Blucora Reports Fourth Quarter and Full Year 2020 Results
Blucora, a provider of tax-focused financial solutions, reported a 5% increase in total revenue for 2020, reaching $755 million. The acquisition of HK Financial Services contributed to growth, leading to a 29% rise in advisory assets year-over-year. However, the company recorded a net loss of $342.8 million for the year, significantly higher than the previous year, with diluted loss per share at $(7.14).
For Q4 2020, total revenue was $155.2 million, up 4% compared to Q4 2019, while segment operating income decreased 26% for the year.
- 5% increase in total revenue to $755 million for 2020.
- 29% rise in advisory assets year-over-year.
- Acquisition of HKFS added approximately $5.0 billion in assets.
- TaxAct recorded 23 consecutive years of revenue growth.
- Net loss of $342.8 million for the year, a decline of 813%.
- Diluted loss per share was $(7.14), down 829%.
- Tax Preparation segment operating income decreased by 48%.
DALLAS, Feb. 17, 2021 (GLOBE NEWSWIRE) -- Blucora, Inc. (NASDAQ: BCOR), a leading provider of technology-enabled, tax-focused financial solutions, today announced financial results for the fourth quarter and full year ended December 31, 2020.
2020 Highlights and Recent Developments
- Increased total revenue by
5% year-over-year, to$755 million , including the addition of HK Financial Services (“HKFS”), on July 1 - Recorded 23rd consecutive year of segment revenue growth at TaxAct, excluding sale of SimpleTax
- Completed acquisition of HKFS, now rebranded as Avantax Planning Partners (“APP”), adding a historically fast growing, highly profitable registered investment advisor (“RIA”) and its fee-based advisory assets to the Company’s wealth management business
- Increased advisory assets
29% year-over-year, including the addition of approximately$5.0 billion in APP assets - Increased total client assets
17% to$83.0 billion , with$35.6 billion or42.9% in advisory assets - Further strengthened Board of Directors with appointments of Karthik Rao, Jana Schreuder and Mark Ernst
“After an unprecedented year, I am extremely proud of our team’s focus and execution of our business plan in 2020,” said Chris Walters, Blucora’s President and Chief Executive Officer. “During the past year our new leadership team has made tremendous progress implementing our differentiated, tax-focused strategy, repositioning both Avantax and TaxAct for sustainable growth and moving forward with new plans to realize significant synergy potential between the two business units. Based on the progress and investments we made during 2020, I am optimistic about 2021 and beyond, as we execute on our plans to drive long-term earnings growth and shareholder value.”
Summary Financial Performance: Q4 and Full Year 2020
($ in millions except per share amounts)
| Q4 | Q4 | Full Year | Full Year | ||||||||||||||||||||
| 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Wealth Management | $ | 149.4 | $ | 145.2 | 3 | % | $ | 546.2 | $ | 508.0 | 8 | % | |||||||||||
| Tax Preparation | $ | 5.8 | $ | 4.2 | 38 | % | $ | 208.8 | $ | 210.0 | (1 | ) | % | ||||||||||
| Total Revenue | $ | 155.2 | $ | 149.4 | 4 | % | $ | 755.0 | $ | 717.9 | 5 | % | |||||||||||
| Segment Operating Income (Loss): | |||||||||||||||||||||||
| Wealth Management | $ | 20.4 | $ | 19.1 | 7 | % | $ | 72.2 | $ | 68.3 | 6 | % | |||||||||||
| Tax Preparation | $ | (11.0 | ) | $ | (12.3 | ) | 11 | % | $ | 49.6 | $ | 96.2 | (48 | ) | % | ||||||||
| Total Segment Operating Income | $ | 9.3 | $ | 6.8 | 37 | % | $ | 121.8 | $ | 164.5 | (26 | ) | % | ||||||||||
| Unallocated Corporate-Level General and Administrative Expenses | $ | 7.1 | $ | 7.6 | (7 | ) | % | $ | 26.7 | $ | 27.4 | (3 | ) | % | |||||||||
| GAAP: | |||||||||||||||||||||||
| Operating Loss | $ | (23.7 | ) | $ | (26.0 | ) | 9 | % | $ | (269.1 | ) | $ | — | N/A | |||||||||
| Net Income (Loss) Attributable to Blucora. Inc. | $ | (50.7 | ) | $ | 17.3 | (393 | ) | % | $ | (342.8 | ) | $ | 48.1 | (813 | ) | % | |||||||
| Diluted Net Income (Loss) Per Share Attributable to Blucora. Inc. | $ | (1.05 | ) | $ | 0.36 | (392 | ) | % | $ | (7.14 | ) | $ | 0.98 | (829 | ) | % | |||||||
| Non-GAAP: (1) | |||||||||||||||||||||||
| Adjusted EBITDA | $ | 2.2 | $ | (0.7 | ) | 414 | % | $ | 95.1 | $ | 137.2 | (31 | ) | % | |||||||||
| Net Income (Loss) | $ | (9.0 | ) | $ | (4.8 | ) | (88 | ) | % | $ | 54.1 | $ | 104.2 | (48 | ) | % | |||||||
| Diluted Net Income (Loss) per Share (EPS) | $ | (0.19 | ) | $ | (0.10 | ) | (90 | ) | % | $ | 1.12 | $ | 2.11 | (47 | ) | % | |||||||
____________________________
(1) See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.
2020 Results vs. Prior Guidance
| ($ in millions except per share amounts) | Prior Guidance | Actual | ||
| Wealth Management Revenue (1) | $ | 546.2 | ||
| Tax Preparation Revenue | $ | 208.8 | ||
| Total Revenue | $ | 755.0 | ||
| Wealth Management Segment Operating Income (1) | $ | 72.2 | ||
| Tax Preparation Segment Operating Income | $ | 49.6 | ||
| Unallocated Corporate-Level General and Administrative Expenses | $ | 26.7 | ||
| GAAP: | ||||
| Net Loss (1) | $ | (342.8 | ) | |
| Net Loss per share (1) | $ | (7.14 | ) | |
| Non-GAAP: | ||||
| Adjusted EBITDA (1) (2) | $ | 95.1 | ||
| Non-GAAP Net Income (1) (2) | $ | 54.1 | ||
| Non-GAAP Net Income per share (1) (2) | $ | 1.12 | ||
_________________________
(1) Includes HKFS results from July 1, 2020 to December 31, 2020.
(2) See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.
Tax Season Update
“With the IRS delaying the official beginning of tax season to February 12, our tax season has only just begun. Regardless, I feel confident about the actions we have taken this season as well as the mid to long-term benefits of the investments we made in 2020 to further improve the customer experience,” Walters continued. “We have now launched our online-assisted offering to meet a significant need that has emerged in the marketplace. We have also refined our marketing to efficiently add paid customers, all while reinforcing our differentiated value position with a compelling offering. We expect these initiatives to contribute to the financial improvements we shared for this year as well as strong financial results in the mid- to long-term.”
Outlook
Given the delayed start of the tax season, the Company is not providing updated first quarter guidance for the Tax Preparation segment but rather reaffirming full year guidance of low single digit revenue growth and a minimum of
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 fourth quarter and full year results, its outlook for the first quarter, 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. The supplemental financial information has also been filed with the SEC on Form 8-K. A replay of the call will be available on our website.
About Blucora®
Blucora, Inc. (NASDAQ: BCOR) is on the forefront of financial technology, a provider of data and technology-driven solutions that empower people to improve their financial wellness. Blucora operates in two segments including (i) wealth management, through its Avantax Wealth Management brand, with a collective
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 and Section 21E of the Securities Exchange Act of 1934. When used in this release, terms such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “intends,” “anticipates,” “may,” “forecasts,” “projects” and similar expressions and variations are intended to identify forward-looking statements. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: our ability to effectively implement our future business plans and growth strategy; our ability to effectively compete within our industry; our ability to attract and retain qualified employees and leadership, advisors, clients and customers; our ability to execute upon our contemplated strategic and performance initiatives and to successfully integrate acquired businesses or assets and realize the anticipated benefits thereof; the availability of financing and our ability to meet our current and future debt service obligations and comply with our debt covenants; our ability to generate strong investment performance for our customers and the impact of the financial markets on our customers’ portfolios; political and economic conditions and events that directly or indirectly impact the wealth management and tax preparation industries; our ability to successfully make technology enhancements and introduce new and improve on existing products and services; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; our ability to manage leadership and employee transitions; risks related to goodwill and other intangible asset impairment; our ability to comply with regulations (or interpretations thereof) applicable to the wealth management and tax preparation industries, including increased costs associated with or reductions in revenue resulting from new or changing regulations or interpretations of existing regulations; risks associated with our business being subject to enhanced regulatory scrutiny; our ability to comply with laws and regulations regarding privacy and protection of data; cybersecurity risks; our ability to develop and maintain our relationships with third party partners; the seasonality of our business; legal proceedings risks, including litigation and regulatory proceedings; our assessments and estimates that determine our effective tax rate; the impact of new or changing tax legislation; our ability to develop, establish and maintain strong brands; and our ability to protect our intellectual property. A more detailed description of these and certain other factors that could affect actual results is included in the Risk Factors section of the Form 10-K and Form 10-Q that we most recently filed 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 hereof. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date hereof, except as required by law. In addition, the Company has not filed its Form 10-K for the year ended December 31, 2020. As a result, all financial results described in this earnings release should be considered preliminary, and are subject to change to reflect the completion of our audit and any necessary adjustments or changes in accounting estimates that are identified prior to the time the Company files the Form 10-K.
Blucora, Inc.
Preliminary Condensed Consolidated Statements of Operations
(Unaudited) (Amounts in thousands, except per share data)
| Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Revenue: | |||||||||||||||
| Wealth management services revenue | $ | 149,384 | $ | 145,188 | $ | 546,189 | $ | 507,979 | |||||||
| Tax preparation services revenue | 5,773 | 4,233 | 208,763 | 209,966 | |||||||||||
| Total revenue | 155,157 | 149,421 | 754,952 | 717,945 | |||||||||||
| Operating expenses: | |||||||||||||||
| Cost of revenue: | |||||||||||||||
| Wealth management services cost of revenue | 103,630 | 101,200 | 385,962 | 352,081 | |||||||||||
| Tax preparation services cost of revenue | 2,569 | 1,708 | 12,328 | 10,691 | |||||||||||
| Total cost of revenue | 106,199 | 102,908 | 398,290 | 362,772 | |||||||||||
| Engineering and technology | 5,359 | 8,608 | 27,258 | 30,931 | |||||||||||
| Sales and marketing | 26,833 | 21,401 | 177,618 | 126,205 | |||||||||||
| General and administrative | 18,625 | 22,808 | 82,158 | 78,529 | |||||||||||
| Acquisition and integration | 12,303 | 8,024 | 31,085 | 25,763 | |||||||||||
| Depreciation | 1,948 | 1,633 | 7,293 | 5,479 | |||||||||||
| Amortization of other acquired intangible assets | 7,578 | 10,062 | 29,745 | 37,357 | |||||||||||
| Impairment of goodwill and an intangible asset | — | — | 270,625 | 50,900 | |||||||||||
| Total operating expenses | 178,845 | 175,444 | 1,024,072 | 717,936 | |||||||||||
| Operating income (loss) | (23,688 | ) | (26,023 | ) | (269,120 | ) | 9 | ||||||||
| Other loss, net (1) | (7,918 | ) | (5,233 | ) | (31,304 | ) | (16,915 | ) | |||||||
| Loss before income taxes | (31,606 | ) | (31,256 | ) | (300,424 | ) | (16,906 | ) | |||||||
| Income tax benefit (expense) | (19,094 | ) | 48,584 | (42,331 | ) | 65,054 | |||||||||
| Net income (loss) attributable to Blucora, Inc. | $ | (50,700 | ) | $ | 17,328 | $ | (342,755 | ) | $ | 48,148 | |||||
| Net income (loss) per share attributable to Blucora, Inc.: | |||||||||||||||
| Basic | $ | (1.05 | ) | $ | 0.36 | $ | (7.14 | ) | $ | 1.00 | |||||
| Diluted | $ | (1.05 | ) | $ | 0.36 | $ | (7.14 | ) | $ | 0.98 | |||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 48,107 | 47,689 | 47,978 | 48,264 | |||||||||||
| Diluted | 48,107 | 48,344 | 47,978 | 49,282 | |||||||||||
____________________________
(1) Other loss, net consisted of the following (in thousands):
| Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Interest expense | $ | 7,160 | $ | 5,002 | $ | 24,570 | $ | 19,017 | |||||||
| Amortization of debt issuance costs | 366 | 194 | 1,372 | 1,042 | |||||||||||
| Accretion of debt discounts | 279 | 39 | 693 | 228 | |||||||||||
| Total interest expense | 7,805 | 5,235 | 26,635 | 20,287 | |||||||||||
| Interest income | (38 | ) | (108 | ) | (65 | ) | (449 | ) | |||||||
| Gain on sale of a business | — | — | (349 | ) | (3,256 | ) | |||||||||
| Non-capitalized debt issuance expenses | — | — | 3,687 | — | |||||||||||
| Other | 151 | 106 | 1,396 | 333 | |||||||||||
| Other loss, net | $ | 7,918 | $ | 5,233 | $ | 31,304 | $ | 16,915 | |||||||
Blucora, Inc.
Preliminary Condensed Consolidated Balance Sheets
(Unaudited) (Amounts in thousands)
| December 31, | |||||||
| 2020 | 2019 | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 150,125 | $ | 80,820 | |||
| Cash segregated under federal or other regulations | 637 | 5,630 | |||||
| Accounts receivable, net of allowance | 12,736 | 16,266 | |||||
| Commissions receivable | 26,132 | 21,176 | |||||
| Other receivables | 717 | 2,902 | |||||
| Prepaid expenses and other current assets, net | 10,321 | 12,349 | |||||
| Total current assets | 200,668 | 139,143 | |||||
| Long-term assets: | |||||||
| Property and equipment, net | 58,500 | 18,706 | |||||
| Right-of-use assets, net | 23,455 | 10,151 | |||||
| Goodwill, net | 454,821 | 662,375 | |||||
| Other intangible assets, net | 322,179 | 290,211 | |||||
| Deferred tax asset, net | — | 9,997 | |||||
| Other long-term assets | 4,569 | 6,989 | |||||
| Total long-term assets | 863,524 | 998,429 | |||||
| Total assets | $ | 1,064,192 | $ | 1,137,572 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 9,290 | $ | 10,969 | |||
| Commissions and advisory fees payable | 19,021 | 19,905 | |||||
| Accrued expenses and other current liabilities | 56,419 | 36,144 | |||||
| Deferred revenue—current | 12,298 | 12,014 | |||||
| Lease liabilities—current | 2,304 | 3,272 | |||||
| Current portion of long-term debt, net | 1,784 | 11,228 | |||||
| Total current liabilities | 101,116 | 93,532 | |||||
| Long-term liabilities: | |||||||
| Long-term debt, net | 552,553 | 381,485 | |||||
| Deferred tax liability, net | 30,663 | — | |||||
| Deferred revenue—long-term | 6,247 | 7,172 | |||||
| Lease liabilities—long-term | 36,404 | 5,916 | |||||
| Other long-term liabilities | 24,919 | 5,952 | |||||
| Total long-term liabilities | 650,786 | 400,525 | |||||
| Total liabilities | 751,902 | 494,057 | |||||
| Stockholders’ equity: | |||||||
| Common stock, par | 5 | 5 | |||||
| Additional paid-in capital | 1,598,230 | 1,586,972 | |||||
| Accumulated deficit | (1,257,546 | ) | (914,791 | ) | |||
| Accumulated other comprehensive income (loss) | — | (272 | ) | ||||
| Treasury stock, at cost—1,306 shares at December 31, 2020 and December 31, 2019 | (28,399 | ) | (28,399 | ) | |||
| Total stockholders’ equity | 312,290 | 643,515 | |||||
| Total liabilities and stockholders’ equity | $ | 1,064,192 | $ | 1,137,572 | |||
Blucora, Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(Unaudited) (Amounts in thousands)
| Years Ended December 31, | |||||||
| 2020 | 2019 | ||||||
| Operating activities: | |||||||
| Net income (loss) | $ | (342,755 | ) | $ | 48,148 | ||
| Adjustments to reconcile net income (loss) to net cash from operating activities: | |||||||
| Stock-based compensation | 10,066 | 16,300 | |||||
| Depreciation and amortization of acquired intangible assets | 39,907 | 44,208 | |||||
| Impairment of goodwill and an intangible asset | 270,625 | 50,900 | |||||
| Reduction of right-of-use lease assets | 8,908 | 4,425 | |||||
| Deferred income taxes | 41,059 | (67,549 | ) | ||||
| Amortization of debt issuance costs | 1,372 | 1,042 | |||||
| Accretion of debt discounts | 693 | 228 | |||||
| Gain on sale of a business | (349 | ) | (3,256 | ) | |||
| Change in fair value of acquisition-related contingent consideration liability | 8,300 | — | |||||
| Accretion of lease liability | 1,922 | 599 | |||||
| Other | 1,508 | 135 | |||||
| Cash provided (used) by changes in operating assets and liabilities: | |||||||
| Accounts receivable | 10,705 | 871 | |||||
| Commissions and advisory fees receivable | (4,956 | ) | (471 | ) | |||
| Other receivables | 2,185 | 4,506 | |||||
| Prepaid expenses and other current assets | 1,662 | 10,537 | |||||
| Other long-term assets | 2,232 | 3,377 | |||||
| Accounts payable | (4,192 | ) | 29 | ||||
| Commissions and advisory fees payable | (884 | ) | 432 | ||||
| Lease liabilities | (3,894 | ) | (7,335 | ) | |||
| Deferred revenue | (796 | ) | (17,367 | ) | |||
| Accrued expenses and other current and long-term liabilities | 761 | 3,045 | |||||
| Net cash provided by operating activities | 44,079 | 92,804 | |||||
| Investing activities: | |||||||
| Business acquisition, net of cash acquired | (101,910 | ) | (166,560 | ) | |||
| Purchases of property and equipment | (36,002 | ) | (10,501 | ) | |||
| Proceeds from sale of a business, net of cash | 349 | 7,467 | |||||
| Acquisition of customer relationships | (3,143 | ) | — | ||||
| Net cash used by investing activities | (140,706 | ) | (169,594 | ) | |||
| Financing activities: | |||||||
| Proceeds from credit facilities, net of debt issuance costs and debt discount | 226,278 | 131,489 | |||||
| Payments on credit facilities | (66,531 | ) | (313 | ) | |||
| Stock repurchases | — | (28,399 | ) | ||||
| Payment of redeemable noncontrolling interests | — | (24,945 | ) | ||||
| Proceeds from stock option exercises | 97 | 4,387 | |||||
| Proceeds from issuance of stock through employee stock purchase plan | 2,258 | 2,212 | |||||
| Tax payments from shares withheld for equity awards | (1,163 | ) | (5,652 | ) | |||
| Contingent consideration payments for business acquisition | — | (943 | ) | ||||
| Net cash provided by financing activities | 160,939 | 77,836 | |||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | — | 38 | |||||
| Net increase in cash, cash equivalents, and restricted cash | 64,312 | 1,084 | |||||
| Cash, cash equivalents, and restricted cash, beginning of period | 86,450 | 85,366 | |||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 150,762 | $ | 86,450 | |||
Blucora, Inc.
Preliminary Segment Information
(Unaudited) (Amounts in thousands)
| Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Revenue: | |||||||||||||||
| Wealth Management (1) | $ | 149,384 | $ | 145,188 | $ | 546,189 | $ | 507,979 | |||||||
| Tax Preparation (1) | 5,773 | 4,233 | 208,763 | 209,966 | |||||||||||
| Total revenue | 155,157 | 149,421 | 754,952 | 717,945 | |||||||||||
| Operating income (loss): | |||||||||||||||
| Wealth Management | 20,368 | 19,142 | 72,195 | 68,292 | |||||||||||
| Tax Preparation | (11,025 | ) | (12,316 | ) | 49,621 | 96,249 | |||||||||
| Corporate-level activity (2) | (33,031 | ) | (32,849 | ) | (390,936 | ) | (164,532 | ) | |||||||
| Total operating income (loss) | (23,688 | ) | (26,023 | ) | (269,120 | ) | 9 | ||||||||
| Other loss, net | (7,918 | ) | (5,233 | ) | (31,304 | ) | (16,915 | ) | |||||||
| Income tax benefit (expense) | (19,094 | ) | 48,584 | (42,331 | ) | 65,054 | |||||||||
| Net income (loss) attributable to Blucora, Inc. | $ | (50,700 | ) | $ | 17,328 | $ | (342,755 | ) | $ | 48,148 | |||||
____________________________
(1) Revenues by major category within each segment are presented below (in thousands):
| Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Wealth Management: | |||||||||||||||
| Advisory | $ | 87,079 | $ | 75,621 | $ | 314,751 | $ | 252,367 | |||||||
| Commission | 49,864 | 53,199 | 185,201 | 191,050 | |||||||||||
| Asset-based | 4,777 | 11,652 | 23,688 | 48,182 | |||||||||||
| Transaction and fee | 7,664 | 4,716 | 22,549 | 16,380 | |||||||||||
| Total Wealth Management revenue | $ | 149,384 | $ | 145,188 | $ | 546,189 | $ | 507,979 | |||||||
| Tax Preparation: | |||||||||||||||
| Consumer | $ | 5,502 | $ | 4,096 | $ | 192,226 | $ | 195,004 | |||||||
| Professional | 271 | 137 | 16,537 | 14,962 | |||||||||||
| Total Tax Preparation revenue | $ | 5,773 | $ | 4,233 | $ | 208,763 | $ | 209,966 | |||||||
(2) Corporate-level activity included the following (in thousands):
| Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| General and administrative expenses | $ | 7,118 | $ | 7,559 | $ | 26,689 | $ | 27,361 | |||||||
| Stock-based compensation | 2,846 | 5,136 | 10,066 | 16,300 | |||||||||||
| Acquisition and integration costs | 12,303 | 8,024 | 31,085 | 25,763 | |||||||||||
| Depreciation | 2,710 | 2,068 | 10,162 | 6,851 | |||||||||||
| Amortization of acquired intangible assets | 7,578 | 10,062 | 29,745 | 37,357 | |||||||||||
| Impairment of goodwill and an intangible asset | — | — | 270,625 | 50,900 | |||||||||||
| Executive transition costs | 476 | — | 10,701 | — | |||||||||||
| Headquarters relocation costs | — | — | 1,863 | — | |||||||||||
| Total corporate-level activity | $ | 33,031 | $ | 32,849 | $ | 390,936 | $ | 164,532 | |||||||
Blucora, Inc.
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (1)
Preliminary Adjusted EBITDA Reconciliation (1)
(Unaudited) (Amounts in thousands)
| Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Net income attributable to Blucora, Inc. (2) | $ | (50,700 | ) | $ | 17,328 | $ | (342,755 | ) | $ | 48,148 | |||||
| Stock-based compensation | 2,846 | 5,136 | 10,066 | 16,300 | |||||||||||
| Depreciation and amortization of acquired intangible assets | 10,288 | 12,130 | 39,907 | 44,208 | |||||||||||
| Other loss, net | 7,918 | 5,233 | 31,304 | 16,915 | |||||||||||
| Acquisition and integration—Excl. Change in fair value of acquisition-related contingent consideration | 3,003 | 8,024 | 22,785 | 25,763 | |||||||||||
| Acquisition and integration—Change in fair value of acquisition-related contingent consideration | 9,300 | — | 8,300 | — | |||||||||||
| Impairment of goodwill and an intangible asset | — | — | 270,625 | 50,900 | |||||||||||
| Executive transition costs | 476 | — | 10,701 | — | |||||||||||
| Headquarters relocation costs | — | — | 1,863 | — | |||||||||||
| Income tax (benefit) expense | 19,094 | (48,584 | ) | 42,331 | (65,054 | ) | |||||||||
| Adjusted EBITDA | $ | 2,225 | $ | (733 | ) | $ | 95,127 | $ | 137,180 | ||||||
Preliminary Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) Per Share Reconciliation (1)
(Unaudited) (Amounts in thousands, except per share amounts)
| Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Net income (loss) attributable to Blucora, Inc. (2) | $ | (50,700 | ) | $ | 17,328 | $ | (342,755 | ) | $ | 48,148 | |||||
| Stock-based compensation | 2,846 | 5,136 | 10,066 | 16,300 | |||||||||||
| Amortization of acquired intangible assets | 7,578 | 10,062 | 29,745 | 37,357 | |||||||||||
| Impairment of goodwill and an intangible asset | — | — | 270,625 | 50,900 | |||||||||||
| Gain on the sale of a business | — | — | (349 | ) | (3,256 | ) | |||||||||
| Acquisition and integration—Excl. Change in fair value of acquisition-related contingent consideration | 3,003 | 8,024 | 22,785 | 25,763 | |||||||||||
| Acquisition and integration—Change in fair value of acquisition-related contingent consideration | 9,300 | — | 8,300 | — | |||||||||||
| Executive transition costs | 476 | — | 10,701 | — | |||||||||||
| Headquarters relocation costs | — | — | 1,863 | — | |||||||||||
| Non-capitalized debt issuance costs | — | — | 3,687 | — | |||||||||||
| Cash tax impact of adjustments to GAAP net income | (234 | ) | (504 | ) | (1,647 | ) | (2,396 | ) | |||||||
| Non-cash income tax (benefit) expense | 18,732 | (44,859 | ) | 41,059 | (68,618 | ) | |||||||||
| Non-GAAP net income (loss) | $ | (8,999 | ) | $ | (4,813 | ) | $ | 54,080 | $ | 104,198 | |||||
| Per diluted share: | |||||||||||||||
| Net income (loss) attributable to Blucora, Inc. (2) (3) | $ | (1.05 | ) | $ | 0.36 | $ | (7.10 | ) | $ | 0.98 | |||||
| Stock-based compensation | 0.06 | 0.11 | 0.21 | 0.33 | |||||||||||
| Amortization of acquired intangible assets | 0.15 | 0.21 | 0.61 | 0.76 | |||||||||||
| Impairment of goodwill and an intangible asset | — | — | 5.61 | 1.03 | |||||||||||
| Gain on sale of a business | — | — | (0.01 | ) | (0.07 | ) | |||||||||
| Acquisition and integration—Excl. Change in fair value of acquisition-related contingent consideration | 0.06 | 0.17 | 0.47 | 0.52 | |||||||||||
| Acquisition and integration—Change in fair value of acquisition-related contingent consideration | 0.19 | — | 0.17 | — | |||||||||||
| Executive transition costs | 0.01 | — | 0.22 | — | |||||||||||
| Headquarters relocation costs | — | — | 0.04 | — | |||||||||||
| Non-capitalized debt issuance costs | — | — | 0.08 | — | |||||||||||
| Cash tax impact of adjustments to GAAP net income | — | (0.01 | ) | (0.03 | ) | (0.05 | ) | ||||||||
| Non-cash income tax (benefit) expense | 0.39 | (0.94 | ) | 0.85 | (1.39 | ) | |||||||||
| Non-GAAP net income (loss) per share | $ | (0.19 | ) | $ | (0.10 | ) | $ | 1.12 | $ | 2.11 | |||||
| Weighted average shares outstanding used in calculating Non-GAAP net income per share | 48,107 | 47,689 | 48,244 | 49,282 | |||||||||||
Adjusted EBITDA Reconciliation for Prior Guidance (1)
(Amounts in thousands)
| Ranges for the year ending | |||||||
| December 31, 2020 | |||||||
| Low | High | ||||||
| Net income attributable to Blucora, Inc. | $ | (339,000 | ) | $ | (333,000 | ) | |
| Stock-based compensation | 11,900 | 11,800 | |||||
| Depreciation and amortization of acquired intangible assets | 40,800 | 40,500 | |||||
| Other loss, net | 31,700 | 31,200 | |||||
| Acquisition, integration, executive transition, and headquarters relocation costs | 40,900 | 40,600 | |||||
| Impairment of goodwill | 270,600 | 270,600 | |||||
| Income tax expense | 31,600 | 30,800 | |||||
| Adjusted EBITDA | $ | 88,500 | $ | 92,500 | |||
Non-GAAP Income and Non-GAAP Net Income Per Share Reconciliation
for Prior Guidance (1)
(Amounts in thousands, except per share amounts)
| Ranges for the year ended | |||||||
| December 31, 2020 | |||||||
| Low | High | ||||||
| Net loss attributable to Blucora, Inc. | $ | (339,000 | ) | $ | (333,000 | ) | |
| Stock-based compensation | 11,900 | 11,800 | |||||
| Amortization of acquired intangible assets | 30,000 | 29,900 | |||||
| Acquisition, integration, executive transition, and headquarters relocation costs | 40,900 | 40,600 | |||||
| Debt issuance expenses | 3,700 | 3,700 | |||||
| Impairment of goodwill | 270,600 | 270,600 | |||||
| Gain on sale of a business | (300 | ) | (300 | ) | |||
| Cash tax impact of adjustments to net loss | (1,900 | ) | (1,800 | ) | |||
| Non-cash income tax expense | 30,100 | 29,500 | |||||
| Non-GAAP net income | $ | 46,000 | $ | 51,000 | |||
| Per diluted share: | |||||||
| Net loss attributable to Blucora, Inc. (3) | $ | (6.98 | ) | $ | (6.87 | ) | |
| Stock-based compensation | 0.24 | 0.24 | |||||
| Amortization of acquired intangible assets | 0.62 | 0.62 | |||||
| Acquisition, integration, executive transition, and headquarters relocation costs | 0.84 | 0.84 | |||||
| Debt issuance expenses | 0.08 | 0.08 | |||||
| Impairment of goodwill | 5.57 | 5.58 | |||||
| Gain on sale of a business | — | — | |||||
| Cash tax impact of adjustments to net loss | (0.04 | ) | (0.04 | ) | |||
| Non-cash income tax expense | 0.62 | 0.60 | |||||
| Non-GAAP net income per share | $ | 0.95 | $ | 1.05 | |||
| Weighted average shares outstanding used in calculating Non-GAAP net income per share | 48,600 | 48,500 | |||||
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 and amortization of acquired intangible assets, other loss, net, acquisition and integration costs, impairment of goodwill and an intangible asset, executive transition costs, headquarters relocation costs, and income tax (benefit) expense. Acquisition and integration costs primarily relate to the 1st Global Acquisition and the HKFS Acquisition. Impairment of goodwill relates to the impairment of our Wealth Management reporting unit goodwill that was recognized in the first quarter of 2020. Impairment of an intangible asset relates to the impairment of the HD Vest trade name intangible asset following the rebranding of the Wealth Management business in the third quarter of 2019. Executive transition costs relate to the departure of certain Company executives primarily in the first quarter of 2020. Headquarters relocation costs relate to the process of moving from our original Dallas office and Irving office 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) attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets (including acquired technology), impairment of goodwill and an intangible asset, gain on the sale of a business, acquisition and integration costs, executive transition costs, headquarters relocation costs, non-capitalized debt issuance expenses, 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 unutilized, between 2021 and 2024. Gain on the sale of a business relates to the disposition of SimpleTax in the third quarter of 2019 and the subsequent working capital adjustment in the third quarter of 2020. Non-capitalized debt issuance expense relates to the expense recognized as a result of the increase to our term loan 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 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 net income per share. Other companies may calculate non-GAAP net income (loss) and non-GAAP net income (loss) per share differently, and, therefore, our non-GAAP net income (loss) and non-GAAP net income (loss) per share may not be comparable to similarly titled measures of other companies.
(2) As presented in the Preliminary Condensed Consolidated Statements of Operations (unaudited).
(3) Any difference in the “per diluted share” amounts between this table and the Preliminary Condensed Consolidated Statements of Operations is due to using different weighted average shares outstanding in the event that there is GAAP net loss but non-GAAP net income and vice versa.
Blucora, Inc.
Reconciliation of a Non-GAAP Financial Measure to the Nearest GAAP Measure
Reconciliation of Tax Preparation Services Revenue, Excluding SimpleTax, to Tax Preparation Services Revenue (1)
| Years ended December 31, | |||||||||||||||||||||||
| 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||
| Tax preparation services revenue (2) | $ | 208,763 | $ | 209,966 | $ | 187,282 | $ | 160,937 | $ | 139,365 | $ | 117,708 | |||||||||||
| Less: SimpleTax revenue (3) | — | (2,555 | ) | (1,800 | ) | (1,224 | ) | (1,226 | ) | (21 | ) | ||||||||||||
| Tax preparation services revenue, excluding SimpleTax (1) | $ | 208,763 | $ | 207,411 | $ | 185,482 | $ | 159,713 | $ | 138,139 | $ | 117,687 | |||||||||||
____________________________
(1) We define tax preparation services revenue, excluding SimpleTax (which is a non-GAAP measure), as tax preparation services revenue (as presented on the consolidated statements of comprehensive income) less SimpleTax revenue. We believe tax preparation services revenue, excluding SimpleTax, is an important measure of current and historical sources of revenue for the Tax Preparation segment since Blucora disposed of SimpleTax in the third quarter of 2019.
(2) As presented in the Blucora consolidated statements of comprehensive income.
(3) We acquire SimpleTax Software, Inc. (“SimpleTax”) in July 2015 and disposed of SimpleTax in September 2019.
FAQ
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