Blackbaud, Inc. : Announces Second Quarter 2012 Results
08/07/2012| 04:15pm US/Eastern
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Announces Third Quarter 2012 Dividend
Blackbaud, Inc. (Nasdaq: BLKB), the leading global provider of software
and services for nonprofits, today announced financial results for its
second quarter ended June 30, 2012.
"Blackbaud delivered second quarter financial results that were
consistent with our guidance for standalone Blackbaud and made
significant progress on integrating the Convio acquisition, despite
increased macroeconomic headwinds," stated Marc Chardon, Chief Executive
Officer for Blackbaud.
Chardon added, "Over the last few months, we have made significant
progress integrating Convio's employees and operations into Blackbaud.
Market reception to our combination has been favorable, and we are
excited to be in a unique position of delivering the industry's leading
CRM and online fundraising solutions from a single vendor. We believe
that Blackbaud will increasingly be recognized as the vendor of choice
to serve the multi-channel supporter engagement needs of nonprofit
organizations."
Second Quarter 2012 GAAP Financial Results: Consolidated
Blackbaud reported total revenue of $110.2 million for the second
quarter of 2012, an increase of 17% compared to $93.8 million for the
second quarter of 2011. GAAP loss from operations and net loss were
$(1.9) million and $(2.3) million, respectively, compared with GAAP
income from operations of $14.5 million and net income of $9.4 million,
respectively, for the second quarter of 2011. Diluted loss per share was
$(0.05) for the second quarter of 2012, compared with diluted earnings
per share of $0.21 in the same period last year.
Second Quarter 2012 Non-GAAP Financial Results: Consolidated
Blackbaud reported total non-GAAP revenue of $113.7 million for the
second quarter of 2012. Non-GAAP income from operations, which excludes
write-down of Convio deferred revenue, stock-based compensation expense,
amortization of intangibles arising from business combinations,
acquisition and integration related expenses, impairment of cost method
investment, write-off of prepaid proprietary software licenses and gain
on sale of assets, was $19.3 million for the second quarter of 2012,
compared to $19.9 million in the same period last year. Non-GAAP net
income was $10.8 million for the second quarter of 2012, compared to
$12.3 million in the same period last year. Non-GAAP diluted earnings
per share were $0.24 for the second quarter of 2012, compared to $0.28
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."
Second Quarter 2012 Non-GAAP Financial Results: Blackbaud Standalone
On a standalone basis, Blackbaud generated total revenue of $99.6
million, an increase of 6% on a year-over-year basis and consistent with
the company's previously issued guidance range of $99 million to $102
million. Non-GAAP income from operations was $17.1 million for the
second quarter of 2012. This compared to $19.9 million in the same
period last year and was generally consistent with the company's
previously issued guidance range of $15.5 million to $17.0 million.
A reconciliation between Blackbaud's standalone 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."
Tony Boor, Chief Financial Officer of Blackbaud, stated, "The second
half of 2012 represents a transition period as we continue to take
action on numerous plans to capitalize on the synergies between
Blackbaud and Convio. The majority of the benefits we expect to realize
as a result of our efforts, from both a growth and cost synergies
perspective, are expected to occur during 2013 and beyond as a result of
the longer than expected regulatory review process for the acquisition."
Consolidated Balance Sheet and Cash Flow
The Company ended the second quarter with $21.2 million in cash,
compared to $46.0 million at the end of the first quarter. The Company
ended the second quarter with $259.6 million of debt, which reflects the
drawing down of credit facility for the acquisition of Convio. The
Company generated $10.9 million in cash flow from operations during the
second quarter, returned $10.8 million to stockholders by way of
dividend and invested $11.6 million in capital expenditures.
Dividend and Share Repurchase Program
Blackbaud announced today that its Board of Directors has approved a
third quarter 2012 dividend of $0.12 per share payable on September 14,
2012, to stockholders of record on August 28, 2012. Additionally, as of
June 30, 2012, $50.0 million remained available under the Company's
share repurchase program.
Conference Call Details
Blackbaud will host a conference call today, August 7, 2012, at 5:00
p.m. (Eastern Time) to discuss the Company's financial results,
operations and related matters. To access this call, dial 877-407-3982
(domestic) or 201-493-6780 (international). A replay of this conference
call will be available through August 14, 2012, at 877-870-5176
(domestic) or 858-384-5517 (international). The replay passcode is
397056. 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 27,000 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. 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 operations in the United States,
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 which are subject to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995, including but not
limited to statements regarding: market acceptance of Blackbaud's
acquisition of Convio and the resulting unique product offering
position; Blackbaud's ability to achieve its synergy targets and the
timing of the benefits. These statements involve a number of risks and
uncertainties; Blackbaud's ability to serve the multi-channel supporter
engagement needs of nonprofit organizations; and macroeconomic trends
and their effects on Blackbaud and nonprofits. 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; 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; 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.
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
consolidated non-GAAP revenue, consolidated non-GAAP income from
operations, consolidated non-GAAP net income, consolidated non-GAAP
diluted earnings per share, and Blackbaud standalone non-GAAP income
from operations. 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: a write-down of Convio deferred revenue, stock-based
compensation expense; costs associated with amortization of intangibles
arising from business combinations; a write-off of prepaid proprietary
software licenses; acquisition and integration related expenses; a
charge associated with impairment of cost method investment; 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)
June 30,
December 31,
(in thousands, except share amounts)
2012
2011
Assets
Current assets:
Cash and cash equivalents
$
21,192
$
52,520
Donor restricted cash
18,314
40,205
Accounts receivable, net of allowance of $4,208 and $3,913 at June
30, 2012 and December 31, 2011, respectively
Common stock, $0.001 par value; 180,000,000 shares authorized,
54,240,408 and 53,959,532 shares issued at June 30, 2012 and
December 31, 2011, respectively
54
54
Additional paid-in capital
194,254
175,401
Treasury stock, at cost; 9,065,862 and 9,019,824 shares at June
30, 2012 and December 31, 2011, respectively
(167,646
)
(166,226
)
Accumulated other comprehensive loss
(1,601
)
(1,148
)
Retained earnings
121,616
131,921
Total stockholders' equity
146,677
140,002
Total liabilities and stockholders' equity
$
668,429
$
392,590
Blackbaud, Inc.
Consolidated statements of comprehensive income
(Unaudited)
Three months ended June 30,
Six months ended June 30,
(in thousands, except share and per share amounts)
2012
2011
2012
2011
Revenue
License fees
$
4,521
$
5,097
$
11,689
$
9,648
Subscriptions
37,923
25,885
65,985
49,802
Services
31,790
28,332
55,748
53,311
Maintenance
33,880
32,610
67,446
64,443
Other revenue
2,076
1,858
4,028
3,206
Total revenue
110,190
93,782
204,896
180,410
Cost of revenue
Cost of license fees
821
1,062
1,434
1,782
Cost of subscriptions
16,561
10,473
29,535
19,635
Cost of services
25,299
20,307
45,341
39,181
Cost of maintenance
6,178
6,035
12,155
12,286
Cost of other revenue
1,646
1,411
3,115
2,545
Total cost of revenue
50,505
39,288
91,580
75,429
Gross profit
59,685
54,494
113,316
104,981
Operating expenses
Sales and marketing
24,223
19,058
44,600
38,336
Research and development
14,856
11,527
28,160
23,493
General and administrative
21,753
9,176
36,254
18,378
Impairment of cost method investment
200
-
200
-
Amortization
530
246
727
479
Total operating expenses
61,562
40,007
109,941
80,686
Income (loss) from operations
(1,877
)
14,487
3,375
24,295
Interest income
33
45
80
78
Interest expense
(1,462
)
(60
)
(1,653
)
(84
)
Other (expense) income, net
(140
)
216
(448
)
285
Income (loss) before provision for income taxes
(3,446
)
14,688
1,354
24,574
Income tax provision (benefit)
(1,175
)
5,326
866
7,919
Net income (loss)
$
(2,271
)
$
9,362
$
488
$
16,655
Earnings (loss) per share
Basic
$
(0.05
)
$
0.22
$
0.01
$
0.38
Diluted
$
(0.05
)
$
0.21
$
0.01
$
0.38
Common shares and equivalents outstanding
Basic weighted average shares
44,112,905
43,447,007
44,023,650
43,399,874
Diluted weighted average shares
44,112,905
44,098,046
44,659,678
44,004,712
Dividends per share
$
0.12
$
0.12
$
0.24
$
0.24
Other comprehensive income (loss)
Foreign currency translation adjustment
(168
)
(87
)
111
169
Unrealized loss on derivative instruments, net of tax
(564
)
-
(564
)
-
Comprehensive income (loss)
$
(3,003
)
$
9,275
$
35
$
16,824
Blackbaud, Inc.
Consolidated statements of cash flows
(Unaudited)
Six months ended June 30,
(in thousands)
2012
2011
Cash flows from operating activities
Net income
$
488
$
16,655
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
12,223
8,170
Provision for doubtful accounts and sales returns
2,511
2,366
Stock-based compensation expense
9,624
7,325
Excess tax benefits from stock-based compensation
(340
)
(226
)
Deferred taxes
464
3,188
Impairment of cost method investment
200
-
Gain on sale of assets
-
(549
)
Other non-cash adjustments
177
(68
)
Changes in operating assets and liabilities, net of acquisition of
businesses:
Accounts receivable
(16,135
)
(10,580
)
Prepaid expenses and other assets
(7,268
)
3,602
Trade accounts payable
643
1,355
Accrued expenses and other liabilities
(4,692
)
(2,132
)
Donor restricted cash
21,868
5,540
Donations payable
(21,868
)
(5,540
)
Deferred revenue
13,054
9,246
Net cash provided by operating activities
10,949
38,352
Cash flows from investing activities
Purchase of property and equipment
(11,568
)
(7,703
)
Purchase of net assets of acquired companies, net of cash acquired
(280,095
)
(16,475
)
Capitalized software development costs
(235
)
(506
)
Proceeds from sale of assets
-
719
Net cash used in investing activities
(291,898
)
(23,965
)
Cash flows from financing activities
Proceeds from issuance of debt
312,000
-
Payments on debt
(52,400
)
-
Payments of deferred financing costs
(2,440
)
(767
)
Proceeds from exercise of stock options
2,984
1,925
Excess tax benefits from stock-based compensation
340
226
Dividend payments to stockholders
(10,830
)
(10,686
)
Payments on capital lease obligations
-
(25
)
Net cash provided by (used in) financing activities
249,654
(9,327
)
Effect of exchange rate on cash and cash equivalents
(33
)
363
Net increase (decrease) in cash and cash equivalents
(31,328
)
5,423
Cash and cash equivalents, beginning of period
52,520
28,004
Cash and cash equivalents, end of period
$
21,192
$
33,427
Blackbaud, Inc.
Reconciliation of GAAP to Non-GAAP financial measures
(Unaudited)
Three months ended June 30,
Six months ended June 30,
(in thousands, except per share amounts)
2012
2011
2012
2011
GAAP revenue
$
110,190
$
93,782
$
204,896
$
180,410
Non-GAAP adjustments:
Add back: Convio deferred revenue writedown
3,468
-
3,468
-
Total Non-GAAP adjustments
3,468
-
3,468
-
Non-GAAP revenue
$
113,658
$
93,782
$
208,364
$
180,410
GAAP gross profit
$
59,685
$
54,494
$
113,316
$
104,981
Non-GAAP adjustments:
Add: Convio deferred revenue writedown
3,468
-
3,468
-
Add: Stock-based compensation expense
899
810
1,683
1,611
Add: Amortization of intangibles from business combinations
3,567
1,636
5,346
3,259
Add: Write-off of prepaid proprietary software licenses
350
-
350
-
Total Non-GAAP adjustments
8,284
2,446
10,847
4,870
Non-GAAP gross profit
$
67,969
$
56,940
$
124,163
$
109,851
Non-GAAP gross margin
60
%
61
%
60
%
61
%
GAAP income (loss) from operations
$
(1,877
)
$
14,487
$
3,375
$
24,295
Non-GAAP adjustments:
Add: Convio deferred revenue writedown
3,468
-
3,468
-
Add: Stock-based compensation expense
5,788
3,530
9,624
7,326
Add: Amortization of intangibles from business combinations
4,097
1,882
6,073
3,738
Add: Acquisition-related expenses
4,244
-
6,427
1,054
Add: Acquisition integration costs
3,029
-
3,029
-
Add: Write-off of prepaid proprietary software licenses
350
-
350
-
Add: Impairment of cost method investment
200
-
200
-
Less: Gain on sale of assets
-
-
-
(549
)
Total Non-GAAP adjustments
21,176
5,412
29,171
11,569
Non-GAAP income from operations
$
19,299
$
19,899
$
32,546
$
35,864
Non-GAAP operating margin
17
%
21
%
16
%
20
%
GAAP net income (loss)
$
(2,271
)
$
9,362
$
488
$
16,655
Non-GAAP adjustments:
Add: Total Non-GAAP adjustments affecting income from operations
21,176
5,412
29,171
11,569
Less: Tax impact related to Non-GAAP adjustments
(8,090
)
(2,514
)
(11,039
)
(6,178
)
Non-GAAP net income
$
10,815
$
12,260
$
18,620
$
22,046
Shares used in computing Non-GAAP diluted earnings per share
44,739
44,098
44,660
44,005
Non-GAAP diluted earnings per share
$
0.24
$
0.28
$
0.42
$
0.50
Detail of Non-GAAP adjustments:
Stock-based compensation expense:
Cost of revenue
Cost of subscriptions
$
245
$
225
$
426
$
327
Cost of services
565
447
1,057
904
Cost of maintenance
89
138
200
380
Subtotal
899
810
1,683
1,611
Operating expenses
Sales and marketing
603
272
1,020
629
Research and development
847
671
1,498
1,514
General and administrative
3,439
1,777
5,423
3,572
Subtotal
4,889
2,720
7,941
5,715
Total stock-based compensation expense
$
5,788
$
3,530
$
9,624
$
7,326
Amortization of intangibles from business combinations
Cost of revenue
Cost of license fees
$
124
$
156
$
247
$
321
Cost of subscriptions
2,706
816
3,688
1,617
Cost of services
468
391
879
778
Cost of maintenance
250
253
494
505
Cost of other revenue
19
20
38
38
Subtotal
3,567
1,636
5,346
3,259
Operating expenses
530
246
727
479
Total amortization of intangibles from business combinations
$
4,097
$
1,882
$
6,073
$
3,738
Blackbaud, Inc.
Standalone Blackbaud Reconciliation of GAAP to Non-GAAP financial
measures
(Unaudited)
(in thousands, except per share amounts)
Three months ended June 30, 2012
GAAP revenue
$
99,619
GAAP gross profit
$
56,394
Non-GAAP adjustments:
Add: Stock-based compensation expense
899
Add: Amortization of intangibles from business combinations
1,784
Add: Write-off of prepaid proprietary software licenses
350
Total Non-GAAP adjustments
3,033
Non-GAAP gross profit
$
59,427
Non-GAAP gross margin
60
%
GAAP income from operations
$
2,461
Non-GAAP adjustments:
Add: Stock-based compensation expense
5,788
Add: Amortization of intangibles from business combinations
1,954
Add: Acquisition-related expenses
4,244
Add: Acquisition integration costs
2,134
Add: Write-off of prepaid proprietary software licenses
350
Add: Impairment of cost method investment
200
Total Non-GAAP adjustments
14,670
Non-GAAP income from operations
$
17,131
Non-GAAP operating margin
17
%
GAAP net loss
$
(2,271
)
Non-GAAP adjustments:
Add: Total Non-GAAP adjustments affecting income from operations
14,670
Less: Tax impact related to Non-GAAP adjustments
(2,877
)
Non-GAAP net income
$
9,522
Shares used in computing Non-GAAP diluted earnings per share
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