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    BLKB
    Earnings call· Jun 2026(Q2 FY26)

    BLACKBAUD Q2 FY26 earnings call BLKB

    Jul 29, 2026 Source

    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

    10
    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

    Operational metrics

    13
    Organic Revenue Growth
    3%YoY
    Q2 FY26

    In line with expectations.

    Adjusted EBITDA Margin
    38%
    Q2 FY26

    Reflecting continued operating discipline while maintaining investment in growth initiatives and innovation.

    Non-GAAP EPS Growth
    9%YoY
    Q2 FY26

    On track to achieve high teens EPS for the full year 2026.

    Common Stock Outstanding Reduction
    15%
    Since Q4 2023

    Offset 100% of dilution from stock-based compensation.

    Common Stock Outstanding Reduction
    6%
    H1 FY26

    Including the net share settlement of employee stock compensation.

    Contractual Recurring Revenue on 3-year+ contracts
    90%
    Current

    Provides long-term revenue visibility.

    Contractual Recurring Revenue on 4-year+ contracts
    25%
    Current

    Up from more than half on 1-year contracts a few years ago.

    Renewal Cohort Size
    40% largervs last year
    FY26

    Expected to cause a near-term dip in reported gross dollar retention.

    Development Agent Reply Rate
    significantly above the industry average
    Current

    Early results from the Agentic AI offering.

    Development Agent Message Open Rate
    meaningfully above industry benchmarks
    Current

    Early results from the Agentic AI offering.

    Development Agent Average Attributable Gift Size
    well above industry norms
    Current

    Early results from the Agentic AI offering, indicating improved revenue for customers.

    Raiser's Edge NXT customers using ML donor prospecting
    More than half
    Current

    Usage of AI-powered workflows has expanded meaningfully over the past several quarters.

    ML donor prospecting predictions
    Tens of billions
    Annually

    Generated within systems, creating a self-improving feedback loop for better fundraising outcomes.

    Industry KPIs

    8
    MetricValueDetails
    Revenue growth3%%
    Bookings billings—
    Pricing model mix—
    Customer account count—
    Large deal new logo metrics—
    Gross retention renewal rate91% to 92%%
    Operating FCF margin rule of 4038%%
    Ai product adoption monetizationMore than halfcustomers

    Product announcements

    8
    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

    2
    Near-term dip in gross dollar retentionFY26

    40% larger renewal cohort in FY26

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

    Transactional revenue variabilityQ2 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

    4

    Gross Dollar Retention

    Next quarter and through 2027
    CurrentNear-term dip expected
    TargetProgress 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.

    Q&A highlights

    7

    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 read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.