Blackbaud(BLKB) - 2025 Q1 - Quarterly Results

Blackbaud Q1 2025 Earnings Release First Quarter 2025 Financial Highlights 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 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] - 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] - 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] Business Updates and Financial Outlook The company highlighted recent operational achievements and reaffirmed its full-year 2025 financial guidance Recent Company Highlights 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] - Announced the launch of Blackbaud Integrated Payments, extending payment processing to third-party software providers[10] - Continued the global rollout of Blackbaud Donation Forms, launching in Canada for Raiser's Edge NXT® users[10] 2025 Financial Outlook 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 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] - As of March 31, 2025, Blackbaud had approximately $545 million remaining under its common stock repurchase program[14] Financial Statements The unaudited statements detail the company's financial position, performance, and cash flows for the first quarter of 2025 Consolidated Balance Sheets 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 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 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 This section provides detailed reconciliations of GAAP results to key non-GAAP metrics used by management Revenue Reconciliation 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) 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] Adjusted EBITDA Reconciliation 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][42] Free Cash Flow Reconciliation 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 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][21] - Non-GAAP organic revenue growth excludes revenue from acquisitions and divestitures to represent core business growth more comparably[25] - Beginning in 2025, revenue and cost line items were combined due to the immateriality of one-time services revenue[15]