Summary
Blackbaud's second quarter revenue reached $287.3 million, up 6.0% from the prior-year quarter, and first-half revenue was $566.5 million, up 6.3%. Recurring revenue made up 98% of the total, and non-GAAP organic revenue growth was 6.7%. The Social Sector, at 88% of revenue, grew 8.5%. The Corporate Sector went the other way and fell 9.2%, held back by EVERFI. Management said it is weighing strategic alternatives for EVERFI, including a possible divestiture, and called the business a drag on overall performance. Recurring contracts typically run three years and are billed annually in advance, which supports visibility.
Profitability improved sharply. Gross profit was $162.6 million, up 8.7%, and gross margin rose to 56.6%. Operating income climbed to $42.1 million, lifting operating margin to 14.7%, helped by lower Security Incident costs and a drop in stock-based compensation. Non-GAAP operating margin was 30.0%, up 260 basis points. Net income was $21.8 million, or $0.42 per diluted share. First-half net income was $27.1 million, or $0.52 per diluted share, and first-half operating income was $52.8 million at a 9.3% margin. On a non-GAAP basis, quarterly net income was $55.7 million and diluted earnings per share were $1.08, up $0.10. Non-GAAP adjusted EBITDA was $102.5 million, up $13.7 million, at a 35.7% margin that rose 290 basis points.
Cash trends split by measure. Operating cash flow was $53.8 million in the quarter, up 1.2%, and $118.4 million for the first half, up 57.9%. Capital expenditures were $5.9 million in the quarter, up 313.9%, and $6.1 million for the first half. Non-GAAP free cash flow, which subtracts capital spending from operating cash flow, was $32.6 million, down $4.4 million. Non-GAAP adjusted free cash flow was $36.4 million, down $7.2 million. Deferred revenue stood at $429.4 million, down 2.0% from the prior-year quarter. The carrying amount of debt was $963.6 million, and the net leverage ratio was 2.51 to 1.00. Working capital moved against the company, largely on lower accrued Security Incident expenses and lower taxes payable.
Blackbaud has been aggressive with capital returns. In the first half it repurchased 2,954,211 shares for $262.6 million, roughly 5.5% of the shares outstanding at December 31, 2023. In July the board expanded the repurchase authorization from $500 million to $800 million. The accelerated share repurchase was funded with borrowings under the 2024 Credit Facilities, which mature in April 2029. For the full year 2024, management reiterated total revenue guidance of $1.164 billion to $1.194 billion, a non-GAAP adjusted EBITDA margin of 32.5% to 33.5%, non-GAAP earnings per share of $4.12 to $4.38, and non-GAAP adjusted free cash flow of $254 million to $274 million. Full-year capital expenditures are expected at $65 million to $75 million, including $60 million to $70 million of capitalized software and content development costs.
Risks remain. The Security Incident produced $1.8 million in net pre-tax expenses in the quarter and $12.1 million in the first half, and management expects full-year pre-tax expenses of about $5 million to $10 million, with cash outlays of $8 million to $13 million. About $8.5 million of aggregate loss contingency liabilities were recorded as of June 30, 2024, and additional losses could be material. Gross dollar retention was approximately 90% for the twelve months ended June 30, 2024, unchanged from the full year 2023. Interest expense is forecast at roughly $52 million to $56 million for the year because of buyback-related borrowings, and the variable rate portion of debt adds exposure if rates rise. The quarter's Rule of 40 score was 42.4%.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $287.3M | $279.3M | +2.9% | $271.0M | +6.0% |
| Gross profit | $162.6M | $153.0M | +6.2% | $149.6M | +8.7% |
| Gross margin | 56.6% | 54.8% | +1.8 pp | 55.2% | +1.4 pp |
| Research & development | $39.1M | $42.8M | -8.7% | $36.1M | +8.1% |
| Sales & marketing | $47.1M | $50.9M | -7.4% | $53.2M | -11.5% |
| General & administrative | $33.4M | $47.8M | -30.0% | $59.1M | -43.5% |
| Total operating expenses | $120.5M | $142.3M | -15.3% | $149.3M | -19.3% |
| Operating income (loss) | $42.1M | $10.7M | +292.7% | $294.0K | +14217.0% |
| Operating margin | 14.7% | 3.8% | +10.8 pp | 0.1% | +14.5 pp |
| Net income (loss) | $21.8M | $5.2M | +315.6% | $2.1M | +935.8% |
| Net margin | 7.6% | 1.9% | +5.7 pp | 0.8% | +6.8 pp |
| Diluted EPS | $0.42 | $0.10 | +$0.32 | $0.04 | +$0.38 |
| Customers | 13,000 | 13,000 | ±0.0% | — | — |
Risks
The 2020 Security Incident continues to create material legal, regulatory and cost exposure, with approximately $8.5 million in aggregate loss contingency liabilities accrued as of June 30, 2024, including $6.8 million for the California Attorney General settlement paid in Q3 2024, and FY2024 expected Security Incident pre-tax expenses of $5.0 million to $10.0 million and cash outlays of $8.0 million to $13.0 million for ongoing legal fees, excluding prior settlements and current accruals. Insurance coverage was exceeded in Q1 2022, so additional fines, judgments or settlements could materially affect liquidity and results.
The FTC Order, state Attorneys General Administrative Orders, SEC settlement and California Final Judgment require Blackbaud to implement and maintain cybersecurity and data protection processes and comply with legal requirements, which the filing says is expected to be expensive and time-consuming over an extended period, including cybersecurity program commitments through May 2044. Failure to comply could expose it to additional material liability.
Blackbaud significantly increased leverage for the EVERFI acquisition and stock repurchases, with total carrying value of debt up 31.1% to $1,021.9 million at June 30, 2024 from $779.7 million at December 31, 2023, and a net leverage ratio of 2.51 to 1.00 under the 2024 Credit Facilities. Additional leverage could pressure cash flow, increase interest expense, restrict buybacks or dividends and risk covenant compliance.
On July 19, 2024, a flawed CrowdStrike Falcon software update caused widespread Windows system crashes, and some Blackbaud customers were unable to access certain services, including payments processing. Blackbaud is still evaluating actual and potential direct and indirect impacts, which could lead to customer claims, cancellations, delayed payments or litigation.
Corporate Sector revenue decreased $3.5 million, or 9.2%, in the three months ended June 30, 2024 and $5.6 million, or 7.4%, in the six months ended June 30, 2024, driven by EVERFI performance and the March 2024 disposition of EVERFI Limited. Management says EVERFI continues to be a drag on overall performance and is actively considering strategic alternatives, including a potential divestiture.
Interest expense increased during the three and six months ended June 30, 2024 compared with 2023 primarily due to incremental borrowings for the ASR Transaction, and Blackbaud expects FY2024 interest expense of approximately $52 million to $56 million. The variable rate portion of outstanding debt could increase interest expense in a rising interest rate environment.
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 Free Cash Flow Margin
Non-GAAP Free Cash Flow
GAAP Recurring Revenue
Non-GAAP Adjusted EBITDA
Non-GAAP Adjusted Free Cash Flow
Non-GAAP Income from Operations
Non-GAAP Organic Revenue Growth (constant currency)
Summary, forecast, risks and KPIs are extracted from BLACKBAUD INC's SEC filings for Q2 FY2024 (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.