Blackbaud Earnings: Solid Results but Messy Guidance Is Ultimately Shy of Expectations

Narrow-moat Blackbaud reported results that were in line with both our revenue and profitability expectations. The 2025 outlook was shy of our revenue estimate, but better than our non-GAAP EPS estimate, and falls short of broader Street expectations, hence the selloff. 2025 guidance was complicated by several unusual items, including remnants from the Everfi disposition, which occurred on Dec. 31, 2024. Adjustments to our model, therefore, are actually relatively minor, and we maintain our fair value estimate of $77 per share. We thought shares were slightly overvalued heading into the quarter, and now we see them as slightly undervalued. Relatedly, given that the company took a $390 million impairment charge on the disposition of a company it paid $750 million for just three years ago, we have lowered our Capital Allocation Rating to Poor.