It has been about a month since the last earnings report for Blackbaud (BLKB). Shares have added about 5.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Blackbaud due for a pullback? 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 Tops Q4 Earnings & Revenues Estimates
Blackbaud delivered fourth-quarter 2018 non-GAAP earnings of 65 cents per share, outpacing the Zacks Consensus Estimate by 10 cents. Moreover, the figure improved by 4 cents from the year-ago quarter.
The company had adopted the new Accounting Standards Codification ("ASC") 606 using full retrospective method from the first quarter of fiscal 2018. Per the new accounting standards, Blackbaud now reports maintenance and subscriptions combined under recurring revenues as it is shifting toward a cloud-based subscription model from the traditional revenue-base model.
Total non-GAAP revenues increased 1.2% year over year to $221.8 million, marginally surpassing the Zacks Consensus Estimate of $220 million.
Total recurring revenues for the reported quarter came in at $199.9 million, accounting for 90.4% of total revenues. The figure was also up 4.9% year over year. Non-GAAP recurring revenues came in at $200.5 million, up 4.2% year over year.
One-time services and other revenues were pegged at $21.3 million (almost 9.6% of total revenues), declining 20.5% year over year.
Non-GAAP organic revenues were almost flat year over year (up 0.4% on a constant currency basis), while non-GAAP organic recurring revenues improved 2.8%.
Non-GAAP gross profit advanced around 2% from the year-ago quarter to $130.3 million. Moreover, non-GAAP gross margin expanded 50 basis points ("bps") to 58.8%.
Blackbaud’s non-GAAP operating income for the quarter under review declined 10.3% from the year-ago quarter to reach $42.3 million. Non-GAAP operating margin contracted 240 bps from the year-ago figure to reach 19.1%. The decrease may be primarily attributed to an increase of 8.7% in total operating expenses of $103.2 million from the year-ago quarter.
Balance Sheet & Cash Flow
As on Dec 31, 2018, Blackbaud had cash and cash equivalents of $30.9 million compared with $25.4 million, at the end of previous quarter. Total debt (including current portion) amounted to $387.1 million, compared with $425.3 million reported at the end of previous quarter.
Non-GAAP free cash flow came in at $50.7 million during the reported quarter.
The company generated $201.4 million as cash from operating activities for 12 months ended Dec 31, 2018.
The company recently approved a quarterly dividend payment of 12 cents per share to be paid on Mar 15, 2019 to shareholders as on Feb 27, 2019.
The company recently unveiled Blackbaud Purchase Cards and Expense Management in its Financial Edge NXT, thereby aiding social organizations streamline financial processes and enhance mission delivery.
Blackbaud also announced the conclusion of YourCause buyout during the quarter under review. 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.
The move combines YourCause's product vision and capabilities with Blackbaud's technical standards, in turn offering expanded improvement to the market.
We believe growing clout of company’s Financial Edge NXT offering, expansion of product portfolio and collaborations bode well for Blackbaud in the longer haul.
Full Year 2018 Highlights
Blackbaud reported full year 2018 non-GAAP earnings of $2.59 per share. The figure improved by 36 cents from the year-ago quarter.
Total non-GAAP revenues increased 7.6% year over year to $851 million. Total recurring revenues for the reported quarter came in at $762.2 million, accounting for 89.8% of total revenues. Non-GAAP recurring revenues came in at $764.5 million, up 11.3% year over year.
Non-GAAP organic recurring revenues improved 5.6% year over year.
Blackbaud provided 2019 outlook. The company anticipates revenues for 2019 to be in the band of $880-$910 million.
Non-GAAP earnings per share have been forecast in the range of $2.11-$2.28 per share.
Non-GAAP operating margins are projected be in the range of 16.7-17.2%.
Blackbaud anticipates non-GAAP free cash flow expectations for 2019 to be in the range of $124 million to $134 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
Currently, Blackbaud has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Blackbaud has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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