管理層發言
Good day, and welcome to Blackbaud's Second Quarter 2026 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.
Good morning, everyone. Thank you for joining us on Blackbaud's Second Quarter 2026 Earnings Call. Joining me on the call today are Mike Gianoni, Blackbaud's Chief Executive Officer, President and Vice Chairman; and Chad Anderson, Blackbaud's Executive Vice President and Chief Financial Officer. Please note that our comments today contain forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from those projected. Please refer to our most recent Form 10-K and other SEC filings for more information on those risks. Today's discussion will focus on non-GAAP results. Please refer to our press release and investor materials posted to our website for full details on our financial performance, including GAAP results, full year guidance and long-term aspirational goals. We believe that a combination of GAAP and non-GAAP measures provide a more representative view of how we measure our business. Unless otherwise specified, we will refer only to non-GAAP financial measures on this call. Please note that non-GAAP financial measures should not be considered in isolation from or as a substitute for GAAP measures. We have also provided a slide presentation with supplemental data and additional highlights and financial metrics. The earnings release, supplemental tables and presentation are available in the Investor Relations section of our website on blackbaud.com. And with that, let me turn the call over to you, Mike.
Thank you, Tom. Good morning, everyone. We appreciate you joining today. We delivered another quarter of solid execution against our operating plan with a continued focus on efficiency and a rapidly accelerating pace of product innovation. We achieved our planned revenue and other financial targets for the quarter. As you saw in our press release, we pointed investors to the high end of our full-year financial guidance ranges, which does not include any meaningful revenue contribution from our five new AI products launched or announced this year. AI enablement remains central to our success, both in terms of the capabilities we're delivering to customers and in the way Blackbaud is operating. Our first Agentic products moved from launch into real customer results, which is reinforcing our confidence in our strategy and the opportunity ahead. We continue to invest aggressively in innovation to produce meaningful product enhancements and new solutions throughout our portfolio, including generative and Agentic AI capabilities. Our products enable our customers to dramatically improve engagement levels, raise more money and lead their organizations while increasing operational efficiency—ultimately allowing them to spend more time executing on their missions and less time on administrative tasks. No company can better help customers deliver on their meaningful missions than Blackbaud. Blackbaud brings nearly 45 years of specialized domain expertise, serving as a system of record for our customers with deeply embedded workflows purpose-built for the social impact sector. At the same time, we have continued to invest heavily in cybersecurity and AI governance to help protect our customers' data and provide a framework for our AI solutions to use that data responsibly. These are some of our customers' largest concerns, and we have addressed them head on. A significant number of organizations in our vertical markets have limited IT resources and face turnover and staffing shortages. We win because our solutions are intuitive, require fewer complex customizations and integrations, and translate advances like AI into practical outcomes customers can trust—building confidence that supports longer contract terms at renewal. In fact, approximately 90% of our contractual recurring revenue is on three-year or longer contracts and 25% on four-year or longer contracts. You may recall that just a few years ago, more than half of our renewal volume was from customers on one-year contracts. This quarter, we again saw a healthy mix of new customer logo wins and cross-sells of additional solutions to our existing customers. Several of our new logo wins were competitive displacements across multiple verticals. New logos this quarter included Nelson University, which selected Raiser's Edge NXT together with our analytics capabilities, and the East Hampton Historical Society, which chose Raiser's Edge NXT to modernize its fundraising. Additionally, we continue to see great momentum in upselling with our development agent, with cross-sells in our higher education and nonprofit verticals. We also had several notable wins that were competitive takeaways and returning customers. Jacksonville Zoo moved to Raiser's Edge NXT and Prospect Insights, displacing an incumbent point solution and returning to Blackbaud after several years away. And the Center for Autism Services Alberta selected Financial Edge NXT, a competitive takeaway from a horizontal accounting provider and another returning customer. These wins reflect the strength of purpose-built connected solutions over fragmented generic alternatives and the value of our solutions in meeting our customers' ambitious goals. We are more confident than ever that AI strengthens our ability to deliver differentiated solutions and drive future growth as well as improving how we run Blackbaud. Our first Agentic AI offering, the fundraising development agent, launched into general availability ahead of schedule earlier this year and we are now seeing genuine measurable results and return on investment from our customers. The development agent identifies potential in dormant donors who are not in a major gift officer portfolio and executes personalized, brand-aligned, multi-touch engagement sequences under human supervision. Early results are compelling. In production, the agent is generating a reply rate significantly above the industry average, a message open rate meaningfully above industry benchmarks, and an average attributable gift size well above industry norms. Importantly, customers are engaging a broader donor base without adding headcount. And the development agent is just the first of many ways we expect to add value to our customers. Over the last few weeks, we announced four additional Agents for Good solutions planned for the coming months. Each is embedded directly in the solutions our customers already use every day. The Data Health Agent will run autonomously within our fundraising solutions to identify duplicate entries, confirm contact information, and resolve consistent life changes—helping development offices run more curated and targeted campaigns. This agent will free up customer resources, as most customers have data health tasks assigned to staff. The Admissions Agent will enable any independent K–12 school to offer the high-touch, personalized admissions experience that previously only the most well-resourced institutions could achieve. The Digital Marketing Agent will help plan campaigns intelligently—from selecting the right audience to generating tailored content to optimizing outreach across channels in real time. And the Accounts Payable Agent, Financial Edge NXT's first autonomous AI agent, will work alongside finance teams to improve efficiencies, including automating invoice intake and optimizing payments. Alongside these agents, we're advancing a reimagined cloud-native, AI-first connected platform—a single operating system for social impact that connects every product, learns from every interaction and gets smarter over time, all while keeping humans firmly in control. We'll unveil the full details of this connected system, along with additional product news, at BBCON 2026 in Columbus, Ohio at the end of September. We're excited about what's ahead. I also wanted to highlight some innovation specific to our K–12 vertical. Within K–12, we previewed the Admissions Agent at our 2026 user conference and introduced a wave of embedded AI across our total school solution, including predictive candidate insights, new enrollment contract capabilities, and student success insights that help schools proactively support at-risk students. Also embedded is Blackbaud AI Chat that helps administrators quickly ask questions of their data, get insights in plain language, and take action directly within the solution, as well as a common records engine that syncs data in real time across our student information and fundraising systems—breaking down silos between departments and offering our customers the capability to integrate various systems. Our competitive differentiation is clear and widening. Our strength comes from combining proprietary data with the most robust sets of social impact data, processed and secured in real time, with the sector's richest Social Impact Signal Graph, deep embedded sector contacts and purpose-built governance. Native integrations across systems of record, engagement, financial accounting, transaction processing, and intelligence further strengthen that advantage. Our agents stand apart precisely because they are embedded in the solutions customers already trust, reducing the data gaps and security risks created by bolt-on tools. We're also seeing continued momentum in customer adoption—usage of AI-powered workflows has expanded meaningfully over the past several quarters and more than half of our Raiser's Edge NXT customers use machine-learning-enabled donor prospecting, generating tens of billions of predictions annually that live and aggregate within our systems, creating a self-improving feedback loop that generates better fundraising outcomes across our customer base. We also believe trust is critical to organizations allowing intelligent systems to act on their behalf. Our customers trust us as their partner, trust in our solutions that they are used to, trust in the data and trust in our security—our advantages for both our customers and for Blackbaud. Trust matters as AI usage increases. Recent research from the Blackbaud Institute shows that AI is now common across the social impact sector, yet most organizations are held back by a gap between adoption and effective use. We're helping close that gap in two ways: by delivering trusted transformational AI capabilities inside the tools our customers already use and through the AI Coalition for Social Impact, which recently launched a free, product-agnostic AI for Social Impact certification program to help professionals adopt AI effectively and responsibly. Now turning to how we use AI internally. We continue to identify, experiment and scale solutions across engineering, sales and marketing, customer success and the back office to improve speed and operational efficiency. Our engineering teams use leading generative AI tools such as Microsoft GitHub Copilot, Anthropic Claude and other approved solutions to accelerate development, reduce time to remediate software issues and increase throughput on new product delivery. We're also applying AI to better qualify inbound interest, support sales development and improve customer support. I believe our past performance is compelling. In addition to improving our operations, go-to-market capabilities and pace of innovation, we are focused on the value creation opportunities ahead in the near, mid and long term, both operationally and financially. As a reminder, from 2026 through 2030, we are targeting double-digit annual EPS growth driven by the following: organic total revenue growth of 4% to 6% annually with potential upside based on viral events and new product launches such as our Agents for Good catalog; adjusted EBITDA growth of 6% to 8% annually while expanding our adjusted EBITDA margin above 40%. Slide 24 in our investor deck provides more detail on the planned initiatives to drive continued margin expansion, most of which are already underway. We expect this improvement in EBITDA to continue to translate to strong free cash flow growth. We plan to use our very strong cash flows to drive a purposeful capital allocation strategy with consistent stock repurchases as a core tenet. We expect to deploy 50% or more of our cumulative free cash flow generated between 2026 and 2030 for stock purchases and to continue to reduce our common stock outstanding. This is a continuation of our significant stock repurchase program over the last couple of years in which we have reduced common stock outstanding by approximately 15% since the fourth quarter of 2023. In the more near term, as we stated in our earnings press release today, we are pointing investors to the high end of our original FY 2026 guide across revenue, adjusted EBITDA, EPS and free cash flow. Chad will provide more detail and color in a minute. To conclude, we believe Blackbaud is a compelling investment with multiple opportunities for strong shareholder returns. From an operating, financial and strategic perspective, we are pleased to be carrying real momentum into the second half of the year and the years ahead. We look forward to our continued journey. I also would like to thank the entire Blackbaud team for their continued strong efforts and for Blackbaud being named to Time's list of America's Best Companies in 2026—well done. I'd like to turn it over to Chad to walk through our second quarter results and our guide for the remainder of 2026.
Thanks, Mike, and good morning, everyone. In the second quarter, we continued to balance cost management with growth opportunities and innovation. As we do each quarter, we're focused on durable subscription-led performance, prudent expectations around transactional revenue, and steady progress on profitability and cash flow. Our Q2 performance reflected continued demand for our mission-critical solutions along with growth in transactional revenue. As always, transactional revenue can vary from quarter-to-quarter, and our guidance philosophy assumes performance consistent with historical patterns and does not include any assumption for viral giving events. Q2 organic revenue grew 3% to $291 million. As we previously indicated, we expected some moderation in organic revenue growth during the year given the size and timing of certain renewal cohorts. Our second quarter results were in line with those expectations and support our full-year outlook. Non-GAAP adjusted EBITDA was $110 million, representing an adjusted EBITDA margin of approximately 38%, reflecting continued operating discipline while maintaining investment in growth initiatives and innovation. Our disciplined operating focus again translated into strong bottom-line performance. Non-GAAP EPS increased 9% to $1.33 in the second quarter, and we're on track to achieve high-teens EPS for the full year 2026 at the high end of our guidance range. Free cash flow increased approximately $24 million, up 46% year-over-year to $75 million in the quarter. Strong free cash flow generation continues to support our balanced capital allocation strategy. We remain committed to investing in growth, innovation and customer success while returning capital to shareholders. During the first half of 2026, including the net share settlement of employee stock compensation, we repurchased just over 6% of our outstanding common stock as of December 31, 2025. Since the fourth quarter of 2023, we've offset 100% of dilution from stock-based compensation and also reduced common shares outstanding by approximately 15%. Overall, we delivered another solid quarter and first half, reinforcing our confidence in the full-year outlook. Now moving on to our 2026 outlook. Based on our first half performance and our current view of the operating environment, we are reaffirming our full-year guidance ranges but now expect to finish in the upper half of the range across all four key metrics: revenue, adjusted EBITDA, EPS and free cash flow. For EPS and free cash flow, we expect results to be at or above the high end of the ranges. As a reminder, we continue to expect 2026 quarterly financial performance, including revenue growth and profitability, to be heavily weighted to the back half of the year and particularly the fourth quarter, some of which I'll discuss in a moment. Before I close, I'd like to provide a few housekeeping items that are already contemplated in our financial guidance and may be helpful as you think about modeling the business through the balance of 2026 and into 2027. Donor expectations continue to evolve with increased emphasis on donor experience, reliability, privacy and security. Blackbaud continues to invest in modern online giving capabilities to meet these expectations. Our modern online giving forms are designed to help customers raise more for their missions through configurable donor experiences, streamline data integration and optional fee offset capabilities while maintaining a strong focus on donor trust and data protection. As part of that investment, we've introduced a platform fee on certain online form transactions. The fee supports continued innovation and investment in secure, reliable online giving infrastructure and related platform enhancements. To minimize the impact to the majority of our customers, they can use our existing donor cover option whereby donors pay the fee associated with their transaction. As we've previously discussed, the platform fee is expected to contribute to the back-half weighting of our 2026 financial results with the largest benefit expected in the fourth quarter. Turning to gross dollar retention. As we've discussed previously, Blackbaud's 2026 contractual recurring renewal cohort is approximately 40% larger than last year. As a result, we continue to expect a near-term dip in reported gross dollar retention as a greater amount of recurring revenue comes up for renewal during the year. As we move past this larger renewal cohort, we expect gross dollar retention rates to climb back to our more recent norm of 91% to 92% by the end of 2027. This dynamic was factored into our full-year 2026 revenue guidance. And as stated earlier, we currently expect to finish in the upper half of the guidance range. Looking to 2026 and beyond, we expect free cash flow to continue growing significantly. We anticipate deploying at least 50% of cumulative free cash flow generated from 2026 through 2030 toward share repurchases. Beyond that commitment, the company has tremendous optionality for dynamically allocating capital to its highest and best use based on market conditions, including additional share repurchases, debt reduction and strategic tuck-in acquisitions. We have a lot to be proud of—executing well through recessions, financial crises, COVID and the shift to the cloud—through a commitment to providing meaningful solutions to our customers and strong execution of our operating plan. On our journey to becoming a Rule of 45 company, we remain committed to providing investors with an attractive financial model, a balance between growth of revenues, earnings and cash flows along with a prudent and purposeful capital allocation strategy. Always, we remain focused on providing enhanced value to our customers and our shareholders. Thank you all. Mike and I would be happy to take your questions. Operator?
分析師問答
The operator provided instructions on how to ask questions. Our first question comes from Brian Peterson with Raymond James.
I wanted to start on some of the win-backs that you mentioned, Mike. You don't always mention them every quarter, but I'd love to understand if there's anything in terms of the timing of why you're winning back some of those customers you may have lost? And as we think about win rates overall, is there anything you can share about how those have developed in 2026?
Brian, thanks for the question. Yes, I mentioned a couple of those. Those customers are coming back due to the innovation that we're driving in our core products and the AI solutions we're embedding in those core products. So it really is all about the innovation investments that we're making and announcing and the outcomes that our customers are producing. We've got a lot of information around when customers join Blackbaud and use one of our fundraising solutions, there's a pretty big uplift in donations—it really improves their revenue. So that, I think, is a prominent factor in these win-backs. But we feel really good about when that happens.
Okay. That's great to hear. And maybe—I know you guys raised the guidance to kind of the upper end of the range. Any help on what's underpinning that? And how do we think about that in terms of the line items between contractual recurring and then transactional?
Yes. So we mentioned that we are pointing everyone to the top half of the guide range. We also mentioned, in addition to that, we are including the very top end of the range for cash flow and EPS. So sort of top half for other metrics like revenue, and the very top for free cash flow and EPS. We're having a great year in bookings—super positive achievement in overachieving our internal sales bookings plans. We've got a lot of great leadership in sales. Some new leadership has come in just in the last six to eight months, and so we're having a great year related to win rates, just beating our internal sales quota plans in a lot of areas in the company. That gives us a lot of confidence in pointing everyone to the top half of revenue for this year. And as you know, that has great effects for next year and future years because pretty much when customers sign up with us, they sign multi-year contracts. The other thing I mentioned in my prepared remarks, which is relevant to your question: last time I talked about the fact that we had 20% of our customers on four-year or longer contracts. I just made an update in this call: it's 25% of our customers on four-year or longer contracts, which is really great for the long run for us.
Our next question comes from Rob Oliver with Baird.
Two for me, Mike. First for you—just an update on the new logo program. I know this has been part of your go-to-market push since bringing in new sales leadership. And obviously there's some noise around the gross retention around current customers and stuff, but I just wanted to understand where you are with the new logo program and any proof points you can point to to get us comfortable that that's on the right track?
Yes. The gross retention we talked about is gross dollar retention and I think we've said this many times: we have a cohort this year that's about 40% larger. So the results of the quarter and the guide moving to the upper half are all in our plan, and we finalized that plan a year ago. So all that stuff was contemplated in the plan. We're doing really well with new logos in areas like K–12, nonprofit and higher education. Those markets are doing really well. Our year-over-year business is just nailing a lot of new logos across the board. I've mentioned these in past calls—our teams are closing new logos with some of the largest organizations, including Fortune 100 companies. So it's a pretty wide distribution in new logos. And many of our sales teams are focused exclusively on new logos; others focus on cross-sell. So again, we feel really good about sales bookings. We're nicely ahead of plan and all that's going quite well.
Great. And then Chad, one for you. I'm trying to square the commentary around the high end of the guidance versus the kind of 3% constant currency growth that we saw in this quarter versus the 4% to 4.5% for the full year. I know that called out a couple of things—second-half weighting on renewals, transactions, etc. Just wondering if there's anything else going on there in terms of the pricing around these renewal contracts—if you're getting the price? And then one specific question around the platform piece that's new: would you be able to describe the potential impact of that on Q4?
Yes, that's a great question, Rob. And to Mike's earlier point, we're performing to plan. The program continues to perform well. We mentioned the increased cohort size. As we think about the second half of the year, we're operating to plan. We talked about the renewals. I'd also mention that the transaction revenue in the quarter had a tough compare. We exceeded our traditional growth ranges in 2025 and had a little bit of viral giving as well, so we've seen that come back down into the normal range, as you would expect. When I think about the second half of the year, we also talked about the launch of the platform fee. You can think about that as investments that we're making in order to drive better outcomes for our customers from a donor experience perspective. The monetization model is quite common within the industry as well. We're feeling really good about it. Our customers will have options if they choose to have donors cover the fees or not. So it's quite common—we launched that effectively in the Q3 time frame. It was planned for and included in our guide, and that's contributing to the back-end weighting and particularly into Q4, Rob.
Our next question comes from Parker Lane with Stifel.
Mike, I was wondering if you can talk about the sales motion for the agents. I think you're up to four solutions that are out there today. Does every seller in the organization promote those agents to try to get this into the customer base or do you have dedicated teams around those today? And are you offering customers the opportunity to pilot and trial some of these agents before making the commitment on the subscription side of things? Or do they have to commit on subscription?
Thanks. So the first product out in the market is the development agent. We announced last year we had an early adopter program and then went to general availability in March. What we've done is start with a dedicated team because there was a lot of learning for us and for customers. In the early adopter program that started last year, for the first time ever with a new product, we signed up customers to paid early-adopter contracts, which they all did. The general availability pricing is higher, and it came out in March. You can think about it as a ramp-up: announce the product, get early adopters using it with a dedicated selling team embedded with the product and engineering teams so we're close to the customer—it's important to have that close feedback loop while we're iterating and improving the product. Then once the product matures into general availability and after a month or two, we move it into the general global sales team. That helps the product mature, helps our organization learn, and helps customers learn. That's the evolution when we launch these new products. The really cool thing is we've announced five of them now: the development agent went to GA, four more were in the recent press release, and there will be more announced this year, especially at our BBCON conference at the end of September. They'll be more vertical-specific as well—for example, the Admissions Agent is specific to K–12, while the development agent goes across verticals because they all use our fundraising solutions. These are fully Agentic new products for Blackbaud, which is exciting. There's nothing better in sales than having a brand-new solution to talk to prospective or existing customers about. So we're excited about the pace of innovation, and we're just getting going here.
Thanks, Mike. Chad, maybe one for you. Looking at the levers for additional margin expansion through 2030, vendor optimization, AI and other efficiency gains are included on that list. Maybe going into that in more detail—can you talk about how big those levers are relative to the other areas like the workforce strategy, platform modernization and data center closures?
Sure. We're pleased with the progress of our margin expansion, which is continuing to progress very well. There are a number of levers. It's important to know that within the guide, we haven't contemplated efficiency gains in a meaningful way from AI. It's notable that we're continuing to execute on a number of initiatives, but it's also important to recognize the natural flow, like fall-through of the subscription model as well as the SaaS model. From that perspective, we're pleased. We continue to focus and have good outcomes relative to building out the GCC and the workforce strategy in Hyderabad, so we expect to continue to see improvements there. We've also talked about modernization of our tech stack and other items we've laid out in more detail in the investor deck.
I'll add to that as well. We're in the deep process of becoming an AI-first company. We are refactoring every department in Blackbaud. Every part of the company is being considered. What you're seeing now is a pretty significant improvement in innovation with five AI products launched using AI to build those products. It's key that those products are embedded in our trusted solutions—having trust in the solutions for the customers is critical. We have systems of record and systems of intelligence that now include embedded Agentic AI, which gives us a competitive advantage. We are refactoring the whole company and using AI in marketing, sales, support, call centers, engineering, product management and PMO to refactor how we run the business and how the business is structured. That's not yet factored into additional revenue growth or improved margins materially yet—it's early days—but I can already see some interesting improvements in operating performance based on this initiative. We're being very aggressive but also governed as we refactor the entirety of the business.
Our next question comes from Peter Burkly with Evercore ISI.
You talked about the different levels of AI maturity in the industry and your AI Coalition to help that progress over time. I'm curious: where are your customers on average in terms of that maturity stage? And understanding that agents aren't necessarily expected to contribute much to revenue this year, as the maturity curve progresses when do you think we start seeing Agentic contribution—first half of next year, second half, or is it more of a longer-term play?
I'll answer that in two parts. On industry maturity, our customers are experimenting with AI in different ways—there's a very wide range. We have very small local nonprofits and very large enterprise customers, so maturity varies. Everyone is interested in using AI, but it's generally early days in terms of AI positively impacting their business, except where they buy a product from us that delivers measurable outcomes—like the development agent. I discussed some of the things we're seeing with the development agent around big increases in reply rates, message open rates and average gift sizes, which translate into revenue for them. So those customers are getting improved outcomes based on that solution. Regarding monetization, it's not a material part of our numbers this year, but we will see new revenue from these solutions next year, growing over time. There's a mix of excitement and fear about AI among customers of all sizes, and that matters. Working with Blackbaud helps: our approach is Agentic solutions under customer control, embedded in our systems of record. The data in our platform are not available to large language models; proprietary customer data and Blackbaud-enriched data are protected. We own proprietary contextual models in a trusted environment. I think adoption will grow tremendously. It's early days for customers broadly, but our embedded, governed Agentic approach will be highly valuable for customers and for Blackbaud.
Okay. Well, that's it for today. Thank you for joining us. We will be attending a number of investor events over the coming months, including several investor conferences, which are listed on our Investor Relations site, as well as Mike mentioned, our BBCON Customer Conference at the end of September. We hope to see you then and/or speak with you very soon. In the meantime, we wish you continued success and have a wonderful day.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.