Blackbaud BLKB recently announced that it acquired Washington D.C.-based EVERFI in a cash and stock deal worth $750 million, subject to certain customary conditions. EVERFI’s CEO Tom Davidson and the company’s entire executive team will join Blackbaud, post acquistion.
The cash consideration worth $450 million has been financed by utilizing cash on hand and new borrowings under the company’s credit facilities. The remaining $300 million is financed using the Blackbaud’s common stock.
EVERFI specializes in providing Impact-as-a-Service (“IaaS”) solution and digital educational content, which is now being used by 45 million learners worldwide, noted Blackbaud. The acquisition also provides cross-selling and upselling opportunities with Blackbaud’s YourCause solution.
EVERFI expands Blackbaud’s total addressable market or TAM to more than $20 billion. Half of the company’s TAM now represents the lucrative corporate sector, added Blackbaud. With the EVERFI acquisition, Blackbaud is looking to expand its presence in the fast-growing environmental, social and governance (ESG) and corporate social responsibility (CSR) space.
Blackbaud, Inc. Price and Consensus
Blackbaud, Inc. price-consensus-chart | Blackbaud, Inc. Quote
Blackbaud also added that the acquisition would be immediately accretive to the company’s revenue growth. More importantly, the EVERFI buyout along with the company’s recent financial performance will enable Blackbaud to achieve its long-term goal of mid-to-high single-digit organic revenue growth relatively earlier, starting from 2022.
EVERFI is expected to contribute $120 million to Blackbaud’s revenues in 2022 with “year-on-year growth approaching 20%,” stated Blackbaud.
Blackbaud’s Sound Acquisition Strategy
Blackbaud is active on the acquisition front and selects companies that can be easily integrated within its existing or new product lines. The company is engaged in providing cloud-based and on-premise software solutions and related services primarily for social good organizations.
The YourCause acquisition has bolstered Blackbaud’s position as one of the industry leaders in offering enterprise philanthropy solutions to non-profit organizations and for-profit business organisations companies that deal with social concerns. Blackbaud acquired YourCause in 2019 for nearly $157 million.
The company’s JustGiving (2017) acquisition helped the company to expand its peer-to-peer fundraising abilities. Buyouts like AcademicWorks (2017) and Smart Tuition (2015) helped Blackbaud expand its offerings in the K-12 technology sector.
Moreover, Blackbaud noted that EVERFI’s presence in the K-12 public school domain is complementary to the company’s presence in the K-12 private schools and higher education vertical.
These acquisitions have significantly expanded the Blackbaud’s TAM. The company has more than 45,000 clients across 100 countries.
However, the company’s performance is likely to be affected by evolving coronavirus-situation which might negatively impact demand across small- and medium-sized businesses. Stiff competition in the cloud space and a leveraged balance sheet are other concerns.
Zacks Rank and Stocks to Consider
At present, Blackbaud carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector include Salesforce CRM, Hewlett Packard HPE and Microsoft MSFT. While Salesforce and Hewlett Packard sport a Zacks Rank #1 (Strong Buy), Microsoft carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Salesforce’s fiscal 2022 earnings is pegged at $4.68 per share, up 6.4% in the past 60 days. The long-term earnings growth rate of the company is pegged at 16.8%.
Salesforce’s earnings beat the Zacks Consensus Estimate in all of the preceding four quarters, the average surprise being 44.2%. Shares of the company have increased 15.3% in the past year.
The Zacks Consensus Estimate for Hewlett Packard’s fiscal 2022 earnings is pegged at $2.03 per share, unchanged in the past 60 days. The long-term earnings growth rate of the company is pegged at 5.8%.
Hewlett Packard’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 14.4%. Shares of the company have rallied 37% in the past year.
The Zacks Consensus Estimate for Microsoft’s fiscal 2022 earnings is pegged at $9.13 per share. The long-term earnings growth rate of the company is pegged at 12%.
Microsoft’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 14.8%. Shares of the company have surged 53.6% in the past year.
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