Blackbaud Beating Expectations, Despite Short Term Challenges

Leading cloud software company for the non-profit sector Blackbaud (Nasdaq: BLKB) recently announced its second quarter results that surpassed market expectations even amid the current conditions. The company is worried about the short-term impact of the crisis on its financials but is continuing to invest in marketing efforts and product upgrades to tackle the conditions.

Blackbaud’s Offerings

For the second quarter, Blackbaud’s revenues grew 2.5% to $232 million, ahead of the market’s forecast of $218 million. Adjusted EPS of $0.85 was also better than the Street’s forecast of $0.50.

By segment, recurring revenues, which include software subscriptions, grew 3.7% to $216.3 million and revenues from one-time services declined 8.7% to $15.7 million.

The market forecast revenues of $214.45 million for the third quarter with an EPS of $0.52 and revenues of $886.22 million for the year with an EPS of $2.04. The company did not provide any guidance for the upcoming quarter or year.

Blackbaud’s Product Expansion

During the quarter, Blackbaud announced several technology innovations geared to address the COVID-19 situation. It simplified its donation forms, allowing fundraising to expedite collection of donations and enabling organizations to quickly and easily create campaigns. It added new financial management capabilities, such as invoice payment schedules and bank reconciliation reporting to enable the transition to work from home. It announced a new integration between peer-to-peer fundraising and donor management solutions that simplifies the process of raising revenue and acquiring new supporters through pandemic-friendly virtual events and peer-to-peer campaigns. Blackbaud also realizes the need for added security and added additional fraud protection capabilities to its offerings without adding to the costs for its customers.

Blackbaud has been helping organizations power fundraisers that directly fund critical research in essential equipment, including potential vaccine developments, low-cost ventilator production and methods to treat the virus and slow its spread. It is supporting private K-12 schools throughout the pandemic by helping them migrate their daily activities online and plan for the future of the classroom.

Blackbaud is increasing its focus on driving sales effectiveness in the current environment. It has invested in its digital footprint to allow it to be more cost effective in its marketing efforts and to be more flexible in the current market conditions. The COVID-19 crisis is bound to accelerate the existing trends to drive adoption of modern cloud solutions in its market. It introduced new pricing and financing offers that are based on the changing needs of its customers. But Blackbaud accepted that the current uncertainty has created short-term challenges in building a pipeline and its bookings are falling short of budget expectations.

Blackbaud’s stock is trading at $55.34 with a market capitalization of $2.74 billion. It was trading at a 52-week high of $94.93 last October. It had fallen to a 52-week low of $38.22 in March.