☑
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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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
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☑
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Second Quarter 2020 Form 10-Q
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1
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
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2
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Second Quarter 2020 Form 10-Q
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PART I. FINANCIAL INFORMATION
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Second Quarter 2020 Form 10-Q
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3
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4
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Second Quarter 2020 Form 10-Q
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Blackbaud, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
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||||||
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Six months ended
June 30, |
|
||||
(dollars in thousands)
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2020
|
|
2019
|
|
||
Cash flows from operating activities
|
|
|
||||
Net income
|
$
|
16,462
|
|
$
|
6,018
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
||||
Depreciation and amortization
|
46,088
|
|
43,113
|
|
||
Provision for credit losses and sales returns
|
6,677
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4,646
|
|
||
Stock-based compensation expense
|
33,713
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28,755
|
|
||
Deferred taxes
|
1,945
|
|
465
|
|
||
Amortization of deferred financing costs and discount
|
376
|
|
376
|
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||
Other non-cash adjustments
|
477
|
|
1,982
|
|
||
Changes in operating assets and liabilities, net of acquisition and disposal of businesses:
|
|
|
||||
Accounts receivable
|
(48,167
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)
|
(45,071
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)
|
||
Prepaid expenses and other assets
|
(7,068
|
)
|
(12,725
|
)
|
||
Trade accounts payable
|
(8,984
|
)
|
216
|
|
||
Accrued expenses and other liabilities
|
(26,520
|
)
|
(9,014
|
)
|
||
Deferred revenue
|
22,489
|
|
26,328
|
|
||
Net cash provided by operating activities
|
37,488
|
|
45,089
|
|
||
Cash flows from investing activities
|
|
|
||||
Purchase of property and equipment
|
(5,887
|
)
|
(6,375
|
)
|
||
Capitalized software development costs
|
(21,679
|
)
|
(23,206
|
)
|
||
Purchase of net assets of acquired companies, net of cash and restricted cash acquired
|
—
|
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(109,386
|
)
|
||
Other investing activities
|
—
|
|
500
|
|
||
Net cash used in investing activities
|
(27,566
|
)
|
(138,467
|
)
|
||
Cash flows from financing activities
|
|
|
||||
Proceeds from issuance of debt
|
202,100
|
|
329,100
|
|
||
Payments on debt
|
(185,250
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)
|
(155,150
|
)
|
||
Employee taxes paid for withheld shares upon equity award settlement
|
(20,996
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)
|
(19,760
|
)
|
||
Proceeds from exercise of stock options
|
4
|
|
6
|
|
||
Change in due to customers
|
(121,612
|
)
|
(107,808
|
)
|
||
Change in customer funds receivable
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(828
|
)
|
(3,741
|
)
|
||
Dividend payments to stockholders
|
(5,960
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)
|
(11,802
|
)
|
||
Net cash (used in) provided by financing activities
|
(132,542
|
)
|
30,845
|
|
||
Effect of exchange rate on cash, cash equivalents and restricted cash
|
(2,229
|
)
|
(526
|
)
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(124,849
|
)
|
(63,059
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)
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
577,295
|
|
449,846
|
|
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Cash, cash equivalents and restricted cash, end of period
|
$
|
452,446
|
|
$
|
386,787
|
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Second Quarter 2020 Form 10-Q
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5
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(dollars in thousands)
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Common stock
|
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Additional
paid-in
capital
|
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Treasury
stock
|
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Accumulated
other
comprehensive
income (loss)
|
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Retained
earnings
|
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Total stockholders' equity
|
|
||||||||
Shares
|
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Amount
|
|
|||||||||||||||||
Balance at December 31, 2019
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60,206,091
|
|
$
|
60
|
|
$
|
457,804
|
|
$
|
(290,665
|
)
|
$
|
(5,290
|
)
|
$
|
234,855
|
|
$
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396,764
|
|
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4,639
|
|
4,639
|
|
||||||
Payment of dividends ($0.12 per share)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
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|
(5,960
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)
|
(5,960
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)
|
||||||
Exercise of stock options and vesting of restricted stock units
|
210,057
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—
|
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1
|
|
—
|
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—
|
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—
|
|
1
|
|
||||||
Employee taxes paid for 245,358 withheld shares upon equity award settlement
|
—
|
|
—
|
|
—
|
|
(19,782
|
)
|
—
|
|
—
|
|
(19,782
|
)
|
||||||
Stock-based compensation
|
—
|
|
—
|
|
13,539
|
|
—
|
|
—
|
|
41
|
|
13,580
|
|
||||||
Restricted stock grants
|
563,947
|
|
1
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
||||||
Restricted stock cancellations
|
(47,456
|
)
|
—
|
|
—
|
|
—
|
|
—
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|
—
|
|
—
|
|
||||||
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(8,850
|
)
|
—
|
|
(8,850
|
)
|
||||||
Balance at March 31, 2020
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60,932,639
|
|
$
|
61
|
|
$
|
471,344
|
|
$
|
(310,447
|
)
|
$
|
(14,140
|
)
|
$
|
233,575
|
|
$
|
380,393
|
|
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
11,823
|
|
11,823
|
|
||||||
Exercise of stock options and vesting of restricted stock units
|
7,111
|
|
—
|
|
3
|
|
—
|
|
—
|
|
—
|
|
3
|
|
||||||
Employee taxes paid for 21,200 withheld shares upon equity award settlement
|
—
|
|
—
|
|
—
|
|
(1,214
|
)
|
—
|
|
—
|
|
(1,214
|
)
|
||||||
Stock-based compensation
|
—
|
|
—
|
|
20,103
|
|
—
|
|
—
|
|
30
|
|
20,133
|
|
||||||
Restricted stock grants
|
20,776
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Restricted stock cancellations
|
(59,426
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(336
|
)
|
—
|
|
(336
|
)
|
||||||
Balance at June 30, 2020
|
60,901,100
|
|
$
|
61
|
|
$
|
491,450
|
|
$
|
(311,661
|
)
|
$
|
(14,476
|
)
|
$
|
245,428
|
|
$
|
410,802
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
6
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|
Second Quarter 2020 Form 10-Q
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Second Quarter 2020 Form 10-Q
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7
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1. Organization
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2. Basis of Presentation
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8
|
|
Second Quarter 2020 Form 10-Q
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•
|
Temporarily closed our offices worldwide and transitioned our employees to work remotely;
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•
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Rescinded our previously announced policy to pay an annual dividend at a rate of $0.48 per share of common stock and discontinued the declaration and payment of all cash dividends, beginning with the second quarter of 2020 and thereafter until such time, if any, as our Board of Directors may otherwise determine in its sole discretion;
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•
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Temporarily suspended our 401(k)-match program, whereby we have historically matched 50% of qualified U.S. employees' contributions to our 401(k) plan up to 6% of their salaries, effective with the payroll period commencing April 1, 2020;
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•
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Temporarily froze our hiring efforts and implemented a modest and targeted headcount reduction, though we have since began backfilling sales positions;
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•
|
Michael Gianoni, our President and Chief Executive Officer, elected to forego receipt of all but that portion of his base salary necessary to fund, on a pre-tax basis, his contributions to continue to participate in our health benefits plan, between April 1, 2020 and June 16, 2020;
|
•
|
Restricted non-essential employee travel and put in place other operating cost containment actions;
|
•
|
All of our employees with a base salary equal to or less than $75 thousand received financial support in the form of a one-time bonus of $1 thousand on April 30, 2020;
|
•
|
On May 1, 2020, we granted restricted stock units with a total grant date fair value of $8.3 million to our employees that were eligible for base salary merit increases in lieu of such increases, which will vest on May 1, 2021 subject to the recipient's continued employment with us;
|
•
|
On May 1, 2020, we granted performance-based restricted stock units with a total grant date fair value of $34.4 million to our employees that were eligible for a 2020 cash bonus plan in lieu of such cash bonus, which may be earned and become eligible for vesting on May 1, 2021 subject to meeting certain performance conditions and the recipient's continued employment with us.
|
Second Quarter 2020 Form 10-Q
|
|
9
|
(in thousands)
|
Balance at
beginning of year (1)
|
|
Provision/
adjustment
|
|
Write-off
|
|
Recovery
|
|
Balance at June 30, 2020
|
|
|||||
2020
|
$
|
4,011
|
|
$
|
3,708
|
|
$
|
(554
|
)
|
$
|
243
|
|
$
|
7,408
|
|
(1)
|
Upon adoption of ASU 2016-13 at January 1, 2020, we reclassified certain balances previously disclosed within the allowance for sales returns to the allowance for credit losses, as these amounts reflect the credit risk associated with our accounts receivable.
|
(in thousands)
|
Balance at
beginning of year (1) |
|
Provision/
adjustment
|
|
Deduction
|
|
Balance at June 30, 2020
|
|
||||
2020
|
$
|
1,518
|
|
$
|
2,969
|
|
$
|
(2,870
|
)
|
$
|
1,617
|
|
(1)
|
As discussed above, we reclassified certain balances previously disclosed within the allowance for sales returns to the allowance for credit losses upon adoption of ASU 2016-13 at January 1, 2020.
|
10
|
|
Second Quarter 2020 Form 10-Q
|
3. Goodwill and Other Intangible Assets
|
(dollars in thousands)
|
Total
|
||
Balance at December 31, 2019
|
$
|
634,088
|
|
Effect of foreign currency translation
|
(3,401
|
)
|
|
Balance at June 30, 2020
|
$
|
630,687
|
|
4. Earnings Per Share
|
|
Three months ended
June 30, |
|
|
Six months ended
June 30, |
|
||||||||
(dollars in thousands, except per share amounts)
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
||||
Numerator:
|
|
|
|
|
|
||||||||
Net income
|
$
|
11,823
|
|
$
|
7,140
|
|
|
$
|
16,462
|
|
$
|
6,018
|
|
Denominator:
|
|
|
|
|
|
||||||||
Weighted average common shares
|
48,239,928
|
|
47,714,621
|
|
|
48,138,125
|
|
47,622,740
|
|
||||
Add effect of dilutive securities:
|
|
|
|
|
|
||||||||
Stock-based awards
|
178,450
|
|
446,063
|
|
|
326,952
|
|
478,472
|
|
||||
Weighted average common shares assuming dilution
|
48,418,378
|
|
48,160,684
|
|
|
48,465,077
|
|
48,101,212
|
|
||||
Earnings per share:
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.25
|
|
$
|
0.15
|
|
|
$
|
0.34
|
|
$
|
0.13
|
|
Diluted
|
$
|
0.24
|
|
$
|
0.15
|
|
|
$
|
0.34
|
|
$
|
0.13
|
|
|
|
|
|
|
|
||||||||
Anti-dilutive shares excluded from calculations of diluted earnings per share
|
1,484,976
|
|
245,060
|
|
|
1,329,519
|
|
748,743
|
|
Second Quarter 2020 Form 10-Q
|
|
11
|
5. Fair Value Measurements
|
•
|
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.
|
|
Fair value measurement using
|
|
|
||||||||||||
(dollars in thousands)
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
||||
Fair value as of June 30, 2020
|
|
|
|
|
|
|
|
||||||||
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative instruments
|
$
|
—
|
|
|
$
|
5,233
|
|
|
$
|
—
|
|
|
$
|
5,233
|
|
Total financial liabilities
|
$
|
—
|
|
|
$
|
5,233
|
|
|
$
|
—
|
|
|
$
|
5,233
|
|
|
|
|
|
|
|
|
|
||||||||
Fair value as of December 31, 2019
|
|
|
|
|
|
|
|
||||||||
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative instruments
|
$
|
—
|
|
|
$
|
1,757
|
|
|
$
|
—
|
|
|
$
|
1,757
|
|
Total financial liabilities
|
$
|
—
|
|
|
$
|
1,757
|
|
|
$
|
—
|
|
|
$
|
1,757
|
|
12
|
|
Second Quarter 2020 Form 10-Q
|
6. Consolidated Financial Statement Details
|
(dollars in thousands)
|
June 30,
2020 |
|
December 31,
2019 |
|
||
Costs of obtaining contracts(1)(2)
|
$
|
89,080
|
|
$
|
90,764
|
|
Prepaid software maintenance and subscriptions(3)
|
28,975
|
|
17,384
|
|
||
Implementation costs for cloud computing arrangements, net(4)(5)
|
10,563
|
|
7,294
|
|
||
Unbilled accounts receivable
|
8,647
|
|
6,233
|
|
||
Prepaid insurance
|
2,638
|
|
1,585
|
|
||
Taxes, prepaid and receivable
|
842
|
|
849
|
|
||
Security deposits
|
861
|
|
885
|
|
||
Other assets
|
10,766
|
|
8,051
|
|
||
Total prepaid expenses and other assets
|
152,372
|
|
133,045
|
|
||
Less: Long-term portion
|
68,673
|
|
65,193
|
|
||
Prepaid expenses and other current assets
|
$
|
83,699
|
|
$
|
67,852
|
|
(1)
|
Amortization expense from costs of obtaining contracts was $9.4 million and $18.9 million for the three and six months ended June 30, 2020, respectively, $9.8 million and $19.4 million for the three and six months ended June 30, 2019, respectively.
|
(2)
|
The current portion of costs of obtaining contracts as of June 30, 2020 and December 31, 2019 was $32.7 million and $33.0 million, respectively.
|
(3)
|
The current portion of prepaid software maintenance and subscriptions as of June 30, 2020 and December 31, 2019 was $24.4 million and $16.1 million, respectively.
|
(4)
|
These costs, which were previously included in prepaid software maintenance and subscriptions, primarily relate to the multi-year implementations of our new global enterprise resource planning and customer relationship management systems.
|
(5)
|
Amortization expense from capitalized cloud computing implementation costs was insignificant for the three and six months ended June 30, 2020 and 2019, respectively. Accumulated amortization for these costs was insignificant as of June 30, 2020 and December 31, 2019.
|
Second Quarter 2020 Form 10-Q
|
|
13
|
(dollars in thousands)
|
June 30,
2020 |
|
December 31,
2019 |
|
||
Operating lease liabilities, current portion
|
$
|
19,316
|
|
$
|
19,784
|
|
Accrued bonuses(1)
|
5
|
|
24,617
|
|
||
Accrued commissions and salaries
|
7,601
|
|
6,980
|
|
||
Taxes payable
|
12,576
|
|
6,835
|
|
||
Derivative instruments
|
5,233
|
|
1,757
|
|
||
Customer credit balances
|
5,032
|
|
4,505
|
|
||
Unrecognized tax benefit
|
3,833
|
|
3,758
|
|
||
Accrued vacation costs
|
2,278
|
|
2,232
|
|
||
Accrued health care costs
|
2,991
|
|
2,399
|
|
||
Other liabilities
|
5,911
|
|
6,192
|
|
||
Total accrued expenses and other liabilities
|
64,776
|
|
79,059
|
|
||
Less: Long-term portion
|
11,883
|
|
5,742
|
|
||
Accrued expenses and other current liabilities
|
$
|
52,893
|
|
$
|
73,317
|
|
(1)
|
In March 2020, we reduced our accrued bonuses due to the payment of bonuses from the prior year and, in response to the global COVID-19 pandemic, determined to replace our 2020 cash bonus plans with performance-based equity awards (See Note 2).
|
|
Three months ended
June 30, |
|
|
Six months ended
June 30, |
|
||||||||
(dollars in thousands)
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
||||
Interest income
|
$
|
110
|
|
$
|
525
|
|
|
$
|
632
|
|
$
|
1,179
|
|
Other income, net
|
520
|
|
1,656
|
|
|
1,068
|
|
1,184
|
|
||||
Other income, net
|
$
|
630
|
|
$
|
2,181
|
|
|
$
|
1,700
|
|
$
|
2,363
|
|
7. Debt
|
|
Debt balance at
|
|
|
Weighted average
effective interest rate at
|
|
||||||
(dollars in thousands)
|
June 30,
2020 |
|
December 31,
2019 |
|
|
June 30,
2020 |
|
December 31,
2019 |
|
||
Credit facility:
|
|
|
|
|
|
||||||
Revolving credit loans
|
$
|
207,600
|
|
$
|
187,000
|
|
|
2.41
|
%
|
3.11
|
%
|
Term loans
|
277,500
|
|
281,250
|
|
|
3.02
|
%
|
3.22
|
%
|
||
Other debt
|
3,926
|
|
—
|
|
|
5.00
|
%
|
—
|
%
|
||
Total debt
|
489,026
|
|
468,250
|
|
|
2.78
|
%
|
3.18
|
%
|
||
Less: Unamortized discount and debt issuance costs
|
913
|
|
1,150
|
|
|
|
|
||||
Less: Debt, current portion
|
9,194
|
|
7,500
|
|
|
2.29
|
%
|
3.05
|
%
|
||
Debt, net of current portion
|
$
|
478,919
|
|
$
|
459,600
|
|
|
2.78
|
%
|
3.18
|
%
|
14
|
|
Second Quarter 2020 Form 10-Q
|
Years ending December 31,
(dollars in thousands)
|
Annual maturities
|
|
|
2020 - remaining
|
$
|
3,750
|
|
2021
|
9,194
|
|
|
2022
|
475,544
|
|
|
2023
|
538
|
|
|
2024
|
—
|
|
|
Thereafter
|
—
|
|
|
Total required maturities
|
$
|
489,026
|
|
8. Derivative Instruments
|
(dollars in thousands)
|
Term of derivative instrument
|
Notional Value
|
|
|
Derivative instruments designated as hedging instruments:
|
|
|
||
Interest rate swap
|
July 2017 - July 2021
|
$
|
150,000
|
|
Interest rate swap
|
February 2018 - June 2021
|
50,000
|
|
|
Interest rate swap
|
June 2019 - June 2021
|
75,000
|
|
|
|
|
$
|
275,000
|
|
Second Quarter 2020 Form 10-Q
|
|
15
|
|
|
Liability Derivatives
|
|||||
(dollars in thousands)
|
Balance sheet location
|
June 30,
2020 |
|
December 31,
2019 |
|
||
Derivative instruments designated as hedging instruments:
|
|
|
|
||||
Interest rate swaps, current portion
|
Accrued expenses
and other current liabilities
|
$
|
2,515
|
|
$
|
—
|
|
Interest rate swaps, long-term portion
|
Other liabilities
|
2,718
|
|
1,757
|
|
||
Total derivative instruments designated as hedging instruments
|
|
$
|
5,233
|
|
$
|
1,757
|
|
|
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)
|
June 30,
2020 |
|
Three months ended
June 30, 2020 |
|
|
Six months ended
June 30, 2020 |
|
||||
Interest rate swaps
|
$
|
(5,233
|
)
|
Interest expense
|
$
|
(1,018
|
)
|
|
$
|
(1,223
|
)
|
|
|
|
|
|
|
||||||
|
June 30,
2019 |
|
|
Three months ended
June 30, 2019 |
|
|
Six months ended
June 30, 2019 |
|
|||
Interest rate swaps
|
$
|
(1,826
|
)
|
Interest expense
|
$
|
244
|
|
|
$
|
473
|
|
9. Commitments and Contingencies
|
16
|
|
Second Quarter 2020 Form 10-Q
|
|
Three months ended
June 30, |
|
|
Six months ended
June 30, |
|
||||||||
(dollars in thousands)
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
||||
Operating lease cost(1)(2)
|
$
|
6,281
|
|
$
|
5,894
|
|
|
$
|
12,592
|
|
$
|
11,894
|
|
Variable lease cost
|
1,113
|
|
988
|
|
|
2,371
|
|
1,979
|
|
||||
Sublease income
|
(940
|
)
|
(755
|
)
|
|
(1,853
|
)
|
(1,459
|
)
|
||||
Net lease cost
|
$
|
6,454
|
|
$
|
6,127
|
|
|
$
|
13,110
|
|
$
|
12,414
|
|
(1)
|
Includes short-term lease costs, which were immaterial.
|
(2)
|
See Note 15 for a discussion of the pending purchase of our Headquarters Facility that we currently lease.
|
Second Quarter 2020 Form 10-Q
|
|
17
|
10. Income Taxes
|
|
Three months ended
June 30, |
|
|
Six months ended
June 30, |
|
||||||||
(dollars in thousands)
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
||||
Income tax provision
|
$
|
4,496
|
|
$
|
2,733
|
|
|
$
|
5,192
|
|
$
|
899
|
|
Effective income tax rate
|
27.6
|
%
|
27.7
|
%
|
|
24.0
|
%
|
13.0
|
%
|
11. Stock-based Compensation
|
|
Three months ended
June 30, |
|
|
Six months ended
June 30, |
|
||||||||
(dollars in thousands)
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
||||
Included in cost of revenue:
|
|
|
|
|
|
||||||||
Cost of recurring
|
$
|
1,151
|
|
$
|
451
|
|
|
$
|
1,621
|
|
$
|
963
|
|
Cost of one-time services and other
|
1,419
|
|
340
|
|
|
1,814
|
|
802
|
|
||||
Total included in cost of revenue
|
2,570
|
|
791
|
|
|
3,435
|
|
1,765
|
|
||||
Included in operating expenses:
|
|
|
|
|
|
||||||||
Sales, marketing and customer success
|
3,603
|
|
2,827
|
|
|
6,081
|
|
5,738
|
|
||||
Research and development
|
4,348
|
|
2,753
|
|
|
7,147
|
|
5,427
|
|
||||
General and administrative
|
9,612
|
|
8,658
|
|
|
17,050
|
|
15,825
|
|
||||
Total included in operating expenses
|
17,563
|
|
14,238
|
|
|
30,278
|
|
26,990
|
|
||||
Total stock-based compensation expense
|
$
|
20,133
|
|
$
|
15,029
|
|
|
$
|
33,713
|
|
$
|
28,755
|
|
12. Stockholders' Equity
|
18
|
|
Second Quarter 2020 Form 10-Q
|
Declaration Date
|
Dividend
per Share
|
|
Record Date
|
|
Payable Date
|
|
February 10, 2020
|
$
|
0.12
|
|
February 28
|
|
March 13
|
|
Three months ended
June 30, |
|
|
Six months ended
June 30, |
|
||||||||
(dollars in thousands)
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
||||
Accumulated other comprehensive loss, beginning of period
|
$
|
(14,140
|
)
|
$
|
(1,452
|
)
|
|
$
|
(5,290
|
)
|
$
|
(5,110
|
)
|
By component:
|
|
|
|
|
|
||||||||
Gains and losses on cash flow hedges:
|
|
|
|
|
|
||||||||
Accumulated other comprehensive (loss) income balance, beginning of period
|
$
|
(4,445
|
)
|
$
|
566
|
|
|
$
|
(1,323
|
)
|
$
|
1,498
|
|
Other comprehensive loss before reclassifications, net of tax effects of $71, $628, $1,225 and $904
|
(200
|
)
|
(1,759
|
)
|
|
(3,473
|
)
|
(2,522
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss to interest expense
|
1,018
|
|
(244
|
)
|
|
1,223
|
|
(473
|
)
|
||||
Tax (benefit) expense included in provision for income taxes
|
(267
|
)
|
64
|
|
|
(321
|
)
|
124
|
|
||||
Total amounts reclassified from accumulated other comprehensive loss
|
751
|
|
(180
|
)
|
|
902
|
|
(349
|
)
|
||||
Net current-period other comprehensive income (loss)
|
551
|
|
(1,939
|
)
|
|
(2,571
|
)
|
(2,871
|
)
|
||||
Accumulated other comprehensive loss balance, end of period
|
$
|
(3,894
|
)
|
$
|
(1,373
|
)
|
|
$
|
(3,894
|
)
|
$
|
(1,373
|
)
|
Foreign currency translation adjustment:
|
|
|
|
|
|
||||||||
Accumulated other comprehensive loss balance, beginning of period
|
$
|
(9,695
|
)
|
$
|
(2,018
|
)
|
|
$
|
(3,967
|
)
|
$
|
(6,608
|
)
|
Translation adjustments
|
(887
|
)
|
(6,018
|
)
|
|
(6,615
|
)
|
(1,428
|
)
|
||||
Accumulated other comprehensive loss balance, end of period
|
(10,582
|
)
|
(8,036
|
)
|
|
(10,582
|
)
|
(8,036
|
)
|
||||
Accumulated other comprehensive loss, end of period
|
$
|
(14,476
|
)
|
$
|
(9,409
|
)
|
|
$
|
(14,476
|
)
|
$
|
(9,409
|
)
|
13. Revenue Recognition
|
Second Quarter 2020 Form 10-Q
|
|
19
|
(in thousands)
|
June 30,
2020 |
|
December 31,
2019 |
|
||
Total deferred revenue
|
$
|
337,196
|
|
$
|
316,137
|
|
|
Three months ended
June 30, |
|
|
Six months ended
June 30, |
|
||||||||
(dollars in thousands)
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
||||
United States
|
$
|
189,304
|
|
$
|
190,399
|
|
|
$
|
383,263
|
|
$
|
378,525
|
|
United Kingdom
|
29,535
|
|
19,307
|
|
|
45,359
|
|
33,105
|
|
||||
Other countries
|
13,152
|
|
15,928
|
|
|
26,990
|
|
29,834
|
|
||||
Total revenue
|
$
|
231,991
|
|
$
|
225,634
|
|
|
$
|
455,612
|
|
$
|
441,464
|
|
•
|
The GMG focuses on sales primarily to all K-12 private schools, faith-based and arts and cultural organizations, as well as emerging and mid-sized prospects in the U.S.;
|
•
|
The EMG focuses on sales primarily 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 primarily to all prospects and customers outside of the U.S.
|
|
Three months ended
June 30, |
|
|
Six months ended
June 30, |
|
||||||||
(dollars in thousands)
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
||||
GMG
|
$
|
90,453
|
|
$
|
93,259
|
|
|
$
|
185,906
|
|
$
|
185,774
|
|
EMG
|
98,199
|
|
96,710
|
|
|
196,322
|
|
191,875
|
|
||||
IMG
|
43,167
|
|
35,614
|
|
|
73,248
|
|
63,736
|
|
||||
Other
|
172
|
|
51
|
|
|
136
|
|
79
|
|
||||
Total revenue
|
$
|
231,991
|
|
$
|
225,634
|
|
|
$
|
455,612
|
|
$
|
441,464
|
|
20
|
|
Second Quarter 2020 Form 10-Q
|
14. Restructuring
|
15. Property and Equipment
|
Second Quarter 2020 Form 10-Q
|
|
21
|
Executive Summary
|
22
|
|
Second Quarter 2020 Form 10-Q
|
|
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
|
2.
|
Drive Sales Effectiveness
|
3.
|
Expand TAM
|
4.
|
Improve Operating Efficiency
|
Second Quarter 2020 Form 10-Q
|
|
23
|
Total revenue ($M)
|
|
Income from operations ($M)
|
YoY Growth (%)
|
|
YoY Growth (%)
|
|
+
|
|
Growth in recurring revenue related to increases in transactional revenue, positive demand from customers across our portfolio of cloud solutions and increases in services embedded in our renewable cloud solution contracts
|
|
-
|
|
Decreases in one-time consulting revenue primarily from less of one-time sales related to COVID-19
|
|
-
|
|
Decreases in one-time analytics revenue as analytics are generally integrated in our cloud solutions
|
|
+
|
|
Growth in total revenue, as described above
|
|
+
|
|
Reduced overall compensation costs primarily associated with the decision to replace our 2020 cash bonus plans with grants of performance-based equity awards
|
|
+
|
|
Decrease in restructuring costs of $0.7 million and $2.6 million, as our facilities optimization plan was largely completed as of December 31, 2019
|
|
+
|
|
Decrease in acquisition-related expenses and integration costs of $0.8 million and $1.9 million
|
|
+
|
|
Decrease in amortization of intangible assets from business combinations of $2.1 million and $3.2 million
|
|
-
|
|
Increases in cost of revenue from a $4.3 million impairment charge during the three months ended June 30, 2020, against certain previously capitalized software development costs, resulting from our decision to accelerate the end of customer support for certain solutions
|
|
-
|
|
Increases in employee severance of $4.1 million and $0.7 million, related to a modest and targeted headcount reduction during the three months ended June 30, 2020, in response to the COVID-19 pandemic
|
|
-
|
|
Increases in corporate costs of $3.1 million and $3.4 million, primarily related to increases in bad debt expense
|
|
-
|
|
Other increases in cost of revenue related to increases in data center costs, amortization of software development costs and transaction-based costs
|
24
|
|
Second Quarter 2020 Form 10-Q
|
1.
|
Contractual Recurring Revenue (approximately two thirds of total revenue in 2019)
|
2.
|
Transactional Revenue (approximately one quarter of total revenue in 2019)
|
3.
|
Bookings
|
Second Quarter 2020 Form 10-Q
|
|
25
|
Customer retention
|
|
|
26
|
|
Second Quarter 2020 Form 10-Q
|
Results of Operations
|
Recurring
|
|
|
|
|
Revenue ($M)
|
|
Cost of revenue ($M)
|
|
Gross profit ($M)
and gross margin (%) |
YoY Growth (%)
|
|
YoY Growth (%)
|
|
|
Second Quarter 2020 Form 10-Q
|
|
27
|
|
+
|
|
Increases in subscriptions revenue of $11.8 million and $22.4 million related to increases in transactional revenue, positive demand from customers across our portfolio of cloud solutions and increases in services embedded in our renewable cloud solution contracts
|
|
-
|
|
Decreases in maintenance revenue of $4.0 million and $7.9 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
|
|
+
|
|
Impairment charge of $4.3 million during the three months ended June 30, 2020, against certain previously capitalized software development costs that reduced the carrying value of those assets to zero. The impairment charge resulted primarily from our decision to accelerate the end of customer support for certain solutions.
|
|
+
|
|
Increases in hosting and data center costs of $1.7 million and $2.2 million as we are migrating our cloud infrastructure to leading public cloud service providers
|
|
+
|
|
Increases in amortization of software development costs of $0.8 million and $2.2 million due to investments made on innovation, quality and the integration of our cloud solutions
|
|
+
|
|
Increases in transaction-based costs of $0.7 million and $3.0 million related to payment services integrated in our cloud solutions
|
|
+
|
|
For the six months ended June 30, 2020, increase in third-party contractor costs of $1.2 million related to application security and partners delivering services embedded in our renewable cloud solution contracts
|
|
-
|
|
Decreases in compensation costs primarily associated with the decision to replace our 2020 cash bonus plans with grants of performance-based equity awards
|
|
-
|
|
Decreases in costs associated with certain retained and managed services contracts for which revenue is included in one-time services and other revenue beginning January 1, 2020, as discussed above
|
28
|
|
Second Quarter 2020 Form 10-Q
|
One-time services and other
|
|
|
|
|
Revenue ($M)
|
|
Cost of revenue ($M)
|
|
Gross profit ($M)
and gross margin (%)
|
YoY Growth (%)
|
|
YoY Growth (%)
|
|
|
|
+
|
|
Increases in the mix of retained and managed services contracts we present in one-time services and other. Revenue from retained and managed service contracts that we do not expect to have a term consistent with our cloud solution contracts is included in one-time services and other revenue beginning January 1, 2020. This change in presentation resulted in increases to one-time services and other revenue and offsetting decreases in recurring revenue of $4.2 million and $8.5 million during the three and six months ended June 30, 2020.
|
|
-
|
|
Decreases in one-time consulting revenue of $3.8 million and $5.5 million, respectively, primarily from less one-time sales related to COVID-19 as well as services increasingly being embedded in our renewable cloud solution contracts. Our embedded services are recorded as recurring revenue.
|
|
-
|
|
Decreases in one-time analytics revenue of $1.2 million and $2.1 million as analytics are generally integrated in our cloud solutions
|
|
-
|
|
For the six months ended June 30, 2020, decreases in revenue from one-time training services and license fees
|
Second Quarter 2020 Form 10-Q
|
|
29
|
|
+
|
|
Increase in costs of associated with certain retained and managed services contracts for which revenue is included in one-time services and other revenue beginning January 1, 2020, as discussed above
|
|
-
|
|
Reduced amount of compensation costs primarily associated with the decision to replace our 2020 cash bonus plans with grants of performance-based equity awards
|
Sales, marketing and
customer success ($M)
|
|
Research and development ($M)
|
|
General and administrative ($M)
|
Percentages indicate expenses as a percentage of total revenue
|
30
|
|
Second Quarter 2020 Form 10-Q
|
|
+
|
|
Increase in employee severance costs of $1.8 million related to a reduction in our sales headcount in response to the COVID-19 pandemic as discussed above
|
|
-
|
|
Decrease in travel costs of $1.9 million due to our restriction on non-essential employee travel in response to the COVID-19 pandemic
|
|
-
|
|
Decrease in compensation costs of $1.7 million primarily related to the decision to replace our 2020 cash bonus plans with grants of performance-based equity awards
|
|
-
|
|
Decrease in commissions expense of $0.7 million related to a decrease in commissionable sales.
|
|
+
|
|
Increase in employee severance costs of $0.9 million related to a reduction in our sales headcount in response to the COVID-19 pandemic as discussed above
|
|
+
|
|
Increase in compensation costs of $0.9 million primarily associated with the elevated headcount of our direct sales force and our lead generation teams, beginning in the fourth quarter of 2018. The increase in compensation costs related to elevated headcount was partially offset by the decision to replace our 2020 cash bonus plans with grants of performance-based equity awards
|
|
-
|
|
Decrease in travel costs of $1.4 million due to our restriction on non-essential employee travel in response to the COVID-19 pandemic
|
Second Quarter 2020 Form 10-Q
|
|
31
|
|
+
|
|
Increases in corporate costs of $3.1 million and $3.4 million primarily related to increases in bad debt expense
|
|
-
|
|
Decreases in bonus expense of $1.3 million and $2.8 million primarily related to the decision to replace our 2020 cash bonus plans with grants of performance-based equity awards
|
Interest Expense
|
|
|
|
|
|
|
|
||||||||||
|
Three months ended
June 30, |
|
|
Six months ended
June 30, |
|
||||||||||||
(dollars in millions)
|
2020
|
|
2019
|
|
Change
|
|
|
2020
|
|
2019
|
|
Change
|
|
||||
Interest expense
|
$
|
3.9
|
|
$
|
5.8
|
|
(32.9
|
)%
|
|
$
|
8.1
|
|
$
|
11.1
|
|
(27.6
|
)%
|
% of total revenue
|
1.7
|
%
|
2.6
|
%
|
|
|
1.8
|
%
|
2.5
|
%
|
|
(dollars in millions)
|
Timing of recognition
|
June 30,
2020 |
|
December 31,
2019 |
|
Change
|
|
||
Recurring
|
Over the period billed in advance, generally one year
|
$
|
322.1
|
|
$
|
302.8
|
|
6.4
|
%
|
One-time services and other
|
As services are delivered
|
15.1
|
|
13.4
|
|
12.8
|
%
|
||
Total deferred revenue(1)
|
|
337.2
|
|
316.1
|
|
6.7
|
%
|
||
Less: Long-term portion
|
|
4.6
|
|
1.8
|
|
156.7
|
%
|
||
Current portion(1)
|
|
$
|
332.6
|
|
$
|
314.3
|
|
5.8
|
%
|
(1)
|
The individual amounts for each year may not sum to total deferred revenue or current portion of deferred revenue due to rounding.
|
32
|
|
Second Quarter 2020 Form 10-Q
|
Second Quarter 2020 Form 10-Q
|
|
33
|
|
Three months ended
June 30, |
|
|
Six months ended
June 30, |
|
||||||||||||
(dollars in millions)
|
2020
|
|
2019
|
|
Change
|
|
|
2020
|
|
2019
|
|
Change
|
|
||||
GAAP Revenue
|
$
|
232.0
|
|
$
|
225.6
|
|
2.8
|
%
|
|
$
|
455.6
|
|
$
|
441.5
|
|
3.2
|
%
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
||||||||||
Add: Acquisition-related deferred revenue write-down
|
—
|
|
0.7
|
|
(100.0
|
)%
|
|
—
|
|
1.4
|
|
(100.0
|
)%
|
||||
Non-GAAP revenue(1)
|
$
|
232.0
|
|
$
|
226.4
|
|
2.5
|
%
|
|
$
|
455.6
|
|
$
|
442.9
|
|
2.9
|
%
|
|
|
|
|
|
|
|
|
||||||||||
GAAP gross profit
|
$
|
127.1
|
|
$
|
124.8
|
|
1.8
|
%
|
|
$
|
245.8
|
|
$
|
241.4
|
|
1.8
|
%
|
GAAP gross margin
|
54.8
|
%
|
55.3
|
%
|
|
|
54.0
|
%
|
54.7
|
%
|
|
||||||
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
||||||||||
Add: Acquisition-related deferred revenue write-down
|
—
|
|
0.7
|
|
(100.0
|
)%
|
|
—
|
|
1.4
|
|
(100.0
|
)%
|
||||
Add: Stock-based compensation expense
|
2.6
|
|
0.8
|
|
224.9
|
%
|
|
3.4
|
|
1.8
|
|
94.6
|
%
|
||||
Add: Amortization of intangibles from business combinations
|
9.7
|
|
11.3
|
|
(14.5
|
)%
|
|
20.6
|
|
22.7
|
|
(9.4
|
)%
|
||||
Add: Employee severance
|
0.8
|
|
—
|
|
(19,625.0
|
)%
|
|
0.8
|
|
1.1
|
|
(27.1
|
)%
|
||||
Subtotal(1)
|
13.0
|
|
12.8
|
|
1.6
|
%
|
|
24.9
|
|
27.1
|
|
(8.1
|
)%
|
||||
Non-GAAP gross profit(1)
|
$
|
140.1
|
|
$
|
137.7
|
|
1.8
|
%
|
|
$
|
270.7
|
|
$
|
268.4
|
|
0.8
|
%
|
Non-GAAP gross margin
|
60.4
|
%
|
60.8
|
%
|
|
|
59.4
|
%
|
60.6
|
%
|
|
(1)
|
The individual amounts for each year may not sum to non-GAAP revenue, subtotal or non-GAAP gross profit due to rounding.
|
34
|
|
Second Quarter 2020 Form 10-Q
|
|
Three months ended
June 30, |
|
|
Six months ended
June 30, |
|
||||||||||||
(dollars in millions, except per share amounts)
|
2020
|
|
2019
|
|
Change
|
|
|
2020
|
|
2019
|
|
Change
|
|
||||
GAAP income from operations
|
$
|
19.6
|
|
$
|
13.5
|
|
45.1
|
%
|
|
$
|
28.0
|
|
$
|
15.7
|
|
78.7
|
%
|
GAAP operating margin
|
8.4
|
%
|
6.0
|
%
|
|
|
6.1
|
%
|
3.6
|
%
|
|
||||||
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
||||||||||
Add: Acquisition-related deferred revenue write-down
|
—
|
|
0.7
|
|
(100.0
|
)%
|
|
—
|
|
1.4
|
|
(100.0
|
)%
|
||||
Add: Stock-based compensation expense
|
20.1
|
|
15.0
|
|
34.0
|
%
|
|
33.7
|
|
28.8
|
|
17.2
|
%
|
||||
Add: Amortization of intangibles from business combinations
|
10.4
|
|
12.5
|
|
(16.6
|
)%
|
|
22.1
|
|
25.3
|
|
(12.6
|
)%
|
||||
Add: Employee severance
|
4.3
|
|
0.2
|
|
2,132.5
|
%
|
|
4.4
|
|
3.6
|
|
20.7
|
%
|
||||
Add: Acquisition-related integration costs
|
(0.1
|
)
|
0.5
|
|
(115.3
|
)%
|
|
(0.1
|
)
|
1.2
|
|
(108.7
|
)%
|
||||
Add: Acquisition-related expenses
|
0.1
|
|
0.4
|
|
(76.7
|
)%
|
|
0.2
|
|
0.8
|
|
(72.3
|
)%
|
||||
Add: Restructuring costs
|
0.1
|
|
0.7
|
|
(93.2
|
)%
|
|
0.1
|
|
2.7
|
|
(97.2
|
)%
|
||||
Subtotal(1)
|
34.9
|
|
30.0
|
|
16.3
|
%
|
|
60.4
|
|
63.7
|
|
(5.3
|
)%
|
||||
Non-GAAP income from operations(1)
|
$
|
54.5
|
|
$
|
43.5
|
|
25.3
|
%
|
|
$
|
88.4
|
|
$
|
79.4
|
|
11.3
|
%
|
Non-GAAP operating margin
|
23.5
|
%
|
19.2
|
%
|
|
|
19.4
|
%
|
17.9
|
%
|
|
||||||
|
|
|
|
|
|
|
|
||||||||||
GAAP income before provision for income taxes
|
$
|
16.3
|
|
$
|
9.9
|
|
65.3
|
%
|
|
$
|
21.7
|
|
$
|
6.9
|
|
213.1
|
%
|
GAAP net income
|
$
|
11.8
|
|
$
|
7.1
|
|
65.6
|
%
|
|
$
|
16.5
|
|
$
|
6.0
|
|
173.5
|
%
|
Shares used in computing GAAP diluted earnings per share
|
48,418,378
|
|
48,160,684
|
|
0.5
|
%
|
|
48,465,077
|
|
48,101,212
|
|
0.8
|
%
|
||||
GAAP diluted earnings per share
|
$
|
0.24
|
|
$
|
0.15
|
|
60.0
|
%
|
|
$
|
0.34
|
|
$
|
0.13
|
|
161.5
|
%
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
||||||||||
Add: GAAP income tax provision
|
4.5
|
|
2.7
|
|
64.5
|
%
|
|
5.2
|
|
0.9
|
|
477.5
|
%
|
||||
Add: Total non-GAAP adjustments affecting income from operations
|
34.9
|
|
30.0
|
|
16.3
|
%
|
|
60.4
|
|
63.7
|
|
(5.3
|
)%
|
||||
Non-GAAP income before provision for income taxes
|
51.2
|
|
39.8
|
|
28.5
|
%
|
|
82.0
|
|
70.7
|
|
16.1
|
%
|
||||
Assumed non-GAAP income tax provision(2)
|
10.2
|
|
8.0
|
|
28.5
|
%
|
|
16.4
|
|
14.1
|
|
16.1
|
%
|
||||
Non-GAAP net income(1)
|
$
|
41.0
|
|
$
|
31.9
|
|
28.5
|
%
|
|
$
|
65.6
|
|
$
|
56.5
|
|
16.1
|
%
|
|
|
|
|
|
|
|
|
||||||||||
Shares used in computing non-GAAP diluted earnings per share
|
48,418,378
|
|
48,160,684
|
|
0.5
|
%
|
|
48,465,077
|
|
48,101,212
|
|
0.8
|
%
|
||||
Non-GAAP diluted earnings per share
|
$
|
0.85
|
|
$
|
0.66
|
|
28.8
|
%
|
|
$
|
1.35
|
|
$
|
1.18
|
|
14.4
|
%
|
(1)
|
The individual amounts for each year may not sum to subtotal, non-GAAP income from operations 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.
|
|
Six months ended
June 30, |
|
||||||
(dollars in millions)
|
2020
|
|
2019
|
|
Change
|
|
||
GAAP net cash provided by operating activities
|
$
|
37.5
|
|
$
|
45.1
|
|
(16.9
|
)%
|
Less: purchase of property and equipment
|
(5.9
|
)
|
(6.4
|
)
|
(7.7
|
)%
|
||
Less: capitalized software development costs
|
(21.7
|
)
|
(23.2
|
)
|
(6.6
|
)%
|
||
Non-GAAP free cash flow
|
$
|
9.9
|
|
$
|
15.5
|
|
(36.0
|
)%
|
Second Quarter 2020 Form 10-Q
|
|
35
|
(dollars in millions)
|
Three months ended
June 30, |
|
|
Six months ended
June 30, |
|
||||||||
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
|||||
GAAP revenue
|
$
|
232.0
|
|
$
|
225.6
|
|
|
$
|
455.6
|
|
$
|
441.5
|
|
GAAP revenue growth
|
2.8
|
%
|
|
|
3.2
|
%
|
|
||||||
Add: Non-GAAP acquisition-related revenue (1)
|
—
|
|
0.7
|
|
|
—
|
|
1.4
|
|
||||
Non-GAAP organic revenue (2)
|
$
|
232.0
|
|
$
|
226.4
|
|
|
$
|
455.6
|
|
$
|
442.9
|
|
Non-GAAP organic revenue growth
|
2.5
|
%
|
|
|
2.9
|
%
|
|
||||||
|
|
|
|
|
|
||||||||
Non-GAAP organic revenue (2)
|
$
|
232.0
|
|
$
|
226.4
|
|
|
$
|
455.6
|
|
$
|
442.9
|
|
Foreign currency impact on Non-GAAP organic revenue (3)
|
2.0
|
|
—
|
|
|
2.3
|
|
—
|
|
||||
Non-GAAP organic revenue on constant currency basis (3)
|
$
|
234.0
|
|
$
|
226.4
|
|
|
$
|
457.9
|
|
$
|
442.9
|
|
Non-GAAP organic revenue growth on constant currency basis
|
3.4
|
%
|
|
|
3.4
|
%
|
|
||||||
|
|
|
|
|
|
||||||||
GAAP recurring revenue
|
$
|
216.3
|
|
$
|
208.5
|
|
|
$
|
421.1
|
|
$
|
406.6
|
|
GAAP recurring revenue growth
|
3.7
|
%
|
|
|
3.6
|
%
|
|
||||||
Add: Non-GAAP acquisition-related revenue (1)
|
—
|
|
0.7
|
|
|
—
|
|
1.4
|
|
||||
Non-GAAP organic recurring revenue
|
$
|
216.3
|
|
$
|
209.2
|
|
|
$
|
421.1
|
|
$
|
408.0
|
|
Non-GAAP organic recurring revenue growth
|
3.4
|
%
|
|
|
3.2
|
%
|
|
(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, if any, 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 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.
|
36
|
|
Second Quarter 2020 Form 10-Q
|
Liquidity and Capital Resources
|
(dollars in millions)
|
June 30,
2020 |
|
December 31,
2019 |
|
Change
|
|
||
Cash and cash equivalents
|
$
|
30.5
|
|
$
|
31.8
|
|
(4.0
|
)%
|
Property and equipment, net
|
36.5
|
|
35.5
|
|
2.8
|
%
|
||
Software development costs, net
|
106.0
|
|
101.3
|
|
4.7
|
%
|
||
Total carrying value of debt
|
488.1
|
|
467.1
|
|
4.5
|
%
|
||
Working capital
|
(191.8
|
)
|
(254.3
|
)
|
24.6
|
%
|
|
Six months ended June 30,
|
|
||||||
(dollars in millions)
|
2020
|
|
2019
|
|
Change
|
|
||
Net cash provided by operating activities
|
$
|
37.5
|
|
$
|
45.1
|
|
(16.9
|
)%
|
Net cash used in investing activities
|
(27.6
|
)
|
(138.5
|
)
|
(80.1
|
)%
|
||
Net cash (used in) provided by financing activities
|
(132.5
|
)
|
30.8
|
|
(529.7
|
)%
|
Second Quarter 2020 Form 10-Q
|
|
37
|
•
|
Rescinded our previously announced policy to pay an annual dividend at a rate of $0.48 per share of common stock and discontinued the declaration and payment of all cash dividends, beginning with the second quarter of 2020 and thereafter until such time, if any, as our Board of Directors may otherwise determine in its sole discretion;
|
•
|
Temporarily suspended our 401(k)-match program, whereby we have historically matched 50% of qualified U.S. employees' contributions to our 401(k) plan up to 6% of their salaries, effective with the payroll period commencing April 1, 2020;
|
•
|
Temporarily froze our hiring efforts and implemented a modest and targeted headcount reduction, though we have since began backfilling sales positions;
|
•
|
Michael Gianoni, our President and Chief Executive Officer, elected to forego receipt of all but that portion of his base salary necessary to fund, on a pre-tax basis, his contributions to continue to participate in our health benefits plan, between April 1, 2020 and June 16, 2020;
|
•
|
Restricted non-essential employee travel and put in place other operating cost containment actions;
|
•
|
All of our employees with a base salary equal to or less than $75 thousand received financial support in the form of a one-time bonus of $1 thousand on April 30, 2020;
|
•
|
On May 1, 2020, we granted RSUs to our employees that were eligible for base salary merit increases in lieu of such increases, which will vest on May 1, 2021 subject to the recipient's continued employment with us; and
|
•
|
On May 1, 2020, we granted PRSUs to our employees that were eligible for a 2020 cash bonus plan in lieu of such cash bonus, which may be earned and become eligible for vesting on May 1, 2021 subject to meeting certain performance conditions and the recipient's continued employment with us.
|
38
|
|
Second Quarter 2020 Form 10-Q
|
•
|
an increase in current period bonus payments as a result of an increase in amounts accrued as of December 31, 2019 for over-performance against 2019 targets;
|
•
|
a decrease in the current period bonus accrual due to our decision to replace cash payments for our 2020 bonus plans with performance-based equity awards; and
|
•
|
fluctuations in the timing of vendor payments.
|
Second Quarter 2020 Form 10-Q
|
|
39
|
Financial Covenant
|
Requirement
|
Ratio as of June 30, 2020
|
Net Leverage Ratio
|
≤ 3.50 to 1.00
|
2.21 to 1.00
|
Interest Coverage Ratio
|
≥ 2.50 to 1.00
|
11.88 to 1.00
|
|
Payments due by period
|
||||||||||||||
(in millions)
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
|
|||||
Recorded contractual obligations:
|
|
|
|
|
|
||||||||||
Debt(1)
|
$
|
489.0
|
|
$
|
9.2
|
|
$
|
479.8
|
|
$
|
—
|
|
$
|
—
|
|
Interest payments on debt(2)
|
5.2
|
|
5.1
|
|
0.1
|
|
—
|
|
—
|
|
|||||
Operating leases(3)
|
148.9
|
|
24.9
|
|
35.6
|
|
17.1
|
|
71.2
|
|
|||||
|
|
|
|
|
|
||||||||||
Unrecorded contractual obligations:
|
|
|
|
|
|
||||||||||
Interest payments on debt(4)
|
16.1
|
|
8.4
|
|
7.7
|
|
—
|
|
—
|
|
|||||
Purchase obligations(5)
|
90.5
|
|
48.4
|
|
42.1
|
|
—
|
|
—
|
|
|||||
Total contractual obligations
|
$
|
749.8
|
|
$
|
96.1
|
|
$
|
565.4
|
|
$
|
17.1
|
|
$
|
71.2
|
|
(1)
|
Represents principal payments only, under the following assumptions: (i) that the amounts outstanding under the 2017 Credit Facility and our other debt at June 30, 2020 will remain outstanding until maturity, with minimum payments occurring as currently scheduled, and (ii) that there are no assumed future borrowings on the 2017 Credit Facility for the purposes of determining minimum commitment amounts.
|
(2)
|
Represents interest payment obligations related to our interest rate swap agreements.
|
(3)
|
Our commitments related to operating leases have not been reduced by sublease income, incentive payments and reimbursement of leasehold improvements.
|
(4)
|
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.
|
(5)
|
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.
|
Off-Balance Sheet Arrangements
|
40
|
|
Second Quarter 2020 Form 10-Q
|
Foreign Currency Exchange Rates
|
Critical Accounting Policies and Estimates
|
Recently Issued Accounting Pronouncements
|
Interest Rate Risk
|
Second Quarter 2020 Form 10-Q
|
|
41
|
Foreign Currency Risk
|
Evaluation of Disclosure Controls and Procedures
|
Changes in Internal Control Over Financial Reporting
|
42
|
|
Second Quarter 2020 Form 10-Q
|
|
|
PART II. OTHER INFORMATION
|
Operational Risks
|
•
|
changes in customer demand;
|
•
|
our relationship with, and the financial and operational capacities of our service providers, suppliers and business partners, including their ability to fulfill their obligations to us;
|
•
|
further declines in our customers' ability to pay for our solutions and services;
|
•
|
reduced workforce availability and productivity due to working remotely using different technologies and potential health effects and concerns;
|
•
|
risks associated with our indebtedness (including available borrowing capacity, compliance with financial covenants and ability to refinance or repay indebtedness on favorable terms);
|
•
|
the adequacy of our cash flow and earnings and other conditions which may affect our liquidity;
|
•
|
disruptions to our technology network and other critical systems; and
|
•
|
impairment charges against our goodwill and other intangible assets, operating lease right-of-use assets and other long-lived assets.
|
Second Quarter 2020 Form 10-Q
|
|
43
|
44
|
|
Second Quarter 2020 Form 10-Q
|
Issuer Purchases of Equity Securities
|
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, April 1, 2020
|
|
|
|
|
|
|
$
|
50,000
|
|
||||
April 1, 2020 through April 30, 2020
|
175
|
|
|
$
|
80.18
|
|
|
—
|
|
|
50,000
|
|
|
May 1, 2020 through May 31, 2020
|
12,829
|
|
|
53.28
|
|
|
—
|
|
|
50,000
|
|
||
June 1, 2020 through June 30, 2020
|
8,196
|
|
|
63.10
|
|
|
—
|
|
|
50,000
|
|
||
Total
|
21,200
|
|
|
$
|
57.30
|
|
|
—
|
|
|
$
|
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.
|
Second Quarter 2020 Form 10-Q
|
|
45
|
|
|
|
|
Filed In
|
||||||
Exhibit Number
|
|
Description of Document
|
|
Filed Herewith
|
|
Form
|
|
Exhibit Number
|
|
Filing Date
|
|
|
X
|
|
|
|
|
|
|
||
|
|
X
|
|
|
|
|
|
|
||
|
|
X
|
|
|
|
|
|
|
||
|
|
X
|
|
|
|
|
|
|
||
|
|
X
|
|
|
|
|
|
|
||
|
|
X
|
|
|
|
|
|
|
||
|
|
X
|
|
|
|
|
|
|
||
|
|
X
|
|
|
|
|
|
|
||
|
|
X
|
|
|
|
|
|
|
||
|
|
X
|
|
|
|
|
|
|
||
|
|
X
|
|
|
|
|
|
|
||
101.INS
|
|
Inline XBRL Instance Document - the Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL Document.
|
|
X
|
|
|
|
|
|
|
101.SCH
|
|
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
|
|
|
|
|
|
|
46
|
|
Second Quarter 2020 Form 10-Q
|
|
|
SIGNATURES
|
|
|
BLACKBAUD, INC.
|
|
|
|
|
|
Date:
|
August 4, 2020
|
By:
|
/s/ Michael P. Gianoni
|
|
|
|
Michael P. Gianoni
|
|
|
|
President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Date:
|
August 4, 2020
|
By:
|
/s/ Anthony W. Boor
|
|
|
|
Anthony W. Boor
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|
Second Quarter 2020 Form 10-Q
|
|
47
|
|
delivery of the Holder Phase 2 Financing Notice (see Section 13.3(b))
|
|
|
|
LANDLORD:
|
|
|||
|
|
|
|||
|
HPBB1, LLC,
|
|
|||
|
a Georgia limited liability company
|
|
|||
|
|
|
|
|
|
|
By:
|
/s/ John R. Holder
|
|
||
|
|
|
John R. Holder
|
|
|
|
|
|
President
|
|
|
|
[Seal]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TENANT:
|
|
|||
|
|
|
|
|
|
|
BLACKBAUD, INC.,
|
|
|||
|
a Delaware corporation
|
|
|||
|
|
|
|
|
|
|
By:
|
/s/ Jon W. Olson
|
|
||
|
Name:
|
Jon W. Olson
|
|
|
|
|
Title:
|
Sr. Vice President, General Counsel
|
|
||
|
|
|
|
|
|
|
[Seal]
|
|
|
|
|
delivery of the Holder Phase 2 Financing Notice (see Section 13.3(b))
|
|
|
|
LANDLORD:
|
|
|||
|
|
|
|||
|
HPBB1, LLC,
|
|
|||
|
a Georgia limited liability company
|
|
|||
|
|
|
|
|
|
|
By:
|
/s/ John R. Holder
|
|
||
|
|
|
John R. Holder
|
|
|
|
|
|
President
|
|
|
|
[Seal]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TENANT:
|
|
|||
|
|
|
|
|
|
|
BLACKBAUD, INC.,
|
|
|||
|
a Delaware corporation
|
|
|||
|
|
|
|
|
|
|
By:
|
/s/ Jon W. Olson
|
|
||
|
Name:
|
Jon W. Olson
|
|
|
|
|
Title:
|
Sr. Vice President, General Counsel
|
|
||
|
|
|
|
|
|
|
[Seal]
|
|
|
|
delivery of the Holder Phase 2 Financing Notice (see Section 13.3(b))
|
|
|
LANDLORD:
|
|
|||
|
|
|
|||
|
HPBB1, LLC,
|
|
|||
|
a Georgia limited liability company
|
|
|||
|
|
|
|
|
|
|
By:
|
/s/ John R. Holder
|
|
||
|
|
|
John R. Holder
|
|
|
|
|
|
President
|
|
|
|
[Seal]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TENANT:
|
|
|||
|
|
|
|
|
|
|
BLACKBAUD, INC.,
|
|
|||
|
a Delaware corporation
|
|
|||
|
|
|
|
|
|
|
By:
|
/s/ Jon W. Olson
|
|
||
|
Name:
|
Jon W. Olson
|
|
|
|
|
Title:
|
Sr. Vice President, General Counsel
|
|
||
|
|
|
|
|
|
|
[Seal]
|
|
|
|
delivery of the Holder Phase 2 Financing Notice (see Section 13.3(b))
|
|
|
LANDLORD:
|
|
|||
|
|
|
|||
|
HPBB1, LLC,
|
|
|||
|
a Georgia limited liability company
|
|
|||
|
|
|
|
|
|
|
By:
|
/s/ John R. Holder
|
|
||
|
|
|
John R. Holder
|
|
|
|
|
|
President
|
|
|
|
[Seal]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TENANT:
|
|
|||
|
|
|
|
|
|
|
BLACKBAUD, INC.,
|
|
|||
|
a Delaware corporation
|
|
|||
|
|
|
|
|
|
|
By:
|
/s/ Jon W. Olson
|
|
||
|
Name:
|
Jon W. Olson
|
|
|
|
|
Title:
|
Sr. Vice President, General Counsel
|
|
||
|
|
|
|
|
|
|
[Seal]
|
|
|
|
(Delivery of Phase 2 Preliminary Budget by Landlord to Tenant) – 90 days after delivery of the Holder Phase 2 Financing Notice (see Section 13.3(b))
|
August 13, 2020
|
|
LANDLORD:
|
|
|||
|
|
|
|||
|
HPBB1, LLC,
|
|
|||
|
a Georgia limited liability company
|
|
|||
|
|
|
|
|
|
|
By:
|
/s/ John R. Holder
|
|
||
|
|
|
John R. Holder
|
|
|
|
|
|
President
|
|
|
|
[Seal]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TENANT:
|
|
|||
|
|
|
|
|
|
|
BLACKBAUD, INC.,
|
|
|||
|
a Delaware corporation
|
|
|||
|
|
|
|
|
|
|
By:
|
/s/ Jon W. Olson
|
|
||
|
Name:
|
Jon W. Olson
|
|
|
|
|
Title:
|
Sr. Vice President, General Counsel
|
|
||
|
|
|
|
|
|
|
[Seal]
|
|
|
|
5.1
|
Seller’s Authority, Etc. Seller has been duly organized and is validly existing under the laws of the State of Georgia. Seller is duly qualified to do business and is in good standing in the State of South Carolina. Seller has the full right and authority to enter into this Agreement and to transfer all of the Property to be conveyed by Seller and to consummate or cause to be consummated the transactions contemplated in this Agreement in accordance with the terms of this Agreement. The person signing this Agreement on behalf of Seller is authorized to do so and may bind the Seller without the joinder or co-signature of any other person.
|
6.1
|
No ERISA Funds. Purchaser is not acquiring the Property with the assets of an employee benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”), and Purchaser is not aware of any facts or circumstances that would cause the transaction contemplated by this Agreement to be a “prohibited transaction” within the meaning of ERISA.
|
12.1
|
Default by Purchaser. If Purchaser fails to consummate the purchase and sale of the Property contemplated under this Agreement for any reason other than Seller’s default or the permitted termination of this Agreement by either Seller or Purchaser as in this Agreement expressly provided, Seller will be entitled, as its SOLE REMEDY, to terminate this Agreement and receive the Earnest Money as liquidated damages for the breach of this Agreement, it being agreed between the parties hereto that the actual damages to Seller in the event of such breach are impractical to ascertain and the amount of the Earnest Money is a reasonable estimate thereof. Nothing contained in this Section 12.1, however, will limit, restrict or impair the right of Seller to pursue legal or equitable remedies to enforce the obligations of Purchaser (i) under any indemnity provided by Purchaser under this Agreement, (ii) under Article 9, (iii) with respect to the surviving representations and warranties made by Purchaser under Article 6 or (iv) under any of the documents and instruments executed and delivered to Seller pursuant to the terms and conditions hereof.
|
13.1
|
Minor Damage. In the event of loss or damage to the Property or any portion thereof which is not “major” (as defined below), this Agreement will remain in full force and effect provided Seller performs any necessary repairs which Seller is obligated to make under the Lease or, at Purchaser’s option, assigns to Purchaser all of Seller’s right, title and interest to any claims and proceeds Seller may have with respect to any casualty insurance policies or condemnation awards relating to the premises in question. If Purchaser elects for Seller to perform repairs upon the Property, Seller will use reasonable efforts to complete such repairs promptly and the date of Closing will be extended a reasonable time in order to allow for the completion of such repairs. If Purchaser elects for Seller to assign a casualty claim to Purchaser, the Purchase Price will be reduced by an amount equal to the deductible amount under Seller’s insurance policy. Upon Closing, full risk of loss with respect to the Property will pass to Purchaser.
|
|
SELLER:
|
|
|||
|
|
|
|||
|
HPBB1, LLC,
|
|
|||
|
a Georgia limited liability company
|
|
|||
|
|
|
|
|
|
|
By:
|
/s/ John R. Holder
|
|
||
|
|
|
John R. Holder
|
|
|
|
|
|
President
|
|
|
|
PURCHASER:
|
|
|||
|
|
|
|
|
|
|
BBHQ1, LLC,
|
|
|||
|
a Delaware limited liability company
|
|
|||
|
|
|
|
|
|
|
By:
|
/s/ Jon W. Olson
|
|
||
|
Name:
|
Jon W. Olson
|
|
|
|
|
Title:
|
Secretary
|
|
|
BLACKBAUD, INC.,
|
|
|||
|
a Delaware corporation
|
|
|||
|
|
|
|
|
|
|
By:
|
/s/ Michael Gianoni
|
|
||
|
Name:
|
Michael P. Gianoni
|
|
|
|
|
Title:
|
President & CEO
|
|
1.
|
Note Purchase Agreement, dated as of May 2, 2018, between Seller and Lender
|
2.
|
5.12% Senior Secured Note, Series A1, due April 15, 2038, dated May 2, 2018, from Seller, to Lender
|
3.
|
5.61% Senior Secured Note, Series A2, due April 15, 2038, dated May 2, 2018, from Seller, to Lender
|
4.
|
Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing Statement, dated as of May 2, 2018, from Seller, to Lender, and recorded in Book 2736, Page 416, in the ROD Office for Berkeley County, South Carolina (the “Mortgage”)
|
5.
|
Assignment of Leases and Rents, dated as of May 2, 2018, from Seller, to Lender, and recorded in Book 2736, Page 517, in the ROD Office for Berkeley County, South Carolina
|
6.
|
UCC-1 Financing Statement, listing Seller as “Debtor”, and Lender as “Secured Party”, and recorded on May 2, 2017 in Book 2736, Page 539, in the ROD Office for Berkeley County, South Carolina
|
7.
|
UCC-1 Financing Statement, listing Seller as “Debtor”, and Lender as “Secured Party”, and recorded on May 3, 2017 as Instrument 0602018-03856, in the Records of the Clerk of Superior Court for Fulton County, Georgia
|
8.
|
Indemnity and Guaranty Agreement, dated as of May 2, 2018, from John R. Holder, for the benefit of Lender
|
9.
|
Hazardous Materials Indemnity Agreement, dated as of May 2, 2018, from Seller and John R. Holder, for the benefit of Lender
|
10.
|
Cash Management Agreement, dated as of May 2, 2018, between Seller and Lender
|
11.
|
Letter of Direction, dated as of May 2, 2018, between Lender and Seller
|
12.
|
Waiver of Appraisal Rights, dated as of May 2, 2018, from Seller and John R. Holder, for the benefit of Lender
|
13.
|
Subordination, Nondistubrance and Attornment Agreement, dated as of May 2, 2018, among Seller, Tenant, and Lender
|
14.
|
Lease Enhancement Insurance Policy No. 38412372 Issued by Lexington Insurance Company with an effective date of May 1, 2018
|
1.
|
The current year’s and subsequent year’s real property taxes and assessments, which taxes and assessments are not yet due and payable.
|
2.
|
Any recapture, reassessment or similar taxes or increase in taxes caused by Purchaser’s removing the Property from its present classification, subsequent changes in use by Purchaser or failure of Purchaser to apply for any available ad valorem tax classification (all of which are the responsibility of Purchaser).
|
3.
|
All local, state, and federal laws, ordinances, and governmental regulations, including but not limited to, building and zoning laws, ordinances and regulations, now or hereafter in effect and relating to the Property.
|
4.
|
Any state of facts relevant to title which an accurate survey or an inspection of the Properties would reveal, including but not limited to the location of boundary lines, improvements, parties in possession and encroachments.
|
5.
|
The rights of upper and lower riparian owners to the free and unobstructed flow of the water of any rivers, streams or creeks without diminution or pollution, and the consequence of any past or future change in the location of same.
|
6.
|
Title to that portion of the property lying between the high and low water marks of any navigable rivers, streams or creeks, and rights of upper and lower riparian owners in and to same.
|
7.
|
The Lease.
|
8.
|
The Existing Loan Documents.
|
9.
|
The FILOT Agreement.
|
10.
|
Declaration of Covenants, Conditions and Restrictions for Daniel Island Town Center Shared Parking Facilities dated August 19, 1999, and recorded August 20, 1999, in the ROD Office for Berkeley County, South Carolina in Book 1723 at Page 278; First Supplement to Declaration of Covenants, Conditions and Restrictions for Daniel Island Town Center Zone Shared Parking Facilities dated November 10, 2000, and recorded November 28, 2000, in the Berkeley County ROD Office in Book 2090 at Page 206; Supplement to Declaration of Covenants, Conditions and Restrictions for Daniel Island Town Center Zone and Declaration of Covenants, Conditions and Restrictions for Daniel Island Town Center Shared Parking Facilities dated September 24, 2014, and recorded September 26, 2014, in the Berkeley County ROD Office in Book 10982 at Page 125; and Supplement to Both (I) Declaration of Covenants, Conditions and Restrictions for Daniel Island Town Center Zone and (II) Declaration of Covenants, Conditions and Restrictions for Daniel Island Town Center Shared Parking Facilities dated September 8, 2016, and recorded September 8, 2016, in the ROD Office for Berkeley County, South Carolina in Book 2268 at Page 415
|
11.
|
Amended and Restated Declaration of Covenants, Conditions and Restrictions for Daniel Island Town Center Zone dated April 1, 2018, and recorded April 3, 2018, in the ROD Office for Berkeley County, South Carolina in Book 2711 at Page 238; including Right of First Refusal and Option to Repurchase described therein; as amended and supplemented from time to time.
|
12.
|
Notice of Transfer Fee Covenant dated March 21, 2012, and recorded March 26, 2012, in the Berkeley County ROD Office in Book 9379 at Page 144.
|
13.
|
Third Amended and Restated Declaration of Easements and Covenant to Share Costs for Daniel Island dated April 1, 2018, and recorded April 3, 2018, in the ROD Office for Berkeley County, South Carolina in Book 2711 at Page 322.
|
14.
|
Development Agreement by and among the Harry Frank Guggenheim Foundation, Daniel Island Development Company, Inc. and the City of Charleston dated June 1, 1995, and recorded June 23, 1995, in the ROD Office for Berkeley County, South Carolina in Book 681 at Page 300; as amended by First Amendment to Daniel Island Development Agreement dated June 9, 1997, and recorded June 25, 1997, in the ROD Office for Berkeley County, South Carolina in Book 1092 at Page 275; as amended by Second Amendment to Development Agreement (Daniel Island) dated November 24, 1998, and recorded July 20, 1999, in the ROD Office for Berkeley County, South Carolina in Book 1695 at Page 7 4; as amended by Third Amendment to Development Agreement (Daniel Island) dated March 8, 2000, and recorded May 18, 2000, in the ROD Office for Berkeley County, South Carolina in Book 1931 at Page 187; as affected by Assignment and Assumption of Rights and Easements as recorded in Book 1093 at Page 290; as affected by Assignment and Assumption of Rights and Easements as recorded in Book 1093 at Page 298.
|
15.
|
Cooperation Agreement Between Owner Parties to The City Development Agreement by and between Daniel Island Investments, LLC and The Daniel Island Company, Inc. dated November 9, 1998, and recorded November 9, 1998, in the Berkeley County ROD Office in Book 1478 at Page 242.
|
16.
|
Exceptions as stated in that certain deed from Daniel Island Development Company, Inc. unto The Daniel Island Company, Inc. dated June 24, 1997, and recorded June 25, 1997, in the Berkeley County ROD Office in Book 1093 at Page 276; as affected by Assignment and Assumption of Rights and Easements as recorded in Book 1093 at Page 290.
|
17.
|
Utility Easement Electrical and Gas Lines Parcel Q/5 from The Daniel Island Company, Inc. unto South Carolina Electric & Gas Company dated September 14, 2004, and recorded October 5, 2004, in the Berkeley County ROD Office in Book 4276 at Page 0134.
|
18.
|
Easement from Daniel Island Company, Inc. unto South Carolina Electric & Gas Company dated October 31, 2014, and recorded November 17, 2014, in the Berkeley County ROD Office in Book 11073 at Page 194.
|
19.
|
Right-of-Way Easement Water & Sewer from The Daniel Island Company, Inc. unto the Commissioners of Public Works dated February 17, 2015, and recorded July 2, 2015, in the Berkeley County ROD Office in Book 11475 at Page 58.
|
20.
|
Temporary Construction, Parking and Access Easement Agreement from The Daniel Island Company, Inc. to HPDI, LLC dated September 24, 2014, and recorded September 26, 2014, in the ROD Office for Berkeley County, South Carolina in Book 10982 at Page 109.
|
21.
|
Memorandum of Lease Agreement by and between HPBB1, LLC, a Landlord, and Blackbaud, Inc., as Tenant, dated September 8, 2016, and recorded September 8, 2016, in the ROD Office for Berkeley County, South Carolina in Book 2268 at Page 432; as amended by that Amendment to
|
22.
|
Declaration of Easements and Agreement to Share Costs by and between HPBB1, LLC and Blackbaud, Inc. dated September 8, 2016, and recorded September 8, 2016, in the ROD Office for Berkeley County, South Carolina in Book 2268 at Page 438.
|
23.
|
Drainage Easement Agreement by and between Daniel Island Town Association, Inc. and HPBB1, LLC dated September 8, 2016, and recorded September 8, 2016, in the ROD Office for Berkeley County, South Carolina in Book 2268 at Page 423.
|
24.
|
Right-of-Way Easement Sewer from The Daniel Island Company, Inc. unto the Commissioners of Public Works of the City of Charleston dated February 15, 2016 and recorded April 3, 2018, in the ROD Office for Berkeley County, South Carolina in Book 2711 at Page 428. This policy insures against loss or damage which the Insured shall sustain by reason of a final judgment or decree from a court of competent jurisdiction which constitutes a final determination and denies the right to maintain the existing improvements on the Land because of the encroachment, prior to the voluntary removal or destruction by fire or other hazard of the encroachment.
|
25.
|
Right-of-Way and Utility Easement from HPBB1, LLC unto the Commissioners of Public Works for the City of Charleston dated October 10, 2017 and recorded April 3, 2018, in the ROD Office for Berkeley County, South Carolina in Book 2711 at Page 411.
|
26.
|
All matters set forth on that certain plat by Thomas & Hutton Engineering entitled “PLAT OF VARIOUS NEW C.P.W. EASEMENTS THROUGH THE PROPERTY OF HPBB1, LLC”, prepared for and owned by HPBB1, LLC, dated September 6, 2017 and recorded on April 3, 2018 in the ROD Office for Berkeley County in Plat Cabinet Q at Page 187h.
|
27.
|
[insert specific description of any additional matters deemed to be Permitted Exceptions under Section 3.3 or Section 3.4.]
|
28.
|
[insert specific description of any lien, encumbrance or other title exception resulting from any act or omission of Purchaser or of Blackbaud, Inc., as tenant under the Lease]
|
1.
|
Copies of the Lease
|
2.
|
Title Policies
|
3.
|
Survey
|
4.
|
Copies of the income and expense statements pertaining to the operation of the Property as regularly provided to Seller by HPI
|
5.
|
Copies of all environmental and geotechnical reports pertaining the Property
|
6.
|
Copies of the as-built plans for the Improvements
|
7.
|
Copies of the most recent FILOT statement for the Property
|
8.
|
Certificates of Occupancy for the Improvements
|
9.
|
Copies of all warranties
|
10.
|
A summary of all insurance claims submitted by Seller since receipt of Certificate of Occupancy and any pending insurance claims relating to the Property
|
11.
|
Inspection Reports relating to matters arising after completion of construction that are the responsibility of Seller, as Landlord, under the Lease
|
12.
|
Maintenance Reports relating to matters arising after completion of construction that are the responsibility of Seller, as Landlord, under the Lease
|
13.
|
Documents regarding construction defects regarding construction performed by Seller
|
14.
|
Warranties and construction contracts regarding construction performed by Seller as to which Seller or an affiliate is a counterparty
|
1.
|
If there are no documents in the possession or control of Seller (or within the possession or control of Seller within the 3 month period ending on the Effective Date) falling within one or more of the categories referenced above, Seller shall note this when it delivers the Property Documents to Seller.
|
2.
|
Documents in the possession or control of HPI, in its capacity, as Manager for Blackbaud, Inc. shall not constitute “Property Documents”. Seller acknowledges and agrees, however, that Blackbaud, Inc. will request copies of any such documents from HPI in its capacity as Manager and such possession and this Note shall not, in itself, be construed to exclude any information or documents from the scope of required disclosures under this Agreement. Instead, such documents possessed by HPI shall, in fact, constitute Property Documents if such documents fall within the scope of nos. 1-14 above.
|
8.
|
Miscellaneous.
|
STATE OF SOUTH CAROLINA
|
)
|
)
|
TITLE TO REAL ESTATE
|
COUNTY OF CHARLESTON
|
)
|
STATE OF
|
)
|
)
|
ACKNOWLEDGMENT
|
COUNTY OF
|
)
|
|
Assignor:
[_____________________]
By: _________________________
Name: ______________________
Its: _________________________
|
|
Assignee:
[_____________________]
By: _________________________
Name: ______________________
Its: _________________________
|
|
Assignor:
[_____________________]
By: _________________________
Name: ______________________
Its: _________________________
|
|
Assignee:
[_____________________]
By: _________________________
Name: ______________________
Its: _________________________
|
1.
|
Seller is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations);
|
2.
|
Seller is not a disregarded entity as defined in §1.1445-2(b)(2)(iii);
|
3.
|
Seller’s U.S. employer identification number is _______________; and
|
4.
|
Seller’s address is 3300 Cumberland Boulevard, Suite 200, Atlanta, Georgia 30339.
|
|
[_____________________]
By: _________________________
Name: ______________________
Its: _________________________
|
|
HPBB1, LLC, a Georgia limited liability company
By: ___________________________
Name: _________________________
Its: ____________________________
|
|
BLACKBAUD, INC., a Delaware corporation
By: ___________________________
Name: _________________________
Its: ____________________________
|
|
BBHQ1, LLC, a Delaware limited liability company
By: ___________________________
Name: _________________________
Its: ____________________________
|
Existing Date
|
Extended Date
|
(Phase 2 Exercise Deadline) – June 23, 2020
|
45 days after the Trigger Date
|
(Landlord and Tenant to enter into the Phase 2 Lease) –June 23, 2020
|
45 days after the Trigger Date
|
(Delivery of Phase 2 Preliminary Budget by Landlord to Tenant) – August 13, 2020
|
96 days after Trigger Date
|
|
LANDLORD:
|
|
|||
|
|
|
|||
|
HPBB1, LLC,
|
|
|||
|
a Georgia limited liability company
|
|
|||
|
|
|
|
|
|
|
By:
|
/s/ John R. Holder
|
|
||
|
|
|
John R. Holder
|
|
|
|
|
|
President
|
|
|
|
[Seal]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TENANT:
|
|
|||
|
|
|
|
|
|
|
BLACKBAUD, INC.,
|
|
|||
|
a Delaware corporation
|
|
|||
|
|
|
|
|
|
|
By:
|
/s/ Jon W. Olson
|
|
||
|
Name:
|
Jon W. Olson
|
|
|
|
|
Title:
|
Sr. Vice President, General Counsel
|
|
||
|
|
|
|
|
|
|
[Seal]
|
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q 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:
|
August 4, 2020
|
By:
|
|
/s/ Michael P. Gianoni
|
|
|
|
|
Michael P. Gianoni
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q 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:
|
August 4, 2020
|
By:
|
|
/s/ Anthony W. Boor
|
|
|
|
|
Anthony W. Boor
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
(Principal Financial and Accounting Officer)
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
August 4, 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:
|
August 4, 2020
|
By:
|
|
/s/ Anthony W. Boor
|
|
|
|
|
Anthony W. Boor
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
(Principal Financial and Accounting Officer)
|