Blackbaud, Inc. Announces Third Quarter 2015 Results
Third Quarter 2015 Highlights
- Total revenue growth of 9.8% to
$158.8 million - Non-GAAP organic revenue growth of 3.5%; 5.5% in constant currency
- Recurring revenue represented 75.0% of total revenue
- Total subscriptions revenue growth of 20.7% to
$80.9 million - Non-GAAP income from operations increased 12.5% to
$30.6 million - Cash flow from operations of
$37.7 million
President and CEO,
Third Quarter 2015 GAAP Financial Results
Total revenue, income from operations and net income were positively impacted in the third quarter from growth in subscriptions revenue and contributions from
Third Quarter 2015 Non-GAAP Financial Results
Non-GAAP income from operations increased 12.5% to
Non-GAAP income from operations and non-GAAP net income were positively impacted in the third quarter by growth in subscriptions revenue and contributions from
Executive Vice President and CFO,
Full-Year Financial Guidance Update
- Non-GAAP revenue of
$645.0 million to $653.0 million - Non-GAAP income from operations of
$120.0 million to $124.0 million - Non-GAAP operating margin of 18.6% to 19.0%
- Non-GAAP diluted earnings per share of
$1.48 to $1.52 - Cash flow from operations of
$115.0 million to $119.0 million
Balance Sheet and Cash Flow
The company ended the third quarter with
To fund the company's acquisition of Smart Tuition on October 2, 2015 for a net purchase price of
Dividend
Conference Call Details
Investors and others should note that the company announces material financial information to our investors using its website, www.blackbaud.com,
About
Serving the worldwide philanthropic community 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: our projected 2015 full year financial results, expectations that our strategic product transitions will result in continued growth in revenue and profitability; continued execution of and benefit from our five growth and operational improvement strategies; and expectations that past investments will continue to yield subscriptions revenue growth, operational efficiencies and improved operating margins. These statements involve a number of risks and uncertainties. Although
Non-GAAP Financial Measures
In addition,
Blackbaud, Inc. Consolidated balance sheets (Unaudited) |
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(in thousands, except share amounts) | September 30, 2015 |
December 31, 2014 |
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Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 17,555 | $ | 14,735 | |||
Donor restricted cash | 63,460 | 140,709 | |||||
Accounts receivable, net of allowance of $4,448 and $4,539 at September 30, 2015 and December 31, 2014, respectively | 78,152 | 77,523 | |||||
Prepaid expenses and other current assets | 39,557 | 40,392 | |||||
Deferred tax asset, current portion | 10,608 | 14,423 | |||||
Total current assets | 209,332 | 287,782 | |||||
Property and equipment, net | 49,024 | 50,402 | |||||
Goodwill | 345,770 | 349,008 | |||||
Intangible assets, net | 204,738 | 229,307 | |||||
Other assets | 35,300 | 26,684 | |||||
Total assets | $ | 844,164 | $ | 943,183 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Trade accounts payable | $ | 13,137 | $ | 11,436 | |||
Accrued expenses and other current liabilities | 45,576 | 52,201 | |||||
Donations payable | 63,460 | 140,709 | |||||
Debt, current portion | 4,375 | 4,375 | |||||
Deferred revenue, current portion | 227,161 | 212,283 | |||||
Total current liabilities | 353,709 | 421,004 | |||||
Debt, net of current portion | 237,293 | 276,196 | |||||
Deferred tax liability | 34,800 | 43,639 | |||||
Deferred revenue, net of current portion | 7,369 | 8,991 | |||||
Other liabilities | 7,025 | 7,437 | |||||
Total liabilities | 640,196 | 757,267 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock; 20,000,000 shares authorized, none outstanding | — | — | |||||
Common stock, $0.001 par value; 180,000,000 shares authorized, 56,693,785 and 56,048,135 shares issued at September 30, 2015 and December 31, 2014, respectively | 57 | 56 | |||||
Additional paid-in capital | 265,024 | 245,674 | |||||
Treasury stock, at cost; 9,796,306 and 9,740,054 shares at September 30, 2015 and December 31, 2014, respectively | (193,168 | ) | (190,440 | ) | |||
Accumulated other comprehensive loss | (2,020 | ) | (1,032 | ) | |||
Retained earnings | 134,075 | 131,658 | |||||
Total stockholders’ equity | 203,968 | 185,916 | |||||
Total liabilities and stockholders’ equity | $ | 844,164 | $ | 943,183 | |||
Blackbaud, Inc. Consolidated statements of comprehensive income (Unaudited) |
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(in thousands, except share and per share amounts) | Three months ended September 30, |
Nine months ended September 30, |
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2015 | 2014 | 2015 | 2014 | ||||||||||
Revenue | |||||||||||||
Subscriptions | $ | 80,901 | $ | 67,043 | $ | 233,423 | $ | 190,296 | |||||
Maintenance | 38,209 | 36,821 | 115,732 | 109,000 | |||||||||
Services | 35,905 | 35,843 | 100,878 | 95,768 | |||||||||
License fees and other | 3,796 | 4,891 | 12,030 | 16,544 | |||||||||
Total revenue | 158,811 | 144,598 | 462,063 | 411,608 | |||||||||
Cost of revenue | |||||||||||||
Cost of subscriptions | 39,485 | 33,257 | 115,063 | 95,130 | |||||||||
Cost of maintenance | 6,708 | 6,147 | 21,179 | 17,544 | |||||||||
Cost of services | 26,235 | 27,111 | 79,121 | 78,914 | |||||||||
Cost of license fees and other | 1,745 | 1,633 | 4,052 | 4,586 | |||||||||
Total cost of revenue | 74,173 | 68,148 | 219,415 | 196,174 | |||||||||
Gross profit | 84,638 | 76,450 | 242,648 | 215,434 | |||||||||
Operating expenses | |||||||||||||
Sales and marketing | 31,139 | 27,098 | 89,424 | 78,647 | |||||||||
Research and development | 20,561 | 19,707 | 62,003 | 54,265 | |||||||||
General and administrative | 18,446 | 15,519 | 53,244 | 42,118 | |||||||||
Amortization | 524 | 624 | 1,536 | 1,629 | |||||||||
Total operating expenses | 70,670 | 62,948 | 206,207 | 176,659 | |||||||||
Income from operations | 13,968 | 13,502 | 36,441 | 38,775 | |||||||||
Interest income | 8 | 17 | 23 | 46 | |||||||||
Interest expense | (1,816 | ) | (1,272 | ) | (5,375 | ) | (4,059 | ) | |||||
Loss on sale of business | — | — | (1,976 | ) | — | ||||||||
Loss on debt extinguishment and termination of derivative instruments | — | — | — | (996 | ) | ||||||||
Other income, net | 184 | 29 | 584 | 18 | |||||||||
Income before provision for income taxes | 12,344 | 12,276 | 29,697 | 33,784 | |||||||||
Income tax provision | 4,433 | 1,896 | 10,459 | 10,310 | |||||||||
Net income | $ | 7,911 | $ | 10,380 | $ | 19,238 | $ | 23,474 | |||||
Earnings per share | |||||||||||||
Basic | $ | 0.17 | $ | 0.23 | $ | 0.42 | $ | 0.52 | |||||
Diluted | $ | 0.17 | $ | 0.23 | $ | 0.41 | $ | 0.51 | |||||
Common shares and equivalents outstanding | |||||||||||||
Basic weighted average shares | 45,616,832 | 45,196,277 | 45,576,029 | 45,160,434 | |||||||||
Diluted weighted average shares | 46,596,714 | 45,883,570 | 46,403,196 | 45,704,157 | |||||||||
Dividends per share | $ | 0.12 | $ | 0.12 | $ | 0.36 | $ | 0.36 | |||||
Other comprehensive (loss) income | |||||||||||||
Foreign currency translation adjustment | 168 | (232 | ) | (354 | ) | (62 | ) | ||||||
Unrealized (loss) gain on derivative instruments, net of tax | (262 | ) | 468 | (634 | ) | 386 | |||||||
Total other comprehensive (loss) income | (94 | ) | 236 | (988 | ) | 324 | |||||||
Comprehensive income | $ | 7,817 | $ | 10,616 | $ | 18,250 | $ | 23,798 | |||||
Blackbaud, Inc. Consolidated statements of cash flows (Unaudited) |
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Nine months ended September 30, |
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(in thousands) | 2015 | 2014 | ||||
Cash flows from operating activities | ||||||
Net income | $ | 19,238 | $ | 23,474 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 41,340 | 32,586 | ||||
Provision for doubtful accounts and sales returns | 4,573 | 3,837 | ||||
Stock-based compensation expense | 17,899 | 12,492 | ||||
Excess tax benefits from exercise and vesting of stock-based compensation | (1,490 | ) | (3,762 | ) | ||
Deferred taxes | (2,274 | ) | 86 | |||
Loss on sale of business | 1,976 | — | ||||
Impairment of capitalized software development costs | — | 775 | ||||
Loss on debt extinguishment and termination of derivative instruments | — | 996 | ||||
Amortization of deferred financing costs and discount | 660 | 524 | ||||
Other non-cash adjustments | (159 | ) | 1,672 | |||
Changes in operating assets and liabilities, net of acquisition of businesses: | ||||||
Accounts receivable | (6,378 | ) | (1,261 | ) | ||
Prepaid expenses and other assets | (324 | ) | (255 | ) | ||
Trade accounts payable | 3,284 | 939 | ||||
Accrued expenses and other liabilities | (9,027 | ) | 2,902 | |||
Donor restricted cash | 76,091 | 57,059 | ||||
Donations payable | (76,091 | ) | (57,059 | ) | ||
Deferred revenue | 15,973 | 10,487 | ||||
Net cash provided by operating activities | 85,291 | 85,492 | ||||
Cash flows from investing activities | ||||||
Purchase of property and equipment | (14,560 | ) | (8,317 | ) | ||
Capitalized software development costs | (10,868 | ) | (6,287 | ) | ||
Purchase of net assets of acquired companies, net of cash acquired | (520 | ) | (33,275 | ) | ||
Net cash used in sale of business | (521 | ) | — | |||
Net cash used in investing activities | (26,469 | ) | (47,879 | ) | ||
Cash flows from financing activities | ||||||
Proceeds from issuance of debt | 83,600 | 201,000 | ||||
Payments on debt | (122,581 | ) | (181,095 | ) | ||
Debt issuance costs | (429 | ) | (2,484 | ) | ||
Proceeds from exercise of stock options | 23 | 182 | ||||
Excess tax benefits from exercise and vesting of stock-based compensation | 1,490 | 3,762 | ||||
Dividend payments to stockholders | (16,883 | ) | (16,631 | ) | ||
Net cash (used in) provided by financing activities | (54,780 | ) | 4,734 | |||
Effect of exchange rate on cash and cash equivalents | (1,222 | ) | (276 | ) | ||
Net increase in cash and cash equivalents | 2,820 | 42,071 | ||||
Cash and cash equivalents, beginning of period | 14,735 | 11,889 | ||||
Cash and cash equivalents, end of period | $ | 17,555 | $ | 53,960 | ||
Blackbaud, Inc. Reconciliation of GAAP to non-GAAP financial measures (Unaudited) |
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(in thousands, except per share amounts and percentages) | Three months ended September 30, |
Nine months ended September 30, |
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2015 | 2014 | 2015 | 2014 | ||||||||||
GAAP Revenue | $ | 158,811 | $ | 144,598 | $ | 462,063 | $ | 411,608 | |||||
Non-GAAP adjustments: | |||||||||||||
Add: Acquisition-related deferred revenue write-down | 1,126 | 1,600 | 7,132 | 1,600 | |||||||||
Non-GAAP revenue | $ | 159,937 | $ | 146,198 | $ | 469,195 | $ | 413,208 | |||||
GAAP gross profit | $ | 84,638 | $ | 76,450 | $ | 242,648 | $ | 215,434 | |||||
GAAP gross margin | 53.3 | % | 52.9 | % | 52.5 | % | 52.3 | % | |||||
Non-GAAP adjustments: | |||||||||||||
Add: Acquisition-related deferred revenue write-down | 1,126 | 1,600 | 7,132 | 1,600 | |||||||||
Add: Stock-based compensation expense | 769 | 882 | 2,719 | 2,711 | |||||||||
Add: Amortization of intangibles from business combinations | 7,545 | 5,710 | 22,750 | 16,477 | |||||||||
Add: Employee severance | 527 | — | 1,467 | — | |||||||||
Subtotal | 9,967 | 8,192 | 34,068 | 20,788 | |||||||||
Non-GAAP gross profit | $ | 94,605 | $ | 84,642 | $ | 276,716 | $ | 236,222 | |||||
Non-GAAP gross margin | 59.2 | % | 57.9 | % | 59.0 | % | 57.2 | % | |||||
GAAP income from operations | $ | 13,968 | $ | 13,502 | $ | 36,441 | $ | 38,775 | |||||
GAAP operating margin | 8.8 | % | 9.3 | % | 7.9 | % | 9.4 | % | |||||
Non-GAAP adjustments: | |||||||||||||
Add: Acquisition-related deferred revenue write-down | 1,126 | 1,600 | 7,132 | 1,600 | |||||||||
Add: Stock-based compensation expense | 6,486 | 4,448 | 17,899 | 12,492 | |||||||||
Add: Amortization of intangibles from business combinations | 8,068 | 6,334 | 24,286 | 18,106 | |||||||||
Add: Employee severance | 631 | — | 2,211 | — | |||||||||
Add: Impairment of capitalized software development costs | — | — | — | 770 | |||||||||
Add: Acquisition-related integration costs | 53 | 238 | 725 | 335 | |||||||||
Add: Acquisition-related expenses | 257 | 1,080 | 1,045 | 1,145 | |||||||||
Add: CEO transition costs | — | — | — | 870 | |||||||||
Subtotal | 16,621 | 13,700 | 53,298 | 35,318 | |||||||||
Non-GAAP income from operations | $ | 30,589 | $ | 27,202 | $ | 89,739 | $ | 74,093 | |||||
Non-GAAP operating margin | 19.1 | % | 18.6 | % | 19.1 | % | 17.9 | % | |||||
GAAP net income | $ | 7,911 | $ | 10,380 | $ | 19,238 | $ | 23,474 | |||||
Shares used in computing GAAP diluted earnings per share | 46,597 | 45,884 | 46,403 | 45,704 | |||||||||
GAAP diluted earnings per share | $ | 0.17 | $ | 0.23 | $ | 0.41 | $ | 0.51 | |||||
Non-GAAP adjustments: | |||||||||||||
Add: Total Non-GAAP adjustments affecting income from operations | 16,621 | 13,700 | 53,298 | 35,318 | |||||||||
Add: Loss on sale of business | — | — | 1,976 | — | |||||||||
Add: Loss on debt extinguishment and termination of derivative instruments | — | — | — | 996 | |||||||||
Less: Tax impact related to Non-GAAP adjustments | (6,863 | ) | (8,236 | ) | (22,680 | ) | (17,028 | ) | |||||
Non-GAAP net income | $ | 17,669 | $ | 15,844 | $ | 51,832 | $ | 42,760 | |||||
Shares used in computing Non-GAAP diluted earnings per share | 46,597 | 45,884 | 46,403 | 45,704 | |||||||||
Non-GAAP diluted earnings per share | $ | 0.38 | $ | 0.35 | $ | 1.12 | $ | 0.94 | |||||
Blackbaud, Inc. Reconciliation of GAAP to Non-GAAP financial measures (continued) (Unaudited) |
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(in thousands, except percentages) | Three months ended September 30, |
Nine months ended September 30, |
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2015 | 2014 | 2015 | 2014 | ||||||||||
GAAP net income | $ | 7,911 | $ | 10,380 | $ | 19,238 | $ | 23,474 | |||||
Non-GAAP adjustments: | |||||||||||||
Add: Interest, net | 1,808 | 1,255 | 5,352 | 4,013 | |||||||||
Add: Income tax provision | 4,433 | 1,896 | 10,459 | 10,310 | |||||||||
Add: Depreciation | 4,458 | 4,596 | 13,752 | 13,244 | |||||||||
Add: Amortization of intangibles from business combinations | 8,068 | 6,334 | 24,286 | 18,106 | |||||||||
Add: Amortization of software development costs | 1,542 | 462 | 3,302 | 1,236 | |||||||||
Subtotal | 20,309 | 14,543 | 57,151 | 46,909 | |||||||||
EBITDA | $ | 28,220 | $ | 24,923 | $ | 76,389 | $ | 70,383 | |||||
EBITDA Margin | 17.6 | % | 17.0 | % | 16.3 | % | 17.0 | % | |||||
Non-GAAP adjustments: | |||||||||||||
Add: Other (income) expense, net | (184 | ) | (29 | ) | (584 | ) | (18 | ) | |||||
Add: Loss on sale of business | — | — | 1,976 | — | |||||||||
Add: Loss on debt extinguishment and termination of derivative instruments | — | — | — | 996 | |||||||||
Add: Acquisition-related deferred revenue write-down | 1,126 | 1,600 | 7,132 | 1,600 | |||||||||
Add: Stock-based compensation expense | 6,486 | 4,448 | 17,899 | 12,492 | |||||||||
Add: Employee severance | 631 | — | 2,211 | — | |||||||||
Add: Impairment of capitalized software development costs | — | — | — | 770 | |||||||||
Add: Acquisition-related integration costs | 53 | 238 | 725 | 335 | |||||||||
Add: Acquisition-related expenses | 257 | 1,080 | 1,045 | 1,145 | |||||||||
Add: CEO transition costs | — | — | — | 870 | |||||||||
Subtotal | 8,369 | 7,337 | 30,404 | 18,190 | |||||||||
Adjusted EBITDA | $ | 36,589 | $ | 32,260 | $ | 106,793 | $ | 88,573 | |||||
Adjusted EBITDA Margin | 22.9 | % | 22.1 | % | 22.8 | % | 21.4 | % | |||||
Detail of certain Non-GAAP adjustments: | |||||||||||||
Stock-based compensation expense: | |||||||||||||
Included in cost of revenue: | |||||||||||||
Cost of subscriptions | $ | 213 | $ | 192 | $ | 681 | $ | 556 | |||||
Cost of maintenance | 107 | 161 | 353 | 502 | |||||||||
Cost of services | 449 | 529 | 1,685 | 1,653 | |||||||||
Total included in cost of revenue | 769 | 882 | 2,719 | 2,711 | |||||||||
Included in operating expenses: | |||||||||||||
Sales and marketing | 768 | 562 | 2,273 | 1,621 | |||||||||
Research and development | 1,145 | 762 | 3,309 | 2,186 | |||||||||
General and administrative | 3,804 | 2,242 | 9,598 | 5,974 | |||||||||
Total included in operating expenses | 5,717 | 3,566 | 15,180 | 9,781 | |||||||||
Total stock-based compensation expense | $ | 6,486 | $ | 4,448 | $ | 17,899 | $ | 12,492 | |||||
Amortization of intangibles from business combinations: | |||||||||||||
Included in cost of revenue: | |||||||||||||
Cost of subscriptions | $ | 5,761 | $ | 4,721 | $ | 17,300 | $ | 13,715 | |||||
Cost of maintenance | 1,000 | 114 | 3,160 | 344 | |||||||||
Cost of services | 698 | 768 | 2,007 | 2,100 | |||||||||
Cost of license fees and other | 86 | 107 | 283 | 318 | |||||||||
Total included in cost of revenue | 7,545 | 5,710 | 22,750 | 16,477 | |||||||||
Included in operating expenses | 523 | 624 | 1,536 | 1,629 | |||||||||
Total amortization of intangibles from business combinations | $ | 8,068 | $ | 6,334 | $ | 24,286 | $ | 18,106 | |||||
Investor Contact:Jagtar Narula Blackbaud, Inc. 843-654-2164 jagtar.narula@blackbaud.com Media Contact:Nicole McGougan Blackbaud, Inc. 843-654-3307 nicole.mcgougan@blackbaud.com