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BLACKBAUD INC (BLKB)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered organic growth and margin expansion, with non-GAAP diluted EPS $0.96 and Rule of 40 of 40.1%; GAAP revenue was $270.661M and recurring revenue was 97.6% of total .
  • Versus S&P Global consensus, revenue beat by ~$2.0M and EPS beat by $0.04, while guidance was reaffirmed across revenue, margins, EPS, and adjusted FCF for FY 2025 *.
  • Free cash flow was negative due to one-time items (notably a $28M Washington, D.C. lease cash release payment), higher interest expense tied to buybacks, and vendor timing; the company repurchased ~4% of shares in the quarter and had $545M remaining on its authorization at quarter-end .
  • Strategic products and AI momentum (Blackbaud Copilot, Integrated Payments, Expedited Giving) and resilient end markets underpin confidence; management reiterated mid-single-digit-plus organic growth and strong margin focus .

What Went Well and What Went Wrong

What Went Well

  • Mid-single-digit organic growth and margin expansion: Non-GAAP organic revenue growth of 5.8% and adjusted EBITDA margin of 34.3% lifted Rule of 40 to 40.1% .
  • Resilient demand and transactional upside: Management cited 9% transactional revenue growth in Q1 ($2M incremental, including L.A. wildfire-related giving), with stable bookings and retention, driving the “plus” above mid-single-digit growth .
  • Strategic execution and capital returns: Reaffirmed FY25 guidance; repurchased ~4% of shares in Q1; continued product innovation (Copilot/AI, Integrated Payments, Expedited Giving) bolstered competitiveness and cross-sell opportunity .
    Quote: “Our solid first quarter and Rule of 40 attainment give me confidence… on our journey to the Rule of 45 by 2030” .

What Went Wrong

  • Free cash flow headwind: Non-GAAP adjusted free cash flow was -$11.4M due to the $28M D.C. lease cash release payment, higher interest from buybacks, and vendor timing; GAAP operating cash flow fell to $1.4M from $64.6M YoY .
  • Higher interest expense: FY25 interest expected at $65–$69M, reflecting elevated borrowing costs tied to share repurchases .
  • GAAP EPS/FCF optics: GAAP diluted EPS remained $0.10 despite improved GAAP operating margin; near-term FCF optics pressured by one-time items even as FY25 adjusted FCF guidance remained intact .

Financial Results

Sequential performance

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$286.727 $302.232 $270.661
Non-GAAP Diluted EPS ($)$0.99 $1.08 $0.96
GAAP Diluted EPS ($)$0.40 $(6.74) $0.10
Non-GAAP Adjusted EBITDA ($USD Millions)$95.225 $102.242 $92.795
Non-GAAP Adjusted EBITDA Margin (%)33.2% 33.8% 34.3%
GAAP Operating Margin (%)15.3% (121.5)% 7.5%

YoY for Q1

MetricQ1 2024Q1 2025
Revenue ($USD Millions)$279.250 $270.661
Non-GAAP Diluted EPS ($)$0.93 $0.96
GAAP Diluted EPS ($)$0.10 $0.10
Non-GAAP Adjusted EBITDA ($USD Millions)$88.898 $92.795
GAAP Operating Cash Flow ($USD Millions)$64.619 $1.388
Non-GAAP Adjusted Free Cash Flow ($USD Millions)$53.316 $(11.418)

Composition: Recurring revenue

MetricQ3 2024Q4 2024Q1 2025
Recurring Revenue ($USD Millions)$280.018 $296.202 $264.050
Recurring Share (% of Total)98% 98% 97.6%
Total Revenue ($USD Millions)$286.727 $302.232 $270.661

KPIs

KPIQ3 2024Q4 2024Q1 2025
Non-GAAP Organic Revenue Growth (%)4.3% 3.2% 5.8%
Rule of 40 (%)37.5% 37.0% 40.1%
Non-GAAP Adjusted Free Cash Flow ($USD Millions)$97.6 $57.3 $(11.418)
Diluted Weighted Avg Shares (Millions)51.633 49.051 49.445
Share Repurchases (% of Shares)~8% YTD by Q3 10% in 2024 ~4% in Q1

Consensus vs Actual (Q1 2025)

MetricQ1 2025 ConsensusQ1 2025 Actual
Revenue ($USD Millions)268.694*270.661
Primary EPS ($)0.916*0.96

Values marked with * were retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (Q4 2024)Current Guidance (Q1 2025)Change
GAAP Revenue ($B)FY 2025$1.115–$1.125 $1.115–$1.125 Maintained
Organic Rev. Growth (Constant Currency, %)FY 20254.5%–5.4% 4.5%–5.4% Maintained
Non-GAAP Adjusted EBITDA Margin (%)FY 202534.9%–35.9% 34.9%–35.9% Maintained
Non-GAAP EPS ($)FY 2025$4.16–$4.35 $4.16–$4.35 Maintained
Non-GAAP Adjusted FCF ($M)FY 2025$185–$195 $185–$195 Maintained
Assumptions: Tax RateFY 2025~24.5% ~24.5% Maintained
Assumptions: Interest Expense ($M)FY 2025$65–$69 $65–$69 Maintained
Assumptions: Diluted Shares (M)FY 202548.5–49.5 48.5–49.5 Maintained
Assumptions: Capex ($M)FY 2025$55–$65 incl. $50–$60 capitalized $55–$65 incl. $50–$60 capitalized Maintained

Earnings Call Themes & Trends

TopicQ3 2024Q4 2024Q1 2025Trend
AI/technology initiatives“Six waves of innovation” unveiled at bbcon Innovation emphasis continued Copilot tech preview; Agentic AI; broad embedded AI Intensifying
Transactional revenueNot highlighted—~9% growth; ~$2M incremental (L.A. wildfires) Upside variability tailwind
Macro/federal grants exposure——No impact on bookings/retention; solutions focus on individual donors Resilient end markets
Contract renewals/retention——Standardized 3-year terms; 92–93% retention; peak renewals in Q2–early Q3 Stable/predictable
Share repurchases~8% repurchased YTD by Q3 10% in 2024; plan 3–5% in 2025 ~4% in Q1; evaluating pace Continuing
Security Incident/legalCosts and accruals trending lower Nearly finalized most litigation; residual costs $2.2M costs; ~$1.6M liabilities recorded Diminishing impact
International/JustGiving——APAC/Europe bookings strong; JustGiving brand strength Positive

Management Commentary

  • CEO emphasized leadership and durability: “In the first quarter… non-GAAP adjusted EBITDA margin of 34.3%, non-GAAP diluted EPS of $0.96 and a Rule of 40 score of 40.1%… the social impact market has been a consistent grower… our software [is] more critical” .
  • On innovation and capital allocation: “We plan to use our cash flow to repurchase Blackbaud shares… plan to buy back up to 5%… and continue investing in AI and product roadmaps” .
  • CFO transition and continuity: Chad Anderson promoted to CFO; Tony Boor moves to EVP Corporate Development and Strategy; focus on Rule of 45 by 2030 .

Q&A Highlights

  • Demand resilience: No change in gross retention, bookings, or pipeline despite federal grants noise; platform importance for individual donor fundraising underscored .
  • Transactional revenue dynamics: ~9% transactional growth in Q1 with ~$2M upside; “viral giving events” not baked into guide—potential upside if such events recur .
  • Net-new logos: Pivot executed; net-new bookings “up substantially” and pipeline healthy across verticals .
  • Renewals cadence/tone: 25% mix up for renewal; standardized 3-year contracts; peak volumes in Q2–early Q3; retention ~92–93% .
  • AI monetization: Embedded AI (incl. Copilot) included in pricing; exploring monetization for Agentic AI in future .
  • FX tailwind: If USD remains weaker, reported results could see modest tailwind vs constant currency view .

Estimates Context

  • Q1 2025: Revenue $270.661M vs consensus $268.694M; EPS $0.96 vs consensus $0.916 — both beats; management reaffirmed FY25 guidance *.
  • Implications: Consensus models likely adjust for transactional upside and sustained margin expansion, while free cash flow seasonality and one-time cash items should be normalized over FY25; interest expense assumptions ($65–$69M) and diluted shares (48.5–49.5M) remain key modeling inputs .

Values marked with * were retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat and reaffirm: Q1 revenue/EPS beat consensus; FY25 guide maintained across all key metrics — supports a steady multi-year trajectory *.
  • Margin story intact: Adjusted EBITDA margin rose 250 bps YoY to 34.3%; Rule of 40 at 40.1% underscores balanced growth/profitability .
  • FCF optics are transient: Negative adjusted FCF driven by the $28M lease buyout and timing effects; FY25 adjusted FCF guide of $185–$195M still in place .
  • Capital returns: ~4% buyback in Q1 with $545M remaining authorization — ongoing repurchases can support per-share metrics; management evaluating pace vs debt/interest .
  • Demand resilience and pipeline: Bookings/retention steady; net-new logos accelerating; transactional giving provides potential upside not embedded in guide .
  • Product and AI catalysts: Copilot, Integrated Payments, Expedited Giving, and broader connected experiences strengthen competitive moat and cross-sell opportunities .
  • Watch items: Interest expense headwind tied to buybacks; seasonality (Q1 lowest for FCF) and vendor timing; Security Incident costs trending lower but monitored .