UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 8, 2017
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Blackbaud, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
000-50600 | 11-2617163 | |
(Commission File Number) | (IRS Employer ID Number) | |
2000 Daniel Island Drive, Charleston, South Carolina | 29492 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (843) 216-6200
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On February 8, 2017, Blackbaud, Inc. issued a press release reporting unaudited financial results for the quarter and fiscal year ended December 31, 2016. A copy of this press release is attached hereto as Exhibit 99.1.
The information in this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. | Description | |
99.1 | Press release dated February 8, 2017 reporting unaudited financial results for the quarter and fiscal year ended December 31, 2016. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
BLACKBAUD, INC. | |||||
Date: | February 8, 2017 | /s/ Anthony W. Boor | |||
Anthony W. Boor | |||||
Executive Vice President and Chief Financial Officer | |||||
(Principal Financial and Accounting Officer) | |||||
Exhibit 99.1 | ||
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PRESS RELEASE | ||
Blackbaud Announces 2016 Fourth Quarter and Full Year Results
Fourth Quarter Revenue Growth of 12.8%; Non-GAAP Organic Revenue Growth of 11.3%;
Achieves 2016 Full Year Financial Guidance; Announces 2017 Full Year Financial Guidance
Charleston, S.C. (February 8, 2017) - Blackbaud (NASDAQ: BLKB), the world's leading cloud software company powering social good, today announced financial results for its fourth quarter and fiscal year ended December 31, 2016.
"This was a banner year for Blackbaud in which we furthered our strategic growth objectives and strengthened the financial profile of the business," said Mike Gianoni, Blackbaud's president and CEO. "Our recurring revenue reached 80 percent of total revenue in the fourth quarter, which is a major milestone for us, and the highest in our company's history. We made tremendous progress delivering new, innovative, cloud-based technology to the market that drove an increase in our mix of subscription-based recurring revenue, which adds additional stability and predictability to our already strong business."
Fourth Quarter 2016 Results Compared to Fourth Quarter 2015 Results:
• | Total GAAP revenue was $198.3 million, up 12.8%, with $158.6 million in GAAP recurring revenue, representing 80.0% of total revenue. |
• | Total non-GAAP revenue was $198.3 million, up 11.3%, with $158.6 million in non-GAAP recurring revenue, representing 80.0% of total non-GAAP revenue. |
• | Non-GAAP organic revenue increased 11.3% and non-GAAP organic recurring revenue increased 14.4%. |
• | GAAP income from operations increased 133.9% to $24.0 million, with GAAP operating margin increasing 630 basis points to 12.1%. |
• | Non-GAAP income from operations increased 35.9% to $43.8 million, with non-GAAP operating margin increasing 400 basis points to 22.1%. |
• | GAAP net income increased 169.6% to $17.3 million, with GAAP diluted earnings per share up $0.22 to $0.36. |
• | Non-GAAP net income increased 57.1% to $28.0 million, with non-GAAP diluted earnings per share up $0.21 to $0.59. |
• | Cash flow from operations was $53.5 million, up from $39.7 million. |
"We're doing something quite unique here at Blackbaud, in that we've accelerated revenue growth and improved profitability while transitioning our solution portfolio from on-premises to the cloud," Gianoni added.
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 our 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.
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PRESS RELEASE | ||
Fourth Quarter 2016 Company Highlights:
• | Announced the general availability of SKY API™ for Raiser's Edge NXT™ and Financial Edge NXT™ customers and partners, enabling them to customize, integrate or extend the functionality of their current solutions. |
• | Provided sector leadership by releasing key reporting, trend data and commentary throughout #GivingTuesday 2016, including that online giving increased by 20%. |
• | Added Apple Pay® to Blackbaud Merchant Services™ so customers can offer donors an easy, secure and private option for digital checkout - making several Blackbaud customers among the first wave of nonprofits to leverage Apple Pay for philanthropic giving. |
• | Reported dramatic momentum in product innovation and customer response as the company continues to bring new capabilities to market through Altru®, its cultural management solution. |
• | Saw strong momentum in end-of-year giving, as defined as the last three days of the year, including customers using Luminate Online — Blackbaud’s digital marketing solution — who experienced a 17% year-over-year growth in online fundraising. |
Visit www.blackbaud.com/press-room for more information about Blackbaud’s recent highlights.
Full Year 2016 Results Compared to Full Year 2015 Results:
• | Total GAAP revenue was $730.8 million, up 14.6%, with $575.9 million in GAAP recurring revenue, representing 78.8% of total revenue. |
• | Total non-GAAP revenue was $734.5 million, up 13.5%, with $579.6 million in non-GAAP recurring revenue, representing 78.9% of total non-GAAP revenue. |
• | Non-GAAP organic revenue increased 9.2% and non-GAAP organic recurring revenue increased 11.5%. |
• | GAAP income from operations increased 32.3% to $61.8 million, with GAAP operating margin increasing 120 basis points to 8.5%. |
• | Non-GAAP income from operations increased 18.2% to $144.2 million, with non-GAAP operating margin increasing 80 basis points to 19.6%. |
• | GAAP net income increased 61.9% to $41.5 million, with GAAP diluted earnings per share up $0.33 to $0.88. |
• | Non-GAAP net income increased 30.2% to $90.7 million, with non-GAAP diluted earnings per share up $0.42 to $1.92. |
• | Cash flow from operations was $153.6 million, up from $129.2 million. |
"I'm pleased to report that we achieved our 2016 full year financial guidance across all fronts," said Tony Boor, Blackbaud's executive vice president and CFO. "Our strong performance in 2016 resulted in accelerated organic revenue growth, improved profitability, and increased cash flow when compared to 2015. It's worth highlighting that we were able to make additional incremental investments back into the company for future growth, while still meeting aggressive guidance targets. We have a very positive outlook heading into 2017, with full year financial guidance implying strong growth, and achievement of our long-term aspirational goals that we introduced in 2014. These financial goals, which were aimed at improving revenue growth, profitability, and cash generation, were truly aspirational for Blackbaud at the time. Consistent and successful execution against our strategic objectives has positioned us well to meet these aspirational goals in 2017."
Dividend
Blackbaud announced today that its Board of Directors has declared a first quarter 2017 dividend of $0.12 per share payable on March 15, 2017 to stockholders of record on February 28, 2017.
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Financial Outlook
Blackbaud today announced its 2017 full year financial guidance.
• | Non-GAAP revenue of $775 million to $795 million |
• | Non-GAAP income from operations of $155 million to $163 million |
• | Non-GAAP operating margin of 20.0% to 20.5% |
• | Non-GAAP diluted earnings per share of $2.06 to $2.18 |
• | Free cash flow of $120 million to $130 million |
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 has not reconciled forward-looking full year non-GAAP financial measures contained in this news release to their most directly comparable GAAP measures, as permitted by Item 10(e)(1)(i)(B) of Regulation S-K. Such reconciliations would require unreasonable efforts at this time to estimate and quantify with a reasonable degree of certainty various necessary GAAP components, including for example those related to compensation, acquisition transactions and integration, tax items or others that may arise during the year. These components and other factors could materially impact the amount of the future directly comparable GAAP measures, which may differ significantly from their non-GAAP counterparts.
Long Term Aspirational Goals
Blackbaud today announced that it expects to achieve its long-term aspirational goals introduced in 2014 based on 2017 financial outlook.
• | Non-GAAP organic revenue growth of 6% to 10% annually, adjusted for constant currency |
• | Non-GAAP operating margin of 20.5% to 23.5% exiting 2017, adjusted for 2014 constant currency |
• | Aggregate cash flow from operations of $500 million to $550 million from 2014 to 2017 |
Adoption of New Share-based Compensation Expense Accounting Standard
As previously disclosed, during the three months ended September 30, 2016 we early adopted ASU 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting, which addresses, among other items, the accounting for income taxes and forfeitures, and cash flow presentation of share-based compensation. Under ASU 2016-09, excess tax benefits generated upon the settlement or exercise of stock awards are no longer recognized as additional paid-in capital but are instead recognized as a reduction to income tax expense. This change in accounting for income taxes was effective for us on a prospective basis as of the beginning of the 2016 fiscal year. Cash flows related to excess tax benefits are required to be presented as an operating activity rather than a financing activity. In addition, all cash tax payments made on an employee’s behalf for shares withheld upon vesting or settlement are required to be presented as a financing activity. We adopted all amendments related to cash flow presentation on a retrospective basis, which resulted in a $14.9 million increase in net cash provided by operating activities and a $14.9 million decrease in net cash provided by financing activities for the year ended December 31, 2015. We will provide more detailed information regarding the impact of the early adoption of ASU 2016-09 in our annual report on Form 10-K for the year ended December 31, 2016.
Conference Call Details
What: Blackbaud's Fiscal 2016 Fourth Quarter Conference Call
When: February 9, 2017
Time: 8:00 a.m. (Eastern Time)
Live Call: 1-800-310-6649 (domestic) or 1-719-325-2137 (international); passcode 421503.
Webcast: Blackbaud's Investor Relations Webpage
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About Blackbaud
Blackbaud (NASDAQ: BLKB) is the world’s leading cloud software company powering social good. Serving the entire social good community—nonprofits, foundations, corporations, education institutions, and individual change agents—Blackbaud connects and empowers organizations to increase their impact through software, services, expertise, and data intelligence. The Blackbaud portfolio is tailored to the unique needs of vertical markets, with solutions for fundraising and relationship management, digital marketing, advocacy, accounting, payments, analytics, school management, grant management, corporate social responsibility, and volunteerism. Serving the industry for more than three decades, Blackbaud is headquartered in Charleston, South Carolina and has operations in the United States, Australia, Canada, Ireland, and the United Kingdom. For more information, visit www.blackbaud.com.
Investor Contact: | Media Contact: | ||
Mark Furlong | Nicole McGougan | ||
Director of Investor Relations | Blackbaud Public Relations | ||
843-654-2097 | 843-654-3307 | ||
mark.furlong@blackbaud.com | nicole.mcgougan@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: expectations that our revenue and operating cash flow will continue to grow and that our operating margins will continue to improve, and expectations that we will achieve our projected 2017 full year financial guidance and long-term aspirational goals. 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; risks related to our dividend policy and stock repurchase program, including the possibility that we might discontinue payment of dividends; 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
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PRESS RELEASE | ||
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 discusses non-GAAP organic revenue growth, non-GAAP organic revenue growth on a constant currency basis and non-GAAP organic recurring revenue growth, which it believes provides useful information for evaluating the periodic growth of its business on a consistent basis. Each of these measures of non-GAAP organic revenue growth 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 non-GAAP organic revenue growth 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 non-GAAP organic revenue growth 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.
As previously disclosed, beginning in 2016, Blackbaud now applies a non-GAAP effective tax rate of 32.0% in its determination of non-GAAP net income, which represents the GAAP effective tax rate, excluding the discrete tax effect of stock-based compensation. The non-GAAP effective tax rate utilized will be reviewed annually to determine whether it remains appropriate in consideration of Blackbaud's financial results including its periodic effective tax rate calculated in accordance with GAAP, its operating environment and related tax legislation in effect and other factors deemed necessary. All 2015 measures of the tax impact related to non-GAAP adjustments, non-GAAP net income and non-GAAP diluted earnings per share included in this news release are calculated under Blackbaud's historical non-GAAP effective tax rate of 39.0%.
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 the 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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Blackbaud, Inc.
Consolidated balance sheets
(Unaudited)
(dollars in thousands) | December 31, 2016 | December 31, 2015 | ||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 16,902 | $ | 15,362 | ||
Restricted cash due to customers | 353,771 | 255,038 | ||||
Accounts receivable, net of allowance of $3,291 and $4,943 at December 31, 2016 and December 31, 2015, respectively | 88,932 | 80,046 | ||||
Prepaid expenses and other current assets | 48,314 | 48,666 | ||||
Total current assets | 507,919 | 399,112 | ||||
Property and equipment, net | 50,269 | 52,651 | ||||
Software development costs, net | 37,582 | 19,551 | ||||
Goodwill | 438,240 | 436,449 | ||||
Intangible assets, net | 253,676 | 294,672 | ||||
Other assets | 22,524 | 20,901 | ||||
Total assets | $ | 1,310,210 | $ | 1,223,336 | ||
Liabilities and stockholders’ equity | ||||||
Current liabilities: | ||||||
Trade accounts payable | $ | 23,274 | $ | 19,208 | ||
Accrued expenses and other current liabilities | 54,196 | 57,461 | ||||
Due to customers | 353,771 | 255,038 | ||||
Debt, current portion | 4,375 | 4,375 | ||||
Deferred revenue, current portion | 244,500 | 230,216 | ||||
Total current liabilities | 680,116 | 566,298 | ||||
Debt, net of current portion | 338,018 | 403,712 | ||||
Deferred tax liability | 29,558 | 27,996 | ||||
Deferred revenue, net of current portion | 6,440 | 7,119 | ||||
Other liabilities | 8,533 | 7,623 | ||||
Total liabilities | 1,062,665 | 1,012,748 | ||||
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, 57,672,401 and 56,873,817 shares issued at December 31, 2016 and December 31, 2015, respectively | 58 | 57 | ||||
Additional paid-in capital | 310,452 | 276,340 | ||||
Treasury stock, at cost; 10,166,801 and 9,903,071 shares at December 31, 2016 and December 31, 2015, respectively | (215,237 | ) | (199,861 | ) | ||
Accumulated other comprehensive loss | (457 | ) | (825 | ) | ||
Retained earnings | 152,729 | 134,877 | ||||
Total stockholders’ equity | 247,545 | 210,588 | ||||
Total liabilities and stockholders’ equity | $ | 1,310,210 | $ | 1,223,336 | ||
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Blackbaud, Inc.
Consolidated statements of comprehensive income
(Unaudited)
(dollars in thousands, except per share amounts) | Three months ended December 31, | Years ended December 31, | |||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||
Revenue | |||||||||||||
Subscriptions | $ | 122,657 | $ | 98,336 | $ | 428,987 | $ | 331,759 | |||||
Maintenance | 35,927 | 38,069 | 146,946 | 153,801 | |||||||||
Services | 35,247 | 32,100 | 139,690 | 132,978 | |||||||||
License fees and other | 4,474 | 7,372 | 15,192 | 19,402 | |||||||||
Total revenue | 198,305 | 175,877 | 730,815 | 637,940 | |||||||||
Cost of revenue | |||||||||||||
Cost of subscriptions | 60,111 | 52,278 | 213,883 | 167,341 | |||||||||
Cost of maintenance | 5,547 | 5,887 | 22,094 | 27,066 | |||||||||
Cost of services | 23,352 | 23,694 | 96,488 | 102,815 | |||||||||
Cost of license fees and other | 3,392 | 3,357 | 6,755 | 7,409 | |||||||||
Total cost of revenue | 92,402 | 85,216 | 339,220 | 304,631 | |||||||||
Gross profit | 105,903 | 90,661 | 391,595 | 333,309 | |||||||||
Operating expenses | |||||||||||||
Sales, marketing and customer success | 40,047 | 34,222 | 155,754 | 123,646 | |||||||||
Research and development | 21,897 | 22,633 | 89,870 | 84,636 | |||||||||
General and administrative | 19,242 | 22,840 | 81,331 | 76,084 | |||||||||
Amortization | 693 | 695 | 2,840 | 2,231 | |||||||||
Total operating expenses | 81,879 | 80,390 | 329,795 | 286,597 | |||||||||
Income from operations | 24,024 | 10,271 | 61,800 | 46,712 | |||||||||
Interest expense | (2,546 | ) | (2,698 | ) | (10,583 | ) | (8,073 | ) | |||||
Other expense, net | (106 | ) | (318 | ) | (291 | ) | (1,687 | ) | |||||
Income before provision for income taxes | 21,372 | 7,255 | 50,926 | 36,952 | |||||||||
Income tax provision | 4,088 | 844 | 9,411 | 11,303 | |||||||||
Net income | $ | 17,284 | $ | 6,411 | $ | 41,515 | $ | 25,649 | |||||
Earnings per share | |||||||||||||
Basic | $ | 0.37 | $ | 0.14 | $ | 0.90 | $ | 0.56 | |||||
Diluted | $ | 0.36 | $ | 0.14 | $ | 0.88 | $ | 0.55 | |||||
Common shares and equivalents outstanding | |||||||||||||
Basic weighted average shares | 46,272,031 | 45,766,891 | 46,132,389 | 45,623,854 | |||||||||
Diluted weighted average shares | 47,436,116 | 46,714,204 | 47,316,538 | 46,498,704 | |||||||||
Dividends per share | $ | 0.12 | $ | 0.12 | $ | 0.48 | $ | 0.48 | |||||
Other comprehensive income | |||||||||||||
Foreign currency translation adjustment | 63 | 416 | 324 | 62 | |||||||||
Unrealized gain on derivative instruments, net of tax | 422 | 779 | 44 | 145 | |||||||||
Total other comprehensive income | 485 | 1,195 | 368 | 207 | |||||||||
Comprehensive income | $ | 17,769 | $ | 7,606 | $ | 41,883 | $ | 25,856 | |||||
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Blackbaud, Inc.
Consolidated statements of cash flows
(Unaudited)
Years ended December 31, | ||||||
(dollars in thousands) | 2016 | 2015 | ||||
Cash flows from operating activities | ||||||
Net income | $ | 41,515 | $ | 25,649 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 70,491 | 55,997 | ||||
Provision for doubtful accounts and sales returns | 3,730 | 6,825 | ||||
Stock-based compensation expense | 32,638 | 25,246 | ||||
Deferred taxes | 3,033 | 3,165 | ||||
Loss on sale of business | — | 1,976 | ||||
Impairment of capitalized software development costs | — | 239 | ||||
Amortization of deferred financing costs and discount | 958 | 899 | ||||
Other non-cash adjustments | (864 | ) | (197 | ) | ||
Changes in operating assets and liabilities, net of acquisition and disposal of businesses: | ||||||
Accounts receivable | (13,196 | ) | (7,593 | ) | ||
Prepaid expenses and other assets | (2,478 | ) | (10,979 | ) | ||
Trade accounts payable | 3,689 | 6,133 | ||||
Accrued expenses and other liabilities | (751 | ) | 9,255 | |||
Restricted cash due to customers | (96,000 | ) | (34,279 | ) | ||
Due to customers | 96,000 | 34,279 | ||||
Deferred revenue | 14,863 | 12,612 | ||||
Net cash provided by operating activities | 153,628 | 129,227 | ||||
Cash flows from investing activities | ||||||
Purchase of property and equipment | (17,694 | ) | (18,633 | ) | ||
Capitalized software development costs | (26,359 | ) | (15,481 | ) | ||
Purchase of net assets of acquired companies, net of cash | (3,377 | ) | (188,072 | ) | ||
Net cash used in sale of business | — | (521 | ) | |||
Net cash used in investing activities | (47,430 | ) | (222,707 | ) | ||
Cash flows from financing activities | ||||||
Proceeds from issuance of debt | 227,200 | 312,300 | ||||
Payments on debt | (293,575 | ) | (184,475 | ) | ||
Debt issuance costs | — | (429 | ) | |||
Employee taxes paid for withheld shares upon equity award settlement | (15,376 | ) | (9,421 | ) | ||
Proceeds from exercise of stock options | 16 | 32 | ||||
Dividend payments to stockholders | (22,811 | ) | (22,508 | ) | ||
Net cash (used in) provided by financing activities | (104,546 | ) | 95,499 | |||
Effect of exchange rate on cash and cash equivalents | (112 | ) | (1,392 | ) | ||
Net increase in cash and cash equivalents | 1,540 | 627 | ||||
Cash and cash equivalents, beginning of year | 15,362 | 14,735 | ||||
Cash and cash equivalents, end of year | $ | 16,902 | $ | 15,362 | ||
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Blackbaud, Inc.
Reconciliation of GAAP to non-GAAP financial measures
(Unaudited)
(dollars in thousands, except per share amounts) | Three months ended December 31, | Years ended December 31, | |||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||
GAAP Revenue | $ | 198,305 | $ | 175,877 | $ | 730,815 | $ | 637,940 | |||||
Non-GAAP adjustments: | |||||||||||||
Add: Acquisition-related deferred revenue write-down | — | 2,239 | 3,639 | 9,371 | |||||||||
Non-GAAP revenue | $ | 198,305 | $ | 178,116 | $ | 734,454 | $ | 647,311 | |||||
GAAP gross profit | $ | 105,903 | $ | 90,661 | $ | 391,595 | $ | 333,309 | |||||
GAAP gross margin | 53.4 | % | 51.5 | % | 53.6 | % | 52.2 | % | |||||
Non-GAAP adjustments: | |||||||||||||
Add: Acquisition-related deferred revenue write-down | — | 2,239 | 3,639 | 9,371 | |||||||||
Add: Stock-based compensation expense | 694 | 775 | 3,297 | 3,494 | |||||||||
Add: Amortization of intangibles from business combinations | 9,888 | 7,236 | 39,558 | 29,987 | |||||||||
Add: Employee severance | 222 | 26 | 382 | 1,492 | |||||||||
Subtotal | 10,804 | 10,276 | 46,876 | 44,344 | |||||||||
Non-GAAP gross profit | $ | 116,707 | $ | 100,937 | $ | 438,471 | $ | 377,653 | |||||
Non-GAAP gross margin | 58.9 | % | 56.7 | % | 59.7 | % | 58.3 | % | |||||
GAAP income from operations | $ | 24,024 | $ | 10,271 | $ | 61,800 | $ | 46,712 | |||||
GAAP operating margin | 12.1 | % | 5.8 | % | 8.5 | % | 7.3 | % | |||||
Non-GAAP adjustments: | |||||||||||||
Add: Acquisition-related deferred revenue write-down | — | 2,239 | 3,639 | 9,371 | |||||||||
Add: Stock-based compensation expense | 7,633 | 7,347 | 32,638 | 25,246 | |||||||||
Add: Amortization of intangibles from business combinations | 10,581 | 7,931 | 42,398 | 32,218 | |||||||||
Add: Employee severance | 1,522 | 961 | 1,995 | 3,174 | |||||||||
Add: Impairment of capitalized software development costs | — | 239 | — | 239 | |||||||||
Add: Acquisition-related integration costs | — | 367 | 1,419 | 1,091 | |||||||||
Add: Acquisition-related expenses | 36 | 2,859 | 301 | 3,904 | |||||||||
Subtotal | 19,772 | 21,943 | 82,390 | 75,243 | |||||||||
Non-GAAP income from operations | $ | 43,796 | $ | 32,214 | $ | 144,190 | $ | 121,955 | |||||
Non-GAAP operating margin | 22.1 | % | 18.1 | % | 19.6 | % | 18.8 | % | |||||
GAAP net income | $ | 17,284 | $ | 6,411 | $ | 41,515 | $ | 25,649 | |||||
Shares used in computing GAAP diluted earnings per share | 47,436,116 | 46,714,204 | 47,316,538 | 46,498,704 | |||||||||
GAAP diluted earnings per share | $ | 0.36 | $ | 0.14 | $ | 0.88 | $ | 0.55 | |||||
Non-GAAP adjustments: | |||||||||||||
Add: Total Non-GAAP adjustments affecting income from operations | 19,772 | 21,943 | 82,390 | 75,243 | |||||||||
Add: Loss on sale of business | — | — | — | 1,976 | |||||||||
Less: Tax impact related to Non-GAAP adjustments | (9,078 | ) | (10,544 | ) | (33,250 | ) | (33,223 | ) | |||||
Non-GAAP net income | $ | 27,978 | $ | 17,810 | $ | 90,655 | $ | 69,645 | |||||
Shares used in computing Non-GAAP diluted earnings per share | 47,436,116 | 46,714,204 | 47,316,538 | 46,498,704 | |||||||||
Non-GAAP diluted earnings per share | $ | 0.59 | $ | 0.38 | $ | 1.92 | $ | 1.50 | |||||
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Blackbaud, Inc.
Reconciliation of GAAP to Non-GAAP financial measures (continued)
(Unaudited)
(dollars in thousands) | Three months ended December 31, | Years ended December 31, | |||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||
Detail of certain Non-GAAP adjustments: | |||||||||||||
Stock-based compensation expense: | |||||||||||||
Included in cost of revenue: | |||||||||||||
Cost of subscriptions | $ | 264 | $ | 449 | $ | 1,168 | $ | 1,130 | |||||
Cost of maintenance | 117 | 67 | 508 | 420 | |||||||||
Cost of services | 313 | 259 | 1,621 | 1,944 | |||||||||
Total included in cost of revenue | 694 | 775 | 3,297 | 3,494 | |||||||||
Included in operating expenses: | |||||||||||||
Sales, marketing and customer success | 872 | 706 | 3,844 | 2,979 | |||||||||
Research and development | 1,593 | 1,556 | 6,467 | 4,865 | |||||||||
General and administrative | 4,474 | 4,310 | 19,030 | 13,908 | |||||||||
Total included in operating expenses | 6,939 | 6,572 | 29,341 | 21,752 | |||||||||
Total stock-based compensation expense | $ | 7,633 | $ | 7,347 | $ | 32,638 | $ | 25,246 | |||||
Amortization of intangibles from business combinations: | |||||||||||||
Included in cost of revenue: | |||||||||||||
Cost of subscriptions | $ | 7,816 | $ | 5,775 | $ | 31,270 | $ | 23,075 | |||||
Cost of maintenance | 1,331 | 1,003 | 5,327 | 4,162 | |||||||||
Cost of services | 656 | 375 | 2,621 | 2,382 | |||||||||
Cost of license fees and other | 85 | 83 | 340 | 368 | |||||||||
Total included in cost of revenue | 9,888 | 7,236 | 39,558 | 29,987 | |||||||||
Included in operating expenses | 693 | 695 | 2,840 | 2,231 | |||||||||
Total amortization of intangibles from business combinations | $ | 10,581 | $ | 7,931 | $ | 42,398 | $ | 32,218 | |||||
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Blackbaud, Inc.
Reconciliation of GAAP to Non-GAAP financial measures (continued)
(Unaudited)
(dollars in thousands) | Three months ended December 31, | Years ended December 31, | |||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||
GAAP revenue | $ | 198,305 | $ | 175,877 | $ | 730,815 | $ | 637,940 | |||||
GAAP revenue growth | 12.8 | % | 14.6 | % | |||||||||
Add: Non-GAAP acquisition-related revenue (1) | — | 2,239 | 3,639 | 35,480 | |||||||||
Less: Revenue from divested businesses (2) | — | — | — | (586 | ) | ||||||||
Total Non-GAAP adjustments | — | 2,239 | 3,639 | 34,894 | |||||||||
Non-GAAP revenue (3) | $ | 198,305 | $ | 178,116 | $ | 734,454 | $ | 672,834 | |||||
Non-GAAP organic revenue growth | 11.3 | % | 9.2 | % | |||||||||
Non-GAAP revenue (3) | $ | 198,305 | $ | 178,116 | $ | 734,454 | $ | 672,834 | |||||
Foreign currency impact on Non-GAAP revenue (4) | 793 | — | 4,170 | — | |||||||||
Non-GAAP revenue on constant currency basis (4) | $ | 199,098 | $ | 178,116 | $ | 738,624 | $ | 672,834 | |||||
Non-GAAP organic revenue growth on constant currency basis | 11.8 | % | 9.8 | % | |||||||||
GAAP subscriptions revenue | $ | 122,657 | $ | 98,336 | $ | 428,987 | $ | 331,759 | |||||
GAAP maintenance revenue | $ | 35,927 | $ | 38,069 | 146,946 | 153,801 | |||||||
GAAP recurring revenue | $ | 158,584 | $ | 136,405 | $ | 575,933 | $ | 485,560 | |||||
GAAP recurring revenue growth | 16.3 | % | 18.6 | % | |||||||||
Add: Non-GAAP acquisition-related revenue (1) | — | 2,194 | 3,625 | 34,477 | |||||||||
Less: Revenue from divested businesses (2) | — | — | — | (378 | ) | ||||||||
Total Non-GAAP adjustments | — | 2,194 | 3,625 | 34,099 | |||||||||
Non-GAAP recurring revenue | $ | 158,584 | $ | 138,599 | $ | 579,558 | $ | 519,659 | |||||
Non-GAAP organic recurring revenue growth | 14.4 | % | 11.5 | % | |||||||||
(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) | For businesses divested in the prior fiscal year, non-GAAP organic revenue growth excludes the prior period revenue associated with divested businesses. The exclusion of the prior period revenue is to present the results of the divested business within the results of the combined company for the same period of time in both the prior and current periods. |
(3) | Non-GAAP revenue for the prior year periods presented herein will not agree to non-GAAP revenue presented in the respective prior period quarterly financial information solely due to the manner in which non-GAAP organic revenue growth is calculated. |
(4) | 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 Canadian Dollar, EURO, British Pound and Australian Dollar. |
Additional details of Blackbaud's methodology for calculating non-GAAP organic revenue growth and non-GAAP organic revenue growth on a constant currency basis can be found on Blackbaud's investor relations page.
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