Blackbaud, Inc. Q3 FY2025 earnings call

• Mike Gianoni highlighted strong Q3 results across revenue, EBITDA, EPS, and cash flow, emphasizing the power of the team, product offerings, and market leadership. - Focus areas include acquiring new logos, driving innovation (e.g., AI capabilities unveiled at bbcon 2025, such as agentic AI suite Agents for Good), and operational rigor for profitability. - Chad Anderson reiterated Q3 results, including organic revenue growth, adjusted EBITDA, non-GAAP diluted EPS, and adjusted free cash flow, and discussed capital allocation strategy with a focus on stock repurchase.

Blackbaud generated revenue of $281 million in Q3, representing 5.2% organic growth year-over-year. Adjusted EBITDA margin was 35.4%, up more than 200 basis points year-over-year. Non-GAAP diluted earnings per share were $1.10, up 11% year-over-year, and free cash flow was $125 million. The company's solutions drive revenue and enhance employee efficiency for customers in the social impact sector.

• Revenue projection for 2025: $1.120 billion to $1.130 billion, midpoint ~5% organic growth at constant currency. - EBITDA margin: ~35.4% to 36.2%. - Non-GAAP diluted EPS: $4.30 to $4.50, midpoint ~11% growth year-over-year. - Adjusted free cash flow: $195 million to $205 million, increased due to anticipated 2025 cash tax savings. - Stock repurchase target increased from 5% to 5.2% to 7% for 2025, with estimated weighted average diluted share count for 2025 between 48.5 million and 49.5 million shares.

• Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from projections. Investors are referred to the most recent Form 10-K and other SEC filings for more information on these risks.

Q: Congrats on the quarter. Brian Peterson from Raymond James asked about customer feedback post bbcon on AI and agentic functionality, and monetization potential.

A: Mike Gianoni said there's a lot of excitement on AI capabilities, some already released, with new products like the Development Agent starting to be sold this quarter, ramping up next year with expected quick ROI for customers.

Q: Rob Oliver from Baird asked about new logo wins, contract size, and when new logo push might move up customer count, and about revenue reclassification.

A: Michael Gianoni mentioned strong new logo wins with larger ARR deals, average ARR increasing, mid-tier and enterprise customers well-served, and contracts at least 3 years; Chad Anderson said the revenue reclassification was due to an immaterial noncash error related to valuation allowance in income taxes accounting, with adjusting amounts related to revenue south of $100,000.

Q: Kirk Materne with Evercore ISI asked about monetization of agents and ROI.

A: Michael Gianoni said agents start being sold this quarter, with modest revenue and bookings, expecting quick ROI as seen with early adopter customers.

Q: Matthew Kikkert from Stifel asked about structural drivers for transactional revenue growth and margin expansion levers.

A: Michael Gianoni said transactional revenue platforms are doing well without viral events, and margin expansion levers include cost takeout in infrastructure, AI productivity, new solutions like agentic AI, and share repurchase.