EX-99.1 2 ex-991earningsreleaseq32015.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
 
Blucora Announces Third Quarter Results
BELLEVUE, WA — (Marketwired) — October 29, 2015 — Blucora, Inc. (NASDAQ: BCOR) today announced financial results for the third quarter ended September 30, 2015.

“We are pleased to report third quarter results in line with expectations, highlighted by strong year-over-year performance at our TaxACT business,” said Bill Ruckelshaus, President and Chief Executive Officer of Blucora. “As we announced earlier this month, Blucora has initiated a strategic transformation to build on the success of our TaxACT business and to position Blucora in the financial services and technology industry. By acquiring broker-dealer HD Vest, divesting InfoSpace and Monoprice, and reducing corporate operating expenses, the new Blucora will be strategically focused in growing markets and better positioned to drive results and enhance shareholder value.”
Summary Financial Performance: Q3 2015
($ in millions except per share amounts)
 
Q3
 
Q3
 
 
 
2015
 
2014
 
Change
Revenues
$
84.8

 
$
114.9

 
(26
)%
Search and Content
$
43.1

 
$
74.4

 
(42
)%
Tax Preparation
$
2.9

 
$
2.5

 
16
 %
E-Commerce
$
38.8

 
$
38.0

 
2
 %
Adjusted EBITDA
$
(1.6
)
 
$
10.7

 
(115
)%
Non-GAAP Net Income (Loss)
$
(5.5
)
 
$
6.5

 
(184
)%
Non-GAAP Diluted Income (Loss) Per Share
$
(0.13
)
 
$
0.15

 
(187
)%
GAAP Net Loss
$
(10.6
)
 
$
(2.2
)
 
374
 %
GAAP Diluted Loss Per Share
$
(0.26
)
 
$
(0.05
)
 
420
 %
See reconciliations of non-GAAP to GAAP measures in tables below.
 
 
 
 
 
Segment Information
Search and Content
Search and Content segment income for the third quarter of 2015 was $4.5 million or 11 percent of segment revenue.
Tax Preparation
Tax Preparation segment loss for the third quarter of 2015 was $2.5 million.
E-Commerce
E-Commerce segment income for the third quarter of 2015 was $2.2 million or 6 percent of segment revenue.
Corporate Operating Expenses
Unallocated corporate operating expenses for the third quarter of 2015 were $5.8 million and included $1.5 million of one-time charges primarily related to transaction expenses, compared to $3.5 million for the third quarter of 2014.
Fourth Quarter Outlook
For the fourth quarter of 2015, the Company expects revenues to be between $85.9 million and $91.9 million, Adjusted EBITDA to be between $(7.7) million and $(5.2) million, Non-GAAP net loss to be between $9.1 million and $6.5 million, or




$(0.22) to $(0.16) per diluted share, and GAAP net loss to be between $16.0 million and $14.3 million, or $(0.39) to $(0.35) per diluted 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 third quarter results and its outlook for the fourth 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 September 30,
 
Nine months ended September 30,
 
2015
 
2014
 
2015
 
2014
Revenues:
 
 
 
 
 
 
 
Services revenue
$
45,975

 
$
76,885

 
$
268,819

 
$
362,199

Product revenue, net
38,806

 
37,970

 
109,764

 
110,408

Total revenues
84,781

 
114,855

 
378,583

 
472,607

Operating expenses:
 
 
 
 
 
 
 
Cost of revenues:
 
 
 
 
 
 
 
Services cost of revenue (1)
28,492

 
49,754

 
94,204

 
177,280

Product cost of revenue
28,523

 
25,605

 
77,878

 
73,771

Total cost of revenues (2)
57,015

 
75,359

 
172,082

 
251,051

Engineering and technology (2)
5,418

 
5,970

 
15,803

 
14,922

Sales and marketing (2)
16,933

 
18,152

 
98,416

 
96,275

General and administrative (2)
12,513

 
9,495

 
33,936

 
28,552

Depreciation
1,215

 
1,085

 
3,540

 
3,278

Amortization of intangible assets
5,349

 
6,118

 
17,585

 
17,463

Total operating expenses
98,443

 
116,179

 
341,362

 
411,541

Operating income (loss)
(13,662
)
 
(1,324
)
 
37,221

 
61,066

Other loss, net (3)
(3,275
)
 
(3,208
)
 
(11,578
)
 
(11,001
)
Income (loss) before income taxes
(16,937
)
 
(4,532
)
 
25,643

 
50,065

Income tax benefit (expense)
6,326

 
2,294

 
(8,903
)
 
(17,579
)
Net income (loss)
$
(10,611
)
 
$
(2,238
)
 
$
16,740

 
$
32,486

Net income (loss) per share:
 
 
 
 
 
 
 
Basic
$
(0.26
)
 
$
(0.05
)
 
$
0.41

 
$
0.78

Diluted
$
(0.26
)
 
$
(0.05
)
 
$
0.40

 
$
0.75

Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
40,950

 
41,034

 
40,952

 
41,589

Diluted
40,950

 
41,034

 
41,911

 
43,303

(1) Includes amortization of acquired intangible assets of $1.9 million for the three months ended September 30, 2015 and 2014 and $5.6 million for the nine months ended September 30, 2015 and 2014, respectively.
(2) Stock-based compensation expense was allocated among the following captions (in thousands):
 
Three months ended September 30,
 
Nine months ended September 30,
 
2015
 
2014
 
2015
 
2014
Cost of revenues
$
48

 
$
101

 
$
155

 
$
373

Engineering and technology
509

 
568

 
1,315

 
1,312

Sales and marketing
457

 
74

 
1,405

 
1,715

General and administrative
2,296

 
1,865

 
6,482

 
5,574

Total stock-based compensation expense
$
3,310

 
$
2,608

 
$
9,357

 
$
8,974

(3) Other loss, net was allocated among the following captions (in thousands):
 
Three months ended September 30,
 
Nine months ended September 30,
 
2015
 
2014
 
2015
 
2014
Interest income
$
(138
)
 
$
(71
)
 
$
(380
)
 
$
(267
)
Interest expense
2,443

 
2,706

 
7,703

 
8,485

Amortization of debt issuance costs
300

 
288

 
943

 
853

Accretion of debt discounts
975

 
931

 
3,064

 
2,753

Realized (gain) loss on available-for-sale investments, net
(105
)
 
(6
)
 
312

 
(6
)
Other-than-temporary impairment loss on equity securities
—

 
—

 
964

 
—

Decrease in pre-acquisition liability
—

 
(665
)
 
—

 
(665
)
Gain on third party bankruptcy settlement
(224
)
 
—

 
(1,066
)
 
(167
)
Other
24

 
25

 
38

 
15

Other loss, net
$
3,275

 
$
3,208

 
$
11,578

 
$
11,001





Blucora, Inc.
Preliminary Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
 
September 30,
2015
 
December 31,
2014
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
59,638

 
$
46,444

Available-for-sale investments
232,705

 
254,854

Accounts receivable, net
23,157

 
30,988

Other receivables
1,230

 
3,295

Inventories
33,673

 
29,246

Prepaid expenses and other current assets, net
10,768

 
13,477

Total current assets
361,171

 
378,304

Property and equipment, net
15,089

 
15,942

Goodwill, net
308,827

 
304,658

Other intangible assets, net
147,253

 
168,919

Other long-term assets
4,134

 
4,891

Total assets
$
836,474

 
$
872,714

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
33,570

 
$
37,755

Accrued expenses and other current liabilities
18,918

 
21,505

Deferred revenue
6,563

 
7,884

Short-term portion of long-term debt, net
—

 
7,914

Total current liabilities
59,051

 
75,058

Long-term liabilities:
 
 
 
Long-term debt, net
30,000

 
85,835

Convertible senior notes, net
188,050

 
185,177

Deferred tax liability, net
15,024

 
42,963

Deferred revenue
2,382

 
1,915

Other long-term liabilities
6,225

 
2,741

Total long-term liabilities
241,681

 
318,631

Total liabilities
300,732

 
393,689

 
 
 
 
Stockholders’ equity:
 
 
 
Common stock
4

 
4

Additional paid-in capital
1,506,593

 
1,467,658

Accumulated deficit
(970,784
)
 
(987,524
)
Accumulated other comprehensive loss
(71
)
 
(1,113
)
Total stockholders’ equity
535,742

 
479,025

Total liabilities and stockholders’ equity
$
836,474

 
$
872,714





Blucora, Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
 
Nine months ended September 30,
 
2015
 
2014
Operating Activities:
 
 
 
Net income
$
16,740

 
$
32,486

Adjustments to reconcile net income to net cash from operating activities:
 
 
 
Stock-based compensation
9,357

 
8,974

Depreciation and amortization of intangible assets
27,706

 
27,298

Excess tax benefits from stock-based award activity
(35,612
)
 
(29,801
)
Deferred income taxes
(30,904
)
 
(15,621
)
Amortization of premium on investments, net
1,250

 
3,095

Amortization of debt issuance costs
943

 
853

Accretion of debt discounts
3,064

 
2,753

Realized (gain) loss on available-for-sale investments, net
312

 
(6
)
Other-than-temporary impairment loss on equity securities
964

 
—

Other
161

 
78

Cash provided (used) by changes in operating assets and liabilities:
 
 
 
Accounts receivable
7,740

 
16,212

Other receivables
2,065

 
4,134

Inventories
(4,427
)
 
1,067

Prepaid expenses and other current assets
4,150

 
849

Other long-term assets
(219
)
 
43

Accounts payable
(4,185
)
 
(18,382
)
Deferred revenue
(854
)
 
(48
)
Accrued expenses and other current and long-term liabilities
32,689

 
17,174

Net cash provided by operating activities
30,940

 
51,158

Investing Activities:
 
 
 
Business acquisition, net of cash acquired
(1,740
)
 
(44,927
)
Purchases of property and equipment
(3,115
)
 
(4,247
)
Purchases of intangible assets
(696
)
 
—

Proceeds from sales of investments
19,246

 
26,620

Proceeds from maturities of investments
210,699

 
195,296

Purchases of investments
(209,112
)
 
(237,063
)
Net cash provided (used) by investing activities
15,282

 
(64,321
)
Financing Activities:
 
 
 
Proceeds from credit facilities
20,000

 
4,000

Repayment of credit facilities
(83,940
)
 
(62,000
)
Stock repurchases
(7,068
)
 
(29,923
)
Excess tax benefits from stock-based award activity
35,612

 
29,801

Proceeds from stock option exercises
2,374

 
2,447

Proceeds from issuance of stock through employee stock purchase plan
1,193

 
1,376

Tax payments from shares withheld upon vesting of restricted stock units
(1,193
)
 
(2,569
)
Net cash used by financing activities
(33,022
)
 
(56,868
)
Effect of exchange rate changes on cash and cash equivalents
(6
)
 
—

Net increase (decrease) in cash and cash equivalents
13,194

 
(70,031
)
Cash and cash equivalents, beginning of period
46,444

 
130,225

Cash and cash equivalents, end of period
$
59,638

 
$
60,194






Blucora, Inc.
Preliminary Segment Information
(Unaudited)
(Amounts in thousands)
 
Three months ended September 30,
 
Nine months ended September 30,
 
2015
 
2014
 
2015
 
2014
Revenues:
 
 
 
 
 
 
 
Search and Content
$
43,100

 
$
74,416

 
$
153,976

 
$
260,999

Tax Preparation
2,875

 
2,469

 
114,843

 
101,200

E-Commerce
38,806

 
37,970

 
109,764

 
110,408

Total revenues
84,781

 
114,855

 
378,583

 
472,607

Operating income (loss):
 
 
 
 
 
 
 
Search and Content
4,533

 
12,709

 
19,745

 
45,971

Tax Preparation
(2,542
)
 
(1,859
)
 
61,493

 
52,754

E-Commerce
2,188

 
3,336

 
7,374

 
9,192

Corporate-level activity (1)
(17,841
)
 
(15,510
)
 
(51,391
)
 
(46,851
)
Total operating income (loss)
(13,662
)
 
(1,324
)
 
37,221

 
61,066

Other loss, net
(3,275
)
 
(3,208
)
 
(11,578
)
 
(11,001
)
Income tax benefit (expense)
6,326

 
2,294

 
(8,903
)
 
(17,579
)
Net income (loss)
$
(10,611
)
 
$
(2,238
)
 
$
16,740

 
$
32,486

(1) Corporate-level activity included the following (in thousands):
 
Three months ended September 30,
 
Nine months ended September 30,
 
2015
 
2014
 
2015
 
2014
Operating expenses
$
5,757

 
$
3,524

 
$
14,328

 
$
10,579

Stock-based compensation
3,310

 
2,608

 
9,357

 
8,974

Depreciation
1,514

 
1,385

 
4,485

 
4,194

Amortization of intangible assets
7,260

 
7,993

 
23,221

 
23,104

Total corporate-level activity
$
17,841

 
$
15,510

 
$
51,391

 
$
46,851






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 September 30,
 
Nine months ended September 30,
 
2015
 
2014
 
2015
 
2014
Net income (loss) (2)
$
(10,611
)
 
$
(2,238
)
 
$
16,740

 
$
32,486

Stock-based compensation
3,310

 
2,608

 
9,357

 
8,974

Depreciation and amortization of intangible assets
8,774

 
9,378

 
27,706

 
27,298

Other loss, net (3)
3,275

 
3,208

 
11,578

 
11,001

Income tax (benefit) expense
(6,326
)
 
(2,294
)
 
8,903

 
17,579

Adjusted EBITDA
$
(1,578
)
 
$
10,662

 
$
74,284

 
$
97,338






Preliminary Non-GAAP Net Income Reconciliation (1) 
(Unaudited)
(Amounts in thousands, except per share amounts)
 
Three months ended September 30,
 
Nine months ended September 30,
 
2015
 
2014
 
2015
 
2014
Net income (loss) (2)
$
(10,611
)
 
$
(2,238
)
 
$
16,740

 
$
32,486

Stock-based compensation
3,310

 
2,608

 
9,357

 
8,974

Amortization of acquired intangible assets
7,260

 
7,993

 
23,221

 
23,104

Accretion of debt discount on Convertible Senior Notes
975

 
907

 
2,873

 
2,671

Other-than-temporary impairment loss on equity securities
—

 
—

 
964

 
—

Decrease in non-cash pre-acquisition liability
—

 
(665
)
 
—

 
(665
)
Cash tax impact of adjustments to GAAP net income
(166
)
 
(44
)
 
(426
)
 
(295
)
Non-cash income tax (benefit) expense (1)
(6,269
)
 
(2,017
)
 
4,708

 
14,180

Non-GAAP net income (loss)
$
(5,501
)
 
$
6,544

 
$
57,437

 
$
80,455

 
 
 
 
 
 
 
 
Per diluted share:
 
 
 
 
 
 
 
Net income (loss)
$
(0.26
)
 
$
(0.05
)
 
$
0.40

 
$
0.75

Stock-based compensation
0.08

 
0.06

 
0.22

 
0.21

Amortization of acquired intangible assets
0.18

 
0.19

 
0.56

 
0.53

Accretion of debt discount on Convertible Senior Notes
0.02

 
0.02

 
0.07

 
0.06

Other-than-temporary impairment loss on equity securities
—

 
—

 
0.02

 
—

Decrease in non-cash pre-acquisition liability
—

 
(0.02
)
 
—

 
(0.01
)
Cash tax impact of adjustments to GAAP net income
(0.00
)
 
(0.00
)
 
(0.01
)
 
(0.01
)
Non-cash income tax (benefit) expense
(0.15
)
 
(0.05
)
 
0.11

 
0.33

Non-GAAP net income (loss) per share
$
(0.13
)
 
$
0.15

 
$
1.37

 
$
1.86

Weighted average shares outstanding used in computing per diluted share and its components
40,950

 
42,305

 
41,911

 
43,303





Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance
(Amounts in thousands)
 
Ranges for the three months ending
 
December 31, 2015
Net loss
$
(16,000
)
 
$
(14,300
)
Stock-based compensation
4,300

 
4,200

Depreciation and amortization of intangible assets
7,900

 
7,800

Other loss, net (3)
3,600

 
3,500

Income tax benefit
(7,500
)
 
(6,400
)
Adjusted EBITDA
$
(7,700
)
 
$
(5,200
)





Preliminary Non-GAAP Net Income Reconciliation for Forward-Looking Guidance
(Amounts in thousands)
 
Ranges for the three months ending
 
December 31, 2015
Net loss
$
(16,000
)
 
$
(14,300
)
Stock-based compensation
4,300

 
4,200

Amortization of acquired intangible assets
6,200

 
6,300

Accretion of debt discount on Convertible Senior Notes
1,000

 
1,000

Non-cash income tax benefit
(4,600
)
 
(3,700
)
Non-GAAP net loss
$
(9,100
)
 
$
(6,500
)
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 amounts recorded in other loss, net that resulted from an other-than-temporary impairment loss recognized on equity securities in the second quarter of 2015 and adjustments related to 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, other-than-temporary impairment loss on equity securities, 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, realized gains and losses on available-for-sale investments, impairment losses on equity investments, adjustments to contingent liabilities related to business combinations, and gain on third party bankruptcy settlement.