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Blackbaud Announces 2021 First Quarter Results

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CHARLESTON, S.C., April 28, 2021 /PRNewswire/ -- Blackbaud (NASDAQ:BLKB), the world's leading cloud software company powering social good, today announced financial results for its first quarter ended March 31, 2021.

"Our first quarter performance combined with an improving macro environment has us well positioned for a strong and successful year ahead," said Mike Gianoni, president and CEO, Blackbaud. "The progress being made to distribute COVID vaccines is encouraging for our market, our customers and our company. As we look to extend our leadership position in this market, we're accelerating investments in key areas like digital marketing, engineering, security and customer success, and our sights are set on the substantial opportunity ahead of us to drive meaningful acceleration in financial performance in the context of Rule of 40. Overall, we had a strong start to the year, and I'm increasingly optimistic about what's to come in 2021 and over the next several years."

First Quarter 2021 Results Compared to First Quarter 2020 Results:

  • Total GAAP revenue was $219.2 million, down 2.0%, with $206.8 million in GAAP recurring revenue, up 0.9%.
  • Non-GAAP organic recurring revenue increased 0.9%.
  • GAAP income from operations was $6.6 million, with GAAP operating margin of 3.0%, a decrease of 80 basis points.
  • Non-GAAP income from operations was $47.2 million, with non-GAAP operating margin of 21.5%, an increase of 630 basis points.
  • GAAP net loss was $0.2 million, with GAAP diluted earnings per share of $0.00, down $0.10 per share.
  • Non-GAAP net income was $32.8 million, with non-GAAP diluted earnings per share of $0.68, up $0.17 per share.
  • Non-GAAP adjusted EBITDA was $57.2 million, up $12.5 million, with non-GAAP adjusted EBITDA margin of 26.1%.
  • GAAP net cash provided by operating activities was $30.1 million, an increase of $54.6 million.
  • Non-GAAP free cash flow was $17.3 million, an increase of $55.6 million.

"Our first quarter results are encouraging as we continue to see strength in online payments and durability in our recurring revenue streams," said Tony Boor, executive vice president and CFO. "We had solid bookings performance to start the year while reducing customer acquisition costs, and we continued to make accelerated investments in critical areas of the business. As expected, one-time services and other revenue continues to decline which creates a drag on overall revenue growth but is positive over the long term. With one quarter behind us, we have increasing visibility into our near-term performance, and as we exit the pandemic, we see significant growth opportunities ahead of us. Our latest modeling gives us heightened confidence we may have upside to our best estimate for 2021, and the trends we're seeing to start the year combined with favorable foreign exchange rates significantly reduces the likelihood of our downside revenue scenario."

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.

Recent Company Highlights:

Visit www.blackbaud.com/newsroom for more information about Blackbaud's recent highlights.

Conference Call Details:

What:   

Blackbaud's 2021 First Quarter Conference Call

When:   

April 29, 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; cybersecurity and data protection risks; uncertainty regarding the COVID-19 disruption; potential litigation involving us; 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.

Non-GAAP Financial Measures
Blackbaud has provided in this release financial information that has not been prepared in accordance with GAAP. Blackbaud uses non-GAAP financial measures internally in analyzing its operational performance. Accordingly, Blackbaud believes these non-GAAP measures are useful to investors, as a supplement to GAAP measures, in evaluating its ongoing operational performance 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 potential differences in the exact method of calculation between companies.

The non-GAAP financial measures discussed above exclude the impact of certain transactions that Blackbaud believes are not directly related to its operating performance in any particular period, but are for its long-term benefit over multiple periods. Blackbaud believes these non-GAAP financial measures reflect its ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in its business.

While Blackbaud believes these non-GAAP measures provide useful supplemental information, 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 reconciliations of these non-GAAP measures to their most directly comparable GAAP financial measures.

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.

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.

Blackbaud, Inc.
Consolidated Balance Sheets
(Unaudited)


(dollars in thousands)

March 31,

2021

December 31,

2020

Assets



Current assets:



Cash and cash equivalents

$

27,753


$

35,750


Restricted cash

255,158


609,219


Accounts receivable, net of allowance of $10,361 and $10,292 at March 31,
2021 and December 31, 2020, respectively

83,333


95,404


Customer funds receivable

945


321


Prepaid expenses and other current assets

98,095


78,366


Total current assets

465,284


819,060


Property and equipment, net

105,124


105,177


Operating lease right-of-use assets

20,055


22,671


Software development costs, net

113,624


111,827


Goodwill

637,113


635,854


Intangible assets, net

269,118


277,506


Other assets

74,022


72,639


Total assets

$

1,684,340


$

2,044,734


Liabilities and stockholders' equity



Current liabilities:



Trade accounts payable

$

35,274


$

27,836


Accrued expenses and other current liabilities

53,013


52,228


Due to customers

254,947


608,264


Debt, current portion

12,875


12,840


Deferred revenue, current portion

290,025


312,236


Total current liabilities

646,134


1,013,404


Debt, net of current portion

537,924


518,193


Deferred tax liability

54,444


54,086


Deferred revenue, net of current portion

4,495


4,678


Operating lease liabilities, net of current portion

15,744


17,357


Other liabilities

9,439


10,866


Total liabilities

1,268,180


1,618,584


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,
61,595,276 and 60,904,638 shares issued at March 31, 2021 and
December 31, 2020, respectively

62


61


Additional paid-in capital

574,958


544,963


Treasury stock, at cost; 12,760,956 and 12,054,268 shares at March 
31, 2021 and December 31, 2020, respectively

(399,583)


(353,091)


Accumulated other comprehensive income (loss)

4,163


(2,497)


Retained earnings

236,560


236,714


Total stockholders' equity

416,160


426,150


Total liabilities and stockholders' equity

$

1,684,340


$

2,044,734


 

Blackbaud, Inc.
Consolidated Statements of Comprehensive Income
(Unaudited)


(dollars in thousands, except per share amounts)

Three months ended

March 31,

2021

2020

Revenue



Recurring

$

206,750


$

204,867


One-time services and other

12,441


18,754


Total revenue

219,191


223,621


Cost of revenue



Cost of recurring

88,865


89,551


Cost of one-time services and other

14,520


15,314


Total cost of revenue

103,385


104,865


Gross profit

115,806


118,756


Operating expenses



Sales, marketing and customer success

48,793


58,735


Research and development

29,179


24,977


General and administrative

30,587


25,855


Amortization

549


741


Restructuring

54


24


Total operating expenses

109,162


110,332


Income from operations

6,644


8,424


Interest expense

(5,114)


(4,159)


Other (expense) income, net

(1,010)


1,070


Income before provision for income taxes

520


5,335


Income tax provision

684


696


Net (loss) income

$

(164)


$

4,639


Earnings (loss) per share



Basic

$


$

0.10


Diluted

$


$

0.10


Common shares and equivalents outstanding



Basic weighted average shares

47,363,197


48,036,300


Diluted weighted average shares

47,363,197


48,455,751


Other comprehensive income (loss)



Foreign currency translation adjustment

2,511


(5,728)


Unrealized gain (loss) on derivative instruments, net of tax

4,149


(3,122)


Total other comprehensive income (loss)

6,660


(8,850)


Comprehensive income (loss)

$

6,496


$

(4,211)


 

Blackbaud, Inc.
Consolidated Statements of Cash Flows
(Unaudited)



Three months ended

March 31,

(dollars in thousands)

2021

2020

Cash flows from operating activities



Net (loss) income

$

(164)


$

4,639


Adjustments to reconcile net (loss) income to net cash provided by (used in)
operating activities:



Depreciation and amortization

20,461


21,804


Provision for credit losses and sales returns

2,141


2,488


Stock-based compensation expense

30,005


13,580


Deferred taxes

(1,142)


954


Amortization of deferred financing costs and discount

506


188


Other non-cash adjustments

(32)


102


Changes in operating assets and liabilities, net of acquisition and disposal of
businesses:



Accounts receivable

10,407


(3,876)


Prepaid expenses and other assets

(17,426)


(5,303)


Trade accounts payable

7,550


(4,021)


Accrued expenses and other liabilities

549


(31,694)


Deferred revenue

(22,752)


(23,364)


Net cash provided by (used in) operating activities

30,103


(24,503)


Cash flows from investing activities



Purchase of property and equipment

(3,470)


(2,867)


Capitalized software development costs

(9,302)


(10,937)


Net cash used in investing activities

(12,772)


(13,804)


Cash flows from financing activities



Proceeds from issuance of debt

80,700


144,700


Payments on debt

(59,667)


(86,075)


Employee taxes paid for withheld shares upon equity award settlement

(18,426)


(19,782)


Proceeds from exercise of stock options


1


Change in due to customers

(353,597)


(311,095)


Change in customer funds receivable

(563)


(733)


Purchase of treasury stock

(28,066)



Dividend payments to stockholders


(5,960)


Net cash used in financing activities

(379,619)


(278,944)


Effect of exchange rate on cash, cash equivalents and restricted cash

230


(2,822)


Net decrease in cash, cash equivalents and restricted cash

(362,058)


(320,073)


Cash, cash equivalents and restricted cash, beginning of period

644,969


577,295


Cash, cash equivalents and restricted cash, end of period

$

282,911


$

257,222


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)

March 31,

2021

December 31,

2020

Cash and cash equivalents

$

27,753


$

35,750


Restricted cash

255,158


609,219


Total cash, cash equivalents and restricted cash in the statement of cash flows

$

282,911


$

644,969


 

Blackbaud, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)


(dollars in thousands, except per share amounts)

Three months ended

March 31,

2021

2020

GAAP gross profit

$

115,806


$

118,756


GAAP gross margin

52.8

%

53.1

%

Non-GAAP adjustments:



Add: Stock-based compensation expense

5,358


865


Add: Amortization of intangibles from business combinations

9,128


10,930


Add: Employee severance


32


Subtotal

14,486


11,827


Non-GAAP gross profit

$

130,292


$

130,583


Non-GAAP gross margin

59.4

%

58.4

%




GAAP income from operations

$

6,644


$

8,424


GAAP operating margin

3.0

%

3.8

%

Non-GAAP adjustments:



Add: Stock-based compensation expense

30,005


13,580


Add: Amortization of intangibles from business combinations

9,677


11,671


Add: Employee severance

991


97


Add: Acquisition-related integration costs

(98)


(32)


Add: Acquisition-related expenses

65


139


Add: Restructuring and other real estate activities

(111)


24


Subtotal

40,529


25,479


Non-GAAP income from operations

$

47,173


$

33,903


Non-GAAP operating margin

21.5

%

15.2

%




GAAP income before provision for income taxes

$

520


$

5,335


GAAP net (loss) income

$

(164)


$

4,639





Shares used in computing GAAP diluted earnings per share

47,363,197


48,455,751


GAAP diluted earnings per share

$


$

0.10





Non-GAAP adjustments:



Add: GAAP income tax provision

684


696


Add: Total non-GAAP adjustments affecting income from operations

40,529


25,479


Non-GAAP income before provision for income taxes

41,049


30,814


Assumed non-GAAP income tax provision(1)

$

8,210


$

6,163


Non-GAAP net income

$

32,839


$

24,651





Shares used in computing non-GAAP diluted earnings per share

48,387,042


48,455,751


Non-GAAP diluted earnings per share

$

0.68


$

0.51




(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.

 

Blackbaud, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
(Unaudited)


(dollars in thousands)

Three months ended

March 31,

2021

2020

GAAP revenue

$

219,191


$

223,621


GAAP revenue growth

(2.0)

%


Add: Non-GAAP acquisition-related revenue(1)



Non-GAAP organic revenue(2)

$

219,191


$

223,621


Non-GAAP organic revenue growth

(2.0)

%





Non-GAAP organic revenue(2)

$

219,191


$

223,621


Foreign currency impact on non-GAAP organic revenue(3)

(1,953)



Non-GAAP organic revenue on constant currency basis(3)

$

217,238


$

223,621


Non-GAAP organic revenue growth on constant currency basis

(2.9)

%





GAAP recurring revenue

$

206,750


$

204,867


GAAP recurring revenue growth

0.9

%


Add: Non-GAAP acquisition-related revenue(1)



Non-GAAP organic recurring revenue

$

206,750


$

204,867


Non-GAAP organic recurring revenue growth

0.9

%




(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.

 

Blackbaud, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
(Unaudited)


(dollars in thousands)

Three months ended

March 31,

2021

2020

GAAP net income

$

(164)


$

4,639


Non-GAAP adjustments:



Add: Interest, net

4,962


3,637


Add: GAAP income tax provision

684


696


Add: Depreciation

3,211


3,541


Add: Amortization of intangibles from business combinations

9,677


11,671


Add: Amortization of software development costs(1)

7,963


6,672


Subtotal

26,497


26,217


Non-GAAP EBITDA

$

26,333


$

30,856


Non-GAAP EBITDA margin

12.0

%





Non-GAAP adjustments:



Add: Acquisition-related deferred revenue write-down



Add: Stock-based compensation expense

30,005


13,580


Add: Employee severance

991


97


Add: Acquisition-related integration costs

(98)


(32)


Add: Acquisition-related expenses

65


139


Add: Restructuring and other real estate activities

(111)


24


Subtotal

30,852


13,808


Adjusted Non-GAAP EBITDA

$

57,185


$

44,664


Adjusted Non-GAAP EBITDA margin

26.1

%





Rule of 40(2)

24.1

%




(1)

Includes amortization expense related to software development costs and amortization expense from capitalized cloud computing implementation costs.

(2)

Measured by non-GAAP organic revenue growth plus non-GAAP adjusted EBITDA margin. See Non-GAAP organic revenue growth table above.

 

(dollars in thousands)

Three months ended

March 31,

2021

2020

GAAP net cash provided by operating activities

$

30,103


$

(24,503)


Less: purchase of property and equipment

(3,470)


(2,867)


Less: capitalized software development costs

(9,302)


(10,937)


Non-GAAP free cash flow

$

17,331


$

(38,307)


 

Power your passion (PRNewsfoto/Blackbaud)

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SOURCE Blackbaud, Inc.

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