H&R Block, Inc. recently released its 10-K report. The company, through subsidiaries, provides assisted and do-it-yourself tax return preparation in the United States, Canada and Australia, along with related products and services such as Refund Transfers, Peace of Mind extended service plans, debit cards, advance loans, identity protection services and small business financial solutions. It delivers those services through company-owned and franchise offices, as well as online, mobile, virtual and desktop software, and is headquartered in Kansas City, Missouri.
In Item 7, management said fiscal 2026 revenue rose 4.9% to $3.945 billion from $3.761 billion a year earlier. U.S. assisted tax preparation revenue increased 6.1% to $2.561 billion, driven by a 4.0% increase in net average charge and a 2.0% increase in company-owned tax return volumes; total assisted tax return volume slipped 0.1% because franchise volumes fell while company-owned volumes rose. U.S. royalties declined 3.9% to $185.4 million as franchise tax return volumes fell, largely because of franchise acquisitions that shifted returns and revenue into company-owned offices.
DIY tax preparation revenue edged up 0.2% to $384.6 million, while Refund Transfers increased 5.5% to $145.1 million and Tax Identity Shield revenue rose 14.3% to $34.2 million. International revenue climbed 7.4% to $265.4 million, helped by favorable foreign exchange in Canada and Australia, and Wave revenue increased 12.3% to $122.7 million on higher subscription revenue and payments volume. Financial services revenue totaled $99.5 million, down 2.3%, as Emerald Card and Spruce revenue fell 5.6% to $68.8 million, partly offset by a 5.9% increase in interest and fee income on Emerald Advance to $30.7 million.
Operating expenses increased 3.6% to $3.038 billion. Field wages rose 7.5% to $996.7 million, occupancy costs increased 4.2% to $457.2 million, and technology-related expenses within other operating costs rose 8.4% to $129.3 million. Marketing and advertising fell 2.8% to $277.8 million, while total other operating expenses increased 1.6% to $540.3 million.
Pretax income increased 9.3% to $853.9 million. Income tax expense dropped 31.6% to $117.6 million, and management said the effective tax rate fell to 13.8% from 22.0% because of the settlement of an IRS examination of its 2020 federal return and related carryback claims. Net income from continuing operations rose 20.8% to $736.3 million, EBITDA increased 8.3% to $1.057 billion, and diluted earnings per share from continuing operations climbed to $5.69 from $4.42.
Cash provided by operating activities rose to $838.7 million from $680.9 million. Cash used in investing activities increased to $124.8 million, mainly because of higher business acquisition payments, while cash used in financing activities rose to $734.2 million because of higher share repurchases and dividends. The company paid $211.0 million in dividends in fiscal 2026, up from $197.3 million, and repurchased $500.3 million of stock at an average price of $47.48 per share, compared with $400.1 million at $61.10 per share a year earlier.
At year-end, H&R Block had $600.0 million of remaining authorization under its $1.5 billion repurchase program. It also said capital expenditures totaled $82.6 million, and it spent $57.6 million acquiring franchise and competitor businesses, up from $35.5 million in the prior year. The company ended the year with no balance outstanding under its credit facility, which was extended to July 11, 2030 with a $1.5 billion aggregate principal amount, and it issued $350.0 million of 5.375% senior notes due September 15, 2032 while redeeming its 5.250% notes due October 2025. The market has reacted to these announcements by moving the company's shares 1.24% to a price of $54.00. For more information, read the company's full 10-K submission here.
