Blackbaud (BLKB) 28 Oct 172017 Q3 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Blackbaud, Inc. Q3 2017 Earnings Call. Please note, today's call is being recorded. And at this time, I'd like to turn the conference over to Mark Furlong. Please go ahead, sir.

everyone. morning, Good us joining Third XXXX Quarter Thanks on Call. Earnings for Blackbaud's X-point and review in and our will we operational the strategy. our of performance Today our financial results on provide context growth commentary

CEO; measures on from of business. only GAAP more be measures financial Unless both isolation and your Please measures considered non-GAAP to the open should subject in results more statements specified, and forward-looking not and call from uncertainties up financial then we projected. our believe to we otherwise actual are non-GAAP our will Vice contain Mike refer today note filings to President Blackbaud's that this internally non-GAAP measure information our XX-K and representative call. our Joining cause how or results as could more risks the is available Relations me questions. risks. We recent website. make that that and in for CFO. to those for that prepared those a comments other release reconciliation today and SEC press is night, issued Boor, Form our materially we last in on detailed GAAP Mike and on Tony supplemental a and measures. we'll for differ our on our Please Investor will combination Gianoni, Please note the refer of are Blackbaud's most line a of A both and substitution Tony schedule presentation non-GAAP President and available Executive comments GAAP

Investor which our to is briefly activity, upcoming marketing the Relations turn Before call cover over I'll website. I available on our investor Mike,

to Cincinnati, hand interested Please in events. call in James connecting London, Paris, will Conference quarter, over that, the Investor York, be you're fourth I'll With and New Crédit Columbus meeting the conference Suisse if of in our in Scottsdale, reach one conference and York, attending investors Mike. London, Chicago. to Relations in During NASDAQ with team Raymond New out at these Boston, the

thanks call for Mark. morning, Thanks, joining and today. everyone, our Good

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get started. let's Now

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let's Now which third TAM move to our expansion. strategy, is

to with adjacencies who Our both the everyday nonprofits. the today, We investments. to hero, and to causes Blackbaud ability capabilities closed the are the to and is fundraising QX, approach expand their peer-to-peer broadens This into individual newer which which acquisition by JustGiving acquisitions and expands beginning our leading of new support them. the TAM of offers at connect serve nonprofit and donors used individuals organizations TeamRaiser product

Blackbaud expand offering JustGiving to fast-growing TAM which charitable crowdfunding to an provide a fuel portfolio, The our didn't criteria and growth, newer in into group squarely also acquisition previously of fits segment adds giving. revenue profitability we within adjacencies, personal is our strong capabilities to and accelerate ideas Blackbaud, of to and new within focus creativity our we Labs QX, a organically. move our innovation to sole cloud. also market bringing new launched of as the incubate the culture with foster means In

organically that to In running the Microsoft solution auction fact, auction SKY built we've by performing at engineers, this solution the by Blackbaud Azure was natively Blackbaud in a here and auction born environment. new understand on software key live silent developed that What's entirely we bbcon, previewed platform main capability stage. on is the

drive our to outcome. Blackbaud employees innovation the Our clearly now accelerate of customers' performance our customers and platform, excited we're by SKY are excited are and delivering to the pace

Our strengthen is deliver business profitability. focus final the strategic and operational initiative on to to improved efficiency

we've we've basis a performance efficiency initiatives. we operational third of and set which to the upon over to evolved investments of achieving migrating product least back-office and our points us growth, gain on support, entire our us goal that and model, customer long-term customers annually, improvement our deliver years, of XXXX. essentially engineering largely constant for And consistency to The and allowing annually customer we started margins further and how I'm and the progress our in few pleased success, the on in XXX the operations operating very Overall, through execute. profitability inclusive improved infrastructure end made opportunity We guidance. fuel to to setting investments steady goal, of aspirational XXXX at most focus and to finance, productivity our to see made XXXX management in the complete we've recently organizational the like future in midpoint with allows excellence areas and customer that centralized quarter our for last services, us Our in in and midst ahead manage financial basis on the the improve deliver a heightened by cloud. currency We XXXX. future will experience. allow scale, goal improve Since we've year-to-date of the based margins

financial progress Tony it over for our open strategy, for before Tony? greater We performance driving our against greater customers. our we growth is solid now up the in continue delivering detail Q&A. to to I'll call financial and value X-point cover performance turn which to

achieve our financial posted to our us and and focus we website performance. Good aspirational detail to positioning of Thanks, Pleased investor I'll so the long-term release questions. key goals report another yesterday's our your Today, can to updated full press quarter, we get on morning, direct financial materials guidance. highlights well Mike. for QX to you solid that everyone. posted to I'll

to of up roughly making subscription now that our was XX%. organic internal over basis million, and revenue quarter third with on tracking AcademicWorks X/X X.X% well an growing increase expectations. Our revenue is an performing of and $XXX XXXX, balance

customers the and we innovation percentage further mid-market QX recurring to Our than representing originally is revenue. a relatively towards changes well professional revenue of versus total of 'XX to continue an an delivered accelerated total revenue as driving solutions, Recurring business represented services the is XX% and originally and our on integrated exhibit reporting The SKY basis as licenses increasing in are our sales organic as grow, 'XX, for in cloud-based of services services a XXX-basis-point accounted revenue mix continue XXXX. growth of organic solutions to basis. we basis. growth set with shift revenue versus of revenue, performance expected XX% QX is we over revenue it of growing selling guidance which higher We our we the growth in strong and XX% representing a subscription-based XXXX the capabilities Subscriptions Subscriptions improved be key Services, annual for XX.X% Instead, decline total in which is and is XXX towards NXT. of recurring within when delivered successfully our total QX, our of to revenue cloud XX% strategies. as we expected shift improvement XXXX. expected as total QX points represents open move revenue of in decline core of on flat continues to of an as platform us focus than rate to shift other for measure XX.X% and our pronounced revenue. in declined more and compensation organic

operating XX.X%, and was years. high a income cloud XXXX of our back customers is the XX-basis business will generated improvement profitability, while of plan margin us and representing in key XX.X% per to should increased quarter, gross investments profitability operating operating the over for point $XX Turning investments simultaneously infrastructure initiative fourth going improved of million, our note QX drive a an us that several $X.XX. efficiency new margin and cloud. earnings Execution serve diluted long-term in our into of impact against the we make to We in I'll IT share we result that but to making continues delivery enable are to to incremental better which growth.

to cash Moving and the sheet. flow balance statement

free cash flow an to $XX.X million when of XXXX. QX of QX Our $XX.X million, increase was compared

infrastructure amounting for $X.X innovation property to to investments and necessary capitalized to million for in our the and development. making move CapEx cloud, continued and We million equipment $X software support

off software the last expect this on capitalization leveled We year after over total several have ramp amount years. will largely

debt. and during out to paid dividends million also in We net with the quarter shareholders $X.X million in cash ended $XXX.X

of debt-to-EBITDA stood QX, for strategy calls capital than at times. a ratio times X.X less end X.X at we of Our and

$XXX that And the the quarter. acquisition guidance their increase diluted million, the not I'll and margin in their updating to the operating $X.XX XXXX. is expected quarterly acquisition, XX.X%, $XXX typical will be will but QX, flow revenue revenue million. for of be $XXX of million, total margin to accretive per million operating the but the to of for call, and million non-GAAP dilutive operating to are $X.XX, operating JustGiving QX to JustGiving upcoming XX.X% Blackbaud revenue in share million non-GAAP account of to stated margins year. free earlier note cash timing in additive total non-GAAP $XXX $XXX year for year now full in high to seasonality, guiding As $XXX will given to we our to non-GAAP dilutive be of XXXX of although full income which a to non-GAAP earnings Mike We're

new flow commission Our impact XXX, cash to that our financial expense. continue potential a when cash still in of a strong perspective, we now XXXX to accounting year. will fiscal the taxpayer. we expectation of From relate largest are expecting the standards free is full beginning taking which particularly we to evaluate into We're dock ASC impact deferral account

initial time. adopting defer We versus as was using and of if expect period retrospective -- for the current place the method, a the expected of estimated requires which period restate at full average to contractor. of practice us our a greater transition using of standard in 'XX And amount anticipate commissions using longer benefit to time XXXX we that

investments And anticipated continued company. keep improve strengthen execution sheet, our to continue will create We and balance that our strong With up the on underlying deployment to strategy a improved capital that, strategic plan forward. like maintain our maintaining going to the I'll you I'd profitability. is saying, the we of close updated line us drive by return balance against open on our and execute disciplined continue growth to shareholders impact allowing to to approach growth We're questions. will your to scalability. with and for capital the fundamentals business

And we'll ahead, to open. is Please line your Instructions] [Operator go go caller. you. Thank our first

Roderick It's from guys, good Stifel. morning. Hey Tom

with question relative your the to And the maybe impacting overlap just a installed you you I way of what functional to bring on JustGiving, and Michael, should understanding to TeamRaiser? Tony, what us get But me, that that but giving about how more the can in to that let's to everydayhero have And for it functionally core U.K. first understand or table. can start a brings curious peer the think with the can financially, base -- you also this you've what it that part. with want overlaps financially Is just technology PXP model you better of kind both full peer-to-peer how to States? guided maybe year? then as with you we with the of then kind and help doesn't So,

Sure, Thomas. This Mike. is

because so accustomed charities, use presence solution So, for using as can like a then for is for person-to-person, JustGiving that before, adds JustGiving which solution mobile the the actually having to to same important giving. new for didn't get person-to-institution, is example. a person-to-person mobile that it And they have direct people functionally, we category

So, it's have a a cloud in footprint we footprint that the before. mobile -- didn't

sort of they've system bridge but over XXX those you it's It's two. as between actually from well a said, a had the individuals So, business, use U.K.-based countries.

fact platform is a So, it in global already.

is Although me, -- in U.K.-based excuse the U.K. business. business

and it do, we what So, to them, world our couple classic are gap the does like is different fill going that we of not a are integrate platform we're did a them it's existing to There solution, do, back-office we always platforms that will, in we're going of have, if not all a and you and today, integrated. What with middle- that multiple what had. of then solutions.

not frictionless more when globally and to which they but makes back-office money. institutions So, providing integrate are solutions, receive environment also for we'll only that global, resources middle- also be which our we'll solution, more for a

that charity money and manual standpoint, frictionless. going our clunky workflow another a work. solution. eliminate offer it So today to more to our new then to or integrated And if from all and a platform, a it's mobile creates as globally back-office a a and this processes a customers BXB from JustGiving standpoint make from it lot We're we're of going received little

So that's functionality. the

guidance year organic full year if happened recall, acquisitions the Tom, will pro count this we for the exclude will in everybody for for next forma provide calcs numbers, that So, we do year. that year, any when year next the and

our be Revenue-wise, expect accretive. QX far we'd the 'XX, expect million operating for it margins, QX $X is between to for We to $X contribution. we'd As their full million to quarter. dilutive specifically quarter it still in impact, in low seasonal and as year something JustGiving QX be but expect

ahead. our move next And on go please we'll question. to Caller

you nice Azure revenue I'll architecture. acceleration subscription JMP And including all to talked to SKY like? on then organic on Tony. maybe have getting to of follow-up products Can technologically us Two give solutions what's look everything see at in a I timeline to growth. needs you, get the in work past Mike. sense subvertical then Jaluria the I And Securities. would for be and know With moving done you've architecture? It's a start with what for an the Rishi the Blackbaud solutions a the common so, the questions. for doing

it's cloud so progress again, sample, I'll is our of made the microservices user are Yes, one which lot But is Most many means using components. it's most in of a And SKY architecture, just there. Many moving. sure. and the customers user use of today, We've a actually architecture SKY -- APIs. experience. a solutions the are example, in experience SKY Reporting, SKY are solutions the our which cloud represented

journey, it's massive the progress there. architecturally last company we've a amount entire made So, but a moving years of our in several

data colo We we and a in are Azure. foot have a still, centers foot in

You architecturally can imagine, heavy lifting to to of not Azure. there's get a lot

move And with fairly and Azure. along, the kind the colos far portfolio But so, from to we're architecturally across of again, SKY move we're Azure product whole the balancing our architecture to environment.

Or drivers that's helpful. primarily Tony, this we that revenue? And both quarter. mix margin expansion? and margin on the shift it, margin in side that Got driven were saw their nice by other operating to expansion some gross Was

there contributing. all a there's quarter, there. are payments really where QX, progress we'd margins. it's date, to obviously, in we've the mix. of gained. is, which be the our Feel pressure initiatives bit a operating always component Rishi, on parts overall to put payments will anticipate on a a efficiencies mix, In of the key we I'd and of the bit be about most our moving efficiencies are say, good lot In higher in related continued

of of we're but as really side services. one on I things, that shrinking well the service of within is the other the little on percentage a detriment growth is revenue bit think total, doing margins

also, to services of helping margins percentage prop margins. because structure. also improving smaller it impact is is dual that services overall But So being a our up margin our dilutive

several structure my continued in mentioned over also incrementally prepared evolving is that's I new scale. structure, thing remarks been the a for largely one done. provides years, last that organizational and opportunity And to we've Yes,

we'll And our move question. to next on

at Rob Oliver Baird.

thesis that back terms something questions talked than that's Mike, little a expected Just to or kind revenue a since for big are How there kind bit in can talk Tom's question, we about, just how chance go the the response thinking talking it's of to the at could that Tony, follow-up have future for of up to fundraising? about? of to then of, there? and of some is that theme was fit customers question that just, JustGiving bit in of Social in We a a you And about they're would some license bbcon, mostly kind a lot Or coming is there? going behind payments? to more classic And of little of margin we a concerns. And think acquisition. give well? customers your is that payments of some a why the part there can business as us JustGiving forward? as what you impact a had sense is of big

Rob. Sure,

excited the while. giving future of customers has for The evolving a always, So, JustGiving been which are category about of fills.

is think in talked to past pretty online the and have online growing fact significantly. I that XX% about actually less yet we've today, it's than calls shifting

which supports have filler for something with for supports customers but, space. in who've with our a have, This experimenting once other solutions us gap of a platforms product participate the our in different also if the in to gap customers space that. standpoint can the online acquisition fills a platform their you space that our they move integrated the systems, platform we in from in forward didn't will. Our been is fully a provides This with portfolio been experimenting Many giving. also, workflow

there's So, deliver Blackbaud customer have from a be lot the able excitement us to base for of this. think and to I

records stand-alone on, experimenting about think vendors is that -- to some in the have and and experiment to back-office system go other you of are middle- that's the going they been us. If vendors and back

also themselves. they're for out an creating they're experimenting, inefficient So, there environment when

they'll creates -- the lower velocity, So, operationally, environment -- efficient be to. access an higher friction that friction have platform lower now they'll here's that

component. Rob, there have largest of components the And a be recurring then, the various approach, monetization subscription The the of would is some business though on majority offers that transactional.

So, usage-type on so largest portion have payments -- is a any associated wholly much really deferreds it it. seasonality. revenue margins of like look more dilution that operating we won't The the would it'd stream, big like by with anticipate driven

which So QX, in from QX, seasonality our lowest. a goes highest normally is where seasonality be contrary. a unusual bit payment We our payments have bit to theirs is actually the

more So But we by that'll all as a think, company provide, year. combined roll I bit our in overall it seasonality. consistency driven next it's in

So, we full would expect to margins a it basis. accretive to operating be on year

caller. move our to we'll And next

question Furby I first with for or maybe William Justin Tony. Mike Blair. guess

that -- any how the that framework, X% change is there organic I term? the is thinking framework, about the XX% to revenue to long Just mean you're

'XX XX% are going year at you of to AcademicWorks in from from obviously, about total to and those, the being full which in percentage and subscriptions you'll last that's not accelerates now happening a we've been 'XX of over clear organically the have mix with you we're the But of growing And planned XX%. shift or the effect, about years subscription business having line made what's can of acquisitions goals. fall in subscription the think in Yes, with guidance the and talking success it's we're see long-term We're covering the quite QX. that the shifting sort aspirational standpoint. a couple JustGiving, just business, total,

and the the of solutions to model, which to we've in a because couple maintenance talked calls the of services drop While subscription. few last shift cloud and the about times continue

that years looking Just that items, shift few at we really out several happen the those ago. laid show would model

of shift really feel about underway. top the the, that's of, revenue we good sort P&L So,

Mike, do you kind in the then, accelerate your of go happen JustGiving can next do growth the that that I with you install over can guys Or years? And saw base? What you stand-alone. what meaningfully and think few a XX% as -- think, leverage do business you think

that acquisition lot on And have value case. for to answer acquisitions than we generically we a that's synergy better that a case We every a basis. stand-alone Blackbaud make. stand-alone just I'll a internal obviously, looks

synergies of valuation acquisition to we and revenue theory That opportunities. things lot related the are stand-alone, get so, And every applies to include ours is a the make. and those to margin

move please to to Caller go now question. next ahead. will We our

is This Ken from Wong Citi.

So some more. on JustGiving maybe circling back

elaborate And to In of -- plan of also investment how to needs the go-to-market little I'm be a bit maybe going that's can is here of in terms I you more a brand. terms getting done this level your of a kind running? what force terms different and mean, require brand? wondering to building versus their consumer-centric sales of in guys you kind a your on if U.S., base. of -- go to of traditional up you're -- your

of a right is in a wheelhouse. that's brand, It's question. Yes, capabilities, good consumer a but a BXB set our it's also BXB sell which in

to that fact well-known every do of we day. that, take customers in the have we which around once we're plans going our BXB this what our built do market to way, a we've so, is a lot And And brands.

they here in the face that opportunity example, that as for or that charities, that to And so, there's of an have market in them individual leverage space. sort leverage

leverage. again, brand global that more out going our because side. easy case gate, for a or to of significantly to play invest some us, going America we're go-to-market wheelhouse large going in a to did of all which the will And brands the so, is not and We there's That's it's in sometimes there achieve, work standpoint. of does BXB necessarily get on that our We're that. a not from become sudden we that not on larger consumer expect North to think synergy this not some a expect is

then marketing, to continue there? touched seen And impact. get it. might improvements on terms of into you the some can better Got Anything in how the And kind of and that and in potentially you next guys of you've guys terms going seeing sales highlight year retention had beyond?

program initiatives, Yes, this that's well-metric little that we XX sales sales bit. ago structured, got some it's headcount marketing talked added just never now. year, ends, program, about a this transparency standpoint, months now sales last excellence quite results. a a a but started and driving to bit year. better program sure. That's good we've that From a We've a better and We've

We sales going have years wasn't a substantial back amount X, of case ago. X resources market, our the in

with pleased I'm you initiative. retention. not what we're operational meant sure the around of by that comment So, your progress

have rates about remained retention XX%. Our

to analytics actually XXs. like there's adopt when actually our solutions we've And So, retention, and quite up healthy. retention in been the mentioned downward high payments, impact clients past the been no it's that to more goes

caller. our move We will to now next

Kirk be with Materne going partnership. guys are a just first anything go-to-market Microsoft Evercore I'm just the guess to you from them I co-selling really If their customer for from new It's wondering changed to for I'm understand anything's wondering, Is their Mike, go-to-market with base? if doing question any SPIFs perspective? expanded ISI. you're there help the I into just or perspective? Blackbaud on technology a I was wondering there's relationship. salespeople them? push with if just

the gate. decided market. decided focus a want right they Blackbaud to and Microsoft. Blackbaud, Yes. sort new of be on and lot this with down this is the relationship fact, as board across created X strong that's to the really of architecture they has with unit we've last There's Microsoft And us, the been on years they out to on a This moved business the a for And or market. X to partner doubled focused in especially, of been collaboration SKY that cloud. successful,

different to of with solution Blackbaud work a that's sort press is partner release. and level the message underneath bit, roadmaps sort in little Getting a is there's around more a that of which the going their and it product discussion better platforms. of become level partnership cloud the program. provider, across integration So macro

a solutions working We some for and related companies from And are different on things go-to-market and market our efficient how customers. and future for on more collaborating both innovation. to most go we're standpoint, on to what's we

to this on both how And table so, we everything's can win the marketplace. together in related

they Blackbaud of created and out how and significant need a focused a we been said, because they way together. we a it's so, unit significant together this they gate, for for haven't announcement And the win, business do Microsoft in And that's to before. on now they're space the it's because

from opportunities through over possible of with think So, I LinkedIn. of their we're channel, your will mean some really cool product XXX and Office I innovations like with including opportunities come there's that lots lot Dynamics now question, time, to at. and distribution out I a see platform looking here solutions this that here data

in services revenue? total Okay. towards it guys has below 'XX, year of continues cloud, of to or level potentially more And cloud as drag obviously, of and just Tony, I get sort just one your out holistically just this just, guess, move expectations you percentage then little your offerings. rate? this in Tony. it 'XX, keeps but we as going just a I forward, more terms to starts we it a whether bit as for should about keep as ahead business how does I'm want pivoting that think of more about into the this we sense start normalized to thinking towards, trying don't know going down I a this we on run you a a guess, 'XX, get that, Does be think to had come big as

expected when inclusive And year. subscription prior one to the There and certainty recall, smaller percentage and with become and if to a be of came the services smaller services a Kirk, year. total. the that of relatively couple dynamics is We we issues: into software you that is moving this will is of to of year, a model. other set flat continue couple guidance, was we

So, new going Edge Edge to and base products. we legacy less we the back for Raiser's felt -- modules Financial licenses were to sales for have

for We time year first the also were for to BBCRM. subscription a moving this model

lose we license recognition there. revenue to going that And so, were

meaningless Software for total dollars now. has us almost in become

not will So, a it's So but continued that one software now down, have may once few of -- be largely in nonexistent. that's the We for it. dollars extent BBCRM, decline, right? left million bottomed it's

to of to overall doing the the all SKY improved things for required. just continue our innovation, layer positive are architecture, shift The an we're services, are the improved accelerated won't customized I the also implementation quality, the that that amount So and driver. services be need reducing reducing cloud. decline Reporting services SKY move The think,

drop-in continue that expect see services. we'll I'd So, to

in year changed less we services. you how were paying some cases We know, bit also, a as and compensate folks for this we

and strategy. that a are there per So, that design lot of been our by down have pushing drivers

but services of total, the of smaller So, years. can't guidance become give next now, percentage would expect over to I couple a certainly,

our to on move We'll next question. go Please ahead.

good guys, Peterson Brian its Hi, morning from Raymond James.

So just one for me.

partnership wanted you that add there, you with cadence a down wait-and-see still And update investments your partnerships to what years? team. previous a the could next the as So, Or of and few somebody like potentially your those road, playbook sales when Microsoft, sticking are of all an more those over about think you change ambitions I about thinking strategic get is to to that be? maybe the XXX-revenue take does to ultimately just approach investments that kind to at on guys

our sales a would which up productivity. if added I go K customer Yes, focused out Where annually the success organization But we months. in we've didn't really we're really We've headcount last as year. on really, back the organization to have success ago. XX sales also added the we in mean, customer year, I X we've this years productivity break built say well, you that last

added about teams is success focusing an way. customers on of renewals, removing has customer management sales and it the customers the managing so, but from also in benefit And account

toward goes productivity. also that So

And that to it's sales. success customer. helping folks about just about the So, new It's near then of to market support existing sales customer information like inside and not like doing things better the in account about processes. offloads access is and things being information get the onboarding headcount, company management productivity building function from systems our folks adding

and you just quota is to It's and our both. us for is efficiency headcount if related. a sales multipronged not So, will, quota, ability project, it's attainment improving grow related, efficiency

be the to without So, because I think to more there's add having continue on out get want to I headcount. a productivity would opportunities lot clear that headcount existing just just of basically really more to

our move on next we'll to And caller. Please go ahead.

Your line is open.

Schappel The with Mark is This Benchmark. Hi.

Just one you details your wondering if provide Labs Blackbaud additional me. on could Mike, initiative. for was question I some

Yes, sure.

about innovation. really, it's So organic

where market week, the more and is a SKY to did that's the tools entire a have main it's now in and base. last been roll bidding our demo flushed outcomes architecture solutions the well that running architecture while. a out portfolio. a and platform effectively point Blackbaud auction an We event we mobile organically. SKY which capabilities stage built At on in going out we product we're consuming the have A gotten about back measure more Azure, customer now a in and while to event we we that across set SKY our customer bbcon for outcomes, And where Blackbaud building of built we're to whole new with product in

And organic innovation. to that We've do Lab got a so is really about Blackbaud things we'd of like pipeline there. prioritized

And architecture lot things, in so, more we're it's lot easier now in not as -- only an but actually the a well. to it's do where efficient

You is architecture, SKY SKY demoed defined think already that experience, a at like we user the solution auction UX, about building so something toolkit. in the mobile that in there's bbcon,

for reporting reporting the data APIs time having is spend done not UX SKY to engine. you in Reporting so there. a building can you're engineering from scratch, of XX% put sort engine, So, already of, the there a you. XX%, are the

and reporting already to whole environment functional really to and mobile go like So can out, build now auctions. And and APIs the there. we faster solutions market solutions UX with build not because they're have

velocity because our there is That's about. pick architecture. Blackbaud all what builds of up organic to So, now this on Labs ability is

And caller. we'll our go next to ahead. Please move to

Hi, good morning. Liu Riley. with B. It's Kevin

about NXT? Could AcademicWorks. cross-selling expecting even and you that on seeing growth help you're of further? to with of extent a And to First some your what little AcademicWorks introduction Are you with the accelerate RE for solutions? bit talk already existing integration with

Yes, we Actually, yes. cross-sell AcademicWorks. both a started right gate out of the is to

than imagine, more just we units business size have executives the our in given a can You business. sales education lot of had AcademicWorks their

right started a with were and work. Also, away, both is and went not AcademicWorks so of standpoint, ways. that we of market clients we've immediately. completed customers, They have that cross-sell a integration from some so to the Blackbaud lot And cross-sell started

AcademicWorks the of done, it's some but products Blackbaud not of integration and work between complete. the All is

stronger solutions the a So, it makes solution in the combined marketplace.

-- we closing, we a close. quickly but also before back-office, and make executable things go-to-market. And plan starts long-term integration done is have So, now that very an of integrating product like planning operating with acquisitions, when we acquisition's before that

on week the And so, plan. the start operating executing first post close, we

the if quick benefit, about from Could follow-up payments a you during any, what the the just And guys quarter? hurricanes talk saw business. on you

business. always ins in there's our Yes. saw, outs We and

And due happen, when impacted. also natural, But we do, to unfortunately sometimes So, these are pickup. or of we did see volume some fortunately our in disasters some right? disasters, natural customers

or if revenue, so, what during there to there event be upside. just And was Houston could you, some an have in that, not downside

the of So, for weren't out. in QX, to happened the balances But material it anyway kind ones company. that they

some slight material saw nonetheless But downside. it wasn't QX. we upside, some yes, So in but

And move our to caller. we'll next

question follow-up It's I'll here. at Tom shot my again. take Stifel, Roderick another from

you So, little about happens you with would little to side. you in the a of do seeing then a and sort go $X lift churn the pricing what is you, dollar can down to just maybe the of that could same, $X.XX, with continues of want of your as quickly bit expect in lot model Maintenance of turn questions in on line here the away, services subscription maintenance maybe that that How terms presumably, of the maintenance? we in maintenance talked turning subscription time? what it see the dollar attention side, Are maintenance a subscription? top over about staying then getting fact, that happening goes sort of to are help into $X transition. a if But bit when customer's us turning rates that to customer. talk you of And terms understand

uplift. to significantly across is to an uplift at Xx from still little basis seeing in in Investor hasn't still were year We're what what ago. Day the an we look breadth where and RE they changed X.Xx that actual you a annual that if were Yes, Tom, maintenance subscription over FE paying customer pay of on would is a still

does like and not and revenue that anything drag those that usage include things. might payments of other some along Now

longer term. there simultaneous. nearly that there is incremental upside The could So, timing the be for of

same way turning that are time those typically the migrations on we're the maintenance the about subscription. off So, the we're or structured, turning at

And so, and other. lag we between typically would not the have a one

the maintenance the subscription when far not goes, with in it have of amount of what we'll move they the largely, may rev Xx stream. you as be so, And would that But kind into sign X.Xx right subscription contract. rec from seen to maintenance immediate as right

requirement a on Now obviously, upfront services we're that license those as typically not and migrations. sale, said, not new on as well of would getting as the material we

that back with like additional or today's conference And the for closing turn to over does to session. Mike any that, I'd question-and-answer conclude comments.

close pleased operator. Sure. I'll strategic the Thank just our We're plan. pleased our you, quarter. with saying that by we're progress X-point against with really

on around these the with our the forward Thanks, achieve for the results. aspirational results a with our on I next Microsoft all you growth to There's updating shift everyone. happening quarter that announcement, and innovation. look speak guidance Blackbaud I of the plan fourth in a long-term and some call. We the of subscription Tony further and in to lot think initiatives the is goals. And financial at themselves our lot progress obvious

your participation. And with for again, gentlemen, does today's like to ladies that, and conclude you, We'd that call. thank

now may You disconnect.