News Release Details

CHARLESTON, S.C., May 5, 2020 /PRNewswire/ -- Blackbaud (NASDAQ: BLKB), the world's leading cloud software company powering social good, today announced financial results for its first quarter ended March 31, 2020.

"Blackbaud remains highly committed to the success of our customers, our company and the entire social economy during these challenging times," said Mike Gianoni, Blackbaud's president and CEO. "Our teams launched new innovative solutions in response to pandemic-specific needs that arose. We've given back to the social good community through hundreds of free resources, philanthropic gifts, service on boards and more. And we've maintained our commitments to customers, including our very high standard of service and support. Blackbaud has served the social good community as a leader in software for nearly four decades. We have been decisive in our actions, and our immediate priority continues to be the safety and welfare of our people and being a strong global partner for social good organizations around the world during this unprecedented time."

First Quarter 2020 Results Compared to First Quarter 2019 Results:

• Total GAAP revenue was $223.6 million, up 3.6%, with $204.9 million in GAAP recurring revenue, representing 91.6% of total GAAP revenue. GAAP recurring revenue was up 3.4%.
• Total non-GAAP revenue was $223.6 million, up 3.3%, with $204.9 million in non-GAAP recurring revenue, representing 91.6% of total non-GAAP revenue. Non-GAAP recurring revenue was up 3.0%.
• Non-GAAP organic recurring revenue increased 3.0%.
• GAAP income from operations was $8.4 million, with GAAP operating margin of 3.8%, an increase of 280 basis points.
• Non-GAAP income from operations was $33.9 million, with non-GAAP operating margin of 15.2%, a decrease of 140 basis points.
• GAAP net income was $4.6 million, with GAAP diluted earnings per share of $0.10, up $0.12.
• Non-GAAP net income was $24.7 million, with non-GAAP diluted earnings per share of $0.51, unchanged from first quarter 2019.
• Non-GAAP free cash flow was $(38.3) million, a decrease of $15.8 million.

"Following a solid start to the year, we acted quickly to ensure the financial strength and flexibility needed in response to the uncertainty of COVID-19 and current global market conditions while remaining critically focused on the success of our customers and the health and economic stability of our employees," said Tony Boor, executive vice president and CFO, Blackbaud. "Our recurring revenue model and strong balance sheet remain stabilizing factors as we navigate the wide array of potential outcomes that could result from COVID-19, and we will continue to implement the necessary near-term measures to make certain Blackbaud remains in a strong position longer-term on behalf of all of our stakeholders."

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.

COVID-19 Actions

Blackbaud announced several immediate steps to provide additional near-term liquidity and financial flexibility while implementing employee relief measures in light of the COVID-19 pandemic. These actions included:

• Blackbaud's Board of Directors eliminated the payment of quarterly cash dividends on Blackbaud's common stock
• Blackbaud's 401(k) match program is temporarily suspended for US-based employees
• Temporary freeze on company hiring efforts
• Mike Gianoni, Blackbaud's president and CEO, is forgoing his paycheck for the foreseeable future
• Restriction of non-essential employee travel and other operating cost reductions
• Employee cash merit increases for 2020 replaced with a one-time restricted stock grant
• Employee cash bonus programs for 2020 replaced with a one-time performance stock grant
• All worldwide employees that have a base salary equal to or less than $75,000 USD received additional financial support in the form of a one-time bonus of $1,000 USD

Recent Company Highlights

• World War II veteran and centenarian Captain Tom Moore raised more than £32 million ($39 million) for front-line workers in the UK through Blackbaud's JustGiving platform, marking the largest individual-led online crowdfundraising campaign in history. Blackbaud donated £100,000 to NHS Charities Together in celebration of Captain Moore completing his 100-lap challenge.
• In the wake of the COVID-19 pandemic, Blackbaud announced new measures, including hundreds of free resources to support customers and the broader social economy as organizations around the world were thrown into crisis mode.
• A Total Economic Impact™ (TEI) study conducted by Forrester Consulting found that over a three-year period, a higher education institution increased gift revenue by nearly $50 million, increased the average annual gift revenue generated per major gift by more than 60 percent and avoided $1.2 million in labor costs, realizing a 273% return on investment (ROI) with Blackbaud CRM™.
• Blackbaud announced a first-of-its-kind Innovation Partnership with Chief Executives for Corporate Purpose (CECP), which will enable Blackbaud corporate social responsibility (CSR) customers to utilize their social investment data with greater impact.

Visit www.blackbaud.com/newsroom for more information about Blackbaud's recent highlights.

Revenue Classifications

Revenue from retained and managed service contracts that we do not expect to have a term consistent with our cloud solution contracts is included in one-time services and other revenue beginning January 1, 2020. This change in presentation resulted in a $4.3 million decrease in recurring revenue and an offsetting increase to one-time services and other revenue during the three months ended March 31, 2020.

About Blackbaud

Blackbaud (NASDAQ: BLKB) is the world's leading cloud software company powering social good. Serving the entire social good community—nonprofits, higher education institutions, K–12 schools, healthcare organizations, faith communities, arts and cultural organizations, foundations, companies and individual change agents—Blackbaud connects and empowers organizations to increase their impact through cloud software, services, expertise and data intelligence. The Blackbaud portfolio is tailored to the unique needs of vertical markets, with solutions for fundraising and CRM, marketing, advocacy, peer-to-peer fundraising, corporate social responsibility, school management, ticketing, grantmaking, financial management, payment processing and analytics. Serving the industry for more than three decades, Blackbaud is headquartered in Charleston, South Carolina, and has operations in the United States, Australia, Canada, Costa Rica and the United Kingdom. For more information, visit www.blackbaud.com, or follow us on Twitter, LinkedIn, Instagram and Facebook.

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 and expectations that our revenue will continue to grow. These statements 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 acquired companies; uncertainty regarding increased business and renewals from existing customers; a shifting revenue mix that may impact gross margin; continued success in sales growth; uncertainty regarding the COVID-19 disruption; 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.

Trademarks

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 revenue, non-GAAP recurring revenue, non-GAAP gross profit, non-GAAP gross margin, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income and non-GAAP diluted earnings per share. Blackbaud has acquired businesses whose net tangible assets include deferred revenue. In accordance with GAAP reporting requirements, Blackbaud recorded write-downs of deferred revenue to fair value, which resulted in lower recognized revenue. Both on a quarterly and year-to-date basis, the revenue for the acquired businesses is deferred and typically recognized over a one-year period, so Blackbaud's GAAP revenues for the one-year period after the acquisitions will not reflect the full amount of revenues that would have been reported if the acquired deferred revenue was not written down to fair value. The non-GAAP measures described above reverse the acquisition-related deferred revenue write-downs so that the full amount of revenue booked by the acquired companies is included, which Blackbaud believes provides a more accurate representation of a revenue run-rate in a given period. In addition to reversing write-downs of acquisition-related deferred revenue, non-GAAP financial measures discussed above exclude the impact of certain items that Blackbaud believes are not directly related to its performance in any particular period, but are for its long-term benefit over multiple periods.

In addition, Blackbaud uses non-GAAP organic revenue growth, non-GAAP organic revenue growth on a constant currency basis and non-GAAP organic recurring revenue growth, in analyzing its operating performance. Blackbaud believes that these non-GAAP measures are useful to investors, as a supplement to GAAP measures, for evaluating the periodic growth of its business on a consistent basis. Each of these measures excludes incremental acquisition-related revenue attributable to companies acquired in the current fiscal year. For companies acquired in the immediately preceding fiscal year, each of these measures 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 attributable to those companies, as if there were no acquisition-related write-downs of acquired deferred revenue to fair value as required by GAAP. In addition, each of these measures excludes prior period revenue associated with divested businesses. The exclusion of the prior period revenue is to present the results of the divested businesses within the results of the combined company for the same period of time in both the prior and current periods. Blackbaud believes this presentation provides a more comparable representation of its current business' organic revenue growth and revenue run-rate.

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 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 these non-GAAP financial measures reflect Blackbaud's ongoing business in a manner that allows for meaningful period-to-period comparison and analysis of trends in its business. In addition, Blackbaud believes that the use of these non-GAAP financial measures provides additional information for investors to use in evaluating ongoing operating results and trends and in comparing its financial results from period-to-period with other companies in Blackbaud's industry, many of which present similar non-GAAP financial measures to investors. However, these non-GAAP financial measures may not be completely comparable to similarly titled measures of other companies due to differences in the exact method of calculation between companies. 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.

 

 

 

 

 

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:

 

 

 

 

 

 

 

 

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SOURCE Blackbaud