Blucora Announces Second Quarter Results
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BELLEVUE, WA -- (Marketwired) -- 07/30/15 -- Blucora, Inc. (NASDAQ: BCOR) today announced financial results for the second quarter ended June 30, 2015.
"Results in the quarter were consistent with our expectations," said Bill Ruckelshaus, President and Chief Executive Officer of Blucora. "For the first half of 2015, we are pleased with TaxACT's revenue and segment income results, reflecting strong performance in a competitive season. Pressures in our Search and Content segment are contributing to overall declines year-on-year. We remain focused on operating our businesses with discipline, managing expenses and allocating capital wisely during this period of transition."
Summary Financial Performance: Q2 2015
($ in millions except per share amounts)
Q2 Q2
2015 2014 Change
--------- --------- ----------
Revenues $ 119.0 $ 141.6 (16)%
Search and Content $ 52.1 $ 79.8 (35)%
Tax Preparation $ 30.9 $ 26.5 17 %
E-Commerce $ 35.9 $ 35.3 2 %
Adjusted EBITDA $ 25.0 $ 29.8 (16)%
Non-GAAP Net Income $ 20.0 $ 23.9 (17)%
Non-GAAP Diluted EPS $ 0.48 $ 0.55 (13)%
GAAP Net Income $ 4.3 $ 8.7 (51)%
GAAP Diluted EPS $ 0.10 $ 0.20 (50)%
See reconciliations of non-GAAP to GAAP
measures in tables below.
Segment Information
Tax Preparation
Tax Preparation segment income for the second quarter of 2015 was $19.9 million or 64 percent of segment revenue, up 16% compared to the second quarter of 2014.
Search and Content
Search and Content segment income for the second quarter of 2015 was $6.8 million or 13 percent of segment revenue.
E-Commerce
E-Commerce segment income for the second quarter of 2015 was $2.6 million or 7 percent of segment revenue.
Corporate Operating Expenses
Unallocated corporate operating expenses for the second quarter of 2015 were $4.3 million, compared to $3.8 million for the second quarter of 2014.
Third Quarter Outlook
For the third quarter of 2015, the Company expects revenues to be between $82.5 million and $90.3 million, Adjusted EBITDA to be between $(1.0) million and $1.6 million, Non-GAAP net loss to be between $5.7 million and $2.6 million, or $(0.14) to $(0.06) per diluted share, and GAAP net loss to be between $11.2 million and $9.4 million, or $(0.27) to $(0.23) per share.
Conference Call and Webcast
A conference call and live webcast will be held today at 2 p.m. Pacific Time / 5 p.m. Eastern Time during which the Company will further discuss second quarter results and its outlook for the third 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 Six months ended
June 30, June 30,
--------------------- -------------------
2015 2014 2015 2014
---------- ---------- --------- ---------
Revenues:
Services revenue $ 83,030 $ 106,270 $222,844 $285,314
Product revenue, net 35,946 35,299 70,958 72,438
---------- ---------- --------- ---------
Total revenues 118,976 141,569 293,802 357,752
Operating expenses:
Cost of revenues:
Services cost of revenue (1) 30,771 56,233 65,712 127,526
Product cost of revenue 25,255 23,137 49,355 48,166
---------- ---------- --------- ---------
Total cost of revenues (2) 56,026 79,370 115,067 175,692
Engineering and technology (2) 5,168 4,817 10,385 8,952
Sales and marketing (2) 27,287 22,287 81,483 78,123
General and administrative (2) 11,014 10,425 21,423 19,057
Depreciation 1,187 1,135 2,325 2,193
Amortization of intangible assets 6,118 5,761 12,236 11,345
---------- ---------- --------- ---------
Total operating expenses 106,800 123,795 242,919 295,362
---------- ---------- --------- ---------
Operating income 12,176 17,774 50,883 62,390
Other loss, net (3) (4,577) (3,724) (8,303) (7,793)
---------- ---------- --------- ---------
Income before income taxes 7,599 14,050 42,580 54,597
Income tax expense (3,348) (5,313) (15,229) (19,873)
---------- ---------- --------- ---------
Net income $ 4,251 $ 8,737 $ 27,351 $ 34,724
========== ========== ========= =========
Net income per share:
Basic $ 0.10 $ 0.21 $ 0.67 $ 0.83
========== ========== ========= =========
Diluted $ 0.10 $ 0.20 $ 0.65 $ 0.79
========== ========== ========= =========
Weighted average shares
outstanding:
Basic 40,918 41,570 40,953 41,866
Diluted 41,936 43,084 41,918 43,803
(1) Includes amortization of acquired intangible assets of $1.9 million for the three months ended June 30, 2015 and 2014 and $3.7 million and $3.8 million for the six months ended June 30, 2015 and 2014, respectively.
(2) Stock-based compensation expense was allocated among the following captions (in thousands):
Three months ended Six months ended
June 30, June 30,
------------------ ------------------
2015 2014 2015 2014
-------- -------- -------- --------
Cost of revenues $ 58 $ 113 $ 107 $ 272
Engineering and technology 514 315 806 744
Sales and marketing 518 722 948 1,641
General and administrative 2,258 1,808 4,186 3,709
-------- -------- -------- --------
Total stock-based compensation
expense $ 3,348 $ 2,958 $ 6,047 $ 6,366
======== ======== ======== ========
(3) Other loss, net was allocated among the following captions (in thousands):
Three months ended Six months ended
June 30, June 30,
------------------ ------------------
2015 2014 2015 2014
-------- -------- -------- --------
Interest income $ (124) $ (88) $ (242) $ (196)
Interest expense 2,492 2,764 5,260 5,779
Amortization of debt issuance costs 295 284 643 565
Accretion of debt discounts 958 916 2,089 1,822
Realized loss on available-for-sale
investments, net 353 - 417 -
Other-than-temporary impairment loss
on equity securities 964 - 964 -
Gain on third party bankruptcy
settlement (366) (167) (842) (167)
Other 5 15 14 (10)
-------- -------- -------- --------
Other loss, net $ 4,577 $ 3,724 $ 8,303 $ 7,793
======== ======== ======== ========
Blucora, Inc.
Preliminary Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
June 30, December 31,
2015 2014
----------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 59,498 $ 46,444
Available-for-sale investments 237,389 254,854
Accounts receivable, net 26,688 30,988
Other receivables 1,046 3,295
Inventories 34,434 29,246
Prepaid expenses and other current assets, net 12,529 13,477
----------- ------------
Total current assets 371,584 378,304
Property and equipment, net 15,595 15,942
Goodwill, net 304,658 304,658
Other intangible assets, net 153,654 168,919
Other long-term assets 4,238 4,891
----------- ------------
Total assets $ 849,729 $ 872,714
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 31,274 $ 37,755
Accrued expenses and other current liabilities 24,391 21,505
Deferred revenue 6,074 7,884
Short-term portion of long-term debt, net - 7,914
----------- ------------
Total current liabilities 61,739 75,058
Long-term liabilities:
Long-term debt, net 30,000 85,835
Convertible senior notes, net 187,075 185,177
Deferred tax liability, net 23,178 42,963
Deferred revenue 2,910 1,915
Other long-term liabilities 3,195 2,741
----------- ------------
Total long-term liabilities 246,358 318,631
----------- ------------
Total liabilities 308,097 393,689
Stockholders' equity:
Common stock 4 4
Additional paid-in capital 1,501,793 1,467,658
Accumulated deficit (960,173) (987,524)
Accumulated other comprehensive income (loss) 8 (1,113)
----------- ------------
Total stockholders' equity 541,632 479,025
----------- ------------
Total liabilities and stockholders' equity $ 849,729 $ 872,714
=========== ============
Blucora, Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
Six months ended June 30,
--------------------------
2015 2014
------------ ------------
Operating Activities:
Net income $ 27,351 $ 34,724
Adjustments to reconcile net income to net cash
from operating activities:
Stock-based compensation 6,047 6,366
Depreciation and amortization of intangible
assets 18,932 17,920
Excess tax benefits from stock-based award
activity (32,535) (34,369)
Deferred income taxes (21,558) (18,172)
Amortization of premium on investments, net 902 2,221
Amortization of debt issuance costs 643 565
Accretion of debt discounts 2,089 1,822
Realized loss on available-for-sale
investments, net 417 -
Other-than-temporary impairment loss on
equity securities 964 -
Other 112 57
Cash provided (used) by changes in operating
assets and liabilities:
Accounts receivable 4,245 12,347
Other receivables 2,249 4,362
Inventories (5,188) (1,738)
Prepaid expenses and other current assets 2,048 874
Other long-term assets (2) 48
Accounts payable (6,481) (18,011)
Deferred revenue (815) (555)
Accrued expenses and other current and long-
term liabilities 35,270 26,789
------------ ------------
Net cash provided by operating activities 34,690 35,250
Investing Activities:
Business acquisitions, net of cash acquired - (44,927)
Purchases of property and equipment (2,105) (2,859)
Purchases of intangible assets (696) -
Proceeds from sales of investments 15,008 21,546
Proceeds from maturities of investments 113,406 121,496
Purchases of investments (112,090) (144,049)
------------ ------------
Net cash provided (used) by investing
activities 13,523 (48,793)
Financing Activities:
Proceeds from credit facilities 20,000 4,000
Repayment of credit facilities (83,940) (60,000)
Stock repurchases (5,521) (25,785)
Excess tax benefits from stock-based award
activity 32,535 34,369
Proceeds from stock option exercises 2,093 1,746
Proceeds from issuance of stock through
employee stock purchase plan 608 665
Tax payments from shares withheld upon vesting
of restricted stock units (934) (1,913)
------------ ------------
Net cash used by financing activities (35,159) (46,918)
------------ ------------
Net increase (decrease) in cash and cash
equivalents 13,054 (60,461)
Cash and cash equivalents, beginning of period 46,444 130,225
------------ ------------
Cash and cash equivalents, end of period $ 59,498 $ 69,764
============ ============
Blucora, Inc.
Preliminary Segment Information
(Unaudited)
(Amounts in thousands)
Three months ended Six months ended
June 30, June 30,
-------------------- --------------------
2015 2014 2015 2014
--------- --------- --------- ---------
Revenues:
Search and Content $ 52,130 $ 79,818 $110,876 $186,583
Tax Preparation 30,900 26,452 111,968 98,731
E-Commerce 35,946 35,299 70,958 72,438
--------- --------- --------- ---------
Total revenues 118,976 141,569 293,802 357,752
Operating income:
Search and Content 6,814 14,032 15,212 33,262
Tax Preparation 19,890 17,211 64,035 54,613
E-Commerce 2,624 2,378 5,186 5,856
Corporate-level activity (1) (17,152) (15,847) (33,550) (31,341)
--------- --------- --------- ---------
Total operating income 12,176 17,774 50,883 62,390
Other loss, net (4,577) (3,724) (8,303) (7,793)
Income tax expense (3,348) (5,313) (15,229) (19,873)
--------- --------- --------- ---------
Net income $ 4,251 $ 8,737 $ 27,351 $ 34,724
========= ========= ========= =========
(1) Corporate-level activity included the following (in thousands):
Three months Six months ended
ended June 30, June 30,
----------------- -----------------
2015 2014 2015 2014
-------- -------- -------- --------
Operating expenses $ 4,314 $ 3,833 $ 8,571 $ 7,055
Stock-based compensation 3,348 2,958 6,047 6,366
Depreciation 1,509 1,414 2,971 2,809
Amortization of intangible assets 7,981 7,642 15,961 15,111
-------- -------- -------- --------
Total corporate-level activity $ 17,152 $ 15,847 $ 33,550 $ 31,341
======== ======== ======== ========
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 Six months ended
ended June 30, June 30,
----------------- -----------------
2015 2014 2015 2014
-------- -------- -------- --------
Net income (2) $ 4,251 $ 8,737 $ 27,351 $ 34,724
Stock-based compensation 3,348 2,958 6,047 6,366
Depreciation and amortization of
intangible assets 9,490 9,056 18,932 17,920
Other loss, net (3) 4,577 3,724 8,303 7,793
Income tax expense 3,348 5,313 15,229 19,873
-------- -------- -------- --------
Adjusted EBITDA $ 25,014 $ 29,788 $ 75,862 $ 86,676
======== ======== ======== ========
Preliminary Non-GAAP Net Income Reconciliation (1)
(Unaudited)
(Amounts in thousands, except per share amounts)
Three months ended Six months ended
June 30, June 30,
------------------- -------------------
2015 2014 2015 2014
--------- --------- --------- ---------
Net income (2) $ 4,251 $ 8,737 $ 27,351 $ 34,724
Stock-based compensation 3,348 2,958 6,047 6,366
Amortization of acquired intangible
assets 7,981 7,642 15,961 15,111
Accretion of debt discount on
Convertible Senior Notes 958 890 1,898 1,764
Other-than-temporary impairment loss
on equity securities 964 - 964 -
Cash tax impact of adjustments to
GAAP net income (118) (197) (260) (251)
Non-cash income tax expense (1) 2,577 3,878 10,977 16,197
--------- --------- --------- ---------
Non-GAAP net income $ 19,961 $ 23,908 $ 62,938 $ 73,911
========= ========= ========= =========
Per diluted share:
Net income $ 0.10 $ 0.20 $ 0.65 $ 0.79
Stock-based compensation 0.08 0.07 0.15 0.15
Amortization of acquired intangible
assets 0.19 0.17 0.38 0.34
Accretion of debt discount on
Convertible Senior Notes 0.02 0.02 0.05 0.04
Other-than-temporary impairment loss
on equity securities 0.03 - 0.02 -
Cash tax impact of adjustments to
GAAP net income (0.00) (0.00) (0.01) (0.00)
Non-cash income tax expense 0.06 0.09 0.26 0.37
--------- --------- --------- ---------
Non-GAAP net income per share $ 0.48 $ 0.55 $ 1.50 $ 1.69
========= ========= ========= =========
Weighted average shares outstanding
used in computing diluted non-GAAP
net income per share and its
components 41,936 43,084 41,918 43,803
Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance
(Amounts in thousands)
Ranges for the three
months ending
September 30, 2015
---------------------
Net loss $ (11,200) $ (9,400)
Stock-based compensation 3,800 3,800
Depreciation and amortization of intangible assets 9,000 8,900
Other loss, net (3) 3,700 3,600
Income tax benefit (6,300) (5,300)
---------- ----------
Adjusted EBITDA $ (1,000) $ 1,600
========== ==========
Preliminary Non-GAAP Net Income Reconciliation for Forward-Looking Guidance
(Amounts in thousands)
Ranges for the three
months ending
September 30, 2015
---------------------
Net loss $ (11,200) $ (9,400)
Stock-based compensation 3,800 3,800
Amortization of acquired intangible assets 7,200 7,200
Accretion of debt discount on Convertible Senior Notes 1,000 1,000
Non-cash income tax benefit (6,500) (5,200)
---------- ----------
Non-GAAP net loss $ (5,700) $ (2,600)
========== ==========
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 Ybarra425-709-8127Email contact
Source: Blucora
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