Blackbaud, Inc. Announces Second Quarter 2009 Results

Announces Third Quarter 2009 Dividend
CHARLESTON, S.C.--(Business Wire)--
Blackbaud, Inc. (Nasdaq: BLKB), the leading provider of software and related
services designed specifically for nonprofit organizations, today announced
financial results for its second quarter ended June 30, 2009.

Marc Chardon, Chief Executive Officer of Blackbaud, stated, "While the economic
environment remains challenging, Blackbaud delivered second quarter revenue and
profitability that were consistent with or above the high-end of our guidance as
a result of our worldwide organization executing at a very high level. Equally
important, we believe our efforts and investments to solidify our leadership
position and expand our addressable market opportunity will pay off in a
meaningful way when the economy improves and IT budgets increase in the
nonprofit sector."

Chardon added, "We are making solid progress against our goal of establishing a
clear market leadership position in online fundraising solutions, just as we
have in the constituent relationship fundraising solutions market with the
Raiser`s Edge and our newer eCRM offering. During the second quarter, we enjoyed
a strong uptake of our recently introduced, subscription-based Blackbaud
NetCommunity Grow solution. In addition, we continue to be pleased with the
market acceptance and customer commitment related to our Blackbaud Sphere
offering. Our increasingly strong position in the online fundraising solutions
market is very encouraging from a long-term perspective."

On a GAAP basis, Blackbaud reported total revenue of $76.4 million for the
quarter ended June 30, 2009, an increase of over 5% compared with the second
quarter of 2008. Income from operations and net income were $10.8 million and
$6.6 million, respectively, compared with $14.6 million and $9.0 million,
respectively, in the second quarter of 2008. Diluted earnings per share were
$0.15 for the quarter ended June 30, 2009, compared with $0.21 in the same
period last year.

For the quarter ended June 30, 2009, non-GAAP revenue, including a $0.8 million
revenue adjustment related to Kintera purchase accounting, was $77.2 million, an
increase of 6.5% compared with the second quarter of 2008. Non-GAAP income from
operations, which excludes stock-based compensation expense and amortization of
intangibles arising from business combinations, was $16.5 million, above the
Company`s guidance of $15.3 to $16.3 million and representing a non-GAAP
operating margin of 21.3%. Non-GAAP operating income was $18.0 million in the
second quarter of 2008.

Non-GAAP net income was $9.9 million for the quarter ended June 30, 2009,
compared with $10.9 million in the same period last year. Non-GAAP diluted
earnings per share were $0.23 for the quarter ended June 30, 2009, above the
Company`s guidance of $0.21 to $0.22 and compared to $0.25 in the same period
last year.

A reconciliation of GAAP to non-GAAP results has been provided in the financial
statement tables included in this press release. An explanation of these
measures is also included below under the heading "Non-GAAP Financial Measures."

The Company ended the quarter with $18.5 million in cash, down from $23.0
million at the end of the previous quarter. The company generated $22.1 million
in cash from operations during the second quarter, a substantial portion of
which was used to reduce debt by approximately $19 million. The Company also
used $4.5 million for the quarterly payment of dividends to stockholders.

Timothy V. Williams, Chief Financial Officer of Blackbaud, stated, "During the
first half of 2009, a tight focus on controlling expenses enabled Blackbaud to
deliver better-than-expected profitability and a non-GAAP operating margin of
20%, consistent with our full year target. We will continue to manage our
expenses."

Williams added, "We are particularly pleased with the Company`s strong cash flow
in the second quarter, which allowed us to reduce our outstanding debt balance
by approximately 31%, at the same time we continued to return cash to
stockholders by way of our quarterly dividend. Despite the challenges of the
economic environment, Blackbaud remains one of the few public software companies
that is committed to using its strong cash flow to pay a quarterly dividend in
order to enhance long-term stockholder value."

Third Quarter 2009 Dividend and Share Repurchase Program

Blackbaud announced today that its Board of Directors has declared a third
quarter dividend of $0.10 per share payable on September 15, 2009 to
stockholders of record on August 28, 2009. Additionally, as of June 30, the
Company had approximately $30 million remaining under its common stock share
repurchase program that was authorized over a year ago.

Conference Call Details

Blackbaud will host a conference call today, July 30, 2009, at 5:00 p.m.
(Eastern Time) to discuss the Company's financial results, operations and
related matters. To access this call, dial 888-278-8469 (domestic) or
913-312-0851 (international). A replay of this conference call will be available
through August 6, 2009, at 888-203-1112 (domestic) or 719-457-0820
(international). The replay passcode is 1704700. A live webcast of this
conference call will be available on the "Investor Relations" page of the
Company's website at www.blackbaud.com/investorrelations, and a replay will be
archived on the website as well.

About Blackbaud

Blackbaud is the leading global provider of software and services designed
specifically for nonprofit organizations, enabling them to improve operational
efficiency, build strong relationships, and raise more money to support their
missions. Approximately 22,000 organizations - including University of Arizona
Foundation, American Red Cross, Cancer Research UK, The Taft School,Lincoln
Center, In Touch Ministries, Tulsa Community Foundation, Ursinus
College,Earthjustice, International Fund for Animal Welfare, and the WGBH
Educational Foundation - use one or more Blackbaud products and services for
fundraising, constituent relationship management, financial management, website
management, direct marketing, education administration, ticketing, business
intelligence, prospect research, consulting, and analytics. Since 1981,
Blackbaud`s sole focus and expertise has been partnering with nonprofits and
providing them the solutions they need to make a difference in their local
communities and worldwide. Headquartered in the United States, Blackbaud also
has operations in Australia, Canada, the Netherlands, and the United Kingdom.
For more information, visit www.blackbaud.com.

All Blackbaud product names appearing herein are trademarks or registered
trademarks of Blackbaud, Inc.

Forward-looking Statements

Except for historical information, all of the statements, expectations, and
assumptions contained in this news release are forward-looking statements that
involve a number of risks and uncertainties. Although Blackbaud attempts to be
accurate in making these forward-looking statements, it is possible that future
circumstances might differ from the assumptions on which such statements are
based. In addition, other important factors that could cause results to differ
materially include the following: general economic risks; uncertainty regarding
increased business and renewals from existing customers; continued success in
sales growth; management of integration of acquired companies and other risks
associated with acquisitions; risks associated with successful implementation of
multiple integrated software products; the ability to attract and retain key
personnel; risks related to our dividend policy and share repurchase program,
including potential limitations on our ability to grow and the possibility that
we might discontinue payment of dividends; risks relating to restrictions
imposed by the credit facility; risks associated with management of growth;
lengthy sales and implementation cycles, particularly in larger organizations;
technological changes that make our products and services less competitive; and
the other risk factors set forth from time to time in the SEC filings for
Blackbaud, copies of which are available free of charge at the SEC`s website at
www.sec.gov or upon request from Blackbaud's investor relations department.

Non-GAAP Financial Measures

Blackbaud has provided in this release financial information that has not been
prepared in accordance with GAAP. This information includes non-GAAP revenue,
non-GAAP income from operations and margin, non-GAAP net income and non-GAAP
diluted earnings per share. Blackbaud uses these non-GAAP financial measures
internally in analyzing its financial results and believes they are useful to
investors, as a supplement to GAAP measures, in evaluating Blackbaud's ongoing
operational performance. Blackbaud believes that the use of these non-GAAP
financial measures provides an additional tool for investors to use in
evaluating ongoing operating results and trends and in comparing its financial
results with other companies in Blackbaud's industry, many of which present
similar non-GAAP financial measures to investors. As noted, the non-GAAP
financial results discussed above exclude stock-based compensation expense and
costs associated with amortization of intangibles arising from business
combinations and include revenue associated with the Kintera acquisition that is
not recognizable under GAAP purchase accounting.

Non-GAAP financial measures should not be considered in isolation from, or as a
substitute for, financial information prepared in accordance with GAAP.
Investors are encouraged to review the reconciliation of these non-GAAP measures
to their most directly comparable GAAP financial measure below. As previously
mentioned, a reconciliation of our non-GAAP financial measures to their most
directly comparable GAAP measures has been provided in the financial statement
tables included below in this press release.

Blackbaud, Inc.
Consolidated balance sheets
(Unaudited)

June 30, December 31,
(in thousands, except share amounts) 2009 2008

Assets
Current assets:
Cash and cash equivalents $ 18,537 $ 16,361
Donor restricted cash 5,514 12,363
Accounts receivable, net of allowance of $2,696 and $2,777 59,248 52,554
at June 30, 2009 and December 31, 2008, respectively
Prepaid expenses and other current assets 16,839 17,281
Deferred tax asset, current portion 6,754 6,858
Total current assets 106,892 105,417
Property and equipment, net 20,174 21,384
Deferred tax asset 62,751 64,762
Goodwill 75,130 73,615
Intangible assets, net 45,569 48,171
Other assets 480 537

Total assets $ 310,996 $ 313,886

Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable $ 6,787 $ 7,023
Accrued expenses and other current liabilities 23,248 21,758
Donations payable 5,514 12,363
Capital lease obligations, current portion 290 384
Debt, current portion 41,610 60,049
Deferred revenue 126,892 113,802
Total current liabilities 204,341 215,379
Capital lease obligations, noncurrent 81 203
Long-term debt, net of current portion 717 1,288
Deferred revenue, noncurrent 5,597 5,838
Other noncurrent liabilities 792 670

Total liabilities 211,528 223,378

Commitments and contingencies
Stockholders' equity:
Preferred stock; 20,000,000 shares authorized, none outstanding - -
Common stock, $0.001 par value; 180,000,000 shares authorized, 51 51
51,344,233 and 51,269,081 shares issued at June 30, 2009
and December 31, 2008, respectively
Additional paid-in capital 123,470 116,846
Treasury stock, at cost; 7,512,701 and 7,494,466 shares at (130,804 ) (130,594 )
June 30, 2009 and December 31, 2008, respectively
Accumulated other comprehensive loss (218 ) (899 )
Retained earnings 106,969 105,104

Total stockholders' equity 99,468 90,508

Total liabilities and stockholders' equity $ 310,996 $ 313,886

Blackbaud, Inc.
Consolidated statements of operations
(Unaudited)

Three months ended June 30, Six months ended June 30,
(in thousands, except share and per share amounts) 2009 2008 2009 2008
Revenue
License fees $ 5,799 $ 9,603 $ 13,204 $ 19,238
Services 22,465 25,336 43,594 48,912
Maintenance 28,821 26,371 56,832 51,801
Subscriptions 17,773 9,010 34,496 17,795
Other revenue 1,557 2,182 3,030 4,192

Total revenue 76,415 72,502 151,156 141,938

Cost of revenue
Cost of license fees 981 807 1,884 1,649
Cost of services 15,512 14,905 31,721 30,598
Cost of maintenance 5,432 4,595 10,580 9,299
Cost of subscriptions 7,038 3,824 13,778 7,480
Cost of other revenue 1,533 2,023 2,811 3,871

Total cost of revenue 30,496 26,154 60,774 52,897

Gross profit 45,919 46,348 90,382 89,041

Operating expenses
Sales and marketing 15,072 15,672 31,187 30,911
Research and development 11,301 8,642 22,762 17,409
General and administrative 8,513 7,273 17,452 14,539
Amortization 192 167 378 334
- -
Total operating expenses 35,078 31,754 71,779 63,193

Income from operations 10,841 14,594 18,603 25,848
Interest income 37 34 99 199
Interest expense (270 ) (148 ) (695 ) (218 )
Other income (expense), net 31 49 (130 ) (40 )

Income before provision for income taxes 10,639 14,529 17,877 25,789
Income tax provision 4,051 5,542 7,217 9,759

Net income $ 6,588 $ 8,987 $ 10,660 $ 16,030

Earnings per share
Basic $ 0.15 $ 0.21 $ 0.25 $ 0.37
Diluted $ 0.15 $ 0.21 $ 0.25 $ 0.36

Common shares and equivalents outstanding
Basic weighted average shares 42,577,549 42,776,609 42,531,323 43,336,989
Diluted weighted average shares 43,333,871 43,457,710 43,141,654 44,064,436
Dividends per share $ 0.10 $ 0.10 $ 0.20 $ 0.20

Blackbaud, Inc.
Consolidated statements of cash flows
(Unaudited)

Six months ended June 30,
(in thousands) 2009 2008

Cash flows from operating activities
Net income $ 10,660 $ 16,030
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 7,694 5,107
Provision for doubtful accounts and sales returns 1,285 2,199
Stock-based compensation expense 6,245 4,678
Excess tax benefit on exercise of stock options (464 ) (18 )
Deferred taxes 3,345 2,363
Other non-cash adjustments 69 37
Changes in assets and liabilities, net of acquisition of businesses:
Accounts receivable (5,655 ) (20,886 )
Prepaid expenses and other assets 1,208 994
Trade accounts payable (467 ) 519
Accrued expenses and other current liabilities (262 ) (2,773 )
Donor restricted cash 6,849 -
Donations payable (6,849 ) -
Deferred revenue 10,870 13,218
Net cash provided by operating activities 34,528 21,468
Cash flows from investing activities
Purchase of property and equipment (2,665 ) (2,957 )
Purchase of net assets of acquired companies, net of cash acquired (2,258 ) (2,895 )
Net cash used in investing activities (4,923 ) (5,852 )
Cash flows from financing activities
Proceeds from issuance of debt - 27,200
Proceeds from exercise of stock options 255 393
Excess tax benefit on exercise of stock options 464 18
Payments on debt (19,010 ) (2,708 )
Payments of deferred financing fees - (47 )
Payments on capital lease obligations (217 ) (276 )
Purchase of treasury stock - (36,027 )
Dividend payments to stockholders (8,807 ) (8,843 )
Net cash used in financing activities (27,315 ) (20,290 )
Effect of exchange rate on cash and cash equivalents (114 ) (122 )
Net increase (decrease) in cash and cash equivalents 2,176 (4,796 )
Cash and cash equivalents, beginning of period 16,361 14,775
Cash and cash equivalents, end of period $ 18,537 $ 9,979

Blackbaud, Inc.
Reconciliation of GAAP to Non-GAAP financial measures
(Unaudited)

Three months ended June 30, Six months ended June 30,
(in thousands, except per share amounts) 2009 2008 2009 2008

GAAP revenue $ 76,415 $ 72,502 $ 151,156 $ 141,938

Non-GAAP adjustments:
Add back: Kintera deferred revenue writedown 834 - 2,041 -
Total Non-GAAP adjustments 834 - 2,041 -

Non-GAAP revenue $ 77,249 $ 72,502 $ 153,197 $ 141,938

GAAP gross profit $ 45,919 $ 46,348 $ 90,382 $ 89,041

Non-GAAP adjustments:
Add back: Kintera deferred revenue writedown 834 - 2,041 -
Add back: Stock-based compensation expense (see table below) 631 479 1,284 968
Add back: Amortization of intangibles from business combinations (see table below) 1,575 903 3,153 1,806
Total Non-GAAP adjustments 3,040 1,382 6,478 2,774

Non-GAAP gross profit $ 48,959 $ 47,730 $ 96,860 $ 91,815

Non-GAAP gross margin 63 % 66 % 63 % 65 %

GAAP income from operations $ 10,841 $ 14,594 $ 18,603 $ 25,848

Non-GAAP adjustments:
Add back: Kintera deferred revenue writedown 834 - 2,041 -
Add back: Stock-based compensation expense (see table below) 3,025 2,319 6,245 4,678
Add back: Amortization of intangibles from business combinations (see table below) 1,767 1,070 3,531 2,140
Total Non-GAAP adjustments 5,626 3,389 11,817 6,818

Non-GAAP income from operations $ 16,467 $ 17,983 $ 30,420 $ 32,666

Non-GAAP operating margin 21 % 25 % 20 % 23 %

GAAP net income $ 6,588 $ 8,987 $ 10,660 $ 16,030

Non-GAAP adjustments:
Add back: Total Non-GAAP adjustments affecting income from operations 5,626 3,389 11,817 6,818
Add back: Tax impact related to Non-GAAP adjustments (2,292 ) (1,445 ) (4,363 ) (2,958 )

Non-GAAP net income $ 9,922 $ 10,931 $ 18,114 $ 19,890

Shares used in computing Non-GAAP diluted earnings per share 43,334 43,951 43,142 44,551

Non-GAAP diluted earnings per share $ 0.23 $ 0.25 $ 0.42 $ 0.45

Detail of Non-GAAP adjustments:
Stock-based compensation expense:
Cost of revenue
Cost of services $ 360 $ 302 $ 737 $ 652
Cost of maintenance 157 119 314 231
Cost of subscriptions 114 58 233 85
Subtotal 631 479 1,284 968
Operating expenses
Sales and marketing 331 295 671 581
Research and development 686 508 1,397 1,028
General and administrative 1,377 1,037 2,893 2,101
Subtotal 2,394 1,840 4,961 3,710
Total stock-based compensation expense $ 3,025 $ 2,319 $ 6,245 $ 4,678

Amortization of intangibles from business combinations:
Cost of revenue
Cost of license fees $ 90 $ 43 $ 171 $ 86
Cost of services 336 334 670 668
Cost of maintenance 325 98 650 196
Cost of subscriptions 806 409 1,625 818
Cost of other revenue 18 19 37 38
Subtotal 1,575 903 3,153 1,806
Operating expenses 192 167 378 334
Total amortization of intangibles from business combinations $ 1,767 $ 1,070 $ 3,531 $ 2,140

Investor Contact:
ICR
Tim Dolan, 617-956-6727
timothy.dolan@icrinc.com
or
Media Contact:
Blackbaud, Inc.
Melanie Mathos, 843-216-6200 x3307
melanie.mathos@blackbaud.com

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