Blucora, Inc. (NASDAQ:BCOR), a leading provider of
technology-enabled financial solutions to consumers, small
businesses and tax professionals, today announced financial results
for the fourth quarter and full year ended December 31, 2016.
“Our business results exceeded our expectations in the fourth
quarter,” said John Clendening, President and Chief Executive
Officer of Blucora. “HD Vest was the primary driver, as
segment income was up 13 percent versus last year. We are
pleased with the focus of our teams and the significant progress we
made on our multi-stage business transformation.”
2016 Highlights and Recent
Developments
- Exceeded $10 billion in fee-based assets under management, up 7
percent versus prior year
- Increased Tax Preparation revenue and segment income by 18
percent and 17 percent, respectively, versus prior year
- Repaid $172 million in debt, in part driven by the sales of
Infospace and Monoprice
- Strengthened leadership team with the appointment of Sanjay
Baskaran as President of TaxAct and Bob Oros as HD Vest chief
executive officer
Clendening added, “Looking ahead, we continue to build momentum
at HD Vest and are strategically investing in technology and
upgrading trading platforms to enhance our capabilities. To
enable long-term growth in Tax Preparation, we are in the early
stages of re-establishing TaxAct as the challenger brand in the
digital space, with a strong user experience at a superior value
for customers. Blucora now consists of HD Vest and TaxAct as
our operational foundation, a simplified, streamlined and
synergistic business. With new leadership and an energized
team, we are taking the steps necessary to deliver value for
Blucora shareholders in 2017 and beyond.”
The following presentation includes pro forma financial
information and HD Vest. In addition, it excludes the Search
and Content and E-Commerce segments which have been classified as
discontinued operations for all periods presented. The
Company believes that this presentation most accurately reflects
the financial performance of the Company on a go-forward basis.
Summary Financial Performance: Q4 and Full
Year 2016 |
($ in millions except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 |
|
Q4 |
|
|
|
Full Year |
|
Full Year |
|
|
|
2016 |
|
2015 |
|
Change |
|
2016 |
|
2015 |
|
Change |
|
As reported |
|
Pro forma |
|
|
|
As reported |
|
Pro forma |
|
|
Revenue |
$ |
86.8 |
|
|
$ |
85.0 |
|
|
2 |
% |
|
$ |
455.9 |
|
|
$ |
437.4 |
|
|
4 |
% |
Wealth
Management |
$ |
83.0 |
|
|
$ |
82.1 |
|
|
1 |
% |
|
$ |
316.5 |
|
|
$ |
319.7 |
|
|
(1 |
)% |
Tax
Preparation |
$ |
3.8 |
|
|
$ |
2.9 |
|
|
31 |
% |
|
$ |
139.4 |
|
|
$ |
117.7 |
|
|
18 |
% |
Segment Income
(Loss) |
$ |
7.7 |
|
|
$ |
7.7 |
|
|
— |
% |
|
$ |
113.2 |
|
|
$ |
100.0 |
|
|
13 |
% |
Wealth
Management |
$ |
13.8 |
|
|
$ |
12.2 |
|
|
13 |
% |
|
$ |
46.3 |
|
|
$ |
43.0 |
|
|
8 |
% |
Tax
Preparation |
$ |
(6.1 |
) |
|
$ |
(4.5 |
) |
|
35 |
% |
|
$ |
66.9 |
|
|
$ |
57.0 |
|
|
17 |
% |
Unallocated Corporate
Operating Expenses |
$ |
4.9 |
|
|
$ |
4.3 |
|
|
15 |
% |
|
$ |
19.0 |
|
|
$ |
17.8 |
|
|
7 |
% |
GAAP: |
|
|
|
|
|
|
|
|
|
|
|
Operating
Income (Loss) |
$ |
(14.2 |
) |
|
$ |
(12.0 |
) |
|
18 |
% |
|
$ |
37.1 |
|
|
$ |
23.2 |
|
|
60 |
% |
Net Loss
Attributable to Blucora, Inc. |
$ |
(19.3 |
) |
|
$ |
(48.4 |
) |
|
(60 |
)% |
|
$ |
(65.2 |
) |
|
$ |
(38.9 |
) |
|
68 |
% |
Diluted
Net Loss Per Share Attributable to Blucora, Inc. |
$ |
(0.46 |
) |
|
$ |
(1.18 |
) |
|
(61 |
)% |
|
$ |
(1.53 |
) |
|
$ |
(0.93 |
) |
|
65 |
% |
Non-GAAP: |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
2.8 |
|
|
$ |
3.5 |
|
|
(19 |
)% |
|
$ |
94.2 |
|
|
$ |
82.2 |
|
|
15 |
% |
Net
Income (Loss) |
$ |
(7.5 |
) |
|
$ |
(8.0 |
) |
|
(6 |
)% |
|
$ |
45.1 |
|
|
$ |
37.0 |
|
|
22 |
% |
Diluted
Net Income (Loss) per Share |
$ |
(0.18 |
) |
|
$ |
(0.19 |
) |
|
(5 |
)% |
|
$ |
1.06 |
|
|
$ |
0.88 |
|
|
20 |
% |
See
reconciliation of as reported and pro forma non-GAAP to GAAP
measures in tables below. |
First Quarter Outlook
For the first quarter of 2017, the Company expects revenues to
be between $176.3 million and $181.5 million, GAAP income from
continuing operations to be between $14.5 million and $15.2
million, or $0.32 to $0.34 per diluted share, Adjusted EBITDA
to be between $51.0 million and $54.5 million, and Non-GAAP income
from continuing operations to be between $40.2 million and $43.9
million, or $0.90 to $0.98 per diluted share.
Conference Call and Webcast
A conference call and live webcast will be held today at
5:30 a.m. Pacific Time / 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, tax season update and
other business matters. We have also provided supplemental
financial information to our results that can be accessed in the
Investor Relations section of the Blucora corporate website at
http://www.blucora.com and filed with the SEC on Form
8-K. A replay of the call and management's prepared remarks
will also be available on our website.
About Blucora®
Blucora, Inc. (NASDAQ:BCOR) is a leading provider of
technology-enabled financial solutions to consumers, small
businesses and tax professionals. Our products and services
in tax preparation and wealth management, through TaxAct and HD
Vest, help consumers manage their financial lives. TaxAct is
an affordable digital tax preparation solution for individuals,
business owners and tax professionals. HD Vest Financial
Services ® supports an independent network of tax professionals who
provide comprehensive financial planning solutions. For more
information on Blucora or its businesses, please visit
www.blucora.com.
This announcement contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Actual results
may differ significantly from management’s expectations due to
various risks and uncertainties including, but not limited to:
general economic, industry, and market sector conditions; the
effect of current, pending and future legislation, regulation and
regulatory actions, including the DOL rule; the availability of
products to sell; the timing and extent of market acceptance of
developed products and services and related costs; our dependence
on companies to distribute our products and services; the
successful execution of the Company’s strategic initiatives,
technology enhancements, operating plans, and marketing strategies;
the condition of our cash investments; and the Company’s ability to
control operating risks, information technology system risks and
cybersecurity risks. A more detailed description of these and
certain other factors that could affect actual results is included
in Blucora, Inc.’s most recent Quarterly Report on Form 10-Q and
subsequent reports filed with or furnished to the Securities and
Exchange Commission. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as
of the date of this release. Blucora, Inc. undertakes no
obligation to update any forward-looking statements to reflect new
information, events, or circumstances after the date of this
release or to reflect the occurrence of unanticipated events.
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, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wealth
management services revenue |
$ |
83,050 |
|
|
$ |
— |
|
|
$ |
316,546 |
|
|
$ |
— |
|
Tax
preparation services revenue |
3,751 |
|
|
2,865 |
|
|
139,365 |
|
|
117,708 |
|
Total
revenue |
86,801 |
|
|
2,865 |
|
|
455,911 |
|
|
117,708 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Cost of
revenue: |
|
|
|
|
|
|
|
Wealth
management services cost of revenue |
55,783 |
|
|
— |
|
|
213,996 |
|
|
— |
|
Tax
preparation services cost of revenue |
1,819 |
|
|
1,487 |
|
|
8,368 |
|
|
6,167 |
|
Amortization of acquired technology |
47 |
|
|
1,910 |
|
|
812 |
|
|
7,546 |
|
Total
cost of revenue (1) |
57,649 |
|
|
3,397 |
|
|
223,176 |
|
|
13,713 |
|
Engineering and technology (1) |
4,938 |
|
|
1,636 |
|
|
17,780 |
|
|
5,107 |
|
Sales and
marketing (1) |
13,645 |
|
|
3,030 |
|
|
89,360 |
|
|
45,854 |
|
General
and administrative (1) |
11,497 |
|
|
19,869 |
|
|
47,396 |
|
|
43,563 |
|
Depreciation |
975 |
|
|
420 |
|
|
3,881 |
|
|
1,521 |
|
Amortization of other acquired intangible assets |
8,402 |
|
|
3,191 |
|
|
33,331 |
|
|
12,757 |
|
Restructuring (1) |
3,870 |
|
|
— |
|
|
3,870 |
|
|
— |
|
Total
operating expenses |
100,976 |
|
|
31,543 |
|
|
418,794 |
|
|
122,515 |
|
Operating income
(loss) |
(14,175 |
) |
|
(28,678 |
) |
|
37,117 |
|
|
(4,807 |
) |
Other loss, net
(2) |
(9,898 |
) |
|
(3,433 |
) |
|
(39,781 |
) |
|
(12,542 |
) |
Loss from continuing
operations before income taxes |
(24,073 |
) |
|
(32,111 |
) |
|
(2,664 |
) |
|
(17,349 |
) |
Income tax benefit |
10,184 |
|
|
9,767 |
|
|
1,285 |
|
|
4,623 |
|
Loss from continuing
operations |
(13,889 |
) |
|
(22,344 |
) |
|
(1,379 |
) |
|
(12,726 |
) |
Discontinued
operations, net of income taxes (3) |
(5,140 |
) |
|
(34,470 |
) |
|
(63,121 |
) |
|
(27,348 |
) |
Net loss |
(19,029 |
) |
|
(56,814 |
) |
|
(64,500 |
) |
|
(40,074 |
) |
Net income attributable
to noncontrolling interests |
(232 |
) |
|
— |
|
|
(658 |
) |
|
— |
|
Net loss attributable
to Blucora, Inc. |
$ |
(19,261 |
) |
|
$ |
(56,814 |
) |
|
$ |
(65,158 |
) |
|
$ |
(40,074 |
) |
Net loss per share
attributable to Blucora, Inc. - basic: |
|
|
|
|
|
|
|
Continuing operations |
$ |
(0.34 |
) |
|
$ |
(0.55 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.31 |
) |
Discontinued operations |
(0.12 |
) |
|
(0.84 |
) |
|
(1.52 |
) |
|
(0.67 |
) |
Basic net
loss per share |
$ |
(0.46 |
) |
|
$ |
(1.39 |
) |
|
$ |
(1.57 |
) |
|
$ |
(0.98 |
) |
Net loss per share
attributable to Blucora, Inc. - diluted: |
|
|
|
|
|
|
|
Continuing operations |
$ |
(0.34 |
) |
|
$ |
(0.55 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.31 |
) |
Discontinued operations |
(0.12 |
) |
|
(0.84 |
) |
|
(1.52 |
) |
|
(0.67 |
) |
Diluted
net loss per share |
$ |
(0.46 |
) |
|
$ |
(1.39 |
) |
|
$ |
(1.57 |
) |
|
$ |
(0.98 |
) |
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
41,766 |
|
|
40,979 |
|
|
41,494 |
|
|
40,959 |
|
Diluted |
41,766 |
|
|
40,979 |
|
|
41,494 |
|
|
40,959 |
|
(1)
Stock-based compensation expense was allocated among the following
captions (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
|
|
Years ended December 31, |
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
Cost of
revenue |
$ |
|
|
|
|
|
|
49 |
|
|
$ |
|
|
25 |
|
|
$ |
|
|
|
|
|
|
166 |
|
|
$ |
|
|
96 |
|
Engineering and technology |
473 |
|
|
148 |
|
|
1,640 |
|
|
484 |
|
Sales and
marketing |
860 |
|
|
161 |
|
|
2,548 |
|
|
771 |
|
General
and administrative |
2,130 |
|
|
2,386 |
|
|
9,774 |
|
|
7,343 |
|
Restructuring |
(364 |
) |
|
— |
|
|
(364 |
) |
|
— |
|
Total stock-based compensation expense |
$ |
3,148 |
|
|
$ |
2,720 |
|
|
$ |
13,764 |
|
|
$ |
8,694 |
|
(2) Other
loss, net consisted of the following (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
|
|
Years ended December 31, |
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
Interest
income |
$ |
|
|
|
|
|
|
(27 |
) |
|
$ |
|
|
(179 |
) |
|
|
$ |
|
|
|
|
|
(81 |
) |
|
$ |
|
|
(609 |
) |
Interest
expense |
7,028 |
|
|
2,211 |
|
|
32,424 |
|
|
9,044 |
|
Amortization of debt issuance costs |
400 |
|
|
291 |
|
|
1,840 |
|
|
1,133 |
|
Accretion
of debt discounts |
1,091 |
|
|
993 |
|
|
4,690 |
|
|
3,866 |
|
Loss on
debt extinguishment and modification expense |
1,677 |
|
|
398 |
|
|
1,036 |
|
|
398 |
|
Gain on
third party bankruptcy settlement |
(44 |
) |
|
(62 |
) |
|
(172 |
) |
|
(1,128 |
) |
Other |
(227 |
) |
|
(219 |
) |
|
44 |
|
|
(162 |
) |
Other loss, net |
$ |
9,898 |
|
|
$ |
3,433 |
|
|
$ |
39,781 |
|
|
$ |
12,542 |
|
|
(3)
Discontinued operations included loss on sale of discontinued
operations before income taxes of $73.8 million and goodwill and
trade name impairments totaling $59.0 million for the years ended
December 31, 2016 and 2015, respectively. |
Blucora, Inc. |
Preliminary Condensed Consolidated Balance
Sheets |
(Unaudited) |
(Amounts in thousands) |
|
|
|
|
|
December 31, |
|
2016 |
|
2015 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
51,713 |
|
|
$ |
55,473 |
|
Cash
segregated under federal or other regulations |
2,355 |
|
|
3,557 |
|
Available-for-sale investments |
7,101 |
|
|
11,301 |
|
Accounts
receivable, net of allowance |
10,209 |
|
|
7,884 |
|
Commissions receivable |
16,144 |
|
|
16,328 |
|
Other
receivables |
4,004 |
|
|
24,407 |
|
Prepaid
expenses and other current assets, net |
6,321 |
|
|
10,062 |
|
Current
assets of discontinued operations |
— |
|
|
211,663 |
|
Total
current assets |
97,847 |
|
|
340,675 |
|
Long-term assets: |
|
|
|
Property
and equipment, net |
10,836 |
|
|
11,308 |
|
Goodwill,
net |
548,741 |
|
|
548,959 |
|
Other
intangible assets, net |
362,178 |
|
|
396,295 |
|
Other
long-term assets |
3,057 |
|
|
2,311 |
|
Total
long-term assets |
924,812 |
|
|
958,873 |
|
Total
assets |
$ |
1,022,659 |
|
|
$ |
1,299,548 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
4,536 |
|
|
$ |
4,689 |
|
Commissions and advisory fees payable |
16,587 |
|
|
16,982 |
|
Accrued
expenses and other current liabilities |
18,528 |
|
|
13,006 |
|
Deferred
revenue |
12,156 |
|
|
11,521 |
|
Current
portion of long-term debt, net |
2,560 |
|
|
31,631 |
|
Current
liabilities of discontinued operations |
— |
|
|
88,275 |
|
Total
current liabilities |
54,367 |
|
|
166,104 |
|
Long-term
liabilities: |
|
|
|
Long-term
debt, net |
248,221 |
|
|
353,850 |
|
Convertible senior notes, net |
164,176 |
|
|
185,918 |
|
Deferred
tax liability, net |
111,126 |
|
|
103,520 |
|
Deferred
revenue |
1,849 |
|
|
1,902 |
|
Other
long-term liabilities |
10,205 |
|
|
10,932 |
|
Total
long-term liabilities |
535,577 |
|
|
656,122 |
|
Total
liabilities |
589,944 |
|
|
822,226 |
|
|
|
|
|
Redeemable
noncontrolling interests |
15,696 |
|
|
15,038 |
|
|
|
|
|
Stockholders’
equity: |
|
|
|
Common
stock |
4 |
|
|
4 |
|
Additional paid-in capital |
1,510,152 |
|
|
1,490,405 |
|
Accumulated deficit |
(1,092,756 |
) |
|
(1,027,598 |
) |
Accumulated other comprehensive loss |
(381 |
) |
|
(527 |
) |
Total
stockholders’ equity |
417,019 |
|
|
462,284 |
|
Total
liabilities and stockholders’ equity |
$ |
1,022,659 |
|
|
$ |
1,299,548 |
|
Blucora, Inc. |
|
Preliminary Condensed Consolidated Statements
of Cash Flows |
|
(Unaudited) |
|
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31, |
|
|
|
2016 |
|
|
|
2015 |
|
Operating
Activities: |
|
|
|
|
|
|
|
Net
loss |
$ |
(64,500 |
) |
|
$ |
(40,074 |
) |
Less:
Discontinued operations, net of income taxes |
(63,121 |
) |
|
(27,348 |
) |
Net loss
from continuing operations |
(1,379 |
) |
|
(12,726 |
) |
Adjustments to reconcile net loss from continuing operations to net
cash from operating activities: |
|
|
|
Stock-based compensation |
13,764 |
|
|
8,694 |
|
Depreciation and amortization of acquired intangible assets |
38,688 |
|
|
22,590 |
|
Excess
tax benefits from stock-based award activity |
(15,957 |
) |
|
(7,967 |
) |
Deferred
income taxes |
(18,055 |
) |
|
(12,607 |
) |
Amortization of premium on investments, net |
174 |
|
|
1,589 |
|
Amortization of debt issuance costs |
1,840 |
|
|
1,133 |
|
Accretion
of debt discounts |
4,690 |
|
|
3,866 |
|
Loss on
debt extinguishment and modification expense |
1,036 |
|
|
398 |
|
Revaluation of acquisition-related contingent consideration
liability |
391 |
|
|
— |
|
Other |
19 |
|
|
203 |
|
Cash
provided (used) by changes in operating assets and
liabilities: |
|
|
|
Cash
segregated under federal or other regulations |
1,202 |
|
|
— |
|
Accounts
receivable |
(2,340 |
) |
|
(1,862 |
) |
Commissions receivable |
184 |
|
|
— |
|
Other
receivables |
22,875 |
|
|
651 |
|
Prepaid
expenses and other current assets |
3,741 |
|
|
(493 |
) |
Other
long-term assets |
(887 |
) |
|
(15 |
) |
Accounts
payable |
(153 |
) |
|
369 |
|
Commissions and advisory fees payable |
(395 |
) |
|
— |
|
Deferred
revenue |
582 |
|
|
1,875 |
|
Accrued
expenses and other current and long-term liabilities |
21,195 |
|
|
10,643 |
|
Net cash
provided by operating activities from continuing operations |
71,215 |
|
|
16,341 |
|
Investing
Activities: |
|
|
|
Business
acquisitions, net of cash acquired |
(1,788 |
) |
|
(573,366 |
) |
Purchases
of property and equipment |
(3,812 |
) |
|
(1,512 |
) |
Change in
restricted cash |
— |
|
|
150 |
|
Proceeds
from sales of investments |
— |
|
|
156,506 |
|
Proceeds
from maturities of investments |
12,807 |
|
|
296,455 |
|
Purchases
of investments |
(8,767 |
) |
|
(214,257 |
) |
Net cash
used by investing activities from continuing operations |
(1,560 |
) |
|
(336,024 |
) |
Financing
Activities: |
|
|
|
Proceeds
from credit facility, net of debt issuance costs and debt discount
of $9,730 and $12,000 in 2015 |
— |
|
|
378,270 |
|
Repurchase of convertible notes |
(20,667 |
) |
|
— |
|
Repayment
of credit facility |
(140,000 |
) |
|
(51,940 |
) |
Repayment
of note payable with related party |
(3,200 |
) |
|
— |
|
Stock
repurchases |
— |
|
|
(7,735 |
) |
Excess
tax benefits from stock-based award activity |
15,957 |
|
|
7,967 |
|
Proceeds
from stock option exercises |
2,216 |
|
|
2,409 |
|
Proceeds
from issuance of stock through employee stock purchase plan |
1,402 |
|
|
1,193 |
|
Tax
payments from shares withheld for equity awards |
(1,752 |
) |
|
(1,545 |
) |
Net cash
provided (used) by financing activities from continuing
operations |
(146,044 |
) |
|
328,619 |
|
Net cash
provided (used) by continuing operations |
(76,389 |
) |
|
8,936 |
|
|
|
|
|
Net cash provided by
operating activities from discontinued operations |
14,047 |
|
|
14,108 |
|
Net cash provided
(used) by investing activities from discontinued operations |
83,608 |
|
|
(540 |
) |
Net cash provided
(used) by financing activities from discontinued operations |
(25,000 |
) |
|
(8,982 |
) |
Net cash provided by
discontinued operations |
72,655 |
|
|
4,586 |
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
(26 |
) |
|
(17 |
) |
Net increase (decrease)
in cash and cash equivalents |
(3,760 |
) |
|
13,505 |
|
Cash and cash
equivalents, beginning of period |
55,473 |
|
|
41,968 |
|
Cash and cash
equivalents, end of period |
$ |
51,713 |
|
|
$ |
55,473 |
|
Blucora, Inc. |
|
Preliminary Segment Information |
|
(Unaudited) |
|
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
|
|
|
Years ended December 31, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wealth
Management (1) |
$ |
83,050 |
|
|
$ |
— |
|
|
$ |
316,546 |
|
|
$ |
— |
|
Tax
Preparation (1) |
3,751 |
|
|
2,865 |
|
|
139,365 |
|
|
117,708 |
|
Total
revenue |
86,801 |
|
|
2,865 |
|
|
455,911 |
|
|
117,708 |
|
Operating income
(loss): |
|
|
|
|
|
|
|
Wealth
Management |
13,838 |
|
|
— |
|
|
46,296 |
|
|
— |
|
Tax
Preparation |
(6,090 |
) |
|
(4,509 |
) |
|
66,897 |
|
|
56,984 |
|
Corporate-level activity (2) |
(21,923 |
) |
|
(24,169 |
) |
|
(76,076 |
) |
|
(61,791 |
) |
Total
operating income (loss) |
(14,175 |
) |
|
(28,678 |
) |
|
37,117 |
|
|
(4,807 |
) |
Other loss, net |
(9,898 |
) |
|
(3,433 |
) |
|
(39,781 |
) |
|
(12,542 |
) |
Income tax benefit |
10,184 |
|
|
9,767 |
|
|
1,285 |
|
|
4,623 |
|
Discontinued
operations, net of income taxes |
(5,140 |
) |
|
(34,470 |
) |
|
(63,121 |
) |
|
(27,348 |
) |
Net loss |
$ |
(19,029 |
) |
|
$ |
(56,814 |
) |
|
$ |
(64,500 |
) |
|
$ |
(40,074 |
) |
(1)
Revenues by major category within each segment are presented below
(in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
|
|
Years ended December 31, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
Wealth
Management: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commission |
$ |
39,055 |
|
|
$ |
— |
|
|
$ |
150,125 |
|
|
$ |
— |
|
Advisory |
33,658 |
|
|
— |
|
|
129,417 |
|
|
— |
|
Asset-based |
5,964 |
|
|
— |
|
|
22,653 |
|
|
— |
|
Transaction and fee |
4,373 |
|
|
— |
|
|
14,351 |
|
|
— |
|
Total Wealth Management revenue |
$ |
83,050 |
|
|
— |
|
|
$ |
316,546 |
|
|
— |
|
Tax
Preparation: |
|
|
|
|
|
|
|
Consumer |
$ |
3,611 |
|
|
$ |
2,715 |
|
|
$ |
126,289 |
|
|
$ |
105,367 |
|
Professional |
140 |
|
|
150 |
|
|
13,076 |
|
|
12,341 |
|
Total Tax Preparation revenue |
$ |
3,751 |
|
|
$ |
2,865 |
|
|
$ |
139,365 |
|
|
$ |
117,708 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
Corporate-level activity included the following (in
thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
|
|
Years endedDecember
31, |
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
Operating
expenses |
$ |
|
|
|
|
|
|
4,933 |
|
|
$ |
|
|
4,279 |
|
|
$ |
|
|
|
|
|
|
18,999 |
|
|
$ |
|
|
17,750 |
|
Stock-based compensation |
3,512 |
|
|
2,720 |
|
|
14,128 |
|
|
8,694 |
|
Acquisition-related costs |
— |
|
|
9,674 |
|
|
391 |
|
|
10,988 |
|
CEO
separation-related costs |
— |
|
|
1,769 |
|
|
— |
|
|
1,769 |
|
Depreciation |
1,159 |
|
|
626 |
|
|
4,545 |
|
|
2,287 |
|
Amortization of acquired intangible assets |
8,449 |
|
|
5,101 |
|
|
34,143 |
|
|
20,303 |
|
Restructuring |
3,870 |
|
|
— |
|
|
3,870 |
|
|
— |
|
Total corporate-level activity |
$ |
21,923 |
|
|
$ |
24,169 |
|
|
$ |
76,076 |
|
|
$ |
61,791 |
|
Blucora, Inc. |
|
Reconciliations of Non-GAAP Financial Measures
to the Nearest Comparable GAAP Measures |
|
|
|
Preliminary Adjusted EBITDA
Reconciliation (1) |
|
(Unaudited) |
|
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
|
|
Years ended December 31, |
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
Operating income (loss)
(2) |
$ |
|
|
|
|
|
|
(14,175 |
) |
|
$ |
|
|
(28,678 |
) |
|
$ |
|
|
|
|
|
|
37,117 |
|
|
$ |
|
|
(4,807 |
) |
Stock-based
compensation |
3,512 |
|
|
2,720 |
|
|
14,128 |
|
|
8,694 |
|
Depreciation and
amortization of acquired intangible assets |
9,608 |
|
|
5,727 |
|
|
38,688 |
|
|
22,590 |
|
Acquisition-related
costs |
— |
|
|
9,674 |
|
|
391 |
|
|
10,988 |
|
CEO separation-related
costs |
— |
|
|
1,769 |
|
|
— |
|
|
1,769 |
|
Restructuring |
3,870 |
|
|
— |
|
|
3,870 |
|
|
— |
|
Adjusted EBITDA |
$ |
2,815 |
|
|
$ |
(8,788 |
) |
|
$ |
94,194 |
|
|
$ |
39,234 |
|
Preliminary Non-GAAP Net Income (Loss)
Reconciliation (1) |
|
(Unaudited) |
|
(Amounts in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
|
|
Years ended December 31, |
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
Net loss attributable
to Blucora, Inc.(2) |
$ |
|
|
|
|
|
|
(19,261 |
) |
|
$ |
|
|
(56,814 |
) |
|
$ |
|
|
|
|
|
|
(65,158 |
) |
|
$ |
|
|
(40,074 |
) |
Discontinued
operations, net of income taxes |
5,140 |
|
|
34,470 |
|
|
63,121 |
|
|
27,348 |
|
Stock-based
compensation |
3,512 |
|
|
2,720 |
|
|
14,128 |
|
|
8,694 |
|
Amortization of
acquired intangible assets |
8,449 |
|
|
5,101 |
|
|
34,143 |
|
|
20,303 |
|
Accretion of debt
discount on Convertible Senior Notes |
917 |
|
|
993 |
|
|
3,666 |
|
|
3,866 |
|
Accelerated accretion
of debt discount on Convertible Senior Notes |
— |
|
|
— |
|
|
1,628 |
|
|
— |
|
Gain on Convertible
Senior Notes repurchased |
— |
|
|
— |
|
|
(7,724 |
) |
|
— |
|
Write-off of debt
issuance costs on closed TaxAct 2013 credit facility |
— |
|
|
398 |
|
|
— |
|
|
398 |
|
Acquisition-related
costs |
— |
|
|
9,674 |
|
|
391 |
|
|
10,988 |
|
CEO separation-related
costs |
— |
|
|
1,769 |
|
|
— |
|
|
1,769 |
|
Restructuring |
3,870 |
|
|
— |
|
|
3,870 |
|
|
— |
|
Impact of
noncontrolling interests |
232 |
|
|
— |
|
|
658 |
|
|
— |
|
Cash tax impact of
adjustments to GAAP net income |
(69 |
) |
|
61 |
|
|
175 |
|
|
(236 |
) |
Non-cash income tax
benefit (1) |
(10,262 |
) |
|
(9,827 |
) |
|
(3,802 |
) |
|
(4,857 |
) |
Non-GAAP net income
(loss) |
$ |
(7,472 |
) |
|
$ |
(11,455 |
) |
|
$ |
45,096 |
|
|
$ |
28,199 |
|
|
|
|
|
|
|
|
|
Per diluted share: |
|
|
|
|
|
|
|
Net loss attributable
to Blucora, Inc.(2) |
$ |
(0.46 |
) |
|
$ |
(1.39 |
) |
|
$ |
(1.53 |
) |
|
$ |
(0.96 |
) |
Discontinued
operations, net of income taxes |
0.12 |
|
|
0.84 |
|
|
1.48 |
|
|
0.66 |
|
Stock-based
compensation |
0.08 |
|
|
0.07 |
|
|
0.33 |
|
|
0.21 |
|
Amortization of
acquired intangible assets |
0.21 |
|
|
0.13 |
|
|
0.80 |
|
|
0.49 |
|
Accretion of debt
discount on Convertible Senior Notes |
0.02 |
|
|
0.02 |
|
|
0.09 |
|
|
0.09 |
|
Accelerated accretion
of debt discount on Convertible Senior Notes |
— |
|
|
— |
|
|
0.04 |
|
|
— |
|
Gain on Convertible
Senior Notes repurchased |
— |
|
|
— |
|
|
(0.18 |
) |
|
— |
|
Write-off of debt
issuance costs on closed TaxAct 2013 credit facility |
— |
|
|
0.01 |
|
|
— |
|
|
0.01 |
|
Acquisition-related
costs |
— |
|
|
0.24 |
|
|
0.01 |
|
|
0.26 |
|
CEO separation-related
costs |
— |
|
|
0.04 |
|
|
— |
|
|
0.04 |
|
Restructuring |
0.09 |
|
|
— |
|
|
0.09 |
|
|
— |
|
Impact of
noncontrolling interests |
0.01 |
|
|
— |
|
|
0.02 |
|
|
— |
|
Cash tax impact of
adjustments to GAAP net income |
(0.00 |
) |
|
0.00 |
|
|
0.00 |
|
|
(0.01 |
) |
Non-cash income tax
benefit |
(0.25 |
) |
|
(0.24 |
) |
|
(0.09 |
) |
|
(0.12 |
) |
Non-GAAP net income
(loss) |
$ |
(0.18 |
) |
|
$ |
(0.28 |
) |
|
$ |
1.06 |
|
|
$ |
0.67 |
|
Weighted average shares
outstanding used in computing per diluted share amounts |
41,766 |
|
|
40,979 |
|
|
42,686 |
|
|
41,861 |
|
Blucora, Inc. |
|
Reconciliations of Non-GAAP Financial Measures
to the Nearest Comparable GAAP Measures |
|
(As Reported and Pro Forma) |
|
|
|
Preliminary Adjusted EBITDA Reconciliation (As
Reported and Pro Forma) (1) |
|
(Unaudited) |
|
(Amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
|
|
Years ended December 31, |
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
As reported |
|
|
Pro forma |
|
|
As reported |
|
|
Pro forma |
|
Operating income
(loss) |
$ |
|
|
|
|
|
|
(14,175 |
) |
|
$ |
|
|
(11,983 |
) |
|
$ |
|
|
|
|
|
|
37,117 |
|
|
$ |
|
|
23,176 |
|
Stock-based
compensation |
3,512 |
|
|
4,034 |
|
|
14,128 |
|
|
13,591 |
|
Depreciation and
amortization of acquired intangible assets |
9,608 |
|
|
11,406 |
|
|
38,688 |
|
|
45,464 |
|
Acquisition-related
costs |
— |
|
|
— |
|
|
391 |
|
|
— |
|
Restructuring |
3,870 |
|
|
— |
|
|
3,870 |
|
|
— |
|
Adjusted EBITDA |
$ |
2,815 |
|
|
$ |
3,457 |
|
|
$ |
94,194 |
|
|
$ |
82,231 |
|
Preliminary Non-GAAP Net Income (Loss)
Reconciliation (As Reported and Pro Forma) (1) |
|
(Unaudited) |
|
(Amounts in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
|
|
Years ended December 31, |
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
As reported |
|
|
Pro forma |
|
|
As reported |
|
|
Pro forma |
|
Net loss attributable
to Blucora, Inc. |
$ |
|
|
|
|
|
|
(19,261 |
) |
|
$ |
|
|
(48,363 |
) |
|
$ |
|
|
|
|
|
|
(65,158 |
) |
|
$ |
|
|
(38,884 |
) |
Discontinued
operations, net of income taxes |
5,140 |
|
|
34,470 |
|
|
63,121 |
|
|
27,348 |
|
Stock-based
compensation |
3,512 |
|
|
4,034 |
|
|
14,128 |
|
|
13,591 |
|
Amortization of
acquired intangible assets |
8,449 |
|
|
10,238 |
|
|
34,143 |
|
|
40,851 |
|
Accretion of debt
discount on Convertible Senior Notes |
917 |
|
|
993 |
|
|
3,666 |
|
|
3,866 |
|
Accelerated accretion
of debt discount on Convertible Senior Notes |
— |
|
|
— |
|
|
1,628 |
|
|
— |
|
Gain on Convertible
Senior Notes repurchased |
|
— |
|
|
— |
|
|
(7,724 |
) |
|
— |
|
Acquisition-related
costs |
— |
|
|
— |
|
|
391 |
|
|
— |
|
Restructuring |
3,870 |
|
|
— |
|
|
3,870 |
|
|
— |
|
Impact of
noncontrolling interests |
232 |
|
|
— |
|
|
658 |
|
|
— |
|
Cash tax impact of
adjustments to GAAP net income |
(69 |
) |
|
(100 |
) |
|
175 |
|
|
(400 |
) |
Non-cash income tax
benefit |
(10,262 |
) |
|
(9,248 |
) |
|
(3,802 |
) |
|
(9,422 |
) |
Non-GAAP net income
(loss) |
$ |
(7,472 |
) |
|
$ |
(7,976 |
) |
|
$ |
45,096 |
|
|
$ |
36,950 |
|
|
|
|
|
|
|
|
|
Per diluted share: |
|
|
|
|
|
|
|
Net loss attributable
to Blucora, Inc. |
$ |
(0.46 |
) |
|
$ |
(1.18 |
) |
|
$ |
(1.53 |
) |
|
$ |
(0.93 |
) |
Discontinued
operations, net of income taxes |
0.12 |
|
|
0.84 |
|
|
1.48 |
|
|
$ |
0.65 |
|
Stock-based
compensation |
0.08 |
|
|
0.10 |
|
|
0.33 |
|
|
$ |
0.32 |
|
Amortization of
acquired intangible assets |
0.21 |
|
|
0.25 |
|
|
0.80 |
|
|
$ |
0.98 |
|
Accretion of debt
discount on Convertible Senior Notes |
0.02 |
|
|
0.02 |
|
|
0.09 |
|
|
$ |
0.09 |
|
Accelerated accretion
of debt discount on Convertible Senior Notes |
— |
|
|
— |
|
|
0.04 |
|
|
$ |
— |
|
Gain on Convertible
Senior Notes repurchased |
— |
|
|
— |
|
|
(0.18 |
) |
|
$ |
— |
|
Acquisition-related
costs |
— |
|
|
— |
|
|
0.01 |
|
|
$ |
— |
|
Restructuring |
0.09 |
|
|
— |
|
|
0.09 |
|
|
$ |
— |
|
Impact of
noncontrolling interests |
0.01 |
|
|
— |
|
|
0.02 |
|
|
$ |
— |
|
Cash tax impact of
adjustments to GAAP net income |
(0.00 |
) |
|
(0.00 |
) |
|
0.00 |
|
|
$ |
(0.01 |
) |
Non-cash income tax
benefit |
(0.25 |
) |
|
(0.22 |
) |
|
(0.09 |
) |
|
$ |
(0.22 |
) |
Non-GAAP net income
(loss) |
$ |
(0.18 |
) |
|
$ |
(0.19 |
) |
|
$ |
1.06 |
|
|
$ |
0.88 |
|
Weighted average shares
outstanding used in computing per diluted share amounts |
41,766 |
|
|
40,979 |
|
|
42,686 |
|
|
41,861 |
|
Preliminary Adjusted EBITDA Reconciliation for
Forward-Looking Guidance |
|
(Amounts in thousands) |
|
|
|
|
|
|
|
|
Ranges for the three months ending |
|
|
March 31, 2017 |
|
Income from continuing
operations |
$ |
|
|
|
|
|
|
14,500 |
|
|
$ |
|
15,200 |
|
Stock-based
compensation |
3,200 |
|
|
3,100 |
|
Depreciation and
amortization of acquired intangible assets |
9,800 |
|
|
9,600 |
|
Restructuring |
700 |
|
|
600 |
|
Other loss, net
(3) |
9,400 |
|
|
9,500 |
|
Income tax expense |
13,400 |
|
|
16,500 |
|
Adjusted EBITDA |
$ |
51,000 |
|
|
$ |
54,500 |
|
Preliminary Non-GAAP Income from Continuing
Operations Reconciliation for Forward-Looking
Guidance |
|
(Amounts in thousands) |
|
|
|
|
|
|
|
|
Ranges for the three months ending |
|
|
March 31, 2017 |
|
Income from continuing
operations |
$ |
|
|
|
|
|
|
14,500 |
|
|
$ |
|
15,200 |
|
Stock-based
compensation |
3,200 |
|
|
3,100 |
|
Amortization of
acquired intangible assets |
8,500 |
|
|
8,400 |
|
Accretion of debt
discount on Convertible Senior Notes |
900 |
|
|
900 |
|
Restructuring |
700 |
|
|
600 |
|
Non-cash income tax
expense |
12,400 |
|
|
15,700 |
|
Non-GAAP income from
continuing operations |
$ |
40,200 |
|
|
$ |
43,900 |
|
Notes to Reconciliations of Non-GAAP
Financial Measures to the Nearest Comparable GAAP
Measures
(1) We define Adjusted EBITDA differently for this report than
we have defined it in the past, due to: (i) restructuring costs
related to the upcoming move of our corporate headquarters which
was announced in the fourth quarter of 2016, (ii) the impact of
noncontrolling interests from the HD Vest acquisition that we began
recognizing in the first quarter of 2016, (iii) the discontinued
operations treatment of our Search and Content and E-Commerce
businesses as determined in the fourth quarter of 2015, (iv)
separation-related costs in connection with the departure of our
former chief executive office which was announced in the fourth
quarter of 2015, and (v) acquisition-related costs in connection
with the HD Vest and SimpleTax acquisitions that we would not have
otherwise incurred as part of our business operations.
Acquisition-related costs include professional services fees and
other direct transaction costs and changes in the fair value of
contingent consideration liabilities related to acquired
companies. The HD Vest acquisition closed in the fourth
quarter of 2015 and resulted in significant transaction
costs. The SimpleTax acquisition included contingent
consideration, for which the fair value of that liability was
revalued in the second quarter of 2016. We define Adjusted
EBITDA as operating income (loss), determined in accordance with
GAAP, excluding the effects of depreciation, amortization of
acquired intangible assets (including acquired technology),
stock-based compensation, acquisition-related costs, CEO
separation-related costs, and restructuring costs.
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 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 differently for this report than
we have defined it in the past, due to: (i) restructuring costs
related to the upcoming move of our corporate headquarters which
was announced in the fourth quarter of 2016, (ii) the impact of
noncontrolling interests from the HD Vest acquisition that we began
recognizing in the first quarter of 2016, (iii) the discontinued
operations treatment of our Search and Content and E-Commerce
businesses as determined in the fourth quarter of 2015, (iv)
separation-related costs in connection with the departure of our
former chief executive office which was announced in the fourth
quarter of 2015, and (v) acquisition-related costs in connection
with the HD Vest and SimpleTax acquisitions that we would not have
otherwise incurred as part of our business operations.
Acquisition-related costs are described further under the first
paragraph in this note (1). For this report, we define
non-GAAP net income as net loss attributable to Blucora, Inc.,
determined in accordance with GAAP, excluding the effects of
discontinued operations, stock-based compensation, amortization of
acquired intangible assets (including acquired technology),
accretion of debt discount and accelerated accretion of debt
discount on the Convertible Senior Notes, gain on Convertible
Senior Notes repurchased, write-off of debt issuance costs on
closed TaxAct 2013 credit facility, acquisition-related costs, CEO
separation-related costs, restructuring costs, the impact of
noncontrolling interests, and the related cash tax impact of those
adjustments, and non-cash income taxes. We exclude the
non-cash portion of income taxes because of our ability to offset a
substantial portion of our cash tax liabilities by using deferred
tax assets, which primarily consist of U.S. federal net operating
losses. The majority of these net operating losses will
expire, if unutilized, between 2020 and 2024.
We believe that non-GAAP net income and non-GAAP net income per
share provide meaningful supplemental information to management,
investors, and analysts regarding our performance and the valuation
of our business by excluding items in the statement of operations
that we do not consider part of our ongoing operations or have not
been, or are not expected to be, settled in cash.
Additionally, we believe that non-GAAP net income and non-GAAP net
income per share are common measures used by investors and analysts
to evaluate our performance and the valuation of our
business. Non-GAAP net income should be evaluated in light of
our financial results prepared in accordance with GAAP and should
be considered as a supplement to, and not as a substitute for or
superior to, GAAP net loss. Other companies may calculate
non-GAAP net income differently, and, therefore, our non-GAAP net
income may not be comparable to similarly titled measures of other
companies.
(2) As presented in the Preliminary Condensed Consolidated
Statements of Operations (unaudited). Any difference in "per
diluted share" between the Preliminary Condensed Consolidated
Statements of Operations (unaudited) and non-GAAP table 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.
(3) Other loss, net primarily includes items such as interest
income, interest expense, amortization of debt issuance costs,
accretion of debt discounts, gain/loss on debt extinguishment and
modification expense, and gain on third party bankruptcy
settlement.
Blucora Contact:
Stacy Ybarra, 425-709-8127
stacy.ybarra@blucora.com
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