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Blackbaud (BLKB) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Jul 29, 2026

Source: earnings call transcript

Executive summary

Blackbaud Q2 FY26 — Strong AI Product Innovation and Raised Full-Year Outlook

Blackbaud delivered solid Q2 FY26 results, driven by strong execution and significant AI product innovation. The company is pointing investors to the high end of its full-year financial guidance, with EPS and free cash flow expected at or above the high end. Management emphasized the success of its new Agentic AI offerings, which are driving measurable customer outcomes and reinforcing confidence in its strategy, alongside a disciplined capital allocation approach focused on share repurchases.

Highlights

5

  • Q2 organic revenue grew 3% to $291 million, in line with expectations.

  • Non-GAAP adjusted EBITDA was $110 million, representing an adjusted EBITDA margin of approximately 38%.

  • Non-GAAP EPS increased 9% to $1.33 in Q2, on track for high teens EPS for the full year.

  • Free cash flow increased approximately $24 million, up 46% year-over-year to $75 million in the quarter.

  • Reduced common shares outstanding by approximately 15% since Q4 2023, including 6% in H1 FY26.

Concerns

2

  • Expected near-term dip in gross dollar retention due to a 40% larger renewal cohort in FY26, with rates expected to return to 91-92% by end of 2027.

  • Transactional revenue had a tough compare in Q2, returning to normal ranges after a strong 2025.

Guidance & targets

CategoryTargetConfidence
Full-year FY26 Revenue
Upper half of original guidance range
high materiality
High
Full-year FY26 Adjusted EBITDA
Upper half of original guidance range
high materiality
High
Full-year FY26 Non-GAAP EPS
At or above the high end of original guidance range
high materiality
High
Full-year FY26 Free Cash Flow
At or above the high end of original guidance range
high materiality
High
Annual EPS Growth
Double-digit
high materiality
High
Organic Total Revenue Growth
4% to 6% annually
high materiality
High
Adjusted EBITDA Growth
6% to 8% annually
high materiality
High
Adjusted EBITDA Margin
40% plus
high materiality
High
Cumulative Free Cash Flow Deployment for Stock Repurchases
50% or more
high materiality
High
Gross Dollar Retention
91% to 92%
medium materiality
High

Product announcements

ProductTypeDetails
Development Agentlaunch
Data Health Agentroadmap
Admissions Agentroadmap
Digital Marketing Agentroadmap
Accounts Payable Agentroadmap
Reimagined Cloud-Native AI-First Connected Platformroadmap
Blackbaud AI Chatlaunch
Common Records Enginelaunch

Risks & headwinds

Near-term dip in gross dollar retention FY26

40% larger renewal cohort in FY26

Mitigation:Expected to climb back to 91% to 92% by the end of 2027.

Transactional revenue variability Q2 FY26

Tough compare in Q2 FY26, returning to normal range

Mitigation:Guidance philosophy assumes performance consistent with historical patterns and does not include any assumption for viral giving events.

What to watch in Q3 FY26

Gross Dollar Retention

Next quarter and through 2027
Current Near-term dip expected
Target Progress towards 91-92%

Why it matters

To confirm the expected recovery of retention rates after a larger renewal cohort, which is critical for long-term recurring revenue stability.

As we move past this larger renewal cohort, we expect gross dollar retention rates to climb back to our more recent norm of 91% to 92% by the end of 2027.

Find out whether BLKB delivers this. Inve re-checks your case every morning.

Q&A highlights

Inquired about the timing and reasons behind winning back lost customers and the general trend in win rates in FY26.

Mike Gianoni attributed win-backs to innovation in core products and embedded AI solutions, noting significant uplift in donations for customers using their fundraising solutions. He expressed confidence in current win rates.

“Those customers are coming back due to the innovation that we're driving in our core products. And then the AI solutions were embedding in those core products.”

asked by Brian Peterson · answered by Michael Gianoni

2 min read 6 chapters

Detailed narrative

AI-First Strategy and Innovation

Blackbaud is aggressively investing in AI, launching 5 new Agentic AI products, including the "development agent" which is already showing measurable customer ROI with significantly above-industry average reply rates, message open rates, and gift sizes. The company is refactoring all departments using AI to improve operational efficiency and speed, with expected improvements not yet factored into current financial numbers.

Customer Trust and Competitive Differentiation

Blackbaud leverages its 45 years of domain expertise, proprietary data, and the social impact Signal Graph to build trusted, purpose-built solutions. The new AI agents are embedded in existing solutions, reducing data gaps and security risks, which is critical for customers with limited IT resources and high turnover. This approach fosters trust, leading to longer contract terms.

Contractual Recurring Revenue Strength

The company has significantly improved its contract terms, with approximately 90% of contractual recurring revenue now on 3-year or longer contracts, and 25% on 4-year or longer contracts, up from over half on 1-year contracts just a few years ago. This shift provides greater long-term revenue visibility and stability.

Sales Momentum and Win-Backs

Blackbaud saw a healthy mix of new customer logo wins and cross-sales, including competitive displacements and returning customers like Jacksonville Zoo and Center for Autism Services Alberta. This reflects the strength of their connected solutions and the value proposition of purpose-built software, driven by innovation in core products and embedded AI.

Platform Fee Introduction

A new platform fee has been introduced on certain online form transactions, effective Q3, to support continued investment in secure, reliable online giving infrastructure. This fee is expected to contribute to the back-half weighting of FY26 financial results, particularly in Q4, and is a common monetization model within the industry.

Long-Term Financial Targets

Blackbaud reiterated its long-term aspirational goals for 2026-2030, targeting double-digit annual EPS growth, 4-6% organic total revenue growth, 6-8% adjusted EBITDA growth, and an adjusted EBITDA margin of 40%+. The company plans to deploy 50% or more of cumulative free cash flow for stock repurchases as a core tenet of its capital allocation strategy.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.