Good day, and welcome to the Blackbaud 2015 Fourth Quarter and Year End Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mark Furlong, Director of Investor Relations. Please go ahead, sir.

Good morning, everyone, and greetings from Charleston, South Carolina. Thanks for joining us today on Blackbaud's 2015 Fourth Quarter Conference Call. Today, we will review our fourth quarter and year end financial and operating results, provide commentary on our performance in the context of our five-point growth strategy and discuss our plans for 2016, including financial guidance for the year and updates to our long-term aspirational goals. 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'll 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 our 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. During this call, we discuss non-GAAP organic revenue growth, which we believe provides useful information for evaluating the periodic growth of our business on a consistent basis. Details of our methodology in calculating non-GAAP organic revenue growth can be found on the Investor Relations section of our website at www.blackbaud.com. Also, please note that a recording and transcript of today's call as well as our quarterly investor materials will be archived on the Investor Relations section of our website. Before I turn the call over to Mike, I would like to communicate our upcoming Investor Relations activity. During the first quarter, our team will…

We'll take our first question. Tom Roderick - Stifel, Nicolaus & Co., Inc.: Hey, gentlemen, good morning. It's Tom Roderick from Stifel. Mike, I wanted to ask the first question to you. I think at the Analyst Day or not the Analyst Day, but the user conference and probably at the Analyst Day as well, you did provide an update at that time with the number of NXT customers that had upgraded or the number of customers on RE that had upgraded to NXT, I think that number was 1,500, with say, around 1,000 that have implemented. Curious if you can offer some sort of an update either qualitative or quantitative as to how that progressed in the fourth quarter? And maybe even more interesting beyond that, what sort of anecdotal evidence can you offer to us about pricing power, and – pricing power in the up-sell cross-sell traction you saw for early adopters on NXT? Michael P. Gianoni - President, Chief Executive Officer & Director: Sure. Tom, thanks for the question. So we continue to drive that platform in sort of early days on that midmarket transition. In fact, we continue to add head count in sales and customer success in the company that sort of covers a lot of products, but this product is a increasing opportunity for us. We just went live last July as you recall. So it's fairly new. It still represents some revenue headwinds for us for a while, but it gains momentum. The customer testimonials are actually fantastic. We have a lot of referenceable clients that are creating a lot of buzz in the market. We continue to have those road shows that we did all last year. We'll continue to do them this year as well around the country. So it's a…

And we'll take our next question. Steve M. Ashley - Robert W. Baird & Co., Inc. (Broker): Hi, it's Steve Ashley from Robert Baird. I just like to start by asking about the payments business. Maybe you could bring us up-to-date on what kind of traction you're receiving with payments from new customers attaching? And then if you're seeing engagement and anything around transaction processing metrics you could give us? Michael P. Gianoni - President, Chief Executive Officer & Director: Sure. Hi, Steve, it's Mike. I'll take that. Yeah. So, again, it's – to my earlier comment around, it's sort of early days for the industry to move online. It's also the same related to our ability to keep just driving the payments transaction and customer acquisition pace forward. And we see a nice uptick every month, every quarter. And net new clients and existing clients moving to our payments platform. The big value prop for us is the deep integration with our core solutions. And so we – with that integration, it better operationalizes the payments flow for our customers, which eliminates internal back office operations for them. And so there's a pretty straight forward value prop. We're not heavily penetrated in the market. We're not heavily penetrated in our existing client base. And so the combination of our focus on cross-selling into the base, and just including that capability with net new clients or with clients that are moving let's say from Raiser's Edge to Raiser's Edge NXT as sort of a core part of the offering, which has not always been the case, continues to sort of drive the momentum there for us. And we're barely penetrated in the market. So I see a long-term runway here for helping our clients that'll automate this and driving our…

And we'll take our next question.

Hi, guys. Brad Felt (48:52) here. I wonder if you could provide a little color around Financial Edge NXT. It's been a recent launch. Can you just describe how the reaction has been to the offering? Are you starting to see some good traction on the migration there? Michael P. Gianoni - President, Chief Executive Officer & Director: Yeah. Sort of like RE NXT, but launched a little bit later. It's picking up steam. The value prop is a little different than RE NXT, but the modernization of the solution is the same. And what I mean by that is RE NXT, as I just mentioned, sort of incorporated multiple products. So it really broadened its the value prop, where FE NXT, monitoring UI, monitoring workflow, but didn't incorporate five or six other products like RE NXT did. But it's – the uptick is happening there. The cross-sell opportunity exists just like it does with RE NXT.

Got it. Great, thanks. And could you remind me what installed base is left that's on legacy RE and what's your expectations for migration there? Michael P. Gianoni - President, Chief Executive Officer & Director: Yeah. I'll just remind you that back I had an earlier question on this when we talked about before when we were disclosing the NXT numbers. We had disclosed 1,500 sold back then last time we disclosed and there's about 13,000 RE customers that we have. So, it's early days, right? The product went live in July. The momentum builds. It's going to take a while for us to convert customers, but we're converting customers at a pretty healthy clip, and we're signing on brand-new – new to Blackbaud names as well.

Okay, great. Thanks. And then, the gross margin per subscription declined. I assume a lot of that is just seasonality with payments, but is there anything else going on with subscription margin? Anthony W. Boor - Chief Financial Officer & Executive Vice President of Finance and Administration: I think that, on a GAAP basis spread, the other two things that would be impacting subscription gross margin and will be an impact going forward is our acquisitions have largely been – at least the recent acquisitions with WhippleHill, MicroEdge and Smart, have largely been subscription related. Convio (51:28) would have been as well. And so, any amortization of finite-lived intangibles related to the acquired software would end up in the subscription line. And so, you have that which is a fairly significant impact on a GAAP basis. And then, secondarily, we – in the execution of our five-point growth strategy, we're spending – investing more in R&D. And as a result, as we've guided to, you're seeing a higher capitalized R&D amount, and that is largely associated with these new cloud products. And that include Raiser's Edge NXT, Financial Edge NXT, the new Outcomes product, investments in AngelPoints, the new Luminate Next GEN, the Everyday Hero U.S., Outcomes which I remembered (52:19) I have mentioned them all. But a lot of incremental investment and innovation, resulting cap software and then the amortization would largely all end up in the subscription line as well up in COGS. And hence, you see a lower R&D down below the gross margin line, but we're actually spending more in R&D in total. It's just that it's getting capped and then amortized through that line. And then, the rest would be mix.

Got it. Great. Thanks, guys. Anthony W. Boor - Chief Financial Officer & Executive Vice President of Finance and Administration: You bet.

And we'll take our next question. Kevin Liu - B. Riley & Co. LLC: Hi, good morning. It's Kevin Liu with B. Riley. Just, first, on the capitalized software expenses with RE and FE NXT. I would have thought that maybe it will start to stabilize, not come down. Could you just talk about where the incremental investment for this year goes tied to Smart Tuition or some of the other acquired products and when would you expect that number to start to peak? Michael P. Gianoni - President, Chief Executive Officer & Director: Sure. I'll take the first part of that. Hi, Kevin. It's Mike. So, from a software standpoint, I just want to build on what Tony said. We have a much higher focus on innovation than we've had, I think, historically as a company. You saw that with NXT RE and FE NXT, but that continues to hit a lot of our products like Luminate. We announced at our client conference that we will be coming out with what we're calling Luminate Next GEN this year, which will incorporate and use some of the SKY capabilities like SKY UX, for example. We have a big announcement at bbcon around that capability in RE NXT called Nonprofit Intelligence, which is a business intelligence and reporting capability. That Nonprofit Intelligence capability will be coming out and Luminate Next GEN as well, which we announced at bbcon. And also, things like the drive on Enterprise CRM 4.0 and in my prepared remarks that conversions to 4.0 that we saw last year, almost all of our clients now are on 4.0 or the most previous version. So, we have a pretty big shift toward innovation and a shift toward the spend, if you will, and sort of FTE hours in engineering…

And we'll take our next question.

Hi. This is Anubhav, filling in for John. So, maybe just a quick one on the macro and a couple after that. So, on the macro, like, is there any kind of lead indicator maybe you're giving as a proxy or something else that you could use to say we are actually seeing it? Like, going forward, what would you probably do? Michael P. Gianoni - President, Chief Executive Officer & Director: Yeah. Well, it's not a straightforward single metric, right? So...

Yeah. Michael P. Gianoni - President, Chief Executive Officer & Director: Our company revenue is not all driven by giving. So, giving last year in 2014 was $358 billion in the U.S. And the growth on the online side in 2015 was nearly six times the total growth. In online, it's less than 10%. So, our revenue drivers, a small part of it, if you will, is driven by actual giving which would be our Payments line. But our other revenue drivers are around things like usage of systems. And the move to online continues and will continue and in fact will accelerate. We've seen acceleration in things like mobile giving, which was nearly 14% last year; so it continues to grow. And so, it's not a single metric. And the last thing I'll say is our percentage of TAM in this space is not very high, right? So, the industry has remained healthy during lots of, sort of, turns in the marketplace over the last 40 years or 50 years. And our percentage of total is fairly small, and it's going through in early transition to online. So, we think we're positioned quite well. The last thing I'll say too is, historically, the – when there's some difficulty in the stock market, it might impact major gifts, which is not the largest percentage of total. So, of that $358 billion number, a little over 70% were gifts by individuals at a very small amount, which the market doesn't necessarily impact per se. So, we're positioned quite well in this space and we don't see a macro headwind to our guidance that we gave this morning. Anthony W. Boor - Chief Financial Officer & Executive Vice President of Finance and Administration: And I think the one thing I would add…

Okay. Great. That was very helpful. Now, just moving on to the SKY API, the whole new platform that you have. As of now, and I think it might be a little too early, but are you seeing any new partners? Or when do you expect to see, like, an impact from that as far as that goes? Michael P. Gianoni - President, Chief Executive Officer & Director: Sure. So, the SKY platform, both API – REST API and UX, we've used pretty extensively internally. Starting with the NXT line and kind of moving across other products like Outcomes and soon to be Luminate, just in the last quarter, did we open it up to partners and it's going through kind of early adopter partners and then sort of an early adopter to release days, UX first, API second and they're both in process right now. So, we'll start to see partners pick up on using SKY UX and SKY API this year, but it's fairly new. So, we've gone through with a handful of early adopters in the fourth quarter, if you will.

Okay. Great. And maybe one last one just on the deferred revenue. I was wondering, if you could just kind of explain to us maybe what are the kind of the puts and takes that drive this line, given that you have subscription growing and maybe some other maintenance coming off and so on? Anthony W. Boor - Chief Financial Officer & Executive Vice President of Finance and Administration: Yeah. So, it's a tough one because we don't currently and don't have a plan to disclose enough granularity, I think, to allow you guys to triangulate back to the impact deferreds would have on future revenues and some of the difficulties there that you have to keep in mind and trying to do so as we have historically had a fairly significant amount of seasonality in our business that would affect our deferreds, so timing of renewals for instance. And that seasonality has actually changed quite a bit with some of our recent acquisitions with MicroEdge and certainly with WhippleHill and now Smart Tuition that is more weighted towards billing cycles midyear. And so, we have that seasonality impacts, which we don't provide granularity on. Also, you need to keep in mind that a large portion of our business is driven by transactional business, so the payments, the usage side of things with Smart, there's also transactional and usage related that does not get recorded as deferred revenue balance – on the balance sheet. Those are recorded when earned directly to the P&L. So, you've got that impact. And then, I think that one of the other issues that you would have wrestled with recently is just the sheer number of acquisitions that we've done and the GAAP required deferred revenue write-offs on the opening balance sheets. So, when you bring those acquisitions onboard, you're not seeing the deferred in the balance sheet that you would expect because you would take a fairly significant haircut in most cases on those opening balance sheets. So, we'd have to provide a great deal of granularity that we're just not open to doing today to allow you to be able to effectively understand the driver in that. So, I'd just suggest instead and part of why we provided the long-term aspirational goals that we have. And then, also, I would refer you to our 2016 guidance and what we expect for overall acceleration and growth, which is kind of a three-year continuing trend and then also in overall continued expansion in our margins is probably a better means for you to focus attention on.

Great. Thanks. Thank you. Anthony W. Boor - Chief Financial Officer & Executive Vice President of Finance and Administration: You bet. (01:06:09). Thank you.

And we'll take our next question.

Hi. Good morning. Thank you for taking my question here. Michael, I realized it's still early days for the Financial Edge NXT product, but how did the – how did bookings fare in the quarter? And did the product contribute to revenue during Q4? Michael P. Gianoni - President, Chief Executive Officer & Director: Yeah. We feel good about that. We don't break out unit bookings, but it's a little earlier on FE than RE, right, because it came out a couple of months later in Q3. But again, it's sort of a similar story as RE NXT, where it's building – built for net new and for existing customer migrations. It's a pretty high value prop with a modern platform that the existing clients they haven't seen in a long time. So, we're excited about that product and we're excited about it being sold along with other products like with WhippleHill on suite in K-12 and RE NXT in K-12, as an example.

Okay. Thank you. And then, Tony, I believe, in the last quarter, there were some services around your Enterprise CRM product that slipped a quarter or two. And I was wondering if that services work has started yet. Anthony W. Boor - Chief Financial Officer & Executive Vice President of Finance and Administration: So, we don't – Mark (01:07:38), we don't break out the specifics on those. I think, the enterprise side of things, we continue to have a little bit of softness in the quarter overall from services. I think the new COO that we brought onboard in the enterprise space, Walter, has been doing a great job and we've really cleaned up our tracking of our backlog and pipeline on that side of the business. And I think you can, early days, can see some of the significant improvement in the services margin in the P&L. Year-over-year, there was a fairly dramatic improvement in those margins. That was one of our kind of key focus areas to help with our overall margin improvement aspirational goals. So, we're happy with what we're seeing there. The other side of the services, we expect it to continue to be a drag on our growth rates. We expect services as a percentage of total revenue to continue to shrink as we move more and more to the cloud and as our products mature. So, as that CRM product in the enterprise space matures and we continue to innovate there, we believe that our customers and clients will need to do less customization and the implementation cycle will get shorter and require less overall services, and that is a key focus. We would like to see that services line continue to shrink as a percentage of total and the margins improve at the same time.

Great. Thank you. Anthony W. Boor - Chief Financial Officer & Executive Vice President of Finance and Administration: You're welcome.

And it appears there are no further questions at this time. I'd like to turn the conference back over to our speakers for any additional or closing remarks. Michael P. Gianoni - President, Chief Executive Officer & Director: Thanks, operator. Everyone, I'd like to close the call by saying 2015 was a great year, and we did an excellent job positioning ourselves to accelerate performance in 2016. We look forward to delivering on our financial guidance and reporting progress on our longer-term aspirational goals. Thanks, everyone, for your participation this morning.

This does conclude today's conference. We thank you for your participation.