Blackbaud (BLKB -5.85%), a leading provider of cloud software for social impact organizations, released its results on July 30, 2025. The company announced strong financial performance, highlighted by non-GAAP earnings per share of $1.21, which beat analysts’ expectations of $1.06 (non-GAAP). Revenue, excluding the impact of divestitures, grew 6.8% organically. This result topped estimates, reaching $281.4 million in non-GAAP revenue, compared to a non-GAAP forecast of $276.5 million. Reported revenue, which includes all accounting impacts, declined 2.1% year over year due to the completed sale of EVERFI. The quarter featured record-high profitability metrics (non-GAAP) and led management to raise its full-year 2025 guidance.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.21 | $1.06 | $1.08 | 12.0% |
| Revenue (GAAP) | $281.4 million | $276.5 million | $287.3 million | (2.1 %) |
| Non-GAAP Organic Revenue | $281.4 million | $263.5 million | 6.8 % | |
| Operating Margin (GAAP) | 20.1 % | 14.7 % | 5.4 pp | |
| Non-GAAP Adjusted EBITDA | $108.5 million | $102.5 million | 5.9 % | |
| Non-GAAP Adjusted Free Cash Flow | $53.1 million | $41.7 million | 27.4 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About Blackbaud and Core Focus Areas
Blackbaud builds software tailored for nonprofits, educational organizations, and other groups working for social good. Its platforms help these organizations with fundraising, donor management, transactional processing, compliance, and analytics.
The company’s most recent strategies focus on strengthening its leadership in social impact software, driving product innovation—especially with artificial intelligence (AI)—and optimizing recurring and transactional revenue streams. Maintaining operational efficiency and promoting employee engagement also stand out as critical to its ongoing performance.
Quarter Highlights: Performance, Product, and Profitability
In the quarter, Blackbaud reported a 12.0% increase in non-GAAP earnings per share, climbing from $1.08 in Q2 2024 to $1.21. Revenue grew 6.8% on a non-GAAP organic (divestiture-adjusted) basis, powered mainly by strong growth in the company’s non-GAAP organic recurring revenue streams. Recurring revenue (GAAP) reached $275.6 million, comprising 98% of total sales for the period, with non-GAAP organic recurring revenue up 6.9%. The headline revenue figure (GAAP) declined, but this was solely due to the prior sale of the EVERFI division, not to core business weakness.
Profitability expanded sharply, with GAAP operating margin rising by 5.4 percentage points from the prior-year quarter. These improvements came from both disciplined cost management and prior headcount reductions—employee numbers fell from about 3,600 in Q3 2022 to 2,600 as of December 31, 2024—and ongoing efforts to close legacy data centers. Non-GAAP adjusted EBITDA was $108.5 million, up $5.9 million from the prior year.
Product innovation took center stage. Blackbaud continued rolling out advanced AI features, including a forthcoming "Copilot" AI agent designed to provide users with tailored fundraising recommendations. The firm also highlighted new AI tools for third-party developers and described an upcoming launch of Agentic AI, which aims to further enhance productivity for social impact organizations. As of this quarter, Blackbaud has not separately charged customers for its embedded AI features but is evaluating future business models around further AI capabilities.
From a service perspective, Blackbaud completed a strategic integration of its fundraising software with Constant Contact, an email marketing solution. International platforms, such as its JustGiving donation processing service in the UK, and YourCause, its employee engagement platform, both performed well.
On the transactional revenue side, the continued growth in consumer giving and tuition processing remained a bright spot.
Notably, Cost management initiatives led to substantial free cash flow gains. Adjusted free cash flow (non-GAAP) rose 45.9% year-over-year to $53.1 million. Employee engagement—a key strategic area—also received mention, with more than 76% of employees having volunteered with nonprofits annually as of December 31, 2024, and Blackbaud’s ongoing recognition for environmental, social, and governance (ESG) leadership.
Looking Forward: Guidance and Areas to Watch
Management raised its full-year 2025 guidance, now expecting GAAP revenue between $1.120 billion and $1.130 billion, compared to a previous range of $1.115 billion to $1.125 billion (GAAP). The new forecast for non-GAAP adjusted EBITDA margin is 35.4% to 36.2%, and for non-GAAP earnings per share, $4.30 to $4.50. Non-GAAP adjusted free cash flow is projected in the range of $190 million to $200 million. These increases reflect stronger-than-expected cash generation and profitability in the first half.
Investors should monitor several ongoing dynamics. While recurring revenue and customer retention remain strong, future success will depend on Blackbaud’s ongoing innovation—especially in artificial intelligence—and its ability to maintain contract renewal rates as it shifts to longer-term agreements. In addition, a former executive of the company, now leading a competitor, has raised questions about the pace of innovation at Blackbaud, though current management has responded with detailed plans for continuous product updates. The company’s focus on AI product launches and continued operational efficiency will remain central to results for the remainder of fiscal 2025.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
