The first-quarter profit at Blackbaud Inc. jumped 46 percent compared to a year ago, but the technology firm is maintaining a cautious outlook for 2010, even as some of its customers say business is perking up.
The Daniel Island-based company, which sells software and services that help nonprofit groups raise money, earned $6 million in the first three months of the year. Revenue edged up 2 percent to $76.2 million for the period ended March 31, but it was slightly short of projections, and stock shares fell $2.59 Wednesday to close at $23.05 per share.
The latest numbers were at the upper end of the company's previously announced guidance. Marc Chardon, chief executive officer, said it would be premature to celebrate, despite some upbeat signals.
The nonprofit business has been hammered during the recession as individual and corporate donations to many groups have shriveled. Blackbaud, with 22,000 customers and access to current donation data, said a broad-based rebound for the industry is unlikely this year.
"While our first-quarter financial results were again consistent with our expectations, we still have not seen a material change in buying behavior from an overall perspective," Chardon told analysts during a conference call Tuesday.
"As a result, we continue to plan our business based on the assumption that the macro environment will not improve materially during 2010."
But he also said it is "encouraging" that some small to mid-sized nonprofit groups are now showing signs of stability and, on average, are reporting modest upticks in donations. The significance is that Blackbaud previously determined that this part of its customer base was hardest hit by the recession.
Larger nonprofits, on average, are not seeing the same sort of revenue growth.
"So in some sense, it's much like a small business sometimes leads the recovery in the United States," Chardon said. "Well, small nonprofits seem to be somewhat leading the recovery here."
He also noted that Blackbaud booked more sales to small organizations in the latest quarter than it has since the downturn began, saying, "It's nice to see a few more customers come out of that no-decision pool."
"It's not a hundred percent increase, but it was double-digit," he said.
Chardon said he's hopeful that pattern will continue.
"I'm not counting on it yet though, because a quarter does not make a trend."
In the meantime, the company is focused on its "key growth initiatives, including online fundraising, where Blackbaud is strengthening its already leading position in the market."
He said the company, which is the largest in its industry, is poised to benefit and take market share from competitors once the economy recovers and donations increase.
"When budgets and the spending environment improve, we believe Blackbaud will be well-positioned to capture a very sizable portion of any increase in demand in the marketplace," he said.
The company released its earnings after U.S. stock markets closed on Tuesday.
Also, Blackbaud's board approved a quarterly dividend of 11 cents a share payable June 15 to stockholders of record on May 28.
Contact John McDermott at 937-5572 or firstname.lastname@example.org.