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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
       
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                          to                     
Commission File Number: 000-25131
https://cdn.kscope.io/e1564d8a676df9be920523581f75609b-bcor-20200630_g1.jpg
Blucora, Inc.
(Exact name of registrant as specified in its charter)

Delaware91-1718107
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
3200 Olympus Blvd, Suite 100, Dallas, Texas 75019
(Address of principal executive offices) (Zip Code)
(972870-6400
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.0001 per shareBCORNASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. ý Yes o No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  ý Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerýAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ý No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of July 31, 2020, 48,037,939 shares of the registrant’s Common Stock were outstanding.



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This report includes some of the trademarks, trade names, and service marks of Blucora, Inc. (referred to throughout this report as “Blucora,” the “Company,” “we,” “us,” or “our”), including Blucora, Avantax Wealth Management, HD Vest, 1st Global, HKFS, TaxAct, Tax-Smart Investing, Capital Gains Analyzer, Tax-Loss Harvester, and Social Security Planner. Each one of these trademarks, trade names, or service marks is either (i) our registered trademark, (ii) a trademark for which we have a pending application, (iii) a trade name or service mark for which we claim common law rights, or (iv) a registered trademark or application for registration that we have been authorized by a third party to use.
Solely for convenience, the trademarks, service marks, and trade names included in this report are without the ®, ™ or other applicable symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks, and trade names. This report may also include additional trademarks, service marks, and trade names of others, which are the property of their respective owners. All trademarks, service marks, and trade names included in this report are, to our knowledge, the property of their respective owners.
References to our or our subsidiaries’ website addresses or the website addresses of third parties in this report do not constitute incorporation by reference of the information contained on such websites and should not be considered part of this document.

Blucora, Inc. | Q2 2020 Form 10-Q 2


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“Form 10-Q”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Many of the forward-looking statements are located in Part I, Item 2 of this Form 10-Q under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “anticipates,” “believes,” “plans,” “expects,” “future,” “intends,” “may,” “will,” “would,” “could,” “should,” “estimates,” “predicts,” “potential,” “continues,” “target,” “outlook,” and similar terms and expressions, but the absence of these words does not mean that the statement is not forward-looking. These forward-looking statements include, but are not limited to, statements regarding:
the impact of the coronavirus pandemic on our results of operations and our business, including the impact of the resulting economic and market disruption, the extension of tax filing deadlines, and other related relief;
our ability to effectively compete within our industry;
our ability to attract and retain financial professionals, qualified employees, clients and customers, as well as our ability to provide strong customer/client service;
our ability to close, finance, and realize all of the anticipated benefits of acquisitions, as well as our ability to integrate the operations of recently acquired businesses;
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;
our ability to generate strong performance for our clients and the impact of the financial markets on our clients’ portfolios;
the impact of new or changing legislation and regulations (or interpretations thereof) on our business, including our ability to successfully address and comply with such legislation and regulations (or interpretations thereof) and increased costs, reductions of revenue, and potential fines, penalties, or disgorgement to which we may be subject as a result thereof;
risks, burdens, and costs, including fines, penalties, or disgorgement, associated with our business being subjected to regulatory inquiries, investigations, or initiatives, including those of the Financial Industry Regulatory Authority and the Securities and Exchange Commission;
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;
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;
Blucora, Inc. | Q2 2020 Form 10-Q 3


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.
Forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors that may cause our results, levels of activity, performance, achievements, and prospects to be materially different from those expressed or implied by such forward-looking statements. These risks, uncertainties, and other factors include, among others, the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as supplemented by those identified under Part II, Item 1A, “Risk Factors” and elsewhere in this Form 10-Q, as well as in our other filings with the SEC. All forward-looking statements speak only as of the date of this Form 10-Q. We do not undertake any obligation and do not intend to update or revise any forward-looking statement to reflect new information, events, or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events, except as required by law.




Blucora, Inc. | Q2 2020 Form 10-Q 4



PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BLUCORA, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
June 30,
2020
December 31,
2019
ASSETS
Current assets:
Cash and cash equivalents$90,081  $80,820  
Cash segregated under federal or other regulations1,266  5,630  
Accounts receivable, net of allowance15,913  16,266  
Commissions receivable15,590  21,176  
Other receivables5,711  2,902  
Prepaid expenses and other current assets, net10,237  12,349  
Total current assets138,798  139,143  
Long-term assets:
Property and equipment, net43,793  18,706  
Right-of-use assets, net27,653  10,151  
Goodwill, net391,084  662,375  
Other intangible assets, net275,790  290,211  
Deferred tax asset, net1,613  9,997  
Other long-term assets3,749  6,989  
Total long-term assets743,682  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 payable14,695  19,905  
Accrued expenses and other current liabilities35,114  36,144  
Deferred revenue—current4,178  12,014  
Lease liabilities—current1,251  3,272  
Current portion of long-term debt, net1,230  11,228  
Total current liabilities70,157  93,532  
Long-term liabilities:
Long-term debt, net381,561  381,485  
Deferred revenue—long-term6,709  7,172  
Lease liabilities—long-term36,407  5,916  
Other long-term liabilities6,785  5,952  
Total long-term liabilities431,462  400,525  
Total liabilities501,619  494,057  
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock, par value $0.0001 per share—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 capital1,589,895  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’ equity380,861  643,515  
Total liabilities and stockholders’ equity$882,480  $1,137,572  

See accompanying notes to unaudited condensed consolidated financial statements.
Blucora, Inc. | Q2 2020 Form 10-Q 5


BLUCORA, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share data)

 Three months ended June 30,Six months ended June 30,
 2020201920202019
Revenue:
Wealth management services revenue$115,884  $127,831  $260,873  $217,363  
Tax preparation services revenue45,238  65,909  163,569  202,145  
Total revenue161,122  193,740  424,442  419,508  
Operating expenses:
Cost of revenue:
Wealth management services cost of revenue83,868  87,477  186,210  148,851  
Tax preparation services cost of revenue3,054  3,149  7,067  7,350  
Total cost of revenue86,922  90,626  193,277  156,201  
Engineering and technology7,377  7,159  15,892  13,688  
Sales and marketing40,057  29,256  119,767  84,828  
General and administrative20,200  19,002  44,928  36,079  
Acquisition and integration2,824  9,183  8,506  10,980  
Depreciation1,675  1,315  3,471  2,376  
Amortization of other acquired intangible assets6,673  9,169  14,421  17,213  
Impairment of goodwill     270,625    
Total operating expenses165,728  165,710  670,887  321,365  
Operating income (loss)(4,606) 28,030  (246,445) 98,143  
Other loss, net(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:
Basic47,941  48,555  47,884  48,358  
Diluted48,092  49,822  47,884  49,681  
Comprehensive income (loss):
Net income (loss)$49,645  $31,036  $(265,849) $93,206  
Other comprehensive income  131  272  238  
Comprehensive income (loss) attributable to Blucora, Inc.$49,645  $31,167  $(265,577) $93,444  













See accompanying notes to unaudited condensed consolidated financial statements.
Blucora, Inc. | Q2 2020 Form 10-Q 6


BLUCORA, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
Redeemable Noncontrolling InterestsAdditional paid-in capitalAccumulated deficitAccumulated other comprehensive loss
Common stockTreasury stock
SharesAmountSharesAmountTotal
Balance as of December 31, 2019$  49,059  $5  $1,586,972  $(914,791) $(272) (1,306) $(28,399) $643,515  
Common stock issued for stock options and restricted stock units—  89      —  —  —  —    
Stock-based compensation—  —  —  (1,201) —  —  —  —  (1,201) 
Tax payments from shares withheld for equity awards—  —  —  (917) —  —  —  —  (917) 
Cumulative translation adjustment—  —  —  —  —  272  —  —  272  
Net loss  —  —  —  (315,494) —  —  —  (315,494) 
Balance as of March 31, 2020$  49,148  $5  $1,584,854  $(1,230,285) $  (1,306) $(28,399) $326,175  
Common stock issued for stock options, restricted stock units, and employee stock purchase plan—  192  —  1,226  —  —  —  —  1,226  
Stock-based compensation—  —  —  3,904  —  —  —  —  3,904  
Tax payments from shares withheld for equity awards—  —  —  (89) —  —  —  —  (89) 
Net income  —  —  —  49,645  —  —  —  49,645  
Balance as of June 30, 2020$  49,340  $5  $1,589,895  $(1,180,640) $  (1,306) $(28,399) $380,861  
Redeemable Noncontrolling InterestsCommon stockAdditional paid-in capitalAccumulated deficitAccumulated other comprehensive lossTreasury stock
SharesAmountSharesAmountTotal
Balance as of December 31, 2018$24,945  48,044  $5  $1,569,725  $(961,689) $(446)   $  $607,595  
Common stock issued for stock options and restricted stock units—  211  —  283  —  —  —  —  283  
Stock-based compensation—  —  —  2,443  —  —  —  —  2,443  
Tax payments from shares withheld for equity awards—  —  —  (2,425) —  —  —  —  (2,425) 
Reclassification of mandatorily redeemable noncontrolling interests(22,428) —  —  —  —  —  —  —  —  
Impact of adoption of new leases accounting standard—  —  —  —  (1,636) —  —  —  (1,636) 
Cumulative translation adjustment—  —  —  —  —  107  —  —  107  
Net income  —  —  —  62,170  —  —  —  62,170  
Balance as of March 31, 2019$2,517  48,255  $5  $1,570,026  $(901,155) $(339)   $  $668,537  
Common stock issued for stock options, restricted stock units, and employee stock purchase plan—  524  —  4,181  —  —  —  —  4,181  
Stock-based compensation—  —  —  4,082  —  —  —  —  4,082  
Tax payments from shares withheld for equity awards—  —  —  (2,735) —  —  —  —  (2,735) 
Redemption of noncontrolling interests(2,517) —  —  —  —  —  —  —  —  
Cumulative translation adjustment—  —  —  —  —  131  —  —  131  
Net income  —  —  —  31,036  —  —  —  31,036  
Balance as of June 30, 2019$  48,779  $5  $1,575,554  $(870,119) $(208)   $  $705,232  










See accompanying notes to unaudited condensed consolidated financial statements.
Blucora, Inc. | Q2 2020 Form 10-Q 7


BLUCORA, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Six months ended June 30,
 20202019
Operating activities:
Net income (loss)$(265,849) $93,206  
Adjustments to reconcile net income (loss) to net cash from operating activities:
Stock-based compensation2,703  6,525  
Depreciation and amortization of acquired intangible assets19,253  20,185  
Impairment of goodwill270,625    
Reduction of right-of-use lease assets3,196  1,977  
Deferred income taxes8,784  4,446  
Amortization of debt issuance costs644  547  
Accretion of debt discounts138  123  
Other1,571  260  
Cash provided (used) by changes in operating assets and liabilities:
Accounts receivable184  (3,217) 
Commissions receivable5,586  847  
Other receivables(2,809) (661) 
Prepaid expenses and other current assets1,435  12,258  
Other long-term assets3,162  (355) 
Accounts payable2,942  (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 activities34,374  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 facilities55,000  121,499  
Payments on credit facilities(65,625)   
Payment of redeemable noncontrolling interests  (24,945) 
Proceeds from stock option exercises25  3,320  
Proceeds from issuance of stock through employee stock purchase plan1,201  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 cash4,897  24,386  
Cash, cash equivalents, and restricted cash, beginning of period86,450  85,366  
Cash, cash equivalents, and restricted cash, end of period$91,347  $109,752  
Supplemental cash flow information:
Cash paid for income taxes$1,189  $2,566  
Cash paid for interest$9,702  $6,671  
Non-cash investing activities:
Purchases of property and equipment through leasehold incentives (investing)$9,726  $  





See accompanying notes to unaudited condensed consolidated financial statements.
Blucora, Inc. | Q2 2020 Form 10-Q 8


BLUCORA, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Description of the Business
Blucora, Inc. (the “Company,” “Blucora,” “we,” “our,” or “us”) operates two primary businesses: the Wealth Management business and the digital Tax Preparation business.
Wealth Management
The Wealth Management business consists of the operations of Avantax Wealth Management (“Avantax,” the “Wealth Management business,” or the “Wealth Management segment”), which provides tax-focused wealth management solutions for financial professionals, tax preparers, certified public accounting firms, and their clients. Avantax offers its services through its registered broker-dealer, registered investment advisor (“RIA”), and insurance agency subsidiaries and is the largest U.S. tax-focused independent broker-dealer. Avantax works with a nationwide network of financial professionals that operate as independent contractors, and Avantax provides these financial professionals with an integrated platform of technical, practice, and product support tools to assist in making each financial professional a comprehensive financial service center for his or her clients. Avantax formerly operated under the HD Vest and 1st Global brands prior to the rebranding of the Wealth Management business to Avantax Wealth Management in 2019.
On July 1, 2020, we acquired Honkamp Krueger Financial Services, Inc. (“HKFS,” and such acquisition, the “HKFS Acquisition”). HKFS operates as a captive, or employee-based, RIA and wealth management business that partners with CPA firms in order to provide their consumer and small business clients with holistic planning and financial advisory services. As the HKFS Acquisition closed on July 1, 2020, the financial results of HKFS were not included in our condensed consolidated financial statements as of and for the three and six months ended June 30, 2020. For more information, see “Note 14—Subsequent Events.”
Tax Preparation
The Tax Preparation business consists of the operations of TaxAct, Inc. (“TaxAct,” the “Tax Preparation business,” or the “Tax Preparation segment”) and provides digital tax preparation solutions for consumers, small business owners, and tax professionals through its website www.TaxAct.com.
The Tax Preparation segment is highly seasonal, with a significant portion of its annual revenue typically earned in the first four months of the fiscal year. During the third and fourth quarters, the Tax Preparation segment typically reports losses because revenue from the segment is minimal while core operating expenses continue. In March 2020 and as a result of the coronavirus pandemic, the Internal Revenue Service (“IRS”) extended the filing deadline for federal tax returns from April 15, 2020 to July 15, 2020. This filing extension resulted in the shifting of a significant portion of Tax Preparation segment revenue that is usually earned in the first and second quarters of 2020 to the third quarter of 2020. In addition, sales and marketing expenses were elevated in the first and second quarters of 2020.
Segments
We have two reportable segments: (1) the Wealth Management segment and (2) the Tax Preparation segment.

Note 2: Summary of Significant Accounting Policies
Interim financial information
The accompanying condensed consolidated financial statements have been prepared by us under the rules and regulations of the Securities and Exchange Commission (the SEC”) for interim financial reporting. These condensed consolidated financial statements are unaudited and, in management’s opinion, include all adjustments, consisting of normal recurring adjustments and accruals, necessary for a fair presentation of the consolidated financial position, results of operations, and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP”) have been omitted in accordance with the rules and regulations of the SEC. These unaudited condensed consolidated financial statements should be read in conjunction with the audited
Blucora, Inc. | Q2 2020 Form 10-Q 9


consolidated financial statements and accompanying notes in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2019. Interim results are not necessarily indicative of results for a full year.
Cash, cash equivalents, and restricted cash
The following table presents cash, cash equivalents, and restricted cash as reported on the consolidated balance sheets and the consolidated statements of cash flows (in thousands):
June 30, 2020December 31, 2019
Cash and cash equivalents$90,081  $80,820  
Cash segregated under federal or other regulations1,266  5,630  
Total cash, cash equivalents, and restricted cash$91,347  $86,450  
We generally invest our available cash in high-quality marketable investments, which primarily consist of investments in money market funds invested in securities issued by agencies of the U.S. government. We may invest, from time-to-time, in other vehicles, such as debt instruments issued by the U.S. federal government and its agencies, international governments, municipalities and publicly held corporations, as well as commercial paper and insured time deposits with commercial banks. Specific holdings can vary from period to period depending upon our cash requirements. Such investments are reported at fair value on the consolidated balance sheets.
Cash segregated under federal and other regulations is held in a separate bank account for the exclusive benefit of our Wealth Management business clients and is considered restricted cash.
Recently adopted accounting pronouncements
Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification (“ASC”). We consider the applicability and impact of all recent ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position and results of operations. We have recently adopted the ASUs described below.
Measurement of Credit Losses. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which changes how entities account for credit losses of financial assets measured at amortized cost. ASU 2016-13 requires financial assets measured at amortized cost to be presented on the balance sheet at the net amount expected to be collected.
The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. ASU 2016-13 replaces the previous “incurred loss” model with a “current expected credit loss” model that requires consideration of a broader range of information to estimate expected credit losses over the lifetime of the financial asset. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including the interim periods within those fiscal years. Entities must apply ASU 2016-13 using a modified-retrospective approach by recording a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which ASU 2016-13 is effective.
We adopted ASU 2016-13 effective January 1, 2020. Our financial assets within the scope of ASU 2016-13 primarily consisted of our commissions receivable and accounts receivable. While we have implemented the current expected credit loss model and assessed the impact of this new model on our in-scope financial assets, the adoption of ASU 2016-13 did not have a material impact on our consolidated financial statements and did not result in a cumulative-effect adjustment to retained earnings as of January 1, 2020.
Goodwill. In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Accounting for Goodwill (“ASU 2017-04”), which simplifies the subsequent measurement of goodwill by eliminating the previously applicable step two from the goodwill impairment test. Under the amended guidance of ASU 2017-04, when required to test goodwill for recoverability, an entity will perform its goodwill impairment test by comparing the fair value of the reporting unit to its carrying value and recognizing an impairment charge for the amount by which the carrying value exceeds the fair value of the reporting unit. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, and entities must apply ASU 2017-04 on a prospective basis.
Blucora, Inc. | Q2 2020 Form 10-Q 10


We adopted ASU 2017-04 effective January 1, 2020 and applied this new guidance to the goodwill impairment test we performed as of March 31, 2020. For more information on this impairment test, see “Note 5—Goodwill and Other Intangible Assets.”

Note 3: 1st Global Acquisition
On May 6, 2019, we closed the acquisition of all of the issued and outstanding common stock of 1st Global, Inc. and 1st Global Insurance Services, Inc. (together, “1st Global”), a tax-focused wealth management company, for a cash purchase price of $180.0 million (the “1st Global Acquisition”). The operations of 1st Global are included in our operating results as part of the Wealth Management segment from the date of the 1st Global Acquisition.
The purchase price was allocated to 1st Global’s tangible assets, identifiable intangible assets, and assumed liabilities based on their estimated fair values at the time of the 1st Global Acquisition. The fair values of assets acquired and liabilities assumed in the 1st Global Acquisition were as follows (in thousands):
Purchase Price Allocation at
December 31, 2019
Purchase Price Allocation Adjustments Since
December 31, 2019
Final Purchase Price Allocation
Assets acquired:
Tangible assets acquired, including cash of $12,389
$38,413  $—  $38,413  
Goodwill117,792  (666) 117,126  
Identifiable intangible assets83,980  —  83,980  
Liabilities assumed:
Contingent liability(11,052) —  (11,052) 
Deferred revenues(17,715) —  (17,715) 
Other current liabilities(12,956) 281  (12,675) 
Deferred tax liabilities, net(18,462) 385  (18,077) 
Total assets acquired and liabilities assumed$180,000  $—  $180,000  
During the six months ended June 30, 2020, we adjusted the fair values of goodwill, other current liabilities, and deferred tax liabilities, net, due to the pre-acquisition 1st Global tax returns that were filed in the first quarter of 2020. As one year has elapsed since the 1st Global Acquisition date, the measurement period for the 1st Global Acquisition has ended, and the purchase price allocation is considered final.
As part of the 1st Global Acquisition, we assumed a contingent liability related to a regulatory inquiry and recorded the contingent liability as part of the opening balance sheet. While the inquiry is still on-going, we evaluated a range of possible losses, resulting in a contingent liability reserve balance (including accrued interest) of $11.5 million at June 30, 2020.

Note 4: Segment Information and Revenues
We have two reportable segments: (1) the Wealth Management segment and (2) the Tax Preparation segment. Our Chief Executive Officer is the chief operating decision maker and reviews financial information presented on a disaggregated basis. This information is used for purposes of allocating resources and evaluating financial performance.
We do not allocate certain general and administrative costs (including personnel and overhead costs), stock-based compensation, depreciation, amortization of intangible assets, acquisition and integration costs, executive transition costs, headquarters relocation costs, or impairment of goodwill to the reportable segments. Such amounts are reflected in the table below under the heading “Corporate-level activity.” In addition, we do not allocate other loss, net, or income taxes to the reportable segments. We do not report assets or capital expenditures by segment to the chief operating decision maker.
Blucora, Inc. | Q2 2020 Form 10-Q 11


Information on reportable segments currently presented to our chief operating decision maker and a reconciliation to consolidated net income (loss) are presented below (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Revenue:
Wealth Management$115,884  $127,831  $260,873  $217,363  
Tax Preparation45,238  65,909  163,569  202,145  
Total revenue161,122  193,740  424,442  419,508  
Operating income (loss):
Wealth Management11,731  16,979  34,329  28,519  
Tax Preparation