H&R Block, Inc.

Ladies and gentlemen, thank you for standing by and welcome to H&R Block second quarter fiscal 2022 financial results conference call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Michaela Galena, Vice President, Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon, and welcome to H&R Block's second quarter fiscal 2022 financial results conference call. Joining me are Jeff Jones, our President and Chief Executive Officer, and Tony Bowen, our Chief Financial Officer. Earlier today, we issued a press release and presentation that can be downloaded or viewed live on our website at investors.hrblock.com. Our call is being broadcast and webcast live, and a replay will be available on the website for 14 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. For a description of these risks and uncertainties, please see our annual report on Form 10-K and quarterly reports on Form 10-Q as updated periodically with our other SEC filings. Please note the content of this call contains time-sensitive information, accurate only as of today, February 1st, 2022. H&R Block undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances after the date of this call. With that, I will now turn it over to Jeff.

Good afternoon, everyone, and thanks for joining us. We have made significant progress in preparing for this year's tax season and executing against block horizons, and we're happy to be with you today. I'll begin our prepared remarks by sharing second quarter highlights and discuss why we feel well positioned for tax season 22. Then I'll provide color on our strategic imperatives, including the launch of Spruce, our new mobile banking platform. Finally, Tony will review our financials, outlook, and how we're creating value for shareholders. Turning to our Q2 results, we built on the momentum from Q1 as revenue increased 12%. We are continuing to appropriately invest while returning capital to shareholders through dividends and buybacks, and our repurchases have reduced shares outstanding by 7% so far this fiscal year. Coming off a strong tax season last year, we feel well positioned to serve clients in 22. We have a compelling value proposition and strong customer metrics and feedback. The season is underway, and we expect filers to seek help as they navigate the ongoing pandemic tax credits, and unemployment. To help navigate these challenges, we have fine-tuned our marketing against even more precise audience segments and continue to optimize our messages and channels to ensure the most efficient mix of advertising spend. Customer feedback has been loud and clear. Help is both what they need and what they know block for, so we've leaned into that messaging. Our Help Is Here campaign highlights all the ways we can help consumers, virtually to in-person, DIY to fully assisted, and everything in between. For decades, clients have trusted our tax pros to get their biggest possible refund guaranteed. Our 60,000 tax pros have unmatched experience, averaging 10 years at Block, which means we are well equipped to handle clients of any complexity. We are leading the convergence of digital capabilities with human expertise and believe our ongoing technology investments and digital experience will continue to enable us to attract new, younger customers. Through the block experience imperative, we've increased our focus on retail and crypto trading by adding functionality in DIY enhanced training for tax professionals, and specific marketing acquisition messages. In the DIY flow, we optimized onboarding and navigation in order to improve conversion from registration to completion, and we've seen early success based on these changes. We also advanced the product to identify clients who may need help along the way in order to increase adoption of online assist and TaxPro review. I'm very happy with the progress we've made over the last several years, and our software continues to be awarded top ratings from third parties such as Bankrate and NerdWallet. In addition to digital capabilities, we continue to test ways to improve the efficiency of our labor and physical footprint. For example, in Assisted, Our innovative fulfillment network allows customers to provide their data to a centralized queue and then be served by any pro who has capacity, regardless of where they are physically located. This provides efficiency for both our clients and our network. We're also leveraging the same technology with outpost locations for drop-off returns as we continue to evolve and better utilize TaxPro capacity. In summary, we feel good about our consumer tax business. Turning to our small business imperative, this growing segment offers promising opportunity to expand client services year-round with both Wave and Block Advisors. Together, we are better positioned than ever to serve this market. Wave is focused on the DIY small business owner, while Block Advisors is focused on the small business owner who needs expert help. First, let's discuss WAVE. Year-over-year revenue again grew more than 30%, driven by increasing the value of existing customers as well as adding new clients. In the last year, WAVE doubled the number of customers paying for more than one product, a testament to the work being done to build a full ecosystem of services for the small business owner. I continue to be pleased with the progress this business is making. Regarding Block Advisors, nearly all of our company offices and approximately two-thirds of our franchise locations are equipped to offer small business services. We've raised the bar with tax-pro education, more sophisticated lead generation, and better tailored marketing. As you recall, last year we certified over 20,000 tax professionals in small business. This year, More than half those tax pros elected to take a new, even more advanced certification, enabling them to provide specialized advice to our most sophisticated clients. For example, some of these services include complex payroll and bookkeeping solutions, estimating quarterly tax payments to optimize cash flow throughout the year, and complex strategies to help deliver the most tax-advantaged outcomes. We've also taken a step forward in our cross-selling efforts with a new lead generation and sales flow program that automates the process of referring clients from tax professionals to our bookkeepers as we continue to grow year-round services. Now let me share more about our third imperative, financial products. Our mission is to develop solutions that create confidence and ease the financial burden felt by too many. while simultaneously enriching our client relationships year-round. Just about 10 days ago, we launched Spruce, our mobile banking platform. This is a meaningful milestone in our journey. We spend 12 million hours in conversations with clients every year about their financial challenges and dreams. Combined with that experience, extensive customer research has highlighted the needs and opportunities in this market. we know that two-thirds of the U.S. population struggle with one or more aspects of their finances, including spending, saving, and planning. We also know that the current financial needs of 8 million of our existing clients are not well served. Additionally, we already have a large base of Emerald Card users who deposit $9 billion in refunds annually. While several competitors exist, What hasn't existed until today is a mobile-first banking platform from a trusted brand with 66 years of knowledge from helping people with their money. When we look at the competitive landscape, we see a tale of two halves. One are banks, who have brand recognition but generally lack trust in modern customer experiences. And two, challenger banks that are feature-rich but don't have deep brand recognition and are trying to build trust. Spruce bridges that gap by combining leading technology and features with our trusted brand and established financial relationships. I am proud of the platform we launched on day one. While others have spent years building what their products are today, we came to market with a very robust feature set. Let me take you through some of the highlights. We have long believed in providing transparency to our customers. That's why we launched upfront transparent pricing for our tax services a few years ago. And that's why there are no monthly or sign-up fees with Spruce. We also pride ourselves on low barriers to entry, such as no minimum balances to open accounts. Its unique savings feature, Spruce Rewards, helps consumers with their goals through personalized notifications and automatic cashback offers from over 10,000 retailers, including Costco, Sam's Club, H&M, Adidas, Office Depot, Shake Shack, and Finish Line. It also provides clients access to a free credit score and helps them understand the factors that impact it. In addition, customers can get paid up to two days early and get access to over 55,000 fee-free ATMs. Additionally, Spruce features tax refund recommendations that enable clients to become effective at saving a part of their refund. During this tax season, we're introducing clients to the platform in the DIY experience and beginning to market to our assisted customers. We'll be working every day to acquire clients and increase deposits in their Spruce accounts. The revenue model is largely driven through interchange fees when clients transact, and we have a strong relationship and favorable economics with our partner, MetaBank. We invite you to learn more at a virtual event for analysts in March, where we will demo the product and take a deeper dive into its features. More details will come in the next few weeks. Before turning it to Tony, Let me emphasize how strong I feel about our positioning today, the progress we are making, and the path we are on. We continue to advance our operational excellence, blur the lines between human help and technology, drive brand relevance, and make meaningful and innovative progress on our strategic imperatives. I am more than excited than ever about where we are going. Now, Tony will cover our financial results.