Blackbaud, Inc. Announces Third Quarter 2009 Results
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Announces Fourth Quarter 2009 Dividend
CHARLESTON, S.C.--(BUSINESS WIRE)-- 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, 2009.
Marc Chardon, Chief Executive Officer of Blackbaud, stated, "We are very pleased with the company's better-than-expected financial results in the third quarter. We continue to see the largest nonprofit organizations moving forward with technology investments in order to optimize their fundraising activities in the current economic environment, while also driving operational enhancements that will benefit their organizations long-term. As a result, Blackbaud's enterprise sales efforts and the Blackbaud Enterprise CRM(TM) product offering continue to represent important drivers of our solid financial performance."
"While the market environment remains challenging, Blackbaud is making steady progress in strengthening its market position. We continue to expand our existing relationships and add to our customer base in the online fundraising segment of the market, and the company's already solid overall win rates continue to increase. These reasons, along with others, cause us to believe Blackbaud is well positioned for enhanced growth when the economy eventually improves."
On a GAAP basis, Blackbaud reported total revenue of $79.2 million for the quarter ended September 30, 2009, a decrease of 1.1% compared with the third quarter of 2008. Income from operations and net income were $13.9 million and $9.8 million, respectively, compared with $11.5 million and $7.3 million, respectively, in the third quarter of 2008. Diluted earnings per share were $0.22 for the quarter ended September 30, 2009, compared with $0.17 in the same period last year.
For the quarter ended September 30, 2009, non-GAAP revenue, including a $0.5 million revenue adjustment related to Kintera purchase accounting, was $79.7 million, a decrease of 3.6% compared with non-GAAP revenues in the third quarter of 2008. Non-GAAP income from operations, which excludes stock-based compensation expense and amortization of intangibles arising from business combinations, was $18.9 million, above the Company's guidance of $15.5 to $16.5 million and representing a non-GAAP operating margin of 23.8%. Non-GAAP operating income was $19.2 million in the third quarter of 2008.
Non-GAAP net income was $11.6 million for the quarter ended September 30, 2009, compared with $11.4 million in the same period last year. Non-GAAP diluted earnings per share were $0.26 for the quarter ended September 30, 2009, above the Company's guidance of $0.22 to $0.23 and compared to $0.26 in the same period last year.
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 quarter with $22.2 million in cash, up from $18.5 million at the end of the previous quarter. The company generated $25.8 million in cash from operations during the third quarter, approximately $23 million of which was used to reduce debt. The Company also used $4.4 million for the quarterly payment of dividends to stockholders.
Timothy V. Williams, Chief Financial Officer of Blackbaud, stated, "The company's strong third quarter financial results were enhanced by a couple of large Blackbaud Enterprise CRM(TM) deals that closed and were recognized during the quarter. Revenue and profitability would have been above the high-end of our guidance even without these larger transactions, and the company's evolution to subscription-based offerings and recurring revenue continues to progress." Williams added, "We are pleased with the company's ability to execute at the highest level with respect to expense management. During the third quarter, our worldwide organization continued to identify incremental expense savings and to focus on how to improve the efficiency of our operations."
Fourth Quarter 2009 Dividend and Share Repurchase Program
Blackbaud announced today that its Board of Directors has declared a fourth quarter dividend of $0.10 per share payable on December 15, 2009 to stockholders of record on November 27, 2009. Additionally, as of September 30, the Company had approximately $30 million remaining under its common stock share repurchase program that was authorized over a year ago.
Conference Call Details
Blackbaud will host a conference call today, October 28, 2009, at 5:00 p.m. (Eastern Time) to discuss the Company's financial results, operations and related matters. To access this call, dial 800-575-5790 (domestic) or 719-325-2392 (international). A replay of this conference call will be available through November 4, 2009, at 888-203-1112 (domestic) or 719-457-0820 (international). The replay passcode is 4454356. 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
Blackbaud is the leading global provider of software and services designed specifically for nonprofit organizations, enabling them to improve operational efficiency, build strong relationships, and raise more money to support their missions. Approximately 22,000 organizations -- including University of Arizona Foundation, American Red Cross, Cancer Research UK, The Taft School, Lincoln Center, In Touch Ministries, Tulsa Community Foundation, Ursinus College, Earthjustice, International Fund for Animal Welfare, and the WGBH Educational Foundation -- use one or more Blackbaud products and services for fundraising, constituent relationship management, financial management, website management, direct marketing, education administration, ticketing, business intelligence, prospect research, consulting, and analytics. Since 1981, Blackbaud's sole focus and expertise has been partnering with nonprofits and providing them the solutions they need to make a difference in their local communities and worldwide. Headquartered in the United States, Blackbaud also has operations in Australia, Canada, the Netherlands, and the United Kingdom. For more information, visit www.blackbaud.com.
All Blackbaud product names appearing herein are trademarks or registered trademarks of Blackbaud, Inc.
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.
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 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 and costs associated with amortization of intangibles arising from business combinations and include revenue associated with the Kintera acquisition that is not recognizable under GAAP purchase accounting.
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 measure below. 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.
Blackbaud, Inc.
Consolidated balance sheets
(Unaudited)
September 30, December 31,
(in thousands, except share amounts) 2009 2008
Assets
Current assets:
Cash and cash equivalents $ 22,238 $ 16,361
Donor restricted cash 16,493 12,363
Accounts receivable, net of allowance of $2,911 and
$2,777 at September 30, 2009 and December 31, 2008, 51,266 52,554
respectively
Prepaid expenses and other current assets 21,978 17,281
Deferred tax asset, current portion 6,745 6,858
Total current assets 118,720 105,417
Property and equipment, net 19,287 21,384
Deferred tax asset 61,096 64,762
Goodwill 74,208 73,615
Intangible assets, net 43,815 48,171
Other assets 530 537
Total assets $ 317,656 $ 313,886
Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable $ 7,085 $ 7,023
Accrued expenses and other current liabilities 26,371 21,758
Donations payable 16,493 12,363
Capital lease obligations, current portion 230 384
Debt, current portion 18,642 60,049
Deferred revenue 128,168 113,802
Total current liabilities 196,989 215,379
Capital lease obligations, noncurrent 57 203
Long-term debt, net of current portion 420 1,288
Deferred revenue, noncurrent 5,449 5,838
Other noncurrent liabilities 1,386 670
Total liabilities 204,301 223,378
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, 51,683,679 and 51,269,081 shares issued 52 51
at September 30, 2009 and December 31, 2008,
respectively
Additional paid-in capital 132,324 116,846
Treasury stock, at cost; 7,536,337 and 7,494,466
shares at September 30, 2009 and December 31, 2008, (131,265 ) (130,594 )
respectively
Accumulated other comprehensive loss (164 ) (899 )
Retained earnings 112,408 105,104
Total stockholders' equity 113,355 90,508
Total liabilities and stockholders' equity $ 317,656 $ 313,886
Blackbaud, Inc.
Consolidated statements of operations
(Unaudited)
Three months ended September Nine months ended September 30,
30,
(in thousands,
except share 2009 2008 2009 2008
and per share
amounts)
Revenue
License fees $ 5,919 $ 8,099 $ 19,123 $ 27,337
Services 22,818 27,076 66,412 75,988
Maintenance 29,742 27,411 86,574 79,212
Subscriptions 19,190 15,547 53,686 33,342
Other revenue 1,536 1,965 4,566 6,157
Total revenue 79,205 80,098 230,361 222,036
Cost of
revenue
Cost of 987 1,011 2,871 2,660
license fees
Cost of 15,269 16,703 46,990 47,301
services
Cost of 5,498 5,363 16,078 14,662
maintenance
Cost of 7,462 6,259 21,240 13,739
subscriptions
Cost of other 1,325 1,970 4,136 5,841
revenue
Total cost of 30,541 31,306 91,315 84,203
revenue
Gross profit 48,664 48,792 139,046 137,833
Operating
expenses
Sales and 15,778 16,686 46,965 47,597
marketing
Research and 11,389 10,568 34,151 27,977
development
General and 7,420 9,848 24,872 24,387
administrative
Amortization 194 190 572 524
Total
operating 34,781 37,292 106,560 100,485
expenses
Income from 13,883 11,500 32,486 37,348
operations
Interest 32 219 131 418
income
Interest (181 ) (603 ) (876 ) (821 )
expense
Other income 226 (152 ) 96 (192 )
(expense), net
Income before
provision for 13,960 10,964 31,837 36,753
income taxes
Income tax 4,132 3,648 11,349 13,407
provision
Net income $ 9,828 $ 7,316 $ 20,488 $ 23,346
Earnings per
share
Basic $ 0.23 $ 0.17 $ 0.48 $ 0.54
Diluted $ 0.22 $ 0.17 $ 0.47 $ 0.53
Common shares
and
equivalents
outstanding
Basic weighted 42,781,072 42,668,276 42,805,498 43,112,209
average shares
Diluted
weighted 43,826,550 43,409,941 43,493,362 43,889,859
average shares
Dividends per $ 0.10 $ 0.10 $ 0.30 $ 0.30
share
Blackbaud, Inc.
Consolidated statements of cash flows
(Unaudited)
Nine months ended September 30,
(in thousands) 2009 2008
Cash flows from operating activities
Net income $ 20,488 $ 23,346
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 11,563 9,099
Provision for doubtful accounts and sales 2,082 4,018
returns
Stock-based compensation expense 9,062 7,912
Excess tax benefit on exercise of stock options (4,806 ) (168 )
Deferred taxes 5,896 1,837
Other non-cash adjustments 94 80
Changes in assets and liabilities, net of
acquisition of businesses:
Accounts receivable 1,389 (12,516 )
Prepaid expenses and other assets 447 (1,020 )
Trade accounts payable (198 ) 904
Accrued expenses and other current liabilities 2,625 (5,459 )
Donor restricted cash (4,129 ) (6,343 )
Donations payable 4,129 6,343
Deferred revenue 11,713 19,963
Net cash provided by operating activities 60,355 47,996
Cash flows from investing activities
Purchase of property and equipment (3,865 ) (5,577 )
Purchase of net assets of acquired companies, (2,258 ) (49,927 )
net of cash acquired
Net cash used in investing activities (6,123 ) (55,504 )
Cash flows from financing activities
Proceeds from issuance of debt - 86,000
Proceeds from exercise of stock options 2,127 696
Excess tax benefit on exercise of stock options 4,806 168
Payments on debt (42,275 ) (27,283 )
Payments of deferred financing fees - (47 )
Payments on capital lease obligations (300 ) (427 )
Purchase of treasury stock - (40,338 )
Dividend payments to stockholders (13,206 ) (13,196 )
Net cash (used in) provided by financing (48,848 ) 5,573
activities
Effect of exchange rate on cash and cash 493 (537 )
equivalents
Net increase (decrease) in cash and cash 5,877 (2,472 )
equivalents
Cash and cash equivalents, beginning of period 16,361 14,775
Cash and cash equivalents, end of period $ 22,238 $ 12,303
Blackbaud, Inc.
Reconciliation of GAAP to Non-GAAP financial measures
(Unaudited)
Three months ended September Nine months ended September 30,
30,
(in thousands,
except per 2009 2008 2009 2008
share amounts)
GAAP revenue $ 79,205 $ 80,098 $ 230,361 $ 222,036
Non-GAAP
adjustments:
Add back:
Kintera
deferred 452 2,555 2,493 2,555
revenue
writedown
Total Non-GAAP 452 2,555 2,493 2,555
adjustments
Non-GAAP $ 79,657 $ 82,653 $ 232,854 $ 224,591
revenue
GAAP gross $ 48,664 $ 48,792 $ 139,046 $ 137,833
profit
Non-GAAP
adjustments:
Add back:
Kintera
deferred 452 2,555 2,493 2,555
revenue
writedown
Add back:
Stock-based
compensation 685 566 1,969 1,534
expense (see
table below)
Add back:
Amortization
of intangibles
from business 1,583 1,735 4,736 3,541
combinations
(see table
below)
Total Non-GAAP 2,720 4,856 9,198 7,630
adjustments
Non-GAAP gross $ 51,384 $ 53,648 $ 148,244 $ 145,463
profit
Non-GAAP gross 65 % 65 % 64 % 65 %
margin
GAAP income
from $ 13,883 $ 11,500 $ 32,486 $ 37,348
operations
Non-GAAP
adjustments:
Add back:
Kintera
deferred 452 2,555 2,493 2,555
revenue
writedown
Add back:
Stock-based
compensation 2,817 3,234 9,062 7,912
expense (see
table below)
Add back:
Amortization
of intangibles
from business 1,777 1,925 5,308 4,065
combinations
(see table
below)
Total Non-GAAP 5,046 7,714 16,863 14,532
adjustments
Non-GAAP
income from $ 18,929 $ 19,214 $ 49,349 $ 51,880
operations
Non-GAAP
operating 24 % 23 % 21 % 23 %
margin
GAAP net $ 9,828 $ 7,316 $ 20,488 $ 23,346
income
Non-GAAP
adjustments:
Add back:
Total Non-GAAP
adjustments 5,046 7,714 16,863 14,532
affecting
income from
operations
Add back: Tax
impact related (3,280 ) (3,636 ) (7,644 ) (6,594 )
to Non-GAAP
adjustments
Non-GAAP net $ 11,594 $ 11,394 $ 29,707 $ 31,284
income
Shares used in
computing
Non-GAAP 43,827 43,918 43,493 44,388
diluted
earnings per
share
Non-GAAP
diluted $ 0.26 $ 0.26 $ 0.68 $ 0.70
earnings per
share
Detail of
Non-GAAP
adjustments:
Stock-based
compensation
expense:
Cost of
revenue
Cost of $ 335 $ 360 $ 1,072 $ 1,012
services
Cost of 230 138 544 369
maintenance
Cost of 120 68 353 153
subscriptions
Subtotal 685 566 1,969 1,534
Operating
expenses
Sales and 422 424 1,093 1,005
marketing
Research and 718 581 2,115 1,609
development
General and 992 1,663 3,885 3,764
administrative
Subtotal 2,132 2,668 7,093 6,378
Total
stock-based $ 2,817 $ 3,234 $ 9,062 $ 7,912
compensation
expense
Amortization
of intangibles
from business
combinations:
Cost of
revenue
Cost of $ 95 $ 80 $ 266 $ 166
license fees
Cost of 336 336 1,006 1,004
services
Cost of 326 370 976 566
maintenance
Cost of 807 931 2,432 1,749
subscriptions
Cost of other 19 18 56 56
revenue
Subtotal 1,583 1,735 4,736 3,541
Operating 194 190 572 524
expenses
Total
amortization
of intangibles $ 1,777 $ 1,925 $ 5,308 $ 4,065
from business
combinations
Source: Blackbaud, Inc.
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