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BCOR Blucora

Filed: 5 May 21, 6:38am

Exhibit 99.1
 blucoralogo1a.jpg
Blucora Announces First Quarter 2021 Results
DALLAS, TX — May 5, 2021 — Blucora, Inc. (NASDAQ: BCOR), a leading provider of technology-enabled, tax focused financial solutions, today announced financial results for the first quarter ended March 31, 2021.
First Quarter Highlights and Recent Developments
Increased total revenue for the quarter to $278.4 million, or 6% year-over-year
GAAP Net Income of $27.6 million, or $0.56 per diluted share
Non-GAAP Net Income of $51.0 million, or $1.04 per diluted share
Total client assets ended the quarter up 39% year over year to $84.8 billion, with $36.8 billion, or 43.4% in advisory assets
Advisory assets increased 56% year-over-year, including the addition of approximately $5.0 billion in Avantax Planning Partners (“APP”) assets
Free cash flow of $45.1 million in Q1 2021 vs. $39.1 million during Q1 2020, or a 15% increase
Strong cash position, ending the quarter with $191.8 million in cash and cash equivalents compared to $150.1 million at December 31, 2020, while reducing net debt levels since December 31, 2020 with a 3.5x net leverage ratio as of March 31, 2021
Announced appointment of Tina Perry, President of OWN, to our Board of Directors

“As we continue to serve our financial professionals and assist in the growth of their businesses, our wealth management segment reported strong results with the first quarter coming in at the high end of our expectations, commented Chris Walters, Blucora’s President and Chief Executive Officer. “We continue to see growth in total client assets as well as advisory assets, which sets the Company up for a strong year.”

Tax Season Update

“Our progress leading up to the conclusion of the extended Tax Year 2020 continues to be on track. We are realizing the benefits of continued strong NPS scores, retention rates, improved marketing effectiveness and ARPU strength driven by our broad set of customer offerings for consumers.” Walters continued.
Summary Financial Performance: Q1 2021
($ in millions except per share amounts)
Q1 2021Q1 2020Change
Revenue:
Wealth Management$154.5 $145.0 %
Tax Software$123.9 $118.3 %
Total Revenue$278.4 $263.3 %
Segment Operating Income
Wealth Management$19.4 $22.6 (14)%
Tax Software$50.9 $37.8 35 %
Total Segment Operating Income$70.3 $60.4 16 %
Unallocated Corporate-Level General and Administrative Expenses$(5.7)$(7.0)19 %
GAAP:
Operating Income (Loss)$37.2 $(241.8)115 %
Net Income (Loss)$27.6 $(315.5)109 %
Diluted Net Income (Loss) Per Share$0.56 $(6.60)108 %
Non-GAAP: (1)
Adjusted EBITDA$64.6 $53.3 21 %
Net Income$51.0 $43.6 17 %
Diluted Net Income per Share$1.04 $0.90 16 %
_________________________
(1)See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.


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Second Quarter and Full Year 2021 Outlook

($ in millions except per share amounts)2Q 2021Full Year 2021
Wealth Management Revenue$155.5 - $161.5$631.5 - $649.5
TaxAct Revenue$82.5 - $87.5$212.5 - $218.0
Total Revenue$238.0 - $249.0$844.0 - $867.5
Wealth Management Segment Operating Income$17.5 - $19.5$79.0 - $83.5
TaxAct Segment Operating Income$53.0 - $58.0$72.0 - $76.5
Unallocated Corporate-Level General and Administrative Expenses$7.5 - $7.0$28.5 - $27.5
GAAP:
Net Income$22.5 - $31.5($12.5) - $2.0
Net Income per share$0.45 - $0.63($0.25) - $0.04
Non-GAAP:
Adjusted EBITDA (1)$63.0 - $70.5$122.5 - $132.5
Non-GAAP Net Income (1)$47.0 - $55.5$67.5 - $80.0
Non-GAAP Net Income per share (1)$0.94 - $1.11$1.34 - $1.60
____________________________

(1)See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below.


Conference Call and Webcast
A conference call and live webcast will be held today at 8:30 a.m. Eastern Time during which the Company will further discuss first quarter results, its outlook for full year 2021, its tax season update, and other business matters. We will also provide supplemental financial information to our results on the Investor Relations section of the Blucora corporate website at www.blucora.com prior to the call. The supplemental financial information has also been furnished with the SEC on Form 8-K. A replay of the call will be available on our website.

About Blucora®
Blucora, Inc. (NASDAQ: BCOR) is on the forefront of financial technology, a provider of data and technology-driven solutions that empowers people to improve their financial wellness. Blucora operates in two segments including (i) wealth management, through its Avantax Wealth Management brand, with a collective $85 billion in total client assets as of March 31, 2021 and (ii) tax software, through its TaxAct business, a market leader in tax software with approximately 3 million consumer and 23,000 professional users in 2020. With integrated tax-focused software and wealth management, Blucora is uniquely positioned to assist our customers in achieving better long-term outcomes via holistic, tax-advantaged solutions. For more information on Blucora, visit www.blucora.com.

Source: Blucora

Blucora Investor Relations
Dee Littrell (972) 870-6463
IR@Blucora.com
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “intends,” “anticipates,” “may,” “forecasts,” “future,” “will,” “projects,” “predicts,” “potential,” “continues,” “target,” “outlook” and similar expressions and variations. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: the impact of the coronavirus pandemic on our results of operations and our business, including the impact of the resulting economic and market disruption, the extension of tax filing deadlines and other related relief; our ability to effectively implement our future business plans and growth strategy; our ability to effectively compete

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within our industry; our ability to attract and retain financial professionals, qualified employees, clients, and customers, as well as our ability to provide strong customer/client service; our ability to close, finance, and realize all of the anticipated benefits of acquisitions, as well as our ability to integrate the operations of recently acquired businesses, and the potential impact of such acquisitions on our existing indebtedness and leverage; our future capital requirements and the availability of financing, if necessary; our ability to meet our current and future debt service obligations, including our ability to maintain compliance with our debt covenants; downgrade of the Company’s credit ratings; our ability to generate strong performance for our clients and the impact of the financial markets on our clients’ portfolios; the impact of new or changing legislation and regulations (or interpretations thereof) on our business, including our ability to successfully address and comply with such legislation and regulations (or interpretations thereof) and increased costs, reductions of revenue, and potential fines, penalties or disgorgement to which we may be subject as a result thereof; risks, burdens, and costs, including fines, penalties or disgorgement, associated with our business being subjected to regulatory inquiries, investigations or initiatives; risks associated with legal proceedings, including litigation and regulatory proceedings; our ability to manage leadership and employee transitions, including costs and time burdens on management and our board of directors related thereto; political and economic conditions and events that directly or indirectly impact the wealth management and tax software industries; our ability to respond to rapid technological changes, including our ability to successfully release new products and services or improve upon existing products and services; the compromising of confidentiality, availability or integrity of information, including cyberattacks; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; risks related to goodwill and other intangible asset impairment; our ability to develop, establish, and maintain strong brands; risks associated with the use and implementation of information technology and the effect of security breaches, computer viruses, and computer hacking attacks; our ability to comply with laws and regulations regarding privacy and protection of user data; our ability to maintain our relationships with third-party partners, providers, suppliers, vendors, distributors, contractors, financial institutions, industry associations, and licensing partners, and our expectations regarding and reliance on the products, tools, platforms, systems, and services provided by these third parties; our beliefs and expectations regarding the seasonality of our business; our assessments and estimates that determine our effective tax rate; and our ability to protect our intellectual property and the impact of any claim that we have infringed on the intellectual property rights of others. A more detailed description of these and certain other factors that could affect actual results is included in the Company’s filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date hereof, except as may be required by law.

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Blucora, Inc.
Condensed Consolidated Statements of Operations
(Unaudited) (Amounts in thousands, except per share data)
 Three months ended
March 31,
 20212020
Revenues:
Wealth management services revenue$154,491 $144,989 
Tax software services revenue123,892 118,331 
Total revenue278,383 263,320 
Operating expenses:
Cost of revenue:
Wealth management services cost of revenue108,623 102,342 
Tax software services cost of revenue5,578 4,013 
Total cost of revenue114,201 106,355 
Engineering and technology7,128 8,515 
Sales and marketing77,562 79,710 
General and administrative24,685 24,728 
Acquisition and integration8,103 5,682 
Depreciation2,300 1,796 
Amortization of other acquired intangible assets7,175 7,748 
Impairment of goodwill— 270,625 
Total operating expenses241,154 505,159 
Operating income (loss)37,229 (241,839)
Other loss, net (1)
(7,883)(6,135)
Income (loss) before income taxes29,346 (247,974)
Income tax expense(1,700)(67,520)
Net income (loss)$27,646 $(315,494)
Net income (loss) per share:
Basic$0.57 $(6.60)
Diluted$0.56 $(6.60)
Weighted average shares outstanding:
Basic48,261 47,827 
Diluted49,097 47,827 
_________________________
(1)Other loss, net consisted of the following (in thousands):
Three months ended
March 31,
20212020
Interest expense$7,183 $5,316 
Amortization of debt issuance costs363 313 
Accretion of debt discounts277 68 
Total interest expense7,823 5,697 
Interest income(2)(14)
Other62 452 
Other loss, net$7,883 $6,135 




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Blucora, Inc.
Condensed Consolidated Balance Sheets
(Unaudited) (Amounts in thousands)

March 31,
2021
December 31,
2020
ASSETS
Current assets:
Cash and cash equivalents$191,803 $150,125 
Cash segregated under federal or other regulations2,241 637 
Accounts receivable, net of allowance24,348 12,736 
Commissions and advisory fees receivable26,021 26,132 
Other receivables186 717 
Prepaid expenses and other current assets, net12,015 10,321 
Total current assets256,614 200,668 
Long-term assets:
Property and equipment, net64,160 58,500 
Right-of-use assets, net22,886 23,455 
Goodwill, net454,821 454,821 
Other intangible assets, net315,294 322,179 
Other long-term assets5,342 4,569 
Total long-term assets862,503 863,524 
Total assets$1,119,117 $1,064,192 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$22,019 $9,290 
Commissions and advisory fees payable18,762 19,021 
Accrued expenses and other current liabilities72,735 56,419 
Deferred revenue—current5,280 12,298 
Lease liabilities—current3,327 2,304 
Current portion of long-term debt, net1,786 1,784 
Total current liabilities123,909 101,116 
Long-term liabilities:
Long-term debt, net552,684 552,553 
Deferred tax liability, net30,394 30,663 
Deferred revenue—long-term6,015 6,247 
Lease liabilities—long-term35,723 36,404 
Other long-term liabilities25,738 24,919 
Total long-term liabilities650,554 650,786 
Total liabilities774,463 751,902 
Stockholders’ equity:
Common stock, par $0.0001—900,000 authorized shares; 49,615 shares issued and 48,309 shares outstanding at March 31, 2021; 49,483 shares issued and 48,177 shares outstanding at December 31, 2020
Additional paid-in capital1,602,948 1,598,230 
Accumulated deficit(1,229,900)(1,257,546)
Treasury stock, at cost—1,306 shares at March 31, 2021 and December 31, 2020(28,399)(28,399)
Total stockholders’ equity344,654 312,290 
Total liabilities and stockholders’ equity$1,119,117 $1,064,192 


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Blucora, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited) (Amounts in thousands)
 Three months ended March 31,
 20212020
Operating activities:
Net income (loss)$27,646 $(315,494)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Stock-based compensation5,610 (1,201)
Depreciation and amortization of acquired intangible assets10,418 10,168 
Impairment of goodwill— 270,625 
Reduction of right-of-use lease assets569 1,625 
Deferred income taxes(269)57,898 
Amortization of debt issuance costs363 313 
Accretion of debt discounts277 68 
Change in fair value of acquisition-related contingent consideration6,300 — 
Accretion of lease liability514 424 
Other(78)495 
Cash provided (used) by changes in operating assets and liabilities:
Accounts receivable(11,541)(9,066)
Commissions and advisory fees receivable111 3,457 
Other receivables531 (3,239)
Prepaid expenses and other current assets(1,694)(1,715)
Other long-term assets(828)2,560 
Accounts payable12,729 17,744 
Commissions and advisory fees payable(259)(1,965)
Lease liabilities(172)(1,289)
Deferred revenue(7,250)(7,820)
Accrued expenses and other current and long-term liabilities10,745 23,276 
Net cash provided by operating activities53,722 46,864 
Investing activities:
Purchases of property and equipment(8,598)(7,715)
Asset acquisitions(587)— 
Net cash used by investing activities(9,185)(7,715)
Financing activities:
Proceeds from credit facilities— 55,000 
Payments on credit facilities(453)(10,313)
Proceeds from stock option exercises63 — 
Tax payments from shares withheld for equity awards(865)(918)
Net cash provided (used) by financing activities(1,255)43,769 
Net increase in cash, cash equivalents, and restricted cash43,282 82,918 
Cash, cash equivalents, and restricted cash, beginning of period150,762 86,450 
Cash, cash equivalents, and restricted cash, end of period$194,044 $169,368 














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Blucora, Inc.
Segment Information
(Unaudited) (Amounts in thousands)
Three months ended
March 31,
20212020
Revenue:
Wealth Management (1)
$154,491 $144,989 
Tax Software (1)
123,892 118,331 
Total revenue278,383 263,320 
Operating income (loss):
Wealth Management19,396 22,598 
Tax Software50,888 37,753 
Corporate-level activity (2)
(33,055)(302,190)
Total operating income (loss)37,229 (241,839)
Other loss, net(7,883)(6,135)
Income (loss) before income taxes29,346 (247,974)
Income tax expense(1,700)(67,520)
Net income (loss)$27,646 $(315,494)
_________________________
(1)Revenues by major category within each segment are presented below (in thousands):
Three months ended
March 31,
20212020
Wealth Management:
Advisory$91,119 $78,757 
Commission52,534 50,580 
Asset-based5,329 10,579 
Transaction and fee5,509 5,073 
Total Wealth Management revenue$154,491 $144,989 
Tax Software:
Consumer$110,567 $103,821 
Professional13,325 14,510 
Total Tax Software revenue$123,892 $118,331 

(2) Corporate-level activity included the following (in thousands):
Three months ended
March 31,
 20212020
Unallocated corporate-level general and administrative expenses$5,694 $7,016 
Stock-based compensation5,610 (1,201)
Acquisition and integration costs8,103 5,682 
Depreciation3,243 2,420 
Amortization of acquired intangible assets7,175 7,748 
Impairment of goodwill— 270,625 
Executive transition costs— 9,184 
Headquarters relocation costs— 716 
Contested proxy and other legal and consulting costs3,230 — 
Total corporate-level activity$33,055 $302,190 


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Blucora, Inc.
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (1)
Adjusted EBITDA Reconciliation (1)
(Unaudited) (Amounts in thousands)
Three months ended
March 31,
 20212020
Net income (loss) (2)
$27,646 $(315,494)
Stock-based compensation5,610 (1,201)
Depreciation and amortization of acquired intangible assets10,418 10,168 
Other loss, net7,883 6,135 
Acquisition and integration—Excl. Change in fair value of acquisition-related contingent consideration1,803 5,682 
Acquisition and integration—Change in fair value of acquisition-related contingent consideration6,300 — 
Impairment of goodwill— 270,625 
Executive transition costs— 9,184 
Headquarter relocation costs— 716 
Contested proxy and other legal and consulting costs3,230 — 
Income tax expense1,700 67,520 
Adjusted EBITDA (1)
$64,590 $53,335 


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Non-GAAP Net Income and Non-GAAP Net Income Per Share Reconciliation (1)
(Unaudited) (Amounts in thousands, except per share amounts)
Three months ended
March 31,
 20212020
Net income (loss) (2)
$27,646 $(315,494)
Stock-based compensation5,610 (1,201)
Amortization of acquired intangible assets7,175 7,748 
Acquisition and integration—Excluding change in fair value of HKFS Contingent Consideration1,803 5,682 
Acquisition and integration—Change in fair value of HKFS Contingent Consideration6,300 — 
Impairment of goodwill— 270,625 
Executive transition costs— 9,184 
Headquarters relocation costs— 716 
Contested proxy and other legal and consulting costs3,230 — 
Cash tax impact of adjustments to GAAP net income(543)(736)
Non-cash income tax (benefit) expense(269)67,037 
Non-GAAP net income$50,952 $43,561 
Per diluted share:
Net income (loss) (2) (3)
$0.56 $(6.54)
Stock-based compensation0.11 (0.02)
Amortization of acquired intangible assets0.15 0.16 
Acquisition and integration—Excluding change in fair value of HKFS Contingent Consideration0.04 0.12 
Acquisition and integration—Change in fair value of HKFS Contingent Consideration0.13 — 
Impairment of goodwill— 5.61 
Executive transition costs— 0.19 
Headquarters relocation costs— 0.01 
Contested proxy and other legal and consulting costs0.07 — 
Cash tax impact of adjustments to GAAP net income(0.01)(0.02)
Non-cash income tax (benefit) expense(0.01)1.39 
Non-GAAP net income per share$1.04 $0.90 
Weighted average shares outstanding used in computing per diluted share amounts49,097 48,253 


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Net Leverage Ratio Reconciliation (4) (5)
(Amounts in thousands)

March 31,
2021
December 31,
2020
Debt:
Senior secured credit facility$562,703 $563,156 
Cash:
Cash and cash equivalents$191,803 $150,125 
Net debt (6)
$370,900 $413,031 
Trailing twelve months:
Wealth Management segment operating income$68,993 $72,195 
Tax Software segment operating income62,756 49,621 
$131,749 $121,816 
Unallocated corporate-level general and administrative expenses(25,367)(26,689)
Adjusted EBITDA (1)
$106,382 $95,127 
Net leverage ratio (4) (5)
3.5 x4.3 x

Trailing Twelve Month Adjusted EBITDA Reconciliation (1) (4)
(Amounts in thousands)

For the trailing twelve months ended
 March 31,
2021
December 31,
2020
Net income (loss) (2)
$385 $(342,755)
Stock-based compensation16,877 10,066 
Depreciation and amortization of acquired intangible assets40,157 39,907 
Other loss, net33,052 31,304 
Acquisition and integration—Excluding change in fair value of HKFS Contingent Consideration18,906 22,785 
Acquisition and integration—Change in fair value of HKFS Contingent Consideration14,600 8,300 
Executive transition costs1,517 10,701 
Headquarter relocation costs1,147 1,863 
Contested proxy and other legal and consulting costs3,230 — 
Income tax (benefit) expense(23,489)42,331 
Impairment of goodwill and an intangible asset— 270,625 
Adjusted EBITDA (1)
$106,382 $95,127 

Operating Free Cash Flow Reconciliation (7)
(Amounts in thousands)

Three months ended
March 31,
20212020
Net cash provided by operating activities (8)
$53,722 $46,864 
Purchase of property and equipment (8)
(8,598)(7,715)
Operating free cash flow (7)
$45,124 $39,149 


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Adjusted EBITDA Reconciliation for Forward-Looking Guidance (1)
(Amounts in thousands)

 Ranges for the three months endingRanges for the year ending
June 30, 2021December 31, 2021
LowHighLowHigh
Net income (loss)$22,500 $31,500 $(12,500)$2,000 
Stock-based compensation5,500 5,400 21,500 21,200 
Depreciation and amortization of acquired intangible assets11,100 10,800 45,000 44,500 
Other loss, net8,800 8,500 33,500 32,400 
Acquisition, integration, and contested proxy and other legal and consulting costs (9)
12,900 12,300 32,800 31,000 
Income tax expense2,200 2,000 2,200 1,400 
Adjusted EBITDA$63,000 $70,500 $122,500 $132,500 

Non-GAAP Net Income and Non-GAAP Net Income Per Share Reconciliation
for Forward-Looking Guidance (1)
(Amounts in thousands, except per share amounts)

 Ranges for the three months endingRanges for the year ending
June 30, 2021December 31, 2021
LowHighLowHigh
Net income (loss)$22,500 $31,500 $(12,500)$2,000 
Stock-based compensation5,500 5,400 21,500 21,200 
Amortization of acquired intangible assets7,200 7,100 28,600 28,300 
Acquisition, integration, and contested proxy and other legal and consulting costs (9)
12,900 12,300 32,800 31,000 
Cash tax impact of adjustments to net loss(500)(400)(2,000)(1,700)
Non-cash income tax benefit(600)(400)(900)(800)
Non-GAAP net income$47,000 $55,500 $67,500 $80,000 
Per diluted share:
Net income (loss) (3)
$0.45 $0.63 $(0.25)$0.04 
Stock-based compensation0.11 0.11 0.43 0.42 
Amortization of acquired intangible assets0.14 0.14 0.57 0.57 
Acquisition, integration, and contested proxy and other legal and consulting costs (9)
0.26 0.25 0.65 0.62 
Cash tax impact of adjustments to net loss(0.01)(0.01)(0.04)(0.03)
Non-cash income tax benefit(0.01)(0.01)(0.02)(0.02)
Non-GAAP net income per share$0.94 $1.11 $1.34 $1.60 
Weighted average shares outstanding used in computing per diluted share amounts50,100 50,000 50,300 50,100 


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Notes to Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measure
(1)We define Adjusted EBITDA as net income (loss), determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation and amortization of acquired intangible assets, other loss, net, acquisition and integration costs, impairment of goodwill and an intangible asset, executive transition costs, headquarters relocation costs, contested proxy and other legal and consulting costs, and income tax expense. Other loss, net primarily constitutes our interest expense, net of interest income. Acquisition and integration costs primarily relate to the acquisition of HKFS and the acquisition of 1st Global. Impairment of goodwill relates to the impairment of our Wealth Management reporting unit goodwill in the first quarter of 2020. The impairment of an intangible asset relates to the impairment of the HD Vest trade name intangible asset in the third quarter of 2019. Executive transition costs relate to the departure of certain Company executives in the first quarter of 2020. Headquarters relocation costs relate to the process of moving from our Dallas and Irving offices to our new headquarters.
We believe that Adjusted EBITDA provides meaningful supplemental information regarding our performance. We use this non-GAAP financial measure for internal management and compensation purposes, when publicly providing guidance on possible future results, and as a means to evaluate period-to-period comparisons. We believe that Adjusted EBITDA is a common measure used by investors and analysts to evaluate our performance, that it provides a more complete understanding of the results of operations and trends affecting our business when viewed together with GAAP results, and that management and investors benefit from referring to this non-GAAP financial measure. Items excluded from Adjusted EBITDA are significant and necessary components to the operations of our business and, therefore, Adjusted EBITDA should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income (loss). Other companies may calculate Adjusted EBITDA differently and, therefore, our Adjusted EBITDA may not be comparable to similarly titled measures of other companies.
We define non-GAAP net income as net income (loss), determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets, acquisition and integration costs, impairment of goodwill, executive transition costs, headquarters relocation costs, contested proxy and other legal and consulting costs, non-capitalized debt issuance expense, the related cash tax impact of those adjustments, and non-cash income tax (benefit) expense. We exclude the non-cash portion of income tax expense because of our ability to offset a substantial portion of our cash tax liabilities by using deferred tax assets, which primarily consist of U.S. federal net operating losses. The majority of these net operating losses will either be utilized or expire between 2021 and 2024. Non-capitalized debt issuance expense relates to the expense recognized as a result of the increase to our term loan in the third quarter of 2020.
We believe that non-GAAP net income and non-GAAP net income per share provide meaningful supplemental information to management, investors, and analysts regarding our performance and the valuation of our business by excluding items in the statement of operations that we do not consider part of our ongoing operations or have not been, or are not expected to be, settled in cash. Additionally, we believe that non-GAAP net income and non-GAAP net income per share are common measures used by investors and analysts to evaluate our performance and the valuation of our business. Non-GAAP net income and non-GAAP net income per share should be evaluated in light of our financial results prepared in accordance with GAAP and should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income (loss) and net income (loss) per share. Other companies may calculate non-GAAP net income and non-GAAP net income per share differently, and, therefore, our non-GAAP net income and non-GAAP net income per share may not be comparable to similarly titled measures of other companies.
(2)As presented in the condensed consolidated statements of operations (unaudited).
(3)Any difference in the “per diluted share” amounts between this table and the condensed consolidated statements of comprehensive income is due to using different weighted average shares outstanding in the event that there is GAAP net loss but non-GAAP net income and vice versa.
(4)Non-GAAP measure using Adjusted EBITDA for the last twelve months. Adjusted EBITDA for the trailing twelve month period is reconciled to the nearest GAAP measure on page 10.
(5)Net leverage ratio is calculated by dividing net debt by Adjusted EBITDA for the trailing twelve months.
(6)We define net debt, a non-GAAP financial measure, as cash and cash equivalents less the outstanding principal of debt. Management believes that the presentation of this non-GAAP financial measure provides useful information to investors because it is an important liquidity measurement that reflects our ability to service our debt.
(7)We define operating free cash flow, which is a non-GAAP measure, as net cash provided by (used in) operating activities less purchases of property and equipment. We believe operating free cash flow is an important liquidity measure that reflects the cash generated by our businesses, after the purchases of property and equipment, that can then be used for, among other things, strategic acquisitions and investments in the businesses, stock repurchases, and funding ongoing operations.
(8)As presented in the condensed consolidated statements of cash flows (unaudited).
(9)The breakout of components cannot be determined on a forward-looking basis without unreasonable efforts.

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