| [August 04, 2008] |
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Blackbaud, Inc. Announces Second Quarter 2008 Results and Third Quarter 2008 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 second quarter ended June 30, 2008.
Marc Chardon, Chief Executive Officer of Blackbaud, stated, "We are pleased with the Company's overall financial performance in the second quarter in the face of the continued challenging economic environment. The quarter was highlighted by solid total revenue growth, continued rapid growth in our subscription revenue and strong profit margins that drove our non-GAAP earnings per share to the high-end of our expectations."
Chardon continued, "During the quarter, we added two new Enterprise CRM customers, including the upgrade of an existing Target Team Approach customer. This upgrade represented the achievement of the last of our four major Target Software milestones, approximately six months ahead of schedule. We were also pleased with the traction displayed by our eTapestry software-as-a-service fundraising offering, which delivered strong operating results in the quarter. The success we have enjoyed with both the Target and eTapestry acquisitions provides us with confidence as we begin to integrate the recently announced Kintera acquisition. Customer and employee response have been decidedly positive since that acquisition announcement, and we look forward to adding the industry's leading on-line fundraising solution to our product suite and further solidifying the growth of our subscription revenue."
For the quarter ended June 30, 2008, Blackbaud reported total revenue of $72.5 million, an increase of 13% compared with the second quarter of 2007. Income from operations and net income, determined in accordance with generally accepted accounting principles ("GAAP"), were $14.6 million and $9.0 million, respectively, for the second quarter of 2008. This compares to GAAP income from operations of $13.6 million and net income of $8.2 million in the same period last year. GAAP diluted earnings per share were $0.21 for the quarter ended June 30, 2008, compared with $0.19 in the same period last year.
For the quarter ended June 30, 2008, non-GAAP income from operations, which excludes stock-based compensation expense and amortization of intangibles arising from business combinations, was $18.0 million, an increase of 11% from $16.2 million in the same period last year. Non-GAAP net income was $10.9 million for the quarter ended June 30, 2008, an increase of 12% from $9.7 million in the same period last year. Non-GAAP diluted earnings per share were $0.25 for the quarter ended June 30, 2008, at the high-end of the Company's guidance and an increase of 14% over 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 generated $21.5 million in cash from operations for the six months ended June 30, 2008 and during the second quarter, the Company repurchased approximately 580,000 shares of its stock for approximately $13.4 million. On a year-to-date basis, the Company has repurchased approximately 1.5 million shares for approximately $36.0 million.
Timothy V. Williams, Chief Financial Officer of Blackbaud, stated, "The Company was able to deliver a higher-than-expected non-GAAP operating margin of 25% during the second quarter, leading to non-GAAP diluted EPS that was at the high-end of our expectations. In addition, we continue to believe the Company will deliver strong cash flows during 2008, and our third quarter is off to a good start with record collections in July following the conversion to a new billing system and related increase in receivables during the second quarter."
Williams continued, "The macro-economic environment was challenging in the first half of 2008, and we believe it is prudent to expect a similar environment for the remainder of the year. With a strong market position and business model in place, we continue to believe the Company is well positioned to deliver solid revenue growth and strong profitability during 2008. From a longer-term perspective, we believe the Kintera acquisition further enhances our financial profile by increasing our subscription revenue, which continues to be our highest growth revenue source."
Third Quarter 2008 Dividend and Share Repurchase Authorization
Blackbaud announced today that its Board of Directors has declared a third quarter dividend of $0.10 per share payable on September 15, 2008 to stockholders of record on August 28, 2008. Additionally, in May 2008, the Board of Directors authorized an increase in the Company's common stock share repurchase authorization to $40.0 million. As of June 30, the Company had approximately $38.5 million remaining under this authorization.
Conference Call Details
Blackbaud will host a conference call today, August 4, 2008, at 5:00 p.m. (Eastern Time) to discuss the Company's financial results, operations and related matters. To access this call, dial 888-801-6494 (domestic) or 913-981-5542 (international). A replay of this conference call will be available through August 11, 2008, at 888-203-1112 (domestic) or 719-457-0820 (international). The replay passcode is 3148327. A live webcast of this conference call will be available on the "Investor Relations" page of the Company's Web site, and a replay will be archived on the Web site 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, InTouch 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 Canada, the United Kingdom, and Australia. 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 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 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.
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)
June 30, December 31,
(in thousands, except share amounts) 2008 2007
-----------------------------------------------------------------
-----
Assets
Current assets:
Cash and cash equivalents $ 9,979 $ 14,775
Accounts receivable, net of allowance of
$1,728 and $1,935 at June 30, 2008 and
December 31, 2007, respectively 64,227 44,689
Prepaid expenses and other current assets 10,287 11,279
Deferred tax asset, current portion 2,802 2,276
-------------------------
Total current assets 87,295 73,019
Property and equipment, net 16,967 16,962
Deferred tax asset 48,795 51,696
Goodwill 61,175 58,275
Intangible assets, net 35,133 37,272
Other assets 490 470
-------------------------
Total assets $ 249,855 $ 237,694
=========================
Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable $ 6,341 $ 5,802
Accrued expenses and other current
liabilities 18,180 20,575
Capital lease obligations, current
portion 470 513
Short-term debt 24,500 -
Deferred revenue 107,000 93,106
-------------------------
Total current liabilities 156,491 119,996
Capital lease obligations, noncurrent 352 586
Deferred revenue, noncurrent 3,093 2,994
Other noncurrent liabilities 613 1,015
-------------------------
Total liabilities 160,549 124,591
-------------------------
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,
50,499,324 and 50,450,675 shares issued
at June 30, 2008 and December 31, 2007,
respectively 50 50
Additional paid-in capital 110,771 105,687
Treasury stock, at cost; 6,933,667 and
5,431,852 shares at June 30, 2008 and
December 31, 2007, respectively (121,514) (85,487)
Accumulated other comprehensive income 91 137
Retained earnings 99,908 92,716
-------------------------
Total stockholders' equity 89,306 113,103
-------------------------
Total liabilities and stockholders'
equity $ 249,855 $ 237,694
=========================
Blackbaud, Inc.
Consolidated statements of operations
(Unaudited)
Three months ended June Six months ended June 30,
30,
------------------------- -------------------------
(in thousands,
except share and
per share
amounts) 2008 2007 2008 2007
-------------------------------------------- -------------------------
Revenue
License fees $ 9,603 $ 11,030 $ 19,238 $ 19,097
Services 25,336 22,218 48,912 40,532
Maintenance 26,371 23,164 51,801 45,600
Subscriptions 9,010 5,539 17,795 10,332
Other revenue 2,182 2,094 4,192 3,629
------------------------- -------------------------
Total revenue 72,502 64,045 141,938 119,190
------------------------- -------------------------
Cost of revenue
Cost of license
fees 807 804 1,649 1,280
Cost of services 14,905 13,606 30,598 25,722
Cost of
maintenance 4,595 4,220 9,299 8,239
Cost of
subscriptions 3,824 2,190 7,480 4,114
Cost of other
revenue 2,023 1,776 3,871 3,136
------------------------- -------------------------
Total cost of
revenue 26,154 22,596 52,897 42,491
------------------------- -------------------------
Gross profit 46,348 41,449 89,041 76,699
------------------------- -------------------------
Operating expenses
Sales and
marketing 15,672 14,223 30,911 27,140
Research and
development 8,642 6,926 17,409 13,753
General and
administrative 7,273 6,592 14,539 12,736
Amortization 167 98 334 182
------------------------- -------------------------
Total
operating
expenses 31,754 27,839 63,193 53,811
------------------------- -------------------------
Income from
operations 14,594 13,610 25,848 22,888
Interest income 34 156 199 527
Interest expense (148) (379) (218) (746)
Other income
(expense), net 49 (8) (40) (77)
------------------------- -------------------------
Income before
provision for
income taxes 14,529 13,379 25,789 22,592
Income tax
provision 5,542 5,176 9,759 8,633
------------------------- -------------------------
Net income $ 8,987 $ 8,203 $ 16,030 $ 13,959
========================= =========================
Earnings per share
Basic $ 0.21 $ 0.19 $ 0.37 $ 0.32
Diluted $ 0.21 $ 0.19 $ 0.36 $ 0.31
Common shares and
equivalents
outstanding
Basic weighted
average shares 42,776,609 43,355,261 43,336,989 43,508,166
Diluted weighted
average shares 43,457,710 44,338,741 44,064,436 44,501,949
Dividends per
share $ 0.100 $ 0.085 $ 0.200 $ 0.170
Blackbaud, Inc.
Consolidated statements of cash flows
(Unaudited)
Six months ended
June 30,
-------------------
(in thousands) 2008 2007
-----------------------------------------------------------------
-----
Cash flows from operating activities
Net income $ 16,030 $ 13,959
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 5,107 3,570
Provision for doubtful accounts and sales
returns 2,199 1,271
Stock-based compensation expense 4,678 3,511
Excess tax benefit on exercise of stock
options (18) (709)
Deferred taxes 2,363 4,028
Other non-cash adjustments 37 24
Changes in assets and liabilities, net of
acquisition:
Accounts receivable (20,886) (11,897)
Prepaid expenses and other assets 994 1,250
Trade accounts payable 519 (1,388)
Accrued expenses and other current
liabilities (2,773) (3,589)
Deferred revenue 13,218 9,360
-------------------
Net cash provided by operating
activities 21,468 19,390
-------------------
Cash flows from investing activities
Purchase of property and equipment (2,957) (3,128)
Purchase of net assets of acquired companies (2,895) (59,243)
-------------------
Net cash used in investing activities (5,852) (62,371)
-------------------
Cash flows from financing activities
Proceeds from issuance of debt 27,200 30,000
Proceeds from exercise of stock options 393 828
Excess tax benefit on exercise of stock options 18 709
Payments on debt (2,708) (16,922)
Payments of deferred financing fees (47) -
Payments on capital lease obligations (276) (204)
Purchase of treasury stock (36,027) (14,106)
Dividend payments to stockholders (8,843) (7,503)
-------------------
Net cash used in financing activities (20,290) (7,198)
-------------------
Effect of exchange rate on cash and cash
equivalents (122) 59
-------------------
Net decrease in cash and cash equivalents (4,796) (50,120)
Cash and cash equivalents, beginning of period 14,775 67,783
-------------------
Cash and cash equivalents, end of period $ 9,979 $ 17,663
===================
Blackbaud, Inc.
Reconciliation of GAAP to Non-GAAP financial measures
(Unaudited)
(In thousands, except per share amounts)
Three months Six months ended
ended June 30, June 30,
2008 2007 2008 2007
---------------- ------------------
GAAP revenue $72,502 $64,045 $141,938 $119,190
================ ==================
GAAP gross profit $46,348 $41,449 $ 89,041 $ 76,699
Non-GAAP adjustments:
Add back: Stock-based
compensation expense (see
table below) 479 245 968 459
Add back: Amortization of
intangibles from business
combinations (see table below) 903 693 1,806 1,221
---------------- ------------------
Non-GAAP gross profit $47,730 $42,387 $ 91,815 $ 78,379
================ ==================
Non-GAAP gross margin 66% 66% 65% 66%
================ ==================
GAAP income from operations $14,594 $13,610 $ 25,848 $ 22,888
Non-GAAP adjustments:
Add back: Stock-based
compensation expense (see
table below) 2,319 1,799 4,678 3,511
Add back: Amortization of
intangibles from business
combinations (see table below) 1,070 791 2,140 1,403
----------------- ------------------
Total Non-GAAP adjustments 3,389 2,590 6,818 4,914
---------------- ------------------
Non-GAAP income from operations $17,983 $16,200 $ 32,666 $ 27,802
================ ==================
Non-GAAP operating margin 25% 25% 23% 23%
================ ==================
GAAP net income $ 8,987 $ 8,203 $ 16,030 $ 13,959
Non-GAAP adjustments:
Add back: Total Non-GAAP
adjustments affecting income
from operations 3,389 2,590 6,818 4,914
Add back: Tax impact related to
Non-GAAP adjustments (1,445) (1,052) (2,958) (2,163)
---------------- ------------------
Non-GAAP net income $10,931 $ 9,741 $ 19,890 $ 16,710
================ ==================
GAAP shares used in computing
diluted earnings per share 43,458 44,339 44,064 44,502
Non-GAAP adjustments:
Add back: Incremental shares
related to dilutive securities 493 392 487 408
---------------- ------------------
Shares used in computing Non-GAAP
diluted earnings per share 43,951 44,731 44,551 44,910
================ ==================
Non-GAAP diluted earnings per
share $ 0.25 $ 0.22 $ 0.45 $ 0.37
================ ==================
Detail of Non-GAAP adjustments:
Stock-based compensation
expense:
Cost of revenue
Cost of services $ 302 $ 182 $ 652 $ 339
Cost of maintenance 119 52 231 99
Cost of subscriptions 58 11 85 21
---------------- ------------------
Subtotal 479 245 968 459
Operating expenses
Sales and marketing 295 261 581 521
Research and development 508 266 1,028 535
General and administrative 1,037 1,027 2,101 1,996
---------------- ------------------
Subtotal 1,840 1,554 3,710 3,052
---------------- ------------------
Total stock-based
compensation expense $ 2,319 $ 1,799 $ 4,678 $ 3,511
================ ==================
Amortization of intangibles
from business combinations:
Cost of revenue
Cost of license fees $ 43 $ 43 $ 86 $ 67
Cost of services 334 312 668 533
Cost of maintenance 98 103 196 181
Cost of subscriptions 409 214 818 403
Cost of other revenue 19 21 38 37
---------------- ------------------
Subtotal 903 693 1,806 1,221
---------------- ------------------
Operating expenses 167 98 334 182
---------------- ------------------
Total amortization of
intangibles from
business combinations $ 1,070 $ 791 $ 2,140 $ 1,403
================ ==================
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