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): July 30, 2009

 

 

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 July 30, 2009, Blackbaud, Inc. issued a press release reporting unaudited financial results for the quarter ended June 30, 2009. 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
99.1		Press release dated July 30, 2009.

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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: July 30, 2009						/s/ Timothy V. Williams
						Timothy V. Williams,
						Senior Vice President and Chief Financial Officer

Exhibit 99.1

Blackbaud, Inc. Announces Second Quarter 2009 Results

Announces Third Quarter 2009 Dividend

CHARLESTON, S.C. – July 30, 2009 – 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, 2009.

Marc Chardon, Chief Executive Officer of Blackbaud, stated, “While the economic environment remains challenging, Blackbaud delivered second quarter revenue and profitability that were consistent with or above the high-end of our guidance as a result of our worldwide organization executing at a very high level. Equally important, we believe our efforts and investments to solidify our leadership position and expand our addressable market opportunity will pay off in a meaningful way when the economy improves and IT budgets increase in the nonprofit sector.”

Chardon added, “We are making solid progress against our goal of establishing a clear market leadership position in online fundraising solutions, just as we have in the constituent relationship fundraising solutions market with the Raiser’s Edge and our newer eCRM offering. During the second quarter, we enjoyed a strong uptake of our recently introduced, subscription-based Blackbaud NetCommunity Grow solution. In addition, we continue to be pleased with the market acceptance and customer commitment related to our Blackbaud Sphere offering. Our increasingly strong position in the online fundraising solutions market is very encouraging from a long-term perspective.”

On a GAAP basis, Blackbaud reported total revenue of $76.4 million for the quarter ended June 30, 2009, an increase of over 5% compared with the second quarter of 2008. Income from operations and net income were $10.8 million and $6.6 million, respectively, compared with $14.6 million and $9.0 million, respectively, in the second quarter of 2008. Diluted earnings per share were $0.15 for the quarter ended June 30, 2009, compared with $0.21 in the same period last year.

For the quarter ended June 30, 2009, non-GAAP revenue, including a $0.8 million revenue adjustment related to Kintera purchase accounting, was $77.2 million, an increase of 6.5% compared with the second quarter of 2008. Non-GAAP income from operations, which excludes stock-based compensation expense and amortization of intangibles arising from business combinations, was $16.5 million, above the Company’s guidance of $15.3 to $16.3 million and representing a non-GAAP operating margin of 21.3%. Non-GAAP operating income was $18.0 million in the second quarter of 2008.

Non-GAAP net income was $9.9 million for the quarter ended June 30, 2009, compared with $10.9 million in the same period last year. Non-GAAP diluted earnings per share were $0.23 for the quarter ended June 30, 2009, above the Company’s guidance of $0.21 to $0.22 and compared to $0.25 in 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 ended the quarter with $18.5 million in cash, down from $23.0 million at the end of the previous quarter. The company generated $22.1 million in cash from operations during the second quarter, a substantial portion of which was used to reduce debt by approximately $19 million. The Company also used $4.5 million for the quarterly payment of dividends to stockholders.

Timothy V. Williams, Chief Financial Officer of Blackbaud, stated, “During the first half of 2009, a tight focus on controlling expenses enabled Blackbaud to deliver better-than-expected profitability and a non-GAAP operating margin of 20%, consistent with our full year target. We will continue to manage our expenses.”

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Williams added, “We are particularly pleased with the Company’s strong cash flow in the second quarter, which allowed us to reduce our outstanding debt balance by approximately 31%, at the same time we continued to return cash to stockholders by way of our quarterly dividend. Despite the challenges of the economic environment, Blackbaud remains one of the few public software companies that is committed to using its strong cash flow to pay a quarterly dividend in order to enhance long-term stockholder value.”

Third Quarter 2009 Dividend and Share Repurchase Program

Blackbaud announced today that its Board of Directors has declared a third quarter dividend of $0.10 per share payable on September 15, 2009 to stockholders of record on August 28, 2009. Additionally, as of June 30, the Company had approximately $30 million remaining under its common stock share repurchase program that was authorized over a year ago.

Conference Call Details

Blackbaud will host a conference call today, July 30, 2009, at 5:00 p.m. (Eastern Time) to discuss the Company’s financial results, operations and related matters. To access this call, dial 888-278-8469 (domestic) or 913-312-0851 (international). A replay of this conference call will be available through August 6, 2009, at 888-203-1112 (domestic) or 719-457-0820 (international). The replay passcode is 1704700. A live webcast of this conference call will be available on the “Investor Relations” page of the Company’s website at www.blackbaud.com/investorrelations, and a replay will be archived on the website 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, In Touch 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 Australia, Canada, the Netherlands, and the United Kingdom. For more information, visit www.blackbaud.com.

All Blackbaud product names appearing herein 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: 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

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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 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 or 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 revenue, 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 and include revenue associated with the Kintera acquisition that is not recognizable under GAAP purchase accounting.

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 Mathos

Blackbaud, Inc.

melanie.mathos@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, 2009				December 31, 2008
Assets
Current assets:
Cash and cash equivalents		$	18,537			$	16,361
Donor restricted cash			5,514				12,363
Accounts receivable, net of allowance of $2,696 and $2,777 at June 30, 2009 and December 31, 2008, respectively			59,248				52,554
Prepaid expenses and other current assets			16,839				17,281
Deferred tax asset, current portion			6,754				6,858
Total current assets			106,892				105,417
Property and equipment, net			20,174				21,384
Deferred tax asset			62,751				64,762
Goodwill			75,130				73,615
Intangible assets, net			45,569				48,171
Other assets			480				537
Total assets		$	310,996			$	313,886
Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable		$	6,787			$	7,023
Accrued expenses and other current liabilities			23,248				21,758
Donations payable			5,514				12,363
Capital lease obligations, current portion			290				384
Debt, current portion			41,610				60,049
Deferred revenue			126,892				113,802
Total current liabilities			204,341				215,379
Capital lease obligations, noncurrent			81				203
Long-term debt, net of current portion			717				1,288
Deferred revenue, noncurrent			5,597				5,838
Other noncurrent liabilities			792				670
Total liabilities			211,528				223,378
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, 51,344,233 and 51,269,081 shares issued at June 30, 2009 and December 31, 2008, respectively			51				51
Additional paid-in capital			123,470				116,846
Treasury stock, at cost; 7,512,701 and 7,494,466 shares at June 30, 2009 and December 31, 2008, respectively			(130,804	)			(130,594	)
Accumulated other comprehensive loss			(218	)			(899	)
Retained earnings			106,969				105,104
Total stockholders’ equity			99,468				90,508
Total liabilities and stockholders’ equity		$	310,996			$	313,886

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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)		2009				2008						2009				2008
Revenue
License fees		$	5,799			$	9,603					$	13,204			$	19,238
Services			22,465				25,336						43,594				48,912
Maintenance			28,821				26,371						56,832				51,801
Subscriptions			17,773				9,010						34,496				17,795
Other revenue			1,557				2,182						3,030				4,192
Total revenue			76,415				72,502						151,156				141,938
Cost of revenue
Cost of license fees			981				807						1,884				1,649
Cost of services			15,512				14,905						31,721				30,598
Cost of maintenance			5,432				4,595						10,580				9,299
Cost of subscriptions			7,038				3,824						13,778				7,480
Cost of other revenue			1,533				2,023						2,811				3,871
Total cost of revenue			30,496				26,154						60,774				52,897
Gross profit			45,919				46,348						90,382				89,041
Operating expenses
Sales and marketing			15,072				15,672						31,187				30,911
Research and development			11,301				8,642						22,762				17,409
General and administrative			8,513				7,273						17,452				14,539
Amortization			192				167						378				334
Total operating expenses			35,078				31,754						71,779				63,193
Income from operations			10,841				14,594						18,603				25,848
Interest income			37				34						99				199
Interest expense			(270	)			(148	)					(695	)			(218	)
Other income (expense), net			31				49						(130	)			(40	)
Income before provision for income taxes			10,639				14,529						17,877				25,789
Income tax provision			4,051				5,542						7,217				9,759
Net income		$	6,588			$	8,987					$	10,660			$	16,030
Earnings per share
Basic			$  0.15				$  0.21						$  0.25				$  0.37
Diluted			$  0.15				$  0.21						$  0.25				$  0.36
Common shares and equivalents outstanding
Basic weighted average shares			42,577,549				42,776,609						42,531,323				43,336,989
Diluted weighted average shares			43,333,871				43,457,710						43,141,654				44,064,436
Dividends per share			$  0.10				$  0.10						$  0.20				$  0.20

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Blackbaud, Inc.

Consolidated statements of cash flows

(Unaudited)

 

		Six months ended June 30,
(in thousands)		2009				2008
Cash flows from operating activities
Net income		$	10,660			$	16,030
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			7,694				5,107
Provision for doubtful accounts and sales returns			1,285				2,199
Stock-based compensation expense			6,245				4,678
Excess tax benefit on exercise of stock options			(464	)			(18	)
Deferred taxes			3,345				2,363
Other non-cash adjustments			69				37
Changes in assets and liabilities, net of acquisition of businesses:
Accounts receivable			(5,655	)			(20,886	)
Prepaid expenses and other assets			1,208				994
Trade accounts payable			(467	)			519
Accrued expenses and other current liabilities			(262	)			(2,773	)
Donor restricted cash			6,849				-
Donations payable			(6,849	)			-
Deferred revenue			10,870				13,218
Net cash provided by operating activities			34,528				21,468
Cash flows from investing activities
Purchase of property and equipment			(2,665	)			(2,957	)
Purchase of net assets of acquired companies, net of cash acquired			(2,258	)			(2,895	)
Net cash used in investing activities			(4,923	)			(5,852	)
Cash flows from financing activities
Proceeds from issuance of debt			-				27,200
Proceeds from exercise of stock options			255				393
Excess tax benefit on exercise of stock options			464				18
Payments on debt			(19,010	)			(2,708	)
Payments of deferred financing fees			-				(47	)
Payments on capital lease obligations			(217	)			(276	)
Purchase of treasury stock			-				(36,027	)
Dividend payments to stockholders			(8,807	)			(8,843	)
Net cash used in financing activities			(27,315	)			(20,290	)
Effect of exchange rate on cash and cash equivalents			(114	)			(122	)
Net increase (decrease) in cash and cash equivalents			2,176				(4,796	)
Cash and cash equivalents, beginning of period			16,361				14,775
Cash and cash equivalents, end of period		$	18,537			$	9,979

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Blackbaud, Inc.

Reconciliation of GAAP to Non-GAAP financial measures

(Unaudited)

 

		Three months ended June 30,										Six months ended June 30,
(in thousands, except per share amounts)		2009				2008						2009				2008
GAAP revenue		$	76,415			$	72,502					$	151,156			$	141,938
Non-GAAP adjustments:
Add back: Kintera deferred revenue writedown			834				-						2,041				-
Total Non-GAAP adjustments			834				-						2,041				-
Non-GAAP revenue		$	77,249			$	72,502					$	153,197			$	141,938
GAAP gross profit		$	45,919			$	46,348					$	90,382			$	89,041
Non-GAAP adjustments:
Add back: Kintera deferred revenue writedown			834				-						2,041				-
Add back: Stock-based compensation expense (see table below)			631				479						1,284				968
Add back: Amortization of intangibles from business combinations (see table below)			1,575				903						3,153				1,806
Total Non-GAAP adjustments			3,040				1,382						6,478				2,774
Non-GAAP gross profit		$	48,959			$	47,730					$	96,860			$	91,815
Non-GAAP gross margin			63	%			66	%					63	%			65	%
GAAP income from operations		$	10,841			$	14,594					$	18,603			$	25,848
Non-GAAP adjustments:
Add back: Kintera deferred revenue writedown			834				-						2,041				-
Add back: Stock-based compensation expense (see table below)			3,025				2,319						6,245				4,678
Add back: Amortization of intangibles from business combinations (see table below)			1,767				1,070						3,531				2,140
Total Non-GAAP adjustments			5,626				3,389						11,817				6,818
Non-GAAP income from operations		$	16,467			$	17,983					$	30,420			$	32,666
Non-GAAP operating margin			21	%			25	%					20	%			23	%
GAAP net income		$	6,588			$	8,987					$	10,660			$	16,030
Non-GAAP adjustments:
Add back: Total Non-GAAP adjustments affecting income from operations			5,626				3,389						11,817				6,818
Add back: Tax impact related to Non-GAAP adjustments			(2,292	)			(1,445	)					(4,363	)			(2,958	)
Non-GAAP net income		$	9,922			$	10,931					$	18,114			$	19,890
Shares used in computing Non-GAAP diluted earnings per share			43,334				43,951						43,142				44,551
Non-GAAP diluted earnings per share		$	0.23			$	0.25					$	0.42			$	0.45
Detail of Non-GAAP adjustments:
Stock-based compensation expense:
Cost of revenue
Cost of services		$	360			$	302					$	737			$	652
Cost of maintenance			157				119						314				231
Cost of subscriptions			114				58						233				85
Subtotal			631				479						1,284				968
Operating expenses
Sales and marketing			331				295						671				581
Research and development			686				508						1,397				1,028
General and administrative			1,377				1,037						2,893				2,101
Subtotal			2,394				1,840						4,961				3,710
Total stock-based compensation expense		$	3,025			$	2,319					$	6,245			$	4,678
Amortization of intangibles from business combinations:
Cost of revenue
Cost of license fees		$	90			$	43					$	171			$	86
Cost of services			336				334						670				668
Cost of maintenance			325				98						650				196
Cost of subscriptions			806				409						1,625				818
Cost of other revenue			18				19						37				38
Subtotal			1,575				903						3,153				1,806
Operating expenses			192				167						378				334
Total amortization of intangibles from business combinations		$	1,767			$	1,070					$	3,531			$	2,140