan terms, the line of credit can be utilized year-round.
During fiscal year 2022, we prepared 20.5 million U.S. tax returns (1) which contributed to our consolidated revenues of $3.5 billion, net income from continuing operations of $560.6 million, EBITDA (2) from continuing operations of $889.5 million, and diluted EPS from continuing operations of $3.26 per share. We repurchased 23.1 million shares of our common stock. (1) U.S.
During fiscal year 2023, we prepared 20.1 million U.S. tax returns (1) which contributed to our consolidated revenues of $3.5 billion, net income from continuing operations of $561.8 million, EBITDA (2) from continuing operations of $914.7 million, and diluted EPS from continuing operations of $3.56 per share.
GOVERNMENT REGULATION Our business is subject to various forms of government regulation, including U.S. Federal and state tax preparer regulations, financial consumer protection and privacy regulations, state regulations, franchise regulations and foreign regula tions. See further discussion of these items in our Item 1A. Risk Factors and Item 7 under "Regulatory Environment" of this Form 10-K.
Federal and state tax preparer regulations, financial consumer protection and privacy regulations, state regulations, franchise regulations and foreign regula tions. See further discussion of these items in our Item 1A. Risk Factors and Item 7 under "Regulatory Environment" of this Form 10-K. HUMAN CAPITAL Fulfilling our purpose extends to helping and inspiring confidence in our associates.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS We report a single segment that includes all of our continuing operations, which includes tax preparation, small business services, and financial services and products. See discussion below.
(2) See " Non-GAAP Financial Information " in Item 7 for a reconciliation of non-GAAP measures. 2 2023 Form 10-K | H&R Block, Inc. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS We report a single segment that includes all of our continuing operations, which includes tax preparation, small business services, and financial services and products. See discussion below.
We had approxima tely 3,800 regular full-time associates as of June 30, 2022. Our business is dependent on the availability of a seasonal workforce, including tax professionals, and our ability to hire, train, and supervise these associates. The highest number of persons we employed during the fiscal year ended June 30, 2022, including seasonal associates, was approximately 69,900. Associate Engagement.
Our business is dependent on the availability of a seasonal workforce, including tax professionals, and our ability to hire, train, and supervise these associates. The highest number of persons we employed during the fiscal year ended June 30, 2023, including seasonal associates, was approximately 74,400. H&R Block, Inc. | 2023 Form 10-K 5 Associate Engagement.
HUMAN CAPITAL Fulfilling our purpose extends to helping and inspiring confidence in our associates. We are committed to our associates’ total well-being—physical, mental, financial, career, team and community. Together, when we balance these components, we achieve personal, team and organizational strength. These commitments extend to both our year-round and seasonal associates. Associates.
We are committed to our associates’ total well-being—physical, mental, financial, career, team and community. Together, when we balance these components, we achieve personal, team and organizational strength. These commitments extend to both our year-round and seasonal associates. Associates. We had approxima tely 4,000 regular full-time associates as of June 30, 2023.
We are one of the largest providers of tax return preparation solutions and electronic filing services in the U.S., Canada, and Australia with 23.6 million returns filed by or through H&R Block in fiscal year 2022 via 10,488 tax offices and our virtual tax pr eparation services, mobile applications, and online and desktop DIY solutions.
We are one of the largest providers of tax return preparation solutions and electronic filing services in the U.S., Canada, and Australia with 23.4 million returns filed by or through H&R Block in fiscal year 2023. GOVERNMENT REGULATION Our business is subject to various forms of government regulation, including U.S.
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 tax return.
Our online software may be accessed through our website at www.hrblock.com or in a mobile application, while our desktop software may be purchased online and through third-party retail stores. 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 tax return.
We materialized these efforts through our Belonging@Block program which is a council of associates from multiple departments across the organization with the responsibility to represent and improve our diverse and inclusive culture. Because of our efforts to foster a culture of belonging, we are consistently recognized as a top employer in many different categories.
We believe taking care of our associates significantly increases their job satisfaction and is instrumental to the company’s ongoing success. We materialized these efforts through our Belonging@Block program which is a council of associates from multiple departments across the organization with the responsibility to represent and improve our diverse and inclusive culture.
We have been successful in driving digital adoption by leveraging MyBlock features, such as uploading documents, approving returns online, and utilizing virtual chat. We are gaining traction as virtual uptake from our clients more than tripled in the current year.
We have been successful in driving digital adoption by leveraging the MyBlock app features such as uploading documents, approving returns online, and utilizing virtual chat. This year, more than 30% of assisted clients used a virtual tool during their tax preparation experience within our company-owned offices.
Each year, our tax professionals receive on average ov er 30 hours of Tax Education and over 16 hours of Conti nuing Professional Education. Diversity, Inclusion and Belonging. We continually evaluate our management approaches to improving diversity and inclusion, which includes looking at how we can provide a sense of belonging in the workplace for our associates.
In preparation for the upcoming tax season, our tax professionals receive training on H&R Block products, soft skills and tax office best practices. Diversity, Inclusion and Belonging. We continually evaluate our management approaches to improving diversity and inclusion, which includes looking at how we can provide a sense of belonging in the workplace for our associates.
H&R Block provides comprehensive medical insurance to our associates, H&R Block, Inc. | 2022 Form 10-K 5 and extends the opportunity for medical insurance to our seasonal workforce who satisfy the eligibility guidelines of the Affordable Care Act (ACA).
H&R Block provides comprehensive medical insurance to our associates, and extends the opportunity for medical insurance to our seasonal workforce who satisfy the eligibility guidelines of the Affordable Care Act. Subject to meeting eligibility requirements, associates can also choose to participate in the H&R Block Retirement Savings Plan 401(k) and Employee Stock Purchase Plan. Training and Development.
These lines of credit are offered by our bank partner, and we subsequently purchase a participation interest in all EAs originated by our bank partner. Tax Identity Shield®.
In addition to the required monthly payments, borrowers 4 2023 Form 10-K | H&R Block, Inc. may elect to pay down balances on EAs with their tax refunds. These lines of credit are offered by our bank partner, and we subsequently purchase a participation interest in all EAs originated by our bank partner. Tax Identity Shield®.
We administer an annual survey to all associates to better understand their levels of engagement and identify areas where we can improve. We are pleased with our overall engagement score, meeting or exceeding the global benchmark in all measured categories, and will continue to explore new ways to advance our engagement efforts in the future. Compensation and Benefits.
We administer an annual survey to all associates to better understand their levels of engagement and identify areas where we can improve. In previous years, we compared our scores against a global benchmark, which is the average of thousands of companies.
As a result, we generally operate at a loss through the first two quarters of our fiscal year. As a result of the COVID-19 pande mic and a delayed federal tax filing deadline in the prior year, there has been a shift in the typical seasonality of our business and the comparability of our financial results.
As a result, we generally operate at a loss through the first two quarters of our fiscal year.
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Through Block Advisors ® and Wave ® , we help small business owners thrive with innovative products like Wave Money ® , a mobile-first, small-business bank account that manages bookkeeping automatically. H&R Block, Inc. was organized as a corporation in 1955 under the laws of the State of Missouri.
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H&R Block, Inc. was organized as a corporation in 1955 under the laws of the State of Missouri. A complete list of our subsidiaries as of June 30, 2023 can be found in Exhibit 21 .
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A complete list of our subsidiaries as of June 30, 2022 can be found in Exhibit 21 . RECENT DEVELOPMENTS On June 9, 2021, the Board of Directors approved a change of the Company's fiscal year end from April 30 to June 30. The Company's 2022 fiscal year began on July 1, 2021 and ended on June 30, 2022.
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We repurchased 14.6 million shares of our common stock, and declared dividends of $1.16 per share, which was an increase of $0.08, or 7.4%, per share from the prior year. (1) U.S. Tax returns prepared includes tax returns prepared in U.S. company and franchise office locations, virtually, and through our DIY solutions.
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On December 20, 2021, we entered into a First Amendment to our August 2020 Program Management Agreement (PMA) with Pathward TM , N.A., formerly known as MetaBank®, N.A. (Pathward), which, among other things, extends the PMA through June 30, 2025, and adds Spruce℠ accounts to the program.
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Small Business During fiscal year 2023 small business assisted tax improved client satisfaction metrics, and continued to focus on helping small business clients beyond tax. We launched an entity formation tool to allow small business customers to take advantage of benefits that may come from incorporating, and while early, our bookkeeping and payroll services are gaining traction.
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In January 2022, we launched the Spruce℠ mobile banking platform as a part of the Financial Products imperative of our previously-announced Block Horizons 2025 strategic plan.
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Wave is our one-stop money management platform for small business owners. Our top two priorities at Wave are accelerating revenue growth and driving long term profitability. Financial Products In January 2023, we introduced Spruce SM , our mobile banking platform, to our assisted clients for the first time.
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The Spruce℠ platform, built by H&R Block with banking products powered by Pathward, includes a spending account with a debit card, along with a connected savings account that allows for budgeting for specific goals, and other features to help customers be good with money.
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Since the launch of Spruce SM through June 30, 2023, we have had 300 thousand signups and $334 million dollars in customer deposits. Spruce SM is committed to helping clients be better with money, and we are seeing progress towards that goal.
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In August 2022, the Board of Directors approved a $1.25 billion share repurchase program, effective through fiscal year 2025 and increased the quarterly cash dividend by 7% to $0.29 per share.
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During the year, we launched new features enabling clients to easily set up direct deposit within the app with just a few clicks and build healthy spending habits. Thousands of clients have engaged with the tools within the app, and feedback indicates that features give them the visibility and control they have been missing in their financial lives.
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Tax returns prepared includes tax returns prepared in U.S. company and franchise office locations, virtually, and through our DIY solutions. (2) See " Non-GAAP Financial Information " section within this filing for a reconciliation of non-GAAP measures. 2 2022 Form 10-K | H&R Block, Inc.
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From here, we are working to improve how we acquire clients both in and out of the tax season. Block Experience Block Experience is all about blending technology and digital tools with human expertise and care to serve clients however they want to be served: fully virtual to fully in person and everything in between.
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Small Business We are focused on growing our base of tax customers by leveraging the Block Advisors ® brand and serving more entrepreneurs through our Wave ® platform. In small business, our strong marketing and more advanced tax pro training allowed us to grow our assisted tax clients and our net average charge as we serve more complex businesses.
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This year we aspirationally changed our benchmark from the global benchmark to the top 25th percentile of the global benchmark to challenge our associates and leaders and to yield reports that are easier for leaders to identify opportunities to take action.
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In Wave, we have been successful in attracting new clients and increasing the value of existing clients, as both average revenue per user and average invoicing volume saw accelerating growth trends year over year. Financial Products In January 2022, we launched our new mobile banking platform, Spruce SM .
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Across the company, over half of culture and engagement questions measured were at or above the top 25th percentile of the global benchmark. We are pleased with our overall employee satisfaction score which continues on an upward trend. This year, individual leaders at all levels have begun formally creating and monitoring culture and engagement-related goals to continue our upward trajectory.
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We believe there is an opportunity to combine leading technology and features with our trusted brand and established financial relationships. Throughout the year we tested multiple iterations of our sign-up offer and continued to release updates to improve the product. We introduced clients to Spruce SM only in the DIY channel at launch to learn and gain customer insights.
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We have continued to grow our membership in diversity and inclusion groups focusing on LGBTQ+, neurodiversity, young professionals, veterans, women, and Black associates. We have also extended our diversity and inclusion efforts to support supplier diversity, enhancement of our Racial Equity Action Plan, and the development of a program that supports technology talent diversity.
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During the next fiscal year, we will test customer acquisition outside the tax season and prepare for launch in the Assisted channel. Block Experience The Block Experience is all about blending technology and digital tools with human expertise.
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We also remain committed to building a Connected Culture—one in which trust, care, and connections are how we work together as we continue to create an environment where everyone feels safe to bring their authentic self to work every day and feels like they belong as part of a larger team.
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H&R Block, Inc. | 2022 Form 10-K 3 Our online software may be accessed through our website at www.hrblock.com or in a mobile application, while our desktop software may be purchased online and through third-party retail stores.
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Our people are the number one enabler for living our Purpose and we value our associates by offering various talent development opportunities, tax training and support, and regularly assessing compensation policies and data to ensure pay equity.
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Subject to meeting eligibility requirements, associates can also choose to participate in the H&R Block Retirement Savings Plan 401(k) and Employee Stock Purchase Plan. Training and Development. We offer a variety of development opportunities for our associates, including in-person classes, online courses, assessments, and a learning library.
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To thank our associates and protect against heightened stress, burnout, and uncertainty, we have implemented ‘The Annual Reboot,’ a paid week of time off offered during the first week of July to disconnect and recharge. Because of our efforts to foster a culture of belonging, we are consistently recognized as a top employer in many different categories.
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Prior to that she served as our Senior Vice President, U.S. Retail beginning in May 2016, and our Vice President of Retail Operations from May 2011 until May 2016.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs a profitable multinational corporation, we are subject to a material amount of taxes in the U.S. and numerous foreign jurisdictions where our subsidiaries are organized and conduct their operations. Significant judgment is required in determining our worldwide provision for income taxes and other tax liabilities.
Biggest changeChanges in corporate tax laws or regulations, or in the interpretations of tax laws or regulations, could materially affect our financial condition, cash flows, and operating results. As a profitable multinational corporation, we are subject to a material amount of taxes in the U.S. and numerous foreign jurisdictions where our subsidiaries are organized and conduct their operations.
In addition, holders of our common stock are only entitled to receive such dividends, and the Company may repurchase shares, as our Board of Directors may authorize out of funds legally available for such payments.
In addition, holders of our common stock are only entitled to receive such dividends, and the Company may only repurchase shares, as our Board of Directors may authorize out of funds legally available for such payments.
Unfavorable changes in economic conditions, which are typically beyond our control, including without limitation, inflation, slowing growth, rising interest rates, recession, changes in the political climate, war (including, but not limited to, the conflict between Russia and Ukraine), supply chain or labor market disruptions, or other adverse changes, could negatively affect our business and financial condition.
Unfavorable changes in economic conditions, which are typically beyond our control, including without limitation, inflation, slowing growth, rising interest rates, recession, changes in the political climate, war (including, but not limited to, the conflict between Russia and Ukraine), supply chain or labor market disruptions, banking or financial market disruptions, or other adverse changes, could negatively affect our business and financial condition.
The further spread of COVID-19 or a variant thereof or a new global or national outbreak of COVID-19, or a variant thereof, or another highly infectious or contagious disease, the requirements to take action to help limit the spread of illness, and the other risks described above may further impact our ability to carry out our business and may materially adversely impact global economic conditions, our business, results of operations, cash flows, and financial condition.
The resurgence of COVID-19 or a variant thereof or a new global or national outbreak of another highly infectious or contagious disease, the requirements to take action to help limit the spread of illness, and the other risks described above may further impact our ability to carry out our business and may materially adversely impact global economic conditions, our business, results of operations, cash flows, and financial condition.
Adverse publicity (whether or not justified) relating to events or activities involving or attributed to us, our franchisees, employees, or agents or our services or products, which may be enhanced due to the nature of social media, may tarnish our reputation and reduce the value of our brands.
Adverse publicity (whether or not justified) relating to events or activities involving or attributed to us, our franchisees, employees, vendors, or agents or our services or products, which may be enhanced due to the nature of social media, may tarnish our reputation and reduce the value of our brands.
Numerous jurisdictions have passed, and may in the future pass, new laws related to the use and retention of consumer or employee information and this area continues to be an area of interest for U.S. federal, state, and foreign governmental authorities.
Numerous jurisdictions have passed, and may in the future pass, new laws related to the collection, use, and retention of consumer or employee information and this area continues to be an area of interest for U.S. federal, state, and foreign governmental authorities.
Taxing authorities in various state, local, and foreign jurisdictions in which we operate have also introduced measures seeking to simplify or otherwise modify the preparation and filing of tax returns or the issuance of refunds in their respective jurisdictions.
Taxing authorities in various federal, state, local, and foreign jurisdictions in which we operate have also introduced measures seeking to simplify or otherwise modify the preparation and filing of tax returns or the issuance of refunds in their respective jurisdictions.
Cybersecurity and the continued development and enhancement of our controls, processes, and practices designed to protect our systems, computers, software, data, and networks from attack, damage, or unauthorized access remain a priority for us.
Cybersecurity and the continued development and enhancement of our controls, processes, and practices designed to protect our systems, computers, software, data, and networks from attack, damage, or unauthorized access remain a top priority for us.
We have incurred, and may continue to incur, significant expenses to comply with existing privacy and data security standards and protocols imposed by law, regulation, industry standards or contractual obligations.
We have incurred, and may continue to incur, significant expenses to comply with existing or future privacy and data security standards and protocols imposed by law, regulation, industry standards or contractual obligations.
Due to the structure of our business model, we also rely on our franchisees and other private and governmental third parties to maintain secure systems and respond to cybersecurity risks.
Due to the structure of our business model, we also rely on our franchisees, vendors, and other private and governmental third parties to maintain secure systems and respond to cybersecurity risks.
We have been named and, in the future will likely continue to be named, in various legal actions, including arbitrations, class or representative actions, actions or inquiries by state attorneys general and other regulators, and other litigation arising in connection with our various business activities, including relating to our various service and product offerings.
We have been named and, in the future will likely continue to be named, in various legal actions, including class or representative actions, individual or mass arbitrations, actions or inquiries by state attorneys general and other regulators, and other litigation arising in connection with our various business activities, including relating to our various service and product offerings.
In certain instances, we are vulnerable to vendor error, service inefficiencies, service interruptions, or service delays, and such issues by our key vendors in providing services to or for us could result in material losses for us due to the nature of the services being provided or our contractual relationships with our vendors.
In certain instances, we are vulnerable to vendor error, service inefficiencies, data breaches, service interruptions, or service delays, and such issues by our key vendors in providing services to or for us could result in material losses for us due to the nature of the services being provided or our contractual relationships with our vendors.
STRATEGIC AND INDUSTRY RISKS Changes in applicable tax laws have had, and may in the future have, a negative impact on the demand for and pricing of our services. Government changes in tax filing processes may adversely affect our business and our consolidated financial position, results of operations, and cash flows.
STRATEGIC AND INDUSTRY RISKS Changes in applicable tax laws have had, and may in the future have, a negative impact on the demand for and pricing of our services. Government changes in tax filing or IRS processes may adversely affect our business and our consolidated financial position, results of operations, and cash flows.
Free File, Inc., which operates under an agreement that is currently set to expire in October 2023, is currently the sole means through which the IRS offers free DIY tax software to taxpayers, however the IRS is not prohibited from offering competing services.
Free File, Inc., which operates under an agreement that is currently set to expire in October 2025, is currently the sole means through which the IRS offers free DIY tax software to taxpayers, however the IRS is not prohibited from offering competing services.
Currently proposed or new CFPB and state regulations, or expanded interpretations of current regulations, may require changes to the financial products we offer, our services or contracts, and this could have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows.
Currently proposed or new federal and state laws and regulations, or expanded interpretations of current laws and regulations, may require changes to the financial products we offer, our services or contracts, and this could have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows.
Notwithstanding our efforts to address the impacts of the COVID-19 pandemic, or a variant thereof, on our business, there is no certainty that the measures we implemented, or may implement in the future, are or will be sufficient to mitigate the risks posed by COVID-19, or a variant thereof.
Notwithstanding our efforts to address the impacts of the COVID-19 pandemic, or a variant thereof, on our business, there is no certainty that the measures we implemented, or may implement in the future, are or will be sufficient to mitigate the risks posed by COVID-19, a variant thereof, or another infectious disease.
There have been significant new or proposed regulations and/or heightened focus by the government and others in some of these areas, including, for example, related to privacy and data security, climate change, interchange fees, consumer financial services and products, endorsements and testimonials, telemarketing, restrictive covenants, and labor, including overtime and exemption regulations, state and local laws on minimum wage, worker classification, and other labor-related issues.
There have been significant new or proposed regulations and/or heightened focus by the government and others in some of these areas, including, for example, privacy and data security, climate change, interchange fees, consumer financial services and products, endorsements and testimonials, telemarketing, web and wireless marketing technologies, restrictive covenants, and labor, including overtime and exemption regulations, state and local laws on minimum wage, worker classification, and other labor-related issues.
(FIS), Galileo Financial Technologies, LLC, or similar vendors, for data processing and card production services, Pathward, for the issuance of RTs, EAs RAs, Emerald Cards, and Spruce accounts, and Microsoft Corporation, for cloud computing services.
(FIS), Galileo Financial Technologies, LLC, or similar vendors, for data processing and card production services, Pathward, for the issuance of RTs, EAs RAs, Emerald Cards, and Spruce accounts, and Microsoft Corporation, for cloud computing services and artificial intelligence technology.
Claimants have also attempted, and may in the future 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 June 30, 2022, total approximately $264 million and consist of an intercompany note receivable.
Claimants have also attempted, and may in the future 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 June 30, 2023, total approximately $262 million and consist of an intercompany note receivable.
The concentration of our revenue-generating activity during this relatively short period presents a number of challenges for us, including (1) cash and resource management during the remainder of our fiscal year, when we generally operate at a loss and incur fixed costs and costs of preparing for the upcoming tax season, (2) responding to changes in competitive conditions, including marketing, pricing, and new product offerings, which could affect our position during the tax season, (3) disruptions, delays, or extensions in a tax season, including those caused by pandemics, such as the COVID-19 outbreak, (4) client dissatisfaction issues or negative social media campaigns, which may not be timely discovered or satisfactorily addressed, and (5) ensuring optimal uninterrupted operations and service delivery during the tax season.
The concentration of our revenue-generating activity during this relatively short period presents a number of challenges for us, including (1) cash and resource management during the remainder of our fiscal year, when we generally operate at a loss and incur fixed costs and costs of preparing for the upcoming tax season, (2) responding to changes in competitive conditions, including marketing, pricing, and new product offerings, which could affect our position during the tax season, (3) disruptions, delays, or extensions in a tax season, including those caused by pandemics, such as the COVID-19 outbreak, or severe weather, (4) client dissatisfaction issues or negative social media campaigns, which may not be timely discovered or satisfactorily addressed, and (5) ensuring optimal uninterrupted operations and service delivery during the tax season, which may be disrupted by natural or manmade disasters, extreme weather conditions, pandemics, or other catastrophic events.
Alleged failures in this regard could result in negative impacts, including regulatory investigations, claims, legal actions, harm to our reputation and brands, fines, penalties, and other damages. As a result of the COVID-19 pandemic, the IRS extended the deadline in consecutive tax seasons for 2019 and 2020 individual income tax returns.
Alleged failures in this regard could result in negative impacts, including regulatory investigations, claims, legal actions, harm to our reputation and brands, fines, penalties, and other damages. As a result of the COVID-19 pandemic, the IRS and substantially all U.S. states extended the filing deadline in consecutive tax seasons for 2019 and 2020 individual income tax returns.
Additionally, there are risks inherent in doing business internationally, including: (1) changes in trade regulations; (2) difficulties in managing foreign operations as a result of distance, language, and cultural differences; (3) profit repatriation restrictions, and fluctuations in foreign currency exchange rates; (4) geopolitical events, including acts of war and terrorism, and economic and political instability; (5) compliance with anti-corruption laws such as the U.S.
Additionally, there are risks inherent in doing business internationally, including: (1) changes in trade regulations; (2) difficulties in managing foreign operations as a result H&R Block, Inc. | 2023 Form 10-K 13 of distance, language, and cultural differences; (3) profit repatriation restrictions, and fluctuations in foreign currency exchange rates; (4) geopolitical events, including acts of war and terrorism, and economic and political instability; (5) compliance with anti-corruption laws such as the U.S.
If we are slow to enhance our services, products, or technologies, if our competitors are able to achieve results more quickly than us, or if there are new and unexpected entrants into the industry, we may fail to capture, or lose, a significant share of the market.
If we are slow to enhance our services, products, or technologies, if our competitors are able to achieve results more quickly than us, if there are new and unexpected entrants into the industry, or if there are new technologies available that provide products or services that compete with ours, we may fail to capture, or lose, a significant share of the market.
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.
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. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
The adoption or expansion of any measures that significantly simplify tax return preparation, or otherwise reduce the need for third-party tax return preparation services or financial products, including governmental encroachment at the U.S. federal and state levels, as well as in foreign jurisdictions, could reduce demand for our services and products and could have a material adverse effect on our business and our consolidated financial position, results of operations and cash flows.
The adoption or expansion of any measures that significantly simplify tax return preparation, or otherwise reduce the need for third-party tax return preparation services or financial products, including governmental encroachment at the U.S. federal and state levels, as well as in foreign jurisdictions, could reduce demand for our services and products and could have a material adverse effect on our business and our consolidated financial position, results of operations and cash flows. 8 2023 Form 10-K | H&R Block, Inc.
Our business depends on our ability to attract, develop, motivate, and retain key personnel in a timely manner, including members of our executive team and those in seasonal tax preparation positions (which may be required on short notice during any extended tax season or to serve extended filers) or with other required specialized expertise, including technical positions.
Our business depends on our ability to attract, develop, motivate, and retain key personnel in a timely manner, including members of our executive team and those in seasonal tax preparation positions (which may be required on short notice during any extended tax season or to serve extended filers) or with other required specialized expertise, such as technical positions (including with respect to cybersecurity, artificial intelligence, and machine learning).
In addition, if our costs of labor or related costs increase or if new or revised labor laws, rules or regulations are adopted or implemented that impact our seasonal workforce and increase our labor costs, there could be a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows.
In addition, if our costs of labor or related costs increase, if new or revised labor laws, rules, or regulations are adopted or implemented that impact our seasonal workforce and increase our labor costs, or if our labor costs are unpredictable due to tax season fluctuations or otherwise, there could be a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows.
These networks, systems, and operations are potentially vulnerable to damage or interruption from upgrades and maintenance, network failure, 10 2022 Form 10-K | H&R Block, Inc. hardware failure, software failure, power or telecommunications failures, cyberattacks, human error, and natural disasters. As our tax preparation business is seasonal, our systems must be capable of processing high volumes during our peak periods.
These networks, systems, and operations are potentially vulnerable to damage or interruption from upgrades and maintenance, network failure, hardware failure, software failure, power or telecommunications failures, cyberattacks, human error, and natural disasters. As our tax preparation business is seasonal, our systems must be capable of processing high volumes during our peak periods.
A security breach or other unauthorized access to our systems could have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows.
A security breach or other unauthorized access to our systems, or third-party systems on which we rely, could have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows.
H&R Block, Inc. | 2022 Form 10-K 11 We rely on a single vendor or a limited number of vendors to provide certain key services or products, and the loss of such relationships, the inability of these key vendors to meet our needs, or errors by the key vendors in providing services to or for us, could have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows.
We rely on a single vendor or a limited number of vendors to provide certain key services or products, and the loss of such relationships, the inability of these key vendors to meet our needs, or errors by the key vendors in providing services to or for us, could have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows.
If we experience significant business disruptions during the tax season or if we are unable to effectively address the challenges described above and related challenges associated with a seasonal business, we could experience a loss, disruption, or change in timing of business, which could have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows.
If we experience 12 2023 Form 10-K | H&R Block, Inc. significant business disruptions during the tax season or if we are unable to effectively address the challenges described above and related challenges associated with a seasonal business, we could experience a loss, disruption, or change in timing of business, which could have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows.
Furthermore, as fraudulent activity becomes more pervasive and sophisticated, we may implement fraud detection and prevention measures that could make it less convenient for legitimate clients to obtain and use our services and products, which may adversely affect the demand for our services and products, our reputation, and our financial performance.
Furthermore, as fraudulent activity becomes more pervasive and sophisticated, we may implement fraud detection and prevention measures that could make it less convenient for legitimate clients to obtain and use our 10 2023 Form 10-K | H&R Block, Inc. services and products, which may adversely affect the demand for our services and products, our reputation, and our financial performance.
Our risk and exposure to these matters remain heightened due to a variety of factors including, among other things, (1) the evolving nature of these threats and related regulation, (2) the increased activity and sophistication of hostile foreign governments, organized crime, cyber criminals, and hackers that may initiate cyberattacks against us or third-party systems on which we rely, (3) the prominence of our brand, (4) our and our franchisees' extensive office footprint, (5) our plans to continue to implement strategies for our online and mobile applications and our desktop software, (6) our use of third-party vendors, and (7) the usage of remote working arrangements by our associates, franchisees, and third-party vendors, which significantly expanded due to the COVID-19 pandemic.
Our risk and exposure to these matters remain heightened due to a variety of factors including, among other things, (1) the evolving nature of these threats and related regulation, (2) the increased activity and sophistication of hostile foreign governments, organized crime, cyber criminals, and hackers that may initiate cyberattacks against us or third-party systems on which we rely, (3) the prominence of our brand, (4) our and our franchisees' extensive office footprint, (5) our plans to continue to implement strategies for our online and mobile applications and our desktop software, (6) our use of third-party vendors, (7) our use of certain new technologies, such as artificial intelligence and H&R Block, Inc. | 2023 Form 10-K 15 machine learning, and (8) the usage of remote working arrangements by our associates, franchisees, and third-party vendors, which significantly expanded due to the COVID-19 pandemic.
These competitive factors may diminish our revenue and profitability, or harm our ability to acquire and retain clients, resulting in a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows. H&R Block, Inc. | 2022 Form 10-K 9 Our businesses may be adversely affected by difficult economic conditions.
These competitive factors may diminish our revenue and profitability, or harm our ability to acquire and retain clients, resulting in a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows. Our businesses may be adversely affected by difficult economic conditions.
In addition, unanticipated changes in governmental processes, or newly implemented processes, for (1) accepting tax filings and related forms, including the ability of taxing authorities to accept electronic tax return filings, or (2) distributing tax refunds or other amounts to clients may result in processing delays by us or applicable taxing authorities.
In addition, unanticipated changes in governmental processes, or newly implemented processes, for (1) accepting tax filings and related forms, including the ability of taxing authorities to accept electronic tax H&R Block, Inc. | 2023 Form 10-K 11 return filings, or (2) distributing tax refunds or other amounts to clients may result in processing delays by us or applicable taxing authorities.
In addition, we face intense competition with our small business solutions. We may be unsuccessful in competing with other providers, which may diminish our revenue and profitability, and harm our ability to acquire and retain clients. Offers of free services or products could adversely affect our revenues and profitability.
We may be unsuccessful in competing with other providers, which may diminish our revenue and profitability, and harm our ability to acquire and retain clients. Offers of free services or products could adversely affect our revenues and profitability.
H&R Block, Inc. | 2022 Form 10-K 13 Costs for us to comply with such laws, regulations, and policies that are applicable to us could be significant. We may also face audits or investigations by one or more foreign government agencies relating to these laws, regulations, and policies that could result in the imposition of penalties or fines.
Costs for us to comply with such laws, regulations, and policies that are applicable to us could be significant. We may also face audits or investigations by one or more foreign government agencies relating to these laws, regulations, and policies that could result in the imposition of penalties or fines.
The above requirements and business implications are subject to change and evolving application, including by means of new legislation, legislative changes, and/or executive orders, and there may be additional regulatory actions or enforcement priorities, or new interpretations of existing requirements that differ from ours.
H&R Block, Inc. | 2023 Form 10-K 17 The above requirements and business implications are subject to change and evolving application, including by means of new legislation, legislative changes, and/or executive orders, and there may be additional regulatory actions or enforcement priorities, or new interpretations of existing requirements that differ from ours.
Our tax returns and other tax matters are periodically examined by tax authorities and governmental bodies, including the IRS, which may disagree with positions taken by us in determining our tax liability. There can be no assurance as to the outcome of these examinations.
Our tax returns and other tax matters are periodically examined by tax authorities and governmental bodies, including the IRS, which may disagree with positions taken by us in determining our tax liability. There can be no H&R Block, Inc. | 2023 Form 10-K 19 assurance as to the outcome of these examinations.
Colorado, Connecticut, Utah, and Virginia have adopted comprehensive privacy laws, and other jurisdictions have adopted or may in the future adopt their own, different privacy laws. These laws may contain different requirements or may be interpreted and applied inconsistently from jurisdiction to jurisdiction.
In addition, certain states have adopted comprehensive privacy laws, and other jurisdictions have adopted or may in the future adopt their own, different privacy laws. These laws may contain different requirements or may be interpreted and applied inconsistently from jurisdiction to jurisdiction.
Where appropriate, we impose certain requirements and controls on these third parties, but it is possible that they may not appropriately employ these H&R Block, Inc. | 2022 Form 10-K 15 controls or that such controls (or their own separate requirements and controls) may be insufficient to protect personal information.
Where appropriate, we impose certain requirements and controls on these third parties, but it is possible that they may not appropriately employ these controls or that such controls (or their own separate requirements and controls) may be insufficient to protect personal information.
We are also subject to, among other things, advertising standards for electronic tax return 16 2022 Form 10-K | H&R Block, Inc. filers, and to possible monitoring by the IRS, and if deemed appropriate, the IRS could impose various penalties, including suspension from the IRS electronic filing program.
We are also subject to, among other things, advertising standards for electronic tax return filers, and to possible monitoring by the IRS, and if deemed appropriate, the IRS could impose various penalties, including suspension from the IRS electronic filing program.
In addition, if rating agencies downgrade our credit rating or interest rates increase, the cost of debt under our existing financing arrangements, as well as future financing arrangements, could increase and our capital market access could decrease or become unavailable.
In addition, if rating agencies downgrade our credit rating or interest rates increase, the cost of debt under our existing financing 18 2023 Form 10-K | H&R Block, Inc. arrangements, as well as future financing arrangements, could increase and our capital market access could decrease or become unavailable.
In DIY and virtual, options include various forms of digital electronic assistance, including online and mobile applications, and desktop software, all of which we offer. Our DIY and virtual services and products compete with a number of online and software companies, primarily on price and functionality.
Commercial tax return preparers are highly competitive with regard to price and service. In DIY and virtual, options include various forms of digital electronic assistance, including online and mobile applications, and desktop software, all of which we offer. Our DIY and virtual services and products compete with a number of online and software companies, primarily on price and functionality.
However, additional competitors have entered, and in the future may enter, the market to provide tax preparation services or products. In the assisted tax services category, there are a substantial number of tax return preparation firms and accounting firms offering tax return preparation services. Commercial tax return preparers are highly competitive with regard to price and service.
All categories in the tax return preparation industry are highly competitive, and additional competitors have entered, and in the future may enter, the market to provide tax preparation services or products. In the assisted tax services category, there are a substantial number of tax return preparation firms and accounting firms offering tax return preparation services.
For example, as previously reported, we are subject to litigation and have received and are responding to certain governmental inquiries relating to the IRS Free File program. These inquiries include requests for information and, in some cases, subpoenas from various regulators and state attorneys general.
For example, as previously reported, we are subject to litigation and have received and are responding to certain governmental inquiries relating to the IRS Free File program and our DIY tax preparation services. These inquiries include, among other things, requests for information and subpoenas from various regulators and state attorneys general.
If the IRS disregards this direction, and sends the tax refund via check, then it could result in a loss of tax preparation and financial product revenue, negative publicity, and client dissatisfaction.
Certain of our financial products are dependent on the IRS following the client’s directions to direct deposit the tax refund. If the IRS disregards this direction, and sends the tax refund via check, then it could result in a loss of tax preparation and financial product revenue, negative publicity, and client dissatisfaction.
If we are unable to attract, develop, motivate, and retain key personnel, our business, operations, and financial results could be negatively 12 2022 Form 10-K | H&R Block, Inc. impacted.
If we are unable to attract, develop, motivate, and retain key personnel, our business, operations, and financial results could be negatively impacted.
Such future changes could decrease the demand or the amount we charge for our services, and, in turn, have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows. In addition, there are various initiatives from time to time seeking to simplify the tax return preparation filing process.
Such future changes could decrease the demand or the amount we charge for our services, and, in turn, have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows.
Establishing systems and processes, or making changes to our existing policies, to achieve compliance with these complex and evolving requirements may increase our costs or limit our ability to pursue certain business opportunities.
Establishing systems and processes, or making changes to our existing policies, to achieve compliance with these complex and evolving requirements may increase our costs or limit our ability to pursue certain business opportunities. There can be no assurance that we will successfully comply in all circumstances.
Due to the nature of our business, we collect, use, and retain large amounts of personal information and data pertaining to clients, including tax return information, financial product and service information, and social security numbers. In addition, we collect, use, and retain personal information and data of our employees in the ordinary course of our business.
Due to the nature of our business, we collect, use, and retain large amounts of personal information and data pertaining to clients, including tax return information, financial product and service information, and social security 14 2023 Form 10-K | H&R Block, Inc. numbers.
To the extent that our intellectual property is not H&R Block, Inc. | 2022 Form 10-K 17 protected effectively by trademarks, copyrights, patents, or other means, other parties with knowledge of our intellectual property, including former employees, may seek to exploit our intellectual property for their own or others' advantage.
To the extent that our intellectual property is not protected effectively by trademarks, copyrights, patents, or other means, other parties with knowledge of our intellectual property, including former employees, may seek to exploit our intellectual property for their own or others' advantage. Competitors may also misappropriate our trademarks, copyrights or other intellectual property rights or duplicate our technology and products.
During March 2020, the World Health Organization declared the COVID-19 outbreak to be a global pandemic, and the impacts of the pandemic have been felt since that time.
During March 2020, the World Health Organization declared the COVID-19 outbreak to be a global pandemic, and the impacts of the pandemic have been felt since that time. Since the beginning of the pandemic, jurisdictions in which we operate have from time-to-time imposed various restrictions on our business.
For example, the State of California adopted the California Consumer Privacy Act (CCPA), which became effective January 1, 2020, as amended by the California Privacy Rights Act (CPRA), which will 14 2022 Form 10-K | H&R Block, Inc. be effective January 1, 2023.
For example, the State of California adopted the California Consumer Privacy Act (CCPA), which became effective January 1, 2020, as amended by the California Privacy Rights Act (CPRA) on January 1, 2023.
It is difficult to predict how currently proposed or new regulations may impact the financial products we offer. The CFPB and state regulators may examine, investigate, and take enforcement actions against our subsidiaries that offer consumer financial services and products, as well as financial institutions and service providers upon which our subsidiaries rely to provide consumer financial services and products.
The CFPB and other federal or state regulators may examine, investigate, and take enforcement actions against our subsidiaries that offer consumer financial services and products, as well as financial institutions and other third parties upon which our subsidiaries rely to provide consumer financial services and products.
Though tax return filing deadlines were generally not extended for individual 2021 tax returns, Treasury, the IRS, and state or foreign officials may determine to extend future tax deadlines or take other actions, which could have an additional material adverse effect on our business and our consolidated financial position, results of operations, and cash flows in future years.
In the event of a resurgence of COVID-19 or the outbreak of another infectious disease, Treasury, the IRS, and state or foreign officials may determine to extend future tax deadlines or take other actions, which could have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows in future years.
The CFPB has broad powers to administer, investigate compliance with, and, in some cases, enforce U.S. federal financial consumer protection laws. The CFPB has broad rule-making authority for a wide range of financial consumer protection laws that apply to certain of the financial products we offer, including the authority to prohibit or allege "unfair, deceptive, or abusive" acts and practices.
The CFPB has broad rule-making authority for a wide range of financial consumer protection laws that apply to certain of the financial products we offer, including the authority to 16 2023 Form 10-K | H&R Block, Inc. prohibit or allege "unfair, deceptive, or abusive" acts and practices.
Further, changes in governmental administrations or regulations could result in further and unanticipated changes in requirements or processes, which may require us to make corresponding changes to our client service systems and procedures. Certain of our financial products are dependent on the IRS following the client’s directions to direct deposit the tax refund.
Further, changes in governmental administrations or regulations could result in further and unanticipated changes in requirements or processes, which may require us to make corresponding changes to our client service systems and procedures.
Individual tax filers may elect to change their tax preparation method, choosing from among various assisted, DIY, and virtual offerings.
Individual tax filers may elect to change their tax preparation method, choosing from among various assisted, DIY, and virtual offerings. Our Block Horizons strategy is focused on small businesses, financial products and the tax client experience.
We can make no assurances that we will be able to offer, or continue to offer, all of these services and products and a failure to do so could negatively impact our financial results and ability to compete. Intense competition could result in a reduction of our market share, lower revenues, lower margins, and lower profitability.
Any such changes to our services or products or any failure to continue offering such services and products could negatively impact our financial results and ability to compete. Intense competition could result in a reduction of our market share, lower revenues, lower margins, and lower profitability. In addition, we face intense competition with our small business solutions.
We may be unable to attract and retain key personnel.
We may be unable to attract and retain key personnel or fully control or accurately predict our labor costs.
Competitors may also misappropriate our trademarks, copyrights or other intellectual property rights or duplicate our technology and products. Any significant impairment or misappropriation of our intellectual property or proprietary information could harm our business and our brand, and may adversely affect our ability to compete.
Any significant impairment or misappropriation of our intellectual property or proprietary information could harm our business and our brand, and may adversely affect our ability to compete. In addition, third parties may allege we are infringing their intellectual property rights, and we may face intellectual property challenges from other parties.
Even if we have sufficient resources to pay dividends and to repurchase shares of our common stock, our Board of Directors may determine 18 2022 Form 10-K | H&R Block, Inc. to use such resources to fund other Company initiatives.
Even if we have sufficient resources to pay dividends and to repurchase shares of our common stock, our Board of Directors may determine to use such resources to fund other Company initiatives. Accordingly, we cannot make any assurance that future dividends will be paid, or future repurchases will be made, at levels comparable to our historical practices, if at all.
There can be no assurance that we will successfully comply in all cases, which could result in regulatory investigations, claims, legal actions, harm to our reputation and brands, fines, penalties, and other damages.
We are, and may in the future be, subject to regulatory investigations, claims and legal actions related to the collection, use, sharing, and/or retention of information, which could lead to further inquiries, further legal actions, other regulatory or legislative actions, harm to our reputation and brands, fines, penalties, and other damages.
In addition, substantially all U.S. states with an April individual state income tax filing requirement also extended their respective deadlines. These extensions impacted the typical seasonality of our business and the comparability of our financial results.
These extensions impacted the typical seasonality of our business and the comparability of our financial results.
Removed
All categories in the tax return preparation industry are highly competitive and we have also announced our Block Horizons strategy, focusing on small businesses, 8 2022 Form 10-K | H&R Block, Inc. financial products, and the tax client experience, to differentiate ourselves from those competitors.
Added
In addition, there are various initiatives from time to time seeking to simplify the tax return preparation filing process or otherwise modify IRS processes.
Removed
Since the beginning of the pandemic, jurisdictions in which we operate have from time-to-time imposed various restrictions on our business, including at various times over the past fiscal year imposing certain operational limitations, and social distancing requirements.
Added
In addition, new technologies, such as those related to artificial intelligence, machine learning, automation, and algorithms, may have unexpected consequences, which may be due to their limitations, potential manipulation or unintended uses, or our failure to use or implement them effectively.
Removed
In addition, third parties may allege we are infringing their intellectual property rights, and we may face intellectual property challenges from other parties.
Added
From time to time we may make changes to certain of our services and products and we can make no assurances that we will be able to offer, or that we will continue to offer, all of these services and products.
Removed
Accordingly, we cannot make any assurance that future dividends will be paid, or future repurchases will be made, at levels comparable to our historical practices, if at all. Changes in corporate tax laws or regulations, or in the interpretations of tax laws or regulations, could materially affect our financial condition, cash flows, and operating results.
Added
For example, in May 2023, the IRS announced that it is beginning a limited pilot project to evaluate customer support and technology needs related to a direct online tax filing system, and is also evaluating the IRS’s ability to overcome the potential operational challenges associated with such a system.
Added
As a result of this or other programs, H&R Block, Inc. | 2023 Form 10-K 9 the federal government could become our direct competitor, which could have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows.
Added
In addition, any delays in launching new financial service or product offerings, or technical or other issues associated with the launch, could cause a loss of clients or client dissatisfaction, especially if such issues occur during the tax season.
Added
In addition, we collect, use, and retain personal information and data of our employees in the ordinary course of our business.
Added
The CFPB has broad powers to administer, investigate compliance with, and, in some cases, enforce U.S. federal financial consumer protection laws.
Added
It is difficult to predict how currently proposed or new regulations may impact the financial products we offer.
Added
In addition, as we continue to incorporate additional or emerging technologies into our business, such as in the areas of artificial intelligence and machine learning, we may become subject to increased government regulation or regulatory scrutiny.
Added
Significant judgment is required in determining our worldwide provision for income taxes and other tax liabilities.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. MINE SAFETY DISCLOSURES 20 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 20 ITEM 6. SELECTED FINANCIAL DATA 21 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 22 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 35 ITEM 8.
Biggest changeITEM 4. MINE SAFETY DISCLOSURES 20 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 20 ITEM 6. SELECTED FINANCIAL DATA 21 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 22 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 31 ITEM 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+2 added−3 removed1 unchanged
Biggest changeWe previously used a self-selected peer group based on companies with similar market capitalization or public companies in the tax return preparation industry. Beginning in fiscal year 2022, we are using the compensation peer group disclosed in our annual meeting proxy statement as the selected peer group in order to provide consistency in peers across disclosures.
Biggest changeWe previously used a self-selected peer group that consisted of the compensation peer group disclosed in our proxy statement. Beginning in fiscal year 2023, we are using the S&P 400 Consumer Services Industry index as the included industry or line-of-business index.
Note: The Current Peer Group includes the following companies: ACI Worldwide Inc., Equifax Inc., Euronet Worldwide, Inc., Gartner, Inc., Genpact Limited, Global Payments Inc., Insperity, Inc., Intuit Inc., Jack Henry & Associates, Inc., Paychex, Inc., TransUnion, TriNet Group, Inc., Unisys Corporation, The Western Union Company, WEX Inc, and Workday, Inc.
The Prior Year Peer Group includes the following companies: ACI Worldwide Inc., Equifax Inc., Euronet Worldwide, Inc., Gartner, Inc., Genpact Limited, Global Payments Inc., Insperity, Inc., Intuit Inc., Jack Henry & Associates, Inc., Paychex, Inc., TransUnion, TriNet Group, Inc., Unisys Corporation, The Western Union Company, WEX Inc, and Workday, Inc.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER – A summary of our purchases of H&R Block common stock during the fourth quarter of fiscal year 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 be Purchased Under the Plans or Programs (2) April 1 – April 30 — $ — — $ 13,797 May 1 - May 31 1 $ 25.93 — $ 13,797 June 1 - June 30 224 $ 35.32 — $ — 225 $ 35.27 — (1) We purchased approximately 225 thousand shares in connection with funding employee income tax withholding obligations arising upon the lapse of restrictions on restricted share units.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER – A summary of our purchases of H&R Block common stock during the fourth quarter of fiscal year 2023 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 be Purchased Under the Plans or Programs (2) April 1 – April 30 1 $ 35.24 — $ 900,000 May 1 - May 31 3,024 $ 30.09 3,015 $ 809,310 June 1 - June 30 3,536 $ 31.66 3,452 $ 700,000 6,561 $ 30.94 6,467 (1) We purchased approximately 94 thousand shares in connection with funding employee income tax withholding obligations arising upon the lapse of restrictions on restricted share units.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION AND HOLDERS – H&R Block's common stock is traded on the New York Stock Exchange (NYSE) under the symbol HRB. On July 29, 2022, there were 13,337 shareholders of record and the closing stock price on the NYSE was $39.96 per share.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION AND HOLDERS – H&R Block's common stock is traded on the New York Stock Exchange (NYSE) under the symbol HRB.
An investment of $100, with reinvestment of all dividends, is assumed to have been made in our common stock and in each of the indexes on June 30, 2017, and its relative performance is tracked through June 30, 2022.
An investment of $100, with reinvestment of all dividends, is assumed to have been made in our common stock and in each of the indexes on June 30, 2018, and its relative performance is tracked through June 30, 2023. Note: The Current Year Peer Group is the S&P 400 Consumer Services Industry Index.
PERFORMANCE GRAPH – The following graph compares the cumulative five-year total return provided to shareholders of H&R Block, Inc.'s common stock relative to the cumulative total returns of the S&P Midcap 400 index and a selected peer group.
(2) In August 2022, we announced that our Board of Directors approved a $1.25 billion share repurchase program, effective through June 2025. PERFORMANCE GRAPH – The following graph compares the cumulative five-year total return provided to shareholders of H&R Block, Inc.'s common stock relative to the cumulative total returns of the S&P Midcap 400 index and a selected peer group.
Removed
(2) In September 2015, we announced that our Board of Directors approved a $3.5 billion share repurchase program, effective through June 2019. In June 2019, our Board of Directors extended the share repurchase program, which expired on June 30, 2022. 20 2022 Form 10-K | H&R Block, Inc.
Added
On July 31, 2023, there were 12,788 shareholders of record and the closing stock price on the NYSE was $33.61 per share. 20 2023 Form 10-K | H&R Block, Inc.
Removed
This is the peer group used in benchmarking fiscal year 2023 executive compensation as will be described in our 2022 definitive proxy statement. The Prior Year Peer Group (included in the graph for comparison purposes) includes the following companies: Intuit Inc., Blucora, Inc., ICF International, Inc., CBIZ, Inc., Resources Connection, Inc., Willis Towers Watson PLC and Huron Consulting Group Inc.
Added
We believe using an index will provide more consistency than the compensation peer group disclosed in our proxy statement that is selected on an annual basis.
Removed
Previously, the Prior Year Group also included Liberty Tax, Inc. and Navigant Consulting, Inc., but they are not included in the chart above as they have been acquired.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

42 edited+19 added−36 removed38 unchanged
Biggest changeDIY tax preparation 319,086 367,289 (48,203) (13.1) % International 231,335 229,407 1,928 0.8 % Refund Transfers 162,893 172,356 (9,463) (5.5) % Emerald Card® 125,444 144,095 (18,651) (12.9) % Peace of Mind® Extended Service Plan 94,637 97,851 (3,214) (3.3) % Tax Identity Shield® 39,114 40,999 (1,885) (4.6) % Interest and fee income on Emerald Advance SM 43,981 53,241 (9,260) (17.4) % Wave 80,965 63,134 17,831 28.2 % Other 45,961 41,234 4,727 11.5 % Total revenues 3,463,270 3,588,645 (125,375) (3.5) % Compensation and benefits: Field wages 808,903 812,123 3,220 0.4 % Other wages 284,689 280,304 (4,385) (1.6) % Benefits and other compensation 206,902 211,382 4,480 2.1 % 1,300,494 1,303,809 3,315 0.3 % Occupancy 413,162 413,500 338 0.1 % Marketing and advertising 284,244 264,745 (19,499) (7.4) % Depreciation and amortization 142,178 154,818 12,640 8.2 % Bad debt 71,778 82,353 10,575 12.8 % Other 506,517 477,785 (28,732) (6.0) % Total operating expenses 2,718,373 2,697,010 (21,363) (0.8) % Other income (expense), net 2,454 4,989 (2,535) (50.8) % Interest expense on borrowings (88,282) (99,491) 11,209 11.3 % Income from continuing operations before income taxes 659,069 797,133 (138,064) (17.3) % Income taxes 98,423 106,675 8,252 7.7 % Net income from continuing operations 560,646 690,458 (129,812) (18.8) % Net loss from discontinued operations (6,972) (6,509) (463) (7.1) % Net income $ 553,674 $ 683,949 $ (130,275) (19.0) % DILUTED EARNINGS PER SHARE: Continuing operations $ 3.26 $ 3.67 $ (0.41) (11.2) % Discontinued operations (0.04) (0.03) (0.01) (33.3) % Consolidated $ 3.22 $ 3.64 $ (0.42) (11.5) % Adjusted diluted EPS (1) $ 3.51 $ 3.94 $ (0.43) (10.9) % EBITDA (1) $ 889,529 $ 1,051,442 $ (161,913) (15.4) % (1) All non-GAAP measures are results from continuing operations.
Biggest changeConsolidated – Financial Results (in 000s, except per share amounts) Year ended June 30, 2023 2022 $ Change % Change Revenues: U.S. tax preparation and related services: Assisted tax preparation $ 2,167,138 $ 2,094,612 $ 72,526 3.5 % Royalties 210,631 225,242 (14,611) (6.5) % DIY tax preparation 314,758 319,086 (4,328) (1.4) % Refund Transfers 143,310 162,893 (19,583) (12.0) % Peace of Mind® Extended Service Plan 95,181 94,637 544 0.6 % Tax Identity Shield® 38,265 39,114 (849) (2.2) % Other 45,252 45,961 (709) (1.5) % Total U.S. tax preparation and related services 3,014,535 2,981,545 32,990 1.1 % Financial services: Emerald Card® and Spruce SM 84,651 125,444 (40,793) (32.5) % Interest and fee income on Emerald Advance SM 47,554 43,981 3,573 8.1 % Total financial services 132,205 169,425 (37,220) (22.0) % International 235,131 231,335 3,796 1.6 % Wave 90,314 80,965 9,349 11.5 % Total revenues $ 3,472,185 $ 3,463,270 $ 8,915 0.3 % Compensation and benefits: Field wages 841,742 808,903 (32,839) (4.1) % Other wages 273,850 284,689 10,839 3.8 % Benefits and other compensation 220,530 206,902 (13,628) (6.6) % 1,336,122 1,300,494 (35,628) (2.7) % Occupancy 428,167 413,162 (15,005) (3.6) % Marketing and advertising 286,255 284,244 (2,011) (0.7) % Depreciation and amortization 130,501 142,178 11,677 8.2 % Bad debt 60,401 71,778 11,377 15.9 % Other 482,041 506,517 24,476 4.8 % Total operating expenses 2,723,487 2,718,373 (5,114) (0.2) % Other income (expense), net 35,492 2,454 33,038 1,346.3 % Interest expense on borrowings (72,978) (88,282) 15,304 17.3 % Income from continuing operations before income taxes 711,212 659,069 52,143 7.9 % Income taxes 149,412 98,423 (50,989) (51.8) % Net income from continuing operations 561,800 560,646 1,154 0.2 % Net loss from discontinued operations (8,100) (6,972) (1,128) (16.2) % Net income $ 553,700 $ 553,674 $ 26 — % DILUTED EARNINGS PER SHARE: Continuing operations $ 3.56 $ 3.26 $ 0.30 9.2 % Discontinued operations (0.05) (0.04) (0.01) (25.0) % Consolidated $ 3.51 $ 3.22 $ 0.29 9.0 % Adjusted diluted EPS (1) $ 3.82 $ 3.51 $ 0.31 8.8 % EBITDA (1) $ 914,691 $ 889,529 $ 25,162 2.8 % (1) All non-GAAP measures are results from continuing operations.
Our goodwill impairment analysis utilizes both the income and market approaches, which includes revenue and expense forecasts, changes in working capital and selection of a discount rate, all of which are highly subjective. Assumptions and Approach Used. Our goodwill impairment analysis is performed at the reporting unit level.
Our goodwill impairment analysis utilizes both income and market approaches, which includes revenue and expense forecasts, changes in working capital and selection of a discount rate, all of which are highly subjective. Assumptions and Approach Used. Our goodwill impairment analysis is performed at the reporting unit level.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 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.
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.
Actual results may differ from our current judgments due to a variety of factors, including changes in law, interpretations of law by taxing authorities that differ from our assessments, changes in the jurisdictions in which we operate and results of routine tax examinations. We believe we have adequately provided for any reasonably foreseeable outcome related to these matters.
Actual results may differ from our current judgments due to a variety of factors, including changes in law, interpretations of law by taxing authorities that differ from our assessments, changes in the jurisdictions in which we operate and results of routine tax examinations. We believe we have adequately provided for any reasonably foreseeable outcomes related to these matters.
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 June 30, 2022 are sufficient to meet our future operating and financing 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 June 30, 2023 are sufficient to meet our future operating and financing needs.
We were in compliance with our CLOC covenants as of June 30, 2022. As of June 30, 2022, amounts available to borrow under the CLOC were not limited by the debt-to-EBITDA covenant. We had no balance outstanding under our CLOC as of June 30, 2022.
We were in compliance with our CLOC covenants as of June 30, 2023. As of June 30, 2023, amounts available to borrow under the CLOC were not limited by the debt-to-EBITDA covenant. We had no balance outstanding under our CLOC as of June 30, 2023.
As of June 30, 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, was not material.
As of June 30, 2023, we believe the estimate of the aggregate range of reasonably possible losses in excess of amounts accrued, where the range of loss can be estimated, was not material.
H&R Block, Inc. | 2022 Form 10-K 31 CRITICAL ACCOUNTING ESTIMATES We consider the estimates discussed below to be critical to understanding our financial statements, as they require the use of significant judgment and estimation in order to measure, at a specific point in time, matters that are inherently uncertain.
H&R Block, Inc. | 2023 Form 10-K 27 CRITICAL ACCOUNTING ESTIMATES We consider the estimates discussed below to be critical to understanding our financial statements, as they require the use of significant judgment and estimation in order to measure, at a specific point in time, matters that are inherently uncertain.
H&R Block, Inc. | 2022 Form 10-K 33 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.
H&R Block, Inc. | 2023 Form 10-K 29 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.
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. 34 2022 Form 10-K | H&R Block, Inc.
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. 30 2023 Form 10-K | H&R Block, Inc.
See the discussion of loss contingencies related to our discontinued operations in Item 1A, Risk Factors and in Item 8, note 12 to the consolidated financial statements.
See Item 8, note 9 to the consolidated financial statements for additional discussion. See the discussion of loss contingencies related to our discontinued operations in Item 1A, Risk Factors and in Item 8, note 12 to the consolidated financial statements.
Capital expenditures totaled $62.0 million and $53.1 million for the years ended June 30, 2022 and 2021, respectively . Our capital expenditures relate primarily to recurring improvements to 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.
Capital expenditures totaled $69.7 million and $62.0 million for the years ended June 30, 2023 and 2022, respectively . Our capital expenditures relate primarily to recurring improvements to 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.
See Item 8, note 7 to the consolidated financial statements for discussion of our CLOC and Senior Notes. 30 2022 Form 10-K | H&R Block, Inc.
See Item 8, note 7 to the consolidated financial statements for discussion of our CLOC and Senior Notes. 26 2023 Form 10-K | H&R Block, Inc.
We cannot predict what effect future laws, changes in interpretations of existing laws or the results of future governmental inquiries with respect to services and products or other matters relating to our business may have on our consolidated financial position, results of operations and cash flows. We have received certain governmental inquiries relating to the IRS Free File Program.
We cannot predict what effect future laws, changes in interpretations of existing laws or the results of future governmental inquiries with respect to services and products or other matters relating to our business may have on our consolidated financial position, results of operations and cash flows.
The following table provides ratings for debt issued by Block Financial LLC (Block Financial) as of June 30, 2022 and 2021: As of June 30, 2022 June 30, 2021 Short-term Long-term Outlook Short-term Long-term Outlook Moody's P-3 Baa3 Stable P-3 Baa3 Stable S&P A-2 BBB Stable A-2 BBB Stable CASH AND OTHER ASSETS – As of June 30, 2022, we held cash and cash equivalents, excluding restricted amounts, of $885.0 million, including $201.0 million held by our foreign subsidiaries.
The following table provides ratings for debt issued by Block Financial LLC (Block Financial) as of June 30, 2023 and 2022: As of June 30, 2023 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 CASH AND OTHER ASSETS – As of June 30, 2023, we held cash and cash equivalents, excluding restricted amounts, of $987.0 million, including $293.4 million held by our foreign subsidiaries.
We acquired franchise and competitor businesses totaling $35.9 million and $17.0 million during the years ended Ju ne 30, 2022 and 2021, respectively. See Item 8, note 6 for additional information on our acquisitions. Contractual Obligations.
We acquired franchise and competitor businesses totaling $48.2 million and $35.9 million during the years ended Ju ne 30, 2023 and 2022, respectively. See Item 8, note 6 for additional information on our acquisitions. Contractual Obligations.
Our uncertain tax positions arise from items such as apportionment of income for state purposes, transfer pricing, and the deductibility of related party transactions. We evaluate each uncertain tax 32 2022 Form 10-K | H&R Block, Inc. position based on its technical merits.
Our uncertain tax positions arise from items such as apportionment of income for state purposes, transfer pricing, and the deductibility of intercompany transactions. We evaluate each uncertain tax 28 2023 Form 10-K | H&R Block, Inc. position based on its technical merits.
The following table summarizes our shares outstanding, shares repurchased, and annual dividends per share: (in 000s, except per share amounts) Year ended June 30, 2022 Two months ended June 30, 2021 (Transition Period) Year ended April 30, 2021 Year ended April 30, 2020 Year ended April 30, 2019 Shares outstanding 159,930 181,813 181,466 192,475 201,959 Shares Repurchased 23,085 — 11,551 10,130 7,862 Dividends declared per share $ 1.08 $ 0.27 $ 1.04 $ 1.04 $ 1.00 Capital Investment.
The following table summarizes our shares outstanding, shares repurchased, and annual dividends per share: (in 000s, except per share amounts) Year ended June 30, 2023 Year ended June 30, 2022 Two months ended June 30, 2021 (Transition Period) Year ended April 30, 2021 Year ended April 30, 2020 Shares outstanding 146,150 159,930 181,813 181,466 192,475 Shares repurchased 14,635 23,085 — 11,551 10,130 Dividends declared per share $ 1.16 $ 1.08 $ 0.27 $ 1.04 $ 1.04 Capital Investment.
CASH REQUIREMENTS – Dividends and Share Repurchase. Returning capital to shareholders in the form of dividends and the repurchase of outstanding shares has historically been a significant component of our capital allocation plan. We have consistently paid quarterly dividends. Dividends paid totaled $186.5 million and $195.1 million in the years ended June 30, 2022 and June 30, 2021, respectively.
Returning capital to shareholders in the form of dividends and the repurchase of outstanding shares has historically been a significant component of our capital allocation plan. We have consistently paid quarterly dividends. Dividends paid totaled $177.9 million and $186.5 million in the years ended June 30, 2023 and 2022, respectively.
Therefore, we normally require the use of cash to fund losses 28 2022 Form 10-K | H&R Block, Inc. and working capital needs, periodically resulting in a working capital deficit, from May through January. We typically have relied on available cash balances from the prior tax season and borrowings to meet liquidity needs.
Therefore, we normally require the use of cash to fund losses and working capital needs, periodically resulting in a working capital deficit, from May through January. We typically have relied on available cash balances from the prior tax season and borrowings to meet liquidity needs.
We may also be subject to future inquiries or other proceedings regarding this program or other aspects of our business. Regulatory inquiries may result in us incurring additional expense, diversion of management's attention, adverse judgments, settlements, fines, penalties, injunctions or other relief. See additional discussion of legal matters in Item 8, note 12 to the consolidated financial statements.
Regulatory inquiries may result in us incurring additional expense, diversion of management's attention, adverse judgments, settlements, fines, penalties, injunctions or other relief. See additional discussion of legal matters in Item 8, note 12 to the consolidated financial statements.
We received $52.2 million of our federal income tax receivable subsequent to June 30, 2022. 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 June 30, 2022.
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 June 30, 2023.
Cash provided by operating activities totaled $808.5 million for the year ended June 30, 2022 compared to $761.2 million in the prior year period. The increase is primarily due to higher income tax payments in the prior year and the receipt of income tax receivables in the current year, partially offset by lower net income in the current year.
Cash provided by operating activities totaled $821.8 million for the year ended June 30, 2023 compared to $808.5 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 lower bonus accruals in the current year. Investing Activities.
Investing Activities. Cash used in investing activities totaled $76.5 million for the year ended June 30, 2022 compared to $42.6 million for the prior year period. The increase is primarily due to higher payments to acquire businesses. Financing Activities.
Cash used in investing activities totaled $101.4 million for the year ended June 30, 2023 compared to $76.5 million for the prior year period. The increase is primarily due to higher payments to acquire businesses and capital expenditures in the current year. H&R Block, Inc. | 2023 Form 10-K 25 Financing Activities.
Although we have historically paid dividends and plan H&R Block, Inc. | 2022 Form 10-K 29 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. Our current share repurchase program ended in June 2022.
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.
See " Non-GAAP Financial Information " at the end of this item for a reconciliation of non-GAAP measures. 26 2022 Form 10-K | H&R Block, Inc.
See " Non-GAAP Financial Information " at the end of this item for a reconciliation of non-GAAP measures. H&R Block, Inc. | 2023 Form 10-K 23 FISCAL YEAR 2023 COMPARED TO FISCAL YEAR 2022 Revenues increased $8.9 million, or 0.3%, from the prior year.
DISCUSSION OF CONSOLIDATED STATEMENTS OF CASH FLOWS – The following table summarizes our statements of cash flows for the years ended June 30, 2022 and June 30, 2021. See Item 8 for the complete consolidated statements of cash flows for the years ended June 30, 2022, April 30, 2021, April 30, 2020 and the two months ended June 30, 2021.
DISCUSSION OF CONSOLIDATED STATEMENTS OF CASH FLOWS – The following table summarizes our statements of cash flows for fiscal year 2023 and 2022. See Item 8 for the complete consolidated statements of cash flows for these periods.
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.
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. 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.
SUMMARIZED BALANCE SHEET (in 000s) As of June 30, 2022 GUARANTOR AND ISSUER Current assets $ 38,922 Noncurrent assets 1,698,242 Current liabilities 75,855 Noncurrent liabilities 1,495,732 SUMMARIZED STATEMENTS OF OPERATIONS (in 000s) Year ended June 30, 2022 GUARANTOR AND ISSUER Total revenues $ 199,683 Income from continuing operations before income taxes 44,404 Net income from continuing operations 41,979 Net income 35,007 The table above reflects $1.6 billion of non-current intercompany receivables due to the Issuer from non-guarantor subsidiaries.
SUMMARIZED BALANCE SHEET (in 000s) As of June 30, 2023 GUARANTOR AND ISSUER Current assets $ 37,407 Noncurrent assets 1,725,234 Current liabilities 78,259 Noncurrent liabilities 1,494,010 SUMMARIZED STATEMENTS OF OPERATIONS (in 000s) Year ended June 30, 2023 GUARANTOR AND ISSUER Total revenues $ 160,236 Income from continuing operations before income taxes 40,285 Net income from continuing operations 31,713 Net income 23,613 The table above reflects $1.7 billion of non-current intercompany receivables due to the Issuer from non-guarantor subsidiaries.
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. We are unsure whether, when, or in what form the Payday Rule will go into effect.
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.
The following is a reconciliation of net income to EBITDA from continuing operations and adjusted EBITDA from continuing operations, which are non-GAAP financial measures: (in 000s) Year ended June 30, 2022 June 30, 2021 April 30, 2021 April 30, 2020 Net income (loss) - as reported $ 553,674 $ 683,949 $ 583,791 $ (7,526) Discontinued operations, net 6,972 6,509 6,421 13,682 Net income from continuing operations - as reported 560,646 690,458 590,212 6,156 Add back: Income taxes (benefit) 98,423 106,675 78,524 (9,530) Interest expense 88,282 99,491 106,870 96,094 Depreciation and amortization 142,178 154,818 156,852 169,536 328,883 360,984 342,246 256,100 EBITDA from continuing operations $ 889,529 $ 1,051,442 $ 932,458 $ 262,256 Adjustments: Impairment of goodwill — — — 106,000 Adjusted EBITDA from continuing operations $ 889,529 $ 1,051,442 $ 932,458 $ 368,256 The following is a reconciliation of our results from continuing operations to our adjusted results from continuing operations, which are non-GAAP financial measures: (in 000s, except per share amounts) Year ended June 30, 2022 June 30, 2021 April 30, 2021 April 30, 2020 Net income from continuing operations - as reported $ 560,646 $ 690,458 $ 590,212 $ 6,156 Adjustments: Amortization of intangibles related to acquisitions (pretax) 56,292 66,246 68,387 74,561 Impairment of goodwill (pretax) — — — 106,000 Tax effect of adjustments (1) (13,358) (15,115) (15,884) (19,126) Adjusted net income from continuing operations $ 603,580 $ 741,589 $ 642,715 $ 167,591 Diluted earnings per share from continuing operations - as reported $ 3.26 $ 3.67 $ 3.11 $ 0.03 Adjustments, net of tax 0.25 0.27 0.28 0.81 Adjusted diluted earnings per share from continuing operations $ 3.51 $ 3.94 $ 3.39 $ 0.84 (1) The tax effect of adjustments is the difference between the tax provision calculation on a GAAP basis and on an adjusted non-GAAP basis .
The following is a reconciliation of net income to EBITDA from continuing operations, which is a non-GAAP financial measure: (in 000s) Year ended June 30, 2023 June 30, 2022 Net income - as reported $ 553,700 $ 553,674 Discontinued operations, net 8,100 6,972 Net income from continuing operations - as reported 561,800 560,646 Add back: Income taxes 149,412 98,423 Interest expense 72,978 88,282 Depreciation and amortization 130,501 142,178 352,891 328,883 EBITDA from continuing operations $ 914,691 $ 889,529 The following is a reconciliation of our results from continuing operations to our adjusted results from continuing operations, which are non-GAAP financial measures: (in 000s, except per share amounts) Year ended June 30, 2023 June 30, 2022 Net income from continuing operations - as reported $ 561,800 $ 560,646 Adjustments: Amortization of intangibles related to acquisitions (pretax) 51,411 56,292 Tax effect of adjustments (1) (10,797) (13,358) Adjusted net income from continuing operations $ 602,414 $ 603,580 Diluted earnings per share from continuing operations - as reported $ 3.56 $ 3.26 Adjustments, net of tax 0.26 0.25 Adjusted diluted earnings per share from continuing operations $ 3.82 $ 3.51 (1) The tax effect of adjustments is the difference between the tax provision calculation on a GAAP basis and on an adjusted non-GAAP basis.
The components of other expenses are as follows: (in 000s) Year ended June 30, 2022 2021 $ Change % Change Consulting and outsourced services $ 136,397 $ 136,288 $ (109) (0.1) % Bank partner fees 26,648 22,616 (4,032) (17.8) % Client claims and refunds 31,814 29,857 (1,957) (6.6) % Employee and travel expenses 31,714 23,959 (7,755) (32.4) % Technology-related expenses 97,934 85,499 (12,435) (14.5) % Credit card/bank charges 90,209 86,203 (4,006) (4.6) % Insurance 15,224 11,528 (3,696) (32.1) % Legal fees and settlements 19,625 21,993 2,368 10.8 % Supplies 28,846 31,927 3,081 9.7 % Other 28,106 27,915 (191) (0.7) % $ 506,517 $ 477,785 $ (28,732) (6.0) % Employee and travel expenses increased $7.8 million, or 32.4%, due to less travel in the prior year as a result of COVID-19 travel restrictions.
The components of other expenses are as follows: (in 000s) Year ended June 30, 2023 2022 $ Change % Change Consulting and outsourced services $ 109,120 $ 136,397 $ 27,277 20.0 % Bank partner fees 24,108 26,648 2,540 9.5 % Client claims and refunds 29,484 31,814 2,330 7.3 % Employee and travel expenses 39,262 31,714 (7,548) (23.8) % Technology-related expenses 102,753 97,934 (4,819) (4.9) % Credit card/bank charges 96,074 90,209 (5,865) (6.5) % Insurance 8,806 15,224 6,418 42.2 % Legal fees and settlements 12,058 19,625 7,567 38.6 % Supplies 29,278 28,846 (432) (1.5) % Other 31,098 28,106 (2,992) (10.6) % $ 482,041 $ 506,517 $ 24,476 4.8 % Consulting and outsourced services expense decreased $27.3 million, or 20.0%, due to higher spend in the prior year related to our strategic imperatives, and lower call center volumes and Emerald Card® data processing in the current year.
Interest and fees on 24 2022 Form 10-K | H&R Block, Inc. Emerald Advances decreased $9.3 million, or 17.4%, due to a decline in Emerald Advances. Wave revenues increased $17.8 million, or 28.2%, due to higher small business payments processing volumes. Total operating expenses increased $21.4 million, or 0.8%, from the prior year.
Wave revenues increased $9.3 million, or 11.5%, due to higher small business payments processing volumes. Total operating expenses increased $5.1 million, or 0.2%, from the prior year. Field wages increased $32.8 million, or 4.1%, primarily due to higher wages in the current year. Other wages decreased $10.8 million, or 3.8%, due to lower corporate bonuses in the current year.
Year Ended June 30, 2022 Compared to Year Ended June 30, 2021 Revenues Operating Expenses Net Income from Continuing Operations $3.46B 3.5% $2.72B 0.8% $560.6M 18.8% Diluted EPS from Continuing Operations EBITDA (1) from Continuing Operations $3.26 Reported: 11.2% $889.5M 15.4% $3.51 Adjusted (1) : 10.9% (1) See " Non-GAAP Financial Information " section within this filing for a reconciliation of non-GAAP measures. 22 2022 Form 10-K | H&R Block, Inc.
Fiscal Year 2023 Compared to Fiscal Year 2022 Revenues Operating Expenses Net Income from Continuing Operations $3.47B 0.3% $2.72B 0.2% $561.8M 0.2% Diluted EPS from Continuing Operations EBITDA (1) from Continuing Operations $3.56 Reported: 9.2% $914.7M 2.8% $3.82 Adjusted (1) : 8.8% (1) See " Non-GAAP Financial Information " at the end of this item for a reconciliation of non-GAAP measures.
As a part of the repurchase program, in the current year, we purchased $550.3 million of our common stock at an average price of $23.84 per share. In August 2022, the Board of Directors approved a $1.25 billion share repurchase program, effective through fiscal year 2025.
During the year ended June 30, 2023, we repurchased $550.2 million of our common stock at an average price of $37.59 per share. In the prior year, we repurchased $550.3 million of our common stock at an average price of $23.84 per share. Our share repurchase program has remaining authorization of $700.0 million which is effective through fiscal year 2025.
We recorded income tax expense of $29.9 million during the Transition Period compared to $1.7 million in the prior year comparative period. The effective tax rate for the two months ended June 30, 2021, and 2020 was 24.7% and (23.3)%, respectively.
We recorded income tax expense of $149.4 million in the current year compared to $98.4 million in the prior year. The increase is due to higher pretax income and effective tax rate in the current year. The effective tax rate for the year ended June 30, 2023, and 2022 was 21.0% and 14.9%, respectively.
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.
We do not currently intend to repatriate non-borrowed funds held by our foreign subsidiaries in a manner that would trigger a tax liability. The impact of changes in foreign exchange rates during the period on our international cash balances resulted in a decrease of $4.9 million and $8.1 million during the years ended June 30, 2023 and 2022, respectively.
Cash used in financing activities totaled $1.3 billion for the year ended June 30, 2022 compared to $1.9 billion for the prior year period. The decrease is primarily due to the repayment of the $2.0 billion draw on our CLOC in the prior year, partially offset by proceeds from the issuance of long-term debt in the prior year.
Cash us ed in financing activities totaled $751.0 million for the year ended June 30, 2023 compared to $1.3 billion for the prior year period. The change is primarily due to repayment of our $500 million 5.500% Senior Notes in the prior year. CASH REQUIREMENTS – Dividends and Share Repurchase.
We report a single segment that includes all of our continuing operations. CHANGE IN FISCAL YEAR END On June 9, 2021, the Board of Directors approved a change of the Company's fiscal year end from April 30 to June 30. The Company's 2022 fiscal year began on July 1, 2021 and ended on June 30, 2022.
Fiscal Year End On June 9, 2021, the Board of Directors approved a change in the Company's fiscal year end from April 30 to June 30. The Company's transition period was from May 1, 2021 to June 30, 2021 (Transition Period). 22 2023 Form 10-K | H&R Block, Inc.
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.
FINANCIAL CONDITION These comments should be read in conjunction with the consolidated balance sheets and consolidated statements of cash flows included in Item 8 . 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.
Emerald Card® revenues decreased $18.7 million, or 12.9%, due to some stimulus payments being loaded on to Emerald Cards in the prior year, which was partially offset by additional activity in the current year related to the IRS loading Child Tax Credits monthly to Emerald Cards during July through December 2021.
Emerald Card® and Spruce SM revenues decreased $40.8 million, or 32.5%, primarily due to higher Emerald Card® activity in the prior year, which was the result of the IRS loading Child Tax Credits monthly to Emerald Cards® and lower Refund Transfer volume in the current year.
Marketing and advertising expense increased $19.5 million, or 7.4%, due to higher online advertising and agency fees in the current year. Depreciation and amortization expense decreased $12.6 million, or 8.2%, due primarily to lower amortization of acquired intangibles. Bad debt expense decreased $10.6 million, or 12.8%, due to lower Refund Transfer volume and lower bad debt rates.
Employee and travel expenses increased $7.5 million, or 23.8%, due to more travel in the current year. Insurance expense decreased $6.4 million, or 42.2%, due to due to favorable developments in insurance loss reserves. Legal fees and settlements expense decreased $7.6 million, or 38.6%, due to lower fees in the current year.
Removed
We have recast the income statement and statement of cash flows for the year ended June 30, 2021 and have provided a comparison to the year ended June 30, 2022. We have also provided a comparison of the two months ended June 30, 2021 (Transition Period) to the two months ended June 30, 2020.
Added
We report a single segment that includes all of our continuing operations. This year's tax filing season was expected to return to normal with the pandemic largely behind us, no new federal programs, a large number of stimulus filers having left the industry in the prior year, and strong employment.
Removed
The recast income statement was derived as follows: (in 000s) Year ended April 30, 2021 Plus: Two months ended June 30, 2021 (Transition Period) Less: Two months ended June 30, 2020 Year ended June 30, 2021 Revenues $ 3,413,987 $ 466,106 $ 291,448 $ 3,588,645 Operating expenses 2,644,360 331,751 279,101 2,697,010 Pretax income (loss) 668,736 120,995 (7,402) 797,133 Net income (loss) from continuing operations 590,212 91,119 (9,127) 690,458 FINANCIAL OVERVIEW - YEAR ENDED JUNE 30, 2022 COMPARED TO YEAR ENDED JUNE 30, On March 21, 2020, the federal tax filing deadline in the U.S. for individual 2019 tax returns was extended from April 15, 2020 to July 15, 2020 due to the pandemic.
Added
Generally, tax return volume was expected to increase compared to the prior year, however, the industry volume declined year over year due to more stimulus filers not returning and the tax deadline being extended in certain states due to natural disasters. In fiscal year 2023, revenue increased $8.9 million over the prior year, despite the decline in industry volume.
Removed
Therefore, fiscal year 2022 results are not comparable to the prior year period, as 15 days of tax season 2020 were included in the results for the year ended June 30, 2021, resulting in a year-over-year decrease in revenues, net income from continuing operations and EPS as shown in the table below.
Added
U.S. assisted tax preparation revenues were higher $72.5 million primarily due to an increase in net average charge. Lower Emerald Card® revenues, which is the result of the discontinuance of prior year federal programs, and lower Refund Transfer volume partially offset this increase.
Removed
RESULTS OF OPERATIONS - YEAR ENDED JUNE 30, 2022 COMPARED TO YEAR ENDED JUNE 30, 2021 Operating Statistics Year ended June 30, 2022 2021 (1) % Change TAX RETURNS PREPARED : (in 000s) (2) United States: Company-owned operations 8,769 9,558 (8.3) % Franchise operations 3,185 3,696 (13.8) % Total assisted 11,954 13,254 (9.8) % Desktop 1,868 2,298 (18.7) % Online 6,661 7,570 (12.0) % Total DIY 8,529 9,868 (13.6) % Total U.S. returns 20,483 23,122 (11.4) % International: Canada 2,449 2,459 (0.4) % Australia 668 680 (1.8) % Total international returns 3,117 3,139 (0.7) % Tax returns prepared worldwide 23,600 26,261 (10.1) % NET AVERAGE CHARGE (U.S.
Added
Operating expenses increased $5.1 million primarily due to higher labor costs, which was partially offset by lower consulting and outsourced services expenses. Higher interest income and lower interest expense on borrowings resulted in an increase in income from continuing operations before income taxes of $52.1 million, or 7.9%.
Removed
ONLY): (3) Company-owned operations $ 238.87 $ 223.94 6.7 % Franchise operations (4) $ 230.58 $ 212.32 8.6 % Online $ 37.87 $ 39.17 (3.3) % TAX OFFICES (as of March 31) : U.S. offices: Company-owned offices 6,492 6,512 (0.3) % Franchise offices 2,605 2,759 (5.6) % Total U.S. offices 9,097 9,271 (1.9) % International offices : Canada 987 983 0.4 % Australia 404 422 (4.3) % Total international offices 1,391 1,405 (1.0) % Tax offices worldwide 10,488 10,676 (1.8) % (1) Represents a partial 2019 individual tax filing season, which was extended until July 15, 2020 and the full 2020 individual tax filing season.
Added
Income tax expense increased $51.0 million, or 51.8%, due to a higher effective tax rate in the current year. Net income from continuing operations of $561.8 million increased $1.2 million from the prior year.
Removed
(2) An assisted tax return is defined as a current or prior year individual or business tax return that has been accepted by the client. A DIY online return is defined as a current year individual or business tax return that has been accepted by the client.
Added
U.S. assisted tax preparation revenues increased $72.5 million, or 3.5%, due to a 4.0% increase in net average charge, partially offset by lower tax return volumes in the current year. U.S. royalties revenue decreased $14.6 million, or 6.5%, due to lower volumes, partially offset by a higher net average charge in the current year.
Removed
A DIY desktop return is defined as a current year individual or business tax return that has been electronically submitted to the IRS. (3) Net average charge is calculated as total tax preparation fees divided by tax returns prepared.
Added
During the year we purchased franchise offices which results in increasing tax preparation revenues and decreasing royalties as the revenues and returns become company-owned after the acquisition. Through the year ended June 30, 2023, our total assisted tax return volume, which includes both company-owned and franchise offices, decreased 3.2% from the prior year. U.S.
Removed
(4) Net average charge related to H&R Block Franchise operations represents tax preparation fees collected by H&R Block franchisees divided by returns prepared in franchise offices. H&R Block will recognize a portion of franchise revenues as franchise royalties based on the terms of franchise agreements.
Added
DIY tax preparation revenues decreased $4.3 million, or 1.4%, due to a decline in online paid returns and lower software sales in the current year. Refund Transfer revenues decreased $19.6 million, or 12.0%, due to fewer Refund Transfers in the current year.
Removed
We provide Net Average Charge as a key operating metric because we consider it an important supplemental measure useful to analysts, investors, and other interested parties as it provides insights into pricing and tax return mix relative to our customer base, which are significant drivers of revenue.
Added
Benefits and other compensation increased $13.6 million, or 6.6%, due to higher payroll taxes and employee insurance. Occupancy expense increased $15.0 million or 3.6%, primarily due to higher rent and office repairs. Depreciation and amortization expense decreased $11.7 million, or 8.2%, due primarily to lower amortization of acquired intangibles.
Removed
Our definition of Net Average Charge may not be comparable to similarly titled measures of other companies.
Added
Bad debt expense decreased $11.4 million, or 15.9%, primarily due to fewer Refund Transfers and lower bad debt rates compared to the prior year. Other operating expenses decreased $24.5 million, or 4.8%.
Removed
H&R Block, Inc. | 2022 Form 10-K 23 Consolidated – Financial Results (in 000s, except per share amounts) Year ended June 30, 2022 2021 $ Change % Change Revenues: U.S. assisted tax preparation $ 2,094,612 $ 2,140,410 $ (45,798) (2.1) % U.S. royalties 225,242 238,629 (13,387) (5.6) % U.S.
Added
Other income (expense), net increased $33.0 million primarily due to higher interest income and income from a legal settlement in the current year.
Removed
See " Non-GAAP Financial Information " at the end of this item for a reconciliation of non-GAAP measures. YEAR ENDED JUNE 30, 2022 COMPARED TO YEAR ENDED JUNE 30, 2021 Revenues decreased $125.4 million, or 3.5%, from the prior year.
Added
Interest expense on borrowings decreased $15.3 million, or 17.3%, 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. 24 2023 Form 10-K | H&R Block, Inc.
Removed
The decrease in revenue is due to lower tax return volumes in the current year as the prior year includes an additional tax season deadline due to the 2020 tax season being extended to July 15, 2020. This resulted in a decrease in U.S. tax preparation, royalty and Refund Transfer revenues.
Added
YEAR ENDED APRIL 30, 2021 COMPARED TO YEAR ENDED APRIL 30, 2020 The comparison of the year ended April 30, 2021 to April 30, 2020 has been omitted from this Form 10-K, but can be found in our Form 10-K for the fiscal year ended June 30, 2022, filed on August 16, 2022.
Removed
Other operating expenses increased $28.7 million, or 6.0%.
Added
TWO MONTHS ENDED JUNE 30, 2021 COMPARED TO TWO MONTHS ENDED JUNE 30, 2020 The comparison of the two months ended June 30, 2021 to the two months ended June 30, 2020 has been omitted from this Form 10-K, but can be found in our Form 10-K for the fiscal year ended June 30, 2022, filed on August 16, 2022.
Removed
Technology-related expenses increased $12.4 million, or 14.5%, due to increased investments in information technology. Interest expense on borrowings decreased $11.2 million , or 11.3% , primarily due to lower borrowings on our CLOC in the current year. We recorded income tax expense of $98.4 million in the current year compared to $106.7 million in the prior year.
Added
(in 000s) Year ended June 30, 2023 2022 Net cash provided by (used in): Operating activities $ 821,841 $ 808,537 Investing activities (101,389) (76,541) Financing activities (750,992) (1,257,346) Effects of exchange rates on cash (4,857) (8,101) Net decrease in cash and cash equivalents, including restricted balances $ (35,397) $ (533,451) Operating Activities.
Removed
The decrease is primarily related to lower pretax income in the current year. See Item 8, note 9 to the consolidated financial statements for additional discussion. See the discussion of loss contingencies related to our discontinued operations in Item 1A, Risk Factors and in Item 8, note 12 to the consolidated financial statements.
Added
We first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.
Removed
H&R Block, Inc. | 2022 Form 10-K 25 RESULTS OF OPERATIONS - YEAR ENDED APRIL 30, 2021 COMPARED TO YEAR ENDED APRIL 30, 2020 Consolidated – Financial Results (in 000s, except per share amounts) Year ended April 30, 2021 2020 $ Change % Change Revenues: U.S. assisted tax preparation $ 2,035,107 $ 1,533,303 $ 501,804 32.7 % U.S. royalties 226,253 193,411 32,842 17.0 % U.S.
Added
If, based on a review of qualitative factors, it is more likely than not that the fair value of a reporting unit is less than its carrying value, we perform a quantitative analysis.
Removed
DIY tax preparation 313,055 208,901 104,154 49.9 % International 249,868 180,065 69,803 38.8 % Refund Transfers 163,329 154,687 8,642 5.6 % Emerald Card® 136,717 92,737 43,980 47.4 % Peace of Mind® Extended Service Plan 98,882 105,185 (6,303) (6.0) % Tax Identity Shield® 40,624 31,797 8,827 27.8 % Interest and fee income on Emerald Advance SM 53,430 60,867 (7,437) (12.2) % Wave 58,277 36,711 21,566 58.7 % Other 38,445 42,056 (3,611) (8.6) % Total revenues 3,413,987 2,639,720 774,267 29.3 % Compensation and benefits: Field wages 797,262 678,813 (118,449) (17.4) % Other wages 272,664 218,548 (54,116) (24.8) % Benefits and other compensation 208,147 175,535 (32,612) (18.6) % 1,278,073 1,072,896 (205,177) (19.1) % Occupancy 414,389 410,402 (3,987) (1.0) % Marketing and advertising 261,960 255,094 (6,866) (2.7) % Depreciation and amortization 156,852 169,536 12,684 7.5 % Bad debt 78,763 77,470 (1,293) (1.7) % Impairment of goodwill — 106,000 106,000 100.0 % Other 454,323 471,239 16,916 3.6 % Total operating expenses 2,644,360 2,562,637 (81,723) (3.2) % Other income (expense), net 5,979 15,637 (9,658) (61.8) % Interest expense on borrowings (106,870) (96,094) (10,776) (11.2) % Income (loss) from continuing operations before income taxes (benefit) 668,736 (3,374) 672,110 ** Income taxes (benefit) 78,524 (9,530) (88,054) ** Net income from continuing operations 590,212 6,156 584,056 9,487.6 % Net loss from discontinued operations (6,421) (13,682) 7,261 53.1 % Net income (loss) $ 583,791 $ (7,526) $ 591,317 ** DILUTED EARNINGS (LOSS) PER SHARE: Continuing operations $ 3.11 $ 0.03 $ 3.08 10,266.7 % Discontinued operations (0.03) (0.07) 0.04 57.1 % Consolidated $ 3.08 $ (0.04) $ 3.12 ** Adjusted diluted EPS (1) $ 3.39 $ 0.84 $ 2.55 303.6 % EBITDA (1) $ 932,458 $ 262,256 $ 670,202 255.6 % Adjusted EBITDA (1) $ 932,458 $ 368,256 $ 564,202 153.2 % (1) All non-GAAP measures are results from continuing operations.
Added
On November 14, 2022, the CFPB filed a petition for review with the United States Supreme Court, which the Supreme Court granted on February 27, 2023. We are unsure whether, when, or in what form the Payday Rule will go into effect.
Removed
YEAR ENDED APRIL 30, 2021 COMPARED TO YEAR ENDED APRIL 30, 2020 Due to the extension of the 2019 individual tax deadline to July 2020 related to the COVID-19 pandemic, we had significant increases in the number of tax returns prepared in all categories during the first half of the year ended April 30, 2021.
Added
We have received certain governmental inquiries related to the IRS Free File Program and our DIY tax preparation services. We may also be subject to future inquiries or other proceedings regarding these programs or other aspects of our business.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−0 removed3 unchanged
Biggest changeAs our CLOC borrowings are generally seasonal, interest rate risk typically increases during the months of November through March. While our CLOC borrowings are relatively insensitive to interest rate changes, interest expense on CLOC borrowings will increase and decrease with changes in the underlying short-term interest rates. We had no outstanding balance on our CLOC as of June 30, 2022.
Biggest changeAs our CLOC borrowings are generally seasonal, interest rate risk typically increases during the months of November through March. We had no outstanding balance on our CLOC as of June 30, 2023.
We generally use foreign exchange forward contracts to mitigate foreign currency exchange rate risk for loans we advance to our Canadian operations. We had no forward contracts outstanding at June 30, 2022, June 30, 2021, or April 30, 2021. 36 2022 Form 10-K | H&R Block, Inc.
We generally use foreign exchange forward contracts to mitigate foreign currency exchange rate risk for loans we advance to our Canadian operations. We had no forward contracts outstanding at June 30, 2023 or 2022 . 32 2023 Form 10-K | H&R Block, Inc.
We estimate a 10% change in foreign exchange rates by itself would impact consolidated pretax income in the year ended June 30, 2022 and the year ended June 30, 2021 by $2.8 million and $3.2 million, respectively, and cash balances, excluding restricted balances, as of June 30, 2022 and June 30, 2021 by $18.5 million and $16.4 million, respectively.
We estimate a 10% change in foreign exchange rates by itself would impact consolidated pretax income for the years ended June 30, 2023 and 2022 by $3.8 million and $2.8 million, respectively, and cash balances, excluding restricted balances, as of June 30, 2023 and 2022 by $13.0 million and $18.5 million, respectively.
Assets and liabilities of foreign subsidiaries are translated into U.S. dollars at exchange rates at the end of the year. Translation adjustments are recorded as a separate component of other comprehensive income in stockholders' equity.
Assets and liabilities of foreign H&R Block, Inc. | 2023 Form 10-K 31 subsidiaries are translated into U.S. dollars at exchange rates at the end of the year. Translation adjustments are recorded as a separate component of other comprehensive income in stockholders' equity.
Our cash equivalents are primarily held for liquidity purposes and are comprised of high quality, short-term investments, including money market funds. Because our cash and cash equivalents have a short maturity, our portfolio's market value is relatively insensitive to interest rate changes.
Our cash equivalents are primarily held for liquidity purposes and are comprised of high quality, short-term investments, including money market funds and U.S. Treasuries. Because our cash and cash equivalents have a short maturity, our portfolio's market value is relatively insensitive to interest rate changes. Interest expense on our CLOC borrowings is determined based on short-term interest rates.
Our long-term debt as of June 30, 2022, consists primarily of fixed-rate Senior Notes; therefore, a change in interest rates would have no impact on consolidated pretax earnings until these notes mature or are refinanced. H&R Block, Inc. | 2022 Form 10-K 35 The fixed-rate interest payable on our Senior Notes is subject to adjustment based upon our credit ratings.
Our long-term debt as of June 30, 2023, consists primarily of fixed-rate Senior Notes; therefore, a change in interest rates would have no impact on consolidated pretax earnings until these notes mature or are refinanced. The interest we pay on our Senior Notes is fixed and is subject to adjustment based upon our credit ratings.
The impact of changes in foreign exchange rates during the period on our international cash balances resulted in a decrease of $8.1 million during the year ended June 30, 2022 compared to an increase of $13.5 million in year ended June 30, 2021.
The impact of changes in foreign exchange rates during the period on our international cash balances resulted in a decrease of $4.9 million and $8.1 million during the years ended June 30, 2023 and 2022, respectively.

Other HRB 10-K year-over-year comparisons