Company Reports

We are discontinuing analyst coverage of Blackbaud.

Blackbaud reported second-quarter results, including revenue growth of 3.3% to $290.6 million and non-GAAP operating margin of 32.6%. The firm also reiterated full-year guidance while indicating key measures would likely come in above previously issued midpoints.

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, which is consistent with management’s long-term outlook.

Blackbaud's first-quarter results included revenue growth of 4.2% to $281.1 million and non-GAAP operating margin of 29.6%. The firm does not provide quarterly guidance, so results can diverge from expectations. Management reiterated its full-year guidance.

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, which is consistent with management’s long-term outlook.

The pace of change in the software industry has accelerated in recent months, leading to heightened uncertainty and prompting us to reassess our moat ratings.

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, which is consistent with management’s long-term outlook.

Blackbaud reported fourth-quarter results, including adjusted revenue growth of 4.3% to $295.3 million and non-GAAP operating margin of 30.0%. The firm does not provide quarterly guidance, so results can diverge from expectations. The newly issued 2026 guidance was slightly mixed versus our model.

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.

Blackbaud reported third-quarter results, including adjusted revenue growth of 5.2% to $281.1 million and non-GAAP operating margin of 29.9%. The firm does not provide quarterly guidance, so results can diverge from expectations. Annual guidance was maintained.

Blackbaud reported second-quarter results that included adjusted revenue growth of 6.8% to $281.4 million and non-GAAP operating margin of 33.5%. The firm does not provide quarterly guidance, so results can diverge from expectations. Management raised its full-year guidance slightly.

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. These factors combined with the evolving software landscape cause us to scrutinize the firm's long-term trajectory.

Blackbaud reported good first-quarter results, which included adjusted revenue growth of 5.8% to $270.7 million and non-GAAP operating margin of 28.6%. The firm does not provide quarterly guidance, so results can diverge from expectations.

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. These factors combined with the evolving software landscape cause us to scrutinize the firm's long-term trajectory.

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.

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. These factors combined with the evolving software landscape cause us to scrutinize the firm's long-term trajectory.

Narrow-moat Blackbaud reported results that were in line with our revenue expectations and slightly better than we anticipated from a profitability standpoint. We were below FactSet consensus estimates from both perspectives given our belief that EVERFI issues would continue to worsen and because the company provides only annual guidance. Ultimately, that belief played out during the third quarter, with the company disclosing that as it relates to EVERFI, it had taken cost-cutting actions and retained Goldman Sachs to explore alternatives. Because of persistent issues, Blackbaud lowered its annual guidance for both revenue and non-GAAP EPS, while raising its adjusted EBITDA margin. Because we were already anticipating more prolonged EVERFI weakness, we are maintaining our fair value estimate of $77 per share. We see shares as fairly valued after the large selloff on Oct. 30.

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. These factors combined with the evolving software landscape cause us to scrutinize the firm's long-term trajectory.

Narrow-moat Blackbaud reported results that were generally in line with our expectations, if not slightly shy on the revenue side and slightly better on the profitability side. The firm also reiterated its full-year outlook so changes to our model are trivial. Therefore, we are maintaining our fair value estimate of $77 per share and see the stock as fairly valued. We are pleased to see Blackbaud’s cloud-first commitment paying off, supported by continued growth of recurring revenue, with a push to move standard contract terms to three years with annual pricing escalators. Pricing and renewal rates continue to drive Blackbaud’s goal of mid- to high-single-digit organic growth annually and surpassing its “Rule of 40” goal. We believe Blackbaud remains a leader in the social good space and is well positioned to propel the space forward with its broad portfolio.

On May 16, Blackbaud rejected a buyout offer from Clearlake Capital (received on April 14) for $80 per share, representing a 4% premium to the closing price at that time. In a statement, narrow-moat Blackbaud said that its board unanimously agreed that the offer significantly undervalues the company. Prior to the most recent offer, Clearlake made a buyout offer early in 2023 at $71 per share, which represented a 23% premium to the closing price at the time. Clearlake Capital currently holds an 18% stake in Blackbaud. We did not change our $77 per share fair value estimate after the $80 offer, and we are once again maintaining our $77 valuation.