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EX-99.2 - EXHIBIT 99.2 - BLUCORA, INC.ex-992earningsreleaseq.htm
8-K - 8-K - BLUCORA, INC.bcor8-kq42019earningsr.htm


Exhibit 99.1
 blucoralogoa03.jpg
Blucora Reports Fourth Quarter and Full Year 2019 Results

IRVING, TX — February 19, 2020 — Blucora, Inc. (NASDAQ: BCOR), a leading provider of tax-smart financial solutions that empower people’s goals, today announced financial results for the fourth quarter and full year ended December 31, 2019.

2019 Highlights and Recent Developments

Increased total revenue by 28% year-over-year (y/y), including addition of 1st Global since May 6
Achieved record advisory net flows at Avantax of approximately $1 billion
Recorded 22nd consecutive year of revenue growth at TaxAct, growing 12% year-over-year
Completed $28 million of a $100 million share repurchase program, supported by strong cash flow generation
Completed acquisition of 1st Global, adding significant scale, complementary capabilities and high recurring revenue
Achieved $6.5 million in synergies related to 1st Global in 2019, more than double original estimate
“Blucora’s fourth quarter results cap a year of strong financial performance, strengthening our platform, and investing for future growth,” said Chris Walters, Blucora’s President and Chief Executive Officer. “While we have made good progress on many fronts, I’m even more excited about the growth opportunities we see ahead.”
Summary Financial Performance: Q4 and Full Year 2019
($ in millions except per share amounts)
 
Q4
 
Q4
 
 
 
Full Year
 
Full Year
 
 
 
2019
 
2018
 
Change
 
2019
 
2018
 
Change
Revenue
 
 
 
 
 
 
 
 
 
 
 
Wealth Management
$
145.2

 
$
97.2

 
49
 %
 
$
508.0

 
$
373.2

 
36
 %
Tax Preparation
$
4.2

 
$
4.1

 
2
 %
 
$
210.0

 
$
187.3

 
12
 %
  Total Revenue
$
149.4

 
$
101.3

 
47
 %
 
$
717.9

 
$
560.5

 
28
 %
Segment Income (Loss):
 
 
 
 
 
 
 
 
 
 
 
Wealth Management
$
19.1

 
$
14.1

 
35
 %
 
$
68.3

 
$
53.1

 
29
 %
Tax Preparation
$
(12.3
)
 
$
(8.7
)
 
(41
)%
 
$
96.2

 
$
87.2

 
10
 %
  Total Segment Income
$
6.8

 
$
5.4

 
26
 %
 
$
164.5

 
$
140.3

 
17
 %
Unallocated Corporate Operating Expenses
$
7.6

 
$
6.1

 
25
 %
 
$
27.4

 
$
20.5

 
34
 %
GAAP:
 
 
 
 
 
 
 
 
 
 
 
Operating Income (Loss)
$
(26.0
)
 
$
(13.5
)
 
(93
)%
 
$

 
$
67.7

 
(100
)%
Net Income (Loss) Attributable to Blucora. Inc.
$
17.3

 
$
(16.0
)
 
208
 %
 
$
48.1

 
$
50.6

 
(5
)%
Diluted Net Income (Loss) Per Share Attributable to Blucora. Inc. (1)
$
0.36

 
$
(0.38
)
 
195
 %
 
$
0.98

 
$
0.90

 
9
 %
Non-GAAP: (2)
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
$
(0.7
)
 
$
(0.8
)
 
13
 %
 
$
137.2

 
$
119.8

 
15
 %
Net Income (Loss)
$
(4.8
)
 
$
(7.5
)
 
36
 %
 
$
104.2

 
$
94.0

 
11
 %
Diluted Net Income (Loss) per Share
$
(0.10
)
 
$
(0.16
)
 
38
 %
 
$
2.11

 
$
1.90

 
11
 %
____________________________
(1)
Includes noncontrolling interest redemption impacts of $(0.05) and (0.13) for the fourth quarter and full year ended December 31, 2018, respectively.
(2)
See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.





2019 Results vs. Prior Guidance

$ in millions
Prior Guidance
Midpoint
Actual
Difference at Midpoint
   Wealth Management Revenue
$505.0 - $510.0
$507.5
$508.0
$0.5
   TaxAct Revenue
$209.5 - $210.5
$210.0
$210.0
$—
Total Revenue
$714.5 - $720.5
$717.5
$717.9
$0.4
   Wealth Management Segment Income
$67.0 - $69.5
$68.3
$68.3
$—
   TaxAct Segment Income
$93.0 - $94.5
$93.8
$96.2
$2.4
   Corporate Unallocated Operating Expenses
$28.5 - $29.5
$29.0
$27.4
$1.6
Adjusted EBITDA
$130.5 - $135.5
$133.0
$137.2
$4.2

Tax Season Update

“We’re excited to have a significantly improved experience for TaxAct customers this tax season,” Walters continued. “Customers filing with TaxAct this year will experience a much easier and more enjoyable tax filing process, with several benefits to make the experience even more rewarding. A few highlights for this season include:

My Tax Plan: a new feature which creates a custom plan for each user to save more on taxes next year. It is personalized to the customer's tax situation, provides specific savings amounts, and includes a downloadable "checklist" of actions to save. We believe this is a significant and differentiated benefit to customers;

Pro Tips: a visually enticing way to reveal lesser-known tax advantages, customized for the individual filer, that help customers get a bigger refund this year and for years to come.

We also brought back some more of our most popular features, like our $100,000 accuracy guarantee, and an enhanced personalized Deduction Maximizer, which checks if customers have included every available deduction.”

“Based on early tax season data, we continue to expect first-half 2020 tax preparation revenue growth of approximately 3%-5% versus the comparable period last year, adjusted for the removal of SimpleTax, with segment margin in the range of 56.7%-57.7%.”

First Quarter Outlook

For the first quarter of 2020, the Company expects revenues to be between $271.0 million and $281.5 million, GAAP net income attributable to Blucora, Inc. to be between $31.5 million and $34.5 million, or $0.64 to $0.70 per diluted share, Adjusted EBITDA to be between $85.0 million and $91.0 million, and Non-GAAP net income to be between $74.5 million and $80.5 million, or $1.52 to $1.64 per diluted share.

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 fourth quarter and full year results, its outlook for the first quarter, 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 http://www.blucora.com prior to the call. The supplemental financial information has also been filed with the SEC on Form 8-K. A replay of the call will be available on our website.





About Blucora®
Blucora, Inc. (NASDAQ: BCOR) is on the forefront of financial technology, pioneering tax-smart financial solutions that empower people’s goals. Blucora operates in two segments including wealth management, through its Avantax Wealth Management business (formerly operating under the HD Vest and 1st Global brands), the No. 1 tax-focused broker-dealer, with $71 billion in total client assets as of December 31, 2019, and tax preparation, through its TaxAct business, a market leader in tax preparation software with approximately 3 million consumer and professional users. With integrated tax and wealth management, Blucora is uniquely positioned to provide better long-term outcomes for customers with 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,” “projects” and similar expressions and variations as they relate to the Company or its management are intended to identify forward-looking statements. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: our ability to effectively implement our future business plans and growth strategy; our ability to effectively compete within our industry; our ability to attract and retain qualified employees and leadership, advisors, clients and customers; our ability to execute upon the contemplated strategic and performance initiatives and to successfully integrate acquired businesses or assets and realize the anticipated benefits thereof; the availability of financing and our ability to meet our current and future debt service obligations and comply with our debt covenants; our ability to generate strong investment performance for our customers and the impact of the financial markets on our customers’ portfolios; political and economic conditions and events that directly or indirectly impact the wealth management and tax preparation industries; our ability to successfully make technology enhancements and introduce new and improve on existing products and services; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; our ability to manage leadership and employee transitions; risks related to goodwill and other intangible asset impairment; our ability to comply with regulations (or interpretations thereof) applicable to the wealth management and tax preparation industries, including increased costs associated with or reductions in revenue resulting from new or changing regulations or interpretations of existing regulations; risks associated with our business being subject to enhanced regulatory scrutiny; our ability to comply with laws and regulations regarding privacy and protection of data; cybersecurity risks; our ability to develop and maintain our relationships with third party partners; the seasonality of our business; legal proceedings risks, including litigation and regulatory proceedings; our assessments and estimates that determine our effective tax rate; the impact of new or changing tax legislation; our ability to develop, establish and maintain strong brands; and our ability to protect our intellectual property. 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. In addition, the Company has not filed its Form 10-K for the year ended December 31, 2019. As a result, all financial results described in this earnings release should be considered preliminary, and are subject to change to reflect the completion of our audit and any necessary adjustments or changes in accounting estimates that are identified prior to the time the Company files the Form 10-K.







Blucora, Inc.
Preliminary Condensed Consolidated Statements of Operations
(Unaudited) (Amounts in thousands, except per share data)
 
Three Months Ended December 31,
 
Years Ended December 31,
 
2019
 
2018
 
2019
 
2018
Revenue:
 
 
 
 
 
 
 
Wealth management services revenue
$
145,188

 
$
97,190

 
$
507,979

 
$
373,174

Tax preparation services revenue
4,233

 
4,068

 
209,966

 
187,282

Total revenue
149,421

 
101,258

 
717,945

 
560,456

Operating expenses:
 
 
 
 
 
 
 
Cost of revenue:
 
 
 
 
 
 
 
Wealth management services cost of revenue
101,200

 
66,054

 
352,081

 
253,580

Tax preparation services cost of revenue
1,708

 
1,858

 
10,691

 
10,040

Amortization of acquired technology

 

 

 
99

Total cost of revenue (1)
102,908

 
67,912

 
362,772

 
263,719

Engineering and technology (1)
8,608

 
5,107

 
30,931

 
19,332

Sales and marketing (1)
21,401

 
16,642

 
126,205

 
111,361

General and administrative (1)
22,808

 
16,229

 
78,529

 
60,124

Acquisition and integration
8,024

 

 
25,763

 

Depreciation
1,633

 
762

 
5,479

 
4,468

Amortization of other acquired intangible assets
10,062

 
8,103

 
37,357

 
33,487

Impairment of intangible asset

 

 
50,900

 

Restructuring

 
(3
)
 

 
288

Total operating expenses
175,444

 
114,752

 
717,936

 
492,779

Operating income (loss)
(26,023
)
 
(13,494
)
 
9

 
67,677

Other loss, net (2)
(5,233
)
 
(3,947
)
 
(16,915
)
 
(15,797
)
Income (loss) before income taxes
(31,256
)
 
(17,441
)
 
(16,906
)
 
51,880

Income tax benefit (expense)
48,584

 
1,741

 
65,054

 
(311
)
Net income (loss)
17,328

 
(15,700
)
 
48,148

 
51,569

Net income attributable to noncontrolling interests

 
(281
)
 

 
(935
)
Net income (loss) attributable to Blucora, Inc.
$
17,328

 
$
(15,981
)
 
$
48,148

 
$
50,634

Net income (loss) per share attributable to Blucora, Inc.:
 
 
 
 
 
 
 
Basic
$
0.36

 
$
(0.38
)
 
$
1.00

 
$
0.94

Diluted
$
0.36

 
$
(0.38
)
 
$
0.98

 
$
0.90

Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
47,689

 
48,002

 
48,264

 
47,394

Diluted
48,344

 
48,002

 
49,282

 
49,381

____________________________
(1)
Stock-based compensation expense was allocated among the following captions (in thousands):
 
Three Months Ended December 31,
 
Years Ended December 31,
 
2019
 
2018
 
2019
 
2018
Cost of revenue
$
1,341

 
$
527

 
$
4,082

 
$
1,467

Engineering and technology
193

 
176

 
715

 
766

Sales and marketing
257

 
589

 
346

 
2,424

General and administrative
3,345

 
2,402

 
11,157

 
8,596

Total stock-based compensation expense
$
5,136

 
$
3,694

 
$
16,300

 
$
13,253

(2)
Other loss, net consisted of the following (in thousands):
 
Three Months Ended December 31,
 
Years Ended December 31,
 
2019
 
2018
 
2019
 
2018
Interest expense
$
5,002

 
$
3,838

 
$
19,017

 
$
15,610

Interest income
(108
)
 
(132
)
 
(449
)
 
(349
)
Amortization of debt issuance costs
194

 
174

 
1,042

 
833

Accretion of debt discounts
39

 
38

 
228

 
163

Loss on debt extinguishment

 

 

 
1,534

Gain on sale of a business

 

 
(3,256
)
 

Other
106

 
29

 
333

 
(1,994
)
Other loss, net
$
5,233

 
$
3,947

 
$
16,915

 
$
15,797






Blucora, Inc.
Preliminary Condensed Consolidated Balance Sheets
(Unaudited) (Amounts in thousands)
 
December 31,
 
2019
 
2018
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
80,820

 
$
84,524

Cash segregated under federal or other regulations
5,630

 
842

Accounts receivable, net of allowance
16,266

 
15,721

Commissions receivable
21,176

 
15,562

Other receivables
2,902

 
7,408

Prepaid expenses and other current assets, net
12,349

 
7,755

Total current assets
139,143

 
131,812

Long-term assets:
 
 
 
Property and equipment, net
18,706

 
12,389

Right-of-use assets, net
10,151

 

Goodwill, net
662,375

 
548,685

Other intangible assets, net
290,211

 
294,603

Deferred tax asset, net
9,997

 

Other long-term assets
6,989

 
10,236

Total long-term assets
998,429

 
865,913

Total assets
$
1,137,572

 
$
997,725

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
10,969

 
$
3,798

Commissions and advisory fees payable
19,905

 
15,199

Accrued expenses and other current liabilities
36,144

 
18,980

Deferred revenue—current
12,014

 
10,257

Lease liabilities—current
3,272

 
46

Current portion of long-term debt, net
11,228

 

Total current liabilities
93,532

 
48,280

Long-term liabilities:
 
 
 
Long-term debt, net
381,485

 
260,390

Deferred tax liability, net

 
40,394

Deferred revenue—long-term
7,172

 
8,581

Lease liabilities—long-term
5,916

 
100

Other long-term liabilities
5,952

 
7,440

Total long-term liabilities
400,525

 
316,905

Total liabilities
494,057

 
365,185

 
 
 
 
Redeemable noncontrolling interests

 
24,945

 
 
 
 
Stockholders’ equity:
 
 
 
Common stock, par $0.0001—900,000 authorized shares; 49,059 shares issued and 47,753 shares outstanding at December 31, 2019; 48,044 shares issued and outstanding at December 31, 2018
5

 
5

Additional paid-in capital
1,586,972

 
1,569,725

Accumulated deficit
(914,791
)
 
(961,689
)
Accumulated other comprehensive loss
(272
)
 
(446
)
Treasury stock, at cost—1,306 shares at December 31, 2019
(28,399
)
 

Total stockholders’ equity
643,515

 
607,595

Total liabilities and stockholders’ equity
$
1,137,572

 
$
997,725







Blucora, Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(Unaudited) (Amounts in thousands)
 
Years Ended December 31,
 
2019
 
2018
Operating activities:
 
 
 
Net income
$
48,148

 
$
51,569

Adjustments to reconcile net income to net cash from operating activities:
 
 
 
Stock-based compensation
16,300

 
13,253

Depreciation and amortization of acquired intangible assets
44,208

 
38,589

Impairment of intangible asset
50,900

 

Reduction of right-of-use assets
4,425

 

Deferred income taxes
(67,549
)
 
(3,039
)
Amortization of premium on investments, net, and debt issuance costs
1,042

 
833

Accretion of debt discounts
228

 
163

Loss on debt extinguishment and modification expense

 
1,534

Gain on sale of a business
(3,256
)
 

Other
734

 
73

Cash provided (used) by changes in operating assets and liabilities:
 
 
 
Accounts receivable
871

 
(4,286
)
Commissions receivable
(471
)
 
1,260

Other receivables
4,506

 
(3,851
)
Prepaid expenses and other current assets
10,537

 
(815
)
Other long-term assets
3,377

 
3,450

Accounts payable
29

 
(615
)
Commissions and advisory fees payable
432

 
(2,614
)
Lease liabilities
(7,335
)
 

Deferred revenue
(17,367
)
 
9,930

Accrued expenses and other current and long-term liabilities
3,045

 
114

Net cash provided by operating activities
92,804

 
105,548

Investing activities:
 
 
 
Business acquisition, net of cash acquired
(166,560
)
 

Purchases of property and equipment
(10,501
)
 
(7,633
)
Proceeds from sale of a business, net of cash
7,467

 

Net cash used by investing activities
(169,594
)
 
(7,633
)
Financing activities:
 
 
 
Proceeds from credit facilities, net of debt issuance costs and debt discount
131,489

 

Payments on credit facilities
(313
)
 
(80,000
)
Stock repurchases
(28,399
)
 

Payment of redeemable noncontrolling interests
(24,945
)
 

Proceeds from stock option exercises
4,387

 
12,773

Proceeds from issuance of stock through employee stock purchase plan
2,212

 
2,100

Tax payments from shares withheld for equity awards
(5,652
)
 
(8,362
)
Contingent consideration payments for business acquisition
(943
)
 
(1,315
)
Net cash provided (used) by financing activities
77,836

 
(74,804
)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
38

 
(56
)
Net increase in cash, cash equivalents, and restricted cash
1,084

 
23,055

Cash, cash equivalents, and restricted cash, beginning of period
85,366

 
62,311

Cash, cash equivalents, and restricted cash, end of period
$
86,450

 
$
85,366







Blucora, Inc.
Preliminary Segment Information
(Unaudited) (Amounts in thousands)
 
Three Months Ended December 31,
 
Years Ended December 31,
 
2019
 
2018
 
2019
 
2018
Revenue:
 
 
 
 
 
 
 
Wealth Management (1)
$
145,188

 
$
97,190

 
$
507,979

 
$
373,174

Tax Preparation (1)
4,233

 
4,068

 
209,966

 
187,282

Total revenue
149,421

 
101,258

 
717,945

 
560,456

Operating income (loss):
 
 
 
 
 
 
 
Wealth Management
19,142

 
14,133

 
68,292

 
53,053

Tax Preparation
(12,316
)
 
(8,742
)
 
96,249

 
87,249

Corporate-level activity (2)
(32,849
)
 
(18,885
)
 
(164,532
)
 
(72,625
)
Total operating income (loss)
(26,023
)
 
(13,494
)
 
9

 
67,677

Other loss, net
(5,233
)
 
(3,947
)
 
(16,915
)
 
(15,797
)
Income tax benefit (expense)
48,584

 
1,741

 
65,054

 
(311
)
Net income (loss)
$
17,328

 
$
(15,700
)
 
$
48,148

 
$
51,569

____________________________
(1)
Revenues by major category within each segment are presented below (in thousands):
 
Three Months Ended December 31,
 
Years Ended December 31,
 
2019
 
2018
 
2019
 
2018
Wealth Management:
 
 
 
 
 
 
 
Commission
$
53,199

 
$
39,932

 
$
191,050

 
$
164,201

Advisory
75,621

 
43,551

 
252,367

 
164,353

Asset-based
11,652

 
9,999

 
48,182

 
31,456

Transaction and fee
4,716

 
3,708

 
16,380

 
13,164

Total Wealth Management revenue
$
145,188

 
$
97,190

 
$
507,979

 
$
373,174

Tax Preparation:
 
 
 
 
 
 
 
Consumer
$
4,096

 
$
3,912

 
$
195,004

 
$
172,207

Professional
137

 
156

 
14,962

 
15,075

Total Tax Preparation revenue
$
4,233

 
$
4,068

 
$
209,966

 
$
187,282


(2)Corporate-level activity included the following (in thousands):
 
Three Months Ended December 31,
 
Years Ended December 31,
 
2019
 
2018
 
2019
 
2018
Operating expenses
$
7,559

 
$
6,144

 
$
27,361

 
$
20,495

Stock-based compensation
5,136

 
3,694

 
16,300

 
13,253

Acquisition and integration costs
8,024

 

 
25,763

 

Depreciation
2,068

 
947

 
6,851

 
5,003

Amortization of acquired intangible assets
10,062

 
8,103

 
37,357

 
33,586

Impairment of intangible asset

 

 
50,900

 

Restructuring

 
(3
)
 

 
288

Total corporate-level activity
$
32,849

 
$
18,885

 
$
164,532

 
$
72,625












Blucora, Inc.
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (1)

Preliminary Adjusted EBITDA Reconciliation (1)
(Unaudited) (Amounts in thousands)
 
Three Months Ended December 31,
 
Years Ended December 31,
 
2019
 
2018
 
2019

2018
Net income attributable to Blucora, Inc. (2)
$
17,328

 
$
(15,981
)
 
$
48,148

 
$
50,634

Stock-based compensation
5,136

 
3,694

 
16,300

 
13,253

Depreciation and amortization of acquired intangible assets
12,130

 
9,050

 
44,208

 
38,589

Restructuring

 
(3
)
 

 
288

Other loss, net (3)
5,233

 
3,947

 
16,915

 
15,797

Net income attributable to noncontrolling interests

 
281

 

 
935

Acquisition and integration costs
8,024

 

 
25,763

 

Income tax (benefit) expense
(48,584
)
 
(1,741
)
 
(65,054
)
 
311

Impairment of intangible asset

 

 
50,900

 

Adjusted EBITDA
$
(733
)
 
$
(753
)
 
$
137,180

 
$
119,807


Preliminary Non-GAAP Net Income (Loss) and Non-GAAP Income (Loss) Per Share Reconciliation (1)
(Unaudited) (Amounts in thousands, except per share amounts)
 
Three Months Ended December 31,
 
Years Ended December 31,
 
2019
 
2018
 
2019
 
2018
Net income (loss) attributable to Blucora, Inc. (2)
$
17,328

 
$
(15,981
)
 
$
48,148

 
$
50,634

Stock-based compensation
5,136

 
3,694

 
16,300

 
13,253

Amortization of acquired intangible assets
10,062

 
8,103

 
37,357

 
33,586

Impairment of intangible asset

 

 
50,900

 

Gain on sale of a business

 

 
(3,256
)
 

Acquisition and integration costs
8,024

 

 
25,763

 

Restructuring

 
(3
)
 

 
288

Net income attributable to noncontrolling interests

 
281

 

 
935

Cash tax impact of adjustments to GAAP net income
(504
)
 
(536
)
 
(2,396
)
 
(2,257
)
Non-cash income tax benefit
(44,859
)
 
(3,050
)
 
(68,618
)
 
(2,403
)
Non-GAAP net income (loss)
$
(4,813
)
 
$
(7,492
)
 
$
104,198

 
$
94,036

Per diluted share:
 
 
 
 
 
 
 
Net income (loss) attributable to Blucora, Inc. (2)
$
0.36

 
$
(0.38
)
 
$
0.98

 
$
0.90

Stock-based compensation
0.11

 
0.08

 
0.33

 
0.27

Amortization of acquired intangible assets
0.21

 
0.15

 
0.76

 
0.68

Impairment of intangible asset

 

 
1.03

 

Gain on sale of a business

 

 
(0.07
)
 

Acquisition and integration costs
0.17

 

 
0.52

 

Restructuring

 

 

 
0.01

Net income attributable to noncontrolling interests

 
0.06

 

 
0.14

Cash tax impact of adjustments to GAAP net income
(0.01
)
 
(0.01
)
 
(0.05
)
 
(0.05
)
Non-cash income tax benefit
(0.94
)
 
(0.06
)
 
(1.39
)
 
(0.05
)
Non-GAAP net income (loss) per share
$
(0.10
)
 
$
(0.16
)
 
$
2.11

 
$
1.90

Weighted average shares outstanding used in calculating Non-GAAP net income per share
47,689

 
48,002

 
49,282

 
49,381






Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance (1)
(Amounts in thousands)
 
Ranges for the three months ending
 
March 31, 2020
 
Low
 
High
Net income attributable to Blucora, Inc.
$
31,500

 
$
34,500

Stock-based compensation
3,200

 
3,000

Depreciation and amortization of acquired intangible assets
10,600

 
10,200

Acquisition, integration, relocation, and executive transition costs
18,200

 
17,800

Other loss, net (3)
5,600

 
5,400

Income tax expense
15,900

 
20,100

Adjusted EBITDA
$
85,000

 
$
91,000

Preliminary Non-GAAP Income Reconciliation for Forward-Looking Guidance (1)
(Amounts in thousands)
 
Ranges for the three months ending
 
March 31, 2020
 
Low
 
High
Net income attributable to Blucora, Inc.
$
31,500

 
$
34,500

Stock-based compensation
3,200

 
3,000

Amortization of acquired intangible assets
7,900

 
7,800

Acquisition, integration, relocation, and executive transition costs
18,200

 
17,800

Cash tax impact of adjustments to net income (loss)
(500
)
 
(500
)
Non-cash income tax expense
14,200

 
17,900

Non-GAAP income
$
74,500

 
$
80,500

Per diluted share:
 
 
 
Net income attributable to Blucora, Inc.
$
0.64

 
$
0.70

Stock-based compensation
0.07

 
0.06

Amortization of acquired intangible assets
0.16

 
0.16

Acquisition, integration, relocation, and executive transition costs
0.37

 
0.36

Cash tax impact of adjustments to net income (loss)
(0.01
)
 
(0.01
)
Non-cash income tax expense
0.29

 
0.37

Non-GAAP net income per share
$
1.52

 
$
1.64

 
 
 
 
Weighted average shares outstanding used in calculating Non-GAAP net income per share
49,154

 
49,004


Preliminary Adjusted EBITDA Reconciliation for Prior Guidance (1)
(Amounts in thousands)
 
Ranges for the year ending
 
December 31, 2019
 
Low
 
High
Net income attributable to Blucora, Inc.
$
(5,400
)
 
$
(400
)
Stock-based compensation
17,000

 
16,500

Depreciation and amortization of acquired intangible assets
45,500

 
45,000

Other loss, net (3)
19,000

 
18,000

Acquisition and integration costs
24,000

 
23,500

Impairment of intangible asset
51,000

 
51,000

Income tax benefit
(20,600
)
 
(18,100
)
Adjusted EBITDA
$
130,500

 
$
135,500







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

(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, restructuring, other loss, net, net income attributable to noncontrolling interests, acquisition and integration costs, income tax (benefit) expense, and the impairment of an intangible asset. Restructuring costs relate to the relocation of our corporate headquarters that were completed in 2018. Acquisition and integration costs relate to the acquisition of 1st Global. The impairment of an intangible asset relates to the impairment of the HD Vest trade name intangible asset.

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) attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets, the impairment of an intangible asset (described further under Adjusted EBITDA above), gain on the sale of a business, acquisition and integration costs (described further under Adjusted EBITDA above), restructuring costs (described further under Adjusted EBITDA above), net income attributable to noncontrolling interests, the related cash tax impact of those adjustments, and non-cash income taxes. The gain on the sale of a business refers to the gain recognized on the sale of SimpleTax in 2019. We exclude the non-cash portion of income taxes because of our ability to offset a substantial portion of our cash tax liabilities by using deferred tax assets, which primarily consist of U.S. federal net operating losses. The majority of these net operating losses will expire, if unutilized, between 2020 and 2024. The aforementioned items are only included in the calculation of non-GAAP net income (loss) in the periods they occurred.

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 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 net income per share. Other companies may calculate non-GAAP net income (loss) and non-GAAP net income (loss) per share differently, and, therefore, our non-GAAP net income (loss) and non-GAAP net income (loss) per share may not be comparable to similarly titled measures of other companies.

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

(3)
Other loss, net, primarily includes items such as interest expense, interest income, amortization of debt issuance costs, accretion of debt discounts, loss on debt extinguishment, and gain on the sale of a business.