Attached files
| file | filename |
|---|---|
| EX-99.1 - EX-99.1 - BLUCORA, INC. | ex-991erq32020.htm |
| 8-K - 8-K - BLUCORA, INC. | bcor-20201109.htm |
Exhibit 99.2
Blucora, Inc.
Supplemental Information
September 30, 2020
Table of Contents
| Financial Information | |||||
Blucora Consolidated Statements of Operations | |||||
| Operating Metrics | |||||
Tax Preparation | |||||
Blucora Consolidated Statements of Operations
(in thousands except %s and per share amounts, rounding differences may exist) | 2018 | 2019 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| FY 12/31 | 1Q | 2Q | 3Q | 4Q | FY 12/31 | 1Q | 2Q | 3Q | |||||||||||||||||||||||||||||||||||||||||||||
| Segment revenue: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wealth Management | $ | 373,174 | $ | 89,532 | $ | 127,831 | $ | 145,428 | $ | 145,188 | $ | 507,979 | $ | 144,989 | $ | 115,884 | $ | 135,932 | |||||||||||||||||||||||||||||||||||
| Tax Preparation | 187,282 | 136,236 | 65,909 | 3,588 | 4,233 | 209,966 | 118,331 | 45,238 | 39,421 | ||||||||||||||||||||||||||||||||||||||||||||
| Total segment revenue | 560,456 | 225,768 | 193,740 | 149,016 | 149,421 | 717,945 | 263,320 | 161,122 | 175,353 | ||||||||||||||||||||||||||||||||||||||||||||
| Operating Expenses: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of revenue: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wealth Management | 253,580 | 61,374 | 87,477 | 102,030 | 101,200 | 352,081 | 102,342 | 83,868 | 96,122 | ||||||||||||||||||||||||||||||||||||||||||||
| Tax Preparation | 10,040 | 4,201 | 3,149 | 1,633 | 1,708 | 10,691 | 4,013 | 3,054 | 2,692 | ||||||||||||||||||||||||||||||||||||||||||||
| Amortization of acquired technology | 99 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Total segment cost of revenue | 263,719 | 65,575 | 90,626 | 103,663 | 102,908 | 362,772 | 106,355 | 86,922 | 98,814 | ||||||||||||||||||||||||||||||||||||||||||||
| Engineering and technology | 19,332 | 6,529 | 7,159 | 8,635 | 8,608 | 30,931 | 8,515 | 7,377 | 6,007 | ||||||||||||||||||||||||||||||||||||||||||||
| Sales and marketing | 111,361 | 55,572 | 29,256 | 19,976 | 21,401 | 126,205 | 79,710 | 40,057 | 31,018 | ||||||||||||||||||||||||||||||||||||||||||||
| General and administrative | 60,124 | 17,077 | 19,002 | 19,642 | 22,808 | 78,529 | 24,728 | 20,200 | 18,605 | ||||||||||||||||||||||||||||||||||||||||||||
| Depreciation | 4,468 | 1,061 | 1,315 | 1,470 | 1,633 | 5,479 | 1,796 | 1,675 | 1,874 | ||||||||||||||||||||||||||||||||||||||||||||
| Amortization of other acquired intangible assets | 33,487 | 8,044 | 9,169 | 10,082 | 10,062 | 37,357 | 7,748 | 6,673 | 7,746 | ||||||||||||||||||||||||||||||||||||||||||||
| Impairment of goodwill and an intangible asset | — | — | — | 50,900 | — | 50,900 | 270,625 | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Acquisition and integration | — | 1,797 | 9,183 | 6,759 | 8,024 | 25,763 | 5,682 | 2,824 | 10,276 | ||||||||||||||||||||||||||||||||||||||||||||
| Restructuring | 288 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Total operating expenses | 492,779 | 155,655 | 165,710 | 221,127 | 175,444 | 717,936 | 505,159 | 165,728 | 174,340 | ||||||||||||||||||||||||||||||||||||||||||||
| Operating income (loss) | 67,677 | 70,113 | 28,030 | (72,111) | (26,023) | 9 | (241,839) | (4,606) | 1,013 | ||||||||||||||||||||||||||||||||||||||||||||
| Other loss, net | (15,797) | (3,958) | (5,118) | (2,606) | (5,233) | (16,915) | (6,135) | (5,288) | (11,963) | ||||||||||||||||||||||||||||||||||||||||||||
| Income (loss) before income taxes | 51,880 | 66,155 | 22,912 | (74,717) | (31,256) | (16,906) | (247,974) | (9,894) | (10,950) | ||||||||||||||||||||||||||||||||||||||||||||
| Income tax benefit (expense) | (311) | (3,985) | 8,124 | 12,331 | 48,584 | 65,054 | (67,520) | 59,539 | (15,256) | ||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | (935) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to Blucora, Inc. | 50,634 | 62,170 | 31,036 | (62,386) | 17,328 | 48,148 | (315,494) | 49,645 | (26,206) | ||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) per share attributable to Blucora, Inc.: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basic | $ | 0.94 | $ | 1.29 | $ | 0.64 | $ | (1.28) | $ | 0.36 | $ | 1.00 | $ | (6.60) | $ | 1.04 | $ | (0.55) | |||||||||||||||||||||||||||||||||||
| Diluted | $ | 0.90 | $ | 1.25 | $ | 0.62 | $ | (1.28) | $ | 0.36 | $ | 0.98 | $ | (6.60) | $ | 1.03 | $ | (0.55) | |||||||||||||||||||||||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basic | 47,394 | 48,161 | 48,555 | 48,652 | 47,689 | 48,264 | 47,827 | 47,941 | 48,039 | ||||||||||||||||||||||||||||||||||||||||||||
| Diluted | 49,381 | 49,542 | 49,822 | 48,652 | 48,344 | 49,282 | 47,827 | 48,092 | 48,039 | ||||||||||||||||||||||||||||||||||||||||||||
2
Blucora Consolidated Financial Results (1)
(in thousands except %s and per share amounts, rounding differences may exist) | 2018 | 2019 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| FY 12/31 | 1Q | 2Q | 3Q | 4Q | FY 12/31 | 1Q | 2Q | 3Q | |||||||||||||||||||||||||||||||||||||||||||||
| Segment revenue: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Wealth Management (1) | $ | 373,174 | $ | 89,532 | $ | 127,831 | $ | 145,428 | $ | 145,188 | $ | 507,979 | $ | 144,989 | $ | 115,884 | $ | 135,932 | |||||||||||||||||||||||||||||||||||
Tax Preparation (2) | 187,282 | 136,236 | 65,909 | 3,588 | 4,233 | 209,966 | 118,331 | 45,238 | 39,421 | ||||||||||||||||||||||||||||||||||||||||||||
| Total segment revenue | $ | 560,456 | $ | 225,768 | $ | 193,740 | $ | 149,016 | $ | 149,421 | $ | 717,945 | $ | 263,320 | $ | 161,122 | $ | 175,353 | |||||||||||||||||||||||||||||||||||
Segment operating income (loss): (3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Wealth Management (1) | $ | 53,053 | $ | 11,540 | $ | 16,979 | $ | 20,631 | $ | 19,142 | $ | 68,292 | $ | 22,598 | $ | 11,731 | $ | 17,498 | |||||||||||||||||||||||||||||||||||
Tax Preparation (2) | 87,249 | 79,272 | 41,368 | (12,075) | (12,316) | 96,249 | 37,753 | 6,659 | 16,234 | ||||||||||||||||||||||||||||||||||||||||||||
| Total segment operating income (loss) | $ | 140,302 | $ | 90,812 | $ | 58,347 | $ | 8,556 | $ | 6,826 | $ | 164,541 | $ | 60,351 | $ | 18,390 | $ | 33,732 | |||||||||||||||||||||||||||||||||||
| Segment operating income (loss) % of revenue: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Wealth Management (1) | 14 | % | 13 | % | 13 | % | 14 | % | 13 | % | 13 | % | 16 | % | 10 | % | 13 | % | |||||||||||||||||||||||||||||||||||
Tax Preparation (2) | 47 | % | 58 | % | 63 | % | (337) | % | (291) | % | 46 | % | 32 | % | 15 | % | 41 | % | |||||||||||||||||||||||||||||||||||
| Total segment operating income (loss) % of revenue | 25 | % | 40 | % | 30 | % | 6 | % | 5 | % | 23 | % | 23 | % | 11 | % | 19 | % | |||||||||||||||||||||||||||||||||||
Unallocated corporate-level general and administrative expenses (3) | $ | 20,495 | $ | 7,105 | $ | 6,221 | $ | 6,476 | $ | 7,559 | $ | 27,361 | $ | 7,016 | $ | 5,810 | $ | 6,745 | |||||||||||||||||||||||||||||||||||
Adjusted EBITDA (4) | $ | 119,807 | $ | 83,707 | $ | 52,126 | $ | 2,080 | $ | (733) | $ | 137,180 | $ | 53,335 | $ | 12,580 | $ | 26,987 | |||||||||||||||||||||||||||||||||||
Other unallocated corporate-level operating expenses: (3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | $ | 13,253 | $ | 2,443 | $ | 4,082 | $ | 4,639 | $ | 5,136 | $ | 16,300 | $ | (1,201) | $ | 3,904 | $ | 4,517 | |||||||||||||||||||||||||||||||||||
| Acquisition and integration—Excl. Change in fair value of acquisition-related contingent consideration | — | 1,797 | 9,183 | 6,759 | 8,024 | 25,763 | 5,682 | 2,824 | 11,276 | ||||||||||||||||||||||||||||||||||||||||||||
| Acquisition and integration—Change in fair value of acquisition-related contingent consideration | — | — | — | — | — | — | — | — | (1,000) | ||||||||||||||||||||||||||||||||||||||||||||
| Depreciation | 5,003 | 1,310 | 1,662 | 1,811 | 2,068 | 6,851 | 2,420 | 2,412 | 2,620 | ||||||||||||||||||||||||||||||||||||||||||||
| Amortization of acquired intangible assets | 33,586 | 8,044 | 9,169 | 10,082 | 10,062 | 37,357 | 7,748 | 6,673 | 7,746 | ||||||||||||||||||||||||||||||||||||||||||||
| Executive transition costs | — | — | — | — | — | — | 9,184 | 636 | 405 | ||||||||||||||||||||||||||||||||||||||||||||
| Headquarters relocation costs | — | — | — | — | — | — | 716 | 737 | 410 | ||||||||||||||||||||||||||||||||||||||||||||
Impairment of goodwill and intangible asset | — | — | — | 50,900 | — | 50,900 | 270,625 | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Restructuring | 288 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Operating income (loss) | $ | 67,677 | $ | 70,113 | $ | 28,030 | $ | (72,111) | $ | (26,023) | $ | 9 | $ | (241,839) | $ | (4,606) | $ | 1,013 | |||||||||||||||||||||||||||||||||||
Unallocated other (income) loss, net: (3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | $ | 15,610 | $ | 3,776 | $ | 4,770 | $ | 5,469 | $ | 5,002 | $ | 19,017 | $ | 5,316 | $ | 4,840 | 7,254 | ||||||||||||||||||||||||||||||||||||
| Amortization of debt issuance costs | 833 | 172 | 375 | 301 | 194 | 1,042 | 313 | 331 | 362 | ||||||||||||||||||||||||||||||||||||||||||||
| Accretion of debt discounts | 163 | 38 | 85 | 66 | 39 | 228 | 68 | 70 | 276 | ||||||||||||||||||||||||||||||||||||||||||||
| Total interest expense | $ | 16,606 | $ | 3,986 | $ | 5,230 | $ | 5,836 | $ | 5,235 | $ | 20,287 | $ | 5,697 | $ | 5,241 | $ | 7,892 | |||||||||||||||||||||||||||||||||||
| Interest income | (349) | (140) | (149) | (52) | (108) | (449) | (14) | (11) | (2) | ||||||||||||||||||||||||||||||||||||||||||||
| Loss on debt extinguishment and modification expense | 1,534 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Gain on sale of a business | — | — | — | (3,256) | — | (3,256) | — | — | (349) | ||||||||||||||||||||||||||||||||||||||||||||
| Non-capitalized debt issuance expenses | — | — | — | — | — | — | — | — | 3,687 | ||||||||||||||||||||||||||||||||||||||||||||
| Other (income) loss, net | (1,994) | 112 | 37 | 78 | 106 | 333 | 452 | 58 | 735 | ||||||||||||||||||||||||||||||||||||||||||||
| Total other loss, net | $ | 15,797 | $ | 3,958 | $ | 5,118 | $ | 2,606 | $ | 5,233 | $ | 16,915 | $ | 6,135 | $ | 5,288 | $ | 11,963 | |||||||||||||||||||||||||||||||||||
| Income (loss) before income taxes | $ | 51,880 | $ | 66,155 | $ | 22,912 | $ | (74,717) | $ | (31,256) | $ | (16,906) | $ | (247,974) | $ | (9,894) | $ | (10,950) | |||||||||||||||||||||||||||||||||||
Income tax (benefit) expense: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash | $ | 2,714 | $ | 834 | $ | 3,193 | $ | 3,262 | $ | (3,725) | $ | 3,564 | $ | 483 | $ | 158 | $ | 269 | |||||||||||||||||||||||||||||||||||
Non-cash (5) | (2,403) | 3,151 | (11,317) | (15,593) | (44,859) | (68,618) | 67,037 | (59,697) | 14,987 | ||||||||||||||||||||||||||||||||||||||||||||
| Total income tax (benefit) expense | $ | 311 | $ | 3,985 | $ | (8,124) | $ | (12,331) | $ | (48,584) | $ | (65,054) | $ | 67,520 | $ | (59,539) | $ | 15,256 | |||||||||||||||||||||||||||||||||||
| GAAP net income (loss) | $ | 51,569 | $ | 62,170 | $ | 31,036 | $ | (62,386) | $ | 17,328 | $ | 48,148 | $ | (315,494) | $ | 49,645 | $ | (26,206) | |||||||||||||||||||||||||||||||||||
GAAP impact of noncontrolling interests (6) | (935) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| GAAP net income (loss) attributable to Blucora, Inc. | $ | 50,634 | $ | 62,170 | $ | 31,036 | $ | (62,386) | $ | 17,328 | $ | 48,148 | $ | (315,494) | $ | 49,645 | $ | (26,206) | |||||||||||||||||||||||||||||||||||
| GAAP net income (loss) per share - diluted | $ | 0.90 | $ | 1.25 | $ | 0.62 | $ | (1.28) | $ | 0.36 | $ | 0.98 | $ | (6.60) | $ | 1.03 | $ | (0.55) | |||||||||||||||||||||||||||||||||||
Non-GAAP net income (loss) (4) | $ | 94,036 | $ | 77,194 | $ | 41,382 | $ | (9,565) | $ | (4,813) | $ | 104,198 | $ | 43,561 | $ | 4,463 | $ | 15,055 | |||||||||||||||||||||||||||||||||||
Non-GAAP net income (loss) per share - diluted (4) (7) | $ | 1.90 | $ | 1.56 | $ | 0.83 | $ | (0.20) | $ | (0.10) | $ | 2.11 | $ | 0.90 | $ | 0.09 | $ | 0.31 | |||||||||||||||||||||||||||||||||||
| Basic weighted average shares outstanding | 47,394 | 48,161 | 48,555 | 48,652 | 47,689 | 48,264 | 47,827 | 47,941 | 48,039 | ||||||||||||||||||||||||||||||||||||||||||||
| Diluted weighted average shares outstanding | 49,381 | 49,542 | 49,822 | 48,652 | 48,344 | 49,282 | 47,827 | 48,092 | 48,039 | ||||||||||||||||||||||||||||||||||||||||||||
3
Notes to Consolidated Financial Results
(1)The operations of 1st Global are included in the Company's operating results as part of the Wealth Management segment beginning May 6, 2019 when 1st Global was acquired. The operations of HKFS are included in the Company's operating results as part of the Wealth Management segment beginning July 1, 2020 when HKFS was acquired.
(2)As a highly seasonal business, almost all of the Tax Preparation revenue is typically generated in the first four months of the calendar year. In March 2020 and as a result of the coronavirus pandemic, the Internal Revenue Service extended the filing deadline for federal tax returns from April 15, 2020 to July 15, 2020. This filing extension resulted in the shifting of a significant portion of Tax Preparation segment revenue and segment income that is usually earned in the first and second quarters of 2020 to the third quarter of 2020.
(3)We do not allocate certain general and administrative costs (including personnel and overhead costs), stock-based compensation, acquisition and integration costs, depreciation, amortization of acquired intangible assets, executive transition costs, headquarters relocation costs, impairment of goodwill and intangible asset, restructuring, other income/loss, or income taxes to the reportable segments. General and administrative costs are included in "Unallocated corporate operating expenses."
(4)Non-GAAP measure. See Reconciliation of Certain Non-GAAP Financial Measures on page 5 for additional information.
(5)Amounts represent the non-cash portion of income taxes. 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 consist primarily of U.S. federal net operating losses. The majority of these net operating losses will expire, if unutilized, between 2020 and 2024.
(6)GAAP income (loss) excludes the impact of noncontrolling interests associated with the HD Vest management rollover equity ownership of 4.48%. The impact of noncontrolling interests is recorded separately and after GAAP income (loss) through December 31, 2018, which was the final measurement date of those ownership interests.
(7)For periods in which non-GAAP net income is generated, non-GAAP net income per share is calculated using diluted weighted average shares outstanding. For periods in which non-GAAP net loss is generated, non-GAAP net loss per share is calculated using basic weighted average shares outstanding.
4
Blucora Reconciliation of Certain Non-GAAP Financial Measures (1) (2)
| 2018 | 2019 | 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands except per share amounts, rounding differences may exist) | FY 12/31 | 1Q | 2Q | 3Q | 4Q | FY 12/31 | 1Q | 2Q | 3Q | ||||||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to Blucora, Inc. (1) (2) | $ | 50,634 | $ | 62,170 | $ | 31,036 | $ | (62,386) | $ | 17,328 | $ | 48,148 | $ | (315,494) | $ | 49,645 | $ | (26,206) | |||||||||||||||||||||||||||||||||||
| Stock-based compensation | 13,253 | 2,443 | 4,082 | 4,639 | 5,136 | 16,300 | (1,201) | 3,904 | 4,517 | ||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization of acquired intangible assets | 38,589 | 9,354 | 10,831 | 11,893 | 12,130 | 44,208 | 10,168 | 9,085 | 10,366 | ||||||||||||||||||||||||||||||||||||||||||||
| Other loss, net | 15,797 | 3,958 | 5,118 | 2,606 | 5,233 | 16,915 | 6,135 | 5,288 | 11,963 | ||||||||||||||||||||||||||||||||||||||||||||
| Acquisition and integration costs | — | 1,797 | 9,183 | 6,759 | 8,024 | 25,763 | 5,682 | 2,824 | 10,276 | ||||||||||||||||||||||||||||||||||||||||||||
| Executive transition costs | — | — | — | — | — | — | 9,184 | 636 | 405 | ||||||||||||||||||||||||||||||||||||||||||||
| Headquarters relocation costs | — | — | — | — | — | — | 716 | 737 | 410 | ||||||||||||||||||||||||||||||||||||||||||||
| Restructuring | 288 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | 935 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Income tax (benefit) expense | 311 | 3,985 | (8,124) | (12,331) | (48,584) | (65,054) | 67,520 | (59,539) | 15,256 | ||||||||||||||||||||||||||||||||||||||||||||
| Impairment of goodwill and intangible asset | — | — | — | 50,900 | — | 50,900 | 270,625 | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 119,807 | $ | 83,707 | $ | 52,126 | $ | 2,080 | $ | (733) | $ | 137,180 | $ | 53,335 | $ | 12,580 | $ | 26,987 | |||||||||||||||||||||||||||||||||||
| Non-GAAP Net Income (Loss) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to Blucora, Inc. (1) (2) | $ | 50,634 | $ | 62,170 | $ | 31,036 | $ | (62,386) | $ | 17,328 | $ | 48,148 | $ | (315,494) | $ | 49,645 | $ | (26,206) | |||||||||||||||||||||||||||||||||||
| Stock-based compensation | 13,253 | 2,443 | 4,082 | 4,639 | 5,136 | 16,300 | (1,201) | 3,904 | 4,517 | ||||||||||||||||||||||||||||||||||||||||||||
Amortization of acquired intangible assets | 33,586 | 8,044 | 9,169 | 10,082 | 10,062 | 37,357 | 7,748 | 6,673 | 7,746 | ||||||||||||||||||||||||||||||||||||||||||||
| Impairment of goodwill and an intangible asset | — | — | — | 50,900 | — | 50,900 | 270,625 | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Gain on the sale of a business | — | — | — | (3,256) | — | (3,256) | — | — | (349) | ||||||||||||||||||||||||||||||||||||||||||||
| Acquisition and integration costs | — | 1,797 | 9,183 | 6,759 | 8,024 | 25,763 | 5,682 | 2,824 | 10,276 | ||||||||||||||||||||||||||||||||||||||||||||
| Executive transition costs | — | — | — | — | — | — | 9,184 | 636 | 405 | ||||||||||||||||||||||||||||||||||||||||||||
| Headquarters relocation costs | — | — | — | — | — | — | 716 | 737 | 410 | ||||||||||||||||||||||||||||||||||||||||||||
| Non-capitalized debt issuance expenses | — | — | — | — | — | — | — | — | 3,687 | ||||||||||||||||||||||||||||||||||||||||||||
Restructuring | 288 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to noncontrolling interests | 935 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Cash tax impact of adjustments to GAAP net income | (2,257) | (411) | (771) | (710) | (504) | (2,396) | (736) | (259) | (418) | ||||||||||||||||||||||||||||||||||||||||||||
| Non-cash income tax (benefit) expense | (2,403) | 3,151 | (11,317) | (15,593) | (44,859) | (68,618) | 67,037 | (59,697) | 14,987 | ||||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP net income (loss) | $ | 94,036 | $ | 77,194 | $ | 41,382 | $ | (9,565) | $ | (4,813) | $ | 104,198 | $ | 43,561 | $ | 4,463 | $ | 15,055 | |||||||||||||||||||||||||||||||||||
Non-GAAP net income (loss) per share (3) | $ | 1.90 | $ | 1.56 | $ | 0.83 | $ | (0.20) | $ | (0.10) | $ | 2.11 | $ | 0.90 | $ | 0.09 | $ | 0.31 | |||||||||||||||||||||||||||||||||||
Weighted average shares outstanding (3) | 49,381 | 49,542 | 49,822 | 48,652 | 47,689 | 49,282 | 48,253 | 48,092 | 48,203 | ||||||||||||||||||||||||||||||||||||||||||||
Notes to Reconciliations of Certain Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures on next page
5
Notes to Reconciliations of Certain 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, the impairment of goodwill and an intangible asset, executive transition costs, and headquarters relocation costs. 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 and the acquisition of HKFS. The impairment of an intangible asset relates to the impairment of the HD Vest trade name intangible asset. The impairment of goodwill relates to the impairment of our Wealth Management reporting unit goodwill that was recognized in the first quarter of 2020. Executive transition costs relate to the departure of certain company executives in the first quarter of 2020. Headquarters relocation costs relate to the process of moving from our Dallas and Irving offices to our new headquarters office.
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 goodwill and an intangible asset, gain on the sale of a business, acquisition and integration costs, executive transition costs, headquarters relocation costs, non-capitalized debt issuance expenses, restructuring costs, net income attributable to noncontrolling interests, the related cash tax impact of those adjustments, and non-cash income taxes. 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. Gain of the sale of a business relates to the disposition of SimpleTax in the third quarter of 2019 and the subsequent working capital adjustment in the third quarter of 2020. Non-capitalized debt issuance expense relates to the expense recognized as a result of the increase to our term loan in the third quarter of 2020.
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 GAAP net income (loss) per share. Other companies may calculate these non-GAAP measures 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 Blucora Consolidated Financial Results (unaudited) on page 3.
(3)For periods in which non-GAAP net income is generated, non-GAAP net income per share is calculated using diluted weighted average shares outstanding. For periods in which non-GAAP net loss is generated, non-GAAP net loss per share is calculated using basic weighted average shares outstanding.
6
Blucora Net Leverage Ratio
| 2018 | 2019 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands except ratio, rounding differences may exist) | 4Q | 1Q | 2Q | 3Q | 4Q | 1Q | 2Q | 3Q | ||||||||||||||||||||||||||||||||||||||||||
DEBT: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior secured credit facility | $ | 265,000 | $ | 265,000 | $ | 390,000 | $ | 390,000 | $ | 399,687 | $ | 444,375 | $ | 389,062 | $ | 563,609 | ||||||||||||||||||||||||||||||||||
| CASH: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 84,524 | $ | 149,762 | $ | 109,606 | $ | 97,466 | $ | 80,820 | $ | 168,198 | $ | 90,081 | $ | 151,166 | ||||||||||||||||||||||||||||||||||
NET DEBT (2) | $ | 180,476 | $ | 115,238 | $ | 280,394 | $ | 292,534 | $ | 318,867 | $ | 276,177 | $ | 298,981 | $ | 412,443 | ||||||||||||||||||||||||||||||||||
| Last twelve months: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SEGMENT INCOME: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Wealth Management | $ | 53,053 | $ | 51,518 | $ | 55,543 | $ | 63,283 | $ | 68,292 | $ | 79,350 | $ | 74,102 | $ | 70,969 | ||||||||||||||||||||||||||||||||||
Tax Preparation | 87,249 | 107,715 | 104,962 | 99,823 | 96,249 | 54,730 | 20,021 | 48,330 | ||||||||||||||||||||||||||||||||||||||||||
| $ | 140,302 | $ | 159,233 | $ | 160,505 | $ | 163,106 | $ | 164,541 | $ | 134,080 | $ | 94,123 | 119,299 | ||||||||||||||||||||||||||||||||||||
| Unallocated corporate-level general and administrative expenses | (20,495) | (22,059) | (24,042) | (25,946) | (27,361) | (27,272) | (26,861) | (27,130) | ||||||||||||||||||||||||||||||||||||||||||
ADJUSTED EBITDA (1) | $ | 119,807 | $ | 137,174 | $ | 136,463 | $ | 137,160 | $ | 137,180 | $ | 106,808 | $ | 67,262 | $ | 92,169 | ||||||||||||||||||||||||||||||||||
NET LEVERAGE RATIO (1) (3) | 1.5 | x | 0.8 | x | 2.1 | x | 2.1 | x | 2.3 | x | 2.6 | x | 4.4 | x | 4.5 | x | ||||||||||||||||||||||||||||||||||
Blucora Reconciliation of Trailing Twelve Month ("TTM") Adjusted EBITDA (1) (4)
| 2018 | 2019 | 2020 | |||||||||||||||||||||||||||||||||||||||||||||
| (in thousands except per share amounts, rounding differences may exist) | TTM 4Q | TTM 1Q | TTM 2Q | TTM 3Q | TTM 4Q | TTM 1Q | TTM 2Q | TTM 3Q | |||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | |||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to Blucora, Inc. | $ | 50,634 | $ | 67,463 | $ | 63,261 | $ | 14,839 | $ | 48,148 | $ | (329,516) | $ | (310,907) | $ | (274,727) | |||||||||||||||||||||||||||||||
| Stock-based compensation | 13,253 | 12,741 | 13,093 | 14,858 | 16,300 | 12,656 | 12,478 | 12,356 | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization of acquired intangible assets | 38,589 | 37,584 | 38,436 | 41,128 | 44,208 | 45,022 | 43,276 | 41,749 | |||||||||||||||||||||||||||||||||||||||
| Other loss, net | 15,797 | 14,527 | 16,886 | 15,629 | 16,915 | 19,092 | 19,262 | 28,619 | |||||||||||||||||||||||||||||||||||||||
| Acquisition and integration costs | — | 1,797 | 10,980 | 17,739 | 25,763 | 29,648 | 23,289 | 26,806 | |||||||||||||||||||||||||||||||||||||||
| Executive transition costs | — | — | — | — | — | 9,184 | 9,820 | 10,225 | |||||||||||||||||||||||||||||||||||||||
| Headquarters relocation costs | — | — | — | — | — | 716 | 1,453 | 1,863 | |||||||||||||||||||||||||||||||||||||||
| Restructuring | 288 | (1) | (3) | (3) | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | 935 | 730 | 508 | 281 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Income tax (benefit) expense | 311 | 2,333 | (6,698) | (18,211) | (65,054) | (1,519) | (52,934) | (25,347) | |||||||||||||||||||||||||||||||||||||||
| Impairment of goodwill and intangible asset | — | — | — | 50,900 | 50,900 | 321,525 | 321,525 | 270,625 | |||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 119,807 | $ | 137,174 | $ | 136,463 | $ | 137,160 | $ | 137,180 | $ | 106,808 | $ | 67,262 | $ | 92,169 | |||||||||||||||||||||||||||||||
1.Non-GAAP measure using Adjusted EBITDA for the last twelve months. Adjusted EBITDA for the trailing twelve month period is reconciled to the nearest GAAP measure on this page.
2.We define net debt, a non-GAAP financial measure, as cash and cash equivalents less the outstanding principal of debt. Management believes that the presentation of this non-GAAP financial measure provides useful information to investors because it is an important liquidity measurement that reflects our ability to service our debt.
3.Net leverage ratio is calculated by dividing net debt by Adjusted EBITDA for the trailing twelve months.
4.For additional information on Adjusted EBITDA and its use as a non-GAAP measure, see page 6.
7
Blucora Reconciliation of Operating Free Cash Flow (1)
| 2018 | 2019 | 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands, rounding differences may exist) | FY 12/31 | 1Q | 2Q | 3Q | 4Q | FY 12/31 | 1Q | 2Q | 3Q | ||||||||||||||||||||||||||||||||||||||||||||
| Net cash provided by (used in) operating activities | $ | 105,548 | $ | 70,236 | $ | 26,576 | $ | (565) | $ | (3,443) | $ | 92,804 | $ | 46,864 | $ | (12,490) | $ | 940 | |||||||||||||||||||||||||||||||||||
| Purchases of property and equipment | (7,633) | (1,243) | (1,695) | (3,949) | (3,614) | (10,501) | (7,715) | (11,357) | (9,639) | ||||||||||||||||||||||||||||||||||||||||||||
Operating free cash flow | $ | 97,915 | $ | 68,993 | $ | 24,881 | $ | (4,514) | $ | (7,057) | $ | 82,303 | $ | 39,149 | $ | (23,847) | $ | (8,699) | |||||||||||||||||||||||||||||||||||
(1)We define operating free cash flow from continuing operations, which is a non-GAAP measure, as net cash provided by (used in) operating activities from continuing operations less purchases of property and equipment. We believe operating free cash flow is an important liquidity measure that reflects the cash generated by the continuing businesses, after the purchases of property and equipment, that can then be used for, among other things, strategic acquisitions and investments in the businesses, stock repurchases, and funding ongoing operations.
8
Blucora Operating Metrics - Wealth Management
| 2018 | 2019 | 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands except %s, rounding differences may exist) | FY 12/31 | 1Q | 2Q | 3Q | 4Q | FY 12/31 | 1Q | 2Q | 3Q | ||||||||||||||||||||||||||||||||||||||||||||
| Segment revenue | $ | 373,174 | $ | 89,532 | $ | 127,831 | $ | 145,428 | $ | 145,188 | $ | 507,979 | $ | 144,989 | $ | 115,884 | $ | 135,932 | |||||||||||||||||||||||||||||||||||
| Less: Financial professional commission payout | $ | (252,357) | $ | (60,860) | $ | (86,583) | $ | (100,700) | $ | (99,860) | $ | (348,003) | $ | (100,804) | $ | (82,656) | $ | (94,794) | |||||||||||||||||||||||||||||||||||
Segment net revenue (1) | $ | 120,817 | $ | 28,672 | $ | 41,248 | $ | 44,728 | $ | 45,328 | $ | 159,976 | $ | 44,185 | $ | 33,228 | $ | 41,138 | |||||||||||||||||||||||||||||||||||
Segment income (2) | $ | 53,053 | $ | 11,540 | $ | 16,979 | $ | 20,631 | $ | 19,142 | $ | 68,292 | $ | 22,598 | $ | 11,731 | $ | 17,498 | |||||||||||||||||||||||||||||||||||
| Segment income % of revenue | 14 | % | 13 | % | 13 | % | 14 | % | 13 | % | 13 | % | 16 | % | 10 | % | 13 | % | |||||||||||||||||||||||||||||||||||
| Segment income % of net revenue | 44 | % | 40 | % | 41 | % | 46 | % | 42 | % | 43 | % | 51 | % | 35 | % | 43 | % | |||||||||||||||||||||||||||||||||||
| (in thousands except %s, rounding differences may exist) | 2018 | 2019 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sources of Revenue | Primary Drivers | FY 12/31 | 1Q | 2Q | 3Q | 4Q | FY 12/31 | 1Q | 2Q | 3Q | |||||||||||||||||||||||||||||||||||||||||||||||||
| Financial professional-driven | Advisory | - Advisory asset levels | $ | 164,353 | $ | 39,757 | $ | 61,410 | $ | 75,579 | $ | 75,621 | $ | 252,367 | $ | 78,757 | $ | 66,303 | $ | 82,612 | |||||||||||||||||||||||||||||||||||||||
| Commission | - Transactions - Asset levels - Product mix | 164,201 | 37,160 | 48,068 | 52,623 | 53,199 | 191,050 | 50,580 | 39,836 | 44,921 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other revenue | Asset-based | - Cash balances - Interest rates - Number of accounts - Client asset levels | 31,456 | 9,693 | 13,219 | 13,618 | 11,652 | 48,182 | 10,579 | 3,981 | 4,351 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Transaction and fee | - Account activity - Number of clients - Number of financial professionals - Number of accounts | 13,164 | 2,922 | 5,134 | 3,608 | 4,716 | 16,380 | 5,073 | 5,764 | 4,048 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | $ | 373,174 | $ | 89,532 | $ | 127,831 | $ | 145,428 | $ | 145,188 | $ | 507,979 | $ | 144,989 | $ | 115,884 | $ | 135,932 | |||||||||||||||||||||||||||||||||||||||||
Total recurring revenue (3) | $ | 303,117 | $ | 73,241 | $ | 106,557 | $ | 121,304 | $ | 121,026 | $ | 422,128 | $ | 119,255 | $ | 100,004 | $ | 117,822 | |||||||||||||||||||||||||||||||||||||||||
Recurring revenue rate (3) | 81.2 | % | 81.8 | % | 83.4 | % | 83.4 | % | 83.4 | % | 83.1 | % | 82.3 | % | 86.3 | % | 86.7 | % | |||||||||||||||||||||||||||||||||||||||||
(in thousands except %s and as otherwise indicated, rounding differences may exist) | 2018 | 2019 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| FY 12/31 | 1Q | 2Q | 3Q | 4Q | FY 12/31 | 1Q | 2Q | 3Q | |||||||||||||||||||||||||||||||||||||||||||||
Total client assets | $ | 42,249,055 | $ | 46,164,603 | $ | 67,602,006 | $ | 67,682,510 | $ | 70,644,385 | $ | 70,644,385 | $ | 61,014,454 | $ | 68,519,998 | $ | 76,152,721 | |||||||||||||||||||||||||||||||||||
Brokerage assets | $ | 29,693,650 | $ | 32,176,414 | $ | 41,335,972 | $ | 41,358,346 | $ | 43,015,221 | $ | 43,015,221 | $ | 37,395,490 | $ | 41,964,610 | $ | 43,733,735 | |||||||||||||||||||||||||||||||||||
Advisory assets | $ | 12,555,405 | $ | 13,988,189 | $ | 26,266,034 | $ | 26,324,164 | $ | 27,629,164 | $ | 27,629,164 | $ | 23,618,964 | $ | 26,555,388 | $ | 32,418,986 | |||||||||||||||||||||||||||||||||||
| % of total client assets | 29.7 | % | 30.3 | % | 38.9 | % | 38.9 | % | 39.1 | % | 39.1 | % | 38.7 | % | 38.8 | % | 42.6 | % | |||||||||||||||||||||||||||||||||||
Number of financial professionals (in ones) (4) | 3,593 | 3,553 | 4,225 | 4,119 | 3,984 | 3,984 | 3,945 | 3,862 | 3,975 | ||||||||||||||||||||||||||||||||||||||||||||
Advisory and commission revenue per financial professional (5) | $ | 91.4 | $ | 21.6 | $ | 25.9 | $ | 31.1 | $ | 32.3 | $ | 111.3 | $ | 32.8 | $ | 27.5 | $ | 32.1 | |||||||||||||||||||||||||||||||||||
(1)Non-GAAP financial measure represents segment revenue less financial professional commission payout.
(2)Excludes expenses associated with non-recurring projects.
(3)Recurring revenue consists of trailing commissions, advisory fees, fees from cash sweep programs, and certain transaction and fee revenue.
(4)The increase in financial professionals in the third quarter of 2020 resulted from the addition of 19 in-house financial professionals (licensed financial planning consultants, which are employees of HKFS) and 131 licensed referring representatives at CPA firms that partner with HKFS.
(5)Full year advisory and commission revenue per financial professional is based upon a full year of advisory and commission revenue.
9
Blucora Operating Metrics - Tax Preparation
| (in thousands except %s and as otherwise indicated, rounding differences may exist) | Nine months ended September 30, | Year-to-date period ended July 16, | |||||||||||||||||||||||||||||||||
| 2020 | 2019 | % change | 2020 (1) | 2019 (1) | % change | ||||||||||||||||||||||||||||||
| Total e-files (2) | 5,234 | 5,165 | 1 | % | 5,149 | 5,108 | 1 | % | |||||||||||||||||||||||||||
| Consumers | |||||||||||||||||||||||||||||||||||
| E-files (2) | 3,145 | 3,203 | (2) | % | 3,113 | 3,184 | (2) | % | |||||||||||||||||||||||||||
| Preparers | |||||||||||||||||||||||||||||||||||
| E-files | 2,089 | 1,962 | 6 | % | 2,036 | 1,924 | 6 | % | |||||||||||||||||||||||||||
| Units sold (in ones) | 20,288 | 20,679 | (2) | % | 20,207 | 20,596 | (2) | % | |||||||||||||||||||||||||||
| E-files per unit sold (in ones) | 102.9 | 94.9 | 8 | % | 100.8 | 93.4 | 8 | % | |||||||||||||||||||||||||||
(1)Tax season begins on the first day that the IRS begins accepting e-files and ends on filing deadline day plus one day. As a result of the coronavirus pandemic, the IRS extended the filing deadline for federal tax returns relating to the 2019 tax year to July 15, 2020. In order to provide comparable prior period data, we also provided e-file information for the equivalent period in 2019.
(2)We participate in the Free File Alliance that is part of an IRS partnership that provides free electronic tax filing services to taxpayers meeting certain income-based guidelines. Free File Alliance e-files are included within total e-files and consumer e-files above.
10