Blackbaud (BLKB) 31 Jul 182018 Q2 Earnings call transcript

Good day, and welcome to the Blackbaud Second Quarter 2018 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mark Furlong, Director of Investor Relations. Please go ahead, sir.

Good morning, everyone. on quarter us earnings joining for Blackbaud's XXXX second call. Thanks four-point and will in and our review we operational the strategy. our of performance Today, our financial results, on provide context growth commentary

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

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

our & Forum] Communications Conference be Executive During Leadership XXth the in New Baltusrol Growth Global [Annual Davidson Boston; Vertical Technology in Jersey. third Growth D.A. will New (sic) KeyBanc Oppenheimer Vail; quarter, Annual attending and Forum the (XX:XX) team Technology in Canaccord York; in Stifel's Leadership Summit Technology Conference Boston; Conference in Technology, Internet XXXX

calendars holding meetings York, be also October Day Boston, Toronto. investors With and on Investor to Orlando, Florida annual be will turn New conjunction in which User Montreal XX call We with your our I'll Conference Portland, Mike. held in for with Please in also over bbcon. Seattle, our mark will the that,

on industry. Giving XX% customers non-GAAP everyone, innovation The of that transformation to to QX, opportunity and an from to today. helping massive unmatched of impact and charitable by Thanks, for own for solutions not-for-profits to And in time to XXXX. the them giving now X% of their This and recurring global effectiveness our in accelerating is and recurring have $XXX United furthering contributions. with strong. We've to of of total our first USA joining revenue Mark. billion and organic subscription-based roughly model Blackbaud Charitable thanks organizations continued Good that delivering of number industry millions comprising XXXX, with for base world reported history suggests our mix innovative the millions individuals to growth our we're continues digital revenue healthy our and giving institutions giving growth morning, in XX,XXX drive and to around over offer $XXX QX, into a growing total. billion market surpassed the missions in the index increased grow the growth for revenue in and increase very States our XX,XXX pace in exhibit is outcomes. the remains towards X% drive the recurring move call momentum of continues

detail an our provide four-point results, update will and our Tony context on of provide the I'll more in financial growth usual, As strategy.

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raising Advancement consistent quote, advancing successfully highly existing true know, and key purpose-built, this opportunity fund-raising view month, we peers. XXXX, competition, Raiser's the improved different we customer NXT outcomes, through solution sell, specific our drives you focused Blackbaud's our in donors." value. bringing now Our the metrics, a of create after that and existing over user a I'll customers empowering CRM experience, the told their and insight, the and Raiser's our and reporting largely complement all holding planning We colleges needs the to been sales executives in alumni and is us, allowed that strategy productive to and direct sales of of in made the performance with our uniquely flat common Marquette solutions else solid acquire inside reporting. us of and drive XXXX our productivity increased into purpose-built refer to our The compensation poured across Blackbaud. entire in hiring to gives of model, in and resulting across them with payments of and we're Director experience. quantify and and portfolio. is within their foundation fund-raising Senior last vertical, to space achieve our productivity performance per Blackbaud attaching its and That's considerable not account XX to fund giving Services a that Offering growth. products from is customer long half performance retention, develop has University's SKY data, bookings improves have scalable selling released know is University best training, Information ability No increases quarter our this. half We've more proprietary of the continue only In capability comprehensive Edge now campus with sales departments tools set Marquette new it's first to And capabilities analytics, we ramp customer ahead. XXX metrics users clouds and total-solution one against focused in also teams a but plans provide customers across compare This revenue Earlier growing to our driving unique goals supporting recurring "Implementing we've of XXXX. degree on its happening customer, retention year together on value from doing leverage count procedures, laser to improving higher This to innovate lead value benchmarking for our as ASPs, in the and of head and measures, tools their gains driving term. sales and the Edge history, lifetime key cloud first operating NXT second ability the training, by we improves company the cloud customers. half

product Let's $X expansion. TAM strategy which addressable into TAM is through billion and several which billion expanded expand turn We're to our investments. now primarily to to new adjacencies years with have or this continuing third and $X roughly executing strategy, added near for We've our TAM acquisitions, total market. been our acquisitions

Communities, that's an and billion Cloud and a $XXX to the and There now vertical comprehensive Faith-based was alone, This Solution total market not integration product the on primarily point-solution tremendous With faith acquire of opportunities work a Faith last expand we're option introduction position as development. massive organizations is in comprised acquisitions roughly just of for are future for the Faith-based also United to the Blackbaud in our XXX,XXX to the TAM. we TAM the over build States And market purpose-built in in contributions and bring a remain in organically incremental active JustGiving year. opportunity TAM one-third now Blackbaud the vendors. of for organizations to giving We've legacy continued internal cloud a of evaluation through Reeher. and to

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

positive. The it's to and and new edge high-tech in truly offering cohesive infrastructure the model In We customers, global more employees, a to it's that connects initiatives, efficiency continue leading been collaborative, how industry and our a Innovation never into and through to Center, productivity the we we've driving operating for execute creates also not home a realignments. convene, XXXX, consistency community towards scalable It's investments, meeting organizational executing global to partners, better leaders, feedback with strategy objectives Blackbaud space diverse employee align numbers turn across our influencers roughly impact. facility QX, our overwhelmingly action In our before. geographically is we dynamic workplace our which moved like organizational has workforce that the and workforce, eco-friendly new X,XXX in total. and incredibly just class, been world for headquarters technology into

customers. located enhancing of for replace that upgrade highly Our were locations. South employees offices already and into facilities our us Charleston, our expand centrally are closer moving more our our existing We've outside leveraging of to our Carolina The more successfully our and for into and employees collaborative transitioned in our the WeWork offices, ahead office of XXXX to subscription footprint employees pleased six I'm continued modern and and new some key Overall, the customers employees' we're delivering recurring our coverage the and opportunity I'm our is opportunity shift market. daily now productivity also with geographic our beyond. excited towards experience utilization, based of innovation to about to in improve and revenue, optimizing faith-based our us improving and our effectiveness.

it before game true to we our Tony? institutions. detail I call think we greater Q&A. over open for up I'll now these can to turn a important financial for in the be performance Tony changer cover

Today, Thanks, the on our key focus and so everyone. questions. I'll to of financial materials press can get our refer release full for yesterday's we Mike. the to your posted investor to Good detail QX performance. highlights morning, website Please

$XXX quarter on represented higher of basis revenue X% on XXXX of XXX revenue XXXX. an QX second which points an over an was organic XX% is million, growth increase Recurring X.X% of total Our basis and than revenue, basis. organic

services company services in anticipate QX versus We services continued other reducing is continue revenue One-time will declined mix the revenue the and mix near-term. one-time of XX% to revenue, positive creates long-term and on drag represented which decline for for of total of XX% XXXX. the other but We revenue XXXX. significant revenue a and outlook growth total

profitability, is we the account earnings executives. XXXX being And and XX.X%, an on per return versus heading $X.XX. on to performance productivity land guidance sales XXX fully full-year into a solution share mentioned, strong. of important to investment, operating particularly Management XX.X% and XXXX, material developed we're It's our these top basis was million, of $XX until operating We this margin the representing solid to margin point solid that our diluted We ramp board the and within generated internally. second seen operating margin point to line I'll and gross which expect inclusive gains plan XXXX. ramp of sales strong QX is Turning of Church new XX.X% investments out in is note hiring improvement of to half income incremental that XX.X%. to our still expecting don't of which as to-date, in our see we've more XXXX Mike of as new

QX $XX free our statement cash the million. Moving to flow sheet, flow balance cash and was

our innovation and infrastructure, $X amounting to million $X in million investments headquarters and necessary move CapEx investment with cloud capitalized support infrastructure the costs. making our to in primarily in software development associated continued new and We to

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

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

full to million, we're strategy. our workplace XXXX these costs majority million associated expected with activities to the incur the $X $X payback this first mentioned of the $X of We between and In costs that restructuring are million incurred investments of XXXX. of recorded in making XXXX associated $X before-tax through XXXX, incremental years of these two to roughly year, expect in key Turning with XXXX. with estimated beyond part charges future expecting as we annual and an be half $X.X operating of approximately We're Mike efficiencies to initiative. to restructuring currently million but between gain million savings before-tax beginning

the reiterating first and guidance our the half are the year, year year full XXXX, at our low the end of beginning based us now We anticipating of in we're with the at issued guidance ranges. and upon rest coming behind the our for projection of of

still count to Mike sheet, create will count healthy Mike growth given hiring we I'll fuel portion into continuing emphasis business and more associated to execute maintaining is Our to stable profitability, which capital a these and head the improve our continue And we're internationally on our we on UK and heading to second deployment exhibit open growth, the our payments anticipate will growth giving capital of With line expected. coming year. less mentioned. and train the primarily a as We're we note for on balanced offer strategic mentioned we're also execute where business strengthening strong strategy maintain scalability. investments balance to market and return XXXX I'd revenue, which growth the shareholders, continues beyond A sales that that plan, up originally and the than contractual that questions. U.S., dynamics. to with today, our that, to your drive to of and and in the model but like JustGiving which and is predictable against half bringing strong account in board placing executives. head approach that sales market lighter is direct new and business, not is JustGiving recurring disciplined as growth than still expanded exhibiting we've

Thank you.

first Please We go Tom will our of take now Stifel. from question Roderick ahead.

gentlemen. here. chance to for Hey, a question Good morning. ask the Thanks

to So, for for lower kind your the want go to productivity year. through this relative Tony, of end us revenue on I the range guiding of line comments to and the sales earnings

a some you start, you if bit, with again of the the productivity maybe So, that little don't for just quarter. unpack could comments and mind,

of you So, is of if with of guys the extent that this to be or guidance And the why that that's just kind bit coming that side a needs at is quarter the down for payment year? reinvigorate sort to had, the on subscription, the it sort odds little rest is still bookings of to not the predictable? best have done what less

productivity, productivity investments sales track in does get second next the and about our and future. want for where of have count, the that about comfortable years feel the ramp that on to very to pushing longer We've put Hey, as and been front. we we marketing over new to constraint whole been faster. But to of hard on the good on think and that's of and marketing, the a been years, few at and his sales in expect have sales that practices more know, right we've and the sight half. putting we're up. term relatively Tom. from a the Investor processes, not that installed ramping talk that systems, said productivity. our comments, as gain of what we've We'll on plans and to line we're you couple And Mike Day to on sales investments get metrics focused in ourselves Sales last improve flat overall part on And of head we upcoming over productivity set in

for QX our it being quarter said, a we bookings. bookings great a That's revenue, that turn that business again, time obviously, ratable to bit perspective, a most take XX% of at of was this with going of being and we've into from with As had point recurring.

– obviously, big perspective, in So, from low in Overall, see but second the we little we the the biggest the We that ahead planned is would of have to guide. to some be to we elections. range. a seems unpredictable than will where decline side We've sticking prior year The market we piece that of decline and continuing revenue half, of bit UK the really And a services. portion to not that our a a we're compare run seasonality. be been year. what that softer saw with know, you end lot a as an the of in a anticipated tough talked year on JustGiving is then more It thought that a of bit events little QX the drive anticipated. last and continue to the the little to little business that on just would a bit a seems one-time – it rate decline. payments bit as earnings less the that there there's that of of predictable in has and we little payments many and We market as been we've overall had bit seen this of year-over-year little

piece revenue half. in to I some expectations probably the in is and favorability currency a reverse second we bit second in think the half the last drags largely we've that half, expect first had on that the on

Okay. Got shift want about and Mike, of kind it. talk gears here faith-based to I initiatives.

appear to after a at we this how we historically M&A Should think Thanks. going of guys right? different you to looked like go new should a after to accelerate how to you is take this will have new gain about pretty weren't market didn't the of where be market M&A to organically. solution this I in-house, at think an Or gone with perspective, still you via How M&A from look the there this So, in opportunity this or this? a parts the develop it deal as is an relative scale forward? long opportunities markets they kind valuations big

verticals. of a look at players We Yeah, platform, very market this we our for the like all Yeah. come Sure, quite look did differentiator a is Tom. We the comprehensive wanted we at us. understand do with to key which out at well there.

which the which today you predominantly raising the fund and If we some the And we Management, in marketing. have presence is this design XX fund-raising the modules just once it's live, the cloud, of and, existing market, part built, And that architecture in cases, in by online has look in Church of at financial financials different a they're they new built. environment. part we are

no we We build M&A platform than a that the there's felt better vendors. to XX I one that So, remarks, able And integration. replace system platform a customer single could to was customer in a prepared that buy that standpoint. is just like felt an from having could we we reference mentioned be going my

a much a platform than is to we and the we real we that capability architecture, which customers given buy could though build standpoint. a have different remains. we build is so, all, It little from – expand standpoint. versus better an M&A That this change pretty lot have at in And we does came viable much faster SKY the a it in of of maturity from doesn't to mean of Timeframe, particular a that the in bit the space. TAM, we M&A environment, a just powerful strategy this decision have an a will option, of have a our case. a first way, mean very acquisition of because felt there's of What

to the cloud, one We're space, and adding financials Management. fund-raising. team We Church in sales have a selling this dedicated

early fall have Management Church using will new We this with adopters platform year. the general next availability

Thank you.

of from question move Baird. our to ahead. Please Rob will We now Oliver go next

maybe Customers a any change had deals to on that there Rob. meaningful there a question may have just bit I than longer earlier any And a closed morning. Matt quarter duration? there. no deals were had similarly, company bookings for guess, Was or coming. thing It's history. best signing change The the contracts be I Good Hi. expected? This durations. around is was Lemenager good on question in the I in

the expected. having – the know second than and maybe with deals quarter such the a I if came quarter, earlier any in didn't seasonality Just strong

No almost Hey, one, Matt. at contract on your I change On related eight. mean questions. Mike. signed every three-year And in signed big and It's contracts. some is we average, when to I I we some mean don't years. say average, three

So, ramps years, hasn't count calls the in contracts, the new lot verticals couple talking and all now, includes single buildup and this I've fruition. couple changed coming revenue information common changed. and on higher the coming years. of for three-year pretty global is while the the program, a been plan last earlier like in signed end up of focus systems, the created which much, few last selling about a focused that together, of we in engine Tony on healthcare, we mentioned years stood just X.X productivity head What's our last a that's one just we've to things, recurring of two on Sales compensation

had been on as in quarter couple the ramp year productivity given good performance, just a QX a So, nothing It's we're relatively back years. focus folks we general that that this really push XXXX in head combined nicely. a been We we've seeing our because productivity going XXXX, on to in productivity, of massive the half kept we're and just resulting, so working in ours. And program for really build productivity a and of fact of in it a count the up of in and in margin is resulting year-to-date that big has added flat XXX sales come well, unusual.

there sales That's Not be head to might roughly is of but looking helpful. on half And if looking for folks into in XXXX? add Mike. XXX in there number, ramping back count, and of what year the Thanks, it any kind of an were ballpark? the exact that XXXX-XXXX, what

mention but going fast numbers. because have as time to total how Yeah. done than not it's is, because know, a not in of hiring. out aggressive We we're of aggressive mentioned program problem We're year, to K to haven't head a lot a don't not it's than you we've it which I publish And folks more had on rather historically, but the the number at a the what the we aggressive historically. lot finding because got an break any dynamics K, next that we've based going again break which And call we more when we program. working I'd It's on we want you will of count there's a we of give with, hire. talent, be can out in give but that number had

to our expect little we'd to Day... a insight give upcoming And at that you Investor more guys

Yeah.

in talk longer plans detail. those we'll about ...where term more

Which is October.

Thank you.

go our ahead. from of Blair Justin move now Please question will We next Company. William & to Furby

for through Hey, to head, running I concise. so first on guys. thoughts guidance. guess, I'll Tony, you try Several maybe be my the

the how Just revenue of to clear, versus changing recurring of be in is that the of recurring, on sort lower side, of the much non-recurring other? your revenue and end terms and view

we've Obviously, Justin. not revenue, We're is Yeah, the only guiding We're services mix. point. that. seen. so give right that total I this There biggest now specifics can't changing drag. to any at is a One-time

to last I think year year, XX% off and we're versus XX% QX off date. QX

is Overall, events, softness the the maintenance that recurring unpredictability, subs payments good. we've like really and the I and the softness be there numbers in acquisition. drag. we that, kind UK some last some And then of year one associated That is portion timing really look So, in a JustGiving earlier, big said, like market with about of recurring seen to saw talked continues revenue. of

Yeah.

So for...

I But most that's about give the you can now. right

be for from (XX:XX) to Tony, similar growth (XX:XX) growth this here should margin what quarter it organic – similar are organic (XX:XX)? lower? for the So, the or organic rest Like, or the be on, should

Yeah.

guiding not getting any total longer. and granularity. organic not the guiding that revenue We're Justin. to only Sorry, We're

going overall good at the be can has we're one-time and end, acquisitions recurring you you've that got what knowing see on the low think look at their done think full take year. what to the into estimates you'll I that you the guide And think impact on and back side. I and fairly roughly on

that. you back So, able be should to get to

you. Thank

our next from of ahead. Rishi Jaluria to move question now go D.A. Please will We Davidson.

that is acquired Hey, mean, technology. an side, for place know on mentioned you internally all my enter. accolades I faith-based from as solution Thanks colleagues, mostly opposed developed I this the taking questions. an guys. again to the it's to Mike, exciting

applications portfolio, is reach alongside is churches? have for existing to follow-up mostly you in maybe this And hiring there and And then, rep an and to modules products of of terms of element In retool been that, or brand-new for what able incremental applications appeal you've that the sort sub-vertical? is sales that that have necessary to a Tony. I

Sure.

of digital using NXT a NXT like customers financials. for higher Luminate analytics. of and ones cases, also fund-raising the lot faith-based payments there. some larger Edge Raiser's have solutions already In been the some couple And end and for and those customers. products and market, add Financial Edge a a things So, In would marketing, have we

customers a core that the the faith-based that multiple our modules the of markets, those the platforms. have solutions sell of from existing sort in built SKY are in XX So, of using we operations church. we've scratch brand What lot new modules using are run platform we

with added analytics. schools. equivalent modules had ago. heard the of build when like through built. of but the is if an need very so operations and you deployed don't you So, us reporting, years, we it and that able a SKY. run where there. to digital churches, that components we've lead, because payments, That market you They go because and run are and are will, the is talk already over SKY, it e-mailing, traditionally marketing, And of existing you financials, built you've and the it it scratch be the that user reason the K-XX think about This do significant in four and start can over a is fund little a and raising, the solutions fast was in years the the acquisition experience that we're lot from we to And and in

integration there no work we Raiser's SKY, is are that fact in is are fall. those are brand for early inherent mode other will in up these because products live, And to those signed because Edge that that to or do, modules on be SKY. with when they're already integration built already from built to scratch, XX in in customers NXT them Those SKY are and the new. So, this adopter are we integrate churches

productive that modules scratch, build very solutions, new XX to again, way from churches. So, run built the

payments That's And you helpful. about side, mentioned when the you're that... Thanks. Got Tony, talking it.

I think question... your second

Yeah.

ahead. Sorry. Go

I was add. going to Yeah.

Your second question ramp. again was around count sales head

not Some but it. of the faith-based, for ramp all is of

Some our in and of the it many performance. board is of our year-to-date improvements productivity verticals across given

going the sell vertical cloud we now dedicated that a team to whole solution. again, faith-based, So, have are

we'll markets in well. but other as there ramp will We ramp

Got hasn't it. mean yet And, you JustGiving extended market. the U.S. Tony, Thanks, to Mike. I from that mentioned been UK the

that in has extend feels Given back the acquisition changed been to Thanks. that the closed pushing or has it time take ago, led always has plan of this that like it to amount market the of about anything months maybe would expansion XX and terms timeline? that what geographically

actually was That No. our with Yeah. timeline. in line original right

the all board. to got had build right do. that the We to product work work You've infrastructure itself. bit of on a There's the to of and get for folks on quite do

processing all with build to our side donations, products. of the integration relationships some the got You've on the other

in ready get big of heavy there's to be it a the done be lifting So to a behind U.S. success quite the to bit scenes

give in certainly what our in product offered value it our And coupled U.S. we'll focused other a availability. the we'd being bringing XXXX be to to we're existing So, UK, of tightly launch in kind set. expect other our be a more the in more it with be here different would in to manner with approach will on than that it customers that And integrated market general much different more products

Thank you.

Evercore our Kirk Materne to go We will question ISI. now ahead. Please from move of next

Thank Kirk. Peter my Levine for you very is taking This much for question.

two just So, quick ones.

decline partners? more is of to expected that The off services, due first kind that to of more in one handing is the faster

We've Peter. It's our don't how a that's long Mike and three I that's that on for into in topic watching you've decline talking – built been years services been know or Hey, Gianoni. about but now, plans. us, one-time

little pretty license services fully over now revenue services by in recurring for don't the is going that the backwards years, three we is forced a have the Our big and increase implementations. fact cloud, and in been has last a actually we're which XX%,

margin lightweight So, it's last of the in the same services. business the time period, sort services in almost At years. tripled we've three the

So, of it's the of plan strategic the company. part

QX, thought. To So, XX% it's we down bit than a a faster in little we Tony's down point, more little XX% down year-to-date, it's anticipated. than

that which just grew again, bit shift of drag X%, organic a growth. So, of we've in it's organically revenue, company. a total at on the it's made company But the part XX% recurring

part good so, planned, have than I fine become And of we're little It smaller it's with. – news feel and bit revenue. Tony both I that feel total a faster to a the and happened which

you're bit partner-driven you kind one-time less quite a of of we I'd impact networks And then, VAR seeing customizations, expect the We for things. for really the will that a with call, that, do need that's we to know, about business. really and to Peter, it's add not our our last recurring. secondarily, The build so those Mike's got good cloud, moved of to haven't of in out That's side partner point, that to a kind up as role then, that not implementations, on us the to channels, moving his opportunity new moving big built future. a focus, we've the for talked growth the today for today. bigger we've impact offers And is, bit Brian

other to of of so, other recurring of analytics some a training one-time. starting of services services And in our subscription kind we're sell and and model some the high-value instead

grow our because normal Those of creating little growth, talked overall are would. recurring so, And shifting revenue bit up a the actually subscription drag about those line. subscriptions also of a we our they last quarter slower than typically that's some on into

So, the impact of that's also part on that a line.

focused well. Yeah. that cloud recurring not going have the we I'll just is it's portfolio one-time, focused with program program that in because on – We're on today. as so focus add predominantly the a partner line have partner

you're exploring? guys acquire that – I you versus just there about or the spaces new are you are that question, mean Faith could now platform. buy other into you Another way build for build guys into the your other even other talked exploring verticals that the

We've four there three Yeah, been acquisitive last years. fairly are. or the

lot quite strategic be so, market, planning outbound potentially to We to means there's of related verticals. inbound new by which And activity. known a of lots adjacency we're so, work including near do vertical

function. ongoing an just is that so, And

team have their time a looking small that spends those all opportunities. We at

Thank ahead. please Raymond you. Brian Peterson go James, from

taking the for question. Thanks Hi.

you something want over within understand, is last logo into two. me could mostly you that quarter on the little of the you new bookings that's I one the help commentary could focus but and to the perspective productivity guys, improved I Mike, a there dive or specifically that's is for or that drove a maybe know improvements? a key from So, bit products really what individual

this you couple Yeah. But don't products, a just standpoint, know. years. We for break has from productivity as out Sure. a been building of

a Just plan recently, and we have comp focused revenue. it's everyone on comp plan on recurring same the

have vertical sales more And so, modules from Also, these of vertical a standpoint drive us for ARR. and solutions continue the drives to drive it revenue. in out bookings as big a build recurring to it's that comp higher cloud we clouds, each

And more as so, to there's because back base well. more net there's for to to cross-sell the new sell customers,

ability generating by of years, add vertical. our we would. and last TAM the – just for Sales to it anticipated results it's the continuation again, we've drive modules couple driving bookings continue And and we X.X to a been program productivity that in so, that of just it's And the in

mentioned the of me, case Tony, the I first is still be know forgive in to I back Got some revenue, year, you are that you but quarter. it. relates there said last quarter, the first to believe half payments low that organic it And, would if this, related the parts Mike. recurring as in Thanks, quarter? the but the guys moving point

did this We the not not going Brian, to say to organic, anything be expected on that low to it. quarter we're update time, last the we guiding at quarter.

stick to have this I'll that So, with at point.

have back Justin, with think you should information, the able be earlier you about relatively I talked we as think closely. I into that to

U.S. wildcard for do for pieces where of on all would we is up, does out on services, and first figure where moving services will the I dollar with to shakes. trying end where this other full be is, point one-time does that currency that year, big question your what the two productivity. the which the the think One the see all to add – then the are as Mike thing I'd to go, want

driving Reeher positive things that very has as nice acquisitions, we've been positive acquisitions. we've on us result continues the One AcademicWorks been seen positive bookings other some they've We've done is well, are good already accretive, and seen which to a and for results really and and of really some be productivity very also.

revenue really key total for QX, in strong just recurring XX% to QX numbers Two XX.X% Yeah. again, and that things me are of at us. is, at organic in related recurring for revenue

you. Thank

take will now of from KeyBanc. Please our Celino We next Jason ahead. question go

Hey, guys. Thanks for taking Monika my question. I'm this for line morning. on the

of to organic about the maybe going how thinking not we ramping I revenue you how back you're and guiding Should forward? necessarily it with revenue faith-based growth of sales and this the kind for accelerate, the what kind are and XXXX, see should we kind about solution. know that? organic year of mentioned of half think XXXX new You but

Yeah.

either adopter to the waiting then, being built general the the and financials my those that example whole or solution, in And customers like Church and with new up prepared For for we customer get whole a implemented is – it's but again, year. things. a cloud. raising and good fund signing fall faith-based, able example couple in to I a implement modules of used early that signing one And for the representative Management availability remarks have we One in customer next for things like now. up an

while take we obviously solutions can faith-based. in believe to given that the platforms up, going the and cloud ramp announced. it's are to accelerate whole platform, new the So, we that comprehensive But a today, available we just

No market, been architecture. have don't game-changer. ramping couple really go the is SKY with one this, be and And head because said, pace marketplace. that platform count will again a this in after for us we years, after can, we of believe I our market So, including given all at head the this a we a of in to allows studying capabilities the that I've verticals faith-based believe that our count, sales we've done as one has

more you Okay. what into specifically go you mentioned little That's kind some or Thank helpful. on bit driving you. detail the then, And of maybe in JustGiving, UK is that? can market a softness

Yeah.

in the the the grows U.S. market and look Just historically not size of UK giving size market. the if nearly you nearly growth UK, general, at the U.S. or the versus is like

events, So, event in And it's particular donations, make it's folks drives market, you naturally bit that have it right? revenue if which softer in too, So, U.S. a to just it's just lot of the also a gravitates general. platform. like driven

well, And out control. so, it's our event obviously based is as of which

is it's predictable Tony that mentioned. more It North drive its that from so, in less and little product bit product predominantly revenue America And that will from that a drives as market. today in particular more XXXX and revenue market beyond,

you. Thank

our other around in again, teams And sales on raising. teams mentioned year-to-date portfolio. markets. That sales productivity discussion product fund it's internationally, our and well. our very our one Blackbaud the really international Yeah. could marketing portfolio side digital doing I've world in side, the in are tell well sales extremely We're that, the I includes around and you much the doing

Thank you.

ahead. We will move to next of Please now from Company. Ryan our MacDonald go & question Needham

guys. Hi,

of in focus also, you done, is XXX,XXX for that attacking with and of to Is new a solution you the First churches Management it Church call U.S. within on about expanding existing follow-up and there have there over and with a sub-segment organizations some vertical the the the target then other U.S. Church select a today the them is or starting the we've XXX,XXX on? you you're Mike, customer question customer target could already that I mentioned on mega in base for side And a Tony. logos? of Management area. there, think in more Mike, work a opportunity or focus first then the solutions some a X,XXX base net

it's both. Ryan, bit question. It's of Yeah, little good a a

churches. a by particular a have of denomination, if of of And as of lot well. churches, these have church a fits institution them mega and many size, might couple mid-tier solution so, smaller type and pick module it's right? many hierarchy they sort different you So, This a cloud all institutions a

all of for example, hierarchy the But denomination, that church. of sizes larger, or Church the then, the larger a fit Church built or financial bit that one the So, will platform. mid-tier new in all all centralized have them would And they're megas their fund-raising might we've modules little be only ones of have different. the Management the a Yet, churches Management. in will

which So, we've also is all and that built of this up down cloud pretty solution them, unique. for scales

church are customers We're sales Blackbaud. for several deployed We model to financials, and to been are new for all marketing, words, in platform In folks focused on that of customers for also which existing, adding we've talking other cross-sell we developed talking base. new management. to the then market last modules: Blackbaud to back what the Management new raising, fits Church go-to customers and years net the fund which years, have net existing obviously have customers potential the

we're both. So, doing

one going So, XX requires to platform, which cross-sell We're the time is remarks, to an to systems I There operating improvements was are cloud just we're thought either been mentioned it exclusive tremendous, be it's replacing doing vendors, that replacing this small No X, the integrator. vendors. single-point there from and response again has XX use, new. integrated or I church XX, we first with and And both. inbound net my a significant not prepared single-integrated and be market one the standpoint. the example single-cloud by in X, an doing is

a space, part well. billion But $XXX It's big donation And the It's as largest get this ratable So, realized I time, to the it's And largest it's to It's is a going donations the marketplace. just market, in going believe in thousand take time on last it's this – take year. the rev churches. cloud several rec. in this to donations right. it's all hundred changer. the segment game of fully so it's side

doing we're what about excited we're So, here. pretty

quick you mentioned... That's Mike. then for Tony, Tony. Thanks. Right. helpful, really follow-up And

Yeah.

...about of far from with the I customers discuss about in, that of go of a guess, Is softness Is is payments softness we've the in the that, could recurring more portion on sort adding or – changes when – say, reform that revenue. the new that a some something more you this detail? tax payments talked little donation module perhaps you thus seen this a or in greater year? volumes the

Yes.

JustGiving, events I of in or there. think disasters it's events of less Ryan, as more, of of market, events things. Unfortunately, Mike and the because or like with UK softness, spoke of softness timing the many just these growth in number are market other to, natural kind

what so, to And of beholden happens kind on that we're front.

The the we side still other thing impacts hits is – all sunsetting. on as we're payment some the products have well, and just it

of and has One old it. with quite our is Sphere payments that products associated largest Kintera bit of the product a

new to We're a good so where rate higher of that kind I drives of areas on now before, as our the rationalizing with or adding. continuing on through add that we're we go can many capability it. good, more that customers about pretty those to look spoken part continued portfolio, churn we penetration we've so we legacy of payments portfolio. And have win front, the as that, kind looks of so, products in we're number Overall, times think for feel the I net of future

the I feel long-term. on And good so,

kind I just of think anything specific not seasonality, that. of more this it's more than

our pretty customers, up ramped with recurring where payments again, of X% win yeah, on all kind results we're adding mean that Even growth with good. nicely, pleased heading. with platform. I'll even that Yeah, larger to of rates organic it's I on, really are the and we're them the going add

Thank you.

We ahead. question Mark will now go take from Benchmark. Schappel next of our Please

question. with in my Hi. your that you who the faith-based to respect principal you taking space? Good competitors Michael, the Thank expect morning. to for see are initiative,

bunch of out there. a There's companies

one Ministry Brands, them several Pushpay. payment-only a of ones out others. ACS. some There's there. is called There's One called called There's is company

And that a cloud. we user dozen faith-based platform our that what space for digital experience and I new this represents cloud, analytics. And in And this the I And financials we just on us single sort just a But companies. and log-on a players. mentioned marketing modules. couple capability. mentioned, core all have have new with platforms and of is, of one all of solutions these they're world-class we already have XX – that the So, which and for don't then represents in what cloud, ID larger have point we comprehensive it's payment in fund-raising built a like going

we an so, and one, to next to want the start can the next another And the one, I with to then institution not want on and I the to a without daunting that do professional turn smaller are displacing ton vendor and process another resources, implementation as services And to a fund-raising one implement to another the of do go meaning need modules, institution contract. and another process and that. have and it's next IT

in few. out just vendors space, of lots them. lot I that a mentioned a of there's So,

church, space. it's And focused and to to are do have And career, opportunity on in that software and their us. the operations. I that. or and to to the It's and a also I've hard again, the challenges big a roll of people up There's difficult These big. this to have space a whole really run operation. lot it's changer for been problems Blackbaud really is customer a really in their big a game their as and So, this improve my the that mission numbers are think see we corporate institutions do – opportunity operating big and that. numbers for for they you I

going be really, so, And is to for the impactful think this churches. really we

sell? they the to or channel helpful. are with direct That's you. respect sold a competitor products And are through initiative, Thank typically Great. faith-based a most

sell. on No, phone. Blackbaud A model, of Mostly, this. it sell. a lot behind direct they're mostly in of the we kind And it the fits putting what do. sell of power a we're direct right? So, we're And with direct is whole a

online lot a very of right? of We cloud that in remember, cloud wrap tech a with this well-run, all talked SKY. and education very will wrap we everything training. business. capabilities for else around have, the highly-utilized this platform power we script, the have faith-based So, I've about the But We'll online those

capabilities which analytics We is will add our here, whole space. unique in this

payments you space, have don't this We part toward When core is a this platform. will that's pointed These new. which cloud, a right. our leverage of we platform, substantial things to build

the We teams a product services that best and and center implementations got call marketing our for a We'll practices. professional we've large will large very product management go-to-market for team leverage and marketing. leverage fact support, very

the so tens and the community thousands cloud right? about tech, just and of So, we cloud market customers to all, we practices. platform a all that space provides, this software, is about online – Blackbaud our faith-based things to around company, and platform we things with the free, but use that's tens online the All is all have additive deployed. that differentiates in I other that the in what also best talked for communities built which they bring and at of what each solution everything those the talk that for whole exist The don't

I'm you and the full the of probably it. pretty power tell again, up towards is pointed can about pumped So space getting Blackbaud

you. Thank Great.

Thank you.

move of Please Kevin go FBR. Liu We Riley from next B. now ahead. will our question to

Hi. Good morning.

versus kind was activity characterize strength logo of that if in you by strength? wondering Just the booking quarter, I second driven was in saw new of of the how you could much terms conversion

deal It's We're multiple solution changed strength really as pretty new selling do seeing selling again, average because to We've balanced we're solutions. logo seeing size organization of a really product-only. actually. get opposed a well. little to bigger We're

the massive. vertical a well new. cross-sell K-XX just over and schools. net opportunity And historically. it's space talked between We again, our to There's and about go-get big. big or lot base XX,XXX or is net yet pretty cross-sell new the that net is was in even scratching surface the existing our just and on then cross-sell. even And pretty just existing balanced So, cross-sell addressable the in not new for We're

our thus So, on focus productivity.

are second Tony, what reflective timing other back efforts the And Management of just into the visibility then, for launch capitalized And of Church it that? more in quarter, year? that just software, development the there the capitalized should Okay. up on half of we is expect driving or software ticked in

the in, of Yeah, total overall what had with our our portfolio results the R&D a means Kev, spend up as focus is you all innovation I ramping about then dollar more and rationalizing talked code, on acquisition, that we've quality on dollars and we're big spending gross which with improving and before.

versus QX and coming had you the having because into taking people think I ramp end off seasonality the holidays time well, as January. it some in up

a has some Faith of cap has products like certainly, these ramped cap little an our spend what for announced of certainly But we've innovation software. on then impact that impact on bit some here So, that building of software.

we to $XX to we what this million ballpark year, a $XX normally had from somewhere CapEx or software the $XX is online coming million. built higher because CapEx of $XX good be the had But expect new $XX That's running, that of a in guided number that bit headquarters million the million year. be our to For million cap million for expected in to be still $XX year. going up lease we to to because full

lot. a Thanks right. Great. All

Thanks, Kev.

you. Thank

We Pat take queue the will of from go Walravens JMP ahead. Securities. now in Please last our question

Pat. challenge is And the taking between if any or organizations had is Mathew you of I drastic education maybe, or those break you there's Thank single facing a you what biggest maybe on Thank Hi. pick This for today? our for difference. one guess Spencer if could the it non-profit you. to or question. faith higher down K-XX

is There's big There's a – this Mike. difference. a Yeah.

– and up quite challenge and view, go going So, through into digital you a is church, which their a focused transformation through from When through, challenges, to from K-XX healthcare, go digital ed. all is a them their really transformation a to is industry higher school, they're it's market, every whether the we're biggest charity, it's help to what a biggest a like it They opportunity, a view right. have different, on. our get our that's

government on all – on of is. that's Higher and faith-based, vertical, a which decades. for those are addressable to to verticals. our some the online and participation is again, keeping going the them ed, care for things they digital market own such as So, mega been its are physical these it's the up different, and opposed and all transformation, from But a is and large of an all opportunity all right? mega it's for a a couple by campus. right, I education challenge path churches, mix different of participation, quite mean are our to view, has have and which focus Those in this coming Medicare, what student have – us. And in to, health insurance, a spot, digital a and is need given that's they the an for

Great. That's Thank helpful. really you.

Thank you.

the like to questions will that are closing As any back I remarks. question-and-answer to Mike there no to conclude today's further in Gianoni queue, would And now, or session. go turn additional for

for Thanks, game and as fully-integrated deploy morning, Blackbaud. opportunity churches a cloud saying changer our operator. you've this a heard commitment a and massive end-to-end is by to that faith the just develop close space, I'll for for

you execute the progress our Tony call. And forward on and next We all look four-point updating strategy on also to growth call. to on updated I I against our as our everyone continue

everyone, this thanks, for morning. your participation So,

participation, call. your Thank Thank for today's you you. That will conclude conference gentlemen. ladies and

disconnect. now may You