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Blackbaud (BLKB) Q3 Earnings & Revenues Surpass Estimates

Zacks Equity Research

Blackbaud, Inc. BLKB delivered third-quarter 2019 non-GAAP earnings of 56 cents per share, outpacing the Zacks Consensus Estimate of 50 cents. However, the figure declined 5.1% from the year-ago quarter.

Total non-GAAP revenues improved 5.4% year over year to $221.4 million, surpassing the Zacks Consensus Estimate of $220 million.

Blackbaud’s stock has gained 37.3% on a year-to-date basis, outperforming the industry's rally of 31.3%.

 

 

Quarter in Detail

Blackbaud reports maintenance and subscriptions under recurring revenues as it is shifting toward a cloud-based subscription model from the traditional revenue-based model.

Total non-GAAP recurring revenues for the reported quarter were $205.5 million, accounting for 92.8% of total non-GAAP revenues. The figure was also up 8.6% year over year.

One-time services and other revenues were $15.9 million, declining 23.9% year over year.

Non-GAAP organic revenues improved 2.7% year over year to $215.9 million. Meanwhile, non-GAAP organic recurring revenues advanced 5.6% to $199.7 million.

Margin Details

Non-GAAP gross margin contracted 100 bps to 59.5%.

Non-GAAP operating margin contracted 240 bps from the year-ago figure to 16.5%. The decrease can primarily be attributed to higher investments.

Balance Sheet & Cash Flow

As on Sep 30, 2019, Blackbaud had cash and cash equivalents of $29.1 million compared with $32.7 million at the end of the previous quarter. Total debt (including current portion) amounted to $503.1 million compared with $561.3 million reported at the end of the last reported quarter.

Cash flow from operating activities during the nine months ended Sep 30, 2019, was $122.1 million. Free cash flow during the quarter was $62.5 million.

The company recently approved a quarterly dividend payment of 12 cents per share to be paid out on Dec 13, 2019, to shareholders as of Nov 27, 2019.

Guidance

Blackbaud maintained 2019 outlook. The company anticipates revenues of $880-$910 million (mid-point $895 million) for 2019. The Zacks Consensus Estimate is currently pegged at $893.9 million.

It anticipates non-GAAP earnings per share of $2.11-$2.28 per share (mid-point of $2.20) for 2019. The Zacks Consensus Estimate is pegged at $2.22 per share.

Non-GAAP operating margin is projected to be 16.7-17.2%.

Blackbaud continues to anticipate non-GAAP free cash flow of $124-$134 million for 2019.

Zacks Rank & Stocks to Consider

Currently, Blackbaud carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Vonage Holdings Corp. VG, Hewlett Packard Enterprise Company HPE and Taiwan Semiconductor Manufacturing Company Ltd. TSM. Each of the stocks flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rates for Vonage, Hewlett Packard Enterprise and Taiwan Semiconductor are currently pegged at 5%, 7.1% and 10.4%, respectively.

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