A month has gone by since the last earnings report for Blackbaud (BLKB Quick QuoteBLKB - Free Report) . Shares have added about 10.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Blackbaud due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Blackbaud Q1 Earnings Beat Estimates, Revenues Up Y/Y

Blackbaud delivered first-quarter 2020 non-GAAP earnings of 51 cents per share, which beat the Zacks Consensus Estimate by 10.9%. The figure was flat year over year.

Total non-GAAP revenues increased 3.3% year over year to $223.6 million, which beat the consensus mark of $223 million.

Quarter in Detail

Blackbaud reports maintenance and subscriptions under recurring revenues as it is shifting toward a cloud-based subscription model from the traditional revenue-based model.

Moreover, revenues from retained and managed service contracts that did not have a term consistent with cloud solution contracts were included in one-time services and other revenue from Jan 1. This led to a decline of $4.3 million in recurring revenues and an increase to one-time services and other revenues during the quarter.

Total non-GAAP recurring revenues for the reported quarter were $204.9 million, which contributed 91.6% to total non-GAAP revenues. The figure increased 3% year over year.

One-time services and other revenues were $18.8 million, up 5.7% year over year.

Non-GAAP organic revenues rose 3.3% year over year to $223.6 million. Non-GAAP organic revenue on constant currency (CC) basis amounted to $223.9 million, up 3.4% year over year.

Meanwhile, non-GAAP organic recurring revenues moved up 3% year over year to $204.9 million.

Margin Details

Non-GAAP gross margin contracted 200 basis points (bps) to 58.4%.

Sales, marketing & customer success expenses, as a percentage of revenues, expanded 60 bps from the year-ago quarter’s tally to 26.3%. Research and development expenses contracted 200 bps to 11.2%, while general & administrative expenses contracted 100 bps to 11.6%.

Non-GAAP operating margin contracted 140 bps from the year-ago quarter’s figure to 15.2%.

Balance Sheet & Cash Flow

As on Mar 31, 2020, Blackbaud had cash and cash equivalents of $25 million compared with $31.8 million as of Dec 31, 2019.

Total debt (including current portion) as of Mar 31, amounted to $530.9 million compared with $467.1 million as of Dec 31, 2019.

Cash used in operating activities during the quarter was $24.5 million compared with $182.5 million of cash generated from operating activities in the prior quarter.

Non-GAAP free cash outflow during the quarter was $38.3 million compared with $46.1 million of free cash flow in the last reported quarter.

Withdraws Guidance for 2020

For 2020, Blackbaud has withdrawn guidance, citing uncertainty pertaining to coronavirus crisis.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted 34.62% due to these changes.

VGM Scores

At this time, Blackbaud has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Blackbaud has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.