Blackbaud Earnings: Results Mostly in Line as EVERFI Drag Intensifies

Narrow-moat Blackbaud reported results that were generally in line with our expectations, if not slightly shy on the revenue side and slightly better on the profitability side. The firm also reiterated its full-year outlook so changes to our model are trivial. Therefore, we are maintaining our fair value estimate of $77 per share and see the stock as fairly valued. We are pleased to see Blackbaud’s cloud-first commitment paying off, supported by continued growth of recurring revenue, with a push to move standard contract terms to three years with annual pricing escalators. Pricing and renewal rates continue to drive Blackbaud’s goal of mid- to high-single-digit organic growth annually and surpassing its “Rule of 40” goal. We believe Blackbaud remains a leader in the social good space and is well positioned to propel the space forward with its broad portfolio.