CHARLESTON, S.C., April 27, 2016 (GLOBE NEWSWIRE) -- Blackbaud, Inc. (the "Company") (NASDAQ:BLKB), the leading provider of software and services for the global philanthropic community, today announced financial results for its first quarter ended March 31, 2016.

"The philanthropic market remains very strong and the success we're seeing across the portfolio positions us well for future growth," said Mike Gianoni, Blackbaud's president and CEO. "The market is excited about our next generation solutions and we're just beginning to tap the extraordinary opportunity in the cloud with Blackbaud SKY TM."

First Quarter 2016

Total revenue was $169.3 million, up 15.1% from one year ago, with $134.0 million in recurring revenue, representing 79.2% of total revenue. Income from operations increased 30.3% to $10.4 million, with operating margin increasing 70 basis points to 6.2%. Net income increased 16.6% to $5.0 million, with diluted earnings per share up $0.02 to $0.11.
  • Total non-GAAP revenue was $171.0 million, up from $150.5 million one year ago, an increase of 13.6%, and an increase of 8.6% on an organic basis adjusted for constant currency.
  • Non-GAAP recurring revenue was $135.8 million, up from $114.7 million one year ago, an increase of 18.4%, and an increase of 10.3% on an organic basis adjusted for constant currency.
  • Non-GAAP recurring revenue was 79.4% of total non-GAAP revenue, highest in the Company's history.
  • Non-GAAP income from operations was $31.6 million, up from $26.5 million one year ago, an increase of 19.3%. Non-GAAP operating margin was 18.5%, up from 17.6% one year ago.
  • Non-GAAP net income was $19.6 million, up from $14.9 million one year ago and an increase of 31.0%. Non-GAAP diluted earnings per share was $0.42, up from $0.32 one year ago.
  • Cash flow from operations was $0.1 million, down from $4.2 million one year ago.
  • Blackbaud SKY now powers six next generation solutions and has delivered nearly 1,000 rapid updates to highly satisfied customers just six months after its debut. See press release.
  • SKY UX TM is now generally available to customers, partners, and developers.
  • Independent commissioned Total Economic Impact TM (TEI) studies, conducted by Forrester Consulting, highlighted the tremendous benefits delivered by Blackbaud fundraising solutions Raiser's Edge NXT TM and Blackbaud CRM TM .

"The first quarter was a solid start to the year," said Tony Boor, Blackbaud's executive vice president and CFO. "We executed well against our strategic plan, keeping us on track to accelerate revenue growth, improve profitability and achieve our full year guidance."

Dividend

Blackbaud announced today that its Board of Directors has declared a second quarter 2016 dividend of $0.12 per share payable on June 15, 2016 to stockholders of record on May 27, 2016.

Financial Outlook

No change from the full year financial guidance issued February 2016.
  • Non-GAAP revenue of $725.0 million to $740.0 million
  • Non-GAAP income from operations of $141.0 million to $147.0 million
  • Non-GAAP operating margin of 19.4% to 19.9%
  • Non-GAAP diluted earnings per share of $1.90 to $1.98
  • Cash flow from operations of $145.0 million to $155.0 million 

Conference Call Details
What:   Blackbaud's Fiscal 2016 First Quarter Conference Call
When:   April 28
Time:   8:00 a.m. (Eastern Time)
Live Call:   1-800-862-9098 (domestic) or 1-785-424-1051 (international); passcode 150739.
Webcast:   www.blackbaud.com/investorrelations
     

About Blackbaud

Serving the worldwide philanthropic community for more than 35 years, Blackbaud (NASDAQ: BLKB) combines innovative software and services, and expertise to help organizations achieve their missions. Blackbaud works in over 60 countries to power the passions of approximately 35,000 customers, including nonprofits, K-12 private and higher education institutions, healthcare organizations, foundations and other charitable giving entities, and corporations. The company offers a full spectrum of cloud and on-premises solutions, as well as a resource network that empowers and connects organizations of all sizes. Blackbaud's portfolio of software and services support nonprofit fundraising and relationship management, digital marketing, advocacy, accounting, payments and analytics, as well as grant management, corporate social responsibility, and education. Organizations use Blackbaud technology to raise, invest, manage, and award more than $100 billion each year. Recognized as a top company, Blackbaud is headquartered in Charleston, South Carolina and has operations in the United States, Australia, Canada, Ireland, and the United Kingdom. For more information, visit  www.blackbaud.com.

Forward-looking Statements

Except for historical information, all of the statements, expectations, and assumptions contained in this news release are forward-looking statements which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding: expectations that our revenue will continue to grow and that our operating margins will continue to improve, expectations that we will achieve our projected 2016 full year financial guidance and expectations that effectively managing our capital structure will allow us to seize compelling opportunities that accelerate our shift to the cloud and are accretive to our financial performance. These statements involve a number of risks and uncertainties. Although Blackbaud attempts to be accurate in making these forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based. In addition, other important factors that could cause results to differ materially include the following: management of integration of acquired companies; uncertainty regarding increased business and renewals from existing customers; a shifting revenue mix that may impact gross margin; continued success in sales growth; risks related to our dividend policy and stock repurchase program, including the possibility that we might discontinue payment of dividends; and the other risk factors set forth from time to time in the SEC filings for Blackbaud, copies of which are available free of charge at the SEC's website at www.sec.gov or upon request from Blackbaud's investor relations department. Blackbaud assumes no obligation and does not intend to update these forward-looking statements, except as required by law. All Blackbaud product names appearing herein are trademarks or registered trademarks of Blackbaud, Inc.

Non-GAAP Financial Measures

Blackbaud has provided in this release financial information that has not been prepared in accordance with GAAP. This information includes non-GAAP revenue, non-GAAP recurring revenue, non-GAAP gross profit, non-GAAP gross margin, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income and non-GAAP diluted earnings per share. The Company has acquired businesses whose net tangible assets include deferred revenue. In accordance with GAAP reporting requirements, the Company recorded write-downs of deferred revenue to fair value, which resulted in lower recognized revenue. Both on a quarterly and year-to-date basis, the revenue for the acquired businesses is deferred and typically recognized over a one-year period, so Blackbaud's GAAP revenues for the one-year period after the acquisitions will not reflect the full amount of revenues that would have been reported if the acquired deferred revenue was not written down to fair value. The non-GAAP measures described above reverse the acquisition-related deferred revenue write-downs so that the full amount of revenue booked by the acquired companies is included, which the Company believes provides a more accurate representation of a revenue run-rate in a given period. In addition to reversing write-downs of acquisition-related deferred revenue, non-GAAP financial measures discussed above exclude the impact of certain items that Blackbaud believes are not directly related to its performance in any particular period, but are for its long-term benefit over multiple periods.

In addition, Blackbaud discusses non-GAAP organic revenue growth, non-GAAP organic revenue growth on a constant currency basis and non-GAAP organic recurring revenue growth, which it believes provides useful information for evaluating the periodic growth of its business on a consistent basis. Each of these measures of non-GAAP organic revenue growth excludes incremental acquisition-related revenue attributable to companies acquired in the current fiscal year. For companies acquired in the immediately preceding fiscal year, each of these non-GAAP organic revenue growth measures reflects presentation of full year incremental non-GAAP revenue derived from such companies as if they were combined throughout the prior period, and it includes the non-GAAP revenue attributable to those companies, as if there were no acquisition-related write-downs of acquired deferred revenue to fair value as required by GAAP. In addition, each of these non-GAAP organic revenue growth measures excludes prior period revenue associated with divested businesses. The exclusion of the prior period revenue is to present the results of the divested businesses within the results of the combined company for the same period of time in both the prior and current periods. Blackbaud believes this presentation provides a more comparable representation of its current business' organic revenue growth and revenue run-rate.

Unaudited calculations of non-GAAP organic revenue growth, non-GAAP organic revenue growth on a constant currency basis and non-GAAP organic recurring revenue growth for the first quarter of 2016, as well as unaudited reconciliations of those non-GAAP measures to their most directly comparable GAAP measures, are as follows:
(dollars in thousands)   Three months ended March 31,
  2016 2015
GAAP revenue   $ 169,256   $ 146,993  
GAAP revenue growth   15.1 %  
Add: Non-GAAP acquisition-related revenue (1)   1,786   12,341  
Less: Revenue from divested businesses (2)     (395 )
Total Non-GAAP adjustments   1,786   11,946  
Non-GAAP revenue (3)   $ 171,042   $ 158,939  
Non-GAAP organic revenue growth   7.6 %  
       
Non-GAAP revenue (3)   $ 171,042   $ 158,939  
Foreign currency impact on Non-GAAP revenue (4)   1,527    
Non-GAAP revenue on constant currency basis (4)   $ 172,569   $ 158,939  
Non-GAAP organic revenue growth on constant currency basis   8.6 %  
       
GAAP subscriptions revenue   $ 96,851   $ 72,513  
GAAP maintenance revenue   37,160   38,896  
GAAP recurring revenue   $ 134,011   $ 111,409  
GAAP recurring revenue growth   20.3 %  
Add: Non-GAAP acquisition-related revenue (1)   1,781   11,902  
Less: Revenue from divested businesses (2)     (245 )
Total Non-GAAP adjustments   1,781   11,657  
Non-GAAP recurring revenue   $ 135,792   $ 123,066  
Non-GAAP organic recurring revenue growth   10.3 %  

(1) Non-GAAP acquisition-related revenue excludes incremental acquisition-related revenue calculated in accordance with GAAP that is attributable to companies acquired in the current fiscal year. For companies acquired in the immediately preceding fiscal year, non-GAAP acquisition-related revenue reflects presentation of full-year incremental non-GAAP revenue derived from such companies, as if they were combined throughout the prior period, and it includes the non-GAAP revenue from the acquisition-related deferred revenue write-down attributable to those companies. (2) For businesses divested in the prior fiscal year, non-GAAP organic revenue growth excludes the prior period revenue associated with divested businesses. The exclusion of the prior period revenue is to present the results of the divested business within the results of the combined company for the same period of time in both the prior and current periods. (3) Non-GAAP revenue for the prior year periods presented herein will not agree to non-GAAP revenue presented in the respective prior period quarterly financial information solely due to the manner in which non-GAAP organic revenue growth is calculated. (4) To determine non-GAAP organic revenue growth on a constant currency basis, revenues from entities reporting in foreign currencies were translated to U.S. Dollars using the comparable prior period's quarterly weighted average foreign currency exchange rates. The primary foreign currencies creating the impact are the Canadian Dollar, EURO, British Pound and Australian Dollar.

Additional details of Blackbaud's methodology for calculating non-GAAP organic revenue growth and non-GAAP organic revenue growth on a constant currency basis can be found on the company's investor relations page at www.blackbaud.com/investorrelations.

As previously disclosed, beginning in 2016, Blackbaud now applies a non-GAAP effective tax rate of 32.0% in its calculation of the tax impact on non-GAAP adjustments, which impacts the tax impact related to non-GAAP adjustments, non-GAAP net income and non-GAAP diluted earnings per share measures. The non-GAAP effective tax rate utilized will be reviewed annually to determine whether it remains appropriate in consideration of Blackbaud's financial results including its periodic effective tax rate calculated in accordance with GAAP, its operating environment and related tax legislation in effect and other factors deemed necessary. All first quarter 2015 measures of the tax impact related to non-GAAP adjustments included in this news release are calculated under Blackbaud's historical non-GAAP effective tax rate of 39.0%.

Blackbaud uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Blackbaud's ongoing operational performance. Blackbaud believes that these non-GAAP financial measures reflect the Blackbaud's ongoing business in a manner that allows for meaningful period-to-period comparison and analysis of trends in its business. In addition, Blackbaud believes that the use of these non-GAAP financial measures provides additional information for investors to use in evaluating ongoing operating results and trends and in comparing its financial results from period-to-period with other companies in Blackbaud's industry, many of which present similar non-GAAP financial measures to investors. However, these non-GAAP financial measures may not be completely comparable to similarly titled measures of other companies due to differences in the exact method of calculation between companies. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures.
Blackbaud, Inc.
Consolidated balance sheets
(Unaudited)
 
(dollars in thousands) March 31,  2016 December 31,  2015
Assets    
Current assets:    
Cash and cash equivalents $ 12,084   $ 15,362  
Restricted cash due to customers 115,000   255,038  
Accounts receivable, net of allowance of $4,541 and $4,943 at March 31, 2016 and December 31, 2015, respectively 78,456   80,046  
Prepaid expenses and other current assets 48,435   48,666  
Total current assets 253,975   399,112  
Property and equipment, net 54,543   52,651  
Software development costs, net 23,021   19,551  
Goodwill 435,994   436,449  
Intangible assets, net 284,188   294,672  
Other assets 20,207   20,901  
Total assets $ 1,071,928   $ 1,223,336  
Liabilities and stockholders' equity    
Current liabilities:    
Trade accounts payable $ 18,286   $ 19,208  
Accrued expenses and other current liabilities 37,577   57,461  
Due to customers 115,000   255,038  
Debt, current portion 4,375   4,375  
Deferred revenue, current portion 222,415   230,216  
Total current liabilities 397,653   566,298  
Debt, net of current portion 417,989   403,712  
Deferred tax liability 28,546   27,996  
Deferred revenue, net of current portion 6,583   7,119  
Other liabilities 8,000   7,623  
Total liabilities 858,771   1,012,748  
Commitments and contingencies    
Stockholders' equity:    
Preferred stock; 20,000,000 shares authorized, none outstanding    
Common stock, $0.001 par value; 180,000,000 shares authorized, 57,496,559 and 56,873,817 shares issued at March 31, 2016 and December 31, 2015, respectively 57   57  
Additional paid-in capital 285,376   276,340  
Treasury stock, at cost; 10,007,715 and 9,903,071 shares at March 31, 2016 and December 31, 2015, respectively (205,377 ) (199,861 )
Accumulated other comprehensive loss (1,091 ) (825 )
Retained earnings 134,192   134,877  
Total stockholders' equity 213,157   210,588  
Total liabilities and stockholders' equity $ 1,071,928   $ 1,223,336  
 

Blackbaud, Inc.
Consolidated statements of comprehensive income
(Unaudited)
 
(dollars in thousands, except per share amounts)   Three months ended  March 31,
  2016 2015
Revenue      
Subscriptions   $ 96,851   $ 72,513  
Maintenance   37,160   38,896  
Services   32,414   31,306  
License fees and other   2,831   4,278  
Total revenue   169,256   146,993  
Cost of revenue      
Cost of subscriptions   49,672   36,178  
Cost of maintenance   5,323   7,502  
Cost of services   24,319   26,971  
Cost of license fees and other   602   1,161  
Total cost of revenue   79,916   71,812  
Gross profit   89,340   75,181  
Operating expenses      
Sales, marketing and customer success   35,614   28,562  
Research and development   22,779   21,276  
General and administrative   19,756   16,843  
Amortization   752   488  
Total operating expenses   78,901   67,169  
Income from operations   10,439   8,012  
Interest expense   (2,675 ) (1,686 )
Other expense, net   (105 ) (287 )
Income before provision for income taxes   7,659   6,039  
Income tax provision   2,664   1,754  
Net income   $ 4,995   $ 4,285  
Earnings per share      
Basic   $ 0.11   $ 0.09  
Diluted   $ 0.11   $ 0.09  
Common shares and equivalents outstanding      
Basic weighted average shares   45,967,863   45,529,668  
Diluted weighted average shares   46,757,458   46,168,096  
Dividends per share   $ 0.12   $ 0.12  
Other comprehensive (loss) income      
Foreign currency translation adjustment   403   (326 )
Unrealized loss on derivative instruments, net of tax   (669 ) (469 )
Total other comprehensive loss   (266 ) (795 )
Comprehensive income   $ 4,729   $ 3,490  
               

Blackbaud, Inc.
Consolidated statements of cash flows
(Unaudited)
 
    Three months ended  March 31,
(dollars in thousands)   2016 2015
Cash flows from operating activities      
Net income   $ 4,995   $ 4,285  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization   17,609   13,678  
Provision for doubtful accounts and sales returns   1,017   1,358  
Stock-based compensation expense   7,916   5,102  
Excess tax benefits from exercise and vesting of stock-based compensation   (1,137 ) (584 )
Deferred taxes   558   (886 )
Amortization of deferred financing costs and discount   239   210  
Other non-cash adjustments   (217 ) 524  
Changes in operating assets and liabilities, net of acquisition and disposal of businesses:      
Accounts receivable   817   555  
Prepaid expenses and other assets   1,846   3,633  
Trade accounts payable   139   (111 )
Accrued expenses and other liabilities   (24,795 ) (18,768 )
Restricted cash due to customers   141,055   82,140  
Due to customers   (141,055 ) (82,140 )
Deferred revenue   (8,883 ) (4,765 )
Net cash provided by operating activities   104   4,231  
Cash flows from investing activities      
Purchase of property and equipment   (7,837 ) (2,521 )
Capitalized software development costs   (5,798 ) (3,129 )
Net cash used in investing activities   (13,635 ) (5,650 )
Cash flows from financing activities      
Proceeds from issuance of debt   74,600   41,800  
Payments on debt   (60,494 ) (36,694 )
Proceeds from exercise of stock options   3   11  
Excess tax benefits from exercise and vesting of stock-based compensation   1,137   584  
Dividend payments to stockholders   (5,700 ) (5,626 )
Net cash provided by financing activities   9,546   75  
Effect of exchange rate on cash and cash equivalents   707   (105 )
Net decrease in cash and cash equivalents   (3,278 ) (1,449 )
Cash and cash equivalents, beginning of period   15,362   14,735  
Cash and cash equivalents, end of period   $ 12,084   $ 13,286  
               

Blackbaud, Inc.
Reconciliation of GAAP to non-GAAP financial measures
(Unaudited)
 
(dollars in thousands, except per share amounts)   Three months ended  March 31,
  2016 2015
GAAP Revenue   $ 169,256   $ 146,993  
Non-GAAP adjustments:      
Add: Acquisition-related deferred revenue write-down   1,786   3,522  
Non-GAAP revenue   $ 171,042   $ 150,515  
       
GAAP gross profit   $ 89,340   $ 75,181  
GAAP gross margin   52.8 % 51.1 %
Non-GAAP adjustments:      
Add: Acquisition-related deferred revenue write-down   1,786   3,522  
Add: Stock-based compensation expense   872   901  
Add: Amortization of intangibles from business combinations   9,881   7,639  
Add: Employee severance   64   596  
Subtotal   12,603   12,658  
Non-GAAP gross profit   $ 101,943   $ 87,839  
Non-GAAP gross margin   59.6 % 58.4 %
       
GAAP income from operations   $ 10,439   $ 8,012  
GAAP operating margin   6.2 % 5.5 %
Non-GAAP adjustments:      
Add: Acquisition-related deferred revenue write-down   1,786   3,522  
Add: Stock-based compensation expense   7,916   5,102  
Add: Amortization of intangibles from business combinations   10,633   8,127  
Add: Employee severance   288   1,139  
Add: Acquisition-related integration costs   383   484  
Add: Acquisition-related expenses   113   73  
Subtotal   21,119   18,447  
Non-GAAP income from operations   $ 31,558   $ 26,459  
Non-GAAP operating margin   18.5 % 17.6 %
       
GAAP net income   $ 4,995   $ 4,285  
       
Shares used in computing GAAP diluted earnings per share   46,757,458   46,168,096  
GAAP diluted earnings per share   $ 0.11   $ 0.09  
       
Non-GAAP adjustments:      
Add: Total Non-GAAP adjustments affecting loss from operations   21,119   18,447  
Less: Tax impact related to Non-GAAP adjustments   (6,544 ) (7,797 )
Non-GAAP net income   $ 19,570   $ 14,935  
       
Shares used in computing Non-GAAP diluted earnings per share   46,757,458   46,168,096  
Non-GAAP diluted earnings per share   $ 0.42   $ 0.32  
               

Blackbaud, Inc.
Reconciliation of GAAP to Non-GAAP financial measures (continued)
(Unaudited)
 
(dollars in thousands)   Three months ended  March 31,
  2016 2015
Detail of certain Non-GAAP adjustments:      
Stock-based compensation expense:      
Included in cost of revenue:      
Cost of subscriptions   $ 281   $ 143  
Cost of maintenance   123   161  
Cost of services   468   597  
Total included in cost of revenue   872   901  
Included in operating expenses:      
Sales, marketing and customer success   901   701  
Research and development   1,535   978  
General and administrative   4,608   2,522  
Total included in operating expenses   7,044   4,201  
Total stock-based compensation expense   $ 7,916   $ 5,102  
       
Amortization of intangibles from business combinations:      
Included in cost of revenue:      
Cost of subscriptions   $ 7,811   $ 5,772  
Cost of maintenance   1,332   1,153  
Cost of services   653   607  
Cost of license fees and other   85   107  
Total included in cost of revenue   9,881   7,639  
Included in operating expenses   752   488  
Total amortization of intangibles from business combinations   $ 10,633   $ 8,127  
               
Investor Contact:Mark FurlongDirector of Investor Relations843-654-2097mark.furlong@blackbaud.comMedia Contact:Nicole McGouganBlackbaud Public Relations843-654-3307nicole.mcgougan@blackbaud.com

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