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Blackbaud Announces 2021 First Quarter Results
First Quarter Cash Flow from Operations Increases $55 Million Year-Over-Year

 

CHARLESTON, S.C., April 28, 2021 /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, 2021.

"Our first quarter performance combined with an improving macro environment has us well positioned for a strong and successful year ahead," said Mike Gianoni, president and CEO, Blackbaud. "The progress being made to distribute COVID vaccines is encouraging for our market, our customers and our company. As we look to extend our leadership position in this market, we're accelerating investments in key areas like digital marketing, engineering, security and customer success, and our sights are set on the substantial opportunity ahead of us to drive meaningful acceleration in financial performance in the context of Rule of 40. Overall, we had a strong start to the year, and I'm increasingly optimistic about what's to come in 2021 and over the next several years."

First Quarter 2021 Results Compared to First Quarter 2020 Results:

  • Total GAAP revenue was $219.2 million, down 2.0%, with $206.8 million in GAAP recurring revenue, up 0.9%.
  • Non-GAAP organic recurring revenue increased 0.9%.
  • GAAP income from operations was $6.6 million, with GAAP operating margin of 3.0%, a decrease of 80 basis points.
  • Non-GAAP income from operations was $47.2 million, with non-GAAP operating margin of 21.5%, an increase of 630 basis points.
  • GAAP net loss was $0.2 million, with GAAP diluted earnings per share of $0.00, down $0.10 per share.
  • Non-GAAP net income was $32.8 million, with non-GAAP diluted earnings per share of $0.68, up $0.17 per share.
  • Non-GAAP adjusted EBITDA was $57.2 million, up $12.5 million, with non-GAAP adjusted EBITDA margin of 26.1%.
  • GAAP net cash provided by operating activities was $30.1 million, an increase of $54.6 million.
  • Non-GAAP free cash flow was $17.3 million, an increase of $55.6 million.

"Our first quarter results are encouraging as we continue to see strength in online payments and durability in our recurring revenue streams," said Tony Boor, executive vice president and CFO. "We had solid bookings performance to start the year while reducing customer acquisition costs, and we continued to make accelerated investments in critical areas of the business. As expected, one-time services and other revenue continues to decline which creates a drag on overall revenue growth but is positive over the long term. With one quarter behind us, we have increasing visibility into our near-term performance, and as we exit the pandemic, we see significant growth opportunities ahead of us. Our latest modeling gives us heightened confidence we may have upside to our best estimate for 2021, and the trends we're seeing to start the year combined with favorable foreign exchange rates significantly reduces the likelihood of our downside revenue scenario."

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:

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

Conference Call Details:

What:   

Blackbaud's 2021 First Quarter Conference Call

When:   

April 29, 2021 

Time:      

8:00 a.m. (Eastern Time)

Live Call: 

1-877-407-3088 (US/Canada)

Webcast:  

Blackbaud's Investor Relations Webpage

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 nearly four 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.

Investor Contact:

 

Media Contact:

 

Steve Hufford

 

media@blackbaud.com

 

Director, Investor Relations

     

IR@blackbaud.com

     

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; cybersecurity and data protection risks; uncertainty regarding the COVID-19 disruption; potential litigation involving us; 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. Blackbaud uses non-GAAP financial measures internally in analyzing its operational performance. Accordingly, Blackbaud believes these non-GAAP measures are useful to investors, as a supplement to GAAP measures, in evaluating its ongoing operational performance 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 potential differences in the exact method of calculation between companies.

The non-GAAP financial measures discussed above exclude the impact of certain transactions that Blackbaud believes are not directly related to its operating performance in any particular period, but are for its long-term benefit over multiple periods. Blackbaud believes these non-GAAP financial measures reflect its ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in its business.

While Blackbaud believes these non-GAAP measures provide useful supplemental information, 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 reconciliations of these non-GAAP measures to their most directly comparable GAAP financial measures.

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.

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

Rule of 40 is defined as non-GAAP organic revenue growth plus non-GAAP adjusted EBITDA margin. Non-GAAP adjusted EBITDA is defined as GAAP net income plus interest, net; income tax provision; depreciation; amortization of intangible assets from business combinations; amortization of software development costs; acquisition-related deferred revenue write-down; stock-based compensation; acquisition-related integration costs; acquisition-related expenses; employee severance; and restructuring and other real estate activities.

Blackbaud, Inc.
Consolidated Balance Sheets
(Unaudited)
 

 

(dollars in thousands)

March 31,

2021

December 31,

2020

Assets

   

Current assets:

   

Cash and cash equivalents

$

27,753

 

$

35,750

 

Restricted cash

255,158

 

609,219

 

Accounts receivable, net of allowance of $10,361 and $10,292 at March 31,
2021 and December 31, 2020, respectively

83,333

 

95,404

 

Customer funds receivable

945

 

321

 

Prepaid expenses and other current assets

98,095

 

78,366

 

Total current assets

465,284

 

819,060

 

Property and equipment, net

105,124

 

105,177

 

Operating lease right-of-use assets

20,055

 

22,671

 

Software development costs, net

113,624

 

111,827

 

Goodwill

637,113

 

635,854

 

Intangible assets, net

269,118

 

277,506

 

Other assets

74,022

 

72,639

 

Total assets

$

1,684,340

 

$

2,044,734

 

Liabilities and stockholders' equity

   

Current liabilities:

   

Trade accounts payable

$

35,274

 

$

27,836

 

Accrued expenses and other current liabilities

53,013

 

52,228

 

Due to customers

254,947

 

608,264

 

Debt, current portion

12,875

 

12,840

 

Deferred revenue, current portion

290,025

 

312,236

 

Total current liabilities

646,134

 

1,013,404

 

Debt, net of current portion

537,924

 

518,193

 

Deferred tax liability

54,444

 

54,086

 

Deferred revenue, net of current portion

4,495

 

4,678

 

Operating lease liabilities, net of current portion

15,744

 

17,357

 

Other liabilities

9,439

 

10,866

 

Total liabilities

1,268,180

 

1,618,584

 

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,
61,595,276 and 60,904,638 shares issued at March 31, 2021 and
December 31, 2020, respectively

62

 

61

 

Additional paid-in capital

574,958

 

544,963

 

Treasury stock, at cost; 12,760,956 and 12,054,268 shares at March 
31, 2021 and December 31, 2020, respectively

(399,583)

 

(353,091)

 

Accumulated other comprehensive income (loss)

4,163

 

(2,497)

 

Retained earnings

236,560

 

236,714

 

Total stockholders' equity

416,160

 

426,150

 

Total liabilities and stockholders' equity

$

1,684,340

 

$

2,044,734

 

 

Blackbaud, Inc.
Consolidated Statements of Comprehensive Income
(Unaudited)

 

(dollars in thousands, except per share amounts)

Three months ended

March 31,

2021

2020

Revenue

   

Recurring

$

206,750

 

$

204,867

 

One-time services and other

12,441

 

18,754

 

Total revenue

219,191

 

223,621

 

Cost of revenue

   

Cost of recurring

88,865

 

89,551

 

Cost of one-time services and other

14,520

 

15,314

 

Total cost of revenue

103,385

 

104,865

 

Gross profit

115,806

 

118,756

 

Operating expenses

   

Sales, marketing and customer success

48,793

 

58,735

 

Research and development

29,179

 

24,977

 

General and administrative

30,587

 

25,855

 

Amortization

549

 

741

 

Restructuring

54

 

24

 

Total operating expenses

109,162

 

110,332

 

Income from operations

6,644

 

8,424

 

Interest expense

(5,114)

 

(4,159)

 

Other (expense) income, net

(1,010)

 

1,070

 

Income before provision for income taxes

520

 

5,335

 

Income tax provision

684

 

696

 

Net (loss) income

$

(164)

 

$

4,639

 

Earnings (loss) per share

   

Basic

$

 

$

0.10

 

Diluted

$

 

$

0.10

 

Common shares and equivalents outstanding

   

Basic weighted average shares

47,363,197

 

48,036,300

 

Diluted weighted average shares

47,363,197

 

48,455,751

 

Other comprehensive income (loss)

   

Foreign currency translation adjustment

2,511

 

(5,728)

 

Unrealized gain (loss) on derivative instruments, net of tax

4,149

 

(3,122)

 

Total other comprehensive income (loss)

6,660

 

(8,850)

 

Comprehensive income (loss)

$

6,496

 

$

(4,211)

 

 

Blackbaud, Inc.
Consolidated Statements of Cash Flows
(Unaudited)

 
 

Three months ended

March 31,

(dollars in thousands)

2021

2020

Cash flows from operating activities

   

Net (loss) income

$

(164)

 

$

4,639

 

Adjustments to reconcile net (loss) income to net cash provided by (used in)
operating activities:

   

Depreciation and amortization

20,461

 

21,804

 

Provision for credit losses and sales returns

2,141

 

2,488

 

Stock-based compensation expense

30,005

 

13,580

 

Deferred taxes

(1,142)

 

954

 

Amortization of deferred financing costs and discount

506

 

188

 

Other non-cash adjustments

(32)

 

102

 

Changes in operating assets and liabilities, net of acquisition and disposal of
businesses:

   

Accounts receivable

10,407

 

(3,876)

 

Prepaid expenses and other assets

(17,426)

 

(5,303)

 

Trade accounts payable

7,550

 

(4,021)

 

Accrued expenses and other liabilities

549

 

(31,694)

 

Deferred revenue

(22,752)

 

(23,364)

 

Net cash provided by (used in) operating activities

30,103

 

(24,503)

 

Cash flows from investing activities

   

Purchase of property and equipment

(3,470)

 

(2,867)

 

Capitalized software development costs

(9,302)

 

(10,937)

 

Net cash used in investing activities

(12,772)

 

(13,804)

 

Cash flows from financing activities

   

Proceeds from issuance of debt

80,700

 

144,700

 

Payments on debt

(59,667)

 

(86,075)

 

Employee taxes paid for withheld shares upon equity award settlement

(18,426)

 

(19,782)

 

Proceeds from exercise of stock options

 

1

 

Change in due to customers

(353,597)

 

(311,095)

 

Change in customer funds receivable

(563)

 

(733)

 

Purchase of treasury stock

(28,066)

 

 

Dividend payments to stockholders

 

(5,960)

 

Net cash used in financing activities

(379,619)

 

(278,944)

 

Effect of exchange rate on cash, cash equivalents and restricted cash

230

 

(2,822)

 

Net decrease in cash, cash equivalents and restricted cash

(362,058)

 

(320,073)

 

Cash, cash equivalents and restricted cash, beginning of period

644,969

 

577,295

 

Cash, cash equivalents and restricted cash, end of period

$

282,911

 

$

257,222

 

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)

March 31,

2021

December 31,

2020

Cash and cash equivalents

$

27,753

 

$

35,750

 

Restricted cash

255,158

 

609,219

 

Total cash, cash equivalents and restricted cash in the statement of cash flows

$

282,911

 

$

644,969

 

 

Blackbaud, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)

 

(dollars in thousands, except per share amounts)

Three months ended

March 31,

2021

2020

GAAP gross profit

$

115,806

 

$

118,756

 

GAAP gross margin

52.8

%

53.1

%

Non-GAAP adjustments:

   

Add: Stock-based compensation expense

5,358

 

865

 

Add: Amortization of intangibles from business combinations

9,128

 

10,930

 

Add: Employee severance

 

32

 

Subtotal

14,486

 

11,827

 

Non-GAAP gross profit

$

130,292

 

$

130,583

 

Non-GAAP gross margin

59.4

%

58.4

%

     

GAAP income from operations

$

6,644

 

$

8,424

 

GAAP operating margin

3.0

%

3.8

%

Non-GAAP adjustments:

   

Add: Stock-based compensation expense

30,005

 

13,580

 

Add: Amortization of intangibles from business combinations

9,677

 

11,671

 

Add: Employee severance

991

 

97

 

Add: Acquisition-related integration costs

(98)

 

(32)

 

Add: Acquisition-related expenses

65

 

139

 

Add: Restructuring and other real estate activities

(111)

 

24

 

Subtotal

40,529

 

25,479

 

Non-GAAP income from operations

$

47,173

 

$

33,903

 

Non-GAAP operating margin

21.5

%

15.2

%

     

GAAP income before provision for income taxes

$

520

 

$

5,335

 

GAAP net (loss) income

$

(164)

 

$

4,639

 
     

Shares used in computing GAAP diluted earnings per share

47,363,197

 

48,455,751

 

GAAP diluted earnings per share

$

 

$

0.10

 
     

Non-GAAP adjustments:

   

Add: GAAP income tax provision

684

 

696

 

Add: Total non-GAAP adjustments affecting income from operations

40,529

 

25,479

 

Non-GAAP income before provision for income taxes

41,049

 

30,814

 

Assumed non-GAAP income tax provision(1)

$

8,210

 

$

6,163

 

Non-GAAP net income

$

32,839

 

$

24,651

 
     

Shares used in computing non-GAAP diluted earnings per share

48,387,042

 

48,455,751

 

Non-GAAP diluted earnings per share

$

0.68

 

$

0.51

 
   

(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.
Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
(Unaudited)

 

(dollars in thousands)

Three months ended

March 31,

2021

2020

GAAP revenue

$

219,191

 

$

223,621

 

GAAP revenue growth

(2.0)

%

 

Add: Non-GAAP acquisition-related revenue(1)

 

 

Non-GAAP organic revenue(2)

$

219,191

 

$

223,621

 

Non-GAAP organic revenue growth

(2.0)

%

 
     

Non-GAAP organic revenue(2)

$

219,191

 

$

223,621

 

Foreign currency impact on non-GAAP organic revenue(3)

(1,953)

 

 

Non-GAAP organic revenue on constant currency basis(3)

$

217,238

 

$

223,621

 

Non-GAAP organic revenue growth on constant currency basis

(2.9)

%

 
     

GAAP recurring revenue

$

206,750

 

$

204,867

 

GAAP recurring revenue growth

0.9

%

 

Add: Non-GAAP acquisition-related revenue(1)

 

 

Non-GAAP organic recurring revenue

$

206,750

 

$

204,867

 

Non-GAAP organic recurring revenue growth

0.9

%

 
   

(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 Australian Dollar, British Pound, Canadian Dollar and EURO.

 

Blackbaud, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
(Unaudited)

 

(dollars in thousands)

Three months ended

March 31,

2021

2020

GAAP net income

$

(164)

 

$

4,639

 

Non-GAAP adjustments:

   

Add: Interest, net

4,962

 

3,637

 

Add: GAAP income tax provision

684

 

696

 

Add: Depreciation

3,211

 

3,541

 

Add: Amortization of intangibles from business combinations

9,677

 

11,671

 

Add: Amortization of software development costs(1)

7,963

 

6,672

 

Subtotal

26,497

 

26,217

 

Non-GAAP EBITDA

$

26,333

 

$

30,856

 

Non-GAAP EBITDA margin

12.0

%

 
     

Non-GAAP adjustments:

   

Add: Acquisition-related deferred revenue write-down

 

 

Add: Stock-based compensation expense

30,005

 

13,580

 

Add: Employee severance

991

 

97

 

Add: Acquisition-related integration costs

(98)

 

(32)

 

Add: Acquisition-related expenses

65

 

139

 

Add: Restructuring and other real estate activities

(111)

 

24

 

Subtotal

30,852

 

13,808

 

Adjusted Non-GAAP EBITDA

$

57,185

 

$

44,664

 

Adjusted Non-GAAP EBITDA margin

26.1

%

 
     

Rule of 40(2)

24.1

%

 
   

(1)

Includes amortization expense related to software development costs and amortization expense from capitalized cloud computing implementation costs.

(2)

Measured by non-GAAP organic revenue growth plus non-GAAP adjusted EBITDA margin. See Non-GAAP organic revenue growth table above.

 

(dollars in thousands)

Three months ended

March 31,

2021

2020

GAAP net cash provided by operating activities

$

30,103

 

$

(24,503)

 

Less: purchase of property and equipment

(3,470)

 

(2,867)

 

Less: capitalized software development costs

(9,302)

 

(10,937)

 

Non-GAAP free cash flow

$

17,331

 

$

(38,307)

 

 

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SOURCE Blackbaud, Inc.