Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - BLUCORA, INC. | d574434d8k.htm |
| EX-99.1 - EX-99.1 - BLUCORA, INC. | d574434dex991.htm |
Exhibit 99.2
Blucora, Inc.
Q2 2013 Earnings
Supplemental Information
Table of Contents
| Financial Information |
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| Summary - Consolidated Financial Results |
2 | |||
| Reconciliation of Non-GAAP Financial Measures |
4 | |||
| Operating Metrics |
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| Search |
5 | |||
| Tax Preparation |
6 | |||
| Pro-Forma Information |
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| Q2 year-over-year Tax Preparation |
7 | |||
| Last 12 Months - Pro Forma Results |
8 | |||
| Last 12 Months - Levered Free Cash Flow |
9 | |||
| Reconciliation Pro Forma Non-GAAP Financial Measures |
10 | |||
1
Blucora Consolidated Financial Results
(in thousands except earnings per share, rounding differences may exist)
| 2011 | 2012 | 2013 | ||||||||||||||||||||||||||||||
| FYE 12/31 | 1Q12 | 2Q12 | 3Q12 | 4Q12 | FYE 12/31 | 1Q13 | 2Q13 | |||||||||||||||||||||||||
| Segment Revenue |
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| Search |
$ | 228,814 | $ | 75,295 | $ | 81,808 | $ | 91,408 | $ | 96,303 | $ | 344,814 | $ | 100,601 | $ | 94,497 | ||||||||||||||||
| Tax Preparation (1) |
— | 40,401 | 19,075 | 1,462 | 1,167 | 62,105 | 64,737 | 22,684 | ||||||||||||||||||||||||
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| Total |
$ | 228,814 | $ | 115,696 | $ | 100,883 | $ | 92,870 | $ | 97,470 | $ | 406,919 | $ | 165,338 | $ | 117,181 | ||||||||||||||||
| Segment Income (Loss) (2) |
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| Search |
$ | 46,206 | $ | 13,373 | $ | 15,078 | $ | 16,356 | $ | 17,378 | $ | 62,185 | $ | 18,270 | $ | 17,912 | ||||||||||||||||
| Tax Preparation (1) |
— | 22,135 | 11,954 | (1,561 | ) | (2,476 | ) | 30,052 | 30,784 | 14,438 | ||||||||||||||||||||||
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| Total |
$ | 46,206 | $ | 35,508 | $ | 27,032 | $ | 14,795 | $ | 14,902 | $ | 92,237 | $ | 49,054 | $ | 32,350 | ||||||||||||||||
| Segment Income (Loss) % of Revenue |
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| Search |
20 | % | 18 | % | 18 | % | 18 | % | 18 | % | 18 | % | 18 | % | 19 | % | ||||||||||||||||
| Tax Preparation |
na | 55 | % | 63 | % | (107 | %) | (212 | %) | 48 | % | 48 | % | 64 | % | |||||||||||||||||
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| Total |
20 | % | 31 | % | 27 | % | 16 | % | 15 | % | 23 | % | 30 | % | 28 | % | ||||||||||||||||
| Unallocated Corporate Operating Expense |
$ | 9,583 | $ | 3,806 | (3) | $ | 2,525 | $ | 2,695 | $ | 2,772 | $ | 11,798 | $ | 3,198 | $ | 3,135 | |||||||||||||||
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| Adjusted EBITDA |
$ | 36,623 | $ | 31,702 | $ | 24,507 | $ | 12,100 | $ | 12,130 | $ | 80,439 | $ | 45,856 | $ | 29,215 | ||||||||||||||||
| Other Unallocated Corporate |
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| Depreciation |
$ | 4,861 | $ | 951 | $ | 956 | $ | 988 | $ | 917 | $ | 3,812 | $ | 1,003 | $ | 990 | ||||||||||||||||
| Amortization of Intangibles |
2,595 | 3,624 | (4) | 5,248 | 5,183 | 5,144 | 19,199 | 5,109 | 5,095 | |||||||||||||||||||||||
| Stock Compensation |
7,687 | 6,708 | (5) | 2,020 | 2,195 | 2,300 | 13,223 | 2,485 | 2,753 | |||||||||||||||||||||||
| Loss (Gain) on derivative instruments |
— | 272 | (333 | ) | 4,335 | (1,928 | ) | 2,346 | (348 | ) | 2,323 | |||||||||||||||||||||
| Interest Income |
(369 | ) | (9 | ) | (52 | ) | (18 | ) | (52 | ) | (131 | ) | (55 | ) | (109 | ) | ||||||||||||||||
| Interest Expense |
73 | 844 | 1,009 | 794 | 875 | 3,522 | 1,148 | 2,890 | (6) | |||||||||||||||||||||||
| Amortization of debt issuance costs |
— | 331 | 332 | 83 | 74 | 820 | 107 | 476 | (6) | |||||||||||||||||||||||
| Accretion of debt discount |
— | 135 | 124 | 34 | 31 | 324 | 161 | 949 | (6) | |||||||||||||||||||||||
| Other (Income) Loss |
1,541 | (18 | ) | (150 | ) | (32 | ) | (4 | ) | (204 | ) | (8 | ) | (225 | ) | |||||||||||||||||
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| Total |
$ | 16,388 | $ | 12,838 | $ | 9,154 | $ | 13,562 | $ | 7,357 | $ | 42,911 | $ | 9,602 | $ | 15,142 | ||||||||||||||||
| Income (Loss) Before Taxes |
20,235 | 18,864 | 15,353 | (1,462 | ) | 4,773 | 37,528 | 36,254 | 14,073 | |||||||||||||||||||||||
| Income Tax |
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| Cash |
$ | 1,712 | $ | 861 | $ | 474 | $ | (185 | ) | $ | 293 | $ | 1,443 | $ | 1,472 | $ | 435 | |||||||||||||||
| Non-cash (7) |
(13,000 | ) | 6,597 | 5,181 | 1,121 | 660 | 13,559 | 11,174 | 5,232 | |||||||||||||||||||||||
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| Total |
$ | (11,288 | )(8) | $ | 7,458 | $ | 5,655 | $ | 936 | $ | 953 | $ | 15,002 | $ | 12,646 | $ | 5,667 | |||||||||||||||
| Income (Loss) from Continuing Operations |
31,523 | 11,406 | 9,698 | (2,398 | ) | 3,820 | 22,526 | 23,608 | 8,406 | |||||||||||||||||||||||
| Discontinued Operations Loss (9) |
(9,927 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||
| GAAP Net Income (Loss) |
$ | 21,596 | $ | 11,406 | $ | 9,698 | $ | (2,398 | ) | $ | 3,820 | $ | 22,526 | $ | 23,608 | $ | 8,406 | |||||||||||||||
| GAAP Earnings Per Share - diluted |
$ | 0.56 | $ | 0.28 | $ | 0.23 | (10) | $ | (0.06 | ) | $ | 0.04 | (10) | $ | 0.54 | 0.53 | (11) | $ | 0.20 | |||||||||||||
| Non-GAAP Net Income |
$ | (11,195 | ) | $ | 28,517 | $ | 21,817 | $ | 10,421 | $ | 10,005 | $ | 70,760 | $ | 41,997 | $ | 24,632 | |||||||||||||||
| Non-GAAP Earnings (Loss) Per Share - diluted |
$ | (0.29 | ) | $ | 0.70 | $ | 0.53 | $ | 0.25 | (12) | $ | 0.24 | $ | 1.70 | $ | 0.95 | $ | 0.58 | ||||||||||||||
| Outstanding Shares |
39,534 | 39,804 | 40,334 | 40,633 | 40,832 | 40,832 | 40,933 | 41,143 | ||||||||||||||||||||||||
| Basic Shares |
37,954 | 39,692 | 40,116 | 40,511 | 40,789 | 40,279 | 40,911 | 41,050 | ||||||||||||||||||||||||
| Fully-diluted Shares |
38,621 | 40,978 | 41,245 | 40,511 | 42,411 | 41,672 | 44,294 | 42,724 | ||||||||||||||||||||||||
| Cash & Short-term Investment |
$ | 293,551 | $ | 129,868 | $ | 141,867 | $ | 150,417 | $ | 162,288 | $ | 162,288 | $ | 401,677 | $ | 415,493 | ||||||||||||||||
| Outstanding Debt |
— | 85,000 | 75,000 | 74,496 | 74,496 | 74,496 | 275,746 | 265,746 | ||||||||||||||||||||||||
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| Net Cash |
$ | 293,551 | $ | 44,868 | $ | 66,867 | $ | 75,921 | $ | 87,792 | $ | 87,792 | $ | 125,931 | $ | 149,747 | ||||||||||||||||
Notes to Consolidated Financial Results on next page
2
Notes to Consolidated Financial Results
| 1) | On January 31, 2012, the Company acquired TaxACT Holdings, Inc. and its wholly-owned subsidiary, 2nd Story Software, Inc., which operates the TaxACT tax preparation software and online service and software business. The TaxACT business consists of an online tax preparation service for individuals, tax preparation software for individuals and professional tax preparers, and ancillary data storage services. The majority of the TaxACT business’s revenue is generated by the online service at www.taxact.com. As a highly seasonal business, almost all of the TaxACT revenue is generated in the first four months of the calendar year. Amounts for 2012 represent the results of operations for the TaxACT business from February 1, 2012 to December 31, 2012. |
| (2) | The Company does not allocate certain general, administrative, and overhead costs, or stock-based compensation, depreciation, amortization of intangible assets, other loss (income), net, income tax expense, or results from discontinued operations to the reportable segments. The general, administrative and overhead costs are included in Unallocated Corporate Operating Expense. |
| (3) | Amount for the quarter ended March 31, 2012 includes $1.1 million in transaction costs related to the TaxACT acquisition. |
| (4) | Amount for the quarter ended March 31, 2012 includes $3.4 million related to amortization of acquired intangible assets related to the TaxACT acquisition. |
| (5) | In the quarter ended March 31, 2012, $5.2 million in stock-based compensation expense was recorded in association with the modification of the terms of a warrant and the vesting of a non-employee performance-based equity award, which were both triggered by the acquisition of the TaxACT business. |
| (6) | Interest expense, amortization of debt issuance costs, and accretion of debt discount include amounts associated with the convertible debt issued on March 15, 2013. |
| (7) | Amounts represent the non-cash portion of income tax expense from continuing operations. The Company excludes the non-cash portion of income tax expense because of its ability to offset a substantial portion of its cash tax liabilities by using these deferred tax assets. The majority of these deferred tax assets will expire if unutilized in 2020. |
| (8) | Amount includes a tax benefit of $18.9 million, due to the release of the valuation allowance on deferred tax assets. |
| (9) | In the quarter ended June 30, 2011, the Company completed the sale of its Mercantila e-commerce business. The operating results of that business have been presented as discontinued operations for all periods presented. |
| (10) | Calculation excludes the income effect of dilutive derivative instruments. |
| (11) | Calculation excludes the income effect of dilutive derivative instruments and interest expense, amortization of debt issuance costs, and accretion of discount on convertible debt, net of tax effect. |
| (12) | Calculation uses 42,048,000 fully-diluted shares, due to non-GAAP net income. |
3
Blucora Non-GAAP Reconciliation(1)
(in thousands except earnings per share, rounding differences may exist)
| 2011 | 2012 | 2013 | ||||||||||||||||||||||||||||||
| FYE 12/31 | 1Q12 | 2Q12 | 3Q12 | 4Q12 | FYE 12/31 | 1Q13 | 2Q13 | |||||||||||||||||||||||||
| Adjusted EBITDA |
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| Net Income (loss) (2) |
$ | 21,596 | $ | 11,406 | $ | 9,698 | $ | (2,398 | ) | $ | 3,820 | $ | 22,526 | $ | 23,608 | $ | 8,406 | |||||||||||||||
| Discontinued operations |
9,927 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Depreciation |
4,861 | 951 | 956 | 988 | 917 | 3,812 | 1,003 | 990 | ||||||||||||||||||||||||
| Amortization of intangible assets |
2,595 | 3,624 | 5,248 | 5,183 | 5,144 | 19,199 | 5,109 | 5,095 | ||||||||||||||||||||||||
| Stock-based compensation |
7,687 | 6,708 | 2,020 | 2,195 | 2,300 | 13,223 | 2,485 | 2,753 | ||||||||||||||||||||||||
| Other (income) loss (3) |
1,245 | 1,555 | 930 | 5,196 | (1,004 | ) | 6,677 | 1,005 | 6,304 | |||||||||||||||||||||||
| Income tax expense (benefit) |
(11,288 | ) | 7,458 | 5,655 | 936 | 953 | 15,002 | 12,646 | 5,667 | |||||||||||||||||||||||
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| Adjusted EBITDA |
$ | 36,623 | $ | 31,702 | $ | 24,507 | $ | 12,100 | $ | 12,130 | $ | 80,439 | $ | 45,856 | $ | 29,215 | ||||||||||||||||
| Non-GAAP Net Income |
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| Net Income (loss) (2) |
$ | 21,596 | $ | 11,406 | $ | 9,698 | $ | (2,398 | ) | $ | 3,820 | $ | 22,526 | $ | 23,608 | $ | 8,406 | |||||||||||||||
| Discontinued operations |
9,927 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Amortization of acquired intangible assets |
2,595 | 3,624 | 5,248 | 5,183 | 5,144 | 19,199 | 5,109 | 5,095 | ||||||||||||||||||||||||
| Accretion of debt discount on convertible notes |
— | — | — | — | — | — | 132 | 841 | ||||||||||||||||||||||||
| Stock-based compensation |
7,687 | 6,708 | 2,020 | 2,195 | 2,300 | 13,223 | 2,485 | 2,753 | ||||||||||||||||||||||||
| Loss / (Gain) on derivative |
— | 272 | (333 | ) | 4,335 | (1,928 | ) | 2,346 | (348 | ) | 2,323 | |||||||||||||||||||||
| Cash tax impacts of GAAP adjustments |
(40 | ) | (90 | ) | 3 | (15 | ) | 9 | (93 | ) | (163 | ) | (17 | ) | ||||||||||||||||||
| Non-cash income tax expenses (benefit) from continuing operations (1) |
(13,000 | ) | 6,597 | 5,181 | 1,121 | 660 | 13,559 | 11,174 | 5,231 | |||||||||||||||||||||||
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| Non-GAAP net income (4) (5) |
$ | 28,765 | $ | 28,517 | $ | 21,817 | $ | 10,421 | $ | 10,005 | $ | 70,760 | $ | 41,997 | $ | 24,632 | ||||||||||||||||
| Non-GAAP Earnings Per Share |
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| Non-GAAP Net Income |
$ | 28,765 | $ | 28,517 | $ | 21,817 | $ | 10,421 | $ | 10,005 | $ | 70,760 | $ | 41,997 | $ | 24,632 | ||||||||||||||||
| Non-GAAP Earnings Per Share (4) |
$ | 0.74 | $ | 0.70 | $ | 0.53 | $ | 0.25 | $ | 0.24 | $ | 1.70 | $ | 0.95 | $ | 0.58 | ||||||||||||||||
| Fully-diluted Shares |
38,621 | 40,978 | 41,245 | 42,048 | 42,411 | 41,672 | 44,294 | 42,724 | ||||||||||||||||||||||||
| (1) | For definitions of these non-GAAP financial measures and their relationship to the Company’s GAAP financial statements, please see Note 1 to the Company’s Reconciliations of Non-GAAP financial Measures to the Nearest Comparable GAAP Measure for the three and six months ended June 30, 2013 and 2012 in exhibit 99.1 to this Current Report on Form 8-K filed on August 1, 2013. |
| (2) | As presented in the Preliminary Condensed Consolidated Statements of Operations (unaudited). |
| (3) | Other (income) loss, net primarily includes such items as interest expense, interest income, derivative instrument gains or losses, adjustments to the fair values of contingent liabilities related to business combinations, gains on resolutions of contingencies and litigation settlements, foreign currency gains or losses, and gains or losses from the disposal of assets, . |
| (4) | Amounts previously disclosed have been revised to reflect the effect of classifying the Company’s Mercantila e-commerce business as discontinued operations. |
| (5) | The Company defines Non-GAAP Net Income differently effective with the quarter ended March 31, 2013 to include accretion of debt discount on convertible notes. The Company’s new definition of non-GAAP net income does not impact presentation of this non-GAAP financial measure for prior periods. |
4
Blucora Operating Metrics - Search
| 2011 | 2012 | 2013 | ||||||||||||||||||||||||||||||
| FYE 12/31 | 1Q12 | 2Q12 | 3Q12 | 4Q12 | FYE 12/31 | 1Q13 | 2Q13 | |||||||||||||||||||||||||
| Revenue by Source |
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| Owned & Operated (B2C) |
21 | % | 13 | % | 12 | % | 12 | % | 11 | % | 12 | % | 12 | % | 15 | % | ||||||||||||||||
| Distribution (B2B) |
79 | % | 87 | % | 88 | % | 88 | % | 89 | % | 88 | % | 88 | % | 85 | % | ||||||||||||||||
| * | Owned & Operated includes revenue from the Make The Web Better acquisition in 2Q 2010; the installed base has experienced attrition since the acquisition. Owned & Operated also includes other development-stage initiatives. |
5
Blucora Operating Metrics - Tax Preparation
(in thousands, rounding differences may exist)
Consumer (DDIY) e-files
| Tax season ended | Six months ended | |||||||||||||||||||||||
| April 16, 2013 | April 18, 2012 | % change | June 30, 2013 | June 30, 2012 | % change | |||||||||||||||||||
| TaxACT Desktop |
270 | 256 | 5 | % | 275 | 261 | 5 | % | ||||||||||||||||
| TaxACT Online |
4,865 | 4,490 | 8 | % | 4,968 | 4,581 | 8 | % | ||||||||||||||||
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| TaxACT sub-total units |
5,135 | 4,746 | 8 | % | 5,243 | 4,842 | 8 | % | ||||||||||||||||
| TaxACT Free File Alliance |
147 | 160 | (8 | %) | 152 | 164 | (7 | %) | ||||||||||||||||
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| TaxACT total units (1) |
5,282 | 4,906 | 8 | % | 5,395 | 5,006 | 8 | % | ||||||||||||||||
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| (1) | The Company redefined e-files during the quarter ended March 31, 2013 to exclude e-filed extensions as it believes this is a more accurate metric in evaluating performance of the Tax Preparation segment. The figures set forth above for 2012 and 2013 reflect this change. |
6
Tax Preparation Segment - Pro Forma 2Q Year-over-Year Results
(in thousands, rounding differences may exist)
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||
| (a) | (b) | (c) | (d) | |||||||||||||||||||||
| 2013 | 2012 | Growth | 2013 | 2012 | Growth | |||||||||||||||||||
| Pro Forma Revenue |
$ | 23,088 | $ | 19,810 | 17 | % | $ | 88,474 | $ | 81,754 | 8 | % | ||||||||||||
| Pro Forma Segment Income |
$ | 14,842 | $ | 12,689 | 17 | % | $ | 46,275 | $ | 43,266 | (e) | 7 | % | |||||||||||
| Segment Margin |
64 | % | 64 | % | 52 | % | 53 | % | ||||||||||||||||
| (a) | Includes $404,000 of revenue not reported on a GAAP basis due to fair value purchase accounting on deferred revenue at date of acquisition. |
| (b) | Includes $735,000 of revenue not reported on a GAAP basis due to fair value purchase accounting on deferred revenue at date of acquisition. |
| (c) | Includes $1.1 million of revenue not reported on a GAAP basis due to fair value purchase accounting on deferred revenue at date of acquisition. |
| (d) | Includes $1.4 million of revenue not reported on a GAAP basis due to purchase accounting in February through June 2012, and revenue of $20.9 million for January 2012 (prior to acquisition). |
| (e) | Excludes $120,000 of non-operational expenses related to a non-consummated sales transaction for the six months ended 2Q 2012. |
7
Pro Forma - Consolidated Financial Performance
twelve months ending 6/30/2013
(in thousands, rounding differences may exist)
| (a) | ||||||||||||||||
| Tax Preparation |
Search | Corporate | Consolidated | |||||||||||||
| Revenue |
$ | 92,353 | $ | 382,810 | $ | — | $ | 475,162 | ||||||||
| Segment income |
$ | 43,489 | $ | 69,916 | $ | — | $ | 113,405 | ||||||||
| Unallocated Corporate expenses |
$ | — | $ | — | $ | (11,801 | ) | $ | (11,801 | ) | ||||||
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| Adjusted EBITDA |
$ | 101,604 | ||||||||||||||
| Non-GAAP Net Income |
$ | 83,248 | (b) | |||||||||||||
| Non-GAAP Earnings Per Share |
$ | 1.96 | ||||||||||||||
| Diluted Shares for the twelve-month period ended June 30, 2013 |
42,433 | |||||||||||||||
| (a) | Includes $2.3 million of revenue not reported on a GAAP basis due to fair value purchase accounting on deferred revenue at date of acquisition in 2012. |
| (b) | Includes twelve months of pro forma cash interest and amortization of debt issuance costs on the convertible debt issued March 15, 2013. |
8
Pro-Forma Free Cash Flow (“FCF”)
twelve months ending 6/30/2013
(in thousands, rounding differences may exist)
| Pro Forma Adjusted EBITDA |
$ | 101,604 | (a) | |
| Less - Pro Forma Capital Expenditures |
$ | (5,309 | )(b) | |
| Less - Pro Forma Cash Taxes |
$ | (1,464 | ) | |
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| Unlevered FCF |
$ | 94,831 | ||
| Less - Pro Forma Cash Interest Expense |
$ | (11,505 | )(c) | |
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| Levered FCF |
$ | 83,326 | ||
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| (a) | See reconciliation of Pro Forma Adjusted EBITDA on Blucora Pro Forma Non-GAAP Reconciliation. |
| (b) | Amount includes $3.5m of costs associated with the build-out of a data center redundancy site and capitalized tenant improvement costs associated with the move of our Bellevue offices. |
| (c) | Amount represents cash interest expense on term and convertible debt. For periods prior to issuance, cash interest expense on the convertible debt is estimated at 4.25% on $201.25m debt balance. |
9
Blucora Pro Forma Non-GAAP Reconciliation (1)
twelve months ending 6/30/2013
(in thousands except rates, rounding differences may exist)
| Pro Forma Adjusted EBITDA |
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| Pro forma income from continuing operations |
$ | 26,072 | ||
| Pro forma depreciation |
$ | 3,898 | ||
| Pro forma amortization of intangible assets |
$ | 20,531 | ||
| Pro forma stock-based compensation |
$ | 9,733 | ||
| Pro forma other expense, net |
$ | 20,544 | ||
| Pro forma income tax expense |
$ | 20,826 | ||
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| Pro Forma Adjusted EBITDA |
$ | 101,604 | ||
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| Pro Forma Non-GAAP Net Income |
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| Pro forma income from continuing operations |
$ | 26,072 | ||
| Pro forma amortization of acquired intangible assets |
$ | 20,531 | ||
| Pro forma accretion of debt discount on convertible debt |
$ | 3,353 | ||
| Pro forma stock-based compensation |
$ | 9,734 | ||
| Loss on derivative |
$ | 4,382 | ||
| Pro forma cash tax impact of GAAP adjustments |
$ | (186 | ) | |
| Pro forma non-cash income tax expense from continuing operations |
$ | 19,362 | ||
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| Pro forma non-GAAP net income |
$ | 83,248 | ||
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| Pro forma non-GAAP Earnings per share - diluted |
$ | 1.96 | ||
| Weighted average diluted shares |
42,433 | |||
| (1) | For definitions of these non-GAAP financial measures and their relationship to the Company’s GAAP financial statements, please see Note 1 to the Company’s Reconciliations of Non-GAAP financial Measures to the Nearest Comparable GAAP Measure for the three and six months ended June 30, 2013 and 2012 in exhibit 99.1 to this Current Report on Form 8-K filed on August 1, 2013. |
10