Bill Michalek - Vice President, Investor Relations John Clendening - Chief Executive Officer Davinder Athwal - Chief Financial Officer

Chris Shutler - William Blair Alex Perez - Barrington Research

Good day, ladies and gentlemen, and welcome to Blucora’s 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to introduce your host for today’s conference Mr. Bill Michalek, Vice President, Investor Relations. Please go ahead.

Thank you and welcome everyone to Blucora’s first quarter 2018 earnings conference call. By now, you should have had the opportunity to review a copy of our earnings release, supplemental information and prepared remarks. If you have not reviewed these documents, all three are available on the Investor Relations section of our website at Blucora.com. I'm joined today by John Clendening, Chief Executive Officer and Davinder Athwal Chief Financial Officer. Before we begin, let me remind everyone that today's discussion contains forward-looking statements based on the environment as we currently see it and speak only as of the current date. As such, they include risks and uncertainties, and actual results and events could differ materially from our current expectations. Please refer to our press release and our other SEC filings, including Forms 10-K, 10-Q and other reports, for more information on the specific risk factors. We assume no obligation to update our forward-looking statements. We will discuss both GAAP and non-GAAP financial measures today, and the earnings release available on blucora.com includes the full GAAP and non-GAAP reconciliations. With that, let me hand it over to John.

Thanks Bill and good morning everyone. In addition to releasing our earnings result this morning, we also announced that our Head of TaxAct, Sanjay Baskaran has made the decision to step down as President of TaxAct and leave the company for personal reasons effective last Friday, May 4. I know this is a difficult decision for him. We are all grateful for all of Sanjay’s contributions and we are pleased that he has agreed to remain with us on a transition basis through August 1. During his time with us, Sanjay has made many valuable contributions, including playing a key role in a very strong tax season results we announced today. So we thank him for all that and for all that he has contributed. On an interim basis, I will assume Sanjay’s responsibilities for TaxAct, supported by the strong team we have at both TaxAct and Blucora. We have initiated a search for a replacement, and will make an announcement as soon as we have something finalized. So net earnings, I am pleased to report that Blucora had a very strong start to the year posting double-digit growth rates and exceeding the high end of our guidance range on all metrics. Compared to last years’ first quarter, Blucora revenue grew by 13%, adjusted EBITDA by 14% and non-GAAP EPS by 15%. Strong cash flow generation allowed us to further strengthen our balance sheet. During the quarter, we reduced debt by another $40 million and improved our net leverage ratio to 2.1 times. This compares to 3.3 times in the year earlier period and 6.3 times at the end of 2015. Big picture, we are on track with our plans to drive growth in our businesses. Moving to the business unit level starting first with wealth management, HD Vest continued its strong business momentum with double-digit growth across the key metrics. Revenue grew by 11% year-over-year to $92 million, with continued investment in the business this year including costs associated with the clearing firm conversion, segment income grew 10% year-over-year to $13.1 million. Total assets under administration or AUA increased 10% year-over-year to $44.4 billion, and fee based advisory assets under management or AUM were up 15% year-over-year to $12.7 billion. These levels for both AUA and AUM are new records for the company. Net inflows into AUA in Q1 were about $625 million which I believe is the highest single quarter inflow level on record. This is driven in part by a number of recent advisor recruits coming on board, including the first funds from the large advisor we announced last quarter. Net inflows into AUM were up $320 million and AUM as a percent of AUA increased to 28.7%, up about 130 basis points from the year ago quarter and also hitting a high-water mark. A few updates I’ll call out here for HD Vest. The clearing conversion remains on track for late September. We continued to expect break-even on a conversion for 2018 and perhaps see a slight less benefit or by a $68 million benefit in 2019 and an $8 million to $10 million benefit in 2020. Our advisors success and productivity efforts continue to show progress. Advisors recruited under the new assessment process are showing exam pass rates 20 points higher than our historical average, which is a strong leading indicator. In addition, these advisors are hitting the initial benchmarks in growing gross commissions in about 120 days versus our prior 800 days, which is a remarkable early statistic. While it’s still relatively new process and the dollar volumes are still small, it’s a good indication that we are bringing the right new recruits on board and better enabling them to engage their clients on wealth management. Another update in terms of recruits, we’ve received about 700 advisor needs to date, from the relationship we announced late last year with Drake, a maker of tax software for the professional market. A few have already become HD Vest Advisors and with taxes and down the rear view mirror we would expect the increase activity in this regard. Lastly, we continue to make changes to drive improvement advisor support. One example resulted in the quarter was in driving our average speed to answer advisor calls to its lowest point on record for February and March. These months represented 50% improvement versus the comparable period last year. This is just another example of the types of opportunities in front of us to further improve an already strong business. So in summary, the first quarter was another strong quarter for HD Vest in terms of results as well as positioned for future success. And speaking of the future, there is a great deal of potential ahead of us, in each of the three key drivers of value creation. Organic growth, conversion of fee-based AUM and increased income from suite Turning to tax preparation, and for this discussion I’ll be talking about the full tax season, which is to tax day +1 or through April 19 as well as our full first half 2018 expectation for TaxAct. TaxAct delivered good progress on our multi-year strategy to reposition the business with a focus on growing monetized units. Monetized units generally include online and desktop software units for which we are paid, for either or both of the software or ancillary services as well as partnership units. As you may recall, for the three prior tax seasons, we’ve seen a decline in monetized units. I have described it in prior calls as being on the left side of the letter U, with our hope being able to get to the flat part of the U overtime as a precursor to growth in monetized units. In our last call, I noted that we saw a path to get it flat this season and I’m pleased that we could get there and a little beyond, by growing monetized filers modestly. The net effect along with pricing and product actions is that we expect to grow first half TaxAct revenue by approximately 15% versus the comparable period last year, which will put us well above the high end of both our original and revised outlook ranges for revenue. We continue to make strategic and technology infrastructure investments in the business and even with some incremental investments expect first half segment income will come in at the 56% range, putting us slightly above our revised outlook on segment margin. So let’s get into a little bit of detail. While the season got off to a slow start with the IRS opening a week later than last year, along with some confusion around the impact of tax reform and as of early February total IRS files were down 10%. The DIY market saw a nice recovery from there and hopefully ended the season up about 3% in unit volume. This season, we continued our focus on higher value customers and driving monetized units for superior life time value. As we would expect, we are aiming for higher value customers in de-emphasizing free our total DDIY e-filings declined year-over-year while our average revenue per user increased. Through April 19, our total U.S. consumer e-filings were $3.772 million, representing total market share of about 7.1%, a reduction of 130 basis points from last season again to your drop off I unpaid filers while increasing monetized filers. Our efforts in driving high-value centered on four areas of opportunity I have discussed in the past. Trading high potential DDIY segments, transparent pricing, leveraging enhanced capabilities, diversifying revenue by gaining additional distribution and extending our relationship with filers. We worked hard to improve our competitive position for this tax season focused on enhancing the value propositions, particularly around our core focus segments within the gig-accounting and disaffected Turbo Tax and H&R Block filers We launched the $100,000 accuracy guarantee, personalized reduction maximize, which will definitely increase our mobile capability and streamline our import capabilities, in addition to launching a Freelancer SKU for this season, which should promise for growth in future years. While we continue to increase our federal pricing, we have maintained a strong advantage versus the volumetric leader of about 50%. In addition, we continue to present our pricing very clearly, from the very start of the experience so filers know what our prices are. During the season we introduced a new basic SKU which targets the segment of the population that files 40A [ph] that is willing to pay for a low-cost product to get a great experience and all that comes with their products will be clear about what they will pay. This product is very popular and exceeded our expectations. It’s important to point out that market prices increased faster than last year and with second peak pricing increase weeks earlier than traditionally. These factors enabled us to move more aggressively in price than we had anticipated. So mix and additional pricing help driving incremental revenue relative to guidance. This year, we enhanced our capabilities through investments in our people as well as introducing machine learning and augmented intelligence at key part of the filer experience. In addition, we significantly enhanced our customer support capabilities and efficiency, and migrated successfully to a new cloud platform, which makes us more secure, efficient and scalable. These enhancements will serve us well for years into the future. Strategic partnerships enable us to diversify our revenue in two ways; one, by creating new sources of customer acquisition and two, extending customer relationships to new products and offers while we serve the more holistically across their financial lives. We announced over 10 new partner agreements for this season. In terms of the first point, new sources of customers, new agreements included Fidelity investments, Netspend and KeyBank. I use KeyBank as an example of new customer centric propositions we are building, where KeyBank customers receive our premium filing solutions free of charge to them and at their election can receive more accurate and relevant financial wellness recommendations from KeyBank. This type of partnership was new for us, and each partnership came online at a different point this season, but in total, they generated good learnings and insights. We hope to have even deeper product integration in the future’s which provides incremental volume opportunity, even greater partner value and enhanced customer experience. As it pertains to the second item, extending customer relationships through new products and offers, this year we launched the BluPrint financial assessment, which turns insights from a tax return into actionable recommendations designed to improve the filers’ financial situation. With the tax filer’s consent, we use dozens of data points within the 1040 to offer financial insights and suggestions, which will help them save on their taxes, lessen their debt burdens and improve their future financial health. We believe, we can help the average U.S. filer save thousands of dollars with the insights and solutions we provide. In fact, the average savings identified for customers this season is approximately $2,700. Think about that, for the cost of filing their taxes, finding savings of that magnitude. For the average filer, there will be a doubling of their tax return. That is differentiated from those in the market place that either offer no additional benefit or perhaps not much more than a credit score. How do we enable these savings? By making each of our customers to go from analysis to action. This year, we offered access to product partner’s help consumers generate more interest on their hard-earned money through high-yield deposit account and a better dealer consumer debt or manage risk to adding life insurance at a competitive rate. When we started the new season, we engaged with these partnerships, and they generated good learnings. One other point I would add here on BluPrint is that our customer request [ph] rate is performing customized analysis was well above expectations. We hope this represents the beginning of a significant shift and our TaxAct customers work with us. Historically, they have come down their taxes down on assets. This year, that has changed as the large majority of customers have agreed and shown that they want more solutions for TaxAct to help them with their financial lives throughout the year. Looking ahead, through partners and customer engagement, we hope to shift to more year round engagement. We now have more than 2 million customers that have indicated an interest and that we can seek to serve outside the tax season. To finish up on TaxACT, the few other positive developments I called for the season include; one, our retention rates, both overall and for paid filers improved versus last season. Two, from an efficiency standpoint, our customers call duration time is almost 10% versus last year, saving us several thousand employee hours and three, professional e-filers increased 3% year-over-year. Stepping back on tax preparation, given the season is only few weeks behind us, we continue to build on our assessment of last year and we’ll quickly turn our attention to actions to generate continued progress next season, their first year under tax reform. In closing, I’m very pleased with the strong first quarter, at double digit revenue earnings growth and with significant cash flow allowing us to continue to strengthen our balance sheet. And with HD Vest showing double-digit growth in revenue, segment income AUA and AUM. TaxAct showed significant progress with improved retention, improved products and return to growth in monetized units. Simply put, we continue to do what we said we would do, and I’m pleased with their progress. Finally, I wanted to add a big thank you to our employees for all their work on behalf of our customers, clients and advisors. The team has been doing incredible work, and I’m very proud to represent them. With that, I am pleased to turn the call over for the first time to our relatively new CFO, Davinder Athwal, who joined us from February. We are very excited to have him as part of the team, and he is already making a strong positive impact. So welcome again, Davinder. The call is yours.

Thanks, John. And before I begin my remarks, I’d like to say I’m excited to be here and look forward to driving continued financial performance as we execute our strategy. As I refer to John’s comments, I’d like to provide some additional detail on first quarter performance, our balance sheet update as well as an outlook for each of the second quarter and full fiscal year. Beginning with consolidated results for the first quarter and year-on-year growth, revenue was $206 million or up 13%. Adjusted EBITDA was $66.3 million up 14%.Non-GAAP net income was $58.2 million or $1.20 per diluted ratio representing improvement of 23% from 15% respectively. GAAP net income was $45.3 million or $0.93 per diluted share representing improvement of 48% and 39% respectively and lastly, operating free cash flow for the quarter was $56.7 million up 10%. Turning now to segment performance and beginning with wealth management. HD Vest’s first quarter revenue was $92.1 million and segment income was $13.1 million both above the high end of our guidance range, driven by better than expected transactional revenue due in large part to higher annuity and mutual fund sale. We are pleased whether AUA net flows of $625 million fee-based AUM net flows of $380 million each of which, the excellent work our advisors are doing with clients that was a long term potential of the business. I will note that as we approach the clearing from conversion transition date, we expect to see a slowing in net flow followed by a stronger fourth quarter. The current transition is on schedule and non-recurring expenses incurred in first quarter were approximately $200,000 and we expect to incur another $1.2 million or non-recurring expenses in the second and third quarter of this year. Our outlook for wealth management in the second quarter is for revenue of $88.6 million to $91.6 million and segment’s income of $10.4 million to $11.9 million. Moving onto tax preparation. TaxAct first quarter revenue was $113.9 million and segment income $58.8 million, both of which are above the high end of our guidance range driven largely by pricing impacting actions that we were able to accelerate given the competitive landscape. As John mentioned, we expect first half revenue growth to be approximately 15% versus last year. These results are driven by an approximately 38% increase in digital -- consumer average revenue for either. John has shared our growth and margin expectations for the first half of 2018. This translates into a second quarter outlook for TaxAct on revenue between $63.2 million to $64 million and segment income of $40.3 million to $41.5 million. Finishing up on first quarter performance. Unallocated corporate expenses came in at $5.5 million, a bit better than expected and included approximately $600,000 on non-recurring transition related cost. We expect the second quarter unallocated corporate expenses to come in around $5.6 million, approximately $200,000 to $300,000 of expenses that we had expected in the first quarter that shifted to the second quarter. Moving onto the balance sheet, we ended the quarter with cash and cash equivalents of $77.1 million and our net debt was $227.9 million, which reflected $40 million pay down during the quarter, enabled by the continued strong cash flow generation that characterizes our business. This reduction is consistent with our stated expectation of paying down $80 million to $100 million of debt in the first half of 2018. Our focus on leverage reduction is reflected in our recent debt rating upgrade by S&P to BB with a stable outlook from BB minus. With that, let’s turn to consolidated outlook for the second quarter and full year. For the second quarter, we expect consolidated revenue of $151.8 million to $155.6 million, adjusted EBITDA of $45 million to $48 million, non-GAAP net income of $39.8 million to $42.9 million or $0.82 to $0.88 per diluted share and GAAP net income attributable to Blucora of $27 million to $28.9 million or $0.55 to $0.59 per diluted share. For the full year, we expect consolidated revenue of $545.8 million to $559.8 million. Adjusted EBITDA of $110.5 million to $118.3 million, non-GAAP net income of $86.3 million to $94.2 million or $1.76 to $1.93 per diluted share and GAAP net income attributable to Blucora of $38.7 million to $45 million or $0.79 to $0.92 per diluted share. As a reminder, our outlook includes the following assumptions. The broad range for a broad range for transactional revenue due to variability; impact of clearing firm transitional-related expenses, market volatility including impact to net flows and cash free balances and effective tax rate 4% to 8% for GAAP net income attributable to Blucora and finally our guidance for GAAP net income or loss attributable to Blucora. And finally, our guidance for GAAP net income or loss attributable to Blucora excludes any impact to tax expense for discrete items and variable stock-based compensation granted to non-employee advisors. Consistent with our previous messaging we will continue to run the business to optimize for adjusted EBITDA as such we will refine our investment into each segment along with corporate operating expense for the second half of year. This concludes our prepared remarks. We will now turn the call over to the operator for Q&A. Christy.

Thank you. [Operator Instructions]. And our first question comes from Chris Shutler from William Blair. Your line is open.

Hi, guys. Good morning. Maybe just a little more color on the distribution partnerships, John, what kind of results has generated for you this tax season? What the response from the partners has been to-date? And what should we expect from to see from you is next tax season from a distribution standpoint?

Hey, Chris, good morning and thanks for the question, really appreciate it. So, in terms of partnerships as we laid out we've got two ways of thinking about this. So I'll question on both types of partnerships. The first type is around creating new sources of customer acquisition and we're happy with where we're at on that this year. As we noted in the prepared remarks we raised really quickly with a lot of these arrangements coming online in fact even during the courses of season itself. And we also pointed out just as a reminder back in November that this is sort of year one of this sort of approach instead of be a good – would be a test and learn. So, we had some important takeaways around the partnership types and the merchandizing that's required to enable these sorts of arrangements to drive material traffic flow. Its still is a multiyear approach to take it in my mind on this one in terms of the deals we've done so far to have that sort of a move the needle impact on the numbers. But encouraged by what we've seen so far there and we'll be turning our attention within the next couple of weeks to continue to move down as half of that in more partnerships in this pain, so we even more ready for next tax season. The second flavor around extending relationships through parts and offers; really happy with the consumer response that we saw here in terms of consumers opting for situation we make an offer to them, really encouraged in that regard. As I mentioned, we're encouraged by the numbers that we demonstrated. We can say consumers are getting interested. But again in this case also its early days. But I think in this case as well as the first case around driving traffic you will see us to be more aggressive as we head in the next year. And I think the lessons that we've learned and determines even more positive business impacts. We've also been happy with the partner reaction. We're engaged in the breeze on those partners around how we sort of come together to make these more impactful for everybody, most of that will be the consumer. So net-net where expect we would be on year one, more to come as we share plans later in year for next year.

All right. And then why did you make the decision to re-introduced the basic SKU kind of mid season?

Yes. Thanks for the question there and that's well Chris. Couple of things there. First is every season is different. We did walk away from that SKU couple of seasons ago. Every season is different. The marketplace is really dynamic and what it means for us is we got to nimble and to make the calls that we need to make in advance of season as well as in the season. Having said that as sort of back, the most important as you made that decision was we saw significant consumer demand. For a SKU that was more that something that free – for a SKU that consisted of prior-year import alongside that access to customer care on a continuous and unlimited basis. And so, we began observing that. And as you know we got multiple tests in the marketplace at any particular time. When we saw that we move towards introducing that SKU and we feel like we are pricing at right spot. In fact it's one of the period that we're little bit pessimistic around response we would get In fact there is a far stronger respond that often we'd anticipated. And so for those reasons we introduce it and merchandise it a bit and we're happy with what we saw.

Okay. And then just one more, John, on the HD Vest this time. So HD Vest has been around for a while. It's well known by tax pros. So what's the pitch to get those who have been on the sidelines with respect to wealth management on board? And how is now any different than three or five years ago?

So, Chris, thanks for the question there as well. Its an important one because since we are focused on growing our own and as we've talked on this call for several quarters that the focus is to upgrade our efforts in targeting and then getting advisors on board. And so while enduring attraction to doing something this is the same, right? We're getting tax professional who has a customer base to trust them, a tax pro who understands what's going on in people's financial life and so they have a basis with which to establish the relationship. They see the carnage in people's portfolios. And on top of that they've got an opportunity to stay engage in the off-season for them, so they can, without adding any cost add to their practice and add to their practice value. Having said that, why now? Two things there I think are most important. Number one, we are retooling our outreach and our marketing efforts. For many years it has been simply a mailroom shop, if you were spewing tons of tons of direct mail out to the advisor base. And I think people get a little bit numb at that. Think everybody in the call, think about the mail you don't open when you get, is the vast majority of what you get in your mail box. And so we've created a new ways of reaching out through partnerships, through consortiums and these sorts of things to approach the advisor in different way. We've also got the great partnership which is a new way of engaging client with a potential advisor where the advisor feels like, hey, wait a second, it’s a firm Drake that I trust for my professional software, they're saying I will take a look at this. You heard the response we got from that. So, we talk to someone and where you catch them different than spewing on direct mail, where we still do some direct mail is one reason why we get a new look now. And then second people are taking notice around the work we been doing to upgrade our interaction with prospects where we're focusing clearing on more attractive prospects, but also we can now stay around the length of time it can take and how easy it can be with the right training and with the right licensing, to get to speed and have an impact in this business. So you heard some of the numbers in prepared remarks, pretty stunning for someone whose not being well professional or brokerage individual to be able to get up to speed that quickly, and so that message around, hey, you can do this. We can help. Is a really strong message that we're getting some good response to.

All right. Thank you.

You bet.

Thank you. [Operator Instructions]. Now I'm showing no further – I'm sorry. We do have a question from Alex Perez from Barrington Research. Your line is open.

Hi, guys.

Good morning.

Couple of questions. I came on a couple of minutes later, don't know if you addressed this already, but you paid down $40 million in debt in the first quarter. You're targeting 80 to 100 million for the full year. Deleveraging has been an important part of those P&L here and balance sheet I guess over the last few years. I know your debt was -- your net leverage ratio was over six times after the HD Vest acquisition. What is it now or what was it at year-end and what do you expected to be with plan paydown at the end of this year?

So, hey, thanks for the question. Since you missed it, one thing the intro, I want to let you know that Davinder Athwal on the call here as our new CFO. And he's been on the job for a couple of months and one of the areas that he focused on an initially, of course is understanding the balance sheet and capital structure. He's – I'll turn the question over to him.

Thanks, John and good morning Alex. Thanks for the question. So, basically as we announced we pay down 40 million in the quarter. And just kind of walking through where we are? Where we be? We were as you know, we had about 6.3 at the HD Vest acquisition. At the end of last year we ended up with about 3.3 and right now we're sitting at about 2.1. We do expect to pay another 40 million to 50 million for the balance of the year. So at the end of this year we expect to be kind of right around 1.8, which is been our stated target.

Okay, great. Thank you for that. And then another question; shifting gears, just a follow-up on the partnership question. How many partnerships do you have -- you might have said this. I apologize. And what sort of things are you referring to? I heard you say life insurance and other thing. Just get a more thorough response, please?

You bet, you bet. Again, Alex, thanks for the question. So get over 10 partnerships and again big picture there is some partnerships that are around essentially traffic flow generation and widening our distribution outside of being dependent on consumer marketing, which is some that we've covered over the past several quarters as we like have another sort of intake valve of consumers to come in and file the tax. The other one is – and wait a second, you have people already coming right now and you look increase that. Why not do a better job of better serving those customers by extending our relationship with them. I know that's the heart of your question. So the offerings that we have available -- had available last season were around consumer debt. It was around consumer loans, around student lending, high-yield deposit accounts and life insurance. And so we worked late last year and finalize those four arrangements. And essence of it is that based on the information that the taxpayers make available to us with their permission we can then make an offer to them. And we do so in the context of having access to 40 or 50 data points in that tax file and we turn that into customize tailored experience for the consumer where they feel they are even in session, having the opportunity to improve their financial situation. The numbers are big, right, $2,700, $3,000 doubling your refund that sort of thing. And critically I'll point on as well, with that consumers permission we can now also market these services to them during the course of the year which than opens up to us engaging them across the year. One of the recombinants in the entire industry is moving away from one and done sort of experience. And so these give us an ability to do that. So again early days but that’s the type of offer that we're making. And that comes from consumer to the consumer, again, in a customized easy to act on way.

Great. Well, thank you for that additional color. I Appreciate that.

You bet.

Thank you. And we do have a follow-up from Chris Shutler from William Blair. Your line is open.

Hey, guys. I'll take advantage of lack of questions here. Regarding M&A, maybe just talk about your appetite at this point, given where the leverage ratio is. And I guess just as important you get a sense there maybe some properties in your wheelhouse that could become available or maybe available at some point over the next year?

Hey, Chris. Thanks again for the question. The topic of M&A is one that was completely off the table for us when you're up there 6x and you're going down that glide path and you're looking to strengthen your balance sheet. And most important for folks that have been following the stock for some time period, we were very clear that we're going to pace our efforts to grow this business in the right fashion and we're not going to get distracted at the wrong time and things that just wouldn't be practical for us to go to. Having said that from a philosophical point of view, the most I can share today is we believe that well handled, well executed M&A can be very, very accretive to the shareholder. And so its part of what we need to be doing is being open minded to and paying attention to the possibility that having now a strategy as of last August which we shared in November. Having a strategy that's understood and articulated, guide this in towards to what extend can M&A be done in fulfillment of that strategy very different than what Blucora had been focused on previous which is more around do we feel like we can add value to the shareholder through smart M&A. And so that strategy in mind that having been paid down in mind we are – we're got to be a firm that to extent that deals can be done at the right price and with the right asset in mind, with the path toward accretion than of course we're going to be interested. That's all I can say at this point.

All right. And then lastly, in TaxAct you -- I think you noted some – you'll be making some incremental investments in that business, so just wanted to get more clarity there? And that the Q2 revenue outlook for TaxAct look good, EBITDA maybe a little lighter. But just wondering how much of that is aggressive distribution deals you entered into which I know Eric alluded to on last call a bit versus investments? Thanks.

Thanks again. So, good to say that it's still eight months and so we're into the next tax season. We've done a lot of adjusting in the last year, the tax year now behind us. And so there's work to be done clearly though relatively quickly to focus our efforts for next tax season. And so, when we speak about investments they're going to come into couple of forms. One's going to be around capability. It was a year where we did some experimentation around augmented and machine -- machine learning and so we're sorting out how to best deploy that. And that's just an example number, so related that we've talked about having moved to the cloud. We're also need to think about how do we modernized other elements of our technology so that we can get better metrics, frankly just for making experience better. And as once we move to the cloud there's elements of the software that can be upgraded. The second type of investment is around taking the learning some in the last year and improving the client experience and the marketing of that client experience. It's not a whole bunch of investment that goes with that, but there is some. We can't stay still. Competitors are moving. We're learning a lot as we go. As everybody on the call knows, we've got a team that's maturing into this business and every single season and these are hyper-seasonal businesses create significant learning that caused us to see new opportunities that we haven't seen previously, and so improving the client experience is a part of that. So capacity, technology, client experience those are the type of investments. Now underneath partnerships with learning we have from this season in hand. I think it's very fair to say that we are clear on what sort of partnerships should command most of our focus and those that would demand less focus based on a potential that comes from them. And on top of that we are looking to make it easier for partners to essentially integrate into our systems. And so that's another example of an investment that will be an enabler around this business going forward. But all of this is contemplated in the guidance remarks that we've made and we feel like we're pacing the investment properly in this business sort of weighing the capacity to invest with the marketplace opportunities with the profit growth potential that we see in the future. And so we're at a point where we say, hey, there's a big bang that's coming, oh, my gosh, we had to go, put in multiple of normal investment in this business. That said, we look back at two years ago, three years ago, four years ago and say, yes, we should have been spending more into this business. It’s a good business. We should be putting in the growth and we're looking to leg into that.

All right. Thanks a lot.

Welcome.

Thank you. And I'm showing no further questions from our phone line. I would now like to turn the conference call back over to management for any closing remarks.

Thank you. And thanks everybody. Really appreciate the focus and attention on the call today. And in closing I'd like to reinforce some of the things that's I said in the earlier remarks around gratitude. Really appreciate everybody joining. Very grateful as is the team here, around our employees, advisers and customers, folks that make the business as strong as it is, enjoyable as it is for me to be employed here at Blucora. It's certainly true that those constituents are at the heart of our success. So, in closing please to report another strong quarter and look forward to continue to update you on our progress. Thanks everybody.

Ladies and gentlemen, thank for participating in today's conference. This does conclude the program. You may all disconnect. Everyone have a wonderful day.