Blucora Announces First Quarter Results and Preliminary Tax Season Update

  Blucora Announces First Quarter Results and Preliminary Tax Season Update

  Strong operating performance for TaxACT, full season gains in DDIY market
                                    share

Business Wire

BELLEVUE, Wash. -- May 02, 2013

Blucora, Inc. (NASDAQ:BCOR) today announced financial results for the first
quarter ended March 31, 2013.

“Blucora is off to a strong start in 2013 in both the online search and tax
preparation segments of the business,” said Bill Ruckelshaus, President and
Chief Executive Officer of Blucora. “We are especially pleased with the growth
of TaxACT and our success in building DDIY market share in a
highly-competitive and unpredictable tax season. The TaxACT results reflect
the team’s strong execution, successful product enhancements this season and
our ability to drive consumer demand.”

Highlights

  *TaxACT consumer DDIY federal e-files were 5.3 million, up approximately 8%
    versus the same period last year
  *TaxACT pro forma revenue expected to grow approximately 9% for the six
    months through June 30, 2013 versus the same period last year
  *Search segment revenue and income up 34% and 37%, respectively, versus the
    first quarter of 2012
  *Blucora issued $201.25 million of convertible senior notes


Summary Financial Performance: 1Q 2013

($ in millions except per share amounts)
                               Q1 2013          Q1 2012*          Growth
Revenues                        $165.3           $115.7            43%
Search                          $100.6            $75.3              34%
Tax Preparation                 $ 64.7            $ 40.4             60%
                                                                     
Adjusted EBITDA                 $45.9             $31.7              45%
Non-GAAP Net Income             $42.0             $28.5              47%
Non-GAAP Diluted EPS            $0.95             $0.70              36%
                                                                     
Net Income                      $23.6             $11.4              107%
GAAP Diluted EPS                $0.53             $0.28              89%

* Q1 2012 results include results for TaxACT from the acquisition on January
31, 2012 through March 31, 2012.

See reconciliation of non-GAAP to GAAP measures below.


Segment Information

Search

Search segment revenue for the first quarter of 2013 reflects strong growth
from search distribution and in our owned and operated properties, up 35
percent and 27 percent, respectively, over the first quarter of 2012. Search
segment income for the first quarter of 2013 was $18.3 million, up 37 percent
over the first quarter of 2012.

Tax Preparation


TaxACT Season-to-date Federal      Tax season ended                
Accepted E-Files*
                                    April 16, 2013  April 18, 2012   % change
TaxACT desktop e-files              270              256              5%
TaxACT online e-files               4,865            4,490            8%
TaxACT sub-total e-files            5,135            4,746            8%
TaxACT Free File Alliance e-files   147              160              (8)%
TaxACT total e-files                5,282            4,906            8%
*Tax Season begins on the first
day the IRS begins accepting       
e-files and continues through tax
day +1.


Tax preparation segment income for the first quarter of 2013 was $30.8
million, up 39 percent over the first quarter of 2012. The first quarter of
2012 excludes TaxACT operating results before January 31, 2012, as the Company
acquired TaxACT on that date.

For the six months through June 30, 2013, TaxACT expects pro forma revenue
growth of approximately 9 percent and pro forma segment income to be up
approximately 7 - 8 percent compared to the same period last year.

TaxACT consumer DDIY federal e-files for the tax season were approximately 5.3
million, up approximately 8 percent compared to the same period last year.
According to IRS statistics through April 19, total consumer DDIY federal
e-files for the tax season were up 1.8 million, or 4 percent compared to the
same period last year.

TaxACT professional preparer filings for the tax season grew approximately 10
percent compared to the same period last year. Combined TaxACT offerings
assisted approximately 6.5 million filers this tax season.

Corporate Operating Expenses

Unallocated corporate operating expenses for the first quarter of 2013 were
$3.2 million, down 16 percent from the first quarter of 2012.

Second Quarter Outlook

For the second quarter of 2013, the Company expects revenues to be between
$113.0million and $117.5 million, Adjusted EBITDA to be between $27.0 million
and $28.5million, Non-GAAP Net Income to be between $22.0 million and $23.5
million, or $0.51 to $0.55 per diluted share, and Net Income to be between
$9.0 and $10.0million, or $0.21 to $0.23per 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 and live webcast will be held today at 2p.m. Pacific time /
5p.m. Eastern time during which the Company will further discuss first
quarter results and its outlook including tax preparation segment guidance for
the second quarter of 2013, search segment guidance for the second quarter
2013, and search segment expectations for 2013. The supplemental materials are
included in a current report on form 8-K filed today 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 for one year and are may be accessed under the “Events &
Presentations” section of the Investor Center. You may also listen to the
conference call audio on the Blucora YouTube Channel at
www.YouTube.com/Blucora.

About Blucora™

Blucora operates two leading Internet businesses. OurInfoSpacebusiness
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 atwww.blucora.com. Follow and subscribe to us on Twitter,
LinkedIn andYouTube.

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 Operations ^(1)
(Unaudited)
(Amounts in thousands, except per share data)

                              Three months ended
                               March 31,                   March 31,
                               2013                         2012
Revenues                       $     165,338                $    115,696
                                                            
Cost of sales (includes
amortization of acquired             78,675                      59,547
intangible assets of
$1,940 and $1,511) ^(1)
                                                           
Gross profit                         86,663                      56,149
                                                            
Expenses and other loss,
net:
Engineering and                      2,538                       2,573
technology ^(1)
Sales and marketing ^(1)             36,796                      19,443
General and                          6,384                       11,066
administrative ^(1)
Depreciation                         517                         535
Amortization of                      3,169                       2,113
intangible assets
Other loss, net ^(2)                1,005                     1,555     
                                                            
Total expenses and other            50,409                    37,285    
loss, net
                                                            
Income before income                 36,254                      18,864
taxes
                                                            
Income tax expense                   (12,646     )               (7,458    )
                                                           
Net income                     $     23,608                $    11,406    
                                                            
Net income per share -         $     0.58                  $    0.29      
Basic
                                                            
Net income per share -         $     0.53                  $    0.28      
Diluted ^(3)
                                                            
                                                            
Weighted average shares
outstanding used in                 40,911                    39,692    
computing basic net
income per share
Weighted average shares
outstanding used in                 44,294                    40,978    
computing diluted net
income per share

^(1) In the three months ended March 31, 2012, an additional $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 months
ended March 31, 2013 and 2012 is allocated among the following captions (in
thousands):

                               Three months ended
Stock-Based Compensation       March 31,                    March 31,
                               2013                         2012
Cost of sales                  $     219                    $    80
Engineering and                      253                         256
technology
Sales and marketing                  477                         414
General and                         1,536                     5,958     
administrative
Total stock-based              $     2,485                 $    6,708     
compensation expense

^(2) Other loss, net for the three months ended March 31, 2013 and 2012 is
allocated among the following captions (in thousands):

                               Three months ended
                               March 31,                    March 31,
                               2013                         2012
Other Loss, Net
Interest income                $     (55         )          $    (9        )
Interest expense                     1,148                       844
Amortization of debt                 107                         331
issuance costs
Accretion of debt                    161                         135
discount
(Gain) loss on                       (348        )               272
derivative instruments
Other                               (8          )              (18       )
Total other loss, net          $     1,005                 $    1,555     

^(3) Calculation excludes the income effect of dilutive derivative
instruments, as well as interest expense, amortization of debt issuance costs
and accretion of debt discount on convertible debt, net of tax effect.



Blucora, Inc.
Preliminary Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)

                                                March 31,      December 31,
                                                 2013            2012
ASSETS
                                                                 
Current assets:
Cash and cash equivalents                        $ 264,635       $ 68,278
Short-term investments, available-for-sale         137,042         94,010
Accounts receivable, net of allowance of $133      41,256          34,932
and $10
Other receivables                                  4,226           3,942
Prepaid expenses and other current assets, net    7,842         10,911    
                                                                 
Total current assets                               455,001         212,073
                                                                 
Property and equipment, net                        9,269           7,533
Goodwill                                           230,290         230,290
Other intangible assets, net                       127,706         132,815
Other long-term assets                            11,255        2,582     
                                                                 
Total assets                                     $ 833,521      $ 585,293   
                                                                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                 
Current liabilities:
Accounts payable                                 $ 41,043        $ 37,687
Accrued expenses and other current liabilities     20,440          13,280
Deferred revenue                                   3,121           3,157
Short-term portion of long-term debt, net of       6,948           4,590
discount of $177 and $160
Derivative instruments                            8,564         8,974     
                                                                 
Total current liabilities                          80,116          67,688
                                                                 
Long-term liabilities:
Long-term debt, net of discount of $422 and        66,949          69,278
$468
Convertible senior notes                           179,041         -
Deferred tax liability                             31,602          29,333
Deferred revenue                                   2,477           1,319
Other long-term liabilities                       2,283         2,225     
                                                                 
Total long-term liabilities                       282,352       102,155   
                                                                 
Total liabilities                                  362,468         169,843
                                                                 
Stockholders' equity:
Common stock                                       4               4
Additional paid-in capital                         1,424,009       1,392,098
Accumulated deficit                                (952,768  )     (976,376  )
Accumulated other comprehensive loss              (192      )    (276      )
                                                                 
Total stockholders' equity                        471,053       415,450   
                                                                 
Total liabilities and stockholders' equity       $ 833,521      $ 585,293   



Blucora, Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)

                                                   Three months ended
                                                    March 31,    March 31,
                                                    2013          2012
Operating activities:
Net income                                          $ 23,608      $ 11,406
Adjustments to reconcile net income to net cash
provided by operating activities:
Stock-based compensation                              2,485         2,422
Warrant-related stock-based compensation              -             4,286
(Gain) loss on derivative instruments                 (348    )     272
Depreciation and amortization of intangible           6,112         4,575
assets
Excess tax benefits from stock-based award            (17,842 )     (12,058  )
activity
Deferred income taxes                                 (6,668  )     (5,462   )
Unrealized amortization of premium or accretion       391           (327     )
of discount on investments, net
Amortization of debt issuance costs                   107           331
Accretion of debt discount                            161           135
Other                                                 55            26
Cash provided (used) by changes in operating
assets and liabilities:
Accounts receivable                                   (6,225  )     2,971
Other receivables                                     (284    )     657
Prepaid expenses and other current assets             3,587         (1,564   )
Other long-term assets                                (114    )     1,863
Accounts payable                                      3,122         (3,713   )
Deferred revenue                                      1,122         2,054
Accrued expenses and other current and long-term     22,486      11,174   
liabilities
Net cash provided by operating activities             31,755        19,048
                                                                  
Investing activities:
Business acquisition, net of cash acquired            -             (279,386 )
Equity investment in privately-held company           (4,000  )     -
Purchases of property and equipment                   (1,543  )     (193     )
Change in restricted cash                             231           767
Proceeds from sales of investments                    -             163,883
Proceeds from maturities of investments               18,718        20,020
Purchases of investments                             (62,077 )    -        
Net cash used by investing activities                 (48,671 )     (94,909  )
                                                                  
Financing activities:
Proceeds from issuance of convertible debt, net       195,213       -
of debt issuance costs of $6,037
Proceeds from loan, net of debt issuance costs of     -             96,704
$2,343 and debt discount of $953
Repayment of debt                                     -             (15,000  )
Excess tax benefits from stock-based award            17,842        12,058
activity
Proceeds from stock option exercises                  293           2,063
Proceeds from issuance of stock through employee      461           189
stock purchase plan
Tax payments from shares withheld upon vesting of    (536    )    (210     )
restricted stock units
Net cash provided by financing activities             213,273       95,804
                                                                  
Net increase in cash and cash equivalents             196,357       19,943
                                                                  
Cash and cash equivalents:
Beginning of period                                  68,278      81,897   
End of period                                       $ 264,635    $ 101,840  



Blucora, Inc.
Preliminary Segment Information
(Unaudited)
(Amounts in thousands)

                             Three months ended
                              March 31,                  March 31,
                              2013                        2012
Search:
Revenue                       $     100,601               $    75,295
Cost of revenue ^(1)                70,618                     53,106
Operating expenses                 11,713                   8,816      
Search segment income               18,270                     13,373
Search segment margin               18          %              18         %
                                                          
Tax Preparation:
Revenue                             64,737                     40,401
Cost of revenue ^(1)                2,214                      2,579
Operating expenses                 31,739                   15,687     
Tax Preparation segment             30,784                     22,135
income
Tax Preparation segment             48          %              55         %
margin
                                                          
Total segment:
Total revenue                       165,338                    115,696
Total cost of revenue               72,832                     55,685
Total segment operating            43,452                   24,503     
expenses
Total segment income                49,054                     35,508
Total segment margin                30          %              31         %
                                                          
Corporate:
Operating expense                   3,198                      3,806
Stock-based                         2,485                      6,708
compensation
Depreciation                        1,003                      951
Amortization of                     5,109                      3,624
intangible assets
Other loss, net                     1,005                      1,555
Income tax expense                 12,646                   7,458      
Total corporate                     25,446                     24,102
                                                         
Net income                    $     23,608               $    11,406     

^(1) Amounts do not include amortization of acquired intangible assets and
certain costs associated with customer service and the operation of the data
centers that serve our businesses, which include personnel expenses (which
include salaries, benefits and other employee related costs, and stock-based
compensation expense), the cost of temporary help and contractors to augment
our staffing, bandwidth costs and depreciation.Such amounts are reflected
under the heading "Corporate".



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
                                            March 31,           March 31,
                                            2013                 2012
Net income ^(2)                             $    23,608          $  11,406
Depreciation and amortization of                 6,112              4,575
intangible assets
Stock-based compensation                         2,485              6,708
Other loss, net ^(3)                             1,005              1,555
Income tax expense                              12,646           7,458   
Adjusted EBITDA                             $    45,856         $  31,702  


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
                                            March 31,            March 31,
                                            2013                 2012
Net income ^(2)                             $    23,608          $  11,406
Stock-based compensation                         2,485              6,708
Amortization of acquired intangible              5,109              3,624
assets
Accretion of debt discount on convertible        132                -
notes
(Gain) loss on derivative instruments            (348     )         272
Cash tax impact of adjustments to GAAP           (163     )         (90     )
net income
Non-cash income tax expense ^(1)                11,174           6,597   
Non-GAAP net income ^(4)                    $    41,997         $  28,517  
                                                                 
Per share amounts
Net income - diluted ^(5)                        0.53               0.28
Stock-based compensation - diluted               0.06               0.16
Amortization of intangible assets -              0.11               0.09
diluted
Accretion of debt discount on convertible        0.00               -
notes - diluted
(Gain) loss on derivative instruments -          0.00               0.01
diluted
Cash tax impact of adjustments to GAAP           0.00               0.00
net income - diluted
Non-cash income tax expense per share -         0.25             0.16    
diluted
Non-GAAP net income per share - diluted     $    0.95           $  0.70    


Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance
(Amounts in thousands)

                                            Ranges for the three months ending
                                            June 30, 2013
Net income                                  $   9,000          $ 10,000
Depreciation and amortization of acquired        6,100             6,100
intangible assets
Stock-based compensation                         2,800              2,800
Accretion of debt discount                       800                800
Other loss (income), net ^(6)                    3,400              3,400
Income tax expense                              4,900            5,400   
Adjusted EBITDA                             $    27,000         $  28,500  


Preliminary Non-GAAP Net Income Reconciliation for Forward-Looking Guidance
(Amounts in thousands)

                                            Ranges for the three months ending
                                            June 30, 2013
Net income                                  $   9,000          $ 10,000
Stock-based compensation                         2,800              2,800
Amortization of intangible assets                5,100              5,100
Accretion of debt discount                       800                800
Non-cash income tax expense                     4,300            4,800   
Non-GAAP net income                         $    22,000         $  23,500  


^(1) Blucora’s Adjusted EBITDA is calculated by adjusting net income
determined in accordance with the accounting principles generally accepted in
the United States of America ("GAAP"), excluding the effects of 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 intangible assets, stock-based compensation
expense, and other loss (income), net (which includes such items as interest
expense, interest income, gains or losses on derivative instruments, 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, gains on resolution of contingencies, and litigation
settlements), as detailed above. Blucora’s management believes that Adjusted
EBITDA provides meaningful supplemental information regarding the Company’s
performance. Blucora uses this non-GAAP financial measure for internal
management and compensation purposes, when publicly providing guidance on
possible future results, and as a means to evaluate period-to-period
comparisons. 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. Items
excluded from Adjusted EBITDA should be considered as a supplement to, and not
as a substitute for or superior to, GAAP net income. Other companies may
calculate Adjusted EBITDA differently and, therefore, Blucora's Adjusted
EBITDA may not be comparable to similarly titled measures of other companies.

Blucora defines non-GAAP net income differently for this report than the
Company has defined it in the past, due to issuance of the senior convertible
notes in March 2013. For this report, Blucora defines non-GAAP net income as
net income, determined in accordance with GAAP, excluding the effects of loss
from discontinued operations, net of taxes, stock-based compensation expense,
amortization of acquired intangible assets, accretion of debt discount on
convertible notes, gain or loss on derivative instruments, and the related
cash tax impact of those adjustments, and non-cash income taxes 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 (which consist primarily of U.S. federal net operating losses). The
Company’s management believes that excluding the non-cash portion of income
tax expense from its GAAP net income provides meaningful supplemental
information to investors and analysts regarding the Company’s performance and
the valuation of its business 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. Non-GAAP net income should be evaluated in
light of our financial results prepared in accordance with GAAP, and should be
considered as a supplement to, and not as a substitute for or superior to,
GAAP net income. Other companies may calculate non-GAAP net income
differently, and therefore Blucora's non-GAAP net income may not be comparable
to similarly titled measures of other companies.

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

^(3) Other loss (income), net includes such items as interest expense,
interest income, derivative instrument gains or losses, accretion of debt
discount and amortization of debt issuance costs, foreign currency gains or
losses, and gains or losses from the disposal of assets,

^(4) Our new definition of non-GAAP net income does not impact presentation of
this non-GAAP financial measure for prior periods.

^(5) Calculation excludes the income effect of dilutive derivative instruments
as well as interest expense, amortization of debt issuance costs and accretion
of debt discount on convertible debt, net of tax effect.

^(6) Other loss (income), 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, gains
on resolution of contingencies, and litigation settlements. 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