Blackbaud Inc. is making a $43 million bet that data analytics is central to the future of its business, acquiring a startup to shore up its ability to crunch numbers for nonprofit groups.
The Daniel Island-based technology company said Tuesday that by purchasing Reeher, it will get another data tool to sell to customers. Reeher makes software that predicts who might be willing to give money and tells professional fundraisers how well they're doing.
Unlike Blackbaud, Reeher, which is headquartered in Minnesota, has been squarely focused on building software for universities. Blackbaud's bet is that the same tools will be useful for other nonprofits because it sells to all sorts of groups and organizations that seek donations.
"Frankly, this one we think will spread beyond higher education for us, given the other verticals we have," Blackbaud chief executive Mike Gianoni said on a conference call with investors. "We think it's applicable to more than just higher ed."
The acquisition is Blackbaud's first in nearly a year, but it tacks onto a string of purchases it has made in the last few years. The company typically looks to buy startups that can give it a new skill set or a foothold in a new market. Because Blackbaud is relatively new to higher education, Reeher does both.
Gianoni told investors that the deal would give Blackbaud a chance to win over new customers, but he said Reeher would cut into the company's profit margin slightly.
Data analysis has been a key to Blackbaud's business for years now, but its significance has bubbled up fairly recently in its 37-year history. Analytics products pulled in less than $1 million 15 years ago, but made more than $40 million a decade later.
Those products are now cooked into Blackbaud's other offerings, which pulled in $788 million of sales last year.
The company's business continued to tick upward at the beginning of the year, according to financial figures released Monday. Profits soared 35 percent in the first quarter compared to 2017. The company earned $13 million in the first three months of the year.
Profits have been boosted by a new, more lucrative business model of selling subscriptions to software rather than one-off licenses. But sales have also increased: Total revenue rose 13 percent in the first quarter to nearly $181 million.