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Transcript Summary

H&R Block delivered a strong Q3 2026 performance, leading to a raised full-year outlook. The company successfully stabilized its market share in the assisted channel, holding flat against the industry for the first time in several years. Revenue rose 5% to $2.4 billion, supported by higher Net Average Charge and a shift toward more complex, high-value clients. A strategic decision was made in the DIY segment to focus on lifetime value rather than volume, resulting in a healthier mix of paid filers despite lower overall volumes. Central to their strategy is 'expert-led, technology-enabled' service, utilizing AI tools like 'Sidekick' to automate mechanical tasks and free up tax pros for advisory roles. Management highlighted a 600 basis point retention boost from their AI-driven 'Second Look' feature. Capital allocation remains a priority, with $500 million in share repurchases planned for the fiscal year. CEO Curtis Campbell emphasized that AI is an amplifier of expertise rather than a replacement, positioning the firm to thrive as complexity in tax prep remains high. The company also successfully enrolled 2 million clients in new 538A Trump Accounts following tax law changes.

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Full Earnings Call Transcript — Q3 • 2026-05-06

Operator: Thank you for standing by, and welcome to H&R Block's Third Quarter Fiscal Year 2026 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Jessica Hazel, Vice President, Investor Relations. Please go ahead.
Jessica Hazel: Thank you. Good afternoon, and welcome to H&R Block's Fiscal 2026 Third Quarter Financial Results Conference Call. Joining me today are Curtis Campbell, 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 would 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 have reconciled the comparable GAAP and non-GAAP figures in the appendix of our presentation. Finally, the content of this call contains time-sensitive information accurate only as of today, May 6, 2026. H&R Block undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances after the date of this call. I will now turn the call over to Curtis.
Curtis Campbell: Good afternoon, and thank you for joining us. This quarter, we delivered strong results ahead of expectations across all key metrics. Those results demonstrate that our strategy is translating and that the quality of our business continues to improve. Based on our year-to-date performance, we are raising our full year outlook. This tax season provided early evidence that our strategy focused on expert-led technology-enabled experiences is showing up in measurable ways, not just in our financial performance, but also in how clients are choosing us, engaging with our experts and experiencing more technology and AI-enabled service. Those outcomes reflect capabilities we built steadily over the last year and that we further sharpened this season through strategic experimentation, targeted decisioning and disciplined execution, all centered on the clients we serve. Our progress this year reinforces that H&R Block is uniquely positioned to meet clients where they are, earn their trust through expert judgment and give them the confidence to navigate the complexity of tax preparation and tax planning. Coming out of the season, it's clear that our focus on assistance is delivering tangible results. A key question surrounding H&R Block's performance has been when we stabilize assisted channel market share. Well, this season, we did. After 2 years of improving share trends, that progress translated into meaningful inflection in tax season '26, as we maintained assisted share, holding our position in a highly competitive environment. Importantly, our assisted channel market share performance was favorable each week throughout the entire season. That consistency matters. It reflects stronger execution from the start of the season through the peak. We continue to see our value proposition resonate most in client segments with a strong desire for confidence, trust and judgment. Clients with more complex needs are choosing to engage with H&R Block at higher rates, and our omnichannel model is designed to serve those clients with the right combination of human expertise and technology. I'll speak more to that in a moment. This season's performance underscores the quality, consistency and strategic focus of the assistance we provide, supporting a more durable business. Our disciplined execution also translated into better outcomes for clients, including evolved experiences that deliver clear expectations, fewer friction points and more consistent delivery with our clients engage with us digitally or in person. Those experience improvements drove stronger conversion, higher retention and better product attach rates, reinforcing both the quality of the experience we're delivering and our clients are responding to it. One example of how we improved conversion this season was the introduction of a personalized pre-appointment experience that set clear expectations, reduced unnecessary steps and guided clients through a more streamlined path into the appointment. By addressing friction early in the journey, clients came into appointments better prepared and more confident, which translated into higher conversion rates. Along with conversion, we also saw meaningful retention improvement this season with Second Look a clear proof point. Last quarter, I shared our plans to meaningfully automate and scale Second Look and why we view it as an important driver of client loyalty over time. I'm pleased to share that new clients who received Second Look last tax season returned at a 600-plus basis point higher rate compared to new clients who did not receive Second Look, reinforcing its role in building trust, confidence and a quality experience from the very start of the relationship. We are now using AI-based technology to scale Second Look and embed it more consistently into the new client experience so more clients can benefit. By automating the initial review of prior year tax transcripts, we can focus tax pros time on returns with the greatest opportunity while still delivering timely, actionable insights to more clients. This capability allows us to expand Second Look in ways that were not previously feasible and extend its positive impact even further. I've also emphasized our focus on eliminating and/or automating inefficient work so that our tax pros can focus on what matters most to clients, and that's the relational and trust-building experience that differentiates H&R Block. As part of that effort, this season we equipped all of our offices with Client Experience Monitors, allowing clients to learn about and explore add-on products in a simple, self-guided way without the need for tax pro intervention. Our tax flows are naturally focused on accuracy, advice and building trust with clients. So simplifying choices, improving clarity and digitally engaging clients through the Client Experience Monitors proved very successful. Coming out of the season, we saw a 550 basis point increase in product attach and clients reported greater comfort with the process. Recent tax law changes also contributed to positive client outcomes this season. Average refund amounts for H&R Block clients increased by approximately 11%. We saw approximately 7% growth in clients who received the refund and a more than 25% decline in clients who owed the IRS. Those recent tax changes also created new opportunities to help clients access meaningful benefits. A clear example is 538A Trump Accounts, where we helped enroll more than 2 million accounts, representing over 90% of eligible clients whose children qualified for the $1,000 seed contribution. Together, these results underscore the role we play in helping millions of clients navigate complexity, support important financial goals for their families and strengthen their financial confidence. We're also seeing our strategy translate clearly in the segments that are most impactful to the long-term health of the business. That impact is most evident with more complex clients where confidence, trust and judgment play a central role in the decision to engage. As our execution and customer experience improved, we've seen a greater mix shift towards higher complexity clients this year, reinforcing that our model resonates most where expertise truly matters. As we said before, not all market share is created equal, particularly in the DIY channel. Customer lifetime value matters more to the financial health of our business than raw volume. Our focus remains on attracting and retaining clients who are more likely to build long-term relationships with us rather than optimizing the lower lifetime value transitory filers. This season's results reflect deliberate progress in this area, improving both durability and economics within our business. The gains we're seeing reinforce our focus. They are proof points that disciplined execution and deliberate choices are translating into higher quality, more durable growth. This season reinforced that the winning model in an AI-driven future is expert-led technology-enabled experiences, particularly in the high stakes, highly regulated environment by tax preparation. As AI adoption increases, accuracy and confidence matter more than ever, and clients continue to value the trust, judgment and accountability that comes from working with a tax expert. Our model is well positioned in this environment, and our approach continues to receive external recognition. CNET not only named H&R Block the best online tax product, but also recognized H&R Block's AI-powered tax platform with its best use of AI award. That recognition highlights how we pair advanced technology with trusted expertise to deliver better experiences for our clients. And we saw this expert-led technology-enabled positioning reinforced through client and tax behaviors and outcomes this season. Let me touch on a few examples of how this came to life. This year, we rolled out Sidekick, our AI-enabled tax pro assistant. Through our collaboration with OpenAI and grounded in the expertise of H&R Block's Tax Institute, we created a unique AI tool that allows tax pros to query and research complex tax topics. Sidekick received positive feedback and saw strong adoption all season, underscoring the power of embedding AI-assisted support directly to the expert workflow where professional judgment remains critical and AI amplifies impact for clients. Similarly, within the paid DIY filing experience, AI Tax Assist provided clients with real-time expert-informed answers and is becoming increasingly effective as we incorporate learnings from each season. This tax season, AI Tax Assist supported 4.1 million client messages and responses, representing an 88% increase year-over-year. Together these examples, along with AI-enabled scaling of Second Look I discussed earlier, illustrate how we're applying AI in practice, drawing on the capabilities we develop in-house and with select external partners. They reinforce that our strategy is not about replacing expertise with technology, but about using technology to scale expertise, strengthen trust and deliver more consistent, higher-quality outcomes for our clients, whether they work with our tax pros or choose to self-prepare. I've shared the evidence of our strategy at work this season, reflected in stronger conversion, higher client retention, better client experiences and improvements in the quality of our business. What I want to focus on next is what I believe will continue to drive results next season and for years to come. At the core is how we operate, we've embedded a disciplined learning mindset into how we run the business, focused on identifying what drives meaningful impact, learning for what happens in the wild and scaling what works. This isn't about one-off initiatives. It's about building repeatable execution that compounds over time. Our approach is intentional and focused on removing friction and elevating outcomes for the clients we serve. Not every experiment will earn the right to scale. Some experiments will fail, but every experiment must generate learnings that sharpen execution and accelerate our velocity. We ran more than 150 experiments this season, which is exponentially higher than in prior years. I talked about several already, and I won't go through all of them, but I do want to highlight one that illustrates how this discipline translates into real impact. One of the meaningful areas of progress this season has been AI automation. We're accelerating our testing and use of more advanced AI tools across tax preparation with a clear goal, eliminating manual data entry, which is a non-value-added step for both clients and tax pros. These efforts are designed to handle more of the mechanical work behind the scenes, the data collection, data entry and calculations while keeping tax pros firmly in the role of review, judgment and advice. By reducing time spent on manual task, we can free up capacity for our tax pros to generate deeper insights and enable higher-value client conversations. This combination creates a structural advantage relative to purely digital models, particularly in a category where mistakes car real consequences and confidence matters. Results from our AI-enabled automation experimentation this season have been strong. Although there's still more to learn, we're encouraged by what we're seeing with a clear path to further scaling over time and expanding our ability to help empower financial freedom for millions of Americans. I've covered a significant amount of information today and shared examples of how we're operating with discipline, testing in real-world conditions and learning quickly and scaling what works. The takeaway is that this is how we compound progress over time and continue to raise the consistency, quality and durability of our business. What we saw this tax season reinforces that our strategy is delivering results while also making clear that we're just getting started. There is significant opportunity ahead to raise the bar in execution, deepen our impact with more complex clients and further scale the capabilities driving consistency and quality across the business. Our omnichannel model is designed to extend that execution across client needs and the ways clients choose to engage. I also want to mention I'm excited about the leadership team we have in place. They bring a strong combination of deep industry experience and fresh perspectives, and I'm confident this team will continue to execute with discipline and momentum as we move forward. As we look ahead, our priorities are clear. We will continue to elevate the client experience, serve more complex clients, expand our small business opportunity and apply AI and technology to scale trusted expertise and deliver consistent expert-led outcomes at a level independents cannot match. I'll now hand the call over to Tiffany.
Tiffany Mason: Thank you, Curtis, and good afternoon, everyone. In the third quarter, we delivered strong year-over-year growth across our key financial metrics with revenue up 5%, EBITDA up 6% and adjusted EPS up 12%, reflecting performance above expectations. Based on our year-to-date results, including a strong tax season, we have raised our full year outlook. In the third quarter, we delivered revenue of $2.4 billion, an increase of 5.3% over the prior year. This increase was primarily driven by higher NAC and volume in U.S. assisted tax prep, growth in international revenue and an increase in refund transfer volume. As Curtis noted, our assisted channel market share trend improved meaningfully this season, marking the third consecutive year of improvement in our core business. We were able to maintain our market share position this season through better execution in a highly competitive environment. In the DIY channel, not all market share is created equally because of the free and paid dynamic, and we have made a strategic choice to prioritize lifetime value. So while our assisted volume growth outpaced DIY, key underlying health metrics improved across the business. We drove improved conversion rates in both channels year-over-year, supported by lower friction and better client experiences. We delivered higher retention rates among prior clients, and our mix continued to shift toward more complex returns, particularly with $100,000-plus AGI clients. We also continue to benefit from our ability to make low single-digit pricing adjustments without impacting clients' value perception. Taken together, we believe these results reflect a healthy and improving business. Total operating expenses for the quarter were $1.4 billion, a 4.8% increase over the prior year. This increase was primarily due to higher field wages as a result of higher assisted revenue. As we've experienced the last few years, a significant amount of volume is processed in the final weeks of the season, which puts pressure on labor capacity, resulting in overtime. Additionally, as we serve increasingly more complex clients, we have an opportunity to allocate return volume more effectively across our tax pro population. Third quarter EBITDA increased 5.9% over the prior year to $1.1 billion. Our effective tax rate was 16.5% compared to 24.6% last year. During the quarter, we recognized a onetime noncash tax benefit related to the resolution of an IRS examination that we have previously discussed. This $84.1 million benefit reduced income tax expense and provided a $0.65 benefit to earnings per share. Net income from continuing operations was $848.8 million, an increase of 17.4%, and earnings per share from continuing operations were $6.61, an increase of 24.2%. Adjusted net income was $773.7 million, an increase of 5.8% and adjusted earnings per share were $6.02, an increase of 11.9%. The increase was a result of fewer shares outstanding from share repurchases and higher net income. Our disciplined approach to capital allocation continues to create meaningful shareholder value. We generate significant stable annual cash flow and expect the same for this fiscal year. We use this cash flow to invest in the business, grow the dividend and return excess capital to shareholders through share repurchases. In the first 9 months of the fiscal year, we generated operating cash flow of $586.7 million. During that period, we have returned $560.9 million to shareholders in the form of dividends and share repurchases, with Board approval to repurchase an incremental $100 million of stock in the fourth quarter under our previously disclosed $1.5 billion repurchase program. Currently, we have approximately $700 million remaining under that program. Turning to our full year outlook. Based on strong year-to-date performance, we are raising our guidance for fiscal 2026. As reflected in today's earnings release, we now expect revenue in the range of $3.91 billion to $3.92 billion; EBITDA in the range of $1.025 billion to $1.035 billion; an effective tax rate of approximately 14%; and adjusted diluted earnings per share in the range of $5.10 to $5.20. Our updated outlook reflects the strength and consistency of our execution every quarter of fiscal '26. And with the tax season now complete, we've also incorporated full season results, peak period labor costs and a planned shift in marketing expense that aligns with later season filing dynamics. We were pleased with our third quarter operational and financial results, yet the more important takeaway is what they reflect about the trajectory of our business. We are creating a more durable, expert-led technology-enabled model, providing assistance to our clients wherever and however they choose to engage with us. That positions us to generate more cash flow and deliver greater value for shareholders. With that, I'll turn it back over to Curtis for closing remarks.
Curtis Campbell: Thank you, Tiffany. This quarter reflects continued progress against our strategy and improved execution across the business. As the results show, better client experiences, stronger retention and a continued shift towards more complex clients are contributing to a more durable business. I want to thank our tax pros, associates, franchisees and partners for their continued dedication to serving clients with expertise and with care. And importantly, I want to thank our clients for their continued trust and confidence in H&R Block. At the core of what we do, H&R Block is in the business of trust, and we don't take that responsibility lightly. It remains central to everything that we are. And with that, operator, we'll open up the line for questions.
Operator: [Operator Instructions] Our first question comes from the line of Kartik Mehta of Northcoast Research.
Kartik Mehta: Curtis, I wanted to just look at Assisted market share and kind of your perspective on that this tax season. I know the tax results we give are kind of from July 1 to April 30. But if you looked at the tax season from January 1 through April 30, kind of the IRS data that's out now, how would you characterize kind of market share for H&R Block this season on the Assisted side?
Curtis Campbell: Yes, I'm happy to talk about our results this season. Let me touch on the Kartik, and thank you for the question. I hope you're doing well. We had a really strong season in Assisted. We had a really strong season in Assisted this year. And just a reminder, Assisted gained share in 3 of the last 5 tax seasons. This tax season and tax law changes, as you know, resulted in an increase in the number of taxpayers receiving a refund. If you take a look at the information from the IRS, it also resulted in an increase in the average refund amount by 11% and a decrease in the amount of balance dues by a little over 20%. All those things are strong positives for most taxpayers. Now keep in mind, and most people know this, to some extent, higher refunds were enabled by the fact that payroll providers and employers didn't adjust their withholding tables by the time the tax changes from the one big beautiful bill came out late last year. Oftentimes as well, tax law changes are believed to drive tailwinds for Assisted, especially when there are potential negative impacts to taxpayers. So Kartik think fear uncertainty is down. In this case, this tax season and taxpayer impacts were super positive. There's very little additional boost or tailwind in the Assisted market. I'd say as we start to think about next year, employers and payroll providers are working on updating their withholding payables. So there could be an adjustment back to a normal, and we might see refund amounts decrease and balance dues increase.
Tiffany Mason: Kartik, I would just punctuate too. We were really pleased with the team's performance this tax season and really pleased with the fact that after 2 years of making progressive improvement in our Assisted channel market share, we were able to hold flat market share relative to industry growth. So really pleased with the team's performance.
Kartik Mehta: And then just, Curtis, on your tax pro product, I know you tried something a little bit different there. And I'm wondering how you think of the success of that business and maybe how many -- what kind of conversion rate you were able to have because of the program?
Curtis Campbell: Yes. And Kartik, when you say our tax pro product, what specifically are you talking about?
Kartik Mehta: I apologize, Tax Assist, a DIY product that allows a tax preparer to review the tax return.
Curtis Campbell: For sure. So we saw nice progress there. You know that's been an offering for us for many years now. We continue to lever that up. We saw really good results from a conversion perspective for those paid filers that utilize Tax Pro Assist. And I'll take it all the way back to one of the talking points in my prepared remarks. I talked a lot about assistance. It's really important for us from a strategic standpoint to lean into assistance and those filers that are looking for that from us from a trust, confidence and judgment perspective, we saw really strong performance in TPR as well as other promos that we ran this year. We'll continue to learn just like we do every year.
Operator: Our next question comes from the line of Scott Schneeberger of Oppenheimer & Company.
Scott Schneeberger: Just following up on Kartik's question. I think just a little confusion. Maybe, Tiffany, could you discuss this year and the last 2 years of the market share progression in Assisted of H&R Block versus itself? I think it's a different dynamic versus the industry, but versus itself is what I think you're outlining. Could you quantify it each of the last 3 years so we can gauge the progression?
Tiffany Mason: Yes, Scott, I can. So we saw improved market share performance in each of the last 3 seasons. So we were down in market share in Assisted in the Assisted channel in tax season '24. We made improvement in tax season '25. I'm not going to give you basis points because obviously, that's proprietary information, but we were down in each of the last 2 years, but trajectory was improving, and we are flat relative to the industry in tax season '26. So we made sizable progress from last tax season to this tax season. I want to make sure that as you're looking at data, I think I can help reconcile some of this confusion because if you're looking at our operating statistics table, which is in the slide deck that we posted on our Investor Relations website just before the call, that data runs from July 1 until April 30. So that's point number one. So that reflects full year-to-date performance. Obviously, the information that you're looking at from the IRS, which is publicly reported, is data that is 1 week in arrears. So that data is as of April 24, and it only reflects the tax season, okay? So those are 2 different points in time with 2 different starting points. And then the third thing I'll say is our data also that's on the operating statistics table includes all filing data. So not just e-file, which is what the IRS reports, but it would also include things like paper filings and entity filings, for example. But what I will tell you is when we share our market share statistics, we do it on the same basis that the IRS reports. So we're talking about e-file data like-for-like versus the IRS, and that data suggests that our market share is flat for the season, which we're really proud of.
Scott Schneeberger: And just a clarification. It sounds like you're measuring from summer last year. So when you do the comparison. So any commentary on just maybe extensions and what impact that had in the back half of last year, assuming that is the time frame that you're capturing in this measure?
Tiffany Mason: So Scott, that's not what I said. So the operating statistics table that you're looking at is from last summer through the tax season. But when we give our market share commentary in our prepared remarks, it is just like the IRS reports. So from January 1 through the end of the tax season, our market share is flat in the Assisted channel. Right. That's a great performance for us. To your point about extension data, for this tax season, extensions are up. So we should continue to have good performance through this coming extension season.
Scott Schneeberger: Looking forward. Okay. Got you. And I understand. So were you using the most recent IRS we see public or the one that -- the prior week that captures the last week of the deadline?
Tiffany Mason: Yes. So our commentary was based on the same information you can see in the public data, which is as of April 24. That's the last time the IRS reported publicly.
Scott Schneeberger: Got you. Okay. That's really helpful. clarifies a lot. I guess just -- and sorry, I know I took up a bunch of time there. I just -- I guess I'll ask on the buybacks, the strategy with the buybacks. Obviously, there's a very opportune share price at H&R Block probably behind the decision. Often, you haven't done it in this time period. Just some commentary on that and how that might impact your normally elevated repurchase activity in the, I guess, we'll call it the fiscal first half of your new fiscal year.
Tiffany Mason: Yes, Scott, thanks for the question. So really pleased that the Board approved an incremental $100 million share repurchase, of course, subject to market conditions for the fourth quarter of this fiscal year. As you know, and I said in my prepared remarks, we did $400 million in the first half of the fiscal year. So that will bring -- assuming we can get it done in the fourth quarter, that will bring our full year fiscal '26 share repurchase to $500 million. So a fantastic result. We'll be able to take advantage of what has been some dislocation in the stock price. And so that should be a great result for us this fiscal year. It has right now no bearing on fiscal '27, but I also can't project any expectations. We obviously haven't guided to fiscal '27. And anything that we do in fiscal '27 is still subject to Board approval. So more to come as we get to next quarter and guide for the next fiscal year.
Operator: Our next question comes from the line of George Tong of Goldman Sachs.
Keen Fai Tong: You made the decision to prioritize lifetime value with DIY. It's understandable that online free DIY volumes fell this year, but also noticed that online paid DIY volumes fell too. Can you talk about the dynamics here and what's behind that?
Curtis Campbell: Yes, George, thank you for your question. Let me emphasize first that not all DIY market share is created equal. And our focus is on attracting and retaining more complex clients with higher lifetime value rather than pursuing transactional low lifetime value clients that applies to paid and certain categories are paid and of course, they're free. If I take a look at the data for this season, our DIY mix between free and paid improved by 140 basis points. And we saw really strong year-over-year growth in AGI bands over $100,000. That's very positive. as a part of our strategy. When I think about DIY, I do want to call out that it's an important entry point within our model. We don't manage the business to optimize for DIY volume in isolation. At the end of the day, our approach is going to be focusing on clients that are looking for the right level of assistance that we can deliver through our omnichannel model.
Keen Fai Tong: Okay. Got it. So it sounds like it's a decision to selectively go after customers that can eventually upsell themselves and deemphasize paying clients that don't have much monetization opportunity.
Curtis Campbell: For sure because we've got to look at our customer acquisition cost versus lifetime value. That's a really important equation for the business. In my prepared remarks, I talked a lot about assistance and I talked about our strategy. I talked about the evolution of us leveraging AI to automate the transactional aspects of tax preparation to focus on the relational pieces. It's really important for us strategically to focus on clients that align with that.
Keen Fai Tong: Understood. And then as a follow-up, on the Assisted side, I noticed that the franchise operations volumes fell this tax season. Can you elaborate on that, if you think that, that's like a structural dynamic that will persist over the medium term or if that's something that just happened this year?
Tiffany Mason: Yes, George, thanks for the question. So let's just -- let's unpack franchise for just a minute. So a couple of things to point out. So if you're looking at the decline in royalty revenue year-over-year, of course, we do have the franchise buyback strategy. I would say the decline in royalty revenue is largely a result of our buyback strategy. Year-to-date, we've done about 150 franchise acquisitions. However, if you set those acquisitions aside and you just look on a like-for-like basis this year versus last year at our franchisee base, the franchise footprint is underperforming our company office footprint by about 2%, and that was entirely driven by volume. So if you think about the success we've had in our company offices, both in driving conversion of our WIP and in driving higher retention through some of our strategic initiatives, we are seeing our company offices perform a bit better. I don't think there's necessarily a structural difference, but I do think there's just some local market differences as we compete head-to-head with independents across our geographic base in the U.S.
Operator: [Operator Instructions] Our next question comes from the line of Alex Paris of Barrington Research.
Alexander Paris: Congrats, guys, on the beat and raise in the quarter. Most of my questions have been asked and answered. Just a quick question, a follow-up on the last one. Tiffany, you mentioned you did approximately 150 franchise buybacks this year year-to-date. What was the number last year for either the 9 months or the full year? Was it like 124, my notes show?
Tiffany Mason: Yes, you got it, Alex. It was 124. You got it right on the dot. And thank you for the congratulations. We appreciate it.
Alexander Paris: You got it. And then with regard to the raised guidance, were there any divergences from the underlying assumptions that you had for the season? For example, you talked about industry growth of 1%, healthier balance of volume, price and mix. That's what I'm talking about. Did anything come in materially better or worse than you had expected going into the season?
Tiffany Mason: Yes. Alex, I would say a couple of things I'll note. So none of the underlying assumptions really changed. Industry growth rate is coming in right where we expected. I do want to highlight the pursuit of the healthier balance of price, volume and mix. You opened the door there, so I'm going to take it. If we think about our performance in the Assisted channel, Volume in the Assisted channel, and you can see it in that operating statistics channel -- in that operating statistics table, excuse me, volume is up 2.1% and NAC is up 3.9%. So we -- this is probably the healthiest balance we've seen in some time. So we're really proud of that. NAC, in particular, if you unpack that, we took a low single-digit price increase in the Assisted channel and the rest of that is mix. So again, really nice balance. So that's playing out the way that we had expected. If I think about the inflection from the tax season, so Q3 into Q4, the only thing I would point out would be the shift that you can see in marketing. So we made an intentional shift to match the timing of our marketing spend with the way that the season was unfolding and the way that we continue to see filers come later and later into the season. So there's a little bit of shift in marketing dollars from Q3 to Q4. That's something to think about as you plan the rest of the year relative to our results. And the other would just be the same thing with field labor. So obviously, you see peak volumes in the early part of April, which hits our Q4, that's when you're going to see those peak labor costs as well. Otherwise, no dramatic difference in what we had planned at the start of the year. Curtis, maybe you want to spend a few minutes talking about strategy.
Curtis Campbell: Yes, for sure. Alex, thanks for the question. Let me double down a little bit on strategy. I know I talked about this in the prepared remarks. I'll talk specifically about AI. I often get that question on the road. It's our belief that H&R Block is uniquely positioned to win in an AI-driven tax industry. we can seamlessly blend AI capabilities with our 70 years of human expertise and accountability in a way that we believe independents can't. And I'll unpack this for everybody just real quick on the call. When you think about tax preparation, we view 2 components of tax preparation. There's the actual data collection, data entry and calculation portion. We often call it the mechanical portion. We call that component one. And then you have component 2, which is the relational experience where trust, accountability and judgment live, that is really important folks as a part of our strategy. We believe as AI automates the mechanical work of tax prep, differentiation is going to shift away from those mechanical pieces towards the relational pieces that matter most to clients, the trust, the judgment, the accountability. And when you think about the high stakes world of taxes, and everybody remember, this is the biggest paycheck of the year for most Americans. When taxpayers get this wrong, bad things happen. Typically, taxpayers, they don't want to get this wrong. And history shows us that. So over the last 30 years, the percentage of taxpayers seeking assistance has remained fairly constant through the transition from paper to box software to cloud, to mobile, to machine learning to Gen 1 AI. More than half of taxpayers continue to seek assistance. And it's not for calculations. It's for confidence, guidance and accountability that comes from working with the taxpayers. So as we think about an AI-driven future, we believe the premium on trust increases and the winner is going to be those that can seamlessly blend AI speed with consistent human expertise. And that's why you heard me emphasize earlier our expert-led technology-enabled focus. It's at the core of what we're doing at Blocknex with our go-forward strategy. And we believe H&R Block is structurally advantaged in this environment with 70 years both on trust, judgment and accountability. And by the way, decades of real-class scenarios and data, we're using AI to amplify expertise, not replace it. So we think that we're well positioned from a strategic standpoint to continue to win. Thank you for the question, Alex.
Alexander Paris: I appreciate the color. And then my last question is really regarding the long-term algorithm. As I start to think towards fiscal 2027 and beyond, I think the long-term growth algorithm, I'm wondering if there's any change to it, but historically, it's been 3% to 6% revenue growth, adjusted EBITDA growing 1.5x that rate and EPS growing at double-digit rate. Is that a reasonable proxy at this juncture going forward? Are there any thoughts or changes to that long-term algorithm?
Tiffany Mason: Yes. No changes, Alex. We're committed to the long-term growth algorithm. And if anything, as we start to get some proof points on the Board around the strategy that Curtis just talked about and some of the things that we talked about in our scripted remarks today, we have even more conviction that, that's the right code for us to be in.
Alexander Paris: And then the last question and kind of relates to a prior question regarding the incremental share repurchases expected in the fourth quarter. I think the question was, does that have any impact on expected share repurchases next year? Obviously, the Board has to opine there. I'm wondering a similar question, does it have any impact on dividend? Because I know the Board reviews the dividend only once annually, and we usually find out about it after the fourth quarter. But the incremental $100 million, does that have any impact or bearing on a decision whether to maintain, which would be the minimum expectation or raise the dividend this summer?
Tiffany Mason: So our capital allocation priorities are unchanged. So priority #1 is to invest in the business. Number two is grow the dividend; and number three is return excess capital to shareholders through share repurchase. So as the Finance committee of the Board meets this summer in advance of the August earnings call, they'll think about our capital allocation in that order. So obviously, more to come, but shouldn't be any concern with any of the dividend protocol or anything thereafter.
Alexander Paris: And for what it's worth, I applaud the decision of the Board to increase share repurchases in the fourth quarter, given the dislocation in the stock price, driven largely by the AI bogeyman. It seems like AI is a significant tailwind potentially for you in terms of, without getting into it again, efficiency of the tax pros and the client experience.
Curtis Campbell: Alex. Let me give you a virtual high five. Thank you.
Operator: Thank you. I would now like to turn the conference back to Jessica Hazel for closing remarks. Madam?
Jessica Hazel: Thank you, everyone, for joining us today. We look forward to reconnecting with you again soon.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.