What changed in H&R BLOCK INC's 10-K — 2023 vs 2024
vs
Paragraph-level year-over-year comparison of H&R BLOCK INC's 2023 and 2024 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 2024 report.
+199 added−209 removedSource: 10-K (2024-08-15) vs 10-K (2023-08-17)
Top changes in H&R BLOCK INC's 2024 10-K
199 paragraphs added · 209 removed · 154 edited across 7 sections
- Item 1A. Risk Factors+73 / −78 · 61 edited
- Item 7. Management's Discussion & Analysis+64 / −67 · 50 edited
- Item 1. Business+47 / −48 · 31 edited
- Item 5. Market for Registrant's Common Equity+6 / −8 · 4 edited
- Item 7A. Quantitative and Qualitative Disclosures About Market Risk+6 / −6 · 6 edited
Item 1. Business
Business — how the company describes what it does
31 edited+16 added−17 removed19 unchanged
Item 1. Business
Business — how the company describes what it does
31 edited+16 added−17 removed19 unchanged
2023 filing
2024 filing
Biggest changeThe Emerald Card ® enables clients to receive their tax refunds from the IRS directly on a prepaid debit card, or to direct RT, EA or RA proceeds to the card. The card can be used for everyday purchases, bill payments and ATM withdrawals anywhere Debit Mastercard ® (Mastercard is a registered trademark of Mastercard International Incorporated) is accepted.
Biggest changeThe Emerald Card ® and Spruce SM debit card can be used for everyday purchases, bill payments and ATM withdrawals anywhere Debit Mastercard ® (Mastercard is a registered trademark of Mastercard International Incorporated) is accepted. Clients can receive their tax refunds and direct RT, EA or RA proceeds directly onto an Emerald Card ® or into their Spruce SM account.
For our Canadian clients, we also offer POM, H&R Block's Instant Refund SM , H&R Block Pay With Refund®, and small business financial solutions. Refund Transfers. RTs enable clients to receive their tax refunds by their chosen method of disbursement and include a feature enabling clients to deduct tax preparation and related fees from their tax refunds.
For our Canadian clients, we also offer POM, H&R Block's Instant Refund ® , H&R Block Pay With Refund®, and small business financial solutions. Refund Transfers. RTs enable clients to receive their tax refunds by their chosen method of disbursement and include a feature enabling clients to deduct tax preparation and related fees from their tax refunds.
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
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. | 2024 Form 10-K 7
The additional taxes paid under POM have a cumulative limit of $6,000 for U.S. clients and $3,000 CAD for Canadian clients with respect to the federal, state/provincial and local tax returns we prepared for applicable clients during the taxable year protected by POM. H&R Block Emerald Prepaid Mastercard®.
The additional taxes paid under POM have a cumulative limit of $6,000 for U.S. clients and $3,000 CAD for Canadian clients with respect to the federal, state/provincial and local tax returns we prepared for applicable clients during the taxable year protected by POM. H&R Block Emerald Prepaid Mastercard® and Spruce SM .
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.
H&R Block also 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.
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.
Jones II , 56, 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.
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 .
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 2024, 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®.
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.
We are one of the largest providers of tax return preparation solutions and electronic filing services in the U.S., Canada, and Australia with 23.8 million returns filed by or through H&R Block in fiscal year 2024. GOVERNMENT REGULATION Our business is subject to various forms of government regulation, including U.S.
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.
He also served as the Executive Vice President and Chief Marketing Officer of Target Corporation from April 2012 until September 2016. Tony G. Bowen , 49, 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.
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.
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 2024 Form 10-K | H&R Block, Inc. INFORMATION ABOUT OUR EXECUTIVE OFFICERS (as of June 30, 2024) Jeffrey J.
We provide assisted and do-it-yourself (DIY) tax return preparation solutions through multiple channels (including in-person, online and mobile applications, virtual, and desktop software) and distribute H&R Block-branded services and products, including those of our bank partners, to the general public primarily in the U.S., Canada and Australia.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS We provide assisted and do-it-yourself (DIY) tax preparation solutions through multiple channels (including in-person, online and mobile applications, virtual, and desktop software) and distribute H&R Block-branded services and products, including those of our bank partners, to the general public primarily in the United States (U.S.), Canada and Australia.
COMPETITIVE CONDITIONS We provide assisted and DIY tax preparation services and products, as well as small business financial solutions, and face substantial competition in and across each category from tax return preparation firms and software providers, accounting firms, independent tax preparers, and certified public accountants.
COMPETITIVE CONDITIONS We provide assisted and DIY tax preparation services and products, as well as small business financial solutions, and face substantial competition in and across each category, including from tax return preparation firms, software providers, accounting firms, independent tax preparers, certified public accountants and governmental organizations, including the IRS, state and foreign tax authorities.
Clients can come into an office, digitally "drop off" their documents for their tax professional, approve their return online, have a tax professional review a return they prepared themselves through Tax Pro Review or get their questions answered as they complete their own return through Online Assist.
Clients can come into an office, digitally "drop off" their documents for their tax professional, approve their return online, or have a tax professional review a return they prepared themselves through Tax Pro Review ® .
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, Inc. | 2024 Form 10-K 3 OTHER OFFERINGS During fiscal year 2024, 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 ® ), Spruce SM , H&R Block Emerald Advance® (EA) term loans, Tax Identity Shield® (TIS), Refund Advances (RA), and small business financial solutions.
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.
Redler , 57, became our Chief Legal Officer in January 2022. 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. Curtis A.
Additional funds can be added to the card year-round, such as through direct deposit or at participating retail reload providers, and the Emerald Card ® can be added to clients' mobile wallets. We distribute the Emerald Card ® issued by our bank partner. H&R Block Emerald Advance® Lines of Credit.
Additional funds can be added to the Emerald Card ® and to Spruce SM year-round, such as through direct deposit or at participating retail reload providers. The Emerald Card® and Spruce SM debit card can be added to clients' mobile wallets. We distribute the Emerald Card ® and the Spruce SM debit card issued by our bank partner.
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 remain 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. Associates. We had approxima tely 4,200 regular full-time associates as of June 30, 2024.
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.
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, 2024, including seasonal associates, was approximately 70,900. Associate Engagement.
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.
We report a single segment that includes all of our continuing operations. 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.
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.
He will be retiring effective September 13, 2024. Kellie J. Logerwell , 54, 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.
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.
During fiscal year 2024, we prepared 11.4 million U.S. assisted tax returns (1) and our clients filed 3.8 million DIY online paid tax returns (1) which contributed to our consolidated revenues of $3.6 billion, net income from continuing operations of $598.0 million, EBITDA (2) from continuing operations of $963.2 million, and diluted EPS from continuing operations of $4.14 per share.
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.
We repurchased 8.0 million shares of our common stock, and declared dividends of $1.28 per share, which was an increase of $0.12, or 10.3%, per share from the prior year. (1) U.S. assisted tax returns prepared includes tax returns prepared in U.S. company-owned and franchise operations, including virtual returns.
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.
Across the company, over 40% 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 currently meets the Top 25 benchmark. Individual leaders at all levels create and monitor culture and engagement-related goals. Compensation and Benefits.
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.
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.
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 .
Through Block Advisors and Wave, we help small-business owners thrive with year-round bookkeeping, payroll, advisory and payment processing solutions. 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, 2024 can be found in Exhibit 21 .
We 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.
H&R Block 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.
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.
Our total rewards programs are designed to attract and retain top talent by supporting what associates need to be their authentic selves. 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.
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.
We administer an annual survey to all associates to better understand their levels of engagement and identify areas where we can improve. We compare our scores 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.
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.
Assisted tax returns are covered by our 100% accu racy guarantee, whereby we will reimburse a client for penalties and interest attributable to an H&R Block error on a tax return.
(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.
(2) See " Non-GAAP Financial Information " in Item 7 for a reconciliation of non-GAAP measures. 2 2024 Form 10-K | H&R Block, Inc.
Wave provides small business owners with an online solution to manage their finances, including payment processing, payroll and bookkeeping services.
Our Block Advisors small business certified tax professionals provide small businesses with financial expertise in taxes, bookkeeping and payroll through our office network (including in-person, online and virtual). Wave provides small business owners with an online solution to manage their finances, including payment processing, payroll and bookkeeping services. 4 2024 Form 10-K | H&R Block, Inc.
Removed
During fiscal year 2021, we introduced Block Horizons, our five year strategy that will leverage our human expertise and technological infrastructure to deliver growth by driving tax solution innovation, helping small businesses to thrive, and support individuals where they need the most help with money.
Added
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 paid return is defined as a current year individual or business tax return that has been accepted by the client.
Removed
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.
Added
Tax returns are either prepared by H&R Block tax professionals in one of our company-owned or franchise offices, virtually or via an online review or prepared and filed by our clients through our DIY tax solutions. We also offer small business solutions through our company-owned and franchise offices (including in-person, online and virtual) and online through Wave.
Removed
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.
Added
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. Our generative AI powered technology, AI Tax Assist, and human help was offered to clients who prepared a paid DIY online return in the current year at no additional charge.
Removed
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.
Added
H&R Block Emerald Advance® Term Loans. EA term loans are offered by our bank partner to clients in our offices, in November and December, in amounts of $350 to $1,300. EA term loans are interest bearing with principal and interest due in full on March 31, and there are no annual fees or required monthly payments. Tax Identity Shield®.
Removed
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.
Added
H&R Block offers comprehensive mental and behavioral health support through robust well-being programs, ensuring regular associates and their families have access to therapists, coaching, and holistic mental health services.
Removed
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.
Added
To thank our associates for their resiliency and hard work, each year H&R Block takes an “Annual Reboot” – a paid week of time off offered during the first week of July – as an important time for our associates to disconnect, recharge, and reboot.
Removed
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.
Added
Collectively, these programs promote and support the physical, mental, financial, and community well-being of our associates. H&R Block, Inc. | 2024 Form 10-K 5 Training and Development. Our people are the number one enabler for living our Purpose, and we recognize the importance of attracting, developing, and retaining top talent.
Removed
We also offer small business financial solutions through our company-owned and franchise offices and online through Wave. Major revenue sources include fees earned for tax preparation via our assisted and DIY channels, royalties from franchisees, and fees from related services and products.
Added
Our goal is to provide continuous development opportunities to our associates in order to help them grow both personally and professionally. We do this through a robust offering of programs, educational courses, and learning journeys offered virtually and in person. Our expertise is delivered each year through our tax professional network.
Removed
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.
Added
These resources ultimately enable us to continue enhancing our services and better our client experience. Belonging. At H&R Block, we foster a culture of belonging, where every voice is heard and our associates feel safe, included, and inspired.
Removed
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®.
Added
We are committed to a fair and respectful workplace culture, free of discrimination; and we work to foster a Connected Culture that ensures all associates have a strong sense of belonging across the organization. Connected Culture is a relationship centered principle at H&R Block that puts associates and clients at the heart of our strategic focus.
Removed
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.
Added
It creates an environment of clear accountability, partnership, and trust – all focused on common goals, allowing for accelerated business and personal progress. Relationships are at the heart of how we work with each other, our customers, and in our communities.
Removed
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.
Added
In the workplace we are committed to creating an environment where everyone feels they belong, and we believe that our commitment to diversity and inclusion makes us a stronger, more successful company.
Removed
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.
Added
We continually reflect on our management approaches to improve the workplace, including discussions with our Board of Directors, to review how we can provide a sense of belonging within the company for our associates - what we call Belonging@Block.
Removed
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.
Added
One of the many ways we work to foster a Connected Culture across the organization for all associates to connect, support, motivate, and inspire is through our associate-led Belonging Groups focusing on LGBTQ+, neurodiversity, young professionals, veterans, women, Black, and Hispanic/Latino/a/x associates.
Removed
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.
Added
Campbell , 51, became our President, Global Consumer Tax and Chief Product Officer in June 2024. Prior to that, he served as the Chief Executive Officer of TaxAct where he ran TaxAct from 2018 until it was sold by Blucora, Inc. in 2022. He continued to lead TaxAct after the sale until 2023. Prior to TaxAct, Mr.
Removed
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.
Added
Campbell served Capital One Financial Corporation as Managing Vice President of Consumer Auto from 2017 to 2018. He also served in Vice President roles at Intuit Inc, leading Product Management and Strategy from 2014 to 2017.
Removed
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.
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
61 edited+12 added−17 removed123 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
61 edited+12 added−17 removed123 unchanged
2023 filing
2024 filing
Biggest changeAll 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.
Biggest changeIncreased competition for clients could adversely affect our current market share and profitability. We face substantial competition throughout our businesses. 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.
Senior management and the Board of Directors, acting as a whole and through its committees, take an active role in our risk management process and have delegated certain activities related to the oversight of risk management to the Company's enterprise risk management team and the Enterprise Risk Committee, which is comprised of Vice Presidents of major business and control functions and members of the enterprise risk management team.
Senior management and the Board of Directors, acting as a whole and through its committees, take an active role in our risk management process and have delegated certain activities related to the oversight of risk management to the Company's enterprise risk management (ERM) team and the Enterprise Risk Committee, which is comprised of Vice Presidents of major business and control functions and members of the ERM team.
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.
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 2024 Form 10-K | H&R Block, Inc.
The Company’s enterprise risk management team, working in coordination with the Enterprise Risk Committee, is responsible for identifying and monitoring risk exposures and related mitigation and leading the continued development of our risk management policies and practices.
The Company’s ERM team, working in coordination with the Enterprise Risk Committee, is responsible for identifying and monitoring risk exposures and related mitigation and leading the continued development of our risk management policies and practices.
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.
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, non-competition agreements and other restrictive covenants, and labor, including overtime and exemption regulations, state and local laws on minimum wage, worker classification, and other labor-related issues.
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.
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 2024 Form 10-K | H&R Block, Inc. numbers.
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.
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.
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.
In addition, any delays in launching new or existing financial service or product offerings, or technical or other issues associated with the launch, could cause a loss of revenue, a loss of clients, or client dissatisfaction, especially if such issues occur during the tax season.
The market for such personnel is extremely competitive, and there can be no assurance that we will be successful in our efforts to attract and retain the required qualified personnel within necessary timeframes, or at expected cost levels.
The market for key personnel is extremely competitive, and there can be no assurance that we will be successful in our efforts to attract and retain the required qualified personnel within necessary timeframes, or at expected cost levels.
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.
In addition, taxing authorities in various federal, state, local, and foreign jurisdictions in which we operate have 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 risks may result from fraud or malice (a cyberattack), human error, or accidental technological failure. Cyberattacks are designed to electronically circumvent network security for malicious purposes such as unlawfully obtaining personal information, disrupting our ability to offer services, damaging our brand and reputation, stealing our intellectual property, or advancing social or political agendas.
Cybersecurity risks may result from fraud or malice from external or internal actors (a cyberattack), human error, or accidental technological failure. Cyberattacks are designed to electronically circumvent network security for malicious purposes such as unlawfully obtaining personal information, disrupting our ability to offer services, damaging our brand and reputation, stealing our intellectual property, or advancing social or political agendas.
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.
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, geopolitical or public health conditions.
A number of companies, including some in the tax return preparation and financial services industries, have reported instances where criminals gained access to consumer information or user accounts maintained on their systems by using stolen identity information (e.g., email, username, password information, or credit history) obtained from third-party sources.
A number of companies, including those in the tax return preparation and financial services industries, have reported instances where criminals created new accounts, or gained access to consumer information or user accounts maintained on their systems by using stolen identity information (e.g., email, username, password information, or credit history) obtained from third-party sources.
We have experienced, and in the future may continue to experience, this form of unauthorized and illegal access to our systems, despite no breach in the security of our systems.
We have experienced, and in the future may continue to experience, this form of unauthorized and illegal use and/or access to our systems, despite no breach in the security of our systems.
We face legal actions in connection with our various business activities, and current or future legal actions may damage our reputation, impair our product offerings, or result in material liabilities and losses.
We face legal actions in connection with our various business activities, both past and present, and current or future legal actions may damage our reputation, impair our product offerings, or result in material liabilities and losses.
While we believe that our strategic objectives reflect opportunities that are appropriate and achievable, it is possible that our objectives may not deliver projected long-term growth in revenue and profitability due to competition, inadequate execution, incorrect assumptions, sub-optimal resource allocation, or other reasons, including any of the other risks described in this “Risk Factors” section.
While we believe that we have identified and will identify strategic objectives that are appropriate and achievable, it is possible that our objectives may not deliver projected long-term growth in revenue and profitability due to competition, inadequate execution, incorrect assumptions, sub-optimal resource allocation, or other reasons, including any of the other risks described in this “Risk Factors” section.
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.
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 using technology and other strategies that continue to evolve, including artificial intelligence and social engineering, (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 H&R Block, Inc. | 2024 Form 10-K 15 and machine learning, and (8) the usage of remote working arrangements by our associates, franchisees, and third-party vendors, which has significantly expanded in recent years.
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.
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, 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 endemics, catastrophes, or a wide variety of events within or outside of our control.
Our international operations are subject to risks that may harm our business and our consolidated financial position, results of operations, and cash flows. We have international operations, including tax preparation businesses in Canada and Australia, technology centers in India and Ireland, and Wave in Canada.
Our international operations are subject to risks that may harm our business and our consolidated financial position, results of operations, and cash flows. We have international operations, including tax preparation businesses in Canada and Australia, a technology and shared services center in India, a technology center in Ireland, and Wave in Canada.
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.
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.
It is difficult to predict how currently proposed or new regulations may impact the financial products we offer.
It is difficult to predict how currently proposed or new regulations, or new interpretations of existing regulations, may impact the financial products we offer.
If our effective tax rates were to increase, or if the ultimate determination of our taxes owed is for an amount in excess of amounts previously accrued, our operating results, cash flows, and financial condition could be adversely affected.
If our effective tax rates were to increase, or if the ultimate determination of our taxes owed is for an amount in excess of amounts previously accrued, our operating results, cash flows, and financial condition could be adversely affected. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Wave’s revenues were negatively impacted during the start of the COVID-19 pandemic, and may again be negatively impacted in the event of a sustained economic slowdown or recession. Difficult economic conditions, including an economic recession or high inflationary period, could have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows.
Wave’s revenues may be negatively impacted in the event of a sustained economic slowdown or recession. Difficult economic conditions, including an economic recession or high inflationary period, could have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows.
If our vendors are unable to meet our needs and we are not able to develop alternative sources for these services and products quickly and cost-effectively, or if a key vendor were to commit a major error or suffer a material adverse event, it could result in a material and adverse impact on our business and our consolidated financial position, results of operations, and cash flows.
If our vendors are unable to meet our needs and we are not able to develop alternative sources for these services and products quickly and cost-effectively, or if a key vendor were to commit a major error or suffer a material adverse event, it could result in a material and adverse impact on our business and our consolidated financial position, results of operations, and cash flows. 12 2024 Form 10-K | H&R Block, Inc.
As the global labor market continues to evolve as a result of the COVID-19 pandemic and other changes, our current and prospective key personnel may seek new or different opportunities based on pay levels, benefits, or remote work flexibility that are different from what we offer, or may determine to leave the workforce, making it difficult to attract and retain them.
As the global labor market continues to evolve, our current and prospective key personnel may seek new or different opportunities based on pay levels, benefits, or remote work flexibility that are different from what we offer, or may determine to leave the workforce, making it difficult to attract and retain them.
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.
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.
There can be no assurance that system or internet failures or interruptions in critical business capabilities will not occur, or, if they do occur, that we, our franchisees or the private or governmental third parties on whom we rely, will adequately address them.
We have experienced systems outages in the past, and there can be no assurance that system or internet failures or interruptions in critical business capabilities will not occur in the future, and, if they do occur, that we, our franchisees or the private or governmental third parties on whom we rely, will adequately address them.
The amount of tax due in various jurisdictions may change significantly as a result of political or economic factors beyond our control, including changes to tax laws or new interpretations of existing laws that are inconsistent with previous interpretations or positions taken by taxing authorities on which we have relied.
The amount of tax due in various jurisdictions may change significantly as a result of political or economic factors beyond our control, including changes to tax laws or new interpretations of existing laws that are inconsistent with previous H&R Block, Inc. | 2024 Form 10-K 19 interpretations or positions taken by taxing authorities on which we have relied.
(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.
(FIS), Galileo Financial Technologies, LLC, or similar vendors, for data processing and card production services; Pathward TM , N.A. (Pathward), a wholly-owned subsidiary of Pathward Financial, Inc., for the issuance of RTs, EAs, RAs, Emerald Cards, and Spruce accounts; and Microsoft Corporation, for cloud computing services and artificial intelligence technology.
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, 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.
We may not be successful in defending against any such challenges or in obtaining licenses to avoid or resolve any intellectual property disputes and, in that event, we could lose significant revenues, incur significant royalty or technology development expenses, suffer harm to our reputation, or pay significant monetary damages.
We may not be successful in defending against any such challenges or in obtaining licenses to avoid or resolve any intellectual property disputes and, in that event, we could lose significant revenues, incur significant royalty or technology development expenses, suffer harm to our reputation, or pay significant monetary damages. 18 2024 Form 10-K | H&R Block, Inc.
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.
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 H&R Block, Inc. | 2023 Form 10-K 19 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 assurance as to the outcome of these examinations.
For example, a person with malicious intent may unlawfully take user account and password information from our clients to electronically file fraudulent federal and state tax returns, which could impede our clients' ability to file their tax returns and receive refunds (or other amounts due) and diminish consumers' perceptions of the security and reliability of our services and products, despite no breach in the security of our systems.
For example, a person with malicious intent may unlawfully create a new account with stolen information or take existing user account and password information from our clients to electronically file fraudulent federal and state tax returns, which could impede their ability to file their tax returns and receive refunds (or other amounts due) and diminish consumers' perceptions of the security and reliability of our services and products, despite no breach in the security of our systems. 10 2024 Form 10-K | H&R Block, Inc.
Damage to our reputation and loss of brand equity may reduce demand for our services and products and thus have an adverse effect on our future financial results, as well as require additional resources to rebuild our reputation and restore the value of our brands.
Damage to our reputation and loss of brand equity may reduce demand for our services and products and H&R Block, Inc. | 2024 Form 10-K 13 thus have an adverse effect on our future financial results, as well as require additional resources to rebuild our reputation and restore the value of our brands.
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.
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. State regulators also have certain authority in enforcing and promulgating financial consumer protection laws.
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.
Currently proposed or new federal and state laws and regulations, or expanded interpretations of current laws and regulations that differ from our existing interpretations, may result in legal actions, may impact our ability to offer certain financial products, or 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.
If we are unable to realize the desired benefits from our business strategy, our ability to compete across our business and our consolidated financial position, results of operations, and cash flows could be adversely affected.
If we are unable to realize the desired benefits from our business strategy, our ability to compete across our business and our consolidated financial position, results of operations, and cash flows could be adversely affected. Offers of free services or products could adversely affect our revenues and profitability.
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.
Furthermore, as fraudulent activity continues to become 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.
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.
In addition, as we continue to H&R Block, Inc. | 2024 Form 10-K 17 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.
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 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.
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.
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 solutions, primarily on price and functionality.
LEGAL AND REGULATORY RISKS Regulations promulgated by the Consumer Financial Protection Bureau (CFPB) or other regulators may affect our financial services businesses in ways we cannot predict, which may require changes to the financial products we offer, our services and contracts.
LEGAL AND REGULATORY RISKS Regulations promulgated by state and federal regulators, including the Consumer Financial Protection Bureau (CFPB), may affect our financial services businesses in new or unexpected ways, which may impact our ability to offer certain financial products or require changes to the financial products we offer, our services, and contracts.
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.
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, significant armed conflicts, acts of war or terrorism, supply chain or labor market disruptions, banking or financial market disruptions, pandemics or endemics, or other adverse changes, could negatively affect our business and financial condition.
OPERATIONAL AND EXECUTION RISKS Our failure to effectively address fraud by third parties using our offerings could have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows. Many industries have experienced an increased variety and amount of attempted fraudulent activities by third parties, and those fraudulent activities are becoming increasingly sophisticated.
OPERATIONAL AND EXECUTION RISKS Our failure to effectively address fraud by third parties using our offerings could have a material adverse effect on our business and our consolidated financial position, results of operations, and cash flows.
In addition, many of our competitors offer certain tax preparation services and products, and other financial services and products, at no charge. Government tax authorities, volunteer organizations, our competitors, and potential new market entrants may also elect to implement or expand free offerings in the future.
In addition, many of our competitors offer certain tax preparation services and products, and other financial services and products, H&R Block, Inc. | 2024 Form 10-K 9 at no charge. Government tax authorities, volunteer organizations, our competitors, and potential new market entrants have implemented, and may expand free offerings in the future.
We may be unable to attract and retain key personnel or fully control or accurately predict our labor costs.
We rely on the performance of key personnel, including our executive leadership and other key associates, and we may be unable to attract and retain key personnel or fully control or accurately predict our labor costs.
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.
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.
RISKS RELATING TO DISCONTINUED OPERATIONS Sand Canyon Corporation, previously known as Option One Mortgage Corporation (including its subsidiaries, collectively, SCC), is subject to loss contingencies, including indemnification and contribution claims, which may result in significant financial losses. Additionally, we could be subject to claims by the creditors of SCC.
In addition, our discontinued operations, which include the results of operations of Sand Canyon Corporation, formerly known as Option One Mortgage Corporation (including its subsidiaries, collectively, SCC), have been, and may in the future be, subject to loss contingencies, which may result in significant financial losses.
Our intellectual property could be wrongfully acquired as a result of a cyberattack, other wrongful conduct by employees or third parties, or human error.
Despite our efforts to protect our intellectual property and proprietary information, we may be unable to do so effectively in all cases. Our intellectual property could be wrongfully acquired as a result of a cyberattack, other wrongful conduct by employees or third parties, or human error.
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.
Individual tax filers may elect to change their tax preparation method, choosing from among various assisted, DIY, and virtual offerings.
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.
Government changes in tax filing or IRS processes may adversely affect our business and our consolidated financial position, results of operations, and cash flows.
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.
For example, as previously reported, we are subject to legal actions and have received and are responding to certain governmental inquiries and other matters relating to the IRS Free File program and other aspects of our DIY tax preparation services, including the use of pixels.
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.
H&R Block, Inc. | 2024 Form 10-K 11 Further, changes in governmental administrations or regulations could result in a delay of the start of the tax season, create uncertainty, or 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 immediately prior to, or during, a tax season.
Failure to protect our intellectual property rights may harm our competitive position and litigation to protect our intellectual property rights or defend against third party allegations of infringement may be costly. Despite our efforts to protect our intellectual property and proprietary information, we may be unable to do so effectively in all cases.
See discussion in Item 8, note 12 to the consolidated financial statements for additional information. Failure to protect our intellectual property rights may harm our competitive position and litigation to protect our intellectual property rights or defend against third party allegations of infringement may be costly.
State regulators also have certain authority in enforcing and promulgating financial consumer protection laws, the results of which could be (i) states issuing new and broader financial consumer protection laws, some of which could be more comprehensive than existing U.S. federal regulations, or (ii) state attorneys general bringing actions to enforce federal consumer protection laws.
As a result, some states have issued new and broader financial consumer protection laws and others may in the future, which are more comprehensive than existing U.S. federal regulations. In addition, state attorneys general may in some cases bring actions to enforce federal consumer protection laws.
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.
In addition, certain members of private industry offer free DIY tax software to certain taxpayers through Free File, Inc., which operates under an agreement among the IRS and those industry participants that is currently set to expire in October 2029.
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.
As a result of these or other programs, the government has, and could further, 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. In order to compete, we have offered certain, and may in the future offer, additional services and products at no charge.
We cannot predict whether these legal actions could lead to further inquiries, further litigation, fines, injunctions or other regulatory or legislative actions or impacts on our brand, reputation and business. See discussion in Item 8, note 12 to the consolidated financial statements for additional information.
The creditors of SCC or other potential claimants may attempt to assert claims against us for payment of SCC's obligations. We cannot predict whether the legal actions described above could lead to further inquiries, further litigation, fines, damages, injunctions or other regulatory or legislative actions, or impacts on our brand, reputation and business.
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. We may not be effective in achieving our strategic and operating objectives. Our strategy is focused on small business, financial products and the tax client experience.
Therefore, the payment of dividends or stock repurchases at such times would cause us to further increase that GAAP negative net worth. The payment of future dividends and future repurchases will depend upon our earnings, economic conditions, liquidity and capital requirements, and other factors, including our debt leverage.
Our repurchase program may be suspended or terminated at any time, and there can be no assurance that our repurchase program will enhance long-term shareholder value. The payment of future dividends and future repurchases will depend upon our earnings, economic conditions, liquidity and capital requirements, and other factors, including our debt leverage.
Removed
In addition, there are various initiatives from time to time seeking to simplify the tax return preparation filing process or otherwise modify IRS processes.
Added
These risks may be exacerbated by the effects of local, national, and global conditions or events, including macroeconomic, political, geopolitical, or public health conditions or events, which may cause significant instability. 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.
Removed
Increased competition for clients could adversely affect our current market share and profitability, and we may not be effective in achieving our strategic and operating objectives. We face substantial competition throughout our businesses.
Added
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.
Removed
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 part of our strategy, we expect to continue to seek growth through acquisitions. Our future growth and profitability may depend, in part, upon our successful execution of those acquisitions.
Removed
In order to compete, we have offered certain, and may in the future offer additional, services and products at no charge.
Added
However, we may not be able to execute on our growth strategy due to a number of factors, including an inability to identify sufficient suitable acquisition candidates, an unwillingness of businesses to sell to us, an inability to generate the funds necessary to fully execute desired acquisitions, or our inability to successfully integrate acquired businesses into our business model and operate them effectively.
Removed
Our financial condition and results of operations have been, and may continue to be, adversely affected by the COVID-19 pandemic, and may be impacted by a resurgence of COVID-19 or a variant thereof or a future outbreak of another highly infectious or contagious disease.
Added
In tax season 2024, the IRS launched a limited free direct tax filing system, which it has announced it will expand for the 2025 filing season.
Removed
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.
Added
Many industries have experienced an increased variety and amount of attempted fraudulent activities by third parties, and those fraudulent activities are becoming increasingly sophisticated through the use of artificial intelligence, social engineering, and other technological developments and strategies.
Removed
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.
Added
Any unanticipated changes to federal or state tax filing deadlines may further amplify the impact of seasonality on our business and affect the comparability of our financial results from period to period.
Removed
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.
Added
Changes in our management team resulting from the hiring or departure of executives and key associates from time to time could disrupt our business. Executive leadership transition periods may negatively impact operations due to increased or unanticipated expenses, operational inefficiencies, uncertainty, decreased employee morale and productivity, or increased turnover.
Removed
These extensions impacted the typical seasonality of our business and the comparability of our financial results.
Added
In addition, state or local jurisdictions in which we operate have passed, and may in the future pass, new laws related to banking and the offering of financial products. These laws may contain different requirements or may be interpreted and applied inconsistently from 16 2024 Form 10-K | H&R Block, Inc. jurisdiction to jurisdiction.
Removed
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.
… 10 more changes not shown on this page.
Item 2. Properties
Properties — owned and leased real estate
1 edited+1 added−0 removed1 unchanged
Item 2. Properties
Properties — owned and leased real estate
1 edited+1 added−0 removed1 unchanged
2023 filing
2024 filing
Biggest changeWave's headquarters are located in leased offices in Toronto, Ontario. All current leased and owned facilities are in reasonably good repair and adequate to meet our needs. ITEM 3. LEGAL PROCEEDINGS For a description of our material pending legal proceedings, see discussion in Item 8, note 12 to the consolidated financial statements. ITEM 4. MINE SAFETY DISCLOSURES Not applicable.
Biggest changeWave's headquarters are located in leased offices in Toronto, Ontario. H&R Block, Inc. | 2024 Form 10-K 21 All current leased and owned facilities are in reasonably good repair and adequate to meet our needs. ITEM 3. LEGAL PROCEEDINGS For a description of our material pending legal proceedings, see discussion in Item 8, note 12 to the consolidated financial statements.
Added
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II
Item 4. Mine Safety Disclosures
Mine Safety Disclosures — required of mining issuers
1 edited+0 added−0 removed0 unchanged
Item 4. Mine Safety Disclosures
Mine Safety Disclosures — required of mining issuers
1 edited+0 added−0 removed0 unchanged
2023 filing
2024 filing
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.
Biggest changeITEM 4. MINE SAFETY DISCLOSURES 22 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 22 ITEM 6. SELECTED FINANCIAL DATA 23 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 24 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 33 ITEM 8.
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
4 edited+2 added−4 removed1 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
4 edited+2 added−4 removed1 unchanged
2023 filing
2024 filing
Biggest change(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.
Biggest changePERFORMANCE 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 the S&P 400 Consumer Services Industry index.
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.
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 2024 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)(3) April 1 – April 30 1 $ 47.02 — $ 350,000 May 1 - May 31 9 $ 47.96 — $ 350,000 June 1 - June 30 1 $ 49.64 — $ 350,000 11 $ 47.98 — (1) We purchased approximately 11 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.
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 31, 2024, there were 12,147 shareholders of record and the closing stock price on the NYSE was $57.94 per share.
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.
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, 2019, and its relative performance is tracked through June 30, 2024.
Removed
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.
Added
(2) In August 2022, we announced that our Board of Directors approved a $1.25 billion share repurchase program, effective through June 2025. (3) On August 15, 2024, we announced that our Board of Directors authorized a new $1.5 billion share repurchase program.
Removed
We 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.
Added
This repurchase program does not have an expiration date and replaced the previously existing share repurchase program. 22 2024 Form 10-K | H&R Block, Inc.
Removed
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
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.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
50 edited+14 added−17 removed32 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
50 edited+14 added−17 removed32 unchanged
2023 filing
2024 filing
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.
Biggest changeConsolidated – Financial Results (in 000s, except per share amounts) Year ended June 30, 2024 2023 $ Change % Change Revenues: U.S. tax preparation and related services: Assisted tax preparation $ 2,274,835 $ 2,167,138 $ 107,697 5.0 % Royalties 204,802 210,631 (5,829) (2.8) % DIY tax preparation 349,812 314,758 35,054 11.1 % Refund Transfers 142,249 143,310 (1,061) (0.7) % Peace of Mind® Extended Service Plan 93,087 95,181 (2,094) (2.2) % Tax Identity Shield® 33,386 38,265 (4,879) (12.8) % Other 51,555 45,252 6,303 13.9 % Total U.S. tax preparation and related services 3,149,726 3,014,535 135,191 4.5 % Financial services: Emerald Card® and Spruce SM 76,093 84,651 (8,558) (10.1) % Interest and fee income on Emerald Advance® 40,933 47,554 (6,621) (13.9) % Total financial services 117,026 132,205 (15,179) (11.5) % International 247,123 235,131 11,992 5.1 % Wave 96,472 90,314 6,158 6.8 % Total revenues $ 3,610,347 $ 3,472,185 $ 138,162 4.0 % Compensation and benefits: Field wages 869,002 841,742 (27,260) (3.2) % Other wages 298,819 273,850 (24,969) (9.1) % Benefits and other compensation 228,723 220,530 (8,193) (3.7) % 1,396,544 1,336,122 (60,422) (4.5) % Occupancy 432,461 428,167 (4,294) (1.0) % Marketing and advertising 277,747 286,255 8,508 3.0 % Depreciation and amortization 121,784 130,501 8,717 6.7 % Bad debt 91,523 60,401 (31,122) (51.5) % Other 485,011 482,041 (2,970) (0.6) % Total operating expenses 2,805,070 2,723,487 (81,583) (3.0) % Other income (expense), net 36,125 35,492 633 1.8 % Interest expense on borrowings (79,080) (72,978) (6,102) (8.4) % Income from continuing operations before income taxes 762,322 711,212 51,110 7.2 % Income taxes 164,359 149,412 (14,947) (10.0) % Net income from continuing operations 597,963 561,800 36,163 6.4 % Net loss from discontinued operations (2,646) (8,100) 5,454 67.3 % Net income $ 595,317 $ 553,700 $ 41,617 7.5 % DILUTED EARNINGS PER SHARE: Continuing operations $ 4.14 $ 3.56 $ 0.58 16.3 % Discontinued operations (0.02) (0.05) 0.03 60.0 % Consolidated $ 4.12 $ 3.51 $ 0.61 17.4 % Adjusted diluted EPS (1) $ 4.41 $ 3.82 $ 0.59 15.4 % EBITDA (1) $ 963,186 $ 914,691 $ 48,495 5.3 % (1) All non-GAAP measures are results from continuing operations.
These aspects include, but are not limited to, commercial income tax return preparation, income tax courses, the electronic filing of income tax returns, the offering of RTs, privacy and data security, consumer protection, marketing and advertising, franchising, antitrust and competition, sales methods, and financial services and products.
These aspects include, but are not limited to, commercial income tax return preparation, income tax courses, the electronic filing of income tax returns, the offering of RTs and RAs, privacy and data security, consumer protection, marketing and advertising, franchising, antitrust and competition, sales methods, and financial services and products.
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.
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, 2024 are sufficient to meet our future operating and financing needs.
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.
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, 2024.
See Item 8, note 7 , 10 , and 11 to the consolidated financial statements for additional information. FINANCING RESOURCES – Our CLOC has capacity up to $1.5 billion and is scheduled to expire in June 2026. Proceeds under the CLOC may be used for working capital needs or for other general corporate purposes.
See Ite m 8, note 7 , 10 , and 11 to the consolidated financial statements for additional information. FINANCING RESOURCES – Our CLOC has capacity up to $1.5 billion and is scheduled to expire in June 2026. Proceeds under the CLOC may be used for working capital needs or for other general corporate purposes.
We 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.
We were in compliance with our CLOC covenants as of June 30, 2024. As of June 30, 2024, 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, 2024.
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.
As of June 30, 2024, 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.
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.
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 $2.8 million and $4.9 million during the years ended June 30, 2024 and 2023, respectively.
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.
DISCUSSION OF CONSOLIDATED STATEMENTS OF CASH FLOWS – The following table summarizes our statements of cash flows for fiscal year 2024 and 2023. See Item 8 for the complete consolidated statements of cash flows for these periods.
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. | 2024 Form 10-K 29 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.
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.
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 position based 30 2024 Form 10-K | H&R Block, Inc. on its technical merits.
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.
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. During the year ended June 30, 2024 our total assisted tax return volume, which includes both company-owned and franchise offices, decreased 1.3% from the prior year. U.S.
Differences between a tax position taken or expected to be taken in our tax returns and the amount of benefit recorded in our financial statements result in unrecognized tax benefits. Unrecognized tax benefits are recorded in the balance sheet as either a liability or reductions to recorded tax assets as applicable.
Differences between a tax position taken or expected to be taken in our tax returns and the amount of benefit recorded in our financial statements result in uncertain tax positions. Uncertain tax positions are recorded in the balance sheet as either a liability or reductions to recorded tax assets as applicable.
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.
Capital expenditures totaled $63.7 million and $69.7 million for the years ended June 30, 2024 and 2023, 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.
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.
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 $179.8 million and $177.9 million in the years ended June 30, 2024 and 2023, respectively.
We test goodwill for impairment annually in the third quarter or more frequ ently if events occur or circumstances change which would, more likely than not, reduce the fair value of a reporting unit below its carrying value.
We test goodwill for impairment annually as of February 1 or more frequ ently if events occur or circumstances change which would, more likely than not, reduce the fair value of a reporting unit below its carrying value.
Our valuation methods include a discounted cash flow model for the income approach and the guideline public company and market capitalization methods for the market approach. The income approach requires significant management judgment with respect to revenue and expense forecasts, anticipated changes in working capital and selection of an appropriate discount rate.
Our valuation methods include a discounted cash flow model for the income approach and the guideline public company method for the market approach. The income approach requires significant management judgment with respect to revenue and expense forecasts and selection of an appropriate discount rate.
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.
FISCAL YEAR 2023 COMPARED TO FISCAL YEAR 2022 The comparison of fiscal year 2023 to 2022 has been omitted from this Form 10-K, but can be found in our Form 10-K for the fiscal year ended June 30, 2023, filed on August 17, 2023.
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.
We acquired franchise and competitor businesses totaling $43.4 million and $48.2 million during the years ended Ju ne 30, 2024 and 2023, respectively. See Item 8, note 6 for additional information on our acquisitions. Contractual Obligations and Commercial Commitments.
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.
Our goodwill impairment analysis utilizes both income and market approaches, which includes revenue and expense forecasts, selection of market multiples of comparable publicly traded companies 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.
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.
See " Non-GAAP Financial Information " at the end of this item for a reconciliation of non-GAAP measures. H&R Block, Inc. | 2024 Form 10-K 25 FISCAL YEAR 2024 COMPARED TO FISCAL YEAR 2023 Revenues increased $138.2 million, or 4.0%, from the prior year.
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.
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.
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.
The following table provides ratings for debt issued by Block Financial LLC (Block Financial) as of June 30, 2024 and 2023: As of June 30, 2024 June 30, 2023 Short-term Long-term Outlook Short-term Long-term Outlook Moody's P-3 Baa3 Stable P-3 Baa3 Positive S&P A-2 BBB Stable A-2 BBB Stable CASH AND OTHER ASSETS – As of June 30, 2024, we held cash and cash equivalents, excluding restricted amounts, of $1.1 billion, including $170.8 million held by our foreign subsidiaries. 28 2024 Form 10-K | H&R Block, Inc.
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.
Cash provided by operating activities totaled $720.9 million for the year ended June 30, 2024 compared to $821.8 million in the prior year period. The change is primarily due to deferred taxes, the receipt of income tax receivables in the prior year, and higher receivables in the current year, partially offset by lower bonus payments in the current year.
From time to time, we receive inquiries from governmental authorities regarding the applicability of laws to our services and products and other matters relating to our business.
Risk Factors under "Legal and Regulatory Risks" of this Form 10-K. From time to time, we receive inquiries from governmental authorities regarding the applicability of laws to our services and products and other matters relating to our business.
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.
See Item 8, note 7 to the consolidated financial statements for discussion of our CLOC and Senior Notes.
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.
U.S. assisted tax preparation revenues increased $107.7 million, or 5.0%, due to a 4.0% increase in net average charge combined with higher company-owned tax return volumes in the current year. U.S. royalties revenue decreased $5.8 million, or 2.8%, due to lower franchise tax return volumes.
REGULATORY ENVIRONMENT The federal government, various state, local, provincial and foreign governments, and some self-regulatory organizations have enacted statutes and ordinances, or adopted rules and regulations, regulating many aspects of our business.
NEW ACCOUNTING PRONOUNCEMENTS See Item 8, note 1 to the consolidated financial statements for any recently issued accounting pronouncements. REGULATORY ENVIRONMENT The federal government, various state, local, provincial and foreign governments, and some self-regulatory organizations have enacted statutes and ordinances, or adopted rules and regulations, regulating many aspects of our business.
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.
Investing Activities. Cash used in investing activities totaled $93.9 million for the year ended June 30, 2024 compared to $101.4 million for the prior year period. The decrease is primarily due to lower capital expenditures and payments to acquire businesses in the current year. Financing Activities.
Tax returns are either prepared by H&R Block tax professionals (in company-owned or franchise offices, virtually or via an internet review) or prepared and filed by our clients through our DIY tax solutions. We also offer small business solutions through our company-owned and franchise offices and online through Wave.
Tax returns are either prepared by H&R Block tax professionals in one of our 6,643 company-owned or 2,168 franchise offices (as of March 31, 2024), virtually or via an online review or prepared and filed by our clients through our DIY tax solutions.
(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.
(in 000s) Year ended June 30, 2024 2023 Net cash provided by (used in): Operating activities $ 720,860 $ 821,841 Investing activities (93,858) (101,389) Financing activities (564,311) (750,992) Effects of exchange rates on cash (2,814) (4,857) Net increase (decrease) in cash and cash equivalents, including restricted balances $ 59,877 $ (35,397) Operating Activities.
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.
Cash used in financing activities totaled $564.3 million for the year ended June 30, 2024 compared to $751.0 million for the prior year period. The change is primarily due to lower share repurchases in the current year. CASH REQUIREMENTS – Dividends and Share Repurchase.
Changes in projections or assumptions could materially affect our estimate of reporting unit fair values. The use of different assumptions could increase or decrease estimated discounted future operating cash flows and could affect our conclusion regarding the existence or amount of potential impairment. Sensitivity of Estimate to Change.
The use of different assumptions could increase or decrease estimated discounted future operating cash flows and could affect our conclusion regarding the existence or amount of potential impairment. Sensitivity of Estimate to Change. Estimates of fair value may be adversely impacted by declining economic conditions and changes in the industries and markets in which we operate.
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.
The following table summarizes our shares outstanding, shares repurchased, and annual dividends per share: (in 000s, except per share amounts) Year ended June 30, 2024 2023 2022 Shares outstanding 139,591 146,150 159,930 Shares repurchased 8,020 14,635 23,085 Dividends declared per share $ 1.28 $ 1.16 $ 1.08 Capital Investment.
We work to comply with those laws that are applicable to us or our services or products, and we continue to monitor developments in the regulatory environment in which we operate. See further discussion of these items in our Item 1A. Risk Factors under "Legal and Regulatory Risks" of this Form 10-K.
We work to comply with those laws that are applicable to us or our services or products, and we continue to monitor developments in the regulatory environment in which we operate.
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%.
Operating expenses increased $81.6 million due to higher labor costs and bad debt expense, which was partially offset by lower consulting and outsourced services expenses. This resulted in an increase in pretax income of $51.1 million, or 7.2%. Net income from continuing operations of $598.0 million increased $36.2 million from the prior year.
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.
SUMMARIZED BALANCE SHEET (in 000s) As of June 30, 2024 GUARANTOR AND ISSUER Current assets $ 44,423 Noncurrent assets 1,778,832 Current liabilities 77,848 Noncurrent liabilities 1,492,211 SUMMARIZED STATEMENTS OF OPERATIONS (in 000s) Year ended June 30, 2024 GUARANTOR AND ISSUER Total revenues $ 144,206 Income from continuing operations before income taxes 75,819 Net income from continuing operations 57,441 Net income 54,795 The table above reflects $1.7 billion of non-current intercompany receivables due to the Issuer from non-guarantor subsidiaries.
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.
Legal fees and settlements expense increased $16.5 million in the current year. We recorded income tax expense of $164.4 million in the current year compared to $149.4 million in the prior year. The increase is due to higher pretax income and effective tax rate in the current year.
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.
Although we have historically paid dividends and plan to H&R Block, Inc. | 2024 Form 10-K 27 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.
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.
The components of other expenses are as follows: (in 000s) Year ended June 30, 2024 2023 $ Change % Change Consulting and outsourced services $ 92,737 $ 109,120 $ 16,383 15.0 % Bank partner fees 28,856 24,108 (4,748) (19.7) % Client claims and refunds 25,623 29,484 3,861 13.1 % Employee and travel expenses 33,473 39,262 5,789 14.7 % Technology-related expenses 108,694 102,753 (5,941) (5.8) % Credit card/bank charges 102,377 96,074 (6,303) (6.6) % Insurance 12,075 8,806 (3,269) (37.1) % Legal fees and settlements 28,536 12,058 (16,478) (136.7) % Supplies 23,090 29,278 6,188 21.1 % Other 29,550 31,098 1,548 5.0 % $ 485,011 $ 482,041 $ (2,970) (0.6) % Consulting and outsourced services expense decreased $16.4 million, or 15.0%, due to lower contract labor, Emerald Card® data processing and call center expenses in the current year.
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.
During the year ended June 30, 2024, we repurchased $350.1 million of our common stock at an average price of $43.66 per share under the previously existing share repurchase authorization. In the prior year, we repurchased $550.2 million of our common stock at an average price of $37.59 per share.
Estimates of fair value may be adversely impacted by declining economic conditions and changes in the industries and markets in which we operate. Additionally, if future operating results of our reporting units are below our current modeled expectations, fair value estimates may decline. Any of these factors could result in future impairments, and those impairments could be significant.
Additionally, if future operating results of our reporting units are below our current modeled expectations, fair value estimates may decline. Any of these factors could result in future impairments, and those impairments could be significant. A schedule of changes in our goodwill balances, including any impairment charges, is included in Item 8, note 6 to the consolidated financial statements.
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.
Fiscal Year 2024 Compared to Fiscal Year 2023 Revenues Operating Expenses Net Income from Continuing Operations $3.61B 4.0% $2.81B 3.0% $598.0M 6.4% Diluted EPS from Continuing Operations EBITDA (1) from Continuing Operations $4.14 Reported: 16.3% $963.2M 5.3% $4.41 Adjusted (1) : 15.4% (1) See " Non-GAAP Financial Information " at the end of this item for a reconciliation of non-GAAP measures. 24 2024 Form 10-K | H&R Block, Inc.
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 following is a reconciliation of our results from continuing operations to our adjusted results from continuing operations, which is a non-GAAP financial measure: (in 000s, except per share amounts) Year ended June 30, 2024 June 30, 2023 Net income from continuing operations - as reported $ 597,963 $ 561,800 Adjustments: Amortization of intangibles related to acquisitions (pretax) 50,835 51,411 Tax effect of adjustments (1) (11,751) (10,797) Adjusted net income from continuing operations $ 637,047 $ 602,414 Diluted earnings per share from continuing operations - as reported $ 4.14 $ 3.56 Adjustments, net of tax 0.27 0.26 Adjusted diluted earnings per share from continuing operations $ 4.41 $ 3.82 (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.
Share repurchases may be effectuated through open market transactions, some of which may be effectuated under SEC Rule 10b5-1. The Company may cancel, suspend, or extend the time period for the purchase of shares at any time. Any repurchases will be funded primarily through available cash and cash from operations.
Share repurchases are subject to prevailing market prices, may be made in open market transactions (some of which may be effectuated under SEC Rule 10b5-1) and remain subject to the discretion of our Board of Directors. The Company may cancel or suspend the repurchase of shares at any time.
Though we do not currently expect the Payday Rule to have a material adverse impact on Emerald Advance SM , our business, or our consolidated financial position, results of operations, and cash flows, we will continue to monitor and analyze the potential impact of any further developments on the Company.
Though we do not expect the Payday Rule to have a material adverse impact on us, we will continue to monitor and analyze the potential impact of this and other current and future regulatory developments related to financial services and products. See further discussion of these items in our Item 1A.
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.
Field wages increased $27.3 million, or 3.2%, due to higher wages in the current year primarily resulting from an increase in company-owned volumes. Other wages increased $25.0 million, or 9.1%, due to higher corporate bonuses and wages in the current year. Benefits and other compensation increased $8.2 million, or 3.7%, due to higher payroll taxes.
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.
Emerald Card® and Spruce SM revenues decreased $8.6 million, or 10.1%, due to lower Emerald Card® activity in the current year as a result of less funds being loaded on the cards.
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.
DIY tax preparation revenues increased $35.1 million, or 11.1%, due to a 5.4% increase in online paid returns combined with a 6.8% increase in paid net average charge compared to the prior year.
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%.
Bad debt expense increased $31.1 million, or 51.5%, due to higher EA bad debt rates coupled with an increase in EAs and RTs compared to the prior year. Other operating expenses increased $3.0 million, or 0.6%.
Removed
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.
Added
We also offer small business solutions through our company-owned and franchise offices (including in-person, online and virtual) and online through Wave. We report a single segment that includes all of our continuing operations. In fiscal year 2024, revenue increased $138.2 million over the prior year.
Removed
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.
Added
U.S. assisted tax preparation revenues were higher $107.7 million due to an increase in net average charge and company-owned tax return volumes. U.S. DIY tax preparation revenues increased $35.1 million due to increases in online paid returns and paid net average charge.
Removed
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.
Added
Interest and fee income on Emerald Advance® decreased $6.6 million, or 13.9%, due to lower customer fees under the new EA term loans, partially offset by higher interest income due to the increase in EA term loans and a longer loan term in the current year.
Removed
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.
Added
International revenues increased $12.0 million, or 5.1%, due to higher tax returns prepared by our Canadian and Australian operations, partially offset by unfavorable foreign currency exchange rates. Wave revenues increased $6.2 million, or 6.8%, due to higher small business payments processing volumes. Total operating expenses increased $81.6 million, or 3.0%, from the prior year.
Removed
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.
Added
Marketing and advertising expense decreased $8.5 million, or 3.0%, due to vendor refunds for expired customer incentives and lower agency fees. Depreciation and amortization decreased $8.7 million, or 6.7%, due to lower amortization of capitalized software.
Removed
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.
Added
The effective tax rate for the year ended June 30, 2024, and 2023 was 21.6% and 21.0%, respectively. See Item 8, note 9 to the consolidated financial statements for additional discussion. 26 2024 Form 10-K | H&R Block, Inc.
Removed
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.
Added
On August 15, 2024, our Board of Directors authorized a new share repurchase program under which we may repurchase up to $1.5 billion of our outstanding common stock. This repurchase program does not have an expiration date and replaced the previously existing share repurchase program.
Removed
Other income (expense), net increased $33.0 million primarily due to higher interest income and income from a legal settlement in the current year.
Added
Any repurchases will be funded primarily through available cash and cash from operations. There can be no assurance that we will repurchase any shares.
Removed
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.
Added
Effective October 20, 2023, we amended the Program Management Agreement (PMA) with Pathward and entered into a new participation agreement related to EAs. Additionally, on April 1, 2024, we further amended the PMA to facilitate an interest-bearing feature for Spruce savings accounts.
Removed
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
The market approach requires significant assumptions related to the selection of comparable publicly traded companies and the market multiples. Changes in projections or assumptions could materially affect our estimate of reporting unit fair values.
Removed
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.
Added
H&R Block, Inc. | 2024 Form 10-K 31 There has been recent increased regulatory focus in the area of financial services and products, which has impacted or may in the future impact our program, our contractual arrangements with our bank partner or other partners, or the offering of financial products and services to our clients.
Removed
Although we may continue to repurchase shares, there is no assurance that we will purchase up to the full Board authorization.
Added
For example, as previously disclosed, in 2017 the CFPB published a final rule regulating certain consumer credit products (Payday Rule). The Payday Rule was challenged through litigation, which stayed the compliance deadline. On May 16, 2024, the U.S.
Removed
A schedule of changes in our goodwill balances, including any impairment charges, is included in Item 8, note 6 to the consolidated financial statements. NEW ACCOUNTING PRONOUNCEMENTS See Item 8, note 1 to the consolidated financial statements for any recently issued accounting pronouncements.
Added
Supreme Court upheld the constitutionality of the CFPB, and the new effective date of the Payday Rule is currently set for March 30, 2025, though further developments are possible.
Removed
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.
Added
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, 2024 June 30, 2023 Net income - as reported $ 595,317 $ 553,700 Discontinued operations, net 2,646 8,100 Net income from continuing operations - as reported 597,963 561,800 Add back: Income taxes 164,359 149,412 Interest expense 79,080 72,978 Depreciation and amortization 121,784 130,501 365,223 352,891 EBITDA from continuing operations $ 963,186 $ 914,691 32 2024 Form 10-K | H&R Block, Inc.
Removed
Certain limited provisions of the Payday Rule became effective in 2018, but most provisions were scheduled to go into effect in 2019. Litigation in a federal district court in Texas had stayed that effective date, but on August 31, 2021 the judge in that litigation ruled in favor of the CFPB.
Removed
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.
… 1 more changes not shown on this page.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
6 edited+0 added−0 removed4 unchanged
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
6 edited+0 added−0 removed4 unchanged
2023 filing
2024 filing
Biggest changeWe 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.
Biggest changeWe 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, 2024 or 2023 . H&R Block, Inc. | 2024 Form 10-K 33
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.
Our long-term debt as of June 30, 2024, consists 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.
As 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.
As 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, 2024.
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.
The impact of changes in foreign exchange rates during the period on our international cash balances resulted in a decrease of $2.8 million and $4.9 million during the years ended June 30, 2024 and 2023, 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.
We estimate a 10% change in foreign exchange rates by itself would impact consolidated pretax income for the years ended June 30, 2024 and 2023 by $4.3 million and $3.8 million, respectively, and cash balances, excluding restricted balances, as of June 30, 2024 and 2023 by $16.7 million and $13.0 million, respectively.
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.
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.