H&R Block, Inc.

Good afternoon, ladies and gentlemen, and welcome to Q3 2020 H&R Block Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touch-tone telephone. I would now like to turn the conference over to your host, Mr. Colby Browne, Vice President of Finance and Investor Relations. Sir, the floor is yours.

Thank you, Anne. Good afternoon, everyone, and thank you for joining us to discuss our fiscal 2020 third quarter results. On the call today are Jeff Jones, our President and CEO, and Tony Bowen, our CFO. We posted today's press release on the Investor Relations website at hrblock.com. Also on the website, you will find a link for the webcast containing today's presentation, which will be posted after this call. Some of the figures that we'll discuss today are presented on a non-GAAP basis. We've reconciled the comparable GAAP and non-GAAP figures and schedules attached to our press release. Before we begin our prepared remarks, I'll remind everyone that this call will include forward-looking statements as defined under the securities laws. Such statements are based on current information and management's expectations as of this date, and are not guarantees of future performance. Forward-looking statements involve certain risks, uncertainties, and assumptions that are difficult to predict. As such, our actual outcomes and results could differ materially. You can learn more about these risks in our Form 10-K for fiscal 2019 and our other SEC filings. H&R Block undertakes no obligation to publicly update these risk factors or forward-looking statements. At the conclusion of our prepared remarks, we'll have a Q&A session. During Q&A, we ask that participants limit themselves to one question with a follow-up, after which they may choose to jump back into the queue. With that, I'll now turn the call over to Jeff.

Thank you, Colby. Good afternoon, everyone, and thanks for joining us. When we talked with you last quarter, we outlined our strategic objectives to digitally enable every aspect of our business, to deliver our expertise to consumers in new and exciting ways, and we're seeing some positive results. We're focused on serving assisted clients with higher quality and better value and are on track to achieve our goal of holding share in the category. We're seeing stronger demand for our virtual product, TaxProGo. We continue to grow clients in DIY. Client satisfaction scores are up across all products following a year in which we saw unprecedented growth. And we continue to make strides in small business, including another strong quarter from Wave. While pleased with these early results, we identified a couple of areas to improve DIY performance in the second half that I will comment on later. We have a lot to cover on today's call. First, I'll provide our perspective on what we've seen in the tax industry. Then I'll review our tax season to date results, discuss our expectations for the second half of the season, and provide an update on small business. Finally, Tony will review our third quarter results and offer additional thoughts on our financial outlook for the fiscal year. Starting with the industry, overall trends in filings are consistent with our expectations. At this point, the increase in DIY mix is at levels lower than last year. So while there was speculation by some that the second year of the new tax law would cause more assisted filers to switch to DIY, we aren't seeing any evidence of this in either our data or the industry's, and the change has actually moderated. Turning to our performance, I'd like to spend some time providing an update on our progress in each of the key areas we outlined last quarter. Starting with assisted, We've focused on leading the industry with upfront transparent pricing, enhancing our standard operating procedures, and digitizing how tax pros serve clients through WorkCenter. In pricing, we're bringing upfront and transparent to life in an even stronger way this year through a new price estimator tool to help our tax pros provide clients a better estimate at the outset. Upfront transparent pricing is a key element of our recently launched no-surprise guarantee, which also provides free audit assistance and a mid-year tax check-in for clients across all of our products. We've also improved WorkCenter, which digitizes how our tax pros serve and communicate with clients, providing them with a superior experience. We're seeing results from these efforts with higher retention for both new and prior clients, as well as better conversion. Client survey scores increased three points for price for value and two points for overall quality. Considering the nine-point improvement in these scores last season, these results are tremendous. This has led to a significant improvement in client trajectory compared to this time last year. With a lot of season left, we're confident that we will achieve our goal of holding share in the assisted category. Turning to virtual, tax season 20 marks the second year of TaxProGo, an innovative product that provides clients with access to the unparalleled expertise of our tax pros from the convenience of their mobile device. This year, we redesigned the client experience to improve the product flow, simplified pricing, and made it easier to connect with our expert tax pros. We're also highlighting the advantages of this product in our marketing, which is driving an increase in tax pro go demand and mobile usage. We're seeing the results of these efforts with improvements in key client service metrics and strong client growth. And while we're still in the early stages of this product, this continued growth gives us confidence that we can satisfy unmet needs and attract new clients to our brand. In DIY, we've maintained our challenger strategy of investing to improve the product and user experience, pricing at a level that is competitive and provides value to clients, and communicating this value to grow awareness and compel DIY consumers to switch to H&R Block. We continue to utilize AI and machine learning to improve ease, speed, and personalization in our product. We've also increased the prominence of online assist, which provides DIY clients with on-demand access to a TaxPro through chat, phone, and screen sharing. This product is priced competitively and is supported by the unmatched expertise of our extensive TaxPro network. And our service levels have been tremendous this season, with most clients able to access a TaxPro within one minute. Collectively, these efforts have led to strong results in our net promoter scores, increasing over three points. This is significant considering the nine-point increase we saw last year. And our product has received a number of third-party accolades, including number one in the Street.com's rankings of the best online tax software and NerdWallet's best software for simple returns. While we're excited about the progress we're making in our product and in the value we're delivering for our clients, we believe we can improve both our volume and net average charge results in the second half and have already taken the appropriate steps. First, we made changes to optimize our marketing investment to drive greater new client demand. And second, we've corrected an issue with a key online page that didn't allow clients to choose a different product resulting in a loss of monetization. Since we've remedied the issue, we have seen a 4% improvement in net average charge in DIY. We're confident that we've made the appropriate changes and believe that our second half will be stronger. We expect to end the year growing DIY clients in line with the category. Finally, in small business, starting with tax, we've highlighted our expertise through new tools and a redesigned experience. We're beginning to see traction from these new initiatives, but believe it will take some time to increase awareness of our small business expertise. With WAVE, we continue to innovate to simplify the financial lives of small business owners. During the quarter, WAVE continued to make progress on its strategic roadmap in a number of areas. We're seeing demand grow for WAVE advisors where clients can get personalized help from our in-house bookkeepers. In payroll, we're adding full service capabilities in more states to automatically file clients' state and federal payroll taxes. And in payments, we've made key changes to streamline the client onboarding process to assist clients in getting the right product and to gather key information earlier in the process. All of these improvements are fueling WAVE's impressive performance, which continued this quarter with year-over-year revenue growth of over 40%. To summarize, we're on track to deliver our financial outlook for the year by digitally enabling our business, driving improved client trajectory and assisted, innovating in virtual, enhancing our award-winning DIY product, and expanding in small business. We have clear visibility in the areas for improvement and are focused on executing in the second half to deliver stronger results by season's end. With that, I'll now hand the call over to Tony.