Summary
Blackbaud closed fiscal 2025 with fourth quarter GAAP revenue of $295.3 million, down 2.3% from the prior-year quarter, a decline the company attributes to the divestiture of EVERFI. The underlying business grew. Non-GAAP organic revenue rose 4.3% in the quarter and 5.5% for the full year. Recurring revenue was 98.5% of fourth quarter total revenue, and non-GAAP organic recurring revenue grew 4.8%. Full-year GAAP revenue was $1.13 billion, down 2.3%. Gross margin expanded to 58.4% in the quarter from 53.8% a year earlier, and to 58.8% for the full year from 54.7%.
Profitability swung hard in the right direction. Fourth quarter gross profit was $172.3 million, up 6.0%. GAAP income from operations was $59.1 million against a loss of $367.3 million in the prior-year quarter, which had absorbed the EVERFI disposition charge. Operating margin was 20.0% versus negative 121.6%. Net income was $36.7 million, compared with a loss of $346.4 million a year earlier. For the full year, GAAP income from operations was $190.8 million at a 16.9% operating margin, and net income was $115.0 million against a prior-year loss of $299.5 million. Full-year diluted earnings per share were $2.37, compared with a loss of $5.92.
Non-GAAP measures tell a steadier story. Fourth quarter non-GAAP income from operations was $88.7 million at a 30.0% margin, up 270 basis points. Non-GAAP diluted earnings per share were $1.19, up $0.12, and adjusted EBITDA was $104.5 million, up $2.3 million, at a 35.4% margin. For the full year, non-GAAP income from operations was $344.4 million at a 30.5% margin, adjusted EBITDA was $405.3 million at 35.9%, and non-GAAP diluted earnings per share were $4.45, up $0.39. The full-year Rule of 40 score of 41.4% is an achievement the company says came two years ahead of schedule.
Cash flow did not keep pace with earnings. Fourth quarter GAAP operating cash flow was $58.0 million, down 21.2%, with an operating cash flow margin of 19.6%, down 480 basis points. Full-year operating cash flow was $265.6 million, down 10.3%. Non-GAAP free cash flow was $41.1 million in the quarter, down $15.4 million, and $203.5 million for the year, down $25.2 million, at an 18.0% margin. Capital expenditures were $3.0 million in the quarter and $7.8 million for the full year, up 4.4%. Deferred revenue ended the year at $371.8 million, up 3.1%. Net leverage stood at 2.52 to 1.00, with $413.6 million of available borrowing capacity.
Management guides the 2026 full year to non-GAAP adjusted EBITDA of $430 million to $438 million, non-GAAP diluted earnings per share of $5.15 to $5.25, and non-GAAP free cash flow of $280 million to $290 million. Capital expenditures are expected at $60 million to $70 million, including $52 million to $62 million of capitalized software development costs. Interest expense is forecast at $62 million to $66 million, the non-GAAP effective tax rate at about 24.5%, and fully diluted shares at 45.0 million to 46.0 million. On capital return, the board expanded and replenished the repurchase authorization to $1.0 billion in December 2025, leaving $960.6 million available. Blackbaud repurchased 3,337,844 shares for $214.0 million during 2025 and plans to repurchase between 5.0% and 10.0% of its outstanding common stock in 2026.
The renewal calendar is the biggest near-term risk. About 40% of existing customer contracts come due in 2026, versus roughly 30% in each of 2027 and 2028, and the contractual annual recurring revenue up for renewal in the 2026 cohort is about 40% higher than the 2025 cohort. Management warns this could produce higher churn dollars in 2026 even if retention patterns hold. Gross dollar retention was approximately 92% for 2025. The company also expects pre-tax costs of $6 million to $8 million in 2026 for its global capability center workforce transition, with efficiencies from that effort starting in 2027. Cybersecurity and data protection liabilities and acquisition integration also sit on the risk list.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2025 | Q3 FY2025 | QoQ | Q4 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $295.3M | $281.1M | +5.0% | $302.2M | -2.3% |
| Gross profit | $172.3M | $167.5M | +2.9% | $164.4M | +4.8% |
| Gross margin | 58.4% | 59.6% | -1.2 pp | 54.4% | +4.0 pp |
| Research & development | $33.8M | $37.2M | -9.2% | $39.3M | -14.2% |
| Sales & marketing | $44.8M | $44.1M | +1.5% | $50.1M | -10.6% |
| General & administrative | $34.0M | $31.0M | +9.6% | $35.9M | -5.2% |
| Total operating expenses | $113.1M | $112.9M | +0.2% | $531.5M | -78.7% |
| Operating income (loss) | $59.1M | $54.6M | +8.4% | -$367.1M | +116.1% |
| Operating margin | 20.0% | 19.4% | +0.6 pp | -121.5% | +141.5 pp |
| Net income (loss) | $36.7M | $47.5M | -22.7% | -$330.8M | +111.1% |
| Net margin | 12.4% | 16.9% | -4.5 pp | -109.4% | +121.9 pp |
| Diluted EPS | $0.76 | $0.98 | -$0.22 | -$6.54 | +$7.30 |
Risks
Blackbaud is embedding generative, predictive, interactive and agentic AI across its solutions and launched Agents for Good in 2025, but competitors may develop similar or superior AI features that are more cost-effective, and third-party proprietary rights may block implementation. AI also requires substantial additional investment, which could pressure financial results as expansion continues.
Increasing AI features, including agentic AI that acts autonomously, face evolving U.S. and international laws, privacy and data protection obligations, intellectual property uncertainty around AI-generated content, and embedded security vulnerabilities. Noncompliance or flawed AI output could lead to regulatory enforcement, litigation, reputational harm and liability.
Approximately 40% of existing customer contracts are due for renewal in 2026, 30% in 2027 and 30% in 2028, and the contractual annual recurring revenue up for renewal in 2026 is approximately 40% higher than in 2025. The larger 2026 cohort may cause higher churn dollars relative to prior years even if underlying customer retention patterns remain stable.
Many nonprofit customers depend significantly on U.S. federal and state grants, awards or other funding, and changes or uncertainty in availability, amount or conditions could reduce their willingness or ability to purchase Blackbaud solutions. This dependence ties Blackbaud's demand to legislative, regulatory and political funding decisions it cannot predict.
Leverage remained elevated at 2.52 to 1.00 as of December 31, 2025 after peaking at 2.91 to 1.00 as of March 31, 2025, largely due to stock repurchases, and interest expense increased in 2025 compared with 2024. The 2024 Credit Facilities impose covenants and restrictions on dividends, stock repurchases and acquisitions, and a default could require immediate repayment of borrowings.
The May 2020 Security Incident continues to require compliance with FTC, state Attorneys General, SEC and California settlement obligations through May 2044, with two subrogation cases still active and unresolved. Ongoing management time and expenses, plus possible loss of customer confidence, could materially harm business even though many matters are resolved.
Investor sentiment about AI can materially influence Blackbaud's stock price independent of operating performance; if investors believe its AI strategy, pace of innovation or monetization is insufficient, the stock could decline even if business and financial results remain strong.
Subscription and maintenance renewals represent a significant portion of total revenue and are generally three-year arrangements; if customers do not renew on beneficial terms or at all, or if extended-term contracts shift renewal timing, revenue and financial liquidity could be harmed. Revenue is recognized ratably, so sales downturns may not be immediately reflected in reported revenue.
A reduction in charitable giving growth due to deteriorating economic conditions, recession or tax law changes could limit nonprofit, education and healthcare customers' spending and reduce transaction-based payment processing volumes. MD&A notes transactional recurring revenue is influenced by giving patterns, macroeconomic conditions and seasonal activity.
Global tax developments including the OECD Pillar Two 15% global minimum tax, U.S. side-by-side agreements and the One Big Beautiful Bill Act phases create uncertainty and compliance complexity for 2026 and beyond. Blackbaud had $125.6 million of deferred tax assets as of December 31, 2025 and retains a valuation allowance against U.S. net deferred tax assets, so future tax charges or cash tax increases could affect results.
At December 31, 2025, Blackbaud had $1.1 billion of goodwill and $106.7 million of intangible assets, and impairment testing depends on stock price, market capitalization, cash flows and growth rates. Impairment of a significant portion, as happened with EVERFI in 2024, could materially and negatively affect operating results and financial condition.
Competition for highly qualified personnel is intense, especially for AI skills and India expansion, and equity incentive programs may become less effective if the stock price declines. Blackbaud may need new or additional compensation programs, which could be dilutive and adversely affect results.
Blackbaud is expanding in India through its Global Capability Center and expects no revenue there in the foreseeable future, while facing intense competition for skilled technology personnel and geopolitical risks in India. It expects $6 million to $8 million in pre-tax GCC workforce transition costs in 2026, with efficiencies expected to begin in 2027.
Payment processing and transaction services represent a significant percentage of revenue and require PCI DSS compliance, fraud prevention and costly system upgrades. Fee increases, regulatory changes, system disruptions or failure to maintain compliance could materially affect customer retention and results of operations.
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
Non-GAAP Adjusted Free Cash Flow
Non-GAAP organic recurring revenue growth on constant currency basis
Rule of 40 on constant currency basis
Summary, forecast, risks and KPIs are extracted from BLACKBAUD INC's SEC filings for Q4 FY2025 (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.