Analyst Note| Dan Romanoff, CPA |
Wide-moat Blackbaud reported solid overall second-quarter results that were mildly mixed compared with our expectations. Given that the firm provides only annual guidance, we think the quarter was generally in line with investor expectations, with revenue slightly light and profitability better. Management reined in its full-year outlook for both revenues and operating margins, mostly to account for worsening currency but also for a continued decline in one-time services and a modest slowdown in EVERFI bookings. While we think Blackbaud is obviously progressing toward its "rule of 40" goals, based on results and the outlook, we are modestly lowering our expectations for 2022 and 2023, which drives our fair value estimate to $70 per share, from $74. We still see shares as attractive for long-term investors but we view shares as more sensitive to a recession than most of our enterprise software stocks.