Blackbaud Inc (BLKB) Q3 2024 Earnings Call Highlights: Navigating Growth Amid EVERFI Challenges

GuruFocus News
4 min read

In This Article:

  • Total Revenue: $287 million, up 3.3% year over year, and 4.3% on an organic basis.

  • Social Sector Revenue Growth: 6.6%.

  • EVERFI Revenue Decline: 26% year over year, representing 7% of total company revenue.

  • Adjusted EBITDA Margin: 33.2%.

  • Adjusted Free Cash Flow: $98 million in the third quarter, $187 million year-to-date.

  • Gross Dollar Retention: 90%, excluding EVERFI approximately 92%.

  • Full-Year Revenue Guidance: $1.150 billion to $1.160 billion.

  • Organic Growth Rate Guidance: 5.2% at the midpoint.

  • Adjusted EBITDA Margin Guidance: 33% to 34%.

  • Non-GAAP Earnings Per Share Guidance: $3.98 to $4.16.

  • Adjusted Free Cash Flow Guidance: $235 million to $245 million, a 12% increase over 2023 at the midpoint.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Blackbaud Inc (NASDAQ:BLKB) reported strong performance in its social sector, which accounts for approximately 89% of its revenue, with a growth of 6.6% year-over-year.

  • The company announced six waves of innovation, including AI capabilities and new partnerships, which were well-received at their annual user conference, bbcon.

  • Gross dollar retention rate improved to 90%, and excluding EVERFI, it was approximately 92%, indicating strong customer satisfaction and retention.

  • Blackbaud Inc (NASDAQ:BLKB) generated $98 million of adjusted free cash flow in the third quarter, supporting its aggressive stock repurchase program.

  • The company has successfully repurchased approximately 8% of its common stock outstanding at the end of 2023, with plans to buy back up to 10% by year-end 2024.

Negative Points

  • Blackbaud Inc (NASDAQ:BLKB) lowered its annual revenue guidance due to the continued negative financial impact of EVERFI, which declined 26% year-over-year in the quarter.

  • EVERFI, representing 7% of total company revenue, continues to be a drag on overall performance, prompting the company to explore strategic alternatives with Goldman Sachs.

  • The company has not experienced any unusually large viral events this year, impacting the growth rate of its transactional business.

  • Despite right-sizing efforts, EVERFI remains dilutive to Blackbaud Inc (NASDAQ:BLKB)'s bottom line and cash flow.

  • The revised full-year guidance reflects underperformance at EVERFI, with anticipated headwinds continuing in the near term.

Q & A Highlights

Q: Can you explain the impact of EVERFI on Blackbaud's growth rate and any changes in expectations for the social sector? A: Anthony Boor, CFO, explained that the social sector is performing well, with pricing holding steady and a high percentage of customers opting for multi-year contracts. The slight decrease in growth expectations is due to the absence of viral events that boosted last year's growth, not due to issues with the social sector itself. EVERFI's underperformance continues to weigh on overall growth.

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