bcor-20221101

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

November 1, 2022

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 November 1, 2022, Blucora, Inc. (the “Company”) announced its financial results for the quarter ended September 30, 2022. Copies of the press release and supplemental financial information are furnished to, but not filed with, the Securities and Exchange Commission (the "SEC") 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 results of operations and financial condition. 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 November 1, 2022
99.2						Supplemental financial information dated November 1, 2022
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, including without limitation, statements regarding the outlook of the Company and its segments, the expected timing of the consummation of the sale of our tax software business (the “TaxAct Sale”), the plan for the Company to change its name to Avantax, the anticipated business strategy and corporate focus of the Company following consummation of the TaxAct Sale and the intended use of proceeds from the sale. 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 “anticipates,” “believes,” “plans,” “expects,” “future,” “intends,” “may,” “will,” “would,” “could,” “should,” “estimates,” “predicts,” “potential,” “continues,” “target,” “outlook,” and similar terms and expressions, but the absence of these words does not mean that the statement is not forward-looking. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: our ability to effectively compete within our industries; our ability to generate strong performance for our clients and the impact of the financial markets on our clients’ portfolios; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; our ability to attract and retain financial professionals, employees, clients, and customers, as well as our ability to provide strong customer/client service; 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; 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, including those of the Financial Industry Regulatory Authority, Inc. and the SEC; risks associated with legal proceedings, including litigation and regulatory proceedings; 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 ability to retain employees and acquired client assets following acquisitions; any compromise of confidentiality, availability or integrity of information, including cyberattacks; 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 software industries; the impact of the continuing 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 government actions, and changes in customer behavior related to the foregoing; 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 ability to

respond to rapid technological changes, including our ability to successfully release new products and services or improve upon existing products and services; risks related to goodwill and acquired 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; the seasonality of our business; our assessments and estimates that determine our effective tax rate; our ability to protect our intellectual property and the impact of any claim that we infringed on the intellectual property rights of others; disruptions to our business and operations resulting from the TaxAct Sale agreement (or the announcement thereof); our inability to successfully close the TaxAct Sale; our failure to realize the expected benefits of the transaction if it does close; our inability to return capital to stockholders in the amount anticipated if we are unable to secure financing on desirable terms after the consummation of the TaxAct Sale; and the effects on our business of actions of activist stockholders. A more detailed description of these and certain other factors that could affect actual results is included in the Company’s most recent Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q filed with the SEC. 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 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, thereunto duly authorized.


			BLUCORA, INC.

			By			/s/ Marc Mehlman
						Marc Mehlman
						Chief Financial Officer

						November 1, 2022

Exhibit 99.1

Blucora Reports Third Quarter 2022 Results

DALLAS, TX — November 1, 2022 — Blucora, Inc. (NASDAQ: BCOR), a leading provider of technology-enabled, tax focused financial solutions, today announced financial results for the third quarter ended September 30, 2022.

Third Quarter Highlights and Recent Developments

•Avantax added newly recruited assets of $214 million during the third quarter for a total of approximately $1.3 billion during the first nine months of 2022. This exceeds full year 2021 newly recruited assets of $929 million.

•Avantax continued to deliver net positive asset flows with $380 million for the quarter and $810 million year to date.

•Blucora reported total revenue of $171.7 million, a decrease of 1% versus the third quarter of the prior year.

•Avantax ended the third quarter with total client assets of $72.6 billion and advisory assets of $35.4 billion, or 48.8% of total client assets.

•During the third quarter, Blucora paid down $35 million of its term loan balance and paid the final $23 million earn-out obligation related to the HKFS acquisition. The company ended the third quarter with $91.1 million in cash and cash equivalents.

Chris Walters, Blucora’s President and Chief Executive Officer commented, “Overall, Blucora has continued to perform well and execute on our growth strategy. I am pleased to announce that yesterday the company signed an agreement to sell our tax software business, TaxAct, to an affiliate of Cinven in an all-cash transaction that is expected to close by the end of the year. Cinven’s interest and offer further validate the extraordinary work our TaxAct team has done to grow the business by enhancing our products and customer care approach as well as the significant strides made acquiring customers via increasing the sophistication of our marketing efforts and scaling partnerships.”

Mr. Walters continued, “Following the closing, we will rebrand Blucora to Avantax and focus solely on executing our long-term, sustainable growth strategy for our tax-focused wealth business. This means aligning the company’s operations and enabling strategic investment in high-return initiatives to best support the needs of our financial professionals and CPA firms and their clients.”

TaxAct

Blucora today announced that an agreement has been entered into for the sale of TaxAct to an affiliate of Cinven for $720 million, subject to adjustment as set forth in the agreement, in an all-cash transaction. The net proceeds will be used to pay down existing indebtedness and return excess capital to shareholders. To view the announcement, you may go to the investor relations section of the Blucora website located at www.blucora.com/news-releases.

Summary Financial Performance: Q3 2022


($ in millions, except per share amounts)	Q3 2022		Q3 2021		Change
Revenue:
Wealth Management	$	165.0	$	169.1	(2.4)	%
Tax Software	6.7		5.0		34.0	%
Total Revenue	$	171.7	$	174.2	(1.4)	%
Segment Operating Income (Loss)
Wealth Management	$	27.6	$	19.6	40.8	%
Tax Software	(12.5)		(13.9)		10.1	%
Total Segment Operating Income	$	15.1	$	5.7	164.9	%
Unallocated Corporate-Level General and Administrative Expenses	$	(7.5)	$	(6.5)	(15.4)	%
GAAP:
Operating Loss	$	(13.8)	$	(20.3)	32.0	%
Net Loss	$	(21.8)	$	(27.8)	21.6	%
Net Loss per share — Diluted	$	(0.46)	$	(0.57)	19.3	%
Non-GAAP:
Adjusted EBITDA (1)	$	7.7	$	(0.8)	1062.5	%
Net Loss (1)	$	(9.8)	$	(12.8)	23.4	%
Net Loss per share — Diluted (1)	$	(0.20)	$	(0.26)	23.1	%

_________________________

Note: Totals may not foot due to rounding.

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

Full Year 2022 Outlook


($ in millions, except per share amounts)						Full Year 2022 Outlook
Wealth Management Revenue						$660.0 - $665.0
Tax Software Revenue						$249.0 - $250.0
Total Revenue						$909.0 - $915.0
Wealth Management Segment Operating Income						$93.0 - $95.0
Tax Software Segment Operating Income						$89.0 - $91.0
Unallocated Corporate-Level General and Administrative Expenses						$30.0 - $29.5
GAAP:
Net Income						$36.0 - $41.0
Net Income per share — Diluted						$0.73 - $0.83
Non-GAAP:
Adjusted EBITDA (1)						$152.0 - $156.5
Non-GAAP Net Income (1)						$86.0 - $90.5
Non-GAAP Net Income per share — Diluted (1)						$1.75 - $1.84

____________________________

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

Conference Call and Webcast

A conference call and live webcast will be held on Tuesday, November 1, 2022 at 8:30 a.m. Eastern Time during which the Company will further discuss third quarter results, its outlook for full year 2022, the TaxAct transaction and the Company’s strategic transformation. 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. A replay of the call will be available on our website.

About Blucora®

Blucora, Inc. (NASDAQ: BCOR) is a provider of data and technology-driven solutions that empower people to improve their financial wellness. Blucora operates in two segments (i) wealth management, through its Avantax Wealth Management and Avantax Planning Partners brands, with a collective $73 billion in total client assets as of

September 30, 2022 and (ii) tax software, through its TaxAct business, a market leader in tax software with over 3 million consumer users and approximately 21,000 professional users in 2022. 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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation, statements regarding the outlook of Blucora, Inc. (the “Company”) and its segments, the expected timing of the consummation of the sale of our tax software business (the “TaxAct Sale”), the plan for the Company to change its name to Avantax, the anticipated business strategy and corporate focus of the Company following consummation of the TaxAct Sale and the intended use of proceeds from the sale. 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 “anticipates,” “believes,” “plans,” “expects,” “future,” “intends,” “may,” “will,” “would,” “could,” “should,” “estimates,” “predicts,” “potential,” “continues,” “target,” “outlook,” and similar terms and expressions, but the absence of these words does not mean that the statement is not forward-looking. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: our ability to effectively compete within our industries; our ability to generate strong performance for our clients and the impact of the financial markets on our clients’ portfolios; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; our ability to attract and retain financial professionals, employees, clients, and customers, as well as our ability to provide strong customer/client service; 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; 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, including those of the Financial Industry Regulatory Authority, Inc. and the Securities and Exchange Commission (the “SEC”); risks associated with legal proceedings, including litigation and regulatory proceedings; 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 ability to retain employees and acquired client assets following acquisitions; any compromise of confidentiality, availability or integrity of information, including cyberattacks; 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 software industries; the impact of the continuing 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 government actions, and changes in customer behavior related to the foregoing; 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 ability to respond to rapid technological changes, including our ability to successfully release new products and services or improve upon existing products and services; risks related to goodwill and acquired 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; the seasonality of our business; our assessments and estimates that determine our effective tax rate; our ability to protect our intellectual property and the impact of any claim that we infringed on the intellectual property rights of others; disruptions to our business and operations resulting from the TaxAct Sale agreement (or the announcement thereof); our inability to successfully close the TaxAct Sale; our failure to realize the expected benefits of the transaction if it does close; our inability to return capital to stockholders in the amount anticipated if we are unable to secure financing on desirable terms after the consummation of the TaxAct Sale; and the effects on our business of actions of activist stockholders. A more detailed description of these and certain other factors that could affect actual results is included in the Company’s

most recent Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q filed with the SEC. 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 may be required by law.

BLUCORA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited) (In thousands, except per share amounts)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Revenue:
Wealth Management	$	165,032	$	169,135	$	494,104	$	486,021
Tax Software	6,664		5,039		242,028		220,848
Total revenue	171,696		174,174		736,132		706,869
Operating expenses:
Cost of revenue:
Wealth Management	105,301		120,641		338,819		343,174
Tax Software	3,879		2,323		20,178		12,330

Total cost of revenue	109,180		122,964		358,997		355,504
Engineering and technology	7,474		7,874		24,598		22,233
Sales and marketing	30,485		28,399		162,396		140,809
General and administrative	27,778		23,102		83,499		71,619
Acquisition and integration	416		2,241		(4,710)		28,513
Depreciation	3,839		2,867		9,907		8,371
Amortization of acquired intangible assets	6,342		7,009		19,435		21,247

Total operating expenses	185,514		194,456		654,122		648,296
Operating income (loss)	(13,818)		(20,282)		82,010		58,573
Interest expense and other, net (1)	(9,749)		(8,295)		(25,707)		(24,202)
Income (loss) before income taxes	(23,567)		(28,577)		56,303		34,371
Income tax benefit (expense)	1,726		774		(4,099)		(2,920)
Net income (loss)	$	(21,841)	$	(27,803)	$	52,204	$	31,451

Net income (loss) per share:
Basic	$	(0.46)	$	(0.57)	$	1.09	$	0.65
Diluted	$	(0.46)	$	(0.57)	$	1.06	$	0.64
Weighted average shares outstanding:
Basic	47,847		48,707		47,981		48,492
Diluted	47,847		48,707		49,153		49,373

_________________________

(1)Interest expense and other, net consisted of the following (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Interest expense	$	8,771	$	7,304	$	23,166	$	21,789
Amortization of debt issuance costs	403		388		1,191		1,128
Amortization of debt discount	302		290		893		851
Total interest expense	9,476		7,982		25,250		23,768



Interest income and other	273		313		457		434
Interest expense and other, net	$	9,749	$	8,295	$	25,707	$	24,202

BLUCORA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)


	September 30, 2022		December 31, 2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	91,104	$	134,824

Accounts receivable, net	25,683		21,906
Commissions and advisory fees receivable	20,486		25,073

Prepaid expenses and other current assets	19,670		18,476
Total current assets	156,943		200,279
Long-term assets:
Property, equipment, and software, net	75,086		73,638
Right-of-use assets, net	19,753		20,466
Goodwill, net	454,821		454,821
Acquired intangible assets, net	288,610		302,289

Other long-term assets	30,376		20,450
Total long-term assets	868,646		871,664
Total assets	$	1,025,589	$	1,071,943
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,804	$	8,216
Commissions and advisory fees payable	13,803		17,940
Accrued expenses and other current liabilities	33,948		65,678
Current deferred revenue	5,908		13,180
Current lease liabilities	5,112		4,896
Current portion of long-term debt	—		1,812
Total current liabilities	62,575		111,722
Long-term liabilities:
Long-term debt, net	521,094		553,134
Long-term lease liabilities	31,176		33,267
Deferred tax liabilities, net	19,546		20,124
Long-term deferred revenue	4,627		5,322
Other long-term liabilities	14,981		6,752
Total long-term liabilities	591,424		618,599
Total liabilities	653,999		730,321



Stockholders’ equity:
Common stock, par value $0.0001 per share—900,000 authorized shares; 50,955 shares issued and 47,774 shares outstanding as of September 30, 2022; 50,137 shares issued and 48,831 shares outstanding as of December 31, 2021	5		5
Additional paid-in capital	1,632,569		1,619,805
Accumulated deficit	(1,197,585)		(1,249,789)

Treasury stock, at cost—3,181 shares at September 30, 2022 and 1,306 shares at December 31, 2021	(63,399)		(28,399)
Total stockholders’ equity	371,590		341,622
Total liabilities and stockholders’ equity	$	1,025,589	$	1,071,943

BLUCORA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (In thousands)


	Nine Months Ended September 30,
	2022		2021
Operating activities:
Net income	$	52,204	$	31,451
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of acquired intangible assets	35,131		32,498
Stock-based compensation	17,129		15,499


Change in the fair value of acquisition-related contingent consideration	(5,320)		19,500
Reduction of right-of-use lease assets	1,103		2,694
Deferred income taxes	(578)		(1,161)
Amortization of debt discount and issuance costs	2,084		1,979


Accretion of lease liabilities	1,522		731
Other non-cash items	4,387		1,371
Changes in operating assets and liabilities, net of acquisitions and disposals:

Accounts receivable, net	(3,670)		(5,008)
Commissions and advisory fees receivable	4,587		1,129

Prepaid expenses and other current assets	160		(549)
Other long-term assets	(14,887)		(10,898)
Accounts payable	(4,412)		(358)
Commissions and advisory fees payable	(4,137)		(500)
Lease liabilities	(3,788)		(1,047)
Deferred revenue	(7,967)		(7,523)
Accrued expenses and other current and long-term liabilities	(11,632)		(5,417)
Net cash provided by operating activities	61,916		74,391
Investing activities:
Purchases of property, equipment, and software	(17,154)		(21,624)


Asset acquisitions	(3,743)		(3,823)

Net cash used by investing activities	(20,897)		(25,447)
Financing activities:
Proceeds from credit facilities, net of debt discount and issuance costs	—		(502)
Payments on credit facilities	(35,906)		(1,359)
Acquisition-related contingent consideration payments	(14,548)		(13,150)
Stock repurchases	(35,000)		—





Proceeds from issuance of stock through employee stock purchase plan	2,324		1,845
Tax payments from shares withheld for equity awards	(2,090)		(1,613)
Proceeds from stock option exercises	481		535
Net cash used by financing activities	(84,739)		(14,244)








Net increase (decrease) in cash, cash equivalents, and restricted cash	(43,720)		34,700
Cash, cash equivalents, and restricted cash, beginning of period	134,824		150,762
Cash, cash equivalents, and restricted cash, end of period	$	91,104	$	185,462

Supplemental cash flow information:

Cash paid for income taxes	$	2,408	$	2,864
Cash paid for interest	$	23,005	$	21,626

BLUCORA, INC.

Segment Information and Revenue

(Unaudited) (In thousands)

Information on reportable segments currently presented to our Chief Executive Officer (our chief operating decision maker) and a reconciliation to consolidated net income (loss) are presented below:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Revenue:
Wealth Management	$	165,032	$	169,135	$	494,104	$	486,021
Tax Software	6,664		5,039		242,028		220,848
Total revenue	171,696		174,174		736,132		706,869
Operating income (loss):
Wealth Management	27,626		19,564		59,920		60,356
Tax Software	(12,517)		(13,864)		99,372		100,472
Corporate-level activity	(28,927)		(25,982)		(77,282)		(102,255)
Total operating income (loss)	(13,818)		(20,282)		82,010		58,573
Interest expense and other, net	(9,749)		(8,295)		(25,707)		(24,202)
Income (loss) before income taxes	(23,567)		(28,577)		56,303		34,371
Income tax benefit (expense)	1,726		774		(4,099)		(2,920)
Net income (loss)	$	(21,841)	$	(27,803)	$	52,204	$	31,451

Revenues by major category within each segment are presented below:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Wealth Management:
Advisory	$	95,070	$	103,540	$	306,394	$	291,167
Commission	41,788		52,961		132,278		157,197
Asset-based	21,147		5,659		33,774		16,514
Transaction and fee	7,027		6,975		21,658		21,143
Total Wealth Management revenue	$	165,032	$	169,135	$	494,104	$	486,021
Tax Software:
Consumer	$	5,974	$	4,479	$	222,262	$	203,891
Professional	690		560		19,766		16,957
Total Tax Software revenue	$	6,664	$	5,039	$	242,028	$	220,848

Corporate-level activity included the following:


	Three Months Ended					Nine Months Ended
	September 30,				September 30,
	2022		2021			2022		2021
Unallocated corporate-level general and administrative expenses	$	7,456	$	6,499		$	22,428	$	18,452
Stock-based compensation	5,706		4,729			17,129		15,499
Acquisition and integration	416		2,241			(4,710)		28,513
Depreciation	6,020		3,906			15,696		11,251
Amortization of acquired intangible assets	6,342		7,009			19,435		21,247
Contested proxy, transaction and other legal and consulting costs	2,987		1,598			7,304		7,293



Total corporate-level activity	$	28,927	$	25,982		$	77,282	$	102,255

BLUCORA, INC.

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

(Unaudited) (In thousands, except per share amounts)

Adjusted EBITDA Reconciliation (1)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net income (loss) (2)	$	(21,841)	$	(27,803)	$	52,204	$	31,451
Stock-based compensation	5,706		4,729		17,129		15,499
Depreciation and amortization of acquired intangible assets	12,362		10,915		35,131		32,498
Interest expense and other, net	9,749		8,295		25,707		24,202
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration	416		541		610		9,013
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration	—		1,700		(5,320)		19,500
Contested proxy, transaction and other legal and consulting costs	2,987		1,598		7,304		7,293



Income tax (benefit) expense	(1,726)		(774)		4,099		2,920
Adjusted EBITDA (1)	$	7,653	$	(799)	$	136,864	$	142,376

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net income (loss) (2)	$	(21,841)	$	(27,803)	$	52,204	$	31,451
Stock-based compensation	5,706		4,729		17,129		15,499
Amortization of acquired intangible assets	6,342		7,009		19,435		21,247
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration	416		541		610		9,013
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration	—		1,700		(5,320)		19,500
Contested proxy, transaction and other legal and consulting costs	2,987		1,598		7,304		7,293





Cash tax impact of adjustments to GAAP net income (loss)	(319)		(331)		(1,631)		(1,523)
Non-cash income tax (benefit) expense	(3,071)		(197)		1,090		(1,160)
Non-GAAP Net Income (Loss) (1)	$	(9,780)	$	(12,754)	$	90,821	$	101,320
Per diluted share:
Net income (loss) (2) (4)	$	(0.46)	$	(0.57)	$	1.06	$	0.64
Stock-based compensation	0.12		0.10		0.35		0.31
Amortization of acquired intangible assets	0.14		0.14		0.40		0.43
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration	0.01		0.01		0.01		0.18
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration	—		0.03		(0.11)		0.39
Contested proxy, transaction and other legal and consulting costs	0.06		0.04		0.15		0.15





Cash tax impact of adjustments to GAAP net income (loss)	(0.01)		(0.01)		(0.03)		(0.03)
Non-cash income tax (benefit) expense	(0.06)		—		0.02		(0.02)
Non-GAAP Net Income (Loss) per share — Diluted (1)	$	(0.20)	$	(0.26)	$	1.85	$	2.05
Diluted weighted average shares outstanding	47,847		48,707		49,153		49,373

BLUCORA, INC.

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

(Unaudited) (In thousands, except per share amounts)

Adjusted EBITDA Reconciliation for Forward-Looking Guidance (1)


	Ranges for year ending
	December 31, 2022
		Low		High
Net income		$	36,000	$	41,000
Stock-based compensation		23,000		23,000
Depreciation and amortization of acquired intangible assets		48,500		48,500
Interest expense and other, net		37,000		37,000
Acquisition, integration, and contested proxy, transaction and other legal and consulting costs (3)		4,000		3,500
Income tax expense		3,500		3,500
Adjusted EBITDA (1)		$	152,000	$	156,500

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

for Forward-Looking Guidance (1)


	Ranges for year ending
	December 31, 2022
		Low		High
Net income		$	36,000	$	41,000
Stock-based compensation		23,000		23,000
Amortization of acquired intangible assets		25,500		25,500
Acquisition, integration, and contested proxy, transaction and other legal and consulting costs (3)		4,000		3,500
Cash tax impact of adjustments to net income		(2,000)		(2,000)
Non-cash income tax (benefit) expense		(500)		(500)
Non-GAAP Net Income (1)		$	86,000	$	90,500
Per diluted share:
Net income		$	0.73	$	0.83
Stock-based compensation		0.47		0.47
Amortization of acquired intangible assets		0.52		0.52
Acquisition, integration, and contested proxy, transaction and other legal and consulting costs (3)		0.08		0.07
Cash tax impact of adjustments to net income		(0.04)		(0.04)
Non-cash income tax (benefit) expense		(0.01)		(0.01)
Non-GAAP Net Income per share — Diluted (1)		$	1.75	$	1.84
Diluted weighted average shares outstanding		49,120		49,120

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

(1)We define Adjusted EBITDA as net income (loss), determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation and amortization of acquired intangible assets, interest expense and other, net, acquisition and integration costs, contested proxy, transaction and other legal and consulting costs, and income tax (benefit) expense. Interest expense and other, net primarily consists of interest expense, net. Acquisition and integration costs primarily relate to the acquisitions of Avantax Planning Partners and 1st Global.

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), determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets, acquisition and integration costs, contested proxy, transaction and other legal and consulting costs, 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 not utilized, between 2022 and 2024.

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 that 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 Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) per share differently, and, therefore, these measures may not be comparable to similarly titled measures of other companies.

(2)As presented in the condensed consolidated statements of operations (unaudited).

(3)The breakout of components cannot be determined on a forward-looking basis without unreasonable efforts.

(4)Any difference in the “per diluted share” amounts between this table and the condensed consolidated statements of operations is due to using different diluted weighted average shares outstanding in the event that there is GAAP net loss but Non-GAAP Net Income and vice versa.

Exhibit 99.2

Blucora, Inc.

Supplemental Information

September 30, 2022

Table of Contents


			Page
Consolidated Financial Information:
Condensed Consolidated Statements of Operations (Unaudited)			2
Condensed Consolidated Financial Results (Unaudited)			3
Reconciliation of Certain Non-GAAP Financial Measures to the Nearest Comparable GAAP Financial Measures			4
Net Leverage Ratio			6
Reconciliation of Operating Free Cash Flow			7

Segment Operating Metrics:
Wealth Management			8
Tax Software			10

Blucora Condensed Consolidated Statements of Operations


(Unaudited, in thousands, except per share amounts. Rounding differences may exist.)	2020		2021										2022
	FY 12/31		1Q		2Q		3Q		4Q		FY 12/31		1Q		2Q		3Q
Revenue:
Wealth Management	$	546,189	$	154,491	$	162,395	$	169,135	$	172,192	$	658,213	$	166,403	$	162,669	$	165,032
Tax Software	208,763		123,892		91,917		5,039		6,139		226,987		141,150		94,214		6,664
Total revenue	754,952		278,383		254,312		174,174		178,331		885,200		307,553		256,883		171,696
Operating expenses:
Cost of revenue:
Wealth Management	385,962		108,623		113,910		120,641		121,119		464,293		119,874		113,644		105,301
Tax Software	12,328		5,578		4,429		2,323		3,228		15,558		9,426		6,873		3,879

Total cost of revenue	398,290		114,201		118,339		122,964		124,347		479,851		129,300		120,517		109,180
Engineering and technology	27,258		7,128		7,231		7,874		8,471		30,704		8,504		8,620		7,474
Sales and marketing	177,618		77,562		34,848		28,399		32,522		173,331		84,403		47,508		30,485
General and administrative	82,158		24,685		23,832		23,102		27,052		98,671		29,075		26,646		27,778
Acquisition and integration	31,085		8,103		18,169		2,241		4,285		32,798		1,666		(6,792)		416
Depreciation	7,293		2,300		3,204		2,867		2,535		10,906		2,931		3,137		3,839
Amortization of acquired intangible assets	29,745		7,175		7,063		7,009		7,073		28,320		6,631		6,462		6,342
Impairment of goodwill (1)	270,625		—		—		—		—		—		—		—		—

Total operating expenses	1,024,072		241,154		212,686		194,456		206,285		854,581		262,510		206,098		185,514
Operating income (loss)	(269,120)		37,229		41,626		(20,282)		(27,954)		30,619		45,043		50,785		(13,818)
Interest expense and other, net	(31,304)		(7,883)		(8,024)		(8,295)		(7,878)		(32,080)		(7,841)		(8,117)		(9,749)
Income (loss) before income taxes	(300,424)		29,346		33,602		(28,577)		(35,832)		(1,461)		37,202		42,668		(23,567)
Income tax benefit (expense)	(42,331)		(1,700)		(1,994)		774		12,138		9,218		(2,582)		(3,243)		1,726

Net income (loss)	$	(342,755)	$	27,646	$	31,608	$	(27,803)	$	(23,694)	$	7,757	$	34,620	$	39,425	$	(21,841)

Net income (loss) per share:
Basic	$	(7.14)	$	0.57	$	0.65	$	(0.57)	$	(0.49)	$	0.16	$	0.71	$	0.83	$	(0.46)
Diluted	$	(7.14)	$	0.56	$	0.64	$	(0.57)	$	(0.49)	$	0.16	$	0.70	$	0.81	$	(0.46)
Weighted average shares outstanding:
Basic	47,978		48,261		48,508		48,707		48,834		48,578		48,513		47,582		47,847
Diluted	47,978		49,097		49,385		48,707		48,834		49,526		49,747		48,690		47,847

____________________________

(1)In 2020, we recognized a $270.6 million goodwill impairment related to our Wealth Management reporting unit.

Blucora Condensed Consolidated Financial Results


(Unaudited, in thousands, except % and per share amounts. Rounding differences may exist.)	2020				2021																				2022
	FY 12/31				1Q				2Q				3Q				4Q				FY 12/31				1Q				2Q				3Q
GAAP Financial Results:
Segment revenue:
Wealth Management	$	546,189			$	154,491			$	162,395			$	169,135			$	172,192			$	658,213			$	166,403			$	162,669			$	165,032
Tax Software (1)	208,763				123,892				91,917				5,039				6,139				226,987				141,150				94,214				6,664
Total revenue	$	754,952			$	278,383			$	254,312			$	174,174			$	178,331			$	885,200			$	307,553			$	256,883			$	171,696

Segment operating income: (2)
Wealth Management	$	72,195			$	19,396			$	21,396			$	19,564			$	21,856			$	82,212			$	16,421			$	15,873			$	27,626
Tax Software (1)	49,621				50,888				63,448				(13,864)				(18,593)				81,879				58,030				53,859				(12,517)
Total segment operating income	$	121,816			$	70,284			$	84,844			$	5,700			$	3,263			$	164,091			$	74,451			$	69,732			$	15,109

Segment operating income as a % of segment revenue:
Wealth Management	13.2		%		12.6		%		13.2		%		11.6		%		12.7		%		12.5		%		9.9		%		9.8		%		16.7		%
Tax Software (1)	23.8		%		41.1		%		69.0		%		(275.1)		%		(302.9)		%		36.1		%		41.1		%		57.2		%		(187.8)		%
Total segment operating income as a % of segment revenue	16.1		%		25.2		%		33.4		%		3.3		%		1.8		%		18.5		%		24.2		%		27.1		%		8.8		%

Unallocated corporate-level general and administrative expenses (2)	$	26,689			$	5,694			$	6,259			$	6,499			$	7,103			$	25,555			$	7,292			$	7,680			$	7,456

GAAP Net Income (Loss)	$	(342,755)			$	27,646			$	31,608			$	(27,803)			$	(23,694)			$	7,757			$	34,620			$	39,425			$	(21,841)
GAAP Net Income (Loss) per share — Diluted	$	(7.14)			$	0.56			$	0.64			$	(0.57)			$	(0.49)			$	0.16			$	0.70			$	0.81			$	(0.46)

Non-GAAP Financial Results: (3)
Adjusted EBITDA (3)	$	95,127			$	64,590			$	78,585			$	(799)			$	(3,840)			$	138,536			$	67,159			$	62,052			$	7,653
Non-GAAP Net Income (Loss) (3)	$	54,080			$	50,952			$	63,122			$	(12,754)			$	(14,131)			$	87,189			$	52,609			$	47,992			$	(9,780)
Non-GAAP Net Income (Loss) per share — Diluted (3)	$	1.12			$	1.04			$	1.28			$	(0.26)			$	(0.29)			$	1.76			$	1.06			$	0.99			$	(0.20)

Net Leverage Ratio (3)	4.3			x	3.5			x	1.9			x	2.6			x	3.1			x	3.1			x	3.0			x	3.1			x	3.3			x
Operating Free Cash Flow (3)	$	8,077			$	45,124			$	38,603			$	(30,960)			$	(46,212)			$	6,555			$	42,612			$	31,261			$	(29,111)

____________________________

(1)Our Tax Software segment is highly seasonal with a significant portion of its annual revenue typically earned in the first two quarters of the fiscal year. In March 2020 and as a result of the COVID-19 pandemic, the Internal Revenue Service (“IRS”) 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 Software segment revenue that is usually earned in the first and second quarters to the third quarter of 2020. As a result of the continued impact of the COVID-19 pandemic, including disruptions associated with the distribution of the second and third rounds of Economic Impact Payments, the IRS delayed the start of the 2021 tax season and extended the filing and payment deadline for tax year 2020 federal tax returns from April 15, 2021 to May 17, 2021. In addition, the IRS extended the federal filing and payment deadline for Texas, Louisiana, and Oklahoma to June 15, 2021. Beyond federal filings, the majority of states also extended their filing and payment deadlines for tax year 2020 state tax returns. This extension resulted in the shifting of a significant portion of Tax Software segment revenue that is usually earned in the first quarter to the second quarter of 2021.

(2)We do not allocate certain operating expenses (including personnel and overhead costs), stock-based compensation, acquisition and integration costs, depreciation, amortization of acquired intangible assets, executive transition costs, headquarters relocation costs, contested proxy, transaction and other legal and consulting costs, impairment of goodwill, interest expense and other, net, or income taxes to the reportable segments. General and administrative costs are included in "Unallocated corporate-level expenses."

(3)Refer to the subsequent pages for reconciliations of these non-GAAP financial measures to their nearest comparable GAAP financial measures.

Blucora Reconciliation of Certain Non-GAAP Financial Measures to the Nearest Comparable GAAP Financial Measures (1) (2)


	2020		2021										2022
(Unaudited, in thousands except per share amounts. Rounding differences may exist.)	FY 12/31		1Q		2Q		3Q		4Q		FY 12/31		1Q		2Q		3Q
Adjusted EBITDA (1)
Net income (loss) (2)	$	(342,755)	$	27,646	$	31,608	$	(27,803)	$	(23,694)	$	7,757	$	34,620	$	39,425	$	(21,841)
Stock-based compensation	10,066		5,610		5,160		4,729		5,255		20,754		6,225		5,198		5,706
Depreciation and amortization of acquired intangible assets	39,907		10,418		11,165		10,915		10,928		43,426		11,305		11,464		12,362
Interest expense and other, net	31,304		7,883		8,024		8,295		7,878		32,080		7,841		8,117		9,749
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration	22,785		1,803		6,669		541		1,385		10,398		(34)		228		416
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration	8,300		6,300		11,500		1,700		2,900		22,400		1,700		(7,020)		—
Executive transition costs	10,701		—		—		—		—		—		—		—		—
Headquarters relocation costs	1,863		—		—		—		—		—		—		—		—
Contested proxy, transaction and other legal and consulting costs	—		3,230		2,465		1,598		3,646		10,939		2,920		1,397		2,987


Impairment of goodwill	270,625		—		—		—		—		—		—		—		—
Income tax (benefit) expense	42,331		1,700		1,994		(774)		(12,138)		(9,218)		2,582		3,243		(1,726)
Adjusted EBITDA(1)	$	95,127	$	64,590	$	78,585	$	(799)	$	(3,840)	$	138,536	$	67,159	$	62,052	$	7,653
Non-GAAP Net Income (Loss) (1)
Net income (loss) (2)	$	(342,755)	$	27,646	$	31,608	$	(27,803)	$	(23,694)	$	7,757	$	34,620	$	39,425	$	(21,841)
Stock-based compensation	10,066		5,610		5,160		4,729		5,255		20,754		6,225		5,198		5,706
Amortization of acquired intangible assets	29,745		7,175		7,063		7,009		7,073		28,320		6,631		6,462		6,342
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration	22,785		1,803		6,669		541		1,385		10,398		(34)		228		416
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration	8,300		6,300		11,500		1,700		2,900		22,400		1,700		(7,020)		—
Executive transition costs	10,701		—		—		—		—		—		—		—		—
Headquarters relocation costs	1,863		—		—		—		—		—		—		—		—
Contested proxy, transaction and other legal and consulting costs	—		3,230		2,465		1,598		3,646		10,939		2,920		1,397		2,987
Non-capitalized debt issuance expenses	3,687		—		—		—		—		—		—		—		—


Impairment of goodwill	270,625		—		—		—		—		—		—		—		—
Gain on the sale of a business	(349)		—		—		—		—		—		—		—		—
Cash tax impact of adjustments to GAAP net income (loss)	(1,647)		(543)		(649)		(331)		(351)		(1,874)		(959)		(353)		(319)
Non-cash income tax (benefit) expense	41,059		(269)		(694)		(197)		(10,345)		(11,505)		1,506		2,655		(3,071)
Non-GAAP Net Income (Loss) (1)	$	54,080	$	50,952	$	63,122	$	(12,754)	$	(14,131)	$	87,189	$	52,609	$	47,992	$	(9,780)

Non-GAAP Net Income (Loss) per share — Diluted (1) (3)	$	1.12	$	1.04	$	1.28	$	(0.26)	$	(0.29)	$	1.76	$	1.06	$	0.99	$	(0.20)
Diluted weighted average shares outstanding (3)	48,244		49,097		49,385		48,707		48,834		49,526		49,747		48,690		47,847

Notes to Reconciliations of Certain Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures on next page.

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

(1) We define Adjusted EBITDA as net income (loss), determined in accordance with GAAP, excluding (if applicable) the effects of stock-based compensation, depreciation and amortization of acquired intangible assets, interest expense and other, net, acquisition and integration costs, executive transition costs, headquarters relocation costs, contested proxy, transaction and other legal and consulting costs, impairment of goodwill, and income tax (benefit) expense. Interest expense and other, net primarily consists of interest expense, net, and non-capitalized debt issuance expenses. Acquisition and integration costs primarily relate to the acquisitions of Avantax Planning Partners and 1st Global. Impairment of goodwill relates to the impairment of our Wealth Management reporting unit goodwill 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 Dallas, TX and Irving, TX offices to our new headquarters.

We define Non-GAAP Net Income (Loss) as net income (loss), determined in accordance with GAAP, excluding (if applicable) the effects of stock-based compensation, amortization of acquired intangible assets, acquisition and integration costs, executive transition costs, headquarters relocation costs, contested proxy, transaction and other legal and consulting costs, non-capitalized debt issuance expenses, impairment of goodwill, gain on the sale of a business, 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 not utilized, between 2022 and 2024. Gain on the sale of a business relates to the disposition of SimpleTax in 2019 and the subsequent working capital adjustment in the third quarter of 2020. Non-capitalized debt issuance expenses relate to the expense recognized as a result of the Term Loan increase in the third quarter of 2020.

(2) See the Condensed Consolidated Statements of Operations on page 2.

(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, diluted weighted average shares outstanding is the same as basic weighted average shares outstanding.

Blucora Reconciliation of Trailing Twelve Month ("TTM") Adjusted EBITDA (1) (2)


	2020		2021								2022
(Unaudited, in thousands. Rounding differences may exist.)	TTM 4Q		TTM 1Q		TTM 2Q		TTM 3Q		TTM 4Q		TTM 1Q		TTM 2Q		TTM 3Q
Adjusted EBITDA (1) (2)
Net income (loss)	$	(342,755)	$	385	$	(17,652)	$	(19,249)	$	7,757	$	14,731	$	22,548	$	28,510
Stock-based compensation	10,066		16,877		18,133		18,345		20,754		21,369		21,407		22,384
Depreciation and amortization of acquired intangible assets	39,907		40,157		42,237		42,786		43,426		44,313		44,612		46,059
Interest expense and other, net	31,304		33,052		35,788		32,120		32,080		32,038		32,131		33,585
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration	22,785		18,906		22,751		12,016		10,398		8,561		2,120		1,995
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration	8,300		14,600		26,100		28,800		22,400		17,800		(720)		(2,420)
Executive transition costs	10,701		1,517		881		476		—		—		—		—
Headquarter relocation costs	1,863		1,147		410		—		—		—		—		—
Contested proxy, transaction and other legal and consulting costs	—		3,230		5,695		7,293		10,939		10,629		9,561		10,950

Impairment of goodwill and an intangible asset	270,625		—		—		—		—		—		—		—
Income tax (benefit) expense	42,331		(23,489)		38,044		22,014		(9,218)		(8,336)		(7,087)		(8,039)
Adjusted EBITDA(1) (2)	$	95,127	$	106,382	$	172,387	$	144,601	$	138,536	$	141,105	$	124,572	$	133,024

Blucora Net Leverage Ratio (1) (3) (4)


(Unaudited, in thousands except Net Leverage Ratio. Rounding differences may exist.)	2020			2021												2022
	4Q			1Q			2Q			3Q			4Q			1Q			2Q			3Q
Net Debt (3)
Senior Secured Credit Facility	$	563,156		$	562,703		$	562,250		$	561,797		$	561,344		$	560,891		$	560,438		$	525,438
Less: Cash and cash equivalents	150,125			191,803			232,409			184,926			134,824			144,222			171,297			91,104
Net Debt (3)	$	413,031		$	370,900		$	329,841		$	376,871		$	426,520		$	416,669		$	389,141		$	434,334






Adjusted EBITDA (1) (2)	$	95,127		$	106,382		$	172,387		$	144,601		$	138,536		$	141,105		$	124,572		$	133,024

Net Leverage Ratio (1) (3) (4)	4.3		x	3.5		x	1.9		x	2.6		x	3.1		x	3.0		x	3.1		x	3.3		x

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(1) Non-GAAP measure using Adjusted EBITDA for the trailing twelve-month period. Adjusted EBITDA for the trailing twelve-month period is reconciled to the nearest comparable GAAP measure, net income (loss).

(2) For additional information on Adjusted EBITDA and its use as a non-GAAP measure, see page 5.

(3) We define Net Debt, a non-GAAP financial measure, as the outstanding principal of debt less cash and cash equivalents. We believe 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.

(4) Net Leverage Ratio is calculated by dividing Net Debt by Adjusted EBITDA for the trailing twelve-month period.

Blucora Reconciliation of Operating Free Cash Flow (1)


	2020		2021										2022
(Unaudited, in thousands. Rounding differences may exist.)	FY 12/31		1Q		2Q		3Q		4Q		FY 12/31		1Q		2Q		3Q
Net cash provided by (used in) operating activities	$	44,079	$	53,722	$	43,549	$	(22,880)	$	(37,560)	$	36,831	$	47,343	$	38,320	$	(23,747)
Purchases of property, equipment, and software	(36,002)		(8,598)		(4,946)		(8,080)		(8,652)		(30,276)		(4,731)		(7,059)		(5,364)
Operating Free Cash Flow (1)	$	8,077	$	45,124	$	38,603	$	(30,960)	$	(46,212)	$	6,555	$	42,612	$	31,261	$	(29,111)

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

Wealth Management Operating Metrics


	2020			2021															2022
(In thousands, except percentages. Rounding differences may exist.)	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q			2Q			3Q
Segment revenue	$	546,189		$	154,491		$	162,395		$	169,135		$	172,192		$	658,213		$	166,403		$	162,669		$	165,032
Less: Financial professional commission payout	(379,543)			(106,855)			(111,708)			(118,231)			(118,560)			(455,354)			(116,704)			(110,958)			(102,760)
Revenue Not Remitted to Financial Professionals (1)	$	166,646		$	47,636		$	50,687		$	50,904		$	53,632		$	202,859		$	49,699		$	51,711		$	62,272

Payout Rate (2)	75.9		%	74.4		%	75.4		%	75.5		%	75.0		%	75.1		%	75.4		%	75.5		%	75.1		%

Segment operating income (3)	$	72,195		$	19,396		$	21,396		$	19,564		$	21,856		$	82,212		$	16,421		$	15,873		$	27,626
Segment operating income as a % of revenue	13.2		%	12.6		%	13.2		%	11.6		%	12.7		%	12.5		%	9.9		%	9.8		%	16.7		%
Segment operating income as a % of Revenue Not Remitted to Financial Professionals	43.3		%	40.7		%	42.2		%	38.4		%	40.8		%	40.5		%	33.0		%	30.7		%	44.4		%


(In thousands, except percentages. Rounding differences may exist.)			2020			2021															2022
	Sources of Revenue	Primary Drivers	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q			2Q			3Q
Financial professional-driven	Advisory	- Advisory asset levels	$	314,751		$	91,119		$	96,508		$	103,540		$	104,633		$	395,800		$	107,169		$	104,155		$	95,070
	Commission	- Transactions - Asset levels - Product mix	185,201			52,534			51,702			52,961			53,480			210,677			47,655			42,835			41,788
Other revenue	Asset-based	- Cash balances - Interest rates - Number of accounts - Client asset levels	23,688			5,329			5,526			5,659			5,587			22,101			5,663			6,964			21,147
	Transaction and fee	- Account activity - Number of clients - Number of financial professionals - Number of accounts	22,549			5,509			8,659			6,975			8,492			29,635			5,916			8,715			7,027
	Total revenue		$	546,189		$	154,491		$	162,395		$	169,135		$	172,192		$	658,213		$	166,403		$	162,669		$	165,032
	Total recurring revenue (4)		$	464,944		$	130,755		$	138,900		$	145,311		$	144,728		$	559,694		$	143,737		$	141,935		$	144,512
	Recurring revenue rate (4)		85.1		%	84.6		%	85.5		%	85.9		%	84.1		%	85.0		%	86.4		%	87.3		%	87.6		%

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(1) We define Revenue Not Remitted to Financial Professionals, a non-GAAP financial measure, as GAAP segment revenue less financial professional commission payout. Financial professional commission payout represents commissions owed to financial professionals based on their advisory and commission revenues generated during the respective period. Financial professional commission payout does not include charges associated with financial professional stock-based compensation or the amortization of financial professional forgivable loans. We believe that the presentation of this non-GAAP financial measure provides useful information to investors because it reflects the portion of our segment revenue that is not remitted to financial professionals in the form of cash. We and investors utilize this non-GAAP financial measure when evaluating our performance relative to total client assets.

(2) We define Payout Rate as financial professional commission payout as a percentage of financial professional-driven revenue from the tables above.

(3) We do not allocate certain operating expenses (including personnel and overhead costs), stock-based compensation, acquisition and integration costs, depreciation, amortization of acquired intangible assets, executive transition costs, headquarters relocation costs, contested proxy, transaction and other legal and consulting costs, impairment of goodwill, interest expense and other, net, or income taxes to the reportable segments.

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

Wealth Management Operating Metrics (continued)


(In thousands, except percentages. Rounding differences may exist.)	2020			2021															2022
	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q			2Q			3Q
Total client assets (1)	$	82,961,244		$	84,776,191		$	87,814,790		$	86,647,743		$	89,086,032		$	89,086,032		$	86,144,055		$	76,522,066		$	72,592,882
Brokerage assets (1)	$	47,357,687		$	48,001,320		$	48,373,805		$	46,850,354		$	46,906,981		$	46,906,981		$	45,222,763		$	39,776,018		$	37,150,327
Advisory assets (1)	$	35,603,557		$	36,774,871		$	39,440,985		$	39,797,389		$	42,179,051		$	42,179,051		$	40,921,292		$	36,746,048		$	35,442,555
% of total client assets (1)	42.9		%	43.4		%	44.9		%	45.9		%	47.3		%	47.3		%	47.5		%	48.0		%	48.8		%
Number of financial professionals (in ones)	3,770			3,718			3,606			3,529			3,416			3,416			3,409			3,349			3,347
Advisory and commission revenue per financial professional (2)	$	132.6		$	38.6		$	41.1		$	44.3		$	46.3		$	177.5		$	45.4		$	43.9		$	40.9

Quarterly Production Retention Rate: (3)
TTM Financial professional-driven revenue (4)	$	499,952		$	514,268		$	556,339		$	585,307		$	606,477		$	606,477		$	617,648		$	616,428		$	596,785
TTM Financial professional-driven revenue related to independent financial professionals who departed in the quarter (4)	19,101			8,127			9,881			12,157			11,079			11,079			2,201			3,836			8,356
TTM Financial professional-driven revenue, less that related to independent financial professionals who departed in the quarter (4)	$	480,851		$	506,141		$	546,458		$	573,150		$	595,398		$	595,398		$	615,447		$	612,592		$	588,429
Quarterly Production Retention Rate (3)	96.2		%	98.4		%	98.2		%	97.9		%	98.2		%	98.2		%	99.6		%	99.4		%	98.6		%

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(1) In connection with our ongoing integration of acquisitions, as of December 31, 2021, we refined the methodology by which we calculate client assets to align the methodologies within our Wealth Management segment for calculating such metrics. Specifically, such changes to the methodology include alignment to one third party data aggregator for assets not placed in custody with our clearing firm and to one consistent set of logic for all assets and transaction types. We have not recast client assets for prior periods to conform to our current presentation as we believe the changes to the calculation to be immaterial.

(2) Calculations are based on the ending number of financial professionals and advisory and commission revenue for each respective period.

(3) Quarterly Production Retention Rate is a non-GAAP financial measure. We believe Quarterly Production Retention Rate is an important measure of our quarterly retention of financial professional-driven revenue (which consists of advisory revenue and commission revenue). We use Quarterly Production Retention Rate to measure the impact of financial professional departures on our business. Quarterly Production Retention Rate is calculated by dividing (x) the difference of (i) total financial professional-driven revenue for the trailing twelve-month period then ended minus (ii) financial professional-driven revenue for the trailing twelve-month period then ended related to independent financial professionals that departed in the quarter by (y) total financial professional-driven revenue for the trailing twelve-month period then ended. As Quarterly Production Retention Rate is a measure of retention during a quarter, it also includes quarterly production from independent financial professionals who departed in prior quarters in the trailing twelve-month period, and therefore does not show production retention rate over longer periods of time.

(4) For the trailing twelve-month period then ended.

Blucora Operating Metrics - Tax Software


(In thousands, except as otherwise indicated)	Nine Months Ended September 30,		Change
	2022	2021	Units	%
Total e-files (1)	5,658	5,492	166	3.0	%
Consumer:
Consumer e-files (1)	3,232	3,144	88	2.8	%
Professional:
Professional e-files	2,426	2,348	78	3.3	%
Units sold (in ones)	21,051	20,808	243	1.2	%
Professional e-files per unit sold (in ones)	115.2	112.8	2.4	2.1	%

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(1)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.