☑
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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|
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Delaware
|
11-2617163
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Large accelerated filer
|
☑
|
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
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Smaller reporting company
|
☐
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Emerging growth company
|
☐
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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
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|
Item 13.
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Certain relationships and related transactions, and director independence
|
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Item 14.
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Principal accountant fees and services
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||
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2019 Form 10-K
|
|
1
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|
|
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
|
2
|
|
2019 Form 10-K
|
|
|
PART I.
|
Description of Business
|
Market Overview
|
•
|
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;
|
2019 Form 10-K
|
|
3
|
•
|
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.
|
Strategy
|
4
|
|
2019 Form 10-K
|
1.
|
Delight Customers with Innovative Cloud Solutions
|
2.
|
Drive Sales Effectiveness
|
2019 Form 10-K
|
|
5
|
3.
|
Expand TAM
|
4.
|
Improve Operating Efficiency
|
6
|
|
2019 Form 10-K
|
Solutions and Services
|
2019 Form 10-K
|
|
7
|
8
|
|
2019 Form 10-K
|
2019 Form 10-K
|
|
9
|
10
|
|
2019 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.
|
Customers
|
Sales and Marketing
|
2019 Form 10-K
|
|
11
|
Corporate Philanthropy and Volunteerism
|
Competition
|
•
|
Niche products are usually developed as a solution for a single problem at an organization and are adopted by similar organizations to solve a specialized need. These are typically offered by vendors who may have deep industry expertise but may not have the resources to expand beyond a specialized area. We believe we compete against these solutions by offering a set of integrated solutions rather than a single point solution, which we believe improves the overall customer experience. In addition, our open platform allows integration to specialized applications so the opportunity for disruption from these competitors is minimized.
|
•
|
Vertical-specific solutions are offered by competitors seeking to meet the enterprise-wide needs of a specific sub-segment of social good community. Typically, these solutions are offered by vendors who may offer either a point solution or integrated suite of products used by a vertical. We believe we compete successfully against these competitors through a combination of our integrated suite of offerings within verticals where we compete, offering solutions with market leading robustness as well as the scale, reach, and reputation of our organization.
|
•
|
General business software vendors such as Salesforce.com and Oracle, compete with us in certain areas of our business. While there is a growing trend toward social investment that is prompting philanthropic solutions from these general business vendors, most do not have a complete nonprofit specific focus and, therefore, do not offer or intend to offer nonprofit-specific versions for outside sales. However, there is a subset of general business software competitors who have introduced nonprofit-specific versions of their products. These products generally do not satisfy the needs of nonprofits from end-to-end as they were not designed to support the specific needs of nonprofits during the original architecture, design, and requirements elicitation phases; therefore, we believe that because these products were not originally designed for nonprofits, they are not yet capable of meeting market needs without significant customization. The significant customization required to transform general business products into nonprofit solutions often requires the use of consultants to guide the implementation, without which, leave the adoption of general business software
|
12
|
|
2019 Form 10-K
|
•
|
Consumer-oriented fundraising platforms such as GoFundMe, Virgin Money Giving and Facebook compete with our business where consumers raise funds directly. To drive adoption of their platforms, these vendors rely on a combination of direct-to-consumer marketing, marketing to nonprofits who in turn market to their supporters, and marketing to intermediate entities such as an event sponsor who will market to participants. We believe we compete well in this market through a combination of positive brand recognition among all three of these groups and the combination of our consumer- and organization-oriented tools relative to those of the competition.
|
Technology and Architecture
|
•
|
Flexibility: Customers can extend our component-based architecture to accommodate changing demands without modifying source code.
|
•
|
Adaptability: 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.
|
•
|
Scalability: 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.
|
Intellectual Property and Other Proprietary Rights
|
2019 Form 10-K
|
|
13
|
Employees
|
Seasonality
|
Working Capital
|
Available Information
|
Information About Our Executive Officers
|
Name
|
|
Age
|
|
|
Title
|
Michael P. Gianoni
|
|
59
|
|
|
President and Chief Executive Officer
|
Anthony W. Boor
|
|
57
|
|
|
Executive Vice President and Chief Financial Officer
|
Kevin W. Mooney
|
|
61
|
|
|
Executive Vice President and President, General Markets Group
|
Kevin P. Gregoire
|
|
52
|
|
|
Executive Vice President and President, Enterprise Markets Group
|
Jon W. Olson
|
|
56
|
|
|
Senior Vice President and General Counsel
|
14
|
|
2019 Form 10-K
|
Strategic Risks
|
2019 Form 10-K
|
|
15
|
16
|
|
2019 Form 10-K
|
•
|
the imposition of additional withholding taxes or other tax on our foreign income, tariffs or 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, including those pertaining to export restrictions, privacy and data protection, trade and employment restrictions and intellectual protections.
|
2019 Form 10-K
|
|
17
|
18
|
|
2019 Form 10-K
|
Operational Risks
|
2019 Form 10-K
|
|
19
|
20
|
|
2019 Form 10-K
|
Financial Risks
|
•
|
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;
|
•
|
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.
|
2019 Form 10-K
|
|
21
|
Legal and Compliance Risks
|
22
|
|
2019 Form 10-K
|
2019 Form 10-K
|
|
23
|
24
|
|
2019 Form 10-K
|
2019 Form 10-K
|
|
25
|
|
|
PART II.
|
Stock Performance Graph
|
December 31,
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
2018
|
|
|
2019
|
|
||||||
Blackbaud, Inc.
|
$
|
100.00
|
|
|
$
|
153.62
|
|
|
$
|
150.42
|
|
|
$
|
223.36
|
|
|
$
|
149.47
|
|
|
$
|
190.28
|
|
Nasdaq Composite Index
|
100.00
|
|
|
106.96
|
|
|
116.45
|
|
|
150.96
|
|
|
146.67
|
|
|
200.49
|
|
||||||
Nasdaq Computer & Data Processing Index
|
100.00
|
|
|
123.21
|
|
|
132.37
|
|
|
185.07
|
|
|
187.89
|
|
|
262.83
|
|
26
|
|
2019 Form 10-K
|
Common Stock Acquisitions and Repurchases
|
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, 2019
|
|
|
|
|
|
|
|
$
|
50,000
|
|
||||
October 1, 2019 through October 31, 2019
|
|
1,870
|
|
|
$
|
87.33
|
|
|
—
|
|
|
50,000
|
|
|
November 1, 2019 through November 30, 2019
|
|
4,347
|
|
|
84.30
|
|
|
—
|
|
|
50,000
|
|
||
December 1, 2019 through December 31, 2019
|
|
37,338
|
|
|
79.60
|
|
|
—
|
|
|
50,000
|
|
||
Total
|
|
43,555
|
|
|
$
|
80.40
|
|
|
—
|
|
|
$
|
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.
|
Dividend Policy
|
•
|
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.
|
2019 Form 10-K
|
|
27
|
28
|
|
2019 Form 10-K
|
|
Year ended December 31,
|
||||||||||||||||||
(in thousands, except per share data)
|
2019(1)
|
|
|
2018
|
|
|
2017(2)
|
|
|
2016(2)
|
|
|
2015
|
|
|||||
SUMMARY OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
$
|
900,423
|
|
|
$
|
848,606
|
|
|
$
|
788,487
|
|
|
$
|
731,642
|
|
|
$
|
637,940
|
|
Total cost of revenue
|
418,424
|
|
|
381,742
|
|
|
361,904
|
|
|
339,220
|
|
|
304,631
|
|
|||||
Gross profit
|
481,999
|
|
|
466,864
|
|
|
426,583
|
|
|
392,422
|
|
|
333,309
|
|
|||||
Total operating expenses
|
454,854
|
|
|
407,447
|
|
|
358,405
|
|
|
324,198
|
|
|
286,597
|
|
|||||
Income from operations
|
27,145
|
|
|
59,417
|
|
|
68,178
|
|
|
68,224
|
|
|
46,712
|
|
|||||
Net income
|
11,908
|
|
|
44,841
|
|
|
73,633
|
|
|
45,404
|
|
|
25,649
|
|
|||||
PER SHARE DATA
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic net income
|
$
|
0.25
|
|
|
$
|
0.95
|
|
|
$
|
1.58
|
|
|
$
|
0.98
|
|
|
$
|
0.56
|
|
Diluted net income
|
0.25
|
|
|
0.93
|
|
|
1.54
|
|
|
0.96
|
|
|
0.55
|
|
|||||
Cash dividends
|
0.48
|
|
|
0.48
|
|
|
0.48
|
|
|
0.48
|
|
|
0.48
|
|
|||||
BALANCE SHEET DATA
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets(3)
|
$
|
1,992,963
|
|
|
$
|
1,615,305
|
|
|
$
|
1,797,846
|
|
|
$
|
1,345,009
|
|
|
$
|
1,223,336
|
|
Deferred revenue, including current portion
|
316,137
|
|
|
298,555
|
|
|
278,706
|
|
|
250,289
|
|
|
237,335
|
|
|||||
Total debt, including current portion(3)
|
467,100
|
|
|
387,124
|
|
|
438,224
|
|
|
342,393
|
|
|
408,087
|
|
|||||
Total long-term liabilities(3)
|
607,362
|
|
|
435,867
|
|
|
486,946
|
|
|
396,466
|
|
|
446,450
|
|
(1)
|
Reflects the impact of adopting Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) in 2019, on a prospective basis. See Note 2 of our consolidated financial statements in this report for further discussion.
|
(2)
|
Reflects the impact of adopting ASU 2014-09, Revenue from Contracts with Customers (Topic 606) in 2018, on a retrospective basis.
|
(3)
|
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 by approximately $0.5 million.
|
2019 Form 10-K
|
|
29
|
Executive Summary
|
|
1
|
|
Delight Customers with Innovative Cloud Solutions
|
|
|
|
|
|
|
|
2
|
|
Drive Sales Effectiveness
|
|
|
|
|
|
|
|
3
|
|
Expand Total Addressable Market
|
|
|
|
|
|
|
|
4
|
|
Improve Operating Efficiency
|
|
1.
|
Delight Customers with Innovative Cloud Solutions
|
30
|
|
2019 Form 10-K
|
2.
|
Drive Sales Effectiveness
|
3.
|
Expand TAM
|
4.
|
Improve Operating Efficiency
|
2019 Form 10-K
|
|
31
|
Total Revenue ($M)
|
|
Income from Operations ($M)
|
YoY Growth (%)
|
|
YoY Growth (%)
|
|
+
|
|
Growth in recurring revenue related to positive demand from customers across our portfolio of cloud solutions and, to a lesser extent, the inclusion of YourCause, an increase in services embedded in our renewable cloud solution contracts and increased sales of subscription-based contracts for retained professional services
|
|
-
|
|
Decline in one-time services and other revenue from our continued shift in focus towards selling cloud subscription solutions. In general, our cloud solutions include integrated analytics, training and payment services, and require little to no customization services. As a result, we expect that one-time services and other revenue will continue to decline and total revenue growth will continue to be negatively impacted.
|
|
+
|
|
Growth in total revenue, as described above
|
|
-
|
|
Increased investments we have made in our sales organization and innovation
|
|
-
|
|
Increase in stock-based compensation of $10.4 million, due to increases in the grant date fair values of our annual equity awards granted to employees over the last three years as our headcount has grown
|
|
-
|
|
Increase in hosting and data center costs of $5.4 million as we are migrating our cloud infrastructure to leading public cloud service providers
|
|
-
|
|
Increase in amortization of software development costs of $4.1 million due to investments made on innovation, quality and the integration of our cloud solutions
|
|
-
|
|
Increase in amortization of intangible assets from business combinations of $3.0 million
|
|
-
|
|
Increase in employee severance of $2.2 million related to the elimination of certain roles within the company, most of which occurred during the first quarter of 2019
|
|
-
|
|
Increase in rent expense of $1.8 million primarily associated with the lease of our New Headquarters Facility in Charleston, South Carolina, which commenced in April 2018
|
|
-
|
|
Increase in restructuring costs of $1.2 million
|
Customer Retention
|
|
|
32
|
|
2019 Form 10-K
|
Results of Operations
|
•
|
YourCause Holdings, LLC ("YourCause") – January 2, 2019; and
|
•
|
Reeher LLC ("Reeher") – April 30, 2018
|
2019 Form 10-K
|
|
33
|
Recurring
|
|
|
|
|
Revenue ($M)
|
|
Cost of revenue ($M)
|
|
Gross profit ($M)
and gross margin (%) |
YoY Growth (%)
|
|
YoY Growth (%)
|
|
|
|
+
|
|
Increase in subscriptions revenue of $87.8 million related to positive demand across our portfolio of cloud solutions and, to a lesser extent, the inclusion of YourCause, an increase in services embedded in our renewable cloud solution contracts and increased sales of subscription-based retained professional services
|
|
-
|
|
Decrease in maintenance revenue of $18.4 million primarily related to our continuing efforts to migrate customers from legacy on-premises solutions onto our solutions powered by Blackbaud SKY, our modern cloud platform
|
|
+
|
|
Increase in transaction-based costs of $13.0 million, related to payment services integrated in our cloud solutions
|
|
+
|
|
Increase in compensation costs of $11.2 million, primarily attributable to an increasing portion of our resources now providing subscription-based retained services as opposed to one-time
|
|
+
|
|
Increase in hosting and data center costs of $5.4 million as we are migrating our cloud infrastructure to leading public cloud service providers
|
|
+
|
|
Increase in third-party data and tool costs of $5.1 million
|
34
|
|
2019 Form 10-K
|
|
+
|
|
Increase in allocated corporate costs of $5.1 million primarily due to investments in corporate IT, including cyber security and increases in related headcount
|
|
+
|
|
Increase in amortization of software development costs of $4.1 million due to investments made on innovation, quality and the integration of our cloud solutions
|
|
-
|
|
Decrease in one-time consulting revenue of $12.6 million. Services are increasingly embedded in our renewable cloud solution contracts and we are selling more subscription-based contracts for retained professional services. Both our embedded services and retained services are recorded as recurring revenue.
|
|
-
|
|
Decrease in one-time analytics revenue of $3.8 million as analytics are generally integrated in our cloud solutions
|
2019 Form 10-K
|
|
35
|
Sales, marketing and
customer success ($M)
|
|
Research and development ($M)
|
|
General and administrative ($M)
|
Percentages indicate expenses as a percentage of total revenue
|
|
+
|
|
Increase in compensation costs of $21.2 million primarily associated with our efforts beginning in the second half of 2018 to increase our direct sales force as well as incremental headcount associated with the inclusion of YourCause. As a result, our direct sales headcount increased 8% during 2019.
|
|
+
|
|
Increases in allocated corporate costs of $7.0 million primarily driven by investments made in corporate IT, including cyber security and increases in related headcount
|
|
+
|
|
Increase in commission expense of $2.2 million primarily driven by an increase in commissionable sales
|
|
+
|
|
Increase in compensation costs of $11.6 million primarily associated with the inclusion of YourCause's engineering resources
|
|
+
|
|
Increases in allocations of depreciation, facilities and IT support costs of $3.5 million primarily driven by investments made in corporate IT, including cyber security and increases in related headcount
|
|
-
|
|
Partially offset by an increase in software development costs of $9.5 million that were required to be capitalized under the internal-use software guidance — see discussion below
|
36
|
|
2019 Form 10-K
|
|
+
|
|
Increase in compensation costs of $13.2 million primarily related to stock-based compensation and our acquisition of YourCause. The increase in stock-based compensation was primarily driven by increases in the grant date fair values of our annual equity awards granted to employees over the last three years as our headcount has grown.
|
|
-
|
|
Decrease in acquisition-related expenses and integration costs of $3.0 million
|
|
Cumulative costs incurred as of
|
|
|
Costs incurred during the
year ended(1)
|
|
|
Cumulative costs incurred as of
|
|
|||
(in thousands)
|
December 31, 2018
|
|
|
December 31, 2019
|
|
||||||
By component:
|
|
|
|
|
|
||||||
Contract termination costs
|
$
|
4,176
|
|
|
$
|
4,906
|
|
|
$
|
9,082
|
|
Other costs
|
1,208
|
|
|
902
|
|
|
2,110
|
|
|||
Total
|
$
|
5,384
|
|
|
$
|
5,808
|
|
|
$
|
11,192
|
|
(1)
|
Includes $3.8 million of operating lease ROU asset impairment costs.
|
2019 Form 10-K
|
|
37
|
|
Accrued at
|
|
|
Increases for incurred costs(1)
|
|
|
Written off
upon adoption of ASU 2016-02(2) |
|
|
Costs paid
|
|
|
Accrued at
|
|
|||||
(in thousands)
|
December 31, 2018
|
|
|
|
|
|
December 31, 2019
|
|
|||||||||||
By component:
|
|
|
|
|
|
|
|
|
|
||||||||||
Contract termination costs
|
$
|
1,865
|
|
|
$
|
4,906
|
|
|
$
|
(1,656
|
)
|
|
$
|
(5,115
|
)
|
|
$
|
—
|
|
Other costs
|
50
|
|
|
902
|
|
|
—
|
|
|
(952
|
)
|
|
—
|
|
|||||
Total
|
$
|
1,915
|
|
|
$
|
5,808
|
|
|
$
|
(1,656
|
)
|
|
$
|
(6,067
|
)
|
|
$
|
—
|
|
(1)
|
Includes $3.8 million of operating lease ROU asset impairment costs.
|
(2)
|
Upon adoption of ASU 2016-02 at January 1, 2019, we reduced our operating lease ROU assets recognized at transition by the carrying amounts of the restructuring liabilities for certain leased office spaces that we ceased using prior to December 31, 2018.
|
Interest expense
|
|
|
|
|||||
|
Years ended December 31,
|
|
|
|||||
(dollars in millions)
|
2019
|
|
2018
|
|
Change
|
|
||
Interest expense
|
$
|
20.6
|
|
$
|
15.9
|
|
29.7
|
%
|
% of total revenue
|
2.3
|
%
|
1.9
|
%
|
|
(dollars in millions)
|
Timing of recognition
|
December 31,
2019 |
|
December 31,
2018 |
|
Change
|
|
||
Recurring
|
Over the period billed in advance, generally one year
|
$
|
302.8
|
|
$
|
287.0
|
|
5.5
|
%
|
One-time services and other
|
As services are delivered
|
13.4
|
|
11.6
|
|
15.4
|
%
|
||
Total deferred revenue(1)
|
|
316.1
|
|
298.6
|
|
5.9
|
%
|
||
Less: Long-term portion
|
|
1.8
|
|
2.6
|
|
(29.7
|
)%
|
||
Current portion(1)
|
|
$
|
314.3
|
|
$
|
296.0
|
|
6.2
|
%
|
(1)
|
The individual amounts for each year may not sum to total deferred revenue or current portion of deferred revenue due to rounding.
|
2019 Form 10-K
|
|
38
|
|
Years ended December 31,
|
|
||||
(dollars in millions)
|
2019
|
|
2018
|
|
||
Income tax benefit
|
$
|
(1.3
|
)
|
$
|
(0.2
|
)
|
Effective income tax rate
|
(12.5
|
)%
|
(0.5
|
)%
|
2019 Form 10-K
|
|
39
|
|
Years ended December 31,
|
|
|
|||||
(dollars in millions)
|
2019
|
|
2018
|
|
Change
|
|
||
GAAP Revenue
|
$
|
900.4
|
|
$
|
848.6
|
|
6.1
|
%
|
Non-GAAP adjustments:
|
|
|
|
|||||
Add: Acquisition-related deferred revenue write-down
|
1.9
|
|
2.4
|
|
(19.8
|
)%
|
||
Non-GAAP revenue(1)
|
$
|
902.4
|
|
$
|
851.0
|
|
6.0
|
%
|
|
|
|
|
|||||
GAAP gross profit
|
$
|
482.0
|
|
$
|
466.9
|
|
3.2
|
%
|
GAAP gross margin
|
53.5
|
%
|
55.0
|
%
|
|
|||
Non-GAAP adjustments:
|
|
|
|
|||||
Add: Acquisition-related deferred revenue write-down
|
1.9
|
|
2.4
|
|
(19.8
|
)%
|
||
Add: Stock-based compensation expense
|
3.4
|
|
5.2
|
|
(35.8
|
)%
|
||
Add: Amortization of intangibles from business combinations
|
44.8
|
|
42.2
|
|
6.0
|
%
|
||
Add: Employee severance
|
1.2
|
|
0.9
|
|
33.0
|
%
|
||
Subtotal(1)
|
51.3
|
|
50.8
|
|
0.9
|
%
|
||
Non-GAAP gross profit(1)
|
$
|
533.3
|
|
$
|
517.7
|
|
3.0
|
%
|
Non-GAAP gross margin
|
59.1
|
%
|
60.8
|
%
|
|
(1)
|
The individual amounts for each year may not sum to non-GAAP revenue, subtotal or non-GAAP gross profit due to rounding.
|
40
|
|
2019 Form 10-K
|
|
Years ended December 31,
|
|
|
|||||
(dollars in millions, except per share amounts)
|
2019
|
|
2018
|
|
Change
|
|
||
GAAP income from operations
|
$
|
27.1
|
|
$
|
59.4
|
|
(54.3
|
)%
|
GAAP operating margin
|
3.0
|
%
|
7.0
|
%
|
|
|||
Non-GAAP adjustments:
|
|
|
|
|||||
Add: Acquisition-related deferred revenue write-down
|
1.9
|
|
2.4
|
|
(19.8
|
)%
|
||
Add: Stock-based compensation expense
|
58.6
|
|
48.3
|
|
21.5
|
%
|
||
Add: Amortization of intangibles from business combinations
|
50.1
|
|
47.1
|
|
6.4
|
%
|
||
Add: Employee severance
|
4.4
|
|
2.2
|
|
97.0
|
%
|
||
Add: Acquisition-related integration costs
|
2.4
|
|
3.7
|
|
(35.0
|
)%
|
||
Add: Acquisition-related expenses
|
1.2
|
|
2.8
|
|
(59.2
|
)%
|
||
Add: Restructuring costs
|
5.8
|
|
4.6
|
|
26.5
|
%
|
||
Subtotal(1)
|
124.4
|
|
111.1
|
|
12.0
|
%
|
||
Non-GAAP income from operations(1)
|
$
|
151.6
|
|
$
|
170.5
|
|
(11.1
|
)%
|
Non-GAAP operating margin
|
16.8
|
%
|
20.0
|
%
|
|
|||
|
|
|
|
|||||
GAAP income before provision for income taxes
|
$
|
10.6
|
|
$
|
44.6
|
|
(76.3
|
)%
|
GAAP net income
|
$
|
11.9
|
|
$
|
44.8
|
|
(73.4
|
)%
|
Shares used in computing GAAP diluted earnings per share
|
48,312,271
|
|
48,045,084
|
|
0.6
|
%
|
||
GAAP diluted earnings per share
|
$
|
0.25
|
|
$
|
0.93
|
|
(73.1
|
)%
|
Non-GAAP adjustments:
|
|
|
|
|||||
Less: GAAP income tax benefit
|
(1.3
|
)
|
(0.2
|
)
|
504.1
|
%
|
||
Add: Total Non-GAAP adjustments affecting loss from operations
|
124.4
|
|
111.1
|
|
12.0
|
%
|
||
Non-GAAP income before provision for income taxes
|
135.0
|
|
155.7
|
|
(13.3
|
)%
|
||
Assumed non-GAAP income tax provision(2)
|
27.0
|
|
31.1
|
|
(13.3
|
)%
|
||
Non-GAAP net income(1)
|
$
|
108.0
|
|
$
|
124.6
|
|
(13.3
|
)%
|
|
|
|
|
|||||
Shares used in computing Non-GAAP diluted earnings per share
|
48,312,271
|
|
48,045,084
|
|
0.6
|
%
|
||
Non-GAAP diluted earnings per share
|
$
|
2.24
|
|
$
|
2.59
|
|
(13.5
|
)%
|
(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)
|
We apply a non-GAAP effective tax rate of 20.0% when calculating non-GAAP net income and non-GAAP diluted earnings per share.
|
|
Years ended December 31,
|
|
|
|||||
(dollars in millions)
|
2019
|
|
2018
|
|
Change
|
|
||
GAAP net cash provided by operating activities
|
$
|
182.5
|
|
$
|
201.4
|
|
(9.4
|
)%
|
Less: purchase of property and equipment
|
(11.5
|
)
|
(14.7
|
)
|
(21.9
|
)%
|
||
Less: capitalized software development costs
|
(46.9
|
)
|
(37.6
|
)
|
24.6
|
%
|
||
Non-GAAP free cash flow
|
$
|
124.1
|
|
$
|
149.0
|
|
(16.7
|
)%
|
2019 Form 10-K
|
|
41
|
|
Years ended December 31,
|
|
|
|||||
(dollars in millions)
|
2019
|
|
2018
|
|
Change
|
|
||
GAAP revenue
|
$
|
900.4
|
|
$
|
848.6
|
|
6.1
|
%
|
(Less) Add: Non-GAAP acquisition-related revenue (1)
|
(20.1
|
)
|
5.6
|
|
|
|||
Non-GAAP organic revenue (2)
|
$
|
880.3
|
|
$
|
854.2
|
|
3.1
|
%
|
Foreign currency impact on Non-GAAP organic revenue (3)
|
6.0
|
|
—
|
|
|
|||
Non-GAAP organic revenue on constant currency basis (3)
|
$
|
886.3
|
|
$
|
854.2
|
|
3.8
|
%
|
|
|
|
|
|||||
GAAP recurring revenue
|
$
|
831.6
|
|
$
|
762.2
|
|
9.1
|
%
|
(Less) Add: Non-GAAP acquisition-related revenue (1)
|
(19.8
|
)
|
5.5
|
|
|
|||
Non-GAAP organic recurring revenue
|
$
|
811.8
|
|
$
|
767.6
|
|
5.8
|
%
|
(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 Australian Dollar, British Pound, Canadian Dollar and EURO.
|
42
|
|
2019 Form 10-K
|
Liquidity and Capital Resources
|
(dollars in millions)
|
December 31,
2019 |
|
December 31,
2018 |
|
Change
|
|
||
Cash and cash equivalents
|
$
|
31.8
|
|
$
|
30.9
|
|
3.1
|
%
|
Property and equipment, net
|
35.5
|
|
40.0
|
|
(11.2
|
)%
|
||
Software development costs, net
|
101.3
|
|
75.1
|
|
34.9
|
%
|
||
Total carrying value of debt
|
467.1
|
|
387.1
|
|
20.7
|
%
|
||
Working capital
|
(254.3
|
)
|
(207.7
|
)
|
(22.5
|
)%
|
|
Years ended December 31,
|
|
|
|||||
(dollars in millions)
|
2019
|
|
2018
|
|
Change
|
|
||
Net cash provided by operating activities
|
$
|
182.5
|
|
$
|
201.4
|
|
(9.4
|
)%
|
Net cash used in investing activities
|
(167.2
|
)
|
(97.8
|
)
|
71.0
|
%
|
||
Net cash provided by (used in) financing activities
|
111.2
|
|
(291.9
|
)
|
(138.1
|
)%
|
2019 Form 10-K
|
|
43
|
•
|
an increase in the amount of deferred revenue recognized slightly outpacing customer billings;
|
•
|
an increase in collection of customer account balances in 2018 from an aging improvement initiative; and
|
•
|
an income tax refund received in 2018 which did not recur in 2019; partially offset by
|
•
|
an increase in accrued bonuses as of December 31, 2019 when compared the same date in 2018; and
|
•
|
fluctuations in the timing of vendor payments.
|
44
|
|
2019 Form 10-K
|
Financial Covenant
|
Requirement
|
Ratio as of December 31, 2019
|
Net Leverage Ratio
|
≤ 3.50 to 1.00
|
2.30 to 1.00
|
Interest Coverage Ratio
|
≥ 2.50 to 1.00
|
9.27 to 1.00
|
2019 Form 10-K
|
|
45
|
|
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)
|
$
|
468.3
|
|
$
|
7.5
|
|
$
|
460.8
|
|
$
|
—
|
|
$
|
—
|
|
Operating leases(2)
|
161.6
|
|
26.0
|
|
39.0
|
|
22.4
|
|
74.2
|
|
|||||
Interest payments on debt(3)
|
1.8
|
|
1.0
|
|
0.7
|
|
—
|
|
—
|
|
|||||
|
|
|
|
|
|
||||||||||
Unrecorded contractual obligations:
|
|
|
|
|
|
||||||||||
Purchase obligations(4)
|
91.7
|
|
41.6
|
|
49.2
|
|
0.8
|
|
—
|
|
|||||
Interest payments on debt(5)
|
33.7
|
|
14.0
|
|
19.7
|
|
—
|
|
—
|
|
|||||
Debt(6)
|
2.2
|
|
0.5
|
|
1.1
|
|
0.5
|
|
—
|
|
|||||
Total contractual obligations
|
$
|
759.1
|
|
$
|
90.7
|
|
$
|
570.5
|
|
$
|
23.8
|
|
$
|
74.2
|
|
(1)
|
Represents principal payments only, under the following assumptions: (i) that the amounts outstanding under the 2017 Credit Facility at December 31, 2019 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 sublease income, incentive payments, reimbursement of leasehold improvements and the amount representing imputed interest of $46.2 million.
|
(3)
|
Represents interest payment obligations related to our interest rate swap agreements.
|
(4)
|
We have contractual obligations for third-party technology used in our solutions and for other services we purchase as part of our normal operations. In certain cases, these arrangements require a minimum annual purchase commitment by us.
|
(5)
|
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.
|
(6)
|
Represents principal payments only for our other debt as described in Note 9 to our consolidated financial statements included in this report.
|
Off-Balance Sheet Arrangements
|
46
|
|
2019 Form 10-K
|
Foreign Currency Exchange Rates
|
Inflation
|
Critical Accounting Estimates
|
2019 Form 10-K
|
|
47
|
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.
|
48
|
|
2019 Form 10-K
|
2019 Form 10-K
|
|
49
|
Long-lived Assets and Intangible Assets Other Than Goodwill
|
|
|
Description
|
Judgments and Uncertainties
|
Effect if Actual Results Differ
From Assumptions
|
We review our long-lived assets and intangible assets other than goodwill for impairment when events or changes in circumstances indicate the carrying amount may not be recoverable. If such events or changes in circumstances occur, we use the undiscounted cash flow method to determine whether our long-lived and intangible assets other than goodwill are impaired. To the extent that the carrying value of the asset exceeds the undiscounted cash flows over the estimated remaining life of the asset, we measure the impairment using discounted cash flows.
|
When measuring impairment of an asset using discounted cash flows, we make assumptions and apply judgment in estimating future cash flows and asset fair values, including annual revenue growth rates, a terminal year growth rate and selecting a discount rate that reflects the risk inherent in future cash flows.
|
We have not made any material changes in the accounting methodology we use to assess impairment loss during the year ended December 31, 2019.
During 2019, we recorded impairment charges against a finite-lived intangible asset, certain property and equipment assets and certain operating lease ROU assets. For additional information, see Notes 4, 7 and 11 to our consolidated financial statements in this report.
We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to assess impairment losses. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to an impairment charge that could materially adversely impact our consolidated financial position and results of operations.
|
Recently Issued Accounting Pronouncements
|
50
|
|
2019 Form 10-K
|
Interest Rate Risk
|
Foreign Currency Risk
|
2019 Form 10-K
|
|
51
|
52
|
|
2019 Form 10-K
|
2019 Form 10-K
|
|
53
|
54
|
|
2019 Form 10-K
|
2019 Form 10-K
|
|
55
|
(dollars in thousands)
|
December 31,
2019 |
|
December 31,
2018 |
|
||
Assets
|
|
|
||||
Current assets:
|
|
|
||||
Cash and cash equivalents
|
$
|
31,810
|
|
$
|
30,866
|
|
Restricted cash due to customers
|
545,485
|
|
418,980
|
|
||
Accounts receivable, net of allowance of $5,529 and $4,722 at December 31, 2019 and December 31, 2018, respectively
|
88,868
|
|
86,595
|
|
||
Customer funds receivable
|
524
|
|
1,753
|
|
||
Prepaid expenses and other current assets
|
67,852
|
|
59,788
|
|
||
Total current assets
|
734,539
|
|
597,982
|
|
||
Property and equipment, net
|
35,546
|
|
40,031
|
|
||
Operating lease right-of-use assets
|
104,400
|
|
—
|
|
||
Software development costs, net
|
101,302
|
|
75,099
|
|
||
Goodwill
|
634,088
|
|
545,213
|
|
||
Intangible assets, net
|
317,895
|
|
291,617
|
|
||
Other assets
|
65,193
|
|
65,363
|
|
||
Total assets
|
$
|
1,992,963
|
|
$
|
1,615,305
|
|
Liabilities and stockholders’ equity
|
|
|
||||
Current liabilities:
|
|
|
||||
Trade accounts payable
|
$
|
47,676
|
|
$
|
34,538
|
|
Accrued expenses and other current liabilities
|
73,317
|
|
46,893
|
|
||
Due to customers
|
546,009
|
|
420,733
|
|
||
Debt, current portion
|
7,500
|
|
7,500
|
|
||
Deferred revenue, current portion
|
314,335
|
|
295,991
|
|
||
Total current liabilities
|
988,837
|
|
805,655
|
|
||
Debt, net of current portion
|
459,600
|
|
379,624
|
|
||
Deferred tax liability
|
44,594
|
|
44,291
|
|
||
Deferred revenue, net of current portion
|
1,802
|
|
2,564
|
|
||
Operating lease liabilities, net of current portion
|
95,624
|
|
—
|
|
||
Other liabilities
|
5,742
|
|
9,388
|
|
||
Total liabilities
|
1,596,199
|
|
1,241,522
|
|
||
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, 60,206,091 and 59,327,633 shares issued at December 31, 2019 and December 31, 2018, respectively
|
60
|
|
59
|
|
||
Additional paid-in capital
|
457,804
|
|
399,241
|
|
||
Treasury stock, at cost; 11,066,354 and 10,760,574 shares at December 31, 2019 and December 31, 2018, respectively
|
(290,665
|
)
|
(266,884
|
)
|
||
Accumulated other comprehensive loss
|
(5,290
|
)
|
(5,110
|
)
|
||
Retained earnings
|
234,855
|
|
246,477
|
|
||
Total stockholders’ equity
|
396,764
|
|
373,783
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,992,963
|
|
$
|
1,615,305
|
|
|
|
|
||||
The accompanying notes are an integral part of these consolidated financial statements.
|
56
|
|
2019 Form 10-K
|
(dollars in thousands, except per share amounts)
|
Years ended December 31,
|
|
|||||||
2019
|
|
2018
|
|
2017
|
|
||||
Revenue
|
|
|
|
||||||
Recurring
|
$
|
831,609
|
|
$
|
762,181
|
|
$
|
684,583
|
|
One-time services and other
|
68,814
|
|
86,425
|
|
103,904
|
|
|||
Total revenue
|
900,423
|
|
848,606
|
|
788,487
|
|
|||
Cost of revenue
|
|
|
|
||||||
Cost of recurring
|
357,988
|
|
305,481
|
|
277,639
|
|
|||
Cost of one-time services and other
|
60,436
|
|
76,261
|
|
84,265
|
|
|||
Total cost of revenue
|
418,424
|
|
381,742
|
|
361,904
|
|
|||
Gross profit
|
481,999
|
|
466,864
|
|
426,583
|
|
|||
Operating expenses
|
|
|
|
||||||
Sales, marketing and customer success
|
224,152
|
|
192,848
|
|
169,559
|
|
|||
Research and development
|
106,164
|
|
98,811
|
|
89,911
|
|
|||
General and administrative
|
113,414
|
|
106,354
|
|
94,870
|
|
|||
Amortization
|
5,316
|
|
4,844
|
|
3,271
|
|
|||
Restructuring
|
5,808
|
|
4,590
|
|
794
|
|
|||
Total operating expenses
|
454,854
|
|
407,447
|
|
358,405
|
|
|||
Income from operations
|
27,145
|
|
59,417
|
|
68,178
|
|
|||
Interest expense
|
(20,618
|
)
|
(15,898
|
)
|
(12,097
|
)
|
|||
Other income, net
|
4,058
|
|
1,103
|
|
2,260
|
|
|||
Income before provision for income taxes
|
10,585
|
|
44,622
|
|
58,341
|
|
|||
Income tax benefit
|
(1,323
|
)
|
(219
|
)
|
(15,292
|
)
|
|||
Net income
|
$
|
11,908
|
|
$
|
44,841
|
|
$
|
73,633
|
|
Earnings per share
|
|
|
|
||||||
Basic
|
$
|
0.25
|
|
$
|
0.95
|
|
$
|
1.58
|
|
Diluted
|
$
|
0.25
|
|
$
|
0.93
|
|
$
|
1.54
|
|
Common shares and equivalents outstanding
|
|
|
|
||||||
Basic weighted average shares
|
47,695,383
|
|
47,206,669
|
|
46,669,440
|
|
|||
Diluted weighted average shares
|
48,312,271
|
|
48,045,084
|
|
47,775,702
|
|
|||
Other comprehensive loss
|
|
|
|
||||||
Foreign currency translation adjustment
|
2,641
|
|
(5,218
|
)
|
(789
|
)
|
|||
Unrealized (loss) gain on derivative instruments, net of tax
|
(2,821
|
)
|
583
|
|
751
|
|
|||
Total other comprehensive loss
|
(180
|
)
|
(4,635
|
)
|
(38
|
)
|
|||
Comprehensive income
|
$
|
11,728
|
|
$
|
40,206
|
|
$
|
73,595
|
|
|
|
|
|
||||||
The accompanying notes are an integral part of these consolidated financial statements.
|
2019 Form 10-K
|
|
57
|
|
Years ended December 31,
|
|
|||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
2017
|
|
|||
Cash flows from operating activities
|
|
|
|
||||||
Net income
|
$
|
11,908
|
|
$
|
44,841
|
|
$
|
73,633
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||||
Depreciation and amortization
|
85,693
|
|
79,566
|
|
73,948
|
|
|||
Provision for doubtful accounts and sales returns
|
8,725
|
|
6,890
|
|
11,686
|
|
|||
Stock-based compensation expense
|
58,633
|
|
48,274
|
|
40,631
|
|
|||
Deferred taxes
|
(3,600
|
)
|
(619
|
)
|
(17,814
|
)
|
|||
Amortization of deferred financing costs and discount
|
752
|
|
752
|
|
838
|
|
|||
Other non-cash adjustments
|
4,906
|
|
(1,912
|
)
|
504
|
|
|||
Changes in operating assets and liabilities, net of acquisition and disposal of businesses:
|
|
|
|
||||||
Accounts receivable
|
(6,569
|
)
|
2,166
|
|
(15,821
|
)
|
|||
Prepaid expenses and other assets
|
6,383
|
|
(5,217
|
)
|
(9,550
|
)
|
|||
Trade accounts payable
|
12,900
|
|
9,487
|
|
1,024
|
|
|||
Accrued expenses and other liabilities
|
(9,718
|
)
|
(2,027
|
)
|
(4,973
|
)
|
|||
Deferred revenue
|
12,464
|
|
19,184
|
|
22,184
|
|
|||
Net cash provided by operating activities
|
182,477
|
|
201,385
|
|
176,290
|
|
|||
Cash flows from investing activities
|
|
|
|
||||||
Purchase of property and equipment
|
(11,492
|
)
|
(14,719
|
)
|
(10,208
|
)
|
|||
Capitalized software development costs
|
(46,874
|
)
|
(37,629
|
)
|
(28,345
|
)
|
|||
Purchase of net assets of acquired companies, net of cash and restricted cash acquired
|
(109,353
|
)
|
(44,943
|
)
|
(146,789
|
)
|
|||
Purchase of derivative instruments
|
—
|
|
—
|
|
(568
|
)
|
|||
Proceeds from settlement of derivative instruments
|
—
|
|
—
|
|
1,030
|
|
|||
Other investing activities
|
500
|
|
(500
|
)
|
—
|
|
|||
Net cash used in investing activities
|
(167,219
|
)
|
(97,791
|
)
|
(184,880
|
)
|
|||
Cash flows from financing activities
|
|
|
|
||||||
Proceeds from issuance of debt
|
424,000
|
|
270,900
|
|
774,500
|
|
|||
Payments on debt
|
(344,500
|
)
|
(322,476
|
)
|
(679,119
|
)
|
|||
Debt issuance costs
|
—
|
|
—
|
|
(3,085
|
)
|
|||
Employee taxes paid for withheld shares upon equity award settlement
|
(23,781
|
)
|
(27,685
|
)
|
(23,962
|
)
|
|||
Proceeds from exercise of stock options
|
7
|
|
11
|
|
15
|
|
|||
Change in due to customers
|
77,793
|
|
(188,502
|
)
|
226,717
|
|
|||
Change in customer funds receivable
|
1,301
|
|
(844
|
)
|
6,644
|
|
|||
Dividend payments to stockholders
|
(23,607
|
)
|
(23,312
|
)
|
(23,069
|
)
|
|||
Net cash provided by (used in) financing activities
|
111,213
|
|
(291,908
|
)
|
278,641
|
|
|||
Effect of exchange rate on cash, cash equivalents and restricted cash
|
978
|
|
(2,014
|
)
|
(550
|
)
|
|||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
127,449
|
|
(190,328
|
)
|
269,501
|
|
|||
Cash, cash equivalents and restricted cash, beginning of year
|
449,846
|
|
640,174
|
|
370,673
|
|
|||
Cash, cash equivalents and restricted cash, end of year
|
$
|
577,295
|
|
$
|
449,846
|
|
$
|
640,174
|
|
|
|
|
|
||||||
Supplemental disclosure of cash flow information
|
|
|
|
||||||
Cash (paid) received during the year for:
|
|
|
|
||||||
Interest
|
(19,926
|
)
|
(15,261
|
)
|
(10,614
|
)
|
|||
Taxes, net of refunds
|
(383
|
)
|
7,138
|
|
(5,613
|
)
|
|||
Non-cash investing and financing activities:
|
|
|
|
||||||
Purchase of equipment and other assets included in accounts payable
|
(794
|
)
|
(882
|
)
|
(1,546
|
)
|
|||
Acquired restricted cash liabilities due to customers
|
46,838
|
|
—
|
|
31,644
|
|
58
|
|
2019 Form 10-K
|
(dollars in thousands)
|
Common stock
|
|
Additional
paid-in
capital
|
|
Treasury
stock
|
|
Accumulated
other
comprehensive
loss
|
|
Retained
earnings
|
|
Total stockholders' equity
|
|
||||||||
Shares
|
|
Amount
|
|
|||||||||||||||||
Balance at December 31, 2016
|
57,672,401
|
|
$
|
58
|
|
$
|
310,452
|
|
$
|
(215,237
|
)
|
$
|
(604
|
)
|
$
|
174,409
|
|
$
|
269,078
|
|
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
73,633
|
|
73,633
|
|
||||||
Payment of dividends ($0.48 per share)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(23,069
|
)
|
(23,069
|
)
|
||||||
Exercise of stock options and stock appreciation rights and vesting of restricted stock units
|
390,291
|
|
—
|
|
15
|
|
—
|
|
—
|
|
—
|
|
15
|
|
||||||
Employee taxes paid for 308,993 withheld shares upon equity award settlement
|
—
|
|
—
|
|
—
|
|
(23,962
|
)
|
—
|
|
—
|
|
(23,962
|
)
|
||||||
Stock-based compensation
|
—
|
|
—
|
|
40,575
|
|
—
|
|
—
|
|
56
|
|
40,631
|
|
||||||
Restricted stock grants
|
570,208
|
|
1
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
||||||
Restricted stock cancellations
|
(81,139
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(38
|
)
|
—
|
|
(38
|
)
|
||||||
Balance at December 31, 2017
|
58,551,761
|
|
$
|
59
|
|
$
|
351,042
|
|
$
|
(239,199
|
)
|
$
|
(642
|
)
|
$
|
225,029
|
|
$
|
336,289
|
|
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
44,841
|
|
44,841
|
|
||||||
Payment of dividends ($0.48 per share)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(23,312
|
)
|
(23,312
|
)
|
||||||
Exercise of stock options and stock appreciation rights and vesting of restricted stock units
|
349,248
|
|
—
|
|
11
|
|
—
|
|
—
|
|
—
|
|
11
|
|
||||||
Employee taxes paid for 284,780 withheld shares upon equity award settlement
|
—
|
|
—
|
|
—
|
|
(27,685
|
)
|
—
|
|
—
|
|
(27,685
|
)
|
||||||
Stock-based compensation
|
—
|
|
—
|
|
48,188
|
|
—
|
|
—
|
|
86
|
|
48,274
|
|
||||||
Restricted stock grants
|
541,786
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Restricted stock cancellations
|
(115,162
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(4,635
|
)
|
—
|
|
(4,635
|
)
|
||||||
Reclassification upon adoption of ASU 2018-02(1)
|
—
|
|
—
|
|
—
|
|
—
|
|
167
|
|
(167
|
)
|
—
|
|
||||||
Balance at December 31, 2018
|
59,327,633
|
|
$
|
59
|
|
$
|
399,241
|
|
$
|
(266,884
|
)
|
$
|
(5,110
|
)
|
$
|
246,477
|
|
$
|
373,783
|
|
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
11,908
|
|
11,908
|
|
||||||
Payment of dividends ($0.48 per share)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(23,607
|
)
|
(23,607
|
)
|
||||||
Exercise of stock options and stock appreciation rights and vesting of restricted stock units
|
267,455
|
|
—
|
|
7
|
|
—
|
|
—
|
|
—
|
|
7
|
|
||||||
Employee taxes paid for 305,780 withheld shares upon equity award settlement
|
—
|
|
—
|
|
—
|
|
(23,781
|
)
|
—
|
|
—
|
|
(23,781
|
)
|
||||||
Stock-based compensation
|
—
|
|
—
|
|
58,556
|
|
—
|
|
—
|
|
77
|
|
58,633
|
|
||||||
Restricted stock grants
|
723,868
|
|
1
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
||||||
Restricted stock cancellations
|
(112,865
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(180
|
)
|
—
|
|
(180
|
)
|
||||||
Balance at December 31, 2019
|
60,206,091
|
|
$
|
60
|
|
$
|
457,804
|
|
$
|
(290,665
|
)
|
$
|
(5,290
|
)
|
$
|
234,855
|
|
$
|
396,764
|
|
(1) Refer to the discussion of recently adopted accounting pronouncements in Note 2 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed with the SEC on February 20, 2019.
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
|
2019 Form 10-K
|
|
59
|
1. Organization
|
2. Basis of Presentation
|
60
|
|
2019 Form 10-K
|
2019 Form 10-K
|
|
61
|
•
|
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.
|
62
|
|
2019 Form 10-K
|
2019 Form 10-K
|
|
63
|
(1)
|
Certain of the customer relationships and acquired software and technology assets are amortized on an accelerated basis.
|
64
|
|
2019 Form 10-K
|
2019 Form 10-K
|
|
65
|
66
|
|
2019 Form 10-K
|
Years ended December 31,
(in thousands)
|
Balance at
beginning of year
|
|
Provision/
adjustment
|
|
Write-off
|
|
Balance at
end of year
|
|
||||
2019
|
$
|
3,377
|
|
$
|
6,232
|
|
$
|
(5,963
|
)
|
$
|
3,646
|
|
2018
|
4,400
|
|
4,952
|
|
(5,975
|
)
|
3,377
|
|
||||
2017
|
2,704
|
|
10,511
|
|
(8,815
|
)
|
4,400
|
|
Years ended December 31,
(in thousands)
|
Balance at
beginning of year
|
|
Provision/
adjustment
|
|
Write-off
|
|
Balance at
end of year
|
|
||||
2019
|
$
|
1,345
|
|
$
|
2,476
|
|
$
|
(1,938
|
)
|
$
|
1,883
|
|
2018
|
741
|
|
2,446
|
|
(1,842
|
)
|
1,345
|
|
||||
2017
|
587
|
|
1,148
|
|
(994
|
)
|
741
|
|
2019 Form 10-K
|
|
67
|
3. Business Combinations
|
(in thousands)
|
Purchase price allocation
|
|
|
Net working capital, excluding deferred revenue
|
$
|
3,711
|
|
Other long-term assets
|
2,574
|
|
|
Identifiable intangible assets
|
74,690
|
|
|
Deferred tax liability
|
(4,660
|
)
|
|
Deferred revenue
|
(4,300
|
)
|
|
Other long-term liabilities
|
(1,650
|
)
|
|
Goodwill
|
87,350
|
|
|
Total purchase price
|
$
|
157,715
|
|
68
|
|
2019 Form 10-K
|
|
|
Weighted average amortization period
|
Intangible assets acquired
|
|
|
YourCause
|
Valuation Method
|
(in years)
|
(in thousands)
|
|
|
Acquired technology
|
Relief-from-Royalty
|
12
|
$
|
47,800
|
|
Customer relationships
|
Multi-period Excess Earnings
|
15
|
25,900
|
|
|
Marketing assets
|
Relief-from-Royalty
|
2
|
830
|
|
|
Non-compete agreements
|
Comparative (With and Without)
|
0
|
160
|
|
|
Total intangible assets
|
|
13
|
$
|
74,690
|
|
2019 Form 10-K
|
|
69
|
4. Goodwill and Other Intangible Assets
|
(dollars in thousands)
|
Total
|
|
|
Balance at December 31, 2018
|
$
|
545,213
|
|
Additions related to current year business combinations
|
87,350
|
|
|
Effect of foreign currency translation
|
1,525
|
|
|
Balance at December 31, 2019
|
$
|
634,088
|
|
70
|
|
2019 Form 10-K
|
|
December 31,
|
|
||||
(dollars in thousands)
|
2019
|
|
2018
|
|
||
Finite-lived gross carrying amount
|
|
|
||||
Customer relationships
|
$
|
286,951
|
|
$
|
280,309
|
|
Marketing assets
|
34,246
|
|
48,484
|
|
||
Acquired software and technology
|
233,094
|
|
211,654
|
|
||
Non-compete agreements
|
2,200
|
|
2,499
|
|
||
Database
|
—
|
|
4,275
|
|
||
Total finite-lived gross carrying amount
|
556,491
|
|
547,221
|
|
||
Accumulated amortization
|
|
|
||||
Customer relationships
|
(118,031
|
)
|
(116,648
|
)
|
||
Marketing assets
|
(3,648
|
)
|
(16,395
|
)
|
||
Acquired software and technology
|
(115,048
|
)
|
(118,268
|
)
|
||
Non-compete agreements
|
(1,869
|
)
|
(1,618
|
)
|
||
Database
|
—
|
|
(4,275
|
)
|
||
Total accumulated amortization
|
(238,596
|
)
|
(257,204
|
)
|
||
Indefinite-lived gross carrying amount
|
|
|
||||
Marketing assets
|
—
|
|
1,600
|
|
||
Intangible assets, net
|
$
|
317,895
|
|
$
|
291,617
|
|
2019 Form 10-K
|
|
71
|
|
Years ended December 31,
|
|
|||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
2017
|
|
|||
Included in cost of revenue:
|
|
|
|
||||||
Cost of recurring
|
$
|
42,565
|
|
$
|
39,877
|
|
$
|
37,557
|
|
Cost of one-time services and other
|
2,204
|
|
2,356
|
|
2,542
|
|
|||
Total included in cost of revenue
|
44,769
|
|
42,233
|
|
40,099
|
|
|||
Included in operating expenses
|
5,316
|
|
4,844
|
|
3,271
|
|
|||
Total amortization of intangibles from business combinations
|
$
|
50,085
|
|
$
|
47,077
|
|
$
|
43,370
|
|
Years ending December 31,
(dollars in thousands)
|
Amortization
expense
|
|
|
2020
|
$
|
41,544
|
|
2021
|
37,010
|
|
|
2022
|
34,671
|
|
|
2023
|
33,665
|
|
|
2024
|
33,150
|
|
|
Total
|
$
|
180,040
|
|
5. Earnings Per Share
|
|
Years ended December 31,
|
|
|||||||
(dollars in thousands, except per share amounts)
|
2019
|
|
2018
|
|
2017
|
|
|||
Numerator:
|
|
|
|
||||||
Net income
|
$
|
11,908
|
|
$
|
44,841
|
|
$
|
73,633
|
|
Denominator:
|
|
|
|
||||||
Weighted average common shares
|
47,695,383
|
|
47,206,669
|
|
46,669,440
|
|
|||
Add effect of dilutive securities:
|
|
|
|
||||||
Stock-based awards
|
616,888
|
|
838,415
|
|
1,106,262
|
|
|||
Weighted average common shares assuming dilution
|
48,312,271
|
|
48,045,084
|
|
47,775,702
|
|
|||
Earnings per share:
|
|
|
|
||||||
Basic
|
$
|
0.25
|
|
$
|
0.95
|
|
$
|
1.58
|
|
Diluted
|
$
|
0.25
|
|
$
|
0.93
|
|
$
|
1.54
|
|
|
|
|
|
||||||
Anti-dilutive shares excluded from calculations of diluted earnings per share
|
241,336
|
|
48,881
|
|
4,634
|
|
72
|
|
2019 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, 2019
|
|
|
|
|
|
|
|
||||||||
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative instruments
|
$
|
—
|
|
|
$
|
1,757
|
|
|
$
|
—
|
|
|
$
|
1,757
|
|
Total financial liabilities
|
$
|
—
|
|
|
$
|
1,757
|
|
|
$
|
—
|
|
|
$
|
1,757
|
|
|
|
|
|
|
|
|
|
||||||||
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
|
|
2019 Form 10-K
|
|
73
|
7. Property and Equipment and Software Development Costs
|
|
Estimated
useful life
(years)
|
|
December 31,
|
|
||||
(dollars in thousands)
|
2019
|
|
2018
|
|
||||
Equipment
|
3 - 5
|
|
$
|
4,512
|
|
$
|
4,243
|
|
Computer hardware
|
1 - 5
|
|
67,045
|
|
75,060
|
|
||
Computer software
|
1 - 5
|
|
35,726
|
|
34,294
|
|
||
Construction in progress
|
—
|
|
213
|
|
233
|
|
||
Furniture and fixtures
|
1 - 7
|
|
7,823
|
|
7,004
|
|
||
Leasehold improvements
|
Lesser of lease term or estimated useful life
|
|
24,295
|
|
26,795
|
|
||
Total property and equipment
|
|
139,614
|
|
147,629
|
|
|||
Less: accumulated depreciation
|
|
(104,068
|
)
|
(107,598
|
)
|
|||
Property and equipment, net
|
|
$
|
35,546
|
|
$
|
40,031
|
|
74
|
|
2019 Form 10-K
|
|
Estimated
useful life
(years)
|
December 31,
|
|
||||
(dollars in thousands)
|
2019
|
|
2018
|
|
|||
Software development costs
|
3 - 7
|
$
|
139,014
|
|
$
|
121,983
|
|
Less: accumulated amortization
|
|
(37,712
|
)
|
(46,884
|
)
|
||
Software development costs, net
|
|
$
|
101,302
|
|
$
|
75,099
|
|
8. Consolidated Financial Statement Details
|
(dollars in thousands)
|
December 31,
2019 |
|
December 31,
2018 |
|
||
Costs of obtaining contracts(1)(2)
|
$
|
90,764
|
|
$
|
85,590
|
|
Prepaid software maintenance and subscriptions
|
24,678
|
|
21,134
|
|
||
Unbilled accounts receivable
|
6,233
|
|
4,161
|
|
||
Prepaid insurance
|
1,585
|
|
1,087
|
|
||
Taxes, prepaid and receivable
|
849
|
|
2,055
|
|
||
Security deposits
|
885
|
|
1,020
|
|
||
Other assets
|
8,051
|
|
10,104
|
|
||
Total prepaid expenses and other assets
|
133,045
|
|
125,151
|
|
||
Less: Long-term portion
|
65,193
|
|
65,363
|
|
||
Prepaid expenses and other current assets
|
$
|
67,852
|
|
$
|
59,788
|
|
(1)
|
Amortization expense from costs of obtaining contracts was $38.1 million, $35.7 million and $35.8 million for the years ended December 31, 2019, 2018 and 2017, respectively, and is included in sales, marketing and customer success expense in our consolidated statements of comprehensive income.
|
(2)
|
The current portion of costs of obtaining contracts as of December 31, 2019 and 2018 was $33.0 million and $31.7 million, respectively.
|
2019 Form 10-K
|
|
75
|
(dollars in thousands)
|
December 31,
2019 |
|
December 31,
2018 |
|
||
Operating lease liabilities, current portion(1)
|
$
|
19,784
|
|
$
|
—
|
|
Accrued bonuses
|
$
|
24,617
|
|
$
|
14,868
|
|
Accrued commissions and salaries
|
6,980
|
|
9,934
|
|
||
Taxes payable
|
6,835
|
|
6,204
|
|
||
Customer credit balances
|
4,505
|
|
4,076
|
|
||
Unrecognized tax benefit
|
3,758
|
|
2,719
|
|
||
Accrued vacation costs
|
2,232
|
|
2,352
|
|
||
Accrued health care costs
|
2,399
|
|
1,497
|
|
||
Other liabilities
|
7,949
|
|
14,631
|
|
||
Total accrued expenses and other liabilities
|
79,059
|
|
56,281
|
|
||
Less: Long-term portion
|
5,742
|
|
9,388
|
|
||
Accrued expenses and other current liabilities
|
$
|
73,317
|
|
$
|
46,893
|
|
(1)
|
Upon adoption of ASU 2016-02 at January 1, 2019, we recognized lease liabilities for our operating leases. See Note 2 of these consolidated financial statements for details.
|
(dollars in thousands)
|
December 31,
2019 |
|
December 31,
2018 |
|
||
Recurring
|
$
|
302,751
|
|
$
|
286,960
|
|
One-time services and other
|
13,386
|
|
11,595
|
|
||
Total deferred revenue
|
316,137
|
|
298,555
|
|
||
Less: Long-term portion
|
1,802
|
|
2,564
|
|
||
Deferred revenue, current portion
|
$
|
314,335
|
|
$
|
295,991
|
|
|
Years ended December 31,
|
|
|||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
2017
|
|
|||
Interest income
|
$
|
2,802
|
|
$
|
2,008
|
|
$
|
993
|
|
Gain on derivative instrument
|
—
|
|
—
|
|
462
|
|
|||
Loss on debt extinguishment
|
—
|
|
—
|
|
(299
|
)
|
|||
Other income (expense), net
|
1,256
|
|
(905
|
)
|
1,104
|
|
|||
Other income, net
|
$
|
4,058
|
|
$
|
1,103
|
|
$
|
2,260
|
|
76
|
|
2019 Form 10-K
|
9. Debt
|
|
Debt balance at
|
|
|
Weighted average
effective interest rate at
|
|
||||||
(dollars in thousands)
|
December 31,
2019 |
|
December 31,
2018 |
|
|
December 31,
2019 |
|
December 31,
2018 |
|
||
Credit facility:
|
|
|
|
|
|
||||||
Revolving credit loans
|
$
|
187,000
|
|
$
|
100,000
|
|
|
3.11
|
%
|
4.13
|
%
|
Term loans
|
281,250
|
|
288,750
|
|
|
3.22
|
%
|
3.44
|
%
|
||
Total debt
|
468,250
|
|
388,750
|
|
|
3.18
|
%
|
3.61
|
%
|
||
Less: Unamortized discount and debt issuance costs
|
1,150
|
|
1,626
|
|
|
|
|
||||
Less: Debt, current portion
|
7,500
|
|
7,500
|
|
|
3.05
|
%
|
3.77
|
%
|
||
Debt, net of current portion
|
$
|
459,600
|
|
$
|
379,624
|
|
|
3.18
|
%
|
3.61
|
%
|
2019 Form 10-K
|
|
77
|
Years ending December 31,
(dollars in thousands)
|
Annual
maturities
|
|
|
2020
|
$
|
7,500
|
|
2021
|
7,500
|
|
|
2022
|
453,250
|
|
|
2023
|
—
|
|
|
2024
|
—
|
|
|
Thereafter
|
—
|
|
|
Total required maturities
|
$
|
468,250
|
|
78
|
|
2019 Form 10-K
|
10. Derivative Instruments
|
|
|
Asset Derivatives
|
|
|
Liability Derivatives
|
||||||||||
(dollars in thousands)
|
Balance sheet location
|
December 31,
2019 |
|
December 31,
2018 |
|
|
Balance sheet location
|
December 31,
2019 |
|
December 31,
2018 |
|
||||
Derivative instruments designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps, current portion
|
Prepaid expenses
and other current assets
|
$
|
—
|
|
$
|
—
|
|
|
Accrued expenses
and other current liabilities
|
$
|
—
|
|
$
|
—
|
|
Interest rate swaps, long-term portion
|
Other assets
|
—
|
|
2,260
|
|
|
Other liabilities
|
1,757
|
|
186
|
|
||||
Total derivative instruments designated as hedging instruments
|
|
$
|
—
|
|
$
|
2,260
|
|
|
|
$
|
1,757
|
|
$
|
186
|
|
2019 Form 10-K
|
|
79
|
|
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,
2019 |
|
Year ended
December 31, 2019 |
|
|||
Interest rate swaps
|
$
|
(1,757
|
)
|
Interest expense
|
$
|
573
|
|
|
|
|
|
||||
|
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
|
)
|
|
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
|
|
$
|
462
|
|
11. Commitments and Contingencies
|
80
|
|
2019 Form 10-K
|
|
Year ended
December 31, |
|
|
(dollars in thousands)
|
2019
|
|
|
Operating lease cost(1)
|
$
|
27,519
|
|
Variable lease cost
|
4,035
|
|
|
Sublease income
|
(3,189
|
)
|
|
Net lease cost
|
$
|
28,365
|
|
(1)
|
Includes short-term lease costs, which were immaterial.
|
Years ending December 31,
(dollars in thousands) |
Operating leases(1)
|
|
|
2020
|
$
|
25,999
|
|
2021
|
21,840
|
|
|
2022
|
17,187
|
|
|
2023
|
14,651
|
|
|
2024
|
7,790
|
|
|
Thereafter
|
74,168
|
|
|
Total lease payments
|
161,635
|
|
|
Less: Amount representing interest
|
46,227
|
|
|
Present value of future payments
|
$
|
115,408
|
|
(1)
|
Our maturities of our operating lease liabilities do not include payments related to Phase Two of our New Headquarters Facility, as that option had not been exercised as of December 31, 2019.
|
2019 Form 10-K
|
|
81
|
Years ending December 31,
(dollars in thousands)
|
Operating leases
|
|
|
2019
|
$
|
20,808
|
|
2020
|
20,274
|
|
|
2021
|
16,924
|
|
|
2022
|
14,391
|
|
|
2023
|
12,923
|
|
|
Thereafter
|
81,755
|
|
|
Total minimum lease payments
|
$
|
167,075
|
|
(dollars in thousands)
|
December 31,
2019 |
|
|
Operating leases
|
|
||
Operating lease right-of-use assets
|
$
|
104,400
|
|
|
|
||
Accrued expenses and other current liabilities
|
$
|
19,784
|
|
Operating lease liabilities, net of current portion
|
95,624
|
|
|
Total operating lease liabilities
|
$
|
115,408
|
|
(dollars in thousands)
|
December 31,
2019 |
|
Operating leases
|
|
|
Weighted average remaining lease term (years)
|
12.5
|
|
Weighted average discount rate
|
5.96
|
%
|
|
Year ended
December 31, |
|
|
(dollars in thousands)
|
2019
|
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows from operating leases
|
$
|
24,569
|
|
Right-of-use assets obtained in exchange for lease obligations (non-cash):
|
|
||
Operating leases
|
102,245
|
|
82
|
|
2019 Form 10-K
|
12. Income Taxes
|
2019 Form 10-K
|
|
83
|
|
Years ended December 31,
|
|
|||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
2017
|
|
|||
Current taxes:
|
|
|
|
||||||
U.S. Federal
|
$
|
1,534
|
|
$
|
(1,088
|
)
|
$
|
2,565
|
|
U.S. State and local
|
613
|
|
1,182
|
|
(144
|
)
|
|||
International
|
130
|
|
306
|
|
101
|
|
|||
Total current taxes
|
2,277
|
|
400
|
|
2,522
|
|
|||
Deferred taxes:
|
|
|
|
||||||
U.S. Federal
|
(1,724
|
)
|
659
|
|
(17,128
|
)
|
|||
U.S. State and local
|
(2,235
|
)
|
45
|
|
398
|
|
|||
International
|
359
|
|
(1,323
|
)
|
(1,084
|
)
|
|||
Total deferred taxes
|
(3,600
|
)
|
(619
|
)
|
(17,814
|
)
|
|||
Total income tax benefit
|
$
|
(1,323
|
)
|
$
|
(219
|
)
|
$
|
(15,292
|
)
|
|
Years ended December 31,
|
|
|||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
2017
|
|
|||
U.S.
|
$
|
5,149
|
|
$
|
47,532
|
|
$
|
58,547
|
|
International
|
5,436
|
|
(2,910
|
)
|
(206
|
)
|
|||
Income before provision for income taxes
|
$
|
10,585
|
|
$
|
44,622
|
|
$
|
58,341
|
|
84
|
|
2019 Form 10-K
|
|
Years ended December 31,
|
|
||||
|
2019
|
|
2018
|
|
2017
|
|
Federal statutory rate
|
21.0
|
%
|
21.0
|
%
|
35.0
|
%
|
Effect of:
|
|
|
|
|||
State income taxes, net of federal benefit
|
(1.7
|
)
|
4.1
|
|
1.8
|
|
Change in federal income tax rate applied to deferred tax balances
|
—
|
|
—
|
|
(43.1
|
)
|
Change in state income tax rate applied to deferred tax balances
|
(3.1
|
)
|
(0.4
|
)
|
—
|
|
Unrecognized tax benefit
|
4.4
|
|
(2.6
|
)
|
1.5
|
|
State credits, net of federal benefit
|
(15.4
|
)
|
(1.9
|
)
|
(1.4
|
)
|
Change in valuation reserve (primarily state credit reserves)
|
3.7
|
|
0.4
|
|
(1.0
|
)
|
Federal credits generated
|
(37.6
|
)
|
(10.4
|
)
|
(5.8
|
)
|
Foreign tax rate
|
(6.3
|
)
|
0.4
|
|
0.2
|
|
Acquisition costs
|
0.5
|
|
—
|
|
2.2
|
|
Section 162(m) limitation
|
30.8
|
|
4.2
|
|
2.5
|
|
Stock-based compensation
|
(20.2
|
)
|
(17.4
|
)
|
(18.9
|
)
|
GILTI inclusion
|
5.9
|
|
—
|
|
—
|
|
FDII benefit
|
(1.5
|
)
|
(0.7
|
)
|
—
|
|
Nondeductible meals, entertainment and transportation
|
11.3
|
|
2.6
|
|
0.8
|
|
Other
|
(4.3
|
)
|
0.2
|
|
—
|
|
Income tax benefit effective rate
|
(12.5
|
)%
|
(0.5
|
)%
|
(26.2
|
)%
|
2019 Form 10-K
|
|
85
|
|
December 31,
|
|
||||
(dollars in thousands)
|
2019
|
|
2018
|
|
||
Deferred tax assets relating to:
|
|
|
||||
Federal and state and foreign net operating loss carryforwards
|
$
|
9,203
|
|
$
|
11,021
|
|
Federal, state and foreign tax credits
|
24,435
|
|
18,936
|
|
||
Operating leases
|
35,620
|
|
—
|
|
||
Intangible assets
|
1,560
|
|
1,041
|
|
||
Stock-based compensation
|
11,717
|
|
11,462
|
|
||
Accrued bonuses
|
1,713
|
|
973
|
|
||
Deferred revenue
|
682
|
|
854
|
|
||
Allowance for doubtful accounts
|
1,374
|
|
1,242
|
|
||
Other
|
7,487
|
|
5,607
|
|
||
Total deferred tax assets
|
93,791
|
|
51,136
|
|
||
Deferred tax liabilities relating to:
|
|
|
||||
Intangible assets
|
(46,569
|
)
|
(43,700
|
)
|
||
Operating leases
|
(32,888
|
)
|
—
|
|
||
Fixed assets
|
(4,446
|
)
|
(4,444
|
)
|
||
Costs of obtaining contracts
|
(21,128
|
)
|
(19,573
|
)
|
||
Capitalized software development costs
|
(26,107
|
)
|
(19,469
|
)
|
||
Other
|
(315
|
)
|
(926
|
)
|
||
Total deferred tax liabilities
|
(131,453
|
)
|
(88,112
|
)
|
||
Valuation allowance
|
(6,453
|
)
|
(6,855
|
)
|
||
Net deferred tax liability
|
$
|
(44,115
|
)
|
$
|
(43,831
|
)
|
Years ended December 31,
|
Balance
at beginning
of year
|
|
Acquisition-
related
change
|
|
Charges to
expense
|
|
Balance at
end of
year
|
|
||||
(dollars in thousands)
|
||||||||||||
2019
|
$
|
6,855
|
|
$
|
—
|
|
$
|
(402
|
)
|
$
|
6,453
|
|
2018
|
7,205
|
|
16
|
|
(366
|
)
|
6,855
|
|
||||
2017
|
6,994
|
|
—
|
|
211
|
|
7,205
|
|
86
|
|
2019 Form 10-K
|
|
Years ended December 31,
|
|
|||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
2017
|
|
|||
Balance at December 31, 2018
|
$
|
3,704
|
|
$
|
5,160
|
|
$
|
3,145
|
|
Increases from prior period positions
|
1,183
|
|
104
|
|
1,860
|
|
|||
Decreases in prior year positions
|
(385
|
)
|
(413
|
)
|
(238
|
)
|
|||
Increases from current period positions
|
456
|
|
58
|
|
404
|
|
|||
Lapse of statute of limitations
|
(612
|
)
|
(1,205
|
)
|
(11
|
)
|
|||
Balance at December 31, 2019
|
$
|
4,346
|
|
$
|
3,704
|
|
$
|
5,160
|
|
13. Stock-based Compensation
|
2019 Form 10-K
|
|
87
|
|
Outstanding at December 31,
|
|
||
Award type
|
2019
|
|
2018
|
|
Restricted stock awards
|
1,316,764
|
|
1,263,510
|
|
Restricted stock units
|
501,487
|
|
459,673
|
|
Stock appreciation rights
|
—
|
|
60,871
|
|
Stock options
|
206
|
|
836
|
|
|
Years ended December 31,
|
|
|||||||
(in thousands)
|
2019
|
|
2018
|
|
2017
|
|
|||
Included in cost of revenue:
|
|
|
|
||||||
Cost of recurring
|
$
|
1,879
|
|
$
|
2,464
|
|
$
|
1,627
|
|
Cost of one-time services and other
|
1,487
|
|
2,778
|
|
1,843
|
|
|||
Total included in cost of revenue
|
3,366
|
|
5,242
|
|
3,470
|
|
|||
Included in operating expenses:
|
|
|
|
||||||
Sales, marketing and customer success
|
11,203
|
|
9,285
|
|
6,381
|
|
|||
Research and development
|
11,115
|
|
9,048
|
|
7,765
|
|
|||
General and administrative
|
32,949
|
|
24,699
|
|
23,015
|
|
|||
Total included in operating expenses
|
55,267
|
|
43,032
|
|
37,161
|
|
|||
Total stock-based compensation expense
|
$
|
58,633
|
|
$
|
48,274
|
|
$
|
40,631
|
|
88
|
|
2019 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, 2019
|
1,263,510
|
|
$
|
75.46
|
|
|
|
|
||
Granted
|
723,868
|
|
78.39
|
|
|
|
|
|||
Vested
|
(557,749
|
)
|
67.26
|
|
|
|
|
|||
Forfeited
|
(112,865
|
)
|
80.27
|
|
|
|
|
|||
Unvested at December 31, 2019
|
1,316,764
|
|
79.92
|
|
|
8.4
|
$
|
104,814
|
|
(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, 2019
|
459,673
|
|
$
|
79.78
|
|
|
|
|
||
Granted
|
302,719
|
|
77.90
|
|
|
|
|
|||
Forfeited
|
(7,201
|
)
|
85.63
|
|
|
|
|
|||
Vested
|
(253,704
|
)
|
75.68
|
|
|
|
|
|||
Unvested at December 31, 2019
|
501,487
|
|
80.49
|
|
|
8.5
|
$
|
39,918
|
|
(1)
|
The intrinsic value is calculated as the market value as of the end of the fiscal period.
|
2019 Form 10-K
|
|
89
|
14. Stockholders' Equity
|
Declaration Date
|
Dividend
per Share
|
|
Record Date
|
|
Payable Date
|
|
February 6, 2019
|
$
|
0.12
|
|
February 27
|
|
March 15
|
April 30, 2019
|
0.12
|
|
May 28
|
|
June 14
|
|
July 30, 2019
|
0.12
|
|
August 28
|
|
September 13
|
|
October 28, 2019
|
0.12
|
|
November 27
|
|
December 13
|
90
|
|
2019 Form 10-K
|
|
Years ended December 31,
|
|
|||||||
(in thousands)
|
2019
|
|
2018
|
|
2017
|
|
|||
Accumulated other comprehensive loss, beginning of period
|
$
|
(5,110
|
)
|
$
|
(642
|
)
|
$
|
(604
|
)
|
By component:
|
|
|
|
||||||
Gains and losses on cash flow hedges:
|
|
|
|
||||||
Accumulated other comprehensive income (loss) balance, beginning of period
|
$
|
1,498
|
|
$
|
748
|
|
$
|
(3
|
)
|
Other comprehensive (loss) income before reclassifications, net of tax effects of $860, $(239) and $(374)
|
(2,399
|
)
|
670
|
|
574
|
|
|||
Amounts reclassified from accumulated other comprehensive (loss) income to interest expense
|
(573
|
)
|
(118
|
)
|
293
|
|
|||
Tax benefit included in provision for income taxes
|
151
|
|
31
|
|
(116
|
)
|
|||
Total amounts reclassified from accumulated other comprehensive (loss) income
|
(422
|
)
|
(87
|
)
|
177
|
|
|||
Net current-period other comprehensive (loss) income
|
(2,821
|
)
|
583
|
|
751
|
|
|||
Reclassification upon adoption of ASU 2018-02
|
—
|
|
167
|
|
—
|
|
|||
Accumulated other comprehensive (loss) income balance, end of period
|
$
|
(1,323
|
)
|
$
|
1,498
|
|
$
|
748
|
|
Foreign currency translation adjustment:
|
|
|
|
||||||
Accumulated other comprehensive loss balance, beginning of period
|
$
|
(6,608
|
)
|
$
|
(1,390
|
)
|
$
|
(601
|
)
|
Translation adjustments
|
2,641
|
|
(5,218
|
)
|
(789
|
)
|
|||
Accumulated other comprehensive loss balance, end of period
|
(3,967
|
)
|
(6,608
|
)
|
(1,390
|
)
|
|||
Accumulated other comprehensive loss, end of period
|
$
|
(5,290
|
)
|
$
|
(5,110
|
)
|
$
|
(642
|
)
|
15. Defined Contribution Plan
|
16. Segment Information
|
2019 Form 10-K
|
|
91
|
|
Years ended
December 31, |
|
||||
(dollars in thousands)
|
2019
|
|
2018
|
|
||
United States
|
$
|
32,606
|
|
$
|
37,015
|
|
Other countries
|
2,940
|
|
3,016
|
|
||
Total property and equipment
|
$
|
35,546
|
|
$
|
40,031
|
|
17. Revenue Recognition
|
(in thousands)
|
December 31,
2019 |
|
December 31,
2018 |
|
||
Total deferred revenue
|
$
|
316,137
|
|
$
|
298,555
|
|
92
|
|
2019 Form 10-K
|
|
Years ended
December 31, |
|
|||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
2017
|
|
|||
United States
|
$
|
775,308
|
|
$
|
727,366
|
|
$
|
706,904
|
|
Other countries
|
125,115
|
|
121,240
|
|
81,583
|
|
|||
Total revenue
|
$
|
900,423
|
|
$
|
848,606
|
|
$
|
788,487
|
|
•
|
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 the U.S.;
|
•
|
The EMG focuses on sales to all healthcare and higher education institutions, corporations and foundations, as well as large and/or strategic prospects in the U.S.; and
|
•
|
The IMG focuses on sales to all prospects and customers outside of the U.S.
|
|
Years ended
December 31, |
|
|||||||
(dollars in thousands)
|
2019
|
|
2018(2)
|
|
2017(2)
|
|
|||
GMG
|
$
|
378,384
|
|
$
|
362,585
|
|
$
|
353,166
|
|
EMG(1)
|
392,258
|
|
360,873
|
|
352,034
|
|
|||
IMG
|
126,511
|
|
123,522
|
|
83,217
|
|
|||
Other
|
3,270
|
|
1,626
|
|
70
|
|
|||
Total revenue
|
$
|
900,423
|
|
$
|
848,606
|
|
$
|
788,487
|
|
(1)
|
The operating results of YourCause have been included in EMG from the date of acquisition. See Note 3 to these consolidated financial statements for details regarding this acquisition.
|
(2)
|
Beginning in the first quarter of 2019, all of our Canadian operations are included in IMG. We have recast our revenue by market group for the twelve months ended December 31, 2018 and 2017, to present them on a consistent basis with the current year.
|
2019 Form 10-K
|
|
93
|
18. Quarterly Results (Unaudited)
|
(dollars in thousands, except per share data)
|
December 31,
2019 |
|
September 30,
2019 |
|
June 30,
2019 |
|
March 31,
2019 |
|
||||
Total revenue
|
$
|
237,839
|
|
$
|
221,120
|
|
$
|
225,634
|
|
$
|
215,830
|
|
Gross profit
|
121,302
|
|
119,323
|
|
124,827
|
|
116,547
|
|
||||
Income from operations
|
3,586
|
|
7,883
|
|
13,491
|
|
2,185
|
|
||||
Income before provision for income taxes
|
(1,262
|
)
|
4,930
|
|
9,873
|
|
(2,956
|
)
|
||||
Net income
|
1,324
|
|
4,566
|
|
7,140
|
|
(1,122
|
)
|
||||
Earnings per share
|
|
|
|
|
||||||||
Basic
|
$
|
0.03
|
|
$
|
0.10
|
|
$
|
0.15
|
|
$
|
(0.02
|
)
|
Diluted
|
0.03
|
|
0.09
|
|
0.15
|
|
(0.02
|
)
|
||||
|
|
|
|
|
||||||||
(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
|
|
19. Restructuring
|
94
|
|
2019 Form 10-K
|
|
Cumulative costs incurred as of
|
|
|
Costs incurred during the
year ended(1)
|
|
|
Cumulative costs incurred as of
|
|
|||
(in thousands)
|
December 31, 2018
|
|
|
December 31, 2019
|
|
||||||
By component:
|
|
|
|
|
|
||||||
Contract termination costs
|
$
|
4,176
|
|
|
$
|
4,906
|
|
|
$
|
9,082
|
|
Other costs
|
1,208
|
|
|
902
|
|
|
2,110
|
|
|||
Total
|
$
|
5,384
|
|
|
$
|
5,808
|
|
|
$
|
11,192
|
|
(1)
|
Includes $3.8 million of operating lease ROU asset impairment costs.
|
|
Accrued at
|
|
|
Increases for incurred costs(1)
|
|
|
Written off
upon adoption of ASU 2016-02(2) |
|
|
Costs paid
|
|
|
Accrued at
|
|
|||||
(in thousands)
|
December 31, 2018
|
|
|
|
|
|
December 31, 2019
|
|
|||||||||||
By component:
|
|
|
|
|
|
|
|
|
|
||||||||||
Contract termination costs
|
$
|
1,865
|
|
|
$
|
4,906
|
|
|
$
|
(1,656
|
)
|
|
$
|
(5,115
|
)
|
|
$
|
—
|
|
Other costs
|
50
|
|
|
902
|
|
|
—
|
|
|
(952
|
)
|
|
—
|
|
|||||
Total
|
$
|
1,915
|
|
|
$
|
5,808
|
|
|
$
|
(1,656
|
)
|
|
$
|
(6,067
|
)
|
|
$
|
—
|
|
(1)
|
Includes $3.8 million of operating lease ROU asset impairment costs.
|
(2)
|
Upon adoption of ASU 2016-02 at January 1, 2019, we reduced our operating lease ROU assets recognized at transition by the carrying amounts of the restructuring liabilities for certain leased office spaces that we ceased using prior to December 31, 2018.
|
Evaluation of Disclosure Controls and Procedures
|
Changes in Internal Control Over Financial Reporting
|
2019 Form 10-K
|
|
95
|
Management’s Report on Internal Control Over Financial Reporting
|
96
|
|
2019 Form 10-K
|
|
|
PART III.
|
2019 Form 10-K
|
|
97
|
|
|
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
|
|
6/14/2019
|
|
3.1
|
|
|
||
|
|
|
|
|
|
|
|
X
|
||
†
|
|
S-8
|
|
8/4/2008
|
|
10.34
|
|
|
98
|
|
2019 Form 10-K
|
|
|
|
|
Filed In
|
||||||
Exhibit
Number
|
|
Description of Document
|
|
Registrant’s
Form
|
|
Dated
|
|
Exhibit
Number
|
|
Filed
Herewith
|
†
|
|
S-8
|
|
8/4/2008
|
|
10.35
|
|
|
||
†
|
|
S-8
|
|
8/4/2008
|
|
10.36
|
|
|
||
|
|
8-K
|
|
12/11/2008
|
|
10.37
|
|
|
||
†**
|
|
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
|
|
|
||
†
|
|
8-K
|
|
6/26/2012
|
|
10.60
|
|
X
|
||
†
|
|
10-K
|
|
2/27/2013
|
|
10.65
|
|
|
||
|
|
8-K
|
|
3/28/2013
|
|
10.66
|
|
|
||
|
|
10-Q
|
|
8/4/2016
|
|
10.84
|
|
|
||
†
|
|
DEF 14A
|
|
4/26/2016
|
|
Appendix C
|
|
|
||
|
|
10-Q
|
|
11/4/2016
|
|
10.87
|
|
|
||
†
|
|
10-K
|
|
2/27/2013
|
|
10.65
|
|
|
||
|
|
8-K
|
|
6/5/2017
|
|
10.90
|
|
|
2019 Form 10-K
|
|
99
|
|
|
|
|
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
|
|
|
||
|
|
10-Q
|
|
5/3/2019
|
|
10.96
|
|
|
||
|
|
10-Q
|
|
5/3/2019
|
|
10.97
|
|
|
||
|
|
10-Q
|
|
8/4/2017
|
|
10.92
|
|
|
||
|
|
8-K
|
|
12/13/2019
|
|
10.99
|
|
|
||
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
X
|
100
|
|
2019 Form 10-K
|
|
|
|
|
Filed In
|
||||||
Exhibit
Number
|
|
Description of Document
|
|
Registrant’s
Form
|
|
Dated
|
|
Exhibit
Number
|
|
Filed
Herewith
|
101.INS
|
***
|
Inline XBRL Instance Document - the Instance Document does not appear in the interactive data file because its XBRL tags, including Cover Page XBRL tags, are embedded within the Inline XBRL Document.
|
|
|
|
|
|
|
|
X
|
101.SCH
|
***
|
Inline XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
X
|
101.CAL
|
***
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
X
|
101.DEF
|
***
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
X
|
101.LAB
|
***
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
X
|
101.PRE
|
***
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
X
|
104
|
***
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
|
|
|
|
|
|
|
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 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 Inline 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.
|
2019 Form 10-K
|
|
101
|
|
|
SIGNATURES
|
|
|
|
|
|
Blackbaud, Inc.
|
|
|
|
Signed:
|
February 20, 2020
|
/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, 2020
|
|
Michael P. Gianoni
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/S/ ANTHONY W. BOOR
|
|
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
Date:
|
February 20, 2020
|
|
Anthony W. Boor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/S/ ANDREW M. LEITCH
|
|
Chairman of the Board of Directors
|
|
Date:
|
February 20, 2020
|
|
Andrew M. Leitch
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/S/ TIMOTHY CHOU
|
|
Director
|
|
Date:
|
February 20, 2020
|
|
Timothy Chou
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/S/ GEORGE H. ELLIS
|
|
Director
|
|
Date:
|
February 20, 2020
|
|
George H. Ellis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/S/ THOMAS R. ERTEL
|
|
Director
|
|
Date:
|
February 20, 2020
|
|
Thomas R. Ertel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/S/ SARAH E. NASH
|
|
Director
|
|
Date:
|
February 20, 2020
|
|
Sarah E. Nash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/S/ JOYCE M. NELSON
|
|
Director
|
|
Date:
|
February 20, 2020
|
|
Joyce M. Nelson
|
|
|
|
|
102
|
|
2019 Form 10-K
|
•
|
the board of directors approved the transaction in which the stockholder became an interested stockholder prior to the date the interested stockholder attained that status;
|
•
|
when the stockholder became an interested stockholder, he or she owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding shares owned by persons who are directors and also officers, as well as certain shares owned by employee benefits plans; or
|
•
|
on or subsequent to the date the business combination is approved by the board of directors, the business combination is authorized by the affirmative vote of at least 66 2/3% of the voting stock of the corporation at an annual or special meeting of stockholders.
|
|
|
Organized Under Laws of:
|
Blackbaud, Inc.
|
|
Delaware
|
Subsidiaries
|
|
|
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
|
Everyday Hero Ltd.
|
|
England and Wales
|
Everyday Hero Pty. Ltd.
|
|
Australia
|
Giving.com Limited
|
|
England and Wales
|
Giving Limited
|
|
England and Wales
|
JGCrowdfunding USA, LLC
|
|
Delaware
|
JG US Inc.
|
|
Delaware
|
MyCharity, Ltd.
|
|
Ireland
|
NPO Account Services, LLC
|
|
Delaware
|
Smart, LLC
|
|
Delaware
|
YC Blocker 1, LLC
|
|
Delaware
|
YourCause Holdings, LLC
|
|
Delaware
|
YourCause, LLC
|
|
Texas
|
|
/S/ PRICEWATERHOUSECOOPERS LLP
|
|
Raleigh, North Carolina
|
February 20, 2020
|
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, 2020
|
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;
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4.
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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
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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.
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Date:
|
February 20, 2020
|
By:
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|
/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, 2020
|
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, 2020
|
By:
|
|
/s/ Anthony W. Boor
|
|
|
|
|
Anthony W. Boor
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
(Principal Financial and Accounting Officer)
|