Blackbaud (BLKB) Q4 2023 earnings summary

Executive summary

• Q4 revenue grew 7.4% YoY and adjusted EBITDA margin reached 33.6%, producing a 41.0% Rule of 40 result.

• A five-point operating plan targets mid- to high-single-digit revenue growth and low- to mid-30s adjusted EBITDA margins in 2024 and beyond.

Financial highlights

• Q4 GAAP revenue was $295.0M; recurring revenue was $287.4M, up 8.4% YoY and 97% of total revenue.

• Q4 GAAP net income was $5.4M versus a $21.3M loss; adjusted EBITDA was $99.3M with a 33.6% margin, versus $67.9M and 25.7% a year earlier.

• FY23 revenue was $1,105.4M, up 4.5%; GAAP net income was $1.8M versus a $45.4M loss, and adjusted EBITDA was $356.5M with a 32.2% margin.

• Non-GAAP diluted EPS was $1.14 in Q4 and $3.98 for FY23, versus $0.68 and $2.69 in the prior-year periods.

Outlook and guidance

• FY24 guidance: revenue $1,170M–$1,200M; adjusted EBITDA margin 32.5%–33.5%; diluted EPS $4.12–$4.38; adjusted free cash flow $254M–$274M.

• FY24 guidance midpoints imply ~7% organic revenue growth, a 33% adjusted EBITDA margin, $264M adjusted free cash flow and Rule of 40 of ~40%.

• Guidance assumptions include a 24.5% non-GAAP tax rate, $34M–$38M interest expense, 53.5M–54.5M diluted shares and $65M–$75M capital expenditures.

• FY24 security incident expectations include $5M–$10M net pretax expense and $8M–$13M net cash outlays for ongoing legal fees.

• Pricing execution, operating improvements and cost control are priorities; renewal pricing is expected to compound and one-time services declines are expected to slow.