Blackbaud(US:BLKB)2025-12-10 11:32Summary of Blackbaud Conference Call Company Overview - Company: Blackbaud - Industry: Vertical software company focused on the global social good space, serving nonprofits, foundations, K-12 schools, and corporate social responsibility programs [2][3] Financial Performance - Q3 2025 Highlights: Strong performance with raised guidance in all categories, including cash flow [3][31] - Revenue Growth: Expected mid-single-digit organic revenue growth, higher EBITDA growth, and double-digit earnings per share growth [6][31] - Cash Flow: Raised cash flow guidance twice this year, with improvements expected next year [32][34] Market Opportunity - Total Addressable Market (TAM): Estimated at $10 billion, focusing on mid-tier and enterprise-sized institutions [5] - Nonprofit Sector Resilience: U.S. giving is around $600 billion annually, growing at 2-3% per year, with a 6% growth last year [6][7] Product and Sales Strategy - Product Pricing: One-third of revenue from transaction fees; the rest from cloud software subscriptions with multi-year contracts [11] - Sales Cycle: Typically 6-8 months, with significant decisions made by executives [12] - Growth Algorithm: Combination of acquiring new customers and cross-selling to existing ones [14] Competitive Landscape - Competitors: Primarily smaller, founder-led firms and some apps built on Salesforce or Dynamics; no enterprise-level competitors [16][18] AI Integration - AI Utilization: Blackbaud is both a consumer and creator of AI, with over 70 AI capabilities in core solutions and plans for a fully agentic AI solution in 2026 [19][20] - Internal AI Use: Implementing AI for sales forecasting and lead generation, improving efficiency and productivity [25][26] Capital Allocation - Share Buybacks: Plans to buy back 7-8% of shares outstanding this year, with a focus on buybacks, debt reduction, and small acquisitions [28][29] Future Outlook - 2026 Expectations: Anticipates solid growth driven by new product launches and a stable customer base; confident in being undervalued and aggressive in stock buybacks [34][35] Key Takeaways - Recurring Revenue: 98% of revenue is recurring, indicating stability [34] - Market Resilience: Proven resilience through economic downturns and COVID-19 [7][34] - Focus on Engineering and AI: A significant portion of the workforce is in engineering, emphasizing innovation and product development [34]