Blackbaud (BLKB) 8-K Blackbaud, Inc. Announces Third Quarter 2011 Results

Exhibit 99.1

Blackbaud, Inc. Announces Third Quarter 2011 Results

Announces Fourth Quarter 2011 Dividend

CHARLESTON, S.C. – November 1, 2011 – Blackbaud, Inc. (Nasdaq: BLKB), the leading provider of software and related services designed specifically for nonprofit organizations, today announced financial results for its third quarter ended September 30, 2011.

Marc Chardon, Chief Executive Officer of Blackbaud, stated, “Solid execution during the third quarter enabled Blackbaud to deliver organic revenue growth of 12% and total revenue growth of 15%. We believe the company remains well positioned to deliver low double digit organic revenue growth and mid-teens total revenue growth for the full year 2011. This would represent a meaningful acceleration in growth from the 5% level in 2010, in spite of the continued challenging economic environment.”

“During the third quarter, we closed a record 7 new Enterprise CRM deals as Blackbaud continues to expand its growing leadership position at the high-end of the nonprofit market. Our Enterprise CRM wins continue to be diversified across our major nonprofit sub-verticals, and two of our third quarter wins were with international nonprofit organizations,” Chardon added. “Our General Markets Business Unit is also executing at a high level, delivering strong growth and gaining significant market share in the mid-market. Blackbaud has created a strong market leadership position in the mid-market over several decades, and we believe it remains a large and underpenetrated market opportunity.”

Blackbaud reported total revenue of $95.5 million for the quarter ended September 30, 2011, an increase of 15% compared to $83.2 million for the third quarter of 2010. Income from operations and net income, determined in accordance with GAAP, were $15.7 million and $9.8 million, respectively, compared with $13.1 million and $8.5 million, respectively, for the third quarter of 2010. Diluted earnings per share were $0.22 for the quarter ended September 30, 2011 compared with $0.20 in the same period last year.

Non-GAAP income from operations, which excludes stock-based compensation expense and amortization of intangibles arising from business combinations, was $21.1 million, an increase of 17% compared to $18.0 million in the same period last year. Non-GAAP net income was $12.8 million for the quarter ended September 30, 2011, an increase of 16% compared to $11.0 million in the same period last year. Non-GAAP diluted earnings per share were $0.29 for the quarter ended September 30, 2011, an increase of 16% compared with $0.25 in the same period last year.

The company’s third quarter 2011 results include an adjustment to lengthen the amortization period of the initial set-up fees associated with certain subscription based offerings as analysis indicated that the average life of related customer relationships is longer than previously estimated. This adjustment reduced third quarter revenue by approximately $700,000, non-GAAP operating income by approximately $400,000 and non-GAAP diluted earnings per share by $0.01.

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.”

The Company ended the third quarter with $52.0 million in cash, an increase from $33.4 million at the end of the previous quarter. The company generated $67.7 million in cash from operations for the nine months ended September 30, 2011, an increase of 38% compared to the same period last year.

Timothy V. Williams, Chief Financial Officer of Blackbaud, said, “In addition to re-accelerating revenue growth, the company has been able to start the process of re-expanding margins modestly during 2010. The third quarter represented the highest quarterly non-GAAP operating margin since 2009, and contributed to 40 basis points of margin expansion for the first nine months of the year as compared to 2010. We remain confident in the company’s ability to expand margins modestly over the next several years as our business continues to scale and the economic environment eventually improves.”

Fourth Quarter 2011 Dividend and Share Repurchase Program

Blackbaud announced today that its Board of Directors has approved a fourth quarter dividend of $0.12 per share payable on December 15, 2011, to stockholders of record on November 28, 2011. Additionally, as of September 30, 2011, $50.0 million remained available under the Company’s share repurchase program, which became effective on August 1, 2010.

Conference Call Details

Blackbaud will host a conference call today, November 1, 2011, at 5:00 p.m. (Eastern Time) to discuss the Company’s financial results, operations and related matters. To access this call, dial 888-364-3109 (domestic) or 719-325-2497 (international). A replay of this conference call will be available through November 8, 2011, at 877-870-5176 (domestic) or 858-384-5517 (international). The replay passcode is 4844367. A live webcast of this conference call will be available on the “Investor Relations” page of the Company’s website atwww.blackbaud.com/investorrelations, and a replay will be archived on the website as well.

About Blackbaud

Serving the nonprofit and education sectors for 30 years, Blackbaud (NASDAQ: BLKB) combines technology and expertise to help organizations achieve their missions. Blackbaud works with more than 25,000 customers in over 60 countries that support higher education, healthcare, human services, arts and culture, faith, the environment, independent K-12 education, animal welfare, and other charitable causes. The company offers a full spectrum of cloud-based and on-premise software solutions and related services for organizations of all sizes including: fundraising, eMarketing, social media, advocacy, constituent relationship management (CRM), analytics, financial management, and vertical-specific solutions. Using Blackbaud technology, these organizations raise more than $100 billion each year. Recognized as a top company by Forbes, InformationWeek, and Software Magazine and honored by Best Places to Work, Blackbaud is headquartered in Charleston, South Carolina and has employees throughout the US, and in Australia, Canada, Hong Kong, Mexico, the Netherlands, and the United Kingdom. For more information, visitwww.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 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: general economic risks; uncertainty regarding increased business and renewals from existing customers; continued success in sales growth; management of integration of acquired companies and other risks associated with acquisitions; risks associated with successful implementation of multiple integrated software products; 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; lengthy sales and implementation cycles, particularly in larger organizations; 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 website atwww.sec.gov or upon request from Blackbaud’s investor relations department. 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. This information includes non-GAAP income from operations 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 stock-based compensation expense, costs associated with amortization of intangibles arising from business combinations, one-time write-offs or expenses incurred in connection with acquisitions and a gain in connection with the sale of a business.

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 measures. 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

timothy.dolan@icrinc.com

617-956-6727

Media Contact:

Melanie Mathos

Blackbaud, Inc.

melanie.mathos@Blackbaud.com

843-216-6200 x3307

SOURCE: Blackbaud, Inc.

Blackbaud, Inc.

Consolidated balance sheets

(Unaudited)

(in thousands, except share amounts)	September 30, 2011			December 31, 2010
Assets
Current assets:
Cash and cash equivalents	$	51,999		$	27,974
Donor restricted cash		21,180			16,359
Accounts receivable, net of allowance of $2,940 and $2,687 at September 30, 2011 and December 31, 2010, respectively		62,641			59,804
Prepaid expenses and other current assets		30,724			33,847
Deferred tax asset, current portion		5,173			5,164
Total current assets		171,717			143,148
Property and equipment, net		28,778			22,963
Deferred tax asset		35,553			44,639
Goodwill		89,255			76,247
Intangible assets, net		40,343			38,515
Other assets		5,716			2,579
Total assets	$	371,362		$	328,091
Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable	$	9,908		$	9,883
Accrued expenses and other current liabilities		30,405			28,322
Donations payable		21,180			16,359
Deferred revenue		155,015			141,149
Total current liabilities		216,508			195,713
Deferred revenue, noncurrent		6,992			6,900
Other noncurrent liabilities		2,854			2,419
Total liabilities		226,354			205,032
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, 53,488,169 and 53,316,280 shares issued at September 30, 2011 and December 31, 2010, respectively		54			53
Additional paid-in capital		171,025			158,419
Treasury stock, at cost; 8,872,688 and 8,842,882 shares at September 30, 2011 and December 31, 2010, respectively		(161,966	)		(161,186	)
Accumulated other comprehensive loss		(687	)		(512	)
Retained earnings		136,582			126,285
Total stockholders’ equity		145,008			123,059
Total liabilities and stockholders’ equity	$	371,362		$	328,091

Blackbaud, Inc.

Consolidated statements of operations

(Unaudited)

	Three months ended September 30,						Nine months ended September 30,
(in thousands, except share and per share amounts)	2011			2010			2011			2010
Revenue
License fees	$	4,952		$	5,070		$	14,600		$	17,209
Subscriptions		26,035			21,235			77,415			60,797
Services		29,782			23,992			81,790			64,967
Maintenance		32,895			31,416			97,329			92,970
Other revenue		1,867			1,513			5,073			4,193
Total revenue		95,531			83,226			276,207			240,136
Cost of revenue
Cost of license fees		796			626			2,515			2,218
Cost of subscriptions		10,625			7,950			30,260			22,792
Cost of services		20,019			17,008			59,200			48,761
Cost of maintenance		6,521			6,310			18,807			18,005
Cost of other revenue		1,708			1,381			4,253			3,831
Total cost of revenue		39,669			33,275			115,035			95,607
Gross profit		55,862			49,951			161,172			144,529
Operating expenses
Sales and marketing		18,731			16,953			57,124			52,399
Research and development		12,224			11,776			36,223			34,395
General and administrative		8,975			7,901			27,351			23,199
Amortization		249			195			729			587
Total operating expenses		40,179			36,825			121,427			110,580
Income from operations		15,683			13,126			39,745			33,949
Interest income		55			21			133			64
Interest expense		(59	)		(45	)		(143	)		(170	)
Other income (expense), net		(107	)		53			178			(129	)
Income before provision for income taxes		15,572			13,155			39,913			33,714
Income tax provision		5,811			4,636			13,640			12,453
Net income	$	9,761		$	8,519		$	26,273		$	21,261
Earnings per share
Basic	$	0.22		$	0.20		$	0.60		$	0.49
Diluted	$	0.22		$	0.20		$	0.60		$	0.48
Common shares and equivalents outstanding
Basic weighted average shares		43,548,494			42,747,209			43,449,958			43,145,289
Diluted weighted average shares		44,147,911			43,472,822			44,045,438			43,880,554
Dividends per share	$	0.12		$	0.11		$	0.36		$	0.33

Blackbaud, Inc.

Consolidated statements of cash flows

(Unaudited)

	Nine months ended September 30,
(in thousands)	2011			2010
Cash flows from operating activities
Net income	$	26,273		$	21,261
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		12,281			11,955
Provision for doubtful accounts and sales returns		3,708			1,960
Stock-based compensation expense		10,913			9,240
Excess tax benefits from stock based compensation		(423	)		(1,161	)
Deferred taxes		6,088			3,480
Other non-cash adjustments		(703	)		(114	)
Changes in operating assets and liabilities, net of acquisition of businesses:
Accounts receivable		(5,864	)		(7,549	)
Prepaid expenses and other assets		516			(779	)
Trade accounts payable		909			(771	)
Accrued expenses and other liabilities		(216	)		(2,800	)
Donor restricted cash		(7,598	)		(6,020	)
Donations payable		7,598			6,020
Deferred revenue		14,237			14,141
Net cash provided by operating activities		67,719			48,863
Cash flows from investing activities
Purchase of property and equipment		(12,997	)		(10,597	)
Purchase of net assets of acquired companies, net of cash acquired		(16,475	)		(390	)
Purchase of investment		-			(2,000	)
Purchase of intangible assets		-			(130	)
Proceeds from sale of assets		874			-
Net cash used in investing activities		(28,598	)		(13,117	)
Cash flows from financing activities
Dividend payments to stockholders		(16,034	)		(14,609	)
Proceeds from exercise of stock options		1,973			4,695
Excess tax benefits from stock based compensation		423			1,161
Purchase of treasury stock		-			(22,613	)
Proceeds from issuance of debt		-			4,000
Payments on debt		-			(4,868	)
Payments of deferred financing costs		(767	)		-
Payments on capital lease obligations		(35	)		(135	)
Net cash used in financing activities		(14,440	)		(32,369	)
Effect of exchange rate on cash and cash equivalents		(656	)		107
Net increase in cash and cash equivalents		24,025			3,484
Cash and cash equivalents, beginning of period		27,974			22,769
Cash and cash equivalents, end of period	$	51,999		$	26,253

Blackbaud, Inc.

Reconciliation of GAAP to Non-GAAP financial measures

(Unaudited)

		Three months ended  September 30,						Nine months ended  September 30,
(in thousands, except per share amounts)		2011			2010			2011			2010
GAAP revenue		$	95,531		$	83,226		$	276,207		$	240,136
GAAP gross profit		$	55,862		$	49,951		$	161,172		$	144,529
Non-GAAP adjustments:
Add: Stock-based compensation expense	��		764			711			2,375			2,083
Add: Amortization of intangibles from business combinations			1,582			1,548			4,778			4,594
Total Non-GAAP adjustments			2,346			2,259			7,153			6,677
Non-GAAP gross profit		$	58,208		$	52,210		$	168,325		$	151,206
Non-GAAP gross margin			61	%		63	%		61	%		63	%
GAAP income from operations		$	15,683		$	13,126		$	39,745		$	33,949
Non-GAAP adjustments:
Add: Stock-based compensation expense			3,587			3,180			10,913			9,240
Add: Amortization of intangibles from business combinations			1,831			1,743			5,507			5,181
Add: Acquisition-related expenses			-			-			1,054			-
Less: Gain on sale of assets			-			-			(549	)		-
Total Non-GAAP adjustments			5,418			4,923			16,925			14,421
Non-GAAP income from operations		$	21,101		$	18,049		$	56,670		$	48,370
Non-GAAP operating margin			22	%		22	%		21	%		20	%
GAAP net income		$	9,761		$	8,519		$	26,273		$	21,261
Non-GAAP adjustments:
Add: Total Non-GAAP adjustments affecting income from operations			5,418			4,923			16,925			14,421
Add: Tax impact related to Non-GAAP adjustments			(2,374	)		(2,415	)		(8,527	)		(6,320	)
Non-GAAP net income		$	12,805		$	11,027		$	34,671		$	29,362
Shares used in computing Non-GAAP diluted earnings per share			44,148			43,473			44,045			43,881
Non-GAAP diluted earnings per share		$	0.29		$	0.25		$	0.79		$	0.67
Detail of Non-GAAP adjustments:
Stock-based compensation expense:
Cost of revenue
Cost of subscriptions		$	80		$	112		$	407		$	279
Cost of services			491			380			1,395			1,230
Cost of maintenance			193			219			573			574
Subtotal			764			711			2,375			2,083
Operating expenses
Sales and marketing			305			272			934			977
Research and development			759			715			2,273			2,130
General and administrative			1,759			1,482			5,331			4,050
Subtotal			2,823			2,469			8,538			7,157
Total stock-based compensation expense		$	3,587		$	3,180		$	10,913		$	9,240
Amortization of intangibles from business combinations:
Cost of revenue
Cost of license fees		$	126		$	116		$	384		$	325
Cost of subscriptions			823			760			2,440			2,280
Cost of services			394			343			1,172			1,020
Cost of maintenance			221			310			726			913
Cost of other revenue			18			19			56			56
Subtotal			1,582			1,548			4,778			4,594
Operating expenses			249			195			729			587
Total amortization of intangibles from business combinations		$	1,831		$	1,743		$	5,507		$	5,181