Blackbaud made waves in the nonprofit software world last January when it announced it would acquire Texas rival Convio.
When the deal finally closed in May after a protracted U.S. Department of Justice review, an executive at the Daniel Island company brushed off a question about layoffs, pointing to Blackbaud’s more than 200 posted job openings, more than enough slots for people who might have to switch roles in the combined company.
A year later, Blackbaud provided a different answer to that question, laying off 150 employees Tuesday, including about 50 people at the local headquarters. After most of the cuts become effective at the end of the month, Blackbaud will have about 2,600 employees, about 1,150 on Daniel Island.
In an internal email, CEO Marc Chardon said Tuesday was “a sad day for Blackbaud,” but that the “restructuring” was necessary for the future health of the publicly traded company.
Among the reasons for the cuts, according to an attached series of questions and answers for employees, were the company’s “recent financial performance (slow growth of revenue and bookings),” including Convio’s disappointing performance last year, and the “continued (and likely continuing) slow economy.”
“Since 2008, we have been responding to the economic storm by reducing costs and acting as a leaner company,” according to the document. “Seventy-two percent of our total expense as a company is directly to people, so to impact costs on a level we needed to change meant focusing on the number of positions to support the level of our business.”
Karoline McLaughlin, a company spokeswoman, said the cuts, which were decided last month, are spread across the company’s offices.
Only “a handful” of positions were cut at Convio’s former headquarters in Austin, Texas, now Blackbaud’s second-largest office, McLaughlin said. Other recent moves, like the expansion of that office space and last year’s consolidation of the company’s San Diego office to Austin, signal the future prominence of that office.
McLaughlin also said the cuts are spread among departments like sales, marketing and administration. Some laid-off employees took to social media with plucky optimism.
“I am not bitter; I had a great run with Blackbaud and I always land on my feet,” Marc Van Baar, an enterprise educational consulting manager, according to LinkedIn, wrote on his Facebook page. “I am going to travel for a few weeks, see my family, etc. Please be on the lookout for job opportunities for me as I will be looking for a new job soon. Good things will come out of this!”
Christina Orso announced the layoffs, which included her “entire communications team,” on Twitter. The technical editor, according to LinkedIn, cheerily accepted encouragement and offered only joking anger toward Blackbaud, which is providing severance and “outplacement services” to the laid-off workers.
It didn’t take long Tuesday for area software companies to either hear from the outgoing Blackbaud employees or solicit them. Companies ranging from military contractors like Life Cycle Engineering to video-game maker Kiz Studios offered their condolences and recruiting pitches on Twitter.
The cuts follow a smaller reshuffling in late August, when the company eliminated 51 positions around the time it announced it would discontinue one of Convio’s products. McLaughlin said Tuesday that all of those people were offered different jobs within the company but only about half took those offers.
Blackbaud eventually paid a total of $325 million for Convio, based on a $275 million valuation of thve company plus the $50 million Convio had in cash on hand.
Last summer, Blackbaud executives said they were aiming for a 20 percent profit margin, but the company’s third-quarter earnings report in November was short of expectations because of a spike in costs related to the Convio acquisition.
The shortfall was blamed on “execution” issues within the Blackbaud’s services business and sales-force disruptions in the July-September period, when the company announced the first reorganization and Convio’s former CEO resigned as president of a key Blackbaud business.
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. Blackbaud will announce its year-end earnings early next month, according to McLaughlin.
McLaughlin noted Tuesday that Blackbaud has about 50 open positions, especially for financial specialists and software developers, and that there is no hiring freeze in effect. She said the company’s international and online fund-raising businesses are highlights going into 2013.
The internal email attachment made no promises about the future, though, both with regard to staffing or the companies’ offices, the leases for three of which are up at the end of this year.
Ross MacMillan has been covering Blackbaud for Jefferies & Co. since 2006, two years after Blackbaud went public. He said Tuesday’s layoffs, which he described as “not immaterial but … not massive either,” weren’t surprising given Blackbaud’s — and within it, Convio’s — recent financial performance.
“To make the ...target, you have to lower your cost structure, which it sounds like they’re doing here,” MacMillan said.