Blucora Announces Third Quarter 2020 Results

November 9, 2020

DALLAS, Nov. 09, 2020 (GLOBE NEWSWIRE) -- Blucora, Inc. (NASDAQ: BCOR), a provider of data and technology-driven tax software and wealth management solutions that empower people to improve their financial wellness, today announced financial results for the third quarter ended September 30, 2020.

Third Quarter Highlights and Recent Developments

  • Closed acquisition of HK Financial Services, adding a historically fast-growing, highly profitable registered investment advisor (“RIA”) to the Company’s wealth management business
  • Advisory assets increased 23% year-over-year, including addition of HKFS
  • Total client assets ended the quarter at $76.2 billion, with $32.4 billion, or 42.6% in advisory assets
  • Announced appointment of Karthik Rao, Nielsen COO, to our Board of Directors

“I’m pleased to report that Blucora’s third quarter results showed incremental improvement and came in better than expected on a number of metrics,” commented Chris Walters, Blucora’s President and Chief Executive Officer.  “In wealth management, we hit record levels of advisory assets. Our acquisition of HK Financial Services allows us to serve CPA firms and tax advisors in compelling new ways. In tax preparation, we completed the extended tax season while simultaneously working to ensure that we will enter the fast-approaching new season optimized across product and marketing.”

“Over the first nine months of my tenure, we have identified several key challenges and opportunities and acted quickly to address a number of immediate needs. We have brought on the right people and aligned our organizational structure to a common set of goals. We’ve developed plans to ensure that we have the right technology systems and service models across the Company and laid the groundwork to test synergies across our two business units. We have done all of this while facing the COVID-19-related headwinds, and I believe we are making the right moves to set Blucora up for sustainable long-term success.”

Summary Financial Performance: Q3 2020
($ in millions except per share amounts)

  Q3 2020   Q3 2019   Change
Revenue:          
Wealth Management $ 135.9       $ 145.4       (7 ) %
Tax Preparation $ 39.4       $ 3.6       999   %
Total Revenue $ 175.4       $ 149.0       18   %
Segment Operating Income:          
Wealth Management $ 17.5       $ 20.6       (15 ) %
Tax Preparation $ 16.2       $ (12.1 )     (234 ) %
Total Segment Operating Income $ 33.7       $ 8.6       294   %
Unallocated Corporate-Level General and Administrative Expenses $ (6.7 )     $ (6.5 )     4   %
GAAP:          
Operating Income (Loss) $ 1.0       $ (72.1 )     (101 ) %
Net Loss Attributable to Blucora, Inc. $ (26.2 )     $ (62.4 )     (58 ) %
Diluted Net Loss Per Share Attributable to Blucora, Inc. $ (0.55 )     $ (1.28 )     (58 ) %
Non-GAAP: (1)          
Adjusted EBITDA $ 27.0       $ 2.1       1197   %
Net Income (Loss) $ 15.1       $ (9.6 )     (257 ) %
Diluted Net Income (Loss) per Share (EPS) $ 0.31       $ (0.20 )     (255 ) %

_________________________
(1)    See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.

Full Year 2020 Outlook

($ in millions except per share amounts) Prior Outlook Current Outlook Difference at
Midpoint
Wealth Management Revenue (1) $530.0 - $541.0 $535.5 - $540.5 $2.5
TaxAct Revenue $203.0 - $206.0 $207.0 - $208.0 $3.0
Total Revenue $733.0 - $747.0 $742.5 - $748.5 $5.5
Wealth Management Segment Operating Income (1) $65.5 - $69.5 $68.5 - $70.5 $2.0
TaxAct Segment Operating Income $46.5 - $48.0 $47.5 - $48.5 $0.8
Unallocated Corporate-Level General and Administrative Expenses $26.0 - $24.5 $27.5 - $26.5 $1.8
GAAP:      
Net Loss (1) ($343.5) – ($334.0) ($339.0) – ($333.0) $2.8
Net Loss per share (1) ($7.09) – ($6.92) ($7.05) – ($6.94) $0.01
Non-GAAP:      
Adjusted EBITDA (1)(2) $86.0 - $93.0 $88.5 - $92.5 $1.0
Non-GAAP Net Income (1)(2) $40.5 - $48.0 $46.0 - $51.0 $4.3
Non-GAAP Net Income per share (1)(2) $0.83 - $0.98 $0.95 - $1.05 $0.10

_________________________
(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.

Preliminary 2021 Tax Preparation Outlook

Due to the extended tax season in 2020, we believe it is more helpful to provide a full-year 2021, rather than first half, outlook for tax preparation. 

As we continue to improve our product features, implement our new marketing approach and prepare to launch our new hybrid-assisted offering, we feel confident approaching the new tax year.  At the same time, given our planned transition from price-driven growth to unit-driven growth, supplemented by ARPU benefits of incremental offerings, and the longer guidance period, we want to be appropriately cautious in our outlook. Given these and other factors, we are targeting low single digit revenue growth in tax preparation for full-year 2021 and reaffirming our prior segment operating income outlook, which calls for a minimum of $20 million improvement vs. 2020.

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 third quarter results, its outlook for full year 2020 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 furnished 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 empowers people to improve their financial wellness. Blucora operates in two segments including (i) wealth management, through its tax-focused Avantax Wealth Management and HK Financial Services brands, with a collective $76 billion in total client assets as of September 30, 2020 and (ii) tax preparation, through its TaxAct business, a market leader in tax preparation software with approximately 3 million consumer and 20,000 professional users in 2020. With integrated tax focused software and wealth management, Blucora is uniquely positioned to assist our customers in achieving better long-term outcomes via holistic, tax-advantaged solutions. For more information on Blucora, visit www.blucora.com.

Source: Blucora

Contact:
Blucora Investor Relations
IR@Blucora.com
(972) 870-6463

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. 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 “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “intends,” “anticipates,” “may,” “forecasts,” “future,” “will,” “projects,” “predicts,” “potential,” “continues,” “target,” “outlook” and similar expressions and variations. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: the impact of the coronavirus 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 relief; 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 financial professionals, qualified employees, clients, and customers, as well as our ability to provide strong customer/client service; 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 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; downgrade of the Company’s credit ratings; our ability to generate strong performance for our clients and the impact of the financial markets on our clients’ portfolios; 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; risks associated with legal proceedings, including litigation and regulatory proceedings; 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 preparation industries; 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; the compromising of confidentiality, availability or integrity of information, including cyberattacks; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; risks related to goodwill and other intangible asset impairment; our ability to develop, establish, and maintain strong brands; risks associated with the use and implementation of information technology and the effect of security breaches, computer viruses, and computer hacking attacks; our ability to comply with laws and regulations regarding privacy and protection of user data; 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 beliefs and expectations regarding the seasonality of our business; our assessments and estimates that determine our effective tax rate; and our ability to protect our intellectual property and the impact of any claim that we have infringed on the intellectual property rights of others. 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 hereof. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date hereof, except as may be required by law.


Blucora, Inc.
Condensed Consolidated Statements of Operations
(Unaudited) (Amounts in thousands, except per share data)

  Three months ended
September 30,
  Nine months ended
September 30,
  2020   2019   2020   2019
Revenue:              
Wealth management services revenue $ 135,932       $ 145,428       $ 396,805       $ 362,791    
Tax preparation services revenue 39,421       3,588       202,990       205,733    
Total revenue 175,353       149,016       599,795       568,524    
Operating expenses:              
Cost of revenue:              
Wealth management services cost of revenue 96,122       102,030       282,332       250,881    
Tax preparation services cost of revenue 2,692       1,633       9,759       8,983    
Total cost of revenue 98,814       103,663       292,091       259,864    
Engineering and technology 6,007       8,635       21,899       22,323    
Sales and marketing 31,018       19,976       150,785       104,804    
General and administrative 18,605       19,642       63,533       55,721    
Acquisition and integration 10,276       6,759       18,782       17,739    
Depreciation 1,874       1,470       5,345       3,846    
Amortization of other acquired intangible assets 7,746       10,082       22,167       27,295    
Impairment of goodwill and an intangible asset       50,900       270,625       50,900    
Total operating expenses 174,340       221,127       845,227       542,492    
Operating income (loss) 1,013       (72,111 )     (245,432 )     26,032    
Other loss, net (1) (11,963 )     (2,606 )     (23,386 )     (11,682 )  
Income (loss) before income taxes (10,950 )     (74,717 )     (268,818 )     14,350    
Income tax benefit (expense) (15,256 )     12,331       (23,237 )     16,470    
Net income (loss) attributable to Blucora, Inc. $ (26,206 )     $ (62,386 )     $ (292,055 )     $ 30,820    
Net income (loss) per share attributable to Blucora, Inc.:              
Basic $ (0.55 )     $ (1.28 )     $ (6.09 )     $ 0.64    
Diluted $ (0.55 )     $ (1.28 )     $ (6.09 )     $ 0.62    
Weighted average shares outstanding:              
Basic 48,039       48,652       47,936       48,456    
Diluted 48,039       48,652       47,936       49,596    

_________________________
(1)    Other loss, net consisted of the following (in thousands):

  Three months ended
September 30,
  Nine months ended
September 30,
  2020   2019   2020   2019
Interest expense $ 7,254       $ 5,469       $ 17,410       $ 14,015    
Amortization of debt issuance costs 362       301       1,006       848    
Accretion of debt discounts 276       66       414       189    
Total interest expense 7,892       5,836       18,830       15,052    
Interest income (2 )     (52 )     (27 )     (341 )  
Gain on the sale of a business (349 )     (3,256 )     (349 )     (3,256 )  
Non-capitalized debt issuance costs 3,687             3,687          
Other 735       78       1,245       227    
Other loss, net $ 11,963       $ 2,606       $ 23,386       $ 11,682    



Blucora, Inc.

Condensed Consolidated Balance Sheets
(Unaudited) (Amounts in thousands)

  September 30,
2020
  December 31,
2019
ASSETS      
Current assets:      
Cash and cash equivalents $ 151,166       $ 80,820    
Cash segregated under federal or other regulations 203       5,630    
Accounts receivable, net of allowance 12,191       16,266    
Commissions receivable 22,656       21,176    
Other receivables 5,811       2,902    
Prepaid expenses and other current assets, net 9,428       12,349    
Total current assets 201,455       139,143    
Long-term assets:      
Property and equipment, net 53,940       18,706    
Right-of-use assets, net 24,028       10,151    
Goodwill, net 449,221       662,375    
Other intangible assets, net 331,014       290,211    
Deferred tax asset, net       9,997    
Other long-term assets 4,093       6,989    
Total long-term assets 862,296       998,429    
Total assets $ 1,063,751       $ 1,137,572    
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 6,464       $ 10,969    
Commissions and advisory fees payable 16,893       19,905    
Accrued expenses and other current liabilities 42,815       36,144    
Deferred revenue—current 4,281       12,014    
Lease liabilities—current 1,552       3,272    
Current portion of long-term debt, net 1,782       11,228    
Total current liabilities 73,787       93,532    
Long-term liabilities:      
Long-term debt, net 552,417       381,485    
Deferred tax liability, net 12,802          
Deferred revenue—long-term 6,478       7,172    
Lease liabilities—long-term 36,973       5,916    
Other long-term liabilities 22,150       5,952    
Total long-term liabilities 630,820       400,525    
Total liabilities 704,607       494,057    
       
Stockholders’ equity:      
Common stock, par $0.0001—900,000 authorized shares; 49,350 shares issued and 48,044 shares outstanding at September 30, 2020; 49,059 shares issued and 47,753 shares outstanding at December 31, 2019 5       5    
Additional paid-in capital 1,594,384       1,586,972    
Accumulated deficit (1,206,846 )     (914,791 )  
Accumulated other comprehensive loss       (272 )  
Treasury stock, at cost—1,306 shares at September 30, 2020 and December 31, 2019 (28,399 )     (28,399 )  
Total stockholders’ equity 359,144       643,515    
Total liabilities and stockholders’ equity $ 1,063,751       $ 1,137,572    



Blucora, Inc.

Condensed Consolidated Statements of Cash Flows
(Unaudited) (Amounts in thousands)

  Nine months ended September 30,
  2020   2019
Operating activities:      
Net income (loss) $ (292,055 )     $ 30,820    
Adjustments to reconcile net income (loss) to net cash from operating activities:      
Stock-based compensation 7,220       11,164    
Depreciation and amortization of acquired intangible assets 29,619       32,078    
Impairment of goodwill and an intangible asset 270,625       50,900    
Reduction of right-of-use lease assets 8,335       3,117    
Deferred income taxes 23,199       (23,343 )  
Amortization of debt issuance costs 1,006       848    
Accretion of debt discounts 414       189    
Gain on sale of a business (349 )     (3,256 )  
Change in fair value of acquisition-related contingent consideration (1,000 )        
Accretion of lease liability 1,413       460    
Other 984       48    
Cash provided (used) by changes in operating assets and liabilities:      
Accounts receivable 12,267       352    
Commissions receivable (1,480 )     (19 )  
Other receivables (2,909 )     (18 )  
Prepaid expenses and other current assets 2,555       13,828    
Other long-term assets 2,763       497    
Accounts payable (7,018 )     (2,346 )  
Commissions and advisory fees payable (3,012 )     (602 )  
Lease liabilities (3,568 )     (3,371 )  
Deferred revenue (8,582 )     (21,694 )  
Accrued expenses and other current and long-term liabilities (5,113 )     6,595    
Net cash provided by operating activities 35,314       96,247    
Investing activities:      
Business acquisition, net of cash acquired (102,425 )     (166,561 )  
Purchases of property and equipment (28,711 )     (6,887 )  
Proceeds from sale of a business, net of cash 349       7,467    
Net cash used by investing activities (130,787 )     (165,981 )  
Financing activities:      
Proceeds from credit facilities 226,278       121,489    
Payments on credit facilities (66,078 )        
Stock repurchases       (11,968 )  
Payment of redeemable noncontrolling interests       (24,945 )  
Proceeds from stock option exercises 25       3,811    
Proceeds from issuance of stock through employee stock purchase plan 1,201       1,144    
Tax payments from shares withheld for equity awards (1,034 )     (5,508 )  
Contingent consideration payments for business acquisition       (943 )  
Net cash provided by financing activities 160,392       83,080    
Effect of exchange rate changes on cash, cash equivalents, and restricted cash       38    
Net increase in cash, cash equivalents, and restricted cash 64,919       13,384    
Cash, cash equivalents, and restricted cash, beginning of period 86,450       85,366    
Cash, cash equivalents, and restricted cash, end of period $ 151,369       $ 98,750    



Blucora, Inc.

Segment Information
(Unaudited) (Amounts in thousands)

  Three months ended
September 30,
  Nine months ended
September 30,
  2020   2019   2020   2019
Revenue:              
Wealth Management (1) $ 135,932       $ 145,428       $ 396,805       $ 362,791    
Tax Preparation (1) 39,421       3,588       202,990       205,733    
Total revenue 175,353       149,016       599,795       568,524    
Operating income (loss):              
Wealth Management 17,498       20,631       51,827       49,150    
Tax Preparation 16,234       (12,075 )     60,646       108,565    
Corporate-level activity (2) (32,719 )     (80,667 )     (357,905 )     (131,683 )  
Total operating income (loss) 1,013       (72,111 )     (245,432 )     26,032    
Other loss, net (11,963 )     (2,606 )     (23,386 )     (11,682 )  
Income tax benefit (expense) (15,256 )     12,331       (23,237 )     16,470    
Net income (loss) attributable to Blucora, Inc. $ (26,206 )     $ (62,386 )     $ (292,055 )     $ 30,820    

_________________________
(1)    Revenues by major category within each segment are presented below (in thousands):

  Three months ended
September 30,
  Nine months ended
September 30,
  2020   2019   2020   2019
Wealth Management:              
Advisory $ 82,612     $ 75,579       $ 227,672     $ 176,746  
Commission 44,921     52,623       135,337     137,851  
Asset-based 4,351     13,618       18,911     36,530  
Transaction and fee 4,048     3,608       14,885     11,664  
Total Wealth Management revenue $ 135,932     $ 145,428       $ 396,805     $ 362,791  
Tax Preparation:              
Consumer $ 38,482     $ 4,280       $ 186,724     $ 190,908  
Professional 939     (692 )     16,266     14,825  
Total Tax Preparation revenue $ 39,421     $ 3,588       $ 202,990     $ 205,733  

(2) Corporate-level activity included the following (in thousands):

  Three months ended
September 30,
  Nine months ended
September 30,
  2020   2019   2020   2019
General and administrative expenses $ 6,745     $ 6,476     $ 19,571     $ 19,802  
Stock-based compensation 4,517     4,639     7,220     11,164  
Acquisition and integration costs 10,276     6,759     18,782     17,739  
Executive transition costs 405         10,225      
Headquarters relocation costs 410         1,863      
Depreciation 2,620     1,811     7,452     4,783  
Amortization of acquired intangible assets 7,746     10,082     22,167     27,295  
Impairment of goodwill and an intangible asset     50,900     270,625     50,900  
Total corporate-level activity $ 32,719     $ 80,667     $ 357,905     $ 131,683  


Blucora, Inc.
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (1)

Adjusted EBITDA Reconciliation (1)
(Unaudited) (Amounts in thousands)

  Three months ended
September 30,
  Nine months ended
September 30,
  2020   2019   2020   2019
Net income (loss) attributable to Blucora, Inc. (2) $ (26,206 )     $ (62,386 )     $ (292,055 )     $ 30,820    
Stock-based compensation 4,517       4,639       7,220       11,164    
Depreciation and amortization of acquired intangible assets 10,366       11,893       29,619       32,078    
Other loss, net 11,963       2,606       23,386       11,682    
Acquisition and integration costs 10,276       6,759       18,782       17,739    
Impairment of goodwill and an intangible asset       50,900       270,625       50,900    
Executive transition costs 405             10,225          
Headquarters relocation costs 410             1,863          
Income tax (benefit) expense 15,256       (12,331 )     23,237       (16,470 )  
Adjusted EBITDA $ 26,987       $ 2,080       $ 92,902       $ 137,913    


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
September 30,
  Nine months ended
September 30,
  2020   2019   2020   2019
Net income (loss) attributable to Blucora, Inc. (2) $ (26,206 )     $ (62,386 )     $ (292,055 )     $ 30,820    
Stock-based compensation 4,517       4,639       7,220       11,164    
Amortization of acquired intangible assets 7,746       10,082       22,167       27,295    
Gain on the sale of a business (349 )     (3,256 )     (349 )     (3,256 )  
Acquisition and integration costs 10,276       6,759       18,782       17,739    
Impairment of goodwill and an intangible asset       50,900       270,625       50,900    
Executive transition costs 405             10,225          
Headquarters relocation costs 410             1,863          
Non-capitalized debt issuance costs 3,687             3,687          
Cash tax impact of adjustments to GAAP net income (418 )     (710 )     (1,413 )     (1,892 )  
Non-cash income tax (benefit) expense 14,987       (15,593 )     22,327       (23,759 )  
Non-GAAP net income (loss) $ 15,055       $ (9,565 )     $ 63,079       $ 109,011    
Per diluted share:              
Net income (loss) attributable to Blucora, Inc. (2) (3) $ (0.54 )     $ (1.28 )     $ (6.06 )     $ 0.62    
Stock-based compensation 0.09       0.10       0.15       0.23    
Amortization of acquired intangible assets 0.16       0.19       0.46       0.55    
Gain on the sale of a business (0.01 )     (0.07 )     (0.01 )     (0.07 )  
Acquisition and integration costs 0.21       0.14       0.39       0.36    
Impairment of goodwill and an intangible asset       1.05       5.62       1.03    
Executive transition costs 0.01             0.21          
Headquarters relocation costs 0.01             0.04          
Non-capitalized debt issuance costs 0.08             0.08          
Cash tax impact of adjustments to GAAP net income (0.01 )     (0.01 )     (0.03 )     (0.04 )  
Non-cash income tax (benefit) expense 0.31       (0.32 )     0.46       (0.48 )  
Non-GAAP net income (loss) per share $ 0.31       $ (0.20 )     $ 1.31       $ 2.20    
Weighted average shares outstanding used in computing per diluted share amounts 48,203       48,652       48,184       49,596    


Adjusted EBITDA Reconciliation for Forward-Looking Guidance (1)
(Amounts in thousands)

  Ranges for the year ending
  December 31, 2020
  Low   High
Net loss 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 Net Income and Non-GAAP Net Income Per Share Reconciliation
for Forward-Looking Guidance (1)
(Amounts in thousands, except per share amounts)

  Ranges for the year ending
  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. (4) $ (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 computing per diluted share amounts 48,600       48,500    



Adjusted EBITDA Reconciliation for Prior Guidance (1)
(Amounts in thousands)

  Ranges for the year ending
  December 31, 2020
  Low   High
Net loss attributable to Blucora, Inc. $ (343,500 )     $ (334,000 )  
Stock-based compensation 12,100       11,900    
Depreciation and amortization of acquired intangible assets 47,800       45,500    
Other loss, net 31,800       31,300    
Acquisition, integration, executive transition, and headquarters relocation costs 43,300       43,000    
Impairment of goodwill 270,600       270,600    
Income tax expense 23,900       24,700    
Adjusted EBITDA $ 86,000       $ 93,000    


Non-GAAP Net Income and Non-GAAP Net Income Per Share Reconciliation for Prior Guidance (1)
(Amounts in thousands, except per share amounts)

  Ranges for the year ending
  December 31, 2020
  Low   High
Net loss attributable to Blucora, Inc. $ (343,500 )     $ (334,000 )  
Stock-based compensation 12,100       11,900    
Amortization of acquired intangible assets 34,700       32,900    
Acquisition, integration, executive transition, and headquarters relocation costs 43,300       43,000    
Debt issuance expenses 4,300       4,300    
Impairment of goodwill 270,600       270,600    
Cash tax impact of adjustments to net loss (1,900 )     (1,800 )  
Non-cash income tax expense 20,900       21,100    
Non-GAAP net income $ 40,500       $ 48,000    
Per diluted share:      
Net loss attributable to Blucora, Inc. (5) $ (7.00 )     $ (6.83 )  
Stock-based compensation 0.25       0.24    
Amortization of acquired intangible assets 0.70       0.68    
Acquisition, integration, executive transition, and headquarters relocation costs 0.88       0.88    
Debt issuance expenses 0.09       0.09    
Impairment of goodwill 5.52       5.53    
Cash tax impact of adjustments to net loss (0.04 )     (0.04 )  
Non-cash income tax expense 0.43       0.43    
Non-GAAP net income per share $ 0.83       $ 0.98    
Weighted average shares outstanding used in computing per diluted share amounts 49,050       48,900    


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

(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 acquisition of 1st Global and the acquisition of HKFS. 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 executives in the first quarter of 2020. Headquarters relocation costs relate to the ongoing process to move from our Dallas and Irving offices to our new headquarters.

We believe that Adjusted EBITDA provides meaningful supplemental information regarding our performance. We use this non-GAAP financial measure for internal management and compensation purposes, when publicly providing guidance on possible future results, and as a means to evaluate period-to-period comparisons. We believe that Adjusted EBITDA is a common measure used by investors and analysts to evaluate our performance, that it provides a more complete understanding of the results of operations and trends affecting our business when viewed together with GAAP results, and that management and investors benefit from referring to this non-GAAP financial measure. Items excluded from Adjusted EBITDA are significant and necessary components to the operations of our business and, therefore, Adjusted EBITDA should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income (loss). Other companies may calculate Adjusted EBITDA differently and, therefore, our Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

We define non-GAAP net income (loss) as net income (loss) attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets, gain on the sale of a business, acquisition and integration costs, impairment of goodwill and an intangible asset, executive transition costs, headquarters relocation costs, non-capitalized debt issuance expense, the related cash tax impact of those adjustments, and non-cash income tax (benefit) expense. We exclude the non-cash portion of income tax expense 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. 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 (loss) 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 condensed consolidated statements of operations (unaudited).

(3)   As presented in the condensed consolidated statements of comprehensive income(loss), net loss per share attributable to Blucora, Inc. was $0.55 and $6.09 for the three and nine months ended September 30, 2020, respectively, and was calculated based on weighted average shares outstanding of 48,039,000 and 47,936,000, respectively, which excluded the effect of potentially dilutive shares due to the net loss earned for the period. For non-GAAP reconciliation purposes, net loss per share attributable to Blucora, Inc. of $0.54 and $6.06 for the three and nine months ended September 30, 2020, respectively, included the effects of potentially dilutive shares due to non-GAAP net income during the period.

(4)   As presented in the “Full Year 2020 Outlook” section of this press release, the range of net loss per share attributable to Blucora, Inc. for the year ending December 31, 2020 (Current Outlook) was $6.94 to $7.05, and these amounts were calculated based on weighted average shares outstanding of 48,000,000 and 48,100,000, respectively, which excluded the effect of potentially dilutive shares due to the net loss earned for the period. For non-GAAP reconciliation purposes, net loss per share attributable to Blucora, Inc. included the effect of potentially dilutive shares due to non-GAAP net income projected to be earned during these periods.

(5)   As presented in the “Full Year 2020 Outlook” section of this press release, the range of net loss per share attributable to Blucora, Inc. for the year ending December 31, 2020 (Prior Outlook) was $6.92 to $7.09, and these amounts were calculated based on weighted average shares outstanding of 48,300,000 and 48,450,000, respectively, which excluded the effect of potentially dilutive shares due to the net loss earned for the period. For non-GAAP reconciliation purposes, net loss per share attributable to Blucora, Inc. included the effect of potentially dilutive shares due to non-GAAP net income projected to be earned during these periods.


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Source: Blucora, Inc.