Q4 2024 H&R Block Inc Earnings Call
Thank you for standing by and welcome to H&R Block's fourth quarter fiscal year 2024 earnings conference call. At this time all participants are in a listen only mode. After the speaker presentation it will be.
Yeah.
To ask a.
Speaker Change: Question during the session you will need to press star one one on your telephone to remove yourself from the queue. You May press star one again.
I would now like to hand, the call over to Michaella Gallina, Vice President Investor Relations. Please go ahead.
Michaella Gallina: Thank you operator, good afternoon, everyone and welcome to H&R block fiscal year 'twenty 'twenty four financial results Conference call. Joining me today are Jeff Jones, our President and Chief Executive Officer until he Bowen, our Chief Financial Officer.
Speaker Change: Earlier today, we issued a press release and presentation deck can be downloaded or viewed live on our website at investors that HR block Dot com.
Speaker Change: Our call is being broadcast and webcast live and a replay of the webcast will be available for 90 days 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 in any forward looking.
Speaker Change: <unk> 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. 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.
As in the appendix of our presentation. Finally, the content of this call contains time sensitive information accurate only as of today August 15 2024.
Speaker Change: H&R block undertakes no obligation to revise or otherwise update any statement to reflect events or circumstances. After the date of this call.
Jeff: With that I will now turn it over to Jeff good.
Jeff Good: Good afternoon, everyone and thanks for joining us today.
Jeff Good: We will begin by sharing our results for the full fiscal year and the progress we continue to make on our block Horizons imperatives.
Jeff Good: Tony will discuss our financial performance and outlook for fiscal 'twenty five and then we'll open it up for Q&A.
Tony: Beginning with our fiscal 'twenty four results I am pleased that we were able to deliver another year of revenue growth EBITDA grows even faster and double digit EPS growth.
Tony: Our DIY business continued its momentum with market share gains for the second consecutive year.
Tony: Performance was driven by paid client and not growth as well as ongoing strength in our tax Pro review product.
Tony: I was pleased with how fast we were able to launch AI tax assist which resulted in higher new client conversion and our customer satisfaction scores remained strong.
Tony: In assisted our brand continued to resonate with higher value clients, and we were able to grow <unk>.
Tony: Trends in assisted small business tax also remain positive this year.
Tony: In addition, we're continuing to drive value for shareholders through our capital allocation practice.
Tony: In fact today, we announced another 17% increase to our quarterly dividend as well as the new repurchase authorization of $1 $5 billion, which replaces the prior authorization.
Tony: Since 2016 through today.
Tony: We've increased the dividend, 88% and repurchased more than 40% of shares outstanding.
Tony: Looking to fiscal 'twenty, five we feel well positioned to deliver for our clients and shareholders.
Tony: Tony will share more about our outlook in a moment.
Tony: But first let me turn to our block Horizon strategy, where we continue to make important progress in all three of our imperatives.
Tony: Starting with small business we.
Tony: We had another good year in tax delivering revenue growth in the mid single digits.
Speaker Change: <unk> grew 3% entity trends remained strong and bookkeeping and payroll had another year of double digit growth.
Speaker Change: Our centralized fulfillment model alongside our dedicated sales team have driven services client conversion and we continue to see a lot of opportunity ahead.
Speaker Change: Turning to wave I'm pleased with the progress that's been made in the last year on our key priorities to accelerate revenue growth and drive profitability.
Speaker Change: Youll recall, we recently launched a new paid subscription solution called pro tier.
Speaker Change: This along with our paid receipt products are both designed to further empower small business owners to manage their business better.
Speaker Change: These products have been performing better than anticipated.
Speaker Change: The full year revenue growth was 7%.
Speaker Change: We continue to improve the losses in the business and expect ongoing positive trends in fiscal 'twenty five.
Speaker Change: Moving onto our financial products imperative, we're pleased with the growth of our mobile banking platform spruce and its performance in both the assisted and DIY channels. This season.
Speaker Change: Since launch through June 30, spruce has 476000 sign ups and we're nearing a milestone of $1 billion in customer deposits.
Speaker Change: We're pleased to see positive deposit trends with nearly 50% coming from non tax sources. This year.
Speaker Change: In fact last month deposits increased 60% year over year.
Speaker Change: At the same time spruce is continuing to deliver on its mission to help people be better with money.
Speaker Change: We're excited about new innovations that will be rolling out in the coming months and our team is focused on acquiring users in and out of the tax season.
Speaker Change: Now, let's turn to block experience, which is all about blending digital tools with human expertise and care we.
Speaker Change: We feel great about how we're positioned to serve clients. However, they want to be served.
Speaker Change: Fully virtual to fully in person in every way in between.
Speaker Change: In DIY, our strategy continues to deliver and we're pleased with the results.
Speaker Change: As I mentioned, we had meaningful growth in paid clients and knack, which translated to strong revenue growth of 11%. This year AI taxis has performed well and we're excited about our gen. AI use cases, which have the potential to drive future efficiencies and cost savings.
Speaker Change: We look forward to continuing this momentum in fiscal year 'twenty five in the assisted channel. We were pleased with our net growth improve client satisfaction scores and success in attracting and serving higher value clients. We're clear about where we can improve the experience for our clients and recently welcomed Curtis Campbell.
Curtis Campbell: As president of global consumer tax and Chief product Officer, who has more than 10 years of tax industry experience.
Curtis Campbell: His impact is already being felt across the organization and I am excited about his leadership.
Curtis Campbell: The last few years, we've made significant strides in our products services and features to our block Horizons plan and I'm feeling very good about our positioning for fiscal year 'twenty five.
Tony: I turn things over to Tony to share more about our financial performance and outlook I want to take a moment to thank him for his incredible tenure at H&R ballpark as we shared on the Q2 call Tony made the personal decision to retire after a 20 year career with block <unk>.
Speaker Change: Tony has been an integral part of our company playing a key role in our growth transformation and success his financial acumen and strategic insights and industry experience have been invaluable to our team.
Speaker Change: During his tenure Tony helped us navigate through numerous challenges and opportunities.
Tony: Ensuring that we remain on strong financial footing. He began his career with H&R block is the senior Treasury analyst and has since held multiple executive roles under his leadership as CFO, we've returned more than $3 9 billion to shareholders.
Speaker Change: His impact on H&R block will be felt for years to come.
Speaker Change: On behalf of the entire block family and our board of directors I want to extend our gratitude to Tony for his years of service and leadership and wish him all the best in his retirement in future endeavors.
Speaker Change: As you may have seen in our announcement last week I'm pleased to share that we've hired Tony successor.
Speaker Change: Tiffany Mason brings a proven track record of financial leadership in consumer services retail and franchising, which are all critical to our business.
Speaker Change: She most recently served as EVP and CFO at driven brands are high growth Auto services company, where she drove strong organic and inorganic growth.
Tiffany Mason: Led the company through a successful IPO.
Speaker Change: Prior to that Tiffany spent 13 years at Lowe's, a fortune 50, Omnichannel home improvement retailer Tony Antiphony are working closely together to ensure a seamless transition and she will officially step into the role of CFO on September 13.
Speaker Change: In addition, as we continue to transform H&R block into an agile and innovative company that delivers more value to our clients associates and shareholders. I've also added another key member to our senior leadership team.
Speaker Change: Scott manual joined last week, as Chief strategy and operations Officer and reports directly to me.
Speaker Change: Within this role Scott is overseeing functions essential to driving our long term enterprise strategy and improving our execution.
Speaker Change: Scott has a long history of delivering customer centric innovation in complex and dynamic environment.
Speaker Change: He is an accomplished engineer has worked in large scale companies and private equity and across industries and he is steeped in artificial intelligence.
Speaker Change: To have Curtis Tiffany and Scott joined the already strong senior leadership team.
Speaker Change: With that Tony I will now turn it over to you.
Tony Antiphony: Thank you Jeff.
Tony Antiphony: It's been an incredible journey and I am deeply grateful for their career I've had an H&R block.
Speaker Change: First and foremost I want to thank our finance Department and associates, whose hard work and commitment have been instrumental in driving our success.
Also want to extend my gratitude to our board of directors shareholders and investors for their support and trust.
Speaker Change: As I look back on my time with the company I'm immensely proud of what we've accomplished together.
Speaker Change: I am confident that block will continue to drive value for shareholders in the years to come.
Speaker Change: With that I will now turn to our fiscal year 'twenty four results.
Speaker Change: We delivered $3 $6 billion of revenue, an increase of 4% or $138 million, primarily due to a higher net average charge and company on volumes in the assisted category and.
Speaker Change: Combined with greater online paid returns at a higher net average charge in DIY.
Speaker Change: Partially offset by lower Emerald card activity in the current year.
Speaker Change: Total operating expenses in the year were $2 8 billion, an increase of 3% or $82 million, primarily due to higher labor cost and bad debt expense.
Speaker Change: Partially offset by lower consulting and outsource services.
Speaker Change: Interest expense was $79 million, an increase of 8% over the prior year due to higher draws on our line of credit and the higher rate environment.
Speaker Change: Pre tax income of $762 million, an increase of $51 million or 7%, primarily due to higher revenues in the current year.
Speaker Change: Our effective tax rate was 21, 6% for the full year versus 21% in the prior year.
Turning to EBITDA, we delivered $963 million compared to $915 million in the prior year, an increase of more than 5%.
Speaker Change: We are pleased with another year of growing EBITDA faster than revenue.
Speaker Change: Earnings per share from continuing operations increased from $3 56 to $4 14.
Speaker Change: Our 16% while adjusted earnings per share from continuing operations increased from $3 82.
Speaker Change: To $4 41.
Speaker Change: 15%.
Speaker Change: In FY 'twenty four we acquired a total of 158 franchise offices.
Speaker Change: We feel great about franchisees willingness to sell to US and are pleased with how this strategy supports our longer term revenue and earnings growth.
Speaker Change: As Jeff shared our capital allocation story remains strong.
Jeff Good: Regardless of year to year nuances are disciplined approach drives meaningful value for shareholders, we produced significant and stable cash flow pay a growing dividend and buyback a material number of shares.
Jeff Good: We also today announced a 17% increase in our quarterly dividend to <unk> 37 five per share.
Jeff Good: Since 2016, we've increased the dividend by 88%.
Jeff Good: In FY 'twenty, four we completed $350 million of share repurchases at an average price of $43 66.
And today, we are pleased to announce a new share repurchase authorization of $1 5 billion.
Jeff Good: Since 2016, we have repurchased more than $2 3 billion returning over 89 million shares for more than 40% of shares outstanding at an average price of $26 74.
Jeff Good: Now turning to our FY 'twenty five outlook, let me begin with context around the assumptions we've made.
Jeff Good: First we believe the industry growth next year will be in line with historical trends are about 1%.
Jeff Good: Second we assume that we will maintain market share in the overall tax category, but our goal of course is to always grow share.
Jeff Good: Third we expect to continue taking low single digit price, which we successfully executed again this year with customer satisfaction scores remaining strong.
Jeff Good: Fourth we expect wave in small business to continue to be revenue growth drivers and lastly, we will continue to repurchase franchise locations opportunistically.
Jeff Good: As a result, our outlook for FY 'twenty five is for revenue to be in the range of $3 69 to $3 75 billion.
Jeff Good: EBITDA to be in the range of $975 million to $1 2 billion.
Jeff Good: EPS to be in the range of $5 15 to $5 35.
Jeff Good: Which will benefit from an unusually low effective tax rate of approximately 13%.
Jeff Good: The tax rate is positively impacted due to the anticipated closures of various matters under examination and the expiration of statute of limitations.
Jeff Good: We expect it to contribute approximately 50 cents to EPS in fiscal year 'twenty five.
Jeff Good: As we have shared we have multiple levers to drive annual revenue growth in our targeted range of 3% to 6%.
Jeff Good: And we believe we can leverage our cost structure for EBITDA to outpace revenue, while utilizing share repurchase to grow EPS even faster.
All in all we are well positioned for fiscal year, 'twenty five and beyond.
Jeff Good: In closing it has been an honor to serve as CFO and I look forward to seeing the company's continued success in the years to come with that I will now turn it back over to Jeff for some closing remarks.
Jeff Good: Thank you Tony.
Jeff Good: As I reflect on all that we've accomplished I'm grateful for our associates and team.
Jeff Good: Every day, we strive to deliver on our purpose of providing help and inspiring confidence in our clients and communities everywhere.
Jeff Good: I would like to extend a sincere and meaningful thank you to our tax professionals, our franchisees and our associates, who make our success possible.
Jeff Good: Looking forward to all we will accomplish in the next year and sharing our Q1 results in November.
Speaker Change: Now operator, we will open the line for questions.
Speaker Change: As a reminder to ask a question you will need to press star one one on your telephone to remove yourself from the queue. You May press star one again.
Speaker Change: Please standby, while we compile the Q&A roster.
<unk> Mehta: Our first question comes from the line of <unk> Mehta of Northcoast research.
Mehta: Hey, good afternoon first of all Tony.
Speaker Change: They're working with you the best of luck in your retirement.
Thanks Kartik.
Speaker Change: Hey, Jeff if you look at FY 'twenty five.
Speaker Change: Our next tax season, and compared to this tax season.
What changes do you think that block.
Speaker Change: To make sure that you maintain your market share on the assisted side.
Got it thank you.
Speaker Change: I mean, there's no question.
Speaker Change: It's up a bit in our last call of just the opportunity I saw last year as I traveled in office execution in assisted.
Speaker Change: We have lots and lots of clients that are choosing the brand, they're making an appointment they are coming to the office and we just.
Speaker Change: Didn't deliver well enough and so that's that's really the focus of the entire team as we go into 'twenty five is how do we improve the experience.
Speaker Change: How do we better manage expectations, how do we help clients understand the value.
Speaker Change: And then ultimately how do we deliver on that and with a real emphasis on new clients in particular.
Speaker Change: We saw theres, even more opportunity for those people who are coming to us for the first time.
Speaker Change: Don't really understand exactly how the process should work at H&R block and so.
Speaker Change: There's many things across all the different businesses that teams are working on but that has everyone's attention for next year.
Speaker Change: And then sorry.
Speaker Change: Free cash flow.
Your free cash flow measure was much higher than net income I am assuming depreciation will be higher than Capex again next year.
Speaker Change: But any other changes on the operating cash flow line that might impact free cash flow next year.
Speaker Change: No I mean, youre right <unk> depreciation and amortization continues to exceed Capex, which is why we are generating more than 100% of free cash flow relative to net income so that trend should continue as you know FY.
Speaker Change: FY2023 we had unusually high free cash flow because of some tax benefits that we got but this year I would say it was more of a normal year.
Speaker Change: Free cash flow as defined by cash flow from operations less Capex is north of $650 million I think that's a pretty good run rate number for us going forward.
Speaker Change: Alright, Thank you I appreciate it.
Speaker Change: Thanks, Scott Thanks Kartik.
Speaker Change: Thank you our next question.
Speaker Change: Comes from the line of Scott Schneeberger of Oppenheimer and company.
Scott Schneeberger: Thanks, very much good afternoon and.
Scott Schneeberger: Tony going to Miss you as well all the best.
Scott Schneeberger: And I'll get a question to you I promise, but it's starting now Jeff.
Scott Schneeberger: Level.
Speaker Change: Looking out to next year.
Scott Schneeberger: Yes.
Speaker Change: Given a little bit of color on what you're expecting.
Speaker Change: The next earnings earnings call is going to be right around the election, I'm curious, how you're thinking about.
Speaker Change: The political outlook and develops developments in that 1% growth for the industry.
Speaker Change: Just kind of maybe compare and contrast candidates and other things you are thinking about out there.
Speaker Change: That could influence the tax season next year, and then I'll follow up a quick follow up thanks.
Speaker Change: Alright, yes.
Speaker Change: The compare and contrast candidates for the political pundits.
Speaker Change: We absolutely have been in this business long enough to be through many election cycles, and just have never really seen an election itself impact the tax filing season.
Speaker Change: So.
Speaker Change: It will happen and then as we get into whatever happens in terms of who wins whatever policy changes they may make and how that trickles down and impacts the consumer I mean, we certainly arent trying to predict that but that's that's where it really starts to potentially have an impact positive potentially on the business as well.
Speaker Change: So as we think about the season, Tony mentioned, we expect it to be a more normal season. Each year. There is always a little something that pops up I think we've proven it great ability to respond to whatever those things are.
Speaker Change: <unk> thousand 99 cases have been on the agenda for a couple of years.
Speaker Change: We're ready if it happens it's not built into the plan. We don't know if it will happen. So that does hang out there and we will wait and see but otherwise were most focus on what can we best do to serve our customers and how do we build the best products and experiences to win more people to the brand.
Speaker Change: Okay. Thanks, I appreciate that Jeff just one more follow up for you and then I'll get to Tony but the Kartik asked about.
Speaker Change: Market share opportunity and assisted in what you can do there you have done a nice job. The last couple of years and do it yourself on the market share front is that sustainable and what are some of the levers you're pulling to try and keep that position.
Speaker Change: Sure.
Speaker Change: Well, it's been a couple of years of really nice performance as you said and the key always starts with having an excellent product and experience that is easy for the consumer and we feel very good about the product of course, Theres always things, we want to do every year to make it better and better but that's always the starting point.
Speaker Change: We have to deliver great value and price competitively.
Speaker Change: We're doing that that's obviously a more dynamic conversation as the season unfolds and we see competitive moves and then the third thing is we continue to be very aggressive about going after dissatisfied turbotax going to clients.
Speaker Change: And we've made that very easy to switch.
Speaker Change: We have been very aggressive in how we market against them and you should expect us to follow that recipe, but not take anything for granted.
Speaker Change: Great. Thanks, I appreciate that and then Tony.
Again my.
Speaker Change: My question to you is on margin expansion it looks like got a little bit. This year, you referenced growing EBITDA faster than revenue.
Speaker Change: And the guidance next year appears.
Speaker Change: The ranges imply kind of in line.
Tiffany Mason: What is the opportunity as you kind of had passed the baton to Tiffany of Av.
Tiffany Mason: What type of margin expansion can be achieved.
Tiffany Mason: In years to come and where might however be there. Thanks.
Tiffany Mason: Thanks, Scott and I really appreciate it working with you over the years so.
Speaker Change: We've delivered pretty consistently EBITDA growing faster than revenue for a number of years and we've talked about if we can hit that 3% revenue number EBITDA can grow over the long term and one five times that rate and I think that just takes advantage of the cost structure takes advantage of us managing.
Speaker Change: <unk> trying to drive productivity figuring out ways to invest in the business by taking out costs in other places and as you said margins expanded several years in a row and I think it will continue.
Speaker Change: Guided to obviously topline growth again in 'twenty, five we guided to EBITDA growing faster than the revenue and EPS growing even faster. So the model is working there's always Europe specific nuances one year over over another this year, we have some <unk>.
Speaker Change: BRC credits that we got the benefit of <unk> 24 that arent continuing in 'twenty five so that that has EBITDA being a little bit lower on a year over year basis, but it's still outpacing revenue. When you look at the guidance range. So overall the model's still working no inflation has moderated versus what we saw kind of coming out of it.
Speaker Change: Pandemic. So that's obviously helpful. We're still seeing things like merit increases and rent go up but some of those other things like supplies and utilities that were kind of out of control for a few years are now kind of more normal rates. So.
Speaker Change: The model is working and I think it will continue to work for the foreseeable future.
Speaker Change: Great. Thanks, a lot.
Speaker Change: Okay.
Scott: Thanks Scott.
Speaker Change: Thank you our.
Speaker Change: Next question.
Speaker Change: Comes from the line of.
Speaker Change: George Tong of Goldman Sachs.
George Tong: Hi, Thanks, good morning, or good afternoon, I would also like to extend thanks and congrats Tony.
Speaker Change: Best wishes ahead.
Tony Antiphony: Thank you George I appreciate it.
Speaker Change: So you mentioned.
Speaker Change: Looking at the outlook industry volumes.
Speaker Change: It can be up 1% can you break that down into expectations for the assisted and DIY categories. How fast you expect both of those to grow in the 2025 tax season.
Speaker Change: Yes, I mean, I don't think our expectations for this upcoming season are different than what we would've thought over the last several years. Obviously this most recent one was a little bit unusual because of the California extension, causing some kind of rebound. This most recent tax season, but I think going into next.
Speaker Change: Year, we expect DIY to grow a little bit faster than assisted I think thats consistent with the longer term trend.
Speaker Change: Overall industry growth of 1% <unk> DIY growing a couple percent assisted slightly up I think.
Speaker Change: It's been our mantra for a long time and I think over.
Speaker Change: Year to year, you might have a slight nuances, but over the longer term that's been that's been the trend.
Speaker Change: Got it that's helpful.
Speaker Change: And then with respect to the <unk>.
Speaker Change: Bold and maintain market share is that how much of that is a reflection of overall tax volumes versus.
Speaker Change: Individually.
Speaker Change: And DIY in other words would you expect to be gaining share in DIY is that the base case assumed in guidance and is the guidance does the guidance also assume assisted market share is stable.
Speaker Change: Yes, I think the we.
Speaker Change: With we want to make sure we maintain overall share we want to make sure that we're serving as many as many customers as a category is growing and obviously we did that in this most recent year, so thats a starting place.
Jeff Good: Obviously, given the trends in our assisted business over the last few years, we know that thats more of a headwind in DIY has got a lot of tailwind so that wouldn't be surprising, but as Jeff said, we're making a lot of changes and focus in the assisted channel to try to get back to flat year. So that's definitely the goal, but but it's not a current <unk>.
Jeff Good: Spectation overall share being flat across the tax category is the base expectation.
Speaker Change: Got it that's helpful and just one more quick follow up on <unk>.
Speaker Change: <unk> to drive higher or stable or higher market share in assisted.
Speaker Change: I know last year the trying.
Speaker Change: Trying to maintain market share was a big area of focus for FSA and you've tried a number of initiatives I guess, how will the approach this year be different than last year. Given last year, you had such a big focus on maintaining our market share in assisted as well.
Speaker Change: Yes, Youre exactly right, we did and we will for sure I mean last year, we were able to slow the decline among ITC filers. So we did see progress there that's good news.
Speaker Change: But it's not enough and some of the things I mentioned about converting more of the people who are choosing us and starting with us.
Speaker Change: Is really what is a big shift for this year.
Speaker Change: And as I mentioned, a couple of times already George I mean, when we look at the customer journey and the fact that they're choosing us and they're coming in they're starting with us.
George Tong: Two big reasons that they didn't finish last year had a lot to do with they were new clients to block. They didn't fully understand how the process was going to work we didn't do a good enough job communicating and welcoming them to the brand and Thats a breakdown in execution. So what the team has been working on is <unk>.
Real changes to the client experience in the office, we think about before during and after tax prep and then specifically within it is on new clients.
Which we know is an extra area of emphasis.
Very helpful. Thank you very much.
George Tong: Thanks, George Thank you George.
Speaker Change: Thank you our next question.
Alex Paris: It comes from the line of Alex Paris Barrington Research.
Alex Paris: Hi, guys can you hear me.
Got you.
Thank you.
Speaker Change: I'd like to add my congratulations to Tony and we'll definitely Miss you.
Speaker Change: Just wanted to say to Tiffany who I'm sure is listening we look forward to working with you.
Speaker Change: Sure.
Tony Antiphony: Thank you Alex it's been a pleasure so <unk> been great over the years.
Tony Antiphony: Yeah same here thank you.
Tony Antiphony: So just to dive a little bit more into the fiscal 2025 guidance.
Speaker Change: You basically have revenue growth of 3% EBITDA growth at 4% and adjusted EPS growth at about 8%.
Speaker Change: So.
Speaker Change: First question is what sort of assumption do you have for share repurchases in fiscal 2025.
Speaker Change: Yes, I mean, we obviously, we don't share the specific number that we're targeting but obviously, we've assumed some share repurchase which is obviously driving EPS benefit obviously some of the share repurchase we did even in 'twenty four gives a benefit going into 'twenty five as well, but I think you should expect us to be on a trend similar to what we've done.
Speaker Change: In the last several years.
Speaker Change: Obviously, we try to be opportunistic and take advantage of volatility in the stock price that naturally happens over time, but I think our approach will be very consistent with what you've seen in the last several years.
Speaker Change: Great and then.
Speaker Change: Seasonally refresh my memory, you do more of your share repurchasing in the first half of the fiscal year.
Speaker Change: That's right, we typically come out of this call and have a focus on it so in Q1 and into Q2 and we do that for a couple of reasons. One is we get a better EPS benefit the earlier, we buy it in the year.
Speaker Change: Secondly, we're typically in blackout a lot of time during tax season. So for that reason, we try to do most of it in the first half of the year that isn't always the case there have been years, where we've done <unk> 501 programs that we've executed during tax season, we've done open market purchases coming out of tax season. So it's not always the case, but generally we try to do it in the <unk>.
Speaker Change: Half of the year.
Speaker Change: Great. Thank you and then.
Speaker Change: Regarding the long term growth algorithm.
Speaker Change: Rhythm.
Speaker Change: Yeah.
Speaker Change: For fiscal 2025, Youre kind of at the low end of that revenue range I assume there is some conservatism built into that adjusted EBITDA is definitely growing our EBITDA is growing faster than revenue, but I think you said it earlier, perhaps in response to a question you have some.
Speaker Change: ERC numbers that are not going to repeat this year versus last year is that.
Speaker Change: Entire explanation for the.
Speaker Change: The slightly lower EBITDA growth rate, then I would expect.
Speaker Change: But with all that said I just want to be clear I realize youre guidance is above consensus so just.
Speaker Change: Yes.
Speaker Change: The employee retention credit the employee retention credit is about a $15 million impact. So it definitely pushed EBITDA quite a bit higher if it wasn't for that that roll off that we received in 'twenty four.
Speaker Change: But regardless as you said, we tried to set these numbers in a level, where we can achieve.
Speaker Change #100: And the fact that the topline is in even if its a lower end of the range is still in the range top end of the EBITDA number is over $1 billion on the guidance range, which is an incredible feat. Obviously EPS is benefited from the much lower tax rate, which I talked about in the opening comments I mean, the fact that we exceeded $4 each.
Speaker Change #100: On an adjusted or a regular GAAP basis, and EPS in 'twenty, four and now guiding to a number that's over $5. Even if it's benefited from tax rate is an incredible feat. So feel good about the progress there is always year over year kind of P&L nuances. If you will but trajectory remains the same which is up into the right.
Speaker Change #100: Even with that expected one time <unk> <unk> per share gain as a result of the tax benefit the.
Speaker Change #101: The adjusted EPS guidance, excluding that benefit is still above consensus I wanted to ask you about.
Speaker Change #102: That tax benefit is there a particular quarter that you expect that to hit or is that going to hit evenly over the four quarters.
Speaker Change #103: No it'll it'll hit in a particular quarter once we resolve the open audit and kind of the statutes expire, we're not exactly sure which quarter that will be yet.
Speaker Change #103: It could be Q2 could be later in the year, but it will definitely happen, we believe in and the fiscal year, which is why we included in the guidance range.
Speaker Change #104: Got you so.
Speaker Change #105: You answered that question is unlikely in Q1, it's going to be Q2 or later in the year.
Speaker Change #104: Yes.
Speaker Change #104: As possible.
Speaker Change #104: We arent complete control of when that's going to happen, but it will happen by the end of the fiscal year.
Speaker Change #106: And then I think my last question for you is California.
Speaker Change #107: You got a little benefit in fiscal 'twenty four.
Speaker Change #108: Because of the extent the extended deadline from April 15th of October 15th as I recall, how much did that contribute to that extra bolus of revenue from the California, because I'm, assuming you've got to bolus of revenue from California last fall and then this spring.
Speaker Change #108: What's the grow over for fiscal 2025 because of that.
Speaker Change #109: I mean, maybe the way to think about is how much it drove the industry volume and as you saw the assisted category is probably up about a point more because of that California extension in the prior year. So you think that's driving a point of volume, but obviously not all of that is that doesn't equal a point of revenue. So it's probably.
Speaker Change #109: 75% of that from a revenue perspective, so three quarters of a point of revenue about a point of industry.
Speaker Change #109: Tax prep volume.
Speaker Change #110: Great Super helpful guys. Thanks again.
Speaker Change #111: Thank you thank you Alex.
Speaker Change #110: Yes.
Speaker Change #110: Thank you I would now like to turn the conference back through Mckellar Galena for closing remarks.
Mckellar Galena: Thanks, Keith and thanks, everyone for joining us we look forward to speaking with you next quarter.
Speaker Change #113: And this concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change #113: Okay.
Speaker Change #113: Okay.
Speaker Change #113: [music].
Speaker Change #113: Okay.
Speaker Change #113: Okay.
Speaker Change #113: Okay.
Speaker Change #113: [music].
Speaker Change #113: Okay.
Speaker Change #113: Thanks.
Okay.
Speaker Change #113: Okay.
Speaker Change #113: Sure.