Blucora Announces First Quarter Results and Preliminary Tax Season Update

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Blucora Announces First Quarter Results and Preliminary Tax Season Update

Strong operating performance for TaxACT, full season gains in DDIY market share

BELLEVUE, Wash.--(BUSINESS WIRE)-- Blucora, Inc. (NAS: BCOR) today announced financial results for the first quarter ended March 31, 2013.


"Blucora is off to a strong start in 2013 in both the online search and tax preparation segments of the business," said Bill Ruckelshaus, President and Chief Executive Officer of Blucora. "We are especially pleased with the growth of TaxACT and our success in building DDIY market share in a highly-competitive and unpredictable tax season. The TaxACT results reflect the team's strong execution, successful product enhancements this season and our ability to drive consumer demand."

Highlights

  • TaxACT consumer DDIY federal e-files were 5.3 million, up approximately 8% versus the same period last year
  • TaxACT pro forma revenue expected to grow approximately 9% for the six months through June 30, 2013 versus the same period last year
  • Search segment revenue and income up 34% and 37%, respectively, versus the first quarter of 2012
  • Blucora issued $201.25 million of convertible senior notes
 
Summary Financial Performance: 1Q 2013

($ in millions except per share amounts)

 Q1 2013 Q1 2012* Growth
Revenues$165.3 $115.7 43%
Search$100.6$75.334%
Tax Preparation$ 64.7$ 40.460%
 
Adjusted EBITDA$45.9$31.745%
Non-GAAP Net Income$42.0$28.547%
Non-GAAP Diluted EPS$0.95$0.7036%
 
Net Income$23.6$11.4107%
GAAP Diluted EPS$0.53$0.2889%
 

* Q1 2012 results include results for TaxACT from the acquisition on January 31, 2012 through March 31, 2012.

 

See reconciliation of non-GAAP to GAAP measures below.

 

Segment Information

Search

Search segment revenue for the first quarter of 2013 reflects strong growth from search distribution and in our owned and operated properties, up 35 percent and 27 percent, respectively, over the first quarter of 2012. Search segment income for the first quarter of 2013 was $18.3 million, up 37 percent over the first quarter of 2012.

Tax Preparation

 

TaxACT Season-to-date Federal Accepted E-Files*

 Tax season ended 
April 16, 2013 April 18, 2012% change
TaxACT desktop e-files2702565%
TaxACT online e-files4,8654,4908%
TaxACT sub-total e-files5,1354,7468%
TaxACT Free File Alliance e-files147160(8)%
TaxACT total e-files5,2824,9068%
*Tax Season begins on the first day the IRS begins accepting e-files and continues through tax day +1.  
 

Tax preparation segment income for the first quarter of 2013 was $30.8 million, up 39 percent over the first quarter of 2012. The first quarter of 2012 excludes TaxACT operating results before January 31, 2012, as the Company acquired TaxACT on that date.

For the six months through June 30, 2013, TaxACT expects pro forma revenue growth of approximately 9 percent and pro forma segment income to be up approximately 7 - 8 percent compared to the same period last year.

TaxACT consumer DDIY federal e-files for the tax season were approximately 5.3 million, up approximately 8 percent compared to the same period last year. According to IRS statistics through April 19, total consumer DDIY federal e-files for the tax season were up 1.8 million, or 4 percent compared to the same period last year.

TaxACT professional preparer filings for the tax season grew approximately 10 percent compared to the same period last year. Combined TaxACT offerings assisted approximately 6.5 million filers this tax season.

Corporate Operating Expenses

Unallocated corporate operating expenses for the first quarter of 2013 were $3.2 million, down 16 percent from the first quarter of 2012.

Second Quarter Outlook

For the second quarter of 2013, the Company expects revenues to be between $113.0 million and $117.5 million, Adjusted EBITDA to be between $27.0 million and $28.5 million, Non-GAAP Net Income to be between $22.0 million and $23.5 million, or $0.51 to $0.55 per diluted share, and Net Income to be between $9.0 and $10.0 million, or $0.21 to $0.23 per diluted share. The Company's forward-looking guidance does not reflect potential gains or losses from derivative instruments.

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 first quarter results and its outlook including tax preparation segment guidance for the second quarter of 2013, search segment guidance for the second quarter 2013, and search segment expectations for 2013. The 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 for one year and are may be accessed under the "Events & Presentations" section of the Investor Center. You may also listen to the conference call audio on the Blucora YouTube Channel at www.YouTube.com/Blucora.

About Blucora™

Blucora operates two leading Internet businesses. Our InfoSpace business provides online search and monetization solutions to a network of more than 100 partners globally. Through TaxACT, we provide online tax preparation solutions to consumers and professional preparers. The Blucora team brings decades of experience operating and investing in desktop, online, and mobile businesses. We are passionate about the power of the Internet to improve the lives of consumers, and our businesses operate at the forefront of digital migration trends in their respective markets. More information about Blucora may be found at www.blucora.com. Follow and subscribe to us on Twitter, LinkedIn and YouTube.

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 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, 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 Annual Report on Form 10-K 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(1)
(Unaudited)
(Amounts in thousands, except per share data)
 
 Three months ended
March 31,
2013
 March 31,
2012
Revenues$165,338$115,696
 

Cost of sales (includes amortization of acquired intangible assets of $1,940 and $1,511) (1)

78,67559,547
  
Gross profit86,66356,149
 
Expenses and other loss, net:
Engineering and technology (1)2,5382,573
Sales and marketing (1)36,79619,443
General and administrative (1)6,38411,066
Depreciation517535
Amortization of intangible assets3,1692,113
Other loss, net (2) 1,005  1,555 
 
Total expenses and other loss, net 50,409  37,285 
 
Income before income taxes36,25418,864
 
Income tax expense(12,646)(7,458)
  
Net income$23,608 $11,406 
 
Net income per share - Basic$0.58 $0.29 
 
Net income per share - Diluted (3)$0.53 $0.28 
 
 

Weighted average shares outstanding used in computing basic net income per share

 40,911  39,692 

Weighted average shares outstanding used in computing diluted net income per share

 44,294  40,978 
 

(1) In the three months ended March 31, 2012, an additional $5.2 million in stock-based compensation expense was recorded in association with the modification of the terms of a warrant and the vesting of a non-employee performance-based equity award, which were both triggered by the acquisition of the TaxACT business, and the related expense was allocated to general and administrative expense.  Stock-based compensation expense for the three months ended March 31, 2013 and 2012 is allocated among the following captions (in thousands):

 
Three months ended
Stock-Based CompensationMarch 31,
2013
March 31,
2012
Cost of sales$219$80
Engineering and technology253256
Sales and marketing477414
General and administrative 1,536  5,958 
Total stock-based compensation expense$2,485 $6,708 
 

(2) Other loss, net for the three months ended March 31, 2013 and 2012 is allocated among the following captions (in thousands):

 
Three months ended
March 31,
2013
March 31,
2012
Other Loss, Net
Interest income$(55)$(9)
Interest expense1,148844
Amortization of debt issuance costs107331
Accretion of debt discount161135
(Gain) loss on derivative instruments(348)272
Other (8) (18)
Total other loss, net$1,005 $1,555 
 

(3) Calculation excludes the income effect of dilutive derivative instruments, as well as interest expense, amortization of debt issuance costs and accretion of debt discount on convertible debt, net of tax effect.

 
 
Blucora, Inc.
Preliminary Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
 
 March 31,
2013
 December 31,
2012
ASSETS
 
Current assets:
Cash and cash equivalents$264,635$68,278
Short-term investments, available-for-sale137,04294,010
Accounts receivable, net of allowance of $133 and $1041,25634,932
Other receivables4,2263,942
Prepaid expenses and other current assets, net 7,842  10,911 
 
Total current assets455,001212,073
 
Property and equipment, net9,2697,533
Goodwill230,290230,290
Other intangible assets, net127,706132,815
Other long-term assets 11,255  2,582 
 
Total assets$833,521 $585,293 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
Accounts payable$41,043$37,687
Accrued expenses and other current liabilities20,44013,280
Deferred revenue3,1213,157
Short-term portion of long-term debt, net of discount of $177 and $1606,9484,590
Derivative instruments 8,564  8,974 
 
Total current liabilities80,11667,688
 
Long-term liabilities:
Long-term debt, net of discount of $422 and $46866,94969,278
Convertible senior notes179,041-
Deferred tax liability31,60229,333
Deferred revenue2,4771,319
Other long-term liabilities 2,283  2,225 
 
Total long-term liabilities 282,352  102,155 
 
Total liabilities362,468169,843
 
Stockholders' equity:
Common stock44
Additional paid-in capital1,424,0091,392,098
Accumulated deficit(952,768)(976,376)
Accumulated other comprehensive loss (192) (276)
 
Total stockholders' equity 471,053  415,450 
 
Total liabilities and stockholders' equity$833,521 $585,293 
 
 
Blucora, Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
 
 Three months ended
March 31,
2013
 March 31,
2012
Operating activities:
Net income$23,608$11,406
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation2,4852,422
Warrant-related stock-based compensation-4,286
(Gain) loss on derivative instruments(348)272
Depreciation and amortization of intangible assets6,1124,575
Excess tax benefits from stock-based award activity(17,842)(12,058)
Deferred income taxes(6,668)(5,462)
Unrealized amortization of premium or accretion of discount on investments, net391(327)
Amortization of debt issuance costs107331
Accretion of debt discount161135
Other5526
Cash provided (used) by changes in operating assets and liabilities:
Accounts receivable(6,225)2,971
Other receivables(284)657
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