Blackbaud, Inc. Announces 2014 Fourth Quarter and Full Year Results
Fourth Quarter 2014 Highlights
-
Subscriptions revenue of
$73.1 million , achieving growth of 20.1% - Non-GAAP organic revenue growth accelerates to 7.5%
-
Total revenue of
$152.8 million , achieving 13.3% growth - Recurring revenue represented 73.0% of total revenue
-
Non-GAAP income from operations of
$27.6 million
2015 Full Year Financial Guidance
-
Total non-GAAP revenue of
$625 million to $645 million - Total non-GAAP revenue growth of approximately 10% to 13%
-
Non-GAAP operating income of
$112 million to $118 million - Non-GAAP operating margin of 17.9% to 18.3%
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Non-GAAP diluted earnings per share of
$1.39 to $1.47 -
Cash flow from operations of
$110 million to $120 million
Fourth Quarter 2014 GAAP Financial Results
Income from operations, net income and diluted earnings per share were negatively impacted in the fourth quarter because of increased operating expenses from costs associated with acquisitions completed in 2014 and the impairment of capitalized software development costs. The greatest impacts resulted from increased amortization of intangible assets arising from acquisitions completed in 2014 and implementation of the company's 2014 incremental investments plan which focused on accelerating revenue growth, product optimization, accelerating product transition to the cloud and increasing operating efficiencies.
Fourth Quarter 2014 Non-GAAP Financial Results
Non-GAAP income from operations was
Balance Sheet and Cash Flow
The company ended the fourth quarter with
Full Year 2014 GAAP and Non-GAAP Financial Results
Income from operations, net income and diluted earnings per share were negatively impacted because of increased operating expenses from costs associated with acquisitions completed in 2014, the impairment of capitalized software development costs and expenses associated with our CEO transition. The greatest impacts resulted from increased amortization of intangible assets arising from acquisitions completed in 2014 and implementation of the company's 2014 incremental investments plan.
Non-GAAP income from operations was
"In summary, 2014 was a very good year for our customers and for the company. We delivered on our financial guidance, remained on track to achieve our long-term aspirational goals, strengthened our operating platform and heightened our quality and innovation. We look forward to continuing on this path in 2015, as evidenced by our 2015 financial guidance," concluded Gianoni.
Dividend
Conference Call Details
Investors and others should note that
About
Serving the nonprofit, charitable giving and education communities for more than 30 years,
Forward-looking Statements
Except for historical information, all of the statements, expectations, and assumptions contained in this news release are forward-looking statements which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding: estimates for achievement of 2015 financial guidance; expectations for continuing to successfully execute our five point growth strategy; expectations that achieving our goals will provide improved product quality and innovative solutions for our customers; expectations that our 2014 incremental investments will provide future growth; expectations that the consolidation of legacy systems into best-of-breed platforms will drive increasing operating efficiency and contribute to the margin improvement plan we are focused on executing through 2017; expectations that our financial position provides flexibility to fuel future growth through acquisitions or other opportunities; expectations that past acquisitions have expanded our customer and market opportunities; expectations that we will continue to effectively manage our capital structure; and expectations that we will remain on track to achieve our long-term aspirational goals. These statements involve a number of risks and uncertainties. Although
Non-GAAP Financial Measures
In addition, we discuss non-GAAP organic revenue growth which we believe provides a useful tool for evaluating the periodic growth of our business on a consistent basis. In this non-GAAP financial measure, we reflect certain revenue derived from our payment processing services for the year ended
We have included the results of operations of acquired companies in our consolidated results of operations from the date of their respective acquisition, which impacts the comparability of our results of operations when comparing 2014 to 2013. We have noted in the discussion above, to the extent meaningful, the impact on the comparability of our consolidated results of operations due to the inclusion of acquired companies. Because we are integrating these operations, we expect it will become impracticable to determine the operating results attributable solely to the acquired businesses in 2015.
Investors are also encouraged to refer to previously released financial information on the "Investor Relations" page of our website at www.blackbaud.com/investorrelations for analysis of
Blackbaud, Inc. | ||
Consolidated balance sheets | ||
(Unaudited) | ||
(in thousands, except share amounts) |
December 31, 2014 |
December 31, 2013 |
Assets | ||
Current assets: | ||
Cash and cash equivalents | $14,735 | $11,889 |
Donor restricted cash | 140,709 | 107,362 |
Accounts receivable, net of allowance of $4,539 and $5,613 at December 31, 2014 and 2013, respectively | 77,523 | 66,969 |
Prepaid expenses and other current assets | 40,392 | 30,115 |
Deferred tax asset, current portion | 14,423 | 13,434 |
Total current assets | 287,782 | 229,769 |
Property and equipment, net | 50,402 | 49,550 |
Goodwill | 349,008 | 264,599 |
Intangible assets, net | 229,307 | 143,441 |
Other assets | 26,684 | 19,251 |
Total assets | $943,183 | $706,610 |
Liabilities and stockholders' equity | ||
Current liabilities: | ||
Trade accounts payable | $11,436 | $10,244 |
Accrued expenses and other current liabilities | 52,201 | 40,443 |
Donations payable | 140,709 | 107,362 |
Debt, current portion | 4,375 | 17,158 |
Deferred revenue, current portion | 212,283 | 181,475 |
Total current liabilities | 421,004 | 356,682 |
Debt, net of current portion | 276,196 | 135,750 |
Deferred tax liability | 43,639 | 36,880 |
Deferred revenue, net of current portion | 8,991 | 9,099 |
Other liabilities | 7,437 | 6,655 |
Total liabilities | 757,267 | 545,066 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock; 20,000,000 shares authorized, none outstanding | — | — |
Common stock, $0.001 par value; 180,000,000 shares authorized, 56,048,135 and 55,699,817 shares issued at December 31, 2014 and 2013, respectively | 56 | 56 |
Additional paid-in capital | 245,674 | 220,763 |
Treasury stock, at cost; 9,740,054 and 9,573,102 shares at December 31, 2014 and 2013, respectively | (190,440) | (183,288) |
Accumulated other comprehensive loss | (1,032) | (1,385) |
Retained earnings | 131,658 | 125,398 |
Total stockholders' equity | 185,916 | 161,544 |
Total liabilities and stockholders' equity | $943,183 | $706,610 |
Blackbaud, Inc. | ||||
Consolidated statements of comprehensive income | ||||
(Unaudited) | ||||
Three months ended December 31, |
Years Ended December 31, |
|||
(in thousands, except share and per share amounts) | 2014 | 2013 | 2014 | 2013 |
Revenue | ||||
License fees | $5,021 | $3,914 | $16,216 | $16,715 |
Subscriptions | 73,139 | 60,902 | 263,435 | 212,656 |
Services | 32,603 | 30,931 | 128,371 | 126,548 |
Maintenance | 38,418 | 35,753 | 147,418 | 138,745 |
Other revenue | 3,632 | 3,372 | 8,981 | 9,153 |
Total revenue | 152,813 | 134,872 | 564,421 | 503,817 |
Cost of revenue | ||||
Cost of license fees | 415 | 903 | 1,818 | 2,763 |
Cost of subscriptions | 38,091 | 30,179 | 133,221 | 93,649 |
Cost of services | 27,592 | 25,982 | 106,506 | 104,005 |
Cost of maintenance | 7,904 | 6,653 | 25,448 | 25,741 |
Cost of other revenue | 3,262 | 2,641 | 6,445 | 6,505 |
Total cost of revenue | 77,264 | 66,358 | 273,438 | 232,663 |
Gross profit | 75,549 | 68,514 | 290,983 | 271,154 |
Operating expenses | ||||
Sales and marketing | 28,713 | 24,966 | 107,360 | 97,614 |
Research and development | 22,914 | 16,186 | 77,179 | 65,645 |
General and administrative | 16,159 | 12,101 | 58,277 | 50,320 |
Restructuring | — | 28 | — | 3,494 |
Amortization | 174 | 611 | 1,803 | 2,539 |
Total operating expenses | 67,960 | 53,892 | 244,619 | 219,612 |
Income from operations | 7,589 | 14,622 | 46,364 | 51,542 |
Interest income | 13 | 14 | 59 | 67 |
Interest expense | (1,952) | (1,233) | (6,011) | (5,818) |
Loss on debt extinguishment and termination of derivative instruments | — | — | (996) | — |
Other expense, net | (200) | (116) | (182) | (462) |
Income before provision for income taxes | 5,450 | 13,287 | 39,234 | 45,329 |
Income tax provision | 634 | 1,497 | 10,944 | 14,857 |
Net income | $4,816 | $11,790 | $28,290 | $30,472 |
Earnings per share | ||||
Basic | $0.11 | $0.26 | $0.63 | $0.68 |
Diluted | $0.10 | $0.26 | $0.62 | $0.67 |
Common shares and equivalents outstanding | ||||
Basic weighted average shares | 45,377,465 | 44,985,334 | 45,215,138 | 44,684,812 |
Diluted weighted average shares | 46,055,420 | 45,583,255 | 45,799,874 | 45,421,140 |
Dividends per share | $0.12 | $0.12 | $0.48 | $0.48 |
Other comprehensive income (loss) | ||||
Foreign currency translation adjustment | 323 | (60) | 261 | 53 |
Unrealized (loss) gain on derivative instruments, net of tax | (295) | 84 | 92 | 535 |
Total other comprehensive income | 28 | 24 | 353 | 588 |
Comprehensive income | $4,844 | $11,814 | $28,643 | $31,060 |
Blackbaud, Inc. | ||
Consolidated statements of cash flows | ||
(Unaudited) | ||
Years ended December 31, | ||
(in thousands) | 2014 | 2013 |
Cash flows from operating activities | ||
Net income | $28,290 | $30,472 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 45,417 | 43,164 |
Provision for doubtful accounts and sales returns | 5,248 | 5,403 |
Stock-based compensation expense | 17,345 | 16,910 |
Excess tax benefits from stock based compensation | (7,455) | — |
Deferred taxes | 3,050 | 13,873 |
Impairment of capitalized software development costs | 1,626 | — |
Loss on debt extinguishment and termination of derivative instruments | 996 | — |
Amortization of deferred financing costs and discount | 734 | 613 |
Other non-cash adjustments | 1,163 | 1,261 |
Changes in operating assets and liabilities, net of acquisition of businesses: | ||
Accounts receivable | (5,750) | 3,161 |
Prepaid expenses and other assets | (8,464) | 2,977 |
Trade accounts payable | (948) | (218) |
Accrued expenses and other liabilities | 4,014 | (17,055) |
Donor restricted cash | (33,510) | (39,801) |
Donations payable | 33,510 | 39,801 |
Deferred revenue | 17,011 | 6,683 |
Net cash provided by operating activities | 102,277 | 107,244 |
Cash flows from investing activities | ||
Purchase of property and equipment | (13,911) | (20,086) |
Purchase of net assets of acquired companies, net of cash acquired | (188,918) | (876) |
Capitalized software development costs | (8,535) | (3,197) |
Net cash used in investing activities | (211,364) | (24,159) |
Cash flows from financing activities | ||
Proceeds from issuance of debt | 365,100 | 103,008 |
Payments on debt | (235,589) | (165,600) |
Debt issuance costs | (3,003) | — |
Proceeds from exercise of stock options | 188 | 385 |
Excess tax benefits from stock based compensation | 7,455 | — |
Dividend payments to stockholders | (22,107) | (22,081) |
Net cash provided by (used in) financing activities | 112,044 | (84,288) |
Effect of exchange rate on cash and cash equivalents | (111) | (399) |
Net increase (decrease) in cash and cash equivalents | 2,846 | (1,602) |
Cash and cash equivalents, beginning of year | 11,889 | 13,491 |
Cash and cash equivalents, end of year | $14,735 | $11,889 |
Blackbaud, Inc. | ||||
Reconciliation of GAAP to Non-GAAP financial measures | ||||
(Unaudited) | ||||
Three months ended December 31, |
Years Ended December 31, |
|||
(in thousands, except per share amounts) | 2014 | 2013 | 2014 | 2013 |
GAAP revenue | $152,813 | $134,872 | $564,421 | $503,817 |
Non-GAAP adjustments: | ||||
Add: Acquisition-related deferred revenue write-down | 4,642 | 75 | 6,242 | 1,060 |
Total Non-GAAP adjustments | 4,642 | 75 | 6,242 | 1,060 |
Non-GAAP revenue | $157,455 | $134,947 | $570,663 | $504,877 |
GAAP gross profit | $75,549 | $68,514 | $290,983 | $271,154 |
GAAP gross margin | 49% | 51% | 52% | 54% |
Non-GAAP adjustments: | ||||
Add: Acquisition-related deferred revenue write-down | 4,642 | 75 | 6,242 | 1,060 |
Add: Stock-based compensation expense | 894 | 1,025 | 3,605 | 4,041 |
Add: Amortization of intangibles from business combinations | 7,868 | 5,461 | 24,345 | 22,059 |
Add: Acquisition-related integration costs | — | 157 | — | 835 |
Total Non-GAAP adjustments | 13,404 | 6,718 | 34,192 | 27,995 |
Non-GAAP gross profit | $88,953 | $75,232 | $325,175 | $299,149 |
Non-GAAP gross margin | 56% | 56% | 57% | 59% |
GAAP income from operations | $7,589 | $14,622 | $46,364 | $51,542 |
GAAP operating margin | 5% | 11% | 8% | 10% |
Non-GAAP adjustments: | ||||
Add: Acquisition-related deferred revenue write-down | 4,642 | 75 | 6,242 | 1,060 |
Add: Stock-based compensation expense | 4,853 | 3,942 | 17,345 | 16,910 |
Add: Amortization of intangibles from business combinations | 8,042 | 6,072 | 26,148 | 24,598 |
Add: Impairment of capitalized software development costs | 856 | — | 1,626 | — |
Add: Acquisition-related integration costs | 461 | 369 | 796 | 1,785 |
Add: Acquisition-related expenses | 1,170 | — | 2,315 | — |
Add: CEO transition costs | — | — | 870 | 1,275 |
Add: Restructuring costs | — | 28 | — | 3,494 |
Add: Employee severance | — | — | — | 625 |
Total Non-GAAP adjustments | 20,024 | 10,486 | 55,342 | 49,747 |
Non-GAAP income from operations | $27,613 | $25,108 | $101,706 | $101,289 |
Non-GAAP operating margin | 18% | 19% | 18% | 20% |
GAAP net income | $4,816 | $11,790 | $28,290 | $30,472 |
Shares used in computing GAAP diluted earnings per share | 46,055 | 45,583 | 45,800 | 45,421 |
GAAP diluted earnings per share | $0.10 | $0.26 | $0.62 | $0.67 |
Non-GAAP adjustments: | ||||
Add: Total Non-GAAP adjustments affecting income from operations | 20,024 | 10,486 | 55,342 | 49,747 |
Add: Loss on debt extinguishment and termination of derivative instruments | — | — | 996 | — |
Less: Tax impact related to Non-GAAP adjustments | (9,299) | (7,775) | (26,328) | (22,224) |
Non-GAAP net income | $15,541 | $14,501 | $58,300 | $57,995 |
Shares used in computing Non-GAAP diluted earnings per share | 46,055 | 45,583 | 45,800 | 45,421 |
Non-GAAP diluted earnings per share | $0.34 | $0.32 | $1.27 | $1.28 |
Blackbaud, Inc. | ||||
Reconciliation of GAAP to Non-GAAP financial measures | ||||
(Unaudited) | ||||
Three months ended December 31, |
Years Ended December 31, |
|||
(in thousands, except per share amounts) | 2014 | 2013 | 2014 | 2013 |
Detail of certain Non-GAAP adjustments: | ||||
Stock-based compensation expense: | ||||
Cost of revenue | ||||
Cost of subscriptions | $131 | $277 | $687 | $1,032 |
Cost of services | 576 | 559 | 2,229 | 2,464 |
Cost of maintenance | 187 | 189 | 689 | 545 |
Subtotal | 894 | 1,025 | 3,605 | 4,041 |
Operating expenses | ||||
Sales and marketing | 526 | 596 | 2,147 | 2,351 |
Research and development | 1,078 | 754 | 3,264 | 3,731 |
General and administrative | 2,355 | 1,567 | 8,329 | 6,787 |
Subtotal | 3,959 | 2,917 | 13,740 | 12,869 |
Total stock-based compensation expense | $4,853 | $3,942 | $17,345 | $16,910 |
Amortization of intangibles from business combinations | ||||
Cost of revenue | ||||
Cost of license fees | $87 | $87 | $349 | $421 |
Cost of subscriptions | 6,524 | 4,610 | 20,239 | 18,578 |
Cost of services | 810 | 631 | 2,910 | 2,528 |
Cost of maintenance | 428 | 115 | 772 | 457 |
Cost of other revenue | 19 | 18 | 75 | 75 |
Subtotal | 7,868 | 5,461 | 24,345 | 22,059 |
Operating expenses | 174 | 611 | 1,803 | 2,539 |
Total amortization of intangibles from business combinations | $8,042 | $6,072 | $26,148 | $24,598 |
CONTACT: Investor Contact:Robert Weiner Blackbaud, Inc. 843-654-3138 rob.weiner@blackbaud.com Media Contact:Nicole McGougan Blackbaud, Inc. 843-654-3307 nicole.mcgougan@blackbaud.com