Q4 2019 Earnings Call
And welcome to the Bluecore Inc. fourth quarter 2019 earnings conference call. At this time all participant lines are in listen only mode. After the speakers presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you recall.
For any further assistance. Please press star Zero I would now like to hand, the conference over to your Speaker today, Bill Michelin Vice President of Investor Relations. Thank you. Please go ahead Sir.
Thank you and welcome everyone to Nucor's fourth quarter 2019 earnings conference call.
By now you should have had opportunity to review a copy of our earnings release and supplemental information.
He is not review these documents are available on the Investor Relations section of our website at Blucora dotcom.
I'm joined today by Chris Walters, Chief Executive Officer, and Todd Mackay, our chief business operations and development Officer.
Before we begin let me remind everyone that today's discussion contain forward looking statements based on the environment as it currently see and speak only as of the currency.
As such the include risks and uncertainties and actual results and events could differ materially from our current expectations.
Please refer to our press release and other SEC filings, including our form 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 record Dot Com includes a full GAAP and non-GAAP reconciliations with that let me hand over to Chris.
Thanks, Bill and good morning, everyone Im excited to be speaking with all of you for the first time in my capacity as CEO Blucora.
I've had the pleasure of serving on record board of directors since 2014.
And from that feed appointed active role in developing our current strategy, including driving our tax centric vision and champion our acquisition of HD Vest first global and HK Fs.
I've also had the benefit of great insight into the business did successes growth opportunities challenges and how blucora has been able to position itself for the future.
Thats exactly for these reasons, but I was so interested to expand my role as a company and take the CEO position.
I believe blucora has the potential to accelerate organic growth for the cat cash engine that can be a great enabler.
I'm also genuinely excited about the purpose of the company, including maximizing value for consumers and enabling them to have better financial lives.
In short I couldn't be more pleased to transition to CEO and spearhead. The next phase of our group and work with all of you.
We have a lot to cover today, including fourth quarter results that were in line or better than our target ranges on all metrics record annual performance for both Taxact and around tax and an update on tax season.
So let's dive right in.
Starting first with wealth management fourth quarter wealth management revenue was 145.2 million and segment income was $19 million.
Both of which were at or above the midpoint of our target ranges.
On a consolidated basis net flows into total client assets.
Were about 180 million and we ended the quarter with 70.6 billion in total client assets.
Net inflows into advisory assets in the fourth quarter were about 200 million and we ended the quarter with 27.6 billion and advisory assets.
Advisory assets as a portion of total client assets ended the quarter at 39%.
A few update I'll call out here for wealth management.
During the quarter, we completed the final business combination of our backend processing and support functions in wealth management. Following the first global acquisition, which will allow us to operate even more efficiently.
We enhanced our advisors service structure with regional teams leveraging an area, where first global had great success to provide segment the groups of advisors with enhanced service and operational support through small dedicated teams.
We also rolled out a robust action plan to enhance our operations and service metrics to improve the advisor experience. The team has been successfully executing on the deadline to achieve results that will continue to integrate platforms and streamline functionality.
The initiative has been well received by advisors.
We began cross selling some of the more popular products between the legacy HD vest and first global advisor basis, including select home Office Advisory solutions, and a retirement planning offerings with more products the coming Q1, all to the benefit of clients.
Recruiting continues to be strong with more than 60, new advisors, joining in Q4, including new tax pro advisors as well as established advisor transfers.
We also added another high value accounting firm in the quarter with approximately $10 million in cumulative accounting revenue and representing an estimated 1 billion prospecting opportunity in total client assets.
As it relates to our proprietary tax smart investing platform for key OSI, which is designed to help advisors systematically identified and capture tax alpha for clients across multiple accounts, we have a few very positive updates.
First we ended the year with about 900 advisors on the platform significantly exceeding our goal of 500.
And we began to rollout our legacy first global advisor base, adding about 100 visors there.
Overall feedback from advisors and clients continues to be very good.
Second we officially launched our second module the capital gains analyzer.
Which captures and reports the annual capital gains estimates of mutual funds.
This module allows our advisors to focus more on planning and client outcomes as opposed to data gathering.
We also launched version 2.0 of the tax loss Harvester.
Which can identify losses to offset those gains for clients.
Fraction of the time, the new version streamlined reporting and adds incremental a lot level detail and other data for deeper client conversations.
The last update on TSR is that we just launched this month, a beta test of our third tier Psi module, the social security plan.
This module health clients optimize their social security benefit based on their specific cash flow needs and maximizes relative benefits for each partner in a couple early feedback on this module is quite positive.
The other big news in the broader wealth management Arena recently was our announcement in early January of our intend to acquire HK financial services. This pending transaction reinforces our strategy of delivering tax advantage wealth management solutions to advisors SCPA firms and end clients.
The combination with H. Kfs is expected to add approximately 4.5 billion to Bluecore total client assets, bringing the total based on year end numbers to more than 75 billion.
By comparison, we ended 2018 with just over 42 billion. So that would represent almost 80% growth in total client assets and about one year.
The complementary nature of the transaction is expected to expand bluecore addressable market.
Add growth and profit engine and enhance and expand available growth opportunities ultimately further strengthening the company's established leadership in tax aware investing.
Most importantly, it enables us to serve CPA firms the way they want to be served either in our independent model with FCA, becoming wealth management advisors or a turnkey Andre for SCPA firms, who prefer to essentially outsource the wealth management work to affirm they trust while ensuring close.
Coordination.
As we enhance our offerings CPA firms and given the more optionality. It will increase the performance of recruiting efforts as a reminder, HK financial services will be run as a third division of Blue core with very little integration and no overlap eliminating risk of disruption to the advanced acts advisors.
We continue to expect the transaction to close around the end of the first quarter subject to customary closing conditions.
For the company as a whole we look back at the full year 2019. The team has really accomplished a great deal, including growing total revenue by 28%, including the addition of first global starting from the May acquisition date.
Growing adjusted EBITDA by 15%.
Growing non-GAAP earnings by 11% and crossing the two dollar Mark at $2, an 11 cents diluted net income per share.
Generating more than 80 million in free cash flow.
Improving wealth management revenue by 36%.
Achieving record net flows including approximately $1 billion into advisory.
Acquiring first global which added significant scale complementary capabilities and high recurring revenue.
Achieving 6.5 million in synergies related to first global which is more than double our original estimate at the time of acquisition.
Achieving our 22nd consecutive year of revenue growth at tax act, while growing 12% and maintaining stability in our monetize units.
Implementing a share repurchase program following a $100 million authorization.
And last but not least bringing great new talent into the organization.
In 2019, we generated strong financial results, while investing for the future strengthening our platform and laying the groundwork to capture the significant opportunities. We see ahead, while we've made good progress.
Im even more excited about where we'll go from here.
So, let's move to tax preparation and our update of on the current season.
As you may be aware total IRS filings are roughly flat year over year and DIY filings are up about 3.5% as of February eight.
Competitive intensity continues to be high with the volume metric meters spending aggressively on marketing with a messaging focus around their free offerings and the storefront front players focusing on both free and hybrid assisted offerings.
Against this backdrop, we came into this year with the goal of building on the success of last season targeting to achieve more balanced growth across units and pricing.
To do so we made several significant improvement, particularly in our user experience, which I'm excited about and will discuss in more detail in a moment.
As you all know every tax season is unique and this one is no different.
So far this season, we're excited about a lot of the progress we're making the same time, we do have opportunities to optimize in certain areas as we move forward through the season.
So lets touch on the areas. We are excited about as well as the areas, we want to optimize a bit further.
In the last couple of calls we've discussed the need to improve our customers' experience.
And to do so we have continued to invest both in updating our legacy code as well as Reimagine end user experience.
I'm happy to share that we started to see the fruits of our labor.
For example.
Our conversion or complete rate is up five points versus this time last year, which has a good indicator that the off season improvements we made in the product an underlying engine, where the right ones and having the desired result.
Also our retention for returning customer rates are also running ahead of last year by four points.
As well as those bright spots. We have also faced challenges and this is still a very competitive market, especially around the three product where today, we don't enjoy the advantage we have versus the volume metric leaders that we do with our higher end skews in terms of pricing.
The price to acquire a three customer significantly up we continue to optimize in this space to find the right balance of costs and profitable growth.
Along with pressure with the free product. We were also a bit at a position starts to season from a marketing perspective with our messaging initially not focused on what would resonating with early season filers, resulting in a top of funnel that has been below expectations, albeit improving.
At this relatively early point in the season as is that Mccain at this point in time in previous seasons, our performance lagged. The overall market with starts down about 20% through February 16th and E files down 11%.
A couple of things I would note here, one we delayed our ramp in marketing spend somewhat compared to last year.
To our business tends to make of ground in the second peak of tax season, given our focus on paying filers disproportionately file later in the season.
We see opportunities to improve our approach and top of funnel performance in the second Pete. This is an area where adds significant experience and I'm working closely with team to ensure that we are in the best possible position for the remainder of the season.
All factors considered we remain comfortable with our prior outlook for the first half of 2020, which includes segment margin in the range of.
56.7% to 57.7% on revenue growth of 3% to 5%.
Versus the comparable prior year period as adjusted for simple tax.
Switching back to our product experience during the off season. The number one focus of our teams has been improving the client experience. The team spent countless hours scouring over every page in every word on the customer journey, making it much easier and more enjoyable, while removing friction points for filers at every level of complex.
Yes.
We believe this is reflected in a significantly improved customer experience the season, which we hope will continue to drive increases in conversion in season with less leakage in the customer funnel as well as better retention in subsequent seasons.
We have also launched new and improved branded features which we believe we'll have strong appeal and differentiation.
These include.
My tax plan. This new feature creates a custom plan for tax act filers to save more on taxes next year.
Our technology personalizes each plan for the customers unique tax situation provide specific savings amounts and includes a downloadable checklist of actions to save we believe this feature will be a real and differentiated benefits for customers and help bring them back next year.
Protests.
As a visually enticing way to reveal lesser known tax advantages customized for the individual filer that helped the customer get a bigger refund this year and for years to come.
This feature is expanded and greatly enhanced for the season.
We also brought back some of our more popular features like enhance personalized deduction, maximizer, which helps customers uncover additional deductions than our experience are commonly overlooked.
As well as our $100000 accuracy guarantee.
We believe we're the only tax online tax software company that offers this level of personalized insight.
And guidance into the financial health of our customers. This delivered significant value to our customers, who can save real money now and for years to come.
One last update here is our assisted offering where tax gurus offer live tax health as you may recall, we piloted this offering last year and our expanding our testing the season.
Our goal is to exit the season with a fully vetted plan to launch a more fulsome offering profitably and at scale next season.
Should our testing prove a viable economic model.
Overall, we've made great strides improving our product positioning and capabilities in this business Curtis has done a great job in its first full off season at the helm and the product is significantly improved and already showing results with higher conversion rates.
I see great deal of opportunity for the business over the medium to long term and Thats, perhaps one of the thing that has been most exciting to me in terms of my initial observations but.
The product improvements will drive higher retention rates going forward and when combined with improved marketing efforts will be in a stronger position to grow units in coming years.
In conclusion across the full business, we had a solid fourth quarter, which capped a strong 2019 for blue core with record performance in a number of categories. The company has made good progress positioning itself for future growth.
And our expectations for this tax season remain in line with our previous estimates while I'm only in wheat number three of my tenure as CEO and I'm still learning assessing and my initial observations I already see a number of ways, we could optimize to spur higher organic growth rates.
With that let me turn it over top.
Thanks, Chris and good morning, everyone. It's great to be here today I'll provide some additional detail on our fourth quarter results and add color on our outlook for Q1 and the tax season.
For the Corp, fourth quarter, we reported total revenue of 149.4 million, which was bit a bit above the midpoint of our guidance adjusted EBITDA loss of 733000, which exceeded the top end of our target.
Non-GAAP net loss of 4.8 million or 10 cents per share both better than the top end of the range.
And GAAP net income of 17.3 million or 36 cents per share, which surpassed expectations based on better operational results as well as a $49 billion tax benefit resulting from the release some valuation allowances associated with our annual wells and our ability to.
Utilize them in future periods.
In terms of segment performance and beginning with wealth management revenue was 145.2 million and segment income was 19.1 billion, both of which were at or above the midpoint of our target ranges.
Segment income included a 540000 dollar legal settlement that was not contemplated in our guidance.
On a pro forma basis for first growth for the first global acquisition wealth management revenue was up 2% year over year, driven by advisory and transaction revenue, which were up 4% and 13%, respectively and more than offset the decline in mutual fund revenue share and sweep revenues and.
Fees driven by interest rates.
Net inflows into advisory assets in the fourth quarter were about 200 million and we ended the quarter with 27.6 billion and advisory assets net flows into total client assets were approximately 180 million and we cross of 70 billion threshold for the first time ending the.
Fourth quarter was 70.6 billion.
Advisory assets as a proportion of total client assets ended the quarter at 39.1% also a new record.
Moving onto the tax Prep segment tax Act revenue for the fourth quarter was 4.2 million up 4% versus the prior year.
Segment loss was 12.3 million up by about 3.6 million versus the prior year driven by the product development investment work that we discussed over the past couple of quarters.
Finishing up on the fourth quarter for performance under allocated corporate operating expenses were 7.6 million, which is lighter than we expected as we were able to find efficiencies and defer some planned spend.
Moving on now to liquidity, we ended the quarter with cash and cash equivalents of $80.8 million and our net debt was 318.9 million, resulting in a net leverage ratio of 2.3 times at the end of December.
During the quarter, we repurchased approximately 744000 shares at an average price of $21.05 per share for a total of about 15.7 million and repurchases and representing about 1.5% of our shares outstanding.
We have about 72 million remaining under our current share repurchase authorization, which will allow us to continue to be opportunistic in the future as we deem appropriate.
Finally, as it relates to the acquisition and integration costs in the fourth quarter, we recorded $8 million of which about 60% was related first global integration and the remainder related costs associated with HK, which the age Kfs acquisition.
For the first quarter, we expect tax act revenues to be between 131 million to 136.5 million or approximately 64% of the first half 2020 revenue and segment income of 77 million to 80.5 million.
We expect a band tax first quarter revenue to be between $140 million and a 145 million and segment income of 16.5 to 18.5 million.
On a consolidated basis, we expect first quarter revenue to be between 271 million and 281.5 million.
Adjusted EBITDA between $85 million and 91 million.
Non-GAAP net income of 74.5 to 80.5 million or one dollar and 52 cents to one dollar and 64 cents per diluted share and GAAP income attributed attributable to Blue Cora of 31.5 to 34.5 million.
Or 64 cents to 70 cents per diluted share.
This includes unallocated corporate operating expenses are between eight and 8.5 million.
As we've done in the past, we expect to provide a full year outlook during our first quarter call. Upon the completion of the tax season.
There are a couple of items I mentioned now that may be helpful. As you look ahead for modeling purposes.
Regarding ano wells in 2019, we utilized approximately 70 million in nonetheless, leaving a gross or pre tax balance of 392 million.
Given that we've released a large portion of valuation allowances associated with our annual wells at once rather than quarterly offsets that we have shown historically, we will show higher GAAP tax rate in 2020 estimated at approximately 30%.
In terms of nonrecurring items, we expect approximately 13 million of remaining integration costs relating to first global which should close out our integration expense related to the transaction and keeps us on our originally targeted budget.
We also expect to close our acquisition of HK financial services by the end of Q1 or shortly thereafter subject to satisfaction of customary closing conditions.
We estimate that approximately $8 million of the plans $10 million to $11 million of integration cost to hit in 2020 as well as the transaction costs.
In Q1, we also expect to record about 6.5 million related to our senior management transition.
This concludes our prepared remarks, we will now turn it over to the operator for QNX operator.
As a reminder, casket question you want me to press Star one on your telephone to withdraw your question Thats. The pound King please standby will be composite Kunaev Austin.
And our first question comes from the line of Chris Shutler from William Blair. Your line is now thanks.
Hey, guys good morning.
First I wanted to touch on the tax season. So on the decline in starts in you file so far.
Can you give us a sense what those metrics look like for I guess, just the free versus the premium priced units and how much of an impact the reduction or elimination of basic played into that.
Yes. So this is Todd we don't break out the metrics of of free versus premium as as consistent with with our AR pack past practices.
As you know in the past, we've been pushing for stable or growth and and monetize units.
And we'll continue to do that as well as as.
Stabilization and growth in units as a whole.
Okay.
And I guess the other one on taxes, just given all the testing that you had done at a tax season, obviously, good to see conversion and retention rates improved significantly but.
I guess weight.
Based on your assessment Crystal why do you think that the company was alpha position early in tax season.
There are few things around messaging and actually I'd break it apart into product and marketing I think we're exactly where we wanted to be from a product perspective as I noted Curtis has done a remarkable job and literally every drop off point, where we could see consumers the part and we have seen improvements in.
Core metrics and so ultimately that will lead to higher conversion rates for everybody that makes it to us and slightly higher retention rates year over year from really happy on that the mentioned in terms of the marketing side.
We were out of physician as described in some of it was on messaging early in the season. It free is an important.
Element of messaging and part of that is that free filers or more inclined to engage early.
We don't have as unique value proposition there relative to the other players however.
It's still is important to play into free early on in season for the second thing is we needed to be experimenting with a broader array. So unlike product where you can test extensively before you can test messaging in marketing a bit earlier, but you don't really get into channel performance level detail and.
So you're in season and.
You can see how you are performing relative to competition.
And so we had fewer thing even flight test and then scale and then we'd ideally one and so part of whatever dues inside of jumped in and working with the team. The broadening the number of tactics that we're employing and ultimately will be able to allocate to those that are performing best in the.
Six or eight weeks for the season.
Okay got it.
And then.
Switching over to the wealth business slender two questions. There. So you gave us the advisory flows of.
Just 200 million can you give us the total net flows for the quarter.
Including the brokerage.
And then maybe just address the continued decline in the advisor headcount that I don't know if you could give a.
Production retention type of metric or at least give us some sense of what's going on from us.
Our retention perspective.
Yes sure. So the total net flows were $180 million.
And so we saw.
A greater portion flow into advisory, which is which is where we won the business to be moving.
In fact, we we.
Our a record levels now in our advisory assets that at over 39% of our totally way being and.
In advisory or or fee based accounts.
Which is the trend line that that we want to continue to see on the asset movement out and advisor headcount side.
The attrition in the fourth quarter.
Obviously is.
Delayed.
In line with what we've seen in the in the past in terms of higher attrition going toward the end of the year.
And we did have a couple of regrettable attrition, but overall in line and ahead of what we mapped out.
When we when we did the first global.
First global transaction. So we're ahead of expectations internally there.
Any sense, Todd or Chris win.
When we should expect the headcount already asked if we should expect data headcount to.
To stabilize for certainly recognize the.
The revenue retention.
And slows or a lot more important than head count necessarily but any thoughts on stabilization account just from up I think in optics standpoint would be helpful.
Yeah, we don't usually forecast advisor headcount and the reason being that our model, obviously as a little bit different than than others in the market with newly licensed folks coming onboard we know that many of those will will be can become successful and growing advisors, but many of those also.
Churn out over over time as as it becomes apparent that thats not the right practice for them. So there's there's always flows in and out from our from our recruiting arm.
And from the newly licensed advisors important note that those guys are producing advisors, usually at at that point anyway, and so the measures that we look at internally.
And don't necessarily report on but our or the average production per advisor overtime, and we're comfortable with those numbers.
Okay. Thank you.
Thank you. Our next question comes from the liner Dan Florness from Benchmark Company. Your line is now thanks.
Great. Thanks, good morning.
Chris just since you guys bought tax act back in 12, I don't think I've ever heard the company's say they've been well positioned from a marketing perspective coming into the tax season, and so I don't know that this is any any different I just curious because.
It's kind of kind of part of the prior thought process was too.
Get more data driven approach and possibly place different marketing channels I think you alluded to some of that and so I'm just kind of curious about.
Maybe how your reallocating are shifting your spend in kind of what you're putting in place.
Going forward to be maybe less reactionary understanding that you made the very fair point that the value prop is a lot less compelling in free than it is when you get into the pay phones.
Right. So I think our team had made some strides in terms of be more data driven and experiment in the new channels I'd say there was a.
The heavy shift prior to my arrival to almost exclusively kind of bottom of the funnel digital tactics.
As you can see some of our competitors are doing a lot more top of the funnel. So you're probably all fee and extraordinary number of television ad than sponsorships and water requires that the rate set of tools and analytics to understand the impact of those other channel and so I think we're going to broaden out a bit and b.
Working more with kind of some of the traditional mass channel.
And implementing tools that will allow us to understand the impact of those and a broader array of digital tactics. So there are a variety of marketing model even in terms of how you pay that your marketing partners.
And so we're looking at a broader set of tactics and alternative models in terms of how we engage marketing partners and applying a new set of tools that will help us better understand and optimize within Q.
That will have the most pronounced impact in the coming year. So.
We won't be on the same conversation next year about the position at the start of the season. Maybe this is an area, where we can make great strides comparable to the stride to remain in product.
Got it Thats helpful. And then just as you know look as you did mention just on that on the free competition and obviously with the.
That the change in the IRS ruling it either these guys now have to show free on search.
You know way.
And given what you just said.
Do you think you can still kind of accomplish the priming of the funnel the way that you want to this year from a free perspective.
I think you can we will not be as focused on free for the remainder of the season as I said, it's important early in the season.
We have to get the right message out to a very large number of consumers.
Ultimately have them be aware and engaged in our product as we described earlier. The wonderful thing is the return associated with our marketing spend will be higher for this year and going forward based on some of the product advancements that we've made and all the metrics that we see and so we won't be as focused on free for the remainder of the season, we will be for.
Good on ensuring that we're testing and ultimately leveraging the channels and tactics that are driving the highest return.
Got it and then xeno to that to that point and this is probably a bit of an unfair question, but last year to sort of make up for the crash of free we saw some pretty aggressive pricing.
From the competition I don't know if you have a view on sort of timing or when you know that uplift begins his for so early in the tax season process, but you still have a relatively healthy pricing Delta I, just trying to get a sense of how much of a lever you think you have there versus just simply going after paid unit growth.
So we always look at price with some things throughout the season, we're contemplating what refinements, we should take in season and win this year isn't any different and so we're looking at that now we do have room based on where we are if we want to push price and ultimately is going be directly tied to the.
The effectiveness of our marketing activities.
And based on where we get too and where we see opportunity.
We will take price collectively.
Alright, Thanks appreciate it.
Thank you as a reminder to ask a question you want me to press Star one on your telephone to withdraw your question press the pound King. Our next question comes from the line of will cutting from JP Morgan. Your line is now open.
Good morning.
So Chris you want to on the Blucora board going back to the decision to acquire HD vest and divest the legacy Internet businesses.
There will be helpful to talk more about your vision for the business, we going forward.
With that in mind, how do you think about division for synergies between wealth management and tax effect over the medium term.
And more specifically how do you think at a high level about the next.
Lets leg of opportunities for crab collaboration between these two businesses beyond Techsmart investing.
So I'm really optimistic about the opportunities across the business and we will be very targeted about testing a variety of those opportunities I'll give some examples of things that can be done, but ultimately will be working with the leadership team and broader team here.
Over the coming months to prioritize those areas. So the initial vision that we had when we made the acquisition was there was real opportunity for collaboration.
A lot of the focus could date has been on driving the performance of each of the business independently. So there's been a little bit less investment than initially anticipated in realizing value across the businesses, but there are a number of things that have been observed over the years and even in my short time in this role where I believe we can see.
The real value and drive higher levels of organic growth in both businesses.
I'll provide a couple of examples of things that could be done.
These are not certain that we'll be testing new pads, but there are number of areas across the business. So one great example, if we have a very large number of professional tax.
Or tax professionals that utilize our.
Software product and tax Act.
That number is actually larger than the number wealth advisors that we have.
On our wealth management side of the business.
It may be that there is meaningful opportunity and what we don't have a sense of yet is what portion of those tax professionals that we serve with our software business ultimately would value the wealth.
Second revenue stream that would come from wealth advisory and so we'll think hard about how we ultimately can size that opportunity and potentially present that effectively to our.
Per tax software clients.
A second example is every single one of our wealth.
Lines would our wealth advisors would value more and customers.
We do have some very sophisticated skills and marketing on the tax assets out of the business.
We acquire a very large number of customers every year and there's a question about how we can ultimately apply those skills and capabilities to support our wealth advisors.
In the wealth management business and so those are two examples.
As I said I'll be working where the team over the next few months to figure out what are the areas that we went into intact, but there are number of areas, where we can create value across the business.
Great. Thank you for that.
Building on that so HSS.
Thanks, Phil.
Fill the gap and some of the addressable market. When you think about some of these opportunities moving forward to other other gaps that it would be necessary to build additional tools or potentially acquire additional tools and capabilities like HCAT pass in order to fully realize the value from the overlap.
Well. So we really are excited about age kfs because weekend when we go to market and.
Engage additional tax professionals and work with them to provide a second revenue stream. We now have a model that is really a high involvement model or lower involvement model with h. kfs in the portfolio and so our ability to close new advisors.
As our success rate in business development will increase.
We look across the portfolio, we see multiple areas, where we can drive organic growth and.
We have a clear strategy in terms of what we want to do.
M&A is not the priority driving organic growth is the priority that said opportunities may arise that will help us accelerate what we're trying to achieve.
With with targeted M&A, but thats really not the priority right now.
Got it thank you.
He also update us on your CFO search.
Sure the searches in process I can't provide.
Certain date, when we'll have it resolved but.
Already media spend time with candidates and I look forward to actually finalizing a direction.
It is my top priority from.
In perspective, and we're working hard to.
Solve that as quickly as possible.
Got it.
Last one from me so the tax expenses came in a little bit lower than suggested by the guidance.
But there's also investment back into the business for the quarter could you talk about what drove the the better than expected expenses and tax act for the quarter.
Hey wells.
We were able to diverse client them a cost saving.
Opportunities into for some costs.
From Q4 into Q1.
Okay, Alright, thank you for taking my questions.
Yes.
Thank you at this time I'm showing no further questions I would like to turn the call back over to management for closing remarks.
Great. Thank you all for joining us today in closing I'd, just like to say that I'm incredibly excited to have expanded role with blue core and have the opportunity to work more closely with our employees as we provide the best products services and solutions through our customers and advisors and enable better outcome for end clients too.
As a 19 with a great year for Blucora and I'm looking forward to keeping you updated on our progress.
Speaker the next quarter.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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