bcor-20211104

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 4, 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 November 4, 2021, Blucora, Inc. (the “Company”) announced its financial results for the quarter ended September 30, 2021. 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 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


Exhibit No						Description

99.1						Press release dated November 4, 2021
99.2						Supplemental financial information dated November 4, 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,” "guidance" 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: our ability to effectively compete within our industries; our ability to attract and retain financial professionals, qualified employees, clients, and customers, as well as our ability to provide strong customer/client service; 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 government actions; our ability to retain employees and acquired client assets following acquisitions; 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 including those of the Financial Industry Regulatory Authority, Inc. and the Securities and Exchange Commission; 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 manage leadership and employee transitions, including costs and time burdens on management and our board of directors related thereto; the compromising of confidentiality, availability or integrity of information, including cyberattacks; political and economic conditions and events that directly or indirectly impact the wealth management and tax preparation software 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; 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 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 4, 2021

Exhibit 99.1

Blucora Announces Third Quarter 2021 Results

DALLAS, TX — November 4, 2021 — 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, 2021.

Third Quarter Highlights and Recent Developments

•Total revenue for the quarter was $174.2 million

•GAAP Net Loss of $27.8 million, or $(0.57) per diluted share

•Non-GAAP Net Loss of $12.8 million, or $(0.26) per diluted share

•Total client assets ended the quarter up 14% year-over-year to $86.6 billion, with $39.8 billion, or 45.9% in advisory assets

•Advisory assets increased 23% year-over-year, including approximately $5.4 billion in Avantax Planning Partners (“APP”) assets

•Preliminary outlook for the tax software segment projects revenue growth of between 14% and 18% from the mid-point of our 2021 full-year guidance. Preliminary outlook for operating income for full year 2022 of between $98 million and $106 million, which would be an all-time high

•In late August, we completed the acquisition of Headquarters Advisory Group, LLC and on November 2nd, we announced the completed acquisition of Warner Finance, both were existing FPs, which continues to expand the nationwide footprint of Avantax’s in-house RIA

“We believe that continued execution of our strategy will drive long-term sustainable growth within both of our segments. It’s great to see the progress that our team is making in delivering ongoing improvements in the experiences for our Financial Professionals and customers” commented Chris Walters, Blucora’s President and Chief Executive Officer. Mr. Walters continued, “Our progress is highlighted by the strong 2022 tax software segment outlook that we’ve shared today.”

Summary Financial Performance: Q3 2021

($ in millions, except per share amounts)


	Q3 2021		Q3 2020		Change
Revenue:
Wealth Management	$	169.1	$	135.9	24	%
Tax Software	5.0		39.4		(87)	%
Total Revenue	$	174.2	$	175.4	(1)	%
Segment Operating Income (Loss)
Wealth Management	$	19.6	$	17.5	12	%
Tax Software	(13.9)		16.2		(185)	%
Total Segment Operating Income	$	5.7	$	33.7	(83)	%
Unallocated Corporate-Level General and Administrative Expenses	$	(6.5)	$	(6.7)	3	%
GAAP:
Operating Income (Loss)	$	(20.3)	$	1.0	(2,102)	%
Net Loss	$	(27.8)	$	(26.2)	(6)	%
Diluted Net Loss Per Share	$	(0.57)	$	(0.55)	(4)	%
Non-GAAP: (1)
Adjusted EBITDA	$	(0.8)	$	27.0	(103)	%
Net Income (Loss)	$	(12.8)	$	15.1	(185)	%
Net Income (Loss) per Share - diluted	$	(0.26)	$	0.31	(184)	%

_________________________

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

Full Year 2021 Outlook


($ in millions, except per share amounts)	Prior Outlook	Current Outlook
Wealth Management Revenue	$631.5 - $649.5	$645.0 - $650.0
Tax Software Revenue	$223.5 - $226.5	$225.5 - $226.5
Total Revenue	$855.0 - $876.0	$870.5 - $876.5
Wealth Management Segment Operating Income	$79.0 - $83.5	$81.0 - $83.0
Tax Software Segment Operating Income	$80.0 - $82.0	$80.5 - $81.5
Unallocated Corporate-Level General and Administrative Expenses	$27.5 - $26.5	$26.0 - $25.5
GAAP:
Net Income (loss)	($8.5) - $1.0	($4.5) - ($0.0)
Net Income (loss) per diluted share	($0.17) - $0.02	($0.09) - ($0.00)
Non-GAAP:
Adjusted EBITDA (1)	$131.5 - $139.0	$135.5 - $139.0
Non-GAAP Net Income (loss) (1)	$76.0 - $84.5	$82.0 - $86.0
Non-GAAP Net Income (loss) per diluted share (1)	$1.52 - $1.70	$1.65 - $1.73

____________________________

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

Preliminary 2022 Tax Software Outlook

As we have continued to analyze the data from our new marketing efforts and from our new product and service offerings, we are confident in providing our preliminary outlook for 2022. At this time, we are providing our preliminary 2022 outlook for the Tax Software segment to provide revenue growth of between 14% and 18% from the mid-point of our full year 2021 guidance and segment operating income of between $98 and $106 million.

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 third quarter results, its outlook for full year 2021, 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 furnished 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 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 and Avantax Planning Partners brands, with a collective $87 billion in total client assets as of September 30, 2021 and (ii) tax software, through its TaxAct business, a market leader in tax software with approximately 3 million consumer users and approximately 24,500 professional users in 2021. 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. 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,” “guidance” 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: our ability to effectively compete within our industries; our ability to attract and retain financial professionals, qualified employees, clients, and customers, as well as our ability to provide strong customer/client service; 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 government actions; our ability to retain employees and acquired client assets following acquisitions; 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 including those of the Financial Industry Regulatory Authority, Inc. and the Securities and Exchange Commission; 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 manage leadership and employee transitions, including costs and time burdens on management and our board of directors related thereto; the compromising of confidentiality, availability or integrity of information, including cyberattacks; political and economic conditions and events that directly or indirectly impact the wealth management and tax preparation software 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; 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 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) (Amounts in thousands, except per share data)


	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Revenue:
Wealth management services revenue	$	169,135	$	135,932	$	486,021	$	396,805
Tax software services revenue	5,039		39,421		220,848		202,990
Total revenue	174,174		175,353		706,869		599,795
Operating expenses:
Cost of revenue:
Wealth management services cost of revenue	120,641		96,122		343,174		282,332
Tax software services cost of revenue	2,323		2,692		12,330		9,759

Total cost of revenue	122,964		98,814		355,504		292,091
Engineering and technology	7,874		6,007		22,233		21,899
Sales and marketing	28,399		31,018		140,809		150,785
General and administrative	23,102		18,605		71,619		63,533
Acquisition and integration	2,241		10,276		28,513		18,782
Depreciation	2,867		1,874		8,371		5,345
Amortization of other acquired intangible assets	7,009		7,746		21,247		22,167
Impairment of goodwill	—		—		—		270,625
Total operating expenses	194,456		174,340		648,296		845,227
Operating income (loss)	(20,282)		1,013		58,573		(245,432)
Other loss, net (1)	(8,295)		(11,963)		(24,202)		(23,386)
Income (loss) before income taxes	(28,577)		(10,950)		34,371		(268,818)
Income tax benefit (expense)	774		(15,256)		(2,920)		(23,237)
Net income (loss)	$	(27,803)	$	(26,206)	$	31,451	$	(292,055)
Net income (loss) per share:
Basic	$	(0.57)	$	(0.55)	$	0.65	$	(6.09)
Diluted	$	(0.57)	$	(0.55)	$	0.64	$	(6.09)
Weighted average shares outstanding:
Basic	48,707		48,039		48,492		47,936
Diluted	48,707		48,039		49,373		47,936

_________________________

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


	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Interest expense	$	7,304	$	7,254	$	21,789	$	17,410
Amortization of debt issuance costs	388		362		1,128		1,006
Accretion of debt discounts	290		276		851		414
Total interest expense	7,982		7,892		23,768		18,830
Interest income	—		(2)		(2)		(27)
Gain on the sale of a business	—		(349)		—		(349)
Non-capitalized debt issuance expenses	—		3,687		—		3,687
Other	313		735		436		1,245
Other loss, net	$	8,295	$	11,963	$	24,202	$	23,386

Blucora, Inc.

Condensed Consolidated Balance Sheets

(Amounts in thousands, except per share amounts)


	September 30, 2021 (unaudited)		December 31, 2020 (audited)
ASSETS
Current assets:
Cash and cash equivalents	$	184,926	$	150,125
Cash segregated under federal or other regulations	536		637
Accounts receivable, net of allowance	17,886		12,736
Commissions and advisory fees receivable	25,003		26,132
Other receivables	468		717
Prepaid expenses and other current assets, net	11,119		10,321
Total current assets	239,938		200,668
Long-term assets:
Property and equipment, net	68,950		58,500
Right-of-use assets, net	20,818		23,455
Goodwill	454,821		454,821
Other intangible assets, net	304,435		322,179

Other long-term assets	14,519		4,569
Total long-term assets	863,543		863,524
Total assets	$	1,103,481	$	1,064,192
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,932	$	9,290
Commissions and advisory fees payable	18,297		19,021
Accrued expenses and other current liabilities	75,375		56,419
Deferred revenue—current	5,469		12,298
Lease liabilities—current	4,429		2,304
Current portion of long-term debt	1,790		1,784
Total current liabilities	114,292		101,116
Long-term liabilities:
Long-term debt, net	552,987		552,553
Deferred tax liability, net	29,502		30,663
Deferred revenue—long-term	5,553		6,247
Lease liabilities—long-term	34,020		36,404
Other long-term liabilities	7,992		24,919
Total long-term liabilities	630,054		650,786
Total liabilities	744,346		751,902



Stockholders’ equity:
Common stock, par value $0.0001 per share—900,000 authorized shares; 50,025 shares issued and 48,719 shares outstanding at September 30, 2021; 49,483 shares issued and 48,177 shares outstanding at December 31, 2020	5		5
Additional paid-in capital	1,613,624		1,598,230
Accumulated deficit	(1,226,095)		(1,257,546)

Treasury stock, at cost—1,306 shares at September 30, 2021 and December 31, 2020	(28,399)		(28,399)
Total stockholders’ equity	359,135		312,290
Total liabilities and stockholders’ equity	$	1,103,481	$	1,064,192

Blucora, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited) (Amounts in thousands)


	Nine months ended September 30,
	2021		2020
Operating activities:
Net income (loss)	$	31,451	$	(292,055)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Stock-based compensation	15,499		7,220
Depreciation and amortization of acquired intangible assets	32,498		29,619
Impairment of goodwill	—		270,625

Reduction of right-of-use lease assets	2,694		8,335
Deferred income taxes	(1,161)		23,199
Amortization of debt issuance costs	1,128		1,006
Accretion of debt discounts	851		414
Gain on sale of a business	—		(349)
Change in fair value of acquisition-related contingent consideration	19,500		(1,000)
Accretion of lease liability	731		1,413
Other	1,371		984
Cash provided (used) by changes in operating assets and liabilities:

Accounts receivable	(5,008)		12,267
Commissions and advisory fees receivable	1,129		(1,480)
Other receivables	249		(2,909)
Prepaid expenses and other current assets	(798)		2,555
Other long-term assets	(10,898)		2,763
Accounts payable	(358)		(7,018)
Commissions and advisory fees payable	(500)		(3,012)
Lease liabilities	(1,047)		(3,568)
Deferred revenue	(7,523)		(8,582)
Accrued expenses and other current and long-term liabilities	(5,417)		(5,113)
Net cash provided by operating activities	74,391		35,314
Investing activities:
Purchases of property and equipment	(21,624)		(28,711)
Business acquisitions, net of cash acquired	—		(102,425)

Asset acquisitions, net of cash acquired	(3,823)		—
Proceeds from sale of a business	—		349
Net cash used by investing activities	(25,447)		(130,787)
Financing activities:
Proceeds from credit facilities, net of debt issuance costs and debt discounts	(502)		226,278
Payments on credit facilities	(1,359)		(66,078)





Proceeds from stock option exercises	535		25
Proceeds from issuance of stock through employee stock purchase plan	1,845		1,201
Tax payments from shares withheld for equity awards	(1,613)		(1,034)
Acquisition-related contingent consideration payments	(13,150)		—
Net cash provided (used) by financing activities	(14,244)		160,392








Net increase in cash, cash equivalents, and restricted cash	34,700		64,919
Cash, cash equivalents, and restricted cash, beginning of period	150,762		86,450
Cash, cash equivalents, and restricted cash, end of period	$	185,462	$	151,369

Blucora, Inc.

Segment Information

(Unaudited) (Amounts in thousands)


	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Revenue:
Wealth Management (1)	$	169,135	$	135,932	$	486,021	$	396,805
Tax Software (1)	5,039		39,421		220,848		202,990
Total revenue	$	174,174	$	175,353	$	706,869	$	599,795
Operating income (loss):
Wealth Management	$	19,564	$	17,498	$	60,356	$	51,827
Tax Software	(13,864)		16,234		100,472		60,646
Corporate-level activity (2)	(25,982)		(32,719)		(102,255)		(357,905)
Total operating income (loss)	(20,282)		1,013		58,573		(245,432)
Other loss, net	(8,295)		(11,963)		(24,202)		(23,386)
Income (loss) before income taxes	(28,577)		(10,950)		34,371		(268,818)
Income tax benefit (expense)	774		(15,256)		(2,920)		(23,237)
Net income (loss)	$	(27,803)	$	(26,206)	$	31,451	$	(292,055)

_________________________

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


	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Wealth Management:
Advisory revenue	$	103,540	$	82,612	$	291,167	$	227,672
Commission revenue	52,961		44,921		157,197		135,337
Asset-based revenue	5,659		4,351		16,514		18,911
Transaction and fee revenue	6,975		4,048		21,143		14,885
Total Wealth Management revenue	$	169,135	$	135,932	$	486,021	$	396,805
Tax Software:
Consumer revenue	$	4,479	$	38,482	$	203,891	$	186,724
Professional revenue	560		939		16,957		16,266
Total Tax Software revenue	$	5,039	$	39,421	$	220,848	$	202,990

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


	Three months ended September 30,				Nine months ended September 30,
	2021		2020			2021		2020
Unallocated corporate-level general and administrative expenses	$	6,499	$	6,745		$	18,452	$	19,571
Stock-based compensation	4,729		4,517			15,499		7,220
Acquisition and integration costs	2,241		10,276			28,513		18,782
Depreciation	3,906		2,620			11,251		7,452
Amortization of acquired intangible assets	7,009		7,746			21,247		22,167
Impairment of goodwill	—		—			—		270,625
Executive transition costs	—		405			—		10,225
Headquarters relocation costs	—		410			—		1,863
Contested proxy and other legal and consulting costs	1,598		—			7,293		—
Total corporate-level activity	$	25,982	$	32,719		$	102,255	$	357,905

Blucora, Inc.

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

Adjusted EBITDA Reconciliation (1)

(Unaudited) (Amounts in thousands)


	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Net income (loss) (2)	$	(27,803)	$	(26,206)	$	31,451	$	(292,055)
Stock-based compensation	4,729		4,517		15,499		7,220
Depreciation and amortization of acquired intangible assets	10,915		10,366		32,498		29,619
Other loss, net	8,295		11,963		24,202		23,386
Acquisition and integration—Excluding change in the fair value of acquisition-related contingent consideration	541		11,276		9,013		19,782
Acquisition and integration—Change in the fair value of acquisition-related contingent consideration	1,700		(1,000)		19,500		(1,000)
Impairment of goodwill	—		—		—		270,625
Executive transition costs	—		405		—		10,225
Headquarters relocation costs	—		410		—		1,863
Contested proxy and other legal and consulting costs	1,598		—		7,293		—
Income tax (benefit) expense	(774)		15,256		2,920		23,237
Adjusted EBITDA (1)	$	(799)	$	26,987	$	142,376	$	92,902

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 September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Net income (loss) (2)	$	(27,803)	$	(26,206)	$	31,451	$	(292,055)
Stock-based compensation	4,729		4,517		15,499		7,220
Amortization of acquired intangible assets	7,009		7,746		21,247		22,167
Gain on the sale of a business	—		(349)		—		(349)
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration	541		11,276		9,013		19,782
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration	1,700		(1,000)		19,500		(1,000)
Impairment of goodwill	—		—		—		270,625
Executive transition costs	—		405		—		10,225
Headquarters relocation costs	—		410		—		1,863
Contested proxy and other legal and consulting costs	1,598		—		7,293		—
Non-capitalized debt issuance expenses	—		3,687		—		3,687
Cash tax impact of adjustments to GAAP net income (loss)	(331)		(418)		(1,523)		(1,413)
Non-cash income tax (benefit) expense	(197)		14,987		(1,160)		22,327
Non-GAAP net income (loss)	$	(12,754)	$	15,055	$	101,320	$	63,079
Per diluted share:
Net income (loss) (2) (3)	$	(0.57)	$	(0.54)	$	0.64	$	(6.06)
Stock-based compensation	0.10		0.09		0.31		0.15
Amortization of acquired intangible assets	0.14		0.16		0.43		0.46
Gain on the sale of a business	—		(0.01)		—		(0.01)
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration	0.01		0.23		0.18		0.41
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration	0.03		(0.02)		0.39		(0.02)
Impairment of goodwill	—		—		—		5.62
Executive transition costs	—		0.01		—		0.21
Headquarters relocation costs	—		0.01		—		0.04
Contested proxy and other legal and consulting costs	0.04		—		0.15		—
Non-capitalized debt issuance expenses	—		0.08		—		0.08
Cash tax impact of adjustments to GAAP net income (loss)	(0.01)		(0.01)		(0.03)		(0.03)
Non-cash income tax (benefit) expense	—		0.31		(0.02)		0.46
Non-GAAP net income (loss) per share - diluted	$	(0.26)	$	0.31	$	2.05	$	1.31
Weighted average shares outstanding - diluted	48,707		48,203		49,373		48,184

Adjusted EBITDA Reconciliation for Forward-Looking Guidance (1)

(Amounts in thousands)


	Ranges for the year ending
	December 31, 2021
		Low		High
Net income (loss)		$	(4,500)	$	—
Stock-based compensation		20,700		20,500
Depreciation and amortization of acquired intangible assets		44,200		44,100
Other loss, net		32,600		32,200
Acquisition, integration, and contested proxy and other legal and consulting costs (4)		40,500		40,300
Income tax (benefit) expense		2,000		1,900
Adjusted EBITDA		$	135,500	$	139,000

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

for Forward-Looking Guidance (1)

(Amounts in thousands, except per share amounts)


	Ranges for the year ending
	December 31, 2021
		Low		High
Net income (loss)		$	(4,500)	$	—
Stock-based compensation		20,700		20,500
Amortization of acquired intangible assets		28,300		28,300
Acquisition, integration, and contested proxy and other legal and consulting costs (4)		40,500		40,300
Cash tax impact of adjustments to net income (loss)		(2,000)		(2,000)
Non-cash income tax benefit		(1,000)		(1,100)
Non-GAAP net income (loss)		$	82,000	$	86,000
Per diluted share:
Net income (loss) (3)		$	(0.09)	$	—
Stock-based compensation		0.42		0.41
Amortization of acquired intangible assets		0.57		0.58
Acquisition, integration, and contested proxy and other legal and consulting costs (4)		0.81		0.81
Cash tax impact of adjustments to net income (loss)		(0.04)		(0.04)
Non-cash income tax benefit		(0.02)		(0.03)
Non-GAAP net income per share		$	1.65	$	1.73
Weighted average shares outstanding - diluted		49,670		49,570

Adjusted EBITDA Reconciliation for Prior Guidance (1)

(Amounts in thousands)


	Ranges for the year ending
	December 31, 2021
		Low		High
Net income (loss)		$	(8,500)	$	1,000
Stock-based compensation		21,700		21,300
Depreciation and amortization of acquired intangible assets		46,100		45,600
Other loss, net		32,600		31,900
Acquisition, integration, and contested proxy and other legal and consulting costs (4)		38,100		37,400



Income tax expense		1,500		1,800
Adjusted EBITDA		$	131,500	$	139,000

Non-GAAP Net Income and Non-GAAP Net Income Per Share Reconciliation for Prior Guidance (1)

(Amounts in thousands, except per share amounts)


	Ranges for the year ending
	December 31, 2021
		Low		High
Net income (loss)		$	(8,500)	$	1,000
Stock-based compensation		21,700		21,300
Amortization of acquired intangible assets		28,300		28,200
Acquisition, integration, and contested proxy and other legal and consulting costs (4)		38,100		37,400




Cash tax impact of adjustments to net income (loss)		(2,200)		(2,000)
Non-cash income tax benefit		(1,400)		(1,400)
Non-GAAP net income		$	76,000	$	84,500
Per diluted share:
Net income (loss) (3)		$	(0.17)	$	0.02

Stock-based compensation		0.43		0.43
Amortization of acquired intangible assets		0.57		0.57
Acquisition, integration, and contested proxy and other legal and consulting costs (4)		0.76		0.75




Cash tax impact of adjustments to net income (loss)		(0.04)		(0.04)
Non-cash income tax benefit		(0.03)		(0.03)
Non-GAAP net income per share		$	1.52	$	1.70
Weighted average shares outstanding - diluted		50,000		49,800

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, other loss, net, acquisition and integration costs, impairment of goodwill, executive transition costs, headquarters relocation costs, contested proxy and other legal and consulting costs, and income tax expense. Other loss, net primarily consists of interest expense, net and non-capitalized debt issuance expenses. Acquisition and integration costs primarily relate to the HKFS Acquisition and 1st Global Acquisition. 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 and Irving offices 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), determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets, gain on the sale of a business, acquisition and integration costs, impairment of goodwill, executive transition costs, headquarters relocation costs, contested proxy and other legal and consulting 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 tax expense 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 be utilized or expire between 2021 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 expense relates to the expense recognized as a result of the Term Loan increase 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 (loss) 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 condensed consolidated statements of operations (unaudited).

(3)Any difference in the “per diluted share” amounts between this table and the condensed consolidated statements of comprehensive income 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.

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

Exhibit 99.2

Blucora, Inc.

Supplemental Information

September 30, 2021

Table of Contents


			Page
Financial Information:
Consolidated Statements of Operations (Unaudited)			2
Consolidated Financial Results (Unaudited)			3
Reconciliation of Certain Non-GAAP Financial Measure to the Nearest Comparable GAAP Financial Measures			5
Net Leverage Ratio			7
Reconciliation of Operating Free Cash Flow			8

Operating Metrics:
Wealth Management			9
Tax Software			11

Blucora Consolidated Statements of Operations (Unaudited)


(in thousands except %s and per share amounts, rounding differences may exist)	2019		2020										2021
	FY 12/31		1Q		2Q		3Q		4Q		FY 12/31		1Q		2Q		3Q
Segment revenue:
Wealth Management	$	507,979	$	144,989	$	115,884	$	135,932	$	149,384	$	546,189	$	154,491	$	162,395	$	169,135
Tax Software	209,966		118,331		45,238		39,421		5,773		208,763		123,892		91,917		5,039
Total segment revenue	717,945		263,320		161,122		175,353		155,157		754,952		278,383		254,312		174,174
Operating expenses:
Cost of revenue:
Wealth Management	352,081		102,342		83,868		96,122		103,630		385,962		108,623		113,910		120,641
Tax Software	10,691		4,013		3,054		2,692		2,569		12,328		5,578		4,429		2,323

Total segment cost of revenue	362,772		106,355		86,922		98,814		106,199		398,290		114,201		118,339		122,964
Engineering and technology	30,931		8,515		7,377		6,007		5,359		27,258		7,128		7,231		7,874
Sales and marketing	126,205		79,710		40,057		31,018		26,833		177,618		77,562		34,848		28,399
General and administrative	78,529		24,728		20,200		18,605		18,625		82,158		24,685		23,832		23,102
Depreciation	5,479		1,796		1,675		1,874		1,948		7,293		2,300		3,204		2,867
Amortization of other acquired intangible assets	37,357		7,748		6,673		7,746		7,578		29,745		7,175		7,063		7,009
Impairment of goodwill and an intangible asset (1)	50,900		270,625		—		—		—		270,625		—		—		—
Acquisition and integration	25,763		5,682		2,824		10,276		12,303		31,085		8,103		18,169		2,241

Total operating expenses	717,936		505,159		165,728		174,340		178,845		1,024,072		241,154		212,686		194,456
Operating income (loss)	9		(241,839)		(4,606)		1,013		(23,688)		(269,120)		37,229		41,626		(20,282)
Other loss, net	(16,915)		(6,135)		(5,288)		(11,963)		(7,918)		(31,304)		(7,883)		(8,024)		(8,295)
Income (loss) before income taxes	(16,906)		(247,974)		(9,894)		(10,950)		(31,606)		(300,424)		29,346		33,602		(28,577)
Income tax benefit (expense)	65,054		(67,520)		59,539		(15,256)		(19,094)		(42,331)		(1,700)		(1,994)		774

Net income (loss)	$	48,148	$	(315,494)	$	49,645	$	(26,206)	$	(50,700)	$	(342,755)	$	27,646	$	31,608	$	(27,803)
Net income (loss) per share:
Basic	$	1.00	$	(6.60)	$	1.04	$	(0.55)	$	(1.05)	$	(7.14)	$	0.57	$	0.65	$	(0.57)
Diluted	$	0.98	$	(6.60)	$	1.03	$	(0.55)	$	(1.05)	$	(7.14)	$	0.56	$	0.64	$	(0.57)
Weighted average shares outstanding:
Basic	48,264		47,827		47,941		48,039		48,107		47,978		48,261		48,508		48,707
Diluted	49,282		47,827		48,092		48,039		48,107		47,978		49,097		49,385		48,707

____________________________

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


(in thousands except %s and per share amounts, rounding differences may exist)	2019			2020															2021
	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q			2Q			3Q
Segment revenue:
Wealth Management (1)	$	507,979		$	144,989		$	115,884		$	135,932		$	149,384		$	546,189		$	154,491		$	162,395		$	169,135
Tax Software (2)	209,966			118,331			45,238			39,421			5,773			208,763			123,892			91,917			5,039
Total segment revenue	$	717,945		$	263,320		$	161,122		$	175,353		$	155,157		$	754,952		$	278,383		$	254,312		$	174,174
Segment operating income: (3)
Wealth Management (1)	$	68,292		$	22,598		$	11,731		$	17,498		$	20,368		$	72,195		$	19,396		$	21,396		$	19,564
Tax Software (2)	96,249			37,753			6,659			16,234			(11,025)			49,621			50,888			63,448			(13,864)
Total segment operating income	$	164,541		$	60,351		$	18,390		$	33,732		$	9,343		$	121,816		$	70,284		$	84,844		$	5,700
Segment operating income as a % of segment revenue:
Wealth Management (1)	13		%	16		%	10		%	13		%	14		%	13		%	13		%	13		%	12		%
Tax Software (2)	46		%	32		%	15		%	41		%	(191)		%	24		%	41		%	69		%	(275)		%
Total operating income as a % of segment revenue	23		%	23		%	11		%	19		%	6		%	16		%	25		%	33		%	3		%
Unallocated corporate-level general and administrative expenses (3)	$	27,361		$	7,016		$	5,810		$	6,745		$	7,118		$	26,689		$	5,694		$	6,259		$	6,499
Adjusted EBITDA (4)	$	137,180		$	53,335		$	12,580		$	26,987		$	2,225		$	95,127		$	64,590		$	78,585		$	(799)
Other unallocated corporate-level operating expenses: (3)
Stock-based compensation	$	16,300		$	(1,201)		$	3,904		$	4,517		$	2,846		$	10,066		$	5,610		$	5,160		$	4,729
Acquisition and integration—Excluding change in the fair value of acquisition-related contingent consideration	25,763			5,682			2,824			11,276			3,003			22,785			1,803			6,669			541
Acquisition and integration—Change in the fair value of acquisition-related contingent consideration	—			—			—			(1,000)			9,300			8,300			6,300			11,500			1,700
Depreciation	6,851			2,420			2,412			2,620			2,710			10,162			3,243			4,102			3,906
Amortization of acquired intangible assets	37,357			7,748			6,673			7,746			7,578			29,745			7,175			7,063			7,009
Executive transition costs	—			9,184			636			405			476			10,701			—			—			—
Headquarters relocation costs	—			716			737			410			—			1,863			—			—			—
Contested proxy and other legal and consulting costs	—			—			—			—			—			—			3,230			2,465			1,598
Impairment of goodwill and an intangible asset	50,900			270,625			—			—			—			270,625			—			—			—

Operating income (loss)	$	9		$	(241,839)		$	(4,606)		$	1,013		$	(23,688)		$	(269,120)		$	37,229		$	41,626		$	(20,282)
Unallocated other (income) loss, net: (3)
Interest expense	$	19,017		$	5,316		$	4,840		$	7,254		$	7,160		$	24,570		$	7,183		$	7,302		$	7,304
Amortization of debt issuance costs	1,042			313			331			362			366			1,372			363			377			388
Accretion of debt discounts	228			68			70			276			279			693			277			284			290
Total interest expense	$	20,287		$	5,697		$	5,241		$	7,892		$	7,805		$	26,635		$	7,823		$	7,963		$	7,982
Interest income	(449)			(14)			(11)			(2)			(38)			(65)			(2)			—			—
Gain on sale of a business	(3,256)			—			—			(349)			—			(349)			—			—			—
Non-capitalized debt issuance expenses	—			—			—			3,687			—			3,687			—			—			—
Other loss, net	333			452			58			735			151			1,396			62			61			313
Total other loss, net	$	16,915		$	6,135		$	5,288		$	11,963		$	7,918		$	31,304		$	7,883		$	8,024		$	8,295
Income (loss) before income taxes	$	(16,906)		$	(247,974)		$	(9,894)		$	(10,950)		$	(31,606)		$	(300,424)		$	29,346		$	33,602		$	(28,577)
Income tax (benefit) expense:
Cash	$	3,564		$	483		$	158		$	269		$	362		$	1,272		$	1,969		$	2,688		$	(577)
Non-cash (5)	(68,618)			67,037			(59,697)			14,987			18,732			41,059			(269)			(694)			(197)
Total income tax (benefit) expense	$	(65,054)		$	67,520		$	(59,539)		$	15,256		$	19,094		$	42,331		$	1,700		$	1,994		$	(774)
GAAP net income (loss)	$	48,148		$	(315,494)		$	49,645		$	(26,206)		$	(50,700)		$	(342,755)		$	27,646		$	31,608		$	(27,803)


GAAP net income (loss) per share - diluted	$	0.98		$	(6.60)		$	1.03		$	(0.55)		$	(1.05)		$	(7.14)		$	0.56		$	0.64		$	(0.57)
Non-GAAP net income (loss) (4)	$	104,198		$	43,561		$	4,463		$	15,055		$	(8,999)		$	54,080		$	50,952		$	63,122		$	(12,754)
Non-GAAP net income (loss) per share - diluted (4) (6)	$	2.11		$	0.90		$	0.09		$	0.31		$	(0.19)		$	1.12		$	1.04		$	1.28		$	(0.26)

Weighted average shares outstanding - basic	48,264			47,827			47,941			48,039			48,107			47,978			48,261			48,508			48,707
Weighted average shares outstanding - diluted	49,282			47,827			48,092			48,039			48,107			47,978			49,097			49,385			48,707

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, a significant portion of Tax Software revenue is typically generated in the first two quarters of the calendar year. In March 2020 and as a result of the COVID-19 pandemic, the Internal Revenue Service (the "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 and segment operating income that would typically be earned in the first and second quarters of 2020 to the third quarter of 2020. As a result of the continued impact of the COVID-19 pandemic, 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 mid-June. This extension resulted in the shifting of a significant portion of Tax Software segment revenue that would typically have been expected to be earned in the first quarter of 2021 to the second quarter of 2021.

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

(4)See the Reconciliation of Certain Non-GAAP Financial Measures to the Nearest Comparable GAAP Financial Measures on page 5.

(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 either be utilized or expire between 2021 and 2024.

(6)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 Certain Non-GAAP Financial Measures to the Nearest Comparable GAAP Financial Measures (1) (2)


	2019		2020										2021
(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
Net income (loss) (1) (2)	$	48,148	$	(315,494)	$	49,645	$	(26,206)	$	(50,700)	$	(342,755)	$	27,646	$	31,608	$	(27,803)
Stock-based compensation	16,300		(1,201)		3,904		4,517		2,846		10,066		5,610		5,160		4,729
Depreciation and amortization of acquired intangible assets	44,208		10,168		9,085		10,366		10,288		39,907		10,418		11,165		10,915
Other loss, net	16,915		6,135		5,288		11,963		7,918		31,304		7,883		8,024		8,295
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration	25,763		5,682		2,824		11,276		3,003		22,785		1,803		6,669		541
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration	—		—		—		(1,000)		9,300		8,300		6,300		11,500		1,700
Executive transition costs	—		9,184		636		405		476		10,701		—		—		—
Headquarters relocation costs	—		716		737		410		—		1,863		—		—		—
Contested proxy and other legal and consulting costs	—		—		—		—		—		—		3,230		2,465		1,598


Income tax (benefit) expense	(65,054)		67,520		(59,539)		15,256		19,094		42,331		1,700		1,994		(774)
Impairment of goodwill and an intangible asset	50,900		270,625		—		—		—		270,625		—		—		—
Adjusted EBITDA	$	137,180	$	53,335	$	12,580	$	26,987	$	2,225	$	95,127	$	64,590	$	78,585	$	(799)
Non-GAAP Net Income (Loss)
Net income (loss) (1) (2)	$	48,148	$	(315,494)	$	49,645	$	(26,206)	$	(50,700)	$	(342,755)	$	27,646	$	31,608	$	(27,803)
Stock-based compensation	16,300		(1,201)		3,904		4,517		2,846		10,066		5,610		5,160		4,729
Amortization of acquired intangible assets	37,357		7,748		6,673		7,746		7,578		29,745		7,175		7,063		7,009
Impairment of goodwill and an intangible asset	50,900		270,625		—		—		—		270,625		—		—		—
Gain on the sale of a business	(3,256)		—		—		(349)		—		(349)		—		—		—
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration	25,763		5,682		2,824		11,276		3,003		22,785		1,803		6,669		541
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration	—		—		—		(1,000)		9,300		8,300		6,300		11,500		1,700
Executive transition costs	—		9,184		636		405		476		10,701		—		—		—
Headquarters relocation costs	—		716		737		410		—		1,863		—		—		—
Contested proxy and other legal and consulting costs	—		—		—		—		—		—		3,230		2,465		1,598
Non-capitalized debt issuance expenses	—		—		—		3,687		—		3,687		—		—		—


Cash tax impact of adjustments to GAAP net income (loss)	(2,396)		(736)		(259)		(418)		(234)		(1,647)		(543)		(649)		(331)
Non-cash income tax (benefit) expense	(68,618)		67,037		(59,697)		14,987		18,732		41,059		(269)		(694)		(197)
Non-GAAP net income (loss)	$	104,198	$	43,561	$	4,463	$	15,055	$	(8,999)	$	54,080	$	50,952	$	63,122	$	(12,754)

Non-GAAP net income (loss) per share (3)	$	2.11	$	0.90	$	0.09	$	0.31	$	(0.19)	$	1.12	$	1.04	$	1.28	$	(0.26)
Weighted average shares outstanding (3)	49,282		48,253		48,092		48,203		48,107		48,244		49,097		49,385		48,707

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 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, contested proxy and other legal and consulting costs, and income tax (benefit) expense. Other loss, net primarily consists of interest expense, net and non-capitalized debt issuance expenses. Acquisition and integration costs relate to the acquisition of HKFS and the acquisition of 1st Global, including the increase to the contingent liability reserve in the second quarter of 2021 related to the regulatory inquiry assumed in the acquisition of 1st Global. The impairment of goodwill relates to the impairment of our Wealth Management reporting unit goodwill in the first quarter of 2020. The impairment of an intangible asset relates to the impairment of the HD Vest trade name intangible asset in 2019. 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.

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, impairment of goodwill and an intangible asset, gain on the sale of a business, executive transition costs, headquarters relocation costs, contested proxy and other legal and consulting 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 either be utilized or expire between 2021 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 expense relates to the expense recognized as a result of the increase to our Term Loan.

(2) See the Consolidated Financial Results 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 Reconciliation of Trailing Twelve Month ("TTM") Adjusted EBITDA (1) (2)


	2019		2020								2021
(in thousands except per share amounts, rounding differences may exist)	TTM 4Q		TTM 1Q		TTM 2Q		TTM 3Q		TTM 4Q		TTM 1Q		TTM 2Q		TTM 3Q
Adjusted EBITDA
Net income (loss)	$	48,148	$	(329,516)	$	(310,907)	$	(274,727)	$	(342,755)	$	385	$	(17,652)	$	(19,249)
Stock-based compensation	16,300		12,656		12,478		12,356		10,066		16,877		18,133		18,345
Depreciation and amortization of acquired intangible assets	44,208		45,022		43,276		41,749		39,907		40,157		42,237		42,786
Other loss, net	16,915		19,092		19,262		28,619		31,304		33,052		35,788		32,120
Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration	25,763		29,648		23,289		27,806		22,785		18,906		22,751		12,016
Acquisition and integration—Change in the fair value of HKFS Contingent Consideration	—		—		—		(1,000)		8,300		14,600		26,100		28,800
Executive transition costs	—		9,184		9,820		10,225		10,701		1,517		881		476
Headquarter relocation costs	—		716		1,453		1,863		1,863		1,147		410		—
Contested proxy and other legal and consulting costs	—		—		—		—		—		3,230		5,695		7,293

Income tax (benefit) expense	(65,054)		(1,519)		(52,934)		(25,347)		42,331		(23,489)		38,044		22,014
Impairment of goodwill and an intangible asset	50,900		321,525		321,525		270,625		270,625		—		—		—
Adjusted EBITDA	$	137,180	$	106,808	$	67,262	$	92,169	$	95,127	$	106,382	$	172,387	$	144,601

Blucora Net Leverage Ratio


	2019			2020												2021
(in thousands, except ratio, rounding differences may exist)	4Q			1Q			2Q			3Q			4Q			1Q			2Q			3Q
DEBT:
Senior Secured Credit Facility	$	399,687		$	444,375		$	389,062		$	563,609		$	563,156		$	562,703		$	562,250		$	561,797
CASH:
Cash and cash equivalents	$	80,820		$	168,198		$	90,081		$	151,166		$	150,125		$	191,803		$	232,409		$	184,926
NET DEBT (3)	$	318,867		$	276,177		$	298,981		$	412,443		$	413,031		$	370,900		$	329,841		$	376,871

Last twelve months:





ADJUSTED EBITDA (1)	$	137,180		$	106,808		$	67,262		$	92,169		$	95,127		$	106,382		$	172,387		$	144,601

NET LEVERAGE RATIO (1) (4)	2.3		x	2.6		x	4.4		x	4.5		x	4.3		x	3.5		x	1.9		x	2.6		x

____________________________

(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 comparable GAAP measure in the top table on this page.

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

(3) 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.

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

Blucora Reconciliation of Operating Free Cash Flow (1)


	2019		2020										2021
(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	$	92,804	$	46,864	$	(12,490)	$	940	$	8,765	$	44,079	$	53,722	$	43,549	$	(22,880)
Purchases of property and equipment	(10,501)		(7,715)		(11,357)		(9,639)		(7,291)		(36,002)		(8,598)		(4,946)		(8,080)
Operating free cash flow	$	82,303	$	39,149	$	(23,847)	$	(8,699)	$	1,474	$	8,077	$	45,124	$	38,603	$	(30,960)

____________________________

(1) We define operating free cash flow, which is a non-GAAP measure, as net cash provided (used) by operating activities less purchases of property and equipment. We believe operating free cash flow is an important liquidity measure that reflects the cash generated by our 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


	2019			2020															2021
(in thousands except %s, rounding differences may exist)	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q			2Q			3Q
Segment revenue	$	507,979		$	144,989		$	115,884		$	135,932		$	149,384		$	546,189		$	154,491		$	162,395		$	169,135
Less: Financial professional commission payout	$	(348,003)		$	(100,804)		$	(82,656)		$	(94,794)		$	(102,610)		$	(380,864)		$	(107,211)		$	(112,164)		$	(119,044)
Segment net revenue (1)	$	159,976		$	44,185		$	33,228		$	41,138		$	46,774		$	165,325		$	47,280		$	50,231		$	50,091
Segment income (2)	$	68,292		$	22,598		$	11,731		$	17,498		$	20,368		$	72,195		$	19,396		$	21,396		$	19,564
Segment income as a % of revenue	13		%	16		%	10		%	13		%	14		%	13		%	13		%	13		%	12		%
Segment income as a % of net revenue	43		%	51		%	35		%	43		%	44		%	44		%	41		%	43		%	39		%


(in thousands except %s, rounding differences may exist)			2019			2020															2021
	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	$	252,367		$	78,757		$	66,303		$	82,612		$	87,079		$	314,751		$	91,119		$	96,508		$	103,540
	Commission	- Transactions - Asset levels - Product mix	191,050			50,580			39,836			44,921			49,864			185,201			52,534			51,702			52,961
Other revenue	Asset-based	- Cash balances - Interest rates - Number of accounts - Client asset levels	48,182			10,579			3,981			4,351			4,777			23,688			5,329			5,526			5,659
	Transaction and fee	- Account activity - Number of clients - Number of financial professionals - Number of accounts	16,380			5,073			5,764			4,048			7,664			22,549			5,509			8,659			6,975
	Total revenue		$	507,979		$	144,989		$	115,884		$	135,932		$	149,384		$	546,189		$	154,491		$	162,395		$	169,135
	Total recurring revenue (3)		$	422,128		$	119,255		$	100,004		$	117,822		$	127,863		$	464,944		$	130,755		$	138,900		$	145,311
	Recurring revenue rate (3)		83.1		%	82.3		%	86.3		%	86.7		%	85.6		%	85.1		%	84.6		%	85.5		%	85.9		%

____________________________

(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.

Blucora Operating Metrics - Wealth Management (continued)


(in thousands except %s and as otherwise indicated, rounding differences may exist)	2019			2020															2021
	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q			2Q			3Q
Total client assets	$	70,644,385		$	61,014,454		$	68,519,998		$	76,152,721		$	82,961,244		$	82,961,244		$	84,776,191		$	87,814,790		$	86,647,743
Brokerage assets	$	43,015,221		$	37,395,490		$	41,964,610		$	43,733,735		$	47,357,687		$	47,357,687		$	48,001,320		$	48,373,805		$	46,850,354
Advisory assets	$	27,629,164		$	23,618,964		$	26,555,388		$	32,418,986		$	35,603,557		$	35,603,557		$	36,774,871		$	39,440,985		$	39,797,389
% of total client assets	39.1		%	38.7		%	38.8		%	42.6		%	42.9		%	42.9		%	43.4		%	44.9		%	45.9		%
Number of financial professionals (in ones) (1)	3,984			3,945			3,862			3,975			3,770			3,770			3,718			3,606			3,529
Advisory and commission revenue per financial professional (2)	$	111.3		$	32.8		$	27.5		$	32.1		$	36.3		$	111.3		$	38.6		$	41.1		$	44.3

Quarterly production retention rate: (3)
TTM Financial professional-driven revenue (4)	$	443,417		$	495,837		$	492,498		$	491,829		$	499,952		$	499,952		$	514,268		$	556,339		$	585,307
TTM Financial professional-driven revenue related to independent financial professionals who departed in the quarter (4)	$	10,770		$	4,586		$	11,445		$	5,366		$	19,101		$	19,101		$	8,127		$	9,881		$	12,157
TTM Financial professional-driven revenue, less that related to independent financial professionals who departed in the quarter (4)	$	432,647		$	491,251		$	481,053		$	486,463		$	480,851		$	480,851		$	506,141		$	546,458		$	573,150
Quarterly production retention rate (3)	97.6		%	99.1		%	97.7		%	98.9		%	96.2		%	96.2		%	98.4		%	98.2		%	97.9		%

____________________________

(1) 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 HKFS) and 131 licensed referring representatives at CPA firms that partner with HKFS.

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

(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). Management uses 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 %s and as otherwise indicated, rounding differences may exist)	Nine months ended September 30,				Year-to-date period ended July 16,
	2021	2020	% change		2021 (1)	2020 (1)	% change
Total e-files (2)	5,492	5,234	5	%	5,421	5,149	5	%
Consumers
E-files (2)	3,144	3,145	—	%	3,122	3,113	—	%
Professional
E-files	2,348	2,089	12	%	2,299	2,036	13	%
Units sold (in ones)	20,808	20,288	3	%	20,711	20,207	2	%
E-files per unit sold (in ones)	112.8	103.0	10	%	111.0	100.8	10	%

(1)Tax season begins on the first day that the IRS begins accepting e-files and ends on filing deadline day plus one day. Due to the impact of the COVID-19 pandemic, the IRS extended the filing deadlines for federal tax returns relating to the 2020 and 2019 tax years to May 17, 2021 (with the filing deadline extended to June 15, 2021 for Texas, Louisiana, and Oklahoma) and July 15, 2020, respectively. In order to provide comparable tax season data, we provided the above metrics for the year-to-date periods ended July 16, 2021 and 2020 as these periods capture the activity of the entire tax season for each year.

(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.