Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

H&R; Block (HRB) Q2 2021 Earnings Call Transcript

By Motley Fool Transcribing - Dec 9, 2020 at 12:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

HRB earnings call for the period ending September 30, 2020.

Logo of jester cap with thought bubble.

Image source: The Motley Fool.

H&R Block ( HRB -0.78% )
Q2 2021 Earnings Call
Dec 08, 2020, 10:00 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Welcome to H&R Block's 2020 investor day. Please note that today's presentation includes forward-looking statements as described in the safe harbor language displayed on the screen and in today's materials and that actual results could differ materially from these statements. [Operator instructions] [Commercial break]

Jeff Jones -- President and Chief Executive Officer

Good morning, everybody, and thank you so much for joining us for our investor update today. We're incredibly excited to share this next phase of our strategic transformation, what we call Block Horizons 2025. Now the work you're going to hear about today builds on everything we've done over the last two and a half years to strengthen the foundation of H&R Block and position us for long-term sustainable growth. Now as I've said from Day 1, we believe we can serve more customers in more ways by better leveraging our existing assets.

As we share our plans with you this morning, there are three key themes that I hope you'll take away. First, we're a stronger company today from talent to technology, pace of innovation, our brand strength, our customer feedback. Now we're not declaring victory in any sense, but H&R Block is transforming. Second, our strategy development process has been rigorous and methodical.

Each of the three strategic imperatives we'll share is grounded in more than a year of customer input, market testing, and a solid base of current business. We're confident that we understand the opportunity for H&R Block and what it will take to win. Third, we are ready to execute. Beyond just developing compelling plans, we've installed new people and processes to help us manage execution across the organization and ensure it creates value for all of our stakeholders.

Our business and financial strategies are linked, and we have a new framework for our long-term financial principles and outlook that Tony is going to talk about more a bit later. Block's expertise, our reputation, our scale, position us to capitalize on the significant opportunities that we have with the millions of customers who deeply trust our brand and the millions more we can serve with our enhanced value proposition and expanded focus. Today, we're outlining what we are doing to achieve this potential. Since the day I arrived, elevating our talent and culture has been a top priority, and we've made significant progress, particularly at the management level.

Our leadership team is a mix of skilled executives with a great balance of H&R Block and external experience. And what we all have in common is a relentless focus on the customer and achieving the next level of growth for block. Joining me today are six of the leaders who are driving this work. You're going to hear from each of them, and then they'll join me for Q&A.

First is Kirk Simpson, the CEO, and co-founder of Wave, who joined us following the acquisition in 2019. Kirk has dedicated the last decade to deeply understanding small business owners and developing beautiful digital experiences to simplify their lives. Kirk's expertise and his entrepreneurial mindset have made him a great partner and have informed much of our work to serve small business owners moving forward. Karen Orosco, our senior VP of U.S.

retail, has a large and diverse role and is responsible for delivering our physical and virtual tax prep experience. She's responsible for partnering with our franchisees and leading the team, building the small business services offering within Block. Karen's expertise is informed by 20 years at the company in a variety of finance and operational roles. Karen will join Kirk to tell you all about our small business plans.

Next is our chief financial services officer, Les Whiting. Les is one of the leading experts on payments in North America with more than 25 years of experience in technology and banking and financial services. Les has worked with Kirk to transform Wave from a software start-up to a fintech disruptor, and we're thrilled to have him leading the development and implementation of our financial products portfolio across Block and Wave. Julius Lai, our chief product and experience officer, joined the company in September.

Julius is responsible for marketing and reimagining the Block experience with a digital-first multichannel focus. Throughout Julius' career, he's operated at the intersection of customer experience, technology, and marketing for global leaders such as Activision, Expedia, Marriott, and AMC. Heather Watts is our senior VP of DIY tax, and she's been driving fantastic results in our business by consistently solving customer pain points and making our product easier, faster, and more personalized. Heather is a true expert in the tax business, and we benefit greatly from her tenure at Block.

Heather will join Julius to share the work we're doing called Block Experience. This is all about accelerating the blending of digital tools and human help in every single facet of our tax business. And finally, our CFO, Tony Bowen. Tony has provided me and the team with invaluable insight from his 16 years at the company, helping to ensure that our business strategy, financial strategy, and capital priorities are all in sync.

Now before I turn it over to my colleagues, let me cover what you can expect this morning. First, I'll introduce you to Block Horizons, providing context for where we've been, why we're ready to take this next step, and why I'm confident about what's ahead. Then the team will share details about each of our three strategic imperatives. As I mentioned, Kirk and Karen will cover small business, Les will cover financial products, and Julius and Heather will cover Block Experience.

Tony will join us at the end and provide thoughts on our financial principles and how we plan to measure and manage the business going forward, including our outlook for fiscal-year 2021. I'll then come back for a few closing comments, and then all of us will be available for Q&A. Let me begin by where we begin as a team, with our purpose: to provide help and inspire confidence in our clients and communities everywhere. Providing help and inspiring confidence, especially financial confidence, is at the core of all that we do.

We're finding new ways to leverage our expertise in human advantage. Consumers and small business owners trust us to play an important role. And we are having an impact in communities across this country with our ambition to make every Block better. Clear purpose is instrumental in attracting and retaining great people and inspiring results that create value for all stakeholders.

This clarity of purpose has also been instrumental in helping us accomplish all that we have over the last couple of years to position us today to take this next step. Immediately after I arrived in the fall of 2017, we stepped back and undertook a deep review of our history, our strategies, and our overall business performance. This helped all of us get ruthlessly clear on our most significant challenges, and we began tackling them one by one. In the spring of 2018, we disrupted the industry with upfront transparent pricing, including lowering prices for millions of our customers.

We also accelerated investments in technology platforms and tools, which have helped us increase efficiency and improve the customer experience and will ultimately reduce run-rate spend on technology. In late 2018, we brought in an external advisor to help us assess potential adjacencies that could drive growth. During this thorough review, we explored more than 20 different adjacencies. In the spring of 2019, we confirmed the opportunities in small business and financial products.

And a few months later, we acquired Wave. Each of these steps since the fall of 2017 has followed a disciplined approach and has resulted in significant progress in four key areas. First is talent and culture. In addition to our leadership team, we've been successful in recruiting and attracting great people from all around the country.

In fact, over the last few years, over half of our vice presidents and 45% of our directors are new to Block or have been promoted to a new role. And even with this significant change, our associate engagement scores remain very high at 85%. And importantly, our pace of innovation and product development has increased dramatically. Second, our digital and data platforms.

Since increasing our technology investments in 2018, every single facet of our road map has advanced: cloud migration, data architecture, infrastructure, and moving to a single tax engine. And while this work is not yet complete, capabilities like tax tips powered by artificial intelligence, digital drop-off, approve and pay online, MyBlock, and tax pros working from home are just a few of the many benefits that we are starting to see. Third is our brand. We're so fortunate to have a well-known and highly trusted brand in H&R Block.

It's a great foundation from which we can build. Now as a result of our focus on quality, value, and digital innovation, we are seeing year-over-year improvements in our Net Promoter Score, intent to return, and value for price paid. Finally and importantly, improvement in our consumer tax results. Over the last three years, our assisted results have shown consistent improvement as we've made decisions to focus on more valuable customers.

As we reported in March before COVID, we were on track to maintain assisted share for the first time in seven years. In DIY, we've gained market share in three of the last four years and have seen significant growth over that time. We've grown total clients by 1.9 million customers, or an annual rate of 6.3%. All of this progress provides a strong foundation to support this next stage of our growth.

Our work on these imperatives has been under way for more than a year now. And while we've certainly been challenged by the pandemic, our current situation has allowed us to stress test many of these digital capabilities and take a step back from the day-to-day to reassess everything we do and how we do it. The result of this is an accelerated commitment to change and a complete focus on three strategic imperatives: small business, financial products, and Block Experience. The teams are going to do a deep dive into all the imperatives in a moment, but let me first hit on some of the key points before they begin.

Success in all three imperatives will pave the way for a company that looks very different over the next five years. We're dedicating dollars, people, and focus to all three areas to disrupt business as usual. And everything about how we're approaching these opportunities is different from the past. In small business, many people are surprised to learn that we already serve over 2 million customers, so we have a strong base.

But the fact is we haven't approached this category strategically in the past. We've not developed specific products or experiences. We've not had marketing plans to acquire customers in this area of small business until now. In financial products, our offerings are currently linked to the tax event, and the Emerald Card is used to provide easier access to the tax refund.

In the future, our products will play a new and bigger role by expanding in ways we haven't in the past, revolutionizing our Emerald Card for consumers, and growing Wave Money for small business owners. Small business and financial products are both categories with structural tailwinds, where we have a right to compete and advantages that will help us win. They both complement our consumer tax business. And over time, we expect they can help balance our current once-a-year purchase frequency.

Our third imperative, Block Experience, encompasses a new approach to our tax business. We will continue reimagining the customer experience to blend digital capabilities and data with human expertise and care. This work will continue to break down the historical lines between in person-assisted tax preparation and do it yourself. Moving forward, we'll go to market with digital capabilities, not lower-priced virtual products.

So not only does digital not mean DIY, but these capabilities will not erode our assisted net average charge. Importantly, these imperatives will shift the focus for our business. As I mentioned, while small business and financial products have been components of our business, historically we haven't made a concerted effort to target either opportunity. With Block Horizons, by leveraging our client relationships and technology platform, we will accelerate growth in both areas.

And over the next five years, they will become a more meaningful part of our business relative to now, where consumer tax drives the overall success of the company. Our Block Experience imperative will continue to modernize the consumer tax business to increase the relevance of H&R Block by digitally enabling our human advantage. Tony will outline the details of our financial principles in a minute. And be assured, our focus is on growth and creating value for our shareholders.

Now with that as a broad backdrop for the morning, I'd now like to hand it over to Kirk and Karen, who are going to walk us through our small business imperative. Kirk, over to you.

Kirk Simpson -- Chief Executive Officer and Co-Founder of Wave

Good morning and thanks for joining us today. I'm Kirk Simpson, co-founder, and CEO of Wave, and it's a real pleasure for me to be here today. When Jeff and the team at Block proposed that they acquire Wave back in March of 2019, I was struck by the opportunity for Block to be a larger player within small business. And since that time as I've dug in to understand the opportunity more deeply, I've only become more excited about the prospects for Block and Wave to make a meaningful difference in the lives of small business owners.

There are several reasons why I'm excited about the future as we sit here today. First, we have a huge base of business, with 2.4 million small business customers across both platforms. And we're driving almost $500 million of annual revenue from these customers, which means there's a significant level of trust in our products and services and a solid foundation from which we can accelerate growth as we apply purposeful focus. Second, across both organizations, we share a true love and passion for small business owners.

I've started three companies, and 50% of Wave's team has owned small businesses. Jeff grew up in a family of entrepreneurs and has been a business owner himself. Within H&R Block, we have the examples of our successful franchisees, and of course the truly amazing entrepreneurial story of our founders, Henry and Richard Block. I believe strongly that you cannot truly build for small business owners unless you've understood the joys and quite frankly the pain yourself.

Empathy for their journey and the desire to make their lives better lives strongly in all of us. And finally, I found that both teams share an unwavering passion for building a great culture, innovating with technology, and delivering superior customer experiences. With these three key building blocks in place, we'll focus on making Block a leader in small business. And if the pandemic has taught us anything, it's how important small businesses are to our communities and how important it is at this unique moment in time for us to help make it easier to start and successfully run a small business.

Small businesses make up a large and fast-growing segment. Before the pandemic, there were 32 million small businesses in the U.S. with about 100,000 new ones starting each month. They generate $7 trillion in annual revenue.

But let's face it, despite the sometimes romantic portrayal of life as an entrepreneur, it's not easy. The joy of creating something from scratch and of being your own boss is balanced by how difficult it can be to manage the financial side of your business, and that is especially true at tax time. Being part of the Block family allows us to do more than we could as Wave alone, thanks to the unique value proposition Block brings to small business owners. We estimate that more than 80% of entrepreneurs use no software at all to track income and expenses.

They're doing their books and getting ready for taxes with a shoebox of receipts and maybe a spreadsheet. They need our help, so they can focus on running their business. Our tools help them make, move, and manage their money easily, quickly, and oftentimes for free. In fact, the relative lack of technology adoption by small businesses is why this is such a big opportunity for us.

We don't have to displace an incumbent to win new customers. We just have to convince them to try Wave and H&R Block. On that note, while the pandemic has been a challenge for many small businesses, it's also spurred what The Economist Magazine calls a once-in-a-generation surge in start-ups. We expect that small businesses will lead the recovery just as they did after the Great Recession in 2009.

And this group of new business owners is making software payments, banking, and tax decisions without being walked into any legacy systems. As we look at the market opportunity, we are focused on small businesses with zero to nine employees and annual revenue of $10,000 or more. They generate almost half of U.S. GDP and employ more than half of U.S.

workers, an incredibly attractive target that represents a significant total addressable market. This group is attractive because it's when they start generating more significant revenues that entrepreneurs start thinking about their businesses as more than just a side hustle. H&R Block has built a solid presence in small business tax without differentiating between the small business owner and his or her business. We understand, however, that to fully capitalize on the opportunity in this category, we must intentionally focus on the unique needs of small business owners, creating very specific products and services that provide personalized experiences relevant to their business needs.

Small business owners will have two options when they come to us, Block Advisors and Wave. Our two brands enable us to address the full spectrum a small business needs when it comes to invoicing, payments, bookkeeping, payroll, and of course, tax. And importantly, we will directly own the customer relationship. And now Karen will provide some additional details on Block Advisors, our dedicated small business offering.

And then, I'll come back to talk more about Wave.

Karen Orosco -- Senior Vice President of U.S. Retail

Thanks, Kirk. As you just heard, we start from a position of strength in small business. At H&R Block, we've earned the trust of more than 2 million small business tax customers today, thanks to the strength of our brand, our service, and our client referrals. As we've built these trusted relationships, we've uncovered their unique needs as business owners and identified the opportunity to serve them beyond completing their tax returns.

In fact, about 25% of our retail network already provides additional business services to these clients. However, as we've spent the last year assessing our work and listening to customers, it's clear, we can do more. Inspired by client feedback and insights, we conducted broader research to create a compelling value proposition, prioritize our offerings, and validate our brand strategy. Through this work, we heard from entrepreneurs who told us about their challenges: being short on time, lacking financial expertise, and struggling to find the support or resources they need to be successful.

When business owners talk to us about their needs, they told us how having it all in one place would be a whole lot simpler and how valuable it would be to have a team of experts who could provide a full suite of products and services in a single location. Furthermore, business owners stress the importance of guaranteed accuracy and consultative advisors who help them maximize their cash flow and profitability, all while taking care of their financial tasks like taxes, bookkeeping, and payroll, so they can focus on what they love. We also confirmed that branding our offering as Block Advisors will allow us to benefit from our trusted, well-known H&R Block brand while elevating our unique small business expertise and capabilities under the Block Advisors brand. Human health will remain the cornerstone of our Block Advisors small business offering, and we've rebuilt it as digitally native from the ground up.

In other words, customers can interact with our advisors whenever and however is most convenient for them, whether in person or virtually. We've redesigned the entire small business tax workflow from setting an appointment to completing and filing the return to post-service follow-up, all to create a more valuable relationship. At each step in the customer journey, we're gathering and sharing information that's relevant to the unique needs of a business owner, providing them answers to questions like, "How can I reduce my tax liability by changing my legal entity structure?" or "What percentage of my revenue am I spending on advertising? And how can I go faster by altering that spend?" In tax season '20, we launched our initial small business P&L, and then we surveyed our clients to understand its value. More than half of them recalled the P&L, and more than 65% of these clients gave it the highest value scores.

And our additional tax products and services create value separate from the tax return. Clients can choose new products this year, like business audit support or quarterly payment consultations, to get additional support throughout the year. Initially, we'll remain focused on tax and related business services like bookkeeping and payroll, but we intend to broaden our offering over time. We will deliver great value for small business owners when they come to Block, providing them access to the services they need in the manner they choose.

Our Block Advisors tax pros are critical to providing our clients confidence and expertise, and they're a major key to retaining and growing our small business client base. These pros already hold our highest levels of tax knowledge. In addition, they must complete extensive training focused on the unique elements of small business tax returns and on financial consultation to provide broader support and play an ongoing advisory role for these clients. This additional certification is key to delivering the expertise that small business owners need and expect.

Our focus in the coming year will be to expand the availability and appeal of the Block Advisors brand for small business owners. So let me spend a minute on how we're going to do that. We have 360 Block Advisors locations today, and we have 30,000 tax professionals across our H&R Block network with the knowledge to support small businesses. In other words, they're already eligible to become certified under the new program.

So this year, you'll see us utilize our certified Block Advisors tax pros to expand availability of our small business offering significantly. We'll have more than 7,500 H&R Block locations with certified Block Advisors tax pros inside them, providing our new small business products and services. With this ingredient brand strategy, we'll ensure that no matter where entrepreneurs are, they can find the small business expertise they need. There are other ways in which our enhanced focus on small business will be evident in the 2021 tax season and beyond.

We're investing in marketing, branding, and expanded offerings to drive growth. Specifically, we will launch a national integrated marketing campaign for Block advisors this season, with advertising on multiple channels, brand collateral in certified Block Advisors offices, a new website, and a number of strategic partnerships. Making the brand more visible will drive awareness, which will lead to trial of our services. And the expertise of our advisors and the convenience of our service offerings will lead to conversion of new clients.

We have immense upside, starting with small business tax. Our share in that category is not as large as it is in the consumer tax prep category. In fact, every 1-percentage-point increase in small business tax share could generate $60 million in new revenue for us. Additionally, the net average charge of our small business clients is significantly higher than that of our consumer tax clients.

And as we expand our products and services beyond tax, we'll continue to see our revenue per client increase. Tax season '21 is just the beginning as we go after this market aggressively. We will help small business owners thrive by delivering valuable solutions through trusted relationships. With that, let me turn it back over to Kirk to dive into Wave.

Kirk Simpson -- Chief Executive Officer and Co-Founder of Wave

Thanks so much, Karen. At Wave, we're also focused on customer acquisition, retention, and cross-product adoption. Our free and easy-to-use platform removes the pain points and areas of friction that come with running a small business. Our innovative model provides free accounting and invoicing software to small business owners.

Revenue then comes through value-added services such as payment processing, payroll, and bookkeeping. To give you an idea of scale, we currently have over 260,000 monthly active users in North America. More than 75% of them use our invoicing functionality. They send over $22 billion in invoices every year.

And Wave processes over $2 billion in annualized payments through our credit card and bank payment systems. We've seen continued recovery of the Wave business since the pandemic-induced lows in April, given the strength of our value proposition and the ways we are helping small business owners navigate these turbulent times. And we've seen increased adoption of digital invoicing and payments as a result of the pandemic, a shift that we had expected over the next decade which has been significantly accelerated by the pandemic. I also want to call out our payroll product, which pays tens of thousands of employees every month and moves over $650 million in wages and payroll taxes every year.

This is one of the areas of our company where Wave employees live the values I mentioned earlier of deep empathy for small business owners. As the government rolled out many different programs to help small business owners and their employees during the early days of the pandemic, Wave first to market with many key changes in our software to help educate small business owners and help them preserve their cash. This was painstaking work by the team, and our customers took notice. After an obvious slowdown during the first few months of the pandemic, payroll now is achieving record highs in customer retention, and our payroll-related revenue growth is accelerating.

Overall, last quarter, Wave revenue grew 31% year over year, and our current positioning in the market is strong. With our core product offering growing quickly and driving value for customers, we're excited to roll out our innovative digital banking product called Wave Money, which is fully integrated with our software. In seconds, our users can send an invoice, get paid, and have access to their funds via their Wave Money accounting card. When they spend on that card, all their transactions are automatically categorized and ready for tax.

This is an incredible time saver for our customers and allows them to focus on what they do best, which is definitely not accounting. You can see just how easy it is to use Wave and Wave Money in this video. [Commercial break] 

There's one more thing that makes Wave Money such a great opportunity. About 90% of the dollar volume passing through Wave invoices or around $20 billion annually is not flowing through our payment system right now. With Wave Money, a full-fledged bank account product, we're confident we can capture more of these funds, helping to increase our revenue while also delivering an even better customer experience. Before wrapping up, I want to touch on the synergies between Wave and Block, which will also help to drive growth.

This year, we will roll out a simple and seamless connection between Wave and Block advisors for tax. With one click, Wave users will be able to automatically feed all their bookkeeping data from Wave right into Block's tax categories. This will save hours of manual work and infinite amounts of frustration. From there, our users will be able to choose any of Block's tax preparation services depending on their comfort level with taxes.

This will help Wave become a customer acquisition engine for Block, while also cementing our deep customers' ongoing relationship with Wave. From invoicing to payments, to real-time access to funds, to seamless banking and bookkeeping, and even tax and support services. Together, Wave and Block have small business owners covered.

Jeff Jones -- President and Chief Executive Officer

Kirk and Karen, that was excellent. Thank you both so much. Now as you heard, we're transforming ourselves to help small business owners thrive, especially at this crucial juncture. What I'd like to do now is hand it over to Les, who's going to walk us through our financial products imperative, where our focus is on providing mobile banking solutions that will address the unique needs of our customers.

Les, over to you.

Les Whiting -- Chief Financial Services Officer

Thank you, Jeff. I'm excited to be here this morning to tell you more about our second strategic imperative financial products. I joined the Block leadership team a few months back in the newly created role of chief financial services officer after nine years at Wave. I'm a reformed banker having spent my entire career at the intersection of financial services and technology.

During my time at Wave, we coupled innovative small business software and deeply embedded financial products with a disruptive pricing model, allowing entrepreneurs to gain control over their finances and giving them back time to do what they do best. At Block, I'm thrilled to leverage these learnings to design and build new financial products to increase the utility of our offering for customers who already trust us for tax. Before jumping into what we are doing at Block, it's important to understand the significant need for consumer-friendly financial products team. 24% of American households are underbanked.

It's a total of 31 million according to the FDIC. These customers either don't have a bank account, or they have one but also use expensive alternative financial services to meet their needs. This is the right time for us to pursue this opportunity as traditional banking is simply not working for too many people. The current industry dynamics highlight massive unmet needs.

First, with low-interest rates and regulation of debit card interchange, traditional banks are under increased pressure. They're charging higher fees and increasing minimal balance requirements to compensate. Not surprisingly, customers are frustrated by these changes. In the recent FDIC study on how America banks, 29% of unbanked customers said the main reason they did not have a bank account was that they could not meet these minimum balance requirements.

The average minimum to waive monthly fees is now $12,000, triple what it was in 2013. And just 29% of traditional banks still offer free checking accounts, down from 37% in 2013. In addition, consumers paid over $30 billion in overdraft fees. To say that again, $30 billion.

To put that in perspective, it works out to everyone in the U.S. between ages of 20 and 64, paying $156 a year in overdraft fees. And just one of these $35 fees can be devastating for the underbanked. We find this all deeply troubling, and it truly demonstrates why the traditional banking system is not working for too many hard-working Americans.

Second, there's an increasing lack of trust of traditional banks and financial institutions and recent missteps by some of the larger players in this space. Third, industry consolidation and the adoption of digital banking options is reducing the number of U.S. bank branches. There are approximately 77,000 branches in the U.S.

in 2019, down 7% from the peak in 2012. Today, consumers are less likely to decide where they bank based on where the branch is located. Instead, they value the convenience of digital tools and are gravitating toward innovative new banking brands that offer more choice, flexibility, and a customer-first approach. This shift to digital banking has been accelerated by the pandemic, and consumers are trying all kinds of new tools out of necessity and becoming much more comfortable with them.

From menus with QR codes, to contactless payments, curbside pickup at the grocery store, and paying bills for mobile apps, consumers are using digital capabilities more than ever before. We're confident, based on our research, that many of these new habits will stick, and those changes and consumer preferences make digital banking more accessible for us. Given the significant opportunity and the industry changes I just outlined, many nontraditional brands are looking to get into the space. But Block is uniquely positioned to win because of the large customer base we already have for our tax products.

We over-index among underbanked customers who have a greater need for these services. Specifically, H&R Block already serves the tax preparation needs of 8 million underbanked customers. Our customer research suggests that nearly nine out of 10 underbanked Block customers would trust us to provide banking services. In addition, 67% described themselves as likely to open a mobile bank account through Block if offered with their desired features.

Many of our customers already use our financial products. Of the 20 million customers who use our tax preparation services annually, about 80% get a tax refund. Today, almost 2 million customers receive those refunds on our Emerald Card, which is often the single largest deposit of a year. The Emerald Card is the third largest prepaid debit program in the U.S.

with $9 billion deposited annually. However, it has limited mobile capabilities. So you'll see us do a number of changes in the coming months as we build out our financial products offering. We're making Emerald Card available digitally, allowing customers to add it to their Apple or Google Wallet with just one click.

This means customers can access their tax refund immediately rather than waiting to receive their card in the mail. By enhancing the positioning and capabilities of our financial products and nurturing the customer relationships we already have, there's a meaningful opportunity to boost growth at little incremental cost. We can also do much more to leverage card spending data to provide targeted offers for these customers to help them gain financial confidence while increasing deposit activity. But more importantly, we're thinking much bigger and bolder about what our financial products can be.

We're shifting our focus to a more customer-centric value proposition and experience, fueled by product innovation, increased mobile and digital capabilities, and a focus on year-round sales that will drive deeper engagement with the Block brand. Specifically, as we move further into calendar '21, we aim to reposition the Emerald Card as a mobile-first banking platform with key features and benefits aimed at addressing the needs of the underbanked. And importantly, we already have a lot of the necessary infrastructure in place, including the right banking partner, processing capabilities, and technology platform. As a result, we'll focus first on developing the digital experience and customer acquisition strategy, which will allow us to drive incremental revenue growth in this category faster.

We believe this is an important element of our long-term growth strategy, especially as our recent customer research shows strong interest in a product like this from Block. I am confident we can succeed in recasting the Emerald Card. It will become a much more full-featured mobile banking platform by building a better experience and creating a year-round value proposition for our customers.

Jeff Jones -- President and Chief Executive Officer

Les, thank you. Great job. Financial products are crucial to unlocking confidence for our clients. Today, they come to us for a tax refund, which is an essential part of creating that confidence.

But as you heard, our products can and will play a bigger role by expanding in new ways that we just haven't pursued before. And with that, I'd like to now introduce Julius and Heather, who are going to walk us through Block Experience. This is how we are reimagining the process of doing your taxes with an increased focus on the client experience.

Julius Lai -- Chief Product and Experience Officer

Thanks, Jeff. Block Experience is the part of our business you know us best for already, and that's tax. We are reimagining tax prep for a digital-first world, unleashing H&R Block's human advantage for all customers through any touchpoint at any time. When delivered at scale, this will help us bring in more new customers and better serve returning ones, which will help grow our revenue and customer base.

I joined Block only a few months ago and have already been tremendously impressed by our company's commitment to transformation and the opportunity for us to evolve from good to great. The Block Experience work aims to reimagine how H&R Block delivers tax services using technology and data to create a world-class experience that is convenient and fulfilling for customers, while also preserving our commitment to customer care that has long been part of Block's DNA. We are passionate about our customers' well-being, and we seek to fully understand their needs so that we can serve them better and win their engagement and loyalty over time. So while we are early in this part of our transformation journey, we already have signs that this strategy will work.

First, as we enable more in-office services to digital, we see that customers are already adopting rapidly, especially given the ongoing pandemic. In fact, last year, the number of customers who engaged with a tax pro or approved their return online more than doubled year over year. Second, as we increase convenience and ease, intent to return also increases, as much as 8 percentage points year over year. Finally and most importantly, as customer adoption and satisfaction both grow, our business grows as well.

H&R Block's total clients have increased year over year as a result of these changes that we have made. So in combination, these proof points demonstrate that we are on the right path, and we are just getting started. At its core, the Block Experience work is about seamlessly combining Block's human expertise and care with world-class digital capabilities. This will allow us to reach more customers, offer more choices and services, and solve more customer problems than anyone else.

So when we use technology smartly to drive more customer choice, ease, speed, and convenience, then customers engage with Block differently. And when customers engage with Block differently, their lifetime value grows, and our business grows as a result. Let me give you a few examples of how this reimagined hybrid customer experience is already coming to life. A customer who starts their tax journey online using do-it-yourself can get a little bit of help live from a tax pro while they're working on their return and also ask for a full review before filing.

Meanwhile, a customer who starts their tax journey by coming into an office for assistance and drop off documents, but then go online to complete the rest of their process. Or they could choose digital drop off, so they don't have to come into the office at all, but can still communicate with their preferred tax pro by text, chat, or video call. Customers no longer have to choose between what's convenient or getting the best tax outcome. With Block, it's all available anywhere.

As I mentioned earlier, we've already seen that being able to choose among many service options is appealing across our base of more than 20 million customers regardless of their age, income level, or other demographic indicators. That's why we're confident that our investments in a better Block Experience will scale tremendously and successfully. In fact, we're targeting that within a few years, at least 50% of assisted clients are using digital services in part of their tax journey. Through this Block Experience work and innovation, we're changing digital, such that it no longer equals DIY, but is an enabler instead to unlock the value of Block's human expertise across more of the customer base than ever before.

And as we execute on this imperative, digital will be accretive to EBITDA, which Tony will talk more about later. With that, it is my pleasure to hand it over to Heather, who will dive further into our newly revamped MyBlock digital platforms.

Heather Watts -- Senior Vice President of DIY Tax

Thanks, Julius, and I'm thrilled to be here today. A Block Experience is centered on taking something complex and making it simple. And I'd like to start by sharing with you an example that shows how we are bringing this to life with MyBlock. MyBlock is an evolution of our website and mobile app, reengineered to create a convenient, personalized entry point for customers.

Our vision is for MyBlock to provide the best of everything Block in one easy package. Our web and mobile app experiences allow customers to upload documents, set and manage appointments, and even chat live with tax pros via video, all from the palm of their hand anywhere at any time. As Julius mentioned, our ambition is to serve customers however they want to engage with us instead of forcing them into one path or another. MyBlock is a key way this comes to life.

Offering choice and control drives customer engagement, satisfaction, and retention and is a proven winning formula for growth. To give you a better idea of how MyBlock works, we have a brief video walk-through. [Commercial break]

As you saw, customers can easily upload documents, manage appointments, chat live with tax pros and do so much more via the MyBlock mobile app. Clients can start their tax prep process inside of MyBlock, even if they plan to get help in an office before filing, by connecting with the tax pro or arranging digital drop-off of their documents. This is a shift from our prior approach. For example, last season, we offered Tax Pro Go as a stand-alone product.

You can upload your documents and consult a tax pro virtually for help. And while we saw significant growth in customers using this service, we realize we can give customers more flexibility by embedding the same features into MyBlock and making it more prominent and accessible to everyone. Importantly, this is also supportive of a consistent net average charge. Our pricing structure will stay the same regardless of how much customers use our offices or our digital tools.

As we are reimagining the experience for our assisted customers to incorporate more digital tools, we are also leveraging our offices and tax pros to benefit our DIY customers. Our DIY products remain critical to driving growth as demonstrated by market share gains in this category in three of the past four years. And we intend to build on our strong track record of performance. Our ability to automatically gather customers' data through importing and photo capture has created a best-in-class experience when DIY filers switch to Block.

And we've made it seamless for DIY customers to connect to our network of tax pros for help with assistance options via chat, voice, and video that better meet a range of customer needs. When we combine our human and digital capabilities, we deliver unique unmatched experiences, and our customers are more satisfied. As our DIY experience has evolved, customers have noticed, with Net Promoter Scores improving more than 10 percentage points and retention increasing by more than 2 percentage points in the last two years. There's so much more we can do to delight our clients who consider doing their taxes a complex task.

We're concept-ing new designs and investing in multiple use cases for artificial intelligence. This will provide a faster, easier, and more intuitive experience for customers while increasing their confidence that we've helped them get the best possible outcome. We're developing ways we can use more of what we know about returning clients to help them complete their farms more quickly and accurately, with the goal of reducing total time to complete by up to 50%. And we're exploring how we can enable customers to collaborate in real-time with their spouse, connect more easily to financial data sources such as payroll and bank accounts to reduce manual data entry, make predictive recommendations on deductions and credits to drive a dramatically better and more personalized tax experience that wows them.

We're excited about the changes to how we work and interact with customers as a result of the Block Experience imperative. We're effortlessly blending technology with human expertise and care in new and exciting ways, giving consumers more ways to interact with us than ever before. And by delivering a faster, more personalized experience throughout our offerings, we'll continue to drive higher satisfaction and stronger loyalty. We are reimagining the tax preparation process, uniquely positioning us to deliver growth over time.

Jeff Jones -- President and Chief Executive Officer

Heather, thank you. And Julius, thank you as well. As you just heard, and this is a really important part to understand, that digital does not mean DIY. Our assisted clients will pay assisted prices even if their experience incorporates more and more digital tools, all in an effort to make tax prep faster and easier.

Our digital capabilities are no longer siloed, distinct product paths. Instead, they're an integral part of the tax process for all customers, really positioning us for the future. Now with that, let me introduce Tony, who's going to walk us through our financial principles and outlook, as these are closely tied to our strategic imperatives and future vision for Block. Tony?

Tony Bowen -- Chief Financial Officer

Thanks, Jeff. I'm excited to share how our five key financial principles align with our strategy to deliver sustainable and profitable growth over the long term. Our first financial principle is centered on our most important objective as a company: growth. This growth will be achieved through the imperatives we've just outlined, with significant opportunities in small business and financial products, and continued innovation in consumer tax.

As we execute our three imperatives, we are targeting consistent annual revenue growth of 3% to 6%. As Jeff outlined at the start of this presentation, we carefully chose our adjacencies because they build on our strong foundation. Because of that, we have tremendous operating leverage in our business. Revenue growth leverages our fixed cost structure and current assets, enabling EBITDA and EPS to grow at rates faster than revenue.

To illustrate the leverage, we made a sensitivity analysis at various levels of revenue growth and estimated the resulting EBITDA and EPS impact. For example, with revenue growth of 4%, EBITDA is expected to grow one and a half times faster than revenue and EPS would grow two and a half times faster. Modest revenue growth that outpaces inflation creates significant growth in earnings. Additionally, when we think about growing earnings, we have opportunities on the costs side as well.

We have a multiyear expense reduction goal to focus our teams on driving efficiencies. These expense reductions will help fund our future by providing dollars to invest for growth and will also help with the operating leverage mentioned earlier. Our goal is to identify $150 million in cost reductions by 2025 to provide the investments needed for future growth. We see efficiencies as we continue to evolve our technology road map, employing lean practices and robotic process automation.

And we're infusing a cultural mindset focused on growth, which is leading to increased accountability on spending across the organization. Two specific opportunities we see over the next several years include our office footprint and labor model. Our offices are an asset. And through Block Experience, we will leverage a combination of digital tools and physical locations more than ever before.

That said, because we lease all of our locations and about one-third are up for renewal each year, we can be agile and reposition quickly. As clients take advantage of our digital capabilities, we have the opportunity to thoughtfully consolidate offices where it makes sense. Similar to our footprint, our labor model has flexibility because the vast majority of our workforce is seasonal. This means future increases in virtual interactions and customer behaviors will drive efficiencies and change how we hire and deploy tax professionals.

Our current staffing model is driven by peak demand in physical locations. By smoothing out that peak demand and leveraging a more efficient workforce model, we will be able to hire fewer tax professionals, and over time reduce overall labor spend. Of course, success for Block Horizon goes beyond measuring revenue and earnings. In the past, our key metrics included clients and net average charge.

Going forward, there are new metrics we plan to share on an annual basis to help you track our progress. For our small business imperative, we will be sharing total small business customers, showing the growth from our base of 2.4 million across Block and Wave, along with revenue per small business customer. We will also provide updates on our performance leveraging our Block Advisors brand, as well as Wave. In financial products, we will share the number of customers who sign up and reload the mobile banking product and revenue per client.

For the Block Experience, our focus is on total consumer tax customers served, regardless of the channel through which they come. While we will continue providing assisted and DIY returns this year, we are increasingly managing the business as consumer tax as we infuse digital tools and human help into the workflow for both assisted and DIY customers. Along these lines, we will share the percentage of assisted customers who have a digital interaction with us, which helps our business and financial goals. As Julius mentioned, we expect to materially increase adoption over the next several years.

This is important as it shows we are serving customers the way they want to be served, modernizes our offering and creates opportunities for efficiencies. OK, switching gears. We will continue to maintain a strong balance sheet with adequate access to liquidity. This will allow us the flexibility to invest for growth and fund our seasonality.

We continue to target an adjusted debt-to-EBITDA ratio of two and a half to three times, and we are currently trending below this range. And with our recent $650 million debt offering and continued access to our $2 billion line of credit, we are well-positioned from a liquidity perspective. Turning to capital returns. We recognize that our dividend is important to shareholders.

And we are committed to continuing it, with the goal of growing the dividend over time. We are also committed to repurchasing shares to offset dilution, and we'll opportunistically repurchase shares beyond that. During Q2 for example, we repurchased 9.5 million shares at an average price of $15.83. And during my tenure as CFO, we have repurchased 19% of shares outstanding.

We have $600 million remaining on our authorization, which runs through June of 2022. Before I wrap up, I do want to share more specific expectations for the first year of Block Horizons. We're off to a great start with solid results for the first half of fiscal-year '21. For the full year, we expect revenue of $3.5 billion to $3.6 billion.

We also expect EBITDA of $950 million to $1 billion, which will generate significant free cash flow. Our effective tax rate will be 18% to 20%, down from our typical range of 23% to 25% due to some favorable tax planning. These expectations assume there will be no significant disruption to our business from the pandemic, and that the tax filing deadline returns to the normal date of April 15. Obviously, our share repurchases and lower tax rate are favorable on a full-year basis.

But as we typically report a loss in Q3, the repurchases and reduced tax rate will negatively impact Q3 results. Also as a reminder, fiscal-year '21 results include activity related to the extension of tax season '20. This will likely result in a decline in revenue and EBITDA for fiscal-year '22. To summarize, we are executing on Block Horizons with five core principles in mind: first, sustainable annual revenue growth of 3% to 6%; second, EBITDA and EPS growing at a rate faster than revenue, given the operating leverage in our business; third, funding the future through efficiencies and cost reductions and redeploying the savings to the highest ROI opportunities; fourth, maintaining a strong balance sheet and liquidity position; and last, continuing to return capital via dividends and share buybacks.

We expect that the imperatives we have described today, which are grounded in our financial principles, will lead to sustainable long-term growth for Block, allowing us to continue to create value for shareholders as we serve our customers' needs and fulfill our purpose. With that, let me hand it back over to Jeff to wrap up and begin the Q&A.

Jeff Jones -- President and Chief Executive Officer

Tony, thank you. Now we've shared a lot of information this morning, and the main thought I want to leave you with is this. H&R Block is a better company than we were just a few short years ago. We've strengthened our foundation.

We have created a culture of experimentation. We're leveraging data and artificial intelligence in new ways. And we're focused on solving problems for consumers and small business owners alike. H&R Block has a human advantage that is very difficult to replicate, and our brand is well-known and trusted for more than consumer tax.

But we know we can deliver more, and Block Horizons is our plan to do just that. Our imperatives will help us respond more effectively to a changing market landscape and will help our brand and company remain relevant for the long term as we deliver sustainable growth and value for all stakeholders. I want to thank you all again for joining us this morning, and I want to thank every member of the H&R Block team who remain focused every day on delivering our purpose. We now look forward to hearing your thoughts and answering your questions.

Thank you very much.

Questions & Answers:


We will now take a brief break to assemble the queue for our question-and-answer session. [Operator instructions] We will be back shortly. [Commercial break]

Colby Brown -- Vice President of Finance and Investor Relations

Good morning, everyone. I'm Colby Brown, vice president of finance and investor relations at H&R Block. And once again, we are so thrilled that you joined us today. Thank you so much for your participation.

We've assembled the Q&A queue, so we're just going to jump right in and get right at it. Our first question comes -- Jeff, from Jeff Silber from BMO Capital Markets. And his question is, "I understand that you believe most of the small businesses you're targeting don't have an incumbent provider, but there are lots of companies that hit this -- the target, the zero- to nine-employee market. What are your competitive advantages versus these and other companies?"

Jeff Jones -- President and Chief Executive Officer

Great. Jeff, thank you very much for the question. Small business is something that, as I mentioned, we've been looking at closely for almost two years now, really understanding what do we offer, how are we viewed by our customers, and where do we see the white space? And there's a few things I would highlight that get us very excited about what the opportunity is. Number one is, we're starting from a large base of business.

So as you heard today, nearly 2.5 million customers are trusting Block and Wave for this topic. Customers that we've spoken to absolutely view our credibility to help them more than we are today. So the Block brand is very well known. And on the Wave side, I think their growth rate and value proposition speak to how much they're viewed and how well they're trusted to.

I mean, we are owning the client relationship directly in both businesses. Wave is built directly and designed for the small business owner. Block works directly with the small business owner. So the value of owning the client relationship, we also think, is incredibly important.

Again, we go to market with two different offerings. Wave has started from a place of being a free accounting platform. But as you heard from Kirk, it's already so much more. The opportunity for a small business owner with the integration of Wave Money to literally think about invoicing payments, charging on the debit card, all of their accounts being fully and automatically reconciled with a seamless handoff to Block for tax, is a really, really special experience.

And on the Block side, we know that people value human expertise and care. And so today, we have an incredible network of professionals who can deliver that. As you heard Karen say, we'll go to market in '21 with 7,500 locations Block Adviser-certified to be able to deliver. And we'll start first by building on our expertise in tax, and then move into expansion into bookkeeping and payroll and other services down the road.

So the combination of those two offerings, given what we've learned about our customers, make us feel really, really good about this start.

Colby Brown -- Vice President of Finance and Investor Relations

That's great. Thank you, Jeff. Our next question comes from Hamzah Mazari from Jefferies. "Jeff, you had a previous rendition of Block Advisors out there historically.

How is this initiative specifically different from what you were doing before?"

Jeff Jones -- President and Chief Executive Officer

Hamzah, thanks for the question. And I think something you've heard from this management team is candor and transparency. And so you also heard in our opening remarks, we've also paid close attention to what we've done well and what we haven't done well in developing these imperatives. And I think you raise a great question.

For many, many years, H&R Block has served more complex customers. And we've had a business called Block Premium, which became Block Advisors, which was playing that role. Over the last couple of years as we've looked in Block Advisors, we've heard from those customers and understand that today, we're already serving a lot of small businesses in Block Advisors. But as I also said, that wasn't because we had done anything uniquely to develop products or experiences or marketing for them.

So really, everything about what we're doing now with Block Advisors is different, starting from a standpoint of we've completely rebuilt the customer experience from scratch, how they make an appointment, how they're served, and what happens post-filing in taxes to build a year-round relationship with them and to have a trusted team of advisors that can help their business beyond just tax. That's fundamentally different. We will go to market and actually market and support this business. We know we have to build more brand awareness.

We know we have to acquire more customers, and that's everything from performance marketing to video to building new website. So in the past, I think we've had Block Advisors, but didn't do enough to support it. That's fundamentally different now as well, the way we are thinking about what it means to be Block Advisor certified. This is a real chance to how we scale the business.

We have 360 stand-alone locations in Block Advisors. But as we certify professionals in H&R Block locations, that gives us enormous scale to deliver this expertise beyond those 360 locations. That's fundamentally different from what we've done in the past as well. So those are a few examples of how we've thought about this really holistically and from the customer perspective.

Colby Brown -- Vice President of Finance and Investor Relations

That's great. So Jeff, another -- or a question now from Jeff Goldstein of Morgan Stanley. "Is there any update around long-term Wave profitability? Could you also provide some of these growth initiatives -- could some of these growth initiatives drive more operating leverage and positive EBITDA faster than you initially expected?"

Jeff Jones -- President and Chief Executive Officer

So a few different questions there. Let me tee it up, and I'll hand it over to Tony to see if he wants to comment further. First, on Wave, I mean, as we've said all along, we are investing for growth at Wave. And while we do have a path to profitability, we're very clear that's not about the next year or two.

And as we've seen the business recover so well from the pandemic and continue to innovate in new products and things like Wave Money, that's really the first priority at Wave. And this team that's on this call with you are all aligned on that approach. Tony, do you want to comment more specifically about the operations leverage and the initiatives and what we could see happening with EBITDA?

Tony Bowen -- Chief Financial Officer

Yeah, absolutely. I mean, as you said, I mean, specifically for Wave as that business grows, we know we'll get to profitability. It's just a matter of scale and just making sure that we're investing for that growth is really the key priority. When we think about the overall company, our top-line view is growing revenue at 3% to 6%, which I outlined in my opening remarks, and then letting EBITDA and EPS grow at rates faster than revenue.

And that's really our key focus. And we believe that by leveraging our fixed assets and leveraging our existing cost structure, we've got an ability to grow EBITDA faster than revenue, which is really our key focus over the next several years.

Colby Brown -- Vice President of Finance and Investor Relations

Thank you. Our next question comes from Kartik Mehta from Northcoast Research. "You mentioned revenue growth and EBITDA growth medium-term guidance. What would you say is the baseline for this revenue and EBITDA growth?" Tony, it's probably over to you on that one.

Tony Bowen -- Chief Financial Officer

Yeah. I mean, I'm not sure if I completely understand what he's asking. But I mean, when we think about growing the business over the next several years, getting to that growth level of at least 3% is really a critical point for us. And we showed in the one slide on the opening presentation that we're able to get leverage at that point and really allow EBITDA and EPS to grow at a rate faster than revenue beyond that.

And so getting to that initial level of revenue growth that's supported by the three imperatives, continuing to improve in our tax business, investing in growing small business and then building a new financial services capabilities including the mobile banking platform, is going to allow us to drive that top-line revenue that then will drive EBITDA and ultimately EPS faster than that level.

Colby Brown -- Vice President of Finance and Investor Relations

Yeah. It's great. So the next question comes from Scott Schneeberger of Oppenheimer. "You cited this in morning," Jeff, for you, "that you cited in this morning's press release, the redeployment of savings to the highest ROI opportunities.

Could you please rank the top three to four perceived opportunities?"

Jeff Jones -- President and Chief Executive Officer

Yeah, Scott, thank you. So at the highest level, the top three opportunities are really reflected in our imperatives. And so what that means again is in small business, building out the Block Advisor's capability to be able to go to market to complement what we're already doing with Wave. In financial products, it's really about taking this franchise called Emerald and building a more full-featured mobile banking platform.

And then, in Block Experience, it really is about continuing to build digital capabilities to make sure that the seamless combination of human help with data is enabling the customer to do their taxes in a faster, easier way. So those three imperatives are really about enhanced focus and prioritization on what we believe the biggest opportunities are for us to grow moving forward.

Colby Brown -- Vice President of Finance and Investor Relations

Thank you. Our next question, for Tony. "Will any of the $100 million to $150 million of targeted cost savings fall to the bottom line? Or will it all be reinvested into growth initiatives?"

Tony Bowen -- Chief Financial Officer

Yeah. Thank you for the question. We've got a great start in identifying cost reductions, really starting with this year. All of that is contemplated in the revenue and ultimately the EBITDA outlook that I provided in my opening comments.

When we think about taking costs out over the next several years, we know there's going to be required investments to grow. And we want to make sure that we have that flexibility to ultimately fund our future. We also know that there's opportunities to grow EBITDA as well and some of those cost savings will drop to the bottom line, and we'll evaluate each of those opportunities on an individual basis. We'll look at the ROI of that expected project, what the investment is and what that will ultimately drive, and then stack rank that against other opportunities, knowing that the goal is growing revenue and growing EBITDA over time.

So we aren't providing specific guidance on how we are breaking out those various buckets, because frankly, it will play itself out over the next several years as those investment opportunities come before us.

Colby Brown -- Vice President of Finance and Investor Relations

So our next question, another one from Kartik Mehta from Northcoast. "What are your expectations for market share gains in fiscal year -- in fiscal '21?"

Jeff Jones -- President and Chief Executive Officer

Thanks, Kartik. So in the consumer tax business, we absolutely expect that we'll continue to build on the momentum we've seen in the last few years. As that plays out in the assisted business, we absolutely expect that we'll maintain share. And in the DIY business, we expect that we'll grow volume and grow market share as we have three of the last four years.

Colby Brown -- Vice President of Finance and Investor Relations

It's great. Our next question comes from Michael Millman from Millman Research Associates. And his question is, "Can you provide more clarification around the second-quarter decline in EPS?" Tony?

Tony Bowen -- Chief Financial Officer

Yeah, I can take that. Obviously, from a top-line perspective, we had a great quarter, grew revenue almost 10%, and improved EBITDA significantly. Really, the only negative for the quarter, and it's not a negative at all on a full-year basis, is a lower effective tax rate. So we had some really good tax planning that we put in place during the second quarter that resulted in a lower tax rate.

Because we operate at a loss in our second quarter, that meant a lower tax benefit and ultimately higher loss per share. But it's all just timing. On a full-year basis, the guidance we provided was a tax rate of 18% to 20%, which is, obviously, lower than our typical run rate of $22 -- 23% to 25%, excuse me. So that's going to be a benefit on a full-year basis, but in the second quarter, actually, just showed up as a negative because of the lower tax benefit.

We also provided that because we've executed share repurchase, that we expect our Q3 quarter to be impacted by not only the lower tax rate but also lower shares outstanding. Obviously, both of those are beneficial on a full-year basis, but again just in quarters when you operate a loss, show up a little bit unusual in the P&L, but will all be a benefit on a full-year basis.

Colby Brown -- Vice President of Finance and Investor Relations

That's great. Our next question, Jeff, is around financial products. "So what is needed in your infrastructure to offer more banking solutions? You used to have a bank, not anymore. What have you learned?"

Jeff Jones -- President and Chief Executive Officer

Great question. And so as we assess this business, there's a few things that we understand. Number one is consumers have to know and trust your brand to be involved in this part of their financial lives. And we know that they know and trust the Block brand.

We see that in spades, both in terms of the volume and business we do today, but also in the research we've been doing over the last couple of years to more fully understand it. The second thing you need is the ability to acquire customers. And we start from a position of strength here, given the number of customers that come to us for tax preparation. And today, we were serving about 8 million underbanked customers out of a universe of about 31 million underbanked in America.

So we know we have a strong starting point there. We have distribution both in terms of our product today in Emerald and in our physical network. So we know we have some advantages for people if they think they need to find a location or if they're comfortable digitally. And we have a great new bank partner in Meta.

And so when you put all those things together, what we know we have to do most is fully explore all the different offerings that are needed today in a real mobile bank offering. Today, you can check your balance, you can do check deposit, you can transfer money. So there are core things that already exist today within MyBlock as part of the Emerald franchise. But really building a great front end-user experience and a fully featured mobile bank is what we have to do, but we're doing that on top of a great foundation and a lot of key pieces of infrastructure.

Colby Brown -- Vice President of Finance and Investor Relations

Thank you, Jeff. Another question from Jeff Silber from BMO. Tony, this might be for you. "Are your small business and financial products profitable? How do they compare to your consumer tax business?"

Tony Bowen -- Chief Financial Officer

Yeah, thanks for the question. So the short answer is yes, they're profitable today. And as we leverage the assets that we already have, we expect that profitability to be even better in the future. I mean, just using Emerald Card as a current example.

We have all of the infrastructure today, favorable bank partner economics. We've got a lot of the back-end processing and pieces that we did in place. Obviously, there's investments we'll need to make in building out that incredible customer experience that Jeff just mentioned, as well as marketing the program to make sure we grow customers. But a lot of the core infrastructure is in place.

Obviously, the profitability could be significant, and we're able to grow that base even faster in the future. Similarly, on small business as well, a lot of those assets are leveraging when we think about our existing staff, our existing footprint, some of the technology infrastructure we have are all able to be leveraged going forward, which will allow us, again, to grow EBITDA and ultimately EPS faster than the revenue.

Colby Brown -- Vice President of Finance and Investor Relations

OK. Our next question comes from Hamzah Mazari. Jeff, we'll start with you. "How much further investment is there to achieve the Block Horizons strategy? Specifically, can you compare it to what you invested in the business since 2018? And what long-term margins look like if the strategy is successful?"

Jeff Jones -- President and Chief Executive Officer

Yeah, great, thank you for that question. Tony and I will tag-team here a little bit. But in 2018, our key investments were really in three areas: focus on improving quality of service delivery in our retail footprint, the investments we made in price when we introduced upfront, transparent pricing and in our IT road map. And as we sit here today, all three of those investments, we see continued improvement in our business as a result.

We see it reflected in Net Promoter Score and quality rankings, value for price paid in retail. So we know that those are starting to resonate with the assist customer. The investments we've made in our IT road map have really helped us to get to where we are today to start unlocking so many of these digital capabilities that you're hearing about. We know we have to invest more, which is why we've been so stringent about putting in place what we call fund the future, and that's the $150 million to find in the business to reinvest.

We feel good about what that investment level can do. We know that as these businesses start to get traction more than they already are, they can fund themselves. And that's really our mindset about it. Tony talked earlier about the expense and the $150 million and what we've seen in Year 1.

But I can tell you from my seat that the organization and the leadership team has embraced this idea about how we fund our future and has really looked under every rock possible to find expense dollars that we can reinvest back in the business to drive growth. Tony, is there anything you'd want to add to that?

Tony Bowen -- Chief Financial Officer

No. I think you hit all the points, so well said.

Jeff Jones -- President and Chief Executive Officer


Colby Brown -- Vice President of Finance and Investor Relations

Great. Our next question, Jeff. "With these new processes being implemented, will this reduce the number of offices needed to reach customers?"

Jeff Jones -- President and Chief Executive Officer

So it's a really important question because I think sometimes our retail footprint can be misunderstood in the context of the broader retail landscape. So I'll start with a few things about how we think about the footprint, starting with we know today the footprint is an advantage in being able to be available with our experts in local communities. So we know that's a starting point. As you heard from Tony, our footprint is incredibly flexible.

We rent each of our locations. They're very capital-light and about a third of them every single year come up for renewal. So what that means is as we see more and more consumer adoption, it allows us year over year to assess the footprint and make decisions. Do we open, close, relocate? Have we reached a point in consumer adoption where we can still serve clients with expertise but do it with a smaller footprint? Obviously, those are things that we look at incredibly closely every single year.

And you also heard Karen mention this year, we are testing multiple different operating models in the country to further understand the opportunity and leverage of how we serve clients differently than we have in the past.

Colby Brown -- Vice President of Finance and Investor Relations

Thank you. Another question from Jeff Goldstein from Morgan Stanley. "Can you talk about the revenue ramp of some of these new initiatives and how to think about in the context of your long-term revenue guidance of 3% to 6%? In other words, how much is coming from these new initiatives versus the legacy tax business?"

Jeff Jones -- President and Chief Executive Officer

Yeah, Tony, I'll see if you want to chime in. But all of these businesses have been imagined and what we're sharing today for all of them to drive growth, especially small business and financial products. We've been intentional to think about we do need to make investments. We're starting from a position of strength.

We don't have hockey stick plans, where everything comes at the end. We're really thinking year over year how do we continue to improve and grow by acquiring more customers and serving more highly valuable customers. That's really been our mindset in building these plans. In the consumer tax business, as you heard me say, this year, we expect to continue improvement in the trajectory we've been on.

And the more we do that, the more leverage we see across the entire business. So we have not given up in any stretch of the imagination on consumer tax. We continue to invest to make that experience better and better so we can attract more customers there as well.

Colby Brown -- Vice President of Finance and Investor Relations

Great. So a couple of questions on the upcoming tax season, Jeff, from Scott Schneeberger of Oppenheimer. "At certain times last tax season, H&R Block was operating with only about half of its offices open and many of those limited due to COVID. How many offices will be open this year relative to last year?"

Jeff Jones -- President and Chief Executive Officer

Well, thanks for the question. I'm not sure any of us thought nine months ago we would be in COVID 2.0 as an operating environment, but obviously, we are. And I'd first start by saying our plan is to open the full network as we would in any given year. Full complement of offices, tax professionals, franchisees, all fully open and ready to serve.

And we've been given no indication from the IRS about any changes to those opening plans. We've also taken additional steps to ensure that everything we are doing in our physical locations will protect the safety and health of our clients and tax professionals. You've also heard us talk from last quarter and today about the digital capabilities that really were stress test in the last tax season. And we feel very, very good about what we have in place to be able to serve a client, to give them access to a full assisted experience without having to go to a physical office if they're not comfortable doing that or if they're not able to do that.

But our expectation sitting here today is the full network of offices will be open, and we'll deal with the local ordinances if and how they come.

Colby Brown -- Vice President of Finance and Investor Relations

So the next question from Scott, Jeff, was that, "You mentioned a quarter ago that you anticipate being more assertive with pricing in our -- in your DIY offerings this coming tax season. Can you please elaborate on your plans?"

Jeff Jones -- President and Chief Executive Officer

Absolutely. And so as we've talked for now many quarters together, one of the keys to thinking about our DIY business growth has been a strategy that was very focused, continue making the product easier, more personalized, market the product, and make sure that the customer knows it's an option and maintain a price advantage in the marketplace. And so we think the core components of that strategy hold up. We're not making fundamental changes to that core strategy.

But as we're seeing competition increasingly take more price year over year, we believe we have an opportunity to do the same in DIY, and we will do that this year.

Colby Brown -- Vice President of Finance and Investor Relations

Great. Jeff, our next question. "This is a perfect year to drive consumers to digital solutions. Can you give any metrics outlining how the consumers' tax prep habits changed for the better for H&R Block's offerings?"

Jeff Jones -- President and Chief Executive Officer

Yeah, great question. So if you just take a step back for a second, and we're talking about clients that want assistance and expertise. Those clients today have a range of options engaging digitally, starting with using MyBlock to upload their documents, to get to their tax professional to do all the work for you. They now have the option to engage with the tax pro through MyBlock, whether it's video chat with the tax professional or just message exchange.

As the work's being done, they can stay connected to their tax professional, questions and answers being shared and asked to make sure that the customer knows that every step along the way, where is their return in its progress. The customer can review that work. They can approve their return, and they can pay online. So all of those capabilities that we deployed last year and have improved for this year have the potential to really improve the experience for a customer if they want to choose to use any version of those capabilities.

For some people, it still might be simpler to drop off their docs at an office and then come back later to review, approve, and pay online. So really, any combination. And as we mentioned, an important distinction for this year is there is not a lower price that they will pay for those services. So our assisted pricing holds up no matter how many digital capabilities the customer uses.

I think I'd highlight video is something that a year ago, our customers told us wasn't that important. But clearly, as we sit here today, talking to you through video, we see the world is tipped to video. So we made sure this year that we have full video capabilities across the network and a customer can choose to engage that way with their pro if they'd like.

Colby Brown -- Vice President of Finance and Investor Relations

Great. Tony, a question for you from Michael Millman from Millman Research Associates. "You mentioned a potential decline in fiscal '22 results. Can you elaborate on the driver of that potential decline?"

Tony Bowen -- Chief Financial Officer

Yeah, absolutely. And as we go back to last year, we had the extended tax season rolling into our Q1 of fiscal-year '21. Obviously, it's going to result in really high revenue, earnings, and cash flow this year not just relative to FY '20, but even relative to a typical year like fiscal-year '19. When we go into FY '22, assuming tax season ends on time this year on April 15, which we're all hoping for, that will mean we won't have that extended tax season going into that Q1 of fiscal-year '22.

So really, that incremental revenue that we got in fiscal-year '21 we expect would not occur in fiscal-year '22, which is why we shared in the opening remarks, we expect revenue and earnings to decline as a result.

Colby Brown -- Vice President of Finance and Investor Relations

Great. Another question, Tony, for you. "How do you guys think about dividends compared to share repurchases? Why not favor dividends over share repurchases or either way?"

Tony Bowen -- Chief Financial Officer

Yeah, I mean, we definitely love consistency in our dividend. I mean, we think about our capital allocation as a waterfall, first making sure we have adequate liquidity to fund the business. We then think about required investments in the business that we think will drive ultimately growth. We then make sure that we support our dividend with the goal of growing the dividend over time as our earnings profile improves.

And then, lastly, opportunistically repurchasing shares. I mean, as I mentioned, we just repurchased $150 million during Q2, taking advantage of a relatively low stock price. And we'll continue to be opportunistic going forward. But we believe the consistency in the dividend is important.

We know that a lot of our shareholders value it, and our goal is to grow it over time and then really view share repurchases as opportunistically buying and deploying capital beyond that.

Colby Brown -- Vice President of Finance and Investor Relations

Great. So Jeff, our next question comes to us from Jeff Goldstein from Morgan Stanley. "Normalizing for the tax deadline shift, what are our expectations for assisted and DIY industry volumes?" And then, the second part of the question, "Can you -- we've already talked about DIY pricing, but can we talk about assisted pricing?" So industry growth in both areas and then our pricing in assisted.

Jeff Jones -- President and Chief Executive Officer

OK, sure. So for industry growth, just like last year, there's a number of variables that we are weighing and netting against each other to have our best estimate for the industry. And we think the first thing we have to do is to back out the EIP returns, the stimulus payment returns. The IRS reported that there were approximately 8 million of those.

And we expect that that volume needs to be backed out because those consumers filed just for the purpose of stimulus and they weren't true tax returns. When you remove that 8 million, there are still a number of variables that we're looking at. But to cut to the punchline, we expect the industry to be flat to slightly down for the upcoming year. We're evaluating the start and end dates to the season, and we are assuming that the season starts and ends on time.

We're, obviously, paying close attention to the impact of the pandemic. Is there something that doesn't just impact the operations, but in a more macro way, could change consumer behavior? Obviously, unemployment is a big variable, both in terms of the number of consumers that are unemployed but also the unemployment benefits that they receive. We think that there could be some surprises to consumers if they're not really prepared and thinking about their unemployment income the right way. And then, finally, there's, obviously, a lot of talk about a second round of stimulus payments and how might that impact consumer behavior in this year and then what might be the impact for the following year.

So a lot of things we're paying attention to, sorry to bring you inside the thinking a little bit, but all that nets to flat to slightly down for the industry. On pricing, we just finished our second year of implementing the pricing changes we made. This will be our third year. And we're getting really positive feedback from our consumers and from our tax professionals.

And the thing we're paying attention to is the customer saying they're getting a great value for the price they pay. We see that showing up in the feedback we are getting, and we know that the expertise of our professionals can come through more if they're not defending or selling a price. As we move forward, and we haven't given an outlook for '22 yet on pricing, but our expectation is that we can get back to inflationary level price increases in our assisted business.

Colby Brown -- Vice President of Finance and Investor Relations

That's great. Our next question, Jeff, and possibly, Kirk. "Wave has shown impressive growth since the acquisition, and it sounds like it's bounced back from the start of the pandemic. Is this growth coming more from growing customers? Or are you monetizing better?"

Jeff Jones -- President and Chief Executive Officer

So let me just start, and I will definitely hand it over to Kirk to get into some of the details about what we're seeing. But we are very pleased with the recovery. And as we said before, Wave dipped as the small business landscape took a very hard hit. And as Wave starts to come back, there's definitely some tailwinds there.

But I think beyond a great leadership, there's definitely things that are happening in the business to drive the shift in performance. And so, Kirk, do you want to talk about how we're seeing the changes in consumer behavior?

Kirk Simpson -- Chief Executive Officer and Co-Founder of Wave

Yeah, sure, Jeff. Thanks very much. So as you mentioned, at the beginning of the pandemic, we definitely saw that small businesses were in a challenging situation. And so we, as Wave, took really quick action to make a couple of our services work better for them.

So as an example, we actually reduced all the fees for instant payouts, so that our small business owners could get their cash more quickly, which was, obviously, very, very important to them at the time. And as I mentioned in my opening remarks, we also in the payroll software made really quick adjustments. And all kudos to the team for making really quick adjustments as the government was rolling out many different initiatives to help small business so that our small business owners could keep more of that cash in their pockets. As the pandemic progressed, we saw some interesting changes to the trajectory of our business, and it really related to the adoption of digital payments.

The acceleration of the adoption of digital invoicing and digital payments has really helped our business. And so the mix of what's driving the revenue growth is, number one, from the influx of new customers, who are attracted to our innovative model and who are then adopting some of our paid services. And then, the second is generating additional revenue from our existing base through, as I mentioned before, the adoption of digital payments. And now we're really excited about the opportunity to move more and more of them into Wave Money to give them a better experience and to drive revenue for Wave.

So that's really what's driving the tailwinds in the business today.

Jeff Jones -- President and Chief Executive Officer

Yes. Thank you.

Colby Brown -- Vice President of Finance and Investor Relations

Thanks, guys. Next question comes from Scott Schneeberger. "Fiscal '21 represents the entrance into the latter innings of H&R Block's technology investment initiative that was announced a couple of years ago or a few years ago. Can you please provide a progress report or assessment across the key categories, Jeff, of that initiative?"

Jeff Jones -- President and Chief Executive Officer

Yes, I'd be happy to. It's not complete yet, and we're as eager to get everything complete as anybody is. But we have made tremendous progress from where we were just two short years ago. And as you may recall, we are really tackling every facet of our IT road map, how we think about data architecture and infrastructure, how we think about cloud migration, data security, and importantly, moving to a single tax engine.

And I'll use the last one as a great example because moving to a single tax engine -- as some of you may recall, today, we operate three tax engines. And so getting to a single tax engine, obviously, reduces run rate spend. We're not every single year making updates three times. But importantly, it enables more unlock in the customer experience when we have one record of the tax return no matter how the customer is engaging.

This year, we will continue to throttle more and more of our traffic in our DIY product to that new engine. This is a team that, for years, had struggled to have this breakthrough. But because the way we organize, the way we thought about talent, and the way we resource the initiative, we have made significant progress. So we'll commit to giving you regular updates as we move forward.

We know again that, ultimately, this will result in run-rate savings in this line item. And importantly, we'll continue to unlock more and more potential capabilities for the customer.

Colby Brown -- Vice President of Finance and Investor Relations

Great. Our next question, Jeff. "On small business, what are the specifics in terms of what you're doing in the small business space in terms of the products and the services that you offer this year? And when do you expect to roll out more services to be more of a one-stop-shop for small business owners?"

Jeff Jones -- President and Chief Executive Officer

So I'll let Karen walk you through specifically how we're thinking about products now and in the future. I guess all I would say to tier up is we are definitely prioritizing tax to start. And this year, you'll see us focus more on that. But very quickly, bookkeeping and payroll and others to follow, which we're actually doing today already.

So Karen, why don't you walk us through how we're thinking about today, all the work we've done to rebuild the experience, and maybe what's on the horizon?

Karen Orosco -- Senior Vice President of U.S. Retail

Thanks, Jeff. So we've absolutely redesigned the tax experience from how an appointment is booked to the interaction with the certified Block Advisors tax pro to post-payment services. And that really starts, and we know that from the strong base of our clients, over 2 million clients in small business tax today that we can do more for them. The nearest in services in really studying and listening to our customers are in bookkeeping and payroll.

So this year, I'm most excited that we'll be able to offer bookkeeping and payroll to our small business clients in over 7,500 of our retail offices today, either through those offices that have already been providing that service locally, which is about a quarter of our network or through a centralized services option. The other thing that we are doing this year is really expanding on the small business tax experience by offering complementary products that we know add value uniquely to the small business client. So those are things like business audits support, quarterly payment consultation that really helps the small business understand how to optimize cash flow and make timely payments against their tax liability, and things like tax readiness that can be uniquely challenging for small business owners, as Kirk shared, who may be used to a shoebox or maybe a spreadsheet. And then, preparing at tax time, there's a lot of implications for that.

And so we can help ensure they're ready so they get the best possible tax outcome.

Jeff Jones -- President and Chief Executive Officer

Thank you.

Colby Brown -- Vice President of Finance and Investor Relations

That's great. All right. Jeff, "Why will this strategy be more successful than past efforts to drive growth?"

Jeff Jones -- President and Chief Executive Officer

Great question and I appreciate whoever asked that. And I think it would be -- it would seem dismissive to just say everything is different. So let me just give you a -- to step back and talk in more detail. As I mentioned before, we've been studying these opportunities now for two years.

Really going back to the fall of 2018, we brought in an external advisor. We looked at about 20 different potential adjacencies. And then, in the following spring, we confirmed both the market size, how we're perceived, the product offering, the base of our current business and confirm that small business and financial products are really white space for us to accelerate growth. We, obviously, acquired Wave just a few months later as a step in that journey.

We have organized the teams differently. We've brought in new talent from the outside to run these businesses. We are allocating dollars in everything from engineering to product development to marketing to ensure we're building the right customer experience. And we've been very critical of ourselves looking in the past.

And I think it's safe to say that in each of those areas, what we are doing to now -- today is fundamentally different from how we've approached these topics in the past.

Colby Brown -- Vice President of Finance and Investor Relations

That's great. We actually have just one more question in the queue here. So Jeff, "How exactly will the connection between Wave and H&R Block work? And will you be promoting that more strongly this upcoming tax season?"

Jeff Jones -- President and Chief Executive Officer

It's a great question. And so I'm very, very happy with the engineering work that's happened to get this experience where it is. You may recall, in our first year, we said that we are lightly marketing this opportunity, and Year 2 would be integration. And here we are.

So think about it like this. If you're a Wave customer, you'll be able in one click to import a full year of your books automatically into Block Advisors. And that will automatically categorize for you in the IRS categories for taxes. That is an enormous amount of savings of time and effort and energy on a small business owner.

That small business owner will also have a choice. If they're comfortable in DIY, we have a Block Advisors DIY product SKU that will seamlessly integrate, automatically populate. And the data from Wave will be imported into the Block Advisors DIY experience. If you choose a fully assisted model and you can engage with your tax pro virtually, we will also make you tax ready.

That handoff will just happen in a different way, obviously. And then, inside Wave, whether it's email or in product, being able to get somebody tax-ready is ultimately one of the big reasons why a small business owner does their books to begin with. So everyone has this moment every single year. And so in product, in email, etc., on our websites, we are making sure that customers know that that's an option and just how much time can be saved because of how simple it will be to import all of your Wave data in the Block Advisors.

Colby Brown -- Vice President of Finance and Investor Relations

OK. Well, I think that wraps our Q&A session. So, Jeff, I'll turn it back over to you for any closing comments.

Jeff Jones -- President and Chief Executive Officer

Well, I want to say thank you to everyone for joining today. It's a new world in this digital, virtual world we're in. But we're thrilled with the chance to really start talking to you about what Block has become in the last couple years, all the improvements we've made to become a stronger company, but even more importantly, how we see the next several years and our focus on small business, financial products, and Block experience. Thank you for attending, and thank you for all the great questions.

Have a great rest of the week, everybody.

Duration: 119 minutes

Call participants:

Jeff Jones -- President and Chief Executive Officer

Kirk Simpson -- Chief Executive Officer and Co-Founder of Wave

Karen Orosco -- Senior Vice President of U.S. Retail

Les Whiting -- Chief Financial Services Officer

Julius Lai -- Chief Product and Experience Officer

Heather Watts -- Senior Vice President of DIY Tax

Tony Bowen -- Chief Financial Officer

Colby Brown -- Vice President of Finance and Investor Relations

More HRB analysis

All earnings call transcripts

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

H&R Block, Inc. Stock Quote
H&R Block, Inc.
$23.50 (-0.78%) $0.18

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/03/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.