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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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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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(IRS Employer
Identification No.)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, par value $0.0001 per share
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BCOR
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NASDAQ Global Select Market
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Large Accelerated Filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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Item 1.
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Item 1A.
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Item 1B.
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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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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16.
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•
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our ability to effectively compete within our industry;
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our ability to attract and retain financial advisors, qualified employees, clients, and customers, as well as our ability to provide strong customer/client service;
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our ability to close, finance, and realize all of the anticipated benefits of our recent or pending acquisitions, as well as our ability to integrate the operations of recently acquired businesses;
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our future capital requirements and the availability of financing, if necessary;
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our ability to meet our current and future debt service obligations, including our ability to maintain compliance with our debt covenants;
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our ability to generate strong performance for our clients and the impact of the financial markets on our clients’ portfolios;
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the impact of new or changing legislation and regulations (or interpretations thereof) on our business, including our ability to successfully address and comply with such legislation and regulations (or interpretations thereof) and increased costs, reductions of revenue, and potential fines, penalties or disgorgement to which we may be subject as a result thereof;
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risks, burdens, and costs, including fines, penalties or disgorgement, associated with our business being subjected to regulatory inquiries, investigations or initiatives, including those of the Financial Industry Regulatory Authority (“FINRA”) and the Securities and Exchange Commission (“SEC”);
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risks associated with legal proceedings, including litigation and regulatory proceedings;
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our ability to manage leadership and employee transitions, including costs and time burdens on management and our board of directors (“Board”) related thereto;
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political and economic conditions and events that directly or indirectly impact the wealth management and tax preparation industries;
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our ability to respond to rapid technological changes, including our ability to successfully release new products and services or improve upon existing products and services;
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our expectations concerning the revenues we generate from fees associated with the financial products that we distribute;
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risks related to goodwill and other intangible asset impairment;
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our ability to develop, establish, and maintain strong brands;
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risks associated with the use and implementation of information technology and the effect of security breaches, computer viruses, and computer hacking attacks;
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our ability to comply with laws and regulations regarding privacy and protection of user data;
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our ability to maintain our relationships with third-party partners, providers, suppliers, vendors, distributors, contractors, financial institutions, industry associations, and licensing partners, and our expectations regarding and reliance on the products, tools, platforms, systems, and services provided by these third parties;
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our beliefs and expectations regarding the seasonality of our business;
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our assessments and estimates that determine our effective tax rate; and
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our ability to protect our intellectual property and the impact of any claim that we have infringed on the intellectual property rights of others.
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A “free” federal and state edition that handled simple returns;
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A “basic” offering that offered features for filers with dependents or college expenses;
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A “deluxe” offering that contained all of the basic offering features in addition to tools to maximize credits and deductions, as well as tools for homeowners;
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A “premier” offering that contained all of the deluxe offering features in addition to tools for investments, rental property, and prioritized support; and
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A “self-employed” offering for independent contractors and self-employed filers.
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Increased total revenue by 28% compared to 2018;
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Completed the acquisition of 1st Global, adding significant scale and complementary capabilities to our Wealth Management business;
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Achieved record advisory net flows of $1.0 billion in our Wealth Management business;
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Recorded 22nd consecutive year of revenue growth in our Tax Preparation business, growing 12% compared to 2018; and
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•
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Completed $28.3 million of a $100.0 million share repurchase program, supported by strong cash flow generation.
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(1)
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On May 6, 2019, we acquired 1st Global, a tax-focused wealth management company. The operations of 1st Global are included in our operating results as part of the Wealth Management segment from the date of the 1st Global Acquisition.
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(2)
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Represents the compound annual growth rate (“CAGR”) for each financial metric.
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(3)
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Represents a non-GAAP financial measure. For a description of each non-GAAP financial measure and a reconciliation of each measure to the most directly comparable GAAP financial measure (which is Net Income Attributable to Blucora, Inc.), see the “Non-GAAP Financial Measures” section of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
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In 2008, InfoSpace began principally focusing on internet search services and content (our “Search and Content” business).
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In January 2012, InfoSpace acquired TaxAct. In connection with this acquisition, InfoSpace changed its name to Blucora, Inc. in June 2012.
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In August 2013, Blucora acquired Monoprice, Inc. (“Monoprice”), an e-commerce company that sold self-branded electronics and accessories to both consumers and businesses (our “E-Commerce” business).
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In July 2015, Blucora acquired SimpleTax Software Inc. (“SimpleTax”), a provider of digital tax preparation services for individuals in Canada.
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In December 2015, Blucora acquired HD Vest, a provider of wealth management and advisory solutions specifically for tax professionals, and announced its plans to focus on the technology-enabled financial solutions market (the “Strategic Transformation”). The Strategic Transformation refers to our transformation into a technology-enabled financial solutions company comprised of TaxAct and HD Vest.
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As part of the Strategic Transformation, we divested our Search and Content business in August 2016 and our E-Commerce business in November 2016. We subsequently relocated our corporate headquarters from Bellevue, Washington to Irving, Texas in 2017.
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On May 6, 2019, we closed the acquisition of all of the issued and outstanding common stock of 1st Global, Inc. and 1st Global Insurance Services, Inc. (together, “1st Global”), a tax-focused wealth management company, for a cash purchase price of $180.0 million (the “1st Global Acquisition”). The 1st Global Acquisition was strategically important as it expands our presence as the leading tax-focused independent broker-dealer while also providing the scale to compete more broadly in the wealth management market. The operations of 1st Global are included in our operating results as part of the Wealth Management segment from the date of the 1st Global Acquisition.
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Following an evaluation of the Tax Preparation business’s strategic initiatives, including which aspects of the Tax Preparation business were considered non-core strategies, on September 4, 2019, we completed the disposition of all of the issued and outstanding stock of SimpleTax for proceeds of $9.6 million. This amount was received in the third quarter of 2019, resulting in a $3.3 million gain on sale for the year ended December 31, 2019. Prior to its sale, SimpleTax was a component of our Tax Preparation business.
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On September 9, 2019, we announced a rebranding of our Wealth Management business to Avantax Wealth Management (the “Rebranding”). In connection with the Rebranding, HD Vest (which comprised all of the Wealth Management business prior to the 1st Global Acquisition) was renamed Avantax Wealth Management in mid-September 2019, and 1st Global converted in late October 2019. The Rebranding is designed to bring broader awareness to our Tax-Smart wealth management approach, providing tax-focused wealth management advice with technology-advantaged tools, allowing our financial advisors to easily provide Tax-Smart wealth solutions to their clients.
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In the Wealth Management business, we will accelerate organic growth as the largest tax-focused broker-dealer by:
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Recruiting high potential tax firms as financial advisors and investing in the training and support to make them successful, including the rollout of regional support teams and the introduction of a comprehensive training and support program for new advisors, Avantax University.
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Providing practice management and coaching to our advisors to grow their businesses and client base.
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Continually evaluating and expanding our product suite to provide the best wealth management solutions for our advisors and their clients.
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Delivering advisory products and services to increase client assets held on our platform.
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Driving integrations by aligning systems, processes and technologies, while applying product, technology, and data analytics to identify and capture asset growth opportunities.
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Continuing to enhance and optimize service and support for advisors.
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In the Tax Preparation business, we will create continued growth and momentum by:
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Continuing to invest in our core product experience based on direct customer feedback and research to create delightful experiences for our customers.
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Differentiating the TaxAct experience with unique product capabilities and features that reinforce our brand’s deep expertise in tax.
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Developing new and cost-effective marketing strategies to drive acquisition of new customers.
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Appealing to a large, attitudinal segment that is looking for a forward-leaning approach to improve their financial position.
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Innovating new solutions and models that expand the DDIY category.
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Providing ancillary services and partnerships to our customers that enhance our value and brand promise.
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Creating year-long engagement with customers to improve retention.
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Build Tax-Smart Leadership. A key element of our business model is to leverage tax information, which we believe enables clients and advisors to better achieve their financial goals and uncover potential opportunities for clients by delivering technology-enabled tax-smart solutions and financial insights.
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One Blucora. A key objective of our strategy is to continue to enable efficiencies and cross-business synergies through shared services and expertise across our Wealth Management and Tax Preparation businesses. We believe that building a high-performing organization that attracts, retains, develops, and engages the strongest talent will drive a shared purpose and common culture.
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Deliver Results. Our goal is to drive continuous improvement by focusing on specific financial metrics that drive the organization and allow us to meet our stated goals and targets. These key metrics currently include revenue growth, net income growth, adjusted EBITDA growth, and non-GAAP net income growth. Adjusted EBITDA and non-GAAP net income are non-GAAP financial measures. For more information on these non-GAAP financial measures, including definitions, see the “Non-GAAP Financial Measures” section contained in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
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offer broad and comprehensive wealth solutions that address a client’s accumulation, income, and protection needs across their entire lives;
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offer a differentiated value proposition (in terms of brand recognition, reputation, and financial advisor payouts) in order to recruit and retain financial advisors;
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offer products and technology solutions that are attractive to financial advisors and their clients;
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negotiate competitive compensation arrangements with third parties, including vendors, suppliers, and product sponsors;
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ensure the privacy and security of personal client information submitted to our financial advisors;
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develop and react to new technology, services, and regulation in the financial services industry; and
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establish an efficient support and service network for our financial advisors and clients.
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optimizing or minimizing the taxes paid by each of our customers;
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offering competitive pricing;
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continuing to offer reliable, easy-to-use, and accessible software and services that are compelling to consumers;
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offering software that is backed by financial and tax-expertise;
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ensuring the privacy and security of user data submitted through our products;
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marketing our software and services in a cost-effective way; and
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offering ancillary services that are attractive to users.
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during the period until and after we consummate the HKFS Acquisition, uncertainty and disruptions may negatively impact HKFS’s relationships with its employees, its CPA partner firms and representatives, or those advisors’ and representatives’ relationships with their clients, which could harm HKFS’s financial condition and results of operations;
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•
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we may fail to realize the anticipated benefits of the HKFS Acquisition, including the expected operational, revenue, and cost synergies with our Wealth Management business and the level of revenue and profitability growth that we are expecting;
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we may face difficulties in attracting and retaining key management and employees, or we may need to attract and retain additional management resources, which could negatively impact the operations of HKFS, disrupt our ongoing operations, and divert ours and HKFS’s management’s attention from ongoing operations and opportunities;
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•
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after we acquire HKFS, our management’s attention may be diverted from the daily operations of our existing businesses;
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our financial results may be negatively impacted by cash expenses and non-cash charges incurred in connection with the HKFS Acquisition or in the future if goodwill or other intangible assets we acquire in the HKFS Acquisition become impaired;
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notwithstanding the due diligence we performed in connection with the HKFS Acquisition, HKFS may have liabilities, losses, or other exposures (including regulatory risks) for which we do not have adequate insurance coverage, indemnification, or other protection; and
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we expect to incur substantial additional indebtedness to finance the HKFS Acquisition, enhancing our vulnerability to increased debt service requirements should interest rates rise, reducing the amount of expected cash flow available for other purposes, including capital expenditures and acquisitions, and limiting our flexibility in planning for, or reacting to, changes in our businesses and industries.
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diversion of management’s and our employees’ attention to integration matters;
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higher than anticipated integration costs and difficulties in achieving anticipated cost savings, synergies, business opportunities, and growth prospects from the 1st Global Acquisition;
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difficulties in the integration of operations and systems, including the use of our clearing platform;
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difficulties in conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures;
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difficulties in keeping advisors and clients;
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difficulties in managing the expanded operations of a significantly larger and more complex company; and
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the impact of potential liabilities inherited from 1st Global, including potential liability related to a regulatory inquiry. See “Item 8. Financial Statements and Supplementary Data—Note 3” for additional information.
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•
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the need to manage relationships with various strategic partners and other third parties;
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the need to maintain levels of service expected by clients and customers;
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the creation, implementation, consolidation, or conversion of technological infrastructure, platforms, products and service offerings;
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the pressure to deliver our products and services on a timely basis;
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difficulties in hiring and retaining skilled personnel necessary to support our business;
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increased costs and capacity constraints in connection with providing office space for our employee population;
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the integration of acquired businesses and organic business, customer and revenue growth strategies and initiatives;
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pressures for the continued development of our products and financial and information management systems; and
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the possible need to create lines of businesses or departments that do not now exist, and to hire, train, motivate, and manage a growing number of staff.
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increasing our vulnerability to downturns in our businesses, to competitive pressures, and to adverse economic and industry conditions;
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requiring the dedication of a portion of our expected cash from operations to service the indebtedness, thereby reducing the amount of expected cash flow available for other purposes, including capital expenditures and complementary acquisitions;
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increasing our interest payment obligations in the event that interest rates rise; and
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limiting our flexibility in planning for, or reacting to, changes in our businesses and our industries.
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•
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actual or anticipated variations in quarterly and annual results of operations;
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impairment charges, changes in or loss of material contracts and relationships, dispositions or announcements of complementary acquisitions, or other business developments by us, our partners, or our competitors;
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•
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changes in executive officers;
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•
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conditions or trends in the tax preparation or wealth management markets or changes in market share;
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•
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changes in general conditions in the United States and global economies or financial markets;
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announcements of technological innovations or new services by us or our competitors;
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changes in financial estimates or recommendations by securities analysts;
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disclosures of any accounting issues, such as restatements or material weaknesses in internal control over financial reporting;
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equity issuances resulting in the dilution of stockholders;
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•
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the adoption of new regulations or accounting standards;
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adverse publicity (whether justified or not) with respect to our business; and
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•
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announcements or publicity relating to litigation or governmental enforcement actions.
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•
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the inability of any of our businesses to implement business plans and to meet our expectations;
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the seasonality of our Tax Preparation business and the resulting large quarterly fluctuations in our revenues;
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variable demand for our services, rapidly evolving technologies and markets, and consumer preferences;
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the level and mix of total client assets and advisory assets, which are subject to fluctuation based on market conditions and client activity;
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the mix of revenues generated by existing businesses or other businesses that we develop or acquire;
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changes in interest rates or reductions in our cash sweep revenue;
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volatility in stock markets impacting the value of our advisory assets;
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•
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gains or losses driven by fair value accounting;
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•
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litigation expenses and settlement costs;
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misconduct by employees, contractors and/or financial advisors, which is difficult to detect and deter;
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•
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expenses incurred in finding, evaluating, negotiating, consummating, and integrating acquisitions;
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impairment or negative performance of the many different industries and counterparties we rely on and are exposed to;
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•
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any restructuring charges we may incur;
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•
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any economic downturn, which could result in lower acceptance rates on premium products and services offered by our Wealth Management business and impact the commissions and fee revenues of our financial advisory services;
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•
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new court rulings, or the adoption of new or interpretation of existing laws, rules, or regulations, that adversely affect our business or that otherwise increase our potential liability or compliance costs;
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•
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impairment in the value of long-lived assets or the value of acquired assets, including goodwill, technology, and acquired contracts and relationships; and
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•
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the effect of changes in accounting principles or standards or in our accounting treatment of revenues or expenses.
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•
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the requirement for supermajority approval by stockholders for certain business combinations;
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•
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the ability of our Board to authorize the issuance of shares of undesignated preferred stock without a vote by stockholders;
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•
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the ability of our Board to amend or repeal our bylaws;
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•
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limitations on the removal of directors;
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•
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limitations on stockholders’ ability to call special stockholder meetings;
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advance notice requirements for nominating candidates for election to our Board or for proposing matters that can be acted upon by stockholders at stockholder meetings; and
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certain restrictions in our certificate of incorporation on transfers of our common stock designed to preserve our federal NOLs.
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Period
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Total Number of Shares Purchased
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Average Price Paid per Share
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
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Maximum Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs
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October 1-31, 2019
|
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431
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|
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$
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21.18
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431
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|
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$
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78,203
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November 1-30, 2019
|
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313
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|
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$
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20.87
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313
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|
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$
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71,671
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December 1-31, 2019
|
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—
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|
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$
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—
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|
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—
|
|
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$
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71,671
|
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Total
|
|
744
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$
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21.05
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|
|
744
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|
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Years Ended December 31,
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2019
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2018
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2017
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2016
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2015
|
||||||||||
Consolidated Statements of Operations Data:
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(1) (2)
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(In thousands, except per share data)
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Revenue:
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|
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|
|
|
|
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|
|
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||||||||||
Wealth management services revenue
|
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$
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507,979
|
|
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$
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373,174
|
|
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$
|
348,620
|
|
|
$
|
316,546
|
|
|
$
|
—
|
|
Tax preparation services revenue
|
|
209,966
|
|
|
187,282
|
|
|
160,937
|
|
|
139,365
|
|
|
117,708
|
|
|||||
Total revenue
|
|
717,945
|
|
|
560,456
|
|
|
509,557
|
|
|
455,911
|
|
|
117,708
|
|
|||||
Operating income (loss)
|
|
9
|
|
|
67,677
|
|
|
48,037
|
|
|
37,117
|
|
|
(4,807
|
)
|
|||||
Other loss, net
|
|
(16,915
|
)
|
|
(15,797
|
)
|
|
(44,551
|
)
|
|
(39,781
|
)
|
|
(12,542
|
)
|
|||||
Income (loss) from continuing operations before income taxes
|
|
(16,906
|
)
|
|
51,880
|
|
|
3,486
|
|
|
(2,664
|
)
|
|
(17,349
|
)
|
|||||
Income tax benefit (expense)
|
|
65,054
|
|
|
(311
|
)
|
|
25,890
|
|
|
1,285
|
|
|
4,623
|
|
|||||
Income (loss) from continuing operations
|
|
48,148
|
|
|
51,569
|
|
|
29,376
|
|
|
(1,379
|
)
|
|
(12,726
|
)
|
|||||
Discontinued operations, net of income taxes
|
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
(63,121
|
)
|
|
(27,348
|
)
|
|||||
Net income (loss)
|
|
48,148
|
|
|
51,569
|
|
|
29,376
|
|
|
(64,500
|
)
|
|
(40,074
|
)
|
|||||
Net income attributable to noncontrolling interests
|
|
—
|
|
|
(935
|
)
|
|
(2,337
|
)
|
|
(658
|
)
|
|
—
|
|
|||||
Net income attributable to Blucora, Inc.
|
|
$
|
48,148
|
|
|
$
|
50,634
|
|
|
$
|
27,039
|
|
|
$
|
(65,158
|
)
|
|
$
|
(40,074
|
)
|
Basic net income (loss) per share attributable to Blucora, Inc.:
|
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations
|
|
$
|
1.00
|
|
|
$
|
0.94
|
|
|
$
|
0.61
|
|
|
$
|
(0.05
|
)
|
|
$
|
(0.31
|
)
|
Discontinued operations
|
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.52
|
)
|
|
(0.67
|
)
|
|||||
Basic net income (loss) per share
|
|
$
|
1.00
|
|
|
$
|
0.94
|
|
|
$
|
0.61
|
|
|
$
|
(1.57
|
)
|
|
$
|
(0.98
|
)
|
Basic weighted average shares outstanding
|
|
48,264
|
|
|
47,394
|
|
|
44,370
|
|
|
41,494
|
|
|
40,959
|
|
|||||
Diluted net income (loss) per share attributable to Blucora, Inc.:
|
|
|
|
|
|
|
|
|
||||||||||||
Continuing operations
|
|
$
|
0.98
|
|
|
$
|
0.90
|
|
|
$
|
0.57
|
|
|
$
|
(0.05
|
)
|
|
$
|
(0.31
|
)
|
Discontinued operations
|
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.52
|
)
|
|
(0.67
|
)
|
|||||
Diluted net income (loss) per share
|
|
$
|
0.98
|
|
|
$
|
0.90
|
|
|
$
|
0.57
|
|
|
$
|
(1.57
|
)
|
|
$
|
(0.98
|
)
|
Diluted weighted average shares outstanding
|
|
49,282
|
|
|
49,381
|
|
|
47,211
|
|
|
41,494
|
|
|
40,959
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated Balance Sheet Data:
|
(1)
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash, cash equivalents, and investments
|
|
$
|
80,820
|
|
|
$
|
84,524
|
|
|
$
|
59,965
|
|
|
$
|
58,814
|
|
|
$
|
66,774
|
|
Working capital
|
(3) (4)
|
45,611
|
|
|
83,532
|
|
|
47,641
|
|
|
43,480
|
|
|
174,571
|
|
|||||
Total assets
|
|
1,137,572
|
|
|
997,725
|
|
|
1,001,671
|
|
|
1,022,659
|
|
|
1,299,548
|
|
|||||
Total long-term liabilities
|
(2) (3) (4)
|
400,525
|
|
|
316,905
|
|
|
390,495
|
|
|
535,577
|
|
|
656,122
|
|
|||||
Total stockholders’ equity
|
|
643,515
|
|
|
607,595
|
|
|
541,387
|
|
|
417,019
|
|
|
462,284
|
|
(1)
|
On December 31, 2015, we acquired HD Vest, a wealth management business that, in combination with 1st Global, was renamed Avantax Wealth Management as part of the Rebranding in 2019.
|
(2)
|
On May 6, 2019, we acquired 1st Global, a tax-focused wealth management company. The purchase price was partially paid for using the proceeds from a $125.0 million increase in the term loan under our credit agreement. The operations of 1st Global are included in our operating results as part of the Wealth Management segment from the date of the 1st Global Acquisition.
|
(3)
|
On October 14, 2015, we announced plans to divest the Search and Content and E-Commerce businesses. Accordingly, the operating results of these businesses have been presented as discontinued operations for all periods presented, and the related balance sheet data has been classified in its entirety within current assets and current liabilities as of December 31, 2015 but classified within current and long-term assets and liabilities, as appropriate, for prior periods. We sold the Search and Content business and the E-Commerce business on August 9, 2016 and November 17, 2016, respectively.
|
(4)
|
As of December 31, 2016, our convertible senior notes were classified as a long-term liability with an outstanding balance, net of discount and issuance costs, of $164.2 million. We redeemed the convertible senior notes in June 2017.
|
(In thousands, except percentages)
|
Years Ended December 31,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
Revenue:
|
|
|
|
|
|
|
|
|||||||
Wealth Management
|
$
|
507,979
|
|
|
$
|
373,174
|
|
|
$
|
134,805
|
|
|
36
|
%
|
Tax Preparation
|
209,966
|
|
|
187,282
|
|
|
22,684
|
|
|
12
|
%
|
|||
Total revenue
|
717,945
|
|
|
560,456
|
|
|
157,489
|
|
|
28
|
%
|
|||
Operating income:
|
|
|
|
|
|
|
|
|||||||
Wealth Management
|
68,292
|
|
|
53,053
|
|
|
15,239
|
|
|
29
|
%
|
|||
Tax Preparation
|
96,249
|
|
|
87,249
|
|
|
9,000
|
|
|
10
|
%
|
|||
Corporate-level activity
|
(164,532
|
)
|
|
(72,625
|
)
|
|
(91,907
|
)
|
|
127
|
%
|
|||
Total operating income
|
$
|
9
|
|
|
$
|
67,677
|
|
|
$
|
(67,668
|
)
|
|
(100
|
)%
|
(In thousands, except percentages)
|
Years Ended December 31,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
Revenue
|
$
|
507,979
|
|
|
$
|
373,174
|
|
|
$
|
134,805
|
|
|
36
|
%
|
Operating income
|
$
|
68,292
|
|
|
$
|
53,053
|
|
|
$
|
15,239
|
|
|
29
|
%
|
Segment margin
|
13
|
%
|
|
14
|
%
|
|
|
|
|
•
|
Wealth Management revenue increased $134.8 million due to the addition of $114.8 million in revenue from 1st Global, as well as $11.6 million and $7.2 million in increased advisory revenue and asset-based revenue, respectively, from our legacy business.
|
•
|
Wealth Management operating expenses increased $119.6 million due to incremental expenses of $104.8 million from 1st Global. In addition, we experienced increased cost of revenue in our legacy business, primarily due to an increase in commissions and advisory fees paid to our financial advisors.
|
(In thousands, except percentages)
|
Years Ended December 31,
|
|
Change
|
|||||||||||||
|
Sources of Revenue
|
Primary Drivers
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
Advisor-driven
|
Commission
|
- Transactions
- Asset levels
- Product mix
|
$
|
191,050
|
|
|
$
|
164,201
|
|
|
$
|
26,849
|
|
|
16
|
%
|
Advisory
|
- Advisory asset levels
|
252,367
|
|
|
164,353
|
|
|
88,014
|
|
|
54
|
%
|
||||
Other revenue
|
Asset-based
|
- Cash balances
- Interest rates
- Number of accounts
- Client asset levels
|
48,182
|
|
|
31,456
|
|
|
16,726
|
|
|
53
|
%
|
|||
Transaction and fee
|
- Account activity
- Number of clients - Number of advisors - Number of accounts |
16,380
|
|
|
13,164
|
|
|
3,216
|
|
|
24
|
%
|
||||
|
Total revenue
|
$
|
507,979
|
|
|
$
|
373,174
|
|
|
$
|
134,805
|
|
|
36
|
%
|
|
|
Total recurring revenue
|
$
|
422,128
|
|
|
$
|
303,117
|
|
|
$
|
119,011
|
|
|
39
|
%
|
|
|
Recurring revenue rate
|
83.1
|
%
|
|
81.2
|
%
|
|
|
|
|
(In thousands, except percentages and as otherwise indicated)
|
Years Ended December 31,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
Total Client Assets
|
$
|
70,644,385
|
|
|
$
|
42,249,055
|
|
|
$
|
28,395,330
|
|
|
67
|
%
|
Brokerage Assets
|
$
|
43,015,221
|
|
|
$
|
29,693,650
|
|
|
$
|
13,321,571
|
|
|
45
|
%
|
Advisory Assets
|
$
|
27,629,164
|
|
|
$
|
12,555,405
|
|
|
$
|
15,073,759
|
|
|
120
|
%
|
Advisory assets as a percentage of total client assets
|
39.1
|
%
|
|
29.7
|
%
|
|
|
|
|
|||||
Number of advisors (in ones)
|
3,984
|
|
|
3,593
|
|
|
391
|
|
|
11
|
%
|
|||
Advisor-driven revenue per advisor
|
111.3
|
|
|
91.4
|
|
|
19.9
|
|
|
22
|
%
|
(In thousands, except percentages)
|
Years Ended December 31,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
By product category:
|
|
|
|
|
|
|
|
|||||||
Mutual funds
|
$
|
90,407
|
|
|
$
|
87,624
|
|
|
$
|
2,783
|
|
|
3
|
%
|
Variable annuities
|
63,420
|
|
|
51,199
|
|
|
12,221
|
|
|
24
|
%
|
|||
Insurance
|
19,282
|
|
|
14,160
|
|
|
5,122
|
|
|
36
|
%
|
|||
General securities
|
17,941
|
|
|
11,218
|
|
|
6,723
|
|
|
60
|
%
|
|||
Total commission revenue
|
$
|
191,050
|
|
|
$
|
164,201
|
|
|
$
|
26,849
|
|
|
16
|
%
|
By type of commission:
|
|
|
|
|
|
|
|
|||||||
Transaction-based
|
$
|
82,604
|
|
|
$
|
67,350
|
|
|
$
|
15,254
|
|
|
23
|
%
|
Trailing
|
108,446
|
|
|
96,851
|
|
|
11,595
|
|
|
12
|
%
|
|||
Total commission revenue
|
$
|
191,050
|
|
|
$
|
164,201
|
|
|
$
|
26,849
|
|
|
16
|
%
|
•
|
Transaction-based commission revenue increased $15.3 million, primarily due to approximately $13.4 million of transaction-based commission revenue from 1st Global; and
|
•
|
Trailing commission revenue increased $11.6 million, primarily due to approximately $13.2 million of trailing commission revenue from 1st Global, partially offset by the conversion of certain client assets to lower expense share classes.
|
(In thousands)
|
Years Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Balance, beginning of the period
|
$
|
12,555,405
|
|
|
$
|
12,530,165
|
|
Net increase in new advisory assets
|
997,968
|
|
|
957,252
|
|
||
Inflows from the 1st Global Acquisition
|
11,397,301
|
|
|
—
|
|
||
Market impact and other
|
2,678,491
|
|
|
(932,012
|
)
|
||
Balance, end of the period
|
$
|
27,629,165
|
|
|
$
|
12,555,405
|
|
Advisory revenue
|
$
|
252,367
|
|
|
$
|
164,353
|
|
Average advisory fee rate
|
118 bps
|
|
|
127 bps
|
|
(In thousands, except percentages)
|
Years Ended December 31,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
Revenue
|
$
|
209,966
|
|
|
$
|
187,282
|
|
|
$
|
22,684
|
|
|
12
|
%
|
Operating income
|
$
|
96,249
|
|
|
$
|
87,249
|
|
|
$
|
9,000
|
|
|
10
|
%
|
Segment margin
|
46
|
%
|
|
47
|
%
|
|
|
|
|
•
|
Tax Preparation revenue increased $22.7 million, almost entirely due to an increase in consumer revenue as a result of price increases and a shift in product mix toward higher-priced products. While consumer e-files decreased 17%, this decrease was primarily due to a decrease in unpaid filers; and
|
•
|
Tax Preparation operating expenses increased $13.7 million primarily due to an increase in personnel costs supporting product development, an increase in software development expenses, and higher sales and marketing consulting efforts, partially offset by reduced media spend.
|
(In thousands, except percentages)
|
Years Ended December 31,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
Consumer
|
$
|
195,004
|
|
|
$
|
172,207
|
|
|
$
|
22,797
|
|
|
13
|
%
|
Professional
|
14,962
|
|
|
15,075
|
|
|
(113
|
)
|
|
(1
|
)%
|
|||
Total revenue
|
$
|
209,966
|
|
|
$
|
187,282
|
|
|
$
|
22,684
|
|
|
12
|
%
|
(In thousands, except percentages and as
|
Years Ended December 31,
|
|
Change
|
||||||||
otherwise indicated)
|
2019
|
|
2018
|
|
$
|
|
%
|
||||
Consumer:
|
|
|
|
|
|
|
|
||||
Consumer e-files (1)
|
3,239
|
|
|
3,896
|
|
|
(657
|
)
|
|
(17
|
)%
|
Professional:
|
|
|
|
|
|
|
|
||||
Professional e-files
|
2,011
|
|
|
1,916
|
|
|
95
|
|
|
5
|
%
|
Units sold (in ones)
|
20,746
|
|
|
20,719
|
|
|
27
|
|
|
—
|
%
|
Professional e-files per unit sold (in ones)
|
96.9
|
|
|
92.5
|
|
|
4.4
|
|
|
4.8
|
%
|
(1)
|
We participate in the Free File Alliance that is part of an IRS partnership that provides free electronic tax filing services to taxpayers meeting certain income-based guidelines. Free File Alliance e-files are included within consumer e-files above.
|
(In thousands)
|
Years Ended December 31,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
Operating expenses
|
$
|
(27,361
|
)
|
|
$
|
(20,495
|
)
|
|
$
|
(6,866
|
)
|
|
34
|
%
|
Stock-based compensation
|
(16,300
|
)
|
|
(13,253
|
)
|
|
(3,047
|
)
|
|
23
|
%
|
|||
Acquisition and integration costs
|
(25,763
|
)
|
|
—
|
|
|
(25,763
|
)
|
|
N/A
|
|
|||
Depreciation
|
(6,851
|
)
|
|
(5,003
|
)
|
|
(1,848
|
)
|
|
37
|
%
|
|||
Amortization of acquired intangible assets
|
(37,357
|
)
|
|
(33,586
|
)
|
|
(3,771
|
)
|
|
11
|
%
|
|||
Impairment of intangible asset
|
(50,900
|
)
|
|
—
|
|
|
(50,900
|
)
|
|
N/A
|
|
|||
Restructuring
|
—
|
|
|
(288
|
)
|
|
288
|
|
|
(100
|
)%
|
|||
Total corporate-level activity
|
$
|
(164,532
|
)
|
|
$
|
(72,625
|
)
|
|
$
|
(91,907
|
)
|
|
127
|
%
|
•
|
an increase in operating expenses primarily due to increases in headcount as a result of strategic initiatives;
|
•
|
an increase in stock-based compensation, primarily due to the impact from 1st Global, partially offset by a reduction in stock-based compensation for 2019 due to forfeitures as a result of executive departures;
|
•
|
acquisition and integration costs for 2019, primarily related to the 1st Global Acquisition;
|
•
|
an increase in depreciation expense, primarily due to increased amortization from depreciable assets acquired from 1st Global and internally-developed software fixed assets capitalized in 2019 and the latter part of 2018;
|
•
|
an increase in amortization expense, primarily due to increased amortization from intangible assets obtained in the 1st Global Acquisition; and
|
•
|
an impairment charge of $50.9 million related to the HD Vest trade name intangible asset following the Rebranding.
|
(In thousands, except percentages)
|
Years Ended December 31,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
Wealth management services cost of revenue
|
$
|
352,081
|
|
|
$
|
253,580
|
|
|
$
|
98,501
|
|
|
39
|
%
|
Tax preparation services cost of revenue
|
10,691
|
|
|
10,040
|
|
|
651
|
|
|
6
|
%
|
|||
Amortization of acquired technology
|
—
|
|
|
99
|
|
|
(99
|
)
|
|
(100
|
)%
|
|||
Total cost of revenue
|
$
|
362,772
|
|
|
$
|
263,719
|
|
|
$
|
99,053
|
|
|
38
|
%
|
Percentage of revenue
|
51
|
%
|
|
47
|
%
|
|
|
|
|
•
|
a $98.5 million increase in Wealth Management services cost of revenue, primarily due to an increase in commissions and advisory fees paid to our financial advisors, including approximately $80.0 million of commissions paid to 1st Global advisors; and
|
•
|
a $0.7 million increase in Tax Preparation services cost of revenue, primarily due to an increase in data center costs.
|
(In thousands, except percentages)
|
Years Ended December 31,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
Engineering and technology
|
$
|
30,931
|
|
|
$
|
19,332
|
|
|
$
|
11,599
|
|
|
60
|
%
|
Percentage of revenue
|
4
|
%
|
|
3
|
%
|
|
|
|
|
(In thousands, except percentages)
|
Years Ended December 31,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
Sales and marketing
|
$
|
126,205
|
|
|
$
|
111,361
|
|
|
$
|
14,844
|
|
|
13
|
%
|
Percentage of revenue
|
18
|
%
|
|
20
|
%
|
|
|
|
|
•
|
Higher expenses in our Wealth Management business, including approximately $14.1 million of costs from 1st Global; and
|
•
|
Higher consulting efforts and headcount in our Tax Preparation business.
|
(In thousands, except percentages)
|
Years Ended December 31,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
General and administrative
|
$
|
78,529
|
|
|
$
|
60,124
|
|
|
$
|
18,405
|
|
|
31
|
%
|
Percentage of revenue
|
11
|
%
|
|
11
|
%
|
|
|
|
|
|
Year Ended
|
||
(In thousands, except percentages)
|
December 31, 2019
|
||
Employee-related expenses
|
$
|
5,241
|
|
Professional services
|
17,752
|
|
|
Other expenses
|
2,770
|
|
|
Total
|
$
|
25,763
|
|
Percentage of revenue
|
4
|
%
|
(In thousands, except percentages)
|
Years Ended December 31,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
Depreciation
|
$
|
5,479
|
|
|
$
|
4,468
|
|
|
$
|
1,011
|
|
|
23
|
%
|
Amortization of acquired intangible assets
|
37,357
|
|
|
33,487
|
|
|
3,870
|
|
|
12
|
%
|
|||
Impairment of goodwill and intangible assets
|
50,900
|
|
|
—
|
|
|
50,900
|
|
|
N/A
|
|
|||
Total
|
$
|
93,736
|
|
|
$
|
37,955
|
|
|
$
|
55,781
|
|
|
147
|
%
|
Percentage of revenue
|
13
|
%
|
|
7
|
%
|
|
|
|
|
(In thousands)
|
Years Ended December 31,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
Interest expense
|
$
|
19,017
|
|
|
$
|
15,610
|
|
|
$
|
3,407
|
|
|
22
|
%
|
Loss on debt extinguishment and amortization of debt issuance costs
|
1,042
|
|
|
2,367
|
|
|
(1,325
|
)
|
|
(56
|
)%
|
|||
Accretion of debt discounts
|
228
|
|
|
163
|
|
|
65
|
|
|
40
|
%
|
|||
Interest income
|
(449
|
)
|
|
(349
|
)
|
|
(100
|
)
|
|
29
|
%
|
|||
Gain on sale of a business
|
(3,256
|
)
|
|
—
|
|
|
(3,256
|
)
|
|
N/A
|
|
|||
Other
|
333
|
|
|
(1,994
|
)
|
|
2,327
|
|
|
(117
|
)%
|
|||
Other loss, net
|
$
|
16,915
|
|
|
$
|
15,797
|
|
|
$
|
1,118
|
|
|
7
|
%
|
•
|
a $3.4 million increase in interest expense due to higher outstanding debt balances as a result of the $125.0 million increase in the term loan under the Senior Secured Credit Facility (as defined herein) in the second quarter of 2019;
|
•
|
a $3.3 million gain on the sale of SimpleTax, which was a provider of digital tax preparation services in Canada, that we recognized in 2019 and included in “Gain on sale of a business” in the above table;
|
•
|
a $2.1 million gain on the sale of an investment that we recognized in 2018 and is included in “Other” in the above table; and
|
•
|
a loss on debt extinguishment related to debt prepayments that we recognized in 2018.
|
(In thousands)
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income attributable to Blucora, Inc.
|
$
|
48,148
|
|
|
$
|
50,634
|
|
|
$
|
27,039
|
|
Stock-based compensation
|
16,300
|
|
|
13,253
|
|
|
11,653
|
|
|||
Depreciation and amortization of acquired intangible assets
|
44,208
|
|
|
38,589
|
|
|
38,139
|
|
|||
Restructuring
|
—
|
|
|
288
|
|
|
3,101
|
|
|||
Other loss, net
|
16,915
|
|
|
15,797
|
|
|
44,551
|
|
|||
Net income attributable to noncontrolling interests
|
—
|
|
|
935
|
|
|
2,337
|
|
|||
Acquisition and integration costs
|
25,763
|
|
|
—
|
|
|
—
|
|
|||
Income tax expense (benefit)
|
(65,054
|
)
|
|
311
|
|
|
(25,890
|
)
|
|||
Impairment of intangible asset
|
50,900
|
|
|
—
|
|
|
—
|
|
|||
Adjusted EBITDA
|
$
|
137,180
|
|
|
$
|
119,807
|
|
|
$
|
100,930
|
|
(In thousands, except per share amounts)
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income attributable to Blucora, Inc.
|
$
|
48,148
|
|
|
$
|
50,634
|
|
|
$
|
27,039
|
|
Stock-based compensation
|
16,300
|
|
|
13,253
|
|
|
11,653
|
|
|||
Amortization of acquired intangible assets
|
37,357
|
|
|
33,586
|
|
|
34,002
|
|
|||
Impairment of intangible asset
|
50,900
|
|
|
—
|
|
|
—
|
|
|||
Accretion and write-off of debt discount and debt issuance costs on previous debt
|
—
|
|
|
—
|
|
|
17,875
|
|
|||
Gain on sale of a business
|
(3,256
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisition and integration costs
|
25,763
|
|
|
—
|
|
|
—
|
|
|||
Restructuring costs
|
—
|
|
|
288
|
|
|
3,101
|
|
|||
Net income attributable to noncontrolling interests
|
—
|
|
|
935
|
|
|
2,337
|
|
|||
Cash tax impact of adjustments to GAAP net income
|
(2,396
|
)
|
|
(2,257
|
)
|
|
(6
|
)
|
|||
Non-cash income tax benefit
|
(68,618
|
)
|
|
(2,403
|
)
|
|
(26,853
|
)
|
|||
Non-GAAP net income
|
$
|
104,198
|
|
|
$
|
94,036
|
|
|
$
|
69,148
|
|
Per diluted share:
|
|
|
|
|
|
||||||
Net income attributable to Blucora, Inc. (1)
|
$
|
0.98
|
|
|
$
|
0.90
|
|
|
$
|
0.57
|
|
Stock-based compensation
|
0.33
|
|
|
0.27
|
|
|
0.25
|
|
|||
Amortization of acquired intangible assets
|
0.76
|
|
|
0.68
|
|
|
0.72
|
|
|||
Impairment of intangible asset
|
1.03
|
|
|
—
|
|
|
—
|
|
|||
Accretion and write-off of debt discount and debt issuance costs on previous debt
|
—
|
|
|
—
|
|
|
0.37
|
|
|||
Gain on sale of a business
|
(0.07
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisition and integration costs
|
0.52
|
|
|
—
|
|
|
—
|
|
|||
Restructuring
|
—
|
|
|
0.01
|
|
|
0.07
|
|
|||
Net income attributable to noncontrolling interests
|
—
|
|
|
0.14
|
|
|
0.05
|
|
|||
Cash tax impact of adjustments to GAAP net income
|
(0.05
|
)
|
|
(0.05
|
)
|
|
—
|
|
|||
Non-cash income tax benefit
|
(1.39
|
)
|
|
(0.05
|
)
|
|
(0.57
|
)
|
|||
Non-GAAP net income
|
$
|
2.11
|
|
|
$
|
1.90
|
|
|
$
|
1.46
|
|
Weighted average shares outstanding used in calculating Non-GAAP net income per share
|
49,282
|
|
|
49,381
|
|
|
47,211
|
|
(1)
|
Any difference in “per diluted share” between this table and the consolidated statements of comprehensive income is due to using different weighted average shares outstanding in the event that there is GAAP net loss but non-GAAP net income and vice versa.
|
(In thousands)
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|
Total
|
||||||||||||||
Operating lease commitments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating lease obligations (1) (2)
|
$
|
3,715
|
|
|
$
|
2,275
|
|
|
$
|
4,714
|
|
|
$
|
4,817
|
|
|
$
|
4,919
|
|
|
$
|
35,418
|
|
|
$
|
55,858
|
|
Sublease income
|
(991
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(991
|
)
|
|||||||
Net operating lease commitments
|
2,724
|
|
|
2,275
|
|
|
4,714
|
|
|
4,817
|
|
|
4,919
|
|
|
35,418
|
|
|
54,867
|
|
|||||||
Purchase commitments
|
14,759
|
|
|
6,866
|
|
|
5,150
|
|
|
3,244
|
|
|
1,500
|
|
|
5,625
|
|
|
37,144
|
|
|||||||
Debt commitment—Term Loan
|
1,250
|
|
|
1,250
|
|
|
1,250
|
|
|
1,250
|
|
|
384,688
|
|
|
—
|
|
|
389,688
|
|
|||||||
Debt commitment—Revolver
|
10,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,000
|
|
|||||||
Interest payable
|
19,507
|
|
|
19,126
|
|
|
18,920
|
|
|
18,757
|
|
|
7,793
|
|
|
—
|
|
|
84,103
|
|
|||||||
Total
|
$
|
48,240
|
|
|
$
|
29,517
|
|
|
$
|
30,034
|
|
|
$
|
28,068
|
|
|
$
|
398,900
|
|
|
$
|
41,043
|
|
|
$
|
575,802
|
|
(1)
|
Operating lease obligations include obligations due to short-term leases. In accordance with the short-term lease practical expedient in Accounting Standards Codification 842, Leases, we do not record a lease liability for short-term leases.
|
(2)
|
Operating lease obligations include obligations relating to our new corporate headquarters office lease, which will be located in Coppell, TX. The corporate headquarters building will replace our Irving, Texas corporate office and our additional office located in Dallas, TX. Lease payments will commence in August 2021 and end in June 2033, and will result in $45.3 million in undiscounted lease payments during this time period.
|
(In thousands)
|
Years Ended December 31,
|
|
|
||||||||
|
2019
|
|
2018
|
|
Change ($)
|
||||||
Net cash provided by operating activities
|
$
|
92,804
|
|
|
$
|
105,548
|
|
|
$
|
(12,744
|
)
|
Net cash used by investing activities
|
(169,594
|
)
|
|
(7,633
|
)
|
|
(161,961
|
)
|
|||
Net cash provided (used) by financing activities
|
77,836
|
|
|
(74,804
|
)
|
|
152,640
|
|
|||
Net cash provided by continuing operations
|
1,046
|
|
|
23,111
|
|
|
(22,065
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
38
|
|
|
(56
|
)
|
|
94
|
|
|||
Net increase in cash, cash equivalents, and restricted cash
|
$
|
1,084
|
|
|
$
|
23,055
|
|
|
$
|
(21,971
|
)
|
(In thousands)
|
Years Ended December 31,
|
|
|
||||||||
|
2019
|
|
2018
|
|
Change ($)
|
||||||
Net income
|
$
|
48,148
|
|
|
$
|
51,569
|
|
|
$
|
(3,421
|
)
|
Non-cash adjustments
|
47,032
|
|
|
51,406
|
|
|
(4,374
|
)
|
|||
Operating cash flows before working capital
|
95,180
|
|
|
102,975
|
|
|
(7,795
|
)
|
|||
Changes in working capital
|
(2,376
|
)
|
|
2,573
|
|
|
(4,949
|
)
|
|||
Net cash provided by operating activities
|
$
|
92,804
|
|
|
$
|
105,548
|
|
|
$
|
(12,744
|
)
|
(In thousands)
|
Years Ended December 31,
|
|
|
||||||||
|
2019
|
|
2018
|
|
Change
|
||||||
Business acquisition, net of cash acquired
|
$
|
(166,560
|
)
|
|
$
|
—
|
|
|
$
|
(166,560
|
)
|
Purchases of property and equipment
|
(10,501
|
)
|
|
(7,633
|
)
|
|
(2,868
|
)
|
|||
Proceeds from sale of a business, net of cash
|
7,467
|
|
|
—
|
|
|
7,467
|
|
|||
Net cash used by investing activities
|
$
|
(169,594
|
)
|
|
$
|
(7,633
|
)
|
|
$
|
(161,961
|
)
|
(In thousands)
|
Years Ended December 31,
|
|
|
||||||||
|
2019
|
|
2018
|
|
Change
|
||||||
Proceeds from credit facilities, net of debt issuance costs and debt discount
|
$
|
131,489
|
|
|
$
|
—
|
|
|
$
|
131,489
|
|
Payments on credit facilities
|
(313
|
)
|
|
(80,000
|
)
|
|
79,687
|
|
|||
Stock repurchases
|
(28,399
|
)
|
|
—
|
|
|
(28,399
|
)
|
|||
Payment of redeemable noncontrolling interests
|
(24,945
|
)
|
|
—
|
|
|
(24,945
|
)
|
|||
Proceeds from stock option exercises
|
4,387
|
|
|
12,773
|
|
|
(8,386
|
)
|
|||
Proceeds from issuance of stock through employee stock purchase plan
|
2,212
|
|
|
2,100
|
|
|
112
|
|
|||
Tax payments from shares withheld for equity awards
|
(5,652
|
)
|
|
(8,362
|
)
|
|
2,710
|
|
|||
Contingent consideration payments for business acquisition
|
(943
|
)
|
|
(1,315
|
)
|
|
372
|
|
|||
Net cash provided (used) by financing activities
|
$
|
77,836
|
|
|
$
|
(74,804
|
)
|
|
$
|
152,640
|
|
•
|
intangible assets, including the valuation methodology, estimations of future cash flows, discount rates, growth rates, as well as the estimated useful life of intangible assets;
|
•
|
deferred tax assets and liabilities and uncertain tax positions;
|
•
|
pre-existing liabilities or legal claims, and deferred revenue, in each case as may be applicable; and
|
•
|
goodwill, as measured as the excess of consideration transferred over the net of the 1st Global Acquisition date fair values of the assets acquired and the liabilities assumed.
|
|
2018
|
|
2019
|
||||||||||||||||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||||||||||
|
(In thousands except per share data and percentages)
|
||||||||||||||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Wealth management services revenue
|
$
|
92,082
|
|
|
$
|
92,015
|
|
|
$
|
91,887
|
|
|
$
|
97,190
|
|
|
$
|
89,532
|
|
|
$
|
127,831
|
|
|
$
|
145,428
|
|
|
$
|
145,188
|
|
Tax preparation services revenue
|
113,883
|
|
|
65,833
|
|
|
3,498
|
|
|
4,068
|
|
|
136,236
|
|
|
65,909
|
|
|
3,588
|
|
|
4,233
|
|
||||||||
Total revenue
|
205,965
|
|
|
157,848
|
|
|
95,385
|
|
|
101,258
|
|
|
225,768
|
|
|
193,740
|
|
|
149,016
|
|
|
149,421
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Wealth management services cost of revenue
|
63,064
|
|
|
62,149
|
|
|
62,313
|
|
|
66,054
|
|
|
61,374
|
|
|
87,477
|
|
|
102,030
|
|
|
101,200
|
|
||||||||
Tax preparation services cost of revenue
|
4,353
|
|
|
2,459
|
|
|
1,370
|
|
|
1,858
|
|
|
4,201
|
|
|
3,149
|
|
|
1,633
|
|
|
1,708
|
|
||||||||
Amortization of acquired technology
|
50
|
|
|
49
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total cost of revenue
|
67,467
|
|
|
64,657
|
|
|
63,683
|
|
|
67,912
|
|
|
65,575
|
|
|
90,626
|
|
|
103,663
|
|
|
102,908
|
|
||||||||
Engineering and technology
|
5,131
|
|
|
4,848
|
|
|
4,246
|
|
|
5,107
|
|
|
6,529
|
|
|
7,159
|
|
|
8,635
|
|
|
8,608
|
|
||||||||
Sales and marketing
|
55,253
|
|
|
23,791
|
|
|
15,675
|
|
|
16,642
|
|
|
55,572
|
|
|
29,256
|
|
|
19,976
|
|
|
21,401
|
|
||||||||
General and administrative
|
14,866
|
|
|
15,625
|
|
|
13,404
|
|
|
16,229
|
|
|
17,077
|
|
|
19,002
|
|
|
19,642
|
|
|
22,808
|
|
||||||||
Acquisition and integration
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,797
|
|
|
9,183
|
|
|
6,759
|
|
|
8,024
|
|
||||||||
Depreciation
|
1,915
|
|
|
993
|
|
|
798
|
|
|
762
|
|
|
1,061
|
|
|
1,315
|
|
|
1,470
|
|
|
1,633
|
|
||||||||
Amortization of other acquired intangible assets
|
8,307
|
|
|
8,806
|
|
|
8,271
|
|
|
8,103
|
|
|
8,044
|
|
|
9,169
|
|
|
10,082
|
|
|
10,062
|
|
||||||||
Impairment of intangible asset (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50,900
|
|
|
—
|
|
||||||||
Restructuring (2)
|
289
|
|
|
2
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total operating expenses
|
153,228
|
|
|
118,722
|
|
|
106,077
|
|
|
114,752
|
|
|
155,655
|
|
|
165,710
|
|
|
221,127
|
|
|
175,444
|
|
||||||||
Operating income (loss)
|
52,737
|
|
|
39,126
|
|
|
(10,692
|
)
|
|
(13,494
|
)
|
|
70,113
|
|
|
28,030
|
|
|
(72,111
|
)
|
|
(26,023
|
)
|
||||||||
Other loss, net
|
(5,228
|
)
|
|
(2,759
|
)
|
|
(3,863
|
)
|
|
(3,947
|
)
|
|
(3,958
|
)
|
|
(5,118
|
)
|
|
(2,606
|
)
|
|
(5,233
|
)
|
||||||||
Income (loss) before income taxes
|
47,509
|
|
|
36,367
|
|
|
(14,555
|
)
|
|
(17,441
|
)
|
|
66,155
|
|
|
22,912
|
|
|
(74,717
|
)
|
|
(31,256
|
)
|
||||||||
Income tax benefit (expense)
|
(1,963
|
)
|
|
(907
|
)
|
|
818
|
|
|
1,741
|
|
|
(3,985
|
)
|
|
8,124
|
|
|
12,331
|
|
|
48,584
|
|
||||||||
Net income (loss)
|
45,546
|
|
|
35,460
|
|
|
(13,737
|
)
|
|
(15,700
|
)
|
|
62,170
|
|
|
31,036
|
|
|
(62,386
|
)
|
|
17,328
|
|
||||||||
Net income attributable to noncontrolling interests
|
(205
|
)
|
|
(222
|
)
|
|
(227
|
)
|
|
(281
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Net income (loss) attributable to Blucora, Inc.
|
$
|
45,341
|
|
|
$
|
35,238
|
|
|
$
|
(13,964
|
)
|
|
$
|
(15,981
|
)
|
|
$
|
62,170
|
|
|
$
|
31,036
|
|
|
$
|
(62,386
|
)
|
|
$
|
17,328
|
|
Net income (loss) per share attributable to Blucora, Inc.:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
0.97
|
|
|
$
|
0.75
|
|
|
$
|
(0.37
|
)
|
|
$
|
(0.38
|
)
|
|
$
|
1.29
|
|
|
$
|
0.64
|
|
|
$
|
(1.28
|
)
|
|
$
|
0.36
|
|
Diluted
|
$
|
0.93
|
|
|
$
|
0.71
|
|
|
$
|
(0.37
|
)
|
|
$
|
(0.38
|
)
|
|
$
|
1.25
|
|
|
$
|
0.62
|
|
|
$
|
(1.28
|
)
|
|
$
|
0.36
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
46,641
|
|
|
47,221
|
|
|
47,712
|
|
|
48,002
|
|
|
48,161
|
|
|
48,555
|
|
|
48,652
|
|
|
47,689
|
|
||||||||
Diluted
|
48,665
|
|
|
49,434
|
|
|
47,712
|
|
|
48,002
|
|
|
49,542
|
|
|
49,822
|
|
|
48,652
|
|
|
48,344
|
|
(1)
|
In the third quarter of 2019, we recognized a $50.9 million impairment of an intangible asset related to the HD Vest trade name intangible asset following the Rebranding. See “Item 8. Financial Statements and Supplementary Data—Note 6” for more information.
|
(2)
|
In 2017, we relocated our corporate headquarters from Bellevue, Washington to Irving, Texas. In connection with this plan, we incurred restructuring costs. See “Item 8. Financial Statements and Supplementary Data—Note 4” for more information.
|
|
Amount
|
Weighted Average Interest rate
|
|||
2020
|
$
|
4,264
|
|
2.29
|
%
|
Thereafter
|
—
|
|
—
|
|
|
Total
|
$
|
4,264
|
|
2.29
|
%
|
Fair Value
|
$
|
4,264
|
|
|
Description of the Matter
|
On May 6, 2019, the Company completed its acquisition of 1st Global for a total consideration of $180 million, as disclosed in Note 3 to the consolidated financial statements. The transaction was accounted for as a business combination.
Auditing management’s accounting for the 1st Global acquisition was complex and highly judgmental due to the significant estimation required in determining the future cash flows expected to be generated by the acquired intangible assets, which primarily included advisor relationships. In particular, the future cash flow estimates are sensitive to significant assumptions such as the projections of revenues, gross profit margins, operating expenses (collectively referred to as projected financial information or “PFI”), advisor attrition rate, and the discount rate. These significant assumptions are forward looking and could be affected by future economic and market conditions.
|
How We Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process to account for acquisitions, including management’s review of key judgments and assumptions underlying the recognition and valuation of the intangible assets.
For the 1st Global acquisition, we evaluated, among other items, the significant assumptions, including the projected financial information, advisor attrition rate, and discount rates used in valuing the intangibles. When evaluating these assumptions, we considered current industry and economic trends, 1st Global’s past performance, and current business plans. In addition, we evaluated the completeness and accuracy of the underlying data supporting the assumptions. We involved our valuation specialists to assist in auditing the valuation methodology and assumptions used by the Company. We have also evaluated the Company’s disclosures in relation to this matter.
|
Description of the Matter
|
At December 31, 2019, the Company had gross deferred tax assets on deductible temporary differences of $129.3 million, which were offset by a $43.8 million valuation allowance, resulting in a net deferred tax asset of $85.5 million, as disclosed in Note 16. Included in the gross deferred tax assets was $84.7 million generated by net operating loss carryforwards. Deferred tax assets are reduced by a valuation allowance if, based upon the weight of all available evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.
Management’s analysis of the realizability of its deferred tax assets was complex and highly judgmental because the amounts are material to the financial statements and the assessment process can be complex, involves significant judgment, and includes assumptions that may be affected by future market or economic conditions.
|
How We Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls that address the risks of material misstatement relating to the realizability of deferred tax assets, including controls over management’s projections of future taxable income, and the future reversal of existing taxable temporary differences.
Among other audit procedures performed, we evaluated the assumptions used by the Company related to projections of future taxable income and tested the completeness and accuracy of the underlying data used in its projections. For example, we assessed the historical accuracy of management’s projections and compared the projections of future taxable income with other forecasted financial information prepared by the Company, as well as management’s consideration of current industry and economic trends. We also tested the Company’s scheduling of the reversal of existing temporary taxable differences. We have also evaluated the Company’s income tax disclosures in relation to this matter.
|
Description of the Matter
|
As reflected in the Company’s consolidated financial statements at December 31, 2018, the Company’s indefinite-lived intangible assets were $72 million. As disclosed in Note 6 to the consolidated financial statements, indefinite-lived intangible assets are tested for impairment annually as of November 30, or more frequently if indicators of impairment require the performance of an interim impairment assessment. On September 9, 2019, the Company announced its intention to rebrand its Wealth Management business, which caused the existing HD Vest trade name indefinite-lived intangible asset to become impaired. As a result, a non-cash impairment charge of $50.9 million was recorded in the quarter ended September 30, 2019.
Auditing management’s impairment test related to this indefinite-lived intangible was complex and highly judgmental due to the measurement uncertainty in determining the fair values of the asset. The fair value estimate for the trade name was sensitive to significant assumptions such as forecasted revenue, revenue growth rates, revenue survival rates, and the selected discount rate.
|
How We Addressed the Matter in Our Audit
|
We tested controls over the Company’s indefinite-lived intangible asset impairment assessment process. This included testing of controls over the review of the Company’s forecast as well as controls over the review of the significant assumptions used to estimate the fair values of the indefinite-lived intangible asset.
To test the fair value of the indefinite-lived intangible asset, our audit procedures included assessing methodologies and testing the significant assumptions and underlying data used by the Company, specifically the projected financial information including revenue growth and survival rates and the selected discount rate. We also evaluated the completeness and accuracy of the underlying data supporting the assumptions. Additionally, we compared the significant assumptions used by management to current industry and economic trends as well as other relevant factors. We performed sensitivity analyses of significant assumptions to evaluate the change in the fair value of the indefinite-lived intangible asset and assessed the historical accuracy of management’s estimates. In addition, we involved a valuation specialist to assist in evaluating the significant assumptions in the fair value estimate.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
80,820
|
|
|
$
|
84,524
|
|
Cash segregated under federal or other regulations
|
5,630
|
|
|
842
|
|
||
Accounts receivable, net of allowance
|
16,266
|
|
|
15,721
|
|
||
Commissions receivable
|
21,176
|
|
|
15,562
|
|
||
Other receivables
|
2,902
|
|
|
7,408
|
|
||
Prepaid expenses and other current assets, net
|
12,349
|
|
|
7,755
|
|
||
Total current assets
|
139,143
|
|
|
131,812
|
|
||
Long-term assets:
|
|
|
|
||||
Property and equipment, net
|
18,706
|
|
|
12,389
|
|
||
Right-of-use assets, net
|
10,151
|
|
|
—
|
|
||
Goodwill, net
|
662,375
|
|
|
548,685
|
|
||
Other intangible assets, net
|
290,211
|
|
|
294,603
|
|
||
Deferred tax asset, net
|
9,997
|
|
|
—
|
|
||
Other long-term assets
|
6,989
|
|
|
10,236
|
|
||
Total long-term assets
|
998,429
|
|
|
865,913
|
|
||
Total assets
|
$
|
1,137,572
|
|
|
$
|
997,725
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
10,969
|
|
|
$
|
3,798
|
|
Commissions and advisory fees payable
|
19,905
|
|
|
15,199
|
|
||
Accrued expenses and other current liabilities
|
36,144
|
|
|
18,980
|
|
||
Deferred revenue—current
|
12,014
|
|
|
10,257
|
|
||
Lease liabilities—current
|
3,272
|
|
|
46
|
|
||
Current portion of long-term debt, net
|
11,228
|
|
|
—
|
|
||
Total current liabilities
|
93,532
|
|
|
48,280
|
|
||
Long-term liabilities:
|
|
|
|
||||
Long-term debt, net
|
381,485
|
|
|
260,390
|
|
||
Deferred tax liability, net
|
—
|
|
|
40,394
|
|
||
Deferred revenue—long-term
|
7,172
|
|
|
8,581
|
|
||
Lease liabilities—long-term
|
5,916
|
|
|
100
|
|
||
Other long-term liabilities
|
5,952
|
|
|
7,440
|
|
||
Total long-term liabilities
|
400,525
|
|
|
316,905
|
|
||
Total liabilities
|
494,057
|
|
|
365,185
|
|
||
|
|
|
|
||||
Redeemable noncontrolling interests
|
—
|
|
|
24,945
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 11)
|
|
|
|
||||
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Common stock, par $0.0001—900,000 authorized shares; 49,059 shares issued and 47,753 shares outstanding at December 31, 2019; 48,044 shares issued and outstanding at December 31, 2018
|
5
|
|
|
5
|
|
||
Additional paid-in capital
|
1,586,972
|
|
|
1,569,725
|
|
||
Accumulated deficit
|
(914,791
|
)
|
|
(961,689
|
)
|
||
Accumulated other comprehensive loss
|
(272
|
)
|
|
(446
|
)
|
||
Treasury stock, at cost—1,306,000 shares at December 31, 2019
|
(28,399
|
)
|
|
—
|
|
||
Total stockholders’ equity
|
643,515
|
|
|
607,595
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,137,572
|
|
|
$
|
997,725
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Wealth management services revenue
|
$
|
507,979
|
|
|
$
|
373,174
|
|
|
$
|
348,620
|
|
Tax preparation services revenue
|
209,966
|
|
|
187,282
|
|
|
160,937
|
|
|||
Total revenue
|
717,945
|
|
|
560,456
|
|
|
509,557
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Cost of revenue:
|
|
|
|
|
|
||||||
Wealth management services cost of revenue
|
352,081
|
|
|
253,580
|
|
|
235,859
|
|
|||
Tax preparation services cost of revenue
|
10,691
|
|
|
10,040
|
|
|
10,018
|
|
|||
Amortization of acquired technology
|
—
|
|
|
99
|
|
|
195
|
|
|||
Total cost of revenue
|
362,772
|
|
|
263,719
|
|
|
246,072
|
|
|||
Engineering and technology
|
30,931
|
|
|
19,332
|
|
|
19,614
|
|
|||
Sales and marketing
|
126,205
|
|
|
111,361
|
|
|
102,798
|
|
|||
General and administrative
|
78,529
|
|
|
60,124
|
|
|
52,668
|
|
|||
Acquisition and integration
|
25,763
|
|
|
—
|
|
|
—
|
|
|||
Depreciation
|
5,479
|
|
|
4,468
|
|
|
3,460
|
|
|||
Amortization of other acquired intangible assets
|
37,357
|
|
|
33,487
|
|
|
33,807
|
|
|||
Impairment of intangible asset
|
50,900
|
|
|
—
|
|
|
—
|
|
|||
Restructuring
|
—
|
|
|
288
|
|
|
3,101
|
|
|||
Total operating expenses
|
717,936
|
|
|
492,779
|
|
|
461,520
|
|
|||
Operating income
|
9
|
|
|
67,677
|
|
|
48,037
|
|
|||
Other loss, net
|
(16,915
|
)
|
|
(15,797
|
)
|
|
(44,551
|
)
|
|||
Income (loss) before income taxes
|
(16,906
|
)
|
|
51,880
|
|
|
3,486
|
|
|||
Income tax benefit (expense)
|
65,054
|
|
|
(311
|
)
|
|
25,890
|
|
|||
Net income
|
48,148
|
|
|
51,569
|
|
|
29,376
|
|
|||
Net income attributable to noncontrolling interests
|
—
|
|
|
(935
|
)
|
|
(2,337
|
)
|
|||
Net income attributable to Blucora, Inc.
|
$
|
48,148
|
|
|
$
|
50,634
|
|
|
$
|
27,039
|
|
Net income per share attributable to Blucora, Inc. (1):
|
|
|
|
|
|
||||||
Basic
|
$
|
1.00
|
|
|
$
|
0.94
|
|
|
$
|
0.61
|
|
Diluted
|
$
|
0.98
|
|
|
$
|
0.90
|
|
|
$
|
0.57
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
48,264
|
|
|
47,394
|
|
|
44,370
|
|
|||
Diluted
|
49,282
|
|
|
49,381
|
|
|
47,211
|
|
|||
Comprehensive income (loss):
|
|
|
|
|
|
||||||
Net income
|
$
|
48,148
|
|
|
$
|
51,569
|
|
|
$
|
29,376
|
|
Other comprehensive income (loss)
|
174
|
|
|
(442
|
)
|
|
377
|
|
|||
Comprehensive income
|
48,322
|
|
|
51,127
|
|
|
29,753
|
|
|||
Comprehensive income attributable to noncontrolling interests
|
—
|
|
|
(935
|
)
|
|
(2,337
|
)
|
|||
Comprehensive income attributable to Blucora, Inc.
|
$
|
48,322
|
|
|
$
|
50,192
|
|
|
$
|
27,416
|
|
(1)
|
Net income per share for the year ended December 31, 2018 included the noncontrolling interest redemption impact discussed further in “Note 2—Summary of Significant Accounting Policies” and in “Note 17—Net Income Per Share.”
|
|
Redeemable noncontrolling interests
|
|
|
|
Additional
paid-in
capital
|
|
Accumulated
deficit
|
|
Accumulated
other
comprehensive
income (loss)
|
|
|
|
|
||||||||||||||||||||
|
Common stock
|
|
Treasury stock
|
|
|||||||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
Total
|
|||||||||||||||||||||||||
Balance as of December 31, 2016
|
$
|
15,696
|
|
|
41,845
|
|
|
$
|
4
|
|
|
$
|
1,510,152
|
|
|
$
|
(1,092,756
|
)
|
|
$
|
(381
|
)
|
|
—
|
|
|
—
|
|
|
$
|
417,019
|
|
|
Common stock issued for stock options and restricted stock units
|
—
|
|
|
4,382
|
|
|
1
|
|
|
40,271
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,272
|
|
|||||||
Common stock issued for employee stock purchase plan
|
—
|
|
|
139
|
|
|
—
|
|
|
1,429
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,429
|
|
|||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
377
|
|
|
—
|
|
|
—
|
|
|
377
|
|
|||||||
Stock-based compensation and impact of ASU 2016-09
|
—
|
|
|
—
|
|
|
—
|
|
|
12,801
|
|
|
51,543
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64,344
|
|
|||||||
Tax payments from shares withheld for equity awards
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,095
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,095
|
)
|
|||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||||
Net income
|
2,337
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,039
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,039
|
|
|||||||
Balance as of December 31, 2017
|
$
|
18,033
|
|
|
46,366
|
|
|
$
|
5
|
|
|
$
|
1,555,560
|
|
|
$
|
(1,014,174
|
)
|
|
$
|
(4
|
)
|
|
—
|
|
|
$
|
—
|
|
|
$
|
541,387
|
|
Common stock issued for stock options and restricted stock units
|
—
|
|
|
1,577
|
|
|
—
|
|
|
13,151
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,151
|
|
|||||||
Common stock issued for employee stock purchase plan
|
—
|
|
|
101
|
|
|
—
|
|
|
2,100
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,100
|
|
|||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(442
|
)
|
|
—
|
|
|
—
|
|
|
(442
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
13,253
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,253
|
|
|||||||
Tax payments from shares withheld for equity awards
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,362
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,362
|
)
|
|||||||
Impact of adoption of new accounting guidance related to revenue recognition
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,851
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,851
|
|
|||||||
Adjustment of redeemable noncontrolling interests to redemption value
|
5,977
|
|
|
—
|
|
|
—
|
|
|
(5,977
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,977
|
)
|
|||||||
Net income
|
935
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50,634
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50,634
|
|
|||||||
Balance as of December 31, 2018
|
$
|
24,945
|
|
|
48,044
|
|
|
$
|
5
|
|
|
$
|
1,569,725
|
|
|
$
|
(961,689
|
)
|
|
$
|
(446
|
)
|
|
—
|
|
|
$
|
—
|
|
|
$
|
607,595
|
|
Common stock issued for stock options and restricted stock units
|
—
|
|
|
906
|
|
|
—
|
|
|
4,387
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,387
|
|
|||||||
Common stock issued for employee stock purchase plan
|
—
|
|
|
109
|
|
|
—
|
|
|
2,212
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,212
|
|
|||||||
Stock repurchases
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,306
|
)
|
|
(28,399
|
)
|
|
(28,399
|
)
|
|||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
174
|
|
|
—
|
|
|
—
|
|
|
174
|
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
16,300
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,300
|
|
|||||||
Tax payments from shares withheld for equity awards
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,652
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,652
|
)
|
|||||||
Impact of adoption of new leases accounting standard
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,636
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,636
|
)
|
|||||||
Impact of ASC 842 consolidated deferred tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
386
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
386
|
|
|||||||
Reclassification of mandatorily redeemable noncontrolling interests
|
(22,428
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Redemption of noncontrolling interests
|
(2,517
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48,148
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48,148
|
|
|||||||
Balance as of December 31, 2019
|
$
|
—
|
|
|
49,059
|
|
|
$
|
5
|
|
|
$
|
1,586,972
|
|
|
$
|
(914,791
|
)
|
|
$
|
(272
|
)
|
|
(1,306
|
)
|
|
$
|
(28,399
|
)
|
|
$
|
643,515
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
48,148
|
|
|
$
|
51,569
|
|
|
$
|
29,376
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
|
|
||||||
Stock-based compensation
|
16,300
|
|
|
13,253
|
|
|
11,653
|
|
|||
Depreciation and amortization of acquired intangible assets
|
44,208
|
|
|
38,589
|
|
|
38,139
|
|
|||
Impairment of intangible asset
|
50,900
|
|
|
—
|
|
|
—
|
|
|||
Reduction of right-of-use assets
|
4,425
|
|
|
—
|
|
|
—
|
|
|||
Restructuring (non-cash)
|
—
|
|
|
—
|
|
|
1,569
|
|
|||
Deferred income taxes
|
(67,549
|
)
|
|
(3,039
|
)
|
|
(16,159
|
)
|
|||
Amortization of premium on investments, net, and debt issuance costs
|
1,042
|
|
|
833
|
|
|
1,099
|
|
|||
Accretion of debt discounts
|
228
|
|
|
163
|
|
|
1,947
|
|
|||
Loss on debt extinguishment and modification expense
|
—
|
|
|
1,534
|
|
|
20,445
|
|
|||
Gain on sale of a business
|
(3,256
|
)
|
|
—
|
|
|
—
|
|
|||
Other
|
734
|
|
|
73
|
|
|
30
|
|
|||
Cash provided (used) by changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
871
|
|
|
(4,286
|
)
|
|
(483
|
)
|
|||
Commissions receivable
|
(471
|
)
|
|
1,260
|
|
|
(678
|
)
|
|||
Other receivables
|
4,506
|
|
|
(3,851
|
)
|
|
(204
|
)
|
|||
Prepaid expenses and other current assets
|
10,537
|
|
|
(815
|
)
|
|
(869
|
)
|
|||
Other long-term assets
|
3,377
|
|
|
3,450
|
|
|
(12,281
|
)
|
|||
Accounts payable
|
29
|
|
|
(615
|
)
|
|
(123
|
)
|
|||
Commissions and advisory fees payable
|
432
|
|
|
(2,614
|
)
|
|
1,226
|
|
|||
Lease liabilities
|
(7,335
|
)
|
|
—
|
|
|
—
|
|
|||
Deferred revenue
|
(17,367
|
)
|
|
9,930
|
|
|
(3,248
|
)
|
|||
Accrued expenses and other current and long-term liabilities
|
3,045
|
|
|
114
|
|
|
1,407
|
|
|||
Net cash provided by operating activities
|
92,804
|
|
|
105,548
|
|
|
72,846
|
|
|||
Investing activities:
|
|
|
|
|
|
||||||
Business acquisition, net of cash acquired
|
(166,560
|
)
|
|
—
|
|
|
—
|
|
|||
Purchases of property and equipment
|
(10,501
|
)
|
|
(7,633
|
)
|
|
(5,039
|
)
|
|||
Proceeds from sale of a business, net of cash
|
7,467
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from sales of investments
|
—
|
|
|
—
|
|
|
249
|
|
|||
Proceeds from maturities of investments
|
—
|
|
|
—
|
|
|
7,252
|
|
|||
Purchases of investments
|
—
|
|
|
—
|
|
|
(409
|
)
|
|||
Net cash provided (used) by investing activities
|
(169,594
|
)
|
|
(7,633
|
)
|
|
2,053
|
|
|||
Financing activities:
|
|
|
|
|
|
||||||
Proceeds from credit facilities, net of debt issuance costs and debt discount
|
131,489
|
|
|
—
|
|
|
365,836
|
|
|||
Repurchase of convertible notes
|
—
|
|
|
—
|
|
|
(172,827
|
)
|
|||
Payments on credit facilities
|
(313
|
)
|
|
(80,000
|
)
|
|
(290,000
|
)
|
|||
Repayment of note payable with related party
|
—
|
|
|
—
|
|
|
(3,200
|
)
|
|||
Stock repurchases
|
(28,399
|
)
|
|
—
|
|
|
—
|
|
|||
Payment of redeemable noncontrolling interests
|
(24,945
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from stock option exercises
|
4,387
|
|
|
12,773
|
|
|
40,271
|
|
|||
Proceeds from issuance of stock through employee stock purchase plan
|
2,212
|
|
|
2,100
|
|
|
1,429
|
|
|||
Tax payments from shares withheld for equity awards
|
(5,652
|
)
|
|
(8,362
|
)
|
|
(9,095
|
)
|
|||
Contingent consideration payments for business acquisition
|
(943
|
)
|
|
(1,315
|
)
|
|
(946
|
)
|
|||
Other
|
—
|
|
|
—
|
|
|
(30
|
)
|
|||
Net cash provided (used) by financing activities
|
77,836
|
|
|
(74,804
|
)
|
|
(68,562
|
)
|
|||
Net cash provided by continuing operations
|
1,046
|
|
|
23,111
|
|
|
6,337
|
|
|||
Net cash provided by investing activities from discontinued operations
|
—
|
|
|
—
|
|
|
1,028
|
|
|||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
38
|
|
|
(56
|
)
|
|
78
|
|
|||
Net increase in cash, cash equivalents, and restricted cash
|
1,084
|
|
|
23,055
|
|
|
7,443
|
|
|||
Cash, cash equivalents, and restricted cash, beginning of period
|
85,366
|
|
|
62,311
|
|
|
54,868
|
|
|||
Cash, cash equivalents, and restricted cash, end of period
|
$
|
86,450
|
|
|
$
|
85,366
|
|
|
$
|
62,311
|
|
Supplemental cash flow information:
|
|
|
|
|
|
||||||
Cash paid for income taxes
|
$
|
3,106
|
|
|
$
|
1,806
|
|
|
$
|
1,267
|
|
Cash paid for interest
|
$
|
18,852
|
|
|
$
|
15,335
|
|
|
$
|
23,316
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Cash and cash equivalents
|
$
|
80,820
|
|
|
$
|
84,524
|
|
Cash segregated under federal or other regulations
|
5,630
|
|
|
842
|
|
||
Total cash, cash equivalents, and restricted cash
|
$
|
86,450
|
|
|
$
|
85,366
|
|
|
Estimated Useful Life
|
Computer equipment and software
|
3 years
|
Data center servers
|
3 years
|
Internally developed software
|
3 years
|
Office equipment
|
7 years
|
Office furniture
|
7 years
|
Leasehold improvements
|
Shorter of lease term or economic life
|
•
|
intangible assets, including the valuation methodology, estimations of future cash flows, discount rates, growth rates, as well as the estimated useful life of intangible assets;
|
•
|
deferred tax assets and liabilities and uncertain tax positions, which were initially estimated as of the 1st Global Acquisition date;
|
•
|
pre-existing liabilities or legal claims, and deferred revenue, in each case as may be applicable; and
|
•
|
goodwill as measured as the excess of consideration transferred over the net of the 1st Global Acquisition date fair values of the assets acquired and the liabilities assumed.
|
•
|
contract(s) with customers have been identified;
|
•
|
performance obligations have been identified;
|
•
|
transaction prices have been determined;
|
•
|
transaction prices have been allocated to the performance obligations; and
|
•
|
the performance obligations have been fulfilled by transferring control over the promised services to the customer.
|
|
Years Ended December 31,
|
||||||||||||||||||||||
|
2019
|
|
2018
|
||||||||||||||||||||
Wealth Management Segment Revenues:
|
Recognized Upon Transaction
|
|
Recognized Over Time
|
|
Total
|
|
Recognized Upon Transaction
|
|
Recognized Over Time
|
|
Total
|
||||||||||||
Commission revenue
|
$
|
82,604
|
|
|
$
|
108,446
|
|
|
$
|
191,050
|
|
|
$
|
67,351
|
|
|
$
|
96,850
|
|
|
$
|
164,201
|
|
Advisory revenue
|
—
|
|
|
252,367
|
|
|
252,367
|
|
|
—
|
|
|
164,353
|
|
|
164,353
|
|
||||||
Asset-based revenue
|
—
|
|
|
48,182
|
|
|
48,182
|
|
|
—
|
|
|
31,456
|
|
|
31,456
|
|
||||||
Transaction and fee revenue
|
3,457
|
|
|
12,923
|
|
|
16,380
|
|
|
3,211
|
|
|
9,953
|
|
|
13,164
|
|
||||||
Total
|
$
|
86,061
|
|
|
$
|
421,918
|
|
|
$
|
507,979
|
|
|
$
|
70,562
|
|
|
$
|
302,612
|
|
|
$
|
373,174
|
|
|
Years Ended December 31,
|
||||||||||||||||||||||
|
2019
|
|
2018
|
||||||||||||||||||||
Tax Preparation Segment Revenues:
|
Recognized Upon Transaction
|
|
Recognized Over Time
|
|
Total
|
|
Recognized Upon Transaction
|
|
Recognized Over Time
|
|
Total
|
||||||||||||
Consumer
|
$
|
192,438
|
|
|
$
|
2,566
|
|
|
$
|
195,004
|
|
|
$
|
172,207
|
|
|
$
|
—
|
|
|
$
|
172,207
|
|
Professional
|
12,616
|
|
|
2,346
|
|
|
14,962
|
|
|
12,604
|
|
|
2,471
|
|
|
15,075
|
|
||||||
Total
|
$
|
205,054
|
|
|
$
|
4,912
|
|
|
$
|
209,966
|
|
|
$
|
184,811
|
|
|
$
|
2,471
|
|
|
$
|
187,282
|
|
•
|
At the time of adoption and 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 that we have deemed realizable in the income tax provision (rather than in additional paid-in capital). This caused income taxes to differ from taxes at the statutory rates for 2017. For the year ended December 31, 2017, we recognized an estimated $20.1 million decrease to the income tax provision, which resulted in a $20.1 million increase to income from continuing operations and net income attributable to Blucora, a $0.45 increase to basic earnings per share, and a $0.43 increase to diluted earnings per share.
|
•
|
We 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). For the year ended December 31, 2017, that resulted in an increase to cash provided by operating activities from continuing operations of $16.0 million and a corresponding decrease to cash used by financing activities from continuing operations. The restatement had no impact on total cash flows for the period presented.
|
|
Estimated Purchase Price Allocation at 1st Global Acquisition Date
|
|
Purchase Price Allocation Adjustments Since Acquisition Date
|
|
Purchase Price Allocation at December 31, 2019
|
||||||
Assets acquired:
|
|
|
|
|
|
||||||
Tangible assets acquired including cash of $12,389
|
$
|
37,153
|
|
|
$
|
1,260
|
|
|
$
|
38,413
|
|
Goodwill
|
125,277
|
|
|
(7,485
|
)
|
|
117,792
|
|
|||
Identifiable intangible assets
|
78,200
|
|
|
5,780
|
|
|
83,980
|
|
|||
Liabilities assumed:
|
|
|
|
|
|
||||||
Contingent liability
|
(10,000
|
)
|
|
(1,052
|
)
|
|
(11,052
|
)
|
|||
Deferred revenues
|
(17,715
|
)
|
|
—
|
|
|
(17,715
|
)
|
|||
Other current liabilities
|
(13,397
|
)
|
|
441
|
|
|
(12,956
|
)
|
|||
Deferred tax liabilities, net
|
(19,518
|
)
|
|
1,056
|
|
|
(18,462
|
)
|
|||
Total assets acquired and liabilities assumed
|
$
|
180,000
|
|
|
$
|
—
|
|
|
$
|
180,000
|
|
Cash paid at the 1st Global Acquisition date
|
|
|
|
|
$
|
176,850
|
|
||||
Cash to be paid after the 1st Global Acquisition date (1)
|
|
|
|
|
$
|
3,150
|
|
(1)
|
The Company retained $3.2 million of the purchase price of the 1st Global Acquisition, of which $2.1 million was paid to employees of 1st Global in 2019, with the remainder to be paid to either 1st Global or former employees of 1st Global within the twelve months following the 1st Global Acquisition.
|
|
Estimated Fair Value
|
|
Accumulated Amortization through
December 31, 2019 |
|
Weighted Average Estimated Remaining Useful Life (in months)
|
||||
Advisor relationships
|
$
|
78,400
|
|
|
$
|
3,568
|
|
|
196
|
Developed technology
|
2,980
|
|
|
916
|
|
|
29
|
||
Trade name
|
1,000
|
|
|
218
|
|
|
29
|
||
Training materials
|
900
|
|
|
196
|
|
|
29
|
||
Sponsor relationships
|
700
|
|
|
38
|
|
|
137
|
||
Balance as of December 31, 2019
|
$
|
83,980
|
|
|
$
|
4,936
|
|
|
|
|
Years Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Revenue
|
$
|
777,245
|
|
|
$
|
734,489
|
|
Net income
|
36,205
|
|
|
41,319
|
|
Major classes of assets and liabilities:
|
September 3, 2019
|
|
December 31, 2018
|
||||
Cash
|
$
|
2,198
|
|
|
$
|
1,088
|
|
Accounts receivable
|
12
|
|
|
27
|
|
||
Intangible assets
|
119
|
|
|
143
|
|
||
Goodwill
|
4,199
|
|
|
4,102
|
|
||
Total assets
|
6,528
|
|
|
5,360
|
|
||
|
|
|
|
||||
Accrued expenses and other current liabilities
|
102
|
|
|
77
|
|
||
Long-term liabilities
|
38
|
|
|
37
|
|
||
Total liabilities
|
$
|
140
|
|
|
$
|
114
|
|
|
Employee-Related Termination Costs
|
|
Contract Termination Costs
|
|
Total
|
||||||
Balance as of December 31, 2017
|
$
|
1,202
|
|
|
$
|
681
|
|
|
$
|
1,883
|
|
Restructuring charges
|
288
|
|
|
—
|
|
|
288
|
|
|||
Payments
|
(1,490
|
)
|
|
(157
|
)
|
|
(1,647
|
)
|
|||
Balance as of December 31, 2018
|
$
|
—
|
|
|
$
|
524
|
|
|
$
|
524
|
|
Payments
|
—
|
|
|
(524
|
)
|
|
(524
|
)
|
|||
Balance as of December 31, 2019
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Wealth Management
|
$
|
507,979
|
|
|
$
|
373,174
|
|
|
$
|
348,620
|
|
Tax Preparation
|
209,966
|
|
|
187,282
|
|
|
160,937
|
|
|||
Total revenue
|
717,945
|
|
|
560,456
|
|
|
509,557
|
|
|||
Operating income:
|
|
|
|
|
|
||||||
Wealth Management
|
68,292
|
|
|
53,053
|
|
|
50,916
|
|
|||
Tax Preparation
|
96,249
|
|
|
87,249
|
|
|
72,921
|
|
|||
Corporate-level activity
|
(164,532
|
)
|
|
(72,625
|
)
|
|
(75,800
|
)
|
|||
Total operating income
|
9
|
|
|
67,677
|
|
|
48,037
|
|
|||
Other loss, net
|
(16,915
|
)
|
|
(15,797
|
)
|
|
(44,551
|
)
|
|||
Income tax benefit (expense)
|
65,054
|
|
|
(311
|
)
|
|
25,890
|
|
|||
Net income
|
$
|
48,148
|
|
|
$
|
51,569
|
|
|
$
|
29,376
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Wealth Management:
|
|
|
|
|
|
||||||
Commission
|
$
|
191,050
|
|
|
$
|
164,201
|
|
|
$
|
160,241
|
|
Advisory
|
252,367
|
|
|
164,353
|
|
|
145,694
|
|
|||
Asset-based
|
48,182
|
|
|
31,456
|
|
|
26,297
|
|
|||
Transaction and fee
|
16,380
|
|
|
13,164
|
|
|
16,388
|
|
|||
Total Wealth Management revenue
|
$
|
507,979
|
|
|
$
|
373,174
|
|
|
$
|
348,620
|
|
Tax Preparation:
|
|
|
|
|
|
||||||
Consumer
|
$
|
195,004
|
|
|
$
|
172,207
|
|
|
$
|
147,084
|
|
Professional
|
14,962
|
|
|
15,075
|
|
|
13,853
|
|
|||
Total Tax Preparation revenue
|
$
|
209,966
|
|
|
$
|
187,282
|
|
|
$
|
160,937
|
|
|
Wealth Management
|
|
Tax Preparation
|
|
Total
|
||||||
Balance as of December 31, 2017
|
$
|
356,041
|
|
|
$
|
192,996
|
|
|
$
|
549,037
|
|
Foreign currency translation adjustment
|
—
|
|
|
(352
|
)
|
|
(352
|
)
|
|||
Balance as of December 31, 2018
|
356,041
|
|
|
192,644
|
|
|
548,685
|
|
|||
Acquired (1)
|
117,792
|
|
|
—
|
|
|
117,792
|
|
|||
Disposed (1)
|
—
|
|
|
(4,102
|
)
|
|
(4,102
|
)
|
|||
Balance as of December 31, 2019
|
$
|
473,833
|
|
|
$
|
188,542
|
|
|
$
|
662,375
|
|
(1)
|
For the year ended December 31, 2019, goodwill acquired resulted from the 1st Global Acquisition, and goodwill disposed resulted from the disposition of SimpleTax. For additional information, see “Note 3—Acquisitions and Dispositions.”
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Weighted Average Amortization Period (months)
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
|
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
|
||||||||||||
Definite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Advisor relationships
|
193
|
$
|
318,700
|
|
|
$
|
(71,066
|
)
|
|
$
|
247,634
|
|
|
$
|
240,300
|
|
|
$
|
(50,973
|
)
|
|
$
|
189,327
|
|
Sponsor relationships
|
166
|
17,200
|
|
|
(3,705
|
)
|
|
13,495
|
|
|
16,500
|
|
|
(2,750
|
)
|
|
13,750
|
|
||||||
Technology
|
26
|
46,952
|
|
|
(41,335
|
)
|
|
5,617
|
|
|
43,847
|
|
|
(38,396
|
)
|
|
5,451
|
|
||||||
Trade names (1)
|
31
|
2,600
|
|
|
(396
|
)
|
|
2,204
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Customer relationships
|
1
|
101,575
|
|
|
(100,518
|
)
|
|
1,057
|
|
|
101,686
|
|
|
(87,811
|
)
|
|
13,875
|
|
||||||
Curriculum
|
29
|
1,700
|
|
|
(996
|
)
|
|
704
|
|
|
800
|
|
|
(600
|
)
|
|
200
|
|
||||||
Total definite-lived intangible assets
|
186
|
488,727
|
|
|
(218,016
|
)
|
|
270,711
|
|
|
403,133
|
|
|
(180,530
|
)
|
|
222,603
|
|
||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trade names (1)
|
|
19,500
|
|
|
—
|
|
|
19,500
|
|
|
72,000
|
|
|
—
|
|
|
72,000
|
|
||||||
Total intangible assets
|
|
$
|
508,227
|
|
|
$
|
(218,016
|
)
|
|
$
|
290,211
|
|
|
$
|
475,133
|
|
|
$
|
(180,530
|
)
|
|
$
|
294,603
|
|
(1)
|
At December 31, 2018, the HD Vest trade name was included in “Trade names” in indefinite-lived intangible assets. At December 31, 2019, the HD Vest trade name was included in “Trade names” in definite-lived intangible assets. For more information, see the “Intangible asset impairment” section below.
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Statement of comprehensive income line item:
|
|
|
|
|
|
||||||
Cost of revenue
|
$
|
—
|
|
|
$
|
99
|
|
|
$
|
195
|
|
Amortization of other acquired intangible assets
|
37,357
|
|
|
33,487
|
|
|
33,807
|
|
|||
Total
|
$
|
37,357
|
|
|
$
|
33,586
|
|
|
$
|
34,002
|
|
2020
|
$
|
27,688
|
|
2021
|
23,992
|
|
|
2022
|
20,732
|
|
|
2023
|
19,502
|
|
|
2024
|
19,025
|
|
|
Thereafter
|
159,772
|
|
|
Total
|
$
|
270,711
|
|
•
|
Level 1: Quoted market prices in active markets for identical assets or liabilities.
|
•
|
Level 2: Observable market-based inputs, other than Level 1, or unobservable inputs that are corroborated by market data.
|
•
|
Level 3: Unobservable inputs that are not corroborated by market data and reflect our own assumptions.
|
|
December 31, 2019
|
|
Fair value measurements at the reporting date using
|
||||||||||||
|
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
|
$
|
4,264
|
|
|
$
|
4,264
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total assets at fair value
|
$
|
4,264
|
|
|
$
|
4,264
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
December 31, 2018
|
|
Fair value measurements at the reporting date using
|
||||||||||||
|
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
|
$
|
23,181
|
|
|
$
|
23,181
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total assets at fair value
|
$
|
23,181
|
|
|
$
|
23,181
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Acquisition-related contingent consideration liability
|
$
|
1,275
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,275
|
|
Total liabilities at fair value
|
$
|
1,275
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,275
|
|
|
Years Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Acquisition-related contingent consideration liability:
|
|
|
|
||||
Balance at beginning of year
|
$
|
1,275
|
|
|
$
|
2,689
|
|
Payment
|
(1,331
|
)
|
|
(1,315
|
)
|
||
Foreign currency transaction (gain) loss
|
56
|
|
|
(99
|
)
|
||
Balance at end of year
|
$
|
—
|
|
|
$
|
1,275
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Income taxes receivable
|
$
|
2,735
|
|
|
$
|
7,243
|
|
Other receivables
|
167
|
|
|
165
|
|
||
Total other receivables
|
$
|
2,902
|
|
|
$
|
7,408
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Prepaid expenses
|
$
|
11,787
|
|
|
$
|
7,169
|
|
Other current assets
|
562
|
|
|
586
|
|
||
Total prepaid expenses and other current assets, net
|
$
|
12,349
|
|
|
$
|
7,755
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Internally developed software
|
$
|
13,046
|
|
|
$
|
9,220
|
|
Computer equipment and data center
|
6,998
|
|
|
5,641
|
|
||
Purchased software
|
5,404
|
|
|
4,214
|
|
||
Leasehold improvements and other
|
4,624
|
|
|
3,313
|
|
||
Office furniture
|
1,221
|
|
|
929
|
|
||
Office equipment
|
1,314
|
|
|
662
|
|
||
|
32,607
|
|
|
23,979
|
|
||
Accumulated depreciation
|
(19,172
|
)
|
|
(13,724
|
)
|
||
|
13,435
|
|
|
10,255
|
|
||
Capital projects in progress
|
5,271
|
|
|
2,134
|
|
||
Total property and equipment, net
|
$
|
18,706
|
|
|
$
|
12,389
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Salaries and related expenses
|
$
|
15,053
|
|
|
$
|
13,050
|
|
Contingent liability from 1st Global Acquisition
|
11,052
|
|
|
—
|
|
||
Retained purchase price from 1st Global Acquisition
|
1,050
|
|
|
—
|
|
||
Accrued vendor and advertising costs
|
4,351
|
|
|
1,541
|
|
||
Other
|
4,638
|
|
|
4,389
|
|
||
Total accrued expenses and other current liabilities
|
$
|
36,144
|
|
|
$
|
18,980
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||||
|
|
|
Unamortized
|
|
|
|
|
|
Unamortized
|
|
|
||||||||||||||||||||
|
Principal amount
|
|
Discount
|
|
Debt issuance costs
|
|
Net carrying value
|
|
Principal amount
|
|
Discount
|
|
Debt issuance costs
|
|
Net carrying value
|
||||||||||||||||
Senior secured credit facility
|
$
|
399,687
|
|
|
$
|
(1,366
|
)
|
|
$
|
(5,608
|
)
|
|
$
|
392,713
|
|
|
$
|
265,000
|
|
|
$
|
(970
|
)
|
|
$
|
(3,640
|
)
|
|
$
|
260,390
|
|
Less: Current portion of long-term debt, net
|
|
|
|
|
|
|
(11,228
|
)
|
|
|
|
|
|
|
|
—
|
|
||||||||||||||
Long-term debt, net
|
|
|
|
|
|
|
$
|
381,485
|
|
|
|
|
|
|
|
|
$
|
260,390
|
|
|
December 31, 2019
|
||
Lease liabilities—current
|
$
|
3,223
|
|
Lease liabilities—long-term
|
5,865
|
|
|
Total operating lease liabilities
|
$
|
9,088
|
|
Undiscounted cash flows:
|
|
||
2020
|
$
|
3,614
|
|
2021
|
1,136
|
|
|
2022
|
1,264
|
|
|
2023
|
1,292
|
|
|
2024
|
1,319
|
|
|
Thereafter
|
1,799
|
|
|
Total undiscounted cash flows
|
$
|
10,424
|
|
Imputed interest
|
(1,336
|
)
|
|
Present value of cash flows
|
$
|
9,088
|
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|
Total
|
||||||||||||||
Operating lease commitments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating lease obligations (1) (2)
|
$
|
3,715
|
|
|
$
|
2,275
|
|
|
$
|
4,714
|
|
|
$
|
4,817
|
|
|
$
|
4,919
|
|
|
$
|
35,418
|
|
|
$
|
55,858
|
|
Sublease income
|
(991
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(991
|
)
|
|||||||
Net operating lease commitments
|
2,724
|
|
|
2,275
|
|
|
4,714
|
|
|
4,817
|
|
|
4,919
|
|
|
35,418
|
|
|
54,867
|
|
|||||||
Purchase commitments
|
14,759
|
|
|
6,866
|
|
|
5,150
|
|
|
3,244
|
|
|
1,500
|
|
|
5,625
|
|
|
37,144
|
|
|||||||
Debt commitment—Term Loan
|
1,250
|
|
|
1,250
|
|
|
1,250
|
|
|
1,250
|
|
|
384,688
|
|
|
—
|
|
|
389,688
|
|
|||||||
Debt commitment—Revolver
|
10,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,000
|
|
|||||||
Interest payable
|
19,507
|
|
|
19,126
|
|
|
18,920
|
|
|
18,757
|
|
|
7,793
|
|
|
—
|
|
|
84,103
|
|
|||||||
Total
|
$
|
48,240
|
|
|
$
|
29,517
|
|
|
$
|
30,034
|
|
|
$
|
28,068
|
|
|
$
|
398,900
|
|
|
$
|
41,043
|
|
|
$
|
575,802
|
|
(1)
|
Operating lease obligations include obligations due to short-term leases. In accordance with the short-term lease practical expedient in ASC 842, we do not record a lease liability for short-term leases.
|
(2)
|
Operating lease obligations include obligations relating to our new corporate headquarters office lease, which will be located in Coppell, TX. The corporate headquarters building will replace our Irving, Texas corporate office and our additional office located in Dallas, TX. Lease payments will commence in August 2021 and end in June 2033, and will result in $45.3 million in undiscounted lease payments during this time period.
|
|
Unrealized gain (loss) on investments
|
|
Foreign currency translation adjustment
|
|
Total
|
||||||
Balance as of December 31, 2016
|
$
|
(1
|
)
|
|
$
|
(380
|
)
|
|
$
|
(381
|
)
|
Other comprehensive income
|
1
|
|
|
376
|
|
|
377
|
|
|||
Balance as of December 31, 2017
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
|||
Other comprehensive loss
|
—
|
|
|
(442
|
)
|
|
(442
|
)
|
|||
Balance as of December 31, 2018
|
—
|
|
|
(446
|
)
|
|
(446
|
)
|
|||
Other comprehensive income
|
—
|
|
|
174
|
|
|
174
|
|
|||
Balance as of December 31, 2019
|
$
|
—
|
|
|
$
|
(272
|
)
|
|
$
|
(272
|
)
|
Number of shares authorized for awards
|
10,806,231
|
|
Options and RSUs outstanding
|
2,971,002
|
|
Options and RSUs expected to vest
|
2,747,970
|
|
Options and RSUs available for grant
|
5,028,497
|
|
|
Number of Options
|
|
Weighted average exercise price
|
|
Intrinsic value
(in thousands) |
|
Weighted average remaining contractual term (in years)
|
|||||
Stock options:
|
|
|
|
|
|
|
|
|||||
Outstanding at December 31, 2018
|
2,447,939
|
|
|
$
|
14.62
|
|
|
|
|
|
||
Granted
|
280,135
|
|
|
$
|
27.38
|
|
|
|
|
|
||
Forfeited
|
(265,490
|
)
|
|
$
|
17.10
|
|
|
|
|
|
||
Expired
|
(9,995
|
)
|
|
$
|
8.63
|
|
|
|
|
|
||
Exercised
|
(838,282
|
)
|
|
$
|
9.42
|
|
|
|
|
|
||
Outstanding at December 31, 2019
|
1,614,307
|
|
|
$
|
19.16
|
|
|
$
|
11,612
|
|
|
4.5
|
Exercisable at December 31, 2019
|
752,375
|
|
|
$
|
15.12
|
|
|
$
|
8,288
|
|
|
3.8
|
Vested and expected to vest after December 31, 2019
|
1,559,047
|
|
|
$
|
18.91
|
|
|
$
|
11,572
|
|
|
4.4
|
|
Number of Units
|
|
Weighted average grant date fair value
|
|
Intrinsic value
(in thousands) |
|
Weighted average remaining contractual term (in years)
|
|||||
RSUs:
|
|
|
|
|
|
|
|
|||||
Outstanding at December 31, 2018
|
862,935
|
|
|
$
|
21.78
|
|
|
|
|
|
||
Granted
|
1,055,206
|
|
|
$
|
28.89
|
|
|
|
|
|
||
Forfeited
|
(193,368
|
)
|
|
$
|
23.86
|
|
|
|
|
|
||
Vested
|
(368,078
|
)
|
|
$
|
17.30
|
|
|
|
|
|
||
Outstanding at December 31, 2019
|
1,356,695
|
|
|
$
|
28.22
|
|
|
$
|
35,466
|
|
|
1.7
|
Expected to vest after December 31, 2019
|
1,188,923
|
|
|
$
|
28.17
|
|
|
$
|
31,078
|
|
|
1.6
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Stock options:
|
|
|
|
|
|
||||||
Weighted average grant date fair value per option granted
|
$
|
8.88
|
|
|
$
|
7.68
|
|
|
$
|
6.25
|
|
Total intrinsic value of options exercised (in thousands)
|
$
|
17,674
|
|
|
$
|
27,759
|
|
|
$
|
44,405
|
|
Total fair value of options vested (in thousands)
|
$
|
2,593
|
|
|
$
|
4,142
|
|
|
$
|
5,566
|
|
RSUs:
|
|
|
|
|
|
||||||
Weighted average grant date fair value per unit granted
|
$
|
28.89
|
|
|
$
|
26.89
|
|
|
$
|
18.39
|
|
Total intrinsic value of units vested (in thousands)
|
$
|
10,679
|
|
|
$
|
16,452
|
|
|
$
|
14,642
|
|
Total fair value of units vested (in thousands)
|
$
|
6,368
|
|
|
$
|
6,069
|
|
|
$
|
6,469
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cost of revenue
|
$
|
4,082
|
|
|
$
|
1,467
|
|
|
$
|
774
|
|
Engineering and technology
|
715
|
|
|
766
|
|
|
984
|
|
|||
Sales and marketing
|
346
|
|
|
2,424
|
|
|
2,376
|
|
|||
General and administrative
|
11,157
|
|
|
8,596
|
|
|
7,519
|
|
|||
Restructuring
|
—
|
|
|
—
|
|
|
1,148
|
|
|||
Total
|
$
|
16,300
|
|
|
$
|
13,253
|
|
|
$
|
12,801
|
|
|
Years Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Risk-free interest rate
|
2.28% - 2.88%
|
|
|
1.82% - 2.54%
|
|
|
1.2% - 1.94%
|
|
Expected dividend yield
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
Expected volatility
|
38% - 42%
|
|
|
38% - 42%
|
|
|
39% - 45%
|
|
Expected life
|
3.6
|
|
|
3.6
|
|
|
3.8
|
|
|
Expense
(in thousands)
|
|
Weighted average period
over which to be recognized
(in years)
|
||
Stock options
|
$
|
1,544
|
|
|
1.1
|
RSUs
|
18,977
|
|
|
2.0
|
|
Total
|
$
|
20,521
|
|
|
1.9
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Interest expense
|
$
|
19,017
|
|
|
$
|
15,610
|
|
|
$
|
21,211
|
|
Loss on debt extinguishment and amortization of debt issuance costs (1)
|
1,042
|
|
|
2,367
|
|
|
21,534
|
|
|||
Accretion of debt discounts
|
228
|
|
|
163
|
|
|
1,947
|
|
|||
Interest income
|
(449
|
)
|
|
(349
|
)
|
|
(110
|
)
|
|||
Gain on sale of a business (2)
|
(3,256
|
)
|
|
—
|
|
|
—
|
|
|||
Other (3)
|
333
|
|
|
(1,994
|
)
|
|
(31
|
)
|
|||
Other loss, net
|
$
|
16,915
|
|
|
$
|
15,797
|
|
|
$
|
44,551
|
|
(1)
|
For the year ended December 31, 2017, we recognized a $20.4 million loss on debt extinguishment that primarily resulted from the prepayment of a portion of the credit facility previously entered into in 2015 for the purpose of financing the HD Vest acquisition, as well as the redemption of convertible senior notes previously issued in 2013.
|
(2)
|
For the year ended December 31, 2019, we recognized a $3.3 million gain on the sale of SimpleTax. See Note 3—Acquisitions and Dispositions for additional information.
|
(3)
|
For the year ended December 31, 2018, we had a $2.1 million gain on the sale of an investment.
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
$
|
(18,088
|
)
|
|
$
|
51,385
|
|
|
$
|
3,293
|
|
Foreign
|
1,182
|
|
|
495
|
|
|
193
|
|
|||
Income (loss) before income taxes
|
$
|
(16,906
|
)
|
|
$
|
51,880
|
|
|
$
|
3,486
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Current:
|
|
|
|
|
|
||||||
U.S. federal
|
$
|
(732
|
)
|
|
$
|
(42
|
)
|
|
$
|
123
|
|
State
|
2,901
|
|
|
3,230
|
|
|
962
|
|
|||
Foreign
|
333
|
|
|
157
|
|
|
122
|
|
|||
Total current expense
|
2,502
|
|
|
3,345
|
|
|
1,207
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
U.S. federal
|
(62,580
|
)
|
|
(3,035
|
)
|
|
(26,012
|
)
|
|||
State
|
(4,970
|
)
|
|
37
|
|
|
(1,022
|
)
|
|||
Foreign
|
(6
|
)
|
|
(36
|
)
|
|
(63
|
)
|
|||
Total deferred benefit
|
(67,556
|
)
|
|
(3,034
|
)
|
|
(27,097
|
)
|
|||
Income tax expense (benefit)
|
$
|
(65,054
|
)
|
|
$
|
311
|
|
|
$
|
(25,890
|
)
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Income tax expense (benefit) at the statutory federal income tax rate
|
$
|
(3,550
|
)
|
|
$
|
10,895
|
|
|
$
|
1,220
|
|
Non-deductible compensation
|
1,933
|
|
|
2,796
|
|
|
283
|
|
|||
Non-deductible acquisition-related transaction costs
|
1,359
|
|
|
—
|
|
|
—
|
|
|||
State income taxes, net of federal benefit
|
(1,897
|
)
|
|
2,014
|
|
|
582
|
|
|||
Uncertain tax positions and audit settlements
|
(1,227
|
)
|
|
473
|
|
|
(321
|
)
|
|||
Research and development credit
|
—
|
|
|
(552
|
)
|
|
—
|
|
|||
Excess tax benefits of stock-based compensation
|
(4,100
|
)
|
|
(6,851
|
)
|
|
(11,558
|
)
|
|||
Valuation allowances
|
(56,881
|
)
|
|
(8,537
|
)
|
|
4,974
|
|
|||
Tax legislation impact
|
—
|
|
|
—
|
|
|
(21,430
|
)
|
|||
Other
|
(691
|
)
|
|
73
|
|
|
360
|
|
|||
Income tax expense (benefit)
|
$
|
(65,054
|
)
|
|
$
|
311
|
|
|
$
|
(25,890
|
)
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss and credit carryforwards
|
$
|
84,684
|
|
|
$
|
97,154
|
|
Capital loss
|
22,948
|
|
|
23,008
|
|
||
Accrued compensation
|
6,686
|
|
|
5,526
|
|
||
Stock-based compensation
|
4,986
|
|
|
3,971
|
|
||
Deferred revenue
|
4,042
|
|
|
3,700
|
|
||
Lease liability
|
2,133
|
|
|
—
|
|
||
Other, net
|
3,833
|
|
|
2,143
|
|
||
Total gross deferred tax assets
|
129,312
|
|
|
135,502
|
|
||
Valuation allowance
|
(43,824
|
)
|
|
(100,705
|
)
|
||
Deferred tax assets, net of valuation allowance
|
85,488
|
|
|
34,797
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Amortization
|
(69,668
|
)
|
|
(72,563
|
)
|
||
Depreciation
|
(2,521
|
)
|
|
(1,572
|
)
|
||
Right-of-use assets
|
(2,382
|
)
|
|
—
|
|
||
Other, net
|
(920
|
)
|
|
(1,056
|
)
|
||
Total gross deferred tax liabilities
|
(75,491
|
)
|
|
(75,191
|
)
|
||
Net deferred tax assets (liabilities)
|
$
|
9,997
|
|
|
$
|
(40,394
|
)
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at beginning of year
|
$
|
100,705
|
|
|
$
|
109,242
|
|
|
$
|
226,813
|
|
Decrease in valuation allowance—future year utilization
|
(45,651
|
)
|
|
—
|
|
|
—
|
|
|||
Increase (decrease) in valuation allowance—current year utilization
|
(10,943
|
)
|
|
(8,597
|
)
|
|
4,875
|
|
|||
Decrease in valuation allowance—change in federal income tax rate
|
—
|
|
|
—
|
|
|
(72,482
|
)
|
|||
Decrease in valuation allowance—adoption of ASU 2016-09
|
—
|
|
|
—
|
|
|
(50,203
|
)
|
|||
Increase (decrease) in valuation allowance—other
|
(287
|
)
|
|
60
|
|
|
239
|
|
|||
Balance at end of year
|
$
|
43,824
|
|
|
$
|
100,705
|
|
|
$
|
109,242
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at beginning of year
|
$
|
22,590
|
|
|
$
|
22,625
|
|
|
$
|
22,919
|
|
Gross increases for tax positions of prior years
|
—
|
|
|
516
|
|
|
93
|
|
|||
Gross decreases for tax positions of prior years
|
(99
|
)
|
|
—
|
|
|
(31
|
)
|
|||
Gross increases for tax positions of current year
|
60
|
|
|
—
|
|
|
—
|
|
|||
Purchase accounting for 1st Global Acquisition
|
442
|
|
|
—
|
|
|
—
|
|
|||
Settlements with taxing authorities
|
(563
|
)
|
|
—
|
|
|
(66
|
)
|
|||
Statute of limitations expirations
|
(2,947
|
)
|
|
(551
|
)
|
|
(290
|
)
|
|||
Balance at end of year
|
$
|
19,483
|
|
|
$
|
22,590
|
|
|
$
|
22,625
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income
|
$
|
48,148
|
|
|
$
|
51,569
|
|
|
$
|
29,376
|
|
Net income attributable to noncontrolling interests
|
—
|
|
|
(935
|
)
|
|
(2,337
|
)
|
|||
Adjustment of redeemable noncontrolling interests (1)
|
—
|
|
|
(5,977
|
)
|
|
—
|
|
|||
Net income attributable to Blucora, Inc. shareholders after adjustment of redeemable noncontrolling interests
|
$
|
48,148
|
|
|
$
|
44,657
|
|
|
$
|
27,039
|
|
Denominator:
|
|
|
|
|
|
||||||
Basic weighted average common shares outstanding
|
48,264
|
|
|
47,394
|
|
|
44,370
|
|
|||
Dilutive potential common shares
|
1,018
|
|
|
1,987
|
|
|
2,841
|
|
|||
Diluted weighted average common shares outstanding
|
49,282
|
|
|
49,381
|
|
|
47,211
|
|
|||
Net income per share attributable to Blucora, Inc.:
|
|
|
|
|
|
||||||
Basic net income per share
|
$
|
1.00
|
|
|
$
|
0.94
|
|
|
$
|
0.61
|
|
Diluted net income per share
|
$
|
0.98
|
|
|
$
|
0.90
|
|
|
$
|
0.57
|
|
Shares excluded
|
1,150
|
|
|
354
|
|
|
1,058
|
|
(1)
|
For the year ended December 31, 2018, the redemption value adjustment for our redeemable noncontrolling interest was deducted from net income for purposes of calculating net income per share attributable to Blucora, Inc. This redeemable noncontrolling interest was subsequently redeemed in 2019. See “Note 2—Summary of Significant Accounting Policies” for further discussion of redeemable noncontrolling interests.
|
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
Date of First Filing
|
|
Exhibit
Number
|
Filed
Herewith
|
||
|
Stock Purchase Agreement between Blucora, Inc., Monoprice Holdings, Inc. and YFC-Boneagle Electric Co., LTD, dated November 14, 2016
|
|
8-K
|
|
November 15, 2016
|
|
2.1
|
|
|
|
|
|
Stock Purchase Agreement, dated as of March 18, 2019, by and among 1G Acquisitions, LLC, 1st Global, Inc., 1st Global Insurance Services, Inc., the sellers named therein and joinder sellers, SAB Representative, LLC, as the sellers’ representative, and Blucora, Inc., as guarantor
|
|
8-K
|
|
March 19, 2019
|
|
2.1
|
|
|
|
|
|
Stock Purchase Agreement, dated as of January 6, 2020, by and among Blucora, Inc., Honkamp Krueger Financial Services, Inc., the sellers named therein, and JRD Seller Representative, LLC, as the sellers’ representative
|
|
8-K
|
|
January 7, 2020
|
|
2.1
|
|
|
|
|
|
Restated Certificate of Incorporation, as filed with the Secretary of the State of Delaware on August 10, 2012
|
|
8-K (No. 000-25131)
|
|
August 13, 2012
|
|
3.1
|
|
|
|
|
|
Certificate of Amendment to the Restated Certificate of Incorporation of Blucora, Inc. filed with the Secretary of State of Delaware on June 1, 2017
|
|
8-K
|
|
June 5, 2017
|
|
3.1
|
|
|
|
|
|
Certificate of Amendment to the Restated Certificate of Incorporation of Blucora, Inc. filed with the Secretary of State of Delaware on June 8, 2018
|
|
8-K
|
|
June 8, 2018
|
|
3.1
|
|
|
|
|
|
Amended and Restated Bylaws of Blucora, Inc.
|
|
8-K
|
|
February 28, 2017
|
|
3.2
|
|
|
|
|
|
Description of Securities
|
|
|
|
|
|
|
|
X
|
||
|
Restated 1996 Flexible Stock Incentive Plan, as amended and restated effective as of June 5, 2012
|
|
S-8 (No. 333-198645)
|
|
September 8, 2014
|
|
99.1
|
|
|
|
|
|
Blucora, Inc. 2015 Incentive Plan, as Amended and Restated
|
|
DEF 14A
|
|
April 25, 2016
|
|
App-endix A
|
|
|
|
|
|
Form of Blucora, Inc. 2015 Incentive Plan Nonqualified Stock Option Grant Notice
|
|
10-Q
|
|
July 30, 2015
|
|
10.2
|
|
|
|
|
|
Form of Blucora, Inc. 2015 Incentive Plan Restricted Stock Unit Grant Notice
|
|
10-Q
|
|
July 30, 2015
|
|
10.3
|
|
|
|
|
|
Form of Nonqualified Stock Option Agreement for Executive Officers under the Blucora, Inc. 2015 Incentive Plan, as amended and restated
|
|
8-K
|
|
February 23, 2018
|
|
10.2
|
|
|
|
|
|
Form of Time-Based Restricted Stock Unit Agreement for Executive Officers under the Blucora, Inc. 2015 Incentive Plan, as amended and restated
|
|
8-K
|
|
February 23, 2018
|
|
10.3
|
|
|
|
|
|
Form of Performance-Based Restricted Stock Unit Agreement for Executive Officers under the Blucora, Inc. 2015 Incentive Plan, as amended and restated
|
|
8-K
|
|
February 23, 2018
|
|
10.4
|
|
|
|
|
|
Form of Nonqualified Stock Option Grant Notice and Agreement for Nonemployee Directors under the Blucora, Inc. 2015 Incentive Plan
|
|
10-Q
|
|
April 28, 2016
|
|
10.3
|
|
|
|
|
|
Form of Nonqualified Stock Option Grant Notice and Agreement for Nonemployee Chairman of the Board under the Blucora, Inc. 2015 Incentive Plan
|
|
10-Q
|
|
April 28, 2016
|
|
10.4
|
|
|
|
|
|
Form of Director Restricted Stock Unit Grant Notice and Award Agreement for Initial Grants to New Directors under the Amended and Restated Blucora, Inc. 2015 Incentive Plan
|
|
10-Q
|
|
July 27, 2017
|
|
10.3
|
|
|
|
|
|
Form of Director Restricted Stock Unit Grant Notice and Award Agreement for Annual Grants to Directors under the Amended and Restated Blucora, Inc. 2015 Incentive Plan
|
|
10-Q
|
|
July 27, 2017
|
|
10.4
|
|
|
|
|
|
Blucora, Inc. 2018 Long-Term Incentive Plan
|
|
DEF 14A
|
|
April 19, 2018
|
|
App-endix A
|
|
|
|
|
Form of Nonqualified Stock Option Award Agreement for Executive Officers under the Blucora, Inc. 2018 Long-Term Incentive Plan
|
|
|
|
|
|
|
|
X
|
||
|
Form of Time-Based Restricted Stock Unit Award Agreement for Executive Officers under the Blucora, Inc. 2018 Long-Term Incentive Plan
|
|
|
|
|
|
|
|
X
|
||
|
Form of Performance-Based Restricted Stock Unit Award Agreement for Executive Officers under the Blucora, Inc. 2018 Long-Term Incentive Plan
|
|
|
|
|
|
|
|
X
|
||
|
Form of Director Restricted Stock Unit Grant Notice and Award Agreement for Initial Grants to New Directors under the Blucora, Inc. 2018 Long-Term Incentive Plan
|
|
|
|
|
|
|
|
X
|
||
|
Form of Director Restricted Stock Unit Grant Notice and Award Agreement for Annual Grants to Directors under Blucora, Inc. 2018 Long-Term Incentive Plan
|
|
|
|
|
|
|
|
X
|
||
|
Blucora, Inc. 2016 Equity Inducement Plan
|
|
S-8
|
|
January 29, 2016
|
|
99.1
|
|
|
|
|
|
Amendment No. 1 to Blucora, Inc. 2016 Inducement Plan
|
|
S-8
|
|
October 14, 2016
|
|
99.1
|
|
|
|
|
|
Amendment No. 2 to the Blucora, Inc. 2016 Inducement Plan
|
|
8-K
|
|
May 25, 2018
|
|
10.1
|
|
|
|
|
|
Form of Restricted Stock Unit Grant Notice and Award Agreement for Initial Grants to Newly-Hired Executive Officers Under the Blucora, Inc. 2016 Equity Inducement Plan, as amended
|
|
10-Q
|
|
October 31, 2018
|
|
10.2
|
|
|
|
|
|
Form of Blucora, Inc. 2016 Inducement Plan Nonqualified Stock Option Grant Notice
|
|
10-K
|
|
February 24, 2016
|
|
10.41
|
|
|
|
|
|
Form of Blucora, Inc. 2016 Inducement Plan Restricted Stock Unit Grant Notice
|
|
10-K
|
|
February 24, 2016
|
|
10.42
|
|
|
|
|
|
Blucora, Inc. 2018 Annual Incentive Plan
|
|
8-K
|
|
February 23, 2018
|
|
10.1
|
|
|
|
|
|
Employment Agreement by and between Blucora, Inc. and Ann Bruder, dated June 19, 2017
|
|
10-Q
|
|
July 27, 2017
|
|
10.2
|
|
|
|
|
|
Employment Agreement by and between Blucora, Inc. and Todd Mackay, dated December 24, 2018
|
|
10-K
|
|
March 1, 2019
|
|
10.33
|
|
|
|
|
|
Employment Agreement by and between Blucora, Inc. and Curtis Campbell, dated October 12, 2018
|
|
10-K
|
|
March 1, 2019
|
|
10.34
|
|
|
|
|
|
Employment Agreement by and between Blucora, Inc. and Mike Hogan, dated October 20, 2018
|
|
10-K
|
|
March 1, 2019
|
|
10.35
|
|
|
|
|
|
Employment Agreement by and between Blucora, Inc. and Enrique Vasquez, dated May 31, 2019
|
|
10-Q
|
|
August 8, 2019
|
|
10.3
|
|
|
|
|
|
Separation and Release Agreement by and between Blucora, Inc. and Davinder Athwal, dated January 6, 2020
|
|
|
|
|
|
|
|
X
|
||
|
General Release and Waiver of Claims by and between Blucora, Inc. and John Clendening, dated January 15, 2020
|
|
|
|
|
|
|
|
X
|
||
|
Employment Agreement by and between Blucora, Inc. and Christoper W. Walters, dated January 17, 2020
|
|
|
|
|
|
|
|
X
|
||
|
Credit Agreement, dated May 22, 2017, among Blucora, Inc., as borrower, and most of its direct and indirect domestic subsidiaries, as guarantors, and Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent, and each lender from time to time a party to the Credit Agreement
|
|
8-K
|
|
May 23, 2017
|
|
10.1
|
|
|
|
|
|
First Amendment, dated November 28, 2017, among Blucora, Inc., as borrower, and most of its direct and indirect domestic subsidiaries, as guarantors, and Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent, and each lender party to the First Amendment
|
|
8-K
|
|
November 29, 2017
|
|
10.1
|
|
|
|
|
Second Amendment to Credit Agreement, dated May 6, 2019, among Blucora, Inc., as borrower, most of its direct and indirect domestic subsidiaries, as guarantors, and JPMorgan Chase Bank, N.A., as successor administrative agent and successor collateral agent, and each lender party to the Second Amendment
|
|
8-K
|
|
May 6, 2019
|
|
10.1
|
|
|
|
|
|
Lease Agreement between BDDC, Inc. and Blucora, Inc., dated May 10, 2019
|
|
|
|
|
|
|
|
X
|
||
|
Blucora, Inc., 2016 Employee Stock Purchase Plan
|
|
DEF 14A
|
|
April 25, 2016
|
|
App-endix B
|
|
|
|
|
|
Amendment No. 1 to the Blucora, Inc. Employee Stock Purchase Plan
|
|
10-Q
|
|
August 1, 2018
|
|
99.1
|
|
|
|
|
|
Blucora, Inc. Non-Employee Director Compensation Policy
|
|
10-Q
|
|
August 8, 2019
|
|
10.2
|
|
|
|
|
|
Blucora, Inc. Director Tax-Smart Deferral Plan
|
|
10-K
|
|
March 1, 2019
|
|
10.51
|
|
|
|
|
|
Blucora, Inc. Executive Officer Tax-Smart Deferral Plan
|
|
10-K
|
|
March 1, 2019
|
|
10.52
|
|
|
|
|
|
First Amendment to Blucora, Inc. Director Tax-Smart Deferral Plan
|
|
|
|
|
|
|
|
X
|
||
|
First Amendment to Blucora, Inc. Executive Officer Tax-Smart Deferral Plan
|
|
|
|
|
|
|
|
X
|
||
|
Form of Indemnification Agreement
|
|
|
|
|
|
|
|
X
|
||
|
Principal Subsidiaries of the Registrant
|
|
|
|
|
|
|
|
X
|
||
|
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
X
|
||
|
Power of Attorney (contained on the signature page hereto)
|
|
|
|
|
|
|
|
X
|
||
|
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
X
|
||
|
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
X
|
||
|
Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
X
|
||
|
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-K for the fiscal year ended December 31, 2019, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Statements of Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements
|
|
|
|
|
|
|
|
X
|
|
104
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and Contained in Exhibit 101)
|
|
|
|
|
|
|
|
X
|
*
|
|
Indicates a management contract or compensatory plan or arrangement.
|
#
|
|
Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Blucora, Inc. hereby undertakes to furnish supplemental copies of any of the omitted schedules and exhibits upon request by the Securities and Exchange Commission.
|
|
BLUCORA, INC.
|
|
|
|
|
|
By:
|
/s/ Christopher W. Walters
|
|
|
Christopher W. Walters
President and Chief Executive Officer
|
|
|
|
|
Date:
|
February 28, 2020
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Christopher W. Walters
|
|
President, Chief Executive Officer, and Director
(Principal Executive Officer)
|
|
February 28, 2020
|
Christopher W. Walters
|
|
|
|
|
|
|
|
|
|
/s/ Stacy A. Murray
|
|
Chief Accounting Officer
(Interim Principal Financial Officer and Principal Accounting Officer)
|
|
February 28, 2020
|
Stacy A. Murray
|
|
|
|
|
|
|
|
|
|
/s/ Georganne C. Proctor
|
|
Chair and Director
|
|
February 28, 2020
|
Georganne C. Proctor
|
|
|
|
|
|
|
|
|
|
/s/ Steven Aldrich
|
|
Director
|
|
February 28, 2020
|
Steven Aldrich
|
|
|
|
|
|
|
|
|
|
/s/ E.Carol Hayles
|
|
Director
|
|
February 28, 2020
|
E. Carol Hayles
|
|
|
|
|
|
|
|
|
|
/s/ John MacIlwaine
|
|
Director
|
|
February 28, 2020
|
John MacIlwaine
|
|
|
|
|
|
|
|
|
|
/s/ Mary S. Zappone
|
|
Director
|
|
February 28, 2020
|
Mary S. Zappone
|
|
|
|
|
•
|
mergers or consolidations;
|
•
|
sales, leases, exchanges or other transfers of ten percent (10%) or more of the aggregate assets of the corporation;
|
•
|
issuances or transfers by the corporation of any stock of the corporation which would have the effect of increasing the interested stockholder’s proportionate share of the stock of any class or series of the corporation;
|
•
|
any other transaction which has the effect of increasing the proportionate share of the stock of any class or series of the corporation which is owned by the interested stockholder; and
|
•
|
receipt by the interested stockholder of the benefit, except proportionately as a stockholder, of loans, advances, guarantees, pledges or other financial benefits provided by the corporation.
|
•
|
certain mergers or consolidations involving the corporation;
|
•
|
a sale or other transfer of over fifty percent (50%) of the aggregate assets of the corporation; or
|
•
|
a tender or exchange offer for fifty percent (50%) of more of the outstanding voting stock of the corporation.
|
(i)
|
one-third (1/3) of the Option (rounded down to the nearest whole Share) shall vest and become exercisable on the first anniversary of the Vesting Commencement
|
(ii)
|
an additional one-third (1/3) of the Option (rounded down to the nearest whole Share) shall vest and become exercisable on the second anniversary of the Vesting Commencement Date, provided that you are employed by or providing services to the Company or a Related Company on that date; and
|
(iii)
|
the remaining one-third (1/3) of the Option shall vest and become exercisable on the third anniversary of the Vesting Commencement Date, provided that you are employed by or providing services to the Company or a Related Company on that date.
|
Attachments:
1. Stock Option Agreement
2. Incentive Plan
|
|
|
(i)
|
one-third (1/3) of the RSUs (rounded down to the nearest whole unit) shall vest on the first anniversary of the Vesting Commencement Date, provided that you are employed by or providing services to the Company or a Related Company on that date;
|
(ii)
|
an additional one-third (1/3) of the RSUs (rounded down to the nearest whole unit) shall vest on the second anniversary of the Vesting Commencement Date, provided that you are employed by or providing services to the Company or a Related Company on that date; and
|
(iii)
|
the remaining one-third (1/3) of the RSUs shall vest on the third anniversary of the Vesting Commencement Date, provided that you are employed by or providing services to the Company or a Related Company on that date.
|
Subject to the Award:
|
provided that the actual number of RSUs that are granted and may be earned is up to 200% of the Target RSUs
|
BLUCORA, INC.
_________________________________
By:
Its:
|
|
PARTICIPANT
By:
*Electronic acceptance of this Award shall bind the Participant.
|
|
|
|
Attachments:
1. Performance Vesting Conditions
2. Restricted Stock Unit Agreement
3. 2018 Incentive Plan
4. 2018 Plan Prospectus
5. 2019 Proxy/2018 10-K
|
|
|
Performance Goals:
|
For the Performance Period, there are two separate Performance Goals: (i) Non-GAAP Earnings Per Share (“Non-GAAP EPS”) = $3.11, for the 2022 fiscal year (i.e., January 1, 2022 – December 31, 2022) (the “EPS Target”); and (ii) the total shareholder return (“TSR”) ranking of the Company against the TSR Peer Group (as defined below) over the Performance Period (the “Relative TSR”).
|
Vesting Date:
|
The “Vesting Date” shall be the date on which the Committee determines for the Performance Period (i) the actual achievement of the Adjusted Non-GAAP EPS (as defined in footnote one below) for the 2022 fiscal year (the “Actual Non-GAAP EPS”) and (ii) the actual achievement of Relative TSR, which shall occur in 2023 but no later than sixty (60) days following the end of the Performance Period, provided that you are employed by or providing services to the Company or a Related Company on such date.
|
Vesting Schedule:
|
Fifty percent (50%) of the Target RSUs (the “EPS Target RSUs”) will be eligible to vest based on the achievement of Actual Non-GAAP EPS as it compares to the EPS Target, as set forth in the first chart below, and fifty percent (50%) of the Target RSUs (the “TSR Target RSUs”), will be eligible to vest based on the Company’s Relative TSR ranking in the fiftieth (50th) percentile against the TSR Peer Group, as set forth in the second chart below.
|
Performance Level
|
Actual Non-GAAP EPS vs. EPS Target
|
Payout % / EPS Earned RSUs
|
Added Payout% Rate Per 1% Performance
|
Below Threshold
|
< 80%
|
0% of EPS Target RSUs
|
----
|
Decelerated
|
80% but less than 90%
|
50% - 86% of EPS Target RSUs
|
4%
|
Near Target
|
90% but less than 100%
|
90% - 99% of EPS Target RSUs
|
1%
|
Target
|
100% but less than 104%
|
100% of EPS Target RSUs
|
----
|
Near Target
|
104% but less than 109%
|
101% - 105% of EPS Target RSUs
|
1%
|
Accelerated 1
|
109% but less than 114%
|
110% - 130% of EPS Target RSUs
|
5%
|
Accelerated 2
|
114% to 120%
|
140% - 200% of EPS Target RSUs
|
10%
|
Maximum
|
> 120%
|
200% of EPS Target RSUs
|
----
|
Performance Level
|
Company’s Rank vs. TSR Peer Group (Percentile)
|
Payout % / TSR Earned RSUs
|
Added Payout % Rate Per 1% of Performance
|
Below Threshold
|
< 25th Percentile
|
0% of TSR Target RSUs
|
------
|
Between Threshold and Target
|
25th but less than the 50th Percentile
|
50% - 98% of TSR Target RSUs
|
2%
|
Target
|
50th Percentile
|
100% of TSR Target RSUs
|
-------
|
Between Target and Maximum
|
51st to 75th Percentile
|
104%- 200% of TSR Target RSUs
|
4%
|
Maximum
|
>75th Percentile
|
200% of TSR Target RSUs
|
------
|
Forfeiture:
|
Except as otherwise provided herein or in the Employment Agreement (if applicable), vesting will cease upon your Termination of Service prior to the Vesting Date and the unvested portion of the Award will immediately terminate and be forfeited.
|
Permanent Disability:
|
Notwithstanding the foregoing, upon the occurrence of a Termination of Service due to your death or Total and Permanent Disability prior to the Vesting Date, the Target RSUs (both EPS Target RSUs and TSR Target RSUs) shall become fully vested as of the date of such Termination of Service at the Target performance level for the EPS Target (i.e., 100% of EPS Target RSUs) and the 50th Percentile for Relative TSR (i.e., 100% of TSR Target RSUs).
|
Retirement:
|
Notwithstanding the foregoing, in the event of your Termination of Service due to your Retirement on or after the first anniversary of the Date of Grant but prior to the Vesting Date, the RSUs shall remain outstanding and eligible for vesting on the Vesting Date based on the actual achievement of the Performance Goals, and pro-rated based on a fraction, determined by the number of completed days of service from the Date of Grant through the date of your Retirement over the total number of days in the Performance Period. Any RSUs that do not vest on the Vesting Date shall terminate and be forfeited as of the Vesting Date. For purposes of this Award, the term “Retirement” shall mean your voluntary Termination of Service on or after your attainment of (i) age sixty (60) and five (5) years of service with the Company or any Related Company, (ii) age fifty-five (55) and ten (10) years of service with the Company or any Related Company, or (iii) any age with twenty (20) years of service with the Company or any Related Company; provided, however, that if at any time the Committee determines that your Termination of Service should be a Termination of Service for Cause, then your Termination of Service will no longer be due to your Retirement and all RSUs shall immediately be forfeited, and no longer eligible for vesting on the Vesting Date.
|
Change of Control:
|
For purposes of the EPS Target RSUs, upon the occurrence of a Change of Control, the Actual Non-GAAP EPS shall be fixed as of the date of such Change of Control at the EPS Target. Notwithstanding anything herein to the contrary, in the event of your Termination of Service by the Company without Cause or by you for Good Reason (as defined in your Employment Agreement, provided that your Employment Agreement provides for a Termination of Service for Good Reason): (i) on the day of or during the 12-month period immediately following the consummation of a Change of Control (as defined in the Employment Agreement), or (ii) during the 2-month period prior to the consummation of a Change of Control but at the request of any third party participating in or causing the Change of Control or otherwise in connection with the Change of Control, then the RSUs shall vest, effective as of the date of your Termination of Service, as follows: (A) with respect to the EPS Target RSUs, at the Target performance level for the EPS Target (i.e., 100% of EPS Target RSUs), pro-rated based on the number of days you were employed during the Performance Period through the date of your Termination of Service, over the total number of days in the Performance Period, and (B) with respect to the TSR Target RSUs, based on the actual Relative TSR of the Company against the TSR Peer Group through the date of such Change of Control.
|
Examples:
|
Example 1: Following the Performance Period, the Adjusted Non-GAAP EPS for the 2022 fiscal year is $1.80 and no normalizing adjustments are made by the Committee. The actual achievement (expressed as a percentage, rounded up or down to the nearest whole number) is 58% of the Performance Target. Because the achievement is below Threshold, the Payout % / EPS Earned RSUs is zero. With respect to the TSR Target RSUs, the Committee determines that the Company’s Rank against the TSR Peer Group is the 20th Percentile. Because the Relative TSR is below the TSR Threshold, the Payout % / TSR Earned RSUs is zero. Overall, none of the Target RSUs are vested and payable.
|
8x8, Inc.
|
Interactive Brokers Group, Inc.
|
ACI Worldwide, Inc.
|
Intercontinental Exchange, Inc.
|
Adobe Inc.
|
INTL FCStone Inc.
|
Affiliated Managers Group, Inc.
|
Intuit Inc.
|
Agilysys, Inc.
|
Invesco Ltd.
|
Alarm.com Holdings, Inc.
|
Invesco Mortgage Capital Inc.
|
American Express Company
|
j2 Global, Inc.
|
Ameriprise Financial, Inc.
|
Janus Henderson Group plc
|
ANSYS, Inc.
|
Jefferies Financial Group Inc.
|
Apollo Commercial Real Estate Finance, Inc.
|
KKR Real Estate Finance Trust Inc.
|
ARMOUR Residential REIT, Inc.
|
Legg Mason, Inc.
|
Autodesk, Inc.
|
LivePerson, Inc.
|
Berkshire Hathaway Inc.
|
LogMeIn, Inc.
|
Blackbaud, Inc.
|
Manhattan Associates, Inc.
|
BlackRock, Inc.
|
MarketAxess Holdings Inc.
|
Bottomline Technologies (de), Inc.
|
MicroStrategy Incorporated
|
Cadence Design Systems, Inc.
|
Moody's Corporation
|
Capital One Financial Corporation
|
Morgan Stanley
|
Capstead Mortgage Corporation
|
MSCI Inc.
|
Cboe Global Markets, Inc.
|
Nasdaq, Inc.
|
CDK Global, Inc.
|
Navient Corporation
|
Ceridian HCM Holding Inc.
|
New York Mortgage Trust, Inc.
|
Citrix Systems, Inc.
|
Northern Trust Corporation
|
CME Group Inc.
|
PennyMac Mortgage Investment Trust
|
Discover Financial Services
|
Piper Jaffray Companies
|
Donnelley Financial Solutions, Inc.
|
PRA Group, Inc.
|
E*TRADE Financial Corporation
|
Raymond James Financial, Inc.
|
Eaton Vance Corp.
|
Redwood Trust, Inc.
|
Ebix, Inc.
|
S&P Global Inc.
|
Ebix, Inc.
|
salesforce.com, Inc.
|
Encore Capital Group, Inc.
|
SEI Investments
|
Enova International, Inc.
|
SLM Corporation
|
Evercore Inc.
|
SPS Commerce, Inc.
|
EZCORP, Inc.
|
State Street Corporation
|
FactSet Research Systems Inc.
|
Stifel Financial Corp.
|
Fair Isaac Corporation
|
Synchrony Financial
|
Fair Isaac Corporation
|
T. Rowe Price Group, Inc.
|
Federated Investors, Inc.
|
The Bank of New York Mellon Corporation
|
FGL Holdings
|
The Charles Schwab Corporation
|
FirstCash, Inc.
|
The Goldman Sachs Group, Inc.
|
Franklin Resources, Inc.
|
Tyler Technologies, Inc.
|
Granite Point Mortgage Trust Inc.
|
Virtus Investment Partners, Inc.
|
Green Dot Corporation
|
Waddell & Reed Financial, Inc.
|
Greenhill & Co., Inc.
|
WisdomTree Investments, Inc.
|
|
World Acceptance Corporation
|
Subject to the Award:
|
_______________________________
|
(i)
|
one-third (1/3) of the RSUs (rounded down to the nearest whole unit) shall vest on the first anniversary of the Grant Date, provided that you are providing services to the Company on that date;
|
(ii)
|
an additional one-third (1/3) of the RSUs (rounded down to the nearest whole unit) shall vest on the second anniversary of the Grant Date, provided that you are providing services to the Company on that date; and
|
(iii)
|
the remaining one-third (1/3) of the RSUs shall vest on the third anniversary of the Grant Date, provided that you are providing services to the Company on that date.
|
BLUCORA, INC.
By:
Its: Chief Legal Officer & Secretary
|
|
PARTICIPANT
Signature
|
|
|
Date:
|
Attachments:
1. Restricted Stock Unit Agreement
2. Incentive Plan
|
|
|
Subject to the Award:
|
_______________________________
|
Vesting Schedule:
|
Except as specifically provided in the Agreement and subject to the restrictions and conditions set forth in the Incentive Plan, The RSUs shall vest in full (100%) on the earlier of (i) the one-year anniversary of the
|
BLUCORA, INC.
By:
Its: Chief Legal Officer & Secretary
|
|
PARTICIPANT
Signature
|
|
|
Date:
|
Attachments:
1. Restricted Stock Unit Agreement
2. Incentive Plan
|
|
|
1.
|
Termination of Employment and Resignation from the Board
|
2.
|
Consideration
|
(a)
|
Severance Payments. The Company agrees to pay Executive an aggregate amount equal to $5,750,000 (the “Severance Payments”), less applicable payroll taxes and withholdings, with $3,400,000 payable in substantially equal installments in accordance with the Company’s payroll practices over 12 months (the “Severance Period”), with the first payment commencing on the first payroll date following the Effective Date; and $2,350,000 to be paid on January 24, 2020.
|
(b)
|
Option Exercise Period Extension. The Company and Executive previously entered into (i) that certain Nonqualified Stock Option Grant Notice and Stock Option Agreement under the Blucora, Inc. 2018 Incentive Plan dated February 20, 2018 granting an option to Executive with respect to 140,000 shares of the Company’s common stock; and (ii) that
|
(c)
|
COBRA Reimbursements. During the 18-month period following the Separation Date, the Company shall reimburse Executive for the monthly premium for health benefit coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) paid by Executive for himself and his eligible dependents for COBRA coverage under the Company’s group health plan (the “COBRA Reimbursements,” together with the Severance Payments and Exercise Period Extension, the “Severance Benefits”). Notwithstanding the foregoing, if the Company’s providing the COBRA Reimbursements under this Section 2fo} would result in the imposition of excise taxes, penalties or similar charges on the Company or any of its subsidiaries, affiliates or successors, including, without limitation, under Section 4980D of the Code or otherwise violate the nondiscrimination rules applicable to non-grandfathered plans, or would result in the imposition of penalties under the Patient Protection and Affordable Care Act of 20I0, as amended by the Health Care and Education Reconciliation Act of 2010, and the related regulations and guidance promulgated thereunder (the “ACA”), the Company shall reform this Section 2(c} in a manner as is necessary to comply with the nondiscrimination requirement, the ACA, or other applicable law, as applicable, which may include eliminating the benefits provided hereunder. The COBRA Reimbursements shall be paid to Executive by the last day of the month immediately following the month in which Executive timely remits the premium payment. The Company will provide Executive under separate cover at Executive’s home address, information necessary and as required by law regarding the election of COBRA. Executive’s rights and the Company’s obligations for COBRA Reimbursements shall cease immediately upon the earlier of (i) the date Executive becomes eligible to receive substantially similar coverage from another employer, whether or not Executive actually receives such coverage, or (ii) the date Executive is no longer eligible to receive COBRA continuation coverage, and Executive shall immediately notify the Company upon the occurrence of such event.
|
3.
|
Waiver and Release.
|
(a)
|
Executive, for and on behalf of himself and his heirs and assigns, hereby fully and forever waives and releases any and all contractual, common law, statutory or other complaints, claims, charges or causes of action relating to or arising out of any matter arising on or before the date this Agreement is executed by Executive, including all claims arising out of or relating to Executive’s employment or termination of employment with the Company Group, the Employment Agreement, Executive’s services, in any capacity, with the Company Group, and any and all other disputes between Executive and the Company Group (collectively, “Claims”). The Claims waived and released by this Release include any and all Claims, whether known or unknown, whether in law or in equity, which Executive may now have or ever had against any member of the Company Group or any past, present and future shareholder, employee, advisor, officer, director, agent, attorney, representative, trustee, administrator or fiduciary of any member of the Company Group or Avantax Wealth Management, Tax Act (collectively, the “Company Releasees”) up to and including the date of Executive’s execution of this Agreement. The Claims waived and released by this Release include, without limitation, any and all Claims arising out of Executive’s employment with the Company Group under, by way of example and not limitation, the Employment Agreement, the Age Discrimination in Employment Act of 1967 (“ADEA”, a law which prohibits discrimination on the basis of age against persons age 40 and older), the National Labor Relations Act, the Civil Rights Act of 1991, the Americans With Disabilities Act of 1990, Title VII of the Civil Rights Act of 1964, the Employee Retirement Income Security Act of 1974, the Family Medical Leave Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Texas Labor Code, the California Fair Housing and Employment Act, the California Labor Code and applicable California wage orders, California Business and Professions Code, the California and Texas Constitutions, any statute or laws of the State of Texas and State of California, any other federal, state, local, municipal or common law whistleblower, discrimination or anti-retaliation statute law or ordinance, and any other Claims arising under state, federal, local, municipal or common law, as well as any expenses, costs or attorneys’ fees. Except as required by law, Executive agrees that Executive will not commence, maintain, initiate, or prosecute, or cause, encourage, assist, volunteer, advise or cooperate with any other person to commence, maintain, initiate or prosecute, any action, lawsuit, proceeding, charge, petition, complaint or Claim before any court, agency or tribunal against the Company or any of the Company Releasees arising from, concerned with, or otherwise relating to, in whole or in part, Executive’s employment, the terms and conditions of Executive’s employment, or Executive’s separation from employment with the Company, resignation from the Board, or any of the matters or Claims discharged and released in this Release. This release shall not apply to any of the Company’s obligations under this Release. Executive acknowledges that the payments and benefits provided for in Section 2 of this Release constitute good and valuable consideration for the release contained in this Section 3. This Release is a full and final general release by Executive of all unknown, undisclosed, and unanticipated losses, wrongs, injuries, claims, and damages that arise wholly or in part from any act or omission occurring before this Release becomes effective, as well as a general release by Release of all claimed losses, wrongs, injuries, claims, and damages, now known or disclosed, that arise in whole or in part as a result of any act or omission occurring before this Release becomes effective. Therefore, as to any and all claims against the Company Releasees, Executive waives and relinquishes any and all rights and benefits under the terms of Section 1542 of the California Civil Code, which provides as follows:
|
(b)
|
The waiver and release set forth in this Section 3 is intended to be construed as broadly and comprehensively as applicable law permits. The waiver and release shall not be construed as waiving or releasing any claim or right that as a matter of law cannot be waived or released, including Executive’s right to file a charge with the Equal Employment Opportunity Commission or other government agency; however, Executive waives any right to recover monetary remedies and agrees that he will not accept any monetary remedy as a result of any such charge or as a result of any legal action taken against the Company by any such agency to the extent permitted by law.
|
(c)
|
Notwithstanding anything else in this Release, Executive does not waive or release claims with respect to:
|
(i)
|
Executive’s entitlement, if any, to the Severance Benefits pursuant to this Release;
|
(ii)
|
vested benefits or payments specifically to be provided to the Executive pursuant to the Employment Agreement or any Company employee benefit plans or policies;
|
(iii)
|
indemnification pursuant to any applicable provision of the Company’s Bylaws or Certificate of Incorporation, as amended, pursuant to any written indemnification agreement between the Executive and the Company, or pursuant to applicable law;
|
(iv)
|
any claims which the Executive may have solely by virtue of the Executive’s status as a shareholder of the Company;
|
(v)
|
unemployment compensation to which Executive may be entitled under applicable law.
|
(d)
|
Executive represents and warrants that he is the sole owner of the actual or alleged Claims that are released hereby, that the same have not been assigned, transferred, or disposed of in fact, by operation of law, or in any manner, and that he has the full right and power to grant, execute and deliver the releases, undertakings, and agreements contained herein.
|
(e)
|
Executive represents that he has not filed any complaints, charges or lawsuits against the Company with any governmental agency or any court based on Claims that are released and waived by this Release.
|
4.
|
No Admission of Wrongdoing.
|
5.
|
Mutual Non-Disparagement.
|
6.
|
Binding Agreement; Successors and Assigns.
|
7.
|
Other Agreements.
|
8.
|
Knowing and Voluntary Agreement; Consideration and Revocation Periods.
|
(a)
|
Executive acknowledges that he has been given twenty-one (21) calendar days from the date of receipt of this Release to consider all of the provisions of this Release and that if he
|
(b)
|
Executive represents that (i) he has read this Release carefully, (ii) he has hereby been advised by the Company to consult an attorney of his choice and has either done so or voluntarily chosen not to do so, (iii) he fully understands that by signing below he is giving up certain rights which he might otherwise have to sue or assert a claim against any of the Company Releasees, and (iv) he has not been forced or pressured in any manner whatsoever to sign this Release, and agrees to all of its terms voluntarily.
|
(c)
|
Executive shall have seven (7) calendar days from the date of his execution of this Release (the “Revocation Period”) in which he may revoke this Release. Such revocation must be in writing and delivered, prior to the expiration of the Revocation Period, to the attention of the Company’s Chief Legal Officer at the Company’s then-current headquarters address. If Executive revokes this Release during the Revocation Period, then the Release shall be null and void and without effect.
|
9.
|
Effective Date.
|
1.
|
Certain Definitions
|
(a)
|
“Base Salary” has the meaning set forth in Section 5(a).
|
(b)
|
“Board” means the Board of Directors of the Company.
|
(d)
|
“Change of Control” means the occurrence of any of the following:
|
(e)
|
“Code” means the Internal Revenue Code of 1986, as amended.
|
(f)
|
“Compensation Committee” means the Compensation Committee of the Board.
|
(i)
|
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
|
(n)
|
“Target Bonus” has the meaning set forth in Section 5(b).
|
2.
|
Duties and Scope of Employment
|
3.
|
Obligations
|
4.
|
Agreement Term
|
5.
|
Compensation and Benefits
|
(f)
|
Signing Bonus, Temporary Living Allowance and Relocation Expenses.
|
(i)
|
Signing Bonus. The Company will pay the Executive a signing bonus of
|
6.
|
Termination of Employment
|
7.
|
Section 280G
|
8.
|
No Impediment to Agreement
|
9.
|
Confidentiality and Non-Competition Agreement
|
10.
|
Cooperation
|
11.
|
Arbitration
|
12.
|
Successors; Personal Services
|
13.
|
Notices
|
14.
|
Section 409A
|
15.
|
Miscellaneous Provisions
|
1.
|
Confidential Information and Executive’s Non-Disclosure Agreement.
|
(b)
|
Non-Disclosure.
|
(e)
|
Inventions.
|
1.
|
Termination of Employment
|
2.
|
Consideration
|
3.
|
Waiver and Release
|
4.
|
No Interference
|
5.
|
No Admission of Wrongdoing
|
6.
|
Legal Disclosure
|
7.
|
Binding Agreement; Successors and Assigns
|
8.
|
Other Agreements
|
9.
|
Knowing and Voluntary Agreement; Consideration and Revocation Periods
|
(b)
|
Executive represents that (i) Executive has read this Release carefully,
|
10.
|
Disclaimer of Reliance
|
11.
|
Execution in Multiple Counterparts
|
12.
|
Effective Date
|
Lease Date:
|
As listed on the cover page
|
|||
Landlord:
|
As listed on the cover page
|
|||
Tenant:
|
As listed on the cover page
|
|||
Premises:
|
Suite No. 100, 400, and 500, containing initially 149,637 rentable square feet (the "Premises"), consisting of (a) the following "Initial Premises": 21,317 on the first floor of the Building (defined below), all 52,006 rentable square feet on the fourth floor of the Building, and all 51,314 rentable square feet on the fifth floor of the Building; and (b) the following "Must-Take Space": the remaining 25,000 rentable square feet on the first floor of the Building, all in the office building whose street address is 3200 Olympus Boulevard, Dallas, Texas 75019 (the "Building"). The Premises are outlined on the plan attached to the Lease as Exhibit A, which also identifies the Must-Take Space portion of the first floor of the Building. The land on which the Building is located (the "Land") is described on Exhibit B. The term "Project" shall collectively refer to the Building, the Land and the driveways, parking facilities, and similar improvements and easements associated with the foregoing or the operation thereof, in each case to the extent located on the Land.
|
|||
Term:
|
156 full calendar months, plus any partial month from the Commencement Date to the end of the month in which the Commencement Date falls, starting on the Commencement Date and ending at 11:59 p.m. local time on the last day of the 156th full calendar month following the Commencement Date, subject to adjustment and earlier termination as provided in the Lease.
|
|||
Commencement Date:
|
The later of (a) July 1, 2020, and (b) the date that is 180 days after the date on which Landlord tenders possession of the Premises to Tenant, as extended on a day-for-day basis for any Landlord Delay Days (defined in Exhibit D).
|
|||
Estimated Delivery Date:
|
January 1, 2020
|
|||
Basic Rent:
|
Subject to the abatement of Basic Rent set forth in Exhibit X, Basic Rent shall be the following amounts for the following periods of time:
|
|||
|
Lease Month
|
Annual Basic Rent Rate Per Rentable Square Foot
|
Monthly Basic Rent
|
|
|
1–24
|
$22.75*
|
$283,686.81*
|
|
|
25–36
|
$23.25
|
$289,921.69
|
|
|
37–48
|
$23.75
|
$296,156.56
|
|
|
49–60
|
$24.25
|
$302,391.44
|
|
|
61–72
|
$24.75
|
$308,626.31
|
|
|
73–84
|
$25.25
|
$314,861.19
|
|
|
85–96
|
$25.75
|
$321,096.06
|
|
|
97–108
|
$26.25
|
$327,330.94
|
|
|
109–120
|
$26.75
|
$333,565.81
|
|
|
121–132
|
$27.25
|
$339,800.69
|
|
|
133–144
|
$27.75
|
$346,035.56
|
|
|
145–156
|
$28.25
|
$352,270.44
|
|
|
As used herein, the term "Lease Month" means each calendar month during the Term (and if the Commencement Date does not occur on the first day of a calendar month, the period from the Commencement Date to the first day of the next calendar month shall be included in the first Lease Month for purposes of determining the duration of the Term and the monthly Basic Rent rate applicable for such partial month).
*As provided in Exhibit X, all Rent (other than Tenant's Proportionate Share of Electrical Costs) is abated (a) during the first 12 full calendar months of the Term for the 124,637 rentable square feet of the Initial Premises, and (b) during the first 18 full calendar months of the Term for the 25,000 rentable square feet of the Must-Take Space.
|
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Security Deposit:
|
None.
|
|||
Rent:
|
Basic Rent, Tenant's Proportionate Share of Electrical Costs, Tenant's share of Additional Rent, and all other sums that Tenant may owe to Landlord or otherwise be required to pay to Landlord under the Lease.
|
|||
Permitted Use:
|
General office use, and reasonably supporting uses ancillary thereto, including, but not limited to, training, data center, mail and non-industrial print operations, security, and customer support.
|
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Tenant's Proportionate Share:
|
59.5288%, which is the percentage obtained by dividing (a) the number of rentable square feet in the Premises as stated above by (b) the 251,369 rentable square feet in the Building. Within 30 days following written request therefor from Tenant to Landlord (with notice must be delivered not later than the 60th day following the Actual Delivery Date), BOKA Powell (“Landlord’s Architect”), at Landlord’s sole cost and expense, shall provide Landlord and Tenant with a written notice (“Landlord's Architect's Certification Notice”) containing its calculations of the rentable square footage of the Building and the Premises using the Standard Method for Measuring Floor Area in Office Buildings, ANSI/BOMA Z65.1-2017, Method B (the "BOMA Method"). Tenant and its architect shall have the right to measure the Premises and Building during the 60-day period following receipt of Landlord’s Architect’s Certification Notice. If Tenant or Tenant's architect disputes the calculations provided in Landlord’s Architect’s Certification Notice, then Tenant shall notify Landlord (such notice, “Tenant's Dispute Notice”) within 60 days after the date of Tenant’s receipt of Landlord's Architect's Certification Notice, provided Tenant may not issue Tenant’s Dispute Notice if Tenant’s architect’s calculation of rentable square footage for the Building and Premises amounts to less than a 1% difference from the calculation contained in Landlord’s Architect’s Certificate Notice. Tenant's Dispute Notice shall include Tenant’s architect’s calculation of the rentable square footage for the Building and Premises; such calculation (i) shall be made at Tenant's sole cost and expense, (ii) may be completed through field verification, and (iii) shall be in accordance with the BOMA Method. If Tenant fails to timely deliver Tenant's Dispute Notice within 60 days after the date of Tenant’s receipt of Landlord's Architect's Certification Notice, then Tenant shall be deemed to have accepted the calculations provided by Landlord's Architect, and thereafter, no further changes shall be made to such calculations without the consent of both Landlord and Tenant. If Tenant timely delivers Tenant's Dispute Notice, then Landlord and Tenant agree to instruct Landlord's architect and Tenant's architect to (A) confer for a period of ten days to attempt to agree upon the number of rentable square feet in the Premises and the Building, and (B) if no such agreement is reached within such ten-day period, then to jointly select an objective, reputable architect in Dallas, Texas who has at least ten years of relevant experience (the “3rd Party Architect”) to remeasure the Premises and Building. The parties agree and acknowledge that an architect from HKS, DLR Staffelbach or Gensler shall qualify as a 3rd Party Architect, so long as, at the time of such selection, such firm remains objective and reputable in Dallas, Texas, in the reasonable estimation of Landlord’s Architect and Tenant’s architect. The 3rd Party Architect shall promptly issue a written certification of the actual rentable square footage of the Premises and Building using the BOMA Method and thereafter the rentable square footage of the Premises and Building identified in the written certification of the 3rd Party Architect shall be final and binding on both parties and the fees of the 3rd Party Architect shall be shared equally by Landlord and Tenant. As part of any such remeasurement process, all architects participating therein shall be informed that the rentable square feet in the Premises and Tenant's Proportionate Share are to be increased by 1% as an agreed-upon premium for the Common Amenities. Upon the final determination of the rentable square footage, then Landlord and Tenant shall execute a further amendment to this Lease stipulating the actual number of rentable square feet in the Premises and Building based upon such measurement.
|
Initial Liability Insurance Amount:
|
$3,000,000
|
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Tenant's Address:
|
Prior to Commencement Date:
Blucora, Inc.
6333 State Highway 161 Irving, Texas 75038 Attention: David Pistorius Telephone: 972-870-6328
Following Commencement Date:
Blucora, Inc.
At the Premises Attention: David Pistorius Telephone: 972-870-6328 |
With a copy to:
Blucora, Inc.
6333 State Highway 161 Irving, Texas 75038 Attention: Ann Bruder, Chief Legal Officer
With a copy to:
Blucora, Inc.
At the Premises Attention: Ann Bruder, Chief Legal Officer |
||
Landlord's Address:
|
For all Notices:
Billingsley Property Services II, Inc.
1722 Routh Street, Suite 770 Dallas, Texas 75201 Attention: Lease Administration, Office Telephone: 214-270-1000 |
With a copy to:
Billingsley Property Services II, Inc.
1722 Routh Street, Suite 770 Dallas, Texas 75201 Attention: Legal Department Telephone: 214-270-1000 |
LANDLORD:
|
BDDC, INC., a Texas corporation
By: /s/ Kenneth D. Mabry
Name: Kenneth D. Mabry
Title: Sr. Vice President
|
TENANT:
|
BLUCORA, INC., a Delaware corporation
By: /s/ Davinder Athwal
Name: Davinder Athwal
Title: Chief Financial Officer
|
a.
|
Annual Deferral Amount. For each Plan Year, a Participant may elect to defer, as his or her Annual Deferral Amount, Director Fees and the Annual Equity Grant in the following minimum percentages for each deferral elected:
|
Deferral
|
Minimum Percentage
|
Director Fees
|
5%
|
Annual Equity Grant
|
20% (rounded up to the nearest
whole Share)
|
b.
|
Short Plan Year. No deferral of the Annual Equity Grant is permitted for a Plan Year on or after the first day of such Plan Year.
|
4.1
|
In-Service Scheduled Distribution. In connection with each election to defer an Annual Deferral Amount, a Participant may irrevocably elect to receive an In- Service Scheduled Distribution from the Plan with respect to all of the Annual Deferral Amount (each of the Director Fees and Annual Equity Grant for each Plan Year, separately). The In-Service Scheduled Distribution shall be a lump sum payment of cash and/or Shares (if an Annual Equity Grant has been deferred) in an amount (and/or number of Shares) that is equal to the Annual Deferral Amount that the Participant elected to have distributed as an In-Service Scheduled Distribution, plus amounts credited or debited in the manner provided in Section 3.7 above to that amount, calculated as of the close of business on or around the Benefit Distribution Date designated by the Participant in accordance with this Section 4.1 (a “Scheduled Distribution”). The Benefit Distribution Date for an amount subject to an In-Service Scheduled Distribution election shall be the first day of any Plan Year designated by the Participant, which may be no sooner than 3 Plan Years after the end of the Plan Year in which the Annual Deferral Amount is actually deferred. The Participant may elect different Benefit Distribution Dates for Deferred Fees and Annual Equity Grants deferred with respect to different Plan Years. Subject to the other terms and conditions of this Plan, each In-Service Scheduled Distribution elected shall be paid out during a 60-day period commencing immediately after the Benefit Distribution Date. By way of example, if an In-Service Scheduled Distribution is elected for Director Fees that are deferred in the Plan Year commencing January 1, 2020, the earliest Benefit Distribution Date that may be designated by a Participant would be January 1, 2024, and the In-Service Scheduled Distribution would be paid out during the 60-day period commencing immediately after such Benefit Distribution Date.
|
5.1
|
Termination Benefit. A Participant who experiences a Separation from Service shall receive, as a Termination Benefit, his or her vested Account Balance in either a lump sum payment of cash and/or Shares (if an Annual Equity Grant has been deferred) or annual installment payments of cash and/or Shares (if applicable), as elected by the Participant in accordance with Section 5.2. A Participant’s Termination Benefit shall be calculated as of the close of business on the second (2nd) business day of the month immediately following the date the Participant experiences a Separation from Service and paid on the applicable Benefit Distribution Date for such benefit. The Benefit Distribution Date shall be (i) the first day after the end of the six-month period immediately following the date on which the Participant experiences a Separation from Service, if the Participant is a Specified Employee, and (ii) for all other Participants, on or as soon as practicable following (but in any event, within 60 days following) the date on which the Participant experiences a Separation from Service; provided, however, if a Participant changes the form of distribution for the Termination Benefit in accordance with Section 5.2(b), the Benefit Distribution Date for the Termination Benefit shall be determined in accordance with Section 5.2(b). Notwithstanding the foregoing and notwithstanding anything an Election Form to the contrary, if a
|
a.
|
Annual Deferral Amount. For each Plan Year, a Participant may elect to defer, as his or her Annual Deferral Amount, Base Salary, Annual Bonus, and Incentive Bonus in the following minimum percentages for each deferral elected:
|
Deferral
|
Minimum Percentage
|
Base Salary, Annual Bonus and/or Incentive Bonus
|
5%
|
b.
|
[RESERVED].
|
4.1
|
In-Service Scheduled Distribution. In connection with each election to defer an Annual Deferral Amount, a Participant may irrevocably elect to receive an In-Service Scheduled Distribution from the Plan with respect to all of (i) the Annual
|
5.1
|
Retirement Benefit. A Participant who experiences a Separation from Service that qualifies as a Retirement shall receive, as a Retirement Benefit, his or her vested Account Balance in either a lump sum or annual installment payments, as elected by the Participant in accordance with Section 5.2. A Participant’s Retirement Benefit shall be calculated as of the close of business on the second (2nd) business day of the month immediately following the date the Participant Retires and paid on the applicable Benefit Distribution Date for such benefit. The Benefit Distribution Date shall be (i) the first day after the end of the six-month period immediately following the date on which the Participant Retires, if the Participant is a Specified Employee, and (ii) for all other Participants, on or as soon as practicable following (but in any event, within 60 days following) the date the Participant Retires; provided, however, if a Participant changes the form of distribution for the Retirement Benefit in accordance with Section 5.2(b), the Benefit Distribution Date for the Retirement Benefit shall be determined in accordance with Section 5.2(b).
|
6.1
|
Termination Benefit. A Participant who experiences a Separation from Service that does not qualify as a Retirement shall receive a Termination Benefit, which shall be equal to the Participant's vested Account Balance, calculated as of the close of business on the second (2nd) business day of the month immediately following the date the
|
BLUCORA, INC.
|
INDEMNIFICATION AGREEMENT
|
1.
|
DEFINITIONS:
|
3.
|
REVIEWING PARTY.
|
4.
|
INDEMNIFICATION PROCESS AND APPEAL.
|
4.3.
|
Defense to Indemnification, Burden of Proof, and Presumptions.
|
5.
|
INDEMNIFICATION FOR EXPENSES INCURRED IN ENFORCING RIGHTS.
|
|
|
5.1. The Company shall indemnify Indemnitee against any and all Expenses that are incurred by Indemnitee in connection with any claim asserted against or action brought by Indemnitee for:
|
|
(a) enforcement of this Agreement;
(b) indemnification of Expenses or Expense Advances by the Company under this Agreement or any other agreement or under applicable law or the Company’s articles of incorporation or by-laws, now or hereafter in effect, relating to indemnification for Indemnifiable Events; and/or
(c) recovery under directors’ and officers’ liability insurance policies maintained by the Company.
|
6.
|
NOTIFICATION AND DEFENSE OF PROCEEDING.
|
6.2.
|
Defense.
|
|
Blucora, Inc.
Attention: Chief Legal Officer and Secretary 6333 N. State Highway 161, Fourth Floor
Irving, TX 75038
|
|||
|
and to Indemnitee at:
|
|
||
|
[INSERT INDEMNITEE NAME
AND ADDRESS] |
•
|
Registration Statement (Form S-8 No. 333-169691) pertaining to the Blucora, Inc. Restated 1996 Flexible Stock Incentive Plan,
|
•
|
Registration Statement (Form S-8 No. 333-198645) pertaining to the Blucora, Inc. Restated 1996 Flexible Stock Incentive Plan,
|
•
|
Registration Statement (Form S-8 No. 333-204585) pertaining to the Blucora, Inc. 2015 Incentive Plan,
|
•
|
Registration Statement (Form S-8 No. 333-209218) pertaining to the Blucora, Inc. 2016 Equity Inducement Plan,
|
•
|
Registration Statement (Form S-8 No. 333-214117) pertaining to the Blucora, Inc. 2016 Equity Inducement Plan,
|
•
|
Registration Statement (Form S-8 No. 333-211625) pertaining to the Blucora, Inc., 2015 Incentive Plan as Amended and Restated and 2016 Employee Stock Purchase Plan,
|
•
|
Registration Statement (Form S-3 No. 333-216984) pertaining to the resale of shares of common stock of Blucora, Inc. by certain selling stockholders, and
|
•
|
Registration Statement (Form S-8 No. 333- 225495) pertaining to the Blucora, Inc 2018 Incentive Plan;
|
1.
|
I have reviewed this Annual Report on Form 10-K 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/ Christopher W. Walters
|
|
Christopher W. Walters
|
|
Chief Executive Officer and President
(Principal Executive Officer)
|
1.
|
I have reviewed this Annual Report on Form 10-K 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/ Stacy A. Murray
|
|
Stacy A. Murray
|
|
Chief Accounting Officer
(Interim Principal Financial Officer)
|
|
By:
|
/s/ Christopher W. Walters
|
|
Name:
|
Christopher W. Walters
|
|
Title:
|
Chief Executive Officer and President
(Principal Executive Officer)
|
|
By:
|
/s/ Stacy A. Murray
|
|
Name:
|
Stacy A. Murray
|
|
Title:
|
Chief Accounting Officer
(Principal Financial Officer)
|