Just my luck — I’m on the plane back from Netsquared when Blackbaud announces the biggest news of the year in the nonprofit CRM space. Read the full press release…
Blackbaud, Inc. Announces Acquisition of Kintera
Charleston, S.C. – May 29, 2008 – Blackbaud, Inc. (NASDAQ: BLKB), the leading provider of software and related services designed specifically for nonprofit organizations, announced today that it is acquiring Kintera, Inc. (NASDAQ: KNTA), a pioneer and leading provider of a Software as a Service (SaaS) solution to the nonprofit and government sectors. Under the terms of the agreement, Blackbaud will pay an all-cash purchase price of approximately $46.0 million. Blackbaud expects to finance the deal with cash and borrowings from its credit facility.
Kintera’s principal offering is its online Sphere® technology platform, which is used by such leading organizations as American Lung Association, Big Brothers Big Sisters of America, International Fund for Animal Welfare, Lance Armstrong Foundation and Sesame Workshop to manage online fundraising events and in 2007 processed over $400 million in online gifts. The company also offers wealth profiling and screening services as well as an accounting software solution, both similar to offerings of Blackbaud. With approximately 4,000 customers, Kintera is recognized for the proven capabilities of its Sphere® SaaS offering that has allowed nonprofits to effectively grow their base of supporters and expand their online fundraising initiatives. The company reported $44.9 million in total revenue for 2007.
Marc Chardon, Blackbaud’s President and Chief Executive Officer, said, “The acquisition of Kintera is very exciting for us and for the nonprofit industry as a whole. Expanding Blackbaud’s online offering in this way further establishes Blackbaud as the leading solutions partner for nonprofit organizations. The online solutions of the two companies have historically served different segments of the market and this acquisition gives us the ability to broaden our addressable market with proven and rich online product functionality.”
Chardon continued, “Our core capabilities are complementary and we expect to continue to offer a full range of solutions that effectively meet nonprofits’ needs for donor acquisition and cultivation that are intergrated with our suite of CRM solutions, including The Raiser’s Edge®. Kintera’s “Friends Asking Friends®” team fundraising and advocacy solutions are well suited for organizations that use these programs to grow their base of supporters. Similarly, Blackbaud’s NetCommunity™ offering is ideally suited for enriching the online experience of current donors enhancing the value of data that already exists in the CRM system.”
Chardon added, “We are also pleased to offer new options to Kintera’s accounting and wealth data customers. P!N™ has been innovative in coupling traditional wealth screening services with online offerings and we are excited about the potential of combining these offerings with Target Analytics’ current product portfolio. Likewise, Fundware® has long met the fund accounting needs of many nonprofits and we expect to work closely with Kintera and their partners to enhance the range of solutions available to this important set of customers. Combining these solutions with Blackbaud’s current offerings will allow us to continue to grow these important segments of our business.”
Kintera will continue to be led by its current President and Chief Executive Officer, Richard LaBarbera, a high tech industry veteran with more than 30 years experience working with such leading software providers as Sybase, Siemens/Nixdorf, Storage Technology and IBM. Kintera operations will continue to be directed from their existing offices in San Diego.
LaBarbera said, “Joining with Blackbaud gives us a way to leverage our capabilities with those of the industry leader and thus significantly improve the customer’s experience. Importantly, this move also means that nonprofits will be able to choose Kintera solutions confident in the knowledge that they are backed by Blackbaud’s robust corporate infrastructure and that the partner they have selected will be there to serve them for many years into the future. Our focus will now turn exclusively to better meeting the needs of our customers and collaborating with Blackbaud to leverage the investment they are making to better serve the nonprofit sector. We are very excited about the potential to offer more compelling solutions that enhance the donor experience and increase nonprofits’ abilities to raise more money.”
Tim Williams, Blackbaud’s Senior Vice President and Chief Financial Officer, stated, “In addition to the strategic reasons supporting the acquisition of Kintera, we believe the acquisition is attractive from a financial perspective as well. Subscription revenue was already the fastest growing source of revenue at Blackbaud and it was expected to become larger than license revenue at some point in the second half of 2008. With the acquisition of Kintera, this will become a certainty as we will add another significant source of subscription-based revenue from an on-demand service offering. The evolution of Blackbaud’s business model toward new revenue sources with ratable revenue recognition has been a significant and positive development over the past several years, and it complements the very strong cash flow profile of the company.”
Blackbaud’s acquisition of Kintera is structured as an all-cash tender offer for all of the shares of Kintera at a price of $1.12 per share. The company is expected to formally launch the tender sometime next week and close on or around July 2.
(3 votes, average: 4.67 out of 5)
Loading ...
Interesting times. I have no idea if there is a Kintera User Society, but we are going to work hard to create a place for Kintera clients over at the Blackbaud User Society
And the dirty monster becomes bigger and hungrier…
Hmmm… I don’t think of Blackbaud as a “dirty monster”. They’ve been remarkably successful at getting nonprofits to adopt donor management software and using that to leverage themselves into CRM software. On the other hand, I dislike the lack of openness in their architecture and the high cost of their tech support but I don’t think that qualifies them for “dirty monster” status.
And I doubt they’re going to be “hungrier” in the sense that there aren’t any more acquisition targets left in the space that would be a good fit for Blackbaud.
This is like AOL buying Compuserve so they can be the dominate player on the Internet. Yes, for now they’ll be bigger, but they still have a business based on locking people into expensive captive systems that elsewhere are becoming more open and more free. And I mean free as in both beer and speech. Per seat pricing in the internet age? Give me a break.
@rupert: Agreed, per seat pricing stinks to high heaven but development and IT directors seem to greatly prefer RE over other products. The skills are more portable and marketable from one nonprofit to another.
Do I think that in the long-run, the per seat pricing issue will go away? Yes. And I’ve pointed to two alternatives on this blog, plusthree and Mpower. There are many other alternatives as well. I would suggest that it’s better to direct your disgust at the business model into a persuasive argument that gently encourages nonprofit management to “do the right thing”.
It hasn’t take much persuasion, at least not in the companies I’ve been dealing with.
The jury is out on whether Blackbaud’s planned purchase of Kintera is good, but a bigger question is whether Blackbaud can be trusted as the primary online vendor for nonprofits. See my latest blog posting at http://nonprofitbridge.vox.com.
@rupert Well I’m glad nonprofit management is figuring out that per seat pricing isn’t good for them.
@Norman I think people have pretty much decided that RE can be trusted for donor management. The question is how much they ought to pay for it and in what manner.