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): July 31, 2017
 | ||
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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02. Results of Operations and Financial Condition.
On July 31, 2017, Blackbaud, Inc. issued a press release reporting unaudited financial results for the quarter ended June 30, 2017. 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 July 31, 2017 reporting unaudited financial results for the quarter ended June 30, 2017. | |
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: | July 31, 2017 | /s/ Anthony W. Boor | |||
Anthony W. Boor | |||||
Executive Vice President and Chief Financial Officer | |||||
(Principal Financial and Accounting Officer) | |||||
Exhibit 99.1 | ||
 | ||
PRESS RELEASE | ||
Blackbaud Announces 2017 Second Quarter Results
Recurring Revenue Represents Over 80% of Total; Subscriptions Revenue Tops 65%;
Management Reaffirms 2017 Full-Year Financial Guidance
Charleston, S.C. (July 31, 2017) - Blackbaud (NASDAQ: BLKB), the world's leading cloud software company powering social good, today announced financial results for its second quarter ended June 30, 2017.
"We’re delivering powerful, integrated solutions in the cloud that provide our customers with a modern and truly unified experience,” said Mike Gianoni, Blackbaud's president and CEO. "This is quite unique in our industry. Blackbaud is an end-to-end partner that builds, integrates, implements and supports its solutions-no other company in this market offers a value proposition as extensive. Our cloud solutions are fueling strong financial performance, further improving the predictability and stability of our business by shifting us towards a subscription-based revenue model, and positioning us for a long runway of growth ahead. Subscriptions revenue represented 65 percent of total revenue, a new all-time high for us, and non-GAAP organic subscriptions revenue was strong, growing 17 percent this quarter."
Second Quarter 2017 Results Compared to Second Quarter 2016 Results:
• | Total GAAP revenue was $192.2 million, up 6.7%, with $158.2 million in GAAP recurring revenue, representing 82.3% of total revenue, and $125.3 million in subscription revenue, representing 65.2% of total revenue. |
• | Total non-GAAP revenue was $192.5 million, up 5.8%, with $158.5 million in non-GAAP recurring revenue, representing 82.3% of total non-GAAP revenue, and $125.6 million in subscription revenue, representing 65.2% of total revenue. |
• | Non-GAAP organic revenue increased 4.5%, non-GAAP organic recurring revenue increased 9.1%, and non-GAAP organic subscription revenue increased 16.7%. |
• | GAAP income from operations increased 22.9% to $16.7 million, with GAAP operating margin increasing 110 basis points to 8.7%. |
• | Non-GAAP income from operations increased 16.8% to $40.6 million, with non-GAAP operating margin increasing 200 basis points to 21.1%. |
• | GAAP net income increased 23.2% to $11.2 million, with GAAP diluted earnings per share of $0.23, up $0.04. |
• | Non-GAAP net income increased 18.5% to $25.8 million, with non-GAAP diluted earnings per share of $0.54, up $0.08. |
• | Non-GAAP free cash flow was $31.8 million, an increase of $0.9 million. |
"We posted another solid quarter, which was in line with our expectations, and positions us well to achieve our full-year financial guidance and long-term aspirational goals" said Tony Boor, Blackbaud's executive vice president and CFO. "During the quarter, we completed the acquisition of AcademicWorks, adding exciting new scholarship management capabilities to our portfolio, and we also announced our intent to acquire JustGiving, which will expand our footprint in the peer-to-peer fundraising space."
An explanation of all non-GAAP financial measures referenced in this press release, including Blackbaud's definition of non-GAAP free cash flow, is included below under the heading "Non-GAAP Financial Measures." A reconciliation of the company's non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release.
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PRESS RELEASE | ||
Recent Company Highlights:
• | Blackbaud acquired the market leading scholarship management platform, AcademicWorksTM, extending its offerings for higher education, K-12, and corporate and foundation customers. |
• | The company announced its intent to acquire United Kingdom-based fundraising services provider JustGiving™, whose online social giving platform has played a powerful role in the growth of peer-to-peer fundraising. |
• | Blackbaud entered into a new credit facility on June 2 in the aggregate amount of $700 million as a result of successfully executing against the strategy Blackbaud laid out in 2014, causing the company to “outgrow” the existing credit facility. |
• | Hundreds of private school professionals collaborated with peers on industry best practices, participated in over 90 hands-on training sessions, and heard from company executives during Blackbaud's annual K-12 user conference. |
• | Blackbaud has been added to Standard & Poor’s (S&P) MidCap 400 GICS (Global Industry Classification Standard) Application Software Sub-Industry index, underscoring its position as a leading innovative cloud company that is on a strong trajectory. |
• | Blackbaud was recognized with several major awards and honors: The company was recognized on the Forbes America’s Best Mid-Size Employers 2017 list and Forbes Most Innovative Growth Companies 2017 list for a second consecutive year; CognitionX named Blackbaud’s modern, unique approach to social good-optimized Intelligence for Good™ “Best Use of AI for Charity”; and Raiser’s Edge NXT™ and eTapestry® were named “Leaders” on the 2017 FrontRunners quadrant for Nonprofit Donor Software. |
Visit www.blackbaud.com/press-room for more information about Blackbaud’s recent highlights.
Dividend
Blackbaud announced today that its Board of Directors has declared a third quarter 2017 dividend of $0.12 per share payable on September 15, 2017 to stockholders of record on August 28, 2017.
Financial Outlook
Blackbaud today reaffirmed 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 |
• | Non-GAAP free cash flow of $120 million to $130 million |
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.
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PRESS RELEASE | ||
Conference Call Details
What: Blackbaud's 2017 Second Quarter Conference Call
When: August 1, 2017
Time: 8:00 a.m. (Eastern Time)
Live Call: 877-616-0061 (domestic) or 719-325-4844 (international); passcode 780576.
Webcast: Blackbaud's Investor Relations Webpage
About Blackbaud
Blackbaud (NASDAQ: BLKB) is the world’s leading cloud software company powering social good. Serving the entire social good community—nonprofits, foundations, corporations, education institutions, healthcare 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 CRM, marketing, advocacy, peer-to-peer fundraising, corporate social responsibility, school management, ticketing, grantmaking, financial management, payment processing, and analytics. Serving the industry for more than three decades, Blackbaud is headquartered in Charleston, South Carolina and has operations in the United States, Australia, Canada 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 certain aspects of our operations, financial results and financial condition 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
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PRESS RELEASE | ||
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 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, non-GAAP organic subscriptions revenue growth 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 excludes incremental acquisition-related revenue attributable to companies acquired in the current fiscal year. For companies acquired in the immediately preceding fiscal year, each of these measures reflects presentation of full-year incremental non-GAAP revenue derived from such companies as if they were combined throughout the prior period, and it includes the non-GAAP revenue attributable to those companies, as if there were no acquisition-related write-downs of acquired deferred revenue to fair value as required by GAAP. In addition, each of these measures excludes prior period revenue associated with divested businesses. The exclusion of the prior period revenue is to present the results of the divested businesses within the results of the combined company for the same period of time in both the prior and current periods. Blackbaud believes this presentation provides a more comparable representation of its current business’ organic revenue growth and revenue run-rate.
Non-GAAP free cash flow is defined as operating cash flow less capital expenditures, including costs required to be capitalized for software development, and capital expenditures for property and equipment.
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.
4
Blackbaud, Inc.
Consolidated balance sheets
(Unaudited)
(dollars in thousands) | June 30, 2017 | December 31, 2016 | ||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 17,268 | $ | 16,902 | ||
Restricted cash due to customers | 289,232 | 353,771 | ||||
Accounts receivable, net of allowance of $3,738 and $3,291 at June 30, 2017 and December 31, 2016, respectively | 129,890 | 88,932 | ||||
Prepaid expenses and other current assets | 51,285 | 48,314 | ||||
Total current assets | 487,675 | 507,919 | ||||
Property and equipment, net | 45,679 | 50,269 | ||||
Software development costs, net | 44,962 | 37,582 | ||||
Goodwill | 472,643 | 438,240 | ||||
Intangible assets, net | 263,347 | 253,676 | ||||
Other assets | 24,080 | 22,524 | ||||
Total assets | $ | 1,338,386 | $ | 1,310,210 | ||
Liabilities and stockholders’ equity | ||||||
Current liabilities: | ||||||
Trade accounts payable | $ | 17,660 | $ | 23,274 | ||
Accrued expenses and other current liabilities | 46,508 | 54,196 | ||||
Due to customers | 289,232 | 353,771 | ||||
Debt, current portion | 7,500 | 4,375 | ||||
Deferred revenue, current portion | 280,816 | 244,500 | ||||
Total current liabilities | 641,716 | 680,116 | ||||
Debt, net of current portion | 380,162 | 338,018 | ||||
Deferred tax liability | 40,780 | 29,558 | ||||
Deferred revenue, net of current portion | 6,067 | 6,440 | ||||
Other liabilities | 7,572 | 8,533 | ||||
Total liabilities | 1,076,297 | 1,062,665 | ||||
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, 58,456,066 and 57,672,401 shares issued at June 30, 2017 and December 31, 2016, respectively | 58 | 58 | ||||
Additional paid-in capital | 330,559 | 310,452 | ||||
Treasury stock, at cost; 10,397,768 and 10,166,801 shares at June 30, 2017 and December 31, 2016, respectively | (231,881 | ) | (215,237 | ) | ||
Accumulated other comprehensive loss | (558 | ) | (457 | ) | ||
Retained earnings | 163,911 | 152,729 | ||||
Total stockholders’ equity | 262,089 | 247,545 | ||||
Total liabilities and stockholders’ equity | $ | 1,338,386 | $ | 1,310,210 | ||
5
Blackbaud, Inc.
Consolidated statements of comprehensive income
(Unaudited)
(dollars in thousands, except per share amounts) | Three months ended June 30, | Six months ended June 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
Revenue | |||||||||||||
Subscriptions | $ | 125,252 | $ | 104,039 | $ | 243,431 | $ | 200,890 | |||||
Maintenance | 32,917 | 37,449 | 66,698 | 74,609 | |||||||||
Services and other | 34,026 | 38,703 | 65,687 | 73,948 | |||||||||
Total revenue | 192,195 | 180,191 | 375,816 | 349,447 | |||||||||
Cost of revenue | |||||||||||||
Cost of subscriptions | 57,365 | 52,163 | 112,291 | 101,829 | |||||||||
Cost of maintenance | 5,871 | 5,698 | 11,853 | 11,016 | |||||||||
Cost of services and other | 23,759 | 25,751 | 48,333 | 50,656 | |||||||||
Total cost of revenue | 86,995 | 83,612 | 172,477 | 163,501 | |||||||||
Gross profit | 105,200 | 96,579 | 203,339 | 185,946 | |||||||||
Operating expenses | |||||||||||||
Sales, marketing and customer success | 42,961 | 39,408 | 85,201 | 75,017 | |||||||||
Research and development | 22,870 | 22,748 | 45,576 | 45,463 | |||||||||
General and administrative | 21,882 | 20,091 | 43,805 | 39,770 | |||||||||
Amortization | 739 | 708 | 1,430 | 1,460 | |||||||||
Total operating expenses | 88,452 | 82,955 | 176,012 | 161,710 | |||||||||
Income from operations | 16,748 | 13,624 | 27,327 | 24,236 | |||||||||
Interest expense | (3,216 | ) | (2,721 | ) | (5,593 | ) | (5,396 | ) | |||||
Other income (expense), net | 827 | (65 | ) | 1,113 | (170 | ) | |||||||
Income before provision for income taxes | 14,359 | 10,838 | 22,847 | 18,670 | |||||||||
Income tax provision | 3,194 | 1,778 | 171 | 3,373 | |||||||||
Net income | $ | 11,165 | $ | 9,060 | $ | 22,676 | $ | 15,297 | |||||
Earnings per share | |||||||||||||
Basic | $ | 0.24 | $ | 0.20 | $ | 0.49 | $ | 0.33 | |||||
Diluted | $ | 0.23 | $ | 0.19 | $ | 0.48 | $ | 0.32 | |||||
Common shares and equivalents outstanding | |||||||||||||
Basic weighted average shares | 46,662,481 | 46,083,055 | 46,584,263 | 46,047,788 | |||||||||
Diluted weighted average shares | 47,691,340 | 47,263,844 | 47,586,893 | 47,184,926 | |||||||||
Dividends per share | $ | 0.12 | $ | 0.12 | $ | 0.24 | $ | 0.24 | |||||
Other comprehensive (loss) income | |||||||||||||
Foreign currency translation adjustment | (379 | ) | (431 | ) | (279 | ) | (28 | ) | |||||
Unrealized (loss) gain on derivative instruments, net of tax | (4 | ) | (118 | ) | 178 | (787 | ) | ||||||
Total other comprehensive loss | (383 | ) | (549 | ) | (101 | ) | (815 | ) | |||||
Comprehensive income | $ | 10,782 | $ | 8,511 | $ | 22,575 | $ | 14,482 | |||||
6
Blackbaud, Inc.
Consolidated statements of cash flows
(Unaudited)
Six months ended June 30, | ||||||
(dollars in thousands) | 2017 | 2016 | ||||
Cash flows from operating activities | ||||||
Net income | $ | 22,676 | $ | 15,297 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 36,481 | 35,549 | ||||
Provision for doubtful accounts and sales returns | 5,469 | 2,264 | ||||
Stock-based compensation expense | 20,129 | 16,187 | ||||
Deferred taxes | (1,239 | ) | (287 | ) | ||
Amortization of deferred financing costs and discount | 468 | 478 | ||||
Other non-cash adjustments | (540 | ) | (429 | ) | ||
Changes in operating assets and liabilities, net of acquisition and disposal of businesses: | ||||||
Accounts receivable | (44,887 | ) | (30,097 | ) | ||
Prepaid expenses and other assets | (2,501 | ) | (6,011 | ) | ||
Trade accounts payable | (3,951 | ) | 8,857 | |||
Accrued expenses and other liabilities | (8,467 | ) | (12,713 | ) | ||
Restricted cash due to customers | 64,288 | 62,038 | ||||
Due to customers | (64,288 | ) | (62,038 | ) | ||
Deferred revenue | 30,913 | 19,658 | ||||
Net cash provided by operating activities | 54,551 | 48,753 | ||||
Cash flows from investing activities | ||||||
Purchase of property and equipment | (5,666 | ) | (12,569 | ) | ||
Capitalized software development costs | (13,614 | ) | (12,168 | ) | ||
Purchase of net assets of acquired companies, net of cash | (49,729 | ) | 530 | |||
Purchase of derivative instruments | (516 | ) | — | |||
Net cash used in investing activities | (69,525 | ) | (24,207 | ) | ||
Cash flows from financing activities | ||||||
Proceeds from issuance of debt | 575,700 | 120,900 | ||||
Payments on debt | (529,169 | ) | (126,088 | ) | ||
Debt issuance costs | (3,085 | ) | — | |||
Employee taxes paid for withheld shares upon equity award settlement | (16,644 | ) | (8,037 | ) | ||
Proceeds from exercise of stock options | 14 | 5 | ||||
Dividend payments to stockholders | (11,530 | ) | (11,398 | ) | ||
Net cash provided by (used in) financing activities | 15,286 | (24,618 | ) | |||
Effect of exchange rate on cash and cash equivalents | 54 | (27 | ) | |||
Net increase (decrease) in cash and cash equivalents | 366 | (99 | ) | |||
Cash and cash equivalents, beginning of period | 16,902 | 15,362 | ||||
Cash and cash equivalents, end of period | $ | 17,268 | $ | 15,263 | ||
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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 June 30, | Six months ended June 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
GAAP Revenue | $ | 192,195 | $ | 180,191 | $ | 375,816 | $ | 349,447 | |||||
Non-GAAP adjustments: | |||||||||||||
Add: Acquisition-related deferred revenue write-down | 348 | 1,853 | 348 | 3,639 | |||||||||
Non-GAAP revenue | $ | 192,543 | $ | 182,044 | $ | 376,164 | $ | 353,086 | |||||
GAAP gross profit | $ | 105,200 | $ | 96,579 | $ | 203,339 | $ | 185,946 | |||||
GAAP gross margin | 54.7 | % | 53.6 | % | 54.1 | % | 53.2 | % | |||||
Non-GAAP adjustments: | |||||||||||||
Add: Acquisition-related deferred revenue write-down | 348 | 1,853 | 348 | 3,639 | |||||||||
Add: Stock-based compensation expense | 950 | 842 | 1,741 | 1,687 | |||||||||
Add: Amortization of intangibles from business combinations | 10,072 | 9,927 | 19,927 | 19,808 | |||||||||
Add: Employee severance | 21 | 78 | 973 | 142 | |||||||||
Add: Acquisition-related integration costs | — | — | 86 | — | |||||||||
Subtotal | 11,391 | 12,700 | 23,075 | 25,276 | |||||||||
Non-GAAP gross profit | $ | 116,591 | $ | 109,279 | $ | 226,414 | $ | 211,222 | |||||
Non-GAAP gross margin | 60.6 | % | 60.0 | % | 60.2 | % | 59.8 | % | |||||
GAAP income from operations | $ | 16,748 | $ | 13,624 | $ | 27,327 | $ | 24,236 | |||||
GAAP operating margin | 8.7 | % | 7.6 | % | 7.3 | % | 6.9 | % | |||||
Non-GAAP adjustments: | |||||||||||||
Add: Acquisition-related deferred revenue write-down | 348 | 1,853 | 348 | 3,639 | |||||||||
Add: Stock-based compensation expense | 10,835 | 8,444 | 20,129 | 16,187 | |||||||||
Add: Amortization of intangibles from business combinations | 10,811 | 10,635 | 21,357 | 21,268 | |||||||||
Add: Employee severance | 120 | 113 | 2,866 | 401 | |||||||||
Add: Acquisition-related integration costs | — | 119 | 230 | 502 | |||||||||
Add: Acquisition-related expenses | 1,762 | — | 2,332 | 113 | |||||||||
Subtotal | 23,876 | 21,164 | 47,262 | 42,110 | |||||||||
Non-GAAP income from operations | $ | 40,624 | $ | 34,788 | $ | 74,589 | $ | 66,346 | |||||
Non-GAAP operating margin | 21.1 | % | 19.1 | % | 19.8 | % | 18.8 | % | |||||
GAAP net income | $ | 11,165 | $ | 9,060 | $ | 22,676 | $ | 15,297 | |||||
Shares used in computing GAAP diluted earnings per share | 47,691,340 | 47,263,844 | 47,586,893 | 47,184,926 | |||||||||
GAAP diluted earnings per share | $ | 0.23 | $ | 0.19 | $ | 0.48 | $ | 0.32 | |||||
Non-GAAP adjustments: | |||||||||||||
Add: Total Non-GAAP adjustments affecting income from operations | 23,876 | 21,164 | 47,262 | 42,110 | |||||||||
Less: Gain on derivative instrument | (475 | ) | — | (475 | ) | — | |||||||
Add: Loss on debt extinguishment | 162 | — | 162 | — | |||||||||
Less: Tax impact related to Non-GAAP adjustments | (8,941 | ) | (8,463 | ) | (22,164 | ) | (16,076 | ) | |||||
Non-GAAP net income | $ | 25,787 | $ | 21,761 | $ | 47,461 | $ | 41,331 | |||||
Shares used in computing Non-GAAP diluted earnings per share | 47,691,340 | 47,263,844 | 47,586,893 | 47,184,926 | |||||||||
Non-GAAP diluted earnings per share | $ | 0.54 | $ | 0.46 | $ | 1.00 | $ | 0.88 | |||||
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Blackbaud, Inc.
Reconciliation of GAAP to Non-GAAP financial measures (continued)
(Unaudited)
(dollars in thousands) | Three months ended June 30, | Six months ended June 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
Detail of certain Non-GAAP adjustments: | |||||||||||||
Stock-based compensation expense: | |||||||||||||
Included in cost of revenue: | |||||||||||||
Cost of subscriptions | $ | 338 | $ | 311 | $ | 632 | $ | 586 | |||||
Cost of maintenance | 105 | 136 | 191 | 254 | |||||||||
Cost of services and other | 507 | 395 | 918 | 847 | |||||||||
Total included in cost of revenue | 950 | 842 | 1,741 | 1,687 | |||||||||
Included in operating expenses: | |||||||||||||
Sales, marketing and customer success | 1,781 | 1,021 | 3,220 | 1,917 | |||||||||
Research and development | 2,067 | 1,729 | 3,784 | 3,200 | |||||||||
General and administrative | 6,037 | 4,852 | 11,384 | 9,383 | |||||||||
Total included in operating expenses | 9,885 | 7,602 | 18,388 | 14,500 | |||||||||
Total stock-based compensation expense | $ | 10,835 | $ | 8,444 | $ | 20,129 | $ | 16,187 | |||||
Amortization of intangibles from business combinations: | |||||||||||||
Included in cost of revenue: | |||||||||||||
Cost of subscriptions | $ | 8,127 | $ | 7,853 | $ | 16,038 | $ | 15,664 | |||||
Cost of maintenance | 1,289 | 1,332 | 2,582 | 2,664 | |||||||||
Cost of services and other | 656 | 742 | 1,307 | 1,480 | |||||||||
Total included in cost of revenue | 10,072 | 9,927 | 19,927 | 19,808 | |||||||||
Included in operating expenses | 739 | 708 | 1,430 | 1,460 | |||||||||
Total amortization of intangibles from business combinations | $ | 10,811 | $ | 10,635 | $ | 21,357 | $ | 21,268 | |||||
9
Blackbaud, Inc.
Reconciliation of GAAP to Non-GAAP financial measures (continued)
(Unaudited)
(dollars in thousands) | Three months ended June 30, | Six months ended June 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
GAAP revenue | $ | 192,195 | $ | 180,191 | $ | 375,816 | $ | 349,447 | |||||
GAAP revenue growth | 6.7 | % | 7.5 | % | |||||||||
(Less) Add: Non-GAAP acquisition-related revenue (1) | (1,914 | ) | 1,853 | (1,914 | ) | 3,639 | |||||||
Total Non-GAAP adjustments | (1,914 | ) | 1,853 | (1,914 | ) | 3,639 | |||||||
Non-GAAP revenue (2) | $ | 190,281 | $ | 182,044 | $ | 373,902 | $ | 353,086 | |||||
Non-GAAP organic revenue growth | 4.5 | % | 5.9 | % | |||||||||
Non-GAAP revenue (2) | $ | 190,281 | $ | 182,044 | $ | 373,902 | $ | 353,086 | |||||
Foreign currency impact on Non-GAAP revenue (3) | 1,125 | — | 1,265 | — | |||||||||
Non-GAAP revenue on constant currency basis (3) | $ | 191,406 | $ | 182,044 | $ | 375,167 | $ | 353,086 | |||||
Non-GAAP organic revenue growth on constant currency basis | 5.1 | % | 6.3 | % | |||||||||
GAAP subscriptions revenue | $ | 125,252 | $ | 104,039 | $ | 243,431 | $ | 200,890 | |||||
GAAP subscriptions revenue growth | 20.4 | % | 21.2 | % | |||||||||
(Less) Add: Non-GAAP acquisition-related revenue (1) | (1,763 | ) | 1,780 | (1,763 | ) | 3,534 | |||||||
Total Non-GAAP adjustments | (1,763 | ) | 1,780 | (1,763 | ) | 3,534 | |||||||
Non-GAAP organic subscriptions revenue | $ | 123,489 | $ | 105,819 | $ | 241,668 | $ | 204,424 | |||||
Non-GAAP organic subscriptions revenue growth | 16.7 | % | 18.2 | % | |||||||||
GAAP subscriptions revenue | $ | 125,252 | $ | 104,039 | $ | 243,431 | $ | 200,890 | |||||
GAAP maintenance revenue | $ | 32,917 | $ | 37,449 | 66,698 | 74,609 | |||||||
GAAP recurring revenue | $ | 158,169 | $ | 141,488 | $ | 310,129 | $ | 275,499 | |||||
GAAP recurring revenue growth | 11.8 | % | 12.6 | % | |||||||||
(Less) Add: Non-GAAP acquisition-related revenue (1) | (1,763 | ) | 1,844 | (1,763 | ) | 3,625 | |||||||
Total Non-GAAP adjustments | (1,763 | ) | 1,844 | (1,763 | ) | 3,625 | |||||||
Non-GAAP recurring revenue | $ | 156,406 | $ | 143,332 | $ | 308,366 | $ | 279,124 | |||||
Non-GAAP organic recurring revenue growth | 9.1 | % | 10.5 | % | |||||||||
(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) | Non-GAAP revenue for the prior year periods presented herein may 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. |
(3) | To determine non-GAAP organic revenue growth on a constant currency basis, revenues from entities reporting in foreign currencies were translated to U.S. Dollars using the comparable prior period's quarterly weighted average foreign currency exchange rates. The primary foreign currencies creating the impact are the Canadian Dollar, EURO, British Pound and Australian Dollar. |
(dollars in thousands) | Six months ended June 30, | |||||
2017 | 2016 | |||||
GAAP net cash provided by operating activities | $ | 54,551 | $ | 48,753 | ||
Less: purchase of property and equipment | (5,666 | ) | (12,569 | ) | ||
Less: capitalized software development costs | (13,614 | ) | (12,168 | ) | ||
Non-GAAP free cash flow | $ | 35,271 | $ | 24,016 | ||
10