Blucora Reports Strong Second Quarter Results
Blucora Reports Strong Second Quarter Results
Company Announces $180 million Acquisition of Monoprice
BELLEVUE, Wash.--(BUSINESS WIRE)-- Blucora, Inc. (NAS: BCOR) today announced financial results for the second quarter ended June 30, 2013.
"We are pleased to announce solid results across both of our businesses in the first half of 2013," said Bill Ruckelshaus, President and Chief Executive Officer of Blucora. "InfoSpace continues to expand its distribution network and drive growth with existing partners. TaxACT recorded market share gains in tax year 2012 with enhanced core offerings and new services complementary to the filing process."
Summary Financial Performance: 2Q 2013 ($ in millions except per share amounts) | |||||||||||||||||
Q2 2013 | Q2 2012 | Growth | |||||||||||||||
Revenues | $ | 117.2 | $ | 100.9 | 16 | % | |||||||||||
Search | $ | 94.5 | $ | 81.8 | 16 | % | |||||||||||
Tax Preparation | $ | 22.7 | $ | 19.1 | 19 | % | |||||||||||
Adjusted EBITDA | $ | 29.2 | $ | 24.5 | 19 | % | |||||||||||
Non-GAAP Net Income | $ | 24.6 | $ | 21.8 | 13 | % | |||||||||||
Non-GAAP Diluted EPS | $ | 0.58 | $ | 0.53 | 9 | % | |||||||||||
Net Income | $ | 8.4 | (1) | $ | 9.7 | (2) | -13 | % | |||||||||
GAAP Diluted EPS | $ | 0.20 | (1) | $ | 0.23 | -13 | % | ||||||||||
(1) Includes $2.3 million non-cash loss on derivative instrument. | |||||||||||||||||
(2) Includes $0.3 million non-cash gain on derivative instrument. | |||||||||||||||||
See reconciliation of non-GAAP to GAAP measures below. | |||||||||||||||||
Segment Information
Search
Segment revenue for the second quarter of 2013 reflects strong growth from search distribution and in our owned and operated properties, up 12 percent and 46 percent, respectively, over the second quarter of 2012. Segment income for the second quarter of 2013 was $17.9 million, up 19 percent over the second quarter of 2012.
Tax Preparation
Segment income for the second quarter of 2013 was $14.4 million, up 21 percent over the second quarter of 2012, reflecting a strong end to the tax season.
Corporate Operating Expenses
Unallocated corporate operating expenses for the second quarter of 2013 were $3.1 million.
Monoprice Acquisition
Today, the Company announced that it has entered into a definitive agreement to acquire Monoprice, a rapidly growing online provider of self-branded consumer electronics and accessories. The all-cash transaction, valued at $180 million, is subject to satisfaction of customary closing conditions and is expected to close in the third quarter of 2013. For further information, see the acquisition press release issued by the Company today.
Third Quarter Outlook
For the third quarter of 2013, the Company expects revenues to be between $93.5 million and $97.5 million, Adjusted EBITDA to be between $10.0 million and $11.5 million, Non-GAAP Net Income to be between $6.0 million and $7.4 million, or $0.14 to $0.17 per diluted share, and Net Loss to be between $1.8 million and $800 thousand, or $(0.04) to $(0.02) per share. The Company's forward-looking guidance does not reflect the operating results of the Monoprice acquisition nor potential gains or losses from derivative instruments.
Conference Call and Webcast
A conference call and live webcast will be held today at 5:30 a.m. Pacific time / 8:30 a.m. Eastern time during which the Company will further discuss second quarter results, the Monoprice transaction and its outlook for the third quarter of 2013, including tax segment guidance for the third quarter, search segment guidance for the third quarter 2013, and search segment expectations for 2013. The supplemental materials are included in a current report on form 8-K filed today and may 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 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 digitally-enabled businesses. 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 complete and 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-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(1) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(Amounts in thousands, except per share data) | ||||||||||||||||
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenues | $ | 117,181 | $ | 100,883 | $ | 282,519 | $ | 216,579 | ||||||||
Cost of sales (includes amortization of acquired intangible assets of $1,927, $2,080, $3,867 and $3,591) (1) | 69,980 | 64,227 | 148,655 | 123,774 | ||||||||||||
Gross profit | 47,201 | 36,656 | 133,864 | 92,805 | ||||||||||||
Expenses and other loss, net: | ||||||||||||||||
Engineering and technology (1) | 2,508 | 2,448 | 5,046 | 5,021 | ||||||||||||
Sales and marketing (1) | 14,067 | 8,869 | 50,863 | 28,312 | ||||||||||||
General and administrative (1) | 6,557 | 5,356 | 12,941 | 16,422 | ||||||||||||
Depreciation | 524 | 532 | 1,041 | 1,067 | ||||||||||||
Amortization of intangible assets | 3,168 | 3,168 | 6,337 | 5,281 | ||||||||||||
Other loss, net (2) | 6,304 | 930 | 7,309 | 2,485 | ||||||||||||
Total expenses and other loss, net | 33,128 | 21,303 | 83,537 | 58,588 | ||||||||||||
Income before income taxes | 14,073 | 15,353 | 50,327 | 34,217 | ||||||||||||
Income tax expense | (5,667 | ) | (5,655 | ) | (18,313 | ) | (13,113 | ) | ||||||||
Net income | $ | 8,406 | $ | 9,698 | $ | 32,014 | $ | 21,104 | ||||||||
Net income per share - Basic | $ | 0.20 | $ | 0.24 | $ | 0.78 | $ | 0.53 | ||||||||
Net income per share - Diluted (3) | $ | 0.20 | $ | 0.23 | $ | 0.75 | $ | 0.51 | ||||||||
Weighted average shares outstanding used in computing basic net income per share | 41,050 | 40,116 | 40,981 | 39,904 | ||||||||||||
Weighted average shares outstanding used in computing diluted net income per share | 42,724 | 41,245 | 42,657 | 41,112 | ||||||||||||
(1) In the six months ended June 30, 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 and six months ended June 30, 2013 and 2012 is allocated among the following captions (in thousands): | ||||||||||||||||
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||
Stock-Based Compensation | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Cost of sales | $ | 228 | $ | 68 | $ | 447 | $ | 148 | ||||||||
Engineering and technology | 319 | 306 | 572 | 562 | ||||||||||||
Sales and marketing | 526 | 388 | 1,003 | 802 | ||||||||||||
General and administrative | 1,680 | 1,258 | 3,216 | 7,216 | ||||||||||||
Total stock-based compensation expense | $ | 2,753 | $ | 2,020 | $ | 5,238 | $ | 8,728 | ||||||||
(2) Other loss, net for the three and six months ended June 30, 2013 and 2012 is allocated among the following captions (in thousands): | ||||||||||||||||
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Other Loss, Net | ||||||||||||||||
Interest income | $ | (109 | ) | $ | (52 | ) | $ | (164 | ) | $ | (61 | ) | ||||
Interest expense | 2,890 | 1,009 | 4,038 | 1,853 | ||||||||||||
Amortization of debt issuance costs | 476 | 332 | 583 | 663 | ||||||||||||
Accretion of debt discount | 949 | 124 | 1,110 | 259 | ||||||||||||
Loss (gain) on derivative instrument | 2,323 | (333 | ) | 1,975 | (61 | ) | ||||||||||
Other | (225 | ) | (150 | ) | (233 | ) | (168 | ) | ||||||||
Total other loss, net | $ | 6,304 | $ | 930 | $ | 7,309 | $ | 2,485 | ||||||||
(3) Calculation excludes the income effect of dilutive derivative instruments, net of tax effect, if applicable. | ||||||||||||||||
Blucora, Inc. | ||||||||
Preliminary Condensed Consolidated Balance Sheets | ||||||||
(Unaudited) | ||||||||
(Amounts in thousands) | ||||||||
June 30, | December 31, | |||||||
2013 | 2012 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 217,434 | $ | 68,278 | ||||
Short-term investments, available-for-sale | 198,059 | 94,010 | ||||||
Accounts receivable, net of allowance of $10 and $10 | 35,524 | 34,932 | ||||||
Other receivables | 4,123 | 3,942 | ||||||
Prepaid expenses and other current assets, net | 7,185 | 10,911 | ||||||
Total current assets | 462,325 | 212,073 | ||||||
Property and equipment, net | 8,565 | 7,533 | ||||||
Goodwill | 230,290 | 230,290 | ||||||
Other intangible assets, net | 122,611 | 132,815 | ||||||
Other long-term assets | 10,589 | 2,582 | ||||||
Total assets | $ | 834,380 | $ | 585,293 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | ||||||||
