• Revenue: $271 million, representing 5.8% organic growth.
• Non-GAAP Adjusted EBITDA Margin: 34.3%.
• Non-GAAP Diluted Earnings Per Share (EPS): $0.96.
• Rule of 40 Score: 40.1%.
• Adjusted Free Cash Flow: Negative $11 million, impacted by a one-time $28 million cash release payment.
• Share Repurchase: Approximately 4% of outstanding shares repurchased in Q1 2025.
• 2025 Revenue Guidance: $1.115 billion to $1.125 billion, representing 4.2% to 5.1% organic growth.
• 2025 EBITDA Margin Guidance: 34.9% to 35.9%.
• 2025 Non-GAAP EPS Guidance: $4.16 to $4.35 per share, up 2% to 7% year-over-year.
• 2025 Adjusted Free Cash Flow Guidance: $185 million to $195 million.

• Warning! GuruFocus has detected 8 Warning Signs with BLKB.

Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Blackbaud Inc (NASDAQ:BLKB) achieved a 5.8% organic revenue growth in Q1 2025, reaching $271 million.
• The company reported a non-GAAP adjusted EBITDA margin of 34.3% and a Rule of 40 score of 40.1%, indicating strong financial performance.
• Blackbaud Inc (NASDAQ:BLKB) is transitioning its contractual revenue contracts to primarily three-year renewal terms, providing increased visibility and consistency.
• The company is investing in innovation, particularly in AI, to enhance customer operations and internal productivity.
• Blackbaud Inc (NASDAQ:BLKB) repurchased approximately 4% of its outstanding shares in Q1 2025, demonstrating a strong commitment to shareholder value.

Negative Points

• Adjusted free cash flow was negative $11 million in Q1 2025, impacted by a one-time $28 million cash release payment.
• Increased interest expenses related to the share repurchase program negatively affected free cash flow.
• The company faces uncertainties related to federal grant funding, which could impact some of its customers.
• Q1 tends to be the lowest quarter for free cash flow generation due to timing of expenses and vendor payments.
• Blackbaud Inc (NASDAQ:BLKB) has only two remaining private data centers, indicating a reliance on third-party cloud services.

Q & A Highlights

Q: Have you seen any changes in the gross retention side of the bookings environment due to federal grant funding impacts? A: Michael Gianoni, CEO: Our solutions are not in the fund flow of federal grants, and we haven't seen any impact on sales bookings, pipeline, or customer retention. The biggest test was during COVID, and we lost no customers. Our platforms are more critical now for revenue sources from individual donors.

Q: How did the transactional business perform relative to expectations in Q1, and how does it impact the mid-single-digit organic growth outlook? A: Anthony Boor, CFO: Transactions were the biggest driver of overperformance in Q1, with about 9% growth. We included some incremental transaction revenue related to LA wildfires in our guide. Viral giving events could provide additional upside.

Q: What macroeconomic factors were considered in maintaining guidance for 2025, and is there increased confidence in mid-single-digit-plus growth? A: Michael Gianoni, CEO: Most of our customers don't rely on federal grants, and we haven't seen an impact on bookings or retention. We maintain guidance assuming no material macro changes. We saw some plus in Q1 but are not changing the guide yet.

Q: What is the outlook for net new bookings and the pipeline for 2025? A: Michael Gianoni, CEO: The pivot to focus on new logos is behind us, and new bookings are up substantially in Q1. The pipeline looks good across the vertical markets we serve.

Q: How are international markets performing compared to domestic opportunities? A: Michael Gianoni, CEO: We're doing well in Asia Pacific and Europe. JustGiving is performing well, with strong brand recognition in the UK and Europe. There's also significant interest in our YourCause platform for employee engagement.

Q: What gives you confidence in the resiliency of your end market demand environment? A: Michael Gianoni, CEO: Our end markets are healthy, and our innovation is resonating with customers. We've introduced AI capabilities, better integration, and improved user experience, driving good results in new logos and cross-selling.

Q: How are contract renewals progressing, and is there any seasonality to be aware of? A: Michael Gianoni, CEO: Customer retention remains high, and the transition to three-year contracts is now normal. Renewals are higher at the end of Q2 and early Q3.

Q: Will you consider increasing the share buyback program if the target is met early? A: Anthony Boor, CFO: We are well on our way to the 3% to 5% target for 2025. We will continue to evaluate market conditions, share price, and debt levels to decide on any changes to the buyback program.

Q: How do you plan to monetize AI technologies? A: Michael Gianoni, CEO: We've embedded AI and predictive analytics in our solutions without separate charges. We are exploring monetization models for agentic AI in the future.

Q: How does currency fluctuation impact your financial outlook? A: Anthony Boor, CFO: Currency movements are more favorable now compared to when we set guidance, potentially providing a tailwind if current trends hold.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.