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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

  
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                          to                     
Commission File Number: 000-25131
https://cdn.kscope.io/ce632786ca2d3bdcc470f6421bbf1efa-bcor-20220630_g1.jpg
Blucora, Inc.
(Exact name of registrant as specified in its charter)
Delaware91-1718107
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
3200 Olympus Blvd, Suite 100, Dallas, Texas 75019
(Address of principal executive offices) (Zip Code)
(972870-6400
(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. ý Yes o No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  ý Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
ý
Accelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ý No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of August 2, 2022, 47,746,176 shares of the registrant’s Common Stock were outstanding.



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

Blucora, Inc. | Q2 2022 Form 10-Q 2


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“Form 10-Q”) contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Many of the forward-looking statements are located in Part I, Item 2 of this Form 10-Q under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “anticipates,” “believes,” “plans,” “expects,” “future,” “intends,” “may,” “will,” “would,” “could,” “should,” “estimates,” “predicts,” “potential,” “continues,” “target,” “outlook,” and similar terms and expressions, but the absence of these words does not mean that the statement is not forward-looking. 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 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;
Blucora, Inc. | Q2 2022 Form 10-Q 3


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.
Forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors that may cause our results, levels of activity, performance, achievements, and prospects to be materially different from those expressed or implied by such forward-looking statements. These risks, uncertainties, and other factors include, among others, the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as well as in our other filings with the SEC. All forward-looking statements speak only as of the date of this Form 10-Q. We do not undertake any obligation and do not intend to update or revise any forward-looking statement to reflect new information, events, or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events, except as required by law.




Blucora, Inc. | Q2 2022 Form 10-Q 4


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
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, net 20,351 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 
Commitments and contingencies (Note 8)
Stockholders’ equity:
Common stock, par value $0.0001 per share—900,000 shares authorized; 50,921 shares issued and 47,740 shares outstanding as of June 30, 2022; 50,137 shares issued and 48,831 shares outstanding at December 31, 2021
5 5 
Additional paid-in capital1,628,591 1,619,805 
Accumulated deficit(1,175,744)(1,249,789)
Treasury stock, at cost—3,181 shares as of June 30, 2022 and 1,306 shares as of December 31, 2021
(63,399)(28,399)
Total stockholders’ equity389,453 341,622 
Total liabilities and stockholders’ equity$1,099,087 $1,071,943 

See accompanying notes.
Blucora, Inc. | Q2 2022 Form 10-Q 5


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(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 


















See accompanying notes.
Blucora, Inc. | Q2 2022 Form 10-Q 6


BLUCORA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited) (In thousands)

Common stockAdditional paid-in capitalAccumulated deficitTreasury stock
SharesAmountSharesAmountTotal
Balance as of December 31, 202150,137 $5 $1,619,805 $(1,249,789)1,306 $(28,399)$341,622 
Common stock issued pursuant to stock incentive and employee stock purchase plans247 — 96 — — — 96 
Stock repurchases— — — — 1,645 (30,537)(30,537)
Stock-based compensation— — 4,641 — — — 4,641 
Tax payments from shares withheld for equity awards— — (1,569)— — — (1,569)
Net income— — — 34,620 — — 34,620 
Balance as of March 31, 202250,384 $5 $1,622,973 $(1,215,169)2,951 $(58,936)$348,873 
Common stock issued pursuant to stock incentive and employee stock purchase plans537 — 2,402 — — — 2,402 
Stock repurchases— — — — 230 (4,463)(4,463)
Stock-based compensation— — 3,683 — — — 3,683 
Tax payments from shares withheld for equity awards— — (467)— — — (467)
Net income— — — 39,425 — — 39,425 
Balance as of June 30, 202250,921 $5 $1,628,591 $(1,175,744)3,181 $(63,399)$389,453 
Common stockAdditional paid-in capitalAccumulated deficitTreasury stock
SharesAmountSharesAmountTotal
Balance as of December 31, 202049,483 $5 $1,598,230 $(1,257,546)1,306 $(28,399)$312,290 
Common stock issued pursuant to stock incentive and employee stock purchase plans132 — 63 — — — 63 
Stock-based compensation— — 5,520 — — — 5,520 
Tax payments from shares withheld for equity awards— — (865)— — — (865)
Net income— — — 27,646 — — 27,646 
Balance as of March 31, 202149,615 $5 $1,602,948 $(1,229,900)1,306 $(28,399)$344,654 
Common stock issued pursuant to stock incentive and employee stock purchase plans347 — 1,989 — — — 1,989 
Stock-based compensation— — 4,720 — — — 4,720 
Tax payments from shares withheld for equity awards— — (464)— — — (464)
Net income— — — 31,608 — — 31,608 
Balance as of June 30, 202149,962 $5 $1,609,193 $(1,198,292)1,306 $(28,399)$382,507 













See accompanying notes.
Blucora, Inc. | Q2 2022 Form 10-Q 7


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 







See accompanying notes.
Blucora, Inc. | Q2 2022 Form 10-Q 8


BLUCORA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Description of the Business
Blucora, Inc. (the “Company,” “Blucora,” “we,” “our,” or “us”) operates two primary businesses: the Wealth Management business and the digital Tax Software business.
Wealth Management
Our Wealth Management business consists of the operations of Avantax Wealth Management and Avantax Planning Partners (collectively, the “Wealth Management business” or the “Wealth Management segment”).
Avantax Wealth Management provides tax-focused wealth management solutions for financial professionals, tax professionals, certified public accounting (“CPA”) firms, and their clients. Avantax Wealth Management offers its services through its registered broker-dealer, registered investment advisor (“RIA”), and insurance agency subsidiaries and is a leading U.S. tax-focused independent broker-dealer. Avantax Wealth Management works with a nationwide network of financial professionals that operate as independent contractors. Avantax Wealth Management provides these financial professionals with an integrated platform of technical, practice, compliance, operations, sales, and product support tools that enable them to offer tax-advantaged planning, investing, and wealth management services to their clients.
Avantax Planning Partners is an in-house/employee-based RIA, insurance agency, and wealth management business that partners with CPA firms in order to provide their consumer and small business clients with holistic financial planning and advisory services, as well as retirement plan solutions through Avantax Retirement Plan Services. Avantax Planning Partners formerly operated as Honkamp Krueger Financial Services, Inc. (“HKFS”). We acquired HKFS in July 2020 (the “HKFS Acquisition”) and subsequently rebranded it in order to create tighter brand alignment through one common and recognizable brand. Any reference to Avantax Planning Partners in this Form 10-Q is inclusive of HKFS.
Tax Software
Our Tax Software business consists of the operations of TaxAct, Inc. (“TaxAct,” the “Tax Software business,” or the “Tax Software segment”) and provides digital tax preparation services and ancillary services for consumers, small business owners, and tax professionals through its website www.TaxAct.com and its mobile applications.

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. During the third and fourth quarters of the fiscal year, the Tax Software segment typically reports losses because revenue from the segment is minimal while core operating expenses continue.
Segments
We have two reportable segments: (1) the Wealth Management segment and (2) the Tax Software segment.
Note 2: Summary of Significant Accounting Policies
Interim Financial Information
The accompanying unaudited condensed consolidated financial statements have been prepared by us under the rules and regulations of the SEC for interim financial reporting. These condensed consolidated financial statements are unaudited and, in management’s opinion, include all adjustments, consisting of normal recurring adjustments and accruals, necessary for a fair presentation of the condensed consolidated financial position, results of operations, and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in conformity with United States generally accepted accounting principles (GAAP”) have been omitted in accordance with the rules and regulations of the SEC. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2021. Interim results are not necessarily indicative of results for a full year.
Blucora, Inc. | Q2 2022 Form 10-Q 9


A summary of our significant accounting policies is included in Note 2 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no significant changes in our significant accounting policies since December 31, 2021.
Note 3: Segment Information and Revenue
We have two reportable segments: (1) the Wealth Management segment and (2) the Tax Software segment. Our Chief Executive Officer is the chief operating decision maker and reviews financial information presented on a disaggregated basis. This information is used for purposes of allocating resources and evaluating financial performance.
We do not allocate certain general and administrative costs (including personnel and overhead costs), stock-based compensation, acquisition and integration costs, depreciation, amortization of acquired intangible assets, or contested proxy and other legal and consulting costs to the reportable segments. Such amounts are reflected under the heading “Corporate-level activity.” In addition, we do not allocate interest expense and other, net, or income taxes to the reportable segments. We do not report assets or capital expenditures by segment to the chief operating decision maker.
Information on reportable segments currently presented to our chief operating decision maker and a reconciliation to consolidated net income are presented below (in thousands):
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 
Blucora, Inc. | Q2 2022 Form 10-Q 10


Wealth Management Revenue Recognition
Wealth management revenue primarily consists of advisory revenue, commission revenue, asset-based revenue, and transaction and fee revenue.
Revenues by major category within the Wealth Management segment and the timing of Wealth Management revenue recognition was as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Recognized upon transaction:
Commission$17,881 $21,076 $38,505 $43,443 
Transaction and fee1,262 1,192 2,506 2,566 
Total revenue recognized upon transaction$19,143 $22,268 $41,011 $46,009 
Recognized over time:
Advisory$104,155 $96,508 $211,324 $187,627 
Commission24,954 30,626 51,985 60,793 
Asset-based6,964 5,526 12,627 10,855 
Transaction and fee7,453 7,467 12,125 11,602 
Total revenue recognized over time$143,526 $140,127 $288,061 $270,877 
Total Wealth Management revenue:
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 Revenue Recognition
We generate Tax Software revenue from the sale of digital tax preparation services, packaged tax preparation software, ancillary services, and multiple element arrangements that may include a combination of these items.
Revenues by major category within the Tax Software segment and the timing of Tax Software revenue recognition was as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Recognized upon transaction:
Consumer$90,963 $88,846 $216,224 $199,413 
Professional2,164 2,128 15,948 14,255 
Total revenue recognized upon transaction$93,127 $90,974 $232,172 $213,668 
Recognized over time:
Consumer$64 $ $64 $ 
Professional1,023 943 3,128 2,141 
Total revenue recognized over time$1,087 $943 $3,192 $2,141 
Total Tax Software revenue:
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 
Note 4: Asset Acquisitions
During the six months ended June 30, 2022, we completed acquisitions in our Wealth Management business that met the criteria to be accounted for as asset acquisitions. Total initial purchase consideration, including acquisition costs and fixed deferred payments, was $2.2 million. This purchase consideration was allocated to the
Blucora, Inc. | Q2 2022 Form 10-Q 11


acquired assets, primarily customer relationship intangibles. Customer relationship intangibles are amortized on a straight-line basis over an amortization period of 15 years.
We are subject to variable contingent consideration payments related to our asset acquisitions that are not recognized as a liability on our condensed consolidated balance sheets until all contingencies related to the achievement of future financial targets are resolved and the consideration is paid. As of June 30, 2022, the maximum future fixed and contingent payments associated with all prior asset acquisitions were $19.2 million, with specified payment dates from 2022 through 2026.
Note 5: Debt
Our debt consisted of the following as of the periods indicated in the table below (in thousands):
June 30,
2022
December 31,
2021
Senior Secured Credit Facility
Principal outstanding$560,438 $561,344 
Unamortized debt issuance costs(2,714)(3,371)
Unamortized debt discount(2,436)(3,027)
Net carrying value$555,288 $554,946 
In May 2017, we entered into a credit agreement (as the same has been amended, the “Credit Agreement”) with a syndicate of lenders that provides for a term loan facility (the “Term Loan”) and a revolving line of credit (including a letter of credit sub-facility) (the “Revolver”) for working capital, capital expenditures, and general business purposes (as amended, the “Senior Secured Credit Facility”). The Term Loan has a maturity date of May 22, 2024 (the “Term Loan Maturity Date”). On April 26, 2021, to ensure adequate liquidity and flexibility to support the Company’s growth, we entered into Amendment No. 5 to the Credit Agreement (the “Credit Agreement Amendment”). Pursuant to the Credit Agreement Amendment, the Credit Agreement was amended to, among other things, refinance the existing $65.0 million Revolver and add $25.0 million of additional revolving credit commitments, for an aggregate principal amount of $90.0 million in revolving credit commitments (the “New Revolver”). The New Revolver has a maturity date of February 21, 2024 (the “New Revolver Maturity Date”).
The Company capitalized approximately $0.5 million of debt issuance costs paid in connection with the Credit Agreement Amendment, which are included in other long-term assets on the Company’s condensed consolidated balance sheets as part of the total deferred financing costs associated with the New Revolver.
As of June 30, 2022, the Senior Secured Credit Facility provided for up to $765.0 million of borrowings and consisted of a committed $90.0 million under the New Revolver and a $675.0 million Term Loan. As of June 30, 2022, we had $560.4 million in principal amount outstanding under the Term Loan and no amounts outstanding under the New Revolver. Based on aggregate loan commitments as of June 30, 2022, approximately $90.0 million was available for future borrowings under the Senior Secured Credit Facility, subject to customary terms and conditions.
The Company is required to make mandatory annual prepayments on the Term Loan in certain circumstances, including in the event that the Company generates Excess Cash Flow (as defined in the Credit Agreement) in a given fiscal year. The Credit Agreement permits the Company to voluntarily prepay the Term Loan without premium or penalty. In addition, the Company is required to make principal amortization payments on the Term Loan quarterly on the last business day of each March, June, September, and December, in an amount equal to approximately $0.5 million (subject to reduction for prepayments), with the remaining principal amount of the Term Loan due on the Term Loan Maturity Date. On August 5, 2022, and as provided for within our Senior Secured Credit Facility, we voluntarily prepaid $35.0 million of principal outstanding under our Term Loan. We also settled the accrued and unpaid interest on the applicable principal outstanding up to, but not including, the date of prepayment.
The interest rate on the Term Loan is variable at the London Interbank Offered Rate (subject to a floor of 1.0%), plus the applicable interest rate margin of 4.0% for Eurodollar Rate Loans (as defined in the Credit Agreement) and 3.0% for ABR Loans (as defined in the Credit Agreement). As of June 30, 2022, the applicable interest rate on the Term Loan was 5.0%. Depending on the Consolidated First Lien Net Leverage Ratio (as defined in the Credit Agreement), the applicable interest rate margin on the New Revolver ranges from 2.0% to 2.5% for Eurodollar Rate Loans and 1.0% to 1.5% for ABR Loans. The Company is required to pay a commitment fee on the undrawn commitment under the New Revolver in a percentage that is dependent on the Consolidated First Lien Net
Blucora, Inc. | Q2 2022 Form 10-Q 12


Leverage Ratio that ranges from 0.35% to 0.4%. Interest is payable at the end of each interest period, typically quarterly.
Obligations under the Senior Secured Credit Facility are guaranteed by certain of the Company’s subsidiaries and secured by substantially all the assets of the Company and certain of its subsidiaries (including certain subsidiaries acquired in the acquisition of Avantax Planning Partners and certain other material subsidiaries). The Senior Secured Credit Facility includes financial and operating covenants (including a Consolidated Total Net Leverage Ratio), which are set forth in detail in the Credit Agreement.
Pursuant to the Credit Agreement Amendment, if the Company’s usage of the New Revolver exceeds 30% of the aggregate commitments under the New Revolver on the last day of any calendar quarter, the Company shall not permit the Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement) to exceed (i) 4.75 to 1.00 for the period beginning on April 1, 2021 and ending on December 31, 2021, (ii) 4.25 to 1.00 for the period beginning on January 1, 2022 and ending on September 30, 2022, (iii) 4.00 to 1.00 for the period beginning on October 1, 2022 and ending on December 31, 2022, and (iv) 3.50 to 1.00 for the period beginning on January 1, 2023 and ending on February 21, 2024.
Except as described above, the New Revolver has substantially the same terms as the previous Revolver, including certain covenants and events of default. The Company was in compliance with the debt covenants of the Senior Secured Credit Facility as of June 30, 2022.
Note 6: Leases
Our leases are primarily related to office space and are classified as operating leases. Operating lease cost, net of sublease income, is recognized in “General and administrative” expense for those net costs related to leases used in our operations and within “Acquisition and integration” expense for those net costs related to an unoccupied lease assumed in a previous acquisition on the condensed consolidated statements of operations.
Operating lease cost, net of sublease income, and cash paid on operating lease liabilities for the three and six months ended June 30, 2022 and 2021 were as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Fixed lease cost$947 $1,099 $1,920 $2,253 
Variable lease cost363 102 765 245 
Operating lease cost, before sublease income1,310 1,201 2,685 2,498 
Sublease income(234)(116)(468)(232)
Total operating lease cost, net of sublease income$1,076 $1,085 $2,217 $2,266 
Additional lease information:
Cash paid on operating lease liabilities$1,262 $228 $2,491 $445 
Lease liabilities obtained from new right-of-use assets$128 $93 $128 $93 
Right-of-use assets and operating lease liabilities were recorded on the condensed consolidated balance sheets as follows (in thousands):
June 30, 2022December 31, 2021
Right-of-use assets, net$19,879 $20,466 
Current lease liabilities$5,025 $4,896 
Long-term lease liabilities31,795 33,267 
Total operating lease liabilities$36,820 $38,163 
Weighted-average remaining lease term (in years)9.910.3
Weighted-average discount rate5.4 %5.4 %
Blucora, Inc. | Q2 2022 Form 10-Q 13


The maturities of our operating lease liabilities as of June 30, 2022 were as follows (in thousands):
Undiscounted cash flows:
Remainder of 2022$2,583 
20235,226 
20245,121 
20255,023 
20264,193 
Thereafter26,130 
Total undiscounted cash flows48,276 
Imputed interest(11,456)
Present value of cash flows$36,820 
Note 7: Balance Sheet Components
Prepaid expenses and other current assets consisted of the following (in thousands):
June 30, 2022December 31, 2021
Prepaid expenses$12,260 $13,138 
Other current assets5,437 5,338 
Total prepaid expenses and other current assets$17,697 $18,476 
Accrued expenses and other current liabilities consisted of the following (in thousands):
June 30, 2022December 31, 2021
Salaries and related benefit expenses$17,151 $26,417 
HKFS Contingent Consideration liability (1)
22,980 28,300 
Accrued legal costs1,512 2,871 
Accrued vendor and advertising costs3,337 3,777 
Accrued taxes5,495  
Other4,232 4,313 
Total accrued expenses and other current liabilities$54,707 $65,678 
__________________________
(1)For more information on the Company’s contingent liabilities, see "Note 8—Commitments and Contingencies."
Note 8: Commitments and Contingencies
HKFS Contingent Consideration Liability
On July 1, 2020, we closed the acquisition of Avantax Planning Partners, formerly “HKFS”, for an upfront cash purchase price of $104.4 million. The purchase price was subject to variable contingent consideration, or earn-out payments (the “HKFS Contingent Consideration”) totaling a maximum of $60.0 million.
The HKFS Contingent Consideration to be paid is determined based on advisory asset levels and the achievement of certain performance goals (i) for the period beginning July 1, 2020 and ending June 30, 2021 and (ii) for the period beginning July 1, 2021 and ending June 30, 2022. Pursuant to the Stock Purchase Agreement, dated as of January 6, 2020, by and among the Company, HKFS, the selling stockholders named therein (the “Sellers”), and JRD Seller Representative, LLC, as the Sellers’ representative (as amended on April 7, 2020, June 30, 2020, and June 29, 2021) (the “HKFS Purchase Agreement”), the maximum aggregate amount that we would be required to pay for each earn-out period is $30.0 million. If the asset market values on the applicable measurement date fall below certain specified thresholds, no payment of consideration is owed to the Sellers for such period.
Based on advisory asset levels and the achievement of performance goals for the first earn-out period, we paid the full $30.0 million to the Sellers in the third quarter of 2021. Based on ending advisory asset levels and the achievement of performance goals specified in the HKFS Purchase Agreement, the fair value of the HKFS Contingent Consideration for the second earn-out period was $23.0 million as of June 30, 2022 and is expected to
Blucora, Inc. | Q2 2022 Form 10-Q 14


be paid in the third quarter of 2022. For additional information on the valuation of the HKFS Contingent Consideration liability, see "Note 9—Fair Value Measurements."
Litigation
From time to time, we are subject to various legal proceedings, regulatory matters or fines, or claims that arise in the ordinary course of business. We accrue a liability when management believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Although we believe that resolving such claims, individually or in aggregate, will not have a material adverse impact on our financial statements, these matters are subject to inherent uncertainties.
We are not currently a party to any such matters for which we have recognized a material liability on our condensed consolidated balance sheet as of June 30, 2022.
We have entered into indemnification agreements in the ordinary course of business with our officers and directors. Pursuant to these agreements, we may be obligated to advance payment of legal fees and costs incurred by the defendants pursuant to our obligations under these indemnification agreements and applicable Delaware law.
Note 9: Fair Value Measurements
Certain of our assets and liabilities are carried at fair value and are valued using inputs that are classified in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs, other than Level 1, or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data and reflect our own assumptions.
Assets and Liabilities Measured on a Recurring Basis
The fair value hierarchy of our financial assets and liabilities carried at estimated fair value and measured on a recurring basis were as follows (in thousands):
  Fair value measurements at the reporting date using
 June 30, 2022Quoted prices in
active markets
using identical 
assets
(Level 1)
Significant other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Cash equivalents: money market and other funds
$4,302 $4,302 $ $ 
Deferred compensation assets2,554 2,554   
Total assets at fair value$6,856 $6,856 $ $ 
HKFS Contingent Consideration liability
$22,980 $ $ $22,980 
Deferred compensation liabilities2,554 2,554   
Total liabilities at fair value$25,534 $2,554 $ $22,980 
  Fair value measurements at the reporting date using
 December 31, 2021Quoted prices in
active markets
using identical 
assets
(Level 1)
Significant other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Cash equivalents: money market and other funds
$4,293 $4,293 $ $