Wed, Apr 30, 8:32 PM (12 days ago)
**Blackbaud, Inc. (BLKB) Q1 2025 Financial Summary** **Financial Health & Performance:** - **Revenue:** $270.7 million, down 3.1% YoY due to a decrease in contractual recurring revenue and one-time consulting revenue, partially offset by an increase in transactional recurring revenue. - **Gross Profit:** $155.8 million, up 2.5% YoY, with a gross margin of 57.6%. - **Operating Income:** $20.4 million, up 88.7% YoY, driven by cost reductions and lower expenses. - **Net Income:** $4.9 million, down 5.2% YoY, with earnings per share remaining flat at $0.10. - **Cash Flow:** $1.4 million from operations, down 97.9% YoY due to working capital changes. **Profit Margins:** - **Gross Margin:** 57.6%, up 280 basis points YoY. - **Operating Margin:** 7.5%, up 370 basis points YoY. **Cash Flow:** - **Operating Cash Flow:** $1.4 million, down 97.9% YoY. - **Capital Expenditures:** $13.7 million, relatively consistent with the previous year. - **Free Cash Flow:** Negative $12.3 million, down from $51.3 million in Q1 2024. **Earnings Changes:** - **Revenue Decrease:** $8.6 million YoY, primarily due to the sale of EVERFI. - **Operating Income Increase:** $9.7 million YoY, driven by cost reductions and lower expenses. **Quarterly Performance Discussion:** - **Revenue Trends:** Decrease in contractual recurring and one-time consulting revenue, offset by an increase in transactional recurring revenue. - **Expense Management:** Significant reductions in compensation, stock-based compensation, and Security Incident-related expenses. - **Gross Dollar Retention:** Approximately 92%, reflecting customer satisfaction and retention. **Trends & Uncertainties:** - **Market Conditions:** Concerns about federal grant funding in the U.S., but Blackbaud's solutions remain critical for fundraising and cost management. - **Operational Initiatives:** Transition to 3-year contract terms, migration to public cloud services, and AI integration for innovation and productivity. - **Security Incident:** Continued expenses related to the 2020 ransomware attack, with ongoing legal fees and loss contingency accruals. **Future Operations Impact:** - **Stock Repurchase:** $100 million spent on repurchasing 1.5 million shares, with $544.5 million remaining under the program. - **Debt Management:** $1.1 billion in debt, with a net leverage ratio of 2.91 to 1.00, in compliance with debt covenants. - **Liquidity:** Adequate sources of funds and anticipated cash flows to finance operations, meet debt obligations, and fund capital expenditures. **Non-GAAP Measures:** - **Non-GAAP Gross Profit:** $165.6 million, with a margin of 61.2%. - **Non-GAAP Operating Income:** $77.5 million, with a margin of 28.6%. - **Non-GAAP Net Income:** $47.3 million, with earnings per share of $0.96. **Seasonality:** - **Revenue Fluctuations:** Historically lower in Q1 due to customer budget cycles and contract renewals. - **Cash Flow Fluctuations:** Lowest in Q1 due to vendor payments and equity award settlements. **Conclusion:** Blackbaud's Q1 2025 reflects a challenging market with revenue declines, but also shows strong cost management and operational initiatives. The company remains focused on innovation, security, and customer retention, with adequate liquidity to support future operations.