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Blucora, Inc. – ‘8-K’ for 7/27/17 – ‘EX-99.1’

On:  Thursday, 7/27/17, at 6:51am ET   ·   For:  7/27/17   ·   Accession #:  1068875-17-55   ·   File #:  0-25131

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 7/27/17  Blucora, Inc.                     8-K:2,9     7/27/17    3:1.5M

Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                      HTML     22K 
 2: EX-99.1     Miscellaneous Exhibit                               HTML    233K 
 3: EX-99.2     Miscellaneous Exhibit                               HTML    297K

EX-99.1   —   Miscellaneous Exhibit

This exhibit is an HTML Document rendered as filed.  [ Alternative Formats ]

  Exhibit  


Exhibit 99.1
 blucoragraphica07.jpg
Blucora Announces Second Quarter 2017 Results
Continued Business Momentum with Double-Digit Revenue Growth and Strengthened Financial Position

IRVING, TX — July 27, 2017 — Blucora, Inc. (NASDAQ: BCOR), a leading provider of technology-enabled financial solutions to consumers, small businesses and tax professionals, today announced financial results for the second quarter ended June 30, 2017.
Second Quarter Highlights and Recent Developments

•
Increased revenue and operating income by 16% and 34%, respectively, year-over-year
•
HD Vest achieved record levels in AUA of $41.4 billion and AUM of $11.6 billion
•
Grew TaxAct revenue and segment income by 16% for the six months ending June 30, 2017 vs. prior-year period
•
Achieved 2.7x net leverage ratio following successful refinancing and $35 million in net debt reduction
•
Executed agreement with new clearing partner at HD Vest

“Blucora continued its positive momentum in the second quarter, with strong double-digit growth in revenue and segment income across both businesses, and achieved its stated net leverage goal,” said John Clendening, Blucora’s President and Chief Executive Officer. “HD Vest set new records in several categories, including total assets under administration (AUA), fee-based assets under management (AUM) and AUM as a percentage of AUA. TaxAct completed a strong tax season, as expected, and has turned its attention to enhancing its competitive positioning for next season.”

"In addition to our strong performance in the second quarter, I am pleased to announce today that HD Vest has selected Fidelity Clearing & Custody Solutions as its new clearing provider. We believe this relationship, which is expected to go into effect in mid-2018, will provide new capabilities, enable a better advisor experience, and allow us to capture significant financial benefits over the long-term.”

Summary Financial Performance: Q2 2017
($ in millions except per share amounts)
 
Q2
 
Q2
 
 
 
2017
 
2016
 
Change
Revenue
$
139.2

 
$
120.1

 
16
%
Wealth Management
$
85.3

 
$
76.1

 
12
%
Tax Preparation
$
53.9

 
$
44.0

 
22
%
Segment Income
$
48.9

 
$
39.7

 
23
%
Wealth Management
$
12.4

 
$
9.9

 
25
%
Tax Preparation
$
36.5

 
$
29.8

 
23
%
Unallocated Corporate Operating Expenses
$
(6.5
)
 
$
(4.5
)
 
45
%
GAAP:
 
 
 
 
 
Operating Income
$
30.0

 
$
22.4

 
34
%
Net Income (Loss) Attributable to Blucora, Inc.
$
3.3

 
$
(14.4
)
 
123
%
Diluted Net Income (Loss) Per Share Attributable to Blucora, Inc. (EPS)
$
0.07

 
$
(0.34
)
 
121
%
Non-GAAP:
 
 
 
 
 
Adjusted EBITDA
$
42.5

 
$
35.3

 
20
%
Net Income
$
32.9

 
$
23.4

 
41
%
Diluted Net Income Per Share (EPS)
$
0.70

 
$
0.55

 
27
%
See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.





Third Quarter and Full Year 2017 Outlook
For the third quarter of 2017, the Company expects revenues to be between $88.8 million and $91.3 million, GAAP net loss attributable to Blucora, Inc. to be between $18.7 million and $14.8 million, or $(0.42) to $(0.33) per diluted share, Adjusted EBITDA to be between $(2.9) million and $0.9 million, and Non-GAAP net loss to be between $10.9 million and $6.3 million, or $(0.24) to $(0.14) per diluted share.
For the full year 2017, the Company expects revenues to be between $500.0 million and $506.5 million, GAAP net income (loss) attributable to Blucora, Inc. to be between $(3.8) million and $4.6 million, or $(0.09) to $0.10 per diluted share, Adjusted EBITDA to be between $94.1 million and $102.3 million, and Non-GAAP net income to be between $58.7 million and $67.8 million, or $1.25 to $1.45 per diluted share.
The third quarter and fiscal 2017 outlook for GAAP net income or loss attributable to Blucora assumes an estimated tax rate of approximately 15%. Our actual tax rate may differ significantly from this estimated tax rate due to our projected near break even pre-tax income, and the adoption of Accounting Standards Update No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Accounting (“ASU 2016-09”). In addition, our GAAP net income or loss attributable to Blucora outlook excludes any impact to tax expense for discrete items, which are affected by ASU 2016-09, and variable stock-based compensation related to grants to non-employee advisors, and including these items in our actual results when they occur may cause our actual results to differ significantly from the outlook provided.
Conference Call and Webcast
A conference call and live webcast will be held today at 8:30 a.m. Eastern Time during which the Company will further discuss second quarter results, its outlook for the third quarter and full year 2017 and other business matters. We will also provide the prepared remarks for the conference call along with supplemental financial information to our results on the Investor Relations section of the Blucora corporate website at http://www.blucora.com prior to the call. The supplemental financial information has also been filed with the SEC on Form 8-K. A replay of the call be available on our website.
About Blucora®
Blucora, Inc. (NASDAQ: BCOR) is a leading provider of technology-enabled financial solutions to consumers, small businesses and tax professionals. Our products and services in tax preparation and wealth management, through TaxAct and HD Vest, respectively, help consumers manage their financial lives. TaxAct is an affordable digital tax preparation solution for individuals, business owners and tax professionals. HD Vest Financial Services ® supports an independent network of tax professionals who provide comprehensive financial planning solutions. For more information on Blucora or its businesses, please visit www.blucora.com.
Source: Blucora
Blucora Contact:
Bill Michalek (972) 870-6463
VP, Investor Relations
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: risks associated with the Company’s strategic transformation and the successful execution of its strategic initiatives, operating plans and marketing strategies; general economic, political, industry, and market conditions; the Company’s ability to attract and retain productive advisors; the Company’s ability to successfully make technology enhancements and introduce new products and services; information technology and cybersecurity risks; the effect of current, pending and future legislation, regulation and regulatory actions, such as the new Department of Labor rule and any changes in tax laws; dependence on third parties to distribute products and services; litigation risks; the Company’s ability to hire, retain and motivate key employees; the Company’s ability to protect its intellectual property; and financing risks, including risks related to the Company’s existing debt obligations. A more detailed description of these and certain other factors that could affect actual results is included in the Company’s filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of this release.






Blucora, Inc.
Preliminary Condensed Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands, except per share data)
 
Three months ended June 30,
 
Six months ended June 30,
 
2017
 
2016
 
2017
 
2016
Revenue:
 
 
 
 
 
 
 
Wealth management services revenue
$
85,296

 
$
76,117

 
$
167,963

 
$
153,408

Tax preparation services revenue
53,866

 
43,991

 
153,574

 
132,465

Total revenue
139,162

 
120,108

 
321,537

 
285,873

Operating expenses:
 
 
 
 
 
 
 
Cost of revenue:
 
 
 
 
 
 
 
Wealth management services cost of revenue
56,963

 
51,023

 
112,837

 
103,292

Tax preparation services cost of revenue
2,411

 
2,023

 
6,229

 
5,230

Amortization of acquired technology
47

 
49

 
95

 
716

Total cost of revenue (1)
59,421

 
53,095

 
119,161

 
109,238

Engineering and technology (1)
4,242

 
3,959

 
8,990

 
8,254

Sales and marketing (1)
22,296

 
19,913

 
71,294

 
63,750

General and administrative (1)
13,715

 
11,508

 
27,198

 
24,261

Depreciation
873

 
963

 
1,813

 
1,938

Amortization of other acquired intangible assets
8,289

 
8,316

 
16,577

 
16,632

Restructuring (1)
331

 
—

 
2,620

 
—

Total operating expenses
109,167

 
97,754

 
247,653

 
224,073

Operating income
29,995

 
22,354

 
73,884

 
61,800

Other loss, net (2)
(24,200
)
 
(10,916
)
 
(33,908
)
 
(18,430
)
Income from continuing operations before income taxes
5,795

 
11,438

 
39,976

 
43,370

Income tax expense
(2,315
)
 
(5,793
)
 
(5,786
)
 
(17,436
)
Income from continuing operations
3,480

 
5,645

 
34,190

 
25,934

Discontinued operations, net of income taxes
—

 
(19,975
)
 
—

 
(17,453
)
Net income (loss)
3,480

 
(14,330
)
 
34,190

 
8,481

Net income attributable to noncontrolling interests
(176
)
 
(115
)
 
(302
)
 
(259
)
Net income (loss) attributable to Blucora, Inc.
$
3,304

 
$
(14,445
)
 
$
33,888

 
$
8,222

Net income (loss) per share attributable to Blucora, Inc. - basic:
 
 
 
 
 
 
 
Continuing operations
$
0.08

 
$
0.13

 
$
0.79

 
$
0.62

Discontinued operations
—

 
(0.48
)
 
—

 
(0.42
)
Basic net income (loss) per share
$
0.08

 
$
(0.35
)
 
$
0.79

 
$
0.20

Net income (loss) per share attributable to Blucora, Inc. - diluted:
 
 
 
 
 
 
 
Continuing operations
$
0.07

 
$
0.13

 
$
0.73

 
$
0.61

Discontinued operations
—

 
(0.47
)
 
—

 
(0.41
)
Diluted net income (loss) per share
$
0.07

 
$
(0.34
)
 
$
0.73

 
$
0.20

Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
43,644

 
41,405

 
42,895

 
41,288

Diluted
46,937

 
42,298

 
46,182

 
41,954

(1) Stock-based compensation expense was allocated among the following captions (in thousands):
 
Three months ended June 30,
 
Six months ended June 30,
 
2017
 
2016
 
2017
 
2016
Cost of revenue
$
88

 
$
23

 
$
134

 
$
65

Engineering and technology
224

 
322

 
509

 
733

Sales and marketing
581

 
426

 
1,272

 
1,027

General and administrative
1,844

 
2,252

 
3,387

 
5,427

Restructuring
538

 
—

 
981

 
—

Total stock-based compensation expense
$
3,275

 
$
3,023

 
$
6,283

 
$
7,252

(2) Other loss, net consisted of the following (in thousands):
 
Three months ended June 30,
 
Six months ended June 30,
 
2017
 
2016
 
2017
 
2016
Interest income
$
(25
)
 
$
(11
)
 
$
(45
)
 
$
(36
)
Interest expense
5,529

 
8,381

 
11,965

 
17,572

Amortization of debt issuance costs
327

 
417

 
714

 
1,027

Accretion of debt discounts
755

 
1,094

 
1,840

 
2,500

(Gain) loss on debt extinguishment
17,801

 
997

 
19,581

 
(2,846
)
Other
(187
)
 
38

 
(147
)
 
213

Other loss, net
$
24,200

 
$
10,916

 
$
33,908

 
$
18,430






Blucora, Inc.
Preliminary Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
 
June 30,
2017
 
December 31,
2016
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
78,312

 
$
51,713

Cash segregated under federal or other regulations
799

 
2,355

Available-for-sale investments
—

 
7,101

Accounts receivable, net of allowance
7,254

 
10,209

Commissions receivable
15,563

 
16,144

Other receivables
432

 
4,004

Prepaid expenses and other current assets, net
7,041

 
6,321

Total current assets
109,401

 
97,847

Long-term assets:
 
 
 
Property and equipment, net
8,677

 
10,836

Goodwill, net
548,890

 
548,741

Other intangible assets, net
345,521

 
362,178

Other long-term assets
2,677

 
3,057

Total long-term assets
905,765

 
924,812

Total assets
$
1,015,166

 
$
1,022,659

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
3,741

 
$
4,536

Commissions and advisory fees payable
16,143

 
16,587

Accrued expenses and other current liabilities
21,484

 
18,528

Deferred revenue
4,753

 
12,156

Current portion of long-term debt, net
2,560

 
2,560

Total current liabilities
48,681

 
54,367

Long-term liabilities:
 
 
 
Long-term debt, net
353,848

 
248,221

Convertible senior notes, net
—

 
164,176

Deferred tax liability, net
58,905

 
111,126

Deferred revenue
759

 
1,849

Other long-term liabilities
8,628

 
10,205

Total long-term liabilities
422,140

 
535,577

Total liabilities
470,821

 
589,944

 
 
 
 
Redeemable noncontrolling interests
15,998

 
15,696

 
 
 
 
Stockholders’ equity:
 
 
 
Common stock
4

 
4

Additional paid-in capital
1,535,858

 
1,510,152

Accumulated deficit
(1,007,325
)
 
(1,092,756
)
Accumulated other comprehensive loss
(190
)
 
(381
)
Total stockholders’ equity
528,347

 
417,019

Total liabilities and stockholders’ equity
$
1,015,166

 
$
1,022,659






Blucora, Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
 
Six months ended June 30,
 
2017
 
2016
Operating Activities:
 
 
 
Net income
$
34,190

 
$
8,481

Less: Discontinued operations, net of income taxes
—

 
(17,453
)
Net income from continuing operations
34,190

 
25,934

Adjustments to reconcile net income from continuing operations to net cash from operating activities:
 
 
 
Stock-based compensation
5,302

 
7,252

Depreciation and amortization of acquired intangible assets
18,865

 
19,597

Restructuring (non-cash)
1,402

 
—

Deferred income taxes
(681
)
 
(8,806
)
Amortization of premium on investments, net
10

 
155

Amortization of debt issuance costs
714

 
1,027

Accretion of debt discounts
1,840

 
2,500

(Gain) loss on debt extinguishment
19,581

 
(2,846
)
Revaluation of acquisition-related contingent consideration liability
—

 
391

Other
—

 
13

Cash provided (used) by changes in operating assets and liabilities:
 
 
 
Accounts receivable
2,956

 
1,395

Commissions receivable
581

 
1,520

Other receivables
2,544

 
19,460

Prepaid expenses and other current assets
(545
)
 
4,870

Other long-term assets
341

 
95

Accounts payable
(795
)
 
(1,491
)
Commissions and advisory fees payable
(444
)
 
(1,980
)
Deferred revenue
(8,493
)
 
(4,257
)
Accrued expenses and other current and long-term liabilities
3,768

 
26,057

Net cash provided by operating activities from continuing operations
81,136

 
90,886

Investing Activities:
 
 
 
Business acquisition, net of cash acquired
—

 
(1,788
)
Purchases of property and equipment
(1,911
)
 
(1,528
)
Proceeds from sales of investments
249

 
—

Proceeds from maturities of investments
7,252

 
4,000

Purchases of investments
(409
)
 
(659
)
Net cash provided by investing activities from continuing operations
5,181

 
25

Financing Activities:
 
 
 
Proceeds from credit facility
367,212

 
—

Payments on convertible notes
(172,827
)
 
(20,667
)
Payments on credit facility
(275,000
)
 
(60,000
)
Proceeds from stock option exercises
23,996

 
1,142

Proceeds from issuance of stock through employee stock purchase plan
662

 
562

Tax payments from shares withheld for equity awards
(5,267
)
 
(901
)
Contingent consideration payments for business acquisition
(946
)
 
—

Net cash used by financing activities from continuing operations
(62,170
)
 
(79,864
)
Net cash provided by continuing operations
24,147

 
11,047

 
 
 
 
Net cash provided by operating activities from discontinued operations
—

 
14,198

Net cash provided (used) by investing activities from discontinued operations
1,028

 
(970
)
Net cash used by financing activities from discontinued operations
—

 
(7,000
)
Net cash provided by discontinued operations
1,028

 
6,228

 
 
 
 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
43

 
(7
)
Net increase in cash, cash equivalents, and restricted cash
25,218

 
17,268

Cash, cash equivalents, and restricted cash, beginning of period
54,868

 
59,830

Cash, cash equivalents, and restricted cash, end of period
$
80,086

 
$
77,098






Blucora, Inc.
Preliminary Segment Information
(Unaudited)
(Amounts in thousands)
 
Three months ended June 30,
 
Six months ended June 30,
 
2017
 
2016
 
2017
 
2016
Revenue:
 
 
 
 
 
 
 
Wealth Management (1)
$
85,296

 
$
76,117

 
$
167,963

 
$
153,408

Tax Preparation (1)
53,866

 
43,991

 
153,574

 
132,465

Total revenue
139,162

 
120,108

 
321,537

 
285,873

Operating income:
 
 
 
 
 
 
 
Wealth Management
12,406

 
9,924

 
24,259

 
20,830

Tax Preparation
36,515

 
29,796

 
89,648

 
77,369

Corporate-level activity (2)
(18,926
)
 
(17,366
)
 
(40,023
)
 
(36,399
)
Total operating income
29,995

 
22,354

 
73,884

 
61,800

Other loss, net
(24,200
)
 
(10,916
)
 
(33,908
)
 
(18,430
)
Income tax expense
(2,315
)
 
(5,793
)
 
(5,786
)
 
(17,436
)
Discontinued operations, net of income taxes
—

 
(19,975
)
 
—

 
(17,453
)
Net income (loss)
$
3,480

 
$
(14,330
)
 
$
34,190

 
$
8,481

(1) Revenues by major category within each segment are presented below (in thousands):
 
Three months ended June 30,
 
Six months ended June 30,
 
2017
 
2016
 
2017
 
2016
Wealth Management:
 
 
 
 
 
 
 
Commission
$
38,154

 
$
35,252

 
$
77,749

 
$
72,108

Advisory
35,914

 
31,522

 
$
69,490

 
63,054

Asset-based
6,784

 
5,395

 
$
12,750

 
11,213

Transaction and fee
4,444

 
3,948

 
$
7,974

 
7,033

Total Wealth Management revenue
$
85,296

 
$
76,117

 
$
167,963

 
$
153,408

Tax Preparation:
 
 
 
 
 
 
 
Consumer
$
51,848

 
$
42,257

 
$
140,090

 
$
119,728

Professional
2,018

 
1,734

 
13,484

 
12,737

Total Tax Preparation revenue
$
53,866

 
$
43,991

 
$
153,574

 
$
132,465

(2) Corporate-level activity included the following (in thousands):
 
Three months ended June 30,
 
Six months ended June 30,
 
2017
 
2016
 
2017
 
2016
Operating expenses
$
6,463

 
$
4,460

 
$
13,236

 
$
9,159

Stock-based compensation
2,737

 
3,023

 
5,302

 
7,252

Acquisition-related costs
—

 
391

 
—

 
391

Depreciation
1,059

 
1,127

 
2,193

 
2,249

Amortization of acquired intangible assets
8,336

 
8,365

 
16,672

 
17,348

Restructuring
331

 
—

 
2,620

 
—

Total corporate-level activity
$
18,926

 
$
17,366

 
$
40,023

 
$
36,399






Blucora, Inc.
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures
Preliminary Adjusted EBITDA Reconciliation (1) 
(Unaudited)
(Amounts in thousands)
(In thousands)
Three months ended June 30,
 
Six months ended June 30,
 
2017
 
2016
 
2017
 
2016
Net income (loss) attributable to Blucora, Inc.(2)

$
3,304

 
$
(14,445
)
 
$
33,888

 
$
8,222

Stock-based compensation
2,737

 
3,023

 
5,302

 
7,252

Depreciation and amortization of acquired intangible assets
9,395

 
9,492

 
18,865

 
19,597

Restructuring
331

 
—

 
2,620

 
—

Other loss, net (3)
24,200

 
10,916

 
33,908

 
18,430

Net income attributable to noncontrolling interests
176

 
115

 
302

 
259

Income tax expense
2,315

 
5,793

 
5,786

 
17,436

Discontinued operations, net of income taxes
—

 
19,975

 
—

 
17,453

Acquisition-related costs
—

 
391

 
—

 
391

Adjusted EBITDA
$
42,458

 
$
35,260

 
$
100,671

 
$
89,040







Preliminary Non-GAAP Net Income Reconciliation (1) 
(Unaudited)
(Amounts in thousands, except per share amounts)
 
Three months ended June 30,
 
Six months ended June 30,
 
2017
 
2016
 
2017
 
2016
Net income (loss) attributable to Blucora, Inc.(2)
$
3,304

 
$
(14,445
)
 
$
33,888

 
$
8,481

Discontinued operations, net of income taxes
—

 
19,975

 
—

 
17,453

Stock-based compensation
2,737

 
3,023

 
5,302

 
7,252

Amortization of acquired intangible assets
8,336

 
8,365

 
16,672

 
17,348

Accretion of debt discount on Convertible Senior Notes
633

 
885

 
1,567

 
1,848

Accelerated accretion of debt discount on Convertible Senior Notes repurchased
—

 
—

 
—

 
1,628

Gain on Convertible Senior Notes repurchased
—

 
—

 
—

 
(7,724
)
Write-off of debt discount and debt issuance costs on terminated Convertible Senior Notes
6,715

 
—

 
6,715

 
—

Write-off of debt discount and debt issuance costs on closed TaxAct - HD Vest 2015 credit facility
9,593

 
—

 
9,593

 
—

Acquisition-related costs
—

 
391

 
—

 
391

Restructuring
331

 
—

 
2,620

 
—

Impact of noncontrolling interests
176

 
115

 
302

 
259

Cash tax impact of adjustments to GAAP net income
(1,819
)
 
(78
)
 
(2,406
)
 
261

Non-cash income tax expense (1)
2,941

 
5,193

 
6,101

 
15,772

Non-GAAP net income
$
32,947

 
$
23,424

 
$
80,354

 
$
62,710

Per diluted share:
 
 
 
 
 
 
 
Net income (loss) attributable to Blucora, Inc.
$
0.07

 
$
(0.34
)
 
$
0.73

 
$
0.20

Discontinued operations, net of income taxes
—

 
0.47

 
—

 
0.41

Stock-based compensation
0.06

 
0.07

 
0.11

 
0.17

Amortization of acquired intangible assets
0.19

 
0.20

 
0.36

 
0.40

Accretion of debt discount on Convertible Senior Notes
0.01

 
0.02

 
0.03

 
0.04

Accelerated accretion of debt discount on Convertible Senior Notes repurchased
—

 
—

 
—

 
0.04

Gain on Convertible Senior Notes repurchased
—

 
—

 
—

 
(0.18
)
Write-off of debt discount and debt issuance costs on terminated Convertible Senior Notes
0.14

 
—

 
0.15

 
—

Write-off of debt discount and debt issuance costs on closed TaxAct - HD Vest 2015 credit facility
0.20

 
—

 
0.21

 
—

Acquisition-related costs
—

 
0.01

 
—

 
0.01

Restructuring
0.01

 
—

 
0.06

 
—

Impact of noncontrolling interests
0.00

 
0.00

 
0.01

 
0.01

Cash tax impact of adjustments to GAAP net income
(0.04
)
 
(0.00
)
 
(0.05
)
 
0.01

Non-cash income tax expense
0.06

 
0.12

 
0.13

 
0.38

Non-GAAP net income
$
0.70

 
$
0.55

 
$
1.74

 
$
1.49

Weighted average shares outstanding used in computing per diluted share amounts
46,937

 
42,298

 
46,182

 
41,954






Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance
(Amounts in thousands)
 
Ranges for the three months ending
 
Ranges for the year ending
 
September 30, 2017
 
December 31, 2017
 
Low
 
High
 
Low
 
High
Net income (loss) attributable to Blucora, Inc.
$
(18,700
)
 
$
(14,800
)
 
$
(3,800
)
 
$
4,600

Stock-based compensation
3,400

 
3,300

 
12,100

 
11,900

Depreciation and amortization of acquired intangible assets
9,400

 
9,400

 
37,700

 
37,700

Restructuring
200

 
100

 
3,000

 
2,800

Other loss, net (3)
5,300

 
4,900

 
44,600

 
43,800

Impact of noncontrolling interests
200

 
200

 
400

 
700

Income tax (benefit) expense
(2,700
)
 
(2,200
)
 
100

 
800

Adjusted EBITDA
$
(2,900
)
 
$
900

 
$
94,100

 
$
102,300

Preliminary Non-GAAP Net Income (Loss) Reconciliation for Forward-Looking Guidance
(Amounts in thousands)
 
Ranges for the three months ending
 
Ranges for the year ending
 
September 30, 2017
 
December 31, 2017
 
Low
 
High
 
Low
 
High
Net income (loss) attributable to Blucora, Inc.
$
(18,700
)
 
$
(14,800
)
 
$
(3,800
)
 
$
4,600

Stock-based compensation
3,400

 
3,300

 
12,100

 
11,900

Amortization of acquired intangible assets
8,300

 
8,300

 
33,300

 
33,300

Accretion of debt discount on Convertible Senior Notes
—

 
—

 
1,400

 
1,400

Loss on debt extinguishment
—

 
—

 
16,500

 
16,400

Restructuring
200

 
100

 
3,000

 
2,800

Impact of noncontrolling interests
200

 
200

 
400

 
700

Cash tax impact of adjustments to net income (loss)
(300
)
 
(200
)
 
(2,400
)
 
(2,400
)
Non-cash income tax benefit
(4,000
)
 
(3,200
)
 
(1,800
)
 
(900
)
Non-GAAP net income (loss)
$
(10,900
)
 
$
(6,300
)
 
$
58,700

 
$
67,800






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

(1) We define Adjusted EBITDA as net income (loss) attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation, amortization of acquired intangible assets (including acquired technology), restructuring, other loss, net, the impact of noncontrolling interests, income tax expense, the effects of discontinued operations, and acquisition-related costs. Restructuring costs relate to the move of our corporate headquarters, which was announced in the fourth quarter of 2016. Acquisition-related costs include professional services fees and other direct transaction costs and changes in the fair value of contingent consideration liabilities related to acquired companies. The SimpleTax acquisition that was completed in 2015 included contingent consideration, for which the fair value of that liability was revalued in the second quarter of 2016.

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 as net income (loss) attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of discontinued operations, stock-based compensation, amortization of acquired intangible assets (including acquired technology), accretion of debt discount and accelerated accretion of debt discount on the Convertible Senior Notes (the "Notes"), gain on the Notes repurchased, write-off of debt discount and debt issuance costs on the Notes that were redeemed and the terminated TaxAct - HD Vest 2015 credit facility, acquisition-related costs (described further under Adjusted EBITDA above), restructuring costs (described further under Adjusted EBITDA above), the impact of noncontrolling interests, the related cash tax impact of those adjustments, and non-cash income taxes. The write-off of debt discount and debt issuance costs on the terminated Notes and the closed TaxAct - HD Vest 2015 credit facility relates to the debt refinancing that occurred in the second quarter of 2017. We exclude the non-cash portion of income taxes because of our ability to offset a substantial portion of our cash tax liabilities by using deferred tax assets, which primarily consist of U.S. federal net operating losses. The majority of these net operating losses will expire, if unutilized, between 2020 and 2024.

We believe that non-GAAP net income and non-GAAP net income per share provide meaningful supplemental information to management, investors, and analysts regarding our performance and the valuation of our business by excluding items in the statement of operations that we do not consider part of our ongoing operations or have not been, or are not expected to be, settled in cash. Additionally, we believe that non-GAAP net income and non-GAAP net income per share are common measures used by investors and analysts to evaluate our performance and the valuation of our business. Non-GAAP net income 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). Other companies may calculate non-GAAP net income differently, and, therefore, our non-GAAP net income may not be comparable to similarly titled measures of other companies.

(2) As presented in the Preliminary Condensed Consolidated Statements of Operations (unaudited).

(3) Other loss, net primarily includes items such as interest income, interest expense, amortization of debt issuance costs, accretion of debt discounts, and gain/loss on debt extinguishment.




Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘8-K’ Filing    Date    Other Filings
12/31/17
9/30/17
Filed on / For Period End:7/27/17
6/30/17
12/31/1610-K,  PRE 14A
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