View Filing Data

Cost of services and other

183,621

169,256

Cost of revenue

Cost of subscriptions

54,926

49,666

Cost of maintenance

5,982

5,318

24,574

24,905

Total cost of revenue

85,482

79,889

Gross profit

98,139

89,367

Operating expenses

Sales, marketing and customer success

42,240

35,609

Research and development

22,706

22,715

General and administrative

21,923

19,679

Amortization

691

752

Total operating expenses

87,560

78,755

Income from operations

10,579

10,612

Interest expense

(2,377)

(2,675)

Other income (expense), net

286

(105)

Income before provision for income taxes

8,488

7,832

Income tax (benefit) provision

(3,023)

1,595

^[1]

Net income

$ 11,511

$ 6,237

Earnings per share

Basic earnings per share

$ 0.25

$ 0.14

Diluted earnings per share

$ 0.24

$ 0.13

Common shares and equivalents outstanding

Basic weighted average shares

46,501,761

45,967,863

Diluted weighted average shares outstanding

47,482,840

47,064,164

Dividends per share (in dollars per share)

$ 0.12

Other comprehensive income (loss)

Foreign currency translation adjustment

$ 100

$ 403

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

182

(669)

Total other comprehensive income (loss)

282

(266)

Comprehensive income

$ 11,793

$ 5,971

[1]

As discussed in Note 2 to these consolidated financial statements, we early adopted ASU 2016-09 relating to stock-based compensation during the three months ended September 30, 2016. Under ASU 2016-09, tax benefits in excess of compensation costs (windfalls) generated upon the exercise or settlement 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.

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows from operating activities
Net income	$ 11,511	$ 6,237
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	18,091	17,609
Provision for doubtful accounts and sales returns	2,738	1,017
Stock-based compensation expense	9,294	7,743
Deferred taxes	(50)	626
Amortization of deferred financing costs and discount	239	239
Other non-cash adjustments	(243)	(217)
Changes in operating assets and liabilities, net of acquisition and disposal of businesses:
Accounts receivable	(4,041)	817
Prepaid expenses and other assets	(1,214)	1,846
Trade accounts payable	(1,267)	139
Accrued expenses and other liabilities	(15,536)	(20,416)
Restricted cash due to customers	188,824	141,055
Due to customers	(188,824)	(141,055)
Deferred revenue	(6,758)	(8,883)
Net cash provided by operating activities	12,764	6,757
Cash flows from investing activities
Purchase of property and equipment	(2,719)	(7,837)
Capitalized software development costs	(6,583)	(5,798)
Purchase of net assets of acquired companies, net of cash	59	0
Net cash used in investing activities	(9,243)	(13,635)
Cash flows from financing activities
Proceeds from issuance of debt	67,600	74,600
Payments on debt	(53,794)	(60,494)
Employee taxes paid for withheld shares upon equity award settlement	(14,828)	(5,516)
Proceeds from exercise of stock options	11	3
Dividend payments to stockholders	(5,765)	(5,700)
Net cash (used in) provided by financing activities	(6,776)	2,893
Effect of exchange rate on cash and cash equivalents	225	707
Net decrease in cash and cash equivalents	(3,030)	(3,278)
Cash and cash equivalents, beginning of period	16,902	15,362
Cash and cash equivalents, end of period	$ 13,872	$ 12,084

Consolidated Statements of Stockholders' Equity - 3 months ended Mar. 31, 2017 - USD ($) $ in Thousands	Total	Common stock [Member]	Additional paid-in capital [Member]	Treasury stock [Member]	Accumulated other comprehensive loss [Member]	Retained earnings [Member]
Balance (in shares) at Dec. 31, 2016		57,672,401
Balance at Dec. 31, 2016	$ 247,545	$ 58	$ 310,452	$ (215,237)	$ (457)	$ 152,729
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	11,511					11,511
Payment of dividends	(5,765)					(5,765)
Exercise of stock options and stock appreciation rights and vesting of restricted stock units (in shares)		273,415
Exercise of stock options and stock appreciation rights and vesting of restricted stock units	11		11
Employee taxes paid for 208,456 withheld shares upon equity award settlement	(14,828)			(14,828)
Stock-based compensation	9,294		9,268			26
Restricted stock grants (in shares)		499,734
Restricted stock grants	0	$ 0
Restricted stock cancellations (in shares)		(35,131)
Other comprehensive income	282				282
Balance (in shares) at Mar. 31, 2017		58,410,419
Balance at Mar. 31, 2017	$ 248,050	$ 58	$ 319,731	$ (230,065)	$ (175)	$ 158,501

Consolidated Statements of Stockholders' Equity (Parenthetical)	3 Months Ended
	Mar. 31, 2017 shares
Statement of Stockholders' Equity [Abstract]
Surrender of shares upon vesting of restricted stock and restricted stock units and exercise of stock appreciation rights	208,456

Organization

3 Months Ended

Mar. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

1. Organization

We are 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—we connect and empower organizations to increase their impact through software, services, expertise, and data intelligence. Our 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, we are headquartered in Charleston, South Carolina and have operations in the United States, Australia, Canada and the United Kingdom. As of March 31, 2017, we had approximately 35,000 customers.

Basis of Presentation

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Basis of Presentation

2. Basis of Presentation

Unaudited interim consolidated financial statements

The accompanying interim consolidated financial statements have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC") for interim financial reporting. These consolidated statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to state fairly the consolidated balance sheets, consolidated statements of comprehensive income, consolidated statements of cash flows and consolidated statements of stockholders’ equity, for the periods presented in accordance with accounting principles generally accepted in the United States ("GAAP"). The consolidated balance sheet at December 31, 2016, has been derived from the audited consolidated financial statements at that date. Operating results and cash flows for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2017, or any other future period. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted in accordance with the rules and regulations for interim reporting of the SEC. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2016, and other forms filed with the SEC from time to time.

Reclassifications

Due to the insignificance of our revenue from "license fees and other," we have combined that revenue with our "services" revenue beginning in 2017. In order to provide comparability between periods presented, "services" and "license fees and other" have been combined within "services and other" in the previously reported consolidated statements of comprehensive income to conform to presentation of the current period. Similarly, "cost of services" and "cost of license fees and other" have been combined within "cost of services and other" in the previously reported consolidated statements of comprehensive income to conform to presentation of the current period.

Basis of consolidation

The consolidated financial statements include the accounts of Blackbaud, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Recently adopted accounting pronouncements

As previously disclosed, during the three months ended September 30, 2016 we early adopted Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"), which addresses, among other items, the accounting for income taxes and forfeitures, and cash flow presentation of share-based compensation. The early adoption of ASU 2016-09 increased net income for the three months ended March 31, 2016, and resulted in an increase in net cash provided by operating activities and a decrease in net cash provided by financing activities for the three months ended March 31, 2016. Detailed information regarding the impact of our adoption of ASU 2016-09 can be found in our annual report on Form 10-K for the year ended December 31, 2016.

Recently issued accounting pronouncements

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment ("ASU 2017-04"), which removes the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted, and applied prospectively. We do not expect ASU 2017-04 to have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business ("ASU 2017-01"), which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. ASU 2017-01 is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted, and applied prospectively. We are currently evaluating the impact of adopting this standard.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash ("ASU 2016-18"), which requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. ASU 2016-18 is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. Early adoption is permitted, including adoption in an interim period, but any adjustments must be reflected as of the beginning of the fiscal year that includes that interim period. The new standard must be adopted retrospectively. We are currently evaluating the impact of this standard on our consolidated statements of cash flows.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (ASU 2016-02). ASU 2016-02 will require lessees to record most leases on their balance sheets but recognize expenses in the income statement in a manner similar to current guidance. The updated guidance also eliminates certain real estate-specific provisions and changes the guidance on sale-leaseback transactions, initial direct costs and lease executory costs for all entities. For lessors, the standard modifies the classification criteria and the accounting for sales-type and direct financing leases. All entities will classify leases to determine how to recognize lease-related revenue and expense. Classification will continue to affect amounts that lessors record on the balance sheet. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted. Upon adoption, entities will be required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. We expect ASU 2016-02 will impact our consolidated financial statements and are currently evaluating the extent of the impact that implementation of this standard will have on adoption.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The standard also provides guidance on the recognition of costs related to obtaining customer contracts. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. ASU 2014-09 will be effective for us beginning in the first quarter of 2018. We are currently evaluating the transition methods and the impact that the adoption of ASU 2014-09 will have on our consolidated financial statements and related disclosures. As a result of our evaluation to date, we expect that ASU 2014-09 will generally result in a longer deferral of commissions expense as compared with our current amortization periods for such costs, and may result in the deferral of more sales commissions. In addition, we expect changes in the allocation of transactions prices for contracts where we sell perpetual software licenses as ASU 2014-09 requires that the transaction price in a contract be allocated based on relative standalone selling prices of the separate performance obligations. We also anticipate incremental disclosures, including, but not limited to, quantitative reconciliations of opening and closing balances of contract assets and liabilities, the value of remaining performance obligations at the end of each reporting period, and disaggregation of revenue.

Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

3. Goodwill and Other Intangible Assets

The change in goodwill for each reportable segment (as defined in Note 12 below) during the three months ended March 31, 2017, consisted of the following:



(dollars in thousands)	EMG			GMG			IMG			Total
Balance at December 31, 2016	$	241,334		$	192,238		$	4,668		$	438,240
Adjustments related to prior year business combination⁽¹⁾	(21		)	(37		)	(1		)	(59		)
Effect of foreign currency translation	—			—			126			126
Balance at March 31, 2017	$	241,313		$	192,201		$	4,793		$	438,307


(1)	The change in goodwill was related to a post-closing working capital adjustment associated with the prior year acquisition of Good+Geek, Inc. ("Attentive.ly").

Organization, Consolidation and Presentation of Financial Statements [Abstract]

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Earnings Per Share

3 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Earnings Per Share

4. Earnings Per Share

We compute basic earnings per share by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares and dilutive potential common shares outstanding during the period. Diluted earnings per share reflect the assumed exercise, settlement and vesting of all dilutive securities using the “treasury stock method” except when the effect is anti-dilutive. Potentially dilutive securities consist of shares issuable upon the exercise of stock options, settlement of stock appreciation rights and vesting of restricted stock awards and units.

The following table sets forth the computation of basic and diluted earnings per share:



	Three months ended March 31,
(dollars in thousands, except per share amounts)	2017		2016
Numerator:
Net income	$	11,511	$	6,237
Denominator:
Weighted average common shares	46,501,761		45,967,863
Add effect of dilutive securities:
Stock-based awards	981,079		1,096,301
Weighted average common shares assuming dilution	47,482,840		47,064,164
Earnings per share:
Basic	$	0.25	$	0.14
Diluted	$	0.24	$	0.13

Anti-dilutive shares excluded from calculations of diluted earnings per share	199,199		55,844

Fair Value Measurements

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements

5. Fair Value Measurements

We use a three-tier fair value hierarchy to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows:


•	Level 1 - Quoted prices for identical assets or liabilities in active markets;


•	Level 2 - Quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and


•	Level 3 - Valuations derived from valuation techniques in which one or more significant inputs are unobservable.

Recurring fair value measurements

Financial assets and liabilities measured at fair value on a recurring basis consisted of the following, as of:



	Fair value measurement using
(dollars in thousands)	Level 1		Level 2		Level 3		Total
Fair value as of March 31, 2017
Financial assets:
Derivative instruments⁽¹⁾	$	—	$	343	$	—	$	343
Total financial assets	$	—	$	343	$	—	$	343

Fair value as of December 31, 2016
Financial assets:
Derivative instruments⁽¹⁾	$	—	$	206	$	—	$	206
Total financial assets	$	—	$	206	$	—	$	206

Fair value as of December 31, 2016
Financial liabilities:
Derivative instruments⁽¹⁾	$	—	$	163	$	—	$	163
Total financial liabilities	$	—	$	163	$	—	$	163


(1)	The fair value of our interest rate swaps was based on model-driven valuations using LIBOR rates, which are observable at commonly quoted intervals. Accordingly, our interest rate swaps are classified within Level 2 of the fair value hierarchy.

We believe the carrying amounts of our cash and cash equivalents, restricted cash due to customers, accounts receivable, trade accounts payable, accrued expenses and other current liabilities and due to customers approximate their fair values at March 31, 2017 and December 31, 2016, due to the immediate or short-term maturity of these instruments.

We believe the carrying amount of our debt approximates its fair value at March 31, 2017 and December 31, 2016, as the debt bears interest rates that approximate market value. As LIBOR rates are observable at commonly quoted intervals, our debt is classified within Level 2 of the fair value hierarchy.

We did not transfer any assets or liabilities among the levels within the fair value hierarchy during the three months ended March 31, 2017. Additionally, we did not hold any Level 3 assets or liabilities during the three months ended March 31, 2017.

Non-recurring fair value measurements

Assets and liabilities that are measured at fair value on a non-recurring basis include intangible assets and goodwill, which are recognized at fair value during the period in which an acquisition is completed, from updated estimates and assumptions during the measurement period, or when they are considered to be impaired. These non-recurring fair value measurements, primarily for intangible assets acquired, are based on Level 3 unobservable inputs. In the event of an impairment, we determine the fair value of the goodwill and intangible assets using a discounted cash flow approach, which contains significant unobservable inputs and, therefore, is considered a Level 3 fair value measurement. The unobservable inputs in the analysis generally include future cash flow projections and a discount rate.

There were no non-recurring fair value adjustments to intangible assets and goodwill during the three months ended March 31, 2017, except for an insignificant business combination accounting adjustment to the initial fair value estimates of the Attentive.ly assets acquired and liabilities assumed at the acquisition date from updated information obtained during the measurement period. See Note 3 to these consolidated financial statements for additional details. The measurement period of a business combination may be up to one year from the acquisition date. We record any measurement period adjustments to the fair value of assets acquired and liabilities assumed, with the corresponding offset to goodwill.

Consolidated Financial Statement Details

3 Months Ended

Mar. 31, 2017

Consolidated Financial Statement Details

6. Consolidated Financial Statement Details

Accrued expenses and other liabilities



(dollars in thousands)	March 31, 2017		December 31, 2016
Accrued bonuses	$	8,667	$	19,217
Accrued commissions and salaries	5,478		9,352
Lease incentive obligations	5,360		5,604
Customer credit balances	4,759		5,148
Deferred rent liabilities	4,116		4,110
Taxes payable	2,331		3,452
Unrecognized tax benefit	3,359		3,295
Accrued subscriptions	3,032		2,840
Accrued vacation costs	2,169		2,214
Accrued health care costs	2,683		1,495
Other liabilities	4,919		6,002
Total accrued expenses and other liabilities	46,873		62,729
Less: Long-term portion	7,801		8,533
Accrued expenses and other current liabilities	$	39,072	$	54,196

Derivative Instruments

3 Months Ended

Mar. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives Instruments

7. Derivative Instruments

We use derivative instruments to manage our variable interest rate risk. In March 2014, we entered into an interest rate swap agreement (the "March 2014 Swap Agreement"), which effectively converts portions of our variable rate debt under our existing credit facility (the "2014 Credit Facility") to a fixed rate for the term of the swap agreement. The initial notional value of the March 2014 Swap Agreement was $125.0 million with an effective date beginning in March 2014. In March 2017, the notional value of the March 2014 Swap Agreement decreased to $75.0 million for the remaining term through February 2018. We designated the March 2014 Swap Agreement as a cash flow hedge at the inception of the contract.

In October 2015, we entered into an additional interest rate swap agreement (the "October 2015 Swap Agreement"), which effectively converts portions of our variable rate debt under the 2014 Credit Facility to a fixed rate for the term of the October 2015 Swap Agreement. The notional value of the October 2015 Swap Agreement was $75.0 million with an effective date beginning in October 2015 and maturing in February 2018. We designated the October 2015 Swap Agreement as a cash flow hedge at the inception of the contract.

The fair values of our derivative instruments were as follows as of:



(dollars in thousands)	Balance sheet location	March 31, 2017		December 31, 2016
Derivative instruments designated as hedging instruments:
Interest rate swap, current portion	Prepaid expenses and other current assets	$	343	$	—
Interest rate swap, long-term portion	Other assets	$	—	$	206
Total derivative instruments designated as hedging instruments		$	343	$	206
		March 31, 2017		December 31, 2016
Derivative instruments designated as hedging instruments:
Interest rate swaps, long-term portion	Other liabilities	—		163
Total derivative instruments designated as hedging instruments		$	—	$	163

The effects of derivative instruments in cash flow hedging relationships were as follows:



	Gain (loss) recognized in accumulated other comprehensive loss as of			Location of gain (loss) reclassified from accumulated other comprehensive loss into income	Gain (loss) reclassified from accumulated other comprehensive loss into income
(dollars in thousands)	March 31, 2017				Three months ended March 31, 2017
Interest rate swaps	$	343		Interest expense	$	(119	)

	March 31, 2016				Three months ended March 31, 2016
Interest rate swaps	$	(1,135	)	Interest expense	$	(308	)

Our policy requires that derivatives used for hedging purposes be designated and effective as a hedge of the identified risk exposure at the inception of the contract. Accumulated other comprehensive income (loss) includes unrealized gains or losses from the change in fair value measurement of our derivative instruments each reporting period and the related income tax expense or benefit. Changes in the fair value measurements of the derivative instruments and the related income tax expense or benefit are reflected as adjustments to accumulated other comprehensive income (loss) until the actual hedged expense is incurred or until the hedge is terminated at which point the unrealized gain (loss) is reclassified from accumulated other comprehensive income (loss) to current earnings. The estimated accumulated other comprehensive income as of March 31, 2017 that is expected to be reclassified into earnings within the next twelve months is insignificant. There were no ineffective portions of our interest rate swap derivatives during the three months ended March 31, 2017 and 2016. See Note 11 to these consolidated financial statements for a summary of the changes in accumulated other comprehensive income (loss) by component.

Commitments and Contingencies

3 Months Ended

Mar. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

8. Commitments and Contingencies

Leases

Total rent expense was $4.0 million and $2.0 million for the three months ended March 31, 2017 and 2016, respectively. The quarterly South Carolina state incentive payments we received as a result of locating our headquarters facility in Berkeley County, South Carolina, ended in the fourth quarter of 2016. These amounts were recorded as a reduction of rent expense upon receipt and were $1.0 million for the three months ended March 31, 2016.

Other commitments

The term loans under the 2014 Credit Facility require periodic principal payments. The balance of the term loans and any amounts drawn on the revolving credit loans are due upon maturity of the 2014 Credit Facility in February 2019.

We utilize third-party technology in conjunction with our solutions and services, with contractual obligations varying in length from one to five years. In certain cases, such arrangements require a minimum annual purchase commitment. As of March 31, 2017, the remaining aggregate minimum purchase commitment under these arrangements was approximately $51.0 million through 2021.

Solution and service indemnifications

In the ordinary course of business, we provide certain indemnifications of varying scope to customers against claims of intellectual property infringement made by third parties arising from the use of our solutions or services. If we determine that it is probable that a loss has been incurred related to solution or service indemnifications, any such loss that could be reasonably estimated would be recognized. We have not identified any losses and, accordingly, we have not recorded a liability related to these indemnifications.

Legal proceedings

We are subject to legal proceedings and claims that arise in the ordinary course of business. We make a provision for a loss contingency when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Unless otherwise specifically disclosed in this note, we have determined as of March 31, 2017, that no provision for liability nor disclosure is required related to any claim against us because (a) there is not a reasonable possibility that a loss exceeding amounts already recognized (if any) may be incurred with respect to such claim; (b) a reasonably possible loss or range of loss cannot be estimated; or (c) such estimate is immaterial.

All legal costs associated with litigation are expensed as incurred. Litigation is inherently unpredictable. However, we believe that we have valid defenses with respect to the legal matters pending against us. It is possible, nevertheless, that our consolidated financial position, results of operations or cash flows could be negatively affected in any particular period by an unfavorable resolution of one or more of such proceedings claims or investigations.

Income Taxes

3 Months Ended

Mar. 31, 2017

Income Tax Disclosure [Abstract]

Income Taxes

9. Income Taxes

Our Income tax (benefit) provision and effective income tax rates including the effects of period-specific events, were:



	Three months ended March 31,
(dollars in thousands)	2017			2016⁽¹⁾
Income tax (benefit) provision	$	(3,023	)	$	1,595
Effective income tax rate	(35.6		)%	20.4		%

(1)

The decrease in our effective income tax rate during the three months ended March 31, 2017, when compared to the same period in 2016, was primarily due to a $6.1 million discrete tax benefit to expense relating to stock-based compensation items, as compared to a $1.1 million discrete tax benefit for the same period in 2016. The increase in the discrete tax benefit for the three months ended March 31, 2017, as compared to the same period in 2016, was attributable to an increase in the market price for shares of our common stock, as reported by the NASDAQ Stock Market LLC ("NASDAQ"), as well as an increase in the number of stock awards that vested and were exercised.

Our effective income tax rate may fluctuate quarterly as a result of factors, including transactions entered into, changes in the geographic distribution of our earnings or losses, our assessment of certain tax contingencies, valuation allowances, and changes in tax law in jurisdictions where we conduct business.

We have deferred tax assets for federal, state, and international net operating loss carryforwards and state tax credits. The federal and state net operating loss carryforwards are subject to various Internal Revenue Code limitations and applicable state tax laws. A portion of the foreign and state net operating loss carryforwards and a portion of state tax credits have a valuation reserve due to the uncertainty of realizing such carryforwards and credits in the future.

The total amount of unrecognized tax benefit that, if recognized, would favorably affect the effective income tax rate, was $2.4 million and $2.4 million at March 31, 2017 and December 31, 2016, respectively. We recognize accrued interest and penalties, if any, related to unrecognized tax benefits as a component of income tax expense.

Stock-Based Compensation

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

10. Stock-based Compensation

Stock-based compensation expense is allocated to cost of revenue and operating expenses on the consolidated statements of comprehensive income based on where the associated employee’s compensation is recorded. The following table summarizes stock-based compensation expense:



	Three months ended March 31,
(dollars in thousands)	2017		2016
Included in cost of revenue:
Cost of subscriptions	$	294	$	275
Cost of maintenance	86		118
Cost of services and other	411		452
Total included in cost of revenue	791		845
Included in operating expenses:
Sales, marketing and customer success	1,439		896
Research and development	1,717		1,471
General and administrative	5,347		4,531
Total included in operating expenses	8,503		6,898
Total stock-based compensation expense	$	9,294	$	7,743

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References + Details

Stockholders' Equity

3 Months Ended

Mar. 31, 2017

Equity [Abstract]

Stockholders' Equity

11. Stockholders' Equity

Dividends

Our Board of Directors has adopted a dividend policy, which provides for the distribution to stockholders of a portion of cash generated by us that is in excess of operational needs and capital expenditures. The 2014 Credit Facility limits the amount of dividends payable and certain state laws restrict the amount of dividends distributed.

In February 2017, our Board of Directors approved an annual dividend rate of $0.48 per share to be made in quarterly payments. Dividend payments are not guaranteed and our Board of Directors may decide, in its absolute discretion, at any time and for any reason, not to declare and pay further dividends. The following table provides information with respect to quarterly dividends of $0.12 per share paid on common stock during the three months ended March 31, 2017.



Declaration Date	Dividend per Share		Record Date	Payable Date
February 8, 2017	$	0.12	February 28	March 15

On May 1, 2017, our Board of Directors declared a second quarter dividend of $0.12 per share payable on June 15, 2017 to stockholders of record on May 26, 2017.

Changes in accumulated other comprehensive loss by component

The changes in accumulated other comprehensive loss by component, consisted of the following:



	Three months ended March 31,
(dollars in thousands)	2017			2016
Accumulated other comprehensive loss, beginning of period	$	(457	)	$	(825	)
By component:
Gains and losses on cash flow hedges:
Accumulated other comprehensive income (loss) balance, beginning of period	$	25		$	(19	)
Other comprehensive income (loss) before reclassifications, net of tax effects of $(71) and $555	110			(856		)
Amounts reclassified from accumulated other comprehensive loss to interest expense	119			308
Tax benefit included in provision for income taxes	(47		)	(121		)
Total amounts reclassified from accumulated other comprehensive loss	72			187
Net current-period other comprehensive income (loss)	182			(669		)
Accumulated other comprehensive income (loss) balance, end of period	$	207		$	(688	)
Foreign currency translation adjustment:
Accumulated other comprehensive loss balance, beginning of period	$	(482	)	$	(806	)
Translation adjustments	100			403
Accumulated other comprehensive loss balance, end of period	(382		)	(403		)
Accumulated other comprehensive loss, end of period	$	(175	)	$	(1,091	)

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

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-Glossary Preferred Stock
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+ Details

Segment Information

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Segment Information

12. Segment Information

During the first quarter of 2017, we changed the names of our reportable segments. However, there was no change in the determination of our reportable segments or our reporting units. As of March 31, 2017, our reportable segments were the General Markets Group ("GMG"), the Enterprise Markets Group ("EMG"), and the International Markets Group ("IMG"). Following is a description of each reportable segment:


•	The GMG is generally focused on marketing, sales, delivery and support to all emerging and mid-sized prospects and customers in North America;


•	The EMG is generally focused on marketing, sales, delivery and support to all large and/or strategic prospects and customers in North America; and


•	The IMG is focused on marketing, sales, delivery and support to all prospects and customers outside of North America.

Our chief operating decision maker is our chief executive officer ("CEO"). The CEO reviews financial information presented on an operating segment basis for the purposes of making certain operating decisions and assessing financial performance. The CEO uses internal financial reports that provide segment revenues and operating income, excluding stock-based compensation expense, amortization expense, depreciation expense, research and development expense and certain corporate sales, marketing, general and administrative expenses. Currently, the CEO believes that the exclusion of these costs allows for a better understanding of the operating performance of the operating units and management of other operating expenses and cash needs. The CEO does not review any segment balance sheet information.

Summarized reportable segment financial results, were as follows:



	Three months ended March 31,
(dollars in thousands)	2017			2016
Revenue by segment:
GMG	$	94,901		$	87,952
EMG	79,632			71,499
IMG	9,056			9,758
Other⁽¹⁾	32			47
Total revenue	$	183,621		$	169,256
Segment operating income⁽²⁾:
GMG	$	45,704		$	42,611
EMG	42,475			35,766
IMG	1,249			996
Other⁽¹⁾	16			30
	89,444			79,403
Less:
Corporate unallocated costs⁽³⁾	(59,025		)	(50,415		)
Stock-based compensation costs	(9,294		)	(7,743		)
Amortization expense	(10,546		)	(10,633		)
Interest expense	(2,377		)	(2,675		)
Other income (expense), net	286			(105		)
Income before provision for income taxes	$	8,488		$	7,832


(1)	Other includes revenue and the related costs from the sale of solutions and services not directly attributable to a reportable segment.


(2)	Segment operating income includes direct, controllable costs related to the sale of solutions and services by the reportable segment.


(3)	Corporate unallocated costs include research and development, depreciation expense, and certain corporate sales, marketing, general and administrative expenses.

Goodwill and Intangible Assets Disclosure [Abstract]

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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+ Details

Subsequent Events

3 Months Ended

Mar. 31, 2017

Subsequent Events [Abstract]

Subsequent Events

13. Subsequent Events

AcademicWorks acquisition

On April 3, 2017, we acquired all of the outstanding shares of capital stock, including all voting equity interests, of AcademicWorks, Inc., a Texas corporation ("AcademicWorks"), pursuant to a stock purchase agreement. AcademicWorks is the market leader in scholarship management for higher education and K-12 institutions, foundations, and grant-making institutions. The acquisition extends our offerings for our higher education, K-12, and corporate and foundation customers. We acquired AcademicWorks for an aggregate purchase price of $50.0 million in cash, subject to certain adjustments set forth in the stock purchase agreement. We financed the acquisition through a draw down of a revolving credit loan under the 2014 Credit Facility. As a result of the acquisition, AcademicWorks has become a wholly-owned subsidiary of ours. We will include the operating results of AcademicWorks, as well as any goodwill arising from the acquisition, in our consolidated financial statements primarily within EMG from the date of acquisition. During the three months ended March 31, 2017, we incurred insignificant acquisition-related expenses associated with the acquisition of AcademicWorks, which were recorded in general and administrative expense. Due to the timing of the transaction, the initial accounting for this acquisition, including the measurement of assets acquired, liabilities assumed and goodwill, is not complete and is pending detailed analyses of the facts and circumstances that existed as of the April 3, 2017 acquisition date.

Basis of Presentation (Details)	3 Months Ended
Basis of Presentation (Details)	Mar. 31, 2017
Accounting Policies [Abstract]
Unaudited interim consolidated financial statements	Unaudited interim consolidated financial statements The accompanying interim consolidated financial statements have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC") for interim financial reporting. These consolidated statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to state fairly the consolidated balance sheets, consolidated statements of comprehensive income, consolidated statements of cash flows and consolidated statements of stockholders’ equity, for the periods presented in accordance with accounting principles generally accepted in the United States ("GAAP"). The consolidated balance sheet at December 31, 2016, has been derived from the audited consolidated financial statements at that date. Operating results and cash flows for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2017, or any other future period. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted in accordance with the rules and regulations for interim reporting of the SEC. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2016, and other forms filed with the SEC from time to time. Reclassifications Due to the insignificance of our revenue from "license fees and other," we have combined that revenue with our "services" revenue beginning in 2017. In order to provide comparability between periods presented, "services" and "license fees and other" have been combined within "services and other" in the previously reported consolidated statements of comprehensive income to conform to presentation of the current period. Similarly, "cost of services" and "cost of license fees and other" have been combined within "cost of services and other" in the previously reported consolidated statements of comprehensive income to conform to presentation of the current period.
Basis of consolidation	Basis of consolidation The consolidated financial statements include the accounts of Blackbaud, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Recently adopted accounting pronouncements	Recently adopted accounting pronouncements As previously disclosed, during the three months ended September 30, 2016 we early adopted Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"), which addresses, among other items, the accounting for income taxes and forfeitures, and cash flow presentation of share-based compensation. The early adoption of ASU 2016-09 increased net income for the three months ended March 31, 2016, and resulted in an increase in net cash provided by operating activities and a decrease in net cash provided by financing activities for the three months ended March 31, 2016. Detailed information regarding the impact of our adoption of ASU 2016-09 can be found in our annual report on Form 10-K for the year ended December 31, 2016.
Recently issued accounting pronouncements	Recently issued accounting pronouncements In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment ("ASU 2017-04"), which removes the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted, and applied prospectively. We do not expect ASU 2017-04 to have a material impact on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business ("ASU 2017-01"), which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. ASU 2017-01 is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted, and applied prospectively. We are currently evaluating the impact of adopting this standard. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash ("ASU 2016-18"), which requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. ASU 2016-18 is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. Early adoption is permitted, including adoption in an interim period, but any adjustments must be reflected as of the beginning of the fiscal year that includes that interim period. The new standard must be adopted retrospectively. We are currently evaluating the impact of this standard on our consolidated statements of cash flows. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (ASU 2016-02). ASU 2016-02 will require lessees to record most leases on their balance sheets but recognize expenses in the income statement in a manner similar to current guidance. The updated guidance also eliminates certain real estate-specific provisions and changes the guidance on sale-leaseback transactions, initial direct costs and lease executory costs for all entities. For lessors, the standard modifies the classification criteria and the accounting for sales-type and direct financing leases. All entities will classify leases to determine how to recognize lease-related revenue and expense. Classification will continue to affect amounts that lessors record on the balance sheet. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted. Upon adoption, entities will be required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. We expect ASU 2016-02 will impact our consolidated financial statements and are currently evaluating the extent of the impact that implementation of this standard will have on adoption. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The standard also provides guidance on the recognition of costs related to obtaining customer contracts. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. ASU 2014-09 will be effective for us beginning in the first quarter of 2018. We are currently evaluating the transition methods and the impact that the adoption of ASU 2014-09 will have on our consolidated financial statements and related disclosures. As a result of our evaluation to date, we expect that ASU 2014-09 will generally result in a longer deferral of commissions expense as compared with our current amortization periods for such costs, and may result in the deferral of more sales commissions. In addition, we expect changes in the allocation of transactions prices for contracts where we sell perpetual software licenses as ASU 2014-09 requires that the transaction price in a contract be allocated based on relative standalone selling prices of the separate performance obligations. We also anticipate incremental disclosures, including, but not limited to, quantitative reconciliations of opening and closing balances of contract assets and liabilities, the value of remaining performance obligations at the end of each reporting period, and disaggregation of revenue.
Legal proceedings	Legal proceedings We are subject to legal proceedings and claims that arise in the ordinary course of business. We make a provision for a loss contingency when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

Goodwill and Other Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2017

Change in Goodwill by Reportable Segment

The change in goodwill for each reportable segment (as defined in Note 12 below) during the three months ended March 31, 2017, consisted of the following:



(dollars in thousands)	EMG			GMG			IMG			Total
Balance at December 31, 2016	$	241,334		$	192,238		$	4,668		$	438,240
Adjustments related to prior year business combination⁽¹⁾	(21		)	(37		)	(1		)	(59		)
Effect of foreign currency translation	—			—			126			126
Balance at March 31, 2017	$	241,313		$	192,201		$	4,793		$	438,307


(1)	The change in goodwill was related to a post-closing working capital adjustment associated with the prior year acquisition of Good+Geek, Inc. ("Attentive.ly").

Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:



	Three months ended March 31,
(dollars in thousands, except per share amounts)	2017		2016
Numerator:
Net income	$	11,511	$	6,237
Denominator:
Weighted average common shares	46,501,761		45,967,863
Add effect of dilutive securities:
Stock-based awards	981,079		1,096,301
Weighted average common shares assuming dilution	47,482,840		47,064,164
Earnings per share:
Basic	$	0.25	$	0.14
Diluted	$	0.24	$	0.13

Anti-dilutive shares excluded from calculations of diluted earnings per share	199,199		55,844

Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Financial assets and liabilities measured at fair value on a recurring basis consisted of the following, as of:



	Fair value measurement using
(dollars in thousands)	Level 1		Level 2		Level 3		Total
Fair value as of March 31, 2017
Financial assets:
Derivative instruments⁽¹⁾	$	—	$	343	$	—	$	343
Total financial assets	$	—	$	343	$	—	$	343

Fair value as of December 31, 2016
Financial assets:
Derivative instruments⁽¹⁾	$	—	$	206	$	—	$	206
Total financial assets	$	—	$	206	$	—	$	206

Fair value as of December 31, 2016
Financial liabilities:
Derivative instruments⁽¹⁾	$	—	$	163	$	—	$	163
Total financial liabilities	$	—	$	163	$	—	$	163


(1)	The fair value of our interest rate swaps was based on model-driven valuations using LIBOR rates, which are observable at commonly quoted intervals. Accordingly, our interest rate swaps are classified within Level 2 of the fair value hierarchy.

Consolidated Financial Statement Details (Tables)

3 Months Ended

Mar. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Components of Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities



(dollars in thousands)	March 31, 2017		December 31, 2016
Accrued bonuses	$	8,667	$	19,217
Accrued commissions and salaries	5,478		9,352
Lease incentive obligations	5,360		5,604
Customer credit balances	4,759		5,148
Deferred rent liabilities	4,116		4,110
Taxes payable	2,331		3,452
Unrecognized tax benefit	3,359		3,295
Accrued subscriptions	3,032		2,840
Accrued vacation costs	2,169		2,214
Accrued health care costs	2,683		1,495
Other liabilities	4,919		6,002
Total accrued expenses and other liabilities	46,873		62,729
Less: Long-term portion	7,801		8,533
Accrued expenses and other current liabilities	$	39,072	$	54,196

Derivative Instruments (Tables)

3 Months Ended

Mar. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Values of Derivative Instruments

The fair values of our derivative instruments were as follows as of:



(dollars in thousands)	Balance sheet location	March 31, 2017		December 31, 2016
Derivative instruments designated as hedging instruments:
Interest rate swap, current portion	Prepaid expenses and other current assets	$	343	$	—
Interest rate swap, long-term portion	Other assets	$	—	$	206
Total derivative instruments designated as hedging instruments		$	343	$	206
		March 31, 2017		December 31, 2016
Derivative instruments designated as hedging instruments:
Interest rate swaps, long-term portion	Other liabilities	—		163
Total derivative instruments designated as hedging instruments		$	—	$	163

Effects of Derivative Instruments in Cash Flow Hedging Relationships

The effects of derivative instruments in cash flow hedging relationships were as follows:



	Gain (loss) recognized in accumulated other comprehensive loss as of			Location of gain (loss) reclassified from accumulated other comprehensive loss into income	Gain (loss) reclassified from accumulated other comprehensive loss into income
(dollars in thousands)	March 31, 2017				Three months ended March 31, 2017
Interest rate swaps	$	343		Interest expense	$	(119	)

	March 31, 2016				Three months ended March 31, 2016
Interest rate swaps	$	(1,135	)	Interest expense	$	(308	)

Income Taxes (Tables)

3 Months Ended

Mar. 31, 2017

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rates

Our Income tax (benefit) provision and effective income tax rates including the effects of period-specific events, were:



	Three months ended March 31,
(dollars in thousands)	2017			2016⁽¹⁾
Income tax (benefit) provision	$	(3,023	)	$	1,595
Effective income tax rate	(35.6		)%	20.4		%

(1)

Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense:



	Three months ended March 31,
(dollars in thousands)	2017		2016
Included in cost of revenue:
Cost of subscriptions	$	294	$	275
Cost of maintenance	86		118
Cost of services and other	411		452
Total included in cost of revenue	791		845
Included in operating expenses:
Sales, marketing and customer success	1,439		896
Research and development	1,717		1,471
General and administrative	5,347		4,531
Total included in operating expenses	8,503		6,898
Total stock-based compensation expense	$	9,294	$	7,743

Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2017

Equity [Abstract]

Changes in accumulated other comprehensive loss by component

The changes in accumulated other comprehensive loss by component, consisted of the following:



	Three months ended March 31,
(dollars in thousands)	2017			2016
Accumulated other comprehensive loss, beginning of period	$	(457	)	$	(825	)
By component:
Gains and losses on cash flow hedges:
Accumulated other comprehensive income (loss) balance, beginning of period	$	25		$	(19	)
Other comprehensive income (loss) before reclassifications, net of tax effects of $(71) and $555	110			(856		)
Amounts reclassified from accumulated other comprehensive loss to interest expense	119			308
Tax benefit included in provision for income taxes	(47		)	(121		)
Total amounts reclassified from accumulated other comprehensive loss	72			187
Net current-period other comprehensive income (loss)	182			(669		)
Accumulated other comprehensive income (loss) balance, end of period	$	207		$	(688	)
Foreign currency translation adjustment:
Accumulated other comprehensive loss balance, beginning of period	$	(482	)	$	(806	)
Translation adjustments	100			403
Accumulated other comprehensive loss balance, end of period	(382		)	(403		)
Accumulated other comprehensive loss, end of period	$	(175	)	$	(1,091	)

Segment Information (Tables)

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Reportable Segment Financial Results

Summarized reportable segment financial results, were as follows:



	Three months ended March 31,
(dollars in thousands)	2017			2016
Revenue by segment:
GMG	$	94,901		$	87,952
EMG	79,632			71,499
IMG	9,056			9,758
Other⁽¹⁾	32			47
Total revenue	$	183,621		$	169,256
Segment operating income⁽²⁾:
GMG	$	45,704		$	42,611
EMG	42,475			35,766
IMG	1,249			996
Other⁽¹⁾	16			30
	89,444			79,403
Less:
Corporate unallocated costs⁽³⁾	(59,025		)	(50,415		)
Stock-based compensation costs	(9,294		)	(7,743		)
Amortization expense	(10,546		)	(10,633		)
Interest expense	(2,377		)	(2,675		)
Other income (expense), net	286			(105		)
Income before provision for income taxes	$	8,488		$	7,832


(1)	Other includes revenue and the related costs from the sale of solutions and services not directly attributable to a reportable segment.


(2)	Segment operating income includes direct, controllable costs related to the sale of solutions and services by the reportable segment.


(3)	Corporate unallocated costs include research and development, depreciation expense, and certain corporate sales, marketing, general and administrative expenses.

Organization (Details)	Mar. 31, 2017 Customers
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Approximate number of customers distributed across verticals	35,000

Goodwill and Other Intangible Assets (Change in Goodwill by Reportable Segment) (Details)
$ in Thousands

3 Months Ended

Mar. 31, 2017

USD ($)

$ 438,240

126

438,307

EMG [Member]

GMG [Member]

IMG [Member]

126

Attentive.ly [Member]

Attentive.ly [Member] | EMG [Member]

(59)

^[1]

241,334

(21)

^[1]

Attentive.ly [Member] | GMG [Member]

241,313

192,238

(37)

^[1]

Attentive.ly [Member] | IMG [Member]

192,201

4,668

(1)

^[1]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

$ 4,793

[1]	The change in goodwill was related to a post-closing working capital adjustment associated with the prior year acquisition of Good+Geek, Inc. ("Attentive.ly").

Earnings Per Share (Computation of Basic and Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Earnings Per Share [Abstract]
Net income	$ 11,511	$ 6,237
Weighted average common shares	46,501,761	45,967,863
Stock-based awards	981,079	1,096,301
Weighted average common shares assuming dilution	47,482,840	47,064,164
Earnings (Loss) Per Share, Basic and Diluted [Abstract]
Basic earnings per share	$ 0.25	$ 0.14
Diluted earnings per share	$ 0.24	$ 0.13
Anti-dilutive shares excluded from calculations of diluted earnings per share	199,199	55,844

Fair Value Measurements (Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - Fair value measurements, recurring [Member] - USD ($)
$ in Thousands

Mar. 31, 2017

Dec. 31, 2016

$ 163

163

$ 343

206

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

343

206

Level 1 [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Level 2 [Member]

^[1]

163

163

^[1]

343

206

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

343

206

Level 3 [Member]

Income tax (benefit) provision

$ 0

[1]	The fair value of our interest rate swaps was based on model-driven valuations using LIBOR rates, which are observable at commonly quoted intervals. Accordingly, our interest rate swaps are classified within Level 2 of the fair value hierarchy.

Consolidated Financial Statement Details (Components of Accrued Expenses and Other Liabilities) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accrued bonuses	$ 8,667	$ 19,217
Accrued commissions and salaries	5,478	9,352
Lease incentive obligations	5,360	5,604
Customer credit balances	4,759	5,148
Deferred rent liabilities	4,116	4,110
Taxes payable	2,331	3,452
Unrecognized tax benefit	3,359	3,295
Accrued subscriptions	3,032	2,840
Accrued vacation costs	2,169	2,214
Accrued health care costs	2,683	1,495
Other liabilities	4,919	6,002
Total accrued expenses and other liabilities	46,873	62,729
Less: Long-term portion	7,801	8,533
Accrued expenses and other current liabilities	$ 39,072	$ 54,196

Derivative Instruments (Details) - USD ($) $ in Millions	3 Months Ended
Derivative Instruments (Details) - USD ($) $ in Millions	Mar. 31, 2017	Mar. 31, 2016	Oct. 31, 2015	Mar. 31, 2014
Derivative [Line Items]
Ineffective portion of interest rate swap(s)	$ 0.0	$ 0.0
March 2014 Swap [Member]
Derivative [Line Items]
Notional value of the swap agreement				$ 125.0
Future notional value of the swap agreement				$ 75.0
October 2015 Swap [Member]
Derivative [Line Items]
Notional value of the swap agreement			$ 75.0

Derivative Instruments (Fair Value of Derivative Instruments) (Details) - Designated as hedging instrument [Member] - Interest rate swap [Member] - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Derivatives, Fair Value [Line Items]
Total derivative assets designated as hedging instruments	$ 343	$ 206
Total derivative liabilities designated as hedging instruments	0	163
Prepaid expenses and other current assets [Member]
Derivatives, Fair Value [Line Items]
Interest rate swap assets, current	343	0
Other assets [Member]
Derivatives, Fair Value [Line Items]
Interest rate swap assets, long-term portion	0	206
Other liabilities [Member]
Derivatives, Fair Value [Line Items]
Interest rate swap liabilities, long-term portion	$ 0	$ 163

Derivative Instruments (Effects of Derivative Instruments in Cash Flow Hedging Relationships) (Details) - Interest rate swap [Member] - Cash flow hedging [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in accumulated other comprehensive loss	$ 343	$ (1,135)
Interest expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) reclassified from accumulated other comprehensive loss into income	$ (119)	$ (308)

Commitments and Contingencies (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Operating Leased Assets [Line Items]
Total rent expense	$ 4.0	$ 2.0
Third-party technology [Member]
Long-term Purchase Commitment [Line Items]
Remaining aggregate minimum purchase commitment	$ 51.0
Minimum [Member] \| Third-party technology [Member]
Long-term Purchase Commitment [Line Items]
Contractual arrangement length	1 year
Maximum [Member] \| Third-party technology [Member]
Long-term Purchase Commitment [Line Items]
Contractual arrangement length	5 years
Current HQ Facility [Member] \| South Carolina [Member]
Operating Leased Assets [Line Items]
Reduction in rent expense		$ 1.0

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
Income Taxes (Details) - USD ($) $ in Millions	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Income Tax Disclosure [Abstract]
Effective income tax rate reconciliation, deduction, excess tax benefit (deficiency), amount	$ 6.1	$ 1.1
Unrecognized tax benefit that, if recognized, would favorably affect the effective tax rate	$ 2.4		$ 2.4

Income Taxes (Schedule of Effective Income Tax Rates) (Details) - USD ($)
$ in Thousands

3 Months Ended

Mar. 31, 2017

Mar. 31, 2016

^[1]

Income Tax Disclosure [Abstract]

$ (3,023)

$ 1,595

Effective income tax rate

(35.60%)

20.40%

[1]

Stock-Based Compensation (Summary of Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Employee Service Stock-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated stock-based compensation expense	$ 9,294	$ 7,743
Cost of subscriptions [Member]
Employee Service Stock-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated stock-based compensation expense	294	275
Cost of maintenance [Member]
Employee Service Stock-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated stock-based compensation expense	86	118
Cost of services and other [Member]
Employee Service Stock-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated stock-based compensation expense	411	452
Total included in cost of revenue [Member]
Employee Service Stock-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated stock-based compensation expense	791	845
Sales, marketing and customer success [Member]
Employee Service Stock-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated stock-based compensation expense	1,439	896
Research and development [Member]
Employee Service Stock-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated stock-based compensation expense	1,717	1,471
General and administrative [Member]
Employee Service Stock-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated stock-based compensation expense	5,347	4,531
Total included in operating expenses [Member]
Employee Service Stock-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated stock-based compensation expense	$ 8,503	$ 6,898

Stockholders' Equity (Details) - $ / shares		1 Months Ended	3 Months Ended
Stockholders' Equity (Details) - $ / shares	Mar. 15, 2017	Feb. 28, 2017	Mar. 31, 2017	Mar. 31, 2016	Jun. 15, 2017
Dividends Payable [Line Items]
Annual dividend per share approved (in dollars per share)		$ 0.48
Quarterly dividends paid per share (in dollars per share)			$ 0.12
Dividends paid per share (in dollars per share)	$ 0.12		$ 0.12	$ 0.12
Subsequent event [Member]
Dividends Payable [Line Items]
Dividends payable per share (in dollars per share)					$ 0.12

Stockholders' Equity (Changes in accumulated other comprehensive loss by component) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Accumulated Other Comprehensive Income [Roll Forward]
Accumulated other comprehensive (loss) income, beginning of period	$ (457)	$ (825)
Translation adjustments	100	403
Accumulated other comprehensive (loss) income, end of period	(175)	(1,091)
Gains and losses on cash flow hedges [Member]
Accumulated Other Comprehensive Income [Roll Forward]
Accumulated other comprehensive (loss) income, beginning of period	25	(19)
Other comprehensive loss before reclassifications	110	(856)
Amounts reclassified from accumulated other comprehensive loss to interest expense	119	308
Tax benefit included in provision for income taxes	(47)	(121)
Total amounts reclassified from accumulated other comprehensive loss	72	187
Net current-period other comprehensive income (loss)	182	(669)
Accumulated other comprehensive (loss) income, end of period	207	(688)
Unrealized gains (losses), tax effects	(71)	555
Foreign currency translation adjustment [Member]
Accumulated Other Comprehensive Income [Roll Forward]
Accumulated other comprehensive (loss) income, beginning of period	(482)	(806)
Translation adjustments	100	403
Accumulated other comprehensive (loss) income, end of period	$ (382)	$ (403)

Segment Information (Reportable Segment Financial Results) (Details) - USD ($)
$ in Thousands

3 Months Ended

Mar. 31, 2017

Mar. 31, 2016

$ 183,621

$ 169,256

Corporate unallocated costs

10,579

10,612

^[1]

(59,025)

(50,415)

Stock-based compensation costs

(9,294)

(7,743)

Amortization expense

(10,546)

(10,633)

Interest expense

(2,377)

(2,675)

Other income (expense), net

286

(105)

Income before provision for income taxes

8,488

7,832

GMG [Member]

94,901

87,952

^[2]

45,704

42,611

EMG [Member]

79,632

71,499

^[2]

42,475

35,766

IMG [Member]

9,056

9,758

^[2]

1,249

996

Other [Member]

^[3]

Operating Segments [Member]

^[2],[3]