It has been about a month since the last earnings report for Blackbaud (BLKB). Shares have lost about 2.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Blackbaud due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Blackbaud Q3 Earnings Beat Estimates, Revenues Down Y/Y
Blackbaud, Inc. delivered third-quarter 2020 non-GAAP earnings of 73 cents per share, which beat the Zacks Consensus Estimate by 4.3%. The bottom line improved 30.4% year over year.
Total non-GAAP revenues declined 2.9% year over year to $215 million and lagged the consensus mark by 2.5%.
Quarter in Detail
Total non-GAAP recurring revenues for the reported quarter were $200.1 million, which contributed 93.1% to total non-GAAP revenues. The figure decreased 2.6% year over year.
Non-GAAP organic revenues declined 2.9% year over year to $215 million. Non-GAAP organic revenues on a constant currency (CC) basis amounted to $214.2 million, down 3.2% year over year.
Non-GAAP organic recurring revenues declined 2.6% year over year to $200.1 million.
Key Business Highlights
Blackbaud announced technology innovations specifically designed to support the unique needs of social organizations amid the COVID-19 outbreak, which may have generated goodwill around the company’s brand and bolstered recognition for its products.
The company has rolled out Prayer Wall technology to help churches attend to congregants needs as COVID-19 outbreak compelled churches to move their congregations to online environment.
Additionally, higher education and healthcare institutions worldwide are turning to Blackbaud solutions to power fundraisers for COVID-19 vaccines and lifesaving equipment.
In fact, its end-to-end cloud solutions power 24 of the top 25 private U.S. colleges, per a ranking released by Forbes. Notably, the solutions facilitate students with admissions and advancement services, and fundraising and alumni engagement amid coronavirus crisis-led online learning wave.
Enhanced capabilities are expected to drive adoption of Blackbaud’s solutions in the days ahead and boost retention among existing customers.
Non-GAAP gross margin contracted 60 basis points (bps) to 60.1%.
Total operating expenses declined 4.7% to $106.2 million.
Non-GAAP operating margin expanded 590 bps from the year-ago quarter’s figure to 22.4%.
Balance Sheet & Cash Flow
As on Sep 30, 2020, Blackbaud had cash and cash equivalents of $30.6 million compared with $30.5 million as of Jun 30, 2020.
Total debt (including current portion) as of Sep 30 amounted to $508.3 million compared with $488.1 million as of Jun 30.
Cash provided by operating activities for nine months ended Sep 30, 2020, was $109.2 million compared with $122.1 million for nine months ended Sep 30, 2020.
Non-GAAP free cash flow for nine months ended Sep 30, 2020 was $51.3 million compared with $78 million of free cash outflow for nine months ended Sep 30, 2019.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed an upward trend in estimates revision.
Currently, Blackbaud has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Blackbaud has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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