September 22, 202221, 2023
Dear Fellow Shareholders,
2022 was another great yearOne 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 H&R Block. As describedthe future. My fellow Board members and I are extremely 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 in our 2022 Annual Report, virtually all aspects ofthe progress our business did exceptionally well as we refine and execute uponhas made toward achieving our five-year Block Horizons 2025 strategy. And, as a result, calendar 2022 is also the yeartransformational strategy, our share price finally reflects the significant progress we have made.
For calendar 2022, through the end of August, with the broader stock market down about 17% (the worst market decline since the Great Recession of 2008), your company’s share price has increased 91%. To put this data in a broader context, on December 31, 2021, the market value of our company was slightly less than $4 billion. As of September 20, 2022, at a share price of $44.94, it is over $7 billion.
This is an extraordinary performance, and your Board couldn’t be prouder of President and CEO Jeff Jones, his Senior Leadership Team, and all of our associates and franchisees. I know all of you join us in recognizing a job exceptionally well done.
Our success has enabled usongoing commitment to give backreturning capital to you, our shareholders, more directly through increasing dividends and a consistent program of share repurchases. In August, the Board authorized the 4th dividend increaserepurchase, and our manifold commitments to making positive change in the last 5 yearscommunities in which we operate. In this letter, I’d like to a quarterly ratefocus on how we are developing the use of $0.29 per share. We also approved a new $1.25 billion authorization for share repurchases, building upon a program thatartificial intelligence (AI) to serve our clients better.
While AI has resultedonly recently commanded widespread attention through the release of ChatGPT and other generative AI platforms, AI has in repurchasing nearly a third of outstanding shares since 2016.
The headline for 2022 must of course be the performancefact 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 advanced 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 deploy 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 butand broaden our financial products base, generative AI is likely to be a valuable tool. It is an exciting time to be in the businesses we are in and the Board is equallyreally proud of the contributions the company and its associates and franchisees make in the thousands of communities where we do business. Established company-wide programs such as Make Every Block Better are further enhanced by our strong corporate culture of caring, inclusion, and volunteering. Indeed, the help that is provided daily throughout the H&R Block universe may in fact be the most prevalent way we make a difference.
Finally, a brief word about the Board members we are recommending for re-election this year. I believe the shareholders are fortunate to be represented by such a distinguished group of individuals. They are intelligent, diverse, and are all leaders in their respective fields. Along similar lines, I want to thank Christy Wood, who is not standing for re-election, for her diligence and dedication during her 14 years of service on the Board.
I share with Jeff 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 conviction that this pastsecond fiscal year while exceptional, is onlyin a row, we repurchased $550 million of stock and just last month increased our quarterly dividend by an additional 10%, which would be $1.28/share on an annual basis. The solid performance of our stock in a volatile and often confusing market reflects both the beginning. We are continuing to deliver strong resultsstrength of our businesses as well as these capital allocation policies. But another key factor has been a significant improvement in our core tax businessongoing communication with our shareholders and are gaining traction in Block Horizons, our long-term strategic transformation, built on the foundation that we can serve more customers in more ways by better leveraging our existing assets to become a trusted partner year-round. H&R Block’s future is very bright.potential investors. I am proud to be a part of it and most thankful towould encourage all of you for your support.to visit our investor relations website: investors.hrblock.com.
Like most of corporate America, our Annual Meeting is completely virtual and will remain so in the future. But I strongly encourage all of you to log in and participate. Jeff and I will be happy to answer any questions you may have.
As always, the entire H&R Block community—the Board, Senior Management, our Associates, and our Franchisees—sincerely appreciate the support you—our shareholders—provide. We are most thankful.
Best regards,
Robert A. Gerard
Chairman of the Board