Blackbaud, Inc. (Nasdaq: BLKB), the leading provider of software and related services designed specifically for nonprofit organizations, today announced financial results for its fourth quarter and fiscal year ended December 31, 2007.
Marc Chardon, Chief Executive Officer of Blackbaud, stated, “We were quite pleased with the Company’s financial performance in the fourth quarter and full year 2007, both of which were above the high end of our expectations. Even more importantly, the company made significant progress against each of its long-term, strategic growth initiatives.”
Chardon added, “Our first Enterprise CRM customer recently went into live production, and we were pleased to add three new, Enterprise CRM customers during the fourth quarter. In addition, we recently created a dedicated Internet Business Unit to increase our focus on a significant growth opportunity. NetCommunity continues to be our highest growth solution outside of Enterprise CRM, and we recently won our first customer for the soon-to-be released version that runs without the Raiser’s Edge. Combined with continued momentum from our recent acquisitions - the Target Companies and eTapestry - we feel very good about where we stand relative to our strategic growth objectives as we enter 2008.”
For the quarter ended December 31, 2007, Blackbaud reported total revenue of $70.0 million, an increase of 42% compared with the fourth quarter of 2006. License revenue increased 21% to $9.9 million, subscriptions increased 160% to $8.0 million, services revenue increased 65% to $24.5 million, and maintenance revenue increased 18% to $25.0 million, all compared with the same period in 2006.
Blackbaud’s income from operations and net income, determined in accordance with generally accepted accounting principles (“GAAP”), were $14.2 million and $9.0 million, respectively, for the fourth quarter of 2007. This compares to GAAP income from operations of $12.2 million and net income of $8.5 million in the same period last year. GAAP diluted earnings per share were $0.20 for the quarter ended December 31, 2007, compared with $0.19 in the same period last year.
For the quarter ended December 31, 2007, non-GAAP income from operations, which excludes stock-based compensation expense and amortization of intangibles arising from business combinations, was $17.3 million, an increase from $13.9 million in the same period last year and representing a non-GAAP operating margin of 25%. Non-GAAP net income was $10.5 million for the quarter ended December 31, 2007, an increase from $8.9 million in the same period last year. Non-GAAP diluted earnings per share were $0.23 for the quarter ended December 31, 2007, an increase of 15% 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.”
Timothy V. Williams, Chief Financial Officer of Blackbaud, stated, “We are pleased with the Company’s strong growth and increasing portion of the business that is coming from recurring revenue sources. During the fourth quarter, the Company’s license revenue growth was at its highest level in nearly three years, while the percentage of revenue coming from subscriptions increased to 11% of total revenue, up from 9% in the first quarter of the year. At the same time, three of the four large Enterprise CRM deals that we have signed to this point have terms that call for revenue recognition to be spread over time.”
Williams added, “In 2007, we acquired both the Target Companies and eTapestry to significantly expand our market opportunity and domain expertise. Although we used debt facilities to assist us in financing both acquisitions, by year-end we had no debt outstanding, a testament to our continuing strong cash flow.”
Full Year 2007 Results
For the year ended December 31, 2007, Blackbaud reported total revenue of $257.0 million, an increase of 34% compared with 2006. License revenue increased 16% to $37.6 million, subscriptions increased 139% to $25.4 million, services revenue increased 49% to $91.4 million, and maintenance increased 17% to $94.6 million, all compared with the full year 2006.
Blackbaud’s GAAP income from operations and net income were $52.4 million and $31.7 million, respectively, for the full year 2007. This compares to income from operations of $47.1 million and net income of $30.2 million in 2006. GAAP diluted earnings per share were $0.71 for the year ended December 31, 2007, compared with $0.68 in the same period last year.
For the year ended December 31, 2007, non-GAAP income from operations, which excludes stock-based compensation expense and amortization of intangibles arising from business combinations, was $62.8 million, an increase of 14% compared with the full year 2006. Non-GAAP net income was $37.8 million for the year ended December 31, 2007, leading to non-GAAP diluted earnings per share of $0.84. This compares to non-GAAP net income of $34.5 million and diluted earnings per share of $0.77 in the full year 2006.
First Quarter 2008 Dividend
Blackbaud announced today that its Board of Directors has approved an increase in its annual dividend from $0.34 to $0.40 per share and declared a first quarter dividend of $0.10 per share payable on March 14, 2008 to stockholders of record on February 28, 2008.
Conference Call Details
Blackbaud will host a conference call today, February 7, 2008, at 5:00 p.m. (Eastern Time) to discuss the Company's financial results, operations and related matters. To access this call, dial 888-215-7027 (domestic) or 913-312-0397(international). A replay of this conference call will be available through February 15, 2008, at 888-203-1112 (domestic) or 719-457-0820 (international). The replay passcode is 5847698. 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 19,000 organizations — including the American Red Cross, Dartmouth College, the WGBH Educational Foundation, Episcopal High School, Lincoln Center, Cancer Research UK, Special Olympics, and Arthritis Foundation — use one or more of Blackbaud products and services for fundraising, constituent relationship management, financial management, direct marketing, school administration, ticketing, business intelligence, website management, 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.
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: management of integration of recently acquired companies and other risks associated with acquisitions; risk associated with successful implementation of multiple integrated software products; lengthy sales and implementation cycles, particularly in larger organizations; uncertainty regarding increased business and renewals from existing customers; continued success in sales growth; 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; 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 http://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 gross profit, non-GAAP operating income 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) | ||||||||
| December 31, | December 31, | |||||||
| (in thousands, except share amounts) | 2007 | 2006 | ||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 14,775 | $ | 67,783 | ||||
| Cash, restricted | - | 518 | ||||||
Accounts receivable, net of allowance of $1,935 and $1,268 at December 31, 2007 and 2006, respectively | 44,689 | 29,505 | ||||||
| Prepaid expenses and other current assets | 11,279 | 8,507 | ||||||
| Deferred tax asset, current portion | 3,553 | 5,318 | ||||||
| Total current assets | 74,296 | 111,631 | ||||||
| Property and equipment, net | 16,962 | 10,524 | ||||||
| Deferred tax asset | 50,419 | 62,302 | ||||||
| Goodwill | 58,275 | 2,518 | ||||||
| Intangible assets, net | 37,272 | 7,986 | ||||||
| Other assets | 470 | 48 | ||||||
| Total assets | $ | 237,694 | $ | 195,009 | ||||
| Liabilities and stockholders' equity | ||||||||
| Current liabilities: | ||||||||
| Trade accounts payable | $ | 5,802 | $ | 5,863 | ||||
| Accrued expenses and other current liabilities | 20,575 | 16,047 | ||||||
| Deferred acquisition costs, current portion | - | 518 | ||||||
| Capital lease obligations, current portion | 513 | - | ||||||
| Deferred revenue | 93,106 | 75,078 | ||||||
| Total current liabilities | 119,996 | 97,506 | ||||||
| Deferred acquisition costs, noncurrent | - | 271 | ||||||
| Capital lease obligations, noncurrent | 586 | - | ||||||
| Deferred revenue, noncurrent | 2,994 | 1,874 | ||||||
| Other noncurrent liabilities | 1,015 | - | ||||||
| Total liabilities | 124,591 | 99,651 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Preferred stock; 20,000,000 shares authorized, none outstanding | - | - | ||||||
Common stock, $.001 par value; 180,000,000 shares authorized, 50,450,675 and 49,205,522 shares issued at December 31, 2007 and 2006, respectively | 50 | 49 | ||||||
| Additional paid-in capital | 105,687 | 88,409 | ||||||
Treasury stock, at cost; 5,431,852 and 4,743,895 shares at December 31, 2007 and 2006, respectively | (85,487 | ) | (69,630 | ) | ||||
| Accumulated other comprehensive income | 137 | 232 | ||||||
| Retained earnings | 92,716 | 76,298 | ||||||
| Total stockholders' equity | 113,103 | 95,358 | ||||||
| Total liabilities and stockholders' equity | $ | 237,694 | $ | 195,009 | ||||
| Blackbaud, Inc. | ||||||||
| Consolidated statements of operations | ||||||||
| (Unaudited) | ||||||||
Three months ended | Years ended | |||||||
| (in thousands, except share and per share amounts) | 2007 | 2006 | 2007 | 2006 | ||||
| Revenue | ||||||||
| License fees | $ 9,923 | $ 8,219 | $ 37,569 | $ 32,500 | ||||
| Services | 24,503 | 14,819 | 91,376 | 61,242 | ||||
| Maintenance | 24,987 | 21,145 | 94,602 | 80,893 | ||||
| Subscriptions | 7,994 | 3,071 | 25,389 | 10,605 | ||||
| Other revenue | 2,606 | 2,149 | 8,102 | 6,140 | ||||
| Total revenue | 70,013 | 49,403 | 257,038 | 191,380 | ||||
| Cost of revenue | ||||||||
| Cost of license fees | 891 | 566 | 2,870 | 2,260 | ||||
| Cost of services | 14,603 | 8,818 | 54,908 | 33,717 | ||||
| Cost of maintenance | 4,582 | 3,295 | 17,119 | 13,225 | ||||
| Cost of subscriptions | 3,465 | 585 | 10,306 | 2,360 | ||||
| Cost of other revenue | 2,402 | 1,958 | 7,274 | 5,709 | ||||
| Total cost of revenue | 25,943 | 15,222 | 92,477 | 57,271 | ||||
| Gross profit | 44,070 | 34,181 | 164,561 | 134,109 | ||||
| Operating expenses | ||||||||
| Sales and marketing | 15,238 | 11,333 | 56,994 | 41,405 | ||||
| Research and development | 7,519 | 5,466 | 28,525 | 23,118 | ||||
| General and administrative | 6,972 | 4,953 | 26,144 | 21,757 | ||||
| Amortization | 166 | 190 | 491 | 699 | ||||
| Total operating expenses | 29,895 | 21,942 | 112,154 | 86,979 | ||||
| Income from operations | 14,175 | 12,239 | 52,407 | 47,130 | ||||
| Interest income | 131 | 719 | 813 | 1,584 | ||||
| Interest expense | (98) | (12) | (1,164) | (48) | ||||
| Other (expense), net | (83) | (42) | (503) | (238) | ||||
| Income before provision for income taxes | 14,125 | 12,904 | 51,553 | 48,428 | ||||
| Income tax provision | 5,168 | 4,395 | 19,829 | 18,275 | ||||
| Net income | $ 8,957 | $ 8,509 | $ 31,724 | $ 30,153 | ||||
| Earnings per share | ||||||||
| Basic | $ 0.20 | $ 0.19 | $ 0.73 | $ 0.70 | ||||
| Diluted | $ 0.20 | $ 0.19 | $ 0.71 | $ 0.68 | ||||
| Common shares and equivalents outstanding | ||||||||
| Basic weighted average shares | 43,899,634 | 43,728,144 | 43,619,158 | 43,320,096 | ||||
| Diluted weighted average shares | 44,813,282 | 44,898,635 | 44,595,483 | 44,668,476 | ||||
| Dividends per share | $ 0.085 | $ 0.070 | $ 0.340 | $ 0.280 | ||||
| Blackbaud, Inc. | ||||||||
| Consolidated statements of cash flows | ||||||||
| (Unaudited) | ||||||||
| Years ended December 31, | ||||||||
| (in thousands) | 2007 | 2006 | ||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 31,724 | $ | 30,153 | ||||
| Adjustments to reconcile net income to net cash provided by | ||||||||
| operating activities: | ||||||||
| Depreciation and amortization | 8,149 | 3,709 | ||||||
| Provision for doubtful accounts and sales returns | 2,042 | 1,673 | ||||||
| Stock-based compensation expense | 6,934 | 7,400 | ||||||
| Excess tax benefit on exercise of stock options | (4,931 | ) | (6,041 | ) | ||||
| Deferred taxes | 12,491 | 11,941 | ||||||
| Other non-cash adjustments | 65 | 48 | ||||||
| Changes in assets and liabilities, net of acquisition: | ||||||||
| Accounts receivable | (9,748 | ) | (5,235 | ) | ||||
| Prepaid expenses and other assets | (2,005 | ) | 266 | |||||
| Trade accounts payable | (830 | ) | 1,147 | |||||
| Accrued expenses and other current liabilities | 6,079 | 6,135 | ||||||
| Deferred revenue | 12,897 | 11,759 | ||||||
| Net cash provided by operating activities | 62,867 | 62,955 | ||||||
| Cash flows from investing activities | ||||||||
| Purchase of property and equipment | (8,123 | ) | (4,654 | ) | ||||
| Purchase of net assets of acquired companies | (84,405 | ) | (6,146 | ) | ||||
| Net cash used in investing activities | (92,528 | ) | (10,800 | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of debt | 48,000 | - | ||||||
| Proceeds from exercise of stock options | 5,451 | 7,883 | ||||||
| Excess tax benefit on exercise of stock options | 4,931 | 6,041 | ||||||
| Payments on debt | (49,934 | ) | - | |||||
| Payments of deferred financing fees | (418 | ) | - | |||||
| Payments on capital lease obligations | (477 | ) | - | |||||
| Purchase of treasury stock | (15,857 | ) | (8,728 | ) | ||||
| Dividend payments to stockholders | (15,074 | ) | (12,283 | ) | ||||
| Net cash used in financing activities | (23,378 | ) | (7,087 | ) | ||||
| Effect of exchange rate on cash and cash equivalents | 31 | 32 | ||||||
| Net (decrease) increase in cash and cash equivalents | (53,008 | ) | 45,100 | |||||
| Cash and cash equivalents, beginning of period | 67,783 | 22,683 | ||||||
| Cash and cash equivalents, end of period | $ | 14,775 | $ | 67,783 | ||||
| Blackbaud, Inc. | ||||||||||||||||
| Reconciliation of GAAP to Non-GAAP financial measures | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||
Three months ended | Years ended | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| GAAP revenue | $ | 70,013 | $ | 49,403 | $ | 257,038 | $ | 191,380 | ||||||||
| GAAP gross profit | $ | 44,070 | $ | 34,181 | $ | 164,561 | $ | 134,109 | ||||||||
| Non-GAAP adjustments: | ||||||||||||||||
| Add back: Stock-based compensation expense (see table below) | 402 | 168 | 1,135 | 667 | ||||||||||||
| Add back: Amortization of intangibles from business combinations (see table below) | 898 | - | 2,945 | - | ||||||||||||
| Non-GAAP gross profit | $ | 45,370 | $ | 34,349 | $ | 168,641 | $ | 134,776 | ||||||||
| Non-GAAP gross margin | 65 | % | 70 | % | 66 | % | 70 | % | ||||||||
| GAAP income from operations | $ | 14,175 | $ | 12,239 | $ | 52,407 | $ | 47,130 | ||||||||
| Non-GAAP adjustments: | ||||||||||||||||
| Add back: Stock-based compensation expense (see table below) | 2,066 | 1,500 | 6,934 | 7,400 | ||||||||||||
| Add back: Amortization of intangibles from business combinations (see table below) | 1,064 | 190 | 3,436 | 699 | ||||||||||||
| Total Non-GAAP adjustments | 3,130 | 1,690 | 10,370 | 8,099 | ||||||||||||
| Non-GAAP income from operations | $ | 17,305 | $ | 13,929 | $ | 62,777 | $ | 55,229 | ||||||||
| Non-GAAP operating margin | 25 | % | 28 | % | 24 | % | 29 | % | ||||||||
| GAAP net income | $ | 8,957 | $ | 8,509 | $ | 31,724 | $ | 30,153 | ||||||||
| Non-GAAP adjustments: | ||||||||||||||||
| Add back: Total Non-GAAP adjustments affecting income from operations | 3,130 | 1,690 | 10,370 | 8,099 | ||||||||||||
| Add back: Tax impact related to Non-GAAP adjustments | (1,561 | ) | (1,297 | ) | (4,321 | ) | (3,771 | ) | ||||||||
| Non-GAAP net income | $ | 10,526 | $ | 8,902 | $ | 37,773 | $ | 34,481 | ||||||||
| GAAP shares used in computing diluted earnings per share | 44,813 | 44,899 | 44,595 | 44,668 | ||||||||||||
| Non-GAAP adjustments: | ||||||||||||||||
| Add back: Incremental shares related to dilutive securities | 403 | 362 | 381 | 330 | ||||||||||||
| Shares used in computing Non-GAAP diluted earnings per share | 45,216 | 45,261 | 44,976 | 44,998 | ||||||||||||
| Non-GAAP diluted earnings per share | $ | 0.23 | $ | 0.20 | $ | 0.84 | $ | 0.77 | ||||||||
| Detail of Non-GAAP adjustments: | ||||||||||||||||
| Stock-based compensation expense: | ||||||||||||||||
| Cost of revenue | ||||||||||||||||
| Cost of services | $ | 101 | $ | 129 | $ | 627 | $ | 531 | ||||||||
| Cost of maintenance | 83 | 33 | 234 | 117 | ||||||||||||
| Cost of subscriptions | 218 | 6 | 274 | 19 | ||||||||||||
| Subtotal | 402 | 168 | 1,135 | 667 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Sales and marketing | 287 | 180 | 831 | 813 | ||||||||||||
| Research and development | 424 | 184 | 1,219 | 746 | ||||||||||||
| General and administrative | 953 | 968 | 3,749 | 5,174 | ||||||||||||
| Subtotal | 1,664 | 1,332 | 5,799 | 6,733 | ||||||||||||
| Total stock-based compensation expense | $ | 2,066 | $ | 1,500 | $ | 6,934 | $ | 7,400 | ||||||||
| Amortization of intangibles from business combinations: | ||||||||||||||||
| Cost of revenue | ||||||||||||||||
| Cost of license fees | $ | 43 | $ | - | $ | 153 | $ | - | ||||||||
| Cost of services | 327 | - | 1,178 | - | ||||||||||||
| Cost of maintenance | 115 | - | 406 | - | ||||||||||||
| Cost of subscriptions | 382 | - | 1,112 | - | ||||||||||||
| Cost of other revenue | 31 | - | 96 | - | ||||||||||||
| Subtotal | 898 | - | 2,945 | - | ||||||||||||
| Operating expenses | 166 | 190 | 491 | 699 | ||||||||||||
| Total amortization of intangibles from business combinations | $ | 1,064 | $ | 190 | $ | 3,436 | $ | 699 | ||||||||
Contacts:
ICR
Tim Dolan, 617-956-6727
timothy.dolan@icrinc.com
or
Media:
Blackbaud,
Inc.
Melanie Milonas, 843-216-6200 x3307
melanie.milonas@blackbaud.com
