Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Avantax Reports Fourth Quarter 2022 Results By: Avantax via GlobeNewswire February 15, 2023 at 16:15 PM EST DALLAS, Feb. 15, 2023 (GLOBE NEWSWIRE) -- Avantax, Inc. (NASDAQ: AVTA), a leading provider of technology-enabled, tax focused financial solutions, today announced financial results for the fourth quarter ended December 31, 2022. Fourth Quarter and Full Year 2022 Highlights and Recent Developments Following the close of the TaxAct sale in December, the Company changed its corporate name and ticker symbol to Avantax, Inc. and AVTA, respectively. In the fourth quarter and for the year, Avantax set record highs in many of its performance metrics.Avantax added over $401 million of newly recruited assets during the fourth quarter for a total of approximately $1.7 billion of newly recruited assets for the full year of 2022, which was a new record. This exceeds full year 2021 newly recruited assets of $929 million.Avantax continued to deliver net positive asset flows with $495 million for the quarter and $1.3 billion for the year, which was a new record.Avantax reported total revenue of $172.4 million for the quarter, which was a new record, an increase of 0.1% versus the fourth quarter of the prior year.Avantax ended the fourth quarter with total client assets of $76.9 billion, $38.3 billion of which were advisory assets, representing 49.8% of total client assets, which was a new record.The Company ended the year with $263.9 million in cash and cash equivalents and no outstanding indebtedness under its credit facility, compared to $100.6 million in cash and cash equivalents and $561.3 million of outstanding indebtedness under its credit facility at December 31, 2021. Chris Walters, Chief Executive Officer of Avantax said, “I am extremely proud of the progress that we have made following the close of the TaxAct sale in December, and I would personally like to thank all of our financial professionals and our employees who have played a part in getting our company to this point. We have completed our refinancing of the Company’s debt and commenced the modified Dutch Auction tender offer to return capital to shareholders.” Mr. Walters continued, “Also, we have begun streamlining our organization and are positioning our team to execute our wealth-only growth strategy. As part of this work, we have announced the departure of multiple leaders and our team has been aligned to deliver on our strategic priorities. These efforts have positioned the Company well as we enter into this new phase as a pure-play wealth management company.” Summary Financial Performance: Q4 and Full Year 2022 ($ in millions, except per share amounts)Q4 2022 Q4 2021 Change Full Year2022 Full Year 2021 ChangeGAAP: Revenue$172.4 $172.2 0.1% $666.5 $658.2 1.3% Income (loss) from continuing operations, net of income taxes$(1.6) $(8.0) 80.0% $3.1 $(43.5) 107.1%Income (loss) from discontinued operations, net of income taxes 369.6 (15.7) 2454.1% 417.1 51.3 713.1%Net Income (Loss)$368.0 $(23.7) 1652.7% $420.2 $7.8 5287.2%Net Income (Loss) per share — Basic: Continuing operations$(0.03) $(0.16) 81.3% $0.07 $(0.90) 107.8%Discontinued operations 7.69 (0.33) 2430.3% 8.69 1.06 719.8%Net Income (Loss) per share — Basic$7.66 $(0.49) 1663.3% $8.76 $0.16 5375.0%Net Income (Loss) per share — Diluted: Continuing operations$(0.03) $(0.16) 81.3% $0.06 $(0.90) 106.7%Discontinued operations 7.69 (0.33) 2430.3% 8.48 1.06 700.0%Net Income (Loss) per share — Diluted$7.66 $(0.49) 1663.3% $8.54 $0.16 5237.5%Non-GAAP: Adjusted EBITDA (1)$25.9 $12.0 115.8% $53.7 $46.1 16.5% _________________________ Note: Totals may not foot due to rounding.(1) See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below. Full Year 2023 Outlook ($ in millions, except per share amounts)Full Year 2023 OutlookGAAP: Revenue$750.0 - $758.0Net Income$25.5 - $40.1Net Income per share — Diluted$0.63 - $0.96Non-GAAP: Adjusted EBITDA (1)$124.5 - $135.5 ____________________________ (1) See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below. Our expectations for 2023 financial performance assume 4% market growth during 2023, a 25 basis point increase in the Federal Funds rate in March 2023, between $12.7 million and $13.5 million in interest expense, $14 million in depreciation expense, $25 million in amortization expense, and the achievement of meaningful cost efficiencies in our business. Conference Call and Webcast A conference call and live webcast will be held on Thursday, February 16, 2023 at 8:30 a.m. Eastern Time during which the Company will further discuss fourth quarter results, its outlook for full year 2023, and the Company’s strategic transformation. We will also provide supplemental financial information to our results on the Investor Relations section of the Avantax corporate website at www.avantax.com prior to the call. A replay of the call will be available on our website. About Avantax® Avantax, Inc. (NASDAQ: AVTA) delivers tax-focused wealth management solutions for Financial Professionals, tax professionals and CPA firms, supporting our goal of minimizing clients’ tax burdens through comprehensive tax-focused financial planning. We have two distinct, but related, models within our business: the independent Financial Professional model and the employee-based model. We refer to our independent Financial Professional model as Avantax Wealth Management®. Avantax Wealth Management offers services through its registered broker-dealer, registered investment advisor (RIA), and insurance agency subsidiaries and is a leading U.S. tax-focused independent broker-dealer that works with a nationwide network of Financial Professionals operating as independent contractors. We refer to our employee-based model as Avantax Planning Partners℠. Avantax Planning Partners offers services through its RIA and insurance agency by partnering with CPA firms to provide their consumer and small-business clients with holistic financial planning and advisory services. Collectively, we had $77 billion in total client assets as of December 31, 2022. For more information on Avantax, visit www.avantax.com. Source: Avantax Investor Relations Contact:Dee LittrellAvantax, Inc.(972) 870-6463IR@Avantax.com Media Contacts:Tony Katsulos Avantax, Inc.(972) 870-6654tony.katsulos@avantax.com Kendra GalanteStreetCred PR for Avantax(402) 740-2047kendra@streetcredpr.comavantax@streetcredpr.com This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation, statements regarding the outlook of Avantax, Inc. (the “Company”), the anticipated business strategy and corporate focus of the Company following consummation of the sale of our tax software business (the “TaxAct Sale”) and the intended use of proceeds from the TaxAct Sale. 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 “anticipates,” ���believes,” “plans,” “expects,” “future,” “intends,” “may,” “will,” “would,” “could,” “should,” “estimates,” “predicts,” “potential,” “continues,” “target,” “outlook,” and similar terms and expressions, but the absence of these words does not mean that the statement is not forward-looking. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: our ability to effectively compete within our industry; our ability to generate strong performance for our clients and the impact of the financial markets on our clients’ portfolios; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; our ability to attract and retain financial professionals, employees, and clients, as well as our ability to provide strong client service; the impact of significant interest rate changes; 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; political and economic conditions and events that directly or indirectly impact the wealth management industry; risks related to goodwill and acquired intangible asset impairment; 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; our future capital requirements and the availability of financing, if necessary; 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, including those of the Financial Industry Regulatory Authority, Inc. and the Securities and Exchange Commission (the “SEC”); any compromise of confidentiality, availability, or integrity of information, including cyberattacks; risks associated with legal proceedings, including litigation and regulatory proceedings; 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 ability to retain employees and acquired client assets following acquisitions; our ability to manage leadership and employee transitions, including costs and time burdens on management and our board of directors related thereto; our ability to develop, establish, and maintain strong brands; our ability to comply with laws and regulations regarding privacy and protection of user data; our assessments and estimates that determine our effective tax rate; our ability to protect our intellectual property and the impact of any claim that we infringed on the intellectual property rights of others; any downgrade of the Company’s credit ratings; our failure to realize the expected benefits of the sale of our tax software business; disruptions to our business and operations resulting from the transition services we are providing in connection with the TaxAct Sale; our inability to return capital to stockholders in the amount anticipated; and the effects on our business of actions of activist stockholders. A more detailed description of these and certain other factors that could affect actual results is included in the Company’s most recent Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q filed with the SEC. 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. Important Additional Information The Company intends to file a definitive proxy statement, accompanying WHITE proxy card and other relevant documents with the SEC in connection with the solicitation of proxies for the Company’s 2023 annual meeting of stockholders (the “Annual Meeting”). BEFORE MAKING ANY VOTING DECISION, STOCKHOLDERS OF THE COMPANY ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH OR FURNISHED TO THE SEC, INCLUDING THE COMPANY’S DEFINITIVE PROXY STATEMENT AND ANY AMENDMENTS AND SUPPLEMENTS THERETO, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and stockholders will be able to obtain a copy of the definitive proxy statement and other documents filed by the Company with the SEC free of charge from the SEC’s website at www.sec.gov. In addition, copies will be available at no charge by selecting “SEC Filings” under “Financial Information” in the “Investors” tab of the Company’s website at www.avantax.com. The Company, its directors and certain of its executive officers are participants in the solicitation of proxies from the Company’s stockholders in connection with the Annual Meeting. The names of these directors and executive officers and their respective direct and indirect interests, by security holdings or otherwise, in the Company are set forth in the Company’s Current Report on Form 8-K filed with the SEC on January 23, 2023. AVANTAX, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) (In thousands, except per share amounts) Three Months Ended Twelve Months Ended December 31, December 31, 2022 2021 2022 2021 Revenue$172,392 $172,192 $666,496 $658,213 Operating expenses: Cost of revenue 103,475 121,519 444,918 466,464 Engineering and technology 1,968 2,018 8,701 8,190 Sales and marketing 27,088 22,498 97,914 84,828 General and administrative 23,367 22,437 92,755 81,668 Acquisition and integration 524 4,285 (4,186) 32,798 Depreciation 3,454 2,046 11,882 8,987 Amortization of acquired intangible assets 6,415 7,073 25,850 28,320 Total operating expenses 166,291 181,876 677,834 711,255 Operating income (loss) from continuing operations 6,101 (9,684) (11,338) (53,042)Interest expense and other, net (52) (156) (475) (422)Income (loss) from continuing operations before income taxes 6,049 (9,840) (11,813) (53,464)Income tax benefit (expense) (7,648) 1,833 14,934 9,959 Income (loss) from continuing operations (1,599) (8,007) 3,121 (43,505)Discontinued operations Income (loss) from discontinued operations before gain on disposal and income taxes (21,673) (25,992) 52,492 52,003 Pre-tax gain on disposal 472,237 — 472,237 — Income (loss) from discontinued operations before income taxes 450,564 (25,992) 524,729 52,003 Income tax benefit (expense) (80,922) 10,305 (107,603) (741)Income (loss) from discontinued operations$369,642 $(15,687) $417,126 $51,262 Net income (loss)$368,043 $(23,694) $420,247 $7,757 Basic net income (loss) per share: Continuing operations$(0.03) $(0.16) $0.07 $(0.90)Discontinued operations 7.69 (0.33) 8.69 1.06 Basic net income (loss) per share$7.66 $(0.49) $8.76 $0.16 Diluted net income (loss) per share: Continuing operations$(0.03) $(0.16) $0.06 $(0.90)Discontinued operations 7.69 (0.33) 8.48 1.06 Diluted net income (loss) per share$7.66 $(0.49) $8.54 $0.16 Weighted average shares outstanding: Basic 48,034 48,834 47,994 48,578 Diluted 48,034 48,834 49,183 48,578 AVANTAX, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited) (In thousands, except per share amounts) December 31,2022 December 31,2021ASSETS Current assets: Cash and cash equivalents$263,928 $100,629 Accounts receivable, net 24,117 21,214 Commissions and advisory fees receivable 20,679 25,073 Prepaid expenses and other current assets 15,027 11,731 Current assets of discontinued operations — 41,632 Total current assets 323,751 200,279 Long-term assets: Property, equipment, and software, net 53,041 50,040 Right-of-use assets, net 19,361 20,466 Goodwill, net 266,279 266,279 Acquired intangible assets, net 266,002 282,789 Other long-term assets 35,081 20,414 Long-term assets of discontinued operations — 231,676 Total long-term assets 639,764 871,664 Total assets$963,515 $1,071,943 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable$7,531 $6,493 Commissions and advisory fees payable 13,829 17,940 Accrued expenses and other current liabilities 111,212 55,658 Current deferred revenue 4,583 4,792 Current lease liabilities 5,139 4,896 Current portion of long-term debt — 1,812 Current liabilities of discontinued operations — 20,131 Total current liabilities 142,294 111,722 Long-term liabilities: Long-term debt, net — 553,134 Long-term lease liabilities 30,332 33,267 Deferred tax liabilities, net 20,819 19,124 Long-term deferred revenue 4,396 5,322 Other long-term liabilities 22,476 6,752 Long-term liabilities of discontinued operations — 1,000 Total long-term liabilities 78,023 618,599 Total liabilities 220,317 730,321 Stockholders’ equity: Common stock, par value $0.0001 per share—900,000 authorized shares; 51,260 shares issued and 48,079 shares outstanding as of December 31, 2022; 50,137 shares issued and 48,831 shares outstanding as of December 31, 2021 5 5 Additional paid-in capital 1,636,134 1,619,805 Accumulated deficit (829,542) (1,249,789)Treasury stock, at cost—3,181 shares at December 31, 2022 and 1,306 shares at December 31, 2021 (63,399) (28,399)Total stockholders’ equity 743,198 341,622 Total liabilities and stockholders’ equity$963,515 $1,071,943 AVANTAX, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) (In thousands) Twelve Months Ended December 31, 2022 2021 Operating activities: Net income$420,247 $7,757 Less: Income from discontinued operations, net of income taxes 417,126 51,262 Income (loss) from continuing operations 3,121 (43,505)Adjustments to reconcile income (loss) from continuing operations to net cash from operating activities: Depreciation and amortization of acquired intangible assets 37,732 37,307 Stock-based compensation 21,153 18,119 Change in the fair value of acquisition-related contingent consideration (5,320) 22,400 Reduction of right-of-use lease assets 1,495 2,749 Deferred income taxes 1,695 (8,909)Accretion of lease liabilities 2,012 1,250 Other non-cash items 5,230 2,390 Changes in operating assets and liabilities, net of acquisitions and disposals: Accounts receivable, net (2,747) (9,304)Commissions and advisory fees receivable 4,394 1,059 Prepaid expenses and other current assets (1,661) (5,130)Other long-term assets (21,430) (18,154)Accounts payable 1,038 2,290 Commissions and advisory fees payable (4,111) (857)Lease liabilities (5,095) (1,553)Deferred revenue (1,134) (829)Accrued expenses and other current and long-term liabilities 80,702 (21,657)Net cash provided (used) by operating activities from continuing operations 117,074 (22,334)Investing activities: Purchases of property, equipment, and software (14,892) (20,999)Asset acquisitions (7,887) (8,316)Net cash used by investing activities from continuing operations (22,779) (29,315)Financing activities: Proceeds from credit facilities, net of debt discount and issuance costs — (502)Payments on credit facilities (561,344) (1,812)Acquisition-related contingent consideration payments (15,148) (14,075)Stock repurchases (35,000) — Proceeds from issuance of stock through employee stock purchase plan 3,983 3,277 Proceeds from stock option exercises 935 579 Tax payments from shares withheld for equity awards (2,589) (1,644)Net cash used by financing activities from continuing operations (609,163) (14,177)Net cash used by continuing operations (514,868) (65,826)Net cash provided (used) by operating activities from discontinued operations (10,452) 42,890 Net cash provided (used) by investing activities from discontinued operations 688,619 (9,277)Net cash provided by financing activities from discontinued operations — — Net cash provided by discontinued operations 678,167 33,613 Net increase (decrease) in cash and cash equivalents 163,299 (32,213)Cash and cash equivalents, beginning of period 100,629 132,842 Cash and cash equivalents, end of period$263,928 $100,629 Supplemental cash flow information: Cash paid for income taxes$5,986 $3,056 Cash paid for interest$32,442 $28,897 AVANTAX, INC.Revenue Recognition(Unaudited) (In thousands) Revenues by major category are presented below: Three Months Ended Twelve Months Ended December 31, December 31, 2022 2021 2022 2021Total revenue: Advisory$92,445 $104,633 $398,839 $395,800Commission 41,153 53,480 173,431 210,677Asset-based 31,269 5,587 65,043 22,101Transaction and fee 7,525 8,492 29,183 29,635Total revenue$172,392 $172,192 $666,496 $658,213 AVANTAX, INC.Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (1)(Unaudited) (In thousands) Adjusted EBITDA Reconciliation (1) Three Months Ended Twelve Months Ended December 31, December 31, 2022 2021 2022 2021 Net income (loss) (2)$368,043 $(23,694) $420,247 $7,757 Less: Income (loss) from discontinued operations, net of income taxes 369,642 (15,687) 417,126 51,262 Income from continuing operations, net of income taxes (1,599) (8,007) 3,121 (43,505)Stock-based compensation 6,371 4,586 21,153 18,119 Depreciation and amortization of acquired intangible assets 9,869 9,119 37,732 37,307 Interest expense and other, net 52 156 475 422 Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration 524 1,385 1,134 10,398 Acquisition and integration—Change in the fair value of HKFS Contingent Consideration — 2,900 (5,320) 22,400 Contested proxy, transaction and other legal and consulting costs 1,197 3,646 5,062 10,939 TaxAct divestiture costs (3) 1,813 — 5,252 — Income tax (benefit) expense 7,648 (1,833) (14,934) (9,959)Adjusted EBITDA (1)$25,875 $11,952 $53,675 $46,121 Adjusted EBITDA Reconciliation for Forward-Looking Guidance (1) Ranges for year ending December 31, 2023 Low HighNet income$25,500 $40,050Stock-based compensation 22,500 21,500Depreciation and amortization of acquired intangible assets 39,500 39,000Interest expense and other, net 13,500 12,700Restructuring 13,000 7,000Acquisition, integration, and contested proxy, transaction and other legal and consulting costs (4) 1,500 750Income tax expense 9,000 14,500Adjusted EBITDA (1)$124,500 $135,500 Notes to Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (1)We define Adjusted EBITDA as net income (loss), determined in accordance with GAAP, excluding the effects of discontinued operations, stock-based compensation, depreciation and amortization of acquired intangible assets, interest expense and other, net, acquisition and integration costs, contested proxy, transaction and other legal and consulting costs, TaxAct divestiture costs, and income tax (benefit) expense. Interest expense and other, net primarily consists of interest expense, net. Acquisition and integration costs primarily relate to the acquisitions of Avantax Planning Partners and 1st Global. 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. (2)As presented in the condensed consolidated statements of operations (unaudited). (3)These costs do not include $17.6 million of transaction costs that were determined to be directly attributable to the sale of TaxAct, and are included within income from discontinued operations, net of income taxes, as a reduction to the gain on disposal. TaxAct divestiture costs primarily relate to incremental professional services, consulting, and insurance costs that were incurred in connection with the divestiture. (4)The breakout of components cannot be determined on a forward-looking basis without unreasonable efforts. Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Avantax Reports Fourth Quarter 2022 Results By: Avantax via GlobeNewswire February 15, 2023 at 16:15 PM EST DALLAS, Feb. 15, 2023 (GLOBE NEWSWIRE) -- Avantax, Inc. (NASDAQ: AVTA), a leading provider of technology-enabled, tax focused financial solutions, today announced financial results for the fourth quarter ended December 31, 2022. Fourth Quarter and Full Year 2022 Highlights and Recent Developments Following the close of the TaxAct sale in December, the Company changed its corporate name and ticker symbol to Avantax, Inc. and AVTA, respectively. In the fourth quarter and for the year, Avantax set record highs in many of its performance metrics.Avantax added over $401 million of newly recruited assets during the fourth quarter for a total of approximately $1.7 billion of newly recruited assets for the full year of 2022, which was a new record. This exceeds full year 2021 newly recruited assets of $929 million.Avantax continued to deliver net positive asset flows with $495 million for the quarter and $1.3 billion for the year, which was a new record.Avantax reported total revenue of $172.4 million for the quarter, which was a new record, an increase of 0.1% versus the fourth quarter of the prior year.Avantax ended the fourth quarter with total client assets of $76.9 billion, $38.3 billion of which were advisory assets, representing 49.8% of total client assets, which was a new record.The Company ended the year with $263.9 million in cash and cash equivalents and no outstanding indebtedness under its credit facility, compared to $100.6 million in cash and cash equivalents and $561.3 million of outstanding indebtedness under its credit facility at December 31, 2021. Chris Walters, Chief Executive Officer of Avantax said, “I am extremely proud of the progress that we have made following the close of the TaxAct sale in December, and I would personally like to thank all of our financial professionals and our employees who have played a part in getting our company to this point. We have completed our refinancing of the Company’s debt and commenced the modified Dutch Auction tender offer to return capital to shareholders.” Mr. Walters continued, “Also, we have begun streamlining our organization and are positioning our team to execute our wealth-only growth strategy. As part of this work, we have announced the departure of multiple leaders and our team has been aligned to deliver on our strategic priorities. These efforts have positioned the Company well as we enter into this new phase as a pure-play wealth management company.” Summary Financial Performance: Q4 and Full Year 2022 ($ in millions, except per share amounts)Q4 2022 Q4 2021 Change Full Year2022 Full Year 2021 ChangeGAAP: Revenue$172.4 $172.2 0.1% $666.5 $658.2 1.3% Income (loss) from continuing operations, net of income taxes$(1.6) $(8.0) 80.0% $3.1 $(43.5) 107.1%Income (loss) from discontinued operations, net of income taxes 369.6 (15.7) 2454.1% 417.1 51.3 713.1%Net Income (Loss)$368.0 $(23.7) 1652.7% $420.2 $7.8 5287.2%Net Income (Loss) per share — Basic: Continuing operations$(0.03) $(0.16) 81.3% $0.07 $(0.90) 107.8%Discontinued operations 7.69 (0.33) 2430.3% 8.69 1.06 719.8%Net Income (Loss) per share — Basic$7.66 $(0.49) 1663.3% $8.76 $0.16 5375.0%Net Income (Loss) per share — Diluted: Continuing operations$(0.03) $(0.16) 81.3% $0.06 $(0.90) 106.7%Discontinued operations 7.69 (0.33) 2430.3% 8.48 1.06 700.0%Net Income (Loss) per share — Diluted$7.66 $(0.49) 1663.3% $8.54 $0.16 5237.5%Non-GAAP: Adjusted EBITDA (1)$25.9 $12.0 115.8% $53.7 $46.1 16.5% _________________________ Note: Totals may not foot due to rounding.(1) See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below. Full Year 2023 Outlook ($ in millions, except per share amounts)Full Year 2023 OutlookGAAP: Revenue$750.0 - $758.0Net Income$25.5 - $40.1Net Income per share — Diluted$0.63 - $0.96Non-GAAP: Adjusted EBITDA (1)$124.5 - $135.5 ____________________________ (1) See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below. Our expectations for 2023 financial performance assume 4% market growth during 2023, a 25 basis point increase in the Federal Funds rate in March 2023, between $12.7 million and $13.5 million in interest expense, $14 million in depreciation expense, $25 million in amortization expense, and the achievement of meaningful cost efficiencies in our business. Conference Call and Webcast A conference call and live webcast will be held on Thursday, February 16, 2023 at 8:30 a.m. Eastern Time during which the Company will further discuss fourth quarter results, its outlook for full year 2023, and the Company’s strategic transformation. We will also provide supplemental financial information to our results on the Investor Relations section of the Avantax corporate website at www.avantax.com prior to the call. A replay of the call will be available on our website. About Avantax® Avantax, Inc. (NASDAQ: AVTA) delivers tax-focused wealth management solutions for Financial Professionals, tax professionals and CPA firms, supporting our goal of minimizing clients’ tax burdens through comprehensive tax-focused financial planning. We have two distinct, but related, models within our business: the independent Financial Professional model and the employee-based model. We refer to our independent Financial Professional model as Avantax Wealth Management®. Avantax Wealth Management offers services through its registered broker-dealer, registered investment advisor (RIA), and insurance agency subsidiaries and is a leading U.S. tax-focused independent broker-dealer that works with a nationwide network of Financial Professionals operating as independent contractors. We refer to our employee-based model as Avantax Planning Partners℠. Avantax Planning Partners offers services through its RIA and insurance agency by partnering with CPA firms to provide their consumer and small-business clients with holistic financial planning and advisory services. Collectively, we had $77 billion in total client assets as of December 31, 2022. For more information on Avantax, visit www.avantax.com. Source: Avantax Investor Relations Contact:Dee LittrellAvantax, Inc.(972) 870-6463IR@Avantax.com Media Contacts:Tony Katsulos Avantax, Inc.(972) 870-6654tony.katsulos@avantax.com Kendra GalanteStreetCred PR for Avantax(402) 740-2047kendra@streetcredpr.comavantax@streetcredpr.com This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation, statements regarding the outlook of Avantax, Inc. (the “Company”), the anticipated business strategy and corporate focus of the Company following consummation of the sale of our tax software business (the “TaxAct Sale”) and the intended use of proceeds from the TaxAct Sale. 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 “anticipates,” ���believes,” “plans,” “expects,” “future,” “intends,” “may,” “will,” “would,” “could,” “should,” “estimates,” “predicts,” “potential,” “continues,” “target,” “outlook,” and similar terms and expressions, but the absence of these words does not mean that the statement is not forward-looking. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: our ability to effectively compete within our industry; our ability to generate strong performance for our clients and the impact of the financial markets on our clients’ portfolios; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; our ability to attract and retain financial professionals, employees, and clients, as well as our ability to provide strong client service; the impact of significant interest rate changes; 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; political and economic conditions and events that directly or indirectly impact the wealth management industry; risks related to goodwill and acquired intangible asset impairment; 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; our future capital requirements and the availability of financing, if necessary; 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, including those of the Financial Industry Regulatory Authority, Inc. and the Securities and Exchange Commission (the “SEC”); any compromise of confidentiality, availability, or integrity of information, including cyberattacks; risks associated with legal proceedings, including litigation and regulatory proceedings; 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 ability to retain employees and acquired client assets following acquisitions; our ability to manage leadership and employee transitions, including costs and time burdens on management and our board of directors related thereto; our ability to develop, establish, and maintain strong brands; our ability to comply with laws and regulations regarding privacy and protection of user data; our assessments and estimates that determine our effective tax rate; our ability to protect our intellectual property and the impact of any claim that we infringed on the intellectual property rights of others; any downgrade of the Company’s credit ratings; our failure to realize the expected benefits of the sale of our tax software business; disruptions to our business and operations resulting from the transition services we are providing in connection with the TaxAct Sale; our inability to return capital to stockholders in the amount anticipated; and the effects on our business of actions of activist stockholders. A more detailed description of these and certain other factors that could affect actual results is included in the Company’s most recent Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q filed with the SEC. 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. Important Additional Information The Company intends to file a definitive proxy statement, accompanying WHITE proxy card and other relevant documents with the SEC in connection with the solicitation of proxies for the Company’s 2023 annual meeting of stockholders (the “Annual Meeting”). BEFORE MAKING ANY VOTING DECISION, STOCKHOLDERS OF THE COMPANY ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH OR FURNISHED TO THE SEC, INCLUDING THE COMPANY’S DEFINITIVE PROXY STATEMENT AND ANY AMENDMENTS AND SUPPLEMENTS THERETO, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and stockholders will be able to obtain a copy of the definitive proxy statement and other documents filed by the Company with the SEC free of charge from the SEC’s website at www.sec.gov. In addition, copies will be available at no charge by selecting “SEC Filings” under “Financial Information” in the “Investors” tab of the Company’s website at www.avantax.com. The Company, its directors and certain of its executive officers are participants in the solicitation of proxies from the Company’s stockholders in connection with the Annual Meeting. The names of these directors and executive officers and their respective direct and indirect interests, by security holdings or otherwise, in the Company are set forth in the Company’s Current Report on Form 8-K filed with the SEC on January 23, 2023. AVANTAX, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) (In thousands, except per share amounts) Three Months Ended Twelve Months Ended December 31, December 31, 2022 2021 2022 2021 Revenue$172,392 $172,192 $666,496 $658,213 Operating expenses: Cost of revenue 103,475 121,519 444,918 466,464 Engineering and technology 1,968 2,018 8,701 8,190 Sales and marketing 27,088 22,498 97,914 84,828 General and administrative 23,367 22,437 92,755 81,668 Acquisition and integration 524 4,285 (4,186) 32,798 Depreciation 3,454 2,046 11,882 8,987 Amortization of acquired intangible assets 6,415 7,073 25,850 28,320 Total operating expenses 166,291 181,876 677,834 711,255 Operating income (loss) from continuing operations 6,101 (9,684) (11,338) (53,042)Interest expense and other, net (52) (156) (475) (422)Income (loss) from continuing operations before income taxes 6,049 (9,840) (11,813) (53,464)Income tax benefit (expense) (7,648) 1,833 14,934 9,959 Income (loss) from continuing operations (1,599) (8,007) 3,121 (43,505)Discontinued operations Income (loss) from discontinued operations before gain on disposal and income taxes (21,673) (25,992) 52,492 52,003 Pre-tax gain on disposal 472,237 — 472,237 — Income (loss) from discontinued operations before income taxes 450,564 (25,992) 524,729 52,003 Income tax benefit (expense) (80,922) 10,305 (107,603) (741)Income (loss) from discontinued operations$369,642 $(15,687) $417,126 $51,262 Net income (loss)$368,043 $(23,694) $420,247 $7,757 Basic net income (loss) per share: Continuing operations$(0.03) $(0.16) $0.07 $(0.90)Discontinued operations 7.69 (0.33) 8.69 1.06 Basic net income (loss) per share$7.66 $(0.49) $8.76 $0.16 Diluted net income (loss) per share: Continuing operations$(0.03) $(0.16) $0.06 $(0.90)Discontinued operations 7.69 (0.33) 8.48 1.06 Diluted net income (loss) per share$7.66 $(0.49) $8.54 $0.16 Weighted average shares outstanding: Basic 48,034 48,834 47,994 48,578 Diluted 48,034 48,834 49,183 48,578 AVANTAX, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited) (In thousands, except per share amounts) December 31,2022 December 31,2021ASSETS Current assets: Cash and cash equivalents$263,928 $100,629 Accounts receivable, net 24,117 21,214 Commissions and advisory fees receivable 20,679 25,073 Prepaid expenses and other current assets 15,027 11,731 Current assets of discontinued operations — 41,632 Total current assets 323,751 200,279 Long-term assets: Property, equipment, and software, net 53,041 50,040 Right-of-use assets, net 19,361 20,466 Goodwill, net 266,279 266,279 Acquired intangible assets, net 266,002 282,789 Other long-term assets 35,081 20,414 Long-term assets of discontinued operations — 231,676 Total long-term assets 639,764 871,664 Total assets$963,515 $1,071,943 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable$7,531 $6,493 Commissions and advisory fees payable 13,829 17,940 Accrued expenses and other current liabilities 111,212 55,658 Current deferred revenue 4,583 4,792 Current lease liabilities 5,139 4,896 Current portion of long-term debt — 1,812 Current liabilities of discontinued operations — 20,131 Total current liabilities 142,294 111,722 Long-term liabilities: Long-term debt, net — 553,134 Long-term lease liabilities 30,332 33,267 Deferred tax liabilities, net 20,819 19,124 Long-term deferred revenue 4,396 5,322 Other long-term liabilities 22,476 6,752 Long-term liabilities of discontinued operations — 1,000 Total long-term liabilities 78,023 618,599 Total liabilities 220,317 730,321 Stockholders’ equity: Common stock, par value $0.0001 per share—900,000 authorized shares; 51,260 shares issued and 48,079 shares outstanding as of December 31, 2022; 50,137 shares issued and 48,831 shares outstanding as of December 31, 2021 5 5 Additional paid-in capital 1,636,134 1,619,805 Accumulated deficit (829,542) (1,249,789)Treasury stock, at cost—3,181 shares at December 31, 2022 and 1,306 shares at December 31, 2021 (63,399) (28,399)Total stockholders’ equity 743,198 341,622 Total liabilities and stockholders’ equity$963,515 $1,071,943 AVANTAX, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) (In thousands) Twelve Months Ended December 31, 2022 2021 Operating activities: Net income$420,247 $7,757 Less: Income from discontinued operations, net of income taxes 417,126 51,262 Income (loss) from continuing operations 3,121 (43,505)Adjustments to reconcile income (loss) from continuing operations to net cash from operating activities: Depreciation and amortization of acquired intangible assets 37,732 37,307 Stock-based compensation 21,153 18,119 Change in the fair value of acquisition-related contingent consideration (5,320) 22,400 Reduction of right-of-use lease assets 1,495 2,749 Deferred income taxes 1,695 (8,909)Accretion of lease liabilities 2,012 1,250 Other non-cash items 5,230 2,390 Changes in operating assets and liabilities, net of acquisitions and disposals: Accounts receivable, net (2,747) (9,304)Commissions and advisory fees receivable 4,394 1,059 Prepaid expenses and other current assets (1,661) (5,130)Other long-term assets (21,430) (18,154)Accounts payable 1,038 2,290 Commissions and advisory fees payable (4,111) (857)Lease liabilities (5,095) (1,553)Deferred revenue (1,134) (829)Accrued expenses and other current and long-term liabilities 80,702 (21,657)Net cash provided (used) by operating activities from continuing operations 117,074 (22,334)Investing activities: Purchases of property, equipment, and software (14,892) (20,999)Asset acquisitions (7,887) (8,316)Net cash used by investing activities from continuing operations (22,779) (29,315)Financing activities: Proceeds from credit facilities, net of debt discount and issuance costs — (502)Payments on credit facilities (561,344) (1,812)Acquisition-related contingent consideration payments (15,148) (14,075)Stock repurchases (35,000) — Proceeds from issuance of stock through employee stock purchase plan 3,983 3,277 Proceeds from stock option exercises 935 579 Tax payments from shares withheld for equity awards (2,589) (1,644)Net cash used by financing activities from continuing operations (609,163) (14,177)Net cash used by continuing operations (514,868) (65,826)Net cash provided (used) by operating activities from discontinued operations (10,452) 42,890 Net cash provided (used) by investing activities from discontinued operations 688,619 (9,277)Net cash provided by financing activities from discontinued operations — — Net cash provided by discontinued operations 678,167 33,613 Net increase (decrease) in cash and cash equivalents 163,299 (32,213)Cash and cash equivalents, beginning of period 100,629 132,842 Cash and cash equivalents, end of period$263,928 $100,629 Supplemental cash flow information: Cash paid for income taxes$5,986 $3,056 Cash paid for interest$32,442 $28,897 AVANTAX, INC.Revenue Recognition(Unaudited) (In thousands) Revenues by major category are presented below: Three Months Ended Twelve Months Ended December 31, December 31, 2022 2021 2022 2021Total revenue: Advisory$92,445 $104,633 $398,839 $395,800Commission 41,153 53,480 173,431 210,677Asset-based 31,269 5,587 65,043 22,101Transaction and fee 7,525 8,492 29,183 29,635Total revenue$172,392 $172,192 $666,496 $658,213 AVANTAX, INC.Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (1)(Unaudited) (In thousands) Adjusted EBITDA Reconciliation (1) Three Months Ended Twelve Months Ended December 31, December 31, 2022 2021 2022 2021 Net income (loss) (2)$368,043 $(23,694) $420,247 $7,757 Less: Income (loss) from discontinued operations, net of income taxes 369,642 (15,687) 417,126 51,262 Income from continuing operations, net of income taxes (1,599) (8,007) 3,121 (43,505)Stock-based compensation 6,371 4,586 21,153 18,119 Depreciation and amortization of acquired intangible assets 9,869 9,119 37,732 37,307 Interest expense and other, net 52 156 475 422 Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration 524 1,385 1,134 10,398 Acquisition and integration—Change in the fair value of HKFS Contingent Consideration — 2,900 (5,320) 22,400 Contested proxy, transaction and other legal and consulting costs 1,197 3,646 5,062 10,939 TaxAct divestiture costs (3) 1,813 — 5,252 — Income tax (benefit) expense 7,648 (1,833) (14,934) (9,959)Adjusted EBITDA (1)$25,875 $11,952 $53,675 $46,121 Adjusted EBITDA Reconciliation for Forward-Looking Guidance (1) Ranges for year ending December 31, 2023 Low HighNet income$25,500 $40,050Stock-based compensation 22,500 21,500Depreciation and amortization of acquired intangible assets 39,500 39,000Interest expense and other, net 13,500 12,700Restructuring 13,000 7,000Acquisition, integration, and contested proxy, transaction and other legal and consulting costs (4) 1,500 750Income tax expense 9,000 14,500Adjusted EBITDA (1)$124,500 $135,500 Notes to Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (1)We define Adjusted EBITDA as net income (loss), determined in accordance with GAAP, excluding the effects of discontinued operations, stock-based compensation, depreciation and amortization of acquired intangible assets, interest expense and other, net, acquisition and integration costs, contested proxy, transaction and other legal and consulting costs, TaxAct divestiture costs, and income tax (benefit) expense. Interest expense and other, net primarily consists of interest expense, net. Acquisition and integration costs primarily relate to the acquisitions of Avantax Planning Partners and 1st Global. 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. (2)As presented in the condensed consolidated statements of operations (unaudited). (3)These costs do not include $17.6 million of transaction costs that were determined to be directly attributable to the sale of TaxAct, and are included within income from discontinued operations, net of income taxes, as a reduction to the gain on disposal. TaxAct divestiture costs primarily relate to incremental professional services, consulting, and insurance costs that were incurred in connection with the divestiture. (4)The breakout of components cannot be determined on a forward-looking basis without unreasonable efforts.
DALLAS, Feb. 15, 2023 (GLOBE NEWSWIRE) -- Avantax, Inc. (NASDAQ: AVTA), a leading provider of technology-enabled, tax focused financial solutions, today announced financial results for the fourth quarter ended December 31, 2022. Fourth Quarter and Full Year 2022 Highlights and Recent Developments Following the close of the TaxAct sale in December, the Company changed its corporate name and ticker symbol to Avantax, Inc. and AVTA, respectively. In the fourth quarter and for the year, Avantax set record highs in many of its performance metrics.Avantax added over $401 million of newly recruited assets during the fourth quarter for a total of approximately $1.7 billion of newly recruited assets for the full year of 2022, which was a new record. This exceeds full year 2021 newly recruited assets of $929 million.Avantax continued to deliver net positive asset flows with $495 million for the quarter and $1.3 billion for the year, which was a new record.Avantax reported total revenue of $172.4 million for the quarter, which was a new record, an increase of 0.1% versus the fourth quarter of the prior year.Avantax ended the fourth quarter with total client assets of $76.9 billion, $38.3 billion of which were advisory assets, representing 49.8% of total client assets, which was a new record.The Company ended the year with $263.9 million in cash and cash equivalents and no outstanding indebtedness under its credit facility, compared to $100.6 million in cash and cash equivalents and $561.3 million of outstanding indebtedness under its credit facility at December 31, 2021. Chris Walters, Chief Executive Officer of Avantax said, “I am extremely proud of the progress that we have made following the close of the TaxAct sale in December, and I would personally like to thank all of our financial professionals and our employees who have played a part in getting our company to this point. We have completed our refinancing of the Company’s debt and commenced the modified Dutch Auction tender offer to return capital to shareholders.” Mr. Walters continued, “Also, we have begun streamlining our organization and are positioning our team to execute our wealth-only growth strategy. As part of this work, we have announced the departure of multiple leaders and our team has been aligned to deliver on our strategic priorities. These efforts have positioned the Company well as we enter into this new phase as a pure-play wealth management company.” Summary Financial Performance: Q4 and Full Year 2022 ($ in millions, except per share amounts)Q4 2022 Q4 2021 Change Full Year2022 Full Year 2021 ChangeGAAP: Revenue$172.4 $172.2 0.1% $666.5 $658.2 1.3% Income (loss) from continuing operations, net of income taxes$(1.6) $(8.0) 80.0% $3.1 $(43.5) 107.1%Income (loss) from discontinued operations, net of income taxes 369.6 (15.7) 2454.1% 417.1 51.3 713.1%Net Income (Loss)$368.0 $(23.7) 1652.7% $420.2 $7.8 5287.2%Net Income (Loss) per share — Basic: Continuing operations$(0.03) $(0.16) 81.3% $0.07 $(0.90) 107.8%Discontinued operations 7.69 (0.33) 2430.3% 8.69 1.06 719.8%Net Income (Loss) per share — Basic$7.66 $(0.49) 1663.3% $8.76 $0.16 5375.0%Net Income (Loss) per share — Diluted: Continuing operations$(0.03) $(0.16) 81.3% $0.06 $(0.90) 106.7%Discontinued operations 7.69 (0.33) 2430.3% 8.48 1.06 700.0%Net Income (Loss) per share — Diluted$7.66 $(0.49) 1663.3% $8.54 $0.16 5237.5%Non-GAAP: Adjusted EBITDA (1)$25.9 $12.0 115.8% $53.7 $46.1 16.5% _________________________ Note: Totals may not foot due to rounding.(1) See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below. Full Year 2023 Outlook ($ in millions, except per share amounts)Full Year 2023 OutlookGAAP: Revenue$750.0 - $758.0Net Income$25.5 - $40.1Net Income per share — Diluted$0.63 - $0.96Non-GAAP: Adjusted EBITDA (1)$124.5 - $135.5 ____________________________ (1) See reconciliations of all non-GAAP to GAAP measures presented in this release in the tables below. Our expectations for 2023 financial performance assume 4% market growth during 2023, a 25 basis point increase in the Federal Funds rate in March 2023, between $12.7 million and $13.5 million in interest expense, $14 million in depreciation expense, $25 million in amortization expense, and the achievement of meaningful cost efficiencies in our business. Conference Call and Webcast A conference call and live webcast will be held on Thursday, February 16, 2023 at 8:30 a.m. Eastern Time during which the Company will further discuss fourth quarter results, its outlook for full year 2023, and the Company’s strategic transformation. We will also provide supplemental financial information to our results on the Investor Relations section of the Avantax corporate website at www.avantax.com prior to the call. A replay of the call will be available on our website. About Avantax® Avantax, Inc. (NASDAQ: AVTA) delivers tax-focused wealth management solutions for Financial Professionals, tax professionals and CPA firms, supporting our goal of minimizing clients’ tax burdens through comprehensive tax-focused financial planning. We have two distinct, but related, models within our business: the independent Financial Professional model and the employee-based model. We refer to our independent Financial Professional model as Avantax Wealth Management®. Avantax Wealth Management offers services through its registered broker-dealer, registered investment advisor (RIA), and insurance agency subsidiaries and is a leading U.S. tax-focused independent broker-dealer that works with a nationwide network of Financial Professionals operating as independent contractors. We refer to our employee-based model as Avantax Planning Partners℠. Avantax Planning Partners offers services through its RIA and insurance agency by partnering with CPA firms to provide their consumer and small-business clients with holistic financial planning and advisory services. Collectively, we had $77 billion in total client assets as of December 31, 2022. For more information on Avantax, visit www.avantax.com. Source: Avantax Investor Relations Contact:Dee LittrellAvantax, Inc.(972) 870-6463IR@Avantax.com Media Contacts:Tony Katsulos Avantax, Inc.(972) 870-6654tony.katsulos@avantax.com Kendra GalanteStreetCred PR for Avantax(402) 740-2047kendra@streetcredpr.comavantax@streetcredpr.com This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation, statements regarding the outlook of Avantax, Inc. (the “Company”), the anticipated business strategy and corporate focus of the Company following consummation of the sale of our tax software business (the “TaxAct Sale”) and the intended use of proceeds from the TaxAct Sale. 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 “anticipates,” ���believes,” “plans,” “expects,” “future,” “intends,” “may,” “will,” “would,” “could,” “should,” “estimates,” “predicts,” “potential,” “continues,” “target,” “outlook,” and similar terms and expressions, but the absence of these words does not mean that the statement is not forward-looking. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: our ability to effectively compete within our industry; our ability to generate strong performance for our clients and the impact of the financial markets on our clients’ portfolios; our expectations concerning the revenues we generate from fees associated with the financial products that we distribute; our ability to attract and retain financial professionals, employees, and clients, as well as our ability to provide strong client service; the impact of significant interest rate changes; 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; political and economic conditions and events that directly or indirectly impact the wealth management industry; risks related to goodwill and acquired intangible asset impairment; 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; our future capital requirements and the availability of financing, if necessary; 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, including those of the Financial Industry Regulatory Authority, Inc. and the Securities and Exchange Commission (the “SEC”); any compromise of confidentiality, availability, or integrity of information, including cyberattacks; risks associated with legal proceedings, including litigation and regulatory proceedings; 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 ability to retain employees and acquired client assets following acquisitions; our ability to manage leadership and employee transitions, including costs and time burdens on management and our board of directors related thereto; our ability to develop, establish, and maintain strong brands; our ability to comply with laws and regulations regarding privacy and protection of user data; our assessments and estimates that determine our effective tax rate; our ability to protect our intellectual property and the impact of any claim that we infringed on the intellectual property rights of others; any downgrade of the Company’s credit ratings; our failure to realize the expected benefits of the sale of our tax software business; disruptions to our business and operations resulting from the transition services we are providing in connection with the TaxAct Sale; our inability to return capital to stockholders in the amount anticipated; and the effects on our business of actions of activist stockholders. A more detailed description of these and certain other factors that could affect actual results is included in the Company’s most recent Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q filed with the SEC. 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. Important Additional Information The Company intends to file a definitive proxy statement, accompanying WHITE proxy card and other relevant documents with the SEC in connection with the solicitation of proxies for the Company’s 2023 annual meeting of stockholders (the “Annual Meeting”). BEFORE MAKING ANY VOTING DECISION, STOCKHOLDERS OF THE COMPANY ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH OR FURNISHED TO THE SEC, INCLUDING THE COMPANY’S DEFINITIVE PROXY STATEMENT AND ANY AMENDMENTS AND SUPPLEMENTS THERETO, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and stockholders will be able to obtain a copy of the definitive proxy statement and other documents filed by the Company with the SEC free of charge from the SEC’s website at www.sec.gov. In addition, copies will be available at no charge by selecting “SEC Filings” under “Financial Information” in the “Investors” tab of the Company’s website at www.avantax.com. The Company, its directors and certain of its executive officers are participants in the solicitation of proxies from the Company’s stockholders in connection with the Annual Meeting. The names of these directors and executive officers and their respective direct and indirect interests, by security holdings or otherwise, in the Company are set forth in the Company’s Current Report on Form 8-K filed with the SEC on January 23, 2023. AVANTAX, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) (In thousands, except per share amounts) Three Months Ended Twelve Months Ended December 31, December 31, 2022 2021 2022 2021 Revenue$172,392 $172,192 $666,496 $658,213 Operating expenses: Cost of revenue 103,475 121,519 444,918 466,464 Engineering and technology 1,968 2,018 8,701 8,190 Sales and marketing 27,088 22,498 97,914 84,828 General and administrative 23,367 22,437 92,755 81,668 Acquisition and integration 524 4,285 (4,186) 32,798 Depreciation 3,454 2,046 11,882 8,987 Amortization of acquired intangible assets 6,415 7,073 25,850 28,320 Total operating expenses 166,291 181,876 677,834 711,255 Operating income (loss) from continuing operations 6,101 (9,684) (11,338) (53,042)Interest expense and other, net (52) (156) (475) (422)Income (loss) from continuing operations before income taxes 6,049 (9,840) (11,813) (53,464)Income tax benefit (expense) (7,648) 1,833 14,934 9,959 Income (loss) from continuing operations (1,599) (8,007) 3,121 (43,505)Discontinued operations Income (loss) from discontinued operations before gain on disposal and income taxes (21,673) (25,992) 52,492 52,003 Pre-tax gain on disposal 472,237 — 472,237 — Income (loss) from discontinued operations before income taxes 450,564 (25,992) 524,729 52,003 Income tax benefit (expense) (80,922) 10,305 (107,603) (741)Income (loss) from discontinued operations$369,642 $(15,687) $417,126 $51,262 Net income (loss)$368,043 $(23,694) $420,247 $7,757 Basic net income (loss) per share: Continuing operations$(0.03) $(0.16) $0.07 $(0.90)Discontinued operations 7.69 (0.33) 8.69 1.06 Basic net income (loss) per share$7.66 $(0.49) $8.76 $0.16 Diluted net income (loss) per share: Continuing operations$(0.03) $(0.16) $0.06 $(0.90)Discontinued operations 7.69 (0.33) 8.48 1.06 Diluted net income (loss) per share$7.66 $(0.49) $8.54 $0.16 Weighted average shares outstanding: Basic 48,034 48,834 47,994 48,578 Diluted 48,034 48,834 49,183 48,578 AVANTAX, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited) (In thousands, except per share amounts) December 31,2022 December 31,2021ASSETS Current assets: Cash and cash equivalents$263,928 $100,629 Accounts receivable, net 24,117 21,214 Commissions and advisory fees receivable 20,679 25,073 Prepaid expenses and other current assets 15,027 11,731 Current assets of discontinued operations — 41,632 Total current assets 323,751 200,279 Long-term assets: Property, equipment, and software, net 53,041 50,040 Right-of-use assets, net 19,361 20,466 Goodwill, net 266,279 266,279 Acquired intangible assets, net 266,002 282,789 Other long-term assets 35,081 20,414 Long-term assets of discontinued operations — 231,676 Total long-term assets 639,764 871,664 Total assets$963,515 $1,071,943 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable$7,531 $6,493 Commissions and advisory fees payable 13,829 17,940 Accrued expenses and other current liabilities 111,212 55,658 Current deferred revenue 4,583 4,792 Current lease liabilities 5,139 4,896 Current portion of long-term debt — 1,812 Current liabilities of discontinued operations — 20,131 Total current liabilities 142,294 111,722 Long-term liabilities: Long-term debt, net — 553,134 Long-term lease liabilities 30,332 33,267 Deferred tax liabilities, net 20,819 19,124 Long-term deferred revenue 4,396 5,322 Other long-term liabilities 22,476 6,752 Long-term liabilities of discontinued operations — 1,000 Total long-term liabilities 78,023 618,599 Total liabilities 220,317 730,321 Stockholders’ equity: Common stock, par value $0.0001 per share—900,000 authorized shares; 51,260 shares issued and 48,079 shares outstanding as of December 31, 2022; 50,137 shares issued and 48,831 shares outstanding as of December 31, 2021 5 5 Additional paid-in capital 1,636,134 1,619,805 Accumulated deficit (829,542) (1,249,789)Treasury stock, at cost—3,181 shares at December 31, 2022 and 1,306 shares at December 31, 2021 (63,399) (28,399)Total stockholders’ equity 743,198 341,622 Total liabilities and stockholders’ equity$963,515 $1,071,943 AVANTAX, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) (In thousands) Twelve Months Ended December 31, 2022 2021 Operating activities: Net income$420,247 $7,757 Less: Income from discontinued operations, net of income taxes 417,126 51,262 Income (loss) from continuing operations 3,121 (43,505)Adjustments to reconcile income (loss) from continuing operations to net cash from operating activities: Depreciation and amortization of acquired intangible assets 37,732 37,307 Stock-based compensation 21,153 18,119 Change in the fair value of acquisition-related contingent consideration (5,320) 22,400 Reduction of right-of-use lease assets 1,495 2,749 Deferred income taxes 1,695 (8,909)Accretion of lease liabilities 2,012 1,250 Other non-cash items 5,230 2,390 Changes in operating assets and liabilities, net of acquisitions and disposals: Accounts receivable, net (2,747) (9,304)Commissions and advisory fees receivable 4,394 1,059 Prepaid expenses and other current assets (1,661) (5,130)Other long-term assets (21,430) (18,154)Accounts payable 1,038 2,290 Commissions and advisory fees payable (4,111) (857)Lease liabilities (5,095) (1,553)Deferred revenue (1,134) (829)Accrued expenses and other current and long-term liabilities 80,702 (21,657)Net cash provided (used) by operating activities from continuing operations 117,074 (22,334)Investing activities: Purchases of property, equipment, and software (14,892) (20,999)Asset acquisitions (7,887) (8,316)Net cash used by investing activities from continuing operations (22,779) (29,315)Financing activities: Proceeds from credit facilities, net of debt discount and issuance costs — (502)Payments on credit facilities (561,344) (1,812)Acquisition-related contingent consideration payments (15,148) (14,075)Stock repurchases (35,000) — Proceeds from issuance of stock through employee stock purchase plan 3,983 3,277 Proceeds from stock option exercises 935 579 Tax payments from shares withheld for equity awards (2,589) (1,644)Net cash used by financing activities from continuing operations (609,163) (14,177)Net cash used by continuing operations (514,868) (65,826)Net cash provided (used) by operating activities from discontinued operations (10,452) 42,890 Net cash provided (used) by investing activities from discontinued operations 688,619 (9,277)Net cash provided by financing activities from discontinued operations — — Net cash provided by discontinued operations 678,167 33,613 Net increase (decrease) in cash and cash equivalents 163,299 (32,213)Cash and cash equivalents, beginning of period 100,629 132,842 Cash and cash equivalents, end of period$263,928 $100,629 Supplemental cash flow information: Cash paid for income taxes$5,986 $3,056 Cash paid for interest$32,442 $28,897 AVANTAX, INC.Revenue Recognition(Unaudited) (In thousands) Revenues by major category are presented below: Three Months Ended Twelve Months Ended December 31, December 31, 2022 2021 2022 2021Total revenue: Advisory$92,445 $104,633 $398,839 $395,800Commission 41,153 53,480 173,431 210,677Asset-based 31,269 5,587 65,043 22,101Transaction and fee 7,525 8,492 29,183 29,635Total revenue$172,392 $172,192 $666,496 $658,213 AVANTAX, INC.Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (1)(Unaudited) (In thousands) Adjusted EBITDA Reconciliation (1) Three Months Ended Twelve Months Ended December 31, December 31, 2022 2021 2022 2021 Net income (loss) (2)$368,043 $(23,694) $420,247 $7,757 Less: Income (loss) from discontinued operations, net of income taxes 369,642 (15,687) 417,126 51,262 Income from continuing operations, net of income taxes (1,599) (8,007) 3,121 (43,505)Stock-based compensation 6,371 4,586 21,153 18,119 Depreciation and amortization of acquired intangible assets 9,869 9,119 37,732 37,307 Interest expense and other, net 52 156 475 422 Acquisition and integration—Excluding change in the fair value of HKFS Contingent Consideration 524 1,385 1,134 10,398 Acquisition and integration—Change in the fair value of HKFS Contingent Consideration — 2,900 (5,320) 22,400 Contested proxy, transaction and other legal and consulting costs 1,197 3,646 5,062 10,939 TaxAct divestiture costs (3) 1,813 — 5,252 — Income tax (benefit) expense 7,648 (1,833) (14,934) (9,959)Adjusted EBITDA (1)$25,875 $11,952 $53,675 $46,121 Adjusted EBITDA Reconciliation for Forward-Looking Guidance (1) Ranges for year ending December 31, 2023 Low HighNet income$25,500 $40,050Stock-based compensation 22,500 21,500Depreciation and amortization of acquired intangible assets 39,500 39,000Interest expense and other, net 13,500 12,700Restructuring 13,000 7,000Acquisition, integration, and contested proxy, transaction and other legal and consulting costs (4) 1,500 750Income tax expense 9,000 14,500Adjusted EBITDA (1)$124,500 $135,500 Notes to Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures (1)We define Adjusted EBITDA as net income (loss), determined in accordance with GAAP, excluding the effects of discontinued operations, stock-based compensation, depreciation and amortization of acquired intangible assets, interest expense and other, net, acquisition and integration costs, contested proxy, transaction and other legal and consulting costs, TaxAct divestiture costs, and income tax (benefit) expense. Interest expense and other, net primarily consists of interest expense, net. Acquisition and integration costs primarily relate to the acquisitions of Avantax Planning Partners and 1st Global. 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. (2)As presented in the condensed consolidated statements of operations (unaudited). (3)These costs do not include $17.6 million of transaction costs that were determined to be directly attributable to the sale of TaxAct, and are included within income from discontinued operations, net of income taxes, as a reduction to the gain on disposal. TaxAct divestiture costs primarily relate to incremental professional services, consulting, and insurance costs that were incurred in connection with the divestiture. (4)The breakout of components cannot be determined on a forward-looking basis without unreasonable efforts.