Summary
Blackbaud's fourth quarter of fiscal 2023 was its best top-line period of the year. Revenue reached $295.0 million, up 7.4% from the prior-year quarter. GAAP gross profit rose 14.3% to $159.2 million, and gross margin expanded to 54.0% from 50.7%.
Profitability moved sharply higher. GAAP income from operations was $32.3 million, compared with a loss of $15.5 million a year earlier, and operating margin went to 11.0% from negative 5.7%. GAAP net income was $5.4 million against a loss of $21.3 million in the same quarter last year. The quarter still carried $4.8 million of security incident-related costs inside the operating result.
The full year tells the same story at a larger scale. Fiscal 2023 revenue was $1.11 billion, up 4.5%. Gross profit was $603.2 million, up 9.1%, with a gross margin of 54.6% against 52.2%. GAAP income from operations swung to a profit of $44.7 million from a loss of $28.5 million, and operating margin was 4.0% compared with negative 2.7%. Net income was $1.8 million versus a loss of $45.4 million, and diluted earnings per share for the year was $0.03 against a loss of $0.88 per share.
Cash was the weak spot. Operating cash flow was negative $3.3 million in the quarter, down from $14.1 million a year earlier, and it absorbed $54.9 million of security incident-related payments, including the $49.5 million civil penalty tied to the multi-state Attorneys General settlement. For the full year, operating cash flow was $199.6 million, down 2.1%, with security incident cash outlays of $78.0 million. Capital expenditures were $0.4 million in the quarter, down 75.1%, and $4.7 million for the year, down 61.9%. Deferred revenue closed the year at $394.9 million, up 2.5% from the prior year end.
Non-GAAP figures make the underlying business look sturdier. Recurring revenue was $287.4 million in the quarter, up 8.4% and 97% of total revenue. Non-GAAP income from operations was $83.8 million at a 28.4% margin, up 840 basis points. Adjusted EBITDA was $99.3 million, up $31.3 million, for a 33.6% margin, and the company put the fourth-quarter Rule of 40 at 41.0%. Full-year non-GAAP adjusted free cash flow was $213.5 million, an increase of $59.8 million.
Guidance for the 2024 full year calls for non-GAAP revenue of $1.170 billion to $1.200 billion, an 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. Management says the midpoint implies approximately 7% revenue growth and a 33% adjusted EBITDA margin, enough for Rule of 40 across the year. Assumptions include capital expenditures of $65 million to $75 million, interest expense of about $34 million to $38 million, an annualized non-GAAP tax rate near 24.5%, and fully diluted shares of 53.5 million to 54.5 million. The buyback was refreshed in January 2024 to $500 million of capacity, with about $499 million remaining as of January 19, 2024.
The security incident remains the biggest open risk. Blackbaud carried about $1.5 million in aggregate liabilities for loss contingencies at December 31, 2023, and it says it cannot reasonably estimate the possible loss for customer claims, constituent class actions and governmental investigations still unresolved. Those matters could produce a material adverse impact on results, cash flow or financial condition. For 2024, the company expects net pre-tax expense of $5 million to $10 million and net cash outlays of $8 million to $13 million for ongoing legal fees. Elsewhere, headcount fell from about 3,600 in the third quarter of 2022 to about 3,000 at December 31, 2023, and 2023 gross dollar retention was roughly 90%. Renewals remain a lever: roughly 30% of the renewable base renews in 2024, 25% in 2025 and 10% in early 2026, and management says the pricing changes have not meaningfully raised attrition so far.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $295.0M | $277.6M | +6.3% | $274.8M | +7.4% |
| Gross profit | $159.2M | $155.9M | +2.1% | $139.3M | +14.3% |
| Gross margin | 54.0% | 56.1% | -2.2 pp | 50.7% | +3.3 pp |
| Research & development | $38.6M | $38.0M | +1.7% | $38.2M | +1.1% |
| Sales & marketing | $52.1M | $52.5M | -0.7% | $57.1M | -8.7% |
| General & administrative | $35.4M | $42.6M | -17.0% | $58.9M | -40.0% |
| Total operating expenses | $126.9M | $133.8M | -5.2% | $154.8M | -18.1% |
| Operating income (loss) | $32.3M | $22.0M | +46.6% | -$15.5M | +307.8% |
| Operating margin | 10.9% | 7.9% | +3.0 pp | -5.7% | +16.6 pp |
| Net income (loss) | $5.4M | $9.0M | -40.1% | -$21.3M | +125.4% |
| Net margin | 1.8% | 3.3% | -1.4 pp | -7.7% | +9.6 pp |
| Diluted EPS | $0.10 | $0.17 | -$0.07 | -$0.41 | +$0.51 |
| Customers | 100,000 | 13,000 | +669.2% | 40,000 | +150.0% |
Risks
The 2020 Security Incident continues to drive litigation, government investigations and remedial requirements. For full year 2023, Blackbaud incurred net pre-tax expenses of $53.4 million and net cash outlays of $78.0 million related to the incident, including the $49.5 million multistate Attorneys General settlement paid in Q4 2023 and the $3.0 million SEC civil penalty. Insurance coverage was exceeded in Q1 2022, so future expenses are likely to be largely uninsured.
The SEC settlement, the 49 state Attorneys General and District of Columbia Administrative Orders, and the proposed FTC consent order require Blackbaud to implement and maintain cybersecurity and data protection programs through October 2030. Failure to comply could expose the company to additional material liability, and the filing expects these requirements to be expensive and time-consuming over an extended period.
Blackbaud is embedding generative AI into products such as Prospect Insights Pro, Impact Edge and JustGiving Storywriter, but the risk factor warns that AI is in early commercial use with an emerging regulatory environment, unresolved IP rights for AI-generated content, reliance on third-party providers, and potential misleading or inaccurate output. The company may need additional investment and safeguards, and AI-related privacy or regulatory issues could increase liability and harm sales or reputation.
At December 31, 2023, debt under the 2020 Credit Facility was $720.6 million with a net leverage ratio of 1.97 to 1.00, and the facility matures in October 2025. The filing notes that Security Incident costs, additional acquisitions or other business purposes could require additional indebtedness, and higher leverage could limit flexibility, increase interest expense and impact covenant compliance.
Subscription contracts are generally three years at inception with three-year renewals, and renewals represent a significant portion of total revenue. MD&A describes the 2023 renewal cohort covering approximately 35% of contractual revenue eligible for the new pricing program, with about 30% up for renewal in 2024 and 25% in 2025, and notes gross dollar retention was approximately 90% in 2023, slightly lower than 2022 due to EVERFI. If customers do not renew on beneficial terms, revenue could be harmed.
A large percentage of customers are nonprofits, foundations, education institutions and healthcare organizations that fully or partially rely on charitable donations, and transactional revenue is about one-third of total revenue, including donation processing at roughly 55% of transactional revenue. A reduction in charitable giving due to deteriorating economic conditions or tax law changes could reduce transaction volumes and harm operating results.
The risk factor states that following the EVERFI acquisition Blackbaud experienced the loss of certain employees and unexpected delays in realizing anticipated returns on its investment. Acquisitions also bring integration, dilution, debt and impairment risks.
As of December 31, 2023, the balance sheet included $1.1 billion of goodwill and $581.9 million of intangible assets. An impairment of a significant portion could materially and negatively affect results of operations and financial condition, and changes in stock price, market capitalization, cash flows or slower growth could trigger a write-down.
The filing warns that competition for highly qualified personnel is intense and that equity incentive programs, used in lieu of cash, may lose retention value if the stock price declines. MD&A notes headcount was reduced from approximately 3,600 in Q3 2022 to approximately 3,000 at December 31, 2023, with the goal to run at about this level, which may increase retention pressure if growth resumes.
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
Non-GAAP organic revenue growth on constant currency basis
GAAP Recurring Revenue
Non-GAAP Adjusted EBITDA
Non-GAAP Adjusted Free Cash Flow
Non-GAAP organic recurring revenue growth on constant currency basis
Non-GAAP Income from Operations
Recurring Revenue as % of Total Revenue
GAAP recurring revenue growth
Summary, forecast, risks and KPIs are extracted from BLACKBAUD INC's SEC filings for Q4 FY2023 (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.