Kintera - Watching a Train Wreck
by Michael HoffmanTuesday, March 6th, 2007
It is unusual that nonprofit people follow public companies — unless they are the companies owned by their major donors. Kintera is the exception. Kintera (NASDAQ: KNTA) provides web-based marketing and database and content management software for nonprofits. They have spent a boat load of money on marketing and as a result have a pretty good client base.
Most firms that play in the nonprofit world are private. Which means whatever problems they are having are hidden from the view of the general public and of their clients. Not so with a public company, who is required to report everything of consequence. Kintera’s stock price, as of this writing, is all of $1.79. Their market cap (their value based on their stock price) is about $65 million, on annual revenue of about $45 million. They have about $21 million in the bank, but they lost more than $21 million last year. So, unless they do something, they are a goner.
It has been reported that they have more than 300 employees, way too many for a company selling a web-based product (in my opinion). Shedding payroll is a problem because many people have reported to me that their service isn’t so great and we can only imagine what will happen if they reduce their customer service people.
Now there is another public company that serves nonprofits, but people don’t pay too much attention to their stock because they are healthy and make boat loads of money. They are Blackbaud (NASDAQ: BLKB) and they have $30+ million in profit on more than $1 billion in revenue. They make Raiser’s Edge, the most popular donor database software. They charge an arm and a leg for it, and make nonprofits feel like they gotta have it. Over the past few years they have begun working their way into web-based products, analytics, and even ticketing and seating programs. They are pretty smart and have to know that their premium-priced installed database program will be under increasing threat by low-cost web-based donor management suites, open source software and a bunch of new competitors. Whether they will be able to preserve their revenue and position over the long-term remains to be seen.
I am writing about this whole issue today because today Kintera’s Founder/CEO resigned his job (but not from the Board). The pressure of their major investors — who have gotten killed on this investment — became too much. “Do something!” they screamed. And the something was the rolling head of the CEO. The evidence of the interest in this in the nonprofit sector is that I heard about the news from two email lists within about 5 minutes. One of the posts was to the NTEN (the nonprofit tech association) email list by Katrin Verclas, it’s Executive Director, from her Blackberry. She couldn’t even wait to get to her computer.
