Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - BLUCORA, INC. | d486328d8k.htm |
| EX-99.2 - EX-99.2 - BLUCORA, INC. | d486328dex992.htm |
Exhibit 99.1
Blucora Announces Fourth Quarter and Full Year 2012 Results
2012 Adjusted EBITDA Up 120% on TaxACT Acquisition and Strong Search Performance
BELLEVUE, Wash., February 13, 2013 (BUSINESS WIRE) — Blucora, Inc. (NASDAQ: BCOR) today announced financial results for the fourth quarter and full year ended December 31, 2012.
“The success of online search and tax preparation led Blucora to strong results for fiscal year 2012,” said Bill Ruckelshaus, President and Chief Executive Officer of Blucora. “We are pleased with our performance in both businesses in the fourth quarter and full year 2012. TaxACT entered the current tax season with momentum, driven by core product enhancements, content support improvements, and marketing programs aimed at increasing consumer awareness.”
Highlights
| • | Fourth quarter revenue and Adjusted EBITDA grew 46% and 19% respectively, over the prior year |
| • | Full year revenue and Adjusted EBITDA grew 78% and 120% respectively, year over year |
| • | Full year search segment income grew 35% over the prior year |
| • | Blucora Board of Directors approved a $50 million share repurchase program |
Summary Financial Performance: 4Q and Full Year 2012
($ in millions except per share amounts)
| Q4 2012 | Q4 2011 | Growth | FY 2012 | FY 2011 | Growth | |||||||||||||||||||||
| Revenue |
$ | 97.5 | $ | 66.6 | 46 | % | $ | 406.9 | $ | 228.8 | 78 | % | ||||||||||||||
| Search |
$ | 96.3 | $ | 66.6 | 45 | % | $ | 344.8 | $ | 228.8 | 51 | % | ||||||||||||||
| Tax Preparation |
$ | 1.2 | N/A | N/A | $ | 62.1 | N/A | N/A | ||||||||||||||||||
| Adjusted EBITDA |
$ | 12.1 | $ | 10.2 | 19 | % | $ | 80.4 | $ | 36.6 | 120 | % | ||||||||||||||
| Non-GAAP Net Income |
$ | 10.0 | $ | 6.9 | 45 | % | $ | 70.8 | $ | 28.8 | 146 | % | ||||||||||||||
| Non-GAAP Diluted EPS |
$ | 0.24 | $ | 0.17 | 41 | % | $ | 1.70 | $ | 0.74 | 130 | % | ||||||||||||||
| Net Income |
$ | 3.8 | $ | 22.9 | (2) | -83 | % | $ | 22.5 | $ | 21.6 | (2) | 4 | % | ||||||||||||
| GAAP Diluted Income Per Share |
$ | 0.04 | (1) | $ | 0.57 | (2) | -92 | % | $ | 0.54 | $ | 0.56 | (2) | -4 | % | |||||||||||
| (1) | Excludes a $1.9 million non-cash gain on derivative instrument |
| (2) | Includes a $18.9 million income tax benefit due to the reversal of the valuation allowance on deferred tax assets |
See reconciliation of non-GAAP to GAAP measures below.
Segment Information
Search
Search revenue for the fourth quarter and full year 2012 reflects strong growth from search distribution, up 52 percent and 67 percent over the fourth quarter and full year 2011, respectively. Search segment income for the fourth quarter and full year 2012 was $17.4 million and $62.2 million, up 36 percent and 35 percent over the fourth quarter and full year 2011, respectively.
Tax Preparation
Tax Preparation segment loss for the fourth quarter of 2012 was $2.5 million. Tax preparation typically posts a seasonal loss in the fourth quarter when there is little revenue from its tax business. Tax Preparation segment income for the full year 2012 was $30.1 million. This figure excludes TaxACT operating results before January 31, 2012 as the Company acquired TaxACT on that date.
Corporate Operating Expenses
Unallocated corporate operating expenses for the fourth quarter and full year 2012 were $2.8 million and $11.8 million, up 6 percent and 23 percent over the fourth quarter and full year 2011, respectively.
Share Repurchase Program
The Company’s board of directors has approved a share repurchase program of up to $50 million of the Company’s outstanding shares of common stock. Under the program, shares may be repurchased from time to time in the open market for a two-year period.
First Quarter Outlook
For the first quarter of 2013, the Company expects revenues to be between $156.0 million and $161.0 million, Adjusted EBITDA to be between $43.0 million and $45.0 million, Non-GAAP Net Income to be between $39.5 million and $41.5 million, or $0.93 to $0.97 per diluted share, and Net Income to be between $20.5 and $22.0 million, or $0.48 to $0.52 per diluted share. The Company’s forward-looking guidance does not reflect potential gains or losses from derivative instruments.
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 and its outlook including tax preparation segment guidance for the first half of 2013, search segment guidance for the first quarter 2013 and search segment expectations for 2013. The 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 for one year and are may be accessed under the “Events & Presentations” section of the Investor Center. You may also listen to the conference call audio on the Blucora YouTube Channel at www.YouTube.com/Blucora.
###
About Blucora™
Blucora operates two leading Internet businesses. Our InfoSpace business provides online search and monetization solutions to a network of more than 100 partners globally. Through TaxACT, we provide online tax preparation solutions to consumers and professional preparers. The Blucora team brings
decades of experience operating and investing in desktop, online, and mobile businesses. We are passionate about the power of the Internet to improve the lives of consumers, and our businesses operate at the forefront of digital migration trends in their respective markets. More information about Blucora may be found at www.blucora.com. Follow and subscribe to us on Twitter, LinkedIn and YouTube.
Source: Blucora, Inc.
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 2012. 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, | |||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Revenues |
$ | 97,470 | $ | 66,614 | $ | 406,919 | $ | 228,813 | ||||||||
| Cost of sales (includes amortization of acquired intangible assets of $1,975, $347, $7,580, and $2,595) (2) |
73,704 | 46,954 | 267,451 | 154,962 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross profit |
23,766 | 19,660 | 139,468 | 73,851 | ||||||||||||
| Expenses and other loss (income): |
||||||||||||||||
| Engineering and technology (2) |
2,538 | 1,904 | 9,969 | 7,158 | ||||||||||||
| Sales and marketing (2) |
8,085 | 4,753 | 44,138 | 21,510 | ||||||||||||
| General and administrative (2) |
5,713 | 4,899 | 27,418 | 21,542 | ||||||||||||
| Depreciation |
492 | 473 | 2,119 | 2,162 | ||||||||||||
| Amortization of intangible assets |
3,169 | — | 11,619 | — | ||||||||||||
| Other loss (income), net (3) |
(1,004 | ) | 972 | 6,677 | 1,246 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total expenses and other loss (income) |
18,993 | 13,001 | 101,940 | 53,618 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from continuing operations before income taxes |
4,773 | 6,659 | 37,528 | 20,233 | ||||||||||||
| Income tax benefit (expense) |
(953 | ) | 16,215 | (15,002 | ) | 11,288 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from continuing operations |
3,820 | 22,874 | 22,526 | 31,521 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Discontinued operations: (1) |
||||||||||||||||
| Loss from discontinued operations, net of taxes (2) |
— | — | — | (2,253 | ) | |||||||||||
| Loss on sale of discontinued operations, net of taxes |
— | — | — | (7,674 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income |
$ | 3,820 | $ | 22,874 | $ | 22,526 | $ | 21,594 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Earnings per share - Basic |
||||||||||||||||
| Income from continuing operations |
$ | 0.09 | $ | 0.58 | $ | 0.56 | $ | 0.83 | ||||||||
| Loss from discontinued operations |
— | — | — | (0.06 | ) | |||||||||||
| Loss on sale of discontinued operations |
— | — | — | (0.20 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income per share - Basic |
$ | 0.09 | $ | 0.58 | $ | 0.56 | $ | 0.57 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Earnings per share - Diluted |
||||||||||||||||
| Income from continuing operations |
$ | 0.04 | (4) | $ | 0.57 | $ | 0.54 | $ | 0.82 | |||||||
| Loss from discontinued operations |
— | — | — | (0.06 | ) | |||||||||||
| Loss on sale of discontinued operations |
— | — | — | (0.20 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income per share - Diluted |
$ | 0.04 | $ | 0.57 | $ | 0.54 | $ | 0.56 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted average shares outstanding used in computing basic income per share |
40,789 | 39,448 | 40,279 | 37,954 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted average shares outstanding used in computing diluted income per share |
42,411 | 40,074 | 41,672 | 38,621 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (1) | In the year ended December 31, 2011, the Company completed the sale of its Mercantila e-commerce business. In the year ended December 31, 2011, the Company recorded a $1.3 million income tax benefit related to discontinued operations. In the year ended December 31, 2011, the Company recorded a loss, net of an income tax benefit of $5.1 million, on the sale of the Mercantila business. Revenue, operating expenses and income taxes, loss from discontinued operations and the loss on sale of these discontinued operations are presented below (in thousands): |
| Three months ended | Year ended | |||||||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| E-Commerce |
||||||||||||||||
| Revenue |
$ | — | $ | — | $ | — | $ | 16,894 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating expenses and income taxes |
— | — | — | 19,147 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Loss from discontinued operations, net of taxes |
$ | — | $ | — | $ | — | $ | (2,253 | ) | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Loss on sale of discontinued operations, net of taxes |
$ | — | $ | — | $ | — | $ | (7,674 | ) | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (2) | In the year ended December 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, and the related expense was allocated to general and administrative expense. Stock-based compensation expense for the three months and year ended December 31, 2012 and 2011 is allocated among the following captions (in thousands): |
| Three months ended | Year ended | |||||||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Stock-Based Compensation |
||||||||||||||||
| Cost of sales |
227 | $ | 52 | $ | 558 | $ | 286 | |||||||||
| Engineering and technology |
286 | 137 | 1,180 | 821 | ||||||||||||
| Sales and marketing |
520 | 173 | 1,909 | 1,002 | ||||||||||||
| General and administrative |
1,267 | 906 | 9,576 | 5,579 | ||||||||||||
| Discontinued operations |
— | — | — | (159 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total stock-based compensation expense |
$ | 2,300 | $ | 1,268 | $ | 13,223 | $ | 7,529 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (3) | Other loss, net for the three months and year ended December 31, 2012 and 2011 is allocated among the following captions (in thousands): |
| Three months ended | Year ended | |||||||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Other Loss (Income), Net |
||||||||||||||||
| Interest expense |
$ | 875 | $ | — | $ | 3,522 | $ | — | ||||||||
| Interest income |
(52 | ) | (85 | ) | (131 | ) | (369 | ) | ||||||||
| Amortization of debt issuance costs |
74 | — | 820 | — | ||||||||||||
| Accretion of debt discount |
31 | — | 325 | — | ||||||||||||
| Loss (gain) on derivative instrument |
(1,928 | ) | — | 2,346 | — | |||||||||||
| Gain on contingency resolution |
— | — | — | (1,500 | ) | |||||||||||
| Increase in fair value of earn-out contingent liability |
— | 1,000 | — | 3,000 | ||||||||||||
| Other |
(4 | ) | 57 | (205 | ) | 115 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total other loss (income), net |
$ | (1,004 | ) | $ | 972 | $ | 6,677 | $ | 1,246 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (4) | Calculation excludes the income effect of dilutive derivative instruments. |
Blucora, Inc.
Preliminary Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
| December 31, | December 31, | |||||||
| 2012 | 2011 | |||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 68,278 | $ | 81,897 | ||||
| Short-term investments, available-for-sale |
94,010 | 211,654 | ||||||
| Accounts receivable, net |
34,932 | 25,019 | ||||||
| Other receivables |
3,942 | 542 | ||||||
| Prepaid expenses and other current assets, net |
10,911 | 1,958 | ||||||
|
|
|
|
|
|||||
| Total current assets |
212,073 | 321,070 | ||||||
| Property and equipment, net |
7,533 | 5,277 | ||||||
| Goodwill |
230,290 | 44,815 | ||||||
| Other intangible assets, net |
132,815 | 1,315 | ||||||
| Deferred tax asset, net |
— | 19,102 | ||||||
| Other long-term assets |
2,582 | 3,560 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 585,293 | $ | 395,139 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 37,687 | $ | 28,947 | ||||
| Accrued expenses and other current liabilities |
16,437 | 10,250 | ||||||
| Short-term portion of long-term debt, net of discount of $160 |
4,590 | — | ||||||
| Derivative instruments |
8,974 | — | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
67,688 | 39,197 | ||||||
| Long-term liabilities: |
||||||||
| Long-term debt, net of discount of $468 |
69,278 | — | ||||||
| Deferred tax liability, net |
29,333 | 21 | ||||||
| Other long-term liabilities |
3,544 | 816 | ||||||
|
|
|
|
|
|||||
| Total long-term liabilities |
102,155 | 837 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
169,843 | 40,034 | ||||||
| Stockholders’ equity: |
||||||||
| Common stock |
4 | 4 | ||||||
| Additional paid-in capital |
1,392,098 | 1,353,971 | ||||||
| Accumulated deficit |
(976,376 | ) | (998,902 | ) | ||||
| Accumulated other comprehensive income (loss) |
(276 | ) | 32 | |||||
|
|
|
|
|
|||||
| Total stockholders’ equity |
415,450 | 355,105 | ||||||
|
|
|
|
|
|||||
| Total liabilities and stockholders’ equity |
$ | 585,293 | $ | 395,139 | ||||
|
|
|
|
|
|||||
| Summary of cash, cash equivalents, and short-term investments: |
||||||||
| Cash and cash equivalents |
$ | 68,278 | $ | 81,897 | ||||
| Short-term investments, available-for-sale |
94,010 | 211,654 | ||||||
|
|
|
|
|
|||||
| Cash, cash equivalents, and short-term investments |
$ | 162,288 | $ | 293,551 | ||||
|
|
|
|
|
|||||
Blucora, Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
| Year ended | ||||||||
| December 31, | December 31, | |||||||
| 2012 | 2011 | |||||||
| Operating activities: |
||||||||
| Net income |
$ | 22,526 | $ | 21,594 | ||||
| Loss on sale of discontinued operations |
— | 7,674 | ||||||
| Loss from discontinued operations |
— | 2,253 | ||||||
|
|
|
|
|
|||||
| Income from continuing operations |
22,526 | 31,521 | ||||||
| Adjustments to reconcile income from continuing operations to net cash provided by operating activities of continuing operations: |
||||||||
| Depreciation and amortization of intangible assets |
23,011 | 7,456 | ||||||
| Stock-based compensation |
8,937 | 5,756 | ||||||
| Warrant-related stock-based compensation |
4,286 | 1,932 | ||||||
| Excess tax benefits from stock-based award activity |
(23,041 | ) | (1,260 | ) | ||||
| Deferred income taxes |
(8,738 | ) | (18,870 | ) | ||||
| Unrealized amortization of premium or accretion of discount on investments, net |
(194 | ) | (89 | ) | ||||
| Amortization of debt origination costs |
820 | — | ||||||
| Accretion of debt discount |
325 | — | ||||||
| Loss on derivative instrument |
2,346 | — | ||||||
| Earn-out contingent liability adjustments |
— | 3,000 | ||||||
| Gain on resolution of contingent liability |
— | (1,500 | ) | |||||
| Other |
31 | 18 | ||||||
| Changes in operating assets and liabilities: |
— | |||||||
| Accounts receivable |
(597 | ) | (5,734 | ) | ||||
| Other receivables |
(665 | ) | 643 | |||||
| Prepaid expenses and other current assets |
(5,862 | ) | 284 | |||||
| Other long-term assets |
1,981 | (258 | ) | |||||
| Accounts payable |
(1,600 | ) | 26,253 | |||||
| Accrued expenses and other current and long-term liabilities |
25,265 | (23,889 | ) | |||||
|
|
|
|
|
|||||
| Net cash provided by operating activities of continuing operations |
48,831 | 25,263 | ||||||
| Investing activities: |
||||||||
| Business acquisition, net of cash acquired |
(279,386 | ) | — | |||||
| Purchases of property and equipment |
(3,756 | ) | (2,679 | ) | ||||
| Proceeds from the sale of assets |
4 | — | ||||||
| Change in restricted cash |
252 | 649 | ||||||
| Proceeds from sales of investments |
203,493 | 63,166 | ||||||
| Proceeds from maturities of investments |
36,753 | 160,161 | ||||||
| Purchases of investments |
(122,433 | ) | (336,770 | ) | ||||
|
|
|
|
|
|||||
| Net cash used by investing activities of continuing operations |
(165,073 | ) | (115,473 | ) | ||||
| Financing activities: |
||||||||
| Proceeds from loan, net of debt issuance costs of $2,343 and debt discount of $953 |
96,704 | — | ||||||
| Repayment of debt |
(25,504 | ) | — | |||||
| Excess tax benefits from stock-based award activity |
23,041 | 1,260 | ||||||
| Proceeds from stock option exercises |
9,099 | 17,049 | ||||||
| Proceeds from issuance of stock through employee stock purchase plan |
601 | 377 | ||||||
| Tax payments from shares withheld upon vesting of restricted stock units |
(1,318 | ) | (1,786 | ) | ||||
| Proceeds from sale of common stock |
— | 7,000 | ||||||
| Earn-out payments for business acquisition |
— | (423 | ) | |||||
| Repayment of capital lease obligation |
— | (221 | ) | |||||
|
|
|
|
|
|||||
| Net cash provided by financing activities of continuing operations |
102,623 | 23,256 | ||||||
| Discontinued operations: |
||||||||
| Net cash used by operating activities attributable to discontinued operations |
— | (6,156 | ) | |||||
| Net cash used by investing activities attributable to discontinued operations |
— | (638 | ) | |||||
|
|
|
|
|
|||||
| Net cash used by discontinued operations |
— | (6,794 | ) | |||||
| Net decrease in cash and cash equivalents |
(13,619 | ) | (73,748 | ) | ||||
| Cash and cash equivalents: |
||||||||
| Beginning of period |
81,897 | 155,645 | ||||||
|
|
|
|
|
|||||
| End of period |
$ | 68,278 | $ | 81,897 | ||||
|
|
|
|
|
|||||
Blucora, Inc.
Preliminary Segment Information
(Unaudited)
(Amounts in thousands)
| Three months ended | Year ended | |||||||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Search: |
||||||||||||||||
| Revenue |
$ | 96,303 | $ | 66,614 | $ | 344,814 | $ | 228,813 | ||||||||
| Cost of revenue (1) |
68,590 | 44,856 | 245,135 | 143,887 | ||||||||||||
| Operating expenses |
10,335 | 8,990 | 37,494 | 38,720 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Search segment income |
17,378 | 12,768 | 62,185 | 46,206 | ||||||||||||
| Search segment margin |
18 | % | 19 | % | 18 | % | 20 | % | ||||||||
| Tax Preparation: |
||||||||||||||||
| Revenue |
1,167 | — | 62,105 | — | ||||||||||||
| Cost of revenue (2) |
319 | — | 4,729 | — | ||||||||||||
| Operating expenses |
3,324 | — | 27,324 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Tax Preparation segment income (loss) |
(2,476 | ) | — | 30,052 | — | |||||||||||
| Tax Preparation segment margin |
-212 | % | 0 | % | 48 | % | 0 | % | ||||||||
| Total segment: |
||||||||||||||||
| Total revenue |
97,470 | 66,614 | 406,919 | 228,813 | ||||||||||||
| Total cost of revenue |
68,909 | 44,856 | 249,864 | 143,887 | ||||||||||||
| Total segment operating expenses |
13,659 | 8,990 | 64,818 | 38,720 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total segment income |
14,902 | 12,768 | 92,237 | 46,206 | ||||||||||||
| Total segment margin |
15 | % | 19 | % | 23 | % | 20 | % | ||||||||
| Corporate: |
||||||||||||||||
| Operating expense |
2,772 | 2,603 | 11,798 | 9,583 | ||||||||||||
| Stock-based compensation |
2,300 | 1,268 | 13,223 | 7,688 | ||||||||||||
| Depreciation |
917 | 919 | 3,812 | 4,861 | ||||||||||||
| Amortization of intangible assets |
5,144 | 347 | 19,199 | 2,595 | ||||||||||||
| Other loss (income), net |
(1,004 | ) | 972 | 6,677 | 1,246 | |||||||||||
| Income tax expense (benefit) |
953 | (16,215 | ) | 15,002 | (11,288 | ) | ||||||||||
| Loss from discontinued operations, net of taxes |
— | — | — | 9,927 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total corporate expense (benefit) |
11,082 | (10,106 | ) | 69,711 | 24,612 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income |
$ | 3,820 | $ | 22,874 | $ | 22,526 | $ | 21,594 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (1) | Amounts do not include amortization of acquired technology and costs associated with the operation of the Company’s data centers that serve its search business, including depreciation, personnel expenses (including stock-based compensation expense), energy, and bandwidth costs. |
| (2) | Amounts do not include amortization of acquired technology and costs associated with the operation of the Company’s data center that serves its tax preparation business, including depreciation, personnel expenses, (including stock-based compensation expense), energy, and bandwidth costs, and personnel costs associated with customer service. |
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, | December 31, | December 31, | December 31, | |||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Net income (2) |
$ | 3,820 | $ | 22,874 | $ | 22,526 | $ | 21,594 | ||||||||
| Loss from discontinued operations |
— | — | — | 9,927 | ||||||||||||
| Depreciation and amortization of intangible assets |
6,061 | 1,266 | 23,011 | 7,456 | ||||||||||||
| Stock-based compensation |
2,300 | 1,268 | 13,223 | 7,688 | ||||||||||||
| Other loss (income), net (3) |
(1,004 | ) | 972 | 6,677 | 1,246 | |||||||||||
| Income tax expense (benefit) |
953 | (16,215 | ) | 15,002 | (11,288 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted EBITDA |
$ | 12,130 | $ | 10,165 | $ | 80,439 | $ | 36,623 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
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, | December 31, | December 31, | December 31, | |||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Net income (2) |
$ | 3,820 | $ | 22,874 | $ | 22,526 | $ | 21,594 | ||||||||
| Loss from discontinued operations |
— | — | — | 9,927 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from continuing operations (2) |
3,820 | 22,874 | 22,526 | 31,521 | ||||||||||||
| Stock-based compensation |
2,300 | 1,268 | 13,223 | 7,688 | ||||||||||||
| Amortization of acquired intangible assets |
5,144 | 347 | 19,199 | 2,595 | ||||||||||||
| Loss (gain) on derivative instruments |
(1,928 | ) | — | 2,346 | — | |||||||||||
| Cash tax impact of GAAP adjustments |
9 | 20 | (93 | ) | (40 | ) | ||||||||||
| Non-cash income tax expense (benefit) from continuing operations (1) |
660 | (17,613 | ) | 13,559 | (13,000 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-GAAP net income (4) |
$ | 10,005 | $ | 6,896 | $ | 70,760 | $ | 28,764 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Per share amounts |
||||||||||||||||
| Income from continuing operations - diluted |
0.04 | (5) | 0.57 | 0.54 | 0.82 | |||||||||||
| Stock-based compensation - diluted |
0.06 | 0.03 | 0.32 | 0.19 | ||||||||||||
| Amortization of acquired intangible assets - diluted |
0.12 | 0.01 | 0.46 | 0.07 | ||||||||||||
| Loss (gain) on derivative instruments - diluted |
— | (5) | — | 0.06 | — | |||||||||||
| Cash tax impact of GAAP adjustments - diluted |
0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||
| Non-cash income taxes per share - diluted |
0.02 | (0.44 | ) | 0.32 | (0.34 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-GAAP net income per share - diluted |
$ | 0.24 | $ | 0.17 | $ | 1.70 | $ | 0.74 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance (Amounts in thousands) Ranges for the three months ending March 31, 2013
|
||||||||||||||||
| Net income |
20,500 | 22,000 | ||||||||||||||
| Depreciation and amortization of acquired intangible assets |
6,100 | 6,100 | ||||||||||||||
| Stock-based compensation |
2,500 | 2,500 | ||||||||||||||
| Other loss, net (6) |
1,300 | 1,000 | ||||||||||||||
| Income tax expense |
12,600 | 13,400 | ||||||||||||||
|
|
|
|
|
|||||||||||||
| Adjusted EBITDA |
$ | 43,000 | $ | 45,000 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Preliminary Non-GAAP Net Income Reconciliation for Forward-Looking Guidance (Amounts in thousands) Ranges for the three months ending March 31, 2013
|
| |||||||||||||||
| Net income |
20,500 | 22,000 | ||||||||||||||
| Stock-based compensation |
2,500 | 2,500 | ||||||||||||||
| Amortization of acquired intangible assets |
5,100 | 5,100 | ||||||||||||||
| Non-cash income tax expense from continuing operations |
11,400 | 11,900 | ||||||||||||||
| Non-GAAP net income |
$ | 39,500 | $ | 41,500 | ||||||||||||
|
|
|
|
|
|||||||||||||
| (1) | Blucora’s Adjusted EBITDA is calculated by adjusting net income determined in accordance with generally accepted accounting principles (“GAAP”) to exclude the effects of loss from discontinued operations (which includes loss from discontinued operations, net of taxes, and loss on sale of discontinued operations, net of taxes), income taxes, depreciation, amortization of acquired intangible assets, stock-based compensation expense, and other loss (income), net (which includes such items as interest expense, interest income, derivative instrument gains or losses, foreign currency gains or losses, gains or losses from the disposal of assets, adjustments to the fair values of contingent liabilities related to business combinations, and gains on resolutions of contingencies), as detailed above. Blucora’s management believes that Adjusted EBITDA provides meaningful supplemental information regarding the Company’s performance by excluding certain expenses and gains that management believes are not indicative of its core business operating results. Blucora uses this non-GAAP financial measure for internal management 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. |
Blucora’s Non-GAAP net income and Non-GAAP earnings per share is calculated by adjusting GAAP net income to exclude the effects of discontinued operations, net of taxes (which includes loss from discontinued operations, net of taxes, and loss on sale of discontinued operations, net of taxes), loss from the sale of discontinued operations, net of taxes, stock-based compensation expense, amortization of acquired intangible assets, gain or loss on derivative instruments, the cash tax impact of those adjustments to GAAP net income, and non-cash portion of income tax expense from continuing operations, as detailed in the accompanying table to the preliminary condensed consolidated financial statements (unaudited). 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.
Blucora’s management believes that non-GAAP net income and non-GAAP earnings 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 earnings per share are common measures used by investors and analysts to evaluate the Company’s performance and the valuation of its business.
Adjusted EBITDA, non-GAAP net income and non-GAAP earnings per share should be evaluated in light of the Company’s 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.
| (2) | As presented in the Preliminary Condensed Consolidated Statements of Operations (unaudited). |
| (3) | Other loss (income), net includes such items as interest expense, interest income, derivative instrument gains or losses, foreign currency gains or losses, gains or losses from the disposal of assets, adjustments to the fair values of contingent liabilities related to business combinations, and gains on resolutions of contingencies. |
| (4) | Amounts previously disclosed have been revised to conform to the current presentation. For further information, see section titled, “Non-GAAP Financial Measures” in “Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Form 10-Q for the quarterly period ended March 31, 2012. |
| (5) | Calculation excludes the income effect of dilutive derivative instruments. |
| (6) | Other loss, net, primarily consists of interest expense, interest income, foreign currency gains or losses, and gains or losses from the disposal of assets, and the Company’s forward-looking guidance does not reflect potential gains or losses from derivative instruments. |