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BLACKBAUD INC (BLKB)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered modest top-line growth with GAAP total revenue of $302.2M (+2.4% YoY) and recurring revenue of $296.2M (+3.1% YoY; 98% of total), while non-GAAP adjusted EBITDA was $102.2M (33.8% margin, +20 bps YoY) .
  • A significant non-cash impairment and disposition related to EVERFI drove a GAAP diluted loss per share of $6.74 and GAAP operating margin of (121.5)%; EVERFI sale closed on Dec 31, 2024 and is excluded from go-forward guidance .
  • 2025 guidance targets mid-single-digit organic growth (constant currency 4.5–5.4%), adjusted EBITDA margin of 34.9–35.9%, non-GAAP EPS of $4.16–$4.35, and adjusted free cash flow of $185–$195M; management plans to repurchase 3–5% of shares in 2025 .
  • Management highlighted AI product momentum (Blackbaud Copilot), a pivot to net new logos, and operational cost workstreams (data center exits, India-based tech talent), underpinning a path to “Rule of 45” by 2030 .

What Went Well and What Went Wrong

What Went Well

  • Non-GAAP profitability remained robust: adjusted EBITDA of $102.2M (33.8% margin, +20 bps YoY) and non-GAAP income from operations of $82.7M (27.4% margin) .
  • Cash generation strengthened: GAAP operating cash flow margin expanded to 24.3% in Q4 (+2,540 bps YoY), with non-GAAP free cash flow of $56.5M (+$75.1M YoY) and adjusted FCF of $57.3M (+$21.0M YoY) .
  • Strategic focus sharpened: EVERFI divestiture closed, removing a dilutive asset; CEO: “We see a path to becoming a Rule of 45 company by 2030.” .

What Went Wrong

  • GAAP results were severely impacted by EVERFI: aggregate pre-tax impairment and disposition charges of $405.4M led to GAAP net loss of $330.8M and diluted loss per share of $6.74 .
  • Non-GAAP EPS declined YoY to $1.08 (from $1.14), reflecting lapping of prior renewal pricing uplift and modest near-term bookings softness as sales refocus on net new and cross-sell .
  • Transactional “viral giving” tailwinds were absent in 2024 vs strong 2023, creating tough comps in payments/transactional revenue; management excluded viral giving from 2025 guidance .

Financial Results

Quarterly Performance vs Prior Periods

MetricQ2 2024Q3 2024Q4 2024
GAAP Total Revenue ($USD Millions)$287.3 $286.7 $302.2
GAAP Recurring Revenue ($USD Millions)$281.4 $280.0 $296.2
One-time Services & Other ($USD Millions)$5.9 $6.7 $6.0
GAAP Diluted EPS ($USD)$0.42 $0.40 $(6.74)
Non-GAAP Diluted EPS ($USD)$1.08 $0.99 $1.08
Non-GAAP Adjusted EBITDA ($USD Millions)$102.5 $95.2 $102.2
Adjusted EBITDA Margin (%)35.7% 33.2% 33.8%
GAAP Operating Margin (%)14.7% 15.3% (121.5)%
Non-GAAP Income from Operations ($USD Millions)$86.1 $78.9 $82.7

Q4 2024 vs Q4 2023

MetricQ4 2023Q4 2024YoY Change
GAAP Total Revenue ($USD Millions)$295.0 $302.2 +2.4%
GAAP Net Income (Loss) ($USD Millions)$5.4 $(330.8) Impacted by EVERFI charges
GAAP Diluted EPS ($USD)$0.10 $(6.74) Driven by impairment/disposition
Non-GAAP Diluted EPS ($USD)$1.14 $1.08 (0.06)
Non-GAAP Adjusted EBITDA ($USD Millions)$99.3 $102.2 +$3.0M (+20 bps margin)
Adjusted EBITDA Margin (%)33.6% 33.8% +20 bps

Revenue Components and EVERFI Footnote

MetricQ2 2024Q3 2024Q4 2024
Recurring Revenue ($USD Millions)$281.4 $280.0 $296.2
One-time Services & Other ($USD Millions)$5.9 $6.7 $6.0
Recurring as % of Total (%)98% 98% 98%
Included EVERFI Revenue ($USD Millions)$23.8 $19.4 $18.7

KPIs

KPIQ2 2024Q3 2024Q4 2024
Non-GAAP Free Cash Flow ($USD Millions)$32.6 $88.3 $56.5
Non-GAAP Adjusted Free Cash Flow ($USD Millions)$36.4 $97.6 $57.3
Non-GAAP FCF Margin (%)11.4% 30.8% 18.7%
Rule of 40 (%)42.4% 37.5% 37.0%
Gross Dollar Retention (%)N/AN/A~92% (ex EVERFI)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
GAAP RevenueFY 2025N/A (first issuance)$1.115B–$1.125B New
Organic Revenue Growth (CC)FY 2025N/A4.5%–5.4% New
Non-GAAP Adjusted EBITDA MarginFY 2025N/A34.9%–35.9% New
Non-GAAP EPSFY 2025N/A$4.16–$4.35 New
Non-GAAP Adjusted Free Cash FlowFY 2025N/A$185M–$195M New
Non-GAAP Tax Rate (assumption)FY 2025~24.5% prior~24.5% Maintained
Interest Expense (assumption)FY 2025$56M in 2024 $65M–$69M Higher
Fully Diluted SharesFY 2025~51.0M–52.0M (2024 context) ~48.5M–49.5M Lower
Capital ExpendituresFY 2025$65M–$75M (2024) $55M–$65M (incl. $50M–$60M capitalized software) Lower
Stock RepurchasesFY 2025$645M auth remaining at 12/31/24 Plan to repurchase 3–5% of shares in 2025 Continued

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4 2024)Trend
AI/Technology InitiativesProduct updates; expanded innovation roadmap; Microsoft AI integrations (Q2/Q3) ML adopted by >5,000 Raiser's Edge NXT customers; unveiling Blackbaud Copilot; exploring monetization of advanced AI Accelerating innovation; monetization potential
Pricing Uplift/LappingNot highlightedLapping prior renewal pricing uplift dampens growth; bookings shift to net new/cross-sell Near-term headwind
Viral Giving/Transactional Mix2023 had strong viral tailwinds; tough comps Minimal viral in 2024; exclude viral giving from 2025 guide; wildfire impact < $1M Reduced volatility assumed
Capital AllocationBuyback authorization expanded to $800M; repurchased ~8% YTD (Q3) Repurchased ~10% in 2024; plan 3–5% buyback in 2025 Continued buybacks
EVERFIUnderperformance; strategic options (Q3) Non-cash impairment (~$390M pretax) and disposition; sale closed Dec 31, 2024 Divested; removed from guidance
Regulatory/Legal (Security Incident)Material legal fees and accruals (Q2) 2024 costs $13.7M; 2025 expected $2–$3M expenses and $3–$4M cash outlays Winding down
Infrastructure/Data CentersNot detailedData center exits/Citrix retirement to drive margin expansion over time Operational efficiency tailwind
India Talent/R&D ExecutionNot detailedNew India office; ~$5M one-time; long-term talent/cost benefits Scaling engineering efficiency
Macro/Federal FundingNot detailedNo direct impact from federal allocation changes; focus on individual donor platforms Neutral

Management Commentary

  • CEO Mike Gianoni: “We see a path to becoming a Rule of 45 company by 2030.”
  • CEO on AI: “In the current quarter, we’ll be releasing Blackbaud Copilot, which provides contextual responses to questions and drives actions.”
  • CFO Tony Boor: “In February of ’25, we made a one-time cash release payment of $28M… expected to provide a $3M to $3.5M improvement to adjusted EBITDA on an annualized basis.”
  • CFO on guidance drivers: “We are projecting revenue… representing organic growth of 4.2% to 5.1% as reported or 4.5% to 5.4% on a constant currency basis.”
  • CEO on capital returns: “We repurchased 10% of our outstanding stock… we plan… buying back 3% to 5% of our total outstanding shares [in 2025].”

Q&A Highlights

  • Go-to-market pivot: Management is transitioning resources from migrations to net new logos and cross-sell; bookings expected to rise with notable K-12 and other vertical wins .
  • Viral giving: Not assumed in 2025 guidance; high volatility historically; wildfire-related giving impact < $1M .
  • Free cash flow guide puts/takes: $28M DC lease buyout; India office investment (~$5M); net ~$11M higher interest due to buybacks; working capital timing and divestiture costs .
  • Rule of 45 path: Mix of scale, data center retirements/Citrix exits, India labor arbitrage, and AI-driven productivity; not linear, with stair-step impacts over time .
  • Macro/federal funding: No direct impact to BLKB’s platforms, which are focused on individual donor ecosystems; wide customer mix mitigates exposure .

Estimates Context

  • S&P Global (Capital IQ) consensus estimates were unavailable at the time of request due to service limits; therefore, comparisons vs consensus cannot be provided. If required, we can refresh and update when access is restored.
  • Implication: Sell-side models may reduce near-term EPS/FCF for 2025 given one-time cash uses (lease buyout, India office) and higher interest expense, while margin guidance implies ongoing structural improvement .

Key Takeaways for Investors

  • Q4 non-GAAP performance held up despite the EVERFI charges: adjusted EBITDA $102.2M, 33.8% margin; recurring revenue remains 98% of total, supporting visibility .
  • The GAAP loss was a one-time accounting outcome tied to EVERFI; the business is now streamlined and guidance excludes EVERFI going forward .
  • 2025 guide targets mid-single-digit organic growth and margin expansion (34.9–35.9%), with non-GAAP EPS $4.16–$4.35—supported by operating efficiency programs and AI-led productivity .
  • Adjusted FCF guide ($185–$195M) is lower YoY due to deliberate one-time uses (lease buyout; India office) and higher interest tied to buybacks, but expected to grow in 2026+ .
  • Capital return remains a catalyst: management plans to repurchase 3–5% of shares in 2025; authorization had ~$645M remaining at year-end 2024 .
  • AI commercialization (Blackbaud Copilot) and net-new logo focus should support bookings and pricing power, offsetting lapping of renewal uplift .
  • Watch near-term transactional revenue volatility and FX (~$2–$3M headwind), but structural drivers (data center exits, labor arbitrage) should support the Rule of 45 trajectory by 2030 .