Blackbaud, Inc. : Announces First Quarter 2012 Results
05/03/2012| 04:15pm US/Eastern
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Announces Second Quarter 2012 Dividend
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
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
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