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): October 27, 2004
BLACKBAUD, INC.
Delaware
| 000-50600 | 11-2617163 | |
| (Commission File Number) | (IRS Employer ID Number) |
2000 Daniel Island Drive, Charleston, South Carolina 29492
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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On October 27, 2004, Blackbaud, Inc. issued a press release reporting unaudited financial results for the third quarter ended September 30, 2004. A copy of this press release is attached.
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.
(c) Exhibits
| Exhibit No. |
Description |
|
99.1
|
Press release dated October 27, 2004. |
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: October 27, 2004
|
/s/ Timothy V. Williams | |
| Timothy V. Williams, | ||
| Vice President and Chief Financial Officer |
Blackbaud, Inc. Announces Record Third Quarter 2004 Results
Charleston, S.C. (October 27, 2004) – Blackbaud (Nasdaq: BLKB), the leading provider of software and related services designed specifically for nonprofit organizations, today announced record financial results for its third quarter 2004.
For the quarter ended September 30, 2004, Blackbaud reported total revenue of $36.2 million, an increase of 19% compared with the third quarter of 2003. License revenue increased 19% to $6.2 million, services revenue increased 27% to $12.1 million, and maintenance and subscriptions revenue increased 15% to $17.0 million, over the comparable period.
Blackbaud’s income from operations and net income, determined in accordance with generally accepted accounting principles (GAAP), were $12.7 million and $7.6 million, respectively, for the third quarter 2004 compared with $1.1 million and a loss of $0.1 million in the same period last year. Pro forma income from operations and net income, which exclude stock-based compensation expense, amortization of intangibles arising from business combinations, and costs associated with the Company’s recently completed IPO, were $11.0 million and $6.7 million, respectively, compared with $8.9 million and $4.7 million in the same period last year.
GAAP diluted earnings per share were $0.16 for the quarter ended September 30, 2004, compared with ($0.00) in the same period last year. Pro forma earnings per share were $0.15 for the quarter ended September 30, 2004, compared with $0.10 in the same period last year.
A reconciliation of GAAP to pro forma results has been provided in the financial statement tables included in the press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”
Cash from operations for the third quarter of 2004 was $17.0 million, and for the first nine months of 2004, cash from operations was $33.3 million, up 23% on a year-over-year basis. Blackbaud had cash and cash equivalents of $33.4 million at September 30, 2004.
“We are very pleased with our third quarter results. Our ‘new revenue,’ which we define as the combination of our software and services revenue, grew at 24% on a year-over-year basis. We believe this growth reflects the strength of Blackbaud’s competitive position and product portfolio, as well as the attractiveness of our market opportunity. We have the broadest and deepest solutions focused on solving the business challenges nonprofit organizations face, and we continue to execute well against our strategy to become the nonprofit industry’s one-stop-shop for software and services,” said Robert J. Sywolski, Chief Executive Officer of Blackbaud.
Timothy V. Williams, Chief Financial Officer of Blackbaud, added, “The September quarter was again better than our expectations from a software and services perspective. Our core solutions continue to grow and do very well, while we are excited about the growing acceptance of new solutions such as The Patron Edge™ and Blackbaud Analytics™. We feel good about the tone of our business.”
Conference Call Details
Blackbaud will host a conference call today, October 27, 2004, at 5:00 p.m.
(EDT) to discuss the quarterly results and related matters. To access this
call, dial 877-715-5321 (domestic) or 973-582-2785 (international). A replay
of this conference call will be available through November 3, 2004, at
877-519-4471 (domestic) or 973-341-3080 (international). The replay password
is 5259662. A live webcast of this conference call will be available on the
“Investor Relations” page of the Company’s Web site, and a replay will be
archived on our Web site as well.
About Blackbaud, Inc.
Blackbaud is the leading global provider of software and related services
designed specifically for nonprofit organizations. More than 12,500
organizations – including the American Red Cross, Bowdoin College, the
Chesapeake Bay Foundation, the Crohn’s & Colitis Foundation of America, the
Detroit Zoological Society, Episcopal High School, Help the Aged, the Mayo
Foundation, the New York Philharmonic and United Way of America – use Blackbaud
products and consulting services for fundraising, financial management,
business intelligence and school administration. Blackbaud’s solutions include
The Raiser’s Edge®, The Financial Edge™, The Education Edge™, The Patron Edge™,
The Information Edge™, WealthPoint™ and ProspectPoint™, as well as a wide range
of consulting and educational services. Founded in 1981, Blackbaud is
headquartered in Charleston, South Carolina, and has operations in Toronto,
Ontario, Glasgow, Scotland, and Sydney, Australia. For more information, visit
www.blackbaud.com.
Blackbaud, the Blackbaud logo, The Raiser’s Edge, The Financial Edge, The Education Edge, The Patron Edge, The Information Edge, WealthPoint and ProspectPoint are trademarks or registered trademarks of Blackbaud, Inc.
Forward-looking Statements
Except for historical information, all of the statements, expectations and
assumptions contained in this news release are forward-looking statements that
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: continued success in sales growth; adoption
of our products and services by nonprofits; uncertainty regarding increased
business and renewals from existing customers; risk associated with product
concentration; lengthy sales and implementation cycles; economic conditions and
seasonality; competition; risks associated with management of growth; risks
associated with acquisitions; technological changes that make our products and
services less competitive; the ability to attract and retain key personnel; 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 upon request from
Blackbaud’s investor relations department.
Non-GAAP Financial Measures
Blackbaud has provided in this release certain financial information that has
not been prepared in accordance with GAAP. This information includes pro forma
gross margin, pro forma operating income and margin, pro forma net income and
pro forma earnings per share. 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 the Company’s
ongoing operational performance. Blackbaud believes that the use of these
non-GAAP financial measures provides an additional tool for investors to use in
evaluating ongoing operating results and trends and in comparing its financial
results with other companies in the Company’s industry, many of which present
similar non-GAAP financial measures to investors. As noted, the non-GAAP
financial results discussed above exclude the impact of costs associated with
the Company’s IPO (completed on July 22, 2004) and the expensing of stock
option compensation.
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 measure as detailed above. As previously mentioned, a reconciliation of GAAP to pro forma results has been provided in the financial statement tables included in this press release.
BLACKBAUD, INC.
BALANCE SHEETS
(Unaudited)
(In thousands, except share data)
| September 30, | December 31, | |||||||
| 2004 |
2003 |
|||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 33,382 | $ | 6,708 | ||||
Accounts receivable, net of allowance of $1,531 and
$1,222, respectively |
16,921 | 14,518 | ||||||
Prepaid expenses and other current assets |
3,049 | 2,713 | ||||||
Deferred tax asset, current portion |
1,035 | 1,799 | ||||||
Total current assets |
54,387 | 25,738 | ||||||
Property and equipment, net |
6,354 | 6,621 | ||||||
Deferred tax asset |
80,175 | 86,966 | ||||||
Goodwill |
1,471 | 1,386 | ||||||
Deferred financing fees, net |
161 | 156 | ||||||
Other assets |
37 | 99 | ||||||
Total assets |
$ | 142,585 | $ | 120,966 | ||||
Liabilities and Stockholders’ Equity |
||||||||
Current liabilities: |
||||||||
Trade accounts payable |
$ | 2,362 | $ | 2,590 | ||||
Current portion of long-term debt and capital lease
obligations |
81 | 142 | ||||||
Accrued expenses and other current liabilities |
11,983 | 9,659 | ||||||
Deferred revenue |
51,727 | 43,673 | ||||||
Total current liabilities |
66,153 | 56,064 | ||||||
Long-term debt and capital lease obligations |
— | 5,044 | ||||||
Total liabilities |
66,153 | 61,108 | ||||||
Commitments and contingencies |
||||||||
Stockholders’ equity: |
||||||||
Preferred stock; 20,000,000 shares authorized, none outstanding |
— | — | ||||||
Common stock, $.001 par value; 180,000,000 shares
authorized, 42,542,700 and 42,408,872
shares issued and outstanding in 2004 and 2003,
respectively |
43 | 41,613 | ||||||
Additional paid-in capital |
38,056 | — | ||||||
Deferred compensation |
(1,405 | ) | (4,795 | ) | ||||
Accumulated other comprehensive income |
289 | 518 | ||||||
Retained earnings |
39,449 | 22,522 | ||||||
Total stockholders’ equity |
76,432 | 59,858 | ||||||
Total liabilities and stockholders’ equity |
$ | 142,585 | $ | 120,966 | ||||
BLACKBAUD, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share data)
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
Revenue |
||||||||||||||||
License fees |
$ | 6,244 | $ | 5,252 | $ | 18,614 | $ | 15,427 | ||||||||
Services |
12,062 | 9,515 | 32,678 | 25,888 | ||||||||||||
Maintenance and subscriptions |
16,956 | 14,782 | 48,886 | 43,271 | ||||||||||||
Other revenue |
921 | 795 | 2,849 | 2,906 | ||||||||||||
Total revenue |
36,183 | 30,344 | 103,027 | 87,492 | ||||||||||||
Cost of revenue |
||||||||||||||||
Cost of license fees |
1,053 | 653 | 2,733 | 2,110 | ||||||||||||
Cost of services (of which ($1,211), $892, ($644) and $2,291 in the three months
ended September 30, 2004 and 2003 and the nine months ended September 30, 2004
and 2003 respectively, was stock option compensation (benefit) expense) |
4,795 | 5,255 | 15,988 | 15,347 | ||||||||||||
Cost of maintenance and subscriptions (of which ($167), $135, ($105) and $344 in
the three months ended September 30, 2004 and 2003 and the nine months ended
September 30, 2004 and 2003, respectively, was stock option compensation (benefit) expense) |
2,466 | 3,225 | 7,864 | 9,031 | ||||||||||||
Cost of other revenue |
802 | 843 | 2,577 | 2,556 | ||||||||||||
Total cost of revenue |
9,116 | 9,976 | 29,162 | 29,044 | ||||||||||||
Gross profit |
27,067 | 20,368 | 73,865 | 58,448 | ||||||||||||
Sales and marketing |
6,993 | 5,454 | 20,646 | 15,991 | ||||||||||||
Research and development |
4,541 | 4,302 | 13,245 | 11,506 | ||||||||||||
General and administrative |
3,181 | 2,690 | 9,093 | 8,042 | ||||||||||||
Amortization |
— | 667 | 32 | 800 | ||||||||||||
Costs of initial public offering |
805 | — | 2,455 | — | ||||||||||||
Stock option compensation |
(1,138 | ) | 6,112 | 55 | 17,326 | |||||||||||
Total operating expenses |
14,382 | 19,225 | 45,526 | 53,665 | ||||||||||||
Income from operations |
12,685 | 1,143 | 28,339 | 4,783 | ||||||||||||
Interest income |
79 | 22 | 133 | 70 | ||||||||||||
Interest expense |
(18 | ) | (594 | ) | (268 | ) | (2,216 | ) | ||||||||
Other (expense) income, net |
(4 | ) | (198 | ) | 342 | (100 | ) | |||||||||
Income before provision for income taxes |
12,742 | 373 | 28,546 | 2,537 | ||||||||||||
Income tax provision |
5,155 | 425 | 11,619 | 2,886 | ||||||||||||
Net income (loss) |
$ | 7,587 | $ | (52 | ) | $ | 16,927 | $ | (349 | ) | ||||||
Earnings (loss) per share |
||||||||||||||||
Basic |
$ | 0.18 | $ | (0.00 | ) | $ | 0.40 | $ | (0.01 | ) | ||||||
Diluted |
$ | 0.16 | $ | (0.00 | ) | $ | 0.36 | $ | (0.01 | ) | ||||||
Common shares and equivalents outstanding |
||||||||||||||||
Basic weighted average shares |
42,536,961 | 42,408,873 | 42,480,059 | 42,391,299 | ||||||||||||
Diluted weighted average shares |
46,515,156 | 42,408,873 | 46,466,986 | 42,391,299 | ||||||||||||
Summary of stock option compensation (benefit) expense |
||||||||||||||||
Cost of services |
$ | (1,211 | ) | $ | 892 | $ | (644 | ) | $ | 2,291 | ||||||
Cost of maintenance and subscription revenue |
(168 | ) | 135 | (106 | ) | 344 | ||||||||||
Total cost of revenue |
(1,379 | ) | 1,027 | (750 | ) | 2,635 | ||||||||||
Sales and marketing |
(670 | ) | 490 | (194 | ) | 1,201 | ||||||||||
Research and development |
(833 | ) | 623 | (517 | ) | 1,639 | ||||||||||
General and administrative |
365 | 4,999 | 766 | 14,486 | ||||||||||||
Total operating expense |
(1,138 | ) | 6,112 | 55 | 17,326 | |||||||||||
Total stock option compensation (benefit) expense |
$ | (2,517 | ) | $ | 7,139 | $ | (695 | ) | $ | 19,961 | ||||||
BLACKBAUD, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| Nine Months ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
Cash flows from operating activities |
||||||||
Net income (loss) |
$ | 16,927 | $ | (349 | ) | |||
Adjustments to reconcile net income (loss) to net cash
provided by operating activities |
||||||||
Depreciation |
1,889 | 2,197 | ||||||
Amortization of intangibles |
32 | 800 | ||||||
Stock option compensation |
(695 | ) | 19,961 | |||||
Amortization of deferred financing fees |
156 | 702 | ||||||
Deferred taxes |
7,555 | 283 | ||||||
Changes in assets and liabilities, net of acquisition
Accounts receivable |
(2,365 | ) | (166 | ) | ||||
Prepaid expenses and other assets |
(267 | ) | (1,165 | ) | ||||
Accrued expenses and other current liabilities |
2,240 | 1,493 | ||||||
Deferred revenue |
8,040 | 4,302 | ||||||
Total adjustments |
16,355 | 27,395 | ||||||
Net cash provided by operating activities |
33,282 | 27,046 | ||||||
Cash flows from investing activities |
||||||||
Purchase of property and equipment |
(1,616 | ) | (1,837 | ) | ||||
Purchase of net assets of acquired company |
(97 | ) | (894 | ) | ||||
Net cash used in investing activities |
(1,713 | ) | (2,731 | ) | ||||
Cash flows from financing activities |
||||||||
Repayments on long-term debt and capital
lease obligations |
(5,105 | ) | (34,280 | ) | ||||
Proceeds from exercise of stock options |
642 | 233 | ||||||
Payment of deferred financing fees |
(161 | ) | — | |||||
Net cash used in financing activities |
(4,624 | ) | (34,047 | ) | ||||
Effect of exchange rate on cash and cash equivalents |
(271 | ) | 495 | |||||
Net increase (decrease) in cash and cash equivalents |
26,674 | (9,237 | ) | |||||
Cash and cash equivalents, beginning of year |
6,708 | 18,703 | ||||||
Cash and cash equivalents, end of year |
$ | 33,382 | $ | 9,466 | ||||
Noncash activities |
||||||||
Change in fair value of derivative instruments |
$ | — | $ | 332 | ||||
BLACKBAUD, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
(In thousands, except per share amounts)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, |
September 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
GAAP revenue |
$ | 36,183 | $ | 30,344 | $ | 103,027 | $ | 87,492 | ||||||||
GAAP gross margin |
$ | 27,067 | $ | 20,368 | $ | 73,865 | $ | 58,448 | ||||||||
Pro forma adjustments: |
||||||||||||||||
Amortization of deferred stock compensation |
(1,379 | ) | 1,027 | (750 | ) | 2,635 | ||||||||||
Pro forma gross profit |
$ | 25,688 | $ | 21,395 | $ | 73,115 | $ | 61,083 | ||||||||
Pro forma gross margin |
71 | % | 71 | % | 71 | % | 70 | % | ||||||||
GAAP income from operations |
$ | 12,685 | $ | 1,143 | $ | 28,339 | $ | 4,783 | ||||||||
Pro forma adjustments: |
||||||||||||||||
Amortization of deferred stock compensation |
(2,517 | ) | 7,139 | (695 | ) | 19,961 | ||||||||||
Costs of initial public offering |
805 | — | 2,455 | — | ||||||||||||
Amortization of intangibles from business combinations |
— | 667 | 32 | 800 | ||||||||||||
Total pro forma adjustments |
(1,712 | ) | 7,806 | 1,792 | 20,761 | |||||||||||
Pro forma income from operations |
$ | 10,973 | $ | 8,949 | $ | 30,131 | $ | 25,544 | ||||||||
Pro forma operating margin |
30 | % | 29 | % | 29 | % | 29 | % | ||||||||
GAAP net income (loss) |
$ | 7,587 | $ | (52 | ) | $ | 16,927 | $ | (349 | ) | ||||||
Pro forma adjustments: |
||||||||||||||||
Total pro forma adjustments affecting income from operations |
(1,712 | ) | 7,806 | 1,792 | 20,761 | |||||||||||
Tax impact related to pro forma adjustments |
855 | (3,044 | ) | (211 | ) | (8,097 | ) | |||||||||
Pro forma net income |
$ | 6,730 | $ | 4,710 | $ | 18,508 | $ | 12,315 | ||||||||
GAAP shares used in computing diluted income (loss) per share |
46,515 | 42,409 | 46,467 | 42,391 | ||||||||||||
Pro forma adjustments: |
||||||||||||||||
Incremental shares related to stock options |
(612 | ) | 2,909 | (655 | ) | 2,192 | ||||||||||
Shares used in computing pro forma earnings per diluted share |
45,903 | 45,318 | 45,812 | 44,583 | ||||||||||||
Pro forma earnings per diluted share |
$ | 0.15 | $ | 0.10 | $ | 0.40 | $ | 0.28 | ||||||||
INVESTOR CONTACT:
Tim Dolan
Integrated Corporate Relations
203-682-8200
MEDIA CONTACT:
Megan McDonnell
Integrated Corporate Relations
203-682-8200
SOURCE: Blackbaud, Inc.