Charleston software firm Blackbauds sales, profit take hit from buyout
Blackbaud Inc.’s third-quarter profit skidded 72 percent from a year ago as a big acquisition this spring led to a spike in costs at the locally based technology company.
Also, sales came in slightly short of expectations, partly because of “transition” glitches triggered in the wake of the $275 million purchase, the company said Thursday.
Blackbaud, which sells software and services to nonprofit organizations, is one the region’s biggest tech employers and is the largest company in its industry. It earned $2.8 million for the third quarter, the first reporting period to include numbers from newly acquired online rival Convio.
The profit decline was tied to higher operating expenses, which increased by more than $21 million for the quarter, to $61.2 million. Also eating into the bottom line was Blackbaud’s cost of providing services and software subscriptions, which jumped by $15 million, or 50 percent, to $46 million.
Sales climbed 28 percent to $122.5 million, in large part because of new business the company picked up through the Convio merger in May. But overall the revenue figure was about $1 million short of expectations, officials said.
The shortfall was blamed partly on “execution” issues within the business that sells Blackbaud services. CEO Marc Chardon said that unit underperformed last quarter.
Chardon also pointed to management and sales-force disruptions in the July-September period, when Blackbaud announced that it was cutting 51 jobs and when Convio’s former CEO resigned as president of a key Blackbaud business.
Chardon noted that the services group is under new leadership, and that he expects it to get back on track quickly.
“And so I think these things are actually pretty much behind us,” he said.
Even so, Blackbaud trimmed its sales forecast for the year by 2 percent, projecting that the figure will now come in between $451 million and $453 million. In heavy trading, the company’s stock dropped $1, or more than 4 percent, to close at $22.77.
Chardon and finance chief Tony Boor said the Daniel Island business is ahead of schedule as it looks to ring up to $10 million in annual savings from the Convio deal. The company expects to see a $5 million benefit this year, Boor said.
Contact John P. McDermott at 937-5572.