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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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91-1718107
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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10900 NE 8th Street, Suite 800, Bellevue, Washington
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98004
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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o
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Accelerated filer
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ý
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Non-accelerated filer
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o
(Do not check if a smaller reporting company)
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Smaller reporting company
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o
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Emerging growth company
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o
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Outstanding at
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Class
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April 27, 2017
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Common Stock, Par Value $0.0001
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42,979,798
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Page
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Item 1.
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||
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||
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Item 2.
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Item 3.
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Item 4.
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||
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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March 31,
2017 |
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December 31,
2016 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
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$
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74,609
|
|
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$
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51,713
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Cash segregated under federal or other regulations
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1,872
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|
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2,355
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||
Available-for-sale investments
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160
|
|
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7,101
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||
Accounts receivable, net of allowance
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11,448
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|
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10,209
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||
Commissions receivable
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15,402
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|
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16,144
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Other receivables
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2,380
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|
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4,004
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Prepaid expenses and other current assets, net
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6,800
|
|
|
6,321
|
|
||
Total current assets
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112,671
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|
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97,847
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|
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Long-term assets:
|
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||||
Property and equipment, net
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8,990
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|
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10,836
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|
||
Goodwill, net
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548,778
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|
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548,741
|
|
||
Other intangible assets, net
|
353,847
|
|
|
362,178
|
|
||
Other long-term assets
|
2,897
|
|
|
3,057
|
|
||
Total long-term assets
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914,512
|
|
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924,812
|
|
||
Total assets
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$
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1,027,183
|
|
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$
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1,022,659
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LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
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|
||||
Current liabilities:
|
|
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|
||||
Accounts payable
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$
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7,223
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|
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$
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4,536
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Commissions and advisory fees payable
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16,389
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|
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16,587
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|
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Accrued expenses and other current liabilities
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25,887
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|
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18,528
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Deferred revenue
|
7,435
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|
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12,156
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Current portion of long-term debt, net
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2,560
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|
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2,560
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Total current liabilities
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59,494
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|
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54,367
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|
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Long-term liabilities:
|
|
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|
||||
Long-term debt, net
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212,264
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248,221
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Convertible senior notes, net
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165,350
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|
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164,176
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|
||
Deferred tax liability, net
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59,102
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|
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111,126
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|
||
Deferred revenue
|
1,145
|
|
|
1,849
|
|
||
Other long-term liabilities
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8,546
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|
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10,205
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Total long-term liabilities
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446,407
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535,577
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Total liabilities
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505,901
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589,944
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|
||||
Redeemable noncontrolling interests
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15,822
|
|
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15,696
|
|
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|
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|
||||
Commitments and contingencies (Note 10)
|
|
|
|
||||
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||||
Stockholders’ equity:
|
|
|
|
||||
Common stock, par $0.0001—authorized shares, 900,000; issued and outstanding shares,
|
|
|
|
||||
42,635 and 41,845
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4
|
|
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4
|
|
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Additional paid-in capital
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1,516,421
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|
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1,510,152
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|
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Accumulated deficit
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(1,010,628
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)
|
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(1,092,756
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)
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||
Accumulated other comprehensive loss
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(337
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)
|
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(381
|
)
|
||
Total stockholders’ equity
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505,460
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|
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417,019
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|
||
Total liabilities and stockholders’ equity
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$
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1,027,183
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$
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1,022,659
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Three months ended March 31,
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||||||
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2017
|
|
2016
|
||||
Revenue:
|
|
|
|
||||
Wealth management services revenue
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$
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82,667
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$
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77,291
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Tax preparation services revenue
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99,708
|
|
|
88,474
|
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Total revenue
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182,375
|
|
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165,765
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|
||
Operating expenses:
|
|
|
|
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Cost of revenue:
|
|
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|
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Wealth management services cost of revenue
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55,874
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52,269
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Tax preparation services cost of revenue
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3,818
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3,207
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|
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Amortization of acquired technology
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48
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|
|
667
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Total cost of revenue
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59,740
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|
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56,143
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Engineering and technology
|
4,748
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|
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4,295
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|
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Sales and marketing
|
48,998
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|
|
43,837
|
|
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General and administrative
|
13,483
|
|
|
12,753
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|
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Depreciation
|
940
|
|
|
975
|
|
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Amortization of other acquired intangible assets
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8,288
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8,316
|
|
||
Restructuring
|
2,289
|
|
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—
|
|
||
Total operating expenses
|
138,486
|
|
|
126,319
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|
||
Operating income
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43,889
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|
|
39,446
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|
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Other loss, net
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(9,708
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)
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(7,514
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)
|
||
Income from continuing operations before income taxes
|
34,181
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|
|
31,932
|
|
||
Income tax expense
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(3,471
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)
|
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(11,643
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)
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||
Income from continuing operations
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30,710
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|
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20,289
|
|
||
Discontinued operations, net of income taxes
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—
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|
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2,522
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|
||
Net income
|
30,710
|
|
|
22,811
|
|
||
Net income attributable to noncontrolling interests
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(126
|
)
|
|
(144
|
)
|
||
Net income attributable to Blucora, Inc.
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$
|
30,584
|
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$
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22,667
|
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Net income per share attributable to Blucora, Inc. - basic:
|
|
|
|
||||
Continuing operations
|
$
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0.73
|
|
|
$
|
0.49
|
|
Discontinued operations
|
—
|
|
|
0.06
|
|
||
Basic net income per share
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$
|
0.73
|
|
|
$
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0.55
|
|
Net income per share attributable to Blucora, Inc. - diluted:
|
|
|
|
||||
Continuing operations
|
$
|
0.67
|
|
|
$
|
0.48
|
|
Discontinued operations
|
—
|
|
|
0.06
|
|
||
Diluted net income per share
|
$
|
0.67
|
|
|
$
|
0.54
|
|
Weighted average shares outstanding:
|
|
|
|
||||
Basic
|
42,145
|
|
|
41,171
|
|
||
Diluted
|
45,428
|
|
|
41,610
|
|
||
Other comprehensive income:
|
|
|
|
||||
Net income
|
$
|
30,710
|
|
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$
|
22,811
|
|
Unrealized gain on available-for-sale investments, net of tax
|
1
|
|
|
11
|
|
||
Foreign currency translation adjustment
|
43
|
|
|
322
|
|
||
Other comprehensive income
|
44
|
|
|
333
|
|
||
Comprehensive income
|
30,754
|
|
|
23,144
|
|
||
Comprehensive income attributable to noncontrolling interests
|
(126
|
)
|
|
(144
|
)
|
||
Comprehensive income attributable to Blucora, Inc.
|
$
|
30,628
|
|
|
$
|
23,000
|
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Operating Activities:
|
|
|
|
||||
Net income
|
$
|
30,710
|
|
|
$
|
22,811
|
|
Less: Discontinued operations, net of income taxes
|
—
|
|
|
2,522
|
|
||
Net income from continuing operations
|
30,710
|
|
|
20,289
|
|
||
Adjustments to reconcile net income from continuing operations to net cash from operating activities:
|
|
|
|
||||
Stock-based compensation
|
2,565
|
|
|
4,229
|
|
||
Depreciation and amortization of acquired intangible assets
|
9,470
|
|
|
10,105
|
|
||
Restructuring (non-cash)
|
864
|
|
|
—
|
|
||
Deferred income taxes
|
(481
|
)
|
|
(5,127
|
)
|
||
Amortization of premium on investments, net
|
10
|
|
|
79
|
|
||
Amortization of debt issuance costs
|
387
|
|
|
610
|
|
||
Accretion of debt discounts
|
1,085
|
|
|
1,406
|
|
||
(Gain) loss on debt extinguishment and modification expense
|
1,780
|
|
|
(3,843
|
)
|
||
Other
|
—
|
|
|
13
|
|
||
Cash provided (used) by changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(1,239
|
)
|
|
(2,967
|
)
|
||
Commissions receivable
|
742
|
|
|
1,266
|
|
||
Other receivables
|
2,198
|
|
|
20,146
|
|
||
Prepaid expenses and other current assets
|
(479
|
)
|
|
2,709
|
|
||
Other long-term assets
|
122
|
|
|
95
|
|
||
Accounts payable
|
2,687
|
|
|
5,217
|
|
||
Commissions and advisory fees payable
|
(198
|
)
|
|
(1,705
|
)
|
||
Deferred revenue
|
(5,425
|
)
|
|
(2,610
|
)
|
||
Accrued expenses and other current and long-term liabilities
|
8,102
|
|
|
18,809
|
|
||
Net cash provided by operating activities from continuing operations
|
52,900
|
|
|
68,721
|
|
||
Investing Activities:
|
|
|
|
||||
Purchases of property and equipment
|
(1,165
|
)
|
|
(677
|
)
|
||
Proceeds from sales of investments
|
249
|
|
|
—
|
|
||
Proceeds from maturities of investments
|
7,092
|
|
|
—
|
|
||
Purchases of investments
|
(409
|
)
|
|
(403
|
)
|
||
Net cash provided (used) by investing activities from continuing operations
|
5,767
|
|
|
(1,080
|
)
|
||
Financing Activities:
|
|
|
|
||||
Repurchase of convertible notes
|
—
|
|
|
(20,667
|
)
|
||
Repayment of credit facility
|
(38,000
|
)
|
|
(40,000
|
)
|
||
Proceeds from stock option exercises
|
4,234
|
|
|
1,088
|
|
||
Proceeds from issuance of stock through employee stock purchase plan
|
662
|
|
|
562
|
|
||
Tax payments from shares withheld for equity awards
|
(2,209
|
)
|
|
(329
|
)
|
||
Contingent consideration payments for business acquisition
|
(946
|
)
|
|
—
|
|
||
Net cash used by financing activities from continuing operations
|
(36,259
|
)
|
|
(59,346
|
)
|
||
Net cash provided by continuing operations
|
22,408
|
|
|
8,295
|
|
||
|
|
|
|
||||
Net cash provided by operating activities from discontinued operations
|
—
|
|
|
9,795
|
|
||
Net cash used by investing activities from discontinued operations
|
—
|
|
|
(479
|
)
|
||
Net cash used by financing activities from discontinued operations
|
—
|
|
|
(5,000
|
)
|
||
Net cash provided by discontinued operations
|
—
|
|
|
4,316
|
|
||
|
|
|
|
||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
5
|
|
|
—
|
|
||
Net increase in cash, cash equivalents, and restricted cash
|
22,413
|
|
|
12,611
|
|
||
Cash, cash equivalents, and restricted cash, beginning of period
|
54,868
|
|
|
59,830
|
|
||
Cash, cash equivalents, and restricted cash, end of period
|
$
|
77,281
|
|
|
$
|
72,441
|
|
|
|
|
|
||||
Cash paid for income taxes from continuing operations
|
$
|
284
|
|
|
$
|
294
|
|
Cash paid for interest from continuing operations
|
$
|
4,504
|
|
|
$
|
7,569
|
|
|
March 31,
|
|
December 31,
|
||||||||||||
|
2017
|
|
2016
|
|
2016
|
|
2015
|
||||||||
Cash and cash equivalents
|
$
|
74,609
|
|
|
$
|
67,955
|
|
|
$
|
51,713
|
|
|
$
|
55,473
|
|
Cash segregated under federal or other regulations
|
1,872
|
|
|
3,686
|
|
|
2,355
|
|
|
3,557
|
|
||||
Restricted cash included in "Prepaid expenses and other current assets, net"
|
250
|
|
|
100
|
|
|
250
|
|
|
100
|
|
||||
Restricted cash included in "Other long-term assets"
|
550
|
|
|
700
|
|
|
550
|
|
|
700
|
|
||||
Total cash, cash equivalents, and restricted cash
|
$
|
77,281
|
|
|
$
|
72,441
|
|
|
$
|
54,868
|
|
|
$
|
59,830
|
|
•
|
On a prospective basis, the primary impact of adoption was the recognition of excess tax benefits and deficiencies, including deferred tax assets related to net operating losses that arose from excess tax benefits which the Company has deemed realizable, in the income tax provision (rather than in additional paid-in capital). For the
three months
|
•
|
The Company applied the cash flow presentation guidance on a retrospective basis, restating the consolidated statements of cash flows to present excess tax benefits as an operating activity (rather than a financing activity). This resulted in an increase to cash provided by operating activities from continuing operations and a corresponding increase to cash used by financing activities from continuing operations for the amount historically presented in the "excess tax benefits from stock-based award activity" line item in the consolidated statements of cash flows. For the
three months ended March 31, 2016
, this amount was
$16.9 million
. The restatement had no impact on total cash flows for the periods presented.
|
Tangible assets acquired
|
$
|
78,681
|
|
Liabilities assumed
|
(21,212
|
)
|
|
Identifiable net assets acquired
|
$
|
57,469
|
|
Fair value adjustments for intangible assets:
|
|
||
Advisor relationships
|
$
|
240,300
|
|
Sponsor relationships
|
16,500
|
|
|
Curriculum
|
800
|
|
|
Proprietary technology
|
13,600
|
|
|
Trade name
|
52,500
|
|
|
Fair value of intangible assets acquired
|
$
|
323,700
|
|
Purchase price allocation:
|
|
||
Cash paid
|
$
|
612,288
|
|
Plus: promissory note
|
6,400
|
|
|
Plus: noncontrolling interest
|
15,038
|
|
|
Less: escrow receivable
|
(20,000
|
)
|
|
Purchase price
|
613,726
|
|
|
Less: identifiable net assets acquired
|
(57,469
|
)
|
|
Less: fair value of intangible assets acquired
|
(323,700
|
)
|
|
Plus: deferred tax liability related to intangible assets
|
123,484
|
|
|
Excess of purchase price over net assets acquired, allocated to goodwill
|
$
|
356,041
|
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Major classes of items in net income (loss):
|
|
|
|
||||
Revenues
|
$
|
—
|
|
|
$
|
79,330
|
|
Operating expenses
|
—
|
|
|
(75,031
|
)
|
||
Other loss, net
|
—
|
|
|
(232
|
)
|
||
Discontinued operations, before income taxes
|
—
|
|
|
4,067
|
|
||
Income tax expense
|
—
|
|
|
(1,545
|
)
|
||
Discontinued operations, net of income taxes
|
$
|
—
|
|
|
$
|
2,522
|
|
|
Employee-Related Termination Costs
|
|
Contract Termination Costs
|
|
Fixed Asset Impairments
|
|
Stock-Based Compensation
|
|
Other Costs
|
|
Total
|
||||||||||||
Balance as of December 31, 2016
|
$
|
4,234
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,234
|
|
Restructuring charges
|
209
|
|
|
(241
|
)
|
|
1,878
|
|
|
443
|
|
|
—
|
|
|
2,289
|
|
||||||
Non-cash
|
—
|
|
|
1,457
|
|
|
(1,878
|
)
|
|
(443
|
)
|
|
—
|
|
|
(864
|
)
|
||||||
Balance as of March 31, 2017
|
$
|
4,443
|
|
|
$
|
1,216
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,659
|
|
Total amount expected to be incurred
|
$
|
4,691
|
|
|
$
|
(241
|
)
|
|
$
|
1,878
|
|
|
$
|
602
|
|
|
$
|
43
|
|
|
$
|
6,973
|
|
Cumulative amount incurred to date
|
$
|
4,443
|
|
|
$
|
(241
|
)
|
|
$
|
1,878
|
|
|
$
|
79
|
|
|
$
|
—
|
|
|
$
|
6,159
|
|
|
Wealth Management
|
|
Tax Preparation
|
|
Total
|
||||||
Balance as of December 31, 2016
|
$
|
356,041
|
|
|
$
|
192,700
|
|
|
$
|
548,741
|
|
Foreign currency translation adjustment
|
—
|
|
|
37
|
|
|
37
|
|
|||
Balance as of March 31, 2017
|
$
|
356,041
|
|
|
$
|
192,737
|
|
|
$
|
548,778
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
Gross carrying amount
|
|
Accumulated
amortization
|
|
Net
|
|
Gross carrying amount
|
|
Accumulated
amortization
|
|
Net
|
||||||||||||
Definite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
$
|
101,693
|
|
|
$
|
(65,561
|
)
|
|
$
|
36,132
|
|
|
$
|
101,690
|
|
|
$
|
(62,381
|
)
|
|
$
|
39,309
|
|
Advisor relationships
|
240,300
|
|
|
(21,406
|
)
|
|
218,894
|
|
|
240,300
|
|
|
(17,138
|
)
|
|
223,162
|
|
||||||
Sponsor relationships
|
16,500
|
|
|
(1,146
|
)
|
|
15,354
|
|
|
16,500
|
|
|
(917
|
)
|
|
15,583
|
|
||||||
Curriculum
|
800
|
|
|
(250
|
)
|
|
550
|
|
|
800
|
|
|
(200
|
)
|
|
600
|
|
||||||
Technology
|
43,860
|
|
|
(32,943
|
)
|
|
10,917
|
|
|
43,855
|
|
|
(32,331
|
)
|
|
11,524
|
|
||||||
Total definite-lived intangible assets
|
403,153
|
|
|
(121,306
|
)
|
|
281,847
|
|
|
403,145
|
|
|
(112,967
|
)
|
|
290,178
|
|
||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trade names
|
72,000
|
|
|
—
|
|
|
72,000
|
|
|
72,000
|
|
|
—
|
|
|
72,000
|
|
||||||
Total
|
$
|
475,153
|
|
|
$
|
(121,306
|
)
|
|
$
|
353,847
|
|
|
$
|
475,145
|
|
|
$
|
(112,967
|
)
|
|
$
|
362,178
|
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Statement of comprehensive income line items:
|
|
|
|
||||
Cost of revenue
|
$
|
48
|
|
|
$
|
667
|
|
Amortization of other acquired intangible assets
|
8,288
|
|
|
8,316
|
|
||
Total
|
$
|
8,336
|
|
|
$
|
8,983
|
|
|
|
|
Fair value measurements at the reporting date using
|
||||||||||||
|
March 31, 2017
|
|
Quoted prices in
active markets using identical assets (Level 1) |
|
Significant other
observable
inputs
(Level 2)
|
|
Significant
unobservable
inputs
(Level 3)
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market and other funds
|
$
|
11,527
|
|
|
$
|
—
|
|
|
$
|
11,527
|
|
|
$
|
—
|
|
Total cash equivalents
|
11,527
|
|
|
—
|
|
|
11,527
|
|
|
—
|
|
||||
Available-for-sale investments:
|
|
|
|
|
|
|
|
||||||||
Debt securities:
|
|
|
|
|
|
|
|
||||||||
Time deposits
|
160
|
|
|
—
|
|
|
160
|
|
|
—
|
|
||||
Total debt securities
|
160
|
|
|
—
|
|
|
160
|
|
|
—
|
|
||||
Total assets at fair value
|
$
|
11,687
|
|
|
$
|
—
|
|
|
$
|
11,687
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Acquisition-related contingent consideration liability
|
$
|
2,531
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,531
|
|
Total liabilities at fair value
|
$
|
2,531
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,531
|
|
|
|
|
Fair value measurements at the reporting date using
|
||||||||||||
|
December 31, 2016
|
|
Quoted prices in
active markets
using identical
assets
(Level 1)
|
|
Significant other
observable
inputs
(Level 2)
|
|
Significant
unobservable
inputs
(Level 3)
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
U.S government securities
|
$
|
2,749
|
|
|
$
|
—
|
|
|
$
|
2,749
|
|
|
$
|
—
|
|
Money market and other funds
|
4,090
|
|
|
—
|
|
|
4,090
|
|
|
—
|
|
||||
Commercial paper
|
1,999
|
|
|
—
|
|
|
1,999
|
|
|
—
|
|
||||
Taxable municipal bonds
|
1,301
|
|
|
—
|
|
|
1,301
|
|
|
—
|
|
||||
Total cash equivalents
|
10,139
|
|
|
—
|
|
|
10,139
|
|
|
—
|
|
||||
Available-for-sale investments:
|
|
|
|
|
|
|
|
||||||||
Debt securities:
|
|
|
|
|
|
|
|
||||||||
U.S. government securities
|
2,000
|
|
|
—
|
|
|
2,000
|
|
|
—
|
|
||||
Commercial paper
|
1,998
|
|
|
—
|
|
|
1,998
|
|
|
—
|
|
||||
Time deposits
|
807
|
|
|
—
|
|
|
807
|
|
|
—
|
|
||||
Taxable municipal bonds
|
2,296
|
|
|
—
|
|
|
2,296
|
|
|
—
|
|
||||
Total debt securities
|
7,101
|
|
|
—
|
|
|
7,101
|
|
|
—
|
|
||||
Total assets at fair value
|
$
|
17,240
|
|
|
$
|
—
|
|
|
$
|
17,240
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Acquisition-related contingent consideration liability
|
$
|
3,421
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,421
|
|
Total liabilities at fair value
|
$
|
3,421
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,421
|
|
|
Amortized
cost
|
|
Gross unrealized
gains
|
|
Gross unrealized
losses
|
|
Fair
value
|
||||||||
Balance as of March 31, 2017
|
$
|
160
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
160
|
|
Balance as of December 31, 2016
|
$
|
7,102
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
7,101
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||||
|
Principal
amount
|
|
Discount
|
|
Debt issuance costs
|
|
Net
carrying
value
|
|
Principal
amount
|
|
Discount
|
|
Debt issuance costs
|
|
Net
carrying
value
|
||||||||||||||||
TaxAct - HD Vest 2015 credit facility
|
$
|
222,000
|
|
|
$
|
(5,952
|
)
|
|
$
|
(4,424
|
)
|
|
$
|
211,624
|
|
|
$
|
260,000
|
|
|
$
|
(7,124
|
)
|
|
$
|
(5,295
|
)
|
|
$
|
247,581
|
|
Convertible Senior Notes
|
172,859
|
|
|
(5,979
|
)
|
|
(1,530
|
)
|
|
165,350
|
|
|
172,859
|
|
|
(6,913
|
)
|
|
(1,770
|
)
|
|
164,176
|
|
||||||||
Note payable, related party
|
3,200
|
|
|
—
|
|
|
—
|
|
|
3,200
|
|
|
3,200
|
|
|
—
|
|
|
—
|
|
|
3,200
|
|
||||||||
Total debt
|
$
|
398,059
|
|
|
$
|
(11,931
|
)
|
|
$
|
(5,954
|
)
|
|
$
|
380,174
|
|
|
$
|
436,059
|
|
|
$
|
(14,037
|
)
|
|
$
|
(7,065
|
)
|
|
$
|
414,957
|
|
•
|
During any fiscal quarter commencing July 1, 2013, if the last reported sale price of the Company’s common stock for at least
20
trading days during a period of
30
consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to
130%
of the conversion price on each applicable trading day. As of
March 31, 2017
, the Notes were
not convertible
.
|
•
|
During the
five
business day period after any
five
consecutive trading day period (the
“measurement period”
) in which the trading price per
$1,000
principal amount of the Notes for each trading day of the measurement period was less than
98%
of the product of the last reported sales price of the Company’s common stock and the conversion rate on each trading day.
|
•
|
If the Company calls any or all of the Notes for redemption.
|
•
|
Upon the occurrence of specified corporate events, including a merger or a sale of all or substantially all of the Company’s assets.
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Contractual interest expense (Cash)
|
$
|
1,837
|
|
|
$
|
2,109
|
|
Amortization of debt issuance costs (Non-cash)
|
240
|
|
|
247
|
|
||
Accretion of debt discount (Non-cash)
|
934
|
|
|
963
|
|
||
Total interest expense
|
$
|
3,011
|
|
|
$
|
3,319
|
|
Effective interest rate of the liability component
|
7.32
|
%
|
|
7.32
|
%
|
Balance as of December 31, 2016
|
$
|
15,696
|
|
Net income attributable to noncontrolling interests
|
126
|
|
|
Balance as of March 31, 2017
|
$
|
15,822
|
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Cost of revenue
|
$
|
46
|
|
|
$
|
42
|
|
Engineering and technology
|
285
|
|
|
411
|
|
||
Sales and marketing
|
691
|
|
|
601
|
|
||
General and administrative
|
1,543
|
|
|
3,175
|
|
||
Restructuring
|
443
|
|
|
—
|
|
||
Total in continuing operations
|
3,008
|
|
|
4,229
|
|
||
Discontinued operations
|
—
|
|
|
1,571
|
|
||
Total
|
$
|
3,008
|
|
|
$
|
5,800
|
|
|
Three months ended March 31,
|
||||
|
2017
|
|
2016
|
||
Stock options exercised
|
567
|
|
|
125
|
|
RSUs vested
|
147
|
|
|
89
|
|
Shares purchased pursuant to ESPP
|
76
|
|
|
77
|
|
Total
|
790
|
|
|
291
|
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Revenue:
|
|
|
|
||||
Wealth Management
|
$
|
82,667
|
|
|
$
|
77,291
|
|
Tax Preparation
|
99,708
|
|
|
88,474
|
|
||
Total revenue
|
182,375
|
|
|
165,765
|
|
||
Operating income:
|
|
|
|
||||
Wealth Management
|
11,853
|
|
|
10,906
|
|
||
Tax Preparation
|
53,133
|
|
|
47,573
|
|
||
Corporate-level activity
|
(21,097
|
)
|
|
(19,033
|
)
|
||
Total operating income
|
43,889
|
|
|
39,446
|
|
||
Other loss, net
|
(9,708
|
)
|
|
(7,514
|
)
|
||
Income tax expense
|
(3,471
|
)
|
|
(11,643
|
)
|
||
Discontinued operations, net of income taxes
|
—
|
|
|
2,522
|
|
||
Net income
|
$
|
30,710
|
|
|
$
|
22,811
|
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Wealth Management:
|
|
|
|
||||
Commission
|
$
|
39,595
|
|
|
$
|
36,856
|
|
Advisory
|
33,576
|
|
|
31,532
|
|
||
Asset-based
|
5,966
|
|
|
5,818
|
|
||
Transaction and fee
|
3,530
|
|
|
3,085
|
|
||
Total Wealth Management revenue
|
$
|
82,667
|
|
|
$
|
77,291
|
|
Tax Preparation:
|
|
|
|
||||
Consumer
|
$
|
88,242
|
|
|
$
|
77,471
|
|
Professional
|
11,466
|
|
|
11,003
|
|
||
Total Tax Preparation revenue
|
$
|
99,708
|
|
|
$
|
88,474
|
|
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Numerator:
|
|
|
|
||||
Income from continuing operations
|
$
|
30,710
|
|
|
$
|
20,289
|
|
Net income attributable to noncontrolling interests
|
(126
|
)
|
|
(144
|
)
|
||
Income from continuing operations attributable to Blucora, Inc.
|
30,584
|
|
|
20,145
|
|
||
Income from discontinued operations attributable to Blucora, Inc.
|
—
|
|
|
2,522
|
|
||
Net income attributable to Blucora, Inc.
|
$
|
30,584
|
|
|
$
|
22,667
|
|
Denominator:
|
|
|
|
||||
Weighted average common shares outstanding, basic
|
42,145
|
|
|
41,171
|
|
||
Dilutive potential common shares
|
3,283
|
|
|
439
|
|
||
Weighted average common shares outstanding, diluted
|
45,428
|
|
|
41,610
|
|
||
Net income per share attributable to Blucora, Inc. - basic:
|
|
|
|
||||
Continuing operations
|
$
|
0.73
|
|
|
$
|
0.49
|
|
Discontinued operations
|
—
|
|
|
0.06
|
|
||
Basic net income per share
|
$
|
0.73
|
|
|
$
|
0.55
|
|
Net income per share attributable to Blucora, Inc. - diluted:
|
|
|
|
||||
Continuing operations
|
$
|
0.67
|
|
|
$
|
0.48
|
|
Discontinued operations
|
—
|
|
|
0.06
|
|
||
Diluted net income per share
|
$
|
0.67
|
|
|
$
|
0.54
|
|
Shares excluded
|
2,062
|
|
|
7,773
|
|
(In thousands, except percentages)
|
Three months ended March 31,
|
|||||||||
|
2017
|
|
2016
|
|
Percentage
Change |
|||||
Revenue
|
$
|
182,375
|
|
|
$
|
165,765
|
|
|
10
|
%
|
Operating income
|
$
|
43,889
|
|
|
$
|
39,446
|
|
|
11
|
%
|
•
|
$4.4 million
increase
in the Wealth Management segment’s operating expenses primarily due to higher commissions to our financial advisors, which fluctuated in proportion to the change in underlying commission and advisory revenues earned on client accounts, and, to a lesser extent, higher net personnel expenses as we continue to standardize employee benefits across our businesses.
|
•
|
$5.7 million
increase
in the Tax Preparation segment’s operating expenses primarily due to higher spending on marketing, higher professional services fees mostly related to marketing and development projects, higher data center costs related to software support and maintenance fees, and, to a lesser extent, higher personnel expenses resulting from overall increased headcount supporting most functions.
|
•
|
$2.1 million
increase
in corporate-level expense activity primarily due to (i) restructuring incurred in connection with the upcoming relocation of our corporate headquarters and (ii) higher operating expenses mainly related to Strategic Transformation Costs and costs associated with leadership changes at HD Vest, offset by (iii) lower stock-based compensation mainly related to higher current year forfeitures as well as higher expense recognized in the prior year related to the initial stock award grants to HD Vest employees and (iv) lower amortization expense associated with concluding the useful life of certain TaxAct acquisition-related intangible assets during 2016.
|
(In thousands, except percentages)
|
Three months ended March 31,
|
|||||||||
|
2017
|
|
2016
|
|
Percentage
Change
|
|||||
Revenue
|
$
|
82,667
|
|
|
$
|
77,291
|
|
|
7
|
%
|
Operating income
|
$
|
11,853
|
|
|
$
|
10,906
|
|
|
9
|
%
|
Segment margin
|
14
|
%
|
|
14
|
%
|
|
|
(In thousands, except percentages)
|
Three months ended March 31,
|
|||||||||||
|
Sources of Revenue
|
Primary Drivers
|
2017
|
|
2016
|
|
Percentage
Change
|
|||||
Advisor-driven
|
Commission
|
- Transactions
- Asset levels
|
$
|
39,595
|
|
|
$
|
36,856
|
|
|
7
|
%
|
Advisory
|
- Advisory asset levels
|
33,576
|
|
|
31,532
|
|
|
6
|
%
|
|||
Other revenue
|
Asset-based
|
- Cash balances
- Interest rates
- Number of accounts
- Client asset levels
|
5,966
|
|
|
5,818
|
|
|
3
|
%
|
||
Transaction and fee
|
- Account activity
- Number of clients
- Number of advisors
- Number of accounts
|
3,530
|
|
|
3,085
|
|
|
14
|
%
|
|||
|
Total revenue
|
$
|
82,667
|
|
|
$
|
77,291
|
|
|
7
|
%
|
|
|
Total recurring revenue
|
$
|
63,907
|
|
|
$
|
60,069
|
|
|
6
|
%
|
|
|
Recurring revenue rate
|
77.3
|
%
|
|
77.7
|
%
|
|
|
(In thousands, except percentages and as otherwise indicated)
|
March 31,
|
|||||||||
|
2017
|
|
2016
|
|
Percentage
Change
|
|||||
Total Assets Under Administration (
“
AUA
”
)
|
$
|
40,424,515
|
|
|
$
|
36,505,384
|
|
|
11
|
%
|
Advisory Assets Under Management (
“
AUM
”
)
|
$
|
11,090,767
|
|
|
$
|
9,592,025
|
|
|
16
|
%
|
Percentage of total AUA
|
27.4
|
%
|
|
26.3
|
%
|
|
|
|||
Number of advisors (in ones)
|
4,427
|
|
|
4,584
|
|
|
(3
|
)%
|
(In thousands, except percentages)
|
Three months ended March 31,
|
|||||||||
|
2017
|
|
2016
|
|
Percentage
Change
|
|||||
By product category:
|
|
|
|
|
|
|||||
Mutual funds
|
$
|
20,461
|
|
|
$
|
19,039
|
|
|
7
|
%
|
Variable annuities
|
12,211
|
|
|
12,640
|
|
|
(3
|
)%
|
||
Insurance
|
3,672
|
|
|
2,774
|
|
|
32
|
%
|
||
General securities
|
3,251
|
|
|
2,403
|
|
|
35
|
%
|
||
Total commission revenue
|
$
|
39,595
|
|
|
$
|
36,856
|
|
|
7
|
%
|
|
|
|
|
|
|
|||||
By sales-based and trailing:
|
|
|
|
|
|
|||||
Sales-based
|
$
|
17,946
|
|
|
$
|
16,472
|
|
|
9
|
%
|
Trailing
|
21,649
|
|
|
20,384
|
|
|
6
|
%
|
||
Total commission revenue
|
$
|
39,595
|
|
|
$
|
36,856
|
|
|
7
|
%
|
(In thousands)
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Balance, beginning of the period
|
$
|
10,397,071
|
|
|
$
|
9,692,244
|
|
Net increase (decrease) in new advisory assets
|
297,609
|
|
|
(144,409
|
)
|
||
Market impact and other
|
396,087
|
|
|
44,190
|
|
||
Balance, end of the period
|
$
|
11,090,767
|
|
|
$
|
9,592,025
|
|
(In thousands, except percentages)
|
Three months ended March 31,
|
|||||||||
|
2017
|
|
2016
|
|
Percentage
Change
|
|||||
Revenue
|
$
|
99,708
|
|
|
$
|
88,474
|
|
|
13
|
%
|
Operating income
|
$
|
53,133
|
|
|
$
|
47,573
|
|
|
12
|
%
|
Segment margin
|
53
|
%
|
|
54
|
%
|
|
|
(In thousands, except percentages)
|
Three months ended March 31,
|
|||||||||
|
2017
|
|
2016
|
|
Percentage
Change
|
|||||
Consumer
|
$
|
88,242
|
|
|
$
|
77,471
|
|
|
14
|
%
|
Professional
|
11,466
|
|
|
11,003
|
|
|
4
|
%
|
||
Total revenue
|
$
|
99,708
|
|
|
$
|
88,474
|
|
|
13
|
%
|
(In thousands, except percentages)
|
Three months ended March 31,
|
|
Tax seasons ended
|
||||||||||||||
|
2017
|
|
2016
|
|
Percentage
Change |
|
April 18, 2017
|
|
April 19, 2016
|
|
Percentage
Change |
||||||
Online e-files
|
2,876
|
|
|
3,466
|
|
|
(17
|
)%
|
|
3,958
|
|
|
4,613
|
|
|
(14
|
)%
|
Desktop e-files
|
122
|
|
|
156
|
|
|
(22
|
)%
|
|
184
|
|
|
234
|
|
|
(21
|
)%
|
Sub-total e-files
|
2,998
|
|
|
3,622
|
|
|
(17
|
)%
|
|
4,142
|
|
|
4,847
|
|
|
(15
|
)%
|
Free File Alliance e-files
(1)
|
115
|
|
|
114
|
|
|
1
|
%
|
|
164
|
|
|
158
|
|
|
4
|
%
|
Total e-files
|
3,113
|
|
|
3,736
|
|
|
(17
|
)%
|
|
4,306
|
|
|
5,005
|
|
|
(14
|
)%
|
(1)
|
Free File Alliance e-files are provided as part of an IRS partnership that provides free electronic tax filing services to taxpayers meeting certain income-based guidelines.
|
(In thousands, except percentages and as
|
Three months ended March 31,
|
|
Tax seasons ended
|
||||||||||||||
otherwise indicated)
|
2017
|
|
2016
|
|
Percentage
Change |
|
April 18, 2017
|
|
April 19, 2016
|
|
Percentage
Change |
||||||
E-files
|
1,302
|
|
|
1,269
|
|
|
3
|
%
|
|
1,717
|
|
|
1,630
|
|
|
5
|
%
|
Units sold (in ones)
|
20,327
|
|
|
19,794
|
|
|
3
|
%
|
|
20,964
|
|
|
20,114
|
|
|
4
|
%
|
E-files per unit sold (in ones)
|
64.0
|
|
|
64.1
|
|
|
—
|
%
|
|
81.9
|
|
|
81.0
|
|
|
1
|
%
|
(In thousands)
|
Three months ended March 31,
|
||||||||||
|
2017
|
|
2016
|
|
Change
|
||||||
Operating expenses
|
$
|
6,773
|
|
|
$
|
4,699
|
|
|
$
|
2,074
|
|
Stock-based compensation
|
2,565
|
|
|
4,229
|
|
|
(1,664
|
)
|
|||
Depreciation
|
1,134
|
|
|
1,122
|
|
|
12
|
|
|||
Amortization of acquired intangible assets
|
8,336
|
|
|
8,983
|
|
|
(647
|
)
|
|||
Restructuring
|
2,289
|
|
|
—
|
|
|
2,289
|
|
|||
Total corporate-level activity
|
$
|
21,097
|
|
|
$
|
19,033
|
|
|
$
|
2,064
|
|
(In thousands, except percentages)
|
Three months ended March 31,
|
||||||||||
|
2017
|
|
2016
|
|
Change
|
||||||
Wealth management services cost of revenue
|
$
|
55,874
|
|
|
$
|
52,269
|
|
|
$
|
3,605
|
|
Tax preparation services cost of revenue
|
3,818
|
|
|
3,207
|
|
|
611
|
|
|||
Amortization of acquired technology
|
48
|
|
|
667
|
|
|
(619
|
)
|
|||
Total cost of revenue
|
$
|
59,740
|
|
|
$
|
56,143
|
|
|
$
|
3,597
|
|
Percentage of revenue
|
33
|
%
|
|
34
|
%
|
|
|
(In thousands, except percentages)
|
Three months ended March 31,
|
||||||||||
|
2017
|
|
2016
|
|
Change
|
||||||
Engineering and technology
|
$
|
4,748
|
|
|
$
|
4,295
|
|
|
$
|
453
|
|
Percentage of revenue
|
3
|
%
|
|
3
|
%
|
|
|
(In thousands, except percentages)
|
Three months ended March 31,
|
||||||||||
|
2017
|
|
2016
|
|
Change
|
||||||
Sales and marketing
|
$
|
48,998
|
|
|
$
|
43,837
|
|
|
$
|
5,161
|
|
Percentage of revenue
|
27
|
%
|
|
26
|
%
|
|
|
(In thousands, except percentages)
|
Three months ended March 31,
|
||||||||||
|
2017
|
|
2016
|
|
Change
|
||||||
General and administrative
|
$
|
13,483
|
|
|
$
|
12,753
|
|
|
$
|
730
|
|
Percentage of revenue
|
7
|
%
|
|
8
|
%
|
|
|
(In thousands, except percentages)
|
Three months ended March 31,
|
||||||||||
|
2017
|
|
2016
|
|
Change
|
||||||
Depreciation
|
$
|
940
|
|
|
$
|
975
|
|
|
$
|
(35
|
)
|
Amortization of acquired intangible assets
|
8,288
|
|
|
8,316
|
|
|
(28
|
)
|
|||
Total
|
$
|
9,228
|
|
|
$
|
9,291
|
|
|
$
|
(63
|
)
|
Percentage of revenue
|
5
|
%
|
|
6
|
%
|
|
|
(In thousands, except percentages)
|
Three months ended March 31,
|
||||||||||
|
2017
|
|
2016
|
|
Change
|
||||||
Restructuring
|
$
|
2,289
|
|
|
$
|
—
|
|
|
$
|
2,289
|
|
Percentage of revenue
|
1
|
%
|
|
—
|
%
|
|
|
|
Employee-Related Termination Costs
|
|
Contract Termination Costs
|
|
Fixed Asset Impairments
|
|
Stock-Based Compensation
|
|
Other Costs
|
|
Total
|
||||||||||||
Balance as of December 31, 2016
|
$
|
4,234
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,234
|
|
Restructuring charges
|
209
|
|
|
(241
|
)
|
|
1,878
|
|
|
443
|
|
|
—
|
|
|
2,289
|
|
||||||
Non-cash
|
—
|
|
|
1,457
|
|
|
(1,878
|
)
|
|
(443
|
)
|
|
—
|
|
|
(864
|
)
|
||||||
Balance as of March 31, 2017
|
$
|
4,443
|
|
|
$
|
1,216
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,659
|
|
Total amount expected to be incurred
|
$
|
4,691
|
|
|
$
|
(241
|
)
|
|
$
|
1,878
|
|
|
$
|
602
|
|
|
$
|
43
|
|
|
$
|
6,973
|
|
Cumulative amount incurred to date
|
$
|
4,443
|
|
|
$
|
(241
|
)
|
|
$
|
1,878
|
|
|
$
|
79
|
|
|
$
|
—
|
|
|
$
|
6,159
|
|
(In thousands)
|
Three months ended March 31,
|
||||||||||
|
2017
|
|
2016
|
|
Change
|
||||||
Interest income
|
$
|
(20
|
)
|
|
$
|
(25
|
)
|
|
$
|
5
|
|
Interest expense
|
6,436
|
|
|
9,191
|
|
|
(2,755
|
)
|
|||
Amortization of debt issuance costs
|
387
|
|
|
610
|
|
|
(223
|
)
|
|||
Accretion of debt discounts
|
1,085
|
|
|
1,406
|
|
|
(321
|
)
|
|||
(Gain) loss on debt extinguishment and modification expense
|
1,780
|
|
|
(3,843
|
)
|
|
5,623
|
|
|||
Other
|
40
|
|
|
175
|
|
|
(135
|
)
|
|||
Other loss, net
|
$
|
9,708
|
|
|
$
|
7,514
|
|
|
$
|
2,194
|
|
(In thousands)
|
Three months ended March 31,
|
||||||||||
|
2017
|
|
2016
|
|
Change
|
||||||
Gain on Convertible Senior Notes repurchased
|
$
|
—
|
|
|
$
|
(7,724
|
)
|
|
$
|
7,724
|
|
Accelerated accretion of debt discount on Convertible Senior Notes
|
—
|
|
|
1,628
|
|
|
(1,628
|
)
|
|||
Accelerated amortization of debt issuance costs on Convertible Senior Notes
|
—
|
|
|
416
|
|
|
(416
|
)
|
|||
Accelerated accretion of debt discount and amortization of debt issuance costs on TaxAct - HD Vest 2015 credit facility
|
1,780
|
|
|
1,837
|
|
|
(57
|
)
|
|||
Total (gain) loss on debt extinguishment and modification expense
|
$
|
1,780
|
|
|
$
|
(3,843
|
)
|
|
$
|
5,623
|
|
(In thousands)
|
Three months ended March 31,
|
||||||||||
|
2017
|
|
2016
|
|
Change
|
||||||
Discontinued operations, net of income taxes
|
$
|
—
|
|
|
$
|
2,522
|
|
|
$
|
(2,522
|
)
|
(In thousands)
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Operating income
|
$
|
43,889
|
|
|
$
|
39,446
|
|
Stock-based compensation
|
2,565
|
|
|
4,229
|
|
||
Depreciation and amortization of acquired intangible assets
|
9,470
|
|
|
10,105
|
|
||
Restructuring
|
2,289
|
|
|
—
|
|
||
Adjusted EBITDA
|
$
|
58,213
|
|
|
$
|
53,780
|
|
(In thousands, except per share amounts)
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Net income attributable to Blucora, Inc.
|
$
|
30,584
|
|
|
$
|
22,667
|
|
Discontinued operations, net of income taxes
|
—
|
|
|
(2,522
|
)
|
||
Stock-based compensation
|
2,565
|
|
|
4,229
|
|
||
Amortization of acquired intangible assets
|
8,336
|
|
|
8,983
|
|
||
Accretion of debt discount on Convertible Senior Notes
|
934
|
|
|
963
|
|
||
Accelerated accretion of debt discount on Convertible Senior Notes
|
—
|
|
|
1,628
|
|
||
Gain on Convertible Senior Notes repurchased
|
—
|
|
|
(7,724
|
)
|
||
Restructuring
|
2,289
|
|
|
—
|
|
||
Impact of noncontrolling interests
|
126
|
|
|
144
|
|
||
Cash tax impact of adjustments to GAAP net income
|
(587
|
)
|
|
339
|
|
||
Non-cash income tax expense
|
3,160
|
|
|
10,579
|
|
||
Non-GAAP net income
|
$
|
47,407
|
|
|
$
|
39,286
|
|
|
|
|
|
||||
Per diluted share:
|
|
|
|
||||
Net income attributable to Blucora, Inc.
|
$
|
0.67
|
|
|
$
|
0.54
|
|
Discontinued operations, net of income taxes
|
—
|
|
|
(0.06
|
)
|
||
Stock-based compensation
|
0.06
|
|
|
0.10
|
|
||
Amortization of acquired intangible assets
|
0.18
|
|
|
0.23
|
|
||
Accretion of debt discount on Convertible Senior Notes
|
0.02
|
|
|
0.02
|
|
||
Accelerated accretion of debt discount on Convertible Senior Notes
|
—
|
|
|
0.04
|
|
||
Gain on Convertible Senior Notes repurchased
|
—
|
|
|
(0.19
|
)
|
||
Restructuring
|
0.05
|
|
|
—
|
|
||
Impact of noncontrolling interests
|
0.00
|
|
|
0.00
|
|
||
Cash tax impact of adjustments to GAAP net income
|
(0.01
|
)
|
|
0.01
|
|
||
Non-cash income tax expense
|
0.07
|
|
|
0.25
|
|
||
Non-GAAP net income
|
$
|
1.04
|
|
|
$
|
0.94
|
|
Weighted average shares outstanding used in computing per diluted share amounts
|
45,428
|
|
|
41,610
|
|
(In thousands)
|
Three months ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Net cash provided by operating activities from continuing operations
|
$
|
52,900
|
|
|
$
|
68,721
|
|
Net cash provided (used) by investing activities from continuing operations
|
5,767
|
|
|
(1,080
|
)
|
||
Net cash used by financing activities from continuing operations
|
(36,259
|
)
|
|
(59,346
|
)
|
||
Net cash provided by continuing operations
|
22,408
|
|
|
8,295
|
|
||
Net cash provided by discontinued operations
|
—
|
|
|
4,316
|
|
||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
5
|
|
|
—
|
|
||
Net increase in cash, cash equivalents, and restricted cash
|
$
|
22,413
|
|
|
$
|
12,611
|
|
|
BLUCORA, INC.
|
|
|
|
|
|
By:
|
/s/ Eric M. Emans
|
|
|
Eric M. Emans
Chief Financial Officer
(On behalf of the Registrant and as Principal Financial Officer)
|
|
|
|
|
Date:
|
May 4, 2017
|
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
Date of First Filing
|
|
Exhibit Number
|
|
Filed
Herewith
|
3.2
|
|
Amended and Restated Bylaws of Blucora, Inc.
|
|
8-K
|
|
February 28, 2017
|
|
3.2
|
|
|
10.1
|
|
Employment Agreement by and between Blucora, Inc. and Sanjay Baskaran dated January 12, 2017
|
|
8-K/A
|
|
January 13, 2017
|
|
10.1
|
|
|
10.2
|
|
Employment Agreement by and among Blucora, Inc., H. D. Vest, Inc. and Robert D. Oros dated January 22, 2017
|
|
8-K
|
|
January 23, 2017
|
|
10.1
|
|
|
10.3
|
|
Transition and Separation Agreement by and between H. D. Vest, Inc. and Roger C. Ochs dated January 22, 2017
|
|
8-K
|
|
January 23, 2017
|
|
10.2
|
|
|
10.4
|
|
2017 Executive Bonus Plan
|
|
|
|
|
|
|
|
X
|
10.5
|
|
Sublease dated April 13, 2017, by and between Blucora, Inc. and Xevo, Inc. related to that certain Office Lease dated July 13, 2012 by and between Blucora, Inc. and KBS SOR Plaza Bellevue, LLC (as successor to Plaza Property Center LLC)
|
|
|
|
|
|
|
|
X
|
31.1
|
|
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
X
|
31.2
|
|
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
X
|
32.1
|
|
Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
X
|
32.2
|
|
Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
X
|
101
|
|
The following financial statements from the Company's 10-Q for the fiscal quarter ended March 31, 2017, formatted in XBRL: (i) Unaudited Condensed Consolidated Balance Sheets, (ii) Unaudited Condensed Consolidated Statements of Operations, (iii) Unaudited Condensed Consolidated Statements of Cash Flows, and (iv) Notes to Unaudited Condensed Consolidated Financial Statements
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
2017 Executive Bonus Plan
|
•
|
Provide variable pay opportunities and targeted total cash compensation that are (a) aligned with key financial drivers, and (b) otherwise consistent with the total cash compensation philosophy outlined from time to time by the Compensation Committee of the Compensation Committee of Blucora’s Board of Directors (“Compensation Committee”).
|
•
|
Increase the competitiveness of executive pay without increasing fixed costs, making bonus payments contingent upon organizational and individual success.
|
•
|
Create internal consistency and standard guidelines among the executive peer group.
|
Job Title
|
Target Bonus %
|
President and Chief Executive Officer
|
200%
|
Chief Financial Officer and Treasurer
|
60%
|
Chief Legal and Administrative Officer
|
60%
|
Chief Human Resources Officer
|
50%
|
Chief Marketing Officer
|
40%
|
President, TaxAct*
|
60%
|
Chief Executive Officer, HD Vest*
|
100%
|
|
Target Weighting
|
||||||
Target Category
|
CEO
|
CFO
|
CLO
|
CMO
|
CHRO
|
CEO - HD
|
CEO - TA
|
Consolidated Revenue
|
50%
|
50%
|
50%
|
30%
|
50%
|
|
|
Consolidated Adj EBITDA
|
50%
|
50%
|
50%
|
30%
|
50%
|
20%
|
20%
|
Tax Revenue
|
|
|
|
|
|
|
30%
|
Tax Segment Income*
|
|
|
|
|
|
|
30%
|
Paid DDIY Efiles
|
|
|
|
20%
|
|
|
20%
|
HDV Net Revenue
|
|
|
|
|
|
30%
|
|
HDV Segment Income*
|
|
|
|
|
|
30%
|
|
Fee Base Net Flows
|
|
|
|
|
|
20%
|
|
Advisor Recruiting
|
|
|
|
20%
|
|
|
|
Total
|
100%
|
100%
|
100%
|
100%
|
100%
|
100%
|
100%
|
•
|
Consolidated Revenue
: Consolidated, externally reported Revenue
|
•
|
Consolidated Adjusted EBITDA
: Consolidated, externally reported EBITDA, normalized for internally developed software and other non-operational items
|
•
|
Segment Revenue or Income
(as applicable)
: Externally reported Income or Revenue for the applicable segment, with Income normalized for internally developed software and other non-operational items
|
•
|
Paid DDIY Efiles
: Total DDIY efiles that are paid during the IRS designated filing season
|
•
|
Fee Based Net Flows
:
Actual new fee based assets relative to plan
|
•
|
Advisor Recruiting
:
Actual new advisors onboarded onto the HD Vest platform relative to plan
|
Performance Level
|
Financial Performance vs. Target
|
Bonus Achievement
|
Added Payout Rate Per 1% Attainment
|
Below Minimum
|
0% - 79%
|
0.0%
|
----
|
Decelerated
|
80% - 84%
|
50.0% - 78%
|
7%
|
1:1
|
85% - 115%
|
85% - 115%
|
----
|
Accelerated
|
116% - 120%
|
122% - 150%
|
7%
|
Maximum
|
> 120%
|
Capped at 150%
|
----
|
•
|
Rounding
. Performance results will be rounded up to the nearest whole percentage point. For example, if the calculated performance achievement percentage is 79.1%, it will be rounded up to 80%.
|
•
|
Performance Thresholds
. There will be no payout for a financial performance component if the minimum specified threshold is not achieved. However, if the threshold for one financial performance component is not achieved, a bonus may still be earned on the other financial performance component(s), provided performance for that measure achieves the applicable threshold.
|
•
|
Acceleration Below and Above Target
. For determining bonus achievement percentage where a range is indicated in the financial performance vs. target column, the whole percentage point of financial performance achieved is mapped to the corresponding bonus achievement percentage using a linear scale between the low and high points in the range.
|
Months
|
Monthly Installment of Sublease Rent
|
Annual Sublease Rent per Rentable Square Foot
|
1-6
|
$81,501.75
|
$24.75
|
7-24
|
$105,376
|
$32.00
|
25-36
|
$108,669
|
$33.00
|
37-40
|
$111,962
|
$34.00
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Blucora, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ John S. Clendening
|
|
John S. Clendening
|
|
Chief Executive Officer and President
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Blucora, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Eric M. Emans
|
|
Eric M. Emans
|
|
Chief Financial Officer
(Principal Financial Officer)
|
|
By:
|
/s/ John S. Clendening
|
|
Name:
|
John S. Clendening
|
|
Title:
|
Chief Executive Officer and President
(Principal Executive Officer)
|
|
By:
|
/s/ Eric M. Emans
|
|
Name:
|
Eric M. Emans
|
|
Title:
|
Chief Financial Officer
(Principal Financial Officer)
|