Blackbaud (BLKB) 7 Feb 182017 Q4 Earnings call transcript

Morning, everyone. Thanks for joining us on Blackbaud's Fourth Quarter and Full-Year 2017 Earnings Call. Today, we will review our financial and operational results, provide commentary on our performance in the context of our four-point growth strategy, and discuss our 2018 financial guidance.

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

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

quarter, in James attending Boston, Investor Summit Relations with During in to to City, one connecting Investors Conference Capital our call interested in Securities hand Technology the that, be Seattle. Raymond you're San Technology Orlando, of the out New at and Markets holding Emerging I'll Lake team the JMP investors Institutional will over in Francisco, the events. reach if With Francisco, Please KeyBanc meetings Conference and San York, Mike. Salt the in these Portland first

strategic aspirational for Good strong against our another year pleased thanks Mark. strengthened very Thanks, and full-year goals. delivered morning, today. company's to everyone, we financial the achieved XXXX and our for our joining I'm solid furthered call our initiatives, and long-term financial to guidance as finish report profile, a Blackbaud

to of Forrester, to because forward. and count XX of we XXth World do base climbed marks impressive scoring about to this continued updated over total We Companies Changing vendors lead top XX,XXX you over were and outcomes with most annually growing the ranking named Blackbaud customer industry Fortune's cloud our Our by IDC. importantly, results will solutions IDC's to world's market We of software like researchers going our globally, customers. and have yielded powered several cloud high the asked drove the List, Gartner for and SKY XX,XXX likely recently largest this the

lot a get cover made let's growth and progress strategy. so your started, get against to we to we've questions, want that our have We morning to four-point this

Our itself portfolio, and The most solid shifting and first we deliver is strategy is integrated advanced given XXXX remained solutions to through very open market. shift, decades capabilities end the to the experience positioned industry enable uniquely digital of a online. market and in breadth the in set The this of transformation and are our cloud. undergoing continues industry of of

new tax giving. total a Heading here donation than In by into grew make #GivingTuesday this faster compared you our on speculating XXXX, the donations online to outlook. potential to Index pacing this online law we're past points three XXXX. few impact on times giving U.S. better year fact, on charitable reported not volume our positive I'll And understand in growth November, XX% help Blackbaud but

In XXXX, away. GDP U.S. the correlated donations than which the $XX more going closely total is charitable XXX and has growth giving billion for S&P the massive and to and U.S. in $XXX it's First, were giving in is decades. been not billion, XXXX,

future and XX% that stands than less giving ahead products penetrated XX% only our less our for payment platforms. into Second, opportunity online total penetration. donations. than have monetize We're online significant Also, are processing TAM and donations social of payments at

effort and Forrester cost solution, our to customers, of cost-effective millions the effectiveness. country is to This impact the donor solution sales to engage drive seeking end days mission adopted number hunger. They through office in America, of to After manual fight Third, their standpoint meals. our families more equals $XXX,XXX to manage retention their our That's implementation capabilities. whose raised manual way and product their providing millions total And me with of the missions. able and transitioning customer efficient need, A value. additional incremental real of of of nationwide Online, payment a feed and to well-diversified of unrelated is their And processes. which which we sustainer meals recently designed specifically hungry Blackbaud's Feeding time-consuming example and leveraging our strategy of for they can studies. a second dollars accelerate great market products leads food fundraising banks donor fundraising. eliminated payment finally, generate the to revenue continuously integrated are a over also is improving they automating to and our using in total customer Luminate solution America's growth our for in our are XX achieve were and raise $X because with in economic organizations of solutions many just donor This to a from map is confirmed ownership revenue, reduce network payment back goal to

selling transforming fact, Society us now logs she differentiator told she The NXT key instead way our In how to continues and competitive single organization. been suites that individual day Raiser's every the for into even operate. it's manages complete solutions solution teams. sales Toronto The of are to a the pre-integrated game-changer point organizations a of solutions be in our says Edge Alzheimer CEO move of

stand fully We procedures, quota-carrying sales now common are operating is on increased This over X% metrics, manage is at and heads, model. and a increase teams XXXX. compensation a includes running XXX which key common operating plans reporting, which training, productivity. sales now Our driving

strategy, our TAM which to third expansion. turn is Let's

adding online and product we're several one leading pleased new cloud. expanded quarter, second our to businesses, world's we quarter, closed investments. management the TAM organizations in broadening $X years. non-profits. near fuel adjacencies scholarship into roughly few Our stewardship executing both strategy early and and We've by software to will acquired goal ability and acquisitions with the move underway or our well over TAM our The in is these AcademicWorks giving both billion the the now expand businesses This for improve of through been this profitability, last on donors the expand years of with serve individual year, which the integration is our results and accelerate growth, JustGiving of to revenue TAM, and platforms, and portfolio, fourth to

evaluation of incubate ideas Blackbaud, on market. and creativity through We means also quarter developing introduced with TAM and strong We internally new our new within bringing the fourth opportunities to to expand active remain the innovation a acquisition development. sole Blackbaud Labs and foster capabilities as in product the them and culture our to of internal focus in

we more and services, move focus a first effort we execute. the Marketing aspirational currency, and of inclusive final model operating to Chief basis infrastructure efficiency migrating XXXX scalable execution operations operational to setting marketing XXXX, strengthen midst sustained support, Our in this customer promoted and me. under we've towards constant centralize improvement how in to strategic customers long-term and customer drive profitability. driving us We making the continue operating success. and we delivered complete improved us further after to investments we initiative for on through Catherine operational this heard is by internal improve future the are you've consistency talk furthered heightened margin to And creates using In opportunity QX, initiatives. goal, of and that improved see centralizing engineering, LaCour, in the to focus changes We're lot our points continued and cloud. largely productivity ahead in of in initiative against growth on our deliver to introduced the efficiency about business, annually reporting profitability optimization, a Officer our transformational been who's the will margins business the directly Since excellence XXX

financials have daily in distribution, can and a cover our guidance, our employees on with with our Tony Overall, to footprint guidance. we're deliver to and For example, productivity to from our a financial in we expand we're locations. began numbers align our headquarters X,XXX XXXX outlook. executing us to better effectiveness. allowed The quarter performance and located be coverage our early office our in employees' to feedback goals workplace excited our are our We've geographically our is is objectives. to And This offices workforce, of transitioned achievement closer going experience to the financial see which positive. and now optimizing facilities, for roughly but existing growth, of and strategy our our you I'm truly enhancing full-year very and Emeryville, leveraging These collaborative back pleased offices total. the successfully and acknowledge XXXX first Toronto, aspirational already very some more and our in new the in positive geographic highly as we've cohesive utilization, centrally improve financial and growth which moving clarity accelerate executing when our and into with wanted employees the were replace generation. our long-term I we new of strategic overwhelmingly September The nature global for objectives and customers. our is diverse aspirational the revenue more to introduced goals into offices improve cash detail, profitability in Cambridge, at us them more Investor to Day significant our our underway made announcement improving three strategy WeWork organizational and provided California modern around key

our are receiving With up the success we each the detail and and for to the grant recent law, Q&A. Tony? Tony cover last year, now so our currently outlook $X,XXX over an open owners equity, change before of are the of employees success. equity performance could approximately in federal in greater the turn employee in financial not for all tax combined results call Blackbaud I'll awarding that our XXXX we it to for participate company's

execute now solid everyone. a aspirational a the morning, Thanks, Good to our well We posted us achieve strong financial full-year year, and are to our long-term Mike. finish goals, allowing for complete. guidance which against quarter

introduced ask we your back Today, at And ourselves revenue I goals. growth, the well you growth scale. these and press first importantly, the to and on to materials get our we've full financial delivered of generation, positioned performance. the and midst questions. of for we business, we release and the ambitious performance yesterday's improve set high value customers, greater future key a detail website to more the so to cash our all We against time, full-year in goals transition our and for refer XXXX, our these can profitability focus posted that performed to for quarter I'll bar ourselves the and investor relative to highlights, within cloud. mentioned, Mike to strengthened As the

higher expectations. internal Seasonally, million, fourth organic our continues than basis. revenue highest an is XX% revenue of was revenue total XXX accounted our an QX an revenue XXX-basis-point revenue basis and of of to XXXX, of in for basis on consists total growth Our over revenue be revenue, QX QX terms This an X.X% quarter our XXXX, Recurring of history. points in of revenue, X.X% subscription primarily improvement This dollars of QX. represented strong basis. is of XX.X% over and on XXXX quarter company's growth the an which organic XX% which $XXX increase organic representing on peak in recurring mix, an tracked

of full-year mix services basis. $XXX total delivered and only and other X.X% an midpoint exceeded revenue, quarter. guidance reducing a which XX% on our declined the as revenue organic basis, represented in revenue versus over XXXX of We expected, of growth for X.X% On our million and represents QX the mix of continued we which XX% the or XXXX,

is revenue. than grew emphasize for now and reduction $X XX% continue revenue total mix in and to double in and growth XX% it XX% company total is recurring is key total recurring Services of growth. declined innovation our measure rate business revenue services a a accelerated XXX-basis-point services towards furthering stand organically will mix. growing want increasing successfully means digits. and organic revenue and of us We decline subscription other as represented by rate XXXX, This that in products. on professional as revenue solutions in $X We and at expected decline Our percentage This of and the core XX.X% in a revenue although a our is of our and represents I to XX% this that of drove year the the they total to the of business versus XXXX revenue. in a every recurring continue and shift selling that cloud-based anticipate XXXX. our growing respectively, large at slower and revenue in revenue an out drag total of XX.X% focus

profitability. Turning to

generated versus of of and an XX.X%, was per XXXX. of diluted a margin Our operating $X.XX. operating is gross earnings margin QX $XX XX% We representing income XX-basis-point million, which of decline share

year, efficiency diluted improving per which crossed $XXX the operating XX.X% of and was points margin XX.X%, representing while which improving Both margin full profitability. strong improvement margin We Progress the earnings share to of enabled above $X.XX. subscriptions have the margin to EPS of midpoint financial initiatives basis is in million, a us over against over operating For XX.X%, operating of XXXX. gross exceeded were and income XXX driven full-year XXXX gross and an our and simultaneously our operating our diluted reinvest guidance. business XX-basis-point generated by XX%

a constant long-term steadily building that more will associated us effective scale. adjusted XXXX a and for that for business strong XXX-basis-point was stronger goals. future Our been margin aspirational improvement performance This which currency highlights was our XX%, and with growth we've operating position XXXX

cash the to statement and Moving balance flow sheet.

Our million. QX flow $XX free cash was

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

the a years. total off several software of leveled amount over last after expected, the XXXX capitalization largely As in ramp

and $XX and software For development. for $XX the in for capitalized equipment, invested million property we full year, CapEx million

margin compared to accelerate top Our flow and cash defer strong, XX.X% which exceptionally to this the tax free accelerating range. exceeded XXXX. out significant XX.X% basis our free guidance was revenue that in full-year point of purposes. we full certain XXX project certain points want to flow $XXX $XX was cash late XXXX, XXXX for cash I planning completed flow million, allowed over for tax of expenses our us million or cash and year the when increased Free end that

aspirational also cash goal in end the at XXXX. As aggregate the million a with our during XXXX. million aggregate long-term million We in $XXX XXXX operating cash taxes of execution to posting from $XXX against federal finished currently result, and very we generate cash don't in $XXX by to taxes paid paying million I'm cash. operating federal only this anticipate $X goal in XXXX to any high pleased

quarter, ended the out net During paid and in $XXX million cash dividends to in we debt. with $X shareholders million

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

Now let's inclusive with XXXX, ASCXXX of financial starting is our the turn guidance, the impacts which from in estimated to of adoption QX of XXXX.

year the million, This flow XXXX row. that acceleration XXXX pace or second XX.X% the XXXX to some year, somewhat I'll developing XXX-basis-point comparison performance midpoint XXXX. cash straight to cash represents several operating free We're in XXXX years, expected strategy. fronts, decline free incremental our strong continue improve across to guiding margin We're also over to expecting our assumptions the will $XXX workplace cash sales, revenue given a million operating non-GAAP improvement full-year to marketing, at particularly share the XX.X% particularly slower to a now our key guidance, the for strong points into implies and flow although services a guidance. of in improve We for cash free since in flow. muted turn set are used and Using we XX% diluted second is a to for is past margin rate. R&D accretion we've This to expecting to investments in of which basis $X.XX, flow million, all $XXX $XXX XXX $X.XX and $XXX free $XX to non-GAAP non-GAAP of to per of million of XX%, margin non-GAAP earnings million.

headquarters growth for one-time global us new investments the long-term. future scale well will require that position and Our over significant

federal been Our non-GAAP is tax our XXXX, rate XX% change, has XX% to to EPS. primarily revised in U.S. diluted driven from in XXXX which a the by benefit rate

planning our in work not based are cash We upon completed late be tax XXXX. XXXX payer in a cash expecting to that we tax

expenditures includes costs million, to Our million software capital $XX estimate be XXXX development. to $XX capitalized is combined which for for required

increase in line QX the XXXX, associated new In to with are with of capitalized our global year-over-year of relatively XXXX with fit the headquarters. out software We estimating be primarily we our some associated in additional of WeWork. leverage exit as the with strategy execution that restructuring existing recorded expect charges XXXX to and Mike we of workplace leases charges we covered our

deployment Our changed. strategy of capital hasn't

will We incremental ASCXXX with two and of we're continue our in down From perspective, initiatives, dividend, capacity future adopting stock in grant for investments debt XXXX XXXX. continue a we'll global one-time the to invest and and pay new providing be acquisitions, a growth new our headquarters. operating accounting employees making QX standards to paying

which the will of reclassifications five-year and will minor P&L. be but will retrospective if we no due for line the cash-based combining revenue be revenue and increased to expect balance which amortized of we'll We'll restate now to financial and place requires saying, improve progress commissions, and to deferral manage we time. strengthen maintenance line the will with to will made longer breaking on execute that order streams. to financial as balance maintaining We the to strong shifting our standard the single revenue a continued that, capital immateriality positively largest to at in market deployment The and the us moving our over sheet, forward, impact our that include have the way And impact With remaining investments relate strategy subscriptions moving business. be full to and improved excellent fundamentals on no us between to in the using the be plan cash. adoption recurring like execution on in by XXXX I'd impact finally, up that detail, This against open disciplined to a into be revenue we longer operating subscriptions segment, mix drive will We're will impact will method And to shareholders, XXXX questions. your company. some and given was items we've margins the the capital is a a out life. to align maintenance close continue group-level and I'll business one allowing create with growth our strategic approach growth to scalability. for return underlying of maintain profitability disclosures line the

Roderick Tom from question first our take we'll with Stifel. And

for morning. Hey, taking questions. gentlemen. Thanks Good my

Morning.

Hey, taking question. gentlemen. my morning. Good for Thanks

guess to little XXXX just the of start I subscription here. we in of some moment And some how to parts when about services. I a the in bit the relative the more model. I Tony, to direction So on some if maybe this moving appreciate, with on details But add wanted specifically the ought guide. think you the start line can to to acceleration I'm curious see more the we help

couple last some put into You've the sales investments years. of nice in

and year about products sales So I you the how should year. the And of you helpful. this relative moving And impact the hoping then That'd some headwinds lead they Thank you're that last had. then really back-to-base year those subscription on be about movements you of some some faced force. of was to the productivity organically? and end-of-lifing could line in to parts that Should of you. this talk talk seeing just that subscription acceleration

Thanks, Yeah. Tom.

new Obviously, a to have of the we're continue as head we a to team. count seeing overall the productivity. good On productivity about in bit drag you the trends sales feel add front, we

You've get and productive. on-boarded and those trained ramped got folks hired and to and

we because revenue productivity that this takes I to a mind bit that subscription we keep think as to we materialize in financial the towards model longer in shifted business the upfront. see statements of get much recognition have so is, don't things well the it a have as one

them over board, deferred on folks selling, the life upfront. pipelines but the revenue then contract the get versus trained, built So, and get gets

So, that's one of the impacts.

head the total in mind, in our kind there'd model. count days added that been Overall, P&L year, before exit about last keep near as sales is under large. this to each doing software little by of especially which another starting you the see is about X% So The longer on thing old we versus XX%. subscriptions, time we to We'd be a base overall the the approach tail to of same XXXX, I the the kind to other think XX% probably it somewhere we've year, of revenue. rate of fairly our expect business, be getting subs,

I going as of probably revenue, so approaching somewhere exit be XX% then, think to software, maintenance XXXX. or total. approaching is services XX% of And and services we

bigger bigger it's piece So base. becoming of the a and

So up size adding, to to have the keep that with of obviously, we base. keep resources

so positive the the nice folks the of three, layering the seeing to good impact positive, uplift of we'll I Overall, with NXT feel I FE be over the migrations year, of seeing from about of are getting along subscriptions. We that'll be into roll-out, think, RE we're it. and This NXT. year on continued

think the about Mike, On rate, I didn't hit that anything can you on?

Yeah.

actually to more of product efficient. bag, more the customers. sales had subscription-driven, which some you products model in are and so Just into we their solutions ASPs We're higher the sales the in new as ARR turns makes lot ultimately you to are which from really product add, plans I'll plans if pretty growing certifications would as across what whole training the for folks, comp common Tom, my more operating getting on-boarding across sell, the company, better sales a MRR, flow And comp of just programs common for And then driving, like XX% close that with of doing is and which prepared cash a the new all we're in that, there's describe metrics, of revenue, common model, common reoccurring board, hires, and things hire management this I now which standpoint, common a our process including good as and remarks, well. saw, add breadth I our to will, improvements. productivity now line, our the

fruition is really we've that on a couple been to program sales operationally. of that coming years building So, for

mentioned, products. had sunset Tom, was you on piece last the the think I

migrating you smaller. customers That year, rates churn So, spoken each and some becoming smaller we've have those of and will go those is when shut some that be churn that products, move turn one-time drag we Those base of because those high one them as kind off we're before as we of our actually so loss off number orphaned will go-forward some those on that that about be and we bigger to said, and will customers are actually actively will take revenue products products. each hits getting of there not year. to

just sunset of that getting to And as Yeah. throughout add all small. that revenue maintained of at now and well. that percentage to total behind customer almost that And set a and is customers a us it's as little retention bit of number XX% really a of products, is largely our we've

basis with the about the Is been how in the we kind kind think apples-to-apples you. we've encouraging you way in margin apples-to-apples Tony, guidance X% Other but flat us to terms Or list, – for guess, and your to to margin X% give Thank case ballpark. to view hands full here? relative the think I the in of positive us year. ASCXXX? the down Quick margins around range to Appreciate margins exhaustive it has of ballpark, which companies that guide follow-up kind you're about just a ought QX. like Excellent. would would still the to ASCXXX, Thanks. for getting be on seems it's seen, impact EPS of an to retrospect, in you're this that you, XXXX the of going implied not ASCXXX, the right

Yeah. Sure, Tom.

to a You're ahead have of you. going challenge

I the tough do feel getting couple It's through are trying through you. All depending us, But XX. lot imagine look the I dig material who at, reform. to for to will of on trying a of accounting you less coupled reasons. looking guys enough tax all a company, for one for with you're changes ASCXXX can't

We things with the commissions. But more deferred we won't commissions and we're the We revenue costs, finished as in work. of of we historically have expect variable comp, rules so a and P&L. all should well and payroll and say we be as deferred with that all have we result impact benefits-related ASCXXX items had geographic to will costs going more should numbers said and defer that dusted. very we as before, of although, spoken Obviously, currently I've associated the The haven't we've between some is audited some when that's QX et as line final where – until the the very impact little have end impact always cetera, anticipate commissions. change, to biggest the the don't our layers, but amount, to increase on wouldn't comments, revenue The prepared in going want management my defer give we about I But – is more. have. not probably – XX% we exact an that XX% be to amount more, some moving XXX%

no deferring a lot companies comp. there's who're variable of So

on already That to in up. We already has a will a still is acceleration when amount. using amount life. That will some five-year three-year were significant earned. a life, although, go were deferring revenue it we the based So go now it

some folks less other will impactful. bit impact think from see you I our be a quite what So may to compared

between XX we've for on margin impact XXXX. is estimate to operating somewhere Our XX included point basis

you I in think the Charleston we're that significant mind at to in rolling some margin here capacity with also workforce is key keep new strategy in fairly look our optimization headquarters. that We've and out. facility we're when our operating added investments making overall

few points that structure overall We years base. to upfront, margin closer next our that dividends over is employee the doing some be and future those for the fairly both investments the to pay again, of at to will benefits But, the the and our expect much some some year significant impact over things investments years, on to on like we're impact office negative XXXX. back other XXX that basis

from Justin with next question William And Furby we'll our take Blair.

can customers? start I added customer or that the is methodology guys. maybe your over the as to on you XX,XXX. change talk new in cross-sell bookings to count that follow-up X,XXX And shared, Mike, your about you I've for a to then, it in customers guess That's see terms X,XXX mix then or you well. Thanks, you net you of from quick comments. that have versus Did interpretation shifting Mike And new big one saw new got and year? that started you your increase pretty this

We includes methodology. if three, did. have a the ago, couple go and And back solely organic our while have we mentioned adds to back That of customer on four Sure. that focused not some years, a Yeah. growth. teams are M&A sales focused XX before, change now, we just predominately number months with did on really you It's we're that started customers as new where I've cross-sell. net growth

So sales there's footprint new in on we because customers. cross-sell, and focusing head more net count to increased that both lot cross-sell, in a

sales methodology really so XX% probably. And we last two years for years net it going growth. those and to it's year reiterate, two hadn't talked change though, we've that updated is but, new, and – and ago just X% both focused last up about customer number previous investments the did not on cross-selling But just

year going we'll So that asked we're to every guys now update get lot year you a update forward. about it every just we going that and because by

Okay.

the So number updated. old wasn't

was still like, you when it at XXXX? the is fair, that reported end stale the So, number, of (XX:XX)

wasn't it updated old old. It two The number, years was annually.

Yeah.

Okay.

Okay.

assumption when Do your you accelerate? was Okay. that's you And Thanks. it to it guidance it just have it expect growth to Tony, business? What's a me. for similar standalone in for as you expect it actually, your acquired And XXXX? at as Do for then growth you. what JustGiving on

it. expectations We're to guiding Justin. right it's Yeah, with tracking in our that, acquired when line but not we specific

similar And so that's saw. rate growth what we say I'd a to

Yeah. Right.

Oliver question next take And Baird. our Rob with Okay. from we'll

Hey, my Good for taking Thanks question. guys. morning.

the a guys you Clearly, integrating guess on about of sale in done I question great WhippleHill here. the So follow-up job kind becoming platform Justin's and have real space. a a education platform

and progressing that's products? had, Just as that platform the of if metrics, for people all, the some out some field. just out deal guys the curious, the know your of flows? how maybe color sale I non-profits follow-up, sales a that moving had on year-and-a-half about Mike, cross-sell, productivity maybe a guys. in you little And flavor talked absence at the Thanks, a into of broadening on impact get just then, past around over and core among on What more color sales that's

Sure. Yeah.

to So, little first up yeah, back all, standpoint, I from a bit. of a platform need

the portfolio in now end front The vertical the around business that near-adjacency and markets The markets support of vertical of scenario in of build for company the drive of has we're again, will, markets. us to It's acquisitions are the to a the vertical portfolios. our serve. we around end the excellence continue strategy back consolidated is to the you if centers out company, front end to the of structurally And or organized these customers. So, or out round roadmaps make organized the those organically win-win been either business. business, multiple that round vertical

platform. cloud user heck user solutions of has driving our with are experience. of job Just where five, – the There one displacing asked entire our lots about that experience standalone you space SKY innovation. are as the seven, education single also all vendors for Almost we're portfolio We've the now example. situations six, a done eight

like same So, reporting whether company transitioned a experience, the it's that product bought NXT intelligence that the user built we and same Edge to organically ago, engine. it's years Raiser's the or a we've business WhippleHill like four-and-a-half it's and cloud

platform near-adjacency acquisitions. plan our new verticals or And either this on to integration to is platform that serve building we the continue powerful a integration. that by our across organically is do so And SKY

also the around continue market Your to to to sales and closer required continues. personnel, close the cases to in sales, support close teams yeah, to we is the second customer sales sales some and like markets the customer question major on closer to engineers, just customer. support in building field whatever customer, focus That

So know, strategy might to tied we predominantly the in our new months spun field like larger mentioned remarks field. and rent. phone we as sales on own or Tony I hire to folks also Charleston facility prepared for in that net mentioned XX our that XX facilities. or We hire is we too they Austin, in closely entry-level out get a is, which the That or don't position, you be and my offices

actually because in just another. we one a flipping WeWork of reducing landlord ton company we're this to opportunity overall And an mentioned standpoint, cost So flexibility, there's from the from our in having more to of open that because offices landlord. long of or run offices facilities the more works just model flexibility a in smaller markets, ton in with that but but way

So, that's closely platform. tied to sales field the

Great. Thanks, guys.

Yeah.

we'll And D.A. Davidson. take Rishi our next question with from Jaluria

campaigns. integrating U.S., questions. think the States that mean you scale least, for leveraging asset any has your in its then Thanks and on dropped JustGiving, Do in saw have expect on impact we guess, strategy? I to think Do the the JustGiving And first personal the your the space for follow-up. guys. as follow platform I United suit? leader in Hey, my at I X% about you move one this taking fee you GoFundMe

with of our our back-office is doing we not Most integrating JustGiving what is in But all Yeah. in space, and revenue right? we're of middle- that JustGiving are platforms.

customer-friendly it integration base. our entire does operating workflows So will customer Blackbaud the expense platform a because be drive and operating reduced for

great that see business. and back-office, integrate we well now been the a as but on the quite as of what received actual go-to-market normally So and the It's a integrate well. we're we do long, executing is that It all we're integrate integrate platform really opportunity. hasn't and Blackbaud sales, app of integration the then doing part being

north So million it's I think for registered a great of acquisition XX us, consumers.

plan. an from on and integration standpoint go-to-market So it's and underway

the should years? we together couple of thinking saw how then we'll in relative migrations I helpful. and Thanks. we be That's on. in from subscription seeing that past bucketed to And Great. maintenance Okay. now XXXX, be understand But what about especially

XX%. because to model. bucketed reoccurring they're it's mean, together mean I now we're Yeah. I close revenue a

better back we so today. have than from XXXX frankly originally executed And planned arguably to

a to Given the the reoccurring faster thought shrunk little transition, model. we actually than a now has services predominantly we're because revenue positive

make NXT, just for extremely Raiser's to migrations cloud It's over our Financial to solutions gone well. and maintenance mostly Edge continue and that'll we'll continue. with Edge those NXT So

offer as a customers model are license, subscription product as We our taking many well. now is which in that we that have one Enterprise a CRM product, but

one and who's into it's who Canada So will the the customer logs plan. migrations up I of these basically executing mentioned in all And the to solutions, cloud adoption CEO, market maintenance continue was every that they that where the that had model NXT a difference on for significant The ago, Edge the probably is system. database day. year user administrator Raiser's only the institution, user a

CEO. focused Now, it's in the the drives which really really the being a what lot is including used folks a of we're space. business and on It digital transitions transformation, by

the to maintenance we've in good what year. retention continue over will year the customer last four thing, at transition the yes, we've shown And is So, years maintained XX%.

is So, and healthy executed that transition well.

we think, I talked Rishi, about to spoke it. I it.

XX% total or be the approaching time as by of to we maintenance well. exit XXXX less expect the We

less that getting to much such be meaningful. it's So much, it's number small a

Yeah.

And we'll FBR. Kevin question from next with our Liu take

morning. Good Hi.

Hi, Kev.

Hi. Good morning.

the and line? acceleration base follow-up NXT a they're seeing for about suggest of benefiting the bit getting of as years kind and how a your perhaps little talk decline trends Are just quicker you rate a maintenance in to year. to there this more Just a a I'm terms subscription about getting bit XX% over on of that little or the question. higher

This is long Kevin, on anticipated. pretty what Yeah. say, we multi-year a transition. I'd par it's with

still And do planned. complete. to long as build-out in going it's reason the the only line. not it's pretty we so is some It's have And NXT

keep gaps. functionality and some to needs We little be bit with There's customers close have that integrations knocking some complete down. some that third-party we a roadmap of

not we go, it's for So to quite knew. which ready everybody

every bit weeks. customers kind of two every little production into normal adopters three have all products, normal which and in this. the faster. is any our we of to is SKY-enabled The thing we're like go transition able though really complex put take products a So longer, cool More those that early functionality weeks or

of which some given the and the is gaps the our those to to to really we close But to close customers of go cloud ability keep over that, fast, innovation the new still rest So the have is fast architecture. solutions. low pace really means maintenance-paying faster moving said having is bar the gaps to

couple in And Kev. things keep to mind, a other

would we're total us year Two pieces big not a the big that Mike XX% five- now in would for now XXXX, to moving but bell this we're you other as of would expected And, into is model, consider to be ramped curve, a the we be think a said, that on about CRM exiting subscription most approaching cycle. exiting, when bit of portion full a migrations. units. to a think, three as to be what that bell years of portion We curve to I seven-year be thought

we we're comparatively. goal walked And the not on as very we aspirational thirdly, expected have XXXX. side when this in is rate a So maintenance subscriptions would CRM into back growing fast then, at growing

you've So line. got maintenance shrinking a

as to model wasn't going as we to is got a continue internally, anticipated. growing subscription You've And CRM very acquisitions to subscription that originally add organically, nicely the total. well subscription

lot So, of sense. all makes a

color. on And helpful quick for this the That's Great. then, year. one tax just a rate

a good out had XX% XXXX. or long-term includes anything nature in And it's curious one-time-ish planning on I'm more tax Blackbaud? gone if rate some mentioned of use that that's the coming for You to

that, hadn't good question. somebody a asked No. else Kev. It's I'm surprised

on the of So tax situation side interesting things. an we've got

two creates book over you our for you price as had know, that, tax such date. because purposes, in a permanent of have We the stock or good for the the GAAP price difference stock last appreciation record years grant three

purposes, tax it For vesting you're at taking the date.

stock up rate And now has permanent been been tax our under well appreciating, with rate. well the tax new a so, rules, we the difference federal actually and rate. below XX% XX% the end actually It's with the below GAAP

be kicked million we and in project result cash planning XXXX, that really when our in set in of able in late originally to year taxes $XX tax tax not reduce paying we've million guidance on we GAAP to the as basis. resulting pay expected off a rate advance In the us reform So substantially. year, it of would paid cash potential this we the cash taxes. going into With been at $XX a

XX-plus-percent so, only our in our little $X we And actually a cash tax million paid in just permanent in with that taxes difference XXXX. and stock bit between of planning, north appreciation

things. various the other NOLs had and and credits few what we Now, that's in not than years we substantially paid because higher last

a paid in last cash not six or over lot five years. have really we the taxes So

cash into XXXX. impact planning, that's cash pay little a no tax into more tax we reform XXXX, going to and expect and to federal in So, XXXX there. with going our carry taxes But so

tax piece to people protected change, more for acceleration the us, this that in keep see and some would deductions other question, carry-forward these of The of in NOLs goes is of dollar-for-dollar. mind R&D by in credit rate forward reduction, with which cash advance carry impacted your of can not deductions our to many interesting rate it's And assets. as on we and some rate their this

future. just a that's what from and reduced to kind XX% that us the in part one-time. rate that down that so, R&D of that to And credits not of It's will rate. below rate we our have will It's allow dollar-for-dollar statutory XX% that's credit have reduce

And James. we'll with Raymond take Brian Peterson question our from next

Thanks guys. the Hi, Hey. for question. taking

see when curious, customers, be So, appreciate crystal giving the your Mike, talk ball and tax on color has that, how off could or more. a this? they will understand how on what Because want this on you IT and I nobody horn they the to overall. they that can are investments given reform take by I make the to invest one, that handling impact transpires; they But case hold that might bull on I'm you want the to

prospect and saying your about curious, I'm in conversations, customer tax are So what reform? just they

are keep key but driving digital other operations saying which in of I driving doing, read we're but interested portfolios industries an they to in our vertical side customers. earlier around now we in my the up we're industries, why, in they question, what their earlier what it's highly we're a just They're just of one because answer actually the transformation fundraising on. not transformation market reasons about of because is operation, invest other building Yeah. more not mean focused digital

fast in platforms. our And so, their is in our what's transformation, getting ROI a with investments this digital happening they're customers

that expenses reducing our that situation a And us. not and are expense explain built lots firms those got like on it's white So platforms. revenue of website have cases – their see they outside actually others that through the We're cloud papers up way. by we've where business increasing their operating with our of Forrester going in and some

high every customers solutions. that's to is interest how ours, in there's just level advanced in to take whole go conversations on through a transformation industry, digital including faster for So with had bunch operating cloud of this our out a customers. And, fact, of I've happening costs

versus Got I of doesn't it. much many maybe customers And on the CRM? the with migrations? Thanks, appreciating how that for as some press get anything that there's CRM. those But relationships obviously are new maintenance on difference, CRM the you is of that subscription there Mike. just appreciate And customers that and one the curious, as say migration. economics Enterprise can I'm services NXT intensity

adoption that the a Yeah. with mostly I'd customers. say of model with subscription Enterprise an new CRM is

or existing the interested are have of ones moved. Some

for because that the subscription move. decision that historically of it's a existing want they ones lot just subscription large if in say are I'd you driving a it's made enterprises CRM really that's at customers, But, But to their on-prem, So, new the data that and guys most they're the to again, on maintenance platform trend part, there. the Enterprise mostly subscription, looked centers. net

Materne Kirk ISI. question from next our take with we'll Evercore And

another made XXXX, you is Thanks you. a But should a start investment the is positive of versus cycle for for or return basis, first, on we over guys. years? investments in returns all. sales taking year question. where, year are where from and to the on marketing you sales an net margin of I'm trying sort last the to on couple get overall actually sense just basis a see front. the of the some on on you there's the all investment think income pieces productivity of moving morning, you know statement into Mike, guess, for lot when Good we I just for I about this heading a this

Yeah.

in side answer this less we'll training, in operating which head a and across common on-boarding, that change ability change the prepared really But, common in head from I think training, is is think is whole monitor model count mentioned certification, time investment balanced product is which earlier it's existing biggest where remarks, would manager the It's the operating team big change. which and operating to to though standpoint, common the investments and think a been The the but the side in add the for first is sales, continue metrics. in is, that now though best manager making comp we model plans, my it the uptick a means the sales of sales change means all about place is for productivity I balance in driving team, in an sense. that productivity. big makes I arguably side, place us sales. now now that say an and way count to really more

Okay. That's maybe... then helpful. And

Okay.

about sort still change I'd through be about recurring much revenue But subscription of the about I thinking are you. that, Just recurring more for up realize of that curious insight one you're moving kind tenets, annual have subject I And backlog. all just providing piecing ...Tony, I offering guys was you now is interested might with parts of the guys of to believe, more any of companies that are that into going nature? are you start thoughts on have go in any revenue ASCXXX. their how to so have thinking If that in. you're along to you that? that now statistic

Yeah.

know roll companies the to decipher need disclose, disaggregation SEC thing. the and rules try how all as It's that pieces. minimalistic bodies out this on take come the and and it until are to probably Kirk, we I like a to out when this going hard think, really are we're what going governing we approach appears how to most we

the booked-not-billed expectation. backlog, going over kind my I disclosure much is balance Those information on expectations of sheet. several going see of You'll that's kind with would again and to to more How certainty. materialize are be roll-off things on that's something that incremental the be for revenues stuff, think quarters

because try I going some think to think SEC alignment companies a little over happening in more and I alignment, of needs with would everybody the quarters I back disclosure. on folks lot you're to across a next have the frankly, several see push expectation. to come incremental expect noise, adopt to FASB we'll get is and and to Again, my the

in all to going made segment centers in business a the the the and we've centralization all done. service one are result CoEs changes as of and We we've shared that operating

take disclosure. So would et away, will that a disaggregated information provide similar some revenue we the little for market that revenue of but groups, to our in expect cetera, bit

probably see So you'll most more, but guys would would not as see much you as hope expectation. companies be for my to

mean, growth? misleading at I that anything about either think question, context guess, way. number in be I be guess wouldn't that – is mean to, But of the I it Okay. would that on go follow-up a about it of within to your to organic necessarily would just be is there would services going maybe And your into number we're backlog We're there asking that backlog or least, good quick number? I kind your get going end a meaning backlog that. anything up

No, I think with it's the had frankly. we've same our deferreds thing

a You're bigger just getting picture.

you're our business. billed still a sheet, contractual total a the typically. going balance big So getting we We're piece on versus the what advance value put to year have of in and

You'll have in services are that kind one-time of nature.

to tie to going not they're three So years. the

you So upfront. that because be wouldn't build booked-not-billed a it'll to potentially component have

business transactional payments have You'd have we Smart now and usage the JustGiving. Tuition when added we more business and and

still still is because deferred, to sheet so what and to a big correlating, booked-not-billed, even And will cetera, are be, that we still they're on recorded we transactional correlating be pieces not such have et our more think because balance I if going the tough to that the revenue difficulty moving it's in nature. give bit

our we'll with MacDonald Dougherty Ryan next & question Company. And take from

I Smart you and those acquisitions, MicroEdge about a of the larger a and acquisitions, kind and Can period. XXXX you XXXX when into Yeah. and little we sort guess, being as of Tony. talk sort bit Good back morning, digestion of took M&A strategy? Mike look with Tuition

expect see in? to out phase kind strategy XXXX with looking guess acquisitions, we some look two you that sub-segments you this to year, those sizable with I or should into M&A or continue when do back digestion you another opportunistic expect of invest with fairly to of more areas acquisitions, as Now,

these Yeah. of for be Sure. for acquisitions it to lot necessarily it say continues not just hasn't changed great at mentioned, just And strategy a are them of lot reasons. and that look It's would you've really doesn't include, lot a fit us. a have of and A great I the as period. the We fit digestion them. a

need to in they creates be stronger platform. vertical currently So that TAM-expanding markets a serve adjacencies we near cloud

same as years. you've same So I the last strategy. would expect more the several It's in the seen of

We have a intact, remains these that you the remarks. and updated four-point I in And company's acquisitions. strategy approach strategy my our including prepared with thinking

with one longer-term, adoption some analytics gotten not as with trends When opportunity now of TAM for applications, about updated maybe seeing the as of solution? at analytics of market Yeah. the And follow-up. when customer that then, into side, what and feedback sort of a an just adoption as the can the you maybe sort penetration look some sort integration of but you're much large NXT quick of talk obviously you're payments at you're you obviously and looking getting payment. we've not the But the of sort and of the

product Yeah. for our embedded us. lot of taken solutions It custom-built we or full frankly, our drives customer I'd are and, And well. customers. size strategic as are makes fully or matter into for or vertical say solutions subject of more the analytics analytics have a higher a that these for approach analytics. and core meaning ed heck a we've It's provide growing the customers a core our innovation. the for which they're decent by type, analytics healthcare-type line is a that by the significant stickier value And now fundraising-type add solutions, that

value, part strategic and differentiator a also very it's our a for competitive is it adds business and a lot and very So of us. growing of investment good

from our JMP Securities. we'll question next And take with Walravens Pat

my or in one room Matt for for point for you This maybe with Pat. particular question. a to product geography Spencer you or improvement? that Thanks. Thank well Could some is taking Hi. on vertical please did QX and highlight

or Yeah. We footprint, in that have say way, revenue-wise, two or don't particularly products. the it out dominates – the don't this company. It's geography We our product or a vertical pretty verticals across a market our revenue balanced I'll our product of a a break portfolio. and

guys, solutions in in our verticals So the because basically product of across is adds, for cloud it cross-sell wouldn't board. anyway. our be organic good we the sort across whole well, the But, general, get board, granular which of growth, that new all quite portfolio, meaningful are don't customer good in you doing good

the question think and would And about your adding how you be And, quota-carrying rate guess Great. you Thanks. this business XXXX how I beyond? do another do of Thank you. timeframe? growth to similarly, over sales about multi-year a force think in

last We revenue. either again, count. the in ending invested verticals be the then, we up think count head again, count to Sure. we pretty and opportunity. a Well, sales our added to teams time. high sales ago, productivity In opportunistically, now head about high break several much productivity so to we adding year from the larger – XX% at head every is for added up you've year, this where this from total we'll so and head two over years the healthy. driving this standpoint, year, team year once two The there And X% that anticipate seen productivity see we've year or the year, XX% is, count. last our years, reoccurring we about guidance Last we that's business the thinking a which growth years

past. a balanced in done continued will be as it approach the we've So

In from our keep nice what we to that the cases, do opportunity we'll it some perspective. other also in their of head bag depends and And head on the get things nice from in of from we Matt, that front. a one on count count, an put some mind many get acquisition will synergies an sales acquisition solutions

actual gain new between always acquisition. versus through balance it's adds what we So a

Right.

very helpful. much. That's you Thank

welcome. You're

from Benchmark. we'll take Mark question And with Schappel our next

Thank question. just Mike, my one for here. question morning. you taking Good Hi.

it's the was Regarding that more that Microsoft quarter, just curious doing partnership my functionality entails. partnership length some some at contributing More their meant work expanded that the be if specifically, you discussed was what if and understanding wondering with you're recently you'll was non-profit Dynamics last provide I around could some company details with I joint development to applications?

us. Yeah. What some area are where may joint we're development. tailored around particular and a or doing direct or might they it's go-to We're have work actually geographic they go partners market doing doing to vice joint is we versa for some

standpoint, So there's things Dynamics, platforms XXX. on Office to of a there's integrating execution product We're detailed with with looking a a we're development lot our with that From planning going more them. related lot and at.

us be space synergy customers. platforms, vertical the as clearly there's their and partner so better here more And They in our a a where and horizontal are too. platforms operating deep lot see for there'll much workflows of connections

cloud platforms more in like and that our more So, even platforms RE globally. Azure are them and deploying with platforms, we're other NXT

sort up that on the will, they you revenue pick through so, back-end, consumption And model. if of

execution We're that as here really excited be we a drive lot partnership to of part about interesting they for get I the well. clearly will and continue us and are this really there's really granular of think So this. as combinations

Thank you.

welcome. You're

our question take next Nelson Rodney from with we'll And Morningstar.

taking Hey. Thanks for Good question. guys. my morning,

head thread. one quick the a count to follow-on with sales Just

new faster be little earlier products the a carrying that those with longer, just subscription-based initiatives bit as is historically perhaps and Mike, seeing the of of market But same think, installed? on of is the I relatively getting the new with count are head been time when revenue you head ramping clear, obviously the recognition being horizon in these still you prospecting some given period, time-to-value to that obviously just you've mentioned where products. actually count to that same sort on even it or has sort

Yeah.

change. that So, haven't seen yes, I

from kind because given solutions, And ramp to very invoice budgeting of an at the standpoint now, cloud or customers time. selling our so, we add-on which it's and over actually a large for faster sell subscriptions there it's large predominately easier solutions solutions selling for lower us, for entry-level consumption one-time isn't to folks that folks much going solutions. that right? a a are end longer model It's smaller the dollar enterprise more they're existing for customers But fact get, add-on

so for easier predominantly for well. an having us subscription buy pricing And as customers it's models

follow-up the updating we on introduce that customer around a business? top sort the related Any of just to to evaluate are the to a kind And new be can guys you performance Obviously, basis guidance one statement to consolidated of business? quick at on number shifting metrics plans or that the metrics line. income looking plan any go-forward to subscription Great. but count now, expand

Yeah. we're mean, earlier at We I don't what's have Tony's there. the accounting best to changes practices plans. looking and point, going to be

out important so, look we'll course providing metrics the for at the to, And just couple most quarters metrics And what's more some to anyway. frankly, that most we like for helpful we out of you. give we some balance itself us that that guys this and and flesh insights. throughout is there year, break what's of will next And you to required adding think

Great. Thanks.

Yeah.

welcome. You're

At And the closing time, Mike for call to any this remarks. session. back turn I'll over concludes question-and-answer today's this

that look on pleased calling just call. objectives I'll for thanks, very progress XXXX We the the you we close operator. today. the really made with to optimistic progress strategic for Thanks, and we're by everyone, the next updating Okay. XXXX. call in our on in And forward saying in

this your And for call. does today's conclude Thank you participation.

You disconnect. may now