Blackbaud Reports Fourth-Quarter Gains

Charleston-based software maker Blackbaud Inc. reported a 5 percent profit increase in both its fourth-quarter and full-year results Thursday, as it signed up some large customers and got a boost from a pair of acquisitions.

Blackbaud's earnings for the three months ended Dec. 31 increased to $9 million, or 20 cents a share, compared with the same period a year earlier. Analysts had expected 22 cents a share. Revenue for the quarter jumped to $70 million, a 42 percent increase.

Though Blackbaud's expenses rose faster, by 50 percent in the year's final quarter, Chief Executive Officer Marc Chardon was bullish about the results. "This is one quarter where I don't actually see anything that might stick out to the analyst community," Chardon said Wednesday. "It's sort of the best- looking quarter I've seen since I got here" in November 2005.

For the full year, Blackbaud's profit rose 5 percent to $31.7 million, while its sales surged 34 percent to $257 million. The Daniel Island technology company, which sells financial software and services to nonprofit fund-raising organizations, cashed in on two new businesses. In January 2007, Blackbaud bought Target Software Inc., a Boston-based competitor, for $58.7 million in cash. And in August, Blackbaud dropped another $25.4 million on eTapestry.com, an Indianapolis-based firm focused on small nonprofits.

The company inherited about 300 employees from the acquisition, as well as a number of customers that Chardon said Blackbaud was able to retain. The company also landed a few big customers, including the universities of Iowa and Nebraska, and its average sales transaction topped $50,000 in the fourth quarter for the first time.

Chardon predicted Blackbaud will carry its momentum into 2008, despite signs of the U.S. economy slipping into a recession. "Any public company's CEO is probably somewhat concerned, but the nonprofit sector is relatively insulated," he said. "When times are tough, the need for what they do goes up. And people generally don't want to give less than they did the year before. ... I think we're looking forward to a pretty good year."

Blackbaud's board increased its annual dividend to 40 cents a share from 34 cents, a nearly 18 percent bump. It also approved a 10-cent-a-share quarterly dividend to be paid March 14 to stockholders of record Feb. 28. The company reiterated its full-year guidance, predicting a 15 percent to 20 percent gain in revenue and profits in the range of 98 cents to $1.02 a share.

Despite consistently reporting strong quarters, Chardon said the company is not a ripe takeover target. Its products and services are too specialized for a massive software company like Oracle, and Blackbaud's stock price is too high for "bottom-fishing bargain hunters."

"We're clearly not distressed," Chardon said.

Shares of Blackbaud fell 4 cents in trading Thursday on the Nasdaq Stock Exchange to close at $26.65. The stock is down about 10 percent since it last closed above the $29 mark on Dec. 26, following broader market trends.