A month has gone by since the last earnings report for Blackbaud (BLKB). Shares have lost about 13.7% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Blackbaud due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers.
Blackbaud's Q3 Earnings Surpass Estimates
Blackbaud reported third-quarter 2025 non-GAAP earnings per share (EPS) of $1.10, which surpassed the Zacks Consensus Estimate by 2.8%. The bottom line increased around 11.1% year over year.
Total revenues decreased 1.9% year over year to $281.1 million. This was due to the divestiture of EVERFI. The top line surpassed the Zacks Consensus Estimate by 0.5%.
The company’s solid results demonstrate disciplined execution and continued productivity gains. Blackbaud is focused on delivering an attractive financial model that balances growth in revenue, earnings and cash flow with a thoughtful and strategic approach to capital allocation. So far this year, the company has repurchased more than 5% of its outstanding common stock.
GAAP recurring revenue declined 1.5% to $275.8 million, primarily due to the divestiture of EVERFI, accounting for 98.1% of total revenue.
Non-GAAP organic revenues were up 5.2% on a reported basis and 4.8% on a constant-currency basis, year over year. Non-GAAP organic recurring revenues rose 5.5% on a reported basis and 5.1% on a constant-currency basis.
Margin Details
Non-GAAP gross margin was 63% compared with 61% a year ago. Total operating expenses fell 2.8% on a year-over-year basis to $112.9 million.
GAAP operating margin increased 500 basis points (bps) to 19.4%.
Non-GAAP operating margin increased 240 bps to 29.9%. Non-GAAP adjusted EBITDA margin was 27.6%.
Balance Sheet & Cash Flow
As of Sept. 30, 2025, Blackbaud had total cash, cash equivalents and restricted cash of $457.4 million compared with $911.8 million as of June 30, 2025. Total debt (including the current portion) as of Sept. 30, 2025, was $1 billion compared with $1.1 billion as of June 30, 2025.
For the third quarter, cash provided by operating activities was $207.5 million compared with $222.4 million in the prior-year quarter. Non-GAAP adjusted free cash outflow was $125.1 million, up $27.5 million in the year-ago quarter.
As of Sept. 30, 2025, Blackbaud had nearly $514 million available under its stock buyback program, which was expanded and renewed in July 2024.
According to current plans, the company expects total share repurchases in 2025 to represent between 5.2% and 7.0% of its outstanding common stock as of Dec. 31, 2024.
2025 Outlook
Blackbaud reiterated its guidance for full-year 2025. The company projects GAAP revenues between $1.120 billion and $1.130 billion, reflecting approximately 5% organic growth at the midpoint on a constant currency basis. This represents a $5 million increase, driven by strong transactional revenue in the first half of the year and favorable foreign exchange impacts compared to initial expectations.
The company still projects non-GAAP adjusted EBITDA margin in the range of 35.4-36.2%.
Non-GAAP EPS is anticipated to be between $4.30 and $4.50.
Non-GAAP adjusted free cash flow for 2025 is forecasted to be in the range of $195-$205 million compared with $190-$200 million projected earlier.
Non-GAAP annualized effective tax rate is still anticipated to be approximately 24.5%. Interest expense is expected in the band of $66 million to $70 million.
Fully diluted shares are still estimated to be 48.5 million to 49.5 million. Capital expenditures are expected to be in the range of $55 million to $65 million, which includes $50-$60 million of capitalized software and content development costs.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted 6.38% due to these changes.
VGM Scores
At this time, Blackbaud has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Interestingly, Blackbaud has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Blackbaud, Inc. (BLKB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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