Narrow Moat Remains as Blackbaud Evolves Beyond Cloud Migration

We believe Blackbaud is well entrenched in the social good space, providing the broadest portfolio of nonprofit software solutions. We expect the company to continue to benefit from long-standing customers needing a technology-first approach and believe its cloud migration will progressively enable margin expansion. However, we see Blackbaud as more susceptible to cyclical shocks compared with software peers, given its exclusive service to the social good niche. We view this market as mature, with a more muted pace of growth. We view this market as mature, with a more muted pace of growth, which is consistent with management’s long-term outlook.