EX-99.1 2 ex-991q22015.htm EXHIBIT 99.1 EX-99.1 Q2 2015


Exhibit 99.1
 
Blucora Announces Second Quarter Results
BELLEVUE, WA — (Marketwired) — July 30, 2015 — Blucora, Inc. (NASDAQ: BCOR) today announced financial results for the second quarter ended June 30, 2015.

“Results in the quarter were consistent with our expectations,” said Bill Ruckelshaus, President and Chief Executive Officer of Blucora. “For the first half of 2015, we are pleased with TaxACT’s revenue and segment income results, reflecting strong performance in a competitive season. Pressures in our Search and Content segment are contributing to overall declines year-on-year. We remain focused on operating our businesses with discipline, managing expenses and allocating capital wisely during this period of transition.” 
Summary Financial Performance: Q2 2015
($ in millions except per share amounts)
 
Q2
 
Q2
 
 
 
2015
 
2014
 
Change
Revenues
$
119.0

 
$
141.6

 
(16
)%
Search and Content
$
52.1

 
$
79.8

 
(35
)%
Tax Preparation
$
30.9

 
$
26.5

 
17
 %
E-Commerce
$
35.9

 
$
35.3

 
2
 %
Adjusted EBITDA
$
25.0

 
$
29.8

 
(16
)%
Non-GAAP Net Income
$
20.0

 
$
23.9

 
(17
)%
Non-GAAP Diluted EPS
$
0.48

 
$
0.55

 
(13
)%
GAAP Net Income
$
4.3

 
$
8.7

 
(51
)%
GAAP Diluted EPS
$
0.10

 
$
0.20

 
(50
)%
See reconciliations of non-GAAP to GAAP measures in tables below.
 
 
 
 
 
Segment Information
Tax Preparation
Tax Preparation segment income for the second quarter of 2015 was $19.9 million or 64 percent of segment revenue, up 16% compared to the second quarter of 2014.
Search and Content
Search and Content segment income for the second quarter of 2015 was $6.8 million or 13 percent of segment revenue.
E-Commerce
E-Commerce segment income for the second quarter of 2015 was $2.6 million or 7 percent of segment revenue.
Corporate Operating Expenses
Unallocated corporate operating expenses for the second quarter of 2015 were $4.3 million, compared to $3.8 million for the second quarter of 2014.




Third Quarter Outlook
For the third quarter of 2015, the Company expects revenues to be between $82.5 million and $90.3 million, Adjusted EBITDA to be between $(1.0) million and $1.6 million, Non-GAAP net loss to be between $5.7 million and $2.6 million, or $(0.14) to $(0.06) per diluted share, and GAAP net loss to be between $11.2 million and $9.4 million, or $(0.27) to $(0.23) per share.
Conference Call and Webcast
A conference call and live webcast will be held today at 2 p.m. Pacific Time / 5 p.m. Eastern Time during which the Company will further discuss second quarter results and its outlook for the third quarter of 2015. The live webcast and supplemental materials are included in a current report on form 8-K filed today and can be accessed in the Investor Relations section of the Blucora corporate website at http://www.blucora.com. A replay of the call will also be available on our website.
About Blucora®
Blucora, Inc. (NASDAQ: BCOR) operates a diverse group of Internet businesses. Its mission is to deliver long-term value to its customers, partners, and shareholders through financial discipline, operational expertise, and technology innovation. Named one of Fortune® Magazine’s 100 Fastest-Growing Companies for the past two years, Blucora’s online businesses reach millions of users worldwide every day. Blucora is headquartered in Bellevue, Washington. For more information, please visit www.Blucora.com. Follow and subscribe to Blucora on Twitter, LinkedIn, and YouTube.
Source: Blucora
Blucora Contact:
Stacy Ybarra, 425-709-8127
stacy.ybarra@blucora.com


This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: general economic, industry, and market sector conditions; the availability of products to sell; the timing and extent of market acceptance of developed products and services and related costs; our dependence on companies to distribute our products and services; the ability to successfully integrate acquired businesses; future acquisitions; the successful execution of the Company’s strategic initiatives, technology enhancements, operating plans, and marketing strategies; and the condition of our cash investments. A more detailed description of these and certain other factors that could affect actual results is included in Blucora, Inc.’s most recent Quarterly Report on Form 10-Q and subsequent reports filed with or furnished to the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Blucora, Inc. undertakes no obligation to update any forward-looking statements to reflect new information, events, or circumstances after the date of this release or to reflect the occurrence of unanticipated events.




Blucora, Inc.
Preliminary Condensed Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands, except per share data)
 
Three months ended June 30,
 
Six months ended June 30,
 
2015
 
2014
 
2015
 
2014
Revenues:
 
 
 
 
 
 
 
Services revenue
$
83,030

 
$
106,270

 
$
222,844

 
$
285,314

Product revenue, net
35,946

 
35,299

 
70,958

 
72,438

Total revenues
118,976

 
141,569

 
293,802

 
357,752

Operating expenses:
 
 
 
 
 
 
 
Cost of revenues:
 
 
 
 
 
 
 
Services cost of revenue (1)
30,771

 
56,233

 
65,712

 
127,526

Product cost of revenue
25,255

 
23,137

 
49,355

 
48,166

Total cost of revenues (2)
56,026

 
79,370

 
115,067

 
175,692

Engineering and technology (2)
5,168

 
4,817

 
10,385

 
8,952

Sales and marketing (2)
27,287

 
22,287

 
81,483

 
78,123

General and administrative (2)
11,014

 
10,425

 
21,423

 
19,057

Depreciation
1,187

 
1,135

 
2,325

 
2,193

Amortization of intangible assets
6,118

 
5,761

 
12,236

 
11,345

Total operating expenses
106,800

 
123,795

 
242,919

 
295,362

Operating income
12,176

 
17,774

 
50,883

 
62,390

Other loss, net (3)
(4,577
)
 
(3,724
)
 
(8,303
)
 
(7,793
)
Income before income taxes
7,599

 
14,050

 
42,580

 
54,597

Income tax expense
(3,348
)
 
(5,313
)
 
(15,229
)
 
(19,873
)
Net income
$
4,251

 
$
8,737

 
$
27,351

 
$
34,724

Net income per share:
 
 
 
 
 
 
 
Basic
$
0.10

 
$
0.21

 
$
0.67

 
$
0.83

Diluted
$
0.10

 
$
0.20

 
$
0.65

 
$
0.79

Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
40,918

 
41,570

 
40,953

 
41,866

Diluted
41,936

 
43,084

 
41,918

 
43,803

(1) Includes amortization of acquired intangible assets of $1.9 million for the three months ended June 30, 2015 and 2014 and $3.7 million and $3.8 million for the six months ended June 30, 2015 and 2014, respectively.
(2) Stock-based compensation expense was allocated among the following captions (in thousands):
 
Three months ended June 30,
 
Six months ended June 30,
 
2015
 
2014
 
2015
 
2014
Cost of revenues
$
58

 
$
113

 
$
107

 
$
272

Engineering and technology
514

 
315

 
806

 
744

Sales and marketing
518

 
722

 
948

 
1,641

General and administrative
2,258

 
1,808

 
4,186

 
3,709

Total stock-based compensation expense
$
3,348

 
$
2,958

 
$
6,047

 
$
6,366

(3) Other loss, net was allocated among the following captions (in thousands):
 
Three months ended June 30,
 
Six months ended June 30,
 
2015
 
2014
 
2015
 
2014
Interest income
$
(124
)
 
$
(88
)
 
$
(242
)
 
$
(196
)
Interest expense
2,492

 
2,764

 
5,260

 
5,779

Amortization of debt issuance costs
295

 
284

 
643

 
565

Accretion of debt discounts
958

 
916

 
2,089

 
1,822

Realized loss on available-for-sale investments, net
353

 
—

 
417

 
—

Other-than-temporary impairment loss on equity securities
964

 
—

 
964

 
—

Gain on third party bankruptcy settlement
(366
)
 
(167
)
 
(842
)
 
(167
)
Other
5

 
15

 
14

 
(10
)
Other loss, net
$
4,577

 
$
3,724

 
$
8,303

 
$
7,793





Blucora, Inc.
Preliminary Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
 
June 30,
2015
 
December 31,
2014
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
59,498

 
$
46,444

Available-for-sale investments
237,389

 
254,854

Accounts receivable, net
26,688

 
30,988

Other receivables
1,046

 
3,295

Inventories
34,434

 
29,246

Prepaid expenses and other current assets, net
12,529

 
13,477

Total current assets
371,584

 
378,304

Property and equipment, net
15,595

 
15,942

Goodwill, net
304,658

 
304,658

Other intangible assets, net
153,654

 
168,919

Other long-term assets
4,238

 
4,891

Total assets
$
849,729

 
$
872,714

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
31,274

 
$
37,755

Accrued expenses and other current liabilities
24,391

 
21,505

Deferred revenue
6,074

 
7,884

Short-term portion of long-term debt, net
—

 
7,914

Total current liabilities
61,739

 
75,058

Long-term liabilities:
 
 
 
Long-term debt, net
30,000

 
85,835

Convertible senior notes, net
187,075

 
185,177

Deferred tax liability, net
23,178

 
42,963

Deferred revenue
2,910

 
1,915

Other long-term liabilities
3,195

 
2,741

Total long-term liabilities
246,358

 
318,631

Total liabilities
308,097

 
393,689

 
 
 
 
Stockholders’ equity:
 
 
 
Common stock
4

 
4

Additional paid-in capital
1,501,793

 
1,467,658

Accumulated deficit
(960,173
)
 
(987,524
)
Accumulated other comprehensive income (loss)
8

 
(1,113
)
Total stockholders’ equity
541,632

 
479,025

Total liabilities and stockholders’ equity
$
849,729

 
$
872,714





Blucora, Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
 
Six months ended June 30,
 
2015
 
2014
Operating Activities:
 
 
 
Net income
$
27,351

 
$
34,724

Adjustments to reconcile net income to net cash from operating activities:
 
 
 
Stock-based compensation
6,047

 
6,366

Depreciation and amortization of intangible assets
18,932

 
17,920

Excess tax benefits from stock-based award activity
(32,535
)
 
(34,369
)
Deferred income taxes
(21,558
)
 
(18,172
)
Amortization of premium on investments, net
902

 
2,221

Amortization of debt issuance costs
643

 
565

Accretion of debt discounts
2,089

 
1,822

Realized loss on available-for-sale investments, net
417

 
—

Other-than-temporary impairment loss on equity securities
964

 
—

Other
112

 
57

Cash provided (used) by changes in operating assets and liabilities:
 
 
 
Accounts receivable
4,245

 
12,347

Other receivables
2,249

 
4,362

Inventories
(5,188
)
 
(1,738
)
Prepaid expenses and other current assets
2,048

 
874

Other long-term assets
(2
)
 
48

Accounts payable
(6,481
)
 
(18,011
)
Deferred revenue
(815
)
 
(555
)
Accrued expenses and other current and long-term liabilities
35,270

 
26,789

Net cash provided by operating activities
34,690

 
35,250

Investing Activities:
 
 
 
Business acquisitions, net of cash acquired
—

 
(44,927
)
Purchases of property and equipment
(2,105
)
 
(2,859
)
Purchases of intangible assets
(696
)
 
—

Proceeds from sales of investments
15,008

 
21,546

Proceeds from maturities of investments
113,406

 
121,496

Purchases of investments
(112,090
)
 
(144,049
)
Net cash provided (used) by investing activities
13,523

 
(48,793
)
Financing Activities:
 
 
 
Proceeds from credit facilities
20,000

 
4,000

Repayment of credit facilities
(83,940
)
 
(60,000
)
Stock repurchases
(5,521
)
 
(25,785
)
Excess tax benefits from stock-based award activity
32,535

 
34,369

Proceeds from stock option exercises
2,093

 
1,746

Proceeds from issuance of stock through employee stock purchase plan
608

 
665

Tax payments from shares withheld upon vesting of restricted stock units
(934
)
 
(1,913
)
Net cash used by financing activities
(35,159
)
 
(46,918
)
Net increase (decrease) in cash and cash equivalents
13,054

 
(60,461
)
Cash and cash equivalents, beginning of period
46,444

 
130,225

Cash and cash equivalents, end of period
$
59,498

 
$
69,764






Blucora, Inc.
Preliminary Segment Information
(Unaudited)
(Amounts in thousands)
 
Three months ended June 30,
 
Six months ended June 30,
 
2015
 
2014
 
2015
 
2014
Revenues:
 
 
 
 
 
 
 
Search and Content
$
52,130

 
$
79,818

 
$
110,876

 
$
186,583

Tax Preparation
30,900

 
26,452

 
111,968

 
98,731

E-Commerce
35,946

 
35,299

 
70,958

 
72,438

Total revenues
118,976

 
141,569

 
293,802

 
357,752

Operating income:
 
 
 
 
 
 
 
Search and Content
6,814

 
14,032

 
15,212

 
33,262

Tax Preparation
19,890

 
17,211

 
64,035

 
54,613

E-Commerce
2,624

 
2,378

 
5,186

 
5,856

Corporate-level activity (1)
(17,152
)
 
(15,847
)
 
(33,550
)
 
(31,341
)
Total operating income
12,176

 
17,774

 
50,883

 
62,390

Other loss, net
(4,577
)
 
(3,724
)
 
(8,303
)
 
(7,793
)
Income tax expense
(3,348
)
 
(5,313
)
 
(15,229
)
 
(19,873
)
Net income
$
4,251

 
$
8,737

 
$
27,351

 
$
34,724

(1) Corporate-level activity included the following (in thousands):
 
Three months ended June 30,
 
Six months ended June 30,
 
2015
 
2014
 
2015
 
2014
Operating expenses
$
4,314

 
$
3,833

 
$
8,571

 
$
7,055

Stock-based compensation
3,348

 
2,958

 
6,047

 
6,366

Depreciation
1,509

 
1,414

 
2,971

 
2,809

Amortization of intangible assets
7,981

 
7,642

 
15,961

 
15,111

Total corporate-level activity
$
17,152

 
$
15,847

 
$
33,550

 
$
31,341






Blucora, Inc.
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures

Preliminary Adjusted EBITDA Reconciliation (1) 
(Unaudited)
(Amounts in thousands)
 
Three months ended June 30,
 
Six months ended June 30,
 
2015
 
2014
 
2015
 
2014
Net income (2)
$
4,251

 
$
8,737

 
$
27,351

 
$
34,724

Stock-based compensation
3,348

 
2,958

 
6,047

 
6,366

Depreciation and amortization of intangible assets
9,490

 
9,056

 
18,932

 
17,920

Other loss, net (3)
4,577

 
3,724

 
8,303

 
7,793

Income tax expense
3,348

 
5,313

 
15,229

 
19,873

Adjusted EBITDA
$
25,014

 
$
29,788

 
$
75,862

 
$
86,676






Preliminary Non-GAAP Net Income Reconciliation (1) 
(Unaudited)
(Amounts in thousands, except per share amounts)
 
Three months ended June 30,
 
Six months ended June 30,
 
2015
 
2014
 
2015
 
2014
Net income (2)
$
4,251

 
$
8,737

 
$
27,351

 
$
34,724

Stock-based compensation
3,348

 
2,958

 
6,047

 
6,366

Amortization of acquired intangible assets
7,981

 
7,642

 
15,961

 
15,111

Accretion of debt discount on Convertible Senior Notes
958

 
890

 
1,898

 
1,764

Other-than-temporary impairment loss on equity securities
964

 
—

 
964

 
—

Cash tax impact of adjustments to GAAP net income
(118
)
 
(197
)
 
(260
)
 
(251
)
Non-cash income tax expense (1)
2,577

 
3,878

 
10,977

 
16,197

Non-GAAP net income
$
19,961

 
$
23,908

 
$
62,938

 
$
73,911

 
 
 
 
 
 
 
 
Per diluted share:
 
 
 
 
 
 
 
Net income
$
0.10

 
$
0.20

 
$
0.65

 
$
0.79

Stock-based compensation
0.08

 
0.07

 
0.15

 
0.15

Amortization of acquired intangible assets
0.19

 
0.17

 
0.38

 
0.34

Accretion of debt discount on Convertible Senior Notes
0.02

 
0.02

 
0.05

 
0.04

Other-than-temporary impairment loss on equity securities
0.03

 
—

 
0.02

 
—

Cash tax impact of adjustments to GAAP net income
(0.00
)
 
(0.00
)
 
(0.01
)
 
(0.00
)
Non-cash income tax expense
0.06

 
0.09

 
0.26

 
0.37

Non-GAAP net income per share
$
0.48

 
$
0.55

 
$
1.50

 
$
1.69

Weighted average shares outstanding used in computing diluted non-GAAP net income per share and its components
41,936

 
43,084

 
41,918

 
43,803





Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance
(Amounts in thousands)
 
Ranges for the three months ending
 
September 30, 2015
Net loss
$
(11,200
)
 
$
(9,400
)
Stock-based compensation
3,800

 
3,800

Depreciation and amortization of intangible assets
9,000

 
8,900

Other loss, net (3)
3,700

 
3,600

Income tax benefit
(6,300
)
 
(5,300
)
Adjusted EBITDA
$
(1,000
)
 
$
1,600






Preliminary Non-GAAP Net Income Reconciliation for Forward-Looking Guidance
(Amounts in thousands)
 
Ranges for the three months ending
 
September 30, 2015
Net loss
$
(11,200
)
 
$
(9,400
)
Stock-based compensation
3,800

 
3,800

Amortization of acquired intangible assets
7,200

 
7,200

Accretion of debt discount on Convertible Senior Notes
1,000

 
1,000

Non-cash income tax benefit
(6,500
)
 
(5,200
)
Non-GAAP net loss
$
(5,700
)
 
$
(2,600
)
Notes to Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures:
(1) We define Adjusted EBITDA differently for this report than we have defined it in the past, due to the impairment of goodwill and intangible assets recorded in the fourth quarter of 2014. We define Adjusted EBITDA as net income, determined in accordance with the accounting principles generally accepted in the United States of America (“GAAP”), excluding the effects of income taxes, depreciation, amortization of intangible assets, impairment of goodwill and intangible assets, stock-based compensation, and other loss, net (as described in note (3) below).
We believe that Adjusted EBITDA provides meaningful supplemental information regarding our performance. We use this non-GAAP financial measure for internal management and compensation purposes, when publicly providing guidance on possible future results, and as a means to evaluate period-to-period comparisons. We believe that Adjusted EBITDA is a common measure used by investors and analysts to evaluate our performance, that it provides a more complete understanding of the results of operations and trends affecting our business when viewed together with GAAP results, and that management and investors benefit from referring to this non-GAAP financial measure. Items excluded from Adjusted EBITDA are significant and necessary components to the operations of our business and, therefore, Adjusted EBITDA should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income. Other companies may calculate Adjusted EBITDA differently and, therefore, our Adjusted EBITDA may not be comparable to similarly titled measures of other companies.
We define non-GAAP net income differently for this report than we have defined it in the past, due to the impairment of goodwill and intangible assets recorded in the fourth quarter of 2014 and amounts recorded in other loss, net that resulted from an other-than-temporary impairment loss recognized on equity securities in the second quarter of 2015 and adjustments related to finalizing Monoprice's 2013 federal and state tax returns in the third quarter of 2014. For this report, we define non-GAAP net income as net income, determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets, impairment of goodwill and intangible assets, accretion of debt discount on the Convertible Senior Notes, other-than-temporary impairment loss on equity securities, changes in non-cash pre-acquisition liabilities, and the related cash tax impact of those adjustments, and non-cash income taxes. We exclude the non-cash portion of income taxes because of our ability to offset a substantial portion of our cash tax liabilities by using deferred tax assets, which consist primarily of U.S. federal net operating losses. The majority of these deferred tax assets will expire, if unutilized, between 2020 and 2024.
We believe that non-GAAP net income and non-GAAP net income per share provide meaningful supplemental information to management, investors, and analysts regarding our performance and the valuation of our business by excluding items in the statement of operations that we do not consider part of our ongoing operations or have not been, or are not expected to be, settled in cash. Additionally, we believe that non-GAAP net income and non-GAAP net income per share are common measures used by investors and analysts to evaluate our performance and the valuation of our business. Non-GAAP net income should be evaluated in light of our financial results prepared in accordance with GAAP and should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income. Other companies may calculate non-GAAP net income differently, and, therefore, our non-GAAP net income may not be comparable to similarly titled measures of other companies.
(2) As presented in the Preliminary Condensed Consolidated Statements of Operations (unaudited).
(3) Other loss, net primarily includes items such as interest income, interest expense, amortization of debt issuance costs, accretion of debt discounts, realized gains and losses on available-for-sale investments, impairment losses on equity investments, adjustments to contingent liabilities related to business combinations, and gain on third party bankruptcy settlement.