Blucora Reports Fourth Quarter and Full Year 2020 Results

February 17, 2021

DALLAS, Feb. 17, 2021 (GLOBE NEWSWIRE) -- Blucora, Inc. (NASDAQ: BCOR), a leading provider of technology-enabled, tax-focused financial solutions, today announced financial results for the fourth quarter and full year ended December 31, 2020.

2020 Highlights and Recent Developments

  • Increased total revenue by 5% year-over-year, to $755 million, including the addition of HK Financial Services (“HKFS”), on July 1
  • Recorded 23rd consecutive year of segment revenue growth at TaxAct, excluding sale of SimpleTax
  • Completed acquisition of HKFS, now rebranded as Avantax Planning Partners (“APP”), adding a historically fast growing, highly profitable registered investment advisor (“RIA”) and its fee-based advisory assets to the Company’s wealth management business
  • Increased advisory assets 29% year-over-year, including the addition of approximately $5.0 billion in APP assets
  • Increased total client assets 17% to $83.0 billion, with $35.6 billion or 42.9% in advisory assets
  • Further strengthened Board of Directors with appointments of Karthik Rao, Jana Schreuder and Mark Ernst

“After an unprecedented year, I am extremely proud of our team’s focus and execution of our business plan in 2020,” said Chris Walters, Blucora’s President and Chief Executive Officer. “During the past year our new leadership team has made tremendous progress implementing our differentiated, tax-focused strategy, repositioning both Avantax and TaxAct for sustainable growth and moving forward with new plans to realize significant synergy potential between the two business units. Based on the progress and investments we made during 2020, I am optimistic about 2021 and beyond, as we execute on our plans to drive long-term earnings growth and shareholder value.”

Summary Financial Performance: Q4 and Full Year 2020
($ in millions except per share amounts)

  Q4   Q4       Full Year   Full Year    
  2020   2019   Change   2020   2019   Change
Revenue                      
Wealth Management $ 149.4     $ 145.2     3   %   $ 546.2     $ 508.0     8   %
Tax Preparation $ 5.8     $ 4.2     38   %   $ 208.8     $ 210.0     (1 ) %
Total Revenue $ 155.2     $ 149.4     4   %   $ 755.0     $ 717.9     5   %
Segment Operating Income (Loss):                      
Wealth Management $ 20.4     $ 19.1     7   %   $ 72.2     $ 68.3     6   %
Tax Preparation $ (11.0 )   $ (12.3 )   11   %   $ 49.6     $ 96.2     (48 ) %
Total Segment Operating Income $ 9.3     $ 6.8     37   %   $ 121.8     $ 164.5     (26 ) %
Unallocated Corporate-Level General and Administrative Expenses $ 7.1     $ 7.6     (7 ) %   $ 26.7     $ 27.4     (3 ) %
GAAP:                      
Operating Loss $ (23.7 )   $ (26.0 )   9   %   $ (269.1 )   $     N/A
Net Income (Loss) Attributable to Blucora. Inc. $ (50.7 )   $ 17.3     (393 ) %   $ (342.8 )   $ 48.1     (813 ) %
Diluted Net Income (Loss) Per Share Attributable to Blucora. Inc. $ (1.05 )   $ 0.36     (392 ) %   $ (7.14 )   $ 0.98     (829 ) %
Non-GAAP: (1)                      
Adjusted EBITDA $ 2.2     $ (0.7 )   414   %   $ 95.1     $ 137.2     (31 ) %
Net Income (Loss) $ (9.0 )   $ (4.8 )   (88 ) %   $ 54.1     $ 104.2     (48 ) %
Diluted Net Income (Loss) per Share (EPS) $ (0.19 )   $ (0.10 )   (90 ) %   $ 1.12     $ 2.11     (47 ) %

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


2020 Results vs. Prior Guidance

($ in millions except per share amounts) Prior Guidance Actual
Wealth Management Revenue (1) $535.5 - $540.5 $ 546.2  
Tax Preparation Revenue $207.0 - $208.0 $ 208.8  
Total Revenue $742.5 - $748.5 $ 755.0  
     
Wealth Management Segment Operating Income (1) $68.5 - $70.5 $ 72.2  
Tax Preparation Segment Operating Income $47.5 - $48.5 $ 49.6  
Unallocated Corporate-Level General and Administrative Expenses $27.5 - $26.5 $ 26.7  
     
GAAP:    
Net Loss (1) $(339.0)$(333.0) $ (342.8 )
Net Loss per share (1) $(7.05)$(6.94) $ (7.14 )
     
Non-GAAP:    
Adjusted EBITDA (1) (2) $88.5 - $92.5 $ 95.1  
Non-GAAP Net Income (1) (2) $46.0 - $51.0 $ 54.1  
Non-GAAP Net Income per share (1) (2) $0.95 - $1.05 $ 1.12  

_________________________
(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.

Tax Season Update

“With the IRS delaying the official beginning of tax season to February 12, our tax season has only just begun. Regardless, I feel confident about the actions we have taken this season as well as the mid to long-term benefits of the investments we made in 2020 to further improve the customer experience,” Walters continued. “We have now launched our online-assisted offering to meet a significant need that has emerged in the marketplace. We have also refined our marketing to efficiently add paid customers, all while reinforcing our differentiated value position with a compelling offering. We expect these initiatives to contribute to the financial improvements we shared for this year as well as strong financial results in the mid- to long-term.”

Outlook

Given the delayed start of the tax season, the Company is not providing updated first quarter guidance for the Tax Preparation segment but rather reaffirming full year guidance of low single digit revenue growth and a minimum of $20 million of additional segment operating income relative to 2020. For the Wealth Management segment in the first quarter of 2021, the Company expects revenues of between $150 million and $155.5 million and segment operating income of between $17.0 million and $19.5 million.  The Company also expects corporate unallocated expenses to be between $7.5 and $8.5 million in the period.

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 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 empower people to improve their financial wellness. Blucora operates in two segments including (i) wealth management, through its Avantax Wealth Management brand, with a collective $83 billion in total client assets as of December 31, 2020, and (ii) tax preparation, through its TaxAct business, a market leader in tax preparation software with approximately 3 million consumer and more than 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. 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 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 our 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 Risk Factors section of the Form 10-K and Form 10-Q that we most recently filed 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 required by law. In addition, the Company has not filed its Form 10-K for the year ended December 31, 2020. 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,
  2020   2019   2020   2019
Revenue:              
Wealth management services revenue $ 149,384     $ 145,188     $ 546,189     $ 507,979  
Tax preparation services revenue 5,773     4,233     208,763     209,966  
Total revenue 155,157     149,421     754,952     717,945  
Operating expenses:              
Cost of revenue:              
Wealth management services cost of revenue 103,630     101,200     385,962     352,081  
Tax preparation services cost of revenue 2,569     1,708     12,328     10,691  
Total cost of revenue 106,199     102,908     398,290     362,772  
Engineering and technology 5,359     8,608     27,258     30,931  
Sales and marketing 26,833     21,401     177,618     126,205  
General and administrative 18,625     22,808     82,158     78,529  
Acquisition and integration 12,303     8,024     31,085     25,763  
Depreciation 1,948     1,633     7,293     5,479  
Amortization of other acquired intangible assets 7,578     10,062     29,745     37,357  
Impairment of goodwill and an intangible asset         270,625     50,900  
Total operating expenses 178,845     175,444     1,024,072     717,936  
Operating income (loss) (23,688 )   (26,023 )   (269,120 )   9  
Other loss, net (1) (7,918 )   (5,233 )   (31,304 )   (16,915 )
Loss before income taxes (31,606 )   (31,256 )   (300,424 )   (16,906 )
Income tax benefit (expense) (19,094 )   48,584     (42,331 )   65,054  
Net income (loss) attributable to Blucora, Inc. $ (50,700 )   $ 17,328     $ (342,755 )   $ 48,148  
Net income (loss) per share attributable to Blucora, Inc.:              
Basic $ (1.05 )   $ 0.36     $ (7.14 )   $ 1.00  
Diluted $ (1.05 )   $ 0.36     $ (7.14 )   $ 0.98  
Weighted average shares outstanding:              
Basic 48,107     47,689     47,978     48,264  
Diluted 48,107     48,344     47,978     49,282  

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

  Three Months Ended December 31,   Years Ended December 31,
  2020   2019   2020   2019
Interest expense $ 7,160     $ 5,002     $ 24,570     $ 19,017  
Amortization of debt issuance costs 366     194     1,372     1,042  
Accretion of debt discounts 279     39     693     228  
Total interest expense 7,805     5,235     26,635     20,287  
Interest income (38 )   (108 )   (65 )   (449 )
Gain on sale of a business         (349 )   (3,256 )
Non-capitalized debt issuance expenses         3,687      
Other 151     106     1,396     333  
Other loss, net $ 7,918     $ 5,233     $ 31,304     $ 16,915  

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

  December 31,
  2020   2019
ASSETS      
Current assets:      
Cash and cash equivalents $ 150,125     $ 80,820  
Cash segregated under federal or other regulations 637     5,630  
Accounts receivable, net of allowance 12,736     16,266  
Commissions receivable 26,132     21,176  
Other receivables 717     2,902  
Prepaid expenses and other current assets, net 10,321     12,349  
Total current assets 200,668     139,143  
Long-term assets:      
Property and equipment, net 58,500     18,706  
Right-of-use assets, net 23,455     10,151  
Goodwill, net 454,821     662,375  
Other intangible assets, net 322,179     290,211  
Deferred tax asset, net     9,997  
Other long-term assets 4,569     6,989  
Total long-term assets 863,524     998,429  
Total assets $ 1,064,192     $ 1,137,572  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 9,290     $ 10,969  
Commissions and advisory fees payable 19,021     19,905  
Accrued expenses and other current liabilities 56,419     36,144  
Deferred revenue—current 12,298     12,014  
Lease liabilities—current 2,304     3,272  
Current portion of long-term debt, net 1,784     11,228  
Total current liabilities 101,116     93,532  
Long-term liabilities:      
Long-term debt, net 552,553     381,485  
Deferred tax liability, net 30,663      
Deferred revenue—long-term 6,247     7,172  
Lease liabilities—long-term 36,404     5,916  
Other long-term liabilities 24,919     5,952  
Total long-term liabilities 650,786     400,525  
Total liabilities 751,902     494,057  
       
Stockholders’ equity:      
Common stock, par $0.0001—900,000 authorized shares; 49,483 shares issued and 48,177 shares outstanding at December 31, 2020; 49,059 shares issued and 47,753 shares outstanding at December 31, 2019 5     5  
Additional paid-in capital 1,598,230     1,586,972  
Accumulated deficit (1,257,546 )   (914,791 )
Accumulated other comprehensive income (loss)     (272 )
Treasury stock, at cost—1,306 shares at December 31, 2020 and December 31, 2019 (28,399 )   (28,399 )
Total stockholders’ equity 312,290     643,515  
Total liabilities and stockholders’ equity $ 1,064,192     $ 1,137,572  

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

  Years Ended December 31,
  2020   2019
Operating activities:      
Net income (loss) $ (342,755 )   $ 48,148  
Adjustments to reconcile net income (loss) to net cash from operating activities:      
Stock-based compensation 10,066     16,300  
Depreciation and amortization of acquired intangible assets 39,907     44,208  
Impairment of goodwill and an intangible asset 270,625     50,900  
Reduction of right-of-use lease assets 8,908     4,425  
Deferred income taxes 41,059     (67,549 )
Amortization of debt issuance costs 1,372     1,042  
Accretion of debt discounts 693     228  
Gain on sale of a business (349 )   (3,256 )
Change in fair value of acquisition-related contingent consideration liability 8,300      
Accretion of lease liability 1,922     599  
Other 1,508     135  
Cash provided (used) by changes in operating assets and liabilities:      
Accounts receivable 10,705     871  
Commissions and advisory fees receivable (4,956 )   (471 )
Other receivables 2,185     4,506  
Prepaid expenses and other current assets 1,662     10,537  
Other long-term assets 2,232     3,377  
Accounts payable (4,192 )   29  
Commissions and advisory fees payable (884 )   432  
Lease liabilities (3,894 )   (7,335 )
Deferred revenue (796 )   (17,367 )
Accrued expenses and other current and long-term liabilities 761     3,045  
Net cash provided by operating activities 44,079     92,804  
Investing activities:      
Business acquisition, net of cash acquired (101,910 )   (166,560 )
Purchases of property and equipment (36,002 )   (10,501 )
Proceeds from sale of a business, net of cash 349     7,467  
Acquisition of customer relationships (3,143 )    
Net cash used by investing activities (140,706 )   (169,594 )
Financing activities:      
Proceeds from credit facilities, net of debt issuance costs and debt discount 226,278     131,489  
Payments on credit facilities (66,531 )   (313 )
Stock repurchases     (28,399 )
Payment of redeemable noncontrolling interests     (24,945 )
Proceeds from stock option exercises 97     4,387  
Proceeds from issuance of stock through employee stock purchase plan 2,258     2,212  
Tax payments from shares withheld for equity awards (1,163 )   (5,652 )
Contingent consideration payments for business acquisition     (943 )
Net cash provided by financing activities 160,939     77,836  
Effect of exchange rate changes on cash, cash equivalents, and restricted cash     38  
Net increase in cash, cash equivalents, and restricted cash 64,312     1,084  
Cash, cash equivalents, and restricted cash, beginning of period 86,450     85,366  
Cash, cash equivalents, and restricted cash, end of period $ 150,762     $ 86,450  

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

  Three Months Ended December 31,   Years Ended December 31,
  2020   2019   2020   2019
Revenue:              
Wealth Management (1) $ 149,384     $ 145,188     $ 546,189     $ 507,979  
Tax Preparation (1) 5,773     4,233     208,763     209,966  
Total revenue 155,157     149,421     754,952     717,945  
Operating income (loss):              
Wealth Management 20,368     19,142     72,195     68,292  
Tax Preparation (11,025 )   (12,316 )   49,621     96,249  
Corporate-level activity (2) (33,031 )   (32,849 )   (390,936 )   (164,532 )
Total operating income (loss) (23,688 )   (26,023 )   (269,120 )   9  
Other loss, net (7,918 )   (5,233 )   (31,304 )   (16,915 )
Income tax benefit (expense) (19,094 )   48,584     (42,331 )   65,054  
Net income (loss) attributable to Blucora, Inc. $ (50,700 )   $ 17,328     $ (342,755 )   $ 48,148  

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

  Three Months Ended December 31,   Years Ended December 31,
  2020   2019   2020   2019
Wealth Management:              
Advisory $ 87,079     $ 75,621     $ 314,751     $ 252,367  
Commission 49,864     53,199     185,201     191,050  
Asset-based 4,777     11,652     23,688     48,182  
Transaction and fee 7,664     4,716     22,549     16,380  
Total Wealth Management revenue $ 149,384     $ 145,188     $ 546,189     $ 507,979  
Tax Preparation:              
Consumer $ 5,502     $ 4,096     $ 192,226     $ 195,004  
Professional 271     137     16,537     14,962  
Total Tax Preparation revenue $ 5,773     $ 4,233     $ 208,763     $ 209,966  

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

  Three Months Ended December 31,   Years Ended December 31,
  2020   2019   2020   2019
General and administrative expenses $ 7,118     $ 7,559     $ 26,689     $ 27,361  
Stock-based compensation 2,846     5,136     10,066     16,300  
Acquisition and integration costs 12,303     8,024     31,085     25,763  
Depreciation 2,710     2,068     10,162     6,851  
Amortization of acquired intangible assets 7,578     10,062     29,745     37,357  
Impairment of goodwill and an intangible asset         270,625     50,900  
Executive transition costs 476         10,701      
Headquarters relocation costs         1,863      
Total corporate-level activity $ 33,031     $ 32,849     $ 390,936     $ 164,532  

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,
  2020   2019   2020   2019
Net income attributable to Blucora, Inc. (2) $ (50,700 )   $ 17,328     $ (342,755 )   $ 48,148  
Stock-based compensation 2,846     5,136     10,066     16,300  
Depreciation and amortization of acquired intangible assets 10,288     12,130     39,907     44,208  
Other loss, net 7,918     5,233     31,304     16,915  
Acquisition and integration—Excl. Change in fair value of acquisition-related contingent consideration 3,003     8,024     22,785     25,763  
Acquisition and integration—Change in fair value of acquisition-related contingent consideration 9,300         8,300      
Impairment of goodwill and an intangible asset         270,625     50,900  
Executive transition costs 476         10,701      
Headquarters relocation costs         1,863      
Income tax (benefit) expense 19,094     (48,584 )   42,331     (65,054 )
Adjusted EBITDA $ 2,225     $ (733 )   $ 95,127     $ 137,180  

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

  Three Months Ended December 31,   Years Ended December 31,
  2020   2019   2020   2019
Net income (loss) attributable to Blucora, Inc. (2) $ (50,700 )   $ 17,328     $ (342,755 )   $ 48,148  
Stock-based compensation 2,846     5,136     10,066     16,300  
Amortization of acquired intangible assets 7,578     10,062     29,745     37,357  
Impairment of goodwill and an intangible asset         270,625     50,900  
Gain on the sale of a business         (349 )   (3,256 )
Acquisition and integration—Excl. Change in fair value of acquisition-related contingent consideration 3,003     8,024     22,785     25,763  
Acquisition and integration—Change in fair value of acquisition-related contingent consideration 9,300         8,300      
Executive transition costs 476         10,701      
Headquarters relocation costs         1,863      
Non-capitalized debt issuance costs         3,687      
Cash tax impact of adjustments to GAAP net income (234 )   (504 )   (1,647 )   (2,396 )
Non-cash income tax (benefit) expense 18,732     (44,859 )   41,059     (68,618 )
Non-GAAP net income (loss) $ (8,999 )   $ (4,813 )   $ 54,080     $ 104,198  
Per diluted share:              
Net income (loss) attributable to Blucora, Inc. (2) (3) $ (1.05 )   $ 0.36     $ (7.10 )   $ 0.98  
Stock-based compensation 0.06     0.11     0.21     0.33  
Amortization of acquired intangible assets 0.15     0.21     0.61     0.76  
Impairment of goodwill and an intangible asset         5.61     1.03  
Gain on sale of a business         (0.01 )   (0.07 )
Acquisition and integration—Excl. Change in fair value of acquisition-related contingent consideration 0.06     0.17     0.47     0.52  
Acquisition and integration—Change in fair value of acquisition-related contingent consideration 0.19         0.17      
Executive transition costs 0.01         0.22      
Headquarters relocation costs         0.04      
Non-capitalized debt issuance costs         0.08      
Cash tax impact of adjustments to GAAP net income     (0.01 )   (0.03 )   (0.05 )
Non-cash income tax (benefit) expense 0.39     (0.94 )   0.85     (1.39 )
Non-GAAP net income (loss) per share $ (0.19 )   $ (0.10 )   $ 1.12     $ 2.11  
Weighted average shares outstanding used in calculating Non-GAAP net income per share 48,107     47,689     48,244     49,282  

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

  Ranges for the year ending
  December 31, 2020
  Low   High
Net income attributable to Blucora, Inc. $ (339,000 )   $ (333,000 )
Stock-based compensation 11,900     11,800  
Depreciation and amortization of acquired intangible assets 40,800     40,500  
Other loss, net 31,700     31,200  
Acquisition, integration, executive transition, and headquarters relocation costs 40,900     40,600  
Impairment of goodwill 270,600     270,600  
Income tax expense 31,600     30,800  
Adjusted EBITDA $ 88,500     $ 92,500  

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

  Ranges for the year ended
  December 31, 2020
  Low   High
Net loss attributable to Blucora, Inc. $ (339,000 )   $ (333,000 )
Stock-based compensation 11,900     11,800  
Amortization of acquired intangible assets 30,000     29,900  
Acquisition, integration, executive transition, and headquarters relocation costs 40,900     40,600  
Debt issuance expenses 3,700     3,700  
Impairment of goodwill 270,600     270,600  
Gain on sale of a business (300 )   (300 )
Cash tax impact of adjustments to net loss (1,900 )   (1,800 )
Non-cash income tax expense 30,100     29,500  
Non-GAAP net income $ 46,000     $ 51,000  
Per diluted share:      
Net loss attributable to Blucora, Inc. (3) $ (6.98 )   $ (6.87 )
Stock-based compensation 0.24     0.24  
Amortization of acquired intangible assets 0.62     0.62  
Acquisition, integration, executive transition, and headquarters relocation costs 0.84     0.84  
Debt issuance expenses 0.08     0.08  
Impairment of goodwill 5.57     5.58  
Gain on sale of a business      
Cash tax impact of adjustments to net loss (0.04 )   (0.04 )
Non-cash income tax expense 0.62     0.60  
Non-GAAP net income per share $ 0.95     $ 1.05  
Weighted average shares outstanding used in calculating Non-GAAP net income per share 48,600     48,500  

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, other loss, net, acquisition and integration costs, impairment of goodwill and an intangible asset, executive transition costs, headquarters relocation costs, and income tax (benefit) expense. Acquisition and integration costs primarily relate to the 1st Global Acquisition and the HKFS Acquisition. Impairment of goodwill relates to the impairment of our Wealth Management reporting unit goodwill that was recognized in the first quarter of 2020. Impairment of an intangible asset relates to the impairment of the HD Vest trade name intangible asset following the rebranding of the Wealth Management business in the third quarter of 2019. Executive transition costs relate to the departure of certain Company executives primarily in the first quarter of 2020. Headquarters relocation costs relate to the process of moving from our original Dallas office and Irving office 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 (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 (including acquired technology), impairment of goodwill and an intangible asset, gain on the sale of a business, acquisition and integration costs, executive transition costs, headquarters relocation costs, non-capitalized debt issuance expenses, the related cash tax impact of those adjustments, and non-cash income tax (benefit) expense. 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 2021 and 2024. Gain on the sale of a business relates to the disposition of SimpleTax in the third quarter of 2019 and the subsequent working capital adjustment in the third quarter of 2020. Non-capitalized debt issuance expense relates to the expense recognized as a result of the increase to our term loan in the third quarter of 2020.

We believe that non-GAAP net income (loss) and non-GAAP net income (loss) per share provide meaningful supplemental information to management, investors, and analysts regarding our performance and the valuation of our business by excluding items in the statement of operations that we do not consider part of our ongoing operations or have not been, or are not expected to be, settled in cash. Additionally, we believe that non-GAAP net income (loss) and non-GAAP net income (loss) per share are common measures used by investors and analysts to evaluate our performance and the valuation of our business. Non-GAAP net income (loss) and non-GAAP net income (loss) per share should be evaluated in light of our financial results prepared in accordance with GAAP and should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income (loss) and 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) Any difference in the “per diluted share” amounts between this table and the Preliminary Condensed Consolidated Statements of Operations 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.

Blucora, Inc.
Reconciliation of a Non-GAAP Financial Measure to the Nearest GAAP Measure

Reconciliation of Tax Preparation Services Revenue, Excluding SimpleTax, to Tax Preparation Services Revenue (1)

  Years ended December 31,
  2020   2019   2018   2017   2016   2015
Tax preparation services revenue (2) $ 208,763     $ 209,966     $ 187,282     $ 160,937     $ 139,365     $ 117,708  
Less: SimpleTax revenue (3)     (2,555 )   (1,800 )   (1,224 )   (1,226 )   (21 )
Tax preparation services revenue, excluding SimpleTax (1) $ 208,763     $ 207,411     $ 185,482     $ 159,713     $ 138,139     $ 117,687  

____________________________
(1) We define tax preparation services revenue, excluding SimpleTax (which is a non-GAAP measure), as tax preparation services revenue (as presented on the consolidated statements of comprehensive income) less SimpleTax revenue. We believe tax preparation services revenue, excluding SimpleTax, is an important measure of current and historical sources of revenue for the Tax Preparation segment since Blucora disposed of SimpleTax in the third quarter of 2019.
(2) As presented in the Blucora consolidated statements of comprehensive income.
(3) We acquire SimpleTax Software, Inc. (“SimpleTax”) in July 2015 and disposed of SimpleTax in September 2019.


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Source: Blucora, Inc.