Blackbaud, Inc. Announces Second Quarter 2015 Results
Second Quarter 2015 Highlights
-
Total revenue growth of 12.1% to
$156.3 million - Non-GAAP organic revenue growth of 5.6%; 7.2% in constant currency
- Recurring revenue increased to 75.9% of total revenue
-
Total subscriptions revenue growth of 23.1% to
$80.0 million
President and CEO,
"We continued to focus on executing the key programs within our five growth strategies. Our organic revenue growth and improved operating margin reflects the results of our investments and actions," concluded Mr. Gianoni.
Second Quarter 2015 GAAP Financial Results
Total revenue, income from operations and net income were positively impacted in the second quarter from growth in subscriptions revenue and contributions from acquisitions completed in June and October of 2014. The positive impacts to income from operations and net income were offset by increased amortization of intangible assets arising from those acquisitions as well as increased stock-based compensation. The loss from the sale of a business during the second quarter of 2015 also negatively impacted net income.
Second Quarter 2015 Non-GAAP Financial Results
Non-GAAP income from operations increased 21.1% to
Non-GAAP income from operations and non-GAAP net income were positively impacted in the second quarter by growth in subscriptions revenue and contributions from acquisitions completed in 2014.
Executive Vice President and CFO
Full-Year Financial Guidance Update
-
Non-GAAP revenue of
$635.0 million to $645.0 million ; -
Non-GAAP income from operations of
$118.0 million to $122.0 million ; - Non-GAAP operating margin of 18.6% to 18.9%;
-
Non-GAAP diluted earnings per share of
$1.47 to $1.53 ; and -
Cash flow from operations of
$115.0 million to $125.0 million .
The updates were a result of the company's better than originally expected second quarter and year to date financial performance.
Balance Sheet and Cash Flow
The company ended the second quarter with
Dividend
Conference Call Details
Investors and others should note that we announce material financial information to our investors using our website, www.blackbaud.com,
About
Serving the nonprofit, charitable giving and education communities for more than 30 years,
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: our projected 2015 full year financial results, expectations that our strategic product transitions will result in continued growth in subscriptions revenue; expectations for continuing to execute and benefit from our five growth and operational improvement strategies; and expectations that past investments will continue to yield revenue growth, operational efficiencies and improved operating margins. These statements involve a number of risks and uncertainties. Although
Non-GAAP Financial Measures
In addition, we discuss non-GAAP organic revenue growth and non-GAAP organic revenue growth on a constant currency basis, which we believe provide useful information for evaluating the periodic growth of our business on a consistent basis. Non-GAAP organic revenue growth excludes incremental acquisition-related revenue attributable to companies acquired in the current fiscal year. For companies acquired in the immediately preceding fiscal year, non-GAAP organic revenue growth reflects presentation of full year or stub period incremental non-GAAP revenue derived from such companies as if they were combined throughout the prior period, and it includes the current period 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, non-GAAP organic revenue growth excludes prior period revenue associated with divested businesses in the current fiscal year. 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. We believe this presentation provides a more comparable representation of our current business' organic revenue growth and revenue run-rate. To determine non-GAAP organic revenue growth on a constant currency basis for second quarter of 2015, revenues from entities reporting in foreign currencies were translated into U.S. dollars using the comparable prior year period's quarterly weighted average foreign currency exchange rates which resulted in
Blackbaud, Inc. Consolidated balance sheets (Unaudited) |
||
(in thousands, except share amounts) |
June 30, 2015 |
December 31, 2014 |
Assets | ||
Current assets: | ||
Cash and cash equivalents | $13,227 | $ 14,735 |
Donor restricted cash | 61,055 | 140,709 |
Accounts receivable, net of allowance of $4,433 and $4,539 at June 30, 2015 and December 31, 2014, respectively | 87,462 | 77,523 |
Prepaid expenses and other current assets | 41,628 | 40,392 |
Deferred tax asset, current portion | 11,967 | 14,423 |
Total current assets | 215,339 | 287,782 |
Property and equipment, net | 48,960 | 50,402 |
Goodwill | 345,873 | 349,008 |
Intangible assets, net | 212,596 | 229,307 |
Other assets | 32,592 | 26,684 |
Total assets | $ 855,360 | $ 943,183 |
Liabilities and stockholders' equity | ||
Current liabilities: | ||
Trade accounts payable | $ 18,100 | $ 11,436 |
Accrued expenses and other current liabilities | 45,357 | 52,201 |
Donations payable | 61,055 | 140,709 |
Debt, current portion | 4,375 | 4,375 |
Deferred revenue, current portion | 225,076 | 212,283 |
Total current liabilities | 353,963 | 421,004 |
Debt, net of current portion | 253,130 | 276,196 |
Deferred tax liability | 37,469 | 43,639 |
Deferred revenue, net of current portion | 8,796 | 8,991 |
Other liabilities | 6,747 | 7,437 |
Total liabilities | 660,105 | 757,267 |
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, 56,658,529 and 56,048,135 shares issued at June 30, 2015 and December 31, 2014, respectively | 57 | 56 |
Additional paid-in capital | 257,996 | 245,674 |
Treasury stock, at cost; 9,790,192 and 9,740,054 shares at June 30, 2015 and December 31, 2014, respectively | (192,665) | (190,440) |
Accumulated other comprehensive loss | (1,926) | (1,032) |
Retained earnings | 131,793 | 131,658 |
Total stockholders' equity | 195,255 | 185,916 |
Total liabilities and stockholders' equity | $ 855,360 | $ 943,183 |
Blackbaud, Inc. Consolidated statements of comprehensive income (Unaudited) |
||||
Three months ended June 30, |
Six months ended June 30, |
|||
(in thousands, except share and per share amounts) | 2015 | 2014 | 2015 | 2014 |
Revenue | ||||
Subscriptions | $ 80,009 | $ 64,985 | $ 152,522 | $ 123,253 |
Maintenance | 38,627 | 36,527 | 77,523 | 72,179 |
Services | 33,667 | 31,795 | 64,973 | 59,925 |
License fees and other | 3,956 | 6,081 | 8,234 | 11,653 |
Total revenue | 156,259 | 139,388 | 303,252 | 267,010 |
Cost of revenue | ||||
Cost of subscriptions | 39,400 | 31,749 | 75,578 | 61,873 |
Cost of maintenance | 6,969 | 5,983 | 14,471 | 11,397 |
Cost of services | 25,915 | 25,540 | 52,886 | 51,803 |
Cost of license fees and other | 1,146 | 1,424 | 2,307 | 2,953 |
Total cost of revenue | 73,430 | 64,696 | 145,242 | 128,026 |
Gross profit | 82,829 | 74,692 | 158,010 | 138,984 |
Operating expenses | ||||
Sales and marketing | 29,723 | 26,433 | 58,285 | 51,549 |
Research and development | 20,166 | 18,064 | 41,442 | 34,558 |
General and administrative | 17,955 | 13,781 | 34,798 | 26,599 |
Amortization | 524 | 418 | 1,012 | 1,005 |
Total operating expenses | 68,368 | 58,696 | 135,537 | 113,711 |
Income from operations | 14,461 | 15,996 | 22,473 | 25,273 |
Interest income | 7 | 13 | 15 | 29 |
Interest expense | (1,873) | (1,328) | (3,559) | (2,787) |
Loss on sale of business | (1,976) | — | (1,976) | — |
Loss on debt extinguishment and termination of derivative instruments | — | — | — | (996) |
Other income (expense), net | 695 | 225 | 400 | (11) |
Income before provision for income taxes | 11,314 | 14,906 | 17,353 | 21,508 |
Income tax provision | 4,272 | 5,626 | 6,026 | 8,414 |
Net income | $ 7,042 | $ 9,280 | $ 11,327 | $ 13,094 |
Earnings per share | ||||
Basic | $ 0.15 | $ 0.21 | $ 0.25 | $ 0.29 |
Diluted | $ 0.15 | $ 0.20 | $ 0.24 | $ 0.29 |
Common shares and equivalents outstanding | ||||
Basic weighted average shares | 45,579,345 | 45,155,955 | 45,554,645 | 45,141,878 |
Diluted weighted average shares | 46,402,707 | 45,660,910 | 46,289,440 | 45,607,106 |
Dividends per share | $ 0.12 | $ 0.12 | $ 0.24 | $ 0.24 |
Other comprehensive (loss) income | ||||
Foreign currency translation adjustment | (196) | (385) | (522) | 170 |
Unrealized gain (loss) on derivative instruments, net of tax | 97 | (394) | (372) | (82) |
Total other comprehensive (loss) income | (99) | (779) | (894) | 88 |
Comprehensive income | $ 6,943 | $ 8,501 | $ 10,433 | $ 13,182 |
Blackbaud, Inc. Consolidated statements of cash flows (Unaudited) |
||
Six months ended June 30, |
||
(in thousands) | 2015 | 2014 |
Cash flows from operating activities | ||
Net income | $ 11,327 | $ 13,094 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 27,272 | 21,194 |
Provision for doubtful accounts and sales returns | 2,934 | 2,966 |
Stock-based compensation expense | 11,413 | 8,044 |
Excess tax benefits from exercise and vesting of stock-based compensation | (954) | (2,067) |
Deferred taxes | (801) | 1,757 |
Loss on sale of business | 1,976 | — |
Impairment of capitalized software development costs | — | 770 |
Loss on debt extinguishment and termination of derivative instruments | — | 996 |
Amortization of deferred financing costs and discount | 420 | 343 |
Other non-cash adjustments | 289 | 1,488 |
Changes in operating assets and liabilities, net of acquisition of businesses: | ||
Accounts receivable | (13,355) | (15,096) |
Prepaid expenses and other assets | (2,102) | 2,941 |
Trade accounts payable | 5,235 | (1,333) |
Accrued expenses and other liabilities | (9,882) | 4,419 |
Donor restricted cash | 78,718 | 62,609 |
Donations payable | (78,718) | (62,609) |
Deferred revenue | 13,792 | 5,588 |
Net cash provided by operating activities | 47,564 | 45,104 |
Cash flows from investing activities | ||
Purchase of property and equipment | (7,014) | (5,423) |
Capitalized software development costs | (6,982) | (3,831) |
Purchase of net assets of acquired companies, net of cash acquired | — | (32,762) |
Net cash used in sale of business | (521) | — |
Net cash used in investing activities | (14,517) | (42,016) |
Cash flows from financing activities | ||
Proceeds from issuance of debt | 70,100 | 201,000 |
Payments on debt | (93,388) | (180,002) |
Debt issuance costs | — | (2,484) |
Proceeds from exercise of stock options | 18 | 107 |
Excess tax benefits from from exercise and vesting of stock-based compensation | 954 | 2,067 |
Dividend payments to stockholders | (11,255) | (11,081) |
Net cash (used in) provided by financing activities | (33,571) | 9,607 |
Effect of exchange rate on cash and cash equivalents | (984) | 263 |
Net (decrease) increase in cash and cash equivalents | (1,508) | 12,958 |
Cash and cash equivalents, beginning of period | 14,735 | 11,889 |
Cash and cash equivalents, end of period | $ 13,227 | $ 24,847 |
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 and percentages) | 2015 | 2014 | 2015 | 2014 |
GAAP Revenue | $ 156,259 | $ 139,388 | $ 303,252 | $ 267,010 |
Non-GAAP adjustments: | ||||
Add: Acquisition-related deferred revenue write-down | 2,484 | — | 6,006 | — |
Non-GAAP revenue | $ 158,743 | $ 139,388 | $ 309,258 | $ 267,010 |
GAAP gross profit | $ 82,829 | $ 74,692 | $ 158,010 | $ 138,984 |
GAAP gross margin | 53.0% | 53.6% | 52.1% | 52.1% |
Non-GAAP adjustments: | ||||
Add: Acquisition-related deferred revenue write-down | 2,484 | — | 6,006 | — |
Add: Stock-based compensation expense | 1,049 | 953 | 1,950 | 1,829 |
Add: Amortization of intangibles from business combinations | 7,567 | 5,330 | 15,206 | 10,767 |
Add: Employee severance | 343 | — | 939 | — |
Subtotal | 11,443 | 6,283 | 24,101 | 12,596 |
Non-GAAP gross profit | $ 94,272 | $ 80,975 | $ 182,111 | $ 151,580 |
Non-GAAP gross margin | 59.4% | 58.1% | 58.9% | 56.8% |
GAAP income from operations | $ 14,461 | $ 15,996 | $ 22,473 | $ 25,273 |
GAAP operating margin | 9.3% | 11.5% | 7.4% | 9.5% |
Non-GAAP adjustments: | ||||
Add: Acquisition-related deferred revenue write-down | 2,484 | — | 6,006 | — |
Add: Stock-based compensation expense | 6,311 | 4,330 | 11,413 | 8,044 |
Add: Amortization of intangibles from business combinations | 8,091 | 5,748 | 16,218 | 11,772 |
Add: Employee severance | 443 | — | 1,582 | — |
Add: Impairment of capitalized software development costs | — | 770 | — | 770 |
Add: Acquisition-related integration costs | 187 | 97 | 671 | 97 |
Add: Acquisition-related expenses | 715 | 65 | 788 | 65 |
Add: CEO transition costs | — | — | — | 870 |
Subtotal | 18,231 | 11,010 | 36,678 | 21,618 |
Non-GAAP income from operations | $ 32,692 | $ 27,006 | $ 59,151 | $ 46,891 |
Non-GAAP operating margin | 20.6% | 19.4% | 19.1% | 17.6% |
GAAP net income | $ 7,042 | $ 9,280 | $ 11,327 | $ 13,094 |
Shares used in computing GAAP diluted earnings per share | 46,403 | 45,661 | 46,289 | 45,607 |
GAAP diluted earnings per share | $ 0.15 | $ 0.20 | $ 0.24 | $ 0.29 |
Non-GAAP adjustments: | ||||
Add: Total Non-GAAP adjustments affecting income from operations | 18,231 | 11,010 | 36,678 | 21,618 |
Add: Loss on sale of business | 1,976 | — | 1,976 | — |
Add: Loss on debt extinguishment and termination of derivative instruments | — | — | — | 996 |
Less: Tax impact related to Non-GAAP adjustments | (8,019) | (4,480) | (15,816) | (8,793) |
Non-GAAP net income | $ 19,230 | $ 15,810 | $ 34,165 | $ 26,915 |
Shares used in computing Non-GAAP diluted earnings per share | 46,403 | 45,661 | 46,289 | 45,607 |
Non-GAAP diluted earnings per share | $ 0.41 | $ 0.35 | $ 0.74 | $ 0.59 |
Blackbaud, Inc. Reconciliation of GAAP to Non-GAAP financial measures (continued) (Unaudited) |
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Three months ended June 30, |
Six months ended June 30, |
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(in thousands, except percentages) | 2015 | 2014 | 2015 | 2014 |
GAAP net income | $ 7,042 | $ 9,280 | $ 11,327 | $ 13,094 |
Non-GAAP adjustments: | ||||
Add: Interest, net | 1,866 | 1,315 | 3,544 | 2,758 |
Add: Income tax provision | 4,272 | 5,626 | 6,026 | 8,414 |
Add: Depreciation | 4,517 | 4,345 | 9,293 | 8,648 |
Add: Amortization of intangibles from business combinations | 8,091 | 5,748 | 16,218 | 11,772 |
Add: Amortization of software development costs | 986 | 427 | 1,761 | 774 |
Subtotal | 19,732 | 17,461 | 36,842 | 32,366 |
EBITDA | $ 26,774 | $ 26,741 | $ 48,169 | $ 45,460 |
EBITDA Margin | 16.9% | 19.2% | 15.6% | 17.0% |
Non-GAAP adjustments: | ||||
Add: Other (income) expense, net | (695) | (225) | (400) | 11 |
Add: Loss on sale of business | 1,976 | — | 1,976 | — |
Add: Loss on debt extinguishment and termination of derivative instruments | — | — | — | 996 |
Add: Acquisition-related deferred revenue write-down | 2,484 | — | 6,006 | — |
Add: Stock-based compensation expense | 6,311 | 4,330 | 11,413 | 8,044 |
Add: Employee severance | 443 | — | 1,582 | — |
Add: Impairment of capitalized software development costs | — | 770 | — | 770 |
Add: Acquisition-related integration costs | 187 | 97 | 671 | 97 |
Add: Acquisition-related expenses | 715 | 65 | 788 | 65 |
Add: CEO transition costs | — | — | — | 870 |
Subtotal | 11,421 | 5,037 | 22,036 | 10,853 |
Adjusted EBITDA | $ 38,195 | $ 31,778 | $ 70,205 | $ 56,313 |
Adjusted EBITDA Margin | 24.1% | 22.8% | 22.7% | 21.1% |
Detail of certain Non-GAAP adjustments: | ||||
Stock-based compensation expense: | ||||
Included in cost of revenue: | ||||
Cost of subscriptions | $ 325 | $ 175 | $ 468 | $ 364 |
Cost of maintenance | 85 | 196 | 246 | 341 |
Cost of services | 639 | 582 | 1,236 | 1,124 |
Total included in cost of revenue | 1,049 | 953 | 1,950 | 1,829 |
Included in operating expenses: | ||||
Sales and marketing | 804 | 588 | 1,506 | 1,059 |
Research and development | 1,186 | 762 | 2,164 | 1,424 |
General and administrative | 3,272 | 2,027 | 5,793 | 3,732 |
Total included in operating expenses | 5,262 | 3,377 | 9,463 | 6,215 |
Total stock-based compensation expense | $ 6,311 | $ 4,330 | $ 11,413 | $ 8,044 |
Amortization of intangibles from business combinations: | ||||
Included in cost of revenue: | ||||
Cost of subscriptions | $ 5,767 | $ 4,434 | $ 11,539 | $ 8,994 |
Cost of maintenance | 1,006 | 115 | 2,159 | 230 |
Cost of services | 702 | 676 | 1,309 | 1,332 |
Cost of license fees and other | 92 | 105 | 199 | 211 |
Total included in cost of revenue | 7,567 | 5,330 | 15,206 | 10,767 |
Included in operating expenses | 524 | 418 | 1,012 | 1,005 |
Total amortization of intangibles from business combinations | $ 8,091 | $ 5,748 | $ 16,218 | $ 11,772 |
CONTACT: Investor Contact:Jagtar Narula Blackbaud, Inc. 843-654-2164 jagtar.narula@blackbaud.com Media Contact:Nicole McGougan Blackbaud, Inc. 843-654-3307 nicole.mcgougan@blackbaud.com