H&R Block, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the H&R Block Third Quarter Fiscal 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your host, Vice President of Finance and Investor Relations, Mr. Colby Brown.

Thank you. Good afternoon, everyone, and thank you for joining us to discuss our fiscal 2021 third quarter results. On the call today are Jeff Jones, our president and CEO, and Tony Bowen, our CFO. We've 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 discussed today are presented on a non-GAAP basis. We've reconciled the comparable GAAP and non-GAAP figures in the 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 2020 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. I'm excited to provide an update today on the progress we're making on our Block Horizon strategy, as well as some perspective on the first half of the tax season. Tony will follow with thoughts on our third quarter results, outlook for fiscal 21, and additional detail on our strategic investments. So let's jump right in. Following our investor day in December, we've connected with many of you and have enjoyed hearing your perspectives. Based on these conversations, I thought it would be helpful to start with an update on Block Horizons. our long-term strategy focused on three imperatives, small business, financial products, and block experience. As a reminder, small business and financial products are both categories with structural tailwinds, where we have a right to compete and advantages that will help us win. While these have been components of our business for years, historically, we haven't made a concerted effort to target either opportunity. By leveraging our trusted brand, client relationships, and technology platform, we will accelerate growth in both areas. Over the next five years, they will become a more meaningful part of our business, helping to balance our current once a year purchase frequency. And given our existing assets in these areas, these will not require significant investment, as Tony will outline in more detail later. Our third imperative, block experience, encompasses a new approach to tax as we blend digital capabilities and data with human expertise and care. Through this imperative, we will continue to modernize the consumer tax business, blurring the historical lines between assisted and do-it-yourself. And by digitally enabling our human advantage, we'll increase the relevance of H&R Block. I'll now provide an update on each of these key areas, starting with small business. We're making progress on all three elements of our small business strategy. First, expanding our reach to more small business owners to grow in tax, which includes cross-selling and fully integrating with WAVE. Second, growing our bookkeeping and payroll services and block advisors. And third, embedding WAVE money at the center of the WAVE experience. We've certified over 25,000 professionals to serve the complex tax and financial needs of small business owners. This is a great example of the power of our scale. We've also seen thousands of Wave customers start to engage with the Block Advisors brand for their tax needs. We're continuing to build new capabilities in bookkeeping and payroll. And in mid-February, we launched our Block Advisors marketing campaign to drive awareness of our ability to serve small business owners' unique needs and to reinforce our expertise as a trusted year-round partner. At Wave, we continue to ship meaningful enhancements to our platform that are providing significant value to small business customers. These include the beta launch of the new invoicing features to allow small business owners to better manage their accounts receivable, enabling remote deposit capture for Wave money, and creating new client interfaces to allow users to manage their bookkeeping faster and on more devices. These efforts are paying off as we grew third quarter revenue over 30% at Wave, continuing on the path toward pre-pandemic levels. In financial products, our goal is to provide more value to our customers by transforming the Emerald Card into a fully featured, consumer-friendly mobile banking alternative. We're in the design phase and are excited about what we continue to learn with consumers. For this season, we added a simple new digital feature to the Emerald Card, the ability for customers to automatically set up their mobile wallet on both Google Pay and Apple Pay directly from the MyBlock app. This has resulted in a 10x increase and customers using their mobile wallets, which tells us that we're providing meaningful value. And in Block Experience, we're continuing to infuse human help into our DIY offerings and bring TaxPro expertise to our customers, however they want to be served. I'll provide more detail in a minute, but we're seeing positive momentum in several areas, including adoption of digital tools and assisted, DIY filers engaging more with our tax experts, continued operational improvements in our offices, and enhancements to the DIY user experience. The progress we're making in each of these three strategic imperatives in such a short time frame is a testament to the dedication and drive of our teams and further evidence that we are building from a position of strength. Because we have existing assets across small business, financial products, and consumer tax, it is important to emphasize that the investments we are making will be funded through cost savings, with future investments being success-based and tied to revenue growth. Tony will provide additional color on this later in the call. With that recap of Block Horizons, I'd now like to provide some perspective on the tax season. We are executing on our playbook, digitally enabling our assisted business and integrating human help into our DIY products to deliver a best-in-class experience, however consumers want to buy their taxes. It's early in the season, but we're seeing hundreds of thousands of our assisted clients choosing to interact with us digitally by uploading documents electronically through MyBlock, using video chat, for approving their completed return online. And our continued focus on operational excellence in our offices is translating to a consistent experience for our customers that provides tremendous value. All of these efforts are resonating as we continue to see strong client satisfaction scores. We've also improved the DIY user experience around document import. offered additional support to help users understand the pandemic's impact on their taxes, and provided real-time tax information updates for our mobile users. Our work to personalize the experience and to make it faster for our customers to complete their return continues to resonate. And finally, we're using data to offer human help in the moments clients need it most, resulting in online assist and tax probe review adoption significantly outpacing last year. And as I mentioned earlier, in small business tax, we've seamlessly integrated the WAVE and Block Advisor's experience, leading to increased adoption of our tax services by WAVE clients. We're accomplishing all of this during another season in which the industry has experienced a delay in filings. which resulted primarily from the move of the IRS e-file open date from January to mid-February. While the slow start in the industry has obviously impacted our results, we've seen positive trends throughout the business. I'm encouraged by what we're seeing in our efforts to blend human help with digital capabilities. We're seeing greater uptake of our digital tools by assisted customers. and the desire for more human help from our DIY customers as we continue to see the lines between these two categories blurring. An example of this is the double-digit increase in online assist returns that I mentioned earlier, which is remarkable considering the overall decline in returns due to the delayed start. Elsewhere, we're seeing a meaningful lift in DIY net average charge as mix has been favorable and we've been able to partially close the gap in pricing with our primary competitor. And our efforts to deliver exceptional service and assisted are paying off with continued strong client satisfaction scores. While we're off to a good start, we recognize there's certainly a long way to go. We're focused on executing our playbook in the second half of the season to build on our momentum. In summary, we're executing on our block horizon strategy seeing significant progress in key areas. We're performing well in the tax season, and assuming an April 15th deadline, are on track to deliver our financial outlook for the year. With that, I'll now hand the call over to Tony.