Blackbaud, Inc. Announces Fourth Quarter and Full Year 2009 Results

Blackbaud, Inc. (Nasdaq: BLKB), the leading provider of software and related services designed specifically for nonprofit organizations, today announced financial results for its fourth quarter and full year ended December 31, 2009.

Marc Chardon, Chief Executive Officer of Blackbaud, stated, "The fourth quarter was a solid finish to a successful year for Blackbaud. In the face of the most challenging economic environment the company has ever faced, we exceeded our non-GAAP operating margin goal, exceeded our target for new Blackbaud Enterprise CRM^™ customers and continued to grow our subscription-based business at a solid rate.” Chardon added, "As we enter 2010, the economy and nonprofit market environment remain challenging. Our focus is to continue to deliver strong profitability, invest in our long-term growth initiatives and position the company for enhanced growth when the economy and nonprofit budgets improve.”

On a GAAP basis, Blackbaud reported total revenue of $79.0 million for the quarter ended December 31, 2009, a decrease of 2% compared with the fourth quarter of 2008. Income from operations and net income were $13.3 million and $8.0 million, respectively, compared with $10.1 million and $6.5 million, respectively, for the fourth quarter of 2008. Diluted earnings per share were $0.18 for the quarter ended December 31, 2009, compared with $0.15 in the same period last year.

For the quarter ended December 31, 2009, non-GAAP revenue, including a $0.9 million revenue adjustment related to Kintera purchase accounting, was $79.9 million exceeding the Company’s guidance and representing a decrease of 2.5% compared with the fourth quarter of 2008. Non-GAAP income from operations, which excludes stock-based compensation expense and amortization of intangibles arising from business combinations, was $19.2 million, substantially above the Company’s guidance and representing a non-GAAP operating margin of 24.1%. Non-GAAP operating income was $17.6 million in the fourth quarter of 2008.

Non-GAAP net income was $12.1 million for the quarter ended December 31, 2009, compared with $10.4 million in the same period last year. Non-GAAP diluted earnings per share were $0.27 for the quarter ended December 31, 2009, also substantially above the Company’s guidance and compares with $0.24 in the same period last year.

A reconciliation of GAAP to non-GAAP 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.”

The Company ended the quarter with $22.8 million in cash, up from $22.2 million at the end of the previous quarter. The company generated $26.4 million in cash from operations during the fourth quarter and used approximately $17.5 million to reduce debt. The Company also used $4.5 million for the quarterly payment of dividends to stockholders.

Timothy V. Williams, Chief Financial Officer of Blackbaud, stated, "We are very pleased with our organization’s overall expense management during 2009, which led to a full year non-GAAP operating margin that exceeded our initial goal of 20% by approximately 200 basis points. In addition to strong profitability, Blackbaud generated $86.8 million in cash from operations during 2009. We used our cash flow to pay down debt by approximately $59.0 million and returned the company to a positive net cash position. We also returned $17.7 million to stockholders in the form of dividends. As we enter 2010, we will continue to focus on using our strong cash flow in ways that we believe help to maximize shareholder value.”

Full Year 2009 Results

For the year ended December 31, 2009, on a GAAP basis Blackbaud reported total revenue of $309.3 million, an increase of 2.3% compared with 2008. GAAP income from operations and net income were $45.8 million and $28.4 million, respectively, for the full year 2009. This compares with GAAP income from operations of $47.4 million and net income of $29.9 million for the full year 2008. GAAP diluted earnings per share were $0.65 the year ended December 31, 2009, compared with $0.68 in the same period last year.

For the year ended December 31, 2009, non-GAAP revenue, which includes a $3.4 million revenue adjustment related to Kintera purchase accounting, was $312.8 million, an increase of 2.0% compared with the full year 2008. Non-GAAP income from operations, which excludes stock-based compensation expense and amortization of intangibles arising from business combinations, was $68.6 million, representing a non-GAAP operating margin of 21.9% and compares with $69.5 million for the full year 2008. Non-GAAP net income was $41.8 million for the year ended December 31, 2009, leading to non-GAAP diluted earnings per share of $0.96. This compares with non-GAAP net income of $41.7 million and diluted earnings per share of $0.95 for the full year 2008.

First Quarter 2010 Dividend and Share Repurchase Program

Blackbaud announced today that its Board of Directors has declared a first quarter dividend of $0.11 per share payable on March 15, 2010, to stockholders of record on February 26, 2010. Additionally, as of December 31, 2009, the Company had approximately $30 million remaining under its common stock share repurchase program that was authorized over a year ago.

Conference Call Details

Blackbaud will host a conference call today, February 4, 2010, at 5:00 p.m. (Eastern Time) to discuss the Company's financial results, operations and related matters. To access this call, dial 877-857-6149 (domestic) or 719-325-4796 (international). A replay of this conference call will be available through February 11, 2010, at 888-203-1112 (domestic) or 719-457-0820 (international). The replay passcode is 5764946. A live webcast of this conference call will be available on the "Investor Relations" page of the Company's website at www.blackbaud.com/investorrelations, and a replay will be archived on the website as well.

About Blackbaud

Blackbaud is the leading global provider of software and services designed specifically for nonprofit organizations, enabling them to improve operational efficiency, build strong relationships, and raise more money to support their missions. Approximately 22,000 organizations — including University of Arizona Foundation, American Red Cross, Cancer Research UK, The Taft School, Lincoln Center, In Touch Ministries, Tulsa Community Foundation, Ursinus College, Earthjustice, International Fund for Animal Welfare, and the WGBH Educational Foundation — use one or more Blackbaud products and services for fundraising, constituent relationship management, financial management, website management, direct marketing, education administration, ticketing, business intelligence, prospect research, consulting, and analytics. Since 1981, Blackbaud’s sole focus and expertise has been partnering with nonprofits and providing them the solutions they need to make a difference in their local communities and worldwide. Headquartered in the United States, Blackbaud also has operations in Australia, Canada, the Netherlands, and the United Kingdom. For more information, visit www.blackbaud.com.

All Blackbaud product names appearing herein 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 results to differ materially include the following: general economic risks; uncertainty regarding increased business and renewals from existing customers; continued success in sales growth; management of integration of acquired companies and other risks associated with acquisitions; risks associated with successful implementation of multiple integrated software products; the ability to attract and retain key personnel; risks related to our dividend policy and share repurchase program, including potential limitations on our ability to grow and the possibility that we might discontinue payment of dividends; risks relating to restrictions imposed by the credit facility; risks associated with management of growth; lengthy sales and implementation cycles, particularly in larger organizations; 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 at the SEC’s website at www.sec.gov or 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 non-GAAP revenue, non-GAAP income from operations and margin, non-GAAP net income and non-GAAP diluted 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 stock-based compensation expense and costs associated with amortization of intangibles arising from business combinations and include revenue associated with the Kintera acquisition that is not recognizable under GAAP purchase accounting.

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 our 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.