Summary
Blackbaud grew second quarter revenue 15.5% to $264.9 million. The increase came largely from the EVERFI acquisition, which closed at the end of 2021, and from the ongoing shift of the customer base toward cloud subscriptions. Gross profit rose 14.8% to $139.3 million, but gross margin slipped 0.3 percentage points to 52.6%. On a non-GAAP basis, organic revenue growth was 3.8% for the quarter, or 4.9% in constant currency, and organic recurring revenue growth was 5.1%. Management pointed to contractual and transactional recurring revenue as the main drivers behind the quarter, with transactional revenue lifted by online charitable giving and a partial return of in-person fundraising events.
Profitability was far weaker on a GAAP basis. Operating income was $0.1 million, down 99.6%, and the operating margin fell 5.7 percentage points to 0.0%. The quarter absorbed Security Incident-related costs, net of insurance, along with a noncash impairment of previously capitalized software development costs and acquisition and disposition-related charges. Compensation, third-party contractor, hosting and transaction-based costs all climbed, mostly tied to EVERFI headcount and the migration of cloud infrastructure to public providers. The company swung to a net loss of $3.4 million, and diluted loss per share was $0.07, down $0.21.
The non-GAAP picture held together much better. Non-GAAP income from operations was $54.5 million, with a non-GAAP operating margin of 20.6%, a decrease of 300 basis points. Non-GAAP net income was $38.9 million, and non-GAAP diluted earnings per share was $0.75, down $0.07. Non-GAAP adjusted EBITDA rose $4.8 million to $70.6 million, and its margin of 26.6% improved 80 basis points. Rule of 40 came in at 30.4%, or 31.9% on a constant currency basis, which management framed as steady progress toward a long-term target.
Cash generation softened. Operating cash flow was $57.3 million in the quarter, down 18.0%, and $81.8 million for the first half, down 18.2%. Capital expenditures were $3.3 million for the quarter, up 22.3%. Non-GAAP adjusted free cash flow was $43.9 million, a decrease of $15.1 million, with a margin of 16.6%, down 910 basis points. Deferred revenue rose 20.5% to $416.3 million, helped by multi-year renewal contracts and the seasonal pattern of customer renewals that historically peaks near the start of the third quarter.
Through the first six months, revenue was $522.1 million, up 16.4%, and gross profit of $273.1 million was up 15.1%. The half produced an operating loss of $5.9 million, a net loss of $13.8 million and diluted loss per share of $0.27. The company ended June 30, 2022 with $29.0 million of cash and cash equivalents, $880.9 million of debt under its 2020 Credit Facility, and a net leverage ratio of 3.42 to 1.00 against a covenant ceiling of 4.25 to 1.00. Roughly 92% of customers with recurring revenue contracts were retained for the twelve months ended June 30, 2022.
Blackbaud revised its full year 2022 guidance, which covers the full fiscal year rather than the next quarter. The company now points to non-GAAP revenue of $1.05 billion to $1.07 billion, a non-GAAP adjusted EBITDA margin of 23.7% to 24.2%, non-GAAP earnings per share of $2.43 to $2.63, and non-GAAP adjusted free cash flow of $140 million to $150 million. Full-year assumptions include a 20% non-GAAP effective tax rate, interest expense of approximately $34 million to $37 million, 52 million to 53.5 million fully diluted shares, and capital expenditures of $60 million to $70 million, including roughly $50 million to $60 million of capitalized software and content development costs. Management attributed the revision to unfavorable foreign exchange movement, higher interest rates, a mix shift away from one-time services revenue, and updated sales projections for EVERFI.
The risk list is specific. Blackbaud expects foreign currency fluctuations to have a significant negative impact on full-year 2022 total revenue, and it flagged a bookings gap at EVERFI that it intends to close over the rest of the year. The Security Incident remains a drag on GAAP profitability and GAAP cash flow, with full-year net pre-tax expense of approximately $30 million to $35 million for ongoing legal fees and net cash outlays of $15 million to $25 million, and no loss contingency recorded because the possible loss cannot be reasonably estimated. Interest expense on the variable rate portion of debt could rise further in a rising rate environment.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $264.9M | $257.1M | +3.0% | $229.4M | +15.5% |
| Gross profit | $139.3M | $133.8M | +4.2% | $121.4M | +14.8% |
| Gross margin | 52.6% | 52.0% | +0.6 pp | 52.9% | -0.3 pp |
| Research & development | $38.3M | $40.0M | -4.1% | $30.2M | +26.8% |
| Sales & marketing | $52.7M | $55.2M | -4.5% | $45.5M | +16.0% |
| General & administrative | $47.4M | $43.8M | +8.3% | $32.0M | +48.1% |
| Total operating expenses | $139.3M | $139.7M | -0.3% | $108.3M | +28.6% |
| Operating income (loss) | $54.0K | -$6.0M | +100.9% | $13.0M | -99.6% |
| Operating margin | 0.0% | -2.3% | +2.4 pp | 5.7% | -5.7 pp |
| Net income (loss) | -$3.4M | -$10.4M | +67.1% | $6.7M | -150.8% |
| Net margin | -1.3% | -4.0% | +2.8 pp | 2.9% | -4.2 pp |
| Diluted EPS | -$0.07 | -$0.20 | +$0.13 | $0.14 | -$0.21 |
| Customers | 2,000 | — | — | — | — |
Risks
The Security Incident has had and may continue to have numerous adverse effects on Blackbaud's business, results of operations, financial condition and cash flows. Blackbaud expects the Security Incident to continue to negatively impact GAAP profitability and GAAP cash flow for the foreseeable future, with full year 2022 net pre-tax expense of approximately $30 million to $35 million and net cash outlays of approximately $15 million to $25 million for ongoing legal fees.
Blackbaud faces approximately 260 Customer Reimbursement Requests, approximately 400 reservations of recovery rights, and is a defendant in 19 putative consumer class action cases, including 17 in U.S. federal courts under multidistrict litigation and 2 in Canadian courts. It also received Civil Investigative Demands from 49 state Attorneys General and the District of Columbia and from the California Attorney General, and is subject to investigations by the FTC, HHS, SEC, Australian Information Commissioner and Canadian Privacy Commissioner.
Total expected recoverable costs related to the Security Incident have exceeded the limit of Blackbaud's insurance coverage, leaving the company responsible for all expenses or losses, including penalties, fines or judgments. This could materially and adversely affect liquidity and results of operations, and large fines or penalties could force renegotiation or a waiver under the credit facility or additional debt or equity financing.
GAAP operating income was down 99.6% to $0.05 million in FY2022 Q2 from $13.04 million in FY2021 Q2, and GAAP operating margin was down 5.7 percentage points to 0.0% from 5.7%. GAAP net loss was $3.42 million in FY2022 Q2, down 150.8% and swung to a loss from net income of $6.73 million in FY2021 Q2.
Publicity or developments related to the Security Incident could cause loss of customer confidence, reduced customer demand, reduced customer retention, and associated retention and recruiting difficulties. For the twelve months ended June 30, 2022, approximately 92% of customers with recurring revenue contracts were retained, materially unchanged from the full year ended December 31, 2021.
MD&A states Blackbaud currently expects fluctuations in foreign currency exchange rates to have a significant negative impact on total revenue for full year 2022. For the six months ended June 30, 2022, foreign currency exchange rate fluctuations reduced total revenue by $3.8 million and income from operations by $0.9 million.
MD&A notes that latest projections suggest some softness in the full year 2022 bookings plan for EVERFI, with minimal impact on full year 2022 revenues given ratable revenue recognition. Blackbaud says it will be intently focused on closing the EVERFI bookings gap during the remainder of 2022.
SaaS KPIs
All quarters →Non-GAAP Adjusted EBITDA Margin
Non-GAAP Operating Margin
Non-GAAP Organic Recurring Revenue Growth
Rule of 40
Non-GAAP Organic Revenue Growth
Non-GAAP Adjusted Free Cash Flow Margin
Non-GAAP organic revenue growth on constant currency basis
GAAP Recurring Revenue
Non-GAAP Adjusted EBITDA
Non-GAAP Adjusted Free Cash Flow
Rule of 40 on constant currency basis
Non-GAAP Adjusted EBITDA Margin on Constant Currency Basis
Non-GAAP Income from Operations
Summary, forecast, risks and KPIs are extracted from BLACKBAUD INC's SEC filings for Q2 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.