Blucora Announces First Quarter Results and Preliminary Tax Season Update
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 | $75.3 | 34% | |||
Tax Preparation | $ 64.7 | $ 40.4 | 60% | |||
Adjusted EBITDA | $45.9 | $31.7 | 45% | |||
Non-GAAP Net Income | $42.0 | $28.5 | 47% | |||
Non-GAAP Diluted EPS | $0.95 | $0.70 | 36% | |||
Net Income | $23.6 | $11.4 | 107% | |||
GAAP Diluted EPS | $0.53 | $0.28 | 89% | |||
* 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-files | 270 | 256 | 5% | ||||||
TaxACT online e-files | 4,865 | 4,490 | 8% | ||||||
TaxACT sub-total e-files | 5,135 | 4,746 | 8% | ||||||
TaxACT Free File Alliance e-files | 147 | 160 | (8)% | ||||||
TaxACT total e-files | 5,282 | 4,906 | 8% | ||||||
*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. | ||||||||
Three months ended | ||||||||
March 31, | March 31, | |||||||
Revenues | $ | 165,338 | $ | 115,696 | ||||
Cost of sales (includes amortization of acquired intangible assets of $1,940 and $1,511) (1) | 78,675 | 59,547 | ||||||
Gross profit | 86,663 | 56,149 | ||||||
Expenses and other loss, net: | ||||||||
Engineering and technology (1) | 2,538 | 2,573 | ||||||
Sales and marketing (1) | 36,796 | 19,443 | ||||||
General and administrative (1) | 6,384 | 11,066 | ||||||
Depreciation | 517 | 535 | ||||||
Amortization of intangible assets | 3,169 | 2,113 | ||||||
Other loss, net (2) | 1,005 | 1,555 | ||||||
Total expenses and other loss, net | 50,409 | 37,285 | ||||||
Income before income taxes | 36,254 | 18,864 | ||||||
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 Compensation | March 31, | March 31, | ||||||
Cost of sales | $ | 219 | $ | 80 | ||||
Engineering and technology | 253 | 256 | ||||||
Sales and marketing | 477 | 414 | ||||||
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, | March 31, | |||||||
Other Loss, Net | ||||||||
Interest income | $ | (55 | ) | $ | (9 | ) | ||
Interest expense | 1,148 | 844 | ||||||
Amortization of debt issuance costs | 107 | 331 | ||||||
Accretion of debt discount | 161 | 135 | ||||||
(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. | ||||||||
March 31, | December 31, | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 264,635 | $ | 68,278 | ||||
Short-term investments, available-for-sale | 137,042 | 94,010 | ||||||
Accounts receivable, net of allowance of $133 and $10 | 41,256 | 34,932 | ||||||
Other receivables | 4,226 | 3,942 | ||||||
Prepaid expenses and other current assets, net | 7,842 | 10,911 | ||||||
Total current assets | 455,001 | 212,073 | ||||||
Property and equipment, net | 9,269 | 7,533 | ||||||
Goodwill | 230,290 | 230,290 | ||||||
Other intangible assets, net | 127,706 | 132,815 | ||||||
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 liabilities | 20,440 | 13,280 | ||||||
Deferred revenue | 3,121 | 3,157 | ||||||
Short-term portion of long-term debt, net of discount of $177 and $160 | 6,948 | 4,590 | ||||||
Derivative instruments | 8,564 | 8,974 | ||||||
Total current liabilities | 80,116 | 67,688 | ||||||
Long-term liabilities: | ||||||||
Long-term debt, net of discount of $422 and $468 | 66,949 | 69,278 | ||||||
Convertible senior notes | 179,041 | - | ||||||
Deferred tax liability | 31,602 | 29,333 | ||||||
Deferred revenue | 2,477 | 1,319 | ||||||
Other long-term liabilities | 2,283 | 2,225 | ||||||
Total long-term liabilities | 282,352 | 102,155 | ||||||
Total liabilities | 362,468 | 169,843 | ||||||
Stockholders' equity: | ||||||||
Common stock | 4 | 4 | ||||||
Additional paid-in capital | 1,424,009 | 1,392,098 | ||||||
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. | ||||||||
Three months ended | ||||||||
March 31, | March 31, | |||||||
Operating activities: | ||||||||
Net income | $ | 23,608 | $ | 11,406 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Stock-based compensation | 2,485 | 2,422 | ||||||
Warrant-related stock-based compensation | - | 4,286 | ||||||
(Gain) loss on derivative instruments | (348 | ) | 272 | |||||
Depreciation and amortization of intangible assets | 6,112 | 4,575 | ||||||
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, net | 391 | (327 | ) | |||||
Amortization of debt issuance costs | 107 | 331 | ||||||
Accretion of debt discount | 161 | 135 | ||||||
Other | 55 | 26 | ||||||
Cash provided (used) by changes in operating assets and liabilities: | ||||||||
Accounts receivable | (6,225 | ) | 2,971 | |||||
Other receivables | (284 | ) | 657 | |||||
