And so the story continues with Kintera as their stock asymptotically approaches zero…
On April 2, 2008, Kintera, Inc. (the “Company”) received a notice from the Nasdaq Stock Market (”Nasdaq”) indicating that the Company has failed to comply with Nasdaq Marketplace Rule 4450(a)(5), which requires a minimum $1.00 per share bid price for the Company’s common stock for continued listing on the Nasdaq Global Market, for 30 consecutive business days. Under Nasdaq Marketplace Rule 4450(e)(2), the Company has an initial period of 180 calendar days to regain compliance with this listing requirement. If at any time before September 29, 2008, the minimum bid price of the Company’s common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, Nasdaq will provide the Company with written notification that it has achieved compliance with this rule.
That said, I still think their open API is superior to Convio’s but I don’t see any way they can turn their ship around fast enough without a radical overhaul of their business model.
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Is the recent stock drop for Blackbaud related to this? Is it a result of the recession starting up?
Blackbauds drop is more related to one analyst dropping his estimate and market jitters in the microcap/small cap arena.
I concur with Tom. I don’t see Kintera’s and Blackbaud’s fates being linked together except for the general reason that the Jefferies & Co. analyst dropped his estimate: perceived drops in IT budgets as nonprofits get hit by the recession. I don’t think that’s happening yet though. This upcoming Giving Season will be a good indicator of whether or not the recession is going to impact nonprofits but I find it difficult to believe that people would stop paying for Raiser’s Edge as part of their IT budget. You see, RE isn’t really an IT expense so much as it is a fundraising expense. In that respect, two people are going to have responsibility for RE, the IT manager and the Development Director. That’s a lot of internal support right there that a CFO would have to cut through just to cut RE. Office politics… gotta love it.
I wonder how this will play out for Convio’s IPO plans.
I agree with Allan and Tom that organizations are not going to just drop Blackbaud products as that would be extremely shortsighted (although some going through a procurement process may think twice). However the majority of Blackbaud revenue comes from their consulting division (at least that is what I was reliably informed a while ago). Clearly organizations are going to think twice about making that kind of investment.
David
@Mentor: Gosh, who knows? I know it’s a bad time to IPO but it’s been bad since 2001 so I guess it doesn’t really matter. That said, a recent item on Techcrunch tells me that it’s an especially bad time.
@David Zeidman: That’s a good point there about the consulting services. I wonder if what your source meant by consulting services the data conversion side of Blackbaud. Data conversions would be a good indicator of whether or not people are doing new installs of RE.
Perhaps procurements would slow down or an org would simply look at a cheaper alternative than Blackbaud but I find it hard to believe that an org looking into RE would stop there though. If an org is looking at RE, it’s obviously looking to get somewhat entrepreneurial with its fundraising. Who knows? I’ll just wait until next quarter’s results to see if this slowdown is going to happen or not.
Well yes data conversion is one aspect but it also encompasses training, process analysis, customizations, etc.
David
Just FYI… this is what Blackbaud considers to be its consulting services (from Blackbaud’s recent 10-K filing):
“Consulting and education services revenue consists of consulting, installation, implementation and education services. Consulting, installation and implementation services involve converting data from a customer’s existing system, assistance in file set up and system configuration, and/or process re-engineering.”
Blackbaud made $38.8 million on that one line item alone last year and $26 million on that item in 2006. As I’ve pointed out before, this cost occurs simply because we do closed systems in the nonprofit sector. If we had a single data format for donor data, we wouldn’t have this problem. Or if we had open APIs for all our vendors it wouldn’t be so expensive.
I think this side of Blackbaud’s business may have problems next year but we won’t really know. Obviously, much of this revenue comes from data conversions prior to first-time RE installation. If people don’t procure RE, then I would assume this line of revenue would shrink.
@allan - when RE8 comes out that line item will increase dramatically as their services are retained for conversion from RE7.
Gahhh!!! Are you serious? Blackbaud RE 8 will require a data conversion?