The technology sector has provided great returns since the emergence of generative AI, and it was expected to continue performing strongly this year as well. However, fears about infrastructure spending have once again emerged, alongside speculation that certain domains, such as software engineering, face an existential threat due to extremely powerful AI. This is driving down the tech sector.On 17th February, this sentiment was echoed by Nick Evans, a fund manager at Polar Capital.  He believes only a few ...

The Delaware Supreme Court has re-opened the door for cyber insurers to pursue recovery of claims payments they made to their insureds who took matters into their own hands after their data hosting company allegedly failed to adequately respond to a ransomware attack.In July 2020, a cyber attacker accessed software and data hosting firm Blackbaud Inc.’s system for several months and exfiltrated confidential customer data from its servers. The attacker threatened to publish the data unless Blackbaud paid a r ...

Stock Repurchase and Financial Management - The company announced an increase in its expected stock repurchase range for fiscal year 2025 to between 7.0% and 8.5% of outstanding common stock as of December 31, 2024, with $214.0 million used to repurchase 3,337,844 shares in 2025, representing approximately 7.9% of outstanding stock [39]. - As of December 31, 2025, $960.6 million remains available for stock repurchases, with plans to repurchase between 5.0% and 10.0% of outstanding common stock in 2026 [39]. - The company anticipates utilizing at least 50% of its free cash flow from 2026 to 2030 for stock repurchases [39]. - The company repurchased $217.2 million of its common stock in 2025, a decrease from $418.0 million in 2024 [358]. - The stock repurchase program was expanded to $1.0 billion, with $960.6 million remaining available for repurchases as of December 31, 2025 [361]. - The company expects total capital expenditures for 2026 to be between $60.0 million and $70.0 million [355]. - The net leverage ratio as of December 31, 2025, was 2.52 to 1.00, below the maximum requirement of 3.75 to 1.00 [366]. - Expected future interest payments on debt are approximately $209.5 million over the life of the debt obligations [371]. AI and Technology Integration - The company is focused on enhancing customer experience through AI-powered solutions, integrating payment services, analytics, and business intelligence into its offerings [41]. - AI is a core pillar of the company's long-term business strategy, with ongoing development of AI features to improve operational efficiency and decision-making [49]. - The company has introduced generative AI features across multiple products to enhance customer engagement and streamline workflows [47]. - Blackbaud Raiser's Edge NXT® is highlighted as the first and only all-inclusive cloud fundraising and relationship management solution, integrating various functionalities to enhance user experience [57]. - The company’s data intelligence solutions provide predictive insights and fundraising performance metrics, helping nonprofits optimize their strategies [52]. - Blackbaud Financial Edge NXT® is recognized as the market-leading solution for fund accounting, ensuring compliance and transparency for nonprofit organizations [64]. - The company emphasizes its commitment to responsible AI development, monitoring regulatory developments to mitigate ethical and legal issues [50]. - Blackbaud's technology strategy includes leveraging multiple clouds (AWS and Azure) for high reliability and security, enabling rapid innovation [92]. - The company emphasizes AI-powered solutions, with a commitment to responsible AI adoption through initiatives like the AI Literacy Program launched in 2025 [99]. Employee Engagement and Corporate Responsibility - Blackbaud employed approximately 2,800 professionals worldwide as of December 31, 2025, with no union representation [94]. - Approximately 91% of employees value Blackbaud's commitment to social responsibility, driving engagement and service quality [95]. - Employee participation in affinity groups grew by 5% in 2025, engaging 45% of the global workforce [101]. - The company has achieved carbon neutrality annually since 2021 and was recognized by Newsweek as one of the World's Greenest Companies in 2025 [101]. Financial Performance Metrics - GAAP revenue for 2025 was $1,128.4 million, a decrease of 2.3% from $1,154.6 million in 2024 [324]. - Non-GAAP organic revenue for 2025 was $1,128.4 million, reflecting a growth of 5.5% compared to $1,069.1 million in 2024 [329]. - Non-GAAP net income for 2025 was $215.5 million, compared to $210.0 million in 2024, indicating a slight increase [324]. - Non-GAAP adjusted EBITDA for 2025 was $405.3 million, with a margin of 35.9% [334]. - The Rule of 40 metric for 2025 was 41.4%, combining non-GAAP organic revenue growth and non-GAAP adjusted EBITDA margin [334]. - GAAP gross profit for 2025 was $663.3 million, with a gross margin of 58.8%, up from 54.7% in 2024 [324]. - Non-GAAP gross profit for 2025 was $702.7 million, with a gross margin of 62.3% [324]. - GAAP net income for 2025 was $115.0 million, a significant recovery from a loss of $299.5 million in 2024 [334]. - Non-GAAP organic recurring revenue for 2025 was $1,106.2 million, representing a growth of 5.8% from $1,045.7 million in 2024 [329]. - Non-GAAP free cash flow for 2025 was $203.5 million, down from $228.8 million in 2024, representing an 11.0% decrease [342]. - Cash and cash equivalents decreased by 42.5% to $38.9 million in 2025 from $67.6 million in 2024 [347]. - Total carrying value of debt increased by 3.2% to $1.1 billion in 2025 compared to $1.075 billion in 2024 [347]. Revenue and Deferred Revenue Insights - Deferred revenue increased by 3.1% from $360.6 million in 2024 to $371.8 million in 2025, with the current portion rising by 2.9% [309]. - The increase in deferred revenue was primarily due to billings related to contract renewals and new subscription sales of cloud solutions [311]. - Fluctuations in foreign currency exchange rates increased total revenue by $3.5 million and income from operations by $2.1 million during 2025 [376]. - The accumulated currency translation adjustment was a loss of $3.8 million as of December 31, 2025, compared to a loss of $12.7 million as of December 31, 2024 [375]. Legal and Compliance Matters - The company has completed required improvements to its cybersecurity programs and tools as part of legal settlements [374]. - The company has not made any material changes in its accounting methodology for revenue recognition during the year ended December 31, 2025 [380]. - The company made assumptions in estimating future cash flows and fair values, including annual revenue growth rates and discount rates reflecting risk [398]. - No significant non-recurring fair value adjustments were made to long-lived assets or intangible assets during 2025 [399]. - The company does not anticipate material changes in future estimates or assumptions for assessing impairment losses [400]. - If actual results differ from estimates, the company may face impairment charges that could adversely impact its financial position [400]. - Recently issued accounting pronouncements may affect the company's financial position and results of operations when adopted [401].

Company Overview - Blackbaud Inc. is a leading cloud software company focused on social causes, providing a range of cloud-based and on-premise software solutions for organizations of all sizes, including fundraising, marketing, and financial management [11] - The company’s SKY platform powers innovation and offers tools for clients and partners to extend the Blackbaud ecosystem [11] Investment Highlights - Blackbaud has a Zacks Rank of 1 (Strong Buy) and a VGM Score of A, indicating strong potential for investment [12] - The company has a Value Style Score of A, supported by attractive valuation metrics such as a forward P/E ratio of 9.45, making it appealing to value investors [12] - Recent upward revisions in earnings estimates by two analysts for fiscal 2026 have increased the Zacks Consensus Estimate by $0.13 to $5.19 per share, with an average earnings surprise of +7.1% [12] Conclusion - With a solid Zacks Rank and top-tier Value and VGM Style Scores, Blackbaud is recommended for investors looking for strong investment opportunities [13]

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]

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分组1 - Blackbaud reported quarterly earnings of $1.19 per share, exceeding the Zacks Consensus Estimate of $1.15 per share, and showing an increase from $1.08 per share a year ago, resulting in an earnings surprise of +3.48% [1] - The company achieved revenues of $295.26 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 0.51%, although this represents a decline from year-ago revenues of $302.23 million [2] - Blackbaud has consistently surpassed consensus EPS estimates over the last four quarters, indicating a strong performance trend [2] 分组2 - The stock has underperformed the market, losing approximately 23.8% since the beginning of the year, while the S&P 500 has gained 1.7% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is $1.09 on revenues of $281.32 million, and for the current fiscal year, it is $4.85 on revenues of $1.18 billion [7] 分组3 - The Zacks Industry Rank indicates that the Computer - Software sector is currently in the bottom 38% of over 250 Zacks industries, suggesting potential challenges for stocks in this category [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors or through tools like the Zacks Rank [5][6]

Financial Data and Key Metrics Changes - Full year 2025 organic revenues increased by 5.5% to $1,128 million, with adjusted EBITDA of $405 million, up approximately 8% after adjusting for the impact of the EVERFI divestiture [18][19] - Adjusted EBITDA margin improved to 35.9%, up 220 basis points from 2024 [19] - Non-GAAP EPS rose to $4.45, reflecting a year-over-year increase of approximately 12% [19] - Adjusted free cash flow for 2025 was $208 million, exceeding the high end of the revised guidance range [19] Business Line Data and Key Metrics Changes - The company continues to invest in AI capabilities, enhancing product offerings and operational efficiency, which is expected to drive future growth [5][10] - The average daily usage of AI chat features grew five times since October, with over half of Raiser's Edge NXT customers utilizing machine learning-enabled donor prospecting [10] Market Data and Key Metrics Changes - Nonprofits are experiencing varying levels of stress, with some facing reduced government grants, but overall, the demand for Blackbaud's platform remains strong as customers rely more on it for donations [48] - The company has not seen any customers go out of business, indicating resilience in the market [49] Company Strategy and Development Direction - Blackbaud aims to achieve organic total revenue growth of 4%-6% from 2026 to 2030, with potential upside from new product launches [30] - The company is targeting Adjusted EBITDA growth of 6%-8% CAGR between 2026 and 2030, while expanding the Adjusted EBITDA margin to over 40% [30] - A significant focus on AI and operational efficiency is expected to drive future growth and profitability [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate current economic conditions without significant adverse impacts on revenue [21] - The company anticipates a slightly tougher comparison in Q1 and Q2 of 2026 due to strong transactional revenue performance in the previous year [22] Other Important Information - The company repurchased approximately 8% of its common stock in 2025, following an 11% repurchase in 2024 [20] - A new phase of workforce strategy is being introduced, including expansion into India, which is expected to provide long-term benefits [24] Q&A Session Summary Question: Insights on AI pricing and customer adoption - Management indicated that the pricing model discussed pertains to the development agent, with expectations for future products to follow [38] Question: Customer retention and renewal trends - Renewals remain strong, with over 20% of customers opting for four-year or longer contracts, indicating confidence in the company's offerings [40] Question: Current market stress for nonprofits - Management noted that while some nonprofits are facing funding challenges, the reliance on Blackbaud's platform has increased, benefiting the company [48] Question: Contribution to long-term revenue growth - Management clarified that new AI products are not included in the long-term guidance, but there are opportunities for price increases, new logos, and cross-selling [52]

Financial Data and Key Metrics Changes - Full year 2025 organic revenues increased by 5.5% to $1,128 million [18] - Adjusted EBITDA rose approximately 8% to $405 million, resulting in an adjusted EBITDA margin of 35.9%, up 220 basis points from 2024 [19] - Non-GAAP EPS increased to $4.45, up approximately 12% year-over-year [19] - Adjusted free cash flow for the year was $208 million, exceeding the high end of the revised guidance range [19] Business Line Data and Key Metrics Changes - The company achieved its goal of becoming a Rule of 40 company two years ahead of plan, driven by operational efficiencies and product innovation [4] - The introduction of AI capabilities has significantly enhanced customer engagement and operational efficiency, with over half of Raiser's Edge NXT customers utilizing machine learning-enabled donor prospecting [10] Market Data and Key Metrics Changes - The company noted that users in its vertical markets tend to be less tech-savvy, which presents both challenges and opportunities for product adoption [6] - Nonprofits are experiencing varying levels of stress, particularly regarding government funding, but many are relying more on the company's platform for donations [48] Company Strategy and Development Direction - The company is aggressively investing in AI and cybersecurity to enhance product offerings and customer data security [5] - The strategic focus includes expanding the global workforce, particularly in India, to leverage talent and reduce costs [64] - The company aims for organic total revenue growth of 4%-6% from 2026 to 2030, with a target of Adjusted EBITDA growth at 6%-8% CAGR [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate current market challenges and emphasized the resilience of its customer base [48] - The company anticipates that new AI products will provide potential revenue upside, although they are not included in the current financial guidance [22] Other Important Information - The company repurchased approximately 8% of its common stock in 2025, following an 11% repurchase in 2024 [20] - The company plans to allocate at least 50% of its cumulative free cash flow from 2026 to 2030 for stock repurchases [31] Q&A Session Summary Question: Insights on AI pricing and customer adoption - Management indicated that the pricing model for the new development agent is just the first product, with more to come in the future [38] Question: Customer retention and contract renewals - Management reported strong renewals, with over 20% of customers opting for four-year or longer contracts, indicating customer confidence [40] Question: Current market stress for nonprofits - Management noted that while some nonprofits are facing funding challenges, they are increasingly relying on the company's platform for donations, which has not led to business failures [48] Question: Contribution to long-term revenue growth - Management clarified that new AI products are not included in long-term guidance, but there is a balanced contribution from price increases, new logos, and cross-selling [52]

Financial Data and Key Metrics Changes - Full year 2025 organic revenues increased by 5.5% to $1,128 million, with adjusted EBITDA rising approximately 8% to $405 million, resulting in an adjusted EBITDA margin of 35.9%, up 220 basis points from 2024 [17][18] - Non-GAAP EPS increased to $4.45, up approximately 12% year-over-year [18] - Adjusted free cash flow for the year was $208 million, exceeding the high end of the revised guidance range [18] Business Line Data and Key Metrics Changes - The company achieved its goal of becoming a Rule of 40 company two years ahead of plan, driven by operational efficiencies and product innovation, particularly in AI [4] - The average daily AI chat usage grew five times since October, with over half of Raiser's Edge NXT customers utilizing machine learning-enabled donor prospecting [9] Market Data and Key Metrics Changes - The company noted that while some customers are experiencing reduced government grants, this has not significantly impacted their business, as nonprofits are increasingly relying on the Blackbaud platform for donations [36] - The 2026 contractual revenue renewal cohort is approximately 40% larger than the previous year, which is expected to negatively impact total revenue growth by half a point to three-quarters of a point [21] Company Strategy and Development Direction - The company is focused on aggressive investment in innovation, particularly in AI capabilities, to enhance product offerings and operational efficiency [5][15] - Blackbaud plans to leverage its data moat and AI solutions to drive future growth, with a target of organic total revenue growth of 4%-6% from 2026 to 2030 [28][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate current market challenges, emphasizing that the need for their platform is increasing among nonprofits facing funding pressures [36] - The company anticipates a significant increase in free cash flow in 2026, projecting $280 million-$290 million, and plans to allocate at least 50% of cumulative free cash flow from 2026 to 2030 for stock repurchases [25][30] Other Important Information - The company has reduced its debt leverage from 2.9 times in Q1 to 2.5 times at the end of the year [18] - Blackbaud is expanding its workforce strategy, including operations in India, which is expected to provide long-term benefits [23][44] Q&A Session Summary Question: Insights on AI pricing and deployment - Management clarified that the pricing model discussed pertains to the development agent, which is the first product in a new revenue line, with more products expected in the future [32][33] Question: Current environment for nonprofits and funding stress - Management noted that while some nonprofits are experiencing reduced government grants, this has not led to significant business losses for Blackbaud, as customers are relying more on their platform [36] Question: Contribution to long-term revenue growth - Management indicated that new AI products are not included in the long-term guidance, but there are opportunities for pricing increases, new logos, and cross-selling contributing to revenue growth [38]