Blackbaud, Inc. Announces Second Quarter 2011 Results

Blackbaud, Inc. (Nasdaq: BLKB), the leading provider of software and related services designed specifically for nonprofit organizations, today announced financial results for its second quarter ended June 30, 2011.

Marc Chardon, Chief Executive Officer of Blackbaud, stated, "We are very pleased with the company’s financial performance for the second quarter, which was highlighted by revenue and profitability that were above the high-end of our guidance. Market demand remains stable and our general markets and enterprise business units are executing at a high level.”

"Blackbaud continues to reinforce its leadership position at the high-end of the market. In the second quarter, we matched our record first quarter performance, closing five Enterprise CRM deals, and are well on our way to having a record year in this important growth segment of our market. We are increasingly leveraging our product investments and experience in developing best practices for large and complex implementations, as well as what we have learned in working with the hundreds of enterprise customers using our Target Analytics, Target Software and PIDI solutions,” Chardon added. "The strong adoption of our online fundraising solutions, including a record quarter of unit sales from our Sphere and Net Community offerings, particularly in our general markets business unit, continues to drive strong growth in our subscription revenue.”

Blackbaud reported total revenue of $93.4 million for the quarter ended June 30, 2011, an increase of 16% compared to $80.7 million for the second quarter of 2010. Income from operations and net income, determined in accordance with GAAP, were $13.8 million and $8.9 million, respectively, compared with $11.2 million and $6.8 million, respectively, for the second quarter of 2010. Diluted earnings per share were $0.20 for the quarter ended June 30, 2011, compared with $0.15 in the same period last year.

Non-GAAP income from operations, which excludes stock-based compensation expense and amortization of intangibles arising from business combinations, was $19.2 million, an increase of 21% compared to $15.8 million in the same period last year. Non-GAAP net income was $11.8 million for the quarter ended June 30, 2011, an increase of 24% compared to $9.5 million in the same period last year. Non-GAAP diluted earnings per share were $0.27 for the quarter ended June 30, 2011, an increase of 23% compared with $0.22 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 second quarter with $33.4 million in cash, an increase from $24.1 million at the end of the previous quarter. The company generated $37.8 million in cash from operations for the six months ended June 30, 2011, an increase of 53% compared to the same period last year.

"Blackbaud delivered mid-teens revenue growth for the second consecutive quarter, and we believe the company is well positioned to do the same for the full year 2011,” said Timothy V. Williams, Chief Financial Officer of Blackbaud. "The return to solid services revenue growth is encouraging considering it was particularly hard hit during the economic downturn. In addition, we are very pleased with the growth of our recurring revenue, which has an annualized run rate that is approaching $250 million, including subscription revenue that is now at over $100 million annualized.”

Third Quarter 2011 Dividend and Share Repurchase Program

Blackbaud announced today that its Board of Directors has approved a third quarter dividend of $0.12 per share payable on September 15, 2011, to stockholders of record on August 26, 2011. Additionally, as of June 30, 2011, $50.0 million remained available under the Company’s share repurchase program, which became effective on August 1, 2010.

Conference Call Details

Blackbaud will host a conference call today, August 4, 2011, at 5:00 p.m. (Eastern Time) to discuss the Company's financial results, operations and related matters. To access this call, dial 888-542-1139 (domestic) or 719-325-2474 (international). A replay of this conference call will be available through August 11, 2011, at 877-870-5176 (domestic) or 858-384-5517 (international). The replay passcode is 6644079. 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 24,000 organizations — including The American Red Cross, Cancer Research UK, Earthjustice, International Fund for Animal Welfare, Lincoln Center, The Salvation Army, The Taft School, Tulsa Community Foundation, Ursinus College, the WGBH Educational Foundation, and Yale University — 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, Hong Kong, the Netherlands, and the United Kingdom. For more information, visit www.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 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. 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. This information includes 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, costs associated with amortization of intangibles arising from business combinations, one-time write-offs or expenses incurred in connection with acquisitions and a gain in connection with the sale of a business.

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 measures. 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.