Blackbaud (BLKB) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue grew 3.3% year-over-year to $287 million, driven by strong Social Sector performance and recurring revenue growth, with 89% of revenue from the Social Sector and ongoing product innovation including AI initiatives.

• EVERFI underperformance led to a reduction in annual revenue guidance and strategic review, with management hiring advisors and divesting nonrecurring services.

• Aggressive stock repurchase program executed, with 8% of shares repurchased YTD and a target of up to 10% by year-end, supported by strong cash flows and expanded to $800 million.

• Security Incident-related expenses and legal proceedings continue to impact results, with $12.8 million in pre-tax costs YTD and $6.8 million paid to settle with the California Attorney General.

• The company remains focused on innovation, cost control, and purposeful capital allocation, including targeted M&A and investments in cloud migration and cybersecurity.

Financial highlights

• Q3 2024 GAAP revenue was $286.7 million, up 3.3% year-over-year; non-GAAP organic revenue grew 4.3%.

• Social Sector revenue grew 6.6% year-over-year, representing 89% of total revenue; recurring revenue reached $280 million, up 4.1%.

• Adjusted EBITDA margin was 33.2% in Q3; non-GAAP operating margin was 27.5%.

• Adjusted free cash flow was $98 million in Q3 and $187 million YTD; operating cash flow reached $222.4 million YTD.

• Gross dollar retention was 90% overall and 92% excluding EVERFI.

Outlook and guidance

• Full-year 2024 revenue guidance revised to $1,150–$1,160 million, reflecting EVERFI headwinds; organic growth at midpoint expected to be 5.2%.

• Adjusted EBITDA margin guidance increased to 33–34%; non-GAAP EPS expected between $3.98–$4.16.

• Adjusted free cash flow guidance raised to $235–$245 million, a 12% increase at midpoint over 2023.

• Interest expense for 2024 expected at $53–$57 million; capital expenditures at $65–$75 million.

• Ongoing Security Incident-related legal fees projected at $8–$13 million for 2024.