Exhibit 99.1
Blackbaud, Inc. Announces Fourth Quarter 2005 Results and First Quarter 2006 Dividend
CHARLESTON, S.C.— February 16, 2006 — Blackbaud, Inc. (Nasdaq: BLKB), the leading provider of software and related services designed specifically for nonprofit organizations, today announced financial results for its fourth quarter 2005.
For the quarter ended December 31, 2005, Blackbaud reported total revenue of $42.9 million, an increase of 19% compared with the fourth quarter of 2004. License revenue increased 17% to $7.9 million, services revenue increased 26% to $12.5 million, and maintenance and subscriptions revenue increased 16% to $20.7 million over the comparable period.
Marc Chardon, Chief Executive Officer of Blackbaud, stated, “We are very pleased with the Company’s performance in the fourth quarter, completing a year highlighted by better-than-expected top line momentum and profitability.” Chardon continued, “Nonprofit organizations are increasingly investing in technology to optimize their fundraising and internal operations, and our industry leading solutions, experience and customer satisfaction position us well to continue capitalizing on this growing demand.”
Blackbaud’s income from operations and net income, determined in accordance with generally accepted accounting principles (GAAP), were $8.7 million and $6.2 million, respectively, for the fourth quarter 2005 compared with a loss from operations of $9.2 million and a net loss of $4.3 million in the same period last year. GAAP diluted earnings per share were $0.14 for the quarter ended December 31, 2005, compared with a loss per share of $0.10 in the same period last year.
For the quarter ended December 31, 2005, pro forma income from operations and net income, which exclude stock-based compensation expense and amortization of intangibles arising from business combinations, were $11.8 million and $7.3 million, respectively, compared with $9.9 million and $6.2 million in the same period last year, representing growth of 19% and 18%, respectively. Pro forma earnings per share were $0.16 for the quarter ended December 31, 2005 compared with $0.13 in the same period last year.
A reconciliation of GAAP to pro forma 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.”
Cash from operations for the fourth quarter and full year ended December 31, 2005 was $12.8 million and $51.8 million, respectively, increases of 26% and 19%, respectively, over the prior year periods. Blackbaud had cash and cash equivalents of $22.7 million at December 31, 2005, a $2.0 million increase from the $20.7 million level at the end of the prior quarter.
Timothy V. Williams, Chief Financial Officer of Blackbaud, stated, “In 2005 we were able to deliver a solid operating margin while our revenue growth continued to accelerate over the growth rates seen in recent years. Our leadership position and business model enable us to deliver this attractive combination of profitability and growth, in addition to very strong cash flow that we will continue to use to drive shareholder value.”
First Quarter Dividend
Blackbaud announced today that its Board of Directors has approved an increase in its annual dividend from $0.20 per share to $0.28 per share and declared a first quarter dividend of $0.07 per share payable on March 15, 2006 to stockholders of record on February 28, 2006.
Conference Call Details
Blackbaud will host a conference call today, February 16, 2006, at 5:00 p.m. (EDT) to discuss the Company’s financial results, operations and related matters. To access this call, dial 800-289-0533 (domestic) or 913-981-5525 (international). A replay of this conference call will be available through February 23, 2006, at 888-203-1112 (domestic) or 719-457-0820 (international). The replay passcode is 4524888. A live webcast of this conference call will be available on the “Investor Relations” page of the Company’s Web site, 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. More than 15,000 organizations — including the American Red Cross, Bowdoin College, the Chesapeake Bay Foundation, the Crohn’s & Colitis Foundation of America, the Detroit Zoological Society, Episcopal High School, Help the Aged, the New York Philharmonic and United Way of America — use Blackbaud products and consulting services for fundraising, financial management, business intelligence and school administration. Blackbaud’s solutions includeThe Raiser’s Edge®,The Financial Edge™, The Education Edge™, The Patron Edge®, Blackbaud®NetCommunity™, The Information Edge™, WealthPoint™andProspectPoint™,as well as a wide range of consulting and educational services. Founded in 1981, Blackbaud is headquartered in Charleston, South Carolina, and also has operations in Toronto, Ontario; Glasgow, Scotland; and Sydney, Australia.
Blackbaud, the Blackbaud logo, The Raiser’s Edge, The Financial Edge, The Education Edge, The Information Edge, The Patron Edge, Blackbaud NetCommunity, WealthPoint and ProspectPoint 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 actual results to differ materially from these forward-looking statements include the following: continued success in sales growth; risks associated with management of growth; the ability to attract and retain key personnel; risks related to our dividend and stock repurchase programs, including potential limitations on our ability to grow and the possibility that we might discontinue payment of dividends; adoption of our products and services by nonprofits; uncertainty regarding increased business and renewals from existing customers; risk associated with product concentration; lengthy sales and implementation cycles; economic conditions and seasonality; competition; risks associated with acquisitions; 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 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 pro forma gross margin, pro forma operating income and margin, pro forma net income and pro forma 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 the Blackbaud’s IPO (completed on July 22, 2004), amortization of intangibles arising from business combinations, stock-based compensation expense and certain adjustments to the deferred tax asset.
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 GAAP to our non-GAAP financial measures has been provided in the financial statement tables included in this press release.
INVESTOR CONTACT:
Tim Dolan
Integrated Corporate Relations
203-682-8200
Tim Dolan
Integrated Corporate Relations
203-682-8200
MEDIA CONTACT:
Rachel Hutchisson
Blackbaud
843-270-5824
Rachel Hutchisson
Blackbaud
843-270-5824
SOURCE:Blackbaud, Inc.
BLACKBAUD, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share amounts)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share amounts)
December 31, | ||||||||
2005 | 2004 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 22,683 | $ | 42,144 | ||||
Accounts receivable, net of allowance of $1,100 and $1,420, respectively | 25,577 | 19,580 | ||||||
Prepaid expenses and other current assets | 8,741 | 1,806 | ||||||
Deferred tax asset, current portion | 7,600 | 542 | ||||||
Total current assets | 64,601 | 64,072 | ||||||
Property and equipment, net | 8,700 | 7,199 | ||||||
Deferred tax asset | 71,487 | 87,522 | ||||||
Goodwill | 2,208 | 1,673 | ||||||
Intangible assets, net | 396 | — | ||||||
Other assets | 106 | 342 | ||||||
Total assets | $ | 147,498 | $ | 160,808 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Trade accounts payable | $ | 4,683 | $ | 2,653 | ||||
Current portion of capital lease obligations | — | 44 | ||||||
Accrued expenses and other current liabilities | 15,806 | 16,019 | ||||||
Deferred revenue | 59,459 | 51,593 | ||||||
Total current liabilities | 79,948 | 70,309 | ||||||
Long-term deferred revenue | 1,279 | 710 | ||||||
Total liabilities | 81,227 | 71,019 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock; 20,000,000 shares authorized, none outstanding | — | — | ||||||
Common stock, $.001 par value; 180,000,000 shares authorized, 47,529,836 and 42,549,056 shares issued at December 31, 2005 and 2004, respectively | 48 | 43 | ||||||
Additional paid-in capital | 73,583 | 55,292 | ||||||
Deferred compensation | (6,497 | ) | (1,064 | ) | ||||
Treasury stock, at cost; 4,267,313 shares at December 31, 2005 | (60,902 | ) | — | |||||
Accumulated other comprehensive income | 92 | 355 | ||||||
Retained earnings | 59,947 | 35,163 | ||||||
Total stockholders’ equity | 66,271 | 89,789 | ||||||
Total liabilities and stockholders’ equity | $ | 147,498 | $ | 160,808 | ||||
BLACKBAUD, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share amounts)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share amounts)
Three months ended December 31, | Years ended December 31, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Revenue | ||||||||||||||||
License fees | $ | 7,915 | $ | 6,773 | $ | 29,978 | $ | 25,387 | ||||||||
Services | 12,537 | 9,985 | 52,606 | 42,793 | ||||||||||||
Maintenance and subscriptions | 20,695 | 17,815 | 78,475 | 66,941 | ||||||||||||
Other revenue | 1,794 | 1,467 | 5,237 | 4,316 | ||||||||||||
Total revenue | 42,941 | 36,040 | 166,296 | 139,437 | ||||||||||||
Cost of revenue | ||||||||||||||||
Cost of license fees | 1,214 | 1,077 | 4,380 | 3,545 | ||||||||||||
Cost of services (of which $40, $104, $269 and $(540) in the three months ended December 31, 2005 and 2004 and the years ended December 31, 2005 and 2004, respectively, was stock based compensation expense (benefit)) | 7,419 | 6,325 | 28,409 | 22,807 | ||||||||||||
Cost of maintenance and subscriptions (of which $5, $15, $33 and $(91) in the three months ended December 31, 2005 and 2004 and the years ended December 31, 2005 and 2004, respectively, was stock based compensation expense (benefit)) | 3,326 | 2,732 | 12,398 | 10,862 | ||||||||||||
Cost of other revenue | 1,837 | 1,408 | 4,943 | 3,986 | ||||||||||||
Total cost of revenue | 13,796 | 11,542 | 50,130 | 41,200 | ||||||||||||
Gross profit | 29,145 | 24,498 | 116,166 | 98,237 | ||||||||||||
Sales and marketing | 8,185 | 6,624 | 33,273 | 26,775 | ||||||||||||
Research and development | 5,359 | 4,630 | 20,999 | 17,875 | ||||||||||||
General and administrative | 3,893 | 3,471 | 16,139 | 12,933 | ||||||||||||
Amortization | 8 | — | 18 | 32 | ||||||||||||
Costs of initial public offering | — | — | — | 2,455 | ||||||||||||
Stock based compensation expense | 2,983 | 18,955 | 13 | 19,010 | ||||||||||||
Total operating expenses | 20,428 | 33,680 | 70,442 | 79,080 | ||||||||||||
Income (loss) from operations | 8,717 | (9,182 | ) | 45,724 | 19,157 | |||||||||||
Interest income | 194 | 198 | 964 | 331 | ||||||||||||
Interest expense | (12 | ) | (4 | ) | (49 | ) | (272 | ) | ||||||||
Other income, net | 40 | 14 | 6 | 356 | ||||||||||||
Income (loss) before provision for income taxes | 8,939 | (8,974 | ) | 46,645 | 19,572 | |||||||||||
Income tax provision | 2,752 | (4,688 | ) | 13,344 | 6,931 | |||||||||||
Net income (loss) | $ | 6,187 | $ | (4,286 | ) | $ | 33,301 | $ | 12,641 | |||||||
Earnings (loss) per share | ||||||||||||||||
Basic | $ | 0.15 | $ | (0.10 | ) | $ | 0.78 | $ | 0.30 | |||||||
Diluted | $ | 0.14 | $ | (0.10 | ) | $ | 0.72 | $ | 0.27 | |||||||
Common shares and equivalents outstanding | ||||||||||||||||
Basic weighted average shares | 42,422,014 | 42,544,596 | 42,559,342 | 42,496,280 | ||||||||||||
Diluted weighted average shares | 44,658,872 | 42,544,596 | 46,210,099 | 46,540,790 | ||||||||||||
Dividends per share | $ | 0.05 | $ | 0.00 | $ | 0.20 | $ | 0.00 | ||||||||
Summary of stock based compensation expense (benefit) | ||||||||||||||||
Cost of services | $ | 40 | $ | 104 | $ | 269 | $ | (540 | ) | |||||||
Cost of maintenance and subscription revenue | 5 | 15 | 33 | (91 | ) | |||||||||||
Total cost of revenue | 45 | 119 | 302 | (631 | ) | |||||||||||
Sales and marketing | 35 | 82 | 217 | (112 | ) | |||||||||||
Research and development | 20 | 60 | 139 | (457 | ) | |||||||||||
General and administrative | 2,928 | 18,813 | (343 | ) | 19,579 | |||||||||||
Total operating expense | 2,983 | 18,955 | 13 | 19,010 | ||||||||||||
Total stock based compensation expense (benefit) | $ | 3,028 | $ | 19,074 | $ | 315 | $ | 18,379 | ||||||||
BLACKBAUD, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Years ended December 31, | ||||||||
2005 | 2004 | |||||||
Cash flows from operating activities | ||||||||
Net income (loss) | $ | 33,301 | $ | 12,641 | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities | ||||||||
Depreciation and amortization | 2,684 | 2,521 | ||||||
Provision for doubtful accounts and sales returns | 822 | 1,328 | ||||||
Stock based compensation | 624 | 16,600 | ||||||
Amortization of deferred financing fees | 48 | 184 | ||||||
Deferred taxes | 9,014 | 701 | ||||||
Benefit on exercise of stock options | 8,611 | 179 | ||||||
Changes in assets and liabilities, net of acquisition | ||||||||
Accounts receivable | (6,830 | ) | (5,089 | ) | ||||
Prepaid expenses and other assets | (6,773 | ) | 785 | |||||
Trade accounts payable | 2,045 | 54 | ||||||
Accrued expenses and other current liabilities | (57 | ) | 5,462 | |||||
Deferred revenue | 8,357 | 8,183 | ||||||
Total adjustments | 18,545 | 30,908 | ||||||
Net cash provided by operating activities | 51,846 | 43,549 | ||||||
Cash flows from investing activities | ||||||||
Purchase of property and equipment | (4,160 | ) | (3,039 | ) | ||||
Purchase of net assets of acquired company | (1,013 | ) | (166 | ) | ||||
Net cash used in investing activities | (5,173 | ) | (3,205 | ) | ||||
Cash flows from financing activities | ||||||||
Repayments on long-term debt and capital lease obligations | (44 | ) | (5,142 | ) | ||||
Proceeds from exercise of stock options | 3,627 | 674 | ||||||
Purchase of treasury stock | (60,902 | ) | — | |||||
Dividend payments to stockholders | (8,517 | ) | — | |||||
Payment of deferred financing fees | — | (162 | ) | |||||
Net cash used in financing activities | (65,836 | ) | (4,630 | ) | ||||
Effect of exchange rate on cash and cash equivalents | (298 | ) | (278 | ) | ||||
Net (decrease) increase in cash and cash equivalents | (19,461 | ) | 35,436 | |||||
Cash and cash equivalents, beginning of year | 42,144 | 6,708 | ||||||
Cash and cash equivalents, end of year | $ | 22,683 | $ | 42,144 | ||||
Supplemental disclosures of cash flow information | ||||||||
Cash paid during the year for | ||||||||
Interest | $ | 1 | $ | 45 | ||||
Taxes | 3,885 | 4,009 |
BLACKBAUD, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
(In thousands, except per share amounts)
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
(In thousands, except per share amounts)
Three months ended December 31, | Years ended December 31, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
| ||||||||||||||||
GAAP revenue | $ | 42,941 | $ | 36,040 | $ | 166,296 | $ | 139,437 | ||||||||
GAAP gross margin | $ | 29,145 | $ | 24,498 | $ | 116,166 | $ | 98,237 | ||||||||
Pro forma adjustments: | ||||||||||||||||
Amortization of deferred compensation expense (benefit) — options | 45 | 119 | 302 | (631 | ) | |||||||||||
Pro forma gross profit | $ | 29,190 | $ | 24,617 | $ | 116,468 | $ | 97,606 | ||||||||
Pro forma gross margin | 68 | % | 68 | % | 70 | % | 70 | % | ||||||||
GAAP income (loss) from operations | $ | 8,717 | $ | (9,182 | ) | $ | 45,724 | $ | 19,157 | |||||||
Pro forma adjustments: | ||||||||||||||||
Amortization of deferred compensation expense (benefit) — options | 2,698 | 19,074 | (53 | ) | 18,379 | |||||||||||
Amortization of deferred compensation expense (benefit) — restricted stock | 330 | — | 368 | — | ||||||||||||
Costs of initial public offering | — | — | — | 2,455 | ||||||||||||
Amortization of intangibles from business combinations | 8 | — | 18 | 32 | ||||||||||||
Total pro forma adjustments | 3,036 | 19,074 | 333 | 20,866 | ||||||||||||
Pro forma income from operations | $ | 11,753 | $ | 9,892 | $ | 46,057 | $ | 40,023 | ||||||||
Pro forma operating margin | 27 | % | 27 | % | 28 | % | 29 | % | ||||||||
GAAP net income (loss) | $ | 6,187 | $ | (4,286 | ) | $ | 33,301 | $ | 12,641 | |||||||
Pro forma adjustments: | ||||||||||||||||
Total pro forma adjustments affecting income from operations | 3,036 | 19,074 | 333 | 20,866 | ||||||||||||
Tax impact related to pro forma adjustments | (1,917 | ) | (8,627 | ) | (4,977 | ) | (8,840 | ) | ||||||||
Pro forma net income | $ | 7,306 | $ | 6,161 | $ | 28,657 | $ | 24,667 | ||||||||
GAAP shares used in computing diluted income per share | 44,659 | 42,545 | 46,210 | 46,541 | ||||||||||||
Pro forma adjustments: | ||||||||||||||||
Incremental shares related to stock options | (137 | ) | 4,157 | (569 | ) | (508 | ) | |||||||||
Shares used in computing pro forma earnings per diluted share | 44,522 | 46,702 | 45,641 | 46,033 | ||||||||||||
Pro forma earnings per diluted share | $ | 0.16 | $ | 0.13 | $ | 0.63 | $ | 0.54 | ||||||||