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8-K - FORM 8-K - BLACKBAUD INCd250714d8k.htm
EX-99.2 - EX-99.2 - BLACKBAUD INCd250714dex992.htm

Exhibit 99.1

Blackbaud, Inc. Announces Third Quarter 2011 Results

Announces Fourth Quarter 2011 Dividend

CHARLESTON, S.C. – November 1, 2011 – Blackbaud, Inc. (Nasdaq: BLKB), the leading provider of software and related services designed specifically for nonprofit organizations, today announced financial results for its third quarter ended September 30, 2011.

Marc Chardon, Chief Executive Officer of Blackbaud, stated, “Solid execution during the third quarter enabled Blackbaud to deliver organic revenue growth of 12% and total revenue growth of 15%. We believe the company remains well positioned to deliver low double digit organic revenue growth and mid-teens total revenue growth for the full year 2011. This would represent a meaningful acceleration in growth from the 5% level in 2010, in spite of the continued challenging economic environment.”

“During the third quarter, we closed a record 7 new Enterprise CRM deals as Blackbaud continues to expand its growing leadership position at the high-end of the nonprofit market. Our Enterprise CRM wins continue to be diversified across our major nonprofit sub-verticals, and two of our third quarter wins were with international nonprofit organizations,” Chardon added. “Our General Markets Business Unit is also executing at a high level, delivering strong growth and gaining significant market share in the mid-market. Blackbaud has created a strong market leadership position in the mid-market over several decades, and we believe it remains a large and underpenetrated market opportunity.”

Blackbaud reported total revenue of $95.5 million for the quarter ended September 30, 2011, an increase of 15% compared to $83.2 million for the third quarter of 2010. Income from operations and net income, determined in accordance with GAAP, were $15.7 million and $9.8 million, respectively, compared with $13.1 million and $8.5 million, respectively, for the third quarter of 2010. Diluted earnings per share were $0.22 for the quarter ended September 30, 2011 compared with $0.20 in the same period last year.

Non-GAAP income from operations, which excludes stock-based compensation expense and amortization of intangibles arising from business combinations, was $21.1 million, an increase of 17% compared to $18.0 million in the same period last year. Non-GAAP net income was $12.8 million for the quarter ended September 30, 2011, an increase of 16% compared to $11.0 million in the same period last year. Non-GAAP diluted earnings per share were $0.29 for the quarter ended September 30, 2011, an increase of 16% compared with $0.25 in the same period last year.

The company’s third quarter 2011 results include an adjustment to lengthen the amortization period of the initial set-up fees associated with certain subscription based offerings as analysis indicated that the average life of related customer relationships is longer than previously estimated. This adjustment reduced third quarter revenue by approximately $700,000, non-GAAP operating income by approximately $400,000 and non-GAAP diluted earnings per share by $0.01.

A reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

The Company ended the third quarter with $52.0 million in cash, an increase from $33.4 million at the end of the previous quarter. The company generated $67.7 million in cash from operations for the nine months ended September 30, 2011, an increase of 38% compared to the same period last year.

Timothy V. Williams, Chief Financial Officer of Blackbaud, said, “In addition to re-accelerating revenue growth, the company has been able to start the process of re-expanding margins modestly during 2010. The third quarter represented the highest quarterly non-GAAP operating margin since 2009, and contributed to 40 basis points of margin expansion for the first nine months of the year as compared to 2010. We remain confident in the company’s ability to expand margins modestly over the next several years as our business continues to scale and the economic environment eventually improves.”


Fourth Quarter 2011 Dividend and Share Repurchase Program

Blackbaud announced today that its Board of Directors has approved a fourth quarter dividend of $0.12 per share payable on December 15, 2011, to stockholders of record on November 28, 2011. Additionally, as of September 30, 2011, $50.0 million remained available under the Company’s share repurchase program, which became effective on August 1, 2010.

Conference Call Details

Blackbaud will host a conference call today, November 1, 2011, at 5:00 p.m. (Eastern Time) to discuss the Company’s financial results, operations and related matters. To access this call, dial 888-364-3109 (domestic) or 719-325-2497 (international). A replay of this conference call will be available through November 8, 2011, at 877-870-5176 (domestic) or 858-384-5517 (international). The replay passcode is 4844367. A live webcast of this conference call will be available on the “Investor Relations” page of the Company’s website at www.blackbaud.com/investorrelations, and a replay will be archived on the website as well.

About Blackbaud

Serving the nonprofit and education sectors for 30 years, Blackbaud (NASDAQ: BLKB) combines technology and expertise to help organizations achieve their missions. Blackbaud works with more than 25,000 customers in over 60 countries that support higher education, healthcare, human services, arts and culture, faith, the environment, independent K-12 education, animal welfare, and other charitable causes. The company offers a full spectrum of cloud-based and on-premise software solutions and related services for organizations of all sizes including: fundraising, eMarketing, social media, advocacy, constituent relationship management (CRM), analytics, financial management, and vertical-specific solutions. Using Blackbaud technology, these organizations raise more than $100 billion each year. Recognized as a top company by Forbes, InformationWeek, and Software Magazine and honored by Best Places to Work, Blackbaud is headquartered in Charleston, South Carolina and has employees throughout the US, and in Australia, Canada, Hong Kong, Mexico, the Netherlands, 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 that 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: general economic risks; uncertainty regarding increased business and renewals from existing customers; continued success in sales growth; management of integration of acquired companies and other risks associated with acquisitions; risks associated with successful implementation of multiple integrated software products; the ability to attract and retain key personnel; risks related to our dividend policy and share repurchase program, including potential limitations on our ability to grow and the possibility that we might discontinue payment of dividends; risks relating to restrictions imposed by the credit facility; risks associated with management of growth; lengthy sales and implementation cycles, particularly in larger organizations; technological changes that make our products and services less competitive; 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. 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 income from operations and margin, non-GAAP net income and non-GAAP diluted earnings per share. 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 the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial results with other companies in Blackbaud's industry, many of which present similar non-GAAP financial measures to investors. As noted, the non-GAAP financial results discussed above exclude stock-based compensation expense, costs associated with amortization of intangibles arising from business combinations, one-time write-offs or expenses incurred in connection with acquisitions and a gain in connection with the sale of a business.

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. As previously mentioned, a reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release.

Investor Contact:

Tim Dolan

ICR

timothy.dolan@icrinc.com

617-956-6727

Media Contact:

Melanie Mathos

Blackbaud, Inc.

melanie.mathos@Blackbaud.com

843-216-6200 x3307

SOURCE: Blackbaud, Inc.


Blackbaud, Inc.

Consolidated balance sheets

(Unaudited)

 

(in thousands, except share amounts)    September 30,
2011
    December 31,
2010
 

Assets

    

Current assets:

    

Cash and cash equivalents

       $ 51,999          $ 27,974   

Donor restricted cash

     21,180        16,359   

Accounts receivable, net of allowance of $2,940 and $2,687 at September 30, 2011 and December 31, 2010, respectively

     62,641        59,804   

Prepaid expenses and other current assets

     30,724        33,847   

Deferred tax asset, current portion

     5,173        5,164   
  

 

 

 

Total current assets

     171,717        143,148   

Property and equipment, net

     28,778        22,963   

Deferred tax asset

     35,553        44,639   

Goodwill

     89,255        76,247   

Intangible assets, net

     40,343        38,515   

Other assets

     5,716        2,579   
  

 

 

 

Total assets

       $ 371,362          $ 328,091   
  

 

 

 

Liabilities and stockholders' equity

    

Current liabilities:

    

Trade accounts payable

       $ 9,908          $ 9,883   

Accrued expenses and other current liabilities

     30,405        28,322   

Donations payable

     21,180        16,359   

Deferred revenue

     155,015        141,149   
  

 

 

 

Total current liabilities

     216,508        195,713   

Deferred revenue, noncurrent

     6,992        6,900   

Other noncurrent liabilities

     2,854        2,419   
  

 

 

 

Total liabilities

     226,354        205,032   
  

 

 

 

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, 53,488,169 and 53,316,280 shares issued at September 30, 2011 and December 31, 2010, respectively

     54        53   

Additional paid-in capital

     171,025        158,419   

Treasury stock, at cost; 8,872,688 and 8,842,882 shares at September 30, 2011 and December 31, 2010, respectively

     (161,966     (161,186

Accumulated other comprehensive loss

     (687     (512

Retained earnings

     136,582        126,285   
  

 

 

 

Total stockholders’ equity

     145,008        123,059   
  

 

 

 

Total liabilities and stockholders’ equity

       $ 371,362          $ 328,091   
  

 

 

 


Blackbaud, Inc.

Consolidated statements of operations

(Unaudited)

 

     Three months ended September 30,     Nine months ended September 30,  
(in thousands, except share and per share amounts)    2011     2010     2011     2010  

Revenue

        

License fees

       $ 4,952          $ 5,070          $ 14,600          $ 17,209   

Subscriptions

     26,035        21,235        77,415        60,797   

Services

     29,782        23,992        81,790        64,967   

Maintenance

     32,895        31,416        97,329        92,970   

Other revenue

     1,867        1,513        5,073        4,193   
  

 

 

   

 

 

 

Total revenue

     95,531        83,226        276,207        240,136   
  

 

 

   

 

 

 

Cost of revenue

        

Cost of license fees

     796        626        2,515        2,218   

Cost of subscriptions

     10,625        7,950        30,260        22,792   

Cost of services

     20,019        17,008        59,200        48,761   

Cost of maintenance

     6,521        6,310        18,807        18,005   

Cost of other revenue

     1,708        1,381        4,253        3,831   
  

 

 

   

 

 

 

Total cost of revenue

     39,669        33,275        115,035        95,607   
  

 

 

   

 

 

 

Gross profit

     55,862        49,951        161,172        144,529   
  

 

 

   

 

 

 

Operating expenses

        

Sales and marketing

     18,731        16,953        57,124        52,399   

Research and development

     12,224        11,776        36,223        34,395   

General and administrative

     8,975        7,901        27,351        23,199   

Amortization

     249        195        729        587   
  

 

 

   

 

 

 

Total operating expenses

     40,179        36,825        121,427        110,580   
  

 

 

   

 

 

 

Income from operations

     15,683        13,126        39,745        33,949   

Interest income

     55        21        133        64   

Interest expense

     (59     (45     (143     (170

Other income (expense), net

     (107     53        178        (129
  

 

 

   

 

 

 

Income before provision for income taxes

     15,572        13,155        39,913        33,714   

Income tax provision

     5,811        4,636        13,640        12,453   
  

 

 

   

 

 

 

Net income

       $ 9,761          $ 8,519          $ 26,273          $ 21,261   
  

 

 

   

 

 

 

Earnings per share

        

Basic

       $ 0.22          $ 0.20          $ 0.60          $ 0.49   

Diluted

       $ 0.22          $ 0.20          $ 0.60          $ 0.48   

Common shares and equivalents outstanding

        

Basic weighted average shares

     43,548,494        42,747,209        43,449,958        43,145,289   

Diluted weighted average shares

     44,147,911        43,472,822        44,045,438        43,880,554   

Dividends per share

       $ 0.12          $ 0.11          $ 0.36          $ 0.33   


Blackbaud, Inc.

Consolidated statements of cash flows

(Unaudited)

 

      Nine months ended September 30,  
(in thousands)    2011     2010  

Cash flows from operating activities

    

Net income

           $ 26,273              $ 21,261   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     12,281        11,955   

Provision for doubtful accounts and sales returns

     3,708        1,960   

Stock-based compensation expense

     10,913        9,240   

Excess tax benefits from stock based compensation

     (423     (1,161

Deferred taxes

     6,088        3,480   

Other non-cash adjustments

     (703     (114

Changes in operating assets and liabilities, net of acquisition of businesses:

    

Accounts receivable

     (5,864     (7,549

Prepaid expenses and other assets

     516        (779

Trade accounts payable

     909        (771

Accrued expenses and other liabilities

     (216     (2,800

Donor restricted cash

     (7,598     (6,020

Donations payable

     7,598        6,020   

Deferred revenue

     14,237        14,141   
  

 

 

 

Net cash provided by operating activities

     67,719        48,863   
  

 

 

 

Cash flows from investing activities

    

Purchase of property and equipment

     (12,997     (10,597

Purchase of net assets of acquired companies, net of cash acquired

     (16,475     (390

Purchase of investment

     -        (2,000

Purchase of intangible assets

     -        (130

Proceeds from sale of assets

     874        -   
  

 

 

 

Net cash used in investing activities

     (28,598     (13,117
  

 

 

 

Cash flows from financing activities

    

Dividend payments to stockholders

     (16,034     (14,609

Proceeds from exercise of stock options

     1,973        4,695   

Excess tax benefits from stock based compensation

     423        1,161   

Purchase of treasury stock

     -        (22,613

Proceeds from issuance of debt

     -        4,000   

Payments on debt

     -        (4,868

Payments of deferred financing costs

     (767     -   

Payments on capital lease obligations

     (35     (135
  

 

 

 

Net cash used in financing activities

     (14,440     (32,369
  

 

 

 

Effect of exchange rate on cash and cash equivalents

     (656     107   
  

 

 

 

Net increase in cash and cash equivalents

     24,025        3,484   

Cash and cash equivalents, beginning of period

     27,974        22,769   
  

 

 

 

Cash and cash equivalents, end of period

           $ 51,999              $ 26,253   
  

 

 

 


Blackbaud, Inc.

Reconciliation of GAAP to Non-GAAP financial measures

(Unaudited)

 

      Three months
ended  September 30,
    Nine months
ended  September 30,
 
(in thousands, except per share amounts)    2011     2010     2011     2010  

GAAP revenue

   $ 95,531      $ 83,226      $ 276,207      $ 240,136   
  

 

 

   

 

 

 

GAAP gross profit

   $ 55,862      $ 49,951      $ 161,172      $ 144,529   

Non-GAAP adjustments:

        

Add: Stock-based compensation expense

     764        711        2,375        2,083   

Add: Amortization of intangibles from business combinations

     1,582        1,548        4,778        4,594   
  

 

 

   

 

 

 

Total Non-GAAP adjustments

     2,346        2,259        7,153        6,677   

Non-GAAP gross profit

   $ 58,208      $ 52,210      $ 168,325      $ 151,206   
  

 

 

   

 

 

 

Non-GAAP gross margin

     61     63     61     63
  

 

 

   

 

 

 

GAAP income from operations

   $ 15,683      $ 13,126      $ 39,745      $ 33,949   

Non-GAAP adjustments:

        

Add: Stock-based compensation expense

     3,587        3,180        10,913        9,240   

Add: Amortization of intangibles from business combinations

     1,831        1,743        5,507        5,181   

Add: Acquisition-related expenses

     -        -        1,054        -   

Less: Gain on sale of assets

     -        -        (549     -   
  

 

 

   

 

 

 

Total Non-GAAP adjustments

     5,418        4,923        16,925        14,421   

Non-GAAP income from operations

   $ 21,101      $ 18,049      $ 56,670      $ 48,370   
  

 

 

   

 

 

 

Non-GAAP operating margin

     22     22     21     20
  

 

 

   

 

 

 

GAAP net income

   $ 9,761      $ 8,519      $ 26,273      $ 21,261   

Non-GAAP adjustments:

        

Add: Total Non-GAAP adjustments affecting income from operations

     5,418        4,923        16,925        14,421   

Add: Tax impact related to Non-GAAP adjustments

     (2,374     (2,415     (8,527     (6,320
  

 

 

   

 

 

 

Non-GAAP net income

   $ 12,805      $ 11,027      $ 34,671      $ 29,362   
  

 

 

   

 

 

 

Shares used in computing Non-GAAP diluted earnings per share

     44,148        43,473        44,045        43,881   
  

 

 

   

 

 

 

Non-GAAP diluted earnings per share

   $ 0.29      $ 0.25      $ 0.79      $ 0.67   
  

 

 

   

 

 

 

Detail of Non-GAAP adjustments:

        

Stock-based compensation expense:

        

Cost of revenue

        

Cost of subscriptions

   $ 80      $ 112      $ 407      $ 279   

Cost of services

     491        380        1,395        1,230   

Cost of maintenance

     193        219        573        574   
  

 

 

   

 

 

 

Subtotal

     764        711        2,375        2,083   

Operating expenses

        

Sales and marketing

     305        272        934        977   

Research and development

     759        715        2,273        2,130   

General and administrative

     1,759        1,482        5,331        4,050   
  

 

 

   

 

 

 

Subtotal

     2,823        2,469        8,538        7,157   
  

 

 

   

 

 

 

Total stock-based compensation expense

   $ 3,587      $ 3,180      $ 10,913      $ 9,240   
  

 

 

   

 

 

 

Amortization of intangibles from business combinations:

        

Cost of revenue

        

Cost of license fees

   $ 126      $ 116      $ 384      $ 325   

Cost of subscriptions

     823        760        2,440        2,280   

Cost of services

     394        343        1,172        1,020   

Cost of maintenance

     221        310        726        913   

Cost of other revenue

     18        19        56        56   
  

 

 

   

 

 

 

Subtotal

     1,582        1,548        4,778        4,594   

Operating expenses

     249        195        729        587   
  

 

 

   

 

 

 

Total amortization of intangibles from business combinations

   $ 1,831      $ 1,743      $ 5,507      $ 5,181