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): August 4, 2008

 

 

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)

2000 Daniel Island Drive, 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))

 

 

 

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Item 2.02.

Results of Operations and Financial Condition.

On August 4, 2008, Blackbaud, Inc. issued a press release reporting unaudited financial results for the quarter ended June 30, 2008. 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.

 

(d)

Exhibits

 

Exhibit No.		Description
99.1		Press release dated August 4, 2008.

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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: August 4, 2008				/s/ Timothy V. Williams
				Timothy V. Williams,
				Senior Vice President and Chief Financial Officer

Exhibit 99.1

Blackbaud, Inc. Announces Second Quarter 2008 Results and Third Quarter 2008 Dividend

CHARLESTON, S.C. – August 4, 2008 – Blackbaud, Inc. (Nasdaq: BLKB), the leading provider of software and related services designed specifically for nonprofit organizations, today announced financial results for its second quarter ended June 30, 2008.

Marc Chardon, Chief Executive Officer of Blackbaud, stated, “We are pleased with the Company’s overall financial performance in the second quarter in the face of the continued challenging economic environment. The quarter was highlighted by solid total revenue growth, continued rapid growth in our subscription revenue and strong profit margins that drove our non-GAAP earnings per share to the high-end of our expectations.”

Chardon continued, “During the quarter, we added two new Enterprise CRM customers, including the upgrade of an existing Target Team Approach customer. This upgrade represented the achievement of the last of our four major Target Software milestones, approximately six months ahead of schedule. We were also pleased with the traction displayed by our eTapestry software-as-a-service fundraising offering, which delivered strong operating results in the quarter. The success we have enjoyed with both the Target and eTapestry acquisitions provides us with confidence as we begin to integrate the recently announced Kintera acquisition. Customer and employee response have been decidedly positive since that acquisition announcement, and we look forward to adding the industry’s leading on-line fundraising solution to our product suite and further solidifying the growth of our subscription revenue.”

For the quarter ended June 30, 2008, Blackbaud reported total revenue of $72.5 million, an increase of 13% compared with the second quarter of 2007. Income from operations and net income, determined in accordance with generally accepted accounting principles (“GAAP”), were $14.6 million and $9.0 million, respectively, for the second quarter of 2008. This compares to GAAP income from operations of $13.6 million and net income of $8.2 million in the same period last year. GAAP diluted earnings per share were $0.21 for the quarter ended June 30, 2008, compared with $0.19 in the same period last year.

For the quarter ended June 30, 2008, non-GAAP income from operations, which excludes stock-based compensation expense and amortization of intangibles arising from business combinations, was $18.0 million, an increase of 11% from $16.2 million in the same period last year. Non-GAAP net income was $10.9 million for the quarter ended June 30, 2008, an increase of 12% from $9.7 million in the same period last year. Non-GAAP diluted earnings per share were $0.25 for the quarter ended June 30, 2008, at the high-end of the Company’s guidance and an increase of 14% over the same period last year.

A reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

The Company generated $21.5 million in cash from operations for the six months ended June 30, 2008 and during the second quarter, the Company repurchased approximately 580,000 shares of its stock for approximately $13.4 million. On a year-to-date basis, the Company has repurchased approximately 1.5 million shares for approximately $36.0 million.

Timothy V. Williams, Chief Financial Officer of Blackbaud, stated, “The Company was able to deliver a higher-than-expected non-GAAP operating margin of 25% during the second quarter, leading to non-GAAP diluted EPS that was at the high-end of our expectations. In addition, we continue to believe the Company will deliver strong cash flows during 2008, and our third quarter is off to a good start with record collections in July following the conversion to a new billing system and related increase in receivables during the second quarter.”

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Williams continued, “The macro-economic environment was challenging in the first half of 2008, and we believe it is prudent to expect a similar environment for the remainder of the year. With a strong market position and business model in place, we continue to believe the Company is well positioned to deliver solid revenue growth and strong profitability during 2008. From a longer-term perspective, we believe the Kintera acquisition further enhances our financial profile by increasing our subscription revenue, which continues to be our highest growth revenue source.”

Third Quarter 2008 Dividend and Share Repurchase Authorization

Blackbaud announced today that its Board of Directors has declared a third quarter dividend of $0.10 per share payable on September 15, 2008 to stockholders of record on August 28, 2008. Additionally, in May 2008, the Board of Directors authorized an increase in the Company’s common stock share repurchase authorization to $40.0 million. As of June 30, the Company had approximately $38.5 million remaining under this authorization.

Conference Call Details

Blackbaud will host a conference call today, August 4, 2008, at 5:00 p.m. (Eastern Time) to discuss the Company’s financial results, operations and related matters. To access this call, dial 888-801-6494 (domestic) or 913-981-5542 (international). A replay of this conference call will be available through August 11, 2008, at 888-203-1112 (domestic) or 719-457-0820 (international). The replay passcode is 3148327. 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 the Web site as well.

About Blackbaud

Blackbaud is the leading global provider of software and services designed specifically for nonprofit organizations, enabling them to improve operational efficiency, build strong relationships, and raise more money to support their missions. Approximately 22,000 organizations — including University of Arizona Foundation, American Red Cross, Cancer Research UK, The Taft School, Lincoln Center, InTouch Ministries, Tulsa Community Foundation, Ursinus College, Earthjustice, International Fund for Animal Welfare, and the WGBH Educational Foundation — use one or more Blackbaud products and services for fundraising, constituent relationship management, financial management, website management, direct marketing, education administration, ticketing, business intelligence, prospect research, consulting, and analytics. Since 1981, Blackbaud’s sole focus and expertise has been partnering with nonprofits and providing them the solutions they need to make a difference in their local communities and worldwide. Headquartered in the United States, Blackbaud also has operations in Canada, the United Kingdom, and Australia. For more information, visit www.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 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: general economic risks; uncertainty regarding increased business and renewals from existing customers; continued success in sales growth; management of integration of acquired companies and other risks associated with acquisitions; risks associated with successful implementation of multiple integrated software products; the ability to attract and retain key personnel; risks related to our dividend policy and share repurchase program, including potential limitations on our ability to grow and the possibility that we might discontinue payment of dividends; risks relating to restrictions imposed by the credit facility; risks associated with management of growth; lengthy sales and implementation cycles, particularly in

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larger organizations; technological changes that make our products and services less competitive; 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 upon request from Blackbaud’s investor relations department.

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 income from operations and margin, non-GAAP net income and non-GAAP diluted 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 stock-based compensation expense and costs associated with amortization of intangibles arising from business combinations.

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 below. As previously mentioned, a reconciliation of our 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.

Investor Contact:

Tim Dolan

ICR

timothy.dolan@icrinc.com

617-956-6727

Media Contact:

Melanie Milonas

Blackbaud, Inc.

melanie.milonas@blackbaud.com

843-216-6200 x3307

SOURCE: Blackbaud, Inc.

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Blackbaud, Inc.

Consolidated balance sheets

(Unaudited)

 

(in thousands, except share amounts)		June 30, 2008				December 31, 2007
Assets
Current assets:
Cash and cash equivalents		$	9,979			$	14,775
Accounts receivable, net of allowance of $1,728 and $1,935 at June 30, 2008 and December 31, 2007, respectively			64,227				44,689
Prepaid expenses and other current assets			10,287				11,279
Deferred tax asset, current portion			2,802				2,276
Total current assets			87,295				73,019
Property and equipment, net			16,967				16,962
Deferred tax asset			48,795				51,696
Goodwill			61,175				58,275
Intangible assets, net			35,133				37,272
Other assets			490				470
Total assets		$	249,855			$	237,694
Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable		$	6,341			$	5,802
Accrued expenses and other current liabilities			18,180				20,575
Capital lease obligations, current portion			470				513
Short-term debt			24,500				—
Deferred revenue			107,000				93,106
Total current liabilities			156,491				119,996
Capital lease obligations, noncurrent			352				586
Deferred revenue, noncurrent			3,093				2,994
Other noncurrent liabilities			613				1,015
Total liabilities			160,549				124,591
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, 50,499,324 and 50,450,675 shares issued at June 30, 2008 and December 31, 2007, respectively			50				50
Additional paid-in capital			110,771				105,687
Treasury stock, at cost; 6,933,667 and 5,431,852 shares at June 30, 2008 and December 31, 2007, respectively			(121,514	)			(85,487	)
Accumulated other comprehensive income			91				137
Retained earnings			99,908				92,716
Total stockholders’ equity			89,306				113,103
Total liabilities and stockholders' equity		$	249,855			$	237,694

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Blackbaud, Inc.

Consolidated statements of operations

(Unaudited)

 

		Three months ended June 30,								Six months ended June 30,
(in thousands, except share and per share amounts)		2008				2007				2008				2007
Revenue
License fees		$	9,603			$	11,030			$	19,238			$	19,097
Services			25,336				22,218				48,912				40,532
Maintenance			26,371				23,164				51,801				45,600
Subscriptions			9,010				5,539				17,795				10,332
Other revenue			2,182				2,094				4,192				3,629
Total revenue			72,502				64,045				141,938				119,190
Cost of revenue
Cost of license fees			807				804				1,649				1,280
Cost of services			14,905				13,606				30,598				25,722
Cost of maintenance			4,595				4,220				9,299				8,239
Cost of subscriptions			3,824				2,190				7,480				4,114
Cost of other revenue			2,023				1,776				3,871				3,136
Total cost of revenue			26,154				22,596				52,897				42,491
Gross profit			46,348				41,449				89,041				76,699
Operating expenses
Sales and marketing			15,672				14,223				30,911				27,140
Research and development			8,642				6,926				17,409				13,753
General and administrative			7,273				6,592				14,539				12,736
Amortization			167				98				334				182
Total operating expenses			31,754				27,839				63,193				53,811
Income from operations			14,594				13,610				25,848				22,888
Interest income			34				156				199				527
Interest expense			(148	)			(379	)			(218	)			(746	)
Other income (expense), net			49				(8	)			(40	)			(77	)
Income before provision for income taxes			14,529				13,379				25,789				22,592
Income tax provision			5,542				5,176				9,759				8,633
Net income		$	8,987			$	8,203			$	16,030			$	13,959
Earnings per share
Basic		$	0.21			$	0.19			$	0.37			$	0.32
Diluted		$	0.21			$	0.19			$	0.36			$	0.31
Common shares and equivalents outstanding
Basic weighted average shares			42,776,609				43,355,261				43,336,989				43,508,166
Diluted weighted average shares			43,457,710				44,338,741				44,064,436				44,501,949
Dividends per share		$	0.100			$	0.085			$	0.200			$	0.170

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Blackbaud, Inc.

Consolidated statements of cash flows

(Unaudited)

 

		Six months ended June 30,
(in thousands)		2008				2007
Cash flows from operating activities
Net income		$	16,030			$	13,959
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			5,107				3,570
Provision for doubtful accounts and sales returns			2,199				1,271
Stock-based compensation expense			4,678				3,511
Excess tax benefit on exercise of stock options			(18	)			(709	)
Deferred taxes			2,363				4,028
Other non-cash adjustments			37				24
Changes in assets and liabilities, net of acquisition:
Accounts receivable			(20,886	)			(11,897	)
Prepaid expenses and other assets			994				1,250
Trade accounts payable			519				(1,388	)
Accrued expenses and other current liabilities			(2,773	)			(3,589	)
Deferred revenue			13,218				9,360
Net cash provided by operating activities			21,468				19,390
Cash flows from investing activities
Purchase of property and equipment			(2,957	)			(3,128	)
Purchase of net assets of acquired companies			(2,895	)			(59,243	)
Net cash used in investing activities			(5,852	)			(62,371	)
Cash flows from financing activities
Proceeds from issuance of debt			27,200				30,000
Proceeds from exercise of stock options			393				828
Excess tax benefit on exercise of stock options			18				709
Payments on debt			(2,708	)			(16,922	)
Payments of deferred financing fees			(47	)			—
Payments on capital lease obligations			(276	)			(204	)
Purchase of treasury stock			(36,027	)			(14,106	)
Dividend payments to stockholders			(8,843	)			(7,503	)
Net cash used in financing activities			(20,290	)			(7,198	)
Effect of exchange rate on cash and cash equivalents			(122	)			59
Net decrease in cash and cash equivalents			(4,796	)			(50,120	)
Cash and cash equivalents, beginning of period			14,775				67,783
Cash and cash equivalents, end of period		$	9,979			$	17,663

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Blackbaud, Inc.

Reconciliation of GAAP to Non-GAAP financial measures

(Unaudited)

(In thousands, except per share amounts)

 

		Three months ended June 30,								Six months ended June 30,
		2008				2007				2008				2007
GAAP revenue		$	72,502			$	64,045			$	141,938			$	119,190
GAAP gross profit		$	46,348			$	41,449			$	89,041			$	76,699
Non-GAAP adjustments:
Add back: Stock-based compensation expense (see table below)			479				245				968				459
Add back: Amortization of intangibles from business combinations (see table below)			903				693				1,806				1,221
Non-GAAP gross profit		$	47,730			$	42,387			$	91,815			$	78,379
Non-GAAP gross margin			66	%			66	%			65	%			66	%
GAAP income from operations		$	14,594			$	13,610			$	25,848			$	22,888
Non-GAAP adjustments:
Add back: Stock-based compensation expense (see table below)			2,319				1,799				4,678				3,511
Add back: Amortization of intangibles from business combinations (see table below)			1,070				791				2,140				1,403
Total Non-GAAP adjustments			3,389				2,590				6,818				4,914
Non-GAAP income from operations		$	17,983			$	16,200			$	32,666			$	27,802
Non-GAAP operating margin			25	%			25	%			23	%			23	%
GAAP net income		$	8,987			$	8,203			$	16,030			$	13,959
Non-GAAP adjustments:
Add back: Total Non-GAAP adjustments affecting income from operations			3,389				2,590				6,818				4,914
Add back: Tax impact related to Non-GAAP adjustments			(1,445	)			(1,052	)			(2,958	)			(2,163	)
Non-GAAP net income		$	10,931			$	9,741			$	19,890			$	16,710
GAAP shares used in computing diluted earnings per share			43,458				44,339				44,064				44,502
Non-GAAP adjustments:
Add back: Incremental shares related to dilutive securities			493				392				487				408
Shares used in computing Non-GAAP diluted earnings per share			43,951				44,731				44,551				44,910
Non-GAAP diluted earnings per share		$	0.25			$	0.22			$	0.45			$	0.37
Detail of Non-GAAP adjustments:
Stock-based compensation expense:
Cost of revenue
Cost of services		$	302			$	182			$	652			$	339
Cost of maintenance			119				52				231				99
Cost of subscriptions			58				11				85				21
Subtotal			479				245				968				459
Operating expenses
Sales and marketing			295				261				581				521
Research and development			508				266				1,028				535
General and administrative			1,037				1,027				2,101				1,996
Subtotal			1,840				1,554				3,710				3,052
Total stock-based compensation expense		$	2,319			$	1,799			$	4,678			$	3,511
Amortization of intangibles from business combinations:
Cost of revenue
Cost of license fees		$	43			$	43			$	86			$	67
Cost of services			334				312				668				533
Cost of maintenance			98				103				196				181
Cost of subscriptions			409				214				818				403
Cost of other revenue			19				21				38				37
Subtotal			903				693				1,806				1,221
Operating expenses			167				98				334				182
Total amortization of intangibles from business combinations		$	1,070			$	791			$	2,140			$	1,403