Blackbaud Inc (BLKB) 2014 Q2 法說會逐字稿

Good day and welcome to the Blackbaud 2014 second-quarter conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Robert Weiner, Director of Investor Relations. Please go ahead, sir.

Good morning, everyone. Thank you for joining us today for Blackbaud's 2014 second-quarter conference call. Today we will review our second-quarter financial and operational results for 2014, and provide commentary on our progress toward achieving our goals for the full year.

Joining me on the call today are Mike Gianoni, Blackbaud's President and CEO, and Tony Boor, Blackbaud's Senior Vice President and CFO. Mike and Tony will make prepared comments, and then we will open up the call for your questions.

Please note that our comments today contain forward-looking statements. These statements are based solely on present information and are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements.

Please refer to our SEC filings, including our most recent annual report on Form 10-K and the risk factors contained therein, as well as our periodic reports under the Securities Act of 1934 for more information on these risks and uncertainties and on the limitations that apply to our forward-looking statements. Also, please note that a webcast of today's call will be available on the Investor Relations section of our website.

During this call we will be referring to both GAAP and non-GAAP financial measures. We believe that a combination of both GAAP and non-GAAP measures are more representative of how we internally measure the business. However, non-GAAP financial measures should not be considered in isolation from or as a substitution for GAAP measures. A reconciliation of GAAP and non-GAAP results is available in the press release we issued last night, which is available on our website at www.blackbaud.com.

I would like to take a minute to point out some upcoming investor events and in particular highlight a very important day for the Company, our 2014 Investor Day. On September 12 in New York at the NASDAQ Market site, we will be hosting our 2014 Investor Day from 8 AM to approximately 12 noon. We invite everyone listening in today and those of you who may be interested to please take the time to attend this event.

We will provide a deeper view into our strategies to accelerate growth, gain operational leverage, and to optimize our product portfolio as well as discuss our financial goals. The information sessions will be delivered by a wider group of our executive team than you typically would have the opportunity to meet. Please contact us here in Investor Relations if you would like to attend.

Next week our team will be meeting with investors in Milwaukee and Chicago. Again, please contact Investor Relations if you are interested in meeting with management in one of these locations.

I am now pleased to turn the call over to Blackbaud's President and CEO, Mike Gianoni.

Thanks, Rob. Good morning, everyone. Thank you for joining our call today to report on our second quarter of 2014. I am pleased to say that we are gaining momentum as an organization. Our second quarter and year-to-date financial performance reflects increasing recurring revenue at a higher rate of growth compared to nonrecurring revenue, and our organic growth continues to trend at levels that are approximately double those of our historic organic growth rates for the past several years.

In the second quarter, we sharpened our focus on executional alignment. And by that, I mean further putting into place the structure, process, investments and people to improve the alignment of our activities to more directly match our goals and key priorities to drive accelerated growth and operational effectiveness. I will discuss our progress on executional alignment a little later in the call.

First, let's take a look at the financial performance for the second quarter. Revenue was $139.4 million, an increase of 11.1% over the second quarter of 2013. Non-GAAP organic revenue growth was 6.5% over the second quarter of last year. Non-GAAP operating income was $27 million, with non-GAAP net income of $15.8 million and non-GAAP diluted earnings per share of $0.35. We generated cash flow from operations of $31.8 million during the quarter.

We are very pleased to report continued strong organic growth which, as I mentioned, represents approximately a doubling of growth rates compared to our historical organic growth rates for the past several years. This performance reflects greater alignment of our organization and improved execution.

It also reflects accelerating momentum and growth in our subscription line. Year-to-date, organic growth for subscriptions was 13.5%, more than double the rate of total organic revenue growth of 6.7%.

Our growth in subscriptions on a GAAP basis was 23.6%. It is great to see our momentum spread across all business units. Tony will provide more detail about our second-quarter and year-to-date financial performance a little later during the call.

I would like to talk about some of the steps we have taken to better align the Company's resources to more effectively execute against our strategies. Those strategies require that we focus our investments in areas that have the greatest growth potential and position us for improved product clarity, improved customer satisfaction, and enhanced financial performance.

We have improved alignment of our efforts companywide to more directly match with our four primary objectives of driving accelerated organic revenue growth, optimizing our product portfolio, increasing our mix of recurring revenue, and gaining operational efficiencies.

In the second quarter, we strengthened our Company in the following ways: First, we made investments for future growth, focusing on the go-to-market strategies that deliver organic growth. Second, we invested heavily in products and innovation. But more than that, we have continued to make the changes necessary to better align product development, engineering, marketing and sales, all phases throughout the entire product lifecycle, to become more effective with a focus on and goal of operational excellence.

In the second quarter, we made key product announcements related to the Raiser's Edge, eTapestry and Everyday Hero. For the Raiser's Edge we announced the addition of several new capabilities. The first is crowdfunding capabilities with the integration of Everyday Hero.

The second edition is Credit Card Updater, which automates the process of updating records for expired and replaced credit cards.

Third is the Event mobile app and mobile pay, an easy-to-use mobile payments and event application that captures and transfers point-of-event data seamlessly into Raiser's Edge database. And finally, we announced the Data Health Scorecard, a data analytics tool that defines the path to improved data health, data hygiene and operational efficiency.

These additions to the Raiser's Edge demonstrate our commitment to this key platform and collectively add significant value for our clients, which increases our potential to drive accelerated organic growth. These enhancements are available today.

For eTapestry, we added the Data Health Scorecard and the Address Finder app. Each application is designed both to drive efficiencies and lower operating costs for our customers. As I mentioned, we have begun to integrate our Everyday Hero service into our other products, as well as increase the scalability of Everyday Hero related product management and marketing resources to support what we view as an integral growth driver of our product and solution portfolio.

We are excited by the initial response we have seen in the US since we launched Everyday Hero in May, and we have signed up the globally recognized Rock 'n' Roll Marathons to utilize the service at all of their events. Along with a partnership with MapMyFitness, Everyday Hero represents a new direct-to-consumer category for us to provide value and drive growth.

During the quarter, we announced the acquisition of WhippleHill for $35 million. This acquisition expands our total addressable market, provides us with a compelling and comprehensive K-12 offering, and eliminates certain R&D investments that we were making and had planned for future periods. WhippleHill is a very good strategic fit for us, and it also represents a solid investment for our shareholders. It is a fast-growing cloud-based business with great technology, solutions and people.

WhippleHill's CEO, Travis Warren, has become our K-12 leader for the Education Solutions Group. We have integrated our personnel and operations, and have created a structure that is efficient and scalable. The addition of WhippleHill's products enables Blackbaud to provide solutions to private K-12 schools, combining both our traditional space, helping the administration and financial elements of running a school, with the WhippleHill front end -- student, parent, and teacher-facing elements of running the school, such as admissions, student information systems, attendance, scheduling, reporting and contact management.

With this new structure and the combined capabilities, we are the most comprehensive K-12 solution provider in the space. We have expanded our addressable market and we have increased our potential for higher growth.

Before I wrap up with a discussion on our financial goals, I would like to speak a bit about a few recent additions to the leadership team. We have increased our capabilities and have aligned our organization around becoming more effective and more timely at delivering high-quality, world-class solutions.

Our recent announcement relating to the creation of a center of operational excellence for our Company is an example of how we are redefining the business to produce greater clarity, heightened effectiveness, and increased accountability.

I am excited to report that we recently made three very significant additions to the team. These team members bring more than 90 years of combined leadership experience. I have had the pleasure to work with all three -- Kevin McDearis, Steve Halleck and Steve Hodlin -- in the past, and I am very excited to have their caliber of talent join the Company.

Steve Halleck brings significant experience, leading teams focused on operational excellence and enhanced business performance. Steve has deep experience in strategic business planning, operations best practices, quality improvement and strategic execution, which he gained through his 32-year career in technology services. He joins us from Fiserv.

Joining Steve Halleck to lead our operational excellence and quality initiatives is Steve Hodlin, who is a nationally-recognized expert in process improvement, Lean Six Sigma and quality management. Steve's vast experience includes implementing systematic improvement processes that increase organizational effectiveness while lowering operating expenses.

He has applied his quality and process improvement expertise in several industries, including financial services, semiconductor equipment, data communications and internetworking. He joins us from Video Gaming Technologies.

Most recently, we announced the addition of Kevin McDearis to lead our engineering functions as Senior Vice President of Global Product Development. Kevin joins us with more than 27 years of engineering and product innovation experience and a successful track record of delivering industry-leading, high-quality technology solutions that provide superior customer satisfaction.

He was recently nominated by his peers and is a finalist for Georgia CIO of the Year in the enterprise category. Most recently, Kevin served as CIO for the vertical software company, Manhattan Associates, which many listening may know. At Manhattan he led a global IT organization in strategy development, organization development, portfolio and product management, software and infrastructure engineering, as well as service delivery and operations.

Prior to Manhattan, Kevin was the Chief Technology Officer for the Enterprise Technology Group of Fiserv, and before that the Chief Technology Officer of CheckFree Corporation. We are very excited to have all three of these seasoned leaders on board, and welcome them to the Blackbaud team.

I would now like to wrap up my comments by turning to our financial goals for 2014. We are still gaining momentum. I am pleased to say that we are increasing our 2014 full-year financial goals as a result of our continued strength of performance in the second quarter and year to date, our outlook for the continued strength in the second half of the year, and a modest contribution from WhippleHill in the second half.

Our updated financial goals for 2014 are revenue in the range of $545 million to $560 million, with $552.5 million at the midpoint. This represents a $10 million increase over our original goal.

Non-GAAP operating income in the range of $94 million to $100 million, with $97 million at the midpoint, which represents an increase of $2 million. Operating margin in the range of 17.2% to 17.9% on the high end, which represents an increase of approximately 10 basis points to both the midpoint and the high end of our goal range; and non-GAAP earnings per share in the range of $1.17 to $1.25.

Overall, I am very pleased with our progress in the second quarter and year to date. I believe we are increasing our momentum for both the near and longer-term. Now I will turn the call over to Tony to provide more detail about the second-quarter performance. Tony.

Thanks, Mike. Good morning, everyone. Thank you for joining us today to review our 2014 second-quarter performance. We had a very solid performance in the second quarter, and we have been able to successfully accelerate our organic growth rate in the first half. This acceleration is very gratifying to me. I view it as the beginning of a cycle of higher growth and performance.

I see this future growth as fundamentally driven and well supported by the investments in systems and process improvements we have made over the past two years. We are currently investing in future growth initiatives as well as additional automation and more scalable systems. We are nearing the end to several of these multiyear investment projects, particularly in a number of best-of-breed systems and automation areas.

In fact, we've gone live this year on five enterprisewide systems, including our CRM platform, a marketing platform, a sales quote and commission management system, our travel and expense management system, and an automated system for our professional services. These implementations are largely behind us.

I can see the leverage we are gaining and the pathway to greater efficiencies we can expect to gain as we mature the use of these tools and process improvements gained through these investments. We have and we still are working hard to get to a point where the business is more scalable and automated. Much of the internal heavy lifting that we have been working through these past two years will be behind us as we get into 2015.

I can clearly see a runway to higher growth and profitability, and I believe our initiatives are very well targeted to the areas that are expected to drive optimal performance. This path is beginning to bear fruit and we have a lot of opportunity ahead.

Speaking of investments, I would now like to discuss our recent investment, the acquisition of WhippleHill. As Mike mentioned, we are progressing through the integration work with WhippleHill. We undertook extensive planning and alignment of our two organizations and had a well-crafted day one comprehensive plan to hit the ground running on the integration efforts.

Our teams are now aligned from a sales, marketing, process and people standpoint, and we are diligently working on completing the products and system integration to make WhippleHill a seamless part of Blackbaud and core to our Education Solutions Group.

Now let's turn to the second quarter and year-to-date performance. We delivered revenue of $139.4 million, an increase of 11.1% over the second quarter of 2013. Non-GAAP organic revenue growth was 6.5%. This organic growth comes despite a flat comparison on our services line and a decline in license sales year-over-year.

Our sales mix continues to shift toward subscriptions, which experienced 13.9% non-GAAP organic growth over Q2 of last year. As a percentage of total revenue, subscriptions increased 5.2 percentage points year over year. Recurring revenue represented nearly 73% of total revenue in Q2.

Turning to profitability, non-GAAP gross margin was 58.1%, which was below last year's second quarter and reflected the previously reported change in revenue presentation from net to gross for our Payment Solutions. We generated non-GAAP operating income of $27 million, representing a non-GAAP operating margin of 19.4%, inclusive of our 2014 incremental investments. Our non-GAAP diluted earnings per share were $0.35 for the quarter, which outpaces last year's $0.33 per share.

Now let's look at the balance sheet and cash flow statements. We ended the second quarter with $24.8 million in cash. Our debt balance at the end of the second quarter of 2014 was $172.1 million, slightly down from Q1, and when netted against cash on hand results in net debt balance of $147.3 million.

I will note that our quarter-ending cash and debt balances include the acquisition cost of WhippleHill and certain revenue and operating cost adjustments that were made at the time of closing. And finally, in the second quarter we generated $31.8 million in cash flow from operations and we paid out $5.5 million for our quarterly dividend.

In summary, we will continue to drive growth through cross-selling opportunities and bundled go-to-market strategies. We will continue to see online growth at higher rates compared to our core product growth rates. We will continue to ramp performance as a result of our 2014 incremental investments targeted toward sales and retention strategies, and we will continue to penetrate and seize market opportunities in the enterprise customer space where we are gaining momentum.

We are excited by our prospects; and overall, while I view our 2014 year-to-date performance as a short-term success, I am more excited by the opportunities I see ahead of us, as we are just beginning a cycle of accelerated growth that we expect will drive strong returns for our past and current investments.

With that, we would like to open the lines for your questions. Operator.

(Operator Instructions) Sterling Auty, JPMorgan.

Thanks. I am curious in the new guidance, can you give -- you made some comments about modest second-half contribution from the acquisition. Can you be more specific on what you are expecting in terms of the contribution?

Yes, Sterling, this is Tony. We are not at this point going to give specific information on guidance from WhippleHill, but I will tell you that it is an immaterial acquisition overall, as we stated, and we took a fairly large deferred revenue haircut as a percentage, much larger than what we have historically seen, just the way that the accounting and the math worked out.

So it is a very modest contributor in the second half to the update to guidance. The guidance update there is driven much more by our first-half performance and expected performance for the second half. I think you will see the WhippleHill contribution in 2015 versus this year.

Okay, so maybe to flip it around another way, is the acceleration you are seeing in organic growth, would you expect steady acceleration through the back half of the year, or should there be a little bit of lumpiness in terms of the growth rates, either based on compares or seasonality or anything else?

I think as a percentage, you can look to the actual guidance and back into that from what we've done through the first half and what you will get for growth in the second. I think because such a large portion of our base, I think we were at 73% for the quarter, is recurring revenue now. We have had fairly consistent growth through the first two quarters on subscription at 14% and 13% on an organic as-adjusted basis to adjust for the payments presentation change.

Then we have seen, obviously, some acceleration in the growth rate on maintenance, which is driven by a little bit better dollar retention across the board, and then also in the positive impact we are seeing from the BBCRM product becoming a bigger piece of the base in that we have such high retention rates there.

So I would say I would expect it to be continued growth, but you can get the math from the guidance that we gave in our first-half performance.

Which quarter do we get the apples to apples where -- is it March of 2015 that we get the first apples to apples on the subscription, once we have annualized the payment adjustment?

Yes, that will actually be Q4 of this year. So we have one more quarter that we will have to go through this, but we made the change at the start of Q4 of last year.

Last question, can you give us -- and I'm sure others will dive into the other segments -- but just maybe give some comments on the Blackbaud CRM, the high end in terms of any additional wins that you saw in the quarter; maybe some go-lives and what the pipeline looks like?

Sterling, this is Mike. We had, I think, a very, very strong quarter in bookings around that product. We did see bookings accelerate in the quarter. We think the pipeline is strong, and we also think that it is relatively early days in the addressable market at the top end of the market for that product.

As we continue to drive new versions, we are getting more maturity in the product as well and more capability. So we are pretty bullish on the prospects of that in the long run at the top end of the market for enterprise clients.

All right, great. Thank you.

Tom Roderick, Stifel.

Good morning. So let me piggyback on Sterling's question just about the topline organic growth a little bit. And obviously, you put some investments into the business earlier this year. It would be a little bit presumptuous, I guess, to think that those investments would be paying off already, at least what we can see in the P&L.

But what sort of evidence can you give us from what you are seeing in bookings? What sort of metrics you are putting into place, whether it is new sales heads or additive investments? What are the early leading indicators that tell you that those investments are indeed paying off? And if you have the ability to sort of break it out by GMBU versus enterprise, that would be really helpful. Thanks.

I will start. Tony can chime in there. So a couple of things. So we are seeing those investments pay off. A couple of areas would be that we are seeing the payments investments pay off by faster uptick in number of clients signing up per month. So we see that early on this year.

We also see in the sales channel, Tom, that the sales folks that we have brought in are getting productive quite quickly. So they are turning around a couple of months in and being quite productive from a quota attainment standpoint. So we feel pretty positive about the adds we have made and we are continuing to make in sales.

We also feel very positive, as I had mentioned on answering Sterling's call, on the top end in bookings with the BBCRM product, but also an uptick in our subscriptions revenue which is going to result in adding clients in the subscription platforms as well.

I think the other piece, Tom, I would add is on the retention front and the investments we are making there, it is hard to tell on that front what the impact is going to be on those investments this early in the game. I feel good that we saw an improvement on the maintenance base dollar retention in the last couple of quarters.

I don't know that that is necessarily because -- a result of these investments, but it will probably be late this year, early next year, when we can really measure the return on that specific investment.

Okay, good. One mechanical question about the model. I know you guys don't want to guide on a quarterly basis, but it does strike me that there is some seasonality to remind us about just on the payment side of the business, particularly as events come into play.

Can you just give us a quick reminder as to how seasonality should sort of play into the subscription line? Will it be fairly linear for subscriptions and revenues as a whole as we think to the back half, or is there a spike in Q3 or a sharper spike in Q4? Any details you can offer there would be great.

I think the tough part, Tom, now is just how that business is going to change as a result of the growth since we are adding, as Mike said, quite a few new payments and usage customers to the base; just a shift to online and then our sales back to base.

We will have to see how that plays out, because I think our historical seasonality will certainly change as the mix moves more to subscription and more usage and more payments online. So we will have to see how that goes.

Typically, Q2 and Q3 are relatively flat with each other; 4 is big. I think we always have to worry about as we add new large customers to our base, do they have specific fundraising events or promotions in a given quarter, like in Q1 that might add a new customer who has a big fundraising event in Q1 that we have not had historically that could certainly skew those numbers.

What we have seen is a bit more flattening in the seasonality as we have added more to the payments and online solutions than what we historically had. That said, Q1 typically a bit smaller, Q4 higher, and Q2 and Q3 kind of relatively flat with each other.

Okay, good, helpful. Maybe one last one for me. It looks like you have made a real nice addition with respect to Kevin McDearis running the product development organization. How should we think about that as it impacts the work you have done so far in rolling out a next-generation version of Raiser's Edge? And surely you are racing towards your user conference here in October.

Is that something that you want to set the expectation that customers and investors can hear more about as we go into the next few months, or does the addition of a new leader in that organization mean we ought to be a little bit more patient?

No, I think you can expect we will have more product information in the next few months. We have got a couple of milestones that we are aware of around our investor day in September and our client conference in early October. So we do expect to have more product announcements.

We have sort of started that engine, if you will, earlier in the year. You saw some announcements on both integrating analytics in our eTapestry platform and several additions to Raiser's Edge. I would say those are the beginning of more to come from a product announcement standpoint.

Kevin joining the Company will just sort of pick up and continue to drive those decisions forward that we made a couple of months ago. And that also goes back to your question, Tom, around how our investment is paying off. I think you are seeing investments around integrating things like mobile and payments and analytics into our core platforms in a more of aggressive way than we have in the past. And we are doing it in a way so -- those announcements were also around the fact that all of those capabilities are currently available for all clients on those platforms.

Wonderful. Thank you, guys. Nice job.

(Operator Instructions) Matthew Kempler, Sidoti & Company.

Thank you. So I wanted to follow up on your comment on the large enterprise side. Mike, your predecessor had held the view that the industry was overdue for an upgrade cycle among large enterprises. And I am wondering based on the conversations you have, do you hold the same view, and what do you think needs to happen to drive that upgrade cycle?

Yes, I do hold that view. It is interesting because it is an upgrade from things like custom-built systems and some very old systems that are out there, and so I do hold that same view. I think it will be accelerated because we are maturing that product. It has been out for a couple of years.

We have really had a much higher focus now around maintenance releases that are adding incremental functionality and driving the roadmap. We have a bigger release coming out later this year. We think it is a unique product for enterprise clients because of the ability to scale and consolidate in a way that products in the space historically haven't been able to do. So we are quite excited about the prospects on the top end of the market with that product.

Okay. How do you feel about how the Convio products have so far been integrated into the product portfolio and the traction that you have been getting on that end?

Yes, I think we have done a lot of work there this year so far. Frankly, we have added some fantastic engineering talent to that team, including engineering leadership to that team, and I think they are doing a great job. I think there is a long runway on those products because of the industry shift to online and the fact that the online growth is about triple the industry, overall industry growth, and yet online is less than 10% of total.

We think we are positioned well there. We are also starting to drive our payments capabilities deeper into that product platform. So I think we are in good shape there. I think the product line is solid and, again, although we specifically hadn't had things like a press release like we did for Raiser's Edge, we are driving quite a few releases between now and the end of the year. We have increased capability, so we are pretty excited about the opportunity to grow that business.

Okay. Then lastly, the Company has been targeting improving the delivery of their subscription products, some of which aren't traditionally cloud-based. Can you talk about that effort and when you think we can start to see that materialize in stronger subscription margins?

Yes, that is a good question. As we continue to grow that revenue stream, it becomes a much larger part of who we are. I think Q2, we are recurring at 73% of total and subscription about 47%. So we are getting darn close to half the Company revenue on the subscription line. And I believe we are going to get to a point where we will start to turn that over into being able to drive increased margins, given the ability to scale. So I do see that coming.

Then Matt, the only thing I would remind you is we do have a little bit of drag on the subscription margins because of the payments presentation change. And so that one has affected us a bit the wrong direction. I think as the subscription total regular subscription growth, though, outpaces that, we should see margin improvement.

Okay, thank you.

Tom Roderick, Stifel Nicolaus.

Just one quick follow-up from me. Just looking at sort of the implied profitability as you march toward this, call it, $97 million in pro forma operating income at the midpoint of the range, that certainly suggests that there is a bit of a pullback from what was a real nice increase on margins this quarter. So kind of two parts there.

Number one, did we see the low watermark for margins in Q1 when we were just under 16.5%, or could they dip below that temporarily as you integrate WhippleHill? Number two, any other incremental investments going into the base at this point, now that you have started to see upside on revenues and you're marching ahead of what your current full-year plans were?

Yes, I will start with that and Tony can chime in, Tom. So we are confident in the increased guidance for one. And in the second half, margin -- there will be a bit of a strain on margin with WhippleHill. It's not material, but there will be some related to WhippleHill. We will have some accelerated investments kind of show up in the back half of the year as well.

Those are investments, though, that we've been talking about quite a bit as far as our previously announced investments in products and in some of the core internal operating parts of the business. And it is really about preparing the Company for future growth, so we will see those two show up in the back half of the year.

Tom, on that WhippleHill, again the biggest impact there is the deferred revenue haircut that we have to take; results with a big drag on earnings as a result of that in the second half.

Fair point, okay. And then one last quick one for me. The gross margins, again, those were also improved this quarter. If I look at them on a year-on-year basis, still down. And I guess if I strip out the net to gross change, it still looks like down, I don't know, maybe 400 or 500 bps on the subscription margin.

So what is the right way to think about the direction of gross margins and the things that are impacting them beyond just the net to gross change?

If you do an apples to apples, gross margins are actually slightly up in the quarter, so just about 10 basis points. But if you adjust last year's Q2 and gross that up for the presentation change on payments, you should end up with about a 58% gross margin. And we show 58.1% on an apples to apples.

That is with that kind of downward pressure that we still see because of the growth in the payments business, because it does have a lower gross margin that we have spoken about.

Got it. Okay, that's good. Thank you, guys.

Tom, and again, we are investing in the business as we previously announced, and some of those investments don't recur. Tony talked about in his opening comments a lot of the internal systems, which we have made great progress on and are largely complete and will be complete by the end of the year, some of those investments are kind of doubled up a little bit this year, a legacy to a new internal platform, and some of those don't repeat next year.

Right, got it. Thank you, guys.

(Operator Instructions) There are no further questions in the queue at this time. I would now like to turn the call over to CEO, Mike Gianoni, for any additional or closing remarks.

Great. Thanks, operator. I would like to close our 2014 second-quarter call by saying we're making substantial progress at Blackbaud. While we have an active agenda, I will also stress that we have a well-planned agenda. Our efforts are resourced correctly. We have a defined and clear path to execute on our strategies. We have a great team that is highly focused and engaged and excited about our future.

Also, we will be hosting our 2014 Investor Day on September 12th at the NASDAQ Market site in New York, where our executive team will be reporting on our progress and plans. I encourage any of you who may be interested in attending this important event to call our Investor Relations department. Thanks, everyone, for your participation today. Have a great day.

Again, that does conclude the call. We would like to thank everyone for participating today.