8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

August 7, 2014

Date of Report

(Date of earliest event reported)

BLUCORA, INC.

(Exact name of registrant as specified in its charter)

DELAWARE	000-25131	91-1718107
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

10900 NE 8th Street, Suite 800

Bellevue, Washington 98004

(Address of principal executive offices)

(425) 201-6100

Registrant’s telephone number, including area code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02    RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On August 7, 2014, Blucora announced its financial results for the quarter ended June 30, 2014. Copies of the press release and a supplemental investor presentation are furnished to, but not filed with, the Commission as Exhibits 99.1 and 99.2 hereto.

Item 9.01    FINANCIAL STATEMENTS AND EXHIBITS

99.1 Press release dated August 7, 2014

99.2 Investor presentation dated August 7, 2014

-2-

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BLUCORA, INC.
By	/s/ Eric M. Emans
	Eric M. Emans
	Chief Financial Officer
	August 7, 2014

-3-

EXHIBIT INDEX

Exhibit No	Description
99.1	Press release dated	August 7, 2014

99.2 Investor presentation dated August 7, 2014

-4-

EX-99.1

Exhibit 99.1

Blucora Announces Second Quarter Results

BELLEVUE, Wash., August 7, 2014 (BUSINESS WIRE) — Blucora, Inc. (NASDAQ: BCOR) today announced financial results for the second quarter ended June 30, 2014.

“We made progress in the second quarter," said Bill Ruckelshaus, President and Chief Executive Officer of Blucora. “We are driving stability at InfoSpace through operational changes and focused execution. We were pleased to welcome Bernard Luthi as the new President of Monoprice, and TaxACT capped a strong season with impressive results and important advancements across our product offerings."

Summary Financial Performance: Q22014

($ in millions except per share amounts)

	Q2		Q2
	2014		2013		Change
Revenues	$	141.6	$	117.2	21	%
Search and Content	$	79.8	$	94.5	(16	)%
Tax Preparation	$	26.5	$	22.7	17	%
E-Commerce	$	35.3	N/A		N/A
Adjusted EBITDA	$	29.8	$	29.2	2	%
Non-GAAP Net Income	$	23.9	$	24.6	(3	)%
Non-GAAP Diluted EPS	$	0.55	$	0.58	(5	)%
GAAP Net Income	$	8.7	$	8.4	4	%
GAAP Diluted EPS	$	0.20	$	0.20	—	%
See reconciliation of non-GAAP to GAAP measures in table below.

Segment Information

Tax Preparation

Tax preparation segment income for the second quarter of 2014 was $17.2 million or approximately 65 percent of segment revenue for the second quarter2014.

Search and Content

During the second quarter of 2014, the Company acquired the assets and operations of HowStuffWorks, a trusted digital information resource. As a result, the Company renamed the segment to reflect the addition of HowStuffWorks.

Search and Content segment income for the second quarter of 2014 was $14.0 million or 18 percent of segment revenue for the second quarter2014.

E-Commerce

E-Commerce segment income for the second quarter of 2014 was $2.4 million or 7 percent of segment revenue for the second quarter2014.

Corporate Operating Expenses

Unallocated corporate operating expenses for the second quarter of 2014 were $3.8 million, compared to $3.1 million for the second quarter of 2013.

Third Quarter Outlook

For the third quarter of 2014, the Company expects revenues to be between $112.5 million and $122.5 million, Adjusted EBITDA to be between $7.0 million and $10.0 million, Non-GAAP Net Income to be between $3.2 million and $6.0 million, or $0.07 to $0.14 per diluted share, and GAAP Net Loss to be between $6.3 million and $4.2 million, or ($0.15) to ($0.10) per share.

Conference Call and Webcast

A conference call and live webcast will be held today at 2 p.m. Pacific time / 5 p.m. Eastern time during which the Company will further discuss second quarter results and its outlook for the third quarter2014. The live webcast and supplemental materials are included in a current report on form 8-K filed today and can be accessed in the Investor Relations section of the Blucora corporate website at http://www.blucora.com. A replay of the call will also be available on our website.

About Blucora®

Blucora, Inc. (NASDAQ: BCOR) operates a diverse group of Internet businesses. Its mission is to deliver long-term value to its customers, partners and shareholders through financial discipline, operational expertise, and technology innovation. Recently named one of Fortune® Magazine’s 100 Fastest-Growing Companies, Blucora’s online businesses reach millions of users worldwide every day. Blucora is headquartered in Bellevue, Washington. For more information, please visit www.Blucora.com. Follow and subscribe to Blucora on Twitter, LinkedIn, and YouTube.

Source: Blucora

Blucora Contact:

Stacy Ybarra, 425-709-8127

stacy.ybarra@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 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 ability to successfully integrate acquired businesses; future acquisitions; the successful execution of the Company’s strategic initiatives, technology enhancements, operating plans, and marketing strategies; and the condition of our cash investments. 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 June 30,						Six months ended June 30,
	2014			2013			2014			2013
Revenues:
Services revenue	$	106,270		$	117,181		$	285,314		$	282,519
Product revenue, net	35,299			—			72,438			—
Total revenues	141,569			117,181			357,752			282,519
Operating expenses:
Cost of revenues:
Services cost of revenue (1)	56,233			69,352			127,526			146,339
Product cost of revenue	23,137			—			48,166			—
Total cost of revenues (2)	79,370			69,352			175,692			146,339
Engineering and technology (2)	4,817			2,508			8,952			5,046
Sales and marketing (2)	22,287			14,695			78,123			53,179
General and administrative (2)	10,425			6,557			19,057			12,941
Depreciation	1,135			524			2,193			1,041
Amortization of intangible assets	5,761			3,168			11,345			6,337
Total operating expenses	123,795			96,804			295,362			224,883
Operating income	17,774			20,377			62,390			57,636
Other loss, net (3)	(3,724		)	(6,304		)	(7,793		)	(7,309		)
Income before income taxes	14,050			14,073			54,597			50,327
Income tax expense	(5,313		)	(5,667		)	(19,873		)	(18,313		)
Net income	$	8,737		$	8,406		$	34,724		$	32,014
Net income per share:
Basic	$	0.21		$	0.20		$	0.83		$	0.78
Diluted	$	0.20		$	0.20		$	0.79		$	0.75
Weighted average shares outstanding:
Basic	41,570			41,050			41,866			40,981
Diluted	43,084			42,724			43,803			42,657

⁽¹⁾ Includes amortization of acquired intangible assets of $1.9 million and $1.9 million for the three months ended June 30, 2014 and 2013, respectively, and $3.8 million and $3.9 million for the six months ended June 30, 2014 and 2013, respectively.

⁽²⁾ Stock-based compensation expense was allocated among the following captions (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2014		2013		2014		2013
Cost of revenues	$	113	$	228	$	272	$	447
Engineering and technology	315		319		744		572
Sales and marketing	722		526		1,641		1,003
General and administrative	1,808		1,680		3,709		3,216
Total stock-based compensation expense	$	2,958	$	2,753	$	6,366	$	5,238

⁽³⁾ Other loss, net was allocated among the following captions (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2014			2013			2014			2013
Interest income	$	(88	)	$	(109	)	$	(196	)	$	(164	)
Interest expense	2,764			2,890			5,779			4,038
Amortization of debt issuance costs	284			476			565			583
Accretion of debt discounts	916			949			1,822			1,110
Loss on derivative instrument	—			2,323			—			1,975
Other	(152		)	(225		)	(177		)	(233		)
Other loss, net	$	3,724		$	6,304		$	7,793		$	7,309

Blucora, Inc.

Preliminary Condensed Consolidated Balance Sheets

(Unaudited)

(Amounts in thousands)

	June 30, 2014			December 31, 2013
ASSETS
Current assets:
Cash and cash equivalents	$	69,764		$	130,225
Available-for-sale investments	208,856			203,480
Accounts receivable, net	35,680			48,081
Other receivables	3,915			8,292
Inventories	30,564			28,826
Prepaid expenses and other current assets, net	8,656			9,774
Total current assets	357,435			428,678
Property and equipment, net	16,330			16,108
Goodwill	364,054			348,957
Other intangible assets, net	188,323			178,064
Other long-term assets	5,575			6,223
Total assets	$	931,717		$	978,030
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	43,257		$	61,268
Accrued expenses and other current liabilities	23,714			31,109
Deferred revenue	5,880			7,510
Short-term portion of long-term debt, net	7,912			7,903
Convertible senior notes, net (1)	—			181,583
Total current liabilities	80,763			289,373
Long-term liabilities:
Long-term debt, net	57,242			113,193
Convertible senior notes, net (1)	183,347			—
Deferred tax liability, net	38,443			56,861
Deferred revenue	2,889			1,814
Other long-term liabilities	2,669			2,719
Total long-term liabilities	284,590			174,587
Total liabilities	365,353			463,960
Stockholders’ equity:
Common stock	4			4
Additional paid-in capital	1,481,523			1,466,043
Accumulated deficit	(917,253		)	(951,977		)
Accumulated other comprehensive income	2,090			—
Total stockholders’ equity	566,364			514,070
Total liabilities and stockholders’ equity	$	931,717		$	978,030

⁽¹⁾ The convertibility of the Notes is determined at the end of each reporting period. If the Notes are determined to be convertible, they remain convertible until the end of the subsequent quarter and are classified in “Current liabilities”; otherwise, they are classified in “Long-term liabilities.” Depending upon the price of our common stock or the trading price of the Notes within the reporting period, the Notes could be convertible during one reporting period but not convertible during a comparable reporting period.

Blucora, Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Amounts in thousands)

	Six months ended June 30,
	2014			2013
Operating Activities:
Net income	$	34,724		$	32,014
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	6,366			5,238
Depreciation and amortization of intangible assets	17,920			12,197
Excess tax benefits from stock-based award activity	(34,369		)	(27,036		)
Deferred income taxes	(18,172		)	(10,632		)
Amortization of premium on investments, net	2,221			1,311
Amortization of debt issuance costs	565			583
Accretion of debt discounts	1,822			1,110
Loss on derivative instrument	—			1,975
Other	57			237
Cash provided (used) by changes in operating assets and liabilities:
Accounts receivable	12,347			(591		)
Other receivables	4,362			(180		)
Inventories	(1,738		)	—
Prepaid expenses and other current assets	874			4,383
Other long-term assets	48			(94		)
Accounts payable	(18,011		)	(2,641		)
Deferred revenue	(555		)	1,088
Accrued expenses and other current and long-term liabilities	26,789			30,214
Net cash provided by operating activities	35,250			49,176
Investing Activities:
Business acquisition, net of cash acquired	(44,927		)	—
Purchases of property and equipment	(2,859		)	(2,047		)
Change in restricted cash	—			287
Equity investment in privately-held company	—			(4,000		)
Proceeds from sales of investments	21,546			8,710
Proceeds from maturities of investments	121,496			53,398
Purchases of investments	(144,049		)	(167,434		)
Net cash used by investing activities	(48,793		)	(111,086		)
Financing Activities:
Proceeds from issuance of convertible notes, net of debt issuance costs of $6,432	—			194,818
Proceeds from credit facilities	4,000			—
Repayment of credit facilities	(60,000		)	(10,000		)
Stock repurchases	(25,785		)	(1,051		)
Excess tax benefits from stock-based award activity	34,369			27,036
Proceeds from stock option exercises	1,746			1,244
Proceeds from issuance of stock through employee stock purchase plan	665			461
Tax payments from shares withheld upon vesting of restricted stock units	(1,913		)	(1,442		)
Net cash provided (used) by financing activities	(46,918		)	211,066
Net increase (decrease) in cash and cash equivalents	(60,461		)	149,156
Cash and cash equivalents, beginning of period	130,225			68,278
Cash and cash equivalents, end of period	$	69,764		$	217,434

Blucora, Inc.

Preliminary Segment Information

(Unaudited)

(Amounts in thousands)

	Three months ended June 30,						Six months ended June 30,
	2014			2013			2014			2013
Revenues:
Search and Content	$	79,818		$	94,497		$	186,583		$	195,098
Tax Preparation	26,452			22,684			98,731			87,421
E-Commerce	35,299			—			72,438			—
Total revenues	141,569			117,181			357,752			282,519
Operating income:
Search and Content	14,032			17,912			33,262			36,182
Tax Preparation	17,211			14,438			54,613			45,222
E-Commerce	2,378			—			5,856			—
Corporate-level activity (1)	(15,847		)	(11,973		)	(31,341		)	(23,768		)
Total operating income	17,774			20,377			62,390			57,636
Other loss, net	(3,724		)	(6,304		)	(7,793		)	(7,309		)
Income tax expense	(5,313		)	(5,667		)	(19,873		)	(18,313		)
Net income	$	8,737		$	8,406		$	34,724		$	32,014

⁽¹⁾ Corporate-level activity included the following (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2014		2013		2014		2013
Operating expenses	$	3,833	$	3,135	$	7,055	$	6,333
Stock-based compensation	2,958		2,753		6,366		5,238
Depreciation	1,414		990		2,809		1,993
Amortization of intangible assets	7,642		5,095		15,111		10,204
Total corporate-level activity	$	15,847	$	11,973	$	31,341	$	23,768

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 June 30,				Six months ended June 30,
	2014		2013		2014		2013
Net income (2)	$	8,737	$	8,406	$	34,724	$	32,014
Stock-based compensation	2,958		2,753		6,366		5,238
Depreciation and amortization of intangible assets	9,056		6,085		17,920		12,197
Other loss, net (3)	3,724		6,304		7,793		7,309
Income tax expense	5,313		5,667		19,873		18,313
Adjusted EBITDA	$	29,788	$	29,215	$	86,676	$	75,071

Preliminary Non-GAAP Net Income Reconciliation⁽¹⁾ 

(Unaudited)

(Amounts in thousands, except per share amounts)

	Three months ended June 30,						Six months ended June 30,
	2014			2013			2014			2013
Net income (2)	$	8,737		$	8,406		$	34,724		$	32,014
Stock-based compensation	2,958			2,753			6,366			5,238
Amortization of acquired intangible assets	7,642			5,095			15,111			10,204
Accretion of debt discount on Convertible Senior Notes	890			841			1,764			973
Loss on derivative instrument	—			2,323			—			1,975
Cash tax impact of adjustments to GAAP net income	(197		)	(17		)	(251		)	(180		)
Non-cash income tax expense (1)	3,878			5,231			16,197			16,405
Non-GAAP net income	$	23,908		$	24,632		$	73,911		$	66,629
Per diluted share:
Net income	$	0.20		$	0.20		$	0.79		$	0.75
Stock-based compensation	0.07			0.07			0.15			0.12
Amortization of acquired intangible assets	0.17			0.12			0.34			0.24
Accretion of debt discount on Convertible Senior Notes	0.02			0.02			0.04			0.02
Loss on derivative instrument	—			0.05			—			0.05
Cash tax impact of adjustments to GAAP net income	(0.00		)	(0.00		)	(0.00		)	(0.00		)
Non-cash income tax expense	0.09			0.12			0.37			0.38
Non-GAAP net income per share	$	0.55		$	0.58		$	1.69		$	1.56
Weighted average shares outstanding used in computing diluted non-GAAP net income per share and its components	43,084			42,724			43,803			42,657

Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance

(Amounts in thousands)

	Ranges for the three months ending
	September 30, 2014
Net loss	$	(6,300	)	$	(4,200	)
Stock-based compensation	3,500			3,300
Depreciation and amortization of intangible assets	9,500			9,400
Other loss, net (3)	3,900			3,900
Income tax benefit	(3,600		)	(2,400		)
Adjusted EBITDA	$	7,000		$	10,000

Preliminary Non-GAAP Net Income Reconciliation for Forward-Looking Guidance

(Amounts in thousands)

	Ranges for the three months ending
	September 30, 2014
Net loss	$	(6,300	)	$	(4,200	)
Stock-based compensation	3,500			3,300
Amortization of acquired intangible assets	8,000			8,000
Accretion of debt discount on Convertible Senior Notes	900			900
Non-cash income tax benefit	(2,900		)	(2,000		)
Non-GAAP net income	$	3,200		$	6,000

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

⁽¹⁾ We define Adjusted EBITDA as net income, determined in accordance with the accounting principles generally accepted in the United States of America (“GAAP”), excluding the effects of income taxes, depreciation, amortization of intangible assets, stock-based compensation, and other loss, net (as described in note ⁽³⁾ below).

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. Other companies may calculate Adjusted EBITDA differently and, therefore, our Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

We define non-GAAP net income as net income, determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets, accretion of debt discount on the Convertible Senior Notes, loss on debt extinguishment and modification expense, gains or losses on derivative instrument, other- than-temporary impairment losses on equity investments, the related cash tax impact of those adjustments, and non-cash income taxes. 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 consist primarily of U.S. federal net operating losses. The majority of these deferred tax assets will expire, if unutilized, between 2020 and 2024.

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

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

⁽³⁾ Other loss, net primarily includes items such as interest income, interest expense, amortization of debt issuance costs, accretion of debt discounts, loss on debt extinguishment and modification expense, gains or losses on derivative instrument, other-than-temporary impairment losses on equity investments, and adjustments to the fair values of contingent liabilities related to business combinations.

EX-99.2

Exhibit 99.2

Blucora, Inc.

Supplemental Information

June 30, 2014

Table of Contents

Financial Information
Consolidated Financial Results	2
Reconciliation of Non-GAAP Financial Measures	4
Stock Price Sensitivity Analysis for Diluted Shares	5
Operating Metrics
Search and Content	6
Tax Preparation	7
E-Commerce	8

1

Blucora Consolidated Financial Results

(in thousands except %s and net income per share, rounding differences may exist)

	2012				2013																			2014
	FYE 12/31				1Q				2Q				3Q				4Q				FYE 12/31			1Q			2Q
Segment Revenue
Search and Content (1)	$	344,814			$	100,601			$	94,497			$	107,742			$	125,624			$	428,464		$	106,765		$	79,818
Tax Preparation (2)	62,105				64,737				22,684				1,749				2,043				91,213			72,279			26,452
E-Commerce (3)	—				—				—				14,630				39,673				54,303			37,139			35,299
Total	$	406,919			$	165,338			$	117,181			$	124,121			$	167,340			$	573,980		$	216,183		$	141,569
Segment Income (Loss) (4)
Search and Content (1)	$	62,185			$	18,270			$	17,912			$	21,319			$	25,003			$	82,504		$	19,230		$	14,032
Tax Preparation (2)	30,052				30,784				14,438				(1,605		)		(3,018		)		40,599			37,402			17,211
E-Commerce (3)	—				—				—				906				4,061				4,967			3,478			2,378
Total	$	92,237			$	49,054			$	32,350			$	20,620			$	26,046			$	128,070		$	60,110		$	33,621
Segment Income (Loss) % of Revenue
Search and Content	18		%		18		%		19		%		20		%		20		%		19		%	18		%	18		%
Tax Preparation	48		%		48		%		64		%		(92		)%		(148		)%		45		%	52		%	65		%
E-Commerce	na				na				na				na				10		%		9		%	9		%	7		%
Total	23		%		30		%		28		%		17		%		16		%		22		%	28		%	24		%
Unallocated Corporate Operating Expense (4)	$	11,798		(5)	$	3,198			$	3,135			$	4,025		(6)	$	3,471			$	13,829		$	3,222		$	3,833
Adjusted EBITDA	$	80,439			$	45,856			$	29,215			$	16,595			$	22,575			$	114,241		$	56,888		$	29,788
Other Unallocated (4)
Stock-based compensation	$	13,223		(7)	$	2,485			$	2,753			$	3,252		(8)	$	3,037			$	11,527		$	3,408		$	2,958		(9)
Depreciation	3,812				1,003				990				1,126				1,357				4,476			1,395			1,414
Amortization of intangible assets	19,199				5,109				5,095				6,090			(10)	7,495				23,789			7,469			7,642			(11)
Interest income	(131		)		(55		)		(109		)		(42		)		(94		)		(300		)	(108		)	(88		)
Interest expense	3,522				1,148				2,890			(12)	2,669				2,756				9,463			3,015			2,764
Amortization of debt issuance costs	820				107				476			(12)	258				267				1,108			281			284
Accretion of debt discounts	325				161				949			(12)	862				866				2,838			906			916
(Gain) loss on derivative instrument	2,346				(348		)		2,323				3,956				5,721			(13)	11,652			—			—
Impairment of equity investment in privately-held company	—				—				—				3,711				—				3,711			—			—
Loss on debt extinguishment and modification expense	—				—				—				1,593				—				1,593			—			—
Other (income) loss, net	(205		)		(8		)		(225		)		111				(320		)		(442		)	(25		)	(152		)
Total	$	42,911			$	9,602			$	15,142			$	23,586			$	21,085			$	69,415		$	16,341		$	15,738
Income (Loss) Before Taxes	$	37,528			$	36,254			$	14,073			$	(6,991	)		$	1,490			$	44,826		$	40,547		$	14,050
Income Tax (Benefit) Expense
Cash	$	1,443			$	1,472			$	435			$	(517	)		$	498			$	1,888		$	2,241		$	1,435
Non-cash (14)	13,559				11,174				5,232				7				2,126				18,539			12,319			3,878
Total	$	15,002			$	12,646			$	5,667			$	(510	)		$	2,624			$	20,427		$	14,560		$	5,313
GAAP Net Income (Loss)	$	22,526			$	23,608			$	8,406			$	(6,481	)		$	(1,134	)		$	24,399		$	25,987		$	8,737
GAAP Net Income (Loss) Per Share - diluted	$	0.54			$	0.53		(15)	$	0.20			$	(0.16	)		$	(0.03	)		$	0.56		$	0.58		$	0.20
Non-GAAP Net Income	$	70,760			$	41,997			$	24,632			$	12,970			$	18,095			$	97,694		$	50,003		$	23,908
Non-GAAP Net Income Per Share - diluted	$	1.70			$	0.95			$	0.58			$	0.30		(16)	$	0.40		(17)	$	2.25		$	1.12		$	0.55
Outstanding Shares	40,832				40,933				41,143				41,176				42,083				42,083			42,203			41,039
Basic Shares - GAAP	40,279				40,911				41,050				41,088				41,566				41,201			42,162			41,570
Diluted Shares - GAAP	41,672				44,294				42,724				41,088				41,566				43,480			44,521			43,084
Cash & Short-term Investments	$	162,288			$	401,677			$	415,493			$	248,382			$	333,705			$	333,705		$	336,390		$	278,620
Outstanding Debt - Principal Amount (18)	74,496				275,746				265,746				266,634				322,634				322,634			278,634			266,634
Net Cash	$	87,792			$	125,931			$	149,747			$	(18,252	)		$	11,071			$	11,071		$	57,756		$	11,986

Notes to Consolidated Financial Results on next page

2

Notes to Consolidated Financial Results

⁽¹⁾  On May 30, 2014, we acquired HowStuffWorks ("HSW"). The Search and Content segment, formerly known as the Search segment, includes the financial results of HSW beginning on May 30, 2014.

⁽²⁾  On January 31, 2012, we acquired TaxACT, Inc. As a highly seasonal business, almost all of the TaxACT revenue is generated in the first four months of the calendar year. Amounts for 2012 represented the results of operations for the TaxACT business from January 31, 2012 to December 31, 2012.

⁽³⁾  On August 22, 2013, we acquired Monoprice, Inc. Amounts for 2013 represented the results of operations for the Monoprice business from August 22, 2013 to December 31, 2013.

⁽⁴⁾  We do not allocate certain general and administrative costs (including personnel and overhead costs), stock-based compensation, depreciation, amortization of intangible assets, other income/loss, net, or income tax benefit/expense to the reportable segments. The general and administrative costs are included in Unallocated Corporate Operating Expense.

⁽⁵⁾  Amount in 2012 included $1.1 million in transaction costs related to the TaxACT acquisition.

⁽⁶⁾  Amount for 3Q13 included $0.6 million in transaction costs related to the Monoprice acquisition.

⁽⁷⁾  Amount in 2012 included $5.2 million in stock-based compensation in association with the modification of the terms of a warrant and the vesting of non-employee performance-based stock options upon completion of the TaxACT acquisition.

⁽⁸⁾  In 3Q13, $0.5 million in stock-based compensation was recorded in association with the vesting of performance-based stock options upon completion of the Monoprice acquisition.

⁽⁹⁾  In 2Q14, $0.3 million in stock-based compensation was recorded in association with the vesting of performance-based stock options upon completion of the HSW acquisition.

⁽¹⁰⁾  Amount for 3Q13 included $1.0 million related to amortization of acquired intangible assets related to the Monoprice acquisition.

⁽¹¹⁾  Amount for 2Q14 included $0.2 million related to amortization of acquired intangible assets related to the HSW acquisition.

⁽¹²⁾  Interest expense, amortization of debt issuance costs, and accretion of debt discounts included amounts associated with the Convertible Senior Notes issued on March 15, 2013.

⁽¹³⁾  Warrant was exercised during 4Q13.

⁽¹⁴⁾  Amounts represent the non-cash portion of income tax expense from continuing operations. 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 consist primarily of US federal net operating losses. The majority of these deferred tax assets will expire, if unutilized, between 2020 and 2024.

⁽¹⁵⁾  Calculation excluded the income effect of a dilutive derivative instrument and the Convertible Senior Notes in 1Q13. Related to the Notes, we received shareholder approval for flexible settlement in May 2013.

⁽¹⁶⁾  Calculation in 3Q13 used 43,142,000 diluted shares due to non-GAAP net income.

⁽¹⁷⁾  Calculation in 4Q13 used 45,716,000 diluted shares due to non-GAAP net income.

⁽¹⁸⁾  2012 included the TaxACT 2012 credit facility, issued in January 2012 in connection with the TaxACT acquisition and refinanced during 3Q13 on more favorable terms (the TaxACT 2013 credit facility), 1Q13 included the Convertible Senior Notes issued in March 2013, and 4Q13 included the Monoprice 2013 credit facility issued in November 2013.

3

Blucora Reconciliation of Non-GAAP Financial Measures⁽¹⁾ 

(in thousands except net income per share, rounding differences may exist)

	2012			2013															2014
	FYE 12/31			1Q			2Q			3Q			4Q			FYE 12/31			1Q			2Q
Adjusted EBITDA
Net income (loss)(2)	$	22,526		$	23,608		$	8,406		$	(6,481	)	$	(1,134	)	$	24,399		$	25,987		$	8,737
Stock-based compensation	13,223			2,485			2,753			3,252			3,037			11,527			3,408			2,958
Depreciation and amortization of intangible assets	23,011			6,112			6,085			7,216			8,852			28,265			8,864			9,056
Other loss, net (3)	6,677			1,005			6,304			13,118			9,196			29,623			4,069			3,724
Income tax (benefit) expense	15,002			12,646			5,667			(510		)	2,624			20,427			14,560			5,313
Adjusted EBITDA	$	80,439		$	45,856		$	29,215		$	16,595		$	22,575		$	114,241		$	56,888		$	29,788
Non-GAAP Net Income
Net income (loss) (2)	$	22,526		$	23,608		$	8,406		$	(6,481	)	$	(1,134	)	$	24,399		$	25,987		$	8,737
Stock-based compensation	13,223			2,485			2,753			3,252			3,037			11,527			3,408			2,958
Amortization of acquired intangible assets	19,199			5,109			5,095			6,090			7,495			23,789			7,469			7,642
Accretion of debt discount on Convertible Senior Notes	—			132			841			843			858			2,674			874			890
(Gain) loss on derivative instrument	2,346			(348		)	2,323			3,956			5,721			11,652			—			—
Impairment of equity investment in privately-held company	—			—			—			3,711			—			3,711			—			—
Loss on debt extinguishment and modification expense	—			—			—			1,593			—			1,593			—			—
Cash tax impact of adjustments to GAAP net income	(93		)	(163		)	(17		)	(1		)	(8		)	(189		)	(54		)	(197		)
Non-cash income tax expense (1)	13,559			11,174			5,231			7			2,126			18,538			12,319			3,878
Non-GAAP net income (4)	$	70,760		$	41,997		$	24,632		$	12,970		$	18,095		$	97,694		$	50,003		$	23,908
Non-GAAP Net Income Per Share
Non-GAAP net income	$	70,760		$	41,997		$	24,632		$	12,970		$	18,095		$	97,694		$	50,003		$	23,908
Non-GAAP net income per share	$	1.70		$	0.95		$	0.58		$	0.30		$	0.40		$	2.25		$	1.12		$	0.55
Diluted shares	41,672			44,294			42,724			43,142			45,716			43,480			44,521			43,084

⁽¹⁾  For definitions of these non-GAAP financial measures and their relationship to our GAAP financial statements, please see Note 1 to our Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures in exhibit 99.1 to the August 7, 2014 Current Report on Form 8-K.

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

⁽³⁾  Other loss, net primarily includes items such as interest income, interest expense, amortization of debt issuance costs, accretion of debt discounts, loss on debt extinguishment and modification expense, gains or losses on derivative instrument, other-than-temporary impairment losses on equity investments, and adjustments to the fair values of contingent liabilities related to business combinations.

⁽⁴⁾  We define Non-GAAP net income differently effective with 1Q13 to include accretion of debt discount on Convertible Senior notes and effective with 3Q13 to include other-than-temporary impairment losses on equity investments and loss on debt extinguishment and modification expense. Our new definition of non-GAAP net income did not impact presentation of this non-GAAP financial measure for prior periods.

4

Blucora Stock Price Sensitivity Analysis for Diluted Shares

(in thousands except share prices)

The following table illustrates the potential impact of a change in average stock price on the number of shares included in diluted shares associated with the conversion premium on the convertible notes:

Stock Price		Diluted Shares(a)
$	18.83	—	(b)
$	21.66	—	(c)
$	22.00	144
$	22.50	347
$	23.00	541
$	23.50	728
$	24.00	906
$	24.50	1,077
$	25.00	1,241
$	25.50	1,399
$	26.00	1,551
$	26.50	1,697
$	27.00	1,838
$	27.50	1,973
$	28.00	2,104
$	28.50	2,230
$	29.00	2,352
$	29.50	2,470
$	30.00	2,583

^(a)  Indicative shares associated with conversion premium on convertible notes

^(b)  Average stock price for the current quarter did not exceed the conversion price of the convertible notes

^(c)  Approximate conversion price

5

Blucora Operating Metrics - Search and Content

	2012		2013										2014
Revenue by source	FYE 12/31		1Q		2Q		3Q		4Q		FYE 12/31		1Q		2Q
Owned & Operated (B2C)	12	%	12	%	15	%	19	%	20	%	17	%	22	%	17	%
Distribution (B2B)	88	%	88	%	85	%	81	%	80	%	83	%	78	%	83	%

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Blucora Operating Metrics - Tax Preparation

(in thousands except %s, rounding differences may exist)

	Tax season ended				Six months ended
Consumer e-files	April 16, 2014	April 16, 2013	% change		June 30, 2014	June 30, 2013	% change
TaxACT desktop e-files	246	270	(9	)%	251	275	(9	)%
TaxACT online e-files	5,067	4,865	4	%	5,189	4,968	4	%
TaxACT sub-total e-files	5,313	5,135	3	%	5,440	5,243	4	%
TaxACT Free File Alliance e-files (1)	210	147	43	%	218	152	43	%
TaxACT total e-files	5,523	5,282	5	%	5,658	5,395	5	%

⁽¹⁾  Free File Alliance e-files are provided as part of an IRS partnership that provides free electronic tax filing services to taxpayers meeting certain income-based guidelines.

7

Blucora Operating Metrics - E-Commerce

	2013										2014
	1Q		2Q		3Q		4Q		FYE 12/31		1Q		2Q
Order numbers % change (1)	16	%	22	%	15	%	10	%	15	%	(2	)%	(7	)%

⁽¹⁾  Figures represent increase (decrease) in order numbers as compared to the comparable prior period.

8