Servicing the Servicers: Blackbaud (BLKB)

Blackbaud, and all technology companies, are seeing a shift away from desktop software that is purchased and repurchased by clients. Instead they are moving into “software as a service” and cloud-based models of their tools.  This can cause a bumpy transition and Blackbaud has seen a fall in earnings over the past two years, coinciding with a rough market for nonprofit fundraising and its acquisition.  Expectations are that its revenues will improve this year and that the company is poised for sizeable growth due to its dominance in the nonprofit sector niche, though there are plenty of technology companies that provide similar but less-targeted software. Blackbaud substantially increased its debt when purchasing Convio, which is something to keep an eye on. The company does offer a small dividend that has been slowly creeping up.  Last year Blackbaud hit its all-time high stock prices, when the stock, which has never been cheap, really soared. The stock price pulled back a bit earlier this year, putting it on the edge of our buyable range, but it has regained ground after the company released this quarter’s impressive earnings results. Unlike some of the behemoth technology companies, Blackbaud is unlikely to reach true value prices in the near future, but it is currently trading below its historical price-to-earnings ratio, has an interesting and in-demand story, and with another dip looks like a reasonable bet for those with a higher risk tolerance.

Corporate Responsibility

Staying true to its software, much of Blackbaud’s social responsibility lies in its own charitable giving, both in dollars and services. It makes a point to focus on charities that support disaster relief efforts, and to steer clients towards these groups via its website and other platforms. The company also encourages its employees to volunteer on company time during service days, teaching them grant writing/making skills and nonprofit leadership skills. Blackbaud has developed “Greenbaud,” an employee-led environmental corps that works on projects within the company and out in executive leadership team.


Blackbaud (BLKB)

Revenues:            $447 Million
2014E                      $1.45
2013E                      $1.21
2012A                     $0.95

Projected Annual Growth Rate:  15%
Dividend:  1.7%
52 Week High-Low:  $31.60 – $20.99
Risk: High