Blackbaud Q4 Profit Declines on Higher Expenses

Blackbaud, Inc. (BLKB), a provider of software services for nonprofit organizations, reported a decline in its fourth-quarter profit from last year, hurt by higher expenses, despite a revenue growth. Non-GAAP earnings per share grew a penny and topped analysts' expectations by two cents. The company also declared an annual and quarterly cash dividend.

In a statement, chief executive officer, Marc Chardon said, "The Company's fourth quarter results were highlighted by better-than-expected profitability and solid execution in the face of an increasingly challenging macro environment. Moreover, during 2008, the Company made progress against multiple growth initiatives during what proved to be one of the most challenging periods non-profit organizations have ever faced."

The company added that subscription revenue was nearly twice that of its perpetual license revenue in the fourth quarter and the continued growth is a significant and positive evolution of the company's already strong business model.

The Charleston, South Carolina-based company reported fourth-quarter net income of $6.53 million or $0.15 per share, lower than $8.96 million or $0.20 per share in the same quarter last year. On a non-GAAP basis, net income was $10.38 million or $0.24 per share, compared to $10.53 million or $0.23 per share in the year-ago quarter. On average, seven analysts polled by Thomson Reuters expected the company to earn $0.22 per share for the fourth quarter. Analysts' estimates typically exclude special items.

Total revenue for the quarter increased to $80.46 million from $70.01 million in the comparable quarter last year, but missed seven Wall Street analysts' consensus estimate of $82.68 million. Income from operations was $10.05 million, down from $14.17 million in the prior-year quarter. On a non-GAAP basis, income from operations was $17.61 million, up from $17.30 million in the year-ago quarter. Gross profit for the fourth quarter was $48.25 million, up from $44.07 million in the corresponding quarter last year. Sales and marketing expenses for the quarter increased to $17.59 million from $15.24 million in the comparable quarter a year ago. General and administrative expenses were $9.69 million, up from $6.97 million in the same quarter last year. Research and development expenses rose to $10.73 million from $7.52 million in the prior-year quarter.

For fiscal 2008, Blackbaud reported net income of $29.88 million or $0.68 per share, lower than $31.72 million or $0.71 per share in the prior year. On a non-GAAP basis, net income increased to $41.66 million or $0.95 per share from $37.77 million or $0.84 per share in the year ago. Revenue for the full year was $302.50 million, up 18% from $257.04 million reported in the previous year. Analysts expected the company to earn $0.93 per share on revenue of $306.90 million for fiscal 2008. The company also declared an annual dividend of $0.40 per share and a first quarter dividend of $0.10 per share, payable on March 13, to stockholders of record on February 27, 2009.

BLKB closed Thursday's regular trading session at $11.57, up $0.31 or 2.75% on a volume of 0.24 million shares, lower than the three-month average volume of 0.29 million shares.