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| 8-K - 8-K - BLACKBAUD INC | form8-k10x30x2013.htm |
Exhibit 99.1
Blackbaud, Inc. Announces Third Quarter 2013 Results
Announces Fourth Quarter 2013 Dividend
Charleston, S.C. (October 30, 2013) - Blackbaud, Inc. (NASDAQ: BLKB), a leading global provider of software and services for nonprofits, today announced financial results for its third quarter ended September 30, 2013.
“Blackbaud’s third quarter results were highlighted by profitability that exceeded the high end of our guidance,” stated Tony Boor, Interim Chief Executive Officer and Chief Financial Officer of Blackbaud. “Each of our business units delivered a solid performance in the third quarter, and we continue to see nonprofit organizations turning to Blackbaud and our broad suite of leading product offerings to help drive their fundraising initiatives.”
Boor added, “We continue to make progress improving the operational efficiency of the company, and we believe there are still many gains to be captured as we look ahead. At the same time, we are beginning to increase investments in our product portfolio and go-to-market organization to ensure we are properly positioned to benefit from exciting shifts in the market, including SaaS, online fundraising and mobile. We believe this is the right strategy to generate increased revenue growth and optimize shareholder value from a long-term perspective.”
Third Quarter 2013 GAAP Financial Results
Blackbaud reported total revenue of $127.9 million for the third quarter of 2013, an increase of 4% compared to $122.5 million for the third quarter of 2012. GAAP income from operations and net income were $18.0 million and $9.4 million, respectively, compared to $6.2 million and $2.8 million, respectively, for the third quarter of 2012. Diluted earnings per share were $0.21 for the third quarter of 2013, compared to $0.06 in the same period last year.
Third Quarter 2013 Non-GAAP Financial Results
Total non-GAAP revenue was $128.0 million for the third quarter of 2013. Non-GAAP revenue excludes the impact of a $0.1 million write-down of deferred revenue associated with the acquisition of Convio. Non-GAAP income from operations, which also excludes stock-based compensation expense, amortization of intangibles arising from business combinations, integration and restructuring costs, CEO severance costs and employee severance costs, was $28.9 million for the third quarter of 2013, up from $20.7 million in the same period last year and above the high-end of the company’s guidance. Non-GAAP net income was $16.7 million for the third quarter of 2013, up from $11.7 million in the same period last year. Non-GAAP diluted earnings per share were $0.37 for the third quarter of 2013, up from $0.26 in the same period last year and also above the high-end of the company’s guidance.
A reconciliation between GAAP and 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.”
Balance Sheet and Cash Flow
The company ended the third quarter with $16.7 million in cash, compared to $7.3 million on June 30, 2013. The company generated $40.5 million in cash flow from operations during the third quarter, returned $5.5 million to stockholders by way of dividend, invested $4.1 million in capital expenditures and capitalized software and reduced its debt balance by $21.8 million.
Dividend
Blackbaud announced today that its Board of Directors has approved a fourth quarter 2013 dividend of $0.12 per share payable on December 13, 2013 to stockholders of record on November 27, 2013.
Conference Call Details
Blackbaud will host a conference call today, October 30, 2013, at 8:00 a.m. (Eastern Time) to discuss the company's financial results, operations and related matters. To access this call, dial 877-407-3982 (domestic) or 201-493-6780 (international). A replay of this conference call will be available through November 6, 2013, at 877-870-5176 (domestic) or 858-384-5517 (international). The replay passcode is 10000322. 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 29,000 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, advocacy, constituent relationship management (CRM), financial management, payment services, analytics 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 operations in the United States, Australia, Canada, the Netherlands and the United Kingdom. For more information, visit www.blackbaud.com.
Forward-looking Statements
This news release contains forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding: increasing adoption of our solutions by nonprofit organizations, reflecting benefits from our integrated product strategy; improvements in operational efficiency and the pace of such improvements; our plans to invest in products and go-to-market organizations to drive growth and shareholder value; and our fourth quarter dividend payment. 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 and other risks associated with acquisitions; the ability to attract and retain key personnel; general economic risks; uncertainty regarding increased business and renewals from existing customers; continued success in sales growth; risks associated with successful implementation of multiple integrated software products; risks related to our dividend policy and stock 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. 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 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. 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 from period to period with other companies in Blackbaud's industry, many of which present similar non-GAAP financial measures to investors. Non-GAAP financial results discussed above exclude items such as a write-down of Convio deferred revenue, stock-based compensation expense, costs associated with amortization of intangibles arising from business combinations, integration and restructuring costs, CEO severance costs and employee severance costs, because they are not directly related to our performance in any particular period, but are for our long-term benefit over multiple periods.
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:
ICR
Brian Denyeau, 646-277-1251
brian.denyeau@icrinc.com
Media Contact:
Blackbaud, Inc.
Melanie Mathos, 843-216-6200 x3307
melanie.mathos@blackbaud.com
Source: Blackbaud, Inc.
Blackbaud, Inc.
Consolidated balance sheets
(Unaudited)
(in thousands, except share amounts) | September 30, 2013 | December 31, 2012 | |||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 16,679 | $ | 13,491 | |||
Donor restricted cash | 41,758 | 68,177 | |||||
Accounts receivable, net of allowance of $6,809 and $8,546 at September 30, 2013 and December 31, 2012, respectively | 71,309 | 75,692 | |||||
Prepaid expenses and other current assets | 30,286 | 40,589 | |||||
Deferred tax asset, current portion | 8,732 | 15,799 | |||||
Total current assets | 168,764 | 213,748 | |||||
Property and equipment, net | 48,413 | 49,063 | |||||
Goodwill | 264,639 | 265,055 | |||||
Intangible assets, net | 149,698 | 168,037 | |||||
Other assets | 18,435 | 9,844 | |||||
Total assets | $ | 649,949 | $ | 705,747 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Trade accounts payable | $ | 8,449 | $ | 13,623 | |||
Accrued expenses and other current liabilities | 39,551 | 45,996 | |||||
Donations payable | 41,758 | 68,177 | |||||
Debt, current portion | 12,500 | 10,000 | |||||
Deferred revenue, current portion | 185,406 | 173,899 | |||||
Total current liabilities | 287,664 | 311,695 | |||||
Debt, net of current portion | 161,200 | 205,500 | |||||
Deferred tax liability | 29,944 | 24,468 | |||||
Deferred revenue, net of current portion | 8,619 | 11,119 | |||||
Other liabilities | 5,850 | 5,281 | |||||
Total liabilities | 493,277 | 558,063 | |||||
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, 55,222,085 and 54,859,604 shares issued at September 30, 2013 and December 31, 2012, respectively | 55 | 55 | |||||
Additional paid-in capital | 216,827 | 203,638 | |||||
Treasury stock, at cost; 9,425,277 and 9,209,371 shares at September 30, 2013 and December 31, 2012, respectively | (178,001 | ) | (170,898 | ) | |||
Accumulated other comprehensive loss | (1,409 | ) | (1,973 | ) | |||
Retained earnings | 119,200 | 116,862 | |||||
Total stockholders’ equity | 156,672 | 147,684 | |||||
Total liabilities and stockholders’ equity | $ | 649,949 | $ | 705,747 | |||
Blackbaud, Inc.
Consolidated statements of comprehensive income
(Unaudited)
(in thousands, except share and per share amounts) | Three months ended September 30, | Nine months ended September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenue | |||||||||||||||
License fees | $ | 3,831 | $ | 4,465 | $ | 12,801 | $ | 16,154 | |||||||
Subscriptions | 52,034 | 47,414 | 151,754 | 113,399 | |||||||||||
Services | 35,411 | 34,463 | 95,617 | 90,211 | |||||||||||
Maintenance | 34,722 | 34,499 | 102,992 | 101,945 | |||||||||||
Other revenue | 1,856 | 1,631 | 5,781 | 5,659 | |||||||||||
Total revenue | 127,854 | 122,472 | 368,945 | 327,368 | |||||||||||
Cost of revenue | |||||||||||||||
Cost of license fees | 492 | 728 | 1,860 | 2,162 | |||||||||||
Cost of subscriptions | 21,482 | 19,616 | 63,470 | 49,151 | |||||||||||
Cost of services | 26,121 | 26,438 | 78,023 | 71,779 | |||||||||||
Cost of maintenance | 6,653 | 6,789 | 19,088 | 18,944 | |||||||||||
Cost of other revenue | 1,366 | 1,557 | 3,864 | 4,672 | |||||||||||
Total cost of revenue | 56,114 | 55,128 | 166,305 | 146,708 | |||||||||||
Gross profit | 71,740 | 67,344 | 202,640 | 180,660 | |||||||||||
Operating expenses | |||||||||||||||
Sales and marketing | 23,833 | 26,279 | 72,648 | 70,879 | |||||||||||
Research and development | 16,547 | 19,205 | 49,459 | 47,365 | |||||||||||
General and administrative | 12,628 | 14,985 | 38,219 | 51,239 | |||||||||||
Restructuring | 110 | — | 3,466 | — | |||||||||||
Amortization | 614 | 690 | 1,928 | 1,417 | |||||||||||
Impairment of cost method investment | — | — | — | 200 | |||||||||||
Total operating expenses | 53,732 | 61,159 | 165,720 | 171,100 | |||||||||||
Income from operations | 18,008 | 6,185 | 36,920 | 9,560 | |||||||||||
Interest income | 16 | 38 | 53 | 118 | |||||||||||
Interest expense | (1,394 | ) | (1,976 | ) | (4,585 | ) | (3,629 | ) | |||||||
Other (expense) income, net | (140 | ) | 382 | (346 | ) | (66 | ) | ||||||||
Income before provision for income taxes | 16,490 | 4,629 | 32,042 | 5,983 | |||||||||||
Income tax provision | 7,097 | 1,804 | 13,360 | 2,670 | |||||||||||
Net income | $ | 9,393 | $ | 2,825 | $ | 18,682 | $ | 3,313 | |||||||
Earnings per share | |||||||||||||||
Basic | $ | 0.21 | $ | 0.06 | $ | 0.42 | $ | 0.08 | |||||||
Diluted | $ | 0.21 | $ | 0.06 | $ | 0.41 | $ | 0.07 | |||||||
Common shares and equivalents outstanding | |||||||||||||||
Basic weighted average shares | 44,735,425 | 44,172,836 | 44,583,623 | 44,077,911 | |||||||||||
Diluted weighted average shares | 45,569,275 | 44,718,101 | 45,332,617 | 44,650,028 | |||||||||||
Dividends per share | $ | 0.12 | $ | 0.12 | $ | 0.36 | $ | 0.36 | |||||||
Other comprehensive (loss) income | |||||||||||||||
Foreign currency translation adjustment | 94 | (123 | ) | 113 | (12 | ) | |||||||||
Unrealized (loss) gain on derivative instruments, net of tax | (97 | ) | (319 | ) | 451 | (883 | ) | ||||||||
Total other comprehensive (loss) income | (3 | ) | (442 | ) | 564 | (895 | ) | ||||||||
Comprehensive income | $ | 9,390 | $ | 2,383 | $ | 19,246 | $ | 2,418 | |||||||
Blackbaud, Inc.
Consolidated statements of cash flows
(Unaudited)
Nine months ended September 30, | |||||||
(in thousands) | 2013 | 2012 | |||||
Cash flows from operating activities | |||||||
Net income | $ | 18,682 | $ | 3,313 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 31,625 | 21,433 | |||||
Provision for doubtful accounts and sales returns | 1,072 | 4,212 | |||||
Stock-based compensation expense | 12,968 | 14,455 | |||||
Excess tax benefits from stock-based compensation | — | (81 | ) | ||||
Deferred taxes | 9,192 | 2,670 | |||||
Impairment of cost method investment | — | 200 | |||||
Other non-cash adjustments | 1,390 | 444 | |||||
Changes in operating assets and liabilities, net of acquisition of businesses: | |||||||
Accounts receivable | 3,203 | (11,965 | ) | ||||
Prepaid expenses and other assets | 10,092 | (5,609 | ) | ||||
Trade accounts payable | (1,466 | ) | (1,313 | ) | |||
Accrued expenses and other liabilities | (18,643 | ) | (3,618 | ) | |||
Donor restricted cash | 26,626 | 14,273 | |||||
Donations payable | (26,626 | ) | (14,273 | ) | |||
Deferred revenue | 9,855 | 15,528 | |||||
Net cash provided by operating activities | 77,970 | 39,669 | |||||
Cash flows from investing activities | |||||||
Purchase of property and equipment | (13,407 | ) | (15,427 | ) | |||
Purchase of net assets of acquired companies, net of cash acquired | (876 | ) | (280,687 | ) | |||
Capitalized software development costs | (2,371 | ) | (572 | ) | |||
Net cash used in investing activities | (16,654 | ) | (296,686 | ) | |||
Cash flows from financing activities | |||||||
Proceeds from issuance of debt | 63,100 | 315,000 | |||||
Payments on debt | (104,900 | ) | (70,000 | ) | |||
Payments of deferred financing costs | — | (2,440 | ) | ||||
Proceeds from exercise of stock options | 335 | 3,105 | |||||
Excess tax benefits from stock-based compensation | — | 81 | |||||
Dividend payments to stockholders | (16,458 | ) | (16,248 | ) | |||
Net cash (used in) provided by financing activities | (57,923 | ) | 229,498 | ||||
Effect of exchange rate on cash and cash equivalents | (205 | ) | 581 | ||||
Net increase (decrease) in cash and cash equivalents | 3,188 | (26,938 | ) | ||||
Cash and cash equivalents, beginning of period | 13,491 | 52,520 | |||||
Cash and cash equivalents, end of period | $ | 16,679 | $ | 25,582 | |||
Blackbaud, Inc.
Reconciliation of GAAP to Non-GAAP financial measures
(Unaudited)
(in thousands, except per share amounts) | Three months ended September 30, | Nine months ended September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
GAAP revenue | $ | 127,854 | $ | 122,472 | $ | 368,945 | $ | 327,368 | |||||||
Non-GAAP adjustments: | |||||||||||||||
Add: Convio deferred revenue write-down | 119 | 1,352 | 985 | 4,819 | |||||||||||
Total Non-GAAP adjustments | 119 | 1,352 | 985 | 4,819 | |||||||||||
Non-GAAP revenue | $ | 127,973 | $ | 123,824 | $ | 369,930 | $ | 332,187 | |||||||
GAAP gross profit | $ | 71,740 | $ | 67,344 | $ | 202,640 | $ | 180,660 | |||||||
GAAP gross margin | 56 | % | 55 | % | 55 | % | 55 | % | |||||||
Non-GAAP adjustments: | |||||||||||||||
Add: Convio deferred revenue write-down | 119 | 1,352 | 985 | 4,819 | |||||||||||
Add: Stock-based compensation expense | 908 | 1,263 | 3,016 | 2,946 | |||||||||||
Add: Amortization of intangibles from business combinations | 5,508 | 4,866 | 16,598 | 10,212 | |||||||||||
Add: Acquisition integration costs | 79 | 595 | 678 | 595 | |||||||||||
Add: Write-off of prepaid proprietary software licenses | — | — | — | 350 | |||||||||||
Total Non-GAAP adjustments | 6,614 | 8,076 | 21,277 | 18,922 | |||||||||||
Non-GAAP gross profit | $ | 78,354 | $ | 75,420 | $ | 223,917 | $ | 199,582 | |||||||
Non-GAAP gross margin | 61 | % | 61 | % | 61 | % | 60 | % | |||||||
GAAP income from operations | $ | 18,008 | $ | 6,185 | $ | 36,920 | $ | 9,560 | |||||||
GAAP operating margin | 14 | % | 5 | % | 10 | % | 3 | % | |||||||
Non-GAAP adjustments: | |||||||||||||||
Add: Convio deferred revenue write-down | 119 | 1,352 | 985 | 4,819 | |||||||||||
Add: Stock-based compensation expense | 3,072 | 4,831 | 12,968 | 14,455 | |||||||||||
Add: Amortization of intangibles from business combinations | 6,122 | 5,556 | 18,526 | 11,629 | |||||||||||
Add: Acquisition integration costs | 170 | 2,766 | 1,416 | 5,795 | |||||||||||
Add: Restructuring costs | 109 | — | 3,466 | — | |||||||||||
Add: CEO severance | 636 | — | 1,275 | — | |||||||||||
Add: Employee severance | 625 | — | 625 | — | |||||||||||
Add: Acquisition-related expenses | — | — | — | 6,427 | |||||||||||
Add: Write-off of prepaid proprietary software licenses | — | — | — | 350 | |||||||||||
Add: Impairment of cost method investment | — | — | — | 200 | |||||||||||
Total Non-GAAP adjustments | 10,853 | 14,505 | 39,261 | 43,675 | |||||||||||
Non-GAAP income from operations | $ | 28,861 | $ | 20,690 | $ | 76,181 | $ | 53,235 | |||||||
Non-GAAP operating margin | 23 | % | 17 | % | 21 | % | 16 | % | |||||||
GAAP net income | $ | 9,393 | $ | 2,825 | $ | 18,682 | $ | 3,313 | |||||||
Non-GAAP adjustments: | |||||||||||||||
Add: Total Non-GAAP adjustments affecting income from operations | 10,853 | 14,505 | 39,261 | 43,675 | |||||||||||
Less: Tax impact related to Non-GAAP adjustments | (3,567 | ) | (5,659 | ) | (14,449 | ) | (16,697 | ) | |||||||
Non-GAAP net income | $ | 16,679 | $ | 11,671 | $ | 43,494 | $ | 30,291 | |||||||
Shares used in computing Non-GAAP diluted earnings per share | 45,569 | 44,718 | 45,333 | 44,650 | |||||||||||
Non-GAAP diluted earnings per share | $ | 0.37 | $ | 0.26 | $ | 0.96 | $ | 0.68 | |||||||
Detail of Non-GAAP adjustments: | |||||||||||||||
Stock-based compensation expense: | |||||||||||||||
Cost of revenue | |||||||||||||||
Cost of subscriptions | $ | 340 | $ | 308 | $ | 755 | $ | 734 | |||||||
Cost of services | 468 | 854 | 1,905 | 1,911 | |||||||||||
Cost of maintenance | 100 | 101 | 356 | 301 | |||||||||||
Subtotal | 908 | 1,263 | 3,016 | 2,946 | |||||||||||
Operating expenses | |||||||||||||||
Sales and marketing | 512 | 714 | 1,755 | 1,734 | |||||||||||
Research and development | 762 | 980 | 2,977 | 2,478 | |||||||||||
General and administrative | 890 | 1,874 | 5,220 | 7,297 | |||||||||||
Subtotal | 2,164 | 3,568 | 9,952 | 11,509 | |||||||||||
Total stock-based compensation expense | $ | 3,072 | $ | 4,831 | $ | 12,968 | $ | 14,455 | |||||||
Amortization of intangibles from business combinations | |||||||||||||||
Cost of revenue | |||||||||||||||
Cost of license fees | $ | 87 | $ | 119 | $ | 334 | $ | 366 | |||||||
Cost of subscriptions | 4,657 | 4,044 | 13,968 | 7,732 | |||||||||||
Cost of services | 631 | 571 | 1,897 | 1,450 | |||||||||||
Cost of maintenance | 114 | 114 | 342 | 608 | |||||||||||
Cost of other revenue | 19 | 18 | 57 | 56 | |||||||||||
Subtotal | 5,508 | 4,866 | 16,598 | 10,212 | |||||||||||
Operating expenses | 614 | 690 | 1,928 | 1,417 | |||||||||||
Total amortization of intangibles from business combinations | $ | 6,122 | $ | 5,556 | $ | 18,526 | $ | 11,629 | |||||||