Blackbaud (NASDAQ:BLKB) Chief Executive Officer Mike Gianoni outlined the company’s market position, artificial intelligence strategy and financial priorities during a discussion with Zach Canter, managing director in JPMorgan’s technology investment banking group.
Gianoni described Blackbaud as a cloud software company serving the nonprofit and broader social impact sector, including nonprofits, foundations, community foundations, universities, hospitals, K-12 schools, performing arts centers, museums and corporations that run employee volunteering and matching gift programs. He said the company pegs its total addressable market at $10 billion, as reflected in its investor relations materials.
Blackbaud Emphasizes Vertical Software Breadth
Gianoni said Blackbaud’s portfolio includes fundraising platforms, a financial platform built for nonprofit accounting needs, a full ERP platform for K-12 schools, ticketing and membership tools for performing arts organizations, and YourCause, a corporate platform used for employee volunteering, donations and matching gifts.
He said the company’s K-12 offering can support student recruitment, enrollment, classroom scheduling, student information, parent mobile apps, tuition processing, fundraising and financials. For corporations, Gianoni said YourCause integrates with HR and payroll systems and helps employees coordinate volunteering and donations while Blackbaud distributes funds to recipient nonprofits.
Asked about competition, Gianoni said Blackbaud most often competes with small, private, founder-led software companies offering single-point solutions. He said horizontal providers such as Salesforce appear in parts of the market, particularly around higher education, but are not broadly present across areas such as performing arts, K-12 schools, religious organizations or corporate giving platforms.
Gianoni pointed to Blackbaud’s vertical focus, system-of-record position and integrated product set as competitive differentiators. He said the company’s products contain proprietary customer data, enriched industry data and workflows tailored to specific customer types. Integrated fundraising, financial and payments tools can automate processes such as account reconciliation, he said, reducing the need for customers to stitch together multiple vendors.
AI Strategy Centers on Embedded Agents
Gianoni said Blackbaud has used machine learning and predictive analytics in its products for more than a decade and has added AI capabilities across multiple solutions over the past two years. He said the company recently launched its first “fully agentic” product, a fundraising agent that had been generally available for six weeks at the time of the discussion.
The product, which Blackbaud calls part of its “Agents for Good” category, is embedded in the company’s system of record. Gianoni said the development agent can use Blackbaud’s data, predictive analytics and wealth screening tools to profile potential donors, create outreach through SMS, email or an avatar, and either hand off a larger opportunity to a human fundraiser or close a donation transaction through Blackbaud’s payments rails.
Gianoni gave the example of a university with 190,000 alumni whose staff can only reach a fraction of that audience. He said an AI fundraising agent could help scale outreach to donors who would otherwise not be contacted, including recent graduates who may start as small monthly donors.
Blackbaud is not using seat-based pricing for the product, Gianoni said. Instead, he described a fixed annual fee model, citing a range of about $25,000 to $30,000 per year, with return on investment tied to how much the agent raises. He said Blackbaud considered consumption-based and donation-percentage models but chose a pricing structure closer to its existing offerings because customers want predictability.
Gianoni said customer receptivity is still in the early stages, but Blackbaud is holding webinars with hundreds of existing customers and signing customers each week across higher education, hospitals, K-12 schools and nonprofits.
Nonprofit Market Remains Resilient, CEO Says
Discussing the nonprofit backdrop, Gianoni said the U.S. market is large and resilient, with donations exceeding $600 billion annually and growing 6% in 2024. He said the sector has broadly tracked U.S. GDP over the past 45 years, with slowdowns during 2007-2008 and COVID.
Gianoni said reduced federal funding has affected some nonprofits, but Blackbaud is not in the federal grants funds flow. Instead, its software supports fundraising, major gifts and events. If grants decline, he said, Blackbaud’s platform can become a higher percentage of a nonprofit’s revenue-generating activity.
He also cited COVID as a major test for the sector, saying Blackbaud’s K-12 customers were able to move students to remote school quickly and that institutions such as museums, performing arts centers and zoos pivoted to digital online fundraising and membership changes. He said Blackbaud did not have customers go out of business during COVID.
Financial Outlook and Capital Allocation
Gianoni said Blackbaud crossed the Rule of 40 for the first time and has laid out plans to reach Rule of 45. He described the company’s outlook for the next several years as mid-single-digit organic revenue growth, high-single-digit EBITDA growth, mid-double-digit EPS growth of 13% or higher, and strong cash flow performance. He said cash flow was $208 million last year, with the midpoint of this year’s guidance at $285 million.
About one-third of revenue comes from transaction processing, including donation processing, JustGiving and school tuition management, Gianoni said. He said those businesses grow organically in the high single digits. The rest of revenue comes largely from cloud software contracts, generally three years or longer, with more than 20% of customers now on four-year or longer contracts.
On capital allocation, Gianoni said share repurchases are Blackbaud’s top priority, with the company focused on net share reduction rather than simply offsetting stock-based compensation. He said shares outstanding have declined from roughly 52 million to about 47 million over the past couple of years. He also said Blackbaud may pursue tuck-in M&A, especially in adjacent or AI-focused areas, and has reduced debt, with debt to EBITDA at about 2.1 times.
Gianoni said Blackbaud has also invested in a startup building a student information system for universities, taking an equity interest and securing a first right of refusal to buy the company if it chooses.
About Blackbaud (NASDAQ:BLKB)
Blackbaud, Inc is a leading provider of cloud software, services and data intelligence solutions designed specifically for the social good community. The company's main offerings include fundraising and relationship management platforms, financial management systems, grant and award management tools, and advanced analytics. Its flagship products—such as Raiser's Edge NXT, Blackbaud Financial Edge NXT and Blackbaud NetCommunity—help nonprofit organizations, educational institutions, healthcare providers and foundations streamline donor engagement, optimize financial operations and measure program impact.
Founded in 1981 and headquartered in Charleston, South Carolina, Blackbaud has grown from a small technology startup into a global specialist in nonprofit software.
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