Announces Third Quarter 2010 Dividend
Jul. 27, 2010 (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, 2010.
“While the pace of economic recovery remains uncertain, we saw increased evidence of stabilization and improvement in the nonprofit market during the second quarter,” said Marc Chardon, Chief Executive Officer of Blackbaud. “Revenue was at the high-end of our expectations and we experienced solid and increased demand for our expanding suite of subscription-based solutions and enterprise CRM offering, both of which will also have a positive financial impact in future periods.”
Chardon added, “During the second quarter, both our general markets and enterprise business units delivered solid results. In addition to an improvement in economic conditions, we believe that Blackbaud is executing well bringing new products and packaged offerings to market. We are excited by the market’s acceptance of these new solutions and are confident that we will continue to strengthen our market position and expand our market opportunity as we implement our long-term product roadmap.”
Blackbaud reported total revenue of $80.7 million for the quarter ended June 30, 2010, an increase of approximately 6% compared to $76.4 million for the second quarter of 2009. Income from operations and net income were $11.2 million and $6.8 million, respectively, compared with $10.8 million and $6.6 million, respectively, for the second quarter of 2009. Diluted earnings per share were $0.15 for the quarter ended June 30, 2010, compared with $0.15 in the same period last year.
Non-GAAP income from operations, which excludes stock-based compensation expense and amortization of intangibles arising from business combinations, was $15.8 million, representing a non-GAAP operating margin of approximately 20% and compared with $16.5 million in the same period last year.
Non-GAAP net income was $9.5 million for the quarter ended June 30, 2010, compared with $9.9 million in the same period last year. Non-GAAP diluted earnings per share were $0.22 for the quarter ended June 30, 2010, at the top of the Company’s guidance range and compared with $0.23 in 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 ended the second quarter with $13.3 million in cash, down from $23.3 million at the end of the previous quarter due to using approximately $21.5 million in cash to purchase 958,000 shares of the company’s stock during the quarter. A portion of the stock repurchases was funded with the Company’s revolving credit facility; $3.5 million was outstanding under this facility at the end of the quarter. The Company generated $17.4 million in cash flow from operations during the second quarter.
Timothy V. Williams, Chief Financial Officer of Blackbaud, stated, “Blackbaud continues to deliver solid non-GAAP operating margins of approximately 20% at the same time we are investing in long-term growth initiatives and experiencing a growing percentage of product sales being recognized as revenue ratably. We plan to continue expanding the number of solutions that are sold on a subscription basis, and expect the company to gain natural operating leverage over the long-term as our base of recurring revenue scales.”
Williams added, “The strength of our subscription and maintenance revenue also is a key driver to the company’s cash flow. During the second quarter, we continued to return capital to shareholders in the form of dividends, in addition to resuming execution of our share repurchase program.”
Third Quarter 2010 Dividend and Share Repurchase Program
Blackbaud announced today that its Board of Directors has declared a third quarter dividend of $0.11 per share payable on September 15, 2010, to stockholders of record on August 27, 2010. Additionally, effective August 1, 2010, the Board authorized a new program to repurchase up to $50 million of the Company’s common stock. The amount remaining under the Company’s prior share repurchase authorization, which expires on July 31, 2010, is $8.2 million.
Conference Call Details
Blackbaud will host a conference call today, July 27, 2010, at 5:00 p.m. (Eastern Time) to discuss the Company's financial results, operations and related matters. To access this call, dial 877-719-9804 (domestic) or 719-325-4819 (international). A replay of this conference call will be available through August 3, 2010, at 888-203-1112 (domestic) or 719-457-0820 (international). The replay passcode is 9764274. 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
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, In Touch 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 Australia, Canada, Hong Kong, the Netherlands, and the United Kingdom. For more information, visit www.blackbaud.com.
All Blackbaud product names appearing herein are trademarks or registered trademarks of Blackbaud, Inc.
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 or 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) | 2010 | 2009 | |||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 13,264 | $ | 22,769 | |||
| Donor restricted cash | 6,936 | 12,874 | |||||
| Accounts receivable, net of allowance of $2,887 and $3,559 | 61,991 | 50,220 | |||||
| Prepaid expenses and other current assets | 17,698 | 18,155 | |||||
| Deferred tax asset, current portion | 5,728 | 5,728 | |||||
| Total current assets | 105,617 | 109,746 | |||||
| Property and equipment, net | 23,315 | 22,507 | |||||
| Deferred tax asset | 53,946 | 55,570 | |||||
| Goodwill | 73,544 | 73,919 | |||||
| Intangible assets, net | 39,171 | 42,019 | |||||
| Other assets | 2,527 | 468 | |||||
| Total assets | $ | 298,120 | $ | 304,229 | |||
| Liabilities and stockholders' equity | |||||||
| Current liabilities: | |||||||
| Trade accounts payable | $ | 10,616 | $ | 10,683 | |||
| Accrued expenses and other current liabilities | 22,077 | 25,974 | |||||
| Donations payable | 6,936 | 12,874 | |||||
| Debt, current portion | 4,217 | 1,288 | |||||
| Deferred revenue | 138,175 | 129,412 | |||||
| Total current liabilities | 182,021 | 180,231 | |||||
| Deferred revenue, noncurrent | 7,316 | 6,172 | |||||
| Other noncurrent liabilities | 1,493 | 1,720 | |||||
| Total liabilities | 190,830 | 188,123 | |||||
| Commitments and contingencies | |||||||
| Stockholders' equity: | |||||||
| Preferred stock; 20,000,000 shares authorized, none outstanding | - | - | |||||
| Common stock, $0.001 par value; 180,000,000 | 52 | 52 | |||||
| Additional paid-in capital | 144,767 | 134,726 | |||||
| Treasury stock, at cost; 8,633,780 and 7,677,341 shares at | (155,897 | ) | (134,382 | ) | |||
| Accumulated other comprehensive loss | (485 | ) | (201 | ) | |||
| Retained earnings | 118,853 | 115,911 | |||||
| Total stockholders' equity | 107,290 | 116,106 | |||||
| Total liabilities and stockholders' equity | $ | 298,120 | $ | 304,229 | |||
| Blackbaud, Inc. | ||||||||||||||||
| Consolidated statements of operations | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| (in thousands, except share and per share amounts) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
| Revenue | ||||||||||||||||
| License fees | $ | 6,972 | $ | 5,799 | $ | 12,139 | $ | 13,204 | ||||||||
| Services | 20,886 | 22,465 | 40,975 | 43,594 | ||||||||||||
| Maintenance | 30,957 | 28,821 | 61,554 | 56,832 | ||||||||||||
| Subscriptions | 20,386 | 17,773 | 39,562 | 34,496 | ||||||||||||
| Other revenue | 1,470 | 1,557 | 2,680 | 3,030 | ||||||||||||
| Total revenue | 80,671 | 76,415 | 156,910 | 151,156 | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Cost of license fees | 975 | 981 | 1,592 | 1,884 | ||||||||||||
| Cost of services | 15,837 | 15,512 | 31,753 | 31,721 | ||||||||||||
| Cost of maintenance | 5,925 | 5,432 | 11,695 | 10,580 | ||||||||||||
| Cost of subscriptions | 7,616 | 7,038 | 14,842 | 13,778 | ||||||||||||
| Cost of other revenue | 1,333 | 1,533 | 2,450 | 2,811 | ||||||||||||
| Total cost of revenue | 31,686 | 30,496 | 62,332 | 60,774 | ||||||||||||
| Gross profit | 48,985 | 45,919 | 94,578 | 90,382 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Sales and marketing | 19,023 | 15,072 | 35,446 | 31,187 | ||||||||||||
| Research and development | 11,710 | 11,301 | 22,619 | 22,762 | ||||||||||||
| General and administrative | 6,901 | 8,513 | 15,298 | 17,452 | ||||||||||||
| Amortization | 196 | 192 | 392 | 378 | ||||||||||||
| - | - | - | - | |||||||||||||
| Total operating expenses | 37,830 | 35,078 | 73,755 | 71,779 | ||||||||||||
| Income from operations | 11,155 | 10,841 | 20,823 | 18,603 | ||||||||||||
| Interest income | 23 | 37 | 43 | 99 | ||||||||||||
| Interest expense | (79 | ) | (270 | ) | (125 | ) | (695 | ) | ||||||||
| Other income (expense), net | (185 | ) | 31 | (182 | ) | (130 | ) | |||||||||
| Income before provision for income taxes | 10,914 | 10,639 | 20,559 | 17,877 | ||||||||||||
| Income tax provision | 4,124 | 4,051 | 7,817 | 7,217 | ||||||||||||
| Net income | $ | 6,790 | $ | 6,588 | $ | 12,742 | $ | 10,660 | ||||||||
| Earnings per share | ||||||||||||||||
| Basic | $ | 0.16 | $ | 0.15 | $ | 0.29 | $ | 0.25 | ||||||||
| Diluted | $ | 0.15 | $ | 0.15 | $ | 0.29 | $ | 0.25 | ||||||||
| Common shares and equivalents outstanding | ||||||||||||||||
| Basic weighted average shares | 43,260,625 | 42,577,549 | 43,347,630 | 42,531,323 | ||||||||||||
| Diluted weighted average shares | 44,027,307 | 43,333,871 | 44,126,259 | 43,141,654 | ||||||||||||
| Dividends per share | $ | 0.11 | $ | 0.10 | $ | 0.22 | $ | 0.20 | ||||||||
| Blackbaud, Inc. | ||||||||
| Consolidated statements of cash flows | ||||||||
| (Unaudited) | ||||||||
| Six months ended June 30, | ||||||||
| (in thousands) | 2010 | 2009 | ||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 12,742 | $ | 10,660 | ||||
| Adjustments to reconcile net income to net cash provided by | ||||||||
| Depreciation and amortization | 7,844 | 7,694 | ||||||
| Provision for doubtful accounts and sales returns | 702 | 1,285 | ||||||
| Stock-based compensation expense | 6,060 | 6,245 | ||||||
| Excess tax benefits from stock based compensation | (1,040 | ) | (464 | ) | ||||
| Deferred taxes | 1,737 | 3,345 | ||||||
| Other non-cash adjustments | (140 | ) | 69 | |||||
| Changes in assets and liabilities, net of acquisition of businesses: | ||||||||
| Accounts receivable | (12,540 | ) | (5,655 | ) | ||||
| Prepaid expenses and other assets | 1,318 | 1,208 | ||||||
| Trade accounts payable | 1,411 | (467 | ) | |||||
| Accrued expenses and other current liabilities | (3,517 | ) | (262 | ) | ||||
| Donor restricted cash | 5,929 | 6,849 | ||||||
| Donations payable | (5,929 | ) | (6,849 | ) | ||||
| Deferred revenue | 10,109 | 10,870 | ||||||
| Net cash provided by operating activities | 24,686 | 34,528 | ||||||
| Cash flows from investing activities | ||||||||
| Purchase of property and equipment | (6,761 | ) | (2,665 | ) | ||||
| Purchase of net assets of acquired companies, net of cash acquired | (390 | ) | (2,258 | ) | ||||
| Purchase of intangible assets | (130 | ) | - | |||||
| Purchase of investment | (2,000 | ) | - | |||||
| Net cash used in investing activities | (9,281 | ) | (4,923 | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of debt | 4,000 | - | ||||||
| Proceeds from exercise of stock options | 2,980 | 255 | ||||||
| Excess tax benefits from stock based compensation | 1,040 | 464 | ||||||
| Payments on debt | (1,071 | ) | (19,010 | ) | ||||
| Payments on capital lease obligations | (112 | ) | (217 | ) | ||||
| Purchase of treasury stock | (21,542 | ) | - | |||||
| Dividend payments to stockholders | (9,839 | ) | (8,807 | ) | ||||
| Net cash used in financing activities | (24,544 | ) | (27,315 | ) | ||||
| Effect of exchange rate on cash and cash equivalents | (366 | ) | (114 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | (9,505 | ) | 2,176 | |||||
| Cash and cash equivalents, beginning of period | 22,769 | 16,361 | ||||||
| Cash and cash equivalents, end of period | $ | 13,264 | $ | 18,537 | ||||
| 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) | 2010 | 2009 | 2010 | 2009 | |||||||||||
| GAAP revenue | $ | 80,671 | $ | 76,415 | $ | 156,910 | $ | 151,156 | |||||||
| Non-GAAP adjustments: | |||||||||||||||
| Add back: Kintera deferred revenue writedown | - | 834 | - | 2,041 | |||||||||||
| Non-GAAP revenue | $ | 80,671 | $ | 77,249 | $ | 156,910 | $ | 153,197 | |||||||
| GAAP gross profit | $ | 48,985 | $ | 45,919 | $ | 94,578 | $ | 90,382 | |||||||
| Non-GAAP adjustments: | |||||||||||||||
| Add back: Kintera deferred revenue writedown | - | 834 | - | 2,041 | |||||||||||
| Add back: Stock-based compensation expense (see table below) | 667 | 631 | 1,372 | 1,284 | |||||||||||
| Add back: Amortization of intangibles from business combinations | 1,540 | 1,575 | 3,046 | 3,153 | |||||||||||
| Total Non-GAAP adjustments | 2,207 | 3,040 | 4,418 | 6,478 | |||||||||||
| Non-GAAP gross profit | $ | 51,192 | $ | 48,959 | $ | 98,996 | $ | 96,860 | |||||||
| Non-GAAP gross margin | 63 | % | 63 | % | 63 | % | 63 | % | |||||||
| GAAP income from operations | $ | 11,155 | $ | 10,841 | $ | 20,823 | $ | 18,603 | |||||||
| Non-GAAP adjustments: | |||||||||||||||
| Add back: Kintera deferred revenue writedown | - | 834 | - | 2,041 | |||||||||||
| Add back: Stock-based compensation expense (see table below) | 2,908 | 3,025 | 6,060 | 6,245 | |||||||||||
| Add back: Amortization of intangibles from business combinations | 1,736 | 1,767 | 3,438 | 3,531 | |||||||||||
| Total Non-GAAP adjustments | 4,644 | 5,626 | 9,498 | 11,817 | |||||||||||
| Non-GAAP income from operations | $ | 15,799 | $ | 16,467 | $ | 30,321 | $ | 30,420 | |||||||
| Non-GAAP operating margin | 20 | % | 21 | % | 19 | % | 20 | % | |||||||
| GAAP net income | $ | 6,790 | $ | 6,588 | $ | 12,742 | $ | 10,660 | |||||||
| Non-GAAP adjustments: | |||||||||||||||
| Add back: Total Non-GAAP adjustments affecting income from operations | 4,644 | 5,626 | 9,498 | 11,817 | |||||||||||
| Add back: Tax impact related to Non-GAAP adjustments | (1,943 | ) | (2,292 | ) | (3,905 | ) | (4,363 | ) | |||||||
| Non-GAAP net income | $ | 9,491 | $ | 9,922 | $ | 18,335 | $ | 18,114 | |||||||
| Shares used in computing Non-GAAP diluted earnings per share | 44,027 | 43,334 | 44,126 | 43,142 | |||||||||||
| Non-GAAP diluted earnings per share | $ | 0.22 | $ | 0.23 | $ | 0.42 | $ | 0.42 | |||||||
| Detail of Non-GAAP adjustments: | |||||||||||||||
| Stock-based compensation expense: | |||||||||||||||
| Cost of revenue | |||||||||||||||
| Cost of services | $ | 414 | $ | 360 | $ | 850 | $ | 737 | |||||||
| Cost of maintenance | 178 | 157 | 355 | 314 | |||||||||||
| Cost of subscriptions | 75 | 114 | 167 | 233 | |||||||||||
| Subtotal | 667 | 631 | 1,372 | 1,284 | |||||||||||
| Operating expenses | |||||||||||||||
| Sales and marketing | 344 | 331 | 705 | 671 | |||||||||||
| Research and development | 704 | 686 | 1,415 | 1,397 | |||||||||||
| General and administrative | 1,193 | 1,377 | 2,568 | 2,893 | |||||||||||
| Subtotal | 2,241 | 2,394 | 4,688 | 4,961 | |||||||||||
| Total stock-based compensation expense | $ | 2,908 | $ | 3,025 | $ | 6,060 | $ | 6,245 | |||||||
| Amortization of intangibles from business combinations: | |||||||||||||||
| Cost of revenue | |||||||||||||||
| Cost of license fees | $ | 115 | $ | 90 | $ | 209 | $ | 171 | |||||||
| Cost of services | 341 | 336 | 677 | 670 | |||||||||||
| Cost of maintenance | 306 | 325 | 603 | 650 | |||||||||||
| Cost of subscriptions | 760 | 806 | 1,520 | 1,625 | |||||||||||
| Cost of other revenue | 18 | 18 | 37 | 37 | |||||||||||
| Subtotal | 1,540 | 1,575 | 3,046 | 3,153 | |||||||||||
| Operating expenses | 196 | 192 | 392 | 378 | |||||||||||
| Total amortization of intangibles from business combinations | $ | 1,736 | $ | 1,767 | $ | 3,438 | $ | 3,531 | |||||||
