• Total Revenue: $179 million, flat year-over-year.
• Operating Expenses: $472 million, an increase of 6% due to higher wages, healthcare, occupancy costs, and marketing expenses.
• Pre-tax Loss: $312 million, compared to $283 million in the prior year.
• EBITDA Loss: $261 million, compared to $231 million last year.
• Loss Per Share from Continuing Operations: $1.79, compared to $1.33 last year.
• Adjusted Loss Per Share from Continuing Operations: $1.73, compared to $1.27 last year.
• Share Repurchases: $190 million in Q2, totaling $400 million for the first half of the year.
• Wave Revenue Growth: 15% increase in the quarter.
• Spruce Sign-ups: 491,000 total sign-ups, a 55% increase compared to the prior year.
• Fiscal Year 2025 Outlook: Revenue expected to be $3.69 billion to $3.75 billion; EBITDA $975 million to $1.02 billion; Adjusted EPS $5.15 to $5.35.

• Warning! GuruFocus has detected 7 Warning Sign with ATEN.

Release Date: February 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• H&R Block Inc (NYSE:HRB) successfully wrapped up the extension season and saw continued strength in small business services, with strong revenue growth in assisted small business tax and double-digit growth in bookkeeping and payroll services.
• The company achieved a 15% revenue growth at Wave, driven by strong adoption of high-margin subscription products.
• Spruce, the mobile banking platform, saw a 55% increase in total sign-ups and more than doubled customer deposits compared to the prior year.
• H&R Block Inc (NYSE:HRB) introduced a smart tax refund feature and maintained a competitive 3.5% APY on savings accounts, enhancing client engagement and financial health.
• The company reaffirmed its fiscal '25 outlook, expecting revenue between $3.69 billion to $3.75 billion and adjusted diluted earnings per share between $5.15 to $5.35.

Negative Points

• Total revenue for the second quarter was flat year-over-year due to lower Emerald Advance volume.
• Operating expenses increased by 6% due to higher wages, increased healthcare costs, and marketing expenses.
• The company reported a pretax loss of $312 million for the second quarter, compared to $283 million in the prior year.
• The EBITDA loss was $261 million, up from $231 million last year, and the adjusted loss per share increased to $1.73 from $1.27.
• Lower interest and fee income on Emerald Advance was attributed to a decrease in loan volume, and the company is evaluating its performance in this area.

Q & A Highlights

Q: Jeff, can you provide your perspective on total volumes for the tax industry this season and how H&R Block is performing so far? A: Jeffrey Jones, President and CEO, stated that they anticipate a normal year with a 1% volume growth, consistent with historical trends. DIY is expected to grow slightly faster than assisted services. The company is prepared for the changes in tax document requirements and is optimistic about their strategy and market presence.

Q: Are you seeing any changes in competition this year, particularly from Intuit? A: Jeffrey Jones noted that Intuit has been making moves in the assisted business, which has been a trend for a couple of years. H&R Block is focusing on addressing consumer dissatisfaction with competitors by enhancing both their assisted and DIY services.

Q: What are your thoughts on the IRS and government changes that could impact the industry? A: Tiffany Mason, CFO, mentioned that while there are changes with the new administration, they do not expect significant impacts from direct file initiatives, as many companies, including H&R Block, already offer free tax preparation services.

Q: How does H&R Block's pricing compare with independent tax preparers? A: Jeffrey Jones explained that H&R Block does not aim to be the lowest price provider. Instead, they focus on offering a comprehensive value proposition that includes local expertise, ease of use, and unique offerings like refund advances and second look services, which independents typically do not offer.

Q: Can you discuss the marketing strategy for this tax season? A: Jeffrey Jones highlighted that the marketing campaign emphasizes the value of H&R Block's services, including the price match guarantee, refund advance, and second look services. The company is focusing on digital channels and personalized experiences to effectively communicate these benefits to consumers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.