BLACKBAUD INC Q3 FY2024 earnings call

• The Social Sector performed well, with contractual recurring revenue growing 6.8% and social transactional recurring revenue growing 6.6%. Gross dollar retention was 90%, and excluding EVERFI, it was 92%.
• Blackbaud held bbcon in September, announcing six waves of innovation including AI capabilities, partnerships with Constant Contact, and new features like Payment Assist.
• The company right-sized EVERFI's business and hired Goldman Sachs as a strategic advisor to evaluate options for EVERFI.
• Adjusted free cash flow was strong at nearly $100 million in the third quarter.

Blackbaud's Social Sector, which constitutes approximately 89% of revenue in the quarter, achieved a revenue growth of 6.6%. The corporate sector, specifically EVERFI, which represents around 7% of total revenue, declined by 26% year-over-year.

• Revised full-year 2024 revenue guidance: $1.150 billion to $1.160 billion, with an organic growth rate of 5.2% at the midpoint.
• Adjusted EBITDA margin guidance range increased to 33% to 34%.
• Non-GAAP earnings per share expected between $3.98 and $4.16.
• Adjusted free cash flow expected between $235 million and $245 million, a 12% increase over 2023 at the midpoint.

• EVERFI's continued underperformance and its negative impact on financial results.
• Macro-economic factors affecting the business, particularly in the area where EVERFI operates.

Q: Rob Oliver asked about the change in Social Sector growth rate from Q2.

A: Tony Boor discussed contract renewals, pricing, and that gross dollar retention was holding in line with plan.

Q: Brian Peterson inquired about EVERFI's margin profile.

A: Tony and Mike talked about EVERFI being dilutive even after cost right-sizing but mentioned recent new wins.

Q: Parker Lane asked about the impact of innovation.

A: Mike discussed bbcon innovations and their role in retention and growth.

Q: Matt VanVliet asked about EVERFI's impact and Your Cause.

A: Mike spoke about EVERFI's macro pullback and Your Cause's strong performance.

Q: Kirk Materne asked about contractual recurring bookings and divested business.

A: Mike discussed net new logos and Tony mentioned the divested business drag of about $6 million in annual revenue.