News Release Details

CHARLESTON, S.C., Feb. 8, 2021 /PRNewswire/ -- Blackbaud (NASDAQ: BLKB), the world's leading cloud software company powering social good, today announced financial results for its fourth quarter and full year ended December 31, 2020.

"We finished the year strong with fourth quarter results that showcase our ability to operationally scale through a balance of revenue growth and significantly improved profitability, and I want to say thank you to our employees for stepping up in a big way this year to support each other, our customers, our communities and Blackbaud," said Mike Gianoni, president and CEO, Blackbaud. "Without a doubt, 2020 tested the industry and underscored the resiliency of our over 45,000 customers as they serve such a critical role in solving the challenges we face as a society. This past year put a spotlight on the need for digital capabilities as social good organizations worked to pivot their own operations and strategic roadmaps to ensure they continue to deliver on their missions in the current environment. Looking ahead to 2021, I'm increasingly optimistic about the opportunity in front of us. We are already underway executing against our own strategic plan that will move us further toward our long-term aspirational goal of achieving the Rule of 40 through a balance of revenue growth and improved profitability, and we believe our fourth quarter results are a solid early indicator that over time this goal is within our reach."

Fourth Quarter 2020 Results Compared to Fourth Quarter 2019 Results:

• Total GAAP revenue was $242.6 million, up 2.0%, with $229.5 million in GAAP recurring revenue, up 4.4%.
• Total non-GAAP revenue was $242.6 million, up 1.9%, with $229.5 million in non-GAAP recurring revenue, up 4.3%.
• Non-GAAP organic recurring revenue increased 4.3%.
• GAAP loss from operations was $0.9 million, with GAAP operating margin of (0.4)%, a decrease of 190 basis points.
• Non-GAAP income from operations was $58.3 million, with non-GAAP operating margin of 24.0%, an increase of 910 basis points.
• GAAP net loss was $13.6 million, with GAAP diluted loss per share of $0.28, down $0.31 per share.
• Non-GAAP net income was $42.0 million, with non-GAAP diluted earnings per share of $0.85, up $0.34 per share.
• Non-GAAP adjusted EBITDA was $68.9 million, up $25.2 million, with non-GAAP adjusted EBITDA margin of 28.4%.
• Non-GAAP free cash flow was $24.8 million, a decrease of $21.3 million.

"Strong performance in year-end giving for many of our customers drove record transaction volumes and highlights the resilience of the market as we head into 2021," said Tony Boor, executive vice president and CFO. "Our early cost actions in response to the pandemic allowed us to continue making critical investments in the business in areas like engineering, security, our continued shift of cloud infrastructure to third party cloud service providers, and the maturation of our go-to-market strategy. We have a significant opportunity to leverage investments in digital marketing to reduce our customer acquisition cost and increase our sales velocity, ultimately driving a more scalable and cost-effective go-to-market model. As we plan for a more flexible future of work at Blackbaud, we're exiting the year having reduced our real estate footprint by roughly half, which drove approximately $16 million of one-time expense reflected in our non-GAAP adjustments and a cash outlay of $20 million in the quarter. This is expected to generate substantial cost savings going forward. In light of our heightened focus on operational efficiency and flexible workforce strategy going forward, we also revisited elements of our tax planning strategy and wrote off certain tax assets resulting in an increase in our effective tax rate for the fourth quarter that will not repeat in 2021. This tax impact is also reflected in our non-GAAP adjustments for the quarter. Looking ahead, there are significant opportunities in front of us to strengthen the business and elevate our financial profile, and we believe that steady execution against the Rule of 40 financial framework, paired with our updated capital deployment strategy, will drive substantial shareholder value."

Recent Company Highlights

• Blackbaud invites members of the investment community to attend a virtual investor session on March 25, 2021.
• Furthering the company's commitment to social good, Blackbaud launches a formal Environmental, Social and Governance (ESG) program.
• Blackbaud announced long-term financial goals and strategic outlook in December 2020.
• In November 2020, the board of directors of Blackbaud reauthorized and expanded the company's existing share repurchase program to $250 million. Through January 31, 2021 Blackbaud has repurchased approximately 1.2 million shares of its common stock at a total cost of $69.0 million.
• Blackbaud launches an updated marketplace, delivering increased innovation to social good organizations
• Colleges and universities rely on Blackbaud's Cloud Solution for Higher Education to drive efficiency, increase revenue and deepen engagement during the pandemic.
• Blackbaud celebrates the ninth annual GivingTuesday, virtually ringing the opening bell at Nasdaq and amplifying stories of its customers' impact during the pandemic.
• Through corporate social responsibility initiatives, Blackbaud supports community needs during COVID-19.
• Blackbaud named to Built In's list of 100 Best Places to Work in Austin for the third year in a row.

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

Full-Year 2020 Results Compared to Full-Year 2019 Results:

• Total GAAP revenue was $913.2 million, up 1.4%, with $850.7 million in GAAP recurring revenue, up 2.3%.
• Total non-GAAP revenue was $913.2 million, up 1.2%, with $850.7 million in non-GAAP recurring revenue, up 2.1%.
• Non-GAAP organic recurring revenue increased 2.1%.
• GAAP income from operations was $37.2 million, with GAAP operating margin of 4.1%, an increase of 110 basis points.
• Non-GAAP income from operations was $194.8 million, with non-GAAP operating margin of 21.3%, an increase of 450 basis points.
• GAAP net income was $7.7 million, with GAAP diluted earnings per share of $0.16, down $0.09.
• Non-GAAP net income was $143.3 million, with non-GAAP diluted earnings per share of $2.94, up $0.70.
• Non-GAAP adjusted EBITDA was $241.9 million, up $53.1 million, with non-GAAP adjusted EBITDA margin of 26.5%.
• Non-GAAP free cash flow was $76.1 million, a decrease of $48.0 million.

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.

Conference Call Details
What:        Blackbaud's Fourth Quarter and Full Year 2020 Conference Call
When:       February 9, 2021
Time:        8:00 a.m. (Eastern Time)
Live Call:  1-877-407-3088 (US/Canada)
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, higher education institutions, K–12 schools, healthcare organizations, faith communities, arts and cultural organizations, foundations, companies 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 nearly four decades, Blackbaud is headquartered in Charleston, South Carolina, and has operations in the United States, Australia, Canada, Costa Rica and the United Kingdom. For more information, visit www.blackbaud.com, or follow us on Twitter, LinkedIn, Instagram, and Facebook.

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 condition and results of operations. 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; the security of our data and that of our customers; uncertainty regarding the COVID-19 disruption; 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-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.

Rule of 40 is defined as non-GAAP organic revenue growth plus non-GAAP adjusted EBITDA margin. Non-GAAP adjusted EBITDA is defined as GAAP net income plus interest, net; income tax provision; depreciation; amortization of intangible assets from business combinations; amortization of software development costs; acquisition-related deferred revenue write-down; stock-based compensation; acquisition-related integration costs; acquisition-related expenses; employee severance; and restructuring and other real estate activities.

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.

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:

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SOURCE Blackbaud, Inc.