Q2 2024 H&R Block Inc Earnings Call
[music].
Operator: Thank you for standing by, and welcome to H & R Block's second quarter fiscal year 2024 earnings conference call. At this time, all participants are in a listen-only mode.
Thank you for standing by and welcome to the H&R Block's second quarter fiscal year 2024 earnings conference call. At this time all participants are in a listen only mode. After the speaker presentation, there will be a question.
Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. To remove yourself from the queue, you may press star 11 again.
And in answer session to ask a question during the session you will need to press star one on your telephone to remove yourself from the queue. You May press star one again.
Michaela Galena: I would now like to hand the call over to Vice President of Investor Relations, Michaela Galena. Please, go ahead. Thank you, Lateef. Good afternoon, everyone, and welcome to H & R Block's second quarter Fiscal 2024 Financial Results Conference Call. Joining me today 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, which can be downloaded or viewed live on our website at investors.hrblock.com. Our call is being broadcast and webcast live, and a replay of the webcast will be available for 90 days. 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.
Galena McCann: I would now like to hand, the call over to Vice President of Investor Relations Mccann Galena. Please go ahead.
Galena McCann: Thank you Latif and good afternoon, everyone and welcome to H&R block second quarter fiscal 2024 financial results Conference call.
Joining me today are Jeff Jones, our President and Chief Executive Officer, and Tony Vaughn, Our Chief Financial Officer.
Mccann Galena: Earlier today, we issued a press release and presentation, which can be downloaded or be it live on our website at investors Dot HR block Dot com.
Mccann Galena: Our call is being broadcast and webcast live and a replay of the webcast will be available for 90 days.
Mccann Galena: 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.
Mccann Galena: These statements involve material risks and uncertainties and actual results could differ from those projected in any forward looking statement due to numerous factors for a description of these risks and uncertainties. Please see H&R Block's annual report on Form 10-K, and quarterly reports on Form 10-Q as updated periodically with our other SEC filings.
Michaela Galena: For a description of these risks and uncertainties, please see H & R Block's annual report on Form 10-K and quarterly reports on Form 10-Q, as updated periodically with our other SEC filings. Please note that some metrics we'll discuss today are presented on a non-GAAP basis. We've reconciled the comparable GAAP and non-GAAP figures in the appendix of our presentation. Finally, the content of this call contains time-sensitive information accurate only as of today, February 6, 2024. H & R Block undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances after the date of this call.
Mccann Galena: Please note some metrics we will discuss today are presented on a non-GAAP basis, we've reconciled the comparable GAAP and non-GAAP figures in the appendix of our presentation.
Mccann Galena: Finally, the content of this call contains time sensitive information accurate only as of today February six 2020 for 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.
Jeffrey J. Jones: With that, I will now turn it over to Jeff. Thank you, Michaela. Good afternoon, everyone, and thanks for joining us.
Thank you Mikael good.
Jeff: Afternoon, everyone and thanks for joining us.
Jeffrey J. Jones: I'll begin today with a summary of Q2 results, provide an update on our Block Horizon's progress, and share more on why we are well positioned for the tax season. Then I'll discuss the announcement today regarding Tony's decision to retire. And finally, he'll provide context on our financials, including the strength of our capital allocation and balance sheet. Turning to Q2 results, performance continues to meet expectations, and today we reaffirmed our fiscal year outlook. In the quarter, revenue grew 8% as we had a strong finish to the extended filing season. In addition, we saw consumers in need of cash, and many turned to H & R Block to meet their financial needs with our new Emerald Advance offering, which we believe bodes well for the tax season. We also continued our share repurchase program, buying back $218 million in the quarter, or another 3% of shares outstanding.
Jeff: Again today with a summary of Q2 results.
Jeff: Provide an update on our block horizons progress and share more on why we are well positioned for the tax season.
Jeff: Then I'll discuss the announcement today regarding <unk> decision to retire and finally he'll provide context on our financials, including the strength of our capital allocation and balance sheet.
Jeff: Turning to Q2 results performance continues to meet expectations and today, we reaffirmed our fiscal year outlook.
Jeff: In the quarter revenue grew 8% as we had a strong finish to the extended filing season.
Jeff: In addition, we saw consumers in need of cash and many turned to H&R block to meet their financial needs with our new Emerald advance offering, which we believe bodes well for the tax season.
Jeff: We also continued our share repurchase program buying back $218 million in the quarter or another 3% of shares outstanding overall I feel very good about our results.
Jeffrey J. Jones: Overall, I feel very good about our results. Now, I'll provide an update on our Block Horizon strategy, where we continue to make progress. Starting with small business, revenue grew over 20% in the quarter.
Jeff: Now I'll provide an update on our block horizon strategy, where we continue to make progress.
Jeff: Starting with small business revenue grew over 20% in the quarter.
Jeffrey J. Jones: Assisted small business tax volumes finished the extended season with momentum. We had nearly a 4% increase in net average charge, and we continue to see favorable trends in bookkeeping and payroll. While the second quarter only included two weeks of the filing season, given the October 15th deadline, we feel great about the start of the year.
Jeff: Assisted small business tax volumes finished the extended season with momentum.
Jeff: We had nearly a 4% increase in net average charge and we continue to see favorable trends in bookkeeping and payroll.
While the second quarter only included two weeks of the filing season, given the October 15th deadline, we feel great about the start of the year.
Jeffrey J. Jones: We have focused our marketing plan on the gig economy and specific industry segments we already do well in. Overall, I continue to be pleased with the growth we're seeing in small business. Turning now to WAVE, revenue growth was 5% in Q2. Last quarter, I detailed the strategic shift in Waze's business model to build more premium features to meet the evolving needs of our customers. This past week, we took another step forward by introducing a paid-tier subscription service. This new tier includes features like automated bank transaction imports, preferred pricing on payments, and agent support rather than self-service support. At the same time, WAVE will continue to offer payments and payroll for an additional fee.
Jeff: We have focused our marketing plan on the gig economy and specific industry segments, we already do well.
Jeff: Overall I continue to be pleased with the growth we're seeing in small business.
Jeff: Turning now to wave revenue growth was 5% in Q2.
Jeff: Last quarter I detailed the strategic shift in <unk> business model to build more premium features to meet the evolving needs of our customers.
Jeff: This past week, we took another step forward by introducing a paid tier subscription service.
Jeff: This new tier incorporates features like automated bank transaction imports preferred pricing on payments and agent support rather than self service support.
Jeff: At the same time wave will continue to offer payments and payroll for an additional fee.
Jeffrey J. Jones: These recent moves reflect progress on our roadmap to accelerate revenue growth and drive long-term profitability and aligns with our commitment to empower small business owners to start, survive, and thrive. Moving to financial products, as I mentioned earlier, Emerald Advance performed well in the quarter. Although the name remains the same, significant changes have been made to the product in collaboration with our bank partner, PathWord, to better meet client needs. A few of those include transitioning the product from a line of credit to a short-term loan with flexible repayment options, eliminating the annual fee and streamlining the application process, and increasing the maximum available loan amount, which helps customers with their holiday spending needs. In total, over $380 million in Emerald Advance loans were originated, up 25% from the prior year, and we received positive feedback from clients and associates. Regarding Spruce, as of December 31, we had 316,000 sign-ups and $456 million in customer deposits.
Jeff: These recent moves reflect progress on our roadmap to accelerate revenue growth and drive long term profitability and aligns with our commitment to empower small business owners to start survive and thrive.
Jeff: Moving to financial products as I mentioned earlier Emerald advance performed well in the quarter.
Jeff: Although the name remains the same significant changes were made to the product in collaboration with our bank partner password to better meet client needs.
Jeff: A few of those include transitioning the product from a line of credit to a short term loan with flexible repayment options.
Jeff: Eliminating the annual fee and streamlining the application process.
Jeff: And increasing the maximum available loan amount, which helped customers with their holiday spending needs.
Jeff: In total over $380 million and Emerald advance loans were originated.
Jeff: Up 25% to the prior year, and we received positive feedback from clients and associates.
Jeff: Regarding spruce as of December 31, we had 316000 sign ups.
Jeff: And $456 million in customer deposits.
Jeffrey J. Jones: We continue to enhance the user experience, have seen improved app store ratings, and feel good about the increase in new client accounts and engagement. Our savings features are delivering on Spruce's mission to help clients be better with money. In fact, 20% of users who set and achieved a savings goal did so to build emergency savings, and another 17% successfully saved for a vacation.
Jeff: We continue to enhance the user experience have seen improved app store ratings and feel good about the increase in new client accounts and engagement.
Jeff: Our savings features are delivering on Spruces mission to help clients be better with money.
Jeff: In fact, 20% of users who set and achieved savings goal did so to build emergency savings and.
Jeff: And another 17% successfully say for vacations.
Jeffrey J. Jones: In addition, this year is the first time we are cross-selling assisted and DIY tax offerings in the Spruce app. Additionally, more than 30% of customers that signed up during last year's season were not H & R Block tax clients, which we see as an opportunity. I'll now discuss our Block Experience Imperative, which underpins our ability to win in both assisted and DIY by creating personalized experiences. Clients are empowered to be served however they choose, fully virtually or fully in person, in every way in between, whether uploading documents from home, having virtual calls with tax pros, or signing their return online.
Jeff: In addition, this year's the first time, we are cross selling assisted and DIY tax offerings in the spruce app.
Jeff: More than 30% of customers that signed up during last year's season, we're not H&R block tax clients, which we see as an opportunity.
Jeff: I will now discuss our block experience imperative, which underpins our ability to win in both the assisted and DIY by creating personalized experiences.
Jeff: Clients are empowered to be served however, they choose full.
Jeff: Fully virtually or fully in person in every way in between.
Jeff: Whether uploading documents from home, having virtual calls with tax pros are signing their return online.
Jeffrey J. Jones: We also recently launched our initial two generative AI products that focus on improving the client experience and reducing costs, which I'll share more about in a minute. Our progress across this imperative is one of the reasons we feel well positioned for this tax season. Let me share some more, starting with assisted tax.
Jeff: We also recently launched our initial two generative AI products that focus on improving the client experience and reducing costs, which I'll share more about in a minute.
Jeff: Our progress across this imperative is one of the reasons, we feel well positioned for this tax season.
Jeff: Let me share some more starting with assisted tax.
Jeffrey J. Jones: To begin with, we achieved our hiring goals and saw continued strong trends in tax pro retention. We have heard positive feedback from our tax professionals about the flexibility we offer. In addition, our innovative fulfillment network will now be available to our entire network of tax pros, which can improve the speed of our service and help us better manage our capacity. Last quarter, I shared some of the many enhancements to the My Block app that were made with the client experience in mind, including a status tracker to help clients understand where they are in the process, when to take action, and to give them easier access to their digital documents in return. Not only are we focused on the client experience, but we also see an opportunity to reduce expenses with AI. We have already launched the technology in our call center operations and continue to learn from its use. Early signs indicate that customers are able to help themselves, which reduces related call center volume.
Jeff: To begin with we achieved our hiring goals and saw continued strong trends in tax pro retention.
Jeff: We have heard positive feedback from our tax pros about the flexibility we offer.
In addition, our innovative fulfillment network will now be available to our entire network of tax pros, which can improve the speed of our service and help us better manage our capacity.
Jeff: Last quarter I shared some of the many enhancements to the <unk> block out that were made with the client experience in mind include.
Jeff: Including a status tracker to help clients understand where they are in the flow when to take action and to give them easier access to their digital documents in return.
Jeff: Not only are refocused on the client experience, but we also see an opportunity to reduce expenses with AI.
Jeff: We have already launched the technology and our call center operations and continue to learn from its use.
Jeff: Early signs indicate that customers are able to help themselves, which reduces related call center volumes.
Jeffrey J. Jones: This should also enable our agents to assist with more complex issues. While we're just getting started, we're pleased with the speed that we're able to deploy this innovation and how it will help us better serve our clients. All of these advancements, alongside our positive customer satisfaction metrics from last year, including value for price paid, give us confidence to take modest price increases this year, which we have previously discussed. Turning to DIY, we believe the formula for success continues to be offering an award-winning product that is continually innovative. Make it easy for clients to switch, and price competitively.
Jeff: This should also enable our agents to assist with more complex issues.
Jeff: While we're just getting started we're pleased with the speed that we're able to deploy this innovation and how it will help us better serve our clients.
Jeff: All of these advancements alongside our positive customer satisfaction metrics from last year, including value for price paid.
Jeff: Give us confidence to take modest price increases this year, which we have previously discussed.
Jeff: Turning to DIY. We believe is a formula for success continues to be offer an award winning product that is continually innovative.
Jeff: Make it easy for our clients to switch.
Jeff: And price competitively.
Jeffrey J. Jones: We executed this plan last year and returned to share gains. This year, we'll continue to build on that momentum. As you may have seen, we're excited to have launched AI TaxAssist in all of our DIY paid SKUs. This innovation enables customers to get real-time tax answers and information, leveraging knowledge from our world-class tax institute and decades of fielding client inquiries. It's simple to use, and clients can ask as many questions as they would like. If life help is preferred, H & R Block's tax professionals are there to assist.
Jeff: We executed this plan last year and returned to share gains. This year, we will continue to build on that momentum.
Jeff: As you May have seen we're excited to have launched AI tax assist in all of our DIY paid skus.
Jeff: This innovation enables customers to get real time tax answers and information leveraging knowledge from our World class tax Institute and decades of fielding client inquiries.
Jeff: It's simple to use and clients can ask as many questions as they would like.
Jeff: If life health as preferred H&R block's tax professionals are there to assist.
Jeffrey J. Jones: We believe this offers significant value for clients with AI tax assist and access to human help included at no extra charge. However, we know that a critical barrier for clients to switch is the cumbersome process of transferring their data. Last year, we actively marketed how simple it was to drag and drop a PDF of the prior year return into our flow, which automatically imported up to 150 data fields. This year, we made it even easier for TurboTax customers to retrieve their prior year return, saving significant time and effort in switching. All in all, we feel really good about our DIY product and strategy. As discussed last quarter, we're taking modest price increases in this channel. Finally, our marketing is aggressively promoting the reasons to switch to H & R Block and messages the strong value proposition of both our assisted and DIY offerings.
Jeff: We believe this offers significant value for our clients with AI tax assist and access to human health included at no extra charge.
Jeff: We know that a critical barrier for clients to switch is the cumbersome process of transferring their data.
Jeff: Last year, we actively marketed how simple it was to drag and drop a PDF of the prior year return into our flow, which automatically imported up to 150 data fields.
Jeff: This year, we made it even easier for turbotax customers to retrieve their prior year return savings significant time and effort in switching.
Jeff: In all we feel really good about our DIY product and strategy.
Jeff: As discussed last quarter, we're taking modest price increases in this channel.
Jeff: Finally, our marketing as aggressively promoting the reasons to switch to H&R block and messages the strong value proposition of both our assisted and DIY offerings.
Jeffrey J. Jones: This year's campaign, It's Better with Block, demonstrates just how easy it is to switch and showcases the simplicity of our experiences, which empower clients to file however they prefer, from easy-to-use DIY software to full-service assistance through our extensive local network across every corner of America. It also highlights our refund advance product that helps clients get their money sooner, our transparent and competitive pricing, our accuracy and max refund guarantees, and the expertise of our global network of tax pros. In summary, we are well prepared to compete this season. Before handing it over, I want to share more about Tony's decision to retire and focus on personal interests after nearly 20 years of service to H & R Block, including the last eight as CFO.
Jeff: This year's campaign, it's better with block demonstrates just how easy it is the switch and showcases the simplicity of our experiences which empower clients to file however, they prefer.
Jeff: From easy to use DIY software to full service assistance through our extensive local network across every corner of America.
Jeff: It also highlights our refund advance product that helps clients to get their money sooner are transparent and competitive pricing.
Jeff: Our accuracy and Max refund guarantees and the expertise of our global network of tax pros.
Jeff: In summary, we are well prepared to execute this season.
Speaker Change: Before handing it over I want to share more about Tony's decision to retire and focus on personal interest after nearly 20 years of service to H&R block, including the last eight as CFO.
Jeffrey J. Jones: Tony has been instrumental in driving results and will leave us in a strong position financially. Some of his most meaningful contributions include the rollout of our upfront transparent pricing model, driving material earnings growth in the business, and achieving a notable track record of returning capital to shareholders. As part of Tony's decision, he's committed to remaining CFO through the end of August to see us through tax season, complete the fiscal year, and participate in our full-year 2024 earnings call. We're in the process of engaging a search firm to find his replacement, and we'll share more at a later date.
Speaker Change: Tony has been instrumental in driving results and will leave us in a strong position financially.
Speaker Change: Some of his most meaningful contributions include the rollout of our upfront transparent pricing model.
Speaker Change: Driving material earnings growth in the business and achieving a notable track record of returning capital to shareholders.
Speaker Change: As part of Tonys decision. He is committed to remaining CFO through the end of August.
Speaker Change: <unk> through tax season complete the fiscal year and participate in our full year 2024 earnings call.
Speaker Change: We're in the process of engaging a search firm to find his replacement and will share more at a later date.
Tony G. Bowen: I'm proud of all we've accomplished together, Tony, and I only wish you the best as you prepare to enter this next chapter of life. Over to you. Thanks, Jeff. My tenure at H & R Block has been an incredible experience, and I'm grateful for all I've learned and the opportunities I've been given. It's been an honor to be part of this transformation journey, and I'm confident about the path that H & R Block is on. I'd like to reiterate that this is my personal decision, and as Jeff mentioned, nothing will change about my role in the meantime.
Speaker Change: I'm proud of all we've accomplished together, Tony and I only wish you the best as you prepare to enter this next chapter of life over to you.
Speaker Change: Thanks, Jeff.
Speaker Change: <unk> and H&R block has been an incredible experience and I am grateful for all I've learned and the opportunities I've been given.
Speaker Change: It's been an honor to be part of this transformation journey and I am confident about the path that H&R block is on.
Tony: I'd like to reiterate that this is my personal decision and as Jeff mentioned nothing will change about my role in the meantime.
Tony G. Bowen: I'm committed to ensuring a smooth transition through the end of August, and my engagement as H & R Block CFO will not change in the coming months. With that, I will now turn to the Q2 results. We delivered $179 million of revenue, which increased 8% or $12.7 million over the prior year. The increase was primarily due to higher volumes and Net Average Charge Unassisted combined with higher interest and fee income on Emerald Advance. Total operating expenses of $446.5 million decreased by $3 million as a result of lower consulting and marketing expenses, partially offset by higher corporate wages in the current year. EBITDA was a loss of $231 million, an improvement of 6% or $15 million over the prior year. Interest expense was $21 million, an increase of $2 million, or 13%, due to higher draws on our line of credit, coupled with higher interest rates compared to the prior year.
Tony: I am committed to ensuring a smooth transition through the end of August and my engagement as H&R block CFO will not change in the coming months.
Speaker Change: With that I will now turn to the Q2 results.
Speaker Change: We delivered $179 million of revenue, which increased 8% or $12 7 million over the prior year.
Speaker Change: The increase was primarily due to higher volumes and net average charge in assisted combined with higher interest and fee income on Emerald advance.
Speaker Change: Total operating expenses of $446 5 million decreased by $3 million as a result of lower consulting and marketing expenses, partially offset by higher corporate wages in the current year.
Speaker Change: EBITDA was a loss of $231 million, an improvement of 6% or $15 million to the prior year.
Speaker Change: Interest expense was $21 million, an increase of $2 million or 13% due to higher draws on our line of credit coupled with higher interest rates compared to the prior year.
Tony G. Bowen: Pre-tax losses decreased by $15 million to $283 million, and our effective tax rate was 33.1% compared to 25.9% last year. Loss per share from continuing operations improved from $1.43 to $1.33, while adjusted loss per share from continuing operations improved from $1.37 to $1.27. Both were driven by lower losses, partially offset by fewer shares outstanding. While the first half of the year is a small portion of our overall fiscal year, I am pleased with our performance, and as such, we are reaffirming our fiscal year 24 outlook. Turning to capital allocation, our practice remains strong. In Q2, we bought a total of 4.8 million shares for $218 million at an average price of $45.88. This was another 3% of shares outstanding. In the first half of fiscal 24, we repurchased a total of $350 million, or 5.5% of shares outstanding.
Speaker Change: Pre tax loss decreased by $15 million to $283 million and our effective tax rate was 33, 1% compared to 25, 9% last year.
Speaker Change: Loss per share from continuing operations improved from $1 43 to $1 33, while adjusted loss per share from continuing operations improved from $1 37 to $1 27.
Speaker Change: Both were driven by lower loss, partially offset by fewer shares outstanding.
Speaker Change: While the first half of the year is a small portion of our overall fiscal year I am pleased with our performance and as such we are reaffirming our fiscal year 'twenty for outlook.
Speaker Change: Turning to capital allocation, our practice remains strong.
Speaker Change: In Q2, we bought a total of $4 8 million shares for $218 million at an average price of $45 88.
Speaker Change: This was another 3% of shares outstanding.
Speaker Change: In the first half of fiscal 'twenty, four we repurchased a total of $350 million or five 5% of shares outstanding.
Tony G. Bowen: As a reminder, given our narrow trading windows, we have historically executed most of our share repurchases in the first half of the fiscal year. I believe this is a great use of capital, and I am pleased with what we have accomplished. Finally, as I shared on the last call, we continue to feel good about Balanchine and how we are positioned in the current environment given our relatively low leverage. All in all, I'm looking forward to the second half of the year. I'll now turn it back over to Jeff for some closing remarks. Thanks, Tony.
Speaker Change: As a reminder, given our narrow trading windows, we have historically executed most of our share repurchase in the first half of the fiscal year.
Speaker Change: I believe this is a great use of capital and I am pleased with what we have accomplished.
Speaker Change: Finally, as I shared on the last call. We continue to feel good about balance sheet and how we are positioned in the current environment, given our relatively low leverage.
Speaker Change: All in all I am looking forward to the second half of the year I will now turn it back over to Jeff for some closing remarks, thanks, Tony I am pleased with our performance and confident in our ability to drive value for shareholders through our business results and capital allocation.
Jeff: As we end our prepared remarks, I would like to extend a sincere. Thank you to our team of tax professionals associates and franchisees.
Jeffrey J. Jones: I'm pleased with our performance and confident in our ability to drive value for shareholders through our business results and capital allocation. As we end our prepared remarks, I would like to extend a sincere thank you to our team of tax professionals, associates, and franchisees whose hard work, expertise, and collective spirit continue to deliver on our purpose every day. Together, we provide help and inspire confidence in our clients and communities everywhere. As a reminder, our next update on the tax season will be on our Q3 call in early May. Now we'll open the line for questions. Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone. Again, that's star one one to ask a question. To remove yourself from the queue, you may press star one one again.
Jeff: The hard work expertise and collective spirit continue to deliver on our purpose every day.
Together, we provide help and inspire confidence in our clients and communities everywhere.
Jeff: As a reminder, our next update on the tax season will be on our Q3 call in early may.
Speaker Change: Now we will open the line for questions.
Speaker Change: Thank you as a reminder to ask a question you will need to press star one one on your telephone again Thats star one to ask a question to remove yourself from the queue. You May press Star one again, please standby, while we compile the Q&A roster.
Speaker Change: Our first question.
Speaker Change: It comes from the line of Kartik Mehta of Northcoast Research. Please go ahead.
Thanks.
Kartik Mehta: Any surprises retiring, but congratulations that I'm sure, we'll get a chance to talk later.
Operator: Please stand by while we compile the Q&A roster at www.larryweaver.com. Our first question comes from the line of Kartik Mehta of Northcoast Research. Please go ahead, Kartik. Tony, I'm surprised you're retiring, but congratulations, and I'm sure we'll get a chance to talk later, but it's been good working with you. Jeff, as you look at the early tax season, anything you've noticed from a competitive standpoint that might be different than you had anticipated? Hey Kartik, I'll let Tony respond to you shortly, and there will be plenty of chances to say thanks and celebrate him for sure.
Kartik Mehta: But it's been great working with here.
Kartik Mehta: Bob.
Kartik Mehta: Jeff as you look at the early tax season.
Jeff: Anything you've noted from a competitive standpoint that might be different than you had anticipated.
Jeff: Hey, Kartik I'll, let Tony respond to you shortly and there'll be plenty of chances to say, thanks and celebrate in for sure.
Jeff: Obviously E file opened a little over a week ago and to date, we're not seeing anything competitively that we did not anticipate.
Jeff: Would say that in the industry.
Jeff: It is getting started maybe a little slower than we thought.
Jeff: We have no reason to believe that that's anything other than probably related to child tax credit.
Jeffrey J. Jones: Um... Obviously, e-file opened a little over a week ago, and to date, we're not seeing anything competitively that we did not anticipate. I would say that in the industry... It is getting started, maybe a little slower than we thought. We have no reason to believe that it's anything other than probably related to the child tax credit, and we're not worried about what we see for volume for the year, etc. So in the first week or two, you know, I think that's really the only thing that we're seeing that wasn't expected, but nothing competitively, and then just uh, I guess that segues into my next question, just from a assisted standpoint and DIY standpoint, you know you said it started slow. Is there one that's different than the other, or do you think both are a little bit slower than you anticipated, with people I mean, there's no question that filers for the EITC or child tax credit are going to be in both channels. So I wouldn't want to call it like that this early.
Jeff: And we're not worried about what we see for volume for the year et cetera. So in the first week or two.
Jeff: I think that's really the only thing that we're seeing that wasn't expected, but nothing competitively.
Jeff: And then just I guess the.
Jeff: Segways into my next question just from a.
Jeff: Standpoint in DIY endpoint.
Speaker Change: Alright got it.
Speaker Change: Alright.
Speaker Change: One that is different than the other or do you think both are a little bit slower than you anticipated people waiting on tax.
Speaker Change: <unk> got to get through Congress.
Speaker Change: Yeah.
Speaker Change: It's so hard to try to get that precise at this early point and tease apart by channel.
Speaker Change: There is no question that.
Speaker Change: Tyler's for ITC or child tax credit filers are going to be in both channels.
Speaker Change: So I wouldn't want to call it like that this early.
Speaker Change: But we are seeing that being a little slower than we expected and when we do some of our consumer pulse surveys. We think one of the reasons really is about child tax credit.
Speaker Change: And then I know, it's only possible on the margin but.
Any thoughts on marketing would you change your strategy or maybe the channels you are using just.
Jeffrey J. Jones: But, you know, we are seeing it a little slower than we expected. And when we do some of our consumer poll surveys, we think, you know, one of the reasons really is the child tax credit. And then I know this is only possible on the margin, but any thoughts on marketing? Would you change your strategy or maybe the channels you're using just from what you learn in the first couple weeks of the season?
Speaker Change: Just from what you are learning in the first couple of weeks.
Speaker Change: Great question.
Speaker Change: I think we're always trying to get the timing right.
Speaker Change: We obviously have plans going into the season.
Speaker Change: And by the way the early season plans, we had a lot of emphasis on ITC and refund advance.
Jeffrey J. Jones: Great question. You know, I think we're always trying to get the timing right. We obviously have plans going into the season, and by the way, you know, the early season plans, we put a lot of emphasis on EITC and refund advance. We know that marketing creative is landing very positively with consumers.
Speaker Change: That marketing creative is landing very positively with consumers.
Speaker Change: So it is more on the margins where the teams are thinking about search timing or shifting around a little bit of spending or the timing of an email campaign those kinds of things, but again, it's still so early in the season and we don't see real impact overall, and so we don't want to make any really big knee jerk REIT.
Jeffrey J. Jones: So it is more on the margins where the teams are thinking about search timing or shifting around a little bit of spending or the timing of an email campaign, those kind of things. But again, it's still so early in the season, and we don't see any real impact overall. And so we don't want to make any really big knee-jerk reactions based on maybe a little slower start. Perfect. Thank you very much.
Speaker Change: Actions based on maybe a little slower start.
Speaker Change: Perfect. Thank you very much.
Speaker Change: Thanks Kartik.
Speaker Change: Thank you.
Speaker Change: Right.
Speaker Change: Our next question.
Speaker Change: Comes from the line of George Tong of Goldman Sachs. Your line is open George.
George K. Tong: Hi, Thanks, good afternoon.
George K. Tong: You reiterated your revenue guide of 2% to 3% growth for this year your longer term revenue growth target is 3% to 6% what are some of the things that could cause growth this year to come below the long term target.
Operator: Thanks, Kartik. Thank you. Our next question comes from the line of George Tong of Goldman Sachs. Your line is open, George. Hi, thanks. Good afternoon.
George K. Tong: You've reiterated your revenue guide of 2% to 3% growth for this year. Your longer-term revenue growth target is 3% to 6%. What are some of the things that could cause growth this year to come below the long-term target? Hey, George, this is Tony. I can I can take a stab at that.
George K. Tong: Hey, George this is Tony I can I can take a stab at that.
Tony: So as you said the top end of the range is within the longer term range of 3% to 6% I think coming off of last year, where obviously.
Tony: There's a few reasons why specifically client volume was what we wanted we wanted to make sure. This year that we set guidance that was achievable and frankly took into account some potential curve balls that inevitably get thrown at the industry. So those are all built in the first half of the year was.
Tony G. Bowen: I mean, obviously, as you said, the top end of the range is within the longer-term range of 3 to 6 percent. I think coming off of last year, there are obviously a few reasons why, specifically, client volume wasn't what we wanted. We wanted to make sure this year that we set guidance that was achievable and, frankly, took into account some potential curveballs that inevitably get thrown at the industry. So those were all built in.
Tony: A really good start.
Tony: Quarter, We just reported was really strong so I feel good about heading into tax season, and obviously, we've got a long way to go but signs so far look good that we can achieve the guidance.
Tony G. Bowen: You know, the first half of the year was a really good start. The quarter we just reported was, you know, really strong. So I feel good about heading into tax season. And obviously, we've got a long way to go, but signs so far look good that we can achieve the guidance, and you know we still have confidence that over the long term we can grow north of three percent, possibly even this year. We'll obviously have to see how tax season goes, but regardless, I think we know we're going to generate a lot of cash flow, buy back a lot of And that's what we'll focus on. Got it?
Tony: We still have confidence that over the long term, we can we can grow north of 3%.
Tony: Possibly even this year, we'll obviously have to see how tax season goes, but but regardless I think we know we're going to generate a lot of cash flow buyer.
Tony: Buyback a lot of stock continue to pay an increasing dividend and ultimately create value for shareholders and that's all focused on.
Speaker Change: Got it that's helpful.
Speaker Change: Can you talk a little bit about how your approach is changing this year, an assistant to help stabilize market share performance and potentially drive market share gains compared to last year.
Speaker Change: Yes, absolutely George I mean, remembering again that the assisted loss last year, we identified three reasons two of which are behind us and the one that has been of center of focus. This year is early season refund advance and strong value communication to.
Jeffrey J. Jones: That's helpful. And can you talk a little bit about how your approach is changing this year to help stabilize market share performance and potentially drive market share gains compared to last year? Yeah, absolutely, George.
Speaker Change: SEC filers.
Speaker Change: But holistically there are a number of things every year that we look at and I'm feeling very good about today.
Speaker Change: How we prepare the field organization to serve clients.
Jeffrey J. Jones: I mean, remembering again that the assisted loss last year, we identified three reasons, two of which are behind us. And the one that has been of, you know, central focus this year is the early season refund advance and strong value communication to EITC filers. But holistically, there are a number of things every year that we look at, and I'm feeling very good about today, how we prepare the field organization to serve clients, hiring, retention, and training. That's essential, obviously, to deliver a great experience.
Speaker Change: <unk> retention training.
Speaker Change: That's essential obviously to deliver a great experience the role of pricing we've talked about.
Speaker Change: <unk> single digit price increases.
Speaker Change: Which is what we intend to deliver this year and then broadly the way we go to market and communicate the value proposition to assisted clients.
Speaker Change: All of that comes together to our value proposition and the way we organize the field to execute for the season and as Tony said, we have a we have a really strong start.
Speaker Change: The season, a good first half and now it's about execution for the balance of the year.
Speaker Change: Got it very helpful. Thank you.
George K. Tong: The role of pricing, we've talked about, low single-digit price increases, which is what we intend to deliver this year. And then, broadly, the way we go to market and communicate the value proposition to assisted clients. All of that comes together in our value proposition and the way we organize the field to execute for the season. And, as Tony said, we had a really strong start to the season, a good first half, and now it's about execution for the balance of the year. Got it. Very helpful. Thank you. Thanks, George.
Speaker Change: Thanks George.
Thank you.
Speaker Change: Our next question.
Speaker Change: Comes from the line of Scott Schneeberger of Oppenheimer <unk> Company. Your question. Please Scott.
Scott Schneeberger: Thanks, very much congratulations Tony.
Scott Schneeberger: Guys, I guess jumping off I'm curious about.
Scott Schneeberger: Strong revenue in the quarter.
Speaker Change: Apparently from the extension season.
Scott Schneeberger: So now that that's completely in the rearview mirror do you have a quantification of what that impact was.
Scott Schneeberger: How that would.
Scott Schneeberger: Q2, this year this fiscal year's revenue growth.
Speaker Change: Relative to expectations are just absolutely. Thanks.
Operator: Thank you. Our next question comes from the line of Scott Schneeberger of Oppenheimer & Company. Your question, please, Scott. Thanks very much.
Speaker Change: Yes, we don't have a specific number Scott and thank you by the way for the congratulations.
Speaker Change: We talked all along about California, obviously being a bit of a potential tailwind going into this fiscal year given what happened last year. We saw some of that come to fruition definitely in October I think just broadly volume was kind of a strong across the country. We obviously realized some net average charge.
Scott Schneeberger: Congratulations, Tony. Guys, I guess jumping off the bandwagon, I'm curious about, you know, it was strong revenue in the quarter apparently from the extension season. So now that that's completely in the rearview mirror, do you have a quantification of what that impact was, how that would contribute to this year's, this fiscal year's revenue growth relative to expectations or just absolutely? Yeah, we don't have a specific number, Scott, and thank you, by the way, for the congratulations.
Speaker Change: On top of the volume and assessed it.
Speaker Change: And then as Jeff said in his opening comments Emerald advance.
Speaker Change: I had a really good season, we made a number of changes to that product and the number of loans that we gave out was materially higher than last year, which obviously, we participate in so just a number of things on the revenue side also on the expense side I mean expenses were down despite revenue being up.
Tony G. Bowen: You know, we talked all along about California obviously being a bit of a potential tailwind going into this fiscal year, given what happened last year. And we saw some of that come to fruition definitely in October. I think just broadly, volume was kind of strong across the country. We obviously realized some net average charge on top of the volume and assisted. And then, as Jeff said in his opening comments, Emerald Advance had a really good season.
Speaker Change: So thats obviously.
Speaker Change: A really good start, but we always like to keep in mind. The first two quarters is about 10% of our revenue for the year. So despite having a good start we're still early in the game, we have a lot of business to do.
Speaker Change: Next season, it looks like it's starting well.
Speaker Change: From our perspective, even though it's a little bit slower for the industry. So long way to go but we feel good about <unk>.
Speaker Change: The start of the year.
Speaker Change: Thanks, Tony just following on that last time, you mentioned, you said, starting well for you but for the industry.
Tony G. Bowen: We made a number of changes to that product, and the number of loans that we gave out was materially higher than last year, which obviously we participate in. So just a number of things on the revenue side. Also, on the expense side, I mean, expenses were down despite revenue being up.
Speaker Change: So you are you think outperforming earlier or are you starting to <unk> as well I added that didn't tie with something I thought I heard what you say earlier and then the.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Real quick let me just filing a second pipeline.
Speaker Change: Yes, I think Jeff attributed to.
Tony G. Bowen: So that's obviously, you know, a really good start. But we always like to keep in mind the first two quarters are about 10 percent of our revenue for the year. So despite having a good start, we're still early in the game.
Speaker Change: And that that that situation.
Speaker Change: Are you guys have you done survey work or you think thats why it is.
Speaker Change: That's why you think it is.
Speaker Change: Our might exactly I'm curious, what you're seeing hearing from consumers is there a need for money.
Tony G. Bowen: We have a lot of business to do, and tax season looks like it's starting well from our perspective, even though it's a little bit slower for the industry. We have a long way to go, but we feel good about the start of the year.
Speaker Change: I thought there might have been this year and that might have pushed them earlier, although I understand why they would wait under the same dynamic. Thanks.
Speaker Change: Thanks, a lot it out but I appreciate you tackling it altogether.
Tony G. Bowen: Thanks, Tony. Just following on that last line you mentioned, you said it was starting well for you but slow for the industry. So you are, you think, outperforming early, or are you starting slow as well? I didn't agree with something I thought I heard you say earlier.
Speaker Change: Let me start with the clarification because I.
Speaker Change: It wasn't clear enough so.
Speaker Change: I think the overall industry is starting slower.
Speaker Change: And that would include US obviously, we're a big part, especially in the early part of the industry.
Speaker Change: And that's not atypical I mean, I think you see that Scott you've been around this business for a long time a lot of times early in the season, especially when you compare on a day to day basis typically shows softer volume I think CTC is exaggerating that a little bit. This year. We know we've talked to clients who are waiting even though they don't technically need to to kind of see what <unk>.
Tony G. Bowen: And then the follow-on to that is, Real quick, let me just slide in the second part, Tony. I think Jeff attributed it to EITC and that situation. Are you guys, have you done survey work? Do you think that's why it is? That's why you think it is? Or might it just be slow?
Speaker Change: He gets finalized and then just filing their taxes to that point. That's all just timing I think when we look at the things we can control our operational execution.
Tony G. Bowen: I'm curious what you're seeing and hearing from consumers. Is there a need for money? You know, I thought there might have been some this year and that might have pushed them earlier, although I understand why they would wait under the EITC dynamic. Thanks a lot, but I appreciate you taking it all together. Let me start with some clarification, because I probably wasn't clear enough. So I think the overall industry is starting slower, and that would include us, obviously. We're a big part, especially the early part of the industry. And that's not atypical.
Speaker Change: Our pricing mix.
Our volume of new clients prior clients everything everything looks good. So that's what I mean by 31, theyre, starting well for us, even though volumes slower than what ultimately land. We know that's just timing that's all going to catch up here in the next few weeks I'll, let Jeff at the ITC point.
Jeff: Yes, I mean, it's obviously ITC in CTC, and so theres going to be some overlap there. So Tony just commented on that but again, our focus early season on value prop and refund advanced messaging.
Jeff: That's that's that's strong we are in the market, we're communicating that value and what you may see the most is what you see on television.
Tony G. Bowen: I mean, I think you see that Scott, you've been around this business for a long time, a lot of times early in the season, especially when you compare on a day-to-day basis, typically shows softer volume. I think CTC is exaggerating that a little bit this year. We know, we've talked to clients who are waiting, even though they don't technically need to, to kind of see what eventually gets finalized, and then just filing their taxes at that point.
Jeff: That advertising creative is performing very well with the refund advance, but underneath that is a lot of very specific targeted work, we're doing with audiences.
Jeff: And we know that's an important segment to do better with this year.
Speaker Change: Great. Thanks for that clarification.
Speaker Change: AI AI taxes here.
Speaker Change: I just wanted to it's early for you, but I just want your first read if we could have doubt about that and maybe a part two of this one because I like the part of twos and threes.
Tony G. Bowen: That's all just timing. I think when we look at the things we can control, our operational execution, our pricing mix, you know, our volume of new clients, prior clients, everything, everything looks good. So that's what I mean by, you know, starting well for us, even though volumes are slower than where they will ultimately land. We know that's just timing. That's all going to catch up here in the next few weeks. I'll let Jeff hit the EITC.
Speaker Change: <unk>.
Speaker Change: The decision to price free on attained skewed.
What was behind that strategy.
Speaker Change: Not free and free I get it, but just a little bit more elaboration on that approach.
Speaker Change: But more importantly on the first question what are the early signs that youre seeing from that rollout.
Speaker Change: Yes.
It's all through eight year point. It is absolutely early both in absolute terms about generative AI and certainly for us with AI tax assist.
Jeffrey J. Jones: Yeah, I mean, obviously, EITC and CTC clients; there's going to be some overlap there. So you know, Tony just commented on that. But again, our focus early season on value prop and refund advanced messaging. You know, that's, that's strong. We are in the market, we're communicating that value. And you know, what you may see the most is what you see on television.
Speaker Change: I am very pleased with how quickly we brought this product to market both in DIY and in our call center operations to different products.
Speaker Change: And the teams looking at lots of things every day.
Speaker Change: Ultimately, what we want to see is.
Speaker Change: What's the consumer behavior, how often are they using AI tax exist versus self help versus opting for a tax professional to help them.
Speaker Change: It's unknown at this point they have great choices. The user experience is very strong, but we're watching that kind of simple human behavior. Ultimately we want to see if this product can help drive higher conversion inside DIY.
Jeffrey J. Jones: That advertising creative is performing very well with refund advance, but underneath that is a lot of very specific targeted work we're doing with audiences. And, you know, we know that's an important segment to do better with this year. Great, thanks for all that clarification, guys. A.I.
Speaker Change: But we're looking at accuracy and quality and what consumers choose so I think as this tax season plays out and we get into Q3 and Q4, we will know a lot more and be able to share a lot more about our learning.
Jeffrey J. Jones: Tax Assist, it's early for you, but I just want your first read, if we could, about that, and maybe a part two of this one, because I like the part twos and threes. The decision to price it free on the paid SKUs, just kind of what was behind that strategy, not free and cheap, I get it, but just a little bit more elaboration on that approach. But more importantly, on the first question, just what are the early signs that you're seeing from that rollout? Yeah, I mean, I'll reiterate your point.
Speaker Change: The idea about pricing it for free is just the ability to strengthen the value proposition we have versus competitors.
Speaker Change: It's really that simple.
Speaker Change: The technology is new in the World, we feel great about our core user experience and the SKU lineup and our pricing for value perception versus competition and we thought this was a great opportunity to even strengthen the value we deliver for clients.
Jeffrey J. Jones: It is absolutely early, both in absolute terms about generative AI and certainly for us with AI tax assist. I'm very pleased with how quickly we brought this product to market, both in DIY and in our call center operations, two different products. And the team's looking at lots of things every day. I mean, ultimately, what we want to see is. What's the consumer behavior? How often are they using AI Tax Exist versus self-help versus opting for a tax professional to help them?
Speaker Change: Great. Thanks again, that's it for me correctly the tax season, Congrats again Tony.
Tony: Thanks, Scott I appreciate it.
Speaker Change: Thank you.
Speaker Change: Our next question.
Alex: Comes from the line of Alex Paris Barrington Research Your question. Please Alex.
Alex Paris: Yes. Thank you I'll add my congratulations as well, Tony but we will talk later.
Alex Paris: Sure Alex.
Alex Paris: Question on pricing I think you just said that it's low single digit price increases unassisted and then you had said I think in the prepared text that youre, taking modest price increases on the DIY side as well orders of magnitude low single digits like assisted as my first question and second.
Jeffrey J. Jones: That's unknown at this point. They have many choices. The user experience is very strong, but we're watching that kind of simple human behavior. Ultimately, we want to see if this product can help drive higher conversion inside DIY. But we're looking at accuracy and quality and what consumers choose. So, you know, I think as this tax season plays out and we get into Q3 and Q4, we will know a lot more and be able to share a lot more about our learning. The idea about pricing it for free is just the ability to strengthen the value proposition we have versus competitors. It's really that simple. The technology is new in the world.
Alex Paris: How has that changed if any the price discount versus turbotax for example.
Alex Paris: So this is Jeff Alice I'll chime in first in in consumer tax assisted and DIY.
Jeffrey D. Goldstein: Two to three 4% kind of range and similar in both channels.
Jeffrey D. Goldstein: Obviously in DIY, we can be more dynamic with the pricing given the nature of the channel and what we see happening competitively in the market.
Jeffrey D. Goldstein: For years now we have maintained a price advantage relative to turbotax.
Jeffrey J. Jones: We feel great about our core user experience and the SKU lineup and our pricing for value perception versus competition. And we thought this was a great opportunity to even strengthen the value we deliver for clients. Thanks again, that's it for me, go out for the tax season, congrats again. Thanks Scott, I appreciate it.
Jeffrey D. Goldstein: And as the quality of our experiences grown we feel more and more confident about closing that price gap.
Jeffrey D. Goldstein: They continue to take prices dramatically.
Jeffrey D. Goldstein: So we're not trying to follow their lead necessarily as they continue to take significant price increases, but we do see the ability to close the gap, we wanted to be really intentional about that and make sure that the consumer is telling us that they are getting great value things like AI tax exist and the experience.
Operator: Thank you. Our next question comes from the line of Alex Paris of Barrington Research. Your question, please, Alex. Yes, thank you. I'll add my congratulations as well, Tony, but we'll talk later.
Jeffrey D. Goldstein: That theyre getting is worth paying for.
Jeffrey D. Goldstein: And so that's a little bit of thinking about how we view pricing strategy, but in DIY. It obviously is a dynamic.
Alex Paris: Thank you, Alex. Question on pricing. I think you just said that it's low single-digit price increases on Assisted. And then you had said, in the prepared text, that you're taking modest price increases on the DIY side as well. Orders of magnitude, low single digits like Assisted.
Jeffrey D. Goldstein: Dynamic than what we do in assisted.
Jeffrey D. Goldstein: Great.
Speaker Change: Point of clarification, you said your prices up to three 4% on both sides both channels DIY, but they continue to take price dramatically. So I would take away from that your price discount versus turbo did.
Jeffrey J. Jones: And second, how has that changed, if any, the price discount versus TurboTax, for example? So this is Jeff Ousselt. Please chime in first. I mean, yeah, in consumer tax assisted in DIY, you know, 2, 3, 4 percent of the kind of range and similar in both channels. Obviously, in DIY, we can be more dynamic with the pricing, given the nature of the channel and what we see happening competitively in the market. You know, for years now, we have maintained a price advantage relative to TurboTax. And as the quality of our experience has grown, we feel more and more confident about closing that price gap. They continue to raise prices dramatically.
Speaker Change: It did not narrow, but you see the opportunity for it to narrow over time is that correct.
Speaker Change: I think thats generally right with it.
Speaker Change: Gets complex fast because there are so many different skus there are attaches to skus all of those have different price gaps. So I'm definitely generalizing our philosophy on pricing versus trying to do a SKU by SKU lineup in comparison.
Speaker Change: Tony would you would you Adam I think the only thing is on the paid Skus that include AI assess we know we've got a much larger price discrepancy right. So I think to your point it depends on which skew in which product your bonds.
Jeffrey J. Jones: And so we're not necessarily trying to follow their lead necessarily as they continue to take significant price increases, but we do see the ability to close the gap. We want to be really intentional about that and make sure that the consumer is telling us that they're getting great value, things like AI tax exist, and the experience that they're getting is worth paying for. And so that's a little bit of the thinking about how we view pricing strategy. But in DIY, it obviously is a bit more dynamic than what we do in assisted.
Speaker Change: Much time in the season.
Speaker Change: Definitely think that having an advantage is important we're trying to lean into that and we know as the number two player in the DIY category.
Speaker Change: Used prices, an additional piece of the value proposition to drive volume, but still drive overall revenue growth and that's essentially been our strategy. The last few years and they will continue this year.
Speaker Change: Okay, Great I appreciate that and then.
Speaker Change: Complexity tax code changes.
Speaker Change: While modest do you expect any lift in NAC due to tax code changes.
Jeffrey J. Jones: Great, so just a point of clarification, you said your price is up 2, 3, 4 percent on both sides, both channels, DIY, but they continue to take prices dramatically. So, I would take away from that, your price discount versus turbo did not narrow, but you see the opportunity for it to narrow over time, is that correct? I think that's generally right with the, you know, it gets complex fast because there are so many different SKUs. There are attached to SKUs. All of those have different price gaps, so I'm definitely generalizing our philosophy on pricing versus trying to do a skew-by-skew lineup in comparison. Tony, would you add anything?
Speaker Change: This year.
Speaker Change: Yes, I think we both about the answer at the same time not not really I mean, this is a year where other than CTC, it's not a year, where we see a lot of changes happening that benefit our customers. So that's really the one and obviously thats more about timing as we talked earlier.
Speaker Change: Yeah.
Speaker Change: Great and then.
Speaker Change: I guess last question for me.
Speaker Change: H&R block has routinely repurchased franchise locations I assume thats, a first half a fair given the tax season is awfully busy I think your target of 100 to 150 per year do you expect to be in that same.
Jeffrey J. Jones: Well, I think the only thing is on the paid SKUs that include AI assist. We know we've got a much larger price discrepancy. Right. So I think, to your point, it depends on which SKU and which product you're buying. And which time of season it is.
Speaker Change: Neighborhood.
Speaker Change: This year.
Speaker Change: Yeah, you're exactly right. So we do almost all of those in the first half we try to close those base rate before tax season starts which is now behind us.
Speaker Change: Probably closer to 150 level at this point so the team did a nice job.
Tony G. Bowen: We definitely think that having an advantage is important. We're trying to lean into that. And we know, as a number two player in the DIY category, we can use price as an additional piece of the value proposition to drive volume, but still drive overall revenue growth.
Speaker Change: And the franchisees being willing to sell which is which has been fantastic and we love acquiring them if they're if they're willing buyers sorry, if they are willing sellers, where the willing buyers and it's been a great use of capital we've got a great ROI on those investments. The integration is very seamless given they're already operating as H&R block location. So we're always.
Tony G. Bowen: And that's essentially been our strategy the last few years, and it will continue this year. Thanks. Okay, great. I appreciate that. And then there are the complications of tax code changes.
Speaker Change: His willingness at the locations are right, which they typically are.
Speaker Change: And like I said this year it probably is going to end up being about 150 in total.
Alex Paris: While modest, do you expect any lift in NAC due to tax code changes this year? Well, yeah, we're both about to answer at the same time. Not really.
Speaker Change: Great Alright, well. Thank you that answers my questions guys. Thank you.
Speaker Change: Thanks, Alex Alex.
Speaker Change: Thank you I would now like to turn the conference back to Michaella Gallina for closing remarks.
Jeffrey J. Jones: I mean, this is a year where, other than CTC, it's not a year where we see a lot of changes happening that benefit our customers. So that's really the one. And obviously, that's more about timing, as we talked earlier.
Michael Millman: Thanks, Latif and thanks, everyone for joining US today. This concludes our second quarter fiscal 2024 financial results Conference call.
Jeffrey J. Jones: Great. And then, um, I guess the last question for me: H & R Block has routinely repurchased franchise locations.
Speaker Change: Thank you for participating.
Participating you may now disconnect.
Speaker Change: Okay.
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Alex Paris: I assume that's a first half affair given the tax season is awfully busy. I think you target 100 to 150 per year. Do you expect to be in that same neighborhood this year? Yeah, you're exactly right. So, we do almost all of those in the first half. We try to close those basically before tax season starts, which is now behind us. We're probably closer to the 150 level at this point.
Speaker Change: Okay.
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Tony G. Bowen: So, the team did a nice job of reacting to franchisees being willing to sell, which has been fantastic. I mean, we love acquiring them if they're willing buyers, or, sorry, if they're willing sellers. We're the willing buyers. It's been a great use of capital. We've got a great ROI on those investments, and the integration is very seamless given they're already operating as H & R Block locations. So, we're always willing if the locations are right, which they typically are. And like I said, this year, it probably is going to end up being about 150 in total.
Speaker Change: Okay.
Speaker Change: Phil.
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Tony G. Bowen: Great. All right. Well, thank you. That answers my questions, guys.
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Speaker Change: Okay.
Alex Paris: Thank you. Thanks, Alex. Thank you. I would now like to turn the conference back to Michaela Galina for closing remarks. Thanks Lateef, and thanks everyone for joining us today. This concludes our second quarter fiscal 2024 financial results conference call.
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Michaela Galina: Thank you for participating. You may now disconnect................. Copyright 2021 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent.
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