bcor-20210217

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

February 17, 2021

Date of Report

(Date of earliest event reported)

BLUCORA, INC.

(Exact name of registrant as specified in its charter)


Delaware	000-25131	91-1718107
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

3200 Olympus Blvd, Suite 100

Dallas, Texas 75019

(Address of principal executive offices)

(972) 870-6400

Registrant’s telephone number, including area code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	BCOR	NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

On February 17, 2021, Blucora, Inc. (the “Company”) announced its financial results for the quarter and year ended December 31, 2020. Copies of the press release and supplemental financial information are furnished to, but not filed with, the Securities and Exchange Commission as Exhibits 99.1 and 99.2 hereto.

The press release and supplemental financial information include non-GAAP financial measures as that term is defined in Regulation G. The press release and supplemental financial information also include the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”), information reconciling the non-GAAP financial measures to the GAAP financial measures, and a discussion of the reasons why the Company’s management believes that the presentation of the non-GAAP financial measures provides useful information to investors regarding the Company’s financial condition and results of operations. The non-GAAP financial information presented therein should be considered in addition to, not as a substitute for, or superior to, financial measures calculated and presented in accordance with GAAP.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits


Exhibit No						Description

99.1						Press release dated February 17, 2021
99.2						Supplemental financial information dated February 17, 2021
104.1						Cover Page Interactive Data File (embedded within the Inline XBRL Document).

Safe Harbor Statement Under the Private Securities and Litigation Reform Act

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “intends,” “anticipates,” “may,” “forecasts,” “future,” “will,” “projects,” “predicts,” “potential,” “continues,” “target,” “outlook” and similar expressions and variations. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: the impact of the COVID-19 pandemic on our results of operations and our business, including the impact of the resulting economic and market disruption, the extension of tax filing deadlines and other related relief; our ability to effectively implement our future business plans and growth strategy; our ability to effectively compete within our industry; our ability to attract and retain financial professionals, qualified employees, clients, and customers, as well as our ability to provide strong customer/client service; our ability to close, finance, and realize all of the anticipated benefits of acquisitions, as well as our ability to integrate the operations of recently acquired businesses, and the potential impact of such acquisitions on our existing indebtedness and leverage; our future capital requirements and the availability of financing, if necessary; our ability to meet our current and future debt service obligations, including our ability to maintain compliance with our debt covenants; any downgrade of the Company’s credit ratings; our ability to generate strong performance for our clients and the impact of the financial markets on our clients’ portfolios; the impact of new or changing legislation and regulations (or interpretations thereof) on our business, including our ability to successfully address and comply with such legislation and regulations (or interpretations thereof) and increased costs, reductions of revenue, and potential fines, penalties or disgorgement to which we may be subject as a result thereof; risks, burdens, and costs, including fines, penalties or disgorgement, associated with our business being subjected to regulatory inquiries, investigations or initiatives; risks associated with legal proceedings, including litigation and regulatory proceedings; our ability to manage leadership and employee transitions, including costs and time burdens on management and our board of directors related thereto; political and economic conditions and events that directly or indirectly impact the wealth management and tax preparation industries; our ability to respond to rapid technological changes, including our ability to successfully release new products and services or improve upon existing products and services; the compromising of confidentiality, availability or integrity of information, including cyberattacks; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; risks related to goodwill and other intangible asset impairment; our ability to develop, establish, and maintain strong brands; risks associated with the use and implementation of information technology and the effect of security breaches, computer viruses, and computer hacking attacks; our ability to comply with laws and regulations regarding privacy and protection of user data; our ability to maintain our relationships with third-party partners, providers, suppliers, vendors, distributors, contractors, financial institutions, industry associations, and licensing partners, and our

expectations regarding and reliance on the products, tools, platforms, systems, and services provided by these third parties; our beliefs and expectations regarding the seasonality of our business; our assessments and estimates that determine our effective tax rate; and our ability to protect our intellectual property and the impact of any claim that we have infringed on the intellectual property rights of others. A more detailed description of these and certain other factors that could affect actual results is included in the Company’s filings with 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 report. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of this report, except as may be required by law.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.


Date: February 17, 2021

	BLUCORA, INC.

	By	/s/ Marc Mehlman
		Marc Mehlman
		Chief Financial Officer

Exhibit 99.1

Blucora Reports Fourth Quarter and Full Year 2020 Results

DALLAS, TX — February 17, 2021 — Blucora, Inc. (NASDAQ: BCOR), a leading provider of technology-enabled, tax-focused financial solutions, today announced financial results for the fourth quarter and full year ended December 31, 2020.

2020 Highlights and Recent Developments

•Increased total revenue by 5% year-over-year, to $755 million, including the addition of HK Financial Services (“HKFS”), on July 1

•Recorded 23rd consecutive year of segment revenue growth at TaxAct, excluding sale of SimpleTax

•Completed acquisition of HKFS, now rebranded as Avantax Planning Partners (“APP”), adding a historically fast growing, highly profitable registered investment advisor (“RIA”) and its fee-based advisory assets to the Company’s wealth management business

•Increased advisory assets 29% year-over-year, including the addition of approximately $5.0 billion in APP assets

•Increased total client assets 17% to $83.0 billion, with $35.6 billion or 42.9% in advisory assets

•Further strengthened Board of Directors with appointments of Karthik Rao, Jana Schreuder and Mark Ernst

“After an unprecedented year, I am extremely proud of our team’s focus and execution of our business plan in 2020,” said Chris Walters, Blucora’s President and Chief Executive Officer. “During the past year our new leadership team has made tremendous progress implementing our differentiated, tax-focused strategy, repositioning both Avantax and TaxAct for sustainable growth and moving forward with new plans to realize significant synergy potential between the two business units. Based on the progress and investments we made during 2020, I am optimistic about 2021 and beyond, as we execute on our plans to drive long-term earnings growth and shareholder value.”

Summary Financial Performance: Q4 and Full Year 2020

($ in millions except per share amounts)


	Q4		Q4				Full Year		Full Year
	2020		2019		Change		2020		2019		Change

Revenue
Wealth Management	$	149.4	$	145.2	3	%	$	546.2	$	508.0	8	%
Tax Preparation	$	5.8	$	4.2	38	%	$	208.8	$	210.0	(1)	%
Total Revenue	$	155.2	$	149.4	4	%	$	755.0	$	717.9	5	%
Segment Operating Income (Loss):
Wealth Management	$	20.4	$	19.1	7	%	$	72.2	$	68.3	6	%
Tax Preparation	$	(11.0)	$	(12.3)	11	%	$	49.6	$	96.2	(48)	%
Total Segment Operating Income	$	9.3	$	6.8	37	%	$	121.8	$	164.5	(26)	%
Unallocated Corporate-Level General and Administrative Expenses	$	7.1	$	7.6	(7)	%	$	26.7	$	27.4	(3)	%
GAAP:
Operating Loss	$	(23.7)	$	(26.0)	9	%	$	(269.1)	$	—	N/A
Net Income (Loss) Attributable to Blucora. Inc.	$	(50.7)	$	17.3	(393)	%	$	(342.8)	$	48.1	(813)	%
Diluted Net Income (Loss) Per Share Attributable to Blucora. Inc.	$	(1.05)	$	0.36	(392)	%	$	(7.14)	$	0.98	(829)	%
Non-GAAP: (1)
Adjusted EBITDA	$	2.2	$	(0.7)	414	%	$	95.1	$	137.2	(31)	%
Net Income (Loss)	$	(9.0)	$	(4.8)	(88)	%	$	54.1	$	104.2	(48)	%
Diluted Net Income (Loss) per Share (EPS)	$	(0.19)	$	(0.10)	(90)	%	$	1.12	$	2.11	(47)	%

____________________________

(1)See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.

2020 Results vs. Prior Guidance


($ in millions except per share amounts)	Prior Guidance	Actual
Wealth Management Revenue (1)	$535.5 - $540.5	$546.2
Tax Preparation Revenue	$207.0 - $208.0	$208.8
Total Revenue	$742.5 - $748.5	$755.0

Wealth Management Segment Operating Income (1)	$68.5 - $70.5	$72.2
Tax Preparation Segment Operating Income	$47.5 - $48.5	$49.6
Unallocated Corporate-Level General and Administrative Expenses	$27.5 - $26.5	$26.7


GAAP:
Net Loss (1)	$(339.0) – $(333.0)	$(342.8)
Net Loss per share (1)	$(7.05) – $(6.94)	$(7.14)

Non-GAAP:
Adjusted EBITDA (1) (2)	$88.5 - $92.5	$95.1
Non-GAAP Net Income (1) (2)	$46.0 - $51.0	$54.1
Non-GAAP Net Income per share (1) (2)	$0.95 - $1.05	$1.12

_________________________

(1)Includes HKFS results from July 1, 2020 to December 31, 2020.

(2)See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.

Tax Season Update

“With the IRS delaying the official beginning of tax season to February 12, our tax season has only just begun. Regardless, I feel confident about the actions we have taken this season as well as the mid to long-term benefits of the investments we made in 2020 to further improve the customer experience,” Walters continued. “We have now launched our online-assisted offering to meet a significant need that has emerged in the marketplace. We have also refined our marketing to efficiently add paid customers, all while reinforcing our differentiated value position with a compelling offering. We expect these initiatives to contribute to the financial improvements we shared for this year as well as strong financial results in the mid- to long-term.”

First Quarter Outlook

Given the delayed start of the tax season, the Company is not providing updated first quarter guidance for the Tax Preparation segment. For the Wealth Management segment in the first quarter of 2021, the Company expects revenues of between $150 million and $155.5 million and segment operating income of between $17.0 million and $19.5 million. The Company also expects corporate unallocated expenses to be between $7.5 and $8.5 million in the period.

Conference Call and Webcast

A conference call and live webcast will be held today at 8:30 a.m. Eastern Time during which the Company will further discuss fourth quarter and full year results, its outlook for the first quarter, its tax season update, and other business matters. We will also provide supplemental financial information to our results on the Investor Relations section of the Blucora corporate website at www.blucora.com prior to the call. The supplemental financial information has also been filed with the SEC on Form 8-K. A replay of the call will be available on our website.

About Blucora®

Blucora, Inc. (NASDAQ: BCOR) is on the forefront of financial technology, a provider of data and technology-driven solutions that empower people to improve their financial wellness. Blucora operates in two segments including (i) wealth management, through its Avantax Wealth Management brand, with a collective $83 billion in total client assets as of December 31, 2020, and (ii) tax preparation, through its TaxAct business, a market leader in tax preparation software with approximately 3 million consumer and more than 23,000 professional users in 2020. With integrated tax-focused software and wealth management, Blucora is uniquely positioned to assist our customers in achieving better long-term outcomes via holistic, tax-advantaged solutions. For more information on Blucora, visit www.blucora.com.

Source: Blucora

Blucora Investor Relations:

Dee Littrell (972) 870-6463

[email protected]

This release 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. When used in this release, terms such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “intends,” “anticipates,” “may,” “forecasts,” “projects” and similar expressions and variations are intended to identify forward-looking statements. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: our ability to effectively implement our future business plans and growth strategy; our ability to effectively compete within our industry; our ability to attract and retain qualified employees and leadership, advisors, clients and customers; our ability to execute upon our contemplated strategic and performance initiatives and to successfully integrate acquired businesses or assets and realize the anticipated benefits thereof; the availability of financing and our ability to meet our current and future debt service obligations and comply with our debt covenants; our ability to generate strong investment performance for our customers and the impact of the financial markets on our customers’ portfolios; political and economic conditions and events that directly or indirectly impact the wealth management and tax preparation industries; our ability to successfully make technology enhancements and introduce new and improve on existing products and services; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; our ability to manage leadership and employee transitions; risks related to goodwill and other intangible asset impairment; our ability to comply with regulations (or interpretations thereof) applicable to the wealth management and tax preparation industries, including increased costs associated with or reductions in revenue resulting from new or changing regulations or interpretations of existing regulations; risks associated with our business being subject to enhanced regulatory scrutiny; our ability to comply with laws and regulations regarding privacy and protection of data; cybersecurity risks; our ability to develop and maintain our relationships with third party partners; the seasonality of our business; legal proceedings risks, including litigation and regulatory proceedings; our assessments and estimates that determine our effective tax rate; the impact of new or changing tax legislation; our ability to develop, establish and maintain strong brands; and our ability to protect our intellectual property. A more detailed description of these and certain other factors that could affect actual results is included in the Risk Factors section of the Form 10-K and Form 10-Q that we most recently filed with 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 hereof. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date hereof, except as required by law. In addition, the Company has not filed its Form 10-K for the year ended December 31, 2020. As a result, all financial results described in this earnings release should be considered preliminary, and are subject to change to reflect the completion of our audit and any necessary adjustments or changes in accounting estimates that are identified prior to the time the Company files the Form 10-K.

Blucora, Inc.

Preliminary Condensed Consolidated Statements of Operations

(Unaudited) (Amounts in thousands, except per share data)


	Three Months Ended December 31,				Years Ended December 31,
	2020		2019		2020		2019
Revenue:
Wealth management services revenue	$	149,384	$	145,188	$	546,189	$	507,979
Tax preparation services revenue	5,773		4,233		208,763		209,966
Total revenue	155,157		149,421		754,952		717,945
Operating expenses:
Cost of revenue:
Wealth management services cost of revenue	103,630		101,200		385,962		352,081
Tax preparation services cost of revenue	2,569		1,708		12,328		10,691

Total cost of revenue	106,199		102,908		398,290		362,772
Engineering and technology	5,359		8,608		27,258		30,931
Sales and marketing	26,833		21,401		177,618		126,205
General and administrative	18,625		22,808		82,158		78,529
Acquisition and integration	12,303		8,024		31,085		25,763
Depreciation	1,948		1,633		7,293		5,479
Amortization of other acquired intangible assets	7,578		10,062		29,745		37,357
Impairment of goodwill and an intangible asset	—		—		270,625		50,900

Total operating expenses	178,845		175,444		1,024,072		717,936
Operating income (loss)	(23,688)		(26,023)		(269,120)		9
Other loss, net (1)	(7,918)		(5,233)		(31,304)		(16,915)
Loss before income taxes	(31,606)		(31,256)		(300,424)		(16,906)
Income tax benefit (expense)	(19,094)		48,584		(42,331)		65,054




Net income (loss) attributable to Blucora, Inc.	$	(50,700)	$	17,328	$	(342,755)	$	48,148



Net income (loss) per share attributable to Blucora, Inc.:
Basic	$	(1.05)	$	0.36	$	(7.14)	$	1.00



Diluted	$	(1.05)	$	0.36	$	(7.14)	$	0.98
Weighted average shares outstanding:
Basic	48,107		47,689		47,978		48,264
Diluted	48,107		48,344		47,978		49,282

____________________________

(1)Other loss, net consisted of the following (in thousands):


	Three Months Ended December 31,				Years Ended December 31,
	2020		2019		2020		2019
Interest expense	$	7,160	$	5,002	$	24,570	$	19,017
Amortization of debt issuance costs	366		194		1,372		1,042
Accretion of debt discounts	279		39		693		228
Total interest expense	7,805		5,235		26,635		20,287
Interest income	(38)		(108)		(65)		(449)
Gain on sale of a business	—		—		(349)		(3,256)
Non-capitalized debt issuance expenses	—		—		3,687		—

Other	151		106		1,396		333
Other loss, net	$	7,918	$	5,233	$	31,304	$	16,915

Blucora, Inc.

Preliminary Condensed Consolidated Balance Sheets

(Unaudited) (Amounts in thousands)


	December 31,
	2020		2019
ASSETS
Current assets:
Cash and cash equivalents	$	150,125	$	80,820
Cash segregated under federal or other regulations	637		5,630

Accounts receivable, net of allowance	12,736		16,266
Commissions receivable	26,132		21,176
Other receivables	717		2,902
Prepaid expenses and other current assets, net	10,321		12,349

Total current assets	200,668		139,143
Long-term assets:
Property and equipment, net	58,500		18,706
Right-of-use assets, net	23,455		10,151
Goodwill, net	454,821		662,375
Other intangible assets, net	322,179		290,211
Deferred tax asset, net	—		9,997

Other long-term assets	4,569		6,989
Total long-term assets	863,524		998,429
Total assets	$	1,064,192	$	1,137,572
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	9,290	$	10,969
Commissions and advisory fees payable	19,021		19,905
Accrued expenses and other current liabilities	56,419		36,144
Deferred revenue—current	12,298		12,014
Lease liabilities—current	2,304		3,272
Current portion of long-term debt, net	1,784		11,228



Total current liabilities	101,116		93,532
Long-term liabilities:
Long-term debt, net	552,553		381,485

Deferred tax liability, net	30,663		—
Deferred revenue—long-term	6,247		7,172
Lease liabilities—long-term	36,404		5,916
Other long-term liabilities	24,919		5,952
Total long-term liabilities	650,786		400,525
Total liabilities	751,902		494,057





Stockholders’ equity:
Common stock, par $0.0001—900,000 authorized shares; 49,483 shares issued and 48,177 shares outstanding at December 31, 2020; 49,059 shares issued and 47,753 shares outstanding at December 31, 2019	5		5
Additional paid-in capital	1,598,230		1,586,972
Accumulated deficit	(1,257,546)		(914,791)
Accumulated other comprehensive income (loss)	—		(272)
Treasury stock, at cost—1,306 shares at December 31, 2020 and December 31, 2019	(28,399)		(28,399)
Total stockholders’ equity	312,290		643,515
Total liabilities and stockholders’ equity	$	1,064,192	$	1,137,572

Blucora, Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited) (Amounts in thousands)


	Years Ended December 31,
	2020		2019
Operating activities:
Net income (loss)	$	(342,755)	$	48,148


Adjustments to reconcile net income (loss) to net cash from operating activities:
Stock-based compensation	10,066		16,300
Depreciation and amortization of acquired intangible assets	39,907		44,208
Impairment of goodwill and an intangible asset	270,625		50,900
Reduction of right-of-use lease assets	8,908		4,425


Deferred income taxes	41,059		(67,549)
Amortization of debt issuance costs	1,372		1,042

Accretion of debt discounts	693		228

Gain on sale of a business	(349)		(3,256)



Change in fair value of acquisition-related contingent consideration liability	8,300		—
Accretion of lease liability	1,922		599
Other	1,508		135
Cash provided (used) by changes in operating assets and liabilities:

Accounts receivable	10,705		871
Commissions and advisory fees receivable	(4,956)		(471)
Other receivables	2,185		4,506

Prepaid expenses and other current assets	1,662		10,537
Other long-term assets	2,232		3,377
Accounts payable	(4,192)		29
Commissions and advisory fees payable	(884)		432
Lease liabilities	(3,894)		(7,335)
Deferred revenue	(796)		(17,367)
Accrued expenses and other current and long-term liabilities	761		3,045
Net cash provided by operating activities	44,079		92,804
Investing activities:
Business acquisition, net of cash acquired	(101,910)		(166,560)

Purchases of property and equipment	(36,002)		(10,501)

Proceeds from sale of a business, net of cash	349		7,467



Acquisition of customer relationships	(3,143)		—
Net cash used by investing activities	(140,706)		(169,594)
Financing activities:

Proceeds from credit facilities, net of debt issuance costs and debt discount	226,278		131,489

Payments on credit facilities	(66,531)		(313)


Stock repurchases	—		(28,399)
Payment of redeemable noncontrolling interests	—		(24,945)

Proceeds from stock option exercises	97		4,387
Proceeds from issuance of stock through employee stock purchase plan	2,258		2,212
Tax payments from shares withheld for equity awards	(1,163)		(5,652)
Contingent consideration payments for business acquisition	—		(943)

Net cash provided by financing activities	160,939		77,836







Effect of exchange rate changes on cash, cash equivalents, and restricted cash	—		38
Net increase in cash, cash equivalents, and restricted cash	64,312		1,084
Cash, cash equivalents, and restricted cash, beginning of period	86,450		85,366
Cash, cash equivalents, and restricted cash, end of period	$	150,762	$	86,450

Blucora, Inc.

Preliminary Segment Information

(Unaudited) (Amounts in thousands)


	Three Months Ended December 31,				Years Ended December 31,
	2020		2019		2020		2019
Revenue:
Wealth Management (1)	$	149,384	$	145,188	$	546,189	$	507,979
Tax Preparation (1)	5,773		4,233		208,763		209,966
Total revenue	155,157		149,421		754,952		717,945
Operating income (loss):
Wealth Management	20,368		19,142		72,195		68,292
Tax Preparation	(11,025)		(12,316)		49,621		96,249
Corporate-level activity (2)	(33,031)		(32,849)		(390,936)		(164,532)
Total operating income (loss)	(23,688)		(26,023)		(269,120)		9
Other loss, net	(7,918)		(5,233)		(31,304)		(16,915)

Income tax benefit (expense)	(19,094)		48,584		(42,331)		65,054


Net income (loss) attributable to Blucora, Inc.	$	(50,700)	$	17,328	$	(342,755)	$	48,148

____________________________

(1)Revenues by major category within each segment are presented below (in thousands):


	Three Months Ended December 31,				Years Ended December 31,
	2020		2019		2020		2019
Wealth Management:
Advisory	$	87,079	$	75,621	$	314,751	$	252,367
Commission	49,864		53,199		185,201		191,050
Asset-based	4,777		11,652		23,688		48,182
Transaction and fee	7,664		4,716		22,549		16,380
Total Wealth Management revenue	$	149,384	$	145,188	$	546,189	$	507,979
Tax Preparation:
Consumer	$	5,502	$	4,096	$	192,226	$	195,004
Professional	271		137		16,537		14,962
Total Tax Preparation revenue	$	5,773	$	4,233	$	208,763	$	209,966

(2) Corporate-level activity included the following (in thousands):


	Three Months Ended December 31,				Years Ended December 31,
	2020		2019		2020		2019
General and administrative expenses	$	7,118	$	7,559	$	26,689	$	27,361
Stock-based compensation	2,846		5,136		10,066		16,300
Acquisition and integration costs	12,303		8,024		31,085		25,763
Depreciation	2,710		2,068		10,162		6,851
Amortization of acquired intangible assets	7,578		10,062		29,745		37,357
Impairment of goodwill and an intangible asset	—		—		270,625		50,900
Executive transition costs	476		—		10,701		—
Headquarters relocation costs	—		—		1,863		—

Total corporate-level activity	$	33,031	$	32,849	$	390,936	$	164,532

Blucora, Inc.

Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (1)

Preliminary Adjusted EBITDA Reconciliation (1)

(Unaudited) (Amounts in thousands)


	Three Months Ended December 31,				Years Ended December 31,
	2020		2019		2020		2019
Net income attributable to Blucora, Inc. (2)	$	(50,700)	$	17,328	$	(342,755)	$	48,148
Stock-based compensation	2,846		5,136		10,066		16,300
Depreciation and amortization of acquired intangible assets	10,288		12,130		39,907		44,208

Other loss, net	7,918		5,233		31,304		16,915

Acquisition and integration—Excl. Change in fair value of acquisition-related contingent consideration	3,003		8,024		22,785		25,763
Acquisition and integration—Change in fair value of acquisition-related contingent consideration	9,300		—		8,300		—
Impairment of goodwill and an intangible asset	—		—		270,625		50,900
Executive transition costs	476		—		10,701		—
Headquarters relocation costs	—		—		1,863		—
Income tax (benefit) expense	19,094		(48,584)		42,331		(65,054)
Adjusted EBITDA	$	2,225	$	(733)	$	95,127	$	137,180

Preliminary Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) Per Share Reconciliation (1)

(Unaudited) (Amounts in thousands, except per share amounts)


	Three Months Ended December 31,				Years Ended December 31,
	2020		2019		2020		2019
Net income (loss) attributable to Blucora, Inc. (2)	$	(50,700)	$	17,328	$	(342,755)	$	48,148

Stock-based compensation	2,846		5,136		10,066		16,300
Amortization of acquired intangible assets	7,578		10,062		29,745		37,357
Impairment of goodwill and an intangible asset	—		—		270,625		50,900

Gain on the sale of a business	—		—		(349)		(3,256)
Acquisition and integration—Excl. Change in fair value of acquisition-related contingent consideration	3,003		8,024		22,785		25,763
Acquisition and integration—Change in fair value of acquisition-related contingent consideration	9,300		—		8,300		—


Executive transition costs	476		—		10,701		—
Headquarters relocation costs	—		—		1,863		—
Non-capitalized debt issuance costs	—		—		3,687		—
Cash tax impact of adjustments to GAAP net income	(234)		(504)		(1,647)		(2,396)
Non-cash income tax (benefit) expense	18,732		(44,859)		41,059		(68,618)
Non-GAAP net income (loss)	$	(8,999)	$	(4,813)	$	54,080	$	104,198
Per diluted share:
Net income (loss) attributable to Blucora, Inc. (2) (3)	$	(1.05)	$	0.36	$	(7.10)	$	0.98
Stock-based compensation	0.06		0.11		0.21		0.33
Amortization of acquired intangible assets	0.15		0.21		0.61		0.76
Impairment of goodwill and an intangible asset	—		—		5.61		1.03

Gain on sale of a business	—		—		(0.01)		(0.07)
Acquisition and integration—Excl. Change in fair value of acquisition-related contingent consideration	0.06		0.17		0.47		0.52
Acquisition and integration—Change in fair value of acquisition-related contingent consideration	0.19		—		0.17		—


Executive transition costs	0.01		—		0.22		—
Headquarters relocation costs	—		—		0.04		—
Non-capitalized debt issuance costs	—		—		0.08		—
Cash tax impact of adjustments to GAAP net income	—		(0.01)		(0.03)		(0.05)
Non-cash income tax (benefit) expense	0.39		(0.94)		0.85		(1.39)
Non-GAAP net income (loss) per share	$	(0.19)	$	(0.10)	$	1.12	$	2.11
Weighted average shares outstanding used in calculating Non-GAAP net income per share	48,107		47,689		48,244		49,282

Adjusted EBITDA Reconciliation for Prior Guidance (1)

(Amounts in thousands)


	Ranges for the year ending
	December 31, 2020
	Low		High
Net income attributable to Blucora, Inc.	$	(339,000)	$	(333,000)
Stock-based compensation	11,900		11,800
Depreciation and amortization of acquired intangible assets	40,800		40,500
Other loss, net	31,700		31,200
Acquisition, integration, executive transition, and headquarters relocation costs	40,900		40,600
Impairment of goodwill	270,600		270,600
Income tax expense	31,600		30,800
Adjusted EBITDA	$	88,500	$	92,500

Non-GAAP Income and Non-GAAP Net Income Per Share Reconciliation

for Prior Guidance (1)

(Amounts in thousands, except per share amounts)


	Ranges for the year ended
	December 31, 2020
	Low		High
Net loss attributable to Blucora, Inc.	$	(339,000)	$	(333,000)
Stock-based compensation	11,900		11,800
Amortization of acquired intangible assets	30,000		29,900
Acquisition, integration, executive transition, and headquarters relocation costs	40,900		40,600
Debt issuance expenses	3,700		3,700
Impairment of goodwill	270,600		270,600
Gain on sale of a business	(300)		(300)
Cash tax impact of adjustments to net loss	(1,900)		(1,800)
Non-cash income tax expense	30,100		29,500
Non-GAAP net income	$	46,000	$	51,000
Per diluted share:
Net loss attributable to Blucora, Inc. (3)	$	(6.98)	$	(6.87)
Stock-based compensation	0.24		0.24
Amortization of acquired intangible assets	0.62		0.62
Acquisition, integration, executive transition, and headquarters relocation costs	0.84		0.84
Debt issuance expenses	0.08		0.08
Impairment of goodwill	5.57		5.58
Gain on sale of a business	—		—
Cash tax impact of adjustments to net loss	(0.04)		(0.04)
Non-cash income tax expense	0.62		0.60
Non-GAAP net income per share	$	0.95	$	1.05
Weighted average shares outstanding used in calculating Non-GAAP net income per share	48,600		48,500

Notes to Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures

(1)We define Adjusted EBITDA as net income (loss) attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation and amortization of acquired intangible assets, other loss, net, acquisition and integration costs, impairment of goodwill and an intangible asset, executive transition costs, headquarters relocation costs, and income tax (benefit) expense. Acquisition and integration costs primarily relate to the 1st Global Acquisition and the HKFS Acquisition. Impairment of goodwill relates to the impairment of our Wealth Management reporting unit goodwill that was recognized in the first quarter of 2020. Impairment of an intangible asset relates to the impairment of the HD Vest trade name intangible asset following the rebranding of the Wealth Management business in the third quarter of 2019. Executive transition costs relate to the departure of certain Company executives primarily in the first quarter of 2020. Headquarters relocation costs relate to the process of moving from our original Dallas office and Irving office to our new headquarters.

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 (loss). 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 (loss) as net income (loss) attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets (including acquired technology), impairment of goodwill and an intangible asset, gain on the sale of a business, acquisition and integration costs, executive transition costs, headquarters relocation costs, non-capitalized debt issuance expenses, the related cash tax impact of those adjustments, and non-cash income tax (benefit) expense. 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 primarily consist of U.S. federal net operating losses. The majority of these net operating losses will expire, if unutilized, between 2021 and 2024. Gain on the sale of a business relates to the disposition of SimpleTax in the third quarter of 2019 and the subsequent working capital adjustment in the third quarter of 2020. Non-capitalized debt issuance expense relates to the expense recognized as a result of the increase to our term loan in the third quarter of 2020.

We believe that non-GAAP net income (loss) and non-GAAP net income (loss) 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 (loss) and non-GAAP net income (loss) per share are common measures used by investors and analysts to evaluate our performance and the valuation of our business. Non-GAAP net income (loss) and non-GAAP net income (loss) per share 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 (loss) and net income per share. Other companies may calculate non-GAAP net income (loss) and non-GAAP net income (loss) per share differently, and, therefore, our non-GAAP net income (loss) and non-GAAP net income (loss) per share may not be comparable to similarly titled measures of other companies.

(2)As presented in the Preliminary Condensed Consolidated Statements of Operations (unaudited).

(3)Any difference in the “per diluted share” amounts between this table and the Preliminary Condensed Consolidated Statements of Operations is due to using different weighted average shares outstanding in the event that there is GAAP net loss but non-GAAP net income and vice versa.

Blucora, Inc.

Reconciliation of a Non-GAAP Financial Measure to the Nearest GAAP Measure

Reconciliation of Tax Preparation Services Revenue, Excluding SimpleTax, to Tax Preparation Services Revenue (1)


	Years ended December 31,
	2020		2019		2018		2017		2016		2015
Tax preparation services revenue (2)	$	208,763	$	209,966	$	187,282	$	160,937	$	139,365	$	117,708
Less: SimpleTax revenue (3)	—		(2,555)		(1,800)		(1,224)		(1,226)		(21)
Tax preparation services revenue, excluding SimpleTax (1)	$	208,763	$	207,411	$	185,482	$	159,713	$	138,139	$	117,687

____________________________

(1)We define tax preparation services revenue, excluding SimpleTax (which is a non-GAAP measure), as tax preparation services revenue (as presented on the consolidated statements of comprehensive income) less SimpleTax revenue. We believe tax preparation services revenue, excluding SimpleTax, is an important measure of current and historical sources of revenue for the Tax Preparation segment since Blucora disposed of SimpleTax in the third quarter of 2019.

(2)As presented in the Blucora consolidated statements of comprehensive income.

(3)We acquire SimpleTax Software, Inc. (“SimpleTax”) in July 2015 and disposed of SimpleTax in September 2019.

Exhibit 99.2

Blucora, Inc.

Supplemental Information

December 31, 2020

Table of Contents


Financial Information
Consolidated Statements of Operation s (Una udited )			2
Consolidated Financial Result s (Unaudited)			3
Reconciliation of Non-GAAP Financial Measures			5
Net Leverage Ratio			7
Reconciliation of Operating Free Cash Flow			8

Operating Metrics
Wealth Management			9
Tax Preparation			10

Blucora Consolidated Statements of Operations (Unaudited)


(in thousands except %s and per share amounts, rounding differences may exist)	2018		2019										2020
	FY 12/31		1Q		2Q		3Q		4Q		FY 12/31		1Q		2Q		3Q		4Q		FY 12/31
Segment revenue:
Wealth Management	$	373,174	$	89,532	$	127,831	$	145,428	$	145,188	$	507,979	$	144,989	$	115,884	$	135,932	$	149,384	$	546,189
Tax Preparation	187,282		136,236		65,909		3,588		4,233		209,966		118,331		45,238		39,421		5,773		$	208,763
Total segment revenue	560,456		225,768		193,740		149,016		149,421		717,945		263,320		161,122		175,353		155,157		$	754,952
Operating Expenses:
Cost of revenue:
Wealth Management	253,580		61,374		87,477		102,030		101,200		352,081		102,342		83,868		96,122		103,630		385,962
Tax Preparation	10,040		4,201		3,149		1,633		1,708		10,691		4,013		3,054		2,692		2,569		12,328
Amortization of acquired technology	99		—		—		—		—		—		—		—		—		—		—
Total segment cost of revenue	263,719		65,575		90,626		103,663		102,908		362,772		106,355		86,922		98,814		106,199		398,290
Engineering and technology	19,332		6,529		7,159		8,635		8,608		30,931		8,515		7,377		6,007		5,359		27,258
Sales and marketing	111,361		55,572		29,256		19,976		21,401		126,205		79,710		40,057		31,018		26,833		177,618
General and administrative	60,124		17,077		19,002		19,642		22,808		78,529		24,728		20,200		18,605		18,625		82,158
Depreciation	4,468		1,061		1,315		1,470		1,633		5,479		1,796		1,675		1,874		1,948		7,293
Amortization of other acquired intangible assets	33,487		8,044		9,169		10,082		10,062		37,357		7,748		6,673		7,746		7,578		29,745
Impairment of goodwill and an intangible asset (1)	—		—		—		50,900		—		50,900		270,625		—		—		—		270,625
Acquisition and integration	—		1,797		9,183		6,759		8,024		25,763		5,682		2,824		10,276		12,303		31,085
Restructuring	288		—		—		—		—		—		—		—		—		—		—
Total operating expenses	492,779		155,655		165,710		221,127		175,444		717,936		505,159		165,728		174,340		178,845		1,024,072
Operating income (loss)	67,677		70,113		28,030		(72,111)		(26,023)		9		(241,839)		(4,606)		1,013		(23,688)		(269,120)
Other loss, net	(15,797)		(3,958)		(5,118)		(2,606)		(5,233)		(16,915)		(6,135)		(5,288)		(11,963)		(7,918)		(31,304)
Income (loss) before income taxes	51,880		66,155		22,912		(74,717)		(31,256)		(16,906)		(247,974)		(9,894)		(10,950)		(31,606)		(300,424)
Income tax benefit (expense)	(311)		(3,985)		8,124		12,331		48,584		65,054		(67,520)		59,539		(15,256)		(19,094)		(42,331)
Net income attributable to noncontrolling interests	(935)		—		—		—		—		—		—		—		—		—		—
Net income (loss) attributable to Blucora, Inc.	50,634		62,170		31,036		(62,386)		17,328		48,148		(315,494)		49,645		(26,206)		(50,700)		(342,755)
Net income (loss) per share attributable to Blucora, Inc.:
Basic	$	0.94	$	1.29	$	0.64	$	(1.28)	$	0.36	$	1.00	$	(6.60)	$	1.04	$	(0.55)	$	(1.05)	$	(7.14)
Diluted	$	0.90	$	1.25	$	0.62	$	(1.28)	$	0.36	$	0.98	$	(6.60)	$	1.03	$	(0.55)	$	(1.05)	$	(7.14)
Weighted average shares outstanding:
Basic	47,394		48,161		48,555		48,652		47,689		48,264		47,827		47,941		48,039		48,107		47,978
Diluted	49,381		49,542		49,822		48,652		48,344		49,282		47,827		48,092		48,039		48,107		47,978

____________________________

(1)In the first quarter of 2020, we recognized a $270.6 million goodwill impairment related to our Wealth Management reporting unit. In the third quarter of 2019, we recognized a $50.9 million impairment of an intangible asset related to the HD Vest trade name intangible asset.

Blucora Consolidated Financial Results (Unaudited) (1)


(in thousands except %s and per share amounts, rounding differences may exist)	2018			2019															2020
	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q			2Q			3Q			4Q			FY 12/31
Segment revenue:
Wealth Management (1)	$	373,174		$	89,532		$	127,831		$	145,428		$	145,188		$	507,979		$	144,989		$	115,884		$	135,932		$	149,384		$	546,189
Tax Preparation (2)	187,282			136,236			65,909			3,588			4,233			209,966			118,331			45,238			39,421			5,773			208,763
Total segment revenue	$	560,456		$	225,768		$	193,740		$	149,016		$	149,421		$	717,945		$	263,320		$	161,122		$	175,353		$	155,157		$	754,952
Segment operating income (loss): (3)
Wealth Management (1)	$	53,053		$	11,540		$	16,979		$	20,631		$	19,142		$	68,292		$	22,598		$	11,731		$	17,498		$	20,368		$	72,195
Tax Preparation (2)	87,249			79,272			41,368			(12,075)			(12,316)			96,249			37,753			6,659			16,234			(11,025)			49,621
Total segment operating income	$	140,302		$	90,812		$	58,347		$	8,556		$	6,826		$	164,541		$	60,351		$	18,390		$	33,732		$	9,343		$	121,816
Segment operating income (loss) % of revenue:
Wealth Management (1)	14		%	13		%	13		%	14		%	13		%	13		%	16		%	10		%	13		%	14		%	13		%
Tax Preparation (2)	47		%	58		%	63		%	(337)		%	(291)		%	46		%	32		%	15		%	41		%	(191)		%	24		%
Total segment operating income (loss) % of revenue	25		%	40		%	30		%	6		%	5		%	23		%	23		%	11		%	19		%	6		%	16		%
Unallocated corporate-level general and administrative expenses (3)	$	20,495		$	7,105		$	6,221		$	6,476		$	7,559		$	27,361		$	7,016		$	5,810		$	6,745		$	7,118		$	26,689
Adjusted EBITDA (4)	$	119,807		$	83,707		$	52,126		$	2,080		$	(733)		$	137,180		$	53,335		$	12,580		$	26,987		$	2,225		$	95,127
Other unallocated corporate-level operating expenses: (3)
Stock-based compensation	$	13,253		$	2,443		$	4,082		$	4,639		$	5,136		$	16,300		$	(1,201)		$	3,904		$	4,517		$	2,846		$	10,066
Acquisition and integration—Excl. Change in fair value of acquisition-related contingent consideration	—			1,797			9,183			6,759			8,024			25,763			5,682			2,824			11,276			3,003			22,785
Acquisition and integration—Change in fair value of acquisition-related contingent consideration	—			—			—			—			—			—			—			—			(1,000)			9,300			8,300

Depreciation	5,003			1,310			1,662			1,811			2,068			6,851			2,420			2,412			2,620			2,710			10,162
Amortization of acquired intangible assets	33,586			8,044			9,169			10,082			10,062			37,357			7,748			6,673			7,746			7,578			29,745
Executive transition costs	—			—			—			—			—			—			9,184			636			405			476			10,701
Headquarters relocation costs	—			—			—			—			—			—			716			737			410			—			1,863
Impairment of goodwill and intangible asset	—			—			—			50,900			—			50,900			270,625			—			—			—			270,625
Restructuring	288			—			—			—			—			—			—			—			—			—			—
Operating income (loss)	$	67,677		$	70,113		$	28,030		$	(72,111)		$	(26,023)		$	9		$	(241,839)		$	(4,606)		$	1,013		$	(23,688)		$	(269,120)
Unallocated other (income) loss, net: (3)
Interest expense	$	15,610		$	3,776		$	4,770		$	5,469		$	5,002		$	19,017		$	5,316		$	4,840		$	7,254		$	7,160		$	24,570
Amortization of debt issuance costs	833			172			375			301			194			1,042			313			331			362			366			1,372
Accretion of debt discounts	163			38			85			66			39			228			68			70			276			279			693
Total interest expense	16,606			3,986			5,230			5,836			5,235			20,287			5,697			5,241			7,892			7,805			26,635
Interest income	(349)			(140)			(149)			(52)			(108)			(449)			(14)			(11)			(2)			(38)			(65)
Loss on debt extinguishment and modification expense	1,534			—			—			—			—			—			—			—			—			—			—
Gain on sale of a business	—			—			—			(3,256)			—			(3,256)			—			—			(349)			—			(349)
Non-capitalized debt issuance expenses	—			—			—			—			—			—			—			—			3,687			—			3,687
Other (income) loss, net	(1,994)			112			37			78			106			333			452			58			735			151			1,396
Total other loss, net	$	15,797		$	3,958		$	5,118		$	2,606		$	5,233		$	16,915		$	6,135		$	5,288		$	11,963		$	7,918		$	31,304
Income (loss) before income taxes	$	51,880		$	66,155		$	22,912		$	(74,717)		$	(31,256)		$	(16,906)		$	(247,974)		$	(9,894)		$	(10,950)		$	(31,606)		$	(300,424)
Income tax (benefit) expense:
Cash	$	2,714		$	834		$	3,193		$	3,262		$	(3,725)		$	3,564		$	483		$	158		$	269		$	362		$	1,272
Non-cash (5)	(2,403)			3,151			(11,317)			(15,593)			(44,859)			(68,618)			67,037			(59,697)			14,987			18,732			41,059
Total income tax (benefit) expense	$	311		$	3,985		$	(8,124)		$	(12,331)		$	(48,584)		$	(65,054)		$	67,520		$	(59,539)		$	15,256		$	19,094		$	42,331
GAAP income (loss)	$	51,569		$	62,170		$	31,036		$	(62,386)		$	17,328		$	48,148		$	(315,494)		$	49,645		$	(26,206)		$	(50,700)		$	(342,755)


GAAP impact of noncontrolling interests (6)	(935)			—			—			—			—			—			—			—			—			—			—
GAAP net income (loss) attributable to Blucora, Inc.	$	50,634		$	62,170		$	31,036		$	(62,386)		$	17,328		$	48,148		$	(315,494)		$	49,645		$	(26,206)		$	(50,700)		$	(342,755)
GAAP net income (loss) per share attributable to Blucora, Inc. - diluted	$	0.90		$	1.25		$	0.62		$	(1.28)		$	0.36		$	0.98		$	(6.60)		$	1.03		$	(0.55)		$	(1.05)		$	(7.14)
Non-GAAP net income (loss) (4)	$	94,036		$	77,194		$	41,382		$	(9,565)		$	(4,813)		$	104,198		$	43,561		$	4,463		$	15,055		$	(8,999)		$	54,080
Non-GAAP net income (loss) per share - diluted (4) (7)	$	1.90		$	1.56		$	0.83		$	(0.20)		$	(0.10)		$	2.11		$	0.90		$	0.09		$	0.31		$	(0.19)		$	1.12

Basic weighted average shares outstanding	47,394			48,161			48,555			48,652			47,689			48,264			47,827			47,941			48,039			48,107			47,978
Diluted weighted average shares outstanding	49,381			49,542			49,822			48,652			48,344			49,282			47,827			48,092			48,039			48,107			47,978

Notes to Consolidated Financial Results on next page

Notes to Consolidated Financial Results

(1)The operations of 1st Global are included in the Company's operating results as part of the Wealth Management segment beginning May 6, 2019 when 1st Global was acquired. The operations of HKFS are included in the Company's operating results as part of the Wealth Management segment beginning July 1, 2020 when HKFS was acquired.

(2)As a highly seasonal business, almost all of the Tax Preparation revenue is generated in the first four months of the calendar year. In March 2020 and as a result of the COVID-19 pandemic, the Internal Revenue Service extended the filing deadline for federal tax returns from April 15, 2020 to July 15, 2020. This filing extension resulted in the shifting of a significant portion of Tax Preparation segment revenue and segment income that is usually earned in the first and second quarters of 2020 to the third quarter of 2020.

(3)We do not allocate certain general and administrative costs (including personnel and overhead costs), stock-based compensation, acquisition and integration costs, depreciation, amortization of acquired intangible assets, executive transition costs, headquarters relocation costs, impairment of goodwill and intangible asset, restructuring, other income/loss, or income taxes to the reportable segments. General and administrative costs are included in "Unallocated corporate operating expenses."

(4)Non-GAAP measure. See Blucora Reconciliation of Certain Non-GAAP Financial Measures on page 5 for additional information.

(5)Amounts represent the non-cash portion of 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 net operating losses will expire, if unutilized, between 2021 and 2024.

(6)GAAP income (loss) excludes the impact of noncontrolling interests associated with the HD Vest management rollover equity ownership of 4.48%. The impact of noncontrolling interests is recorded separately and after GAAP income (loss) through December 31, 2018, which was the final measurement date of those ownership interests.

(7)For periods in which non-GAAP net income is generated, non-GAAP net income per share is calculated using diluted weighted average shares outstanding. For periods in which non-GAAP net loss is generated, non-GAAP net loss per share is calculated using basic weighted average shares outstanding.

Blucora Reconciliation of Non-GAAP Financial Measures (1) (2)


(in thousands except per share amounts, rounding differences may exist)	2018		2019										2020
	FY 12/31		1Q		2Q		3Q		4Q		FY 12/31		1Q		2Q		3Q		4Q		FY 12/31
Adjusted EBITDA
Net income (loss) attributable to Blucora, Inc. (1) (2)	$	50,634	$	62,170	$	31,036	$	(62,386)	$	17,328	$	48,148	$	(315,494)	$	49,645	$	(26,206)	$	(50,700)	$	(342,755)
Stock-based compensation	13,253		2,443		4,082		4,639		5,136		16,300		(1,201)		3,904		4,517		2,846		10,066
Depreciation and amortization of acquired intangible assets	38,589		9,354		10,831		11,893		12,130		44,208		10,168		9,085		10,366		10,288		39,907
Other loss, net	15,797		3,958		5,118		2,606		5,233		16,915		6,135		5,288		11,963		7,918		31,304
Acquisition and integration—Excluding change in fair value of HKFS Contingent Consideration	—		1,797		9,183		6,759		8,024		25,763		5,682		2,824		11,276		3,003		22,785
Acquisition and integration—Change in fair value of HKFS Contingent Consideration	—		—		—		—		—		—		—		—		(1,000)		9,300		8,300
Executive transition costs	—		—		—		—		—		—		9,184		636		405		476		10,701
Headquarters relocation costs	—		—		—		—		—		—		716		737		410		—		1,863
Restructuring	288		—		—		—		—		—		—		—		—		—		—
Net income attributable to noncontrolling interests	935		—		—		—		—		—		—		—		—		—		—
Income tax (benefit) expense	311		3,985		(8,124)		(12,331)		(48,584)		(65,054)		67,520		(59,539)		15,256		19,094		42,331
Impairment of goodwill and intangible asset	—		—		—		50,900		—		50,900		270,625		—		—		—		270,625
Adjusted EBITDA	$	119,807	$	83,707	$	52,126	$	2,080	$	(733)	$	137,180	$	53,335	$	12,580	$	26,987	$	2,225	$	95,127
Non-GAAP Net Income (Loss)
Net income (loss) attributable to Blucora, Inc. (1) (2)	$	50,634	$	62,170	$	31,036	$	(62,386)	$	17,328	$	48,148	$	(315,494)	$	49,645	$	(26,206)	$	(50,700)	$	(342,755)
Stock-based compensation	13,253		2,443		4,082		4,639		5,136		16,300		(1,201)		3,904		4,517		2,846		10,066
Amortization of acquired intangible assets	33,586		8,044		9,169		10,082		10,062		37,357		7,748		6,673		7,746		7,578		29,745
Impairment of goodwill and an intangible asset	—		—		—		50,900		—		50,900		270,625		—		—		—		270,625
Gain on the sale of a business	—		—		—		(3,256)		—		(3,256)		—		—		(349)		—		(349)
Acquisition and integration—Excluding change in fair value of HKFS Contingent Consideration	—		1,797		9,183		6,759		8,024		25,763		5,682		2,824		11,276		3,003		22,785
Acquisition and integration—Change in fair value of HKFS Contingent Consideration	—		—		—		—		—		—		—		—		(1,000)		9,300		8,300
Executive transition costs	—		—		—		—		—		—		9,184		636		405		476		10,701
Headquarters relocation costs	—		—		—		—		—		—		716		737		410		—		1,863
Non-capitalized debt issuance expenses	—		—		—		—		—		—		—		—		3,687		—		3,687
Restructuring	288		—		—		—		—		—		—		—		—		—		—
Net income attributable to noncontrolling interests	935		—		—		—		—		—		—		—		—		—		—
Cash tax impact of adjustments to GAAP net income	(2,257)		(411)		(771)		(710)		(504)		(2,396)		(736)		(259)		(418)		(234)		(1,647)
Non-cash income tax (benefit) expense	(2,403)		3,151		(11,317)		(15,593)		(44,859)		(68,618)		67,037		(59,697)		14,987		18,732		41,059
Non-GAAP net income (loss)	$	94,036	$	77,194	$	41,382	$	(9,565)	$	(4,813)	$	104,198	$	43,561	$	4,463	$	15,055	$	(8,999)	$	54,080

Non-GAAP net income (loss) per share (3)	$	1.90	$	1.56	$	0.83	$	(0.20)	$	(0.10)	$	2.11	$	0.90	$	0.09	$	0.31	$	(0.19)	$	1.12
Weighted average shares outstanding (3)	49,381		49,542		49,822		48,652		47,689		49,282		48,253		48,092		48,203		48,107		48,244

Notes to Blucora Reconciliations of Non-GAAP Financial Measures on next page

Notes to Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures

(1)We define Adjusted EBITDA as net income (loss) attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation and amortization of acquired intangible assets, restructuring, other loss, net, net income attributable to noncontrolling interests, acquisition and integration costs, income tax (benefit) expense, the impairment of goodwill and an intangible asset, executive transition costs, and headquarters relocation costs. Restructuring costs relate to the relocation of our corporate headquarters that was completed in 2018. Acquisition and integration costs relate to the acquisition of 1st Global and the acquisition of HKFS. The impairment of an intangible asset relates to the impairment of the HD Vest trade name intangible asset. The impairment of goodwill relates to the impairment of our Wealth Management reporting unit goodwill that was recognized in the first quarter of 2020. Executive transition costs relate to the departure of certain company executives in the first quarter of 2020. Headquarters relocation costs relate to the process of moving from our former Dallas and Irving offices to our new headquarters office.

We define non-GAAP net income (loss) as net income (loss) attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets, the impairment of goodwill and an intangible asset, gain on the sale of a business, acquisition and integration costs, executive transition costs, headquarters relocation costs, non-capitalized debt issuance expenses, restructuring costs, net income attributable to noncontrolling interests, 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 primarily consist of U.S. federal net operating losses. The majority of these net operating losses will expire, if unutilized, between 2021 and 2024. Gain of the sale of a business relates to the disposition of SimpleTax in the third quarter of 2019 and the subsequent working capital adjustment in the third quarter of 2020. Non-capitalized debt issuance expense relates to the expense recognized as a result of the increase to our term loan in the third quarter of 2020.

We believe that non-GAAP net income (loss) and non-GAAP net income (loss) 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 (loss) and non-GAAP net income (loss) per share are common measures used by investors and analysts to evaluate our performance and the valuation of our business. Non-GAAP net income (loss) and non-GAAP net income (loss) per share 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 (loss) and GAAP net income (loss) per share. Other companies may calculate these non-GAAP measures differently, and, therefore, our non-GAAP net income (loss) and non-GAAP net income (loss) per share may not be comparable to similarly titled measures of other companies.

(2) As presented in the Blucora Consolidated Financial Results (unaudited) on page 3.

(3) For periods in which non-GAAP net income is generated, non-GAAP net income per share is calculated using diluted weighted average shares outstanding. For periods in which non-GAAP net loss is generated, non-GAAP net loss per share is calculated using basic weighted average shares outstanding.

Blucora Net Leverage Ratio


	2018			2019											2020
(in thousands except ratio, rounding differences may exist)	4Q			1Q			2Q			3Q			4Q				1Q			2Q			3Q			4Q
DEBT:
Senior secured credit facility	$	265,000		$	265,000		$	390,000		$	390,000		$	399,687			$	444,375		$	389,062		$	563,609		$	563,156
CASH:
Cash and cash equivalents	$	84,524		$	149,762		$	109,606		$	97,466		$	80,820			$	168,198		$	90,081		$	151,166		$	150,125
NET DEBT (2)	$	180,476		$	115,238		$	280,394		$	292,534		$	318,867			$	276,177		$	298,981		$	412,443		$	413,031

Last twelve months:
SEGMENT INCOME:
Wealth Management	$	53,053		$	51,518		$	55,543		$	63,283		$	68,292			$	79,350		$	74,102		$	70,969		$	72,195
Tax Preparation	87,249			107,715			104,962			99,823			96,249				54,730			20,021			48,330			49,621
	$	140,302		$	159,233		$	160,505		$	163,106		$	164,541			$	134,080		$	94,123		$	119,299		$	121,816
Unallocated corporate-level general and administrative expenses	(20,495)			(22,059)			(24,042)			(25,946)			(27,361)				(27,272)			(26,861)			(27,130)			(26,689)
ADJUSTED EBITDA (1)	$	119,807		$	137,174		$	136,463		$	137,160		$	137,180			$	106,808		$	67,262		$	92,169		$	95,127

NET LEVERAGE RATIO (1) (3)	1.5		x	0.8		x	2.1		x	2.1		x	2.3			x	2.6		x	4.4		x	4.5		x	4.3		x

Blucora Reconciliation of Trailing Twelve Month ("TTM") Adjusted EBITDA (1) (4)


(in thousands except per share amounts, rounding differences may exist)	2018		2019								2020
	TTM 4Q		TTM 1Q		TTM 2Q		TTM 3Q		TTM 4Q		TTM 1Q		TTM 2Q		TTM 3Q		TTM 4Q
Adjusted EBITDA
Net income (loss) attributable to Blucora, Inc.	$	50,634	$	67,463	$	63,261	$	14,839	$	48,148	$	(329,516)	$	(310,907)	$	(274,727)	$	(342,755)
Stock-based compensation	13,253		12,741		13,093		14,858		16,300		12,656		12,478		12,356		10,066
Depreciation and amortization of acquired intangible assets	38,589		37,584		38,436		41,128		44,208		45,022		43,276		41,749		39,907
Other loss, net	15,797		14,527		16,886		15,629		16,915		19,092		19,262		28,619		31,304
Acquisition and integration costs	—		1,797		10,980		17,739		25,763		29,648		23,289		26,806		31,085
Executive transition costs	—		—		—		—		—		9,184		9,820		10,225		10,701
Headquarters relocation costs	—		—		—		—		—		716		1,453		1,863		1,863
Restructuring	288		(1)		(3)		(3)		—		—		—		—		—
Net income attributable to noncontrolling interests	935		730		508		281		—		—		—		—		—
Income tax (benefit) expense	311		2,333		(6,698)		(18,211)		(65,054)		(1,519)		(52,934)		(25,347)		42,331
Impairment of goodwill and intangible asset	—		—		—		50,900		50,900		321,525		321,525		270,625		270,625
Adjusted EBITDA	$	119,807	$	137,174	$	136,463	$	137,160	$	137,180	$	106,808	$	67,262	$	92,169	$	95,127

____________________________

(1) Non-GAAP measure using Adjusted EBITDA for the last twelve months. Adjusted EBITDA for the trailing twelve month period is reconciled to the nearest GAAP measure on this page.

(2) We define net debt, a non-GAAP financial measure, as cash and cash equivalents less the outstanding principal of debt. Management believes that the presentation of this non-GAAP financial measure provides useful information to investors because it is an important liquidity measurement that reflects our ability to service our debt.

(3) Net leverage ratio is calculated by dividing net debt by Adjusted EBITDA for the trailing twelve months.

(4) For additional information on Adjusted EBITDA and its use as a non-GAAP measure, see page 6.

Blucora Reconciliation of Operating Free Cash Flow (1)


	2018		2019										2020
(in thousands, rounding differences may exist)	FY 12/31		1Q		2Q		3Q		4Q		FY 12/31		1Q		2Q		3Q		4Q		FY 12/31
Net cash provided (used) by operating activities	$	105,548	$	70,236	$	26,576	$	(565)	$	(3,443)	$	92,804	$	46,864	$	(12,490)	$	940	$	8,765	$	44,079
Purchases of property and equipment	(7,633)		(1,243)		(1,695)		(3,949)		(3,614)		(10,501)		(7,715)		(11,357)		(9,639)		(7,291)		(36,002)
Operating free cash flow	$	97,915	$	68,993	$	24,881	$	(4,514)	$	(7,057)	$	82,303	$	39,149	$	(23,847)	$	(8,699)	$	1,474	$	8,077

____________________________

(1) We define operating free cash flow from continuing operations, which is a non-GAAP measure, as net cash provided by (used in) operating activities from continuing operations less purchases of property and equipment. We believe operating free cash flow is an important liquidity measure that reflects the cash generated by the continuing businesses, after the purchases of property and equipment, that can then be used for, among other things, strategic acquisitions and investments in the businesses, stock repurchases, and funding ongoing operations.

Blucora Operating Metrics - Wealth Management


	2018			2019															2020
(in thousands except %s, rounding differences may exist)	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q			2Q			3Q			4Q			FY 12/31
Segment revenue	$	373,174		$	89,532		$	127,831		$	145,428		$	145,188		$	507,979		$	144,989		$	115,884		$	135,932		$	149,384		$	546,189
Less: Financial professional commission payout	$	(252,357)		$	(60,860)		$	(86,583)		$	(100,700)		$	(99,860)		$	(348,003)		$	(100,804)		$	(82,656)		$	(94,794)		$	(102,610)		$	(380,864)
Segment net revenue (1)	$	120,817		$	28,672		$	41,248		$	44,728		$	45,328		$	159,976		$	44,185		$	33,228		$	41,138		$	46,774		$	165,325
Segment income (2)	$	53,053		$	11,540		$	16,979		$	20,631		$	19,142		$	68,292		$	22,598		$	11,731		$	17,498		$	20,368		$	72,195
Segment income % of revenue	14		%	13		%	13		%	14		%	13		%	13		%	16		%	10		%	13		%	14		%	13		%
Segment income % of net revenue	44		%	40		%	41		%	46		%	42		%	43		%	51		%	35		%	43		%	44		%	44		%


(in thousands except %s, rounding differences may exist)			2018			2019															2020
	Sources of Revenue	Primary Drivers	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q			2Q			3Q			4Q			FY 12/31
Financial professional-driven	Advisory	- Advisory asset levels	$	164,353		$	39,757		$	61,410		$	75,579		$	75,621		$	252,367		78,757			66,303			82,612			87,079			$	314,751
	Commission	- Transactions - Asset levels - Product mix	164,201			37,160			48,068			52,623			53,199			191,050			50,580			39,836			44,921			49,864			185,201
Other revenue	Asset-based	- Cash balances - Interest rates - Number of accounts - Client asset levels	31,456			9,693			13,219			13,618			11,652			48,182			10,579			3,981			4,351			4,777			23,688
	Transaction and fee	- Account activity - Number of clients - Number of financial professionals - Number of accounts	13,164			2,922			5,134			3,608			4,716			16,380			5,073			5,764			4,048			7,664			22,549
	Total revenue		$	373,174		$	89,532		$	127,831		$	145,428		$	145,188		$	507,979		$	144,989		$	115,884		$	135,932		$	149,384		$	546,189
	Total recurring revenue (3)		$	303,117		$	73,241		$	106,557		$	121,304		$	121,026		$	422,128		$	119,255		$	100,004		$	117,822		$	127,863		$	464,944
	Recurring revenue rate (3)		81.2		%	81.8		%	83.4		%	83.4		%	83.4		%	83.1		%	82.3		%	86.3		%	86.7		%	85.6		%	85.1		%


(in thousands except %s and as otherwise indicated, rounding differences may exist)	2018			2019															2020
	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q			2Q			3Q			4Q			FY 12/31
Total client assets	$	42,249,055		$	46,164,603		$	67,602,006		$	67,682,510		$	70,644,385		$	70,644,385		$	61,014,454		$	68,519,998		$	76,152,721		$	82,961,244		$	82,961,244
Brokerage assets	$	29,693,650		$	32,176,414		$	41,335,972		$	41,358,346		$	43,015,221		$	43,015,221		$	37,395,490		$	41,964,610		$	43,733,735		$	47,357,687		$	47,357,687
Advisory assets	$	12,555,405		$	13,988,189		$	26,266,034		$	26,324,164		$	27,629,164		$	27,629,164		$	23,618,964		$	26,555,388		$	32,418,986		$	35,603,557		$	35,603,557
% of total client assets	29.7		%	30.3		%	38.9		%	38.9		%	39.1		%	39.1		%	38.7		%	38.8		%	42.6		%	42.9		%	42.9		%
Number of financial professionals (in ones) (4)	3,593			3,553			4,225			4,119			3,984			3,984			3,945			3,862			3,975			3,770			3,770
Advisory and commission revenue per financial professional (5)	$	91.4		$	21.6		$	25.9		$	31.1		$	32.3		$	111.3		$	32.8		$	27.5		$	32.1		$	36.3		$	132.6

____________________________

(1) Non-GAAP financial measure represents segment revenue less financial professional commission payout.

(2) Excludes expenses associated with non-recurring projects.

(3) Recurring revenue consists of trailing commissions, advisory fees, fees from cash sweep programs, and certain transaction and fee revenue.

(4) The increase in financial professionals in the third quarter of 2020 resulted from the addition of 19 in-house financial professionals (licensed financial planning consultants, which are employees of Avantax Planning Partners) and 131 licensed referring representatives at CPA firms that partner with Avantax Planning Partners.

(5) Full year advisory and commission revenue per financial professional is based upon a full year of advisory and commission revenue.

Blucora Operating Metrics - Tax Preparation


(in thousands except %s and as otherwise indicated, rounding differences may exist)	Years ended December 31,				Year-to-date period ended July 16,
	2020	2019	% change		2020 (1)	2019 (1)	% change
Total e-files (2)	5,319	5,250	1	%	5,149	5,108	1	%

Consumers
E-files (2)	3,178	3,239	(2)	%	3,113	3,184	(2)	%
Preparers
E-files	2,141	2,011	6	%	2,036	1,924	6	%
Units sold (in ones)	20,360	20,746	(2)	%	20,207	20,596	(2)	%
E-files per unit sold (in ones)	105.2	96.9	9	%	100.8	93.4	8	%

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(1)Tax season begins on the first day that the IRS begins accepting e-files and ends on filing deadline day plus one day. As a result of the COVID-19 pandemic, the IRS extended the filing deadline for federal tax returns relating to the 2019 tax year to July 15, 2020. In order to provide comparable prior period data, we also provided e-file information for the equivalent period in 2019.

(2)We participate in the Free File Alliance that is part of an IRS partnership that provides free electronic tax filing services to taxpayers meeting certain income-based guidelines. Free File Alliance e-files are included within total e-files and consumer e-files above.