Q2 2022 H & R Block Inc Earnings Call
Speaker 1: Ladies and gentlemen, thank you for standing by and welcome to H&R Block's second quarter fiscal 2022 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 1 on your telephone.
Ladies and gentlemen, thank you for standing by and welcome to H&R Block second quarter fiscal 2022 financial results Conference call. At this time, all participants are in a listen only mode.
After the speaker's presentation, there will be a question answer session back a question. During the session you will need to press star one on your telephone. Please be advised that today's conference maybe recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today, Mccaleb, Galena Vice President Investor.
Speaker 1: Please be advised that today's conference may be recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Michaela Galina, Vice President, Investor Relations. Please go ahead.
Relations. Please go ahead.
Speaker 2: Thank you, operator. Good afternoon and welcome to H&R Block's second quarter fiscal 2022 financial results conference call.
Thank you operator, good afternoon, and welcome to H&R block second quarter fiscal 2022 financial results Conference call.
Speaker 2: Joining me are Jeff Jones, our president and chief executive officer, and Tony Bowen, our chief financial officer.
Joining me are Jeff Jones, our President and Chief Executive Officer, and Tony Bowen, Our Chief Financial Officer.
Earlier today, we issued a press release and presentation that can be downloaded or viewed live on our website at investors Dot HR block Dot com.
Speaker 2: Earlier today we issued a press release and presentation that can be downloaded or viewed live on our website at investors.hrblock.com. Our call is being broadcast and webcast live and a replay will be available on the website for 14 days.
Our call is being broadcast and webcast live and a replay will be available on the website for 14 days.
Speaker 2: Before we begin, I'd like to remind listeners that comments made by management may include forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties, and actual results could differ from those projected in any forward-looking statement due to numerous factors.
Before we begin I would like to remind listeners that comments made by management may include forward looking statements within the meaning of federal Securities laws. These statements involve material risks and uncertainties and actual results could differ from those projected.
Any forward looking statement due to numerous factors for a description of these risks and uncertainties. Please see our annual report on Form 10-K , and quarterly reports on Form 10-Q as updated periodically with our other SEC filings. Please.
Speaker 2: For a description of these risks and uncertainties, please see our annual report on Form 10K in quarterly reports on Form 10Q as updated periodically with our other SEC filing.
Speaker 2: Please note the content of this call contains time-sensitive information, accurate only as of today, February 1, 2022. H&R Block undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances after the date of this call. With that, I will now turn it over to Jeff. Good afternoon.
Please note the content of this call contains time sensitive information accurate only as of today February one 2022.
H&R block undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances. After the date of this call with that I will now turn it over to Jeff.
Good afternoon, everyone and thanks for joining us we.
Speaker 3: We have made significant progress in preparing for this year's tax season and executing against block horizons, and we're happy to be with you today.
We have made significant progress in preparing for this year's tax season, and executing against block Horizons and were happy to be with you today.
Speaker 3: I'll begin our prepared remarks by sharing second quarter highlights and discuss why we feel well positioned for tax season 22.
I will begin our prepared remarks by sharing second quarter highlights and discuss why we feel well positioned for tax season in 'twenty two.
Speaker 3: that will provide color on our strategic imperatives, including the launch of Spruce, our new mobile banking platform.
Then I'll provide color on our strategic imperatives, including the launch of spruce, our new mobile banking platform.
Speaker 3: Finally, Tony will review our financials, outlook, and how we're creating value for shareholders.
Finally, Tony will review, our financials and outlook and how we're creating value for shareholders.
Speaker 3: Turning to our Q2 results, we built on the momentum from Q1 as revenue increased 12%.
Turning to our Q2 results we built on the momentum from Q1 as revenue increased 12%.
Speaker 3: We are continuing to appropriately invest while returning capital to shareholders through dividends and buybacks.
We are continuing to appropriately invest low returning capital to shareholders through dividends and buybacks.
Speaker 3: and our repurchases have reduced shares outstanding by 7% so far this fiscal year.
And our repurchases have reduced shares outstanding by 7% so far this fiscal year.
Coming off a strong tax season last year, we feel well positioned to serve clients in 'twenty two.
Speaker 3: Coming off a strong tax season last year, we feel well positioned to serve clients in 22.
Speaker 3: We have a compelling value proposition and strong customer metrics and feedback.
We have a compelling value proposition and strong customer metrics and feedback.
The season is underway and we expect filers to seek help as they navigate the ongoing pandemic.
Speaker 3: The season is underway and we expect filers to seek help as they navigate the ongoing pandemic, tax credits and unemployment.
Tax credits and unemployment.
Speaker 3: To help navigate these challenges, we have fine-tuned our marketing against even more precise audience...
To help navigate these challenges we have fine tuned our marketing against even more precise audience segments and continue to optimize our messages and channels to ensure the most efficient mix of advertising spend.
Speaker 3: and continue to optimize our messages and channels to ensure the most efficient mix of advertising spend. Customer feedback.
Customer feedback has been loud and clear.
Speaker 3: Help is both what they need and what they know block for. So we've leaned into that message.
Help is both what they need and what they know block four so we've leaned into that messaging.
Speaker 3: Our Help is Here campaign highlights all the ways we can help consumers.
Our help us here campaign highlights all the ways, we can help consumers.
Speaker 3: Virtually to in person, DIY to fully assisted, and everything in between.
Virtual lead to in person.
Why to fully assisted and everything in between.
For decades clients have trusted our tax pros to get their biggest possible refund guaranteed.
Speaker 3: For decades, clients have trusted our tax pros to get their biggest possible refund guaranteed.
Speaker 3: Our 60,000 tax froze have unmatched experience, averaging 10 years at block, which means we are well equipped to handle clients of any complexity.
Our 60000 tax pros have unmatched experience.
Averaging 10 years at block, which means we are well equipped to handle clients of any complexity.
Speaker 3: We are leading the conversions of digital capabilities with human expertise and believe our ongoing technology investments and digital experience will continue to enable us to attract new younger customers.
We are leading the convergence of digital capabilities with human expertise and believe our ongoing technology investments and digital experience, we will continue to enable us to attract new younger customers.
Speaker 3: through the block experience imperative, we've increased our focus on retail and crypto trading by adding functionality in DIY, enhanced training for tax professionals, and specific marketing acquisition messages.
Through the block experience imperative, we've increased our focus on retail and crypto trading by adding functionality and DIY.
Enhanced training for tax professionals and specific marketing acquisition messages.
Speaker 3: In the DIY flow, we optimize onboarding and navigation in order to improve conversion from registration to completion. And we've seen early success based on these changes.
In the DIY flow, we optimized onboarding and navigation in order to improve conversion from registration to completion and we've seen early success based on these changes.
We also advanced the product to identify clients, who may need help along the way in order to increase adoption of online to assist and tax Pro review.
Speaker 3: We also advance the product to identify clients who may need help along the way in order to increase adoption of online assist and tax pro review.
Speaker 3: I'm very happy with the progress we've made over the last several years. And our software continues to be awarded top ratings from third parties, such as Bank Rate and Nerd Wallet.
I'm very happy with the progress we've made over the last several years.
Our software continues to be awarded top ratings from third parties, such as bank rate in nerd wallet.
In addition to digital capabilities, we continue to test ways to improve the efficiency of our labor and physical footprint.
Speaker 3: In addition to digital capabilities, we continue to test ways to improve the efficiency of our labor and physical footprint.
For example in assisted our innovative fulfillment network allows customers to provide their data to a centralized SKU.
Speaker 3: For example, in Assisted, our Innovative Filmmet Network allows customers to provide their data to a centralized queue and then be served by any pro who has capacity regardless of where they are physically located.
And then be served by any pro who has capacity regardless of where they are physically located.
Speaker 3: This provides efficiency for both our clients and our network.
This provides efficiency for both our clients and our network.
Speaker 3: We're also leveraging the same technology with outpost locations for drop-off returns as we continue to evolve and better utilize tax pro capacity.
We're also leveraging the same technology with outpost locations for drop off returns as we continue to evolve and better utilize tax pro capacity.
Speaker 3: In summary, we feel good about our consumer tax business.
In summary, we feel good about our consumer tax business.
Turning to our small business imperative. This growing segment offers promising opportunity to expand client services year round with both wave and block advisors together.
Speaker 3: Turning to our small business imperative, this growing segment offers promising opportunity to expand client services year round with both wave and block advisors. Together we are better positioned than ever.
Together, we are better positioned than ever to serve this market.
Speaker 3: Wave is focused on the DIY small business owner, while BlockAdvisors is focused on the small business owner who needs expert help.
Wave is focused on the DIY small business owner, while block advisors is focused on the small business owner who needs expert help.
First let's discuss wave.
Year over year revenue again grew more than 30% driven by increasing the value of existing customers as well as adding new clients.
Speaker 3: Year over year revenue again grew more than 30%. Driven by increasing the value of existing customers, as well as adding new clients.
Speaker 3: In the last year, Wave doubled the number of customers paying for more than one product.
In the last year wave doubled the number of customers paying for more than one product.
Speaker 3: a testament to the work being done to build a full ecosystem of services for the small business owner.
A testament to the work being done to build a full ecosystem of services for the small business owner.
Speaker 3: I continue to be pleased with the progress this business is making.
I continue to be pleased with the progress of this business is making.
Speaker 3: Regarding block advisors, nearly all of our company offices and approximately two thirds of our franchise locations are equipped to offer small business services.
Regarding block advisors, nearly all of our company offices and approximately two thirds of our franchise locations are equipped to offer small business services.
Speaker 3: We've raised the bar with tax pro-education, more sophisticated lead generation, and better tailored marketing.
We've raised the bar with tax pro education, more sophisticated lead generation and better tailored marketing.
Speaker 3: As you recall, last year we certified over 20,000 tax professionals in small business.
As you recall last year, we certified over 20000 tax professionals in small business.
Speaker 3: This year, more than half those tax bros elected to take a new, even more advanced certification, enabling them to provide specialized advice to our most sophisticated clients.
This year more than half those tax pros elected to take a new even more advanced certification enabling.
Enabling them to provide specialized advice to our most sophisticated clients.
Speaker 3: For example, some of these services include complex payroll and bookkeeping solutions.
For example, some of these services include complex payroll and bookkeeping solutions.
Speaker 3: estimating quarterly tax payments to optimize cash flow throughout the year.
Estimating quarterly tax payments to optimize cash flow throughout the year and.
Speaker 3: and complex strategies to help deliver the most tax-advantaged outcomes.
And complex strategies to help deliver the most tax advantaged outcomes.
Speaker 3: We've also taken a step forward in our cross-selling efforts with a new lead generation and sales flow program that automates the process of referring clients from tax professionals to our bookkeepers as we continue to grow year-round services.
We've also taken a step forward in our cross selling efforts with a new lead generation and sales flow program that automates the process of referring clients from tax professionals to our bookkeepers as we continue to grow year round services.
Now, let me share more about our third imperative financial products.
Speaker 3: Now let me share more about our third imperative, financial products.
Our mission is to develop solutions that create confidence and ease the financial burden felt by too many <unk>.
Speaker 3: Our mission is to develop solutions that create confidence and ease the financial burden felt by too many, while simultaneously enriching our client relationships year round.
Simultaneously enriching our client relationships year round.
Just about 10 days ago, we launched spruce, our mobile banking platform.
Speaker 3: Just about 10 days ago, we launched Spruce, our mobile banking platform. This is a meaningful milestone.
This is a meaningful milestone in our journey.
We spend 12 million hours in conversations with clients every year about their financial challenges and dreams.
Speaker 3: We spend 12 million hours in conversations with clients every year about their financial challenges and dreams.
Combined with that experience extensive customer research has highlighted the needs and opportunities in this market.
Speaker 3: Combined with that experience, extensive customer research has highlighted the needs and opportunities in this market.
We know that two thirds of the U S population struggle with one or more aspects of their finances.
Speaker 3: We know that two-thirds of the U.S. population struggle with one or more aspects of their finances, including spending, safety...
Including spending saving and planning.
Speaker 3: We also know that the current financial needs of 8 million of our existing clients are not well served.
We also know that the current financial needs of $8 million of our existing clients are not well served.
Additionally, we already have a large base of Emerald card users, who deposit 9 billion and refunds annually.
Speaker 3: Additionally, we already have a large base of Emerald Card users who deposit $9 billion in refunds annually.
Speaker 3: While several competitors exist, what hasn't existed until today is a mobile-first banking platform from a trusted brand with 66 years of knowledge from helping people with their money.
While several competitors exist what hasnt existed until today is a mobile first banking platform from a trusted brand with 66 years of knowledge from helping people with their money.
When we look at the competitive landscape, we see a tale of two halves, one our banks, who have brand recognition, but generally lack trust and modern customer experiences.
Speaker 3: When we look at the competitive landscape, we see a tale of two halves. One, our banks.
Speaker 3: who have brand recognition but generally lack trust in modern customer experience.
Speaker 3: And two, challenger banks that are feature-rich but don't have deep brand recognition and are trying to build trust.
And to challenger banks that are feature rich, but don't have deep brand recognition and are trying to build trust.
Speaker 3: Spruce bridges that gap by combining leading technology and features with our trusted brand and established financial relationships.
Spruce bridges that gap by combining leading technology and features with our trusted brand and establish financial relationships.
I am proud of the platform, we launched on day one.
Speaker 3: I am proud of the platform we launched on day one.
Speaker 3: While others have spent years building what their products are today, we came to market with a very robust feature set. Let me take you through some of the highlights.
While others have spent years building what their products are today.
We came to market with a very robust feature set let.
Let me take you through some of the highlights.
Speaker 3: We have long believed in providing transparency to our customers.
We have long believed in providing transparency to our customers.
Speaker 3: That's why we launched upfront transparent pricing for our tax services a few years ago.
That's why we launched upfront transparent pricing for our tax services, a few years ago and.
Speaker 3: And that's why there are no monthly or sign-up fees with Spruce.
And Thats why there are no monthly or sign up fees with spruce.
Speaker 3: We also pride ourselves on low barriers to entry, such as no minimum balances to open accounts.
We also pride ourselves on low barriers to entry.
As no minimum balances to open accounts.
Speaker 3: Its unique savings feature, Spruce Rewards, helps consumers with their goals through personalized notifications and automatic cashback offers from over 10,000 retailers, including Costco, Sam's Club, H&M, Adidas, Office Depot, Shake Shack, and Finish Line.
It's unique savings feature spruce rewards helps consumers with their goals through personalized notifications and automatic cashback offers from over 10000 retailers, including Costco Sam's club H and M. Adidas Office depot, Shake Shack and finish line.
Speaker 3: It also provides clients access to a free credit score and helps them understand the factors that impact them.
It also provides clients access to a free credit score and helps them understand the factors that impacted.
Speaker 3: In addition, customers can get paid up to two days early and get access to over 55,000 fee-free ATMs.
In addition customers can get paid up to two days early and get access to over 55000 fee free Atms.
Additionally, spruce features tax refund recommendations that enable clients to become effective at saving a part of their refund.
Speaker 3: Additionally, SPRUCE features tax refund recommendations that enable clients to become effective at saving a part of their refund.
During this tax season, we are introducing clients to the platform and the DIY experience and beginning to market to our assisted customers.
Speaker 3: During this tax season, we're introducing clients to the platform and the DIY experience and beginning to market to our assisted.
We will be working everyday to acquire clients and increased deposits and their spruce accounts.
Speaker 3: We will be working every day to acquire clients and increase deposits in their Spruce accounts.
Speaker 3: The revenue model is largely driven through interchange fees when clients transact, and we have a strong relationship and favorable economics with our partner, MetaBank.
The revenue model is largely driven through interchange fees when clients transact and we have a strong relationship and favorable economics with our partner Meadowbank.
We invite you to learn more at a virtual event for analysts in March where we will demo the product and take a deeper dive into its features more details will come in the next few weeks.
Speaker 3: We invite you to learn more at a virtual event for analysts in March, where we will demo the product and take a deeper dive into its features. More details will come in the next few weeks.
Speaker 3: Before turning it to Tony, let me emphasize how strong I feel about our positioning today, the progress we are making, and the path we are on. We continue to advance our operational excellence. Blur the line.
Before turning it to Tony.
Let me emphasize how strong I feel about our positioning today the progress we are making and the path we're on.
We continue to advance our operational excellence.
Blurred the lines between human health and technology.
Speaker 3: drive brand relevance and make meaningful and innovative progress on our strategic imperative.
Drive brand relevance and make meaningful and innovative progress on our strategic imperatives.
Speaker 3: I am more than excited than ever about where we are going. Now, Tony will cover our financial results.
I am more than excited than ever about where we're going.
Now Tony will cover our financial results.
Thanks, Jeff and good afternoon, everyone.
Speaker 4: Today I will review our results from the second fiscal quarter, discuss our outlook, and our financial progress and capital allocation strategy.
Today I will review our results from the second fiscal quarter discuss our outlook and our financial progress and capital allocation strategy.
For the second quarter of fiscal 'twenty, two we delivered approximately $159 million of revenue, which increased 12% or $17 million over the prior year.
Speaker 4: For the second quarter of fiscal 22, we delivered approximately $159 million of revenue, which increased 12% or $17 million over the prior year.
The increase was primarily driven by the strength in Emerald card as well as payment volumes away.
Speaker 4: The increase was primarily driven by the strength in Emerald card, as well as payment volumes at WAVE.
Total operating expenses were $436 million, an increase of $15 million for the prior period or 4% driven by higher compensation as well as banking charges, partially offset by lower depreciation and amortization expenses.
Speaker 4: Total operating expenses were $436 million, an increase of $15 million to the prior period, or 4%, driven by higher compensation, as well as banking charges, partially offset by lower depreciation and amortization expenses.
Speaker 4: Interest expense was $23 million, an increase of $1.6 million or 7%.
Interest expense was $23 million, an increase of $1 6 million or 7% in.
Speaker 4: entirely due to the $500 million notes we preemptively issued last June .
Entirely due to the $500 million notes, we preemptively issued last June .
Speaker 4: As a reminder, the interest on the newly issued notes is about half of the interest on the maturing notes, which we plan to pay off by the end of the fiscal year.
As a reminder, the interest on the newly issued notes is about half of the interest on the maturing notes, which we plan to pay off by the end of the fiscal year.
Speaker 4: For the quarter, our pre-tax loss was $299 million compared to $300 million in the prior year.
For the quarter, our pre tax loss was $299 million compared to $300 million in the prior year.
Speaker 4: Our effective tax rate was 37% as we realized the discrete tax benefit during the quarter.
Our effective tax rate was 37% as we realize the discrete tax benefit during the quarter.
We continue to expect the effective tax rate for the full year to be in the 16% to 18% range.
Speaker 4: We continue to expect the effective tax rate for the four year to be in the 16 to 18 percent range.
Loss per share from continuing operations improved from $1 38 to $1 nine while adjusted loss per share from continuing operations improved from $1 28 to $1 two.
Speaker 4: Loss per share from continuing operations improved from $1.38 to $1.09 while adjusted loss per share from continuing operations improved from $1.28 to $1.02.
Speaker 4: Regarding this continued operations, there were no changes to accrued contingent liabilities related to St. Cain in during the quarter.
Regarding discontinued operations, there were no changes to accrued contingent liabilities related to sand canyon during the quarter.
For additional information on sand Canyon, please refer to disclosures in the Companys reports on forms 10-K, and 10-Q and other SEC filings.
Speaker 4: For additional information on Tin Canyon, please refer to disclosures in the company's reports on Forms 10-K and 10-Q and other SEC filings.
Speaker 4: Overall, we had a strong first half, and are again reiterating our fiscal year 22 outlook.
Overall, we had a strong first half and are again reiterating our fiscal year 'twenty two outlook.
Speaker 4: And we remain confident that over the long term we can grow revenue 3 to 6% with the bottom line growing even faster than the top line.
And we remain confident that over the long term, we can grow revenue, 3% to 6% with the bottom line growing even faster than the top line.
Speaker 4: Please note that our next update on tax season results, filing volumes and financial performance will be on our fiscal third quarter call in early May.
Please note that our next update on tax season results filing volumes and financial performance will be on our fiscal third quarter call in early may.
Turning to share repurchases, we continue to be aggressive in Q2.
Speaker 4: Turning to share repurchases, we continue to be aggressive in Q2. We bought 6.6 million shares at an average price of $24.10, $129 million and we chart another 4% of our float.
We bought $6 6 million shares at an average price of $24 10.
Totaling a $159 million.
And retired another 4% of our float.
Speaker 4: In total, in the first half of the fiscal year, we have repurchased $325 million, more than 7% of shares outstanding.
In total in the first half of the fiscal year, we have repurchased $325 million more than 7% of shares outstanding.
Speaker 4: We have 239 million dollars remaining on our authorization to June 30th.
We have $239 million remaining on our authorization through June 30.
Speaker 4: We believe this is a good use of capital, especially today's share price.
We believe this is a good use of capital, especially at today's share price.
Speaker 4: Since 2016, we have retired more than a quarter of our shares outspain.
Since 2016, we have retired more than a quarter of our shares outstanding.
Speaker 4: Overall, I feel very good about where we are and look forward to finishing the year strong. With that, I will now turn it back over to Jeff for some closing remarks.
Overall I feel very good about where we are and look forward to finishing the year strong with that I will now turn it back over to Jeff for some closing remarks.
Speaker 3: Thanks, Tony. In summary, we're proud of the progress we've made, the momentum in our business, and the path that we're on.
Thanks, Tony.
In summary, we're proud of the progress we've made the momentum in our business and the path that we're on.
Speaker 3: We're confident in our ability to drive shareholder value with both our capital allocation approach today and our future with block arises.
We're confident in our ability to drive shareholder value with both our capital allocation approach today, and our future with block Horizons.
Speaker 3: As we end our prepared remarks, I owe a debt of gratitude to our associates and business partners for all they are going.
As we end our prepared remarks, I owe a debt of gratitude to our associates and business partners for all they are going.
First I want to thank the team that built spruce and brought it to market.
Speaker 3: First I want to thank the team that built Spruce and brought it to market. I'm so pleased with what they've accomplished in such a short period of time.
So pleased with what they've accomplished in such a short period of time.
Second the team at wave. This group continues to execute and add value to small business owners and we've appreciated their steadfast efforts throughout the pandemic.
Speaker 3: Second, the team at Wave. This group continues to execute and add value to small business owners. And we've appreciated their steadfast efforts throughout the pandemic.
Next our hard working associates franchisees in tax pros, who inspire confidence in our clients and communities everywhere.
Speaker 3: Next are hardworking associates, franchisees, and tax grows who inspire confidence in our clients and communities everywhere.
Speaker 3: Having already spent multiple days in the field, I can tell you they are in full force this tax season and I can't thank them enough.
Having already spent multiple days in the field I can tell you. They are in full force this tax season, and I can't thank them enough.
Last but certainly not least.
Speaker 3: Last but certainly not least, I want to personally thank Tom Gurkey, who recently retired as General Counsel in Chief Administrative Office.
I want to personally thank Tom Gerke, who recently retired as general counsel and Chief administrative officer.
Speaker 3: Thomas provided strong leadership and strategic counsel over the last 10 years and has been an invaluable partner to me. We wish him all the best. Now.
Tom has provided strong leadership and strategic council over the last 10 years and has been an invaluable partner to me.
We wish him all the best.
Now we will open the line for questions.
Thank you as a reminder to ask a question you will need to press star one on your telephone.
Speaker 1: Thank you. As a reminder to ask a question, you'll need to press Star 1 on your telephone through a DRR question. Press the pound.
Your question press the pound key.
Speaker 1: Our first question comes from Carpic Mehta with North Coast Research. You might proceed with your question.
Our first question comes from Kartik Mehta with Northcoast Research you May proceed with your question.
Hey, Jeff Good afternoon, Hey, Tony.
Speaker 5: Hey Jeff, good afternoon. Hey Tony. Jeff, I wanted to ask you about just recruiting tax repairs and generally just recruiting for H in our block. Obviously, every company is going through the difficult time of trying to recruit people and I'm interested for block stands, especially on that tax repair side.
Chip I wanted to ask you about just recruiting tax preparers and generally just recruiting for H&R block. Obviously every company is going through.
Therefore, what time of trying to recruit people and I'm interested or blocked and especially on the tax repair side.
Speaker 3: Hey, Cardig, I'm very pleased to say that we had an excellent hiring year this year. So we think about hiring in two buckets, retention of prior tax pros, and then obviously new tax pros each year.
Hey, Kartik I am very pleased to say that we had an excellent hiring year. This year. So we think about hiring in two buckets retention of prior tax pros and then obviously new tax pros each year.
Speaker 3: and really given the strength of our business last year, which translated into the earnings of tax pros last year, we had extremely high retention of prior tax pros.
And really given the strength of our business last year, which translated into the earnings of tax pros last year, we had extremely high retention of prior tax pros.
And then as you may recall every year, we run a nationwide income tax course, and higher to the best of that course as year one tax pros.
Speaker 3: And then as you may recall every year we run a nationwide income tax course and hire the best of that course as year one tax pros. And we were able to do that very successfully. It really in all districts across the company this year.
And we were able to do that very successfully at really at all districts across the company this year.
Speaker 5: And then just just I know we've talked a little bit about price before and you've given your thoughts.
And then just chip I know, we've talked a little bit about price before and you've given your thoughts.
Speaker 5: Obviously the cost of everything is going up and inflation is a big part of the story of the economy. I'm wondering if you've changed your perspective at all on what type of price increases might be appropriate for the upcoming tax season.
Honestly the cost of everything is going up in inflation.
Inflation is a big part of the story and the economy I'm wondering if you've changed your perspective at all on what type of price increases might be appropriate for the upcoming tax season.
Speaker 3: Yeah, so, you know, we talked about a couple points of price in the assisted business. And that is what we're planning to execute as the season gets underway. You know, as we continue to look at feedback from clients, we know that we're starting this year with very high retention, high price for a value paid for services. So we feel that's an appropriate increase.
Yes, so we talked about a couple of points of price in the assisted business.
And that is what we're planning to execute as the season gets underway.
As we continue to look at feedback from clients. We know that we're starting this year with very high retention high price for value paid for services. So we feel that's an appropriate increase.
Speaker 3: we certainly don't want to get back to the days of really driving top line exclusively through price so we think it's a good first step as we move back into what we believe we can start taking price you know moving forward and assisted and then in d.i.y. you know we were successful last year uh... at moving a number of levers to drive price and act about twenty percent
We certainly don't want to get back to the days of really driving topline exclusively through price. So we think it's a good first step as we move back into what we believe we can start taking price moving forward in assisted and then in DIY.
We were successful last year at moving a number of levers to drive price in that about 20% and we will continue to be opportunistic and follow the market leader here with how we move price in DIY.
Speaker 1: and we'll continue to be opportunistic and follow the market leader here with how we move price in DIY. Thank you very much, I appreciate.
Alright, Thank you very much I appreciate it thanks Kartik.
Thank you. Our next question comes from Hamzah <unk> with Jefferies. You May proceed with your question.
Speaker 1: Thank you. Next question comes from Hamza Mazar with Jeff Lee. See me proceed with your question.
Hi, This is Mario <unk> filling in for Hamzah.
Speaker 6: Hi, this is Mario Cordellacci, filling in for Hamza. You just reintegrated your 3 to 6% growth. Could you just remind us how you get to 6% versus the 3%. What are the building blocks between those two figures? And then also, could you just talk about the timeframe, or maybe ask a different way around the timeframe, is your timeline to get there more back and loaded on your 5% growth.
Just.
Sorry can you just reiterated the 3% to 6% growth.
Could you just remind us how you get to 6% versus the 3% what are the building blocks between those two figures and then also could you just talk about the timeframe.
Or maybe asked a different way around the timeframe is your timeline to get there more backend loaded.
And your five year plan.
Speaker 3: Thanks, Mario. Let me just share a few opening comments and then Tony can can jump in as well. One of the things we're really trying to do for you all is break down the components of how we see our ability to drive that kind of growth range. Obviously, it's a range.
Thanks, Mario let me just share a few opening comments and then Tony can jump in as well.
One of the things, we're really trying to do for you. All is broke down the components of how we see our ability.
To drive that kind of growth range, obviously, it's a range.
Speaker 3: But when we look at just holding share or growing share in the assisted industry, we think we can get a point there. When we look at think about the role pricing plays, we think about the role that franchise buybacks play. Those are elements that get us in the 3 to 4% zone before we layer in the real upside from our strategic and paradis and block horizons.
But when we look at.
Just holding share or growing share in the assisted industry. We think we can get a point there when we think about the role pricing plays we think about the role of the franchise buybacks play.
Those are elements that get us in the 3% to 4% zone before we layer in the real upside from our strategic imperatives and block Horizons.
Speaker 3: And so that's why we provided that range. Obviously, we're not starting from scratch with small business and financial products, but we're building new sustainable businesses. But that's really how we think about the building blocks of that price growth. And Tony, please jump in with anything you wanna add.
And so that's why we provided that range, obviously, we're not starting from scratch with small business and financial products, but we're building new sustainable businesses, but thats really how we think about the building blocks of that price growth and Tony Please jump in with anything you want to add.
Yes.
Speaker 2: Yes, it's Michaela. Tony dropped in and is dialing back in, but I would also just like to add to that.
Hey, Jeff It's Makayla, Tony Dropkin is dialing back in fact, I would just like to add to that.
Speaker 2: If you refer back to our Q1 earnings deck, Mario, we broke out a little bit of that growth in more detail. So we think of the low end of that guidance being some amount, small amount of.
If you refer back to our Q1 earnings Zach Mario we broke out a little bit of accuracy in more detail. So we think at the low end of that guidance being some amount small amount.
Speaker 2: modest, low single-digit pricing within the business. That's kind of underpinned by our block experience initiative.
Modest low single digit pricing within the business that kind of underpinned by our block experiencing scan and then you layer on 1% growth from franchise acquisition, another 1% growth from <unk> and then two checkpoint blocker.
Speaker 2: And then you layer on the 1% growth from franchise acquisition, another 1% growth from Wade, and then to just point, block horizons really is upside to that 3% to 6% target. So hope that frames it up a little bit better.
Block Horizon really is upside to that 3% to 6% target and put that frames it up a little bit better.
Got it thanks, and then for my follow up.
Speaker 6: Got it. Thank you. And that's from my follow up. I mean, you guys have always talked about working with the underbanked population. And you just talked about or mentioned your new mobile banking platform. Could you just comment on what your competitive set is and in this environment, I guess, who are you competing with specifically? I know there's a lot of pop ups and new entrance to the market with FinTechs. But I guess could you just comment on that as well?
I mean, you guys have always talked about.
Working with the under banked population and you just talked about or mentioned your new mobile banking platform could you just comment on what your competitive set is and in this environment I guess, who are you competing with specifically I know, there's a lot of pop ups and new entrants in the market with Fintech.
But I guess could you just comment on that as well.
Speaker 3: Yes, absolutely. So there's no question that there are a number of competitors in the Challenger Bank FinTech space.
Yes, absolutely. So there is no question that there are a number of competitors.
In the Challenger Bank Fintech space.
Speaker 3: and that's because the problem in america's large uh... we know that two thirds of americans struggle with some dimension of their financial health uh... and despite the competitors that problem remains and you know this is a large part of our client base if you think about you know call it twenty million clients in america for block we know right off the bat eight million of them consider themselves under bank
That's because the problem in America is large.
We know that two thirds of Americans struggle with some dimension of their financial health.
And despite the competitors that problem remains and this is a large part of our client base.
You think about call. It 20 million clients in America for block, we know right off the bat 8 million of them consider themselves under banked.
Speaker 3: So, you know, the addressable market is large and it includes millions of clients that are currently coming to block.
So the addressable market is large and it includes millions of clients that are currently coming to block.
Speaker 3: When we looked at the competitive landscape and I mentioned this a bit in my prepared remarks, so I'll expand on it. You know, we see that there are obviously the traditional established banks.
When we looked at the competitive landscape.
I mentioned this a bit in my prepared remarks will expand on it.
We see that there are obviously the traditional established banks.
Speaker 3: that are moving more and more into offering great technology and mobile applications. The tech is less and less of a differentiator today, now that many companies have caught up, but they generally haven't been as feature rich. The Fintechs, on the other hand, have had great user experiences, lots of features, and there are multiples of those.
That are moving more and more into offering great technology and mobile applications. The tech is less and less of a differentiator today now that many companies have caught up.
But they generally haven't been as feature rich.
The fintech on the other hand of add great user experiences lots of features.
And there are multiples of those.
Speaker 3: time borrow Sofie Dave Money Lion, you know, are a few. And while they've come out with great products over time, we know that they're starting from scratch in terms of customer acquisition, relationships, building brand awareness, building trust.
Chime Varo sulfide, Dave Moneyline are a few.
And while they have come out with great products over time.
We know that they are starting from scratch in terms of customer acquisition relationships building brand awareness building Trust.
Speaker 3: And so when we combine, you know, the platform that we have launched.
And so when we combine the platform that we've launched.
Speaker 3: with what we know to be a highly trusted brand and block.
With what we know to be a highly trusted brand in block.
Speaker 3: that people are already coming to for financial transactions. That's really the sweet spot of where we see Spruce playing. And, you know, this is our day one when we launched. And, you know, I'm really proud that we come to market with a very feature rich product that compares against many that have been doing this for years. And obviously, as the year plays out and the years play out, we'll continue to add features and functionality for the customer.
That people are already coming to for financial transactions, that's really the sweet spot of where we see spruce playing.
And this is our this is our day one when we launched in <unk>.
Really proud that we come to market with a very feature rich product that compares against many that had been doing this for years and obviously as the year plays out in the years play out we will continue to add features and functionality for the customer.
Great. Thank you so much.
You.
Hey, Jeff Sorry, I had some technical difficulties, but I'm back that's alright.
Speaker 1: Hey Jeff, sorry I had some technical discolors but I'm back on it. That's alright. We're good.
We're good.
Okay.
Speaker 1: Thank you. Our next question comes from George Tongue with Goldman Sachs. He may proceed with your question.
Thank you. Our next question comes from George Tong with Goldman Sachs. You May proceed with your question.
Hi, Thanks, good afternoon.
Speaker 7: Hi, thanks. Good afternoon. Labor represents a significant portion of H&R Block's operating expenses. What are you budgeting for labor cost increases for the upcoming tax season, and how do you expect pricing increases numerically to compare with labor cost increases?
Labor represents a significant portion of H&R block's operating expenses, what are you budgeting for labor cost increases for the upcoming tax season, and how do you expect pricing increases numerically to compare with labor cost increases.
Tony do you want to comment on that and obviously, specifically around how we pay tax pros and what that looks like.
Speaker 3: Tony, do you want to comment on that and obviously specifically around how we pay tax pros and what that looks like?
Speaker 4: Yes, sir. Thanks George for the question. So, you know, I think you know that largely the compensation for tax professionals is a commission-type structure where we pay a percentage based on the revenue that they generate in their book of business.
Yeah sure. Thanks, George for the question. So I think you know that largely the compensation for tax professionals as a commission type structure, where we pay a percentage based on the revenue that they generate in their book of business. So as revenue goes up or down then obviously their compensation is an individual goes up in.
Speaker 4: as revenue goes up or down, then obviously their competition as an individual goes up and down as well. So we always make slight tweaks.
Down as well, so we always make slight tweaks around the edges, but for the most part it's highly correlated with the move in move in revenue. So specific to your question on price as we take price increases the tax professionals would get an incremental amount for that particular tax return all else being equal which would.
Speaker 4: around the edges, but for the most part, it's highly correlated with the move and move and revenue. So, specific your question on price.
Speaker 4: As we take price increases, the tax professionals would get an incremental amount for that particular tax return, all else being equal, which would obviously a portion flow due to them. I think if you look back over the last several years, it runs.
Obviously, a portion flow through to them I think if you look back over the last several years it runs somewhere in the 25% to 28% range, depending on the year as far as what we're paying to tax professionals per the dollar that they generate so obviously.
Speaker 4: somewhere in the 25 to 28% range, depending on the year, as far as what we're paying to tax professionals per the dollar that they generate. So obviously, H&R.
Our block it's.
Speaker 4: a large portion of that benefit, but in the tax professionals also benefit as we drive. In criminal revenue as well as
A large portion of that benefit in the tax professionals also benefit as we drive incremental revenue as well as incremental price.
Got it that's helpful and can you provide your latest views on what the growth rate for assisted volumes at the industry level.
Speaker 7: Got it. That's helpful. And can you provide your latest views on what the growth rate for assisted volumes at the industry level would look like for the upcoming tax season and how you expect volumes at the age of life in a specific compare with the industry?
Look like for this upcoming tax season, and how you expect volumes to H&R block.
Fit to compare with the industry.
Yeah, George I'll take it and Tony can add on a few months. So when we provide our outlook, we still believe that the industry will be flat to slightly down.
Speaker 3: Yeah George, I'll take it and Tony can add on a few once. So when we provide our outlook, we still believe that the industry will be flat to slightly down.
Speaker 3: And the variable there is really about the number of those one-time filers.
And the variable there is really about the number of those onetime filers.
Speaker 3: And so what we've been focused on is communicating with those one-time bothers.
And so what we've been focused on is communicating with those onetime filers.
Speaker 3: ensuring that they understand the benefit of filing again.
Ensuring that they understand the benefit of filing again.
Speaker 3: I think unemployment, child tax credit, those things can be compelling reasons to stay in the system and file. That's really the biggest variable, and for ourselves, we expect that our goal is to hold share, but as we provided in our outlook, flat to slightly down in assisted, again, be driven by those one-time filers.
I think unemployment child tax credit those things can.
Can be compelling reasons to stay in the system and file.
That's really the biggest variable and for ourselves we expect that we will our goal is to hold share, but as we provided in our outlook.
Flat to slightly down in assisted again really driven by those onetime filers.
Yes, I think the only thing I would.
Thanks, George I mean, just given the success, we had last year, bringing in so many incremental new clients from that first time filer base and the fact, George that we gained so much market share last year.
Speaker 4: I mean, just given the success we had last year bringing in so many incremental new clients for that first time, Filer Vase.
Speaker 4: and the fact that we gained so much market share last year, you know, as some of those first-time filers will inevitably go back to the sidelines, even though we're doing everything we can to recruit and retain them to continue to file taxes.
The first time filers will inevitably go back to the sidelines, even though we're doing everything we can to recruit and retain them to continue to file taxes.
Speaker 4: That's why we're saying that it could be a slight headwind for the industry and then H&R blocks, obviously, would have our share impact as a result of that. So it's just...
That's why we're saying that it could be a slight headwind for the industry and then H&R block's, obviously, we'd have our share impact as a result of that.
Speaker 4: But you know, when you look at it over the two year basis, we're still gonna be up in clients and up in share. It's just a slight reversion based off the growth we had last year. My shot.
When you look at it over the two year basis, we're still going to be up in clients and helping share is just a slight reversion based off the growth we had last year.
Yep makes lot of sense, thanks very much thank.
Thank you Serge.
Thank you. Our next question comes from Scott Schneeberger with Oppenheimer. You May proceed with your question.
Speaker 1: Hey, Karen, next question from some Scotch, Steve Ritter with Oppenheimer. Can you make a see-through question?
Speaker 8: Thanks very much. Good afternoon. And there have been some questions around.
Thanks, very much good afternoon.
And there have been some questions around.
Speaker 8: assisted pricing just curious of following up on on
Assistant pricing.
Just curious following up on <unk>.
Speaker 8: DIY pricing, we track that pretty closely in the industry and see that basically flat year over year for you starting the tax season.
<unk> pricing.
We track that pretty closely in the industry and see that.
Basically flat year over year for you starting the tax season, and now you've made comments in the past seeing.
Speaker 8: Now you may comment in the past seeing in DIY opportunity to grow the net average chart. And Jeff, you just mentioned earlier, our product's question.
Seeing in DIY opportunity to to.
To grow that net average charge and Jackie just mentioned earlier on <unk> question.
That you would view track the industry leader in kind of follow there just curious what is the strategy for later the tax season, presuming youre still going to work.
Speaker 8: that you track the industry leader and kind of follow there. Just curious, what is the strategy for later in the tax season, presuming you're still going to look to get some pricing this year in the DIY category? Thanks.
To get some pricing this year in the DIY category.
Speaker 3: Yeah, thank you. I mean, I think the answer in DIY is we have the flexibility to be very dynamic in pricing. So it's not a decision we have to make now on what we'll do at the end of the season. We'll be able to watch how the season unfolds in a number of ways. Obviously the list price and then what happens with mix. And then finally, what are we seeing in terms of attach?
Thank you I mean I think the.
The answer in DIY as we have the flexibility to be very dynamic in pricing. So it is not a decision we have to make now on what we will do at the end of the season, we will be able to watch how the season unfolds and a number of ways. Obviously the list price and then what happens with mix and then <unk>.
Finally, what are we seeing in terms of attach.
Speaker 3: products like Online Assist in particular, which we've seen year over year, kind of 50% growth rate the last couple of years.
Products like online assist in particular, which we have seen year over year kind of 50% growth rate the last couple of years.
Speaker 3: And we'll always be dynamic, we'll test different pricing, and we'll see how the category moves as the season plays out. But we've done a lot of work since last year, just to revisit how do we continue to improve from registration to conversion in DIY? What are we doing to improve the feature set around things like crypto, et cetera?
And we will always be dynamic, we'll test different pricing and we'll see how the category moves as the season plays out.
But we've done a lot of work since last year just to revisit how do we continue to improve from registration to conversion in DIY.
What are we doing to improve the feature set around things like crypto et cetera.
Speaker 3: And then a lot of changes in how we think about marketing for DIY, including starting marketing much earlier, refining our audience segments, et cetera. So a lot of things happening in the DIY business to go along with price.
And then a lot of changes in how we think about marketing for DIY, including starting marketing much earlier refining our audience segments et cetera. So.
A lot of things happening in the DIY business that go along with the price.
Great. Thanks.
Speaker 8: Next question. Curious on last year, a industry growth category was increased investor activity at brokerages and stocks rates and such, creating more.
Next question curious on.
Last year, a industry growth category was.
Increased investor activity.
Brokerages.
Stock trades in such creating more premium a premier level Act.
Speaker 8: premium or premier level activity. Just curious what you see there on an industry level for this tax season versus that big move up last year. And then specifically, I mean, you mentioned crypto, if that plays in, how H&R Block is positioning within that category in this tax season.
Activity just curious what you see there on an industry level four.
This tax season versus that big move up last year, and then specifically I mean, you mentioned crypto it that plays in.
And our market positioning within that category in this tax season.
Speaker 3: Yeah, you got it. And again, Tony, please weigh in here. But we absolutely saw an increase in those scheduled defilers last year, both in assisted and DIY, both retail investing and crypto. So two different things, same theme. And that's why we really leaned in this year to say, how do we strengthen our offering in a few different ways? Number one is improving the user flow in the DIY product.
You got it and again Tony please weigh in here, but we absolutely saw an increase in those scheduled <unk> filers last year, both in assisted and DIY, both retail investing and crypto. So two different things same theme.
And Thats why we really leaned in this year to say how do we strengthen our offering in a few different ways number one is improving the user flow and the DIY product.
Speaker 3: Number two is more advanced training for our tax professionals at retail to understand those dynamics to provide better advice.
<unk> two is more advanced training for our tax professionals at retail to understand those dynamics to provide better advice and.
Speaker 3: And number three is leaning into those messages in our advertising, where we are specifically talking about our expertise in those areas.
Number three is leaning into those messages in our advertising, where we are specifically talking about our expertise in those areas.
Speaker 3: So we'll do all three of those things this year and continue to watch the macro trends.
So we will.
We'll do all three of those things this year and continue to watch the macro trend.
Great. Thanks, and just a quick last one for me and I think it probably is not going to be much of an answer but that's why I'm asking it in case. It is we're only one week into the tax season, I know, it's really too early to comment on any grand themes, but just anything you're seeing.
Speaker 8: Great thanks. And just a quick last one for me and I think it probably is not going to be much of an answer, but I'm asking you in case it is. We're only one week into the taxis. And so I know it's really to comment on any grand themes, but just anything you're seeing that's unique this year that may be surprising to us that wasn't anticipated or just too early to tell any themes at this point.
That unique this year that may be surprising.
To us that wasn't anticipated or just too early to tell any.
At this point.
Speaker 3: Yeah, I hate to confirm what you thought might be the answer, but it's too early to tell on any major themes. Obviously, you know, one of the things we're paying close attention to are the child tax credit letters.
Yeah, I hate to confirm what you thought might be the answer but it's too early to tell on any major themes obviously.
One of the things, we're paying close attention to.
Are the child tax credit letters.
Speaker 3: helping our clients understand the importance of those letters of matching the dollar amount to their return to not be pulled for special processing. So that's something that's on our radar for sure just given the tens of millions of those letters that went out. But in terms of results or real trends, it's just been a week. Great, thanks.
Helping our clients understand the importance of those letters of matching the dollar amount to their return to not be pulled for special processing.
So thats something thats on our on our radar for sure just given the tens of millions of those letters that went out but in terms of results are real trends.
It's just been a week.
Great. Thanks, Thanks, Jeff Thank you.
Thank you. Our next question comes from Alex Paris with Barrington Research you May proceed with your question.
Speaker 1: Thank you. Our next question comes from Alex Paris with Barrington Research. You may proceed with your question.
Speaker 9: Hi guys, thanks for taking my question.
Hi, guys. Thanks for taking my question.
And looking forward to the March virtual demos for spruce card.
Speaker 9: I'm looking forward to the March virtual demos for SpruceCard. I'm wondering, though, if I can get a bit of a preview. I mean, just really how this product works.
I'm wondering though if I can get a bit of a preview.
And then just really how this product works.
Speaker 9: in terms of business process. You know, right now or before the spruce card, there was the emerald card which loaded a majority of your tax refunds. What'll be different with spruce? And how will spruce revenues be reported? Well, it's own line item under revenue, or will it land in several buckets?
In terms of business process.
Right now or before the spruce card there was the Emerald card, which loaded a majority of your your tax refunds will be different with spruce.
And how will spruce revenues will be reported would have its own line item under revenue or will it land in several buckets.
Speaker 3: All right, well, let me give you a little preview and I'll let Tony tag team on the back end of that. But I think the simplest way to think about it is Emerald Card is a product and has been a product developed and positioned simply as a refund load mechanism.
Alright, let me give you a little preview and I'll.
I'll, let Tony Tag team on the back end of that but I think the simplest way to think about it is emerald card.
<unk> is a product and has been a product.
Developed in positioned simply as a refund.
Load mechanism.
Speaker 3: highly tied to the tax event in a way for consumers to get their refund and then really spend the balance down almost like a gift card.
Highly tied to the tax event and a way for consumers to get their refund and then really spend the balance down almost like a gift card.
And spruce, while loading refunds, we anticipate to be a great way for our clients to jumpstart their accounts is quite different in a number and a number of ways.
Speaker 3: And Spruce, while loading refunds, we anticipate to be a great way for our clients to jumpstart their accounts, is quite different in a number of ways. I think number one is that there are no hidden fees, no monthly fees, no sign-up fees, no minimum balance fees, no foreign transaction fees, a very large ATM network, all fee-free.
Number one is that there are no hidden fees no monthly fees no sign up fees no minimum balance fees no foreign transaction fees are very large ATM network all fee free.
Speaker 3: It has built in to the user experience in the mobile app.
It has built into the user experience and the mobile app.
Speaker 3: a wonderful feature we call Spruce Reward.
A wonderful feature we call spruce rewards.
Speaker 3: which is without requiring the customer to sign up for anything, automatically delivers cash back from thousands of retailers when they use the card into a savings account. When they open their Spruce account, we'll concurrently open a savings account. The customer can set micro-savings goals for vacation, or a pair of shoes, or whatever they aspire to.
Which is without requiring the customer to sign up for anything automatically delivers cash back from thousands of retailers when they use the card into a savings account.
So when they open their spruce account will concurrently open a savings account.
The customer can set micro savings goals for vacation or a pair of shoes or whatever they aspire to.
Speaker 3: Getting paid faster is a real standard expectation in this category. So to be able to get paid up to two days early, features around credit score, overdraft protection.
Getting paid faster.
A real standard expectation in this category so to be able to get paid up to two days early.
Features around credit score overdraft protection.
Speaker 3: A number of things that, you know, on day one makes Bruce a very, very competitive FinTech offering. And like I said, you know, this is our day one product we've built over the last 11 or so months and we'll continue to build value for the customer.
A number of things that on day, one makes Bruce a very very competitive fintech.
Offering and like I said this is our day one product we've built over the last 11, or so months and will continue to build value for the customer.
Speaker 3: over time with, you know, you can imagine the linkage to tax preparation and other things. So that's a bit of a preview and I'll let Tony comment about the economics in more detail.
Over time with you can imagine.
The linkage to tax preparation and other things so that's a bit of a preview and I'll, let Tony comment.
The economics in more detail.
Yes.
Speaker 4: Yeah, Alex, I mean, as you know, we provide a lot of transparency on our products in our MDMA table and our financials.
We provide a lot of transparency on our products and our MD&A table in our financials that breaks up an incredible amount of detail I do expect that this card continues to grow its Bruce may be its own line item I think early on it will likely be combined with kind of other bank fees, just because of material out of it.
Speaker 4: breaks out an incredible amount of detail. I do expect that this cart can continue to grow, you know, spruce may be its own line item. I think early on it'll likely be combined with kind of other bank fees just because in the peer-allowty of it in the early days won't be large enough.
In the early days won't won't be large enough, but one of the things we've been thinking about is how do we provide transparency on what is that progress so things like looking at number of sign ups dollars loaded.
Speaker 4: But one of the things we've been thinking about is how do we provide transparency on, you know, what is that progress? So things like looking at number of sign-ups, dollars loaded.
Speaker 4: and other early indicators will be something that we're going to commit to share, you know, in the coming quarters once we kind of get this up and running. So, longer term, I think it likely would be its own line item, but we are getting a lot of lines of revenue breakouts and consolidating some of those that will probably be a benefit for everybody.
Other early indicators will be something that we're going to commit to share in the coming quarters. Once we kind of get this up and running so longer term I think it likely would be its own line item, but.
We are we are getting a lot of lines of revenue breakout.
But that was that.
It's a benefit for everybody at some point.
Speaker 9: Great, thank you. And while I have you, Tony, could you give us a little bit more information on that discrete tax item? It looked kind of on the large side. What was it? And then related to that, your full year guidance, does it exclude the discrete tax item or does it include the discrete tax item?
Great. Thank you and while I have you Tony.
Could you give us a little bit more information on that discrete tax item it looked kind of on the large side.
What was it and then and then related to that your full year guidance does it exclude the discrete tax item or does that include the discrete tax items.
Speaker 4: Yeah, so it does include it. So we have that contemplated in our guidance that we set at the beginning of the year. So we're not changing that outlook.
Yes. So it does include it so we have that contemplated in our guidance that we set at the beginning of the year. So we're not changing that outlook and what it was we had a statute of limitations expire on some reserves that we've put up over the last few years.
Speaker 4: And what it was is we had a statute of limitations expire on some reserves that we put up over the last few years, that basically that October period was the expiration. So we're able to release those reserves. It was about $50 million.
But basically that October period was the exploration, but we were able to release those reserves. It was about $50 million, which is why the tax rate. During the quarter was was pretty unusual obviously getting a higher tax rate.
Speaker 4: which is why the tax rate during the quarter was was pretty unusual obviously getting a higher tax rate.
Speaker 4: in a quarter where you're operating in a loss is a good thing. Usually a high tax rate is a bad thing, but when you're operating in a loss, it's a good thing. It's obviously allowing us to have a low tax rate for the full year of 16% to 18%. You may remember, Alex, when you used to be...
In a quarter, where youre operating at a loss is a good thing.
Usually a high tax rate is a bad thing, but when youre operating at a loss it's a good thing.
And it's obviously, allowing us to having low tax rate for the full year of 2016% to 18% you may remember Alex I mean, we used to be in the mid <unk> from a tax perspective, and we've continued to run in the mid to high teens for the last several years, which we've just got a really awesome job of taking advantage of some tax planning and.
Speaker 4: in the mid-30s from a tax perspective, and we've continued to run in these mid-to-high teens for the last several years, which we've just done a really awesome job of taking advantage.
Speaker 4: of some tax planning and ultimately creating a lot of extra cash flow for the company, obviously releasing a reserve.
Ultimately, creating a lot of extra cash flow for the company, obviously, releasing a reserve is not necessarily cash connect at this time, but obviously when we made those tax planning strategy several years ago.
Speaker 4: is not necessarily cash connected this time, but obviously when we made those tax planning strategies several years ago, that's when we got that cash benefit at that time. So contemplating our full year outlook and still feel good about the 16 days.
When we got that cash benefit at that time, so contemplate our full year outlook and still feel good about the 16% to 18%.
Great and then the last thing is more of a comment.
Speaker 9: Great. And then the last thing is more of a comment, you know, with your change in the fiscal year from April 30th to June 30th, I use FACSAT, you know, to gauge consensus, and FACSAT is all over the board. You know, I think it has some analyst estimates based on the previous quarters and the previous April fiscal year quarters and, you know.
With your change in the fiscal year from April <unk> to June 30th.
I use factset to gauge consensus and Factset is all over the board I think it has some analysts' estimates based on the previous quarters the previous.
Oral fiscal year quarters.
Speaker 9: So it's hard to tell how H&R Block did relative to the consensus, but I would point out that you beat my estimates on every line item, revenues, adjusted EBITDA, and EPS. So just wanted to offer you congratulations there, and that's it for me. Thank you so much.
So.
It's hard to tell how H&R block did relative to the consensus but I would point out that you beat my estimates on every line item revenues adjusted EBITDA and EPS.
So just wanted to ask congratulations there and.
That's it for me. Thank you so much.
Speaker 4: Yeah, thank you. Thanks, Alex. You know, we've been working to obviously clean that up, and you know, we're in different kind of evolutions with different analysts. But I think that's part of the growing pains of changing your fiscal year, and it takes a little bit of time for everybody to get on a new cycle. I think it's been a good change. I'm glad we did it, but it's a little bit painful in the interim. The nice thing is
Yes. Thank you thanks, Alex.
We've been working to obviously, a clean clean that up and we're in different kind of evolutions with different analysts, but I think thats part of the growing pains of changing your fiscal year and it takes a little bit of time to everybody again on the new cycle.
I think it's been a good change.
We did it but it's a little bit painful in the interim the nice thing is <unk>.
Speaker 4: assuming tax season starts on time, which it already has, and then ends at the expected timeline of April 18.
Sumit tax season starts on time, it's already has and then <unk>.
At the expected timeline of April 18.
Speaker 4: Obviously, all of our revenues will be, you know, in the current fiscal year from a tax season perspective. We'll have a clean year to report, and we'll have a nice baseline going forward, versus if we hadn't made the fiscal year change, we would have had a tax season from last year rolling into May 17th, and it would have been an unusual comparable.
Obviously all of our revenues will be.
In the current fiscal year from a tax season perspective, we'll have a clean year to report and we will have a nice baseline going forward versus if we hadn't made this fiscal year change. We would have had a tax season from last year rolling into may 17th and what it would've been an unusual comparable so.
Speaker 4: It's a little bit painful making the change. I appreciate everybody's effort and work going into it. Because I think we're all going to be better off once we get to the others.
A little bit painful, making the change I appreciate everybody's effort and work going into it.
So I think we're all going to be better off once we get to the other side.
Thank you and I'm not showing any further questions. At this time I would now like to turn the call back over to <unk> for any further remarks.
Speaker 1: Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Michaela Galina for any further remarks.
Speaker 2: Thank you, Josh, and thank you everyone for joining us today. This concludes our second quarter 2022 financial results conference call.
Thank you Josh and thank you everyone for joining US today. This concludes our second quarter 2022 financial results Conference call.
Speaker 1: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
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