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Blucora Announces Second Quarter 2020 Results

Blucora, Inc.
·25 min read

DALLAS, Aug. 05, 2020 (GLOBE NEWSWIRE) -- Blucora, Inc. (NASDAQ: BCOR), a provider of data and technology-driven tax software and wealth management solutions that empowers people to improve their financial wellness, today announced financial results for the second quarter ended June 30, 2020.

Second Quarter and Tax Season Highlights and Recent Developments

  • TaxAct grows total e-files (consumer + professional) by 1% year-over-year, amid extended tax season (due to COVID-19), with consumer e-files declining 2% and professional e-files growing by 6%.

  • Improved several key business metrics for tax season, including unique visitors, retention and conversion rates and net promoter score.

  • Tax preparation revenue expected to decline approximately 3% for the full-year 2020 compared to the full-year 2019. Full-year 2019 tax preparation revenue included approximately $14.0 million generated by the discontinued Basic Online SKU and the SimpleTax business, divested in the third quarter of 2019.

  • Closed acquisition of HK Financial Services (“HKFS”) on July 1, 2020, adding a fast-growing, highly profitable RIA to the Company’s wealth management business.

“In the face of negative impacts of COVID-19 on our financial results, I’m pleased that we are operating effectively in this environment,” said Chris Walters, Blucora’s President and Chief Executive Officer. “In tax preparation, we started the season slow and faced challenges from the tax-season extension; however, our in-season refinements improved a number of important business metrics leading to growth in total e-files and new consumer e-files for the first time since tax years 2014 and 2012, respectively. TaxAct significantly increased visitors to its website and increased conversion and retention rates as well as net promoter scores. In wealth management, second quarter results reflect the market and interest rate declines from the prior quarter. Our service to financial professionals has been uninterrupted and improved in many areas. We closed on our acquisition of HKFS after quarter-end, providing us with more opportunities to serve CPA firms and thereby increasing our addressable market while enhancing our growth opportunities.

At the six-month mark in my tenure, we have defined our strategic priorities, addressed skills gaps amongst our leadership team and realigned our business to deliver on our detailed execution plans. While there is much to be done, we feel good about the progress we’ve made and how it positions the Company for future growth.”

Summary Financial Performance: Q2 2020
($ in millions except per share amounts)

Q2 2020

Q2 2019

Change

Revenue:

Wealth Management

$

115.9

$

127.8

(9)%

Tax Preparation

$

45.2

$

65.9

(31)%

Total Revenue

$

161.1

$

193.7

(17)%

Segment Income:

Wealth Management

$

11.7

$

17.0

(31)%

Tax Preparation

$

6.7

$

41.4

(84)%

Total Segment Income

$

18.4

$

58.3

(68)%

Unallocated Corporate-Level General and Administrative Expenses

$

(5.8

)

$

(6.2

)

(7)%

GAAP:

Operating Income (Loss)

$

(4.6

)

$

28.0

(116)%

Net Income Attributable to Blucora, Inc.

$

49.6

$

31.0

60 %

Diluted Net Income Per Share Attributable to Blucora, Inc.

$

1.03

$

0.62

66 %

Non-GAAP: (1)

Adjusted EBITDA

$

12.6

$

52.1

(76)%

Net Income

$

4.5

$

41.4

(89)%

Diluted Net Income per Share

$

0.09

$

0.83

(89)%

(1) See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.

Tax Season Update

Tax season begins on the first day that the IRS begins accepting e-files and ends on filing deadline day plus one day. As a result of the coronavirus pandemic, the IRS extended the filing deadline for federal tax returns relating to the 2019 tax year to July 15, 2020. In order to provide comparable prior period data, we have also provided e-file information for the equivalent period in 2019.

Year-to-date period ended July 16,

(In thousands, except percentages)

2020

2019

Change

Consumer (1)

3,113

3,184

(2)%

Professional tax preparer

2,036

1,924

6 %

Total e-files (1)

5,149

5,108

1 %

(1) We participate in the Free File Alliance that is part of an IRS partnership that provides free electronic tax filing services to taxpayers meeting certain income-based guidelines. Free File Alliance e-files are included within total e-files and consumer e-files above.

Third Quarter and Full Year 2020 Outlook

($ in millions except per share amounts)

3Q 2020

Full Year 2020

Wealth Management Revenue (1)

$133.5 - $138.5

$530.0 - $541.0

TaxAct Revenue

$36.5 - $39.0

$203.0 - $206.0

Total Revenue

$170.0 - $177.5

$733.0 - $747.0

Wealth Management Segment Income (1)

$15.0 - $16.5

$65.5 - $69.5

TaxAct Segment Income

$14.0 - $15.0

$46.5 - $48.0

Unallocated Corporate-Level General and Administrative Expenses

$6.5 - $7.5

$24.5 - $26.0

GAAP:

Net Loss (1)

($28.0) – ($22.0)

($343.5) – ($334.0)

Net Loss per share (1)

($0.58) – ($0.46)

($7.09) – ($6.92)

Non-GAAP:

Adjusted EBITDA (1)(2)

$21.5 - $25.0

$86.0 - $93.0

Non-GAAP Net Income (1)(2)

$7.5 - $11.5

$40.5 - $48.0

Non-GAAP Net Income per share (1)(2)

$0.15 - $0.23

$0.83 - $0.98

  1. Includes HKFS results from July 1, 2020 to December 31, 2020.

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

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 the second quarter, its outlook for full year 2020, its tax season update, 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 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 will be available on our website.

About Blucora®

Blucora, Inc. (NASDAQ: BCOR) is on the forefront of financial technology, a provider of data and technology-driven solutions that empowers people to improve their financial wellness. Blucora operates in two segments including (i) wealth management, through its Avantax Wealth Management business (formerly operating under the HD Vest and 1st Global brands), the largest U.S. tax-focused independent broker-dealer, with $69 billion in total client assets as of June 30, 2020, and (ii) tax preparation, through its TaxAct business, a market leader in tax preparation software with approximately 3 million consumer and 20,000 professional users in 2020. With integrated tax focused software and wealth management, Blucora is uniquely positioned to assist our customers in achieving better long-term outcomes via holistic, tax-advantaged solutions. For more information on Blucora, 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,” “future,” “will,” “projects,” “predicts,” “potential,” “continues,” “target,” “outlook” 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: the impact of the coronavirus outbreak on our results of operations and our business, including the impact of the resulting economic and market disruption, the extension of tax filing deadlines and other related relief; 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 financial professionals, qualified employees, clients, and customers, as well as our ability to provide strong customer/client service; our ability to close, finance, and realize all of the anticipated benefits of our acquisitions, as well as our ability to integrate the operations of recently acquired businesses, and the potential impact of such acquisitions on our existing indebtedness and leverage; our future capital requirements and the availability of financing, if necessary; our ability to meet our current and future debt service obligations, including our ability to maintain compliance with our debt covenants; downgrade of the Company’s credit ratings; our ability to generate strong investment performance for our clients and the impact of the financial markets on our clients’ portfolios; the impact of new or changing legislation and regulations (or interpretations thereof) on our business, including our ability to successfully address and comply with such legislation and regulations (or interpretations thereof) and increased costs, reductions of revenue, and potential fines, penalties or disgorgement to which we may be subject as a result thereof; risks, burdens, and costs, including fines, penalties or disgorgement, associated with our business being subjected to regulatory inquiries, investigations or initiatives; risks associated with legal proceedings, including litigation and regulatory proceedings; our ability to manage leadership and employee transitions, including costs and time burdens on management and our board of directors related thereto; political and economic conditions and events that directly or indirectly impact the wealth management and tax preparation industries; our ability to respond to rapid technological changes, including our ability to successfully release new products and services or improve upon existing products and services; the compromising of confidentiality, availability or integrity of information, including cyberattacks; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; risks related to goodwill and other intangible asset impairment; our ability to develop, establish, and maintain strong brands; risks associated with the use and implementation of information technology and the effect of security breaches, computer viruses, and computer hacking attacks; our ability to comply with laws and regulations regarding privacy and protection of user data; our ability to maintain our relationships with third-party partners, providers, suppliers, vendors, distributors, contractors, financial institutions, industry associations, and licensing partners, and our expectations regarding and reliance on the products, tools, platforms, systems, and services provided by these third parties; our beliefs and expectations regarding the seasonality of our business; our assessments and estimates that determine our effective tax rate; and our ability to protect our intellectual property and the impact of any claim that we have infringed on the intellectual property rights of others. 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 hereof. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date hereof, except as may be required by law.

Blucora, Inc.
Condensed Consolidated Statements of Operations
(Unaudited) (Amounts in thousands, except per share data)

Three months ended June 30,

Six months ended June 30,

2020

2019

2020

2019

Revenue:

Wealth management services revenue

$

115,884

$

127,831

$

260,873

$

217,363

Tax preparation services revenue

45,238

65,909

163,569

202,145

Total revenue

161,122

193,740

424,442

419,508

Operating expenses:

Cost of revenue:

Wealth management services cost of revenue

83,868

87,477

186,210

148,851

Tax preparation services cost of revenue

3,054

3,149

7,067

7,350

Total cost of revenue

86,922

90,626

193,277

156,201

Engineering and technology

7,377

7,159

15,892

13,688

Sales and marketing

40,057

29,256

119,767

84,828

General and administrative

20,200

19,002

44,928

36,079

Acquisition and integration

2,824

9,183

8,506

10,980

Depreciation

1,675

1,315

3,471

2,376

Amortization of other acquired intangible assets

6,673

9,169

14,421

17,213

Impairment of goodwill

270,625

Total operating expenses

165,728

165,710

670,887

321,365

Operating income (loss)

(4,606

)

28,030

(246,445

)

98,143

Other loss, net (1)

(5,288

)

(5,118

)

(11,423

)

(9,076

)

Income (loss) before income taxes

(9,894

)

22,912

(257,868

)

89,067

Income tax benefit (expense)

59,539

8,124

(7,981

)

4,139

Net income (loss) attributable to Blucora, Inc.

$

49,645

$

31,036

$

(265,849

)

$

93,206

Net income (loss) per share attributable to Blucora, Inc.:

Basic

$

1.04

$

0.64

$

(5.55

)

$

1.93

Diluted

$

1.03

$

0.62

$

(5.55

)

$

1.88

Weighted average shares outstanding:

Basic

47,941

48,555

47,884

48,358

Diluted

48,092

49,822

47,884

49,681

(1) Other loss, net consisted of the following (in thousands):

Three months ended June 30,

Six months ended June 30,

2020

2019

2020

2019

Interest expense

$

4,840

$

4,770

$

10,156

$

8,546

Amortization of debt issuance costs

331

375

644

547

Accretion of debt discounts

70

85

138

123

Total interest expense

5,241

5,230

10,938

9,216

Interest income

(11

)

(149

)

(25

)

(289

)

Other

58

37

510

149

Other loss, net

$

5,288

$

5,118

$

11,423

$

9,076


Blucora, Inc.

Condensed Consolidated Balance Sheets
(Unaudited) (Amounts in thousands)

June 30,
2020

December 31,
2019

ASSETS

Current assets:

Cash and cash equivalents

$

90,081

$

80,820

Cash segregated under federal or other regulations

1,266

5,630

Accounts receivable, net of allowance

15,913

16,266

Commissions receivable

15,590

21,176

Other receivables

5,711

2,902

Prepaid expenses and other current assets, net

10,237

12,349

Total current assets

138,798

139,143

Long-term assets:

Property and equipment, net

43,793

18,706

Right-of-use assets, net

27,653

10,151

Goodwill, net

391,084

662,375

Other intangible assets, net

275,790

290,211

Deferred tax asset, net

1,613

9,997

Other long-term assets

3,749

6,989

Total long-term assets

743,682

998,429

Total assets

$

882,480

$

1,137,572

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

13,689

$

10,969

Commissions and advisory fees payable

14,695

19,905

Accrued expenses and other current liabilities

35,114

36,144

Deferred revenue—current

4,178

12,014

Lease liabilities—current

1,251

3,272

Current portion of long-term debt, net

1,230

11,228

Total current liabilities

70,157

93,532

Long-term liabilities:

Long-term debt, net

381,561

381,485

Deferred revenue—long-term

6,709

7,172

Lease liabilities—long-term

36,407

5,916

Other long-term liabilities

6,785

5,952

Total long-term liabilities

431,462

400,525

Total liabilities

501,619

494,057

Stockholders’ equity:

Common stock, par $0.0001—900,000 authorized shares; 49,340 shares issued and 48,034 shares outstanding at June 30, 2020; 49,059 shares issued and 47,753 shares outstanding at December 31, 2019

5

5

Additional paid-in capital

1,589,895

1,586,972

Accumulated deficit

(1,180,640

)

(914,791

)

Accumulated other comprehensive loss

(272

)

Treasury stock, at cost—1,306 shares at June 30, 2020 and December 31, 2019

(28,399

)

(28,399

)

Total stockholders’ equity

380,861

643,515

Total liabilities and stockholders’ equity

$

882,480

$

1,137,572


Blucora, Inc.

Condensed Consolidated Statements of Cash Flows
(Unaudited) (Amounts in thousands)

Six months ended June 30,

2020

2019

Operating activities:

Net income (loss)

$

(265,849

)

$

93,206

Adjustments to reconcile net income (loss) to net cash from operating activities:

Stock-based compensation

2,703

6,525

Depreciation and amortization of acquired intangible assets

19,253

20,185

Impairment of goodwill

270,625

Reduction of right-of-use lease assets

3,196

1,977

Deferred income taxes

8,784

4,446

Amortization of debt issuance costs

644

547

Accretion of debt discounts

138

123

Other

1,571

260

Cash provided (used) by changes in operating assets and liabilities:

Accounts receivable

184

(3,217

)

Commissions receivable

5,586

847

Other receivables

(2,809

)

(661

)

Prepaid expenses and other current assets

1,435

12,258

Other long-term assets

3,162

(355

)

Accounts payable

2,942

(2,995

)

Commissions and advisory fees payable

(5,210

)

(663

)

Lease liabilities

(2,572

)

(2,066

)

Deferred revenue

(8,299

)

(24,760

)

Accrued expenses and other current and long-term liabilities

(1,110

)

(8,845

)

Net cash provided by operating activities

34,374

96,812

Investing activities:

Business acquisition, net of cash acquired

(164,461

)

Purchases of property and equipment

(19,072

)

(2,938

)

Net cash used by investing activities

(19,072

)

(167,399

)

Financing activities:

Proceeds from credit facilities

55,000

121,499

Payments on credit facilities

(65,625

)

Payment of redeemable noncontrolling interests

(24,945

)

Proceeds from stock option exercises

25

3,320

Proceeds from issuance of stock through employee stock purchase plan

1,201

1,144

Tax payments from shares withheld for equity awards

(1,006

)

(5,160

)

Contingent consideration payments for business acquisition

(943

)

Net cash provided (used) by financing activities

(10,405

)

94,915

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

58

Net increase in cash, cash equivalents, and restricted cash

4,897

24,386

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

86,450

85,366

Cash, cash equivalents, and restricted cash, end of period

$

91,347

$

109,752


Blucora, Inc.

Segment Information
(Unaudited) (Amounts in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019

Revenue:

Wealth Management (1)

$

115,884

$

127,831

$

260,873

$

217,363

Tax Preparation (1)

45,238

65,909

163,569

202,145

Total revenue

161,122

193,740

424,442

419,508

Operating income:

Wealth Management

11,731

16,979

34,329

28,519

Tax Preparation

6,659

41,368

44,412

120,640

Corporate-level activity (2)

(22,996

)

(30,317

)

(325,186

)

(51,016

)

Total operating income (loss)

(4,606

)

28,030

(246,445

)

98,143

Other loss, net

(5,288

)

(5,118

)

(11,423

)

(9,076

)

Income tax benefit (expense)

59,539

8,124

(7,981

)

4,139

Net income (loss) attributable to Blucora, Inc.

$

49,645

$

31,036

$

(265,849

)

$

93,206

(1) Revenues by major category within each segment are presented below (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019

Wealth Management:

Advisory

$

66,303

$

61,410

$

145,060

$

101,167

Commission

39,836

48,068

90,416

85,228

Asset-based

3,981

13,219

14,560

22,912

Transaction and fee

5,764

5,134

10,837

8,056

Total Wealth Management revenue

$

115,884

$

127,831

$

260,873

$

217,363

Tax Preparation:

Consumer

$

44,421

$

62,686

$

148,242

$

186,628

Professional

817

3,223

15,327

15,517

Total Tax Preparation revenue

$

45,238

$

65,909

$

163,569

$

202,145

(2) Corporate-level activity included the following (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019

General and administrative expenses

$

5,810

$

6,221

$

12,826

$

13,326

Stock-based compensation

3,904

4,082

2,703

6,525

Acquisition and integration costs

2,824

9,183

8,506

10,980

Executive transition costs

636

9,820

Headquarters relocation costs

737

1,453

Depreciation

2,412

1,662

4,832

2,972

Amortization of acquired intangible assets

6,673

9,169

14,421

17,213

Impairment of goodwill

270,625

Total corporate-level activity

$

22,996

$

30,317

$

325,186

$

51,016


Blucora, Inc.

Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (1)

Adjusted EBITDA Reconciliation (1)
(Unaudited) (Amounts in thousands)

Three months ended June 30,

Six months ended June 30,

2020

2019

2020

2019

Net income (loss) attributable to Blucora, Inc. (2)

$

49,645

$

31,036

$

(265,849

)

$

93,206

Stock-based compensation

3,904

4,082

2,703

6,525

Depreciation and amortization of acquired intangible assets

9,085

10,831

19,253

20,185

Other loss, net

5,288

5,118

11,423

9,076

Acquisition and integration costs

2,824

9,183

8,506

10,980

Impairment of goodwill

270,625

Executive transition costs

636

9,820

Headquarters relocation costs

737

1,453

Income tax (benefit) expense

(59,539

)

(8,124

)

7,981

(4,139

)

Adjusted EBITDA

$

12,580

$

52,126

$

65,915

$

135,833


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,

2020

2019

2020

2019

Net income (loss) attributable to Blucora, Inc. (2)

$

49,645

$

31,036

$

(265,849

)

$

93,206

Stock-based compensation

3,904

4,082

2,703

6,525

Amortization of acquired intangible assets

6,673

9,169

14,421

17,213

Acquisition and integration costs

2,824

9,183

8,506

10,980

Impairment of goodwill

270,625

Executive transition costs

636

9,820

Headquarters relocation costs

737

1,453

Cash tax impact of adjustments to GAAP net income

(259

)

(771

)

(995

)

(1,182

)

Non-cash income tax (benefit) expense

(59,697

)

(11,317

)

7,340

(8,166

)

Non-GAAP net income

$

4,463

$

41,382

$

48,024

$

118,576

Per diluted share:

Net income (loss) attributable to Blucora, Inc. (2) (3)

$

1.03

$

0.62

$

(5.52

)

$

1.88

Stock-based compensation

0.08

0.08

0.06

0.13

Amortization of acquired intangible assets

0.14

0.20

0.30

0.34

Acquisition and integration costs

0.06

0.18

0.18

0.22

Impairment of goodwill

5.62

Executive transition costs

0.01

0.20

Headquarters relocation costs

0.02

0.03

Cash tax impact of adjustments to GAAP net income

(0.01

)

(0.02

)

(0.02

)

(0.02

)

Non-cash income tax (benefit) expense

(1.24

)

(0.23

)

0.15

(0.16

)

Non-GAAP net income per share

$

0.09

$

0.83

$

1.00

$

2.39

Weighted average shares outstanding used in computing per diluted share amounts

48,092

49,822

48,172

49,681


Adjusted EBITDA Reconciliation for Forward-Looking Guidance (1)

(Amounts in thousands)

Ranges for the three months ending

Ranges for the year ending

September 30, 2020

December 31, 2020

Low

High

Low

High

Net loss attributable to Blucora, Inc.

$

(28,000

)

$

(22,000

)

$

(343,500

)

$

(334,000

)

Stock-based compensation

4,600

4,500

12,100

11,900

Depreciation and amortization of acquired intangible assets

14,500

12,500

47,800

45,500

Other loss, net

12,500

12,200

31,800

31,300

Acquisition, integration, and other nonrecurring costs

17,600

17,100

43,300

43,000

Impairment of goodwill

270,600

270,600

Income tax expense

300

700

23,900

24,700

Adjusted EBITDA

$

21,500

$

25,000

$

86,000

$

93,000


Non-GAAP Net Income Reconciliation for Forward-Looking Guidance (1)

(Amounts in thousands, except per share amounts)

Ranges for the three months ending

Ranges for the year ending

September 30, 2020

December 31, 2020

Low

High

Low

High

Net loss attributable to Blucora, Inc.

$

(28,000

)

$

(22,000

)

$

(343,500

)

$

(334,000

)

Stock-based compensation

4,600

4,500

12,100

11,900

Amortization of acquired intangible assets

10,500

8,800

34,700

32,900

Acquisition, integration, and other nonrecurring costs

17,600

17,100

43,300

43,000

Debt issuance expenses

4,300

4,300

4,300

4,300

Impairment of goodwill

270,600

270,600

Cash tax impact of adjustments to net loss

(500

)

(400

)

(1,900

)

(1,800

)

Non-cash income tax (benefit) expense

(1,000

)

(800

)

20,900

21,100

Non-GAAP net income

$

7,500

$

11,500

$

40,500

$

48,000

Per diluted share:

Net loss attributable to Blucora, Inc. (4)

$

(0.57

)

$

(0.45

)

$

(7.00

)

$

(6.83

)

Stock-based compensation

0.09

0.09

0.25

0.24

Amortization of acquired intangible assets

0.21

0.18

0.70

0.68

Acquisition, integration, and other nonrecurring costs

0.36

0.35

0.88

0.88

Debt issuance expenses

0.09

0.09

0.09

0.09

Impairment of goodwill

5.52

5.53

Cash tax impact of adjustments to net loss

(0.01

)

(0.01

)

(0.04

)

(0.04

)

Non-cash income tax (benefit) expense

(0.02

)

(0.02

)

0.43

0.43

Non-GAAP net income per share

$

0.15

$

0.23

$

0.83

$

0.98

Weighted average shares outstanding used in computing per diluted share amounts

49,384

49,284

49,050

48,900


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

(1)

We define Adjusted EBITDA as net income (loss) attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation and amortization of acquired intangible assets, other loss, net, acquisition and integration costs, impairment of goodwill, executive transition costs, headquarters relocation costs, and income tax (benefit) expense. Acquisition and integration costs primarily relate to the acquisition of 1st Global and the acquisition of HKFS. Impairment of goodwill relates to the impairment of our Wealth Management reporting unit goodwill that was recognized in the first quarter of 2020. Executive transition costs relate to the departure of certain executives in the first quarter of 2020. Headquarters relocation costs relate to the ongoing process to move from our Dallas and Irving offices to our new headquarters.

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 (loss). 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 (loss) attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets, acquisition and integration costs, impairment of goodwill, executive transition costs, headquarters relocation costs, the related cash tax impact of those adjustments, and non-cash income tax (benefit) expense. We exclude the non-cash portion of income tax expense 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 (loss) and net income (loss) 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 condensed consolidated statements of operations (unaudited).

(3)

As presented in the condensed consolidated statements of comprehensive income, net loss per share attributable to Blucora, Inc. was $5.55 for the six months ended June 30, 2020 and was calculated based on weighted average shares outstanding of 47,884,000, which excluded the effect of potentially dilutive shares due to the net loss earned for the period. For non-GAAP reconciliation purposes, net loss per share attributable to Blucora, Inc. of $5.52 presented in the table above included the effect of potentially dilutive shares due to non-GAAP net income earned during the period.

(4)

As presented in the “Third Quarter and Full Year 2020 Outlook” section of this press release, the range of net loss per share attributable to Blucora, Inc. for the three months ending September 30, 2020 was $0.46 to $0.58, and these amounts were calculated based on weighted average shares outstanding of 48,284,000, which excluded the effect of potentially dilutive shares due to the net loss earned for the period. The range of net loss per share attributable to Blucora, Inc. for the year ending December 31, 2020 was $6.92 to $7.09, and these amounts were calculated based on weighted average shares outstanding of 48,300,000 and 48,450,000, respectively, which excluded the effect of potentially dilutive shares due to the net loss earned for the period. For non-GAAP reconciliation purposes, net loss per share attributable to Blucora, Inc. for all periods presented included the effect of potentially dilutive shares due to non-GAAP net income projected to be earned during these periods.