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

  
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                          to                     
Commission File Number: 000-25131
https://cdn.kscope.io/ef934c21c57efcb3f1f6e4ee57fb82b1-bcor-20210630_g1.jpg
Blucora, Inc.
(Exact name of registrant as specified in its charter)
Delaware91-1718107
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
3200 Olympus Blvd, Suite 100, Dallas, Texas 75019
(Address of principal executive offices) (Zip Code)
(972870-6400
(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. ý Yes o No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  ý Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
ý
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ý No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of July 28, 2021, 48,671,126 shares of the registrant’s Common Stock were outstanding.



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Item 5.
Item 6.
This report includes some of the trademarks, trade names, and service marks of Blucora, Inc. (referred to throughout this report as “Blucora,” the “Company,” “we,” “us,” or “our”), including Blucora, Avantax Wealth Management, Avantax Planning Partners, Avantax Retirement Plan Services, HD Vest, 1st Global, HKFS, and TaxAct. Each one of these trademarks, trade names, or service marks is either (i) our registered trademark, (ii) a trademark for which we have a pending application, (iii) a trade name or service mark for which we claim common law rights, or (iv) a registered trademark or application for registration that we have been authorized by a third party to use.
Solely for convenience, the trademarks, service marks, and trade names included in this report are without the ®, ™ or other applicable symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks, and trade names. This report may also include additional trademarks, service marks, and trade names of others, which are the property of their respective owners. All trademarks, service marks, and trade names included in this report are, to our knowledge, the property of their respective owners.
References to our or our subsidiaries’ website addresses or the website addresses of third parties in this report do not constitute incorporation by reference of the information contained on such websites and should not be considered part of this report.

Blucora, Inc. | Q2 2021 Form 10-Q 2


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“Form 10-Q”) contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Many of the forward-looking statements are located in Part I, Item 2 of this Form 10-Q under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “anticipates,” “believes,” “plans,” “expects,” “future,” “intends,” “may,” “will,” “would,” “could,” “should,” “estimates,” “predicts,” “potential,” “continues,” “target,” “outlook,” and similar terms and expressions, but the absence of these words does not mean that the statement is not forward-looking. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to:
the impact of the COVID-19 pandemic on our results of operations and our business, including the impact of the resulting economic and market disruption, the extension of tax filing deadlines, and other related government actions;
our ability to effectively compete within our industries;
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;
any 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, including those of the Financial Industry Regulatory Authority, Inc. and the Securities and Exchange Commission (“SEC”);
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 software 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;
Blucora, Inc. | Q2 2021 Form 10-Q 3


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.
Forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors that may cause our results, levels of activity, performance, achievements, and prospects to be materially different from those expressed or implied by such forward-looking statements. These risks, uncertainties, and other factors include, among others, the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as supplemented by those identified under Part II, Item 1A, “Risk Factors” and elsewhere in this Form 10-Q, as well as in our other filings with the SEC. All forward-looking statements speak only as of the date of this Form 10-Q. We do not undertake any obligation and do not intend to update or revise any forward-looking statement to reflect new information, events, or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events, except as required by law.




Blucora, Inc. | Q2 2021 Form 10-Q 4



PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BLUCORA, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
June 30,
2021
December 31,
2020
ASSETS
Current assets:
Cash and cash equivalents$232,409 $150,125 
Cash segregated under federal or other regulations591 637 
Accounts receivable, net of allowance18,784 12,736 
Commissions and advisory fees receivable26,662 26,132 
Other receivables1,045 717 
Prepaid expenses and other current assets, net13,972 10,321 
Total current assets293,463 200,668 
Long-term assets:
Property and equipment, net65,004 58,500 
Right-of-use assets, net21,245 23,455 
Goodwill, net454,821 454,821 
Other intangible assets, net308,743 322,179 
Other long-term assets13,613 4,569 
Total long-term assets863,426 863,524 
Total assets$1,156,889 $1,064,192 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$10,164 $9,290 
Commissions and advisory fees payable19,170 19,021 
Accrued expenses and other current liabilities80,359 56,419 
Deferred revenue—current5,084 12,298 
Lease liabilities—current3,768 2,304 
Current portion of long-term debt, net1,788 1,784 
Total current liabilities120,333 101,116 
Long-term liabilities:
Long-term debt, net552,828 552,553 
Deferred tax liability, net29,700 30,663 
Deferred revenue—long-term5,784 6,247 
Lease liabilities—long-term34,765 36,404 
Other long-term liabilities30,972 24,919 
Total long-term liabilities654,049 650,786 
Total liabilities774,382 751,902 
Commitments and contingencies (Note 7)
Stockholders’ equity:
Common stock, par value $0.0001 per share—900,000 authorized shares; 49,962 shares issued and 48,656 shares outstanding at June 30, 2021; 49,483 shares issued and 48,177 shares outstanding at December 31, 2020
5 5 
Additional paid-in capital1,609,193 1,598,230 
Accumulated deficit(1,198,292)(1,257,546)
Treasury stock, at cost—1,306 shares at June 30, 2021 and December 31, 2020
(28,399)(28,399)
Total stockholders’ equity382,507 312,290 
Total liabilities and stockholders’ equity$1,156,889 $1,064,192 

See accompanying notes to unaudited condensed consolidated financial statements.
Blucora, Inc. | Q2 2021 Form 10-Q 5


BLUCORA, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share data)

 Three months ended June 30,Six months ended June 30,
 2021202020212020
Revenues:
Wealth management services revenue$162,395 $115,884 $316,886 $260,873 
Tax software services revenue91,917 45,238 215,809 163,569 
Total revenue254,312 161,122 532,695 424,442 
Operating expenses:
Cost of revenue:
Wealth management services cost of revenue113,910 83,868 222,533 186,210 
Tax software services cost of revenue4,429 3,054 10,007 7,067 
Total cost of revenue118,339 86,922 232,540 193,277 
Engineering and technology7,231 7,377 14,359 15,892 
Sales and marketing34,848 40,057 112,410 119,767 
General and administrative23,832 20,200 48,517 44,928 
Acquisition and integration18,169 2,824 26,272 8,506 
Depreciation3,204 1,675 5,504 3,471 
Amortization of other acquired intangible assets7,063 6,673 14,238 14,421 
Impairment of goodwill   270,625 
Total operating expenses212,686 165,728 453,840 670,887 
Operating income (loss)41,626 (4,606)78,855 (246,445)
Other loss, net(8,024)(5,288)(15,907)(11,423)
Income (loss) before income taxes33,602 (9,894)62,948 (257,868)
Income tax benefit (expense)(1,994)59,539 (3,694)(7,981)
Net income (loss)$31,608 $49,645 $59,254 $(265,849)
Net income (loss) per share:
Basic$0.65 $1.04 $1.22 $(5.55)
Diluted$0.64 $1.03 $1.20 $(5.55)
Weighted average shares outstanding:
Basic48,508 47,941 48,384 47,884 
Diluted49,385 48,092 49,241 47,884 
Comprehensive income (loss):
Net income (loss)$31,608 $49,645 $59,254 $(265,849)
Other comprehensive income   272 
Comprehensive income (loss)$31,608 $49,645 $59,254 $(265,577)













See accompanying notes to unaudited condensed consolidated financial statements.
Blucora, Inc. | Q2 2021 Form 10-Q 6


BLUCORA, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
Additional paid-in capitalAccumulated deficitAccumulated other comprehensive loss
Common stockTreasury stock
SharesAmountSharesAmountTotal
Balance as of December 31, 202049,483 $5 $1,598,230 $(1,257,546)$ (1,306)$(28,399)$312,290 
Common stock issued for stock options and restricted stock units132 — 63 — — — — 63 
Stock-based compensation— — 5,520 — — — — 5,520 
Tax payments from shares withheld for equity awards— — (865)— — — — (865)
Net income— — — 27,646 — — — 27,646 
Balance as of March 31, 202149,615 $5 $1,602,948 $(1,229,900)$ (1,306)$(28,399)$344,654 
Common stock issued for stock options, restricted stock units, and employee stock purchase plan347 — 1,989 — — — — 1,989 
Stock-based compensation— — 4,720 — — — — 4,720 
Tax payments from shares withheld for equity awards— — (464)— — — — (464)
Net income— — — 31,608 — — — 31,608 
Balance as of June 30, 202149,962 $5 $1,609,193 $(1,198,292)$ (1,306)$(28,399)$382,507 
Additional paid-in capitalAccumulated deficitAccumulated other comprehensive loss
Common stockTreasury stock
SharesAmountSharesAmountTotal
Balance as of December 31, 201949,059 $5 $1,586,972 $(914,791)$(272)(1,306)$(28,399)$643,515 
Common stock issued for stock options and restricted stock units89 — — — — — —  
Stock-based compensation— — (1,201)— — — — (1,201)
Tax payments from shares withheld for equity awards— — (917)— — — — (917)
Cumulative translation adjustment— — — — 272 — — 272 
Net loss— — — (315,494)— — — (315,494)
Balance as of March 31, 202049,148 $5 $1,584,854 $(1,230,285)$ (1,306)$(28,399)$326,175 
Common stock issued for stock options, restricted stock units, and employee stock purchase plan192 — 1,226 — — — — 1,226 
Stock-based compensation— — 3,904 — — — — 3,904 
Tax payments from shares withheld for equity awards— — (89)— — — — (89)
Net income— — — 49,645 — — — 49,645 
Balance as of June 30, 202049,340 $5 $1,589,895 $(1,180,640)$ (1,306)$(28,399)$380,861 



















See accompanying notes to unaudited condensed consolidated financial statements.
Blucora, Inc. | Q2 2021 Form 10-Q 7


BLUCORA, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Six months ended June 30,
 20212020
Operating activities:
Net income (loss)$59,254 $(265,849)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Stock-based compensation10,770 2,703 
Depreciation and amortization of acquired intangible assets21,583 19,253 
Impairment of goodwill 270,625 
Reduction of right-of-use lease assets1,420 3,196 
Deferred income taxes(963)8,784 
Amortization of debt issuance costs740 644 
Accretion of debt discounts561 138 
Change in fair value of acquisition-related contingent consideration17,800  
Accretion of lease liability1,046 901 
Other481 670 
Cash provided (used) by changes in operating assets and liabilities:
Accounts receivable(5,948)184 
Commissions and advisory fees receivable(530)5,586 
Other receivables(406)(2,809)
Prepaid expenses and other current assets(3,651)1,435 
Other long-term assets(9,239)3,162 
Accounts payable874 2,942 
Commissions and advisory fees payable149 (5,210)
Lease liabilities(431)(2,572)
Deferred revenue(7,677)(8,299)
Accrued expenses and other current and long-term liabilities11,438 (1,110)
Net cash provided by operating activities97,271 34,374 
Investing activities:
Purchases of property and equipment(13,544)(19,072)
Asset acquisitions(881) 
Net cash used by investing activities(14,425)(19,072)
Financing activities:
Proceeds from credit facilities, net of debt issuance costs and debt discounts(502)55,000 
Payments on credit facilities(906)(65,625)
Proceeds from stock option exercises284 25 
Proceeds from issuance of stock through employee stock purchase plan1,845 1,201 
Tax payments from shares withheld for equity awards(1,329)(1,006)
Net cash used by financing activities(608)(10,405)
Net increase in cash, cash equivalents, and restricted cash82,238 4,897 
Cash, cash equivalents, and restricted cash, beginning of period150,762 86,450 
Cash, cash equivalents, and restricted cash, end of period$233,000 $91,347 
Supplemental cash flow information:
Cash paid for income taxes$596 $1,189 
Cash paid for interest$14,324 $9,702 
Non-cash investing activities:
Purchases of property and equipment through leasehold incentives (investing)$ $9,726 

See accompanying notes to unaudited condensed consolidated financial statements.
Blucora, Inc. | Q2 2021 Form 10-Q 8


BLUCORA, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Description of the Business
Blucora, Inc. (the “Company,” “Blucora,” “we,” “our,” or “us”) operates two primary businesses: the Wealth Management business and the digital Tax Software business.
Wealth Management
The Wealth Management business consists of the operations of Avantax Wealth Management and Avantax Planning Partners (collectively, the “Wealth Management business” or the “Wealth Management segment”).
Avantax Wealth Management provides tax-focused wealth management solutions for financial professionals, tax professionals, certified public accounting (“CPA”) firms, and their clients. Avantax Wealth Management offers its services through its registered broker-dealer, registered investment advisor (“RIA”), and insurance agency subsidiaries and is the leading U.S. tax-focused independent broker-dealer. Avantax Wealth Management works with a nationwide network of financial professionals that operate as independent contractors. Avantax Wealth Management provides these financial professionals with an integrated platform of technical, practice, compliance, and product support tools that enable them to offer tax-advantaged investing and wealth management services to their clients.
Avantax Planning Partners operates as an employee-based RIA and wealth management business that partners with CPA firms in order to provide their consumer and small business clients with holistic financial planning and advisory services, as well as retirement plan solutions through Avantax Retirement Plan Services. Avantax Planning Partners formerly operated as Honkamp Krueger Financial Services, Inc. (“HKFS”). On July 1, 2020, we acquired all of the issued and outstanding common stock of HKFS (the “HKFS Acquisition”). The operations of HKFS are included in our operating results as part of the Wealth Management segment from the date of the HKFS Acquisition.
Tax Software
The Tax Software business consists of the operations of TaxAct, Inc. (“TaxAct,” the “Tax Software business,” or the “Tax Software segment”) and provides digital tax preparation services, packaged tax software, and ancillary services for consumers, small business owners, and tax professionals through its website www.TaxAct.com and its mobile applications. We had referred to this business as the “Tax Preparation business” and “Tax Preparation segment” in previous filings.
The Tax Software segment is highly seasonal with a significant portion of its annual revenue typically earned in the first two quarters of the fiscal year. During the third and fourth quarters, the Tax Software segment typically reports losses because revenue from the segment is minimal while core operating expenses continue.
In March 2020 and as a result of the COVID-19 pandemic, the Internal Revenue Service (“IRS”) extended the filing deadline for federal tax returns from April 15, 2020 to July 15, 2020. This filing extension resulted in the shifting of a significant portion of Tax Software segment revenue that is usually earned in the first and second quarters of 2020 to the third quarter of 2020.
As a result of the continued impact of the COVID-19 pandemic, the IRS delayed the start of the 2021 tax season and extended the filing and payment deadline for tax year 2020 federal tax returns from April 15, 2021 to May 17, 2021. In addition, the IRS further extended the federal filing and payment deadline for Texas, Louisiana, and Oklahoma to June 15, 2021. This extension resulted in the shifting of a significant portion of Tax Software segment revenue that would typically have been expected to be earned in the first quarter of 2021 to the second quarter of 2021.
Segments
We have two reportable segments: (1) the Wealth Management segment and (2) the Tax Software segment.

Blucora, Inc. | Q2 2021 Form 10-Q 9


Note 2: Summary of Significant Accounting Policies
Interim financial information
The accompanying condensed consolidated financial statements have been prepared by us under the rules and regulations of the SEC for interim financial reporting. These condensed consolidated financial statements are unaudited and, in management’s opinion, include all adjustments, consisting of normal recurring adjustments and accruals, necessary for a fair presentation of the consolidated financial position, results of operations, and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in conformity with United States generally accepted accounting principles (GAAP”) have been omitted in accordance with the rules and regulations of the SEC. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2020. Interim results are not necessarily indicative of results for a full year.
Cash, cash equivalents, and restricted cash
The following table presents cash, cash equivalents, and restricted cash as reported on the condensed consolidated balance sheets and the condensed consolidated statements of cash flows (in thousands):
June 30, 2021December 31, 2020
Cash and cash equivalents$232,409 $150,125 
Cash segregated under federal or other regulations591 637 
Total cash, cash equivalents, and restricted cash$233,000 $150,762 
We generally invest our available cash in high-quality marketable investments. These investments include money market funds invested in securities issued by agencies of the U.S. government. We may invest, from time-to-time, in other vehicles, such as debt instruments issued by the U.S. federal government and its agencies, international governments, municipalities, and publicly held corporations, as well as commercial paper and insured time deposits with commercial banks. Specific holdings can vary from period to period depending upon our cash requirements. Such investments are reported at fair value on the condensed consolidated balance sheets.
Cash segregated under federal and other regulations is held in a separate bank account for the exclusive benefit of our Avantax Wealth Management clients and is considered restricted cash.
Goodwill
Goodwill represents the cost of an acquisition less the fair value of the net identifiable assets of the acquired business. We evaluate goodwill for impairment annually, as of November 30, or more frequently when events or circumstances indicate it is more likely than not that the fair value of one or more of our reporting units is less than its carrying amount. To determine whether it is necessary to perform a goodwill impairment test, we first assess qualitative factors to evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. We may elect to perform a goodwill impairment test without completing a qualitative assessment.
Beginning in March 2020, the COVID-19 pandemic had a significant negative impact on the U.S. and global economy and caused substantial disruption in the U.S. and global securities markets, and as a result, negatively impacted certain key Wealth Management business drivers, such as client asset levels and interest rates. These macroeconomic and Company-specific factors, in totality, served as a triggering event that resulted in the testing of the goodwill of the Wealth Management reporting unit and the Tax Software reporting unit for potential impairment.
As part of the goodwill impairment test, we compared the estimated fair values of the Wealth Management and Tax Software reporting units to their respective carrying values. Estimated fair value was calculated using Level 3 inputs and utilized a blended valuation method that factored in the income approach and the market approach. The income approach estimated fair value by using the present value of future discounted cash flows. Significant estimates used in the discounted cash flow model included our forecasted cash flows, our long-term rates of growth, and our weighted average cost of capital. The weighted average cost of capital factors in the relevant risk associated with business-specific characteristics and the uncertainty related to the ability to achieve our projected cash flows. The market approach estimated fair value by taking income-based valuation multiples for a set of comparable companies and applying the valuation multiple to each reporting unit’s income.
Blucora, Inc. | Q2 2021 Form 10-Q 10


For the Wealth Management reporting unit, the carrying value of the reporting unit exceeded its fair value by $270.6 million. Therefore, we recorded an impairment of goodwill of $270.6 million in the first quarter of 2020. For the Tax Software reporting unit, the carrying value of the reporting unit was significantly below its fair value, and therefore, the goodwill of the Tax Software reporting unit was not considered impaired.
While no goodwill impairment triggering events were identified during the six months ended June 30, 2021, the Wealth Management reporting unit is considered to be at risk for a future impairment of its goodwill in the event of a further decline in general economic, market, or business conditions, or any significant unfavorable changes in our forecasted revenue, expenses, cash flows, weighted average cost of capital, and/or market valuation multiples. We will continue to monitor for events and circumstances that could negatively impact the key assumptions in determining the fair value of the Wealth Management reporting unit.

Note 3: Segment Information and Revenues
We have two reportable segments: (1) the Wealth Management segment and (2) the Tax Software segment. Our Chief Executive Officer is the chief operating decision maker and reviews financial information presented on a disaggregated basis. This information is used for purposes of allocating resources and evaluating financial performance.
We do not allocate certain general and administrative costs (including personnel and overhead costs), stock-based compensation, depreciation, amortization of acquired intangible assets, acquisition and integration costs, executive transition costs, headquarters relocation costs, contested proxy and other legal and consulting costs, or impairment of goodwill to the reportable segments. Such amounts are reflected in the table below under the heading “Corporate-level activity.” In addition, we do not allocate other loss, net, or income taxes to the reportable segments. We do not report assets or capital expenditures by segment to the chief operating decision maker.
Information on reportable segments currently presented to our chief operating decision maker and a reconciliation to consolidated net income (loss) are presented below (in thousands):
Three months ended June 30,Six months ended June 30,
2021202020212020
Revenue:
Wealth Management$162,395 $115,884 $316,886 $260,873 
Tax Software91,917 45,238 215,809 163,569 
Total revenue254,312 161,122 532,695 424,442 
Operating income (loss):
Wealth Management21,396 11,731 40,792 34,329 
Tax Software63,448 6,659 114,336 44,412 
Corporate-level activity(43,218)(22,996)(76,273)(325,186)
Total operating income (loss)41,626 (4,606)78,855 (246,445)
Other loss, net(8,024)(5,288)(15,907)(11,423)
Income tax benefit (expense)(1,994)59,539 (3,694)(7,981)
Net income (loss)$31,608 $49,645 $59,254 $(265,849)
Blucora, Inc. | Q2 2021 Form 10-Q 11


Revenues by major category within each segment are presented below (in thousands):
Three months ended June 30,Six months ended June 30,
2021202020212020
Wealth Management:
Advisory$96,508 $66,303 $187,627 $145,060 
Commission51,702 39,836 104,236 90,416 
Asset-based5,526 3,981 10,855 14,560 
Transaction and fee8,659 5,764 14,168 10,837 
Total Wealth Management revenue$162,395 $115,884 $316,886 $260,873 
Tax Software:
Consumer$88,846 $44,421 $199,413 $148,242 
Professional3,071 817 16,396 15,327 
Total Tax Software revenue$91,917 $45,238 $215,809 $163,569 
Wealth Management revenue recognition
Wealth management revenue primarily consists of advisory revenue, commission revenue, asset-based revenue, and transaction and fee revenue.
The timing of Wealth Management revenue recognition was as follows (in thousands):
Three months ended June 30,
20212020
Recognized Upon TransactionRecognized Over TimeTotalRecognized Upon TransactionRecognized Over TimeTotal
Advisory revenue$ $96,508 $96,508 $ $66,303 $66,303 
Commission revenue21,076 30,626 51,702 14,803 25,033 39,836 
Asset-based revenue 5,526 5,526  3,981 3,981 
Transaction and fee revenue1,192 7,467 8,659 1,137 4,627 5,764 
Total Wealth Management revenue$22,268 $140,127 $162,395 $15,940 $99,944 $115,884 
Six months ended June 30,
20212020
Recognized Upon TransactionRecognized Over TimeTotalRecognized Upon TransactionRecognized Over TimeTotal
Advisory revenue$ $187,627 $187,627 $ $145,060 $145,060 
Commission revenue43,443 60,793 104,236 38,184 52,232 90,416 
Asset-based revenue 10,855 10,855  14,560 14,560 
Transaction and fee revenue2,566 11,602 14,168 2,996 7,841 10,837 
Total Wealth Management revenue$46,009 $270,877 $316,886 $41,180 $219,693 $260,873 
Tax Software revenue recognition
We generate Tax Software revenue from the sale of tax preparation digital services, packaged tax preparation software, ancillary services, and multiple element arrangements that may include a combination of these items.
The timing of Tax Software revenue recognition was as follows (in thousands):
Three months ended June 30,
20212020
Recognized Upon TransactionRecognized Over TimeTotalRecognized Upon TransactionRecognized Over TimeTotal
Consumer revenue$88,846 $ $88,846 $44,420 $1 $44,421 
Professional revenue2,128 943 3,071 187 630 817 
Total Tax Software revenue$90,974 $943 $91,917 $44,607 $631 $45,238 
Blucora, Inc. | Q2 2021 Form 10-Q 12


Six months ended June 30,
20212020
Recognized Upon TransactionRecognized Over TimeTotalRecognized Upon TransactionRecognized Over TimeTotal
Consumer revenue$199,413 $ $199,413 $148,241 $1 $148,242 
Professional revenue14,255 2,141 16,396 13,181 2,146 15,327 
Total Tax Software revenue$213,668 $2,141 $215,809 $161,422 $2,147 $163,569 

Note 4: Debt
Our debt consisted of the following as of the periods indicated in the table below (in thousands):
 June 30, 2021December 31, 2020
 Principal
amount
DiscountDebt issuance costsNet 
carrying
value
Principal
amount
DiscountDebt issuance costsNet 
carrying
value
Senior secured credit facility
$562,250 $(3,612)$(4,022)$554,616 $563,156 $(4,173)$(4,646)$554,337 
Less: Current portion of long-term debt, net(1,788)(1,784)
Long-term debt, net$552,828 $552,553 
In May 2017, we entered into a credit agreement (as the same has been amended, the “Credit Agreement”) with a syndicate of lenders, which provides for a term loan facility (the “Term Loan”) and a revolving line of credit (including a letter of credit sub-facility) (the “Revolver”) for working capital, capital expenditures, and general business purposes (the “Senior Secured Credit Facility”).
On April 26, 2021, to ensure adequate liquidity and flexibility to support growth, we entered into Amendment No. 5 to the Credit Agreement (the “Credit Agreement Amendment”). Pursuant to the Credit Agreement Amendment, the Credit Agreement was amended to, among other things, refinance the existing $65.0 million Revolver and add $25.0 million of additional revolving credit commitments, for an aggregate principal amount of $90.0 million in revolving credit commitments (the “New Revolver”).
As of June 30, 2021, the Senior Secured Credit Facility provided for up to $765.0 million of borrowings and consisted of a committed $90.0 million under the New Revolver and a $675.0 million Term Loan that mature on February 21, 2024 and May 22, 2024, respectively. Obligations under the Senior Secured Credit Facility are guaranteed by certain of the Company’s subsidiaries and secured by substantially all the assets of the Company and certain of its subsidiaries (including certain subsidiaries acquired in the HKFS Acquisition and certain other material subsidiaries). The Senior Secured Credit Facility includes financial and operating covenants (including a Consolidated Total Net Leverage Ratio), which are set forth in detail in the Credit Agreement.
As of June 30, 2021, we had $562.3 million in principal amount outstanding under the Term Loan and no amounts outstanding under the New Revolver. Based on aggregate loan commitments as of June 30, 2021, approximately $90.0 million was available for future borrowing under the Senior Secured Credit Facility, subject to customary terms and conditions.
The interest rate on the Term Loan is variable at the London Interbank Offered Rate, plus the applicable interest rate margin of 4.0% for Eurodollar Rate Loans (as defined in the Credit Agreement) and 3.0% for ABR Loans (as defined in the Credit Agreement). As of June 30, 2021, the applicable interest rate on the Term Loan was 5.0%.
The Company is required to make mandatory annual prepayments on the Term Loan in certain circumstances, including in the event that the Company generates Excess Cash Flow (as defined in the Credit Agreement) in a given fiscal year. The Credit Agreement permits the Company to voluntarily prepay the Term Loan without premium or penalty. The Company is required to make principal amortization payments on the Term Loan quarterly on the last business day of each March, June, September, and December, in an amount equal to $0.5 million (subject to reduction for prepayments), with the remaining principal amount of the Term Loan due on the maturity date of May 22, 2024.
Blucora, Inc. | Q2 2021 Form 10-Q 13


Depending on the Consolidated First Lien Net Leverage Ratio (as defined in the Credit Agreement), the applicable interest rate margin on the New Revolver ranges from 2.0% to 2.5% for Eurodollar Rate Loans and 1.0% to 1.5% for ABR Loans. The Company is required to pay a commitment fee on the undrawn commitment under the New Revolver in a percentage that is dependent on the Consolidated First Lien Net Leverage Ratio that ranges from 0.35% to 0.4%. Interest is payable at the end of each interest period.
Pursuant to the Credit Agreement Amendment, if the Company’s usage of the New Revolver exceeds 30% of the aggregate commitments under the New Revolver on the last day of any calendar quarter, the Company shall not permit the Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement) to exceed (i) 4.75 to 1.00 for the period beginning on April 1, 2021 and ending on December 31, 2021, (ii) 4.25 to 1.00 for the period beginning on January 1, 2022 and ending on September 30, 2022, (iii) 4.00 to 1.00 for the period beginning on October 1, 2022 and ending on December 31, 2022, and (iv) 3.50 to 1.00 for the period beginning on January 1, 2023 and ending on February 21, 2024.

Note 5: Leases
Our leases are primarily related to office space and are classified as operating leases. Operating lease expense, net of sublease income, is recognized in “General and administrative” expense (for net lease expense related to leases used in our operations) and “Acquisition and integration” expense (for net lease expense related to the unoccupied lease resulting from the acquisition of 1st Global, Inc. and 1st Global Insurance Services, Inc. (together, “1st Global”) in 2019 (the “1st Global Acquisition”)) on the condensed consolidated statements of comprehensive income (loss).
Lease expense, cash paid on operating lease liabilities, and lease liabilities obtained from new right-of-use assets for the three and six months ended June 30, 2021 and 2020 were as follows (in thousands):
Three months ended June 30,Six months ended June 30,
2021202020212020
Fixed lease expense$1,099 $2,050 $2,253 $4,086 
Variable lease expense102 286 245 587 
Lease expense, before sublease income1,201 2,336 2,498 4,673 
Sublease income(116)(329)(232)(655)
Total lease expense, net of sublease income$1,085 $2,007 $2,266 $4,018 
Additional lease information:
Cash paid on operating lease liabilities$228 $1,282 $445 $2,472 
Lease liabilities obtained from new right-of-use assets (1)
$93 $ $93 $20,414 
__________________________
(1)Lease liabilities obtained from new right-of-use assets for the six months ended June 30, 2020 resulted from the new corporate headquarters lease that commenced in January 2020.
As of June 30, 2021, our weighted-average remaining operating lease term was approximately 10.8 years, and our weighted-average operating lease discount rate was 5.4%.
Blucora, Inc. | Q2 2021 Form 10-Q 14


Operating leases were recorded on the condensed consolidated balance sheets as follows (in thousands):
June 30, 2021December 31, 2020
Lease liabilities—current$3,768 $2,304 
Lease liabilities—long-term34,765 36,404 
Total operating lease liabilities$38,533 $38,708 
The scheduled maturities of our operating lease liabilities as of June 30, 2021 are as follows (in thousands):
Undiscounted cash flows:
Remainder of 2021$1,407 
2022