0001068875-18-000055.txt : 20180801 0001068875-18-000055.hdr.sgml : 20180801 20180801063709 ACCESSION NUMBER: 0001068875-18-000055 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20180801 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20180801 DATE AS OF CHANGE: 20180801 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLUCORA, INC. CENTRAL INDEX KEY: 0001068875 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE SERVICES [6199] IRS NUMBER: 911718107 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-25131 FILM NUMBER: 18982956 BUSINESS ADDRESS: STREET 1: 6333 N. STATE HWY 161 STREET 2: 4TH FLOOR CITY: IRVING STATE: TX ZIP: 75038 BUSINESS PHONE: 972-870-6000 MAIL ADDRESS: STREET 1: 6333 N. STATE HWY 161 STREET 2: 4TH FLOOR CITY: IRVING STATE: TX ZIP: 75038 FORMER COMPANY: FORMER CONFORMED NAME: INFOSPACE INC DATE OF NAME CHANGE: 20000428 FORMER COMPANY: FORMER CONFORMED NAME: INFOSPACE COM INC DATE OF NAME CHANGE: 19980824 8-K 1 bcor8-kq22018earningsrelea.htm 8-K Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
August 1, 2018
Date of Report
(Date of earliest event reported)
  
 
BLUCORA, INC.
(Exact name of registrant as specified in its charter)
 

DELAWARE
000-25131
91-1718107
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
6333 State Hwy 161, 4th Floor
Irving, Texas 75038
(Address of principal executive offices)
(972) 870-6000
Registrant’s telephone number, including area code
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
 




Item 2.02    RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On August 1, 2018, Blucora, Inc. (the “Company”) announced its financial results for the quarter ended June 30, 2018. Copies of the press release and supplemental financial information are furnished to, but not filed with, the Securities and Exchange Commission as Exhibits 99.1 and 99.2 hereto.
The press release includes non-GAAP financial measures as that term is defined in Regulation G. The press release also includes the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”), information reconciling the non-GAAP financial measures to the GAAP financial measures, and a discussion of the reasons why the Company’s management believes that presentation of the non-GAAP financial measures provides useful information to investors regarding the Company’s financial condition and results of operations. The non-GAAP financial information presented therein should be considered in addition to, not as a substitute for, or superior to, financial measures calculated and presented in accordance with GAAP.

Item 9.01    FINANCIAL STATEMENTS AND EXHIBITS

Safe Harbor Statement Under the Private Securities and Litigation Reform Act
This report 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. When used in this report, terms such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “intends,” “anticipates,” “may,” “forecasts,” “projects” and similar expressions and variations as they relate to the Company or its management are intended to identify forward-looking statements. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: our ability to effectively implement our future business plans and growth strategy; our ability to effectively compete within our industry; our ability to attract and retain customers; the availability of financing and our ability to meet our current and future debt service obligations and comply with our debt covenants; our ability to generate strong investment performance for our customers and the impact of the financial markets on our customers’ portfolios; political and economic conditions and events that directly or indirectly impact the wealth management and tax preparation industries; our ability to attract and retain productive financial advisors; our ability to successfully make technology enhancements and introduce new and improve on existing products and services; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; our ability to comply with laws and regulations, including, among others, those related to privacy protection and consumer data; our ability to successfully transition our wealth management business to a new clearing platform and our expectations concerning the benefits that may be derived therefrom; cybersecurity risks; our ability to maintain our relationships with third party partners; the seasonality of our business; litigation risks; our ability to attract and retain qualified employees; our assessments and estimates that determine our effective tax rate; the impact of new or changing tax legislation; our ability to develop, establish and maintain strong brands; our ability to protect our intellectual property; and our ability to effectively integrate companies or assets that we acquire. A more detailed description of these and certain other factors that could affect actual results is included in the Company’s filings with 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 report. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of this report, except as may be required by law.



-2-



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
BLUCORA, INC.
 
 
 
 
By
/s/ Davinder Athwal
 
 
Davinder Athwal
 
 
Chief Financial Officer
 
 
 
 
 
August 1, 2018


-3-
EX-99.1 2 ex-991earningsreleaseq2201.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
 blucoragraphica14.jpg
Blucora Announces Second Quarter 2018 Results
Continued Double-Digit Revenue Growth, Strong Cash Generation

IRVING, TX — August 1, 2018 — Blucora, Inc. (NASDAQ: BCOR), a leading provider of technology-enabled financial solutions to consumers, small businesses and tax professionals, today announced financial results for the second quarter ended June 30, 2018.
Second Quarter Highlights and Recent Developments

Increased revenue and operating income by 13% and 29%, respectively, year-over-year (y/y)
Grew TaxAct revenue by 17% y/y for the first half of 2018, with 57.3% segment margin
Posted record level of advisory assets (formerly referred to as assets under management) at HD Vest of $12.9 billion, or 28.8% of total client assets (formerly referred to as assets under administration)
Achieved 1.5x net leverage ratio on continued strong cash generation and debt reduction

“Strong tax preparation results helped drive continued double-digit growth in revenue and earnings with healthy cash flow," said John Clendening, Blucora's President and Chief Executive Officer. "We once again utilized that cash flow to reduce debt, further strengthen our balance sheet and accelerate earnings growth. Our wealth management business also continued its upward momentum demonstrating strong revenue growth and record asset levels.”

Summary Financial Performance: Q2 2018
($ in millions except per share amounts)
 
Q2
 
Q2
 
 
 
2018
 
2017
 
Change
Revenue:
 
 
 
 
 
Wealth Management
$
92.0

 
$
85.3

 
8
 %
Tax Preparation
$
65.8

 
$
53.9

 
22
 %
Total Revenue
$
157.8

 
$
139.2

 
13
 %
Segment Income:
 
 
 
 
 
Wealth Management
$
13.0

 
$
12.4

 
4
 %
Tax Preparation
$
44.1

 
$
36.5

 
21
 %
Total Segment Income
$
57.1

 
$
48.9

 
17
 %
Unallocated Corporate Operating Expenses
$
(4.2
)
 
$
(6.5
)
 
(34
)%
GAAP:
 
 
 
 
 
Operating Income
$
38.8

 
$
30.0

 
29
 %
Net Income Attributable to Blucora, Inc.
$
34.9

 
$
3.3

 
957
 %
Diluted Net Income Per Share Attributable to Blucora, Inc. (EPS)
$
0.71

 
$
0.07

 
914
 %
Non-GAAP:
 
 
 
 
 
Adjusted EBITDA
$
52.8

 
$
42.5

 
24
 %
Net Income
$
47.7

 
$
32.9

 
45
 %
Diluted Net Income Per Share (EPS)
$
0.97

 
$
0.70

 
39
 %
See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.

Third Quarter and Full Year 2018 Outlook
For the third quarter of 2018, the Company expects revenues to be between $92.0 million and $95.5 million, GAAP net loss attributable to Blucora, Inc. to be between $18.5 million and $22.5 million, or $0.39 to $0.47 per diluted share, Adjusted EBITDA loss to be between $2.0 million and $5.0 million, and Non-GAAP net loss to be between $8.0 million and $11.0 million, or $0.17 to $0.23 per diluted share.






For the full year 2018, the Company expects revenues to be between $553.5 million and $563.0 million, GAAP net income attributable to Blucora, Inc. to be between $42.5 million and $46.0 million, or $0.86 to $0.93 per diluted share, Adjusted EBITDA to be between $114.5 million and $119.5 million, and Non-GAAP net income to be between $89.0 million and $94.5 million, or $1.80 to $1.92 per diluted share.
The third quarter and fiscal 2018 outlook for GAAP net income or loss attributable to Blucora assumes an estimated tax rate of approximately 2% to 6%.
Conference Call and Webcast
A conference call and live webcast will be held today at 8:30 a.m. Eastern Time during which the Company will further discuss second quarter results, its outlook for the third quarter and full year 2018 and other business matters. We will also provide the prepared remarks for the conference call along with supplemental financial information to our results on the Investor Relations section of the Blucora corporate website at http://www.blucora.com prior to the call. The supplemental financial information has also been filed with the SEC on Form 8-K. A replay of the call be available on our website.
About Blucora®
Blucora, Inc. (NASDAQ: BCOR) is a leading provider of technology-enabled financial solutions to consumers, small businesses and tax professionals. Our products and services in tax preparation and wealth management, through TaxAct and HD Vest, respectively, help consumers manage their financial lives. TaxAct is an affordable digital tax preparation solution for individuals, business owners and tax professionals. HD Vest Financial Services ® supports an independent network of tax professionals who provide comprehensive financial planning solutions. For more information on Blucora or its businesses, please visit www.blucora.com.
Source: Blucora
Blucora Contact:
Bill Michalek (972) 870-6463
VP, Investor Relations
This release 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. When used in this release, terms such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “intends,” “anticipates,” “may,” “forecasts,” “projects” and similar expressions and variations as they relate to the Company or its management are intended to identify forward-looking statements. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: our ability to effectively implement our future business plans and growth strategy; our ability to effectively compete within our industry; our ability to attract and retain customers; the availability of financing and our ability to meet our current and future debt service obligations and comply with our debt covenants; our ability to generate strong investment performance for our customers and the impact of the financial markets on our customers’ portfolios; political and economic conditions and events that directly or indirectly impact the wealth management and tax preparation industries; our ability to attract and retain productive financial advisors; our ability to successfully make technology enhancements and introduce new and improve on existing products and services; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; our ability to comply with laws and regulations, including, among others, those related to privacy protection and consumer data; our ability to successfully transition our wealth management business to a new clearing platform and our expectations concerning the benefits that may be derived therefrom; cybersecurity risks; our ability to maintain our relationships with third party partners; the seasonality of our business; litigation risks; our ability to attract and retain qualified employees; our assessments and estimates that determine our effective tax rate; the impact of new or changing tax legislation; our ability to develop, establish and maintain strong brands; our ability to protect our intellectual property; and our ability to effectively integrate companies or assets that we acquire. A more detailed description of these and certain other factors that could affect actual results is included in the Company’s filings with 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. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of this release, except as may be required by applicable law.








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,
 
2018
 
2017
 
2018
 
2017
Revenue:
 
 
 
 
 
 
 
Wealth management services revenue
$
92,015

 
$
85,296

 
$
184,097

 
$
167,963

Tax preparation services revenue
65,833

 
53,866

 
179,716

 
153,574

Total revenue
157,848

 
139,162

 
363,813

 
321,537

Operating expenses:
 
 
 
 
 
 
 
Cost of revenue:
 
 
 
 
 
 
 
Wealth management services cost of revenue
62,452

 
56,963

 
125,519

 
112,837

Tax preparation services cost of revenue
2,459

 
2,411

 
6,812

 
6,229

Amortization of acquired technology
49

 
47

 
99

 
95

Total cost of revenue (1)
64,960

 
59,421

 
132,430

 
119,161

Engineering and technology (1)
4,848

 
4,242

 
9,979

 
8,990

Sales and marketing (1)
23,791

 
22,296

 
79,044

 
71,294

General and administrative (1)
15,625

 
13,715

 
30,491

 
27,198

Depreciation
993

 
873

 
2,908

 
1,813

Amortization of other acquired intangible assets
8,806

 
8,289

 
17,113

 
16,577

Restructuring (1)
2

 
331

 
291

 
2,620

Total operating expenses
119,025

 
109,167

 
272,256

 
247,653

Operating income
38,823

 
29,995

 
91,557

 
73,884

Other loss, net (2)
(2,759
)
 
(24,200
)
 
(7,987
)
 
(33,908
)
Income before income taxes
36,064

 
5,795

 
83,570

 
39,976

Income tax expense
(907
)
 
(2,315
)
 
(2,870
)
 
(5,786
)
Net income
35,157

 
3,480

 
80,700

 
34,190

Net income attributable to noncontrolling interests
(222
)
 
(176
)
 
(427
)
 
(302
)
Net income attributable to Blucora, Inc.
$
34,935

 
$
3,304

 
$
80,273

 
$
33,888

Net income per share attributable to Blucora, Inc.:
 
 
 
 
 
 
 
Basic
$
0.74

 
$
0.08

 
$
1.71

 
$
0.79

Diluted
$
0.71

 
$
0.07

 
$
1.64

 
$
0.73

Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
47,221

 
43,644

 
46,931

 
42,895

Diluted
49,434

 
46,937

 
49,049

 
46,182

(1) Stock-based compensation expense was allocated among the following captions (in thousands):
 
Three Months Ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Cost of revenue
$
574

 
$
88

 
$
833

 
$
134

Engineering and technology
202

 
224

 
412

 
509

Sales and marketing
702

 
581

 
1,218

 
1,272

General and administrative
2,555

 
1,844

 
4,528

 
3,387

Restructuring

 
538

 

 
981

Total stock-based compensation expense
$
4,033

 
$
3,275

 
$
6,991

 
$
6,283

(2) Other loss, net consisted of the following (in thousands):
 
Three Months Ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Interest income
$
(58
)
 
$
(25
)
 
$
(98
)
 
$
(45
)
Interest expense
3,847

 
5,529

 
8,028

 
11,965

Amortization of debt issuance costs
284

 
327

 
487

 
714

Accretion of debt discounts
40

 
755

 
87

 
1,840

Loss on debt extinguishment
758

 
17,801

 
1,534

 
19,581

Other
(2,112
)
 
(187
)
 
(2,051
)
 
(147
)
Other loss, net
$
2,759

 
$
24,200

 
$
7,987

 
$
33,908







Blucora, Inc.
Preliminary Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
 
June 30,
2018
 
December 31,
2017
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
89,840

 
$
59,965

Cash segregated under federal or other regulations
1,117

 
1,371

Accounts receivable, net of allowance
6,595

 
10,694

Commissions receivable
16,820

 
16,822

Other receivables
38

 
3,180

Prepaid expenses and other current assets, net
6,754

 
7,365

Total current assets
121,164

 
99,397

Long-term assets:
 
 
 
Property and equipment, net
9,308

 
9,831

Goodwill, net
548,838

 
549,037

Other intangible assets, net
310,983

 
328,205

Other long-term assets
15,806

 
15,201

Total long-term assets
884,935

 
902,274

Total assets
$
1,006,099

 
$
1,001,671

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
4,472

 
$
4,413

Commissions and advisory fees payable
17,158

 
17,813

Accrued expenses and other current liabilities
16,181

 
19,577

Deferred revenue
2,661

 
9,953

Total current liabilities
40,472

 
51,756

Long-term liabilities:
 
 
 
Long-term debt, net
260,029

 
338,081

Deferred tax liability, net
42,652

 
43,433

Deferred revenue
501

 
804

Other long-term liabilities
6,871

 
8,177

Total long-term liabilities
310,053

 
390,495

Total liabilities
350,525

 
442,251

 
 
 
 
Redeemable noncontrolling interests
18,460

 
18,033

 
 
 
 
Stockholders’ equity:
 
 
 
Common stock
5

 
5

Additional paid-in capital
1,569,412

 
1,555,560

Accumulated deficit
(932,050
)
 
(1,014,174
)
Accumulated other comprehensive loss
(253
)
 
(4
)
Total stockholders’ equity
637,114

 
541,387

Total liabilities and stockholders’ equity
$
1,006,099

 
$
1,001,671







Blucora, Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
 
Six months ended June 30,
 
2018
 
2017
Operating Activities:
 
 
 
Net income
$
80,700

 
$
34,190

Adjustments to reconcile net income to net cash from operating activities:
 
 
 
Stock-based compensation
6,991

 
5,302

Depreciation and amortization of acquired intangible assets
20,338

 
18,865

Restructuring (non-cash)

 
1,402

Deferred income taxes
(781
)
 
(681
)
Amortization of premium on investments, net, and debt issuance costs
487

 
724

Accretion of debt discounts
87

 
1,840

Loss on debt extinguishment
1,533

 
19,581

Cash provided (used) by changes in operating assets and liabilities:
 
 
 
Accounts receivable
4,096

 
2,956

Commissions receivable
2

 
581

Other receivables
3,142

 
2,544

Prepaid expenses and other current assets
461

 
(545
)
Other long-term assets
(764
)
 
341

Accounts payable
59

 
(795
)
Commissions and advisory fees payable
(655
)
 
(444
)
Deferred revenue
(5,746
)
 
(8,493
)
Accrued expenses and other current and long-term liabilities
(3,393
)
 
3,768

Net cash provided by operating activities
106,557

 
81,136

Investing Activities:
 
 
 
Purchases of property and equipment
(2,602
)
 
(1,911
)
Proceeds from sales of investments

 
249

Proceeds from maturities of investments

 
7,252

Purchases of investments

 
(409
)
Net cash provided (used) by investing activities
(2,602
)
 
5,181

Financing Activities:
 
 
 
Proceeds from credit facilities

 
367,212

Payments on convertible notes

 
(172,827
)
Payments on credit facilities
(80,000
)
 
(275,000
)
Proceeds from stock option exercises
10,386

 
23,996

Proceeds from issuance of stock through employee stock purchase plan
704

 
662

Tax payments from shares withheld for equity awards
(4,229
)
 
(5,267
)
Contingent consideration payments for business acquisition
(1,315
)
 
(946
)
Net cash used by financing activities
(74,454
)
 
(62,170
)
Net cash provided by continuing operations
29,501

 
24,147

 
 
 
 
Net cash provided by investing activities from discontinued operations

 
1,028

Net cash provided by discontinued operations

 
1,028

Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(30
)
 
43

Net increase in cash, cash equivalents, and restricted cash
29,471

 
25,218

Cash, cash equivalents, and restricted cash, beginning of period
62,311

 
54,868

Cash, cash equivalents, and restricted cash, end of period
$
91,782

 
$
80,086







Blucora, Inc.
Preliminary Segment Information
(Unaudited)
(Amounts in thousands)
 
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Revenue:
 
 
 
 
 
 
 
Wealth Management (1)
$
92,015

 
$
85,296

 
$
184,097

 
$
167,963

Tax Preparation (1)
65,833

 
53,866

 
179,716

 
153,574

Total revenue
157,848

 
139,162

 
363,813

 
321,537

Operating income:
 
 
 
 
 
 
 
Wealth Management
12,954

 
12,406

 
26,029

 
24,259

Tax Preparation
44,121

 
36,515

 
102,927

 
89,648

Corporate-level activity (2)
(18,252
)
 
(18,926
)
 
(37,399
)
 
(40,023
)
Total operating income
38,823

 
29,995

 
91,557

 
73,884

Other loss, net
(2,759
)
 
(24,200
)
 
(7,987
)
 
(33,908
)
Income tax expense
(907
)
 
(2,315
)
 
(2,870
)
 
(5,786
)
Net income
$
35,157

 
$
3,480

 
$
80,700

 
$
34,190

(1) Revenues by major category within each segment are presented below (in thousands):
 
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Wealth Management:
 
 
 
 
 
 
 
Commission
$
40,384

 
$
38,154

 
$
83,254

 
$
77,749

Advisory
40,058

 
35,914

 
79,359

 
69,490

Asset-based
7,306

 
6,784

 
14,478

 
12,750

Transaction and fee
4,267

 
4,444

 
7,006

 
7,974

Total Wealth Management revenue
$
92,015

 
$
85,296

 
$
184,097

 
$
167,963

Tax Preparation:
 
 
 
 
 
 
 
Consumer
$
63,137

 
$
51,848

 
$
165,049

 
$
140,090

Professional
2,696

 
2,018

 
14,667

 
13,484

Total Tax Preparation revenue
$
65,833

 
$
53,866

 
$
179,716

 
$
153,574

(2) Corporate-level activity included the following (in thousands):
 
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Operating expenses
$
(4,238
)
 
$
(6,463
)
 
$
(9,779
)
 
$
(13,236
)
Stock-based compensation
(4,033
)
 
(2,737
)
 
(6,991
)
 
(5,302
)
Depreciation
(1,124
)
 
(1,059
)
 
(3,126
)
 
(2,193
)
Amortization of acquired intangible assets
(8,855
)
 
(8,336
)
 
(17,212
)
 
(16,672
)
Restructuring
(2
)
 
(331
)
 
(291
)
 
(2,620
)
Total corporate-level activity
$
(18,252
)
 
$
(18,926
)
 
$
(37,399
)
 
$
(40,023
)






Blucora, Inc.
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures
Preliminary Adjusted EBITDA Reconciliation (1) 
(Unaudited)
(Amounts in thousands)
(In thousands)
Three Months Ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Net income attributable to Blucora, Inc.(2)
$
34,935

 
$
3,304

 
$
80,273

 
$
33,888

Stock-based compensation
4,033

 
2,737

 
6,991

 
5,302

Depreciation and amortization of acquired intangible assets
9,979

 
9,395

 
20,338

 
18,865

Restructuring
2

 
331

 
291

 
2,620

Other loss, net (3)
2,759

 
24,200

 
7,987

 
33,908

Net income attributable to noncontrolling interests
222

 
176

 
427

 
302

Income tax expense
907

 
2,315

 
2,870

 
5,786

Adjusted EBITDA
$
52,837

 
$
42,458

 
$
119,177

 
$
100,671


Preliminary Non-GAAP Net Income and Non-GAAP Net Income Per Share Reconciliation (1) 
(Unaudited)
(Amounts in thousands, except per share amounts)
 
Three months ended June 30,
 
Six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Net income attributable to Blucora, Inc.(2)
$
34,935

 
$
3,304

 
$
80,273

 
$
33,888

Stock-based compensation
4,033

 
2,737

 
6,991

 
5,302

Amortization of acquired intangible assets
8,855

 
8,336

 
17,212

 
16,672

Accretion of debt discount on the Notes

 
633

 

 
1,567

Write-off of debt discount and debt issuance costs on terminated Notes

 
6,715

 

 
6,715

Write-off of debt discount and debt issuance costs on terminated TaxAct - HD Vest 2015 credit facility

 
9,593

 

 
9,593

Restructuring
2

 
331

 
291

 
2,620

Impact of noncontrolling interests
222

 
176

 
427

 
302

Cash tax impact of adjustments to GAAP net income
(903
)
 
(1,819
)
 
(1,216
)
 
(2,406
)
Non-cash income tax expense (1)
582

 
2,941

 
1,980

 
6,101

Non-GAAP net income
$
47,726

 
$
32,947

 
$
105,958

 
$
80,354

Per diluted share:
 
 
 
 
 
 
 
Net income attributable to Blucora, Inc.
$
0.71

 
$
0.07

 
$
1.64

 
$
0.73

Stock-based compensation
0.08

 
0.06

 
0.14

 
0.11

Amortization of acquired intangible assets
0.19

 
0.19

 
0.34

 
0.36

Accretion of debt discount on the Notes

 
0.01

 

 
0.03

Write-off of debt discount and debt issuance costs on terminated Notes

 
0.14

 

 
0.15

Write-off of debt discount and debt issuance costs on terminated TaxAct - HD Vest 2015 credit facility

 
0.20

 

 
0.21

Restructuring

 
0.01

 
0.01

 
0.06

Impact of noncontrolling interests
0.00

 
0.00

 
0.01

 
0.01

Cash tax impact of adjustments to GAAP net income
(0.02
)
 
(0.04
)
 
(0.02
)
 
(0.05
)
Non-cash income tax expense
0.01

 
0.06

 
0.04

 
0.13

Non-GAAP net income per share
$
0.97

 
$
0.70

 
$
2.16

 
$
1.74

Weighted average shares outstanding used in computing per diluted share amounts
49,434

 
46,937

 
49,049

 
46,182







Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance
(Amounts in thousands)
 
Ranges for the three months ending
 
Ranges for the year ending
 
September 30, 2018
 
December 31, 2018
 
Low
 
High
 
Low
 
High
Net income (loss) attributable to Blucora, Inc.
$
(22,500
)
 
$
(18,500
)
 
$
42,500

 
$
46,000

Stock-based compensation
3,800

 
3,700

 
14,400

 
14,300

Depreciation and amortization of acquired intangible assets
9,500

 
9,400

 
39,300

 
39,200

Restructuring

 

 
300

 
300

Other loss, net (3)
4,000

 
3,900

 
16,200

 
15,700

Impact of noncontrolling interests
200

 
200

 
700

 
700

Income tax (benefit) expense

 
(700
)
 
1,100

 
3,300

Adjusted EBITDA
$
(5,000
)
 
$
(2,000
)
 
$
114,500

 
$
119,500

Preliminary Non-GAAP Net Income (Loss) Reconciliation for Forward-Looking Guidance
(Amounts in thousands)
 
Ranges for the three months ending
 
Ranges for the year ending
 
September 30, 2018
 
March 31, 2018
 
Low
 
High
 
Low
 
High
Net income (loss) attributable to Blucora, Inc.
$
(22,500
)
 
$
(18,500
)
 
$
42,500

 
$
46,000

Stock-based compensation
3,800

 
3,700

 
14,400

 
14,300

Amortization of acquired intangible assets
8,300

 
8,300

 
33,700

 
33,700

Restructuring

 

 
300

 
300

Impact of noncontrolling interests
200

 
200

 
700

 
700

Cash tax impact of adjustments to net income (loss)
(300
)
 
(300
)
 
(1,600
)
 
(1,600
)
Non-cash income tax benefit
(500
)
 
(1,400
)
 
(1,000
)
 
1,100

Non-GAAP net income (loss)
$
(11,000
)
 
$
(8,000
)
 
$
89,000

 
$
94,500







Notes to Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures

(1) We define Adjusted EBITDA as net income attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation and amortization of acquired intangible assets (including acquired technology), restructuring, other loss, net, the impact of noncontrolling interests and income tax expense. Restructuring costs relate to the relocation of our corporate headquarters during 2017.

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 as net income attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets (including acquired technology), accelerated accretion of debt discount on our Convertible Senior Notes that were outstanding for a portion of 2017 (the "Notes"), write-off of debt discount and debt issuance costs on terminated Notes and terminated TaxAct - HD Vest 2015 credit facility, restructuring costs (described further under Adjusted EBITDA above), the impact of noncontrolling interests, 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 primarily consist of U.S. federal net operating losses. The majority of these net operating losses 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 and non-GAAP net income per share 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 and net income per share. Other companies may calculate non-GAAP net income and non-GAAP net income per share differently, and, therefore, our non-GAAP net income and non-GAAP net income per share 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, and gain/loss on debt extinguishment.




EX-99.2 3 ex-992earningsreleaseq2201.htm EXHIBIT 99.2 Exhibit


Exhibit 99.2
Blucora, Inc.
Supplemental Information
June 30, 2018
Table of Contents
 

1



Blucora Consolidated Financial Results (1) 
(in thousands except %s and per share amounts, rounding differences may exist)
2016
 
2017
 
2018
FY 12/31
 
1Q
 
2Q
 
3Q
 
4Q
 
FY 12/31
 
1Q
 
2Q
Segment revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wealth Management (1)
$
316,546

 
$
82,667

 
$
85,296

 
$
86,809

 
$
93,848

 
$
348,620

 
$
92,082

 
$
92,015

Tax Preparation (2)
139,365

 
99,708

 
53,866

 
3,362

 
4,001

 
160,937

 
113,883

 
65,833

Total
$
455,911

 
$
182,375

 
$
139,162

 
$
90,171

 
$
97,849

 
$
509,557

 
$
205,965

 
$
157,848

Segment income (loss): (3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wealth Management (1)
$
46,296

 
$
11,853

 
$
12,406

 
$
12,425

 
$
14,232

 
$
50,916

 
$
13,075

 
$
12,954

Tax Preparation (2)
66,897

 
53,133

 
36,515

 
(6,238
)
 
(10,489
)
 
72,921

 
58,806

 
44,121

Total
$
113,193

 
$
64,986

 
$
48,921

 
$
6,187

 
$
3,743

 
$
123,837

 
$
71,881

 
$
57,075

Segment income (loss) % of revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wealth Management (1)
15
%
 
14
%
 
15
%
 
14
 %
 
15
 %
 
15
%
 
14
%
 
14
%
Tax Preparation (2)
48
%
 
53
%
 
68
%
 
(186
)%
 
(262
)%
 
45
%
 
52
%
 
67
%
Total
25
%
 
36
%
 
35
%
 
7
 %
 
4
 %
 
24
%
 
35
%
 
36
%
Unallocated corporate operating expenses (3)
$
18,999

 
$
6,773

 
$
6,463

 
$
4,587

 
$
5,084

 
$
22,907

 
$
5,541

 
$
4,238

Adjusted EBITDA
$
94,194

 
$
58,213

 
$
42,458

 
$
1,600

 
$
(1,341
)
 
$
100,930

 
$
66,340

 
$
52,837

Other unallocated operating expenses: (3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation (4)
$
14,128

 
$
2,565

 
$
2,737

 
$
3,132

 
$
3,219

 
$
11,653

 
$
2,958

 
$
4,033

Acquisition-related costs
391

 

 

 

 

 

 

 

Depreciation
4,545

 
1,134

 
1,059

 
1,023

 
921

 
4,137

 
2,002

 
1,124

Amortization of acquired intangible assets (4)
34,143

 
8,336

 
8,336

 
8,665

 
8,665

 
34,002

 
8,357

 
8,855

Restructuring
3,870

 
2,289

 
331

 
106

 
375

 
3,101

 
289

 
2

Operating income (loss)
$
37,117

 
$
43,889

 
$
29,995

 
$
(11,326
)
 
$
(14,521
)
 
$
48,037

 
$
52,734

 
$
38,823

Unallocated other income/loss: (3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
$
(81
)
 
$
(20
)
 
$
(25
)
 
$
(31
)
 
$
(34
)
 
$
(110
)
 
$
(40
)
 
$
(58
)
Interest expense (5)
32,424

 
6,436

 
5,529

 
4,781

 
4,465

 
21,211

 
4,181

 
3,847

Amortization of debt issuance costs (5)
1,840

 
387

 
327

 
177

 
198

 
1,089

 
203

 
284

Accretion of debt discounts (5)
4,690

 
1,085

 
755

 
53

 
54

 
1,947

 
47

 
40

Loss on debt extinguishment and modification expense (6)
1,036

 
1,780

 
17,801

 
183

 
681

 
20,445

 
776

 
758

Other (income) loss, net
(128
)
 
40

 
(187
)
 
78

 
38

 
(31
)
 
61

 
(2,112
)
Total
$
39,781

 
$
9,708

 
$
24,200

 
$
5,241

 
$
5,402

 
$
44,551

 
$
5,228

 
$
2,759

Income (loss) from continuing operations before income taxes
$
(2,664
)
 
$
34,181

 
$
5,795

 
$
(16,567
)
 
$
(19,923
)
 
$
3,486

 
$
47,506

 
$
36,064

Income tax (benefit) expense: (3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash
$
2,517

 
$
311

 
$
(626
)
 
$
(58
)
 
$
1,336

 
$
963

 
$
565

 
$
325

Non-cash (7)
(3,802
)
 
3,160

 
2,941

 
224

 
(33,178
)
 
(26,853
)
 
1,398

 
582

Total
$
(1,285
)
 
$
3,471

 
$
2,315

 
$
166

 
$
(31,842
)
 
$
(25,890
)
 
$
1,963

 
$
907

GAAP income (loss) from continuing operations (8)
$
(1,379
)
 
$
30,710

 
$
3,480

 
$
(16,733
)
 
$
11,919

 
$
29,376

 
$
45,543

 
$
35,157

GAAP income (loss) from continuing operations per share - diluted
$
(0.05
)
 
$
0.67

 
$
0.07

 
$
(0.37
)
 
$
0.21

 
$
0.57

 
$
0.93

 
$
0.71

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP discontinued operations, net of income taxes (9)
$
(63,121
)
 
$

 
$

 
$

 
$

 
$

 
$

 
$

GAAP impact of noncontrolling interests (8)
(658
)
 
(126
)
 
(176
)
 
(164
)
 
(1,871
)
 
(2,337
)
 
(205
)
 
(222
)
GAAP net income (loss) attributable to Blucora, Inc.
$
(65,158
)
 
$
30,584

 
$
3,304

 
$
(16,897
)
 
$
10,048

 
$
27,039

 
$
45,338

 
$
34,935

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP net income (loss)
$
45,096

 
$
47,407

 
$
32,947

 
$
(5,534
)
 
$
(5,672
)
 
$
69,148

 
$
58,232

 
$
47,726

Non-GAAP net income (loss) per share - diluted
$
1.06

(10)
$
1.04

 
$
0.70

 
$
(0.12
)
 
$
(0.12
)
 
$
1.46

(11
)
$
1.20

 
$
0.97

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding Shares
41,845

 
42,635

 
44,681

 
46,077

 
46,366

 
46,366

 
46,828

 
47,493

Basic shares - GAAP
41,494

 
42,145

 
43,644

 
45,459

 
46,231

 
44,370

 
46,641

 
47,221

Diluted shares - GAAP
41,494

 
45,428

 
46,937

 
45,459

 
48,406

 
47,211

 
48,665

 
49,434

Notes to Consolidated Financial Results on next page

2



Notes to Consolidated Financial Results
 
(1) 
On October 14, 2015, we announced the acquisition of HD Vest, which closed on December 31, 2015. As part of our announcement, we also stated our plans to divest the Search and Content and E-Commerce businesses in order to focus more strategically on the technology-enabled financial solutions market. The pro forma information represents the combination of HD Vest, TaxAct, and corporate expenses as if the acquisition closed on January 1, 2014. The Company believes that this presentation most accurately reflects the financial performance of the Company on a go-forward basis.
(2) 
As a highly seasonal business, almost all of the Tax Preparation revenue is generated in the first four months of the calendar year.
(3) 
We do not allocate certain general and administrative costs (including personnel and overhead costs), stock-based compensation, acquisition-related costs, depreciation, amortization of acquired intangible assets, restructuring, other income/loss, or income taxes to the reportable segments.  The general and administrative costs are included in "Unallocated corporate operating expenses."
(4) 
Includes stock-based compensation for Blucora share-based award grants to HD Vest employees and amortization of the definite-lived intangible assets identified in the HD Vest acquisition.
(5) 
Excludes interest expense and amortization of debt-related costs associated with the TaxAct 2013 credit facility and HD Vest's previous debt facility, both of which were paid off at the acquisition date, and includes similar expenses associated with the TaxAct - HD Vest 2015 credit facility that was used to finance the HD Vest acquisition.
(6) 
1Q16 gain on debt extinguishment related to the repurchase of a portion of our previously outstanding Notes below par value, offset by a loss on debt extinguishment related to the prepayment of a portion of the TaxAct - HD Vest 2015 credit facility, which resulted in the acceleration of a portion of the unamortized discount and debt issuance costs. 2Q16, 3Q16, 4Q16, 1Q17, and 2Q17 loss on debt extinguishment related to the prepayment of a portion of the TaxAct - HD Vest 2015 credit facility during each of those quarters. 2Q17 loss on debt extinguishment also related to the redemption of all of the Convertible Senior Notes and pay-off of the remaining TaxAct - HD Vest 2015 credit facility, resulting in the write-off of the remaining unamortized debt discount and issuance costs.
(7) 
Amounts represent the non-cash portion of income taxes from continuing operations. 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 primarily consist of U.S. federal net operating losses. The majority of these net operating losses will expire, if unutilized, between 2020 and 2024.
(8) 
GAAP income (loss) from continuing operations excludes the impact of noncontrolling interests associated with former HD Vest management rollover equity ownership of 4.48%. The impact of noncontrolling interests is recorded separately and after GAAP income (loss) from continuing operations.
(9) 
On October 14, 2015, Blucora announced plans to divest of the Search and Content and E-Commerce businesses. Accordingly, our financial condition, results of operations, and cash flows reflect the Search and Content and E-Commerce businesses as discontinued operations for all periods presented. On August 9, 2016, we closed on an agreement with OpenMail, under which OpenMail acquired substantially all of the assets and assumed certain specified liabilities of the Search and Content business for $45.2 million. On November 17, 2016, we closed on an agreement with YFC, under which YFC acquired the E-Commerce business for $40.5 million. As a result, we recognized a combined loss on sale of discontinued operations before income taxes of $73.8 million in FY 2016.
(10) 
Calculation in FY 2016 used 42,686,000 diluted shares due to non-GAAP net income.
(11) 
Calculation in FY 2017 used 47,211,000 diluted shares due to non-GAAP net income.

3



Blucora Reconciliation of Non-GAAP Financial Measures (1) (2) 
 
2016
 
2017
 
2018
(in thousands except per share amounts, rounding differences may exist)
FY 12/31
 
1Q
 
2Q
 
3Q
 
4Q
 
FY 12/31
 
1Q
 
2Q
Adjusted EBITDA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to Blucora, Inc. (1) (2) (3)
$
(65,158
)
 
$
30,584

 
$
3,304

 
$
(16,897
)
 
$
10,048

 
$
27,039

 
$
45,338

 
$
34,935

Stock-based compensation
14,128

 
2,565

 
2,737

 
3,132

 
3,219

 
11,653

 
2,958

 
4,033

Depreciation and amortization of acquired intangible assets
38,688

 
9,470

 
9,395

 
9,688

 
9,586

 
38,139

 
10,359

 
9,979

Restructuring
3,870

 
2,289

 
331

 
106

 
375

 
3,101

 
289

 
2

Other loss, net
39,781

 
9,708

 
24,200

 
5,241

 
5,402

 
44,551

 
5,228

 
2,759

Net income attributable to noncontrolling interests
658

 
126

 
176

 
164

 
1,871

 
2,337

 
205

 
222

Income tax expense
(1,285
)
 
3,471

 
2,315

 
166

 
(31,842
)
 
(25,890
)
 
1,963

 
907

Discontinued operations, net of income taxes
63,121

 

 

 

 

 

 

 

Acquisition-related costs
391

 

 

 

 

 

 

 

Adjusted EBITDA
$
94,194

 
$
58,213

 
$
42,458

 
$
1,600

 
$
(1,341
)
 
$
100,930

 
$
66,340

 
$
52,837

Non-GAAP Net Income (Loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to Blucora, Inc. (1) (2) (3)
$
(65,158
)
 
$
30,584

 
$
3,304

 
$
(16,897
)
 
$
10,048

 
$
27,039

 
$
45,338

 
$
34,935

Discontinued operations, net of income taxes
63,121

 

 

 

 

 

 

 

Stock-based compensation
14,128

 
2,565

 
2,737

 
3,132

 
3,219

 
11,653

 
2,958

 
4,033

Amortization of acquired intangible assets
34,143

 
8,336

 
8,336

 
8,665

 
8,665

 
34,002

 
8,357

 
8,855

Accretion of debt discount on Convertible Senior Notes
3,666

 
934

 
633

 

 

 
1,567

 

 

Accelerated accretion of debt discount on Convertible Senior Notes repurchased
1,628

 

 

 

 

 

 

 

Gain on Convertible Senior Notes repurchased
(7,724
)
 

 

 

 

 

 

 

Write-off of debt discount and debt issuance costs on terminated Convertible Senior Notes

 

 
6,715

 

 

 
6,715

 

 

Write-off of debt discount and debt issuance costs on closed TaxAct - HD Vest 2015 credit facility

 

 
9,593

 

 

 
9,593

 

 

Acquisition-related costs
391

 

 

 

 

 

 

 

Restructuring
3,870

 
2,289

 
331

 
106

 
375

 
3,101

 
289

 
2

Impact of noncontrolling interests
658

 
126

 
176

 
164

 
1,871

 
2,337

 
205

 
222

Cash tax impact of adjustments to GAAP net income
175

 
(587
)
 
(1,819
)
 
(928
)
 
3,328

 
(6
)
 
(313
)
 
(903
)
Non-cash income tax (benefit) expense
(3,802
)
 
3,160

 
2,941

 
224

 
(33,178
)
 
(26,853
)
 
1,398

 
582

Non-GAAP net income (loss)
$
45,096