Blackbaud, Inc. Announces Second Quarter 2013 Results

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Blackbaud, Inc. Announces Second Quarter 2013 Results

Announces Third Quarter 2013 Dividend

CHARLESTON, S.C.--(BUSINESS WIRE)-- Blackbaud, Inc. (NAS: BLKB) , a leading global provider of software and services for nonprofits, today announced financial results for its second quarter ended June 30, 2013.

"Blackbaud generated strong second quarter results, with both revenue and profitability above the high-end of our guidance range," stated Marc Chardon, Chief Executive Officer of Blackbaud. "We saw strong performance across each of our business units and we are seeing positive signs that our integrated product strategy is resonating with customers and having a positive impact on our pipeline of opportunities."

Chardon added, "We see nonprofits across all sectors looking for ways to improve and increase their fundraising, and they are looking for powerful, easy-to-use technology that can help them meet their needs. We believe our best-of-breed offerings in both online fundraising and CRM position Blackbaud well to gain share in the multi-billion dollar nonprofit software market."

Second Quarter 2013 GAAP Financial Results

Blackbaud reported total revenue of $125.5 million for the second quarter of 2013, an increase of 14% compared to $110.2 million for the second quarter of 2012. GAAP income from operations and net income were $14.3 million and $6.6 million, respectively, compared to a loss of $1.9 million and $2.3 million, respectively, for the second quarter of 2012. Diluted earnings per share were $0.15 for the second quarter of 2013, compared to a loss of $0.05 in the same period last year.

Second Quarter 2013 Non-GAAP Financial Results

Total non-GAAP revenue, including $0.3 million of deferred revenue write-down associated with the Convio acquisition, was $125.7 million for the second quarter of 2013, which exceeded the high-end of the company's guidance. Non-GAAP income from operations, which excludes the write-down of Convio deferred revenue, stock-based compensation expense, amortization of intangibles arising from business combinations, integration and restructuring costs, and CEO severance costs, was $26.4 million for the second quarter of 2013, up from $19.3 million in the same period last year and above the high-end of the company's guidance. Non-GAAP net income was $15.0 million for the second quarter of 2013, up from $10.8 million in the same period last year. Non-GAAP diluted earnings per share were $0.33 for the second quarter of 2013, up from $0.25 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."

"Blackbaud generated profitability that was ahead of our expectations as the cost rationalization efforts we have made in recent quarters are positively impacting our financial performance," said Tony Boor, Chief Financial Officer of Blackbaud. "The plans we have put in place to improve operational efficiency are yielding positive results which is allowing us to invest in our business."

Balance Sheet and Cash Flow

The company ended the second quarter with $7.3 million in cash, compared to $8.4 million on March 31, 2013. The company generated $24.5 million in cash flow from operations during the second quarter, returned $5.5 million to stockholders by way of dividend, invested $4.7 million in capital expenditures and capitalized software and reduced its debt balance by $15.5 million.


Blackbaud announced today that its Board of Directors has approved a third quarter 2013 dividend of $0.12 per share payable on September 13, 2013, to stockholders of record on August 28, 2013.

Conference Call Details

Blackbaud will host a conference call today, July 31, 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 August 7, 2013, at 877-870-5176 (domestic) or 858-384-5517 (international). The replay passcode is 416471. A live webcast of this conference call will be available on the "Investor Relations" page of the company's website at and a replay will be archived on the website as well.

About Blackbaud

Serving the nonprofit and education sectors for 30 years, Blackbaud (NAS: BLKB) combines technology and expertise to help organizations achieve their missions. Blackbaud works with more than 28,000 nonprofit 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 software, online fundraising software, event fundraising software, eMarketing, social media, advocacy, constituent relationship management (CRM), analytics, financial management and vertical-specific solutions for ticketing, school management, and more. For more information, visit

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: the growing need for nonprofit organizations to invest in new technology; benefits from our integrated product strategy; the positive direction of our company and solutions; customer demand trends; improvements in operational efficiency and the pace of such improvements; our ability to invest more quickly in back office systems; the ability of system investments to help our integrated organizational scale; the ability of our operational efficiency plans to drive meaningful shareholder value; improved revenue growth over time; and, such revenue growth providing value creation. 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 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 income from operations, non-GAAP net income, non-GAAP diluted earnings per share and non-GAAP operating margin. 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, and CEO severance, 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.

Blackbaud, Inc.
Consolidated balance sheets
June 30, December 31,
(in thousands, except share amounts)         2013   2012
Current assets:
Cash and cash equivalents $ 7,300 $ 13,491
Donor restricted cash 27,054 68,177
Accounts receivable, net of allowance of $7,542 and $8,546
at June 30, 2013 and December 31, 2012, respectively 85,749 75,692
Prepaid expenses and other current assets 32,205 40,589
Deferred tax asset, current portion   12,973       15,799  
Total current assets 165,281 213,748
Property and equipment, net 49,802 49,063
Goodwill 264,454 265,055
Intangible assets, net 155,746 168,037
Other assets   17,894       9,844  
Total assets $ 653,177     $ 705,747  
Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable $ 5,725 $ 13,623
Accrued expenses and other current liabilities 47,046 45,996
Donations payable 27,054 68,177
Debt, current portion 11,250 10,000
Deferred revenue, current portion   180,932       173,899  
Total current liabilities 272,007 311,695
Debt, net of current portion 184,250 205,500
Deferred tax liability 27,291 24,468
Deferred revenue, net of current portion 10,608 11,119
Other liabilities   5,632       5,281  
Total liabilities   499,788       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, 55,062,141 and 54,859,604 shares issued
at June 30, 2013 and December 31, 2012, respectively 55 55
Additional paid-in capital 213,707 203,638
Treasury stock, at cost; 9,318,148 and 9,209,371 shares
at June 30, 2013 and December 31, 2012, respectively (174,206 ) (170,898 )
Accumulated other comprehensive loss (1,406 ) (1,973 )
Retained earnings   115,239       116,862  
Total stockholders' equity   153,389       147,684  
Total liabilities and stockholders' equity $ 653,177     $ 705,747  
Blackbaud, Inc.
Consolidated statements of comprehensive income
Three months ended June 30, Six months ended June 30,
(in thousands, except share and per share amounts)         2013   2012 2013   2012
License fees $ 5,990 $ 4,521 $ 8,970 $ 11,689
Subscriptions 51,964 37,923 99,720 65,985
Services 31,368 31,790 60,206 55,748
Maintenance 34,122 33,880 68,270 67,446
Other revenue   2,024       2,076     3,925       4,028  
Total revenue   125,468       110,190     241,091       204,896  
Cost of revenue
Cost of license fees 643 821 1,368 1,434
Cost of subscriptions 21,605 16,561 41,988 29,535
Cost of services 26,503 25,299 51,902 45,341
Cost of maintenance 6,561 6,178 12,435 12,155
Cost of other revenue   1,301       1,646     2,498       3,115  
Total cost of revenue   56,613       50,505     110,191       91,580  
Gross profit   68,855       59,685     130,900       113,316  
Operating expenses
Sales and marketing 24,423 24,223 48,815 44,600
Research and development 16,483 14,856 32,912 28,160
General and administrative 12,849 21,753 25,591 36,254
Restructuring 146 - 3,356 -
Amortization 636 530 1,314 727
Impairment of cost method investment   -       200     -       200  
Total operating expenses   54,537       61,562     111,988       109,941  
Income (loss) from operations 14,318 (1,877 ) 18,912 3,375
Interest income 20 33 37 80
Interest expense (1,497 ) (1,462 ) (3,191 ) (1,653 )
Other expense, net   (309 )     (140 )   (206 )     (448 )
Income (loss) before provision for income taxes 12,532 (3,446 ) 15,552 1,354
Income tax provision (benefit)   5,909       (1,175 )   6,263       866  
Net income (loss) $ 6,623     $ (2,271 ) $
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