Key Takeaways:
H&R Block Inc. (NYSE: HRB) raised its fiscal 2026 outlook after third-quarter adjusted earnings per share grew 11.9 percent, driven by stabilizing market share in its assisted tax business and the adoption of new artificial intelligence tools.
"A key question surrounding H&R Block’s performance has been when we’d stabilize assisted channel market share. Well, this season we did,” President and CEO Curtis Campbell said on the company’s earnings call, noting performance was favorable each week throughout the tax season.
The tax preparation company reported third-quarter revenue of $2.4 billion, a 5.3 percent increase from the prior-year period and 2.5 percent ahead of consensus estimates. Adjusted earnings of $6.02 per share beat analyst expectations by 5.8 percent. The results were also boosted by a one-time, non-cash tax benefit of $84.1 million, or $0.65 per share, from the resolution of an IRS examination.
Shares of H&R Block surged as much as 26 percent following the report, according to Seeking Alpha. The company raised its full-year fiscal 2026 guidance and now expects revenue of $3.91 billion to $3.92 billion and adjusted EPS between $5.10 and $5.20, up from a consensus estimate of $4.98.
Management said the company maintained its assisted market share relative to industry growth, a significant improvement after several years of declines. The assisted channel saw a 2.1 percent increase in volume and a 3.9 percent rise in the net average charge per return.
The company is increasingly using AI to improve efficiency and client experience. Its AI-enabled assistant for tax professionals, Sidekick, saw strong adoption, while its client-facing AI Tax Assist tool handled 4.1 million messages, an 88 percent increase from the prior year. H&R Block is also using AI to automate the review of prior-year tax returns, a service that management said improves new client retention by over 600 basis points.
H&R Block returned $560.9 million to shareholders in the first nine months of the fiscal year through dividends and share repurchases. The board authorized an additional $100 million in share repurchases for the fourth quarter, with approximately $700 million remaining under the current program.
The stronger-than-expected results and guidance increase signal management’s confidence that its technology investments are translating into financial gains. Investors will watch for continued market share stability and margin performance when the company reports fourth-quarter results.
This article is for informational purposes only and does not constitute investment advice.
