Blucora Reports Fourth Quarter and Full Year 2019 Results

February 19, 2020

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

2019 Highlights and Recent Developments

  • Increased total revenue by 28% year-over-year (y/y), including addition of 1st Global since May 6
  • Achieved record advisory net flows at Avantax of approximately $1 billion
  • Recorded 22nd consecutive year of revenue growth at TaxAct, growing 12% year-over-year
  • Completed $28 million of a $100 million share repurchase program, supported by strong cash flow generation
  • Completed acquisition of 1st Global, adding significant scale, complementary capabilities and high recurring revenue
  • Achieved $6.5 million in synergies related to 1st Global in 2019, more than double original estimate

“Blucora’s fourth quarter results cap a year of strong financial performance, strengthening our platform, and investing for future growth,” said Chris Walters, Blucora’s President and Chief Executive Officer. “While we have made good progress on many fronts, I’m even more excited about the growth opportunities we see ahead.”

Summary Financial Performance: Q4 and Full Year 2019
($ in millions except per share amounts)

  Q4   Q4       Full Year   Full Year    
  2019   2018   Change   2019   2018   Change
Revenue                      
Wealth Management $ 145.2     $ 97.2     49 %   $ 508.0     $ 373.2     36 %
Tax Preparation $ 4.2     $ 4.1     2 %   $ 210.0     $ 187.3     12 %
Total Revenue $ 149.4     $ 101.3     47 %   $ 717.9     $ 560.5     28 %
Segment Income (Loss):                      
Wealth Management $ 19.1     $ 14.1     35 %   $ 68.3     $ 53.1     29 %
Tax Preparation $ (12.3 )   $ (8.7 )   (41 )%   $ 96.2     $ 87.2     10 %
Total Segment Income $ 6.8     $ 5.4     26 %   $ 164.5     $ 140.3     17 %
Unallocated Corporate Operating Expenses $ 7.6     $ 6.1     25 %   $ 27.4     $ 20.5     34 %
GAAP:                      
Operating Income (Loss) $ (26.0 )   $ (13.5 )   (93 )%   $     $ 67.7     (100 )%
Net Income (Loss) Attributable to Blucora. Inc. $ 17.3     $ (16.0 )   208 %   $ 48.1     $ 50.6     (5 )%
Diluted Net Income (Loss) Per Share Attributable to Blucora. Inc. (1) $ 0.36     $ (0.38 )   195 %   $ 0.98     $ 0.90     9 %
Non-GAAP: (2)                      
Adjusted EBITDA $ (0.7 )   $ (0.8 )   13 %   $ 137.2     $ 119.8     15 %
Net Income (Loss) $ (4.8 )   $ (7.5 )   36 %   $ 104.2     $ 94.0     11 %
Diluted Net Income (Loss) per Share $ (0.10 )   $ (0.16 )   38 %   $ 2.11     $ 1.90     11 %

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

2019 Results vs. Prior Guidance

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

Tax Season Update

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

  • My Tax Plan: a new feature which creates a custom plan for each user to save more on taxes next year. It is personalized to the customer's tax situation, provides specific savings amounts, and includes a downloadable "checklist" of actions to save. We believe this is a significant and differentiated benefit to customers;
  • Pro Tips: a visually enticing way to reveal lesser-known tax advantages, customized for the individual filer, that help customers get a bigger refund this year and for years to come.

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

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

First Quarter Outlook

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

Conference Call and Webcast

A conference call and live webcast will be held today at 8:30 a.m. Eastern Time during which the Company will further discuss fourth quarter and full year results, its outlook for the first quarter, its tax season update, and other business matters. We will also provide the prepared remarks for the conference call along with supplemental financial information to our results on the Investor Relations section of the Blucora corporate website at http://www.blucora.com prior to the call. The supplemental financial information has also been filed with the SEC on Form 8-K. A replay of the call will be available on our website.

About Blucora®

Blucora, Inc. (NASDAQ: BCOR) is on the forefront of financial technology, pioneering tax-smart financial solutions that empower people’s goals. Blucora operates in two segments including wealth management, through its Avantax Wealth Management business (formerly operating under the HD Vest and 1st Global brands), the No. 1 tax-focused broker-dealer, with $71 billion in total client assets as of December 31, 2019, and tax preparation, through its TaxAct business, a market leader in tax preparation software with approximately 3 million consumer and professional users. With integrated tax and wealth management, Blucora is uniquely positioned to provide better long-term outcomes for customers with holistic, tax-advantaged solutions. For more information on Blucora, visit www.blucora.com.

Source: Blucora

Blucora Contact:
Bill Michalek (972) 870-6463
VP, Investor Relations

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When used in this release, terms such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “intends,” “anticipates,” “may,” “forecasts,” “projects” and similar expressions and variations as they relate to the Company or its management are intended to identify forward-looking statements. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: our ability to effectively implement our future business plans and growth strategy; our ability to effectively compete within our industry; our ability to attract and retain qualified employees and leadership, advisors, clients and customers; our ability to execute upon the contemplated strategic and performance initiatives and to successfully integrate acquired businesses or assets and realize the anticipated benefits thereof; the availability of financing and our ability to meet our current and future debt service obligations and comply with our debt covenants; our ability to generate strong investment performance for our customers and the impact of the financial markets on our customers’ portfolios; political and economic conditions and events that directly or indirectly impact the wealth management and tax preparation industries; our ability to successfully make technology enhancements and introduce new and improve on existing products and services; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; our ability to manage leadership and employee transitions; risks related to goodwill and other intangible asset impairment; our ability to comply with regulations (or interpretations thereof) applicable to the wealth management and tax preparation industries, including increased costs associated with or reductions in revenue resulting from new or changing regulations or interpretations of existing regulations; risks associated with our business being subject to enhanced regulatory scrutiny; our ability to comply with laws and regulations regarding privacy and protection of data; cybersecurity risks; our ability to develop and maintain our relationships with third party partners; the seasonality of our business; legal proceedings risks, including litigation and regulatory proceedings; our assessments and estimates that determine our effective tax rate; the impact of new or changing tax legislation; our ability to develop, establish and maintain strong brands; and our ability to protect our intellectual property. A more detailed description of these and certain other factors that could affect actual results is included in the Company’s filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date hereof, except as may be required by law. In addition, the Company has not filed its Form 10-K for the year ended December 31, 2019. As a result, all financial results described in this earnings release should be considered preliminary, and are subject to change to reflect the completion of our audit and any necessary adjustments or changes in accounting estimates that are identified prior to the time the Company files the Form 10-K.


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

  Three Months Ended December 31,   Years Ended December 31,
  2019   2018   2019   2018
Revenue:              
Wealth management services revenue $ 145,188     $ 97,190     $ 507,979     $ 373,174  
Tax preparation services revenue 4,233     4,068     209,966     187,282  
Total revenue 149,421     101,258     717,945     560,456  
Operating expenses:              
Cost of revenue:              
Wealth management services cost of revenue 101,200     66,054     352,081     253,580  
Tax preparation services cost of revenue 1,708     1,858     10,691     10,040  
Amortization of acquired technology             99  
Total cost of revenue (1) 102,908     67,912     362,772     263,719  
Engineering and technology (1) 8,608     5,107     30,931     19,332  
Sales and marketing (1) 21,401     16,642     126,205     111,361  
General and administrative (1) 22,808     16,229     78,529     60,124  
Acquisition and integration 8,024         25,763      
Depreciation 1,633     762     5,479     4,468  
Amortization of other acquired intangible assets 10,062     8,103     37,357     33,487  
Impairment of intangible asset         50,900      
Restructuring     (3 )       288  
Total operating expenses 175,444     114,752     717,936     492,779  
Operating income (loss) (26,023 )   (13,494 )   9     67,677  
Other loss, net (2) (5,233 )   (3,947 )   (16,915 )   (15,797 )
Income (loss) before income taxes (31,256 )   (17,441 )   (16,906 )   51,880  
Income tax benefit (expense) 48,584     1,741     65,054     (311 )
Net income (loss) 17,328     (15,700 )   48,148     51,569  
Net income attributable to noncontrolling interests     (281 )       (935 )
Net income (loss) attributable to Blucora, Inc. $ 17,328     $ (15,981 )   $ 48,148     $ 50,634  
Net income (loss) per share attributable to Blucora, Inc.:              
Basic $ 0.36     $ (0.38 )   $ 1.00     $ 0.94  
Diluted $ 0.36     $ (0.38 )   $ 0.98     $ 0.90  
Weighted average shares outstanding:              
Basic 47,689     48,002     48,264     47,394  
Diluted 48,344     48,002     49,282     49,381  

(1) Stock-based compensation expense was allocated among the following captions (in thousands):

  Three Months Ended December 31,   Years Ended December 31,
  2019   2018   2019   2018
Cost of revenue $ 1,341     $ 527     $ 4,082     $ 1,467  
Engineering and technology 193     176     715     766  
Sales and marketing 257     589     346     2,424  
General and administrative 3,345     2,402     11,157     8,596  
Total stock-based compensation expense $ 5,136     $ 3,694     $ 16,300     $ 13,253  

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

  Three Months Ended December 31,   Years Ended December 31,
  2019   2018   2019   2018
Interest expense $ 5,002     $ 3,838     $ 19,017     $ 15,610  
Interest income (108 )   (132 )   (449 )   (349 )
Amortization of debt issuance costs 194     174     1,042     833  
Accretion of debt discounts 39     38     228     163  
Loss on debt extinguishment             1,534  
Gain on sale of a business         (3,256 )    
Other 106     29     333     (1,994 )
Other loss, net $ 5,233     $ 3,947     $ 16,915     $ 15,797  


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

  December 31,
  2019   2018
ASSETS      
Current assets:      
Cash and cash equivalents $ 80,820     $ 84,524  
Cash segregated under federal or other regulations 5,630     842  
Accounts receivable, net of allowance 16,266     15,721  
Commissions receivable 21,176     15,562  
Other receivables 2,902     7,408  
Prepaid expenses and other current assets, net 12,349     7,755  
Total current assets 139,143     131,812  
Long-term assets:      
Property and equipment, net 18,706     12,389  
Right-of-use assets, net 10,151      
Goodwill, net 662,375     548,685  
Other intangible assets, net 290,211     294,603  
Deferred tax asset, net 9,997      
Other long-term assets 6,989     10,236  
Total long-term assets 998,429     865,913  
Total assets $ 1,137,572     $ 997,725  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 10,969     $ 3,798  
Commissions and advisory fees payable 19,905     15,199  
Accrued expenses and other current liabilities 36,144     18,980  
Deferred revenue—current 12,014     10,257  
Lease liabilities—current 3,272     46  
Current portion of long-term debt, net 11,228      
Total current liabilities 93,532     48,280  
Long-term liabilities:      
Long-term debt, net 381,485     260,390  
Deferred tax liability, net     40,394  
Deferred revenue—long-term 7,172     8,581  
Lease liabilities—long-term 5,916     100  
Other long-term liabilities 5,952     7,440  
Total long-term liabilities 400,525     316,905  
Total liabilities 494,057     365,185  
       
Redeemable noncontrolling interests     24,945  
       
Stockholders’ equity:      
Common stock, par $0.0001—900,000 authorized shares; 49,059 shares issued and 47,753 shares outstanding at December 31, 2019; 48,044 shares issued and outstanding at December 31, 2018 5     5  
Additional paid-in capital 1,586,972     1,569,725  
Accumulated deficit (914,791 )   (961,689 )
Accumulated other comprehensive loss (272 )   (446 )
Treasury stock, at cost—1,306 shares at December 31, 2019 (28,399 )    
Total stockholders’ equity 643,515     607,595  
Total liabilities and stockholders’ equity $ 1,137,572     $ 997,725  


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

  Years Ended December 31,
  2019   2018
Operating activities:      
Net income $ 48,148     $ 51,569  
Adjustments to reconcile net income to net cash from operating activities:      
Stock-based compensation 16,300     13,253  
Depreciation and amortization of acquired intangible assets 44,208     38,589  
Impairment of intangible asset 50,900      
Reduction of right-of-use assets 4,425      
Deferred income taxes (67,549 )   (3,039 )
Amortization of premium on investments, net, and debt issuance costs 1,042     833  
Accretion of debt discounts 228     163  
Loss on debt extinguishment and modification expense     1,534  
Gain on sale of a business (3,256 )    
Other 734     73  
Cash provided (used) by changes in operating assets and liabilities:      
Accounts receivable 871     (4,286 )
Commissions receivable (471 )   1,260  
Other receivables 4,506     (3,851 )
Prepaid expenses and other current assets 10,537     (815 )
Other long-term assets 3,377     3,450  
Accounts payable 29     (615 )
Commissions and advisory fees payable 432     (2,614 )
Lease liabilities (7,335 )    
Deferred revenue (17,367 )   9,930  
Accrued expenses and other current and long-term liabilities 3,045     114  
Net cash provided by operating activities 92,804     105,548  
Investing activities:      
Business acquisition, net of cash acquired (166,560 )    
Purchases of property and equipment (10,501 )   (7,633 )
Proceeds from sale of a business, net of cash 7,467      
Net cash used by investing activities (169,594 )   (7,633 )
Financing activities:      
Proceeds from credit facilities, net of debt issuance costs and debt discount 131,489      
Payments on credit facilities (313 )   (80,000 )
Stock repurchases (28,399 )    
Payment of redeemable noncontrolling interests (24,945 )    
Proceeds from stock option exercises 4,387     12,773  
Proceeds from issuance of stock through employee stock purchase plan 2,212     2,100  
Tax payments from shares withheld for equity awards (5,652 )   (8,362 )
Contingent consideration payments for business acquisition (943 )   (1,315 )
Net cash provided (used) by financing activities 77,836     (74,804 )
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 38     (56 )
Net increase in cash, cash equivalents, and restricted cash 1,084     23,055  
Cash, cash equivalents, and restricted cash, beginning of period 85,366     62,311  
Cash, cash equivalents, and restricted cash, end of period $ 86,450     $ 85,366  


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

  Three Months Ended December 31,   Years Ended December 31,
  2019   2018   2019   2018
Revenue:              
Wealth Management (1) $ 145,188     $ 97,190     $ 507,979     $ 373,174  
Tax Preparation (1) 4,233     4,068     209,966     187,282  
Total revenue 149,421     101,258     717,945     560,456  
Operating income (loss):              
Wealth Management 19,142     14,133     68,292     53,053  
Tax Preparation (12,316 )   (8,742 )   96,249     87,249  
Corporate-level activity (2) (32,849 )   (18,885 )   (164,532 )   (72,625 )
Total operating income (loss) (26,023 )   (13,494 )   9     67,677  
Other loss, net (5,233 )   (3,947 )   (16,915 )   (15,797 )
Income tax benefit (expense) 48,584     1,741     65,054     (311 )
Net income (loss) $ 17,328     $ (15,700 )   $ 48,148     $ 51,569  

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

  Three Months Ended December 31,   Years Ended December 31,
  2019   2018   2019   2018
Wealth Management:              
Commission $ 53,199     $ 39,932     $ 191,050     $ 164,201  
Advisory 75,621     43,551     252,367     164,353  
Asset-based 11,652     9,999     48,182     31,456  
Transaction and fee 4,716     3,708     16,380     13,164  
Total Wealth Management revenue $ 145,188     $ 97,190     $ 507,979     $ 373,174  
Tax Preparation:              
Consumer $ 4,096     $ 3,912     $ 195,004     $ 172,207  
Professional 137     156     14,962     15,075  
Total Tax Preparation revenue $ 4,233     $ 4,068     $ 209,966     $ 187,282  

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

  Three Months Ended December 31,   Years Ended December 31,
  2019   2018   2019   2018
Operating expenses $ 7,559     $ 6,144     $ 27,361     $ 20,495  
Stock-based compensation 5,136     3,694     16,300     13,253  
Acquisition and integration costs 8,024         25,763      
Depreciation 2,068     947     6,851     5,003  
Amortization of acquired intangible assets 10,062     8,103     37,357     33,586  
Impairment of intangible asset         50,900      
Restructuring     (3 )       288  
Total corporate-level activity $ 32,849     $ 18,885     $ 164,532     $ 72,625  


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

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

  Three Months Ended December 31,   Years Ended December 31,
  2019   2018   2019   2018
Net income attributable to Blucora, Inc. (2) $ 17,328     $ (15,981 )   $ 48,148     $ 50,634  
Stock-based compensation 5,136     3,694     16,300     13,253  
Depreciation and amortization of acquired intangible assets 12,130     9,050     44,208     38,589  
Restructuring     (3 )       288  
Other loss, net (3) 5,233     3,947     16,915     15,797  
Net income attributable to noncontrolling interests     281         935  
Acquisition and integration costs 8,024         25,763      
Income tax (benefit) expense (48,584 )   (1,741 )   (65,054 )   311  
Impairment of intangible asset         50,900      
Adjusted EBITDA $ (733 )   $ (753 )   $ 137,180     $ 119,807  


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

  Three Months Ended December 31,   Years Ended December 31,
  2019   2018   2019   2018
Net income (loss) attributable to Blucora, Inc. (2) $ 17,328     $ (15,981 )   $ 48,148     $ 50,634  
Stock-based compensation 5,136     3,694     16,300     13,253  
Amortization of acquired intangible assets 10,062     8,103     37,357     33,586  
Impairment of intangible asset         50,900      
Gain on sale of a business         (3,256 )    
Acquisition and integration costs 8,024         25,763      
Restructuring     (3 )       288  
Net income attributable to noncontrolling interests     281         935  
Cash tax impact of adjustments to GAAP net income (504 )   (536 )   (2,396 )   (2,257 )
Non-cash income tax benefit (44,859 )   (3,050 )   (68,618 )   (2,403 )
Non-GAAP net income (loss) $ (4,813 )   $ (7,492 )   $ 104,198     $ 94,036  
Per diluted share:              
Net income (loss) attributable to Blucora, Inc. (2) $ 0.36     $ (0.38 )   $ 0.98     $ 0.90  
Stock-based compensation 0.11     0.08     0.33     0.27  
Amortization of acquired intangible assets 0.21     0.15     0.76     0.68  
Impairment of intangible asset         1.03      
Gain on sale of a business         (0.07 )    
Acquisition and integration costs 0.17         0.52      
Restructuring             0.01  
Net income attributable to noncontrolling interests     0.06         0.14  
Cash tax impact of adjustments to GAAP net income (0.01 )   (0.01 )   (0.05 )   (0.05 )
Non-cash income tax benefit (0.94 )   (0.06 )   (1.39 )   (0.05 )
Non-GAAP net income (loss) per share $ (0.10 )   $ (0.16 )   $ 2.11     $ 1.90  
Weighted average shares outstanding used in calculating Non-GAAP net income per share 47,689     48,002     49,282     49,381  


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

  Ranges for the three months ending
  March 31, 2020
  Low   High
Net income attributable to Blucora, Inc. $ 31,500     $ 34,500  
Stock-based compensation 3,200     3,000  
Depreciation and amortization of acquired intangible assets 10,600     10,200  
Acquisition, integration, relocation, and executive transition costs 18,200     17,800  
Other loss, net (3) 5,600     5,400  
Income tax expense 15,900     20,100  
Adjusted EBITDA $ 85,000     $ 91,000  


Preliminary Non-GAAP Income Reconciliation for Forward-Looking Guidance (1)
(Amounts in thousands)

  Ranges for the three months ending
  March 31, 2020
  Low   High
Net income attributable to Blucora, Inc. $ 31,500     $ 34,500  
Stock-based compensation 3,200     3,000  
Amortization of acquired intangible assets 7,900     7,800  
Acquisition, integration, relocation, and executive transition costs 18,200     17,800  
Cash tax impact of adjustments to net income (loss) (500 )   (500 )
Non-cash income tax expense 14,200     17,900  
Non-GAAP income $ 74,500     $ 80,500  
Per diluted share:      
Net income attributable to Blucora, Inc. $ 0.64     $ 0.70  
Stock-based compensation 0.07     0.06  
Amortization of acquired intangible assets 0.16     0.16  
Acquisition, integration, relocation, and executive transition costs 0.37     0.36  
Cash tax impact of adjustments to net income (loss) (0.01 )   (0.01 )
Non-cash income tax expense 0.29     0.37  
Non-GAAP net income per share $ 1.52     $ 1.64  
       
Weighted average shares outstanding used in calculating Non-GAAP net income per share 49,154     49,004  


Preliminary Adjusted EBITDA Reconciliation for Prior Guidance (1)
(Amounts in thousands)

  Ranges for the year ending
  December 31, 2019
  Low   High
Net income attributable to Blucora, Inc. $ (5,400 )   $ (400 )
Stock-based compensation 17,000     16,500  
Depreciation and amortization of acquired intangible assets 45,500     45,000  
Other loss, net (3) 19,000     18,000  
Acquisition and integration costs 24,000     23,500  
Impairment of intangible asset 51,000     51,000  
Income tax benefit (20,600 )   (18,100 )
Adjusted EBITDA $ 130,500     $ 135,500  


Notes to Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures
 
(1) We define Adjusted EBITDA as net income (loss) attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation and amortization of acquired intangible assets, restructuring, other loss, net, net income attributable to noncontrolling interests, acquisition and integration costs, income tax (benefit) expense, and the impairment of an intangible asset. Restructuring costs relate to the relocation of our corporate headquarters that were completed in 2018. Acquisition and integration costs relate to the acquisition of 1st Global. The impairment of an intangible asset relates to the impairment of the HD Vest trade name intangible asset.
   
  We believe that Adjusted EBITDA provides meaningful supplemental information regarding our performance. We use this non-GAAP financial measure for internal management and compensation purposes, when publicly providing guidance on possible future results, and as a means to evaluate period-to-period comparisons. We believe that Adjusted EBITDA is a common measure used by investors and analysts to evaluate our performance, that it provides a more complete understanding of the results of operations and trends affecting our business when viewed together with GAAP results, and that management and investors benefit from referring to this non-GAAP financial measure. Items excluded from Adjusted EBITDA are significant and necessary components to the operations of our business and, therefore, Adjusted EBITDA should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income (loss). Other companies may calculate Adjusted EBITDA differently and, therefore, our Adjusted EBITDA may not be comparable to similarly titled measures of other companies.
   
  We define non-GAAP net income (loss) as net income (loss) attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets, the impairment of an intangible asset (described further under Adjusted EBITDA above), gain on the sale of a business, acquisition and integration costs (described further under Adjusted EBITDA above), restructuring costs (described further under Adjusted EBITDA above), net income attributable to noncontrolling interests, the related cash tax impact of those adjustments, and non-cash income taxes. The gain on the sale of a business refers to the gain recognized on the sale of SimpleTax in 2019. We exclude the non-cash portion of income taxes because of our ability to offset a substantial portion of our cash tax liabilities by using deferred tax assets, which primarily consist of U.S. federal net operating losses. The majority of these net operating losses will expire, if unutilized, between 2020 and 2024. The aforementioned items are only included in the calculation of non-GAAP net income (loss) in the periods they occurred.
   
  We believe that non-GAAP net income (loss) and non-GAAP net income (loss) per share provide meaningful supplemental information to management, investors, and analysts regarding our performance and the valuation of our business by excluding items in the statement of operations that we do not consider part of our ongoing operations or have not been, or are not expected to be, settled in cash. Additionally, we believe that non-GAAP net income (loss) and non-GAAP net income (loss) per share are common measures used by investors and analysts to evaluate our performance and the valuation of our business. Non-GAAP net income (loss) and non-GAAP net income (loss) per share should be evaluated in light of our financial results prepared in accordance with GAAP and should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income (loss) and net income per share. Other companies may calculate non-GAAP net income (loss) and non-GAAP net income (loss) per share differently, and, therefore, our non-GAAP net income (loss) and non-GAAP net income (loss) per share may not be comparable to similarly titled measures of other companies.
   
(2) As presented in the Preliminary Condensed Consolidated Statements of Operations (unaudited).
   
(3) Other loss, net, primarily includes items such as interest expense, interest income, amortization of debt issuance costs, accretion of debt discounts, loss on debt extinguishment, and gain on the sale of a business.
   

Blucora.jpg

Source: Blucora, Inc.