Slide 1: Investor Presentation
INVESTOR PRESENTATION March 2014
Slide 2: Mike Gianoni, President & Chief Executive Officer
MIKE GIANONI, PRESIDENT & CHIEF EXECUTIVE OFFICER 2.
Slide 3: Forward Looking Statement
FORWARD LOOKING STATEMENT Except for historical information, all of the statements, expectations, and assumptions contained in this presentation are forward-looking statements which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not
Slide 4: Blackbaud: A Market-Leading Growth Company
BLACKBAUD (NASDAQ: BLKB) A MARKET-LEADING GROWTH COMPANY Market leader in an attractive vertical software market Unique advantage from 30+ years of building deep domain knowledge Well positioned to realize value from growth in online fundraising Broad suite of solutions benefits from transition to c
Slide 5: Nonprofits We Serve Have Unique Missions That Require Unique Focus
NONPROFITS WE SERVE HAVE UNIQUE MISSIONS THAT REQUIRE UNIQUE FOCUS Blackbaud has more than 29,000 customers in over 60 countries with a primary focused in six key geographies 5.
Slide 6: Nonprofits Have Unique Needs Requiring Tailored Software and Services
NONPROFITS HAVE UNIQUE NEEDS REQUIRING TAILORED SOFTWARE AND SERVICES UNIQUE NEEDS MARKET SEGMENTS • Supporter Relationship ENTERPRISE Journey Target: 5,000+ potential orgs Supporters don’t fit into a sales pipeline, they serve their cause in many ways MID-MARKET Target: 100,000+ • Program Mission /
Slide 7: Nonprofit Organizations: Consistent Track Record of Historic Growth
NONPROFIT ORGANIZATIONS: CONSISTENT TRACK RECORD OF HISTORIC GROWTH Growth of Donations1 (Inflation — adjusted $ in billions) 4% CAGR $316B $305B $293B $274B 2009 2010 2011 2012 1 2013 Giving USA Foundation 2 Giving USA, Blackbaud – The Chronicle of Philanthropy 7.
Slide 8: Nonprofit Organizations: Market Trends and Growth Drivers
NONPROFIT ORGANIZATIONS: MARKET TRENDS AND GROWTH DRIVERS • Cloud-based software is increasingly in demand as it effectively becomes “the MIGRATING TO THE CLOUD organization” (no IT, centralized office); BLKB is well-positioned to capitalize on the continuing shift in the marketplace SHIFT TO • Onli
Slide 9: Blackbaud Provides Unique Array of Highly-Targeted Solutions
BLACKBAUD PROVIDES UNIQUE ARRAY OF HIGHLY- TARGETED SOLUTIONS Ticketing management Event Student information management systems Internet Data analysis and fundraising reporting tools Financial data and Tailored Online interactive donor integration SOFTWARE & SERVICES communities Payment Campaign ser
Slide 10: Competitive Advantages in a Fragmented Industry
COMPETITIVE ADVANTAGES IN A FRAGMENTED INDUSTRY 29,000+ Customers Worldwide HORIZONTAL VERTICAL/NICHE APPS1 Vertically tailored, comprehensive suite of solutions for NPO X Domain knowledge in sales, services and products teams Product breadth/depth X X Domain expertise for all NPO verticals X
Slide 11: Continued Core Markets Growth of Subscription/Recurring Revenue
CONTINUED CORE MARKETS GROWTH OF SUBSCRIPTION/ RECURRING REVENUE Driving Momentum for the Future • Select geographic market expansion INTERNATIONAL • Grow key CRM and online offerings in current markets Target: 5.5 Million potential orgs • Leverage Everyday Hero to expand customer base • Drive penet
Slide 12: Strong Leadership and Increased Focus on Growth, Cash Flow, and Execution
STRONG LEADERSHIP AND INCREASED FOCUS ON GROWTH, CASH FLOW, AND EXECUTION CEO Mike Gianoni joined January 2014 Transformation to SaaS/ Renewed Focus on Product Recurring Revenue Company Suite Optimization Increasing Operating Efficiencies Capitalize on Key Market Trends Optimize Sources of Recurring
Slide 13: Significant 2014 Growth Opportunities
SIGNIFICANT 2014 GROWTH OPPORTUNITIES Driving Momentum for the Future • Revenue Growth - Accelerating Organic Growth • Product Optimization - Simplifying • Transformation to a Recurring Revenue Company - Focus on SaaS/MRR • Increased Operating Efficiencies - Increasing Scalability 13.
Slide 14: Significant 2014 Growth Opportunities
SIGNIFICANT 2014 GROWTH OPPORTUNITIES Revenue Growth Product Optimization • Accelerated Growth/Product Integration • Continue to Simplify/Refine Product Payments, Analytics and Mobile Suite • Core Markets Growth – MRR • Drive Integrated Solutions • New Investments in Sales/Retention • Launch New Pro
Slide 15: Tony Boor, Chief Financial Officer
TONY BOOR, CHIEF FINANCIAL OFFICER 15.
Slide 16: Consistent Track Record of Revenue Growth
CONSISTENT TRACK RECORD OF REVENUE GROWTH 2014 Organic growth is expected to increase by more than 50% vs. 2013 $600 $503.8 M $500 13% CAGR $400 $300 $200 $166.3 M $100 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 Maintenance Subscription Services, license, other 16.
Slide 17: Fast Growing Recurring Revenue Stream
FAST GROWING RECURRING REVENUE STREAM Mix of Revenue Consistent, Solid Growth (2013 breakdown) (recurring revenue) $351.4 M 28% 18% MAINTENANCE CAGR 25% SERVICES $91.5 M 42% SUBSCRIPTION 3% Licenses 2% 2006 2007 2008 2009 2010 2011 2012 2013 Other 17.
Slide 18: Diversified Revenue Streams
DIVERSIFIED REVENUE STREAMS Revenue by Business Unit** INTERNATIONAL* 8% 47% 45% ENTERPRISE GENERAL CUSTOMERS MARKETS **Excludes Canada which is reported in GMBU and ECBU for 18. segment reporting purposes
Slide 19: Track Record of Generating Strong Non-GAAP Operating Income
TRACK RECORD OF GENERATING STRONG NON- GAAP OPERATING INCOME $101.3 M 9% CAGR $46.1 M 2005 2006 2007 2008 2009 2010 2011 2012 2013 19.
Slide 20: Record of Using Strong Cash Flow to Enhance Shareholder Value
RECORD OF USING STRONG CASH FLOW TO ENHANCE SHAREHOLDER VALUE CASH FLOW 2013 CFFO of $107.2 M / 21% margin DIVIDEND PAYMENTS & STRATEGIC DEBT REDUCTION ACQUISITIONS • $0.48 per share dividend – 2013 • 12 acquisitions since early 2006, • $142.1 million total net debt total of ~$500M reduction since C
Slide 21: 2013 Financial Highlights
2013 FINANCIAL HIGHLIGHTS 34% GROWTH 11.4% 35% GROWTH $101.3 M Total non-GAAP GROWTH $504.9 M $1.28 Non-GAAP Operating Income Earnings / Share TOTAL NON-GAAP REVENUE ($503.8 M GAAP Revenue) 56% $22.1 M Dividend Payments GROWTH $62.6 M Net Debt Reduction $107.2 M Cash Flow From Operations 21.
Slide 22: 2014 P&L Optics Change
2014 P & L OPTICS CHANGE NET-TO-GROSS: PAYMENTS BUSINESS Accounting Presentation Change Expectations Revenue and COGS Impact: adds $25 – $30 M Gross Margin Impact: decreases by 300 basis points Operating Margin Impact: decreases by 90 basis points • Optical changes only — no economic impact • Paymen
Slide 23: 2014 Operating Investments
2014 OPERATING INVESTMENTS (EXPECTED $) • Revenue Growth - $8 M Incremental 2014 Investment • Expand emerging and mid-markets sales force • Enhance enterprise-wide customer retention services • Product Optimization - $2.5 M Incremental 2014 Investment • New product launch - EDH • Increased SaaS/onli
Slide 24: Financial Goals
LOOKING AHEAD ~ $100 M 2014 $535 – $550 M CASH FLOW NON-GAAP FROM REVENUE OPERATIONS* FINANCIAL GOALS $92 – $98 M $1.16 – $1.24 NON-GAAP EARNINGS OPERATING PER SHARE INCOME *with stable free cash flow compared to 2013 24.
Slide 25: BLKB Investment Considerations
BLKB INVESTMENT CONSIDERATIONS STRONG RECURRING MANAGEMENT REVENUE MODEL TEAM WITH PROVEN DRIVEN BY GROWING SAAS OFFERING MARKET LEADER WITH TRACK RECORD Deep industry knowledge Represents over 70% of revenue for 2013 DIVERSIFIED GLOBAL and expertise with broad CUSTOMER BASE international exposure 3