News Release Details

Blackbaud, Inc.

Consolidated Balance Sheets

(Unaudited)
 

(dollars in thousands, except per share amounts)

September 30,
2024

December 31,
2023

Assets

Current assets:

Cash and cash equivalents

$           34,633

$           31,251

Restricted cash

428,095

697,006

Accounts receivable, net of allowance of $6,307 and $6,907 at September 30, 2024 and 
December 31, 2023, respectively

97,988

101,862

Customer funds receivable

7,343

353

Prepaid expenses and other current assets

87,499

99,285

Total current assets

655,558

929,757

Property and equipment, net

95,053

98,689

Operating lease right-of-use assets

27,522

36,927

Software and content development costs, net

169,507

160,194

Goodwill

1,056,882

1,053,738

Intangible assets, net

536,008

581,937

Other assets

60,444

51,037

Total assets

$      2,600,974

$      2,912,279

Liabilities and stockholders' equity

Current liabilities:

Trade accounts payable

$           43,983

$           25,184

Accrued expenses and other current liabilities

48,745

64,322

Due to customers

434,093

695,842

Debt, current portion

23,830

19,259

Deferred revenue, current portion

411,554

392,530

Total current liabilities

962,205

1,197,137

Debt, net of current portion

977,019

760,405

Deferred tax liability

68,196

93,292

Deferred revenue, net of current portion

1,705

2,397

Operating lease liabilities, net of current portion

35,218

40,085

Other liabilities

12,304

10,258

Total liabilities

2,056,647

2,103,574

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, 70,955,940 and 
69,188,304 shares issued at September 30, 2024 and December 31, 2023, respectively; 
50,869,218 and 53,625,440 shares outstanding at September 30, 2024 and December 31, 
2023, respectively

71

69

Additional paid-in capital

1,227,198

1,203,012

Treasury stock, at cost; 20,086,722 and 15,562,864 shares at September 30, 2024 and 
December 31, 2023, respectively

(922,516)

(591,557)

Accumulated other comprehensive loss

(6,887)

(1,688)

Retained earnings

246,461

198,869

Total stockholders' equity

544,327

808,705

Total liabilities and stockholders' equity

$      2,600,974

$      2,912,279

Blackbaud, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)
 

(dollars in thousands, except per share amounts)

Three months ended
September 30,

Nine months ended
September 30,

2024

2023

2024

2023

Revenue

Recurring

$        280,018

$        269,001

$        832,912

$        784,139

One-time services and other

6,709

8,625

20,351

26,282

Total revenue

286,727

277,626

853,263

810,421

Cost of revenue

Cost of recurring

122,646

114,132

361,644

342,558

Cost of one-time services and other

4,871

7,634

16,779

23,795

Total cost of revenue

127,517

121,766

378,423

366,353

Gross profit

159,210

155,860

474,840

444,068

Operating expenses

Sales, marketing and customer success

49,454

52,462

147,400

160,038

Research and development

39,368

37,965

121,238

114,702

General and administrative

25,645

42,596

106,842

154,582

Amortization

918

793

2,724

2,355

Total operating expenses

115,385

133,816

378,204

431,677

Income from operations

43,825

22,044

96,636

12,391

Interest expense

(14,140)

(9,620)

(40,131)

(31,449)

Other income, net

2,997

5,662

9,654

10,447

Income (loss) before provision (benefit) for income taxes

32,682

18,086

66,159

(8,611)

Income tax provision (benefit)

12,140

9,069

18,567

(5,032)

Net income (loss)

$          20,542

$            9,017

$          47,592

$          (3,579)

Earnings (loss) per share

Basic

$              0.41

$              0.17

$              0.93

$             (0.07)

Diluted

$              0.40

$              0.17

$              0.91

$             (0.07)

Common shares and equivalents outstanding

Basic weighted average shares

50,409,292

52,704,974

51,067,255

52,495,556

Diluted weighted average shares

51,632,569

54,089,897

52,107,147

52,495,556

Other comprehensive loss

Foreign currency translation adjustment

$            6,463

$          (4,794)

$            5,617

$               419

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

(13,525)

4,093

(10,816)

(1,216)

Total other comprehensive loss

(7,062)

(701)

(5,199)

(797)

Comprehensive income (loss)

$          13,480

$            8,316

$          42,393

$          (4,376)

Blackbaud, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

Nine months ended
September 30,

(dollars in thousands)

2024

2023

Cash flows from operating activities

Net income (loss)

$           47,592

$            (3,579)

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

Depreciation and amortization

91,618

81,627

Provision for credit losses and sales returns

1,721

4,815

Stock-based compensation expense

76,430

95,668

Deferred taxes

(21,776)

(31,163)

Amortization of deferred financing costs and discount

1,786

1,388

Loss on disposition of business

1,561

—

Other non-cash adjustments

2,462

5,106

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

Accounts receivable

918

(4,757)

Prepaid expenses and other assets

(873)

14,488

Trade accounts payable

18,322

(3,362)

Accrued expenses and other liabilities

(16,373)

9,073

Deferred revenue

18,998

33,679

Net cash provided by operating activities

222,386

202,983

Cash flows from investing activities

Purchase of property and equipment

(7,235)

(4,243)

Capitalized software and content development costs

(42,882)

(44,664)

Purchase of net assets of acquired companies, net of cash and restricted cash acquired

—

(13)

Net cash used in disposition of business

(1,179)

—

Other investing activities

(5,029)

(250)

Net cash used in investing activities

(56,325)

(49,170)

Cash flows from financing activities

Proceeds from issuance of debt

1,303,400

175,800

Payments on debt

(1,080,192)

(293,957)

Debt issuance costs

(6,458)

—

Employee taxes paid for withheld shares upon equity award settlement

(55,950)

(35,568)

Change in due to customers

(263,732)

(339,735)

Change in customer funds receivable

(6,777)

(3,286)

Purchase of treasury stock

(325,408)

—

Net cash used in financing activities

(435,117)

(496,746)

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

3,527

(311)

Net decrease in cash, cash equivalents and restricted cash

(265,529)

(343,244)

Cash, cash equivalents and restricted cash, beginning of period

728,257

733,931

Cash, cash equivalents and restricted cash, end of period

$         462,728

$         390,687

(dollars in thousands)

September 30,
2024

December 31,
2023

Cash and cash equivalents

$           34,633

$           31,251

Restricted cash

428,095

697,006

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

$         462,728

$         728,257

Blackbaud, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited)
 

(dollars in thousands, except per share amounts)

Three months ended
September 30,

Nine months ended
September 30,

2024

2023

2024

2023

GAAP Revenue

$      286,727

$      277,626

$      853,263

$      810,421

GAAP gross profit

$      159,210

$      155,860

$      474,840

$      444,068

GAAP gross margin

55.5 %

56.1 %

55.6 %

54.8 %

Non-GAAP adjustments:

Add: Stock-based compensation expense

2,915

4,145

10,066

12,242

Add: Amortization of intangibles from business combinations

14,667

13,117

43,969

39,364

Add: Employee severance

—

—

—

797

Subtotal

17,582

17,262

54,035

52,403

Non-GAAP gross profit

$      176,792

$      173,122

$      528,875

$      496,471

Non-GAAP gross margin

61.7 %

62.4 %

62.0 %

61.3 %

GAAP income from operations

$        43,825

$        22,044

$        96,636

$        12,391

GAAP operating margin

15.3 %

7.9 %

11.3 %

1.5 %

Non-GAAP adjustments:

Add: Stock-based compensation expense

18,574

32,379

76,430

95,668

Add: Amortization of intangibles from business combinations

15,585

13,910

46,693

41,719

Add: Employee severance

—

140

—

5,094

Add: Acquisition and disposition-related costs

246

7,029

4,899

6,799

Add: Security Incident-related costs⁽¹⁾

637

4,086

12,782

48,646

Subtotal

35,042

57,544

140,804

197,926

Non-GAAP income from operations

$        78,867

$        79,588

$      237,440

$      210,317

Non-GAAP operating margin

27.5 %

28.7 %

27.8 %

26.0 %

GAAP income (loss) before provision (benefit) for income taxes

$        32,682

$        18,086

$        66,159

$        (8,611)

GAAP net income (loss)

$        20,542

$          9,017

$        47,592

$        (3,579)

Shares used in computing GAAP diluted earnings (loss) per share

51,632,569

54,089,897

52,107,147

52,495,556

GAAP diluted earnings (loss) per share

$            0.40

$            0.17

$            0.91

$          (0.07)

Non-GAAP adjustments:

Add: GAAP income tax provision (benefit)

12,140

9,069

18,567

(5,032)

Add: Total non-GAAP adjustments affecting income from operations

35,042

57,544

140,804

197,926

Non-GAAP income before provision for income taxes

67,724

75,630

206,963

189,315

Assumed non-GAAP income tax provision⁽²⁾

16,592

15,126

50,706

37,863

Non-GAAP net income

$        51,132

$        60,504

$      156,257

$      151,452

Shares used in computing non-GAAP diluted earnings per share

51,632,569

54,089,897

52,107,147

53,469,768

Non-GAAP diluted earnings per share

$            0.99

$            1.12

$            3.00

$            2.83

(1)

Includes Security Incident-related costs incurred during the three months ended September 30, 2024 which were insignificant, during the nine months ended September 30, 2024 of $12.8 million, which included approximately $6.8 million in recorded liabilities for loss contingencies, and during the three and nine months ended September 30, 2023 of $4.1 million and $48.6 million, respectively, which included approximately $0.0 million and $30.0 million, respectively, in recorded aggregate liabilities for loss contingencies. Recorded expenses consisted primarily of payments to third-party service providers and consultants, including legal fees, as well as settlements of customer claims, negotiated settlements and accruals for certain loss contingencies. Not included in this adjustment were costs associated with enhancements to our cybersecurity program. For full year 2024, we currently expect pre-tax expenses of approximately $5 million to $10 million and cash outlays of approximately $8 million to $13 million for ongoing legal fees related to the Security Incident. Not included in these ranges are our previous settlements or current accruals for loss contingencies related to the matters discussed below. In line with our policy, legal fees are expensed as incurred. As of September 30, 2024, we have recorded approximately $0.7 million in aggregate liabilities for loss contingencies based primarily on recent negotiations with certain customers  related to the Security Incident that we believe we can reasonably estimate. During the third quarter of 2024, we paid $6.8 million in connection with our settlement with the Attorney General of the State of California (as previously disclosed on June 14, 2024). It is reasonably possible that our estimated or actual losses may change in the near term for those matters and be materially in excess of the amounts accrued, but we are unable at this time to reasonably estimate the possible additional loss. There are other Security Incident-related matters, including customer claims, customer constituent class actions and governmental investigations, for which we have not recorded a liability for a loss contingency as of September 30, 2024 because we are unable at this time to reasonably estimate the possible loss or range of loss. Each of these matters could, separately or in the aggregate, result in an adverse judgment, settlement, fine, penalty or other resolution, the amount, scope and timing of which we are currently unable to predict, but could have a material adverse impact on our results of operations, cash flows or financial condition.

(2)

Beginning in 2024, we now apply a non-GAAP effective tax rate of 24.5% when calculating non-GAAP net income and non-GAAP diluted earnings per share. For the three and nine months ended September 30, 2023, the tax impact related to non-GAAP adjustments is calculated under our historical non-GAAP effective tax rate of 20.0%.

Blackbaud, Inc.

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

(Unaudited)
 

(dollars in thousands)

Three months ended
September 30,

Nine months ended
September 30,

2024

2023

2024

2023

GAAP revenue⁽¹⁾

$     286,727

$        277,626

$     853,263

$        810,421

GAAP revenue growth

3.3 %

5.3 %

Less: Non-GAAP revenue from divested businesses⁽²⁾

—

(2,692)

—

(5,189)

Non-GAAP organic revenue⁽²⁾

$     286,727

$        274,934

$     853,263

$        805,232

Non-GAAP organic revenue growth

4.3 %

6.0 %

Non-GAAP organic revenue⁽³⁾

$     286,727

$        274,934

$     853,263

$        805,232

Foreign currency impact on non-GAAP organic revenue⁽⁴⁾

(1,024)

—

(2,130)

—

Non-GAAP organic revenue on constant currency basis⁽⁴⁾

$     285,703

$        274,934

$     851,133

$        805,232

Non-GAAP organic revenue growth on constant currency basis

3.9 %

5.7 %

GAAP recurring revenue

$     280,018

$        269,001

$     832,912

$        784,139

GAAP recurring revenue growth

4.1 %

6.2 %

Less: Non-GAAP recurring revenue from divested businesses⁽²⁾

—

—

—

—

Non-GAAP organic recurring revenue⁽³⁾

$     280,018

$        269,001

$     832,912

$        784,139

Non-GAAP organic recurring revenue growth

4.1 %

6.2 %

Non-GAAP organic recurring revenue⁽²⁾

$     280,018

$        269,001

$     832,912

$        784,139

Foreign currency impact on non-GAAP organic recurring revenue⁽⁴⁾

(1,005)

—

(2,070)

—

Non-GAAP organic recurring revenue on constant currency basis⁽⁴⁾

$     279,013

$        269,001

$     830,842

$        784,139

Non-GAAP organic recurring revenue growth on constant 
currency basis

3.7 %

6.0 %

(1)

Includes EVERFI revenue of $19.4 million and $26.2 million for the three months ended September 30, 2024 and 2023, respectively, and $66.8 million and $80.4 million for the nine months ended September 30, 2024 and 2023, respectively.

(2)

Non-GAAP revenue from divested businesses excludes revenue associated with divested businesses. The exclusion of the prior period revenue is to present the results of the divested business with the results of the combined company for the same period of time in both the prior and current periods.

(3)

Non-GAAP organic revenue and non-GAAP organic recurring revenue for the prior year periods presented herein may not agree to non-GAAP organic revenue and non-GAAP organic recurring revenue presented in the respective prior period quarterly financial information solely due to the manner in which non-GAAP organic revenue growth and non-GAAP organic recurring revenue growth are calculated.

(4)

To determine non-GAAP organic revenue growth and non-GAAP organic recurring 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
September 30,

Nine months ended
September 30,

2024

2023

2024

2023

GAAP net income (loss)

$       20,542

$            9,017

$       47,592

$          (3,579)

Non-GAAP adjustments:

Add: Interest, net

11,022

6,608

32,150

24,893

Add: GAAP income tax provision (benefit)

12,140

9,069

18,567

(5,032)

Add: Depreciation

3,293

3,293

9,621

9,901

Add: Amortization of intangibles from business combinations

15,585

13,910

46,693

41,719

Add: Amortization of software and content development costs⁽¹⁾

13,186

11,573

37,915

33,113

Subtotal

55,226

44,453

144,946

104,594

Non-GAAP EBITDA

$       75,768

$          53,470

$     192,538

$        101,015

Non-GAAP EBITDA margin⁽²⁾

26.4 %

22.6 %

Non-GAAP adjustments:

Add: Stock-based compensation expense

$       18,574

$          32,379

$       76,430

$          95,668

Add: Employee severance

—

140

—

5,094

Add: Acquisition and disposition-related costs⁽³⁾

246

7,029

4,899

6,799

Add: Security Incident-related costs⁽³⁾

637

4,086

12,782

48,646

Subtotal

19,457

43,634

94,111

156,207

Non-GAAP adjusted EBITDA

$       95,225

$          97,104

$     286,649

$        257,222

Non-GAAP adjusted EBITDA margin⁽⁴⁾

33.2 %

33.6 %

Rule of 40⁽⁵⁾

37.5 %

39.6 %

Non-GAAP adjusted EBITDA

$       95,225

$          97,104

$     286,649

$        257,222

Foreign currency impact on Non-GAAP adjusted EBITDA⁽⁶⁾

(556)

(1,162)

(1,059)

709

Non-GAAP adjusted EBITDA on constant currency basis⁽⁶⁾

$       94,669

$          95,942

$     285,590

$        257,931

Non-GAAP adjusted EBITDA margin on constant currency basis

33.1 %

33.6 %

Rule of 40 on constant currency basis⁽⁷⁾

37.0 %

39.3 %

(1)

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

(2)

Measured by GAAP revenue divided by non-GAAP EBITDA.

(3)

See additional details in the reconciliation of GAAP to Non-GAAP operating income above.

(4)

Measured by non-GAAP organic revenue divided by non-GAAP adjusted EBITDA.

(5)

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

(6)

To determine non-GAAP adjusted EBITDA on a constant currency basis, non-GAAP adjusted EBITDA 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.

(7)

Measured by non-GAAP organic revenue growth on constant currency basis plus non-GAAP adjusted EBITDA margin on constant currency basis.

(dollars in thousands)

Nine months ended
September 30,

2024

2023

GAAP net cash provided by operating activities

$      222,386

$      202,983

GAAP operating cash flow margin

26.1 %

25.0 %

Non-GAAP adjustments:

Less: purchase of property and equipment

(7,235)

(4,243)

Less: capitalized software and content development costs

(42,882)

(44,664)

Non-GAAP free cash flow

$      172,269

$      154,076

Non-GAAP free cash flow margin

20.2 %

19.0 %

Non-GAAP adjustments:

Add: Security Incident-related cash flows

15,081

23,100

Non-GAAP adjusted free cash flow

$      187,350

$      177,176

Non-GAAP adjusted free cash flow margin

22.0 %

21.9 %