11/04/2021 | Press release | Distributed by Public on 11/04/2021 04:42
Q3 2021 | Q3 2020 | Change | ||||
Revenue: | ||||||
Wealth Management | $ | 169.1 | $ | 135.9 | 24 | % |
Tax Software | 5.0 | 39.4 | (87) | % | ||
Total Revenue | $ | 174.2 | $ | 175.4 | (1) | % |
Segment Operating Income (Loss) | ||||||
Wealth Management | $ | 19.6 | $ | 17.5 | 12 | % |
Tax Software | (13.9) | 16.2 | (185) | % | ||
Total Segment Operating Income | $ | 5.7 | $ | 33.7 | (83) | % |
Unallocated Corporate-Level General and Administrative Expenses | $ | (6.5) | $ | (6.7) | 3 | % |
GAAP: | ||||||
Operating Income (Loss) | $ | (20.3) | $ | 1.0 | (2,102) | % |
Net Loss | $ | (27.8) | $ | (26.2) | (6) | % |
Diluted Net Loss Per Share | $ | (0.57) | $ | (0.55) | (4) | % |
Non-GAAP: (1)
|
||||||
Adjusted EBITDA | $ | (0.8) | $ | 27.0 | (103) | % |
Net Income (Loss) | $ | (12.8) | $ | 15.1 | (185) | % |
Net Income (Loss) per Share - diluted | $ | (0.26) | $ | 0.31 | (184) | % |
($ in millions, except per share amounts) |
Prior Outlook
|
Current Outlook
|
Wealth Management Revenue | $631.5 - $649.5 | $645.0 - $650.0 |
Tax Software Revenue | $223.5 - $226.5 | $225.5 - $226.5 |
Total Revenue | $855.0 - $876.0 | $870.5 - $876.5 |
Wealth Management Segment Operating Income | $79.0 - $83.5 | $81.0 - $83.0 |
Tax Software Segment Operating Income | $80.0 - $82.0 | $80.5 - $81.5 |
Unallocated Corporate-Level General and Administrative Expenses | $27.5 - $26.5 | $26.0 - $25.5 |
GAAP: | ||
Net Income (loss) | ($8.5) - $1.0 | ($4.5) - ($0.0) |
Net Income (loss) per diluted share | ($0.17) - $0.02 | ($0.09) - ($0.00) |
Non-GAAP: | ||
Adjusted EBITDA (1)
|
$131.5 - $139.0 | $135.5 - $139.0 |
Non-GAAP Net Income (loss) (1)
|
$76.0 - $84.5 | $82.0 - $86.0 |
Non-GAAP Net Income (loss) per diluted share (1)
|
$1.52 - $1.70 | $1.65 - $1.73 |
Three months ended September 30, |
Nine months ended September 30, |
|||||||
2021 | 2020 | 2021 | 2020 | |||||
Revenue: | ||||||||
Wealth management services revenue | $ | 169,135 | $ | 135,932 | $ | 486,021 | $ | 396,805 |
Tax software services revenue | 5,039 | 39,421 | 220,848 | 202,990 | ||||
Total revenue | 174,174 | 175,353 | 706,869 | 599,795 | ||||
Operating expenses: | ||||||||
Cost of revenue: | ||||||||
Wealth management services cost of revenue | 120,641 | 96,122 | 343,174 | 282,332 | ||||
Tax software services cost of revenue | 2,323 | 2,692 | 12,330 | 9,759 | ||||
Total cost of revenue | 122,964 | 98,814 | 355,504 | 292,091 | ||||
Engineering and technology | 7,874 | 6,007 | 22,233 | 21,899 | ||||
Sales and marketing | 28,399 | 31,018 | 140,809 | 150,785 | ||||
General and administrative | 23,102 | 18,605 | 71,619 | 63,533 | ||||
Acquisition and integration | 2,241 | 10,276 | 28,513 | 18,782 | ||||
Depreciation | 2,867 | 1,874 | 8,371 | 5,345 | ||||
Amortization of other acquired intangible assets | 7,009 | 7,746 | 21,247 | 22,167 | ||||
Impairment of goodwill | - | - | - | 270,625 | ||||
Total operating expenses | 194,456 | 174,340 | 648,296 | 845,227 | ||||
Operating income (loss) | (20,282) | 1,013 | 58,573 | (245,432) | ||||
Other loss, net (1)
|
(8,295) | (11,963) | (24,202) | (23,386) | ||||
Income (loss) before income taxes | (28,577) | (10,950) | 34,371 | (268,818) | ||||
Income tax benefit (expense) | 774 | (15,256) | (2,920) | (23,237) | ||||
Net income (loss) | $ | (27,803) | $ | (26,206) | $ | 31,451 | $ | (292,055) |
Net income (loss) per share: | ||||||||
Basic | $ | (0.57) | $ | (0.55) | $ | 0.65 | $ | (6.09) |
Diluted | $ | (0.57) | $ | (0.55) | $ | 0.64 | $ | (6.09) |
Weighted average shares outstanding: | ||||||||
Basic | 48,707 | 48,039 | 48,492 | 47,936 | ||||
Diluted | 48,707 | 48,039 | 49,373 | 47,936 |
Three months ended September 30, |
Nine months ended September 30, |
|||||||
2021 | 2020 | 2021 | 2020 | |||||
Interest expense | $ | 7,304 | $ | 7,254 | $ | 21,789 | $ | 17,410 |
Amortization of debt issuance costs | 388 | 362 | 1,128 | 1,006 | ||||
Accretion of debt discounts | 290 | 276 | 851 | 414 | ||||
Total interest expense | 7,982 | 7,892 | 23,768 | 18,830 | ||||
Interest income | - | (2) | (2) | (27) | ||||
Gain on the sale of a business | - | (349) | - | (349) | ||||
Non-capitalized debt issuance expenses | - | 3,687 | - | 3,687 | ||||
Other | 313 | 735 | 436 | 1,245 | ||||
Other loss, net | $ | 8,295 | $ | 11,963 | $ | 24,202 | $ | 23,386 |
September 30, 2021 (unaudited) |
December 31, 2020 (audited) |
|||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $ | 184,926 | $ | 150,125 |
Cash segregated under federal or other regulations | 536 | 637 | ||
Accounts receivable, net of allowance | 17,886 | 12,736 | ||
Commissions and advisory fees receivable | 25,003 | 26,132 | ||
Other receivables | 468 | 717 | ||
Prepaid expenses and other current assets, net | 11,119 | 10,321 | ||
Total current assets | 239,938 | 200,668 | ||
Long-term assets: | ||||
Property and equipment, net | 68,950 | 58,500 | ||
Right-of-use assets, net | 20,818 | 23,455 | ||
Goodwill | 454,821 | 454,821 | ||
Other intangible assets, net | 304,435 | 322,179 | ||
Other long-term assets | 14,519 | 4,569 | ||
Total long-term assets | 863,543 | 863,524 | ||
Total assets | $ | 1,103,481 | $ | 1,064,192 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Current liabilities: | ||||
Accounts payable | $ | 8,932 | $ | 9,290 |
Commissions and advisory fees payable | 18,297 | 19,021 | ||
Accrued expenses and other current liabilities | 75,375 | 56,419 | ||
Deferred revenue-current | 5,469 | 12,298 | ||
Lease liabilities-current | 4,429 | 2,304 | ||
Current portion of long-term debt | 1,790 | 1,784 | ||
Total current liabilities | 114,292 | 101,116 | ||
Long-term liabilities: | ||||
Long-term debt, net | 552,987 | 552,553 | ||
Deferred tax liability, net | 29,502 | 30,663 | ||
Deferred revenue-long-term | 5,553 | 6,247 | ||
Lease liabilities-long-term | 34,020 | 36,404 | ||
Other long-term liabilities | 7,992 | 24,919 | ||
Total long-term liabilities | 630,054 | 650,786 | ||
Total liabilities | 744,346 | 751,902 | ||
Stockholders' equity: | ||||
Common stock, par value $0.0001 per share-900,000 authorized shares; 50,025 shares issued and 48,719 shares outstanding at September 30, 2021; 49,483 shares issued and 48,177 shares outstanding at December 31, 2020
|
5 | 5 | ||
Additional paid-in capital | 1,613,624 | 1,598,230 | ||
Accumulated deficit | (1,226,095) | (1,257,546) | ||
Treasury stock, at cost-1,306 shares at September 30, 2021 and December 31, 2020
|
(28,399) | (28,399) | ||
Total stockholders' equity | 359,135 | 312,290 | ||
Total liabilities and stockholders' equity | $ | 1,103,481 | $ | 1,064,192 |
Nine months ended September 30, | ||||
2021 | 2020 | |||
Operating activities: | ||||
Net income (loss) | $ | 31,451 | $ | (292,055) |
Adjustments to reconcile net income (loss) to net cash from operating activities: | ||||
Stock-based compensation | 15,499 | 7,220 | ||
Depreciation and amortization of acquired intangible assets | 32,498 | 29,619 | ||
Impairment of goodwill | - | 270,625 | ||
Reduction of right-of-use lease assets | 2,694 | 8,335 | ||
Deferred income taxes | (1,161) | 23,199 | ||
Amortization of debt issuance costs | 1,128 | 1,006 | ||
Accretion of debt discounts | 851 | 414 | ||
Gain on sale of a business | - | (349) | ||
Change in fair value of acquisition-related contingent consideration | 19,500 | (1,000) | ||
Accretion of lease liability | 731 | 1,413 | ||
Other | 1,371 | 984 | ||
Cash provided (used) by changes in operating assets and liabilities: | ||||
Accounts receivable | (5,008) | 12,267 | ||
Commissions and advisory fees receivable | 1,129 | (1,480) | ||
Other receivables | 249 | (2,909) | ||
Prepaid expenses and other current assets | (798) | 2,555 | ||
Other long-term assets | (10,898) | 2,763 | ||
Accounts payable | (358) | (7,018) | ||
Commissions and advisory fees payable | (500) | (3,012) | ||
Lease liabilities | (1,047) | (3,568) | ||
Deferred revenue | (7,523) | (8,582) | ||
Accrued expenses and other current and long-term liabilities | (5,417) | (5,113) | ||
Net cash provided by operating activities | 74,391 | 35,314 | ||
Investing activities: | ||||
Purchases of property and equipment | (21,624) | (28,711) | ||
Business acquisitions, net of cash acquired | - | (102,425) | ||
Asset acquisitions, net of cash acquired | (3,823) | - | ||
Proceeds from sale of a business | - | 349 | ||
Net cash used by investing activities | (25,447) | (130,787) | ||
Financing activities: | ||||
Proceeds from credit facilities, net of debt issuance costs and debt discounts | (502) | 226,278 | ||
Payments on credit facilities | (1,359) | (66,078) | ||
Proceeds from stock option exercises | 535 | 25 | ||
Proceeds from issuance of stock through employee stock purchase plan | 1,845 | 1,201 | ||
Tax payments from shares withheld for equity awards | (1,613) | (1,034) | ||
Acquisition-related contingent consideration payments | (13,150) | - | ||
Net cash provided (used) by financing activities | (14,244) | 160,392 | ||
Net increase in cash, cash equivalents, and restricted cash | 34,700 | 64,919 | ||
Cash, cash equivalents, and restricted cash, beginning of period | 150,762 | 86,450 | ||
Cash, cash equivalents, and restricted cash, end of period | $ | 185,462 | $ | 151,369 |
Three months ended September 30, |
Nine months ended September 30, |
|||||||
2021 | 2020 | 2021 | 2020 | |||||
Revenue: | ||||||||
Wealth Management (1)
|
$ | 169,135 | $ | 135,932 | $ | 486,021 | $ | 396,805 |
Tax Software (1)
|
5,039 | 39,421 | 220,848 | 202,990 | ||||
Total revenue | $ | 174,174 | $ | 175,353 | $ | 706,869 | $ | 599,795 |
Operating income (loss): | ||||||||
Wealth Management | $ | 19,564 | $ | 17,498 | $ | 60,356 | $ | 51,827 |
Tax Software | (13,864) | 16,234 | 100,472 | 60,646 | ||||
Corporate-level activity (2)
|
(25,982) | (32,719) | (102,255) | (357,905) | ||||
Total operating income (loss) | (20,282) | 1,013 | 58,573 | (245,432) | ||||
Other loss, net | (8,295) | (11,963) | (24,202) | (23,386) | ||||
Income (loss) before income taxes | (28,577) | (10,950) | 34,371 | (268,818) | ||||
Income tax benefit (expense) | 774 | (15,256) | (2,920) | (23,237) | ||||
Net income (loss) | $ | (27,803) | $ | (26,206) | $ | 31,451 | $ | (292,055) |
Three months ended September 30, |
Nine months ended September 30, |
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2021 | 2020 | 2021 | 2020 | |||||
Wealth Management: | ||||||||
Advisory revenue | $ | 103,540 | $ | 82,612 | $ | 291,167 | $ | 227,672 |
Commission revenue | 52,961 | 44,921 | 157,197 | 135,337 | ||||
Asset-based revenue | 5,659 | 4,351 | 16,514 | 18,911 | ||||
Transaction and fee revenue | 6,975 | 4,048 | 21,143 | 14,885 | ||||
Total Wealth Management revenue | $ | 169,135 | $ | 135,932 | $ | 486,021 | $ | 396,805 |
Tax Software: | ||||||||
Consumer revenue | $ | 4,479 | $ | 38,482 | $ | 203,891 | $ | 186,724 |
Professional revenue | 560 | 939 | 16,957 | 16,266 | ||||
Total Tax Software revenue | $ | 5,039 | $ | 39,421 | $ | 220,848 | $ | 202,990 |
Three months ended September 30, |
Nine months ended September 30, |
|||||||
2021 | 2020 | 2021 | 2020 | |||||
Unallocated corporate-level general and administrative expenses | $ | 6,499 | $ | 6,745 | $ | 18,452 | $ | 19,571 |
Stock-based compensation | 4,729 | 4,517 | 15,499 | 7,220 | ||||
Acquisition and integration costs | 2,241 | 10,276 | 28,513 | 18,782 | ||||
Depreciation | 3,906 | 2,620 | 11,251 | 7,452 | ||||
Amortization of acquired intangible assets
|
7,009 | 7,746 | 21,247 | 22,167 | ||||
Impairment of goodwill
|
- | - | - | 270,625 | ||||
Executive transition costs | - | 405 | - | 10,225 | ||||
Headquarters relocation costs | - | 410 | - | 1,863 | ||||
Contested proxy and other legal and consulting costs
|
1,598 | - | 7,293 | - | ||||
Total corporate-level activity | $ | 25,982 | $ | 32,719 | $ | 102,255 | $ | 357,905 |
Three months ended September 30, |
Nine months ended September 30, |
|||||||
2021 | 2020 | 2021 | 2020 | |||||
Net income (loss) (2)
|
$ | (27,803) | $ | (26,206) | $ | 31,451 | $ | (292,055) |
Stock-based compensation | 4,729 | 4,517 | 15,499 | 7,220 | ||||
Depreciation and amortization of acquired intangible assets
|
10,915 | 10,366 | 32,498 | 29,619 | ||||
Other loss, net | 8,295 | 11,963 | 24,202 | 23,386 | ||||
Acquisition and integration-Excluding change in the fair value of acquisition-related contingent consideration | 541 | 11,276 | 9,013 | 19,782 | ||||
Acquisition and integration-Change in the fair value of acquisition-related contingent consideration | 1,700 | (1,000) | 19,500 | (1,000) | ||||
Impairment of goodwill | - | - | - | 270,625 | ||||
Executive transition costs | - | 405 | - | 10,225 | ||||
Headquarters relocation costs | - | 410 | - | 1,863 | ||||
Contested proxy and other legal and consulting costs
|
1,598 | - | 7,293 | - | ||||
Income tax (benefit) expense | (774) | 15,256 | 2,920 | 23,237 | ||||
Adjusted EBITDA (1)
|
$ | (799) | $ | 26,987 | $ | 142,376 | $ | 92,902 |
Three months ended September 30, |
Nine months ended September 30, |
|||||||
2021 | 2020 | 2021 | 2020 | |||||
Net income (loss) (2)
|
$ | (27,803) | $ | (26,206) | $ | 31,451 | $ | (292,055) |
Stock-based compensation
|
4,729 | 4,517 | 15,499 | 7,220 | ||||
Amortization of acquired intangible assets
|
7,009 | 7,746 | 21,247 | 22,167 | ||||
Gain on the sale of a business
|
- | (349) | - | (349) | ||||
Acquisition and integration-Excluding change in the fair value of HKFS Contingent Consideration | 541 | 11,276 | 9,013 | 19,782 | ||||
Acquisition and integration-Change in the fair value of HKFS Contingent Consideration | 1,700 | (1,000) | 19,500 | (1,000) | ||||
Impairment of goodwill | - | - | - | 270,625 | ||||
Executive transition costs | - | 405 | - | 10,225 | ||||
Headquarters relocation costs | - | 410 | - | 1,863 | ||||
Contested proxy and other legal and consulting costs
|
1,598 | - | 7,293 | - | ||||
Non-capitalized debt issuance expenses | - | 3,687 | - | 3,687 | ||||
Cash tax impact of adjustments to GAAP net income (loss)
|
(331) | (418) | (1,523) | (1,413) | ||||
Non-cash income tax (benefit) expense | (197) | 14,987 | (1,160) | 22,327 | ||||
Non-GAAP net income (loss) | $ | (12,754) | $ | 15,055 | $ | 101,320 | $ | 63,079 |
Per diluted share:
|
||||||||
Net income (loss) (2) (3)
|
$ | (0.57) | $ | (0.54) | $ | 0.64 | $ | (6.06) |
Stock-based compensation
|
0.10 | 0.09 | 0.31 | 0.15 | ||||
Amortization of acquired intangible assets
|
0.14 | 0.16 | 0.43 | 0.46 | ||||
Gain on the sale of a business
|
- | (0.01) | - | (0.01) | ||||
Acquisition and integration-Excluding change in the fair value of HKFS Contingent Consideration | 0.01 | 0.23 | 0.18 | 0.41 | ||||
Acquisition and integration-Change in the fair value of HKFS Contingent Consideration | 0.03 | (0.02) | 0.39 | (0.02) | ||||
Impairment of goodwill | - | - | - | 5.62 | ||||
Executive transition costs | - | 0.01 | - | 0.21 | ||||
Headquarters relocation costs | - | 0.01 | - | 0.04 | ||||
Contested proxy and other legal and consulting costs
|
0.04 | - | 0.15 | - | ||||
Non-capitalized debt issuance expenses | - | 0.08 | - | 0.08 | ||||
Cash tax impact of adjustments to GAAP net income (loss)
|
(0.01) | (0.01) | (0.03) | (0.03) | ||||
Non-cash income tax (benefit) expense | - | 0.31 | (0.02) | 0.46 | ||||
Non-GAAP net income (loss) per share - diluted | $ | (0.26) | $ | 0.31 | $ | 2.05 | $ | 1.31 |
Weighted average shares outstanding - diluted
|
48,707 | 48,203 | 49,373 | 48,184 |
Ranges for the year ending | ||||
December 31, 2021 | ||||
Low | High | |||
Net income (loss) | $ | (4,500) | $ | - |
Stock-based compensation | 20,700 | 20,500 | ||
Depreciation and amortization of acquired intangible assets | 44,200 | 44,100 | ||
Other loss, net
|
32,600 | 32,200 | ||
Acquisition, integration, and contested proxy and other legal and consulting costs (4)
|
40,500 | 40,300 | ||
Income tax (benefit) expense | 2,000 | 1,900 | ||
Adjusted EBITDA | $ | 135,500 | $ | 139,000 |
Ranges for the year ending | ||||
December 31, 2021 | ||||
Low | High | |||
Net income (loss) | $ | (4,500) | $ | - |
Stock-based compensation | 20,700 | 20,500 | ||
Amortization of acquired intangible assets | 28,300 | 28,300 | ||
Acquisition, integration, and contested proxy and other legal and consulting costs (4)
|
40,500 | 40,300 | ||
Cash tax impact of adjustments to net income (loss) | (2,000) | (2,000) | ||
Non-cash income tax benefit | (1,000) | (1,100) | ||
Non-GAAP net income (loss) | $ | 82,000 | $ | 86,000 |
Per diluted share: | ||||
Net income (loss) (3)
|
$ | (0.09) | $ | - |
Stock-based compensation | 0.42 | 0.41 | ||
Amortization of acquired intangible assets | 0.57 | 0.58 | ||
Acquisition, integration, and contested proxy and other legal and consulting costs (4)
|
0.81 | 0.81 | ||
Cash tax impact of adjustments to net income (loss) | (0.04) | (0.04) | ||
Non-cash income tax benefit | (0.02) | (0.03) | ||
Non-GAAP net income per share | $ | 1.65 | $ | 1.73 |
Weighted average shares outstanding - diluted | 49,670 | 49,570 |
Ranges for the year ending | ||||
December 31, 2021 | ||||
Low | High | |||
Net income (loss) | $ | (8,500) | $ | 1,000 |
Stock-based compensation | 21,700 | 21,300 | ||
Depreciation and amortization of acquired intangible assets | 46,100 | 45,600 | ||
Other loss, net
|
32,600 | 31,900 | ||
Acquisition, integration, and contested proxy and other legal and consulting costs (4)
|
38,100 | 37,400 | ||
Income tax expense | 1,500 | 1,800 | ||
Adjusted EBITDA | $ | 131,500 | $ | 139,000 |
Ranges for the year ending | ||||
December 31, 2021 | ||||
Low | High | |||
Net income (loss) | $ | (8,500) | $ | 1,000 |
Stock-based compensation | 21,700 | 21,300 | ||
Amortization of acquired intangible assets | 28,300 | 28,200 | ||
Acquisition, integration, and contested proxy and other legal and consulting costs (4)
|
38,100 | 37,400 | ||
Cash tax impact of adjustments to net income (loss) | (2,200) | (2,000) | ||
Non-cash income tax benefit | (1,400) | (1,400) | ||
Non-GAAP net income | $ | 76,000 | $ | 84,500 |
Per diluted share: | ||||
Net income (loss) (3)
|
$ | (0.17) | $ | 0.02 |
Stock-based compensation | 0.43 | 0.43 | ||
Amortization of acquired intangible assets | 0.57 | 0.57 | ||
Acquisition, integration, and contested proxy and other legal and consulting costs (4)
|
0.76 | 0.75 | ||
Cash tax impact of adjustments to net income (loss) | (0.04) | (0.04) | ||
Non-cash income tax benefit | (0.03) | (0.03) | ||
Non-GAAP net income per share | $ | 1.52 | $ | 1.70 |
Weighted average shares outstanding - diluted | 50,000 | 49,800 |