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Blackbaud Completes YourCause Acquisition for $157 Million

Zacks Equity Research

Blackbaud, Inc. BLKB announced the conclusion of YourCause buyout for around $157 million.

Founded in 2007, YourCause, a corporate social responsibility and employee engagement software company, has anticipated annual revenue of more than $12 million. Notably,around eight million people are associated with YourCause's solution, which process over $245,000 in donations every business hour. The acquisition will position Blackbaud as one of the industry leaders in offering solutions to non-profit organizations and for-profit companies which deal with social concerns.

Taking the buyout into consideration, Blackbaud will own a team of 155 employees including YourCause’s CEO Matthew Combs.This acquisition not only opens up new avenues for Blackbaud but also provides anopportunity to attract and retain customers in turn strengthening the company's reputation.

Meanwhile, YourCause customers will gain from Blackbaud's insightful investments in research and development. Blackbaud’s focus on strategic growth initiatives via constant investments in enhancing capacity, improvement of customer services, innovations and increased limited time offerings is an added positive. The move combines YourCause's product vision and capabilities with Blackbaud's technical standards, in turn offering expanded improvement to the market.

Blackbaud, Inc. Price

Blackbaud, Inc. Price | Blackbaud, Inc. Quote

Acquisitions: A Key Catalyst

Blackbaud remains very active on the acquisition front and chooses companies that can be easily integrated within its existing or new product lines. With YourCauseacquisition, Blackbaud has spent more than $750 million on buyouts in the past five years.

From time to time, Blackbaud also acquires organizations with competing technologies with the intention of killing rival products. Over the last three years, the company has aggressively pursued acquisitions which are in sync with its strategy of bolstering presence in the cloud computing and database markets. YourCause is the eighth acquisition since January 2014 and the largest in three years.

These buyouts have also expanded the company’s total TAM. We believe that Blackbaud will continue to pursue strategic acquisitions to improve the top line and market share, going forward.

Our Take

The year 2018 has been a transition year for Blackbaud. The company’s cloud-based suite of applications demonstrates strong growth momentum driven by the transition of organizations from the traditional revenue-base model to the cloud-based subscription-based model. Blackbaud is also benefiting from the growing clout of its Financial Edge NXT offering and expanding product portfolio.

Further, Blackbaud expanded alliance with Microsoft MSFT with Integrated Cloud Initiative for Nonprofits, which bodes well. The company also launched the Nonprofit Resource Management, which is jointly-developed with Microsoft. Moreover, increasing investments on emerging trends like IoT, digital marketing and cloud-based platforms present significant growth opportunity.

Now, the latest acquisition will effectively help Blackbaud to drive revenues and margins.

Zacks Rank & Other Stocks to Consider

Currently, Blackbaudcarries a Zacks Rank #2 (Buy).

Few other top-ranked stocks in the broader technology sector are Upland Software UPLD and Marvell Technology Group Ltd. MRVL, both flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Upland Software and Marvell is currently pegged at 20%and 9.4%, respectively.

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