Blackbaud (BLKB) Raises FY Cash Flow Guidance
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Blackbaud, Inc. (NASDAQ: BLKB), the world's leading cloud software company powering social good, today announced that it increased its full-year operating cash flow expectations for 2016 as a result of its early adoption of ASU 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). The Company now expects its full-year cash flow from operations for 2016 to be $147.0 million to $157.0 million, up from $135.0 million to $145.0 million previously, and reaffirmed its previously announced non-GAAP revenue, non-GAAP income from operations, non-GAAP operating margins and non-GAAP diluted earnings per share expectations for 2016.
"We are maintaining our non-GAAP financial guidance while increasing cash flow from operations to account for the early adoption of ASU 2016-09," said Tony Boor, Blackbaud's executive vice president and CFO. "Our updated guidance indicates organic revenue growth acceleration, improved profitability and increased cash flow for the full-year when compared to 2015."
Adoption of New Share-based Compensation Expense Accounting StandardDuring the three months ended September 30, 2016, Blackbaud early adopted ASU 2016-09, which addresses, among other items, the accounting for income taxes and forfeitures, and cash flow presentation of share-based compensation. Under ASU 2016-09, excess tax benefits generated upon the settlement or exercise of stock awards are no longer recognized as additional paid-in capital but are instead recognized as a reduction to income tax expense. This change in accounting for income taxes is effective on a prospective basis as of the beginning of the 2016 fiscal year. Cash flows related to excess tax benefits are required to be presented as an operating activity rather than a financing activity. In addition, all cash tax payments made on an employee's behalf for shares withheld upon vesting or settlement are required to be presented as a financing activity. Blackbaud adopted all amendments related to cash flow presentation on a retrospective basis.
The early adoption of ASU 2016-09 increased GAAP net income by $1.2 million for both the three months ended March 31, 2016 and June 30, 2016, respectively, and increased net cash provided by operating activities and net cash used in financing activities by $6.7 million and $4.1 million for the three months ended March 31, 2016 and June 30, 2016, respectively. The impacts of adoption are reflected in Blackbaud's guidance and will be reflected in its results for the nine months ended September 30, 2016. In addition, retrospective application of the amendments related to cash flow presentation resulted in a $4.2 million increase in both net cash provided by operating activities and net cash used in financing activities for the nine months ended September 30, 2015. Blackbaud will provide more detailed information regarding the impact of the early adoption of ASU 2016-09 in its quarterly report on Form 10-Q for the quarter ended September 30, 2016.
Financial Outlook: Full-Year Financial Guidance
- 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 $147.0 million to $157.0 million
(Street sees FY EPS of $1.92 on revenue of $733 million)
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