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CST: 17/10/2019 23:19:43   

Blucora Announces Second Quarter 2019 Results

71 Days ago

IRVING, Texas, Aug. 07, 2019 (GLOBE NEWSWIRE) -- Blucora, Inc. (NASDAQ: BCOR), a leading provider of tax-smart financial solutions that empower people’s goals, today announced financial results for the second quarter ended June 30, 2019.

Second Quarter Highlights and Recent Developments

  • Closed acquisition of 1st Global, extending lead in tax-focused wealth management segment.
  • Increased total revenue by 23% and wealth management revenue by 39% year-over-year (y/y), including addition of 1st Global since May 6 acquisition date.
  • HD Vest Advisory Assets increased 12% y/y to $14.5 billion; 1st Global Advisory Assets increased 5% y/y to $11.7 billion. Total Client Assets ended quarter at $67.6 billion.
  • Initiated launch of Tax Smart Investing software solution that is expected to give advisors a significant incremental edge in driving value for clients.
  • Grew TaxAct revenue by 12.5% y/y for the first half of 2019, with 60% segment margin.

“Our second quarter results reflect the completion of a very strong tax season and first half in tax preparation, as well as the completion of an important acquisition in wealth management,” said John Clendening, Blucora's President and Chief Executive Officer. “Most importantly, we continue to improve our business positioning and capabilities across both businesses to ensure we are best positioned for future growth.”

Summary Financial Performance: Q2 2019
($ in millions except per share amounts)

  Q2   Q2    
  2019   2018   Change
Revenue:          
Wealth Management $ 127.8     $ 92.0     39 %
Tax Preparation $ 65.9     $ 65.8     %
Total Revenue $ 193.7     $ 157.8     23 %
Segment Income:          
Wealth Management $ 17.0     $ 13.0     31 %
Tax Preparation $ 41.4     $ 44.1     (6 )%
Total Segment Income $ 58.3     $ 57.1     2 %
Unallocated Corporate Operating Expenses $ (6.2 )   $ (4.2 )   47 %
GAAP:          
Operating Income $ 28.0     $ 39.1     (28 )%
Net Income Attributable to Blucora, Inc. $ 31.0     $ 35.2     (12 )%
Diluted Net Income Per Share Attributable to Blucora, Inc. (EPS) $ 0.62     $ 0.71     (13 )%
Non-GAAP*:          
Adjusted EBITDA* $ 52.1     $ 52.8     (1 )%
Net Income* $ 41.4     $ 47.7     (13 )%
Diluted Net Income Per Share (EPS)* $ 0.83     $ 0.97     (14 )%
* See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.
 


Second Quarter Results vs. Prior Guidance        
$ in millions Prior Guidance Midpoint Actual Difference at Midpoint
Wealth Management Revenue $121.0 - $125.5 123.3 127.8 4.5
HD Vest $95.5 - $98.5 97 98.8 1.8
1st Global (May 6-Jun 30) $25.5 - $27.0 26.3 29 2.7
TaxAct Revenue $67.5 – $68.0 67.8 65.9 -1.9
Total Revenue $188.5 - $193.5** 191 193.7 2.7
Wealth Management Segment Income $14.0 - $16.0 15 17 2
HD Vest Segment Income $13.0 - $14.5 13.8 14.8 1
1st Global Segment Income $1.0 - $1.5 1.3 2.2 0.9
TaxAct Segment Income $39.0 - $40.0 39.5 41.4 1.9
Corporate Unallocated Operating Expenses $7.5 - $8.0 7.8 6.2 1.6
Adjusted EBITDA* $45.0 - $48.5** 46.8 52.1 5.3
**Prior guidance including 1st Global.        
         

Third Quarter and Full Year 2019 Outlook

For the third quarter of 2019, the Company expects revenues to be between $142.5 million and $149.5 million, GAAP net loss attributable to Blucora, Inc. to be between $30.5 million and $35.5 million, or $0.62 to $0.72 per diluted share, Adjusted EBITDA* to be between $4.0 million and breakeven, and Non-GAAP net loss* to be between $10.0 million and $14.5 million, or $0.20 to $0.29 per diluted share.

Full Year 2019 Outlook      
$ in millions Prior Guidance Current Outlook Difference at Midpoint
Wealth Management Revenue $493.0 - $511.0 $500.0 - $513.0 4.5
HD Vest $384.5 - $395.5    
1st Global (May 6-Dec. 31) $108.5 - $115.5    
TaxAct Revenue $211.0 - $213.0 $210.0 - $211.0 (1.5)
Total Revenue $704.0 - $724.0** $710.0 - $724.0 3
Wealth Management Segment Income $65.5 - $73.5 $67.0 - $73.5 0.7
HD Vest Segment Income $56.5 - $62.5    
1st Global Segment Income $9.0 - $11.0    
TaxAct Segment Income $92.0 - $95.0 $93.0 - $94.5 0.3
Corporate Unallocated Operating Expense $28.5 - $29.5 $28.5 - $29.5 0
Adjusted EBITDA* $128.0 - $140.0** $130.5 - $139.5 1
Net Income   $27.0 - $37.5  
Net Income per share   $0.54 - $0.75  
Non-GAAP Net Income*   $92.5 - $102.5  
Non-GAAP Net Income per share*   $1.84 - $2.04  
       

The third quarter and fiscal 2019 outlook for GAAP net income or loss attributable to Blucora assumes an estimated tax rate of approximately (3%) to (7%).

Conference Call and Webcast

A conference call and live webcast will be held today at 8:30 a.m. Eastern Time during which the Company will further discuss second quarter results, its outlook for the full year 2019 and other business matters. We will also provide the prepared remarks for the conference call along with supplemental financial information to our results on the Investor Relations section of the Blucora corporate website at http://www.blucora.com prior to the call.  The supplemental financial information has also been filed with the SEC on Form 8-K.  A replay of the call will be available on our website.

About Blucora®

Blucora, Inc. (NASDAQ: BCOR) is on the forefront of financial technology, pioneering tax-smart financial solutions that empower people’s goals. Blucora operates in two segments including wealth management, through its HD Vest and 1st Global businesses, the No. 1 and No. 2 tax-focused broker-dealers, respectively, with a combined $67 billion in total client assets as of June 30, 2019, and tax preparation, through its TaxAct business, the No. 3 tax preparation software by market share with approximately 3 million consumer and professional users. With integrated tax and wealth management, Blucora is uniquely positioned to provide better long-term outcomes for customers with holistic, tax-advantaged solutions. For more information on Blucora, visit www.blucora.com.

Source: Blucora

Blucora Contact:

Bill Michalek (972) 870-6463

VP, Investor Relations

This release 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. When used in this release, terms such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “intends,” “anticipates,” “may,” “forecasts,” “projects” and similar expressions and variations as they relate to the Company or its management are intended to identify forward-looking statements. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: our ability to effectively implement our future business plans and growth strategy; our ability to effectively compete within our industry; our ability to attract and retain customers and productive financial advisors; our ability to realize all of the anticipated benefits of the acquisition of 1st Global, as well as our ability to integrate the operations of 1st Global; the availability of financing and our ability to meet our current and future debt service obligations and comply with our debt covenants; our ability to generate strong investment performance for our customers and the impact of the financial markets on our customers’ portfolios and investment behavior; political and economic conditions and changes and events that directly or indirectly impact the wealth management and tax preparation industries; our ability to successfully make technology enhancements and introduce new and improve on existing products and services; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; risks related to goodwill and other intangible asset impairment; our ability to comply with laws and regulations, including, among others, those related to privacy protection and consumer data; our expectations concerning the benefits that may be derived from our clearing platform and investment advisory platform; cybersecurity risks; our ability to maintain our relationships with third party partners; the seasonality of our business; litigation risks; our ability to attract and retain qualified employees; our assessments and estimates that determine our effective tax rate; the impact of new or changing tax legislation; our ability to develop, establish and maintain strong brands; our ability to protect our intellectual property; and our ability to effectively integrate other companies or assets that we may acquire. A more detailed description of these and certain other factors that could affect actual results is included in the Company’s filings with 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. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of this release, except as may be required by applicable law.

Blucora, Inc.
Preliminary Condensed Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands, except per share data)

  Three Months Ended June 30,   Six months ended June 30,
  2019   2018   2019   2018
Revenue:              
Wealth management services revenue $ 127,831     $ 92,015     $ 217,363     $ 184,097  
Tax preparation services revenue 65,909     65,833     202,145     179,716  
Total revenue 193,740     157,848     419,508     363,813  
Operating expenses:              
Cost of revenue:              
Wealth management services cost of revenue 87,477     62,149     148,851     125,213  
Tax preparation services cost of revenue 3,149     2,459     7,350     6,812  
Amortization of acquired technology     49         99  
Total cost of revenue (1) 90,626     64,657     156,201     132,124  
Engineering and technology (1) 7,159     4,848     13,688     9,979  
Sales and marketing (1) 29,256     23,791     84,828     79,044  
General and administrative (1) 19,002     15,625     36,079     30,491  
Acquisition and integration 9,183         10,980      
Depreciation 1,315     993     2,376     2,908  
Amortization of other acquired intangible assets 9,169     8,806     17,213     17,113  
Restructuring (1)     2         291  
Total operating expenses 165,710     118,722     321,365     271,950  
Operating income 28,030     39,126     98,143     91,863  
Other loss, net (2) (5,118 )   (2,759 )   (9,076 )   (7,987 )
Income before income taxes 22,912     36,367     89,067     83,876  
Income tax benefit (expense) 8,124     (907 )   4,139     (2,870 )
Net income 31,036     35,460     93,206     81,006  
Net income attributable to noncontrolling interests     (222 )       (427 )
Net income attributable to Blucora, Inc.: $ 31,036     $ 35,238     $ 93,206     $ 80,579  
Net income per share attributable to Blucora, Inc.:              
Basic $ 0.64     $ 0.75     $ 1.93     $ 1.72  
Diluted $ 0.62     $ 0.71     $ 1.88     $ 1.64  
Weighted average shares outstanding:              
Basic 48,555     47,221     48,358     46,931  
Diluted 49,822     49,434     49,681     49,049  
                       

(1) Stock-based compensation expense was allocated among the following captions (in thousands):

  Three Months Ended June 30,   Six months ended June 30,
  2019   2018   2019   2018
Cost of revenue $ 896   $ 271   $ 1,416     $ 527
Engineering and technology 156   202   332     412
Sales and marketing 180   702   (13 )   1,218
General and administrative 2,850   2,555   4,790     4,528
Total stock-based compensation expense $ 4,082   $ 3,730   $ 6,525     $ 6,685
                         

(2) Other loss, net consisted of the following (in thousands):

  Three Months Ended June 30,   Six months ended June 30,
  2019   2018   2019   2018
Interest income $ (149 )   $ (58 )   $ (289 )   $ (98 )
Interest expense 4,770     3,847     8,546     8,028  
Amortization of debt issuance costs 375     284     547     487  
Accretion of debt discounts 85     40     123     87  
Loss on debt extinguishment     758         1,534  
Other 37     (2,112 )   149     (2,051 )
Other loss, net $ 5,118     $ 2,759     $ 9,076     $ 7,987  
                               

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

  June 30,
2019
  December 31,
2018
ASSETS      
Current assets:      
Cash and cash equivalents $ 109,606     $ 84,524  
Cash segregated under federal or other regulations 146     842  
Accounts receivable, net of allowance 20,391     15,721  
Commissions receivable 19,857     15,562  
Other receivables 8,069     7,408  
Prepaid expenses and other current assets, net 10,595     7,755  
Total current assets 168,664     131,812  
Long-term assets:      
Property and equipment, net 15,090     12,389  
Right-of-use assets, net 11,338      
Goodwill, net 674,130     548,685  
Other intangible assets, net 355,596     294,603  
Other long-term assets 10,820     10,236  
Total long-term assets 1,066,974     865,913  
Total assets $ 1,235,638     $ 997,725  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 7,945     $ 3,798  
Commissions and advisory fees payable 18,810     15,199  
Accrued expenses and other current liabilities 43,429     18,980  
Lease liabilities 7,168     46  
Deferred revenue 4,158     10,257  
Current portion of long-term debt, net 919      
Total current liabilities 82,429     48,280  
Long-term liabilities:      
Long-term debt, net 381,579     260,390  
Deferred tax liability, net 44,840     40,394  
Deferred revenue 7,635     8,581  
Lease liabilities 6,911     100  
Other long-term liabilities 7,012     7,440  
Total long-term liabilities 447,977     316,905  
Total liabilities 530,406     365,185  
       
Redeemable noncontrolling interests     24,945  
       
Stockholders’ equity:      
Common stock 5     5  
Additional paid-in capital 1,575,554     1,569,725  
Accumulated deficit (870,119 )   (961,689 )
Accumulated other comprehensive loss (208 )   (446 )
Total stockholders’ equity 705,232     607,595  
Total liabilities and stockholders’ equity $ 1,235,638     $ 997,725  
               

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

  Six months ended June 30,
  2019   2018
Operating Activities:      
Net income $ 93,206     $ 81,006  
Adjustments to reconcile net income to net cash from operating activities:      
Stock-based compensation 6,525     6,685  
Depreciation and amortization of acquired intangible assets 20,185     20,338  
Reduction of right-of-use lease assets 1,977      
Deferred income taxes 4,446     (781 )
Amortization of premium on investments, net, and debt issuance costs 547     487  
Accretion of debt discounts 123     87  
Loss on debt extinguishment     1,533  
Other 260      
Cash provided (used) by changes in operating assets and liabilities:      
Accounts receivable (3,217 )   4,096  
Commissions receivable 847     2  
Other receivables (661 )   3,142  
Prepaid expenses and other current assets 12,258     461  
Other long-term assets (355 )   (764 )
Accounts payable (2,995 )   59  
Commissions and advisory fees payable (663 )   (655 )
Lease liabilities (2,066 )    
Deferred revenue (24,760 )   (5,746 )
Accrued expenses and other current and long-term liabilities (8,845 )   (3,393 )
Net cash provided by operating activities 96,812     106,557  
Investing Activities:      
Business acquisition, net of cash acquired (164,461 )    
Purchases of property and equipment (2,938 )   (2,602 )
Net cash used by investing activities (167,399 )   (2,602 )
Financing Activities:      
Proceeds from credit facilities 121,499      
Payments on credit facilities     (80,000 )
Payment of redeemable noncontrolling interests (24,945 )    
Proceeds from stock option exercises 3,320     10,386  
Proceeds from issuance of stock through employee stock purchase plan 1,144     704  
Tax payments from shares withheld for equity awards (5,160 )   (4,229 )
Contingent consideration payments for business acquisition (943 )   (1,315 )
Net cash provided (used) by financing activities 94,915     (74,454 )
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 58     (30 )
Net increase in cash, cash equivalents, and restricted cash 24,386     29,471  
Cash, cash equivalents, and restricted cash, beginning of period 85,366     62,311  
Cash, cash equivalents, and restricted cash, end of period $ 109,752     $ 91,782  
               

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

  Three months ended June 30,   Six months ended June 30,
  2019   2018   2019   2018
Revenue:              
Wealth Management (1) $ 127,831     $ 92,015     $ 217,363     $ 184,097  
Tax Preparation (1) 65,909     65,833     202,145     179,716  
Total revenue 193,740     157,848     419,508     363,813  
Operating income (loss):              
Wealth Management 16,979     12,954     28,519     26,029  
Tax Preparation 41,368     44,121     120,640     102,927  
Corporate-level activity (2) (30,317 )   (17,949 )   (51,016 )   (37,093 )
Total operating income 28,030     39,126     98,143     91,863  
Other loss, net (5,118 )   (2,759 )   (9,076 )   (7,987 )
Income tax benefit (expense) 8,124     (907 )   4,139     (2,870 )
Net income $ 31,036     $ 35,460     $ 93,206     $ 81,006  
                               

(1) Revenues by major category within each segment are presented below (in thousands):

  Three months ended June 30,   Six months ended June 30,
  2019   2018   2019   2018
Wealth Management:              
Commission $ 48,068   $ 40,384   $ 85,228   $ 83,254
Advisory 61,410   40,058   101,167   79,359
Asset-based 13,219   7,306   22,912   14,478
Transaction and fee 5,134   4,267   8,056   7,006
Total Wealth Management revenue $ 127,831   $ 92,015   $ 217,363   $ 184,097
Tax Preparation:              
Consumer $ 62,686   $ 63,137   $ 186,628   $ 165,049
Professional 3,223   2,696   15,517   14,667
Total Tax Preparation revenue $ 65,909   $ 65,833   $ 202,145   $ 179,716
                       

(2) Corporate-level activity included the following (in thousands):

  Three months ended June 30,   Six months ended June 30,
  2019   2018   2019   2018
Operating expenses $ (6,221 )   $ (4,238 )   $ (13,326 )   $ (9,779 )
Stock-based compensation (4,082 )   (3,730 )   (6,525 )   (6,685 )
Acquisition-related costs (9,183 )       (10,980 )    
Depreciation (1,662 )   (1,124 )   (2,972 )   (3,126 )
Amortization of acquired intangible assets (9,169 )   (8,855 )   (17,213 )   (17,212 )
Restructuring     (2 )       (291 )
Total corporate-level activity $ (30,317 )   $ (17,949 )   $ (51,016 )   $ (37,093 )
                               

Blucora, Inc.
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (1)

Preliminary Adjusted EBITDA Reconciliation (1)
(Unaudited)
(Amounts in thousands)

(In thousands) Three Months Ended June 30,   Six months ended June 30,
  2019   2018   2019   2018
Net income attributable to Blucora, Inc. (2) $ 31,036     $ 35,238   $ 93,206     $ 80,579
Stock-based compensation 4,082     3,730   6,525     6,685
Depreciation and amortization of acquired intangible assets 10,831     9,979   20,185     20,338
Restructuring     2       291
Other loss, net (3) 5,118     2,759   9,076     7,987
Net income attributable to noncontrolling interests     222       427
Acquisition and integration costs 9,183       10,980    
Income tax (benefit) expense (8,124 )   907   (4,139 )   2,870
Adjusted EBITDA $ 52,126     $ 52,837   $ 135,833     $ 119,177
                           

Preliminary Non-GAAP Net Income and Non-GAAP Net Income Per Share Reconciliation (1)
(Unaudited)
(Amounts in thousands, except per share amounts)

  Three months ended June 30,   Six months ended June 30,
  2019   2018   2019   2018
Net income attributable to Blucora, Inc. (2) $ 31,036     $ 35,238     $ 93,206     $ 80,579  
Stock-based compensation 4,082     3,730     6,525     6,685  
Amortization of acquired intangible assets 9,169     8,855     17,213     17,212  
Restructuring     2         291  
Impact of noncontrolling interests     222         427  
Acquisition and integration costs 9,183         10,980      
Cash tax impact of adjustments to GAAP net income (771 )   (903 )   (1,182 )   (1,216 )
Non-cash income tax (benefit) expense (1) (11,317 )   582     (8,166 )   1,980  
Non-GAAP net income $ 41,382     $ 47,726     $ 118,576     $ 105,958  
Per diluted share:              
Net income attributable to Blucora, Inc. $ 0.62     $ 0.71     $ 1.88     $ 1.64  
Stock-based compensation 0.08     0.08     0.13     0.14  
Amortization of acquired intangible assets 0.20     0.19     0.34     0.34  
Restructuring             0.01  
Impact of noncontrolling interests     0.00     0.00     0.01  
Acquisition and integration costs 0.18     0.00     0.22     0.00  
Cash tax impact of adjustments to GAAP net income (0.02 )   (0.02 )   (0.02 )   (0.02 )
Non-cash income tax (benefit) expense (0.23 )   0.01     (0.16 )   0.04  
Non-GAAP net income per share $ 0.83     $ 0.97     $ 2.39     $ 2.16  
Weighted average shares outstanding used in computing per diluted share amounts 49,822     49,434     49,681     49,049  
                       

Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance (1)
(Amounts in thousands)

  Ranges for the three months ending   Ranges for the year ending
  September 30, 2019   December 31, 2019
  Low   High   Low   High
Net income (loss) attributable to Blucora, Inc. $ (35,500 )   $ (30,500 )   $ 27,000     $ 37,500  
Stock-based compensation 4,900     4,900     16,700     16,300  
Depreciation and amortization of acquired intangible assets 12,600     12,500     45,500     45,000  
Other loss, net (3) 6,100     5,900     20,900     20,700  
Acquisition and integration costs 6,500     6,100     22,400     22,000  
Income tax (benefit) expense 1,400     1,100     (2,000 )   (2,000 )
Adjusted EBITDA $ (4,000 )   $     $ 130,500     $ 139,500  
                               

Preliminary Adjusted EBITDA Reconciliation for Prior Guidance Including 1st Global (1)
(Amounts in thousands)

  Ranges for the three months ending   Ranges for the year ending
  June 30, 2019   December 31, 2019
  Low   High   Low   High
Net income attributable to Blucora, Inc. $ 20,100   $ 24,000   $ 33,200   $ 47,700
Stock-based compensation 5,400   5,100   18,700   17,900
Depreciation and amortization of acquired intangible assets 11,600   11,200   45,900   44,300
Other loss, net (3) 5,700   5,400   24,000   23,300
Income tax expense 2,200   2,800   6,200   6,800
Adjusted EBITDA $ 45,000   $ 48,500   $ 128,000   $ 140,000
                       

Preliminary Non-GAAP Net Income (Loss) Reconciliation for Forward-Looking Guidance (1)
(Amounts in thousands, except per share amounts)

  Ranges for the three months ending   Ranges for the year ending
  September 30, 2019   December 31, 2019
  Low   High   Low   High
Net income (loss) attributable to Blucora, Inc. $ (35,500 )   $ (30,500 )   $ 27,000     $ 37,500  
Stock-based compensation 4,900     4,900     16,700     16,300  
Amortization of acquired intangible assets 9,900     9,900     37,000     37,000  
Acquisition and integration costs 6,500     6,100     22,400     22,000  
Cash tax impact of adjustments to net income (loss) (500 )   (500 )   (2,000 )   (2,000 )
Non-cash income tax benefit 200     100     (8,600 )   (8,300 )
Non-GAAP net income (loss) $ (14,500 )   $ (10,000 )   $ 92,500     $ 102,500  
Per diluted share:              
Net income (loss) attributable to Blucora, Inc. $ (0.72 )   $ (0.62 )   $ 0.54     $ 0.75  
Stock-based compensation 0.10     0.10     0.33     0.32  
Amortization of acquired intangible assets 0.20     0.20     0.73     0.74  
Acquisition and integration costs 0.13     0.12     0.44     0.44  
Cash tax impact of adjustments to net income (loss) (0.01 )   (0.01 )   (0.04 )   (0.04 )
Non-cash income tax benefit 0.01     0.01     (0.16 )   (0.17 )
Non-GAAP net income per share $ (0.29 )   $ (0.20 )   $ 1.84     $ 2.04  
Weighted average shares outstanding used in computing per diluted share amounts 49,300     49,200     50,400     50,200  
                       

Notes to Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures

(1) We define Adjusted EBITDA as net income attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation and amortization of acquired intangible assets, restructuring, other loss, net, the impact of noncontrolling interests, acquisition and integration costs and income tax (benefit) expense. Restructuring costs relate to the relocation of our corporate headquarters that were completed in 2018. Acquisition and integration costs relate to the acquisition of 1st Global.

We believe that Adjusted EBITDA provides meaningful supplemental information regarding our performance.  We use 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.  We believe that Adjusted EBITDA is a common measure used by investors and analysts to evaluate our performance, that it provides a more complete understanding of the results of operations and trends affecting our 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 are significant and necessary components to the operations of our business and, therefore, 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, our Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

We define non-GAAP net income as net income attributable to Blucora, Inc., determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets, restructuring costs (described further under Adjusted EBITDA above), the impact of noncontrolling interests, acquisition and integration costs, the related cash tax impact of those adjustments, and non-cash income taxes.  We exclude the non-cash portion of income taxes because of our ability to offset a substantial portion of our cash tax liabilities by using deferred tax assets, which primarily consist of U.S. federal net operating losses.  The majority of these net operating losses will expire, if unutilized, between 2020 and 2024. The aforementioned items are only included in non-GAAP net income in the periods they occurred.

We believe that non-GAAP net income and non-GAAP net income per share provide meaningful supplemental information to management, investors, and analysts regarding our performance and the valuation of our business by excluding items in the statement of operations that we do not consider part of our ongoing operations or have not been, or are not expected to be, settled in cash.  Additionally, we believe that non-GAAP net income and non-GAAP net income per share are common measures used by investors and analysts to evaluate our performance and the valuation of our business.  Non-GAAP net income and non-GAAP net income per share 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 and net income per share.  Other companies may calculate non-GAAP net income and non-GAAP net income per share differently, and, therefore, our non-GAAP net income and non-GAAP net income per share 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, net primarily includes items such as interest income, interest expense, amortization of debt issuance costs, accretion of debt discounts, and gain/loss on debt extinguishment.

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