Avantax (AVTA) 8-K Blucora Announces Strong Third Quarter Results

Exhibit 99.2

Blucora, Inc.

Q3 2012 Earnings

Supplemental Information

Table of Contents

Financial Information
Summary - Consolidated Financial Results	2
Reconciliation of Non-GAAP Financial Measures	4
Search Operating Metrics	5
Pro-Forma Information
Q3 year-over-year Tax Preparation	6
Last 12 Months - Pro Forma Results	7
Last 12 Months - Levered Free Cash Flow	8
Reconciliation Pro Forma Non-GAAP Financial Measures	9

1

Blucora Consolidated Financial Results

(in thousands except earnings per share, rounding differences may exist)

	2010			2011															2012
	FYE 12/31			1Q11			2Q11			3Q11			4Q11			FYE 12/31			1Q12			2Q12			3Q12			3Q12 YTD
Segment Revenue
Search	$	214,343		$	51,650		$	54,292		$	56,257		$	66,615		$	228,814		$	75,295		$	81,808		$	91,408		$	248,511
Tax Preparation(1)		0			0			0			0			0			0			40,401			19,075			1,462			60,938
Total	$	214,343		$	51,650		$	54,292		$	56,257		$	66,615		$	228,814		$	115,696		$	100,883		$	92,870		$	309,449
Segment Income (Loss)(2)
Search	$	49,266		$	11,095		$	11,534		$	10,809		$	12,768		$	46,206		$	13,373		$	15,078		$	16,356		$	44,807
Tax Preparation(1)		0			0			0			0			0			0			22,135			11,954			(1,561	)		32,528
Total	$	49,266		$	11,095		$	11,534		$	10,809		$	12,768		$	46,206		$	35,508		$	27,032		$	14,795		$	77,335
Segment Income (Loss) % of Revenue
Search		23	%		21	%		21	%		19	%		19	%		20	%		18	%		18	%		18	%		18	%
Tax Preparation		na			na			na			na			na			na			55	%		63	%		-107	%		53	%
Total		23	%		21	%		21	%		19	%		19	%		20	%		31	%		27	%		16	%		25	%
Unallocated Corporate Operating Expense	$	16,801		$	2,130		$	2,543		$	2,307		$	2,603		$	9,583		$	3,806	(3)	$	2,525		$	2,695		$	9,026
Adjusted EBITDA	$	32,465		$	8,965		$	8,991		$	8,502		$	10,165		$	36,623		$	31,702		$	24,507		$	12,100		$	68,309
Other Unallocated Corporate
Depreciation	$	6,596		$	1,451		$	1,376		$	1,115		$	919		$	4,861		$	951		$	956		$	988		$	2,895
Amortization of Intangibles		9,197			958			772			518			347			2,595			3,624	(4)		5,248			5,183			14,055
Stock Compensation		13,919			2,033			1,338			3,049			1,267			7,687			6,708	(5)		2,020			2,195			10,923
Other (Income) Expense		(15,244	)		(75	)		(107	)		455			972			1,245			1,555			930			5,196	(6)		7,681
Total	$	14,468		$	4,367		$	3,379		$	5,137		$	3,505		$	16,388		$	12,838		$	9,154		$	13,562		$	35,554
Income (Loss) Before Taxes		17,997			4,598			5,612			3,365			6,660			20,235			18,864			15,353			(1,462	)		32,755
Income Tax
Cash	$	196		$	113		$	133		$	68		$	1,398		$	1,712		$	861		$	474		-$	185		$	1,150
Non-cash(7)		8,530			1,589			1,803			1,221			(17,613	)		(13,000	)		6,597			5,181			1,121			12,899
Total	$	8,726		$	1,702		$	1,936		$	1,289		-$	16,215	(8)	-$	11,288		$	7,458		$	5,655		$	936		$	14,049
Income (Loss) from Continuing Operations		9,271			2,896			3,676			2,076			22,875			31,523			11,406			9,698			(2,398	)		18,706
Discontinued Operations Loss(9)		(4,593	)		(1,573	)		(8,354	)		—			—			(9,927	)		—			—			—			—
GAAP Net Income (Loss)	$	4,678		$	1,323		-$	4,678		$	2,076		$	22,875		$	21,596		$	11,406		$	9,698		-$	2,398		$	18,706
GAAP Earnings Per Share	$	0.13		$	0.04		-$	0.12		$	0.05		$	0.57		$	0.56		$	0.28		$	0.24		-$	0.06		$	0.45
Non-GAAP Net Income	$	40,557		$	7,433		$	7,590		$	6,846		$	6,896		-$	11,195		$	28,517		$	21,817		$	10,421		$	60,755
Non-GAAP Earnings (Loss) Per Share	$	1.10		$	0.20		$	0.20		$	0.17		$	0.17		-$	0.29		$	0.70		$	0.53		$	0.26		$	1.47
Outstanding Shares		36,089			36,502			37,964			39,323			39,534			39,534			39,804			40,334			40,633			40,633
Basic Shares		35,886			36,339			37,422			38,568			39,448			37,954			39,692			40,116			40,511			40,108
Fully-diluted Shares		36,829			37,084			38,128			39,158			40,074			38,621			40,978			41,245			40,511			41,425
Cash & Short-term Investment	$	253,736		$	249,765		$	263,402		$	279,276		$	293,551		$	293,551		$	129,868		$	141,867		$	150,417		$	150,417
Outstanding Debt		0			0			0			0			0			0			85,000			75,000			74,496			74,496
Net Cash	$	253,736		$	249,765		$	263,402		$	279,276		$	293,551		$	293,551		$	44,868		$	66,867		$	75,921		$	75,921

Notes to Consolidated Financial Results on next page

2

Notes to Consolidated Financial Results

⁽¹⁾ On January 31, 2012, the Company acquired TaxACT Holdings, Inc. and its wholly-owned subsidiary, 2^nd Story Software, Inc., which operates the TaxACT tax preparation software and online service and software business. The TaxACT business consists of an online tax preparation service for individuals, tax preparation software for individuals and professional tax preparers, and ancillary data storage services. The majority of the TaxACT business’s revenue is generated by the online service at www.taxact.com. As a highly seasonal business, almost all of the TaxACT revenue is generated in the first four months of the calendar year. Amounts represent the results of operations for the TaxACT business from February 1, 2012 to September 30, 2012.

⁽²⁾ The Company does not allocate certain general, administrative, and overhead costs, or stock-based compensation, depreciation, amortization of intangible assets, other loss (income), net, income tax expense, or results from discontinued operations to the reportable segments. The general, administrative and overhead costs are included in Unallocated Corporate Operating Expense.

⁽³⁾ Amount for the quarter ended March 31, 2012 includes $1.1 million in transaction costs related to the TaxACT acquisition.

⁽⁴⁾ Amount for the quarter ended March 31, 2012 includes $3.4 million related to amortization of acquired intangible assets related to the TaxACT acquisition.

⁽⁵⁾ In the quarter ended September 30, 2011, $1.9 million in stock-based compensation expense was recorded in association with issuance of a warrant. In the quarter ended March 31, 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.

⁽⁶⁾ Amount includes $4.3 million related to loss on derivative.

⁽⁷⁾ Amounts represent the non-cash portion of income tax expense from continuing operations. 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.

⁽⁸⁾ Amount includes a tax benefit of $19.6 million, due to the release of the valuation allowance on deferred tax assets.

⁽⁹⁾ In the quarter ended June 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.

3

Blucora Non-GAAP Reconciliation⁽¹⁾

(in thousands except earnings per share, rounding differences may exist)

	2010			2011															2012
	FYE 12/31			1Q11			2Q11			3Q11			4Q11			FYE 12/31			1Q12			2Q12			3Q12			3Q12 YTD
Adjusted EBITDA
Net Income (loss)(2)	$	4,678		$	1,323		$	(4,678	)	$	2,076		$	22,875		$	21,596		$	11,406		$	9,698		$	(2,398	)	$	18,706
Discontinued operations		4,593			1,573			8,354			—			—			9,927			—			—			—			—
Depreciation		6,596			1,451			1,376			1,115			919			4,861			951			956			988			2,895
Amortization of intangible assets		9,197			958			772			518			347			2,595			3,624			5,248			5,183			14,055
Stock-based compensation		13,919			2,033			1,338			3,049			1,267			7,687			6,708			2,020			2,195			10,923
Other (income) loss(3)		(15,244	)		(75	)		(107	)		455			972			1,245			1,555			930			5,196			7,681
Income tax expense (benefit)		8,726			1,702			1,936			1,289			(16,215	)		(11,288	)		7,458			5,655			936			14,049
Adjusted EBITDA	$	32,465		$	8,965		$	8,991		$	8,502		$	10,165		$	36,623		$	31,702		$	24,507		$	12,100		$	68,309
Non-GAAP Net Income
Net Income(2)	$	4,678		$	1,323		$	(4,678	)	$	2,076		$	22,875		$	21,596		$	11,406		$	9,698		$	(2,398	)	$	18,706
Discontinued operations		4,593			1,573			8,354			—			—			9,927			—			—			—			—
Amortization of acquired intangible assets		9,197			958			772			518			347			2,595			3,624			5,248			5,183			14,055
Stock-based compensation		13,919			2,033			1,338			3,049			1,267			7,687			6,708			2,020			2,195			10,923
Loss / (Gain) on derivative		—			—			—			—			—			—			272			(333	)		4,335			4,274
Cash tax impacts of GAAP adjustments		(360	)		(43	)		1			(18	)		20			(40	)		(90	)		3			(15	)		(102	)
Non-cash income tax expenses (benefit) from continuing operations(1)		8,530			1,589			1,803			1,221			(17,613	)		(13,000	)		6,597			5,181			1,121			12,899
Non-GAAP net income(4)	$	40,557		$	7,433		$	7,590		$	6,846		$	6,896		$	28,765		$	28,517		$	21,817		$	10,421		$	60,755
Non-GAAP Earnings Per Share
Non-GAAP Net Income	$	40,557		$	7,433		$	7,590		$	6,846		$	6,896		$	28,765		$	28,517		$	21,817		$	10,421		$	60,755
Non-GAAP Earnings Per Share(4)	$	1.10		$	0.20		$	0.20		$	0.17		$	0.17		$	0.74		$	0.70		$	0.53		$	0.26		$	1.47
Fully-diluted Shares		36,829			37,084			38,128			39,158			40,074			38,621			40,978			41,245			40,511			41,425

⁽¹⁾ For definitions of these non-GAAP financial measures and their relationship to the Company’s GAAP financial statements, please see Note 1 to the Company’s Reconciliations of Non-GAAP financial Measures to the Nearest Comparable GAAP Measure for the three months ended September 30, 2012 and 2011 in exhibit 99.1 to this Current Report on Form 8-K filed on November 1, 2012

⁽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, 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 resolutions of contingencies and litigation settlements.

⁽⁴⁾ Amounts previously disclosed have been revised to reflect the effect of classifying the Company’s Mercantila e-commerce business as discontinued operations.

4

Blucora Operating Metrics - Search

	2010			2011															2012
	FYE 12/31			1Q11			2Q11			3Q11			4Q11			FYE 12/31			1Q12			2Q12			3Q12			3Q12 YTD
Revenue by Source
Owned & Operated (B2C)		31	%		27	%		22	%		19	%		16	%		21	%		13	%		12	%		12	%		12	%
Distribution (B2B)		69	%		73	%		78	%		81	%		84	%		79	%		87	%		88	%		88	%		88	%

* Owned & Operated includes revenue from the Make The Web Better acquisition in 2Q 2010; the installed base has experienced attrition since the acquisition. Owned & Operated also includes other development-stage initiatives.

5

Tax Preparation Segment - Pro Forma 3Q Year-over-Year Results

(in thousands, rounding differences may exist)

	Three Months Ended									Nine months ended
	(a) 3Q12			3Q11			Growth			(c) 3Q12			3Q11			Growth
Pro Forma Revenue	$	2,075		$	2,004			4	%	$	83,829		$	76,577			9	%
Pro Forma Segment Income	$	(948	)	$	(435	)(b)		118	%	$	42,411		$	38,685	(d)		10	%
Segment Margin		-46	%		-22	%					51	%		51	%

^(a) Includes $613,000 of revenue not reported on a GAAP basis due to fair value purchase accounting on deferred revenue at date of acquisition.

^(b) Excludes $3.6 million of non-operational expenses related to a non-consummated sales transaction for 3Q 2011.

^(c) Includes $2.0M of revenue not reported on a GAAP basis due to fair value purchase accounting on deferred revenue at date of acquisition.

^(d) Excludes $120,000 and $6.4M of non-operational expenses related to a non-consummated sales transaction for the nine months ended 3Q 2012 and 3Q 2011, respectively.

Tax Preparation Segment - Pro Forma Calendar Quarter Historical Performance

(in thousands, rounding differences may exist)

	1Q11			2Q11			3Q11			4Q11			FY 2011			1Q12
Pro Forma Revenue	$	56,758		$	17,815		$	2,004		$	2,205		$	78,782		$	61,944
Pro Forma Segment Income (c)	$	28,564		$	10,556		$	(435	)	$	(1,134	)	$	37,551		$	30,577
Segment Margin		50	%		59	%		-22	%		-51	%		48	%		49	%

^(c) Excludes $1.1 million, $1.8 million, $3.6 million, $2.9 million and $9.3 million of non-operational expenses related to a non-consummated sales transaction for 1Q 2011, 2Q 2011, 3Q 2011, 4Q 2011 and full-year 2011.

6

Pro Forma - Consolidated Financial Performance

twelve months ending 9/30/2012

(in thousands, rounding differences may exist)

	(a) Tax Preparation			Search		Corporate			Consolidated
Revenue	$	86,032		$	315,126	$	—		$	401,158
Segment income	$	41,184	(b)	$	57,575	$	—		$	98,759
Unallocated Corporate expenses	$	—		$	—	$	(11,617	)	$	(11,617	)
Adjusted EBITDA									$	87,142
Non-GAAP Net Income									$	76,045
Non-GAAP Earnings Per Share									$	1.73
Diluted Shares for the twelve-month period ended September 30, 2012										41,087

^(a) Includes $2.0M of revenue not reported on a GAAP basis due to fair value purchase accounting on deferred revenue at date of acquisition in 2012, and $23.1M revenue prior to the acquisition (October 2011 - January 2012).

^(b) Includes $2.0M of revenue which was not reported on a GAAP basis due to fair value purchase accounting on deferred revenue in 2012 and excludes $3.0M of Transaction expenses related to the failed HRB acquisition

7

Pro-Forma Free Cash Flow (“FCF”)

twelve months ending 9/30/2012

(in thousands, rounding differences may exist)

Pro Forma Adjusted EBITDA	$	87,142
Less - Pro Forma Capital Expenditures	$	(3,050	)
Less - Pro Forma Cash Taxes	$	(1,043	)
Unlevered FCF	$	83,049
Less - Pro Forma Cash Interest Expense	$	(4,329	)(a)
Levered FCF	$	78,720

^(a) Interest expense estimated at 5% and assumes initial debt amount of $100 million for periods prior to acquisition; as of September 30, 2012 there is $74.5M of debt outstanding.

8

Blucora Pro Forma Non-GAAP Reconciliation

twelve months ending 9/30/2012

(in thousands except rates, rounding differences may exist)

Pro Forma Adjusted EBITDA
Pro forma income from continuing operations	$	23,695
Pro forma depreciation	$	4,071
Pro forma amortization of intangible assets	$	21,111
Pro forma stock-based compensation	$	12,526
Pro forma other expense, net	$	10,353
Pro forma income tax expense	$	15,386
Pro Forma Adjusted EBITDA	$	87,142
Pro Forma Non-GAAP Net Income
Pro forma income from continuing operations	$	23,695
Pro forma amortization of acquired intangible assets	$	12,526
Pro forma stock-based compensation	$	21,111
Loss on derivative	$	4,274
Pro forma cash tax impact of GAAP adjustments	$	97
Pro forma non-cash income tax expense from continuing operations	$	14,343
Pro forma non-GAAP net income	$	76,045
Pro forma non-GAAP Earnings per share - diluted	$	1.85
Weighted average diluted shares		41,087

⁽¹⁾ For definitions of these non-GAAP financial measures and their relationship to the Company’s GAAP financial statements, please see Note 1 to the Company’s Reconciliations of Non-GAAP financial Measures to the Nearest Comparable GAAP Measure for the three months ended September 30, 2012 and 2011 in exhibit 99.1 to this Current Report on Form 8-K filed on November 1, 2012.

9