February 17, 2006

After '04 loss, Blackbaud income surges in final quarter

Kyle Stock  /  Post and Courier

Blackbaud Inc. swung to a profit in the fourth quarter of 2005 as the company continued to roll out new products and sell to larger nonprofit customers.

In the last three months of 2005 the Daniel Island-based software company posted income of $6.8 million, or 14 cents per share, compared with a $4.3 million loss a year earlier, which mainly resulted from almost $19 million in stock-option expenses. Blackbaud's fourth-quarter revenue surged from $36 million to $42.9 million, a 19.1 percent increase.

"What you see here is just good performance across the board," said Chief Financial Officer Tim Williams. "We feel pretty good about our business."

Blackbaud executives noted that its average deal size is more than $30,000 and continues to grow, and that more than 90 percent of Blackbaud customers agree to renew their subscriptions and maintenance contracts every year.

Marc Chardon, who was named chief executive officer in November, said that although the company boasts 15,000 customers, there is "relatively untapped opportunity" for selling software to nonprofit organizations. "There are a lot of small- to mid-sized (potential) customers where the competition is still 3-by-5 notecards," Chardon said.

Blackbaud's income for the full year reached $33.3 million, more than double the $12.6 million it earned in 2004 and 11 cents per share better than Wall Street analysts' average estimate. Revenue for the year jumped 19.3 percent to $166.3 million. Blackbaud also announced that it will raise its annual dividend from 20 cents per share to 28 cents, or 7 cents per quarter. Blackbaud executives said they expect revenue of $186 million to $192 million this year, a rise of 12 to 15.5 percent.

However, Blackbaud faces an estimated $7.8 million in additional costs this year as it complies with more stringent rules for accounting for stock options granted to executives. Blackbaud reported its results after the market closed Thursday. Its stock lost 15 cents a share, or 0.8 percent, to close at $18.60 before the announcement.