One of the region's biggest technology businesses cut its revenue and profit forecast Monday, triggering an overnight sell-off that briefly knocked more than 20 percent off its stock price.
Shares of Blackbaud Inc. regained some of the lost ground when trading resumed Tuesday.
The stock tumbled after the Charleston company disclosed late Monday afternoon that its 2018 sales will fall short of previous estimates by as much as $36 million, dragging down profits and hurting other key financial metrics.
Shares of Blackbaud, which closed at about $90 to start the week, fell to $69.62 by Tuesday morning. They ended the session at $77.38, down 14 percent.
Based on Daniel Island, the company sells software and support services to more than 40,000 customers in the nonprofit industry, from traditional charities to private schools worldwide.
The financial update came just as Blackbaud was kicking off its three-day bbcon conference in Orlando, Fla.
On a call with analysts, management attributed roughly half of the shortfall to a drop in revenue from one-time sales and services, which the company has been phasing out. The goal is to replace that category with "subscriptions" that generate recurring income, but for now the transition is creating some "short-term pain," Blackbaud finance chief Tony Boor said Monday.
The other major culprit was a unanticipated drop in fees the company collects for processing charitable gifts, tuition and other payments.
“We’ve seen some recent shifts in consumer behavior that's impacting our transaction business," CEO Mike Gianoni said.
He said the average size of donations is down compared to previous projections, partly because of fewer natural disasters. Also, "a lack of confidence" stemming from a recent scandal involving U.K. nonprofits has hurt charitable giving in Britain, Gianoni said.
Rob Oliver, who follows Blackbaud as a senior analyst at Baird Equity Research, described the revised outlook in a new report as a "meaningful reduction."
On a per-share basis, the company's year-end profit is now expected to be between $2.42 and $2.56, or about 32 cents less than previously thought. Revenue is projected to come in between $844 million and $855 million. Both estimates remain on pace to top the company's 2017 results.
Gianoni and Boor stressed that the lower outlook has no effect on the long-term growth strategy at Blackbaud, which has more than 3,300 employees worldwide and plans to add about 300 jobs at its Charleston headquarters over the next five years.
"We're continuing to invest in sales and marketing because we have a large opportunity to better cover our markets," Gianoni said. "And we're going to continue to innovate because there's a tremendous opportunity to move this industry online and into the cloud.”