Blackbaud Announces 2019 Fourth Quarter and Full Year Results

Staff Report From South Carolina CEO

Tuesday, February 11th, 2020

Blackbaud (NASDAQ: BLKB), the world's leading cloud software company powering social good, today announced financial results for its fourth quarter and full year ended December 31, 2019.

"We had a strong finish to 2019 as we furthered our strategic initiatives and drove valuable outcomes for our over 45,000 customers. Looking ahead, we have a positive outlook as the market remains solid, and we continue to be uniquely positioned to digitally transform the markets we serve," said Mike Gianoni, Blackbaud's president and CEO. "We've made truly transformational changes across the company over the last several years as we built a scalable operating model, created a culture of innovation and better positioned ourselves to capture the large market opportunities in front of us. The structural changes are now largely behind us, and we're well positioned to further differentiate ourselves as the leading cloud software company powering social good and deliver increased value to our customers, employees and our shareholders."

Fourth Quarter 2019 Results Compared to Fourth Quarter 2018 Results:

Total GAAP revenue was $237.8 million, up 7.5%, with $219.8 million in GAAP recurring revenue, representing 92.4% of total GAAP revenue. GAAP recurring revenue was up 9.9%.

Total non-GAAP revenue was $238.1 million, up 7.3%, with $220.1 million in non-GAAP recurring revenue, representing 92.4% of total non-GAAP revenue. Non-GAAP recurring revenue was up 9.8%.

Non-GAAP organic recurring revenue increased 6.7%.

GAAP income from operations was $3.6 million, with GAAP operating margin of 1.5%, a decrease of 510 basis points.

Non-GAAP income from operations was $35.5 million, with non-GAAP operating margin of 14.9%, a decrease of 420 basis points.

GAAP net income was $1.3 million, with GAAP diluted earnings per share of $0.03, down $0.16.

Non-GAAP net income was $24.5 million, with non-GAAP diluted earnings per share of $0.51, down $0.14.

Non-GAAP free cash flow was $46.1 million, a decrease of $4.6 million.

"Our strong performance in the fourth-quarter allowed us to achieve our full year financial guidance and exceed the mid-point of our ranges for revenue and earnings per share. Over the course of 2019, we made strategic investments to further expand our go-to-market model, drive cloud innovation for our customers and ensure scalability in our business," said Tony Boor, Blackbaud's executive vice president and CFO. "We're optimistic about the year ahead as we continue the positive shift in revenue mix towards recurring revenue. From a profitability and cash flow perspective, we're underway in a multi-year effort to migrate our cloud infrastructure to leading public cloud service providers, and we expect to continue a heightened pace of investment in our go-to-market model and cloud innovation to better position the business for accelerated growth and long term success."

An explanation of all non-GAAP financial measures referenced in this press release is included below under the heading "Non-GAAP Financial Measures." A reconciliation of the company's non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release.

 Recent Company Highlights:

A year after acquiring market-leading corporate social responsibility provider, YourCause, Blackbaud reports record growth and expansion of its solutions for companies committed to social good.

Blackbaud K–12 Solutions™ closes out a marquee 2019 marked by increasing revenue and efficiencies for private schools through its total school solution.

Blackbaud appoints Margaret "Maggie" Driscoll as its Chief People Officer, leading all human resources functions for the company.

Blackbaud, which powers 24 of the top 25 private U.S. colleges as ranked by Forbes with its solutions, continues to transform the higher education technology landscape and demonstrate growth just a year after introducing its comprehensive Cloud Solution for Higher Education.

To celebrate the eighth annual global giving holiday, GivingTuesday, Blackbaud unveils a new digital resource to support comprehensive giving strategies.

Visit www.blackbaud.com/newsroom for more information about Blackbaud's recent highlights.

Full-Year 2019 Results Compared to Full-Year 2018 Results:

Total GAAP revenue was $900.4 million, up 6.1%, with $831.6 million in GAAP recurring revenue, representing 92.4% of total GAAP revenue. GAAP recurring revenue was up 9.1%.

Total non-GAAP revenue was $902.4 million, up 6.0%, with $833.5 million in non-GAAP recurring revenue, representing 92.4% of total non-GAAP revenue. Non-GAAP recurring revenue was up 9.0%.

Non-GAAP organic recurring revenue increased 5.8%.

GAAP income from operations was $27.1 million, with GAAP operating margin of 3.0%, a decrease of 400 basis points.

Non-GAAP income from operations was $151.6 million, with non-GAAP operating margin of 16.8%, a decrease of 320 basis points.

GAAP net income was $11.9 million, with GAAP diluted earnings per share of $0.25, down $0.68.

Non-GAAP net income was $108.0 million, with non-GAAP diluted earnings per share of $2.24, down $0.35.

Non-GAAP free cash flow was $124.1 million, a decrease of $24.9 million.

Dividend
Blackbaud announced today that its Board of Directors has declared a first quarter 2020 dividend of $0.12 per share payable on March 13, 2020 to stockholders of record on February 28, 2020.

Financial Outlook
Blackbaud today announced its 2020 full year financial guidance:

Non-GAAP revenue of $930 million to $955 million

Non-GAAP operating margin of 16.0% to 16.5%

Non-GAAP diluted earnings per share of $2.20 to $2.35

Non-GAAP free cash flow of $100 million to $115 million