Revenue Growth More than Doubles Year over
Year with Significantly Improved Profitability; Blackbaud Board of
Directors Approve Expanded $800
Million Stock Repurchase Authorization
CHARLESTON, S.C., July 30,
2024 /PRNewswire/ -- Blackbaud (NASDAQ: BLKB), the
leading provider of software for powering social impact, today
announced financial results for its second quarter ended
June 30, 2024.
"We continue to execute on our strategic initiatives, and I am
optimistic about the opportunities ahead in the near, mid and
long-term," said Mike Gianoni,
president, CEO and vice chairman of the board of directors,
Blackbaud. "Blackbaud is a clear market leader with a path to
penetrate even further into a rich market opportunity. The leverage
of our financial model allows us to aggressively invest in
innovation, which provides great value to our existing customers
and increases our ability to attract new prospects. And our strong
cash flow enables us to execute on a purposeful and prudent stock
repurchase program to improve shareholder value."
Second Quarter 2024 Results Compared to Second Quarter 2023
Results:
- GAAP total revenue was $287.3
million, up 6.0% and non-GAAP organic revenue increased
6.7%.
- GAAP recurring revenue was $281.4
million, up 7.2% and represented 98% of total revenue.
Non-GAAP organic recurring revenue increased 7.2%.
- GAAP income from operations was $42.1
million, with GAAP operating margin of 14.7%, an increase of
1,460 basis points.
- Non-GAAP income from operations was $86.1 million, with non-GAAP operating margin of
30.0%, an increase of 260 basis points.
- GAAP net income was $21.8
million, with GAAP diluted earnings per share of
$0.42, up $0.38 per share.
- Non-GAAP net income was $55.7
million, with non-GAAP diluted earnings per share of
$1.08, up $0.10 per share.
- Non-GAAP adjusted EBITDA was $102.5
million, up $13.7 million,
with non-GAAP adjusted EBITDA margin of 35.7%, an increase of 290
basis points.
- GAAP net cash provided by operating activities was $53.8 million, an increase of $0.6 million, with GAAP operating cash flow
margin of 18.7%, a decrease of 90 basis points.
- Non-GAAP free cash flow was $32.6
million, a decrease of $4.4
million, with non-GAAP free cash flow margin of 11.4%, a
decrease of 220 basis points.
- Non-GAAP adjusted free cash flow was $36.4 million, a decrease of $7.2 million, with non-GAAP adjusted free cash
flow margin of 12.7%, a decrease of 340 basis points.
"I'm pleased with our financial performance in the second
quarter as our operating plan continues to deliver greatly improved
profitable growth," said Tony Boor,
executive vice president and CFO, Blackbaud. "In the second
quarter, total revenue grew 6.0%, while non-GAAP organic revenue
growth was 6.7%. Our Social Sector, representing 88% of total
revenue in the quarter, grew even faster at 8.5%. Non-GAAP adjusted
EBITDA performance in the quarter was strong with a margin of
35.7%, a 290 basis points increase year over year. With our new
$800 million repurchase authorization
and ample debt capacity, we plan to be very purposeful about buying
back our stock and believe there is no better use of capital than
investing back into our business through product innovation and
returning money to shareholders at this valuation."
An explanation of all non-GAAP financial measures referenced in
this press release, including the Rule of 40, 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
- Blackbaud's board of directors reauthorized, expanded and
replenished the company's existing stock repurchase program,
raising the total capacity from $500
million to $800 million
available for repurchases of the company's common stock.
- Blackbaud recently announced that Dale
Strange has taken the reins of the Corporate Impact business
and been appointed to the company's executive leadership team as
Tom Davidson, founder of EVERFI,
moves to a strategic advisory role.
- Blackbaud was named one of America's Best Mid-Size Companies
2024 by TIME, ranking 195 out of 500 companies based on employee
satisfaction, revenue growth and sustainability
transparency.
- At its recent spring Product Update Briefings, Blackbaud
announced hundreds of product updates and rolled out new roadmaps,
sharing how the company is more deeply connecting customers'
business offices, incorporating AI for greater impact, and
delivering a unified view for Raiser's Edge NXT®.
- Blackbaud made a strategic investment in UBIQ Education,
innovators in school websites, to extend Blackbaud's Total School
Solution and offer a native integration with UBIQ's AMAIS platform,
giving customers direct access to a cutting-edge suite of marketing
and admissions tools with seamless data integration across the
platform.
- Six companies are participating in the July 2024 cohort of Blackbaud's Social Good
Startup Program, bringing innovative solutions to Blackbaud
customers—from AI-powered fundraising and content tools to digital
assistant chatbots.
- Blackbaud announced its bbcon 2024 tech conference, happening
Sept. 24-26 in Seattle.
Visit www.blackbaud.com/newsroom for more information about
Blackbaud's recent highlights.
Financial Outlook
Blackbaud today reiterated its 2024
full year financial guidance:
- GAAP revenue of $1.164 billion to
$1.194 billion
- Non-GAAP adjusted EBITDA margin of 32.5% to 33.5%
- Non-GAAP earnings per share of $4.12 to $4.38
- Non-GAAP adjusted free cash flow of $254
million to $274 million
Included in its 2024 full year financial guidance are the
following updated assumptions:
- Non-GAAP annualized effective tax rate is expected to be
approximately 24.5%
- Interest expense for the year is expected to be approximately
$52 million to $56 million
- Fully diluted shares for the year are expected to be
approximately 51.0 million to 52.0 million
- Capital expenditures for the year are expected to be
approximately $65 million to
$75 million, including approximately
$60 million to $70 million of capitalized software and content
development costs
Blackbaud has not reconciled forward-looking full-year non-GAAP
financial measures contained in this news release to their most
directly comparable GAAP measures, as permitted by Item
10(e)(1)(i)(B) of Regulation S-K. Such reconciliations would
require unreasonable efforts at this time to estimate and quantify
with a reasonable degree of certainty various necessary GAAP
components, including for example those related to compensation,
acquisition transactions and integration, tax items or others that
may arise during the year. These components and other factors could
materially impact the amount of the future directly comparable GAAP
measures, which may differ significantly from their non-GAAP
counterparts.
In order to provide a meaningful basis for comparison, Blackbaud
uses non-GAAP adjusted free cash flow in analyzing its operating
performance. Non-GAAP adjusted free cash flow is defined as
operating cash flow less capital expenditures, including costs
required to be capitalized for software and content development,
capital expenditures for property and equipment, plus cash outflows
related to the previously disclosed Security Incident discovered in
May 2020 (the "Security Incident").
Total costs related to the Security Incident exceeded the limit of
our insurance coverage during the first quarter of 2022. For full
year 2024, Blackbaud currently expects net cash outlays of
$8 million to $13 million for ongoing legal fees related to the
Security Incident. In line with the company's policy, all
associated costs due to third-party service providers and
consultants, including legal fees, are expensed as incurred. Please
refer to the section below titled "Non-GAAP Financial Measures" for
more information on Blackbaud's use of non-GAAP financial
measures.
Stock Repurchase Program
As of July 16, 2024, Blackbaud had approximately
$800.0 million remaining under its
common stock repurchase program that was expanded, replenished and
reauthorized in July 2024.
Conference Call
Details
What:
Blackbaud's 2024 Second Quarter Conference Call
When: July 31,
2024
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
leading software provider exclusively dedicated to powering social
impact. Serving the nonprofit and education sectors, companies
committed to social responsibility and individual change makers,
Blackbaud's essential software is built to accelerate impact in
fundraising, nonprofit financial management, digital giving,
grantmaking, corporate social responsibility and education
management. With millions of users and over $100 billion raised, granted or managed through
Blackbaud platforms every year, Blackbaud's solutions are
unleashing the potential of the people and organizations who change
the world. Blackbaud has been named to Newsweek's list of America's
Most Responsible Companies, Quartz's list of Best Companies for
Remote Workers and Forbes' list of America's Best Employers. A
remote-first company, Blackbaud has operations in the United States, Australia, Canada, Costa
Rica and the United
Kingdom, supporting users in 100+ countries. Learn more at
www.blackbaud.com, or follow us on X/Twitter, LinkedIn,
Instagram, and Facebook.
Investor Contact
IR@blackbaud.com
Media Contact
media@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 and related liabilities; 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.
As previously disclosed, beginning in 2024, we apply a non-GAAP
effective tax rate of 24.5% when calculating non-GAAP net income
and non-GAAP diluted earnings per share. The non-GAAP tax rate
utilized in future periods will be reviewed annually to determine
whether it remains appropriate in consideration of our financial
results including our periodic effective tax rate calculated in
accordance with GAAP, our operating environment and related tax
legislation in effect and other factors deemed necessary. All 2023
measures of non-GAAP net income and non-GAAP diluted earnings per
share included in this news release are calculated under
Blackbaud's historical non-GAAP effective tax rate of 20.0%.
Non-GAAP free cash flow is defined as operating cash flow less
capital expenditures, including costs required to be capitalized
for software and content development, and capital expenditures for
property and equipment. In addition, and in order to provide a
meaningful basis for comparison, Blackbaud also uses non-GAAP
adjusted free cash flow in analyzing its operating performance.
Non-GAAP adjusted free cash flow is defined as operating cash flow
less capital expenditures, including costs required to be
capitalized for software and content development, and capital
expenditures for property and equipment, plus cash outflows related
to the Security Incident. Blackbaud believes non-GAAP free cash
flow and non-GAAP adjusted free cash flow provide useful measures
of the company's operating performance. Non-GAAP free cash flow and
Non-GAAP adjusted free cash flow are not intended to represent and
should not be viewed as the amount of residual cash flow available
for discretionary expenditures.
In addition, Blackbaud uses non-GAAP organic revenue growth,
non-GAAP organic revenue growth on a constant currency basis,
non-GAAP organic recurring revenue growth and non-GAAP organic
recurring revenue growth on a constant currency basis, 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. 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
(benefit); depreciation; amortization of intangible assets from
business combinations; amortization of software and content
development costs; stock-based compensation; employee severance;
acquisition and disposition-related costs; restructuring and other
real estate activities; Security Incident-related costs; and
impairment of capitalized software development costs.
|
Blackbaud,
Inc.
|
|
Consolidated Balance
Sheets
|
|
(Unaudited)
|
|
|
(dollars in
thousands, except per share amounts)
|
June 30,
2024
|
December 31,
2023
|
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
30,438
|
$
31,251
|
|
Restricted
cash
|
800,670
|
697,006
|
|
Accounts receivable,
net of allowance of $6,006 and $6,907 at June 30, 2024 and
December 31, 2023, respectively
|
152,832
|
101,862
|
|
Customer funds
receivable
|
2,943
|
353
|
|
Prepaid expenses and
other current assets
|
92,290
|
99,285
|
|
Total current
assets
|
1,079,173
|
929,757
|
|
Property and
equipment, net
|
98,066
|
98,689
|
|
Operating lease
right-of-use assets
|
28,489
|
36,927
|
|
Software and content
development costs, net
|
165,465
|
160,194
|
|
Goodwill
|
1,053,249
|
1,053,738
|
|
Intangible assets,
net
|
549,521
|
581,937
|
|
Other
assets
|
68,785
|
51,037
|
|
Total
assets
|
$ 3,042,748
|
$ 2,912,279
|
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities:
|
|
|
|
Trade accounts
payable
|
$
44,038
|
$
25,184
|
|
Accrued expenses and
other current liabilities
|
51,682
|
64,322
|
|
Due to
customers
|
802,372
|
695,842
|
|
Debt, current
portion
|
23,786
|
19,259
|
|
Deferred revenue,
current portion
|
427,098
|
392,530
|
|
Total current
liabilities
|
1,348,976
|
1,197,137
|
|
Debt, net of current
portion
|
998,071
|
760,405
|
|
Deferred tax
liability
|
75,397
|
93,292
|
|
Deferred revenue, net
of current portion
|
2,315
|
2,397
|
|
Operating lease
liabilities, net of current portion
|
36,290
|
40,085
|
|
Other
liabilities
|
4,362
|
10,258
|
|
Total
liabilities
|
2,465,411
|
2,103,574
|
|
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, 70,883,488 and
69,188,304 shares issued at June 30, 2024 and
December 31, 2023, respectively;
51,623,951 and 53,625,440 shares outstanding at June 30, 2024
and December 31, 2023,
respectively
|
71
|
69
|
|
Additional paid-in
capital
|
1,208,624
|
1,203,012
|
|
Treasury stock, at
cost; 19,259,537 and 15,562,864 shares at June 30, 2024
and
December 31, 2023, respectively
|
(857,452)
|
(591,557)
|
|
Accumulated other
comprehensive income (loss)
|
175
|
(1,688)
|
|
Retained
earnings
|
225,919
|
198,869
|
|
Total stockholders'
equity
|
577,337
|
808,705
|
|
Total liabilities
and stockholders' equity
|
$ 3,042,748
|
$ 2,912,279
|
|
Blackbaud,
Inc.
|
|
Consolidated
Statements of Comprehensive Income (Loss)
|
|
(Unaudited)
|
|
|
(dollars in
thousands, except per share amounts)
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
2024
|
2023
|
|
2024
|
2023
|
|
Revenue
|
|
|
|
|
|
|
Recurring
|
$
281,376
|
$
262,390
|
|
$
552,894
|
$
515,138
|
|
One-time services and
other
|
5,910
|
8,652
|
|
13,642
|
17,657
|
|
Total
revenue
|
287,286
|
271,042
|
|
566,536
|
532,795
|
|
Cost of
revenue
|
|
|
|
|
|
|
Cost of
recurring
|
119,810
|
113,926
|
|
238,998
|
228,426
|
|
Cost of one-time
services and other
|
4,890
|
7,549
|
|
11,908
|
16,161
|
|
Total cost of
revenue
|
124,700
|
121,475
|
|
250,906
|
244,587
|
|
Gross
profit
|
162,586
|
149,567
|
|
315,630
|
288,208
|
|
Operating
expenses
|
|
|
|
|
|
|
Sales, marketing and
customer success
|
47,081
|
53,191
|
|
97,946
|
107,576
|
|
Research and
development
|
39,068
|
36,146
|
|
81,870
|
76,737
|
|
General and
administrative
|
33,443
|
59,148
|
|
81,197
|
111,986
|
|
Amortization
|
902
|
788
|
|
1,806
|
1,562
|
|
Total operating
expenses
|
120,494
|
149,273
|
|
262,819
|
297,861
|
|
Income (loss) from
operations
|
42,092
|
294
|
|
52,811
|
(9,653)
|
|
Interest
expense
|
(15,715)
|
(11,167)
|
|
(25,991)
|
(21,829)
|
|
Other income,
net
|
3,310
|
2,778
|
|
6,657
|
4,785
|
|
Income (loss)
before provision (benefit) for income taxes
|
29,687
|
(8,095)
|
|
33,477
|
(26,697)
|
|
Income tax provision
(benefit)
|
7,883
|
(10,200)
|
|
6,427
|
(14,101)
|
|
Net income
(loss)
|
$
21,804
|
$
2,105
|
|
$
27,050
|
$
(12,596)
|
|
Earnings (loss) per
share
|
|
|
|
|
|
|
Basic
|
$
0.43
|
$
0.04
|
|
$
0.53
|
$
(0.24)
|
|
Diluted
|
$
0.42
|
$
0.04
|
|
$
0.52
|
$
(0.24)
|
|
Common shares and
equivalents outstanding
|
|
|
|
|
|
|
Basic weighted average
shares
|
50,747,337
|
52,642,411
|
|
51,399,853
|
52,389,112
|
|
Diluted weighted
average shares
|
51,677,418
|
53,643,124
|
|
52,371,927
|
52,389,112
|
|
Other comprehensive
(loss) income
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
$
339
|
$
3,055
|
|
$
(846)
|
$
5,213
|
|
Unrealized (loss) gain
on derivative instruments, net of tax
|
(1,386)
|
5,383
|
|
2,709
|
(5,309)
|
|
Total other
comprehensive (loss) income
|
(1,047)
|
8,438
|
|
1,863
|
(96)
|
|
Comprehensive
income (loss)
|
$
20,757
|
$
10,543
|
|
$
28,913
|
$
(12,692)
|
|
Blackbaud,
Inc.
|
|
Consolidated
Statements of Cash Flows
|
|
(Unaudited)
|
|
|
Six months
ended
June 30,
|
|
(dollars in
thousands)
|
2024
|
2023
|
|
Cash flows from
operating activities
|
|
|
|
Net income
(loss)
|
$
27,050
|
$
(12,596)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
60,553
|
53,622
|
|
Provision for credit
losses and sales returns
|
519
|
3,798
|
|
Stock-based
compensation expense
|
57,856
|
63,289
|
|
Deferred
taxes
|
(18,810)
|
(33,101)
|
|
Amortization of
deferred financing costs and discount
|
984
|
963
|
|
Loss on disposition of
business
|
1,561
|
—
|
|
Other non-cash
adjustments
|
2,462
|
(1,569)
|
|
Changes in operating
assets and liabilities, net of acquisition and disposal of
businesses:
|
|
|
|
Accounts
receivable
|
(53,062)
|
(69,624)
|
|
Prepaid expenses and
other assets
|
(2,473)
|
9,470
|
|
Trade accounts
payable
|
19,146
|
(3,431)
|
|
Accrued expenses and
other liabilities
|
(13,579)
|
11,948
|
|
Deferred
revenue
|
36,228
|
52,233
|
|
Net cash provided
by operating activities
|
118,435
|
75,002
|
|
Cash flows from
investing activities
|
|
|
|
Purchase of property
and equipment
|
(6,118)
|
(2,779)
|
|
Capitalized software
and content development costs
|
(28,392)
|
(28,756)
|
|
Net cash used in
disposition of business
|
(1,179)
|
—
|
|
Other investing
activities
|
(5,029)
|
—
|
|
Net cash used in
investing activities
|
(40,718)
|
(31,535)
|
|
Cash flows from
financing activities
|
|
|
|
Proceeds from issuance
of debt
|
1,211,600
|
158,000
|
|
Payments on
debt
|
(966,680)
|
(171,824)
|
|
Debt issuance
costs
|
(6,458)
|
—
|
|
Employee taxes paid
for withheld shares upon equity award settlement
|
(54,483)
|
(33,687)
|
|
Change in due to
customers
|
106,851
|
61,313
|
|
Change in customer
funds receivable
|
(2,577)
|
(3,359)
|
|
Purchase of treasury
stock
|
(262,596)
|
—
|
|
Net cash provided
by financing activities
|
25,657
|
10,443
|
|
Effect of exchange rate
on cash, cash equivalents and restricted cash
|
(523)
|
2,489
|
|
Net increase in
cash, cash equivalents and restricted cash
|
102,851
|
56,399
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
728,257
|
733,931
|
|
Cash, cash
equivalents and restricted cash, end of period
|
$
831,108
|
$
790,330
|
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)
|
June 30,
2024
|
December 31,
2023
|
|
Cash and cash
equivalents
|
$
30,438
|
$
31,251
|
|
Restricted
cash
|
800,670
|
697,006
|
|
Total cash, cash
equivalents and restricted cash in the statement of cash
flows
|
$
831,108
|
$
728,257
|
|
Blackbaud,
Inc.
|
|
Reconciliation of
GAAP to Non-GAAP Financial Measures
|
|
(Unaudited)
|
|
|
(dollars in
thousands, except per share amounts)
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
2024
|
2023
|
|
2024
|
2023
|
|
GAAP
Revenue
|
$ 287,286
|
$ 271,042
|
|
$ 566,536
|
$ 532,795
|
|
|
|
|
|
|
|
GAAP gross
profit
|
$ 162,586
|
$ 149,567
|
|
$ 315,630
|
$ 288,208
|
|
GAAP gross
margin
|
56.6 %
|
55.2 %
|
|
55.7 %
|
54.1 %
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
Add: Stock-based
compensation expense
|
3,377
|
4,143
|
|
7,151
|
8,097
|
|
Add: Amortization of
intangibles from business combinations
|
14,639
|
13,136
|
|
29,302
|
26,247
|
|
Add: Employee
severance
|
—
|
54
|
|
—
|
797
|
|
Subtotal
|
18,016
|
17,333
|
|
36,453
|
35,141
|
|
Non-GAAP gross
profit
|
$ 180,602
|
$ 166,900
|
|
$ 352,083
|
$ 323,349
|
|
Non-GAAP gross
margin
|
62.9 %
|
61.6 %
|
|
62.1 %
|
60.7 %
|
|
|
|
|
|
|
|
GAAP income (loss)
from operations
|
$
42,092
|
$
294
|
|
$
52,811
|
$
(9,653)
|
|
GAAP operating
margin
|
14.7 %
|
0.1 %
|
|
9.3 %
|
(1.8) %
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
Add: Stock-based
compensation expense
|
24,286
|
33,364
|
|
57,856
|
63,289
|
|
Add: Amortization of
intangibles from business combinations
|
15,541
|
13,924
|
|
31,108
|
27,809
|
|
Add: Employee
severance
|
—
|
632
|
|
—
|
4,954
|
|
Add: Acquisition and
disposition-related costs
|
2,398
|
(849)
|
|
4,653
|
(230)
|
|
Add: Security
Incident-related costs(1)
|
1,822
|
26,777
|
|
12,145
|
44,560
|
|
Subtotal
|
44,047
|
73,848
|
|
105,762
|
140,382
|
|
Non-GAAP income from
operations
|
$
86,139
|
$
74,142
|
|
$ 158,573
|
$ 130,729
|
|
Non-GAAP operating
margin
|
30.0 %
|
27.4 %
|
|
28.0 %
|
24.5 %
|
|
|
|
|
|
|
|
GAAP income (loss)
before provision (benefit) for income taxes
|
$
29,687
|
$
(8,095)
|
|
$
33,477
|
$ (26,697)
|
|
GAAP net income
(loss)
|
$
21,804
|
$
2,105
|
|
$
27,050
|
$ (12,596)
|
|
|
|
|
|
|
|
Shares used in
computing GAAP diluted earnings (loss) per share
|
51,677,418
|
53,643,124
|
|
52,371,927
|
52,389,112
|
|
GAAP diluted
earnings (loss) per share
|
$
0.42
|
$
0.04
|
|
$
0.52
|
$
(0.24)
|
|
|
|
|
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
Add: GAAP income tax
provision (benefit)
|
7,883
|
(10,200)
|
|
6,427
|
(14,101)
|
|
Add: Total non-GAAP
adjustments affecting income from operations
|
44,047
|
73,848
|
|
105,762
|
140,382
|
|
Non-GAAP income
before provision for income taxes
|
73,734
|
65,753
|
|
139,239
|
113,685
|
|
Assumed non-GAAP
income tax provision(2)
|
18,065
|
13,151
|
|
34,114
|
22,737
|
|
Non-GAAP net
income
|
$
55,669
|
$
52,602
|
|
$ 105,125
|
$
90,948
|
|
|
|
|
|
|
|
Shares used in
computing non-GAAP diluted earnings per share
|
51,677,418
|
53,643,124
|
|
52,371,927
|
53,168,985
|
|
Non-GAAP diluted
earnings per share
|
$
1.08
|
$
0.98
|
|
$
2.01
|
$
1.71
|
|
|
|
(1)
|
Includes Security
Incident-related costs incurred during the three and six months
ended June 30, 2024 of $1.8 million and $12.1 million,
respectively, which includes approximately $0.0 million and $7.0
million, respectively, in recorded liabilities for loss
contingencies, and during the three and six months ended June 30,
2023 of $26.8 million and $44.6 million, respectively, which
included approximately $19.8 million and $30.0 million,
respectively, in recorded aggregate liabilities for loss
contingencies. Recorded expenses consisted primarily of payments to
third-party service providers and consultants, including legal
fees, as well as settlements of customer claims, negotiated
settlements and accruals for certain loss contingencies. Not
included in this adjustment were costs associated with enhancements
to our cybersecurity program. For full year 2024, we currently
expect pre-tax expenses of approximately $5 million to $10 million
and cash outlays of approximately $8 million to $13 million for
ongoing legal fees related to the Security Incident. Not included
in these ranges are our previous settlements or current accruals
for loss contingencies related to the matters discussed below. In
line with our policy, legal fees are expensed as incurred. As of
June 30, 2024, we have recorded approximately $8.5 million in
aggregate liabilities for loss contingencies, which included $6.8
million for our settlement with the Attorney General of the State
of California on June 13, 2024, and other accruals based primarily
on recent negotiations with certain customers related to the
Security Incident that we believe we can reasonably estimate. It is
reasonably possible that our estimated or actual losses may change
in the near term for those matters and be materially in excess of
the amounts accrued, but we are unable at this time to reasonably
estimate the possible additional loss. There are other Security
Incident-related matters, including customer claims, customer
constituent class actions and governmental investigations, for
which we have not recorded a liability for a loss contingency as of
June 30, 2024 because we are unable at this time to reasonably
estimate the possible loss or range of loss. Each of these matters
could, separately or in the aggregate, result in an adverse
judgment, settlement, fine, penalty or other resolution, the
amount, scope and timing of which we are currently unable to
predict, but could have a material adverse impact on our results of
operations, cash flows or financial condition.
|
|
(2)
|
Beginning in 2024, we
now apply a non-GAAP effective tax rate of 24.5% when calculating
non-GAAP net income and non-GAAP diluted earnings per share. For
the three and six months ended June 30, 2023, the tax impact
related to non-GAAP adjustments is calculated under our historical
non-GAAP effective tax rate of 20.0%.
|
|
Blackbaud,
Inc.
|
|
Reconciliation of
GAAP to Non-GAAP Financial Measures
(continued)
|
|
(Unaudited)
|
|
|
(dollars in
thousands)
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
2024
|
2023
|
|
2024
|
2023
|
|
GAAP
revenue(1)
|
$ 287,286
|
$
271,042
|
|
$ 566,536
|
$
532,795
|
|
GAAP revenue
growth
|
6.0 %
|
|
|
6.3 %
|
|
|
Less: Non-GAAP revenue
from divested businesses(2)
|
—
|
(1,851)
|
|
—
|
(2,497)
|
|
Non-GAAP organic
revenue(2)
|
$ 287,286
|
$
269,191
|
|
$ 566,536
|
$
530,298
|
|
Non-GAAP organic
revenue growth
|
6.7 %
|
|
|
6.8 %
|
|
|
|
|
|
|
|
|
Non-GAAP organic
revenue(3)
|
$ 287,286
|
$
269,191
|
|
$ 566,536
|
$
530,298
|
|
Foreign currency impact
on non-GAAP organic revenue(4)
|
(195)
|
—
|
|
(1,106)
|
—
|
|
Non-GAAP organic
revenue on constant currency basis(4)
|
$ 287,091
|
$
269,191
|
|
$ 565,430
|
$
530,298
|
|
Non-GAAP organic
revenue growth on constant currency basis
|
6.6 %
|
|
|
6.6 %
|
|
|
|
|
|
|
|
|
GAAP recurring
revenue
|
$ 281,376
|
$
262,390
|
|
$ 552,894
|
$
515,138
|
|
GAAP recurring
revenue growth
|
7.2 %
|
|
|
7.3 %
|
|
|
Less: Non-GAAP
recurring revenue from divested businesses(2)
|
—
|
—
|
|
—
|
—
|
|
Non-GAAP organic
recurring revenue(3)
|
$ 281,376
|
$
262,390
|
|
$ 552,894
|
$
515,138
|
|
Non-GAAP organic
recurring revenue growth
|
7.2 %
|
|
|
7.3 %
|
|
|
|
|
|
|
|
|
Non-GAAP organic
recurring revenue(2)
|
$ 281,376
|
$
262,390
|
|
$ 552,894
|
$
515,138
|
|
Foreign currency impact
on non-GAAP organic recurring revenue(4)
|
(197)
|
—
|
|
(1,065)
|
—
|
|
Non-GAAP organic
recurring revenue on constant currency
basis(4)
|
$ 281,179
|
$
262,390
|
|
$ 551,829
|
$
515,138
|
|
Non-GAAP organic
recurring revenue growth on constant
currency basis
|
7.2 %
|
|
|
7.1 %
|
|
|
|
|
(1)
|
Includes EVERFI revenue
of $23.8 million and $27.3 million for the three months ended June
30, 2024 and 2023, respectively, and $47.3 million and $54.2
million for the six months ended June 30, 2024 and 2023,
respectively.
|
|
(2)
|
Non-GAAP revenue from
divested businesses excludes revenue associated with divested
businesses. The exclusion of the prior period revenue is to present
the results of the divested business with the results of the
combined company for the same period of time in both the prior and
current periods.
|
|
(3)
|
Non-GAAP organic
revenue and non-GAAP organic recurring revenue for the prior year
periods presented herein may not agree to non-GAAP organic revenue
and non-GAAP organic recurring revenue presented in the respective
prior period quarterly financial information solely due to the
manner in which non-GAAP organic revenue growth and non-GAAP
organic recurring revenue growth are calculated.
|
|
(4)
|
To determine non-GAAP
organic revenue growth and non-GAAP organic recurring 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
June 30,
|
|
Six months
ended
June 30,
|
|
2024
|
2023
|
|
2024
|
2023
|
|
GAAP net income
(loss)
|
$
21,804
|
$
2,105
|
|
$
27,050
|
$
(12,596)
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
Add: Interest,
net
|
12,900
|
8,859
|
|
21,128
|
18,285
|
|
Add: GAAP income tax
provision (benefit)
|
7,883
|
(10,200)
|
|
6,427
|
(14,101)
|
|
Add:
Depreciation
|
3,253
|
3,272
|
|
6,328
|
6,608
|
|
Add: Amortization of
intangibles from business combinations
|
15,541
|
13,924
|
|
31,108
|
27,809
|
|
Add: Amortization of
software and content development costs(1)
|
12,639
|
10,934
|
|
24,729
|
21,540
|
|
Subtotal
|
52,216
|
26,789
|
|
89,720
|
60,141
|
|
Non-GAAP
EBITDA
|
$
74,020
|
$
28,894
|
|
$ 116,770
|
$
47,545
|
|
Non-GAAP EBITDA
margin(2)
|
25.8 %
|
|
|
20.6 %
|
|
|
|
|
|
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
Add: Stock-based
compensation expense
|
24,286
|
33,364
|
|
57,856
|
63,289
|
|
Add: Employee
severance
|
—
|
632
|
|
—
|
4,954
|
|
Add: Acquisition and
disposition-related costs(3)
|
2,398
|
(849)
|
|
4,653
|
(230)
|
|
Add: Security
Incident-related costs(3)
|
1,822
|
26,777
|
|
12,145
|
44,560
|
|
Subtotal
|
28,506
|
59,924
|
|
74,654
|
112,573
|
|
Non-GAAP adjusted
EBITDA
|
$ 102,526
|
$
88,818
|
|
$ 191,424
|
$
160,118
|
|
Non-GAAP adjusted
EBITDA margin(4)
|
35.7 %
|
|
|
33.8 %
|
|
|
|
|
|
|
|
|
Rule of
40(5)
|
42.4 %
|
|
|
40.6 %
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted
EBITDA
|
102,526
|
88,818
|
|
191,424
|
160,118
|
|
Foreign currency
impact on Non-GAAP adjusted EBITDA(6)
|
(88)
|
574
|
|
(503)
|
1,871
|
|
Non-GAAP adjusted
EBITDA on constant currency basis(6)
|
$ 102,438
|
$
89,392
|
|
$ 190,921
|
$
161,989
|
|
Non-GAAP adjusted
EBITDA margin on constant currency basis
|
35.7 %
|
|
|
33.8 %
|
|
|
|
|
|
|
|
|
Rule of 40 on
constant currency basis(7)
|
42.3 %
|
|
|
40.4 %
|
|
|
|
|
(1)
|
Includes amortization
expense related to software and content development costs, and
amortization expense from capitalized cloud computing
implementation costs.
|
|
(2)
|
Measured by GAAP
revenue divided by non-GAAP EBITDA.
|
|
(3)
|
See additional details
in the reconciliation of GAAP to Non-GAAP operating income
above.
|
|
(4)
|
Measured by non-GAAP
organic revenue divided by non-GAAP adjusted EBITDA.
|
|
(5)
|
Measured by non-GAAP
organic revenue growth plus non-GAAP adjusted EBITDA margin. See
Non-GAAP organic revenue growth table above.
|
|
(6)
|
To determine non-GAAP
adjusted EBITDA on a constant currency basis, non-GAAP adjusted
EBITDA 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.
|
|
(7)
|
Measured by non-GAAP
organic revenue growth on constant currency basis plus non-GAAP
adjusted EBITDA margin on constant currency basis.
|
|
(dollars in
thousands)
|
Six months
ended
June 30,
|
|
2024
|
2023
|
|
GAAP net cash
provided by operating activities
|
$ 118,435
|
$
75,002
|
|
GAAP operating cash
flow margin
|
20.9 %
|
14.1 %
|
|
Non-GAAP
adjustments:
|
|
|
|
Less: purchase of
property and equipment
|
(6,118)
|
(2,779)
|
|
Less: capitalized
software and content development costs
|
(28,392)
|
(28,756)
|
|
Non-GAAP free cash
flow
|
$
83,925
|
$
43,467
|
|
Non-GAAP free cash
flow margin
|
14.8 %
|
8.2 %
|
|
Non-GAAP
adjustments:
|
|
|
|
Add: Security
Incident-related cash flows
|
5,822
|
15,822
|
|
Non-GAAP adjusted
free cash flow
|
$
89,747
|
$
59,289
|
|
Non-GAAP adjusted
free cash flow margin
|
15.8 %
|
11.1 %
|
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SOURCE Blackbaud