Software Maker Surging

Shares of Blackbaud Inc. surged Tuesday following a late-Monday announcement that the Daniel Island-based software maker posted a 7.3 percent increase in second-quarter income and snapped up a small rival for $26.3 million in cash. Blackbaud's profit for the quarter ended June 30 rose to $8.2 million, or 19 cents per share, from $7.6 million, or 17 cents per share, in the same period last year.

The results were driven by a company that Blackbaud bought in January and the strongest growth in new customers the company has had in two years. Revenue surged from $48.6 million to $64 million in the second quarter, almost 32 percent. Blackbaud also announced that it bought eTapestry, an Indiana-based firm, for $26.3 million in cash.

Like Blackbaud, eTapestry makes software to help nonprofits raise money. However, it sells its offering "on demand" to small organizations, while its Charleston rival generally casts for bigger fish. The company's 85 workers posted a small profit last year.

"This acquisition opens up a market opportunity that Blackbaud was not actively addressing," said Blackbaud Chief Executive Marc Chardon. "... We believe that Blackbaud is now positioned to meet the fundraising needs of all nonprofits, irrespective of their size or approach to technology."

Blackbaud broke its bullish financial news after the market closed Monday. The company's stock price surged 10.8 percent Tuesday to $24.16 in trading almost four times heavier than normal on the Nasdaq Stock Market. Blackbaud said its earnings for the full year would be clipped by the eTapestry purchase, though it increased its revenue prediction. It lowered its earnings guidance from a range of 82 to 85 cents a share to between 81 and 83 cents per share. The company upped its full-year sales prediction from its earlier forecast of $240 million to $248 million, to a range between $251 million and $254.3 million.

Blackbaud is starting to reap the rewards of its January purchase of Massachusetts-based Target Software Inc., a firm that targets big, blue-chip nonprofits. In the second quarter, Blackbaud booked more than 100 deals that tallied more than $50,000 each. It also closed one of the five biggest deals in its 25-year history, selling software and services to Heifer International, an Arkansas-based nonprofit that combats world hunger. Much of the Heifer International income will go on Blackbaud's books in the coming months. "The market clearly respects our high level of domain expertise," Chardon said.

ETapestry's operations will remain largely unchanged, according to Blackbaud. The firm's top executives, including current Chief Executive Officer Jay Love, will stay at the helm of the company in Indianapolis. Blackbaud also said it will pay a third-quarter dividend of 9 cents per share for stockholders of record on Aug. 28.