Blackbaud Announces 2020 Third Quarter Results
"Our customers continue to navigate the challenges caused by the pandemic which will put pressure on our ability to drive near-term revenue growth in 2020 and 2021, thus we're executing our balanced strategy with a sharper focus on profitability," said
Third Quarter 2020 Results Compared to Third Quarter 2019 Results:
- Total GAAP revenue was
$215.0 million , down 2.8%, with$200.1 million in GAAP recurring revenue, representing 93.1% of total GAAP revenue. GAAP recurring revenue was down 2.5%. - Total non-GAAP revenue was
$215.0 million , down 2.9%, with$200.1 million in non-GAAP recurring revenue, representing 93.1% of total non-GAAP revenue. Non-GAAP recurring revenue was down 2.6%. - Non-GAAP organic recurring revenue decreased 2.6%.
- GAAP income from operations was
$10.1 million , with GAAP operating margin of 4.7%, an increase of 110 basis points. - Non-GAAP income from operations was
$48.1 million , with non-GAAP operating margin of 22.4%, an increase of 590 basis points. - GAAP net income was
$4.9 million , with GAAP diluted earnings per share of$0.10 , up$0.01 per share. - Non-GAAP net income was
$35.7 million , with non-GAAP diluted earnings per share of$0.73 , up$0.17 per share. - Non-GAAP free cash flow was
$41.4 million , a decrease of$21.1 million .
"Our third quarter results are indicative of our ability to drive a strong margin profile inclusive of near-term pressure on revenues and necessary investments in areas like engineering and security," 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
- Virtual Prayer Wall released through Blackbaud Church Management to meet churches' needs as they transitioned their congregations to remote environments.
- Blackbaud completes purchase of headquarters building and property in
Charleston, SC providing additional strategic flexibility with significant future cost savings expected. - Blackbaud appoints
Michael Boulware Moore as Diversity and Inclusion Executive, first leader completely dedicated to diversity and inclusion for the company. - For the second consecutive year, CEO
Mike Gianoni named a Top 50 SaaS CEO. - Blackbaud hosts record attendance at first-ever virtual, global bbcon, welcoming over 38,000 individuals from over 70 countries, the equivalent to well over a decade of historic attendance levels.
- Blackbaud report reveals COVID-19 is reshaping K–12 parent expectations for the long term.
Visit www.blackbaud.com/newsroom for more information about Blackbaud's recent highlights.
Conference Call Details
What: Blackbaud's 2020 Third Quarter Conference Call
When: October 29, 2020
Time: 8:00 a.m. (Eastern Time)
Live Call: 1-877-407-3088 (US/
Webcast: Blackbaud's Investor Relations Webpage
About Blackbaud
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Investor Contact: |
Media Contact: |
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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 condition and results of operations. 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; the security of our data and that of our customers; uncertainty regarding the COVID-19 disruption; and the other risk factors set forth from time to time in the
Trademarks
All Blackbaud product names appearing herein are trademarks or registered trademarks of
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.
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(dollars in thousands) |
|
|
||||
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Assets |
||||||
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Current assets: |
||||||
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Cash and cash equivalents |
$ |
30,563 |
$ |
31,810 |
||
|
Restricted cash |
203,660 |
545,485 |
||||
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Accounts receivable, net of allowance of |
96,830 |
88,868 |
||||
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Customer funds receivable |
4,901 |
524 |
||||
|
Prepaid expenses and other current assets |
76,761 |
67,852 |
||||
|
Total current assets |
412,715 |
734,539 |
||||
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Property and equipment, net |
109,469 |
35,546 |
||||
|
Operating lease right-of-use assets |
30,218 |
104,400 |
||||
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Software development costs, net |
108,891 |
101,302 |
||||
|
|
632,840 |
634,088 |
||||
|
Intangible assets, net |
284,414 |
317,895 |
||||
|
Other assets |
72,617 |
65,193 |
||||
|
Total assets |
$ |
1,651,164 |
$ |
1,992,963 |
||
|
Liabilities and stockholders' equity |
||||||
|
Current liabilities: |
||||||
|
Trade accounts payable |
$ |
31,775 |
$ |
47,676 |
||
|
Accrued expenses and other current liabilities |
48,380 |
73,317 |
||||
|
Due to customers |
207,356 |
546,009 |
||||
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Debt, current portion |
10,305 |
7,500 |
||||
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Deferred revenue, current portion |
322,452 |
314,335 |
||||
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Total current liabilities |
620,268 |
988,837 |
||||
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Debt, net of current portion |
497,953 |
459,600 |
||||
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Deferred tax liability |
46,989 |
44,594 |
||||
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Deferred revenue, net of current portion |
5,803 |
1,802 |
||||
|
Operating lease liabilities, net of current portion |
25,706 |
95,624 |
||||
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Other liabilities |
12,610 |
5,742 |
||||
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Total liabilities |
1,209,329 |
1,596,199 |
||||
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Commitments and contingencies |
||||||
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Stockholders' equity: |
||||||
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Preferred stock; 20,000,000 shares authorized, none outstanding |
— |
— |
||||
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Common stock, |
61 |
60 |
||||
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Additional paid-in capital |
512,269 |
457,804 |
||||
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|
(311,951) |
(290,665) |
||||
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Accumulated other comprehensive loss |
(8,872) |
(5,290) |
||||
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Retained earnings |
250,328 |
234,855 |
||||
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Total stockholders' equity |
441,835 |
396,764 |
||||
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Total liabilities and stockholders' equity |
$ |
1,651,164 |
$ |
1,992,963 |
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|||||||||||||
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(dollars in thousands, except per share amounts) |
Three months ended |
Nine months ended |
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2020 |
2019 |
2020 |
2019 |
||||||||||
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Revenue |
|||||||||||||
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Recurring |
$ |
200,102 |
$ |
205,227 |
$ |
621,229 |
$ |
611,789 |
|||||
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One-time services and other |
14,899 |
15,893 |
49,384 |
50,795 |
|||||||||
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Total revenue |
215,001 |
221,120 |
670,613 |
662,584 |
|||||||||
|
Cost of revenue |
|||||||||||||
|
Cost of recurring |
84,251 |
87,645 |
265,172 |
259,013 |
|||||||||
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Cost of one-time services and other |
14,434 |
14,152 |
43,317 |
42,874 |
|||||||||
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Total cost of revenue |
98,685 |
101,797 |
308,489 |
301,887 |
|||||||||
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Gross profit |
116,316 |
119,323 |
362,124 |
360,697 |
|||||||||
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Operating expenses |
|||||||||||||
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Sales, marketing and customer success |
48,460 |
55,499 |
159,149 |
165,963 |
|||||||||
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Research and development |
22,783 |
25,941 |
72,655 |
80,304 |
|||||||||
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General and administrative |
34,132 |
28,897 |
89,829 |
84,557 |
|||||||||
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Amortization |
749 |
703 |
2,219 |
3,231 |
|||||||||
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Restructuring |
105 |
400 |
179 |
3,083 |
|||||||||
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Total operating expenses |
106,229 |
111,440 |
324,031 |
337,138 |
|||||||||
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Income from operations |
10,087 |
7,883 |
38,093 |
23,559 |
|||||||||
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Interest expense |
(3,997) |
(5,111) |
(12,049) |
(16,233) |
|||||||||
|
Other income, net |
542 |
2,158 |
2,242 |
4,521 |
|||||||||
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Income before provision for income taxes |
6,632 |
4,930 |
28,286 |
11,847 |
|||||||||
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Income tax provision |
1,756 |
364 |
6,948 |
1,263 |
|||||||||
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Net income |
$ |
4,876 |
$ |
4,566 |
$ |
21,338 |
$ |
10,584 |
|||||
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Earnings per share |
|||||||||||||
|
Basic |
$ |
0.10 |
$ |
0.10 |
$ |
0.44 |
$ |
0.22 |
|||||
|
Diluted |
$ |
0.10 |
$ |
0.09 |
$ |
0.44 |
$ |
0.22 |
|||||
|
Common shares and equivalents outstanding |
|||||||||||||
|
Basic weighted average shares |
48,271,139 |
47,757,769 |
48,182,799 |
47,668,235 |
|||||||||
|
Diluted weighted average shares |
48,859,707 |
48,464,529 |
48,582,068 |
48,223,712 |
|||||||||
|
Other comprehensive income (loss) |
|||||||||||||
|
Foreign currency translation adjustment |
4,661 |
(3,893) |
(1,954) |
(5,321) |
|||||||||
|
Unrealized gain (loss) on derivative instruments, net of tax |
943 |
(363) |
(1,628) |
(3,234) |
|||||||||
|
Total other comprehensive income (loss) |
5,604 |
(4,256) |
(3,582) |
(8,555) |
|||||||||
|
Comprehensive income |
$ |
10,480 |
$ |
310 |
$ |
17,756 |
$ |
2,029 |
|||||
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Blackbaud, Inc. |
||||||
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Nine months ended |
||||||
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(dollars in thousands) |
2020 |
2019 |
||||
|
Cash flows from operating activities |
||||||
|
Net income |
$ |
21,338 |
$ |
10,584 |
||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||
|
Depreciation and amortization |
68,755 |
63,998 |
||||
|
Provision for credit losses and sales returns |
10,156 |
6,192 |
||||
|
Stock-based compensation expense |
54,556 |
43,621 |
||||
|
Deferred taxes |
1,879 |
(75) |
||||
|
Amortization of deferred financing costs and discount |
569 |
564 |
||||
|
Other non-cash adjustments |
2,203 |
2,047 |
||||
|
Changes in operating assets and liabilities, net of acquisition and disposal of businesses: |
||||||
|
Accounts receivable |
(18,319) |
(6,375) |
||||
|
Prepaid expenses and other assets |
4,292 |
(5,129) |
||||
|
Trade accounts payable |
(17,203) |
(74) |
||||
|
Accrued expenses and other liabilities |
(31,595) |
(13,592) |
||||
|
Deferred revenue |
12,534 |
20,363 |
||||
|
Net cash provided by operating activities |
109,165 |
122,124 |
||||
|
Cash flows from investing activities |
||||||
|
Purchase of property and equipment |
(25,836) |
(9,597) |
||||
|
Capitalized software development costs |
(32,028) |
(34,513) |
||||
|
Purchase of net assets of acquired companies, net of cash and restricted cash acquired |
— |
(109,353) |
||||
|
Other investing activities |
— |
500 |
||||
|
Net cash used in investing activities |
(57,864) |
(152,963) |
||||
|
Cash flows from financing activities |
||||||
|
Proceeds from issuance of debt |
267,400 |
371,200 |
||||
|
Payments on debt |
(290,999) |
(255,625) |
||||
|
Debt issuance costs |
(593) |
— |
||||
|
Employee taxes paid for withheld shares upon equity award settlement |
(21,286) |
(20,279) |
||||
|
Proceeds from exercise of stock options |
4 |
7 |
||||
|
Change in due to customers |
(337,821) |
(215,942) |
||||
|
Change in customer funds receivable |
(4,495) |
(6,283) |
||||
|
Dividend payments to stockholders |
(5,960) |
(17,705) |
||||
|
Net cash used in financing activities |
(393,750) |
(144,627) |
||||
|
Effect of exchange rate on cash, cash equivalents and restricted cash |
(623) |
(2,240) |
||||
|
Net decrease in cash, cash equivalents and restricted cash |
(343,072) |
(177,706) |
||||
|
Cash, cash equivalents and restricted cash, beginning of period |
577,295 |
449,846 |
||||
|
Cash, cash equivalents and restricted cash, end of period |
$ |
234,223 |
$ |
272,140 |
||
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) |
|
|
||||
|
Cash and cash equivalents |
$ |
30,563 |
$ |
31,810 |
||
|
Restricted cash |
203,660 |
545,485 |
||||
|
Total cash, cash equivalents and restricted cash in the statement of cash flows |
$ |
234,223 |
$ |
577,295 |
||
|
|
|||||||||||||
|
(dollars in thousands, except per share amounts) |
Three months ended |
Nine months ended |
|||||||||||
|
2020 |
2019 |
2020 |
2019 |
||||||||||
|
GAAP Revenue |
$ |
215,001 |
$ |
221,120 |
$ |
670,613 |
$ |
662,584 |
|||||
|
Non-GAAP adjustments: |
|||||||||||||
|
Add: Acquisition-related deferred revenue write-down |
— |
259 |
— |
1,691 |
|||||||||
|
Non-GAAP revenue |
$ |
215,001 |
$ |
221,379 |
$ |
670,613 |
$ |
664,275 |
|||||
|
GAAP gross profit |
$ |
116,316 |
$ |
119,323 |
$ |
362,124 |
$ |
360,697 |
|||||
|
GAAP gross margin |
54.1 |
% |
54.0 |
% |
54.0 |
% |
54.4 |
% |
|||||
|
Non-GAAP adjustments: |
|||||||||||||
|
Add: Acquisition-related deferred revenue write-down |
— |
259 |
— |
1,691 |
|||||||||
|
Add: Stock-based compensation expense |
3,688 |
784 |
7,123 |
2,549 |
|||||||||
|
Add: Amortization of intangibles from business combinations |
9,219 |
11,225 |
29,835 |
33,970 |
|||||||||
|
Add: Employee severance |
— |
19 |
813 |
1,134 |
|||||||||
|
Subtotal |
12,907 |
12,287 |
37,771 |
39,344 |
|||||||||
|
Non-GAAP gross profit |
$ |
129,223 |
$ |
131,610 |
$ |
399,895 |
$ |
400,041 |
|||||
|
Non-GAAP gross margin |
60.1 |
% |
59.5 |
% |
59.6 |
% |
60.2 |
% |
|||||
|
GAAP income from operations |
$ |
10,087 |
$ |
7,883 |
$ |
38,093 |
$ |
23,559 |
|||||
|
GAAP operating margin |
4.7 |
% |
3.6 |
% |
5.7 |
% |
3.6 |
% |
|||||
|
Non-GAAP adjustments: |
|||||||||||||
|
Add: Acquisition-related deferred revenue write-down |
— |
259 |
— |
1,691 |
|||||||||
|
Add: Stock-based compensation expense |
20,843 |
14,866 |
54,556 |
43,621 |
|||||||||
|
Add: Amortization of intangibles from business combinations |
9,968 |
11,928 |
32,054 |
37,201 |
|||||||||
|
Add: Employee severance |
232 |
48 |
4,593 |
3,660 |
|||||||||
|
Add: Acquisition-related integration costs |
(15) |
1,024 |
(118) |
2,206 |
|||||||||
|
Add: Acquisition-related expenses |
64 |
220 |
288 |
1,030 |
|||||||||
|
Add: Restructuring and other real estate activities |
6,943 |
400 |
7,017 |
3,083 |
|||||||||
|
Subtotal |
38,035 |
28,745 |
98,390 |
92,492 |
|||||||||
|
Non-GAAP income from operations |
$ |
48,122 |
$ |
36,628 |
$ |
136,483 |
$ |
116,051 |
|||||
|
Non-GAAP operating margin |
22.4 |
% |
16.5 |
% |
20.4 |
% |
17.5 |
% |
|||||
|
GAAP income before provision for income taxes |
$ |
6,632 |
$ |
4,930 |
$ |
28,286 |
$ |
11,847 |
|||||
|
GAAP net income |
$ |
4,876 |
$ |
4,566 |
$ |
21,338 |
$ |
10,584 |
|||||
|
Shares used in computing GAAP diluted earnings per share |
48,859,707 |
48,464,529 |
48,582,068 |
48,223,712 |
|||||||||
|
GAAP diluted earnings per share |
$ |
0.10 |
$ |
0.09 |
$ |
0.44 |
$ |
0.22 |
|||||
|
Non-GAAP adjustments: |
|||||||||||||
|
Add: GAAP income tax provision |
1,756 |
364 |
6,948 |
1,263 |
|||||||||
|
Add: Total non-GAAP adjustments affecting income from operations |
38,035 |
28,745 |
98,390 |
92,492 |
|||||||||
|
Non-GAAP income before provision for income taxes |
44,667 |
33,675 |
126,676 |
104,339 |
|||||||||
|
Assumed non-GAAP income tax provision(1) |
8,933 |
6,735 |
$ |
25,335 |
$ |
20,868 |
|||||||
|
Non-GAAP net income |
$ |
35,734 |
$ |
26,940 |
$ |
101,341 |
$ |
83,471 |
|||||
|
Shares used in computing non-GAAP diluted earnings per share |
48,859,707 |
48,464,529 |
48,582,068 |
48,223,712 |
|||||||||
|
Non-GAAP diluted earnings per share |
$ |
0.73 |
$ |
0.56 |
$ |
2.09 |
$ |
1.73 |
|||||
|
(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. |
|
|
|||||||||||||
|
(dollars in thousands) |
Three months ended |
Nine months ended |
|||||||||||
|
2020 |
2019 |
2020 |
2019 |
||||||||||
|
GAAP revenue |
$ |
215,001 |
$ |
221,120 |
$ |
670,613 |
$ |
662,584 |
|||||
|
GAAP revenue growth |
(2.8) |
% |
1.2 |
% |
|||||||||
|
Add: Non-GAAP acquisition-related revenue(1) |
— |
259 |
— |
1,691 |
|||||||||
|
Non-GAAP organic revenue(2) |
$ |
215,001 |
$ |
221,379 |
$ |
670,613 |
$ |
664,275 |
|||||
|
Non-GAAP organic revenue growth |
(2.9) |
% |
1.0 |
% |
|||||||||
|
Non-GAAP organic revenue(2) |
$ |
215,001 |
$ |
221,379 |
$ |
670,613 |
$ |
664,275 |
|||||
|
Foreign currency impact on non-GAAP organic revenue(3) |
(796) |
— |
1,522 |
— |
|||||||||
|
Non-GAAP organic revenue on constant currency basis(3) |
$ |
214,205 |
$ |
221,379 |
$ |
672,135 |
$ |
664,275 |
|||||
|
Non-GAAP organic revenue growth on constant currency basis |
(3.2) |
% |
1.2 |
% |
|||||||||
|
GAAP recurring revenue |
$ |
200,102 |
$ |
205,227 |
$ |
621,229 |
$ |
611,789 |
|||||
|
GAAP recurring revenue growth |
(2.5) |
% |
1.5 |
% |
|||||||||
|
Add: Non-GAAP acquisition-related revenue(1) |
— |
259 |
— |
1,691 |
|||||||||
|
Non-GAAP organic recurring revenue |
$ |
200,102 |
$ |
205,486 |
$ |
621,229 |
$ |
613,480 |
|||||
|
Non-GAAP organic recurring revenue growth |
(2.6) |
% |
1.3 |
% |
|||||||||
|
(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 |
|
(dollars in thousands) |
Nine months ended |
|||||
|
2020 |
2019 |
|||||
|
GAAP net cash provided by operating activities |
$ |
109,165 |
$ |
122,124 |
||
|
Less: purchase of property and equipment |
(25,836) |
(9,597) |
||||
|
Less: capitalized software development costs |
(32,028) |
(34,513) |
||||
|
Non-GAAP free cash flow |
$ |
51,301 |
$ |
78,014 |
||
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SOURCE