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Blucora Reports First Quarter 2022 Results

Blucora, Inc.
Blucora, Inc.

DALLAS, May 04, 2022 (GLOBE NEWSWIRE) -- Blucora, Inc. (NASDAQ: BCOR), a leading provider of technology-enabled, tax focused financial solutions, today announced financial results for the first quarter ended March 31, 2022.

First Quarter Highlights and Recent Developments

  • Grew total revenue over 10% year over year to $307.6 million in Q1 2022.

  • TaxAct gained 19bp of market share during the tax season - delivering on our promise at Investor Day.

  • Avantax delivered net positive flows for the quarter, first time since Q1 2020.

  • Ended the first quarter with total client assets of $86.1 billion, growing percent of advisory assets to 47.5%.

  • Advisory assets at the end of the first quarter were $40.9 billion, with $1.2 billion growth in net new advisory assets, the highest ever for the Company.

  • Expectation of double-digit top line growth for TaxAct for tax year 2021.

“During our Investor Day in June of last year we shared a number of goals, that when achieved, would signal the positive execution of our strategy. I am happy to report that we have effectively executed on the most critical of these metrics and we feel better positioned than ever to deliver sustainable, profitable growth,” commented Chris Walters, Blucora’s President and Chief Executive Officer. “Despite short-term headwinds associated with volatility in equity markets and an unexpected dip in DIY tax filers this season, we expect to deliver double digit revenue and Adjusted EBITDA growth for the business. This will be driven by market share and ARPU gains in TaxAct, and net positive flows, shifts to higher ROA revenue streams and a rising interest rate environment in Avantax.”

Full Year 2022 Outlook

With the bulk of the tax season now complete, Blucora is providing a consolidated outlook for fiscal 2022, including a revised outlook for the Tax Software segment, for total revenue of between $937.5 and $971.0 million and Adjusted EBITDA between $143.5 and $162.0 million, compared to $885.2 million and $138.5 million, respectively, in fiscal 2021.

Summary Financial Performance: Q1 2022

($ in millions, except per share amounts)

Q1 2022

Q1 2021

Change

Revenue:

Wealth Management

$

166.4

$

154.5

7.7

%

Tax Software

141.2

123.9

14.0

%

Total Revenue

$

307.6

$

278.4

10.5

%

Segment Operating Income

Wealth Management

$

16.5

$

19.4

(14.9

)

%

Tax Software

58.0

50.9

13.9

%

Total Segment Operating Income

$

74.5

$

70.3

6.0

%

Unallocated Corporate-Level General and Administrative Expenses

$

(7.3

)

$

(5.7

)

(28.1

)

%

GAAP:

Operating Income

$

45.0

$

37.2

21.0

%

Net Income

$

34.6

$

27.6

25.4

%

Net Income per share — Diluted

$

0.70

$

0.56

25.0

%

Non-GAAP:

Adjusted EBITDA (1)

$

67.2

$

64.6

4.0

%

Net Income (1)

$

52.6

$

51.0

3.1

%

Net Income per share — Diluted (1)

$

1.06

$

1.04

1.9

%


______________________________

(1)

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


Full Year 2022 Outlook

($ in millions, except per share amounts)

Full Year 2022 Outlook

Wealth Management Revenue

$690.0 - $720.0

Tax Software Revenue

$247.5 - $251.0

Total Revenue

$937.5 - $971.0

Wealth Management Segment Operating Income

$85.0 - $100.0

Tax Software Segment Operating Income

$89.0 - $91.0

Unallocated Corporate-Level General and Administrative Expenses

$30.5 - $29.0

GAAP:

Net Income

$22.5 - $43.5

Net Income per share — Diluted

$0.46 - $0.89

Non-GAAP:

Adjusted EBITDA (1)

$143.5 - $162.0

Non-GAAP Net Income (1)

$81.0 - $100.0

Non-GAAP Net Income per share — Diluted (1)

$1.65 - $2.04


______________________________

(1)

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 first quarter results, its outlook for full year 2022, its tax season update, and other business matters. We will also provide supplemental financial information to our results on the Investor Relations section of the Blucora corporate website at www.blucora.com prior to the call. A replay of the call will be available on our website.

About Blucora®

Blucora, Inc. (NASDAQ: BCOR) is a provider of data and technology-driven solutions that empower people to improve their financial wellness. Blucora operates in two segments (i) wealth management, through its Avantax Wealth Management and Avantax Planning Partners brands, with a collective $86 billion in total client assets as of March 31, 2022 and (ii) tax software, through its TaxAct business, a market leader in tax software with over 3 million consumer users and approximately 24,500 professional users in 2021. 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 Investor Relations
Dee Littrell (972) 870-6463
IR@Blucora.com

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. including without limitation, statements regarding the outlook of Blucora, Inc. (the “Company”) and its segments, expectations regarding net flows for its wealth business, and expectations with respect to the current tax season. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “intends,” “anticipates,” “may,” “forecasts,” “future,” “will,” “projects,” “predicts,” “potential,” “continues,” “target,” “outlook,” “guidance,” and similar expressions and variations. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: our ability to effectively compete within our industries; our ability to attract and retain financial professionals, qualified employees, clients, and customers, as well as our ability to provide strong customer/client service; the impact of the COVID-19 pandemic 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 government actions; 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; any downgrade of the Company’s credit ratings; our ability to generate strong 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, including those of the Financial Industry Regulatory Authority, Inc. and the Securities and Exchange Commission (“SEC”); risks associated with legal proceedings, including litigation and regulatory proceedings; our ability to close, finance, and realize all of the anticipated benefits of 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 ability to retain employees and acquired client assets following acquisitions; any compromise of confidentiality, availability or integrity of information, including cyberattacks; 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 software 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; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; risks related to goodwill and acquired 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; our ability to protect our intellectual property and the impact of any claim that we infringed on the intellectual property rights of others; and the effects on our business of actions of activist stockholders. A more detailed description of these and certain other factors that could affect actual results is included in the Company’s most recent Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q filed with the SEC. 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) (In thousands, except per share amounts)

Three Months Ended March 31,

2022

2021

Revenue:

Wealth Management

$

166,403

$

154,491

Tax Software

141,150

123,892

Total revenue

307,553

278,383

Operating expenses:

Cost of revenue:

Wealth Management

119,874

108,623

Tax Software

9,426

5,578

Total cost of revenue

129,300

114,201

Engineering and technology

8,504

7,128

Sales and marketing

84,403

77,562

General and administrative

29,075

24,685

Acquisition and integration

1,666

8,103

Depreciation

2,931

2,300

Amortization of acquired intangible assets

6,631

7,175

Total operating expenses

262,510

241,154

Operating income

45,043

37,229

Interest expense and other, net (1)

(7,841

)

(7,883

)

Income before income taxes

37,202

29,346

Income tax expense

(2,582

)

(1,700

)

Net income

$

34,620

$

27,646

Net income per share:

Basic

$

0.71

$

0.57

Diluted

$

0.70

$

0.56

Weighted average shares outstanding:

Basic

48,513

48,261

Diluted

49,747

49,097


______________________________

(1)

Interest expense and other, net consisted of the following (in thousands):


Three Months Ended March 31,

2022

2021

Interest expense

$

7,130

$

7,183

Amortization of debt issuance costs

389

363

Amortization of debt discount

292

277

Total interest expense

7,811

7,823

Interest income and other

30

60

Interest expense and other, net

$

7,841

$

7,883


BLUCORA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)

March 31,

December 31,

2022

2021

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

144,222

$

134,824

Accounts receivable, net

26,618

21,906

Commissions and advisory fees receivable

22,890

25,073

Prepaid expenses and other current assets

21,695

18,476

Total current assets

215,425

200,279

Long-term assets:

Property, equipment, and software, net

73,687

73,638

Right-of-use assets, net

20,113

20,466

Goodwill, net

454,821

454,821

Acquired intangible assets, net

296,894

302,289

Other long-term assets

23,019

20,450

Total long-term assets

868,534

871,664

Total assets

$

1,083,959

$

1,071,943

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

23,879

$

8,216

Commissions and advisory fees payable

15,387

17,940

Accrued expenses and other current liabilities

61,255

65,678

Current deferred revenue

8,459

13,180

Current lease liabilities

4,945

4,896

Current portion of long-term debt

1,812

1,812

Total current liabilities

115,737

111,722

Long-term liabilities:

Long-term debt, net

553,297

553,134

Long-term lease liabilities

32,504

33,267

Deferred tax liabilities, net

19,480

20,124

Long-term deferred revenue

5,090

5,322

Other long-term liabilities

8,978

6,752

Total long-term liabilities

619,349

618,599

Total liabilities

735,086

730,321

Stockholders’ equity:

Common stock, par value $0.0001 per share—900,000 authorized shares; 50,384 shares issued and 47,433 shares outstanding at March 31, 2022; 50,137 shares issued and 48,831 shares outstanding at December 31, 2021

5

5

Additional paid-in capital

1,622,973

1,619,805

Accumulated deficit

(1,215,169

)

(1,249,789

)

Treasury stock, at cost—2,951 shares at March 31, 2022 and 1,306 shares at December 31, 2021

(58,936

)

(28,399

)

Total stockholders’ equity

348,873

341,622

Total liabilities and stockholders’ equity

$

1,083,959

$

1,071,943


BLUCORA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In thousands)

Three Months Ended March 31,

2022

2021

Operating activities:

Net income

$

34,620

$

27,646

Adjustments to reconcile net income to net cash from operating activities:

Depreciation and amortization of acquired intangible assets

11,305

10,418

Stock-based compensation

6,225

5,610

Change in the fair value of acquisition-related contingent consideration

1,700

6,300

Reduction of right-of-use lease assets

353

569

Deferred income taxes

(644

)

(269

)

Amortization of debt discount and issuance costs

681

640

Accretion of lease liabilities

514

514

Other non-cash items

1,101

(78

)

Changes in operating assets and liabilities, net of acquisitions and disposals:

Accounts receivable, net

(4,647

)

(11,541

)

Commissions and advisory fees receivable

2,183

111

Prepaid expenses and other current assets

(2,741

)

(1,163

)

Other long-term assets

(3,363

)

(828

)

Accounts payable

15,663

12,729

Commissions and advisory fees payable

(2,553

)

(259

)

Lease liabilities

(1,229

)

(172

)

Deferred revenue

(4,953

)

(7,250

)

Accrued expenses and other current and long-term liabilities

(6,872

)

10,745

Net cash provided by operating activities

47,343

53,722

Investing activities:

Purchases of property, equipment, and software

(4,731

)

(8,598

)

Asset acquisitions

(751

)

(587

)

Net cash used by investing activities

(5,482

)

(9,185

)

Financing activities:

Payments on credit facilities

(453

)

(453

)

Stock repurchases

(30,537

)

Proceeds from stock option exercises

96

63

Tax payments from shares withheld for equity awards

(1,569

)

(865

)

Net cash used by financing activities

(32,463

)

(1,255

)

Net increase in cash, cash equivalents, and restricted cash

9,398

43,282

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

134,824

150,762

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

$

144,222

$

194,044

Supplemental cash flow information:

Cash paid for income taxes

$

850

$

Cash paid for interest

$

7,107

$

7,123


BLUCORA, INC.

Segment Information and Revenue
(Unaudited) (In thousands)

Information on reportable segments currently presented to our Chief Executive Officer (our chief operating decision maker) and a reconciliation to consolidated net income are presented below:

Three Months Ended March 31,

2022

2021

Revenue:

Wealth Management

$

166,403

$

154,491

Tax Software

141,150

123,892

Total revenue

307,553

278,383

Operating income (loss):

Wealth Management

16,421

19,396

Tax Software

58,030

50,888

Corporate-level activity

(29,408

)

(33,055

)

Total operating income

45,043

37,229

Interest expense and other, net

(7,841

)

(7,883

)

Income before income taxes

37,202

29,346

Income tax expense

(2,582

)

(1,700

)

Net income

$

34,620

$

27,646

Revenues by major category within each segment are presented below:

Three Months Ended March 31,

2022

2021

Wealth Management:

Advisory

$

107,169

$

91,119

Commission

47,655

52,534

Asset-based

5,663

5,329

Transaction and fee

5,916

5,509

Total Wealth Management revenue

$

166,403

$

154,491

Tax Software:

Consumer

$

125,261

$

110,567

Professional

15,889

13,325

Total Tax Software revenue

$

141,150

$

123,892

Corporate-level activity included the following:

Three Months Ended March 31,

2022

2021

Unallocated corporate-level general and administrative expenses

$

7,292

$

5,694

Stock-based compensation

6,225

5,610

Acquisition and integration

1,666

8,103

Depreciation

4,674

3,243

Amortization of acquired intangible assets

6,631

7,175

Contested proxy and other legal and consulting costs

2,920

3,230

Total corporate-level activity

$

29,408

$

33,055


BLUCORA, INC.

Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (1)
(Unaudited) (In thousands, except per share amounts)

Adjusted EBITDA Reconciliation (1)

Three Months Ended March 31,

2022

2021

Net income (2)

$

34,620

$

27,646

Stock-based compensation

6,225

5,610

Depreciation and amortization of acquired intangible assets

11,305

10,418

Interest expense and other, net

7,841

7,883

Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration

(34

)

1,803

Acquisition and integration—Change in the fair value of HKFS Contingent Consideration

1,700

6,300

Contested proxy and other legal and consulting costs

2,920

3,230

Income tax expense

2,582

1,700

Adjusted EBITDA (1)

$

67,159

$

64,590

Non-GAAP Net Income and Non-GAAP Net Income Per Share Reconciliation (1)

Three Months Ended March 31,

2022

2021

Net income (2)

$

34,620

$

27,646

Stock-based compensation

6,225

5,610

Amortization of acquired intangible assets

6,631

7,175

Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration

(34

)

1,803

Acquisition and integration—Change in the fair value of HKFS Contingent Consideration

1,700

6,300

Contested proxy and other legal and consulting costs

2,920

3,230

Cash tax impact of adjustments to GAAP net income

(959

)

(543

)

Non-cash income tax (benefit) expense

1,506

(269

)

Non-GAAP Net Income (1)

$

52,609

$

50,952

Per diluted share:

Net income (2)(4)

$

0.70

$

0.56

Stock-based compensation

0.13

0.11

Amortization of acquired intangible assets

0.13

0.15

Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration

0.04

Acquisition and integration—Change in the fair value of HKFS Contingent Consideration

0.03

0.13

Contested proxy and other legal and consulting costs

0.06

0.07

Cash tax impact of adjustments to GAAP net income

(0.02

)

(0.01

)

Non-cash income tax (benefit) expense

0.03

(0.01

)

Non-GAAP Net Income per share — Diluted (1)

$

1.06

$

1.04

Diluted weighted average shares outstanding

49,747

49,097


BLUCORA, INC.

Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (1)
(Unaudited) (In thousands, except per share amounts)

Adjusted EBITDA Reconciliation for Forward-Looking Guidance (1)

Ranges for the year ending

December 31, 2022

Low

High

Net income

$

22,500

$

43,500

Stock-based compensation

25,500

24,500

Depreciation and amortization of acquired intangible assets

52,500

50,500

Interest expense and other, net

33,000

33,000

Acquisition, integration, and contested proxy and other legal and consulting costs (3)

8,000

8,000

Income tax expense

2,000

2,500

Adjusted EBITDA (1)

$

143,500

$

162,000

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

Ranges for the year ending

December 31, 2022

Low

High

Net income

$

22,500

$

43,500

Stock-based compensation

25,500

24,500

Amortization of acquired intangible assets

27,000

26,000

Acquisition, integration, and contested proxy and other legal and consulting costs (3)

8,000

8,000

Cash tax impact of adjustments to net income

(1,000

)

(1,000

)

Non-cash income tax (benefit) expense

(1,000

)

(1,000

)

Non-GAAP Net Income (1)

$

81,000

$

100,000

Per diluted share:

Net income

$

0.46

$

0.89

Stock-based compensation

0.52

0.50

Amortization of acquired intangible assets

0.55

0.53

Acquisition, integration, and contested proxy and other legal and consulting costs (3)

0.16

0.16

Cash tax impact of adjustments to net income

(0.02

)

(0.02

)

Non-cash income tax (benefit) expense

(0.02

)

(0.02

)

Non-GAAP Net Income per share — Diluted (1)

$

1.65

$

2.04

Diluted weighted average shares outstanding

49,011

49,011


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

(1)

We define Adjusted EBITDA as net income (loss), determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation and amortization of acquired intangible assets, interest expense and other, net, acquisition and integration costs, contested proxy and other legal and consulting costs, and income tax expense. Interest expense and other, net primarily consists of interest expense, net. Acquisition and integration costs primarily relate to the acquisitions of Avantax Planning Partners and 1st Global.

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 (Loss) as net income (loss), determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets, acquisition and integration costs, contested proxy and other legal and consulting costs, the related cash tax impact of those adjustments, and non-cash income tax (benefit) expense. 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 not utilized, between 2022 and 2024.

We believe that Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) 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 that have not been, or are not expected to be, settled in cash. Additionally, we believe that Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) per share are common measures used by investors and analysts to evaluate our performance and the valuation of our business. Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) 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 GAAP net income (loss) per share. Other companies may calculate Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) per share differently, and, therefore, these measures may not be comparable to similarly titled measures of other companies.

(2)

As presented in the condensed consolidated statements of operations (unaudited).

(3)

The breakout of components cannot be determined on a forward-looking basis without unreasonable efforts.

(4)

Any difference in the “per diluted share” amounts between this table and the condensed consolidated statements of operations is due to using different diluted weighted average shares outstanding in the event that there is GAAP net loss but Non-GAAP Net Income and vice versa.


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