One of South Carolina’s largest technology companies is working with a major Wall Street dealmaker to sort out the future of its biggest-ever acquisition, a $750 million investment that hasn’t paid off.
Blackbaud Inc. said Oct. 30 that it’s working with bankers at Goldman Sachs to review “strategic options” for Everfi, including the possibility of a sale of the online education unit.
The Daniel Island-based company also “recently right-sized” the struggling subsidiary and eliminated “some pretty substantial” expenses to better match up the costs with the revenue, CEO Mike Gianoni told financial analysts during a conference call.
“We’ve got Goldman Sachs on the case here to work with us. So, we’ll resolve this problem,” Gianoni said.
Blackbaud said in a written statement late after the earnings call that the cost reductions included “a small reduction in workforce in some areas within the Everfi business, but that was a relatively small component.”
The update was included in a quarterly sales and profit report that fell short of Wall Street’s expectations, triggering a sharp sell-off in Blackbaud’s stock. Shares of the Nasdaq-listed company skidded 15 percent to $74.29.
The slumping Everfi business also prompted Blackbaud to cut its 2024 revenue estimate by between $14 million and $34 million. The company now expects its total sales for the year to fall in the $1.15 billion to $1.16 billion range.
“We expect headwinds at Everfi to continue in the near term, which is reflected in our revised guide,” said Tony Boor, chief financial officer.
Acquired in late 2021, Everfi was an established player in a growing $10 billion market, with 500 workers, $120 million in annual revenue and 2,000-plus customers that included big banks and the National Football League.
At the time, the Washington, D.C.-based company was riding a hot trend. In addition to selling standard digital learning products for K-12 students, its platform could help big businesses meet “environmental, social and governance” goals, or ESG, by providing them with online content ranging from financial wellness to racial equity and workplace diversity.
Everfi was expected to boost Blackbaud’s top line with annual sales gains of nearly 20 percent, but it hasn’t followed through. Its 2024 revenue is down 17 percent to $67 million through Sept. 30.
Earlier this year, Gianoni told investors unfavorable shifts in spending on “corporate social responsibility” programs were hurting Everfi. The CEO also announced that a turnaround plan was in the works.
Gianoni said Wednesday that the customers he’s met remain “enamored” with the subsidiary’s online products. He rattled off several “wins” Everfi has finalized this year with customers such as NASCAR, Truth Initiative and Guardian Life Insurance Co.
“There’s just been some macro pullback in the space, which has caused the business to … struggle … . In fact, it’s going backwards a bit. But it’s not all doom and gloom,” he said.
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