Nonprofit technology solutions provider Blackbaud (NASDAQ:BLKB) reported first-quarter results after the closing bell on Wednesday. While earnings and revenue were basically in line with analysts' estimates, the company did start the year off strong, as revenue growth accelerated. That has the company on pace to meet its expectations for 2015.
A look at the numbers
Blackbaud reported total revenue of $147 million, up 15.2% over the prior year's first-quarter and within a half-million dollars of what analysts were expecting to see. Meanwhile, non-GAAP revenue, which Blackbaud uses to better reflect deferred revenue from acquisitions, grew by 8.5% to $150.5 million. That represented an accelerated growth rate and would have been an even better 9.7% if currencies had held constant.
Driving this growth was subscriptions revenue, which was up 24.4% to 72.5 million, as well as contributions from acquisitions the company completed last year. Moreover, the company achieved a milestone, as recurring revenue increased to 75.8% of total revenue, which exceeded the company's target of 75% of revenue for the first time in its history.
This strong earnings growth led to even stronger growth in non-GAAP income, which increased 34.4% over the prior year to $14.9 million. This equated to non-GAAP earnings per share of $0.32, which was well above the $0.24 per share the company earned in the first quarter of last year. It was also in line with what analysts were expecting to see. The stronger earnings growth was due to better margins as the company "continue[s] to gain operating leverage in the business through solid execution on our strategic initiatives," according to comments from CFO Tony Boor in the press release.
A look ahead
Blackbaud expects these solid results to continue throughout 2015. It reiterated its 2015 guidance for revenue, profit, and cash flow. That guidance calls for non-GAAP revenue of $625 million to $645 million, which would be 10% to 13% higher than revenue in 2014. It also expects non-GAAP net income of $112 million to $118 million, or $1.39-$1.47 per share, which would be 9%-16% higher than last year. Finally, the company expects to generate cash flow from operations of $110 million to $120 million, which would be well beyond the $102.3 million in cash it generated last year.
That being said, the company does have a few headwinds that could affect results. First, foreign currencies are expected to have an impact on revenue and could result in growth toward the lower end of the guidance range. Meanwhile, the company is experiencing some near-term revenue impact from the transition of its Raiser's Edge and Financial Edge products to the company's NXT subscription-based offerings. Product transitions do have the potential to take longer than expected.
Overall, Blackbaud delivered solid first-quarter results. Its revenue growth is accelerating and would have been even stronger if it weren't held back by currencies. Meanwhile, the company remains on pace to hit its full-year targets despite the headwinds it's facing. Given its acquisitive nature, it could even exceed those targets if it does make another acquisition or two before the year is out.