Blackbaud, Inc. reports 39.1% Net Income decline in 2018 and 1.6 pp EBITDA Margin decline from 18.0% to 16.4%
02/06/2019 • About Blackbaud, Inc. (
$BLKB) • By InTwits
Blackbaud, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Blackbaud, Inc. is a growth stock: 2018 revenue growth was 7.6%, 5 year revenue CAGR was 11.0% at 2018 ROIC 7.7%
- Blackbaud, Inc. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 was 4.4% while average EBITDA Margin was 17.2% for the sames years. In 2018 SBC/Revenue was even higher: 5.7%
- Blackbaud, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.2%. At the same time it's in pair with industry average of 13.2%
- CAPEX is quite volatile: $37m in FY2018, $35m in FY2017, $24m in FY2016, $13m in FY2015, $11m in FY2014
- In the last 5 years the company invested considerably less than D&A: $75m vs. $325m. In 2018 this situation was still the same: CAPEX was 15 while D&A was 80
- The company has business model with low profitability: ROIC is 7.7%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.6x while industry average is -2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 7.6%. Revenue growth showed slowdown in 18Q4 - it was 1.8% YoY. During the last 5 years Revenue growth topped in 2016 at 14.7% and was decelerating since that time. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 2.4 pp from 10.0% to 7.6% in 2018.
Gross Margin increased slightly on 0.91 pp from 54.1% to 55.0% in 2018. Gross Margin grew at 0.88 pp per annum in the last 5 years. SG&A as a % of Revenue increased slightly on 1.7 pp from 33.5% to 35.3% in 2018. SG&A as a % of Revenue grew at 1.4 pp per annum in the last 5 years. Stock Based Compensation (SBC) as a % of Revenue increased slightly on 0.54 pp from 5.2% to 5.7% in 2018. SBC as a % of Revenue stuck to a growing trend at 0.91 pp per annum in the last 5 years.
Net Income margin decreased on 4.1 pp from 9.3% to 5.3% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.7% in 2018. Blackbaud, Inc.'s CAPEX/Revenue decreased slightly on 1.2 pp from 2.9% in 2015 to 1.7% in 2018. Average CAPEX/Revenue for the last three years was 1.8%.
Accounts receivable as a % of Revenue decreased slightly on 1.9 pp from 12.1% to 10.2% in 2018. Accounts payable as a % of Revenue increased on 2.2 pp from 6.8% to 9.0% in 2018.
Blackbaud, Inc. has spent
$45m on M&A in 2018 which accounts for 5.3% of revenue.
Return on investment
The company operates at good ROE (12.6%) while ROIC is low (7.7%). ROIC decreased on 2.2 pp from 9.9% to 7.7% in 2018. ROE dropped on 12.6 pp from 25.2% to 12.6% in 2018.
Leverage (Debt)
Debt level is 2.6x Net Debt / EBITDA and 2.8x Debt / EBITDA. Net Debt / EBITDA dropped on 0.3x from 2.9x to 2.6x in 2018. Debt dropped on 11.7% while cash increased on 3.5%.
Blackbaud, Inc. has good short term financial stability: Interest coverage ratio (ICR) is 3.7x. Blackbaud, Inc. has no short term refinancing risk: cash is higher than short term debt (411.5%).
Average interest expence charged on company's debt was 4.1% in 2018.
Valuation and dividends
Blackbaud, Inc.'s trades at EV/EBITDA 29.5x and P/E 83.5x.
The company paid 51.3% of Net Income as dividends in 2018. Dividends grew on average at 0.9% per annum in the last 5 years).
Management team
Blackbaud, Inc.'s CEO is Michael P Gianoni "Mike". Michael P Gianoni "Mike" is a founder and has 5 years tenure with the company. CEO total compensation was
$9,289,690 in 2018 which included
$715,778 salary. Blackbaud, Inc.'s CFO is Anthony W Boor "Tony". Anthony W Boor "Tony" has 7 years tenure at the company.
1.7% of the company is owned by insiders. Insider ownership didn't change in 2018.
The company has 3,353 employees. The number of employees increased on 5.4%. Average revenue per employee in 2018 was
$253,089 and it increased on 2.1%.
Financial and operational results
FY ended 12/31/2018
Blackbaud, Inc. ($BLKB) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 564.4 | 637.9 | 731.6 | 788.5 | 848.6 | 7.6% |
| Gross Profit | 291.0 | 333.3 | 392.4 | 426.6 | 466.9 | 9.4% |
| SG&A | 165.6 | 199.7 | 231.5 | 264.4 | 299.2 | 13.2% |
| EBITDA | 91.8 | 102.7 | 138.7 | 142.1 | 139.0 | -2.2% |
| EBIT | 46.4 | 46.7 | 68.2 | 68.2 | 59.4 | -12.9% |
| Interest expence | 6.0 | | 10.6 | 12.1 | 15.9 | 31.4% |
| Tax | 10.9 | 11.3 | 11.9 | -15.3 | -0.2 | |
| Net Income | 28.3 | 25.6 | 45.4 | 73.6 | 44.8 | -39.1% |
| Stock Based Compensation | 9.9 | 25.2 | 32.6 | 40.6 | 48.3 | 18.8% |
Balance Sheet
|
|---|
| Cash | 14.7 | 15.4 | 16.9 | 29.8 | 30.9 | 3.5% |
| Accounts Receivable | 77.5 | 80.0 | 88.9 | 95.7 | 86.6 | -9.5% |
| Accounts Payable | 11.4 | 19.2 | 23.3 | 24.7 | 34.5 | 39.9% |
| Short Term Debt | 4.4 | 4.4 | 4.4 | 8.6 | 7.5 | -12.5% |
| Long Term Debt | 276.2 | 403.7 | 338.0 | 429.6 | 379.6 | -11.6% |
Cash flow
|
|---|
| Capex | 13.9 | 18.6 | 17.7 | 10.2 | 14.7 | 44.2% |
| Dividends | 22.0 | 23.0 | 23.0 | 23.0 | 23.0 | 0.0% |
| Acquisitions | 188.9 | 188.1 | 3.4 | 146.8 | 44.9 | -69.4% |
Ratios
|
|---|
| Revenue growth | 12.0% | 13.0% | 14.7% | 7.8% | 7.6% | |
| EBITDA growth | -3.1% | 11.9% | 35.1% | 2.5% | -2.2% | |
|
|---|
| Gross Margin | 51.6% | 52.2% | 53.6% | 54.1% | 55.0% | 0.9% |
| EBITDA Margin | 16.3% | 16.1% | 19.0% | 18.0% | 16.4% | -1.6% |
| EBIT Margin | 8.2% | 7.3% | 9.3% | 8.6% | 7.0% | -1.6% |
| SG&A, % of revenue | 29.3% | 31.3% | 31.6% | 33.5% | 35.3% | 1.7% |
| SBC, % of revenue | 1.8% | 4.0% | 4.5% | 5.2% | 5.7% | 0.5% |
| Net Income Margin | 5.0% | 4.0% | 6.2% | 9.3% | 5.3% | -4.1% |
| CAPEX, % of revenue | 2.5% | 2.9% | 2.4% | 1.3% | 1.7% | 0.4% |
|
|---|
| ROIC | 11.5% | 8.4% | 11.2% | 9.9% | 7.7% | -2.2% |
| ROE | 16.3% | 12.9% | 19.8% | 25.2% | 12.6% | -12.6% |
| Net Debt/EBITDA | 2.9x | 3.8x | 2.3x | 2.9x | 2.6x | -0.3x |
| Interest coverage ratio (ICR) | 7.7x | | 6.4x | 5.6x | 3.7x | -1.9x |
| Interest expence / Average debt | 2.1% | | 2.8% | 3.1% | 4.1% | 1.0% |
People
|
|---|
| Insider ownership | 1.7% | 1.7% | 1.7% | 1.7% | 1.7% | 0.0% |
| Employees | 3,033 | 3,095 | 3,156 | 3,182 | 3,353 | 5.4% |
| Revenue/Employee, th. $ | 186 | 206 | 232 | 248 | 253 | 2.1% |
Blackbaud, Inc. ($BLKB) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 204 | 214 | 210 | 221 | | 10.3% | 11.5% | 7.8% | 1.8% |
| EBITDA | 37 | 31 | 36 | 34 | | 19.2% | -10.1% | -2.1% | -12.5% |
| Net Income | 18 | 7 | 11 | 9 | | 35.1% | -40.2% | -12.9% | -74.5% |
Balance Sheet
|
|---|
| Cash | 25 | 29 | 25 | 31 | | 80.3% | 69.1% | 48.7% | 3.5% |
| Short Term Debt | 9 | 9 | 9 | 8 | | 96.0% | 14.3% | 0.0% | -12.5% |
| Long Term Debt | 459 | 471 | 417 | 380 | | 30.3% | 24.0% | 26.5% | -11.6% |
Ratios
|
|---|
| Gross Margin | 56.9% | 55.5% | 54.5% | 53.3% | | 3.1% | 0.9% | -0.7% | 0.4% |
| EBITDA Margin | 18.3% | 14.7% | 17.1% | 15.5% | | 1.4% | -3.5% | -1.7% | -2.5% |
| Net Income Margin | 8.7% | 3.1% | 5.3% | 4.2% | | 1.6% | -2.7% | -1.3% | -12.6% |
Peers in Application Software
Below we provide Blackbaud, Inc. benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 14.0% | 13.6% | 15.7% | 15.2% |
|---|
| Blackbaud, Inc. ($BLKB) | | 13.0% | 14.7% | 7.8% | 7.6% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 63.4% | 61.9% | 64.2% | 64.6% | 66.1% |
|---|
| Blackbaud, Inc. ($BLKB) | 51.6% | 52.2% | 53.6% | 54.1% | 55.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.3% | -10.7% | -5.3% | -4.2% | -3.3% |
|---|
| Blackbaud, Inc. ($BLKB) | 16.3% | 16.1% | 19.0% | 18.0% | 16.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 3.0% | 2.3% | 2.4% |
|---|
| Blackbaud, Inc. ($BLKB) | 2.5% | 2.9% | 2.4% | 1.3% | 1.7% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.4% | -13.1% | -9.8% | -11.8% | -10.4% |
|---|
| Blackbaud, Inc. ($BLKB) | 11.5% | 8.4% | 11.2% | 9.9% | 7.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (69 companies) | -1.4x | -1.0x | -0.9x | -0.9x | -0.7x |
|---|
| Blackbaud, Inc. ($BLKB) | 2.9x | 3.8x | 2.3x | 2.9x | 2.6x |
