黑佰德

We are discontinuing analyst coverage of Blackbaud.

We will discontinue analyst coverage of Blackbaud on or about Sept. 11. We provide analyst research and ratings on over 1,500 companies globally and periodically adjust our coverage according to investor interest and staffing.

Our fair value estimate is $65 per share, which implies a fiscal 2026 enterprise value/sales multiple of 3 times, adjusted price/earnings multiple of 13 times, and a 7% free cash flow yield.

We model a five-year revenue compound annual growth rate of 4% and expect recurring revenue to be in excess of 95% of total revenue. Our forecast incorporates mid-single-digit growth from Blackbaud’s core verticals and no further acquisitions. This is generally consistent with management’s vision through 2030, as it expects revenue to grow 4%-6% annually from 2026 through then. We expect non-GAAP operating margin to expand from 31% in 2025 (actual) to beyond 35% in 2030, driven by savings from the closure of two data centers, the opening of a research and development facility in India, and other efficiency measures. Management is targeting a "Rule of 45" framework by 2030, which we note is above our model.

We assign a narrow Morningstar economic moat rating to Blackbaud, driven by high switching costs and, to a lesser extent, intangible assets based on its extensive software suite and deep domain expertise. We expect modest growth coupled with ongoing cost containment and margin expansion in the coming years. However, Blackbaud operates in a mature market characterized by structurally lower margins and higher sensitivity to economic environments. The software landscape is also evolving, reducing barriers to entry for competitors. We believe these factors may outweigh Blackbaud’s fundamental performance, affecting the firm’s ability to generate excess returns in the long term.

Blackbaud’s solutions are tailored toward the social good industry, which involves nonprofits, arts/cultural organizations, corporate social responsibility initiatives, faith communities, foundations, healthcare, education, and individual change agents. While the social good sector is seemingly niche, there are almost 2 million nonprofits in the US, with more than $500 billion given to charities each year. Within the philanthropic market, organizations must adhere to complex regulatory standards and accounting regulations at the state and country levels. Further, each customer is a unique use case, differing in size, causes served, data collection requirements, and fundraising and distribution capability. Blackbaud provides an extensive suite of customizable solutions, spanning customer relationship management, financial management, marketing, payment processing, and analytics, all purpose-built for the social good industry.

Blackbaud’s flagship product, Raiser’s Edge NXT, is a robust fundraising and donor management software-as-a-service platform that allows for a variety of add-on modules. It is commonly packaged with Financial Edge NXT, which is the fund accounting and financial management software essential for operating a nonprofit organization. Blackbaud also offers Noza, the world’s largest searchable database for charitable donors. We view the combination of vertical nonprofit software, donor management CRM, and proprietary data as a competitive advantage for the company.

In our view, Blackbaud’s moat is maintained by high switching costs. In the software space, switching costs are primarily driven by the direct time and expense of deploying new software for the customer while maintaining the existing platform. In addition, there are myriad indirect costs, namely lost productivity as employees are trained on new systems and added distraction amid the technological change. Switching software also brings significant operational risk, including compromised or lost data, project execution, and operational disruption. We believe these associated costs and risks are exacerbated in Blackbaud’s case, since customers in the nonprofit sector are generally more sensitive to budgetary constraints. Additionally, customers use Blackbaud’s software to store and organize copious amounts of sensitive data, where switching software poses a threat to operational continuity and security. Finally, Blackbaud software often has several touchpoints across the organizations it serves, with customers purchasing at least two products as core solutions. For customers, it makes little sense to switch from the intuitive software, which is often ingrained in the organization across the development, executive, and administrative levels. This is evidenced in Blackbaud consistently reaching customer retention of 91%-93%. These churn rates are not best of breed in the enterprise software industry, but here, we think Blackbaud’s rates are solid, as churn is found to come from smaller organizations that tend to have shorter lifespans.

We view intangible assets as a secondary moat source for Blackbaud. Of the approximately hundreds of billions of dollars in charitable giving in the United States, approximately 20% occurs on Blackbaud’s platform, making it the largest fundraising platform. With over 40 years of experience and deep domain expertise, Blackbaud’s solutions are viewed as the gold standard for nonprofit software. Blackbaud has earned this regard through delivering high-quality, specialized solutions at scale, supported by its ability to keep a pulse on the evolving needs of the social good sector. Additionally, Blackbaud has maintained a competitive advantage over its peers by providing Noza as a subscription service, which we believe is a significant factor in customers’ choice of software options.

Blackbaud has made several tuck-in acquisitions aimed to mitigate immediate competitive threats in its verticals as well as expand into new areas. This is especially pertinent on the fundraising side, with Blackbaud acquiring eTapestry, Convio, JustGiving, and Reeher. While the acquisition spree has enabled Blackbaud to inorganically expand its total addressable market across several verticals, it has also resulted in the company having a more fragmented portfolio of offerings that in most cases do not induce upselling or cross-selling opportunities. The success of acquisitions has varied, with Blackbaud seeing success in its payments vertical; however, it has yet to realize strong returns from other endeavors, such as corporate sector expansion.

The market in which Blackbaud operates for nonprofit software is highly fragmented, in our view. There are a multitude of smaller fundraising and donor management software firms with lower pricing packages, but we find they struggle to provide solutions at scale and secure larger deals. On the other hand, large software peers such as Salesforce also offer solutions for nonprofits of all sizes, but their software is often not tailored for the industry to the same extent as Blackbaud. While Blackbaud has historically benefited from this environment, we believe the software development landscape is evolving.

Blackbaud is a clear leader in the niche fundraising and nonprofit market, with gold-standard CRM, financial management, and numerous other modules that create a comprehensive suite of offerings.

Blackbaud has decreased its competition through acquisitions, notably Convio, MicroEdge, YourCause, and JustGiving.

Blackbaud’s cloud-first commitment is paying off, as the firm’s revenue is largely generated by subscriptions, which boast strong lifetime value from customers.

Blackbaud has structurally lower margins compared with other software peers and is more susceptible to cyclical downturns, given its nonprofit customer base.

Blackbaud’s acquisition spree has led to a fragmented portfolio and compressed margins. The Everfi acquisition did not go well and was sold just three years later.

Increased cloud computing and data-management capabilities allow peers to offer lower-priced, at-scale solutions of competing quality.