It has been about a month since the last earnings report for Blackbaud (BLKB). Shares have lost about 3.4% 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 the most recent earnings report in order to get a better handle on the important drivers.
Blackbaud Q2 Earnings & Revenues Surpass Estimates
Blackbaud delivered second-quarter non-GAAP earnings of 66 cents per share, outpacing the Zacks Consensus Estimate of 55 cents. However, the figure declined 4.3% from the year-ago quarter.
Total non-GAAP revenues improved 5.5% year over year to $226.4 million, surpassing the Zacks Consensus Estimate of $224 million.
Blackbaud 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 recurring revenues for the reported quarter came in at $209.2 million, accounting for 92.4% of total non-GAAP revenues. The figure was also up 8% year over year.
One-time services and other revenues were pegged at $17.2 million (almost 8% of total revenues), declining 17.9% year over year.
Non-GAAP organic revenues improved 2.6% year over year (up 3.6% on a constant currency basis) to $221.1 million. Meanwhile, non-GAAP organic recurring revenues advanced 5% to $204.2 million.
Non-GAAP gross profit advanced 4.5% from the year-ago quarter to $137.7 million. However, non-GAAP gross margin contracted 60 bps to 60.8%.
Blackbaud’s non-GAAP operating income for the quarter under review declined 3.9% from the year-ago quarter to reach almost $43.5 million.
Non-GAAP operating margin contracted 190 bps from the year-ago figure to 19.2%. The decrease can primarily be attributed to higher investments.
Balance Sheet & Cash Flow
As on Jun 30, 2019, Blackbaud had cash and cash equivalents of $32.7 million compared with $25.2 million, at the end of previous quarter. Total debt (including current portion) amounted to $561.3 million, compared with $583.6 million reported at the end of previous quarter.
Cash flow from operating activities for during the quarter came in at $43.5 million. Free cash flow came in at $38 million compared with ($22.5) million reported in the prior-quarter.
The company recently approved a quarterly dividend payment of 12 cents per share to be paid out on Sep 13, 2019 to shareholders as on Aug 28, 2019.
Blackbaud maintained 2019 outlook. The company anticipates revenues for 2019 to be in the band of $880-$910 million (mid-point $895 million).
Non-GAAP earnings per share have been forecast in the range of $2.11-$2.28 per share (mid-point of $2.20).
Non-GAAP operating margins are projected be in the range of 16.7-17.2%.
Blackbaud continues to anticipate 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 have trended downward during the past month. The consensus estimate has shifted -20.36% due to these changes.
Currently, Blackbaud has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Blackbaud has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Blackbaud, Inc. (BLKB) : Free Stock Analysis Report
To read this article on Zacks.com click here.