Summary
Blackbaud's fiscal 2026 second quarter showed steady top-line growth and sharper profitability. GAAP revenue was $290.6 million for the quarter, up 3.0% from the prior-year quarter. Year-to-date revenue reached $571.7 million, up 3.6%. Non-GAAP organic recurring revenue grew 3.3%. Gross profit rose 5.8% to $178.2 million, lifting gross margin to 61.3%, up 1.6 percentage points. Operating income increased 8.2% to $62.0 million, with an operating margin of 21.3%, up 1.0 percentage point. Net income was $35.4 million, up 33.6%, and diluted earnings per share were $0.79, up $0.24. For the first half, net income was $66.5 million, up 116.0%, and diluted EPS was $1.46, up $0.83.
The non-GAAP picture was mixed. Non-GAAP income from operations was $94.6 million, with a non-GAAP operating margin of 32.6%, down 110 basis points. Non-GAAP net income was $59.7 million, and non-GAAP diluted EPS was $1.33, up $0.11. Adjusted EBITDA was $110.3 million, up $1.2 million, while adjusted EBITDA margin was 38.0%, down 70 basis points. The Rule of 40 score was 41.0%. Cash generation improved. GAAP operating cash flow was $91.1 million for the quarter, up $24.1 million. Non-GAAP free cash flow was $75.3 million, up $23.8 million, with a margin of 25.9%, up 760 basis points. Year-to-date GAAP operating cash flow was $142.5 million, up 108.6%, and year-to-date non-GAAP free cash flow was $112.3 million. Capital expenditures were $2.45 million in the quarter, up 293.1%, and $4.12 million for the first half, up 214.0%.
Operationally, Blackbaud continued to push AI across its portfolio. The company launched its first agentic AI solution, the Blackbaud fundraising development agent, into general availability. It is offered under a subscription model, with annual pricing generally in the tens of thousands of dollars. Four more Agents for Good are planned: Data Health, Admissions, Digital Marketing, and Accounts Payable. More than half of Raiser's Edge NXT customers use machine-learning-enabled donor prospecting. The company also convened the AI Coalition for Social Impact and launched a free certification program. Gross dollar retention was approximately 91% for the twelve months ended June 30, 2026, lower than the rate for the twelve months ended December 31, 2025. Management said the 2026 renewal cohort is about 40% larger than the 2025 cohort and expects temporary pressure on gross dollar retention, with improvement by the end of 2027.
The balance sheet and capital returns remain in focus. Deferred revenue was $406.4 million at June 30, 2026, up 1.2% from the prior-year quarter. In the quarter, Blackbaud repurchased 797,795 shares for $28.0 million. In the first half, it repurchased 2,398,852 shares for $110.1 million. Including net share settlement of employee stock compensation, those repurchases equal about 6.2% of outstanding common stock as of December 31, 2025. The company had $850.4 million remaining under its repurchase program and expects total 2026 repurchases to represent between 6% and 10% of shares outstanding as of December 31, 2025.
For full-year 2026, Blackbaud reaffirmed guidance and said it expects to finish in the upper half of its ranges across all four key metrics, with EPS and free cash flow at the high end. The full-year 2026 guidance includes non-GAAP adjusted EBITDA of $430 million to $438 million, non-GAAP diluted EPS of $5.15 to $5.25, and non-GAAP free cash flow of $280 million to $290 million. Assumptions include a non-GAAP annualized effective tax rate of about 24.5%, interest expense of about $62 million to $66 million, and diluted weighted average shares of about 45.0 million to 46.0 million. Risks include the larger 2026 renewal cohort, pressure on gross dollar retention, AI development and adoption, cybersecurity and data protection, litigation, integration of acquisitions, and a shifting revenue mix. The company had a net leverage ratio of 2.58 to 1.00 and $374.0 million of available borrowing capacity at June 30, 2026. OBBBA tax changes are expected to partly offset cash tax reductions in 2026 and 2027. Foreign currency also matters: about 18% of first-half revenue came from operations outside the U.S., and currency fluctuations affected first-half revenue and income from operations.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $290.6M | $281.1M | +3.4% | $281.4M | +3.3% |
| Gross profit | $178.2M | $166.6M | +7.0% | $167.7M | +6.2% |
| Gross margin | 61.3% | 59.2% | +2.1 pp | 59.6% | +1.7 pp |
| Research & development | $34.9M | $36.9M | -5.6% | $33.6M | +3.8% |
| Sales & marketing | $46.3M | $47.3M | -2.3% | $44.0M | +5.0% |
| General & administrative | $34.4M | $30.3M | +13.8% | $32.9M | +4.8% |
| Total operating expenses | $116.1M | $115.1M | +0.9% | $111.1M | +4.6% |
| Operating income (loss) | $62.0M | $51.4M | +20.5% | $56.7M | +9.4% |
| Operating margin | 21.3% | 18.3% | +3.0 pp | 20.1% | +1.2 pp |
| Net income (loss) | $35.4M | $31.1M | +13.5% | $26.0M | +36.1% |
| Net margin | 12.2% | 11.1% | +1.1 pp | 9.2% | +2.9 pp |
| Diluted EPS | $0.79 | $0.67 | +$0.12 | $0.54 | +$0.25 |
Risks
Gross dollar retention was approximately 91% for the twelve months ended June 30, 2026, lower than the rate for the twelve months ended December 31, 2025. The 2026 renewal cohort has approximately 40% higher contractual annual recurring revenue up for renewal than 2025, which management expects to create temporary pressure on gross dollar retention.
The first agentic AI solution, the Blackbaud fundraising development agent, entered general availability in the first half of 2026, but commercialization remains early and financial contributions are still being evaluated. Annual subscription pricing is generally in the tens of thousands of dollars, and adoption trends and operational impacts remain uncertain.
At June 30, 2026, the carrying amount of debt was $1.1 billion and the net leverage ratio was 2.58 to 1.00, with $374.0 million available under the 2024 Credit Facilities. The credit facilities restrict dividends and share repurchases if pro forma net leverage is not sufficiently below the covenant requirement.
OBBBA state conformity and the phase-in of international tax provisions are expected to partly offset U.S. cash tax reductions in 2026 and 2027. Management expects a material impact from future phases in fiscal years 2026 and 2027.
In connection with Security Incident settlements, the company agreed to implement and improve certain cybersecurity programs and tools through May 2044. The anticipated costs are primarily expected to be expensed as incurred, creating a long-term compliance and spending obligation.
The company expects interest expense for full year 2026 to be approximately $62 million to $66 million. Interest expense on the variable rate portion of outstanding debt could increase 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 Free Cash Flow Margin
Non-GAAP Free Cash Flow
GAAP Recurring Revenue
Non-GAAP Gross Margin
Summary, forecast, risks and KPIs are extracted from BLACKBAUD INC's SEC filings for Q2 FY2026 (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.