Greetings and welcome to the Blackbaud's First-Quarter 2015 Earnings Conference Call. Today's conference is being recorded. I'd now like to turn the conference over to Mr. Jagtar Narula, Blackbaud's Vice President of Investor Relations and Business Planning. Thank you, Mr. Narula. You may begin.

Good morning everyone. Thanks for joining us today for Blackbaud's 2015 first quarter conference call. Today, we will review our first quarter financial and operational results for 2015 and provide commentary on our progress for achieving our goal for the full year. Joining me on the call today are Mike Gianoni, Blackbaud's President and CEO; and Tony Boor, Blackbaud's Executive 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, included 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 Web site. 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. In addition, we discuss non-GAAP organic revenue growth which we believe provides a useful tool for evaluating the periodic growth of our business on a consistent basis. Non-GAAP organic revenue growth excludes incremental acquisition-related revenue attributable to companies acquired in the current fiscal year. For companies acquired in the immediately preceding fiscal year, non-GAAP organic revenue growth reflects presentation of full year or stub period incremental non-GAAP revenue derived from such companies…

Thanks Jagtar. Thank you everyone for joining our call today to report on our progress in the first quarter 2015. I would like to start by mentioning that we have the new Investor Relations team here at Blackbaud. Rob Weiner, our former head of Investor Relations decided to step down in March. Rob helped with the transition as we in sourced our Investor Relations function and was instrumental in our recent investor outreach efforts including organizing our company's Investor Day last fall. I would like to thank him for his leadership and we wish you well. Jagtar Narula is now leading our Investor Relations efforts and moved into this role after managing our corporate Financial Planning and Analysis team. Jagtar brings a wealth of experience to the job, including positions in finance, corporate strategy and acquisitions with Xerox Corporation as well as private equity and Investment Banking experience. We believe his knowledge of the financials of the company combined with his capital markets and strategy experience will prove useful to analysts and investors that are following and evaluating Blackbaud. Now let's turn to the first quarter results. We began 2015 with a solid first quarter performance. Non-GAAP revenue was $150.5 million, an increase of 17.9% over the first quarter of 2014. Non-GAAP operating income was $26.5 million. Adjusted EBITDA was 32 million with non-GAAP net income of $14.9 million and non-GAAP diluted earnings per share of $0.32. This is a strong start to the year. A recurring revenue the person at approximately 76% of total revenue, a high yes share in the company history. We also expanded year-over-year non-GAAP margin driven by a combination of return on investments we have made and focused on expense control and efficiency. Tony will provide more detail of our first quarter financial performance later…

Thanks Mike, good morning everyone. Thank you for joining us today to review our 2015 first quarter performance. We had a solid first quarter enhancing strong momentum heading into the rest of the year. Before I review the quarter's results let me discuss the changes we made in our P&L and disclosures. First, we have changed our income statement to reflect the ongoing transition of the business to subscription. In 2014 subscription revenue represented approximately 47% of total revenues and is expected to continue to increase as a percentage of total revenues as we continue transitioning our products to cloud-based subscription offers. As a result we have reordered the P&L from largest to smallest revenue stream to better align with our focus on subscriptions and recurring revenue. Secondarily, we have combined the software and other revenue lines to reflect the decreasing importance of software revenue to our business. In 2014, software revenue represented less than 3% of total revenue and is expected to decline over time as the company continues to transition customers to subscription. Finally with the continued integration of analytics into our solution portfolio, Mike no longer reviews operating results separately from other business units when assessing results for making resource decisions. As a result we no longer target analytics as a separate reportable segment and the revenues and the associated cost for offerings historically provided by target analytics are now presented within each of our other reported business units based upon the business unit servicing the end customer. Now let's turn to the first quarter performance. We delivered non-GAAP revenue of 150.5 million, an increase of 17.9% over the first quarter of 2014. Non-GAAP organic growth was 8.5% when compared to non-GAAP revenue for Q1 of last year. Our recurring revenue represented approximately 76% of total revenue…

We will take our first question from Matt Van Vliet with Stifel Nicolaus.

This is Matt Van Vliet on for Tom Roderick this morning. I guess first question on the strong organic growth here driven by subscription. Could you just give us a little bit more detail in terms of what's driving the majority of the subscription growth, how much of the NXT bundled sale is driving that and what we should expect in the next couple quarters into the launch?

Matt, this is Mike. First of all, the subscription growth is pretty spread out across the product portfolio. There's no product that's significantly overweighting others. So it's a nice spread across the product portfolio. And secondly, we are not seeing organic growth from NXT because we don't go live with clients until the back half of the year. So NXT go lives will start to drive future organic growth. The one we're seeing in the first quarter is really across the portfolio products.

And then, as we look down to cash flows, I know you mentioned that the shift to the annual bonus payment had a little bit of impact here in the quarter. But as we look out for the full year, what are the expectations now after the quarter maybe came in a little behind, but I think overall we're still expecting pretty strong cash flow growth?

Yes, Matt. This is Tony. Cash flows came right in line with our expectations, largely for the quarter. So on the year, as we said, we are sticking to the full-year guidance. So we would expect you will see a little different seasonality this year than you saw on previous years because of the change in when we pay off bonuses for some of our folks. But that was incorporated in our thoughts when we put the guidance together. So we still expect to see that 12% or so at midpoint improvement year-over-year on cash flow.

And then on the currency headwind, you mentioned I think it was $1.7 million in the quarter on the top line. How does that impact the full year? What was in the guidance to begin with? And has that changed at all as we've seen rates move against the accounting treatment here?

I think we benefited of it because our guidance, when we gave that, was a bit later than I believe many companies that you guys covered did because, as you recall, we didn't give our guidance until our Q4 release. So we had already seen the majority off the strengthening of the U.S. dollar against all currencies anyways and we have built into our guidance $8 million to $9 million worth of currency headwinds. Q1 came in right in line with expectations, so no surprises there. Some of the strengthening of the oil prices and the weakening of the U.S. dollar will be interesting to watch because that may have a positive impact on revenues for us when we look at our Canadian dollar currencies, that we'll have to wait and see. So right now we are sticking with the original thought of 8 million to 9 million on the full-year impact. That was built into the guidance.

And then last question -- on the payments business, we've obviously seen a nice uptick over, I guess, the last five quarters which I didn't think, non-coincidentally -- is kind of around the time Mike joined the Company. What kind of trajectory do we expect to see moving forward as we start to lap maybe the greater focus and the more ingrained, built-in features of payments into the existing products?

Sure, it's still a strong driver of growth for us. But I just reemphasize that the organic growth is sort of portfolio wide from a subscription standpoint. So payment is in there, but it doesn't necessarily significantly overweight the entire product portfolio. Although strong and I think it has a long runway onto itself, we feel the same about the rest of the subscription product portfolio as well.

And, Matt, one of the things we probably forgot to mention is we are seeing good traction from the WhippleHill and MicroEdge acquisitions. And those are largely all subscription offers. And so those have been accretive as well to the business. So that's been very positive.

For our next question we moved to Pete Wahlstrom of MorningStar Investment Research.

So quickly, year-over-year non-GAAP operating margins -- roughly 200-basis-points margin improvement. So when we take a step back and look at the next three years and the road map to get 300 to 600 basis points, are you arguably conservative? What else might you be doing internally which could cause a pause in the margin trajectory?

Pete, Mike. First, we feel positive about not only this year's guidance but our long-term aspirational goals we released on Investor Day last fall. It's early days related to that. We continue to invest in the business. We talked a lot last year about internal investments around infrastructure and back-office and product. The back-office investments are largely behind us, but we continue to add investments in key areas from a product standpoint. So I think we are on track with our long-term goals. We feel pretty good about last year's results and the first quarter of this year, lining up to those goals. And I think we're making progress against those. So all in all I think we're exactly the right areas as far as internal infrastructure and our products. And I think we're starting to see that in subscription revenue growth.

Okay. And then certainly one of the five key focus areas is, as you mentioned, to expand the TAM. Oftentimes, that comes via acquisitions. So, given some of the Salesforce.com rumors from late yesterday and potential valuations increasing across the board, particularly in some of the cloud space or areas, how does that impact your approach or strategy when you are looking at having discussions with potential targets?

Sure, we did think that there is still interesting opportunities. The two acquisitions we made last year, WhippleHill and MicroEdge, have proved to be, to Tony's earlier comment, accretive. We are doing quite well in executing on those two acquisitions. I think that the news yesterday on salesforce doesn't necessarily impact how we think about acquisitions because our world is quite different. We are focused on interesting near adjacencies that expand our TAM and so just the definition of that would be tuck-ins that are like what we showed our hand with last year, with the two that we purchased. So I don't think that new changes that for us, and I do think that we have a large addressable TAM that's organically growing well and I think that given the ability to execute well on acquisitions puts us in a good position to continue down that path.

Two final housekeeping items; first, total subscription revenue is up a little more than 24%. Do you have the organic subscription growth rate in the quarter?

Yes. I think, Pete, that's -- and I can come back and check. That's 18%, I believe is what it is.

And last item for you is -- you mentioned moving the analytics into specific business units. Are the changes large enough to warrant restatement of historical segment financials, either from revenue, or a margin perspective?

No, that would not be, and it had been immaterial, so we want require to disclose. It's a separate segment previously and that's part of what drove it. Right, it's become a smaller percentage of the total because of the growth in the business elsewhere and then we are going to treat it more so going forward as another line of business or solution offering and will just record that as would payments or any other product, just across whichever business unit happens to sell that.

The other thing, Pete, that's key here that because of the product integration, that we're been pushing on a lot of for analytic solutions over time more and more are deeply integrated in our solutions. And I think the Raiser's Edge NXT is a great example of our customer's ability to purchase Raiser's Edge NXT and it has analytic solution show up in that. That happens on the low end with eTapestry as well. And so it's deeply integrated like online or payments. So it's become an integrated value-added product and not really a standalone, if you will.

Hey Pete one more thing, I just have checked. The guys were digging on this. Non-GAAP organic subscription growth, is that what you're asking, or no?

Yes, if you got that that would be great.

Yes, non-GAAP organic subscription was 15.8 year-over-year.

15.8. Thank you.

For our next question, we got Sterling Auty with JPMorgan.

Curious in terms of -- you mentioned the customers that you already have live on NXT. Any sense of what your early experience was in terms of implementation and conversion time, whether they were brand-new installs or conversions from the legacy products? How long did it take to get up and running?

Yes, it was as non-impactful and it smoothed as we anticipated. So it's fairly automated, Sterling, to move clients to the live, if you will on the NXT platform as we have built and anticipated. So client feedback has been very positive. Than what we did is that we made sure we had a mix of different clients to -- both domestic and international and an different types as well. So it's going well

But in terms of -- is this like a several-week process, several-month, several-quarter? So just so we get an understanding of what goes live and we think about how the conversions for the rest of the days it might go.

It's a little bit different by client, that I would say on an average I would call it a very high velocity implementation which is what we have built.

And you mentioned another very large CRM win. Can you remind us how many total large CRM customers do you have? And are all of those live as well? So where are we in the process of those implementations?

Yes, we typically don't break that as far as all the questions that you just asked. But we'll have to follow up with you on that. I can tell you though that is accelerating, our 4.0 release in the fall has gone over quite well. And the reason I included both mention of a client with Enterprise CRM and the fact that we've sold hundreds of NXT is to just be clear that we see very positive results from a sales standpoint, sort of up and down the client-size, small, midmarket and enterprise; we have seen acceleration in activity.

Okay. And then last question area would be on the WhippleHill side. Can you update us where you are with that asset, what you are seeing in terms of the competitive landscape? Because that is obviously a space that we've seen the vendors kind of ebb and flow in terms of strength or fading. And I think you even have some competitors that have been exiting the market. Just kind of curious where that one stands on the competitive landscape side?

Yes, I did tell you, we're pretty just up about our integration and our results. The interesting thing about what's happening now in that space for us is, we are selling deals that are 5, 6 integrated solutions, where historically we sold maybe Raiser's Edge or Financial Edge. And so we are selling these broader more impactful integrated solutions because we pretty quickly integrated the WhippleHill solution set with Raiser's Edge and so we are out in the marketplace selling all their modules and Raiser's Edge NXT, Financial Edge NXT as well. And it has given as a bit of a different wider competitive mode, being able to cover those solution sets in that market. So we're pretty excited about the results from the momentum there.

I have no further questions. I would like to turn the call back over to Blackbaud's CEO, Mike Gianoni for closing remarks.

Thanks operator. I would like to just close the call by saying that the first quarter this year was very strong start for us. The performance of the businesses is really gaining momentum. We're on track to achieve our 2015 guidance and longer-term aspirational goals. Thanks everyone.

That concludes today's conference. Again we thank everyone for joining us.