Categories Consumer, Earnings Call Transcripts

H&R Block, Inc. (HRB) Q4 2021 Earnings Call Transcript

HRB Earnings Call - Final Transcript

H&R Block, Inc. (NYSE: HRB) Q4 2021 earnings call dated Jun. 15, 2021

Corporate Participants:

Colby Brown — Investor Relations

Jeffrey J. Jones II — President and Chief Executive Officer

Tony Bowen — Chief Financial Officer

Analysts:

Kartik Mehta — Northcoast Research Partners LLC — Analyst

Jeffrey D. Goldstein — Morgan Stanley & Co. LLC — Analyst

Scott Schneeberger — Oppenheimer & Co. Inc. — Analyst

Mario Cortellacci — Jefferies LLC — Analyst

Jeff Silber — BMO Capital Markets Corp. — Analyst

George Tong — Goldman Sachs & Co. LLC — Analyst

Michael Millman — Millman Research Associates — Analyst

Presentation:

Operator

Thank you for standing by, and welcome to H&R Block’s Fiscal 2021 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference may be recorded. [Operator Instructions]

I would now like to hand the conference over to your host, Vice President of Finance, Colby Brown.

Colby Brown — Investor Relations

Thank you, operator. Good afternoon, everyone, and thank you for joining us to discuss our fiscal 2021 results. On the call today are Jeff Jones, our President and CEO; and Tony Bowen, our CFO. Today’s press release is posted on the Investor Relations website at hrblock.com where you can also access a webcast of today’s presentation. The presentation will also be posted online after this call. Some of these figures we’ll discuss today are presented on a non-GAAP basis. We’ve reconciled the comparable GAAP and non-GAAP figures in the schedules attached to our press release and in today’s presentation. Before we begin our prepared remarks, I’ll remind everyone that this call will include forward-looking statements as defined under the securities laws.

Such statements are based on current information and management’s expectations as of this date and are not guarantees of future performance. Forward-looking statements involve certain risks, uncertainties, and assumptions that are difficult to predict. As a result, our actual outcomes and results could differ materially. You can learn more about these risks in our Form 10-K and our other SEC filings. H&R Block undertakes no obligation to publicly update these risk factors or forward-looking statements. At the conclusion of our prepared remarks, we’ll have a Q&A session. During Q&A, we ask that participants limit themselves to one question with a follow-up, after which they may choose to jump back into the queue.

With that, I’ll now turn the call over to Jeff.

Jeffrey J. Jones II — President and Chief Executive Officer

Thank you, Colby. Good afternoon, everyone, and thanks for joining us. Today, I’m excited to share our outstanding results. I’m proud of what our team has accomplished including progress on our Block Horizons strategy and the very strong tax season. Our results show that our multi-year efforts to improve client trajectory are gaining traction. We grew clients and achieved our largest overall and the largest assisted market share gains in over a decade. We drove significant growth in DIY revenue and continued strong growth at Wave.

We increased digitization of the business, advanced how we serve small businesses of Block Advisors and made meaningful progress in building our new mobile banking product. Today, we also announced another increase in our quarterly dividend, our fifth in the past six years, further demonstrating the confidence we have in both our financial strength and outlook for continued long-term growth. With that backdrop, let me provide more detail on what we’ve achieved with Block Horizons since our Investor Day in December, followed by additional color on the 2021 tax season. Tony will then review our full year financials and capital structure, discuss our fiscal year change and provide thoughts on our fiscal year ’22 outlook.

Since our Investor Day in December where we laid out our Block Horizons strategy, we’ve had our foot on the gas to execute across our three strategic imperatives: Small Business, Financial Products, and Block Experience. Small Business and Financial Products are categories where we have a right to compete and advantages to help us win. Block Experience represents our modernized approach to tax. I’ll start with an update on each of these key areas. In small business, we’ve gained traction on all elements of our strategy. First, we expanded our reach to more small business owners by improving our client experience in tax and amplifying our messaging. In a few short months, we certified over 25,000 tax professionals to serve small businesses, re-launched the Block Advisors brand, and built a new Block Advisors products in DIY, which includes unlimited expert help.

Our Block Advisors marketing campaign, which launched in mid-February, resonated with customers as it drove awareness of our ability to serve small business owners’ unique needs and reinforced our expertise as a trusted year-round partner for this critical customer segment. Second, we made progress in bookkeeping and payroll services, laying the foundation for future growth. And third, Wave continued its exceptional growth of over 35% for the year while also expanding Wave Money as the center of the experience. Turning to Financial Products, we’ve begun our journey to provide additional value to under-banked customers by offering a mobile banking alternative to meet their unique needs.

We’ve completed the design phase and are now building the beta version of our product which we expect to launch by calendar year-end. Regarding Block Experience, we’re continuing to infuse human help into our DIY offering and transform the assisted experience through digital tools as we meet our customers however and wherever they wish to be served. We’re already seeing positive signs in virtual adoption by our assisted customers. And we also saw great uptake of DIY clients requesting human help. I’ll share more on this in a moment as I go through taxes in details. The theme of this year’s tax season for H&R Block can be summed up in one word, growth.

To provide context on the strength of our result this year, I’d like to first frame the industry dynamics, particularly given this year’s unique considerations. The season included a delayed start from the IRS, a two additional rounds of related stimulus payments, midseason changes to tax laws, added new policies regarding unemployment and recovery rebate credits; and finally, a one month delay in the filing deadline to May 17, all in year two of the pandemic. The industry in total saw an increase in filings when compared to last year’s completed season. That is to the filing deadlines in each year. There was also a mix shift from DIY to Assisted, representing a reversal of prior-year trends.

As a reminder, the category also showed strength in 2020 as assisted returns were essentially flat in a year when the operating environment was far from normal. The resilience and sustainability of the Assisted category even amid the pandemic reflects our conviction and its stability over time. The bottom line continues to be that most Americans want personal help with their taxes. And nobody is better positioned than we are in delivering that expert help. With the industry backdrop as important context, I’d like to provide more detail on our results. To clarify, when making comparisons, I will discuss the full tax season in 2021 versus the full tax season in 2020, despite the different filing deadlines. Later, Tony will share more about our fiscal year results and how these were impacted by the extension.

As I said at the beginning of this call, I am very proud of the results our team achieved this season. We saw growth in overall clients, total share, assisted share, and strong revenue performance in DIY. We estimate that we gained approximately 30 basis points of total market share when compared to last year’s completed tax season. This is our best result in over a decade. In our Assisted Business, we grew clients by over 700,000 or approximately 7% and estimate we gained 70 basis points of market share; again, the best in over 10 years. Based on these results and the continued positive feedback we hear from customers, we know that our work to improve value, quality, and digital capabilities are helping consumers rediscover a new H&R Block.

We were the go-to source of help for many individuals who haven’t normally been filing, but who this year had questions about unemployment or receiving the recovery rebate credit. Though some of these filings may be one time in nature, we’re committed to doing all we can to retain these additional clients. Importantly, our client satisfaction scores remained strong. And our new client scores improved with high marks for; being cared for, price for service, and intent to return. With these dynamics, we held pricing flat in Assisted. Our net average charge was down about 2% due entirely to mix as the majority of growth in new clients came from filers at lower price points.

While these new clients caused a decrease in our average charge, they were additive to revenue. Our share gains show that our values being recognized in the marketplace, giving us confidence to consider modest price increases. Moving to our DIY business, revenue grew nearly 20% due to an increase in the net average charge related to improved mix and pricing actions. Also, significantly more clients chose to add human health, resulting in the second year in a row of tax pro review growing more than 50%. We saw a slight share loss as we focused on more valuable returns evidenced by our improved mix and an increase in NAC of over 20%.

The increasing use of human health by our DIY customers, along with the use of digital tools by our assisted customers, demonstrates the importance of our Block Experience efforts to blend digital capabilities with human expertise and care. We’re confident we’re on the right path to serving consumers in a modern way. As a reminder, digital does not mean DIY and the increasing use of digital capabilities in the Assisted business does not reduce our NAC. I’ll now move on to small business, which includes our Block Advisors and Wave brands.

We grew assisted small business filers by 4%. And as I previously shared, Wave continues to produce strong results as we see increases in customers new to the brand, overall payments volume and the use of payroll services. This all led to revenue growth of over 35%. In addition, our strategy of putting Wave Money at the core of our offering is picking up steam as Wave Money deposits have grown at a pace of 40% per month for the past six months. In summary, our team provided help and inspired confidence for millions of consumers and small business owners this season.

We made tremendous progress in our first year Block Horizons, winning technology and digital tools with human expertise in tax to help achieve our largest market share gains in over a decade. We improved our offerings in small business, drove significant growth at Wave and are making progress on our new mobile banking platform. We are confident about the journey we’re on and I’m very excited about our future.

I’ll now turn it over to Tony to cover our financial results.

Tony Bowen — Chief Financial Officer

Thanks Jeff. Good afternoon, everyone. Today I’ll provide color on our full fiscal year results, discuss the impact of the filing extension beyond our fiscal year, recap our dividend and capital allocation strategy, provide details on our new line of credit and share more about our fiscal year-end change. I’ll also provide some more context about our baseline earnings and our outlook for fiscal ’22. The extension of the US federal tax filing deadline to May 17 led to the tax season concluding beyond fiscal ’21, causing a timing difference in our financial results. If we were able to include these amounts in our fiscal 2021 results, we would have significantly surpassed the high end of our previous outlook for both revenue and earnings.

In fiscal ’21, we delivered $3.4 billion in revenue representing a 29% increase from the prior year, primarily driven by an increase in U.S. tax return volumes due to the extension of last tax season into fiscal ’21. We also achieved improved monetization within DIY, an increase in Emerald Card revenues related to federal stimulus payments and strong growth from Wave. Regarding expenses, through the strong fiscal management, we outperformed our savings target while still investing appropriately in our Block Horizons strategic imperatives. Total operating expenses were $2.6 billion, which increased by $82 million or 3% due to an increase in variable labor, which is partially offset by prior-year impairment charges, lower bank partner fees and travel-related costs.

Interest expense increased $11 million, which reflects the precautionary draw on our line of credit at the end of last fiscal year, partially offset by a lower interest rate on our debt issuance earlier in the fiscal year. As a result, pre-tax income was $669 million compared to a pre-tax loss of $3 million in the prior year. Our effective tax rate was just 12%, driven by favorable tax planning we implemented during the year. Diluted earnings per share from continuing operations increased from $0.03 to $3.11, while adjusted earnings per share from continuing operations increased from $0.84 to $3.39. Regarding discontinued operations, there were no changes to accrued contingent liabilities related to Sand Canyon during the quarter.

For additional information on Sand Canyon, please refer to disclosures in the company’s reports on Forms 10-K and 10-Q and other SEC filings. Moving to capital allocation, our strategy demonstrates current strength and confidence in our future, supported by strong free cash flow. Our priorities remain unchanged: first, maintain adequate liquidity; next, invest in our business; and then support the dividend and opportunistically repurchase shares. Due to the health of our business and our outlook, we announced today an increase in our quarterly dividend of 4% to $0.27 per share. This marks the fifth time we raised the dividend in six years, resulting in a 35% total increase over that time.

Regarding share repurchases, we bought a total of $38 million in the fourth quarter. For the full year, we repurchased $188 million at an average price of $16.29, allowing us to retire 11.6 million shares or 6% of our float. Approximately $564 million remains under our share repurchase authorization which expires in June of 2022. I’m also pleased to announce that we just amended our line of credit to a new five-year facility. We lowered the capacity to $1.5 billion, which is more appropriate for our business needs and results in lower cost. We were able to renew at favorable rates and reduce our expected run rate cost by approximately $3 million per year.

Finally, we aligned our covenants to our new fiscal calendar, which I’ll share more about in a moment. This is yet another sign of our financial strength, which provides a solid foundation for growth. Switching gears, I’d like to talk about our decision to change the fiscal year. Given the lack of comparability in our results over the past couple of years due to taxes and extensions, we felt it was appropriate to examine our fiscal year-end. After this review, we had made the decision to move from an April year-end to a June year-end effective immediately. The change allows for better alignment of complete tax seasons in comparable fiscal periods and other related benefits.

We plan to file a report on Form 10-QT for the transition months of May and June later this summer. Fiscal 2022 will begin on July 1 and end on June 30, 2022, with our first quarter results through September 30 reported in early November. Finally, I’d like to discuss our outlook for fiscal ’22, based on our new June year-end. Before doing so, we know investors are seeking to better understand baseline results and thought it would be helpful to provide additional context for fiscal ’21 including the change in the fiscal year. To reset to the new fiscal year, we take our current fiscal year ’21 results and remove May and June from 2020 at the beginning of the year, and then add May and June from 2021.

We then normalize the fiscal ’21 for two things. First, given taxes in 2020 concluded on July 15, we are backing out the activity related to tax season that carried into the new fiscal ’21. Second, we remove one-time impacts related to the pandemic. These primarily consisted of incremental Emerald Card revenue related to stimulus payment loads and one-time expenses for associated benefits and supplies both related to the pandemic. This normalized view of fiscal ’21 ending June 30 would result in estimated revenue of $3.25 billion and EBITDA of $760 million.

Turning now to fiscal ’22, we considered a number of variables both for the tax industry and for us. These include the potential industry loss of one-time filers who were motivated to file this past tax season for the recovery rebate credit, changes in unemployment related benefits, and the expansion of the child tax credit. After considering these impacts, we expect industry volumes to be flat to slightly down in ’22 and anticipate a similar trend for our volume. As such, we now expect fiscal 2022 revenue to be in the range of $3.25 billion to $3.35 billion. EBITDA is expected to be in the range of $765 million to $815 million.

Both of these are an improvement to the normalized fiscal year ’21 results I shared with EBITDA growing faster than revenue. Regarding our outlook, the effective tax rate is anticipated to be between 16% and 18%. Depreciation and amortization is anticipated to be between $150 million and $160 million. And interest expense is anticipated to be between $90 million and $100 million. Our projected results demonstrate solid growth despite comparing against very strong performance last year and are a sign that we have the right strategy underway. In summary, I am very pleased with both our tremendous performance this season and the trends we are seeing in the business. We are committed to our financial principles and are on path to long-term sustainable growth.

I’ll now turn it back over to Jeff for some closing comments before we begin Q&A.

Jeffrey J. Jones II — President and Chief Executive Officer

Thanks Tony. I also want to reiterate how pleased I am about this year’s results and the progress we’ve made, as well as our confidence in the Block Horizons strategy going forward. The last two years have been incredibly complex and disruptive, and this success is made possible by our hard working associates, franchisees and tax pros, who once again demonstrated how H&R Block inspires confidence in our clients and communities. As we open the line for Q&A, I want to make a note of transition in our investor relations role.

Colby Brown has been leading these efforts for more than eight years and has done a tremendous job. I want to congratulate and thank him on all he’s done. And we’re thrilled that he will be taking on more responsibility in the finance organization. We recognize the importance of supporting our investment community and as Colby transitions out of the IR role, we have brought on Michaella Gallina whose sole focus will be serving analysts and investors. Michaella has led IR at a number of companies and was also an analyst on the buy side. We’re very happy to welcome Michaella to the team and look forward to you all getting to know her.

Now, operator, we will open the line for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from the line of Kartik Mehta of Northcoast Research. Your line is open.

Kartik Mehta — Northcoast Research Partners LLC — Analyst

Hey, Jeff. Hey, Tony. Tony, just — maybe Jeff you as well. Just two thoughts on FY ’22 guidance. I think if I look at the midpoint, if I did my calculations right. You’re talking about EBITDA margin somewhere around 24%. And out of curiosity, what do you think is the kind of the go forward EBITDA margin growth that you would expect for the business?

Jeffrey J. Jones II — President and Chief Executive Officer

Hey Kartik. Thank you. It’s Jeff. I’ll kick it off. So, we are focused on growing revenue obviously. We talked about 3% to 6% in Block Horizons. EBITDA and EPS growing faster than that. The 24% margin rate that you mentioned is the math but we’re not focused on margin rate per se. We’ve talked before about just how important it is that we drive top line. We leverage the expense structure of the company to drive even a faster. And so that’s why we’re not providing outlook on the margin rate moving forward just on top line revenue and EBITDA. Tony, anything else you’d want to add?

Tony Bowen — Chief Financial Officer

No. You said it perfectly.

Kartik Mehta — Northcoast Research Partners LLC — Analyst

Okay. And then just the second question, Jeff, for you, just the outlook for the assisted market as we head into next tax season. Obviously, this tax season, it looks like the assisted market is going to end up growing faster than DIY. And as we go into next tax season, what are your expectations for the industry?

Jeffrey J. Jones II — President and Chief Executive Officer

Yes. We’re obviously in a period right now for the last couple years of just a heightened number of external factors. And we talked last year as well about the way we think about forecasting the year, unemployment stimulus, the changes to the tax code, refundable rebate credits, all those things. And so, we look at kind of the headwinds and the tailwinds. We see the industry being flat to slightly down next year. We do see there to be a modest shift back to DIY, certainly not what we’ve seen in history.

But I think you know the most important thing that we’re focused on Kartik, is continuing to maintain the operating flexibility to compete in environments where there’s so many factors. I think this year, we demonstrated incredible flexibility of when we see tailwinds how do we lean into that and get disproportionate share growth; and when we see headwinds, doing a great job of controlling costs and flexing labor like we’ve also done this year. So that’s where we see the industry looking next year. But obviously, there are so many things again. We might get it right. We might get it wrong. But I’m very confident in how we’ve proven the flexibility to operate in that environment over the last couple of years.

Kartik Mehta — Northcoast Research Partners LLC — Analyst

Perfect. Thank you Jeff. I really appreciate it.

Jeffrey J. Jones II — President and Chief Executive Officer

Thanks Kartik.

Operator

Thank you. Our next question comes from Jeff Goldstein of Morgan Stanley. Your line is open.

Jeffrey J. Jones II — President and Chief Executive Officer

Hey. Good afternoon, guys. So assisted volumes were obviously very positive for Block this year. I’m curious how you’re thinking about the one-time impacts this year related to COVID? And I know you talked about questions around unemployment and recovery rebate credit, so maybe you could just touch on those again; or if you’re able to quantify the impact there, that would be great. But I’m also curious if you thought that some of the work from home arrangements this year or maybe the acceleration in brokerage accounts, did that have any benefit as well to assisted? Maybe you could just talk about some of those impacts a little bit.

Tony Bowen — Chief Financial Officer

Yeah. Hey, Jeff. This is Tony. I’ll kick us off. So, I mean, there was a number of impacts, as you mentioned a few of them there. I do think the one-time filers is probably the biggest impact for the industry and then obviously for H&R Block as well. It was great to see we’re able to over-index and gain market share in that — those filers come in to the market for the first time. It’s hard to know exactly how many are in the industry as well as H&R Block. I mean some of those are identified because basically their AGI is zero and those were fairly easy to identify. But there’s several filers that we believe came off the sidelines who don’t normally file and they’re a little bit more in the mix for the overall industry and harder to identify.

So we’ve assumed some headwind going into next year. That’s why Jeff talked about flat to slightly down for the industry. That’s largely driven by those — some of those one-time filers going back to the sidelines. One of the things we focus on though is how do we make sure that we retain as many clients as we possibly can and show the benefits of continuing to file for some of those clients who maybe historically haven’t done it. So, there’s lots of moving parts. The brokerage account thing we’ve looked at a little bit, we were up in the number of clients that filed H&R Block who had brokerage accounts this year. But I don’t think it’s a huge driver of client volume for us. I think a lot of those clients were clients who have already come to H&R Block who took advantage of opening brokerage accounts and getting to that game for the first time. I think there’s some new clients in that as well. But I think the biggest impact for sure was the one-time filers.

Jeffrey J. Jones II — President and Chief Executive Officer

Jeff, the only thing I would add was — is just the notion of customers needing help. Whether that’s the growth we’re seeing in Assisted business or in the DIY business, the number of customers who were upgrading to add human help, I think all of these external factors that we’re talking about are causing the customer to recognize that they need our expertise and that’s what we’re seeing.

Jeffrey D. Goldstein — Morgan Stanley & Co. LLC — Analyst

Okay. Got it. That was all very helpful. And then you’ve spoken in the past about how you lease all your real estate, which gives you a certain level of flexibility each year. So I was just curious given the results from this tax season and maybe some of the favorable results you saw around digital, is there any change to your thinking on the real estate footprint or is it still just too early at this point?

Jeffrey J. Jones II — President and Chief Executive Officer

Yeah. It’s a great question and one of the most important things that we’re paying attention to as we watch consumer behavior. We definitely saw an increase in assisted clients accessing one of our four main digital tools. However, we didn’t see that happening at a rate that would dramatically change our footprint. Because we have that flexibility, it’s something we’re paying close attention to because the leverage that comes when we see consumer adoption really accelerate is significant both with labor utilization and the footprint that didn’t happen this year at a significant rate. And honestly, we still believe that we should offer the customer choice as opposed to force them down a particular path. But yeah, we’ll always keep an eye on footprint and labor utilization as we watch consumer adoption of digital.

Jeffrey D. Goldstein — Morgan Stanley & Co. LLC — Analyst

All right. Thanks a lot.

Jeffrey J. Jones II — President and Chief Executive Officer

Thanks Jeff.

Operator

Thank you. Our next question comes from Scott Schneeberger of Oppenheimer. Your line is open.

Scott Schneeberger — Oppenheimer & Co. Inc. — Analyst

Thanks. Good afternoon. For my first question, I guess just in the Assisted category, obviously the pandemic caused a lot of disruption last year of your fellow assisted competitors. What did you see this year? You guys did well on grabbing some share in the category and the category grew. What did you see from the assisted competitors? And I assume some of them were washed out. Do you anticipate them coming back next year and what were some of the things that you as Block being larger and perhaps areas of execution where you were able to sharpen your elbows and kind of built some [Indecipherable] to control some of that market share next year? Thanks.

Jeffrey J. Jones II — President and Chief Executive Officer

Yeah. Great question. So, we don’t know yet today where the number of independents will net out for the year. We see T10s are down a bit. So, it’s possible that the slight decline in independents definitely left customers looking for a place to come and they came to Block. I think the major shift we saw happening in the industry this year from assisted competitors is really following our lead to offer virtual and digital capabilities, recognizing that people want help but offering that in virtual ways not always having to come to an office. That was a major dynamic in the industry. I think one of our operating levers, which served us very well was our ability to flex labor to serve customers in very concentrated periods of time. We grew new clients and assisted by about 700,000 clients. And when the time pressure is on and it’s very concentrated, our operational excellence to be able to flex labor up and down around demand but also controlling costs when the demand isn’t there is something that we do extraordinarily well and that served us in our favor.

Scott Schneeberger — Oppenheimer & Co. Inc. — Analyst

All right. Thanks. Appreciate that, Jeff. I’m going to turn it over to the DIY category now. This year you changed the qualifications for the tiers, the basic deluxe premium tiers to be more comparable to TurboTax. It prompted consumers to higher SKU levels than they would have been before. And clearly, this helps revenue per return a lot as it should. and you mentioned you’ve seen that it have been in DIY share of per volume which makes sense. it looks like they actually did pretty well considering making a shift like that in this year on those two dynamics. If you could just delve into a little bit more on what you saw? How that impacted retention? And what that could mean for next year as far as making that change this year? Thanks.

Jeffrey J. Jones II — President and Chief Executive Officer

Yeah, absolutely. I mean you’re right in how you assessed it that is what we did. We had an intentional strategy this year of starting to close the price gap with our number one competitor. We did that both in some pricing action but also in product upgrades as you referenced. And that led to great revenue growth. When we look at our share, the slight share loss we keep in mind that we still don’t have final IRS results on the Free File program. So that number may move around a little bit. We may actually be even done better than we think we did at this stage. But listen, the thing I’m most disappointed about is our ability to acquire new clients in DIY. We just didn’t do it as well this year as we have in multiple recent years. And the team is all over learning about what we did this year and making sure we get back on the right track for next year.

Scott Schneeberger — Oppenheimer & Co. Inc. — Analyst

Thanks Jeff. And in fact I could just follow up on that Free File alliance you were involved last year. You were not involved this year. I assume that’s not in the numbers we’re discussing here. Those are exed-out from both years in the discussion. But just based on your comments just then of procuring new business, how much do you think that influenced your ability to procure new business this year?

Jeffrey J. Jones II — President and Chief Executive Officer

You know, you’re right. It is netted out of both numbers. So, we’re comparing apples-to-apples. We did about 1 million Free File returns in our last year in the program and what we’re focused on now is delivering a great Free product experience for the consumer, whether they may have been in DIY, or sorry in Free File in the past or not. So, we’re just — we’re moving forward to continue to make the Free product as competitive and good as possible.

Tony Bowen — Chief Financial Officer

Yeah. And to kind of think what Jeff is referencing is that the new clients in the non-FFA channel were not at the level that we were — really wanted this year and that’s what we’re focused on for next year excluding FFA. Thank you.

Scott Schneeberger — Oppenheimer & Co. Inc. — Analyst

All right. Thanks Tony. I understand. Thanks guys.

Operator

Thank you. Our next question comes from Hamzah Mazari of Jefferies. Your line is open.

Mario Cortellacci — Jefferies LLC — Analyst

Hi. Thank you. This is Mario Cortellacci filling in for Hamzah. Maybe you can just touch on some of the big milestones that we should expect regarding the Block Horizons initiatives in fiscal ’22?

Jeffrey J. Jones II — President and Chief Executive Officer

Absolutely, Mario. This is Jeff. I’ll kick this off. So Block Horizons is based on three imperatives; Small Business, Financial Products, and what we call Block Experience. And I think in small business, what we want to continue seeing is acquiring more small business customers. This year we grew assisted small business customers by about 4% and continued fast growth at Wave. That business has now fully recovered and is back growing at the levels when we did the deal. Those are really what we’re focused in small business. In Financial Products, as I mentioned in my prepared remarks, we are in build mode of our new mobile banking platform. We expect to launch that in a beta form by the end of this calendar year.

And remember, in that business, we’re really moving to build a year round business where we think about the value prop of acquiring customers in the year-round way. That one will be focused on launch and starting the journey of customer acquisition in ’22. And then in Block Experience, it’s really all about how we’ll be digitizing the consumer experience — sorry, the assisted experience and how are we offering human help to DIY filers, as we’ve said, continuing to blur those lines. This year we saw meaningful growth in the rate of people in assisted using digital tools. But we know there’s still more upside there as we educate consumers about the benefit and our tax professionals about the benefit. They are great advocates for their clients and we need to make sure tax pros understand the benefit of that change as well.

Mario Cortellacci — Jefferies LLC — Analyst

Understood. Thank you. And then just a quick follow-up on marketing spend. Maybe you can just update us on where you expect that spend to be in 2022 versus 2021. And also what kind of impact are you seeing from that micro-targeting campaign? And then in addition to that, maybe you can also update us on what your brand recognition is currently in DIY?

Jeffrey J. Jones II — President and Chief Executive Officer

Make sure I get all those as I click through them. So the first one, just marketing spend in general, we never break it out particularly looking forward, but it’s obviously contemplated in our outlook. I think the area of incremental investment that was incremental in ’21 was to support our small business imperative. And we expect common levels of investment in ’22. So what that means is we currently have two different marketing efforts, one for the consumer tax business, that’s really about driving and understanding of all the new ways you can file, competing strongly in DIY and in small business this year was our first year in many years to have a dedicated marketing campaign. And we like the early signs of that campaign. We saw great traffic growth and ultimately we saw 4% growth in assisted clients. So that team thinks about how are they acquiring customers as efficiently as possible, thinking about investment against lifetime value and has a very quantitative approach to determining how they make investments.

Tony Bowen — Chief Financial Officer

DIY awareness?

Jeffrey J. Jones II — President and Chief Executive Officer

DIY awareness, I don’t know sitting here today what that level is, something we can follow up with you on. But I will tell you that we know there’s always more work to do there. We’re always surprised to learn that customers still don’t know that H&R Block is in the DIY software business. So that will remain a focus. But I don’t know the percentage sitting here today.

Mario Cortellacci — Jefferies LLC — Analyst

Understood. Thank you so much.

Jeffrey J. Jones II — President and Chief Executive Officer

Thanks Mario.

Operator

Thank you. Our next question comes from Jeff Silber of BMO Capital Markets. Your question please.

Jeff Silber — BMO Capital Markets Corp. — Analyst

Thanks so much. Wanted to go back to your outlook for fiscal ’22. I realize the revenue growth sort of flattish to slightly up implies some of the issues that you talked about impacting next year some of the folks returning to the sidelines. But I just want to double check beyond that you would still feel comfortable with your long term 3% to 6% growth. Is that correct?

Tony Bowen — Chief Financial Officer

Yeah that’s right, Jeff. And you said it well. I mean we feel really good that we’re able to guide to revenue growth for FY ’22, coming off such strong performance in ’21. And as you mentioned, there will be some likely clients for the industry to go back to the sidelines. But we still haven’t changed our outlook from a long-term perspective. And as Jeff mentioned, with things like Financial Products just launching at the kind of later end of FY ’22, we know we still have upside from a revenue perspective.

Jeff Silber — BMO Capital Markets Corp. — Analyst

Okay. That’s great. And on EBITDA and I know you don’t like to talk about margins but your guidance for the outlook does imply some margin expansion. Can we talk about how you think you’re going to get there? And I know, last week, you announced some restructuring. I’m wondering if that’s the reason for that. Thanks.

Tony Bowen — Chief Financial Officer

Yeah. There’s a lot of moving parts as we try to normalize all that in the guidance we provided. I mean, the restructuring did provide some savings, but we’re also investing a good portion of that savings in things like the Financial Products imperative that we talked about. We have guided that EBITDA consistent with the message we shared in December should grow faster than revenue, and I think you saw that represented in the outlook.

Jeff Silber — BMO Capital Markets Corp. — Analyst

Okay, great. I’ll follow up offline with details. Thanks so much.

Tony Bowen — Chief Financial Officer

Great.

Jeffrey J. Jones II — President and Chief Executive Officer

Thanks Jeff.

Operator

Thank you. Our next question comes from George Tong of Goldman Sachs. Please go ahead.

George Tong — Goldman Sachs & Co. LLC — Analyst

Hi, thanks. Good afternoon. You gained 30 bps of total market share versus last year’s tax season overall. If you had to estimate how much market share did you gain in Assisted and I know the federal fee file numbers aren’t in but if you have to take a guess, how — what was your market share performance in DIY excluding that impact?

Jeffrey J. Jones II — President and Chief Executive Officer

Hey, George. It’s Jeff. We estimate that we gained 70 bps in Assisted, and we estimated that we lost 20 bps in DIY.

George Tong — Goldman Sachs & Co. LLC — Analyst

Got it. That’s helpful. And then looking ahead to what’s been guided to in fiscal ’22, can you perhaps elaborate on your thoughts around assisted market share performance and pricing? And same for DIY, what are your expectations that are embedded in the guide with regard to market share performance and pricing?

Jeffrey J. Jones II — President and Chief Executive Officer

Tony and I will tag team here a little bit. But for next year, I think we estimate that we will lose a little share for ’22, consistent with our view on the industry overall. In terms of pricing, I’ll split it into Assisted and DIY. In Assisted, we anticipate that we’ll start taking some price increases in ’22. This is the — we just finished the third year in a row upholding pricing flat. And based on our client performance and our client satisfaction scores, we believe we’ve earned the right to start taking price again. We want to move cautiously and slowly there to make sure we’re not getting too fast and too much back on just raising prices. In the DI — oops, sorry, do you want to jump in? No? In the DIY business, I would just add pricing there is obviously more dynamic. We will always pay attention to this — to the pricing gap relative to our largest competitor and look for ways to both close the gap and exploit the gap with customers.

Tony Bowen — Chief Financial Officer

Yeah. And then I was just going to say back on the market share slight decline in Assisted. I mean that’s largely driven by the fact that we over-indexed this year and those one-time filers. And again, it’s an assumption. But assuming that there’s some roll-off of those one-time filers in the industry given the fact that we over-indexed this year, we’ll likely over-index in the roll-off which is why we’re assuming a slight market share loss next year in Assisted.

George Tong — Goldman Sachs & Co. LLC — Analyst

Got it. Makes a lot of sense. Thanks very much.

Jeffrey J. Jones II — President and Chief Executive Officer

Thanks George.

Operator

Thank you. Our next question comes from Michael Millman of Michael Millman Research. Please go ahead.

Michael Millman — Millman Research Associates — Analyst

Thank you. Two questions. One is what kind of growth, I guess, with question mark, do you see over the next five years for Assisted annual growth? And secondly, how do you look at or do you have plans for moving more into what Intuit is doing or actually Credit Karma is doing very, very well and very profitably or beginning to be profitable? Thank you.

Tony Bowen — Chief Financial Officer

Yeah. I’ll take the first one. So, just thinking about growth in Assisted over the next five years, we talked a little bit about this previously in Investor Day. I mean, we definitely believe that we can get to holding market share in the Assisted business on a consistent basis. Our base assumption for the industry in Assisted is flat to slightly up. If you look at the last five-plus years, it’s been somewhere in that zone. But on top of that, we believe that we can have modest price increases as well. So that, obviously, is additive on a revenue basis and starts getting us towards that 3% to 6% long-term guidance that we provided previously. I don’t know Jeff, do you want to comment on the Credit Karma model?

Jeffrey J. Jones II — President and Chief Executive Officer

Well, so I’m not sure exactly what it is you’re referencing that you see them doing well. I think from our perspective what we’re focused on is in this consumer tax business, making sure that consumers can get access to human health and digitizing the experience. We feel very good about the products we’re launching, the leadership position we’re taking there and the momentum we’re building both in terms of client growth, but also the feedback we’re getting from our customers. That’s something that we see others in the industry doing as well. But we feel like we’re really out in front and feel great about our progress.

Michael Millman — Millman Research Associates — Analyst

So you’re suggesting that you would expect revenue and earnings growth to be similar to what Credit Karma has put up in the last couple of years or am I missing something here?

Jeffrey J. Jones II — President and Chief Executive Officer

Yeah. I don’t know what you’re comparing to Credit Karma. I know what we’ve provided as our multi-year outlook is revenue growth of 3% to 6% and EBITDA and EPS growing faster; very, very strong performance based on three strategic imperatives, which we’ve outlined here and launched at our Investor Day. We feel great about that outlook and that’s what we’re focused on.

Michael Millman — Millman Research Associates — Analyst

Well, I was specifically pointing to have — what their business is. So not the total Intuit growth.

Jeffrey J. Jones II — President and Chief Executive Officer

Yeah. I’m not sure how to respond where — we have outlook for our business. We feel great about what our outlook is, what our business model is and that’s what H&R Block is up to.

Michael Millman — Millman Research Associates — Analyst

Okay, great. Thank you very much.

Jeffrey J. Jones II — President and Chief Executive Officer

Thank you.

Operator

Thank you. At this time, I’d like to turn the call back over to Colby Brown for closing remarks.

Colby Brown — Investor Relations

All right. We want to thank everyone for joining again today and this will conclude the call.

Operator

[Operator Closing Remarks]

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