EX-99.1 2 g07144exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
 

Exhibit 99.1
Blackbaud, Inc. Announces First Quarter 2007 Results and Second Quarter 2007 Dividend
CHARLESTON, S.C., May 3, 2007 — 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 ended March 31, 2007.
Marc Chardon, Chief Executive Officer of Blackbaud, stated, “We were pleased with our performance in the first quarter, which was highlighted by revenue and operating profit that exceeded the high-end of our guidance. The strength of our performance was well balanced with contributions coming from each of our key product offerings and primary sales channels. We are still in the early stages of integrating the recently acquired Target companies, but we are making solid progress and our experience-to-date has reinforced the strategic reasons behind these acquisitions.”
Chardon continued, “We feel very good about our product strategy, strong competitive position, and expanding market opportunity. Blackbaud is now the only vendor that can deliver best-in-class solutions that meet both the major giving and high-volume fundraising needs of nonprofit organizations. During the quarter, we released Blackbaud Enterprise CRM, our next generation enterprise fundraising solution, and Blackbaud Direct Marketing, our application targeting the needs of organizations that depend on direct response fundraising campaigns. Customer and prospect feedback has been decidedly positive on these solutions and our longer-term product roadmap for integrating and leveraging Target Software’s functionality. This is very exciting for our long-term growth prospects.”
For the quarter ended March 31, 2007, Blackbaud reported total revenue of $55.3 million, an increase of 27% compared with the first quarter of 2006. License revenue increased 12% to $8.1 million, subscriptions increased 111% to $4.9 million, services revenue increased 34% to $18.3 million, and maintenance increased 17% to $22.5 million, compared with the same period in 2006.
Blackbaud’s income from operations and net income, determined in accordance with generally accepted accounting principles (“GAAP”), were $9.5 million and $5.9 million, respectively, for the first quarter of 2007 compared with income from operations of $9.2 million and net income of $5.7 million in the same period last year. GAAP diluted earnings per share were $0.13 for the quarter ended March 31, 2007, consistent with the same period last year.
For the quarter ended March 31, 2007, non-GAAP income from operations, which excludes stock-based compensation expense and amortization of intangibles arising from business combinations, was $11.8 million, representing a non-GAAP operating margin of 21% and exceeding the high-end of Blackbaud’s previously issued guidance. Non-GAAP net income was $7.1 million for the quarter ended March 31, 2007, an increase of 3% compared with the same period last year. Non-GAAP diluted earnings per share were $0.16 for the quarter ended March 31, 2007, consistent with the prior year period and at the high-end of Blackbaud’s previously issued guidance.
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.”
Blackbaud had cash and cash equivalents of $16.0 million at March 31, 2007, a decrease of $51.8 million compared to the end of the prior quarter. During the quarter Blackbaud spent $58.7 million on the acquisition of the Target companies, $30.0 million of which was funded under the Company’s existing credit facility. Blackbaud also repurchased approximately 622,000 shares of its stock for $14.1 million, paid quarterly dividends of $3.8 million and repaid $10.0 million under the credit facility. For the first quarter of 2007, Blackbaud generated $7.5 million in cash from operations, an increase of over 100% compared with the $3.3 million generated in the same period in 2006.
Timothy V. Williams, Chief Financial Officer of Blackbaud, stated, “The first quarter was a strong start to 2007. During the quarter, the operations of Blackbaud and the Target companies both contributed to the revenue and operating profit upside. With a little more than three months behind us since the acquisitions closed, we believe the acquisition will not be as dilutive as originally expected and we continue to expect that we will exit the year with the Target companies’ results being neutral to our non-GAAP earnings per share.”
Second Quarter Dividend
Blackbaud announced today that its Board of Directors has declared a second quarter dividend of $0.085 per share payable on June 15, 2007 to stockholders of record on May 28, 2007.

 

 

Conference Call Details
Blackbaud will host a conference call today, May 3, 2007, at 5:00 p.m. (Eastern Time) to discuss Blackbaud’s financial results, operations and related matters. To access this call, dial 800-811-7286 (domestic) or 913-981-4902 (international). A replay of this conference call will be available through May 10, 2007, at 888-203-1112 (domestic) or 719-457-0820 (international). The replay passcode is 7394159. A live webcast of this conference call will be available on the “Investor Relations” page of Blackbaud’s Web site at www.blackbaud.com, and a replay will be archived on the Web site as well.
About Blackbaud
Blackbaud is the leading global provider of software and related services designed specifically for nonprofit organizations. Approximately 16,000 organizations — including the American Red Cross, Dartmouth College, the WGBH Educational Foundation, Episcopal High School, Lincoln Center, Cancer Research UK, Special Olympics, United Way of America and Arthritis Foundation — use one or more of Blackbaud products and services for fundraising, financial management, direct marketing, Web site management, school administration and ticketing. Blackbaud’s solutions include The Raiser’s Edge®, Blackbaud Enterprise CRMTM, Blackbaud Direct MarketingTM, Team Approach®, The Financial EdgeTM, The Education EdgeTM, The Patron Edge®, Blackbaud® NetCommunityTM, The Information EdgeTM, WealthPointTM, ProspectPointTM and donorCentricsTM, as well as a wide range of consulting, analytical and educational services. Founded in 1981, Blackbaud is headquartered in Charleston, South Carolina and has operations in Cambridge, Massachusetts; Toronto, Ontario; London, England; Glasgow, Scotland; and Sydney, Australia. 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: management of integration of Target Software and Target Analysis and other risks associated with acquisitions; risk associated with successful implementation of multiple integrated software products; lengthy sales and implementation cycles, particularly in larger organizations; uncertainty regarding increased business and renewals from existing customers; continued success in sales growth; 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; 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 websites 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 gross profit, non-GAAP operating income 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 the impact of costs associated with amortization of intangibles arising from business combinations, stock-based compensation expense and certain tax-related adjustments.
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
617-956-6727
MEDIA CONTACT:
Melanie Milonas
Blackbaud, Inc.
melanie.milonas@blackbaud.com
843-216-6200 x3307
SOURCE: Blackbaud, Inc.

 

 

Blackbaud, Inc.
Consolidated balance sheets
(Unaudited)
                 
    March 31,     December 31,  
(in thousands, except share amounts)   2007     2006  
Assets
                
Current assets:
                
Cash and cash equivalents
   $ 15,982     $ 67,783  
Cash, restricted
     —       518  
Accounts receivable, net of allowance of $1,395 and $1,268 at March 31, 2007 and December 31, 2006, respectively
     33,843       29,505  
Prepaid expenses and other current assets
     7,613       8,507  
Deferred tax asset, current portion
     4,559       4,129  
 
            
Total current assets
     61,997       110,442  
Property and equipment, net
     12,833       10,524  
Deferred tax asset
     60,538       62,302  
Goodwill
     40,527       2,518  
Intangible assets, net
     29,643       7,986  
Other assets
     34       48  
 
            
Total assets
   $ 205,572     $ 193,820  
 
            
 
                
Liabilities and stockholders’ equity
                
Current liabilities:
                
Trade accounts payable
   $ 5,091     $ 5,863  
Accrued expenses and other current liabilities
     16,631       16,047  
Deferred acquisition costs, current portion
     25       518  
Capital lease obligations, current portion
     488       —  
Short-term debt
     20,000       —  
Deferred revenue
     71,864       72,015  
 
            
Total current liabilities
     114,099       94,443  
Deferred acquisition costs, long-term portion
     —       271  
Capital lease obligations, long-term portion
     930       —  
Deferred revenue, long-term portion
     2,102       1,874  
Other liabilities, long-term
     976       —  
 
            
Total liabilities
     118,107       96,588  
 
            
 
                
Commitments and contingencies
                
Stockholders’ equity:
                
Preferred stock; 20,000,000 shares authorized, none outstanding
     —       —  
Common stock, $.001 par value; 180,000,000 shares authorized, 49,289,798 and 49,205,522 shares issued at March 31, 2007 and December 31, 2006, respectively
     49       49  
Additional paid-in capital
     90,995       88,409  
Deferred compensation
     —       —  
Treasury stock, at cost; 5,365,963 and 4,743,895 shares at March 31, 2007 and December 31, 2006, respectively
     (83,734 )     (69,630 )
Accumulated other comprehensive income
     160       232  
Retained earnings
     79,995       78,172  
 
            
Total stockholders’ equity
     87,465       97,232  
 
            
Total liabilities and stockholders’ equity
   $ 205,572     $ 193,820  
 
            

 

Blackbaud, Inc.
Consolidated statements of operations
(Unaudited)
                 
    Three months ended March 31,  
(in thousands, except share and per share amounts)   2007     2006  
Revenue
                
License fees
   $ 8,067     $ 7,221  
Services
     18,314       13,714  
Maintenance
     22,529       19,199  
Subscriptions
     4,876       2,308  
Other revenue
     1,535       1,290  
 
            
Total revenue
     55,321       43,732  
 
            
Cost of revenue
                
Cost of license fees
     476       670  
Cost of services
     12,116       8,111  
Cost of maintenance
     4,019       3,207  
Cost of subscriptions
     1,924       540  
Cost of other revenue
     1,360       1,090  
 
            
Total cost of revenue
     19,895       13,618  
 
            
Gross profit
     35,426       30,114  
 
            
Operating expenses
                
Sales and marketing
     12,917       9,284  
Research and development
     6,827       6,024  
General and administrative
     6,144       5,461  
Amortization
     84       129  
 
            
Total operating expenses
     25,972       20,898  
 
            
Income from operations
     9,454       9,216  
Interest income
     371       149  
Interest expense
     (367 )     (12 )
Other (expense), net
     (69 )     (29 )
 
            
Income before provision for income taxes
     9,389       9,324  
Income tax provision
     3,529       3,654  
 
            
Net income
   $ 5,860     $ 5,670  
 
            
 
                
Earnings per share
                
Basic
   $ 0.13     $ 0.13  
Diluted
   $ 0.13     $ 0.13  
 
                
Common shares and equivalents outstanding
                
Basic weighted average shares
     43,662,569       42,883,929  
Diluted weighted average shares
     44,833,093       44,600,235  
Dividends per share
   $ 0.085     $ 0.070  

 

Blackbaud, Inc.
Consolidated statements of cash flows
(Unaudited)
                 
    Three months ended March 31,  
(in thousands)   2007     2006  
Cash flows from operating activities
                
Net income
   $ 5,860     $ 5,670  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
     1,648       846  
Provision for doubtful accounts and sales returns
     491       256  
Stock-based compensation expense
     1,712       1,974  
Amortization of deferred financing fees
     12       12  
Deferred taxes
     2,084       1,339  
Changes in assets and liabilities, net of acquisition
                
Accounts receivable
     351       411  
Prepaid expenses and other assets
     1,695       (929 )
Trade accounts payable
     (1,387 )     (1,354 )
Accrued expenses and other current liabilities
     (3,049 )     (3,151 )
Deferred revenue
     (1,870 )     (1,814 )
 
            
Net cash provided by operating activities
     7,547       3,260  
 
            
Cash flows from investing activities
                
Purchase of property and equipment
     (1,050 )     (264 )
Purchase of net assets of acquired companies
     (59,216 )     (6,081 )
 
            
Net cash used in investing activities
     (60,266 )     (6,345 )
 
            
Cash flows from financing activities
                
Proceeds from issuance of debt
     30,000       —  
Proceeds from exercise of stock options
     428       3,266  
Excess tax benefit on exercise of stock options
     446       2,922  
Payments on debt
     (10,000 )     —  
Payments on debt acquired
     (1,922 )     —  
Payments on capital lease obligations
     (92 )     —  
Purchase of treasury stock
     (14,104 )     (6,254 )
Dividend payments to stockholders
     (3,768 )     (3,034 )
 
            
Net cash provided by (used in) financing activities
     988       (3,100 )
 
            
Effect of exchange rate on cash and cash equivalents
     (70 )     (8 )
 
            
Net decrease in cash and cash equivalents
     (51,801 )     (6,193 )
Cash and cash equivalents, beginning of period
     67,783       22,683  
 
            
Cash and cash equivalents, end of period
   $ 15,982     $ 16,490  
 
            

 

Blackbaud, Inc.
Reconciliation of GAAP to Non-GAAP financial measures
(Unaudited)
(In thousands, except per share amounts)
                 
    Three months ended March 31,  
    2007     2006  
GAAP revenue
   $ 55,321     $ 43,732  
 
            
 
                
GAAP gross profit
   $ 35,426     $ 30,114  
Non-GAAP adjustments:
                
Add back: Stock-based compensation expense (see table below)
     214       173  
Add back: Amortization of intangibles from business combinations (see table below)
     528       —  
 
            
Non-GAAP gross profit
   $ 36,168     $ 30,287  
 
            
Non-GAAP gross margin
     65 %     69 %
 
            
 
                
GAAP income from operations
   $ 9,454     $ 9,216  
Non-GAAP adjustments:
                
Add back: Stock-based compensation expense (see table below)
     1,712       1,974  
Add back: Amortization of intangibles from business combinations (see table below)
     612       129  
 
            
Total Non-GAAP adjustments
     2,324       2,103  
 
            
Non-GAAP income from operations
   $ 11,778     $ 11,319  
 
            
Non-GAAP operating margin
     21 %     26 %
 
            
 
                
GAAP net income
   $ 5,860     $ 5,670  
Non-GAAP adjustments:
                
Add back: Total Non-GAAP adjustments affecting income from operations
     2,324       2,103  
Add back: Tax impact related to Non-GAAP adjustments
     (1,039 )     (803 )
 
            
Non-GAAP net income
   $ 7,145     $ 6,970  
 
            
 
                
GAAP shares used in computing diluted earnings per share
     44,833       44,600  
Non-GAAP adjustments:
                
Add back: Incremental shares related to dilutive securities
     257       176  
 
            
Shares used in computing Non-GAAP diluted earnings per share
     45,090       44,776  
 
            
Non-GAAP diluted earnings per share
   $ 0.16     $ 0.16  
 
            
 
                
Detail of Non-GAAP adjustments:
                
Stock-based compensation expense:
                
Cost of revenue
                
Cost of services
   $ 157     $ 140  
Cost of maintenance
     47       29  
Cost of subscriptions
     10       4  
 
            
Subtotal
     214       173  
Operating expenses
                
Sales and marketing
     260       220  
Research and development
     269       191  
General and administrative
     969       1,390  
 
            
Subtotal
     1,498       1,801  
 
            
Total stock-based compensation expense
     1,712       1,974  
 
            
 
                
Amortization of intangibles from business combinations:
                
Cost of revenue
                
Cost of license fees
   $ 24     $ —  
Cost of services
     221       —  
Cost of maintenance
     78       —  
Cost of subscriptions
     189       —  
Cost of other revenue
     16       —  
 
            
Subtotal
     528       —  
 
            
Operating expenses
     84       129  
 
            
Total amortization of intangibles from business combinations
     612       129