Core Viewpoint - Blackbaud reported strong financial performance for Q2 2025, with non-GAAP earnings per share of $1.21, exceeding analysts' expectations of $1.06, and a 6.8% organic revenue growth, leading to an increase in full-year guidance for 2025 [1][10]. Financial Performance - Non-GAAP earnings per share increased by 12.0% from $1.08 in Q2 2024 to $1.21 in Q2 2025 [2][5]. - Non-GAAP revenue reached $281.4 million, surpassing the forecast of $276.5 million, while reported GAAP revenue declined by 2.1% year-over-year to $281.4 million due to the sale of EVERFI [1][2]. - Non-GAAP organic revenue grew by 6.8%, driven by strong recurring revenue streams, with recurring revenue accounting for 98% of total sales at $275.6 million [5][6]. Profitability Metrics - GAAP operating margin improved by 5.4 percentage points year-over-year to 20.1%, attributed to cost management and headcount reductions [2][6]. - Non-GAAP adjusted EBITDA was $108.5 million, reflecting a year-over-year increase of $5.9 million [2][6]. - Adjusted free cash flow rose significantly by 45.9% year-over-year to $53.1 million [9]. Strategic Focus Areas - Blackbaud is concentrating on enhancing its leadership in social impact software, driving product innovation particularly in AI, and optimizing revenue streams [4][11]. - The company is rolling out advanced AI features, including a "Copilot" AI agent for tailored fundraising recommendations, and evaluating future business models for AI capabilities [7][11]. - A strategic integration of fundraising software with Constant Contact has been completed, and international platforms like JustGiving and YourCause have performed well [8]. Future Guidance - Management raised its full-year 2025 guidance, now expecting GAAP revenue between $1.120 billion and $1.130 billion, with non-GAAP adjusted EBITDA margin projected at 35.4% to 36.2% [10]. - Non-GAAP earnings per share are forecasted to be between $4.30 and $4.50, with adjusted free cash flow projected in the range of $190 million to $200 million [10].

[Cautionary Statement Regarding Forward-Looking Statements](index=3&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section outlines that the report contains forward-looking statements based on estimates and assumptions, subject to uncertainties and not guarantees of future performance - The report contains forward-looking statements based on estimates, assumptions, and plans, subject to uncertainties and made under safe-harbor provisions. These statements are not assurances of future performance, and actual results may differ materially[8](index=8&type=chunk)[9](index=9&type=chunk) [Part I. Financial Information](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20statements) This section presents Blackbaud, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of comprehensive income, cash flows, and stockholders' equity, along with detailed notes explaining accounting policies, earnings per share, fair value measurements, debt, derivatives, commitments, income taxes, segment information, and revenue recognition for the periods ended June 30, 2025 and December 31, 2024 [Condensed Consolidated Balance Sheets (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) This section presents the company's unaudited condensed consolidated balance sheets, detailing assets, liabilities, and stockholders' equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (Unaudited) - Key Figures | (dollars in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | **Assets** | | | | Total current assets | $1,153,969 | $976,308 | | Total assets | $2,629,393 | $2,495,715 | | **Liabilities** | | | | Total current liabilities | $1,380,057 | $1,252,097 | | Total liabilities | $2,541,443 | $2,353,722 | | **Stockholders' Equity** | | | | Total stockholders' equity | $87,950 | $141,993 | - Total assets increased by **$133.68 million** from December 31, 2024, to June 30, 2025, primarily driven by increases in restricted cash and accounts receivable[12](index=12&type=chunk) - Total stockholders' equity decreased by **$54.043 million** from December 31, 2024, to June 30, 2025[12](index=12&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)) This section presents the company's unaudited condensed consolidated statements of comprehensive income, including revenue, gross profit, income from operations, net income, and EPS for specified periods Condensed Consolidated Statements of Comprehensive Income (Unaudited) - Key Figures | (dollars in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $281,382 | $287,286 | $552,043 | $566,536 | | Gross profit | $167,749 | $162,586 | $323,595 | $315,630 | | Income from operations | $56,686 | $42,092 | $77,116 | $52,811 | | Net income | $25,980 | $21,804 | $30,847 | $27,050 | | Basic EPS | $0.54 | $0.43 | $0.64 | $0.53 | | Diluted EPS | $0.54 | $0.42 | $0.63 | $0.52 | - Net income for the three months ended June 30, 2025, increased by **$4.176 million (19.15%)** compared to the same period in 2024[14](index=14&type=chunk) - Diluted EPS for the three months ended June 30, 2025, increased by **$0.12 (28.57%)** compared to the same period in 2024[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) This section presents the company's unaudited condensed consolidated statements of cash flows, detailing operating, investing, and financing activities for specified periods Condensed Consolidated Statements of Cash Flows (Unaudited) - Key Figures (Six months ended June 30) | (dollars in thousands) | 2025 | 2024 | | :--------------------- | :-------- | :-------- | | Net cash provided by operating activities | $68,329 | $118,435 | | Net cash used in investing activities | $(41,333) | $(40,718) | | Net cash provided by financing activities | $68,094 | $25,657 | | Net increase in cash, cash equivalents and restricted cash | $102,302 | $102,851 | | Cash, cash equivalents and restricted cash, end of period | $911,814 | $831,108 | - Net cash provided by operating activities decreased by **$50.106 million (42.3%)** for the six months ended June 30, 2025, compared to the same period in 2024[17](index=17&type=chunk) - Net cash provided by financing activities increased significantly by **$42.437 million (165.4%)** for the six months ended June 30, 2025, compared to the same period in 2024[17](index=17&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Unaudited)) This section presents the company's unaudited condensed consolidated statements of stockholders' equity, detailing changes in equity components for specified periods Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - Key Changes (Six months ended June 30, 2025) | (dollars in thousands) | Balance at Dec 31, 2024 | Net Income | Treasury Stock Purchases | Stock-based Compensation | Other Comprehensive Loss | Balance at Jun 30, 2025 | | :--------------------- | :---------------------- | :--------- | :----------------------- | :----------------------- | :----------------------- | :---------------------- | | Total stockholders' equity | $141,993 | $30,847 | $(101,292) | $55,792 | $(1,423) | $87,950 | - Total stockholders' equity decreased from **$141.993 million** at December 31, 2024, to **$87.950 million** at June 30, 2025, primarily due to treasury stock purchases and other comprehensive loss, partially offset by net income and stock-based compensation[19](index=19&type=chunk)[21](index=21&type=chunk) - The company repurchased **1,513,022 shares** for **$100.425 million** under its stock repurchase program during the six months ended June 30, 2025[19](index=19&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed notes to the unaudited condensed consolidated financial statements, explaining accounting policies and specific financial items [Note 1. Organization](index=9&type=section&id=Note%201.%20Organization) This note describes Blackbaud, Inc.'s business as a software provider for social impact and its global operational footprint - Blackbaud, Inc. is a leading software provider exclusively dedicated to powering social impact, serving nonprofit, education, and socially responsible sectors globally[24](index=24&type=chunk) - The company operates as a remote-first entity with operations in the U.S., Australia, Canada, Costa Rica, India, and the U.K., supporting users in over 100 countries[24](index=24&type=chunk) [Note 2. Basis of Presentation](index=9&type=section&id=Note%202.%20Basis%20of%20Presentation) This note explains the basis of preparation for the unaudited condensed consolidated interim financial statements and any significant accounting policy changes - The condensed consolidated interim financial statements are unaudited and prepared in accordance with SEC rules for interim reporting and U.S. GAAP, including all necessary recurring adjustments[25](index=25&type=chunk) - Revenue from 'recurring' and 'one-time services and other' has been combined into 'revenue' starting in 2025 due to immateriality of one-time services, with prior periods reclassified for comparability[26](index=26&type=chunk) - No material changes to significant accounting policies were reported compared to the Annual Report on Form 10-K for the year ended December 31, 2024[32](index=32&type=chunk) [Note 3. Earnings Per Share](index=10&type=section&id=Note%203.%20Earnings%20Per%20Share) This note details the computation of basic and diluted earnings per share for the reported periods Earnings Per Share (EPS) Computation | (dollars in thousands, except per share amounts) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $25,980 | $21,804 | $30,847 | $27,050 | | Basic weighted average shares | 47,784,062 | 50,747,337 | 48,104,780 | 51,399,853 | | Diluted weighted average shares | 48,248,057 | 51,677,418 | 48,786,793 | 52,371,927 | | Basic EPS | $0.54 | $0.43 | $0.64 | $0.53 | | Diluted EPS | $0.54 | $0.42 | $0.63 | $0.52 | - Diluted EPS increased to **$0.54** for Q2 2025 from **$0.42** for Q2 2024, and to **$0.63** for the six months ended June 30, 2025, from **$0.52** for the same period in 2024[34](index=34&type=chunk) [Note 4. Fair Value Measurements](index=11&type=section&id=Note%204.%20Fair%20Value%20Measurements) This note describes the company's fair value hierarchy and measurements for financial assets and liabilities - The company uses a three-tier fair value hierarchy (Level 1, 2, 3) for financial assets and liabilities, with interest rate swaps and foreign currency forward contracts classified as Level 2[36](index=36&type=chunk)[37](index=37&type=chunk)[40](index=40&type=chunk) Recurring Fair Value Measurements (June 30, 2025) | (dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | | :--------------------- | :------ | :------ | :------ | :---- | | **Financial assets:** | | | | | | Interest rate swaps | $— | $1,321 | $— | $1,321| | Total financial assets | $— | $1,321 | $— | $1,321| | **Financial liabilities:** | | | | | | Interest rate swaps | $— | $2,497 | $— | $2,497| | Foreign currency forward contracts | $— | $1,359 | $— | $1,359| | Total financial liabilities | $— | $3,856 | $— | $3,856| - There were no significant non-recurring fair value adjustments to long-lived assets, intangible assets, goodwill, or operating lease ROU assets during the six months ended June 30, 2025[45](index=45&type=chunk) [Note 5. Consolidated Financial Statement Details](index=12&type=section&id=Note%205.%20Consolidated%20Financial%20Statement%20Details) This note provides additional details on specific line items within the consolidated financial statements, such as restricted cash and other income Restricted Cash (dollars in thousands) | (dollars in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Restricted cash due to customers | $869,061 | $740,370 | | Total restricted cash | $870,248 | $741,884 | Prepaid Expenses and Other Assets (dollars in thousands) | (dollars in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Total prepaid expenses and other assets | $146,006 | $148,508 | | Prepaid expenses and other current assets | $91,222 | $81,287 | Accrued Expenses and Other Liabilities (dollars in thousands) | (dollars in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Total accrued expenses and other liabilities | $48,659 | $80,339 | | Accrued expenses and other current liabilities | $40,863 | $75,543 | Other Income, Net (dollars in thousands) | (dollars in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest income | $1,968 | $2,815 | $3,623 | $4,863 | | Currency revaluation losses | $(2,022) | $(380) | $(2,899) | $(97) | | Other income, net | $1,118 | $3,310 | $3,223 | $6,657 | [Note 6. Debt](index=14&type=section&id=Note%206.%20Debt) This note provides details on the company's debt balances, weighted average effective interest rates, and compliance with debt covenants Debt Balances and Weighted Average Effective Interest Rates | (dollars in thousands) | June 30, 2025 | December 31, 2024 | Weighted average effective interest rate at June 30, 2025 | Weighted average effective interest rate at December 31, 2024 | | :--------------------- | :------------ | :---------------- | :-------------------------------------------------------- | :-------------------------------------------------------- | | Revolving credit loans | $325,400 | $229,900 | 6.47 % | 6.37 % | | Term loans | $780,000 | $790,000 | 5.53 % | 5.59 % | | Real estate loans | $54,270 | $55,135 | 5.23 % | 5.23 % | | Other debt | $691 | $2,783 | 9.13 % | 8.77 % | | Total debt | $1,160,361 | $1,077,818 | 5.78 % | 5.75 % | | Debt, net of current portion | $1,136,112 | $1,051,110 | 5.77 % | 5.73 % | - Total debt increased by **$82.543 million** from December 31, 2024, to June 30, 2025, primarily due to an increase in revolving credit loans[57](index=57&type=chunk) - The company was in compliance with all debt covenants under the 2024 Credit Facilities and Real Estate Loans as of June 30, 2025[58](index=58&type=chunk)[59](index=59&type=chunk) [Note 7. Derivative Instruments](index=15&type=section&id=Note%207.%20Derivative%20Instruments) This note describes the company's use of derivative instruments to manage interest rate and foreign currency risks - Blackbaud uses derivative instruments, specifically interest rate swaps and foreign currency forward contracts, to manage interest rate and foreign currency exchange risk, not for speculative purposes[64](index=64&type=chunk) - Interest rate swaps effectively convert portions of variable rate debt under the 2024 Credit Facilities to a fixed rate, with an aggregate notional value of **$700.0 million** as of June 30, 2025[66](index=66&type=chunk) Fair Values of Derivative Instruments (dollars in thousands) | (dollars in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Total asset derivatives | $1,321 | $10,550 | | Total liability derivatives | $3,856 | $— | [Note 8. Commitments and Contingencies](index=17&type=section&id=Note%208.%20Commitments%20and%20Contingencies) This note outlines the company's significant commitments, including lease obligations, purchase commitments, and legal contingencies - In February 2025, the company made a one-time cash payment of **$28.0 million** to release from an office lease in Washington, DC, resulting in a **$24.3 million** loss on lease termination[75](index=75&type=chunk) Net Lease Cost (dollars in thousands) | (dollars in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net lease cost | $168 | $1,018 | $123 | $2,619 | - As of June 30, 2025, the company had remaining aggregate minimum purchase commitments of approximately **$170.6 million** through 2029 for third-party technology and services[81](index=81&type=chunk) - For the six months ended June 30, 2025, the company incurred **$2.6 million** in net pre-tax expenses related to the May 2020 Security Incident, primarily for ongoing legal fees and loss contingency accruals[87](index=87&type=chunk) [Note 9. Income Taxes](index=19&type=section&id=Note%209.%20Income%20Taxes) This note provides information on the company's income tax provision, effective tax rate, and the impact of recent tax legislation Income Tax Provision and Effective Income Tax Rate | (dollars in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax provision | $13,413 | $7,883 | $14,136 | $6,427 | | Effective income tax rate | 34.0 % | 26.6 % | 31.4 % | 19.2 % | - The effective income tax rate increased for both the three and six months ended June 30, 2025, primarily due to the unfavorable impact of a valuation allowance against net U.S. deferred tax assets[88](index=88&type=chunk) - The United States enacted the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, which is expected to meaningfully reduce cash taxes for the company in the near-term, though the full impact is still being assessed[89](index=89&type=chunk) [Note 10. Stockholders' Equity](index=20&type=section&id=Note%2010.%20Stockholders'%20Equity) This note details changes in stockholders' equity, including the stock repurchase program and other comprehensive income/loss - The Board of Directors reauthorized and expanded the stock repurchase program to **$800.0 million** in July 2024, with **$544.5 million** remaining available as of June 30, 2025[93](index=93&type=chunk)[94](index=94&type=chunk) - During the six months ended June 30, 2025, the company repurchased **1,513,022 shares** for **$100.0 million**, representing approximately **4.2%** of outstanding common stock as of December 31, 2024[94](index=94&type=chunk) Changes in Accumulated Other Comprehensive (Loss) Income by Component (Six months ended June 30) | (in thousands) | 2025 | 2024 | | :------------- | :-------- | :-------- | | Accumulated other comprehensive (loss) income, beginning of period | $(4,869) | $(1,688) | | Net current-period other comprehensive (loss) income | $(1,423) | $1,863 | | Accumulated other comprehensive (loss) income, end of period | $(6,292) | $175 | [Note 11. Segment Information](index=21&type=section&id=Note%2011.%20Segment%20Information) This note clarifies that Blackbaud operates as a single operating and reportable segment, with consolidated financial information used for performance assessment - Blackbaud operates as one operating segment and one reportable segment, with the CEO reviewing consolidated financial information and disaggregated revenue for performance assessment and resource allocation[97](index=97&type=chunk) - The CEO uses consolidated operating margin and net income as primary measures of profit or loss[97](index=97&type=chunk) [Note 12. Revenue Recognition](index=21&type=section&id=Note%2012.%20Revenue%20Recognition) This note provides details on the company's revenue recognition policies, remaining performance obligations, deferred revenue, and disaggregated revenue - As of June 30, 2025, approximately **$1.3 billion** of revenue from remaining performance obligations is expected to be recognized, with about **50%** within the next 12 months[99](index=99&type=chunk) Total Deferred Revenue (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Total deferred revenue | $401,386 | $361,544 | - The increase in deferred revenue is primarily due to a seasonal increase in customer contract billings, historically peaking at the beginning of the third quarter[101](index=101&type=chunk) Revenue by Geographic Area (dollars in thousands) | (dollars in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $231,001 | $241,831 | $460,218 | $479,940 | | United Kingdom | $33,708 | $29,980 | $59,830 | $56,109 | | Other countries | $16,673 | $15,475 | $31,995 | $30,487 | | Total revenue | $281,382 | $287,286 | $552,043 | $566,536 | Revenue by Type (dollars in thousands) | (dollars in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Contractual recurring | $180,224 | $193,542 | $356,160 | $384,397 | | Transactional recurring | $95,407 | $87,834 | $183,521 | $168,497 | | Total recurring revenue | $275,631 | $281,376 | $539,681 | $552,894 | | One-time services and other | $5,751 | $5,910 | $12,362 | $13,642 | | Total revenue | $281,382 | $287,286 | $552,043 | $566,536 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20discussion%20and%20analysis%20of%20financial%20condition%20and%20results%20of%20operations) This section provides a detailed discussion and analysis of Blackbaud's financial condition and results of operations, highlighting key business updates, financial performance, non-GAAP measures, seasonality, liquidity, and capital resources for the periods ended June 30, 2025 and 2024 [Executive Summary](index=23&type=section&id=Executive%20Summary) This section provides an overview of Blackbaud's business as a leading software provider for social impact and its primary revenue sources - Blackbaud is the leading software provider for social impact, offering solutions in fundraising, financial management, digital giving, grantmaking, corporate social responsibility, and education management[107](index=107&type=chunk) - Revenue is primarily generated from cloud software solutions and payment/transaction services[108](index=108&type=chunk) [Business Update](index=23&type=section&id=Business%20Update) This section highlights the company's business resilience, focus on innovation, strategic priorities, and operational initiatives - The company's business has shown resilience, with a focus on innovation, particularly through applied AI, to help customers improve fundraising and cost management[109](index=109&type=chunk)[111](index=111&type=chunk) - Key management focuses include acquiring new customers, strengthening relationships through innovation and renewals, and driving profitability via operational discipline[112](index=112&type=chunk) - Operational initiatives include transitioning to primarily 3-year contractual revenue terms, migrating products to public cloud providers, increasing AI use, and rationalizing office leases and vendor contracts[113](index=113&type=chunk) - Blackbaud repurchased **1,513,022 shares** for **$100.0 million** during the six months ended June 30, 2025, representing approximately **4.2%** of outstanding common stock[116](index=116&type=chunk) [Financial Summary](index=24&type=section&id=Financial%20Summary) This section summarizes Blackbaud's key financial performance metrics, including revenue, income from operations, gross dollar retention, and liquidity - Total revenue decreased by **$5.9 million (2.1%)** for the three months and **$14.5 million (2.6%)** for the six months ended June 30, 2025, primarily due to the sale of EVERFI, partially offset by transactional recurring revenue growth[120](index=120&type=chunk) - Income from operations increased by **$14.6 million** for the three months and **$24.3 million** for the six months ended June 30, 2025, driven by decreased compensation, amortization of intangibles (due to EVERFI impairment), and Security Incident-related expenses[120](index=120&type=chunk)[122](index=122&type=chunk)[124](index=124&type=chunk) - Gross dollar retention was approximately **92%** for the twelve months ended June 30, 2025, an increase primarily due to the sale of EVERFI[127](index=127&type=chunk) - Cash and cash equivalents were **$41.6 million** at June 30, 2025, with a net leverage ratio of **2.70 to 1.00**[128](index=128&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's operating results, including disposition impacts, reclassifications, revenue, cost of revenue, and operating expenses [Disposition](index=27&type=section&id=Disposition) This section details the disposition of the EVERFI business and its impact on consolidated operations - On December 31, 2024, Blackbaud disposed of its EVERFI business to an unaffiliated private investment firm for nominal cash consideration, and EVERFI's results are no longer included in consolidated operations[131](index=131&type=chunk) [Reclassifications](index=27&type=section&id=Reclassifications) This section explains the reclassification of revenue lines for improved comparability in financial reporting - Beginning in 2025, 'recurring' and 'one-time services and other' revenue lines have been combined into 'revenue' due to the immateriality of one-time services, with prior periods reclassified for comparability[132](index=132&type=chunk) [Revenue and Cost of Revenue](index=28&type=section&id=Revenue%20and%20Cost%20of%20Revenue) This section analyzes the trends and drivers of the company's revenue, cost of revenue, and gross margin - Revenue decreased by **2.1% ($5.9 million)** for the three months and **2.6% ($14.5 million)** for the six months ended June 30, 2025, primarily due to the EVERFI disposition, partially offset by transactional recurring revenue growth[142](index=142&type=chunk) - Cost of revenue decreased by **8.9% ($11.1 million)** for the three months and **9.0% ($22.5 million)** for the six months ended June 30, 2025, mainly due to reduced amortization of EVERFI intangible assets and lower compensation costs[142](index=142&type=chunk)[147](index=147&type=chunk) - Gross margin increased by **300 basis points** and **290 basis points** for the three and six months ended June 30, 2025, respectively, as cost of revenue decreases outpaced revenue declines[143](index=143&type=chunk) [Operating Expenses](index=29&type=section&id=Operating%20Expenses) This section provides an analysis of the company's operating expenses, including sales, marketing, customer success, research and development, and general and administrative costs [Sales, marketing and customer success](index=30&type=section&id=Sales,%20marketing%20and%20customer%20success) This section analyzes changes in sales, marketing, and customer success expenses and their primary drivers - Sales, marketing and customer success expense decreased by **$3.0 million (6.4%)** for the three months and **$9.3 million (9.5%)** for the six months ended June 30, 2025, primarily due to lower compensation and advertising costs related to the EVERFI disposition[151](index=151&type=chunk)[153](index=153&type=chunk) [Research and development](index=30&type=section&id=Research%20and%20development) This section analyzes changes in research and development expenses, including capitalized software development costs - Research and development expenses decreased by **$5.5 million (14.0%)** for the three months and **$14.7 million (18.0%)** for the six months ended June 30, 2025, mainly due to reduced compensation and third-party contractor costs from the EVERFI disposition[152](index=152&type=chunk)[154](index=154&type=chunk) - Capitalized software development costs were **$14.4 million** for the three months and **$26.8 million** for the six months ended June 30, 2025, expected to remain consistent with ongoing innovation investments[152](index=152&type=chunk) [General and administrative](index=31&type=section&id=General%20and%20administrative) This section analyzes changes in general and administrative expenses, including acquisition/disposition costs and Security Incident expenses - General and administrative expense decreased by **$0.6 million (1.8%)** for the three months ended June 30, 2025, due to lower acquisition/disposition costs, Security Incident expenses, and rent[157](index=157&type=chunk)[158](index=158&type=chunk) - For the six months ended June 30, 2025, G&A expense increased by **$8.3 million (10.3%)**, primarily due to **$20.7 million** in acquisition and disposition-related costs from the Washington, DC office lease release, partially offset by decreases in Security Incident expenses and stock-based compensation[157](index=157&type=chunk)[158](index=158&type=chunk) [Interest Expense](index=32&type=section&id=Interest%20Expense) This section analyzes the trends and drivers of the company's interest expense, including the impact of borrowings and interest rate swaps - Interest expense increased for both the three and six months ended June 30, 2025, primarily due to incremental borrowings for stock repurchases and the expiration of favorable interest rate swaps in October 2024[162](index=162&type=chunk) - Full-year 2025 interest expense is projected to be approximately **$65 million to $69 million**[162](index=162&type=chunk) [Other Income, Net](index=32&type=section&id=Other%20Income,%20Net) This section analyzes the trends and drivers of the company's other income, net, including currency revaluation losses - Other income, net, decreased for both the three and six months ended June 30, 2025, primarily due to increased currency revaluation losses compared to prior periods[165](index=165&type=chunk) [Deferred Revenue](index=33&type=section&id=Deferred%20Revenue) This section analyzes the company's deferred revenue balance and the factors contributing to its changes Deferred Revenue (dollars in millions) | (dollars in millions) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Deferred revenue | $401.4 | $361.5 | 11.0 % | - The increase in deferred revenue during the six months ended June 30, 2025, was primarily due to a seasonal increase in customer contract billings and renewals[169](index=169&type=chunk) [Income Taxes](index=33&type=section&id=Income%20Taxes) This section analyzes the company's effective income tax rate and the expected impact of recent tax legislation - The effective income tax rate increased for the three and six months ended June 30, 2025, mainly due to the unfavorable impact of a valuation allowance against net U.S. deferred tax assets[172](index=172&type=chunk) - The recently enacted OBBBA is expected to reduce cash taxes for the company in the near-term[173](index=173&type=chunk) [Non-GAAP Financial Measures](index=33&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliations and discussions of non-GAAP financial measures used by management to assess performance [Non-GAAP organic revenue growth](index=35&type=section&id=Non-GAAP%20organic%20revenue%20growth) This section presents the company's non-GAAP organic revenue growth, including constant currency adjustments Non-GAAP Organic Revenue Growth | (dollars in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | GAAP revenue | $281.4 | $287.3 | $552.0 | $566.5 | | Non-GAAP organic revenue | $281.4 | $263.5 | $552.0 | $519.4 | | Non-GAAP organic revenue growth | 6.8 % | | 6.3 % | | | Non-GAAP organic revenue growth on constant currency basis | 6.0 % | | 6.0 % | | - Non-GAAP organic revenue growth was **6.8%** for the three months and **6.3%** for the six months ended June 30, 2025, reflecting growth after excluding divested businesses[183](index=183&type=chunk) - Non-GAAP organic recurring revenue growth on a constant currency basis was **6.1%** for the three months and **6.0%** for the six months ended June 30, 2025[183](index=183&type=chunk) [Rule of 40](index=36&type=section&id=Rule%20of%2040) This section presents the company's Rule of 40 metric, combining non-GAAP organic revenue growth and adjusted EBITDA margin - The Rule of 40, defined as non-GAAP organic revenue growth plus non-GAAP adjusted EBITDA margin, was **45.3%** for the three months and **42.8%** for the six months ended June 30, 2025[188](index=188&type=chunk)[191](index=191&type=chunk) Non-GAAP Adjusted EBITDA (dollars in millions) | (dollars in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | GAAP net income | $26.0 | $21.8 | $30.8 | $27.1 | | Non-GAAP adjusted EBITDA | $108.5 | $102.5 | $201.2 | $191.4 | | Non-GAAP adjusted EBITDA margin | 38.5 % | | 36.5 % | | [Non-GAAP free cash flow and non-GAAP adjusted free cash flow](index=37&type=section&id=Non-GAAP%20free%20cash%20flow%20and%20non-GAAP%20adjusted%20free%20cash%20flow) This section presents the company's non-GAAP free cash flow and adjusted free cash flow metrics Non-GAAP Free Cash Flow (dollars in millions) - Six months ended June 30 | (dollars in millions) | 2025 | 2024 | | :-------------------- | :---- | :---- | | GAAP net cash provided by operating activities | $68.3 | $118.4| | Non-GAAP free cash flow | $39.2 | $83.9 | | Non-GAAP free cash flow margin | 7.1 % | 14.8 %| | Non-GAAP adjusted free cash flow | $41.7 | $89.7 | | Non-GAAP adjusted free cash flow margin | 7.6 % | 15.8 %| - Non-GAAP free cash flow decreased to **$39.2 million** for the six months ended June 30, 2025, from **$83.9 million** in the prior year, with a margin of **7.1%**[198](index=198&type=chunk) - Non-GAAP adjusted free cash flow, which includes Security Incident-related cash flows, was **$41.7 million** for the six months ended June 30, 2025[198](index=198&type=chunk) [Seasonality](index=37&type=section&id=Seasonality) This section describes the typical seasonal fluctuations in the company's revenue and cash flows - Revenue typically fluctuates seasonally, with the first quarter historically being the lowest for bookings and total revenue, and the fourth quarter achieving the highest total revenue[199](index=199&type=chunk) - Cash flow from operations is usually lowest in the first quarter due to lower revenues and annual vendor contract payments, and generally lower in the second quarter compared to the third and fourth quarters[200](index=200&type=chunk) - Financing cash flow is negatively impacted in the first quarter due to tax payments on behalf of employees for equity award settlements[203](index=203&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's sources and uses of cash, including operating, investing, and financing activities, and its capital structure [Operating Cash Flow](index=39&type=section&id=Operating%20Cash%20Flow) This section analyzes the changes and drivers of the company's net cash provided by operating activities - Net cash provided by operating activities decreased by **$50.1 million** for the six months ended June 30, 2025, primarily due to a **$9.5 million** decrease in net income (adjusted for non-cash expenses) and a **$40.6 million** decrease in cash flow from working capital[211](index=211&type=chunk) - The decrease in working capital cash flow was driven by fluctuations in vendor payment timing and a decrease in accrued expenses related to disposition costs[211](index=211&type=chunk)[218](index=218&type=chunk) - The OBBBA is expected to meaningfully reduce cash taxes for the company in the near-term[212](index=212&type=chunk) [Investing Cash Flow](index=39&type=section&id=Investing%20Cash%20Flow) This section analyzes the changes and drivers of the company's net cash used in investing activities - Net cash used in investing activities remained relatively consistent at **$41.3 million** for the six months ended June 30, 2025[213](index=213&type=chunk) - Cash used for software development costs was **$27.8 million**, consistent with the prior year, while purchases of property and equipment decreased by **$4.8 million**[214](index=214&type=chunk) - Net cash used for business disposition increased to **$12.2 million** in 2025 from **$1.2 million** in 2024[214](index=214&type=chunk) [Financing Cash Flow](index=39&type=section&id=Financing%20Cash%20Flow) This section analyzes the changes and drivers of the company's net cash provided by financing activities - Net cash provided by financing activities increased significantly to **$68.1 million** for the six months ended June 30, 2025, from **$25.7 million** in the prior year[204](index=204&type=chunk) - This increase was driven by a net increase in borrowings of **$84.6 million**, primarily for stock repurchases and tax obligations related to equity award settlements[215](index=215&type=chunk) - Cash flow from financing activities associated with changes in restricted cash due to customers increased by **$128.6 million**[217](index=217&type=chunk) [Stock repurchase program](index=40&type=section&id=Stock%20repurchase%20program) This section provides an update on the company's stock repurchase program, including authorization and activity - The Board reauthorized and expanded the stock repurchase program to **$800.0 million** in July 2024, with **$544.5 million** remaining available as of June 30, 2025[220](index=220&type=chunk)[221](index=221&type=chunk) - During the six months ended June 30, 2025, the company repurchased **1,513,022 shares** for **$100.0 million**[221](index=221&type=chunk) [2024 Credit Facilities](index=40&type=section&id=2024%20Credit%20Facilities) This section details the company's available borrowing capacity and compliance with financial covenants under its 2024 Credit Facilities - As of June 30, 2025, the company had **$374.3 million** in available borrowing capacity under the 2024 Credit Facilities, which mature in April 2029[222](index=222&type=chunk) Financial Covenants under 2024 Credit Facilities (as of June 30, 2025) | Financial covenant | Requirement | Ratio as of June 30, 2025 | | :----------------- | :------------- | :------------------------ | | Net leverage ratio | ≤ 3.75 to 1.00 | 2.70 to 1.00 | | Interest coverage ratio | ≥ 2.50 to 1.00 | 6.41 to 1.00 | - The company was in compliance with all debt covenants under the 2024 Credit Facilities as of June 30, 2025[224](index=224&type=chunk) [Commitments and Contingencies](index=41&type=section&id=Commitments%20and%20Contingencies) This section outlines the company's total contractual obligations, including debt, operating leases, and purchase commitments Total Contractual Obligations (in millions) as of June 30, 2025 | (in millions) | Less than 1 year | More than 1 year | Total | | :------------ | :--------------- | :--------------- | :------ | | Debt | $22.6 | $1,137.8 | $1,160.4| | Operating leases | $1.9 | $6.2 | $8.1 | | Interest payments on debt | $0.3 | $3.7 | $4.0 | | Purchase obligations | $88.3 | $82.2 | $170.6 | | Interest payments on debt (unrecorded) | $67.0 | $203.9 | $271.0 | | Total contractual obligations | $180.1 | $1,433.9 | $1,614.0| - As of June 30, 2025, total remaining principal payments on debt were approximately **$1.2 billion**, and estimated future interest payments were **$274.9 million**[228](index=228&type=chunk)[229](index=229&type=chunk) - Remaining operating lease payments were **$8.1 million**, and purchase obligations for third-party technology and services totaled **$170.6 million**[230](index=230&type=chunk)[231](index=231&type=chunk) [Foreign Currency Exchange Rates](index=42&type=section&id=Foreign%20Currency%20Exchange%20Rates) This section discusses the company's exposure to foreign currency exchange rate fluctuations and its hedging strategies - Approximately **17%** of total revenue for the six months ended June 30, 2025, was generated from operations outside the U.S[235](index=235&type=chunk) - Foreign currency translation resulted in increases in revenues and expenses denominated in non-U.S. currencies during the six months ended June 30, 2025, increasing total revenue by **$1.6 million**[236](index=236&type=chunk) - The company uses foreign currency forward contracts to hedge foreign currency exposure, particularly for Canadian Dollar denominated revenues and British Pound denominated investments[235](index=235&type=chunk)[236](index=236&type=chunk) [Critical Accounting Policies and Estimates](index=42&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms that there have been no significant changes to the company's critical accounting policies and estimates - There have been no significant changes in critical accounting policies and estimates during the six months ended June 30, 2025, compared to those disclosed in the Annual Report on Form 10-K for fiscal year 2024[237](index=237&type=chunk) [Recently Issued Accounting Pronouncements](index=42&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) This section addresses the expected impact of recently issued accounting pronouncements on the company's financial statements - No recently issued accounting pronouncements are expected to have a material impact on the consolidated financial statements when adopted in the future[31](index=31&type=chunk)[238](index=238&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20qualitative%20disclosures%20about%20market%20risk) This section discusses Blackbaud's exposure to market risks, specifically interest rate risk and foreign currency exchange rate risk, and how these risks are managed [Interest Rate Risk](index=43&type=section&id=Interest%20Rate%20Risk) This section describes the company's exposure to interest rate fluctuations and its strategies for managing this risk - The company's primary market risk exposure for changing interest rates is its variable rate debt, managed through borrowings and derivative instruments (hedging)[241](index=241&type=chunk) - Interest income from restricted cash for payment processing solutions acts as a partial natural hedge against interest rate risk[241](index=241&type=chunk) - No significant changes in interest rate risk management occurred between December 31, 2024, and June 30, 2025[241](index=241&type=chunk) [Foreign Currency Risk](index=43&type=section&id=Foreign%20Currency%20Risk) This section describes the company's exposure to foreign currency exchange rate fluctuations and their potential impact - Blackbaud is exposed to foreign currency exchange rate fluctuations, primarily between the U.S. dollar and the British Pound and Canadian dollar, but the impact has generally not been material[236](index=236&type=chunk)[242](index=242&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20procedures) This section confirms the effectiveness of Blackbaud's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the most recent fiscal quarter [Evaluation of Disclosure Controls and Procedures](index=43&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and procedures - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance of meeting their objectives[243](index=243&type=chunk) [Changes in Internal Control Over Financial Reporting](index=43&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on any changes in internal control over financial reporting during the fiscal quarter - No changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025, that materially affected or are reasonably likely to materially affect internal control over financial reporting[244](index=244&type=chunk) [Part II. Other Information](index=44&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20proceedings) This section refers to Note 8 of the financial statements for a discussion of the company's legal proceedings and claims - Information regarding legal proceedings is detailed in Note 8 to the unaudited, condensed consolidated financial statements[247](index=247&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20factors) This section supplements the risk factors from the Annual Report on Form 10-K, focusing on strategic risks associated with the increasing incorporation of AI technology into solutions and services [Strategic Risks](index=44&type=section&id=Strategic%20Risks) This section details strategic risks, particularly those related to the increasing incorporation of AI technology into the company's solutions - The company is increasingly incorporating AI technology, including generative, predictive, interactive, and agentic AI, into its solutions, which presents regulatory, litigation, ethical, reputational, operational, and financial risks[249](index=249&type=chunk)[250](index=250&type=chunk)[253](index=253&type=chunk) - Emerging AI regulations, privacy concerns, intellectual property issues, and potential security vulnerabilities pose significant risks, including liability and harm to reputation[251](index=251&type=chunk)[252](index=252&type=chunk) - Substantial investment is required for AI development and safeguards, which could negatively impact financial results, and the success of AI-enhanced products depends on market acceptance and competition[256](index=256&type=chunk)[257](index=257&type=chunk)[258](index=258&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20sales%20of%20equity%20securities%20and%20use%20of%20proceeds) This section provides information on the company's equity security transactions, specifically focusing on issuer purchases of common stock under its repurchase program and shares withheld for tax obligations [Issuer Purchases of Equity Securities](index=45&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) This section details the company's purchases of its own equity securities, including shares withheld for tax obligations Issuer Purchases of Equity Securities (Three months ended June 30, 2025) | Period | Total number of shares purchased | Average price paid per share | | :--------------------------- | :------------------------------- | :--------------------------- | | April 1, 2025 through April 30, 2025 | — | $— | | May 1, 2025 through May 31, 2025 | 13,939 | $62.24 | | June 1, 2025 through June 30, 2025 | — | $— | | Total | 13,939 | $62.24 | - During the three months ended June 30, 2025, the company withheld **13,939 shares** in May to satisfy minimum tax obligations of employees upon vesting of restricted stock awards and units[261](index=261&type=chunk) - The remaining amount available under the stock repurchase program was **$544.5 million** as of June 30, 2025[262](index=262&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20information) This section reports on trading arrangements adopted or terminated by the company's directors or executive officers [Trading Arrangements Adopted or Terminated](index=46&type=section&id=Trading%20Arrangements%20Adopted%20or%20Terminated) This section reports on any trading arrangements adopted or terminated by the company's directors or executive officers - None of the company's directors or executive officers adopted or terminated any contract, instruction, or written plan for the purchase or sale of company securities during the three months ended June 30, 2025[264](index=264&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed or incorporated by reference as part of this Quarterly Report on Form 10-Q - The report includes various exhibits, such as certifications by the CEO and CFO (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[265](index=265&type=chunk) [Signatures](index=47&type=section&id=SIGNATURES) This section contains the official signatures of the company's principal executive and financial officers, certifying the report - The report is signed by Michael P. Gianoni, Chief Executive Officer, President and Vice Chairman of the Board, and Chad M. Anderson, Executive Vice President and Chief Financial Officer, on July 30, 2025[268](index=268&type=chunk)

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like t ...

Financial Data and Key Metrics Changes - In Q2 2025, the company generated revenue of $281 million, representing a 6.8% organic growth year over year [6][23] - Adjusted EBITDA margin improved to 38.5%, up nearly 300 basis points year over year [6][23] - Non-GAAP diluted earnings per share (EPS) increased to $1.21, up 12% year over year [6][23] - Adjusted free cash flow was $53 million, up from $36 million last year, representing an adjusted free cash flow margin of 18.9% compared to 12.7% in Q2 2024 [23][24] Business Line Data and Key Metrics Changes - The company highlighted strong performance in transaction solutions, contributing to revenue overperformance [23] - New customer acquisitions included significant deals with organizations like a large youth development organization and Sunnybrook Foundation, showcasing the company's strength in the nonprofit sector [9][11] Market Data and Key Metrics Changes - The company reported strong growth in the higher education vertical, with California Polytechnic State University selecting Blackbaud's solutions for its digital transformation [11][12] - The YourCause solution saw strong expansion with large customers like NASDAQ and Tyson Foods, indicating robust demand in the corporate employee engagement space [12] Company Strategy and Development Direction - The company is focused on acquiring new logos, driving innovation, and strengthening customer relationships through additional solutions and renewals [7][8] - Continued investment in innovation is a priority, with advancements in AI capabilities and product offerings like the AgenTeq AI strategy [17][80] - The company aims for mid-single-digit organic revenue growth, EBITDA growth exceeding revenue growth, and double-digit EPS growth moving forward [20][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's long-term success, citing consistent growth and profitability [22] - The company raised its guidance for 2025, projecting revenue between $1.12 billion and $1.13 billion, reflecting strong first-half performance [27][28] - Management noted that while transactional revenue can be volatile, they do not expect the same level of overperformance in the second half of the year [42] Other Important Information - The company has reduced leverage to 2.7 times, down from 2.9 times, indicating improved financial health [25] - The impact of recent tax law changes is being analyzed, with expectations of reduced cash taxes in the near term [26][87] Q&A Session Summary Question: How is AI impacting customer conversations and budget considerations? - Management noted that AI has been a topic of interest among customers, with ongoing investments in AI capabilities and new product offerings expected to drive revenue [34][36] Question: How should investors think about transactional revenue relative to long-term growth rates? - Management indicated that while the first half saw strong transactional performance, they do not expect this to recur in the second half, and any viral giving events would represent upside [42][43] Question: What are the priorities for the new Head of North American Sales? - The new hire is expected to bring fresh ideas and best practices, enhancing the company's ability to compete and drive new customer acquisitions [49][50] Question: What is the thought process behind stock buybacks? - The company has repurchased approximately 4% of its shares and is focused on balancing stock repurchases with debt repayment, considering interest rates and market conditions [52][54] Question: How is the company approaching upsell opportunities with existing customers? - Management stated that upselling is an ongoing activity, not limited to contract renewals, with a focus on cross-selling across various customer types [67] Question: What are the implications of the recent tax law changes? - The primary impact is expected from the repeal of Section 174, which will favorably affect cash taxes related to domestic R&D expenditures [87][88]

Financial Data and Key Metrics Changes - In Q2 2025, Blackbaud generated revenue of $281 million, representing a 6.8% organic growth year over year [6][22] - Adjusted EBITDA margin improved to 38.5%, up nearly 300 basis points year over year [6][22] - Non-GAAP diluted earnings per share (EPS) increased to $1.21, up 12% year over year [6][22] - Adjusted free cash flow was $53 million, up from $36 million last year, representing an adjusted free cash flow margin of 18.9% compared to 12.7% in Q2 2024 [22] Business Line Data and Key Metrics Changes - The company highlighted strong performance in transaction solutions, contributing to revenue overperformance [22] - New customer acquisitions included significant deals with organizations like a large youth development organization and Sunnybrook Foundation, showcasing growth in the nonprofit and higher education sectors [7][10] Market Data and Key Metrics Changes - Blackbaud's YourCause solution saw strong customer additions, including large brands like NASDAQ and Tyson Foods, indicating growth in corporate engagement [11] - The company is experiencing a growing momentum in the higher education vertical, as evidenced by partnerships with institutions like California Polytechnic State University [10] Company Strategy and Development Direction - The company is focused on acquiring new logos, driving innovation, and strengthening customer relationships through additional solutions and renewals [7] - Blackbaud is investing aggressively in innovation, particularly in AI, with initiatives like the AI Everywhere strategy and the upcoming AgenTeq offerings [16][17] - The company aims for mid-single-digit organic revenue growth, EBITDA growth exceeding revenue growth, and double-digit diluted EPS growth [19][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's long-term success, citing consistent growth and profitability [21] - The company raised its guidance for the remainder of 2025, projecting revenue between $1.12 billion and $1.13 billion, reflecting strong first-half performance [26] - Management noted that while transactional revenue can be volatile, they do not expect the same level of overperformance in the second half of the year [40] Other Important Information - The company is analyzing the tax implications of recent legislation, which is expected to reduce cash taxes in the near term [24][88] - Blackbaud's leverage decreased to 2.7 times in Q2, down from 2.9 times in the previous quarter, indicating improved financial health [23] Q&A Session Summary Question: How is AI coming up in customer conversations and budget considerations? - Management indicated that AI is a significant topic in customer discussions, with ongoing investments in AI capabilities and new product developments expected to drive revenue [31][34] Question: How should investors think about transactional revenue relative to long-term growth rates? - Management acknowledged strong transactional performance in the first half but cautioned that such overperformance may not recur in the second half, emphasizing the importance of monitoring [40] Question: What are the priorities for the new Head of North America, Bill Ford? - Management expressed optimism about Bill Ford's experience and insights, expecting him to enhance the company's ability to compete and drive new customer acquisitions [48] Question: What is the thought process behind the stock buyback strategy? - Management clarified that while stock repurchases are a priority, they are also focused on debt repayment, with a balanced approach to capital allocation [51] Question: How are contract renewals structured and what is the expected impact? - Management noted that renewals are typically higher in Q2 and Q4, with a smooth process expected as the company approaches the end of its three-year contract cycle [58] Question: What are the implications of the recent tax law changes? - Management highlighted that the repeal of Section 174 related to R&D expenditures is expected to have a favorable impact on cash taxes, although specific sizing is still under analysis [88]

This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements in this presentation consist of, among other things, statements regarding future operating results, all of which are based on current expectations, estimates, and forecasts, and the beliefs and assumptions of the Company's management. Words such as "believes," "seeks," "expects," "may, ...

[Press Release Overview](index=1&type=section&id=Press%20Release%20Overview) [Announcement and Executive Commentary](index=1&type=section&id=Announcement%20and%20Executive%20Commentary) Blackbaud announced its Q2 2025 earnings, raising full-year guidance, with the CEO highlighting significant growth and profitability improvements since 2020 and a record Rule of 40 score, while the CFO attributed outperformance to operational execution and a robust financial model - Blackbaud announced its **Q2 2025 earnings** and **raised its full-year financial guidance**[1](index=1&type=chunk)[4](index=4&type=chunk) - CEO Mike Gianoni stated the company significantly exceeded the **Rule of 40** in Q2, reaching a **record 45.3%**, with plans to advance towards the Rule of 45[2](index=2&type=chunk)[5](index=5&type=chunk) - CFO Chad Anderson noted revenue and profitability exceeded expectations, driven by **rigorous operational execution**, **continuous productivity improvements**, and a **strong financial model**[4](index=4&type=chunk) [Second Quarter 2025 Financial Performance](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Performance) [Key Financial Metrics (GAAP & Non-GAAP)](index=1&type=section&id=Key%20Financial%20Metrics%20(GAAP%20%26%20Non-GAAP)) Blackbaud achieved robust financial performance in Q2 2025, with significant growth in non-GAAP organic and recurring revenue despite a slight GAAP total revenue decrease due to the EVERFI divestiture, demonstrating enhanced operational efficiency and profitability across key GAAP and non-GAAP metrics Q2 2025 Key Financial Data (Compared to Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | Change Rate | Notes | | :-------------------------------- | :------------- | :------------- | :--- | :----- | :--- | | **GAAP Total Revenue** | $281.4 million | $287.2 million | -$5.8 million | -2.1% | Impacted by EVERFI divestiture | | **Non-GAAP Organic Revenue** | $281.4 million | $263.5 million | +$17.9 million | +6.8% | | | **GAAP Recurring Revenue** | $275.6 million | $281.4 million | -$5.8 million | -2.0% | 98.0% of total revenue, impacted by EVERFI divestiture | | **Non-GAAP Organic Recurring Revenue** | $275.6 million | $258.0 million | +$17.6 million | +6.9% | | | **GAAP Operating Income** | $56.7 million | $42.1 million | +$14.6 million | +34.7% | Operating Margin 20.1% (+540 bps) | | **Non-GAAP Operating Income** | $94.3 million | $86.1 million | +$8.2 million | +9.5% | Operating Margin 33.5% (+350 bps) | | **GAAP Net Income** | $26.0 million | $21.8 million | +$4.2 million | +19.3% | | | **GAAP Diluted EPS** | $0.54 | $0.42 | +$0.12 | +28.6% | | | **Non-GAAP Net Income** | $58.2 million | $55.7 million | +$2.5 million | +4.5% | | | **Non-GAAP Diluted EPS** | $1.21 | $1.08 | +$0.13 | +12.0% | | | **Non-GAAP Adjusted EBITDA** | $108.5 million | $102.5 million | +$6.0 million | +5.9% | Adjusted EBITDA Margin 38.5% (+280 bps) | | **Rule of 40 Score** | 45.3% | - | - | - | | | **GAAP Net Cash from Operating Activities** | $66.9 million | $53.8 million | +$13.1 million | +24.3% | Operating Cash Flow Margin 23.8% (+510 bps) | | **Non-GAAP Free Cash Flow** | $51.5 million | $32.6 million | +$18.9 million | +58.0% | Free Cash Flow Margin 18.3% (+690 bps) | | **Non-GAAP Adjusted Free Cash Flow** | $53.1 million | $36.4 million | +$16.7 million | +45.9% | Adjusted Free Cash Flow Margin 18.9% (+620 bps) | [Company Updates and Future Outlook](index=2&type=section&id=Company%20Updates%20and%20Future%20Outlook) [Recent Company Highlights](index=2&type=section&id=Recent%20Company%20Highlights) Blackbaud achieved several key milestones in Q2 2025, including executive appointments, deepened AI strategy and product integration, a strategic partnership with Constant Contact, industry report publication, and ESG recognition - Appointed Salesforce veteran **Bill Fort** as **Senior Vice President of North America Sales**[11](index=11&type=chunk) - Unveiled the **Agentic AI vision** at the annual developer conference, aiming to enhance client efficiency in donor cultivation and fundraising operations through AI[11](index=11&type=chunk) - Showcased the **Intelligence for Good® AI strategy** in the May product update brief, emphasizing direct integration of powerful, responsible AI into products[11](index=11&type=chunk) - Partnered with **Constant Contact** to integrate leading digital marketing capabilities through **Blackbaud Raiser's Edge NXT®**, enabling social impact clients to more effectively reach and engage supporters[11](index=11&type=chunk) - Blackbaud Institute released the **2025 Status of Fundraising Report**, indicating growing recognition of technology (including AI) in the social impact sector and its positive effect on fundraising revenue growth[11](index=11&type=chunk) - Published the **2024 Impact Report** and was named one of **Newsweek's World's Most Environmental Companies for 2025**, highlighting the company's ESG commitment[11](index=11&type=chunk) [Full Year 2025 Financial Guidance](index=2&type=section&id=Full%20Year%202025%20Financial%20Guidance) Blackbaud raised its full-year 2025 financial guidance, covering key metrics such as GAAP revenue, non-GAAP adjusted EBITDA margin, non-GAAP EPS, and non-GAAP adjusted free cash flow, based on strong first-half performance - Blackbaud **raised its full-year 2025 financial guidance**, excluding the potential impact of a future "One Big Beautiful Bill Act"[10](index=10&type=chunk) Full Year 2025 Financial Guidance | Metric | Full Year 2025 Guidance | | :-------------------------------- | :------------- | | **GAAP Revenue** | $1.120 billion - $1.130 billion | | **Non-GAAP Adjusted EBITDA Margin** | 35.4% - 36.2% | | **Non-GAAP EPS** | $4.30 - $4.50 | | **Non-GAAP Adjusted Free Cash Flow** | $190 million - $200 million | | **Non-GAAP Annualized Effective Tax Rate** | Approximately 24.5% | | **Full-Year Interest Expense** | Approximately $65 million - $69 million | | **Full-Year Fully Diluted Shares** | Approximately 48.5 million - 49.5 million shares | | **Full-Year Capital Expenditures** | Approximately $55 million - $65 million (including $50-$60 million capitalized software development costs) | [Stock Repurchase Program](index=3&type=section&id=Stock%20Repurchase%20Program) As of June 30, 2025, Blackbaud's common stock repurchase program had approximately $545 million remaining authorization - As of June 30, 2025, Blackbaud's common stock repurchase program (expanded, supplemented, and reauthorized in July 2024) had approximately **$545 million remaining authorization**[15](index=15&type=chunk) [Reclassifications](index=3&type=section&id=Reclassifications) Effective 2025, Blackbaud combined "recurring revenue" and "one-time services and other revenue" into "revenue," and "recurring costs" and "one-time services and other costs" into "cost of revenue" to ensure comparability of financial statements - Effective 2025, due to the immateriality of one-time services and other revenue, the company combined **"recurring revenue"** and **"one-time services and other revenue"** into **"revenue"**[16](index=16&type=chunk) - To ensure comparability across periods, previously reported **"recurring revenue"** and **"one-time services and other revenue"** in the consolidated statements of comprehensive income have been combined to align with current period presentation[16](index=16&type=chunk) - Similarly, **"recurring costs"** and **"one-time services and other costs"** have been combined into **"cost of revenue"**[16](index=16&type=chunk) [Corporate Information and Disclosures](index=3&type=section&id=Corporate%20Information%20and%20Disclosures) [Conference Call Details](index=3&type=section&id=Conference%20Call%20Details) Blackbaud will host its Q2 2025 conference call on July 30, 2025, to discuss financial results - Blackbaud's **Q2 2025 conference call** will be held on **July 30, 2025, at 8:00 AM ET**[17](index=17&type=chunk) - Live access is available by dialing **1-877-407-3088 (US/Canada)** or via webcast on the **Blackbaud Investor Relations webpage**[17](index=17&type=chunk) [About Blackbaud](index=3&type=section&id=About%20Blackbaud) Blackbaud is a leading social impact software provider, serving nonprofits, educational institutions, corporate social responsibility departments, and individual changemakers globally, accelerating impact in fundraising, financial management, and digital giving, with multiple industry recognitions - Blackbaud (NASDAQ: BLKB) is a **leading software provider focused on powering social impact**[17](index=17&type=chunk) - Serves **nonprofit and education sectors**, companies committed to **corporate social responsibility**, and **individual changemakers**[17](index=17&type=chunk) - Its software is designed to accelerate impact in **fundraising, nonprofit financial management, digital giving, grantmaking, corporate social responsibility, and education management**[17](index=17&type=chunk) - Over **$100 billion** is raised, granted, or managed annually through the Blackbaud platform, serving **millions of users**[17](index=17&type=chunk) - Recognized by **Newsweek** as one of America's Most Responsible Companies, by **Quartz** as a Best Company for Remote Workers, and by **Forbes** as one of America's Best Employers[17](index=17&type=chunk) - As a remote-first company, Blackbaud has operations in the **US, Australia, Canada, Costa Rica, India, and the UK**, supporting users in **over 100 countries**[17](index=17&type=chunk) [Investor & Media Contacts](index=3&type=section&id=Investor%20%26%20Media%20Contacts) Provides contact email addresses for investor relations and media relations - Investor contact email: **IR@blackbaud.com**[18](index=18&type=chunk) - Media contact email: **media@blackbaud.com**[18](index=18&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This press release contains forward-looking statements protected by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, involving projections of the company's financial condition and operating results, which are subject to risks and uncertainties, and the company undertakes no obligation to update these statements - All statements, expectations, and assumptions in this press release (other than historical information) are **forward-looking statements**, protected by the **safe harbor provisions of the Private Securities Litigation Reform Act of 1995**[20](index=20&type=chunk) - These statements involve numerous **risks and uncertainties**, including managing acquired company integration, uncertainties in existing customer business and renewals, impact of revenue mix changes on gross margins, continued success of sales growth, cybersecurity and data protection risks and related liabilities, and potential litigation[20](index=20&type=chunk) - Blackbaud undertakes **no obligation to update these forward-looking statements**, except as required by law[20](index=20&type=chunk) [Non-GAAP Financial Measures Explanation](index=4&type=section&id=Non-GAAP%20Financial%20Measures%20Explanation) Blackbaud provides non-GAAP financial information, explaining its rationale and definitions for using these metrics, including non-GAAP free cash flow, adjusted free cash flow, organic revenue growth, and Rule of 40, emphasizing their usefulness as supplements to GAAP - Blackbaud uses **non-GAAP financial measures** to analyze its operating performance, believing they supplement GAAP measures and aid investors in evaluating ongoing operational performance and trends[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) - **Non-GAAP free cash flow** is defined as **cash flow from operations less capital expenditures** (including capitalized software development costs and property and equipment capital expenditures)[25](index=25&type=chunk) - **Non-GAAP adjusted free cash flow** adds cash outflows related to the **May 2020 security incident** to non-GAAP free cash flow[25](index=25&type=chunk) - **Non-GAAP organic revenue growth** and **non-GAAP organic recurring revenue growth** exclude incremental revenue from current period acquisitions and adjust for divested business revenue to provide a more comparable view of business growth performance[27](index=27&type=chunk) - The **Rule of 40** is defined as **non-GAAP organic revenue growth plus non-GAAP adjusted EBITDA margin**[28](index=28&type=chunk) - **Non-GAAP adjusted EBITDA** is defined as **GAAP net income plus net interest, provision for income taxes, depreciation, amortization of intangible assets from business combinations, amortization of capitalized software development costs, share-based compensation, employee severance costs, acquisition and disposition related costs, security incident related costs, and impairment and disposition charges**[28](index=28&type=chunk) [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, Blackbaud's consolidated balance sheet shows increases in total assets and liabilities, with significant rises in restricted cash and accounts receivable, while stockholders' equity decreased Consolidated Balance Sheet Key Data (As of June 30, 2025, and December 31, 2024) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | Change Rate | | :-------------------------------- | :------------- | :------------- | :--- | :----- | | **Assets** | | | | | | Cash and Cash Equivalents | $41,566 | $67,628 | -$26,062 | -38.5% | | Restricted Cash | $870,248 | $741,884 | +$128,364 | +17.3% | | Accounts Receivable, Net | $145,237 | $83,539 | +$61,698 | +73.9% | | Total Assets | $2,629,393 | $2,495,715 | +$133,678 | +5.4% | | **Liabilities** | | | | | | Accounts Payable | $42,664 | $50,810 | -$8,146 | -16.0% | | Customer Funds Payable | $874,757 | $742,340 | +$132,417 | +17.8% | | Debt, Non-Current Portion | $1,136,112 | $1,051,110 | +$85,002 | +8.1% | | Total Liabilities | $2,541,443 | $2,353,722 | +$187,721 | +8.0% | | **Stockholders' Equity** | | | | | | Total Stockholders' Equity | $87,950 | $141,993 | -$54,043 | -38.1% | [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Blackbaud achieved year-over-year growth in net income and operating income for Q2 and H1 2025, despite a slight decrease in total revenue, with improved gross profit and operating margins reflecting effective cost control and efficiency gains Consolidated Statements of Comprehensive Income Key Data (For the Periods Ended June 30, 2025) | Metric (in thousands) | Q2 2025 | Q2 2024 | Change Rate (QoQ) | H1 2025 | H1 2024 | Change Rate (YoY) | | :-------------------------------- | :------------- | :------------- | :----------- | :----------- | :----------- | :----------- | | **Revenue** | $281,382 | $287,286 | -2.1% | $552,043 | $566,536 | -2.6% | | **Cost of Revenue** | $113,633 | $124,700 | -8.9% | $228,448 | $250,906 | -8.9% | | **Gross Profit** | $167,749 | $162,586 | +3.2% | $323,595 | $315,630 | +2.5% | | **Operating Expenses** | $111,063 | $120,494 | -7.8% | $246,479 | $262,819 | -6.3% | | **Operating Income** | $56,686 | $42,092 | +34.7% | $77,116 | $52,811 | +46.0% | | **Interest Expense** | ($18,411) | ($15,715) | +17.1% | ($35,356) | ($25,991) | +36.0% | | **Income Tax Expense** | $13,413 | $7,883 | +70.1% | $14,136 | $6,427 | +119.9% | | **Net Income** | $25,980 | $21,804 | +19.2% | $30,847 | $27,050 | +14.0% | | **Diluted EPS** | $0.54 | $0.42 | +28.6% | $0.63 | $0.52 | +21.2% | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) In H1 2025, Blackbaud's cash flow from operating activities decreased, but cash flow from financing activities significantly increased, primarily due to debt issuance, while investing activities cash outflow remained relatively stable Consolidated Statements of Cash Flows Key Data (For the Periods Ended June 30, 2025) | Metric (in thousands) | H1 2025 | H1 2024 | Change | Change Rate | | :-------------------------------- | :------------- | :------------- | :--- | :----- | | **Net Cash Provided by Operating Activities** | $68,329 | $118,435 | -$50,106 | -42.3% | | **Net Cash Used in Investing Activities** | ($41,333) | ($40,718) | -$615 | +1.5% | | **Net Cash Provided by Financing Activities** | $68,094 | $25,657 | +$42,437 | +165.4% | | **Cash, Cash Equivalents, and Restricted Cash at End of Period** | $911,814 | $831,108 | +$80,706 | +9.7% | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=9&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) [Non-GAAP Gross Profit and Operating Income Reconciliation](index=9&type=section&id=Non-GAAP%20Gross%20Profit%20and%20Operating%20Income%20Reconciliation) Blackbaud provides a reconciliation of GAAP gross profit and operating income to their non-GAAP counterparts, with key adjustments including share-based compensation, amortization of business combination intangibles, severance, acquisition/disposition costs, and security incident costs, significantly improving non-GAAP margins Non-GAAP Gross Profit and Operating Income Reconciliation (For the Periods Ended June 30, 2025) | Metric (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------------- | :------------- | :------------- | :----------- | :----------- | | **GAAP Gross Profit** | $167,749 | $162,586 | $323,595 | $315,630 | | **Non-GAAP Gross Profit** | $178,321 | $180,602 | $343,917 | $352,083 | | **Non-GAAP Gross Margin** | 63.4% | 62.9% | 62.3% | 62.1% | | **GAAP Operating Income** | $56,686 | $42,092 | $77,116 | $52,811 | | **Non-GAAP Operating Income** | $94,330 | $86,139 | $171,828 | $158,573 | | **Non-GAAP Operating Margin** | 33.5% | 30.0% | 31.1% | 28.0% | | **Key Adjustments (Q2 2025):** | | | | | | Share-Based Compensation Expense | $27,252 | $24,286 | $49,422 | $57,856 | | Amortization of Intangible Assets from Business Combinations | $7,586 | $15,541 | $15,172 | $31,108 | | Employee Severance Costs | $2,147 | — | $2,147 | — | | Acquisition and Disposition Related Costs | $264 | $2,398 | $25,396 | $4,653 | | Security Incident Related Costs | $395 | $1,822 | $2,575 | $12,145 | - Acquisition and disposition related costs for H1 2025 included **$24.3 million** for the termination of a Washington D.C. office space lease, acquired through the **EVERFI acquisition**[38](index=38&type=chunk) - Security incident related costs primarily include **third-party service provider and consultant fees** (including legal fees), as well as **customer claims and negotiated settlements**; as of June 30, 2025, approximately **$1.6 million** in loss contingencies have been recorded[39](index=39&type=chunk) [Non-GAAP Revenue and Recurring Revenue Reconciliation](index=10&type=section&id=Non-GAAP%20Revenue%20and%20Recurring%20Revenue%20Reconciliation) Blackbaud reconciles GAAP revenue and recurring revenue to non-GAAP organic and organic recurring revenue, providing a clearer view of core business growth by excluding divested business revenue and accounting for foreign exchange impacts Non-GAAP Revenue and Recurring Revenue Reconciliation (For the Periods Ended June 30, 2025) | Metric (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------------- | :------------- | :------------- | :----------- | :----------- | | **GAAP Revenue** | $281,382 | $287,286 | $552,043 | $566,536 | | **GAAP Revenue Growth** | -2.1% | - | -2.6% | - | | **Non-GAAP Organic Revenue** | $281,382 | $263,530 | $552,043 | $519,371 | | **Non-GAAP Organic Revenue Growth** | 6.8% | - | 6.3% | - | | **Non-GAAP Organic Revenue (Constant Currency)** | $279,472 | $263,530 | $550,431 | $519,371 | | **Non-GAAP Organic Revenue Growth (Constant Currency)** | 6.0% | - | 6.0% | - | | **GAAP Recurring Revenue** | $275,631 | $281,376 | $539,681 | $552,894 | | **GAAP Recurring Revenue Growth** | -2.0% | - | -2.4% | - | | **Non-GAAP Organic Recurring Revenue** | $275,631 | $257,958 | $539,681 | $507,422 | | **Non-GAAP Organic Recurring Revenue Growth** | 6.9% | - | 6.4% | - | | **Non-GAAP Organic Recurring Revenue (Constant Currency)** | $273,737 | $257,958 | $538,064 | $507,422 | | **Non-GAAP Organic Recurring Revenue Growth (Constant Currency)** | 6.1% | - | 6.0% | - | - **Non-GAAP organic revenue** and **recurring revenue** exclude revenue generated by divested businesses in prior periods to provide a more comparable view of business performance[42](index=42&type=chunk) - **Non-GAAP organic revenue growth at constant currency** is determined by converting foreign currency reporting entity revenues to U.S. dollars using comparable prior period weighted average foreign currency exchange rates, primarily impacted by **AUD, GBP, CAD, and EUR**[44](index=44&type=chunk) [Non-GAAP EBITDA, Adjusted EBITDA, and Free Cash Flow Reconciliation](index=11&type=section&id=Non-GAAP%20EBITDA%2C%20Adjusted%20EBITDA%2C%20and%20Free%20Cash%20Flow%20Reconciliation) Blackbaud provides reconciliations from GAAP net income to non-GAAP EBITDA and adjusted EBITDA, and from GAAP operating cash flow to non-GAAP free cash flow and adjusted free cash flow, illustrating the company's true operating profitability and cash generation capabilities after excluding specific non-cash and non-recurring items Non-GAAP EBITDA and Adjusted EBITDA Reconciliation (For the Periods Ended June 30, 2025) | Metric (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------------- | :------------- | :------------- | :----------- | :----------- | | **GAAP Net Income** | $25,980 | $21,804 | $30,847 | $27,050 | | **Non-GAAP EBITDA** | $78,393 | $74,020 | $121,706 | $116,770 | | **Non-GAAP EBITDA Margin** | 27.9% | - | 22.0% | - | | **Non-GAAP Adjusted EBITDA** | $108,451 | $102,526 | $201,246 | $191,424 | | **Non-GAAP Adjusted EBITDA Margin** | 38.5% | - | 36.5% | - | | **Rule of 40** | 45.3% | - | 42.8% | - | | **Rule of 40 (Constant Currency)** | 44.4% | - | 42.4% | - | | **Key Adjustments (Q2 2025):** | | | | | | Net Interest | $16,443 | $12,900 | $31,733 | $21,128 | | GAAP Provision for Income Taxes | $13,413 | $7,883 | $14,136 | $6,427 | | Depreciation | $2,667 | $3,253 | $5,642 | $6,328 | | Amortization of Intangible Assets from Business Combinations | $7,586 | $15,541 | $15,172 | $31,108 | | Amortization of Capitalized Software Development Costs | $12,304 | $12,639 | $24,176 | $24,729 | | Share-Based Compensation Expense | $27,252 | $24,286 | $49,422 | $57,856 | | Employee Severance Costs | $2,147 | — | $2,147 | — | | Acquisition and Disposition Related Costs | $264 | $2,398 | $25,396 | $4,653 | | Security Incident Related Costs | $395 | $1,822 | $2,575 | $12,145 | Non-GAAP Free Cash Flow Reconciliation (For the Periods Ended June 30, 2025) | Metric (in thousands) | H1 2025 | H1 2024 | | :-------------------------------- | :------------- | :------------- | | **GAAP Net Cash Provided by Operating Activities** | $68,329 | $118,435 | | **GAAP Operating Cash Flow Margin** | 12.4% | 20.9% | | **Non-GAAP Free Cash Flow** | $39,231 | $83,925 | | **Non-GAAP Free Cash Flow Margin** | 7.1% | 14.8% | | **Non-GAAP Adjusted Free Cash Flow** | $41,704 | $89,747 | | **Non-GAAP Adjusted Free Cash Flow Margin** | 7.6% | 15.8% | | **Key Adjustments (H1 2025):** | | | | Less: Purchases of Property and Equipment | ($1,311) | ($6,118) | | Less: Capitalized Software Development Costs | ($27,787) | ($28,392) | | Add: Security Incident Related Cash Outflows | $2,473 | $5,822 |

Core Viewpoint - Blackbaud has raised its full-year 2025 financial guidance due to strong performance in the first half of the year, demonstrating significant improvement in growth and profitability since 2020 [1][4][2]. Financial Performance - For the second quarter of 2025, GAAP total revenue was $281.4 million, a decrease of 2.1% compared to the same period in 2024, primarily due to the divestiture of EVERFI. Non-GAAP organic revenue increased by 6.8% [6][29]. - GAAP recurring revenue was $275.6 million, down 2.0%, representing 98.0% of total revenue, while non-GAAP organic recurring revenue rose by 6.9% [6][29]. - GAAP income from operations was $56.7 million, with a GAAP operating margin of 20.1%, an increase of 540 basis points. Non-GAAP income from operations was $94.3 million, with a non-GAAP operating margin of 33.5%, an increase of 350 basis points [6][29]. - GAAP net income was $26.0 million, with GAAP diluted earnings per share of $0.54, up $0.12 per share. Non-GAAP net income was $58.2 million, with non-GAAP diluted earnings per share of $1.21, up $0.13 per share [6][29]. - Non-GAAP adjusted EBITDA was $108.5 million, up $5.9 million, with a non-GAAP adjusted EBITDA margin of 38.5%, an increase of 280 basis points [6][29]. Financial Guidance - The company has updated its full-year 2025 financial guidance, projecting GAAP revenue between $1.120 billion and $1.130 billion, non-GAAP adjusted EBITDA margin of 35.4% to 36.2%, and non-GAAP earnings per share of $4.30 to $4.50 [7][8]. - Non-GAAP adjusted free cash flow is expected to be between $190 million and $200 million [8]. Recent Highlights - Blackbaud's Rule of 40 score reached 45.3%, indicating strong operational performance [6][29]. - As of June 30, 2025, the company had approximately $545 million remaining under its common stock repurchase program [10]. Company Overview - Blackbaud is a leading software provider dedicated to powering social impact, serving nonprofit and education sectors, and has raised over $100 billion through its platforms annually [12].

CHARLESTON, S.C., July 15, 2025 /PRNewswire/ -- Blackbaud (NASDAQ: BLKB), the leading provider of software for powering social impact, will report its second quarter 2025 financial results on Wednesday, July 30, before the U.S. financial markets open for trading. In conjunction with this announcement, Blackbaud will host a conference call at 8:00 a.m. ET to discuss the company's financial results. Event: Blackbaud's Second Quarter 2025 Financial Results Conference Call Date: Wednesday, July 30, 2025 Time: 8 ...

Core Insights - Blackbaud, Inc. (BLKB) and Constant Contact have launched an integration aimed at enhancing digital engagement in the social impact sector by embedding Constant Contact's AI-driven marketing tools into Blackbaud's Raiser's Edge NXT [1][9] Group 1: Integration Benefits - The integration allows social impact organizations to engage supporters through a unified interface, utilizing email, SMS, social media, and other digital marketing channels directly within Raiser's Edge NXT [2] - Users of Raiser's Edge NXT will benefit from improved supporter engagement through customized campaigns, with Constant Contact's AI tools facilitating rapid campaign creation, including content suggestions and scheduling [3] - The integration eliminates manual data transfers, enhancing automation, preference management, and data synchronization, thereby streamlining operations [3][6] Group 2: Product Rollout and Future Plans - The integration is being rolled out in phases, starting this month with select Raiser's Edge NXT customers, with general availability expected by early August [5] - Blackbaud plans to expand its product portfolio and accelerate product launches, focusing on cloud software solutions and advanced technologies, with investments anticipated in 2025 [7] Group 3: Market Position and Performance - Blackbaud currently holds a Zacks Rank of 3 (Hold), with its shares declining by 12% over the past year, contrasting with a 13.2% growth in the Computer – Software industry [8]