Avantax, Inc. · GETTEX:3EV
Avantax — Blucora — Investor Presentation (June 2022)
49 slides from Avantax's investor presentation, Jun 22, 2022
Slide 1: Investor Presentation – NASDAQ: BCOR
Exhibit 99.1 Investor Presentation – NASDAQ: BCOR March 2022
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
Forward-Looking Statements and Non-GAAP Financial Measures Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, including withou
Slide 3: Blucora's Purpose, Delivered by the Missions of Its Two Businesses
Blucora’s Purpose, Delivered by the Missions of Its Two Businesses Blucora Purpose: Avantax Mission: TaxAct Mission: To be the leader serving a To be the preferred tax To enable financial success community of CPAs, tax software solution, enabling by changing the way professionals, and tax-focused cu
Slide 4: Blucora – Repositioned to Deliver Sustainable Growth
Blucora – Repositioned to Deliver Sustainable Growth Building on two strong businesses Solid progress repositioning Blucora Delivering strong results 4
Slide 5: Blucora is Building on Two Strong, Differentiated Businesses
Blucora is Building on Two Strong, Differentiated Businesses 1 Tax focus at our core 2 Positioned in large growing markets Tax Wealth 3 Strong competitive advantages Strong position in both segments 5
Slide 6: A Leading Provider of Tax-Focused Financial Solutions
A Leading Provider of Tax-Focused Financial Solutions Revenue (TTM Q1 2022) Employees Market Cap. Balance Sheet 1 1 $914M ~1,100 ~$800M Strong up 3% vs. 2021 Two Synergistic Businesses Headquarters Wealth Management Tax Software ~53% of TTM Q1 2022 ~47% of TTM Q1 2022 2* 2* Operating Income Operatin
Slide 7: Why a Strong Tax Focus Makes a Difference
Why a Strong Tax Focus Makes a Difference Advantages Tax prep creates strong 1 80% of people view tax professionals as their most trusted financial advisor relationships Taxes are huge recurring Americans spend more on taxes than mortgages, groceries, and vehicles 2 combined expense Mortgage – refin
Slide 8: Tax Represents a Large and Growing Opportunity
Tax Represents a Large and Growing Opportunity Continued Secular Shift To Digital Clients Look to Tax Pros for Wealth Advice Effectiveness of wealth advisor lead generation 1 % of filings by DIY Software 2 Financial Professional Survey 100% 46% 42% 35% 80% ~80% 60% 40% 20% 0% CPAs and Law Firms P&C
Slide 9: Our Strategy is Designed to Drive Accelerated Differentiation
Our Strategy is Designed to Drive Accelerated Differentiation Simple and NPS scores and customer retention have Targeted segments with marketing, grown meaningfully through addressing recruiting, affiliation and service offerings Easy to Use Focus friction points to enhance ease-of-use catered to ea
Slide 10: While Focusing on Serving the Needs of our Target Markets
While Focusing on Serving the Needs of our Target Markets AGI • $50K+ AGI • $100K+ • Primary focus on Strivers (age 18-44, • Thrivers (age 45+, business owners, dual income, career oriented) professionals, advanced in career trajectory, Target and Thrivers planning for retirement) Target Demo Demo •
Slide 11: With a Strong Base of Recurring Revenue Growth
With a Strong Base of Recurring Revenue Growth Significant Recurring Revenue 75% 85% 1 Recurring Tax Filers Recurring Wealth Management 2 Revenue 1 Paid federal retention rate/returning customers 12/31/2021. 2 11 Reflects full year December 31, 2021.
Slide 12: DIY Tax Software is a ~$4B Top-Line Market
DIY Tax Software is a ~$4B Top-Line Market With Consistent Long-Term Growth 1 DIY Tax Software Market Continued Secular Shift To Digital Steady Market Growth 2 2 DIY Tax Returns Filed Electronically % of filings by DIY Software 6% CAGR Total Market: ~$4B Revenue 44% 40% software share ~5% 2017 2021
Slide 13: Tax Year 2021 Key Metrics Summary
Tax Year 2021 Key Metrics Summary Season Results (Preliminary)* New Customers Up 19% Completions Up 1% Customer Acquisition / Paid Retention Up 335 bps Retention ARPU Up 11% Start Rate Up 223 bps DIY Market Share Gain Up 19 bps Market Share Market Share 4.94% Market Share Gain Up 13 bps Tax Professi
Slide 14: While in Wealth We Benefit From Powerful Secular Tailwinds
While in Wealth We Benefit From Powerful Secular Tailwinds Strong Wealth Management Industry Asset Wealth Management Industry 1 1 Growth in Independent Channels Shifting to Advisory (US $T) (Industry Advisory Fees as % of Revenue) 5% CAGR +9pp $21.3 77% CAGR 68% ‘13-‘20 $15.2 2 Other 3% IBD 5% RIA 1
Slide 15: Many Financial Professionals Fail to Deliver Tax-Smart Wealth Advice
Many Financial Professionals Fail to Deliver Tax-Smart Wealth Advice We Help Address an Unfilled Client Need Tax-Centric Advisors are Uniquely Positioned Additional Industry Focus Avantax Focus Other financial professionals provide insufficient advice on tax planning Avantax financial professionals
Slide 16: Wealth Advice is a Natural Capability Extension for Tax Professionals
Wealth Advice is a Natural Capability Extension for Tax Professionals Clients Look to Tax Pros for Wealth Advice Wealth Advice Enhances Tax Pros’ Franchises Effectiveness of wealth advisor lead generation Tangible benefits Financial Professional Survey Ability to offer holistic 100% financial advice
Slide 17: Wealth Management Q1 '22 Key Metrics Summary
Wealth Management Q1 ‘22 Key Metrics Summary Q1 ‘22 Results* Qtrly. Production 99.6% Retention Rate** Attrition of FPs with over $500k in rolling Financial -0- 12-month gross Professional Retention revenue Exceeded $500M for Recruited Assets Q1 2022 Net Positive In-Flows >$245M Assets Advisory In-Fl
Slide 18: Wealth Management Annual Sweep Revenue
Wealth Management Annual Sweep Revenue Wealth Management Segment Annual Sweep Revenue* ($ in millions) 1 1 * Source: Company documents. 18 18 1 Based on Company estimates, assuming that rates end the year in 2022 at 225bp to 250bp, with no additional hikes in 2023.
Slide 19: Blucora – Repositioned to Deliver Sustainable Growth
Blucora – Repositioned to Deliver Sustainable Growth Building on two strong businesses Solid progress repositioning Blucora Delivering strong results 19
Slide 20: Solid progress repositioning Blucora
Solid progress repositioning Blucora Summary of Key Repositioning Actions in 2020 / 2022 Elevated or added top executives 9 of 9 Added new Board Members 6 of 11 1 200+ Brought in new Financial Professionals Repositioning for Expanded number of TaxAct partnerships 10x Long-Term 3 Increased employee e
Slide 21: Strong ESG Profile
Building on two strong businesses Strong ESG Profile Environmental Social Governance Millions of tax returns filed 43% of roles in workforce are 10 of 11 Board Members are electronically, eliminating held by women independent Directors paper waste 63% of Leadership Team is All Board committees New L
Slide 22: Blucora – Repositioned to Deliver Sustainable Growth
Blucora – Repositioned to Deliver Sustainable Growth Solid progress repositioning Blucora Building on two strong businesses Delivering strong results 22
Slide 23: Delivering strong results
Delivering strong results On Right Path to Maximizing Value for Our Stockholders Solid Performance Track Record Strong Financial Outlook Disciplined Capital Allocation 23
Slide 24: Building on a Solid Performance Record Despite COVID-19 Headwinds
Building on a Solid Performance Record Despite COVID-19 Headwinds ($’s in millions, except net income per share) Revenue Non-GAAP Net Income Per Share* 26% CAGR 16% CAGR Pre-COVID Pre-COVID $2.11 $954 $1.85 $885 $1.76 $718 $456 $1.06 2016 2017 2018 2019 2020 2021 **2022 2016 2017 2018 2019 2020 2021
Slide 25: Continued Avantax's Track Record of Top-Line Growth
Continued Avantax’s Track Record of Top-Line Growth ($’s in millions) Wealth Management Segment Revenue Segment Operating Income ’16-FYE ‘22 Est. Mid Point $705 CAGR: Total: ~14% $658 Pre COVID: 14% CAGR $93 $82 $508 $68 $317 $46 2016 2017 2018 2019 2020 2021 *2022 Est. 2016 2017 2018 2019 2020 2021
Slide 26: Continued TaxAct's Track Record of Top-Line Growth
Continued TaxAct’s Track Record of Top-Line Growth ($’s in millions) Tax Software Segment Revenue Segment Operating Income ’16-FYE ’22 Est. Mid Point $249 CAGR: Total: ~10% $227 Consumer Pro $210 Pre COVID: 13% CAGR $96 $90 $139 $82 $67 2016 2017 2018 2019 2020 2021 *2022 2016 2017 2018 2019 2020 20
Slide 27: Blucora Has Carefully Managed Expenses to Expand Margins
Blucora Has Carefully Managed Expenses to Expand Margins 1 Corporate-Level Costs Decreasing… Significant Margin Improvement % of Gross Revenue Adjusted EBITDA Margin Ex-Sweep* 130bps 2 +390bps 4.5% 15.3% 4.2% 3.8% 3.7% 3.5% 11.4% 2.9% 2016 2017 2018 2019 2020 2021 2020 2021 1 Reflects unallocated co
Slide 28: Stable Business Model Producing Strong Free Cash Flow
Stable Business Model Producing Strong Free Cash Flow 75% $263M 75% 85% Average CFO to Operating FCF FCF Conversion Last 5 Years* 3* Last 5 Years 1 Recurring Tax Filers Recurring Wealth 2 Revenue 1 Paid federal retention rate. 2 Reflects FYE December 31, 2021. 3 Average of 62% for the years 2017-201
Slide 29: Delivering strong results
Delivering strong results On Right Path to Maximizing Value for Our Stockholders Solid Performance Track Record Strong Financial Outlook Disciplined Capital Allocation 29
Slide 30: Additional Upside Drivers Not Embedded in Our Outlook
Additional Upside Drivers Not Embedded in Our Outlook Ø Increase in Fed Funds Rates – Ø For every 25 bps improvement expect will generate ~$6M-$7M in annual Adjusted EBITDA Ø RIA acquisitions – Ø Potential for additional spend could generate an additional $35M to $50M in revenue Ø Significant upside
Slide 31: On Right Path to Maximizing Value for Our Stockholders
On Right Path to Maximizing Value for Our Stockholders Solid Performance Track Record Strong Financial Outlook Disciplined Capital Allocation 31
Slide 32: Disciplined capital allocation: Capital Allocation Priorities
Disciplined capital allocation Capital Allocation Priorities • Ample capital to support growth Maintain Strong 1 • On track to achieve target Net Leverage Ratio* of 2x to 3x Balance Sheet • Return capital to shareholders • Unlocking upside across our businesses Invest to Fuel 2 Business Growth • Tec
Slide 33: Strong Balance Sheet with Capacity to Invest
Disciplined capital allocation Strong Balance Sheet with Capacity to Invest 2 Cash and Cash Equivalents $144M 1 Revolver Capacity $90M Revolver Accessü Capacity to Invest Covenant-lite Flexible Debtü for Future Growth 2 Net Leverage Ratio* 3.0x Target Net Leverage Ratio* 2.0-3.0x 3 Incremental M&A D
Slide 34: Committed to Deleveraging
Disciplined capital allocation Committed to Deleveraging Net Leverage Ratio* The Path to Target Leverage 4.3x 2022 Segment Income Improvement 3.5x 3.1x 3.0x Strong Operating Cash Flow Ample Cash Position Optional Discretionary Debt Pay Down End of FY2020 End of Q1 2021 End of FY2021 End of Q1 2022 C
Slide 35: We Are Investing in the Business to Fuel Organic Growth
Disciplined capital allocation We Are Investing in the Business to Fuel Organic Growth Investment Areas Expected Impact Tax Software Product Experience Monetized Filers & Retention Segment Marketing Capabilities Lower Cost Per Complete Partnerships Growth Focus Wealth Investment Solutions Increased
Slide 36: Full Year 2022 Guidance vs. Full Year 2021
Full Year 2022 Guidance vs. Full Year 2021 Full Year Full Year $ in millions, except per share amounts 2021 2022 Guidance Total Revenue $937.5 – $971.0 $885.2 $658.2 Wealth Management Revenue $690.0 – $720.0 $227.0 Tax Software Revenue $247.5 – $251.0 * $143.5 – $162.0 $138.5 Adjusted EBITDA Weal
Slide 37: Investor Contact
Investor Presentation – NASDAQ: BCOR Investor Contact Dee Littrell – Director Investor Relations (972) 870-6463 Dee.Littrell@blucora.com
Slide 38: Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures
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Slide 39: Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures
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Slide 40: Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures 40
Slide 41: Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures 41
Slide 42: Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures 42
Slide 43: Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures 43
Slide 44: Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures 44
Slide 45: Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures 45
Slide 46: Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures 46
Slide 47: Notes to Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures
Notes to Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures 47
Slide 48: Notes to Reconciliations of Non-GAAP Financial Measures (continued)
Notes to Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (continued) 48
Slide 49: Notes to Reconciliations of Non-GAAP Financial Measures (continued)
Notes to Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (continued) 49