BLUCORA, INC. - FORM 8-K - EX-99.1

Attached files

file	filename
8-K - 8-K - BLUCORA, INC.	d678625d8k.htm
EX-99.2 - EX-99.2 - BLUCORA, INC.	d678625dex992.htm

Exhibit 99.1

LOGO

Blucora Announces Fourth Quarter and Full Year 2013 Results

BELLEVUE, Wash., February 20, 2014 (BUSINESS WIRE) — Blucora, Inc. (NASDAQ: BCOR) today announced financial results for the fourth quarter and full year ended December 31, 2013.

“We are pleased with our results for the fourth quarter and full year,” said Bill Ruckelshaus, President and Chief Executive Officer of Blucora. “Our businesses participate in large and growing markets and they are well positioned going forward.”

Summary Financial Performance: Q4 and Full Year 2013

($ in millions except per share amounts)


	Q4 2013			Q4 2012		Growth			FY 2013			FY 2012		Growth
Revenue	$	167.3		$	97.5		72	%	$	574.0		$	406.9		41	%
Search	$	125.6		$	96.3		30	%	$	428.5		$	344.8		24	%
Tax Preparation	$	2.0		$	1.2		75	%	$	91.2		$	62.1		47	%
E-Commerce	$	39.7			N/A		N/A		$	54.3	⁽¹⁾		N/A		N/A

Adjusted EBITDA	$	22.6		$	12.1		86	%	$	114.2		$	80.4		42	%
Non-GAAP Net Income	$	18.1		$	10.0		81	%	$	97.7		$	70.8		38	%
Non-GAAP Diluted EPS	$	0.40		$	0.24		67	%	$	2.25		$	1.70		32	%

GAAP Net Income (Loss)	$	(1.1	)⁽²⁾	$	3.8		-130	%	$	24.4	⁽²⁾	$	22.5		8	%
GAAP Diluted Income (Loss) Per Share	$	(0.03	)⁽²⁾	$	0.04		-175	%	$	0.56	⁽²⁾	$	0.54		4	%

1)	Blucora completed the acquisition of Monoprice on August 22, 2013. Full year 2013 e-commerce revenue excludes results prior to the acquisition.

2)	GAAP Net Income (Loss) and GAAP Diluted Income (Loss) Per Share includes a $5.7 million and $11.7 million non-cash loss on a derivative instrument in Q413 and full year 2013, respectively. See reconciliation of non-GAAP to GAAP measures below.

Segment Information

Tax Preparation

Tax Preparation segment loss for the fourth quarter of 2013 was $3.0 million, which is consistent due to the seasonality of the business. Tax Preparation segment income for the full year 2013 was $40.6 million.

E-Commerce

E-Commerce segment income was $4.1 million or 10 percent of segment revenue for the fourth quarter of 2013. E-Commerce segment income for the full year 2013 was $5.0 million, which represents stub period results from the Monoprice acquisition date (August 22, 2013).

Search

Search segment income for the fourth quarter and full year 2013 was $25.0 million and $82.5 million, up 44 percent and 33 percent over the fourth quarter and full year 2012, respectively.

Corporate Operating Expenses

Unallocated corporate operating expenses for the fourth quarter and full year 2013 were $3.5 million and $13.8 million, respectively.

Other

Blucora ended 2013 with cash, cash equivalents and short-term investments of $333.7 million and net cash of $11.1 million (excluding outstanding debt principal).

For the full year 2013, the Company repurchased 417,000 shares for approximately $10.0 million. The Company has approximately $40.0 million approved for future share repurchases under the current plan.

First Quarter Outlook

For the first quarter of 2014, the Company expects revenues to be between $213.0 million and $222.0 million, Adjusted EBITDA to be between $51.0 million and $54.0 million, Non-GAAP Net Income to be between $45.0 million and $48.0 million, or $1.00 to $1.06 per diluted share, and GAAP Net Income to be between $22.0 million and $24.5 million, or $0.49 to $0.54 per diluted share.

Conference Call and Webcast

A conference call and live webcast will be held today at 2 p.m. Pacific time / 5 p.m. Eastern time during which the Company will further discuss fourth quarter and full year results, its outlook for the first quarter 2014, tax preparation segment guidance for the first half of 2014, and other business matters. The live webcast and supplemental materials are included in a current report on form 8-K filed today and can be accessed in the Investor Relations section of the Blucora corporate website at http://www.blucora.com. A replay of the call will also be available on our website.

###

About Blucora™

Blucora, Inc. (NASDAQ: BCOR) operates a diverse group of Internet businesses. Its mission is to deliver long-term value to its customers, partners and shareholders through financial discipline, operational expertise, and technology innovation. Recently named one of Fortune^® Magazine’s 100 Fastest-Growing Companies, Blucora’s online businesses reach millions of users worldwide every day. Blucora is headquartered in Bellevue, Washington. For more information, please visit www.Blucora.com.

Source: Blucora

Blucora Contact:

Stacy Ybarra, 425-709-8127

stacy.ybarra@blucora.com

This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: general economic, industry, and market sector conditions; the timing and extent of market acceptance of developed products and services and related costs; our dependence on companies to distribute our products and services; the ability to successfully integrate acquired businesses; future acquisitions; the successful execution of the Company’s strategic initiatives, operating plans, and marketing strategies; and the condition of our cash investments, and the completion of the audit of our financial statements for 2013. A more detailed description of these and certain other factors that could affect actual results is included in Blucora, Inc.’s most recent Annual Report on Form 10-K and subsequent reports filed with or furnished to the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Blucora, Inc. undertakes no obligation to update any forward-looking statements to reflect new information, events, or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

Blucora, Inc.

Preliminary Condensed Consolidated Statements of Operations ⁽¹⁾

(Unaudited)

(Amounts in thousands, except per share data)


	Three months ended						Year ended
	December 31,			December 31,			December 31,			December 31,
	2013			2012			2013			2012
Revenues:
Services revenue	$	127,667		$	97,470		$	519,677		$	406,919
Product revenue, net		39,673			—			54,303			—


Total revenues		167,340			97,470			573,980			406,919

Operating expenses:
Cost of revenues:
Services cost of revenue (includes amortization of acquired intangible assets of $1,895, $1,975, $7,668, and $7,580)		83,005			73,637			302,279			265,945
Product cost of revenue		27,559			—			38,181			—


Total cost of revenues ⁽¹⁾		110,564			73,637			340,460			265,945

Engineering and technology ⁽¹⁾		3,731			2,538			11,682			9,969
Sales and marketing ⁽¹⁾		27,273			8,152			98,682			45,644
General and administrative ⁽¹⁾		8,485			5,713			29,847			27,418
Depreciation		1,001			492			2,739			2,119
Amortization of intangible assets		5,600			3,169			16,121			11,619


Total operating expenses		156,654			93,701			499,531			362,714


Operating income		10,686			3,769			74,449			44,205
Other income (loss), net⁽²⁾		(9,196	)		1,004			(29,623	)		(6,677	)


Income before income taxes		1,490			4,773			44,826			37,528
Income tax expense		(2,624	)		(953	)		(20,427	)		(15,002	)


Net income (loss)	$	(1,134	)	$	3,820		$	24,399		$	22,526


Income (loss) per share:
Basic	$	(0.03	)	$	0.09		$	0.59		$	0.56

Diluted	$	(0.03	)	$	0.04		$	0.56		$	0.54


Weighted average shares outstanding:
Basic		41,566			40,789			41,201			40,279
Diluted		41,566			42,411			43,480			41,672

⁽¹⁾

In the year ended December 31, 2012, $5.2 million in stock-based compensation was recorded in association with the modification of the terms of a warrant and the vesting of non-employee performance-based stock options upon completion of the TaxACT acquisition, and the related expense was allocated to general and administrative expense. Stock-based compensation expense was allocated among the following captions (in thousands):


	Three months ended				Year ended
	December 31, 2013		December 31, 2012		December 31, 2013		December 31, 2012
	December 31, 2013		December 31, 2012		December 31, 2013		December 31, 2012
Stock-Based Compensation
Cost of revenues	$	121	$	227	$	662	$	558
Engineering and technology		409		286		1,351		1,180
Sales and marketing		683		520		2,335		1,909
General and administrative		1,824		1,267		7,179		9,576

Total stock-based compensation expense	$	3,037	$	2,300	$	11,527	$	13,223

⁽²⁾	Other (income) loss, net was allocated among the following captions (in thousands):


	Three months ended						Year ended
	December 31,			December 31,			December 31,			December 31,
	2013			2012			2013			2012
Other (Income) Loss, Net
Interest income	$	(94	)	$	(52	)	$	(300	)	$	(131	)
Interest expense		2,756			875			9,463			3,522
Amortization of debt issuance costs		267			74			1,108			820
Accretion of debt discounts		866			31			2,838			325
Loss on debt extinguishment and modification expense		—			—			1,593			—
(Gain) loss on derivative instrument		5,721			(1,928	)		11,652			2,346
Impairment of equity investment in privately-held company		—			—			3,711			—
Decrease in fair value of earn-out contingent liability		(300	)		—			(300	)		—
Other		(20	)		(4	)		(142	)		(205	)

Total other (income) loss, net	$	9,196		$	(1,004	)	$	29,623		$	6,677

Blucora, Inc.

Preliminary Condensed Consolidated Balance Sheets

(Unaudited)

(Amounts in thousands)


	December 31, 2013			December 31, 2012
ASSETS

Current assets:
Cash and cash equivalents	$	130,225		$	68,278
Short-term investments, available-for-sale		203,480			94,010
Accounts receivable, net of allowance of $62 and $10		48,081			34,932
Other receivables		8,292			3,942
Inventories		28,826			—
Prepaid expenses and other current assets, net		9,774			10,911


Total current assets		428,678			212,073
Property and equipment, net		16,108			7,533
Goodwill		348,957			230,290
Other intangible assets, net		178,064			132,815
Other long-term assets		6,223			2,582


Total assets	$	978,030		$	585,293


LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	61,268		$	37,687
Accrued expenses and other current liabilities		31,109			13,280
Deferred revenue		7,510			3,157
Short-term portion of long-term debt, net		7,903			4,590
Convertible senior notes, net		181,583			—
Derivative instruments		—			8,974


Total current liabilities		289,373			67,688

Long-term liabilities:
Long-term debt, net		113,193			69,278
Deferred tax liability, net		56,861			29,333
Deferred revenue		1,814			1,319
Other long-term liabilities		2,719			2,225


Total long-term liabilities		174,587			102,155


Total liabilities		463,960			169,843

Stockholders’ equity:
Common stock		4			4
Additional paid-in capital		1,466,043			1,392,098
Accumulated deficit		(951,977	)		(976,376	)
Accumulated other comprehensive loss		—			(276	)


Total stockholders’ equity		514,070			415,450


Total liabilities and stockholders’ equity	$	978,030		$	585,293

Blucora, Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Amounts in thousands)


	Year ended
	December 31,			December 31,
	2013			2012
Operating activities:
Net income	$	24,399		$	22,526
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation		11,527			8,937
Warrant-related stock-based compensation		—			4,286
Loss on derivative instrument		11,652			2,346
Depreciation and amortization of intangible assets		28,265			23,011
Excess tax benefits from stock-based award activity		(29,400	)		(23,041	)
Deferred income taxes		(10,849	)		(8,738	)
Amortization of premium or accretion of discount on investments, net		3,007			(194	)
Impairment loss on equity investment in privately-held company		3,711			—
Amortization of debt issuance costs		1,108			820
Accretion of debt discount		2,838			325
Loss on debt extinguishment and modification expense		1,593			—
Earn-out contingent liability adjustments		(300	)		—
Other		767			31
Cash provided (used) by changes in operating assets and liabilities:
Accounts receivable		(9,911	)		(597	)
Other receivables		1,741			(665	)
Inventories		(1,349	)		—
Prepaid expenses and other current assets		2,511			(5,862	)
Other long-term assets		256			1,981
Accounts payable		12,275			(1,600	)
Deferred revenue		3,527			4,170
Accrued expenses and other current and long-term liabilities		37,688			21,095

Net cash provided by operating activities		95,056			48,831

Investing activities:
Business acquisitions, net of cash acquired		(184,982	)		(279,386	)
Equity investment in privately-held company		(4,000	)		—
Purchases of property and equipment		(4,747	)		(3,752	)
Change in restricted cash		2,491			252
Proceeds from sales of investments		25,812			203,493
Proceeds from maturities of investments		213,616			36,753
Purchases of investments		(351,883	)		(122,433	)

Net cash used by investing activities		(303,693	)		(165,073	)

Financing activities:
Proceeds from issuance of convertible debt, net of debt issuance costs of $6,432		194,818			—
Proceeds from credit facilities, net of debt issuance costs and debt discount of $406 and $300 in 2013 and $2,343 and $953 in 2012		55,294			96,704
Debt issuance costs on credit facility		(28	)		—
Repayment of debt		(10,000	)		(25,504	)
Stock repurchases		(10,006	)		—
Excess tax benefits from stock-based award activity		29,400			23,041
Proceeds from issuance of common stock upon warrant exercise		9,620			—
Proceeds from stock option exercises		2,826			9,099
Proceeds from issuance of stock through employee stock purchase plan		1,065			601
Tax payments from shares withheld upon vesting of restricted stock units		(2,405	)		(1,318	)

Net cash provided by financing activities		270,584			102,623

Net increase (decrease) in cash and cash equivalents		61,947			(13,619	)

Cash and cash equivalents:
Beginning of period		68,278			81,897

End of period	$	130,225		$	68,278

Blucora, Inc.

Preliminary Segment Information

(Unaudited)

(Amounts in thousands)


	Three months ended						Year ended
	December 31, 2013			December 31, 2012			December 31, 2013			December 31, 2012

Revenues:
Search	$	125,624		$	96,303		$	428,464		$	344,814
Tax Preparation		2,043			1,167			91,213			62,105
E-Commerce		39,673			—			54,303			—

Total revenues		167,340			97,470			573,980			406,919

Operating income:
Search		25,003			17,378			82,504			62,185
Tax Preparation		(3,018	)		(2,476	)		40,599			30,052
E-Commerce		4,061			—			4,967			—
Corporate-level activity		(15,360	)		(11,133	)		(53,621	)		(48,032	)

Total operating income		10,686			3,769			74,449			44,205

Other income (loss), net		(9,196	)		1,004			(29,623	)		(6,677	)
Income tax expense		(2,624	)		(953	)		(20,427	)		(15,002	)

Net income (loss)	$	(1,134	)	$	3,820		$	24,399		$	22,526

Blucora, Inc.

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

Preliminary Adjusted EBITDA Reconciliation ⁽¹⁾

(Unaudited)

(Amounts in thousands)


	Three months ended						Year ended
	December 31, 2013			December 31, 2012			December 31, 2013		December 31, 2012
Net income (loss) ⁽²⁾	$	(1,134	)	$	3,820		$	24,399	$	22,526
Depreciation and amortization of intangible assets		8,852			6,061			28,265		23,011
Stock-based compensation		3,037			2,300			11,527		13,223
Other (income) loss, net ⁽³⁾		9,196			(1,004	)		29,623		6,677
Income tax expense		2,624			953			20,427		15,002

Adjusted EBITDA	$	22,575		$	12,130		$	114,241	$	80,439

Blucora, Inc.

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

Preliminary Non-GAAP Net Income Reconciliation ⁽¹⁾

(Unaudited)

(Amounts in thousands, except per share amounts)


	Three months ended						Year ended
	December 31, 2013			December 31, 2012			December 31, 2013			December 31, 2012
Net income (loss) ⁽²⁾	$	(1,134	)	$	3,820		$	24,399		$	22,526
Stock-based compensation		3,037			2,300			11,527			13,223
Amortization of acquired intangible assets		7,495			5,144			23,789			19,199
Accretion of debt discount on convertible notes		858			—			2,674			—
(Gain) loss on derivative instrument		5,721			(1,928	)		11,652			2,346
Impairment of equity investment in privately-held company		—			—			3,711			—
Loss on debt extinguishment and modification expense		—			—			1,593			—
Cash tax impact of adjustments to GAAP net income		(8	)		9			(189	)		(93	)
Non-cash income tax expense ⁽¹⁾		2,126			660			18,538			13,559

Non-GAAP net income	$	18,095		$	10,005		$	97,694		$	70,760


Per share amounts
Net income (loss) - diluted		(0.03	)		0.04	⁽⁴⁾		0.56			0.54
Stock-based compensation - diluted		0.07			0.06			0.26			0.32
Amortization of acquired intangible assets - diluted		0.16			0.12			0.55			0.46
Accretion of debt discount on convertible notes - diluted		0.02			—			0.06			—
Loss on derivative instrument - diluted		0.13			—	⁽⁴⁾		0.27			0.06
Impairment of equity investment in privately-held company - diluted		—			—			0.09			—
Loss on debt extinguishment and modification expense - diluted		—			—			0.03			—
Cash tax impact of adjustments to GAAP net income - diluted		0.00			0.00			0.00			0.00
Non-cash income tax expense - diluted		0.05			0.02			0.43			0.32

Non-GAAP net income per share - diluted	$	0.40		$	0.24		$	2.25		$	1.70


Weighted average shares outstanding used in computing diluted non-GAAP income per share and its components		45,716			42,411			43,480			41,672

Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance

(Amounts in thousands)


	Ranges for the three months ending March 31, 2014
Net income	$	22,000	$	24,500
Depreciation and amortization of intangible assets		9,000		9,000
Stock-based compensation		3,100		2,900
Other loss, net ⁽³⁾		4,100		4,100
Income tax benefit		12,800		13,500

Adjusted EBITDA	$	51,000	$	54,000

Preliminary Non-GAAP Net Income Reconciliation for Forward-Looking Guidance

(Amounts in thousands)


	Ranges for the three months ending
	March 31, 2014
Net income	$	22,000	$	24,500
Stock-based compensation		3,100		2,900
Amortization of acquired intangible assets		7,500		7,500
Accretion of debt discount on convertible notes		900		900
Non-cash income tax benefit		11,500		12,200

Non-GAAP net income	$	45,000	$	48,000

⁽¹⁾

Blucora defines Adjusted EBITDA as net income determined in accordance with the accounting principles generally accepted in the United States of America (“GAAP”), excluding the effects of discontinued operations (which includes loss from discontinued operations and loss on sale of discontinued operations, both net of taxes), income taxes, depreciation, amortization of intangible assets, stock-based compensation, and other income/loss, net (as described in note ⁽³⁾below). Blucora’s management believes that Adjusted EBITDA provides meaningful supplemental information regarding the Company’s performance. Blucora uses 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. Blucora believes that Adjusted EBITDA is a common measure used by investors and analysts to evaluate its performance, that it provides a more complete understanding of the results of operations and trends affecting the Company’s 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 the Company’s 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, Blucora’s Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

Blucora defines non-GAAP net income as net income, determined in accordance with GAAP, excluding the effects of discontinued operations (which includes loss from discontinued operations and loss on sale of discontinued operations, both net of taxes), stock-based compensation, amortization of acquired intangible assets, accretion of debt discount on convertible notes, losses on debt extinguishment and modification expense, gains or losses on derivative instrument, other- than-temporary impairment losses on equity investment, the related cash tax impact of those adjustments, and non-cash income taxes 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 deferred tax assets, which consist primarily of U.S. federal net operating losses. The majority of these deferred tax assets will expire, if unutilized, between 2020 and 2024.

Blucora’s management believes that non-GAAP net income and non-GAAP net income per share provide meaningful supplemental information to management, investors, and analysts regarding the Company’s performance and the valuation of its business by excluding items in the statement of operations that management does not consider part of the Company’s ongoing operations or have not been, or are not expected to be, settled in cash. Additionally, Blucora’s management believes that non-GAAP net income and non-GAAP net income per share are common measures used by investors and analysts to evaluate the Company’s performance and the valuation of its business. Non-GAAP net income should be evaluated in light of our financial results prepared in accordance with GAAP and should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income. Other companies may calculate non-GAAP net income differently, and, therefore, Blucora’s non-GAAP net income may not be comparable to similarly titled measures of other companies.

⁽²⁾	As presented in the Preliminary Condensed Consolidated Statements of Operations (unaudited).

⁽³⁾

Other income/loss, net primarily includes items such as interest income, interest expense, amortization of debt issuance costs, accretion of debt discounts, loss on debt extinguishment and modification expense, gains or losses on derivative instrument, other-than-temporary impairment losses on equity investments, and adjustments to the fair values of contingent liabilities related to business combinations.

⁽⁴⁾	Calculation excludes the income effect of a dilutive derivative instrument.

BLUCORA, INC. - FORM 8-K - EX-99.1 - February 20, 2014

Attached files

BLUCORA, INC. Reports