Blackbaud to sell shares

Software-maker plans initial public offering of stock.

By Todd Cohen

[05.03.04] — Blackbaud, a software firm in Charleston, S.C., plans to raise $100 million in an initial public offering of common stock, plus $15 million in an “over-allotment” option.

Blackbaud also is teaming up with United Way of America in Alexandria, Va., to develop a version of The Raiser’s Edge, Blackbaud’s fundraising product, to handle workplace giving and “leadership” gifts of $1,000 or more for local United Ways.

While Blackbaud legally may not comment on the IPO during a “blackout” period before the stock is sold, a registration statement it filed with the U.S. Securities and Exchange Commission says the “fragmented” nature of the nonprofit industry “presents an opportunity for us to continue to increase our market penetration.”

Blackbaud licenses software and provides services for fundraising, financial management, data analysis, prospect targeting and relationship-building, and for managing student information, and charges fees for its products, services and annual support.

After posting net income for five straight years, including $15.64 million in 2002, up from $8.9 million a year earlier, Blackbaud posted a net loss of $478,000 in 2003, the registration statement says.

That reflected more than $27.5 million that Blackbaud accounted for as stock-option compensation in 2003, up from zero each of the previous two years.

Annual revenue totaled nearly $118.1 million in 2003, including nearly $58.4 million from maintenance and subscription fees for its products.

Blackbaud had more than 12,500 customers in 2003, including more than 11,900 that paid annual maintenance fees for its products, the registration statement says.

Of those 11,900 customers, many of which subscribed to several Blackbaud products, 10,500 purchased maintenance for its fundraising product, The Raiser’s Edge.

In each of the past three years, more than 94 percent of its customers, on average, have renewed their maintenance plans for Blackbaud products, and the firm has added an average of 1,300 new customers a year.

Blackbaud says its customers raised a total of more than $26 billion in contributions in 2002.

The firm, with customers in 45 countries, most of them in the United States, United Kingdom and Canada, has international offices in Toronto and in Glasgow, Scotland, and Sydney Australia, and says the U.K., Canada, Australia and other international markets represent “growing market opportunities.”

The firm had about 780 employees at the end of 2003, including 150 in sales and marketing, 150 in research and development, 360 in customer support and 120 general and administrative personnel.

Incorporated in 1982, Blackbaud in July 2002 paid $500,000 for nearly all the assets of AppealMaster Ltd., a software firm in the United Kingdom.

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