Sammy Yon

Sammy Yon, on behalf of George Tong from Goldman Sachs, questioned H&R Block's outlook for assisted share loss despite expectations of increased complexity driving clients towards assisted filing. She also inquired if AI tools enhancing DIY filing posed a long-term threat to the assisted business.

Answer

President and CEO Curtis Campbell explained that past assisted share challenges stemmed from client loss in the mid-to-lower funnel due to manual processes, which H&R Block is addressing with technology for automation and improved client experiences, a multi-year transformation. CFO Tiffany Mason clarified that the high end of their guidance assumes holding assisted share. Regarding AI in DIY, Campbell stated it's not a threat but an opportunity for blended experiences, allowing DIY clients to access tax pros, aligning with their multi-year strategy.

Sammy Yon, representing George Tong from Goldman Sachs, questioned H&R Block's outlook for assisted market share loss despite expectations of increased complexity driving clients to assisted filing. She also asked if the implementation of AI tools in DIY products, like AI Tax Assist, poses a long-term threat to the assisted business.

Answer

President and CEO Curtis Campbell attributed past assisted share loss to manual processes and client attrition in the mid-to-lower funnel, emphasizing a multi-year strategy to use technology for automation and improved client experience. CFO Tiffany Mason clarified that the high end of their fiscal 2026 guidance assumes holding assisted market share. Curtis Campbell also stated that AI in DIY is not seen as a threat, but rather an opportunity for blended experiences and connecting DIY clients with tax professionals.

Sammy, on behalf of George Tong, inquired about the margin guidance step down from 2025 to 2026, asking if 23.5% is the new baseline or if the decline is temporary with a quick return to 25% margins.

Answer

CFO Craig Safian explained that the 2026 plan reflects managing the run rate into 2026, aligning costs with CV and revenue growth, and incorporating a 5% year-over-year operating expense growth (4% FX neutral) for merit increases and selected investments. He believes 23.5% is the new baseline, with expectations to expand margins going forward, aided by accelerating CV growth, though revenue lags.