A month has gone by since the last earnings report for Blackbaud (
BLKB Quick Quote BLKB - Free Report) . Shares have lost about 5.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Blackbaud due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Blackbaud Q3 Earnings & Revenues Beats Estimates
Blackbaud delivered third-quarter 2019 non-GAAP earnings of 56 cents per share, outpacing the Zacks Consensus Estimate of 50 cents. However, the figure declined 5.1% from the year-ago quarter.
Total non-GAAP revenues improved 5.4% year over year to $221.4 million, surpassing the Zacks Consensus Estimate of $220 million.
Quarter in Detail
Blackbaud reports maintenance and subscriptions under recurring revenues as it is shifting toward a cloud-based subscription model from the traditional revenue-based model.
Total non-GAAP recurring revenues for the reported quarter were $205.5 million, accounting for 92.8% of total non-GAAP revenues. The figure was also up 8.6% year over year.
One-time services and other revenues were $15.9 million, declining 23.9% year over year.
Non-GAAP organic revenues improved 2.7% year over year to $215.9 million. Meanwhile, non-GAAP organic recurring revenues advanced 5.6% to $199.7 million.
Non-GAAP gross margin contracted 100 bps to 59.5%.
Non-GAAP operating margin contracted 240 bps from the year-ago figure to 16.5%. The decrease can primarily be attributed to higher investments.
Balance Sheet & Cash Flow
As on Sep 30, 2019, Blackbaud had cash and cash equivalents of $29.1 million compared with $32.7 million at the end of the previous quarter. Total debt (including current portion) amounted to $503.1 million compared with $561.3 million reported at the end of the last reported quarter.
Cash flow from operating activities during the nine months ended Sep 30, 2019, was $122.1 million. Free cash flow during the quarter was $62.5 million.
The company recently approved a quarterly dividend payment of 12 cents per share to be paid out on Dec 13, 2019, to shareholders as of Nov 27, 2019.
Blackbaud maintained 2019 outlook. The company anticipates revenues of $880-$910 million (mid-point $895 million) for 2019.
It anticipates non-GAAP earnings per share of $2.11-$2.28 per share (mid-point of $2.20) for 2019.
Non-GAAP operating margin is projected to be 16.7-17.2%.
Blackbaud continues to anticipate non-GAAP free cash flow of $124-$134 million for 2019.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -11.92% due to these changes.
Currently, Blackbaud has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Blackbaud has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.