Avantax (AVTA) 8-K Blucora Announces First Quarter 2017 Results and Preliminary Tax Season Results

Exhibit 99.2

Blucora, Inc.

Supplemental Information

March 31, 2017

Table of Contents

Financial Information
Consolidated Financial Results	2
Reconciliation of Non-GAAP Financial Measures	4
Net Leverage Ratio	5
Reconciliation of Operating Free Cash Flow from Continuing Operations	6
Operating Metrics
Wealth Management	7
Tax Preparation	8

Blucora Consolidated Financial Results ⁽¹⁾ 

(in thousands except %s and per share amounts, rounding differences may exist)	2015				2016																	2017
	FY 12/31				1Q			2Q			3Q			4Q			FY 12/31					1Q
	pro forma				as reported			as reported			as reported			as reported			as reported					as reported
Segment revenue:
Wealth Management (1)	$	319,739			$	77,291		$	76,117		$	80,088		$	83,050		$	316,546				$	82,667
Tax Preparation (2)	117,708				88,474			43,991			3,149			3,751			139,365					99,708
Total	$	437,447			$	165,765		$	120,108		$	83,237		$	86,801		$	455,911				$	182,375
Segment income (loss): (3)
Wealth Management (1)	$	42,997			$	10,906		$	9,924		$	11,628		$	13,838		$	46,296				$	11,853
Tax Preparation (2)	56,984				47,573			29,796			(4,382		)	(6,090		)	66,897					53,133
Total	$	99,981			$	58,479		$	39,720		$	7,246		$	7,748		$	113,193				$	64,986
Segment income (loss) % of revenue:
Wealth Management (1)	13		%		14		%	13		%	15		%	17		%	15		%			14		%
Tax Preparation (2)	48		%		54		%	68		%	(139		)%	(162		)%	48		%			53		%
Total	23		%		35		%	33		%	9		%	9		%	25		%			36		%
Unallocated corporate operating expenses (3)	$	17,750			$	4,699		$	4,460		$	4,907		$	4,933		$	18,999				$	6,773
Adjusted EBITDA	$	82,231			$	53,780		$	35,260		$	2,339		$	2,815		$	94,194				$	58,213
Other unallocated operating expenses: (3)
Stock-based compensation (4)	$	13,591			$	4,229		$	3,023		$	3,364		$	3,512		$	14,128				$	2,565
Acquisition-related costs	—				—			391			—			—			391					—
Depreciation	4,613				1,122			1,127			1,137			1,159			4,545					1,134
Amortization of acquired intangible assets (4)	40,851				8,983			8,365			8,346			8,449			34,143					8,336
Restructuring	—				—			—			—			3,870			3,870					2,289
Operating income (loss)	$	23,176			$	39,446		$	22,354		$	(10,508	)	$	(14,175	)	$	37,117				$	43,889
Unallocated other income/loss: (3)
Interest income	$	(609	)		$	(25	)	$	(11	)	$	(18	)	$	(27	)	$	(81	)			$	(20	)
Interest expense (5)	37,059				9,191			8,381			7,824			7,028			32,424					6,436
Amortization of debt issuance costs (5)	1,894				610			417			413			400			1,840					387
Accretion of debt discounts (5)	4,880				1,406			1,094			1,099			1,091			4,690					1,085
(Gain) loss on debt extinguishment and modification expense (6)	—				(3,843		)	997			2,205			1,677			1,036					1,780
Other (income) loss, net	(1,290		)		175			38			(70		)	(271		)	(128		)			40
Total	$	41,934			$	7,514		$	10,916		$	11,453		$	9,898		$	39,781				$	9,708
Income (loss) from continuing operations before income taxes	$	(18,758	)		$	31,932		$	11,438		$	(21,961	)	$	(24,073	)	$	(2,664	)			$	34,181
Income tax (benefit) expense: (3) (7)
Cash	$	2,200			$	1,064		$	600		$	775		$	78		$	2,517				$	311
Non-cash (8)	(9,422		)		10,579			5,193			(9,312		)	(10,262		)	(3,802		)			3,160
Total	$	(7,222	)		$	11,643		$	5,793		$	(8,537	)	$	(10,184	)	$	(1,285	)			$	3,471
GAAP income (loss) from continuing operations (9)	$	(11,536	)		$	20,289		$	5,645		$	(13,424	)	$	(13,889	)	$	(1,379	)			$	30,710
GAAP income (loss) from continuing operations per share - diluted	$	(0.28	)		$	0.48		$	0.13		$	(0.33	)	$	(0.34	)	$	(0.05	)			$	0.67
GAAP discontinued operations, net of income taxes (10)	$	(27,348	)		$	2,522		$	(19,975	)	$	(40,528	)	$	(5,140	)	$	(63,121	)			$	—
GAAP impact of noncontrolling interests (9)	—				(144		)	(115		)	(167		)	(232		)	(658		)			(126		)
GAAP net income (loss) attributable to Blucora, Inc.	$	(38,884	)		$	22,667		$	(14,445	)	$	(54,119	)	$	(19,261	)	$	(65,158	)			$	30,584
Non-GAAP net income (loss)	$	36,950			$	39,286		$	23,424		$	(10,142	)	$	(7,472	)	$	45,096				$	47,407
Non-GAAP net income (loss) per share - diluted	$	0.88		(11)	$	0.94		$	0.55		$	(0.24	)	$	(0.18	)	$	1.06		(12	)	$	1.04
Outstanding Shares	40,954				41,245			41,495			41,711			41,845			41,845					42,635
Basic shares - GAAP	40,959				41,171			41,405			41,635			41,766			41,494					42,145
Diluted shares - GAAP	40,959				41,610			42,298			41,635			41,766			41,494					45,428

Notes to Consolidated Financial Results on next page

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Notes to Consolidated Financial Results

⁽¹⁾  On October 14, 2015, Blucora announced the acquisition of HD Vest, which closed on December 31, 2015. As part of that announcement, we also stated our plans to divest the Search and Content and E-Commerce businesses in order to focus more strategically on the technology-enabled financial solutions market. The pro forma information represents the combination of HD Vest, TaxAct, and corporate expenses as if the acquisition closed on January 1, 2014. The Company believes that this presentation most accurately reflects the financial performance of the Company on a go-forward basis.

⁽²⁾  As a highly seasonal business, almost all of the Tax Preparation revenue is generated in the first four months of the calendar year.

⁽³⁾  We do not allocate certain general and administrative costs (including personnel and overhead costs), stock-based compensation, acquisition-related costs, depreciation, amortization of acquired intangible assets, restructuring, other income/loss, or income taxes to the reportable segments.  The general and administrative costs are included in "Unallocated corporate operating expenses." In addition, "Unallocated corporate operating expenses" for the pro forma 2015 results exclude transaction costs related to the HD Vest acquisition and CEO separation-related costs.

⁽⁴⁾  Includes stock-based compensation for Blucora share-based award grants to HD Vest employees and amortization of the definite-lived intangible assets identified in the HD Vest acquisition.

⁽⁵⁾  Excludes interest expense and amortization of debt-related costs associated with the TaxAct 2013 credit facility and HD Vest's previous debt facility, both of which were paid off at the acquisition date, and includes similar expenses associated with the TaxAct - HD Vest 2015 credit facility that was used to finance the HD Vest acquisition.

⁽⁶⁾  1Q16 gain on debt extinguishment and modification expense related to the repurchase of a portion of the Convertible Senior Notes below par value, offset by a loss on debt extinguishment and modification expense related to the prepayment of a portion of the TaxAct - HD Vest 2015 credit facility, which resulted in the write-down of a portion of the unamortized discount and debt issuance costs. 2Q16, 3Q16, 4Q16 and 1Q17 loss on debt extinguishment and modification expense related to the prepayment of a portion of the TaxAct - HD Vest 2015 credit facility during each of those quarters.

⁽⁷⁾  Pro forma excludes historical tax expense and includes tax expense using an effective tax rate of 38.5% with anticipated cash taxes of $2.2 million, given expected net operating loss utilization.

⁽⁸⁾  Amounts represent the non-cash portion of income taxes from continuing operations. 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.

⁽⁹⁾  GAAP income (loss) from continuing operations excludes the impact of noncontrolling interests associated with HD Vest management rollover equity ownership of 4.48%. The impact of noncontrolling interests is recorded separately and after GAAP income (loss) from continuing operations.

⁽¹⁰⁾  On October 14, 2015, Blucora announced plans to divest of the Search and Content and E-Commerce businesses. Accordingly, our financial condition, results of operations, and cash flows reflect the Search and Content and E-Commerce businesses as discontinued operations for all periods presented. On August 9, 2016, we closed on an agreement with OpenMail, under which OpenMail acquired substantially all of the assets and assumed certain specified liabilities of the Search and Content business for $45.2 million. On November 17, 2016, we closed on an agreement with YFC, under which YFC acquired the E-Commerce business for $40.5 million. As a result, we recognized a combined loss on sale of discontinued operations before income taxes of $73.8 million in FY 2016.

⁽¹¹⁾  Calculation in FY 2015 used 41,861,000 diluted shares due to non-GAAP net income.

⁽¹²⁾  Calculation in FY 2016 used 42,686,000 diluted shares due to non-GAAP net income.

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Blucora Reconciliation of Non-GAAP Financial Measures^{(1) (2)} 

	2015			2016															2017
(in thousands except per share amounts, rounding differences may exist)	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q
	pro forma			as reported			as reported			as reported			as reported			as reported			as reported
Adjusted EBITDA
Operating income (loss) (3)	$	23,176		$	39,446		$	22,354		$	(10,508	)	$	(14,175	)	$	37,117		$	43,889
Stock-based compensation	13,591			4,229			3,023			3,364			3,512			14,128			2,565
Depreciation and amortization of acquired intangible assets	45,464			10,105			9,492			9,483			9,608			38,688			9,470
Acquisition-related costs	—			—			391			—			—			391			—
Restructuring	—			—			—			—			3,870			3,870			2,289
Adjusted EBITDA	$	82,231		$	53,780		$	35,260		$	2,339		$	2,815		$	94,194		$	58,213
Non-GAAP Net Income (Loss)
Net income (loss) attributable to Blucora, Inc. (3)	$	(38,884	)	$	22,667		$	(14,445	)	$	(54,119	)	$	(19,261	)	$	(65,158	)	$	30,584
Discontinued operations, net of income taxes	27,348			(2,522		)	19,975			40,528			5,140			63,121			—
Stock-based compensation	13,591			4,229			3,023			3,364			3,512			14,128			2,565
Amortization of acquired intangible assets	40,851			8,983			8,365			8,346			8,449			34,143			8,336
Accretion of debt discount on Convertible Senior Notes	3,866			963			885			901			917			3,666			934
Accelerated accretion of debt discount on Convertible Senior Notes	—			1,628			—			—			—			1,628			—
Gain on Convertible Senior Notes repurchased	—			(7,724		)	—			—			—			(7,724		)	—
Acquisition-related costs	—			—			391			—			—			391			—
Restructuring	—			—			—			—			3,870			3,870			2,289
Impact of noncontrolling interests	—			144			115			167			232			658			126
Cash tax impact of adjustments to GAAP net income	(400		)	339			(78		)	(17		)	(69		)	175			(587		)
Non-cash income tax (benefit) expense	(9,422		)	10,579			5,193			(9,312		)	(10,262		)	(3,802		)	3,160
Non-GAAP net income (loss)	$	36,950		$	39,286		$	23,424		$	(10,142	)	$	(7,472	)	$	45,096		$	47,407
Non-GAAP net income (loss) per share	$	0.88		$	0.94		$	0.55		$	(0.24	)	$	(0.18	)	$	1.06		$	1.04
Diluted shares	41,861			41,610			42,298			41,635			41,766			42,686			45,428

⁽¹⁾  On October 14, 2015, Blucora announced the acquisition of HD Vest, which closed on December 31, 2015. As part of that announcement, we also stated our plans to divest the Search and Content and E-Commerce businesses in order to focus more strategically on the technology-enabled financial solutions market. The pro forma information represents the combination of HD Vest, TaxAct, and corporate expenses as if the acquisition closed on January 1, 2014. The Company believes that this presentation most accurately reflects the financial performance of the Company on a go-forward basis.

⁽²⁾  For definitions of these non-GAAP financial measures and their relationship to our GAAP financial statements, please see Note 1 to our Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures in exhibit 99.1 to the May 4, 2017 Current Report on Form 8-K. Acquisition-related costs include professional services fees and other direct transaction costs and changes in the fair value of contingent consideration liabilities related to acquired companies. The SimpleTax acquisition included contingent consideration, for which the fair value of that liability was revalued in 2Q16. Restructuring costs relate to the upcoming move of our corporate headquarters, which was announced in 4Q16. Effective with 1Q16, we also define Non-GAAP Net Income (Loss) to exclude the impact of noncontrolling interests from the HD Vest acquisition that we began recognizing in 1Q16, as well as the gain on Convertible Senior Notes repurchased in 1Q16 (which we repurchased below par value) and the related accelerated accretion of debt discount.

⁽³⁾  As presented in the Blucora Consolidated Financial Results (unaudited) on page 2.

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Blucora Net Leverage Ratio

	2015				2016																				2017
(in thousands except ratio, rounding differences may exist)	FY 12/31				1Q				2Q				3Q				4Q				FY 12/31				1Q
CASH:
Cash and cash equivalents	$	55,473			$	67,955			$	74,273			$	71,165			$	51,713			$	51,713			$	74,609
Available-for-sale investments	11,301				11,642				7,821				4,492				7,101				7,101				160
	$	66,774			$	79,597			$	82,094			$	75,657			$	58,814			$	58,814			$	74,769
DEBT:
TaxAct - HD Vest 2015 credit facility	$	400,000			$	360,000			$	340,000			$	295,000			$	260,000			$	260,000			$	222,000
Convertible Senior Notes	201,250				172,859				172,859				172,859				172,859				172,859				172,859
Note payable, related party	6,400				6,400				6,400				6,400				3,200				3,200				3,200
	$	607,650			$	539,259			$	519,259			$	474,259			$	436,059			$	436,059			$	398,059
NET DEBT FROM CONTINUING OPERATIONS	$	(540,876	)		$	(459,662	)		$	(437,165	)		$	(398,602	)		$	(377,245	)		$	(377,245	)		$	(323,290	)
OTHER:
Add: Escrow receivable (1)	$	20,000			$	—			$	—			$	—			$	—			$	—			$	—
TOTAL NET DEBT FROM CONTINUING OPERATIONS	$	(520,876	)		$	(459,662	)		$	(437,165	)		$	(398,602	)		$	(377,245	)		$	(377,245	)		$	(323,290	)
Last twelve months (pro forma): (2)
SEGMENT INCOME:
Wealth Management	$	42,997			$	45,256			$	44,563			$	44,703			$	46,296			$	46,296			$	47,243
Tax Preparation	56,984				60,412				70,318				68,478				66,897				66,897				72,457
	99,981				105,668				114,881				113,181				113,193				113,193				119,700
Unallocated corporate operating expenses	(17,750		)		(18,073		)		(17,871		)		(18,345		)		(18,999		)		(18,999		)		(21,073		)
ADJUSTED EBITDA	$	82,231			$	87,595			$	97,010			$	94,836			$	94,194			$	94,194			$	98,627
LEVERAGE RATIO	6.3			x	5.2			x	4.5			x	4.2			x	4.0			x	4.0			x	3.3			x

⁽¹⁾  Amount represents consideration funded to escrow that was contingent upon HD Vest's 2015 earnings performance. The contingent consideration was not achieved; therefore, the amount was returned to the Company from escrow in 1Q16.

⁽²⁾  The pro forma information represents the combination of HD Vest, TaxAct, and corporate expenses as if the acquisition closed on January 1, 2014. The Company believes that this presentation most accurately reflects the financial performance of the Company on a go-forward basis.

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Blucora Reconciliation of Operating Free Cash Flow from Continuing Operations⁽¹⁾ 

	2015				2016																2017
(in thousands, rounding differences may exist)	FY 12/31				1Q				2Q			3Q			4Q			FY 12/31			1Q
Net cash provided (used) by operating activities from continuing operations	$	24,308		(2)	$	68,721		(2)	$	22,165		$	(2,349	)	$	(2,567	)	$	85,970		$	52,900
Purchases of property and equipment	(1,512		)		(677		)		(851		)	(1,120		)	(1,164		)	(3,812		)	(1,165		)
Operating free cash flow from continuing operations	$	22,796			$	68,044			$	21,314		$	(3,469	)	$	(3,731	)	$	82,158		$	51,735

⁽¹⁾  We define operating free cash flow from continuing operations as net cash provided (used) by operating activities from continuing operations less purchases of property and equipment. We believe operating free cash flow is an important liquidity measure that reflects the cash generated by the continuing businesses, after the purchases of property and equipment, that can then be used for, among other things, strategic acquisitions and investments in the businesses, stock repurchases, and funding ongoing operations.

⁽²⁾  FY 2015 includes $20.0 million of consideration funded to escrow that was contingent upon HD Vest's 2015 earnings performance. The contingent consideration was not achieved; therefore, the amount was returned to the Company from escrow in 1Q16.

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Blucora Operating Metrics - Wealth Management

	2015			2016															2017
(in thousands except %s, rounding differences may exist)	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q
	pro forma			as reported			as reported			as reported			as reported			as reported			as reported
Segment revenue	$	319,739		$	77,291		$	76,117		$	80,088		$	83,050		$	316,546		$	82,667
Segment net revenue (1)	$	99,749		$	25,022		$	25,094		$	25,167		$	27,267		$	102,550		$	26,793
Segment income (2)	$	42,997		$	10,906		$	9,924		$	11,628		$	13,838		$	46,296		$	11,853
Segment income % of revenue	13		%	14		%	13		%	15		%	17		%	15		%	14		%
Segment income % of net revenue	43		%	44		%	40		%	46		%	51		%	45		%	44		%

(in thousands except %s, rounding differences may exist)			2015			2016															2017
	Sources of Revenue	Primary Drivers	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q
			pro forma			as reported			as reported			as reported			as reported			as reported			as reported
Advisor-driven	Commission	- Transactions - Asset levels	$	156,943		$	36,856		$	35,252		$	38,962		$	39,055		$	150,125		$	39,595
	Advisory	- Advisory asset levels	129,433			31,532			31,522			32,705			33,658			129,417			33,576
Other revenue	Asset-based	- Cash balances - Interest rates - Number of accounts - Client asset levels	18,871			5,818			5,395			5,476			5,964			22,653			5,966
	Transaction and fee	- Account activity - Number of clients - Number of advisors - Number of accounts	14,492			3,085			3,948			2,945			4,373			14,351			3,530
	Total revenue		$	319,739		$	77,291		$	76,117		$	80,088		$	83,050		$	316,546		$	82,667
	Total recurring revenue (3)		$	247,993		$	60,069		$	61,160		$	62,543		$	65,538		$	249,310		$	63,907
	Recurring revenue rate (3)		77.6		%	77.7		%	80.3		%	78.1		%	78.9		%	78.8		%	77.3		%

(in thousands except %s and as otherwise indicated, rounding differences may exist)	2015			2016															2017
	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q
	pro forma			as reported			as reported			as reported			as reported			as reported			as reported
Total Assets Under Administration (“AUA”)	$	36,573,766		$	36,505,384		$	37,233,522		$	38,482,620		$	38,663,595		$	38,663,595		$	40,424,515
Advisory Assets Under Management (“AUM”)	$	9,692,244		$	9,592,025		$	9,814,232		$	10,204,448		$	10,397,071		$	10,397,071		$	11,090,767
% of total AUA	26.5		%	26.3		%	26.4		%	26.5		%	26.9		%	26.9		%	27.4		%
Number of advisors (in ones)	4,600			4,584			4,561			4,568			4,472			4,472			4,427

⁽¹⁾  Amount represents segment revenue less advisor commission payout.

⁽²⁾  Excludes expenses associated with non-recurring projects.

⁽³⁾  Recurring revenue consists of trailing commissions, advisory fees, fees from cash sweep programs, and certain transaction and fee revenue.

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Blucora Operating Metrics - Tax Preparation

(in thousands except %s, rounding differences may exist)	U.S. tax seasons ended				Three months ended March 31,
Consumers	April 18, 2017	April 19, 2016	% change		2017	2016	% change
Online e-files	3,958	4,613	(14	)%	2,876	3,466	(17	)%
Desktop e-files	184	234	(21	)%	122	156	(22	)%
Sub-total e-files	4,142	4,847	(15	)%	2,998	3,622	(17	)%
Free File Alliance e-files (1)	164	158	4	%	115	114	1	%
Total e-files	4,306	5,005	(14	)%	3,113	3,736	(17	)%

(in thousands except %s and as otherwise indicated, rounding differences may exist)	U.S. tax seasons ended				Three months ended March 31,
Preparers	April 18, 2017	April 19, 2016	% change		2017	2016	% change
E-files	1,717	1,630	5	%	1,302	1,269	3	%
Units sold (in ones)	20,964	20,114	4	%	20,327	19,794	3	%
E-files per unit sold (in ones)	81.9	81.0	1	%	64.0	64.1	—	%

⁽¹⁾  Free File Alliance e-files are provided as part of an IRS partnership that provides free electronic tax filing services to taxpayers meeting certain income-based guidelines.

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