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Blackbaud, Nonprofit Software Company, To Cut 7.1% Of Its Workforce

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BLACKBAUD LAYOFF
Nonprofit software company Blackbaud plans to cut 150 jobs, putting it on track to eliminate 7.1 percent of its workforce. | Alamy

By Paul Clolery, The NonProfit Times

Nonprofit software behemoth Blackbaud will cut 150 jobs from across the company, which will bring to 200 the number of jobs eliminated since this past summer. The layoffs come almost one year to the day that it announced the acquisition of Convio, its largest rival in the online fundraising business.

The jobs are from North American operations. According to Karoline McLaughlin, Blackbaud director of corporate marketing, sales in Europe are a bright spot. “There is strong momentum,” in Europe as the firm closes “CRM deals,” she said.

The 150 cuts will come mostly from services and sales, she said. The sales jobs are from overlapping territories related to last year’s acquisition of Convio.

The reduction is 3.7 percent of the Charleston, S.C., headquarters staff. There are also cuts at its Kintera operation in San Diego, Calif., the eTapestry division in Indianapolis, Ind., the Target Analytics division in Cambridge, Mass., and Austin, Texas where Convio was based.

The company reports a workforce of approximately 2,800 worldwide, making the 200 cuts represent approximately 7.1 percent of the total workforce.

There are 100 open positions within Blackbaud that are skills-driven and location-based. These new layoffs do not impact that number. Those being let go are not a fit for those open positions, she said.

“Things have slowed down (economically) and this is preparation for weathering that storm,” said McLaughlin.

Third quarter revenue did not meet expectations, she said. She was not permitted to discuss fourth quarter numbers due to Blackbaud’s standing as a publicly traded company. Blackbaud is traded on NASDAQ and its stock price is down 19 percent from this time last year.

Blackbaud reported total revenue of $122.5 million for the third quarter of 2012, an increase of 28 percent compared to $95.4 million for the third quarter of 2011. However, income from operations and net income were $6.2 million and $2.8 million, respectively, compared with $16 million and $10.2 million, respectively, for the third quarter of 2011. Diluted earnings per share were 6 cents for the third quarter of 2012, compared with 23 cents in the same period of 2011.

Blackbaud reported total non-GAAP revenue of $123.8 million, which includes $1.3 million of the deferred revenue write down associated with the Convio acquisition. Non-GAAP income from operations was $20.7 million for the third quarter of 2012, compared to $21.5 million in the same period of 2011. Non-GAAP net income was $11.7 million, or 26 cents per diluted share for the third quarter of 2012, compared to $13 million, or 30 cents per diluted share in the same period of 2011.

Blackbaud announced on Jan. 17, 2012 its intention to acquire its archrival Convio for $275 million. It was estimated at the time that the combined company would have annual revenue of $440 million, free cash flow of $66.5 million and net debt of $240 million. Blackbaud paid 49 percent premium for the Convio stock. The deal officially closed in May.

Nearly all of the senior managers at Convio at the time of the acquisition have left Blackbaud. This past August Blackbaud announced it was paring 50 positions, some of which were not filled and offering jobs within the firm to some in positions to be cut.

A former Blackbaud official who was acquired in one of many deals during the past few years, privately praised the move, even though people will lose their jobs in a tight economy.

“When you acquire many companies to grow revenue and you don't rationalize how the new product(s) fit with existing stuff, you create a ton of redundancy which is what happened,” the executive said. Blackbaud’s leadership “has historically not made the tough decisions to kill old and tired product lines which is what you need to do in order to stay both lean and relevant in the market. This expense cut is long overdue.”

This story was originally published in the NonProfit Times.

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