Blackbaud’s bottom line for the first quarter ended March 31 did a sharp turnaround from a year ago. The nonprofit software company reported a net loss of $1.1 million, compared to $17.8 million in net income in last year’s corresponding period.

Revenue rose to $215.8 million in the most recently ended period, up 5.7 percent from $204.2 million a year ago. The bottom line took a hit from a 12.3-percent rise in the cost of revenue, which depressed margins. Increased sales force hiring in the second half of 2018 also had an impact as the sales force is not entirely up to target levels of production. Blackbaud increased its sales staff about 20 percent last year and also changed the sales model. “In the first quarter, we implemented a common sales leadership framework across the company providing sales managers with best practice tools and training necessary to be successful,” CEO Tony Boor said during this week’s earnings webcast. Boor said there were substantial investments which added to costs that included moving out of co-located data centers and into Blackbaud’s owning its own hardware in the third-party cloud. Increased bookings for the NXT software line and cloud products also meant more investments in the cloud are being made sooner than expected. The company had $55.5 million in expenses for sales and marketing and customer success, an increase of 22 percent from $44.5 percent with total operating expenses up 16 percent. Blackbaud also shifted offers from one-time services to embedding implementation services into subscriptions. That led to a 24-percent drop in revenue from one-time services, which fell to $17.7 million from $23.3 million.

Last modified on Friday, 03 May 2019
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