Blackbaud, Inc. (Nasdaq: BLKB), the leading provider of software and related services designed specifically for nonprofit organizations, today announced financial results for its first quarter ended March 31, 2012.

"The first quarter was a solid start to 2012. Our Enterprise Business Unit delivered a particularly strong performance, and we continue to gain market share with our Blackbaud CRM offering. Our momentum in the higher education vertical is strong and growing, and our broader-based CRM momentum is being aided by our expanding customer references across each nonprofit vertical," stated Marc Chardon, Chief Executive Officer of Blackbaud. "We believe Blackbaud is well positioned in the early stages of a major product replacement cycle. Many large nonprofit organizations continue to run their fundraising efforts based on 20+ year old technology, and we believe there is growing demand for modern solutions such as Blackbaud CRM that can help them better achieve their mission."

Chardon added, "We are excited to have recently received regulatory approval to move forward with our acquisition of Convio, which we expect to close tomorrow. We believe our combined organization is well positioned to deliver a best of both worlds offering to nonprofit organizations, including the most comprehensive CRM and online fundraising solution. Our corporate cultures are very similar, our products are highly complementary and we believe our combined organization is in a much better position to serve the multi-channel supporter engagement needs of nonprofit organizations."

First Quarter 2012 GAAP Financial Results

Blackbaud reported total revenue of $94.7 million for the first quarter of 2012, an increase of 9% compared to $86.6 million for the first quarter of 2011. GAAP income from operations and net income were $5.3 million and $2.8 million, respectively, compared with $9.8 million and $7.3 million, respectively, for the first quarter of 2011. Diluted earnings per share were $0.06 for the first quarter of 2012, compared with $0.17 in the same period last year.

First Quarter 2012 Non-GAAP Financial Results

Non-GAAP income from operations, which excludes stock-based compensation expense, amortization of intangibles arising from business combinations, acquisition-related expenses and gain on sale of assets, was $13.2 million for the first quarter of 2012, compared to $16.0 million in the same period last year. Non-GAAP net income was $7.8 million for the first quarter of 2012, compared to $9.8 million in the same period last year. Non-GAAP diluted earnings per share were $0.17 for the first quarter of 2012, compared to $0.22 in the same period last year.

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."

"The solid momentum of our business contributed to first quarter revenue that was at the high-end of our guidance," stated Tony Boor, Chief Financial Officer of Blackbaud. "As previously discussed, we made important incremental investments in G&A, R&D and services during the first quarter. Our investments to improve our back-office business processes were more front-end weighted than originally expected, and we accelerated hiring in sales and marketing to continue driving our momentum. We still expect to deliver a 20% non-GAAP operating margin for the full year 2012, and we believe our focus on improving internal efficiencies will enable Blackbaud to more effectively scale from a long-term perspective."

"As we look ahead, we expect the acquisition of Convio to have a positive impact on Blackbaud's long-term revenue growth, in addition to significantly accelerating our evolution to a subscription-based revenue model. In addition, we continue to expect the transaction to be accretive to our non-GAAP profitability for the first twelve months following the close of the acquisition, though the delayed close date will naturally push a majority of the benefit beyond the current calendar year," Boor concluded.

Balance Sheet and Cash Flow

The Company ended the first quarter with $46.0 million in cash, compared to $52.5 million at the end of the fourth quarter. The Company generated $4.0 million in cash flow from operations during the first quarter, returned $5.4 million to stockholders by way of dividend and invested $6.3 million in capital expenditures.

While not drawn down as of March 31, 2012, the Company closed a $325 million credit facility during the first quarter, providing Blackbaud with the financing capacity to complete the acquisition of Convio. Additional details related to this credit facility can be found in the Company's filings with the SEC.

Dividend and Share Repurchase Program

Blackbaud announced today that its Board of Directors has approved a second quarter 2012 dividend of $0.12 per share payable on June 15, 2012, to stockholders of record on May 25, 2012. Additionally, as of March 31, 2012, $50.0 million remained available under the Company's share repurchase program.

Conference Call Details

Blackbaud will host a conference call today, May 3, 2012, at 5:00 p.m. (Eastern Time) to discuss the Company's financial results, operations and related matters. To access this call, dial 877-719-9789 (domestic) or 719-325-4810 (international). A replay of this conference call will be available through May 10, 2012, at 877-870-5176 (domestic) or 858-384-5517 (international). The replay passcode is 9938407. 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 26,000 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, social media, advocacy, constituent relationship management (CRM), analytics, financial management, and vertical-specific solutions. Using Blackbaud technology, these organizations raise more than $100 billion each year. Blackbaud has been 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 employees throughout the United States, and in Australia, Canada, Mexico, the Netherlands, and the United Kingdom. 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; risks related to closing the proposed acquisition of Convio; 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. 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 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 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, costs associated with amortization of intangibles arising from business combinations, one-time write-offs or expenses incurred in connection with acquisitions, and a gain in connection with the sale of assets. We use these measures and believe them useful to investors because they provide additional insight in comparing results from period to period.

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
(Unaudited)
   
March 31, December 31,
(in thousands, except share amounts)   2012   2011
 
Assets
Current assets:
Cash and cash equivalents $ 45,967 $ 52,520
Donor restricted cash 20,891 40,205

Accounts receivable, net of allowance of $3,950 and $3,913 at March 31, 2012 and December 31, 2011, respectively

63,486 62,656
Prepaid expenses and other current assets 32,401 31,016
Deferred tax asset, current portion   1,560       1,551  
Total current assets 164,305 187,948
Property and equipment, net 34,773 34,397
Deferred tax asset 28,552 29,376
Goodwill 90,216 90,122
Intangible assets, net 42,818 44,660
Other assets   8,526       6,087  
 
Total assets $ 369,190     $ 392,590  
 
Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable $ 12,194 $ 13,464
Accrued expenses and other current liabilities 27,840 32,707
Donations payable 20,891 40,205
Deferred revenue   152,708       153,665  
Total current liabilities 213,633 240,041
Deferred revenue, noncurrent 9,443 9,772
Other noncurrent liabilities   2,357       2,775  
 
Total liabilities   225,433       252,588  
 
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, 54,205,775 and 53,959,532 shares issued at March 31, 2012 and December 31, 2011, respectively

54 54
Additional paid-in capital 182,498 175,401

Treasury stock, at cost; 9,050,125 and 9,019,824 shares at March 31, 2012 and December 31, 2011, respectively

(167,205 ) (166,226 )
Accumulated other comprehensive loss (869 ) (1,148 )
Retained earnings   129,279       131,921  
 
Total stockholders' equity   143,757       140,002  
 
Total liabilities and stockholders' equity $ 369,190     $ 392,590  
 
 
Blackbaud, Inc.
Consolidated statements of comprehensive income
(Unaudited)
   
 
Three months ended March 31,
(in thousands, except share and per share amounts)   2012   2011
Revenue
License fees $ 7,168 $ 4,551
Subscriptions 28,062 23,917
Services 23,958 24,979
Maintenance 33,566 31,833
Other revenue   1,952       1,348  
 
Total revenue   94,706       86,628  
 
Cost of revenue
Cost of license fees 613 720
Cost of subscriptions 12,974 9,162
Cost of services 20,042 18,874
Cost of maintenance 5,977 6,251
Cost of other revenue   1,469       1,134  
 
Total cost of revenue   41,075       36,141  
 
Gross profit   53,631       50,487  
 
Operating expenses
Sales and marketing 20,377 19,278
Research and development 13,304 11,966
General and administrative 14,501 9,202
Amortization   197       233  
 
Total operating expenses   48,379       40,679  
 
Income from operations 5,252 9,808
Interest income 47 33
Interest expense (191 ) (24 )
Other (expense) income, net   (308 )     69  
 
Income before provision for income taxes 4,800 9,886
Income tax provision   2,041       2,593  
 
Net income $ 2,759     $ 7,293  
 
Earnings per share
Basic $ 0.06 $ 0.17
Diluted $ 0.06 $ 0.17
 
Common shares and equivalents outstanding
Basic weighted average shares 43,944,459 43,352,216
Diluted weighted average shares 44,613,256 43,916,657
 
Dividends per share $ 0.12 $ 0.12
 
 
Other comprehensive income
Foreign currency translation adjustment   279       256  
Comprehensive income $ 3,038     $ 7,549  
 
 
Blackbaud, Inc.
Consolidated statements of cash flows
(Unaudited)
   
Three months ended March 31,
(in thousands)   2012   2011
 
Cash flows from operating activities
Net income $ 2,759 $ 7,293

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 4,816 4,048
Provision for doubtful accounts and sales returns 1,117 1,124
Stock-based compensation expense 3,836 3,796
Excess tax benefits from stock-based compensation (310 ) (193 )
Deferred taxes 967 1,076
Gain on sale of assets - (549 )
Other non-cash adjustments (555 ) (12 )
Changes in operating assets and liabilities, net of acquisition of businesses:
Accounts receivable (1,686 ) 9,148
Prepaid expenses and other assets (1,754 ) 6,889
Trade accounts payable 1,739 (1,677 )
Accrued expenses and other liabilities (5,253 ) (7,067 )
Donor restricted cash 19,361 1,527
Donations payable (19,361 ) (1,527 )
Deferred revenue   (1,691 )     (6,365 )
Net cash provided by operating activities   3,985       17,511  
Cash flows from investing activities
Purchase of property and equipment (6,297 ) (1,073 )
Purchase of net assets of acquired companies, net of cash acquired - (16,475 )
Proceeds from sale of assets   -       600  
Net cash used in investing activities   (6,297 )     (16,948 )
Cash flows from financing activities
Dividend payments to stockholders (5,409 ) (5,336 )
Proceeds from exercise of stock options 2,959 316
Excess tax benefits from stock-based compensation 310 193
Payments of deferred financing costs (2,440 ) -
Payments on capital lease obligations   -       (14 )
Net cash used in financing activities   (4,580 )     (4,841 )
Effect of exchange rate on cash and cash equivalents   339       429  
Net decrease in cash and cash equivalents (6,553 ) (3,849 )
Cash and cash equivalents, beginning of period   52,520       28,004  
Cash and cash equivalents, end of period $ 45,967     $ 24,155  
 
 
Blackbaud, Inc.
Reconciliation of GAAP to Non-GAAP financial measures
(Unaudited)
   
Three months ended March 31,
(in thousands, except per share amounts)   2012   2011
 
GAAP revenue $ 94,706     $ 86,628  
 
 
GAAP gross profit $ 53,631 $ 50,487
 
Non-GAAP adjustments:
Add: Stock-based compensation expense 784 801
Add: Amortization of intangibles from business combinations   1,779       1,623  
Total Non-GAAP adjustments 2,563 2,424
 
Non-GAAP gross profit $ 56,194     $ 52,911  
 
Non-GAAP gross margin   59 %     61 %
 
GAAP income from operations $ 5,252 $ 9,808
 
Non-GAAP adjustments:
Add: Stock-based compensation expense 3,836 3,796
Add: Amortization of intangibles from business combinations 1,976 1,856
Add: Acquisition-related expenses 2,183 1,054
Less: Gain on sale of assets   -       (549 )
Total Non-GAAP adjustments 7,995 6,157
 
Non-GAAP income from operations $ 13,247     $ 15,965  
 
Non-GAAP operating margin   14 %     18 %
 
GAAP net income $ 2,759 $ 7,293
 
Non-GAAP adjustments:
Add: Total Non-GAAP adjustments affecting income from operations 7,995 6,157
Less: Tax impact related to Non-GAAP adjustments   (2,949 )     (3,663 )
 
Non-GAAP net income $ 7,805     $ 9,787  
 
 
Shares used in computing Non-GAAP diluted earnings per share   44,613       43,917  
 
Non-GAAP diluted earnings per share $ 0.17     $ 0.22  
 
Detail of Non-GAAP adjustments:
Stock-based compensation expense:
Cost of revenue
Cost of subscriptions $ 181 $ 102
Cost of services 492 457
Cost of maintenance   111       242  
Subtotal 784 801
Operating expenses
Sales and marketing 417 357
Research and development 651 843
General and administrative   1,984       1,795  
Subtotal   3,052       2,995  
Total stock-based compensation expense $ 3,836     $ 3,796  
 
Amortization of intangibles from business combinations
Cost of revenue
Cost of license fees $ 123 $ 165
Cost of subscriptions 982 801
Cost of services 411 387
Cost of maintenance 244 252
Cost of other revenue   19       18  
Subtotal 1,779 1,623
Operating expenses   197       233  
Total amortization of intangibles from business combinations $ 1,976     $ 1,856  

Investor Contact:
ICR
Tim Dolan, 617-956-6727
timothy.dolan@icrinc.com
or
ICR
Brian Denyeau, 646-277-1251
brian.denyeau@icrinc.com
or
Media Contact:
Blackbaud, Inc.
Melanie Mathos, 843-216-6200 x3307
melanie.mathos@Blackbaud.com