SECURITIES AND EXCHANGE COMMISSION
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): April 27, 2005
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 April 27, 2005, Blackbaud, Inc. issued a press release reporting unaudited financial results for the quarter ended March 31, 2005. 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 April 27, 2005. |
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: April 27, 2005
|
/s/ Timothy V. Williams | |
| Timothy V. Williams, | ||
| Vice President and Chief Financial Officer |
Blackbaud, Inc. Announces First Quarter 2005 Results and Second Quarter Dividend
CHARLESTON, S.C.—April 27, 2005—Blackbaud, Inc. (Nasdaq: BLKB), the leading provider of software and related services designed specifically for nonprofit organizations, today announced financial results for its first quarter 2005.
For the quarter ended March 31, 2005, Blackbaud reported total revenue of $37.3 million, an increase of 19% compared with the first quarter of 2004. License revenue increased 27% to $6.5 million, services revenue increased 20% to $11.4 million, and maintenance and subscriptions revenue increased 17% to $18.4 million, over the comparable period.
Robert J. Sywolski, Chief Executive Officer of Blackbaud, stated, “We are very pleased with our first quarter results. Our core solutions – The Raisers Edge, The Financial Edge and The Education Edge – have established Blackbaud as the clear market leader with 13,000 customers. The fact that we delivered our second highest quarterly revenue growth rate in the past two years is a direct result of the investments we have made in research and development and the expansion of our key account sales force. Indeed, the success of our high value-add new offerings and integrated solutions and sales to large non-profit organizations continues to fuel our momentum.”
Blackbaud’s income from operations and net income, determined in accordance with generally accepted accounting principles (GAAP), were $17.3 million and $10.9 million, respectively, for the first quarter 2005 compared with income from operations of $6.6 million and net income of $4.0 million in the same period last year. GAAP diluted earnings per share were $0.23 for the quarter ended March 31, 2005, compared with $0.09 in the same period last year.
Pro forma income from operations and net income, which exclude stock-based compensation expense, costs of the Company’s initial public offering and amortization of intangibles arising from business combinations were $9.6 million and $6.0 million, respectively, compared with $8.6 million and $5.3 million in the same period last year. This represents growth of 13% in pro forma income from operations and 12% growth in pro forma net income, respectively, while pro forma earnings per share was $0.13 for the quarter ended March 31, 2005.
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 first quarter of 2005 was $7.4 million, an increase of 49% on a year-over-year basis. Blackbaud had cash and cash equivalents of $43.3 million at March 31, 2005.
Timothy V. Williams, Chief Financial Officer of Blackbaud, stated, “In a quarter that was challenging for many software companies, Blackbaud’s positive results stand out. As in prior quarters, our first quarter results continued to be driven by two primary factors: our differentiated vertical market focus and our proven business model which is heavily dependent upon recurring revenue and a high volume of sales at relatively low average sales prices. This model has produced high levels of profitability and strong cash flow for us.”
Blackbaud also announced today that its Board of Directors has declared a second quarter dividend of $0.05 per share payable on May 29 to stockholders of record on May 15.
Conference Call Details
Blackbaud will host a conference call today, April 27, 2005, at 5:00 pm (EDT) to discuss the Company’s financial results and related matters. To access this call, dial 800-289-0528 (domestic) or 913-981-5522 (international). A replay of this conference call will be available through May 4, 2005, at 888-203-1112 (domestic) or 719-457-0820 (international). The replay passcode is 9436501. A live webcast of this conference call will be available on the “Investor Relations” page of the Company’s website, and a replay will be archived on the website as well.
About Blackbaud
Blackbaud is the leading global provider of software and related services designed specifically for nonprofit organizations. Approximately 13,000 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 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 ™, Blackbaud NetCommunity™, 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.
Blackbaud, the Blackbaud logo, The Raiser’s Edge, The Financial Edge, The Education Edge, The Information Edge, The Patron Edge, Blackbaud NetCommunity, 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 actual results to differ materially from these forward-looking statements 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 related to our proposed dividend and stock repurchase program, including potential limitations on our ability to grow and the possibility that we might discontinue payment of dividends; 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 Blackbaud’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 Blackbaud’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 Blackbaud’s IPO (completed on July 22, 2004), amortization of intangibles arising from business combinations 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.
INVESTOR CONTACT:
Tim Dolan
Integrated Corporate Relations
203-682-8200
MEDIA CONTACT:
Megan McDonnell
Integrated Corporate Relations
203-682-8200
SOURCE: Blackbaud, Inc.
BLACKBAUD, INC.
BALANCE SHEETS
(In thousands, except share and per share amounts)
| March 31, | December 31, | |||||||
| 2005 | 2004 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 43,269 | $ | 42,144 | ||||
Accounts receivable, net of allowance of $1,419 and
$1,420, respectively |
18,314 | 19,580 | ||||||
Prepaid expenses and other current assets |
2,084 | 1,806 | ||||||
Deferred tax asset, current portion |
542 | 542 | ||||||
Total current assets |
64,209 | 64,072 | ||||||
Property and equipment, net |
6,610 | 7,199 | ||||||
Deferred tax asset |
82,552 | 87,522 | ||||||
Goodwill |
1,699 | 1,673 | ||||||
Deferred financing fees, net |
121 | 133 | ||||||
Other assets |
84 | 209 | ||||||
Total assets |
$ | 155,275 | $ | 160,808 | ||||
Liabilities and Stockholders’ Equity |
||||||||
Current liabilities: |
||||||||
Trade accounts payable |
$ | 2,484 | $ | 2,653 | ||||
Current portion of capital lease obligations |
7 | 44 | ||||||
Accrued expenses and other current liabilities |
10,814 | 16,019 | ||||||
Deferred revenue |
50,918 | 51,593 | ||||||
Total current liabilities |
64,223 | 70,309 | ||||||
Long-term deferred revenue |
793 | 710 | ||||||
Total liabilities |
65,016 | 71,019 | ||||||
Commitments and contingencies |
||||||||
Stockholders’ equity: |
||||||||
Preferred stock; 20,000,000 shares authorized, none outstanding |
— | — | ||||||
Common stock, $.001 par value and no par value; 180,000,000
and 95,000,000 shares authorized, 42,833,880 and 42,549,056
shares issued and outstanding at March 31, 2005 and December 31,
2004, respectively |
44 | 43 | ||||||
Additional paid-in capital |
54,780 | 55,292 | ||||||
Deferred compensation |
(789 | ) | (1,064 | ) | ||||
Treasury stock, at cost |
(7,969 | ) | — | |||||
Accumulated other comprehensive income |
322 | 355 | ||||||
Retained earnings |
43,871 | 35,163 | ||||||
Total stockholders’ equity |
90,259 | 89,789 | ||||||
Total liabilities and stockholders’ equity |
$ | 155,275 | $ | 160,808 | ||||
BLACKBAUD, INC.
STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
| Three months ended March 31, | ||||||||
| 2005 | 2004 | |||||||
Revenue |
||||||||
License fees |
$ | 6,468 | $ | 5,077 | ||||
Services |
11,429 | 9,545 | ||||||
Maintenance and subscriptions |
18,442 | 15,779 | ||||||
Other revenue |
934 | 954 | ||||||
Total revenue |
37,273 | 31,355 | ||||||
Cost of revenue |
||||||||
Cost of license fees |
1,059 | 729 | ||||||
Cost of services (of which $91 and $294 in the three months ended March 31, 2005
and 2004, respectively, was stock option compensation expense) |
6,593 | 5,600 | ||||||
Cost of maintenance and subscriptions (of which $11 and $37 in the three months
ended March 31, 2005 and 2004, respectively, was stock option compensation
expense) |
2,830 | 2,660 | ||||||
Cost of other revenue |
816 | 860 | ||||||
Total cost of revenue |
11,298 | 9,849 | ||||||
Gross profit |
25,975 | 21,506 | ||||||
Sales and marketing |
7,681 | 6,138 | ||||||
Research and development |
5,047 | 4,276 | ||||||
General and administrative |
3,705 | 2,851 | ||||||
Amortization |
— | 32 | ||||||
Costs of initial public offering |
— | 950 | ||||||
Stock option compensation |
(7,742 | ) | 667 | |||||
Total operating expenses |
8,691 | 14,914 | ||||||
Income from operations |
17,284 | 6,592 | ||||||
Interest income |
253 | 25 | ||||||
Interest expense |
(13 | ) | (213 | ) | ||||
Other income, net |
(112 | ) | 349 | |||||
Income before provision for income taxes |
17,412 | 6,753 | ||||||
Income tax provision |
6,553 | 2,756 | ||||||
Net income |
$ | 10,859 | $ | 3,997 | ||||
Earnings per share |
||||||||
Basic |
$ | 0.25 | $ | 0.09 | ||||
Diluted |
$ | 0.23 | $ | 0.09 | ||||
Common shares and equivalents outstanding |
||||||||
Basic weighted average shares |
42,643,705 | 42,410,956 | ||||||
Diluted weighted average shares |
47,555,533 | 46,139,536 | ||||||
Summary of stock option compensation (benefit) expense |
||||||||
Cost of services |
$ | 91 | $ | 294 | ||||
Cost of maintenance and subscription revenue |
11 | 37 | ||||||
Total cost of revenue |
102 | 331 | ||||||
Sales and marketing |
74 | 254 | ||||||
Research and development |
55 | 174 | ||||||
General and administrative |
(7,871 | ) | 239 | |||||
Total operating expense |
(7,742 | ) | 667 | |||||
Total stock option compensation (benefit) expense |
$ | (7,640 | ) | $ | 998 | |||
BLACKBAUD, INC.
STATEMENTS OF CASH FLOWS
(In thousands)
| Three months ended March 31, | ||||||||
| 2005 | 2004 | |||||||
Cash flows from operating activities |
||||||||
Net income |
$ | 10,859 | $ | 3,997 | ||||
Adjustments to reconcile net income to net cash
provided by operating activities |
||||||||
Depreciation |
668 | 624 | ||||||
Amortization of intangibles |
— | 32 | ||||||
Provision for doubtful accounts and sales returns |
429 | 212 | ||||||
Stock option compensation |
(6,922 | ) | 998 | |||||
Amortization of deferred financing fees |
12 | 156 | ||||||
Deferred taxes |
4,970 | 2,040 | ||||||
Benefit on exercise of stock options |
2,606 | — | ||||||
Changes in assets and liabilities, net of acquisition |
||||||||
Accounts receivable |
780 | (238 | ) | |||||
Prepaid expenses and other assets |
(158 | ) | 122 | |||||
Trade accounts payable |
(168 | ) | (862 | ) | ||||
Accrued expenses and other current liabilities |
(5,182 | ) | (2,183 | ) | ||||
Deferred revenue |
(537 | ) | 42 | |||||
Total adjustments |
(3,502 | ) | 943 | |||||
Net cash provided by operating
activities |
7,357 | 4,940 | ||||||
Cash flows from investing activities |
||||||||
Purchase of property and equipment |
(85 | ) | (695 | ) | ||||
Purchase of net assets of acquired company |
(49 | ) | (8 | ) | ||||
Net cash used in investing activities |
(134 | ) | (703 | ) | ||||
Cash flows from financing activities |
||||||||
Repayments on long-term debt and capital
lease obligations |
(37 | ) | (5,033 | ) | ||||
Proceeds from exercise of stock options |
4,079 | 113 | ||||||
Purchase of treasury stock |
(7,969 | ) | — | |||||
Dividend payments to shareholders |
(2,151 | ) | — | |||||
Net cash used in financing activities |
(6,078 | ) | (4,920 | ) | ||||
Effect of exchange rate on cash and cash equivalents |
(20 | ) | 60 | |||||
Net increase (decrease) in cash and cash equivalents |
1,125 | (623 | ) | |||||
Cash and cash equivalents, beginning of year |
42,144 | 6,708 | ||||||
Cash and cash equivalents, end of year |
$ | 43,269 | $ | 6,085 | ||||
Supplemental disclosures of cash flow information |
||||||||
Cash paid during the year for |
||||||||
Interest |
1 | 26 | ||||||
Taxes |
1,134 | 69 | ||||||
BLACKBAUD, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
(In thousands, except per share amounts)
| Three months ended March 31, | ||||||||
| 2005 | 2004 | |||||||
GAAP revenue |
$ | 37,273 | $ | 31,355 | ||||
GAAP gross margin |
$ | 25,975 | $ | 21,506 | ||||
Pro forma adjustments: |
||||||||
Amortization of deferred stock compensation |
102 | 331 | ||||||
Pro forma gross profit |
$ | 26,077 | $ | 21,837 | ||||
Pro forma gross margin |
70 | % | 70 | % | ||||
GAAP income from operations |
$ | 17,284 | $ | 6,592 | ||||
Pro forma adjustments: |
||||||||
Amortization of deferred stock compensation expense (benefit) |
(7,640 | ) | 998 | |||||
Costs of initial public offering |
— | 950 | ||||||
Amortization of intangibles from business combinations |
— | 32 | ||||||
Total pro forma adjustments |
(7,640 | ) | 1,980 | |||||
Pro forma income from operations |
$ | 9,644 | $ | 8,572 | ||||
Pro forma operating margin |
26 | % | 27 | % | ||||
GAAP net income |
$ | 10,859 | $ | 3,997 | ||||
Pro forma adjustments: |
||||||||
Total pro forma adjustments affecting income from operations |
(7,640 | ) | 1,980 | |||||
Tax impact related to pro forma adjustments |
2,742 | (650 | ) | |||||
Pro forma net income |
$ | 5,961 | $ | 5,327 | ||||
GAAP shares used in computing diluted income per share |
47,556 | 46,140 | ||||||
Pro forma adjustments: |
||||||||
Incremental shares related to stock options |
(950 | ) | (388 | ) | ||||
Shares used in computing pro forma earnings per diluted share |
46,606 | 45,752 | ||||||
Pro forma earnings per diluted share |
$ | 0.13 | $ | 0.12 | ||||