Dive Brief:

• H&R Block is looking ahead to the 2024 tax season and adding new features to improve the tax filing experience in its flagship app and Spruce, according to its Q1 earnings call last week. Spruce is an H&R Block mobile banking and personal finance app.
• Within its MyBlock app, the tax preparation company introduced a tax status tracker so clients know what stage they are in the tax prep process. It also plans to introduce a personalized checklist, which would include the specific tax forms a client needs along with directions on how to upload them.  
• H&R Block ended Q1 with $183.8 million in revenue, a 2% increase over the prior year, for the period ending Sept. 30.

Dive Insight:

H&R Block is looking to improve its app experience ahead of the 2024 tax season in an effort to acquire new customers.

“This imperative is all about blending digital tools with human help to provide better experiences for clients while empowering them to be served however they choose, fully virtual to fully in-person and everything in between,” said Jeff Jones, president and CEO of H&R Block, during the Q1 earnings call.

In addition to the tax status tracker and personalized checklist, H&R Block’s MyBlock app will recommend next steps to clients, whether that’s uploading documents, talking to an H&R Block tax professional or reviewing their return, Jones said. 

Jones also touted the Spruce improvements, which include streamlining the process to create an account. As of the end of September, Spruce had more than 300,000 sign-ups and nearly $400 million in customer deposits, up from roughly 160,000 signups and $98 million customer deposits last year, according to Jones. 

The focus for Spruce in fiscal year 2024, he says, is “on efficiently acquiring clients at tax time, which includes the DIY flow and driving customer engagement within the app.”

H&R Block is also prioritizing generative AI to enhance the customer experience, reduce expenses and increase productivity. The tax preparation company is currently testing its use to field customer calls about tax prep.

“Over time, we believe these initiatives can result in meaningful cost savings, but we are not assuming any this fiscal year as we are in initial testing phases,” Jones said.

H&R Block’s tax prep competition includes TurboTax and now the federal government, which is set to launch its own free tax-filing pilot this upcoming tax season.

Intuit, the parent company of TurboTax, and H&R Block have long lobbied against the government providing such free software directly to taxpayers, ProPublica found. In May, as the IRS was set to release a report on the feasibility of offering such a service, shares for both H&R Block and Intuit slid, marking investors’ worries.

When asked about the IRS’s pilot program on the earnings call, Jones said the IRS had dialed back the magnitude of its pilot this year. He also argued that consumers “don't think the IRS should be in the business.”

“We find it hard to believe over time that they'll be able to use taxpayer dollars to be in the business of building a product, marketing a product and supporting a product year in and year out,” Jones said.