Blucora Announces First Quarter 2021 Results

May 5, 2021

DALLAS, May 05, 2021 (GLOBE NEWSWIRE) -- Blucora, Inc. (NASDAQ: BCOR), a leading provider of technology-enabled, tax focused financial solutions, today announced financial results for the first quarter ended March 31, 2021.

First Quarter Highlights and Recent Developments

  • Increased total revenue for the quarter to $278.4 million, or 6% year-over-year
  • GAAP Net Income of $27.6 million, or $0.56 per diluted share
  • Non-GAAP Net Income of $51.0 million, or $1.04 per diluted share
  • Total client assets ended the quarter up 39% year over year to $84.8 billion, with $36.8 billion, or 43.4% in advisory assets
  • Advisory assets increased 56% year-over-year, including the addition of approximately $5.0 billion in Avantax Planning Partners (“APP”) assets
  • Free cash flow of $45.1 million in Q1 2021 vs. $39.1 million during Q1 2020, or a 15% increase
  • Strong cash position, ending the quarter with $191.8 million in cash and cash equivalents compared to $150.1 million at December 31, 2020, while reducing net debt levels since December 31, 2020 with a 3.5x net leverage ratio as of March 31, 2021
  • Announced appointment of Tina Perry, President of OWN, to our Board of Directors

“As we continue to serve our financial professionals and assist in the growth of their businesses, our wealth management segment reported strong results with the first quarter coming in at the high end of our expectations, commented Chris Walters, Blucora’s President and Chief Executive Officer. “We continue to see growth in total client assets as well as advisory assets, which sets the Company up for a strong year.”

Tax Season Update

“Our progress leading up to the conclusion of the extended Tax Year 2020 continues to be on track. We are realizing the benefits of continued strong NPS scores, retention rates, improved marketing effectiveness and ARPU strength driven by our broad set of customer offerings for consumers.” Walters continued.

Summary Financial Performance: Q1 2021
($ in millions except per share amounts)

  Q1 2021   Q1 2020   Change
Revenue:          
Wealth Management $ 154.5     $ 145.0     7   %
Tax Software $ 123.9     $ 118.3     5   %
Total Revenue $ 278.4     $ 263.3     6   %
Segment Operating Income          
Wealth Management $ 19.4     $ 22.6     (14 ) %
Tax Software $ 50.9     $ 37.8     35   %
Total Segment Operating Income $ 70.3     $ 60.4     16   %
Unallocated Corporate-Level General and Administrative Expenses $ (5.7 )   $ (7.0 )   19   %
GAAP:          
Operating Income (Loss) $ 37.2     $ (241.8 )   115   %
Net Income (Loss) $ 27.6     $ (315.5 )   109   %
Diluted Net Income (Loss) Per Share $ 0.56     $ (6.60 )   108   %
Non-GAAP: (1)          
Adjusted EBITDA $ 64.6     $ 53.3     21   %
Net Income $ 51.0     $ 43.6     17   %
Diluted Net Income per Share $ 1.04     $ 0.90     16   %


(1) See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.

Second Quarter and Full Year 2021 Outlook

($ in millions except per share amounts) 2Q 2021 Full Year 2021
Wealth Management Revenue $155.5 - $161.5 $631.5 - $649.5
TaxAct Revenue $82.5 - $87.5 $212.5 - $218.0
Total Revenue $238.0 - $249.0 $844.0 - $867.5
Wealth Management Segment Operating Income $17.5 - $19.5 $79.0 - $83.5
TaxAct Segment Operating Income $53.0 - $58.0 $72.0 - $76.5
Unallocated Corporate-Level General and Administrative Expenses $7.5 - $7.0 $28.5 - $27.5
GAAP:    
Net Income $22.5 - $31.5 ($12.5) - $2.0
Net Income per share $0.45 - $0.63 ($0.25) - $0.04
Non-GAAP:    
Adjusted EBITDA (1) $63.0 - $70.5 $122.5 - $132.5
Non-GAAP Net Income (1) $47.0 - $55.5 $67.5 - $80.0
Non-GAAP Net Income per share (1) $0.94 - $1.11 $1.34 - $1.60


(1) See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.

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 first quarter results, its outlook for full year 2021, its tax season update, and other business matters. We will also provide supplemental financial information to our results on the Investor Relations section of the Blucora corporate website at www.blucora.com prior to the call. The supplemental financial information has also been furnished 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, a provider of data and technology-driven solutions that empowers people to improve their financial wellness. Blucora operates in two segments including (i) wealth management, through its Avantax Wealth Management brand, with a collective $85 billion in total client assets as of March 31, 2021 and (ii) tax software, through its TaxAct business, a market leader in tax software with approximately 3 million consumer and 23,000 professional users in 2020. With integrated tax-focused software and wealth management, Blucora is uniquely positioned to assist our customers in achieving better long-term outcomes via holistic, tax-advantaged solutions. For more information on Blucora, visit www.blucora.com.

Source: Blucora

Blucora Investor Relations
Dee Littrell (972) 870-6463
IR@Blucora.com

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. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “intends,” “anticipates,” “may,” “forecasts,” “future,” “will,” “projects,” “predicts,” “potential,” “continues,” “target,” “outlook” and similar expressions and variations. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: the impact of the coronavirus pandemic on our results of operations and our business, including the impact of the resulting economic and market disruption, the extension of tax filing deadlines and other related relief; 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 financial professionals, qualified employees, clients, and customers, as well as our ability to provide strong customer/client service; our ability to close, finance, and realize all of the anticipated benefits of acquisitions, as well as our ability to integrate the operations of recently acquired businesses, and the potential impact of such acquisitions on our existing indebtedness and leverage; our future capital requirements and the availability of financing, if necessary; our ability to meet our current and future debt service obligations, including our ability to maintain compliance with our debt covenants; downgrade of the Company’s credit ratings; our ability to generate strong performance for our clients and the impact of the financial markets on our clients’ portfolios; the impact of new or changing legislation and regulations (or interpretations thereof) on our business, including our ability to successfully address and comply with such legislation and regulations (or interpretations thereof) and increased costs, reductions of revenue, and potential fines, penalties or disgorgement to which we may be subject as a result thereof; risks, burdens, and costs, including fines, penalties or disgorgement, associated with our business being subjected to regulatory inquiries, investigations or initiatives; risks associated with legal proceedings, including litigation and regulatory proceedings; our ability to manage leadership and employee transitions, including costs and time burdens on management and our board of directors related thereto; political and economic conditions and events that directly or indirectly impact the wealth management and tax software industries; our ability to respond to rapid technological changes, including our ability to successfully release new products and services or improve upon existing products and services; the compromising of confidentiality, availability or integrity of information, including cyberattacks; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; risks related to goodwill and other intangible asset impairment; our ability to develop, establish, and maintain strong brands; risks associated with the use and implementation of information technology and the effect of security breaches, computer viruses, and computer hacking attacks; our ability to comply with laws and regulations regarding privacy and protection of user data; our ability to maintain our relationships with third-party partners, providers, suppliers, vendors, distributors, contractors, financial institutions, industry associations, and licensing partners, and our expectations regarding and reliance on the products, tools, platforms, systems, and services provided by these third parties; our beliefs and expectations regarding the seasonality of our business; our assessments and estimates that determine our effective tax rate; and our ability to protect our intellectual property and the impact of any claim that we have infringed on the intellectual property rights of others. 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.

Blucora, Inc.
Condensed Consolidated Statements of Operations
(Unaudited) (Amounts in thousands, except per share data)

  Three months ended
March 31,
  2021   2020
Revenues:      
Wealth management services revenue $ 154,491     $ 144,989  
Tax software services revenue 123,892     118,331  
Total revenue 278,383     263,320  
Operating expenses:      
Cost of revenue:      
Wealth management services cost of revenue 108,623     102,342  
Tax software services cost of revenue 5,578     4,013  
Total cost of revenue 114,201     106,355  
Engineering and technology 7,128     8,515  
Sales and marketing 77,562     79,710  
General and administrative 24,685     24,728  
Acquisition and integration 8,103     5,682  
Depreciation 2,300     1,796  
Amortization of other acquired intangible assets 7,175     7,748  
Impairment of goodwill     270,625  
Total operating expenses 241,154     505,159  
Operating income (loss) 37,229     (241,839 )
Other loss, net (1) (7,883 )   (6,135 )
Income (loss) before income taxes 29,346     (247,974 )
Income tax expense (1,700 )   (67,520 )
Net income (loss) $ 27,646     $ (315,494 )
Net income (loss) per share:      
Basic $ 0.57     $ (6.60 )
Diluted $ 0.56     $ (6.60 )
Weighted average shares outstanding:      
Basic 48,261     47,827  
Diluted 49,097     47,827  


(1) Other loss, net consisted of the following (in thousands):


  Three months ended
March 31,
  2021   2020
Interest expense $ 7,183     $ 5,316  
Amortization of debt issuance costs 363     313  
Accretion of debt discounts 277     68  
Total interest expense 7,823     5,697  
Interest income (2 )   (14 )
Other 62     452  
Other loss, net $ 7,883     $ 6,135  

Blucora, Inc.
Condensed Consolidated Balance Sheets
(Unaudited) (Amounts in thousands)

  March 31,
2021
  December 31,
2020
ASSETS      
Current assets:      
Cash and cash equivalents $ 191,803     $ 150,125  
Cash segregated under federal or other regulations 2,241     637  
Accounts receivable, net of allowance 24,348     12,736  
Commissions and advisory fees receivable 26,021     26,132  
Other receivables 186     717  
Prepaid expenses and other current assets, net 12,015     10,321  
Total current assets 256,614     200,668  
Long-term assets:      
Property and equipment, net 64,160     58,500  
Right-of-use assets, net 22,886     23,455  
Goodwill, net 454,821     454,821  
Other intangible assets, net 315,294     322,179  
Other long-term assets 5,342     4,569  
Total long-term assets 862,503     863,524  
Total assets $ 1,119,117     $ 1,064,192  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 22,019     $ 9,290  
Commissions and advisory fees payable 18,762     19,021  
Accrued expenses and other current liabilities 72,735     56,419  
Deferred revenue—current 5,280     12,298  
Lease liabilities—current 3,327     2,304  
Current portion of long-term debt, net 1,786     1,784  
Total current liabilities 123,909     101,116  
Long-term liabilities:      
Long-term debt, net 552,684     552,553  
Deferred tax liability, net 30,394     30,663  
Deferred revenue—long-term 6,015     6,247  
Lease liabilities—long-term 35,723     36,404  
Other long-term liabilities 25,738     24,919  
Total long-term liabilities 650,554     650,786  
Total liabilities 774,463     751,902  
       
Stockholders’ equity:      
Common stock, par $0.0001—900,000 authorized shares; 49,615 shares issued and 48,309 shares outstanding at March 31, 2021; 49,483 shares issued and 48,177 shares outstanding at December 31, 2020 5     5  
Additional paid-in capital 1,602,948     1,598,230  
Accumulated deficit (1,229,900 )   (1,257,546 )
Treasury stock, at cost—1,306 shares at March 31, 2021 and December 31, 2020 (28,399 )   (28,399 )
Total stockholders’ equity 344,654     312,290  
Total liabilities and stockholders’ equity $ 1,119,117     $ 1,064,192  

Blucora, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited) (Amounts in thousands)

  Three months ended March 31,
  2021   2020
Operating activities:      
Net income (loss) $ 27,646     $ (315,494 )
Adjustments to reconcile net income (loss) to net cash from operating activities:      
Stock-based compensation 5,610     (1,201 )
Depreciation and amortization of acquired intangible assets 10,418     10,168  
Impairment of goodwill     270,625  
Reduction of right-of-use lease assets 569     1,625  
Deferred income taxes (269 )   57,898  
Amortization of debt issuance costs 363     313  
Accretion of debt discounts 277     68  
Change in fair value of acquisition-related contingent consideration 6,300      
Accretion of lease liability 514     424  
Other (78 )   495  
Cash provided (used) by changes in operating assets and liabilities:      
Accounts receivable (11,541 )   (9,066 )
Commissions and advisory fees receivable 111     3,457  
Other receivables 531     (3,239 )
Prepaid expenses and other current assets (1,694 )   (1,715 )
Other long-term assets (828 )   2,560  
Accounts payable 12,729     17,744  
Commissions and advisory fees payable (259 )   (1,965 )
Lease liabilities (172 )   (1,289 )
Deferred revenue (7,250 )   (7,820 )
Accrued expenses and other current and long-term liabilities 10,745     23,276  
Net cash provided by operating activities 53,722     46,864  
Investing activities:      
Purchases of property and equipment (8,598 )   (7,715 )
Asset acquisitions (587 )    
Net cash used by investing activities (9,185 )   (7,715 )
Financing activities:      
Proceeds from credit facilities     55,000  
Payments on credit facilities (453 )   (10,313 )
Proceeds from stock option exercises 63      
Tax payments from shares withheld for equity awards (865 )   (918 )
Net cash provided (used) by financing activities (1,255 )   43,769  
Net increase in cash, cash equivalents, and restricted cash 43,282     82,918  
Cash, cash equivalents, and restricted cash, beginning of period 150,762     86,450  
Cash, cash equivalents, and restricted cash, end of period $ 194,044     $ 169,368  

Blucora, Inc.
Segment Information
(Unaudited) (Amounts in thousands)

  Three months ended
March 31,
  2021   2020
Revenue:      
Wealth Management (1) $ 154,491     $ 144,989  
Tax Software (1) 123,892     118,331  
Total revenue 278,383     263,320  
Operating income (loss):      
Wealth Management 19,396     22,598  
Tax Software 50,888     37,753  
Corporate-level activity (2) (33,055 )   (302,190 )
Total operating income (loss) 37,229     (241,839 )
Other loss, net (7,883 )   (6,135 )
Income (loss) before income taxes 29,346     (247,974 )
Income tax expense (1,700 )   (67,520 )
Net income (loss) $ 27,646     $ (315,494 )


(1) Revenues by major category within each segment are presented below (in thousands):


  Three months ended
March 31,
  2021   2020
Wealth Management:      
Advisory $ 91,119   $ 78,757
Commission 52,534   50,580
Asset-based 5,329   10,579
Transaction and fee 5,509   5,073
Total Wealth Management revenue $ 154,491   $ 144,989
Tax Software:      
Consumer $ 110,567   $ 103,821
Professional 13,325   14,510
Total Tax Software revenue $ 123,892   $ 118,331


(2) Corporate-level activity included the following (in thousands):


  Three months ended
March 31,
  2021   2020
Unallocated corporate-level general and administrative expenses $ 5,694   $ 7,016  
Stock-based compensation 5,610   (1,201 )
Acquisition and integration costs 8,103   5,682  
Depreciation 3,243   2,420  
Amortization of acquired intangible assets 7,175   7,748  
Impairment of goodwill   270,625  
Executive transition costs   9,184  
Headquarters relocation costs   716  
Contested proxy and other legal and consulting costs 3,230    
Total corporate-level activity $ 33,055   $ 302,190  

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

Adjusted EBITDA Reconciliation (1)
(Unaudited) (Amounts in thousands)

  Three months ended
March 31,
  2021   2020
Net income (loss) (2) $ 27,646   $ (315,494 )
Stock-based compensation 5,610   (1,201 )
Depreciation and amortization of acquired intangible assets 10,418   10,168  
Other loss, net 7,883   6,135  
Acquisition and integration—Excl. Change in fair value of acquisition-related contingent consideration 1,803   5,682  
Acquisition and integration—Change in fair value of acquisition-related contingent consideration 6,300    
Impairment of goodwill   270,625  
Executive transition costs   9,184  
Headquarter relocation costs   716  
Contested proxy and other legal and consulting costs 3,230    
Income tax expense 1,700   67,520  
Adjusted EBITDA (1) $ 64,590   $ 53,335  

Non-GAAP Net Income and Non-GAAP Net Income Per Share Reconciliation (1)
(Unaudited) (Amounts in thousands, except per share amounts)

  Three months ended
March 31,
  2021   2020
Net income (loss) (2) $ 27,646     $ (315,494 )
Stock-based compensation 5,610     (1,201 )
Amortization of acquired intangible assets 7,175     7,748  
Acquisition and integration—Excluding change in fair value of HKFS Contingent Consideration 1,803     5,682  
Acquisition and integration—Change in fair value of HKFS Contingent Consideration 6,300      
Impairment of goodwill     270,625  
Executive transition costs     9,184  
Headquarters relocation costs     716  
Contested proxy and other legal and consulting costs 3,230      
Cash tax impact of adjustments to GAAP net income (543 )   (736 )
Non-cash income tax (benefit) expense (269 )   67,037  
Non-GAAP net income $ 50,952     $ 43,561  
Per diluted share:      
Net income (loss) (2) (3) $ 0.56     $ (6.54 )
Stock-based compensation 0.11     (0.02 )
Amortization of acquired intangible assets 0.15     0.16  
Acquisition and integration—Excluding change in fair value of HKFS Contingent Consideration 0.04     0.12  
Acquisition and integration—Change in fair value of HKFS Contingent Consideration 0.13      
Impairment of goodwill     5.61  
Executive transition costs     0.19  
Headquarters relocation costs     0.01  
Contested proxy and other legal and consulting costs 0.07      
Cash tax impact of adjustments to GAAP net income (0.01 )   (0.02 )
Non-cash income tax (benefit) expense (0.01 )   1.39  
Non-GAAP net income per share $ 1.04     $ 0.90  
Weighted average shares outstanding used in computing per diluted share amounts 49,097     48,253  

Net Leverage Ratio Reconciliation (4) (5)
(Amounts in thousands)

  March 31,
2021
  December 31,
2020
Debt:      
Senior secured credit facility $ 562,703       $ 563,156    
Cash:      
Cash and cash equivalents $ 191,803       $ 150,125    
Net debt (6) $ 370,900       $ 413,031    
       
Trailing twelve months:      
Wealth Management segment operating income $ 68,993       $ 72,195    
Tax Software segment operating income 62,756       49,621    
  $ 131,749       $ 121,816    
Unallocated corporate-level general and administrative expenses (25,367 )     (26,689 )  
Adjusted EBITDA (1) $ 106,382       $ 95,127    
       
Net leverage ratio (4) (5) 3.5   x   4.3  

Trailing Twelve Month Adjusted EBITDA Reconciliation (1) (4)

(Amounts in thousands)

  For the trailing twelve months ended
  March 31,
2021
  December 31,
2020
Net income (loss) (2) $ 385     $ (342,755 )
Stock-based compensation 16,877     10,066  
Depreciation and amortization of acquired intangible assets 40,157     39,907  
Other loss, net 33,052     31,304  
Acquisition and integration—Excluding change in fair value of HKFS Contingent Consideration 18,906     22,785  
Acquisition and integration—Change in fair value of HKFS Contingent Consideration 14,600     8,300  
Executive transition costs 1,517     10,701  
Headquarter relocation costs 1,147     1,863  
Contested proxy and other legal and consulting costs 3,230      
Income tax (benefit) expense (23,489 )   42,331  
Impairment of goodwill and an intangible asset     270,625  
Adjusted EBITDA (1) $ 106,382     $ 95,127  

Operating Free Cash Flow Reconciliation (7)
(Amounts in thousands)

  Three months ended
March 31,
  2021   2020
Net cash provided by operating activities (8) $ 53,722      $ 46,864   
Purchase of property and equipment (8) (8,598 )   (7,715 )
Operating free cash flow (7) $ 45,124      $ 39,149   

Adjusted EBITDA Reconciliation for Forward-Looking Guidance (1)
(Amounts in thousands)

  Ranges for the three months ending   Ranges for the year ending
  June 30, 2021   December 31, 2021
  Low   High   Low   High
Net income (loss) $ 22,500   $ 31,500   $ (12,500 )   $ 2,000
Stock-based compensation 5,500   5,400   21,500     21,200
Depreciation and amortization of acquired intangible assets 11,100   10,800   45,000     44,500
Other loss, net 8,800   8,500   33,500     32,400
Acquisition, integration, and contested proxy and other legal and consulting costs (9) 12,900   12,300   32,800     31,000
Income tax expense 2,200   2,000   2,200     1,400
Adjusted EBITDA $ 63,000   $ 70,500   $ 122,500     $ 132,500

Non-GAAP Net Income and Non-GAAP Net Income Per Share Reconciliation
for Forward-Looking Guidance (1)
(Amounts in thousands, except per share amounts)

  Ranges for the three months ending   Ranges for the year ending
  June 30, 2021   December 31, 2021
  Low   High   Low   High
Net income (loss) $ 22,500     $ 31,500     $ (12,500 )   $ 2,000  
Stock-based compensation 5,500     5,400     21,500     21,200  
Amortization of acquired intangible assets 7,200     7,100     28,600     28,300  
Acquisition, integration, and contested proxy and other legal and consulting costs (9) 12,900     12,300     32,800     31,000  
Cash tax impact of adjustments to net loss (500 )   (400 )   (2,000 )   (1,700 )
Non-cash income tax benefit (600 )   (400 )   (900 )   (800 )
Non-GAAP net income $ 47,000     $ 55,500     $ 67,500     $ 80,000  
Per diluted share:              
Net income (loss) (3) $ 0.45     $ 0.63     $ (0.25 )   $ 0.04  
Stock-based compensation 0.11     0.11     0.43     0.42  
Amortization of acquired intangible assets 0.14     0.14     0.57     0.57  
Acquisition, integration, and contested proxy and other legal and consulting costs (9) 0.26     0.25     0.65     0.62  
Cash tax impact of adjustments to net loss (0.01 )   (0.01 )   (0.04 )   (0.03 )
Non-cash income tax benefit (0.01 )   (0.01 )   (0.02 )   (0.02 )
Non-GAAP net income per share $ 0.94     $ 1.11     $ 1.34     $ 1.60  
Weighted average shares outstanding used in computing per diluted share amounts 50,100     50,000     50,300     50,100  

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

(1) We define Adjusted EBITDA as net income (loss), determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation and amortization of acquired intangible assets, other loss, net, acquisition and integration costs, impairment of goodwill and an intangible asset, executive transition costs, headquarters relocation costs, contested proxy and other legal and consulting costs, and income tax expense. Other loss, net primarily constitutes our interest expense, net of interest income. Acquisition and integration costs primarily relate to the acquisition of HKFS and the acquisition of 1st Global. Impairment of goodwill relates to the impairment of our Wealth Management reporting unit goodwill in the first quarter of 2020. The impairment of an intangible asset relates to the impairment of the HD Vest trade name intangible asset in the third quarter of 2019. 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.

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 as net income (loss), determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets, acquisition and integration costs, impairment of goodwill, executive transition costs, headquarters relocation costs, contested proxy and other legal and consulting costs, non-capitalized debt issuance expense, the related cash tax impact of those adjustments, and non-cash income tax (benefit) expense. We exclude the non-cash portion of income tax expense 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 either be utilized or expire between 2021 and 2024. 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 and non-GAAP net income 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 and non-GAAP net income per share are common measures used by investors and analysts to evaluate our performance and the valuation of our business. Non-GAAP net income and non-GAAP net income 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 (loss) per share. Other companies may calculate non-GAAP net income and non-GAAP net income per share differently, and, therefore, our non-GAAP net income and non-GAAP net income per share may not be comparable to similarly titled measures of other companies.

(2) As presented in the condensed consolidated statements of operations (unaudited).

(3) Any difference in the “per diluted share” amounts between this table and the condensed consolidated statements of comprehensive income is due to using different weighted average shares outstanding in the event that there is GAAP net loss but non-GAAP net income and vice versa.

(4) 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 page 10.

(5) Net leverage ratio is calculated by dividing net debt by Adjusted EBITDA for the trailing twelve months. 

(6) 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.

(7) We define operating free cash flow, which is a non-GAAP measure, as net cash provided by (used in) operating activities less purchases of property and equipment. We believe operating free cash flow is an important liquidity measure that reflects the cash generated by our 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) As presented in the condensed consolidated statements of cash flows (unaudited).

(9) The breakout of components cannot be determined on a forward-looking basis without unreasonable efforts.


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Source: Blucora, Inc.