Blackbaud(US:BLKB)2024-07-31 14:40Financial Data and Key Metrics Changes - Organic revenue growth for Q2 2024 was approximately 7%, significantly up from 2.8% in Q2 2023 [5] - Total revenue for Q2 2024 was $287 million, representing a 6% year-over-year increase and nearly 7% on an organic basis [49] - Adjusted EBITDA margin improved to 36%, up nearly 300 basis points year-over-year [19] - Non-GAAP earnings per share was $1.08, reflecting a 10% year-over-year increase [19] - Adjusted free cash flow for the first half of 2024 was up approximately 50% compared to the first half of 2023, totaling $89 million [12] Business Line Data and Key Metrics Changes - The social sector, which represents 88% of total revenue, grew 8.5% year-over-year in Q2 2024, a significant increase from 2% growth in Q2 2023 [9] - Contractual recurring revenue in the social sector grew 9.5% year-over-year, while transactional recurring revenue was up 8.2% [49] - The corporate sector, accounting for approximately 12% of total revenue, declined by 9.2%, primarily due to underperformance at EVERFI [49] Market Data and Key Metrics Changes - The company continues to focus on mid-size and enterprise nonprofits, leveraging its market leadership and strong brand recognition [8] - The U.S. charitable giving market was over $500 billion in 2023, with approximately $100 billion processed through Blackbaud's platforms [21] Company Strategy and Development Direction - The company is executing a five-point operating plan aimed at enhancing growth predictability and maintaining cost management [4] - There is a commitment to repurchase up to 10% of outstanding shares in 2024, with an expanded stock repurchase program totaling $800 million [10][26] - The company is actively considering strategic alternatives for EVERFI, including a potential divestiture [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term trajectory of the social sector, citing its resilience during downturns [9] - The company anticipates being at the low end of revenue guidance due to EVERFI's underperformance but expects to be at the high end of adjusted EBITDA margin guidance [28] - Management highlighted the removal of past challenges, including legal issues and a security incident, as a foundation for sustainable growth [43] Other Important Information - The company has implemented a modernized approach to contract renewals, moving customers to standard three-year contracts with annual price escalators [51] - The corporate sector's performance is impacted by EVERFI, which represents only 8% of total revenues but has been a drag on growth [25][48] Q&A Session Summary Question: Update on bookings environment in the social sector - Management indicated that bookings are doing well in the social sector, with new logos and product sales productivity up, and revenue drag is fully related to EVERFI [33] Question: Margin profile of EVERFI relative to the social side - Management clarified that EVERFI is dilutive to both growth and EBITDA, and they are working on plans to improve its performance [55] Question: Challenges faced in recent years - Management noted that past challenges included a security incident and legal issues, which are now resolved, allowing the company to focus on growth [43] Question: Visibility into viral charitable giving campaigns - Management acknowledged the unpredictability of viral charitable events but noted that they could provide upside if they occur in the second half of the year [44] Question: Importance of the corporate sector - Management affirmed that the corporate sector remains important, particularly the "Your Cause" business, which is performing well [58]