Novo Nordisk, Eli Lilly fall after Trump comments on weight loss drug pricing
Introduction & Market Context
Blackbaud (NASDAQ:BLKB), the leading provider of software for social impact organizations, presented its Q2 2025 investor slides on July 30, 2025, highlighting strong organic growth and an improved financial outlook. The company, which serves approximately 40,000 customers across nonprofits, education, healthcare, and faith communities, reported its highest-ever quarterly Rule of 40 score while raising full-year guidance.
With a $10 billion-plus total addressable market that remains largely underpenetrated, Blackbaud continues to position itself as the comprehensive solution provider in the social impact space. The company’s stock closed at $63.62 on the day of the presentation, showing modest stability despite broader market volatility.
As shown in the following overview of Blackbaud’s scale and reach:
Q2 2025 Performance Highlights
Blackbaud delivered strong Q2 2025 results, achieving 6.8% organic revenue growth year-over-year. This performance was driven by contractual recurring growth supported by sales bookings and the company’s modernized approach to renewal pricing launched in March 2023. The quarter also saw robust transactional recurring growth primarily from volume increases and improved rates.
The company reported that Q2 2025 represented its highest quarterly Rule of 40 score in company history. The Rule of 40 is a key performance metric for software companies that combines growth rate and profit margin.
As illustrated in the following chart detailing Q2 2025 performance:
Blackbaud’s adjusted EBITDA reached $108 million in the quarter, representing a 38.5% margin—an improvement of nearly 300 basis points compared to the same period last year. Non-GAAP diluted earnings per share increased 12% year-over-year to $1.21, while adjusted free cash flow rose to $53 million from $36 million in the prior year.
It’s worth noting that Blackbaud divested its EverFi business as of December 31, 2024, which affects year-over-year comparisons.
Strategic Initiatives and Product Innovation
Blackbaud outlined five key elements of its operating plan driving improved financial performance: product innovation and delivery, bookings growth and acceleration, transactional revenue optimization, modernized pricing approach, and cost management.
The company highlighted several product innovations, including Raiser’s Edge NXT integration with Constant Contact, corporate social impact innovations, and a vision for agentic AI presented at its developer conference. These initiatives aim to strengthen Blackbaud’s competitive position in a fragmented landscape that includes players like Salesforce.org, Authorize.Net, and Bonterra.
The following slide illustrates Blackbaud’s comprehensive solution set compared to competitors:
Blackbaud’s modernized renewal pricing approach, implemented since March 2023, includes primarily 3-year contract renewal terms with mid- to high-teens rate increases upon renewal and mid- to high-single digit embedded escalators in years 2 and 3. This strategy is expected to contribute significantly to revenue growth and margin expansion over the coming years.
As shown in this illustration of the renewal pricing modernization:
Financial Outlook and Guidance
Based on strong Q2 performance, Blackbaud increased its 2025 total company guidance. The revised outlook projects total revenue of $1,125 million (up from $1,120 million), adjusted EBITDA margin of 35.8% (up from 35.4%), diluted EPS of $4.40 (up from $4.26), and adjusted free cash flow of $195 million (up from $190 million).
The following table details the increased 2025 guidance:
Blackbaud’s cost management initiatives continue to drive margin expansion, with non-GAAP adjusted EBITDA margin increasing from 32.2% in 2023 to 33.7% in 2024 and projected to reach 35.8% in 2025. The company attributes this improvement to platform modernization, data center consolidation as it completes migration to third-party cloud, and the fall-through benefit from renewal price increases.
The company’s free cash flow generation has shown consistent improvement, growing from $78 million in 2020 to a projected $195 million in 2025, representing a 150% increase over five years.
As illustrated in the following chart of free cash flow generation:
Long-term Growth Strategy
Blackbaud has set an ambitious goal of achieving a Rule of 45 by fiscal year 2030, up from 39% in 2024. This target will be pursued through a combination of consistent mid-single digit organic revenue growth and margin expansion.
The following chart shows Blackbaud’s progress toward the Rule of 45 goal:
The company’s capital allocation strategy focuses on three key areas: stock repurchases, accretive M&A, and debt repayment. Blackbaud repurchased approximately 3% of common stock outstanding in the first half of 2025 and expects to repurchase up to 5% for the full year. As of June 30, 2025, the company had approximately $545 million remaining under its $800 million authorization.
Blackbaud’s track record of improving financial performance across key metrics provides a solid foundation for its long-term growth strategy. Since 2020, the company has increased organic revenue growth from 1.2% to 5.2%, improved non-GAAP gross margin from 59.0% to 61.5%, and expanded non-GAAP adjusted EBITDA margin from 26.5% to 33.7%.
The following chart illustrates this track record of financial improvement:
During the earnings call, CEO Mike Gianoni emphasized Blackbaud’s leadership position, stating, "We are the premier software partner across the social impact space," while highlighting the company’s commitment to AI innovation. CFO Chad Anderson noted, "We have tremendous optionality to dynamically allocate capital to its highest use."
With its comprehensive solution set, modernized pricing strategy, and disciplined capital allocation approach, Blackbaud appears well-positioned to capitalize on the significant growth opportunities in the social impact software market while delivering improved financial performance for shareholders.
Full presentation:
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.