Blucora Announces Third Quarter Results
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BELLEVUE, WA -- (Marketwired) -- 10/29/15 --
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
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 Nine months ended
September 30, 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 Nine months ended
September 30, 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 Nine months ended
September 30, 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, December 31,
2015 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 Nine months ended
September 30, 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 Nine months ended
September 30, 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 Nine months ended
September 30, 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 Nine months ended
September 30, 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.
Blucora Contact:Stacy [email protected]
Source: Blucora
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