Full Year 2022 Total Revenue Exceeded
$1 Billion with 14% Growth; Full Year
2022 Financial Results Met or Exceeded Guidance; Blackbaud
Announces Full Year 2023 Financial Guidance with Substantial Margin
Expansion
CHARLESTON, S.C., Feb. 13,
2023 /PRNewswire/ -- 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,
2022.
"2022 was a year of substantial progress," said Mike Gianoni, president and CEO, Blackbaud. "We
proactively took steps throughout the year to better position the
company, manage it efficiently and effectively in a weakened
economy, and drive profitability, cash flow and improvement on Rule
of 40. Revenue surpassed the $1
billion mark for the first time in our company history, and
we achieved 14% revenue growth year over year. Looking ahead, we
are building on the strong execution in 2022 and remain focused on
driving efficiencies and improvements across the business as we
progress along our Rule of 40 journey. At the midpoint of our full
year 2023 financial guidance ranges, we anticipate organic revenue
growth at constant currency of 4%, adjusted EBITDA margin of 30%
and Rule of 40 at constant currency of roughly 34%, up five points
versus last year. We are confident in our outlook with plans in
place to achieve substantial performance acceleration as the year
progresses and deliver significant, enhanced shareholder
value."
Fourth Quarter 2022 Results Compared to Fourth Quarter 2021
Results:
- GAAP total revenue was $274.8
million, up 10.8%, with $265.2
million in GAAP recurring revenue, up 11.1%.
- Non-GAAP organic recurring revenue increased 1.3%.
- GAAP loss from operations was $15.5
million, inclusive of security incident-related costs, net
of insurance recoveries of $26.5
million, with GAAP operating margin of (5.7)%, a decrease of
300 basis points.
- Non-GAAP income from operations was $54.9 million, with non-GAAP operating margin of
20.0%, an increase of 20 basis points.
- GAAP net loss was $21.3 million,
with GAAP diluted loss per share of $0.41, down $0.26
per share.
- Non-GAAP net income was $36.0
million, with non-GAAP diluted earnings per share of
$0.68, down $0.07 per share.
- Non-GAAP adjusted EBITDA was $67.9
million, up $7.2 million, with
non-GAAP adjusted EBITDA margin of 24.7%, an increase of 20 basis
points.
- GAAP net cash provided by operating activities was $14.1 million, a decrease of $29.8 million.
- Non-GAAP adjusted free cash flow was $7.6 million, a decrease of $24.3 million, with non-GAAP adjusted free cash
flow margin of 2.8%, a decrease of 1,010 basis points.
"We had a solid end to a strong 2022, meeting or exceeding full
year financial guidance across revenue, profitability and adjusted
free cash flow," said Tony Boor,
executive vice president and CFO, Blackbaud. "For the full year
2022, Rule of 40 at constant currency was 29%, a two-point
improvement over 2021. We drove strong cash generation throughout
the year and will continue to rapidly deleverage in the near term.
In 2023, we expect an acceleration in our financial performance as
the year progresses, starting with meaningful improvement in the
second quarter. We remain intently focused on managing costs and
delivering substantial margin expansion and earnings potential with
actions under management control. We will continue to drive
operational execution across our business that we believe will
accelerate Rule of 40 as the year progresses, giving further
confidence in our ability to reach 40% in the next few years."
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 was named to Newsweek's list of America's Most
Responsible Companies 2023. Blackbaud is one of 500 companies on
the list, which highlights leaders in corporate responsibility,
spanning 14 industries.
- Blackbaud appointed two new directors to its board.
Yogesh K. Gupta, president and CEO,
Progress Software Corporation, and Rupal S.
Hollenbeck, chief commercial officer, Check Point Software
Technologies, joined Blackbaud's board of directors. In addition,
Timothy Chou, Ph.D., and
Joyce M. Nelson retired from the
Blackbaud board.
- Blackbaud named Chad
Anderson chief accounting officer. Prior to this role,
Anderson served Blackbaud as senior vice president and corporate
controller.
- Blackbaud supported bold technology innovation through its
Social Good Startup Program. Startups in the 2022 program recently
visited Blackbaud's world headquarters in December for an annual
showcase, sharing their ideas on ways to impact the social good
community. Additionally, Blackbaud welcomed its six newest members
to the Social Good Startup Program with the January 2023 cohort.
- Blackbaud CEO Mike Gianoni
was named to Charleston Business Magazine's 50 Most
Influential Hall of Fame, making the list of 50 Most Influential
People for the fifth year.
- Blackbaud was honored as a Leading Employer by Built In's
2023 Best Places to Work Awards and RippleMatch's 2023 Campus
Forward Awards.
- Blackbaud announced a major gift to support diversity,
equity and inclusion globally in partnership with five
organizations in each of the regions it operates.
Visit www.blackbaud.com/newsroom for more information about
Blackbaud's recent highlights.
Full-Year 2022 Results Compared to Full-Year 2021
Results:
- GAAP total revenue was $1.1
billion, up 14.1%, with $1.0
billion in GAAP recurring revenue, up 14.9%.
- Non-GAAP organic recurring revenue increased 4.0%.
- GAAP loss from operations was $28.5
million, with GAAP operating margin of (2.7)%, a decrease of
540 basis points.
- Non-GAAP income from operations was $202.6 million, with non-GAAP operating margin of
19.1%, a decrease of 250 basis points.
- GAAP net loss was $45.4 million,
with GAAP diluted loss per share of $0.88, down $1.00
per share.
- Non-GAAP net income was $140.4
million, with non-GAAP diluted earnings per share of
$2.69, down $0.35 per share.
- Non-GAAP adjusted EBITDA was $262.6
million, up $16.5 million,
with non-GAAP adjusted EBITDA margin of 24.8%, a decrease of 170
basis points.
- GAAP net cash provided by operating activities was $203.9 million, a decrease of $9.8 million.
- Non-GAAP adjusted free cash flow was $153.7 million, a decrease of $14.6 million, with non-GAAP free cash flow
margin of 14.5%, a decrease of 360 basis points.
Financial Outlook
Blackbaud today announced its 2023
full year financial guidance:
- Non-GAAP revenue of $1.08 billion
to $1.11 billion
- Non-GAAP adjusted EBITDA margin of 29.5% to 30.5%
- Non-GAAP earnings per share of $3.30 to $3.60
- Non-GAAP adjusted free cash flow of $170
million to $190 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
$40 million to $44 million
- Fully diluted shares for the year are expected to be in the
range of approximately 53 million to 54 million
- Capital expenditures for the year are expected to be in the
range of 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. 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.
Conference Call Details
What:
|
Blackbaud's Fourth
Quarter and Full Year 2022 Conference Call
|
When:
|
February 14,
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
world's leading cloud software company powering social good.
Serving the entire social good community—nonprofits, higher
education institutions, K–12 schools, healthcare organizations,
faith communities, arts and cultural organizations, foundations,
companies and individual change agents—Blackbaud connects and
empowers organizations to increase their impact through cloud
software, services, expertise and data intelligence. The Blackbaud
portfolio is tailored to the unique needs of vertical markets, with
solutions for fundraising and CRM, marketing, advocacy,
peer-to-peer fundraising, corporate social responsibility (CSR) and
environmental, social and governance (ESG), school management,
ticketing, grantmaking, financial management, payment processing
and analytics. Serving the industry for more than four decades,
Blackbaud is a remote-first company headquartered in Charleston, South Carolina, with operations in
the United States, Australia, Canada, Costa
Rica and the United
Kingdom. For more information, visit www.blackbaud.com,
or follow us on Twitter, LinkedIn, Instagram, and
Facebook.
Investor
Contact
|
|
Media
Contact
|
|
IR@blackbaud.com
|
|
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)
|
December 31,
2022
|
December 31,
2021
|
Assets
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
$
31,691
|
$
55,146
|
Restricted
cash
|
702,240
|
596,616
|
Accounts receivable,
net of allowance of $7,318 and $11,155 at December 31, 2022
and
December 31, 2021, respectively
|
102,809
|
102,726
|
Customer funds
receivable
|
249
|
977
|
Prepaid expenses and
other current assets
|
81,654
|
95,506
|
Total current
assets
|
918,643
|
850,971
|
Property and
equipment, net
|
107,426
|
111,428
|
Operating lease
right-of-use assets
|
45,899
|
53,883
|
Software and content
development costs, net
|
141,023
|
121,377
|
Goodwill
|
1,050,272
|
1,058,640
|
Intangible assets,
net
|
635,136
|
698,052
|
Other
assets
|
94,304
|
77,266
|
Total
assets
|
$ 2,992,703
|
$ 2,971,617
|
Liabilities and
stockholders' equity
|
|
|
Current
liabilities:
|
|
|
Trade accounts
payable
|
$
42,559
|
$
22,067
|
Accrued expenses and
other current liabilities
|
86,002
|
100,096
|
Due to
customers
|
700,860
|
594,273
|
Debt, current
portion
|
18,802
|
18,697
|
Deferred revenue,
current portion
|
382,419
|
374,499
|
Total current
liabilities
|
1,230,642
|
1,109,632
|
Debt, net of current
portion
|
840,241
|
937,483
|
Deferred tax
liability
|
125,759
|
148,465
|
Deferred revenue, net
of current portion
|
2,817
|
4,247
|
Operating lease
liabilities, net of current portion
|
44,918
|
53,386
|
Other
liabilities
|
4,294
|
1,344
|
Total
liabilities
|
2,248,671
|
2,254,557
|
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, 67,814,044 and
66,165,666 shares issued at December 31, 2022 and
December 31, 2021, respectively
|
68
|
66
|
Additional paid-in
capital
|
1,075,264
|
968,927
|
Treasury stock, at
cost; 14,745,230 and 14,182,805 shares at December 31, 2022
and
December 31, 2021, respectively
|
(537,287)
|
(500,911)
|
Accumulated other
comprehensive income
|
8,938
|
6,522
|
Retained
earnings
|
197,049
|
242,456
|
Total stockholders'
equity
|
744,032
|
717,060
|
Total liabilities
and stockholders' equity
|
$ 2,992,703
|
$ 2,971,617
|
Blackbaud,
Inc.
Consolidated Statements of Comprehensive (Loss) Income
(Unaudited)
|
|
(dollars in
thousands, except per share amounts)
|
Three months
ended
December 31,
|
|
Years ended
December 31,
|
2022
|
2021
|
|
2022
|
2021
|
Revenue
|
|
|
|
|
|
Recurring
|
$
265,173
|
$
238,584
|
|
$ 1,011,733
|
$
880,850
|
One-time services and
other
|
9,584
|
9,307
|
|
46,372
|
46,890
|
Total
revenue
|
274,757
|
247,891
|
|
1,058,105
|
927,740
|
Cost of
revenue
|
|
|
|
|
|
Cost of
recurring
|
125,300
|
111,680
|
|
463,449
|
390,803
|
Cost of one-time
services and other
|
10,183
|
12,379
|
|
41,940
|
52,392
|
Total cost of
revenue
|
135,483
|
124,059
|
|
505,389
|
443,195
|
Gross
profit
|
139,274
|
123,832
|
|
552,716
|
484,545
|
Operating
expenses
|
|
|
|
|
|
Sales, marketing and
customer success
|
57,088
|
47,366
|
|
221,455
|
186,314
|
Research and
development
|
38,177
|
33,606
|
|
156,913
|
124,573
|
General and
administrative
|
58,895
|
48,934
|
|
199,908
|
146,262
|
Amortization
|
662
|
553
|
|
2,925
|
2,227
|
Restructuring
|
—
|
—
|
|
—
|
263
|
Total operating
expenses
|
154,822
|
130,459
|
|
581,201
|
459,639
|
(Loss) income from
operations
|
(15,548)
|
(6,627)
|
|
(28,485)
|
24,906
|
Interest
expense
|
(9,891)
|
(3,832)
|
|
(35,803)
|
(18,003)
|
Other income
(expense), net
|
5
|
(159)
|
|
8,713
|
180
|
(Loss) income
before (benefit) provision for income taxes
|
(25,434)
|
(10,618)
|
|
(55,575)
|
7,083
|
Income tax (benefit)
provision
|
(4,175)
|
(3,561)
|
|
(10,168)
|
1,385
|
Net (loss)
income
|
$
(21,259)
|
$
(7,057)
|
|
$
(45,407)
|
$
5,698
|
(Loss) earnings per
share
|
|
|
|
|
|
Basic
|
$
(0.41)
|
$
(0.15)
|
|
$
(0.88)
|
$
0.12
|
Diluted
|
$
(0.41)
|
$
(0.15)
|
|
$
(0.88)
|
$
0.12
|
Common shares and
equivalents outstanding
|
|
|
|
|
|
Basic weighted average
shares
|
51,716,948
|
46,989,624
|
|
51,569,148
|
47,412,306
|
Diluted weighted
average shares
|
51,716,948
|
46,989,624
|
|
51,569,148
|
48,230,438
|
Other comprehensive
income
|
|
|
|
|
|
Foreign currency
translation adjustment
|
7,906
|
(399)
|
|
(16,160)
|
661
|
Unrealized (loss) gain
on derivative instruments, net of tax
|
(1,684)
|
3,602
|
|
18,576
|
8,358
|
Total other
comprehensive income
|
6,222
|
3,203
|
|
2,416
|
9,019
|
Comprehensive
(loss) income
|
$
(15,037)
|
$
(3,854)
|
|
$
(42,991)
|
$
14,717
|
Blackbaud,
Inc.
Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
Years ended
December 31,
|
(dollars in
thousands)
|
2022
|
2021
|
Cash flows from
operating activities
|
|
|
Net (loss)
income
|
$
(45,407)
|
$
5,698
|
Adjustments to
reconcile net (loss) income to net cash provided by operating
activities:
|
|
|
Depreciation and
amortization
|
102,369
|
82,410
|
Provision for credit
losses and sales returns
|
6,066
|
11,450
|
Stock-based
compensation expense
|
110,294
|
120,379
|
Deferred
taxes
|
(26,644)
|
(2,429)
|
Amortization of
deferred financing costs and discount
|
2,364
|
1,570
|
Other non-cash
adjustments
|
5,676
|
10,490
|
Changes in operating
assets and liabilities, net of acquisition and disposal of
businesses:
|
|
|
Accounts
receivable
|
(7,340)
|
(6,525)
|
Prepaid expenses and
other assets
|
26,235
|
(2,048)
|
Trade accounts
payable
|
21,607
|
(9,670)
|
Accrued expenses and
other liabilities
|
(2,386)
|
(8,190)
|
Deferred
revenue
|
11,059
|
10,526
|
Net cash provided
by operating activities
|
203,893
|
213,661
|
Cash flows from
investing activities
|
|
|
Purchase of property
and equipment
|
(12,289)
|
(11,664)
|
Capitalized software
and content development costs
|
(58,774)
|
(40,489)
|
Purchase of net assets
of acquired companies, net of cash and restricted cash
acquired
|
(20,912)
|
(419,120)
|
Cash received in sale
of business
|
6,426
|
—
|
Net cash used in
investing activities
|
(85,549)
|
(471,273)
|
Cash flows from
financing activities
|
|
|
Proceeds from issuance
of debt
|
211,000
|
582,200
|
Payments on
debt
|
(310,740)
|
(152,971)
|
Debt issuance
costs
|
—
|
(3,106)
|
Stock issuance
costs
|
(1,339)
|
—
|
Employee taxes paid
for withheld shares upon equity award settlement
|
(36,376)
|
(39,404)
|
Change in due to
customers
|
111,386
|
(13,464)
|
Change in customer
funds receivable
|
380
|
(731)
|
Purchase of treasury
stock
|
—
|
(108,416)
|
Net cash (used in)
provided by financing activities
|
(25,689)
|
264,108
|
Effect of exchange rate
on cash, cash equivalents and restricted cash
|
(10,486)
|
297
|
Net increase in
cash, cash equivalents and restricted cash
|
82,169
|
6,793
|
Cash, cash
equivalents and restricted cash, beginning of year
|
651,762
|
644,969
|
Cash, cash
equivalents and restricted cash, end of year
|
$
733,931
|
$
651,762
|
|
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)
|
December 31,
2022
|
December 31,
2021
|
Cash and cash
equivalents
|
$
31,691
|
$
55,146
|
Restricted
cash
|
702,240
|
596,616
|
Total cash, cash
equivalents and restricted cash in the statement of cash
flows
|
$
733,931
|
$
651,762
|
Blackbaud,
Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
|
|
(dollars in
thousands, except per share amounts)
|
Three months
ended
December 31,
|
|
Years ended
December 31,
|
2022
|
2021
|
|
2022
|
2021
|
GAAP
Revenue
|
$ 274,757
|
$ 247,891
|
|
$ 1,058,105
|
$ 927,740
|
|
|
|
|
|
|
GAAP gross
profit
|
$ 139,274
|
$ 123,832
|
|
$ 552,716
|
$ 484,545
|
GAAP gross
margin
|
50.7 %
|
50.0 %
|
|
52.2 %
|
52.2 %
|
Non-GAAP
adjustments:
|
|
|
|
|
|
Add: Stock-based
compensation expense
|
3,109
|
5,094
|
|
14,436
|
19,952
|
Add: Amortization of
intangibles from business combinations
|
11,686
|
8,209
|
|
48,492
|
34,812
|
Add: Employee
severance
|
1,787
|
—
|
|
2,135
|
29
|
Subtotal
|
16,582
|
13,303
|
|
65,063
|
54,793
|
Non-GAAP gross
profit
|
$ 155,856
|
$ 137,135
|
|
$ 617,779
|
$ 539,338
|
Non-GAAP gross
margin
|
56.7 %
|
55.3 %
|
|
58.4 %
|
58.1 %
|
|
|
|
|
|
|
GAAP (loss) income
from operations
|
$ (15,548)
|
$
(6,627)
|
|
$ (28,485)
|
$
24,906
|
GAAP operating
margin
|
(5.7) %
|
(2.7) %
|
|
(2.7) %
|
2.7 %
|
Non-GAAP
adjustments:
|
|
|
|
|
|
Add: Stock-based
compensation expense
|
26,635
|
30,899
|
|
110,294
|
120,379
|
Add: Amortization of
intangibles from business combinations
|
12,348
|
8,762
|
|
51,417
|
37,039
|
Add: Employee
severance
|
4,470
|
—
|
|
5,164
|
1,510
|
Add: Acquisition and
disposition-related costs(1)
|
430
|
2,973
|
|
6,135
|
3,054
|
Add: Restructuring and
other real estate activities
|
—
|
12,515
|
|
71
|
12,102
|
Add: Security
Incident-related costs, net of insurance(2)
|
26,516
|
494
|
|
55,723
|
1,816
|
Add: Impairment of
capitalized software development costs
|
—
|
—
|
|
2,263
|
—
|
Subtotal
|
70,399
|
55,643
|
|
231,067
|
175,900
|
Non-GAAP income from
operations
|
$
54,851
|
$
49,016
|
|
$ 202,582
|
$ 200,806
|
Non-GAAP operating
margin
|
20.0 %
|
19.8 %
|
|
19.1 %
|
21.6 %
|
|
|
|
|
|
|
GAAP (loss) income
before (benefit) provision for income taxes
|
$ (25,434)
|
$ (10,618)
|
|
$ (55,575)
|
$
7,083
|
GAAP net (loss)
income
|
$ (21,259)
|
$
(7,057)
|
|
$ (45,407)
|
$
5,698
|
|
|
|
|
|
|
Shares used in
computing GAAP diluted (loss) earnings per share
|
51,716,948
|
46,989,624
|
|
51,569,148
|
48,230,438
|
GAAP diluted (loss)
earnings per share
|
$
(0.41)
|
$
(0.15)
|
|
$
(0.88)
|
$
0.12
|
|
|
|
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
Add: GAAP income tax
(benefit) provision
|
(4,175)
|
(3,561)
|
|
(10,168)
|
1,385
|
Add: Total non-GAAP
adjustments affecting income from operations
|
70,399
|
55,643
|
|
231,067
|
175,900
|
Non-GAAP income
before provision for income taxes
|
44,965
|
45,025
|
|
175,492
|
182,983
|
Assumed non-GAAP
income tax provision(3)
|
8,993
|
9,005
|
|
35,098
|
36,597
|
Non-GAAP net
income
|
$
35,972
|
$
36,020
|
|
$ 140,394
|
$ 146,386
|
|
|
|
|
|
|
Shares used in
computing non-GAAP diluted earnings per share
|
52,923,158
|
48,106,044
|
|
52,207,573
|
48,230,438
|
Non-GAAP diluted
earnings per share
|
$
0.68
|
$
0.75
|
|
$
2.69
|
$
3.04
|
|
|
(1)
|
Includes a $2.0 million
noncash impairment of certain intangible assets held for sale
during the twelve months ended December 31, 2022.
|
(2)
|
Includes Security
Incident-related costs incurred during the twelve months ended
December 31, 2022 of $57.6 million, which includes approximately
$23.0 million in recorded aggregate liabilities for loss
contingencies, net of probable insurance recoveries during the same
period of $1.9 million and during the twelve months ended December
31, 2021 of $40.6 million, net of probable insurance recoveries
during the same period of $38.7 million. Recorded expenses
consisted primarily of payments to third-party service providers
and consultants, including legal fees, as well as settlements of
customer claims 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. In
line with our policy, legal fees, are expensed as incurred. As of
December 31, 2022, we have recorded approximately $23.0 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.
It is reasonably possible that our estimated or actual losses may
change in the near term for those matters and be materially in
excess of the amounts accrued, but we are unable at this time to
reasonably estimate the possible additional loss. 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 December 31, 2022 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 judgement, 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.
|
(3)
|
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
December 31,
|
|
Years ended
December 31,
|
2022
|
2021
|
|
2022
|
2021
|
GAAP revenue
|
$ 274,757
|
$
247,891
|
|
$ 1,058,105
|
$
927,740
|
GAAP revenue
growth
|
10.8 %
|
|
|
14.1 %
|
|
Add: Non-GAAP
acquisition-related revenue(1)
|
—
|
27,322
|
|
—
|
104,378
|
Less: Non-GAAP revenue
from divested businesses(2)
|
—
|
(1,527)
|
|
—
|
(1,877)
|
Total Non-GAAP
adjustments
|
—
|
25,795
|
|
—
|
102,501
|
Non-GAAP organic
revenue(3)
|
$ 274,757
|
$
273,686
|
|
$ 1,058,105
|
$ 1,030,241
|
Non-GAAP organic
revenue growth
|
0.4 %
|
|
|
2.7 %
|
|
|
|
|
|
|
|
Non-GAAP organic
revenue(3)
|
$ 274,757
|
$
273,686
|
|
$ 1,058,105
|
$ 1,030,241
|
Foreign currency impact
on non-GAAP organic revenue(4)
|
3,599
|
—
|
|
12,313
|
—
|
Non-GAAP organic
revenue on constant currency basis(4)
|
$ 278,356
|
$
273,686
|
|
$ 1,070,418
|
$ 1,030,241
|
Non-GAAP organic
revenue growth on constant currency basis
|
1.7 %
|
|
|
3.9 %
|
|
|
|
|
|
|
|
GAAP recurring
revenue
|
$ 265,173
|
$
238,584
|
|
$ 1,011,733
|
$
880,850
|
GAAP recurring
revenue growth
|
11.1 %
|
|
|
14.9 %
|
|
Add: Non-GAAP
acquisition-related revenue(1)
|
—
|
24,731
|
|
—
|
93,500
|
Less: Non-GAAP
recurring revenue from divested businesses(2)
|
—
|
(1,510)
|
|
—
|
(1,858)
|
Total Non-GAAP
adjustments
|
—
|
23,221
|
|
—
|
91,642
|
Non-GAAP organic
recurring revenue(3)
|
$ 265,173
|
$
261,805
|
|
$ 1,011,733
|
$
972,492
|
Non-GAAP organic
recurring revenue growth
|
1.3 %
|
|
|
4.0 %
|
|
|
|
|
|
|
|
Non-GAAP organic
recurring revenue(3)
|
$ 265,173
|
$
261,805
|
|
$ 1,011,733
|
$
972,492
|
Foreign currency impact
on non-GAAP organic recurring revenue(4)
|
3,093
|
—
|
|
10,914
|
—
|
Non-GAAP organic
recurring revenue on constant currency
basis(4)
|
$ 268,266
|
$
261,805
|
|
$ 1,022,647
|
$
972,492
|
Non-GAAP organic
recurring revenue growth on constant
currency basis
|
2.5 %
|
|
|
5.2 %
|
|
|
|
(1)
|
Non-GAAP
acquisition-related revenue excludes incremental
acquisition-related revenue calculated in accordance with GAAP that
is attributable to companies acquired in the current fiscal year.
For companies acquired in the immediately preceding fiscal year,
non-GAAP acquisition-related revenue reflects presentation of
full-year incremental non-GAAP revenue derived from such companies,
as if they were combined throughout the prior period.
|
(2)
|
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.
|
(3)
|
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.
|
(4)
|
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
December 31,
|
|
Years ended
December 31,
|
2022
|
2021
|
|
2022
|
2021
|
GAAP net (loss)
income
|
$ (21,259)
|
$
(7,057)
|
|
$ (45,407)
|
$
5,698
|
Non-GAAP
adjustments:
|
|
|
|
|
|
Add: Interest,
net
|
9,053
|
3,751
|
|
34,057
|
17,611
|
Add: GAAP income tax
(benefit) provision
|
(4,175)
|
(3,561)
|
|
(10,168)
|
1,385
|
Add:
Depreciation(1)
|
3,444
|
3,200
|
|
14,086
|
12,686
|
Add: Amortization of
intangibles from business combinations
|
12,348
|
8,762
|
|
51,417
|
37,039
|
Add: Amortization of
software and content development costs(2)
|
10,447
|
8,743
|
|
38,975
|
32,811
|
Subtotal
|
31,117
|
20,895
|
|
128,367
|
101,532
|
Non-GAAP
EBITDA
|
$
9,858
|
$
13,838
|
|
$
82,960
|
$
107,230
|
Non-GAAP EBITDA
margin
|
3.6 %
|
|
|
7.8 %
|
|
|
|
|
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
Add: Stock-based
compensation expense
|
26,635
|
30,899
|
|
110,294
|
120,379
|
Add: Employee
severance
|
4,470
|
—
|
|
5,164
|
1,510
|
Add: Acquisition and
disposition-related costs
|
430
|
2,973
|
|
6,135
|
3,054
|
Add: Restructuring and
other real estate activities
|
—
|
12,515
|
|
71
|
12,102
|
Add: Security
Incident-related costs, net of insurance(3)
|
26,516
|
494
|
|
55,723
|
1,816
|
Add: Impairment of
capitalized software development costs
|
—
|
—
|
|
2,263
|
—
|
Subtotal
|
58,051
|
46,881
|
|
179,650
|
138,861
|
Non-GAAP adjusted
EBITDA
|
$
67,909
|
$
60,719
|
|
$ 262,610
|
$
246,091
|
Non-GAAP adjusted
EBITDA margin
|
24.7 %
|
|
|
24.8 %
|
|
|
|
|
|
|
|
Rule of
40(4)
|
25.1 %
|
|
|
27.5 %
|
|
|
|
|
|
|
|
Non-GAAP adjusted
EBITDA
|
67,909
|
60,719
|
|
262,610
|
246,091
|
Foreign currency
impact on Non-GAAP adjusted EBITDA(5)
|
1,326
|
(294)
|
|
6,305
|
(3,622)
|
Non-GAAP adjusted
EBITDA on constant currency basis(5)
|
$
69,235
|
$
60,425
|
|
$ 268,915
|
$
242,469
|
Non-GAAP adjusted
EBITDA margin on constant currency basis
|
24.9 %
|
|
|
25.1 %
|
|
|
|
|
|
|
|
Rule of 40 on
constant currency basis(6)
|
26.6 %
|
|
|
29.0 %
|
|
|
|
(1)
|
During the third
quarter of 2020 and the fourth quarter of 2021, we reduced the
estimated useful lives of our operating lease right-of-use assets
for certain of our office locations we expected to exit. For these
same office locations, we also reduced the estimated useful lives
of certain facilities-related fixed assets, which resulted in
increases in depreciation expense. The accelerated portions of the
fixed asset depreciation expense related to these activities of
$1.7 million for the three months and twelve months ended December
31, 2021, respectively, were presented in the "Restructuring and
other real estate activities" line of the reconciliation of GAAP to
non-GAAP financial measures. Total depreciation expense was $4.9
million and $14.4 million for the three and twelve months ended
December 31, 2021, respectively.
|
(2)
|
Includes amortization
expense related to software and content development costs, and
amortization expense from capitalized cloud computing
implementation costs.
|
(3)
|
See additional details
in the reconciliation of GAAP to Non-GAAP operating income
above.
|
(4)
|
Measured by non-GAAP
organic revenue growth plus non-GAAP adjusted EBITDA margin. See
Non-GAAP organic revenue growth table above.
|
(5)
|
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.
|
(6)
|
Measured by non-GAAP
organic revenue growth on constant currency basis plus non-GAAP
adjusted EBITDA margin on constant currency basis.
|
Blackbaud,
Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(continued)
(Unaudited)
|
|
(dollars in
thousands)
|
Years ended
December 31,
|
2022
|
2021
|
GAAP net cash
provided by operating activities
|
$
203,893
|
$
213,661
|
Less: purchase of
property and equipment
|
(12,289)
|
(11,664)
|
Less: capitalized
software and content development costs
|
(58,774)
|
(40,489)
|
Non-GAAP free cash
flow
|
$
132,830
|
$
161,508
|
Add: Security
Incident-related cash flows, net of insurance
|
20,864
|
6,739
|
Non-GAAP adjusted
free cash flow
|
$
153,694
|
$
168,247
|
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SOURCE Blackbaud, Inc.