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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 30, 2019

 
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Blackbaud, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
(State or other jurisdiction of incorporation)
000-50600
 
11-2617163
(Commission File Number)
 
(IRS Employer ID Number)
 
 
 
65 Fairchild Street, 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))
 
 
 
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on which Registered
Common Stock, $0.001 Par Value
BLKB
The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)
 
 
 
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 30, 2019, Blackbaud, Inc. (the "Company") issued a press release reporting unaudited financial results for the quarter ended June 30, 2019. 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
 
 
 
 
Press release dated July 30, 2019 reporting unaudited financial results for the quarter ended June 30, 2019.





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 30, 2019
 
 
/s/ Anthony W. Boor
 
 
 
 
 
Anthony W. Boor
 
 
 
 
 
Executive Vice President and Chief Financial Officer
 
 
 
 
 
(Principal Financial and Accounting Officer)
 




Exhibit
 
 
Exhibit 99.1
 
 
 
 
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PRESS RELEASE
 
 



Blackbaud Announces 2019 Second Quarter Results
Second Quarter Recurring Revenue Grows 8% Representing 92% of Total Revenue;
Reaffirms 2019 Financial Guidance

 
Charleston, S.C. (July 30, 2019) - Blackbaud (NASDAQ: BLKB), the world's leading cloud software company powering social good, today announced financial results for its second quarter ended June 30, 2019.
    
"This year marks our 15th year as a Nasdaq listed public company, which is a testament to the incredible team we have and their dedication to drive powerful social impact and create shareholder value," said Mike Gianoni, Blackbaud's president and CEO. "We continued to drive market-specific innovation across our vertical markets. Soon we will be announcing general availability of Blackbaud Church Management™, part of the Cloud Solution for Faith Communities, and we continue to see strong market traction with our new Education Management portfolio, part of the Cloud Solution for Higher Education™."

Second Quarter 2019 Results Compared to Second Quarter 2018 Results:
•
Total GAAP revenue was $225.6 million, up 5.6%, with $208.5 million in GAAP recurring revenue, representing 92.4% of total GAAP revenue. GAAP recurring revenue was up 8.2%.
•
Total non-GAAP revenue was $226.4 million, up 5.5%, with $209.2 million in non-GAAP recurring revenue, representing 92.4% of total non-GAAP revenue. Non-GAAP recurring revenue was up 8.0%.
•
Non-GAAP organic recurring revenue increased 5.0%.
•
GAAP income from operations was $13.5 million, with GAAP operating margin of 6.0%, an increase of 70 basis points.
•
Non-GAAP income from operations was $43.5 million, with non-GAAP operating margin of 19.2%, a decrease of 190 basis points.
•
GAAP net income was $7.1 million, with GAAP diluted earnings per share of $0.15, up $0.01.
•
Non-GAAP net income was $31.9 million, with non-GAAP diluted earnings per share of $0.66, down $0.03.
•
Non-GAAP free cash flow was $38.0 million, a decrease of $3.6 million.

"Execution against our strategic plan drove solid results for the second quarter as we continue investing to further expand our selling footprint, drive cloud innovation for our customers, and ensure scalability in our business," said Tony Boor, Blackbaud's executive vice president and CFO. "We're pleased with the progress of the new sales hires added to date as they ramp to targeted productivity, and we expect to continue hiring as we look to grow our full year sales headcount at an accelerated rate relative to our historical average."

An explanation of all non-GAAP financial measures referenced in this press release is included below under the heading "Non-GAAP Financial Measures." A reconciliation of 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 Celebrates 15 years Listed with Nasdaq
•
Microsoft Awards Blackbaud 2019 MSUS Partner Award for Industry-Education
•
Emmy® Nominated Actress and Humanitarian Connie Britton to Headline BBCON 2019
•
Pascale Harvie Appointed as the President and General Manager for Blackbaud Operations in Europe

Visit www.blackbaud.com/newsroom for more information about Blackbaud’s recent highlights.

Dividend
Blackbaud announced today that its Board of Directors has declared a third quarter 2019 dividend of $0.12 per share payable on September 13, 2019 to stockholders of record on August 28, 2019.

Financial Outlook
Blackbaud today reaffirmed its 2019 full year financial guidance:

•
Non-GAAP revenue of $880 million to $910 million
•
Non-GAAP operating margin of 16.7% to 17.2%
•
Non-GAAP diluted earnings per share of $2.11 to $2.28
•
Non-GAAP free cash flow of $124 million to $134 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.

Adoption of New Lease Accounting Standard
On January 1, 2019, we adopted Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) ("ASU 2016-02"), using the transition method that allowed us to initially apply the guidance at the adoption date of January 1, 2019 without adjusting comparative periods presented. ASU 2016-02 requires lessees to record most leases on their balance sheet but recognize expenses in the income statement in a manner similar to previous guidance. The impacts of adoption are reflected in Blackbaud's guidance and the other financial information herein. We have provided more detailed information regarding the impact of our adoption of ASU 2016-02 in our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 3, 2019.

Conference Call Details
What:    Blackbaud's 2019 Second Quarter Conference Call
When:    July 31, 2019
Time:     8:00 a.m. (Eastern Time)
Live Call:     800-289-0462 (US/Canada); passcode 097160.
Webcast:    Blackbaud's Investor Relations Webpage


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PRESS RELEASE
 
 

About Blackbaud
Blackbaud (NASDAQ: BLKB) is the world’s leading cloud software company powering social good. Serving the entire social good community—nonprofits, foundations, companies, education institutions, healthcare organizations and individual change agents—Blackbaud connects and empowers organizations to increase their impact through cloud 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, or follow us on Twitter, LinkedIn, and Facebook.
Investor Contact:
 
Media Contact:
 
Steve Hufford
 
media@blackbaud.com
 
Director of Investor Relations
 
 
 
843-654-2655
 
 
 
steve.hufford@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: the predictability of our financial results, expectations that our revenue will continue to grow, and expectations that we will achieve our projected 2019 full-year financial guidance. These statements involve a number of risks and uncertainties. Although Blackbaud attempts to be accurate in making these forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based. In addition, other important factors that could cause results to differ materially include the following: management of integration of acquired companies; uncertainty regarding increased business and renewals from existing customers; a shifting revenue mix that may impact gross margin; continued success in sales growth; risks related to our dividend policy and stock repurchase program, including the possibility that we might discontinue payment of dividends; and the other risk factors set forth from time to time in the SEC filings for Blackbaud, copies of which are available free of charge at the SEC’s website at www.sec.gov or upon request from Blackbaud's investor relations department. Blackbaud assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

Trademarks
All Blackbaud product names appearing herein are trademarks or registered trademarks of Blackbaud, Inc.

Non-GAAP Financial Measures
Blackbaud has provided in this release financial information that has not been prepared in accordance with GAAP. This information includes non-GAAP revenue, non-GAAP recurring revenue, non-GAAP gross profit, non-GAAP gross margin, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income and non-GAAP diluted earnings per share. Blackbaud has acquired businesses whose net tangible assets include deferred revenue. In accordance with GAAP reporting requirements, Blackbaud recorded write-downs of deferred revenue to fair value, which resulted in lower recognized revenue. Both on a quarterly and year-to-date basis, the revenue for the acquired businesses is deferred and typically recognized over a one-year period, so Blackbaud's GAAP revenues for the one-year period after the acquisitions will not reflect the full amount of revenues that would have been reported if the acquired deferred revenue was not written down to fair value. The non-GAAP measures described above reverse the acquisition-related deferred revenue write-downs so that the full amount of revenue booked by the acquired companies is included, which Blackbaud believes provides a more accurate representation of a revenue run-rate in a given period. In addition to reversing write-downs of acquisition-

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PRESS RELEASE
 
 

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 uses non-GAAP organic revenue growth, non-GAAP organic revenue growth on a constant currency basis and non-GAAP organic recurring revenue growth, in analyzing its operating performance. Blackbaud believes that these non-GAAP measures are useful to investors, as a supplement to GAAP measures, 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 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,
2019

December 31,
2018

Assets
 
 
Current assets:
 
 
Cash and cash equivalents
$
32,654

$
30,866

Restricted cash due to customers
354,133

418,980

Accounts receivable, net of allowance of $5,231 and $4,722 at June 30, 2019 and December 31, 2018, respectively
131,277

86,595

Customer funds receivable
5,349

1,753

Prepaid expenses and other current assets
76,728

59,788

Total current assets
600,141

597,982

Property and equipment, net
39,569

40,031

Operating lease right-of-use assets
107,165

—

Software development costs, net
87,880

75,099

Goodwill
632,269

545,213

Intangible assets, net
340,615

291,617

Other assets
66,319

65,363

Total assets
$
1,873,958

$
1,615,305

Liabilities and stockholders’ equity
 
 
Current liabilities:
 
 
Trade accounts payable
$
35,749

$
34,538

Accrued expenses and other current liabilities
60,514

46,893

Due to customers
359,482

420,733

Debt, current portion
7,500

7,500

Deferred revenue, current portion
327,299

295,991

Total current liabilities
790,544

805,655

Debt, net of current portion
553,812

379,624

Deferred tax liability
48,658

44,291

Deferred revenue, net of current portion
2,324

2,564

Operating lease liabilities, net of current portion
100,116

—

Other liabilities
5,802

9,388

Total liabilities
1,501,256

1,241,522

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, 60,187,063 and 59,327,633 shares issued at June 30, 2019 and December 31, 2018, respectively
60

59

Additional paid-in capital
427,950

399,241

Treasury stock, at cost; 11,017,004 and 10,760,574 shares at June 30, 2019 and December 31, 2018, respectively
(286,644
)
(266,884
)
Accumulated other comprehensive loss
(9,409
)
(5,110
)
Retained earnings
240,745

246,477

Total stockholders’ equity
372,702

373,783

Total liabilities and stockholders’ equity
$
1,873,958

$
1,615,305




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,
 
2019

2018

 
2019

2018

Revenue
 
 
 
 
 
Recurring
$
208,468

$
192,749

 
$
406,562

$
373,595

One-time services and other
17,166

20,923

 
34,902

44,261

Total revenue
225,634

213,672

 
441,464

417,856

Cost of revenue
 
 
 
 
 
Cost of recurring
86,657

76,350

 
171,368

145,429

Cost of one-time services and other
14,150

18,822

 
28,722

37,780

Total cost of revenue
100,807

95,172

 
200,090

183,209

Gross profit
124,827

118,500

 
241,374

234,647

Operating expenses
 
 
 
 
 
Sales, marketing and customer success
55,009

48,493

 
110,464

93,970

Research and development
25,902

25,297

 
54,363

51,255

General and administrative
28,543

28,447

 
55,660

53,498

Amortization
1,152

1,201

 
2,528

2,470

Restructuring
730

3,688

 
2,683

4,499

Total operating expenses
111,336

107,126

 
225,698

205,692

Income from operations
13,491

11,374

 
15,676

28,955

Interest expense
(5,799
)
(4,303
)
 
(11,122
)
(7,820
)
Other income, net
2,181

346

 
2,363

506

Income before provision for income taxes
9,873

7,417

 
6,917

21,641

Income tax provision (benefit)
2,733

825

 
899

(2,702
)
Net income
$
7,140

$
6,592

 
$
6,018

$
24,343

Earnings per share
 
 
 
 
 
Basic
$
0.15

$
0.14

 
$
0.13

$
0.52

Diluted
$
0.15

$
0.14

 
$
0.13

$
0.51

Common shares and equivalents outstanding
 
 
 
 
 
Basic weighted average shares
47,714,621

47,222,657

 
47,622,740

47,121,692

Diluted weighted average shares
48,160,684

48,053,094

 
48,101,212

48,030,547

Other comprehensive (loss) income
 
 
 
 
 
Foreign currency translation adjustment
(6,018
)
(8,817
)
 
(1,428
)
(2,380
)
Unrealized (loss) gain on derivative instruments, net of tax
(1,939
)
765

 
(2,871
)
1,844

Total other comprehensive loss
(7,957
)
(8,052
)
 
(4,299
)
(536
)
Comprehensive (loss) income
$
(817
)
$
(1,460
)
 
$
1,719

$
23,807


6
Blackbaud, Inc.
Consolidated statements of cash flows
(Unaudited)


 
Six months ended 
 June 30,
 
(dollars in thousands)
2019

2018

Cash flows from operating activities
 
 
Net income
$
6,018

$
24,343

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
43,113

39,847

Provision for doubtful accounts and sales returns
4,646

3,697

Stock-based compensation expense
28,755

24,953

Deferred taxes
465

1,121

Amortization of deferred financing costs and discount
376

376

Other non-cash adjustments
1,982

(419
)
Changes in operating assets and liabilities, net of acquisition and disposal of businesses:
 
 
Accounts receivable
(45,071
)
(38,092
)
Prepaid expenses and other assets
(12,725
)
(18,629
)
Trade accounts payable
216

6,327

Accrued expenses and other liabilities
(9,014
)
(6,675
)
Deferred revenue
26,328

29,545

Net cash provided by operating activities
45,089

66,394

Cash flows from investing activities
 
 
Purchase of property and equipment
(6,375
)
(9,575
)
Capitalized software development costs
(23,206
)
(16,359
)
Purchase of net assets of acquired companies, net of cash and restricted cash acquired
(109,386
)
(45,315
)
Other investing activities
500

—

Net cash used in investing activities
(138,467
)
(71,249
)
Cash flows from financing activities
 
 
Proceeds from issuance of debt
329,100

173,500

Payments on debt
(155,150
)
(132,150
)
Employee taxes paid for withheld shares upon equity award settlement
(19,760
)
(25,184
)
Proceeds from exercise of stock options
6

11

Change in due to customers
(107,808
)
(309,189
)
Change in customer funds receivable
(3,741
)
(4,391
)
Dividend payments to stockholders
(11,802
)
(11,653
)
Net cash provided by (used in) financing activities
30,845

(309,056
)
Effect of exchange rate on cash, cash equivalents and restricted cash
(526
)
(1,606
)
Net decrease in cash, cash equivalents and restricted cash
(63,059
)
(315,517
)
Cash, cash equivalents and restricted cash, beginning of period
449,846

640,174

Cash, cash equivalents and restricted cash, end of period
$
386,787

$
324,657

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown above in the consolidated statements of cash flows:
(dollars in thousands)
June 30,
2019

December 31,
2018

Cash and cash equivalents
$
32,654

$
30,866

Restricted cash due to customers
354,133

418,980

Total cash, cash equivalents and restricted cash in the statement of cash flows
$
386,787

$
449,846


7
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,
 
2019

2018

 
2019

2018

GAAP Revenue
$
225,634

$
213,672

 
$
441,464

$
417,856

Non-GAAP adjustments:
 
 
 
 
 
Add: Acquisition-related deferred revenue write-down
716

919

 
1,432

1,267

Non-GAAP revenue
$
226,350

$
214,591

 
$
442,896

$
419,123

 
 
 
 
 
 
GAAP gross profit
$
124,827

$
118,500

 
$
241,374

$
234,647

GAAP gross margin
55.3
%
55.5
%
 
54.7
%
56.2
%
Non-GAAP adjustments:
 
 
 
 
 
Add: Acquisition-related deferred revenue write-down
716

919

 
1,432

1,267

Add: Stock-based compensation expense
791

1,645

 
1,765

2,740

Add: Amortization of intangibles from business combinations
11,329

10,677

 
22,745

21,063

Add: Employee severance
(4
)
12

 
1,115

587

Add: Acquisition-related integration costs
—

25

 
—

25

Subtotal
12,832

13,278

 
27,057

25,682

Non-GAAP gross profit
$
137,659

$
131,778

 
$
268,431

$
260,329

Non-GAAP gross margin
60.8
%
61.4
%
 
60.6
%
62.1
%
 
 
 
 
 
 
GAAP income from operations
$
13,491

$
11,374

 
$
15,676

$
28,955

GAAP operating margin
6.0
%
5.3
%
 
3.6
%
6.9
%
Non-GAAP adjustments:
 
 
 
 
 
Add: Acquisition-related deferred revenue write-down
716

919

 
1,432

1,267

Add: Stock-based compensation expense
15,029

13,861

 
28,755

24,953

Add: Amortization of intangibles from business combinations
12,481

11,878

 
25,273

23,533

Add: Employee severance
191

100

 
3,612

1,031

Add: Acquisition-related integration costs
464

2,194

 
1,182

2,627

Add: Acquisition-related expenses
365

1,211

 
810

1,605

Add: Restructuring costs
730

3,688

 
2,683

4,499

Subtotal
29,976

33,851

 
63,747

59,515

Non-GAAP income from operations
$
43,467

$
45,225

 
$
79,423

$
88,470

Non-GAAP operating margin
19.2
%
21.1
%
 
17.9
%
21.1
%
 
 
 
 
 
 
GAAP income before provision for income taxes
$
9,873

$
7,417

 
$
6,917

$
21,641

GAAP net income
$
7,140

$
6,592

 
$
6,018

$
24,343

 
 
 
 
 
 
Shares used in computing GAAP diluted earnings per share
48,160,684

48,053,094

 
48,101,212

48,030,547

GAAP diluted earnings per share
$
0.15

$
0.14

 
$
0.13

$
0.51

 
 
 
 
 
 
Non-GAAP adjustments:
 
 
 
 
 
Add: GAAP income tax provision (benefit)
2,733

825

 
899

(2,702
)
Add: Total non-GAAP adjustments affecting income from operations
29,976

33,851

 
63,747

59,515

Non-GAAP income before provision for income taxes
39,849

41,268

 
70,664

81,156

Assumed non-GAAP income tax provision(1)
7,970

8,254

 
$
14,133

$
16,232

Non-GAAP net income
$
31,879

$
33,014

 
$
56,531

$
64,924

 
 
 
 
 
 
Shares used in computing non-GAAP diluted earnings per share
48,160,684

48,053,094

 
48,101,212

48,030,547

Non-GAAP diluted earnings per share
$
0.66

$
0.69

 
$
1.18

$
1.35

(1)
Blackbaud applies a non-GAAP effective tax rate of 20.0% when calculating non-GAAP net income and non-GAAP diluted earnings per share.

8
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,
 
2019

2018

 
2019

2018

GAAP revenue
$
225,634

$
213,672

 
$
441,464

$
417,856

GAAP revenue growth
5.6
%
 
 
5.6
%
 
(Less) Add: Non-GAAP acquisition-related revenue (1)
(4,558
)
1,771

 
(8,944
)
4,485

Non-GAAP organic revenue (2)
$
221,076

$
215,443

 
$
432,520

$
422,341

Non-GAAP organic revenue growth
2.6
%
 
 
2.4
%
 
 
 
 
 
 
 
Non-GAAP organic revenue (2)
$
221,076

$
215,443

 
$
432,520

$
422,341

Foreign currency impact on non-GAAP organic revenue (3)
2,177

—

 
3,956

—

Non-GAAP organic revenue on constant currency basis (3)
$
223,253

$
215,443

 
$
436,476

$
422,341

Non-GAAP organic revenue growth on constant currency basis
3.6
%
 
 
3.3
%
 
 
 
 
 
 
 
GAAP recurring revenue
$
208,468

$
192,749

 
$
406,562

$
373,595

GAAP recurring revenue growth
8.2
%
 
 
8.8
%
 
(Less) Add: Non-GAAP acquisition-related revenue (1)
(4,298
)
1,717

 
(8,473
)
4,316

Non-GAAP organic recurring revenue
$
204,170

$
194,466

 
$
398,089

$
377,911

Non-GAAP organic recurring revenue growth
5.0
%
 
 
5.3
%
 
(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 organic revenue for the prior year periods presented herein may not agree to non-GAAP organic 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,
 
2019

2018

GAAP net cash provided by operating activities
$
45,089

$
66,394

Less: purchase of property and equipment
(6,375
)
(9,575
)
Less: capitalized software development costs
(23,206
)
(16,359
)
Non-GAAP free cash flow
$
15,508

$
40,460



9