BLKB - Earnings call transcript Q4 2024

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Operator

Good day, and welcome to Blackbaud's Fourth Quarter and Fiscal Year 2024 Earnings Conference 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

Good morning, everyone. us Call. Fourth joining Year and for Earnings XXXX you on Quarter Blackbaud's Full Thank

on call Boor, your me and we and President Joining will the Chief Tony Vice CEO, Gianoni, and your remarks, Chairman; President will Blackbaud's open make and and Officer. up questions. Tony Financial Blackbaud's prepared Vice today Executive Mike are then Mike for line

differ subject and cause recent that note our to from Please actual risks could information uncertainties that Form filings contain Please statements comments projected. more and to forward-looking most results those refer other materially those our risks. on for today to SEC XX-K

more website today release guidance. details both on for to The of on focus our GAAP GAAP measures results. measures. non-GAAP our our this non-GAAP financial measures will in GAAP performance, financial internally and Please note as year materials will otherwise call. financial as specified, measures press investor measure Unless combination full including Please business. or be substitute well that as refer a of a representative only and non-GAAP isolation our considered not we the discussion for non-GAAP the results We full on to are refer to that should believe posted how from we

And with Mike. that, let me turn the you, call over to

Michael Gianoni

Thank you, everyone. Good Tom. morning,

I quickly business on touch results, to EVERFI. the want our XX. December on EVERFI into divestiture closed dive of I Before We

are include and to we on As on profitability to into guidance with best. core advance are EVERFI do closed go-forward this year results financial you dilutive pleased and XXXX, looking Blackbaud We're our EVERFI. not into focusing and in the will XXXX. know, forward was business, concentrating we growth and our our both what Heading to new revenue deal

the achievements social rest and with the purpose-built I the some most position comprehensive sector. software the progress the our mission-critical providing key X impact of how to we for XXXX, services am years past Turning year. of highlight I In suite made past the want extended and has the from business. as express pleased leader, to Blackbaud over and market the

to continue developer aggressively and customers partner money our to more raise streamlining extensive with network enhancing help our while their invest in and We operations. innovation

allow solutions spend on the customers what impact work. to their the focusing social concrete to making matters difference Our a premier time more across impact software vital space. remain social We partner them, through

wins we competitive a drive existing our relationships a is our customers. continues differentiator while also XXXX, approximately In of significant sales. innovation market-leading new with list in Our saw to deepening logo and improvement XX,XXX

These I'll in in Academy. the end-to-end Last workflow Notre and Dame like quarter, Jewish ed you schools, In K-XX I and High highlighted other Heritage valued higher in San several innovation. this vertical. Diego education quarter, and ed vertical, give higher American wins including the School, those verticals more institutions our

continue programs. We on new enhancements growth and through focused are industry this our sales in initiative of and logo verticals across all to marketing supporting be very

for Intelligence on learning we'll machine communication. to several multiple outcomes. which spend help responses contextual Copilot, current over introduced by across prospecting our have for that AI quarter, features NXT mainly AI the that program been better good key and be drives machine products on features and But adopted X,XXX workflows, efficiency actions. capabilities Blackbaud better focused in streamline Blackbaud's releasing me The Edge customers AI a customers. minute and of initiatives. learning enhance outreach Let achieve We've generative Raiser's some integrates questions composing provides our

data. encouraging. We're good us AI we to are software prospects access the and we to to cultivating experimentation that of started deliver, the AI way transform with like have genetic could the years also education of efficiencies. work, allow innovation industry, social, is centric benchmark industry-leading leveraging improve an rest thanks CoPilot that And our social we the sectors across only and opportunities corporate to

We successful apply marketing, across continue to success active AI. and engineering an innovator and to a to solutions be scale customer range experiment of identify,

own So when a help employees ask if of our not it me, customers can question It's or them. our AI can does.

Now turning results. XXXX to financial our

Revenues For Rule EBITDA per social earnings and in the and nearly strong up grew of X% despite sector full was approximately of Social, $X.XXX line, a adjusted revenue XX reoccurring $X.XX largest company's FY of non-GAAP 'XX revenue, the X%. year XXXX, score Blackbaud of contractual And a diluted billion produced revenue share of margin XX%, XX%. comparison. within our

revenue grew revenue Our line recurring second largest X%. of Social Transactional

dollar excluding EVERFI. value XX% solutions our driven approximately the customers by our using was retention Gross see

Our cash million XX% strong at remained in from of or approximately up revenue, adjusted free extremely flow XX% XXXX. $XXX

adjusted in well innovation fuel as program. flow to strong free Our repurchase cash us as great ongoing gives confidence in invest continuing stock our

settlement stock share between And outstanding. comp, employee we For the figure to X% XXXX, you XXXX, continue repurchase to to bought In common aggressively back net our to the the of include if XX% shares. the XX%. on intend rises X% stock company of outstanding

our Our years. in attractive past solidifying of the a model financial are successful XXXX X Blackbaud's work over results reflection

since Our cash and revenue, XX flows significantly have Rule of margins, XXXX. improved

spend for to minute success you. like a I'd that outlining

in was XXXX growth X.X%. rate In was it X.X%. XXXX, Our organic

was In Our EBITDA was margin it XXXX, XX.X%. XXXX XX.X%. in

we on Our XXXX a XX is XXXX in continuous success In effectiveness operating only becoming with a in of of a company on XX.X%. plan, our not was and built cash flow efficiencies also combined social proven Blackbaud's XXXX XX.X%. XX.X%. do in Rule it X.X%. XXXX, In a of and go-to-market result refinement centering was was This product adjusted our innovation, Rule margin and programs, And powering customers clear was tenets. focus free employees. And our see be of future all a impact, path by when trajectory XXXX. multi-year we but will in to it both a these opportunities, XX to dedication with steadfast

we a that substantial choice value. continues Let create shareholder me to believe investment sound why should be conclude with Blackbaud

Regarding logos empowered of new and streams organic growth full plus, by you installed expansion innovation. mid-single-digit base visible organic can reoccurring and targeting driven the revenue, both expect revenue by revenue our

You improve to can EBITDA. to on cost, focus strong a employee expect continue productivity

Additionally, a in common very and cash free drive to outstanding purposeful in buy back strategy stock plan of with flow beyond, will X% XXXX X% allocation a strong capital our between XXXX. and

great of and and their we dedication And look We employees journey by as continued our to as ambition to our forward coming XXXX. always, a XX make Blackbaud our years, we value in progress increasing commitment world our the offering Rule for make against thank the around company. shareholders such

let Tony. call to the With over me turn that,

Anthony Boor

through us. remain also results over our committed I'm 'XX excited along providing which I'm our investors cash opportunities prudent with financial model, front Mike strong in financial and improved We growth allocation and profitability and X since Mike. attractive Thanks, years, walked improving pleased XXXX. year revenues, a in results, and capital the progression and earnings these of flows 'XX tells flow a and dramatically with an to purposeful strategy. our full balance last cash between about story of growth topline

XXXX approximately percentage X.X on the EVERFI about million was X with billion. revenues year $XXX EBITDA a full points $XX reiterate approximately were point was $X.XXX to revenue year. up total drag million to of X.X% to growth But organic improvement Adjusted margin. for

earnings compared our Non-GAAP operating X-point EBITDA of share the $X.XX power free was free revenue plan, XX.X% an representing last grow cash impacted and to Adjusted XXXX. of speaks cash to increased ability to margin flow per from to positively $X.XX and margin adjusted up EPS year. cash million flow compared free which in Our adjusted flows. to $XXX million, $XXX last year, XX.X%

This $XX cash associated increase profitability due our higher million tax in increase rate. 'XX in negative approximately taxes despite to interest share additional improved approximately of with program a is repurchase $XX and in the and impact correspondingly million cash expense

number us robust investment cash bought XX%. of if to 'XX. critical share as and like to confidence of include the innovation stock We Our product settlement stock rises And a the stock you flow figure of the employee free comp, repurchases. XX% areas outstanding of net back continue end of gives common in

customers numbers I In year and we provide 'XX, I appropriately. for new logo set both maximize in several deliver models guidance, will and capabilities products XXXX our your invest that Before we to vast table help innovative within and to set influence to plan our We refine quarters ensure the the expansion to and value. that the acquisition our continue capabilities to on go-to-market base. expect our our want factors you customer

and 'XX. longer EVERFI on financial beyond. in our excluded of sector financial sale XX 'XX of guidance. corporate we separately 'XX revenue contributed to no the December will will be completed revenues, $XX.X we XXXX divested, results and but report go-forward from million EVERFI our EVERFI mentioned, With Mike As

YourCause in included line. single the revenue a will revenue of be rest products with our

Asset with cost $XX have million EVERFI improvement In divestiture. of company space of charge $XX of million, EBITDA associated annualized December and related we EVERFI made in divestiture incurred we noncash of transaction would the in The the our which to Group. with $XX February the approximately 'XX, of release of on was to of in D.C., $X basis payment related in connection a acquired forward. costs a costs office an to lastly, lease cash to for provide XXXX. Washington, impairment a adjusted EVERFI part EVERFI the as going the the of been million acquisition $X.X release Regarding was million onetime There lease GAAP-only to million expect it 'XX. And remaining finalized

range The within pretax charge and the million previously $XXX was announced. we

of million. in a offset Additionally, a allowance resulted tax tax sale valuation approximately impairment partially $XX of benefit charge the EVERFI $XXX and million, by

highest Additional our the our quarter is fourth the revenue due year. charitable that details Thinking to events revenue lowest XX-K. timing first quarter recall will quarter, in is and seasonality, while giving typically included about and our throughout be the

and to our tends from a to QX standpoint benefits employee the related of profitability. to timing Turning expenses profitability award employee to due lowest vesting. be stock quarter

every to compared on have QX increases Our employee year, compensation tends QX. costs merit X higher compensation-related into go so annual effect for July to

and million of due $X to to anticipate the currency. to million impact revenue we for Additionally, EBITDA year $X adjusted negative

Moving now to guidance.

financial material or in changes, the bad, XXXX landscape. Our assumes guidance good no macroeconomic current

constant explained So $X.XXX currency can excluding this $X.XXX representing X.X% than rate, midpoint to on organic billion, for and to the of our to range billion less X in the X.X% a or of of range points X growth be are is X.X% The EVERFI, 'XX reported percentage factors. primarily basis. as million by year, we revenue X.X% growth approximately projecting

Remember, way, the First, the quarters the in we cohorts. while price 'XX This a lower trend renewal and of uplift renewal period will basis. recognized represented as 'XX which X, first basis continue in revenue pricing drove and contracts fourth call, on a quarter's last meaningful third continue in have of the X year renewal the years 'XX. third growth discussed the quarter in straight-line lap which we full on in to a we escalators lapped rates is on prior

for a by divided over So contract, example, total the in full the contract and term. evenly recognized value X-year is XX

expect softness well to near transitioned modest we in our efforts as we And focus from some net as migrations, largely have are to lesser bookings complete, sales logos a as now cross-sells. extent, term on new which

incorporating mentioned, in As is was not viral from we with some giving change a initiative growth currently as which success guide we our years. in new any XXXX. Mike significantly And up saw this lastly, past logo early are anticipated

to Shifting profitability.

result reported improvement non-GAAP better higher point in of of of guidance XX.X% the business Rule range at a time, XX constant overall focus the intelligence, to expect And India-based margin $X.XX X% road up cybersecurity or of in to full XXXX the innovation, we continue margins just on revenue making and while combination configuration $X.XX to growth expected outlined, currency will to the to is spend I we for same of tech. basis expansion the XXX which of year-over-year. investments areas XX.X%. as with year-over-year. at artificial year, in The EBITDA anticipate midpoint product We EPS the a opportunities, at X% maps, and XX.X% Therefore, in margin and approximately of is

on continue We driving a adjusted cash free sharp returning have focus to our and capital to shareholders. flow

office The and we're to to Washington, with investments million. access investment including long-term guidance inclusive benefits year, $XXX several I of free that to onetime the the will cash associated cash and a high-quality For adjusted will $XXX office cost-effective payment new company mentioned a range provide flow the million India earlier guiding shareholders and lease that onetime the release that is in D.C. tech for location of talent. provide $XX million to

incremental XXXX of finally, the expense interest using discretionary repurchases, due year-over-year expect for approximately offset of $XX working approximately the debt planned pay we down $XX certain cash. capital million including items year-over-year, factors, interest to we stock to comprised decline incur and million divestiture-related an Additionally, of by XXXX roughly $XX in our of expect million timing and And other costs.

You our can of Slide deck. Investor on XX more details find

have from for is costs. be these to the in $XX the expense are approximately last XX.X Underlying annualized XX.X rate assumptions: for $XX approximately capitalized compared million to million. for million expected 'XX. million, Capital $XX unchanged to are $XX Fully to be is we made expenditures to effective shares guidance be $XX the million year million $XX software million approximately development ranges, Non-GAAP including expected million, diluted million of XX.X% expected to $XX the year year expected be to approximately Interest tax to year. following to

and will repurchasing from continue Looking grow anticipate cash minimum, to shares free dilution adjusted and 'XX flow believe a to share-based offset compensation. beyond, to at we

Beyond to dynamically availability interest including use tremendous has based performance debt. the of additional acquisitions conditions, highest will that, the allocate of capital our The and stock stock, forward. decisions help or company repurchases, of to allocation environment M&A repayment going market our synergistic optionality rate inform capital on its

be We into forward of more of XXXX. a to a Rule of to lot beyond look as to company moves proud XX Blackbaud have with a becoming XXXX a by lot goal and and

to on our As such, providing we and shareholders. value customers remain enhanced focused our

questions. for Operator, up line the let's open

Operator

our We take from will first Instructions] now Raymond Brian James. with question Peterson [Operator

Brian Peterson

you So all I resources know go-to-market appreciate maybe here. of migrations I the the from mentioned commentary and towards pivoting guys the new. some away net

or the guys markets or maybe have So does opportunity look like make you progress XXXX, in what And most XX,XXX that if you beyond that think we today? have end like? look does where customers you opportunity what TAM think the about biggest you the can that where

Michael Gianoni

net question. the Brian, a production which it's few in solutions ago a while of on our to Thanks Mike. logos the up last because new some nice cloud the new really a have largely new the us grew behind of this logo for last good it And year, back We our from -- focus started the year. are is news. platforms to ramped migrations year bigger now, half quite

year. land year clear, Just back-to-base new go course, to on expect total and we're It's more to on in well. expand. that we just do be of logos lot focused bookings we're this up focused of We over and last still cross-selling as a

my I as doing pipeline business, K-XX, well. opportunities board and large mentioned a and remarks, arts logos couple of nonprofit, there in K-XX in in prepared great YourCause across well the wins. cultural, We're new

forward and well. So it several to working last that, we again, logo while we it's ago this been saw tail started because for of year. you look going results shift will, we've year new that migrations years with on We're the a and pleased if this

Brian Peterson

what viral you is in back the of versus assuming I of recurring? any viral California let's And the more, is know the If viral Tony, in guide. kind associated the you say guess, with historically, that, kind appreciate of And Mike. that year? any some this have seen I you events of mentioned giving say, giving you'd we I giving what weren't look commentary, XXXX Great. mix

Anthony Boor

The really for volatile. the seen perspective. viral, year for an 'XX In you. made and the Thank in question. good high viral Brian had can you've from QX, extremely be tough numbers, a that very Yes, year. compare especially as we a QX you've 'XX,

the Last the we transaction year, in of channels our come of side to XX.X% really and through next business, events of up viral no 'XX events. because we're of think viral saw payments largely systems. largely QX I

we we hence, in so And tough a a for and 'XX. just -- had big that really year-over-year whipsaw compare QX transactions tough of saw

run can from, nothing. saw we year as last They to next

something $XX what as kind to So of the range million we've I my as year as could million in to a be here. as zero well you in seen tell could $XX tenure high is that's

we a of south bit for of impact. lot see then it million guide, incorporated volatility. that's wildfires, of into little our was a $X the did but And So

Operator

comes question Rob from Baird. next Our Oliver with

Robert Oliver

would as thinking are on of was, grants. just be in Tony, base customer view be follow-up. many your hear Mike curious this know one then guys for and they'd contemplated first relative hearing My I'd curious how recipients of are to to your one hospitals, around of for guys potential I the 'XX, you your be what foundations, allocation? you federal from how impact to some Two. impact that your guidance guidance potential you're about know changes year? thinking federal in customers, the I whether had And they're about that just and I universities dollar

Michael Gianoni

hearing a see sure, We're bit. We about yet that Yes, impact any don't little Rob. us. for

be at system clear, funding that we're Just to not involved all. in

Our platforms you donors, workflow donations are in individual if cash, driving you of will. We're involved that federal will. for if not through

customers is our donations in that of on their So platforms. marketplace. what which through it's drive haven't we our revenue need using likely there, for the But early much days of will best, us, yet but focus seen we more to

of of customers, K-XX are the Now fundings not than we've more example. involved others, and foundations, for so got some a some in too, wide are those that schools such variety versus like some

Robert Oliver

Got it.

impacts and But guide, we Okay, kind maybe help walk on guys Tony, and rank some just a flow through, decisions slide EVERFI, moving that if parts the be are well. could order than some helpful. the weaker cost some helpful. of of through free lot spending, and this that the you of I definitely the would walked you there of us cash those around cash just free And on of can with on flow understand that I you then And if know But as you expected. for initiatives.

Anthony Boor

there's happy can from the deck guide slide $XXX million, same is of year that on information Rob. look you for to, a a the the that million XXXX. said, in I for Yes, cash of And new provide everybody. But the midpoint going we're like flow $XXX will free

D.C. on for We acquired that of for the this now. EVERFI lease buyout $XX year of we ago hit going Washington, that as million X years part have onetime

would said pick as comments, in $XX The million the million, we paid next over on so remaining nice So $XX a release a few facility. lease perspective prepared cost up from that that I my us for leases, years. have

getting And been about typically have really then going the tough on great around world. million flow India location. one but annualized We've we an the will employees. for talent. come engineers several few has is savings third-party out is going contractors, for those we're forward. is that and bring talent P&L find educated trained, we have countries good the access. believe, those in through a India new just as folks hundreds to to It's in-house that, and year a India actual $X.X India Then a million had $X cash to of that the of of opportunity years,

so talent. the about the fully $X a And of couple usage. be scarcity more million That's of over of India years to next we're investing going in because

big other expense the Interest Rob. is one,

year back over $XX comments our with debt incremental and of into interest as of to carries our because again we As we amount on that planning of this in about that we are year. said back interest. incremental Obviously, then that about stock this you know, this million X% year year. expect related prepared million buying last we the expense. And X%, stock That another of was an XX% $XX bought

million the to of amount million $XX interest impact So overall. $XX gross is

paid good debt had some generation free have and -- cash we Now to obviously, that. offset some down flow

I million. net the year-on-year So is think, $XX about impact,

$XX of And flow and payments ancillary the then puts wash a costs of nuts, takes. the then because then the EVERFI cash investment other have for bit year. timing. the million expense a few some some we the India will free those this through the little working big that buyout, interest are of and largely There big lease And capital. and working But capital changes and vendor the was divestiture

Operator

Our Parker from next comes question with Lane Stifel.

J. Lane

Looking little XXXX. some of of just Or intend sort of line? that Is across about how you a is in can get talk at achieve help you savings here faster? balanced bottom be of cost for initiatives? the to going particularly to Can a mix number a low-hanging target there XX fruit the different that, that Rule relatively you there

Michael Gianoni

sort We've We couple over I'll closed Parker. that, us. get with most mix the to centers a data them a It's Mike. start behind of of Yes, still too. there, have It's years. of

have. that I So that decade quick that far believe out billion will employees, growth, A will here, mid-single-digit revenue help. and we're X,XXX with $X.X than more the We're now example, more getting business in convert. when scale were we the we We of with started, with revenue of employees. in by my billion ever X,XXX $X.X

scale So of to the a more we And getting business. expect out the continue in we're lot that future.

the India be is going time will some labor which online. a arbitrage with there effort really little take to to Tony mentioned come as well, that Also,

there's got really business. with across So really my internally of engineering the in opportunities mid-single remarks, focus the a other in interesting areas. driving things as just been of operations topline AI, in and of the a productivity digits and mentioned sales driving we've I lot on prepared on going And and lot

initiatives got that's to we've Parker, underway, So going several drive that.

pretty results. When all started So those because pretty of big of up months, on did around I huge some it like push in good EBITDA, think we we went jump the feel XX, XX XX Rule roughly. got we've a points we confident

Rule the XX. So here driving get there's I opportunity think forward to and keep of to that great

Anthony Boor

Parker, to add linear expect to this be don't we things. of of XX. in getting couple a One, Rule And just I'd that

of out old FE, RE other about out Mike things off and as migration, get data we'll turn Some a of bunch the the centers, cloud we like et talked versions things of those getting the cetera. of Citrix of the and costs

march we'll that later be throughout things have these impacts little towards XX over years. of the Some a of kind and of some few that next Rule staged stair-step will

Operator

next [Operator Kirk from Materne comes Instructions] question Our with Evercore.

S. Kirk Materne

guys to what just AI how to wondering you Obviously, start sort development think with great impacting that's opportunities was within this data just industry. maybe of of a Mike, treasury have your of of sort AI, I you kind curve around you. your you that of jump existing that could you some expansion incremental growth or bear how your your customers? Can a for and with bring with customers? just maybe opportunity into into bit factors your opportunity little cross-sell

Michael Gianoni

Yes. Great question.

a of said days achieving ton in X,XXX there, customers rates, and are going with have embedded at product got machine And And early We on related now. We've lots Edge our AI. by donor exciting my customers in our some learning over driving that things step-level with remarks, AI and this still Raiser's we I donations to adopted revenue NXT measure have it's that, insights. changes that. it's conversion that increased prepared

and It Edge language really questions, NXT data Copilot, it's if stages Blackbaud generation, It's we're advanced is moving Raiser's in called more game business our drive in now their Impact a which is them revenue. which what will. to to be calling with with with to able I a to be out products think and the and Edge, going We sort allows of you coming Financial Edge improve also changer for to are customers natural of Blackbaud next NXT one soon. their interact

like going and by to accounting combining fund things do automation It's simplify also personalization.

introduced the out coming AI speak. these last year base been have or the coming we are current out. capabilities things so. over are Many we others capabilities advanced as have these in the and Today, products, So

in So on opportunities pricing AI we're working yet, not are solutions. advanced we out are monetize to new at Those looking our those. but

the that in So will future. come something that's

Operator

There are further questions at time. no this

So I back Tom now Barth comments. floor for to turn like the closing would over to

Tom Barth

Maria. you, for everyone, Thank us you, today. joining Thank

you are you, a We speaking and to site. events hope several then our Thank which include February on to you soon. number Relations with and Investor attending of will day. have and listed We a March to investor in see very conferences, nice be

Operator

today's concludes This teleconference.

disconnect participation. may at time. this You you lines Thank your for your

Blackbaud (BLKB) 18 Feb 252024 Q4 Earnings call transcript