Blackbaud (BLKB 0.80%) finished strong last year. Thanks to steady customer growth, its fourth-quarter results pushed full-year revenue and earnings just past the midpoint of its guidance range. The company expects even better results in 2018 as the adoption of its cloud-based software solutions accelerates.
Blackbaud results: The raw numbers
|
Metric |
Q4 2017 |
Q4 2016 |
Year-Over-Year Change |
|---|---|---|---|
|
Non-GAAP revenue |
$218.8 million |
$183.7 million |
10.3% |
|
Non-GAAP net income |
$29.4 million |
$28.0 million |
5.1% |
|
Adjusted EPS |
$0.61 |
$0.59 |
3.4% |
Data source: Blackbaud. EPS=earnings per share.
Image source: Getty Images.
What happened with Blackbaud this quarter?
Subscriptions continue to drive growth.
- Subscription revenue leaped 24% versus the year-ago quarter to $151.9 million and now accounts for 70% of total sales. That more than offset a decline in revenue from maintenance, as well as services and "other" sources. Meanwhile, recurring revenue now represents more than 84% of total sales after rising 15% last quarter.
- Earnings didn't grow quite as fast as revenue because margin shrank a bit in the quarter to 21%. However, that was higher than its full-year level of 20.6%.
- For the full year, non-GAAP revenue rose 7.7% to $790.8 million, which was just above the midpoint of its $785 million to $795 million guidance range. Full-year earnings, meanwhile, were $2.17 per share, up 13% versus 2016 and slightly ahead of the midpoint of its $2.12 to $2.20 per share guidance range.
- Blackbaud generated $137.7 million in free cash flow for the year, up $28.2 million from 2016 and above the high end of its forecast.
What management had to say
CFO Tony Boor commented on the company's results, saying:
We achieved our 2017 full-year financial guidance, exceeding the midpoint of our estimates and topping the high end of our free cash flow range. ... Our free cash flow improvement is particularly strong for a second consecutive year.
Driving those strong financial results has been the company's continued focus on shifting customers over to more predictable recurring revenue streams from subscription-based products. The company is now the 24th largest cloud-based software vendor in the world and boasts 40,000 customers. It's continuing to add more customers and products, which has helped grow recurring revenue at a double-digit annual rate and now accounts for more than 80% of the total.
Looking forward
Blackbaud is "optimistic about the year ahead," according to its CFO. Overall, the company expects non-GAAP revenue to be in the range of $870 million to $890 million, which at the midpoint would be about 11% above last year's total. Meanwhile, it expects non-GAAP earnings to be between $2.75 to $2.88 per share, or up nearly 30% from 2017 at the midpoint. Free cash flow, likewise, should head higher this year, with the company expecting to produce $165 million to $175 million in 2018, about 24% more than last year.
