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]

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]

Financial Data and Key Metrics Changes - Total revenues for Q4 were $141.4 million, a 14% year-over-year increase, and $540.7 million for fiscal '25, a 13% increase over fiscal '24 [44] - Subscription revenues were $125 million in Q4, a 16% year-over-year increase, and $469.2 million for the full year, a 15% increase year-over-year [44] - Non-GAAP operating income for fiscal '25 was $96.2 million, or 18% of total revenues, compared to $61.8 million, or 13% of total revenues in fiscal '24 [47] - Non-GAAP net income for Q4 was $13.9 million, or $0.12 per diluted share, compared to $23.8 million, or $0.21 per diluted share in Q4 of fiscal '24 [48] Business Line Data and Key Metrics Changes - The Consumer Lending business saw momentum with over 20 new deals in Q4, including two large banks with $80 billion and $50 billion in assets [33] - Professional services revenue was $16.4 million in Q4, a 1% year-over-year increase, and $71.5 million for the full year, a 7% increase year-over-year [44] Market Data and Key Metrics Changes - Non-U.S. total revenues were $33.3 million in Q4, up 34% year-over-year, and $116.2 million for fiscal '25, up 30% year-over-year [45] - The company ended fiscal '25 with 549 customers contributing over $100,000 to subscription revenues, a 10% increase from fiscal '24 [51] Company Strategy and Development Direction - The company aims to evolve into the worldwide leader in AI banking, focusing on leveraging data, analytics, and AI to drive efficiency [6][11] - The strategy includes enhancing the product portfolio with AI-driven solutions and expanding into consumer, small business, and mortgage opportunities [29][34] - The company is focused on executing a disciplined approach to capital allocation and aligning product roadmaps with market needs [30] Management's Comments on Operating Environment and Future Outlook - Management noted that macroeconomic headwinds have eased, and customers are forecasting growth in loan portfolios and deposit positions [39] - The company expects improved gross bookings growth as the year progresses, leading to subscription revenue growth reacceleration in fiscal '27 [23][39] - Management acknowledged challenges in execution and sales momentum but expressed confidence in overcoming these issues [19][40] Other Important Information - The company closed the acquisition of Sandbox Banking for $52.5 million, which is expected to enhance integration capabilities and reduce implementation timelines [50] - The company introduced a new pricing framework, with approximately 15% of ACV on platform pricing as of January 31, 2025 [53] Q&A Session Summary Question: Customer willingness to invest in 2025 - Management indicated that customers are turning the corner on previous headwinds and are focusing on improving efficiency, which aligns with the company's value proposition [84] Question: Difference between ACV and revenue growth rates - Management explained that revenue growth is a lagging indicator, while ACV growth is a leading indicator, with various headwinds impacting revenue projections for fiscal '26 [85][86] Question: Go-to-market investments and sales capacity - Management confirmed that they are solidifying their internal team and making intentional moves to reaccelerate growth in sales leadership and marketing functions [95][96]

Core Viewpoint - Block (XYZ) shares have experienced significant declines due to increased competition in the fintech sector and a challenging macroeconomic environment, particularly influenced by U.S. trade policies [1][15]. Stock Performance - Block shares have dropped 31% year to date and 68.1% since reaching a 52-week high of $99.26 on December 5, 2024 [2][1]. - Over the past 12 months, XYZ shares fell 31.4%, underperforming competitors like PayPal, Affirm, and Shopify, which saw respective gains of 3%, 26.8%, and 31.3% [2]. Financial Outlook - Block anticipates at least 15% year-over-year gross profit growth, despite a 50 basis points headwind from unfavorable foreign exchange [6]. - Adjusted operating profit is projected at $2.1 billion, with a margin of 21% on gross profit, indicating a 240 basis points year-over-year expansion [6]. - The Zacks Consensus Estimate for 2025 earnings is $3.95 per share, reflecting a 17.21% growth from the 2024 figure of $3.37 per share [12]. Business Strategy - Block is leveraging an expanding product portfolio and strong marketing initiatives to drive growth in 2025 [5]. - The company’s comprehensive commerce ecosystem supports sellers by integrating software, hardware, and payment services, enhancing customer experiences [7]. - Gross Payment Volume increased by 7.8% year-over-year to $61.95 billion, with the Buy Now Pay Later (BNPL) platform growing 19% to $10.3 billion in Gross Merchandise Value [8]. Partnerships and Collaborations - Block's partnerships, including one with Sysco, are aimed at enhancing operational efficiency for food and beverage sellers [10]. - Collaborations with Cash App and Lyft, as well as Google Play, are designed to provide customer-friendly payment options [11]. Competitive Landscape - Block faces stiff competition in the BNPL space from Affirm and from PayPal, which is monetizing products like Braintree and Venmo [15]. - The current valuation of Block is considered stretched, indicated by a Value Score of C [15]. Market Position - XYZ shares are trading below both the 50-day and 200-day moving averages, suggesting a bearish trend [16]. - The company holds a Zacks Rank 3 (Hold), indicating a cautious approach for potential investors [18].

Financial Data and Key Metrics Changes - For fiscal year 2024, the company reported revenue of $92.1 million and adjusted EBITDA of $11.7 million, exceeding guidance and street expectations [7] - Fourth quarter revenue was $32.3 million, a 14% increase from $28.4 million in the same period of 2023, driven by increased DAAP-related revenue streams [19] - Gross margin improved from 62.9% in Q4 2023 to 68.2% in Q4 2024, attributed to a favorable solution and channel partner mix [19] - Net loss for Q4 2024 was $0.1 million, significantly improved from a net loss of $4.1 million in Q4 2023 [21] - Non-GAAP net income for Q4 2024 was $5.5 million, or $0.30 per diluted share, compared to $4.6 million, or $0.26 per diluted share in the prior year [21] - Adjusted EBITDA for Q4 2024 was $8.8 million, up from $5.8 million in Q4 2023 [21] Business Line Data and Key Metrics Changes - The average revenue for the top 20 pharmaceutical manufacturers was $2.9 million, a 22% increase year-over-year [23] - The top five customers averaged over $9 million in revenue in 2024, with plans to elevate at least one more customer to this level in 2025 [12] Market Data and Key Metrics Changes - The net revenue retention rate improved to 121%, up from 105% in the previous year [23] - Revenue per FTE increased to $701,000, compared to $586,000 in the prior year [23] Company Strategy and Development Direction - The company aims to focus on operational excellence and customer centricity while transitioning to a subscription-based revenue model [5][6] - Plans to become a "Rule of 40" company over the next several years, emphasizing substantial operating leverage and predictable revenue streams [15][16] - The company is positioned in a $10 billion total addressable market with significant growth opportunities driven by increased pharma advertising spend on digital channels [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's growth trajectory and the strong demand for audience creation and dynamic audiences [48] - The company is committed to under-promising and over-delivering, maintaining a conservative approach while being encouraged by current visibility in the business [71] - The management highlighted the importance of monitoring FDA approvals and their impact on the pharmaceutical market [78] Other Important Information - The company completed the Medicx Health acquisition in Q4 2023, which is expected to enhance its service offerings and operational efficiency [20] - The transition from managed services to self-service for Medicx is largely complete, with growth in audience components being a key focus [100] Q&A Session Summary Question: Focus on customer centricity and strategy changes - Management emphasized increasing customer centricity and making it easier for clients to renew and expand their footprint [30] Question: Impact of subscription-based revenue model - The transition to a subscription model is expected to create more predictable and stickier revenue, particularly from the data component of DAAP deals [36] Question: Gross margin expansion drivers - Gross margin expansion was driven by product mix, particularly from DAAP, and while current margins are high, they may not be sustainable at that level [45][46] Question: Visibility into new DAAP deals and backlog - The company is seeing strong demand for DAAP solutions, with visibility into 2025 being significantly stronger than the previous year [52] Question: Timeframe for becoming a Rule of 40 company - Management indicated that achieving the Rule of 40 is a multi-year journey, likely taking 3 to 5 years [58] Question: Baseline growth expectations for next year - Management is optimistic about growth but will maintain a conservative approach in forecasting [70] Question: Customer acquisition costs for data vs transactional components - There is no material difference in customer acquisition costs between data and transactional components [90] Question: Transition of Medicx business from managed to self-service - The transition is largely complete, with growth in high-margin audience components being a focus [99]

Core Viewpoint - Block's Q4 results were weaker than expected, leading to a significant drop in share price, down over 20% year-to-date, raising questions about potential buying opportunities [1] Business Overview - Block operates two main businesses: Square, which facilitates card payments and offers a comprehensive ecosystem for retailers, and Cash App, known for peer-to-peer payments and additional financial services [2][3] Financial Performance - Q4 revenue increased nearly 5% to $6.03 billion, below the expected $6.29 billion; Square revenue rose 9% to $1.97 billion, while Cash App revenue grew 3% to $4.02 billion [3] - Gross profits rose 14% to $2.31 billion, with Square gross profits increasing 12% to $924 million and Cash App gross profits jumping 16% to $1.38 billion; adjusted EPS surged 51% to $0.71 but fell short of the $0.87 consensus [4] Transaction Metrics - Square's gross payment volume (GPV) rose 10% in the quarter, with U.S. GPV increasing 7% and international GPV soaring 25%, attributed to strong retention and same-store sales growth [5] - Cash App's monthly transacting users grew 9% to 25 million, with gross profit per user climbing 13% to $76; active users depositing paychecks increased 25% to 2.5 million [6] Strategic Initiatives - In 2024, Block plans to overhaul Square's technology to transition it into a commerce platform, focusing on customer retention, product enhancements, and increased marketing investments [7] - Cash App will expand financial services capabilities and invest in compliance and customer experience, introducing features like high-yield savings and free tax filing [8] Future Outlook - Block anticipates significant growth in 2025, aiming for a "Rule of 40" run rate, with expectations for Afterpay's rollout on Cash App to drive growth and contributions from its Bitcoin mining chip system Proto [9][10] - Q1 is expected to be the low point for gross profit growth due to last year's leap year and currency headwinds [11] Valuation and Investment Consideration - Block is trading at a forward P/E ratio of 15 times analysts' earnings estimates for 2025, marking one of its lowest valuations in recent times [13] - Despite missing some headline numbers, the overall earnings report showed solid double-digit gross profit growth, with a bullish outlook for 2025, suggesting it may be a good time to buy the stock on the dip [14][15]

Financial Data and Key Metrics Changes - Total company revenues in Q4 2024 were $41.4 million, representing a 15% year-over-year growth [51] - Non-GAAP operating profitability was $5.2 million in Q4, improving by $18.3 million from the same period last year, with an operating margin of 13% [59][60] - Free cash flow for the quarter was negative $7.2 million, an improvement from negative $20.8 million in the same quarter last year [60] Business Line Data and Key Metrics Changes - Consumer Banking revenue grew 48% year-over-year in Q4 2024, totaling $9.5 million, and 42% for the full year, surpassing the 35% target [55][10] - Mortgage suite revenue was $18.2 million, representing a 6% year-over-year growth [51] - Professional services revenue was $2.5 million, slightly up from $2.3 million in the same period last year [55] Market Data and Key Metrics Changes - The remaining performance obligations (RPO) landed at $123 million, a 30% increase compared to the same period last year [62] - The pipeline is now 50% larger than the previous year, indicating strong future growth potential [12][37] Company Strategy and Development Direction - The company is focusing on becoming a software-driven business, simplifying operations, and expanding its partner ecosystem to enhance efficiency and innovation [14][96] - A dedicated business unit for Independent Mortgage Banks (IMBs) was launched to provide tailored technology solutions [102] - The company plans to incorporate AI into its platform to streamline processes and reduce operational costs [118][120] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the challenging macroeconomic environment, with expectations of positive free cash flow in Q1 2025 [44][76] - The company anticipates moderate origination growth for the year, with a cautious approach to annual planning due to market conditions [78] - Management highlighted the importance of maintaining profitability while investing in innovation and expanding the sales and marketing organization [80][81] Other Important Information - The company has signed a strategic partnership with Truework for income verification, which is expected to enhance operational efficiency [48][96] - The mortgage suite's economic value for funded loans declined sequentially to $96, attributed to the transition to a partnership model [64][70] Q&A Session Summary Question: What is the outlook for the mortgage market in 2025? - Management noted that forecasts for mortgage originations have decreased, but they believe the market will perform below these projections, indicating a cautious outlook for Q1 2025 [74][76] Question: How does the company plan to manage expenses in the current environment? - The company plans to tightly manage expenses while continuing to invest in innovation and sales, aiming for a positive free cash flow margin [76][80]

Core Insights - Block's shares fell 18% following a disappointing fourth-quarter earnings report, with earnings per share (EPS) of $0.71, below the $0.89 Wall Street estimate [1][2] - The company's gross profit growth rate slowed to 14% during the holiday season, down from 22% in the same quarter last year, yet it remains optimistic about future growth and profit margins in 2025 [2] Financial Performance - For Q4, Block reported a gross profit of $8.89 billion, with an 18% year-over-year growth expected to decrease to 15% in 2025 [8] - The adjusted operating income margin is projected to rise from 18% in 2024 to 21% in 2025, while the "Rule of 40" metric is expected to decline from 36.5% in 2024 to 35.5% in 2025 [7][8] - Cash App's attach rate increased to 44% from 41% year-over-year, with gross profit per monthly transacting active accounts rising by 13% to $47 [5] User Growth and Market Position - Cash App's active user base grew by only 1.7% to 57 million, indicating potential challenges in user acquisition [6] - The Square segment's gross purchase value increased by 6.9%, but there are concerns about losing market share to competitors like Fiserv and Toast [6] Future Outlook - Block's 2025 outlook includes a forecast of a 15% increase in annual gross profit, with expectations for catalysts such as the integration of Afterpay with Cash App and expansion in Bitcoin mining infrastructure [10] - The company is viewed as having a favorable valuation with a forward price-to-earnings (P/E) ratio of 14, suggesting potential for growth if upcoming quarters show positive results [11] Investment Perspective - The recent stock decline presents a buying opportunity for long-term investors interested in fintech innovation, BNPL, and cryptocurrency adoption [12]

Financial Data and Key Metrics Changes - In Q4 2024, GMV reached $5.4 billion, showing flat year-over-year growth in US dollars and an 11% increase in FX-neutral terms [39] - Revenue totaled $61.5 million, growing 1% year-over-year in US dollars and 12% in FX-neutral for Q4 2024, while full-year revenue reached $226.7 million, representing 13% and 18% growth in US dollars and FX-neutral respectively [40][94] - Subscription revenue for Q4 2024 was $59.5 million, a 2% increase in US dollars and 13% in FX-neutral, with full-year subscription revenue at $217.7 million, up from $190.3 million in 2023, indicating 14% and 20% growth in US dollars and FX-neutral [43][97] Business Line Data and Key Metrics Changes - The number of customers generating over $250,000 in annual recurring revenue increased by 23%, while annual revenue churn remained stable in the mid-single digits [58] - Existing stores' revenue increased to $169 million, with a net revenue retention rate of 104% in FX-neutral [98][100] - Subscription gross margin improved to 78.9% in Q4 2024, up from 78.6% in the same period last year [104] Market Data and Key Metrics Changes - Revenue generated outside Brazil accounted for 43.4% of total revenues in 2024, with Brazil's subscription revenue growing 28% in FX-neutral [101][102] - Latin America excluding Brazil saw a 6% increase in subscription revenue in FX-neutral, while the Rest of the World subscription revenue grew 34% in FX-neutral [102] Company Strategy and Development Direction - VTEX aims to transition from a single product platform to an integrated suite of solutions, expanding its offerings to include B2C, B2B, Sales App, and more [72] - Strategic investments in AI and conversational commerce capabilities, including a stake in Synerise and the acquisition of Weni, are intended to enhance VTEX's product suite and market position [18][73] - The company is focused on building trust with customers and delivering on promises, positioning itself as a comprehensive commerce suite for enterprises [19][73] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in Brazil due to softer consumer spending and currency devaluation but expressed confidence in sustaining profitable growth through new customer acquisitions and product innovations [41][96] - The company targets FX-neutral year-over-year subscription revenue growth of 13% to 15% for Q1 2025 and 14% to 17% for the full year 2025 [56][57] - Management remains optimistic about future opportunities despite short-term growth rate challenges, emphasizing strong operational indicators [57][58] Other Important Information - A new share-repurchase program was approved, allowing the repurchase of up to $30 million in Class A common shares [108] - The company repurchased 1.8 million Class A common shares at an average price of $6.08 per share, totaling $11.2 million in Q4 2024 [108] Q&A Session Summary Question: What are the expectations for subscription revenue growth in 2025? - The company is targeting FX-neutral year-over-year subscription revenue growth of 13% to 15% for Q1 2025 and 14% to 17% for the full year 2025 [56][57] Question: How is the company addressing the challenges in Brazil? - Management highlighted the importance of new customer acquisitions and product innovations to sustain growth despite the challenging consumption environment in Brazil [41][96] Question: What strategic investments has the company made recently? - VTEX made strategic investments in AI and conversational commerce capabilities, including a stake in Synerise and the acquisition of Weni, to enhance its product offerings [18][73]