Analyst Note| Dan Romanoff, CPA |
Wide-moat Blackbaud hosted a virtual annual investor day on March 25, providing an in-depth look at its key growth areas and reemphasizing its leading position as the world emerges from the pandemic. Blackbaud should benefit from several pandemic-induced tailwinds driving digitalization across its verticals, chief among them being a move to online giving and payment processing. In addition to reaping the benefits of an increasingly digitalized industry, Blackbaud emphasized the progress of several initiatives, namely the move to the cloud and the leading technology therein, and an expanding addressable market opportunity, and a largely untapped international opportunity. Management noted based on year-to-date sales, the company is tracking to the higher end of previously issued guidance, which is a welcome sign. Overall, we see the investor day as in line with our view that Blackbaud is a leader in the non-profit space and see the company’s push to a rule of 40 framework over time as generally consistent with our DCF model. We are maintaining our $81 fair value estimate and see shares as attractive.