Blucora Announces Strong Third Quarter Results
Blucora Announces Strong Third Quarter Results
Business Wire
BELLEVUE, Wash. -- November 01, 2012
Blucora, Inc. (NASDAQ: BCOR) today announced financial results for the third
quarter ended September 30, 2012.
“I am pleased to report Blucora had another quarter of strong performance,
driven by great results from our online search business,” said Bill
Ruckelshaus, President and Chief Executive Officer of Blucora. “I am also
pleased with the progress our tax preparation business has made during the
offseason to improve the core product and position for long-term growth.”
“Overall, the strategies in place at Blucora are proving out and our teams are
executing well. We are pleased with our progress and optimistic about our
future plans,” Ruckelshaus added.
Summary Financial Performance: 3Q 2012
($ in millions except per share amounts)
Q3 2012 Q3 2011 Growth
Revenue $ 92.9 $ 56.3 65 %
Search $ 91.4 $ 56.3 62 %
Tax Preparation $ 1.5 N/A N/A
Adjusted EBITDA $ 12.1 $ 8.5 42 %
Non-GAAP Net Income $ 10.4 $ 6.8 52 %
Non-GAAP Diluted EPS $ 0.25 $ 0.17 47 %
Net Income (Loss) $ (2.4)* $ 2.1 N/A
GAAP Diluted Income (Loss) Per Share $(0.06)* $ 0.05 N/A
*Includes a $4.3 million non-cash loss on derivative instrument.
See reconciliation of non-GAAP to GAAP measures below.
Segment Information
Search
Search revenue for the third quarter of 2012 was $91.4 million, up 62 percent
from the third quarter of 2011. Search revenue reflects strong growth from
search distribution, which increased 78 percent over the prior year. Search
segment income was $16.4 million, up 51 percent over the third quarter of
2011.
Tax Preparation
Tax Preparation revenue for the third quarter of 2012 was $1.5 million, and
segment loss was $1.6 million. Tax preparation typically posts a seasonal loss
in the third quarter when there is little revenue from its tax business.
Corporate Operating Expenses
Unallocated corporate operating expenses for the third quarter of 2012 were
$2.7 million.
Fourth Quarter Outlook
For the fourth quarter of 2012, the Company expects revenues to be between
$92.0 million and $95.0 million, Adjusted EBITDA to be between $10.0 million
and $11.0 million, Non-GAAP Net Income to be between $7.7 million and $8.9
million, or $0.18 to 0.21 per diluted share, and Net Income to be between
breakeven and $1.0 million, or $0.00 to $0.02 per diluted share. The Company's
forward-looking guidance does not reflect potential gains or losses from
derivative instruments.
Conference Call and Webcast
A conference call will be held today at 2 p.m. Pacific time / 5 p.m. Eastern
time during which the Company will further discuss third quarter results and
its outlook including tax preparation segment guidance for the first half of
2013. The live webcast and supplemental materials are included in a current
report on form 8-K and can be accessed in the Investor Relations section of
the Blucora corporate website at http://www.blucora.com. A replay of the call
will also be available on our website.
About Blucora™
Blucora operates two leading Internet businesses. Our InfoSpace business
provides online search and monetization solutions to a network of more than
100 partners globally. Through TaxACT, we provide online tax preparation
solutions to consumers and professional preparers. The Blucora team brings
decades of experience operating and investing in desktop, online, and mobile
businesses. We are passionate about the power of the Internet to improve the
lives of consumers, and our businesses operate at the forefront of digital
migration trends in their respective markets. More information about Blucora
may be found at www.blucora.com. Follow and subscribe to us on Twitter,
LinkedIn and YouTube.
This announcement contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual results may differ significantly from
management’s expectations due to various risks and uncertainties including,
but not limited to: general economic, industry, and market sector conditions;
the timing and extent of market acceptance of developed products and services
and related costs; our dependence on companies to distribute our products and
services; the ability to successfully integrate acquired businesses; future
acquisitions; the successful execution of the Company’s strategic initiatives,
operating plans, and marketing strategies; and the condition of our cash
investments. A more detailed description of these and certain other factors
that could affect actual results is included in Blucora, Inc.’s most recent
Annual Report on Form 10-K and subsequent reports filed with or furnished to
the Securities and Exchange Commission. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date of this release. Blucora, Inc. undertakes no obligation to update any
forward-looking statements to reflect new information, events, or
circumstances after the date of this release or to reflect the occurrence of
unanticipated events.
Blucora, Inc.
Preliminary Condensed Consolidated Statements of Comprehensive Income (Loss)
^(1)
(Unaudited)
(Amounts in thousands, except per share data)
Three months ended Nine months ended
September 30, September 30, September September
30, 30,
2012 2011 2012 2011
Revenues $ 92,870 $ 56,257 $ 309,449 $ 162,199
Cost of sales
(includes
amortization of
acquired
intangible 69,973 38,755 193,747 108,008
assets of
$2,014, $518,
$5,606, and
$2,248) ^(2)
Gross profit 22,897 17,502 115,702 54,191
Expenses and
other loss:
Engineering and 2,410 1,806 7,431 5,254
technology ^(2)
Sales and 7,741 4,888 36,053 16,757
marketing ^(2)
General and
administrative 5,283 6,513 21,705 16,643
^(2)
Depreciation 560 475 1,627 1,689
Amortization of
intangible 3,169 - 8,450 -
assets
Other loss, net 5,196 456 7,681 274
^(3)
Total expenses 24,359 14,138 82,947 40,617
and other loss
Income (loss)
from continuing
operations (1,462 ) 3,364 32,755 13,574
before income
taxes
Income tax (936 ) (1,289 ) (14,049 ) (4,927 )
expense
Income (loss)
from continuing (2,398 ) 2,075 18,706 8,647
operations
Discontinued
operations:
^(1)
Loss from
discontinued - - - (2,253 )
operations, net
of taxes ^(2)
Loss on sale of
discontinued - - - (7,674 )
operations, net
of taxes
Net income $ (2,398 ) $ 2,075 $ 18,706 $ (1,280 )
(loss)
Earnings per
share - Basic
Income (loss)
from continuing $ (0.06 ) $ 0.05 $ 0.47 $ 0.23
operations
Loss from
discontinued - - - (0.06 )
operations
Loss on sale of
discontinued - - - (0.20 )
operations
Net income
(loss) per $ (0.06 ) $ 0.05 $ 0.47 $ (0.03 )
share - Basic
Earnings per
share - Diluted
Income (loss)
from continuing $ (0.06 ) $ 0.05 $ 0.45 $ 0.23
operations
Loss from
discontinued - - - (0.06 )
operations
Loss on sale of
discontinued - - - (0.20 )
operations
Net income
(loss) per $ (0.06 ) $ 0.05 $ 0.45 $ (0.03 )
share - Diluted
Weighted
average shares
outstanding
used in 40,511 38,568 40,108 37,451
computing basic
income (loss)
per share
Weighted
average shares
outstanding
used in
40,511 39,158 41,425 38,131
computing
diluted income
(loss) per
share
(1) In the nine months ended September 30, 2011, the Company completed the
sale of its Mercantila e-commerce business. The operating results of that
business have been presented as discontinued operations for all periods
presented. Income taxes related to discontinued operations were a benefit of
$1.3 million for the nine months ended September 30, 2011. Income taxes
related to discontinued operations were $0.6 million and $0.7 million for the
three and nine months ended September 30, 2010, respectively. A loss, net of
an income tax benefit of $5.1 million, on the sale of the Mercantila business
was recorded for the nine months ended September 30, 2011. Revenue, operating
expenses and income taxes, loss from discontinued operations and the loss on
sale of these discontinued operations are presented below (in thousands):
Three months ended Nine months ended
September 30, September 30, September September
30, 30,
E-Commerce 2012 2011 2012 2011
Revenue $ - $ - $ 16,894
Operating
expenses and - - 19,147
income taxes
Loss from
discontinued $ - $ - $ - $ (2,253 )
operations, net
of taxes
Loss on sale of
discontinued $ - $ - $ - $ (7,674 )
operations, net
of taxes
(2) In the nine months ended September 30, 2012, $5.2 million in stock-based
compensation expense was recorded in association with the modification of the
terms of a warrant and the vesting of a non-employee performance-based equity
award, which were both triggered by the acquisition of the TaxACT business,
and the related expense was allocated to general and administrative
expense. Stock-based compensation expense for the three and nine months ended
September 30, 2012 and 2011 is allocated among the following captions (in
thousands):
Three months ended Nine months ended
September 30, September 30, September September
30, 30,
Stock-Based 2012 2011 2012 2011
Compensation
Cost of sales $ 183 $ 37 $ 331 $ 234
Engineering and 332 251 894 684
technology
Sales and 587 177 1,389 829
marketing
General and 1,093 2,584 8,309 4,673
administrative
Discontinued - - - (159 )
operations
Total
stock-based $ 2,195 $ 3,049 $ 10,923 $ 6,261
compensation
expense
(3) Other loss, net for the three and nine months ended September 30, 2012 and
2011 is allocated among the following captions (in thousands):
Three months ended Nine months ended
September 30, September 30, September September
30, 30,
2012 2011 2012 2011
Other Loss, Net
Interest 794 - 2,647 -
expense
Amortization of
debt issuance
costs and 117 - 1,040 -
accretion of
debt discount
Loss on
derivative 4,335 - 4,274 -
instrument
Gain on
contingency - - - (1,500 )
resolution
Increase in
fair value of
earn-out - 500 - 2,000
contingent
liability
Other (50 ) (44 ) (280 ) (226 )
Total other $ 5,196 $ 456 $ 7,681 $ 274
loss, net
Blucora, Inc.
Preliminary Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
September 30, December 31,
2012 2011
ASSETS
Current assets:
Cash and cash equivalents $ 96,407 $ 81,897
Short-term investments, available-for-sale 54,010 211,654
Accounts receivable, net 35,243 25,019
Other receivables, net 1,274 542
Prepaid expenses and other current assets, net 4,514 1,958
Total current assets 191,448 321,070
Property and equipment, net 6,587 5,277
Goodwill 230,980 44,815
Other intangible assets, net 137,959 1,315
Deferred tax asset, net 19,369 19,102
Other long-term assets 4,382 3,560
Total assets $ 590,725 $ 395,139
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 36,954 $ 28,947
Accrued expenses and other current liabilities 12,372 10,250
Short-term portion of long-term debt, net of 2,233 -
discount of $142
Derivative instruments 10,951 -
Total current liabilities 62,510 39,197
Long-term liabilities:
Long-term debt, net of discount of $517 71,604 -
Deferred tax liability 48,149 21
Other long-term liabilities 2,205 816
Total long-term liabilities 121,958 837
Total liabilities 184,468 40,034
Stockholders' equity:
Common stock 4 4
Additional paid-in capital 1,386,741 1,353,971
Accumulated deficit (980,196 ) (998,902 )
Accumulated other comprehensive income (loss) (292 ) 32
Total stockholders' equity 406,257 355,105
Total liabilities and stockholders' equity $ 590,725 $ 395,139
Blucora, Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
Nine months ended
September 30, September 30,
2012 2011
Operating activities:
Net income (loss) $ 18,706 $ (1,280 )
Adjustments to reconcile net income (loss) to
net cash provided by operating activities of
continuing operations:
Loss on sale of discontinued operations - 7,674
Loss from discontinued operations - 2,253
Depreciation and amortization of intangible 16,950 6,190
assets
Stock-based compensation 6,637 4,488
Warrant-related stock-based compensation 4,286 1,932
Excess tax benefits from stock-based award (20,882 ) -
activity
Deferred income taxes (7,398 ) 2
Unrealized amortization of premium or (335 ) 285
accretion of discount on investments, net
Amortization of debt origination costs 746 -
Accretion of debt discount 294 -
Loss on derivative instrument 4,274 -
Earn-out contingent liability adjustments - 2,000
Gain on resolution of contingent liability - (1,500 )
Other (21 ) (8 )
Changes in operating assets and liabilities: -
Accounts receivable (907 ) (882 )
Other receivables 504 (1,118 )
Prepaid expenses and other current assets 705 849
Deferred tax assets and other long-term assets (612 ) (150 )
Accounts payable (2,344 ) 5,981
Accrued expenses and other current and 18,357 (13,660 )
long-term liabilities
Net cash provided by operating activities of 38,960 13,056
continuing operations
Investing activities:
Business acquisition, net of cash acquired (279,386 ) -
Purchases of property and equipment (2,776 ) (2,507 )
Change in restricted cash 168 409
Proceeds from sales of investments 184,934 -
Proceeds from maturities of investments 32,125 83,141
Purchases of investments (59,076 ) (204,777 )
Net cash used by investing activities of (124,011 ) (123,734 )
continuing operations
Financing activities:
Proceeds from loan, net of debt issuance costs 96,704 -
of $2,343 and debt discount of $953
Proceeds from sale of common stock - 7,000
Repayment of debt (25,504 ) -
Excess tax benefits from stock-based award 20,882 -
activity
Proceeds from stock option exercises and
issuance of stock through employee stock 8,413 16,664
purchase plan
Tax payments from shares withheld upon vesting (934 ) (1,388 )
of restricted stock units
Earn-out payments for business acquisition - (423 )
Repayment of capital lease obligation - (221 )
Net cash provided by financing activities of 99,561 21,632
continuing operations
Discontinued operations:
Net cash used by operating activities - (6,156 )
attributable to discontinued operations
Net cash used by investing activities - (638 )
attributable to discontinued operations
Net cash used by discontinued operations - (6,794 )
Net increase (decrease) in cash and cash 14,510 (95,840 )
equivalents
Cash and cash equivalents:
Beginning of period 81,897 155,645
End of period $ 96,407 $ 59,805
Blucora, Inc.
Preliminary Segment Information
(Unaudited)
(Amounts in thousands)
Three months ended Nine months ended
September 30, September 30, September September
30, 30,
2012 2011 2012 2011
Search:
Revenue $ 91,408 $ 56,257 $ 248,511 $ 162,199
Cost of 65,203 36,329 176,545 99,031
revenue ^(1)
Operating 9,849 9,119 27,159 29,730
expenses
Search
segment 16,356 10,809 44,807 33,438
income
Search
segment 18 % 19 % 18 % 21 %
margin
Tax
Preparation:
Revenue 1,462 - 60,938 -
Cost of 292 - 4,410 -
revenue ^(2)
Operating 2,731 - 24,000 -
expenses
Tax
Preparation (1,561 ) - 32,528 -
segment
income
Tax
Preparation -107 % 0 % 53 % 0 %
segment
margin
Total
segment:
Total revenue 92,870 56,257 309,449 162,199
Total cost of 65,495 36,329 180,955 99,031
revenue
Total segment
operating 12,580 9,119 51,159 29,730
expenses
Total segment 14,795 10,809 77,335 33,438
income
Total segment 16 % 19 % 25 % 21 %
margin
Corporate:
Operating 2,695 2,307 9,026 6,980
expense
Stock-based 2,195 3,049 10,923 6,420
compensation
Depreciation 988 1,115 2,895 3,942
Amortization
of intangible 5,183 518 14,055 2,248
assets
Other loss, 5,196 456 7,681 274
net
Income tax 936 1,289 14,049 4,927
expense
Discontinued
operations, - - - 9,927
net of taxes
Total 17,193 8,734 58,629 34,718
corporate
Net income $ (2,398 ) $ 2,075 $ 18,706 $ (1,280 )
(loss)
(1) Amounts do not include amortization of acquired technology and costs
associated with the operation of the Company’s data centers that serve its
search business, including depreciation, personnel expenses (including
stock-based compensation expense), energy, and bandwidth costs.
(2) Amounts do not include amortization of acquired technology and costs
associated with the operation of the Company’s data center that serves its tax
preparation business, including depreciation, personnel expenses, (including
stock-based compensation expense), energy, and bandwidth costs, and personnel
costs associated with customer service.
Blucora, Inc.
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP
Measure
Preliminary Adjusted EBITDA Reconciliation ^(1)
(Unaudited)
(Amounts in thousands)
Three months ended Nine months ended
September 30, September 30, September September
30, 30,
2012 2011 2012 2011
Net income $ (2,398 ) $ 2,075 $ 18,706 $ (1,280 )
(loss) ^(2)
Loss from
discontinued - - - 9,927
operations
Depreciation
and
amortization 6,171 1,633 16,950 6,190
of intangible
assets
Stock-based 2,195 3,049 10,923 6,420
compensation
Other loss, 5,196 456 7,681 274
net ^(3)
Income tax 936 1,289 14,049 4,927
expense
Adjusted $ 12,100 $ 8,502 $ 68,309 $ 26,458
EBITDA ^(4)
Blucora, Inc.
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP
Measure
Preliminary Non-GAAP Net Income Reconciliation ^(1)
(Unaudited)
(Amounts in thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30, September September
30, 30,
2012 2011 2012 2011
Net income $ (2,398 ) $ 2,075 $ 18,706 $ (1,280 )
(loss) ^(2)
Loss from
discontinued - - - 9,927
operations
Income from
continuing (2,398 ) 2,075 18,706 8,647
operations
^(2)
Stock-based 2,195 3,049 10,923 6,420
compensation
Amortization
of acquired 5,183 518 14,055 2,248
intangible
assets
Loss on 4,335 - 4,274 -
derivatives
Cash tax
impact of GAAP (15 ) (18 ) (102 ) (60 )
adjustments
Non-cash
income tax
expense from 1,121 1,221 12,899 4,613
continuing
operations
^(1)
Non-GAAP net $ 10,421 $ 6,845 $ 60,755 $ 21,868
income ^(4)
Per share
amounts
Income (loss)
from
continuing (0.06 ) 0.05 0.45 0.23
operations-
diluted
Stock-based
compensation - 0.05 0.08 0.27 0.16
diluted
Amortization
of acquired
intangible 0.12 0.01 0.34 0.06
assets -
diluted
Loss on
derivatives - 0.11 - 0.10 -
diluted
Cash tax
impact of GAAP (0.00 ) (0.00 ) (0.00 ) (0.00 )
adjustments -
diluted
Non-cash
income taxes 0.03 0.03 0.31 0.12
per share -
diluted
Non-GAAP net
income per $ 0.25 $ 0.17 $ 1.47 $ 0.57
share -
diluted
Weighted
average shares
outstanding
used in
computing 42,048 39,158 41,425 38,131
diluted
non-GAAP
income per
share and its
components
Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance
(Amounts in thousands)
Ranges for the three months
ending
December 31, 2012
Net income - 1,000
Depreciation
and
amortization 6,300 6,100
of acquired
intangible
assets
Stock-based 2,500 2,200
compensation
Other loss, 1,200 1,000
net ^(4)
Income tax - 700
expense
Adjusted $ 10,000 $ 11,000
EBITDA
Preliminary Non-GAAP Net Income Reconciliation for Forward-Looking Guidance
(Amounts in thousands)
Ranges for the three months
ending
December 31, 2012
Net income - 1,000
Stock-based 2,500 2,200
compensation
Amortization
of acquired 5,200 5,100
intangible
assets
Non-cash
income tax
expense from - 600
continuing
operations
Non-GAAP net $ 7,700 $ 8,900
income
(1) Blucora’s Adjusted EBITDA is calculated by adjusting net income (loss)
determined in accordance with generally accepted accounting principles
("GAAP") to exclude the effects of loss from discontinued operations (which
includes loss from discontinued operations, net of taxes, and loss on sale of
discontinued operations, net of taxes), income taxes, depreciation,
amortization of acquired intangible assets, stock-based compensation expense,
and other loss ,net (which includes such items as interest expense, interest
income, derivative instrument gains or losses, foreign currency gains or
losses, gains or losses from the disposal of assets, adjustments to the fair
values of contingent liabilities related to business combinations, and gains
on resolutions of contingencies), as detailed above. Blucora’s management
believes that Adjusted EBITDA provides meaningful supplemental information
regarding the Company’s performance by excluding certain expenses and gains
that management believes are not indicative of its core business operating
results. Blucora uses this non-GAAP financial measure for internal management
purposes, when publicly providing guidance on possible future results, and as
a means to evaluate period-to-period comparisons. Blucora believes that
Adjusted EBITDA is a common measure used by investors and analysts to evaluate
its performance, that it provides a more complete understanding of the results
of operations and trends affecting the Company's business when viewed together
with GAAP results, and that management and investors benefit from referring to
this non-GAAP financial measure.
Blucora's Non-GAAP net income and Non-GAAP earnings per share is calculated by
adjusting GAAP net income (loss) to exclude the effects of discontinued
operations, net of taxes (which includes loss from discontinued operations,
net of taxes, and loss on sale of discontinued operations, net of taxes), loss
from the sale of discontinued operations, net of taxes, stock-based
compensation expense, amortization of acquired intangible assets, gain or
loss on derivatives, the cash tax impact of those adjustments to GAAP net
income, and non-cash portion of income tax expense from continuing operations,
as detailed in the accompanying table to the preliminary condensed
consolidated financial statements (unaudited). The Company excludes the
non-cash portion of income tax expense because of its ability to offset a
substantial portion of its cash tax liabilities by using these deferred tax
assets. The majority of these deferred tax assets will expire if unutilized
in 2020.
Blucora’s management believes that non-GAAP net income and non-GAAP earnings
per share provide meaningful supplemental information to management, investors
and analysts regarding the Company's performance and the valuation of its
business by excluding items in the statement of operations that management
does not consider part of the Company's ongoing operations or have not been,
or are not expected to be, settled in cash. Additionally, Blucora's
management believes that non-GAAP net income and non-GAAP earnings per share
are common measures used by investors and analysts to evaluate the Company's
performance and the valuation of its business.
Adjusted EBITDA, non-GAAP net income and non-GAAP earnings per share should be
evaluated in light of the Company's financial results prepared in accordance
with GAAP, and should be considered as a supplement to, and not as a
substitute for or superior to, GAAP net income.
(2) As presented in the Preliminary Condensed Consolidated Statements of
Operations (unaudited).
(3) Other loss, net includes such items as interest expense, interest income,
derivative instrument gains or losses, foreign currency gains or losses, gains
or losses from the disposal of assets, adjustments to the fair values of
contingent liabilities related to business combinations, and gains on
resolutions of contingencies.
(4) Other loss, net, primarily consists of interest expense, interest income,
foreign currency gains or losses, and gains or losses from the disposal of
assets, and the Company's forward-looking guidance does not reflect potential
gains or losses from derivative instruments.
Contact:
Blucora, Inc.
Stacy Ybarra, 425-709-8127
stacy.ybarra@blucora.com
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement
Rate this Page