Summary
Blackbaud closed fiscal 2021 with fourth-quarter revenue of $247.9 million, up 2.2% from the prior-year quarter. Non-GAAP organic recurring revenue grew 4.0%. That top-line progress did not reach the bottom line. GAAP loss from operations widened to $6.6 million, and GAAP operating margin was -2.7%, down 2.3 percentage points from a year earlier. GAAP net loss was $7.1 million, narrower than the $13.6 million loss reported in the prior-year quarter. Gross margin slipped to 50.0%, down 0.8 percentage points. Management framed the period as a turning point for the company and its market, and said momentum carried into 2022.
Non-GAAP profitability was also under pressure. Non-GAAP income from operations was $49.0 million, a 19.8% margin, down 420 basis points from the prior-year quarter. Non-GAAP net income was $36.0 million, and non-GAAP diluted earnings per share was $0.75, down $0.10. Adjusted EBITDA fell $8.2 million to $60.7 million, a 24.5% margin, down 390 basis points. Cash was the bright spot. GAAP net cash provided by operating activities in the quarter was $43.9 million, up $5.1 million, while non-GAAP free cash flow was $29.7 million, up $4.9 million, at a 12.0% margin that improved 180 basis points.
The full year carried the same mix of modest growth and margin compression. GAAP revenue was $927.7 million, up 1.6%. GAAP income from operations was $24.9 million, with an operating margin of 2.7%, down 1.4 percentage points, and a gross margin of 52.2%, down 0.9 percentage points. GAAP net income was $5.7 million, and GAAP diluted earnings per share was $0.12, down $0.04. GAAP operating cash flow was $213.7 million, up $65.7 million, and non-GAAP free cash flow was $161.5 million, up $85.4 million, at a 17.4% margin that rose 910 basis points. Deferred revenue reached $378.7 million at December 31, 2021, up 19.5% from a year earlier. Capital expenditures were $3.3 million in the quarter, down 13.5%, and $11.7 million for the year, down 60.7%. Roughly 93% of customers with recurring revenue contracts were retained in 2021.
The strategic headline is EVERFI. Blackbaud closed that acquisition on December 31, 2021, doubling its total addressable market to more than $20 billion and creating cross-sell work alongside YourCause. Full-year 2022 guidance calls for non-GAAP revenue of $1.075 billion to $1.095 billion, including $120 million of expected EVERFI revenue. Non-GAAP adjusted EBITDA margin is guided to 24.0% to 24.5%, including $13 million of expected EVERFI adjusted EBITDA. Non-GAAP earnings per share is guided to $2.63 to $2.82, and non-GAAP adjusted free cash flow to $165.0 million to $175.0 million. Planned capital expenditures of $60.0 million to $70.0 million include roughly $45.0 million to $55.0 million of capitalized software development costs. The mid-point of that full-year plan implies total revenue growth of about 17%, organic growth of about 5%, and a Rule of 40 result near 30%.
Two items temper the outlook. The Security Incident remains a live cost. Management said total costs exceeded the insurance coverage limit in the first quarter of 2022, and that the matter will hurt GAAP profitability and GAAP cash flow for the foreseeable future, with net cash outlays of $25 million to $35 million for ongoing legal fees in 2022. No loss contingency was recorded as of December 31, 2021. Capital allocation is also in motion. Blackbaud repurchased 138,785 shares for $10.1 million during the fourth quarter and replenished its buyback authorization to $250.0 million in December 2021. The company ended the year with a net leverage ratio of 3.31 to 1.00 under its 2020 Credit Facility, against a covenant limit of 4.25 to 1.00.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2021 | Q3 FY2021 | QoQ | Q4 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $247.9M | $231.2M | +7.2% | $242.6M | +2.2% |
| Gross profit | $123.8M | $123.5M | +0.2% | $123.0M | +0.7% |
| Gross margin | 50.0% | 53.4% | -3.5 pp | 50.7% | -0.8 pp |
| Research & development | $33.6M | $31.6M | +6.5% | $27.5M | +22.2% |
| Sales & marketing | $47.4M | $44.7M | +6.0% | $50.6M | -6.4% |
| General & administrative | $48.9M | $34.7M | +40.9% | $45.0M | +8.7% |
| Total operating expenses | $130.5M | $111.7M | +16.8% | $123.9M | +5.3% |
| Operating income (loss) | -$6.6M | $11.8M | -155.9% | -$850.0K | -679.6% |
| Operating margin | -2.7% | 5.1% | -7.8 pp | -0.3% | -2.3 pp |
| Net income (loss) | -$7.1M | $6.2M | -214.0% | -$13.6M | +48.2% |
| Net margin | -2.9% | 2.7% | -5.5 pp | -5.6% | +2.8 pp |
| Diluted EPS | -$0.15 | $0.13 | -$0.28 | -$0.28 | +$0.13 |
| Customers | 40,000 | — | — | 45,000 | -11.1% |
Risks
The 2020 Security Incident continues to create legal, regulatory and remediation exposure. Blackbaud has received approximately 260 customer reimbursement requests and approximately 400 reservations of the right to seek future expense recovery, is a defendant in 19 putative consumer class actions, and faces a multi-state Civil Investigative Demand on behalf of 48 state Attorneys General and the District of Columbia plus other regulator inquiries. It expects net cash outlays of $25 million to $35 million for ongoing legal fees in full year 2022 and exceeded its insurance coverage limit in the first quarter of 2022.
The EVERFI acquisition significantly increased debt. At December 31, 2021, the carrying amount of debt under the 2020 Credit Facility was $895.6 million, total carrying value of debt was $956.2 million, up 80.1% from December 31, 2020, and the net leverage ratio was 3.31 to 1.00. Management expects interest expense as a percentage of total revenue to increase in 2022 as a result of the acquisition.
As of December 31, 2021, goodwill was $1.1 billion and intangible assets were $698.1 million, reflecting increases of $422.8 million and $457.4 million respectively from the EVERFI acquisition. Declines in stock price, market capitalization, cash flows or industry growth rates could trigger impairment charges that materially affect results.
Evolving privacy and data protection laws, including GDPR, U.K. GDPR, HIPAA and CCPA, impose compliance costs and can limit features or services. The Security Incident has also triggered inquiries from the FTC, HHS, SEC, U.K. ICO, Australian, Canadian, Spanish and Irish data protection authorities, increasing potential penalties and operational restrictions.
The December 31, 2021 EVERFI acquisition doubled the company's total addressable market to over $20 billion but carries integration, execution and retention risks. Risk factors cite challenges assimilating operations, combining product offerings, potential loss of key employees, and unanticipated costs. EVERFI also increases exposure to financial institution purchases tied to the Community Reinvestment Act, and repeal or modification of the CRA could reduce demand.
The ongoing shift from license-based and one-time services to cloud subscriptions reduces one-time consulting and analytics revenue. In 2021, one-time services and other revenue decreased by $15.6 million, or 24.9%, driven by less implementation and customization services and analytics integrated into cloud solutions. More rapid than expected success in this shift could negatively impact total revenue growth and financial performance.
MD&A attributes part of the $12.3 million decrease in GAAP income from operations during 2021 to a $33.1 million increase in stock-based compensation expense. The company replaced annual cash bonus plans with short-term performance-based equity awards and shortened vesting periods, and a decline in stock price could reduce the retention and recruiting value of equity awards.
A large percentage of customers are nonprofits, foundations, education institutions and healthcare organizations that rely on donations. If charitable giving, including online giving, does not grow or declines, customers may have less ability to pay, and transaction-based payment processing revenue could be negatively affected. MD&A notes 2021 recurring revenue growth benefited from the continued shift to virtual fundraising and online charitable giving.
Recurring revenue contracts are generally three-year terms with one to three-year renewals, and maintenance renewals are expected to decline as customers migrate from perpetual licenses to cloud subscriptions. During 2021 and 2020, approximately 93% of customers with recurring revenue contracts were retained; failure to renew on favorable terms could harm results.
As of December 31, 2021, deferred tax assets were $137.4 million. Realization depends on generating sufficient future taxable income; if a portion is determined not realizable beyond the existing valuation allowance, a charge to earnings and reduced cash flow could result.
SaaS KPIs
All quarters →Non-GAAP Adjusted EBITDA Margin
Non-GAAP Operating Margin
Non-GAAP Organic Recurring Revenue Growth
Rule of 40
Non-GAAP Organic Revenue Growth
Non-GAAP Free Cash Flow Margin
Non-GAAP organic revenue growth on constant currency basis
Rule of 40 on constant currency basis
Summary, forecast, risks and KPIs are extracted from BLACKBAUD INC's SEC filings for Q4 FY2021 (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 Oct 2, 2026.