Blackbaud's software for charities and schools now turns slow-growing revenue into far more profit and cash than a few years ago. The question is whether that cash can pay to buy back its own shares while cutting a heavy debt.
A charity's thank-you email after a donation, or a school's appeal to former pupils, may well run on software that donors never see. Blackbaud makes that kind of software. Nonprofits, schools, healthcare institutions and companies with a philanthropic focus use its cloud programs to track major donors, process gifts, run fundraising campaigns and keep their fund accounts. Most revenue comes from customers in the United States.
The engine is recurring revenue: customers pay regularly to keep using software they depend on. Take a hypothetical hospital foundation that keeps its donor records, gifts and fund accounts in connected Blackbaud systems: to leave, it would have to replace all of them at once. Basic contact management and accounting are easy for rivals to enter, and general vendors such as Microsoft, Oracle and Salesforce compete in parts of the market. So Blackbaud must keep spending on its products, now including AI features. With revenue growing slowly, what remains depends on costs. Since 2023, running the service, product development and shares given to staff as pay have each taken a smaller share of revenue.
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