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SC tech company Blackbaud had a strong start to 2020, but coronavirus effects yet to show

Blackbaud

Blackbaud Inc. took a number of steps to mitigate the effects of an economic downturn from the coronavirus pandemic, including postponing contributions to employee retirement plans and withdrawing its financial guidance for the year. File/Provided

If the coronavirus pandemic is going to put downward pressure on Blackbaud Inc.'s finances, the company's first quarterly results of the year didn't show it.

Sales during the first three months of the year totaled $223.6 million, up nearly 4 percent from the same period in 2019, according to results the firm reported last week.

The Daniel Island-based technology company also swung to a profit for the quarter, earning $4.6 million compared to a $1.1 million loss a year earlier.  

The company's executives fully expect the rest of 2020 to be more challenging.

Blackbaud sells recurring subscriptions to its software products to charities, colleges, churches, grade schools and other nonprofits. That philanthropy industry has struggled during the pandemic, as discretionary incomes and donations have cratered. But the turbulence could create an opportunity for Blackbaud. Among other things, its tech platform supports virtual events and meetings. 

CEO Mike Gianoni told investors during a conference call Wednesday the company "hasn't missed a beat operationally." Its platform has helped schools, among others, move to the web during the lockdown. 

"All of our K-12 customers basically, with little effort or no effort, went virtual," he said. 

He said the pandemic could push more organizations to realize they need to adopt cloud software.

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But Blackbaud, like most businesses, expects a rocky year. Given its current and potential customers are struggling, sales will likely suffer.

The firm took a number of steps to try to counter those effects. Its board halted quarterly dividend payments to investors. Gianoni gave up his salary. Contributions to employee retirement plan were postponed. Hiring efforts were frozen and merit-based raises were replaced with stock grants. And in early April, the company withdrew its financial guidance for the year.

On the flip side, Blackbaud is providing $1,000 onetime bonuses to employees who make less than $75,000 a year.

Gianoni said virus-related disruptions began to show up in the latter half of March, as the first quarter was winding down. The following three-month period will be a tougher slog, as it will be for most businesses.

During the call, an analyst asked whether Blackbaud plans to use $50 million available to buy back shares, a move that can buoy a stock price by increasing the portion of the company each investor owns. Airlines and other companies that received federal assistance because of the pandemic have been criticized in recent weeks for using their capital to buy back stock and reward shareholders. 

In Blackbaud's case, chief financial officer Tony Boor said the best use of money is to reduce debt and increase the company's liquidity "so that we have as much flexibility as possible to do whatever we need to do."

Reach Mary Katherine Wildeman at 843-607-4312. Follow her on Twitter @mkwildeman.

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