BLACKBAUD, INC. ANNOUNCES RECORD THIRD QUARTER 2005 RESULTS, FOURTH QUARTER
DIVIDEND AND CEO SUCCESSION PLAN
CHARLESTON, S.C.--October 31, 2005 -- Blackbaud, Inc. (Nasdaq: BLKB), the
leading provider of software and related services designed specifically for
nonprofit organizations, today announced financial results for its third quarter
2005.
For the quarter ended September 30, 2005, Blackbaud reported total revenue of
$43.1 million, an increase of 18% compared with the third quarter of 2004.
License revenue increased 17% to $7.3 million, services revenue increased 19% to
$14.5 million, and maintenance and subscriptions revenue increased 17% to $20.0
million over the comparable period.
Robert J. Sywolski, Chief Executive Officer of Blackbaud, stated, "We are very
pleased with our third quarter results, which were again highlighted by both
strength in our core applications and continued success with our newer
solutions. During the quarter we generated the highest quarterly sales growth
this year from our core business, thanks to the continued success of our
flagship solution, Raisers Edge. Equally important, our new solutions continued
to deliver very strong results, with sales growth coming in at over 40%."
Blackbaud's income from operations and net income, determined in accordance with
generally accepted accounting principles (GAAP), were $10.7 million and $7.7
million, respectively, for the third quarter 2005 compared with income from
operations of $12.7 million and net income of $7.6 million in the same period
last year. GAAP diluted earnings per share were $0.17 for the quarter ended
September 30, 2005, compared with $0.16 in the same period last year.
For the quarter ended September 30, 2005, pro forma income from operations and
net income, which exclude stock-based compensation expense, certain adjustments
to our deferred tax asset, costs of the Company's initial public offering in
2004 and amortization of intangibles arising from business combinations, were
$12.3 million and $7.6 million, respectively, compared with $11.0 million and
$6.7 million in the same period last year.
Pro forma earnings per share were $0.17 for the quarter ended September 30,
2005. A reconciliation of GAAP to pro forma results has been provided in the
financial statement tables included in this press release. An explanation of
these measures is also included below under the heading "Non-GAAP Financial
Measures."
Cash from operations for the third quarter and nine months ended September 30,
2005 was $19.8 million and $39.1 million, respectively, increases of 15% and 17%
respectively over the prior year periods. Blackbaud had cash and cash
equivalents of $20.7 million at September 30, 2005, a decrease from the $50.4
million level at the end of the prior quarter. As previously announced, in July
the Company used $43.3 million of its cash to repurchase shares of its common
stock in a self-tender offer. Additionally after completion of the tender, the
Company used $2.3 million to repurchase another 171,420 shares in the market.
Timothy V. Williams, Chief Financial Officer of Blackbaud, stated, "Blackbaud
continues to build on its track record of growth, profitability and
predictability. Over the years, our business model has proven to deliver above
average visibility compared with the overall software sector, while our business
momentum has led to higher revenue growth than in prior years. Additionally, the
high levels of profitability produced by our business model and favorable tax
position has combined to drive very strong operating cash flows that are well
above our earnings"
FOURTH QUARTER DIVIDEND
Blackbaud announced today that its Board of Directors has declared a fourth
quarter dividend of $0.05 per share payable on November 30, 2005 to stockholders
of record on November 15, 2005.
CEO SUCCESSION PLAN
The Company announced that Robert J. Sywolski and the Board of Directors have
initiated a succession process to identify a new chief executive officer. The
Board has commenced a search and has already met with several highly qualified
candidates. The Board intends to select and announce a successor as soon as
possible and hopefully well before the expiration of Mr. Sywolski's contract in
March 2006. Mr. Sywolski said, "Proper CEO succession is a necessary
responsibility and critical component to the long-term strategy of any growing,
successful company. I believe that now is the right time for Blackbaud to
recruit a new CEO with the energy, experience and commitment to lead this
Company to continued growth".
CONFERENCE CALL DETAILS
Blackbaud will host a conference call today, October 31, at 5:00 p.m. (EDT) to
discuss the Company's financial results, operations and related matters. To
access this call, dial 888-802-2266 (domestic) or 913-312-1270 (international).
A replay of this conference call will be available through November 4, 2005, at
888-203-1112 (domestic) or 719-457-0820 (international). The replay passcode is
4104567. A live webcast of this conference call will be available on the
"Investor Relations" page of the Company's Web site, and a replay will be
archived on the Web site as well.
ABOUT BLACKBAUD
Blackbaud is the leading global provider of software and related services
designed specifically for nonprofit organizations. Approximately 13,000
organizations - including the American Red Cross, Bowdoin College, the
Chesapeake Bay Foundation, the Crohn's & Colitis Foundation of America, the
Detroit Zoological Society, Episcopal High School, Help the Aged, the New York
Philharmonic and United Way of America - use Blackbaud products and consulting
services for fundraising, financial management, business intelligence and school
administration. Blackbaud's solutions include The Raiser's Edge(R), The
Financial Edge(TM), The Education Edge(TM), The Patron Edge (TM), Blackbaud(R)
NetCommunity(TM), The Information Edge(TM), WealthPoint(TM) and
ProspectPoint(TM), as well as a wide range of consulting and educational
services. Founded in 1981, Blackbaud is headquartered in Charleston, South
Carolina, and also has operations in Toronto, Ontario; Glasgow, Scotland; and
Sydney, Australia.
Blackbaud, the Blackbaud logo, The Raiser's Edge, The Financial Edge, The
Education Edge, The Information Edge, The Patron Edge, Blackbaud NetCommunity,
WealthPoint and ProspectPoint are trademarks or registered trademarks of
Blackbaud, Inc.
FORWARD-LOOKING STATEMENTS
Except for historical information, all of the statements, expectations and
assumptions contained in this news release are forward-looking statements that
involve a number of risks and uncertainties. Although Blackbaud attempts to be
accurate in making these forward-looking statements, it is possible that future
circumstances might differ from the assumptions on which such statements are
based. In addition, other important factors that could cause actual results to
differ materially from these forward-looking statements include the following:
continued success in sales growth; risks associated with management of growth;
the ability to attract and retain key personnel; risks related to our dividend
and stock repurchase programs, including potential limitations on our ability to
grow and the possibility that we might discontinue payment of dividends;
adoption of our products and services by nonprofits; uncertainty regarding
increased business and renewals from existing customers; risk associated with
product concentration; lengthy sales and implementation cycles; economic
conditions and seasonality; competition; risks associated with acquisitions;
technological changes that make our products and services less competitive; and
the other risk
factors set forth from time to time in the SEC filings for Blackbaud, copies of
which are available free of charge upon request from Blackbaud's investor
relations department.
NON-GAAP FINANCIAL MEASURES
Blackbaud has provided in this release financial information that has not been
prepared in accordance with GAAP. This information includes pro forma gross
margin, pro forma operating income and margin, pro forma net income and pro
forma earnings per share. Blackbaud uses these non-GAAP financial measures
internally in analyzing its financial results and believes they are useful to
investors, as a supplement to GAAP measures, in evaluating Blackbaud's ongoing
operational performance. Blackbaud believes that the use of these non-GAAP
financial measures provides an additional tool for investors to use in
evaluating ongoing operating results and trends and in comparing its financial
results with other companies in Blackbaud's industry, many of which present
similar non-GAAP financial measures to investors. As noted, the non-GAAP
financial results discussed above exclude the impact of costs associated with
the Blackbaud's IPO (completed on July 22, 2004), amortization of intangibles
arising from business combinations, stock option compensation expense and
certain adjustments to the deferred tax asset.
Non-GAAP financial measures should not be considered in isolation from, or as a
substitute for, financial information prepared in accordance with GAAP.
Investors are encouraged to review the reconciliation of these non-GAAP measures
to their most directly comparable GAAP financial measure below. As previously
mentioned, a reconciliation of GAAP to our non-GAAP financial measures has been
provided in the financial statement tables included in this press release.
INVESTOR CONTACT:
Tim Dolan
Integrated Corporate Relations
203-682-8200
MEDIA CONTACT:
Megan McDonnell
Integrated Corporate Relations
203-682-8200
SOURCE: Blackbaud, Inc.
BLACKBAUD, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
September 30, December 31,
2005 2004
---------------------------------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 20,703 $ 42,144
Accounts receivable, net of allowance of $1,229 and
$1,420, respectively 22,348 19,580
Prepaid expenses and other current assets 11,945 1,806
Deferred tax asset, current portion 1,022 542
---------------------------------------
Total current assets 56,018 64,072
Property and equipment, net 7,389 7,199
Deferred tax asset 75,480 87,522
Goodwill 2,194 1,673
Intangible assets, net 415 -
Other assets 139 342
---------------------------------------
Total assets $ 141,635 $ 160,808
=======================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 2,742 $ 2,653
Current portion of capital lease obligations - 44
Accrued expenses and other current liabilities 14,736 16,019
Deferred revenue 59,736 51,593
---------------------------------------
Total current liabilities 77,214 70,309
Long-term deferred revenue 1,209 710
---------------------------------------
Total liabilities 78,423 71,019
---------------------------------------
Commitments and contingencies
Stockholders' equity:
Preferred stock; 20,000,000 shares authorized, none outstanding - -
Common stock, $.001 par value; 180,000,000
shares authorized, 45,888,206 and 42,549,056 shares issued
at September 30, 2005 and December 31, 2004, respectively 46 43
Additional paid-in capital 63,816 55,292
Deferred compensation (485) (1,064)
Treasury stock, at cost; 3,998,013 shares at September 30, 2005 (56,229) -
Accumulated other comprehensive income 167 355
Retained earnings 55,897 35,163
---------------------------------------
Total stockholders' equity 63,212 89,789
---------------------------------------
Total liabilities and stockholders' equity $ 141,635 $ 160,808
=======================================
BLACKBAUD, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share amounts)
Three months Nine months
ended September 30, ended September 30,
2005 2004 2005 2004
------------------------------ ---------------------------------
Revenue
License fees $ 7,291 $ 6,244 $ 22,063 $ 18,614
Services 14,486 12,145 40,070 32,808
Maintenance and subscriptions 20,005 17,101 57,779 49,126
Other revenue 1,362 920 3,443 2,849
------------------------------ ---------------------------------
Total revenue 43,144 36,410 123,355 103,397
------------------------------ ---------------------------------
Cost of revenue
Cost of license fees 1,077 975 3,166 2,468
Costuofsservicesble(ofewhicha$55,ance$(1,211),7$229 and
$(644) in the three months ended
September 30, 2005 and 2004 and the nine
months ended September 30, 2005
and 2004, respectively, was stock
based compensation expense (benefit)) 7,236 4,930 20,996 16,482
Cost of maintenance and subscriptions
(of which $6, $(168), $28 and $(106) in the
three months ended September 30, 2005
and 2004 and the nine months ended
September 30, 2005 and 2004, respectively,
was stock based compensation
expense (benefit)) 3,083 2,544 9,071 8,130
Cost of other revenue 1,166 802 3,101 2,578
------------------------------ ---------------------------------
Total cost of revenue 12,562 9,251 36,334 29,658
------------------------------ ---------------------------------
Gross profit 30,582 27,159 87,021 73,739
------------------------------ ---------------------------------
Sales and marketing 8,595 6,858 25,088 20,151
Research and development 5,309 4,541 15,640 13,245
General and administrative 4,405 3,408 12,246 9,462
Amortization 10 - 10 32
Costs of initial public offering - 805 - 2,455
Stock based compensation expense (benefit) 1,546 (1,138) (2,970) 55
------------------------------ ---------------------------------
Total operating expenses 19,865 14,474 50,014 45,400
------------------------------ ---------------------------------
Income from operations 10,717 12,685 37,007 28,339
Interest income 190 79 770 133
Interest expense (12) (18) (37) (268)
Other (expense) income, net (32) (4) (34) 342
------------------------------ ---------------------------------
Income before provision for income taxes 10,863 12,742 37,706 28,546
Income tax provision 3,143 5,155 10,592 11,619
------------------------------ ---------------------------------
Net income $ 7,720 $ 7,587 $ 27,114 $ 16,927
============================== =================================
Earnings per share
Basic $ 0.18 $ 0.18 $ 0.64 $ 0.40
Diluted $ 0.17 $ 0.16 $ 0.58 $ 0.36
Common shares and equivalents outstanding
Basic weighted average shares 41,961,726 42,536,961 42,628,278 42,480,059
Diluted weighted average shares 45,017,221 46,515,156 46,676,356 46,466,986
Dividends per share $ 0.05 - $ 0.15 $ 0.00
Summary of stock based compensation expense (benefit)
Cost of services $ 55 $ (1,211) $ 229 $ (644)
Cost of maintenance and subscription revenue 6 (168) 28 (106)
------------------------------ ---------------------------------
Total cost of revenue 61 (1,379) 257 (750)
Sales and marketing 38 (670) 182 (194)
Research and development 22 (833) 119 (517)
General and administrative 1,486 365 (3,271) 766
------------------------------ ---------------------------------
Total operating expense 1,546 (1,138) (2,970) 55
------------------------------ ---------------------------------
Total stock based compensation expense (benefit) $ 1,607 $ (2,517) $ (2,713) $ (695)
============================== =================================
BLACKBAUD, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
NINE MONTHS ENDED SEPTEMBER 30,
2005 2004
-------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 27,114 $ 16,927
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 2,026 1,889
Provision for doubtful accounts and sales returns 711 32
Stock based compensation benefit (2,404) (695)
Amortization of deferred financing fees 36 156
Deferred taxes 11,613 7,555
Benefit on exercise of stock options 6,033 -
Changes in assets and liabilities, net of acquisition
Accounts receivable (3,427) (2,365)
Prepaid expenses and other assets (9,963) (267)
Trade accounts payable 96 (230)
Accrued expenses and other current liabilities (1,203) 2,353
Deferred revenue 8,452 8,040
-------------------------------------
Total adjustments 11,970 16,468
-------------------------------------
Net cash provided by operating activities 39,084 33,395
-------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (2,223) (1,616)
Purchase of net assets of acquired company (938) (97)
-------------------------------------
Net cash used in investing activities (3,161) (1,713)
-------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments on long-term debt and capital
lease obligations (44) (5,105)
Proceeds from exercise of stock options 5,475 642
Purchase of treasury stock (56,229) (161)
Dividend payments to stockholders (6,380) -
-------------------------------------
Net cash used in financing activities (57,178) (4,624)
-------------------------------------
Effect of exchange rate on cash and cash equivalents (186) (384)
-------------------------------------
Net increase in cash and cash equivalents (21,441) 26,674
Cash and cash equivalents, beginning of period 42,144 6,708
-------------------------------------
Cash and cash equivalents, end of period $ 20,703 $ 33,382
=====================================
BLACKBAUD, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
(In thousands, except per share amounts)
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
2005 2004 2005 2004
------------------------------------- ---------------------------------------
GAAP REVENUE $ 43,144 $ 36,410 $ 123,355 $ 103,397
===================================== =======================================
GAAP GROSS MARGIN $ 30,582 $ 27,159 $ 87,021 $ 73,739
PRO FORMA ADJUSTMENTS:
Amortization of deferred compensation
expense (benefit) - options 61 (1,379) 257 (750)
------------------------------------- ---------------------------------------
PRO FORMA GROSS PROFIT $ 30,643 $ 25,780 $ 87,278 $ 72,989
===================================== =======================================
PRO FORMA GROSS MARGIN 71% 71% 71% 71%
===================================== =======================================
GAAP INCOME FROM OPERATIONS $ 10,717 $ 12,685 $ 37,007 $ 28,339
PRO FORMA ADJUSTMENTS:
Amortization of deferred compensation e
xpense (benefit) - options 1,569 (2,517) (2,713) (695)
Amortization of deferred compensation
expense (benefit) - restricted stock 38 - - -
Costs of initial public offering - 805 - 2,455
Amortization of intangibles from
business combinations 10 - 10 32
------------------------------------- ---------------------------------------
Total pro forma adjustments 1,617 (1,712) (2,703) 1,792
------------------------------------- ---------------------------------------
PRO FORMA INCOME FROM OPERATIONS $ 12,334 $ 10,973 $ 34,304 $ 30,131
===================================== =======================================
PRO FORMA OPERATING MARGIN 29% 30% 28% 29%
===================================== =======================================
GAAP NET INCOME $ 7,720 $ 7,587 $ 27,114 $ 16,927
PRO FORMA ADJUSTMENTS:
Total pro forma adjustments affecting income
from operations 1,617 (1,712) (2,703) 1,792
Tax impact related to pro forma adjustments (1,725) 854 (3,060) (213)
------------------------------------- ---------------------------------------
PRO FORMA NET INCOME $ 7,612 $ 6,729 $ 21,351 $ 18,506
===================================== =======================================
GAAP SHARES USED IN COMPUTING DILUTED
INCOME PER SHARE 45,017 46,515 46,676 46,467
PRO FORMA ADJUSTMENTS:
Incremental shares related to stock options (433) (612) (694) (655)
------------------------------------- ---------------------------------------
SHARES USED IN COMPUTING PRO FORMA
EARNINGS PER DILUTED SHARE 44,584 45,903 45,982 45,812
===================================== =======================================
PRO FORMA EARNINGS PER DILUTED SHARE $ 0.17 $ 0.15 $ 0.46 $ 0.40
===================================== =======================================