Blackbaud (BLKB) Q4 2025 earnings summary

Executive summary

• Achieved Rule of 40 status two years ahead of plan, driven by operational efficiency, product innovation, and strong recurring revenue growth, especially in AI enablement.

• Aggressive investment in generative and agentic AI, launching products like Blackbaud AI Chat and Agents for Good, with early customer adoption and new revenue streams.

• Multi-year subscription model with increasing contract lengths; over 20% of customers now on four-year or longer contracts.

• Strong customer retention and cross-sell opportunities, with new AI-driven revenue lines not yet included in guidance.

• Completed divestiture of EVERFI, impacting year-over-year revenue comparisons.

Financial highlights

• FY25 organic revenue grew 5.5% year-over-year to $1.128 billion; GAAP revenue was $1.1 billion, down 2.3% due to the EVERFI divestiture.

• Adjusted EBITDA rose 8% to $405 million, with margin expanding 220 basis points to 35.9%.

• Non-GAAP EPS increased 12% to $4.45; adjusted free cash flow reached $208 million, margin 18.5%.

• Repurchased 8% of outstanding shares in 2025, following 11% in 2024; 13% reduction since Q4 2023.

• Reduced debt leverage from 2.9x to 2.5x during 2025; $369.8 million in debt repayments.

Outlook and guidance

• 2026 organic revenue growth projected at 4%-4.5%, with revenue guidance of $1.173-$1.179 billion.

• Adjusted EBITDA expected at $430-$438 million, up 6%-8% year-over-year.

• Non-GAAP EPS guidance of $5.15-$5.25, representing 16%-18% growth.

• Free cash flow guidance of $280-$290 million, reflecting recovery from one-time 2025 items.

• 2026 guidance assumes no viral event-based giving, no material AI revenue contribution, and a 24.5% non-GAAP tax rate.