BLACKBAUD INC — Call Transcript 2026

Everyone, hopefully everyone got a chance to have a bite of lunch. I'm Rob Oliver. I follow software here at Baird. I'm a managing director in the technology research team. It's my pleasure to have the management of Blackbaud here. To my left, Chad Anderson, who is the CFO, and Jeff Klein, who is Director of Corporate Strategy and Development. Thank you guys both for joining me. Appreciate it. Oh, appreciate it. Thanks, Rob. Blackbaud is a company we've followed for many, many years. It's a vertical software leader. I don't even think you can call it a niche market. It's actually a really, really big market. It's just niche relative to investors, but you guys really dominate it, and that's the not-for-profit space. Today, the goal of the meeting here, you have a stock that's incredibly inexpensive from our view. We recently upgraded it. My goal is to have everyone leave the room with a better understanding of the moats around your business, both current and then with AI, what you guys are doing to drive the really strong margin and growth profile that you have, and set it up for future inquiry in the room. Let's just start, maybe, Chad, with a little overview. Yeah. You've been at the company, even though you've only been CFO maybe a little over a year, you've been at the company a long time. maybe an overview for the room. I was a week into the job this time last year. Thank you for having us back. The company, and those of you that aren't familiar, we're a cloud software company, right? We serve several end markets. Rob mentioned the nonprofit space, it's a variety. Nonprofits come in different shapes and sizes. You can think about foundations, community foundations, the foundations of universities and hospital systems are all within the hemisphere of our client base. We've been doing what we do, like you said, for 45 years now. Over that time, we've been able to capture and develop domain expertise, not only within how nonprofits operate, but also the solutions that we provide to them. In the core, there's a fundraising solution. We'll talk a little bit more about that as well as a very point-specific financial solution to aid with fund-related accounting designed for nonprofits. We have embedded analytics, embedded payments platform, as well as, again, these years of domain expertise with deep workflows to be able to help the nonprofits do what they do. From the highest level, to step back, we grow roughly in mid-single digits. We've got a revenue profile that is roughly 2/3 subscription base, which is typically the fundraising and financial management solutions. Then roughly 1/3 of the revenue base is payments and different usage and consumption models. As far as where we're at, we're focused on driving new logo sales as well as back-to-base sales. Then we'll talk a lot more about innovation and AI. Maybe to start, because I think with the emergence of AI, investors are thinking a lot about systems of record, systems of action, defensibility, moats. You guys are both a system of record and a system of action. Maybe talk about what these. You're the ERP, you're the SaaS HR provider. You're a lot of things to your customers. Maybe talk about that moat around the Raiser's Edge platform, the products, and the stickiness around that. Yeah, for sure. I'm happy to take that one. Chad mentioned it. When you look at it, at its core, a lot of our systems are mission-critical systems of record. You think donor management, CRM, financial management, general ledger accounting system, payment processing all their donation flows. We are the tools that they wake up and log into every day, and are critical to running the operations of the business, and in many cases, the revenue operations of the business, right? Without our solutions, they're not raising funds, they're not generating revenue for their causes. In terms of when you think of the AI overlay for that, I think there's been three waves over the last couple of years in terms of how I think about AI within our platform and some of the moats around that. I think for a long time now, what we call our analytics business is what I think a lot of people today are referring to as AI. Specific to our customers, it's things like donor prospecting, it's intelligent gift ask. How much should you be asking for? Identifying the right donors to ask, when to ask them, how to ask them, right? Those are things that we've been doing for the last five, 10 years now. Over the last two to three years, we've branched more into generative AI and embedded those in our solutions at no additional cost to our customers. We've lit those solutions up within the existing CRMs and financial management solutions, et cetera. One good example of that is Blackbaud AI Chat. In addition to interacting with the embedded workflows in the UI, UX, you also are able to ask natural language questions, where instead of running a formal database report or querying your database, you can ask for, "Hey, bring up the donor record for Rob Oliver. What types of causes does he like to give to? Hey, please draft an outreach email. I want to get lunch with him next week." Right? It's just another way that you can interact with your system and your donors. The third wave, and I think this is where a lot of companies are now talking about AI, is on the agentic side. Little less than a year ago, we unveiled what we call our Agents for Good strategy, right? That is now the third wave, and I think where a lot of the focus at the company is. That is intended to be a catalog of agentic solutions. The first of those, and we can talk more about that, is the fundraising development agent. That is a fully autonomous virtual teammate that fundraises on behalf of your organization. That went into early adopter program Q4 of last year and into Q1 of this year, and is now generally available to the full customer base, as of late March. Early traction there has been good. I think we're very confident not only in the customer base we have and the solutions we have today, being very sticky with those core and record products, but doing a lot on the AI innovation front to make sure that we're staying ahead of the curve on innovation and what our customers expect. On that point, Jeff, one of the things about your market, if I can generalize, is that there always seems like they've been a few years behind the for-profit enterprise when it comes to innovation, and probably for a few reasons. One, many of them are operating on shoestring budgets, and they're not for-profit entities. They're sticking with what they have, which benefits you. Are you seeing that with AI as well? Obviously AI is so much in the news. Everybody can fool around and play with the tools and stuff like that. Do you guys have a similar window of opportunity to execute on embedding AI into your platform? One of the concerns on software right now is that these SaaS companies just don't have enough time to flip the model and flip the innovation. You guys strike me as being an industry where maybe you have that time, if you're acting quickly, which you are. Address that. Yeah, no, I think that's a really good point. For one, to Rob's point, the pace of adoption in our market historically has not been the same as the for-profit. This isn't true of all of our customers. We have some customers that are very sophisticated, have fully staffed IT departments, and are thinking through these things and moving quickly. By and large, our customers are not technologists. Their IT functions are not staffed the same way that a public company or a large private company would be. The reason we win versus the horizontal players is because our systems of record are purpose-built for them, right? You don't need to customize them out of the box. They're using language that makes sense to you. It's purpose-built for those nonprofit use cases and tends to be looked at that way. The other thing I'd say, too, is on that thread, I think one of the threats that Blackbaud software is seeing is, hey, why can't we use these new cloud code or AI tools to vibe code these solutions in-house, right? The cost and timeline to doing that is lower than ever before. Many of our customers, frankly, just don't have those capabilities. They're looking to vendors like us to bring those technologies to them and frankly, educate them on the best use cases for their end market. Got it. Maybe we could also just talk a little bit briefly before we dive back into the products and the financials, about the current environment, beg your pardon, buying environment. There's been a lot of cuts. The administration came in, and there's been cuts to local funding for charities, nonprofits, we saw it with USAID. I know we've talked about this before, and you guys, even in your public calls have stated you're pretty good on this front. Since this is, I think, a concern that investors have when they look at you, maybe talk about why it is that you guys are relatively immune. I know Mike has said, "Well, we don't get funding directly from the federal government." That's really not what it's about, though. It's really about those customers' budgets and how they feel, because you're coming into a time period now where you have some customers on that three-year renewal cycle. Certainly. Yeah, there's a couple of things. First, I would say, for investors or potential investors, the sector is massive. The nonprofit sector is roughly the third-largest employer in the country, if we're just looking at the U.S. It's significant. It's also growing. The annual donations that flow through nonprofits in the U.S. is somewhere in the range of $600 billion per year and growing. It is vibrant and significant. Doesn't mean there's not pressure. With that said, the nonprofit sector, if you will, has weathered a lot of storms over the years, from financial recessions, COVID, and the like. I think over that time, it's proven to be very resilient. As we talk about the macro environment, what's going on in the Middle East, there are organizations that are impacted. Typically, what we've seen is that whenever big nonprofits are in the federal funds flow, typically big nonprofits will have seven, eight, nine different revenue streams. If some of those are in the funds flow from the government and they go away, it just makes them more reliant on Blackbaud's solutions at the end of the day, then it actually becomes a little bit of a tailwind to the company. Another important point is that not all nonprofits are in that space either. If you think about K-12 organizations, perhaps hospitals and hospital foundations. It's a little bit different depending on the particular vertical, if you will. In the main, while some of our clients have been under pressure, we haven't seen a notable change in client attrition to speak of. Got it. Great. You guys made a bunch of changes a few years back, and you moved your customers towards three-year contracts. You also have done a lot of operational changes internally around cost structure and now leveraging AI. For those maybe who haven't looked at Blackbaud in a few years, the profitability profile of the business is phenomenal. Maybe talk about some of the different changes, and obviously on the contracts side, I want to dive into that a little bit. Sure. Talk about some of the changes overall that have happened over the last few years of the business. Certainly, we're focused on driving profitability. No surprise there. We target 6%-8% kind of EBITDA growth on an annual basis. We've got lots of levers. Over the years, we've focused on internal efficiencies, if you will, vendor consolidation related activities. We've shut down 80% of our private data centers over that time in the migration to public cloud. We actually still have two of those that we're focused on and look forward to winding down here in the near to mid-term. Just as a few examples. Beyond that, we opened up a global capability center in Hyderabad, both to access talent as well as to provide potential opportunities for labor arbitrage. While we've had partners that have provided staffing on a consultancy or staff augmentation basis, we now have badged full-time Blackbaud employees. That's another lever that's going quite well. It's gone from site selection to employee one, to hundreds of employees. We're not the first or the last software company to be in that zone, so we're quite confident that we'll be successful in being able to leverage the global capability center. Beyond that, we see AI as a real potential tailwind. Obviously, there's lots of speculation in regards to, does it put gross margins under pressure or not? We're going through it in a methodical manner. We're all in. We've got the entirety of our employee base trained, as well as leveraging the tools, but being mindful in regards to the use cases and making sure that we're targeting a return at the end of the day. I could mention leveraging the tools in engineering is probably not a surprise. We have a great opportunity to be able to further write code, test code, not only for the solutions that we're selling, but also how we're running the infrastructure of the organization. We're leveraging agentic AI for demand generation sales forecasting. You can kind of go on and on, and it's still very early days on that front. Again, very optimistic that that'll be just another feather in the cap relative to how we're pressing and expanding on margins in the future. Got it. Like music to the ears for an analyst is when you're at a user event, and you're talking to a bunch of customers at a lunch, and you ask them about the price increases, and they kind of say, "Oh, well." No one's ever happy about it. Then you ask them, "What are you thinking about doing? Are you" Not one of them is leaving. In fact, they're looking to do more, so they can get more value. Obviously very, very encouraging. You guys went through this period where you pushed your customers on price, which was a great test of the stickiness of your product and your platform, in our view. You then moved to the three-year contracts. Some of those are coming up for renewal now. How are those going? Give us a look into that sense, because that seems like that's the next kind of catalyst or thing that the Street should really be looking out for. Yeah. In regards to the pricing and the renewal program journey, we really started thinking about it about five or six years ago. We had shorter contracts, and we made a decision to move to more standard three-year agreements. We'd really planned to put it in place during COVID, and we paused. In 2023, we rolled it out. These are standard multi-year contracts, which are quite common in the space. They have embedded price escalators. We've held very solid from a retention perspective. It's kind of stayed stable in kind of those around 92% on a gross dollar retention perspective. To Rob's point, we've now lapped that. At the tail end of Q1, we're basically through the three-year cycle, if you will. We're entering into that next kind of wave. The retention is kind of in line with expectations. We're feeling good about it. It's far better revenue durability for us, longer standard contracts. The ability for us to be able to prove the value to the clients has really not been a challenge for us to this point. We're pleased, but at the same time, we're mindful. The renewals, the retention is there. The other thing you guys have done, which is encouraging, is really focus on that cross-sell, which has always felt like an embedded opportunity for you guys. Obviously, you've got many customers that have multiple products, but it felt like a more concerted effort there could really bear fruit. You brought in some new sales leadership, and you've talked a lot about it. Mike's really made it a theme on the calls. As these renewals come up, how should we think about not just the retention, which we expect will be there, but also that NRR equivalent metric of how you guys are cross-selling? Yeah. It is a very big piece of our model, that land and expand model over time. We have roughly half our sales folks that are focused solely on new logos, so refilling the top of the funnel. The other half are focused on cross-selling the portfolio solutions, and I think as Chad and I have mentioned, we do have a fairly broad portfolio. It's give or take 18 products. We're now bringing new AI products to the market. The agentic AI product will be priced separately. That's a new SKU and what we think is a big back to base opportunity, at least initially. We are very, very focused on driving that further penetration in the customer base over time, both with the software products, the AI products, payments enablement. There's a long runway in terms of the payments side of the business and getting folks payments-enabled for donation processing, tuition processing on the education side. Multiple angles there. I think the other thing that's important to understand because I think many companies, they really only open up their customer relationship at the time of renewal for the cross-sell, up-sell motion. Our teams are cross-selling and upselling every day. It doesn't necessarily have to be tied just to that renewal moment. We have multiple opportunities throughout the year to do that. Those teams are now divided up into the hunters and farmers. Is customer success an element of the cross-sell as well? Has that been combined? The cross-sell, up-sell motion is a sales motion today, so the direct sales force, new logo, and cross-sell, up-sell, and then we have a separate team in the customer success and renewals org that is handling- Got it. just the existing customer relationship and renewals. Got it. Got it. Yeah. Okay, great. Payments is a significant portion of the business for you guys. I should know off the top of my head. It was a high 20s% of the business. It's roughly 1/3. Yeah. Roughly, yeah, more roughly 1/3 of the business. Yeah. Very sticky, and in turn, creates stickier customers when they have it. Great pedigree background here with Mike having been at Fiserv and really driven this very strong payments opportunity, which has defied a lot of the bear cases over the years of different payment vendors coming in, taking this business. How should we think about attach of payments currently into your installed base, the opportunity for payments down the road? It strikes us as a pretty meaningful compounder for you guys in terms of the customer stickiness, what it can add, all that. Yeah. There's a couple of nice things about the transactional side of the business for us. That's actually a piece of the business, as Chad mentioned, it's a little over 1/3 of total revenue today, a very meaningful part of our revenue algorithm. That piece of the business actually tends to grow slightly faster than the core software base. Core software is more mid-single digit. This is mid to high single digit, 6%-8% historically. Couple reasons for that. You've got some of the same growth levers that you have on the software side, which you've got new logos, so you sign a new customer, they're payments-enabled. To Rob's point about the penetration in the existing base, there is a long runway there. We don't disclose specifically the penetration rates, but I'd say needless to say, there's plenty of opportunity even within just the existing base to get them payments-enabled and processing on our platforms, which is obviously a benefit to us. Some things that are specific to payments, we do have pricing levers that are unique there in terms of take rate optimization and donor cover models that have been very positive for us over time. We also benefit from just what we call same-store growth, so donation volume growth or tuition volume growth over time within existing customers. When you think of the total pie of hundreds of billions of dollars donated in the U.S. every year, that tends to grow a couple percent as well, and that's a further tailwind. The last one, which hasn't been as meaningful the last year or two, but is at points in time, is we're primarily monetizing the digital payment side, so credit card processing. As more and more of that pie shifts to digital payments, that's a further tailwind to that business. Multiple growth vectors that we like within that transactional business, and it continues to be a bigger piece of our story over time. Got it. Exciting. I was remiss, if you do have questions, you can send an email. The email's in front of you, and I'll try to get it in. We have about eight minutes left. I have a few more questions. Feel free to add in. On competitive landscape, for years there was a big buzz around Salesforce getting into this business, and they have a small share with some larger places, but they never really seemed to make an impact on you guys. How has the competitive landscape changed? Obviously, barrier to entry in this market is high. You guys are far and away the number one player. We see a lot of action at the low end, a lot of startups, small companies. You guys actually, I think, disclose a chart in your investor deck where you actually lay them all out. Maybe talk about if there's been any change there with AI and what you see in the market. Nothing material. I would say this: Our customer base or our competitive segment is extremely fragmented. We are the only provider in our space that has the full suite of solutions. When you think from financial management to fundraising, to digital marketing, to the school operations, to ticketing for our arts and cultural customers, we have a very broad suite of solutions that integrate with each other, and that tends to be a core differentiator for us. Our competitors, by and large, are vertical specific point solution players. The people we compete with on the fundraising side is different than the people we compete with on the K-12 side, than the financials side. From time to time, we do see some of the larger horizontal players. On the CRM side, do we see Salesforce? Yes. Microsoft Dynamics, yes. They're not purpose-built solutions. If you're going down that path, and some organizations do choose to, you're bringing in a third-party excuse me, consultant to customize that database, build in those workflows, define the fields, and label all that. There's just more work and cost involved upfront. I think from a competitive positioning point, we're pretty well insulated. The other thing I'd bring up on the competitive side, and it pertains to some of the AI topics we've been talking about, I think we feel very confident in the data moat we have as well. That's something that frankly has always been important, especially when you think data intelligence analytics and the like that we've done over time, but even more so as we talk about AI solutions and making sure that we maintain that proprietary data posture. I really think of it in four main categories, right? There's different frameworks you can look at these things in, but it's volume, it's variety, it's velocity, and it's vigilance, right? From a volume standpoint, we are the largest player in the nonprofit space, and we've been around for 40 years, right? There's no one that can match, I think, the breadth of our data set. Variety, you've heard me talk about just the types of solutions we have, right? We've got fundraising data, we have financial data, we have marketing data, right? Click rates and email open rates and the like, right? We can go on and on. I think the variety of our data is very broad. Velocity is a very important one because we have kind of a closed system within the suite. There is no import-export. A lot of these point solution AI startups, you're going to a system of record like Blackbaud, you have to export data out, put it into the AI tool, it's transformed, and then you're porting it back, right? There's time and context that's lost in that porting that we don't have to deal with that we think is a core differentiator. Finally, vigilance is really about trust and data governance, right? We've been around for a long time. We have a very good reputation in this space. We've invested more than anyone in terms of data and cybersecurity, as well as spending years developing kind of data frameworks and AI governance frameworks, that I think our sector in particular, values trust and data security very highly. I think all of those things together from a data moat standpoint, put us in a good position competitively. Great. Super helpful. We only have a couple minutes left. I want to talk about capital allocation. You guys have acquired a lot of companies over the years. I think it's been a pretty solid acquisition motion for the most part. Then you had a pretty high-profile hiccup with EVERFI. You still have the same CEO who's viewed by the street as being a pretty acquisitive guy. You guys have talked a little bit about this. Help us understand how you think about that capital allocation and just to mitigate that risk that you're going to go out and whale hunting again, how to think about how you guys are thinking about that market. We have been prioritizing share buybacks significantly over the last few years. The way that I generally think about it, that's priority number one. We've been very purposeful in not only repurchasing shares, but also driving down the net shares available. If you go back a couple of years, you'll see that we've reduced the overall share count by 14%, which is meaningful. I anticipate that we'll, and certainly in today's market, in today's valuations, will continue to be very aggressive. We've publicly stated that our intent is to dedicate at least 50% of our free cash flow to share repurchases on an annual basis and drive down the number of shares between 5% and 10%. Given where we're at with valuations, I would expect that we'll be in the higher side of that in the near term. I would balance that we're also mindful of managing our balance sheet. We're mindful of trying to keep leverage in a good spot. We target somewhere in the low twos, preferably. At the same time, with valuations where they are, it's important that we also keep that in mind. We're balancing both of those, and at the same time, we've had a number of successful acquisitions over the years. As a third priority, we have optionality for tuck-in acquisitions, if it makes sense with today's valuations, that there are opportunities out there. Again, kind of tuck-ins, and I would say that is, again, the third priority on the capital allocation front. Got it. You mentioned the free cash flow, it's substantial. Yep. The stock is currently trading at, I think, nine times EV to free cash and five times price to free cash. Free cash flow has been a focus, always is. We've had good success driving free cash flow. It's up roughly 25% on a CAGR since 2020. We're going to continue to stay focused on that. If you look deeply into the financials you'll see that we're growing free cash significantly in 2026, as we kind of talked about. Yeah, we're focused on it. It's a big lever to the broader financial profile of the company. We're going to continue to target that mid-single-digit revenue growth, 6%-8% EBITDA growth, 13+ from an EPS perspective, kind of buoyed by the strong free cash flow. We're feeling good about it. AI is a potential tailwind for us, that opportunity's not factored into the guide or the numbers. We're feeling good where we're at. Certainly, with today's valuations, think that we're a great buy for companies as well. Great. Well, please join me in thanking the management of Blackbaud. Chad, Jeff, appreciate it. Thank you guys very much. Appreciate it. Thanks for your time.

Speaker 3: Everyone, hopefully everyone got a chance to have a bite of lunch. I'm Rob Oliver. I follow software here at Baird. I'm a managing director in the technology research team. It's my pleasure to have the management of Blackbaud here. To my left, Chad Anderson, who is the CFO, and Jeff Klein, who is Director of Corporate Strategy and Development. Thank you guys both for joining me. Appreciate it. Everyone, hopefully everyone got a chance to have a bite of lunch. everyone hopefully everyone got a chance to have a bite of lunch I'm Rob Oliver. i'm rob oliver I follow software here at Baird. i follow software here at baird I'm a managing director in the technology research team. i'm a managing director in the technology research team It's my pleasure to have the management of Blackbaud here. it's my pleasure to have the management of blackbaud here To my left, Chad Anderson, who is the CFO, and Jeff Klein, who is Director of Corporate Strategy and Development. to my left chad anderson who is the cfo and jeff klein who is director of corporate strategy and development Thank you guys both for joining me. thank you guys both for joining me Appreciate it. appreciate it

Speaker 2: Oh, appreciate it. Oh, appreciate it. oh appreciate it

Speaker 1: Thanks, Rob. Thanks, Rob. thanks rob

Speaker 3: Blackbaud is a company we've followed for many, many years. It's a vertical software leader. I don't even think you can call it a niche market. It's actually a really, really big market. It's just niche relative to investors, but you guys really dominate it, and that's the not-for-profit space. Today, the goal of the meeting here, you have a stock that's incredibly inexpensive from our view. We recently upgraded it. My goal is to have everyone leave the room with a better understanding of the moats around your business, both current and then with AI, what you guys are doing to drive the really strong margin and growth profile that you have, and set it up for future inquiry in the room. Let's just start, maybe, Chad, with a little overview. Blackbaud is a company we've followed for many, many years. blackbaud is a company we've followed for many many years It's a vertical software leader. it's a vertical software leader I don't even think you can call it a niche market. i don't even think you can call it a niche market It's actually a really, really big market. it's actually a really really big market It's just niche relative to investors, but you guys really dominate it, and that's the not-for-profit space. it's just niche relative to investors but you guys really dominate it and that's the not-for-profit space Today, the goal of the meeting here, you have a stock that's incredibly inexpensive from our view. today the goal of the meeting here you have a stock that's incredibly inexpensive from our view We recently upgraded it. we recently upgraded it My goal is to have everyone leave the room with a better understanding of the moats around your business, both current and then with AI, what you guys are doing to drive the really strong margin and growth profile that you have, and set it up for future inquiry in the room. my goal is to have everyone leave the room with a better understanding of the moats around your business both current and then with ai what you guys are doing to drive the really strong margin and growth profile that you have and set it up for future inquiry in the room Let's just start, maybe, Chad, with a little overview. let's just start maybe chad with a little overview

Speaker 1: Yeah. Yeah. yeah

Speaker 3: You've been at the company, even though you've only been CFO maybe a little over a year, you've been at the company a long time. maybe an overview for the room. You've been at the company, even though you've only been CFO maybe a little over a year, you've been at the company a long time. maybe an overview for the room. you've been at the company even though you've only been cfo maybe a little over a year you've been at the company a long time maybe an overview for the room

Speaker 1: I was a week into the job this time last year. Thank you for having us back. The company, and those of you that aren't familiar, we're a cloud software company, right? We serve several end markets. Rob mentioned the nonprofit space, it's a variety. Nonprofits come in different shapes and sizes. You can think about foundations, community foundations, the foundations of universities and hospital systems are all within the hemisphere of our client base. We've been doing what we do, like you said, for 45 years now. Over that time, we've been able to capture and develop domain expertise, not only within how nonprofits operate, but also the solutions that we provide to them. In the core, there's a fundraising solution. I was a week into the job this time last year. i was a week into the job this time last year Thank you for having us back. thank you for having us back The company, and those of you that aren't familiar, we're a cloud software company, right? the company and those of you that aren't familiar we're a cloud software company right We serve several end markets. we serve several end markets Rob mentioned the nonprofit space, it's a variety. rob mentioned the nonprofit space it's a variety Nonprofits come in different shapes and sizes. nonprofits come in different shapes and sizes You can think about foundations, community foundations, the foundations of universities and hospital systems are all within the hemisphere of our client base. you can think about foundations community foundations the foundations of universities and hospital systems are all within the hemisphere of our client base We've been doing what we do, like you said, for 45 years now. we've been doing what we do like you said for 45 years now Over that time, we've been able to capture and develop domain expertise, not only within how nonprofits operate, but also the solutions that we provide to them. over that time we've been able to capture and develop domain expertise not only within how nonprofits operate but also the solutions that we provide to them In the core, there's a fundraising solution. in the core there's a fundraising solution We'll talk a little bit more about that as well as a very point-specific financial solution to aid with fund-related accounting designed for nonprofits. We have embedded analytics, embedded payments platform, as well as, again, these years of domain expertise with deep workflows to be able to help the nonprofits do what they do. From the highest level, to step back, we grow roughly in mid-single digits. We've got a revenue profile that is roughly 2/3 subscription base, which is typically the fundraising and financial management solutions. Then roughly 1/3 of the revenue base is payments and different usage and consumption models. As far as where we're at, we're focused on driving new logo sales as well as back-to-base sales. Then we'll talk a lot more about innovation and AI. We'll talk a little bit more about that as well as a very point-specific financial solution to aid with fund-related accounting designed for nonprofits. we'll talk a little bit more about that as well as a very point-specific financial solution to aid with fund-related accounting designed for nonprofits We have embedded analytics, embedded payments platform, as well as, again, these years of domain expertise with deep workflows to be able to help the nonprofits do what they do. we have embedded analytics embedded payments platform as well as again these years of domain expertise with deep workflows to be able to help the nonprofits do what they do From the highest level, to step back, we grow roughly in mid-single digits. from the highest level to step back we grow roughly in mid-single digits We've got a revenue profile that is roughly 2/3 subscription base, which is typically the fundraising and financial management solutions. we've got a revenue profile that is roughly 2/3 subscription base which is typically the fundraising and financial management solutions Then roughly 1/3 of the revenue base is payments and different usage and consumption models. then roughly 1/3 of the revenue base is payments and different usage and consumption models As far as where we're at, we're focused on driving new logo sales as well as back-to-base sales. as far as where we're at we're focused on driving new logo sales as well as back-to-base sales Then we'll talk a lot more about innovation and AI. then we'll talk a lot more about innovation and ai

Speaker 3: Maybe to start, because I think with the emergence of AI, investors are thinking a lot about systems of record, systems of action, defensibility, moats. You guys are both a system of record and a system of action. Maybe talk about what these. You're the ERP, you're the SaaS HR provider. You're a lot of things to your customers. Maybe talk about that moat around the Raiser's Edge platform, the products, and the stickiness around that. Maybe to start, because I think with the emergence of AI, investors are thinking a lot about systems of record, systems of action, defensibility, moats. maybe to start because i think with the emergence of ai investors are thinking a lot about systems of record systems of action defensibility moats You guys are both a system of record and a system of action. you guys are both a system of record and a system of action Maybe talk about what these. maybe talk about what these You're the ERP, you're the SaaS HR provider. you're the erp you're the saas hr provider You're a lot of things to your customers. you're a lot of things to your customers Maybe talk about that moat around the Raiser's Edge platform, the products, and the stickiness around that. maybe talk about that moat around the raiser's edge platform the products and the stickiness around that

Speaker 2: Yeah, for sure. I'm happy to take that one. Chad mentioned it. When you look at it, at its core, a lot of our systems are mission-critical systems of record. You think donor management, CRM, financial management, general ledger accounting system, payment processing all their donation flows. We are the tools that they wake up and log into every day, and are critical to running the operations of the business, and in many cases, the revenue operations of the business, right? Without our solutions, they're not raising funds, they're not generating revenue for their causes. In terms of when you think of the AI overlay for that, I think there's been three waves over the last couple of years in terms of how I think about AI within our platform and some of the moats around that. Yeah, for sure. yeah for sure I'm happy to take that one. i'm happy to take that one Chad mentioned it. chad mentioned it When you look at it, at its core, a lot of our systems are mission-critical systems of record. when you look at it at its core a lot of our systems are mission-critical systems of record You think donor management, CRM, financial management, general ledger accounting system, payment processing all their donation flows. you think donor management crm financial management general ledger accounting system payment processing all their donation flows We are the tools that they wake up and log into every day, and are critical to running the operations of the business, and in many cases, the revenue operations of the business, right? we are the tools that they wake up and log into every day and are critical to running the operations of the business and in many cases the revenue operations of the business right Without our solutions, they're not raising funds, they're not generating revenue for their causes. without our solutions they're not raising funds they're not generating revenue for their causes In terms of when you think of the AI overlay for that, I think there's been three waves over the last couple of years in terms of how I think about AI within our platform and some of the moats around that. in terms of when you think of the ai overlay for that i think there's been three waves over the last couple of years in terms of how i think about ai within our platform and some of the moats around that I think for a long time now, what we call our analytics business is what I think a lot of people today are referring to as AI. Specific to our customers, it's things like donor prospecting, it's intelligent gift ask. How much should you be asking for? Identifying the right donors to ask, when to ask them, how to ask them, right? Those are things that we've been doing for the last five, 10 years now. Over the last two to three years, we've branched more into generative AI and embedded those in our solutions at no additional cost to our customers. We've lit those solutions up within the existing CRMs and financial management solutions, et cetera. One good example of that is Blackbaud AI Chat. I think for a long time now, what we call our analytics business is what I think a lot of people today are referring to as AI. i think for a long time now what we call our analytics business is what i think a lot of people today are referring to as ai Specific to our customers, it's things like donor prospecting, it's intelligent gift ask. specific to our customers it's things like donor prospecting it's intelligent gift ask How much should you be asking for? how much should you be asking for Identifying the right donors to ask, when to ask them, how to ask them, right? identifying the right donors to ask when to ask them how to ask them right Those are things that we've been doing for the last five, 10 years now. those are things that we've been doing for the last five 10 years now Over the last two to three years, we've branched more into generative AI and embedded those in our solutions at no additional cost to our customers. over the last two to three years we've branched more into generative ai and embedded those in our solutions at no additional cost to our customers We've lit those solutions up within the existing CRMs and financial management solutions, et cetera. we've lit those solutions up within the existing crms and financial management solutions et cetera One good example of that is Blackbaud AI Chat. one good example of that is blackbaud ai chat In addition to interacting with the embedded workflows in the UI, UX, you also are able to ask natural language questions, where instead of running a formal database report or querying your database, you can ask for, "Hey, bring up the donor record for Rob Oliver. What types of causes does he like to give to? Hey, please draft an outreach email. I want to get lunch with him next week." Right? It's just another way that you can interact with your system and your donors. The third wave, and I think this is where a lot of companies are now talking about AI, is on the agentic side. Little less than a year ago, we unveiled what we call our Agents for Good strategy, right? That is now the third wave, and I think where a lot of the focus at the company is. In addition to interacting with the embedded workflows in the UI, UX, you also are able to ask natural language questions, where instead of running a formal database report or querying your database, you can ask for, "Hey, bring up the donor record for Rob Oliver. in addition to interacting with the embedded workflows in the ui ux you also are able to ask natural language questions where instead of running a formal database report or querying your database you can ask for "hey bring up the donor record for rob oliver What types of causes does he like to give to? what types of causes does he like to give to Hey, please draft an outreach email. hey please draft an outreach email I want to get lunch with him next week." Right? i want to get lunch with him next week." right It's just another way that you can interact with your system and your donors. it's just another way that you can interact with your system and your donors The third wave, and I think this is where a lot of companies are now talking about AI, is on the agentic side. the third wave and i think this is where a lot of companies are now talking about ai is on the agentic side Little less than a year ago, we unveiled what we call our Agents for Good strategy, right? little less than a year ago we unveiled what we call our agents for good strategy right That is now the third wave, and I think where a lot of the focus at the company is. that is now the third wave and i think where a lot of the focus at the company is That is intended to be a catalog of agentic solutions. The first of those, and we can talk more about that, is the fundraising development agent. That is a fully autonomous virtual teammate that fundraises on behalf of your organization. That went into early adopter program Q4 of last year and into Q1 of this year, and is now generally available to the full customer base, as of late March. Early traction there has been good. I think we're very confident not only in the customer base we have and the solutions we have today, being very sticky with those core and record products, but doing a lot on the AI innovation front to make sure that we're staying ahead of the curve on innovation and what our customers expect. That is intended to be a catalog of agentic solutions. that is intended to be a catalog of agentic solutions The first of those, and we can talk more about that, is the fundraising development agent. the first of those and we can talk more about that is the fundraising development agent That is a fully autonomous virtual teammate that fundraises on behalf of your organization. that is a fully autonomous virtual teammate that fundraises on behalf of your organization That went into early adopter program Q4 of last year and into Q1 of this year, and is now generally available to the full customer base, as of late March. that went into early adopter program q4 of last year and into q1 of this year and is now generally available to the full customer base as of late march Early traction there has been good. early traction there has been good I think we're very confident not only in the customer base we have and the solutions we have today, being very sticky with those core and record products, but doing a lot on the AI innovation front to make sure that we're staying ahead of the curve on innovation and what our customers expect. i think we're very confident not only in the customer base we have and the solutions we have today being very sticky with those core and record products but doing a lot on the ai innovation front to make sure that we're staying ahead of the curve on innovation and what our customers expect

Speaker 3: On that point, Jeff, one of the things about your market, if I can generalize, is that there always seems like they've been a few years behind the for-profit enterprise when it comes to innovation, and probably for a few reasons. One, many of them are operating on shoestring budgets, and they're not for-profit entities. They're sticking with what they have, which benefits you. Are you seeing that with AI as well? Obviously AI is so much in the news. Everybody can fool around and play with the tools and stuff like that. On that point, Jeff, one of the things about your market, if I can generalize, is that there always seems like they've been a few years behind the for-profit enterprise when it comes to innovation, and probably for a few reasons. on that point jeff one of the things about your market if i can generalize is that there always seems like they've been a few years behind the for-profit enterprise when it comes to innovation and probably for a few reasons One, many of them are operating on shoestring budgets, and they're not for-profit entities. one many of them are operating on shoestring budgets and they're not for-profit entities They're sticking with what they have, which benefits you. they're sticking with what they have which benefits you Are you seeing that with AI as well? are you seeing that with ai as well Obviously AI is so much in the news. obviously ai is so much in the news Everybody can fool around and play with the tools and stuff like that. everybody can fool around and play with the tools and stuff like that Do you guys have a similar window of opportunity to execute on embedding AI into your platform? One of the concerns on software right now is that these SaaS companies just don't have enough time to flip the model and flip the innovation. You guys strike me as being an industry where maybe you have that time, if you're acting quickly, which you are. Address that. Do you guys have a similar window of opportunity to execute on embedding AI into your platform? do you guys have a similar window of opportunity to execute on embedding ai into your platform One of the concerns on software right now is that these SaaS companies just don't have enough time to flip the model and flip the innovation. one of the concerns on software right now is that these saas companies just don't have enough time to flip the model and flip the innovation You guys strike me as being an industry where maybe you have that time, if you're acting quickly, which you are. you guys strike me as being an industry where maybe you have that time if you're acting quickly which you are Address that. address that

Speaker 2: Yeah, no, I think that's a really good point. For one, to Rob's point, the pace of adoption in our market historically has not been the same as the for-profit. This isn't true of all of our customers. We have some customers that are very sophisticated, have fully staffed IT departments, and are thinking through these things and moving quickly. By and large, our customers are not technologists. Their IT functions are not staffed the same way that a public company or a large private company would be. The reason we win versus the horizontal players is because our systems of record are purpose-built for them, right? You don't need to customize them out of the box. They're using language that makes sense to you. It's purpose-built for those nonprofit use cases and tends to be looked at that way. Yeah, no, I think that's a really good point. yeah no i think that's a really good point For one, to Rob's point, the pace of adoption in our market historically has not been the same as the for-profit. for one to rob's point the pace of adoption in our market historically has not been the same as the for-profit This isn't true of all of our customers. this isn't true of all of our customers We have some customers that are very sophisticated, have fully staffed IT departments, and are thinking through these things and moving quickly. we have some customers that are very sophisticated have fully staffed it departments and are thinking through these things and moving quickly By and large, our customers are not technologists. by and large our customers are not technologists Their IT functions are not staffed the same way that a public company or a large private company would be. their it functions are not staffed the same way that a public company or a large private company would be The reason we win versus the horizontal players is because our systems of record are purpose-built for them, right? the reason we win versus the horizontal players is because our systems of record are purpose-built for them right You don't need to customize them out of the box. you don't need to customize them out of the box They're using language that makes sense to you. they're using language that makes sense to you It's purpose-built for those nonprofit use cases and tends to be looked at that way. it's purpose-built for those nonprofit use cases and tends to be looked at that way The other thing I'd say, too, is on that thread, I think one of the threats that Blackbaud software is seeing is, hey, why can't we use these new cloud code or AI tools to vibe code these solutions in-house, right? The cost and timeline to doing that is lower than ever before. Many of our customers, frankly, just don't have those capabilities. They're looking to vendors like us to bring those technologies to them and frankly, educate them on the best use cases for their end market. The other thing I'd say, too, is on that thread, I think one of the threats that Blackbaud software is seeing is, hey, why can't we use these new cloud code or AI tools to vibe code these solutions in-house, right? the other thing i'd say too is on that thread i think one of the threats that blackbaud software is seeing is hey why can't we use these new cloud code or ai tools to vibe code these solutions in-house right The cost and timeline to doing that is lower than ever before. the cost and timeline to doing that is lower than ever before Many of our customers, frankly, just don't have those capabilities. many of our customers frankly just don't have those capabilities They're looking to vendors like us to bring those technologies to them and frankly, educate them on the best use cases for their end market. they're looking to vendors like us to bring those technologies to them and frankly educate them on the best use cases for their end market

Speaker 3: Got it. Maybe we could also just talk a little bit briefly before we dive back into the products and the financials, about the current environment, beg your pardon, buying environment. There's been a lot of cuts. The administration came in, and there's been cuts to local funding for charities, nonprofits, we saw it with USAID. I know we've talked about this before, and you guys, even in your public calls have stated you're pretty good on this front. Since this is, I think, a concern that investors have when they look at you, maybe talk about why it is that you guys are relatively immune. I know Mike has said, "Well, we don't get funding directly from the federal government." That's really not what it's about, though. Got it. got it Maybe we could also just talk a little bit briefly before we dive back into the products and the financials, about the current environment, beg your pardon, buying environment. maybe we could also just talk a little bit briefly before we dive back into the products and the financials about the current environment beg your pardon buying environment There's been a lot of cuts. there's been a lot of cuts The administration came in, and there's been cuts to local funding for charities, nonprofits, we saw it with USAID. the administration came in and there's been cuts to local funding for charities nonprofits we saw it with usaid I know we've talked about this before, and you guys, even in your public calls have stated you're pretty good on this front. i know we've talked about this before and you guys even in your public calls have stated you're pretty good on this front Since this is, I think, a concern that investors have when they look at you, maybe talk about why it is that you guys are relatively immune. since this is i think a concern that investors have when they look at you maybe talk about why it is that you guys are relatively immune I know Mike has said, "Well, we don't get funding directly from the federal government." That's really not what it's about, though. i know mike has said "well we don't get funding directly from the federal government." that's really not what it's about though It's really about those customers' budgets and how they feel, because you're coming into a time period now where you have some customers on that three-year renewal cycle. It's really about those customers' budgets and how they feel, because you're coming into a time period now where you have some customers on that three-year renewal cycle. it's really about those customers' budgets and how they feel because you're coming into a time period now where you have some customers on that three-year renewal cycle

Speaker 1: Certainly. Yeah, there's a couple of things. First, I would say, for investors or potential investors, the sector is massive. The nonprofit sector is roughly the third-largest employer in the country, if we're just looking at the U.S. It's significant. It's also growing. The annual donations that flow through nonprofits in the U.S. is somewhere in the range of $600 billion per year and growing. It is vibrant and significant. Doesn't mean there's not pressure. With that said, the nonprofit sector, if you will, has weathered a lot of storms over the years, from financial recessions, COVID, and the like. I think over that time, it's proven to be very resilient. As we talk about the macro environment, what's going on in the Middle East, there are organizations that are impacted. Certainly. certainly Yeah, there's a couple of things. yeah there's a couple of things First, I would say, for investors or potential investors, the sector is massive. first i would say for investors or potential investors the sector is massive The nonprofit sector is roughly the third-largest employer in the country, if we're just looking at the U.S. the nonprofit sector is roughly the third-largest employer in the country if we're just looking at the u.s It's significant. it's significant It's also growing. it's also growing The annual donations that flow through nonprofits in the U.S. is somewhere in the range of $600 billion per year and growing. the annual donations that flow through nonprofits in the u.s is somewhere in the range of $600 billion per year and growing It is vibrant and significant. it is vibrant and significant Doesn't mean there's not pressure. doesn't mean there's not pressure With that said, the nonprofit sector, if you will, has weathered a lot of storms over the years, from financial recessions, COVID, and the like. with that said the nonprofit sector if you will has weathered a lot of storms over the years from financial recessions covid and the like I think over that time, it's proven to be very resilient. i think over that time it's proven to be very resilient As we talk about the macro environment, what's going on in the Middle East, there are organizations that are impacted. as we talk about the macro environment what's going on in the middle east there are organizations that are impacted Typically, what we've seen is that whenever big nonprofits are in the federal funds flow, typically big nonprofits will have seven, eight, nine different revenue streams. If some of those are in the funds flow from the government and they go away, it just makes them more reliant on Blackbaud's solutions at the end of the day, then it actually becomes a little bit of a tailwind to the company. Another important point is that not all nonprofits are in that space either. If you think about K-12 organizations, perhaps hospitals and hospital foundations. It's a little bit different depending on the particular vertical, if you will. In the main, while some of our clients have been under pressure, we haven't seen a notable change in client attrition to speak of. Typically, what we've seen is that whenever big nonprofits are in the federal funds flow, typically big nonprofits will have seven, eight, nine different revenue streams. typically what we've seen is that whenever big nonprofits are in the federal funds flow typically big nonprofits will have seven eight nine different revenue streams If some of those are in the funds flow from the government and they go away, it just makes them more reliant on Blackbaud's solutions at the end of the day, then it actually becomes a little bit of a tailwind to the company. if some of those are in the funds flow from the government and they go away it just makes them more reliant on blackbaud's solutions at the end of the day then it actually becomes a little bit of a tailwind to the company Another important point is that not all nonprofits are in that space either. another important point is that not all nonprofits are in that space either If you think about K-12 organizations, perhaps hospitals and hospital foundations. if you think about k-12 organizations perhaps hospitals and hospital foundations It's a little bit different depending on the particular vertical, if you will. it's a little bit different depending on the particular vertical if you will In the main, while some of our clients have been under pressure, we haven't seen a notable change in client attrition to speak of. in the main while some of our clients have been under pressure we haven't seen a notable change in client attrition to speak of

Speaker 3: Got it. Great. You guys made a bunch of changes a few years back, and you moved your customers towards three-year contracts. You also have done a lot of operational changes internally around cost structure and now leveraging AI. For those maybe who haven't looked at Blackbaud in a few years, the profitability profile of the business is phenomenal. Maybe talk about some of the different changes, and obviously on the contracts side, I want to dive into that a little bit. Got it. got it Great. great You guys made a bunch of changes a few years back, and you moved your customers towards three-year contracts. you guys made a bunch of changes a few years back and you moved your customers towards three-year contracts You also have done a lot of operational changes internally around cost structure and now leveraging AI. you also have done a lot of operational changes internally around cost structure and now leveraging ai For those maybe who haven't looked at Blackbaud in a few years, the profitability profile of the business is phenomenal. for those maybe who haven't looked at blackbaud in a few years the profitability profile of the business is phenomenal Maybe talk about some of the different changes, and obviously on the contracts side, I want to dive into that a little bit. maybe talk about some of the different changes and obviously on the contracts side i want to dive into that a little bit

Speaker 1: Sure. Sure. sure

Speaker 3: Talk about some of the changes overall that have happened over the last few years of the business. Talk about some of the changes overall that have happened over the last few years of the business. talk about some of the changes overall that have happened over the last few years of the business

Speaker 1: Certainly, we're focused on driving profitability. No surprise there. We target 6%-8% kind of EBITDA growth on an annual basis. We've got lots of levers. Over the years, we've focused on internal efficiencies, if you will, vendor consolidation related activities. We've shut down 80% of our private data centers over that time in the migration to public cloud. We actually still have two of those that we're focused on and look forward to winding down here in the near to mid-term. Just as a few examples. Beyond that, we opened up a global capability center in Hyderabad, both to access talent as well as to provide potential opportunities for labor arbitrage. While we've had partners that have provided staffing on a consultancy or staff augmentation basis, we now have badged full-time Blackbaud employees. Certainly, we're focused on driving profitability. certainly we're focused on driving profitability No surprise there. no surprise there We target 6%-8% kind of EBITDA growth on an annual basis. we target 6%-8% kind of ebitda growth on an annual basis We've got lots of levers. we've got lots of levers Over the years, we've focused on internal efficiencies, if you will, vendor consolidation related activities. over the years we've focused on internal efficiencies if you will vendor consolidation related activities We've shut down 80% of our private data centers over that time in the migration to public cloud. we've shut down 80% of our private data centers over that time in the migration to public cloud We actually still have two of those that we're focused on and look forward to winding down here in the near to mid-term. we actually still have two of those that we're focused on and look forward to winding down here in the near to mid-term Just as a few examples. just as a few examples Beyond that, we opened up a global capability center in Hyderabad, both to access talent as well as to provide potential opportunities for labor arbitrage. beyond that we opened up a global capability center in hyderabad both to access talent as well as to provide potential opportunities for labor arbitrage While we've had partners that have provided staffing on a consultancy or staff augmentation basis, we now have badged full-time Blackbaud employees. while we've had partners that have provided staffing on a consultancy or staff augmentation basis we now have badged full-time blackbaud employees That's another lever that's going quite well. It's gone from site selection to employee one, to hundreds of employees. We're not the first or the last software company to be in that zone, so we're quite confident that we'll be successful in being able to leverage the global capability center. Beyond that, we see AI as a real potential tailwind. Obviously, there's lots of speculation in regards to, does it put gross margins under pressure or not? We're going through it in a methodical manner. We're all in. We've got the entirety of our employee base trained, as well as leveraging the tools, but being mindful in regards to the use cases and making sure that we're targeting a return at the end of the day. I could mention leveraging the tools in engineering is probably not a surprise. That's another lever that's going quite well. that's another lever that's going quite well It's gone from site selection to employee one, to hundreds of employees. it's gone from site selection to employee one to hundreds of employees We're not the first or the last software company to be in that zone, so we're quite confident that we'll be successful in being able to leverage the global capability center. we're not the first or the last software company to be in that zone so we're quite confident that we'll be successful in being able to leverage the global capability center Beyond that, we see AI as a real potential tailwind. beyond that we see ai as a real potential tailwind Obviously, there's lots of speculation in regards to, does it put gross margins under pressure or not? obviously there's lots of speculation in regards to does it put gross margins under pressure or not We're going through it in a methodical manner. we're going through it in a methodical manner We're all in. we're all in We've got the entirety of our employee base trained, as well as leveraging the tools, but being mindful in regards to the use cases and making sure that we're targeting a return at the end of the day. we've got the entirety of our employee base trained as well as leveraging the tools but being mindful in regards to the use cases and making sure that we're targeting a return at the end of the day I could mention leveraging the tools in engineering is probably not a surprise. i could mention leveraging the tools in engineering is probably not a surprise We have a great opportunity to be able to further write code, test code, not only for the solutions that we're selling, but also how we're running the infrastructure of the organization. We're leveraging agentic AI for demand generation sales forecasting. You can kind of go on and on, and it's still very early days on that front. Again, very optimistic that that'll be just another feather in the cap relative to how we're pressing and expanding on margins in the future. We have a great opportunity to be able to further write code, test code, not only for the solutions that we're selling, but also how we're running the infrastructure of the organization. we have a great opportunity to be able to further write code test code not only for the solutions that we're selling but also how we're running the infrastructure of the organization We're leveraging agentic AI for demand generation sales forecasting. we're leveraging agentic ai for demand generation sales forecasting You can kind of go on and on, and it's still very early days on that front. you can kind of go on and on and it's still very early days on that front Again, very optimistic that that'll be just another feather in the cap relative to how we're pressing and expanding on margins in the future. again very optimistic that that'll be just another feather in the cap relative to how we're pressing and expanding on margins in the future

Speaker 3: Got it. Like music to the ears for an analyst is when you're at a user event, and you're talking to a bunch of customers at a lunch, and you ask them about the price increases, and they kind of say, "Oh, well." No one's ever happy about it. Then you ask them, "What are you thinking about doing? Are you" Not one of them is leaving. In fact, they're looking to do more, so they can get more value. Obviously very, very encouraging. You guys went through this period where you pushed your customers on price, which was a great test of the stickiness of your product and your platform, in our view. You then moved to the three-year contracts. Some of those are coming up for renewal now. How are those going? Give us a look into that sense, because that seems like that's the next kind of catalyst or thing that the Street should really be looking out for. Got it. got it Like music to the ears for an analyst is when you're at a user event, and you're talking to a bunch of customers at a lunch, and you ask them about the price increases, and they kind of say, "Oh, well." No one's ever happy about it. like music to the ears for an analyst is when you're at a user event and you're talking to a bunch of customers at a lunch and you ask them about the price increases and they kind of say "oh well." no one's ever happy about it Then you ask them, "What are you thinking about doing? then you ask them "what are you thinking about doing Are you" Not one of them is leaving. are you" not one of them is leaving In fact, they're looking to do more, so they can get more value. in fact they're looking to do more so they can get more value Obviously very, very encouraging. obviously very very encouraging You guys went through this period where you pushed your customers on price, which was a great test of the stickiness of your product and your platform, in our view. you guys went through this period where you pushed your customers on price which was a great test of the stickiness of your product and your platform in our view You then moved to the three-year contracts. you then moved to the three-year contracts Some of those are coming up for renewal now. some of those are coming up for renewal now How are those going? how are those going Give us a look into that sense, because that seems like that's the next kind of catalyst or thing that the Street should really be looking out for. give us a look into that sense because that seems like that's the next kind of catalyst or thing that the street should really be looking out for

Speaker 1: Yeah. In regards to the pricing and the renewal program journey, we really started thinking about it about five or six years ago. We had shorter contracts, and we made a decision to move to more standard three-year agreements. We'd really planned to put it in place during COVID, and we paused. In 2023, we rolled it out. These are standard multi-year contracts, which are quite common in the space. They have embedded price escalators. We've held very solid from a retention perspective. It's kind of stayed stable in kind of those around 92% on a gross dollar retention perspective. To Rob's point, we've now lapped that. At the tail end of Q1, we're basically through the three-year cycle, if you will. We're entering into that next kind of wave. Yeah. yeah In regards to the pricing and the renewal program journey, we really started thinking about it about five or six years ago. in regards to the pricing and the renewal program journey we really started thinking about it about five or six years ago We had shorter contracts, and we made a decision to move to more standard three-year agreements. we had shorter contracts and we made a decision to move to more standard three-year agreements We'd really planned to put it in place during COVID, and we paused. we'd really planned to put it in place during covid and we paused In 2023, we rolled it out. in 2023 we rolled it out These are standard multi-year contracts, which are quite common in the space. these are standard multi-year contracts which are quite common in the space They have embedded price escalators. they have embedded price escalators We've held very solid from a retention perspective. we've held very solid from a retention perspective It's kind of stayed stable in kind of those around 92% on a gross dollar retention perspective. it's kind of stayed stable in kind of those around 92% on a gross dollar retention perspective To Rob's point, we've now lapped that. to rob's point we've now lapped that At the tail end of Q1, we're basically through the three-year cycle, if you will. at the tail end of q1 we're basically through the three-year cycle if you will We're entering into that next kind of wave. we're entering into that next kind of wave The retention is kind of in line with expectations. We're feeling good about it. It's far better revenue durability for us, longer standard contracts. The ability for us to be able to prove the value to the clients has really not been a challenge for us to this point. We're pleased, but at the same time, we're mindful. The retention is kind of in line with expectations. the retention is kind of in line with expectations We're feeling good about it. we're feeling good about it It's far better revenue durability for us, longer standard contracts. it's far better revenue durability for us longer standard contracts The ability for us to be able to prove the value to the clients has really not been a challenge for us to this point. the ability for us to be able to prove the value to the clients has really not been a challenge for us to this point We're pleased, but at the same time, we're mindful. we're pleased but at the same time we're mindful

Speaker 3: The renewals, the retention is there. The other thing you guys have done, which is encouraging, is really focus on that cross-sell, which has always felt like an embedded opportunity for you guys. Obviously, you've got many customers that have multiple products, but it felt like a more concerted effort there could really bear fruit. You brought in some new sales leadership, and you've talked a lot about it. Mike's really made it a theme on the calls. As these renewals come up, how should we think about not just the retention, which we expect will be there, but also that NRR equivalent metric of how you guys are cross-selling? The renewals, the retention is there. the renewals the retention is there The other thing you guys have done, which is encouraging, is really focus on that cross-sell, which has always felt like an embedded opportunity for you guys. the other thing you guys have done which is encouraging is really focus on that cross-sell, which has always felt like an embedded opportunity for you guys Obviously, you've got many customers that have multiple products, but it felt like a more concerted effort there could really bear fruit. obviously you've got many customers that have multiple products but it felt like a more concerted effort there could really bear fruit You brought in some new sales leadership, and you've talked a lot about it. you brought in some new sales leadership and you've talked a lot about it Mike's really made it a theme on the calls. mike's really made it a theme on the calls As these renewals come up, how should we think about not just the retention, which we expect will be there, but also that NRR equivalent metric of how you guys are cross-selling? as these renewals come up how should we think about not just the retention which we expect will be there but also that nrr equivalent metric of how you guys are cross-selling

Speaker 2: Yeah. It is a very big piece of our model, that land and expand model over time. We have roughly half our sales folks that are focused solely on new logos, so refilling the top of the funnel. The other half are focused on cross-selling the portfolio solutions, and I think as Chad and I have mentioned, we do have a fairly broad portfolio. It's give or take 18 products. We're now bringing new AI products to the market. The agentic AI product will be priced separately. That's a new SKU and what we think is a big back to base opportunity, at least initially. We are very, very focused on driving that further penetration in the customer base over time, both with the software products, the AI products, payments enablement. Yeah. yeah It is a very big piece of our model, that land and expand model over time. it is a very big piece of our model that land and expand model over time We have roughly half our sales folks that are focused solely on new logos, so refilling the top of the funnel. we have roughly half our sales folks that are focused solely on new logos so refilling the top of the funnel The other half are focused on cross-selling the portfolio solutions, and I think as Chad and I have mentioned, we do have a fairly broad portfolio. the other half are focused on cross-selling the portfolio solutions and i think as chad and i have mentioned we do have a fairly broad portfolio It's give or take 18 products. it's give or take 18 products We're now bringing new AI products to the market. we're now bringing new ai products to the market The agentic AI product will be priced separately. the agentic ai product will be priced separately That's a new SKU and what we think is a big back to base opportunity, at least initially. that's a new sku and what we think is a big back to base opportunity at least initially We are very, very focused on driving that further penetration in the customer base over time, both with the software products, the AI products, payments enablement. we are very very focused on driving that further penetration in the customer base over time both with the software products the ai products payments enablement There's a long runway in terms of the payments side of the business and getting folks payments-enabled for donation processing, tuition processing on the education side. Multiple angles there. I think the other thing that's important to understand because I think many companies, they really only open up their customer relationship at the time of renewal for the cross-sell, up-sell motion. Our teams are cross-selling and upselling every day. It doesn't necessarily have to be tied just to that renewal moment. We have multiple opportunities throughout the year to do that. There's a long runway in terms of the payments side of the business and getting folks payments-enabled for donation processing, tuition processing on the education side. there's a long runway in terms of the payments side of the business and getting folks payments-enabled for donation processing tuition processing on the education side Multiple angles there. multiple angles there I think the other thing that's important to understand because I think many companies, they really only open up their customer relationship at the time of renewal for the cross-sell, up-sell motion. i think the other thing that's important to understand because i think many companies they really only open up their customer relationship at the time of renewal for the cross-sell up-sell motion Our teams are cross-selling and upselling every day. our teams are cross-selling and upselling every day It doesn't necessarily have to be tied just to that renewal moment. it doesn't necessarily have to be tied just to that renewal moment We have multiple opportunities throughout the year to do that. we have multiple opportunities throughout the year to do that

Speaker 3: Those teams are now divided up into the hunters and farmers. Is customer success an element of the cross-sell as well? Has that been combined? Those teams are now divided up into the hunters and farmers. those teams are now divided up into the hunters and farmers Is customer success an element of the cross-sell as well? is customer success an element of the cross-sell as well Has that been combined? has that been combined

Speaker 2: The cross-sell, up-sell motion is a sales motion today, so the direct sales force, new logo, and cross-sell, up-sell, and then we have a separate team in the customer success and renewals org that is handling- The cross-sell, up-sell motion is a sales motion today, so the direct sales force, new logo, and cross-sell, up-sell, and then we have a separate team in the customer success and renewals org that is handling- the cross-sell up-sell motion is a sales motion today so the direct sales force new logo and cross-sell up-sell and then we have a separate team in the customer success and renewals org that is handling-

Speaker 3: Got it. Got it. got it

Speaker 2: just the existing customer relationship and renewals. just the existing customer relationship and renewals. just the existing customer relationship and renewals

Speaker 3: Got it. Got it. Got it. got it Got it. got it

Speaker 2: Yeah. Yeah. yeah

Speaker 3: Okay, great. Payments is a significant portion of the business for you guys. I should know off the top of my head. It was a high 20s% of the business. Okay, great. okay great Payments is a significant portion of the business for you guys. payments is a significant portion of the business for you guys I should know off the top of my head. i should know off the top of my head It was a high 20s% of the business. it was a high 20s% of the business

Speaker 2: It's roughly 1/3. Yeah. It's roughly 1/3 . it's roughly 1/3 Yeah. yeah

Speaker 1: Roughly, yeah, more roughly 1/3 of the business. Roughly, yeah, more roughly 1/3 of the business. roughly yeah more roughly 1/3 of the business

Speaker 2: Yeah. Yeah. yeah

Speaker 3: Very sticky, and in turn, creates stickier customers when they have it. Great pedigree background here with Mike having been at Fiserv and really driven this very strong payments opportunity, which has defied a lot of the bear cases over the years of different payment vendors coming in, taking this business. How should we think about attach of payments currently into your installed base, the opportunity for payments down the road? It strikes us as a pretty meaningful compounder for you guys in terms of the customer stickiness, what it can add, all that. Very sticky, and in turn, creates stickier customers when they have it. very sticky and in turn creates stickier customers when they have it Great pedigree background here with Mike having been at Fiserv and really driven this very strong payments opportunity, which has defied a lot of the bear cases over the years of different payment vendors coming in, taking this business. great pedigree background here with mike having been at fiserv and really driven this very strong payments opportunity which has defied a lot of the bear cases over the years of different payment vendors coming in taking this business How should we think about attach of payments currently into your installed base, the opportunity for payments down the road? how should we think about attach of payments currently into your installed base the opportunity for payments down the road It strikes us as a pretty meaningful compounder for you guys in terms of the customer stickiness, what it can add, all that. it strikes us as a pretty meaningful compounder for you guys in terms of the customer stickiness what it can add all that

Speaker 2: Yeah. There's a couple of nice things about the transactional side of the business for us. That's actually a piece of the business, as Chad mentioned, it's a little over 1/3 of total revenue today, a very meaningful part of our revenue algorithm. That piece of the business actually tends to grow slightly faster than the core software base. Core software is more mid-single digit. This is mid to high single digit, 6%-8% historically. Couple reasons for that. You've got some of the same growth levers that you have on the software side, which you've got new logos, so you sign a new customer, they're payments-enabled. To Rob's point about the penetration in the existing base, there is a long runway there. Yeah. yeah There's a couple of nice things about the transactional side of the business for us. there's a couple of nice things about the transactional side of the business for us That's actually a piece of the business, as Chad mentioned, it's a little over 1/3 of total revenue today, a very meaningful part of our revenue algorithm. that's actually a piece of the business as chad mentioned it's a little over 1/3 of total revenue today a very meaningful part of our revenue algorithm That piece of the business actually tends to grow slightly faster than the core software base. that piece of the business actually tends to grow slightly faster than the core software base Core software is more mid-single digit. core software is more mid-single digit This is mid to high single digit, 6%-8% historically. this is mid to high single digit 6%-8% historically Couple reasons for that. couple reasons for that You've got some of the same growth levers that you have on the software side, which you've got new logos, so you sign a new customer, they're payments-enabled. you've got some of the same growth levers that you have on the software side which you've got new logos so you sign a new customer they're payments-enabled To Rob's point about the penetration in the existing base, there is a long runway there. to rob's point about the penetration in the existing base there is a long runway there We don't disclose specifically the penetration rates, but I'd say needless to say, there's plenty of opportunity even within just the existing base to get them payments-enabled and processing on our platforms, which is obviously a benefit to us. Some things that are specific to payments, we do have pricing levers that are unique there in terms of take rate optimization and donor cover models that have been very positive for us over time. We also benefit from just what we call same-store growth, so donation volume growth or tuition volume growth over time within existing customers. When you think of the total pie of hundreds of billions of dollars donated in the U.S. every year, that tends to grow a couple percent as well, and that's a further tailwind. We don't disclose specifically the penetration rates, but I'd say needless to say, there's plenty of opportunity even within just the existing base to get them payments-enabled and processing on our platforms, which is obviously a benefit to us. we don't disclose specifically the penetration rates but i'd say needless to say there's plenty of opportunity even within just the existing base to get them payments-enabled and processing on our platforms which is obviously a benefit to us Some things that are specific to payments, we do have pricing levers that are unique there in terms of take rate optimization and donor cover models that have been very positive for us over time. some things that are specific to payments we do have pricing levers that are unique there in terms of take rate optimization and donor cover models that have been very positive for us over time We also benefit from just what we call same-store growth, so donation volume growth or tuition volume growth over time within existing customers. we also benefit from just what we call same-store growth so donation volume growth or tuition volume growth over time within existing customers When you think of the total pie of hundreds of billions of dollars donated in the U.S. every year, that tends to grow a couple percent as well, and that's a further tailwind. when you think of the total pie of hundreds of billions of dollars donated in the u.s every year that tends to grow a couple percent as well and that's a further tailwind The last one, which hasn't been as meaningful the last year or two, but is at points in time, is we're primarily monetizing the digital payment side, so credit card processing. As more and more of that pie shifts to digital payments, that's a further tailwind to that business. Multiple growth vectors that we like within that transactional business, and it continues to be a bigger piece of our story over time. The last one, which hasn't been as meaningful the last year or two, but is at points in time, is we're primarily monetizing the digital payment side, so credit card processing. the last one which hasn't been as meaningful the last year or two but is at points in time is we're primarily monetizing the digital payment side so credit card processing As more and more of that pie shifts to digital payments, that's a further tailwind to that business. as more and more of that pie shifts to digital payments that's a further tailwind to that business Multiple growth vectors that we like within that transactional business, and it continues to be a bigger piece of our story over time. multiple growth vectors that we like within that transactional business and it continues to be a bigger piece of our story over time

Speaker 3: Got it. Exciting. I was remiss, if you do have questions, you can send an email. The email's in front of you, and I'll try to get it in. We have about eight minutes left. I have a few more questions. Feel free to add in. On competitive landscape, for years there was a big buzz around Salesforce getting into this business, and they have a small share with some larger places, but they never really seemed to make an impact on you guys. How has the competitive landscape changed? Obviously, barrier to entry in this market is high. You guys are far and away the number one player. We see a lot of action at the low end, a lot of startups, small companies. You guys actually, I think, disclose a chart in your investor deck where you actually lay them all out. Got it. got it Exciting. exciting I was remiss, if you do have questions, you can send an email. i was remiss if you do have questions you can send an email The email's in front of you, and I'll try to get it in. the email's in front of you and i'll try to get it in We have about eight minutes left. we have about eight minutes left I have a few more questions. i have a few more questions Feel free to add in. feel free to add in On competitive landscape, for years there was a big buzz around Salesforce getting into this business, and they have a small share with some larger places, but they never really seemed to make an impact on you guys. on competitive landscape for years there was a big buzz around salesforce getting into this business and they have a small share with some larger places but they never really seemed to make an impact on you guys How has the competitive landscape changed? how has the competitive landscape changed Obviously, barrier to entry in this market is high. obviously barrier to entry in this market is high You guys are far and away the number one player. you guys are far and away the number one player We see a lot of action at the low end, a lot of startups, small companies. we see a lot of action at the low end a lot of startups small companies You guys actually, I think, disclose a chart in your investor deck where you actually lay them all out. you guys actually i think disclose a chart in your investor deck where you actually lay them all out Maybe talk about if there's been any change there with AI and what you see in the market. Maybe talk about if there's been any change there with AI and what you see in the market. maybe talk about if there's been any change there with ai and what you see in the market

Speaker 2: Nothing material. I would say this: Our customer base or our competitive segment is extremely fragmented. We are the only provider in our space that has the full suite of solutions. When you think from financial management to fundraising, to digital marketing, to the school operations, to ticketing for our arts and cultural customers, we have a very broad suite of solutions that integrate with each other, and that tends to be a core differentiator for us. Our competitors, by and large, are vertical specific point solution players. The people we compete with on the fundraising side is different than the people we compete with on the K-12 side, than the financials side. From time to time, we do see some of the larger horizontal players. On the CRM side, do we see Salesforce? Yes. Microsoft Dynamics, yes. They're not purpose-built solutions. Nothing material. nothing material I would say this: Our customer base or our competitive segment is extremely fragmented. i would say this our customer base or our competitive segment is extremely fragmented We are the only provider in our space that has the full suite of solutions. we are the only provider in our space that has the full suite of solutions When you think from financial management to fundraising, to digital marketing, to the school operations, to ticketing for our arts and cultural customers, we have a very broad suite of solutions that integrate with each other, and that tends to be a core differentiator for us. when you think from financial management to fundraising to digital marketing to the school operations to ticketing for our arts and cultural customers we have a very broad suite of solutions that integrate with each other and that tends to be a core differentiator for us Our competitors, by and large, are vertical specific point solution players. our competitors by and large are vertical specific point solution players The people we compete with on the fundraising side is different than the people we compete with on the K-12 side, than the financials side. the people we compete with on the fundraising side is different than the people we compete with on the k-12 side than the financials side From time to time, we do see some of the larger horizontal players. from time to time we do see some of the larger horizontal players On the CRM side, do we see Salesforce? on the crm side do we see salesforce Yes. yes Microsoft Dynamics, yes. microsoft dynamics yes They're not purpose-built solutions. they're not purpose-built solutions If you're going down that path, and some organizations do choose to, you're bringing in a third-party excuse me, consultant to customize that database, build in those workflows, define the fields, and label all that. There's just more work and cost involved upfront. I think from a competitive positioning point, we're pretty well insulated. The other thing I'd bring up on the competitive side, and it pertains to some of the AI topics we've been talking about, I think we feel very confident in the data moat we have as well. That's something that frankly has always been important, especially when you think data intelligence analytics and the like that we've done over time, but even more so as we talk about AI solutions and making sure that we maintain that proprietary data posture. I really think of it in four main categories, right? If you're going down that path, and some organizations do choose to, you're bringing in a third-party excuse me, consultant to customize that database, build in those workflows, define the fields, and label all that. if you're going down that path and some organizations do choose to you're bringing in a third-party excuse me consultant to customize that database build in those workflows define the fields and label all that There's just more work and cost involved upfront. there's just more work and cost involved upfront I think from a competitive positioning point, we're pretty well insulated. i think from a competitive positioning point we're pretty well insulated The other thing I'd bring up on the competitive side, and it pertains to some of the AI topics we've been talking about, I think we feel very confident in the data moat we have as well. the other thing i'd bring up on the competitive side and it pertains to some of the ai topics we've been talking about i think we feel very confident in the data moat we have as well That's something that frankly has always been important, especially when you think data intelligence analytics and the like that we've done over time, but even more so as we talk about AI solutions and making sure that we maintain that proprietary data posture. that's something that frankly has always been important especially when you think data intelligence analytics and the like that we've done over time but even more so as we talk about ai solutions and making sure that we maintain that proprietary data posture I really think of it in four main categories, right? i really think of it in four main categories right There's different frameworks you can look at these things in, but it's volume, it's variety, it's velocity, and it's vigilance, right? From a volume standpoint, we are the largest player in the nonprofit space, and we've been around for 40 years, right? There's no one that can match, I think, the breadth of our data set. Variety, you've heard me talk about just the types of solutions we have, right? We've got fundraising data, we have financial data, we have marketing data, right? Click rates and email open rates and the like, right? We can go on and on. I think the variety of our data is very broad. Velocity is a very important one because we have kind of a closed system within the suite. There is no import-export. There's different frameworks you can look at these things in, but it's volume, it's variety, it's velocity, and it's vigilance, right? there's different frameworks you can look at these things in but it's volume it's variety it's velocity and it's vigilance right From a volume standpoint, we are the largest player in the nonprofit space, and we've been around for 40 years, right? from a volume standpoint we are the largest player in the nonprofit space and we've been around for 40 years right There's no one that can match, I think, the breadth of our data set. there's no one that can match i think the breadth of our data set Variety, you've heard me talk about just the types of solutions we have, right? variety you've heard me talk about just the types of solutions we have right We've got fundraising data, we have financial data, we have marketing data, right? we've got fundraising data we have financial data we have marketing data right Click rates and email open rates and the like, right? click rates and email open rates and the like right We can go on and on. we can go on and on I think the variety of our data is very broad. i think the variety of our data is very broad Velocity is a very important one because we have kind of a closed system within the suite. velocity is a very important one because we have kind of a closed system within the suite There is no import-export. there is no import-export A lot of these point solution AI startups, you're going to a system of record like Blackbaud, you have to export data out, put it into the AI tool, it's transformed, and then you're porting it back, right? There's time and context that's lost in that porting that we don't have to deal with that we think is a core differentiator. Finally, vigilance is really about trust and data governance, right? We've been around for a long time. We have a very good reputation in this space. We've invested more than anyone in terms of data and cybersecurity, as well as spending years developing kind of data frameworks and AI governance frameworks, that I think our sector in particular, values trust and data security very highly. I think all of those things together from a data moat standpoint, put us in a good position competitively. A lot of these point solution AI startups, you're going to a system of record like Blackbaud, you have to export data out, put it into the AI tool, it's transformed, and then you're porting it back, right? a lot of these point solution ai startups you're going to a system of record like blackbaud you have to export data out put it into the ai tool it's transformed and then you're porting it back right There's time and context that's lost in that porting that we don't have to deal with that we think is a core differentiator. there's time and context that's lost in that porting that we don't have to deal with that we think is a core differentiator Finally, vigilance is really about trust and data governance, right? finally vigilance is really about trust and data governance right We've been around for a long time. we've been around for a long time We have a very good reputation in this space. we have a very good reputation in this space We've invested more than anyone in terms of data and cybersecurity, as well as spending years developing kind of data frameworks and AI governance frameworks, that I think our sector in particular, values trust and data security very highly. we've invested more than anyone in terms of data and cybersecurity as well as spending years developing kind of data frameworks and ai governance frameworks that i think our sector in particular values trust and data security very highly I think all of those things together from a data moat standpoint, put us in a good position competitively. i think all of those things together from a data moat standpoint put us in a good position competitively

Speaker 3: Great. Super helpful. We only have a couple minutes left. I want to talk about capital allocation. You guys have acquired a lot of companies over the years. I think it's been a pretty solid acquisition motion for the most part. Then you had a pretty high-profile hiccup with EVERFI. You still have the same CEO who's viewed by the street as being a pretty acquisitive guy. You guys have talked a little bit about this. Help us understand how you think about that capital allocation and just to mitigate that risk that you're going to go out and whale hunting again, how to think about how you guys are thinking about that market. Great. great Super helpful. super helpful We only have a couple minutes left. we only have a couple minutes left I want to talk about capital allocation. i want to talk about capital allocation You guys have acquired a lot of companies over the years. you guys have acquired a lot of companies over the years I think it's been a pretty solid acquisition motion for the most part. i think it's been a pretty solid acquisition motion for the most part Then you had a pretty high-profile hiccup with EVERFI. then you had a pretty high-profile hiccup with everfi You still have the same CEO who's viewed by the street as being a pretty acquisitive guy. you still have the same ceo who's viewed by the street as being a pretty acquisitive guy You guys have talked a little bit about this. you guys have talked a little bit about this Help us understand how you think about that capital allocation and just to mitigate that risk that you're going to go out and whale hunting again, how to think about how you guys are thinking about that market. help us understand how you think about that capital allocation and just to mitigate that risk that you're going to go out and whale hunting again how to think about how you guys are thinking about that market

Speaker 1: We have been prioritizing share buybacks significantly over the last few years. The way that I generally think about it, that's priority number one. We've been very purposeful in not only repurchasing shares, but also driving down the net shares available. If you go back a couple of years, you'll see that we've reduced the overall share count by 14%, which is meaningful. I anticipate that we'll, and certainly in today's market, in today's valuations, will continue to be very aggressive. We've publicly stated that our intent is to dedicate at least 50% of our free cash flow to share repurchases on an annual basis and drive down the number of shares between 5% and 10%. Given where we're at with valuations, I would expect that we'll be in the higher side of that in the near term. We have been prioritizing share buybacks significantly over the last few years. we have been prioritizing share buybacks significantly over the last few years The way that I generally think about it, that's priority number one. the way that i generally think about it that's priority number one We've been very purposeful in not only repurchasing shares, but also driving down the net shares available. we've been very purposeful in not only repurchasing shares but also driving down the net shares available If you go back a couple of years, you'll see that we've reduced the overall share count by 14%, which is meaningful. if you go back a couple of years you'll see that we've reduced the overall share count by 14% which is meaningful I anticipate that we'll, and certainly in today's market, in today's valuations, will continue to be very aggressive. i anticipate that we'll and certainly in today's market in today's valuations will continue to be very aggressive We've publicly stated that our intent is to dedicate at least 50% of our free cash flow to share repurchases on an annual basis and drive down the number of shares between 5% and 10%. we've publicly stated that our intent is to dedicate at least 50% of our free cash flow to share repurchases on an annual basis and drive down the number of shares between 5% and 10% Given where we're at with valuations, I would expect that we'll be in the higher side of that in the near term. given where we're at with valuations i would expect that we'll be in the higher side of that in the near term I would balance that we're also mindful of managing our balance sheet. We're mindful of trying to keep leverage in a good spot. We target somewhere in the low twos, preferably. At the same time, with valuations where they are, it's important that we also keep that in mind. We're balancing both of those, and at the same time, we've had a number of successful acquisitions over the years. As a third priority, we have optionality for tuck-in acquisitions, if it makes sense with today's valuations, that there are opportunities out there. Again, kind of tuck-ins, and I would say that is, again, the third priority on the capital allocation front. I would balance that we're also mindful of managing our balance sheet. i would balance that we're also mindful of managing our balance sheet We're mindful of trying to keep leverage in a good spot. we're mindful of trying to keep leverage in a good spot We target somewhere in the low twos, preferably. we target somewhere in the low twos preferably At the same time, with valuations where they are, it's important that we also keep that in mind. at the same time with valuations where they are it's important that we also keep that in mind We're balancing both of those, and at the same time, we've had a number of successful acquisitions over the years. we're balancing both of those and at the same time we've had a number of successful acquisitions over the years As a third priority, we have optionality for tuck-in acquisitions, if it makes sense with today's valuations, that there are opportunities out there. as a third priority we have optionality for tuck-in acquisitions if it makes sense with today's valuations that there are opportunities out there Again, kind of tuck-ins, and I would say that is, again, the third priority on the capital allocation front. again kind of tuck-ins and i would say that is again the third priority on the capital allocation front

Speaker 3: Got it. You mentioned the free cash flow, it's substantial. Got it. got it You mentioned the free cash flow, it's substantial. you mentioned the free cash flow it's substantial

Speaker 1: Yep. Yep. yep

Speaker 3: The stock is currently trading at, I think, nine times EV to free cash and five times price to free cash. The stock is currently trading at, I think, nine times EV to free cash and five times price to free cash. the stock is currently trading at i think nine times ev to free cash and five times price to free cash

Speaker 1: Free cash flow has been a focus, always is. We've had good success driving free cash flow. It's up roughly 25% on a CAGR since 2020. We're going to continue to stay focused on that. If you look deeply into the financials you'll see that we're growing free cash significantly in 2026, as we kind of talked about. Yeah, we're focused on it. It's a big lever to the broader financial profile of the company. We're going to continue to target that mid-single-digit revenue growth, 6%-8% EBITDA growth, 13+ from an EPS perspective, kind of buoyed by the strong free cash flow. We're feeling good about it. AI is a potential tailwind for us, that opportunity's not factored into the guide or the numbers. We're feeling good where we're at. Free cash flow has been a focus, always is. free cash flow has been a focus always is We've had good success driving free cash flow. we've had good success driving free cash flow It's up roughly 25% on a CAGR since 2020. it's up roughly 25% on a cagr since 2020 We're going to continue to stay focused on that. we're going to continue to stay focused on that If you look deeply into the financials you'll see that we're growing free cash significantly in 2026, as we kind of talked about. if you look deeply into the financials you'll see that we're growing free cash significantly in 2026 as we kind of talked about Yeah, we're focused on it. yeah we're focused on it It's a big lever to the broader financial profile of the company. it's a big lever to the broader financial profile of the company We're going to continue to target that mid-single-digit revenue growth, 6%-8% EBITDA growth, 13+ from an EPS perspective, kind of buoyed by the strong free cash flow. we're going to continue to target that mid-single-digit revenue growth 6%-8% ebitda growth 13+ from an eps perspective kind of buoyed by the strong free cash flow We're feeling good about it. we're feeling good about it AI is a potential tailwind for us, that opportunity's not factored into the guide or the numbers. ai is a potential tailwind for us that opportunity's not factored into the guide or the numbers We're feeling good where we're at. we're feeling good where we're at Certainly, with today's valuations, think that we're a great buy for companies as well. Certainly, with today's valuations, think that we're a great buy for companies as well. certainly with today's valuations think that we're a great buy for companies as well

Speaker 3: Great. Well, please join me in thanking the management of Blackbaud. Chad, Jeff, appreciate it. Thank you guys very much. Great. great Well, please join me in thanking the management of Blackbaud. well please join me in thanking the management of blackbaud Chad, Jeff, appreciate it. chad jeff appreciate it Thank you guys very much. thank you guys very much

Speaker 1: Appreciate it. Appreciate it. appreciate it

Speaker 3: Thanks for your time. Thanks for your time. thanks for your time