Q1 2025 Blackbaud Inc Earnings Call
Greetings and welcome to the Blackboard first quarter 'twenty 25 earnings conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this conference is.
Speaker Change: <unk> recorded it is now my pleasure to introduce your host Tom Barth head of Investor Relations. Thank you Sir you may begin.
Speaker Change: Morning, everyone. Thank you for joining us on Blackboard first quarter 2025 earnings call joining.
Speaker Change: Joining me on the call today will be Mike Genuity, Blackboard, CEO, President and Vice Chairman.
Speaker Change: When he bore blackboard executive Vice President and CFO and chat Anderson Black Budge, Chief Accounting Officer, Mike John and Chad will make prepared comments and then we will open up the line for your questions.
Speaker Change: Please note that our comments today contain forward looking statements subject to risks and uncertainties that could cause actual results to differ materially from those projected please refer to our most recent Form 10-K and other SEC filings for more information on those risks the discussion today will focus on non-GAAP results.
Speaker Change: Please refer to our press release and the Investor materials posted on our website for the full details on our financial performance, including GAAP results as well as full year guidance.
Speaker Change: We believe that a combination of both GAAP and non-GAAP measures are more representative of how we internally measure our business.
Speaker Change: Unless otherwise specified we will refer to non-GAAP financial measures on this call.
Speaker Change: Please note that non-GAAP financial measures should not be considered in isolation from or as a substitute GAAP measures and with that I'll turn the call over to you Mike.
Mike Genuity: Thank you Tom and good morning, everyone.
Mike Genuity: Last quarter I spent some time discussing the strong financial progress Blackboard has made over the past five years across both our top and bottom lines.
We continue to extend our position as the market leader and provide the most comprehensive suite of purpose built and mission critical software and services to the social impact sector.
Mike Genuity: Our solutions allow customers to spend more time, focusing on what matters to them their vital social impact work at hospitals private schools universities nonprofit companies and through individual acts of generosity.
Mike Genuity: We remain the premier software partner across the social impact space.
Mike Genuity: Our solid first quarter and rule of 40 attainment give me confidence that blackboard is well positioned on our journey to the rule of 45 by 2030.
Speaker Change: In the first quarter Blackrock generated revenue of $271 million, which is five 8% organic growth.
Speaker Change: non-GAAP adjusted EBITDA margin of 34, 3%.
Speaker Change: non-GAAP diluted earnings per share of 96 cents in the rule of 40 score of 41%.
Speaker Change: These results are a testament to the resilience of our business in challenging times.
Speaker Change: Social impact market, it's been a consistent grower for many decades through recessions business, upturns, and downturns and even through the COVID-19 global pandemic.
Speaker Change: I know there are concerns about federal grant funding and how it impacts our customers, but much like in Covid. This uncertainty only makes our software more critical to our customers' operations, enabling them to improve fundraising outcomes and to undertake our sharpen their own.
Speaker Change: Cost management initiatives to be clear our solutions are not in the funds flow from federal agencies, but are you.
Speaker Change: Used for fund raising from individual donors, which is even more critical now we are proud to play a vital role in supporting our customers' operations as they navigate change.
Speaker Change: <unk> has also undertaken a number of operational initiatives that set us up to perform well even in a challenging market.
Speaker Change: In 'twenty to 'twenty, three we began transitioning our contractual revenue contracts from primarily one year shipped primarily three year renewal terms. This modernized approach to contract terms provides increased visibility and consistency for nearly two thirds of our revenue base and provides.
Speaker Change: Better predictability for our customers.
Speaker Change: Over the past several years, we have transitioned the majority of our products and customers to third party cloud, while shutting down many of our private data colas with only two of our own data centers remaining.
Speaker Change: We continue to innovate through the use of AI to not only empower our customers, but also improve our own internal productivity and lastly, we have right sized our operations by further rationalizing office leases and renegotiating significant vendor contracts.
Speaker Change: And despite our strong focus on reducing expenses, we continue to invest aggressively in innovation and our extensive developer network to help our customers raise more money, while enhancing and streamline their operations, our innovation and end to end workflows continue to be a competitive differentiator and draw.
Speaker Change: <unk> sales.
Speaker Change: We are supporting this innovation through enhancements and sales and marketing programs and we continue to identify experiment and scale a range of successful solutions across marketing customer success and engineering to begin active innovator to apply AI.
Speaker Change: We saw the positive market reaction to our focus here earlier, this month and our corporate social impact summit in Dallas.
Speaker Change: The summit brought together hundreds of executives from leading companies across the U S to share insights and drive meaningful change.
Speaker Change: Attendees received an exclusive preview of product innovations, including how we are integrating our your cause portfolio with our payments and fundraising solutions expanding the use of AI to transform the grantmaking process, helping companies unleashed generosity globally and revolutionizing corporate.
Speaker Change: Social impact.
Speaker Change: Reporting through our partnership with true impact.
Speaker Change: Your cost has made significant strides in innovation, particularly with our announcement of expedited getting.
Speaker Change: Expedited, giving will transform the way employee donations and eligible match funding our process, ensuring that nonprofits received corporate donations directly and faster than ever before which is especially critical during disaster response efforts. This initiative will soon begin testing with us.
Speaker Change: That group of pilot corporations, and nonprofits expediting employee donations to charities that are blackboard integrated payments customers. The key value proposition here for customers is to reduce the time lag of an employee donation to a nonprofit so just a day or two.
Speaker Change: In addition to investing in our innovation, we plan to use our cash flow to repurchase Blackhawk shares as you recall in 2024, the company bought back 10% of our common stock outstanding.
Speaker Change: When you include the net share settlement unemployed stock comp the figure rises to 11%.
Speaker Change: In the first quarter of 2025, we repurchased approximately 4% well within our plans are buying between 3% to 5% of our outstanding shares in 2025.
Speaker Change: Before I close.
Speaker Change: I also want to take this opportunity to say a special thank you to Tony Boor <unk>.
Speaker Change: Tony is transitioning his CFO duties to chat Andersen later today.
Speaker Change: Tony it's been a great CFO and I'm very grateful to him for his many contributions to black box growth and success.
Speaker Change: Over the last 14 years, Tony has developed an outstanding Finance organization and he has instilled a strong operational and financial discipline across the company.
Speaker Change: I look forward to continuing to work with Tony in his new role as EVP of corporate development and strategy to help ensure a smooth transition and continue to drive our success and operational excellence.
Speaker Change: One of his key focus areas will be to help lead our charge to be a rule of 45 company.
Speaker Change: I'm delighted about chats promotion to CFO, Chad is a highly accomplished global finance executive and 12 year veteran of blackboard.
Speaker Change: Deep knowledge of our business, our customers and the industry.
Speaker Change: <unk> has successfully led many key and impactful projects to mature modernize and improve the efficiency and accuracy of the company's financial systems processes and organization.
Speaker Change: Having worked closely with Chad for over a decade I'm looking forward to benefiting from his experience and knowledge in the role of CFO as we work to deliver profitable growth for our shareholders in 2025 and beyond.
Speaker Change: There will be a formal press release and 8-K at the end of the day today.
Speaker Change: Let me conclude with like Blackrock continues to be a sound investment choice that we believe should create substantial shareholder value and our performance in Q1 reinforces that belief regarding organic revenue.
Speaker Change: You can expect mid single digit plus organic revenue growth driven by visible in full reoccurring revenue streams targeting both new logos and expansion of our installed base empowered by innovation.
Speaker Change: You can continue to expect a strong focus on cost and employee productivity to improve EBITA. Additionally, our strong free cash flow will drive a purposeful capital allocation strategy in 2025 and beyond.
Speaker Change: The plan to buyback of up to 5% of common stock outstanding 2025, we look forward to our continued journey and offering our shareholders increasing value in the coming years as we make progress against our rule of 45 ambition by 2030 with that let me turn the call over to Tony.
Tony Boor: Thanks for the kind words, Mike and good morning, everyone. I believe Blackrock is positioned for long term success, delivering consistent growth and industry leading profitability.
Tony Boor: I am very pleased to be turning the reins over to Chad Anderson, whom I have worked with for more than 20 years. Most recently as my Chief Accounting Officer, and I look forward to helping Chad Mike and the team in the near term focused on the corporate development strategy I am confident that this transition will be seamless with that let me dive into the details of our Q1 financial results.
<unk>.
Speaker Change: As Mike outlined blackboard performed well in the first quarter kicking off a good start to the year, we remain committed to providing investors an attractive financial model balanced between growth in revenues earnings and cash flows along with a prudent and purposeful capital allocation strategy.
Speaker Change: Mike walked through the high level Q1 results, which tell a strong story of improving topline growth and dramatically improve profitability, but to reiterate Q1 organic revenues were up five 8% to $271 million non.
Speaker Change: non-GAAP adjusted EBITDA of $93 million.
Speaker Change: It was up approximately $4 million with a 250 basis point improvement to margin as you know we previously only reported Standalone revenue forever because it was not a separate reportable segment for us, but we estimate that every <unk> contribution to our 2024 EBITDA was approximately 10 to 15 million.
Speaker Change: Yeah.
Speaker Change: The mid single digit organic revenue growth and improved EBITDA margins speaks to the power of our five point operating plan, which positively impacted earnings per share non-GAAP EPS increased to 96 cents compared to 93 last year adjusted.
Speaker Change: Adjusted free cash flow was negative $11 million in the quarter. As a reminder, Q1 tends to be our lowest quarter for free cash flow generation in the first quarter of 2025 included the one time $28 million cash lease payment associated with the Washington D. C office lease that we discussed on last quarter's call increased inter.
Speaker Change: <unk> expense related to our share repurchase program and fluctuations in the timing of vendor payments also negatively impacted free cash flow in the quarter.
Speaker Change: However, our expected free cash flow the year gives us confidence to continue investment in a number of critical areas like product innovation and stock repurchases in Q1, we bought back approximately 4% of our outstanding shares and continue to demonstrate a strong commitment to our belief in the value of blackboard.
Speaker Change: With a strong first quarter and start to the year before I move onto guidance for the remainder of 2025. There are several housekeeping items I want to highlight that may influence our numbers and helps you to set your models for both the year and quarters appropriately.
Speaker Change: Thinking about revenue seasonality recall that the fourth quarter is typically our highest revenue quarter, while the first quarter is our lowest due to timing of charitable giving and events throughout the year Q1 tends to be our lowest quarter from a profitability standpoint due to the timing of expenses related to employee benefits and employee stock Award vesting, our annual merit increases for.
Speaker Change: Employee compensation go into effect on July 1st every year, So Q3 tends to have higher compensation related costs compared to Q2.
Speaker Change: Moving now to guidance for the remainder of 2025, our guidance for the year remains unchanged and assumes no material change is good or bad in the current macro economic economic landscape related to the markets. We serve so for the year. We are projecting revenue in the range of $1.115 billion to $1 billion 120.
Speaker Change: $5 million.
Speaker Change: Representing organic growth of 4.2 to five 1% or four five to five 4% on a constant currency basis.
Speaker Change: Shifting to profitability, we will continue to focus on margin expansion opportunities while at the same time, making investments in the business in areas of innovation artificial intelligence product Roadmaps and cyber security.
Speaker Change: Therefore, we anticipate EBITDA margins of approximately 34, 9% to 35, 9%. This does take into account what I mentioned earlier that <unk> contribution to our 2024, EBITA was approximately $10 million to $15 million and with the overall revenue and spend configuration I just outlined we expect 2025.
Speaker Change: non-GAAP EPS in the range of $4 16 to $4 35 per share or up to two 7% year over year.
Speaker Change: The combination of consistent organic revenue growth and improved margin is expected to result in a rule of 40 at constant currency of 44% at the midpoint of guidance for the full year more than 150 basis point improvement year over year.
Speaker Change: We continue to have a sharp focus on driving adjusted free cash flow and returning capital to our shareholders for the year, we're guiding to adjusted free cash flow of 185 million to $195 million. This guidance range is inclusive of several one time investments that will provide long term benefits to the company and shareholders include.
Speaker Change: The buyout of the Washington D C office lease, which was $28 million cash expenditure in Q1 that would've been $42 million. If we kept the lease for full term and will provide a benefit to adjusted EBITDA moving forward.
Speaker Change: Also a new office location in India that will provide access to high quality Tech talent. Additionally, we expect to incur approximately $11 million of incremental interest expense year over year comprised of roughly $30 million in interest for our 2024 and planned 2025 stock repurchases offset by the pay down of debt using discretionary.
Speaker Change: Cash and finally, we expect approximately $15 million decline year over year due to other factors, including timing of certain working capital items and divestiture related costs. You can find more details on slide 24 of our Investor day.
Speaker Change: Looking to the future we believe adjusted free cash flow will continue to grow and anticipate at a minimum repurchasing shares to offset dilution from share based compensation beyond that the company has tremendous optionality to dynamically allocate capital to its highest use based upon market conditions, including.
Speaker Change: Stock repurchases synergistic M&A or repayment of debt the performance of our stock the interest rate environment and the availability of acquisitions will help inform our capital allocation decisions going forward.
Speaker Change: We have a lot to be proud of and a lot more to look forward to through 2025 and beyond.
Speaker Change: Golar, becoming a rule of 45 company by 2030 as such we remain focused on providing enhanced value to our customers and to our shareholders.
Speaker Change: Before we jump to Q&A, let me introduce Chad and again congratulate them on a well deserved promotion Jeff.
Speaker Change: Thanks, Tony and you Mike for the kind words, it's been a pleasure working closely with you both over the past decade, and I look forward to following your example of professionalism and business leadership in the years ahead.
Speaker Change: Operator, let's open up the line for questions.
Speaker Change: Yeah.
Speaker Change: Thank you, ladies and gentlemen, if you would like to ask a question. Please signal by pressing star one on your telephone keypad. If you are using a speakerphone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment again as a reminder, please press star one to ask a question. Please.
Speaker Change:
Speaker Change: Our first question comes from Brian Peterson with Raymond James. Please proceed with your question.
Brian Peterson: Hey, everyone. Thanks for taking my question and congrats to chat and Tony it's truly been a pleasure I hope he won't be a stranger in her new role.
Speaker Change: Mike just wanted to follow up on some of your prepared remarks on the dose impact very much understand how you can help customers through that in the mission criticality of your software, but also curious if you've seen any changes on the gross retention side and the bookings environment in light of this understanding that a lot of this is outside of your control.
Yeah, Hey, Brian Good question.
Speaker Change: First of all where our solutions are not in the fund flow of federal grants I think that's important.
Speaker Change:
Speaker Change: Some of our customers are getting impacted by this.
Speaker Change: Frankly, it makes our donation platforms more important.
Speaker Change: Our platforms are pointed toward individual donors and alumni and things. So we become more important from a revenue source standpoint for customers.
Speaker Change: We've seen no impact on sales bookings no impact on building sales pipeline no impact on existing customers or retention.
The biggest.
Speaker Change: Test of the health of our end markets was COVID-19.
Speaker Change: Because we had customers that closed their doors.
Speaker Change: Forming art centers in K, 12 schools, and others and we lost no customers and we really didn't have any go out of business. Even then and that was the biggest test of.
The health of the end market. So yes, it might cause some difficulty for some of our larger customers.
But we don't see an impact on our business anywhere.
Brian Peterson: Got it and Tony maybe one follow up for you just as we're thinking about the transactional business how did that perform relative to your expectations in the first quarter and as we're thinking about that mid single digit organic growth outlook.
Speaker Change: How do we think about transactional impacting that.
Brian Peterson: Yes.
Brian Peterson: <unk> transactions was the biggest driver of over performance in the quarter, we did well across the board. So as Mike said retention held up fine bookings were.
Brian Peterson: Actually pretty darn good for the quarter as well and have been through April and as you know we had a good Q4, so from a recurring revenue.
Brian Peterson: We're well on track for the year at this point transactions. Our guide included a little bit of incremental transaction revenue related to L. A wildfires, but that was in the original guide and then as we've stated when we're providing our longer term outlook of that mid single digit plus plus typically is going to really.
So that transaction I think we came in at just about 9% or a little over 9% growth in Q1 transaction was about $2 million of incremental revenue for the quarter, which pushed us up to that kind of five eight or five 9% on a constant currency.
Brian Peterson: We're really hard as you know to predict the volatility in some of the transactional revenue we've not built in those viral giving events. This year into the guide and so if we do see more of those like we have with the wildfires would have some incremental upside on the year.
Doug: Thanks, Doug.
Speaker Change: Our next question comes from Rob Oliver with Baird. Please proceed with your question.
Rob Oliver: Great. Thank you good morning, guys I appreciate it.
Speaker Change: Tony I'll Echo what Brian Chad.
Speaker Change: I wish you the best of luck and it's been a pleasure working with you. My question is for you.
Speaker Change: Just I guess another way to attack the macro you know clearly you guys don't have direct exposure to federal and I know you said you haven't seen any change in the behavior of your customers, but it does seem like there was a painful residual effect hackett happening with some of the customers in your market who are exposed to.
Speaker Change: Grants or money flows that are coming from federal agencies, so in light of that.
Speaker Change: You guys maintained guide obviously off of a good Q1, driven by transactions, but just wanted to get a sense for you as you thought about the guidance for this year.
Speaker Change: What sort of macro what's contemplated in that guidance.
Speaker Change: And then secondly, just around the mid single digit plus comment it does seem like a little bit of an uptick from the optionality.
Speaker Change: Comment you guys had previously made about you know the option kind of upset from mid single digits and once they understand.
Speaker Change: If I'm reading that right and what that increased confidence might be and what the timeframe is for that.
Speaker Change: Hey, Rob it's Mike I'll start here and then Tony can kick in.
Speaker Change: Most of our customers don't get federal grants. So you know many of our larger nonprofits do but do you think about the vertical markets. We're in K 12 is a big space for US performing arts centers is a big space for us.
Speaker Change: Your car.
Speaker Change: As in the corporations marketplace.
Speaker Change: We have a lot of faith based customers churches synagogues, we have the justgiving platform in the U K you walk across the company's vertical markets, we serve and you walk across the basically 17 platforms that carry all of our revenue.
Speaker Change: There's very very little impact on the end customers in the main globally that get federal grants.
Speaker Change: So the noise is a lot in the world, but related to blackboard.
Speaker Change: It's not.
Speaker Change: A big part of the customers funding per say, we have a lot of customers.
Speaker Change: That are regional food banks and other.
Speaker Change: Other types of customers, so we're pretty spread out in all the vertical markets.
Speaker Change: <unk> threes or education institutions are in and it's just not a lot of impact we havent seen it like I said in bookings retention or the build of our sales pipeline.
Speaker Change: For this quarter and the rest of the year. So we don't see it on us as a big impact and for some of our customers that are not getting funding that we're working with them to integrate.
Speaker Change: Integrate our AI capabilities in predictive analytics that drive more revenue from individual donors, and it's becoming more of a stickier and an important product for them to drive their revenue.
Speaker Change: So it's not a big impact and we don't see it when we set the original guidance.
Speaker Change: For the year, we use wordings around no material changes in the macro I think when we said that back a couple of months ago.
Speaker Change: And we're sticking with that because we don't we don't really see it.
Related to growth.
Speaker Change: Yeah, we gave guidance at mid single digits, plus we just saw from plus in Q1.
Speaker Change: We're not changing the guide for the year right now.
Speaker Change: Two months away from closing out Q2, so we'll have a view of that obviously when we report on Q2 and then in the summertime, but we've had a really great start to the year, we don't see the macro having a negative impact on us. So we're feeling I'm feeling very optimistic for the.
Speaker Change: As we go forward for the rest of this year.
Great very helpful. Thank you guys.
Rob Oliver: Thanks, Rob.
Speaker Change: Our next question comes from Parker Lane with Stifel. Please proceed with your question.
Matthew Kicker: Hi, This is Matthew kicker for Parker.
Speaker Change: You for taking my questions and congratulations to both Tony and Chad bolt on the long tenure and promotion.
Speaker Change: Last quarter, we talked a lot of you know we talked a lot about the net new emphasis for 2025 I'm just curious how what you saw from that sub segment and <unk> and what the net new pipeline looks like for the rest of the year.
Speaker Change: Yeah, Yeah, we talked about a big focus on new logos.
Speaker Change: And we've made that pivot.
Speaker Change: Successfully and that pivot is behind us.
Speaker Change: It was just a small part of our bookings were conversions from legacy product to cloud product, that's largely behind US now and the focus on new bookings has materialized really quite well new bookings are up substantially.
Speaker Change: In the first quarter this year the pipeline looks good.
Speaker Change: So we're excited about new bookings across the vertical markets that we serve.
Speaker Change: Yeah.
Speaker Change: Okay, that's great to hear and then.
Speaker Change: My second question was on the global market. Some part of the business just giving us over in the U can.
Speaker Change: Some exposure in the international markets I guess, what are you seeing in international markets versus the opportunity here domestically.
Speaker Change: Yeah, we're doing pretty well in our Asia Pac area, good sales bookings good customer retention.
Speaker Change: And across Europe, as well, just giving is doing really well and that continues to perform well this great brand recognition.
Speaker Change: In the U K and in many other parts of Europe on just getting.
Speaker Change: It's used in a lot of major events like London Marathon, another large events and it's doing really well.
Speaker Change: Al It's all donor driven.
Speaker Change: Personal campaign type stuff for fund raising for nonprofits.
Speaker Change: And it continues to perform really well for us.
Speaker Change: We also see a lot of upside.
Speaker Change: In the future and are your cost platform for corporations I mentioned in my prepared remarks, we just had a small customer event in Dallas, we had over 100 customers a lot of them from Fortune 500 companies and there's a big interest in Europe and employee engagement.
Speaker Change: And year causes a leading platform in the world in that space and so we have some some high hopes around the future for that and continuing to drive that platform as well. So you know a new new product sales new logos.
Speaker Change: <unk> going really well.
Speaker Change: Yeah.
Speaker Change: Terrific. Thank you.
Speaker Change: Okay.
Speaker Change: Our next question comes from Koji Ikeda with Bank of America. Please proceed with your question.
Koji Ikeda: Yeah. Good morning, Hey, guys. Thanks, so much for taking the questions and I Echo the statements on congrats Chad and thank you Tony.
Speaker Change: A pleasure.
Speaker Change: Maybe taking a big step back here and asking a big picture question on your end market.
Speaker Change: So I'm hearing a lot of competence in the prepared remarks that ended the answers to the Q&A about your confidence in the end market demand environment. So maybe thats. The question here what is it about your end market that is giving you the competency and the resiliency of the this year.
Speaker Change: Yeah sure. So the end markets are pretty healthy like I said already in the call.
Speaker Change: And the amount of innovation that we've come out with is really resonating with customers and new prospects back in.
Speaker Change: The fall at our annual conference call Datacom in Seattle, We announced what we called six waves of innovation and we've been delivering on that there's a lot of AI capabilities in our products now.
Speaker Change: There's much better integration across the products, so our ability to cross sell them.
Speaker Change: And the innovation is driving.
Speaker Change: Some really good results in new logos and cross selling as well so we've got a healthy market and all the verticals that we serve to my earlier comments, our engineering and product teams are doing a great job in driving innovation with some new solutions and just some more advanced.
Speaker Change: <unk> better UI user experience better integration embedded predictive analytics embedded AI.
Speaker Change: It is resonating with customers.
Speaker Change: Got it thank you and maybe a follow up here, you know kind of digging a little bit more specifically on the contract renewals for this year I know you guys got about 25% of the mix coming up for renewal and so how.
Speaker Change: How are those conversations going specifically and maybe remind us is there any sort of seasonality in the contract renewal cycle that here that we should be aware of is it more front end weighted or is it more back half weighted this year. Thank you.
Speaker Change: Yes sure.
It's going well our customer retention remains really high.
Speaker Change: That hasn't changed even since we started this program.
Speaker Change: The customer retention numbers are high it's going well customers. This is just the normal course of business now it's not new anymore. Because it's been a couple of years, we notified customers of $5. Six months ahead of time. So there is plenty of time for any discussions if needed many of our smaller and mid tier.
Speaker Change: Customers are on auto renewals, we've standardized on three year contracts, some larger customers prefer longer term for five year.
Speaker Change: Contracts.
Speaker Change: Yeah, we're not the only software supplier our customers buy software from other vendors, including us at the same time and so this is normal for them to see this across multiple vendors not just black box. So.
Speaker Change: This tradition is really just normal course of business.
Speaker Change: Every day going well retentions.
Speaker Change: On the 90 293 percentile.
Speaker Change: It's just normal course of business is not new anymore.
Speaker Change: And I really think that given all the innovation, we've kind of you know.
Speaker Change: Really proven to be a long term partner for our customers and they see what's coming.
Speaker Change: Down the road and we're informing them more on what's coming in the future from an innovation standpoint, we have these these customer updates these webinars, where thousands and thousands of customers participate and we've talked to them about the roadmaps and what's been delivered and what's coming in across our portfolio, we have new new innovation.
Speaker Change: The new features that just show up every day every week every month. So it is continuous innovation. We don't do large you know one or two drops a year, it's continuous across the portfolio.
Koji Ikeda: Customers appreciate that and Koji on the scene.
Speaker Change: Analogy, that's still going to be higher at the end of Q2 first part of Q3 is when we have the bigger surge in the renewals.
Koji Ikeda: Really probably shouldn't change much.
Koji Ikeda: Even with all the new contracts that we're going through.
Speaker Change: Got it. Thank you so much and maybe if I could squeeze in one more here.
Speaker Change: I think you guys were already repurchased 3% of your common stock target next of the 5% already for 2025.
Speaker Change: You guys hit that target early the 5% would there be any thought process of potentially increasing the share buyback program. Thank you guys. So much.
Speaker Change: Absolutely. Thanks for that question, we hit about four 2% is where we are through the end of Q1, we had net share settles for all the normal vesting that we'd have in the first quarter and then we bought back one.
Speaker Change: $100 million worth of stock puts us at about 15%. We've now purchased back just in the last year.
Speaker Change: So we've done a great job I think on that from a capital allocation perspective that is up a little bit as you saw in interest expenses up a bit we will as we do every quarter and every year. We will continue to look at that capital allocation strategy will evaluate whats going on in the market what share price well look at our debt levels and interest rate.
Speaker Change: Et cetera, So we will continue to reevaluate that but we're well on our way at about little over 4% towards our 3% to 5% for the full year, but we'll continue to evaluate that and let you guys know if we've decided to change our position on that front.
Speaker Change: Thank you so much.
Speaker Change: Youre welcome.
Speaker Change: Our next question comes from Kirk Mcdonald with Evercore ISI. Please proceed with your question.
Kirk Mcdonald: Yes, thanks, very much and good morning, and congrats to Newtonian Chatham in the new.
Speaker Change: Rolls are Mike I was wondering can you just remind us a little bit about the thought process on the monetization of some of your AI technologies. Just how are you thinking about that rolling through either contracts with your existing or how you think about monetizing some of your net new clients.
Speaker Change: Okay, great. Thanks for the question like I said, we've done a lot in the last 18 months with embedded AI and predictive analytics.
Speaker Change: In our solutions, including generative AI.
Speaker Change: Which are which is available we're launching a technical preview of blackboard co pilot.
Speaker Change: Which is going to come out some of our products in the next several months.
Speaker Change: That's going to be a really interesting add to our solutions, our customers will be able to interact.
Speaker Change: With our with our products and their data.
Speaker Change: I'm asking natural language questions.
Speaker Change: Which is really impactful and uniquely we have all this data in our systems given we've been at this a long time, that's differentiated position for us.
Speaker Change: AI requires to have a lot of data and we happen to so that Blackberry co pilot will be we'll be rolling out you know in the next couple of months and we're doing some tech previews are also on the for further agenda, but not too long ago, Gentex, AI and <unk> AI solutions embedded.
Speaker Change: So far all of these capabilities, we have not separately charged for any of these separate capabilities. We felt we had to drive a lot of innovation, including some of this AI.
Speaker Change: Given the three year contract renewals, we started with some price increases.
To make sure our customers are getting a lot of value.
Speaker Change: From us and they are adjusted AI is a little different we are looking at.
Speaker Change: Monetization models for <unk> in the future were looking at what other firms are doing and what we think is appropriate so that'll be coming down the road, but to date again all of the embedded predictive analytics and AI.
Speaker Change: Just included with.
Speaker Change: With the contractual pricing.
Speaker Change: Okay. That's super helpful and Tony I know you guys think about the world correctly and in constant currency terms, but obviously the dollars yeah pull back a lot here, we're just thinking about sort of our models on a reported basis I'm guessing if the dollar stays where it is today that would be a bit of a tailwind for you all if we look out.
Speaker Change: For the remainder of the year, just any rough thoughts on that I know, it's a bit of a guessing game.
Speaker Change: Yeah, Curt Youre right on the money the currency has been moving a ton it it's a bit more favorable right now when I look at that forward curve versus where we were when we put guidance together.
Speaker Change: So it would be a bit of a tailwind for us at this point if it holds with expectations.
Speaker Change: Okay. Thanks, very much I appreciate it guys.
Speaker Change: Thanks, Robert Yeah. Thank you Kirk and thank you everyone for joining US today, we will be attending a number of investor events in May and June to include several conferences, which are listed on our events page on our Investor Relations site. We hope to see you then and also to speaking with you very soon thank you and have a nice day.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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