Dallas-based Blucora uses investor day to address concerns over its two companies, raises forecast

Dallas-based financial tech company Blucora defended the synergies of its two businesses during its investor day after a proxy fight earlier this year called them into question.

Blucora, which has about 900 employees, with around 80% working in the Cypress Waters development, is divided between two businesses. It has a wealth management division, Avantax Wealth Management and Avantax Planning Partners, with $85 billion in client assets. And it has a tax service business, TaxAct, that had approximately three million consumers and 23,000 professional users last year.

New CEO Chris Walters’ task this year is to prove the two companies work together to create value for investors.

“We’re committed to the two businesses and think they deliver real value,” Walters said in a call after the meeting.

The CEO, who has been at the helm since January 2020, said the company thinks it can grow its assets under management by $2 billion over the next three years by recruiting CPAs using its tax software into its wealth management business.

Blucora, which moved its headquarters from Bellevue, Wash., to Dallas in 2016, prides itself on bringing wealth management services to the masses.

Blucora reported full-year revenue of $755 million last year, up 5% from the year before. During the investor event, it announced that it was raising its second-quarter and full-year outlook. Blucora’s stock popped 10.4% to $18.72 following the Tuesday event after closing Monday at $16.95.

“The last two weeks of the tax season, which are always pivotal for our tax software segment, came in much stronger than we anticipated,” Walters said in a statement.

It now expects annual revenue to reach between $855 million and $876 million, up from a range of $844 million to $867.5 million that it forecasted in early May.

Earlier this year, the company was involved with a proxy battle after Ancora, which has approximately 3.4% ownership in Blucora, said it thought the company was better off without the tax business. Ancora questioned whether the company was “incentivized to maintain a bigger, bloated holding company model rather than a focused, streamlined business.”

After the virtual investor event, Ancora hadn’t changed its mind that the wealth management business was the strongest asset and deserved Blucora’s full attention. It thinks Blucora should explore strategic alternatives for TaxAct, including a sale.

“Though we are pleased that TaxAct is performing better than expectations, Blucora’s investor day confirmed that our original thesis remains valid,” Ancora said in a statement to The Dallas Morning News.

After the proxy fight came to a vote earlier this year, Blucora shareholders voted to reelect the company’s 10 current board members, rejecting Ancora’s nominees.

“Our door is open to all possibilities that create value for shareholders,” Walters said about selling TaxAct. “That said, we laid out a pretty compelling case for the substantial value that can be created in terms of operating each of the businesses independently. And the benefits across them are a cherry on top.”

Blucora was originally founded as Infospace in 1996 by an ex-Microsoft employee. It changed its name in 2012 after acquiring TaxAct.

Walters, who previously served on Blucora’s board, said he was appointed CEO because previously, a “variety of actions taken weren’t good for the long term.” For example, the company raised prices for TaxAct, which increased revenue but led to a drop in customers.

“The company wanted to make some shifts,” he said.