BCOR - Earnings call transcript Q2 2019

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Operator

Good day, ladies and gentlemen. Thank you for standing-by. Welcome to the Second Quarter 2019 Blucora Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions]

to host like Mr. today’s now would introduce for your conference, I Michalek, Relations. Investor President Bill of Vice

You may begin.

Bill Michalek

should to and second earnings conference you quarter you, release XXXX the Thank welcome, earnings call. everyone, and supplemental By of a copy review to information. Blucora’s have our opportunity now

on at you’ve blucora.com. If available yet section Relations these reviewed Investor not of they’re documents, the our website

Athwal, Clendening, Chief by I’m John Chief Executive and joined Officer. Financial Davinder today Officer;

statements the forward-looking on everyone and that Before as today’s currently the we begin, me we contains environment let speak remind discussion only current based see it as of date.

they our from and no actual our Forms forward-looking other reports, XX-K, such, other information our results materially Please risks our statements. expectations. and differ to XX-Q the assume refer and could As We and more specific risk-factors. current press obligation for include including and on update filings, uncertainties to release events SEC

GAAP information will blucora.com and supplemental and non-GAAP both today, full earnings release measures financial GAAP reconciliations. and available We discuss non-GAAP and on the include the

With over to it that, me John. let hand

John Clendening

I’m high and target on to to milestone post acquisition our Bill, most which an second us. and Global, We the is everyone. exceeding strong able pleased on important our for morning, good was year report that start results, quarter closed on solid end to build of Thanks, the Blucora our metrics. ranges of Xst

times net are we results. due And even ratio continue X.X and the after funding ended leverage execute with very plan at the acquisition, our the quarter generation. to strong we to pleased cash Overall, the

of the acquisition May including Xst We Wealth detail, the this closing on segment Let’s on had during some starting quarter, get of in to a Global pieces couple news with Management. big X. of our first in

of contracted, A the significant under revenue bulk our are synergies and and synergies is synergies. scale To fully acquisition, external the management it drives which revenue for our the wealth cost and amount to substantial of meaningful business, rationale control. adds remaining first, the cost briefly review the

enhances our it assets capabilities a position advisor Second, large management. such large in and is accounting portfolio advisory of complementary strong in-house areas key and a with onboarding, HD as in business and development Vest firms, strong to proportion

Third, transaction EPS to as metrics, and financially productivity we key on will be and expect the accretive such other return client assets. advisor performance

of far finally, shared financial And is and our by most established going ultimately to for our positioned footprint affirm companies tax-focused well for and advisors so integration outcomes provide creating the capabilities wealth pleased capable it two investing and better service by our better expands the tax-optimized and expectations. to and to tracking previously manager, our The clients. largest I’m benefit plan,

Global aspects continue management. belief also all making beyond been wealth impressed even our wealth to that be individuals with includes true base the and They talented their the client’s advisor life. that impressed We clients. fundamental their an of a employee which of are share base, highly with the for impact, broad consider must management financial passion Xst quality I’ve

second quarter the have found board. on combined Enrique can’t Enrique to the excited news The Vasquez, we how lead in to other I am right Wealth in say big I the is Management person, business.

and and of No. former the we combined experience Generale X quarter No. XX one GE, and top-notch person interesting in incredible brought and CEO years Specialists. and No. the leadership firm. invaluable of Enrique firms CEO with has is management talent He tax-focused our including overall It’s in wealth Societe as an to team. Financial addition a that the X Cetera X

consists income Consolidated segment basis, Wealth that million ranges. above May from and through both which into the On more Xst then high quarter, HD of date quarter X target of results Global the of the million, closing end Davinder with Management Wealth revenue start can plus $XXX.X consolidated our Wealth of was Management I’ll end. detail. for Vest $XX Management get were the was

$XXX into and we and billion a assets assets. in $XXX the $XX.X with the On a quarter combined assets ended ended flows basis, client total consolidated net $XX advisory in client advisory quarter about total quarter were Net million, into second were the about inflows assets. in billion we million, with

total the as ended couple client XX.X%. here assets Advisory I’ll a proportion Wealth updates add A at assets quarter Management. for of

XX both across businesses. pros. individual are recruiting strong of was First, about all advisors, new This in tax QX includes which

larger a over. $XXX begin had also with assets combined in client established that in We of a handful will two were million size, which soon move of transfers, advisor to

these of RIA. from advisors joins an us One

product While and are and RIA transfers support scale is advisors occurrence, enable offerings compliance our to everyday strong grow compelling. to not an

moved more prospecting In Four advisors addition and the to that QX new accounting asset practices million about we advisors, join six as joined client an practices with $XXX the and with had new QX. over million Two joined established in be total individual opportunity. during firms estimated platform in assets total quarter. will as client in $XX

have version sophisticated second, broader to capture for it clients XXX alpha systematically Tax-Smart and in It’s you Innovation, great rollout now making testing. in HD a strong, response. tax We’ve follow. and Demand we’ve beta some that Vest June we with the advisors now our first advisors with we are available training. in tool told a to requires about help And approximately Tax-Smart launched was had to commercial platform very investing software

meaningful their expect allow growth us now how and metrics using and process and impacts it running. to and how the it, is this up business. see trained This overall group our track advisors be are should to the So which will fall, training throughout usage, getting we focus

have on also a the module end beta the the to working testing to add year. that We’re additional in of of couple to harvesting modules we hope tax-loss by

progress So overall future. strong and in our for in the Wealth Management, results positioning

upwardly up of half first year revised above our season of revenue well tax Turning first to expectation original guidance season. and very with approximately XX% our a completed the in half Tax Preparation, into going versus year-over-year TaxAct tax strong XX.X%

previous half to tax about in spend spending. XXXX of First above largely came lower year initiative of was expectation marketing XX%, our than which timing and expected margin due segment at XX%,

experience; pleased professional overall in up taxes, broadly, the our guide which with which gift another increasing market filers money with and simple our to progress in consumer, national on share Ten million TaxAct process underutilized to while allowed pricing filers to an a opportunities Pro; place gift improving cards bonus experience returns base from complete our to introducing included market mobile almost even two with the including: streamlined number real $XXX; season Refund a tax this XX%; monetized retailers dollars engaging highlights, a BluPrint which in Minute Marketplace, customer while on customers. to for enhanced were of taking We filer more launching than maintaining analyzes up receive uncover our time; savings in experience, cards record refund filers with stable

new believe value software tax real years that and creation of we’re insight improvements all take aspects in of now financial opportunity We for that capabilities of business. partners our more is online customers. to for connect to phenomenal opportunities. guidance and talent the across advantage come. customers to particular lastly comprehensive can should health they money made our the and company only the year And had perhaps of importantly, This save want this our into we level significant them TaxAct to solutions provides our offers and And we which customers,

this in share success plans season. with and of for positioning on refine build We’ll to tax the areas of at experience, year XXXX our removing later are friction detail and points us, to on more of year we filers that Now every significantly improve making further behind around: year level enjoyable, but next the our user much are it competitive a more working hard easier and the complexity. for few focus enhancing

financial value ways providing Ensuring BluPrint value more including lineup their insight and lives; including the and at supporting and investing to free; more points, more them start and order to improve our order the underlying more support to segment, complexity across interview concurrently in powerfully message targeted filers core to of our to attitudinal to tax modernizing bringing in technology is sharpening all enhancements SKU customer insights in of price more to spectrum attractive; our and value our experience. consumers in from give of marketing to within competitive e-file while our the completion; customers, appeal to appealing the the more

later. history, on looking I likely believe sharing overall strong Tax last in be the the the we delivered year-over-year make continued more mentioned the results experience the product So progress repositioning change incremental for business future. and company’s forward to I’m in this but Preparation, our will significant quarter, and very I to most financial in

on quarter exceeded had targets we good met businesses. We closing, In a across all metrics. strong execution with or both our

assets, the acquisition of Global Our leader. wealth record saw of completed business new client advisory a Xst and great management and onboarded levels assets total

Our Overall, positioning beyond. very opportunities to capabilities, is very remain business we tax the our continue season have in season we and and great first and I ahead. delivered and tax making half strong for preparation positioning a optimistic next improve business progress and about

turn the call I’ll to Davinder. over With that,

Davinder Athwal

May quarter, morning, the consolidated update the year. closing date X quarter second begin Xst everyone. a with through I’d remainder provide an for Global performance, the Thanks and good includes updated of which to for sheet from John on outlook additional like detail second balance and quarter-end. I’ll some results

historical guidance GAAP the $XXX.X or revenue $XX.X Total Xst came guidance we Since of target income Adjusted Xst and share above above net on the million end we $X.XX $XX the net of at gave per EBITDA $X.XX range. during high came separately. of range. and was our Non-GAAP million, quarter, Global was for the which closed at $XX.X per income or also in Global million, was share. in end high acquisition our businesses the million,

year-over-year. Xst revenue midpoint our $XXX.X So for and range million at Global, excluding purposes and would of X% been the have up target comparison Blucora

On would basis, the have And versus tax of have down our diluted EBITDA QX or end range. GAAP this Adjusted $X.XX more would target due to this revenue or year-over-year diluted the ranges than to a timing last share, share down our better and X% $XX.X $X.XX to high results versus net have of been last. $XX.X net season be being weighted season and again, per due income non-GAAP would target would per $XX.X of million, timing year year. year-over-year been been million income tax million above

provide reflects and at primarily million, asset breakdown. higher Looking Management consolidated clearing the reviewed on doubled a for revenue Wealth X% well sweep $XX.X of our performance, The I’ll of due the X% up above interest was a quarter up the which was the more year-over-year. which and year-over-year economics the in year-over-year range. bit high-end John advisory Vest was revenue, guidance numbers. segment fee-based change as higher rates advisory and as to more growth cash, combination of balances, than HD

down was revenue. continues was year-over-year, by year-over-year, revenue revenue transaction modestly, advisor-related And fee but normalize. to and primarily Commission about ancillary up driven X% X%

by quarter, offset previously And a as see partially HD another growth Vest we the higher the expect The clearing as segment income range. well about as the $XXX,XXX. of target million, that our of advisor largely QX be also goes grew some in can $XX.X relative reminder, year-ago was $XXX,XXX absence and disclosed bonus then attributed high-end to year-over-year above This to to conversion-related to XX% expense of costs control. year-over-year away. rate the

an end than the and helped a which million segment our Xst added in mentioned period above flows of expected of income, closing and into Global, through revenue net advisory. the as X better the $XX by bit revenue quarter, also were $X.X for acquisition date in transaction ranges, John incremental May target million

for represent assets to assets billion. to $XX total Xst X% At advisory assets the new assets were client year-over-year At $XX up The company. client up on levels for billion, billion. assets total Total $XX.X mark. year-over-year XX% to assets year-over-year X% records and and advisory Vest, next. flat and billion at crossed assets Moving Global, were HD client were year-over-year $XX.X advisory increased the both

the mentioned, targets. we integration track it our to synergy going remain well acquisition, and to hit the is As John relates as on

asset advisor and advisor been very Additionally, retention has strong.

than on shy above was Tax a came strong original a spend our TaxAct and of Moving XX% with to transfer guidance our well lower revenue margin first on in slightly product half most robust versus up Preparation. recent refund about target marketing spending. which initiative slightly of was target. our XX% up of funding, timing Segment at finished on XX.X%, expected

target. were For segment prior upwardly margins the second million, was flat higher quarter, income revenue and year-over-year, was segment year, million, down X% versus our $XX.X than revised $XX.X and

we a mentioned, competitive working growth season, tax groundwork improved hard product from successes next John this going laying position while to the are season significantly our create and As into and learnings tax long-term build and beyond. for on

to technology, next accelerate complete years. work investment part timing As refactoring we of code the in our our plan this, two in over of to particular the

focus sharing Importantly, couple the this look order and expectations over increases in more stage of where refactoring and is client retention. a work on in the experience improving the forward to is at XXXX conversion We next to the strategy our of calls. drive

Finishing timing the of unallocated lighter million, up performance, quarters. expenses items $X.X the we on between expected quarter operating corporate second than certain due were to

and with the million termination Xst of which interest and This the in net Moving cash the on reflect and to to ended was quarter, payout of loan X.X Vest of strong leverage the flow and Term addition and million net liquidity. HD our comfortable acquisition $XXX of million, $XXX equivalents another times cash funded the brings quarter. minority quarter cash. We with million, as was $XXX ratio of cash to of a end closing our $XX which debt B our the Global the

$X.X EBITDA. Finally, them, integration, in costs so purposes recorded we closing supplemental and another broken acquisition back separate quarter as in second line million on our it adjusted they $X.X transaction out costs you million reporting These the relates a added track costs. the can in are in are and information for of integration to and

integration indicated of expense million roughly the at a balance in in total we $XX As expect million $XX in a and reminder, with XXXX. XXXX we as closing,

as cost would more will XXXX as long-term that, and synergies much the Our the increase. into goal to accelerate the possible of likewise we’re pull If of activities to in is integration in total maximize XXXX benefits. doing the successful

turn let’s to that, outlook. With our

loss expect $XX.X TaxAct $X to quarter, between million the of million. third million we segment $X.X million $XX to For revenue and

third to For management quarter segment to revenue our income $XXX Xst business, of wealth $XX.X million including and of million we million million. Global, expect $XX.X $XXX.X

million, the loss we a Global, $XX.X On basis loss a of Blucora Xst $XXX.X and expect to or expenses million. of outlook $XX.X to including for million; per to a million of EBITDA or unallocated loss $X.XX per of a non-GAAP $X.XX consolidated share. This adjusted to $X.XX again to and attributable $XXX.X $X.X third GAAP $XX million, between to includes between net $X net million breakeven; total third to million $X.XX quarter, million quarter revenue operating share; Blucora $XX.X million $X

and TaxAct For which earlier the $XXX to of revenue referenced investment income $XXX segment million, previously. full between million the year technology to $XX $XX.X we and accelerated expect was million million includes

of partial segment adjusted to of of to expect $XXX.X for May million. GAAP million full $XXX.X Xst or income to $X.XX per wealth revenue $XX.X and X $XXX.X translates again for million consolidated million; $X.XX management with to attributable share, Xst $XXX $XX of diluted of includes into expense. year to income to $XX Global year to unallocated our million; and million, corporate diluted non-GAAP $X.XX million to net net through in including $XXX million year which business, a $X.XX $XX.X per of share, of year $XX.X $XX.X to Global the $XXX revenue, $XX.X For million, we or to Blucora the $XXX million period million EBITDA income outlook, end, million of full This between

rate while cash the an our our targets, guidance cut in Wealth also the we which assumed rate out XX call would that and raising affect to also July sweep like Management. incorporated cut into I’d year, we have full for are October

income net to Blucora; volatility, effective non-employee minus variability; following to broad items for and revenue transactional additional net to tax granted and due for loss the flows net any includes Blucora for attributable its of range guidance balances; impact to income rate advisors. market X% to compensation assumptions: sweep to impact our GAAP GAAP cash variable tax also outlook an and attributable including a to stock-based for Our or excludes expense discrete minus X%

This concludes our remarks. prepared

the for will We the Operator? Q&A. operator turn call now to over

Operator

line comes Will the comment first Cuddy JPMorgan. of from Our from Instructions] question [Operator or

Your is open. line

Will Cuddy

Good here? from morning. for markets our that. what on are you Thank market Davinder, from What are number the taking questions. expecting Thanks using? you all guidance, for you

Davinder Athwal

the take the the market Will. of per end and the so at morning, we June, end the what we’d do apply at increase, is So a X% quarter, market of And good we way. quarter by

Will Cuddy

flows sweep interest cash through will that Wealth Can rates you us lower how your revenue Management? remind the please the impact

Davinder Athwal

for the about So not specific million impact change, about a though, like $X XX think income. million to we’ve it you $X bps But given should balance anything is to think every on guidance about or segment that. Will, way

Will Cuddy

And from decreases? symmetrical is just for and increases

Davinder Athwal

down and up Correct, annualized.

Will Cuddy

last you year segment lower then Great. And you the And one. than in just the of push spend, some the TaxAct spending on of around marketing why why the the it expected? Can was initiative in later elaborate spending? did why some

John Clendening

one. dynamic. Thanks looking here, are We’ve getting us tackle year with the before gets marketing, investments to read And martech returns give to the question. what year know, some levels. you a With that regard made marketing. quite on John as respect in constantly spend the ahead we’re or the for better I’ll that around the go season to Will. last we’re and optimize

all year. that And of so time, towards the end we make even the calls on daily the

on different, assessment spend better to a our start something improvements experience. money namely that getting client that was to some so the a there’d of be opportunity And head to

sort around the amount there. do of marketing scoop second capture that’s want And part Davinder, And so the towards with end, of marketing you the initiative or spending? of regard to timing the the to

Davinder Athwal

Yes.

user of in of kind where for initiatives next into the That’s we to first I last that. tax start ramp of like year year. big product conclusion We spending And know, opportunity think typically quite an things We like John business, look and year, experience experience that. mentioned as and tend some see quarter. to about improving we of are. our right tax as we things after up this the So next you improve had this customer a kind think quite opportunity,

actually spending expectation this sooner a little we’ll than bit the be year. that year last is So that

coming may come QX well earlier, see as a so more year-over-year to as as QX through comparison. that we some So of in opposed

Will Cuddy

for you answering Thank Great. my questions.

Operator

you. Thank

from the Berning from or question Craig-Hallum. of Brad next comes comment Our line

Your line you your to need is open. Mr. Berning, unmute phone. may

Brad Berning

Good morning, guys.

of to BluPrint, if actual bit bit Wanted talk are results you little a are forward? more that. some expand of interest proving more on as through get about you partners? you and the you as second you seeing seeing could what we that for that the by continue products a the the can interest efforts about BluPrint. for learn about that move just on And little is testing And part of about an an Sorry as are partnership the there’s the customers kind progress help ROI there’s that frame to you that

John Clendening

Thank Brad. for Appreciate you the that. here. question. Sure, John

year, last So back and a as something backdrop, of with year permission we similar looking tool, at then to a did rolled this going what with with contact we offers. situation, this just seeking forward analytic kind regard to

to capitalize their in against best midst giving demand People that a hands. of BluPrint We message are to those was numbers. we’ve working are through that report we on offers. how email for regard have last large us to with connecting continue in kind itself. see which the we’re It’s And to consent still call, still them that the the similar of in campaigns had raised that

case the been certainly see there. we that demand it’s so And

material this come our will to difficult impact a has into by, be frankly. out more financials Proving been

it’s to become year lot whole – time looking configure from view. we’re hopes out offering the from spend of really it. over not the economic client the contributing that that the So an at figure next with will incrementally more point can for us it ways point we investment to on There’s currently best of of It’s view, more experience. like a

client have, as important to think experience I of well, amount to why point call with from the said greater strong we’ll that It’s as is experience. a is the and improve happen core the other we call in note perspective shared on goes optimism clarity view BluPrint needs the we’ve this we’re before. get thing that of And improving the around around and we itself, call that far path experience, we’ve set sense this receptivity client like we the what to last of it’s also along as a on offer than the well. The feel around ever core

at partner next looking sort currently for what’s We’re year. set the of right

I’m in what’s question, I back thinking it for part but your was it on think partners. of around

it’s in interest to We’re challenge a partners that. want everybody want a and in been with to active discussions make see we work that we Again, sure an where if bit value there’s offering us. to situation convert for but action, well. as We we’re that into as see in for of like a make noted, through can

Brad Berning

And initiative the product of HD up on Vest then efficient follow product initiatives. – one tax kind

the advice rolling offering getting the you opportunity of you’re kind like bit for there this the of further kind update an XXXX product on products rollout Secondly, Just developed little an and wondering could the on a about out if year the set? efficient kind of next tax in year product, thinking number is first the to brand product of that accelerate further? give

John Clendening

question X call to thanks Brad, regard to Awesome, it well. the is so I’ll harvesting, take loss investing what as the we implement we’ve one tax Tax-Smart well. there that begun loss the as Module harvester, tax With for initiatives, here.

couple of focus get feeling prospects beta I’m the this year. is are doing of good about finding going that, possible best to and build adoption be another that. modules our this year around on looking into usage. And to we to top the at ways of of so And

you add we as the to continued itself. to harvester more As will, if robustness, well

going these that are through So right advisors got we’ve the XXX training now.

where to to clip. It’s we’re moving a the get here also was to gosh, ability ago from presentation, say We’re it are a at we measured pretty this PowerPoint good of proportionate moving piece only PowerPoint, standpoint up around advisors a, good a speed, and trained. the at get for year was I’d a the on commercializing. a But clip of, to already

we’re get year, modules, advisors out building larger that this for the super to and then year number work next looking out to these beta next So the of expand toward again, the end around couple of roll end a on year. just of hard of and

So relates captured to thinking like consumer intend and acceleration, the we’re advisor We year. for finalized even sorts to going We feel of alpha. on no we that as with and it to one budgets enormous. haven’t about the those is for path next the pursue ways though opportunity’s think things and it, unbelievable Tax-Smart it is automating regard the tax else investing. in the value about We the

this energy through driver into every going making to is advisors. see So and for put of that our for this one it and we’re so firm ounce the a growth

Brad Berning

lot. Thanks a

Operator

you. Thank

line comes of Paris Our from next Barrington Research. comment the from Alex or question

is line Your open.

Chris Howe

This Chris in morning. Good is Alex. Howe sitting for

John Clendening

Chris. morning, good Hey,

Chris Howe

for just first HD have of the revenue here My is the synergies integration those more interim relates runway quarter, and synergies? you saw some additional Vest. to the cost and share that some the on morning. for the color Good revenue and we synergies Global color, what with in extracting question outlook Could you of of potential Xst

Davinder Athwal

that Chris. Yes. I can take one,

million $XX we’ve million that for total we of million. Just a said $XX in reminder, about in the and expect $XX have XXXX is a to integration XXXX what on side

fully we provided that would as announced synergized we acquisitions synergies, – of well. terms In be run we’ve rate thought a

are are $XX million of the that of and and So, there’s we where of total. second end $X.X which today kind $X.X integration transaction costs, quarter, also of million about look through we’re of we million as costs, outside about

that’s I integration. what terms in of So guide on you would

synergies, observe of we’re terms we to In meet and that targets outlined. I’d that had track the just on

mentioned the risk don’t think clear, I we getting And we be that in thought not frame then to synergies. we thought you we to we where point, time would. see this At any just revenue would to

guide any are as actually and we didn’t So revenue contractual synergies. cost of synergies, These to a all clarification. point just

John Clendening

synergies But built the sort there, we to relationship that. National to just with product with regard amplify Financial, with in relationship of contractual synergy like revenue National some Financial, didn’t of Yes, outside contractual to automatically that’s definitely have stuff any the Fidelity it. positive or the

Chris Howe

Okay. I for now. have That’s all right Thank you. the questions

Operator

Our line next the Shutler of William Chris question or comment from comes from Blair.

open. is line Your

Chris Shutler

increasing retention you you been I like the of also could you on Do about in of bit while there recent that’s or can meaningfully that you the a improve years. new kind that make know prices? think strategy TaxAct you’re things retention is a feel relatively term? a challenge But in working that anything yet-to-be-announced increase near

John Clendening

as have click a Hey, see good or that. can type close in the opportunities morning, double regard that experience the sort to e-file experienced of last kind look eyes. mind to in we the see people here. the waterfall for the apart improve yes. is view John around and And The space, Chris. experience of opportunity current as digital with digital. on Thanks of that we literally rate coming call, the have at feel with business that sort that. in at we’ve fresh kind had Yes. a the, do you consumer of of been ultimately with number to sort client top to Short is of the rip of do Folks the answer just classic the ton us, We and for we of the chance questions. that like client do noted super

that more still on some opportunity moderated, more our there’s profile saying view. to there’s for do to but like We’ve with get that’s feel to And pricing growth on time balanced it pricing. some this now been I And business an pricing. looking a that still with room we’re

improvements alongside want business, see in pricing haven’t here driving more We of other inclusive our retention we for that, that of is this changed opportunities to us. of those. inclusive around available. on It’s the those e-file And of percentage, that there yet We traffic. make all of lever view aspects the still inclusive rate,

be with moderated abate. that’ll will of I balanced manifestation business. that the that profile have Now experience. specific kind a much all sticker with of growth feel first. to in a will that with regard to led those I begin that to like again, that retention, And things why pricing, That’s I shock issue more more think improvements in yes, the together

Chris Shutler

like that. back quarter, about in my Okay. Xst talk right, I’m in advisors advisor then wealth out looks about if XXX And I doing came management Thanks lost over. retention. math the just the XXX if the maybe business, that for It Global you advisors

little numbers just those a more. dive maybe bit into So,

John Clendening

absolutely, for there. The down the Yes, go and quarter. you about count question to XXX quarter thank did by

HD The the it. longer either was we requirements. or removed our where onto that were otherwise inactive no You’re Vest advisors side change on met

As likely past, the we’ve whatever. process folks structural more out where drop or you one or where kind tail of do be And have forward, that more approach end the at retired go think in I of to a this it’s steady the normal a of this quarter of is that. state we’re shared number the will next just of

to bed of program more we call Again, a sorts that these the structural de state put say forward. of minimis going think this of that can go I kind as route. and But producers think steady can up are of that end we

you were on HD So will, definitely and side. from de changes de that, Vest increases sort productivity, if reductions minimis in the the minimis, come non-producers some to of but all

Chris Shutler

see. And Okay, great. then let’s

is don’t which mind going mind some in you quickly, guidance segment I I some QX Would back you think through, of guidance the press release. know pretty that? if Davinder, you the reiterating of gave don’t the Lastly, don’t

John Clendening

Yes, happy to Chris. do that,

second one here. me give Just

just net non-GAAP and a expecting, revenue a Xst between on And Global we $XX.X to we’re which per Global segment So $XX.X of $X On for million. to to million. attributable consolidated income Wealth million with the loss including to $XX again loss $X segment expect third reiterate, breakeven; of $XXX.X million Management Adjusted quarter EBITDA million. $XXX.X side, loss, to $XXX of that’s revenue a in, million million a between related is basis, of we of $XXX.X million to to GAAP what share loss third Xst and $XX.X loss to million $X.XX Chris, the TaxAct equates related $XX.X to $X.X revenue total and a $X.XX of a million million. $XX expect to a quarter, net million net now, Blucora. between And about million

Chris Shutler

for lot I doing it. appreciate a Thanks Great. that.

John Clendening

bet. You

Operator

Our comes Instructions] from or comment Benchmark. Kurnos question Dan [Operator of line the next The from

is line Your open.

Dan Kurnos

Great, thanks. Good morning.

either Just about is to ROI than loss in segment margins seen you’re bit a we’ve kind or larger want and guiding here. Obviously QX a tax that John of Davinder, just lot historically. the little talk

You have some synergies.

sort to continue guys outperform quarters. on the You of

tax, in what’s future? of ROI investing as of aggressive we’re your curious, just sort that the to are kind period for for proceeds groundwork your seeing just I’m guys lay the the payback investment using So obviously you

Davinder Athwal

Yes. performance to there year right already seeing is which from the was had this of Dan. a you prior into Maybe things we one went March fact revenue maybe of how strong the just into think Good end different we’re than over time morning, kind QX with, shift, of start QX, When QX. a at that of the is go QX years bit about frame. then ended we

we up versus got QX that historical in more periods. dollars, dollars more ended of So revenue our compared to QX

reduction causing seeing So of that in you’re segment that’s which is what margin. part

prior Now of have on in actually to we year spending say than this say quicker that years. it’s are that, I’d true we top

say experience, John’s things we We otherwise. some really we his on. under launching how past that in of Curtis how sooner would about So talked one season customer And in he’s great got that ideas. improve than is and a the to product the started or think with under, like so design place I just about now tax with belt, things should

– a actually QX little compared that prior. seeing compared well as bit of you results matter to are QX, guidance into fact, to creep about think a when and we So as the of

around of way think about it’s organic terms – really ROI, In investment. it we the is

rates order if to you are those possible what allocation what kind of KPIs. need start So to to our to capital even product the do we need retention drive in do it things think like get think and that and a to policy, about comes rate conversion we rate really kind we of and down

ROI really kind a dollar hard so spend. around fast on we and more of that any So than it’s

Dan Kurnos

you the given end around at bit at just was segment tax a on aggressively – helpful. side of tax That’s the the which guys intentionally then in little meaningfully but unit’s more you we’ve take surprising your commentary pretty little or following did season, end, know it. if very actually a took income paid – maybe Got quarter. leader? the the just maybe with units nitpicky, guys you bit kind seen did And just up having it to softer. not in what go a or John, historically back don’t paid beat into Did of I free, the pricing And little price. line but

John Clendening

tax No, do, hockey we towards on season. of execute like was nor on That there that wasn’t last not did that the season. a anything a or stick dynamic to end looked the of sort pricing we

not So factor. a that was

Dan Kurnos

to I Okay. And the some sure Xst for like XQ, healthy. so But it make the John, just Vest the very let then in But is of side, back on even kind HD Wealth just then, looks on been you with synergies in obviously outlook got margin upside. and everybody’s this. me want half that. Management Global, focused the you on

a want some versus transition been out organic you’ve So maybe, year be inorganic go the perspective and half of parse that in just kind if of would terms benefits from back you flowing maybe the the about margin in be and back just from of through may talk seeing to the clearing benefits helpful. that

John Clendening

that very it’s as it. with. fact us power the But truly it attractive integration, ask clearly as I’ll cut in amplify Davinder our the that extends to relates focus to that a remarkable we given and that with the deal, Maybe the work as that well to it take economic dominating then professionals regard at tax a way

sooner, because National Financial. already does And contractual relationship of the to nearly synergies, with synergies established with the frankly, Fidelity so begin even immediate that to the revenue see regard one

And so the revenue cool we and it. all was synergy, thing about as the deal in our part was identified contractually around gave that some models while then guidance there it certainly built was

benefit cash suite. you’re so And that right the to away regard with seeing

us. And big the for positive so that’s

cost identifying structure With firmly marching the cost overlapping regard and within it’s to elements integration, begun of down reduction. It’s the already certainly accordingly. our the adjusting control. of of around elements We’ve path remaining

see so those And continue throughout we’ll benefits the to year.

As I’m sort to prepared you Davinder And noted would accelerate in where they a noticed prior remarks, out we’re ounce from question that thought the of get that the looking to business. of that every were impact of we can economic sure that here. feel we this we accelerate we going confident

spend Vest of got a who’s On spurring and HD around conversion look of us a seem Organically, organization advisors that organic for-fee on there’s in HD we’re reassembled, Vest efforts And begin one months. just more I’ll so give well. assets around the set got drive interesting. some Yes, is to the for-fee integration that’s growth looking at is Global just elements of interested advisory to we’ll developing as product job interested the we’ve example that get and of – Xst the lot top along. regard been a team and is the didn’t one more they channel on That an into product strategies time Enrique his be advisory. of be here We’ve to course, into lifting product. bake of any numbers. our that if in, more with that will, potentially his We the extending further product into shelf, couple to got of is that bit with Vasquez you example some synergy pursue would

shape a some develop any take as didn’t another certainly our you want invest of an previously that add you months that We look zero. the of But rope in give strategy bring course. to in due business. get that? have from need to caliber, to sort couple develop in give They’ll opportunity him belt we business. growth would to Davinder, under to his him to approach that you of person We right to anything new clearly, starting for and

Davinder Athwal

of reminder, markets One lift year. we Maybe John. the perspective, things organic as half just bit, couple is into quite us are the up a a the gives the so back from just of that an go a

well that, together of return projects we’re there. some to a seeing half with back is that, addition transactional in efficiency revenues think as in what’s the resulting the year. place I you’re what cost In seeing And in of

John Clendening

the alpha we Just strong can see looking very attention and just paying think now is we the itself it. how to have time on emphasize But the in over the opportunities. super techniques We quite organic that meaningful advisors into tax to investment close to investment other so work of that and that’s initiative to that a use is something Tax-Smart commercialized. thing to manifests terms we’ll be ROI growth capture

it’s to catalyzing that So, there, something close relative more to play we’re to out but paying growth. attention

Dan Kurnos

Good right, good quarter. and perfect. All luck

John Clendening

Thank you.

Operator

closing in questions I’d Thank to back you. I’m for conference showing queue additional no at time. over any like this to the remarks. management turn the

John Clendening

we joining closing, success thank for our like business I’d have heart to enjoyable. at also advisors all and of the customers. us In you so that Thank employees, the They’re and today. make our

everybody. and Take strong quarter. speaking with care, another to quarter report to next look forward you pleased We’re

Operator

ladies and conference. the concludes This program. for you thank today’s gentlemen, in participating

disconnect. Everyone have a You may now day. wonderful

Avantax (AVTA) 7 Aug 192019 Q2 Earnings call transcript