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

April 30, 2015

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 April 30, 2015, Blucora announced its financial results for the quarter ended March 31, 2015. 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	April 30, 2015
99.2	Investor presentation dated	April 30, 2015

-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
	April 30, 2015

-3-

EXHIBIT INDEX

Exhibit No	Description
99.1	Press release dated	April 30, 2015
99.2	Investor presentation dated	April 30, 2015

-4-

EX-99.1

Exhibit 99.1

Blucora Reports First Quarter Results and Preliminary Tax Season Update

TaxACT Expects Double Digit Revenue and Segment Income Growth for the Full Season

BELLEVUE, Wash., April 30, 2015 (Marketwired) — Blucora, Inc. (NASDAQ: BCOR) today announced financial results for the first quarter ended March 31, 2015.

"Blucora results in the first quarter reflect strong in-season performance from TaxACT and continued pressures at Infospace," said Bill Ruckelshaus, President and Chief Executive Officer of Blucora.  "We are pleased to report consolidated performance in the quarter was in line with our expectations. Regaining our momentum through operational execution is the number one priority in 2015. Blucora remains well positioned with a diversified portfolio of businesses, capable leadership and a strong financial position that provides for future flexibility.”

Summary Financial Performance: Q12015

($ in millions except per share amounts)

	Q1		Q1
	2015		2014		Change
Revenues	$	174.8	$	216.2	(19	)%
Search and Content	$	58.7	$	106.8	(45	)%
Tax Preparation	$	81.1	$	72.3	12	%
E-Commerce	$	35.0	$	37.1	(6	)%
Adjusted EBITDA	$	50.8	$	56.9	(11	)%
Non-GAAP Net Income	$	43.0	$	50.0	(14	)%
Non-GAAP Diluted EPS	$	1.03	$	1.12	(8	)%
GAAP Net Income	$	23.1	$	26.0	(11	)%
GAAP Diluted EPS	$	0.55	$	0.58	(5	)%
See reconciliations of non-GAAP to GAAP measures in tables below.

Segment Information

Tax Preparation

Tax Preparation segment income for the first quarter of 2015 was $44.1 million or 54 percent of segment revenue for the first quarter of 2015.

For the six months ended June 30, 2015, TaxACT expects revenue growth of approximately 13 percent and segment income growth of 16 to 17 percent versus the prior year comparable period, with combined consumer and professional preparer e-file growth of 1 percent. The combined TaxACT offerings assisted approximately 7 million filers this tax season.

TaxACT professional preparer filings for the tax season grew approximately 8 percent compared to the same period last year. TaxACT consumer DDIY federal e-files for the tax season were approximately 5.5 million, consistent with the same period last year, as follows:

(in thousands, except %s)	Tax seasons ended April 16,
	2015	2014	% change
Online e-files	5,058	5,067	—
Desktop e-files	261	246	6	%
Sub-total e-files	5,319	5,313	—
Free File Alliance e-files	172	210	(18	)%
Total e-files	5,491	5,523	(1	)%
Tax season begins on the first day that the IRS begins accepting e-files and ends on tax day +1.

Search and Content

Search and Content segment income for the first quarter of 2015 was $8.4 million or 14 percent of segment revenue for the first quarter of 2015.

E-Commerce

E-Commerce segment income for the first quarter of 2015 was $2.6 million or 7 percent of segment revenue for the first quarter of 2015.

Corporate Operating Expenses

Unallocated corporate operating expenses for the first quarter of 2015 were $4.3 million, compared to $3.2 million for the first quarter of 2014.

Second Quarter Outlook

For the second quarter of 2015, the Company expects revenues to be between $114.0 million and $123.5 million, Adjusted EBITDA to be between $20.8 million and $24.8 million, Non-GAAP net income to be between $16.1 million and $20.0 million, or $0.38 to $0.48 per diluted share, and GAAP net income to be between $2.5 million and $5.4 million, or $0.06 to $0.13 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 first quarter results and its outlook for the second quarter of 2015. 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. Named one of Fortune® Magazine’s 100 Fastest-Growing Companies for the past two years, 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 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 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 March 31,
	2015			2014
Revenues:
Services revenue	$	139,814		$	179,044
Product revenue, net	35,012			37,139
Total revenues	174,826			216,183
Operating expenses:
Cost of revenues:
Services cost of revenue (1)	34,941			71,293
Product cost of revenue	24,100			25,029
Total cost of revenues (2)	59,041			96,322
Engineering and technology (2)	5,217			4,135
Sales and marketing (2)	54,196			55,836
General and administrative (2)	10,409			8,632
Depreciation	1,138			1,058
Amortization of intangible assets	6,118			5,584
Total operating expenses	136,119			171,567
Operating income	38,707			44,616
Other loss, net (3)	(3,726		)	(4,069		)
Income before income taxes	34,981			40,547
Income tax expense	(11,881		)	(14,560		)
Net income	$	23,100		$	25,987
Net income per share:
Basic	$	0.56		$	0.62
Diluted	$	0.55		$	0.58
Weighted average shares outstanding:
Basic	40,987			42,162
Diluted	41,899			44,521

⁽¹⁾ Includes amortization of acquired intangible assets of $1.9 million for the three months ended March 31, 2015 and 2014.

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

	Three months ended March 31,
	2015		2014
Cost of revenues	$	49	$	159
Engineering and technology	292		429
Sales and marketing	430		919
General and administrative	1,928		1,901
Total stock-based compensation expense	$	2,699	$	3,408

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

	Three months ended March 31,
	2015			2014
Interest income	$	(118	)	$	(108	)
Interest expense	2,768			3,015
Amortization of debt issuance costs	348			281
Accretion of debt discounts	1,131			906
Gain on third party bankruptcy settlement	(476		)	—
Other	73			(25		)
Other loss, net	$	3,726		$	4,069

Blucora, Inc.

Preliminary Condensed Consolidated Balance Sheets

(Unaudited)

(Amounts in thousands)

	March 31, 2015			December 31, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	61,854		$	46,444
Available-for-sale investments	249,586			254,854
Accounts receivable, net	32,522			30,988
Other receivables	1,404			3,295
Inventories	34,015			29,246
Prepaid expenses and other current assets, net	10,896			13,477
Total current assets	390,277			378,304
Property and equipment, net	16,011			15,942
Goodwill, net	304,658			304,658
Other intangible assets, net	161,635			168,919
Other long-term assets	4,525			4,891
Total assets	$	877,106		$	872,714
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	40,432		$	37,755
Accrued expenses and other current liabilities	27,999			21,505
Deferred revenue	7,096			7,884
Short-term portion of long-term debt, net	—			7,914
Total current liabilities	75,527			75,058
Long-term liabilities:
Long-term debt, net	54,940			85,835
Convertible senior notes, net	186,117			185,177
Deferred tax liability, net	26,624			42,963
Deferred revenue	2,844			1,915
Other long-term liabilities	3,258			2,741
Total long-term liabilities	273,783			318,631
Total liabilities	349,310			393,689
Stockholders’ equity:
Common stock	4			4
Additional paid-in capital	1,493,361			1,467,658
Accumulated deficit	(964,424		)	(987,524		)
Accumulated other comprehensive loss	(1,145		)	(1,113		)
Total stockholders’ equity	527,796			479,025
Total liabilities and stockholders’ equity	$	877,106		$	872,714

Blucora, Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Amounts in thousands)

	Three months ended March 31,
	2015			2014
Operating Activities:
Net income	$	23,100		$	25,987
Adjustments to reconcile net income to net cash from operating activities:
Stock-based compensation	2,699			3,408
Depreciation and amortization of intangible assets	9,442			8,864
Excess tax benefits from stock-based award activity	(25,861		)	(22,743		)
Deferred income taxes	(17,461		)	(10,423		)
Amortization of premium on investments, net	483			1,085
Amortization of debt issuance costs	348			281
Accretion of debt discounts	1,131			906
Other	107			39
Cash provided (used) by changes in operating assets and liabilities:
Accounts receivable	(1,575		)	1,017
Other receivables	1,891			3,695
Inventories	(4,769		)	(687		)
Prepaid expenses and other current assets	3,454			347
Other long-term assets	24			75
Accounts payable	2,677			(5,267		)
Deferred revenue	141			199
Accrued expenses and other current and long-term liabilities	32,358			19,812
Net cash provided by operating activities	28,189			26,595
Investing Activities:
Purchases of property and equipment	(1,002		)	(1,247		)
Purchases of intangible assets	(696		)	—
Proceeds from sales of investments	3,304			12,272
Proceeds from maturities of investments	68,243			68,923
Purchases of investments	(66,833		)	(72,415		)
Net cash provided by investing activities	3,016			7,533
Financing Activities:
Proceeds from credit facilities	18,000			4,000
Repayment of credit facilities	(57,000		)	(48,000		)
Stock repurchases	(4,445		)	—
Excess tax benefits from stock-based award activity	25,861			22,743
Proceeds from stock option exercises	1,616			86
Proceeds from issuance of stock through employee stock purchase plan	608			665
Tax payments from shares withheld upon vesting of restricted stock units	(435		)	(1,091		)
Net cash used by financing activities	(15,795		)	(21,597		)
Net increase in cash and cash equivalents	15,410			12,531
Cash and cash equivalents, beginning of period	46,444			130,225
Cash and cash equivalents, end of period	$	61,854		$	142,756

Blucora, Inc.

Preliminary Segment Information

(Unaudited)

(Amounts in thousands)

	Three months ended March 31,
	2015			2014
Revenues:
Search and Content	$	58,746		$	106,765
Tax Preparation	81,068			72,279
E-Commerce	35,012			37,139
Total revenues	174,826			216,183
Operating income:
Search and Content	8,398			19,230
Tax Preparation	44,145			37,402
E-Commerce	2,562			3,478
Corporate-level activity (1)	(16,398		)	(15,494		)
Total operating income	38,707			44,616
Other loss, net	(3,726		)	(4,069		)
Income tax expense	(11,881		)	(14,560		)
Net income	$	23,100		$	25,987

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

	Three months ended March 31,
	2015		2014
Operating expenses	$	4,257	$	3,222
Stock-based compensation	2,699		3,408
Depreciation	1,462		1,395
Amortization of intangible assets	7,980		7,469
Total corporate-level activity	$	16,398	$	15,494

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 March 31,
	2015		2014
Net income (2)	$	23,100	$	25,987
Stock-based compensation	2,699		3,408
Depreciation and amortization of intangible assets	9,442		8,864
Other loss, net (3)	3,726		4,069
Income tax expense	11,881		14,560
Adjusted EBITDA	$	50,848	$	56,888

Preliminary Non-GAAP Net Income Reconciliation⁽¹⁾ 

(Unaudited)

(Amounts in thousands, except per share amounts)

	Three months ended March 31,
	2015			2014
Net income (2)	$	23,100		$	25,987
Stock-based compensation	2,699			3,408
Amortization of acquired intangible assets	7,980			7,469
Accretion of debt discount on Convertible Senior Notes	940			874
Cash tax impact of adjustments to GAAP net income	(142		)	(54		)
Non-cash income tax expense (1)	8,400			12,319
Non-GAAP net income	$	42,977		$	50,003
Per diluted share:
Net income	$	0.55		$	0.58
Stock-based compensation	0.07			0.07
Amortization of acquired intangible assets	0.19			0.17
Accretion of debt discount on Convertible Senior Notes	0.02			0.02
Cash tax impact of adjustments to GAAP net income	(0.00		)	(0.00		)
Non-cash income tax expense	0.20			0.28
Non-GAAP net income per share	$	1.03		$	1.12
Weighted average shares outstanding used in computing diluted non-GAAP net income per share and its components	41,899			44,521

Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance

(Amounts in thousands)

	Ranges for the three months ending
	June 30, 2015
Net income	$	2,500	$	5,400
Stock-based compensation	3,600		3,600
Depreciation and amortization of intangible assets	9,600		9,500
Other loss, net (3)	3,800		3,500
Income tax expense	1,300		2,800
Adjusted EBITDA	$	20,800	$	24,800

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

(Amounts in thousands)

	Ranges for the three months ending
	June 30, 2015
Net income	$	2,500	$	5,400
Stock-based compensation	3,600		3,600
Amortization of acquired intangible assets	8,000		8,000
Accretion of debt discount on Convertible Senior Notes	1,000		1,000
Non-cash income tax expense	1,000		2,000
Non-GAAP net income	$	16,100	$	20,000

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 the impairment of goodwill and intangible assets recorded in the fourth quarter of 2014. 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, impairment of goodwill and 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 differently for this report than we have defined it in the past, due to the impairment of goodwill and intangible assets recorded in the fourth quarter of 2014 and adjustments recorded in other loss, net that resulted from finalizing Monoprice's 2013 federal and state tax returns in the third quarter of 2014. For this report, 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, impairment of goodwill and intangible assets, accretion of debt discount on the Convertible Senior Notes, changes in non-cash pre-acquisition liabilities, 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 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, adjustments to contingent liabilities related to business combinations, and gain on third party bankruptcy settlement.

EX-99.2

Exhibit 99.2

Blucora, Inc.

Supplemental Information

March 31, 2015

Table of Contents

Financial Information
Consolidated Financial Results	2
Reconciliation of Non-GAAP Financial Measures	4
Reconciliation of Operating Free Cash Flow	5
Operating Metrics
Search and Content	6
Tax Preparation	7
E-Commerce	8

Blucora Consolidated Financial Results

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

	2013				2014																				2015
	FY 12/31				1Q			2Q				3Q				4Q				FY 12/31					1Q
Segment Revenue
Search and Content (1)	$	428,464			$	106,765		$	79,818			$	74,416			$	65,271			$	326,270				$	58,746
Tax Preparation (2)	91,213				72,279			26,452				2,469				2,519				103,719					81,068
E-Commerce (3)	54,303				37,139			35,299				37,970				40,323				150,731					35,012
Total	$	573,980			$	216,183		$	141,569			$	114,855			$	108,113			$	580,720				$	174,826
Segment Income (Loss) (4)
Search and Content (1)	$	82,504			$	19,230		$	14,032			$	12,709			$	9,841			$	55,812				$	8,398
Tax Preparation (2)	40,599				37,402			17,211				(1,859		)		(3,058		)		49,696					44,145
E-Commerce (3)	4,967				3,478			2,378				3,336				2,851				12,043					2,562
Total	$	128,070			$	60,110		$	33,621			$	14,186			$	9,634			$	117,551				$	55,105
Segment Income (Loss) % of Revenue
Search and Content	19		%		18		%	18		%		17		%		15		%		17		%			14		%
Tax Preparation	45		%		52		%	65		%		(75		)%		(121		)%		48		%			54		%
E-Commerce	9		%		9		%	7		%		9		%		7		%		8		%			7		%
Total	22		%		28		%	24		%		12		%		9		%		20		%			32		%
Unallocated Corporate Operating Expense (4)	$	13,829		(5)	$	3,222		$	3,833			$	3,524			$	4,037			$	14,616				$	4,257
Adjusted EBITDA	$	114,241			$	56,888		$	29,788			$	10,662			$	5,597			$	102,935				$	50,848
Other Unallocated (4)
Stock-based compensation	$	11,527		(6)	$	3,408		$	2,958		(7)	$	2,608			$	2,910			$	11,884				$	2,699
Depreciation	4,476				1,395			1,414				1,385				1,387				5,581					1,462
Amortization of intangible assets	23,789				7,469			7,642			(8)	7,993				7,990				31,094					7,980
Impairment of goodwill and intangible assets	—				—			—				—				62,817			(9)	62,817					—
Interest income	(300		)		(108		)	(88		)		(71		)		(85		)		(352		)			(118		)
Interest expense	9,463				3,015			2,764				2,706				2,717				11,202					2,768
Amortization of debt issuance costs	1,108				281			284				288				290				1,143					348
Accretion of debt discounts	2,838				906			916				931				938				3,691					1,131
Loss on debt extinguishment and modification expense	1,593				—			—				—				—				—					—
Loss on derivative instrument	11,652			(10)	—			—				—				—				—					—
Impairment of equity investment in privately-held company	3,711				—			—				—				—				—					—
Other income, net	(442		)		(25		)	(152		)		(646		)		(95		)		(918		)			(403		)
Total	$	69,415			$	16,341		$	15,738			$	15,194			$	78,869			$	126,142				$	15,867
Income (Loss) Before Taxes	$	44,826			$	40,547		$	14,050			$	(4,532	)		$	(73,272	)		$	(23,207	)			$	34,981
Income Tax (Benefit) Expense
Cash	$	1,888			$	2,241		$	1,435			$	(277	)		$	(604	)		$	2,795				$	3,481
Non-cash (11)	18,539				12,319			3,878				(2,017		)		(4,635		)		9,545					8,400
Total	$	20,427			$	14,560		$	5,313			$	(2,294	)		$	(5,239	)		$	12,340				$	11,881
GAAP Net Income (Loss)	$	24,399			$	25,987		$	8,737			$	(2,238	)		$	(68,033	)		$	(35,547	)			$	23,100
GAAP Net Income (Loss) Per Share - diluted	$	0.56			$	0.58		$	0.20			$	(0.05	)		$	(1.67	)		$	(0.86	)			$	0.55
Non-GAAP Net Income	$	97,694			$	50,003		$	23,908			$	6,544			$	1,969			$	82,424				$	42,977
Non-GAAP Net Income Per Share - diluted	$	2.25			$	1.12		$	0.55			$	0.15		(12)	$	0.05		(13)	$	1.92		(14	)	$	1.03
Outstanding Shares	42,083				42,203			41,039				40,977				40,882				40,882					40,851
Basic Shares - GAAP	41,201				42,162			41,570				41,034				40,820				41,396					40,987
Diluted Shares - GAAP	43,480				44,521			43,084				41,034				40,820				41,396					41,899
Cash & Short-term Investments	$	333,705			$	336,390		$	278,620			$	280,394			$	301,298			$	301,298				$	311,440
Outstanding Debt - Principal Amount	322,634				278,634			266,634				264,634				295,190				295,190					256,190
Net Cash	$	11,071			$	57,756		$	11,986			$	15,760			$	6,108			$	6,108				$	55,250

Notes to Consolidated Financial Results on next page

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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.

⁽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, impairment of goodwill and intangible assets, other income/loss, net, or income taxes to the reportable segments. The general and administrative costs are included in Unallocated Corporate Operating Expense.

⁽⁵⁾  Amount in 2013 included $0.6 million in transaction costs related to the Monoprice acquisition.

⁽⁶⁾  Amount in 2013 included $0.5 million in stock-based compensation recorded in association with the vesting of performance-based stock options upon completion of the Monoprice acquisition.

⁽⁷⁾  Amount in 2Q14 included $0.3 million in stock-based compensation recorded in association with the vesting of performance-based stock options upon completion of the HSW acquisition.

⁽⁸⁾  Amount in 2Q14 included $0.2 million related to amortization of acquired intangible assets related to the HSW acquisition.

⁽⁹⁾  In 4Q14, we recognized an impairment of goodwill and trade name intangible assets related to our E-Commerce segment.

⁽¹⁰⁾  Warrant was exercised during 4Q13.

⁽¹¹⁾  Amounts represent the non-cash portion of income taxes from continuing operations. 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 deferred tax assets will expire, if unutilized, between 2020 and 2024.

⁽¹²⁾  Calculation in 3Q14 used 42,305,000 diluted shares due to non-GAAP net income.

⁽¹³⁾  Calculation in 4Q14 used 41,875,000 diluted shares due to non-GAAP net income.

⁽¹⁴⁾  Calculation in FY 2014 used 42,946,000 diluted shares due to non-GAAP net income.

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Blucora Reconciliation of Non-GAAP Financial Measures⁽¹⁾ 

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

	2013			2014															2015
	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q
Adjusted EBITDA
Net income (loss) (2)	$	24,399		$	25,987		$	8,737		$	(2,238	)	$	(68,033	)	$	(35,547	)	$	23,100
Stock-based compensation	11,527			3,408			2,958			2,608			2,910			11,884			2,699
Depreciation and amortization of intangible assets	28,265			8,864			9,056			9,378			9,377			36,675			9,442
Impairment of goodwill and intangible assets	—			—			—			—			62,817			62,817			—
Other loss, net (3)	29,623			4,069			3,724			3,208			3,765			14,766			3,726
Income tax (benefit) expense	20,427			14,560			5,313			(2,294		)	(5,239		)	12,340			11,881
Adjusted EBITDA (4)	$	114,241		$	56,888		$	29,788		$	10,662		$	5,597		$	102,935		$	50,848
Non-GAAP Net Income
Net income (loss) (2)	$	24,399		$	25,987		$	8,737		$	(2,238	)	$	(68,033	)	$	(35,547	)	$	23,100
Stock-based compensation	11,527			3,408			2,958			2,608			2,910			11,884			2,699
Amortization of acquired intangible assets	23,789			7,469			7,642			7,993			7,990			31,094			7,980
Impairment of goodwill and intangible assets	—			—			—			—			62,817			62,817			—
Accretion of debt discount on Convertible Senior Notes	2,674			874			890			907			923			3,594			940
Loss on debt extinguishment and modification expense	1,593			—			—			—			—			—			—
Loss on derivative instrument	11,652			—			—			—			—			—			—
Impairment of equity investment in privately-held company	3,711			—			—			—			—			—			—
Decrease in non-cash pre-acquisition liability	—			—			—			(665		)	—			(665		)	—
Cash tax impact of adjustments to GAAP net income	(189		)	(54		)	(197		)	(44		)	(3		)	(298		)	(142		)
Non-cash income tax (benefit) expense (1)	18,538			12,319			3,878			(2,017		)	(4,635		)	9,545			8,400
Non-GAAP net income (5)	$	97,694		$	50,003		$	23,908		$	6,544		$	1,969		$	82,424		$	42,977
Non-GAAP net income per share	$	2.25		$	1.12		$	0.55		$	0.15		$	0.05		$	1.92		$	1.03
Diluted shares	43,480			44,521			43,084			42,305			41,875			42,946			41,899

⁽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 April 30, 2015 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, loss on derivative instrument, other-than-temporary impairment loss on equity investments, adjustments to contingent liabilities related to business combinations, and gain on third party bankruptcy settlement.

⁽⁴⁾  We define Adjusted EBITDA differently effective with 4Q14 to include impairment of goodwill and intangible assets. Our new definition of Adjusted EBITDA did not impact presentation of this non-GAAP financial measure for prior periods.

⁽⁵⁾  We define Non-GAAP net income differently effective with 1Q13 to include accretion of debt discount on Convertible Senior notes, 3Q13 to include other-than-temporary impairment losses on equity investments and loss on debt extinguishment and modification expense, 3Q14 to include decrease in non-cash pre-acquisition liability, and 4Q14 to include impairment of goodwill and intangible assets. Our new definition of non-GAAP net income did not impact presentation of this non-GAAP financial measure for prior periods.

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Blucora Reconciliation of Operating Free Cash Flow⁽¹⁾ 

(in thousands, rounding differences may exist)

	Last twelve months ended
	March 31, 2014			June 30, 2014			September 30, 2014			December 31, 2014			March 31, 2015
Net cash provided by operating activities	$	89,852		$	81,130		$	79,529		$	55,734		$	57,328
Excess tax benefits from stock-based award activity (2)	34,301			36,733			34,605			23,284			26,402
Purchases of property and equipment	(4,451		)	(5,559		)	(5,928		)	(5,213		)	(4,968		)
Operating free cash flow	$	119,702		$	112,304		$	108,206		$	73,805		$	78,762

⁽¹⁾  We define operating free cash flow as net cash provided by operating activities plus the excess tax benefits from stock-based award activity and less purchases of property and equipment. We believe operating free cash flow is an important liquidity measure that reflects the cash generated by the business after the purchase of property and equipment that can then be used for, among other things, strategic acquisitions and investments in the business, stock repurchases, and funding ongoing operations.

⁽²⁾  The significant majority of excess tax benefits from stock-based award activity represents the utilization of equity net operating loss carryforwards from prior years.

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Blucora Operating Metrics - Search and Content

	2013		2014										2015
Revenue by source	FY 12/31		1Q		2Q		3Q		4Q		FY 12/31		1Q
Owned & Operated (B2C)	17	%	22	%	17	%	21	%	26	%	21	%	34	%
Distribution (B2B)	83	%	78	%	83	%	79	%	74	%	79	%	66	%

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Blucora Operating Metrics - Tax Preparation

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

	Tax seasons ended April 16,				Three months ended March 31,
Consumer e-files	2015	2014	% change		2015	2014	% change
Online e-files	5,058	5,067	—		3,908	4,022	(3	)%
Desktop e-files	261	246	6	%	179	174	3	%
Sub-total e-files	5,319	5,313	—		4,087	4,196	(3	)%
Free File Alliance e-files (1)	172	210	(18	)%	127	166	(23	)%
Total e-files	5,491	5,523	(1	)%	4,214	4,362	(3	)%

⁽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.

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Blucora Operating Metrics - E-Commerce

	2014										2015
	1Q		2Q		3Q		4Q		FY 12/31		1Q
Order numbers % change (1)	(2	)%	(7	)%	(5	)%	(5	)%	(5	)%	(12	)%

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

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