Blackbaud Q3 Earnings Boost Stock Price

Blackbaud announced third-quarter financial results yesterday, reaffirming estimates for 2018 that were revised earlier this month.

Half of the revised outlook on revenue for the Charleston, S.C.-based software and technology firm was from a reduction in one-time services revenue as it shifts to subscription-based recurring revenues.

During its annual bbcon user conference earlier this month in Orlando, Fla., Blackbaud announced a new Cloud Solution for Faith Communities, Cloud Solution for Higher Education, introduced a new Education Management portfolio, and a new partnership with Microsoft with an Integrated Cloud Initiative for Nonprofits.

“We are driving digital transformation in each of the industry segments we serve through the delivery of innovative new cloud software technology, which has expanded the addressable markets for Blackbaud,” President and CEO Mike Gianoni said via a press release announcing financial results for the third quarter ending Sept. 30.

“We’ve been executing a new and more aggressive program to ramp hiring for sales and sales support roles in the third quarter,” Executive Vice President and CFO Tony Boor said. “This is considerable opportunity for Blackbaud to better cover this large market and further improve our sales effectiveness. We’re well underway in the hiring program with the expectation that will begin to see material top-line return on these investments in late 2019 and more fully in 2020,” he said.

Total GAAP revenue was $209.5 million for the quarter, up almost 8 percent over the third quarter of 2017, representing 90 percent of total GAAP revenue. GAAP recurring revenue was up more than 12 percent.

GAAP income from operations decreased 14 percent and non-GAAP income from operations was down 6.4 percent. GAAP net income declined almost 13 percent to $11. 2 million. Non-GAAP net income increased 4.4 percent to $28.4 million and non-GAAP free cash flow declined $1.3 million to $57.8 million.

Blackbaud reaffirmed its 2018 full year financial guidance, after lowering estimates on Oct. 8, anticipating non-GAAP revenue of between $844 million and $854 million, compared to previous guidance of between $870 million and $890 million.

Non-GAAP operating margin of 19.3 percent to 19.6 percent was down from the original estimates of between 20.6 percent and 21 percent. Earnings per share were reassessed at $2.44 to $2.52 from an original $2.75 and $288 per share. Free cash flow is estimated at between $143 million and $147 million.

The stock, which trades on NASDAQ under the symbol BLKB, was up almost 8 percent by late morning to more than $73 per share. It lost about a quarter of its value in late September after spending most of the year trading above the $100 mark.

BLKB hit a 52-week low of $65.51 in trading on Monday, almost half of its 52-week high of $120.35, reached in July. The board declared a fourth quarter dividend of $0.12 per share, payable on Dec. 14 to stockholders of record on Nov. 28.