Summary
Blackbaud reported increased revenues in Q2 2017, primarily driven by a shift toward cloud-based subscription services, as evidenced by total revenues of $192.2 million for the quarter. This transition has its challenges, as the company’s services and other revenue streams declined due to reduced demand for implementation services with cloud solutions. However, the steady growth in subscriptions suggests this strategic shift is gaining traction, with a notable 93% customer retention rate for recurring contracts, consistent with the previous full year figures.
Significant operational enhancements and strategic acquisitions have been a focus. The company recently acquired AcademicWorks in April 2017, expanding its educational solutions and cross-selling opportunities. An agreement was also reached to acquire JustGiving, a UK-based online fundraising platform. This move is intended to strengthen Blackbaud’s peer-to-peer fundraising capabilities, although completion is pending regulatory approvals in the UK.
Operational efficiency has been a target, with a long-term goal of improving non-GAAP operating margins by 300 basis points by the end of 2017 from a 2014 baseline of 17.5%. This goal seems achievable given the company’s historical margin improvements. Net borrowings increased by $46.5 million in H1 2017, primarily supporting the AcademicWorks acquisition and operational investments.
The growth expectations are bolstered by recent leadership changes intended to drive global sales and strategic expansion, although challenges remain. The shift from perpetual licenses to time-based subscription revenue implies deferred recognition, which may initially weigh on revenue growth. Moreover, currency fluctuations, particularly with the British Pound and Canadian dollar, negatively impacted revenue by $1.3 million in the first half of 2017, underlining the exchange rate volatility risk in financial performance.
Overall, while the company continues to make progress in alignment with its long-term strategic shift to cloud-based solutions and operational effectiveness, the transitionary impacts on revenue streams, alongside foreign exchange challenges, remain areas to monitor closely. The strategic acquisitions aim to diversify and solidify their market position, supporting future revenue growth despite the near-term pressure on traditional service revenues.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2017 | Q1 FY2017 | QoQ | Q2 FY2016 | YoY |
|---|---|---|---|---|---|
| Revenue | $192.2M | $183.6M | +4.7% | $180.2M | +6.7% |
| Gross profit | $105.2M | $98.1M | +7.2% | $96.6M | +8.8% |
| Gross margin | 54.7% | 53.5% | +1.3 pp | 53.6% | +1.1 pp |
| Research & development | $22.9M | $22.7M | +0.7% | $22.6M | +1.3% |
| Sales & marketing | $43.0M | $42.2M | +1.7% | $39.3M | +9.3% |
| General & administrative | $21.9M | $21.9M | -0.2% | $19.9M | +10.2% |
| Total operating expenses | $88.5M | $87.6M | +1.0% | $82.5M | +7.3% |
| Operating income (loss) | $16.7M | $10.6M | +58.3% | $14.2M | +18.0% |
| Operating margin | 8.7% | 5.8% | +3.0 pp | 7.9% | +0.8 pp |
| Net income (loss) | $11.2M | $11.5M | -3.0% | $7.8M | +42.9% |
| Net margin | 5.8% | 6.3% | -0.5 pp | 4.3% | +1.5 pp |
| Diluted EPS | $0.23 | $0.24 | -$0.01 | $0.17 | +$0.06 |
Summary, forecast, risks and KPIs are extracted from BLACKBAUD INC's SEC filings for Q2 FY2017 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Aug 4, 2026.