Image source: Blackbaud.

Blackbaud (BLKB -0.95%) delivered another solid quarter after the closing bell on Monday. Thanks to excellent organic growth and the continued contributions from acquisitions, it achieved double-digit growth on both the top and bottom lines. Those results keep the company on pace to meet its full-year guidance for revenue and earnings growth.

Blackbaud results: The raw numbers

 Metric

Q2 2016 Actuals

Q2 2015 Actuals

Growth (YOY)

Non-GAAP revenue

$182.0 million

$158.7 million

14.7%

Non-GAAP net income

$21.8 million

$19.2 million

13.2%

Adjusted earnings per share

$0.46

$0.41

12.2%

YOY = year over year. Data source: Blackbaud.

What happened with Blackbaud this quarter? 

Blackbaud continues to grow.

  • Accelerating organic growth drove the bulk of Blackbaud's non-GAAP revenue increase. Overall non-GAAP organic revenue rose 9.4% while non-GAAP organic recurring revenue was up 11.5% 
  • Subscriptions sales rocketed 30% to $104 million offsetting weaker maintenance and license fee revenue and moderate services revenue growth.
  • Earnings grew at a slightly slower pace than revenue due to a 150 basis point decrease in operating margin. This was primarily the result of a 32.2% ramp in sales, marketing, and customer success expenses.
  • Cash flow from operations also slipped a bit, declining 12.5% to $37.9 million.

What management had to say 

As CEO Mike Gianoni said about the quarter:

Execution against our strategic plan is driving strong and balanced revenue growth across our portfolio. Our next generation solutions are widening the gap between Blackbaud and the competition, positioning us well for future growth, and ultimately delivering greater value for our customers.

Blackbaud continues to make progress on its growth plan. In particular, its cloud-based Blackbaud SKY platform is delivering meaningful value to customers and driving sales. For example, its Raiser's Edge NXT fundraising and relationship management solution have achieved an average 15% increase in donor retention and a 52% increase in retained gift amounts for its longtime customers. Furthermore, the company continues to add new capabilities, such as its new business intelligence solution SKY reporting, which is meeting needs and setting its solutions apart.   

Looking forward 

CFO Tony Boor provided an update on the company's outlook for the rest of the year by saying:

We posted another strong quarter, and we're confident in our ability to achieve full year guidance which we've modified slightly for operating cash flow. Our current non-GAAP financial guidance accelerates organic revenue growth, improves profitability, and increases cash flow for the full year when compared to 2015.

For the most part, he reaffirmed its full-year outlook. Non-GAAP revenue is still expected to be in a range of $725 million to $740 million, while non-GAAP earnings are projected to be between $1.90 to $1.98 per share, which at the midpoint is 14.8% and 29.3% higher year over year, respectively. That said, the company is pulling back expectations for cash flow from operations, which it now forecasts to be in the range of $135 million to $145 million, or $10 million below its prior guidance.