Diluted EPS jumped 28.9%. That is the oddest number in H&R Block’s latest annual report, because revenue grew only 4.9%. The difference came from two places: a lower tax bill and fewer shares outstanding.
For the twelve months ended June 30, H&R Block’s revenue rose from $3.8 billion to $3.9 billion. Net income climbed 21.1% to $733.6 million, operating cash flow rose 23.2% to $838.7 million, and diluted shares fell from 137.3 million to 128.9 million.
That is a tidy set of annual numbers, with one important asterisk. Income tax expense fell $54.4 million, or 31.6%, after the company settled an IRS examination of its 2020 federal return and related carryback claims. H&R Block says the tax settlement was the primary reason for the decrease, so not all of the earnings expansion came from selling more tax returns or running the business more efficiently.
The company put the tax item this way:
"Income tax expense decreased $54.4 million, or 31.6% , primarily due to the settlement of an IRS examination of our 2020 U.S. federal income tax return and related carryback claims to the 2015 through 2018 tax years."
10-K 2026-08-14
In plain English, the tax line did some of the heavy lifting this year. The share count did the rest for EPS, as H&R Block continued reducing the denominator even though cash ended the year at $958.7 million, down 2.5%.
The operating cash story is stronger than the net-income story. Cash from operations rose faster than revenue, and cash conversion improved from 1.12x to 1.14x. Capital spending was nearly flat at $82.6 million, while free-cash-flow margin improved by 3.2 percentage points. Receivables also fell 8.4% to $58.2 million, a small sign that the cash improvement was not accompanied by a larger unpaid-customer balance.
The expense lines show where the company is still adding weight. Marketing and advertising fell $8.0 million as customer incentives and online and television advertising declined. Technology-related expense moved the other way, rising $10.0 million, which H&R Block attributes to higher cloud-related technology spending.
That trade-off matters because the headline margin improvement is real, but its ingredients are uneven. Net margin rose from 16.1% to 18.6%, helped by the tax settlement and lower marketing costs. Meanwhile, the company disclosed that U.S. royalties revenue fell $7.4 million because franchise tax-return volumes declined, primarily as a result of franchise acquisitions. The smaller revenue lines did not all move in the same direction.
H&R Block’s shares closed at $53.33 on August 13, down 1.6% for the day after a sharp move higher earlier in the week. The current valuation is 12.1 times earnings, but the filing leaves a narrower operating question: how much of the profit growth repeats once the tax settlement is behind it?
H&R Block’s next report can answer that through the same two lines that made this year unusual: income-tax expense and operating cash flow. For now, the picture is growing a little more revenue, keeping a lot more profit, and shrinking the share count in between.
Source: H&R Block 2026 Form 10-K for the twelve months ended June 30, 2026.