BCOR - Earnings call transcript Q2 2021

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Operator

Good day and thank you for standing by. Welcome to the Blucora Q2 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today Dee Littrell, Investor Relations. ahead. go Please

Dee Littrell

earnings had XXXX our By you now, release [Technical opportunity conference to have the supplemental of review should and Difficulty] information. call. a earnings copy

not our website Financial blucora.com. available have If Chief they Chris today Officer. at these Marc, Executive Relations of Investor Officer; I'm are and you section on reviewed by the Walters, joined documents, Chief Mehlman

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

results such events current risks As our on other include no and these they refer We required including Form and Please uncertainties. differ uncertainties to risks obligation by press our some and of statements for XX-K from law. filings actual and more our SEC and XX-Q and except assume specific materially release to could our our other update forward-looking reports as information expectations. for

GAAP measures and We will non-GAAP discuss today. financial both

Our reconciliations of financial earnings call Chris. full the financial hand discussed measure With let and non-GAAP nearest me information on to blucora.com to that, release the are GAAP each include measure. available over and applicable supplemental

Chris Walters

that everyone. board our and Blucora's Dee to our vision. continue against have strategic that Thank you, second to results I'm we expectations pleased financial good and morning quarter the report exceeded across execute effectively

business respective and long-term our brief. the will across guidance sets our full company long-term Having just execution Day the remarks our relatively short, shared success. today of long-term position for in businesses the clear our for In is for Investor state year team our and strong. our business Our on short-term growth plans the June, vision market updating potential up for both sustainable be XXXX during is and

realizing AUA unit the a off; of customer-focused learning, enhancements; details differentiated and featured targeted through and fully the growth TaxAct unified, value strategy. the culture. our will into advisory through a reiterate quarter, performance-oriented second driven growth program; delve I by marketing, the synergy and growth model our elements and of I sustainable value a Before and service technology, of implementing lastly, providing

Our the our the and of off is second let's towards attention paying formula building. our turn highlights that, quarter. With is excitement

of Day, financial complete we having for our met $XX same operating been season. a shared With segment our million storms. Investor represents deadline XXXX expectations, XXXX guidance During With we to $XX as to as revenue year-over-year than greater TaxAct, which three the for taken have income, X.X% highlights the reminder states that three $XX the year is which for tax on and are in full and day X.X% remaining discussion million impacted over states extended reiterating our having day the between that now severe million by increase. those winter a place growth

XXx year; increase As us, With a meaningfully Continue the also versus discount XX% highlights. proposition while key of tax for to a value we start versus Improve great number share offer preparation in at a reminder, to retention, customer market. I season. and will the market hybrid by relative the refreshed end-to-end strong turn conversion rate, the this We rate, momentum the leader; NPS customer launching next now in to drove a federal the improved prior experience, new share professional to lowering a tax paid offer. a to scores to season. XX% partnerships experience pricing up few prior of our our gain behind

which in Continue has marketing season. brand For several on tactics recognition our to drive effect the this plan direct balance in on year, our of focus a we our areas. attention improvements to key

where as on improve rate retention the an focus pleased focus team improve and and to on efforts next As opportunity personalized special filers experience first-party lifetime that as in well meaningfully a for relatively value. many seasons prepare quarters our year customer with I'm up sharing the have experiences. the that prioritize, coming we expand two with on And user season. one-to-one marketing two as progress to the our with results upgrades Execute it collection lastly, our start data for tax look I the areas learnings to to reach with greatest year absorbed. has relates workflow. we in XXXX new the over through forward our friction next

Moving on trajectory wealth positive to wealth in management. I'm continued our by encouraged management.

growth drive compelling percentage in highlighted greater solutions a in business our for financial clients. their capital while we our to Day, ROA on platform to opportunity Investor favorable strong and fee-based returns, continue assets, as acquisitions in resulting At overall scale the to advisory delivering of a AUM, an RIA We at deploying by more which results professionals business.

it acquired this APP's choice objectives. XX% both RIA missed, affiliated pipeline option you to that and Planning and independent offer recently opportunities. to growth ability Partners Group. was client They interested both continues billion plan $X.X has Avantax our was is Advisory in grow. of to team long would Headquarters' RFPs best to transition our financial professionals to be Headquarters Our have case to a for the total continued this alternative who independent Blucora looking succession And our solution of attractive and to from a in acquire we The concluded agreed model The an assets. RIA with closed, announced for channel the proving seamless achieve Avantax. that Avantax assets joining Once financial both APP our approximately or to bring professionals

technology Investor to for we improvements relates on mentioned discussed will we've experience it have inflate previous in do much as As the to are we still Day work these and of FPs as calls, many continue. and our

and the technical we finished. support pleased service improvements, flows net are our yet we receiving the on are in quarter-over-quarter are progress our not we While improvement both and on with feedback

through flows year. We expect next forward negative for positive to continue a the shift with beginning few flows now a quarter. a trend highlights on And year-end net

AUM the XX.X%. a Our total set through assets business of client of record QX at percentage greatest for

financial Our XX%. non-producing professionals XX,XXX were at in departing in production. professionals the XX% less Of retention enrolling QX, professional gross financial defined XXX than QX financial XXX as was or production

negative we new billion XXXX. rollup best RAA, provide opportunity plan, be accelerate financial million, RIA the pipeline. quarter came with our Our Net assets client since for in independent to whereby QX continues $X in into our an professionals more to than assets of at $XXX acquired in

As quarter. I reiterate last closing from remarks conclude, I will my

position. a Our strong in business is

to us Our cash ability the balance affords be opportunistic.

performance growth and our are TaxAct to that, our to management margins drive it wealth track. and QX model and over underway, Marc and Our XXXX full expanding year our shift plans QX within well on With and review outlook. turn is to financial I'll

Marc Mehlman

was with earnout. end $X.XX an be costs income our are period HKFS factors I'd increase within per range. you our which income end year just all and the some on million, high Chris, GAAP good year the everyone. above and $X.X and both guidance great or $XXX.X and in per and to first versus GAAP other Embedded for associated of of roughly prior remaining quarter additional these certain Prospective end conflict. year. was second quarter full our of period with XXX% Total our million, XX% versus payment prior of Thank versus Starting figures and million and XXXX $X.XX our quarter, $XX.X morning and above earnout net high detail increases million, revenue million prior results. million EBITDA, million with again. full income $XX like with net the out to the a for growth quarter will range. the $XX.X share high the outlook diluted excludes $XX.X the guidance be provide The second proxy range. our paid net Non-GAAP million associated the expense diluted third the results or share. per the relating It's quarter you of $X second Adjusted of shy to third million, an share. $XX.X $X.XX $XX.X true-up of year guidance of

Turning season. expectations in above now and $XX.X discussed was $XX.X was million which to during meaningfully the Investor the revenue income we our million. Software Software segment, operating as Tax Tax entering segment Day came

management. Moving wealth on to

to of range, wealth released guidance expectations end part focus with down than On $XXX assets income was year-over-year previously continue assets million top management level, $XX.X of quarter of in $XXX.X billion, year-over-year guidance increase of XX% revenue exceeding XX.X%. fund towards total the $XX.X $XXX.X of At costs approximately included Second assets our up outflows but of Wealth million Total total our saw at $X.X the management X% operating of Fee-based included advisory quarter-over-quarter, net the at in $X.X Management corporate and ROA Transaction-based at as by slightly at of increased at to north $XX.X our high of from the the higher above revenues we revenue corporate a corporate and million, monitor high We percentage and million lower having million. were addition X% advisory which the XX% relates assets. in which our commission inflows ROA reported wealth performance platform was end were slightly sequentially, of the support and driven up billion Avantax still of client from legacy with $XX.X lower up quarter. Partners. guidance of Planning platform net increase Avantax as million, client Partners. assets strong operating the $XXX higher client of year-over-year to expenses costs at assets a million direct XX%, than to came to revenue in a X% in ending assets below on came advisory $X.X segment billion basis and which $XX at assets APP. businesses. a quarter robust total Avantax Planning million unallocated million, included revenue expected line end our which

ended $XX.X related acquisition During with acquisition cash quarter liability and cash the to million million reserve The We Xst of the the SEC, reserve Xst $XXX.X the ongoing for equivalents net and we from recognized and in with contingent matter quarter, Global been assumed and liability our has million in of expense. discussions Based integration to we contingent Global. million. million had liability the $X.X about costs the debt reevaluated $XX.X increased $XXX.X HKFS $X.X on in our to the million. increase regulatory

payment. net X.X compared related of outflow an leverage remind $XX at to the of quarter times X.X you third quarter end like the would in earnout will QX XXXX. million of ratio times have the end to reported I first at we was the Our that HKFS to the

during priorities in key discussed investing to fuel our in Day Investor June, cash As business our growth. include for

Our at continued investments capital current funding all customers. sentiment, points aimed and positive of needs rising most assets, in are customer new pain momentum Ensuring the adviser solving critical delivering net the on while our workflows critical lastly, providing and for turn financial third professionals. between our capital for that, outlook. our opportunities. we Ensuring benefits full With to businesses, XXXX properly let's the year are quarter acquisition two and crossover RIA

expect Tax quarter, million to For $X.X $XX.X million million. be loss segment we our and the segment between a $X to million revenue $XX of Software and third

including the expect per Our million This for million and of of and $XXX.X segment loss between net million and of $XXX.X million including of $X million, we million third income of $X.XX expenses or million, On million, quarter, $XX $XX of quarter EBITDA non-GAAP adjusted quarter outlook third $XXX between to $XX.X loss GAAP third includes or unallocated per to million. between and $X.XX $X.X $XX million loss net Blucora a share. and a we to Wealth of to million. of $X.XX $X.XX and negative $XXX.X between $XX.X $XX Management $X consolidated attributable again, loss diluted negative million expect to APP, Blucora total $X.X million, revenue segment, basis share, APP, corporate to million, of diluted a revenue

revenue expect of million income we and million of million year, Software full our segment and $XXX.X Tax the $XX million. For between segment $XXX.X to $XX

$XX $XXX.X and year For we million segment, revenue This again, $XXX share $XXX.X in to concludes and million million, million, per million segment This translates to adjusted million $XXX.X income diluted Blucora of $X.XX of $XX.X to income our to of to of of and outlook expect $XX $X.X of consolidated to includes loss which remarks. million $X.XX Wealth $XX.X of million million year expenses. of unallocated or million net full full million. $XXX or corporate includes income net $XX.X $X.XX income to attributable revenue, $X loss APP million net net outlook, net including diluted $XX.X $XXX to and Management GAAP non-GAAP APP of our between prepared to $X.XX a of share. EBITDA per million This between million

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

Operator

Thank Jackson from you. first Ader [Operator Instructions] with comes Our question JPMorgan.

is open. line Your

Jackson Ader

Great. Good guys. Thanks. morning,

you question The reiterated on business. kind is in from I bit came you heard in quarter second First of the the last tax tax time the midpoint. below June, a little guidance

So I'm the came the in with expectations? just your positive square revenue curious the that how commentary below tax idea

Marc Mehlman

it's to hear Marc here. Jackson, Hey, from good again. It's you

left that extended in amount and where held that the really the you recognize prepared what it out second third we remarks, so and relative nature down things expectation quarter. is of comes to of comes we still the had full earlier that There quarter, were from So the three as would the up just severe for recall about by believe, during to in it the progress filings TaxAct this we we've we happened year to to event finish we ultimately, year. up to tax Day feel made states forecasted good season, But weather were impacted the in we're Investor season. going and this where that finish the

Jackson Ader

the billion announced on assets. And wealth over that acquisition Okay. was little this then, week, just the side earlier in $X

expectations kind Just the get color acquisition? bit more a of we curious, can revenue that, on maybe Headquarters little any for

Marc Mehlman

forward. the with assets Headquarters the economic that value monetize does enterprise this team the Avantax, versus created employee by over contractor the was a for doesn't to revenue standpoint, we opportunity time, that change they've with but going the owned have, amount change ultimately, is From the an model. RIA model affiliating what of So, it it

the The would us it's bring with model move share does well our for I acquisition think, that but as specific transaction, it's that favorable employee-based billion. for that RIA associated clarify independent client from of That is, includes a early both to The out about RIA contractor that's approximately and to exciting, APPs contractor XX% represents right? total the model I client assets model our us. projections it want assets bit as from once model. to is employee-based to one total acquired the thing assets It's revenue RIA client I call the employee-based will do model. $X.X them removed independent thing for assets our the something acquired ultimately client for close, one that

saying Headquarters' as of way days. us in So new a way another able we'll excited the goes to it's more is, relatively time be for on. We're join and details share to early this team

Jackson Ader

examples implement you of already part I sneak those of then, like retain we can to you I Chris, couple could if year, you like mentioned, a fruit kind year strategy, can feel talked about of tax your of in And filers last in Can and of as understand, more one get order increase because totally you're Okay. filers? retention? you some one. year for you low-hanging two next two can that how just the planning

Chris Walters

Yes.

I talked think this we've about before.

tend retention the of quite business, at of but year to level So be for rates filers. two the generally, returning lowest filers all good kind are

offers, things the your a of the the right, do two different and that a needle filers that optimizing and is variety during is, do both this with of respond that really lot off-season And on do communication right, to we'll that. where to One to. in so, then season, of the us there's move for testing we the important there's messages, them, and groups place a things the

effort. is, frictionless So site, the of their the with thing at second experience make it site, is ultimately which right? want lowest enter the they're the achieve what they to possible to ultimately trying level get when arrive we The to max them achieve optimizing as as for right, refund

filers customers, we'll around tailored within have see friction in we're convert, benefit two that in optimizing the is the of a ultimately, higher meet share then, year points, ways of some to homepage could two a third off And is friction a rates which will years those second which the and remaining the for our for some with but thing have the that been so, addressing needs. actually product. all as last is across trending those customers these year experience, points And the but people of accrues to step we'll doing flow. their in users, right? address complete That, something benefit this the we So up lift season all broadly couple be

Jackson Ader

you. right. All Thank Awesome.

Operator

Thank you.

Our with Company. Benchmark Dan next Kurnos question comes from

open. is line Your

Dan Kurnos

to Yes. to just anything here little go year in then, out? you. calling a guys to have Not But Analyst but or one after the the one opportunity, the wealth or in Does with just that bit of in you terms Headquarters. I Good change over Day general for congrats No that lumpiness too you full morning. the that trailers cadence much maybe of that quarterly does there? know core than out about RIA would inflows quick management? Marc, we just exhausted to thought some maybe, excited the guys been asset for pretty did. trends, call guide, more do Just are And super and have you've outflows general, market the just

gave kind it squared call, XX away at accelerated looking laid basis you about in more have uptake. months next, metrics announcements, how know and RIA now of wondering game of build? cadence here just adoption cetera, underlying of kind let's to you're that but your the just sort of of you the kind plan Analyst in think sort et Day, prepared we I of think -- some should I I remarks maybe around the out

Marc Mehlman

the Sure. for us you It's in to trending revenues each a hear are positive making as I'd say, again. good in and transaction which both But operating been those From we're another there higher for lumpiness both, the as certain in extent some certain but the in clients month is financial total streams are revenue generally, standpoint, to wealth and happen been investments revenue a quarter versus the one management client relates the most to from standpoint, could way have total What related from a create from the investments generally, segment in from importantly asset has for down standpoint. to advisory that professionals standpoint, an variability up positive there a look experience and a end trend direction it and quarter, their go business. income. ROA investment

good taken. So that we've we're our financial we've feeling response the about professionals. And the actions from gotten

plan it now. owned independents RIA, to acquisition can discussing detailed the plans really As financial we're giving down that's to right into What to. multiple the Ultimately, not them well of our sort comes really choice. just we affiliation what professionals. as really affiliated to intentionally, flexible models employee firms you provide that And is it relates tell publicly any work I growth there as and options of succession

come And So an opportunity seeks independent, goes. that offering to see you'll to it as transactions. advantage we're take of extent it's what here an going the to

the forward. essence plan in going that's So

Dan Kurnos

it We're maybe then, to tax, end pretty although, for guess, now was I the past just Chris extensively tax Analyst never seems season. obviously Day. on And anymore partnerships one on finally, highlighted

season, building? year? right you any learnings to getting to all traffic got initial your now this next positioning look think there Just we how we into there as season, about gains So extensive kind are after head of you next opportunities as build sort explore you've do for brand the kind of of behind tax that

Chris Walters

Yeah.

on. partnerships is, we So efforts supporting partnerships three One on of really focus types that customer acquisition. there's our

this is member And we introducing pretty that are base. so bases partners leveraging or and And with bases their to meaningfully we customer TaxAct about member, of user brands talked those year. as the increased this number open bases strong other have solid more to relationships who

figure me collectively of help there's out the partners, work with work ultimately in seek lot of out realize as group. off-season we more And one that to forward. on so then, we actually value goes what best, in figure can so kind we'll And worked that's a the additional how move each that categories partner,

around us. for products a If taxes is they opportunities this we remove from The would data our for The or partnerships this looking unique can second is W-Xs to experience, seamlessly. And gone ultimately emerging their on insight that really friction more partners. our more to integrations value pull right? tax help and can customers the we're partners in that consumers highly and is go group category little something based, services that and data have that can the final we bring X,XXXs of TaxAct really to more is, that us process incremental at bit through they've will through with

at And category. that have could you some your positive so partners And looking really incremental customers. retention revenue in to are things value we're that it as some that well bring as drive benefits, could when

So the that those we're areas on. focused are

Dan Kurnos

guys. thanks Great,

Operator

I'm further Walters, now the Thank closing this at time. would remarks. over back for Chris questions you. to I to showing like any call turn not

Chris Walters

next you all for for in interest Blucora. to you Great. speak joining today us quarter. your We'll and Thank

Operator

for participating. This today's you Thank conference call. concludes

disconnect. now may You

Avantax (AVTA) 6 Aug 212021 Q2 Earnings call transcript