Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

February 19, 2020

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.)

6333 State Hwy 161, 4th Floor

Irving, Texas 75038

(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))

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. ☐



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

Item 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On February 19, 2020, Blucora, Inc. (the "Company") announced its financial results for the quarter and year ended December 31, 2019. Copies of the press release and a supplemental investor presentation are furnished to, but not filed with, the Commission as Exhibits 99.1 and 99.2 hereto.

The press release includes non-GAAP financial measures as that term is defined in Regulation G. The press release also includes 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 presentation of the non-GAAP financial measures provides useful information to investors regarding the Company’s financial condition and results of operations. The non-GAAP financial information presented therein should be considered in addition to, not as a substitute for, or superior to, financial measures calculated and presented in accordance with GAAP.

Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS



Exhibit No.		Description
99.1		Press release dated February 19, 2020
99.2		Supplemental financial information dated February 19, 2020
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 and Section 21E of the Securities Exchange Act of 1934. When used in this report, terms such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “intends,” “anticipates,” “may,” “forecasts,” “projects” and similar expressions and variations as they relate to the Company or its management are intended to identify forward-looking statements. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: our ability to effectively implement our future business plans and growth strategy; our ability to effectively compete within our industry; our ability to attract and retain qualified employees and leadership, advisors, clients and customers; our ability to execute upon the contemplated strategic and performance initiatives and to successfully integrate acquired businesses or assets and realize the anticipated benefits thereof; the availability of financing and our ability to meet our current and future debt service obligations and comply with our debt covenants; our ability to generate strong investment performance for our customers and the impact of the financial markets on our customers’ portfolios; political and economic conditions and events that directly or indirectly impact the wealth management and tax preparation industries; our ability to successfully make technology enhancements and introduce new and improve on existing products and services; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; our ability to manage leadership and employee transitions; risks related to goodwill and other intangible asset impairment; our ability to comply with regulations (or interpretations thereof) applicable to the wealth management and tax preparation industries, including increased costs associated with or reductions in revenue resulting from new or changing regulations or interpretations of existing regulations; risks associated with our business being subject to enhanced regulatory scrutiny; our ability to comply with laws and regulations regarding privacy and protection of data; cybersecurity risks; our ability to develop and maintain our relationships with third party partners; the seasonality of our business; legal proceedings risks, including litigation and regulatory proceedings; our assessments and estimates that determine our effective tax rate; the impact of new or changing tax legislation; our ability to develop, establish and maintain strong brands; and our ability to protect our intellectual property. A more detailed description of these and certain other factors that could affect actual results is included in the Company’s filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of this report, except as may be required by law. In addition, the Company has not filed its Form 10-K for the year ended December 31, 2019. As a result, all financial results described in this earnings release should be considered preliminary, and are subject to change to reflect the completion of our audit and any necessary adjustments or changes in accounting estimates that are identified prior to the time the Company files the Form 10-K.

-2-

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/ Stacy A. Murray
		Stacy A. Murray
		Interim Principal Financial Officer and Principal Accounting Officer

		February 19, 2020

-3-

Exhibit 99.1

Blucora Reports Fourth Quarter and Full Year 2019 Results

IRVING, TX — February 19, 2020 — Blucora, Inc. (NASDAQ: BCOR), a leading provider of tax-smart financial solutions that empower people’s goals, today announced financial results for the fourth quarter and full year ended December 31, 2019.

2019 Highlights and Recent Developments


•	Increased total revenue by 28% year-over-year (y/y), including addition of 1st Global since May 6


•	Achieved record advisory net flows at Avantax of approximately $1 billion


•	Recorded 22nd consecutive year of revenue growth at TaxAct, growing 12% year-over-year


•	Completed $28 million of a $100 million share repurchase program, supported by strong cash flow generation


•	Completed acquisition of 1st Global, adding significant scale, complementary capabilities and high recurring revenue


•	Achieved $6.5 million in synergies related to 1st Global in 2019, more than double original estimate

“Blucora’s fourth quarter results cap a year of strong financial performance, strengthening our platform, and investing for future growth,” said Chris Walters, Blucora’s President and Chief Executive Officer. “While we have made good progress on many fronts, I’m even more excited about the growth opportunities we see ahead.”

Summary Financial Performance: Q4 and Full Year 2019

($ in millions except per share amounts)



	Q4			Q4					Full Year		Full Year
	2019			2018			Change		2019		2018		Change
Revenue
Wealth Management	$	145.2		$	97.2		49	%	$	508.0	$	373.2	36	%
Tax Preparation	$	4.2		$	4.1		2	%	$	210.0	$	187.3	12	%
Total Revenue	$	149.4		$	101.3		47	%	$	717.9	$	560.5	28	%
Segment Income (Loss):
Wealth Management	$	19.1		$	14.1		35	%	$	68.3	$	53.1	29	%
Tax Preparation	$	(12.3	)	$	(8.7	)	(41	)%	$	96.2	$	87.2	10	%
Total Segment Income	$	6.8		$	5.4		26	%	$	164.5	$	140.3	17	%
Unallocated Corporate Operating Expenses	$	7.6		$	6.1		25	%	$	27.4	$	20.5	34	%
GAAP:
Operating Income (Loss)	$	(26.0	)	$	(13.5	)	(93	)%	$	—	$	67.7	(100	)%
Net Income (Loss) Attributable to Blucora. Inc.	$	17.3		$	(16.0	)	208	%	$	48.1	$	50.6	(5	)%
Diluted Net Income (Loss) Per Share Attributable to Blucora. Inc. (1)	$	0.36		$	(0.38	)	195	%	$	0.98	$	0.90	9	%
Non-GAAP: (2)
Adjusted EBITDA	$	(0.7	)	$	(0.8	)	13	%	$	137.2	$	119.8	15	%
Net Income (Loss)	$	(4.8	)	$	(7.5	)	36	%	$	104.2	$	94.0	11	%
Diluted Net Income (Loss) per Share	$	(0.10	)	$	(0.16	)	38	%	$	2.11	$	1.90	11	%

____________________________


(1)	Includes noncontrolling interest redemption impacts of $(0.05) and (0.13) for the fourth quarter and full year ended December 31, 2018, respectively.


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

2019 Results vs. Prior Guidance



$ in millions	Prior Guidance	Midpoint	Actual	Difference at Midpoint
Wealth Management Revenue	$505.0 - $510.0	$507.5	$508.0	$0.5
TaxAct Revenue	$209.5 - $210.5	$210.0	$210.0	$—
Total Revenue	$714.5 - $720.5	$717.5	$717.9	$0.4
Wealth Management Segment Income	$67.0 - $69.5	$68.3	$68.3	$—
TaxAct Segment Income	$93.0 - $94.5	$93.8	$96.2	$2.4
Corporate Unallocated Operating Expenses	$28.5 - $29.5	$29.0	$27.4	$1.6
Adjusted EBITDA	$130.5 - $135.5	$133.0	$137.2	$4.2

Tax Season Update

“We’re excited to have a significantly improved experience for TaxAct customers this tax season,” Walters continued. “Customers filing with TaxAct this year will experience a much easier and more enjoyable tax filing process, with several benefits to make the experience even more rewarding. A few highlights for this season include:


•	My Tax Plan: a new feature which creates a custom plan for each user to save more on taxes next year. It is personalized to the customer's tax situation, provides specific savings amounts, and includes a downloadable "checklist" of actions to save. We believe this is a significant and differentiated benefit to customers;


•	Pro Tips: a visually enticing way to reveal lesser-known tax advantages, customized for the individual filer, that help customers get a bigger refund this year and for years to come.

We also brought back some more of our most popular features, like our $100,000 accuracy guarantee, and an enhanced personalized Deduction Maximizer, which checks if customers have included every available deduction.”

“Based on early tax season data, we continue to expect first-half 2020 tax preparation revenue growth of approximately 3%-5% versus the comparable period last year, adjusted for the removal of SimpleTax, with segment margin in the range of 56.7%-57.7%.”

First Quarter Outlook

For the first quarter of 2020, the Company expects revenues to be between $271.0 million and $281.5 million, GAAP net income attributable to Blucora, Inc. to be between $31.5 million and $34.5 million, or $0.64 to $0.70 per diluted share, Adjusted EBITDA to be between $85.0 million and $91.0 million, and Non-GAAP net income to be between $74.5 million and $80.5 million, or $1.52 to $1.64 per diluted share.

Conference Call and Webcast

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

About Blucora®

Blucora, Inc. (NASDAQ: BCOR) is on the forefront of financial technology, pioneering tax-smart financial solutions that empower people’s goals. Blucora operates in two segments including wealth management, through its Avantax Wealth Management business (formerly operating under the HD Vest and 1st Global brands), the No. 1 tax-focused broker-dealer, with $71 billion in total client assets as of December 31, 2019, and tax preparation, through its TaxAct business, a market leader in tax preparation software with approximately 3 million consumer and professional users. With integrated tax and wealth management, Blucora is uniquely positioned to provide better long-term outcomes for customers with holistic, tax-advantaged solutions. For more information on Blucora, visit www.blucora.com.

Source: Blucora

Blucora Contact:

Bill Michalek (972) 870-6463

VP, Investor Relations

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When used in this release, terms such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “intends,” “anticipates,” “may,” “forecasts,” “projects” and similar expressions and variations as they relate to the Company or its management are intended to identify forward-looking statements. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: our ability to effectively implement our future business plans and growth strategy; our ability to effectively compete within our industry; our ability to attract and retain qualified employees and leadership, advisors, clients and customers; our ability to execute upon the contemplated strategic and performance initiatives and to successfully integrate acquired businesses or assets and realize the anticipated benefits thereof; the availability of financing and our ability to meet our current and future debt service obligations and comply with our debt covenants; our ability to generate strong investment performance for our customers and the impact of the financial markets on our customers’ portfolios; political and economic conditions and events that directly or indirectly impact the wealth management and tax preparation industries; our ability to successfully make technology enhancements and introduce new and improve on existing products and services; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; our ability to manage leadership and employee transitions; risks related to goodwill and other intangible asset impairment; our ability to comply with regulations (or interpretations thereof) applicable to the wealth management and tax preparation industries, including increased costs associated with or reductions in revenue resulting from new or changing regulations or interpretations of existing regulations; risks associated with our business being subject to enhanced regulatory scrutiny; our ability to comply with laws and regulations regarding privacy and protection of data; cybersecurity risks; our ability to develop and maintain our relationships with third party partners; the seasonality of our business; legal proceedings risks, including litigation and regulatory proceedings; our assessments and estimates that determine our effective tax rate; the impact of new or changing tax legislation; our ability to develop, establish and maintain strong brands; and our ability to protect our intellectual property. A more detailed description of these and certain other factors that could affect actual results is included in the 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. In addition, the Company has not filed its Form 10-K for the year ended December 31, 2019. As a result, all financial results described in this earnings release should be considered preliminary, and are subject to change to reflect the completion of our audit and any necessary adjustments or changes in accounting estimates that are identified prior to the time the Company files the Form 10-K.

Blucora, Inc.

Preliminary Condensed Consolidated Statements of Operations

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



	Three Months Ended December 31,						Years Ended December 31,
	2019			2018			2019			2018
Revenue:
Wealth management services revenue	$	145,188		$	97,190		$	507,979		$	373,174
Tax preparation services revenue	4,233			4,068			209,966			187,282
Total revenue	149,421			101,258			717,945			560,456
Operating expenses:
Cost of revenue:
Wealth management services cost of revenue	101,200			66,054			352,081			253,580
Tax preparation services cost of revenue	1,708			1,858			10,691			10,040
Amortization of acquired technology	—			—			—			99
Total cost of revenue (1)	102,908			67,912			362,772			263,719
Engineering and technology (1)	8,608			5,107			30,931			19,332
Sales and marketing (1)	21,401			16,642			126,205			111,361
General and administrative (1)	22,808			16,229			78,529			60,124
Acquisition and integration	8,024			—			25,763			—
Depreciation	1,633			762			5,479			4,468
Amortization of other acquired intangible assets	10,062			8,103			37,357			33,487
Impairment of intangible asset	—			—			50,900			—
Restructuring	—			(3		)	—			288
Total operating expenses	175,444			114,752			717,936			492,779
Operating income (loss)	(26,023		)	(13,494		)	9			67,677
Other loss, net (2)	(5,233		)	(3,947		)	(16,915		)	(15,797		)
Income (loss) before income taxes	(31,256		)	(17,441		)	(16,906		)	51,880
Income tax benefit (expense)	48,584			1,741			65,054			(311		)
Net income (loss)	17,328			(15,700		)	48,148			51,569
Net income attributable to noncontrolling interests	—			(281		)	—			(935		)
Net income (loss) attributable to Blucora, Inc.	$	17,328		$	(15,981	)	$	48,148		$	50,634
Net income (loss) per share attributable to Blucora, Inc.:
Basic	$	0.36		$	(0.38	)	$	1.00		$	0.94
Diluted	$	0.36		$	(0.38	)	$	0.98		$	0.90
Weighted average shares outstanding:
Basic	47,689			48,002			48,264			47,394
Diluted	48,344			48,002			49,282			49,381

____________________________


(1)	Stock-based compensation expense was allocated among the following captions (in thousands):



	Three Months Ended December 31,				Years Ended December 31,
	2019		2018		2019		2018
Cost of revenue	$	1,341	$	527	$	4,082	$	1,467
Engineering and technology	193		176		715		766
Sales and marketing	257		589		346		2,424
General and administrative	3,345		2,402		11,157		8,596
Total stock-based compensation expense	$	5,136	$	3,694	$	16,300	$	13,253


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



	Three Months Ended December 31,						Years Ended December 31,
	2019			2018			2019			2018
Interest expense	$	5,002		$	3,838		$	19,017		$	15,610
Interest income	(108		)	(132		)	(449		)	(349		)
Amortization of debt issuance costs	194			174			1,042			833
Accretion of debt discounts	39			38			228			163
Loss on debt extinguishment	—			—			—			1,534
Gain on sale of a business	—			—			(3,256		)	—
Other	106			29			333			(1,994		)
Other loss, net	$	5,233		$	3,947		$	16,915		$	15,797

Blucora, Inc.

Preliminary Condensed Consolidated Balance Sheets

(Unaudited) (Amounts in thousands)



	December 31,
	2019			2018
ASSETS
Current assets:
Cash and cash equivalents	$	80,820		$	84,524
Cash segregated under federal or other regulations	5,630			842
Accounts receivable, net of allowance	16,266			15,721
Commissions receivable	21,176			15,562
Other receivables	2,902			7,408
Prepaid expenses and other current assets, net	12,349			7,755
Total current assets	139,143			131,812
Long-term assets:
Property and equipment, net	18,706			12,389
Right-of-use assets, net	10,151			—
Goodwill, net	662,375			548,685
Other intangible assets, net	290,211			294,603
Deferred tax asset, net	9,997			—
Other long-term assets	6,989			10,236
Total long-term assets	998,429			865,913
Total assets	$	1,137,572		$	997,725
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	10,969		$	3,798
Commissions and advisory fees payable	19,905			15,199
Accrued expenses and other current liabilities	36,144			18,980
Deferred revenue—current	12,014			10,257
Lease liabilities—current	3,272			46
Current portion of long-term debt, net	11,228			—
Total current liabilities	93,532			48,280
Long-term liabilities:
Long-term debt, net	381,485			260,390
Deferred tax liability, net	—			40,394
Deferred revenue—long-term	7,172			8,581
Lease liabilities—long-term	5,916			100
Other long-term liabilities	5,952			7,440
Total long-term liabilities	400,525			316,905
Total liabilities	494,057			365,185

Redeemable noncontrolling interests	—			24,945

Stockholders’ equity:
Common stock, par $0.0001—900,000 authorized shares; 49,059 shares issued and 47,753 shares outstanding at December 31, 2019; 48,044 shares issued and outstanding at December 31, 2018	5			5
Additional paid-in capital	1,586,972			1,569,725
Accumulated deficit	(914,791		)	(961,689		)
Accumulated other comprehensive loss	(272		)	(446		)
Treasury stock, at cost—1,306 shares at December 31, 2019	(28,399		)	—
Total stockholders’ equity	643,515			607,595
Total liabilities and stockholders’ equity	$	1,137,572		$	997,725

Blucora, Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited) (Amounts in thousands)



	Years Ended December 31,
	2019			2018
Operating activities:
Net income	$	48,148		$	51,569
Adjustments to reconcile net income to net cash from operating activities:
Stock-based compensation	16,300			13,253
Depreciation and amortization of acquired intangible assets	44,208			38,589
Impairment of intangible asset	50,900			—
Reduction of right-of-use assets	4,425			—
Deferred income taxes	(67,549		)	(3,039		)
Amortization of premium on investments, net, and debt issuance costs	1,042			833
Accretion of debt discounts	228			163
Loss on debt extinguishment and modification expense	—			1,534
Gain on sale of a business	(3,256		)	—
Other	734			73
Cash provided (used) by changes in operating assets and liabilities:
Accounts receivable	871			(4,286		)
Commissions receivable	(471		)	1,260
Other receivables	4,506			(3,851		)
Prepaid expenses and other current assets	10,537			(815		)
Other long-term assets	3,377			3,450
Accounts payable	29			(615		)
Commissions and advisory fees payable	432			(2,614		)
Lease liabilities	(7,335		)	—
Deferred revenue	(17,367		)	9,930
Accrued expenses and other current and long-term liabilities	3,045			114
Net cash provided by operating activities	92,804			105,548
Investing activities:
Business acquisition, net of cash acquired	(166,560		)	—
Purchases of property and equipment	(10,501		)	(7,633		)
Proceeds from sale of a business, net of cash	7,467			—
Net cash used by investing activities	(169,594		)	(7,633		)
Financing activities:
Proceeds from credit facilities, net of debt issuance costs and debt discount	131,489			—
Payments on credit facilities	(313		)	(80,000		)
Stock repurchases	(28,399		)	—
Payment of redeemable noncontrolling interests	(24,945		)	—
Proceeds from stock option exercises	4,387			12,773
Proceeds from issuance of stock through employee stock purchase plan	2,212			2,100
Tax payments from shares withheld for equity awards	(5,652		)	(8,362		)
Contingent consideration payments for business acquisition	(943		)	(1,315		)
Net cash provided (used) by financing activities	77,836			(74,804		)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	38			(56		)
Net increase in cash, cash equivalents, and restricted cash	1,084			23,055
Cash, cash equivalents, and restricted cash, beginning of period	85,366			62,311
Cash, cash equivalents, and restricted cash, end of period	$	86,450		$	85,366

Blucora, Inc.

Preliminary Segment Information

(Unaudited) (Amounts in thousands)



	Three Months Ended December 31,						Years Ended December 31,
	2019			2018			2019			2018
Revenue:
Wealth Management (1)	$	145,188		$	97,190		$	507,979		$	373,174
Tax Preparation (1)	4,233			4,068			209,966			187,282
Total revenue	149,421			101,258			717,945			560,456
Operating income (loss):
Wealth Management	19,142			14,133			68,292			53,053
Tax Preparation	(12,316		)	(8,742		)	96,249			87,249
Corporate-level activity (2)	(32,849		)	(18,885		)	(164,532		)	(72,625		)
Total operating income (loss)	(26,023		)	(13,494		)	9			67,677
Other loss, net	(5,233		)	(3,947		)	(16,915		)	(15,797		)
Income tax benefit (expense)	48,584			1,741			65,054			(311		)
Net income (loss)	$	17,328		$	(15,700	)	$	48,148		$	51,569

____________________________


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



	Three Months Ended December 31,				Years Ended December 31,
	2019		2018		2019		2018
Wealth Management:
Commission	$	53,199	$	39,932	$	191,050	$	164,201
Advisory	75,621		43,551		252,367		164,353
Asset-based	11,652		9,999		48,182		31,456
Transaction and fee	4,716		3,708		16,380		13,164
Total Wealth Management revenue	$	145,188	$	97,190	$	507,979	$	373,174
Tax Preparation:
Consumer	$	4,096	$	3,912	$	195,004	$	172,207
Professional	137		156		14,962		15,075
Total Tax Preparation revenue	$	4,233	$	4,068	$	209,966	$	187,282

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



	Three Months Ended December 31,					Years Ended December 31,
	2019		2018			2019		2018
Operating expenses	$	7,559	$	6,144		$	27,361	$	20,495
Stock-based compensation	5,136		3,694			16,300		13,253
Acquisition and integration costs	8,024		—			25,763		—
Depreciation	2,068		947			6,851		5,003
Amortization of acquired intangible assets	10,062		8,103			37,357		33,586
Impairment of intangible asset	—		—			50,900		—
Restructuring	—		(3		)	—		288
Total corporate-level activity	$	32,849	$	18,885		$	164,532	$	72,625

Blucora, Inc.

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

Preliminary Adjusted EBITDA Reconciliation (1)

(Unaudited) (Amounts in thousands)



	Three Months Ended December 31,						Years Ended December 31,
	2019			2018			2019			2018
Net income attributable to Blucora, Inc. (2)	$	17,328		$	(15,981	)	$	48,148		$	50,634
Stock-based compensation	5,136			3,694			16,300			13,253
Depreciation and amortization of acquired intangible assets	12,130			9,050			44,208			38,589
Restructuring	—			(3		)	—			288
Other loss, net (3)	5,233			3,947			16,915			15,797
Net income attributable to noncontrolling interests	—			281			—			935
Acquisition and integration costs	8,024			—			25,763			—
Income tax (benefit) expense	(48,584		)	(1,741		)	(65,054		)	311
Impairment of intangible asset	—			—			50,900			—
Adjusted EBITDA	$	(733	)	$	(753	)	$	137,180		$	119,807

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

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



	Three Months Ended December 31,						Years Ended December 31,
	2019			2018			2019			2018
Net income (loss) attributable to Blucora, Inc. (2)	$	17,328		$	(15,981	)	$	48,148		$	50,634
Stock-based compensation	5,136			3,694			16,300			13,253
Amortization of acquired intangible assets	10,062			8,103			37,357			33,586
Impairment of intangible asset	—			—			50,900			—
Gain on sale of a business	—			—			(3,256		)	—
Acquisition and integration costs	8,024			—			25,763			—
Restructuring	—			(3		)	—			288
Net income attributable to noncontrolling interests	—			281			—			935
Cash tax impact of adjustments to GAAP net income	(504		)	(536		)	(2,396		)	(2,257		)
Non-cash income tax benefit	(44,859		)	(3,050		)	(68,618		)	(2,403		)
Non-GAAP net income (loss)	$	(4,813	)	$	(7,492	)	$	104,198		$	94,036
Per diluted share:
Net income (loss) attributable to Blucora, Inc. (2)	$	0.36		$	(0.38	)	$	0.98		$	0.90
Stock-based compensation	0.11			0.08			0.33			0.27
Amortization of acquired intangible assets	0.21			0.15			0.76			0.68
Impairment of intangible asset	—			—			1.03			—
Gain on sale of a business	—			—			(0.07		)	—
Acquisition and integration costs	0.17			—			0.52			—
Restructuring	—			—			—			0.01
Net income attributable to noncontrolling interests	—			0.06			—			0.14
Cash tax impact of adjustments to GAAP net income	(0.01		)	(0.01		)	(0.05		)	(0.05		)
Non-cash income tax benefit	(0.94		)	(0.06		)	(1.39		)	(0.05		)
Non-GAAP net income (loss) per share	$	(0.10	)	$	(0.16	)	$	2.11		$	1.90
Weighted average shares outstanding used in calculating Non-GAAP net income per share	47,689			48,002			49,282			49,381

Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance (1)

(Amounts in thousands)



	Ranges for the three months ending
	March 31, 2020
	Low		High
Net income attributable to Blucora, Inc.	$	31,500	$	34,500
Stock-based compensation	3,200		3,000
Depreciation and amortization of acquired intangible assets	10,600		10,200
Acquisition, integration, relocation, and executive transition costs	18,200		17,800
Other loss, net (3)	5,600		5,400
Income tax expense	15,900		20,100
Adjusted EBITDA	$	85,000	$	91,000

Preliminary Non-GAAP Income Reconciliation for Forward-Looking Guidance (1)

(Amounts in thousands)



	Ranges for the three months ending
	March 31, 2020
	Low			High
Net income attributable to Blucora, Inc.	$	31,500		$	34,500
Stock-based compensation	3,200			3,000
Amortization of acquired intangible assets	7,900			7,800
Acquisition, integration, relocation, and executive transition costs	18,200			17,800
Cash tax impact of adjustments to net income (loss)	(500		)	(500		)
Non-cash income tax expense	14,200			17,900
Non-GAAP income	$	74,500		$	80,500
Per diluted share:
Net income attributable to Blucora, Inc.	$	0.64		$	0.70
Stock-based compensation	0.07			0.06
Amortization of acquired intangible assets	0.16			0.16
Acquisition, integration, relocation, and executive transition costs	0.37			0.36
Cash tax impact of adjustments to net income (loss)	(0.01		)	(0.01		)
Non-cash income tax expense	0.29			0.37
Non-GAAP net income per share	$	1.52		$	1.64

Weighted average shares outstanding used in calculating Non-GAAP net income per share	49,154			49,004

Preliminary Adjusted EBITDA Reconciliation for Prior Guidance (1)

(Amounts in thousands)



	Ranges for the year ending
	December 31, 2019
	Low			High
Net income attributable to Blucora, Inc.	$	(5,400	)	$	(400	)
Stock-based compensation	17,000			16,500
Depreciation and amortization of acquired intangible assets	45,500			45,000
Other loss, net (3)	19,000			18,000
Acquisition and integration costs	24,000			23,500
Impairment of intangible asset	51,000			51,000
Income tax benefit	(20,600		)	(18,100		)
Adjusted EBITDA	$	130,500		$	135,500

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

(1)

We define Adjusted EBITDA as net income (loss) attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation and amortization of acquired intangible assets, restructuring, other loss, net, net income attributable to noncontrolling interests, acquisition and integration costs, income tax (benefit) expense, and the impairment of an intangible asset. Restructuring costs relate to the relocation of our corporate headquarters that were completed in 2018. Acquisition and integration costs relate to the acquisition of 1st Global. The impairment of an intangible asset relates to the impairment of the HD Vest trade name intangible asset.

We believe that Adjusted EBITDA provides meaningful supplemental information regarding our performance. We use this non-GAAP financial measure for internal management and compensation purposes, when publicly providing guidance on possible future results, and as a means to evaluate period-to-period comparisons. We believe that Adjusted EBITDA is a common measure used by investors and analysts to evaluate our performance, that it provides a more complete understanding of the results of operations and trends affecting our business when viewed together with GAAP results, and that management and investors benefit from referring to this non-GAAP financial measure. Items excluded from Adjusted EBITDA are significant and necessary components to the operations of our business and, therefore, Adjusted EBITDA should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income (loss). Other companies may calculate Adjusted EBITDA differently and, therefore, our Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

We define non-GAAP net income (loss) as net income (loss) attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets, the impairment of an intangible asset (described further under Adjusted EBITDA above), gain on the sale of a business, acquisition and integration costs (described further under Adjusted EBITDA above), restructuring costs (described further under Adjusted EBITDA above), net income attributable to noncontrolling interests, the related cash tax impact of those adjustments, and non-cash income taxes. The gain on the sale of a business refers to the gain recognized on the sale of SimpleTax in 2019. We exclude the non-cash portion of income taxes because of our ability to offset a substantial portion of our cash tax liabilities by using deferred tax assets, which primarily consist of U.S. federal net operating losses. The majority of these net operating losses will expire, if unutilized, between 2020 and 2024. The aforementioned items are only included in the calculation of non-GAAP net income (loss) in the periods they occurred.

We believe that non-GAAP net income (loss) and non-GAAP net income (loss) per share provide meaningful supplemental information to management, investors, and analysts regarding our performance and the valuation of our business by excluding items in the statement of operations that we do not consider part of our ongoing operations or have not been, or are not expected to be, settled in cash. Additionally, we believe that non-GAAP net income (loss) and non-GAAP net income (loss) per share are common measures used by investors and analysts to evaluate our performance and the valuation of our business. Non-GAAP net income (loss) and non-GAAP net income (loss) per share should be evaluated in light of our financial results prepared in accordance with GAAP and should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income (loss) and net income per share. Other companies may calculate non-GAAP net income (loss) and non-GAAP net income (loss) per share differently, and, therefore, our non-GAAP net income (loss) and non-GAAP net income (loss) per share may not be comparable to similarly titled measures of other companies.


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


(3)	Other loss, net, primarily includes items such as interest expense, interest income, amortization of debt issuance costs, accretion of debt discounts, loss on debt extinguishment, and gain on the sale of a business.

Exhibit 99.2

Blucora, Inc.

Supplemental Information

December 31, 2019

Table of Contents



Financial Information
Consolidated Financial Results	2
Reconciliation of Non-GAAP Financial Measures	4
Net Leverage Ratio	6
Reconciliation of Operating Free Cash Flow	7

Operating Metrics
Wealth Management	8
Tax Preparation	9

Blucora Consolidated Financial Results⁽¹⁾



(in thousands except %s and per share amounts, rounding differences may exist)	2017			2018															2019
	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q			2Q			3Q			4Q			FY 12/31
Segment revenue:
Wealth Management	$	348,620		$	92,082		$	92,015		$	91,887		$	97,190		$	373,174		$	89,532		$	127,831		$	145,428		$	145,188		$	507,979
Tax Preparation ⁽²⁾	160,937			113,883			65,833			3,498			4,068			187,282			136,236			65,909			3,588			4,233			209,966
Total	$	509,557		$	205,965		$	157,848		$	95,385		$	101,258		$	560,456		$	225,768		$	193,740		$	149,016		$	149,421		$	717,945
Segment income (loss): ⁽³⁾
Wealth Management	$	50,916		$	13,075		$	12,954		$	12,891		$	14,133		$	53,053		$	11,540		$	16,979		$	20,631		$	19,142		$	68,292
Tax Preparation ⁽²⁾	72,921			58,806			44,121			(6,936		)	(8,742		)	87,249			79,272			41,368			(12,075		)	(12,316		)	96,249
Total	$	123,837		$	71,881		$	57,075		$	5,955		$	5,391		$	140,302		$	90,812		$	58,347		$	8,556		$	6,826		$	164,541
Segment income (loss) % of revenue:
Wealth Management	15		%	14		%	14		%	14		%	15		%	14		%	13		%	13		%	14		%	13		%	13		%
Tax Preparation ⁽²⁾	45		%	52		%	67		%	(198		)%	(215		)%	47		%	58		%	63		%	(337		)%	(291		)%	46		%
Total	24		%	35		%	36		%	6		%	5		%	25		%	40		%	30		%	6		%	5		%	23		%
Unallocated corporate operating expenses ⁽³⁾	$	22,907		$	5,541		$	4,238		$	4,572		$	6,144		$	20,495		$	7,105		$	6,221		$	6,476		$	7,559		$	27,361
Adjusted EBITDA ⁽⁴⁾	$	100,930		$	66,340		$	52,837		$	1,383		$	(753	)	$	119,807		$	83,707		$	52,126		$	2,080		$	(733	)	$	137,180
Other unallocated operating expenses: ⁽³⁾
Stock-based compensation	$	11,653		$	2,955		$	3,730		$	2,874		$	3,694		$	13,253		$	2,443		$	4,082		$	4,639		$	5,136		$	16,300
Acquisition and integration costs	—			—			—			—			—			—			1,797			9,183			6,759			8,024			25,763
Depreciation	4,137			2,002			1,124			930			947			5,003			1,310			1,662			1,811			2,068			6,851
Amortization of acquired intangible assets	34,002			8,357			8,855			8,271			8,103			33,586			8,044			9,169			10,082			10,062			37,357
Impairment of intangible asset	—			—			—			—			—			—			—			—			50,900			—			50,900
Restructuring	3,101			289			2			—			(3		)	288			—			—			—			—			—
Operating income (loss)	$	48,037		$	52,737		$	39,126		$	(10,692	)	$	(13,494	)	$	67,677		$	70,113		$	28,030		$	(72,111	)	$	(26,023	)	$	9
Unallocated other income/loss: ⁽³⁾
Interest income	$	(110	)	$	(40	)	$	(58	)	$	(119	)	$	(132	)	$	(349	)	$	(140	)	$	(149	)	$	(52	)	$	(108	)	$	(449	)
Interest expense	21,211			4,181			3,847			3,744			3,838			15,610			3,776			4,770			5,469			5,002			19,017
Amortization of debt issuance costs	1,089			203			284			172			174			833			172			375			301			194			1,042
Accretion of debt discounts	1,947			47			40			38			38			163			38			85			66			39			228
Loss on debt extinguishment and modification expense	20,445			776			758			—			—			1,534			—			—			—			—			—
Gain on sale of a business	—			—			—			—			—			—			—			—			(3,256		)	—			(3,256		)
Other (income) loss, net	(31		)	61			(2,112		)	28			29			(1,994		)	112			37			78			106			333
Total other loss, net	$	44,551		$	5,228		$	2,759		$	3,863		$	3,947		$	15,797		$	3,958		$	5,118		$	2,606		$	5,233		$	16,915
Income (loss) before income taxes	$	3,486		$	47,509		$	36,367		$	(14,555	)	$	(17,441	)	$	51,880		$	66,155		$	22,912		$	(74,717	)	$	(31,256	)	$	(16,906	)
Income tax (benefit) expense:^{(3) (5)}
Cash	$	963		$	565		$	325		$	515		$	1,309		$	2,714		$	834		$	3,193		$	3,262		$	(3,725	)	$	3,564
Non-cash ⁽⁶⁾	(26,853		)	1,398			582			(1,333		)	(3,050		)	(2,403		)	3,151			(11,317		)	(15,593		)	(44,859		)	(68,618		)
Total income tax (benefit) expense	$	(25,890	)	$	1,963		$	907		$	(818	)	$	(1,741	)	$	311		$	3,985		$	(8,124	)	$	(12,331	)	$	(48,584	)	$	(65,054	)
GAAP income (loss)	$	29,376		$	45,546		$	35,460		$	(13,737	)	$	(15,700	)	$	51,569		$	62,170		$	31,036		$	(62,386	)	$	17,328		$	48,148
GAAP impact of noncontrolling interests ⁽⁷⁾	(2,337		)	(205		)	(222		)	(227		)	(281		)	(935		)	—			—			—			—			—
GAAP net income (loss) attributable to Blucora, Inc.	$	27,039		$	45,341		$	35,238		$	(13,964	)	$	(15,981	)	$	50,634		$	62,170		$	31,036		$	(62,386	)	$	17,328		$	48,148
GAAP net income (loss) per share attributable to Blucora, Inc. - diluted	$	0.57		$	0.93		$	0.71		$	(0.37	)	$	(0.38	)	$	0.90		$	1.25		$	0.62		$	(1.28	)	$	0.36		$	0.98
Non-GAAP net income (loss) ⁽⁴⁾	$	69,148		$	58,232		$	47,726		$	(4,430	)	$	(7,492	)	$	94,036		$	77,194		$	41,382		$	(9,565	)	$	(4,813	)	$	104,198
Non-GAAP net income (loss) per share - diluted^{(4) (8)}	$	1.46		$	1.20		$	0.97		$	(0.09	)	$	(0.16	)	$	1.90		$	1.56		$	0.83		$	(0.20	)	$	(0.10	)	$	2.11
Outstanding Shares	46,366			46,828			47,494			47,816			48,044			48,044			48,255			48,044			48,334			47,753			47,753
Basic weighted average shares outstanding	44,370			46,641			47,221			47,712			48,002			47,394			48,161			48,555			48,652			47,689			48,264
Diluted weighted average shares outstanding	47,211			48,665			49,434			47,712			48,002			49,381			49,542			49,822			48,652			48,344			49,282

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.


⁽²⁾	As a highly seasonal business, almost all of the Tax Preparation revenue is generated in the first four months of the calendar year.


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


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


⁽⁵⁾	On December 22, 2017, the Tax Cuts and Job Act was signed into law. This law, effective January 1, 2018, lowered the corporate income tax rate from 35% to 21%. As a result of that reduction, we re-valued our net deferred tax liabilities in 2017, which resulted in an additional income tax benefit of $21.4 million. For 2017, we recorded an income tax benefit of $25.9 million.


⁽⁶⁾	Amounts represent the non-cash portion of income taxes. We exclude the non-cash portion of income taxes because of our ability to offset a substantial portion of our cash tax liabilities by using deferred tax assets, which consist primarily of U.S. federal net operating losses. The majority of these net operating losses will expire, if unutilized, between 2020 and 2024.


⁽⁷⁾	GAAP income (loss) excludes the impact of noncontrolling interests associated with the HD Vest management rollover equity ownership of 4.48%. The impact of noncontrolling interests is recorded separately and after GAAP income (loss) through December 31, 2018, which was the final measurement date of those ownership interests.


⁽⁸⁾	For periods in which non-GAAP net income is generated, non-GAAP net income per share is calculated using diluted weighted average shares outstanding. For periods in which non-GAAP net loss is generated, non-GAAP net loss per share is calculated using basic weighted average shares outstanding.

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



(in thousands except per share amounts, rounding differences may exist)	2017			2018															2019
	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q			2Q			3Q			4Q			FY 12/31
Adjusted EBITDA
Net income (loss) attributable to Blucora, Inc. ^{(1) (2)}	$	27,039		$	45,341		$	35,238		$	(13,964	)	$	(15,981	)	$	50,634		$	62,170		$	31,036		$	(62,386	)	$	17,328		$	48,148
Stock-based compensation	11,653			2,955			3,730			2,874			3,694			13,253			2,443			4,082			4,639			5,136			16,300
Depreciation and amortization of acquired intangible assets	38,139			10,359			9,979			9,201			9,050			38,589			9,354			10,831			11,893			12,130			44,208
Restructuring	3,101			289			2			—			(3		)	288			—			—			—			—			—
Other loss, net	44,551			5,228			2,759			3,863			3,947			15,797			3,958			5,118			2,606			5,233			16,915
Net income attributable to noncontrolling interests	2,337			205			222			227			281			935			—			—			—			—			—
Acquisition and integration costs	—			—			—			—			—			—			1,797			9,183			6,759			8,024			25,763
Income tax benefit (expense)	(25,890		)	1,963			907			(818		)	(1,741		)	311			3,985			(8,124		)	(12,331		)	(48,584		)	(65,054		)
Impairment of intangible asset	—			—			—			—			—			—			—			—			50,900			—			50,900
Adjusted EBITDA	$	100,930		$	66,340		$	52,837		$	1,383		$	(753	)	$	119,807		$	83,707		$	52,126		$	2,080		$	(733	)	$	137,180
Non-GAAP Net Income (Loss)
Net income (loss) attributable to Blucora, Inc. ^{(1) (2)}	$	27,039		$	45,341		$	35,238		$	(13,964	)	$	(15,981	)	$	50,634		$	62,170		$	31,036		$	(62,386	)	$	17,328		$	48,148
Stock-based compensation	11,653			2,955			3,730			2,874			3,694			13,253			2,443			4,082			4,639			5,136			16,300
Amortization of acquired intangible assets	34,002			8,357			8,855			8,271			8,103			33,586			8,044			9,169			10,082			10,062			37,357
Impairment of intangible asset	—			—			—			—			—			—			—			—			50,900			—			50,900
Accretion and write-off of debt discount and debt issuance costs on previous debt	17,875			—			—			—			—			—			—			—			—			—			—
Gain on the sale of a business	—			—			—			—			—			—			—			—			(3,256		)	—			(3,256		)
Acquisition and integration costs	—			—			—			—			—			—			1,797			9,183			6,759			8,024			25,763
Restructuring	3,101			289			2			—			(3		)	288			—			—			—			—			—
Net income attributable to noncontrolling interests	2,337			205			222			227			281			935			—			—			—			—			—
Cash tax impact of adjustments to GAAP net income	(6		)	(313		)	(903		)	(505		)	(536		)	(2,257		)	(411		)	(771		)	(710		)	(504		)	(2,396		)
Non-cash income tax (benefit) expense	(26,853		)	1,398			582			(1,333		)	(3,050		)	(2,403		)	3,151			(11,317		)	(15,593		)	(44,859		)	(68,618		)
Non-GAAP net income (loss)	$	69,148		$	58,232		$	47,726		$	(4,430	)	$	(7,492	)	$	94,036		$	77,194		$	41,382		$	(9,565	)	$	(4,813	)	$	104,198

Non-GAAP net income (loss) per share⁽³⁾	$	1.46		$	1.20		$	0.97		$	(0.09	)	$	(0.16	)	$	1.90		$	1.56		$	0.83		$	(0.20	)	$	(0.10	)	$	2.11
Weighted average shares outstanding⁽³⁾	47,211			48,665			49,434			47,712			48,002			49,381			49,542			49,822			48,652			47,689			49,282

Notes to Reconciliation of Non-GAAP Financial Measures on next page

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

⁽¹⁾We define Adjusted EBITDA as net income (loss) attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation and amortization of acquired intangible assets, restructuring, other loss, net, the impact of noncontrolling interests, acquisition and integration costs, income tax (benefit) expense, and the impairment of an intangible asset. Restructuring costs relate to the relocation of our corporate headquarters that were completed in 2018. Acquisition and integration costs relate to the acquisition of 1st Global. The impairment of an intangible asset relates to the impairment of the HD Vest trade name intangible asset.

We define non-GAAP net income as net income attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets (including acquired technology), the impairment of an intangible asset, accretion and write-off of debt discount and debt issuance costs on previous debt, gain on the sale of a business, acquisition- and integration-related costs, restructuring costs, net income attributable to noncontrolling interests, the related cash tax impact of those adjustments, and non-cash income taxes. The write-off of debt discount and debt issuance costs on our formerly outstanding convertible senior notes and the closed TaxAct - HD Vest 2015 credit facility related to the debt refinancing that occurred in the second quarter of 2017. We exclude the non-cash portion of income taxes because of our ability to offset a substantial portion of our cash tax liabilities by using deferred tax assets, which primarily consist of U.S. federal net operating losses. The majority of these net operating losses will expire, if unutilized, between 2020 and 2024.

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

⁽²⁾As presented in the Blucora Consolidated Financial Results (unaudited) on page 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, non-GAAP net loss per share is calculated using basic weighted average shares outstanding.

Blucora Net Leverage Ratio



	2017				2018																2019
(in thousands except ratio, rounding differences may exist)	4Q				1Q				2Q				3Q				4Q				1Q				2Q				3Q				4Q
CASH:
Cash and cash equivalents	$	59,965			$	77,107			$	89,840			$	88,274			$	84,524			$	149,762			$	109,606			$	97,466			$	80,820
DEBT:
Senior secured credit facility	$	345,000			$	305,000			$	265,000			$	265,000			$	265,000			$	265,000			$	390,000			$	390,000			$	399,687

NET DEBT ^{(1) (2)}	$	(285,035	)		$	(227,893	)		$	(175,160	)		$	(176,726	)		$	(180,476	)		$	(115,238	)		$	(280,394	)		$	(292,534	)		$	(318,867	)

Last twelve months:
SEGMENT INCOME:
Wealth Management	$	50,916			$	52,138			$	52,686			$	53,152			$	53,053			$	51,518			$	55,543			$	63,283			$	68,292
Tax Preparation	72,921				78,594				86,200				85,502				87,249				107,715				104,962				99,823				96,249
	123,837				130,732				138,886				138,654				140,302				159,233				160,505				163,106				164,541
Unallocated corporate operating expenses	(22,907		)		(21,675		)		(19,450		)		(19,435		)		(20,495		)		(22,059		)		(24,042		)		(25,946		)		(27,361		)

ADJUSTED EBITDA ⁽¹⁾	$	100,930			$	109,057			$	119,436			$	119,219			$	119,807			$	137,174			$	136,463			$	137,160			$	137,180

LEVERAGE RATIO ^{(1) (3)}	2.8			x	2.1			x	1.5			x	1.5			x	1.5			x	0.8			x	2.1			x	2.1			x	2.3			x


(1)	Non-GAAP measure using Adjusted EBITDA for the last twelve months.


(2)	We define net debt 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 debt.


(3)	Net debt leverage ratio is net debt divided by Adjusted EBITDA. Adjusted EBITDA is reconciled to the nearest non-GAAP measure above.

Blucora Reconciliation of Operating Free Cash Flow ⁽¹⁾



	2017			2018															2019
(in thousands, rounding differences may exist)	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q			2Q			3Q			4Q			FY 12/31
Net cash provided (used) by operating activities	$	72,846		$	57,450		$	49,107		$	(974	)	$	(35	)	$	105,548		$	70,236		$	26,576		$	(565	)	$	(3,443	)	$	92,804
Purchases of property and equipment	(5,039		)	(940		)	(1,662		)	(2,738		)	(2,293		)	(7,633		)	(1,243		)	(1,695		)	(3,949		)	(3,614		)	(10,501		)
Operating free cash flow	$	67,807		$	56,510		$	47,445		$	(3,712	)	$	(2,328	)	$	97,915		$	68,993		$	24,881		$	(4,514	)	$	(7,057	)	$	82,303

⁽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 the continuing businesses, after the purchases of property and equipment, that can then be used for, among other things, strategic acquisitions and investments in the business, stock repurchases, and funding ongoing operations.

Blucora Operating Metrics - Wealth Management



	2017			2018															2019
(in thousands except %s, rounding differences may exist)	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q			2Q			3Q			4Q			FY 12/31
Segment revenue	$	348,620		$	92,082		$	92,015		$	91,887		$	97,190		$	373,174		$	89,532		$	127,831		$	145,428		$	145,188		$	507,979
Segment net revenue ⁽¹⁾	$	113,417		$	29,256		$	29,822		$	29,994		$	31,745		$	120,817		$	28,672		$	41,248		$	44,728		$	45,328		$	159,976
Segment income ⁽²⁾	$	50,916		$	13,075		$	12,954		$	12,891		$	14,133		$	53,053		$	11,540		$	16,979		$	20,631		$	19,142		$	68,292
Segment income % of revenue	15		%	14		%	14		%	14		%	15		%	14		%	13		%	13		%	14		%	13		%	13		%
Segment income % of net revenue	45		%	45		%	43		%	43		%	45		%	44		%	40		%	41		%	46		%	42		%	43		%



(in thousands except %s, rounding differences may exist)			2017			2018															2019
	Sources of Revenue	Primary Drivers	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q			2Q			3Q			4Q			FY 12/31
Advisor-driven	Commission	- Transactions - Asset levels - Product mix	$	160,241		$	42,870		$	40,384		$	41,015		$	39,932		$	164,201		$	37,160		$	48,068		$	52,623		$	53,199		$	191,050
Advisor-driven	Advisory	- Advisory asset levels	145,694			39,301			40,058			41,443			43,551			164,353			39,757			61,410			75,579			75,621			252,367
Other revenue	Asset-based	- Cash balances - Interest rates - Number of accounts - Client asset levels	26,297			7,172			7,306			6,979			9,999			31,456			9,693			13,219			13,618			11,652			48,182
Other revenue	Transaction and fee	- Account activity - Number of clients - Number of advisors - Number of accounts	16,388			2,739			4,267			2,450			3,708			13,164			2,922			5,134			3,608			4,716			16,380
	Total revenue		$	348,620		$	92,082		$	92,015		$	91,887		$	97,190		$	373,174		$	89,532		$	127,831		$	145,428		$	145,188		$	507,979
	Total recurring revenue ⁽³⁾		$	277,546		$	72,962		$	75,369		$	74,228		$	80,558		$	303,117		$	73,241		$	106,557		$	121,304		$	121,026		$	422,128
	Recurring revenue rate ⁽³⁾		79.6		%	79.2		%	81.9		%	80.8		%	82.9		%	81.2		%	81.8		%	83.4		%	83.4		%	83.4		%	83.1		%



(in thousands except %s and as otherwise indicated, rounding differences may exist)	2017			2018															2019
	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q			2Q			3Q			4Q			FY 12/31
Total Client Assets	$	44,178,710		$	44,383,024		$	45,016,993		$	46,413,409		$	42,249,055		$	42,249,055		$	46,164,603		$	67,602,006		$	67,682,510		$	70,644,385		$	70,644,385
Brokerage Assets	$	31,648,545		$	31,665,899		$	32,069,800		$	32,897,081		$	29,693,650		$	29,693,650		$	32,176,414		$	41,335,972		$	41,358,346		$	43,015,221		$	43,015,221
Advisory Assets	$	12,530,165		$	12,717,125		$	12,947,193		$	13,516,328		$	12,555,405		$	12,555,405		$	13,988,189		$	26,266,034		$	26,324,164		$	27,629,164		$	27,629,164
% of Total Client Assets	28.4		%	28.7		%	28.8		%	29.1		%	29.7		%	29.7		%	30.3		%	38.9		%	38.9		%	39.1		%	39.1		%
Number of Advisors (in ones)	3,999			3,920			3,709			3,687			3,593			3,593			3,553			4,225			4,119			3,984			3,984
Advisor-driven revenue per adviser ⁽⁴⁾	$	76.5		$	21.0		$	21.7		$	22.4		$	23.2		$	91.4		$	21.6		$	25.9		$	31.1		$	32.3		$	111.3


⁽¹⁾	Amount represents segment revenue less advisor commission payout.


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


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


⁽⁴⁾	Full-year advisor-driven revenue per advisor is based upon a full year of advisor-driven revenue.

Blucora Operating Metrics - Tax Preparation



(in thousands except %s and as otherwise indicated, rounding differences may exist)	Years ended December 31,				U.S. tax seasons ended
Consumers	2019	2018	% change		April 16, 2019	April 19, 2018	% change
E-files	3,239	3,896	(17	)%	3,115	3,772	(17	)%
Preparers
E-files	2,011	1,916	5	%	1,833	1,763	4	%
Units sold (in ones)	20,746	20,719	—	%	20,502	20,588	—	%
E-files per unit sold (in ones)	96.9	92.5	5	%	89.4	85.6	4	%