A month has gone by since the last earnings report for Blackbaud (BLKB). Shares have lost about 1.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Blackbaud due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Blackbaud Q2 Earnings Beat Estimates, Revenues Up Y/Y
Blackbaud, Inc. delivered second-quarter 2020 non-GAAP earnings of 85 cents per share, which beat the Zacks Consensus Estimate by 70%. The figure increased 28.8% year over year.
Total non-GAAP revenues increased 2.5% year over year to $231.9 million, which beat the consensus mark by 7.4%
Quarter in Detail
Total non-GAAP recurring revenues for the reported quarter were $216.3 million, which contributed 93.2% to total non-GAAP revenues. The figure increased 3.4% year over year.
One-time services and other revenues were $15.7 million, down 8.3% year over year.
Non-GAAP organic revenues rose 2.5% year over year to $231.9 million. Non-GAAP organic revenues on a constant currency (CC) basis amounted to $233.9 million, up 3.4% year over year.
Non-GAAP organic recurring revenues moved up 3.4% year over year to $216.2 million.
Q2 Business Highlights
Blackbaud announced technology innovations specifically designed to support the unique needs of social organizations during COVID-19, which may have generated goodwill around the company’s brand and boosted recognition for its products.
Welcoming more than 5,000 registrants, Blackbaud's annual tech conference for K-12 private school leaders boasted record attendance, marquee keynote speakers and sessions focused on navigating school reopening and hybrid learning.
Additionally, Blackbaud showcased key learnings and trends in employee philanthropic behavior and companies' corporate social responsibility (CSR) programs in the second quarter.
These enhanced capabilities are expected to drive adoption of Blackbaud’s solutions and boost retention among existing customers.
Higher education and healthcare institutions around the world are turning to Blackbaud solutions to power fundraisers for COVID-19 vaccines and lifesaving equipment.
Non-GAAP gross margin contracted 40 basis points (bps) to 60.4%.
Sales, marketing & customer success expenses, as a percentage of revenues, contracted 200 bps from the year-ago quarter to 22.4%. Research and development expenses contracted 70 bps to 10.7%, while general & administrative expenses expanded 20 bps to 12.9%.
Non-GAAP operating margin expanded 430 bps from the year-ago quarter’s figure to 23.5%.
Balance Sheet & Cash Flow
As on Jun 30, 2020, Blackbaud had cash and cash equivalents of $30.5 million compared with $25 million as of Mar 31, 2020.
Total debt (including current portion) as of Jun 30 amounted to $488.1 million compared with $530.9 million as of Mar 31, 2020.
Cash provided by operating activities during the quarter was $37.4 million against $24.5 million of cash used in operating activities in the prior quarter.
Non-GAAP free cash outflow during the quarter was $48.2 million compared with $38.3 million of free cash flow in the last reported quarter.
On May 5, the board of directors announced suspension of quarterly cash dividend payouts to maintain near-term liquidity and financial flexibility during the COVID-19 crisis.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 63.89% due to these changes.
At this time, Blackbaud has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Blackbaud has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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