Release Date: February 18, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you elaborate on the shift in focus from migrations to net new logos and the potential market opportunity beyond your current customer base? A: Michael Gianoni, President and CEO, explained that Blackbaud has shifted its focus to acquiring new logos as migrations to new cloud solutions are largely complete. The company saw significant growth in new logo production in the latter half of 2024 and expects bookings to increase in 2025. Blackbaud is targeting various sectors, including K-12, arts and cultural, and non-profit, with a continued emphasis on cross-selling within its existing customer base.
Q: How does the 2025 guidance account for viral giving, and have there been any notable events impacting this? A: Anthony Boor, CFO, noted that the 2025 guidance does not assume any viral giving, which can be volatile. In 2023, viral giving was exceptionally high, creating a tough comparison for 2024. The company saw minimal viral events in 2024, with some impact from California wildfires, but it was less than $1 million.
Q: What impact do changes in federal dollar allocation have on your customers, and how is this reflected in your guidance? A: Michael Gianoni stated that while some customers might be affected by changes in federal funding, Blackbaud's platforms primarily drive donations through individual donors, not federal funding. The company has not seen significant impacts yet and continues to focus on helping customers increase revenue through donations.
Q: Can you clarify the factors affecting the 2025 free cash flow guidance, which appears weaker than expected? A: Anthony Boor explained that the free cash flow guidance reflects several factors, including a $28 million lease buyout related to EVERFI, a $5 million investment in a new India location, and increased interest expenses due to stock repurchases. These factors, along with working capital changes and divestiture-related costs, contribute to the lower guidance.
Q: How does Blackbaud plan to achieve its Rule of 45 target by 2030, particularly regarding cost savings and bottom-line improvements? A: Michael Gianoni highlighted a mix of strategies, including closing remaining data centers, achieving more scale, and leveraging labor arbitrage with the India initiative. The company also focuses on AI-driven productivity improvements and expects mid-single-digit revenue growth to contribute to achieving the Rule of 45 target.
Q: How is Blackbaud leveraging its data for AI development, and what impact does this have on growth opportunities? A: Michael Gianoni discussed Blackbaud's extensive use of AI and machine learning, with embedded AI in products like Raiser's Edge NXT. The company is developing advanced AI capabilities, such as Blackbaud co-pilot, to enhance customer interaction with data. These innovations are expected to drive revenue and may lead to new monetization opportunities in the future.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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