Blucora Announces Second Quarter 2020 Results

August 5, 2020

DALLAS, Aug. 05, 2020 (GLOBE NEWSWIRE) -- Blucora, Inc. (NASDAQ: BCOR), a provider of data and technology-driven tax software and wealth management solutions that empowers people to improve their financial wellness, today announced financial results for the second quarter ended June 30, 2020.

Second Quarter and Tax Season Highlights and Recent Developments

  • TaxAct grows total e-files (consumer + professional) by 1% year-over-year, amid extended tax season (due to COVID-19), with consumer e-files declining 2% and professional e-files growing by 6%.
  • Improved several key business metrics for tax season, including unique visitors, retention and conversion rates and net promoter score.
  • Tax preparation revenue expected to decline approximately 3% for the full-year 2020 compared to the full-year 2019. Full-year 2019 tax preparation revenue included approximately $14.0 million generated by the discontinued Basic Online SKU and the SimpleTax business, divested in the third quarter of 2019.
  • Closed acquisition of HK Financial Services (“HKFS”) on July 1, 2020, adding a fast-growing, highly profitable RIA to the Company’s wealth management business.

“In the face of negative impacts of COVID-19 on our financial results, I’m pleased that we are operating effectively in this environment,” said Chris Walters, Blucora’s President and Chief Executive Officer. “In tax preparation, we started the season slow and faced challenges from the tax-season extension; however, our in-season refinements improved a number of important business metrics leading to growth in total e-files and new consumer e-files for the first time since tax years 2014 and 2012, respectively. TaxAct significantly increased visitors to its website and increased conversion and retention rates as well as net promoter scores. In wealth management, second quarter results reflect the market and interest rate declines from the prior quarter. Our service to financial professionals has been uninterrupted and improved in many areas. We closed on our acquisition of HKFS after quarter-end, providing us with more opportunities to serve CPA firms and thereby increasing our addressable market while enhancing our growth opportunities.

At the six-month mark in my tenure, we have defined our strategic priorities, addressed skills gaps amongst our leadership team and realigned our business to deliver on our detailed execution plans.  While there is much to be done, we feel good about the progress we’ve made and how it positions the Company for future growth.”

Summary Financial Performance: Q2 2020
($ in millions except per share amounts)

  Q2 2020   Q2 2019   Change
Revenue:          
Wealth Management $ 115.9       $ 127.8       (9)%
Tax Preparation $ 45.2       $ 65.9       (31)%
Total Revenue $ 161.1       $ 193.7       (17)%
Segment Income:          
Wealth Management $ 11.7       $ 17.0       (31)%
Tax Preparation $ 6.7       $ 41.4       (84)%
Total Segment Income $ 18.4       $ 58.3       (68)%
Unallocated Corporate-Level General and Administrative Expenses $ (5.8 )     $ (6.2 )     (7)%
GAAP:          
Operating Income (Loss) $ (4.6 )     $ 28.0       (116)%
Net Income Attributable to Blucora, Inc. $ 49.6       $ 31.0       60 %
Diluted Net Income Per Share Attributable to Blucora, Inc. $ 1.03       $ 0.62       66 %
Non-GAAP: (1)          
Adjusted EBITDA $ 12.6       $ 52.1       (76)%
Net Income $ 4.5       $ 41.4       (89)%
Diluted Net Income per Share $ 0.09       $ 0.83       (89)%

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

Tax Season Update

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 have also provided e-file information for the equivalent period in 2019.

  Year-to-date period ended July 16,    
(In thousands, except percentages) 2020   2019   Change
Consumer (1) 3,113      3,184      (2)%
Professional tax preparer 2,036      1,924      6 %
Total e-files (1) 5,149      5,108      1 %

(1)   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.

Third Quarter and Full Year 2020 Outlook

($ in millions except per share amounts) 3Q 2020 Full Year 2020
Wealth Management Revenue (1) $133.5 - $138.5 $530.0 - $541.0
TaxAct Revenue $36.5 - $39.0 $203.0 - $206.0
Total Revenue $170.0 - $177.5 $733.0 - $747.0
Wealth Management Segment Income (1) $15.0 - $16.5 $65.5 - $69.5
TaxAct Segment Income $14.0 - $15.0 $46.5 - $48.0
Unallocated Corporate-Level General and Administrative Expenses $6.5 - $7.5 $24.5 - $26.0
GAAP:    
Net Loss (1) ($28.0) – ($22.0) ($343.5) – ($334.0)
Net Loss per share (1) ($0.58) – ($0.46) ($7.09) – ($6.92)
Non-GAAP:    
Adjusted EBITDA (1)(2) $21.5 - $25.0 $86.0 - $93.0
Non-GAAP Net Income (1)(2) $7.5 - $11.5 $40.5 - $48.0
Non-GAAP Net Income per share (1)(2) $0.15 - $0.23 $0.83 - $0.98
  1. Includes HKFS results from July 1, 2020 to December 31, 2020.
  2. 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 the second quarter, its outlook for full year 2020, its tax season update, and other business matters. We will also provide the prepared remarks for the conference call along with supplemental financial information to our results on the Investor Relations section of the Blucora corporate website at www.blucora.com prior to the call. The supplemental financial information has also been filed with the SEC on Form 8-K. A replay of the call will be available on our website.

About Blucora®

Blucora, Inc. (NASDAQ: BCOR) is on the forefront of financial technology, 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 business (formerly operating under the HD Vest and 1st Global brands), the largest U.S. tax-focused independent broker-dealer, with $69 billion in total client assets as of June 30, 2020, and (ii) tax preparation, through its TaxAct business, a market leader in tax preparation software with approximately 3 million consumer and 20,000 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 Contact:
Bill Michalek (972) 870-6463
VP, Investor Relations

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When used in this release, terms such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “intends,” “anticipates,” “may,” “forecasts,” “future,” “will,” “projects,” “predicts,” “potential,” “continues,” “target,” “outlook” and similar expressions and variations as they relate to the Company or its management are intended to identify forward-looking statements. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: the impact of the coronavirus outbreak 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 our 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 investment 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 preparation 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 June 30,   Six months ended June 30,
  2020   2019   2020   2019
Revenue:              
Wealth management services revenue $ 115,884       $ 127,831       $ 260,873       $ 217,363    
Tax preparation services revenue 45,238       65,909       163,569       202,145    
Total revenue 161,122       193,740       424,442       419,508    
Operating expenses:              
Cost of revenue:              
Wealth management services cost of revenue 83,868       87,477       186,210       148,851    
Tax preparation services cost of revenue 3,054       3,149       7,067       7,350    
Total cost of revenue 86,922       90,626       193,277       156,201    
Engineering and technology 7,377       7,159       15,892       13,688    
Sales and marketing 40,057       29,256       119,767       84,828    
General and administrative 20,200       19,002       44,928       36,079    
Acquisition and integration 2,824       9,183       8,506       10,980    
Depreciation 1,675       1,315       3,471       2,376    
Amortization of other acquired intangible assets 6,673       9,169       14,421       17,213    
Impairment of goodwill —        —        270,625       —     
Total operating expenses 165,728       165,710       670,887       321,365    
Operating income (loss) (4,606 )     28,030       (246,445 )     98,143    
Other loss, net (1) (5,288 )     (5,118 )     (11,423 )     (9,076 )  
Income (loss) before income taxes (9,894 )     22,912       (257,868 )     89,067    
Income tax benefit (expense) 59,539       8,124       (7,981 )     4,139    
Net income (loss) attributable to Blucora, Inc. $ 49,645       $ 31,036       $ (265,849 )     $ 93,206    
Net income (loss) per share attributable to Blucora, Inc.:              
Basic $ 1.04       $ 0.64       $ (5.55 )     $ 1.93    
Diluted $ 1.03       $ 0.62       $ (5.55 )     $ 1.88    
Weighted average shares outstanding:              
Basic 47,941       48,555       47,884       48,358    
Diluted 48,092       49,822       47,884       49,681    

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

  Three months ended June 30,   Six months ended June 30,
  2020   2019   2020   2019
Interest expense $ 4,840       $ 4,770       $ 10,156       $ 8,546    
Amortization of debt issuance costs 331       375       644       547    
Accretion of debt discounts 70       85       138       123    
Total interest expense 5,241       5,230       10,938       9,216    
Interest income (11 )     (149 )     (25 )     (289 )  
Other 58       37       510       149    
Other loss, net $ 5,288       $ 5,118        $ 11,423        $ 9,076    


Blucora, Inc.

Condensed Consolidated Balance Sheets
(Unaudited) (Amounts in thousands)

  June 30,
2020
  December 31,
2019
ASSETS      
Current assets:      
Cash and cash equivalents $ 90,081       $ 80,820    
Cash segregated under federal or other regulations 1,266       5,630    
Accounts receivable, net of allowance 15,913       16,266    
Commissions receivable 15,590       21,176    
Other receivables 5,711       2,902    
Prepaid expenses and other current assets, net 10,237       12,349    
Total current assets 138,798       139,143    
Long-term assets:      
Property and equipment, net 43,793       18,706    
Right-of-use assets, net 27,653       10,151    
Goodwill, net 391,084       662,375    
Other intangible assets, net 275,790       290,211    
Deferred tax asset, net 1,613       9,997    
Other long-term assets 3,749       6,989    
Total long-term assets 743,682       998,429    
Total assets $ 882,480       $ 1,137,572    
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 13,689       $ 10,969    
Commissions and advisory fees payable 14,695       19,905    
Accrued expenses and other current liabilities 35,114       36,144    
Deferred revenue—current 4,178       12,014    
Lease liabilities—current 1,251       3,272    
Current portion of long-term debt, net 1,230       11,228    
Total current liabilities 70,157       93,532    
Long-term liabilities:      
Long-term debt, net 381,561       381,485    
Deferred revenue—long-term 6,709       7,172    
Lease liabilities—long-term 36,407       5,916    
Other long-term liabilities 6,785       5,952    
Total long-term liabilities 431,462       400,525    
Total liabilities 501,619       494,057    
       
Stockholders’ equity:      
Common stock, par $0.0001—900,000 authorized shares; 49,340 shares issued and 48,034 shares outstanding at June 30, 2020; 49,059 shares issued and 47,753 shares outstanding at December 31, 2019 5       5    
Additional paid-in capital 1,589,895       1,586,972    
Accumulated deficit (1,180,640 )     (914,791 )  
Accumulated other comprehensive loss —        (272 )  
Treasury stock, at cost—1,306 shares at June 30, 2020 and December 31, 2019 (28,399 )     (28,399 )  
Total stockholders’ equity 380,861       643,515    
Total liabilities and stockholders’ equity $ 882,480       $ 1,137,572    


Blucora, Inc.

Condensed Consolidated Statements of Cash Flows
(Unaudited) (Amounts in thousands)

  Six months ended June 30,
  2020   2019
Operating activities:      
Net income (loss) $ (265,849 )     $ 93,206    
Adjustments to reconcile net income (loss) to net cash from operating activities:      
Stock-based compensation 2,703       6,525    
Depreciation and amortization of acquired intangible assets 19,253       20,185    
Impairment of goodwill 270,625       —     
Reduction of right-of-use lease assets 3,196       1,977    
Deferred income taxes 8,784       4,446    
Amortization of debt issuance costs 644       547    
Accretion of debt discounts 138       123    
Other 1,571       260    
Cash provided (used) by changes in operating assets and liabilities:      
Accounts receivable 184       (3,217 )  
Commissions receivable 5,586       847    
Other receivables (2,809 )     (661 )  
Prepaid expenses and other current assets 1,435       12,258    
Other long-term assets 3,162       (355 )  
Accounts payable 2,942       (2,995 )  
Commissions and advisory fees payable (5,210 )     (663 )  
Lease liabilities (2,572 )     (2,066 )  
Deferred revenue (8,299 )     (24,760 )  
Accrued expenses and other current and long-term liabilities (1,110 )     (8,845 )  
Net cash provided by operating activities 34,374       96,812    
Investing activities:      
Business acquisition, net of cash acquired —        (164,461 )  
Purchases of property and equipment (19,072 )     (2,938 )  
Net cash used by investing activities (19,072 )     (167,399 )  
Financing activities:      
Proceeds from credit facilities 55,000       121,499    
Payments on credit facilities (65,625 )     —     
Payment of redeemable noncontrolling interests —        (24,945 )  
Proceeds from stock option exercises 25       3,320    
Proceeds from issuance of stock through employee stock purchase plan 1,201       1,144    
Tax payments from shares withheld for equity awards (1,006 )     (5,160 )  
Contingent consideration payments for business acquisition —        (943 )  
Net cash provided (used) by financing activities (10,405 )     94,915    
Effect of exchange rate changes on cash, cash equivalents, and restricted cash —        58    
Net increase in cash, cash equivalents, and restricted cash 4,897       24,386    
Cash, cash equivalents, and restricted cash, beginning of period 86,450       85,366    
Cash, cash equivalents, and restricted cash, end of period $ 91,347       $ 109,752    


Blucora, Inc.

Segment Information
(Unaudited) (Amounts in thousands)

  Three Months Ended June 30,   Six Months Ended June 30,
  2020   2019   2020   2019
Revenue:              
Wealth Management (1) $ 115,884       $ 127,831       $ 260,873       $ 217,363    
Tax Preparation (1) 45,238       65,909       163,569       202,145    
Total revenue 161,122       193,740       424,442       419,508    
Operating income:              
Wealth Management 11,731       16,979       34,329       28,519    
Tax Preparation 6,659       41,368       44,412       120,640    
Corporate-level activity (2) (22,996 )     (30,317 )     (325,186 )     (51,016 )  
Total operating income (loss) (4,606 )     28,030       (246,445 )     98,143    
Other loss, net (5,288 )     (5,118 )     (11,423 )     (9,076 )  
Income tax benefit (expense) 59,539       8,124       (7,981 )     4,139    
Net income (loss) attributable to Blucora, Inc. $ 49,645       $ 31,036       $ (265,849 )     $ 93,206    

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

  Three Months Ended June 30,   Six Months Ended June 30,
  2020   2019   2020   2019
Wealth Management:              
Advisory $ 66,303     $ 61,410     $ 145,060     $ 101,167  
Commission 39,836     48,068     90,416     85,228  
Asset-based 3,981     13,219     14,560     22,912  
Transaction and fee 5,764     5,134     10,837     8,056  
Total Wealth Management revenue $ 115,884     $ 127,831     $ 260,873     $ 217,363  
Tax Preparation:              
Consumer $ 44,421     $ 62,686     $ 148,242     $ 186,628  
Professional 817     3,223     15,327     15,517  
Total Tax Preparation revenue $ 45,238     $ 65,909     $ 163,569     $ 202,145  

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

  Three Months Ended June 30,   Six Months Ended June 30,
  2020   2019   2020   2019
General and administrative expenses $ 5,810      $ 6,221      $ 12,826      $ 13,326   
Stock-based compensation 3,904      4,082      2,703      6,525   
Acquisition and integration costs 2,824      9,183      8,506      10,980   
Executive transition costs 636      —      9,820      —   
Headquarters relocation costs 737      —      1,453      —   
Depreciation 2,412      1,662      4,832      2,972   
Amortization of acquired intangible assets 6,673      9,169      14,421      17,213   
Impairment of goodwill —      —      270,625      —   
Total corporate-level activity $ 22,996      $ 30,317      $ 325,186      $ 51,016   


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 June 30,   Six months ended June 30,
  2020   2019   2020   2019
Net income (loss) attributable to Blucora, Inc. (2) $ 49,645       $ 31,036       $ (265,849 )     $ 93,206    
Stock-based compensation 3,904       4,082       2,703       6,525    
Depreciation and amortization of acquired intangible assets 9,085       10,831       19,253       20,185    
Other loss, net 5,288       5,118       11,423       9,076    
Acquisition and integration costs 2,824       9,183       8,506       10,980    
Impairment of goodwill —        —        270,625       —     
Executive transition costs 636       —        9,820       —     
Headquarters relocation costs 737       —        1,453       —     
Income tax (benefit) expense (59,539 )     (8,124 )     7,981       (4,139 )  
Adjusted EBITDA $ 12,580       $ 52,126       $ 65,915       $ 135,833    


Non-GAAP Net Income and Non-GAAP Net Income Per Share Reconciliation (1)

(Unaudited) (Amounts in thousands, except per share amounts)

  Three months ended June 30,   Six months ended June 30,
  2020   2019   2020   2019
Net income (loss) attributable to Blucora, Inc. (2) $ 49,645       $ 31,036       $ (265,849 )     $ 93,206    
Stock-based compensation 3,904       4,082       2,703       6,525    
Amortization of acquired intangible assets 6,673       9,169       14,421       17,213    
Acquisition and integration costs 2,824       9,183       8,506       10,980    
Impairment of goodwill —        —        270,625       —     
Executive transition costs 636       —        9,820       —     
Headquarters relocation costs 737       —        1,453       —     
Cash tax impact of adjustments to GAAP net income (259 )     (771 )     (995 )     (1,182 )  
Non-cash income tax (benefit) expense (59,697 )     (11,317 )     7,340       (8,166 )  
Non-GAAP net income $ 4,463        $ 41,382        $ 48,024        $ 118,576    
Per diluted share:              
Net income (loss) attributable to Blucora, Inc. (2) (3) $ 1.03       $ 0.62       $ (5.52 )     $ 1.88    
Stock-based compensation 0.08       0.08       0.06       0.13    
Amortization of acquired intangible assets 0.14       0.20       0.30       0.34    
Acquisition and integration costs 0.06       0.18       0.18       0.22    
Impairment of goodwill —        —        5.62       —     
Executive transition costs 0.01       —        0.20       —     
Headquarters relocation costs 0.02       —        0.03       —     
Cash tax impact of adjustments to GAAP net income (0.01 )     (0.02 )     (0.02 )     (0.02 )  
Non-cash income tax (benefit) expense (1.24 )     (0.23 )     0.15       (0.16 )  
Non-GAAP net income per share $ 0.09       $ 0.83       $ 1.00       $ 2.39    
Weighted average shares outstanding used in computing per diluted share amounts 48,092       49,822       48,172       49,681    


Adjusted EBITDA Reconciliation for Forward-Looking Guidance (1)

(Amounts in thousands)

  Ranges for the three months ending   Ranges for the year ending
  September 30, 2020   December 31, 2020
  Low   High   Low   High
Net loss attributable to Blucora, Inc. $ (28,000 )     $ (22,000 )     $ (343,500 )     $ (334,000 )  
Stock-based compensation 4,600       4,500       12,100       11,900    
Depreciation and amortization of acquired intangible assets 14,500       12,500       47,800       45,500    
Other loss, net 12,500       12,200       31,800       31,300    
Acquisition, integration, and other nonrecurring costs 17,600       17,100       43,300       43,000    
Impairment of goodwill —        —        270,600       270,600    
Income tax expense 300       700       23,900       24,700    
Adjusted EBITDA $ 21,500       $ 25,000       $ 86,000       $ 93,000    


Non-GAAP Net Income Reconciliation for Forward-Looking Guidance (1)

(Amounts in thousands, except per share amounts)

  Ranges for the three months ending   Ranges for the year ending
  September 30, 2020   December 31, 2020
  Low   High   Low   High
Net loss attributable to Blucora, Inc. $ (28,000 )     $ (22,000 )     $ (343,500 )     $ (334,000 )  
Stock-based compensation 4,600       4,500       12,100       11,900    
Amortization of acquired intangible assets 10,500       8,800       34,700       32,900    
Acquisition, integration, and other nonrecurring costs 17,600       17,100       43,300       43,000    
Debt issuance expenses 4,300       4,300       4,300       4,300    
Impairment of goodwill —        —        270,600       270,600    
Cash tax impact of adjustments to net loss (500 )     (400 )     (1,900 )     (1,800 )  
Non-cash income tax (benefit) expense (1,000 )     (800 )     20,900       21,100    
Non-GAAP net income $ 7,500       $ 11,500        $ 40,500       $ 48,000    
Per diluted share:              
Net loss attributable to Blucora, Inc. (4) $ (0.57 )     $ (0.45 )     $ (7.00 )     $ (6.83 )  
Stock-based compensation 0.09       0.09       0.25       0.24    
Amortization of acquired intangible assets 0.21       0.18       0.70       0.68    
Acquisition, integration, and other nonrecurring costs 0.36       0.35       0.88       0.88    
Debt issuance expenses 0.09       0.09       0.09       0.09    
Impairment of goodwill —        —        5.52       5.53    
Cash tax impact of adjustments to net loss (0.01 )     (0.01 )     (0.04 )     (0.04 )  
Non-cash income tax (benefit) expense (0.02 )     (0.02 )     0.43       0.43    
Non-GAAP net income per share $ 0.15       $ 0.23       $ 0.83       $ 0.98    
Weighted average shares outstanding used in computing per diluted share amounts 49,384       49,284       49,050       48,900    


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

(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, other loss, net, acquisition and integration costs, impairment of goodwill, executive transition costs, headquarters relocation costs, and income tax (benefit) expense. Acquisition and integration costs primarily relate to the acquisition of 1st Global and the acquisition of HKFS. 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 executives in the first quarter of 2020. Headquarters relocation costs relate to the ongoing process to move 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) attributable to Blucora, Inc., 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, 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 expire, if unutilized, between 2020 and 2024.
    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)   As presented in the condensed consolidated statements of comprehensive income, net loss per share attributable to Blucora, Inc. was $5.55 for the six months ended June 30, 2020 and was calculated based on weighted average shares outstanding of 47,884,000, which excluded the effect of potentially dilutive shares due to the net loss earned for the period. For non-GAAP reconciliation purposes, net loss per share attributable to Blucora, Inc. of $5.52 presented in the table above included the effect of potentially dilutive shares due to non-GAAP net income earned during the period.
(4)   As presented in the “Third Quarter and Full Year 2020 Outlook” section of this press release, the range of net loss per share attributable to Blucora, Inc. for the three months ending September 30, 2020 was $0.46 to $0.58, and these amounts were calculated based on weighted average shares outstanding of 48,284,000, which excluded the effect of potentially dilutive shares due to the net loss earned for the period. The range of net loss per share attributable to Blucora, Inc. for the year ending December 31, 2020 was $6.92 to $7.09, and these amounts were calculated based on weighted average shares outstanding of 48,300,000 and 48,450,000, respectively, which excluded the effect of potentially dilutive shares due to the net loss earned for the period. For non-GAAP reconciliation purposes, net loss per share attributable to Blucora, Inc. for all periods presented included the effect of potentially dilutive shares due to non-GAAP net income projected to be earned during these periods.



Blucora.jpg

Source: Blucora, Inc.