Blackbaud Lifts Cash Flow as Revenue Growth Slows
Free cash flow increased $23.8 million to $75.3 million in the second quarter.
{"text": "Blackbaud Inc. (BLKB), the software provider, reported slower second-quarter growth as wider margins and stronger cash generation lifted its Rule of 40 score to 41.0%.\n\nOrganic revenue growth eased to 3.0% from 4.2% in the first quarter and 5.2% three quarters earlier. Revenue increased 3.4% sequentially, signaling improvement from the start of the year even as the year-over-year trajectory moderated.\n\nRevenue rose 3.0% from a year earlier to $290.6 million. GAAP diluted earnings increased $0.24 to $0.79 a share, while adjusted earnings rose $0.11 to $1.33 a share. Both earnings measures also improved sequentially from the first quarter.\n\nRecurring revenue increased 3.3% to $285.3 million and accounted for 98.2% of total revenue. Its growth rate slowed from 5.0% in the first quarter, leaving margin expansion to carry more of the improvement in profitability.\n\nGAAP gross margin widened 160 basis points to 61.3%, and GAAP operating margin rose 100 basis points to 21.3%. Adjusted EBITDA increased $1.2 million to $110.3 million, with its 38.0% margin improving from 35.1% in the first quarter while remaining 70 basis points below the year-earlier period.\n\nCash generation provided the clearest acceleration. Second-quarter operating cash flow increased $24.1 million to $91.1 million, and its margin expanded 760 basis points to 31.3%. First-half operating cash flow more than doubled to $142.5 million, while first-half free cash flow climbed to $112.3 million from $39.2 million.\n\nBlackbaud's 2026 guidance remains $1.173 billion to $1.179 billion in revenue, $430 million to $438 million in adjusted EBITDA and $5.15 to $5.25 in adjusted earnings a share. Results are expected in the upper half of every range, with earnings and free cash flow at the high end.\n\nShare repurchases reduced diluted weighted-average shares 7.0% to 44.9 million. Blackbaud bought back just over 6% of its shares during 2026 and reduced shares outstanding about 15% since the fourth quarter of 2023, extending the capital-return program as revenue growth cooled."}