EX-99.2 3 ex-992erq42021.htm EX-99.2 Document

Exhibit 99.2
Blucora, Inc.
Supplemental Information
December 31, 2021
Table of Contents



Blucora Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except % and per share amounts. Rounding differences may exist)
201920202021
FY 12/311Q2Q3Q4QFY 12/311Q2Q3Q4QFY 12/31
Segment revenue:
Wealth Management$507,979 $144,989 $115,884 $135,932 $149,384 $546,189 $154,491 $162,395 $169,135 $172,192 $658,213 
Tax Software209,966 118,331 45,238 39,421 5,773 208,763 123,892 91,917 5,039 6,139 226,987 
Total segment revenue717,945 263,320 161,122 175,353 155,157 754,952 278,383 254,312 174,174 178,331 885,200 
Operating expenses:
Cost of revenue:
Wealth Management352,081 102,342 83,868 96,122 103,630 385,962 108,623 113,910 120,641 121,119 464,293 
Tax Software10,691 4,013 3,054 2,692 2,569 12,328 5,578 4,429 2,323 3,228 15,558 
Total segment cost of revenue362,772 106,355 86,922 98,814 106,199 398,290 114,201 118,339 122,964 124,347 479,851 
Engineering and technology30,931 8,515 7,377 6,007 5,359 27,258 7,128 7,231 7,874 8,471 30,704 
Sales and marketing126,205 79,710 40,057 31,018 26,833 177,618 77,562 34,848 28,399 32,522 173,331 
General and administrative78,529 24,728 20,200 18,605 18,625 82,158 24,685 23,832 23,102 27,052 98,671 
Acquisition and integration25,763 5,682 2,824 10,276 12,303 31,085 8,103 18,169 2,241 4,285 32,798 
Depreciation5,479 1,796 1,675 1,874 1,948 7,293 2,300 3,204 2,867 2,535 10,906 
Amortization of acquired intangible assets37,357 7,748 6,673 7,746 7,578 29,745 7,175 7,063 7,009 7,073 28,320 
Impairment of goodwill and an intangible asset (1)
50,900 270,625 — — — 270,625 — — — — — 
Total operating expenses717,936 505,159 165,728 174,340 178,845 1,024,072 241,154 212,686 194,456 206,285 854,581 
Operating income (loss)9 (241,839)(4,606)1,013 (23,688)(269,120)37,229 41,626 (20,282)(27,954)30,619 
Interest expense and other, net(16,915)(6,135)(5,288)(11,963)(7,918)(31,304)(7,883)(8,024)(8,295)(7,878)(32,080)
Income (loss) before income taxes(16,906)(247,974)(9,894)(10,950)(31,606)(300,424)29,346 33,602 (28,577)(35,832)(1,461)
Income tax benefit (expense)65,054 (67,520)59,539 (15,256)(19,094)(42,331)(1,700)(1,994)774 12,138 9,218 
Net income (loss)$48,148 $(315,494)$49,645 $(26,206)$(50,700)$(342,755)$27,646 $31,608 $(27,803)$(23,694)$7,757 
Net income (loss) per share:
Basic$1.00 $(6.60)$1.04 $(0.55)$(1.05)$(7.14)$0.57 $0.65 $(0.57)$(0.49)$0.16 
Diluted$0.98 $(6.60)$1.03 $(0.55)$(1.05)$(7.14)$0.56 $0.64 $(0.57)$(0.49)$0.16 
Weighted average shares outstanding:
Basic48,264 47,827 47,941 48,039 48,107 47,978 48,261 48,508 48,707 48,834 48,578 
Diluted49,282 47,827 48,092 48,039 48,107 47,978 49,097 49,385 48,707 48,834 49,526 
____________________________
(1)In the first quarter of 2020, we recognized a $270.6 million goodwill impairment related to our Wealth Management reporting unit. In 2019, we recognized a $50.9 million impairment of an intangible asset related to the HD Vest trade name intangible asset.












2

Blucora Condensed Consolidated Financial Results (1)
(Unaudited, in thousands, except % and per share amounts. Rounding differences may exist)
201920202021
FY 12/311Q2Q3Q4QFY 12/311Q2Q3Q4QFY 12/31
Segment revenue:
Wealth Management (1)
$507,979 $144,989 $115,884 $135,932 $149,384 $546,189 $154,491 $162,395 $169,135 $172,192 $658,213 
Tax Software (2)
209,966 118,331 45,238 39,421 5,773 208,763 123,892 91,917 5,039 6,139 226,987 
Total segment revenue$717,945 $263,320 $161,122 $175,353 $155,157 $754,952 $278,383 $254,312 $174,174 $178,331 $885,200 
Segment operating income: (3)
Wealth Management (1)
$68,292 $22,598 $11,731 $17,498 $20,368 $72,195 $19,396 $21,396 $19,564 $21,856 $82,212 
Tax Software (2)
96,249 37,753 6,659 16,234 (11,025)49,621 50,888 63,448 (13,864)(18,593)81,879 
Total segment operating income$164,541 $60,351 $18,390 $33,732 $9,343 $121,816 $70,284 $84,844 $5,700 $3,263 $164,091 
Segment operating income as a % of segment revenue:
Wealth Management (1)
13 %16 %10 %13 %14 %13 %13 %13 %12 %13 %12 %
Tax Software (2)
46 %32 %15 %41 %(191)%24 %41 %69 %(275)%(303)%36 %
Total segment operating income as a % of segment revenue23 %23 %11 %19 %6 %16 %25 %33 %3 %2 %19 %
Unallocated corporate-level general and administrative expenses (3)
$27,361 $7,016 $5,810 $6,745 $7,118 $26,689 $5,694 $6,259 $6,499 $7,103 $25,555 
Adjusted EBITDA (4)
$137,180 $53,335 $12,580 $26,987 $2,225 $95,127 $64,590 $78,585 $(799)$(3,840)$138,536 
Other unallocated corporate-level operating expenses: (3)
Stock-based compensation$16,300 $(1,201)$3,904 $4,517 $2,846 $10,066 $5,610 $5,160 $4,729 $5,255 $20,754 
Acquisition and integration—Excluding change in the fair value of acquisition-related contingent consideration25,763 5,682 2,824 11,276 3,003 22,785 1,803 6,669 541 1,385 10,398 
Acquisition and integration—Change in the fair value of acquisition-related contingent consideration— — — (1,000)9,300 8,300 6,300 11,500 1,700 2,900 22,400 
Depreciation6,851 2,420 2,412 2,620 2,710 10,162 3,243 4,102 3,906 3,855 15,106 
Amortization of acquired intangible assets37,357 7,748 6,673 7,746 7,578 29,745 7,175 7,063 7,009 7,073 28,320 
Executive transition costs— 9,184 636 405 476 10,701 — — — — — 
Headquarters relocation costs— 716 737 410 — 1,863 — — — — — 
Contested proxy and other legal and consulting costs
— — — — — — 3,230 2,465 1,598 3,646 10,939 
Impairment of goodwill and an intangible asset
50,900 270,625 — — — 270,625 — — — — — 
Operating income (loss)$9 $(241,839)$(4,606)$1,013 $(23,688)$(269,120)$37,229 $41,626 $(20,282)$(27,954)$30,619 
Unallocated interest expense and other, net: (3)
Interest expense$19,017 $5,316 $4,840 $7,254 $7,160 $24,570 $7,183 $7,302 $7,304 $7,018 $28,807 
Amortization of debt issuance costs1,042 313 331 362 366 1,372 363 377 388 394 1,522 
Accretion of debt discounts228 68 70 276 279 693 277 284 290 295 1,146 
Total interest expense20,287 5,697 5,241 7,892 7,805 26,635 7,823 7,963 7,982 7,707 31,475 
Interest income(449)(14)(11)(2)(38)(65)(2)— — (19)(21)
Gain on sale of a business(3,256)— — (349)— (349)— — — — — 
Non-capitalized debt issuance expenses— — — 3,687 — 3,687 — — — — — 
Other333 452 58 735 151 1,396 62 61 313 190 626 
Total interest expense and other, net16,915 6,135 5,288 11,963 7,918 31,304 7,883 8,024 8,295 7,878 32,080 
Income (loss) before income taxes(16,906)(247,974)(9,894)(10,950)(31,606)(300,424)29,346 33,602 (28,577)(35,832)(1,461)
Income tax (benefit) expense:
Cash3,564 483 158 269 362 1,272 1,969 2,688 (577)(1,793)2,287 
Non-cash (5)
(68,618)67,037 (59,697)14,987 18,732 41,059 (269)(694)(197)(10,345)(11,505)
Total income tax (benefit) expense(65,054)67,520 (59,539)15,256 19,094 42,331 1,700 1,994 (774)(12,138)(9,218)
GAAP Net Income (Loss)$48,148 $(315,494)$49,645 $(26,206)$(50,700)$(342,755)$27,646 $31,608 $(27,803)$(23,694)$7,757 
GAAP Net Income (Loss) per share - Diluted$0.98 $(6.60)$1.03 $(0.55)$(1.05)$(7.14)$0.56 $0.64 $(0.57)$(0.49)$0.16 
Non-GAAP Net Income (Loss) (4)
$104,198 $43,561 $4,463 $15,055 $(8,999)$54,080 $50,952 $63,122 $(12,754)$(14,131)$87,189 
Non-GAAP Net Income (Loss) per share - Diluted (4) (6)
$2.11 $0.90 $0.09 $0.31 $(0.19)$1.12 $1.04 $1.28 $(0.26)$(0.29)$1.76 
Basic weighted average shares outstanding48,264 47,827 47,941 48,039 48,107 47,978 48,261 48,508 48,707 48,834 48,578 
Diluted weighted average shares outstanding (6)
49,282 47,827 48,092 48,039 48,107 47,978 49,097 49,385 48,707 48,834 49,526 
Notes to Condensed Consolidated Financial Results on next page

3


Notes to Condensed Consolidated Financial Results

(1)The operations of 1st Global are included in the Company's operating results as part of the Wealth Management segment beginning May 6, 2019 when 1st Global was acquired. The operations of Avantax Planning Partners (formerly "HKFS") are included in the Company's operating results as part of the Wealth Management segment beginning July 1, 2020 when HKFS was acquired.
(2)As a highly seasonal business, a significant portion of Tax Software revenue is typically generated in the first two quarters of the calendar year. In March 2020 and as a result of the COVID-19 pandemic, the Internal Revenue Service (“IRS”) extended the filing deadline for federal tax returns from April 15, 2020 to July 15, 2020. This filing extension resulted in the shifting of a significant portion of Tax Software segment revenue that is usually earned in the first and second quarters to the third quarter of 2020. As a result of the continued impact of the COVID-19 pandemic, including disruptions associated with the distribution of the second and third rounds of Economic Impact Payments, the IRS delayed the start of the 2021 tax season and extended the filing and payment deadline for tax year 2020 federal tax returns from April 15, 2021 to May 17, 2021. In addition, the IRS extended the federal filing and payment deadline for Texas, Louisiana, and Oklahoma to June 15, 2021. Beyond federal filings, the majority of states also extended their filing and payment deadlines for tax year 2020 state tax returns. This extension resulted in the shifting of a significant portion of Tax Software segment revenue that is usually earned in the first quarter to the second quarter of 2021.
(3)We do not allocate certain operating expenses (including personnel and overhead costs), stock-based compensation, acquisition and integration costs, depreciation, amortization of acquired intangible assets, executive transition costs, headquarters relocation costs, contested proxy and other legal and consulting costs, impairment of goodwill and an intangible asset, interest expense and other, net, or income taxes to the reportable segments. General and administrative costs are included in "Unallocated corporate-level expenses."
(4)See the Reconciliation of Certain Non-GAAP Financial Measures to the Nearest Comparable GAAP Financial Measures on page 5.
(5)Amounts represent the non-cash portion of 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 federal net operating losses will expire, if not utilized, between 2022 and 2024.
(6)For periods in which non-GAAP net income is generated, non-GAAP net income per share is calculated using diluted weighted average shares outstanding. For periods in which non-GAAP net loss is generated, diluted weighted average shares outstanding is the same as basic weighted average shares outstanding.

4

Blucora Reconciliation of Certain Non-GAAP Financial Measures to the Nearest Comparable GAAP Financial Measures (1) (2)
 201920202021
(Unaudited, in thousands, rounding differences may exist)FY 12/311Q2Q3Q4QFY 12/311Q2Q3Q4QFY 12/31
Adjusted EBITDA (1)
Net income (loss) (2)
$48,148 $(315,494)$49,645 $(26,206)$(50,700)$(342,755)$27,646 $31,608 $(27,803)$(23,694)$7,757 
Stock-based compensation16,300 (1,201)3,904 4,517 2,846 10,066 5,610 5,160 4,729 5,255 20,754 
Depreciation and amortization of acquired intangible assets
44,208 10,168 9,085 10,366 10,288 39,907 10,418 11,165 10,915 10,928 43,426 
Interest expense and other, net16,915 6,135 5,288 11,963 7,918 31,304 7,883 8,024 8,295 7,878 32,080 
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration25,763 5,682 2,824 11,276 3,003 22,785 1,803 6,669 541 1,385 10,398 
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration— — — (1,000)9,300 8,300 6,300 11,500 1,700 2,900 22,400 
Executive transition costs— 9,184 636 405 476 10,701 — — — — — 
Headquarters relocation costs— 716 737 410 — 1,863 — — — — — 
Contested proxy and other legal and consulting costs
— — — — — — 3,230 2,465 1,598 3,646 10,939 
Income tax (benefit) expense(65,054)67,520 (59,539)15,256 19,094 42,331 1,700 1,994 (774)(12,138)(9,218)
Impairment of goodwill and an intangible asset50,900 270,625 — — — 270,625 — — — — — 
Adjusted EBITDA(1)
$137,180 $53,335 $12,580 $26,987 $2,225 $95,127 $64,590 $78,585 $(799)$(3,840)$138,536 
Non-GAAP Net Income (Loss) (1)
Net income (loss) (2)
$48,148 $(315,494)$49,645 $(26,206)$(50,700)$(342,755)$27,646 $31,608 $(27,803)$(23,694)$7,757 
Stock-based compensation16,300 (1,201)3,904 4,517 2,846 10,066 5,610 5,160 4,729 5,255 20,754 
Amortization of acquired intangible assets
37,357 7,748 6,673 7,746 7,578 29,745 7,175 7,063 7,009 7,073 28,320 
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration25,763 5,682 2,824 11,276 3,003 22,785 1,803 6,669 541 1,385 10,398 
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration— — — (1,000)9,300 8,300 6,300 11,500 1,700 2,900 22,400 
Executive transition costs— 9,184 636 405 476 10,701 — — — — — 
Headquarters relocation costs— 716 737 410 — 1,863 — — — — — 
Contested proxy and other legal and consulting costs
— — — — — — 3,230 2,465 1,598 3,646 10,939 
Non-capitalized debt issuance expenses— — — 3,687 — 3,687 — — — — — 
Impairment of goodwill and an intangible asset50,900 270,625 — — — 270,625 — — — — — 
Gain on the sale of a business
(3,256)— — (349)— (349)— — — — — 
Cash tax impact of adjustments to GAAP net income (loss)
(2,396)(736)(259)(418)(234)(1,647)(543)(649)(331)(351)(1,874)
Non-cash income tax (benefit) expense(68,618)67,037 (59,697)14,987 18,732 41,059 (269)(694)(197)(10,345)(11,505)
Non-GAAP Net Income (Loss) (1)
$104,198 $43,561 $4,463 $15,055 $(8,999)$54,080 $50,952 $63,122 $(12,754)$(14,131)$87,189 
Non-GAAP Net Income (Loss) per share - Diluted (1) (3)
$2.11 $0.90 $0.09 $0.31 $(0.19)$1.12 $1.04 $1.28 $(0.26)$(0.29)$1.76 
Diluted weighted average shares outstanding (3)
49,282 48,253 48,092 48,203 48,107 48,244 49,097 49,385 48,707 48,834 49,526 
 






Notes to Reconciliations of Certain Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures on next page
5

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

(1) We define Adjusted EBITDA as net income (loss), determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation and amortization of acquired intangible assets, interest expense and other, net, acquisition and integration costs, contested proxy and other legal and consulting costs, impairment of goodwill, executive transition costs, headquarters relocation costs, and income tax benefit (expense). Interest expense and other, net primarily consists of interest expense, net and non-capitalized debt issuance expenses. Acquisition and integration costs primarily relate to the acquisition of Avantax Planning Partners and 1st Global. Impairment of goodwill relates to the impairment of our Wealth Management reporting unit goodwill in the first quarter of 2020. Executive transition costs relate to the departure of certain Company executives in the first quarter of 2020. Headquarters relocation costs relate to the process of moving from our Dallas and Irving offices to our new headquarters.
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 (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 (Loss) as net income (loss), determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets, acquisition and integration costs, contested proxy and other legal and consulting costs, impairment of goodwill, executive transition costs, non-capitalized debt issuance expenses, headquarters relocation costs, gain on the sale of a business, the related cash tax impact of those adjustments, and non-cash income tax (benefit) expense. 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 not utilized, between 2022 and 2024. Gain on the sale of a business relates to the disposition of SimpleTax in 2019 and the subsequent working capital adjustment in the third quarter of 2020. Non-capitalized debt issuance expenses relate to the expense recognized as a result of the Term Loan increase in the third quarter of 2020.
We believe that Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) 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 that have not been, or are not expected to be, settled in cash. Additionally, we believe that Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) per share are common measures used by investors and analysts to evaluate our performance and the valuation of our business. Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) per share 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 (loss) and GAAP net income (loss) per share. Other companies may calculate Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) per share differently, and, therefore, these measures may not be comparable to similarly titled measures of other companies.

(2) See the Condensed Consolidated Financial Results on page 3.

(3) For periods in which non-GAAP net income is generated, Non-GAAP Net Income (Loss) per share is calculated using diluted weighted average shares outstanding. For periods in which Non-GAAP Net Loss is generated, diluted weighted average shares outstanding is the same as basic weighted average shares outstanding.
6

Blucora Reconciliation of Trailing Twelve Month ("TTM") Adjusted EBITDA (1) (2)
 201920202021
(Unaudited, in thousands, rounding differences may exist)TTM 4QTTM 1QTTM 2QTTM 3QTTM 4QTTM 1QTTM 2QTTM 3QTTM 4Q
Adjusted EBITDA (1) (2)
Net income (loss)
$48,148 $(329,516)$(310,907)$(274,727)$(342,755)$385 $(17,652)$(19,249)$7,757 
Stock-based compensation16,300 12,656 12,478 12,356 10,066 16,877 18,133 18,345 20,754 
Depreciation and amortization of acquired intangible assets
44,208 45,022 43,276 41,749 39,907 40,157 42,237 42,786 43,426 
Interest expense and other, net16,915 19,092 19,262 28,619 31,304 33,052 35,788 32,120 32,080 
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration25,763 29,648 23,289 27,806 22,785 18,906 22,751 12,016 10,398 
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration— — — (1,000)8,300 14,600 26,100 28,800 22,400 
Executive transition costs— 9,184 9,820 10,225 10,701 1,517 881 476 — 
Headquarter relocation costs— 716 1,453 1,863 1,863 1,147 410 — — 
Contested proxy and other legal and consulting costs
— — — — — 3,230 5,695 7,293 10,939 
Impairment of goodwill and an intangible asset50,900 321,525 321,525 270,625 270,625 — — — — 
Income tax (benefit) expense(65,054)(1,519)(52,934)(25,347)42,331 (23,489)38,044 22,014 (9,218)
Adjusted EBITDA(1)
$137,180 $106,808 $67,262 $92,169 $95,127 $106,382 $172,387 $144,601 $138,536 

Blucora Net Leverage Ratio (1) (3) (4)
 201920202021
(Unaudited, in thousands, rounding differences may exist)4Q1Q2Q3Q4Q1Q2Q3Q4Q
DEBT:
Senior Secured Credit Facility$399,687 $444,375 $389,062 $563,609 $563,156 $562,703 $562,250 $561,797 $561,344 
CASH:
Cash and cash equivalents80,820 168,198 90,081 151,166 150,125 191,803 232,409 184,926 134,824 
NET DEBT (3)
$318,867 $276,177 $298,981 $412,443 $413,031 $370,900 $329,841 $376,871 $426,520 
Last twelve months:
ADJUSTED EBITDA (1) (2)
$137,180 $106,808 $67,262 $92,169 $95,127 $106,382 $172,387 $144,601 $138,536 
NET LEVERAGE RATIO (1) (3) (4)
2.3 x2.6 x4.4 x4.5 x4.3 x3.5 x1.9 x2.6 x3.1 x
____________________________
(1) Non-GAAP measure using Adjusted EBITDA for the last twelve months. Adjusted EBITDA for the trailing twelve month period is reconciled to the nearest comparable GAAP measure, net income (loss).
(2) For additional information on Adjusted EBITDA and its use as a non-GAAP measure, see page 6.
(3) We define Net Debt, a non-GAAP financial measure, as the outstanding principal of debt less cash and cash equivalents. Management believes that the presentation of this non-GAAP financial measure provides useful information to investors because it is an important liquidity measurement that reflects our ability to service our debt.
(4) Net leverage ratio is calculated by dividing net debt by Adjusted EBITDA for the trailing twelve months.



7

Blucora Reconciliation of Operating Free Cash Flow (1)
 201920202021
(Unaudited, in thousands, rounding differences may exist)FY 12/311Q2Q3Q4QFY 12/311Q2Q3Q4QFY 12/31
Net cash provided by (used in) operating activities$92,804 $46,864 $(12,490)$940 $8,765 $44,079 $53,722 $43,549 $(22,880)$(37,560)$36,831 
Purchases of property, equipment, and software(10,501)(7,715)(11,357)(9,639)(7,291)(36,002)(8,598)(4,946)(8,080)(8,652)(30,276)
Operating Free Cash Flow
$82,303 $39,149 $(23,847)$(8,699)$1,474 $8,077 $45,124 $38,603 $(30,960)$(46,212)$6,555 
____________________________
(1) We define Operating Free Cash Flow, which is a non-GAAP measure, as net cash provided by (used in) operating activities less purchases of property, equipment, and software. We believe Operating Free Cash Flow is an important liquidity measure that reflects the cash generated by our businesses, after the purchases of property, equipment, and software, that can then be used for, among other things, strategic acquisitions and investments in the businesses, stock repurchases, and funding ongoing operations.
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Blucora Operating Metrics - Wealth Management
201920202021
(In thousands, rounding differences may exist)FY 12/311Q2Q3Q4QFY 12/311Q2Q3Q4QFY 12/31
Segment revenue$507,979 $144,989 $115,884 $135,932 $149,384 $546,189 $154,491 $162,395 $169,135 $172,192 $658,213 
Less: Financial professional commission payout(348,003)(100,804)(82,656)(94,794)(102,610)(380,864)(107,211)(112,164)(119,044)(119,609)(458,028)
Segment net revenue (1)
$159,976 $44,185 $33,228 $41,138 $46,774 $165,325 $47,280 $50,231 $50,091 $52,583 $200,185 
Segment operating income (2)
$68,292 $22,598 $11,731 $17,498 $20,368 $72,195 $19,396 $21,396 $19,564 $21,856 $82,212 
Segment operating income as a % of revenue13 %16 %10 %13 %14 %13 %13 %13 %12 %13 %12 %
Segment operating income as a % of net revenue43 %51 %35 %43 %44 %44 %41 %43 %39 %42 %41 %
(In thousands, rounding differences may exist)201920202021
Sources of RevenuePrimary DriversFY 12/311Q2Q3Q4QFY 12/311Q2Q3Q4QFY 12/31
Financial professional-drivenAdvisory- Advisory asset levels$252,367 $78,757 $66,303 $82,612 $87,079 $314,751 $91,119 $96,508 $103,540 $104,633 $395,800 
Commission- Transactions
- Asset levels
- Product mix		191,050 50,580 39,836 44,921 49,864 185,201 52,534 51,702 52,961 53,480 210,677 
Other revenueAsset-based- Cash balances
- Interest rates
- Number of accounts
- Client asset levels		48,182 10,579 3,981 4,351 4,777 23,688 5,329 5,526 5,659 5,587 22,101 
Transaction and fee- Account activity
- Number of clients
- Number of financial professionals
- Number of accounts		16,380 5,073 5,764 4,048 7,664 22,549 5,509 8,659 6,975 8,492 29,635 
Total revenue$507,979 $144,989 $115,884 $135,932 $149,384 $546,189 $154,491 $162,395 $169,135 $172,192 $658,213 
Total recurring revenue (3)
$422,128 $119,255 $100,004 $117,822 $127,863 $464,944 $130,755 $138,900 $145,311 $144,728 $559,694 
Recurring revenue rate (3)
83.1 %82.3 %86.3 %86.7 %85.6 %85.1 %84.6 %85.5 %85.9 %84.1 %85.0 %
____________________________
(1) Non-GAAP financial measure represents segment revenue less financial professional commission payout.
(2) We do not allocate certain operating expenses (including personnel and overhead costs), stock-based compensation, acquisition and integration costs, depreciation, amortization of acquired intangible assets, executive transition costs, headquarters relocation costs, contested proxy and other legal and consulting costs, impairment of goodwill and an intangible asset, interest expense and other, net, or income taxes to the reportable segments.
(3) Recurring revenue consists of advisory fees, trailing commissions, fees from cash sweep programs, and certain transaction and fee revenue.
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Blucora Operating Metrics - Wealth Management (continued)
(In thousands, rounding differences may exist)
201920202021
FY 12/311Q2Q3Q4QFY 12/311Q2Q3Q4QFY 12/31
Total client assets
$70,644,385 $61,014,454 $68,519,998 $76,152,721 $82,961,244 $82,961,244 $84,776,191 $87,814,790 $86,647,743 $89,086,032 $89,086,032 
Brokerage assets
$43,015,221 $37,395,490 $41,964,610 $43,733,735 $47,357,687 $47,357,687 $48,001,320 $48,373,805 $46,850,354 $46,906,981 $46,906,981 
Advisory assets
$27,629,164 $23,618,964 $26,555,388 $32,418,986 $35,603,557 $35,603,557 $36,774,871 $39,440,985 $39,797,389 $42,179,051 $42,179,051 
% of total client assets39.1 %38.7 %38.8 %42.6 %42.9 %42.9 %43.4 %44.9 %45.9 %47.3 %47.3 %
Number of financial professionals (in ones) (1)
3,984 3,945 3,862 3,975 3,770 3,770 3,718 3,606 3,529 3,416 3,416 
Advisory and commission revenue per financial professional (2)
$111.3 $32.8 $27.5 $32.1 $36.3 $132.6 $38.6 $41.1 $44.3 $46.3 $177.5 
Quarterly production retention rate: (3)
TTM Financial professional-driven revenue (4)
$443,417 $495,837 $492,498 $491,829 $499,952 $499,952 $514,268 $556,339 $585,307 $606,477 $606,477 
TTM Financial professional-driven revenue related to independent financial professionals who departed in the quarter (4)
$10,770 $4,586 $11,445 $5,366 $19,101 $19,101 $8,127 $9,881 $12,157 $11,079 $11,079 
TTM Financial professional-driven revenue, less that related to independent financial professionals who departed in the quarter (4)
$432,647 $491,251 $481,053 $486,463 $480,851 $480,851 $506,141 $546,458 $573,150 $595,398 $595,398 
Quarterly production retention rate (3)
97.6 %99.1 %97.7 %98.9 %96.2 %96.2 %98.4 %98.2 %97.9 %98.2 %98.2 %
____________________________
(1) The increase in financial professionals in the third quarter of 2020 resulted from the addition of 19 in-house financial professionals (licensed financial planning consultants, which were employees of Avantax Planning Partners) and 131 licensed referring representatives at CPA firms that partner with Avantax Planning Partners.
(2) Advisory and commission revenue per financial professional is based upon a full year of advisory and commission revenue.
(3) Quarterly production retention rate is a non-GAAP financial measure. We believe quarterly production retention rate is an important measure of our quarterly retention of financial professional-driven revenue (which consists of advisory revenue and commission revenue). Management uses quarterly production retention rate to measure the impact of financial professional departures on our business. Quarterly production retention rate is calculated by dividing (x) the difference of (i) total financial professional-driven revenue for the trailing-twelve-month period then ended minus (ii) financial professional-driven revenue for the trailing-twelve-month period then ended related to independent financial professionals that departed in the quarter by (y) total financial professional-driven revenue for the trailing-twelve-month period then ended. As quarterly production retention rate is a measure of retention during a quarter, it also includes quarterly production from independent financial professionals who departed in prior quarters in the trailing-twelve-month period, and therefore does not show production retention rate over longer periods of time.
(4) For the trailing-twelve-month period then ended.



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Blucora Operating Metrics - Tax Software
(In thousands except % and as otherwise indicated, rounding differences may exist)Year ended December 31,Change
20212020Units%
Total e-files (1)
5,583 5,319 264 5 %
Consumers
E-files (1)
3,178 3,178 — — %
Professional
E-files2,405 2,141 264 12 %
Units sold (in ones)20,901 20,360 541 3 %
E-files per unit sold (in ones)115.1 105.2 9.9 9 %
____________________________
(1)We participate in the Free File Alliance that is part of an IRS partnership that provides free electronic tax filing services to taxpayers meeting certain income-based guidelines. Free File Alliance e-files are included within total e-files and consumer e-files above.
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