Earning Date, Transcript Summary & Report

Earnings Per Share Results: Blackbaud reported earnings in line with expectations, achieving an EPS of $1.08, which met analyst forecasts.

Divestiture Impact on Profitability: The divestiture of Everfi was completed on December 31, 2024, allowing Blackbaud to focus on its core business, which is expected to enhance profitability and revenue growth moving forward.

Strong Revenue Performance: In 2024, Blackbaud generated revenue of $1.155 billion, with a 7% growth in the social sector and an 8% increase in contractual recurring revenue, demonstrating strong performance in its primary market.

Adjusted EBITDA Margin Improvement: The company achieved an adjusted EBITDA margin of nearly 34%, reflecting improved operational efficiency and profitability compared to previous years.

Strong Cash Generation: Blackbaud's adjusted free cash flow was robust at approximately $245 million, representing 21% of revenue, which is an increase from 19% in 2023, indicating strong cash generation capabilities.

Share Repurchase Strategy: The company successfully repurchased 10% of its common stock in 2024, with plans to continue repurchasing 3% to 5% of outstanding shares in 2025, showcasing a commitment to returning value to shareholders.

Organic Growth Improvement: Blackbaud's organic growth rate improved significantly from 1.2% in 2020 to 5.2% in 2024, highlighting a successful turnaround and growth strategy.

AI Initiatives in Social Impact: The introduction of AI initiatives, such as Blackbaud's Intelligence for Good program and the upcoming Blackbaud Copilot, positions the company as an innovator in the social impact sector, enhancing customer experience and operational efficiency.

Organic Revenue Projections: The company anticipates continued organic revenue growth in 2025, projecting revenue between $1.115 billion and $1.125 billion, which reflects a positive outlook despite some expected challenges.

Margin Expansion Strategy: Blackbaud's focus on margin expansion and cost management is expected to result in EBITDA margins of approximately 34.9% to 35.9% in 2025, indicating a commitment to profitability alongside growth.

Negative Impact on Performance: Everfi was dilutive to both revenue growth and profitability in 2024, impacting overall performance negatively.

Divestiture Cash Release: The divestiture of Everfi resulted in a one-time cash release payment of $28 million, indicating ongoing costs associated with the divestiture.

Impairment Charge Impact: The company incurred a pre-tax impairment charge of $390 million related to the Everfi asset group, reflecting a significant loss.

Projected Revenue Decline: The anticipated revenue growth for 2025 is projected to be lower than 2024, with a range of 4.2% to 5.1%, which is approximately two percentage points less than the previous year.

Sales Transition Impact: There is expected softness in bookings as the company transitions its sales efforts from migrations to focusing on new logos, which may impact short-term revenue.

Currency Impact on Revenue: The company anticipates a negative impact of $2 million to $3 million on revenue and adjusted EBITDA due to currency fluctuations.

Rising Interest Expenses: Interest expense is expected to increase by approximately $11 million year-over-year, indicating rising costs for the company.

Adjusted Free Cash Flow Guidance: The guidance for adjusted free cash flow in 2025 is lower than in 2024, with a range of $185 million to $195 million, reflecting a decline in cash generation capabilities.