Blucora Reports Fourth Quarter and Full Year 2020 Results

February 17, 2021 6:30 AM EST

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DALLAS, Feb. 17, 2021 (GLOBE NEWSWIRE) -- Blucora, Inc. (NASDAQ: BCOR), a leading provider of technology-enabled, tax-focused financial solutions, today announced financial results for the fourth quarter and full year ended December 31, 2020.

2020 Highlights and Recent Developments

  • Increased total revenue by 5% year-over-year, to $755 million, including the addition of HK Financial Services (“HKFS”), on July 1
  • Recorded 23rd consecutive year of segment revenue growth at TaxAct, excluding sale of SimpleTax
  • Completed acquisition of HKFS, now rebranded as Avantax Planning Partners (“APP”), adding a historically fast growing, highly profitable registered investment advisor (“RIA”) and its fee-based advisory assets to the Company’s wealth management business
  • Increased advisory assets 29% year-over-year, including the addition of approximately $5.0 billion in APP assets
  • Increased total client assets 17% to $83.0 billion, with $35.6 billion or 42.9% in advisory assets
  • Further strengthened Board of Directors with appointments of Karthik Rao, Jana Schreuder and Mark Ernst

“After an unprecedented year, I am extremely proud of our team’s focus and execution of our business plan in 2020,” said Chris Walters, Blucora’s President and Chief Executive Officer. “During the past year our new leadership team has made tremendous progress implementing our differentiated, tax-focused strategy, repositioning both Avantax and TaxAct for sustainable growth and moving forward with new plans to realize significant synergy potential between the two business units. Based on the progress and investments we made during 2020, I am optimistic about 2021 and beyond, as we execute on our plans to drive long-term earnings growth and shareholder value.”

Summary Financial Performance: Q4 and Full Year 2020($ in millions except per share amounts)

 Q4 Q4   Full Year Full Year  
 2020 2019 Change 2020 2019 Change
Revenue           
Wealth Management$149.4  $145.2  3 % $546.2  $508.0  8 %
Tax Preparation$5.8  $4.2  38 % $208.8  $210.0  (1)%
Total Revenue$155.2  $149.4  4 % $755.0  $717.9  5 %
Segment Operating Income (Loss):           
Wealth Management$20.4  $19.1  7 % $72.2  $68.3  6 %
Tax Preparation$(11.0) $(12.3) 11 % $49.6  $96.2  (48)%
Total Segment Operating Income$9.3  $6.8  37 % $121.8  $164.5  (26)%
Unallocated Corporate-Level General and Administrative Expenses$7.1  $7.6  (7)% $26.7  $27.4  (3)%
GAAP:           
Operating Loss$(23.7) $(26.0) 9 % $(269.1) $  N/A
Net Income (Loss) Attributable to Blucora. Inc.$(50.7) $17.3  (393)% $(342.8) $48.1  (813)%
Diluted Net Income (Loss) Per Share Attributable to Blucora. Inc.$(1.05) $0.36  (392)% $(7.14) $0.98  (829)%
Non-GAAP: (1)           
Adjusted EBITDA$2.2  $(0.7) 414 % $95.1  $137.2  (31)%
Net Income (Loss)$(9.0) $(4.8) (88)% $54.1  $104.2  (48)%
Diluted Net Income (Loss) per Share (EPS)$(0.19) $(0.10) (90)% $1.12  $2.11  (47)%

____________________________ (1)    See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.2020 Results vs. Prior Guidance

($ in millions except per share amounts)Prior GuidanceActual
Wealth Management Revenue (1)$535.5 - $540.5$546.2 
Tax Preparation Revenue$207.0 - $208.0$208.8 
Total Revenue$742.5 - $748.5$755.0 
   
Wealth Management Segment Operating Income (1)$68.5 - $70.5$72.2 
Tax Preparation Segment Operating Income$47.5 - $48.5$49.6 
Unallocated Corporate-Level General and Administrative Expenses$27.5 - $26.5$26.7 
   
GAAP:  
Net Loss (1)$(339.0) – $(333.0)$(342.8)
Net Loss per share (1)$(7.05) – $(6.94)$(7.14)
   
Non-GAAP:  
Adjusted EBITDA (1) (2)$88.5 - $92.5$95.1 
Non-GAAP Net Income (1) (2)$46.0 - $51.0$54.1 
Non-GAAP Net Income per share (1) (2)$0.95 - $1.05$1.12 

_________________________ (1)   Includes HKFS results from July 1, 2020 to December 31, 2020.(2)   See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.

Tax Season Update

“With the IRS delaying the official beginning of tax season to February 12, our tax season has only just begun. Regardless, I feel confident about the actions we have taken this season as well as the mid to long-term benefits of the investments we made in 2020 to further improve the customer experience,” Walters continued. “We have now launched our online-assisted offering to meet a significant need that has emerged in the marketplace. We have also refined our marketing to efficiently add paid customers, all while reinforcing our differentiated value position with a compelling offering. We expect these initiatives to contribute to the financial improvements we shared for this year as well as strong financial results in the mid- to long-term.”

Outlook

Given the delayed start of the tax season, the Company is not providing updated first quarter guidance for the Tax Preparation segment but rather reaffirming full year guidance of low single digit revenue growth and a minimum of $20 million of additional segment operating income relative to 2020. For the Wealth Management segment in the first quarter of 2021, the Company expects revenues of between $150 million and $155.5 million and segment operating income of between $17.0 million and $19.5 million.  The Company also expects corporate unallocated expenses to be between $7.5 and $8.5 million in the period.

Conference Call and Webcast

A conference call and live webcast will be held today at 8:30 a.m. Eastern Time during which the Company will further discuss fourth quarter and full year results, its outlook for the first quarter, its tax season update, and other business matters. We will also provide supplemental financial information to our results on the Investor Relations section of the Blucora corporate website at www.blucora.com prior to the call. The supplemental financial information has also been filed with the SEC on Form 8-K. A replay of the call will be available on our website.

About Blucora®

Blucora, Inc. (NASDAQ: BCOR) is on the forefront of financial technology, a provider of data and technology-driven solutions that empower people to improve their financial wellness. Blucora operates in two segments including (i) wealth management, through its Avantax Wealth Management brand, with a collective $83 billion in total client assets as of December 31, 2020, and (ii) tax preparation, through its TaxAct business, a market leader in tax preparation software with approximately 3 million consumer and more than 23,000 professional users in 2020. With integrated tax-focused software and wealth management, Blucora is uniquely positioned to assist our customers in achieving better long-term outcomes via holistic, tax-advantaged solutions. For more information on Blucora, visit www.blucora.com.

Source: Blucora

Blucora Investor Relations:Dee Littrell (972) 870-6463IR@blucora.com

This release 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. When used in this release, terms such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “intends,” “anticipates,” “may,” “forecasts,” “projects” and similar expressions and variations are intended to identify forward-looking statements. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: our ability to effectively implement our future business plans and growth strategy; our ability to effectively compete within our industry; our ability to attract and retain qualified employees and leadership, advisors, clients and customers; our ability to execute upon our contemplated strategic and performance initiatives and to successfully integrate acquired businesses or assets and realize the anticipated benefits thereof; the availability of financing and our ability to meet our current and future debt service obligations and comply with our debt covenants; our ability to generate strong investment performance for our customers and the impact of the financial markets on our customers’ portfolios; political and economic conditions and events that directly or indirectly impact the wealth management and tax preparation industries; our ability to successfully make technology enhancements and introduce new and improve on existing products and services; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; our ability to manage leadership and employee transitions; risks related to goodwill and other intangible asset impairment; our ability to comply with regulations (or interpretations thereof) applicable to the wealth management and tax preparation industries, including increased costs associated with or reductions in revenue resulting from new or changing regulations or interpretations of existing regulations; risks associated with our business being subject to enhanced regulatory scrutiny; our ability to comply with laws and regulations regarding privacy and protection of data; cybersecurity risks; our ability to develop and maintain our relationships with third party partners; the seasonality of our business; legal proceedings risks, including litigation and regulatory proceedings; our assessments and estimates that determine our effective tax rate; the impact of new or changing tax legislation; our ability to develop, establish and maintain strong brands; and our ability to protect our intellectual property. A more detailed description of these and certain other factors that could affect actual results is included in the Risk Factors section of the Form 10-K and Form 10-Q that we most recently filed with 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 hereof. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date hereof, except as required by law. In addition, the Company has not filed its Form 10-K for the year ended December 31, 2020. As a result, all financial results described in this earnings release should be considered preliminary, and are subject to change to reflect the completion of our audit and any necessary adjustments or changes in accounting estimates that are identified prior to the time the Company files the Form 10-K.

Blucora, Inc.Preliminary Condensed Consolidated Statements of Operations(Unaudited) (Amounts in thousands, except per share data)

 Three Months Ended December 31, Years Ended December 31,
 2020 2019 2020 2019
Revenue:       
Wealth management services revenue$149,384  $145,188  $546,189  $507,979 
Tax preparation services revenue5,773  4,233  208,763  209,966 
Total revenue155,157  149,421  754,952  717,945 
Operating expenses:       
Cost of revenue:       
Wealth management services cost of revenue103,630  101,200  385,962  352,081 
Tax preparation services cost of revenue2,569  1,708  12,328  10,691 
Total cost of revenue106,199  102,908  398,290  362,772 
Engineering and technology5,359  8,608  27,258  30,931 
Sales and marketing26,833  21,401  177,618  126,205 
General and administrative18,625  22,808  82,158  78,529 
Acquisition and integration12,303  8,024  31,085  25,763 
Depreciation1,948  1,633  7,293  5,479 
Amortization of other acquired intangible assets7,578  10,062  29,745  37,357 
Impairment of goodwill and an intangible asset    270,625  50,900 
Total operating expenses178,845  175,444  1,024,072  717,936 
Operating income (loss)(23,688) (26,023) (269,120) 9 
Other loss, net (1)(7,918) (5,233) (31,304) (16,915)
Loss before income taxes(31,606) (31,256) (300,424) (16,906)
Income tax benefit (expense)(19,094) 48,584  (42,331) 65,054 
Net income (loss) attributable to Blucora, Inc.$(50,700) $17,328  $(342,755) $48,148 
Net income (loss) per share attributable to Blucora, Inc.:       
Basic$(1.05) $0.36  $(7.14) $1.00 
Diluted$(1.05) $0.36  $(7.14) $0.98 
Weighted average shares outstanding:       
Basic48,107  47,689  47,978  48,264 
Diluted48,107  48,344  47,978  49,282 

____________________________ (1)    Other loss, net consisted of the following (in thousands):

 Three Months Ended December 31, Years Ended December 31,
 2020 2019 2020 2019
Interest expense$7,160  $5,002  $24,570  $19,017 
Amortization of debt issuance costs366  194  1,372  1,042 
Accretion of debt discounts279  39  693  228 
Total interest expense7,805  5,235  26,635  20,287 
Interest income(38) (108) (65) (449)
Gain on sale of a business    (349) (3,256)
Non-capitalized debt issuance expenses    3,687   
Other151  106  1,396  333 
Other loss, net$7,918  $5,233  $31,304  $16,915 

Blucora, Inc.Preliminary Condensed Consolidated Balance Sheets(Unaudited) (Amounts in thousands)

 December 31,
 2020 2019
ASSETS   
Current assets:   
Cash and cash equivalents$150,125  $80,820 
Cash segregated under federal or other regulations637  5,630 
Accounts receivable, net of allowance12,736  16,266 
Commissions receivable26,132  21,176 
Other receivables717  2,902 
Prepaid expenses and other current assets, net10,321  12,349 
Total current assets200,668  139,143 
Long-term assets:   
Property and equipment, net58,500  18,706 
Right-of-use assets, net23,455  10,151 
Goodwill, net454,821  662,375 
Other intangible assets, net322,179  290,211 
Deferred tax asset, net  9,997 
Other long-term assets4,569  6,989 
Total long-term assets863,524  998,429 
Total assets$1,064,192  $1,137,572 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities:   
Accounts payable$9,290  $10,969 
Commissions and advisory fees payable19,021  19,905 
Accrued expenses and other current liabilities56,419  36,144 
Deferred revenue—current12,298  12,014 
Lease liabilities—current2,304  3,272 
Current portion of long-term debt, net1,784  11,228 
Total current liabilities101,116  93,532 
Long-term liabilities:   
Long-term debt, net552,553  381,485 
Deferred tax liability, net30,663   
Deferred revenue—long-term6,247  7,172 
Lease liabilities—long-term36,404  5,916 
Other long-term liabilities24,919  5,952 
Total long-term liabilities650,786  400,525 
Total liabilities751,902  494,057 
    
Stockholders’ equity:   
Common stock, par $0.0001—900,000 authorized shares; 49,483 shares issued and 48,177 shares outstanding at December 31, 2020; 49,059 shares issued and 47,753 shares outstanding at December 31, 20195  5 
Additional paid-in capital1,598,230  1,586,972 
Accumulated deficit(1,257,546) (914,791)
Accumulated other comprehensive income (loss)  (272)
Treasury stock, at cost—1,306 shares at December 31, 2020 and December 31, 2019(28,399) (28,399)
Total stockholders’ equity312,290  643,515 
Total liabilities and stockholders’ equity$1,064,192  $1,137,572 

Blucora, Inc.Preliminary Condensed Consolidated Statements of Cash Flows(Unaudited) (Amounts in thousands)

 Years Ended December 31,
 2020 2019
Operating activities:   
Net income (loss)$(342,755) $48,148 
Adjustments to reconcile net income (loss) to net cash from operating activities:   
Stock-based compensation10,066  16,300 
Depreciation and amortization of acquired intangible assets39,907  44,208 
Impairment of goodwill and an intangible asset270,625  50,900 
Reduction of right-of-use lease assets8,908  4,425 
Deferred income taxes41,059  (67,549)
Amortization of debt issuance costs1,372  1,042 
Accretion of debt discounts693  228 
Gain on sale of a business(349) (3,256)
Change in fair value of acquisition-related contingent consideration liability8,300   
Accretion of lease liability1,922  599 
Other1,508  135 
Cash provided (used) by changes in operating assets and liabilities:   
Accounts receivable10,705  871 
Commissions and advisory fees receivable(4,956) (471)
Other receivables2,185  4,506 
Prepaid expenses and other current assets1,662  10,537 
Other long-term assets2,232  3,377 
Accounts payable(4,192) 29 
Commissions and advisory fees payable(884) 432 
Lease liabilities(3,894) (7,335)
Deferred revenue(796) (17,367)
Accrued expenses and other current and long-term liabilities761  3,045 
Net cash provided by operating activities44,079  92,804 
Investing activities:   
Business acquisition, net of cash acquired(101,910) (166,560)
Purchases of property and equipment(36,002) (10,501)
Proceeds from sale of a business, net of cash349  7,467 
Acquisition of customer relationships(3,143)  
Net cash used by investing activities(140,706) (169,594)
Financing activities:   
Proceeds from credit facilities, net of debt issuance costs and debt discount226,278  131,489 
Payments on credit facilities(66,531) (313)
Stock repurchases  (28,399)
Payment of redeemable noncontrolling interests  (24,945)
Proceeds from stock option exercises97  4,387 
Proceeds from issuance of stock through employee stock purchase plan2,258  2,212 
Tax payments from shares withheld for equity awards(1,163) (5,652)
Contingent consideration payments for business acquisition  (943)
Net cash provided by financing activities160,939  77,836 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash  38 
Net increase in cash, cash equivalents, and restricted cash64,312  1,084 
Cash, cash equivalents, and restricted cash, beginning of period86,450  85,366 
Cash, cash equivalents, and restricted cash, end of period$150,762  $86,450 

Blucora, Inc.Preliminary Segment Information(Unaudited) (Amounts in thousands)

 Three Months Ended December 31, Years Ended December 31,
 2020 2019 2020 2019
Revenue:       
Wealth Management (1)$149,384  $145,188  $546,189  $507,979 
Tax Preparation (1)5,773  4,233  208,763  209,966 
Total revenue155,157  149,421  754,952  717,945 
Operating income (loss):       
Wealth Management20,368  19,142  72,195  68,292 
Tax Preparation(11,025) (12,316) 49,621  96,249 
Corporate-level activity (2)(33,031) (32,849) (390,936) (164,532)
Total operating income (loss)(23,688) (26,023) (269,120) 9 
Other loss, net(7,918) (5,233) (31,304) (16,915)
Income tax benefit (expense)(19,094) 48,584  (42,331) 65,054 
Net income (loss) attributable to Blucora, Inc.$(50,700) $17,328  $(342,755) $48,148 

____________________________ (1)    Revenues by major category within each segment are presented below (in thousands):

 Three Months Ended December 31, Years Ended December 31,
 2020 2019 2020 2019
Wealth Management:       
Advisory$87,079  $75,621  $314,751  $252,367 
Commission49,864  53,199  185,201  191,050 
Asset-based4,777  11,652  23,688  48,182 
Transaction and fee7,664  4,716  22,549  16,380 
Total Wealth Management revenue$149,384  $145,188  $546,189  $507,979 
Tax Preparation:       
Consumer$5,502  $4,096  $192,226  $195,004 
Professional271  137  16,537  14,962 
Total Tax Preparation revenue$5,773  $4,233  $208,763  $209,966 

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

 Three Months Ended December 31, Years Ended December 31,
 2020 2019 2020 2019
General and administrative expenses$7,118  $7,559  $26,689  $27,361 
Stock-based compensation2,846  5,136  10,066  16,300 
Acquisition and integration costs12,303  8,024  31,085  25,763 
Depreciation2,710  2,068  10,162  6,851 
Amortization of acquired intangible assets7,578  10,062  29,745  37,357 
Impairment of goodwill and an intangible asset    270,625  50,900 
Executive transition costs476    10,701   
Headquarters relocation costs    1,863   
Total corporate-level activity$33,031  $32,849  $390,936  $164,532 

Blucora, Inc.Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (1)

Preliminary Adjusted EBITDA Reconciliation (1)(Unaudited) (Amounts in thousands)

 Three Months Ended December 31, Years Ended December 31,
 2020 2019 2020 2019
Net income attributable to Blucora, Inc. (2)$(50,700) $17,328  $(342,755) $48,148 
Stock-based compensation2,846  5,136  10,066  16,300 
Depreciation and amortization of acquired intangible assets10,288  12,130  39,907  44,208 
Other loss, net7,918  5,233  31,304  16,915 
Acquisition and integration—Excl. Change in fair value of acquisition-related contingent consideration3,003  8,024  22,785  25,763 
Acquisition and integration—Change in fair value of acquisition-related contingent consideration9,300    8,300   
Impairment of goodwill and an intangible asset    270,625  50,900 
Executive transition costs476    10,701   
Headquarters relocation costs    1,863   
Income tax (benefit) expense19,094  (48,584) 42,331  (65,054)
Adjusted EBITDA$2,225  $(733) $95,127  $137,180 

Preliminary Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) Per Share Reconciliation (1)(Unaudited) (Amounts in thousands, except per share amounts)

 Three Months Ended December 31, Years Ended December 31,
 2020 2019 2020 2019
Net income (loss) attributable to Blucora, Inc. (2)$(50,700) $17,328  $(342,755) $48,148 
Stock-based compensation2,846  5,136  10,066  16,300 
Amortization of acquired intangible assets7,578  10,062  29,745  37,357 
Impairment of goodwill and an intangible asset    270,625  50,900 
Gain on the sale of a business    (349) (3,256)
Acquisition and integration—Excl. Change in fair value of acquisition-related contingent consideration3,003  8,024  22,785  25,763 
Acquisition and integration—Change in fair value of acquisition-related contingent consideration9,300    8,300   
Executive transition costs476    10,701   
Headquarters relocation costs    1,863   
Non-capitalized debt issuance costs    3,687   
Cash tax impact of adjustments to GAAP net income(234) (504) (1,647) (2,396)
Non-cash income tax (benefit) expense18,732  (44,859) 41,059  (68,618)
Non-GAAP net income (loss)$(8,999) $(4,813) $54,080  $104,198 
Per diluted share:       
Net income (loss) attributable to Blucora, Inc. (2) (3)$(1.05) $0.36  $(7.10) $0.98 
Stock-based compensation0.06  0.11  0.21  0.33 
Amortization of acquired intangible assets0.15  0.21  0.61  0.76 
Impairment of goodwill and an intangible asset    5.61  1.03 
Gain on sale of a business    (0.01) (0.07)
Acquisition and integration—Excl. Change in fair value of acquisition-related contingent consideration0.06  0.17  0.47  0.52 
Acquisition and integration—Change in fair value of acquisition-related contingent consideration0.19    0.17   
Executive transition costs0.01    0.22   
Headquarters relocation costs    0.04   
Non-capitalized debt issuance costs    0.08   
Cash tax impact of adjustments to GAAP net income  (0.01) (0.03) (0.05)
Non-cash income tax (benefit) expense0.39  (0.94) 0.85  (1.39)
Non-GAAP net income (loss) per share$(0.19) $(0.10) $1.12  $2.11 
Weighted average shares outstanding used in calculating Non-GAAP net income per share48,107  47,689  48,244  49,282 

Adjusted EBITDA Reconciliation for Prior Guidance (1)(Amounts in thousands)

 Ranges for the year ending
 December 31, 2020
 Low High
Net income attributable to Blucora, Inc.$(339,000) $(333,000)
Stock-based compensation11,900  11,800 
Depreciation and amortization of acquired intangible assets40,800  40,500 
Other loss, net31,700  31,200 
Acquisition, integration, executive transition, and headquarters relocation costs40,900  40,600 
Impairment of goodwill270,600  270,600 
Income tax expense31,600  30,800 
Adjusted EBITDA$88,500  $92,500 

Non-GAAP Income and Non-GAAP Net Income Per Share Reconciliation for Prior Guidance (1)(Amounts in thousands, except per share amounts)

 Ranges for the year ended
 December 31, 2020
 Low High
Net loss attributable to Blucora, Inc.$(339,000) $(333,000)
Stock-based compensation11,900  11,800 
Amortization of acquired intangible assets30,000  29,900 
Acquisition, integration, executive transition, and headquarters relocation costs40,900  40,600 
Debt issuance expenses3,700  3,700 
Impairment of goodwill270,600  270,600 
Gain on sale of a business(300) (300)
Cash tax impact of adjustments to net loss(1,900) (1,800)
Non-cash income tax expense30,100  29,500 
Non-GAAP net income$46,000  $51,000 
Per diluted share:   
Net loss attributable to Blucora, Inc. (3)$(6.98) $(6.87)
Stock-based compensation0.24  0.24 
Amortization of acquired intangible assets0.62  0.62 
Acquisition, integration, executive transition, and headquarters relocation costs0.84  0.84 
Debt issuance expenses0.08  0.08 
Impairment of goodwill5.57  5.58 
Gain on sale of a business   
Cash tax impact of adjustments to net loss(0.04) (0.04)
Non-cash income tax expense0.62  0.60 
Non-GAAP net income per share$0.95  $1.05 
Weighted average shares outstanding used in calculating Non-GAAP net income per share48,600  48,500 

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

(1) We define Adjusted EBITDA as net income (loss) attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation and amortization of acquired intangible assets, other loss, net, acquisition and integration costs, impairment of goodwill and an intangible asset, executive transition costs, headquarters relocation costs, and income tax (benefit) expense. Acquisition and integration costs primarily relate to the 1st Global Acquisition and the HKFS Acquisition. Impairment of goodwill relates to the impairment of our Wealth Management reporting unit goodwill that was recognized in the first quarter of 2020. Impairment of an intangible asset relates to the impairment of the HD Vest trade name intangible asset following the rebranding of the Wealth Management business in the third quarter of 2019. Executive transition costs relate to the departure of certain Company executives primarily in the first quarter of 2020. Headquarters relocation costs relate to the process of moving from our original Dallas office and Irving office 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) attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets (including acquired technology), impairment of goodwill and an intangible asset, gain on the sale of a business, acquisition and integration costs, executive transition costs, headquarters relocation costs, non-capitalized debt issuance expenses, 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 unutilized, between 2021 and 2024. Gain on the sale of a business relates to the disposition of SimpleTax in the third quarter of 2019 and the subsequent working capital adjustment in the third quarter of 2020. Non-capitalized debt issuance expense relates to the expense recognized as a result of the increase to our term loan 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 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 net income per share. Other companies may calculate non-GAAP net income (loss) and non-GAAP net income (loss) per share differently, and, therefore, our non-GAAP net income (loss) and non-GAAP net income (loss) per share may not be comparable to similarly titled measures of other companies.

(2) As presented in the Preliminary Condensed Consolidated Statements of Operations (unaudited).(3) Any difference in the “per diluted share” amounts between this table and the Preliminary Condensed Consolidated Statements of Operations is due to using different weighted average shares outstanding in the event that there is GAAP net loss but non-GAAP net income and vice versa.

Blucora, Inc.Reconciliation of a Non-GAAP Financial Measure to the Nearest GAAP Measure

Reconciliation of Tax Preparation Services Revenue, Excluding SimpleTax, to Tax Preparation Services Revenue (1)

 Years ended December 31,
 2020 2019 2018 2017 2016 2015
Tax preparation services revenue (2)$208,763  $209,966  $187,282  $160,937  $139,365  $117,708 
Less: SimpleTax revenue (3)  (2,555) (1,800) (1,224) (1,226) (21)
Tax preparation services revenue, excluding SimpleTax (1)$208,763  $207,411  $185,482  $159,713  $138,139  $117,687 

____________________________ (1) We define tax preparation services revenue, excluding SimpleTax (which is a non-GAAP measure), as tax preparation services revenue (as presented on the consolidated statements of comprehensive income) less SimpleTax revenue. We believe tax preparation services revenue, excluding SimpleTax, is an important measure of current and historical sources of revenue for the Tax Preparation segment since Blucora disposed of SimpleTax in the third quarter of 2019.(2) As presented in the Blucora consolidated statements of comprehensive income.(3) We acquire SimpleTax Software, Inc. (“SimpleTax”) in July 2015 and disposed of SimpleTax in September 2019.

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Source: Blucora, Inc.


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