Document
Document - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 28, 2020 | |
Cover [Abstract] | ||
Document type | 10-Q | |
Document quarterly report | true | |
Document period end date | Sep. 30, 2020 | |
Document transition report | false | |
Entity file number | 000-50600 | |
Entity registrant name | Blackbaud, Inc. | |
Entity incorporation, state or country code | DE | |
Entity tax identification number | 11-2617163 | |
Entity address, address line one | 65 Fairchild Street | |
Entity address, city | Charleston | |
Entity address, state | SC | |
Entity address, postal zip code | 29492 | |
City area code | 843 | |
Local phone number | 216-6200 | |
Title of 12(b) security | Common Stock, $0.001 Par Value | |
Trading symbol | BLKB | |
Security exchange name | NASDAQ | |
Entity current reporting status | Yes | |
Entity interactive data current | Yes | |
Entity filer category | Large Accelerated Filer | |
Entity small business | false | |
Entity emerging growth company | false | |
Entity shell company | false | |
Entity common stock, shares outstanding | 49,568,364 | |
Amendment flag | false | |
Document fiscal year focus | 2020 | |
Document fiscal period focus | Q3 | |
Entity central index key | 0001280058 | |
Current fiscal year end date | --12-31 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 30,563 | $ 31,810 |
Total restricted cash | 203,660 | 545,485 |
Accounts receivable, net of allowance of $10,727 and $5,529 at September 30, 2020 and December 31, 2019, respectively | 96,830 | 88,868 |
Customer funds receivable | 4,901 | 524 |
Prepaid expenses and other current assets | 76,761 | 67,852 |
Total current assets | 412,715 | 734,539 |
Property and equipment, net | 109,469 | 35,546 |
Operating lease right-of-use assets | 30,218 | 104,400 |
Software development costs, net | 108,891 | 101,302 |
Goodwill | 632,840 | 634,088 |
Intangible assets, net | 284,414 | 317,895 |
Other assets | 72,617 | 65,193 |
Total assets | 1,651,164 | 1,992,963 |
Accounts receivable, allowance | 10,727 | 5,529 |
Current liabilities: | ||
Trade accounts payable | 31,775 | 47,676 |
Accrued expenses and other current liabilities | 48,380 | 73,317 |
Due to customers | 207,356 | 546,009 |
Debt, current portion | 10,305 | 7,500 |
Deferred revenue, current portion | 322,452 | 314,335 |
Total current liabilities | 620,268 | 988,837 |
Debt, net of current portion | 497,953 | 459,600 |
Deferred tax liability | 46,989 | 44,594 |
Deferred revenue, net of current portion | 5,803 | 1,802 |
Operating lease liabilities, net of current portion | 25,706 | 95,624 |
Other liabilities | 12,610 | 5,742 |
Total liabilities | 1,209,329 | 1,596,199 |
Commitments and contingencies (see Note 10) | ||
Stockholders' equity: | ||
Preferred stock; 20,000,000 shares authorized, none outstanding | 0 | 0 |
Common stock, $0.001 par value; 180,000,000 shares authorized, 60,903,925 and 60,206,091 shares issued at September 30, 2020 and December 31, 2019, respectively | 61 | 60 |
Additional paid-in capital | 512,269 | 457,804 |
Treasury stock, at cost; 11,337,486 and 11,066,354 shares at September 30, 2020 and December 31, 2019, respectively | (311,951) | (290,665) |
Accumulated other comprehensive loss | (8,872) | (5,290) |
Retained earnings | 250,328 | 234,855 |
Total stockholders' equity | 441,835 | 396,764 |
Total liabilities and stockholders' equity | $ 1,651,164 | $ 1,992,963 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance | $ 10,727 | $ 5,529 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 180,000,000 | 180,000,000 |
Common stock, shares issued | 60,903,925 | 60,206,091 |
Treasury stock, shares | 11,337,486 | 11,066,354 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue | ||||
Revenue | $ 215,001 | $ 221,120 | $ 670,613 | $ 662,584 |
Cost of revenue | ||||
Cost of revenue | 98,685 | 101,797 | 308,489 | 301,887 |
Gross profit | 116,316 | 119,323 | 362,124 | 360,697 |
Operating expenses | ||||
Sales, marketing and customer success | 48,460 | 55,499 | 159,149 | 165,963 |
Research and development | 22,783 | 25,941 | 72,655 | 80,304 |
General and administrative | 34,132 | 28,897 | 89,829 | 84,557 |
Amortization | 749 | 703 | 2,219 | 3,231 |
Restructuring | 105 | 400 | 179 | 3,083 |
Total operating expenses | 106,229 | 111,440 | 324,031 | 337,138 |
Income from operations | 10,087 | 7,883 | 38,093 | 23,559 |
Interest expense | (3,997) | (5,111) | (12,049) | (16,233) |
Other income, net | 542 | 2,158 | 2,242 | 4,521 |
Income before provision for income taxes | 6,632 | 4,930 | 28,286 | 11,847 |
Income tax provision | 1,756 | 364 | 6,948 | 1,263 |
Net income | $ 4,876 | $ 4,566 | $ 21,338 | $ 10,584 |
Earnings per share | ||||
Basic earnings per share | $ 0.10 | $ 0.10 | $ 0.44 | $ 0.22 |
Diluted earnings per share | $ 0.10 | $ 0.09 | $ 0.44 | $ 0.22 |
Common shares and equivalents outstanding | ||||
Basic weighted average shares | 48,271,139 | 47,757,769 | 48,182,799 | 47,668,235 |
Diluted weighted average shares outstanding | 48,859,707 | 48,464,529 | 48,582,068 | 48,223,712 |
Other comprehensive income (loss) | ||||
Foreign currency translation adjustment | $ 4,661 | $ (3,893) | $ (1,954) | $ (5,321) |
Unrealized gain (loss) on derivative instruments, net of tax | 943 | (363) | (1,628) | (3,234) |
Total other comprehensive income (loss) | 5,604 | (4,256) | (3,582) | (8,555) |
Comprehensive income | 10,480 | 310 | 17,756 | 2,029 |
Recurring [Member] | ||||
Revenue | ||||
Revenue | 200,102 | 205,227 | 621,229 | 611,789 |
Cost of revenue | ||||
Cost of revenue | 84,251 | 87,645 | 265,172 | 259,013 |
One-time services and other [Member] | ||||
Revenue | ||||
Revenue | 14,899 | 15,893 | 49,384 | 50,795 |
Cost of revenue | ||||
Cost of revenue | $ 14,434 | $ 14,152 | $ 43,317 | $ 42,874 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows $ in Thousands | 9 Months Ended | |
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | |
Cash flows from operating activities | ||
Net income | $ 21,338 | $ 10,584 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 68,755 | 63,998 |
Provision for doubtful accounts and sales returns | 10,156 | 6,192 |
Stock-based compensation expense | 54,556 | 43,621 |
Deferred taxes | 1,879 | (75) |
Amortization of deferred financing costs and discount | 569 | 564 |
Other non-cash adjustments | 2,203 | 2,047 |
Changes in operating assets and liabilities, net of acquisition and disposal of businesses: | ||
Accounts receivable | (18,319) | (6,375) |
Prepaid expenses and other assets | 4,292 | (5,129) |
Trade accounts payable | (17,203) | (74) |
Accrued expenses and other liabilities | (31,595) | (13,592) |
Deferred revenue | 12,534 | 20,363 |
Net cash provided by operating activities | 109,165 | 122,124 |
Cash flows from investing activities | ||
Purchase of property and equipment | (25,836) | (9,597) |
Capitalized software development costs | (32,028) | (34,513) |
Purchase of net assets of acquired companies, net of cash and restricted cash acquired | 0 | (109,353) |
Other Investing activities | 0 | (500) |
Net cash used in investing activities | (57,864) | (152,963) |
Cash flows from financing activities | ||
Proceeds from issuance of debt | 267,400 | 371,200 |
Payments on debt | (290,999) | (255,625) |
Debt issuance costs | (593) | 0 |
Employee taxes paid for withheld shares upon equity award settlement | (21,286) | (20,279) |
Proceeds from exercise of stock options | 4 | 7 |
Change in due to customers | (337,821) | (215,942) |
Change in customer funds receivable | (4,495) | (6,283) |
Dividend payments to stockholders | (5,960) | (17,705) |
Net cash used in financing activities | (393,750) | (144,627) |
Effect of exchange rate on cash, cash equivalents and restricted cash | (623) | (2,240) |
Net decrease in cash, cash equivalents and restricted cash | (343,072) | (177,706) |
Cash, cash equivalents and restricted cash, beginning of period | 577,295 | 449,846 |
Cash, cash equivalents and restricted cash, end of period | 234,223 | $ 272,140 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | ||
Cash and cash equivalents | 30,563 | |
Total restricted cash | 203,660 | |
Total cash, cash equivalents and restricted cash in the statement of cash flows | $ 234,223 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common stock [Member] | Additional paid-in capital [Member] | Treasury stock [Member] | Accumulated other comprehensive income (loss) [Member] | Retained earnings [Member] |
Balance (in shares) at Dec. 31, 2018 | 59,327,633 | |||||
Balance at Dec. 31, 2018 | $ 373,783 | $ 59 | $ 399,241 | $ (266,884) | $ (5,110) | $ 246,477 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | (1,122) | (1,122) | ||||
Payment of dividends | (5,901) | (5,901) | ||||
Exercise of stock options and stock appreciation rights and vesting of restricted stock units (in shares) | 234,453 | |||||
Exercise of stock options and stock appreciation rights and vesting of restricted stock units | 3 | 3 | ||||
Employee taxes paid for withheld shares upon equity award settlement | (18,400) | (18,400) | ||||
Stock-based compensation | 13,726 | 13,693 | 33 | |||
Restricted stock grants (in shares) | 663,906 | |||||
Restricted stock grants | 1 | $ 1 | ||||
Restricted stock cancellations (in shares) | (43,314) | |||||
Other comprehensive income | 3,658 | 3,658 | ||||
Balance (in shares) at Mar. 31, 2019 | 60,182,678 | |||||
Balance at Mar. 31, 2019 | 365,748 | $ 60 | 412,937 | (285,284) | (1,452) | 239,487 |
Balance (in shares) at Dec. 31, 2018 | 59,327,633 | |||||
Balance at Dec. 31, 2018 | 373,783 | $ 59 | 399,241 | (266,884) | (5,110) | 246,477 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 10,584 | |||||
Balance (in shares) at Sep. 30, 2019 | 60,207,091 | |||||
Balance at Sep. 30, 2019 | 381,457 | $ 60 | 442,803 | (287,163) | (13,665) | 239,422 |
Balance (in shares) at Mar. 31, 2019 | 60,182,678 | |||||
Balance at Mar. 31, 2019 | 365,748 | $ 60 | 412,937 | (285,284) | (1,452) | 239,487 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 7,140 | 7,140 | ||||
Payment of dividends | (5,901) | (5,901) | ||||
Exercise of stock options and stock appreciation rights and vesting of restricted stock units (in shares) | 21,726 | |||||
Exercise of stock options and stock appreciation rights and vesting of restricted stock units | 3 | 3 | ||||
Employee taxes paid for withheld shares upon equity award settlement | (1,360) | (1,360) | ||||
Stock-based compensation | 15,029 | 15,010 | 19 | |||
Restricted stock grants (in shares) | 12,405 | |||||
Restricted stock grants | 0 | $ 0 | ||||
Restricted stock cancellations (in shares) | (29,746) | |||||
Other comprehensive income | (7,957) | (7,957) | ||||
Balance (in shares) at Jun. 30, 2019 | 60,187,063 | |||||
Balance at Jun. 30, 2019 | 372,702 | $ 60 | 427,950 | (286,644) | (9,409) | 240,745 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 4,566 | 4,566 | ||||
Payment of dividends | (5,903) | (5,903) | ||||
Exercise of stock options and stock appreciation rights and vesting of restricted stock units (in shares) | 5,315 | |||||
Exercise of stock options and stock appreciation rights and vesting of restricted stock units | 1 | 1 | ||||
Employee taxes paid for withheld shares upon equity award settlement | (519) | (519) | ||||
Stock-based compensation | 14,866 | 14,852 | 14 | |||
Restricted stock grants (in shares) | 37,920 | |||||
Restricted stock grants | 0 | $ 0 | ||||
Restricted stock cancellations (in shares) | (23,207) | |||||
Other comprehensive income | (4,256) | (4,256) | ||||
Balance (in shares) at Sep. 30, 2019 | 60,207,091 | |||||
Balance at Sep. 30, 2019 | 381,457 | $ 60 | 442,803 | (287,163) | (13,665) | 239,422 |
Balance (in shares) at Dec. 31, 2019 | 60,206,091 | |||||
Balance at Dec. 31, 2019 | 396,764 | $ 60 | 457,804 | (290,665) | (5,290) | 234,855 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 4,639 | 4,639 | ||||
Payment of dividends | (5,960) | (5,960) | ||||
Exercise of stock options and stock appreciation rights and vesting of restricted stock units (in shares) | 210,057 | |||||
Exercise of stock options and stock appreciation rights and vesting of restricted stock units | 1 | 1 | ||||
Employee taxes paid for withheld shares upon equity award settlement | (19,782) | (19,782) | ||||
Stock-based compensation | 13,580 | 13,539 | 41 | |||
Restricted stock grants (in shares) | 563,947 | |||||
Restricted stock grants | 1 | $ 1 | ||||
Restricted stock cancellations (in shares) | (47,456) | |||||
Other comprehensive income | (8,850) | (8,850) | ||||
Balance (in shares) at Mar. 31, 2020 | 60,932,639 | |||||
Balance at Mar. 31, 2020 | 380,393 | $ 61 | 471,344 | (310,447) | (14,140) | 233,575 |
Balance (in shares) at Dec. 31, 2019 | 60,206,091 | |||||
Balance at Dec. 31, 2019 | 396,764 | $ 60 | 457,804 | (290,665) | (5,290) | 234,855 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 21,338 | |||||
Balance (in shares) at Sep. 30, 2020 | 60,903,925 | |||||
Balance at Sep. 30, 2020 | 441,835 | $ 61 | 512,269 | (311,951) | (8,872) | 250,328 |
Balance (in shares) at Mar. 31, 2020 | 60,932,639 | |||||
Balance at Mar. 31, 2020 | 380,393 | $ 61 | 471,344 | (310,447) | (14,140) | 233,575 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 11,823 | 11,823 | ||||
Exercise of stock options and stock appreciation rights and vesting of restricted stock units (in shares) | 7,111 | |||||
Exercise of stock options and stock appreciation rights and vesting of restricted stock units | 3 | 3 | ||||
Employee taxes paid for withheld shares upon equity award settlement | (1,214) | (1,214) | ||||
Stock-based compensation | 20,133 | 20,103 | 30 | |||
Restricted stock grants (in shares) | 20,776 | |||||
Restricted stock grants | 0 | $ 0 | ||||
Restricted stock cancellations (in shares) | (59,426) | |||||
Other comprehensive income | (336) | (336) | ||||
Balance (in shares) at Jun. 30, 2020 | 60,901,100 | |||||
Balance at Jun. 30, 2020 | 410,802 | $ 61 | 491,450 | (311,661) | (14,476) | 245,428 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 4,876 | 4,876 | ||||
Exercise of stock options and stock appreciation rights and vesting of restricted stock units (in shares) | 906 | |||||
Exercise of stock options and stock appreciation rights and vesting of restricted stock units | 0 | 0 | ||||
Employee taxes paid for withheld shares upon equity award settlement | (290) | (290) | ||||
Stock-based compensation | 20,843 | 20,819 | 24 | |||
Restricted stock grants (in shares) | 48,783 | |||||
Restricted stock grants | 0 | $ 0 | ||||
Restricted stock cancellations (in shares) | (46,864) | |||||
Other comprehensive income | 5,604 | 5,604 | ||||
Balance (in shares) at Sep. 30, 2020 | 60,903,925 | |||||
Balance at Sep. 30, 2020 | $ 441,835 | $ 61 | $ 512,269 | $ (311,951) | $ (8,872) | $ 250,328 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Stockholders' Equity (Parenthetical) - shares | 3 Months Ended | |||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||||||
Surrender of shares upon vesting of restricted stock and restricted stock units and exercise of stock appreciation rights | 4,574 | 21,200 | 245,358 | 5,795 | 17,119 | 239,311 |
Stockholders' Equity (Changes i
Stockholders' Equity (Changes in Accumulated Other Comprehensive Loss by Component) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Accumulated other comprehensive (loss) income, beginning of period | $ (14,476) | $ (9,409) | $ (5,290) | $ (5,110) |
Translation adjustments | 4,661 | (3,893) | (1,954) | (5,321) |
Accumulated other comprehensive income (loss), end of period | (8,872) | (13,665) | (8,872) | (13,665) |
Gains and losses on cash flow hedges [Member] | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Accumulated other comprehensive (loss) income, beginning of period | (3,894) | (1,373) | (1,323) | 1,498 |
Other comprehensive (loss) income before reclassifications, net of tax effects | 1 | (219) | (3,472) | (2,741) |
Amounts reclassified from accumulated other comprehensive income (loss) to interest expense | 1,276 | (196) | 2,499 | (669) |
Tax (benefit) expense included in provision for income taxes | (334) | 52 | (655) | 176 |
Total amounts reclassified from accumulated other comprehensive income (loss) | 942 | (144) | 1,844 | (493) |
Net current-period other comprehensive income (loss) | 943 | (363) | (1,628) | (3,234) |
Accumulated other comprehensive income (loss), end of period | (2,951) | (1,736) | (2,951) | (1,736) |
Other comprehensive income (loss), unrealized gain (loss) on derivatives arising during period, tax | 0 | 78 | 1,225 | 982 |
Foreign currency translation adjustment [Member] | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Accumulated other comprehensive (loss) income, beginning of period | (10,582) | (8,036) | (3,967) | (6,608) |
Translation adjustments | 4,661 | (3,893) | (1,954) | (5,321) |
Accumulated other comprehensive income (loss), end of period | $ (5,921) | $ (11,929) | $ (5,921) | $ (11,929) |
Organization
Organization | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | 1. Organization We are the world’s leading cloud software company powering social good. Serving the entire social good community—nonprofits, higher education institutions, K–12 schools, healthcare organizations, faith communities, arts and cultural organizations, foundations, companies and individual change agents—we connect and empower organizations to increase their impact through cloud software, services, expertise and data intelligence. Our portfolio is tailored to the unique needs of vertical markets, with solutions for fundraising and CRM, marketing, advocacy, peer-to-peer fundraising, corporate social responsibility, school management, ticketing, grantmaking, financial management, payment processing and analytics. Serving the industry for more than three decades, we are headquartered in Charleston, South Carolina, and have operations in the United States, Australia, Canada, Costa Rica and the United Kingdom. |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 2. Basis of Presentation Unaudited condensed consolidated interim financial statements The accompanying condensed consolidated interim financial statements have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC") for interim financial reporting. These consolidated statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to state fairly the consolidated balance sheets, consolidated statements of comprehensive income, consolidated statements of cash flows and consolidated statements of stockholders’ equity, for the periods presented in accordance with accounting principles generally accepted in the United States ("U.S.") ("GAAP"). The consolidated balance sheet at December 31, 2019 has been derived from the audited consolidated financial statements at that date. Operating results and cash flows for the nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2020, or any other future period. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted in accordance with the rules and regulations for interim reporting of the SEC. These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019, and other forms filed with the SEC from time to time. Basis of consolidation The condensed consolidated financial statements include the accounts of Blackbaud, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Reportable segment We report our operating results and financial information in one operating and reportable segment. Our chief operating decision maker uses consolidated financial information to make operating decisions, assess financial performance and allocate resources. Our chief operating decision maker is our chief executive officer ("CEO"). Risks and uncertainties Impact of COVID-19 We are subject to risks and uncertainties as a result of the global COVID-19 pandemic. We expect that COVID-19 will impact all of our vertical markets across all of our geographies to some degree, but the significance and duration of the impact on our business cannot be determined at this time due to numerous uncertainties, including the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions and business closures, the effectiveness of actions taken to contain the disease and other unforeseeable consequences. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. On an ongoing basis, we reconsider and evaluate our estimates and assumptions, including those that impact revenue recognition, long-lived and intangible assets, income taxes, business combinations, stock-based compensation, capitalization of software development costs, our allowances for credit losses and sales returns, costs of obtaining contracts, valuation of derivative instruments and loss contingencies, among others. Changes in the facts or circumstances underlying these estimates due to COVID-19 could result in material changes and actual results could materially differ from these estimates. Response to COVID-19 To better enable us to weather the extraordinary business challenges brought about by the global COVID-19 pandemic, to protect the safety and welfare of our employees, and to further effect our long-term strategy to deliver the greatest value to our stockholders, we have taken several actions. These initial measures taken are expected to provide us the financial flexibility needed to manage a wide array of outcomes that may result from the pandemic. Some of these actions include the following: • Temporarily closed our offices worldwide and transitioned our employees to work remotely; • Rescinded our previously announced policy to pay an annual dividend at a rate of $0.48 per share of common stock and discontinued the declaration and payment of all cash dividends, beginning with the second quarter of 2020 and thereafter until such time, if any, as our Board of Directors may otherwise determine in its sole discretion; • Temporarily suspended our 401(k)-match program, whereby we have historically matched 50% of qualified U.S. employees' contributions to our 401(k) plan up to 6% of their salaries, effective with the payroll period commencing April 1, 2020; • Temporarily froze our hiring efforts and implemented a modest and targeted headcount reduction, though we have since began backfilling key roles, including engineering positions; • Michael Gianoni, our President and Chief Executive Officer, elected to forego receipt of all but that portion of his base salary necessary to fund, on a pre-tax basis, his contributions to continue to participate in our health benefits plan, between April 1, 2020 and June 16, 2020; • Restricted non-essential employee travel and put in place other operating cost containment actions; • All of our employees with a base salary equal to or less than $75 thousand received financial support in the form of a one-time bonus of $1 thousand on April 30, 2020; • On May 1, 2020, we granted restricted stock units with a total grant date fair value of $8.3 million to our employees that were eligible for base salary merit increases in lieu of such increases, which will vest on May 1, 2021 subject to the recipient's continued employment with us; • On May 1, 2020, we granted performance-based restricted stock units with a total grant date fair value of $34.4 million to our employees that were eligible for a 2020 cash bonus plan in lieu of such cash bonus, which may be earned and become eligible for vesting on May 1, 2021 subject to meeting certain performance conditions and the recipient's continued employment with us; • During the third quarter of 2020, we adjusted our workforce strategy to provide more flexibility for our employees to work remotely when our offices reopen. This change also expands our access to a larger and more diverse talent pool, empowers our leaders to make decisions based on skills and business need rather than location, and it is expected to create efficiencies within our real estate strategy as we optimize our footprint and shift toward more collaborative workspaces within our offices. Recently adopted accounting pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 requires certain types of financial instruments, including trade receivables, to be presented at the net amount expected to be collected based on historical events, current conditions and forward-looking information. We adopted ASU 2016-13 as of the January 1, 2020 effective date and the adoption did not have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). ASU 2018-15 aligns the accounting for implementation costs related to a hosting arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software. We adopted ASU 2018-15 prospectively as of the January 1, 2020 effective date and the adoption did not have a material impact on our consolidated financial statements. Recently issued accounting pronouncements There are no recently issued accounting pronouncements that are expected to have a material impact on our financial position or results of operations when adopted in the future. Summary of significant accounting policies Except for the accounting policies for allowance for credit losses and allowance for sales returns below that were updated as a result of adopting ASU 2016-13, there have been no new or material changes to our significant accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 20, 2020. Allowance for credit losses Our accounts receivable consist of a single portfolio segment. Accounts receivable are recorded at original invoice amounts less an allowance for credit losses, an amount we estimate to be sufficient to provide adequate protection against lifetime expected losses resulting from extending credit to our customers. In judging the adequacy of the allowance for credit losses, we consider multiple factors including historical bad debt experience, the current aging of our receivables and current economic conditions that may affect our customers' ability to pay. A considerable amount of judgment is required in assessing these factors and if any receivables were to deteriorate, an additional provision for credit losses could be required. Accounts are written off after all means of collection are exhausted and recovery is considered remote. Provisions for credit losses are recorded in general and administrative expense. Below is a summary of the changes in our allowance for credit losses. (in thousands) Balance at beginning of year (1) Provision/ Write-off Recovery Balance at September 30, 2020 2020 $ 4,011 $ 6,303 $ (971) $ 302 $ 9,645 (1) Upon adoption of ASU 2016-13 at January 1, 2020, we reclassified certain balances previously disclosed within the allowance for sales returns to the allowance for credit losses, as these amounts reflect the credit risk associated with our accounts receivable. The increase in our allowance for credit losses during the nine months ended September 30, 2020 was primarily due to an increase in the aging of our receivables and observed changes in some of our customers' payment behavior associated with the COVID-19 pandemic, which may continue in the near term. The amount of write-offs during the nine months ended September 30, 2020 was lower than the amount of write-offs during the same period in 2019 as we temporarily suspended sending past due customer accounts to collections during the second and third quarters due to payment delays related to COVID-19. Allowance for sales returns We maintain a reserve for returns and credits which is estimated based on several factors including historical experience, known credits yet to be issued, the aging of customer accounts and the nature of service level commitments. A considerable amount of judgment is required in assessing these factors. Provisions for sales returns and credits are charged against the related revenue items. Below is a summary of the changes in our allowance for sales returns. (in thousands) Balance at (1) Provision/ Deduction Balance at September 30, 2020 2020 $ 1,518 $ 3,853 $ (4,289) $ 1,082 (1) As discussed above, we reclassified certain balances previously disclosed within the allowance for sales returns to the allowance for credit losses upon adoption of ASU 2016-13 at January 1, 2020. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | 3. Goodwill and Other Intangible Assets The change in goodwill during the nine months ended September 30, 2020, consisted of the following: (dollars in thousands) Total Balance at December 31, 2019 $ 634,088 Effect of foreign currency translation (1,248) Balance at September 30, 2020 $ 632,840 |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 4. Earnings Per Share We compute basic earnings per share by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares and dilutive potential common shares outstanding during the period. Diluted earnings per share reflect the assumed exercise, settlement and vesting of all dilutive securities using the “treasury stock method” except when the effect is anti-dilutive. Potentially dilutive securities consist of shares issuable upon the exercise of stock options, settlement of stock appreciation rights and vesting of restricted stock awards and units. The following table sets forth the computation of basic and diluted earnings per share: Three months ended September 30, Nine months ended September 30, (dollars in thousands, except per share amounts) 2020 2019 2020 2019 Numerator: Net income $ 4,876 $ 4,566 $ 21,338 $ 10,584 Denominator: Weighted average common shares 48,271,139 47,757,769 48,182,799 47,668,235 Add effect of dilutive securities: Stock-based awards 588,568 706,760 399,269 555,477 Weighted average common shares assuming dilution 48,859,707 48,464,529 48,582,068 48,223,712 Earnings per share: Basic $ 0.10 $ 0.10 $ 0.44 $ 0.22 Diluted $ 0.10 $ 0.09 $ 0.44 $ 0.22 Anti-dilutive shares excluded from calculations of diluted earnings per share 915,226 227,523 1,036,445 252,282 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 5. Fair Value Measurements We use a three-tier fair value hierarchy to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: • Level 1 - Quoted prices for identical assets or liabilities in active markets; • Level 2 - Quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and • Level 3 - Valuations derived from valuation techniques in which one or more significant inputs are unobservable. Recurring fair value measurements Assets and liabilities that are measured at fair value on a recurring basis consisted of the following, as of the dates indicated below: Fair value measurement using (dollars in thousands) Level 1 Level 2 Level 3 Total Fair value as of September 30, 2020 Financial liabilities: Derivative instruments $ — $ 3,957 $ — $ 3,957 Total financial liabilities $ — $ 3,957 $ — $ 3,957 Fair value as of December 31, 2019 Financial liabilities: Derivative instruments $ — $ 1,757 $ — $ 1,757 Total financial liabilities $ — $ 1,757 $ — $ 1,757 Our derivative instruments within the scope of Accounting Standards Codification ("ASC") 815, Derivatives and Hedging , are required to be recorded at fair value. Our derivative instruments that are recorded at fair value include interest rate swaps. The fair value of our interest rate swaps was based on model-driven valuations using LIBOR rates, which are observable at commonly quoted intervals. Accordingly, our interest rate swaps are classified within Level 2 of the fair value hierarchy. The Financial Conduct Authority in the U.K. has stated that it plans to phase out LIBOR by the end of calendar year 2021. We do not currently anticipate a significant impact to our financial position or results of operations as a result of this action as we expect that our financial contracts currently indexed to LIBOR will either expire or be modified before the phase out occurs. We believe the carrying amounts of our cash and cash equivalents, restricted cash, accounts receivable, trade accounts payable, accrued expenses and other current liabilities and due to customers approximate their fair values at September 30, 2020 and December 31, 2019, due to the immediate or short-term maturity of these instruments. We believe the carrying amount of our debt approximates its fair value at September 30, 2020 and December 31, 2019, as the debt bears interest rates that approximate market value. As LIBOR rates are observable at commonly quoted intervals, our debt under the 2017 Credit Facility (as defined below) is classified within Level 2 of the fair value hierarchy. Our fixed rate debt is also classified within Level 2 of the fair value hierarchy. We did not transfer any assets or liabilities among the levels within the fair value hierarchy during the nine months ended September 30, 2020. Additionally, we did not hold any Level 3 assets or liabilities during the nine months ended September 30, 2020. Non-recurring fair value measurements Assets and liabilities that are measured at fair value on a non-recurring basis include intangible assets, goodwill and operating lease right-of-use ("ROU") assets, which are recognized at fair value during the period in which an acquisition is completed or at lease commencement, from updated estimates and assumptions during the measurement period, or when they are considered to be impaired. These non-recurring fair value measurements, primarily for long-lived assets, intangible assets acquired and operating lease ROU assets, are based on Level 3 unobservable inputs. In the event of an impairment, we determine the fair value of these assets other than goodwill using a discounted cash flow approach, which contains significant unobservable inputs and, therefore, is considered a Level 3 fair value measurement. The unobservable inputs in the analysis generally include future cash flow projections and a discount rate. For goodwill impairment testing, we estimate fair value using market-based methods including the use of market capitalization and consideration of a control premium. During the three months ended June 30, 2020, we recorded an impairment charge of $4.3 million against certain previously capitalized software development costs that reduced the carrying value of those assets to zero. The impairment charge is reflected in cost of recurring revenue and resulted primarily from our decision to accelerate the end of customer support for certain solutions. During the nine months ended September 30, 2020, we also recorded $2.9 million in impairments of operating lease ROU assets associated with certain leased office space we have ceased using or determined we will cease using. These impairment charges are reflected in general and administrative expense. There were no other non-recurring fair value adjustments to our long-lived assets, intangible assets, operating lease ROU assets and goodwill during the nine months ended September 30, 2020. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 6. Property and Equipment Purchase of Headquarters Facility In August 2020, we completed the purchase of the building, fixtures and other improvements and parcels of land of our headquarters facility in Charleston, South Carolina (the "Headquarters Facility"), pursuant to a Purchase and Sale Agreement (the "PSA") with HPBB1, LLC, a Georgia limited liability company (the "Seller") (the "Transaction"). Prior to the completion of the Transaction, we leased the Headquarters facility from the Seller. We paid the Seller a purchase price that included the assumption of the Seller's obligations of $61.1 million, cash of $15.2 million and certain lender fees, closing costs, adjustments and prorations as set forth in the PSA. We funded the cash portion of the purchase price through borrowings under the 2017 Credit Facility (as defined below). We capitalized the insignificant direct transaction costs we incurred as a component of the assets acquired. As a result of the Transaction, we derecognized the ROU asset and lease liability associated with the former lease and recorded the following long-lived assets on a relative fair value basis in property and equipment, net upon closing: (dollars in thousands) Assets Estimated useful life (years) Land $ 9,548 — Building 61,284 39 Building systems 4,393 7 - 15 Total long-lived assets $ 75,225 Depreciation expense Depreciation expense was $5.1 million and $12.3 million for the three and nine months ended September 30, 2020, respectively, and $3.8 million and $11.3 million for the three and nine months ended September 30, 2019, respectively. |
Consolidated Financial Statemen
Consolidated Financial Statement Details | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidated Financial Statement Details | 7. Consolidated Financial Statement Details Restricted cash (dollars in thousands) September 30, December 31, Restricted cash due to customers $ 202,455 $ 545,485 Real estate escrow balances 1,205 — Total restricted cash 203,660 545,485 Prepaid expenses and other assets (dollars in thousands) September 30, December 31, Costs of obtaining contracts (1)(2) $ 86,119 $ 90,764 Prepaid software maintenance and subscriptions (3) 28,999 17,384 Implementation costs for cloud computing arrangements, net (4)(5) 11,372 7,294 Unbilled accounts receivable 9,711 6,233 Receivables for probable insurance recoveries (6) 2,949 — Prepaid insurance 2,079 1,585 Taxes, prepaid and receivable 847 849 Security deposits 808 885 Other assets 6,494 8,051 Total prepaid expenses and other assets 149,378 133,045 Less: Long-term portion 72,617 65,193 Prepaid expenses and other current assets $ 76,761 $ 67,852 (1) Amortization expense from costs of obtaining contracts was $9.4 million and $28.2 million for the three and nine months ended September 30, 2020, respectively, and $9.2 million and $28.6 million for the three and nine months ended September 30, 2019, respectively. (2) The current portion of costs of obtaining contracts as of September 30, 2020 and December 31, 2019 was $32.1 million and $33.0 million, respectively. (3) The current portion of prepaid software maintenance and subscriptions as of September 30, 2020 and December 31, 2019 was $23.5 million and $16.1 million, respectively. (4) These costs, which were previously included in prepaid software maintenance and subscriptions, primarily relate to the multi-year implementations of our new global enterprise resource planning and customer relationship management systems. (5) Amortization expense from capitalized cloud computing implementation costs was insignificant for the three and nine months ended September 30, 2020 and 2019, respectively. Accumulated amortization for these costs was $0.7 million as of September 30, 2020 and insignificant as of December 31, 2019. (6) See discussion of the Security Incident at Note 10. Accrued expenses and other liabilities (dollars in thousands) September 30, December 31, Operating lease liabilities, current portion $ 16,633 $ 19,784 Accrued bonuses (1) — 24,617 Accrued commissions and salaries 2,985 6,980 Taxes payable 13,576 6,835 Derivative instruments 3,957 1,757 Customer credit balances 5,677 4,505 Unrecognized tax benefit 3,833 3,758 Accrued vacation costs 2,300 2,232 Accrued health care costs 2,781 2,399 Other liabilities 9,248 6,192 Total accrued expenses and other liabilities 60,990 79,059 Less: Long-term portion 12,610 5,742 Accrued expenses and other current liabilities $ 48,380 $ 73,317 (1) In March 2020, we reduced our accrued bonuses due to the payment of bonuses from the prior year and, in response to the global COVID-19 pandemic, determined to replace our 2020 cash bonus plans with performance-based equity awards (see Note 2). Other income, net Three months ended September 30, Nine months ended September 30, (dollars in thousands) 2020 2019 2020 2019 Interest income $ 767 $ 1,247 $ 1,399 $ 2,426 Other (expense) income, net (225) 911 843 2,095 Other income, net $ 542 $ 2,158 $ 2,242 $ 4,521 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | 8. Debt The following table summarizes our debt balances and the related weighted average effective interest rates, which includes the effect of interest rate swap agreements. Debt balance at Weighted average (dollars in thousands) September 30, December 31, September 30, December 31, Credit facility: Revolving credit loans $ 169,200 $ 187,000 2.21 % 3.11 % Term loans 275,625 281,250 2.77 % 3.22 % Real estate loans 60,890 — 5.22 % — % Other debt 3,926 — 5.00 % — % Total debt 509,641 468,250 2.89 % 3.18 % Less: Unamortized discount and debt issuance costs 1,383 1,150 Less: Debt, current portion 10,305 7,500 2.39 % 3.05 % Debt, net of current portion $ 497,953 $ 459,600 2.90 % 3.18 % 2017 credit facility In June 2017, we entered into a five-year $700.0 million senior credit facility (the "2017 Credit Facility"). At September 30, 2020, we were in compliance with our debt covenants under the 2017 Credit Facility. Real estate loans In August 2020, we completed the purchase of our Headquarters Facility. As part of the purchase price, we assumed the Seller’s obligations under (i) a 5.12% Senior Secured Note, Series A1, in the outstanding principal amount of $49.1 million, dated May 2, 2018, and (ii) a 5.61% Senior Secured Note, Series A2, in the outstanding principal amount of $12.0 million, dated May 2, 2018, or an aggregate outstanding principal amount of $61.1 million (collectively, the “Real Estate Loans”). The Series A1 Note provides that we will pay the remaining principal amount due thereunder together with interest thereon at the rate indicated above, in monthly installments until it matures in April 2038. The Series A2 Note provides that we pay interest only in monthly installments at the rate indicated above with the principal amount due at maturity in April 2038. The Real Estate Loans are secured by a first priority lien on the real property constituting the Headquarters Facility. Our assumption of the Real Estate Loans was a noncash investing and financing transaction and, therefore, is not reflected in the statement of cash flows. At September 30, 2020, we were in compliance with our debt covenants under the Real Estate Loans. Other debt In December 2019, we entered into a 51-month $2.2 million agreement to finance our purchase of software and related services for our internal use. The agreement is a non-interest-bearing note requiring four equal annual payments, where the first payment was due in January 2020. Interest associated with the note has been imputed at the rate we would incur for amounts borrowed under the 2017 Credit Facility. In January 2020, we entered into an additional 39-month $3.5 million agreement to finance our purchase of software and related services for our internal use. The agreement is a non-interest-bearing note requiring three equal annual payments, where the first payment was due in March 2020. Interest associated with the note has been imputed at the rate we would incur for amounts borrowed under the 2017 Credit Facility. As of September 30, 2020, the required annual maturities related to the 2017 Credit Facility, the Real Estate Loans and our other debt were as follows: Years ending December 31, Annual 2020 - remaining $ 2,139 2021 10,340 2022 438,435 2023 1,983 2024 1,609 Thereafter 55,135 Total required maturities $ 509,641 |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives Instruments | 9. Derivative Instruments Cash flow hedges We generally use derivative instruments to manage our variable interest rate risk. We have entered into interest rate swap agreements, which effectively convert portions of our variable rate debt under the 2017 Credit Facility to a fixed rate for the term of the swap agreements. We designated each of the interest rate swap agreements as a cash flow hedge at the inception of the contracts. The terms and notional values of our derivative instruments were as follows as of September 30, 2020: (dollars in thousands) Term of derivative instrument Notional Derivative instruments designated as hedging instruments: Interest rate swap July 2017 - July 2021 $ 150,000 Interest rate swap February 2018 - June 2021 50,000 Interest rate swap June 2019 - June 2021 75,000 $ 275,000 The fair values of our derivative instruments were as follows as of: Liability derivatives (dollars in thousands) Balance sheet location September 30, December 31, Derivative instruments designated as hedging instruments: Interest rate swaps, current portion Accrued expenses $ 3,957 $ — Interest rate swaps, long-term portion Other liabilities — 1,757 Total derivative instruments designated as hedging instruments $ 3,957 $ 1,757 The effects of derivative instruments in cash flow hedging relationships were as follows: Gain (loss) recognized Location Gain (loss) reclassified from accumulated (dollars in thousands) September 30, Three months ended September 30, Nine months ended September 30, 2019 Interest rate swaps $ (3,957) Interest expense $ (1,276) $ (2,499) September 30, Three months ended September 30, 2019 Nine months ended September 30, 2019 Interest rate swaps $ (2,318) Interest expense $ 196 $ 669 Our policy requires that derivatives used for hedging purposes be designated and effective as a hedge of the identified risk exposure at the inception of the contract. Accumulated other comprehensive income (loss) includes unrealized gains or losses from the change in fair value measurement of our derivative instruments each reporting period and the related income tax expense or benefit. Changes in the fair value measurements of the derivative instruments and the related income tax expense or benefit are reflected as adjustments to accumulated other comprehensive income (loss) until the actual hedged expense is incurred or until the hedge is terminated at which point the unrealized gain (loss) is reclassified from accumulated other comprehensive income (loss) to current earnings. The estimated accumulated other comprehensive loss as of September 30, 2020 that is expected to be reclassified into earnings within the next twelve months is $4.0 million. There were no ineffective portions of our interest rate swap derivatives during the nine months ended September 30, 2020 and 2019. See Note 13 for a summary of the changes in accumulated other comprehensive income (loss) by component. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. Commitments and Contingencies Leases We have operating leases for corporate offices, subleased offices and certain equipment and furniture. In August 2020, we completed the purchase of our Headquarters Facility that we previously leased (see Note 6). As of September 30, 2020, we had operating leases for equipment that had not yet commenced with future rent payments of $1.3 million. These operating leases are expected to commence during 2020 with lease terms of 3 to 5 years. The components of lease expense were as follows: Three months ended September 30, Nine months ended September 30, (dollars in thousands) 2020 2019 2020 2019 Operating lease cost (1) $ 12,128 $ 6,786 $ 24,720 $ 18,680 Variable lease cost 1,120 923 3,491 2,901 Sublease income (732) (803) (2,585) (2,262) Net lease cost $ 12,516 $ 6,906 $ 25,626 $ 19,319 (1) Includes short-term lease costs, which were immaterial. During the third quarter of 2020, we adjusted our workforce strategy to provide more flexibility for our employees to work remotely when our offices reopen. This change is expected to create efficiencies within our real estate strategy as we optimize our footprint and shift toward more collaborative workspaces within our offices. As a result, during the three months ended September 30, 2020, we reduced the estimated useful lives of our operating lease ROU assets for certain of our office locations we expect to exit, which accounts for a substantial portion of the increase in operating lease costs during the periods. For these same office locations, we also reduced the estimated useful lives of certain facilities-related fixed assets, which resulted in an increase in depreciation expense (see Note 6). Maturities of our operating lease liabilities as of September 30, 2020 were as follows: Years ending December 31, Operating leases 2020 – remaining $ 5,055 2021 16,745 2022 12,034 2023 9,107 2024 2,491 Thereafter 535 Total lease payments 45,967 Less: Amount representing interest 3,628 Present value of future payments $ 42,339 Other commitments The term loans under the 2017 Credit Facility require periodic principal payments. The balance of the term loans and any amounts drawn on the revolving credit loans are due upon maturity of the 2017 Credit Facility in June 2022. The Real Estate Loans also require periodic principal payments and the balance of the Real Estate Loans are due upon maturity in April 2038. We have contractual obligations for third-party technology used in our solutions and for other services we purchase as part of our normal operations. In certain cases, these arrangements require a minimum annual purchase commitment by us. As of September 30, 2020, the remaining aggregate minimum purchase commitment under these arrangements was approximately $85.9 million through 2024. Solution and service indemnifications In the ordinary course of business, we provide certain indemnifications of varying scope to customers against claims of intellectual property infringement made by third parties arising from the use of our solutions or services. If we determine that it is probable that a loss has been incurred related to solution or service indemnifications, any such loss that could be reasonably estimated would be recognized. We have not identified any losses and, accordingly, we have not recorded a liability related to these indemnifications. Legal proceedings We are subject to legal proceedings and claims that arise in the ordinary course of business, as well as certain other non-ordinary course proceedings, claims and inquiries, as described below. We make a provision for a loss contingency when it is both probable that a material liability has been incurred and the amount of the loss can be reasonably estimated. If only a range of estimated losses can be determined, we accrue an amount within the range that, in our judgment, reflects the most likely outcome; if none of the estimates within that range is a better estimate than any other amount, we accrue the low end of the range. For proceedings in which an unfavorable outcome is reasonably possible but not probable and an estimate of the loss or range of losses arising from the proceeding can be made, we disclose such an estimate, if material. If such a loss or range of losses is not reasonably estimable, we disclose that fact. We review any such loss contingency provisions at least quarterly and adjust them to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. We recognize insurance recoveries, if any, when they are probable of receipt. All associated legal costs are expensed as incurred. Based on our analysis as described above, we have determined as of September 30, 2020, that no provision for liability nor disclosure is required related to any legal proceeding, claim or inquiry because (a) there is not a reasonable possibility that a loss exceeding amounts already recognized (if any) may be incurred with respect to such claim; (b) a reasonably possible loss or range of loss cannot be estimated; or (c) such estimate is immaterial. Legal proceedings are inherently unpredictable. However, we believe that we have valid defenses with respect to the legal matters pending or threatened against us and intend to defend ourselves vigorously against all claims asserted. We further believe that the amount or range of reasonably possible losses related to such pending or threatened legal proceedings will not have a material adverse effect on our business, operating results, cash flows, or financial condition should such litigation be resolved unfavorably. It is possible, nevertheless, that our consolidated financial position, results of operations or cash flows could be negatively affected in any particular period by an unfavorable resolution of one or more of such legal proceedings. Security incident As previously disclosed, we are subject to risks and uncertainties as a result of a ransomware attack against us in May 2020 in which a cybercriminal removed a copy of a subset of data from our self-hosted environment (the "Security Incident"). Based on the nature of the Security Incident, our research and third party (including law enforcement) investigation, we have no reason to believe that any data went beyond the cybercriminal, was or will be misused, or will be disseminated or otherwise made available publicly. Our investigation into the Security Incident by our cybersecurity team and third-party forensic advisors remains ongoing. In the three months ended September 30, 2020, we recorded $3.2 million of expenses and $2.9 million of accrued insurance recoveries related to the Security Incident, and in the nine months ended September 30, 2020, we recorded $3.6 million of expenses and $2.9 million of accrued insurance recoveries related to the Security Incident. Recorded expenses consisted primarily of payments to third-party service providers and consultants, including legal fees, and enhancements to our cybersecurity measures. Due to the time required to submit and process such insurance claims, we have not yet received any of the accrued insurance recoveries. We present expenses and insurance recoveries related to the Security Incident in general and administrative expense on our condensed consolidated statements of comprehensive income. We expect to continue to experience increased costs related to our response to the Security Incident and our efforts to further enhance our security measures. As a result of the Security Incident, we are currently subject to certain legal proceedings, claims, inquiries and investigations, as discussed below, and could be the subject of additional legal proceedings, claims, inquires and investigations in the future that might result in adverse judgments, settlements, fines, penalties, or other resolution. Although we carry insurance policies that we believe will provide coverage for a significant portion of our current and expected future losses and expenses related to the Security Incident, there can be no assurance that they will do so. Based on our analysis of the factors described above, we have not recorded a liability related to the Security Incident as of September 30, 2020 because we are unable at this time to reasonably estimate the possible loss or range of loss. Customer claims. To date, we have received approximately 160 claims from customers or their attorneys in the U.S., U.K. and Canada related to the Security Incident. Possible exposure could result from our customers’ costs and expenses associated with notifying their own customers of the Security Incident and taking steps to assure that personal information has not been compromised as a result of the Security Incident. We are in the process of analyzing individual customer contracts into which we have entered, the specific claims made and applicable law. At this time we cannot determine what, if any, exposure we have in the context of customer claims. Customer constituent class actions. To date, we have been named as a defendant in 23 putative consumer class action cases (17 in U.S. federal courts, 4 in U.S. state courts and 2 in Canadian courts) alleging harm from the Security Incident. The plaintiffs in these cases, who purport to represent various classes of individual constituents of our customers, generally claim to have been harmed by alleged actions and/or omissions by us in connection with the Security Incident and assert a variety of common law and statutory claims seeking monetary damages, injunctive relief, costs and attorneys’ fees, and other related relief. Lawsuits that are putative class actions require a plaintiff to satisfy a number of procedural requirements before proceeding to trial. These requirements include, among others, demonstration to a court that the law proscribes in some manner our activities, the making of factual allegations sufficient to suggest that our activities exceeded the limits of the law and a determination by the court—known as class certification—that the law permits a group of individuals to pursue the case together as a class. If these procedural requirements are not met, the lawsuit cannot proceed as a class action and the plaintiff may lose the financial incentive to proceed with the case. Frequently, a court’s determination as to these procedural requirements is subject to appeal to a higher court. As a result of these uncertainties, we may be unable to determine the probability of loss until, or after, a court has finally determined that a plaintiff has satisfied the applicable class action procedural requirements. Furthermore, for putative class actions, it is often not possible to estimate the possible loss or a range of loss amounts, even where we have determined that a loss is reasonably possible. Generally, class actions involve a large number of people and raise complex legal and factual issues that result in uncertainty as to their outcome and, ultimately, making it difficult for us to estimate the amount of damages that a plaintiff might successfully prove. This analysis is further complicated by the fact that the plaintiffs lack contractual privity with us. Governmental inquiries. To date, we have received a consolidated, multi-state Civil Investigative Demand issued on behalf of 43 state Attorneys General and the District of Columbia relating to the Security Incident. In addition, we have received communications, inquires and requests from the U.S. Federal Trade Commission, the U.S. Department of Health and Human Services, the Information Commissioner’s Office in the United Kingdom (the “ICO”) under the U.K. Data Protection Act 2018, the Office of the Australian Information Commissioner and the Office of the Privacy Commissioner of Canada. We are cooperating with these offices and responding to their inquiries. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 11. Income Taxes Our income tax provision and effective income tax rates, including the effects of period-specific events, were: Three months ended September 30, Nine months ended September 30, (dollars in thousands) 2020 2019 2020 2019 Income tax provision $ 1,756 $ 364 $ 6,948 $ 1,263 Effective income tax rate 26.5 % 7.4 % 24.6 % 10.7 % The increase in our effective tax rate for the three months ended September 30, 2020, when compared to the same period in 2019, was primarily attributable to higher 2019 discrete benefits against lower pre-tax income. The 2019 effective tax rate was positively impacted by a reduction to the liability for unrecognized tax benefits. The effective tax rate for 2020 was positively impacted by an adjustment to the prior year tax provision net of a tax charge resulting from an increase in the U.K. tax rate. The increase in our effective tax rate for the nine months ended September 30, 2020, when compared to the same period in 2019, was primarily attributable to a reduction in benefits attributable to stock based compensation against increased 2020 profitability. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | 12. Stock-based Compensation Stock-based compensation expense is allocated to cost of revenue and operating expenses on the condensed consolidated statements of comprehensive income based on where the associated employee’s compensation is recorded. The following table summarizes stock-based compensation expense: Three months ended September 30, Nine months ended September 30, (dollars in thousands) 2020 2019 2020 2019 Included in cost of revenue: Cost of recurring $ 1,608 $ 452 $ 3,229 $ 1,415 Cost of one-time services and other 2,080 332 3,894 1,134 Total included in cost of revenue 3,688 784 7,123 2,549 Included in operating expenses: Sales, marketing and customer success 4,004 2,826 10,085 8,564 Research and development 4,098 2,847 11,245 8,274 General and administrative 9,053 8,409 26,103 24,234 Total included in operating expenses 17,155 14,082 47,433 41,072 Total stock-based compensation expense $ 20,843 $ 14,866 $ 54,556 $ 43,621 See Note 2 for discussion of the additional equity award grants we made in response to COVID-19 pandemic. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | 13. Stockholders' Equity Dividends In March 2020, in response to the global COVID-19 pandemic, our Board of Directors rescinded its previously announced policy to pay an annual dividend at a rate of $0.48 per share of common stock and discontinued the declaration and payment of all cash dividends, beginning with the second quarter of 2020 and thereafter until such time, if any, as it may otherwise determine in its sole discretion. Dividends paid on common stock during the nine months ended September 30, 2020, consisted of the following: Declaration Date Dividend Record Date Payable Date February 10, 2020 $ 0.12 February 28 March 13 Changes in accumulated other comprehensive income (loss) by component The changes in accumulated other comprehensive income (loss) by component, consisted of the following: Three months ended September 30, Nine months ended September 30, (dollars in thousands) 2020 2019 2020 2019 Accumulated other comprehensive loss, beginning of period $ (14,476) $ (9,409) $ (5,290) $ (5,110) By component: Gains and losses on cash flow hedges: Accumulated other comprehensive (loss) income balance, beginning of period $ (3,894) $ (1,373) $ (1,323) $ 1,498 Other comprehensive income (loss) before reclassifications, net of tax effects of $0, $78, $1,225 and $982 1 (219) (3,472) (2,741) Amounts reclassified from accumulated other comprehensive income (loss) to interest expense 1,276 (196) 2,499 (669) Tax (benefit) expense included in provision for income taxes (334) 52 (655) 176 Total amounts reclassified from accumulated other comprehensive income (loss) 942 (144) 1,844 (493) Net current-period other comprehensive income (loss) 943 (363) (1,628) (3,234) Accumulated other comprehensive loss balance, end of period $ (2,951) $ (1,736) $ (2,951) $ (1,736) Foreign currency translation adjustment: Accumulated other comprehensive loss balance, beginning of period $ (10,582) $ (8,036) $ (3,967) $ (6,608) Translation adjustments 4,661 (3,893) (1,954) (5,321) Accumulated other comprehensive loss balance, end of period (5,921) (11,929) (5,921) (11,929) Accumulated other comprehensive loss, end of period $ (8,872) $ (13,665) $ (8,872) $ (13,665) |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | 14. Revenue Recognition Transaction price allocated to the remaining performance obligations As of September 30, 2020, approximately $812 million of revenue is expected to be recognized from remaining performance obligations. We expect to recognize revenue on approximately 60% of these remaining performance obligations over the next 12 months, with the remainder recognized thereafter. We applied the practical expedient in ASC 606-10-50-14 and have excluded the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less (one-time services); and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed (payment services and usage). Contract balances Our contract assets as of September 30, 2020 and December 31, 2019 were insignificant. Our opening and closing balances of deferred revenue were as follows: (in thousands) September 30, December 31, Total deferred revenue $ 328,255 $ 316,137 The increase in deferred revenue during the nine months ended September 30, 2020 was primarily due a seasonal increase in customer contract renewals. Historically, due to the timing of customer budget cycles, we have an increase in customer contract renewals at or near the beginning of our third quarter. The amount of revenue recognized during the nine months ended September 30, 2020 that was included in the deferred revenue balance at the beginning of the period was approximately $272 million. The amount of revenue recognized during the nine months ended September 30, 2020 from performance obligations satisfied in prior periods was insignificant. Disaggregation of revenue We sell our cloud solutions and related services in three primary geographical markets: to customers in the United States, to customers in the United Kingdom and to customers located in other countries. The following table presents our revenue by geographic area based on the address of our customers: Three months ended September 30, Nine months ended September 30, (dollars in thousands) 2020 2019 2020 2019 United States $ 182,649 $ 188,649 $ 565,912 $ 567,174 United Kingdom 18,309 17,410 63,668 50,515 Other countries 14,043 15,061 41,033 44,895 Total revenue $ 215,001 $ 221,120 $ 670,613 $ 662,584 The General Markets Group ("GMG"), the Enterprise Markets Group ("EMG"), and the International Markets Group ("IMG") comprise our go-to-market organizations. The following is a description of each market group: • The GMG focuses on sales primarily to all K-12 private schools, faith-based and arts and cultural organizations, as well as emerging and mid-sized prospects in the U.S.; • The EMG focuses on sales primarily to all healthcare and higher education institutions, corporations and foundations, as well as large and/or strategic prospects in the U.S.; and • The IMG focuses on sales primarily to all prospects and customers outside of the U.S. The following table presents our revenue by market group: Three months ended September 30, Nine months ended September 30, (dollars in thousands) 2020 2019 2020 2019 GMG $ 90,567 $ 92,029 $ 276,473 $ 277,803 EMG 91,542 96,270 287,864 288,145 IMG 32,751 32,731 105,999 96,467 Other 141 90 277 169 Total revenue $ 215,001 $ 221,120 $ 670,613 $ 662,584 |
Restructuring
Restructuring | 9 Months Ended |
Sep. 30, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | 15. Restructuring During 2017, in an effort to further our organizational objectives, including improved operating efficiency, customer outcomes and employee satisfaction, we initiated a multi-year plan to consolidate and relocate some of our existing offices to highly modern and more collaborative workspaces with short-term financial commitments. We substantially completed our facilities optimization restructuring plan as of December 2019. During the three and nine months ended September 30, 2019, we incurred $0.4 million and $3.1 million, respectively, in before-tax restructuring charges related to these activities. Such charges during the three and nine months ended September 30, 2020 were insignificant. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 16. Subsequent Events October 2020 refinancing On October 30, 2020, we entered into a 5-year $900.0 million Amended and Restated Credit Agreement (the “2020 Credit Facility”). The 2020 Credit Facility matures in October 2025 and replaces the 2017 Credit Facility by amending and restating it to include a $500.0 million revolving credit facility (the “Revolving Credit Facility”) and a $400.0 million term loan facility (the “Term Facility”). The Revolving Credit Facility includes (a) a $50.0 million sublimit available for the issuance of standby letters of credit, (b) a $50.0 million sublimit available for swingline loans, and (c) a $100.0 million sublimit available for multicurrency borrowings. We may prepay the 2020 Credit Facility in whole or in part at any time without premium or penalty, other than customary breakage costs with respect to certain types of loans. Under the terms of the 2020 Credit Facility, we are entitled on one or more occasions, subject to the satisfaction of certain conditions, to request an increase in the commitments under the Revolving Credit Facility and/or request additional incremental term loans in the aggregate principal amount of up to $250.0 million plus an amount, if any, such that the net leverage ratio shall be no greater than 3.25 to 1.00. In connection with the amendment and restatement of the 2017 Credit Facility, the existing Pledge Agreement dated June 2, 2017 (as amended, supplemented or modified from time to time, the “2017 Pledge Agreement”), by us in favor of Bank of America, N.A., as administrative agent, was likewise amended and restated. On October 30, 2020, we borrowed $400.0 million pursuant to the Term Facility and used the proceeds to repay the outstanding principal balance of the term loan under the 2017 Credit Facility, and repay $124.4 million of outstanding revolving credit loans under the 2017 revolving credit facility. Our obligations under the 2020 Credit Facility are secured by the stock and limited liability company interests of certain of our direct subsidiaries and any of our material domestic subsidiaries, if any, and the proceeds therefrom pledged pursuant to an Amended and Restated Pledge Agreement dated as of October 30, 2020 (the “2020 Pledge Agreement”), by us in favor of Bank of America, N.A., as administrative agent, for the ratable benefit of itself and the secured parties referred to therein. Dollar tranche loans under the Revolving Credit Facility and Term Facility loans bear interest at a rate per annum equal to (a) a base rate equal to the highest of (i) the Federal Funds Rate plus 0.50%, (ii) the prime rate announced by Bank of America, N.A., and (iii) the Eurocurrency Rate (which varies depending on the currency in which the loan is denominated) plus 1.00% (the “Base Rate”), plus (b) an applicable margin as specified in the 2020 Credit Facility (the “Applicable Margin”). Each Eurocurrency Rate Loan under the 2020 Credit Facility shall bear interest at a rate per annum equal to the Eurocurrency Rate, plus the Applicable Margin. The Applicable Margin shall be adjusted quarterly, varies based on our net leverage ratio and varies based on whether the loan is a Base Rate Loan (0.375% to 1.125%) or a Eurocurrency Rate Loan (1.375% to 2.125%). The 2020 Credit Facility also provides for a commitment fee of between 0.250% and 0.375% of the unused commitment under the Revolving Credit Facility, depending on our net leverage ratio. The 2020 Credit Facility contains various representations, warranties and affirmative, negative and financial covenants customary for financings of this type. Financial covenants include a net leverage ratio and an interest coverage ratio. |
Basis of Presentation (Policy)
Basis of Presentation (Policy) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Unaudited interim consolidated financial statements | Unaudited condensed consolidated interim financial statements The accompanying condensed consolidated interim financial statements have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC") for interim financial reporting. These consolidated statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to state fairly the consolidated balance sheets, consolidated statements of comprehensive income, consolidated statements of cash flows and consolidated statements of stockholders’ equity, for the periods presented in accordance with accounting principles generally accepted in the United States ("U.S.") ("GAAP"). The consolidated balance sheet at December 31, 2019 has been derived from the audited consolidated financial statements at that date. Operating results and cash flows for the nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2020, or any other future period. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted in accordance with the rules and regulations for interim reporting of the SEC. These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019, and other forms filed with the SEC from time to time. |
Basis of consolidation | Basis of consolidation The condensed consolidated financial statements include the accounts of Blackbaud, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Reportable segment | Reportable segment We report our operating results and financial information in one operating and reportable segment. Our chief operating decision maker uses consolidated financial information to make operating decisions, assess financial performance and allocate resources. Our chief operating decision maker is our chief executive officer ("CEO"). |
Recently adopted accounting pronouncements | Recently adopted accounting pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 requires certain types of financial instruments, including trade receivables, to be presented at the net amount expected to be collected based on historical events, current conditions and forward-looking information. We adopted ASU 2016-13 as of the January 1, 2020 effective date and the adoption did not have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). ASU 2018-15 aligns the accounting for implementation costs related to a hosting arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software. We adopted ASU 2018-15 prospectively as of the January 1, 2020 effective date and the adoption did not have a material impact on our consolidated financial statements. |
Recently issued accounting pronouncements | Recently issued accounting pronouncements There are no recently issued accounting pronouncements that are expected to have a material impact on our financial position or results of operations when adopted in the future. |
Credit losses and sales returns | Allowance for credit losses Our accounts receivable consist of a single portfolio segment. Accounts receivable are recorded at original invoice amounts less an allowance for credit losses, an amount we estimate to be sufficient to provide adequate protection against lifetime expected losses resulting from extending credit to our customers. In judging the adequacy of the allowance for credit losses, we consider multiple factors including historical bad debt experience, the current aging of our receivables and current economic conditions that may affect our customers' ability to pay. A considerable amount of judgment is required in assessing these factors and if any receivables were to deteriorate, an additional provision for credit losses could be required. Accounts are written off after all means of collection are exhausted and recovery is considered remote. Provisions for credit losses are recorded in general and administrative expense. Below is a summary of the changes in our allowance for credit losses. (in thousands) Balance at beginning of year (1) Provision/ Write-off Recovery Balance at September 30, 2020 2020 $ 4,011 $ 6,303 $ (971) $ 302 $ 9,645 (1) Upon adoption of ASU 2016-13 at January 1, 2020, we reclassified certain balances previously disclosed within the allowance for sales returns to the allowance for credit losses, as these amounts reflect the credit risk associated with our accounts receivable. The increase in our allowance for credit losses during the nine months ended September 30, 2020 was primarily due to an increase in the aging of our receivables and observed changes in some of our customers' payment behavior associated with the COVID-19 pandemic, which may continue in the near term. The amount of write-offs during the nine months ended September 30, 2020 was lower than the amount of write-offs during the same period in 2019 as we temporarily suspended sending past due customer accounts to collections during the second and third quarters due to payment delays related to COVID-19. Allowance for sales returns We maintain a reserve for returns and credits which is estimated based on several factors including historical experience, known credits yet to be issued, the aging of customer accounts and the nature of service level commitments. A considerable amount of judgment is required in assessing these factors. Provisions for sales returns and credits are charged against the related revenue items. Below is a summary of the changes in our allowance for sales returns. (in thousands) Balance at (1) Provision/ Deduction Balance at September 30, 2020 2020 $ 1,518 $ 3,853 $ (4,289) $ 1,082 (1) As discussed above, we reclassified certain balances previously disclosed within the allowance for sales returns to the allowance for credit losses upon adoption of ASU 2016-13 at January 1, 2020. |
Basis of Presentation Basis of
Basis of Presentation Basis of Presentation (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Allowance for Credit Loss [Abstract] | |
Accounts Receivable, Allowance for Credit Loss | Below is a summary of the changes in our allowance for credit losses. (in thousands) Balance at beginning of year (1) Provision/ Write-off Recovery Balance at September 30, 2020 2020 $ 4,011 $ 6,303 $ (971) $ 302 $ 9,645 (1) Upon adoption of ASU 2016-13 at January 1, 2020, we reclassified certain balances previously disclosed within the allowance for sales returns to the allowance for credit losses, as these amounts reflect the credit risk associated with our accounts receivable. Below is a summary of the changes in our allowance for sales returns. (in thousands) Balance at (1) Provision/ Deduction Balance at September 30, 2020 2020 $ 1,518 $ 3,853 $ (4,289) $ 1,082 (1) As discussed above, we reclassified certain balances previously disclosed within the allowance for sales returns to the allowance for credit losses upon adoption of ASU 2016-13 at January 1, 2020. |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Change in Goodwill | The change in goodwill during the nine months ended September 30, 2020, consisted of the following: (dollars in thousands) Total Balance at December 31, 2019 $ 634,088 Effect of foreign currency translation (1,248) Balance at September 30, 2020 $ 632,840 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share: Three months ended September 30, Nine months ended September 30, (dollars in thousands, except per share amounts) 2020 2019 2020 2019 Numerator: Net income $ 4,876 $ 4,566 $ 21,338 $ 10,584 Denominator: Weighted average common shares 48,271,139 47,757,769 48,182,799 47,668,235 Add effect of dilutive securities: Stock-based awards 588,568 706,760 399,269 555,477 Weighted average common shares assuming dilution 48,859,707 48,464,529 48,582,068 48,223,712 Earnings per share: Basic $ 0.10 $ 0.10 $ 0.44 $ 0.22 Diluted $ 0.10 $ 0.09 $ 0.44 $ 0.22 Anti-dilutive shares excluded from calculations of diluted earnings per share 915,226 227,523 1,036,445 252,282 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Assets and liabilities that are measured at fair value on a recurring basis consisted of the following, as of the dates indicated below: Fair value measurement using (dollars in thousands) Level 1 Level 2 Level 3 Total Fair value as of September 30, 2020 Financial liabilities: Derivative instruments $ — $ 3,957 $ — $ 3,957 Total financial liabilities $ — $ 3,957 $ — $ 3,957 Fair value as of December 31, 2019 Financial liabilities: Derivative instruments $ — $ 1,757 $ — $ 1,757 Total financial liabilities $ — $ 1,757 $ — $ 1,757 |
Property, Plant, and Equipment
Property, Plant, and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | As a result of the Transaction, we derecognized the ROU asset and lease liability associated with the former lease and recorded the following long-lived assets on a relative fair value basis in property and equipment, net upon closing: (dollars in thousands) Assets Estimated useful life (years) Land $ 9,548 — Building 61,284 39 Building systems 4,393 7 - 15 Total long-lived assets $ 75,225 |
Consolidated Financial Statem_2
Consolidated Financial Statement Details (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Components of Restricted Cash | Restricted cash (dollars in thousands) September 30, December 31, Restricted cash due to customers $ 202,455 $ 545,485 Real estate escrow balances 1,205 — Total restricted cash 203,660 545,485 |
Components of Prepaid Expenses and Other Assets | Prepaid expenses and other assets (dollars in thousands) September 30, December 31, Costs of obtaining contracts (1)(2) $ 86,119 $ 90,764 Prepaid software maintenance and subscriptions (3) 28,999 17,384 Implementation costs for cloud computing arrangements, net (4)(5) 11,372 7,294 Unbilled accounts receivable 9,711 6,233 Receivables for probable insurance recoveries (6) 2,949 — Prepaid insurance 2,079 1,585 Taxes, prepaid and receivable 847 849 Security deposits 808 885 Other assets 6,494 8,051 Total prepaid expenses and other assets 149,378 133,045 Less: Long-term portion 72,617 65,193 Prepaid expenses and other current assets $ 76,761 $ 67,852 (1) Amortization expense from costs of obtaining contracts was $9.4 million and $28.2 million for the three and nine months ended September 30, 2020, respectively, and $9.2 million and $28.6 million for the three and nine months ended September 30, 2019, respectively. (2) The current portion of costs of obtaining contracts as of September 30, 2020 and December 31, 2019 was $32.1 million and $33.0 million, respectively. (3) The current portion of prepaid software maintenance and subscriptions as of September 30, 2020 and December 31, 2019 was $23.5 million and $16.1 million, respectively. (4) These costs, which were previously included in prepaid software maintenance and subscriptions, primarily relate to the multi-year implementations of our new global enterprise resource planning and customer relationship management systems. (5) Amortization expense from capitalized cloud computing implementation costs was insignificant for the three and nine months ended September 30, 2020 and 2019, respectively. Accumulated amortization for these costs was $0.7 million as of September 30, 2020 and insignificant as of December 31, 2019. (6) See discussion of the Security Incident at Note 10. |
Components of Accrued Expenses and Other Liabilities | Accrued expenses and other liabilities (dollars in thousands) September 30, December 31, Operating lease liabilities, current portion $ 16,633 $ 19,784 Accrued bonuses (1) — 24,617 Accrued commissions and salaries 2,985 6,980 Taxes payable 13,576 6,835 Derivative instruments 3,957 1,757 Customer credit balances 5,677 4,505 Unrecognized tax benefit 3,833 3,758 Accrued vacation costs 2,300 2,232 Accrued health care costs 2,781 2,399 Other liabilities 9,248 6,192 Total accrued expenses and other liabilities 60,990 79,059 Less: Long-term portion 12,610 5,742 Accrued expenses and other current liabilities $ 48,380 $ 73,317 (1) In March 2020, we reduced our accrued bonuses due to the payment of bonuses from the prior year and, in response to the global COVID-19 pandemic, determined to replace our 2020 cash bonus plans with performance-based equity awards (see Note 2). |
Components of Other Income and Expense | Other income, net Three months ended September 30, Nine months ended September 30, (dollars in thousands) 2020 2019 2020 2019 Interest income $ 767 $ 1,247 $ 1,399 $ 2,426 Other (expense) income, net (225) 911 843 2,095 Other income, net $ 542 $ 2,158 $ 2,242 $ 4,521 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Summary of Debt | The following table summarizes our debt balances and the related weighted average effective interest rates, which includes the effect of interest rate swap agreements. Debt balance at Weighted average (dollars in thousands) September 30, December 31, September 30, December 31, Credit facility: Revolving credit loans $ 169,200 $ 187,000 2.21 % 3.11 % Term loans 275,625 281,250 2.77 % 3.22 % Real estate loans 60,890 — 5.22 % — % Other debt 3,926 — 5.00 % — % Total debt 509,641 468,250 2.89 % 3.18 % Less: Unamortized discount and debt issuance costs 1,383 1,150 Less: Debt, current portion 10,305 7,500 2.39 % 3.05 % Debt, net of current portion $ 497,953 $ 459,600 2.90 % 3.18 % |
Annual Maturities Related to Credit Facility | As of September 30, 2020, the required annual maturities related to the 2017 Credit Facility, the Real Estate Loans and our other debt were as follows: Years ending December 31, Annual 2020 - remaining $ 2,139 2021 10,340 2022 438,435 2023 1,983 2024 1,609 Thereafter 55,135 Total required maturities $ 509,641 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Interest Rate Swaps | The terms and notional values of our derivative instruments were as follows as of September 30, 2020: (dollars in thousands) Term of derivative instrument Notional Derivative instruments designated as hedging instruments: Interest rate swap July 2017 - July 2021 $ 150,000 Interest rate swap February 2018 - June 2021 50,000 Interest rate swap June 2019 - June 2021 75,000 $ 275,000 |
Fair Values of Derivative Instruments | The fair values of our derivative instruments were as follows as of: Liability derivatives (dollars in thousands) Balance sheet location September 30, December 31, Derivative instruments designated as hedging instruments: Interest rate swaps, current portion Accrued expenses $ 3,957 $ — Interest rate swaps, long-term portion Other liabilities — 1,757 Total derivative instruments designated as hedging instruments $ 3,957 $ 1,757 |
Effects of Derivative Instruments in Cash Flow Hedging Relationships | The effects of derivative instruments in cash flow hedging relationships were as follows: Gain (loss) recognized Location Gain (loss) reclassified from accumulated (dollars in thousands) September 30, Three months ended September 30, Nine months ended September 30, 2019 Interest rate swaps $ (3,957) Interest expense $ (1,276) $ (2,499) September 30, Three months ended September 30, 2019 Nine months ended September 30, 2019 Interest rate swaps $ (2,318) Interest expense $ 196 $ 669 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Components of Lease Expense | The components of lease expense were as follows: Three months ended September 30, Nine months ended September 30, (dollars in thousands) 2020 2019 2020 2019 Operating lease cost (1) $ 12,128 $ 6,786 $ 24,720 $ 18,680 Variable lease cost 1,120 923 3,491 2,901 Sublease income (732) (803) (2,585) (2,262) Net lease cost $ 12,516 $ 6,906 $ 25,626 $ 19,319 (1) Includes short-term lease costs, which were immaterial. |
Schedule of Maturities of Operating Lease Liabilities | Maturities of our operating lease liabilities as of September 30, 2020 were as follows: Years ending December 31, Operating leases 2020 – remaining $ 5,055 2021 16,745 2022 12,034 2023 9,107 2024 2,491 Thereafter 535 Total lease payments 45,967 Less: Amount representing interest 3,628 Present value of future payments $ 42,339 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rates | Our income tax provision and effective income tax rates, including the effects of period-specific events, were: Three months ended September 30, Nine months ended September 30, (dollars in thousands) 2020 2019 2020 2019 Income tax provision $ 1,756 $ 364 $ 6,948 $ 1,263 Effective income tax rate 26.5 % 7.4 % 24.6 % 10.7 % |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Stock-Based Compensation Expense | The following table summarizes stock-based compensation expense: Three months ended September 30, Nine months ended September 30, (dollars in thousands) 2020 2019 2020 2019 Included in cost of revenue: Cost of recurring $ 1,608 $ 452 $ 3,229 $ 1,415 Cost of one-time services and other 2,080 332 3,894 1,134 Total included in cost of revenue 3,688 784 7,123 2,549 Included in operating expenses: Sales, marketing and customer success 4,004 2,826 10,085 8,564 Research and development 4,098 2,847 11,245 8,274 General and administrative 9,053 8,409 26,103 24,234 Total included in operating expenses 17,155 14,082 47,433 41,072 Total stock-based compensation expense $ 20,843 $ 14,866 $ 54,556 $ 43,621 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Changes in Accumulated Other Comprehensive Loss by Component | The changes in accumulated other comprehensive income (loss) by component, consisted of the following: Three months ended September 30, Nine months ended September 30, (dollars in thousands) 2020 2019 2020 2019 Accumulated other comprehensive loss, beginning of period $ (14,476) $ (9,409) $ (5,290) $ (5,110) By component: Gains and losses on cash flow hedges: Accumulated other comprehensive (loss) income balance, beginning of period $ (3,894) $ (1,373) $ (1,323) $ 1,498 Other comprehensive income (loss) before reclassifications, net of tax effects of $0, $78, $1,225 and $982 1 (219) (3,472) (2,741) Amounts reclassified from accumulated other comprehensive income (loss) to interest expense 1,276 (196) 2,499 (669) Tax (benefit) expense included in provision for income taxes (334) 52 (655) 176 Total amounts reclassified from accumulated other comprehensive income (loss) 942 (144) 1,844 (493) Net current-period other comprehensive income (loss) 943 (363) (1,628) (3,234) Accumulated other comprehensive loss balance, end of period $ (2,951) $ (1,736) $ (2,951) $ (1,736) Foreign currency translation adjustment: Accumulated other comprehensive loss balance, beginning of period $ (10,582) $ (8,036) $ (3,967) $ (6,608) Translation adjustments 4,661 (3,893) (1,954) (5,321) Accumulated other comprehensive loss balance, end of period (5,921) (11,929) (5,921) (11,929) Accumulated other comprehensive loss, end of period $ (8,872) $ (13,665) $ (8,872) $ (13,665) |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Contract Balances | Our opening and closing balances of deferred revenue were as follows: (in thousands) September 30, December 31, Total deferred revenue $ 328,255 $ 316,137 |
Disaggregation of Revenue | The following table presents our revenue by geographic area based on the address of our customers: Three months ended September 30, Nine months ended September 30, (dollars in thousands) 2020 2019 2020 2019 United States $ 182,649 $ 188,649 $ 565,912 $ 567,174 United Kingdom 18,309 17,410 63,668 50,515 Other countries 14,043 15,061 41,033 44,895 Total revenue $ 215,001 $ 221,120 $ 670,613 $ 662,584 The following table presents our revenue by market group: Three months ended September 30, Nine months ended September 30, (dollars in thousands) 2020 2019 2020 2019 GMG $ 90,567 $ 92,029 $ 276,473 $ 277,803 EMG 91,542 96,270 287,864 288,145 IMG 32,751 32,731 105,999 96,467 Other 141 90 277 169 Total revenue $ 215,001 $ 221,120 $ 670,613 $ 662,584 |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 30, 2020 | Feb. 29, 2020 | Jun. 30, 2020 | May 01, 2020 |
Annual dividend per share approved (in dollars per share) | $ 0.48 | |||
Employer matching contribution, percent of qualified employees' contribution | 50.00% | |||
Maximum [Member] | ||||
Employer matching contribution, percent of employees' salary | 6.00% | |||
COVID-19 [Member] | ||||
One-time bonus to employees | $ 1 | |||
COVID-19 [Member] | RSU [Member] | ||||
Grant date fair value | $ 8,300 | |||
COVID-19 [Member] | PRSU [Member] | ||||
Grant date fair value | $ 34,400 | |||
COVID-19 [Member] | Maximum [Member] | ||||
Base salary requirement for one-time bonus | $ 75 |
Basis of Presentation Basis o_2
Basis of Presentation Basis of Presentation (Changes in Allowance for Credit Losses and Sales Returns) (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020USD ($) | ||
Allowance for credit losses [Member] | ||
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items] | ||
Balance at beginning of year | $ 4,011 | [1] |
Provision/adjustment | 6,303 | |
Write-off | 971 | |
Recovery | 302 | |
Balance at period end | 9,645 | |
Allowance for sales returns [Member] | ||
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items] | ||
Balance at beginning of year | 1,518 | [2] |
Provision/adjustment | 3,853 | |
Deduction | 4,289 | |
Balance at period end | $ 1,082 | |
[1] | Upon adoption of ASU 2016-13 at January 1, 2020, we reclassified certain balances previously disclosed within the allowance for sales returns to the allowance for credit losses, as these amounts reflect the credit risk associated with our accounts receivable. | |
[2] | As discussed above, we reclassified certain balances previously disclosed within the allowance for sales returns to the allowance for credit losses upon adoption of ASU 2016-13 at January 1, 2020. |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets (Change in Goodwill) (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 634,088 |
Effect of foreign currency translation | (1,248) |
Ending balance | $ 632,840 |
Earnings Per Share (Computation
Earnings Per Share (Computation of Basic and Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings Per Share [Abstract] | ||||||||
Net income | $ 4,876 | $ 11,823 | $ 4,639 | $ 4,566 | $ 7,140 | $ (1,122) | $ 21,338 | $ 10,584 |
Weighted average common shares | 48,271,139 | 47,757,769 | 48,182,799 | 47,668,235 | ||||
Stock-based awards | 588,568 | 706,760 | 399,269 | 555,477 | ||||
Weighted average common shares assuming dilution | 48,859,707 | 48,464,529 | 48,582,068 | 48,223,712 | ||||
Earnings (Loss) Per Share, Basic and Diluted [Abstract] | ||||||||
Basic earnings per share | $ 0.10 | $ 0.10 | $ 0.44 | $ 0.22 | ||||
Diluted earnings per share | $ 0.10 | $ 0.09 | $ 0.44 | $ 0.22 | ||||
Anti-dilutive shares excluded from calculations of diluted earnings per share | 915,226 | 227,523 | 1,036,445 | 252,282 |
Fair Value Measurements Fair Va
Fair Value Measurements Fair Value Measurements (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Jun. 30, 2020 | Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | ||
Capitalized software development costs, impairments | $ 4.3 | |
Operating lease, ROU assets impairment | $ 2.9 |
Fair Value Measurements (Assets
Fair Value Measurements (Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - Fair value measurements, recurring [Member] - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liabilities | $ 3,957 | $ 1,757 |
Total financial liabilities | 3,957 | 1,757 |
Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liabilities | 0 | 0 |
Total financial liabilities | 0 | 0 |
Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liabilities | 3,957 | 1,757 |
Total financial liabilities | 3,957 | 1,757 |
Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liabilities | 0 | 0 |
Total financial liabilities | $ 0 | $ 0 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Aug. 31, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | ||||||
Aggregate principal amount assumed | $ 509,641 | $ 509,641 | $ 468,250 | |||
Depreciation | $ 5,100 | $ 3,800 | $ 12,300 | $ 11,300 | ||
Global HQ [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Cash outlay | $ 15,200 | |||||
Aggregate principal amount assumed | $ 61,100 |
Property and Equipment (Schedul
Property and Equipment (Schedule of Property and Equipment) (Details) $ in Thousands | 1 Months Ended |
Aug. 31, 2020USD ($) | |
Property, Plant and Equipment [Line Items] | |
Property, land and equipment, gross | $ 75,225 |
Land [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, land and equipment, gross | 9,548 |
Building [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, land and equipment, gross | $ 61,284 |
Property, land and equipment, useful life | 39 years |
Building Systems [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, land and equipment, gross | $ 4,393 |
Building Systems [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, land and equipment, useful life | 7 years |
Building Systems [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, land and equipment, useful life | 15 years |
Consolidated Financial Statem_3
Consolidated Financial Statement Details (Components of Restricted Cash) (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Restricted cash due to customers | $ 202,455 | $ 545,485 |
Real estate escrow balances | 1,205 | 0 |
Restricted Cash and Cash Equivalents, Current, Total | $ 203,660 | $ 545,485 |
Consolidated Financial Statem_4
Consolidated Financial Statement Details (Components of Prepaid Expenses and Other Assets) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | ||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||
Costs of obtaining contracts | [1],[2] | $ 86,119 | $ 86,119 | $ 90,764 | ||||
Prepaid software maintenance and subscriptions, current and long-term | [3] | 28,999 | 28,999 | 17,384 | ||||
Implementation costs for cloud computing arrangements | [4],[5] | 11,372 | 11,372 | 7,294 | ||||
Unbilled accounts receivable | 9,711 | 9,711 | 6,233 | |||||
Receivables for probable insurance recoveries | 2,949 | [6] | 2,949 | [6] | 0 | |||
Prepaid insurance | 2,079 | 2,079 | 1,585 | |||||
Taxes, prepaid and receivable | 847 | 847 | 849 | |||||
Security deposits | 808 | 808 | 885 | |||||
Other assets | 6,494 | 6,494 | 8,051 | |||||
Total prepaid expenses and other assets | 149,378 | 149,378 | 133,045 | |||||
Less: Long-term portion | 72,617 | 72,617 | 65,193 | |||||
Prepaid expenses and other current assets | 76,761 | 76,761 | 67,852 | |||||
Amortization expense from costs of obtaining contracts | 9,400 | $ 9,200 | 28,200 | $ 28,600 | ||||
Current portion of costs of obtaining contracts | 32,100 | 32,100 | 33,000 | |||||
Prepaid software maintenance and subscriptions, current | 23,500 | 23,500 | $ 16,100 | |||||
Implementation costs for cloud computing arrangements, accumulated amortization | $ 700 | $ 700 | ||||||
[1] | Amortization expense from costs of obtaining contracts was $9.4 million and $28.2 million for the three and nine months ended September 30, 2020, respectively, and $9.2 million and $28.6 million for the three and nine months ended September 30, 2019, respectively. | |||||||
[2] | The current portion of costs of obtaining contracts as of September 30, 2020 and December 31, 2019 was $32.1 million and $33.0 million, respectively. | |||||||
[3] | The current portion of prepaid software maintenance and subscriptions as of September 30, 2020 and December 31, 2019 was $23.5 million and $16.1 million, respectively. | |||||||
[4] | Amortization expense from capitalized cloud computing implementation costs was insignificant for the three and nine months ended September 30, 2020 and 2019, respectively. Accumulated amortization for these costs was $0.7 million as of September 30, 2020 and insignificant as of December 31, 2019. (6) See discussion of the Security Incident at Note 10. | |||||||
[5] | These costs, which were previously included in prepaid software maintenance and subscriptions, primarily relate to the multi-year implementations of our new global enterprise resource planning and customer relationship management systems. | |||||||
[6] | See discussion of the Security Incident at Note 10. |
Consolidated Financial Statem_5
Consolidated Financial Statement Details (Components of Accrued Expenses and Other Liabilities) (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Operating lease liabilities, current portion | $ 16,633 | $ 19,784 | |
Accrued bonuses | 0 | [1] | 24,617 |
Accrued commissions and salaries | 2,985 | 6,980 | |
Taxes payable | 13,576 | 6,835 | |
Derivative instruments | 3,957 | 1,757 | |
Customer credit balances | 5,677 | 4,505 | |
Unrecognized tax benefit | 3,833 | 3,758 | |
Accrued vacation costs | 2,300 | 2,232 | |
Accrued health care costs | 2,781 | 2,399 | |
Other liabilities | 9,248 | 6,192 | |
Total accrued expenses and other liabilities | 60,990 | 79,059 | |
Less: Long-term portion | 12,610 | 5,742 | |
Accrued expenses and other current liabilities | $ 48,380 | $ 73,317 | |
[1] | In March 2020, we reduced our accrued bonuses due to the payment of bonuses from the prior year and, in response to the global COVID-19 pandemic, determined to replace our 2020 cash bonus plans with performance-based equity awards (see Note 2). |
Consolidated Financial Statem_6
Consolidated Financial Statement Details (Components of Other Income and Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Interest income | $ 767 | $ 1,247 | $ 1,399 | $ 2,426 |
Other (expense) income, net | (225) | 911 | 843 | 2,095 |
Other income, net | $ 542 | $ 2,158 | $ 2,242 | $ 4,521 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Aug. 31, 2020 | Jan. 31, 2020 | Dec. 31, 2019 | Jun. 02, 2017 |
Business Acquisition [Line Items] | |||||
Credit facility, maximum borrowing capacity | $ 700,000 | ||||
Aggregate principal amount assumed | $ 509,641 | $ 468,250 | |||
Global HQ [Member] | |||||
Business Acquisition [Line Items] | |||||
Aggregate principal amount assumed | $ 61,100 | ||||
Loans payable [Member] | |||||
Business Acquisition [Line Items] | |||||
Other debt, face amount | $ 3,500 | $ 2,200 | |||
Senior secured note, Series A1 [Member] | |||||
Business Acquisition [Line Items] | |||||
Long-term debt, percentage bearing fixed interest, percentage rate | 5.12% | ||||
Senior secured note, Series A1 [Member] | Global HQ [Member] | |||||
Business Acquisition [Line Items] | |||||
Aggregate principal amount assumed | $ 49,100 | ||||
Senior secured note, Series A2 [Member] | |||||
Business Acquisition [Line Items] | |||||
Long-term debt, percentage bearing fixed interest, percentage rate | 5.61% | ||||
Senior secured note, Series A2 [Member] | Global HQ [Member] | |||||
Business Acquisition [Line Items] | |||||
Aggregate principal amount assumed | $ 12,000 |
Debt (Summary of Debt) (Details
Debt (Summary of Debt) (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Line of Credit Facility [Line Items] | ||
Debt, gross | $ 509,641 | $ 468,250 |
Other debt | 3,926 | 0 |
Less: Unamortized discount and debt issuance costs | 1,383 | 1,150 |
Less: Debt, current portion | 10,305 | 7,500 |
Debt, net of current portion | $ 497,953 | $ 459,600 |
Weighted average effective interest rate | 2.89% | 3.18% |
Revolving credit loans [Member] | ||
Line of Credit Facility [Line Items] | ||
Debt, gross | $ 169,200 | $ 187,000 |
Weighted average effective interest rate | 2.21% | 3.11% |
Term loans [Member] | ||
Line of Credit Facility [Line Items] | ||
Debt, gross | $ 275,625 | $ 281,250 |
Weighted average effective interest rate | 2.77% | 3.22% |
Mortgages [Member] | ||
Line of Credit Facility [Line Items] | ||
Debt, gross | $ 60,890 | $ 0 |
Weighted average effective interest rate | 5.22% | 0.00% |
Loans payable [Member] | ||
Line of Credit Facility [Line Items] | ||
Weighted average effective interest rate | 5.00% | 0.00% |
Short-term debt [Member] | ||
Line of Credit Facility [Line Items] | ||
Weighted average effective interest rate | 2.39% | 3.05% |
Long-term debt [Member] | ||
Line of Credit Facility [Line Items] | ||
Weighted average effective interest rate | 2.90% | 3.18% |
Debt (Annual Maturities Related
Debt (Annual Maturities Related to Credit Facility) (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Debt Disclosure [Abstract] | |
2020 - remaining | $ 2,139 |
2021 | 10,340 |
2022 | 438,435 |
2023 | 1,983 |
2024 | 1,609 |
Thereafter | 55,135 |
Total required maturities | $ 509,641 |
Derivative Instruments (Details
Derivative Instruments (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Accumulated other comprehensive loss expected to be reclassified into earnings within next 12 months | $ (4) | |
Ineffective portion of interest rate swap(s) | $ 0 | $ 0 |
Derivative Instruments Derivati
Derivative Instruments Derivative Instruments (Schedule of Interest Rate Swaps) (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Sep. 30, 2019 | Feb. 28, 2018 | Jul. 31, 2017 |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Derivative, notional amount | $ 275,000 | |||
July 2017 Swap [Member] | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Derivative, notional amount | $ 150,000 | |||
February 2018 Swap [Member] | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Derivative, notional amount | $ 50,000 | |||
June 2019 Swap [Member] | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Derivative, notional amount | $ 75,000 |
Derivative Instruments (Fair Va
Derivative Instruments (Fair Value of Derivative Instruments) (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities, long-term portion | $ 3,957 | $ 1,757 |
Designated as hedging instrument [Member] | Interest rate swap [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities, fair value | 3,957 | 1,757 |
Designated as hedging instrument [Member] | Interest rate swap [Member] | Accrued expenses and other current liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities, current | 3,957 | 0 |
Designated as hedging instrument [Member] | Interest rate swap [Member] | Other liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities, long-term portion | $ 0 | $ 1,757 |
Derivative Instruments (Effects
Derivative Instruments (Effects of Derivative Instruments in Cash Flow Hedging Relationships) (Details) - Interest rate swap [Member] - Cash flow hedging [Member] - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in accumulated other comprehensive loss | $ (3,957) | $ (2,318) | ||
Interest expense [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) reclassified from accumulated other comprehensive loss into income | $ (1,276) | $ 196 | $ (2,499) | $ 669 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020USD ($) | Sep. 30, 2020USD ($)cases | |
Lessee, Lease, Description [Line Items] | ||
Operating lease, lease not yet commenced, expense | $ | $ 1.3 | |
Security incident, expense | $ | $ 3.2 | 3.6 |
Security incident, accrued insurance recoveries | $ | $ 2.9 | $ 2.9 |
Security incident, number of customer claims | 160 | |
Security incident, number of consumer class action cases | 23 | |
Security incident, number of state Attorneys General | 43 | |
US Federal [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Security incident, number of consumer class action cases | 17 | |
US States [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Security incident, number of consumer class action cases | 4 | |
Canada [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Security incident, number of consumer class action cases | 2 | |
Maximum [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease, lease not yet commenced, term of contract | 5 years | 5 years |
Minimum [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease, lease not yet commenced, term of contract | 3 years | 3 years |
Third-party technology [Member] | ||
Long-term Purchase Commitment [Line Items] | ||
Remaining aggregate minimum purchase commitment | $ | $ 85.9 | $ 85.9 |
Commitments and Contingencies_3
Commitments and Contingencies (Components of Lease Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Commitments and Contingencies Disclosure [Abstract] | |||||
Operating lease cost | [1] | $ 12,128 | $ 6,786 | $ 24,720 | $ 18,680 |
Variable lease cost | 1,120 | 923 | 3,491 | 2,901 | |
Sublease income | (732) | (803) | (2,585) | (2,262) | |
Net lease cost | $ 12,516 | $ 6,906 | $ 25,626 | $ 19,319 | |
[1] | Includes short-term lease costs, which were immaterial. |
Commitments and Contingencies_4
Commitments and Contingencies (Schedule of Maturities of Operating Lease Liabilities) (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2020 – remaining | $ 5,055 |
2021 | 16,745 |
2022 | 12,034 |
2023 | 9,107 |
2024 | 2,491 |
Thereafter | 535 |
Total lease payments | 45,967 |
Less: Amount representing interest | 3,628 |
Present value of future payments | $ 42,339 |
Income Taxes (Schedule of Effec
Income Taxes (Schedule of Effective Income Tax Rates) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Income tax provision | $ 1,756 | $ 364 | $ 6,948 | $ 1,263 |
Effective income tax rate | 26.50% | 7.40% | 24.60% | 10.70% |
Stock-Based Compensation (Summa
Stock-Based Compensation (Summary of Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Employee Service Stock-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated stock-based compensation expense | $ 20,843 | $ 14,866 | $ 54,556 | $ 43,621 |
Cost of recurring [Member] | ||||
Employee Service Stock-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated stock-based compensation expense | 1,608 | 452 | 3,229 | 1,415 |
One-time services and other [Member] | ||||
Employee Service Stock-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated stock-based compensation expense | 2,080 | 332 | 3,894 | 1,134 |
Total included in cost of revenue [Member] | ||||
Employee Service Stock-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated stock-based compensation expense | 3,688 | 784 | 7,123 | 2,549 |
Sales, marketing and customer success [Member] | ||||
Employee Service Stock-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated stock-based compensation expense | 4,004 | 2,826 | 10,085 | 8,564 |
Research and development [Member] | ||||
Employee Service Stock-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated stock-based compensation expense | 4,098 | 2,847 | 11,245 | 8,274 |
General and administrative [Member] | ||||
Employee Service Stock-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated stock-based compensation expense | 9,053 | 8,409 | 26,103 | 24,234 |
Total included in operating expenses [Member] | ||||
Employee Service Stock-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated stock-based compensation expense | $ 17,155 | $ 14,082 | $ 47,433 | $ 41,072 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - $ / shares | Mar. 13, 2020 | Feb. 29, 2020 |
Equity [Abstract] | ||
Annual dividend per share approved (in dollars per share) | $ 0.48 | |
Dividends paid per share (in dollars per share) | $ 0.12 |
Revenue Recognition (Details)
Revenue Recognition (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue recognized that was included in deferred revenue at beginning of period | $ 272 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 812 |
Revenue, remaining performance obligation, percentage to be recognized | 60.00% |
Revenue, remaining performance obligation, expected timing of satisfaction | 12 months |
Revenue Recognition (Contract B
Revenue Recognition (Contract Balances) (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Revenue from Contract with Customer [Abstract] | ||
Total deferred revenue | $ 328,255 | $ 316,137 |
Revenue Recognition (Disaggrega
Revenue Recognition (Disaggregation of Revenue by Geography) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 215,001 | $ 221,120 | $ 670,613 | $ 662,584 |
United States [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 182,649 | 188,649 | 565,912 | 567,174 |
United Kingdom [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 18,309 | 17,410 | 63,668 | 50,515 |
Other countries [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 14,043 | $ 15,061 | $ 41,033 | $ 44,895 |
Revenue Recognition (Disaggre_2
Revenue Recognition (Disaggregation of Revenue by Market Group) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 215,001 | $ 221,120 | $ 670,613 | $ 662,584 |
GMG [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 90,567 | 92,029 | 276,473 | 277,803 |
EMG [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 91,542 | 96,270 | 287,864 | 288,145 |
IMG [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 32,751 | 32,731 | 105,999 | 96,467 |
Other [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 141 | $ 90 | $ 277 | $ 169 |
Restructuring (Details)
Restructuring (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Restructuring and Related Activities [Abstract] | ||
Restructuring Costs | $ 0.4 | $ 3.1 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | Oct. 30, 2020USD ($) | Jun. 02, 2017USD ($) |
Subsequent Event [Line Items] | ||
Credit facility, maximum borrowing capacity | $ 700 | |
Subsequent event [Member] | ||
Subsequent Event [Line Items] | ||
Debt instrument, term | 5 years | |
Credit facility, maximum borrowing capacity | $ 900 | |
Line of credit facility, available increase capacity, amount | $ 250 | |
Subsequent event [Member] | Fed funds effective rate overnight index swap rate [Member] | ||
Subsequent Event [Line Items] | ||
Line Of credit facility variable interest rate | 0.50% | |
Subsequent event [Member] | Eurodollar [Member] | ||
Subsequent Event [Line Items] | ||
Line Of credit facility variable interest rate | 1.00% | |
Subsequent event [Member] | Maximum [Member] | ||
Subsequent Event [Line Items] | ||
Net leverage ratio | 3.25 | |
Line of credit facility, unused capacity, commitment fee percentage | 0.375% | |
Subsequent event [Member] | Maximum [Member] | Base rate [Member] | ||
Subsequent Event [Line Items] | ||
Debt instrument, basis spread on variable rate | 1.125% | |
Subsequent event [Member] | Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||
Subsequent Event [Line Items] | ||
Debt instrument, basis spread on variable rate | 2.125% | |
Subsequent event [Member] | Minimum [Member] | ||
Subsequent Event [Line Items] | ||
Line of credit facility, unused capacity, commitment fee percentage | 0.25% | |
Subsequent event [Member] | Minimum [Member] | Base rate [Member] | ||
Subsequent Event [Line Items] | ||
Debt instrument, basis spread on variable rate | 0.375% | |
Subsequent event [Member] | Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||
Subsequent Event [Line Items] | ||
Debt instrument, basis spread on variable rate | 1.375% | |
Subsequent event [Member] | Revolving credit loans [Member] | ||
Subsequent Event [Line Items] | ||
Credit facility, maximum borrowing capacity | $ 500 | |
Repayments of lines of credit | 124.4 | |
Subsequent event [Member] | Term loans [Member] | ||
Subsequent Event [Line Items] | ||
Credit facility, maximum borrowing capacity | 400 | |
Proceeds from lines of credit | 400 | |
Subsequent event [Member] | Standby letters of credit [Member] | ||
Subsequent Event [Line Items] | ||
Credit facility, maximum borrowing capacity | 50 | |
Subsequent event [Member] | Swingline loans [Member] | ||
Subsequent Event [Line Items] | ||
Credit facility, maximum borrowing capacity | 50 | |
Subsequent event [Member] | Foreign line of credit [Member] | ||
Subsequent Event [Line Items] | ||
Credit facility, maximum borrowing capacity | $ 100 |
Uncategorized Items - blkb-2020
Label | Element | Value |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | us-gaap_CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents | $ 577,295,000 |