H&R Block, Inc.

Thank you for standing by, and welcome to H&R Block's second quarter fiscal year 2025 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 11 on your telephone. To remove yourself from the queue, you may press star 11 again. I would now like to hand the call over to Colby Brown, Treasurer and Interim Vice President, Investor Relations. Please go ahead.

Thank you, Lateef. Good afternoon, everyone, and welcome to H&R Block's fiscal 2025 second quarter financial results conference call. Joining me today are Jeff Jones, our President and Chief Executive Officer, and Tiffany Mason, 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. 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'll discuss today are presented on a non-GAAP basis. We've reconciled the comparable gap and non-gap figures in the appendix of our presentation. Finally, the content of this call contains time-sensitive information accurate only as of today, February 4th, 2025. 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'll now turn it over to Jeff.

Thank you, Colby. Good afternoon, everyone, and thanks for joining us. I'll kick us off today with a recap of our results from the second quarter, provide an update on the progress we continue to make across each of our block horizon strategic imperatives, and then share more on the plans we are executing this tax season. Tiffany will then discuss our financials, including the ongoing strength of our capital allocation practices. Starting with our performance, the first half of the year was in line with our expectations. Overall, we are well prepared to deliver in the second half of the fiscal year, and I'm pleased to reaffirm our fiscal 25 outlook. In the second quarter, we successfully wrapped up the extension season, and we're pleased to see continued strength in various aspects of our business, including small business services. Total revenue, however, was flat year over year due to lower Emerald advance volume. From a capital allocation perspective, we continued our disciplined practices highlighted by our share repurchase program, buying back another $190 million in the quarter and bringing our total repurchases for the year to nearly 5% of the flow. Now let's turn to our block horizon strategic imperatives. Starting with small business, assisted small business tax performed well again this quarter, delivering strong revenue growth. In DIY, we continue to improve the appeal of our small business SKU. Last season, we launched new custom experiences for clients tailored to their occupation, which drove a seven-point increase in conversion. This year, we have increased the number of custom experiences from five to 20. We also continue to see favorable trends in bookkeeping and payroll services, which altogether deliver double-digit revenue growth year over year. At WAVE, our key priorities of accelerating revenue growth and driving profitability remain unchanged. To that end, I'm pleased that we achieved revenue growth of 15% in the quarter. Monetization trends are positive as we continue to see strong adoption of our high margin subscription products, pro tier, and receipts. We continue to focus on doing what is right for the small business owner, and I feel good about the changes we are implementing to better serve them. Overall, I'm pleased with our small business performance and remain excited about the continued growth opportunities ahead. Turning to financial products, we continue to provide clients with options to help them simplify their financial lives and look for ways to enhance their overall financial health. Last month, we were pleased to raise the maximum amount of our refund advance loan, allowing filers to apply for a loan of up to $4,000, making it one of the largest no-interest, no-fee refund advance loans among national brands. Spruce Our mobile banking platform continues to deliver on its mission to help people be better with money. Users and engagement have both grown at a healthy rate. As of December 31st, we had 491,000 total sign-ups, a 55% increase compared to the prior year, and customer deposits have more than doubled over the same period. More than half of the deposits over the past year came from non-tax sources, demonstrating the year-round engagement clients have with SPRUCE. Recently, we introduced the Smart Tax Refund feature that allows clients to automatically commit their tax refund to savings at the time of deposit. Clients can choose to set aside a portion of their refund to a specific savings goal or simply as extra savings. And as we've done for the past two years, by electing to deposit their federal tax refund into their SPRUCE account, clients can get access to their refund up to five days early. You'll also recall that last year we introduced a high yield savings rate for SPRUCE clients to earn interest on their savings accounts. Despite the FDIC national savings rate averaging just 42 basis points, Spruce continues to offer 3.5% APY with no minimum balance requirements or monthly fees. We believe this is a very strong competitive advantage compared to others in the space. Now let's move on to our third strategic imperative, block experience, which is all about blending digital tools with human expertise and care. There's a reason why millions of taxpayers switched to H&R Block last year. We combine our innovative technology with human help to empower clients to get their maximum refund at tax time. Our pricing is transparent without the additional or hidden fees others may charge. Our teams have been hard at work making data-driven improvements for this tax season, and we're well-positioned to serve clients however they want to be served, fully virtual to fully in-person and every way in between. As we celebrate our 70th anniversary this year, we remain committed to our purpose of providing help and inspiring confidence in our clients and communities everywhere. In the DIY category, we continue to make significant improvements to the user experience, ensuring a smoother journey from start to finish. For new clients, we further simplify the onboarding process to help them easily select a product that fits their needs. giving them confidence in their tax outcome. We've also continued to improve the speed of our import capabilities, and switching to H&R Block from other competitors is now easier than ever, taking less than two minutes. A key focus for us this year has been the enhancement of our GenAI-powered AI Tax Assist tool, which is a strong competitive differentiator. we have significantly expanded its coverage across a broader range of tax topics to deliver higher confidence and improved outcomes for our clients. Importantly, we've seen greater conversion among new clients who leverage AI TaxAssist. The tool is designed to understand and respond to complex tax scenarios with greater precision, offering personalized guidance throughout the filing process. We have also integrated advanced natural language processing capabilities to better understand and address client queries, making the experience more intuitive and user-friendly. Once again, AI Tax Assist will be offered free of charge in all DIY paid SKUs, giving consumers unlimited access to the tool, as well as our tax professionals, ensuring our clients receive the expert help they want and need. DIY clients also have the option for one of our expert tax pros to double check their completed return along with source documents and file on their behalf through our tax pro review product, which has grown double digits annually for nearly a decade. This further demonstrates client's desire for human help and underscores the product's distinct value. Our marketing is aggressively promoting the product enhancements we've made this season and we're continuing to emphasize the ease of switching and unlimited access to expert help. We're also introducing testimonials for clients who have switched to H&R Block and are more satisfied than they were with other brands. Finally, we continue to work closely with the IRS to combat taxpayer identity fraud. This is an industry challenge, and we are committed to doing the right thing, which is at the core of being a trusted brand. Overall, I'm excited about the plans we are executing in DIY and the progress we're making in this category. In Assisted, we continue to provide our clients with transparent pricing, the ability to file however they choose, and genuine care and personalized advice from our expert tax pros, who on average have been with our brand for 10 years. This deep experience and continuity underscore the trust and reliability we offer. and clients can feel confident they're getting every dollar they deserve. Our strong local value proposition is amplified by our extensive retail footprint, with nearly 9,000 H&R Block tax offices conveniently located within five miles of most Americans. This accessibility ensures that clients can easily find and visit our offices for in-person support or access the same expertise virtually. Furthermore, assisted clients can get their taxes done on the same day, most in as little as one hour, making our services both accessible and convenient. To capitalize on these strengths, we're increasing our local marketing to help ensure consumers understand this value. This season, enhancing the experience for new clients is a top priority as we look to improve conversion with those who are coming to H&R Block. we're committed to optimizing and elevating the new client experience by re-engineering how we introduce clients to our brand. Our approach is designed to quickly and deeply understand our clients and their tax situations while clearly setting and managing expectations throughout the process. By providing clear guidance and communication from the onset, new clients will feel informed and confident about what to expect at each stage of the experience. making them more likely to file their return with H&R Block. We have also made significant enhancements to our TaxPro matching algorithm to better pair clients with the tax professional best suited to their specific needs. This personalized matching process benefits both clients and tax professionals, ensuring the clients receive the most relevant expertise and support tailored to their unique circumstances. These strategic improvements focused on personalized interactions, clear expectation management, and expert tax pro matching capabilities are designed to enhance client satisfaction and drive higher conversion rates. Ultimately, our goal is to deliver a superior tailored experience that instills confidence in our services, improves conversion, and importantly, provides compelling value for clients to return year after year. For those who believe the cost of assisted tax preparation is a barrier to entry, we are taking price out of the equation. New clients can take advantage of our price match guarantee, which matches the price an individual paid to their previous tax preparer up to 50% off H&R Block's price. This offer is designed to make our professional tax assistance more accessible. ensuring that a greater number of individuals can experience the value and expertise that we provide. Another way we're demonstrating the value we deliver is through our second look service in which we review the last three years of a new client's tax returns to ensure they didn't leave any refund dollars on the table. We're proud to offer this service to clients completely free and believe this represents a competitive advantage for us. Second Look, along with Price Match Guarantee and the stronger Refund Advance offer I discussed earlier, are being aggressively marketed across all channels as we look to attract new clients to our brand. In addition to our efforts around new clients, we've also rolled out several enhanced features within MyBlock, H&R Block's digital front door, to improve nearly every aspect of the user experience. Beyond uploading and storing tax documents, starting a DIY return, interacting with a tax professional, and reviewing, approving, and paying for a tax return, returning clients will now have a tailored start screen providing information on their tax professional and upcoming appointments. And all clients will see an outcome reveal screen, helping them understand their tax outcome and giving them further confidence in our expertise. In summary, we're well positioned to deliver this tax season and in the second half of the fiscal year. With that, I will now pass it over to Tiffany to share more about our financial results.