ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 91-1718107 | ||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
6333 State Hwy 161, 4th Floor, Irving, Texas
|
75038 | ||||
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer |
ý
|
Accelerated filer | o | ||||||||
Non-accelerated filer |
o (Do not check if a smaller reporting company)
|
Smaller reporting company |
o
|
||||||||
Emerging growth company | o |
Class | Outstanding at | ||||
Common Stock, Par Value $0.0001 | July 25, 2018 | ||||
47,643,903 |
Page | ||||||||
Item 1. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
June 30, 2018 | December 31, 2017 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 89,840 | $ | 59,965 | |||||||
Cash segregated under federal or other regulations | 1,117 | 1,371 | |||||||||
Accounts receivable, net of allowance | 6,595 | 10,694 | |||||||||
Commissions receivable | 16,820 | 16,822 | |||||||||
Other receivables | 38 | 3,180 | |||||||||
Prepaid expenses and other current assets, net | 6,754 | 7,365 | |||||||||
Total current assets | 121,164 | 99,397 | |||||||||
Long-term assets: | |||||||||||
Property and equipment, net | 9,308 | 9,831 | |||||||||
Goodwill, net | 548,838 | 549,037 | |||||||||
Other intangible assets, net | 310,983 | 328,205 | |||||||||
Other long-term assets | 15,806 | 15,201 | |||||||||
Total long-term assets | 884,935 | 902,274 | |||||||||
Total assets | $ | 1,006,099 | $ | 1,001,671 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 4,472 | $ | 4,413 | |||||||
Commissions and advisory fees payable | 17,158 | 17,813 | |||||||||
Accrued expenses and other current liabilities | 16,181 | 19,577 | |||||||||
Deferred revenue | 2,661 | 9,953 | |||||||||
Total current liabilities | 40,472 | 51,756 | |||||||||
Long-term liabilities: | |||||||||||
Long-term debt, net | 260,029 | 338,081 | |||||||||
Deferred tax liability, net | 42,652 | 43,433 | |||||||||
Deferred revenue | 501 | 804 | |||||||||
Other long-term liabilities | 6,871 | 8,177 | |||||||||
Total long-term liabilities | 310,053 | 390,495 | |||||||||
Total liabilities | 350,525 | 442,251 | |||||||||
Redeemable noncontrolling interests | 18,460 | 18,033 | |||||||||
Commitments and contingencies (Note 8) | |||||||||||
Stockholders’ equity: | |||||||||||
Common stock, par $0.0001—authorized shares, 900,000; issued and outstanding shares, | |||||||||||
47,493 and 46,366 | 5 | 5 | |||||||||
Additional paid-in capital | 1,569,412 | 1,555,560 | |||||||||
Accumulated deficit | (932,050) | (1,014,174) | |||||||||
Accumulated other comprehensive loss | (253) | (4) | |||||||||
Total stockholders’ equity | 637,114 | 541,387 | |||||||||
Total liabilities and stockholders’ equity | $ | 1,006,099 | $ | 1,001,671 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Wealth management services revenue | $ | 92,015 | $ | 85,296 | $ | 184,097 | $ | 167,963 | |||||||||||||||
Tax preparation services revenue | 65,833 | 53,866 | 179,716 | 153,574 | |||||||||||||||||||
Total revenue | 157,848 | 139,162 | 363,813 | 321,537 | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Cost of revenue: | |||||||||||||||||||||||
Wealth management services cost of revenue | 62,452 | 56,963 | 125,519 | 112,837 | |||||||||||||||||||
Tax preparation services cost of revenue | 2,459 | 2,411 | 6,812 | 6,229 | |||||||||||||||||||
Amortization of acquired technology | 49 | 47 | 99 | 95 | |||||||||||||||||||
Total cost of revenue | 64,960 | 59,421 | 132,430 | 119,161 | |||||||||||||||||||
Engineering and technology | 4,848 | 4,242 | 9,979 | 8,990 | |||||||||||||||||||
Sales and marketing | 23,791 | 22,296 | 79,044 | 71,294 | |||||||||||||||||||
General and administrative | 15,625 | 13,715 | 30,491 | 27,198 | |||||||||||||||||||
Depreciation | 993 | 873 | 2,908 | 1,813 | |||||||||||||||||||
Amortization of other acquired intangible assets | 8,806 | 8,289 | 17,113 | 16,577 | |||||||||||||||||||
Restructuring | 2 | 331 | 291 | 2,620 | |||||||||||||||||||
Total operating expenses | 119,025 | 109,167 | 272,256 | 247,653 | |||||||||||||||||||
Operating income | 38,823 | 29,995 | 91,557 | 73,884 | |||||||||||||||||||
Other loss, net | (2,759) | (24,200) | (7,987) | (33,908) | |||||||||||||||||||
Income before income taxes | 36,064 | 5,795 | 83,570 | 39,976 | |||||||||||||||||||
Income tax expense | (907) | (2,315) | (2,870) | (5,786) | |||||||||||||||||||
Net income | 35,157 | 3,480 | 80,700 | 34,190 | |||||||||||||||||||
Net income attributable to noncontrolling interests | (222) | (176) | (427) | (302) | |||||||||||||||||||
Net income attributable to Blucora, Inc. | $ | 34,935 | $ | 3,304 | $ | 80,273 | $ | 33,888 | |||||||||||||||
Net income per share attributable to Blucora, Inc.: | |||||||||||||||||||||||
Basic | $ | 0.74 | $ | 0.08 | $ | 1.71 | $ | 0.79 | |||||||||||||||
Diluted | $ | 0.71 | $ | 0.07 | $ | 1.64 | $ | 0.73 | |||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||||
Basic | 47,221 | 43,644 | 46,931 | 42,895 | |||||||||||||||||||
Diluted | 49,434 | 46,937 | 49,049 | 46,182 | |||||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||
Net income | $ | 35,157 | $ | 3,480 | $ | 80,700 | $ | 34,190 | |||||||||||||||
Unrealized gain on available-for-sale investments, net of tax | — | — | — | 1 | |||||||||||||||||||
Foreign currency translation adjustment | (112) | 147 | (249) | 190 | |||||||||||||||||||
Other comprehensive income (loss) | (112) | 147 | (249) | 191 | |||||||||||||||||||
Comprehensive income | 35,045 | 3,627 | 80,451 | 34,381 | |||||||||||||||||||
Comprehensive income attributable to noncontrolling interests | (222) | (176) | (427) | (302) | |||||||||||||||||||
Comprehensive income attributable to Blucora, Inc. | $ | 34,823 | $ | 3,451 | $ | 80,024 | $ | 34,079 |
Six months ended June 30, | |||||||||||
2018 | 2017 | ||||||||||
Operating Activities: | |||||||||||
Net income | $ | 80,700 | $ | 34,190 | |||||||
Adjustments to reconcile net income to net cash from operating activities: | |||||||||||
Stock-based compensation | 6,991 | 5,302 | |||||||||
Depreciation and amortization of acquired intangible assets | 20,338 | 18,865 | |||||||||
Restructuring (non-cash) | — | 1,402 | |||||||||
Deferred income taxes | (781) | (681) | |||||||||
Amortization of premium on investments, net, and debt issuance costs | 487 | 724 | |||||||||
Accretion of debt discounts | 87 | 1,840 | |||||||||
Loss on debt extinguishment | 1,533 | 19,581 | |||||||||
Cash provided (used) by changes in operating assets and liabilities: | |||||||||||
Accounts receivable | 4,096 | 2,956 | |||||||||
Commissions receivable | 2 | 581 | |||||||||
Other receivables | 3,142 | 2,544 | |||||||||
Prepaid expenses and other current assets | 461 | (545) | |||||||||
Other long-term assets | (764) | 341 | |||||||||
Accounts payable | 59 | (795) | |||||||||
Commissions and advisory fees payable | (655) | (444) | |||||||||
Deferred revenue | (5,746) | (8,493) | |||||||||
Accrued expenses and other current and long-term liabilities | (3,393) | 3,768 | |||||||||
Net cash provided by operating activities | 106,557 | 81,136 | |||||||||
Investing Activities: | |||||||||||
Purchases of property and equipment | (2,602) | (1,911) | |||||||||
Proceeds from sales of investments | — | 249 | |||||||||
Proceeds from maturities of investments | — | 7,252 | |||||||||
Purchases of investments | — | (409) | |||||||||
Net cash provided (used) by investing activities | (2,602) | 5,181 | |||||||||
Financing Activities: | |||||||||||
Proceeds from credit facilities | — | 367,212 | |||||||||
Payments on convertible notes | — | (172,827) | |||||||||
Payments on credit facilities | (80,000) | (275,000) | |||||||||
Proceeds from stock option exercises | 10,386 | 23,996 | |||||||||
Proceeds from issuance of stock through employee stock purchase plan | 704 | 662 | |||||||||
Tax payments from shares withheld for equity awards | (4,229) | (5,267) | |||||||||
Contingent consideration payments for business acquisition | (1,315) | (946) | |||||||||
Net cash used by financing activities | (74,454) | (62,170) | |||||||||
Net cash provided by continuing operations | 29,501 | 24,147 | |||||||||
Net cash provided by investing activities from discontinued operations | — | 1,028 | |||||||||
Net cash provided by discontinued operations | — | 1,028 | |||||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (30) | 43 | |||||||||
Net increase in cash, cash equivalents, and restricted cash | 29,471 | 25,218 | |||||||||
Cash, cash equivalents, and restricted cash, beginning of period | 62,311 | 54,868 | |||||||||
Cash, cash equivalents, and restricted cash, end of period | $ | 91,782 | $ | 80,086 | |||||||
Non-cash investing and financing activities from continuing operations: | |||||||||||
Cash paid for income taxes | $ | 767 | $ | 719 | |||||||
Cash paid for interest | $ | 7,991 | $ | 9,478 |
June 30, | December 31, | ||||||||||||||||||||||
2018 | 2017 |
2017
|
|||||||||||||||||||||
Cash and cash equivalents | $ | 89,840 | $ | 78,312 | $ | 59,965 | |||||||||||||||||
Cash segregated under federal or other regulations | 1,117 | 799 | 1,371 | ||||||||||||||||||||
Restricted cash included in "Prepaid expenses and other current assets, net" | 275 | 425 | 425 | ||||||||||||||||||||
Restricted cash included in "Other long-term assets" | 550 | 550 | 550 | ||||||||||||||||||||
Total cash, cash equivalents, and restricted cash | $ | 91,782 | $ | 80,086 | $ | 62,311 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Wealth Management | $ | 92,015 | $ | 85,296 | $ | 184,097 | $ | 167,963 | |||||||||||||||
Tax Preparation | 65,833 | 53,866 | 179,716 | 153,574 | |||||||||||||||||||
Total revenue | 157,848 | 139,162 | 363,813 | 321,537 | |||||||||||||||||||
Operating income: | |||||||||||||||||||||||
Wealth Management | 12,954 | 12,406 | 26,029 | 24,259 | |||||||||||||||||||
Tax Preparation | 44,121 | 36,515 | 102,927 | 89,648 | |||||||||||||||||||
Corporate-level activity | (18,252) | (18,926) | (37,399) | (40,023) | |||||||||||||||||||
Total operating income | 38,823 | 29,995 | 91,557 | 73,884 | |||||||||||||||||||
Other loss, net | (2,759) | (24,200) | (7,987) | (33,908) | |||||||||||||||||||
Income tax expense | (907) | (2,315) | (2,870) | (5,786) | |||||||||||||||||||
Net income | $ | 35,157 | $ | 3,480 | $ | 80,700 | $ | 34,190 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Wealth Management: | |||||||||||||||||||||||
Commission | $ | 40,384 | $ | 38,154 | $ | 83,254 | $ | 77,749 | |||||||||||||||
Advisory | 40,058 | 35,914 | 79,359 | 69,490 | |||||||||||||||||||
Asset-based | 7,306 | 6,784 | 14,478 | 12,750 | |||||||||||||||||||
Transaction and fee | 4,267 | 4,444 | 7,006 | 7,974 | |||||||||||||||||||
Total Wealth Management revenue | $ | 92,015 | $ | 85,296 | $ | 184,097 | $ | 167,963 | |||||||||||||||
Tax Preparation: | |||||||||||||||||||||||
Consumer | $ | 63,137 | $ | 51,848 | $ | 165,049 | $ | 140,090 | |||||||||||||||
Professional | 2,696 | 2,018 | 14,667 | 13,484 | |||||||||||||||||||
Total Tax Preparation revenue | $ | 65,833 | $ | 53,866 | $ | 179,716 | $ | 153,574 |
Wealth Management Segment Revenues | |||||||||||||||||||||||||||||||||||
Three Months Ended June 30, 2018 | Six Months Ended June 30, 2018 | ||||||||||||||||||||||||||||||||||
Recognized Upon Transaction | Recognized Over Time | Total | Recognized Upon Transaction | Recognized Over Time | Total | ||||||||||||||||||||||||||||||
Commission revenue
|
$ | 15,919 | $ | 24,465 | $ | 40,384 | $ | 34,264 | $ | 48,990 | $ | 83,254 | |||||||||||||||||||||||
Advisory revenue | — | 40,058 | 40,058 | — | 79,359 | 79,359 | |||||||||||||||||||||||||||||
Asset-based revenue | — | 7,306 | 7,306 | — | 14,478 | 14,478 | |||||||||||||||||||||||||||||
Transaction and fee revenue
|
1,036 | 3,231 | 4,267 | 1,997 | 5,009 | 7,006 | |||||||||||||||||||||||||||||
Total | $ | 16,955 | $ | 75,060 | $ | 92,015 | $ | 36,261 | $ | 147,836 | $ | 184,097 |
Employee-Related Termination Costs | Contract Termination Costs | Total | |||||||||||||||||||||||||||||||||
Balance as of December 31, 2017 | $ | 1,202 | $ | 681 | $ | 1,883 | |||||||||||||||||||||||||||||
Restructuring charges | 291 | — | 291 | ||||||||||||||||||||||||||||||||
Payments | (1,202) | (140) | (1,342) | ||||||||||||||||||||||||||||||||
Balance as of June 30, 2018 | $ | 291 | $ | 541 | $ | 832 |
Acquisition-related contingent consideration liability: | |||||||||||
Balance as of December 31, 2017 | $ | 2,689 | |||||||||
Payment | (1,315) | ||||||||||
Foreign currency transaction gain | (51) | ||||||||||
Balance as of June 30, 2018 | $ | 1,323 |
June 30, 2018 | December 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||
Principal
amount
|
Discount | Debt issuance costs |
Net
carrying
value
|
Principal
amount
|
Discount | Debt issuance costs |
Net
carrying
value
|
||||||||||||||||||||||||||||||||||||||||
Senior secured credit facility | $ | 265,000 | $ | (1,045) | $ | (3,926) | $ | 260,029 | $ | 345,000 | $ | (1,455) | $ | (5,464) | $ | 338,081 | |||||||||||||||||||||||||||||||
Total debt | $ | 265,000 | $ | (1,045) | $ | (3,926) | $ | 260,029 | $ | 345,000 | $ | (1,455) | $ | (5,464) | $ | 338,081 |
Balance as of December 31, 2017 | $ | 18,033 | |||
Net income attributable to noncontrolling interests | 427 | ||||
Balance as of June 30, 2018 | $ | 18,460 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Cost of revenue | $ | 574 | $ | 88 | $ | 833 | $ | 134 | |||||||||||||||
Engineering and technology | 202 | 224 | 412 | 509 | |||||||||||||||||||
Sales and marketing | 702 | 581 | 1,218 | 1,272 | |||||||||||||||||||
General and administrative | 2,555 | 1,844 | 4,528 | 3,387 | |||||||||||||||||||
Restructuring | — | 538 | — | 981 | |||||||||||||||||||
Total | $ | 4,033 | $ | 3,275 | $ | 6,991 | $ | 6,283 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Stock options exercised | 552 | 1,841 | 872 | 2,408 | |||||||||||||||||||
RSUs vested | 114 | 204 | 220 | 351 | |||||||||||||||||||
Shares purchased pursuant to ESPP | (1) | — | 35 | 76 | |||||||||||||||||||
Total | 665 | 2,045 | 1,127 | 2,835 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Income | $ | 35,157 | $ | 3,480 | $ | 80,700 | $ | 34,190 | |||||||||||||||
Net income attributable to noncontrolling interests | (222) | (176) | (427) | (302) | |||||||||||||||||||
Net income attributable to Blucora, Inc. | $ | 34,935 | $ | 3,304 | $ | 80,273 | $ | 33,888 | |||||||||||||||
Denominator: | |||||||||||||||||||||||
Weighted average common shares outstanding, basic | 47,221 | 43,644 | 46,931 | 42,895 | |||||||||||||||||||
Dilutive potential common shares | 2,213 | 3,293 | 2,118 | 3,287 | |||||||||||||||||||
Weighted average common shares outstanding, diluted | 49,434 | 46,937 | 49,049 | 46,182 | |||||||||||||||||||
Net income per share attributable to Blucora, Inc.: | |||||||||||||||||||||||
Basic | $ | 0.74 | $ | 0.08 | $ | 1.71 | $ | 0.79 | |||||||||||||||
Diluted | $ | 0.71 | $ | 0.07 | $ | 1.64 | $ | 0.73 | |||||||||||||||
Shares excluded | 373 | 664 | 637 | 1,363 |
(In thousands, except percentages) | Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||
2018 | 2017 |
Percentage
Change |
2018 | 2017 |
Percentage
Change |
||||||||||||||||||||||||||||||
Revenue | $ | 157,848 | $ | 139,162 | 13 | % | $ | 363,813 | $ | 321,537 | 13 | % | |||||||||||||||||||||||
Operating income | $ | 38,823 | $ | 29,995 | 29 | % | $ | 91,557 | $ | 73,884 | 24 | % |
(In thousands, except percentages) | Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||
2018 | 2017 |
Percentage
Change
|
2018 | 2017 |
Percentage
Change |
||||||||||||||||||||||||||||||
Revenue | $ | 92,015 | $ | 85,296 | 8 | % | $ | 184,097 | $ | 167,963 | 10 | % | |||||||||||||||||||||||
Operating income | $ | 12,954 | $ | 12,406 | 4 | % | $ | 26,029 | $ | 24,259 | 7 | % | |||||||||||||||||||||||
Segment margin | 14 | % | 14 | % | 14 | % | 14 | % |
(In thousands, except percentages) | Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||||||||
Sources of Revenue | Primary Drivers | 2018 | 2017 |
Percentage
Change
|
2018 | 2017 |
Percentage
Change
|
||||||||||||||||||||||||||||||||||
Advisor-driven
|
Commission |
- Transactions
- Asset levels
|
$ | 40,384 | $ | 38,154 | 6 | % | $ | 83,254 | $ | 77,749 | 7 | % | |||||||||||||||||||||||||||
Advisory | - Advisory asset levels | 40,058 | 35,914 | 12 | % | 79,359 | 69,490 | 14 | % | ||||||||||||||||||||||||||||||||
Other revenue | Asset-based |
- Cash balances
- Interest rates
- Number of accounts
- Client asset levels
|
7,306 | 6,784 | 8 | % | 14,478 | 12,750 | 14 | % | |||||||||||||||||||||||||||||||
Transaction and fee |
- Account activity
- Number of clients
- Number of advisors
- Number of accounts
|
4,267 | 4,444 | (4) | % | 7,006 | 7,974 | (12) | % | ||||||||||||||||||||||||||||||||
Total revenue | $ | 92,015 | $ | 85,296 | 8 | % | $ | 184,097 | $ | 167,963 | 10 | % | |||||||||||||||||||||||||||||
Total recurring revenue | $ | 75,369 | $ | 68,971 | 9 | % | $ | 148,331 | $ | 132,878 | 12 | % | |||||||||||||||||||||||||||||
Recurring revenue rate | 81.9 | % | 80.9 | % | 80.6 | % | 79.1 | % |
(In thousands, except percentages and as otherwise indicated) | June 30, | ||||||||||||||||
2018 | 2017 |
Percentage
Change
|
|||||||||||||||
Total Client Assets | $ | 45,016,993 | $ | 41,427,028 | 9 | % | |||||||||||
Brokerage Assets | $ | 32,069,800 | $ | 29,875,740 | 7 | % | |||||||||||
Advisory Assets | $ | 12,947,193 | $ | 11,551,288 | 12 | % | |||||||||||
Percentage of Total Client Assets | 28.8 | % | 27.9 | % | |||||||||||||
Number of advisors (in ones) | 3,709 | 4,426 | (16) | % | |||||||||||||
Advisor-driven revenue per advisor | $ | 21.7 | $ | 16.7 | 30 | % |
(In thousands, except percentages) | Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||
2018 | 2017 |
Percentage
Change
|
2018 | 2017 |
Percentage
Change |
||||||||||||||||||||||||||||||
By product category: | |||||||||||||||||||||||||||||||||||
Mutual funds | $ | 22,329 | $ | 20,782 | 7 | % | $ | 45,293 | $ | 41,243 | 10 | % | |||||||||||||||||||||||
Variable annuities | 12,386 | 11,730 | 6 | % | 25,850 | 23,941 | 8 | % | |||||||||||||||||||||||||||
Insurance | 3,064 | 3,006 | 2 | % | 6,451 | 6,678 | (3) | % | |||||||||||||||||||||||||||
General securities | 2,605 | 2,636 | (1) | % | 5,660 | 5,887 | (4) | % | |||||||||||||||||||||||||||
Total commission revenue | $ | 40,384 | $ | 38,154 | 6 | % | $ | 83,254 | $ | 77,749 | 7 | % | |||||||||||||||||||||||
By type of commission: | |||||||||||||||||||||||||||||||||||
Sales-based | $ | 15,919 | $ | 15,654 | 2 | % | $ | 34,264 | $ | 33,600 | 2 | % | |||||||||||||||||||||||
Trailing | 24,465 | 22,500 | 9 | % | 48,990 | 44,149 | 11 | % | |||||||||||||||||||||||||||
Total commission revenue | $ | 40,384 | $ | 38,154 | 6 | % | $ | 83,254 | $ | 77,749 | 7 | % |
(In thousands) | Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Balance, beginning of the period | $ | 12,717,125 | $ | 11,090,767 | $ | 12,530,165 | $ | 10,397,071 | |||||||||||||||
Net increase in new advisory assets | 89,249 | 221,831 | 407,814 | 519,440 | |||||||||||||||||||
Market impact and other | 140,819 | 238,690 | 9,214 | 634,777 | |||||||||||||||||||
Balance, end of the period | $ | 12,947,193 | $ | 11,551,288 | $ | 12,947,193 | $ | 11,551,288 |
(In thousands, except percentages) | Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||
2018 | 2017 |
Percentage
Change
|
2018 | 2017 |
Percentage
Change |
||||||||||||||||||||||||||||||
Revenue | $ | 65,833 | $ | 53,866 | 22 | % | $ | 179,716 | $ | 153,574 | 17 | % | |||||||||||||||||||||||
Operating income | $ | 44,121 | $ | 36,515 | 21 | % | $ | 102,927 | $ | 89,648 | 15 | % | |||||||||||||||||||||||
Segment margin | 52 | % | 53 | % | 52 | % | 53 | % |
(In thousands, except percentages) | Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||
2018 | 2017 |
Percentage
Change
|
2018 | 2017 |
Percentage
Change |
||||||||||||||||||||||||||||||
Consumer | $ | 63,137 | $ | 51,848 | 22 | % | $ | 165,049 | $ | 140,090 | 18 | % | |||||||||||||||||||||||
Professional | $ | 2,696 | $ | 2,018 | 34 | % | 14,667 | 13,484 | 9 | % | |||||||||||||||||||||||||
Total revenue | $ | 65,833 | $ | 53,866 | 22 | % | $ | 179,716 | $ | 153,574 | 17 | % |
(In thousands, except percentages) | Three months ended June 30, |
Tax seasons ended
|
|||||||||||||||||||||||||||||||||
2018 |
Percentage
Change
|
2017 | April 19, 2018 |
Percentage
Change |
April 18, 2017 | ||||||||||||||||||||||||||||||
Online e-files | 3,483 | (14) | % | 4,034 | 3,432 | (13) | % | 3,958 | |||||||||||||||||||||||||||
Desktop e-files | 155 | (17) | % | 187 | 152 | (17) | % | 184 | |||||||||||||||||||||||||||
Sub-total e-files | 3,638 | (14) | % | 4,221 | 3,584 | (13) | % | 4,142 | |||||||||||||||||||||||||||
Free File Alliance e-files (1)
|
193 | 13 | % | 171 | 188 | 15 | % | 164 | |||||||||||||||||||||||||||
Total e-files | 3,831 | (13) | % | 4,392 | 3,772 | (12) | % | 4,306 |
(In thousands, except percentages and as | Three months ended June 30, |
Tax seasons ended
|
|||||||||||||||||||||||||||||||||
otherwise indicated) | 2018 |
Percentage
Change |
2017 | April 19, 2018 |
Percentage
Change |
April 18, 2017 | |||||||||||||||||||||||||||||
E-files | 1,833 | 3 | % | 1,786 | 1,763 | 3 | % | 1,717 | |||||||||||||||||||||||||||
Units sold (in ones) | 20,637 | — | % | 20,694 | 20,588 | (2) | % | 20,964 | |||||||||||||||||||||||||||
E-files per unit sold (in ones) | 88.8 | 3 | % | 86.3 | 85.6 | 5 | % | 81.9 |
(In thousands) | Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||||||||||||||
Operating expenses | $ | 4,238 | $ | 6,463 | $ | (2,225) | $ | 9,779 | $ | 13,236 | $ | (3,457) | |||||||||||||||||||||||
Stock-based compensation | 4,033 | 2,737 | 1,296 | 6,991 | 5,302 | 1,689 | |||||||||||||||||||||||||||||
Depreciation | 1,124 | 1,059 | 65 | 3,126 | 2,193 | 933 | |||||||||||||||||||||||||||||
Amortization of acquired intangible assets | 8,855 | 8,336 | 519 | 17,212 | 16,672 | 540 | |||||||||||||||||||||||||||||
Restructuring | 2 | 331 | (329) | 291 | 2,620 | (2,329) | |||||||||||||||||||||||||||||
Total corporate-level activity | $ | 18,252 | $ | 18,926 | $ | (674) | $ | 37,399 | $ | 40,023 | $ | (2,624) |
(In thousands, except percentages) | Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||||||||||||||
Wealth management services cost of revenue | $ | 62,452 | $ | 56,963 | $ | 5,489 | $ | 125,519 | $ | 112,837 | $ | 12,682 | |||||||||||||||||||||||
Tax preparation services cost of revenue | 2,459 | 2,411 | 48 | 6,812 | 6,229 | 583 | |||||||||||||||||||||||||||||
Amortization of acquired technology | 49 | 47 | 2 | 99 | 95 | 4 | |||||||||||||||||||||||||||||
Total cost of revenue | $ | 64,960 | $ | 59,421 | $ | 5,539 | $ | 132,430 | $ | 119,161 | $ | 13,269 | |||||||||||||||||||||||
Percentage of revenue | 41 | % | 43 | % | 36 | % | 37 | % |
(In thousands, except percentages) | Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||||||||||||||
Engineering and technology | $ | 4,848 | $ | 4,242 | $ | 606 | $ | 9,979 | $ | 8,990 | $ | 989 | |||||||||||||||||||||||
Percentage of revenue | 3 | % | 3 | % | 3 | % | 3 | % |
(In thousands, except percentages) | Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||
|
2018 | 2017 |
Change
|
2018 | 2017 | Change | |||||||||||||||||||||||||||||
Sales and marketing | $ | 23,791 | $ | 22,296 | $ | 1,495 | $ | 79,044 | $ | 71,294 | $ | 7,750 | |||||||||||||||||||||||
Percentage of revenue | 15 | % | 16 | % | 22 | % | 22 | % |
(In thousands, except percentages)
|
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||
2018 | 2017 |
Change
|
2018 | 2017 | Change | ||||||||||||||||||||||||||||||
General and administrative | $ | 15,625 | $ | 13,715 | $ | 1,910 | $ | 30,491 | $ | 27,198 | $ | 3,293 | |||||||||||||||||||||||
Percentage of revenue | 10 | % | 10 | % | 8 | % | 8 | % |
(In thousands, except percentages) | Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||||||||||||||
Depreciation | $ | 993 | $ | 873 | $ | 120 | $ | 2,908 | $ | 1,813 | $ | 1,095 | |||||||||||||||||||||||
Amortization of acquired intangible assets | 8,806 | 8,289 | 517 | 17,113 | 16,577 | 536 | |||||||||||||||||||||||||||||
Total | $ | 9,799 | $ | 9,162 | $ | 637 | $ | 20,021 | $ | 18,390 | $ | 1,631 | |||||||||||||||||||||||
Percentage of revenue | 6 | % | 7 | % | 6 | % | 6 | % |
(In thousands, except percentages) | Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||||||||||||||
Restructuring | $ | 2 | $ | 331 | $ | (329) | $ | 291 | $ | 2,620 | $ | (2,329) | |||||||||||||||||||||||
Percentage of revenue | — | % | — | % | — | % | 1 | % |
(In thousands) | Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||||||||||||||
Interest income | $ | (58) | $ | (25) | $ | (33) | $ | (98) | $ | (45) | $ | (53) | |||||||||||||||||||||||
Interest expense | 3,847 | 5,529 | (1,682) | 8,028 | 11,965 | (3,937) | |||||||||||||||||||||||||||||
Amortization of debt issuance costs | 284 | 327 | (43) | 487 | 714 | (227) | |||||||||||||||||||||||||||||
Accretion of debt discounts | 40 | 755 | (715) | 87 | 1,840 | (1,753) | |||||||||||||||||||||||||||||
Loss on debt extinguishment | 758 | 17,801 | (17,043) | 1,534 | 19,581 | (18,047) | |||||||||||||||||||||||||||||
Other | (2,112) | (187) | (1,925) | (2,051) | (147) | (1,904) | |||||||||||||||||||||||||||||
Other loss, net | $ | 2,759 | $ | 24,200 | $ | (21,441) | $ | 7,987 | $ | 33,908 | $ | (25,921) |
(In thousands) | Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Net income attributable to Blucora, Inc. | $ | 34,935 | $ | 3,304 | $ | 80,273 | $ | 33,888 | |||||||||||||||
Stock-based compensation | 4,033 | 2,737 | 6,991 | 5,302 | |||||||||||||||||||
Depreciation and amortization of acquired intangible assets | 9,979 | 9,395 | 20,338 | 18,865 | |||||||||||||||||||
Restructuring | 2 | 331 | 291 | 2,620 | |||||||||||||||||||
Other loss, net | 2,759 | 24,200 | 7,987 | 33,908 | |||||||||||||||||||
Net income attributable to noncontrolling interests | 222 | 176 | 427 | 302 | |||||||||||||||||||
Income tax expense | 907 | 2,315 | 2,870 | 5,786 | |||||||||||||||||||
Adjusted EBITDA | $ | 52,837 | $ | 42,458 | $ | 119,177 | $ | 100,671 |
(In thousands, except per share amounts) | Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Net income attributable to Blucora, Inc. | $ | 34,935 | $ | 3,304 | $ | 80,273 | $ | 33,888 | |||||||||||||||
Stock-based compensation | 4,033 | 2,737 | 6,991 | 5,302 | |||||||||||||||||||
Amortization of acquired intangible assets | 8,855 | 8,336 | 17,212 | 16,672 | |||||||||||||||||||
Accretion of debt discount on the Notes | — | 633 | — | 1,567 | |||||||||||||||||||
Write-off of debt discount and debt issuance costs on terminated Notes | — | 6,715 | — | 6,715 | |||||||||||||||||||
Write-off of debt discount and debt issuance costs on terminated TaxAct - HD Vest 2015 credit facility | — | 9,593 | — | 9,593 | |||||||||||||||||||
Restructuring | 2 | 331 | 291 | 2,620 | |||||||||||||||||||
Impact of noncontrolling interests | 222 | 176 | 427 | 302 | |||||||||||||||||||
Cash tax impact of adjustments to GAAP net income | (903) | (1,819) | (1,216) | (2,406) | |||||||||||||||||||
Non-cash income tax expense | 582 | 2,941 | 1,980 | 6,101 | |||||||||||||||||||
Non-GAAP net income | $ | 47,726 | $ | 32,947 | $ | 105,958 | $ | 80,354 | |||||||||||||||
Per diluted share: | |||||||||||||||||||||||
Net income attributable to Blucora, Inc. | $ | 0.71 | $ | 0.07 | $ | 1.64 | $ | 0.73 | |||||||||||||||
Stock-based compensation | 0.08 | 0.06 | 0.14 | 0.11 | |||||||||||||||||||
Amortization of acquired intangible assets | 0.19 | 0.19 | 0.34 | 0.36 | |||||||||||||||||||
Accretion of debt discount on the Notes | — | 0.01 | — | 0.03 | |||||||||||||||||||
Write-off of debt discount and debt issuance costs on terminated Notes | — | 0.14 | — | 0.15 | |||||||||||||||||||
Write-off of debt discount and debt issuance costs on closed TaxAct - HD Vest 2015 credit facility | — | 0.20 | — | 0.21 | |||||||||||||||||||
Restructuring | — | 0.01 | 0.01 | 0.06 | |||||||||||||||||||
Impact of noncontrolling interests | — | — | 0.01 | 0.01 | |||||||||||||||||||
Cash tax impact of adjustments to GAAP net income | (0.02) | (0.04) | (0.02) | (0.05) | |||||||||||||||||||
Non-cash income tax expense | 0.01 | 0.06 | 0.04 | 0.13 | |||||||||||||||||||
Non-GAAP net income per share | $ | 0.97 | $ | 0.70 | $ | 2.16 | $ | 1.74 | |||||||||||||||
Weighted average shares outstanding used in computing per diluted share amounts | 49,434 | 46,937 | 49,049 | 46,182 |
(In thousands) | Six months ended June 30, | ||||||||||
2018 | 2017 | ||||||||||
Net cash provided by operating activities | $ | 106,557 | $ | 81,136 | |||||||
Net cash provided (used) by investing activities | (2,602) | 5,181 | |||||||||
Net cash used by financing activities | (74,454) | (62,170) | |||||||||
Net cash provided by continuing operations | 29,501 | 24,147 | |||||||||
Net cash provided by discontinued operations | — | 1,028 | |||||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (30) | 43 | |||||||||
Net increase in cash, cash equivalents, and restricted cash | $ | 29,471 | $ | 25,218 |
Exhibit
Number
|
Exhibit Description | Form | Date of First Filing | Exhibit Number |
Filed
Herewith
|
|||||||||||||||||||||||||||
3.1 | 8-K | June 8, 2018 | 3.1 | |||||||||||||||||||||||||||||
10.1 | 8-K | May 25, 2018 | 10.1 | |||||||||||||||||||||||||||||
10.2 | DEF 14A | April 19, 2018 | App-endix A | |||||||||||||||||||||||||||||
10.3 | X | |||||||||||||||||||||||||||||||
10.4 | X | |||||||||||||||||||||||||||||||
31.1 | X | |||||||||||||||||||||||||||||||
31.2 | X | |||||||||||||||||||||||||||||||
32.1 | X | |||||||||||||||||||||||||||||||
32.2 | X | |||||||||||||||||||||||||||||||
99.1 | X | |||||||||||||||||||||||||||||||
101 | The following financial statements from the Company's 10-Q for the fiscal quarter ended June 30, 2018, 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 | ||||||||||||||||||||||||||||||
BLUCORA, INC. | ||||||||
By: | /s/ Davinder Athwal | |||||||
Davinder Athwal
Chief Financial Officer
(On behalf of the Registrant and as Principal Financial Officer)
|
||||||||
Date: | August 1, 2018 |
BLUCORA, INC.
By:______________________________
Its: ____________________________
|
PARTICIPANT
_________________________________
Signature
|
|||||||
Date: ____________________________
|
||||||||
Attachments:
1. Restricted Stock Unit Agreement
2. Incentive Plan
|
BLUCORA, INC.
By: ______________________
Its: ______________________
|
PARTICIPANT
_________________________
Signature
|
|||||||
Date: _____________________
|
||||||||
Attachments:
1. Restricted Stock Unit Agreement
2. Incentive Plan
|
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 |
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)
|
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 |
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/ Davinder Athwal | |||||
Davinder Athwal | |||||
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/ Davinder Athwal | |||||||
Name: | Davinder Athwal | |||||||
Title: |
Chief Financial Officer
(Principal Financial Officer)
|
BLUCORA, INC. | ||||||||
By: | John S. Clendening | |||||||
Name: | John S. Clendening | |||||||
Title: | President and CEO | |||||||