Core Insights - Blackbaud is showcasing its AI strategy and product enhancements during its semi-annual Product Update Briefings, emphasizing the commitment to accelerate innovation for social impact organizations [1][2] Product Innovations - The introduction of Blackbaud Copilot, an AI-powered assistant, aims to enhance fundraising success by automating routine tasks and providing data-driven insights [6] - Upcoming integration with Constant Contact in mid-2025 will enhance digital marketing capabilities within Raiser's Edge NXT, streamlining marketing efforts for customers [6] - Enhanced identity resolution in predictive modeling with LiveRamp is expected to improve match rates for wealth and charitable giving records, with a full rollout anticipated by the end of Q2 [6] - New features in Blackbaud Grantmaking will streamline the grant application process and integrate with Financial Edge NXT for better financial data connectivity [11] Corporate Social Responsibility - The Expedited Giving functionality from YourCause will deliver donations made through corporate employee giving programs to nonprofits 95% faster than existing options [9] - Blackbaud Impact Edge™ is now available, incorporating the Blackbaud Copilot AI assistant to help corporate social responsibility departments track and share their impact [9] Education Solutions - The Common Records Engine in Blackbaud Education Management minimizes duplicate data entry, providing a single source of truth for student information [12] - The Award Cycle Manager Dashboard in Blackbaud Award Management improves visibility into award performance and fund utilization [12] Online Giving and Payments - New tools like Donor Cover and Complete Cover allow donors to cover transaction costs, helping organizations retain up to 100% of donations [11] - Expanded payment processing solutions enable a cohesive "Payments-as-a-Service" experience, including Tap-to-Pay on iPhone for contactless payments [11]

Group 1 - The Q1 earnings season is taking place amidst a challenging macroeconomic environment, necessitating disciplined single-stock selection by investors [1] - Struggling companies are expected to face increased difficulties in navigating the current economic landscape [1] - Gary Alexander has extensive experience in technology sectors, both on Wall Street and in Silicon Valley, influencing his insights into industry trends [1] Group 2 - The article emphasizes the importance of careful stock selection during the earnings season due to the tough economic backdrop [1]

Core Viewpoint - Blackbaud, Inc. reported strong first-quarter 2025 results with non-GAAP EPS of 96 cents, exceeding estimates and showing a year-over-year increase, despite a decline in total revenues due to the divestiture of EVERFI [1][2]. Financial Performance - Non-GAAP EPS for Q1 2025 was 96 cents, surpassing the Zacks Consensus Estimate by 6.7% and increasing 3.2% year over year [1]. - Total revenues decreased 3.1% year over year to $270.7 million, primarily due to the divestiture of EVERFI, but still exceeded the Zacks Consensus Estimate by 0.9% [1][2]. - GAAP recurring revenue declined 2.8% to $264.1 million, accounting for 97.6% of total revenue [2]. - Non-GAAP organic revenues increased by 5.8% on a reported basis and 5.9% on a constant-currency basis year over year [4]. - Non-GAAP gross margin was 61.2%, slightly down from 61.4% a year ago, while total operating expenses fell 4.9% to $135.4 million [4]. Profitability Metrics - GAAP operating margin increased by 370 basis points to 7.5%, and non-GAAP operating margin rose by 270 basis points to 28.6% [5]. - Non-GAAP adjusted EBITDA margin was reported at 34.3% [5]. Balance Sheet and Cash Flow - As of March 31, 2025, total cash and equivalents were $456.6 million, down from $809.5 million at the end of 2024, while total debt increased to $1.2 billion from $1.1 billion [6]. - Cash provided by operating activities was $1.4 million, a significant decrease from $64.6 million in the prior-year quarter, with non-GAAP adjusted free cash outflow of $12.3 million compared to a free cash flow of $51.3 million in the previous year [7]. Share Buyback and Future Outlook - Blackbaud repurchased around 4% of its outstanding shares in Q1 2025, aligning with its plan to buy back 3% to 5% of shares [9]. - The company reaffirmed its 2025 guidance, projecting GAAP revenues between $1.115 billion and $1.125 billion, with non-GAAP adjusted EBITDA margin expected in the range of 34.9-35.9% [10][11]. Recent Developments - Blackbaud has been actively supporting disaster relief efforts and showcased innovations in corporate giving at the YourCause Corporate Social Impact Summit [12]. - The company introduced Blackbaud Integrated Payments, enhancing its payment processing capabilities [13]. - Blackbaud also launched Optimized Donation Forms for users in Canada and published its 2024 Trends in Giving report [14].

Revenue Performance - Total revenue decreased by $8.6 million, or 3.1%, during the three months ended March 31, 2025, compared to the same period in 2024[141]. - GAAP revenue for the three months ended March 31, 2025, was $270.7 million, a decrease from $279.3 million in the same period in 2024[175]. - Non-GAAP organic revenue for Q1 2025 was $270.7 million, reflecting a growth of 5.8% from $255.8 million in Q1 2024[181]. - Non-GAAP organic recurring revenue grew by 5.8% from $249.5 million in Q1 2024 to $264.1 million in Q1 2025[181]. - Approximately 15% of total revenue for the three months ended March 31, 2025, was generated from operations outside the U.S.[231]. Operational Performance - Income from operations increased by $9.7 million during the same period, driven by critical investments in innovation and cybersecurity[120]. - Gross dollar retention for the twelve months ended March 31, 2025, was approximately 92%, an increase from the previous year, attributed to the sale of EVERFI[126]. - Cost of revenue decreased by $11.4 million, or 9.0%, during the same period, leading to a gross margin increase of 280 basis points[142]. - GAAP gross profit increased to $155.8 million for the three months ended March 31, 2025, compared to $153.0 million in the same period in 2024, resulting in a gross margin of 57.6%[175]. Cash Flow and Liquidity - Cash and cash equivalents were $37.2 million as of March 31, 2025, with total debt at $1.1 billion and a net leverage ratio of 2.91 to 1.00[127]. - During the three months ended March 31, 2025, the company generated $1.4 million in cash from operations and returned $100.0 million to stockholders through share repurchases[128]. - Cash flow from operations decreased due to working capital changes, with a notable impact from a security incident[207]. - Net cash provided by operating activities fell by 97.9% to $1.4 million in Q1 2025, down from $64.6 million in Q1 2024[200]. - Non-GAAP free cash flow for Q1 2025 was $(12.3) million, compared to $51.3 million in Q1 2024, indicating a significant decline[196]. Expenses - Sales, marketing, and customer success expenses decreased by $6.2 million, or 12.2%, during the three months ended March 31, 2025, compared to the same period in 2024[149]. - Research and development expenses decreased by $9.2 million or 21.6% for the three months ended March 31, 2025, compared to the same period in 2024[150]. - General and administrative expenses increased by $8.9 million, or 18.7%, for the three months ended March 31, 2025, compared to the same period in 2024[155]. Debt and Interest - Total carrying value of debt increased by 12.2% to $1,205.7 million as of March 31, 2025, compared to $1,075.0 million at December 31, 2024[200]. - Interest expense is expected to be approximately $65 million to $69 million for the full year 2025, influenced by incremental borrowings for stock repurchases and the expiration of favorable interest rate swaps[157]. - Total remaining principal payments on debt amounted to $1.2 billion, with an average daily borrowing of $1.0 billion during the quarter[218]. - The net leverage ratio was 2.91 to 1.00, below the maximum requirement of 3.75 to 1.00 under the 2024 Credit Facilities[218]. Tax and Compliance - The effective income tax rate increased due to reduced current year stock-based compensation benefits and a valuation allowance against net U.S. deferred tax assets[170]. - The total liability for uncertain tax positions was $5.4 million as of March 31, 2025[227]. Stock Repurchase - The company plans to repurchase between 3% and 5% of its outstanding common stock during 2025, with $544.5 million remaining under the stock repurchase program as of March 31, 2025[114]. - The company repurchased 1,513,022 shares for $100.0 million, with $544.5 million remaining under the stock repurchase program as of March 31, 2025[216]. Acquisitions and Dispositions - The company recorded acquisition and disposition-related costs of $25.1 million during the three months ended March 31, 2025, primarily related to the release from a lease for office space[176].

Core Insights - Blackbaud has announced the promotion of Chad Anderson to executive vice president and chief financial officer (CFO), succeeding Tony Boor who served as CFO for 14 years [1][2][3] - Tony Boor will transition to a new role as executive vice president of corporate development and strategy, focusing on long-term value and enterprise-wide strategies [1][2] - Chad Anderson has been with Blackbaud for 12 years and has played a significant role in modernizing the financial organization and driving critical initiatives for the company's future [2][3] Company Overview - Blackbaud is a leading software provider dedicated to powering social impact, serving nonprofit and education sectors, and companies committed to social responsibility [4] - The company has raised, granted, or managed over $100 billion through its platforms annually, supporting millions of users in over 100 countries [4] - Blackbaud has received recognition from Newsweek, Quartz, and Forbes for its responsible business practices and employee satisfaction [4]

Core Viewpoint - Blackbaud reported quarterly earnings of $0.96 per share, exceeding the Zacks Consensus Estimate of $0.90 per share, and showing a slight increase from $0.93 per share a year ago, indicating a 6.67% earnings surprise [1] Financial Performance - The company posted revenues of $270.66 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.92%, but down from $279.25 million year-over-year [2] - Over the last four quarters, Blackbaud has exceeded consensus EPS estimates two times and topped revenue estimates once [2] Stock Performance - Blackbaud shares have declined approximately 13.3% since the beginning of the year, compared to a 5.5% decline in the S&P 500 [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.07 on revenues of $276.75 million, and for the current fiscal year, it is $4.20 on revenues of $1.12 billion [7] - The trend of earnings estimate revisions for Blackbaud is mixed, which could change following the recent earnings report [6] Industry Context - The Computer - Software industry, to which Blackbaud belongs, is currently ranked in the top 31% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Data and Key Metrics Changes - In Q1 2025, the company generated revenue of $271 million, reflecting a 5.8% organic growth, with a non-GAAP adjusted EBITDA margin of 34.3% and non-GAAP diluted earnings per share of $0.96, achieving a Rule of 40 score of 40.1% [6][19][20] - Non-GAAP adjusted EBITDA increased by approximately $4 million compared to the previous year, with a 250 basis point improvement in margin [19][20] - Adjusted free cash flow was negative $11 million in Q1, primarily due to a one-time $28 million cash release payment related to the Washington DC office lease and increased interest expenses [20][24] Business Line Data and Key Metrics Changes - The transactional business was a significant driver of overperformance in Q1, with approximately 9% growth in transactional revenue, contributing about $2 million in incremental revenue for the quarter [34][35] - The company has transitioned the majority of its products and customers to third-party cloud solutions, enhancing operational efficiency [8] Market Data and Key Metrics Changes - The company reported strong performance in international markets, particularly in Asia Pacific and Europe, with good sales bookings and customer retention [53] - JustGiving, a platform in the UK, continues to perform well, benefiting from brand recognition and participation in major events [54] Company Strategy and Development Direction - The company aims to achieve a Rule of 45 by 2030, focusing on organic revenue growth driven by innovation and a strong capital allocation strategy [6][15][26] - The company is investing in AI capabilities to enhance customer engagement and improve internal productivity, with plans to integrate these innovations into existing products [9][10][76] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the social impact market, noting that the company has not seen any negative impact on sales bookings or customer retention despite macroeconomic challenges [6][32][46] - The guidance for 2025 remains unchanged, projecting revenue in the range of $1.5 billion to $1.125 billion, with organic growth of 4.2% to 5.1% [22][23] Other Important Information - The company repurchased approximately 4% of its outstanding shares in Q1 2025, continuing its commitment to return capital to shareholders [12][21] - The transition of CFO duties from Tony Bohr to Chad Anderson was highlighted, with both executives expressing confidence in the company's future [13][14] Q&A Session Summary Question: Impact of federal grant funding on customers - Management clarified that their solutions are not reliant on federal grants, and while some customers may be affected, there has been no impact on sales bookings or customer retention [31][32][46] Question: Performance of the transactional business - The transactional business was a key driver of overperformance in Q1, with strong growth and good performance across the board [34][35] Question: Guidance and macroeconomic considerations - Management maintained that the guidance for the year does not anticipate material changes in the macro environment, expressing optimism for continued growth [41][46] Question: Net new bookings and international market performance - New bookings have increased significantly in Q1, with a positive outlook for international markets, particularly for the JustGiving platform [51][53] Question: Contract renewals and customer retention - Customer retention remains high, with a standard practice of notifying customers well in advance of contract renewals, ensuring smooth transitions [63][66] Question: Share buyback program - The company is on track to meet its share buyback target for 2025 and will continue to evaluate its capital allocation strategy [70][73] Question: Monetization of AI technologies - The company is exploring monetization models for its AI solutions but has not charged separately for these capabilities to date, focusing on delivering value to customers [76][81]

Financial Data and Key Metrics Changes - In Q1 2025, the company generated revenue of $271 million, reflecting a 5.8% organic growth [7][19] - Non-GAAP adjusted EBITDA margin was 34.3%, with adjusted EBITDA of $93 million, an increase of approximately $4 million [7][19] - Non-GAAP diluted earnings per share (EPS) increased to $0.96 compared to $0.93 in the previous year [20][24] Business Line Data and Key Metrics Changes - The transactional business was a significant driver of overperformance in Q1, with approximately 9% growth in transactional revenue [35][36] - The company has transitioned the majority of its products and customers to third-party cloud services, enhancing operational efficiency [10] Market Data and Key Metrics Changes - The company reported strong performance in both domestic and international markets, with good sales bookings in Asia Pacific and Europe [54][62] - JustGiving, a platform in the UK, continues to perform well, leveraging brand recognition and donor-driven campaigns [54][62] Company Strategy and Development Direction - The company aims to achieve a Rule of 45 by 2030, focusing on organic revenue growth and margin expansion [7][16] - There is a strong emphasis on innovation, particularly through AI capabilities, to enhance customer engagement and operational efficiency [11][62] - The company is transitioning to longer-term contracts, primarily three-year renewals, to provide better predictability for revenue [9][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the social impact market, noting that their solutions are critical for customers amid economic uncertainties [8][32] - The guidance for 2025 remains unchanged, projecting revenue between $1.5 billion and $1.125 billion, with organic growth of 4.2% to 5.1% [22][24] Other Important Information - The company repurchased approximately 4% of its outstanding shares in Q1 2025, continuing its commitment to return capital to shareholders [13][21] - The transition of CFO duties from Anthony Boor to Chad Anderson was highlighted, with a focus on maintaining operational excellence [14][15] Q&A Session Summary Question: Impact of federal grant funding on customers - Management noted that their solutions are not reliant on federal grants, and they have not seen any impact on sales bookings or customer retention [31][32] Question: Performance of the transactional business - The transactional business exceeded expectations, contributing significantly to Q1 performance, with strong bookings and retention [35][36] Question: Guidance and macroeconomic considerations - Management maintained guidance for the year, indicating no material changes in the macro environment affecting their business [42][48] Question: International market performance - The company reported good performance in international markets, particularly with the JustGiving platform in the UK [54][62] Question: AI technology monetization - The company is exploring monetization models for its AI solutions but has not charged separately for existing AI capabilities included in contracts [79][80] Question: Share buyback program - Management confirmed that they are on track to repurchase 3% to 5% of outstanding shares in 2025 and will evaluate the program based on market conditions [70][72]

[Blackbaud Q1 2025 Earnings Release](index=1&type=section&id=Blackbaud%20Q1%202025%20Earnings%20Release) [First Quarter 2025 Financial Highlights](index=1&type=section&id=First%20Quarter%202025%20Financial%20Highlights) The company reported a GAAP revenue decline due to a divestiture but achieved strong non-GAAP organic growth and margin expansion Q1 2025 Key Financial Metrics (vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change | Note | | :--- | :--- | :--- | :--- | :--- | | GAAP Total Revenue | $270.7M | $279.3M | -3.1% | Driven by EVERFI divestiture | | Non-GAAP Organic Revenue | - | - | +5.8% | Excludes divestiture impact | | GAAP Operating Margin | 7.5% | 3.8% | +370 bps | - | | Non-GAAP Operating Margin | 28.6% | 25.9% | +270 bps | - | | GAAP Diluted EPS | $0.10 | $0.10 | Unchanged | - | | Non-GAAP Diluted EPS | $0.96 | $0.93 | +$0.03 | - | | Non-GAAP Adjusted EBITDA | $92.8M | $88.9M | +$3.9M | - | | Non-GAAP Adjusted EBITDA Margin | 34.3% | 31.8% | +250 bps | - | | GAAP Net Cash from Operations | $1.4M | $64.6M | -$63.2M | Driven by one-time items | | Non-GAAP Free Cash Flow | $(12.3)M | $51.3M | -$63.6M | Driven by one-time items | [Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlighted strong execution, organic growth, and improved profitability while explaining one-time impacts on free cash flow - CEO Mike Gianoni stated that Blackbaud is a much stronger company than a year ago and is aiming to be a **'Rule of 45' company by 2030**[2](index=2&type=chunk) - CFO Tony Boor attributed the strong quarter to **5.8% non-GAAP organic revenue growth** and a **250 basis point increase** in non-GAAP adjusted EBITDA margin[4](index=4&type=chunk) - The year-over-year decline in free cash flow was primarily due to a previously discussed Washington D.C. **lease cash release payment**, increased interest expense, and timing of vendor payments[4](index=4&type=chunk) [Business Updates and Financial Outlook](index=2&type=section&id=Business%20Updates%20and%20Financial%20Outlook) The company highlighted recent operational achievements and reaffirmed its full-year 2025 financial guidance [Recent Company Highlights](index=2&type=section&id=Recent%20Company%20Highlights) Key initiatives included AI integration in the YourCause platform and the launch of Blackbaud Integrated Payments - Showcased **AI integration** and other innovations for its YourCause® Corporate Social Impact Summit[10](index=10&type=chunk) - Announced the launch of **Blackbaud Integrated Payments**, extending payment processing to third-party software providers[10](index=10&type=chunk) - Continued the global rollout of Blackbaud Donation Forms, launching in Canada for Raiser's Edge NXT® users[10](index=10&type=chunk) [2025 Financial Outlook](index=2&type=section&id=2025%20Financial%20Outlook) Blackbaud reaffirmed its full-year 2025 guidance, projecting continued organic growth and margin expansion Full Year 2025 Financial Guidance | Metric | Guidance Range | | :--- | :--- | | GAAP Revenue | $1.115B - $1.125B | | Organic Revenue Growth (Constant Currency) | 4.5% - 5.4% | | Non-GAAP Adjusted EBITDA Margin | 34.9% - 35.9% | | Non-GAAP Earnings Per Share | $4.16 - $4.35 | | Non-GAAP Adjusted Free Cash Flow | $185M - $195M | [Shareholder and Capital Allocation](index=1&type=section&id=Shareholder%20and%20Capital%20Allocation) The company actively returned capital to shareholders by repurchasing approximately 4% of its outstanding common stock - The company repurchased approximately **4% of its common stock outstanding** in the first quarter of 2025[4](index=4&type=chunk) - As of March 31, 2025, Blackbaud had approximately **$545 million remaining** under its common stock repurchase program[14](index=14&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) The unaudited statements detail the company's financial position, performance, and cash flows for the first quarter of 2025 [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet shows a decrease in total assets and stockholders' equity as of March 31, 2025 Key Balance Sheet Items (in thousands) | Account | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $37,243 | $67,628 | | Total current assets | $627,452 | $976,308 | | Total assets | $2,102,219 | $2,495,715 | | Total current liabilities | $863,898 | $1,252,097 | | Total liabilities | $2,069,044 | $2,353,722 | | Total stockholders' equity | $33,175 | $141,993 | [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) The income statement reflects lower GAAP revenue but improved gross profit and operating income year-over-year Q1 Income Statement Highlights (in thousands) | Account | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $270,661 | $279,250 | | Gross Profit | $155,846 | $153,044 | | Income from Operations | $20,430 | $10,719 | | Net Income | $4,867 | $5,246 | | Diluted EPS | $0.10 | $0.10 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The cash flow statement highlights a significant year-over-year decrease in cash from operations due to one-time payments Q1 Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,388 | $64,619 | | Net cash used in investing activities | $(25,893) | $(14,510) | | Net cash used in financing activities | $(330,032) | $(394,637) | | Net decrease in cash, cash equivalents and restricted cash | $(352,869) | $(345,388) | [Reconciliation of GAAP to Non-GAAP Measures](index=9&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section provides detailed reconciliations of GAAP results to key non-GAAP metrics used by management [Revenue Reconciliation](index=10&type=section&id=Revenue%20Reconciliation) The reconciliation adjusts for a divestiture, showing non-GAAP organic revenue growth of 5.8% despite a GAAP decline Q1 Revenue Growth Reconciliation (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GAAP Revenue | $270,661 | $279,250 | | Less: Non-GAAP revenue from divested businesses | - | $(23,409) | | Non-GAAP Organic Revenue | $270,661 | $255,841 | | **Non-GAAP Organic Revenue Growth** | **5.8%** | | [Profitability Reconciliation (Operating Income, Net Income, EPS)](index=9&type=section&id=Profitability%20Reconciliation%20(Operating%20Income%2C%20Net%20Income%2C%20EPS)) GAAP operating income is adjusted for items like stock-based compensation and acquisition costs to derive non-GAAP profitability Q1 Net Income and EPS Reconciliation (in thousands, except per share) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GAAP Net Income | $4,867 | $5,246 | | Total Non-GAAP Adjustments | $57,791 | $60,259 | | Assumed Non-GAAP Income Tax Provision | $(15,351) | $(16,049) | | **Non-GAAP Net Income** | **$47,307** | **$49,456** | | GAAP Diluted EPS | $0.10 | $0.10 | | **Non-GAAP Diluted EPS** | **$0.96** | **$0.93** | - Major adjustments to operating income included **$22.2M for stock-based compensation**, **$7.6M for amortization**, **$25.1M for acquisition/disposition costs** (including a $24.3M lease release), and **$2.2M for Security Incident costs**[34](index=34&type=chunk) [Adjusted EBITDA Reconciliation](index=11&type=section&id=Adjusted%20EBITDA%20Reconciliation) The reconciliation details adjustments from GAAP net income to arrive at non-GAAP adjusted EBITDA of $92.8 million Q1 Adjusted EBITDA Reconciliation (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GAAP Net Income | $4,867 | $5,246 | | Add: Interest, Taxes, D&A, etc. | $38,446 | $37,504 | | **Non-GAAP EBITDA** | **$43,313** | **$42,750** | | Add: Stock-based compensation | $22,170 | $33,570 | | Add: Acquisition & Security Incident costs | $27,312 | $12,578 | | **Non-GAAP Adjusted EBITDA** | **$92,795** | **$88,898** | - The company's 'Rule of 40' calculation for the quarter, defined as non-GAAP organic revenue growth (5.8%) plus non-GAAP adjusted EBITDA margin (34.3%), was **40.1%**[41](index=41&type=chunk)[42](index=42&type=chunk) [Free Cash Flow Reconciliation](index=11&type=section&id=Free%20Cash%20Flow%20Reconciliation) GAAP operating cash flow is reconciled to non-GAAP adjusted free cash flow, showing a significant year-over-year decrease Q1 Free Cash Flow Reconciliation (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GAAP Net Cash Provided by Operating Activities | $1,388 | $64,619 | | Less: Capital Expenditures & Software Costs | $(13,658) | $(13,331) | | **Non-GAAP Free Cash Flow** | **$(12,270)** | **$51,288** | | Add: Security Incident-related cash flows | $852 | $2,028 | | **Non-GAAP Adjusted Free Cash Flow** | **$(11,418)** | **$53,316** | [Notes and Definitions](index=3&type=section&id=Notes%20and%20Definitions) This section provides context for financial results, including the use of non-GAAP measures and key metric definitions - The company uses non-GAAP measures to supplement GAAP results, believing they provide a better view of ongoing operational performance[20](index=20&type=chunk)[21](index=21&type=chunk) - Non-GAAP organic revenue growth excludes revenue from acquisitions and divestitures to represent core business growth more comparably[25](index=25&type=chunk) - Beginning in 2025, revenue and cost line items were combined due to the immateriality of one-time services revenue[15](index=15&type=chunk)

Company Overview - Blackbaud is a market leader in software for powering social impact, serving over 40,000 customers in 100+ countries[13, 15] - The company facilitates over $100 billion in donations, grants, and investments through its platforms annually and has approximately 2,600 employees[15] - Blackbaud's annual recurring revenue is $11 billion[15] Market Opportunity and Financial Performance - Blackbaud operates in a large and underpenetrated total addressable market (TAM) exceeding $10 billion across various segments[30] - The company has demonstrated improved financial performance with organic revenue growth increasing from 12% in 2020 to 52% in 2024[32] - Non-GAAP gross margin has risen from 590% in 2020 to 615% in 2024[32] - The Rule of 40, defined as non-GAAP organic revenue growth plus non-GAAP adjusted EBITDA margin, improved from 277% in 2020 to 337% in 2024[6, 32] Q1 2025 Performance and 2025 Guidance - Q1 2025 organic revenue growth was 58%[60] - The Rule of 40 for Q1 2025 was 401% as reported and 402% on a constant currency basis[63] - The company projects total revenue between $1115 million and $1125 million for 2025, implying organic growth at constant currency of 45% to 54%[68] - Adjusted EBITDA margin is expected to be between 349% and 359% for 2025, a 170 bps improvement over FY24[68] - Adjusted free cash flow is projected to be between $185 million and $195 million for 2025[68]