Blackbaud, Inc. Announces First Quarter 2015 Results
First Quarter 2015 Highlights
- Non-GAAP organic revenue growth accelerated to 8.5%; 9.7% in constant currency
-
Total revenue growth of 15.2% to
$147.0 million - Recurring revenue increased to 75.8% of total revenue
-
Total subscriptions revenue growth of 24.4% to
$72.5 million
"Our organic growth and improved non-GAAP operating margin are additional steps toward our long term aspirational goals. We remain committed to achieving the 2015 revenue, profit and cash flow guidance that we provided earlier this year," concluded Mr. Gianoni.
First Quarter 2015 GAAP Financial Results
Total revenue, income from operations and net income were positively impacted in the first quarter from growth in subscriptions revenue and contributions from acquisitions completed in 2014. The positive impacts to income from operations and net income were offset by increased amortization of intangible assets arising from those acquisitions.
First Quarter 2015 Non-GAAP Financial Results
Non-GAAP income from operations increased 33.1% to
Non-GAAP income from operations and non-GAAP net income were positively impacted in the first quarter by growth in subscriptions revenue and contributions from acquisitions completed in 2014.
"In addition, our non-GAAP income from operations grew faster than non-GAAP revenue resulting in non-GAAP operating margin expansion. The improvement in non-GAAP margins year-over-year shows that we continue to gain operating leverage in the business through solid execution on our strategic initiatives," concluded Mr. Boor.
Balance Sheet and Cash Flow
The company ended the first quarter with
The reduction in cash flow from operations for the first quarter of 2015 when compared to the same period last year was primarily due to a combination of the change in the timing of payouts for certain bonus plans, from quarterly to annually, and an increase in amounts paid resulting from over-performance against 2014 financial targets.
Dividend
Conference Call Details
Investors and others should note that
About
Serving the nonprofit, charitable giving and education communities for more than 30 years,
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: estimates for achievement of 2015 financial guidance and long term aspirational goals; expectations for continuing to execute our five point growth and operational improvement strategy; expectations that our recurring revenue will continue to grow in line with strategy expectations and that past investments will continue to accelerate growth and operational efficiencies; and expectations that product transitions will increase revenue. These statements involve a number of risks and uncertainties. Although
Non-GAAP Financial Measures
In addition, we discuss non-GAAP organic revenue growth and non-GAAP organic revenue growth on a constant currency basis, which we believe provide useful tools for evaluating the periodic growth of our business on a consistent basis. For companies acquired in the immediately preceding fiscal year, non-GAAP organic revenue growth reflects presentation of full year or stub period incremental non-GAAP revenue derived from such companies as if they were combined throughout the prior period, and it includes the current period non-GAAP revenue attributable to those companies. We believe this presentation provides a more comparable representation of our current business' organic revenue growth and revenue run-rate. To determine non-GAAP organic revenue growth on a constant currency basis for first quarter of 2015, revenues from entities reporting in foreign currencies were translated into U.S. dollars using the comparable prior year period's quarterly weighted average foreign currency exchange rates which resulted in
Blackbaud, Inc. Consolidated balance sheets (Unaudited) |
||
(in thousands, except share amounts) |
March 31, 2015 |
December 31, 2014 |
Assets | ||
Current assets: | ||
Cash and cash equivalents | $ 13,286 | $ 14,735 |
Donor restricted cash | 58,355 | 140,709 |
Accounts receivable, net of allowance of $4,393 and $4,539 at March 31, 2015 and December 31, 2014, respectively | 74,901 | 77,523 |
Prepaid expenses and other current assets | 39,074 | 40,392 |
Deferred tax asset, current portion | 14,119 | 14,423 |
Total current assets | 199,735 | 287,782 |
Property and equipment, net | 47,444 | 50,402 |
Goodwill | 348,605 | 349,008 |
Intangible assets, net | 220,910 | 229,307 |
Other assets | 26,668 | 26,684 |
Total assets | $ 843,362 | $ 943,183 |
Liabilities and stockholders' equity | ||
Current liabilities: | ||
Trade accounts payable | $ 11,203 | $ 11,436 |
Accrued expenses and other current liabilities | 35,270 | 52,201 |
Donations payable | 58,355 | 140,709 |
Debt, current portion | 4,375 | 4,375 |
Deferred revenue, current portion | 205,876 | 212,283 |
Total current liabilities | 315,079 | 421,004 |
Debt, net of current portion | 281,413 | 276,196 |
Deferred tax liability | 42,443 | 43,639 |
Deferred revenue, net of current portion | 9,102 | 8,991 |
Other liabilities | 7,445 | 7,437 |
Total liabilities | 655,482 | 757,267 |
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, 56,641,530 and 56,048,135 shares issued at March 31, 2015 and December 31, 2014, respectively | 57 | 56 |
Additional paid-in capital | 251,340 | 245,674 |
Treasury stock, at cost; 9,775,789 and 9,740,054 shares at March 31, 2015 and December 31, 2014, respectively | (192,038) | (190,440) |
Accumulated other comprehensive loss | (1,827) | (1,032) |
Retained earnings | 130,348 | 131,658 |
Total stockholders' equity | 187,880 | 185,916 |
Total liabilities and stockholders' equity | $ 843,362 | $ 943,183 |
Blackbaud, Inc. Consolidated statements of comprehensive income (Unaudited) |
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Three months ended March 31, |
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(in thousands, except share and per share amounts) | 2015 | 2014 |
Revenue | ||
Subscriptions | $ 72,513 | $ 58,268 |
Maintenance | 38,896 | 35,652 |
Services | 31,306 | 28,130 |
License fees and other | 4,278 | 5,572 |
Total revenue | 146,993 | 127,622 |
Cost of revenue | ||
Cost of subscriptions | 36,178 | 30,124 |
Cost of maintenance | 7,502 | 5,414 |
Cost of services | 26,971 | 26,263 |
Cost of license fees and other | 1,161 | 1,529 |
Total cost of revenue | 71,812 | 63,330 |
Gross profit | 75,181 | 64,292 |
Operating expenses | ||
Sales and marketing | 28,562 | 25,116 |
Research and development | 21,276 | 16,494 |
General and administrative | 16,843 | 12,818 |
Amortization | 488 | 587 |
Total operating expenses | 67,169 | 55,015 |
Income from operations | 8,012 | 9,277 |
Interest income | 8 | 16 |
Interest expense | (1,686) | (1,459) |
Loss on debt extinguishment and termination of derivative instruments | — | (996) |
Other expense, net | (295) | (236) |
Income before provision for income taxes | 6,039 | 6,602 |
Income tax provision | 1,754 | 2,788 |
Net income | $ 4,285 | $ 3,814 |
Earnings per share | ||
Basic | $ 0.09 | $ 0.08 |
Diluted | $ 0.09 | $ 0.08 |
Common shares and equivalents outstanding | ||
Basic weighted average shares | 45,529,668 | 45,127,645 |
Diluted weighted average shares | 46,168,096 | 45,552,451 |
Dividends per share | $ 0.12 | $ 0.12 |
Other comprehensive (loss) income | ||
Foreign currency translation adjustment | (326) | 555 |
Unrealized (loss) gain on derivative instruments, net of tax | (469) | 312 |
Total other comprehensive (loss) income | (795) | 867 |
Comprehensive income | $ 3,490 | $ 4,681 |
Blackbaud, Inc. Consolidated statements of cash flows (Unaudited) |
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Three months ended March 31, |
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(in thousands) | 2015 | 2014 |
Cash flows from operating activities | ||
Net income | $ 4,285 | $ 3,814 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 13,678 | 10,674 |
Provision for doubtful accounts and sales returns | 1,358 | 1,074 |
Stock-based compensation expense | 5,102 | 3,714 |
Excess tax benefits from stock-based compensation | (584) | (603) |
Deferred taxes | (886) | 616 |
Loss on debt extinguishment and termination of derivative instruments | — | 996 |
Amortization of deferred financing costs and discount | 210 | 162 |
Other non-cash adjustments | 524 | 168 |
Changes in operating assets and liabilities, net of acquisition of businesses: | ||
Accounts receivable | 555 | 2,676 |
Prepaid expenses and other assets | 3,633 | 309 |
Trade accounts payable | (111) | 2,789 |
Accrued expenses and other liabilities | (18,768) | (4,158) |
Donor restricted cash | 82,140 | 63,680 |
Donations payable | (82,140) | (63,680) |
Deferred revenue | (4,765) | (8,967) |
Net cash provided by operating activities | 4,231 | 13,264 |
Cash flows from investing activities | ||
Purchase of property and equipment | (2,521) | (6,119) |
Purchase of net assets of acquired companies, net of cash acquired | — | (136) |
Capitalized software development costs | (3,129) | (1,152) |
Net cash used in investing activities | (5,650) | (7,407) |
Cash flows from financing activities | ||
Proceeds from issuance of debt | 41,800 | 196,000 |
Payments on debt | (36,694) | (173,908) |
Debt issuance costs | — | (2,484) |
Proceeds from exercise of stock options | 11 | 25 |
Excess tax benefits from stock-based compensation | 584 | 603 |
Dividend payments to stockholders | (5,626) | (5,537) |
Net cash provided by financing activities | 75 | 14,699 |
Effect of exchange rate on cash and cash equivalents | (105) | 105 |
Net (decrease) increase in cash and cash equivalents | (1,449) | 20,661 |
Cash and cash equivalents, beginning of period | 14,735 | 11,889 |
Cash and cash equivalents, end of period | $ 13,286 | $ 32,550 |
Blackbaud, Inc. Reconciliation of GAAP to Non-GAAP financial measures (Unaudited) |
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Three months ended March 31, |
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(in thousands, except per share amounts and percentages) | 2015 | 2014 |
GAAP Revenue | $ 146,993 | $ 127,622 |
Non-GAAP adjustments: | ||
Add: Acquisition-related deferred revenue write-down | 3,522 | — |
Non-GAAP revenue | $ 150,515 | $ 127,622 |
GAAP gross profit | $ 75,181 | $ 64,292 |
GAAP gross margin | 51.1% | 50.4% |
Non-GAAP adjustments: | ||
Add: Acquisition-related deferred revenue write-down | 3,522 | — |
Add: Stock-based compensation expense | 901 | 876 |
Add: Amortization of intangibles from business combinations | 7,639 | 5,437 |
Add: Employee severance | 596 | — |
Subtotal | 12,658 | 6,313 |
Non-GAAP gross profit | $ 87,839 | $ 70,605 |
Non-GAAP gross margin | 58.4% | 55.3% |
GAAP income from operations | $ 8,012 | $ 9,277 |
GAAP operating margin | 5.5% | 7.3% |
Non-GAAP adjustments: | ||
Add: Acquisition-related deferred revenue write-down | 3,522 | — |
Add: Stock-based compensation expense | 5,102 | 3,714 |
Add: Amortization of intangibles from business combinations | 8,127 | 6,024 |
Add: Employee severance | 1,139 | — |
Add: Acquisition-related integration costs | 484 | — |
Add: Acquisition-related expenses | 73 | — |
Add: CEO transition costs | — | 870 |
Subtotal | 18,447 | 10,608 |
Non-GAAP income from operations | $ 26,459 | $ 19,885 |
Non-GAAP operating margin | 17.6% | 15.6% |
GAAP net income | $ 4,285 | $ 3,814 |
Shares used in computing GAAP diluted earnings per share | 46,168 | 45,552 |
GAAP diluted earnings per share | $ 0.09 | $ 0.08 |
Non-GAAP adjustments: | ||
Add: Total Non-GAAP adjustments affecting income from operations | 18,447 | 10,608 |
Add: Loss on debt extinguishment and termination of derivative instruments | — | 996 |
Less: Tax impact related to Non-GAAP adjustments | (7,797) | (4,312) |
Non-GAAP net income | $ 14,935 | $ 11,106 |
Shares used in computing Non-GAAP diluted earnings per share | 46,168 | 45,552 |
Non-GAAP diluted earnings per share | $ 0.32 | $ 0.24 |
Blackbaud, Inc. Reconciliation of GAAP to Non-GAAP financial measures (continued) (Unaudited) |
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Three months ended March 31, |
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(in thousands, except percentages) | 2015 | 2014 |
GAAP net income | $ 4,285 | $ 3,814 |
Non-GAAP adjustments: | ||
Add: Interest, net | 1,678 | 1,443 |
Add: Income tax provision | 1,754 | 2,788 |
Add: Depreciation | 4,776 | 4,303 |
Add: Amortization of intangibles from business combinations | 8,127 | 6,024 |
Add: Amortization of software development costs | 775 | 347 |
Subtotal | 17,110 | 14,905 |
EBITDA | $ 21,395 | $ 18,719 |
EBITDA Margin | 14.2% | 14.7% |
Non-GAAP adjustments: | ||
Add: Other expense, net | 295 | 236 |
Add: Loss on debt extinguishment and termination of derivative instruments | — | 996 |
Add: Acquisition-related deferred revenue write-down | 3,522 | — |
Add: Stock-based compensation expense | 5,102 | 3,714 |
Add: Employee severance | 1,139 | — |
Add: Acquisition-related integration costs | 484 | — |
Add: Acquisition-related expenses | 73 | — |
Add: CEO transition costs | — | 870 |
Subtotal | 10,615 | 5,816 |
Adjusted EBITDA | $ 32,010 | $ 24,535 |
Adjusted EBITDA Margin | 21.3% | 19.2% |
Detail of certain Non-GAAP adjustments: | ||
Stock-based compensation expense: | ||
Included in cost of revenue: | ||
Cost of subscriptions | $ 143 | $ 189 |
Cost of maintenance | 161 | 145 |
Cost of services | 597 | 542 |
Total included in cost of revenue | 901 | 876 |
Included in operating expenses: | ||
Sales and marketing | 701 | 471 |
Research and development | 978 | 662 |
General and administrative | 2,522 | 1,705 |
Total included in operating expenses | 4,201 | 2,838 |
Total stock-based compensation expense | $ 5,102 | $ 3,714 |
Amortization of intangibles from business combinations: | ||
Included in cost of revenue: | ||
Cost of subscriptions | $ 5,772 | $ 4,560 |
Cost of maintenance | 1,153 | 115 |
Cost of services | 607 | 656 |
Cost of license fees and other | 107 | 106 |
Total included in cost of revenue | 7,639 | 5,437 |
Included in operating expenses | 488 | 587 |
Total amortization of intangibles from business combinations | $ 8,127 | $ 6,024 |
CONTACT: Investor Contact:Jagtar Narula Blackbaud, Inc. 843-654-2164 jagtar.narula@blackbaud.com Media Contact:Nicole McGougan Blackbaud, Inc. 843-654-3307 nicole.mcgougan@blackbaud.com