Financial Performance & Outlook - Blackbaud reported Q1 2024 GAAP revenue of $27925 million, a 67% increase year-over-year[144] - The company's Q1 2024 non-GAAP organic revenue grew by 69%[144] - Blackbaud projects a 74% organic revenue growth rate for 2024, reaching $1179 million at the midpoint of guidance[90, 101] - The company anticipates a non-GAAP adjusted EBITDA margin of 330% for 2024[89] Strategic Initiatives - Blackbaud is executing a five-point operating plan aimed at driving high single-digit revenue growth and mid-30's EBITDA margin[34] - A modernized approach to renewal pricing, launched in March 2023, is expected to contribute significantly to revenue growth[90, 93] - The company intends to repurchase 7% to 10% of outstanding stock in 2024 under a $500 million authorization[45, 136, 140] Market Position & Revenue Streams - Blackbaud identifies as a clear market leader in providing software solutions for social impact, serving over 40000 customers[34, 46] - Transactional recurring revenue streams are broken down as Donation Processing (55%), Consumer Giving (20%), Tuition Processing (20%), and Event-Based Usage (5%)[15] - The company's recurring revenue represented 97% of total revenue in 2023[64]

(1) Non-GAAP revenue from divested businesses excludes revenue associated with divested businesses. The exclusion of the prior period revenue is to present the results of the divested business with the results of the combined company for the same period of time in both the prior and current periods. (2) Non-GAAP organic revenue and non-GAAP organic recurring revenue for the prior year periods presented herein may not agree to non-GAAP organic revenue and non-GAAP organic recurring revenue presented in the r ...

Security Incident - The company incurred net pre-tax expenses of $53.4 million related to the Security Incident in 2023, including $22.4 million for ongoing legal fees and $31.0 million for settlements and recorded liabilities for loss contingencies [177]. - The company experienced net cash outlays of $78.0 million related to the Security Incident in 2023, which included a $3.0 million civil penalty paid in the first quarter and a $49.5 million civil penalty paid in the fourth quarter [177]. - The company has been subject to a Security Incident involving a ransomware attack that affected over 13,000 customers, leading to ongoing investigations and potential liabilities [172]. - The company agreed to a $3.0 million civil penalty as part of a settlement with the SEC related to the Security Incident [174]. - The company has agreed to pay a total of $49.5 million to 49 states and the District of Columbia as part of a settlement related to the Security Incident, which was fully accrued as a contingent liability as of June 30, 2023 [212]. - Approximately 260 specific requests for reimbursement of expenses related to the Security Incident have been received, with 82% (214 requests) fully resolved and closed [195]. - The company is currently a defendant in multiple lawsuits related to the Security Incident, including putative consumer class action cases in U.S. federal courts [198]. - The company has received notices of proposed claims from U.K. data subjects and is reviewing these claims [195]. - The company is subject to ongoing governmental investigations by various agencies, including the U.S. Federal Trade Commission and the California Attorney General [198]. - Future regulatory investigations or litigation settlements may impose additional compliance costs and operational modifications [200]. - The company expects net cash outlays of approximately $8.0 million to $13.0 million for ongoing legal fees related to the Security Incident in 2024 [331]. - Security Incident-related cash flows, net of insurance, contributed $78.0 million to non-GAAP adjusted free cash flow in 2023, up from $20.9 million in 2022 [351]. Financial Performance - Total revenue increased by $47.3 million during 2023, driven largely by growth in recurring revenue [281]. - Recurring revenue increased by $59.8 million, or 5.9%, primarily due to growth in contractual and transactional recurring revenue [287]. - Recurring gross margin increased by 190 basis points, indicating improved efficiency as recurring revenue growth outpaced cost increases [271]. - GAAP revenue for 2023 was $1,105.4 million, an increase of 4.0% from $1,058.1 million in 2022 [308]. - GAAP gross profit rose to $603.2 million, with a gross margin of 54.6%, up from 52.2% in the previous year [308]. - Non-GAAP income from operations increased to $294.1 million, resulting in a non-GAAP operating margin of 26.6%, compared to 19.1% in 2022 [308]. - Non-GAAP free cash flow for 2023 was $135.5 million, slightly up from $132.8 million in 2022 [351]. - Non-GAAP adjusted free cash flow increased to $213.5 million in 2023, compared to $153.7 million in 2022 [351]. - Non-GAAP adjusted free cash flow margin improved to 19.3% in 2023 from 14.5% in 2022 [351]. Operational Challenges - The company may face challenges in integrating acquisitions, such as the acquisition of EVERFI, Inc., which could disrupt operations and dilute shareholder value [186]. - The company is exposed to risks associated with third-party technologies, which could impact its ability to generate revenue and maintain proprietary technology [188]. - The company anticipates that future regulations related to public disclosure and data protection could impose significant compliance costs [179]. - The company recognizes subscription and maintenance revenue ratably over the contract term, which can affect future revenue and profitability [226]. - The decline in non-strategic one-time services revenue is expected to slow in 2024 compared to previous years [281]. - The company faces potential financial liability and reputational harm if it fails to effectively manage payment processing and data security [206]. Investments and Innovations - The company is incorporating generative AI technology into its products and services, which may expose it to operational, financial, and reputational risks due to the emerging regulatory environment [157][158]. - The company plans to accelerate cybersecurity investments in 2024, which may modestly impact profitability in the near term [264]. - New online donation capabilities are expected to be generally available in the first half of 2024, aimed at enhancing customer fundraising efforts [255]. - The Impact Edge solution, an AI-powered reporting tool, is in an early adopter program with a planned full rollout in the second half of 2024 [256]. - The company continues to focus on strategic investments in technology and market expansion initiatives to drive future growth [1]. Debt and Cash Management - The company incurred substantial indebtedness due to acquisitions, including the acquisition of EVERFI, which has increased interest payment obligations [227]. - Total carrying value of debt decreased to $779.7 million, down 9.2% from $859.0 million in 2022 [329]. - Cash and cash equivalents at the end of 2023 were $31.3 million, a slight decrease of 1.4% from $31.7 million in 2022 [329]. - The available borrowing capacity under the 2020 Credit Facility was $384.5 million as of December 31, 2023 [339]. - The company has entered into foreign currency forward contracts with notional values of $29.9 million CAD and £13.2 million for hedging purposes as of December 31, 2023 [319][320]. Cost Management - Transaction-based costs increased by $9.2 million due to higher transaction volumes and vendor rate increases [289]. - Amortization of software development costs rose by $5.6 million as a result of ongoing investments in innovation and security [289]. - Amortization of intangible assets from business combinations increased by $4.0 million, primarily due to the acquisition of EVERFI in December 2021 [289]. - Stock-based compensation costs increased by $2.8 million, influenced by company performance against 2023 goals and adjustments from 2022 performance-based equity awards [289]. - Compensation costs, excluding stock-based compensation, decreased by $8.7 million due to targeted workforce reductions [289]. - Hosting and data center costs decreased by $5.1 million as the company migrates its cloud infrastructure to leading public cloud service providers [289]. - Operating lease costs for 2023 were $8.8 million, a decrease from $9.5 million in 2022 [297]. - The present value of future lease payments as of December 31, 2023, is $46.8 million [299]. - Deferred revenue is recorded for amounts billed in advance of service delivery, with contracts generally for a term of three years [301].

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, ...

Financial Data and Key Metrics - Adjusted free cash flow margin improved to 22% at the midpoint of guidance, up from 14% in 2022 and 19% in 2023 [6] - Full-year revenues for 2023 were $1,105 million, up 4.8% organically, with adjusted EBITDA of $356 million, a 36% increase year-over-year [20] - Earnings per share increased to $3.98 in 2023, compared to $2.69 in 2022 [21] - Adjusted free cash flow for 2023 was $214 million, up from $154 million in 2022, representing a 19.3% margin [21] - For 2024, revenue is expected to be between $1,170 million and $1,200 million, with organic growth projected at 7.2% [22] - Adjusted free cash flow for 2024 is guided at $254 million to $274 million, with a midpoint margin of 22.3% [38] Business Line Data and Key Metrics - Contractual recurring revenues grew 6.4%, transactional recurring revenues grew 12.5%, and total recurring revenue grew 8.4% in Q4 2023 [19] - Non-strategic one-time revenues declined by $2 million in Q4 2023, representing a 1-point drag on total revenue growth [19] - The company is accelerating investments in AI and cybersecurity, with incremental costs expected to ramp up throughout 2024 [26][27] Market Data and Key Metrics - The UK statutory tax rate increased from 19% to 25%, impacting the company's cash tax rate, which is expected to rise to 24.5% in 2024 [6][37] - The company is leveraging cloud environments, with CapEx expected to decline substantially as data centers are shut down and migrated to the cloud [6] Company Strategy and Industry Competition - The company is focused on driving innovation, particularly in AI and cybersecurity, to improve efficiency and profitability [6][26] - The company is transitioning from 1-year to 3-year contracts, with 35% of the base renewed on multiyear contracts in 2023 and an additional 30% expected in 2024 [46][52] - The company is investing in AI-driven product capabilities, such as online donation forms and AI-powered insights, to enhance customer value and drive revenue growth [27][28] Management Commentary on Operating Environment and Future Outlook - The company expects continued improvement in profitability and cash flow, driven by cost reductions, revenue growth, and operational efficiencies [6][20] - Management is optimistic about 2024, with expectations of higher growth rates, improved margins, and continued momentum in the business [33][75] Other Important Information - The company repurchased approximately 500,000 shares for $41 million in December 2023 and January 2024, with a new $500 million repurchase authorization [16][17] - The company is focused on returning capital to shareholders through stock repurchases and maintaining a strong balance sheet, with a debt-to-adjusted EBITDA ratio of approximately 2x [39][40] Summary of Q&A Session Question: Impact of data center shutdowns on cost reduction and gross margins - The company expects substantial CapEx reductions as data centers are shut down and migrated to the cloud, with some duplicative costs remaining during the transition [6] - Long-term efficiency gains are expected from cloud environments, with additional cost savings from automation and AI investments [6] Question: Sales capacity and productivity improvements - The company has the right team in place, with no substantial headcount increases planned, but significant opportunities for productivity improvements and quota attainment [13] Question: Timing and impact of AI investments on EBITDA margins - AI investments began ramping up in Q4 2023 and are expected to continue throughout 2024, with some costs falling off towards the end of the year [26] Question: Pricing strategy and contribution to revenue growth - The pricing optimization program is going well, with 35% of the base renewed on multiyear contracts in 2023 and an additional 30% expected in 2024 [46][52] - The company is focused on driving innovation to justify price increases and multiyear contracts [46][52] Question: Corporate impact market dynamics - The corporate impact market is large, with potential for multi-million-dollar contracts, but it is subject to discretionary spending [63] - The company has a strong presence in this market, with significant opportunities for cross-selling and growth [63]

Blackbaud, Inc. (NASDAQ:BLKB) Q3 2023 Earnings Conference Call November 1, 2023 8:00 AM ET Company Participants Kevin Mooney - EVP, Strategy and Business Development Michael Gianoni - President and CEO Anthony Boor - EVP, Finance and Administration and CFO Conference Call Participants Brian Peterson - Raymond James Robert Oliver - Robert W. Baird Parker Lane - Stifel, Nicolaus & Company Kirk Materne - Evercore ISI Matthew VanVliet - BTIG Koji Ikeda - Bank of America Securities Operator Good day, and welcome ...

Blackbaud discusses non-GAAP organic revenue growth measures, including non-GAAP organic revenue growth, non-GAAP organic revenue growth on a constant currency basis, non-GAAP organic recurring revenue growth, and non-GAAP organic recurring revenue growth on a constant currency basis, which Blackbaud believes provide useful information for evaluating the periodic growth of its business as well as growth on a consistent basis. Each measure of non-GAAP organic revenue growth excludes incremental acquisition-r ...

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑ The number of shares of the registrant's Common Stock outstanding as of October 30, 2023 was 53,852,615. UNITED STATES SECURITIES AND EXCHA ...

2 Non-GAAP free cash flow is defined as operating cash flow less capital expenditures, including costs required to be capitalized for software and content development, and capital expenditures for property and equipment. In addition, and in order to provide a meaningful basis for comparison, Blackbaud now uses non-GAAP adjusted free cash flow in analyzing its operating performance. Non-GAAP adjusted free cash flow is defined as operating cash flow less capital expenditures, including costs required to be ca ...

Blackbaud, Inc. (NASDAQ:BLKB) Q2 2023 Earnings Conference Call August 2, 2023 8:00 AM ET Company Participants Kevin Muni - IR Mike Gianoni - President and CEO Tony Boor - EVP and CFO Conference Call Participants Brian Peterson - Raymond James Rob Oliver - Baird Parker Lane - Stifel Kirk Materne - Evercore ISI Matt VanVliet - BTIG Operator Good day, and welcome to Blackbaud's Second Quarter 2023 Earnings Call. Today's conference is being recorded. I'll now turn the conference over to Kevin Muni. Please go ah ...