BLKB — Blackbaud, Inc.

Summary of Blackbaud's Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Organic Revenue Growth: Increased by 4.2% to $281 million.
• Non-GAAP Adjusted EBITDA: Rose to $99 million, up $7 million with a margin improvement of approximately 1 percentage point.
• Non-GAAP EPS: Increased by 20% to $1.14, compared to $0.95 in the previous year.
• Free Cash Flow: Improved significantly to $37 million, up nearly $50 million year-over-year.
• Share Repurchase: Approximately 4.5% of shares outstanding were bought back in Q1 2026.

2. Strategic Updates and Business Highlights

• AI Enablement: Continued investment in AI capabilities, including the launch of the first agentic AI product, the Blackbaud Fundraising Development Agent, aimed at enhancing customer engagement and operational efficiency.
• New Customer Wins: Notable new logos included private K-12 schools, a performing arts center, a veterans organization, and a UK-based nonprofit, reflecting competitive displacements in various verticals.
• Product Innovation: Focus on integrating AI into existing products, with over half of Raiser's Edge NXT customers utilizing machine learning for donor prospecting.
• Long-term Aspirations: Targeting double-digit annual EPS growth (13% CAGR) from 2026 to 2030, with a focus on organic revenue growth of 4-6% annually and adjusted EBITDA growth of 6-8%.

3. Forward Guidance and Outlook

• 2026 Guidance: Reaffirmed full-year guidance, expecting significant earnings and cash flow improvements, with quarterly performance anticipated to be weighted towards the latter half of the year.
• Cash Flow Expectations: Midpoint of cash flow guidance for 2026 is $285 million, representing a 25% CAGR since 2020.
• Capital Allocation: Plans to allocate over 50% of cumulative free cash flow from 2026 to 2030 towards stock repurchases.

4. Bad News, Challenges, or Points of Concern

• Q2 Adjusted EBITDA: Expected to decline slightly year-over-year due to planned investments in AI, which may impact short-term profitability.
• Variable Transactional Revenue: Transactional revenue remains variable quarter-to-quarter and is not expected to include assumptions for viral giving events in guidance.
• Market Competition: While Blackbaud has a competitive edge with its AI capabilities, ongoing competitive pressures in the market could impact growth.

5. Notable Q&A Insights

• AI Adoption: The agentic AI product is targeted at thousands of existing customers, with strong interest shown in webinars and early adopter programs.
• New Logo Sales: New logo sales are a significant focus, with a notable enterprise deal closed in Q1, indicating a positive trend in customer acquisition.
• Pricing Strategy: The pricing model for the new AI products is based on annual subscriptions rather than usage-based, with potential for exploring other pricing models in the future.
• Operational Efficiency: Investments in AI are expected to enhance internal operations, with improvements in engineering productivity and customer support workflows.

Overall, Blackbaud demonstrated solid financial performance in Q1 2026, with a strong focus on AI-driven innovation and customer engagement, while also navigating challenges related to profitability and market competition.