Blackbaud — Third Quarter 2026 Earnings Summary

Financial Performance:

• GAAP total revenue was $292.6 million, a 4.1% increase year-over-year; non-GAAP organic revenue also increased 4.1%.
• GAAP recurring revenue was $287.0 million, up 4.1% year-over-year, representing 98.1% of total revenue; non-GAAP organic recurring revenue increased 4.1%.
• GAAP income from operations was $60.0 million with an operating margin of 20.5%, an increase of 110 basis points year-over-year.
• Non-GAAP income from operations was $94.6 million with an operating margin of 32.3%, an increase of 240 basis points year-over-year.
• GAAP net income was $46.1 million, with diluted earnings per share (EPS) of $1.02, up $0.04 year-over-year.
• Non-GAAP net income was $61.2 million, with diluted EPS of $1.36, up $0.26 year-over-year.
• Non-GAAP adjusted EBITDA was $111.1 million, up $11.4 million year-over-year, with a margin of 38.0%, an increase of 260 basis points.
• The Rule of 40 score was 42.1%.
• GAAP net cash provided by operating activities was $141.7 million, an increase of $2.5 million year-over-year, with an operating cash flow margin of 48.4%, a decrease of 110 basis points.
• Non-GAAP free cash flow was $126.0 million, an increase of $2.8 million year-over-year, with a margin of 43.1%, a decrease of 70 basis points.
• As of September 30, 2026, total debt was $1.04 billion ($22.7 million current portion, $1.02 billion non-current), down from $1.11 billion at December 31, 2025.
• Deferred revenue totaled $384.7 million ($381.0 million current, $3.7 million non-current), up from $371.8 million at December 31, 2025.

Guidance and Future Outlook:

• Blackbaud reaffirmed its 2026 full-year financial guidance, expecting to finish in the upper half of the range across all four key metrics.
• Full-year GAAP revenue guidance is $1.173 billion to $1.179 billion.
• Full-year non-GAAP adjusted EBITDA guidance is $430 million to $438 million.
• Full-year non-GAAP diluted EPS guidance is $5.15 to $5.25.
• Full-year non-GAAP free cash flow guidance is $280 million to $290 million.
• Updated 2026 assumptions include a non-GAAP annualized effective tax rate of approximately 24.5%, interest expense of $62 million to $66 million, diluted weighted average shares outstanding of 45.0 million to 46.0 million, and capital expenditures of $60 million to $70 million (including $52 million to $62 million of capitalized software development costs).

Business Segments and Product Lines:

• Introduced Platform for Good™, a unified operating system for social impact integrating products, data, AI, workflows, and ecosystem on a shared architecture.
• Unveiled Lantern™, a domain-specific language model purpose-built to optimize fundraising intelligence, developed in collaboration with Databricks; Lantern will be embedded in Platform for Good starting in 2027 and will power select Raiser's Edge NXT® and Agents for Good™ capabilities.
• Announced advancements to the Development Agent and introduced the Data Health Agent, a continuous data steward for data issues via review-and-approve workflows; previewed agentic experiences for finance and education.
• Announced a strategic partnership with BILL to embed BILL's business payments network and payment-processing capabilities into Blackbaud Financial Edge NXT® Payment Assistant™.
• Expanded availability of Expedited Giving and Expedited Giving+ within YourCause® solutions, delivering donations 90% faster than the industry average and enabling near real-time direct-to-nonprofit donations.
• Announced new integrations with Microsoft 365 Copilot and Intuit Mailchimp to connect Raiser's Edge NXT to preferred technologies.

Market and Competitive Landscape:

• Management described the company as the world's leading provider of AI-powered solutions for social impact, citing a widening competitive moat and clear market leadership driven by innovation.
• Blackbaud leverages the sector's largest philanthropic data set and deepest expertise in fundraising workflows, decisions, and results.

Risks and Challenges:

• Forward-looking statements identify risks including management of acquired company integration, uncertainty regarding business and renewals from existing customers, and shifting revenue mix impacting gross margin.
• Risks related to the development, deployment, regulation, security, market adoption, and perception of artificial intelligence technologies are noted.
• Cybersecurity and data protection risks, potential litigation, and other factors detailed in SEC filings are cited as potential material impacts on results.

Management Commentary and Tone:

• CEO Mike Gianoni stated that innovation continues to drive market leadership and that the company is a sound investment choice with potential to create shareholder value, supported by strong year-to-date results and an accelerating pace of innovation.
• CFO Chad Anderson highlighted strong execution discipline, ongoing productivity improvements, and balance sheet optimization, noting a commitment to a financial model balanced across revenue, earnings, and cash flow growth.
• Management expressed confidence in the company's momentum in the near, mid, and long term.

Other Key Points:

• Year-to-date, the company repurchased more than 7% of its common stock outstanding since the end of 2025.
• The leverage ratio was reduced from 2.7x in Q1 2026 to 2.3x in Q3 2026.
• As of September 30, 2026, approximately $832 million remained under the common stock repurchase program, which was expanded, replenished, and reauthorized in December 2025.
• Total repurchases during 2026 are expected to represent between 7% and 10% of outstanding common stock as of December 31, 2025.
• Blackbaud operates in the United States, Australia, Canada, Costa Rica, India, and the United Kingdom, supporting users in over 100 countries.