Blackbaud Q4 2025 Blackbaud Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Blackbaud Inc Earnings Call
Operator: Good day, and welcome to the Blackbaud Inc. Fourth Quarter and Full Year 2025 Earnings Call. Today's conference is being recorded. I'll now turn the conference over to Tom Barth, Head of Investor Relations. Please go ahead, sir.
Tom Barth: ... Everyone. Thank you for joining us on Blackbaud's Q4 and full year 2025 earnings call. Joining me on the call today are Mike Gianoni, Blackbaud's CEO, President, and Vice Chairman, and Chad Anderson, Blackbaud's Executive Vice President and Chief Financial Officer. Mike and Chad will make our customary prepared remarks with additional commentary this morning on our longer-term aspirations, and then we will open up the phone line for your questions. 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. Please refer to our press release and the investor materials posted to our website for full details on our financial performance.
Tom Barth: ... Everyone. Thank you for joining us on Blackbaud's Q4 and full year 2025 earnings call. Joining me on the call today are Mike Gianoni, Blackbaud's CEO, President, and Vice Chairman, and Chad Anderson, Blackbaud's Executive Vice President and Chief Financial Officer. Mike and Chad will make our customary prepared remarks with additional commentary this morning on our longer-term aspirations, and then we will open up the phone line for your questions.
Tom Barth: 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. Please refer to our press release and the investor materials posted to our website for full details on our financial performance.
Speaker #1: to risk and uncertainties that could 2025 Earnings questions. Please note that our comments today Please refer to our most BLACKBAUD's 4th Quarter and Full Year phone line for your recent Form 10-K and other those risks.
Tom Barth: These include GAAP results as well as full year guidance and long-term aspirational goals. We believe that a combination of both GAAP and non-GAAP measures are more representative of how we internally measure our business. Unless otherwise specified, we will refer only to non-GAAP financial measures on this call. Please note that non-GAAP financial measures should not be considered in isolation from or as a substitute for GAAP measures. We have also provided a slide presentation that contains supplemental data for our fourth quarter and fiscal year, and provides additional highlights and financial metrics regarding the aspirational goals we discussed today. The earnings release, supplemental tables, and presentation are available on the investor relations section of our website on blackbaud.com. With that, let me turn the call over to you, Mike.
Tom Barth: These include GAAP results as well as full year guidance and long-term aspirational goals. We believe that a combination of both GAAP and non-GAAP measures are more representative of how we internally measure our business. Unless otherwise specified, we will refer only to non-GAAP financial measures on this call. Please note that non-GAAP financial measures should not be considered in isolation from or as a substitute for GAAP measures. We have also provided a slide presentation that contains supplemental data for our fourth quarter and fiscal year, and provides additional highlights and financial metrics regarding the aspirational goals we discussed today. The earnings release, supplemental tables, and presentation are available on the investor relations section of our website on blackbaud.com. With that, let me turn the call over to you, Mike.
Speaker #1: representative of how we internally measure our results as well as full-year guidance business. Unless otherwise The measures are more measures. We have also considered in isolation from provided a slide presentation that contains or as a substitute for GAAP supplemental data for our 4th Quarter and highlights in financial non-GAAP financial measures should not be release, supplemental tables, and Call.
Speaker #1: this call. on blackblood.com. to non-GAAP financial measures on And with Please note that
Speaker #1: presentation are available on the investor
Speaker #1: Mike, with that, let me turn the call over to you.
Mike Gianoni: Thank you, Tom. Good morning, everyone. On our call today, in addition to talking through our normal highlights, I'm also very excited to outline our strategy and aspirational financial goals for the next several years. But let me start with a significant achievement in 2025, where we reached a major milestone. We accomplished our goal of becoming a Rule of Forty company two years ahead of plan. Our financial success is a result of a proven operating plan focused on company efficiencies and continuous product innovation, particularly in regard to AI enablement, improved effectiveness of our go-to-market programs, and a steadfast dedication to powering social impact centered in all we do with both our customers and employees. Blackbaud's multi-year trajectory moving forward will continue to be built on these tenets.
Mike Gianoni: Thank you, Tom. Good morning, everyone. On our call today, in addition to talking through our normal highlights, I'm also very excited to outline our strategy and aspirational financial goals for the next several years. But let me start with a significant achievement in 2025, where we reached a major milestone. We accomplished our goal of becoming a Rule of Forty company two years ahead of plan. Our financial success is a result of a proven operating plan focused on company efficiencies and continuous product innovation, particularly in regard to AI enablement, improved effectiveness of our go-to-market programs, and a steadfast dedication to powering social impact centered in all we do with both our customers and employees. Blackbaud's multi-year trajectory moving forward will continue to be built on these tenets.
Speaker #2: everyone. On our call Thank you, Tom. today, in addition to talking through Good morning,
Speaker #2: I'm also very excited to outline our
Speaker #2: Several years, let me—we reached a major milestone. We accomplished our goal of
Speaker #2: We start with a significant achievement in the fiscal year and provide additional relations on our website, becoming a Rule of 40 company two years ahead of plan.
Speaker #2: 2025 where efficiencies, and continuous Particularly in regard to AI a steadfast dedication to our go-to-market programs, and product innovation. enablement, improved effectiveness of discussed today.
Speaker #2: Our financial success is a our normal highlights,
Speaker #2: and employees. BLACKBAUD's multi-year trajectory moving all we do with both our customers forward will continue to be built on these tenets. We continue to invest meaningful product enhancements throughout our portfolio
Mike Gianoni: We continue to invest aggressively in innovation to produce meaningful product enhancements throughout our portfolio, including generative and agentic AI capabilities. Our products enable our customers to raise more money while increasing operational efficiency, ultimately allowing them to spend more time executing on their charitable missions and less time on administrative tasks. Blackbaud brings nearly 45 years of specialized domain expertise. We serve as a system of record for our customers with deeply embedded workflows that are purpose-built for the social impact sector. Further, we have invested heavily in cybersecurity and AI governance to ensure that our customers' data remains secure and our AI solutions utilize this data in an ethical manner. Users in our vertical markets tend to be less tech-savvy than other industries, and nonprofits consistently deal with high turnover and staffing shortages.
Mike Gianoni: We continue to invest aggressively in innovation to produce meaningful product enhancements throughout our portfolio, including generative and agentic AI capabilities. Our products enable our customers to raise more money while increasing operational efficiency, ultimately allowing them to spend more time executing on their charitable missions and less time on administrative tasks. Blackbaud brings nearly 45 years of specialized domain expertise. We serve as a system of record for our customers with deeply embedded workflows that are purpose-built for the social impact sector. Further, we have invested heavily in cybersecurity and AI governance to ensure that our customers' data remains secure and our AI solutions utilize this data in an ethical manner. Users in our vertical markets tend to be less tech-savvy than other industries, and nonprofits consistently deal with high turnover and staffing shortages.
Speaker #2: Including generative and products enable our customers to raise agentic AI capabilities, more money while hiring. Social impact centered in increasing operational efficiency, ultimately allowing them to spend more time executing on their charitable missions and less time on administrative tasks. Aggressively in innovation to produce operational efficiency.
Speaker #2: Blackbaud brings nearly 45 years of specialized domain expertise. We serve as a system of record for our earnings customers, with deeply embedded social impact workflows that are purpose-built for the sector.
Speaker #2: Further, we have invested heavily in cybersecurity and AI governance to ensure that our customers' data remain secure, and our AI solutions utilize this data in an ethical manner.
Speaker #2: Users in our vertical markets tend to be less tech-savvy than other industries, and nonprofits consistently deal with high turnover and staffing shortages. We win because our solutions are intuitive for the average nonprofit employee and don't require complex use to interpret how customizations or new technological advancements, such as AI, can benefit them. And Blackbaud remains well-positioned to do that now and in the future.
Mike Gianoni: We win because our solutions are intuitive to the average nonprofit employee and don't require complex customizations or integrations. Our customers rely on us to interpret how new technological advancements, such as AI, can benefit them, and Blackbaud remains well positioned to do that now and in the future. Our customers' confidence in our commitment to them is translating into longer renewal contracts. While our contract renewal program was designed for three-year contracts, more than 20% have asked to move to four-year or longer contracts. I now want to address head-on the big question our industry is facing: Will AI be beneficial to system of record vertical software firms like Blackbaud or detrimental? We are all in on AI. Every employee in the company has been required to get AI training, every department, every employee.
Mike Gianoni: We win because our solutions are intuitive to the average nonprofit employee and don't require complex customizations or integrations. Our customers rely on us to interpret how new technological advancements, such as AI, can benefit them, and Blackbaud remains well positioned to do that now and in the future. Our customers' confidence in our commitment to them is translating into longer renewal contracts. While our contract renewal program was designed for three-year contracts, more than 20% have asked to move to four-year or longer contracts. I now want to address head-on the big question our industry is facing: Will AI be beneficial to system of record vertical software firms like Blackbaud or detrimental? We are all in on AI. Every employee in the company has been required to get AI training, every department, every employee.
Speaker #2: Our customers' confidence in our commitment to them is translating into longer renewal contracts. While our contract renewal program integrations our customers rely on was designed for three-year contracts, more than to four-year or longer contracts.
Speaker #2: I now want to address head-on the big question our industry is facing: will AI be beneficial to system-of-record vertical software firms like Blackbaud, or detrimental?
Speaker #2: We are all in on AI, every employee in the company has been required to get AI training, every department, 20% have asked to move every employee.
Speaker #2: With discuss how AI improves our ability to offer unique that in mind, I'm going to first solutions to drive future growth. While new AI products are not meaningfully guidance, they offer potential upside to our current our internal use of expectations.
Mike Gianoni: With that in mind, I'm going to first discuss how AI improves our ability to offer unique solutions to drive future growth. While new AI products are not meaningfully represented in our current financial guidance, they offer potential upside to our current expectations. Then I'll address how our internal use of AI is propelling our operations forward. Regarding our unique solutions, we have our entire engineering team using leading AI generative assistants, such as Microsoft, GitHub, Copilot, and Anthropic Claude, in areas like code generation, software bug remediation, and new product development. We've introduced generative AI features across multiple products, and at the end of 2025, we released Blackbaud AI Chat, which provides contextual responses to questions and drives actions.
Mike Gianoni: With that in mind, I'm going to first discuss how AI improves our ability to offer unique solutions to drive future growth. While new AI products are not meaningfully represented in our current financial guidance, they offer potential upside to our current expectations. Then I'll address how our internal use of AI is propelling our operations forward. Regarding our unique solutions, we have our entire engineering team using leading AI generative assistants, such as Microsoft, GitHub, Copilot, and Anthropic Claude, in areas like code generation, software bug remediation, and new product development. We've introduced generative AI features across multiple products, and at the end of 2025, we released Blackbaud AI Chat, which provides contextual responses to questions and drives actions.
Speaker #2: forward. Regarding our unique solutions, we have our entire engineering team using assistants such as Microsoft GitHub Copilot, and Anthropic Claude in areas like Then I'll address how code generation, software development.
Speaker #2: We’ve done bug remediation, and our new products have introduced generative AI features across multiple offerings. At the end of 2025, we release BLACKBAUD AI Chad, which provides contextual responses to questions and drives innovation. Chad is an industry-leading advancement that only we could deliver because it’s embedded within and leverages customer and Blackbaud’s unique data.
Mike Gianoni: Blackbaud AI Chat is an industry-leading innovation that only we could deliver, because it's embedded within our systems of record that leverage customer and Blackbaud unique data, as well as years of social good-centric benchmark data. Blackbaud's competitive differentiation is very clear. We have a Data Moat. We have the most robust philanthropic data processed and gleaned in real time, combined with decades of domain experience. This cannot be commoditized. Our product synergies and native integrations across systems of Engagement, systems of Record, systems of financial accounting, and systems of Intelligence add to our differentiation... From a customer adoption perspective, these AI features continue to see significant success.
Mike Gianoni: Blackbaud AI Chat is an industry-leading innovation that only we could deliver, because it's embedded within our systems of record that leverage customer and Blackbaud unique data, as well as years of social good-centric benchmark data. Blackbaud's competitive differentiation is very clear. We have a Data Moat. We have the most robust philanthropic data processed and gleaned in real time, combined with decades of domain experience. This cannot be commoditized. Our product synergies and native integrations across systems of Engagement, systems of Record, systems of financial accounting, and systems of Intelligence add to our differentiation... From a customer adoption perspective, these AI features continue to see significant success.
Speaker #2: As well as years of social good-centric benchmark data. BLACKBAUD's competitive differentiation is very clear. We have a data our systems of record that robust philanthropic data processed and gleaned in real actions. moat.
Speaker #2: As well as years of social good-centric benchmark data. BLACKBAUD's competitive differentiation is very clear. We have a data our systems of record that robust philanthropic data processed and gleaned in real actions.
Speaker #2: Domain experience—this cannot be commoditized. Our product synergies and native integrations across systems of engagement, systems of record, systems of financial accounting, and systems of intelligence are a key differentiation.
Speaker #2: From a customer adoption perspective, these AI times combined with decades of add to our—we have the most—usage grew five times since October and now more than AI chat, half of our Razor’s Edge NXT, Blackbaud AI prospecting that generates annually, which is nearly $30 billion. Predictions generate tens of petabytes of learning-enabled donor data across our base.
Mike Gianoni: Our average daily AI chat usage grew 5 times since October, and now more than half of our Raiser's Edge NXT customers have machine learning-enabled donor prospecting that generates nearly 30 billion predictions annually, which generates tens of petabytes of data across our base. These AI capabilities are embedded as a seamless workflow within our products and utilize the internal data within our system of record solutions. Our solutions are powered by an extensive and diverse set of data sources. These include proprietary survey and benchmarking data from the Blackbaud Institute, combined with licensed data sets from leading providers, identity resolution capabilities, and specialized philanthropic data sets such as Blackbaud Giving Search. Our applied intelligence layer aggregates de-identified behavioral data across its ecosystem, which feeds advanced AI models and predictive analytics.
Mike Gianoni: Our average daily AI chat usage grew 5 times since October, and now more than half of our Raiser's Edge NXT customers have machine learning-enabled donor prospecting that generates nearly 30 billion predictions annually, which generates tens of petabytes of data across our base. These AI capabilities are embedded as a seamless workflow within our products and utilize the internal data within our system of record solutions. Our solutions are powered by an extensive and diverse set of data sources. These include proprietary survey and benchmarking data from the Blackbaud Institute, combined with licensed data sets from leading providers, identity resolution capabilities, and specialized philanthropic data sets such as Blackbaud Giving Search. Our applied intelligence layer aggregates de-identified behavioral data across its ecosystem, which feeds advanced AI models and predictive analytics.
Speaker #2: embedded as a seamless workflow within our These AI capabilities are products and utilize the internal data within our system of record solutions. Our solutions are powered by an extensive and diverse set of data proprietary survey and benchmarking Institute combined with licensed data sources.
Speaker #2: Capabilities and specialized data from the Blackbaud sets from leading providers—identity resolution as Blackbaud Giving Search. Our applied intelligence layer aggregates de-identified behavioral data across philanthropic data sets such as its ecosystem, which feeds advanced AI models and predictive analytics.
Speaker #2: Additional layers of insight come from usage patterns, feedback signals, and decision outcomes, all of which help to surface actionable intelligence for social. These include good organizations.
Mike Gianoni: Additional layers of insight come from usage patterns, feedback signals, and decision outcomes, all of which help to surface actionable intelligence for social good organizations. Our corporate action engine further utilizes external sources, combined with the Blackbaud verified network, to enhance eligibility verification, program measurement, and nonprofit profiling. What sets Blackbaud apart is not just the volume or variety of data, but how it's managed and applied. Our data foundation is built on principles of integrity, responsible governance, and outcome orientation, offering a unified and trustworthy platform for the social impact sector. Leveraging the Four V's framework, volume, variety, velocity, and diligence, Blackbaud ensures high quality, real-time, and secure data that supports billions of AI-driven insights annually. This robust ecosystem enables organizations to make informed decisions, optimizing fundraising and maximizing impact. This data is not publicly available on the internet where LLMs can access it.
Mike Gianoni: Additional layers of insight come from usage patterns, feedback signals, and decision outcomes, all of which help to surface actionable intelligence for social good organizations. Our corporate action engine further utilizes external sources, combined with the Blackbaud verified network, to enhance eligibility verification, program measurement, and nonprofit profiling. What sets Blackbaud apart is not just the volume or variety of data, but how it's managed and applied. Our data foundation is built on principles of integrity, responsible governance, and outcome orientation, offering a unified and trustworthy platform for the social impact sector. Leveraging the Four V's framework, volume, variety, velocity, and diligence, Blackbaud ensures high quality, real-time, and secure data that supports billions of AI-driven insights annually. This robust ecosystem enables organizations to make informed decisions, optimizing fundraising and maximizing impact. This data is not publicly available on the internet where LLMs can access it.
Speaker #2: Our corporate action engine further utilizes external sources combined with the BLACKBAUD verified network to enhance eligibility verification, program measurement, and nonprofit profiling. just the volume of variety of applied.
Speaker #2: Our data foundation is built on data, but how it's managed and on principles of integrity. What sets Blackbaud apart is not responsible governance, and outcome orientation.
Speaker #2: Offering a unified and trustworthy sector. Leveraging the four V's framework, variety, velocity, and diligence, platform for the social impact BLACKBAUD ensures high-quality volume, organizations to make informed real-time and secure data decisions.
Speaker #2: This robust ecosystem enables our system of record solutions near term and in the future. Our first agent for good, a fundraising development agent, is natively embedded within the trusted Blackbaud environment. It enables teams to identify and steward capacity to reach today.
Speaker #2: Optimizing fundraising and maximizing AI-driven insights' impact. This data is not publicly available on the internet or accessible to LLMs. We are now embedding products that have full access to this data.
Mike Gianoni: We are now embedding new agentic AI solutions in our products that have full access to this data. We first introduced Blackbaud Agents for Good at our BBCon conference in October. Blackbaud Agents for Good are agentic virtual team members who can proactively take on complex tasks, workflows, and initiatives while operating within the governance oversight of power users. We plan on releasing many fully agentic products embedded within our system of record solutions near term and in the future. Our first Agent for Good, a fundraising development agent, natively embedded within the trusted Blackbaud environment, enables teams to identify and steward donors that they do not have the capacity to reach today, unlocking new revenue streams for them at a fraction of the cost possible in the past. Here's an example of a university we're working with.
Mike Gianoni: We are now embedding new agentic AI solutions in our products that have full access to this data. We first introduced Blackbaud Agents for Good at our BBCon conference in October. Blackbaud Agents for Good are agentic virtual team members who can proactively take on complex tasks, workflows, and initiatives while operating within the governance oversight of power users. We plan on releasing many fully agentic products embedded within our system of record solutions near term and in the future. Our first Agent for Good, a fundraising development agent, natively embedded within the trusted Blackbaud environment, enables teams to identify and steward donors that they do not have the capacity to reach today, unlocking new revenue streams for them at a fraction of the cost possible in the past. Here's an example of a university we're working with.
Speaker #2: introduced BLACKBAUD Agents for Good at We first October. BLACKBAUD Agents for Good new agentic AI solutions in our are agentic virtual team members who can proactively take on that supports billions of complex tasks workflows and initiatives while operating our BBCon conference in within the governance, on releasing many fully agentic annually.
Speaker #2: a fraction of the cost possible in the past. Here's an example of oversight, power users. products embedded within a university we're working with. They have Unlocking new revenue streams for them at 190,000 alumni We plan but their fundraising team only has a bandwidth to focus on the top 10,000.
Mike Gianoni: They have 190,000 alumni, but their fundraising team only has the bandwidth to focus on the top 10,000. Our Development Agent is an additional staff member assigned to cultivate relationships and raise funds from the other unaddressed 180,000 alumni. This agent self-learns using the data, intelligence, workflows, and personas within our systems, then builds a relationship with alumni through email, text, and a full conversational avatar. This combination of our customer staff, AI agents, and Blackbaud fundraising solutions dramatically improves a customer's potential to raise funds in a secure and easy-to-use system of record. So it's clear that our customers can distinctly benefit from this solution with a clearly defined ROI, but it also benefits us. This fundraising Development Agent is a new revenue line for Blackbaud.
Mike Gianoni: They have 190,000 alumni, but their fundraising team only has the bandwidth to focus on the top 10,000. Our Development Agent is an additional staff member assigned to cultivate relationships and raise funds from the other unaddressed 180,000 alumni. This agent self-learns using the data, intelligence, workflows, and personas within our systems, then builds a relationship with alumni through email, text, and a full conversational avatar. This combination of our customer staff, AI agents, and Blackbaud fundraising solutions dramatically improves a customer's potential to raise funds in a secure and easy-to-use system of record. So it's clear that our customers can distinctly benefit from this solution with a clearly defined ROI, but it also benefits us. This fundraising Development Agent is a new revenue line for Blackbaud.
Speaker #2: Our development agent is an additional staff member assigned to cultivate relationships and raise unaddressed 180,000 alumni. This agent self-learns funds from the other using the data intelligence workflows and personas within our systems.
Speaker #2: Then builds a relationship with alumni through email, text, avatar. This combination AI agents, and BLACKBAUD fundraising solutions dramatically improves our customers' potential to easy-to-use system of record.
Speaker #2: So it's clear that our customers can distinctly benefit from this and a full conversational raise funds in a secure and development agent is a new revenue line for BLACKBAUD.
Speaker #2: ROI but it also benefits bit, the pricing fee with multi-year To frame this a of our customer staff, us. contracts like the majority of our products.
Mike Gianoni: To frame this a bit, the pricing model is an annual subscription fee with multiyear contracts, like the majority of our products. It's a bit early, but we expect the price will be in the tens of thousands per year, and we have thousands of existing customers we will be cross-selling this to, in addition to new logo sales. Additionally, applicable donations raised by the Development Agent would be processed through the Blackbaud integrated payments, driving additional transactional revenue. This new Development Agent is already producing results for a number of early adopter customers, and we expect it will be fully commercially available later this year. This is the first of many agents we plan to introduce across our product portfolio as part of our Agents for Good initiative. To reiterate, we believe that new agentic AI solutions embedded within our systems of record provide a competitive advantage to Blackbaud.
Mike Gianoni: To frame this a bit, the pricing model is an annual subscription fee with multiyear contracts, like the majority of our products. It's a bit early, but we expect the price will be in the tens of thousands per year, and we have thousands of existing customers we will be cross-selling this to, in addition to new logo sales. Additionally, applicable donations raised by the Development Agent would be processed through the Blackbaud integrated payments, driving additional transactional revenue. This new Development Agent is already producing results for a number of early adopter customers, and we expect it will be fully commercially available later this year. This is the first of many agents we plan to introduce across our product portfolio as part of our Agents for Good initiative. To reiterate, we believe that new agentic AI solutions embedded within our systems of record provide a competitive advantage to Blackbaud.
Speaker #2: Model is an annual subscription. The development agent would be processed through the, additionally, applicable donations raised by Blackbaud integrated the tens of thousands per revenue.
Speaker #2: It's a bit early but we solution with a clearly defined This fundraising year and we have thousands of existing customers we will be cross-selling this to in addition to new logo sales.
Speaker #2: This new development agent is already producing results for a number of early adopter customers, and we expect it will be fully commercially available later this year.
Speaker #2: This is the first of many agents we plan to introduce across our product portfolio as part of our, to reiterate, we believe that Agents for Good initiative.
Speaker #2: new agentic AI solutions embedded within our systems of record provide a competitive advantage to BLACKBAUD. Our agents customer-specific data within existing leverage our proprietary and workflows underpinned by a strong AI governance and cybersecurity multi-year subscription model and do not utilize seat-based we offer our solutions through pricing.
Mike Gianoni: Our agents leverage our proprietary and customer-specific data within existing workflows, underpinned by a strong AI governance and cybersecurity framework. Additionally, we offer our solutions through multiyear subscription model and do not utilize seat-based pricing. Now, moving to how we continue to leverage AI to transform the way we work. We continue to identify, experiment, and scale a range of successful solutions across marketing, customer success, and engineering to be an active innovator to apply AI and drive operational efficiency.... Several examples of how we utilize AI internally include a sales development agent driving increased sales development, representative conversations, book meetings, and ultimately sales pipeline. A contract renewal agent to streamline communications and improve engagement with our customers through automation of certain administrative tasks. A quality assurance agent that will be launched soon to automate and scale our QA process for customer support interactions.
Mike Gianoni: Our agents leverage our proprietary and customer-specific data within existing workflows, underpinned by a strong AI governance and cybersecurity framework. Additionally, we offer our solutions through multiyear subscription model and do not utilize seat-based pricing. Now, moving to how we continue to leverage AI to transform the way we work. We continue to identify, experiment, and scale a range of successful solutions across marketing, customer success, and engineering to be an active innovator to apply AI and drive operational efficiency.... Several examples of how we utilize AI internally include a sales development agent driving increased sales development, representative conversations, book meetings, and ultimately sales pipeline. A contract renewal agent to streamline communications and improve engagement with our customers through automation of certain administrative tasks. A quality assurance agent that will be launched soon to automate and scale our QA process for customer support interactions.
Speaker #2: AI to transform the way we to how we continue to leverage framework. work. We continue to Now moving range of successful solutions across Additionally, marketing, customer success, and Several examples of how we utilize AI internally include a operational efficiency.
Speaker #2: increased sales development representative conversations book pipeline. A contract meetings and ultimately sales sales development agent driving communications and improve engagement with our renewal agent to streamline certain administrative tasks.
Speaker #2: A quality assurance agent that will scale our QA process for customer support innovators through applied AI and drive interactions. And, as a general use case, customers through automation of applications around personal will be launched soon to automate Microsoft Copilot.
Mike Gianoni: As a general use application around personal productivity, all employees have access to Microsoft Copilot. Just in the last 4 weeks of 2025, we witnessed over 19,000 hours of AI-assisted outcomes with more than 196,000 actions completed. AI is making a significant impact on internal productivity. As I said, we're all in on AI, both with product innovation and internal operations. So when our customers or employees ask me if AI can help them, my answer is absolutely. Before I turn the call over to Chad, to then come back to outline the specifics of our long-term aspirational plan, I want to say how proud I am of Blackbaud's multiyear trajectory of extending our market leadership. We are providing our customers with the most intelligent solutions, powered by AI and purpose-built for specific nonprofit use cases to help them pursue their world-changing missions.
Mike Gianoni: As a general use application around personal productivity, all employees have access to Microsoft Copilot. Just in the last 4 weeks of 2025, we witnessed over 19,000 hours of AI-assisted outcomes with more than 196,000 actions completed. AI is making a significant impact on internal productivity. As I said, we're all in on AI, both with product innovation and internal operations. So when our customers or employees ask me if AI can help them, my answer is absolutely. Before I turn the call over to Chad, to then come back to outline the specifics of our long-term aspirational plan, I want to say how proud I am of Blackbaud's multiyear trajectory of extending our market leadership.
Speaker #2: Just in the last four weeks of productivity, all employees have access to over 19,000 hours of 2025. We witnessed AI-assisted outcomes with more than 196,000 actions completed.
Speaker #2: AI is making a significant impact on internal productivity. As I said, Both with product innovation and internal operations. So when our can help them, my answer is customers or our employees ask me if AI to Chad, and then come back to outline the specifics of our long-term aspirational plan, I want we're all in on AI.
Speaker #2: multi-year trajectory of extending our market leadership. We are providing our customers with the most intelligent solutions powered by absolutely. specific nonprofit use AI and purpose-built for cases.
Mike Gianoni: We are providing our customers with the most intelligent solutions, powered by AI and purpose-built for specific nonprofit use cases to help them pursue their world-changing missions. When combined with our role in their future opportunities across the social impact sector and our operational discipline, we see a clear path for achieving our long-term aspirational goals. But now, let me turn the call over to Chad to walk through our specific 2025 highlights and our 2026 guide.
Speaker #2: To help them pursue their world-changing missions. When combined with our role in their future, opportunities across the social impact Before I turn the call over discipline we see a clear path for achieving our long-term aspirational goals.
Mike Gianoni: When combined with our role in their future opportunities across the social impact sector and our operational discipline, we see a clear path for achieving our long-term aspirational goals. But now, let me turn the call over to Chad to walk through our specific 2025 highlights and our 2026 guide.
Speaker #2: For now, let me turn the call over to Chad to walk through sector and our operational guide. Thanks, highlights, and our 2026, Mike. Our strong 2025 results closed out another successful year for Blackbaud.
Chad Anderson: Thanks, Mike. Our strong 2025 results closed out another successful year for Blackbaud, and as such, I continue to be excited about our ability to execute on our opportunities in the near, mid, and long term. Our results in 2025 add to our strong record of improved top line organic revenue growth and dramatically improved profitability and cash flow. But to reiterate, full year 2025 organic revenues were up 5.5% to $1,128 million. Adjusted EBITDA of $405 million was up approximately 8% after adjusting for the estimated impact of the EverFi divestiture. This represented an adjusted EBITDA margin of 35.9%, up 220 basis points from 2024.
Chad Anderson: Thanks, Mike. Our strong 2025 results closed out another successful year for Blackbaud, and as such, I continue to be excited about our ability to execute on our opportunities in the near, mid, and long term. Our results in 2025 add to our strong record of improved top line organic revenue growth and dramatically improved profitability and cash flow. But to reiterate, full year 2025 organic revenues were up 5.5% to $1,128 million. Adjusted EBITDA of $405 million was up approximately 8% after adjusting for the estimated impact of the EverFi divestiture. This represented an adjusted EBITDA margin of 35.9%, up 220 basis points from 2024.
Speaker #2: And as opportunities in the near, mid, and long term. Our our ability to execute on our results in 2025 add to our such, I continue to be excited about strong record of improved top-line organic revenue growth and dramatically improved profitability and cash flow.
Speaker #2: But to reiterate, full year 2025 organic revenues were up 5.5% to $1,128,000,000 adjusted EBITDA of $405,000,000 was up approximately 8% after adjusting for the estimated impact of the Everfire divestiture.
Speaker #2: Adjusted EBITDA margin of 35.9%, up 220 basis points from 2024. Our ability to grow—power of our operating plan, which continues to positively impact revenue and EBITDA, speaks to the flows.
Chad Anderson: Our ability to grow revenue and EBITDA speaks to the power of our operating plan, which continues to positively impact earnings per share and free cash flows. Non-GAAP EPS increased to $4.45, up approximately 12% year-over-year, after adjusting for the estimated impact of the EverFi divestiture. Adjusted free cash flow for the year was stronger than expected at $208 million, exceeding the high end of our upwardly revised guidance range, despite a couple of significant one-time investments we made, primarily in Q1 of 2025. Our historical anticipated robust free cash flows provide us confidence to continue investment in a number of critical areas like product innovation and stock repurchases. We continued to aggressively repurchase our shares. We bought back approximately 8% of our common stock outstanding in 2025.
Chad Anderson: Our ability to grow revenue and EBITDA speaks to the power of our operating plan, which continues to positively impact earnings per share and free cash flows. Non-GAAP EPS increased to $4.45, up approximately 12% year-over-year, after adjusting for the estimated impact of the EverFi divestiture. Adjusted free cash flow for the year was stronger than expected at $208 million, exceeding the high end of our upwardly revised guidance range, despite a couple of significant one-time investments we made, primarily in Q1 of 2025. Our historical anticipated robust free cash flows provide us confidence to continue investment in a number of critical areas like product innovation and stock repurchases. We continued to aggressively repurchase our shares. We bought back approximately 8% of our common stock outstanding in 2025.
Speaker #2: Non-GAAP EPS increased to $4.45 up approximately adjusting for the estimated impact of the 12% year over year after Everfire divestiture. earnings per share and free cash This represented an the high end of our upwardly revised guidance range despite a couple of significant one-time investments stronger than expected.
Speaker #2: At $208 million, exceeding what we made primarily in the first quarter of 2025, our historically anticipated adjusted free cash flow for the year was robust. Free cash flows provide us confidence to continue investment in a number of critical areas like product innovation and stock repurchases.
Speaker #2: We continue to aggressively repurchase our stock, buying back approximately 8% of our common shares in 2025. This follows the 11% repurchased in 2024. We also reduced our debt leverage from 2.9 times in Q1 to 2.5 times at the end of the year.
Chad Anderson: This follows the 11% repurchased in 2024. We also reduced our debt leverage from 2.9 times in Q1 to 2.5 times at the end of the year. I'll provide more color on our 2026 capital allocation plans in a minute, and before I provide 2026 guidance, I want to provide color on several other factors to help you set expectations and align your models appropriately. In 2026, we're anticipating the following: Our 2026 financial guidance assumes no material changes, good or bad, in the current macroeconomic landscape or foreign exchange rates. The guidance assumes no viral event-based giving and no meaningful impact to 2026 revenue from AI products, which present potential revenue upside. Additionally, the guidance assumes no significant productivity gains from internal use of AI solutions.
Chad Anderson: This follows the 11% repurchased in 2024. We also reduced our debt leverage from 2.9 times in Q1 to 2.5 times at the end of the year. I'll provide more color on our 2026 capital allocation plans in a minute, and before I provide 2026 guidance, I want to provide color on several other factors to help you set expectations and align your models appropriately. In 2026, we're anticipating the following: Our 2026 financial guidance assumes no material changes, good or bad, in the current macroeconomic landscape or foreign exchange rates. The guidance assumes no viral event-based giving and no meaningful impact to 2026 revenue from AI products, which present potential revenue upside. Additionally, the guidance assumes no significant productivity gains from internal use of AI solutions.
Speaker #2: I'll provide more color on stock outstanding in our 2026 capital allocation plans in a minute. guidance, I want to provide color And before I provide 2026 on several other factors to help you set expectations and align your models appropriately.
Speaker #2: We're anticipating the following: our 2026 financial changes—good or bad—in the current macroeconomic landscape or foreign exchange rates. The guidance assumes no viral event-based impacts in 2026. Guidance also assumes no material giving and no meaningful impact to 2026 revenue from AI products, which present potential revenue upside.
Speaker #2: significant productivity gains from Additionally, the guidance assumes no solutions. As you will have seen in the press release guidance, we expect full year 2026 organic revenue growth to be while the GAAP revenue growth rate improves 4% to 4.5% significantly at the midpoint of internal use of AI non-GAAP 2025 revenue guidance, we expect full year growth for two main 2026 non-GAAP revenue growth to nearly 9% in 2025 which is slightly elevated compared to our historical CAGR of reasons.
Chad Anderson: As you will have seen in the press release guidance, we expect full year 2026 organic revenue growth to be 4% to 4.5%, while the GAAP revenue growth rate improves significantly. At the midpoint of guidance, we expect full year 2026 non-GAAP revenue growth to be slightly lower than non-GAAP 2025 revenue growth for two main reasons. Transactional recurring revenue grew nearly 9% in 2025, which is slightly elevated compared to our historical CAGR of 8% between 2020 and 2024. Our guidance assumes transactional revenue growth more in line with historical norm, with no viral events included. Our 2026 contractual revenue renewal cohort is approximately 40% larger than last year. We expect this to have a negative impact of half a point to three-quarters of a point on total revenue growth for 2026.
Chad Anderson: As you will have seen in the press release guidance, we expect full year 2026 organic revenue growth to be 4% to 4.5%, while the GAAP revenue growth rate improves significantly. At the midpoint of guidance, we expect full year 2026 non-GAAP revenue growth to be slightly lower than non-GAAP 2025 revenue growth for two main reasons. Transactional recurring revenue grew nearly 9% in 2025, which is slightly elevated compared to our historical CAGR of 8% between 2020 and 2024. Our guidance assumes transactional revenue growth more in line with historical norm, with no viral events included. Our 2026 contractual revenue renewal cohort is approximately 40% larger than last year. We expect this to have a negative impact of half a point to three-quarters of a point on total revenue growth for 2026.
Speaker #2: 2024. Our guidance Transactional recurring revenue grew 8% between 2020 and be slightly lower than in line with historical norm with no viral events included.
Speaker #2: assumes transactional revenue growth more Our revenue renewal cohort is approximately 40% larger than last year. negative impact of half a We expect this to have a point to three-quarters of a point detail on slide 15 of our investor 2026.
Chad Anderson: You can find more detail on slide 15 of our investor deck. Regarding quarterly revenue, due to strong transactional revenue performance in the first two quarters of 2025, and the fact that we do not include viral giving in our guide for 2026, we expect a slightly tougher compare in Q1 and Q2 of 2026. Additionally, we expect our revenue growth performance to be more heavily weighted into the back half of 2026. We have several growth initiatives expected to come online later in Q3 and largely in Q4, including some pricing optimization in our transactional products and modest contribution from AI initiatives Mike spoke to earlier. Turning to profitability, 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.
Chad Anderson: You can find more detail on slide 15 of our investor deck. Regarding quarterly revenue, due to strong transactional revenue performance in the first two quarters of 2025, and the fact that we do not include viral giving in our guide for 2026, we expect a slightly tougher compare in Q1 and Q2 of 2026. Additionally, we expect our revenue growth performance to be more heavily weighted into the back half of 2026. We have several growth initiatives expected to come online later in Q3 and largely in Q4, including some pricing optimization in our transactional products and modest contribution from AI initiatives Mike spoke to earlier. Turning to profitability, 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.
Speaker #2: deck. Regarding quarterly revenue, due to strong transactional 2026 contractual 2025 and the fact that revenue performance in the first two quarters of expect a slightly tougher Q2 of compare in Q1 and You can find more weighted into the back half of revenue growth performance to be more heavily 2026.
Speaker #2: We have several growth initiatives expected to come on total revenue growth for online later in Q3 and largely in Q4 including some pricing optimization in our transactional products and modest contribution 2026.
Speaker #2: from AI initiatives Mike spoke to profitability, Q1 tends to be our lowest quarter from a profitability standpoint due to the timing of expenses related earlier.
Speaker #2: employee stock award to employee benefits, vesting. Additionally, our annual Additionally, we expect our employee merit increases go into effect on July 1st. So Q3 and Q4 tend to have higher compensation-related costs to Q1 and Q2.
Chad Anderson: Additionally, our annual employee merit increases go into effect on July 1st, so Q3 and Q4 tend to have higher compensation-related costs to Q1 and Q2. Lastly, we're entering a new phase of our workforce strategy, including the expansion into India. This is a multiyear program to expand operations in the Global Capability Center or GCC. Starting in Q1 2026, we anticipate introducing a new adjustment to our non-GAAP financial measures to exclude the impact of the costs associated with this strategic initiative that we expect to provide long-term benefit to the company. We estimate these items to total approximately $6 to 8 million in 2026, and the impact to free cash flow is included in the guide. Now moving on to guidance.
Chad Anderson: Additionally, our annual employee merit increases go into effect on July 1st, so Q3 and Q4 tend to have higher compensation-related costs to Q1 and Q2. Lastly, we're entering a new phase of our workforce strategy, including the expansion into India. This is a multiyear program to expand operations in the Global Capability Center or GCC. Starting in Q1 2026, we anticipate introducing a new adjustment to our non-GAAP financial measures to exclude the impact of the costs associated with this strategic initiative that we expect to provide long-term benefit to the company. We estimate these items to total approximately $6 to 8 million in 2026, and the impact to free cash flow is included in the guide. Now moving on to guidance.
Speaker #2: Lastly, we're entering a new phase of our workforce into India. This is a multi-year strategy, including the expansion program to expand operations in the Global Capability Center, or GCC.
Speaker #2: Starting in Q1 2026, we anticipate introducing a new adjustment to our non-GAAP financial measures to exclude the impact of the costs associated with an initiative that we expect to provide a strategic long-term benefit to the company.
Speaker #2: We estimate these items to total approximately $6 to $8 million in 2026 and and the impact to free cash flow is included in guide.
Speaker #2: Now moving on to the impact to free cash flow: revenue in the range of $1,173,000,000 to $1,179,000,000, representing organic growth of 4% to 4.5% as reported.
Chad Anderson: For the year, we're projecting revenue in the range of $1,173 million to $1,179 million, representing organic growth of 4% to 4.5% as reported. Shifting to profitability, we'll continue to focus on margin expansion opportunities while at the same time making investments in innovation, artificial intelligence, product roadmaps, cybersecurity, and global workforce strategy. Therefore, we anticipate non-GAAP adjusted EBITDA of $430 million to $438 million, which implies adjusted EBITDA dollar growth of 6% to 8% year-over-year.
Chad Anderson: For the year, we're projecting revenue in the range of $1,173 million to $1,179 million, representing organic growth of 4% to 4.5% as reported. Shifting to profitability, we'll continue to focus on margin expansion opportunities while at the same time making investments in innovation, artificial intelligence, product roadmaps, cybersecurity, and global workforce strategy. Therefore, we anticipate non-GAAP adjusted EBITDA of $430 million to $438 million, which implies adjusted EBITDA dollar growth of 6% to 8% year-over-year.
Speaker #2: Shifting to guidance and profitability, we'll continue to focus on margin. For the year, we're projecting expansion opportunities while at the same time making investments in innovation, artificial intelligence, product roadmaps, and workforce strategy.
Speaker #2: Therefore, we anticipate non-GAAP adjusted EBITDA of $430,000,000 to cybersecurity, and global EBITDA dollar growth of 6% to 8% year over revenue and spend configuration I just $438,000,000 which implies adjusted outlined in combination with our ongoing stock repurchase program, we non-GAAP EPS in the range of $5.15 to expect 2026 $5.25 18% year over year.
Chad Anderson: With the overall revenue and spend configuration I just outlined, in combination with our ongoing stock repurchase program, we expect 2026 non-GAAP EPS in the range of $5.15 to $5.25, or growth of 16% to 18% year-over-year. This is a big improvement in EPS, crossing $5 for the first time with strong growth in 2026. We continue to have sharp focus on driving free cash flow and returning capital to our shareholders. For the year, we're guiding to significantly increased free cash flow of $280 million to $290 million as we move past the approximately $60 million of one-time items and working capital fluctuations that negatively impacted our 2025 free cash flow.
Chad Anderson: With the overall revenue and spend configuration I just outlined, in combination with our ongoing stock repurchase program, we expect 2026 non-GAAP EPS in the range of $5.15 to $5.25, or growth of 16% to 18% year-over-year. This is a big improvement in EPS, crossing $5 for the first time with strong growth in 2026. We continue to have sharp focus on driving free cash flow and returning capital to our shareholders. For the year, we're guiding to significantly increased free cash flow of $280 million to $290 million as we move past the approximately $60 million of one-time items and working capital fluctuations that negatively impacted our 2025 free cash flow.
Speaker #2: This is a big improvement in EPS crossing $5 for the first time with strong growth in focus on driving free cash flow and or growth of 16% to returning capital to our year.
Speaker #2: shareholders. For the year, we're guiding to significantly increased free cash flow With the overall 2026. to $290,000,000 as of $280,000,000 we move past the approximately We continue to have sharp $60,000,000 of one-time items and working capital fluctuations that negatively impacted our 2025 free cash flow.
Speaker #2: Our 2026 guidance range assumes a net positive impact of approximately $10 million to $15 million in cash tax savings related to the One Big Beautiful Bill Act and partially offset by expenses associated with the expansion of our global workforce strategy.
Chad Anderson: Our 2026 guidance range assumes a net positive impact of approximately $10 million to $15 million in cash tax savings related to the One Big Beautiful Bill Act, and partially offset by expenses associated with the expansion of our global workforce strategy. Underlying these guidance ranges, we have made the following assumptions: Non-GAAP annualized effective tax rate is expected to be 24.5%, unchanged from last year. Interest expense for the year is expected to be approximately $62 million to $66 million, compared to $68 million last year. Fully diluted shares for the year are expected to be approximately 45 million to 46 million, compared to 48.5 million last year. Capital expenditures for the year are expected to be approximately $60 million to $70 million, including $52 million to $62 million of capitalized software development costs.
Chad Anderson: Our 2026 guidance range assumes a net positive impact of approximately $10 million to $15 million in cash tax savings related to the One Big Beautiful Bill Act, and partially offset by expenses associated with the expansion of our global workforce strategy. Underlying these guidance ranges, we have made the following assumptions: Non-GAAP annualized effective tax rate is expected to be 24.5%, unchanged from last year. Interest expense for the year is expected to be approximately $62 million to $66 million, compared to $68 million last year. Fully diluted shares for the year are expected to be approximately 45 million to 46 million, compared to 48.5 million last year. Capital expenditures for the year are expected to be approximately $60 million to $70 million, including $52 million to $62 million of capitalized software development costs.
Speaker #2: Underlying these guidance ranges, we have made the following assumptions. Non-GAAP annualized effective tax rate is expected to be 24.5% Interest expense for the year is expected unchanged from last year.
Speaker #2: to be approximately $62,000,000 to $66,000,000 compared to $68,000,000 last year. Fully diluted shares for the year are expected to be approximately $45,000,000 to $46,000,000 compared to $48.5 million last year.
Speaker #2: Capital expenditures for the year are expected to be approximately $60,000,000 to $70,000,000 $62,000,000 of capitalized software development costs. Looking to 2026 and beyond, we believe free including $52,000,000 to anticipate utilizing at least 50% of our cumulative free cash flow from 2026 to 2030 for stock repurchases.
Chad Anderson: Looking to 2026 and beyond, we believe free cash flow will grow significantly, and we anticipate utilizing at least 50% of our cumulative free cash flow from 2026 to 2030 for stock repurchases. Beyond that, the company has tremendous optionality for dynamically allocating capital to its highest and best use based on market conditions, including additional stock repurchases, repayment of debt, or synergistic tuck-in M&A. We have a lot to be proud of.
Chad Anderson: Looking to 2026 and beyond, we believe free cash flow will grow significantly, and we anticipate utilizing at least 50% of our cumulative free cash flow from 2026 to 2030 for stock repurchases. Beyond that, the company has tremendous optionality for dynamically allocating capital to its highest and best use based on market conditions, including additional stock repurchases, repayment of debt, or synergistic tuck-in M&A. We have a lot to be proud of.
Speaker #2: Beyond that, the company has tremendous optionality for dynamically allocating capital to its highest and best use based on market conditions, including additional stock repurchases, repayment of debt, or synergistic tuck-in M&A.
Speaker #2: We have a lot to be proud of. Along with our customers, we've done well through recessions, financial crises, COVID, and the shift to the cloud through commitment to customers, strong execution of our operating plan, and we remain attractive financial model balanced committed to providing investors with an providing meaningful solutions to our earnings, and cash flows along with a prudent and purposeful capital allocation between growth of revenues, strategy and, as always, remain focused on providing enhanced value to our customers and our shareholders.
Chad Anderson: Along with our customers, we've done well through recessions, financial crises, COVID, and the shift to the cloud through commitment to providing meaningful solutions to our customers, strong execution of our operating plan, and we remain committed to providing investors with an attractive financial model balanced between growth of revenues, earnings, and cash flows, along with a prudent and purposeful capital allocation strategy, and as always, remain focused on providing enhanced value to our customers and our shareholders. I'll now turn the call back over to Mike to talk more about our aspirational goals for the next five years.
Chad Anderson: Along with our customers, we've done well through recessions, financial crises, COVID, and the shift to the cloud through commitment to providing meaningful solutions to our customers, strong execution of our operating plan, and we remain committed to providing investors with an attractive financial model balanced between growth of revenues, earnings, and cash flows, along with a prudent and purposeful capital allocation strategy, and as always, remain focused on providing enhanced value to our customers and our shareholders. I'll now turn the call back over to Mike to talk more about our aspirational goals for the next five years.
Speaker #2: I'll now turn the call back over to Mike to talk more about our aspirational goals for the next five years.
Speaker #1: Chad, I note that today's call is a unique format for us, but it's a unique time in software. As such, I'd like to spend the next several minutes providing a bit more color on our aspirational goals for the next five years and why we're a sustained, profitable, ideal platform for growth. Thank you.
Mike Gianoni: Thank you, Chad. I note that today's call is a unique format for us, but it's a unique time in software. As such, I'd like to spend the next several minutes providing a bit more color on our aspirational goals for the next five years and why we're an ideal platform for sustained, profitable growth. While our record of past performance is compelling, we're just getting started. In addition to improving our operations, go-to-market capabilities, and increased pace of innovation, we have successfully addressed and closed the book on many of the challenges the company faced over the past few years, allowing us to focus on the value creation opportunities ahead in the near, mid, and long term. So let's get down to more specifics on our aspirational goals.
Mike Gianoni: Thank you, Chad. I note that today's call is a unique format for us, but it's a unique time in software. As such, I'd like to spend the next several minutes providing a bit more color on our aspirational goals for the next five years and why we're an ideal platform for sustained, profitable growth. While our record of past performance is compelling, we're just getting started. In addition to improving our operations, go-to-market capabilities, and increased pace of innovation, we have successfully addressed and closed the book on many of the challenges the company faced over the past few years, allowing us to focus on the value creation opportunities ahead in the near, mid, and long term. So let's get down to more specifics on our aspirational goals.
Speaker #1: While our record of past performance is compelling, we're just getting started. In addition to improving our operations, go-to-market capabilities, and increased pace of addressed and closed the book on many of innovation, we have successfully the challenges the company allowing us to focus on the value faced over the past few years, near, mid, and long term.
Speaker #1: So let's get down to more specifics on our aspirational goals. From 2026 through 2030, we are targeting creation opportunities ahead in the organic total revenue growth of 4% to 6% with potential upside based on viral events, a new product launches, such as our Agents for Good catalog, and new development agent I discussed earlier.
Mike Gianoni: From 2026 through 2030, we are targeting organic total revenue growth of 4% to 6%, with potential upside based on viral events and new product launches, such as our Agents for Good catalog and new Development Agent I discussed earlier. Our revenues are driven by two primary revenue streams, our contractual software and our transactional solutions. Moving to profitability, we are targeting adjusted EBITDA growth at 6% to 8% CAGR between 2026 and 2030, while expanding our adjusted EBITDA margin to 40%+. Margin and expenses are highly controllable, and our success over the past several years should give you confidence in our discipline to continue improving our earnings. Slide 24 in our investor materials provides more detail on the planned initiatives to drive continued margin expansion, most of which are already underway.
Mike Gianoni: From 2026 through 2030, we are targeting organic total revenue growth of 4% to 6%, with potential upside based on viral events and new product launches, such as our Agents for Good catalog and new Development Agent I discussed earlier. Our revenues are driven by two primary revenue streams, our contractual software and our transactional solutions. Moving to profitability, we are targeting adjusted EBITDA growth at 6% to 8% CAGR between 2026 and 2030, while expanding our adjusted EBITDA margin to 40%+. Margin and expenses are highly controllable, and our success over the past several years should give you confidence in our discipline to continue improving our earnings. Slide 24 in our investor materials provides more detail on the planned initiatives to drive continued margin expansion, most of which are already underway.
Speaker #1: Our revenues are driven by two primary revenue streams: our contractual software and our transactional solutions. Moving to profitability, we are targeting adjusted EBITDA growth at 6% to 8% CAGR between 2026 and 2030 while expanding our adjusted EBITDA margin plus.
Speaker #1: Margin and expenses are highly controllable and our to 40% success over the past several years should give you confidence in our discipline to continue improving our earnings.
Speaker #1: Slide 24 in our investor materials provides more detail on the planned initiatives to drive continued margin expansion, most of which are already underway. We expect this improvement in EBITDA will translate to strong free cash flow growth.
Mike Gianoni: We expect this improvement in EBITDA will translate to strong free cash flow growth. The $285 million midpoint of our 2026 guidance range represents a 25% CAGR since 2020. These strong cash flows drive a purposeful capital allocation strategy with consistent stock repurchases as a core tenet. We expect to deploy 50%+ of our cumulative free cash flow generated between 2026 and 2030 to stock repurchase and continue to reduce our common stock outstanding. This is a continuation of our significant stock repurchase program of the last couple of years, in which we've reduced common stock outstanding by approximately 13% since Q4 2023. Based upon the planned growth across revenue, EBITDA, and cash flow, as well as our aggressive repurchase of our shares, our goal is non-GAAP EPS CAGR of 13%+ between 2026 and 2030.
Mike Gianoni: We expect this improvement in EBITDA will translate to strong free cash flow growth. The $285 million midpoint of our 2026 guidance range represents a 25% CAGR since 2020. These strong cash flows drive a purposeful capital allocation strategy with consistent stock repurchases as a core tenet. We expect to deploy 50%+ of our cumulative free cash flow generated between 2026 and 2030 to stock repurchase and continue to reduce our common stock outstanding. This is a continuation of our significant stock repurchase program of the last couple of years, in which we've reduced common stock outstanding by approximately 13% since Q4 2023. Based upon the planned growth across revenue, EBITDA, and cash flow, as well as our aggressive repurchase of our shares, our goal is non-GAAP EPS CAGR of 13%+ between 2026 and 2030.
Speaker #1: The $285 million midpoint of our 2026 guidance range represents a 2020. These strong cash flows strategy with consistent stock 25% CAGR since tenet. We expect to deploy 50% plus of our cumulative repurchases as a core, reduce our common stock outstanding.
Speaker #1: This is a continuation of our significant stock repurchase program of the last couple of between 2026 and years in which we've reduced common stock 2030 to stock repurchase and continue to outstanding by approximately 2023.
Speaker #1: Based upon the planned growth across flow, as well as our aggressive repurchase of our shares, revenue, EBITDA, and cash our goal is non-GAAP 13% since Q4 EPS CAGR of 13% plus between 2026 off to a good start in that regard.
Mike Gianoni: We are off to a good start in that regard, with expected non-GAAP EPS growth of 17% at the midpoint of 2026 guide, and we're confident in our ability to deliver double-digit EPS growth in 2027 and beyond. To conclude, we believe Blackbaud is a compelling investment with multiple opportunities for strong shareholder returns. From an operating, financial, and strategic perspective, we are thrilled to be carrying momentum into the years ahead. We look forward to our continued journey, and I would like to congratulate the entire Blackbaud team for a very strong year in fiscal 2025, and as always, thank them for the job well done. Thank you. And operator, we're happy to take questions now.
Mike Gianoni: We are off to a good start in that regard, with expected non-GAAP EPS growth of 17% at the midpoint of 2026 guide, and we're confident in our ability to deliver double-digit EPS growth in 2027 and beyond. To conclude, we believe Blackbaud is a compelling investment with multiple opportunities for strong shareholder returns. From an operating, financial, and strategic perspective, we are thrilled to be carrying momentum into the years ahead. We look forward to our continued journey, and I would like to congratulate the entire Blackbaud team for a very strong year in fiscal 2025, and as always, thank them for the job well done. Thank you. And operator, we're happy to take questions now.
Speaker #1: We expect non-GAAP 2026 guide and we're 17% at the midpoint of confident in our ability to deliver and 2030. EPS growth of double-digit EPS growth in We are 2027 and beyond.
Speaker #1: To conclude, we believe Blackbaud is a compelling investment with multiple opportunities for strong shareholder returns. From an operating, financial, and strategic perspective, we are thrilled to be carrying momentum into the years ahead.
Speaker #1: We look forward to our continued journey and would like to congratulate the entire BlackBOAD team for very strong always, thank them for the job well year in fiscal '25 and, as now.
Speaker #1: operator, we're happy to take questions
Speaker #2: Thank using a speakerphone, please make sure you're to facilitate as many questions as mute function is turned off to allow possible. Our first question comes from the line James.
Operator: Thank you. If you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're 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, and please limit yourself to one question plus a follow-up to allow us to facilitate as many questions as possible. Our first question comes from the line of Brian Peterson with Raymond James. Please proceed with your question.
Operator: Thank you. If you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're 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, and please limit yourself to one question plus a follow-up to allow us to facilitate as many questions as possible. Our first question comes from the line of Brian Peterson with Raymond James. Please proceed with your question.
Speaker #2: please signal by pressing star one on your telephone keypad.
Speaker #2: equipment. Again, as a reminder, please your signal to reach our press star one to ask a question and please limit yourself to one done.
Speaker #2: Please proceed with your
Speaker #2: question. Thank you and of Brian Peterson with Raymond
Speaker #3: Thanks,
Brian Peterson: Thanks, guys, and congrats on the strong quarter. So, Mike, I wanted to double-click on some of your comments as it relates to AI. You gave some details as it relates to pricing. I'm curious, is that kind of a fully deployed agentic pricing comment across multiple categories? Because I can see how agentic or Agents for Good can work in fundraising, but I can also see back office, how do they get grants? So it seems like there could be more there. So I'm just trying to think about what that opportunity could look like on a customer level with economics. And do you kind of envision them starting small and building over time, or have you seen customers really lean into this? We'd love to understand some of the early data points you have.
Brian Peterson: Thanks, guys, and congrats on the strong quarter. So, Mike, I wanted to double-click on some of your comments as it relates to AI. You gave some details as it relates to pricing. I'm curious, is that kind of a fully deployed agentic pricing comment across multiple categories? Because I can see how agentic or Agents for Good can work in fundraising, but I can also see back office, how do they get grants? So it seems like there could be more there. So I'm just trying to think about what that opportunity could look like on a customer level with economics. And do you kind of envision them starting small and building over time, or have you seen customers really lean into this? We'd love to understand some of the early data points you have.
Speaker #3: guys, and congrats on the strong quarter. So, Mike, I wanted to double-click on some of your details as it relates to pricing.
Speaker #3: I'm curious, is that kind comments as it relates to AI. You gave some agentic pricing comment across multiple question plus a follow-up to allow us categories?
Speaker #3: Because I can see how agentic or Agents for Good can back office. How do they get grants? So it seems like there could be more there.
Speaker #3: So I'm just trying to think about what that opportunity could look like on a customer level with economics. And do you kind of envision them starting small and customers really lean into this?
Speaker #3: So I'm just trying to think about what that opportunity could look like on a customer level with economics. And do you kind of envision them starting small and building over time, or have you seen We'd love to understand some of that really data points you have.
Speaker #4: Yeah, sure,
Mike Gianoni: Yeah, sure, Brian. So my comments, specifically when I was talking about pricing and the cross-sell opportunity, were just related to that first product, the Development Agent. We will have many products coming out in this catalog that we talked about in our customer conference. But, you know, product number one, that's a new revenue line for us, is this Development Agent. And so the pricing model and the opportunity for cross-sell that I mentioned and, and I think new logos it'll bring, is just the first product.
Mike Gianoni: Yeah, sure, Brian. So my comments, specifically when I was talking about pricing and the cross-sell opportunity, were just related to that first product, the Development Agent. We will have many products coming out in this catalog that we talked about in our customer conference. But, you know, product number one, that's a new revenue line for us, is this Development Agent. And so the pricing model and the opportunity for cross-sell that I mentioned and, and I think new logos it'll bring, is just the first product.
Speaker #4: specifically when I was talking about opportunity were just related to that first product. The development agent. We will have many products coming work in fundraising, but I can also see our customer conference, but product number one, that's a new revenue line for us, is this development agent.
Speaker #4: And so the cross-sell that I mentioned in, out in this catalog that we talked about in, and I think new logos that'll bring is just the first pricing model and the opportunity for product.
Speaker #3: Got it. So it sounds like still more to come there. And I know you mentioned, on some of the
Brian Peterson: Got it. So it sounds like still, still more to come there. And I know you mentioned on some of the contract renewals that some customers were pushing for maybe the three years to four years. You know, anything else that you can share on retention or pricing or cross-sell? I know we have a bigger cohort coming up for renewal in 2026, so would love to kind of understand some of the moving parts and what you're seeing from customers as they come up for renewal. Thanks, guys.
Brian Peterson: Got it. So it sounds like still, still more to come there. And I know you mentioned on some of the contract renewals that some customers were pushing for maybe the three years to four years. You know, anything else that you can share on retention or pricing or cross-sell? I know we have a bigger cohort coming up for renewal in 2026, so would love to kind of understand some of the moving parts and what you're seeing from customers as they come up for renewal. Thanks, guys.
Speaker #3: Customers were pushing for maybe the three-year to four-year terms. Anything else that you can share on retention or pricing or cross-sell? I know we have a bigger cohort coming up for renewal in '26, so we'd love to kind of understand some of the moving parts and what you're seeing from customers as they come up for renewal.
Speaker #3: Thanks, guys.
Speaker #4: Yeah. Our renewals are remaining strong. At our planned numbers, we have a bigger cohort this year. Like you mentioned, and yeah, over
Mike Gianoni: Yeah, our renewals are remaining strong at our planned numbers. We have a bigger cohort this year, like you mentioned. And yeah, over 20% of our customers are on 4-year or longer contracts. So we've, you know, we've started this program years ago, so essentially, you know, everyone's on a 3-year or longer contract, and more than 20% are on 4 years and longer. So it's-- there's no big difference between the success we've had in the past, except this year, we just have a bit of a higher cohort than regular. Thanks, Mike. Yep, you bet.
Mike Gianoni: Yeah, our renewals are remaining strong at our planned numbers. We have a bigger cohort this year, like you mentioned. And yeah, over 20% of our customers are on 4-year or longer contracts. So we've, you know, we've started this program years ago, so essentially, you know, everyone's on a 3-year or longer contract, and more than 20% are on 4 years and longer. So it's-- there's no big difference between the success we've had in the past, except this year, we just have a bit of a higher cohort than regular. Thanks, Mike. Yep, you bet.
Speaker #4: Twenty percent of our customers are on four-year or longer contracts. So we've started this program years ago. So essentially, everyone's on a three-year or longer contract renewal, and some are four years and longer.
Speaker #4: So there's no big difference between the success we've had in the past, except this year we contract, and more than 20% are on cohort than
Speaker #4: So there's no big difference between the success we've had in the past, except this year we contract, and more than 20% are on cohort than just have a bit of a higher.
Speaker #3: Mike.
Speaker #4: Yep, Thank you.
Operator: Thank you. Our next question comes from the line of Rob Oliver with Baird. Please proceed with your question.
Operator: Thank you. Our next question comes from the line of Rob Oliver with Baird. Please proceed with your question.
Speaker #2: comes from the line of Rob Oliver with question.
Speaker #2: comes from the line of Rob Oliver with
Rob Oliver: Great. Thanks, guys. Good morning. I had two questions, Mike, the first one for you. Appreciate all the color and the targets. I wanted to ask about, you know, you've seen a bunch of markets for nonprofits, and, you know, we're reading currently about some of the stress that is, that nonprofits are seeing. There's a bunch of survey work out there about, you know, the impact of federal funding and local funding on some of these nonprofits.
Rob Oliver: Great. Thanks, guys. Good morning. I had two questions, Mike, the first one for you. Appreciate all the color and the targets. I wanted to ask about, you know, you've seen a bunch of markets for nonprofits, and, you know, we're reading currently about some of the stress that is, that nonprofits are seeing. There's a bunch of survey work out there about, you know, the impact of federal funding and local funding on some of these nonprofits.
Speaker #5: morning. I had two questions,
Speaker #5: morning.
Speaker #5: Mike.
Speaker #5: targets. I wanted to ask about you've seen bet. you nonprofits and we're reading currently about some of the stress that a bunch of markets for are seeing.
Speaker #5: There's a bunch of survey work out Our next question impact of federal funding and local funding on some of these nonprofits. Baird. about the current And I was
Speaker #5: there about the environment and what you're seeing there under stress, creates risk or how you guys are addressing that and whether you're from your discussions with customers seeing customers perhaps lean more towards relationship.
Rob Oliver: I was wondering if you could just share with us some color from your discussions with customers about the current environment, and, you know, what you're seeing there under stress, whether that creates, you know, risk or, you know, how you guys are addressing that, and whether you're seeing customers, perhaps, lean more towards providers with whom they've had a long-term relationship. And then I had a quick follow-up for Chad.
Rob Oliver: I was wondering if you could just share with us some color from your discussions with customers about the current environment, and, you know, what you're seeing there under stress, whether that creates, you know, risk or, you know, how you guys are addressing that, and whether you're seeing customers, perhaps, lean more towards providers with whom they've had a long-term relationship. And then I had a quick follow-up for Chad.
Speaker #5: And then I had a quick follow-up for Chad.
Mike Gianoni: Yeah, sure, Rob. So the ultimate stress in our market was COVID. Customers closed their doors for a while, performing arts centers, you know, museums and others, and we saw them all open. So the resiliency test for our market was COVID. We do have customers that are getting either less or no government grants. It's not all of our customers, it's just a handful, 'cause many of them don't. But when that happens, they rely on us even more because we're the platform for donations. Our software solutions are not in the money flow of grants from state, local, or federal government. So if part of their revenue line is under pressure, they put more emphasis on the other part of their revenue line, which is a Blackbaud platform. We haven't seen any customers go out of business.
Mike Gianoni: Yeah, sure, Rob. So the ultimate stress in our market was COVID. Customers closed their doors for a while, performing arts centers, you know, museums and others, and we saw them all open. So the resiliency test for our market was COVID. We do have customers that are getting either less or no government grants. It's not all of our customers, it's just a handful, 'cause many of them don't. But when that happens, they rely on us even more because we're the platform for donations.
Speaker #4: our market was providers with whom they've had a long-term Yeah, sure, Customers closed Please proceed with your their doors for a while. Performing arts Rob. others.
Speaker #4: our market was providers with whom they've had a long-term Yeah, sure, Customers closed Please proceed with your their doors for a while. Performing arts Rob.
Speaker #4: And we saw
Speaker #4: resiliency test for our market was COVID. We do have customers that are getting either less or no government centers, museums, and grants. It's not all of our customers.
Speaker #4: It's just a whether that handful because many of them don't. But when that happens, So the ultimate stress in donations. Our software solutions are not in the money flow of if part of their revenue line is more because we're the platform for emphasis on the other part of their revenue line, which is a under pressure, they put more BlackBOAD platform.
Mike Gianoni: Our software solutions are not in the money flow of grants from state, local, or federal government. So if part of their revenue line is under pressure, they put more emphasis on the other part of their revenue line, which is a Blackbaud platform. We haven't seen any customers go out of business. We've seen them, you know, having to tighten their belts a little bit, but it's actually beneficial for us when the requirement and need of our platform is a higher percentage of their revenue. So we haven't seen this as an issue for our customers.
Speaker #4: Grants. I've seen this as an issue from state, local, or—so we haven't had customers.
Speaker #4: We haven't seen any customers go out of business. We've seen them having to tighten their belts a little bit. But it's actually beneficial for us when the requirement and need of our platform is a higher percentage of their revenue.
Mike Gianoni: We've seen them, you know, having to tighten their belts a little bit, but it's actually beneficial for us when the requirement and need of our platform is a higher percentage of their revenue. So we haven't seen this as an issue for our customers.
Speaker #5: Great. Okay. Thanks, Mike. I
Rob Oliver: Great. Okay. Thanks, Mike. I appreciate that. And then, Chad, one for you and a little bit of a follow-up on Brian's question earlier. So I appreciate the long-term targets, you know, very, very, very helpful. As you look at that top-line CAGR, I was wondering if you could provide us any color around, you know, the contribution to that, perhaps from, say, new logos versus pricing versus cross-sell. Any color that kind of rolls up into that core CAGR number would be extremely helpful. Thank you, guys.
Rob Oliver: Great. Okay. Thanks, Mike. I appreciate that. And then, Chad, one for you and a little bit of a follow-up on Brian's question earlier. So I appreciate the long-term targets, you know, very, very, very helpful. As you look at that top-line CAGR, I was wondering if you could provide us any color around, you know, the contribution to that, perhaps from, say, new logos versus pricing versus cross-sell. Any color that kind of rolls up into that core CAGR number would be extremely helpful. Thank you, guys.
Speaker #5: Chad, one for you, and a little bit of a follow-up on Brian's—they rely on us—even appreciate the questions or question earlier. So, long-term targets are very, very helpful.
Speaker #5: As you look at that top-line CAGR, I was wondering if you could provide us any color around the contribution to that, perhaps from, say, new logos, versus pricing, versus cross-sell, any color that kind of rolls up into that core CAGR number on that would be extremely helpful.
Speaker #5: Thank you, guys.
Speaker #4: Yeah, thanks, Rob. I could start. So, I think the big piece of information here is we do not have in Q4 there, our new AI products represented.
Mike Gianoni: Yeah, thanks, Rob. I could start off there. So I think the big, the big piece of information here is we do not have, you know, in those long-term numbers, our new AI products represented. It's just too early. And so that product that I described, the Development Agent, and I gave some color around pricing and opportunity, is not included in the 2026 guide or the long-term aspirational. So, you know, we, we give the, the guide and the aspirational, and we always say, "Plus," the word plus, well, that's where the plus comes from. So we think there's some interesting opportunities there, but we don't include that. And we've got a pretty good balance of, you know, in those numbers, the long-term numbers, of some price increase, which is just part of the, part of the system now, which is part of the engine.
Mike Gianoni: Yeah, thanks, Rob. I could start off there. So I think the big, the big piece of information here is we do not have, you know, in those long-term numbers, our new AI products represented. It's just too early. And so that product that I described, the Development Agent, and I gave some color around pricing and opportunity, is not included in the 2026 guide or the long-term aspirational. So, you know, we, we give the, the guide and the aspirational, and we always say, "Plus," the word plus, well, that's where the plus comes from. So we think there's some interesting opportunities there, but we don't include that. And we've got a pretty good balance of, you know, in those numbers, the long-term numbers, of some price increase, which is just part of the, part of the system now, which is part of the engine.
Speaker #4: It's just too early. And so, that product that I described, the around pricing, and included in the '26 development agent, and I gave some color guide for the long-term aspirational.
Speaker #4: So we give the guide and the aspirational, and we always say plus the word plus where that's where the plus comes from. So we think there's some interesting opportunities there, but we don't include balance of in that.
Speaker #4: those numbers, the long-term numbers opportunity, is not increase, which is just part of the system now, which is part of the engine. And we've got a pretty good Some price increase with our multi-year contracts.
Mike Gianoni: Some price increase with our multi-year contracts. As I mentioned, we've got, you know, a big part of our customers on four-year or longer, some new logos and some cross-selling. And then also in there, you know, about 1/3 of our revenue is transaction revenue, and that's pretty healthy. It's kind of the high single digits organically. So that's built into those numbers, as well.
Mike Gianoni: Some price increase with our multi-year contracts. As I mentioned, we've got, you know, a big part of our customers on four-year or longer, some new logos and some cross-selling. And then also in there, you know, about 1/3 of our revenue is transaction revenue, and that's pretty healthy. It's kind of the high single digits organically. So that's built into those numbers, as well.
Speaker #4: mentioned, we've got a big part of our customers on four-year or longer some new logos. And As I those long-term numbers in there, about a third of our of some price revenue is transaction revenue.
Speaker #4: high single digits And that's pretty healthy. It's kind of the organically. So that's built into those some cross-selling. And then also well.
Operator: Thank you. Our next question comes from the line of Parker Lane with Stifel. Please proceed with your question.
Operator: Thank you. Our next question comes from the line of Parker Lane with Stifel. Please proceed with your question.
Speaker #2: Next question comes from the line of Parker.
Speaker #2: Lee with Stifel.
Speaker #2: Please proceed with your
Speaker #2: question. Hi, this Thank you. Our
Matthew Kikkert: This is Matthew Kikkert for Parker. Thank you for taking our questions. Congratulations on the quarter. I'm curious, you mentioned the 50% of free cash flow that would go to repurchases through 2030. I'm curious, how much of... are you gonna focus on maybe strategic M&A in the AI landscape out of that free cash flow as well? And then secondly, leverage down to 2.5x, do you have a new leverage target in mind that you would like to see that at through 2030?
Matthew Kikkert: This is Matthew Kikkert for Parker. Thank you for taking our questions. Congratulations on the quarter. I'm curious, you mentioned the 50% of free cash flow that would go to repurchases through 2030. I'm curious, how much of... are you gonna focus on maybe strategic M&A in the AI landscape out of that free cash flow as well? And then secondly, leverage down to 2.5x, do you have a new leverage target in mind that you would like to see that at through 2030?
Speaker #6: for taking our questions. is Matthew Kickert for Parker. Congratulations on the quarter. I'm Thank you 50% of free cash flow that would go
Speaker #6: curious you mentioned the curious how much are '2030. I'm landscape? Out of that free cash flow as well, and then M&A in the AI you going to focus on maybe strategic secondly, leverage down to 2.5X.
Speaker #6: Do you have a new leverage target in mind that you would like to see that
Mike Gianoni: Yeah, I'll take the M&A part. So, you know, share repurchase is our top priority from a capital strategy standpoint. I think we've proven that in the last couple of years and stated that for the aspirational goals. As far as tuck-in M&A, still very much on the table, if you will. We're a natural buyer, you know, in this space. We've done really well in that area the last 10 years. And so there's always some interesting things that are typically small, founder-led, you know, innovative solutions that might accelerate growth for us or expand our current footprint from a near adjacency standpoint. So those are not off the table. It's just stock repurchase is the highest priority. We've got capacity, you know, to do both, quite well.
Mike Gianoni: Yeah, I'll take the M&A part. So, you know, share repurchase is our top priority from a capital strategy standpoint. I think we've proven that in the last couple of years and stated that for the aspirational goals. As far as tuck-in M&A, still very much on the table, if you will. We're a natural buyer, you know, in this space. We've done really well in that area the last 10 years.
Speaker #4: priority from a capital strategy standpoint. I think we've proven that in the last couple of years and stated that for the aspirational goals. M&A, still very As far as tucking much on the table, if you buyer.
Speaker #4: space, we've done really In this in that area the last 10 always some interesting things that are well typically small founder-led innovative solutions years.
Mike Gianoni: And so there's always some interesting things that are typically small, founder-led, you know, innovative solutions that might accelerate growth for us or expand our current footprint from a near adjacency standpoint. So those are not off the table. It's just stock repurchase is the highest priority. We've got capacity, you know, to do both, quite well. What was the other part of this question?
Speaker #4: that might accelerate growth for us or expand our current footprint from a will. And so there's the table. It's just stock We're a natural repurchase is the highest priority.
Speaker #4: near-adjacency standpoint. So those are not off
Speaker #4: And we've got capacity to do both quite well. What was the other part of this
Mike Gianoni: What was the other part of this question?
Speaker #4: question?
Speaker #5: The second part, Matt, was
Chad Anderson: The second part, Matt, was related to the deleveraging, right?
Chad Anderson: The second part, Matt, was related to the deleveraging, right?
Speaker #5: Deleveraging, right? And thank you for the question. Obviously, the share repurchases remain a high priority, but at the same time, we're continuing to focus on the balance sheet, right?
Mike Gianoni: Uh, right.
Mike Gianoni: Uh, right.
Chad Anderson: And thank you for the question. Obviously, the share repurchases remain a high priority, but at the same time... We're continuing to focus on the balance sheet, right? So, you know, from a modeling perspective, whenever you look at our 2026 diluted share count assumption of 45 million to 46 million, right? Our expectations based on the current share price and interest rate environment, we'll be able to not only continue to repurchase shares, but I would expect us to continue to delever as well, Matt. So we don't necessarily share that target, but at this point, you know, I'd consider by the time we get to the end of the year, that'll be, you know, below that 2.5 point where we concluded 2025.
Chad Anderson: And thank you for the question. Obviously, the share repurchases remain a high priority, but at the same time... We're continuing to focus on the balance sheet, right? So, you know, from a modeling perspective, whenever you look at our 2026 diluted share count assumption of 45 million to 46 million, right? Our expectations based on the current share price and interest rate environment, we'll be able to not only continue to repurchase shares, but I would expect us to continue to delever as well, Matt. So we don't necessarily share that target, but at this point, you know, I'd consider by the time we get to the end of the year, that'll be, you know, below that 2.5 point where we concluded 2025.
Speaker #5: So from a modeling perspective, whenever you look at our 2026 diluted million to 46 million, on the current share price right, our expectations based and interest rate environment, we'll be share count, the assumption of 45 able to not only continue to repurchase shares, but I would delever as well, Matt.
Speaker #5: At this point, I'd consider by the time we get there, expect us to continue to be below that to the end of the year. That'll be 2.5 points where we concluded 2025.
Speaker #6: Okay. That's all from me.
Matthew Kikkert: Okay. That's all from me. Thank you.
Matthew Kikkert: Okay. That's all from me. Thank you.
Speaker #6: you.
Speaker #4: Thank you.
Mike Gianoni: Thank you.
Mike Gianoni: Thank you.
Speaker #2: Thank you. Ladies and gentlemen, as a reminder, if you'd like to join the question queue, please So we don't keypad. Our next question comes from the Evercore ISI.
Operator: Thank you. Ladies and gentlemen, as a reminder, if you'd like to join the question queue, please press star one on your telephone keypad. Our next question comes from the line of Bill McNamara with Evercore ISI. Please proceed with your question.
Operator: Thank you. Ladies and gentlemen, as a reminder, if you'd like to join the question queue, please press star one on your telephone keypad. Our next question comes from the line of Bill McNamara with Evercore ISI. Please proceed with your question.
Speaker #2: Please proceed with your line of Bill McNamara, with
Speaker #7: Hi. This is Bill on for Kirk, and thanks for taking my
Bill McNamara: Hi, this is Bill on for Kirk, and thanks for taking my question. Looking out to your long-term guidance, can you outline the key margin expansion catalysts and any high-level timing you can share, such as the data center closures, AI-driven efficiency gains, and your global workforce strategy?
Bill McNamara: Hi, this is Bill on for Kirk, and thanks for taking my question. Looking out to your long-term guidance, can you outline the key margin expansion catalysts and any high-level timing you can share, such as the data center closures, AI-driven efficiency gains, and your global workforce strategy?
Speaker #7: question. Looking at your long-term guidance, can you outline the key margin expansion catalysts and any
Speaker #7: the data center closures, question. workforce
Speaker #7: strategy? Yeah,
Mike Gianoni: Yeah, sure. So those are, those are the three key tenets. The internal use of AI is a significant opportunity for us. I talked a little bit about that in my prepared remarks, and it's a combination of driving future productivity and innovation from a product standpoint. We have AI usage across every department in the company. We're using AI in sales development and pipeline building to contract renewals. We have a quality assurance agent we're using. I talked about the use of Copilot across the entire employee base. There's a lot of use cases in engineering, using tools like Microsoft Copilot, Anthropic Claude, for lots of things, you know, software bug remediation to QA to code generation. So there's a lot of opportunity there.
Mike Gianoni: Yeah, sure. So those are, those are the three key tenets. The internal use of AI is a significant opportunity for us. I talked a little bit about that in my prepared remarks, and it's a combination of driving future productivity and innovation from a product standpoint. We have AI usage across every department in the company. We're using AI in sales development and pipeline building to contract renewals. We have a quality assurance agent we're using. I talked about the use of Copilot across the entire employee base. There's a lot of use cases in engineering, using tools like Microsoft Copilot, Anthropic Claude, for lots of things, you know, software bug remediation to QA to code generation. So there's a lot of opportunity there.
Speaker #4: three key sure. So those are the tenets. The internal use of AI is a talked a little bit about that in my prepared significant opportunity for us.
Speaker #4: of driving future productivity product standpoint. usage across every I department in the company. We're and innovation from a using AI in sales development and pipeline building We have AI We have a quality assurance agent we're using.
Speaker #4: I talked about the
Speaker #4: use AI-driven efficiency gains, and your global to contract renewals. cases in engineering using tools like employee base. There's a lot of Software bug remediation, for lots of things.
Speaker #4: So there's a lot of opportunity there from a workforce standpoint. We established a QA, pretty big footprint over the last 12–13 months in our Blackbaud India office.
Mike Gianoni: From a workforce standpoint, you know, we established a pretty big footprint over the last 12, 13 months in our Blackbaud India office. That continues to grow. That will grow substantially in the next 12 to 18 months go forward. Just a fantastic opportunity to get access to really highly talented direct employees. So we've moved away from, you know, third-party relationships. So moving away from third-party relationships, there's just a natural labor arbitrage there for us. So really great opportunities and, you know, workforce strategy, closing a couple of small data centers that are sort of the last two that we have. That was a multi-year effort. And then internal use of AI for productivity and innovation. So we see lots of really exciting, interesting opportunities across all three of those.
Mike Gianoni: From a workforce standpoint, you know, we established a pretty big footprint over the last 12, 13 months in our Blackbaud India office. That continues to grow. That will grow substantially in the next 12 to 18 months go forward. Just a fantastic opportunity to get access to really highly talented direct employees. So we've moved away from, you know, third-party relationships. So moving away from third-party relationships, there's just a natural labor arbitrage there for us. So really great opportunities and, you know, workforce strategy, closing a couple of small data centers that are sort of the last two that we have. That was a multi-year effort. And then internal use of AI for productivity and innovation. So we see lots of really exciting, interesting opportunities across all three of those.
Speaker #4: That continues to grow. Microsoft Copilot and Anthropic Claude That will grow substantially. And the next 12 to 18 months go forward, just a fantastic opportunity to get access to really highly employees so we've moved away from third-party relationships.
Speaker #4: relationships, there's just a natural labor So moving away from third-party arbitrage there for us. So really great opportunities. And workforce strategy, closing a talented direct couple of small data centers that are sort of the last two that we have that was a multi-year effort.
Speaker #4: And lots of really exciting, interesting opportunities across all three. You're welcome.
Speaker #4: then internal use of AI for productivity and innovation. So we see
Speaker #7: Thanks.
Bill McNamara: Great. Thanks.
Bill McNamara: Great. Thanks.
Mike Gianoni: You're welcome.
Mike Gianoni: You're welcome.
Speaker #1: Well, all right. Well, thank you, Melissa. And thank you, everyone, for joining us today. We will be attending a number of investor events in those.
Chad Anderson: Well, all right. Well, thank you, Melissa, and thank you everyone for joining us today. We will be attending a number of investor events in February and March to include several conferences which are listed on our investor relations site. We hope to see you then and/or speak with you very soon. So we wish you continued success, and have a wonderful day.
Chad Anderson: Well, all right. Well, thank you, Melissa, and thank you everyone for joining us today. We will be attending a number of investor events in February and March to include several conferences which are listed on our investor relations site. We hope to see you then and/or speak with you very soon. So we wish you continued success, and have a wonderful day.
Speaker #1: February and March, to include Great. several conferences which are listed on our investor relations site. We hope to see you then and/or speak with you very soon.
Speaker #1: So, we wish you continued success and have a
Speaker #1: wonderful day. Thank
Speaker #2: you. This concludes today's teleconference. You may disconnect your lines at this time.
Operator: Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
