Blackbaud's Q4 Earnings Surpass Estimates, Revenues Down Y/Y

Core Insights - Blackbaud, Inc. (BLKB) reported Q4 2025 non-GAAP EPS of $1.19, exceeding Zacks Consensus Estimate by 3.5%, with an 11.2% year-over-year increase [1] - Total revenues for 2025 were $1.13 billion, down 2.3% year-over-year, primarily due to the divestiture of EVERFI [2][4] - The company achieved the Rule of 40 milestone two years ahead of schedule, indicating strong execution of its strategic priorities [3] Financial Performance - Non-GAAP organic revenues increased by 4.3% on a reported basis and 4% on a constant-currency basis year-over-year [5] - Non-GAAP gross margin improved to 61.6% from 59.4% a year ago, while total operating expenses decreased significantly to $113.1 million from $529.8 million [6] - GAAP operating margin rose to 20% from a negative 121.6%, and non-GAAP operating margin increased by 270 basis points to 30% [6] Shareholder Returns and Cash Flow - The company repurchased approximately 8% of its outstanding common stock in 2025 and plans to continue share buybacks of 5%-10% in 2026 [3][11] - As of December 31, 2025, Blackbaud had total cash and equivalents of $759 million, up from $457.4 million as of September 30, 2025 [9] - Cash provided by operating activities was $265.6 million for Q4, down from $296 million in the prior-year quarter [10] 2026 Outlook - Blackbaud projects 2026 GAAP revenue between $1.173 billion and $1.179 billion, with non-GAAP diluted EPS forecasted at $5.15 to $5.25 [12] - The company anticipates non-GAAP adjusted EBITDA to reach between $430 million and $438 million, with adjusted free cash flow expected to be $280 million to $290 million [12] Strategic Initiatives - Blackbaud is enhancing its AI capabilities through a partnership with Anthropic, focusing on AI-powered solutions [14] - The company was recognized in Newsweek's list of America's Most Responsible Companies for the fifth consecutive year, highlighting its commitment to responsible business practices [15]