H&R Block Exceeds Q2 Sales Expectations, Sets Optimistic Full-Year Guidance

H&R Block reported Q2 CY2025 revenue of $1.11 billion, up 4.6% YoY, beating estimates. Full-year revenue guidance of $3.89 billion at the midpoint came in 1.5% above analysts' estimates. Non-GAAP profit of $2.27 per share was 19.9% below analysts' consensus estimates. H&R Block's revenue growth has slowed in recent years, with an annualized growth of 4.1% over the last two years, below its five-year trend.

H&R Block (NYSE: HRB) announced its Q2 2025 financial results, revealing a 4.6% year-on-year (YoY) revenue growth to $1.11 billion, surpassing analyst expectations by 1.6%. The company's full-year revenue guidance of $3.89 billion at the midpoint exceeded analysts' estimates by 1.5%. Despite this positive revenue performance, H&R Block's non-GAAP profit of $2.27 per share fell 19.9% short of analysts' consensus estimates.

Key Highlights:

- Revenue: $1.11 billion vs. analyst estimates of $1.09 billion (4.6% YoY growth, 1.6% beat)
- Adjusted EPS: $2.27 vs. analyst expectations of $2.83 (19.9% miss)
- Adjusted EBITDA: $413.2 million vs. analyst estimates of $419.1 million (37.2% margin, 1.4% miss)
- Revenue Guidance: $3.89 billion at the midpoint for fiscal year 2026, beating analyst estimates by 1.5%
- Adjusted EPS Guidance: $4.93 at the midpoint for fiscal year 2026, missing analyst estimates by 4.3%
- EBITDA Guidance: $1.03 billion at the midpoint for fiscal year 2026, in line with analyst expectations

H&R Block's revenue growth has slowed in recent years, with an annualized growth of 4.1% over the last two years, below its five-year trend [1]. The company's Tax Preparation, Financial Services, and Wave Financial segments contributed to this growth, with Tax Preparation and Wave Financial revenues averaging year-on-year growth of 4.2% and 10%, respectively, over the last two years. However, Financial Services revenue declined by an average of 9% annually during the same period.

Operating Margin and Earnings Per Share:

H&R Block's operating margin improved to 34.5% in Q2 2025, up 1.5 percentage points year on year. The company's earnings per share (EPS) grew at a remarkable 18.4% compounded annual growth rate over the last five years, outpacing its 7.3% annualized revenue growth. However, the company's operating margin did not improve significantly during this period.

Full-Year Outlook:

H&R Block projects revenue between $3.875-$3.895 billion, EBITDA of $1.015-$1.035 billion, and adjusted EPS between $4.85-$5.00 for fiscal year 2026, with an expected tax rate of approximately 25%. The company's capital allocation strategy remains shareholder-friendly, with a 12% increase in its quarterly dividend to $0.42 per share and the repurchase of approximately 6.5 million shares (4.7% of shares outstanding) at $400.1 million during fiscal 2025.

Conclusion:

H&R Block's Q2 2025 results demonstrate a strong revenue performance, with growth beating analyst estimates. However, the company's EPS missed expectations due to a one-time tax benefit pushed to the next quarter. The stock remained flat at $51.38 immediately following the results. Investors should consider the company's valuation, business qualities, and the latest quarter's performance when making investment decisions.

References:

[1] http://business.thepilotnews.com/thepilotnews/article/stockstory-2025-8-12-h-and-r-block-nysehrb-beats-q2-sales-expectations-full-year-sales-guidance-is-optimistic
[2] https://www.stocktitan.net/news/HRB/h-r-block-reports-fiscal-2025-results-and-provides-fiscal-2026-ygqgpsuu4ocx.html