What was the success of the Tax Pro Assist product, and what conversion rates were achieved?

The Tax Pro Assist offering saw nice progress and good conversion rates for paid filers who utilized it. The company continues to lean into assistance for clients seeking trust, confidence, and judgment, which aligns with the strategic focus on higher lifetime value clients. “We saw really good results from a conversion perspective for those paid filers that utilize Tax Pro Assist.”

Can you quantify the market share progression in the Assisted channel for H&R Block over the last three years, distinguishing between H&R Block's performance and industry trends?

H&R Block saw improved market share performance in the Assisted channel for each of the last three seasons. While down in tax seasons '24 and '25, the trajectory was improving, and in tax season '26, market share was flat relative to the industry. This commentary is based on e-file data from January 1 through the end of the tax season, consistent with IRS reporting. “we were down in each of the last 2 years, but trajectory was improving, and we are flat relative to the industry in tax season '26. So we made sizable progress from last tax season to this tax season.”

Given the decision to prioritize lifetime value, why did both online free and paid DIY volumes fall, and what are the dynamics behind this?

The decline in DIY volumes reflects a strategic choice to prioritize attracting and retaining more complex clients with higher lifetime value over pursuing transactional, low lifetime value clients, which applies to both paid and free segments. The DIY mix between free and paid improved by 140 basis points, and there was strong year-over-year growth in clients with AGI over $100,000, indicating a focus on clients who align with the company's assistance-driven, omnichannel model. “Our focus is on attracting and retaining more complex clients with higher lifetime value rather than pursuing transactional low lifetime value clients that applies to paid and certain categories are paid and of course, they're free.”

HRB

H&R Block (HRB) Q3 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q3 FY26)· Consumer Discretionary· May 6, 2026

Source: earnings call transcript

Executive summary

H&R Block Q3 FY26 — Strong Performance and Raised Full-Year Outlook Driven by Strategic Execution

H&R Block delivered strong Q3 FY26 results, exceeding expectations and leading to a raised full-year outlook. The company's strategy of expert-led, technology-enabled experiences is yielding measurable improvements in client conversion, retention, and a shift towards higher-complexity clients, stabilizing assisted market share. AI integration, such as Sidekick and AI Tax Assist, is amplifying expertise and driving efficiency, positioning H&R Block to capitalize on an AI-driven tax industry by blending technology with human judgment.

Highlights

Revenue increased by 5.3% year-over-year to $2.4 billion in Q3 FY26.
Adjusted EPS grew by 11.9% to $6.02 in Q3 FY26.
Assisted channel market share was maintained flat for the season, marking a significant improvement after two years of progressive gains.
Client retention improved meaningfully, with new clients using 'Second Look' returning at a 600+ basis point higher rate.
Product attach rates increased by 550 basis points due to Client Experience Monitors.

Concerns

Operating expenses increased by 4.8% to $1.4 billion, primarily due to higher field wages and overtime pressure from late-season volume.
Franchise operations volumes fell, with the franchise footprint underperforming company offices by approximately 2% by volume, excluding buybacks.
DIY online paid volumes also fell as the company prioritized higher lifetime value clients over raw volume.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year Revenue	$3.91 billion to $3.92 billion high materiality	FY26	High
Full-year EBITDA	$1.025 billion to $1.035 billion high materiality	FY26	High
Full-year Effective Tax Rate	approximately 14% medium materiality	FY26	High
Full-year Adjusted Diluted EPS	$5.10 to $5.20 high materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Assisted Channel Maintained market share for the season, a significant improvement after two years of progressive gains. Volume increased by 2.1% and Net Average Charge (NAC) increased by 3.9%, reflecting a healthy balance of price, volume, and mix. Low single-digit price increases contributed to NAC growth, with the remainder from mix shift towards more complex clients. Market Share: Flat (for the season)NAC Growth: 3.9%	—	2.1% (volume)	—	—
DIY Channel Strategic choice to prioritize lifetime value over raw volume, leading to a decline in overall DIY volumes. The mix between free and paid DIY improved by 140 basis points, with strong year-over-year growth in clients with AGI over $100,000. Mix (Free vs. Paid): Improved by 140 bps	—	—	—	—
Franchise Operations Royalty revenue decline largely due to franchise buyback strategy (150 acquisitions year-to-date). On a like-for-like basis, the franchise footprint underperformed company offices by approximately 2% in volume, attributed to local market differences and competition. Underperformance vs. Company Offices: 2% (by volume)	—	—	—	—

Product announcements

Product	Type	Timeline
Sidekick	launch	this year
AI Tax Assist	update	this tax season
Second Look	expansion	this tax season
Client Experience Monitors	launch	this season

Deals & partnerships

Franchise owners Acquisition of franchise operations as part of a buyback strategy.

Approximately 150 franchise acquisitions completed year-to-date in FY26. This follows 124 acquisitions in the prior year.

Risks & headwinds

Labor capacity and overtime costs Q3 FY26

Higher field wages, overtime

Mitigation:Opportunity to allocate return volume more effectively across tax pro population, especially as more complex clients are served.

Potential decrease in refund amounts next year next year (FY27)

Refund amounts decrease, balance dues increase

Mitigation:Employers and payroll providers are working on updating withholding tables, which could lead to an adjustment back to normal, potentially reducing the positive tailwind from this season's higher refunds.

Competition for franchise offices this season

Franchise footprint underperforming company offices by ~2% by volume

Mitigation:Company offices are performing better due to strategic initiatives; local market differences and competition with independents are factors.

What to watch in Q4 FY26

Impact of updated withholding tables

next year

Current Average refund amounts up 11%, clients owing IRS down 25%+

Target Refund amounts decrease, balance dues increase

Why it matters

Changes in withholding tables could impact taxpayer behavior and the overall tax season environment, potentially reducing the positive tailwind experienced this year and affecting Assisted channel demand.

I'd say as we start to think about next year, employers and payroll providers are working on updating their withholding payables. So there could be an adjustment back to a normal, and we might see refund amounts decrease and balance dues increase.

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Q&A highlights

How would H&R Block characterize its Assisted market share performance this tax season, considering IRS data and the impact of tax law changes?

H&R Block had a strong season in Assisted, maintaining flat market share relative to industry growth, a significant improvement after two years of progressive gains. Tax law changes resulted in higher average refunds (up 11%) and fewer balance dues (down 25%+), which reduced the 'fear and uncertainty' tailwind typically seen in Assisted, making the flat share performance particularly strong. The company's internal data for market share is based on e-file data, like the IRS reports, from January 1 through the end of the tax season.

“We were able to hold flat market share relative to industry growth. So really pleased with the team's performance.”

asked by Kartik Mehta · answered by Tiffany Mason

2 min read 6 chapters

Detailed narrative

Strategic Focus on Expert-Led, Technology-Enabled Experiences

H&R Block's core strategy centers on providing expert-led, technology-enabled experiences, particularly for clients with complex tax needs. This approach aims to blend human expertise with advanced technology, including AI, to enhance accuracy, build trust, and deliver consistent, high-quality outcomes. The company believes this model is uniquely positioned to succeed in an AI-driven future where accountability and judgment remain critical, differentiating it from purely digital or independent offerings.

Assisted Channel Market Share Stabilization and Performance

After two years of improving trends, H&R Block successfully maintained its assisted channel market share this tax season, holding its position in a competitive environment. This consistency was observed throughout the season, reflecting stronger execution. The company's value proposition resonated strongly with clients seeking confidence, trust, and judgment, leading to a greater mix shift towards higher complexity clients, particularly those with over $100,000 AGI.

Impact of AI and Technology on Client and Tax Pro Experience

H&R Block is leveraging AI to automate mechanical tasks in tax preparation, freeing up tax professionals to focus on relational aspects and advice. Examples include 'Sidekick,' an AI-enabled tax pro assistant that saw strong adoption, and 'AI Tax Assist,' which supported 4.1 million client messages, an 88% increase year-over-year.

The company also scaled its 'Second Look' program using AI, allowing more clients to benefit from automated prior-year transcript reviews and improving new client retention by over 600 basis points.

Client Experience Improvements and Conversion Drivers

Improvements in client experience drove stronger conversion and higher retention rates. A personalized pre-appointment experience reduced friction and guided clients more effectively, leading to higher conversion. The introduction of Client Experience Monitors in offices allowed clients to explore add-on products self-guided, resulting in a 550 basis point increase in product attach rates and greater client comfort with the process.

These initiatives reinforce the quality of the experience and client responsiveness.

DIY Channel Strategy and Lifetime Value Prioritization

In the DIY channel, H&R Block is strategically prioritizing client lifetime value over raw volume, acknowledging that not all market share is equal due to free and paid dynamics. This focus aims to attract and retain clients more likely to build long-term relationships, even if it means a decline in overall DIY volumes.

The company saw its DIY mix between free and paid improve by 140 basis points, with strong growth in clients with over $100,000 AGI, indicating a healthier and more durable business model.

Capital Allocation and Shareholder Returns

H&R Block maintains a disciplined capital allocation strategy, prioritizing investment in the business, growing the dividend, and returning excess capital to shareholders through share repurchases. In the first nine months of the fiscal year, the company generated $586.7 million in operating cash flow and returned $560.9 million to shareholders.

The Board approved an incremental $100 million for share repurchases in Q4 FY26, taking advantage of stock price dislocation and bringing the full-year total to $500 million.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.