H&R Block’s second quarter outperformed market expectations, led by improvements in both client retention and conversion rates. Management credited these results to a deliberate focus on higher-value, more complex clients and the expansion of technology-driven solutions across assisted and DIY tax preparation. CEO Curtis Campbell highlighted that automation and AI-powered enhancements reduced friction in the client journey, stating, “Conversion improved 200 basis points this season, which we believe is the largest single year improvement in our recorded history.” Enhanced retention, particularly for clients using the Second Look service, further strengthened the company’s competitive position in its core assisted business.
Is now the time to buy HRB? Find out in our full research report (it’s free for active Edge members).
H&R Block (HRB) Q2 CY2026 Highlights:
- Revenue: $1.14 billion vs analyst estimates of $1.12 billion (3% year-on-year growth, 2.5% beat)
- Adjusted EPS: $2.38 vs analyst estimates of $2.21 (7.7% beat)
- Adjusted EBITDA: $420.5 million vs analyst estimates of $394.6 million (36.7% margin, 6.6% beat)
- Adjusted EPS guidance for the upcoming financial year 2027 is $6.14 at the midpoint, beating analyst estimates by 4.8%
- EBITDA guidance for the upcoming financial year 2027 is $1.13 billion at the midpoint, above analyst estimates of $1.07 billion
- Operating Margin: 32.9%, in line with the same quarter last year
- Market Capitalization: $6.18 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From H&R Block’s Q2 Earnings Call
- Scott Schneeberger (Oppenheimer & Co.) asked about the sustainability of recent improvements in conversion and retention. CEO Curtis Campbell explained these were the result of moving toward a consultative, trust-based client approach and described ongoing phases to extend these gains.
- George Tong (Goldman Sachs) inquired about H&R Block’s outlook for the DIY category and investment priorities. Campbell emphasized focus on higher-value DIY clients rather than volume, while CFO Tiffany Mason highlighted investments in labor, training, and technology for both consultative models and small business services.
- Thomas Wendler (Stephens Inc.) sought details on utilization and impact of the Second Look service. Campbell described automation-driven expansion of Second Look, which improved retention for new clients and increased overall participation.
- Kartik Mehta (Northcoast Research) asked about pricing strategies and the number of experiments to be implemented next year. Mason noted plans for continued low single-digit price increases, and Campbell said the pace of real-world testing and scaling of successful pilots will accelerate.
- Alexander Paris (Barrington Research) questioned assumptions behind industry growth and margin guidance. Mason clarified that while industry growth is expected to moderate due to slower job creation, H&R Block’s strategic initiatives and franchise acquisitions underpin margin expansion and guidance assumptions.
Catalysts in Upcoming Quarters
Our analyst team will be watching (1) the rollout and client adoption rates of advisory-focused service pilots in new markets, (2) the impact of further automation and AI integration on both client satisfaction and tax professional productivity, and (3) execution of small business growth initiatives, including integration of the Wave platform. Continued progress in shifting the client mix and maintaining pricing discipline will also be key markers of success.
H&R Block currently trades at $50.55, up from $46.67 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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