Blackbaud, Inc. Announces Third Quarter 2008 Results and Fourth Quarter 2008 Dividend

Blackbaud, Inc. (Nasdaq: BLKB), the leading provider of software and related services designed specifically for nonprofit organizations, today announced financial results for its third quarter ended September 30, 2008.

Marc Chardon, Chief Executive Officer of Blackbaud, stated, "Our third quarter financial results were in-line with our expectations, which we believe is a solid performance considering the difficult economic environment that deteriorated considerably over the course of the quarter. The resiliency of the Company is a testament to Blackbaud’s strong market position, industry leading products, attractive business model and solid management execution. It is uncertain when the macro environment will improve; however, we believe these factors will enable Blackbaud to continue delivering solid profitability and cash flow.”

Chardon continued, "While the uncertainty of the economic environment and volatility of the financial markets has led to an increasingly cautious buying environment, the company has continued to make progress against its long-term growth initiatives. We have added a handful of new Enterprise CRM customers, international operations delivered solid third quarter results, our NetCommunity offering continued to show solid sales growth and the integration of the Kintera acquisition is proceeding very well. We believe progress against initiatives such as these, positions Blackbaud for improved revenue growth when the economic environment improves.”

For the quarter ended September 30, 2008, Blackbaud reported total revenue of $80 million. GAAP income from operations and net income were $11.5 million and $7.3 million, respectively, compared to GAAP income from operations of $15.3 million and net income of $8.8 million in the third quarter of 2007. GAAP diluted earnings per share were $0.17 for the quarter ended September 30, 2008, compared with $0.20 in the same period last year.

For the quarter ended September 30, 2008, non-GAAP revenue, including a $2.6 million revenue adjustment related to Kintera purchase accounting, was $82.7 million, an increase of 22% compared with the third quarter of 2007. Non-GAAP income from operations, which excludes stock-based compensation expense and amortization of intangibles arising from business combinations, was $19.2 million, an increase from $17.7 million in the same period last year. Non-GAAP net income was $11.4 million for the quarter ended September 30, 2008, an increase from $10.5 million in the same period last year. Non-GAAP diluted earnings per share were $0.26 for the quarter ended September 30, 2008, at the high-end of the Company’s guidance and an increase from $0.23 in the same period last year.

A reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures.”

The Company generated $26.5 million in cash from operations during the third quarter, and it repurchased approximately 311,000 common shares for approximately $6 million. On a year-to-date basis, the Company has repurchased approximately 1.8 million shares for approximately $42 million.

Timothy V. Williams, Chief Financial Officer of Blackbaud, stated, "The Company was able to deliver higher-than-expected non-GAAP operating profitability and EPS in the third quarter, while revenue was at the lower-end of our guidance. With the near-term growth of our target markets more uncertain due to the difficult economic environment, the Company is managing expenses closely in an effort to continue delivering solid profitability and cash flow for our shareholders. We believe we are well positioned to continue doing so based on our solid business model, which is characterized by over half of our revenue coming in the form of recurring maintenance and subscription revenue. In fact, in the third quarter, our subscription revenue was approximately twice the level of our license revenue – marking a significant milestone in the evolution of Blackbaud’s business model.”

Fourth Quarter 2008 Dividend and Share Repurchase Program

Blackbaud announced today that its Board of Directors has declared a fourth quarter dividend of $0.10 per share payable on December 15, 2008 to stockholders of record on November 28, 2008. Additionally, as of September 30, the Company had approximately $34 million remaining under its $40.0 million common stock share repurchase program that was authorized in May 2008.

Conference Call Details

Blackbaud will host a conference call today, November 3, 2008, at 5:00 p.m. (Eastern Time) to discuss the Company's financial results, operations and related matters. To access this call, dial 888-812-8594 (domestic) or 913-312-1410 (international). A replay of this conference call will be available through November 10, 2008, at 888-203-1112 (domestic) or 719-457-0820 (international). The replay passcode is 7340974. A live webcast of this conference call will be available on the "Investor Relations" page of the Company's Web site at www.blackbaud.com/investorrelations, and a replay will be archived on the Web site as well.

About Blackbaud

Blackbaud is the leading global provider of software and services designed specifically for nonprofit organizations, enabling them to improve operational efficiency, build strong relationships, and raise more money to support their missions. Approximately 22,000 organizations — including University of Arizona Foundation, American Red Cross, Cancer Research UK, The Taft School, Lincoln Center, InTouch Ministries, Tulsa Community Foundation, Ursinus College, Earthjustice, International Fund for Animal Welfare, and the WGBH Educational Foundation — use one or more Blackbaud products and services for fundraising, constituent relationship management, financial management, website management, direct marketing, education administration, ticketing, business intelligence, prospect research, consulting, and analytics. Since 1981, Blackbaud’s sole focus and expertise has been partnering with nonprofits and providing them the solutions they need to make a difference in their local communities and worldwide. Headquartered in the United States, Blackbaud also has operations in Canada, the United Kingdom, and Australia. For more information, visit www.blackbaud.com.

All Blackbaud product names appearing herein are trademarks or registered trademarks of Blackbaud, Inc.

Forward-looking Statements

Except for historical information, all of the statements, expectations, and assumptions contained in this news release are forward-looking statements that involve a number of risks and uncertainties. Although Blackbaud attempts to be accurate in making these forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based. In addition, other important factors that could cause results to differ materially include the following: general economic risks; uncertainty regarding increased business and renewals from existing customers; continued success in sales growth; management of integration of acquired companies and other risks associated with acquisitions; risks associated with successful implementation of multiple integrated software products; the ability to attract and retain key personnel; risks related to our dividend policy and share repurchase program, including potential limitations on our ability to grow and the possibility that we might discontinue payment of dividends; risks relating to restrictions imposed by the credit facility; risks associated with management of growth; lengthy sales and implementation cycles, particularly in larger organizations; technological changes that make our products and services less competitive; and the other risk factors set forth from time to time in the SEC filings for Blackbaud, copies of which are available free of charge at the SEC’s website at www.sec.gov upon request from Blackbaud's investor relations department.

Non-GAAP Financial Measures

Blackbaud has provided in this release financial information that has not been prepared in accordance with GAAP. This information includes non-GAAP revenue, non-GAAP income from operations and margin, non-GAAP net income and non-GAAP diluted earnings per share. Blackbaud uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Blackbaud's ongoing operational performance. Blackbaud believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial results with other companies in Blackbaud's industry, many of which present similar non-GAAP financial measures to investors. As noted, the non-GAAP financial results discussed above exclude stock-based compensation expense and costs associated with amortization of intangibles arising from business combinations and include revenue associated with the Kintera acquisition that is not recognizable under GAAP purchase accounting.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measure below. As previously mentioned, a reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release.