Blackbaud Announces 2019 Second Quarter Results
"This year marks our 15th year as a Nasdaq listed public company, which is a testament to the incredible team we have and their dedication to drive powerful social impact and create shareholder value," said
Second Quarter 2019 Results Compared to Second Quarter 2018 Results:
- Total GAAP revenue was
$225.6 million , up 5.6%, with$208.5 million in GAAP recurring revenue, representing 92.4% of total GAAP revenue. GAAP recurring revenue was up 8.2%. - Total non-GAAP revenue was
$226.4 million , up 5.5%, with$209.2 million in non-GAAP recurring revenue, representing 92.4% of total non-GAAP revenue. Non-GAAP recurring revenue was up 8.0%. - Non-GAAP organic recurring revenue increased 5.0%.
- GAAP income from operations was
$13.5 million , with GAAP operating margin of 6.0%, an increase of 70 basis points. - Non-GAAP income from operations was
$43.5 million , with non-GAAP operating margin of 19.2%, a decrease of 190 basis points. - GAAP net income was
$7.1 million , with GAAP diluted earnings per share of$0.15 , up$0.01 . - Non-GAAP net income was
$31.9 million , with non-GAAP diluted earnings per share of$0.66 , down$0.03 . - Non-GAAP free cash flow was
$38.0 million , a decrease of$3.6 million .
"Execution against our strategic plan drove solid results for the second quarter as we continue investing to further expand our selling footprint, drive cloud innovation for our customers and ensure scalability in our business," said
An explanation of all non-GAAP financial measures referenced in this press release is included below under the heading "Non-GAAP Financial Measures." A reconciliation of the company's 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.
Recent Company Highlights:
- Blackbaud Celebrates 15 Years Listed with Nasdaq
- Microsoft Awards Blackbaud 2019 MSUS Partner Award for Industry-Education
- Emmy® Nominated Actress and Humanitarian
Connie Britton to Headline bbcon 2019 - Pascale Harvie Appointed as President and General Manager for Blackbaud Operations in
Europe
Visit https://www.blackbaud.com/newsroom for more information about
Dividend
Financial Outlook
- Non-GAAP revenue of
$880 million to $910 million - Non-GAAP operating margin of 16.7% to 17.2%
- Non-GAAP diluted earnings per share of
$2.11 to $2.28 - Non-GAAP free cash flow of
$124 million to $134 million
Adoption of New Lease Accounting Standard
On
Conference Call Details
What:
When:
Time:
Live Call: 800-289-0462 (US/
Webcast:
About
Investor Contact: |
Media Contact: |
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Steve Hufford |
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Director of Investor Relations |
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843-654-2655 |
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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: the predictability of our financial results, expectations that our revenue will continue to grow, and expectations that we will achieve our projected 2019 full-year financial guidance. These statements involve a number of risks and uncertainties. Although
Trademarks
All
Non-GAAP Financial Measures
In addition,
Non-GAAP free cash flow is defined as operating cash flow less capital expenditures, including costs required to be capitalized for software development, and capital expenditures for property and equipment.
Blackbaud, Inc. Consolidated balance sheets (Unaudited)
|
||||||
(dollars in thousands) |
June 30, |
December 31, |
||||
Assets |
||||||
Current assets: |
||||||
Cash and cash equivalents |
$ |
32,654 |
$ |
30,866 |
||
Restricted cash due to customers |
354,133 |
418,980 |
||||
Accounts receivable, net of allowance of $5,231 and $4,722 at June 30, 2019 |
131,277 |
86,595 |
||||
Customer funds receivable |
5,349 |
1,753 |
||||
Prepaid expenses and other current assets |
76,728 |
59,788 |
||||
Total current assets |
600,141 |
597,982 |
||||
Property and equipment, net |
39,569 |
40,031 |
||||
Operating lease right-of-use assets |
107,165 |
— |
||||
Software development costs, net |
87,880 |
75,099 |
||||
Goodwill |
632,269 |
545,213 |
||||
Intangible assets, net |
340,615 |
291,617 |
||||
Other assets |
66,319 |
65,363 |
||||
Total assets |
$ |
1,873,958 |
$ |
1,615,305 |
||
Liabilities and stockholders' equity |
||||||
Current liabilities: |
||||||
Trade accounts payable |
$ |
35,749 |
$ |
34,538 |
||
Accrued expenses and other current liabilities |
60,514 |
46,893 |
||||
Due to customers |
359,482 |
420,733 |
||||
Debt, current portion |
7,500 |
7,500 |
||||
Deferred revenue, current portion |
327,299 |
295,991 |
||||
Total current liabilities |
790,544 |
805,655 |
||||
Debt, net of current portion |
553,812 |
379,624 |
||||
Deferred tax liability |
48,658 |
44,291 |
||||
Deferred revenue, net of current portion |
2,324 |
2,564 |
||||
Operating lease liabilities, net of current portion |
100,116 |
— |
||||
Other liabilities |
5,802 |
9,388 |
||||
Total liabilities |
1,501,256 |
1,241,522 |
||||
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, 60,187,063 |
60 |
59 |
||||
Additional paid-in capital |
427,950 |
399,241 |
||||
Treasury stock, at cost; 11,017,004 and 10,760,574 shares at June 30, 2019 |
(286,644) |
(266,884) |
||||
Accumulated other comprehensive loss |
(9,409) |
(5,110) |
||||
Retained earnings |
240,745 |
246,477 |
||||
Total stockholders' equity |
372,702 |
373,783 |
||||
Total liabilities and stockholders' equity |
$ |
1,873,958 |
$ |
1,615,305 |
Blackbaud, Inc. |
|||||||||||||
(dollars in thousands, except per share amounts) |
Three months ended |
Six months ended |
|||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||
Revenue |
|||||||||||||
Recurring |
$ |
208,468 |
$ |
192,749 |
$ |
406,562 |
$ |
373,595 |
|||||
One-time services and other |
17,166 |
20,923 |
34,902 |
44,261 |
|||||||||
Total revenue |
225,634 |
213,672 |
441,464 |
417,856 |
|||||||||
Cost of revenue |
|||||||||||||
Cost of recurring |
86,657 |
76,350 |
171,368 |
145,429 |
|||||||||
Cost of one-time services and other |
14,150 |
18,822 |
28,722 |
37,780 |
|||||||||
Total cost of revenue |
100,807 |
95,172 |
200,090 |
183,209 |
|||||||||
Gross profit |
124,827 |
118,500 |
241,374 |
234,647 |
|||||||||
Operating expenses |
|||||||||||||
Sales, marketing and customer success |
55,009 |
48,493 |
110,464 |
93,970 |
|||||||||
Research and development |
25,902 |
25,297 |
54,363 |
51,255 |
|||||||||
General and administrative |
28,543 |
28,447 |
55,660 |
53,498 |
|||||||||
Amortization |
1,152 |
1,201 |
2,528 |
2,470 |
|||||||||
Restructuring |
730 |
3,688 |
2,683 |
4,499 |
|||||||||
Total operating expenses |
111,336 |
107,126 |
225,698 |
205,692 |
|||||||||
Income from operations |
13,491 |
11,374 |
15,676 |
28,955 |
|||||||||
Interest expense |
(5,799) |
(4,303) |
(11,122) |
(7,820) |
|||||||||
Other income, net |
2,181 |
346 |
2,363 |
506 |
|||||||||
Income before provision for income taxes |
9,873 |
7,417 |
6,917 |
21,641 |
|||||||||
Income tax provision (benefit) |
2,733 |
825 |
899 |
(2,702) |
|||||||||
Net income |
$ |
7,140 |
$ |
6,592 |
$ |
6,018 |
$ |
24,343 |
|||||
Earnings per share |
|||||||||||||
Basic |
$ |
0.15 |
$ |
0.14 |
$ |
0.13 |
$ |
0.52 |
|||||
Diluted |
$ |
0.15 |
$ |
0.14 |
$ |
0.13 |
$ |
0.51 |
|||||
Common shares and equivalents outstanding |
|||||||||||||
Basic weighted average shares |
47,714,621 |
47,222,657 |
47,622,740 |
47,121,692 |
|||||||||
Diluted weighted average shares |
48,160,684 |
48,053,094 |
48,101,212 |
48,030,547 |
|||||||||
Other comprehensive (loss) income |
|||||||||||||
Foreign currency translation adjustment |
(6,018) |
(8,817) |
(1,428) |
(2,380) |
|||||||||
Unrealized (loss) gain on derivative instruments, net of tax |
(1,939) |
765 |
(2,871) |
1,844 |
|||||||||
Total other comprehensive loss |
(7,957) |
(8,052) |
(4,299) |
(536) |
|||||||||
Comprehensive (loss) income |
$ |
(817) |
$ |
(1,460) |
$ |
1,719 |
$ |
23,807 |
Blackbaud, Inc. Consolidated statements of cash flows (Unaudited)
|
||||||
Six months ended |
||||||
(dollars in thousands) |
2019 |
2018 |
||||
Cash flows from operating activities |
||||||
Net income |
$ |
6,018 |
$ |
24,343 |
||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||
Depreciation and amortization |
43,113 |
39,847 |
||||
Provision for doubtful accounts and sales returns |
4,646 |
3,697 |
||||
Stock-based compensation expense |
28,755 |
24,953 |
||||
Deferred taxes |
465 |
1,121 |
||||
Amortization of deferred financing costs and discount |
376 |
376 |
||||
Other non-cash adjustments |
1,982 |
(419) |
||||
Changes in operating assets and liabilities, net of acquisition and disposal of |
||||||
Accounts receivable |
(45,071) |
(38,092) |
||||
Prepaid expenses and other assets |
(12,725) |
(18,629) |
||||
Trade accounts payable |
216 |
6,327 |
||||
Accrued expenses and other liabilities |
(9,014) |
(6,675) |
||||
Deferred revenue |
26,328 |
29,545 |
||||
Net cash provided by operating activities |
45,089 |
66,394 |
||||
Cash flows from investing activities |
||||||
Purchase of property and equipment |
(6,375) |
(9,575) |
||||
Capitalized software development costs |
(23,206) |
(16,359) |
||||
Purchase of net assets of acquired companies, net of cash and restricted cash |
(109,386) |
(45,315) |
||||
Other investing activities |
500 |
— |
||||
Net cash used in investing activities |
(138,467) |
(71,249) |
||||
Cash flows from financing activities |
||||||
Proceeds from issuance of debt |
329,100 |
173,500 |
||||
Payments on debt |
(155,150) |
(132,150) |
||||
Employee taxes paid for withheld shares upon equity award settlement |
(19,760) |
(25,184) |
||||
Proceeds from exercise of stock options |
6 |
11 |
||||
Change in due to customers |
(107,808) |
(309,189) |
||||
Change in customer funds receivable |
(3,741) |
(4,391) |
||||
Dividend payments to stockholders |
(11,802) |
(11,653) |
||||
Net cash provided by (used in) financing activities |
30,845 |
(309,056) |
||||
Effect of exchange rate on cash, cash equivalents and restricted cash |
(526) |
(1,606) |
||||
Net decrease in cash, cash equivalents and restricted cash |
(63,059) |
(315,517) |
||||
Cash, cash equivalents and restricted cash, beginning of period |
449,846 |
640,174 |
||||
Cash, cash equivalents and restricted cash, end of period |
$ |
386,787 |
$ |
324,657 |
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown above in the consolidated statements of cash flows: |
||||||
(dollars in thousands) |
June 30, |
December 31, |
||||
Cash and cash equivalents |
$ |
32,654 |
$ |
30,866 |
||
Restricted cash due to customers |
354,133 |
418,980 |
||||
Total cash, cash equivalents and restricted cash in the statement of cash flows |
$ |
386,787 |
$ |
449,846 |
Blackbaud, Inc. |
|||||||||||||
(dollars in thousands, except per share amounts) |
Three months ended |
Six months ended |
|||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||
GAAP Revenue |
$ |
225,634 |
$ |
213,672 |
$ |
441,464 |
$ |
417,856 |
|||||
Non-GAAP adjustments: |
|||||||||||||
Add: Acquisition-related deferred revenue write-down |
716 |
919 |
1,432 |
1,267 |
|||||||||
Non-GAAP revenue |
$ |
226,350 |
$ |
214,591 |
$ |
442,896 |
$ |
419,123 |
|||||
GAAP gross profit |
$ |
124,827 |
$ |
118,500 |
$ |
241,374 |
$ |
234,647 |
|||||
GAAP gross margin |
55.3 |
% |
55.5 |
% |
54.7 |
% |
56.2 |
% |
|||||
Non-GAAP adjustments: |
|||||||||||||
Add: Acquisition-related deferred revenue write-down |
716 |
919 |
1,432 |
1,267 |
|||||||||
Add: Stock-based compensation expense |
791 |
1,645 |
1,765 |
2,740 |
|||||||||
Add: Amortization of intangibles from business combinations |
11,329 |
10,677 |
22,745 |
21,063 |
|||||||||
Add: Employee severance |
(4) |
12 |
1,115 |
587 |
|||||||||
Add: Acquisition-related integration costs |
— |
25 |
— |
25 |
|||||||||
Subtotal |
12,832 |
13,278 |
27,057 |
25,682 |
|||||||||
Non-GAAP gross profit |
$ |
137,659 |
$ |
131,778 |
$ |
268,431 |
$ |
260,329 |
|||||
Non-GAAP gross margin |
60.8 |
% |
61.4 |
% |
60.6 |
% |
62.1 |
% |
|||||
GAAP income from operations |
$ |
13,491 |
$ |
11,374 |
$ |
15,676 |
$ |
28,955 |
|||||
GAAP operating margin |
6.0 |
% |
5.3 |
% |
3.6 |
% |
6.9 |
% |
|||||
Non-GAAP adjustments: |
|||||||||||||
Add: Acquisition-related deferred revenue write-down |
716 |
919 |
1,432 |
1,267 |
|||||||||
Add: Stock-based compensation expense |
15,029 |
13,861 |
28,755 |
24,953 |
|||||||||
Add: Amortization of intangibles from business combinations |
12,481 |
11,878 |
25,273 |
23,533 |
|||||||||
Add: Employee severance |
191 |
100 |
3,612 |
1,031 |
|||||||||
Add: Acquisition-related integration costs |
464 |
2,194 |
1,182 |
2,627 |
|||||||||
Add: Acquisition-related expenses |
365 |
1,211 |
810 |
1,605 |
|||||||||
Add: Restructuring costs |
730 |
3,688 |
2,683 |
4,499 |
|||||||||
Subtotal |
29,976 |
33,851 |
63,747 |
59,515 |
|||||||||
Non-GAAP income from operations |
$ |
43,467 |
$ |
45,225 |
$ |
79,423 |
$ |
88,470 |
|||||
Non-GAAP operating margin |
19.2 |
% |
21.1 |
% |
17.9 |
% |
21.1 |
% |
|||||
GAAP income before provision for income taxes |
$ |
9,873 |
$ |
7,417 |
$ |
6,917 |
$ |
21,641 |
|||||
GAAP net income |
$ |
7,140 |
$ |
6,592 |
$ |
6,018 |
$ |
24,343 |
|||||
Shares used in computing GAAP diluted earnings per share |
48,160,684 |
48,053,094 |
48,101,212 |
48,030,547 |
|||||||||
GAAP diluted earnings per share |
$ |
0.15 |
$ |
0.14 |
$ |
0.13 |
$ |
0.51 |
|||||
Non-GAAP adjustments: |
|||||||||||||
Add: GAAP income tax provision (benefit) |
2,733 |
825 |
899 |
(2,702) |
|||||||||
Add: Total non-GAAP adjustments affecting income from operations |
29,976 |
33,851 |
63,747 |
59,515 |
|||||||||
Non-GAAP income before provision for income taxes |
39,849 |
41,268 |
70,664 |
81,156 |
|||||||||
Assumed non-GAAP income tax provision(1) |
7,970 |
8,254 |
$ |
14,133 |
$ |
16,232 |
|||||||
Non-GAAP net income |
$ |
31,879 |
$ |
33,014 |
$ |
56,531 |
$ |
64,924 |
|||||
Shares used in computing non-GAAP diluted earnings per share |
48,160,684 |
48,053,094 |
48,101,212 |
48,030,547 |
|||||||||
Non-GAAP diluted earnings per share |
$ |
0.66 |
$ |
0.69 |
$ |
1.18 |
$ |
1.35 |
|||||
(1) Blackbaud applies a non-GAAP effective tax rate of 20.0% when calculating non-GAAP net income and non-GAAP diluted earnings per share. |
Blackbaud, Inc. |
||||||||||||||
(dollars in thousands) |
Three months ended |
Six months ended |
||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||
GAAP revenue |
$ |
225,634 |
$ |
213,672 |
$ |
441,464 |
$ |
417,856 |
||||||
GAAP revenue growth |
5.6 |
% |
5.6 |
% |
||||||||||
(Less) Add: Non-GAAP acquisition-related revenue (1) |
(4,558) |
1,771 |
(8,944) |
4,485 |
||||||||||
Non-GAAP organic revenue (2) |
$ |
221,076 |
$ |
215,443 |
$ |
432,520 |
$ |
422,341 |
||||||
Non-GAAP organic revenue growth |
2.6 |
% |
2.4 |
% |
||||||||||
Non-GAAP organic revenue (2) |
$ |
221,076 |
$ |
215,443 |
$ |
432,520 |
$ |
422,341 |
||||||
Foreign currency impact on non-GAAP organic revenue (3) |
2,177 |
— |
3,956 |
— |
||||||||||
Non-GAAP organic revenue on constant currency basis (3) |
$ |
223,253 |
$ |
215,443 |
$ |
436,476 |
$ |
422,341 |
||||||
Non-GAAP organic revenue growth on constant currency basis |
3.6 |
% |
3.3 |
% |
||||||||||
GAAP recurring revenue |
$ |
208,468 |
$ |
192,749 |
$ |
406,562 |
$ |
373,595 |
||||||
GAAP recurring revenue growth |
8.2 |
% |
8.8 |
% |
||||||||||
(Less) Add: Non-GAAP acquisition-related revenue (1) |
(4,298) |
1,717 |
(8,473) |
4,316 |
||||||||||
Non-GAAP organic recurring revenue |
$ |
204,170 |
$ |
194,466 |
$ |
398,089 |
$ |
377,911 |
||||||
Non-GAAP organic recurring revenue growth |
5.0 |
% |
5.3 |
% |
||||||||||
(1) |
Non-GAAP acquisition-related revenue excludes incremental acquisition-related revenue calculated in accordance with GAAP that is attributable to companies acquired in the current fiscal year. For companies acquired in the immediately preceding fiscal year, non-GAAP acquisition-related revenue reflects presentation of full-year incremental non-GAAP revenue derived from such companies, as if they were combined throughout the prior period, and it includes the non-GAAP revenue from the acquisition-related deferred revenue write-down attributable to those companies. |
|||||||||||||
(2) |
Non-GAAP organic revenue for the prior year periods presented herein may not agree to non-GAAP organic revenue presented in the respective prior period quarterly financial information solely due to the manner in which non-GAAP organic revenue growth is calculated. |
|||||||||||||
(3) |
To determine non-GAAP organic revenue growth on a constant currency basis, revenues from entities reporting in foreign currencies were translated to U.S. Dollars using the comparable prior period's quarterly weighted average foreign currency exchange rates. The primary foreign currencies creating the impact are the Canadian Dollar, EURO, British Pound and Australian Dollar. |
|||||||||||||
(dollars in thousands) |
Six months ended |
|||||||||||||
2019 |
2018 |
|||||||||||||
GAAP net cash provided by operating activities |
$ |
45,089 |
$ |
66,394 |
||||||||||
Less: purchase of property and equipment |
(6,375) |
(9,575) |
||||||||||||
Less: capitalized software development costs |
(23,206) |
(16,359) |
||||||||||||
Non-GAAP free cash flow |
$ |
15,508 |
$ |
40,460 |
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