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.
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)

78,675

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,
2013

March 31,
2012

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,
2013

March 31,
2012

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.
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-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.
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 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