| Exhibit 99.1 | ||
 | ||
| PRESS RELEASE | ||
Blackbaud Announces 2016 Third Quarter Results
GAAP Revenue Growth of 15.3% and Non-GAAP Organic Revenue Growth of 8.1%;
Recurring Revenue Increases to 77.5% of Total Revenue
Charleston, S.C. (November 1, 2016) - Blackbaud (NASDAQ: BLKB), the world's leading cloud software company powering social good, today announced financial results for its third quarter ended September 30, 2016.
"We posted another very solid quarter, with 77.5% of our total revenue now recurring, and non-GAAP organic revenue growth of 8.1%" said Mike Gianoni, Blackbaud's president and CEO. "Our ability to accelerate customer value through innovative new technology is driving our strong financial performance, and will enable us to fuel future growth. We just concluded our annual conference and it's clear that Blackbaud is setting a new technology standard for the social good community."
Third Quarter 2016 Results Compared to Third Quarter 2015 Results:
| • | Total GAAP revenue was $183.1 million, up 15.3%, with $141.9 million in GAAP recurring revenue, representing 77.5% of total revenue. |
| • | Total non-GAAP revenue was $183.1 million, up 14.5%, with $141.9 million in non-GAAP recurring revenue, representing 77.5% of total non-GAAP revenue. |
| • | Non-GAAP organic revenue increased 8.1% and non-GAAP organic recurring revenue increased 9.6%. |
| • | GAAP income from operations decreased 3.1% to $13.5 million, with GAAP operating margin decreasing 140 basis points to 7.4%. |
| • | Non-GAAP income from operations increased 11.3% to $34.0 million, with non-GAAP operating margin decreasing 50 basis points to 18.6%. |
| • | GAAP net income increased 12.9% to $8.9 million, with GAAP diluted earnings per share up $0.02 to $0.19. |
| • | Non-GAAP net income increased 20.8% to $21.3 million, with non-GAAP diluted earnings per share up $0.07 to $0.45. |
| • | Cash flow from operations was $51.4 million, up from $38.8 million. |
"We are maintaining our non-GAAP financial guidance, while increasing cash flow from operations to account for the early adoption of ASU 2016-09" said Tony Boor, Blackbaud's executive vice president and CFO. "Our updated guidance indicates organic revenue growth acceleration, improves profitability, and increases cash flow for the full year when compared to 2015."
Company Highlights:
| • | Shared the latest insights, trends and innovation to roughly 3,000 change-makers at bbcon 2016 |
| • | Appointed Jerry Needle as president of everydayhero®, Tim Hill as president of Higher Education Solutions group, and Russ Cobb as president of Healthcare Solutions group |
| • | One of the first companies certified under the EU-U.S. Privacy Shield |
| • | Adoption of Blackbaud’s intuitive cloud accounting solution, Financial Edge NXT™, continues to surge |
Visit www.blackbaud.com/press-room for more information about Blackbaud’s recent highlights.
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| PRESS RELEASE | ||
Dividend
Blackbaud announced today that its Board of Directors has declared a fourth quarter 2016 dividend of $0.12 per share payable on December 15, 2016 to stockholders of record on November 23, 2016.
Adoption of New Share-based Compensation Expense Accounting Standard
During the three months ended September 30, 2016, Blackbaud early adopted ASU 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting which addresses, among other items, the accounting for income taxes and forfeitures, and cash flow presentation of share-based compensation. Under ASU 2016-09, excess tax benefits generated upon the settlement or exercise of stock awards are no longer recognized as additional paid-in capital but are instead recognized as a reduction to income tax expense. This change in accounting for income taxes is effective on a prospective basis as of the beginning of the 2016 fiscal year. Cash flows related to excess tax benefits are required to be presented as an operating activity rather than a financing activity. In addition, all cash tax payments made on an employee’s behalf for shares withheld upon vesting or settlement are required to be presented as a financing activity. Blackbaud adopted all amendments related to cash flow presentation on a retrospective basis.
The early adoption of ASU 2016-09 increased GAAP net income by $1.2 million for both the three months ended March 31, 2016 and June 30, 2016, respectively, and increased net cash provided by operating activities and net cash used in financing activities by $6.7 million and $4.1 million for the three months ended March 31, 2016 and June 30, 2016, respectively. The impacts of adoption are reflected in Blackbaud's guidance and its GAAP results for the nine months ended September 30, 2016. In addition, retrospective application of the amendments related to cash flow presentation resulted in a $4.2 million increase in both net cash provided by operating activities and net cash used in financing activities for the nine months ended September 30, 2015. Blackbaud will provide more detailed information regarding the impact of the early adoption of ASU 2016-09 in its quarterly report on Form 10-Q for the quarter ended September 30, 2016.
Financial Outlook
Updated full year financial guidance.
| • | Non-GAAP revenue of $725.0 million to $740.0 million |
| • | Non-GAAP income from operations of $141.0 million to $147.0 million |
| • | Non-GAAP operating margin of 19.4% to 19.9% |
| • | Non-GAAP diluted earnings per share of $1.90 to $1.98 |
| • | Cash flow from operations of $147 million to $157 million |
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.
Conference Call Details
What: Blackbaud's Fiscal 2016 Third Quarter Conference Call
When: November 2, 2016
Time: 8:00 a.m. (Eastern Time)
Live Call: 1-800-324-5531 (domestic) or 1-719-325-2141 (international); passcode 561800.
Webcast: Blackbaud's Investor Relations Webpage
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| PRESS RELEASE | ||
About Blackbaud
Blackbaud (NASDAQ: BLKB) is the world’s leading cloud software company powering social good. Serving the entire social good community—nonprofits, foundations, corporations, education institutions, and individual change agents—Blackbaud connects and empowers organizations to increase their impact through software, services, expertise, and data intelligence. The Blackbaud portfolio is tailored to the unique needs of vertical markets, with solutions for fundraising and relationship management, digital marketing, advocacy, accounting, payments, analytics, school management, grant management, corporate social responsibility, and volunteerism. Serving the industry for more than three decades, Blackbaud is headquartered in Charleston, South Carolina and has operations in the United States, Australia, Canada, Ireland, and the United Kingdom. For more information, visit www.blackbaud.com.
| Investor Contact: | Media Contact: | ||
| Mark Furlong | Nicole McGougan | ||
| Director of Investor Relations | Blackbaud Public Relations | ||
| 843-654-2097 | 843-654-3307 | ||
| mark.furlong@blackbaud.com | nicole.mcgougan@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: expectations that our revenue and operating cash flow will continue to grow and that our operating margins will continue to improve, and expectations that we will achieve our projected 2016 full year financial guidance. 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; risks related to our dividend policy and stock repurchase program, including the possibility that we might discontinue payment of dividends; 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. 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 revenue, non-GAAP recurring revenue, non-GAAP gross profit, non-GAAP gross margin, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income and non-GAAP diluted earnings per share. Blackbaud has acquired businesses whose net tangible assets include deferred revenue. In accordance with GAAP reporting requirements, Blackbaud recorded write-downs of deferred revenue to fair value, which resulted in lower recognized revenue. Both on a quarterly and year-to-date basis, the revenue for the acquired businesses is deferred and typically recognized over a one-year period, so Blackbaud's GAAP revenues for the one-year period after the acquisitions will not reflect the full amount of revenues that would have been reported if the acquired deferred revenue was not written down to fair value. The non-GAAP measures described above reverse the acquisition-related deferred revenue write-downs so that the full amount of revenue booked by the acquired companies is included, which Blackbaud believes provides a more accurate representation of a revenue run-rate in a given period. In addition to reversing write-downs of acquisition-related deferred revenue, non-GAAP financial measures discussed above exclude the impact of certain items that Blackbaud
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believes are not directly related to its performance in any particular period, but are for its long-term benefit over multiple periods.
In addition, Blackbaud discusses non-GAAP organic revenue growth, non-GAAP organic revenue growth on a constant currency basis and non-GAAP organic recurring revenue growth, which it believes provides useful information for evaluating the periodic growth of its business on a consistent basis. Each of these measures of non-GAAP organic revenue growth 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 non-GAAP organic revenue growth 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 non-GAAP organic revenue growth 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.
As previously disclosed, beginning in 2016, Blackbaud now applies a non-GAAP effective tax rate of 32.0% in its determination of non-GAAP net income, which represents the GAAP effective tax rate, excluding the discrete tax effect of stock-based compensation. The non-GAAP effective tax rate utilized will be reviewed annually to determine whether it remains appropriate in consideration of Blackbaud's financial results including its periodic effective tax rate calculated in accordance with GAAP, its operating environment and related tax legislation in effect and other factors deemed necessary. All 2015 measures of the tax impact related to non-GAAP adjustments, 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 39.0%.
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 these non-GAAP financial measures reflect the Blackbaud's ongoing business in a manner that allows for meaningful period-to-period comparison and analysis of trends in its business. In addition, Blackbaud believes that the use of these non-GAAP financial measures provides additional information for investors to use in evaluating ongoing operating results 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 differences in the exact method of calculation between companies. 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.
4
Blackbaud, Inc.
Consolidated balance sheets
(Unaudited)
| (dollars in thousands) | September 30, 2016 | December 31, 2015 | ||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 16,462 | $ | 15,362 | ||
| Restricted cash due to customers | 138,106 | 255,038 | ||||
| Accounts receivable, net of allowance of $4,097 and $4,943 at September 30, 2016 and December 31, 2015, respectively | 86,111 | 80,046 | ||||
| Prepaid expenses and other current assets | 52,145 | 48,666 | ||||
| Total current assets | 292,824 | 399,112 | ||||
| Property and equipment, net | 52,466 | 52,651 | ||||
| Software development costs, net | 32,539 | 19,551 | ||||
| Goodwill | 438,450 | 436,449 | ||||
| Intangible assets, net | 264,405 | 294,672 | ||||
| Other assets | 18,102 | 20,901 | ||||
| Total assets | $ | 1,098,786 | $ | 1,223,336 | ||
| Liabilities and stockholders’ equity | ||||||
| Current liabilities: | ||||||
| Trade accounts payable | $ | 19,601 | $ | 19,208 | ||
| Accrued expenses and other current liabilities | 44,441 | 57,461 | ||||
| Due to customers | 138,106 | 255,038 | ||||
| Debt, current portion | 4,375 | 4,375 | ||||
| Deferred revenue, current portion | 248,152 | 230,216 | ||||
| Total current liabilities | 454,675 | 566,298 | ||||
| Debt, net of current portion | 370,642 | 403,712 | ||||
| Deferred tax liability | 26,688 | 27,996 | ||||
| Deferred revenue, net of current portion | 6,594 | 7,119 | ||||
| Other liabilities | 7,467 | 7,623 | ||||
| Total liabilities | 866,066 | 1,012,748 | ||||
| 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, 57,657,959 and 56,873,817 shares issued at September 30, 2016 and December 31, 2015, respectively | 58 | 57 | ||||
| Additional paid-in capital | 302,837 | 276,340 | ||||
| Treasury stock, at cost; 10,084,745 and 9,903,071 shares at September 30, 2016 and December 31, 2015, respectively | (210,357 | ) | (199,861 | ) | ||
| Accumulated other comprehensive loss | (942 | ) | (825 | ) | ||
| Retained earnings | 141,124 | 134,877 | ||||
| Total stockholders’ equity | 232,720 | 210,588 | ||||
| Total liabilities and stockholders’ equity | $ | 1,098,786 | $ | 1,223,336 | ||
5
Blackbaud, Inc.
Consolidated statements of comprehensive income
(Unaudited)
| (dollars in thousands, except per share amounts) | Three months ended September 30, | Nine months ended September 30, | |||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||
| Revenue | |||||||||||||
| Subscriptions | $ | 105,440 | $ | 80,901 | $ | 306,330 | $ | 233,423 | |||||
| Maintenance | 36,410 | 38,209 | 111,019 | 115,732 | |||||||||
| Services | 36,610 | 35,905 | 104,443 | 100,878 | |||||||||
| License fees and other | 4,603 | 3,796 | 10,718 | 12,030 | |||||||||
| Total revenue | 183,063 | 158,811 | 532,510 | 462,063 | |||||||||
| Cost of revenue | |||||||||||||
| Cost of subscriptions | 51,943 | 39,485 | 153,772 | 115,063 | |||||||||
| Cost of maintenance | 5,531 | 6,708 | 16,547 | 21,179 | |||||||||
| Cost of services | 24,102 | 26,235 | 73,136 | 79,121 | |||||||||
| Cost of license fees and other | 1,741 | 1,745 | 3,363 | 4,052 | |||||||||
| Total cost of revenue | 83,317 | 74,173 | 246,818 | 219,415 | |||||||||
| Gross profit | 99,746 | 84,638 | 285,692 | 242,648 | |||||||||
| Operating expenses | |||||||||||||
| Sales, marketing and customer success | 40,690 | 31,139 | 115,707 | 89,424 | |||||||||
| Research and development | 22,510 | 20,561 | 67,973 | 62,003 | |||||||||
| General and administrative | 22,319 | 18,446 | 62,089 | 53,244 | |||||||||
| Amortization | 687 | 524 | 2,147 | 1,536 | |||||||||
| Total operating expenses | 86,206 | 70,670 | 247,916 | 206,207 | |||||||||
| Income from operations | 13,540 | 13,968 | 37,776 | 36,441 | |||||||||
| Interest expense | (2,641 | ) | (1,816 | ) | (8,037 | ) | (5,375 | ) | |||||
| Other (expense) income, net | (15 | ) | 192 | (185 | ) | (1,369 | ) | ||||||
| Income before provision for income taxes | 10,884 | 12,344 | 29,554 | 29,697 | |||||||||
| Income tax provision | 1,950 | 4,433 | 5,323 | 10,459 | |||||||||
| Net income | $ | 8,934 | $ | 7,911 | $ | 24,231 | $ | 19,238 | |||||
| Earnings per share | |||||||||||||
| Basic | $ | 0.19 | $ | 0.17 | $ | 0.53 | $ | 0.42 | |||||
| Diluted | $ | 0.19 | $ | 0.17 | $ | 0.51 | $ | 0.41 | |||||
| Common shares and equivalents outstanding | |||||||||||||
| Basic weighted average shares | 46,159,956 | 45,616,832 | 46,078,306 | 45,576,029 | |||||||||
| Diluted weighted average shares | 47,394,106 | 46,596,714 | 47,268,469 | 46,403,196 | |||||||||
| Dividends per share | $ | 0.12 | $ | 0.12 | $ | 0.36 | $ | 0.36 | |||||
| Other comprehensive income (loss) | |||||||||||||
| Foreign currency translation adjustment | 289 | 168 | 261 | (354 | ) | ||||||||
| Unrealized gain (loss) on derivative instruments, net of tax | 409 | (262 | ) | (378 | ) | (634 | ) | ||||||
| Total other comprehensive income (loss) | 698 | (94 | ) | (117 | ) | (988 | ) | ||||||
| Comprehensive income | $ | 9,632 | $ | 7,817 | $ | 24,114 | $ | 18,250 | |||||
6
Blackbaud, Inc.
Consolidated statements of cash flows
(Unaudited)
| Nine months ended September 30, | ||||||
| (dollars in thousands) | 2016 | 2015 | ||||
| Cash flows from operating activities | ||||||
| Net income | $ | 24,231 | $ | 19,238 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 53,109 | 41,340 | ||||
| Provision for doubtful accounts and sales returns | 3,139 | 4,573 | ||||
| Stock-based compensation expense | 25,005 | 17,899 | ||||
| Deferred taxes | (225 | ) | (2,274 | ) | ||
| Loss on sale of business | — | 1,976 | ||||
| Amortization of deferred financing costs and discount | 718 | 660 | ||||
| Other non-cash adjustments | (634 | ) | (159 | ) | ||
| Changes in operating assets and liabilities, net of acquisition and disposal of businesses: | ||||||
| Accounts receivable | (9,288 | ) | (6,378 | ) | ||
| Prepaid expenses and other assets | (934 | ) | (324 | ) | ||
| Trade accounts payable | 267 | 3,284 | ||||
| Accrued expenses and other liabilities | (12,837 | ) | (6,299 | ) | ||
| Restricted cash due to customers | 119,291 | 76,091 | ||||
| Due to customers | (119,291 | ) | (76,091 | ) | ||
| Deferred revenue | 17,593 | 15,973 | ||||
| Net cash provided by operating activities | 100,144 | 89,509 | ||||
| Cash flows from investing activities | ||||||
| Purchase of property and equipment | (15,459 | ) | (14,560 | ) | ||
| Capitalized software development costs | (19,078 | ) | (10,868 | ) | ||
| Purchase of net assets of acquired companies, net of cash | (3,377 | ) | (520 | ) | ||
| Net cash used in sale of business | — | (521 | ) | |||
| Net cash used in investing activities | (37,914 | ) | (26,469 | ) | ||
| Cash flows from financing activities | ||||||
| Proceeds from issuance of debt | 179,000 | 83,600 | ||||
| Payments on debt | (212,581 | ) | (122,581 | ) | ||
| Debt issuance costs | — | (429 | ) | |||
| Employee taxes paid for withheld shares upon equity award settlement | (10,497 | ) | (2,728 | ) | ||
| Proceeds from exercise of stock options | 10 | 23 | ||||
| Dividend payments to stockholders | (17,108 | ) | (16,883 | ) | ||
| Net cash used in financing activities | (61,176 | ) | (58,998 | ) | ||
| Effect of exchange rate on cash and cash equivalents | 46 | (1,222 | ) | |||
| Net increase in cash and cash equivalents | 1,100 | 2,820 | ||||
| Cash and cash equivalents, beginning of period | 15,362 | 14,735 | ||||
| Cash and cash equivalents, end of period | $ | 16,462 | $ | 17,555 | ||
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Blackbaud, Inc.
Reconciliation of GAAP to non-GAAP financial measures
(Unaudited)
| (dollars in thousands, except per share amounts) | Three months ended September 30, | Nine months ended September 30, | |||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||
| GAAP Revenue | $ | 183,063 | $ | 158,811 | $ | 532,510 | $ | 462,063 | |||||
| Non-GAAP adjustments: | |||||||||||||
| Add: Acquisition-related deferred revenue write-down | — | 1,126 | 3,639 | 7,132 | |||||||||
| Non-GAAP revenue | $ | 183,063 | $ | 159,937 | $ | 536,149 | $ | 469,195 | |||||
| GAAP gross profit | $ | 99,746 | $ | 84,638 | $ | 285,692 | $ | 242,648 | |||||
| GAAP gross margin | 54.5 | % | 53.3 | % | 53.7 | % | 52.5 | % | |||||
| Non-GAAP adjustments: | |||||||||||||
| Add: Acquisition-related deferred revenue write-down | — | 1,126 | 3,639 | 7,132 | |||||||||
| Add: Stock-based compensation expense | 916 | 769 | 2,603 | 2,719 | |||||||||
| Add: Amortization of intangibles from business combinations | 9,862 | 7,545 | 29,670 | 22,750 | |||||||||
| Add: Employee severance | 18 | 527 | 160 | 1,467 | |||||||||
| Subtotal | 10,796 | 9,967 | 36,072 | 34,068 | |||||||||
| Non-GAAP gross profit | $ | 110,542 | $ | 94,605 | $ | 321,764 | $ | 276,716 | |||||
| Non-GAAP gross margin | 60.4 | % | 59.2 | % | 60.0 | % | 59.0 | % | |||||
| GAAP income from operations | $ | 13,540 | $ | 13,968 | $ | 37,776 | $ | 36,441 | |||||
| GAAP operating margin | 7.4 | % | 8.8 | % | 7.1 | % | 7.9 | % | |||||
| Non-GAAP adjustments: | |||||||||||||
| Add: Acquisition-related deferred revenue write-down | — | 1,126 | 3,639 | 7,132 | |||||||||
| Add: Stock-based compensation expense | 8,818 | 6,486 | 25,005 | 17,899 | |||||||||
| Add: Amortization of intangibles from business combinations | 10,549 | 8,069 | 31,817 | 24,286 | |||||||||
| Add: Employee severance | 72 | 631 | 473 | 2,211 | |||||||||
| Add: Acquisition-related integration costs | 917 | 53 | 1,419 | 725 | |||||||||
| Add: Acquisition-related expenses | 152 | 257 | 265 | 1,045 | |||||||||
| Subtotal | 20,508 | 16,622 | 62,618 | 53,298 | |||||||||
| Non-GAAP income from operations | $ | 34,048 | $ | 30,590 | $ | 100,394 | $ | 89,739 | |||||
| Non-GAAP operating margin | 18.6 | % | 19.1 | % | 18.7 | % | 19.1 | % | |||||
| GAAP net income | $ | 8,934 | $ | 7,911 | $ | 24,231 | $ | 19,238 | |||||
| Shares used in computing GAAP diluted earnings per share | 47,394,106 | 46,596,714 | 47,268,469 | 46,403,196 | |||||||||
| GAAP diluted earnings per share | $ | 0.19 | $ | 0.17 | $ | 0.51 | $ | 0.41 | |||||
| Non-GAAP adjustments: | |||||||||||||
| Add: Total Non-GAAP adjustments affecting income from operations | 20,508 | 16,622 | 62,618 | 53,298 | |||||||||
| Add: Loss on sale of business | — | — | — | 1,976 | |||||||||
| Less: Tax impact related to Non-GAAP adjustments | (8,096 | ) | (6,863 | ) | (24,172 | ) | (22,680 | ) | |||||
| Non-GAAP net income | $ | 21,346 | $ | 17,670 | $ | 62,677 | $ | 51,832 | |||||
| Shares used in computing Non-GAAP diluted earnings per share | 47,394,106 | 46,596,714 | 47,268,469 | 46,403,196 | |||||||||
| Non-GAAP diluted earnings per share | $ | 0.45 | $ | 0.38 | $ | 1.33 | $ | 1.12 | |||||
8
Blackbaud, Inc.
Reconciliation of GAAP to Non-GAAP financial measures (continued)
(Unaudited)
| (dollars in thousands) | Three months ended September 30, | Nine months ended September 30, | |||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||
| Detail of certain Non-GAAP adjustments: | |||||||||||||
| Stock-based compensation expense: | |||||||||||||
| Included in cost of revenue: | |||||||||||||
| Cost of subscriptions | $ | 318 | $ | 213 | $ | 904 | $ | 681 | |||||
| Cost of maintenance | 137 | 107 | 391 | 353 | |||||||||
| Cost of services | 461 | 449 | 1,308 | 1,685 | |||||||||
| Total included in cost of revenue | 916 | 769 | 2,603 | 2,719 | |||||||||
| Included in operating expenses: | |||||||||||||
| Sales, marketing and customer success | 1,055 | 768 | 2,972 | 2,273 | |||||||||
| Research and development | 1,674 | 1,145 | 4,874 | 3,309 | |||||||||
| General and administrative | 5,173 | 3,804 | 14,556 | 9,598 | |||||||||
| Total included in operating expenses | 7,902 | 5,717 | 22,402 | 15,180 | |||||||||
| Total stock-based compensation expense | $ | 8,818 | $ | 6,486 | $ | 25,005 | $ | 17,899 | |||||
| Amortization of intangibles from business combinations: | |||||||||||||
| Included in cost of revenue: | |||||||||||||
| Cost of subscriptions | $ | 7,790 | $ | 5,761 | $ | 23,454 | $ | 17,300 | |||||
| Cost of maintenance | 1,332 | 1,000 | 3,996 | 3,160 | |||||||||
| Cost of services | 655 | 698 | 1,965 | 2,007 | |||||||||
| Cost of license fees and other | 85 | 86 | 255 | 283 | |||||||||
| Total included in cost of revenue | 9,862 | 7,545 | 29,670 | 22,750 | |||||||||
| Included in operating expenses | 687 | 524 | 2,147 | 1,536 | |||||||||
| Total amortization of intangibles from business combinations | $ | 10,549 | $ | 8,069 | $ | 31,817 | $ | 24,286 | |||||
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Blackbaud, Inc.
Reconciliation of GAAP to Non-GAAP financial measures (continued)
(Unaudited)
Unaudited calculations of non-GAAP organic revenue growth, non-GAAP organic revenue growth on a constant currency basis and non-GAAP organic recurring revenue growth for the three and nine months ended September 30, 2016, as well as unaudited reconciliations of those non-GAAP measures to their most directly comparable GAAP measures, are as follows:
| (dollars in thousands) | Three months ended September 30, | Nine months ended September 30, | |||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||
| GAAP revenue | $ | 183,063 | $ | 158,811 | $ | 532,510 | $ | 462,063 | |||||
| GAAP revenue growth | 15.3 | % | 15.2 | % | |||||||||
Add: Non-GAAP acquisition-related revenue (1) | — | 10,505 | 3,639 | 33,241 | |||||||||
Less: Revenue from divested businesses (2) | — | — | — | (586 | ) | ||||||||
| Total Non-GAAP adjustments | — | 10,505 | 3,639 | 32,655 | |||||||||
Non-GAAP revenue (3) | $ | 183,063 | $ | 169,316 | $ | 536,149 | $ | 494,718 | |||||
| Non-GAAP organic revenue growth | 8.1 | % | 8.4 | % | |||||||||
Non-GAAP revenue (3) | $ | 183,063 | $ | 169,316 | $ | 536,149 | $ | 494,718 | |||||
Foreign currency impact on Non-GAAP revenue (4) | 963 | — | 3,377 | — | |||||||||
Non-GAAP revenue on constant currency basis (4) | $ | 184,026 | $ | 169,316 | $ | 539,526 | $ | 494,718 | |||||
| Non-GAAP organic revenue growth on constant currency basis | 8.7 | % | 9.1 | % | |||||||||
| GAAP subscriptions revenue | $ | 105,440 | $ | 80,901 | $ | 306,330 | $ | 233,423 | |||||
| GAAP maintenance revenue | $ | 36,410 | $ | 38,209 | 111,019 | 115,732 | |||||||
| GAAP recurring revenue | $ | 141,850 | $ | 119,110 | $ | 417,349 | $ | 349,155 | |||||
| GAAP recurring revenue growth | 19.1 | % | 19.5 | % | |||||||||
Add: Non-GAAP acquisition-related revenue (1) | — | 10,335 | 3,625 | 32,283 | |||||||||
Less: Revenue from divested businesses (2) | — | — | — | (378 | ) | ||||||||
| Total Non-GAAP adjustments | — | 10,335 | 3,625 | 31,905 | |||||||||
| Non-GAAP recurring revenue | $ | 141,850 | $ | 129,445 | $ | 420,974 | $ | 381,060 | |||||
| Non-GAAP organic recurring revenue growth | 9.6 | % | 10.5 | % | |||||||||
| (1) | 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 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. |
| (2) | For businesses divested in the prior fiscal year, non-GAAP organic revenue growth excludes the prior period revenue associated with divested businesses. The exclusion of the prior period revenue is to present the results of the divested business within the results of the combined company for the same period of time in both the prior and current periods. |
| (3) | Non-GAAP revenue for the prior year periods presented herein will not agree to non-GAAP revenue presented in the respective prior period quarterly financial information solely due to the manner in which non-GAAP organic revenue growth is calculated. |
| (4) | To determine non-GAAP organic 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 Canadian Dollar, EURO, British Pound and Australian Dollar. |
Additional details of Blackbaud's methodology for calculating non-GAAP organic revenue growth and non-GAAP organic revenue growth on a constant currency basis can be found on Blackbaud's investor relations page.
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