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): February 8, 2021
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(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer ID Number) | ||||||
(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 | ||||||
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 February 8, 2021, Blackbaud, Inc. (the "Company") issued a press release reporting unaudited financial results for the quarter and fiscal year ended December 31, 2020. 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 February 8, 2021 reporting unaudited financial results for the quarter and fiscal year ended December 31, 2020. | ||||||||
| 101.INS | Inline XBRL Instance Document - the Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL Document. | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |||||||
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: | February 8, 2021 | /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 2020 Fourth Quarter and Full Year Results
Fourth Quarter Recurring Revenue Increases 4.4% Year Over Year;
2021 Financial Outlook will be Provided on Earnings Conference Call
Charleston, S.C. (February 8, 2021) - 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
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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.
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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.
| Investor Contact: | Media Contact: | ||||||||||
| Steve Hufford | media@blackbaud.com | ||||||||||
| Director, Investor Relations | |||||||||||
| IR@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 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.
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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
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| PRESS RELEASE | ||||||||
in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures.
5
Blackbaud, Inc.
Consolidated Balance Sheets
(Unaudited)
| (dollars in thousands) | December 31, 2020 | December 31, 2019 | ||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 35,750 | $ | 31,810 | ||||
| Restricted cash | 609,219 | 545,485 | ||||||
Accounts receivable, net of allowance of $10,292 and $5,529 at December 31, 2020 and December 31, 2019, respectively | 95,404 | 88,868 | ||||||
| Customer funds receivable | 321 | 524 | ||||||
| Prepaid expenses and other current assets | 78,366 | 67,852 | ||||||
| Total current assets | 819,060 | 734,539 | ||||||
| Property and equipment, net | 105,177 | 35,546 | ||||||
| Operating lease right-of-use assets | 22,671 | 104,400 | ||||||
| Software development costs, net | 111,827 | 101,302 | ||||||
| Goodwill | 635,854 | 634,088 | ||||||
| Intangible assets, net | 277,506 | 317,895 | ||||||
| Other assets | 72,639 | 65,193 | ||||||
| Total assets | $ | 2,044,734 | $ | 1,992,963 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Trade accounts payable | $ | 27,836 | $ | 47,676 | ||||
| Accrued expenses and other current liabilities | 52,228 | 73,317 | ||||||
| Due to customers | 608,264 | 546,009 | ||||||
| Debt, current portion | 12,840 | 7,500 | ||||||
| Deferred revenue, current portion | 312,236 | 314,335 | ||||||
| Total current liabilities | 1,013,404 | 988,837 | ||||||
| Debt, net of current portion | 518,193 | 459,600 | ||||||
| Deferred tax liability | 54,086 | 44,594 | ||||||
| Deferred revenue, net of current portion | 4,678 | 1,802 | ||||||
| Operating lease liabilities, net of current portion | 17,357 | 95,624 | ||||||
| Other liabilities | 10,866 | 5,742 | ||||||
| Total liabilities | 1,618,584 | 1,596,199 | ||||||
| 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, 60,904,638 and 60,206,091 shares issued at December 31, 2020 and December 31, 2019, respectively | 61 | 60 | ||||||
| Additional paid-in capital | 544,963 | 457,804 | ||||||
Treasury stock, at cost; 12,054,268 and 11,066,354 shares at December 31, 2020 and December 31, 2019, respectively | (353,091) | (290,665) | ||||||
| Accumulated other comprehensive loss | (2,497) | (5,290) | ||||||
| Retained earnings | 236,714 | 234,855 | ||||||
| Total stockholders’ equity | 426,150 | 396,764 | ||||||
| Total liabilities and stockholders’ equity | $ | 2,044,734 | $ | 1,992,963 | ||||
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Blackbaud, Inc.
Consolidated Statements of Comprehensive Income
(Unaudited)
| (dollars in thousands, except per share amounts) | Three months ended December 31, | Years ended December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||
| Revenue | |||||||||||||||||
| Recurring | $ | 229,516 | $ | 219,820 | $ | 850,745 | $ | 831,609 | |||||||||
| One-time services and other | 13,090 | 18,019 | 62,474 | 68,814 | |||||||||||||
| Total revenue | 242,606 | 237,839 | 913,219 | 900,423 | |||||||||||||
| Cost of revenue | |||||||||||||||||
| Cost of recurring | 104,509 | 98,975 | 369,681 | 357,988 | |||||||||||||
| Cost of one-time services and other | 15,067 | 17,562 | 58,384 | 60,436 | |||||||||||||
| Total cost of revenue | 119,576 | 116,537 | 428,065 | 418,424 | |||||||||||||
| Gross profit | 123,030 | 121,302 | 485,154 | 481,999 | |||||||||||||
| Operating expenses | |||||||||||||||||
| Sales, marketing and customer success | 50,613 | 58,189 | 209,762 | 224,152 | |||||||||||||
| Research and development | 27,491 | 25,860 | 100,146 | 106,164 | |||||||||||||
| General and administrative | 45,023 | 28,857 | 134,852 | 113,414 | |||||||||||||
| Amortization | 696 | 2,085 | 2,915 | 5,316 | |||||||||||||
| Restructuring | 57 | 2,725 | 236 | 5,808 | |||||||||||||
| Total operating expenses | 123,880 | 117,716 | 447,911 | 454,854 | |||||||||||||
| Income from operations | (850) | 3,586 | 37,243 | 27,145 | |||||||||||||
| Interest expense | (5,238) | (4,385) | (17,287) | (20,618) | |||||||||||||
| Other (expense) income, net | (584) | (463) | 1,658 | 4,058 | |||||||||||||
| (Loss) income before provision (benefit) for income taxes | (6,672) | (1,262) | 21,614 | 10,585 | |||||||||||||
| Income tax provision (benefit) | 6,949 | (2,586) | 13,897 | (1,323) | |||||||||||||
| Net (loss) income | $ | (13,621) | $ | 1,324 | $ | 7,717 | $ | 11,908 | |||||||||
| (Loss) earnings per share | |||||||||||||||||
| Basic | $ | (0.28) | $ | 0.03 | $ | 0.16 | $ | 0.25 | |||||||||
| Diluted | $ | (0.28) | $ | 0.03 | $ | 0.16 | $ | 0.25 | |||||||||
| Common shares and equivalents outstanding | |||||||||||||||||
| Basic weighted average shares | 48,190,388 | 47,777,635 | 48,184,714 | 47,695,383 | |||||||||||||
| Diluted weighted average shares | 48,190,388 | 48,572,575 | 48,696,341 | 48,312,271 | |||||||||||||
| Other comprehensive income (loss) | |||||||||||||||||
| Foreign currency translation adjustment | 6,525 | 7,962 | 4,571 | 2,641 | |||||||||||||
| Unrealized (loss) gain on derivative instruments, net of tax | (150) | 413 | (1,778) | (2,821) | |||||||||||||
| Total other comprehensive income (loss) | 6,375 | 8,375 | 2,793 | (180) | |||||||||||||
| Comprehensive (loss) income | $ | (7,246) | $ | 9,699 | $ | 10,510 | $ | 11,728 | |||||||||
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Blackbaud, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
| Years ended December 31, | ||||||||
| (dollars in thousands) | 2020 | 2019 | ||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 7,717 | $ | 11,908 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 92,735 | 85,693 | ||||||
| Provision for credit losses and sales returns | 13,230 | 8,725 | ||||||
| Stock-based compensation expense | 87,257 | 58,633 | ||||||
| Deferred taxes | 8,837 | (3,600) | ||||||
| Amortization of deferred financing costs and discount | 781 | 752 | ||||||
| Other non-cash adjustments | 2,958 | 4,906 | ||||||
| Changes in operating assets and liabilities, net of acquisition and disposal of businesses: | ||||||||
| Accounts receivable | (18,414) | (6,569) | ||||||
| Prepaid expenses and other assets | 22,568 | 6,383 | ||||||
| Trade accounts payable | (19,997) | 12,900 | ||||||
| Accrued expenses and other liabilities | (49,232) | (9,718) | ||||||
| Deferred revenue | (485) | 12,464 | ||||||
| Net cash provided by operating activities | 147,955 | 182,477 | ||||||
| Cash flows from investing activities | ||||||||
| Purchase of property and equipment | (29,690) | (11,492) | ||||||
| Capitalized software development costs | (42,157) | (46,874) | ||||||
| Purchase of net assets of acquired companies, net of cash and restricted cash acquired | — | (109,353) | ||||||
| Other investing activities | — | 500 | ||||||
| Net cash used in investing activities | (71,847) | (167,219) | ||||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of debt | 748,500 | 424,000 | ||||||
| Payments on debt | (747,563) | (344,500) | ||||||
| Debt issuance costs | (4,586) | — | ||||||
| Employee taxes paid for withheld shares upon equity award settlement | (21,425) | (23,781) | ||||||
| Proceeds from exercise of stock options | 4 | 7 | ||||||
| Change in due to customers | 61,214 | 77,793 | ||||||
| Change in customer funds receivable | 138 | 1,301 | ||||||
| Purchase of treasury stock | (41,001) | — | ||||||
| Dividend payments to stockholders | (5,960) | (23,607) | ||||||
| Net cash (used in) provided by financing activities | (10,679) | 111,213 | ||||||
| Effect of exchange rate on cash, cash equivalents and restricted cash | 2,245 | 978 | ||||||
| Net increase in cash, cash equivalents and restricted cash | 67,674 | 127,449 | ||||||
| Cash, cash equivalents and restricted cash, beginning of year | 577,295 | 449,846 | ||||||
| Cash, cash equivalents and restricted cash, end of year | $ | 644,969 | $ | 577,295 | ||||
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) | December 31, 2020 | December 31, 2019 | ||||||
| Cash and cash equivalents | $ | 35,750 | $ | 31,810 | ||||
| Restricted cash | 609,219 | 545,485 | ||||||
| Total cash, cash equivalents and restricted cash in the statement of cash flows | $ | 644,969 | $ | 577,295 | ||||
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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 December 31, | Years ended December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||
| GAAP Revenue | $ | 242,606 | $ | 237,839 | $ | 913,219 | $ | 900,423 | |||||||||
| Non-GAAP adjustments: | |||||||||||||||||
| Add: Acquisition-related deferred revenue write-down | — | 241 | — | 1,932 | |||||||||||||
| Non-GAAP revenue | $ | 242,606 | $ | 238,080 | $ | 913,219 | $ | 902,355 | |||||||||
| GAAP gross profit | $ | 123,030 | $ | 121,302 | $ | 485,154 | $ | 481,999 | |||||||||
| GAAP gross margin | 50.7 | % | 51.0 | % | 53.1 | % | 53.5 | % | |||||||||
| Non-GAAP adjustments: | |||||||||||||||||
| Add: Acquisition-related deferred revenue write-down | — | 241 | — | 1,932 | |||||||||||||
| Add: Stock-based compensation expense | 6,251 | 817 | 13,374 | 3,366 | |||||||||||||
| Add: Amortization of intangibles from business combinations | 9,133 | 10,799 | 38,968 | 44,769 | |||||||||||||
| Add: Employee severance | 94 | 87 | 907 | 1,221 | |||||||||||||
| Subtotal | 15,478 | 11,944 | 53,249 | 51,288 | |||||||||||||
| Non-GAAP gross profit | $ | 138,508 | $ | 133,246 | $ | 538,403 | $ | 533,287 | |||||||||
| Non-GAAP gross margin | 57.1 | % | 56.0 | % | 59.0 | % | 59.1 | % | |||||||||
| GAAP (loss) income from operations | $ | (850) | $ | 3,586 | $ | 37,243 | $ | 27,145 | |||||||||
| GAAP operating margin | (0.4) | % | 1.5 | % | 4.1 | % | 3.0 | % | |||||||||
| Non-GAAP adjustments: | |||||||||||||||||
| Add: Acquisition-related deferred revenue write-down | — | 241 | — | 1,932 | |||||||||||||
| Add: Stock-based compensation expense | 32,701 | 15,012 | 87,257 | 58,633 | |||||||||||||
| Add: Amortization of intangibles from business combinations | 9,829 | 12,884 | 41,883 | 50,085 | |||||||||||||
| Add: Employee severance | 282 | 765 | 4,875 | 4,425 | |||||||||||||
| Add: Acquisition-related integration costs | (16) | 189 | (134) | 2,395 | |||||||||||||
| Add: Acquisition-related expenses | 65 | 132 | 353 | 1,162 | |||||||||||||
| Add: Restructuring and other real estate activities | 16,273 | 2,725 | 23,290 | 5,808 | |||||||||||||
| Subtotal | 59,134 | 31,948 | 157,524 | 124,440 | |||||||||||||
| Non-GAAP income from operations | $ | 58,284 | $ | 35,534 | $ | 194,767 | $ | 151,585 | |||||||||
| Non-GAAP operating margin | 24.0 | % | 14.9 | % | 21.3 | % | 16.8 | % | |||||||||
| GAAP (loss) income before provision (benefit) for income taxes | $ | (6,672) | $ | (1,262) | $ | 21,614 | $ | 10,585 | |||||||||
| GAAP net (loss) income | $ | (13,621) | $ | 1,324 | $ | 7,717 | $ | 11,908 | |||||||||
| Shares used in computing GAAP diluted (loss) earnings per share | 48,190,388 | 48,572,575 | 48,696,341 | 48,312,271 | |||||||||||||
| GAAP diluted (loss) earnings per share | $ | (0.28) | $ | 0.03 | $ | 0.16 | $ | 0.25 | |||||||||
| Non-GAAP adjustments: | |||||||||||||||||
| Add: GAAP income tax provision (benefit) | 6,949 | (2,586) | 13,897 | (1,323) | |||||||||||||
| Add: Total non-GAAP adjustments affecting income from operations | 59,134 | 31,948 | 157,524 | 124,440 | |||||||||||||
| Non-GAAP income before provision for income taxes | 52,462 | 30,686 | 179,138 | 135,025 | |||||||||||||
Assumed non-GAAP income tax provision(1) | 10,492 | 6,137 | $ | 35,827 | $ | 27,005 | |||||||||||
| Non-GAAP net income | $ | 41,970 | $ | 24,549 | $ | 143,311 | $ | 108,020 | |||||||||
| Shares used in computing non-GAAP diluted earnings per share | 49,097,084 | 48,572,575 | 48,696,341 | 48,312,271 | |||||||||||||
| Non-GAAP diluted earnings per share | $ | 0.85 | $ | 0.51 | $ | 2.94 | $ | 2.24 | |||||||||
(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.
9
Blackbaud, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
(Unaudited)
| (dollars in thousands) | Three months ended December 31, | Years ended December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||
| GAAP revenue | $ | 242,606 | $ | 237,839 | $ | 913,219 | $ | 900,423 | |||||||||
| GAAP revenue growth | 2.0 | % | 1.4 | % | |||||||||||||
Add: Non-GAAP acquisition-related revenue(1) | — | 241 | — | 1,932 | |||||||||||||
Non-GAAP organic revenue(2) | $ | 242,606 | $ | 238,080 | $ | 913,219 | $ | 902,355 | |||||||||
| Non-GAAP organic revenue growth | 1.9 | % | 1.2 | % | |||||||||||||
Non-GAAP organic revenue(2) | $ | 242,606 | $ | 238,080 | $ | 913,219 | $ | 902,355 | |||||||||
Foreign currency impact on non-GAAP organic revenue(3) | (742) | — | 780 | — | |||||||||||||
Non-GAAP organic revenue on constant currency basis(3) | $ | 241,864 | $ | 238,080 | $ | 913,999 | $ | 902,355 | |||||||||
| Non-GAAP organic revenue growth on constant currency basis | 1.6 | % | 1.3 | % | |||||||||||||
| GAAP recurring revenue | $ | 229,516 | $ | 219,820 | $ | 850,745 | $ | 831,609 | |||||||||
| GAAP recurring revenue growth | 4.4 | % | 2.3 | % | |||||||||||||
Add: Non-GAAP acquisition-related revenue(1) | — | 241 | — | 1,932 | |||||||||||||
| Non-GAAP organic recurring revenue | $ | 229,516 | $ | 220,061 | $ | 850,745 | $ | 833,541 | |||||||||
| Non-GAAP organic recurring revenue growth | 4.3 | % | 2.1 | % | |||||||||||||
(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 Australian Dollar, British Pound, Canadian Dollar and EURO.
10
Blackbaud, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
(Unaudited)
| (dollars in thousands) | Three months ended December 31, | Years ended December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||
| GAAP net income | $ | (13,621) | $ | 1,324 | $ | 7,717 | $ | 11,908 | |||||||||
| Non-GAAP adjustments: | |||||||||||||||||
| Add: Interest, net | 4,976 | 4,009 | 15,627 | 17,816 | |||||||||||||
| Add: GAAP income tax provision (benefit) | 6,949 | (2,586) | 13,897 | (1,323) | |||||||||||||
Add: Depreciation(1) | 3,731 | 3,706 | 14,589 | 14,979 | |||||||||||||
| Add: Amortization of intangibles from business combinations | 9,829 | 12,884 | 41,883 | 50,085 | |||||||||||||
Add: Amortization of software development costs(2) | 7,712 | 5,265 | 32,540 | 20,999 | |||||||||||||
| Subtotal | 33,197 | 23,278 | 118,536 | 102,556 | |||||||||||||
| Non-GAAP EBITDA | $ | 19,576 | $ | 24,602 | $ | 126,253 | $ | 114,464 | |||||||||
| Non-GAAP EBITDA margin | 8.1 | % | 13.8 | % | |||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||
| Add: Acquisition-related deferred revenue write-down | — | 241 | — | 1,932 | |||||||||||||
| Add: Stock-based compensation expense | 32,701 | 15,012 | 87,257 | 58,633 | |||||||||||||
| Add: Employee severance | 282 | 765 | 4,875 | 4,425 | |||||||||||||
| Add: Acquisition-related integration costs | (16) | 189 | (134) | 2,395 | |||||||||||||
| Add: Acquisition-related expenses | 65 | 132 | 353 | 1,162 | |||||||||||||
| Add: Restructuring and other real estate activities | 16,273 | 2,725 | 23,290 | 5,808 | |||||||||||||
| Subtotal | 49,305 | 19,064 | 115,641 | 74,355 | |||||||||||||
| Adjusted Non-GAAP EBITDA | $ | 68,881 | $ | 43,666 | $ | 241,894 | $ | 188,819 | |||||||||
| Adjusted Non-GAAP EBITDA margin | 28.4 | % | 26.5 | % | |||||||||||||
Rule of 40 (3) | 30.3 | % | 27.7 | % | |||||||||||||
(1)During the third quarter of 2020, we reduced the estimated useful lives of our operating lease right-of-use assets for certain of our office locations we expected to exit. For these same office locations, we also reduced the estimated useful lives of certain facilities-related fixed assets, which resulted in an increase in depreciation expense. The accelerated portions of the fixed asset depreciation expense related to these activities of $3.2 million and $4.6 million for the three and twelve months ended December 31, 2020, respectively, was presented in the "Restructuring and other real estate activities" line of the reconciliation of GAAP to non-GAAP financial measures. Total depreciation expense for the three and twelve months ended December 31, 2020 was $6.9 million and $19.2 million, respectively.
(2)Includes amortization expense related to software development costs and amortization expense from capitalized cloud computing implementation costs.
(3)Measured by non-GAAP organic revenue growth plus non-GAAP adjusted EBITDA margin. See Non-GAAP organic revenue growth table above.
| (dollars in thousands) | Years ended December 31, | |||||||
| 2020 | 2019 | |||||||
| GAAP net cash provided by operating activities | $ | 147,955 | $ | 182,477 | ||||
| Less: purchase of property and equipment | (29,690) | (11,492) | ||||||
| Less: capitalized software development costs | (42,157) | (46,874) | ||||||
| Non-GAAP free cash flow | $ | 76,108 | $ | 124,111 | ||||
11