PR Newswire | Apr 28, 2021 04:10PM EDT

04/28 15:10 CDT

Blackbaud Announces 2021 First Quarter ResultsFirst Quarter Cash Flow from Operations Increases $55 Million Year-Over-Year CHARLESTON, S.C., April 28, 2021

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:

* The company released its annual social responsibility report including voluntary ESG disclosures aligned with Sustainability Accounting Standards Board (SASB) and Global Reporting Initiative (GRI) standards. * Blackbaud announced it has joined the United Nations (UN) Global Compact initiative, further building on its commitment to ESG. * Blackbaud executive management outlined the company's strategic outlook during a virtual investor session. * Blackbaud Chief Marketing Officer Catherine LaCour was named one of the 2021 Top 50 Most Powerful Women in Technology by the National Diversity Council and DiversityFIRST(tm). * The Blackbaud Institute released its ninth-annual Charitable Giving Report, which found online giving grew 21% in 2020, amidst a global pandemic. * The company announced Blackbaud Grantmaking is now available in SKY UX interface making advanced grant management technology accessible anywhere via any browser on any device. * Blackbaud expanded global capabilities for YourCause(r), announcing a new in-market partnership with GlobalGiving that connects companies to the largest set of charity organizations to accelerate employee giving and volunteering around the world. * Leading enterprise higher education institutions rely on Blackbaud CRMTM to empower teams across campus, strengthen constituent engagement and achieve better fundraising results.

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 BlackbaudBlackbaud (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 StatementsExcept 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.

TrademarksAll Blackbaud product names appearing herein are trademarks or registered trademarks of Blackbaud, Inc.

Non-GAAP Financial MeasuresBlackbaud 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)



March 31, December 31,(dollars in thousands) 2021 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 31,83,333 95,404 2021 and December 31, 2020, respectively

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 62 61 December 31, 2020, respectively

Additional paid-in capital 574,958 544,963

Treasury stock, at cost; 12,760,956 and 12,054,268 shares at March (399,583) (353,091) 31, 2021 and December 31, 2020, respectively

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)



Three months ended (dollars in thousands, except per share amounts) 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 47,363,19748,036,300

Diluted weighted average shares 47,363,19748,455,751

Other comprehensive income (loss)

Foreign currency translation adjustment 2,511 (5,728)

Unrealized gain (loss) on derivative instruments, net of tax4,149 (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:

March 31, December 31,(dollars in thousands) 2021 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)



Three months ended (dollars in thousands, except per share amounts) 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 operations40,529 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)



Three months ended (dollars in thousands) 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 %

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(1) 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.

Non-GAAP organic revenue for the prior year periods presented herein may(2) 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.

To determine non-GAAP organic revenue growth on a constant currency basis, revenues from entities reporting in foreign currencies were translated to(3) 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)



Three months ended (dollars in thousands) 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 combinations9,677 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.

Three months ended (dollars in thousands) 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)

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SOURCE Blackbaud, Inc.