July 31, 2020
September 21, 2023
Dear Fellow Shareholders,
TheseOne of the best parts of serving as your Chairman is this annual opportunity to share with you the Board’s views on the performance of the Company, the business environment and, above all, our thinking about the prospects for the future. My fellow Board members and I are unprecedented times. Our country is facingextremely pleased with the performance of Jeff Jones and his team and look forward to what lies ahead in fiscal 2024 and beyond.
Jeff’s letter in our 2023 Annual Report surveys in detail the progress our business has made toward achieving our five-year Block Horizons transformational strategy, our ongoing commitment to returning capital to you, our shareholders, through dividends and share repurchase, and our manifold commitments to making positive change in the communities in which we operate. In this letter, I’d like to focus on how we are developing the use of artificial intelligence (AI) to serve our clients better.
While AI has only recently commanded widespread attention through the release of ChatGPT and other generative AI platforms, AI has in fact been an integral element of our technology roadmap for some time. Recently, we became part of Microsoft’s AI 100, resulting in an industry-leading partnership with Microsoft to leverage its Azure OpenAI services and leading generative AI technology. Though we have been building in-house capabilities for some time, we believe we can further accelerate our progress by leveraging the most dangerousadvanced AI models in the world while continuing to keep data security a top priority. In the early stages of our partnership with Microsoft, we expect to develop and significant public health crisisdeploy advanced approaches using generative AI to fuel faster and better experiences for taxpayers. We will initially be focused on two areas. First, using generative AI to reduce expenses and increase productivity, and second, to deliver enhanced customer experiences.
And that’s only the beginning. As we grow and expand our services to small business and broaden our financial products base, generative AI is likely to be a valuable tool. It is an exciting time to be in more than a century, one that has afflicted more than 4 million Americans and caused over 150,000 deaths. Essential measures to deal with the crisis have inevitably led to the most substantial economic decline since the Great Depression. Meanwhile,businesses we are individuallyin and as a nation, confronting the consequences of senseless acts of racial injustice.
ItBoard is with both pride and humility that I report that our company has effectively dealt with these severe challenges and remains financially strong and fully capable of meeting the demands of the future.
During the recently concluded tax season, we faced a number of major and unique issues. First, in mid-March (two-thirdsreally proud of the way throughJeff and his team are leaning into this technology.
A few more items. We continue to be aggressive in returning capital to you, our shareholders. For the traditional tax season) the federal government announced that for the first time since the establishmentsecond fiscal year in a row, we repurchased $550 million of the income tax in 1913, the tax filing deadlinestock and just last month increased our quarterly dividend by an additional 10%, which would be extended beyond April 15$1.28/share on an annual basis. The solid performance of our stock in a volatile and often confusing market reflects both the strength of our businesses as well as these capital allocation policies. But another key factor has been a significant improvement in our ongoing communication with our shareholders and potential investors. I would encourage all of you to July 15. Our nationwide Assisted Tax infrastructure, built since its inceptionvisit our investor relations website: investors.hrblock.com.
Like most of corporate America, our Annual Meeting is completely virtual and will remain so in the 1950s around a three month tax season, had to respond quickly to a tax season twice as long.
As the scope of the pandemic was becoming clear by mid-March, state and local jurisdictions throughout the country, heeding medical advice designed to minimize human interaction, began to impose restrictions on businesses and individuals that limited the operations of all but essential businesses. These “lockdown” orders had a double-barreled effect on our business: our clients werefuture. But I strongly advised not to leave their homes and, in many locations, local officials ordered the closure of our offices. We fought to remain open wherever possible, but at the peak nearly 20% of our over 9,400 domestic offices were required to be closed to the public.
Despite these difficulties, it is important to highlight some very real positives. First and foremost, we must recognize our front-line team—our dedicated tax professionals—who came to work determined to help our clients file their taxes and secure the maximum refunds. Their dedication to the job, the company and our clients has been particularly important in helping us through these difficult times.
Also noteworthy is the important role our digital capabilities—Online Assist, Tax Pro Go, Tax Pro Review, and Approve Online—played in meeting clients’ needs. Having shown its value in times like these, we are even more confident that our unique ability to offer the full spectrum of tax preparation services will provide an important advantage going forward.
I should also mention how pleased we are with our acquisition of Wave, the small business accounting and financial services business we acquired last summer. Like so much else in the economy, Wave’s rapid growth rate was also significantly impacted by the pandemic in March and April 2020. But, especially with the addition of Wave Money, the first to market combined banking and bookkeeping solution for small businesses, Wave has resumed its positive trajectory in recent months. It is an important part of our plans for the future of H&R Block.
Finally, I want to recognizeencourage all of our franchiseesyou to log in and associates—participate. Jeff and especially the senior leadership team headed by CEO Jeff Jones—for the extraordinary way they have dealt with the challenges of the year. Our team has performed above and beyond throughout the crisis and, on behalf of the Board, I wantwill be happy to extend our sincere appreciation.answer any questions you may have.
As always, I will conclude by thanking all of you for your confidence inthe entire H&R Block community—the Board, Senior Management, our company. TheseAssociates, and our Franchisees—sincerely appreciate the support you—our shareholders—provide. We are difficult times, but our company is financially strong and strategically well-placed, so we have a great deal of confidence in the future. I look forward to “seeing” you at our first-ever virtual annual meeting in September.most thankful.
Best regards,
Robert A. Gerard
Chairman of the Board