UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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☐ | Definitive Proxy Statement | ||
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☒ | Soliciting Material under §240.14a-12 | ||
BLUCORA, INC. | |||
(Name of Registrant as Specified In Its Charter) | |||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | |||
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On February 16, 2022, Blucora, Inc. (the “Company”) issued a press release containing the Company’s financial results for its fourth quarter and full year ended December 31, 2021. A copy of the press release can be found below, along with the earnings report upon which it is based, a transcript of the earnings call held on February 16, 2022 and the accompanying presentation.
Q4
2021 |
Q4
2020 |
Change | Full Year 2021 | Full Year 2020 | Change | ||||||||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||||||||
Wealth Management | $ | 172.2 | $ | 149.4 | 15 | % | $ | 658.2 | $ | 546.2 | 21 | % | |||||||||||||||||||||||
Tax Software | 6.1 | 5.8 | 5 | % | 227.0 | 208.8 | 9 | % | |||||||||||||||||||||||||||
Total Revenue | $ | 178.3 | $ | 155.2 | 15 | % | $ | 885.2 | $ | 755.0 | 17 | % | |||||||||||||||||||||||
Segment Operating Income (Loss) | |||||||||||||||||||||||||||||||||||
Wealth Management | $ | 21.9 | $ | 20.4 | 7 | % | $ | 82.2 | $ | 72.2 | 14 | % | |||||||||||||||||||||||
Tax Software | (18.6) | (11.0) | (69) | % | 81.9 | 49.6 | 65 | % | |||||||||||||||||||||||||||
Total Segment Operating Income | $ | 3.3 | $ | 9.3 | (65) | % | $ | 164.1 | $ | 121.8 | 35 | % | |||||||||||||||||||||||
Unallocated Corporate-Level General and Administrative Expenses | $ | (7.1) | $ | (7.1) | — | % | $ | (25.6) | $ | (26.7) | 4 | % | |||||||||||||||||||||||
GAAP: | |||||||||||||||||||||||||||||||||||
Operating Income (Loss) | $ | (28.0) | $ | (23.7) | (18) | % | $ | 30.6 | $ | (269.1) | 111 | % | |||||||||||||||||||||||
Net Income (Loss) | $ | (23.7) | $ | (50.7) | 53 | % | $ | 7.8 | $ | (342.8) | 102 | % | |||||||||||||||||||||||
Net Income (Loss) per share - Diluted | $ | (0.49) | $ | (1.05) | 53 | % | $ | 0.16 | $ | (7.14) | 102 | % | |||||||||||||||||||||||
Non-GAAP: | |||||||||||||||||||||||||||||||||||
Adjusted
EBITDA (1) |
$ | (3.8) | $ | 2.2 | (273) | % | $ | 138.5 | $ | 95.1 | 46 | % | |||||||||||||||||||||||
Net
Income (Loss) (1) |
$ | (14.1) | $ | (9.0) | (57) | % | $ | 87.2 | $ | 54.1 | 61 | % | |||||||||||||||||||||||
Net
Income (Loss) per share — Diluted (1) |
$ | (0.29) | $ | (0.19) | (53) | % | $ | 1.76 | $ | 1.12 | 57 | % |
($ in millions, except per share amounts) |
First
Quarter 2022 Outlook |
||||
Wealth Management Revenue | $164.5 - $171.5 | ||||
Tax Software Revenue | $150.0 - $175.0 | ||||
Total Revenue | $314.5 - $346.5 | ||||
Wealth Management Segment Operating Income | $19.5 - $22.0 | ||||
Tax Software Segment Operating Income | $57.0 - $77.0 | ||||
Unallocated Corporate-Level General and Administrative Expenses | $7.0 - $7.5 | ||||
GAAP: | |||||
Net Income | $38.0 - $62.0 | ||||
Net Income per share - Diluted | $0.75 - $1.23 | ||||
Non-GAAP: | |||||
Adjusted
EBITDA (1) |
$69.0 - $92.0 | ||||
Non-GAAP
Net Income
(1) |
$52.5 - $76.5 | ||||
Non-GAAP
Net Income per share — Diluted (1) |
$1.04 - $1.52 |
Three
months ended December 31, |
Year
ended December 31, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Wealth Management | $ | 172,192 | $ | 149,384 | $ | 658,213 | $ | 546,189 | |||||||||||||||
Tax Software | 6,139 | 5,773 | 226,987 | 208,763 | |||||||||||||||||||
Total revenue | 178,331 | 155,157 | 885,200 | 754,952 | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Cost of revenue: | |||||||||||||||||||||||
Wealth Management | 121,119 | 103,630 | 464,293 | 385,962 | |||||||||||||||||||
Tax Software | 3,228 | 2,569 | 15,558 | 12,328 | |||||||||||||||||||
Total cost of revenue | 124,347 | 106,199 | 479,851 | 398,290 | |||||||||||||||||||
Engineering and technology | 8,471 | 5,359 | 30,704 | 27,258 | |||||||||||||||||||
Sales and marketing | 32,522 | 26,833 | 173,331 | 177,618 | |||||||||||||||||||
General and administrative | 27,052 | 18,625 | 98,671 | 82,158 | |||||||||||||||||||
Acquisition and integration | 4,285 | 12,303 | 32,798 | 31,085 | |||||||||||||||||||
Depreciation | 2,535 | 1,948 | 10,906 | 7,293 | |||||||||||||||||||
Amortization of acquired intangible assets | 7,073 | 7,578 | 28,320 | 29,745 | |||||||||||||||||||
Impairment of goodwill | — | — | — | 270,625 | |||||||||||||||||||
Total operating expenses | 206,285 | 178,845 | 854,581 | 1,024,072 | |||||||||||||||||||
Operating income (loss) | (27,954) | (23,688) | 30,619 | (269,120) | |||||||||||||||||||
Interest expense and other,
net (1) |
(7,878) | (7,918) | (32,080) | (31,304) | |||||||||||||||||||
Loss before income taxes | (35,832) | (31,606) | (1,461) | (300,424) | |||||||||||||||||||
Income tax benefit (expense) | 12,138 | (19,094) | 9,218 | (42,331) | |||||||||||||||||||
Net income (loss) | $ | (23,694) | $ | (50,700) | $ | 7,757 | $ | (342,755) | |||||||||||||||
Net income (loss) per share: | |||||||||||||||||||||||
Basic | $ | (0.49) | $ | (1.05) | $ | 0.16 | $ | (7.14) | |||||||||||||||
Diluted | $ | (0.49) | $ | (1.05) | $ | 0.16 | $ | (7.14) | |||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||||
Basic | 48,834 | 48,107 | 48,578 | 47,978 | |||||||||||||||||||
Diluted | 48,834 | 48,107 | 49,526 | 47,978 |
Three
months ended December 31, |
Year
ended December 31, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Interest expense | $ | 7,018 | $ | 7,160 | $ | 28,807 | $ | 24,570 | |||||||||||||||
Amortization of debt issuance costs | 394 | 366 | 1,522 | 1,372 | |||||||||||||||||||
Accretion of debt discounts | 295 | 279 | 1,146 | 693 | |||||||||||||||||||
Total interest expense | 7,707 | 7,805 | 31,475 | 26,635 | |||||||||||||||||||
Interest income | (19) | (38) | (21) | (65) | |||||||||||||||||||
Gain on sale of a business | — | — | — | (349) | |||||||||||||||||||
Non-capitalized debt issuance expenses | — | — | — | 3,687 | |||||||||||||||||||
Other | 190 | 151 | 626 | 1,396 | |||||||||||||||||||
Interest expense and other, net | $ | 7,878 | $ | 7,918 | $ | 32,080 | $ | 31,304 |
December 31, | |||||||||||
2021 | 2020 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 134,824 | $ | 150,125 | |||||||
Cash segregated under federal or other regulations | — | 637 | |||||||||
Accounts receivable, net | 21,906 | 12,736 | |||||||||
Commissions and advisory fees receivable | 25,073 | 26,132 | |||||||||
Prepaid expenses and other current assets | 18,476 | 11,038 | |||||||||
Total current assets | 200,279 | 200,668 | |||||||||
Long-term assets: | |||||||||||
Property, equipment, and software, net | 73,638 | 58,500 | |||||||||
Right-of-use assets, net | 20,466 | 23,455 | |||||||||
Goodwill | 454,821 | 454,821 | |||||||||
Acquired intangible assets, net | 302,289 | 322,179 | |||||||||
Other long-term assets | 20,450 | 4,569 | |||||||||
Total long-term assets | 871,664 | 863,524 | |||||||||
Total assets | $ | 1,071,943 | $ | 1,064,192 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 8,216 | $ | 9,290 | |||||||
Commissions and advisory fees payable | 17,940 | 19,021 | |||||||||
Accrued expenses and other current liabilities | 65,678 | 56,419 | |||||||||
Current deferred revenue | 13,180 | 12,298 | |||||||||
Current lease liabilities | 4,896 | 2,304 | |||||||||
Current portion of long-term debt | 1,812 | 1,812 | |||||||||
Total current liabilities | 111,722 | 101,144 | |||||||||
Long-term liabilities: | |||||||||||
Long-term debt, net | 553,134 | 552,525 | |||||||||
Deferred tax liabilities, net | 20,124 | 30,663 | |||||||||
Long-term deferred revenue | 5,322 | 6,247 | |||||||||
Long-term lease liabilities | 33,267 | 36,404 | |||||||||
Other long-term liabilities | 6,752 | 24,919 | |||||||||
Total long-term liabilities | 618,599 | 650,758 | |||||||||
Total liabilities | 730,321 | 751,902 | |||||||||
Stockholders’ equity: | |||||||||||
Common
stock, par value $0.0001 per share—900,000 authorized shares; 50,137 shares issued and 48,831 shares outstanding at December 31,
2021; 49,483 shares issued and 48,177 shares outstanding at December 31, 2020 |
5 | 5 | |||||||||
Additional paid-in capital | 1,619,805 | 1,598,230 | |||||||||
Accumulated deficit | (1,249,789) | (1,257,546) | |||||||||
Treasury
stock, at cost—1,306 shares at December 31, 2021 and December 31, 2020 |
(28,399) | (28,399) | |||||||||
Total stockholders’ equity | 341,622 | 312,290 | |||||||||
Total liabilities and stockholders’ equity | $ | 1,071,943 | $ | 1,064,192 |
Year ended December 31, | |||||||||||
2021 | 2020 | ||||||||||
Operating activities: | |||||||||||
Net income (loss) | $ | 7,757 | $ | (342,755) | |||||||
Adjustments to reconcile net income (loss) to net cash from operating activities: | |||||||||||
Depreciation and amortization of acquired intangible assets | 43,426 | 39,907 | |||||||||
Stock-based compensation | 20,754 | 10,066 | |||||||||
Impairment of goodwill | — | 270,625 | |||||||||
Reduction of right-of-use lease assets | 3,046 | 8,908 | |||||||||
Deferred income taxes | (10,539) | 41,059 | |||||||||
Amortization of debt discount and issuance costs | 2,668 | 2,065 | |||||||||
Gain on sale of a business | — | (349) | |||||||||
Change in the fair value of acquisition-related contingent consideration | 22,400 | 8,300 | |||||||||
Accretion of lease liabilities | 1,250 | 1,922 | |||||||||
Other non-cash expenses | 2,602 | 1,508 | |||||||||
Changes in operating assets and liabilities, net of acquisitions and disposals: | |||||||||||
Accounts receivable, net | (9,152) | 10,705 | |||||||||
Commissions and advisory fees receivable | 1,059 | (4,956) | |||||||||
Prepaid expenses and other current assets | (7,438) | 3,847 | |||||||||
Other long-term assets | (17,861) | 2,232 | |||||||||
Accounts payable | (1,074) | (4,192) | |||||||||
Commissions and advisory fees payable | (857) | (884) | |||||||||
Lease liabilities | (1,853) | (3,894) | |||||||||
Deferred revenue | (43) | (796) | |||||||||
Accrued expenses and other current and long-term liabilities | (19,314) | 761 | |||||||||
Net cash provided by operating activities | 36,831 | 44,079 | |||||||||
Investing activities: | |||||||||||
Purchases of property, equipment, and software, net | (30,276) | (36,002) | |||||||||
Business acquisitions, net of cash acquired | — | (101,910) | |||||||||
Asset acquisitions | (8,316) | (3,143) | |||||||||
Proceeds from sale of a business, net of cash | — | 349 | |||||||||
Net cash used by investing activities | (38,592) | (140,706) | |||||||||
Financing activities: | |||||||||||
Proceeds from credit facilities, net of debt issuance costs and debt discounts | (502) | 226,278 | |||||||||
Payments on credit facilities | (1,812) | (66,531) | |||||||||
Acquisition-related contingent consideration payments | (14,075) | — | |||||||||
Proceeds from stock option exercises | 579 | 97 | |||||||||
Proceeds from issuance of stock through employee stock purchase plan | 3,277 | 2,258 | |||||||||
Tax payments from shares withheld for equity awards | (1,644) | (1,163) | |||||||||
Net cash provided (used) by financing activities | (14,177) | 160,939 | |||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | (15,938) | 64,312 | |||||||||
Cash, cash equivalents, and restricted cash, beginning of period | 150,762 | 86,450 | |||||||||
Cash, cash equivalents, and restricted cash, end of period | $ | 134,824 | $ | 150,762 | |||||||
Three
months ended December 31, |
Year
ended December 31, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Wealth Management | $ | 172,192 | $ | 149,384 | $ | 658,213 | $ | 546,189 | |||||||||||||||
Tax Software | 6,139 | 5,773 | 226,987 | 208,763 | |||||||||||||||||||
Total revenue | 178,331 | 155,157 | 885,200 | 754,952 | |||||||||||||||||||
Operating income (loss): | |||||||||||||||||||||||
Wealth Management | 21,856 | 20,368 | 82,212 | 72,195 | |||||||||||||||||||
Tax Software | (18,593) | (11,025) | 81,879 | 49,621 | |||||||||||||||||||
Corporate-level activity | (31,217) | (33,031) | (133,472) | (390,936) | |||||||||||||||||||
Total operating income (loss) | (27,954) | (23,688) | 30,619 | (269,120) | |||||||||||||||||||
Interest expense and other, net | (7,878) | (7,918) | (32,080) | (31,304) | |||||||||||||||||||
Loss before income taxes | (35,832) | (31,606) | (1,461) | (300,424) | |||||||||||||||||||
Income tax benefit (expense) | 12,138 | (19,094) | 9,218 | (42,331) | |||||||||||||||||||
Net income (loss) | $ | (23,694) | $ | (50,700) | $ | 7,757 | $ | (342,755) |
Three
months ended December 31, |
Year
ended December 31, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Wealth Management: | |||||||||||||||||||||||
Advisory revenue | $ | 104,633 | $ | 87,079 | $ | 395,800 | $ | 314,751 | |||||||||||||||
Commission revenue | 53,480 | 49,864 | 210,677 | 185,201 | |||||||||||||||||||
Asset-based revenue | 5,587 | 4,777 | 22,101 | 23,688 | |||||||||||||||||||
Transaction and fee revenue | 8,492 | 7,664 | 29,635 | 22,549 | |||||||||||||||||||
Total Wealth Management revenue | $ | 172,192 | $ | 149,384 | $ | 658,213 | $ | 546,189 | |||||||||||||||
Tax Software: | |||||||||||||||||||||||
Consumer revenue | $ | 5,857 | $ | 5,502 | $ | 209,748 | $ | 192,226 | |||||||||||||||
Professional revenue | 282 | 271 | 17,239 | 16,537 | |||||||||||||||||||
Total Tax Software revenue | $ | 6,139 | $ | 5,773 | $ | 226,987 | $ | 208,763 |
Three
months ended December 31, |
Year
ended December 31, |
||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Unallocated corporate-level general and administrative expenses | $ | 7,103 | $ | 7,118 | $ | 25,555 | $ | 26,689 | |||||||||||||||
Stock-based compensation | 5,255 | 2,846 | 20,754 | 10,066 | |||||||||||||||||||
Acquisition and integration | 4,285 | 12,303 | 32,798 | 31,085 | |||||||||||||||||||
Depreciation | 3,855 | 2,710 | 15,106 | 10,162 | |||||||||||||||||||
Amortization
of acquired intangible assets |
7,073 | 7,578 | 28,320 | 29,745 | |||||||||||||||||||
Contested
proxy and other legal and consulting costs |
3,646 | — | 10,939 | — | |||||||||||||||||||
Executive transition costs | — | 476 | — | 10,701 | |||||||||||||||||||
Headquarters relocation costs | — | — | — | 1,863 | |||||||||||||||||||
Impairment
of goodwill |
— | — | — | 270,625 | |||||||||||||||||||
Total corporate-level activity | $ | 31,217 | $ | 33,031 | $ | 133,472 | $ | 390,936 |
Three
months ended December 31, |
Year
ended December 31, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Net income (loss) (2) |
$ | (23,694) | $ | (50,700) | $ | 7,757 | $ | (342,755) | |||||||||||||||
Stock-based compensation | 5,255 | 2,846 | 20,754 | 10,066 | |||||||||||||||||||
Depreciation
and amortization of acquired intangible assets |
10,928 | 10,288 | 43,426 | 39,907 | |||||||||||||||||||
Interest expense and other, net | 7,878 | 7,918 | 32,080 | 31,304 | |||||||||||||||||||
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration | 1,385 | 3,003 | 10,398 | 22,785 | |||||||||||||||||||
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration | 2,900 | 9,300 | 22,400 | 8,300 | |||||||||||||||||||
Contested proxy and other
legal and consulting costs |
3,646 | — | 10,939 | — | |||||||||||||||||||
Impairment of goodwill | — | — | — | 270,625 | |||||||||||||||||||
Executive transition costs | — | 476 | — | 10,701 | |||||||||||||||||||
Headquarters relocation costs | — | — | — | 1,863 | |||||||||||||||||||
Income tax (benefit) expense | (12,138) | 19,094 | (9,218) | 42,331 | |||||||||||||||||||
Adjusted EBITDA (1) |
$ | (3,840) | $ | 2,225 | $ | 138,536 | $ | 95,127 |
Three
months ended December 31, |
Year
ended December 31, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Net income (loss) (2) |
$ | (23,694) | $ | (50,700) | $ | 7,757 | $ | (342,755) | |||||||||||||||
Stock-based
compensation |
5,255 | 2,846 | 20,754 | 10,066 | |||||||||||||||||||
Amortization
of acquired intangible assets |
7,073 | 7,578 | 28,320 | 29,745 | |||||||||||||||||||
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration | 1,385 | 3,003 | 10,398 | 22,785 | |||||||||||||||||||
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration | 2,900 | 9,300 | 22,400 | 8,300 | |||||||||||||||||||
Contested
proxy and other legal and consulting costs |
3,646 | — | 10,939 | — | |||||||||||||||||||
Impairment of goodwill | — | — | — | 270,625 | |||||||||||||||||||
Executive transition costs | — | 476 | — | 10,701 | |||||||||||||||||||
Non-capitalized debt issuance expenses | — | — | — | 3,687 | |||||||||||||||||||
Headquarters relocation costs | — | — | — | 1,863 | |||||||||||||||||||
Gain
on sale of a business |
— | — | — | (349) | |||||||||||||||||||
Cash
tax impact of adjustments to GAAP net income (loss) |
(351) | (234) | (1,874) | (1,647) | |||||||||||||||||||
Non-cash income tax (benefit) expense | (10,345) | 18,732 | (11,505) | 41,059 | |||||||||||||||||||
Non-GAAP Net Income (Loss)
(1) |
$ | (14,131) | $ | (8,999) | $ | 87,189 | $ | 54,080 | |||||||||||||||
Per
diluted share: |
|||||||||||||||||||||||
Net income (loss) (2) |
$ | (0.49) | $ | (1.05) | $ | 0.16 | $ | (7.10) | |||||||||||||||
Stock-based
compensation |
0.11 | 0.06 | 0.42 | 0.21 | |||||||||||||||||||
Amortization
of acquired intangible assets |
0.14 | 0.15 | 0.57 | 0.61 | |||||||||||||||||||
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration | 0.03 | 0.06 | 0.21 | 0.47 | |||||||||||||||||||
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration | 0.06 | 0.19 | 0.45 | 0.17 | |||||||||||||||||||
Contested
proxy and other legal and consulting costs |
0.08 | — | 0.22 | — | |||||||||||||||||||
Impairment of goodwill | — | — | — | 5.61 | |||||||||||||||||||
Executive transition costs | — | 0.01 | — | 0.22 | |||||||||||||||||||
Non-capitalized debt issuance expenses | — | — | — | 0.08 | |||||||||||||||||||
Headquarters relocation costs | — | — | — | 0.04 | |||||||||||||||||||
Gain
on sale of a business |
— | — | — | (0.01) | |||||||||||||||||||
Cash
tax impact of adjustments to GAAP net income (loss) |
(0.01) | — | (0.04) | (0.03) | |||||||||||||||||||
Non-cash income tax (benefit) expense | (0.21) | 0.39 | (0.23) | 0.85 | |||||||||||||||||||
Non-GAAP Net Income (Loss)
per share - Diluted (1)(3) |
$ | (0.29) | $ | (0.19) | $ | 1.76 | $ | 1.12 | |||||||||||||||
Diluted
weighted average shares outstanding (3) |
48,834 | 48,107 | 49,526 | 48,244 |
Ranges for the quarter ending | |||||||||||
March 31, 2022 | |||||||||||
Low | High | ||||||||||
Net income | $ | 38,000 | $ | 62,000 | |||||||
Stock-based compensation | 6,000 | 6,000 | |||||||||
Depreciation and amortization of acquired intangible assets | 12,000 | 11,500 | |||||||||
Interest expense and other,
net |
8,000 | 7,500 | |||||||||
Acquisition, integration,
and contested proxy and other legal and consulting costs (4) |
2,000 | 2,000 | |||||||||
Income tax expense | 3,000 | 3,000 | |||||||||
Adjusted EBITDA (1) |
$ | 69,000 | $ | 92,000 |
Ranges for the quarter ending | |||||||||||
March 31, 2022 | |||||||||||
Low | High | ||||||||||
Net income | $ | 38,000 | $ | 62,000 | |||||||
Stock-based compensation | 6,000 | 6,000 | |||||||||
Amortization of acquired intangible assets | 7,000 | 7,000 | |||||||||
Acquisition, integration,
and contested proxy and other legal and consulting costs (4) |
2,000 | 2,000 | |||||||||
Cash tax impact of adjustments to net income | (300) | (300) | |||||||||
Non-cash income tax (benefit) expense | (200) | (200) | |||||||||
Non-GAAP Net Income (1) |
$ | 52,500 | $ | 76,500 | |||||||
Per diluted share: | |||||||||||
Net income | $ | 0.75 | $ | 1.23 | |||||||
Stock-based compensation | 0.12 | 0.12 | |||||||||
Amortization of acquired intangible assets | 0.14 | 0.14 | |||||||||
Acquisition, integration,
and contested proxy and other legal and consulting costs (4) |
0.04 | 0.04 | |||||||||
Cash tax impact of adjustments to net income | (0.01) | (0.01) | |||||||||
Non-cash income tax (benefit) expense | — | — | |||||||||
Non-GAAP Net Income per
share - Diluted (1)(3) |
$ | 1.04 | $ | 1.52 | |||||||
Diluted weighted average
shares outstanding (3) |
50,285 | 50,285 |
(1) | We define Adjusted EBITDA as net income (loss), determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation and amortization of acquired intangible assets, interest expense and other, net, acquisition and integration costs, contested proxy and other legal and consulting costs, impairment of goodwill, executive transition costs, headquarters relocation costs, and income tax benefit (expense). Interest expense and other, net primarily consists of interest expense, net and non-capitalized debt issuance expenses. Acquisition and integration costs primarily relate to the acquisition of Avantax Planning Partners (formerly “HKFS”) and 1st Global. Impairment of goodwill relates to the impairment of our Wealth Management reporting unit goodwill in the first quarter of 2020. Executive transition costs relate to the departure of certain Company executives in the first quarter of 2020. Headquarters relocation costs relate to the process of moving from our Dallas and Irving offices to our new headquarters. |
We believe that Adjusted EBITDA provides meaningful supplemental information regarding our performance. We use this non-GAAP financial measure for internal management and compensation purposes, when publicly providing guidance on possible future results, and as a means to evaluate period-to-period comparisons. We believe that Adjusted EBITDA is a common measure used by investors and analysts to evaluate our performance, that it provides a more complete understanding of the results of operations and trends affecting our business when viewed together with GAAP results, and that management and investors benefit from referring to this non-GAAP financial measure. Items excluded from Adjusted EBITDA are significant and necessary components to the operations of our business and, therefore, Adjusted EBITDA should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income (loss). Other companies may calculate Adjusted EBITDA differently and, therefore, our Adjusted EBITDA may not be comparable to similarly titled measures of other companies.
We define Non-GAAP Net Income (Loss) as net income (loss), determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets, acquisition and integration costs, contested proxy and other legal and consulting costs, impairment of goodwill, executive transition costs, non-capitalized debt issuance expenses, headquarters relocation costs, gain on the sale of a business, 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 not utilized, between 2022 and 2024. Gain on the sale of a business relates to the disposition of SimpleTax in 2019 and the subsequent working capital adjustment in the third quarter of 2020. Non-capitalized debt issuance expenses relate to the expense recognized as a result of the Term Loan increase 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 that 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 GAAP net income (loss) per share. Other companies may calculate Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) per share differently, and, therefore, these measures may not be comparable to similarly titled measures of other companies.
(2) | As presented in the condensed consolidated statements of operations (unaudited). |
(3) | Any difference in the “per diluted share” amounts between this table and the condensed consolidated statements of operations (unaudited) is due to using different diluted weighted average shares outstanding in the event that there is GAAP net loss but Non-GAAP Net Income and vice versa. |
(4) | The breakout of components cannot be determined on a forward-looking basis without unreasonable efforts. |
Page | |||||
Financial Information: | |||||
Reconciliation
of
Certain
Non-GAAP Financial Measures to the Nearest Comparable GAAP Financial Measures |
|||||
Operating Metrics: | |||||
(Unaudited,
in thousands, except % and per share amounts. Rounding differences may exist) |
2019 | 2020 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FY 12/31 | 1Q | 2Q | 3Q | 4Q | FY 12/31 | 1Q | 2Q | 3Q | 4Q | FY 12/31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment revenue: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Wealth Management | $ | 507,979 | $ | 144,989 | $ | 115,884 | $ | 135,932 | $ | 149,384 | $ | 546,189 | $ | 154,491 | $ | 162,395 | $ | 169,135 | $ | 172,192 | $ | 658,213 | |||||||||||||||||||||||||||||||||||||||||||
Tax Software | 209,966 | 118,331 | 45,238 | 39,421 | 5,773 | 208,763 | 123,892 | 91,917 | 5,039 | 6,139 | 226,987 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total segment revenue | 717,945 | 263,320 | 161,122 | 175,353 | 155,157 | 754,952 | 278,383 | 254,312 | 174,174 | 178,331 | 885,200 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cost of revenue: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Wealth Management | 352,081 | 102,342 | 83,868 | 96,122 | 103,630 | 385,962 | 108,623 | 113,910 | 120,641 | 121,119 | 464,293 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax Software | 10,691 | 4,013 | 3,054 | 2,692 | 2,569 | 12,328 | 5,578 | 4,429 | 2,323 | 3,228 | 15,558 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total segment cost of revenue | 362,772 | 106,355 | 86,922 | 98,814 | 106,199 | 398,290 | 114,201 | 118,339 | 122,964 | 124,347 | 479,851 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Engineering and technology | 30,931 | 8,515 | 7,377 | 6,007 | 5,359 | 27,258 | 7,128 | 7,231 | 7,874 | 8,471 | 30,704 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales and marketing | 126,205 | 79,710 | 40,057 | 31,018 | 26,833 | 177,618 | 77,562 | 34,848 | 28,399 | 32,522 | 173,331 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
General and administrative | 78,529 | 24,728 | 20,200 | 18,605 | 18,625 | 82,158 | 24,685 | 23,832 | 23,102 | 27,052 | 98,671 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and integration | 25,763 | 5,682 | 2,824 | 10,276 | 12,303 | 31,085 | 8,103 | 18,169 | 2,241 | 4,285 | 32,798 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation | 5,479 | 1,796 | 1,675 | 1,874 | 1,948 | 7,293 | 2,300 | 3,204 | 2,867 | 2,535 | 10,906 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of acquired intangible assets | 37,357 | 7,748 | 6,673 | 7,746 | 7,578 | 29,745 | 7,175 | 7,063 | 7,009 | 7,073 | 28,320 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment
of goodwill and an intangible asset
(1) |
50,900 | 270,625 | — | — | — | 270,625 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total operating expenses | 717,936 | 505,159 | 165,728 | 174,340 | 178,845 | 1,024,072 | 241,154 | 212,686 | 194,456 | 206,285 | 854,581 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating income (loss) | 9 | (241,839) | (4,606) | 1,013 | (23,688) | (269,120) | 37,229 | 41,626 | (20,282) | (27,954) | 30,619 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense and other, net | (16,915) | (6,135) | (5,288) | (11,963) | (7,918) | (31,304) | (7,883) | (8,024) | (8,295) | (7,878) | (32,080) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes | (16,906) | (247,974) | (9,894) | (10,950) | (31,606) | (300,424) | 29,346 | 33,602 | (28,577) | (35,832) | (1,461) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax benefit (expense) | 65,054 | (67,520) | 59,539 | (15,256) | (19,094) | (42,331) | (1,700) | (1,994) | 774 | 12,138 | 9,218 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | 48,148 | $ | (315,494) | $ | 49,645 | $ | (26,206) | $ | (50,700) | $ | (342,755) | $ | 27,646 | $ | 31,608 | $ | (27,803) | $ | (23,694) | $ | 7,757 | |||||||||||||||||||||||||||||||||||||||||||
Net income (loss) per share: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic | $ | 1.00 | $ | (6.60) | $ | 1.04 | $ | (0.55) | $ | (1.05) | $ | (7.14) | $ | 0.57 | $ | 0.65 | $ | (0.57) | $ | (0.49) | $ | 0.16 | |||||||||||||||||||||||||||||||||||||||||||
Diluted | $ | 0.98 | $ | (6.60) | $ | 1.03 | $ | (0.55) | $ | (1.05) | $ | (7.14) | $ | 0.56 | $ | 0.64 | $ | (0.57) | $ | (0.49) | $ | 0.16 | |||||||||||||||||||||||||||||||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic | 48,264 | 47,827 | 47,941 | 48,039 | 48,107 | 47,978 | 48,261 | 48,508 | 48,707 | 48,834 | 48,578 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Diluted | 49,282 | 47,827 | 48,092 | 48,039 | 48,107 | 47,978 | 49,097 | 49,385 | 48,707 | 48,834 | 49,526 |
(1) | In the first quarter of 2020, we recognized a $270.6 million goodwill impairment related to our Wealth Management reporting unit. In 2019, we recognized a $50.9 million impairment of an intangible asset related to the HD Vest trade name intangible asset. |
(Unaudited,
in thousands, except % and per share amounts. Rounding differences may exist) |
2019 | 2020 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FY 12/31 | 1Q | 2Q | 3Q | 4Q | FY 12/31 | 1Q | 2Q | 3Q | 4Q | FY 12/31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment revenue: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Wealth
Management (1) |
$ | 507,979 | $ | 144,989 | $ | 115,884 | $ | 135,932 | $ | 149,384 | $ | 546,189 | $ | 154,491 | $ | 162,395 | $ | 169,135 | $ | 172,192 | $ | 658,213 | |||||||||||||||||||||||||||||||||||||||||||
Tax
Software (2) |
209,966 | 118,331 | 45,238 | 39,421 | 5,773 | 208,763 | 123,892 | 91,917 | 5,039 | 6,139 | 226,987 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total segment revenue | $ | 717,945 | $ | 263,320 | $ | 161,122 | $ | 175,353 | $ | 155,157 | $ | 754,952 | $ | 278,383 | $ | 254,312 | $ | 174,174 | $ | 178,331 | $ | 885,200 | |||||||||||||||||||||||||||||||||||||||||||
Segment operating
income: (3) |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Wealth
Management (1) |
$ | 68,292 | $ | 22,598 | $ | 11,731 | $ | 17,498 | $ | 20,368 | $ | 72,195 | $ | 19,396 | $ | 21,396 | $ | 19,564 | $ | 21,856 | $ | 82,212 | |||||||||||||||||||||||||||||||||||||||||||
Tax
Software (2) |
96,249 | 37,753 | 6,659 | 16,234 | (11,025) | 49,621 | 50,888 | 63,448 | (13,864) | (18,593) | 81,879 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total segment operating income | $ | 164,541 | $ | 60,351 | $ | 18,390 | $ | 33,732 | $ | 9,343 | $ | 121,816 | $ | 70,284 | $ | 84,844 | $ | 5,700 | $ | 3,263 | $ | 164,091 | |||||||||||||||||||||||||||||||||||||||||||
Segment operating income as a % of segment revenue: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Wealth
Management (1) |
13 | % | 16 | % | 10 | % | 13 | % | 14 | % | 13 | % | 13 | % | 13 | % | 12 | % | 13 | % | 12 | % | |||||||||||||||||||||||||||||||||||||||||||
Tax
Software (2) |
46 | % | 32 | % | 15 | % | 41 | % | (191) | % | 24 | % | 41 | % | 69 | % | (275) | % | (303) | % | 36 | % | |||||||||||||||||||||||||||||||||||||||||||
Total segment operating income as a % of segment revenue | 23 | % | 23 | % | 11 | % | 19 | % | 6 | % | 16 | % | 25 | % | 33 | % | 3 | % | 2 | % | 19 | % | |||||||||||||||||||||||||||||||||||||||||||
Unallocated corporate-level
general and administrative expenses (3) |
$ | 27,361 | $ | 7,016 | $ | 5,810 | $ | 6,745 | $ | 7,118 | $ | 26,689 | $ | 5,694 | $ | 6,259 | $ | 6,499 | $ | 7,103 | $ | 25,555 | |||||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA
(4) |
$ | 137,180 | $ | 53,335 | $ | 12,580 | $ | 26,987 | $ | 2,225 | $ | 95,127 | $ | 64,590 | $ | 78,585 | $ | (799) | $ | (3,840) | $ | 138,536 | |||||||||||||||||||||||||||||||||||||||||||
Other unallocated
corporate-level operating expenses: (3) |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | $ | 16,300 | $ | (1,201) | $ | 3,904 | $ | 4,517 | $ | 2,846 | $ | 10,066 | $ | 5,610 | $ | 5,160 | $ | 4,729 | $ | 5,255 | $ | 20,754 | |||||||||||||||||||||||||||||||||||||||||||
Acquisition and integration—Excluding change in the fair value of acquisition-related contingent consideration | 25,763 | 5,682 | 2,824 | 11,276 | 3,003 | 22,785 | 1,803 | 6,669 | 541 | 1,385 | 10,398 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and integration—Change in the fair value of acquisition-related contingent consideration | — | — | — | (1,000) | 9,300 | 8,300 | 6,300 | 11,500 | 1,700 | 2,900 | 22,400 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation | 6,851 | 2,420 | 2,412 | 2,620 | 2,710 | 10,162 | 3,243 | 4,102 | 3,906 | 3,855 | 15,106 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of acquired intangible assets | 37,357 | 7,748 | 6,673 | 7,746 | 7,578 | 29,745 | 7,175 | 7,063 | 7,009 | 7,073 | 28,320 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive transition costs | — | 9,184 | 636 | 405 | 476 | 10,701 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Headquarters relocation costs | — | 716 | 737 | 410 | — | 1,863 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contested
proxy and other legal and consulting costs |
— | — | — | — | — | — | 3,230 | 2,465 | 1,598 | 3,646 | 10,939 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment
of goodwill and an intangible asset |
50,900 | 270,625 | — | — | — | 270,625 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating income (loss) | $ | 9 | $ | (241,839) | $ | (4,606) | $ | 1,013 | $ | (23,688) | $ | (269,120) | $ | 37,229 | $ | 41,626 | $ | (20,282) | $ | (27,954) | $ | 30,619 | |||||||||||||||||||||||||||||||||||||||||||
Unallocated interest
expense and other, net: (3) |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense | $ | 19,017 | $ | 5,316 | $ | 4,840 | $ | 7,254 | $ | 7,160 | $ | 24,570 | $ | 7,183 | $ | 7,302 | $ | 7,304 | $ | 7,018 | $ | 28,807 | |||||||||||||||||||||||||||||||||||||||||||
Amortization of debt issuance costs | 1,042 | 313 | 331 | 362 | 366 | 1,372 | 363 | 377 | 388 | 394 | 1,522 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accretion of debt discounts | 228 | 68 | 70 | 276 | 279 | 693 | 277 | 284 | 290 | 295 | 1,146 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total interest expense | 20,287 | 5,697 | 5,241 | 7,892 | 7,805 | 26,635 | 7,823 | 7,963 | 7,982 | 7,707 | 31,475 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest income | (449) | (14) | (11) | (2) | (38) | (65) | (2) | — | — | (19) | (21) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gain on sale of a business | (3,256) | — | — | (349) | — | (349) | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-capitalized debt issuance expenses | — | — | — | 3,687 | — | 3,687 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | 333 | 452 | 58 | 735 | 151 | 1,396 | 62 | 61 | 313 | 190 | 626 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total interest expense and other, net | 16,915 | 6,135 | 5,288 | 11,963 | 7,918 | 31,304 | 7,883 | 8,024 | 8,295 | 7,878 | 32,080 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes | (16,906) | (247,974) | (9,894) | (10,950) | (31,606) | (300,424) | 29,346 | 33,602 | (28,577) | (35,832) | (1,461) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax (benefit) expense: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash | 3,564 | 483 | 158 | 269 | 362 | 1,272 | 1,969 | 2,688 | (577) | (1,793) | 2,287 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-cash
(5) |
(68,618) | 67,037 | (59,697) | 14,987 | 18,732 | 41,059 | (269) | (694) | (197) | (10,345) | (11,505) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total income tax (benefit) expense | (65,054) | 67,520 | (59,539) | 15,256 | 19,094 | 42,331 | 1,700 | 1,994 | (774) | (12,138) | (9,218) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
GAAP Net Income (Loss) | $ | 48,148 | $ | (315,494) | $ | 49,645 | $ | (26,206) | $ | (50,700) | $ | (342,755) | $ | 27,646 | $ | 31,608 | $ | (27,803) | $ | (23,694) | $ | 7,757 | |||||||||||||||||||||||||||||||||||||||||||
GAAP Net Income (Loss) per share - Diluted | $ | 0.98 | $ | (6.60) | $ | 1.03 | $ | (0.55) | $ | (1.05) | $ | (7.14) | $ | 0.56 | $ | 0.64 | $ | (0.57) | $ | (0.49) | $ | 0.16 | |||||||||||||||||||||||||||||||||||||||||||
Non-GAAP Net
Income (Loss) (4) |
$ | 104,198 | $ | 43,561 | $ | 4,463 | $ | 15,055 | $ | (8,999) | $ | 54,080 | $ | 50,952 | $ | 63,122 | $ | (12,754) | $ | (14,131) | $ | 87,189 | |||||||||||||||||||||||||||||||||||||||||||
Non-GAAP Net
Income (Loss) per share - Diluted (4)
(6) |
$ | 2.11 | $ | 0.90 | $ | 0.09 | $ | 0.31 | $ | (0.19) | $ | 1.12 | $ | 1.04 | $ | 1.28 | $ | (0.26) | $ | (0.29) | $ | 1.76 | |||||||||||||||||||||||||||||||||||||||||||
Basic weighted average shares outstanding | 48,264 | 47,827 | 47,941 | 48,039 | 48,107 | 47,978 | 48,261 | 48,508 | 48,707 | 48,834 | 48,578 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Diluted weighted
average shares outstanding (6) |
49,282 | 47,827 | 48,092 | 48,039 | 48,107 | 47,978 | 49,097 | 49,385 | 48,707 | 48,834 | 49,526 |
(1) | The operations of 1st Global are included in the Company's operating results as part of the Wealth Management segment beginning May 6, 2019 when 1st Global was acquired. The operations of Avantax Planning Partners (formerly "HKFS") are included in the Company's operating results as part of the Wealth Management segment beginning July 1, 2020 when HKFS was acquired. |
(2) | As a highly seasonal business, a significant portion of Tax Software revenue is typically generated in the first two quarters of the calendar year. In March 2020 and as a result of the COVID-19 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 Software segment revenue that is usually earned in the first and second quarters to the third quarter of 2020. As a result of the continued impact of the COVID-19 pandemic, including disruptions associated with the distribution of the second and third rounds of Economic Impact Payments, the IRS delayed the start of the 2021 tax season and extended the filing and payment deadline for tax year 2020 federal tax returns from April 15, 2021 to May 17, 2021. In addition, the IRS extended the federal filing and payment deadline for Texas, Louisiana, and Oklahoma to June 15, 2021. Beyond federal filings, the majority of states also extended their filing and payment deadlines for tax year 2020 state tax returns. This extension resulted in the shifting of a significant portion of Tax Software segment revenue that is usually earned in the first quarter to the second quarter of 2021. |
(3) | We do not allocate certain operating expenses (including personnel and overhead costs), stock-based compensation, acquisition and integration costs, depreciation, amortization of acquired intangible assets, executive transition costs, headquarters relocation costs, contested proxy and other legal and consulting costs, impairment of goodwill and an intangible asset, interest expense and other, net, or income taxes to the reportable segments. General and administrative costs are included in "Unallocated corporate-level expenses." |
(4) | See the Reconciliation of Certain Non-GAAP Financial Measures to the Nearest Comparable GAAP Financial Measures on page 5. |
(5) | Amounts represent the non-cash portion of income taxes. 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 federal net operating losses will expire, if not utilized, between 2022 and 2024. |
(6) | For periods in which non-GAAP net income is generated, non-GAAP net income per share is calculated using diluted weighted average shares outstanding. For periods in which non-GAAP net loss is generated, diluted weighted average shares outstanding is the same as basic weighted average shares outstanding. |
2019 | 2020 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited, in thousands, rounding differences may exist) | FY 12/31 | 1Q | 2Q | 3Q | 4Q | FY 12/31 | 1Q | 2Q | 3Q | 4Q | FY 12/31 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted
EBITDA (1) |
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Net income (loss)
(2) |
$ | 48,148 | $ | (315,494) | $ | 49,645 | $ | (26,206) | $ | (50,700) | $ | (342,755) | $ | 27,646 | $ | 31,608 | $ | (27,803) | $ | (23,694) | $ | 7,757 | |||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | 16,300 | (1,201) | 3,904 | 4,517 | 2,846 | 10,066 | 5,610 | 5,160 | 4,729 | 5,255 | 20,754 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation
and amortization of acquired intangible assets |
44,208 | 10,168 | 9,085 | 10,366 | 10,288 | 39,907 | 10,418 | 11,165 | 10,915 | 10,928 | 43,426 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense and other, net | 16,915 | 6,135 | 5,288 | 11,963 | 7,918 | 31,304 | 7,883 | 8,024 | 8,295 | 7,878 | 32,080 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration | 25,763 | 5,682 | 2,824 | 11,276 | 3,003 | 22,785 | 1,803 | 6,669 | 541 | 1,385 | 10,398 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration | — | — | — | (1,000) | 9,300 | 8,300 | 6,300 | 11,500 | 1,700 | 2,900 | 22,400 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive transition costs | — | 9,184 | 636 | 405 | 476 | 10,701 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Headquarters relocation costs | — | 716 | 737 | 410 | — | 1,863 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contested proxy
and other legal and consulting costs |
— | — | — | — | — | — | 3,230 | 2,465 | 1,598 | 3,646 | 10,939 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax (benefit) expense | (65,054) | 67,520 | (59,539) | 15,256 | 19,094 | 42,331 | 1,700 | 1,994 | (774) | (12,138) | (9,218) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment of goodwill and an intangible asset | 50,900 | 270,625 | — | — | — | 270,625 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA(1) |
$ | 137,180 | $ | 53,335 | $ | 12,580 | $ | 26,987 | $ | 2,225 | $ | 95,127 | $ | 64,590 | $ | 78,585 | $ | (799) | $ | (3,840) | $ | 138,536 | |||||||||||||||||||||||||||||||||||||||||||
Non-GAAP
Net Income (Loss) (1) |
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Net income (loss)
(2) |
$ | 48,148 | $ | (315,494) | $ | 49,645 | $ | (26,206) | $ | (50,700) | $ | (342,755) | $ | 27,646 | $ | 31,608 | $ | (27,803) | $ | (23,694) | $ | 7,757 | |||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | 16,300 | (1,201) | 3,904 | 4,517 | 2,846 | 10,066 | 5,610 | 5,160 | 4,729 | 5,255 | 20,754 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization
of acquired intangible assets |
37,357 | 7,748 | 6,673 | 7,746 | 7,578 | 29,745 | 7,175 | 7,063 | 7,009 | 7,073 | 28,320 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration | 25,763 | 5,682 | 2,824 | 11,276 | 3,003 | 22,785 | 1,803 | 6,669 | 541 | 1,385 | 10,398 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration | — | — | — | (1,000) | 9,300 | 8,300 | 6,300 | 11,500 | 1,700 | 2,900 | 22,400 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive transition costs | — | 9,184 | 636 | 405 | 476 | 10,701 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Headquarters relocation costs | — | 716 | 737 | 410 | — | 1,863 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contested proxy
and other legal and consulting costs |
— | — | — | — | — | — | 3,230 | 2,465 | 1,598 | 3,646 | 10,939 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-capitalized debt issuance expenses | — | — | — | 3,687 | — | 3,687 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment of goodwill and an intangible asset | 50,900 | 270,625 | — | — | — | 270,625 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gain
on the sale of a business |
(3,256) | — | — | (349) | — | (349) | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash
tax impact of adjustments to GAAP net income (loss) |
(2,396) | (736) | (259) | (418) | (234) | (1,647) | (543) | (649) | (331) | (351) | (1,874) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-cash income tax (benefit) expense | (68,618) | 67,037 | (59,697) | 14,987 | 18,732 | 41,059 | (269) | (694) | (197) | (10,345) | (11,505) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP Net
Income (Loss) (1) |
$ | 104,198 | $ | 43,561 | $ | 4,463 | $ | 15,055 | $ | (8,999) | $ | 54,080 | $ | 50,952 | $ | 63,122 | $ | (12,754) | $ | (14,131) | $ | 87,189 | |||||||||||||||||||||||||||||||||||||||||||
Non-GAAP Net
Income (Loss) per share - Diluted
(1) (3) |
$ | 2.11 | $ | 0.90 | $ | 0.09 | $ | 0.31 | $ | (0.19) | $ | 1.12 | $ | 1.04 | $ | 1.28 |