Despite the fact that 2015 was a transitional year for Blackbaud (BLKB -0.30%), the company ended it on a strong note. That was evident in its fourth-quarter report, which was released after the market closed on Tuesday. Thanks to strong adoption of its cloud-based solutions like Raiser's Edge NT and Financial Edge NXT, Blackbaud was able to deliver strong organic growth. That's a trend the company sees accelerating in 2016, and that's what's driving Blackbaud's strong guidance for the year ahead.

Blackbaud results: The raw numbers


Q4 2015 Actuals

Q4 2014 Actuals

Growth (YOY)

Non-GAAP Revenue

$178.1 million

$157.5 million


Non-GAAP Net Income

$17.8 million

$15.5 million


Adjusted EPS




Data source: Blackbaud.

What happened with Blackbaud this quarter? 
No matter how you slice it, Blackbaud reported strong revenue growth.

  • Overall, Blackbaud's non-GAAP revenue, which adds back acquisition-related deferred revenue writedowns, grew 13.1% thanks in part to the closing of the acquisition of Smart Tuition during the quarter. Organic revenue growth, which strips away the impact of acquisitions, was also strong, growing 7% for the quarter due to growth in subscriptions revenue. In fact, organic growth actually would have been up 8.5% if it weren't for foreign-exchange fluctuations.
  • Subscriptions revenue was the primary driver of revenue growth, increasing 34.5% year over year to $98.3 million. That offset slightly weaker maintenance, services, and licensing fee revenue. Overall, recurring revenue now represents 77.6% of total revenue.
  • Earnings growth was also solid during the quarter, growing faster than revenue thanks to a year-over-year improvement in operating margin from 17.5% to 18.1%. It's also worth noting that earnings per share would have been $0.01 higher if it weren't for a revaluation of foreign currency that negatively affected expenses by a half-million dollars.
  • Cash flow from operations was really strong, jumping 73.1% to $29 million.

What management had to say 
In commenting on the quarter, CEO Mike Gianoni said:

We had a strong finish to the year and are very pleased with our 2015 financial results, especially when considering this year marked the beginning of our cloud-transition for mid-market solutions like Raiser's Edge NXT and Financial Edge NXT. Non-GAAP recurring revenue reached a record 78% of total revenue in the fourth quarter and fueled the 8.5% non-GAAP organic revenue growth after adjusting for constant currency. The Company maintained its focus on efficiency and profitability resulting in strong margin expansion for the quarter and the full year.

Blackbaud's fourth-quarter results capped a very solid year for the company, which was marked by a transition into the cloud. For the full year, non-GAAP organic revenue grew by 7.7% on a constant currency basis, with even stronger growth in the fourth quarter. Furthermore, by focusing on integrating its acquisitions and keeping its overall costs under control, the company was able to expand its margins, which enabled profits and cash flow to grow by an even faster clip.

Looking forward 
Those trends are expected to continue in 2016, with Blackbaud expected to see its growth rate accelerate in the year ahead. It's guiding for non-GAAP revenue of $725 million to $740 million, which at the midpoint would be 14.8% ahead of last year. Meanwhile, non-GAAP earnings are expected to be in the range of $1.90 to $1.98 per share, which represents 29.3% growth at the midpoint, while cash flow from operations is expected to grow by 31.2% to a range of $145 million to $155 million. Speaking of cash flow, Blackbaud updated its long-term aspirational goal for operating cash flow from 2014 to 2017, boosting it from its initial range of $400 million to $450 million to an updated range of $500 million to $550 million.