🪙 Schwab Lets You Buy Solana. Zeta Grows Revenue 46%. H&R Block Repurchases 2.2M Shares.

0:00Welcome to the Deep Dive. Whether you're driving or prepping for a big strategy meeting or maybe you just want to understand how the market actually works. behind the scenes, you are in the right place. Yeah, absolutely. Glad you're here with us. Today, our mission is to basically step onto this very loud, very chaotic Wall Street trading floor and, you know, extract the actual signal hidden in all that noise. Yeah, man. I mean, there is a tremendous amount of noise this week to filter out. Oh, so much noise. Like, picture walking into a massive high-end restaurant kitchen on a Saturday night.

0:34Pans are clattering. There's a grease fire flaring up on one of the stoves. The head chef is just screaming out orders over the din. Sounds incredibly distracting. It is. And that was exactly what Wall Street looked like this past Monday. I mean, you had the Dow jumping up over 600 points, desperately trying to shake off this market-wide AI hangover. And right in the middle of that panic, NVIDIA's stock was sliding because news broke that their board is probing CEO Jensen Huang. Yeah. And the thing is, when a grease fire breaks out in a busy kitchen, everybody stares at the flames. Right. Exactly.

1:10People tend to focus entirely on the loudest, most dramatic thing in the room, which usually means they miss the prep cooks in the back quietly and methodically chopping the ingredients that actually make the whole meal work. Yeah. And that brings us to the core of what we are unpacking for you today. We are stepping out of that noisy kitchen. Good call. And to do this, we're looking at excerpts from a fascinating financial report we got our hands on. It's titled, Schwab lets you buy Solana. Zeta grows revenue 46%. H &R Block repurchases 2.2 million shares. It's a great stack of sources. It really is.

1:46It looks at three Monday reports, one off-season loss, and, you know, a legacy brokerage suddenly discovering altcoins. Well, the beauty of this specific stack is that it provides a perfect cross-section of the market. I mean, it lets us just ignore the daily panic and look at the actual mechanics of businesses that are just executing their playbooks. Right. And the narrative through line we're exploring today is this. How do companies generate real, tangible value in a chaotic market? Because we're going to see that the answers are wildly different. Completely different. We're going to look at a traditional legacy brokerage adopting alternative cryptocurrencies.

2:23We'll analyze a marketing platform that is proving artificial intelligence is, like, highly profitable right now. Very profitable. And finally, we'll examine a legacy tax preparer that is deliberately and systematically shrinking itself. Okay, let's unpack this. We're starting with Charles Schwab. Right. Founded back in 1971, based in Westlake, Texas. Yeah, and they announced on Monday that Solana, Avalanche, and Chainlink are now live on Schwab Crypto. Which significantly expands their footprint in the digital asset space. It does. It lifts their menu from just two coins to five. And as for the cost, they are charging 75 basis points per trade.

3:02Right, which might sound confusing to some people. Yeah. To put that in plain English for anyone who doesn't speak Wall Street, 75 basis points is just under 1%. So if you make a, say, a$1 ,000 purchase of Solana, Schwab keeps$7.50 a fee. Got it. And the source notes, they actually started rolling this feature out back in May, but it finally reached all eligible retail clients in October. Well, we have to place that timeline into the broader industry context, right? Because Schwab was incredibly late to the spot crypto game. Oh, totally. I mean, they only brought Bitcoin and Ether trading to their platform this past spring, and they didn't even build it themselves.

3:42They had to partner with a company called Paxos to make it happen. Right. And compared to the rest of the financial world, that feels glacially slow. I mean, a major competitor like Fidelity launched their own dedicated digital assets unit all the way back in 2019. Yeah, 2019. That is a massive head start in an industry that moves as fast as crypto. But our source report had this brilliant analogy for Schwab's move. Oh, I loved this part. They said, Schwab getting into altcoins now is the finance version of your uncle showing up to Thanksgiving and announcing he's doing a little DeFi now. Doing a little DeFi.

4:17Yeah. Decentralized finance. Basically the wild west of crypto. You respect the effort, but you're also bracing yourself for the inevitable Venmo requests when he accidentally locks himself out of his wallet. Yeah, the uncle DeFi analogy captures that slightly awkward late adopter energy perfectly. It really does. But I want to push back on the corporate messaging here a bit because Joe Vianti, the head of digital assets at Schwab, framed this whole rollout as giving their clients more choice alongside their traditional investments. Right. The usual corporate line. Yeah. And he emphasized that even more tokens are planned.

4:55But let's be real. Is this actually true innovation from Schwab? Or is this just a 1971 legacy company showing up late to the party because they are terrified of losing their retail clients to modern crypto native platforms like Coinbase? What's fascinating here is that the motivation almost doesn't matter anymore because the structural landscape of personal finance has shifted entirely. How so? Well, the takeaway from our source is that crypto distribution has officially transitioned into a standard brokerage feature. Like it's no longer a fringe offering for early adopters. Right. It has basically become the modern equivalent of offering a standard checking account or a mutual fund.

5:35Exactly. The novelty factor is just gone. It is no longer about being the vanguard of innovation or, you know, being the first to offer digital assets. It is simply about widening the aisle for your established everyday retail clients. Schwab realized that the retail brokerage race now literally runs through the token list. They cannot maintain their position as a primary financial hub if they only offer a two coin menu while their competitors offer dozens. Yeah, I mean, think about the friction involved for the average retail investor. If I have my IRA and my standard stock portfolio sitting safely at Schwab, I don't necessarily want the headache of downloading a new app, linking my bank account all over again, and managing a separate tax document just because I want to buy a little bit of Solana.

6:21And that convenience factor is the entire strategy. By widening the aisle, by adding Solana, Avalanche, and Chainlink, Schwab isn't trying to out-innovate a crypto-native exchange. No. They are building a fence. They are trying to keep their clients' capital inside the Schwab ecosystem. If a client has to leave the platform to buy an asset they want, there is always a risk they might move their other assets, too. So true. So Schwab is adopting existing technology defensively, just to prevent their clients from leaving. Exactly. But what does it look like when a company goes on the offense? What happens when a business isn't just adopting tech to keep up, but it's actually the one building the technology that everyone is throwing money at?

7:05Well, that brings us back to the AI hangover we mentioned at the start of the deep dive. This is where it gets really interesting. While NVIDIA's stock was sliding amid market panic, another company, Zeta Global, was proving that AI spending can turn into massive, tangible revenue. Yeah, Zeta Global. Ticker symbol Z-E-T-A. This is a New York company co-founded in 2007 by David Steinberg and John Scully. And our source highlights a very crucial, almost counterintuitive detail right up front. Zeta is not a fintech company. No, they're not. They aren't building a new blockchain. They aren't a bank.

7:39They are a marketing platform. Yet they reported third quarter revenue of$493 million. That is up 46 % year over year. I mean, for a company founded over 15 years ago to suddenly post near 50 % growth, something fundamental in their business model has to have changed. Absolutely. And the underlying numbers are just as strong. Even if you exclude their recent Marigold acquisition and you strip out all the political ad revenue, which is obviously bloated right now because of the election cycle, their core growth was still 30%. Which is still huge. Yeah. And that core growth is actually accelerating up from 28 % last quarter.

8:18They beat the midpoint of their own guidance by$22 million. And we should look at how that revenue flows through the company because top line growth is kind of meaningless if a business is just burning cash to achieve it. Very true. Let's translate the financial report. They aren't just growing revenue. They are actually keeping the cash. Right. Their gap net income was$38 million. Their adjusted EBITDA, which is basically their profit from core operations before accountants factor in taxes and depreciation, hit$121 million. That is a massive 24.6 % margin. Right. And most importantly, their free cash flow, meaning the actual hard dollars they have left over after keeping the lights on, shot up 73 % to$82 million.

9:03They are generating hard cash while a lot of other tech companies are, you know, still spending billions just trying to figure out their AI strategy. Yeah, exactly. They even raised their full year revenue guidance by$37 million, bringing it to a projected$1.855 billion. The source uses a great sports analogy here. The Steph Curry one? Yeah. Clearing your own guidance by$22 million is like Steph Curry hitting a three-pointer from the logo. It's supposed to be rare. It's supposed to be incredibly difficult. But Zeta is making it look routine. Just routine at this point. The CFO directly credits this explosive growth to the rising adoption of Athena, which is the company's AI layer.

9:42They currently have 212 super-scaled customers, averaging$2 million in revenue each. But I keep getting stuck on this one point. What's that? Well, since Zeta is a marketing platform and not a semiconductor company or an AI foundation model, why does our source call them the cleanest read this week on the entire AI market? If we connect this to the bigger picture, you have to understand the specific anxiety that's currently gripping the tech sector. Okay, lay it out. The market is so absolutely terrified that companies like Microsoft, Google are spending tens of billions of dollars on AI infrastructure.

10:16I mean, they're buying the chips, right? They're building the data centers. And enterprise customers aren't actually paying for AI software yet. Oh, right. I mean, people are worried it's all just theoretical hype designed for tech keynotes. Like everyone is buying the very expensive shovels, but the market is starting to wonder if there's actually any gold in the mountain. Exactly. But Zeta proves the gold exists. And they prove it by solving a very old business problem. Historically, digital marketing has a lot of friction and waste. A brand spends millions blasting ads across the internet hoping the right demographic clicks on them.

10:50Yeah, the spray and pray method. Right. But Athena, Zeta's AI layer, changes that mechanism entirely. Instead of generic targeting, it ingests massive amounts of consumer behavioral data to predict exactly when a specific customer is statistically ready to make a purchase. Oh, wow. So instead of a company paying Zeta to just show ads to a million people, they are paying Zeta because the AI can actually guarantee a higher return on their advertising spend. Exactly. When you can mathematically prove to a brand that your AI drives a better return on investment, of course they are going to hand you$2 million.

11:26Yeah, it's a no-brainer. That is why Zeta is the cleanest read on the market. They aren't selling theoretical AI infrastructure. They are applying AI to drive measurable business outcomes for their clients. It shows that AI demand is finally moving past the hype phase and showing up on the balance sheet as actual generated value. Okay. So Zeta is creating value through warp speed, AI-driven, top-line growth. But let's look at the other end of the spectrum. What if a business wants to create immense value for its shareholders by doing the exact opposite? The complete opposite, yeah. Instead of hyper-growth, we are going to look at the incredible power of deliberate, planned hyper-shrinkage.

12:09Which is honestly a masterclass in how mature industries operate when they can no longer rely on endless market expansion. It really is. We are looking at H &R Block, ticker symbol HRB. Based in Kansas City, founded in 1955, they just reported their fiscal first quarter revenue at$224.3 million, up 10.2%. Not bad. But here is the kicker. They also reported a net loss from continuing operations of$188.1 million. Yeah, that's a big number. That's a loss of$1.53 per share, which is actually worse than the$1.26 per share they lost a year ago at this time. Their operating expenses rose 11.1%, outpacing their revenue growth entirely.

12:54I mean, just to put that in perspective, that is nearly a$200 million operating loss for a single quarter. I know. They did have some isolated bright spots, though. Their international services grew 12.5%, and their tax protection and identity services grew 17.6%. Okay. And despite the massive quarterly loss, they confidently reaffirmed their fiscal 2027 guidance of around$4.1 billion in revenue. Right. But the real story here, the mechanism our source zeroes in on, is their stock buyback program. H &R Block just retired$2.2 million of their own shares. They spent$100.3 million in cash doing this, buying them at an average of$45.68 apiece.

13:37And they still have about$500 million left in the war chest on a massive$1.5 billion authorization. Which is just wild, because when a company buys back its own stock and retires it, those shares literally cease to exist. It is a permanent reduction in the supply of their stock. Exactly. Over the last year alone, their total share count fell from$131.4 million down to$123.1 million. That is about a 6 % drop in just 12 months. Wow. And if you zoom out to a longer timeline, the numbers are staggering. Since 2016, H &R Block has bought back more than 49 % of all its outstanding shares. Basically half the company.

14:18So, what does this all mean? Our source calls buying back half your stock over a decade a Thanos snap for the cap table. Just snapping your fingers and half the ownership shares turn to dust. It's a colorful analogy, but mathematically that is exactly what they have engineered. But I have to push back on the underlying logic here. The source calls this strategy perfectly balanced, except for that off-season loss. Right. Wait a minute. They just lost almost$200 million this quarter. Their expenses are currently rising faster than their revenue. Yet they still took over$100 million in cash and used it to buy back their own stock.

14:52How on earth is that balanced? Like, how does a company lose money, watch expenses rise, and still justify burning cash to shrink their share count? This raises an important question about how legacy businesses function compared to the tech companies we usually hear about. The secret to understanding H &R Block is understanding the mechanics of seasonality. Okay, because the report specifically called the quarter ending September 30th tax season's dead zone. Exactly. H &R Block knows with absolute historical certainty that they are going to lose money in September. People simply do not file their taxes in the early fall.

15:26Right. Nobody's thinking about their W-2s in September. No, of course not. The company models this loss into their annual projections. It is a feature of their calendar, not a bug. They make the overwhelming majority of their profit in a very concentrated window during the spring tax season. The loss isn't a surprise. It's just the cost of keeping the infrastructure alive until April. OK, so the business is perfectly healthy. It just operates on a very lopsided seasonal calendar. Yes. But that still leaves the question of the Thanos snap. Why buy back half the company? Because H &R Block is a mature 1955 business that already dominates its sector.

16:02They are never going to see 46 % revenue growth like Zeta because the total number of people filing taxes only grows at the right of the general population. No, that makes sense. The pie isn't getting much bigger. So how do you create value for your investors when you can't magically double your profits? Well, if you can't make the pie bigger, you reduce the number of people eating it. You shrink the denominator. Wall Street values companies largely based on earnings per share, or EPS. That metric is literally just the company's total profit divided by the number of shares in existence. Okay, simple math.

16:36Right. If H &R Block makes a billion dollars in profit and there are 100 million shares, each share earned$10. But if they buy back half those shares over a decade, leaving only 50 million shares in existence, suddenly that exact same billion dollars in profit means each share earned$20. Wow. The company didn't actually make any more money, but the value of a single share doubled. Exactly. By continually and relentlessly shrinking their share count, H &R Block manufactures EPS growth out of a slow-growing, highly predictable legacy business model. It isn't flashy. No, not at all. It doesn't require a new AI layer or a massive pivot to blockchain technology.

17:17It is just highly effective financial engineering designed to reward the shareholders who stick around. That really brings everything together for you, the listener, because whether you are managing your own portfolio, analyzing tech trends for your company's next product launch, or you're just incredibly curious about how different businesses actually survive all that Wall Street chaos, the big takeaway here is that corporate success is absolutely not one size fits all. Yeah. The mechanics of survival look completely different depending on the company's age, their industry, and, you know, the specific limitations of their market.

17:49Absolutely. Success can mean a legacy brokerage like Schwab adding Solana purely as a defensive play to keep their customers' capital inside their own ecosystem. Right. It can mean a platform like Zeta going on the offense, proving that applied AI can drive massive, tangible revenue today. Or it can meet a company from 1955 like H &R Block, accepting that their market won't double in size and creating value simply by shrinking their share count by 49%. It is all about accurately assessing your environment and knowing which playbook you are supposed to be running. Right. Speaking of playbooks, we want to relay a quick call to action from the author of our source material today.

18:28Oh, yes. They noted that whether you're buying SOL at Schwab, watching Zeta's AI story unfold, or just letting H &R Block do your taxes next April, you should subscribe to their newsletter, FinTech Stacks. You can also follow their trades on Robinhood Social, share their work with a coworker, and check out their podcast and YouTube channel. And we also need to explicitly state the author's disclaimer here. The source material provided is for information and entertainment purposes only. It is absolutely not investment advice. Standard disclaimer stuff. Yeah. The author noted they may or may not hold positions in the companies mentioned, but they definitely own a fintech hoodie and a bunch of debit cards.

19:05Which is basically the required uniform for the industry. But before we wrap up today, I want to leave you with a final thought to 2.1. We've looked at three very different corporate strategies today, and it paints an interesting picture of how companies age. It really does leave you wondering about the long-term life cycle of modern businesses. I mean, think about what we just discussed. If a tax company from 1955 can create massive sustained value simply by financially engineering a smaller share count, and a legacy broker from 1971 can stay relevant simply by opening its doors to alternative crypto coins, what does this actually mean for the lifespan of our modern hyper-growth tech companies?

19:46Oh, that's a great question. Will today's high-flying AI darlings, the ones currently seeing 40 % growth, eventually saturate their markets and be forced to pivot to that exact same kind of defensive financial engineering? Or will the modern tech innovation cycle move so fast that it keeps their growth engines running forever? That is the ultimate question for the next decade of the market. The trading floor is loud and the kitchen is always chaotic. But if you look closely at who is doing the prep work, you can always find the signal. keep questioning those assumptions and stay curious until our next deep dive