bcor-20220808
FALSE000106887500010688752022-08-082022-08-08

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
August 8, 2022
Date of Report
(Date of earliest event reported)  
BLUCORA, INC.
(Exact name of registrant as specified in its charter)
Delaware000-2513191-1718107
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
3200 Olympus Blvd, Suite 100
Dallas, Texas 75019
(Address of principal executive offices)
(972870-6400
Registrant’s telephone number, including area code
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
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. ☐





Item 2.02    RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On August 8, 2022, Blucora, Inc. (the “Company”) announced its financial results for the quarter ended June 30, 2022. Copies of the press release and supplemental financial information are furnished to, but not filed with, the Securities and Exchange Commission (the "SEC") as Exhibits 99.1 and 99.2 hereto.
The press release and supplemental financial information include non-GAAP financial measures as that term is defined in Regulation G. The press release and supplemental financial information also include the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”), information reconciling the non-GAAP financial measures to the GAAP financial measures, and a discussion of the reasons why the Company’s management believes that the presentation of the non-GAAP financial measures provides useful information to investors regarding the Company’s results of operations and financial condition. The non-GAAP financial information presented therein should be considered in addition to, not as a substitute for, or superior to, financial measures calculated and presented in accordance with GAAP.

Item 9.01    FINANCIAL STATEMENTS AND EXHIBITS

(d)    Exhibits
Exhibit NoDescription
Press release dated August 8, 2022
Supplemental financial information dated August 8, 2022
104.1Cover Page Interactive Data File (embedded within the Inline XBRL Document)

Safe Harbor Statement Under the Private Securities and Litigation Reform Act
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation, statements regarding the outlook of the Company and its segments, expectations regarding net flows for its wealth business, and expectations with respect to the current tax season. 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. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: our ability to effectively compete within our industries; our ability to generate strong performance for our clients and the impact of the financial markets on our clients’ portfolios; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; our ability to attract and retain financial professionals, employees, clients, and customers, as well as our ability to provide strong customer/client service; the impact of the continuing COVID-19 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 government actions, and changes in customer behavior related to the foregoing; 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; any downgrade of the Company’s credit ratings; 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, Inc. and the SEC; risks associated with legal proceedings, including litigation and regulatory proceedings; 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, and the potential impact of such acquisitions on our existing indebtedness and leverage; our ability to retain employees and acquired client assets following acquisitions; any compromise of confidentiality, availability or integrity of information, including cyberattacks; 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 software industries; our ability to maintain our relationships with third-party partners, providers, suppliers, vendors, distributors, contractors, financial institutions, industry associations, and licensing partners, and our expectations regarding and reliance on the products, tools, platforms, systems, and services provided by these third parties; our ability to respond to rapid technological changes, including our ability to successfully release new products and services or improve upon existing products and services; risks related to goodwill and acquired intangible asset impairment;
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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; the seasonality of our business; our assessments and estimates that determine our effective tax rate; our ability to protect our intellectual property and the impact of any claim that we infringed on the intellectual property rights of others; and the effects on our business of actions of activist stockholders. A more detailed description of these and certain other factors that could affect actual results is included in the Company’s most recent Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date hereof, except as may be required by law.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
BLUCORA, INC.
By/s/ Marc Mehlman
Marc Mehlman
Chief Financial Officer
August 8, 2022

4
Document

Exhibit 99.1
 https://cdn.kscope.io/ae64a700ef8b49c2a9378a92dec861d0-blucoralogo.jpg
Blucora Reports Second Quarter 2022 Results
DALLAS, TX — August 8, 2022 — Blucora, Inc. (NASDAQ: BCOR), a leading provider of technology-enabled, tax focused financial solutions, today announced financial results for the second quarter ended June 30, 2022.
Second Quarter Highlights and Recent Developments
Avantax added newly recruited assets of $514 million during the second quarter for a total of over $1.0 billion during the first six months of 2022. This exceeds full year 2021 newly recruited assets of $929 million.
Avantax continued to deliver net positive asset flows with $185 million for the quarter.
Grew total revenue over 1% year over year to $256.9 million in Q2 2022 compared to $254.3 million during Q2 2021.
Ended the second quarter with total client assets of $76.5 billion, growing advisory assets to $36.7 billion, or 48.0% of total client assets.
TaxAct gained market share during the tax season, ending Q2 2022 with an approximate 4.94% market share.
Continue to expect double-digit top line growth for TaxAct for tax year 2021.
On August 5th, the Company paid down its term loan balance by $35 million, resulting in an updated principal balance of $525.4 million.

“With our financial results on track for the year, despite a volatile macro picture, we are confident in our ability to deliver even stronger results next year driven by continued strong operating performance as well as favorable interest rate impacts. We expect our positive trajectory to deliver valuable free cash flow in the coming years as we continue to deliver differentiated value and services to our customers and clients. It’s an exciting time for the business.” commented Chris Walters, Blucora’s President and Chief Executive Officer. Mr. Walters continued, “I am proud of our Company’s performance this quarter. We have a lot of reasons to be optimistic about our future performance across the company, not just due to a favorable interest rate environment, but also because of the purposeful investments we chose to make leading into this environment that we believe will allow us to take full advantage of the opportunities that come from operating from a position of strength.”

Summary Financial Performance: Q2 2022
($ in millions, except per share amounts)Q2 2022Q2 2021Change
Revenue:
Wealth Management$162.7 $162.4 0.2 %
Tax Software94.2 91.9 2.5 %
Total Revenue $256.9 $254.3 1.0 %
Segment Operating Income
Wealth Management$15.9 $21.4 (25.7)%
Tax Software53.9 63.4 (15.0)%
Total Segment Operating Income$69.7 $84.8 (17.8)%
Unallocated Corporate-Level General and Administrative Expenses$(7.7)$(6.3)(22.2)%
GAAP:
Operating Income$50.8 $41.6 22.1 %
Net Income$39.4 $31.6 24.7 %
Net Income per share — Diluted$0.81 $0.64 26.6 %
Non-GAAP:
Adjusted EBITDA (1)
$62.1 $78.6 (21.0)%
Net Income (1)
$48.0 $63.1 (23.9)%
Net Income per share — Diluted (1)
$0.99 $1.28 (22.7)%
_________________________
Note: Totals may not foot due to rounding.
(1)See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.


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Full Year 2022 Outlook
($ in millions, except per share amounts)Full Year 2022 Outlook
Wealth Management Revenue$645.0 - $665.0
Tax Software Revenue$247.5 - $251.0
Total Revenue$892.5 - $916.0
Wealth Management Segment Operating Income$90.5 - $94.5
Tax Software Segment Operating Income$89.0 - $91.0
Unallocated Corporate-Level General and Administrative Expenses$30.5 - $29.0
GAAP:
Net Income$28.5 - $43.5
Net Income per share — Diluted$0.58 - $0.89
Non-GAAP:
Adjusted EBITDA (1)
$149.0 - $156.5
Non-GAAP Net Income (1)
$84.0 - $93.5
Non-GAAP Net Income per share — Diluted (1)
$1.71 - $1.90
____________________________
(1)See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.
Conference Call and Webcast
A conference call and live webcast will be held on Tuesday, August 9, 2022 at 8:30 a.m. Eastern Time during which the Company will further discuss second quarter results, its outlook for full year 2022, 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. A replay of the call will be available on our website.
About Blucora®
Blucora, Inc. (NASDAQ: BCOR) is a provider of data and technology-driven solutions that empower people to improve their financial wellness. Blucora operates in two segments (i) wealth management, through its Avantax Wealth Management and Avantax Planning Partners brands, with a collective $77 billion in total client assets as of June 30, 2022 and (ii) tax software, through its TaxAct business, a market leader in tax software with over 3 million consumer users and approximately 21,000 professional users in 2022. 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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation, statements regarding the outlook of Blucora, Inc. (the “Company”) and its segments, expectations regarding net flows for its wealth business, and expectations with respect to the current tax season. 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. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: our ability to effectively compete within our industries; our ability to generate strong performance for our clients and the impact of the financial markets on our clients’ portfolios; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; our ability to attract and retain financial professionals, employees, clients, and customers, as well as our ability to provide strong customer/client service; the impact of the continuing COVID-19 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 government actions, and

2


changes in customer behavior related to the foregoing; 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; any downgrade of the Company’s credit ratings; 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, Inc. and the Securities and Exchange Commission (the “SEC”); risks associated with legal proceedings, including litigation and regulatory proceedings; 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, and the potential impact of such acquisitions on our existing indebtedness and leverage; our ability to retain employees and acquired client assets following acquisitions; any compromise of confidentiality, availability or integrity of information, including cyberattacks; 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 software industries; our ability to maintain our relationships with third-party partners, providers, suppliers, vendors, distributors, contractors, financial institutions, industry associations, and licensing partners, and our expectations regarding and reliance on the products, tools, platforms, systems, and services provided by these third parties; our ability to respond to rapid technological changes, including our ability to successfully release new products and services or improve upon existing products and services; risks related to goodwill and acquired 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; the seasonality of our business; our assessments and estimates that determine our effective tax rate; our ability to protect our intellectual property and the impact of any claim that we infringed on the intellectual property rights of others; and the effects on our business of actions of activist stockholders. A more detailed description of these and certain other factors that could affect actual results is included in the Company’s most recent Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date hereof, except as may be required by law.

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BLUCORA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (In thousands, except per share amounts)

 Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Revenue:
Wealth Management$162,669 $162,395 $329,072 $316,886 
Tax Software94,214 91,917 235,364 215,809 
Total revenue256,883 254,312 564,436 532,695 
Operating expenses:
Cost of revenue:
Wealth Management 113,644 113,910 233,518 222,533 
Tax Software 6,873 4,429 16,299 10,007 
Total cost of revenue120,517 118,339 249,817 232,540 
Engineering and technology8,620 7,231 17,124 14,359 
Sales and marketing47,508 34,848 131,911 112,410 
General and administrative26,646 23,832 55,721 48,517 
Acquisition and integration(6,792)18,169 (5,126)26,272 
Depreciation3,137 3,204 6,068 5,504 
Amortization of acquired intangible assets6,462 7,063 13,093 14,238 
Total operating expenses206,098 212,686 468,608 453,840 
Operating income50,785 41,626 95,828 78,855 
Interest expense and other, net (1)
(8,117)(8,024)(15,958)(15,907)
Income before income taxes42,668 33,602 79,870 62,948 
Income tax expense(3,243)(1,994)(5,825)(3,694)
Net income$39,425 $31,608 $74,045 $59,254 
Net income per share:
Basic$0.83 $0.65 $1.54 $1.22 
Diluted$0.81 $0.64 $1.50 $1.20 
Weighted average shares outstanding:
Basic47,582 48,508 48,048 48,384 
Diluted48,690 49,385 49,220 49,241 
_________________________
(1)Interest expense and other, net consisted of the following (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Interest expense$7,265 $7,302 $14,395 $14,485 
Amortization of debt issuance costs399 377 788 740 
Amortization of debt discount299 284 591 561 
Total interest expense7,963 7,963 15,774 15,786 
Interest income and other154 61 184 121 
Interest expense and other, net$8,117 $8,024 $15,958 $15,907 







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BLUCORA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)

June 30,
2022
December 31,
2021
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$171,297 $134,824 
Accounts receivable, net20,351 21,906 
Commissions and advisory fees receivable21,214 25,073 
Prepaid expenses and other current assets17,697 18,476 
Total current assets230,559 200,279 
Long-term assets:
Property, equipment, and software, net75,741 73,638 
Right-of-use assets, net19,879 20,466 
Goodwill, net454,821 454,821 
Acquired intangible assets, net291,540 302,289 
Other long-term assets26,547 20,450 
Total long-term assets868,528 871,664 
Total assets$1,099,087 $1,071,943 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$6,962 $8,216 
Commissions and advisory fees payable13,814 17,940 
Accrued expenses and other current liabilities54,707 65,678 
Current deferred revenue6,328 13,180 
Current lease liabilities5,025 4,896 
Current portion of long-term debt1,812 1,812 
Total current liabilities88,648 111,722 
Long-term liabilities:
Long-term debt, net553,476 553,134 
Long-term lease liabilities31,795 33,267 
Deferred tax liabilities, net19,125 20,124 
Long-term deferred revenue4,859 5,322 
Other long-term liabilities11,731 6,752 
Total long-term liabilities620,986 618,599 
Total liabilities709,634 730,321 
Stockholders’ equity:
Common stock, par value $0.0001 per share—900,000 authorized shares; 50,921 shares issued and 47,740 shares outstanding as of June 30, 2022; 50,137 shares issued and 48,831 shares outstanding as of December 31, 2021
Additional paid-in capital1,628,591 1,619,805 
Accumulated deficit(1,175,744)(1,249,789)
Treasury stock, at cost—3,181 shares at June 30, 2022 and 1,306 shares at December 31, 2021
(63,399)(28,399)
Total stockholders’ equity389,453 341,622 
Total liabilities and stockholders’ equity$1,099,087 $1,071,943 


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BLUCORA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In thousands)

 Six Months Ended June 30,
 20222021
Operating activities:
Net income$74,045 $59,254 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of acquired intangible assets22,769 21,583 
Stock-based compensation11,423 10,770 
Change in the fair value of acquisition-related contingent consideration(5,320)17,800 
Reduction of right-of-use lease assets715 1,420 
Deferred income taxes(999)(963)
Amortization of debt discount and issuance costs1,379 1,301 
Accretion of lease liabilities1,020 1,046 
Other non-cash items2,574 481 
Changes in operating assets and liabilities, net of acquisitions and disposals:
Accounts receivable, net1,666 (5,948)
Commissions and advisory fees receivable3,859 (530)
Prepaid expenses and other current assets1,776 (4,057)
Other long-term assets(8,804)(9,239)
Accounts payable(1,254)874 
Commissions and advisory fees payable(4,316)149 
Lease liabilities(2,491)(431)
Deferred revenue(7,315)(7,677)
Accrued expenses and other current and long-term liabilities(5,064)11,438 
Net cash provided by operating activities85,663 97,271 
Investing activities:
Purchases of property, equipment, and software(11,790)(13,544)
Asset acquisitions(1,858)(881)
Net cash used by investing activities(13,648)(14,425)
Financing activities:
Proceeds from credit facilities, net of debt discount and issuance costs— (502)
Payments on credit facilities(906)(906)
Acquisition-related contingent consideration payments(98)— 
Stock repurchases(35,000)— 
Proceeds from stock option exercises174 284 
Proceeds from issuance of stock through employee stock purchase plan2,324 1,845 
Tax payments from shares withheld for equity awards(2,036)(1,329)
Net cash used by financing activities(35,542)(608)
Net increase in cash, cash equivalents, and restricted cash36,473 82,238 
Cash, cash equivalents, and restricted cash, beginning of period134,824 150,762 
Cash, cash equivalents, and restricted cash, end of period$171,297 $233,000 
Supplemental cash flow information:
Cash paid for income taxes$1,958 $596 
Cash paid for interest$14,301 $14,324 








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BLUCORA, INC.
Segment Information and Revenue
(Unaudited) (In thousands)
Information on reportable segments currently presented to our Chief Executive Officer (our chief operating decision maker) and a reconciliation to consolidated net income are presented below:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Revenue:
Wealth Management$162,669 $162,395 $329,072 $316,886 
Tax Software94,214 91,917 235,364 215,809 
Total revenue256,883 254,312 564,436 532,695 
Operating income (loss):
Wealth Management15,873 21,396 32,294 40,792 
Tax Software53,859 63,448 111,889 114,336 
Corporate-level activity(18,947)(43,218)(48,355)(76,273)
Total operating income50,785 41,626 95,828 78,855 
Interest expense and other, net(8,117)(8,024)(15,958)(15,907)
Income before income taxes42,668 33,602 79,870 62,948 
Income tax expense(3,243)(1,994)(5,825)(3,694)
Net income$39,425 $31,608 $74,045 $59,254 
Revenues by major category within each segment are presented below:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Wealth Management:
Advisory$104,155 $96,508 $211,324 $187,627 
Commission42,835 51,702 90,490 104,236 
Asset-based6,964 5,526 12,627 10,855 
Transaction and fee8,715 8,659 14,631 14,168 
Total Wealth Management revenue$162,669 $162,395 $329,072 $316,886 
Tax Software:
Consumer$91,027 $88,846 $216,288 $199,413 
Professional3,187 3,071 19,076 16,396 
Total Tax Software revenue$94,214 $91,917 $235,364 $215,809 
Corporate-level activity included the following:
Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Unallocated corporate-level general and administrative expenses$7,680 $6,259 $14,972 $11,953 
Stock-based compensation5,198 5,160 11,423 10,770 
Acquisition and integration(6,792)18,169 (5,126)26,272 
Depreciation5,002 4,102 9,676 7,345 
Amortization of acquired intangible assets
6,462 7,063 13,093 14,238 
Contested proxy and other legal and consulting costs
1,397 2,465 4,317 5,695 
Total corporate-level activity$18,947 $43,218 $48,355 $76,273 


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BLUCORA, INC.
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (1)
(Unaudited) (In thousands, except per share amounts)
Adjusted EBITDA Reconciliation (1)

Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Net income (2)
$39,425 $31,608 $74,045 $59,254 
Stock-based compensation5,198 5,160 11,423 10,770 
Depreciation and amortization of acquired intangible
assets
11,464 11,165 22,769 21,583 
Interest expense and other, net8,117 8,024 15,958 15,907 
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration228 6,669 194 8,472 
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration(7,020)11,500 (5,320)17,800 
Contested proxy and other legal and consulting costs
1,397 2,465 4,317 5,695 
Income tax expense3,243 1,994 5,825 3,694 
Adjusted EBITDA (1)
$62,052 $78,585 $129,211 $143,175 

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

Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Net income (2)
$39,425 $31,608 $74,045 $59,254 
Stock-based compensation
5,198 5,160 11,423 10,770 
Amortization of acquired intangible assets
6,462 7,063 13,093 14,238 
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration228 6,669 194 8,472 
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration(7,020)11,500 (5,320)17,800 
Contested proxy and other legal and consulting costs
1,397 2,465 4,317 5,695 
Cash tax impact of adjustments to GAAP net income
(353)(649)(1,312)(1,192)
Non-cash income tax (benefit) expense2,655 (694)4,161 (963)
Non-GAAP Net Income (1)
$47,992 $63,122 $100,601 $114,074 
Per diluted share:
Net income (2)(4)
$0.81 $0.64 $1.50 $1.20 
Stock-based compensation
0.11 0.10 0.23 0.22 
Amortization of acquired intangible assets
0.14 0.14 0.28 0.29 
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration— 0.14 — 0.17 
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration(0.14)0.23 (0.11)0.36 
Contested proxy and other legal and consulting costs
0.03 0.05 0.09 0.12 
Cash tax impact of adjustments to GAAP net income
(0.01)(0.01)(0.03)(0.02)
Non-cash income tax (benefit) expense0.05 (0.01)0.08 (0.02)
Non-GAAP Net Income per share — Diluted (1)
$0.99 $1.28 $2.04 $2.32 
Diluted weighted average shares outstanding
48,690 49,385 49,220 49,241 


8


BLUCORA, INC.
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (1)
(Unaudited) (In thousands, except per share amounts)

Adjusted EBITDA Reconciliation for Forward-Looking Guidance (1)

 Ranges for year ending
December 31, 2022
LowHigh
Net income$28,500 $43,500 
Stock-based compensation22,500 21,500 
Depreciation and amortization of acquired intangible assets49,000 48,000 
Interest expense and other, net
36,000 35,000 
Acquisition, integration, and contested proxy and other legal and consulting costs (3)
9,500 5,500 
Income tax expense3,500 3,000 
Adjusted EBITDA (1)
$149,000 $156,500 

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

 Ranges for year ending
December 31, 2022
LowHigh
Net income $28,500 $43,500 
Stock-based compensation22,500 21,500 
Amortization of acquired intangible assets26,000 25,500 
Acquisition, integration, and contested proxy and other legal and consulting costs (3)
9,500 5,500 
Cash tax impact of adjustments to net income(2,000)(2,000)
Non-cash income tax (benefit) expense(500)(500)
Non-GAAP Net Income (1)
$84,000 $93,500 
Per diluted share:
Net income$0.58 $0.89 
Stock-based compensation0.46 0.44 
Amortization of acquired intangible assets0.53 0.51 
Acquisition, integration, and contested proxy and other legal and consulting costs (3)
0.19 0.11 
Cash tax impact of adjustments to net income(0.04)(0.04)
Non-cash income tax (benefit) expense(0.01)(0.01)
Non-GAAP Net Income per share — Diluted (1)
$1.71 $1.90 
Diluted weighted average shares outstanding49,084 49,084 


9


Notes to Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures
(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, and income tax expense. Interest expense and other, net primarily consists of interest expense, net. Acquisition and integration costs primarily relate to the acquisitions of Avantax Planning Partners and 1st Global.
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, 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.
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)The breakout of components cannot be determined on a forward-looking basis without unreasonable efforts.
(4)Any difference in the “per diluted share” amounts between this table and the condensed consolidated statements of operations 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.

10
Document

Exhibit 99.2
Blucora, Inc.
Supplemental Information
June 30, 2022
Table of Contents
 
Page
Consolidated Financial Information:
Condensed Consolidated Financial Results (Unaudited)
Reconciliation of Certain Non-GAAP Financial Measures to the Nearest Comparable GAAP Financial Measures
Segment Operating Metrics:



Blucora Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts. Rounding differences may exist.)
202020212022
FY 12/311Q2Q3Q4QFY 12/311Q2Q
Revenue:
Wealth Management$546,189 $154,491 $162,395 $169,135 $172,192 $658,213 $166,403 $162,669 
Tax Software208,763 123,892 91,917 5,039 6,139 226,987 141,150 94,214 
Total revenue754,952 278,383 254,312 174,174 178,331 885,200 307,553 256,883 
Operating expenses:
Cost of revenue:
Wealth Management385,962 108,623 113,910 120,641 121,119 464,293 119,874 113,644 
Tax Software12,328 5,578 4,429 2,323 3,228 15,558 9,426 6,873 
Total cost of revenue398,290 114,201 118,339 122,964 124,347 479,851 129,300 120,517 
Engineering and technology27,258 7,128 7,231 7,874 8,471 30,704 8,504 8,620 
Sales and marketing177,618 77,562 34,848 28,399 32,522 173,331 84,403 47,508 
General and administrative82,158 24,685 23,832 23,102 27,052 98,671 29,075 26,646 
Acquisition and integration31,085 8,103 18,169 2,241 4,285 32,798 1,666 (6,792)
Depreciation7,293 2,300 3,204 2,867 2,535 10,906 2,931 3,137 
Amortization of acquired intangible assets29,745 7,175 7,063 7,009 7,073 28,320 6,631 6,462 
Impairment of goodwill (1)
270,625 — — — — — — — 
Total operating expenses1,024,072 241,154 212,686 194,456 206,285 854,581 262,510 206,098 
Operating income (loss)(269,120)37,229 41,626 (20,282)(27,954)30,619 45,043 50,785 
Interest expense and other, net(31,304)(7,883)(8,024)(8,295)(7,878)(32,080)(7,841)(8,117)
Income (loss) before income taxes(300,424)29,346 33,602 (28,577)(35,832)(1,461)37,202 42,668 
Income tax benefit (expense)(42,331)(1,700)(1,994)774 12,138 9,218 (2,582)(3,243)
Net income (loss)$(342,755)$27,646 $31,608 $(27,803)$(23,694)$7,757 $34,620 $39,425 
Net income (loss) per share:
Basic$(7.14)$0.57 $0.65 $(0.57)$(0.49)$0.16 $0.71 $0.83 
Diluted$(7.14)$0.56 $0.64 $(0.57)$(0.49)$0.16 $0.70 $0.81 
Weighted average shares outstanding:
Basic47,978 48,261 48,508 48,707 48,834 48,578 48,513 47,582 
Diluted47,978 49,097 49,385 48,707 48,834 49,526 49,747 48,690 
____________________________
(1)In 2020, we recognized a $270.6 million goodwill impairment related to our Wealth Management reporting unit.












2


Blucora Condensed Consolidated Financial Results
(Unaudited, in thousands, except % and per share amounts. Rounding differences may exist.)
202020212022
FY 12/311Q2Q3Q4QFY 12/311Q2Q
GAAP Financial Results:
Segment revenue:
Wealth Management$546,189 $154,491 $162,395 $169,135 $172,192 $658,213 $166,403 $162,669 
Tax Software (1)
208,763 123,892 91,917 5,039 6,139 226,987 141,150 94,214 
Total revenue$754,952 $278,383 $254,312 $174,174 $178,331 $885,200 $307,553 $256,883 
Segment operating income: (2)
Wealth Management $72,195 $19,396 $21,396 $19,564 $21,856 $82,212 $16,421 $15,873 
Tax Software (1)
49,621 50,888 63,448 (13,864)(18,593)81,879 58,030 53,859 
Total segment operating income$121,816 $70,284 $84,844 $5,700 $3,263 $164,091 $74,451 $69,732 
Segment operating income as a % of segment revenue:
Wealth Management 13.2 %12.6 %13.2 %11.6 %12.7 %12.5 %9.9 %9.8 %
Tax Software (1)
23.8 %41.1 %69.0 %(275.1)%(302.9)%36.1 %41.1 %57.2 %
Total segment operating income as a % of segment revenue16.1 %25.2 %33.4 %3.3 %1.8 %18.5 %24.2 %27.1 %
Unallocated corporate-level general and administrative expenses (2)
$26,689 $5,694 $6,259 $6,499 $7,103 $25,555 $7,292 $7,680 
GAAP Net Income (Loss)$(342,755)$27,646 $31,608 $(27,803)$(23,694)$7,757 $34,620 $39,425 
GAAP Net Income (Loss) per share — Diluted$(7.14)$0.56 $0.64 $(0.57)$(0.49)$0.16 $0.70 $0.81 
Non-GAAP Financial Results: (3)
Adjusted EBITDA (3)
$95,127 $64,590 $78,585 $(799)$(3,840)$138,536 $67,159 $62,052 
Non-GAAP Net Income (Loss) (3)
$54,080 $50,952 $63,122 $(12,754)$(14,131)$87,189 $52,609 $47,992 
Non-GAAP Net Income (Loss) per share — Diluted (3)
$1.12 $1.04 $1.28 $(0.26)$(0.29)$1.76 $1.06 $0.99 
Net Leverage Ratio (3)
4.3x3.5x1.9x2.6x3.1x3.1x3.0x3.1x
Operating Free Cash Flow (3)
$8,077 $45,124 $38,603 $(30,960)$(46,212)$6,555 $42,612 $31,261 
____________________________
(1)Our Tax Software segment is highly seasonal with a significant portion of its annual revenue typically earned in the first two quarters of the fiscal 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.
(2)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, interest expense and other, net, or income taxes to the reportable segments. General and administrative costs are included in "Unallocated corporate-level expenses."
(3)Refer to the subsequent pages for reconciliations of these non-GAAP financial measures to their nearest comparable GAAP financial measures.

3


Blucora Reconciliation of Certain Non-GAAP Financial Measures to the Nearest Comparable GAAP Financial Measures (1) (2)
 202020212022
(Unaudited, in thousands except per share amounts. Rounding differences may exist.)FY 12/311Q2Q3Q4QFY 12/311Q2Q
Adjusted EBITDA (1)
Net income (loss) (2)
$(342,755)$27,646 $31,608 $(27,803)$(23,694)$7,757 $34,620 $39,425 
Stock-based compensation10,066 5,610 5,160 4,729 5,255 20,754 6,225 5,198 
Depreciation and amortization of acquired intangible assets
39,907 10,418 11,165 10,915 10,928 43,426 11,305 11,464 
Interest expense and other, net31,304 7,883 8,024 8,295 7,878 32,080 7,841 8,117 
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration22,785 1,803 6,669 541 1,385 10,398 (34)228 
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration8,300 6,300 11,500 1,700 2,900 22,400 1,700 (7,020)
Executive transition costs10,701 — — — — — — — 
Headquarters relocation costs1,863 — — — — — — — 
Contested proxy and other legal and consulting costs
— 3,230 2,465 1,598 3,646 10,939 2,920 1,397 
Impairment of goodwill270,625 — — — — — — — 
Income tax (benefit) expense42,331 1,700 1,994 (774)(12,138)(9,218)2,582 3,243 
Adjusted EBITDA(1)
$95,127 $64,590 $78,585 $(799)$(3,840)$138,536 $67,159 $62,052 
Non-GAAP Net Income (Loss) (1)
Net income (loss) (2)
$(342,755)$27,646 $31,608 $(27,803)$(23,694)$7,757 $34,620 $39,425 
Stock-based compensation10,066 5,610 5,160 4,729 5,255 20,754 6,225 5,198 
Amortization of acquired intangible assets
29,745 7,175 7,063 7,009 7,073 28,320 6,631 6,462 
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration22,785 1,803 6,669 541 1,385 10,398 (34)228 
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration8,300 6,300 11,500 1,700 2,900 22,400 1,700 (7,020)
Executive transition costs10,701 — — — — — — — 
Headquarters relocation costs1,863 — — — — — — — 
Contested proxy and other legal and consulting costs
— 3,230 2,465 1,598 3,646 10,939 2,920 1,397 
Non-capitalized debt issuance expenses3,687 — — — — — — — 
Impairment of goodwill270,625 — — — — — — — 
Gain on the sale of a business
(349)— — — — — — — 
Cash tax impact of adjustments to GAAP net income (loss)
(1,647)(543)(649)(331)(351)(1,874)(959)(353)
Non-cash income tax (benefit) expense41,059 (269)(694)(197)(10,345)(11,505)1,506 2,655 
Non-GAAP Net Income (Loss) (1)
$54,080 $50,952 $63,122 $(12,754)$(14,131)$87,189 $52,609 $47,992 
Non-GAAP Net Income (Loss) per share — Diluted (1) (3)
$1.12 $1.04 $1.28 $(0.26)$(0.29)$1.76 $1.06 $0.99 
Diluted weighted average shares outstanding (3)
48,244 49,097 49,385 48,707 48,834 49,526 49,747 48,690 
 









Notes to Reconciliations of Certain Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures on next page.
4


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

(1) We define Adjusted EBITDA as net income (loss), determined in accordance with GAAP, excluding (if applicable) the effects of stock-based compensation, depreciation and amortization of acquired intangible assets, interest expense and other, net, acquisition and integration costs, executive transition costs, headquarters relocation costs, contested proxy and other legal and consulting costs, impairment of goodwill, 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 acquisitions of Avantax Planning Partners 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, TX and Irving, TX 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 (if applicable) the effects of stock-based compensation, amortization of acquired intangible assets, acquisition and integration costs, executive transition costs, headquarters relocation costs, contested proxy and other legal and consulting costs, non-capitalized debt issuance expenses, impairment of goodwill, 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) See the Condensed Consolidated Statements of Operations on page 2.

(3) 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.
5


Blucora Reconciliation of Trailing Twelve Month ("TTM") Adjusted EBITDA (1) (2)
 202020212022
(Unaudited, in thousands. Rounding differences may exist.)TTM 4QTTM 1QTTM 2QTTM 3QTTM 4QTTM 1QTTM 2Q
Adjusted EBITDA (1) (2)
Net income (loss)
$(342,755)$385 $(17,652)$(19,249)$7,757 $14,731 $22,548 
Stock-based compensation10,066 16,877 18,133 18,345 20,754 21,369 21,407 
Depreciation and amortization of acquired intangible assets
39,907 40,157 42,237 42,786 43,426 44,313 44,612 
Interest expense and other, net31,304 33,052 35,788 32,120 32,080 32,038 32,131 
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration22,785 18,906 22,751 12,016 10,398 8,561 2,120 
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration8,300 14,600 26,100 28,800 22,400 17,800 (720)
Executive transition costs10,701 1,517 881 476 — — — 
Headquarter relocation costs1,863 1,147 410 — — — — 
Contested proxy and other legal and consulting costs
— 3,230 5,695 7,293 10,939 10,629 9,561 
Impairment of goodwill and an intangible asset270,625 — — — — — — 
Income tax (benefit) expense42,331 (23,489)38,044 22,014 (9,218)(8,336)(7,087)
Adjusted EBITDA(1)
$95,127 $106,382 $172,387 $144,601 $138,536 $141,105 $124,572 

Blucora Net Leverage Ratio (1) (3) (4)
 202020212022
(Unaudited, in thousands except Net Leverage Ratio. Rounding differences may exist.)4Q1Q2Q3Q4Q1Q2Q
Net Debt (3)
Senior Secured Credit Facility$563,156 $562,703 $562,250 $561,797 $561,344 $560,891 $560,438 
Less: Cash and cash equivalents150,125 191,803 232,409 184,926 134,824 144,222 171,297 
Net Debt (3)
$413,031 $370,900 $329,841 $376,871 $426,520 $416,669 $389,141 
Adjusted EBITDA (1) (2)
$95,127 $106,382 $172,387 $144,601 $138,536 $141,105 $124,572 
Net Leverage Ratio (1) (3) (4)
4.3 x3.5 x1.9 x2.6 x3.1 x3.0 x3.1 x
____________________________
(1) Non-GAAP measure using Adjusted EBITDA for the trailing twelve-month period. Adjusted EBITDA for the trailing twelve-month period is reconciled to the nearest comparable GAAP measure, net income (loss).
(2) For additional information on Adjusted EBITDA and its use as a non-GAAP measure, see page 5.
(3) We define Net Debt, a non-GAAP financial measure, as the outstanding principal of debt less cash and cash equivalents. We believe that the presentation of this non-GAAP financial measure provides useful information to investors because it is an important liquidity measurement that reflects our ability to service our debt.
(4) Net Leverage Ratio is calculated by dividing Net Debt by Adjusted EBITDA for the trailing twelve-month period.



6


Blucora Reconciliation of Operating Free Cash Flow (1)
 202020212022
(Unaudited, in thousands. Rounding differences may exist.)FY 12/311Q2Q3Q4QFY 12/311Q2Q
Net cash provided by (used in) operating activities$44,079 $53,722 $43,549 $(22,880)$(37,560)$36,831 $47,343 $38,320 
Purchases of property, equipment, and software(36,002)(8,598)(4,946)(8,080)(8,652)(30,276)(4,731)(7,059)
Operating Free Cash Flow (1)
$8,077 $45,124 $38,603 $(30,960)$(46,212)$6,555 $42,612 $31,261 
____________________________
(1) We define Operating Free Cash Flow, a non-GAAP financial measure, as net cash provided by (used in) operating activities less purchases of property, equipment, and software. We believe Operating Free Cash Flow is an important liquidity measure that reflects the cash generated by our businesses, after the purchases of property, equipment, and software, that can then be used for, among other things, strategic acquisitions and investments in the businesses, stock repurchases, and funding ongoing operations.
7


Wealth Management Operating Metrics
202020212022
(In thousands, except percentages. Rounding differences may exist.)FY 12/311Q2Q3Q4QFY 12/311Q2Q
Segment revenue$546,189 $154,491 $162,395 $169,135 $172,192 $658,213 $166,403 $162,669 
Less: Financial professional commission payout(379,543)(106,855)(111,708)(118,231)(118,560)(455,354)(116,704)(110,958)
Revenue Not Remitted to Financial Professionals (1)
$166,646 $47,636 $50,687 $50,904 $53,632 $202,859 $49,699 $51,711 
Payout Rate (2)
75.9 %74.4 %75.4 %75.5 %75.0 %75.1 %75.4 %75.5 %
Segment operating income (3)
$72,195 $19,396 $21,396 $19,564 $21,856 $82,212 $16,421 $15,873 
Segment operating income as a % of revenue13.2 %12.6 %13.2 %11.6 %12.7 %12.5 %9.9 %9.8 %
Segment operating income as a % of Segment Net Revenue43.3 %40.7 %42.2 %38.4 %40.8 %40.5 %33.0 %30.7 %
(In thousands, except percentages. Rounding differences may exist.)202020212022
Sources of RevenuePrimary DriversFY 12/311Q2Q3Q4QFY 12/311Q2Q
Financial professional-drivenAdvisory- Advisory asset levels$314,751 $91,119 $96,508 $103,540 $104,633 $395,800 $107,169 $104,155 
Commission- Transactions
- Asset levels
- Product mix