þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the Fiscal Year ended December 31, 2018
|
|
OR
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period from ___________________ to ___________________.
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|
|
|
|
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Delaware
|
11-2617163
|
(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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|
|
Securities Registered Pursuant to Section 12(b) of the Act:
|
|
Title of Each Class
|
Name of Each Exchange on which Registered
|
Common Stock, $0.001 Par Value
|
The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)
|
Securities Registered Pursuant to Section 12(g) of the Act: None
|
|
|
|
Large accelerated filer þ
|
Accelerated filer
|
¨
|
Non-accelerated filer ¨
|
Smaller reporting company
|
¨
|
|
Emerging growth company
|
¨
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|
|
|
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||
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|
|
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||
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||
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||
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Item 12.
|
Security ownership of certain beneficial owners and management and related stockholder matters
|
|
Item 13.
|
Certain relationships and related transactions, and director independence
|
|
Item 14.
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Principal accountant fees and services
|
|
|
|
|
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||
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|
|
2018 Form 10-K
|
|
1
|
|
|
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
|
2
|
|
2018 Form 10-K
|
|
|
PART I.
|
2018 Form 10-K
|
|
3
|
•
|
Solicit funds and build relationships with major donors;
|
•
|
Garner small cash contributions from numerous contributors;
|
•
|
Manage and develop complex relationships with large numbers of constituents;
|
•
|
Advocate for policies and behaviors that advance their cause or institution;
|
•
|
Communicate their accomplishments and the importance of their mission online and offline;
|
•
|
Comply with complex accounting, tax and reporting requirements that differ from those for traditional businesses;
|
•
|
Solicit cash and in-kind contributions from businesses to help raise money or deliver products and services;
|
•
|
Provide a wide array of programs and services to individual constituents and beneficiaries; and
|
•
|
Improve the data collection and information sharing capabilities of their employees, volunteers and donors by creating and providing distributed access to centralized databases.
|
•
|
Quantify and improve the impact of their grants;
|
•
|
Cultivate better relationships with grantees;
|
•
|
Achieve better internal collaboration and alignment with board members, reviewers and other stakeholders;
|
•
|
Illustrate the impact of their corporate philanthropy efforts to the communities they serve;
|
•
|
Engage employees in meaningful volunteering, giving and other activities;
|
•
|
Ensure that their philanthropic efforts align with their business initiatives;
|
•
|
Manage all of a foundation's activities, including fundraising and accounting;
|
•
|
Expand the reach of their fundraising efforts; and
|
•
|
Cultivate new and existing donors.
|
4
|
|
2018 Form 10-K
|
1.
|
Integrated and Open Solutions in the Cloud
|
2.
|
Drive Sales Effectiveness
|
3.
|
Expand TAM into Near Adjacencies with Acquisitions and Product Investments
|
2018 Form 10-K
|
|
5
|
4.
|
Improve Operating Efficiency
|
6
|
|
2018 Form 10-K
|
2018 Form 10-K
|
|
7
|
8
|
|
2018 Form 10-K
|
2018 Form 10-K
|
|
9
|
10
|
|
2018 Form 10-K
|
•
|
System implementation;
|
•
|
Data conversion, business process analysis and application customization;
|
•
|
Database merging and enrichment, and secure credit card transaction processing;
|
•
|
Database production activities; and
|
•
|
Website design services.
|
2018 Form 10-K
|
|
11
|
12
|
|
2018 Form 10-K
|
•
|
Flexible: Customers can extend our component-based architecture to accommodate changing demands without modifying source code.
|
•
|
Adaptable: The architecture of our applications allows us to easily add functionality or integrate with third-party applications to adapt to customer needs and market demands.
|
•
|
Scalable: Scalable architecture and the performance, capacity and load balancing of our customers' industry-standard web servers and databases ensure that applications can scale to meet the needs of large organizations.
|
2018 Form 10-K
|
|
13
|
Name
|
|
Age
|
|
|
Title
|
Michael P. Gianoni
|
|
58
|
|
|
President and Chief Executive Officer
|
Anthony W. Boor
|
|
56
|
|
|
Executive Vice President and Chief Financial Officer
|
Kevin W. Mooney
|
|
60
|
|
|
Executive Vice President and President, General Markets Group
|
Kevin P. Gregoire
|
|
51
|
|
|
Executive Vice President and President, Enterprise Markets Group
|
Brian E. Boruff
|
|
59
|
|
|
Executive Vice President, Partner Ecosystem and Global Alliances
|
Jon W. Olson
|
|
55
|
|
|
Senior Vice President and General Counsel
|
14
|
|
2018 Form 10-K
|
2018 Form 10-K
|
|
15
|
16
|
|
2018 Form 10-K
|
2018 Form 10-K
|
|
17
|
18
|
|
2018 Form 10-K
|
2018 Form 10-K
|
|
19
|
•
|
the imposition of additional withholding taxes or otherwise tax our foreign income, impose tariffs or adopt other restrictions on foreign trade or investment, including currency exchange controls;
|
•
|
greater risk of a failure of our employees and partners to comply with both U.S. and foreign laws, including antitrust regulations, the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act of 2010, and any trade regulations ensuring fair trade practices; and
|
•
|
the imposition of, or unexpected adverse changes in, foreign laws or regulatory requirements may occur, including those pertaining to export restrictions, privacy and data protection, trade and employment restrictions and intellectual protections.
|
20
|
|
2018 Form 10-K
|
•
|
Requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, dividends and other general corporate purposes;
|
•
|
Limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate;
|
2018 Form 10-K
|
|
21
|
•
|
Restricting us from making additional strategic acquisitions or exploiting business opportunities;
|
•
|
Placing us at a competitive disadvantage compared to our competitors that have less debt;
|
•
|
Limiting our ability to borrow additional funds; and
|
•
|
Decreasing our ability to compete effectively or operate successfully under adverse economic and industry conditions.
|
22
|
|
2018 Form 10-K
|
2018 Form 10-K
|
|
23
|
24
|
|
2018 Form 10-K
|
|
|
PART II.
|
December 31,
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
2018
|
|
||||||
Blackbaud, Inc.
|
$
|
100.00
|
|
|
$
|
116.44
|
|
|
$
|
178.87
|
|
|
$
|
175.15
|
|
|
$
|
260.07
|
|
|
$
|
174.04
|
|
Nasdaq Composite Index
|
100.00
|
|
|
114.62
|
|
|
122.81
|
|
|
133.19
|
|
|
172.11
|
|
|
165.84
|
|
||||||
Nasdaq Computer & Data Processing Index
|
100.00
|
|
|
113.68
|
|
|
140.03
|
|
|
150.12
|
|
|
209.72
|
|
|
212.97
|
|
2018 Form 10-K
|
|
25
|
Period
|
|
Total
number
of shares
purchased
|
|
|
Average
price
paid
per
share
|
|
|
Total number
of shares
purchased as
part of
publicly
announced
plans or
programs(1)
|
|
|
Approximate
dollar value
of shares
that may yet
be purchased
under the
plans or programs
(in thousands)
|
|
||
Beginning balance, October 1, 2018
|
|
|
|
|
|
|
|
$
|
50,000
|
|
||||
October 1, 2018 through October 31, 2018
|
|
195
|
|
|
$
|
73.91
|
|
|
—
|
|
|
50,000
|
|
|
November 1, 2018 through November 30, 2018
|
|
3,717
|
|
|
73.38
|
|
|
—
|
|
|
50,000
|
|
||
December 1, 2018 through December 31, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50,000
|
|
||
Total
|
|
3,912
|
|
|
$
|
73.41
|
|
|
—
|
|
|
$
|
50,000
|
|
(1)
|
In August 2010, our Board of Directors approved a stock repurchase program that authorized us to purchase up to $50.0 million of our outstanding shares of common stock. We have not made any repurchases under the program to date, and the program does not have an expiration date.
|
•
|
Our credit facility limits the amount of dividends we are permitted to pay;
|
•
|
Our Board of Directors could decide to reduce dividends or not to pay dividends at all, at any time and for any reason;
|
•
|
The amount of dividends distributed is subject to state law restrictions (as discussed below); and
|
•
|
We might not have enough cash to pay dividends due to changes to our operating earnings, working capital requirements and anticipated cash needs.
|
26
|
|
2018 Form 10-K
|
2018 Form 10-K
|
|
27
|
|
Year ended December 31,
|
||||||||||||||||||
(in thousands, except per share data)
|
2018
|
|
|
2017(2)
|
|
|
2016(2)
|
|
|
2015
|
|
|
2014
|
|
|||||
SUMMARY OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
$
|
848,606
|
|
|
$
|
788,487
|
|
|
$
|
731,642
|
|
|
$
|
637,940
|
|
|
$
|
564,421
|
|
Total cost of revenue
|
381,742
|
|
|
361,904
|
|
|
339,220
|
|
|
304,631
|
|
|
273,438
|
|
|||||
Gross profit
|
466,864
|
|
|
426,583
|
|
|
392,422
|
|
|
333,309
|
|
|
290,983
|
|
|||||
Total operating expenses
|
407,447
|
|
|
358,405
|
|
|
324,198
|
|
|
286,597
|
|
|
244,619
|
|
|||||
Income from operations
|
59,417
|
|
|
68,178
|
|
|
68,224
|
|
|
46,712
|
|
|
46,364
|
|
|||||
Net income
|
44,841
|
|
|
73,633
|
|
|
45,404
|
|
|
25,649
|
|
|
28,290
|
|
|||||
PER SHARE DATA
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic net income
|
$
|
0.95
|
|
|
$
|
1.58
|
|
|
$
|
0.98
|
|
|
$
|
0.56
|
|
|
$
|
0.63
|
|
Diluted net income
|
0.93
|
|
|
1.54
|
|
|
0.96
|
|
|
0.55
|
|
|
0.62
|
|
|||||
Cash dividends
|
0.48
|
|
|
0.48
|
|
|
0.48
|
|
|
0.48
|
|
|
0.48
|
|
|||||
BALANCE SHEET DATA
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets(1)
|
$
|
1,615,305
|
|
|
$
|
1,797,846
|
|
|
$
|
1,345,009
|
|
|
$
|
1,223,336
|
|
|
$
|
942,503
|
|
Deferred revenue, including current portion
|
298,555
|
|
|
278,706
|
|
|
250,289
|
|
|
237,335
|
|
|
221,274
|
|
|||||
Total debt, including current portion(1)
|
387,124
|
|
|
438,224
|
|
|
342,393
|
|
|
408,087
|
|
|
279,891
|
|
|||||
Total long-term liabilities(1)
|
435,867
|
|
|
486,946
|
|
|
396,466
|
|
|
446,450
|
|
|
335,583
|
|
(1)
|
As previously disclosed, on January 1, 2016, we adopted ASU 2015-03, Interest - Imputation of Interest - Simplifying the Presentation of Debt Issuance Costs, on a retrospective basis. Accordingly, we retrospectively adjusted other non-current assets and debt, net of current portion, which had the effect of reducing each of those respective line items in our consolidated balance sheets as of December 31, 2015 and 2014 by approximately $0.5 million and $0.7 million, respectively.
|
(2)
|
Reflects the impact of adopting the new accounting standard in 2018 related to revenue recognition. See Note 2 of our consolidated financial statements in this report for further discussion.
|
28
|
|
2018 Form 10-K
|
Executive Summary
|
1.
|
Integrated and Open Solutions in the Cloud
|
2018 Form 10-K
|
|
29
|
2.
|
Drive Sales Effectiveness
|
3.
|
Expand TAM into Near Adjacencies with Acquisitions and Product Investments
|
4.
|
Improve Operating Efficiency
|
30
|
|
2018 Form 10-K
|
Total revenue
|
|
|
|
|
|||||
|
Years ended December 31,
|
|
|||||||
(dollars in millions)
|
2018
|
|
Change
|
|
|
2017
|
|
||
Total revenue
|
$
|
848.6
|
|
7.6
|
%
|
|
$
|
788.5
|
|
Income from operations
|
|
|
|
|
|||||
|
Years ended December 31,
|
|
|||||||
(dollars in millions)
|
2018
|
|
Change
|
|
|
2017
|
|
||
Income from operations
|
$
|
59.4
|
|
(12.9
|
)%
|
|
$
|
68.2
|
|
2018 Form 10-K
|
|
31
|
Results of Operations
|
•
|
Reeher LLC ("Reeher") – April 30, 2018;
|
•
|
Giving Limited ("JustGiving") – October 2, 2017; and
|
•
|
AcademicWorks, Inc. ("AcademicWorks") – April 3, 2017
|
32
|
|
2018 Form 10-K
|
Recurring
|
|
|
|
|
|
|
|
||||||||
|
Years ended December 31,
|
|
|||||||||||||
(dollars in millions)
|
2018
|
|
Change
|
|
|
2017
|
|
Change
|
|
|
2016
|
|
|||
Recurring revenue
|
$
|
762.2
|
|
11.3
|
%
|
|
$
|
684.6
|
|
12.4
|
%
|
|
$
|
609.1
|
|
Cost of recurring
|
305.5
|
|
10.0
|
%
|
|
277.6
|
|
12.6
|
%
|
|
246.7
|
|
|||
Recurring gross profit(1)
|
$
|
456.7
|
|
12.2
|
%
|
|
$
|
406.9
|
|
12.3
|
%
|
|
$
|
362.4
|
|
Recurring gross margin
|
59.9
|
%
|
|
|
59.4
|
%
|
|
|
59.5
|
%
|
(1)
|
The individual amounts for each year may not sum to recurring gross profit due to rounding.
|
2018 Form 10-K
|
|
33
|
One-time services and other
|
|
|
|
|
|
|
|
||||||||
|
Years ended December 31,
|
|
|||||||||||||
(dollars in millions)
|
2018
|
|
Change
|
|
|
2017
|
|
Change
|
|
|
2016
|
|
|||
One-time services and other revenue
|
$
|
86.4
|
|
(16.8
|
)%
|
|
$
|
103.9
|
|
(15.2
|
)%
|
|
$
|
122.6
|
|
Cost of one-time services and other
|
76.3
|
|
(9.5
|
)%
|
|
84.3
|
|
(9.0
|
)%
|
|
92.6
|
|
|||
One-time services and other gross profit(1)
|
$
|
10.2
|
|
(48.2
|
)%
|
|
$
|
19.6
|
|
(34.6
|
)%
|
|
$
|
30.0
|
|
One-time services and other gross margin
|
11.8
|
%
|
|
|
18.9
|
%
|
|
|
24.5
|
%
|
(1)
|
The individual amounts for each year may not sum to one-time services and other gross profit due to rounding.
|
34
|
|
2018 Form 10-K
|
Sales, marketing and customer success
|
|
|
|
|
|
|
|
||||||||
|
Years ended December 31,
|
|
|||||||||||||
(dollars in millions)
|
2018
|
|
Change
|
|
|
2017
|
|
Change
|
|
|
2016
|
|
|||
Sales, marketing and customer success expense
|
$
|
192.8
|
|
13.7
|
%
|
|
$
|
169.6
|
|
12.9
|
%
|
|
$
|
150.2
|
|
% of total revenue
|
22.7
|
%
|
|
|
21.5
|
%
|
|
|
20.5
|
%
|
2018 Form 10-K
|
|
35
|
Research and development
|
|
|
|
|
|
|
|
||||||||
|
Years ended December 31,
|
|
|||||||||||||
(dollars in millions)
|
2018
|
|
Change
|
|
|
2017
|
|
Change
|
|
|
2016
|
|
|||
Research and development expense(1)
|
$
|
98.8
|
|
9.9
|
%
|
|
$
|
89.9
|
|
—
|
%
|
|
$
|
89.9
|
|
% of total revenue
|
11.6
|
%
|
|
|
11.4
|
%
|
|
|
12.3
|
%
|
(1)
|
Not included in research and development expense for 2018, 2017 and 2016 were $36.5 million, $28.0 million and $26.2 million, respectively, of qualifying costs associated with development activities that are required to be capitalized under the internal-use software accounting guidance such as those related to development of our next generation cloud-based solutions, as well as development costs associated with acquired companies. Qualifying capitalized software development costs associated with our cloud-based solutions are subsequently amortized to cost of subscriptions revenue over the related asset's estimated useful life, which generally range from three to seven years.
|
36
|
|
2018 Form 10-K
|
General and administrative
|
|
|
|
|
|
|
|
||||||||
|
Years ended December 31,
|
|
|||||||||||||
(dollars in millions)
|
2018
|
|
Change
|
|
|
2017
|
|
Change
|
|
|
2016
|
|
|||
General and administrative expense
|
$
|
106.4
|
|
12.1
|
%
|
|
$
|
94.9
|
|
16.6
|
%
|
|
$
|
81.3
|
|
% of total revenue
|
12.5
|
%
|
|
|
12.0
|
%
|
|
|
11.1
|
%
|
2018 Form 10-K
|
|
37
|
|
Costs incurred during the year ended
|
|
|
Cumulative costs incurred as of
|
|
||
(in thousands)
|
December 31, 2018
|
|
|||||
By component:
|
|
|
|
||||
Contract termination costs
|
$
|
3,581
|
|
|
$
|
4,176
|
|
Other costs
|
1,009
|
|
|
1,208
|
|
||
Total
|
$
|
4,590
|
|
|
$
|
5,384
|
|
|
Accrued at
|
|
|
Increases for incurred costs
|
|
|
Costs paid
|
|
|
Accrued at
|
|
||||
(in thousands)
|
December 31, 2017
|
|
|
|
|
December 31, 2018
|
|
||||||||
By component:
|
|
|
|
|
|
|
|
||||||||
Contract termination costs
|
$
|
691
|
|
|
$
|
3,581
|
|
|
$
|
(2,407
|
)
|
|
$
|
1,865
|
|
Other costs
|
—
|
|
|
1,009
|
|
|
(959
|
)
|
|
50
|
|
||||
Total
|
$
|
691
|
|
|
$
|
4,590
|
|
|
$
|
(3,366
|
)
|
|
$
|
1,915
|
|
Interest expense
|
|
|
|
|
|
|
|
||||||||
|
Years ended December 31,
|
|
|||||||||||||
(dollars in millions)
|
2018
|
|
Change
|
|
|
2017
|
|
Change
|
|
|
2016
|
|
|||
Interest expense
|
$
|
15.9
|
|
31.4
|
%
|
|
$
|
12.1
|
|
14.3
|
%
|
|
$
|
10.6
|
|
% of total revenue
|
1.9
|
%
|
|
|
1.5
|
%
|
|
|
1.4
|
%
|
2018 Form 10-K
|
|
38
|
(dollars in millions)
|
Timing of recognition
|
December 31,
2018 |
|
Change
|
|
|
December 31,
2017 |
|
||
Recurring
|
Over the period billed in advance, generally one year
|
$
|
287.0
|
|
8.1
|
%
|
|
$
|
265.5
|
|
One-time services and other
|
As services are delivered
|
11.6
|
|
(12.1
|
)%
|
|
13.2
|
|
||
Total deferred revenue(1)
|
|
298.6
|
|
7.1
|
%
|
|
278.7
|
|
||
Less: Long-term portion
|
|
2.6
|
|
(29.6
|
)%
|
|
3.6
|
|
||
Current portion(1)
|
|
$
|
296.0
|
|
7.6
|
%
|
|
$
|
275.1
|
|
(1)
|
The individual amounts for each year may not sum to total deferred revenue or current portion of deferred revenue due to rounding.
|
2018 Form 10-K
|
|
39
|
|
Years ended December 31,
|
|
|||||||
(dollars in millions)
|
2018
|
|
2017
|
|
2016
|
|
|||
Income tax (benefit) provision
|
$
|
(0.2
|
)
|
$
|
(15.3
|
)
|
$
|
11.9
|
|
Effective income tax rate
|
(0.5
|
)%
|
(26.2
|
)%
|
20.8
|
%
|
40
|
|
2018 Form 10-K
|
2018 Form 10-K
|
|
41
|
|
Years ended December 31,
|
|
|||||||||||||
(dollars in millions)
|
2018
|
|
Change
|
|
|
2017
|
|
Change
|
|
|
2016
|
|
|||
GAAP Revenue
|
$
|
848.6
|
|
7.6
|
%
|
|
$
|
788.5
|
|
7.8
|
%
|
|
$
|
731.6
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
||||||||
Add: Acquisition-related deferred revenue write-down
|
2.4
|
|
(3.5
|
)%
|
|
2.5
|
|
(31.4
|
)%
|
|
3.6
|
|
|||
Non-GAAP revenue(1)
|
$
|
851.0
|
|
7.6
|
%
|
|
$
|
791.0
|
|
7.6
|
%
|
|
$
|
735.3
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP gross profit
|
$
|
466.9
|
|
9.4
|
%
|
|
$
|
426.6
|
|
8.7
|
%
|
|
$
|
392.4
|
|
GAAP gross margin
|
55.0
|
%
|
|
|
54.1
|
%
|
|
|
53.6
|
%
|
|||||
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
||||||||
Add: Acquisition-related deferred revenue write-down
|
2.4
|
|
(3.5
|
)%
|
|
2.5
|
|
(31.4
|
)%
|
|
3.6
|
|
|||
Add: Stock-based compensation expense
|
5.2
|
|
51.1
|
%
|
|
3.5
|
|
5.2
|
%
|
|
3.3
|
|
|||
Add: Amortization of intangibles from business combinations
|
42.2
|
|
5.3
|
%
|
|
40.1
|
|
1.4
|
%
|
|
39.6
|
|
|||
Add: Employee severance
|
0.9
|
|
(7.6
|
)%
|
|
1.0
|
|
160.2
|
%
|
|
0.4
|
|
|||
Add: Acquisition-related integration costs
|
—
|
|
(70.9
|
)%
|
|
0.1
|
|
100.0
|
%
|
|
—
|
|
|||
Subtotal(1)
|
50.8
|
|
7.8
|
%
|
|
47.1
|
|
0.6
|
%
|
|
46.9
|
|
|||
Non-GAAP gross profit(1)
|
$
|
517.7
|
|
9.3
|
%
|
|
$
|
473.7
|
|
7.8
|
%
|
|
$
|
439.3
|
|
Non-GAAP gross margin
|
60.8
|
%
|
|
|
59.9
|
%
|
|
|
59.7
|
%
|
(1)
|
The individual amounts for each year may not sum to non-GAAP revenue, subtotal or non-GAAP gross profit due to rounding.
|
42
|
|
2018 Form 10-K
|
|
Years ended December 31,
|
|
|||||||||||||
(dollars in millions, except per share amounts)
|
2018
|
|
Change
|
|
|
2017
|
|
Change
|
|
|
2016
|
|
|||
GAAP income from operations
|
$
|
59.4
|
|
(12.9
|
)%
|
|
$
|
68.2
|
|
(0.1
|
)%
|
|
$
|
68.2
|
|
GAAP operating margin
|
7.0
|
%
|
|
|
|
8.6
|
%
|
|
|
9.3
|
%
|
||||
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|||||||
Add: Acquisition-related deferred revenue write-down
|
2.4
|
|
(3.5
|
)%
|
|
2.5
|
|
(31.4
|
)%
|
|
3.6
|
|
|||
Add: Stock-based compensation expense
|
48.3
|
|
18.8
|
%
|
|
40.6
|
|
24.5
|
%
|
|
32.6
|
|
|||
Add: Amortization of intangibles from business combinations
|
47.1
|
|
8.5
|
%
|
|
43.4
|
|
2.3
|
%
|
|
42.4
|
|
|||
Add: Employee severance
|
2.2
|
|
(48.3
|
)%
|
|
4.3
|
|
117.8
|
%
|
|
2.0
|
|
|||
Add: Acquisition-related integration costs
|
3.7
|
|
281.3
|
%
|
|
1.0
|
|
(31.9
|
)%
|
|
1.4
|
|
|||
Add: Acquisition-related expenses
|
2.8
|
|
(51.9
|
)%
|
|
5.9
|
|
1,864.8
|
%
|
|
0.3
|
|
|||
Add: Restructuring costs
|
4.6
|
|
478.1
|
%
|
|
0.8
|
|
100.0
|
%
|
|
—
|
|
|||
Subtotal(1)
|
111.1
|
|
12.8
|
%
|
|
98.5
|
|
19.6
|
%
|
|
82.4
|
|
|||
Non-GAAP income from operations(1)
|
$
|
170.5
|
|
2.3
|
%
|
|
$
|
166.7
|
|
10.7
|
%
|
|
$
|
150.6
|
|
Non-GAAP operating margin
|
20.0
|
%
|
|
|
|
21.1
|
%
|
|
|
|
20.5
|
%
|
|||
|
|
|
|
|
|
|
|
||||||||
GAAP income before provision for income taxes
|
$
|
44.6
|
|
(23.5
|
)%
|
|
$
|
58.3
|
|
1.7
|
%
|
|
$
|
57.4
|
|
GAAP net income
|
$
|
44.8
|
|
(39.1
|
)%
|
|
$
|
73.6
|
|
62.2
|
%
|
|
$
|
45.4
|
|
Shares used in computing GAAP diluted earnings per share
|
48,045,084
|
|
0.6
|
%
|
|
47,775,702
|
|
1.0
|
%
|
|
47,316,538
|
|
|||
GAAP diluted earnings per share
|
$
|
0.93
|
|
(39.6
|
)%
|
|
$
|
1.54
|
|
60.4
|
%
|
|
$
|
0.96
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
||||||||
Add: GAAP income tax (benefit) provision
|
(0.2
|
)
|
(98.6
|
)%
|
|
(15.3
|
)
|
(228.0
|
)%
|
|
11.9
|
|
|||
Add: Total Non-GAAP adjustments affecting loss from operations
|
111.1
|
|
12.8
|
%
|
|
98.5
|
|
19.6
|
%
|
|
82.4
|
|
|||
Less: Gain on derivative instrument
|
—
|
|
(100.0
|
)%
|
|
(0.5
|
)
|
100.0
|
%
|
|
—
|
|
|||
Add: Loss on debt extinguishment
|
—
|
|
(100.0
|
)%
|
|
0.3
|
|
100.0
|
%
|
|
—
|
|
|||
Non-GAAP income before provision for income taxes
|
155.7
|
|
(0.6
|
)%
|
|
156.7
|
|
12.1
|
%
|
|
139.7
|
|
|||
Assumed non-GAAP income tax provision(2)
|
31.1
|
|
(37.9
|
)%
|
|
50.1
|
|
12.1
|
%
|
|
44.7
|
|
|||
Non-GAAP net income(1)
|
$
|
124.6
|
|
16.9
|
%
|
|
$
|
106.6
|
|
12.1
|
%
|
|
$
|
95.0
|
|
|
|
|
|
|
|
|
|
||||||||
Shares used in computing Non-GAAP diluted earnings per share
|
48,045,084
|
|
0.6
|
%
|
|
47,775,702
|
|
1.0
|
%
|
|
47,316,538
|
|
|||
Non-GAAP diluted earnings per share
|
$
|
2.59
|
|
16.1
|
%
|
|
$
|
2.23
|
|
10.9
|
%
|
|
$
|
2.01
|
|
(1)
|
The individual amounts for each year may not sum to subtotal, non-GAAP income from operations, non-GAAP income before provision for income taxes or non-GAAP net income due to rounding.
|
(2)
|
Beginning in 2018, we now apply a non-GAAP effective tax rate of 20.0% in our determination of non-GAAP net income, which represents the GAAP effective tax rate, excluding the discrete tax effect of stock-based compensation. For the years ended December 31, 2017 and 2016, we applied a non-GAAP effective tax rate of 32.0% in our determination of non-GAAP net income.
|
2018 Form 10-K
|
|
43
|
|
Years ended December 31,
|
|
|||||||||||||
(dollars in millions)
|
2018
|
|
Change
|
|
|
2017
|
|
Change
|
|
|
2016
|
|
|||
GAAP net cash provided by operating activities
|
$
|
201.4
|
|
14.2
|
%
|
|
$
|
176.3
|
|
14.8
|
%
|
|
$
|
153.6
|
|
Less: purchase of property and equipment
|
(14.7
|
)
|
44.2
|
%
|
|
(10.2
|
)
|
(42.3
|
)%
|
|
(17.7
|
)
|
|||
Less: capitalized software development costs
|
(37.6
|
)
|
32.8
|
%
|
|
(28.3
|
)
|
7.5
|
%
|
|
(26.4
|
)
|
|||
Non-GAAP free cash flow
|
$
|
149.0
|
|
8.2
|
%
|
|
$
|
137.7
|
|
25.7
|
%
|
|
$
|
109.6
|
|
|
Years ended December 31,
|
|
|||||||
(dollars in millions)
|
2018
|
|
Change
|
|
|
2017
|
|
||
GAAP revenue
|
$
|
848.6
|
|
7.6
|
%
|
|
$
|
788.5
|
|
(Less) Add: Non-GAAP acquisition-related revenue (1)
|
(4.9
|
)
|
|
|
32.8
|
|
|||
Total Non-GAAP adjustments
|
(4.9
|
)
|
|
|
32.8
|
|
|||
Non-GAAP organic revenue (2)
|
$
|
843.7
|
|
2.7
|
%
|
|
$
|
821.3
|
|
Foreign currency impact on Non-GAAP organic revenue (3)
|
(2.4
|
)
|
|
|
—
|
|
|||
Non-GAAP organic revenue on constant currency basis (3)
|
$
|
841.3
|
|
2.4
|
%
|
|
$
|
821.3
|
|
|
|
|
|
|
|||||
GAAP recurring revenue
|
$
|
762.2
|
|
11.3
|
%
|
|
$
|
684.6
|
|
(Less) Add: Non-GAAP acquisition-related revenue (1)
|
(4.8
|
)
|
|
|
32.5
|
|
|||
Total Non-GAAP adjustments
|
(4.8
|
)
|
|
|
32.5
|
|
|||
Non-GAAP organic recurring revenue
|
$
|
757.4
|
|
5.6
|
%
|
|
$
|
717.1
|
|
(1)
|
Non-GAAP acquisition-related revenue excludes incremental acquisition-related revenue calculated in accordance with GAAP that is attributable to companies acquired in the current fiscal year. For companies acquired in the immediately preceding fiscal year, non-GAAP acquisition-related revenue reflects presentation of full-year incremental non-GAAP revenue derived from such companies, as if they were combined throughout the prior period, and it includes the current period non-GAAP revenue from the acquisition-related deferred revenue write-down attributable to those companies.
|
(2)
|
Non-GAAP organic revenue for the prior year periods presented herein will not agree to non-GAAP organic revenue presented in the respective prior period quarterly financial information solely due to the manner in which non-GAAP organic revenue growth is calculated.
|
(3)
|
To determine non-GAAP organic revenue growth on a constant currency basis, revenues from entities reporting in foreign currencies were translated to U.S. Dollars using the comparable prior period's quarterly weighted average foreign currency exchange rates. The primary foreign currencies creating the impact are the Canadian Dollar, EURO, British Pound and Australian Dollar.
|
44
|
|
2018 Form 10-K
|
Liquidity and Capital Resources
|
(dollars in millions)
|
December 31,
2018 |
|
Change
|
|
|
December 31,
2017 |
|
||
Cash and cash equivalents
|
$
|
30.9
|
|
3.5
|
%
|
|
$
|
29.8
|
|
Property and equipment, net
|
40.0
|
|
(5.2
|
)%
|
|
42.2
|
|
||
Software development costs, net
|
75.1
|
|
38.8
|
%
|
|
54.1
|
|
||
Total carrying value of debt
|
387.1
|
|
(11.7
|
)%
|
|
438.2
|
|
||
Working capital
|
(207.7
|
)
|
(18.5
|
)%
|
|
(175.2
|
)
|
2018 Form 10-K
|
|
45
|
•
|
an increase in the collection of customer account balances;
|
•
|
a decrease in prepaid taxes; and
|
•
|
the timing of vendor payments.
|
•
|
an increase in prepaid taxes during 2017 related to tax planning; partially offset by
|
•
|
a decrease in bonus payments.
|
46
|
|
2018 Form 10-K
|
2018 Form 10-K
|
|
47
|
Financial Covenant
|
Requirement
|
Ratio as of December 31, 2018
|
Net Leverage Ratio
|
≤ 3.50 to 1.00
|
1.87 to 1.00
|
Interest Coverage Ratio
|
≥ 2.50 to 1.00
|
12.04 to 1.00
|
|
Payments due by period
|
||||||||||||||
(in millions)
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
|
|||||
Recorded contractual obligations:
|
|
|
|
|
|
||||||||||
Debt(1)
|
$
|
388.8
|
|
$
|
7.5
|
|
$
|
15.0
|
|
$
|
366.3
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||||||
Unrecorded contractual obligations:
|
|
|
|
|
|
||||||||||
Operating leases(2)
|
178.1
|
|
24.3
|
|
41.7
|
|
30.2
|
|
81.9
|
|
|||||
Interest payments on debt(3)
|
47.8
|
|
14.1
|
|
27.7
|
|
6.0
|
|
—
|
|
|||||
Purchase obligations(4)
|
109.9
|
|
40.2
|
|
61.7
|
|
8.1
|
|
—
|
|
|||||
Total contractual obligations
|
$
|
724.7
|
|
$
|
86.1
|
|
$
|
146.3
|
|
$
|
410.5
|
|
$
|
81.9
|
|
(1)
|
Represents principal payments only, under the following assumptions: (i) that the amounts outstanding under the 2017 Credit Facility and our other debt at December 31, 2018 will remain outstanding until maturity, with minimum payments occurring as currently scheduled, and (ii) that there are no assumed future borrowings on the 2017 Revolving Facility for the purposes of determining minimum commitment amounts.
|
(2)
|
Our commitments related to operating leases have not been reduced by incentive payments and reimbursement of leasehold improvements.
|
(3)
|
The actual interest expense recognized in our consolidated statements of comprehensive income will depend on the amount of debt, the length of time the debt is outstanding and the interest rate, which could be different from our assumptions described in (1) above.
|
(4)
|
We have contractual obligations for third-party technology used in our solutions and for other service we purchase as part of our normal operations. In certain cases, these arrangements require a minimum annual purchase commitment by us.
|
48
|
|
2018 Form 10-K
|
Off-Balance Sheet Arrangements
|
Foreign Currency Exchange Rates
|
Inflation
|
2018 Form 10-K
|
|
49
|
Critical Accounting Estimates
|
Costs of Obtaining Contracts
|
|
|
Description
|
Judgments and Uncertainties
|
Effect if Actual Results Differ
From Assumptions
|
We pay sales commissions at the time contracts with customers are signed or shortly thereafter, depending on the size and duration of the sales contract. Sales commissions and related fringe benefits earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized in a manner that aligns with the expected period of benefit, which we have determined to be five years. We do not generally pay commissions for contract renewals. The related amortization expense is included in sales, marketing and customer success expense in our consolidated statements of comprehensive income.
|
Our accounting methodology for determining the period over which we amortize costs of obtaining contracts with customers contains uncertainties because it requires us to make significant estimates and assumptions, and to apply judgment.
For example, we must exercise judgment and use estimates in order to determine the expected period of benefit of our sales commissions. We take into consideration our customer contracts, including renewals, retention, our technology and other factors.
|
If we were to change any of these judgments or estimates, it could cause a material increase or decrease in the amount of assets, operating expenses or income that we report in a particular period.
|
50
|
|
2018 Form 10-K
|
2018 Form 10-K
|
|
51
|
Recently Issued Accounting Pronouncements
|
52
|
|
2018 Form 10-K
|
Interest Rate Risk
|
Foreign Currency Risk
|
2018 Form 10-K
|
|
53
|
54
|
|
2018 Form 10-K
|
2018 Form 10-K
|
|
55
|
56
|
|
2018 Form 10-K
|
(dollars in thousands)
|
December 31,
2018 |
|
December 31,
2017 |
|
||
Assets
|
|
|
||||
Current assets:
|
|
|
||||
Cash and cash equivalents
|
$
|
30,866
|
|
$
|
29,830
|
|
Restricted cash due to customers
|
418,980
|
|
610,344
|
|
||
Accounts receivable, net of allowance of $4,722 and $5,141 at December 31, 2018 and December 31, 2017, respectively
|
86,595
|
|
95,679
|
|
||
Customer funds receivable
|
1,753
|
|
1,536
|
|
||
Prepaid expenses and other current assets
|
59,788
|
|
61,978
|
|
||
Total current assets
|
597,982
|
|
799,367
|
|
||
Property and equipment, net
|
40,031
|
|
42,243
|
|
||
Software development costs, net
|
75,099
|
|
54,098
|
|
||
Goodwill
|
545,213
|
|
530,249
|
|
||
Intangible assets, net
|
291,617
|
|
314,651
|
|
||
Other assets
|
65,363
|
|
57,238
|
|
||
Total assets
|
$
|
1,615,305
|
|
$
|
1,797,846
|
|
Liabilities and stockholders’ equity
|
|
|
||||
Current liabilities:
|
|
|
||||
Trade accounts payable
|
$
|
34,538
|
|
$
|
24,693
|
|
Accrued expenses and other current liabilities
|
46,893
|
|
54,399
|
|
||
Due to customers
|
420,733
|
|
611,880
|
|
||
Debt, current portion
|
7,500
|
|
8,576
|
|
||
Deferred revenue, current portion
|
295,991
|
|
275,063
|
|
||
Total current liabilities
|
805,655
|
|
974,611
|
|
||
Debt, net of current portion
|
379,624
|
|
429,648
|
|
||
Deferred tax liability
|
44,291
|
|
48,023
|
|
||
Deferred revenue, net of current portion
|
2,564
|
|
3,643
|
|
||
Other liabilities
|
9,388
|
|
5,632
|
|
||
Total liabilities
|
1,241,522
|
|
1,461,557
|
|
||
Commitments and contingencies (see Note 11)
|
|
|
||||
Stockholders’ equity:
|
|
|
||||
Preferred stock; 20,000,000 shares authorized, none outstanding
|
—
|
|
—
|
|
||
Common stock, $0.001 par value; 180,000,000 shares authorized, 59,327,633 and 58,551,761 shares issued at December 31, 2018 and December 31, 2017, respectively
|
59
|
|
59
|
|
||
Additional paid-in capital
|
399,241
|
|
351,042
|
|
||
Treasury stock, at cost; 10,760,574 and 10,475,794 shares at December 31, 2018 and December 31, 2017, respectively
|
(266,884
|
)
|
(239,199
|
)
|
||
Accumulated other comprehensive loss
|
(5,110
|
)
|
(642
|
)
|
||
Retained earnings
|
246,477
|
|
225,029
|
|
||
Total stockholders’ equity
|
373,783
|
|
336,289
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,615,305
|
|
$
|
1,797,846
|
|
|
|
|
||||
The accompanying notes are an integral part of these consolidated financial statements.
|
2018 Form 10-K
|
|
57
|
58
|
|
2018 Form 10-K
|
|
Years ended December 31,
|
|
|||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2016
|
|
|||
Cash flows from operating activities
|
|
|
|
||||||
Net income
|
$
|
44,841
|
|
$
|
73,633
|
|
$
|
45,404
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||||
Depreciation and amortization
|
79,566
|
|
73,948
|
|
70,491
|
|
|||
Provision for doubtful accounts and sales returns
|
6,890
|
|
11,686
|
|
3,730
|
|
|||
Stock-based compensation expense
|
48,274
|
|
40,631
|
|
32,638
|
|
|||
Deferred taxes
|
(619
|
)
|
(17,814
|
)
|
5,415
|
|
|||
Amortization of deferred financing costs and discount
|
752
|
|
838
|
|
958
|
|
|||
Other non-cash adjustments
|
(1,912
|
)
|
504
|
|
(864
|
)
|
|||
Changes in operating assets and liabilities, net of acquisition and disposal of businesses:
|
|
|
|
||||||
Accounts receivable
|
2,166
|
|
(15,821
|
)
|
(13,007
|
)
|
|||
Prepaid expenses and other assets
|
(5,217
|
)
|
(9,550
|
)
|
(8,495
|
)
|
|||
Trade accounts payable
|
9,487
|
|
1,024
|
|
3,689
|
|
|||
Accrued expenses and other liabilities
|
(2,027
|
)
|
(4,973
|
)
|
(751
|
)
|
|||
Deferred revenue
|
19,184
|
|
22,184
|
|
14,420
|
|
|||
Net cash provided by operating activities
|
201,385
|
|
176,290
|
|
153,628
|
|
|||
Cash flows from investing activities
|
|
|
|
||||||
Purchase of property and equipment
|
(14,719
|
)
|
(10,208
|
)
|
(17,694
|
)
|
|||
Capitalized software development costs
|
(37,629
|
)
|
(28,345
|
)
|
(26,359
|
)
|
|||
Purchase of net assets of acquired companies, net of cash and restricted cash acquired
|
(44,943
|
)
|
(146,789
|
)
|
(3,377
|
)
|
|||
Purchase of derivative instruments
|
—
|
|
(568
|
)
|
—
|
|
|||
Proceeds from settlement of derivative instruments
|
—
|
|
1,030
|
|
—
|
|
|||
Other investing activities
|
(500
|
)
|
—
|
|
—
|
|
|||
Net cash used in investing activities
|
(97,791
|
)
|
(184,880
|
)
|
(47,430
|
)
|
|||
Cash flows from financing activities
|
|
|
|
||||||
Proceeds from issuance of debt
|
270,900
|
|
774,500
|
|
227,200
|
|
|||
Payments on debt
|
(322,476
|
)
|
(679,119
|
)
|
(293,575
|
)
|
|||
Debt issuance costs
|
—
|
|
(3,085
|
)
|
—
|
|
|||
Employee taxes paid for withheld shares upon equity award settlement
|
(27,685
|
)
|
(23,962
|
)
|
(15,376
|
)
|
|||
Proceeds from exercise of stock options
|
11
|
|
15
|
|
16
|
|
|||
Change in due to customers
|
(188,502
|
)
|
226,717
|
|
96,000
|
|
|||
Change in customer funds receivable
|
(844
|
)
|
6,644
|
|
—
|
|
|||
Dividend payments to stockholders
|
(23,312
|
)
|
(23,069
|
)
|
(22,811
|
)
|
|||
Net cash (used in) provided by financing activities
|
(291,908
|
)
|
278,641
|
|
(8,546
|
)
|
|||
Effect of exchange rate on cash, cash equivalents, and restricted cash
|
(2,014
|
)
|
(550
|
)
|
2,622
|
|
|||
Net (decrease) increase in cash, cash equivalents, and restricted cash
|
(190,328
|
)
|
269,501
|
|
100,274
|
|
|||
Cash, cash equivalents, and restricted cash, beginning of year
|
640,174
|
|
370,673
|
|
270,399
|
|
|||
Cash, cash equivalents, and restricted cash, end of year
|
$
|
449,846
|
|
$
|
640,174
|
|
$
|
370,673
|
|
|
|
|
|
||||||
Supplemental disclosure of cash flow information
|
|
|
|
||||||
Cash (paid) received during the year for:
|
|
|
|
||||||
Interest
|
(15,261
|
)
|
(10,614
|
)
|
(9,608
|
)
|
|||
Taxes, net of refunds
|
7,138
|
|
(5,613
|
)
|
(1,340
|
)
|
|||
Non-cash investing and financing activities:
|
|
|
|
||||||
Purchase of equipment and other assets included in accounts payable
|
(882
|
)
|
(1,546
|
)
|
(3,155
|
)
|
|||
Acquired restricted cash liabilities due to customers
|
—
|
|
31,644
|
|
—
|
|
2018 Form 10-K
|
|
59
|
60
|
|
2018 Form 10-K
|
1. Organization
|
2. Basis of Presentation
|
2018 Form 10-K
|
|
61
|
Consolidated balance sheets:
|
|
|
|
|
|
|
|
||||||||||||
|
As of December 31, 2016
|
|
As of December 31, 2017
|
||||||||||||||||
(dollars in thousands)
|
As Reported
|
Adjustments
|
As Adjusted
|
|
As Reported
|
Adjustments
|
As Adjusted
|
||||||||||||
Accounts receivable, net of allowance
|
$
|
88,932
|
|
$
|
(671
|
)
|
$
|
88,261
|
|
|
$
|
96,293
|
|
$
|
(614
|
)
|
$
|
95,679
|
|
Prepaid expenses and other current assets
|
$
|
48,314
|
|
$
|
5,897
|
|
$
|
54,211
|
|
|
$
|
56,099
|
|
$
|
5,879
|
|
$
|
61,978
|
|
Other assets
|
$
|
22,524
|
|
$
|
29,573
|
|
$
|
52,097
|
|
|
$
|
24,083
|
|
$
|
33,155
|
|
$
|
57,238
|
|
Deferred revenue, current portion
|
$
|
244,500
|
|
$
|
(651
|
)
|
$
|
243,849
|
|
|
$
|
276,456
|
|
$
|
(1,393
|
)
|
$
|
275,063
|
|
Deferred tax liability
|
$
|
29,558
|
|
$
|
13,917
|
|
$
|
43,475
|
|
|
$
|
37,597
|
|
$
|
10,426
|
|
$
|
48,023
|
|
Retained earnings
|
$
|
152,729
|
|
$
|
21,680
|
|
$
|
174,409
|
|
|
$
|
195,649
|
|
$
|
29,380
|
|
$
|
225,029
|
|
62
|
|
2018 Form 10-K
|
Consolidated statements of comprehensive income:
|
|
|
|
|
|
|
|
||||||||||||
|
Year ended December 31, 2016
|
|
Year ended December 31, 2017
|
||||||||||||||||
(dollars in thousands, except per share amounts)
|
As Reported(1)
|
Adjustments
|
As Adjusted
|
|
As Reported(1)
|
Adjustments
|
As Adjusted
|
||||||||||||
Revenue
|
|
|
|
|
|
|
|
||||||||||||
Recurring
|
$
|
575,933
|
|
$
|
33,130
|
|
$
|
609,063
|
|
|
$
|
651,031
|
|
$
|
33,552
|
|
$
|
684,583
|
|
One-time services and other
|
154,882
|
|
(32,303
|
)
|
122,579
|
|
|
137,275
|
|
(33,371
|
)
|
103,904
|
|
||||||
Total revenue
|
$
|
730,815
|
|
$
|
827
|
|
$
|
731,642
|
|
|
$
|
788,306
|
|
$
|
181
|
|
$
|
788,487
|
|
Cost of revenue
|
|
|
|
|
|
|
|
||||||||||||
Recurring
|
$
|
235,977
|
|
$
|
10,692
|
|
$
|
246,669
|
|
|
$
|
265,713
|
|
$
|
11,926
|
|
$
|
277,639
|
|
One-time services and other
|
103,243
|
|
(10,692
|
)
|
92,551
|
|
|
96,191
|
|
(11,926
|
)
|
84,265
|
|
||||||
Total cost of revenue
|
$
|
339,220
|
|
$
|
—
|
|
$
|
339,220
|
|
|
$
|
361,904
|
|
$
|
—
|
|
$
|
361,904
|
|
Operating expenses
|
|
|
|
|
|
|
|
||||||||||||
Sales, marketing and customer success
|
$
|
155,754
|
|
$
|
(5,597
|
)
|
$
|
150,157
|
|
|
$
|
173,525
|
|
$
|
(3,966
|
)
|
$
|
169,559
|
|
Net income
|
$
|
41,515
|
|
$
|
3,889
|
|
$
|
45,404
|
|
|
$
|
65,933
|
|
$
|
7,700
|
|
$
|
73,633
|
|
Basic earnings per share
|
$
|
0.90
|
|
$
|
0.08
|
|
$
|
0.98
|
|
|
$
|
1.41
|
|
$
|
0.17
|
|
$
|
1.58
|
|
Diluted earnings per share
|
$
|
0.88
|
|
$
|
0.08
|
|
$
|
0.96
|
|
|
$
|
1.38
|
|
$
|
0.16
|
|
$
|
1.54
|
|
(1)
|
See the discussion of our reclassifications of previously reported revenue and costs of revenue above.
|
2018 Form 10-K
|
|
63
|
64
|
|
2018 Form 10-K
|
•
|
Level 1 - Quoted prices for identical assets or liabilities in active markets;
|
•
|
Level 2 - Quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and
|
•
|
Level 3 - Valuations derived from valuation techniques in which one or more significant inputs are unobservable.
|
2018 Form 10-K
|
|
65
|
66
|
|
2018 Form 10-K
|
|
Basis of amortization
|
Amortization
period
(in years)
|
Customer relationships
|
Straight-line and accelerated(1)
|
4-17
|
Marketing assets
|
Straight-line
|
1-15
|
Acquired software and technology
|
Straight-line and accelerated(1)
|
1-11
|
Non-compete agreements
|
Straight-line
|
1-5
|
Database
|
Straight-line
|
8
|
(1)
|
Certain of the customer relationships and acquired software and technology assets are amortized on an accelerated basis.
|
2018 Form 10-K
|
|
67
|
68
|
|
2018 Form 10-K
|
Years ended December 31,
(in thousands)
|
Balance at
beginning of year
|
|
Provision/
adjustment
|
|
Write-off
|
|
Balance at
end of year
|
|
||||
2018
|
$
|
4,400
|
|
$
|
4,952
|
|
$
|
(5,975
|
)
|
$
|
3,377
|
|
2017
|
2,704
|
|
10,511
|
|
(8,815
|
)
|
4,400
|
|
||||
2016
|
4,431
|
|
3,060
|
|
(4,787
|
)
|
2,704
|
|
Years ended December 31,
(in thousands)
|
Balance at
beginning of year
|
|
Provision/
adjustment
|
|
Write-off
|
|
Balance at
end of year
|
|
||||
2018
|
$
|
741
|
|
$
|
2,446
|
|
$
|
(1,842
|
)
|
$
|
1,345
|
|
2017
|
587
|
|
1,148
|
|
(994
|
)
|
741
|
|
||||
2016
|
512
|
|
499
|
|
(424
|
)
|
587
|
|
2018 Form 10-K
|
|
69
|
70
|
|
2018 Form 10-K
|
3. Business Combinations
|
(in thousands)
|
Purchase price allocation
|
|
|
Net working capital, excluding deferred revenue
|
$
|
1,683
|
|
Property and equipment
|
755
|
|
|
Identifiable intangible assets
|
27,055
|
|
|
Deferred tax asset
|
713
|
|
|
Deferred revenue
|
(2,700
|
)
|
|
Goodwill
|
13,681
|
|
|
Total purchase price
|
$
|
41,187
|
|
|
Intangible assets acquired
|
|
Weighted average amortization period
|
|
Reeher
|
(in thousands)
|
|
(in years)
|
|
Acquired technology
|
$
|
19,500
|
|
11
|
Customer relationships
|
7,000
|
|
10
|
|
Marketing assets
|
480
|
|
3
|
|
Non-compete agreements
|
75
|
|
2
|
|
Total intangible assets
|
$
|
27,055
|
|
11
|
2018 Form 10-K
|
|
71
|
72
|
|
2018 Form 10-K
|
4. Goodwill and Other Intangible Assets
|
(dollars in thousands)
|
Total
|
|
|
Balance at December 31, 2017
|
$
|
530,249
|
|
Additions related to current year business combinations
|
18,271
|
|
|
Adjustments related to prior year business combinations
|
(333
|
)
|
|
Effect of foreign currency translation
|
(2,974
|
)
|
|
Balance at December 31, 2018
|
$
|
545,213
|
|
|
December 31,
|
|
||||
(dollars in thousands)
|
2018
|
|
2017
|
|
||
Finite-lived gross carrying amount
|
|
|
||||
Customer relationships
|
$
|
280,309
|
|
$
|
274,458
|
|
Marketing assets
|
48,484
|
|
49,661
|
|
||
Acquired software and technology
|
211,654
|
|
193,010
|
|
||
Non-compete agreements
|
2,499
|
|
2,603
|
|
||
Database
|
4,275
|
|
4,275
|
|
||
Total finite-lived gross carrying amount
|
547,221
|
|
524,007
|
|
||
Accumulated amortization
|
|
|
||||
Customer relationships
|
(116,648
|
)
|
(96,662
|
)
|
||
Marketing assets
|
(16,395
|
)
|
(12,444
|
)
|
||
Acquired software and technology
|
(118,268
|
)
|
(96,528
|
)
|
||
Non-compete agreements
|
(1,618
|
)
|
(1,125
|
)
|
||
Database
|
(4,275
|
)
|
(4,197
|
)
|
||
Total accumulated amortization
|
(257,204
|
)
|
(210,956
|
)
|
||
Indefinite-lived gross carrying amount
|
|
|
||||
Marketing assets
|
1,600
|
|
1,600
|
|
||
Intangible assets, net
|
$
|
291,617
|
|
$
|
314,651
|
|
2018 Form 10-K
|
|
73
|
|
Years ended December 31,
|
|
|||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2016
|
|
|||
Included in cost of revenue:
|
|
|
|
||||||
Cost of recurring
|
$
|
39,877
|
|
$
|
37,557
|
|
$
|
36,597
|
|
Cost of one-time services and other
|
2,356
|
|
2,542
|
|
2,961
|
|
|||
Total included in cost of revenue
|
42,233
|
|
40,099
|
|
39,558
|
|
|||
Included in operating expenses
|
4,844
|
|
3,271
|
|
2,840
|
|
|||
Total amortization of intangibles from business combinations
|
$
|
47,077
|
|
$
|
43,370
|
|
$
|
42,398
|
|
Years ending December 31,
(dollars in thousands)
|
Amortization
expense
|
|
|
2019
|
$
|
45,266
|
|
2020
|
36,995
|
|
|
2021
|
31,453
|
|
|
2022
|
27,969
|
|
|
2023
|
26,213
|
|
|
Total
|
$
|
167,896
|
|
5. Earnings Per Share
|
|
Years ended December 31,
|
|
|||||||
(dollars in thousands, except per share amounts)
|
2018
|
|
2017
|
|
2016
|
|
|||
Numerator:
|
|
|
|
||||||
Net income
|
$
|
44,841
|
|
$
|
73,633
|
|
$
|
45,404
|
|
Denominator:
|
|
|
|
||||||
Weighted average common shares
|
47,206,669
|
|
46,669,440
|
|
46,132,389
|
|
|||
Add effect of dilutive securities:
|
|
|
|
||||||
Stock-based awards
|
838,415
|
|
1,106,262
|
|
1,184,149
|
|
|||
Weighted average common shares assuming dilution
|
48,045,084
|
|
47,775,702
|
|
47,316,538
|
|
|||
Earnings per share:
|
|
|
|
||||||
Basic
|
$
|
0.95
|
|
$
|
1.58
|
|
$
|
0.98
|
|
Diluted
|
$
|
0.93
|
|
$
|
1.54
|
|
$
|
0.96
|
|
|
|
|
|
||||||
Anti-dilutive shares excluded from calculations of diluted earnings per share
|
48,881
|
|
4,634
|
|
7,339
|
|
74
|
|
2018 Form 10-K
|
6. Fair Value Measurements
|
|
Fair value measurement using
|
|
|
||||||||||||
(dollars in thousands)
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
||||
Fair value as of December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Derivative instruments
|
$
|
—
|
|
|
$
|
2,260
|
|
|
$
|
—
|
|
|
$
|
2,260
|
|
Total financial assets
|
$
|
—
|
|
|
$
|
2,260
|
|
|
$
|
—
|
|
|
$
|
2,260
|
|
|
|
|
|
|
|
|
|
||||||||
Fair value as of December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative instruments
|
$
|
—
|
|
|
$
|
186
|
|
|
$
|
—
|
|
|
$
|
186
|
|
Total financial liabilities
|
$
|
—
|
|
|
$
|
186
|
|
|
$
|
—
|
|
|
$
|
186
|
|
|
|
|
|
|
|
|
|
||||||||
Fair value as of December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Derivative instruments
|
$
|
—
|
|
|
$
|
1,283
|
|
|
$
|
—
|
|
|
$
|
1,283
|
|
Total financial assets
|
$
|
—
|
|
|
$
|
1,283
|
|
|
$
|
—
|
|
|
$
|
1,283
|
|
2018 Form 10-K
|
|
75
|
7. Property and Equipment and Software Development Costs
|
|
Estimated
useful life
(years)
|
|
December 31,
|
|
||||
(dollars in thousands)
|
2018
|
|
2017
|
|
||||
Equipment
|
2 - 5
|
|
$
|
4,243
|
|
$
|
2,728
|
|
Computer hardware
|
2 - 5
|
|
75,060
|
|
76,331
|
|
||
Computer software
|
2 - 5
|
|
34,294
|
|
34,058
|
|
||
Construction in progress
|
—
|
|
233
|
|
3,102
|
|
||
Furniture and fixtures
|
3 - 10
|
|
7,004
|
|
7,265
|
|
||
Leasehold improvements
|
Lesser of lease term or 10 years
|
|
26,795
|
|
22,359
|
|
||
Total property and equipment
|
|
147,629
|
|
145,843
|
|
|||
Less: accumulated depreciation
|
|
(107,598
|
)
|
(103,600
|
)
|
|||
Property and equipment, net
|
|
$
|
40,031
|
|
$
|
42,243
|
|
|
Estimated
useful life
(years)
|
December 31,
|
|
||||
(dollars in thousands)
|
2018
|
|
2017
|
|
|||
Software development costs
|
3 - 7
|
$
|
121,983
|
|
$
|
84,404
|
|
Less: accumulated amortization
|
|
(46,884
|
)
|
(30,306
|
)
|
||
Software development costs, net
|
|
$
|
75,099
|
|
$
|
54,098
|
|
76
|
|
2018 Form 10-K
|
8. Consolidated Financial Statement Details
|
(dollars in thousands)
|
December 31,
2018 |
|
December 31,
2017 |
|
||
Costs of obtaining contracts(1)(2)
|
$
|
85,590
|
|
$
|
77,312
|
|
Prepaid software maintenance and subscriptions
|
21,134
|
|
17,402
|
|
||
Taxes, prepaid and receivable
|
2,055
|
|
10,548
|
|
||
Derivative instruments
|
2,260
|
|
1,283
|
|
||
Unbilled accounts receivable(3)
|
4,161
|
|
3,136
|
|
||
Security deposits
|
1,020
|
|
2,305
|
|
||
Other assets
|
8,931
|
|
7,230
|
|
||
Total prepaid expenses and other assets
|
125,151
|
|
119,216
|
|
||
Less: Long-term portion
|
65,363
|
|
57,238
|
|
||
Prepaid expenses and other current assets
|
$
|
59,788
|
|
$
|
61,978
|
|
(1)
|
Amortization expense from costs of obtaining contracts was $35.7 million for the year ended December 31, 2018.
|
(2)
|
The current portion of costs of obtaining contracts as of December 31, 2018 and 2017 was $31.7 million and $28.0 million, respectively.
|
(3)
|
Amounts previously presented as contract assets are now presented as unbilled accounts receivable as they meet the definition of a receivable.
|
(dollars in thousands)
|
December 31,
2018 |
|
December 31,
2017 |
|
||
Accrued bonuses
|
$
|
14,868
|
|
$
|
16,743
|
|
Accrued commissions and salaries
|
9,934
|
|
6,943
|
|
||
Taxes payable
|
6,204
|
|
5,517
|
|
||
Deferred rent liabilities
|
4,332
|
|
4,548
|
|
||
Customer credit balances
|
4,076
|
|
4,652
|
|
||
Lease incentive obligations
|
3,514
|
|
4,635
|
|
||
Unrecognized tax benefit
|
2,719
|
|
1,972
|
|
||
Accrued vacation costs
|
2,352
|
|
2,458
|
|
||
Accrued health care costs
|
1,497
|
|
2,615
|
|
||
Other liabilities
|
6,785
|
|
9,948
|
|
||
Total accrued expenses and other liabilities
|
56,281
|
|
60,031
|
|
||
Less: Long-term portion
|
9,388
|
|
5,632
|
|
||
Accrued expenses and other current liabilities
|
$
|
46,893
|
|
$
|
54,399
|
|
(dollars in thousands)
|
December 31,
2018 |
|
December 31,
2017 |
|
||
Recurring
|
$
|
286,960
|
|
$
|
265,513
|
|
One-time services and other
|
11,595
|
|
13,193
|
|
||
Total deferred revenue
|
298,555
|
|
278,706
|
|
||
Less: Long-term portion
|
2,564
|
|
3,643
|
|
||
Deferred revenue, current portion
|
$
|
295,991
|
|
$
|
275,063
|
|
2018 Form 10-K
|
|
77
|
|
Years ended December 31,
|
|
|||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2016
|
|
|||
Interest income
|
$
|
2,008
|
|
$
|
993
|
|
$
|
581
|
|
Gain on derivative instrument
|
—
|
|
462
|
|
—
|
|
|||
Loss on debt extinguishment
|
—
|
|
(299
|
)
|
—
|
|
|||
Other (expense) income, net
|
(905
|
)
|
1,104
|
|
(872
|
)
|
|||
Other income (expense), net
|
$
|
1,103
|
|
$
|
2,260
|
|
$
|
(291
|
)
|
9. Debt
|
|
Debt balance at
|
|
|
Weighted average
effective interest rate at
|
|
||||||
(dollars in thousands)
|
December 31,
2018 |
|
December 31,
2017 |
|
|
December 31,
2018 |
|
December 31,
2017 |
|
||
Credit facility:
|
|
|
|
|
|
||||||
Revolving credit loans
|
$
|
100,000
|
|
$
|
143,000
|
|
|
4.13
|
%
|
2.84
|
%
|
Term loans
|
288,750
|
|
296,250
|
|
|
3.44
|
%
|
2.64
|
%
|
||
Other debt
|
—
|
|
1,076
|
|
|
—
|
%
|
4.50
|
%
|
||
Total debt
|
388,750
|
|
440,326
|
|
|
3.61
|
%
|
2.71
|
%
|
||
Less: Unamortized discount and debt issuance costs
|
1,626
|
|
2,102
|
|
|
|
|
||||
Less: Debt, current portion
|
7,500
|
|
8,576
|
|
|
3.77
|
%
|
3.03
|
%
|
||
Debt, net of current portion
|
$
|
379,624
|
|
$
|
429,648
|
|
|
3.61
|
%
|
2.71
|
%
|
78
|
|
2018 Form 10-K
|
2018 Form 10-K
|
|
79
|
Years ending December 31,
(dollars in thousands)
|
Annual
maturities
|
|
|
2019
|
$
|
7,500
|
|
2020
|
7,500
|
|
|
2021
|
7,500
|
|
|
2022
|
366,250
|
|
|
2023
|
—
|
|
|
Thereafter
|
—
|
|
|
Total required maturities
|
$
|
388,750
|
|
10. Derivative Instruments
|
80
|
|
2018 Form 10-K
|
|
|
Asset Derivatives
|
|
|
Liability Derivatives
|
||||||||||
(dollars in thousands)
|
Balance sheet location
|
December 31,
2018 |
|
December 31,
2017 |
|
|
Balance sheet location
|
December 31,
2018 |
|
December 31,
2017 |
|
||||
Derivative instruments designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps, current portion
|
Prepaid expenses
and other current assets
|
$
|
—
|
|
$
|
145
|
|
|
Accrued expenses
and other current liabilities
|
$
|
—
|
|
$
|
—
|
|
Interest rate swaps, long-term portion
|
Other assets
|
2,260
|
|
1,138
|
|
|
Other liabilities
|
186
|
|
—
|
|
||||
Total derivative instruments designated as hedging instruments
|
|
$
|
2,260
|
|
$
|
1,283
|
|
|
|
$
|
186
|
|
$
|
—
|
|
|
Gain (loss) recognized
in accumulated other
comprehensive
loss as of
|
|
Location
of gain (loss)
reclassified from
accumulated other
comprehensive
loss into income
|
Gain (loss) reclassified from accumulated
other comprehensive loss into income
|
|
||
(dollars in thousands)
|
December 31,
2018 |
|
Year ended
December 31, 2018 |
|
|||
Interest rate swaps
|
$
|
2,074
|
|
Interest expense
|
$
|
118
|
|
|
|
|
|
||||
|
December 31,
2017 |
|
|
Year ended
December 31, 2017 |
|
||
Interest rate swaps
|
$
|
1,283
|
|
Interest expense
|
$
|
(293
|
)
|
|
|
|
|
||||
|
December 31,
2016 |
|
|
Year ended
December 31, 2016 |
|
||
Interest rate swaps
|
$
|
42
|
|
Interest expense
|
$
|
(1,106
|
)
|
|
Location of gain (loss)
recognized in income on derivative
|
Gain (loss) recognized in income
|
|
|
(dollars in thousands)
|
Year ended
December 31, 2017 |
|
||
Foreign currency option contracts
|
Other income (expense), net
|
$
|
513
|
|
Foreign currency forward contracts
|
Other income (expense), net
|
$
|
(51
|
)
|
Total gain(1)
|
|
$
|
462
|
|
(1)
|
The individual amounts may not sum to total gain due to rounding.
|
2018 Form 10-K
|
|
81
|
11. Commitments and Contingencies
|
82
|
|
2018 Form 10-K
|
Years ending December 31,
(dollars in thousands)
|
Operating
leases(1)
|
|
|
2019
|
$
|
20,808
|
|
2020
|
20,274
|
|
|
2021
|
16,924
|
|
|
2022
|
14,391
|
|
|
2023
|
12,923
|
|
|
Thereafter
|
81,755
|
|
|
Total minimum lease payments
|
$
|
167,075
|
|
(1)
|
Our future minimum lease commitments related to operating leases do not include payments related to Phase Two of our New Headquarters Facility, as that option had not been exercised as of December 31, 2018.
|
2018 Form 10-K
|
|
83
|
12. Income Taxes
|
|
Years ended December 31,
|
|
|||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2016
|
|
|||
Current taxes:
|
|
|
|
||||||
U.S. Federal
|
$
|
(1,088
|
)
|
$
|
2,565
|
|
$
|
4,808
|
|
U.S. State and local
|
1,182
|
|
(144
|
)
|
1,670
|
|
|||
International
|
306
|
|
101
|
|
53
|
|
|||
Total current taxes
|
400
|
|
2,522
|
|
6,531
|
|
|||
Deferred taxes:
|
|
|
|
||||||
U.S. Federal
|
659
|
|
(17,128
|
)
|
4,782
|
|
|||
U.S. State and local
|
45
|
|
398
|
|
304
|
|
|||
International
|
(1,323
|
)
|
(1,084
|
)
|
329
|
|
|||
Total deferred taxes
|
(619
|
)
|
(17,814
|
)
|
5,415
|
|
|||
Total income tax provision
|
$
|
(219
|
)
|
$
|
(15,292
|
)
|
$
|
11,946
|
|
84
|
|
2018 Form 10-K
|
|
Years ended December 31,
|
|
|||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2016
|
|
|||
U.S.
|
$
|
47,532
|
|
$
|
58,547
|
|
$
|
55,381
|
|
International
|
(2,910
|
)
|
(206
|
)
|
1,969
|
|
|||
Income before provision for income taxes
|
$
|
44,622
|
|
$
|
58,341
|
|
$
|
57,350
|
|
2018 Form 10-K
|
|
85
|
|
December 31,
|
|
||||
(dollars in thousands)
|
2018
|
|
2017
|
|
||
Deferred tax assets relating to:
|
|
|
||||
Federal and state and foreign net operating loss carryforwards
|
$
|
11,021
|
|
$
|
13,597
|
|
Federal, state and foreign tax credits
|
18,936
|
|
14,389
|
|
||
Intangible assets
|
1,041
|
|
693
|
|
||
Stock-based compensation
|
11,462
|
|
9,611
|
|
||
Accrued bonuses
|
973
|
|
1,001
|
|
||
Deferred revenue
|
854
|
|
505
|
|
||
Allowance for doubtful accounts
|
1,242
|
|
1,379
|
|
||
Other
|
5,607
|
|
4,770
|
|
||
Total deferred tax assets
|
51,136
|
|
45,945
|
|
||
Deferred tax liabilities relating to:
|
|
|
||||
Intangible assets
|
(43,700
|
)
|
(47,997
|
)
|
||
Fixed assets
|
(4,444
|
)
|
(4,552
|
)
|
||
Costs of obtaining contracts
|
(19,573
|
)
|
(18,756
|
)
|
||
Capitalized software development costs
|
(19,469
|
)
|
(14,012
|
)
|
||
Other
|
(926
|
)
|
(995
|
)
|
||
Total deferred tax liabilities
|
(88,112
|
)
|
(86,312
|
)
|
||
Valuation allowance
|
(6,855
|
)
|
(7,205
|
)
|
||
Net deferred tax liability
|
$
|
(43,831
|
)
|
$
|
(47,572
|
)
|
Years ended December 31,
|
Balance
at beginning
of year
|
|
Acquisition-
related
change
|
|
Charges to
expense
|
|
Balance at
end of
year
|
|
||||
(dollars in thousands)
|
||||||||||||
2018
|
$
|
7,205
|
|
$
|
16
|
|
$
|
(366
|
)
|
$
|
6,855
|
|
2017
|
6,994
|
|
—
|
|
211
|
|
7,205
|
|
||||
2016
|
7,911
|
|
—
|
|
(917
|
)
|
6,994
|
|
86
|
|
2018 Form 10-K
|
|
Years ended December 31,
|
|
|||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2016
|
|
|||
Balance at December 31, 2017
|
$
|
5,160
|
|
$
|
3,145
|
|
$
|
3,024
|
|
Increases from prior period positions
|
104
|
|
1,860
|
|
23
|
|
|||
Decreases in prior year positions
|
(413
|
)
|
(238
|
)
|
(17
|
)
|
|||
Increases from current period positions
|
58
|
|
404
|
|
358
|
|
|||
Lapse of statute of limitations
|
(1,205
|
)
|
(11
|
)
|
(243
|
)
|
|||
Balance at December 31, 2018
|
$
|
3,704
|
|
$
|
5,160
|
|
$
|
3,145
|
|
13. Stock-based Compensation
|
2018 Form 10-K
|
|
87
|
|
Outstanding at December 31,
|
|
||
Award type
|
2018
|
|
2017
|
|
Restricted stock awards
|
1,263,510
|
|
1,257,574
|
|
Restricted stock units
|
459,673
|
|
493,248
|
|
Stock appreciation rights
|
60,871
|
|
212,506
|
|
Stock options
|
836
|
|
2,050
|
|
|
Years ended December 31,
|
|
|||||||
(in thousands)
|
2018
|
|
2017
|
|
2016
|
|
|||
Included in cost of revenue:
|
|
|
|
||||||
Cost of recurring
|
$
|
2,464
|
|
$
|
1,627
|
|
$
|
1,676
|
|
Cost of one-time services and other
|
2,778
|
|
1,843
|
|
1,621
|
|
|||
Total included in cost of revenue
|
5,242
|
|
3,470
|
|
3,297
|
|
|||
Included in operating expenses:
|
|
|
|
||||||
Sales, marketing and customer success
|
9,285
|
|
6,381
|
|
3,844
|
|
|||
Research and development
|
9,048
|
|
7,765
|
|
6,467
|
|
|||
General and administrative
|
24,699
|
|
23,015
|
|
19,030
|
|
|||
Total included in operating expenses
|
43,032
|
|
37,161
|
|
29,341
|
|
|||
Total stock-based compensation expense
|
$
|
48,274
|
|
$
|
40,631
|
|
$
|
32,638
|
|
88
|
|
2018 Form 10-K
|
Restricted stock awards
|
Restricted
stock awards
|
|
Weighted
average
grant-date
fair value
|
|
|
Weighted
average
remaining
contractual
term
(in years)
|
Aggregate
intrinsic value(1)
(in thousands)
|
|
||
Unvested at January 1, 2018
|
1,257,574
|
|
$
|
61.00
|
|
|
|
|
||
Granted
|
541,786
|
|
94.51
|
|
|
|
|
|||
Vested
|
(420,688
|
)
|
57.56
|
|
|
|
|
|||
Forfeited
|
(115,162
|
)
|
72.93
|
|
|
|
|
|||
Unvested at December 31, 2018
|
1,263,510
|
|
75.46
|
|
|
8.1
|
$
|
79,475
|
|
(1)
|
The intrinsic value is calculated as the market value as of the end of the fiscal period.
|
Restricted stock units
|
Restricted
stock units
|
|
Weighted
average
grant-date
fair value
|
|
|
Weighted
average
remaining
contractual
term
(in years)
|
Aggregate
intrinsic value(1)
(in thousands)
|
|
||
Unvested at January 1, 2018
|
493,248
|
|
$
|
61.05
|
|
|
|
|
||
Granted
|
231,491
|
|
95.59
|
|
|
|
|
|||
Forfeited
|
(24,507
|
)
|
79.85
|
|
|
|
|
|||
Vested
|
(240,559
|
)
|
56.77
|
|
|
|
|
|||
Unvested at December 31, 2018
|
459,673
|
|
79.78
|
|
|
8.4
|
$
|
28,913
|
|
(1)
|
The intrinsic value is calculated as the market value as of the end of the fiscal period.
|
2018 Form 10-K
|
|
89
|
Stock appreciation rights
|
Stock
appreciation
rights
|
|
Weighted
average
exercise
price
|
|
|
Weighted
average
remaining
contractual
term
(in years)
|
Aggregate
intrinsic value(1)
(in thousands)
|
|
||
Outstanding at January 1, 2018
|
212,506
|
|
$
|
23.01
|
|
|
|
|
||
Exercised
|
(151,635
|
)
|
23.31
|
|
|
|
|
|||
Outstanding at December 31, 2018
|
60,871
|
|
22.24
|
|
|
0.8
|
$
|
2,475
|
|
|
Vested and exercisable at December 31, 2018
|
60,871
|
|
22.24
|
|
|
0.8
|
2,475
|
|
(1)
|
The intrinsic value is calculated as the difference between the market value as of the end of the fiscal period and the exercise price of the shares.
|
Stock options
|
Stock
options
|
|
Weighted
average
exercise
price
|
|
|
Weighted
average
remaining
contractual
term
(in years)
|
Aggregate
intrinsic value(1)
(in thousands)
|
|
||
Outstanding at January 1, 2018
|
2,050
|
|
$
|
11.44
|
|
|
|
|
||
Exercised
|
(1,032
|
)
|
10.53
|
|
|
|
|
|||
Expired
|
(182
|
)
|
10.59
|
|
|
|
|
|||
Outstanding at December 31, 2018
|
836
|
|
12.75
|
|
|
0.7
|
$
|
42
|
|
|
Vested and exercisable at December 31, 2018
|
836
|
|
12.75
|
|
|
0.7
|
42
|
|
(1)
|
The intrinsic value is calculated as the difference between the market value as of the end of the fiscal period and the exercise price of the shares.
|
90
|
|
2018 Form 10-K
|
14. Stockholders' Equity
|
Declaration Date
|
Dividend
per Share
|
|
Record Date
|
|
Payable Date
|
|
February 6, 2018
|
$
|
0.12
|
|
February 28
|
|
March 15
|
April 30, 2018
|
0.12
|
|
May 25
|
|
June 15
|
|
July 30, 2018
|
0.12
|
|
August 28
|
|
September 14
|
|
October 29, 2018
|
0.12
|
|
November 28
|
|
December 14
|
2018 Form 10-K
|
|
91
|
|
Years ended December 31,
|
|
|||||||
(in thousands)
|
2018
|
|
2017
|
|
2016
|
|
|||
Accumulated other comprehensive loss, beginning of period
|
$
|
(642
|
)
|
$
|
(604
|
)
|
$
|
(825
|
)
|
By component:
|
|
|
|
||||||
Gains and losses on cash flow hedges:
|
|
|
|
||||||
Accumulated other comprehensive income (loss) balance, beginning of period
|
$
|
748
|
|
$
|
(3
|
)
|
$
|
(19
|
)
|
Other comprehensive income (loss) before reclassifications, net of tax effects of $(239), $(374) and $406
|
670
|
|
574
|
|
(626
|
)
|
|||
Amounts reclassified from accumulated other comprehensive loss to interest expense
|
(118
|
)
|
293
|
|
1,106
|
|
|||
Tax benefit included in provision for income taxes
|
31
|
|
(116
|
)
|
(436
|
)
|
|||
Total amounts reclassified from accumulated other comprehensive loss
|
(87
|
)
|
177
|
|
670
|
|
|||
Net current-period other comprehensive income
|
583
|
|
751
|
|
44
|
|
|||
Cumulative effect of adoption of ASU 2014-09
|
—
|
|
—
|
|
(28
|
)
|
|||
Reclassification upon early adoption of ASU 2018-02
|
167
|
|
—
|
|
—
|
|
|||
Accumulated other comprehensive income (loss) balance, end of period
|
$
|
1,498
|
|
$
|
748
|
|
$
|
(3
|
)
|
Foreign currency translation adjustment:
|
|
|
|
||||||
Accumulated other comprehensive loss balance, beginning of period
|
$
|
(1,390
|
)
|
$
|
(601
|
)
|
$
|
(806
|
)
|
Translation adjustments
|
(5,218
|
)
|
(789
|
)
|
205
|
|
|||
Accumulated other comprehensive loss balance, end of period
|
(6,608
|
)
|
(1,390
|
)
|
(601
|
)
|
|||
Accumulated other comprehensive loss, end of period
|
$
|
(5,110
|
)
|
$
|
(642
|
)
|
$
|
(604
|
)
|
15. Defined Contribution Plan
|
92
|
|
2018 Form 10-K
|
16. Segment Information
|
|
Years ended
December 31, |
|
||||
(dollars in thousands)
|
2018
|
|
2017
|
|
||
United States
|
$
|
37,015
|
|
$
|
39,071
|
|
Other countries
|
3,016
|
|
3,172
|
|
||
Total property and equipment
|
$
|
40,031
|
|
$
|
42,243
|
|
17. Revenue Recognition
|
(in thousands)
|
December 31,
2018 |
|
December 31,
2017 |
|
||
Contract assets(1)
|
$
|
308
|
|
$
|
—
|
|
Total deferred revenue
|
298,555
|
|
278,706
|
|
(1)
|
Amounts previously presented as contract assets are now presented as unbilled accounts receivable as they meet the definition of a receivable. See Note 8 to these consolidated financial statements for additional details.
|
2018 Form 10-K
|
|
93
|
|
Years ended
December 31, |
|
|||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2016
|
|
|||
United States
|
$
|
727,366
|
|
$
|
706,904
|
|
$
|
661,143
|
|
Other countries
|
121,240
|
|
81,583
|
|
70,499
|
|
|||
Total revenue
|
$
|
848,606
|
|
$
|
788,487
|
|
$
|
731,642
|
|
•
|
The GMG focuses on sales to all K-12 private schools, faith communities and arts and cultural organizations, as well as emerging and mid-sized prospects in North America;
|
•
|
The EMG focuses on sales to all healthcare and higher education institutions, corporations and foundations, as well as large and/or strategic prospects in North America; and
|
•
|
The IMG focuses on sales to all prospects and customers outside of North America.
|
|
Years ended
December 31, |
|
|||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
2016
|
|
|||
GMG
|
$
|
387,630
|
|
$
|
373,108
|
|
$
|
340,644
|
|
EMG
|
375,861
|
|
367,203
|
|
346,781
|
|
|||
IMG
|
81,160
|
|
45,682
|
|
42,291
|
|
|||
Other
|
3,955
|
|
2,494
|
|
1,926
|
|
|||
Total revenue
|
$
|
848,606
|
|
$
|
788,487
|
|
$
|
731,642
|
|
2018 Form 10-K
|
|
94
|
18. Quarterly Results (Unaudited)
|
(dollars in thousands, except per share data)
|
December 31,
2018 |
|
September 30,
2018 |
|
June 30,
2018 |
|
March 31,
2018 |
|
||||
Total revenue
|
$
|
221,218
|
|
$
|
209,532
|
|
$
|
213,672
|
|
$
|
204,184
|
|
Gross profit
|
117,922
|
|
114,295
|
|
118,500
|
|
116,147
|
|
||||
Income from operations
|
14,679
|
|
15,783
|
|
11,374
|
|
17,581
|
|
||||
Income before provision for income taxes
|
11,485
|
|
11,496
|
|
7,417
|
|
14,224
|
|
||||
Net income
|
9,334
|
|
11,164
|
|
6,592
|
|
17,751
|
|
||||
Earnings per share
|
|
|
|
|
||||||||
Basic
|
$
|
0.20
|
|
$
|
0.24
|
|
$
|
0.14
|
|
$
|
0.38
|
|
Diluted
|
0.19
|
|
0.23
|
|
0.14
|
|
0.37
|
|
||||
|
|
|
|
|
||||||||
(dollars in thousands, except per share data)
|
December 31,
2017 |
|
September 30,
2017 |
|
June 30,
2017 |
|
March 31,
2017 |
|
||||
Total revenue
|
$
|
217,402
|
|
$
|
194,424
|
|
$
|
191,589
|
|
$
|
185,072
|
|
Gross profit
|
114,980
|
|
107,419
|
|
104,594
|
|
99,590
|
|
||||
Income from operations
|
19,959
|
|
18,423
|
|
16,523
|
|
13,273
|
|
||||
Income before provision for income taxes
|
17,226
|
|
15,799
|
|
14,134
|
|
11,182
|
|
||||
Net income
|
36,638
|
|
12,824
|
|
11,029
|
|
13,142
|
|
||||
Earnings per share
|
|
|
|
|
||||||||
Basic
|
$
|
0.78
|
|
$
|
0.27
|
|
$
|
0.24
|
|
$
|
0.28
|
|
Diluted
|
0.76
|
|
0.27
|
|
0.23
|
|
0.28
|
|
19. Restructuring
|
2018 Form 10-K
|
|
95
|
|
Costs incurred during the year ended
|
|
|
Cumulative costs incurred as of
|
|
||
(in thousands)
|
December 31, 2018
|
|
|||||
By component:
|
|
|
|
||||
Contract termination costs
|
$
|
3,581
|
|
|
$
|
4,176
|
|
Other costs
|
1,009
|
|
|
1,208
|
|
||
Total
|
$
|
4,590
|
|
|
$
|
5,384
|
|
|
Accrued at
|
|
|
Increases for incurred costs
|
|
|
Costs paid
|
|
|
Accrued at
|
|
||||
(in thousands)
|
December 31, 2017
|
|
|
|
|
December 31, 2018
|
|
||||||||
By component:
|
|
|
|
|
|
|
|
||||||||
Contract termination costs
|
$
|
691
|
|
|
$
|
3,581
|
|
|
$
|
(2,407
|
)
|
|
$
|
1,865
|
|
Other costs
|
—
|
|
|
1,009
|
|
|
(959
|
)
|
|
50
|
|
||||
Total
|
$
|
691
|
|
|
$
|
4,590
|
|
|
$
|
(3,366
|
)
|
|
$
|
1,915
|
|
20. Subsequent Events
|
2018 Form 10-K
|
|
96
|
Evaluation of Disclosure Controls and Procedures
|
Changes in Internal Control Over Financial Reporting
|
Management’s Report on Internal Control Over Financial Reporting
|
Attestation Report of Registered Public Accounting Firm
|
2018 Form 10-K
|
|
97
|
98
|
|
2018 Form 10-K
|
|
|
PART III.
|
2018 Form 10-K
|
|
99
|
|
|
PART IV.
|
1.
|
Financial statements
|
2.
|
Financial statement schedules
|
3.
|
Exhibits
|
|
|
|
|
Filed In
|
|||||||
Exhibit
Number
|
|
Description of Document
|
|
Registrant’s
Form
|
|
Dated
|
|
Exhibit
Number
|
|
|
Filed
Herewith
|
|
|
S-1/A
|
|
4/6/2004
|
|
2.1
|
|
|
|
||
*
|
|
10-Q
|
|
5/10/2011
|
|
2.3
|
|
|
|
||
|
|
8-K
|
|
1/17/2012
|
|
2.4
|
|
|
|
||
|
|
10-K
|
|
2/29/2012
|
|
2.7
|
|
|
|
||
|
|
8-K
|
|
10/2/2014
|
|
10.76
|
|
|
|
||
|
|
8-K
|
|
10/8/2015
|
|
10.78
|
|
|
|
||
|
|
8-K
|
|
10/8/2015
|
|
10.79
|
|
|
|
||
|
|
DEF 14A
|
|
4/30/2009
|
|
|
|
|
|||
|
|
8-K
|
|
3/22/2011
|
|
3.4
|
|
|
|
||
†
|
|
S-1/A
|
|
4/6/2004
|
|
10.6
|
|
|
|
||
†
|
|
S-1/A
|
|
4/6/2004
|
|
10.8
|
|
|
|
100
|
|
2018 Form 10-K
|
|
|
|
|
Filed In
|
|||||||
Exhibit
Number
|
|
Description of Document
|
|
Registrant’s
Form
|
|
Dated
|
|
Exhibit
Number
|
|
|
Filed
Herewith
|
†
|
|
8-K
|
|
6/20/2006
|
|
10.20
|
|
|
|
||
†
|
|
10-K
|
|
2/28/2007
|
|
10.26
|
|
|
|
||
†
|
|
10-K
|
|
2/28/2007
|
|
10.27
|
|
|
|
||
†
|
|
DEF 14A
|
|
4/29/2008
|
|
Appendix A
|
|
|
|
||
†
|
|
S-8
|
|
8/4/2008
|
|
10.34
|
|
|
|
||
†
|
|
S-8
|
|
8/4/2008
|
|
10.35
|
|
|
|
||
†
|
|
S-8
|
|
8/4/2008
|
|
10.36
|
|
|
|
||
†**
|
|
10-K/A
|
|
3/26/2008
|
|
10.2
|
|
|
|
||
†**
|
|
10-K/A
|
|
3/26/2008
|
|
10.3
|
|
|
|
||
†
|
|
10-Q
|
|
11/10/2008
|
|
10.37
|
|
|
|
||
|
|
8-K
|
|
12/11/2008
|
|
10.37
|
|
|
|
||
†
|
|
S-8
|
|
7/2/2009
|
|
10.41
|
|
|
|
||
†
|
|
10-Q
|
|
11/8/2011
|
|
10.49
|
|
|
|
||
†
|
|
10-Q
|
|
11/8/2011
|
|
10.50
|
|
|
|
||
†
|
|
10-K
|
|
2/29/2012
|
|
10.55
|
|
|
|
||
†***
|
|
S-1/A
|
|
3/19/2010
|
|
10.1
|
|
|
|
||
†***
|
|
8-K
|
|
2/28/2011
|
|
10.1
|
|
|
|
||
†***
|
|
8-K
|
|
2/28/2011
|
|
10.2
|
|
|
|
||
†***
|
|
S-1
|
|
1/22/2010
|
|
10.2
|
|
|
|
||
†
|
|
8-K
|
|
6/26/2012
|
|
10.59
|
|
|
|
2018 Form 10-K
|
|
101
|
|
|
|
|
Filed In
|
|||||||
Exhibit
Number
|
|
Description of Document
|
|
Registrant’s
Form
|
|
Dated
|
|
Exhibit
Number
|
|
|
Filed
Herewith
|
†
|
|
8-K
|
|
6/26/2012
|
|
10.60
|
|
|
|
||
†
|
|
10-K
|
|
2/27/2013
|
|
10.65
|
|
|
|
||
|
|
8-K
|
|
3/28/2013
|
|
10.66
|
|
|
|
||
†
|
|
8-K
|
|
10/25/2013
|
|
10.70
|
|
|
|
||
†
|
|
10-K
|
|
2/26/2014
|
|
10.71
|
|
|
|
||
†
|
|
10-K
|
|
2/26/2014
|
|
10.72
|
|
|
|
||
†
|
|
10-K
|
|
2/24/2016
|
|
10.81
|
|
|
|
||
†
|
|
10-Q
|
|
5/4/2016
|
|
10.82
|
|
|
|
||
†
|
|
10-Q
|
|
5/4/2016
|
|
10.83
|
|
|
|
||
|
|
10-Q
|
|
8/4/2016
|
|
10.84
|
|
|
|
||
†
|
|
DEF 14A
|
|
4/26/2016
|
|
Appendix C
|
|
|
|
||
†
|
|
10-Q
|
|
11/10/2008
|
|
10.37
|
|
|
|
||
|
|
10-Q
|
|
11/4/2016
|
|
10.87
|
|
|
|
||
†
|
|
10-K
|
|
2/27/2013
|
|
10.65
|
|
|
|
||
†
|
|
10-Q
|
|
11/10/2008
|
|
10.37
|
|
|
|
||
|
|
8-K
|
|
6/5/2017
|
|
10.9
|
|
|
|
102
|
|
2018 Form 10-K
|
|
|
|
|
Filed In
|
||||||
Exhibit
Number
|
|
Description of Document
|
|
Registrant’s
Form
|
|
Dated
|
|
Exhibit
Number
|
|
Filed
Herewith
|
|
|
8-K
|
|
6/5/2017
|
|
10.91
|
|
|
||
|
|
10-Q
|
|
8/4/2017
|
|
10.92
|
|
|
||
|
|
10-K
|
|
2/20/2018
|
|
10.93
|
|
|
||
|
|
10-K
|
|
2/20/2018
|
|
10.94
|
|
|
||
|
|
10-Q
|
|
5/4/2018
|
|
10.95
|
|
|
||
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
X
|
2018 Form 10-K
|
|
103
|
|
|
|
|
Filed In
|
||||||
Exhibit
Number
|
|
Description of Document
|
|
Registrant’s
Form
|
|
Dated
|
|
Exhibit
Number
|
|
Filed
Herewith
|
101.INS
|
****
|
XBRL Instance Document - the Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL Document.
|
|
|
|
|
|
|
|
X
|
101.SCH
|
****
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
X
|
101.CAL
|
****
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
X
|
101.DEF
|
****
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
X
|
101.LAB
|
****
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
X
|
101.PRE
|
****
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
X
|
*
|
The registrant has applied for an extension of the confidential treatment it was previously granted with respect to portions of this exhibit. Those portions have been omitted from the exhibit and filed separately with the U.S. Securities and Exchange Commission.
|
**
|
The Kintera, Inc. 2000 Stock Option Plan, as amended, and form of Stock Option Agreement thereunder (“Kintera 2000 Plan Documents”) and the Kintera, Inc. Amended and Restated 2003 Equity Incentive Plan, as amended, and form of Stock Option Agreement thereunder (“Kintera 2003 Plan Documents”) were filed by Kintera in its Form 10-K/A on March 26, 2008 as Exhibits 10.2 and 10.3, respectively. We assumed the Kintera 2000 Plan Documents and Kintera 2003 Plan Documents when we acquired Kintera in July 2008. We filed the Kintera 2000 Plan Documents and Kintera 2003 Plan Documents by incorporation by reference as exhibits 10.37 and 10.38, respectively, in our Form S-8 on August 4, 2008.
|
***
|
The Convio, Inc. 2009 Amended and Restated Stock Incentive Plan, as amended, and forms of stock option agreements thereunder (“Convio 2009 Original Plan Documents”) and the Convio, Inc. 1999 Stock Option/Stock Issuance Plan, as amended, and forms of stock option agreements thereunder (“Convio 1999 Plan Documents”) were filed by Convio in its Forms S-1/A and S-1, filed March 19, 2010 and January 25, 2010 as exhibits 10.1 and 10.2, respectively. The Convio, Inc. Form of Nonstatutory Stock Option Notice (Double Trigger) and Convio, Inc. Form of Restricted Stock Unit Notice (Double Trigger) and Agreement were filed by Convio in its Form 8-K on February 28, 2011 as exhibits 10.1 and 10.2 (together with the Convio 2009 Original Plan Documents, the “Convio 2009 Plan Documents”). We assumed the Convio 2009 Plan Documents and Convio 1999 Plan Documents when we acquired Convio in May 2012. We filed the Convio 2009 Plan Documents and Convio 1999 Plan Documents by incorporation by reference as exhibits 10.59, 10.60, 10.61 and 10.62 in our Form S-8 on May 7, 2012.
|
****
|
Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Annual Report on Form 10-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to liability of that Section, and shall not be part of any registration statement or other document filed under the Securities Act of the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
|
†
|
Indicates management contract or compensatory plan, contract or arrangement.
|
104
|
|
2018 Form 10-K
|
|
|
SIGNATURES
|
|
|
|
|
|
Blackbaud, Inc.
|
|
|
|
Signed:
|
February 20, 2019
|
/S/ MICHAEL P. GIANONI
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/S/ MICHAEL P. GIANONI
|
|
President, Chief Executive Officer and Director (Principal Executive Officer)
|
|
Date:
|
February 20, 2019
|
|
Michael P. Gianoni
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/S/ ANTHONY W. BOOR
|
|
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
Date:
|
February 20, 2019
|
|
Anthony W. Boor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/S/ ANDREW M. LEITCH
|
|
Chairman of the Board of Directors
|
|
Date:
|
February 20, 2019
|
|
Andrew M. Leitch
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/S/ TIMOTHY CHOU
|
|
Director
|
|
Date:
|
February 20, 2019
|
|
Timothy Chou
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/S/ GEORGE H. ELLIS
|
|
Director
|
|
Date:
|
February 20, 2019
|
|
George H. Ellis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/S/ THOMAS R. ERTEL
|
|
Director
|
|
Date:
|
February 20, 2019
|
|
Thomas R. Ertel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/S/ SARAH E. NASH
|
|
Director
|
|
Date:
|
February 20, 2019
|
|
Sarah E. Nash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/S/ JOYCE M. NELSON
|
|
Director
|
|
Date:
|
February 20, 2019
|
|
Joyce M. Nelson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/S/ PETER J. KIGHT
|
|
Director
|
|
Date:
|
February 20, 2019
|
|
Peter J. Kight
|
|
|
|
|
2018 Form 10-K
|
|
105
|
|
|
Organized Under Laws of:
|
Blackbaud, Inc.
|
|
Delaware
|
Subsidiaries
|
|
|
AcademicWorks, LLC
|
|
Texas
|
ACN 161 644 328 Pty. Ltd.
|
|
Australia
|
Blackbaud Asia, Ltd.
|
|
Hong Kong
|
Blackbaud Canada, Inc.
|
|
Canada
|
Blackbaud Europe Ltd.
|
|
Scotland
|
Blackbaud Global Ltd.
|
|
England and Wales
|
Blackbaud Latin America, S.R.L.
|
|
Costa Rica
|
Blackbaud Pacific Pty. Ltd.
|
|
Australia
|
Convio, LLC
|
|
Delaware
|
Everyday Hero Ltd.
|
|
England and Wales
|
Everyday Hero Pty. Ltd.
|
|
Australia
|
GDG Holdings, LLC
|
|
Delaware
|
Giving.com Limited
|
|
England and Wales
|
Giving Limited
|
|
England and Wales
|
Good + Geek, LLC
|
|
Delaware
|
JGCrowdfunding USA, LLC
|
|
Delaware
|
JG US Inc.
|
|
Delaware
|
MicroEdge, LLC
|
|
New York
|
MyCharity, Ltd.
|
|
Ireland
|
NPO Account Services, LLC
|
|
Delaware
|
Orange Leap, LLC
|
|
Texas
|
Reeher, LLC
|
|
Minnesota
|
Seraphim Software, LLC
|
|
Pennsylvania
|
Smart, LLC
|
|
Delaware
|
VFF I AIV I Corp.
|
|
Delaware
|
YC Blocker 1, LLC
|
|
Delaware
|
YC Blocker 2, LLC
|
|
Delaware
|
YourCause Holdings, LLC
|
|
Delaware
|
YourCause, LLC
|
|
Delaware
|
|
/S/ PRICEWATERHOUSECOOPERS LLP
|
|
Charlotte, North Carolina
|
February 20, 2019
|
1.
|
I have reviewed this annual report on Form 10-K of Blackbaud, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
February 20, 2019
|
By:
|
|
/s/ Michael P. Gianoni
|
|
|
|
|
Michael P. Gianoni
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this annual report on Form 10-K of Blackbaud, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
February 20, 2019
|
By:
|
|
/s/ Anthony W. Boor
|
|
|
|
|
Anthony W. Boor
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
(Principal Financial and Accounting Officer)
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
February 20, 2019
|
By:
|
|
/s/ Michael P. Gianoni
|
|
|
|
|
Michael P. Gianoni
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
February 20, 2019
|
By:
|
|
/s/ Anthony W. Boor
|
|
|
|
|
Anthony W. Boor
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
(Principal Financial and Accounting Officer)
|