Blackbaud Inc BLKB

NAS: BLKB | ISIN: US09227Q1004   20/02/2024
68,99 USD (-0,22%)
(-0,22%)   20/02/2024

Blackbaud Announces 2023 Third Quarter Results

Revenue Growth Accelerating; Operating Discipline Contributes to Another Quarter of Margin Expansion; Rule of 40 Target Achieved Earlier than Expected

CHARLESTON, S.C., Oct. 31, 2023 /PRNewswire/ -- Blackbaud (NASDAQ: BLKB), the leading provider of software for powering social impact, today announced financial results for its third quarter ended September 30, 2023.

"We produced very strong results in the third quarter," said Mike Gianoni, president and CEO, Blackbaud. "Further margin expansion and accelerating revenue growth enabled us to exceed the Rule of 40 a quarter earlier than expected. We are well positioned to build on our momentum in 2024 and are excited about the significant profitable growth and substantial value creation we can achieve through the continued execution of our five-point operating plan."   

Third Quarter 2023 Results Compared to Third Quarter 2022 Results:

  • GAAP total revenue was $277.6 million, up 6.2%, with $269.0 million in GAAP recurring revenue, up 7.9%. GAAP recurring revenue was 97% of total revenue.
  • Non-GAAP organic recurring revenue increased 8.3%.
  • GAAP income from operations was $22.0 million, inclusive of security incident-related costs of $4.1 million, with GAAP operating margin of 7.9%, an increase of 1,060 basis points.
  • Non-GAAP income from operations was $79.6 million, with non-GAAP operating margin of 28.7%, an increase of 960 basis points.
  • GAAP net income was $9.0 million, with GAAP diluted earnings per share of $0.17, up $0.37 per share.
  • Non-GAAP net income was $60.5 million, with non-GAAP diluted earnings per share of $1.12, up $0.43 per share.
  • Non-GAAP adjusted EBITDA was $97.1 million, up $30.2 million, with non-GAAP adjusted EBITDA margin of 35.0%, an increase of 940 basis points.
  • GAAP net cash provided by operating activities was $128.0 million, an increase of $20.0 million.
  • Non-GAAP free cash flow was $110.6 million, an increase of $21.2 million, with non-GAAP free cash flow margin of 39.8%, an increase of 560 basis points.
  • Non-GAAP adjusted free cash flow was $117.9 million, an increase of $24.1 million, with non-GAAP adjusted free cash flow margin of 42.5%, an increase of 660 basis points.

"The third quarter represented an inflection point for revenue growth, with organic revenues growing 6.6% and even faster organic recurring revenue growth of 8.3%," said Tony Boor, executive vice president and CFO, Blackbaud. "Through our cost management initiatives, we also continued to strengthen profitability, with an adjusted EBITDA margin of 35.0%, a more than nine-point improvement year over year. Additionally, we generated $118 million of adjusted free cash flow in the quarter and are on track to meet or exceed the high end of our annual guidance range for adjusted free cash flow."

An explanation of all non-GAAP financial measures referenced in this press release, including the Rule of 40, 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

  • Blackbaud appointed Todd Lant as Chief Customer Officer. Lant, a 20-year Blackbaud veteran, will lead the global customer success team to drive customer value and outcomes.
  • At bbcon 2023, Blackbaud announced a major wave of technology innovation, with product enhancements focused on more seamless integration, built-in artificial intelligence and increased flexibility.
  • Blackbaud announced the development of Impact Edge™, the first AI-powered social impact reporting and storytelling solution for companies that will enable corporate social impact professionals to use quantitative and qualitative data to rapidly articulate their impact to their organization's most important stakeholders.
  • Blackbaud added generative AI capabilities to JustGiving® to revolutionize fundraising by helping individuals create compelling fundraising pages in a matter of seconds to raise more money for the causes they care about.
  • Blackbaud further strengthened its offerings in peer-to-peer fundraising with the next evolution of Good Move™, its activity-tracking mobile app.
  • Blackbaud customers helped support the people of Hawaii in the wake of catastrophic wildfires by raising funds and providing disaster relief. This included the Hawai'i Community Foundation's Maui Strong Fund, which saw a 500% increase in donations in three weeks alone, enabling the foundation to distribute millions in grants to nearly 60 partners on the ground providing immediate relief to Maui communities.

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

Financial Outlook
Blackbaud today reiterated its 2023 full year financial guidance:

  • Non-GAAP revenue of $1.095 billion to $1.125 billion
  • Non-GAAP adjusted EBITDA margin of 30.5% to 31.5%
  • Non-GAAP earnings per share of $3.63 to $3.94
  • Non-GAAP adjusted free cash flow of $190 million to $210 million

Included in its 2023 full year financial guidance are the following assumptions:

  • Non-GAAP annualized effective tax rate is expected to be approximately 20%
  • Interest expense for the year is expected to be approximately $37 million to $41 million
  • Fully diluted shares for the year are expected to be approximately 53 million to 54 million
  • Capital expenditures for the year are expected to be approximately $65 million to $75 million, including approximately $55 million to $65 million of capitalized software and content development costs

Blackbaud has not reconciled forward-looking full-year non-GAAP financial measures contained in this news release to their most directly comparable GAAP measures, as permitted by Item 10(e)(1)(i)(B) of Regulation S-K. Such reconciliations would require unreasonable efforts at this time to estimate and quantify with a reasonable degree of certainty various necessary GAAP components, including for example those related to compensation, acquisition transactions and integration, tax items or others that may arise during the year. These components and other factors could materially impact the amount of the future directly comparable GAAP measures, which may differ significantly from their non-GAAP counterparts.

In order to provide a meaningful basis for comparison, Blackbaud uses non-GAAP adjusted free cash flow in analyzing its operating performance. Non-GAAP adjusted free cash flow is defined as operating cash flow less capital expenditures, including costs required to be capitalized for software and content development, capital expenditures for property and equipment, plus cash outflows, net of insurance, related to the previously disclosed Security Incident discovered in May 2020 (the "Security Incident"). Total costs related to the Security Incident exceeded the limit of our insurance coverage during the first quarter of 2022. For full year 2023, Blackbaud currently expects net cash outlays of $25 million to $35 million for ongoing legal fees related to the Security Incident. For full year 2024, we currently expect a significant decrease in net pre-tax expense related to the Security Incident for ongoing legal fees. In line with the company's policy, all associated costs due to third-party service providers and consultants, including legal fees, are expensed as incurred. Please refer to the section below titled "Non-GAAP Financial Measures" for more information on Blackbaud's use of non-GAAP financial measures.

Stock Repurchase Program
As of September 30, 2023, Blackbaud had approximately $250 million remaining under its common stock repurchase program that was authorized in December 2021.

Conference Call Details

What:

Blackbaud's 2023 Third Quarter Conference Call

When:

November 1, 2023

Time:

8:00 a.m. (Eastern Time)

Live Call:

1-877-407-3088 (US/Canada)

Webcast:

Blackbaud's Investor Relations Webpage

About Blackbaud
Blackbaud (NASDAQ: BLKB) is the leading software provider exclusively dedicated to powering social impact. Serving the nonprofit and education sectors, companies committed to social responsibility and individual change makers, Blackbaud's essential software is built to accelerate impact in fundraising, nonprofit financial management, digital giving, grantmaking, corporate social responsibility and education management. With millions of users and over $100 billion raised, granted or managed through Blackbaud platforms every year, Blackbaud's solutions are unleashing the potential of the people and organizations who change the world. Blackbaud has been named to Newsweek's list of America's Most Responsible Companies, Quartz's list of Best Companies for Remote Workers, and Forbes' list of America's Best Employers. A remote-first company, Blackbaud has operations in the United States, Australia, Canada, Costa Rica and the United Kingdom, supporting users in 100+ countries. Learn more at www.blackbaud.com or follow us on X/Twitter, LinkedIn, Instagram and Facebook.

Investor Contact
IR@blackbaud.com 

Media Contact
media@blackbaud.com 

Forward-Looking Statements
Except for historical information, all of the statements, expectations, and assumptions contained in this news release are forward-looking statements which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding the predictability of our financial condition and results of operations. These statements involve a number of risks and uncertainties. Although Blackbaud attempts to be accurate in making these forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based. In addition, other important factors that could cause results to differ materially include the following: management of integration of acquired companies; uncertainty regarding increased business and renewals from existing customers; a shifting revenue mix that may impact gross margin; continued success in sales growth; cybersecurity and data protection risks and related liabilities; potential litigation involving us; and the other risk factors set forth from time to time in the SEC filings for Blackbaud, copies of which are available free of charge at the SEC's website at www.sec.gov or upon request from Blackbaud's investor relations department. Blackbaud assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

Trademarks
All Blackbaud product names appearing herein are trademarks or registered trademarks of Blackbaud, Inc.

Non-GAAP Financial Measures
Blackbaud has provided in this release financial information that has not been prepared in accordance with GAAP. Blackbaud uses non-GAAP financial measures internally in analyzing its operational performance. Accordingly, Blackbaud believes these non-GAAP measures are useful to investors, as a supplement to GAAP measures, in evaluating its ongoing operational performance and trends and in comparing its financial results from period-to-period with other companies in Blackbaud's industry, many of which present similar non-GAAP financial measures to investors. However, these non-GAAP financial measures may not be completely comparable to similarly titled measures of other companies due to potential differences in the exact method of calculation between companies. 

The non-GAAP financial measures discussed above exclude the impact of certain transactions that Blackbaud believes are not directly related to its operating performance in any particular period, but are for its long-term benefit over multiple periods. Blackbaud believes these non-GAAP financial measures reflect its ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in its business.

While Blackbaud believes these non-GAAP measures provide useful supplemental information, 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 reconciliations of these non-GAAP measures to their most directly comparable GAAP financial measures.

Non-GAAP free cash flow is defined as operating cash flow less capital expenditures, including costs required to be capitalized for software and content development, and capital expenditures for property and equipment. In addition, and in order to provide a meaningful basis for comparison, Blackbaud now uses non-GAAP adjusted free cash flow in analyzing its operating performance. Non-GAAP adjusted free cash flow is defined as operating cash flow less capital expenditures, including costs required to be capitalized for software and content development, and capital expenditures for property and equipment, plus cash outflows, net of insurance, related to the Security Incident. Blackbaud believes non-GAAP free cash flow and non-GAAP adjusted free cash flow provide useful measures of the company's operating performance. Non-GAAP adjusted free cash flow is not intended to represent and should not be viewed as the amount of residual cash flow available for discretionary expenditures.

In addition, Blackbaud uses non-GAAP organic revenue growth, non-GAAP organic revenue growth on a constant currency basis, non-GAAP organic recurring revenue growth and non-GAAP organic recurring revenue growth on a constant currency basis, in analyzing its operating performance. Blackbaud believes that these non-GAAP measures are useful to investors, as a supplement to GAAP measures, for evaluating the periodic growth of its business on a consistent basis. Each of these measures excludes incremental acquisition-related revenue attributable to companies acquired in the current fiscal year. For companies acquired in the immediately preceding fiscal year, each of these measures reflects presentation of full-year incremental non-GAAP revenue derived from such companies as if they were combined throughout the prior period. In addition, each of these measures excludes prior period revenue associated with divested businesses. The exclusion of the prior period revenue is to present the results of the divested businesses within the results of the combined company for the same period of time in both the prior and current periods. Blackbaud believes this presentation provides a more comparable representation of its current business' organic revenue growth and revenue run-rate.

Rule of 40 is defined as non-GAAP organic revenue growth plus non-GAAP adjusted EBITDA margin. Non-GAAP adjusted EBITDA is defined as GAAP net income plus interest, net; income tax provision (benefit); depreciation; amortization of intangible assets from business combinations; amortization of software and content development costs; stock-based compensation; employee severance; acquisition and disposition-related costs; restructuring and other real estate activities; costs, net of insurance, related to the Security Incident; and impairment of capitalized software development costs.

 

Blackbaud, Inc.

Consolidated Balance Sheets

(Unaudited)


(dollars in thousands, except per share amounts)

September 30,
2023

December 31,
2022

Assets



Current assets:



Cash and cash equivalents

$           31,091

$           31,691

Restricted cash

359,596

702,240

Accounts receivable, net of allowance of $7,689 and $7,318 at September 30, 2023 and

December 31, 2022, respectively

102,755

102,809

Customer funds receivable

3,557

249

Prepaid expenses and other current assets

82,407

81,654

Total current assets

579,406

918,643

Property and equipment, net

100,575

107,426

Operating lease right-of-use assets

38,374

45,899

Software and content development costs, net

155,937

141,023

Goodwill

1,051,163

1,050,272

Intangible assets, net

594,169

635,136

Other assets

83,654

94,304

Total assets

$      2,603,278

$      2,992,703

Liabilities and stockholders' equity



Current liabilities:



Trade accounts payable

$           39,357

$           42,559

Accrued expenses and other current liabilities

101,379

86,002

Due to customers

361,837

700,860

Debt, current portion

19,217

18,802

Deferred revenue, current portion

415,810

382,419

Total current liabilities

937,600

1,230,642

Debt, net of current portion

723,376

840,241

Deferred tax liability

94,322

125,759

Deferred revenue, net of current portion

3,022

2,817

Operating lease liabilities, net of current portion

41,811

44,918

Other liabilities

2,976

4,294

Total liabilities

1,803,107

2,248,671

Commitments and contingencies



Stockholders' equity:



Preferred stock; 20,000,000 shares authorized, none outstanding

Common stock, $0.001 par value; 180,000,000 shares authorized, 69,187,767 and

67,814,044 shares issued at September 30, 2023 and December 31, 2022, respectively

69

68

Additional paid-in capital

1,170,919

1,075,264

Treasury stock, at cost; 15,337,077 and 14,745,230 shares at September 30, 2023 and

December 31, 2022, respectively

(572,428)

(537,287)

Accumulated other comprehensive income

8,141

8,938

Retained earnings

193,470

197,049

Total stockholders' equity

800,171

744,032

Total liabilities and stockholders' equity

$      2,603,278

$      2,992,703

 

Blackbaud, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


(dollars in thousands, except per share amounts)

Three months ended
September 30,


Nine months ended
September 30,

2023

2022


2023

2022

Revenue






Recurring

$        269,001

$        249,387


$        784,139

$        746,560

One-time services and other

8,625

11,910


26,282

36,788

Total revenue

277,626

261,297


810,421

783,348

Cost of revenue






Cost of recurring

114,132

111,488


342,558

338,149

Cost of one-time services and other

7,634

9,449


23,795

31,757

Total cost of revenue

121,766

120,937


366,353

369,906

Gross profit

155,860

140,360


444,068

413,442

Operating expenses






Sales, marketing and customer success

52,462

56,414


160,038

164,367

Research and development

37,965

40,451


114,702

118,736

General and administrative

42,596

49,860


154,582

141,013

Amortization

793

647


2,355

2,263

Total operating expenses

133,816

147,372


431,677

426,379

Income (loss) from operations

22,044

(7,012)


12,391

(12,937)

Interest expense

(9,620)

(9,337)


(31,449)

(25,912)

Other income, net

5,662

4,454


10,447

8,708

Income (loss) before provision (benefit) for income taxes

18,086

(11,895)


(8,611)

(30,141)

Income tax provision (benefit)

9,069

(1,576)


(5,032)

(5,993)

Net income (loss)

$            9,017

$        (10,319)


$          (3,579)

$        (24,148)

Earnings (loss) per share






Basic

$              0.17

$             (0.20)


$             (0.07)

$             (0.47)

Diluted

$              0.17

$             (0.20)


$             (0.07)

$             (0.47)

Common shares and equivalents outstanding






Basic weighted average shares

52,704,974

51,692,152


52,495,556

51,519,340

Diluted weighted average shares

54,089,897

51,692,152


52,495,556

51,519,340

Other comprehensive loss






Foreign currency translation adjustment

$          (4,794)

$        (11,536)


$               419

$        (24,066)

Unrealized gain (loss) on derivative instruments, net of tax

4,093

6,797


(1,216)

20,260

Total other comprehensive loss

(701)

(4,739)


(797)

(3,806)

Comprehensive income (loss)

$            8,316

$        (15,058)


$          (4,376)

$        (27,954)

 

Blackbaud, Inc.

Consolidated Statements of Cash Flows

(Unaudited)



Nine months ended
September 30,

(dollars in thousands)

2023

2022

Cash flows from operating activities



Net loss

$            (3,579)

$          (24,148)

Adjustments to reconcile net loss to net cash provided by operating activities:



Depreciation and amortization

81,627

76,606

Provision for credit losses and sales returns

4,815

4,374

Stock-based compensation expense

95,668

83,659

Deferred taxes

(31,163)

(21,672)

Amortization of deferred financing costs and discount

1,388

1,827

Other non-cash adjustments

5,106

5,677

Changes in operating assets and liabilities, net of acquisition and disposal of businesses:



Accounts receivable

(4,757)

9,998

Prepaid expenses and other assets

14,488

22,246

Trade accounts payable

(3,362)

14,435

Accrued expenses and other liabilities

9,073

(7,028)

Deferred revenue

33,679

23,832

Net cash provided by operating activities

202,983

189,806

Cash flows from investing activities



Purchase of property and equipment

(4,243)

(10,512)

Capitalized software and content development costs

(44,664)

(42,757)

Purchase of net assets of acquired companies, net of cash and restricted cash acquired

(13)

(20,945)

Cash received in sale of business

6,426

Other investing activities

(250)

Net cash used in investing activities

(49,170)

(67,788)

Cash flows from financing activities



Proceeds from issuance of debt

175,800

126,900

Payments on debt

(293,957)

(229,442)

Stock issuance costs

(1,205)

Employee taxes paid for withheld shares upon equity award settlement

(35,568)

(36,057)

Change in due to customers

(339,735)

(243,109)

Change in customer funds receivable

(3,286)

(1,291)

Net cash used in financing activities

(496,746)

(384,204)

Effect of exchange rate on cash, cash equivalents and restricted cash

(311)

(14,235)

Net decrease in cash, cash equivalents and restricted cash

(343,244)

(276,421)

Cash, cash equivalents and restricted cash, beginning of period

733,931

651,762

Cash, cash equivalents and restricted cash, end of period

$         390,687

$         375,341

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown above in the consolidated statements of cash flows:

(dollars in thousands)

September 30,
2023

December 31,
2022

Cash and cash equivalents

$           31,091

$           31,691

Restricted cash

359,596

702,240

Total cash, cash equivalents and restricted cash in the statement of cash flows

$         390,687

$         733,931

 

Blackbaud, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited)


(dollars in thousands, except per share amounts)

Three months ended
September 30,


Nine months ended
September 30,

2023

2022


2023

2022

GAAP Revenue

$     277,626

$     261,297


$     810,421

$     783,348







GAAP gross profit

$     155,860

$     140,360


$     444,068

$     413,442

GAAP gross margin

56.1 %

53.7 %


54.8 %

52.8 %

Non-GAAP adjustments:






Add: Stock-based compensation expense

4,145

3,414


12,242

11,327

Add: Amortization of intangibles from business combinations

13,117

11,913


39,364

36,806

Add: Employee severance

(33)


797

348

Subtotal

17,262

15,294


52,403

48,481

Non-GAAP gross profit

$     173,122

$     155,654


$     496,471

$     461,923

Non-GAAP gross margin

62.4 %

59.6 %


61.3 %

59.0 %







GAAP income (loss) from operations

$       22,044

$       (7,012)


$       12,391

$     (12,937)

GAAP operating margin

7.9 %

(2.7) %


1.5 %

(1.7) %

Non-GAAP adjustments:






Add: Stock-based compensation expense

32,379

27,945


95,668

83,659

Add: Amortization of intangibles from business combinations

13,910

12,560


41,719

39,069

Add: Employee severance

140

232


5,094

694

Add: Acquisition and disposition-related costs(1)(2)

7,029

2,456


6,799

5,705

Add: Restructuring and other real estate activities


71

Add: Security Incident-related costs, net of insurance(3)

4,086

13,658


48,646

29,207

Add: Impairment of capitalized software development costs


2,263

Subtotal

57,544

56,851


197,926

160,668

Non-GAAP income from operations

$       79,588

$       49,839


$     210,317

$     147,731

Non-GAAP operating margin

28.7 %

19.1 %


26.0 %

18.9 %







GAAP income (loss) before provision (benefit) for income taxes

$       18,086

$     (11,895)


$       (8,611)

$     (30,141)

GAAP net income (loss)

$         9,017

$     (10,319)


$       (3,579)

$     (24,148)







Shares used in computing GAAP diluted earnings (loss) per share

54,089,897

51,692,152


52,495,556

51,519,340

GAAP diluted earnings (loss) per share

$           0.17

$         (0.20)


$         (0.07)

$         (0.47)







Non-GAAP adjustments:






Add: GAAP income tax provision (benefit)

9,069

(1,576)


(5,032)

(5,993)

Add: Total non-GAAP adjustments affecting income from operations

57,544

56,851


197,926

160,668

Non-GAAP income before provision for income taxes

75,630

44,956


189,315

130,527

Assumed non-GAAP income tax provision(4)

15,126

8,991


37,863

26,105

Non-GAAP net income

$       60,504

$       35,965


$     151,452

$     104,422







Shares used in computing non-GAAP diluted earnings per share

54,089,897

52,362,781


53,469,768

51,985,207

Non-GAAP diluted earnings per share

$           1.12

$           0.69


$           2.83

$           2.01

(1)

Includes a $2.0 million noncash impairment of certain intangible assets held for sale during the nine months ended September 30, 2022.

(2)

Includes noncash impairment charges incurred during the three and nine months ended September 30, 2023 related to the sublease of our Washington, DC office location the lease of which was acquired during the EVERFI acquisition.

(3)

Includes Security Incident-related costs incurred during the three and nine months ended September 30, 2023 of $4.1 million and $48.6 million, respectively, which includes approximately $0.0 million and $30.0 million, respectively, in recorded liabilities for loss contingencies, net of insurance recoveries during the same periods of $0.0 million, and during the three and nine months ended September 30, 2022 of $13.7 million and $31.1 million, respectively, net of insurance recoveries during the same period that were $0.0 million and $1.9 million, respectively. Recorded expenses consisted primarily of payments to third-party service providers and consultants, including legal fees, as well as settlements of customer claims, negotiated settlements and accruals for certain loss contingencies. Not included in this adjustment were costs associated with enhancements to our cybersecurity program. For full year 2023, we currently expect net pre-tax expense of approximately $20 million to $30 million and net cash outlays of approximately $25 million to $35 million for ongoing legal fees related to the Security Incident. Not included in these ranges are our previous settlements or current accruals for loss contingencies related to the matters discussed below. For full year 2024, we currently expect a significant decrease in net pre-tax expense related to the Security Incident for ongoing legal fees. In line with our policy, legal fees, are expensed as incurred. As of September 30, 2023, we have recorded approximately $50.0 million in aggregate liabilities for loss contingencies based primarily on recent negotiations with certain governmental agencies related to the Security Incident that we believe we can reasonably estimate. In connection with the settlement of the multi-state Attorneys General investigation (as previously disclosed on October 5, 2023), we expect to pay $49.5 million during the fourth quarter of 2023. There are other Security Incident-related matters, including customer claims, customer constituent class actions and governmental investigations, for which we have not recorded a liability for a loss contingency as of September 30, 2023 because we are unable at this time to reasonably estimate the possible loss or range of loss. Each of these matters could, separately or in the aggregate, result in an adverse judgment, settlement, fine, penalty or other resolution, the amount, scope and timing of which we are currently unable to predict, but could have a material adverse impact on our results of operations, cash flows or financial condition.

(4)

Blackbaud applies a non-GAAP effective tax rate of 20.0% when calculating non-GAAP net income and non-GAAP diluted earnings per share.

 

Blackbaud, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures (continued)

(Unaudited)


(dollars in thousands)

Three months ended
September 30,


Nine months ended
September 30,

2023

2022


2023

2022

GAAP revenue

$     277,626

$        261,297


$     810,421

$        783,348

GAAP revenue growth

6.2 %



3.5 %


Less: Non-GAAP revenue from divested businesses(1)

(912)


(3,525)

Non-GAAP organic revenue(2)

$     277,626

$        260,385


$     810,421

$        779,823

Non-GAAP organic revenue growth

6.6 %



3.9 %








Non-GAAP organic revenue(2)

$     277,626

$        260,385


$     810,421

$        779,823

Foreign currency impact on non-GAAP organic revenue(3)

(1,942)


1,715

Non-GAAP organic revenue on constant currency basis(3)

$     275,684

$        260,385


$     812,136

$        779,823

Non-GAAP organic revenue growth on constant currency basis

5.9 %



4.1 %








GAAP recurring revenue

$     269,001

$        249,387


$     784,139

$        746,560

GAAP recurring revenue growth

7.9 %



5.0 %


Less: Non-GAAP recurring revenue from divested businesses(1)

(893)


(3,438)

Non-GAAP organic recurring revenue(2)

$     269,001

$        248,494


$     784,139

$        743,122

Non-GAAP organic recurring revenue growth

8.3 %



5.5 %








Non-GAAP organic recurring revenue(2)

$     269,001

$        248,494


$     784,139

$        743,122

Foreign currency impact on non-GAAP organic recurring revenue(3)

(1,749)


1,639

Non-GAAP organic recurring revenue on constant currency basis(3)

$     267,252

$        248,494


$     785,778

$        743,122

Non-GAAP organic recurring revenue growth on constant currency basis

7.5 %



5.7 %


(1)

Non-GAAP revenue from divested businesses excludes revenue associated with divested businesses. The exclusion of the prior period revenue is to present the results of the divested business with the results of the combined company for the same period of time in both the prior and current periods.

(2)

Non-GAAP organic revenue and non-GAAP organic recurring revenue for the prior year periods presented herein may not agree to non-GAAP organic revenue and non-GAAP organic recurring revenue presented in the respective prior period quarterly financial information solely due to the manner in which non-GAAP organic revenue growth and non-GAAP organic recurring revenue growth are calculated.

(3)

To determine non-GAAP organic revenue growth and non-GAAP organic recurring revenue growth on a constant currency basis, revenues from entities reporting in foreign currencies were translated to U.S. Dollars using the comparable prior period's quarterly weighted average foreign currency exchange rates. The primary foreign currencies creating the impact are the Australian Dollar, British Pound, Canadian Dollar and Euro.

 

Blackbaud, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures (continued)

(Unaudited)


(dollars in thousands)

Three months ended
September 30,


Nine months ended
September 30,

2023

2022


2023

2022

GAAP net income (loss)

$         9,017

$        (10,319)


$       (3,579)

$        (24,148)

Non-GAAP adjustments:






Add: Interest, net

6,608

8,666


24,893

25,004

Add: GAAP income tax provision (benefit)

9,069

(1,576)


(5,032)

(5,993)

Add: Depreciation

3,293

3,519


9,901

10,642

Add: Amortization of intangibles from business combinations

13,910

12,560


41,719

39,069

Add: Amortization of software and content development costs(1)

11,573

9,795


33,113

28,528

Subtotal

44,453

32,964


104,594

97,250

Non-GAAP EBITDA

$       53,470

$          22,645


$     101,015

$          73,102

Non-GAAP EBITDA margin(2)

19.3 %



12.5 %








Non-GAAP adjustments:






Add: Stock-based compensation expense

32,379

27,945


95,668

83,659

Add: Employee severance

140

232


5,094

694

Add: Acquisition and disposition-related costs(3)

7,029

2,456


6,799

5,705

Add: Restructuring and other real estate activities


71

Add: Security Incident-related costs, net of insurance(3)

4,086

13,658


48,646

29,207

Add: Impairment of capitalized software development costs


2,263

Subtotal

43,634

44,291


156,207

121,599

Non-GAAP adjusted EBITDA

$       97,104

$          66,936


$     257,222

$        194,701

Non-GAAP adjusted EBITDA margin(4)

35.0 %



31.7 %








Rule of 40(5)

41.6 %



35.6 %








Non-GAAP adjusted EBITDA

97,104

66,936


257,222

194,701

Foreign currency impact on Non-GAAP adjusted EBITDA(6)

(1,162)

2,827


709

4,979

Non-GAAP adjusted EBITDA on constant currency basis(6)

$       95,942

$          69,763


$     257,931

$        199,680

Non-GAAP adjusted EBITDA margin on constant currency basis

34.8 %



31.8 %








Rule of 40 on constant currency basis(7)

40.7 %



35.9 %


(1)

Includes amortization expense related to software and content development costs, and amortization expense from capitalized cloud computing implementation costs.

(2)

Measured by GAAP revenue divided by non-GAAP EBITDA.

(3)

See additional details in the reconciliation of GAAP to Non-GAAP operating income above.

(4)

Measured by non-GAAP organic revenue divided by non-GAAP adjusted EBITDA.

(5)

Measured by non-GAAP organic revenue growth plus non-GAAP adjusted EBITDA margin. See Non-GAAP organic revenue growth table above.

(6)

To determine non-GAAP adjusted EBITDA on a constant currency basis, non-GAAP adjusted EBITDA from entities reporting in foreign currencies were translated to U.S. Dollars using the comparable prior period's quarterly weighted average foreign currency exchange rates. The primary foreign currencies creating the impact are the Australian Dollar, British Pound, Canadian Dollar and Euro.

(7)

Measured by non-GAAP organic revenue growth on constant currency basis plus non-GAAP adjusted EBITDA margin on constant currency basis.

 

(dollars in thousands)

Nine months ended
September 30,

2023

2022

GAAP net cash provided by operating activities

$         202,983

$         189,806

Less: purchase of property and equipment

(4,243)

(10,512)

Less: capitalized software and content development costs

(44,664)

(42,757)

Non-GAAP free cash flow

$         154,076

$         136,537

Add: Security Incident-related cash flows, net of insurance

23,100

9,536

Non-GAAP adjusted free cash flow

$         177,176

$         146,073

 

Power your passion (PRNewsfoto/Blackbaud)

 

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SOURCE Blackbaud, Inc.

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