Blackbaud (BLKB) 7 Feb 192018 Q4 Earnings call transcript

Good day and welcome to the Blackbaud, Inc. Q4 2018 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mark Furlong. Please go ahead.

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

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

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

During Institutional Orlando our Stifel Streamsong. will the attending be in in Executive Conference Raymond Summit James first and team quarter, the Investors

be With and will call We I meetings in turn Milwaukee, City. over Kansas also holding New with Houston that, to Chicago, the York, will Mike. investors

Good Mark. and our initiatives morning, call we furthered I’m to for joining as a everyone, to today. solid Thanks, report and for thanks company success. position XXXX strategic long-term our the pleased finish

the continue XX% towards year recurring recurring that banner of digitally innovation total We pace we with rapidly grow powered solutions which revenue communities, cloud applications advance as with with SKY and researches like scoring Blackbaud Microsoft. higher market, market Forrester, such our management, cloud a partnership XXXX of that to accelerate has serve. existing resource solution lead comprising markets mix our to a the new high revenue and reached us to entirely for continue And revenue enables industry shift new education platform continue faith-based and to transform XXXX, expanded innovation. The a to bring of level and our solutions Blackbaud SKY no development our was our nonprofit we maturity model to IDC. institutions, Blackbaud’s in Gartner joint question There’s is for solution for that marks

in Employer we’ve the with from as practices. progress social our our responsibility, report, responsibility our employees and America we and released initiatives, lasting have governance shareholders. first pleased We’re social create And ever which Top social provides and for insight into In recently our innovative I’m XXXX, value that which in program such our software Forbs. and committed received driving for technology global to national made ethical new Diversity recognition, awarded transparency good customers,

questions. morning, and this to your have lot cover We to want get a we to

the with made started against our get progress growth let’s four-point that we’ve strategy. So

of engineering in a demonstrating XXXX, several our to which the our faith-based in needs is innovate, Church cloud the high this space rapidly that address cloud. first approach. is created We’ve one set No addressable latest strategies Management major We marketing, leverages is and our taking management, in customer proven completely a ability payments our bring velocity our markets. fundraising, industry. in very comprehensive solution financial our entirely which of for together together in and solutions software We innovation The introduced environment unmatched analytics strength technology, our else capabilities. open communities, grow new in and and new integrated four will announcements modern cloud made

We’re platform. their finally built modern comprehensive for they work way advance digitally new adopters Blackbaud provider, product in using Churches footprint can us feedback teams, reduce customer IT SKY platform single our real-time a with cloud a incorporate enabling collaboration who close the is rapidly our today early Church the to transform their Solution from operations. have to Management accountable and solution to

expanded management, education significantly by introducing to learning our also to will alumni inside engagement higher lifecycle This management management, higher comprehensive enable institutions and education the admissions broaden from manage solution. enrollment information one student management, student cloud We content capabilities. cloud tuition complete

with for point is a the cloud experience takes of And cloud made the our solutions predominantly institutions solution a market education enabled to school for functionality. rapid innovation, comprised massive space SKY higher Blackbaud legacy by SKY private education advantage software. deliver modern disparate Blackbaud’s like Blackbaud Just market, user opportunity proven higher faith for experience to us connected with advanced platform. up Blackbaud and that’s this a to in innovation full possible our K-XX extend significantly enhanced capabilities

pre-existing that’s the available start scratch leveraging of power this moved quickly and we’ve at by Our platform. capabilities Blackbaud development from SKY, didn’t

nonprofits. forward of innovation in step our of that initiative initiative in to a needs announcement accelerate is major joint Microsoft, with critical integrated another market areas This mission cloud took also the nonprofits. for We with partnership the in cloud address our across lifecycle investment

financial be through with in another sold partnership initiative, helping nonprofits distribute of of nonprofit in jointly forward for and processes Blackbaud work breakthrough Solutions, is across connected human business a seamlessly track, partner Blackbaud will experience This and and channels is our source, evolving of step will in managing an between Microsoft with their develop, solution jointly measure solution, management, previously and we interesting providing our customers. have distribution. to impact resource industry the innovative software didn’t this effectively will technology development part us advance Microsoft past. core currently a the developed which and an capital co-sell we and that to nonprofit Blackbaud and The optionality is jointly management in for the The a for and suite first the goods adopters. in that resources co-market, collaboration resource early go-to-market announced As solution material called sales distribution

our Finally, technology. I’m Plano, Texas-based in acquisition recently YourCause, responsibility industry excited of leader an enterprise, corporate about announced employee engagement and social

customer hour. as flexible like XXX alike, every an provider Hundreds software chosen donations satisfaction of in and Samsung including exceptional impressive portfolio, an innovative, business over and YourCause scalable companies enable Dell, YourCause small AT&T businesses and $XXX,XXX roughly companies people to retention. with process million have and out stood Fortune along with customer X to

XX have customers. hours YourCause than its volunteer tracked more million and coordinated, rewarded for

capabilities social corporate leader and data that unmatched growth and nonprofit place providing game-changer that’s the social our the cloud for services and with for driving in and highly selling This at Adding global employment for by second good R&D, solutions to change a in differentiated workplace leads both is solutions Blackbaud’s key in volunteering effectiveness. us taken cloud issues. community. customers’ drive strategy sales expertise committed responsibility, competitive industry integrated me differentiator and The YourCause’s and for Our effectiveness intelligence, and our is profit to our teams. combined built engagement software innovatives social cloud organizations strategy, giving to Selling purpose footprint positions for as companies are broader philanthropy platform, engagement is our to sales needs design. companies which transformational a modern, aligned in

strategy recurring value. per more vertical, focused and sales account total and are ASPs overall selling now increase a revenue leading Our by executives on lifetime driving customer solution higher customer, products with

pouring we foundation, cash our half XXXX we’ve to a model, know, and the hiring been steadily of more scalable additional and headcounts, strides than with productive enable you uniform As make second am develop of direct big the sales our in increased roughly methodology process way sales sales of is our which of for the XXXX, more the market and continue investing and over simplify focus share start adding productivity that into trends. our XXXX forward that better we annual hiring. significantly net total logos. to on We’ll XX% highly massive ramping sales second than greater in pleased pace program the historical headcount the by half salespeople to I our year this our adding course and practice. approach going beyond focus and in a refine to to a be will sales new improving better address opportunity We doubled

Library transformation over in with wins organization, the with them the all, over organizations and to customer like selected terrific adding of in K-XX Faith, Bruins XX,XXX you organizations Boston like XXXX customers. sales of to correlations their the that’s Blackbaud I customers, in largely largest hundred University, catholic like our private done but United XXXX, Foundation, a States healthcare sales I nonprofit obviously some choosing inclusive some Dartmouth-Hitchcock like Honolulu, momentum can’t to Clemson really Foundation, K-XX private our School of Bush United wanted cover and largest of Blackbaud, of the in like of of several schools is base institutions, Our higher partner building George schools. part into carry Presidential Portland, with America, plan that We education leaving in Punahou has momentum we cashes sense organization. to one XXX structure had Way [indiscernible] to large growing health, diocese expanded give

both organizational gaining with is advance as joint well, Microsoft introducing Ducks we Blackbaud momentum with like Unlimited, partnership to chose selling with in new Microsoft to Our to their opportunities us objective. partner mission and Microsoft

third TAM our to expansion. which strategy, turn let’s Now

make for announcements, for Blackbaud We’ve innovation. Higher and three executing to Communities, Resource adjacencies for several through our with Management primarily year Cloud We’ve expanding Extended Cloud Faith years acquisitions engineering TAM our TAM expand now, your strategy banner is We’re for Microsoft. until Solution TAM product a with acquisitions expansion XXXX, investments. the introducing continuing organic and Nonprofit Institutions, Blackbaud been which this

that just $X added we’re We’re billion organically adjustable build solution these to our required market. now to demonstrating And not incremental the TAM. introduction approximately able

of acquired adds TAM. also another quarter XXXX, second YourCause, the $X.X day business And the of we’re acquisitions January very and first in which about in recent Reeher performance the our bolster We closed of Blackbaud’s in extensive the XXXX, capabilities. billion excited benchmarking

through TAM stands market over our now development. the evaluation $XX acquisitions opportunities and internal in billion, adjustable product actively and further total to remain Our at we of expand

Our the final business focus strength strategic in long-term us efficiency, operational is success. the position to on initiative for

and our to to initiatives customer is We replace coverage towards existing office more comprehensive our of our London better into through our all Charleston, We our execute and we how locations flexibility, better for to strategy key effectiveness. geographic employee that investments, organizational are workplace allows locations, operating business and leveraging enhancing some operates realignments. footprint executed organizational improve offices footprint. creates office sales new continue our and optimizing In and productivity upgrade Sydney utilization, This experience with geographic Overall, roles. goals as us driving efficiency and daily improving XXXX, consistency for and we us a align to scalable expand a we our more to a and our the meet employees customer-facing strategy needs. infrastructure our of flexible to objectives Austin, productivity model designated hub more

customers cover solutions the pace the greater for addressable XXXX And excited accept we’re of of particularly our and innovation the customers continue significantly We continued reoccurring into to Overall, revenue. with towards I’m by this markets of accelerated market, delivering reaction in our and spend. transformation IT share shift largely the that initiative a end new pleased this in and the and complete year. the have be by cloud business our I’m expanded

financial to commitment for turn our cloud and it industry Tony? the a greater game-changers Q&A. before a Our opportunity performance up integrated open are Blackbaud. I’ll call cover massive detail develop in to the over for for Tony fully we now end-to-end to

morning, Good Mike. everyone. Thanks

the XXXX, of Over better scale. our for future the course and to and customers business, strengthened ourselves growth positioned greater delivered value we

to of profitability mid-point exceed results Our guidance, of website the I’ll year get release we highlights, the exceed allowed of so full the for full fourth detail our quarter questions. financial posted the us and to and revenue details high-end the refer on Today year quarters can to our and ranges I’ll the performance. to materials updated our for for investor updated cash. press the yesterday’s your and both full focus key full

reduce of $X the which the revenue and that declined represented is near a XX% continue successfully the versus long-term growth in services of one-time significant We and million a mix revenue creates quarter our for positive only on to drag of XX% decline term. revenue in mix which other revenues and us QX services One-time other total total is XXXX. company

accelerated are selling shift X.X% a an which organic the XX% represent XXX revenue revenue, our midpoint XX% a revenue, drove is Recurring growth growth and we decline of QX XXXX than revenue the beginning than XXXX. and successfully XXXX, full our XX% a Recurring is and mix basis business, We year $XXX basis. that our an represented professional away which or points is in mix of basis. on rate of basis, guidance portfolio services. represented revenue on XXXX. exceeded represented organic XXX revenue, points X.X% services of revenue versus in over XX% higher updated which total million basis. now exceeded and from total and higher other decline declined services of X.X% this X.X% $XX of One-time from XXXX decline million, organic expectations initial cloud and an We which basis of of growth solutions, delivered one-time on On which modern total an driving is

Turning to quarter increase is QX fourth XX.X%, a profitability, XX gross was which basis XXXX. versus gross quarter fourth margin margin points our of

improvement It’s in operating our our began high of operating year-over-year. Integrated updated margin Both Reeher, end investment per earnings XX%, $X.XX. sales Education XX% to our the innovation year generated full financial earnings diluted margin diluted and to note, per that Cloud operating XXXX. For of an Microsoft, initiative strong point operating and XX.X%, of of our sales XXXX like year, to expansion with guidance. were of over full the an of our margin important adding we was hiring entirely in Higher our was roughly Faith gross representing ramp new inclusive our into is performance which investments the year of We third $XXX basis Cloud, income quarter acquisition Cloud headcount that XX share share and margin million, exceeded full

Moving cash balance the the QX, flow $XX million statement flow. sheet. In to generated and we in free cash

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

year. to landed capitalized CapEx For expectation full in $XX the full year, the which equipment, $XX we for property million for million invested and and software development, within $XX our million million for of $XX

flow due or profitability. to Free to cash compared guidance of full Our increased cash million the free XXXX, flat and which margin full $XXX X.X% million. performance year over of cash $XX didn’t when end year year-over-year. a at range roughly flow was the updated refund XX.X% in our top and for cash exceeded flow roughly of amount pay our received million, the and free XXXX We $X taxes was

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

debt-to-EBITDA ratio X.X closed before we times, than YourCause, ratio this XXXX. I’ll have been our stood a in closed year-end, for times. X.X calls strategy that acquisition capital times. end day excludes the note of would the approximately at the business QX, Our debt-to-EBITDA acquisition first of X.X Having which less at

turn to XXXX. Now let’s

margin million. of to per Non-GAAP Non-GAAP operating earnings of We’re guiding XX.X%. million. share to revenue flow $XXX XX.X% to diluted million million to free non-GAAP cash of and $X.XX $XXX $XXX $X.XX of to $XXX

From expecting the year, services XX%. year-over-year and cash of rate drag We revenue continue key flow the to for our to revenue and of have other year. and several third The profitability roughly development for for assumptions acquisition perspective, to the guidance. a accretive expected accelerate contemplated included, revenue to one-time and to YourCause decline consecutive in anticipate is dilutive the and we’re of be our to

and YourCause is XXXX. contribute our from million excluded million be to revenue, organic $XX will $XX to in revenue expected in calculations annual

the success. approach and taking as inclusion integrate our into foundations year closer we of long-term From offer. profitability and in sales business end the the the to as growth we hires. as XXXX, aggressively the will half low $XX conservative XXXX, We core business for the better our those range, second YourCause guidance, are cannibalize ramp investment year a to position flow a million XXXX incur and in is YourCause corporations of our of hiring with of that We anticipate cash impacted which and in that perspective, $XX some revenue full expense will we million an accelerate to

this the to continue investment to expect We future the of pace business. growth heightened support of

also our the AdSense businesses we for higher We communities another and with with for our announcement YourCause entirely in cloud created faith-based new two in of customers. acquired expanded innovation the We’re investing for cloud education, acquisition. and

estimate software equivalent primarily million development. which Our to capitalized is capital $XX XXXX, the to to for million, combined consistent be XXXX cost is expected and roughly required to expenditure $XX

CapEx headquarters with new decrease fit now a our out year-over-year We’re us. to anticipating global behind

to continuing As against which Mike our mentioned, execute we’ve strategy accelerated we’re workplace XXXX. into

associated incur and been which to largely to million expecting be restructuring of XXXX. with tax restructuring XXXX costs in incurred $X.X through these $X.X the incurred $X.X between million to currently of has remaining costs expect activities before We’re million we

during offices XXXX. estimates consolidate Our of actions to were aggressive reflect the taken more our updated some and relocate

future between tax million beginning $X to $X and expect year XXXX gain We per savings beyond operating in of XXXX. million before with annual efficiencies

expecting of we’re will pay And the XXXX remain minimal with cash rate rate XXXX. non-GAAP Our XX%. taxes in to consistent tax

in $X will Our the million, tax in of YourCause. from acquisition cash flow restructuring of with we’re which business. free impact XXXX impacted be will million, associated investments the repeat accelerated from cash the making workplace refund and strategy, our The XXXX,

a capital to for accounting pay a and providing of will and of debt We’ll QX invest ASC deployment be we new paying continue down XXX Our opportunities. hasn’t perspective, From expansion our adopting and leases dividend, strategy capacity continue changed. for in standards initiatives, growth XXXX. operating

be impact from We asset I’ll balance use expect that financial recognizing minor. P&L per flows will to largest right be substantially saying liabilities statement execute the the impact lease and of that leases. we related The and for to strategic cash to our plan. sheet our against our of all continue close will by

your growth strong maintaining drive And return disciplined up balance With to scalability. to a our approach like to create capital growth and investments capital continue and we’ll to on line strategy our shareholders, for that maintain and We’re that, questions. to balance profitability. deployment execute the open I’d sheet,

you. Instructions] line our your will first Thank caller, We open. [Operator take ahead go question. now Please

Hey, you for good guys. question. morning, thanks Thank the for –

So want innovation, some first. drastically expansion going markets. you’re in after of of And here right of to that I right two so TAM need seem sort big that also time, but markets tackle the pretty some place,

that about little out bit more we sales of innovation some will the getting the it’s to you next this sales one-year love bit of couple given a investment. type as ought think long here even laid to think historical the Or opportunity down this needs as leverage that to hear into given hear out for of I’d to year the year. truly and you ought a one-year as we little a of how about you to certainly an further a these have this And year, in start of sort staying me a suppression expect happen? strikes about to and that margin a think about of that to level I’d and materialize going gap Is talked of the type approach bit you is Tony, And not guidance And to this need of you edge year. years being this below think expansion? investment positions sort facilities in margins. investments, TAM out a so out we leverage about, margin ought we just some little love

really Mike. much and it’s last vertical From – standpoint Tom, I many TAM, know that’s in winder you investment markets an Hey, the we several Yes. have here. expanded our our think, going in what’s of to years TAM related happening by

deals just expansion on in the right And innovation. ed solutions market, important my scholarship need remarks, of new financials announced our been note, providing so K-XX and not ago, faith-based adding And big prepared opportunity. but the essentially already of both the faith-based hundreds platform, well. portfolio, higher higher runs just that about a of market those been And and TAM not we’ve is we’re I’ve schools. that, platform, faith-based. as TAM in churches includes taking is So in universities. really mentioned higher of portfolio into that cloud there of and several just K-XX higher over the for platform we’re that ed, months we expansion is a new question K-XX fundraising one for And in we markets, hundred ed, in to a new and fundraising is financial for that We’ve ed signed management this and that much that massive in your it and now solutions there. just which in and while faith-based. the And in our schools, faith-based, capabilities we’re platform you’re doing pulls what that It’s

and up through expanding solutions one for TAM really long new with opportunities TAM providers lot more stand-alone run many solution, cloud base in software the XX, IT expansions. a these happens to in if so what more XX lot a customer these just investment and and cases, We’re us spend. And eliminate get existing interesting signs

spoke side on in ramp we we us up, historically last where we We started to relatively grown innovation ended majority in we’ve business. mid-year a so K, sales you’ll the up and roughly at up I heads the XX%. margin plan And sales the this growth as headcount XX flat side headcount we so about year of of and QX and from and through the Tom, the of in the increase made sales on sales were then, And things. marketing hit We with on more for perspective, stairstep ended the hitting XX% about QX. net a see

So and of rate to the doubled that future. we kind we’d the continue expect into

The So some of are little revenue see so yet market and impact a as so beyond. bit traction. year XXXX, to those again, there build this and XXXX, later more these half increase will that but expect deals probably I’d as in XXXX closed payback XXXX, but front. in through. of investment seeing to so We seeing late be increase folks innovation board front much heightened investments sales the we of that had those, payback second towards for good just start of a come R&D already being We’ll But the to well. tested maybe on our then in year launching ratable the Innovation year. in certainly much as trained, we’re we more more XXXX starting and solutions on products But and pipelines, this recognition. the Mike we’ll that will as on the see some that late build some more well the out investments, and/or impact investment talked get TAM with new on

business. favorable I a the in So those growth from perspective think will be

strong is side services, prior and one-time before. XX% The the year other year

with actually I of either late to that actually one-time, initiatives that same which see point of a total have help and And we probably growth will think shrink the in or we XXXX/XXXX. this bottoms place our drag kind XXXX accelerating think growth the XXXX. that may out in it from We’re we business in going XX% closer some on I’d it’s year. profile lot in again to And forward, seeing late probably don’t hope start and

all expect opportunity, opportunity then business. should of I from leverage that heightened With we investments, the get leverage growth have those in we better the

stairstep, The headcount, funding other kind thing increase sales in that sales start productive. they’re once the the rate, XX% new should is increases in future this fully of

new to norm, benefits to some able seeing we once be will the they would get the and future I sales So we’ll ramps. fund expect start

have that little over strategy. improved in things a on the other talked The margins workforce optimization, aggressive. more longer-term, script our gotten the We about we’ve facilities

So to of But the take between and for we little end charges annualized now we’ve a savings. year. increased the larger bit expect also our of estimate

So in we’re XXXX from up work, optimization a million the between year savings million seeing beyond. should all start $X we to this which way and annual ramping expected facility’s in and $X

So that’d favorable very be to margins.

We still side also infrastructure are of the the cloud the double on paying to move business. with the

data still paying and for So we’re cloud. centers third-party for our

gain efficiencies leverage business. finish all over that we’re we to as So and just of as well the other in the next things add the transition couple doing years, that should to margins, as

So out margins XX and kind in I’d years. stairstep a improvement gradual expect in of

Great the there. detail jump in in I’ll Thank queue. back guys. you,

Thanks, Tom.

We will James. of Raymond now next from Peterson question our ahead. Brian take Please go

question. the taking for Thanks gentlemen. Hi,

like linearity least and how just into Tony, sequentially it they the marketing to translate investments maybe So, for up that understood much. sales at one I looks expense because sure might make XXXX the the wanted of you. wasn’t I and

quarter? So the there beat of could investments that execution were then I sources And OpEx XXXX? allowed over year. just other of play trying that have we think just to better but margins understand should in about maybe to how the you this guys quarter or savings the fourth out guide looking course those you know the quarterly, through how don’t guys at

Yes, Brian.

was in the year. very I ramped the there, sparked late Tom’s question As headcount on

you would the so as on much have we And numbers didn’t to nearly impact as see. expect

bow year full in start wave that, us QX. So to hit will

see you’ll plan well, continues and Plus then headcount innovation will as investments hit in sales there. us. So ramp our to that

marketing. so more in costs sales investments you where majority that and at be look of the to of and ramp, in in saw you going kind if that that’s the QX to in increase to the the think numbers I So as for the sales continue detailed plan

make kind the did updated record pushed biggest will the QX, so XXXX the certainly pushed much QX piece us of as great did think that really the second end the the and favor the team very we it, some done their be we’ve the numbers a Had we costs heightened prior in years. within job of had basis to that we in had EBIT in team kind hard half. base net when expense in a sure of of hard, everything The second in fourth guide, R&D ability good the the much focused expense points were innovation, quarter. always, being as net a The at of XXX on we of in to just After control there we capitalization. saw I like

have that seen So impact would P&L. of some the in you’d that offset

NXT the And, Maybe that’s it. actually driver the to key few one, wanted my just a been last Got hit pretty growth for over I another you on upgrades. by guys math, years.

As halfway that growth the the going we migration, incremental from think reached forward? point should about how we that opportunity of

Yes.

good been mean, it a and program evolving a to good just program. We keep continues I that’s Yes. be platform. that

if of driving we’re solution several announcement a cloud way made whole will. that derivative faith-based and NXT, the you is fact, months the In of ago church sort management we’ve

So the core bundled level. it’s completely architecture at

that drive it’s really vertical expanded to So, been solution.

based drives the a continuing going expand. to drives the lot architecture, well, and it’s products So really of capabilities now SKY platform the on

you. Thank

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

guys. Mike, products of that it would products to of all morning, for mentioned, out bag the for question YourCause. I million and it’s go-to-market set the align be to think or full of Rob. Matt that Tony be and there needs a $XX done carrying work may for the kind kind a integration on of much bit an later? in Will How reps limited their be Blackbaud’s $XX expand number initial it to cannibalization core Good of million that with Hey, then reps have be I on in guidance year. to little YourCause? Lemenager

sure. Yes,

So, of our is within YourCause YourCause, business required. What unit we’ve business not a means ton a playbook the we’re where used integration Blackbaud. before, there’s is that using

functions. integrate will We the quickly corporate

donations part internal the things that of but so will already another business and adding YourCause The that is team, and just from the the very large for to XXX,XXX the near of in and is very which team it’s team a adjacency, has provided to leadership volunteering, that. sales so added us. was close we’ve their over cost us the unit near And very of a burden company giving expanded much already and YourCause adjacency in cool with have footprint almost a I there a and and global platform nonprofits every gives it platform YourCause my that with in globally mentioned reducing give employees forward and countries. similar And XXX nonprofits over registered in business businesses IT over business We fit if remarks, million over the market, hour. $XXX,XXX on and will, are as you like corporate resources some really XXX,XXX there’s we’re functions, and X prepared their drive

network have a of number arguably customers. interesting an that not reach the big for it donations, more a opportunity it’s and many us, Blackbaud effect are given for received nonprofits of So creates

and really we us nice great near great for investing larger in adjacency So go-to-market a platform, just we’re it’s as a really fit, speak.

thanks. or guidance? all, into or at included rates we follow-up. XXXX could look a as assumption any at that’s guess Thank the is Great, Tony, in embedded in squeeze there quick the the for renewal change I if I you. guidance, XXXX And turn rates

Nothing that guide Matt. we to,

plans, within given have, would on going sunset in migrations we’ve specific with and have retention. So we all contemplated things contemplated no but have just where impacts we relation have that – guidance been there, would that those impacts the the our those and on business various are are normal of to

Thank you.

question take from next go now Please Rutherford James Inc. will Stephens, ahead. of our We

those my Hey, et some Mike provide directionally? changes Do I and productivity. initiatives Mike, per this and for first is billings and of you good territories, the around sort of the big you question what think morning, going you’ve you growth you’re Tony. team. some rep XXXX done? cetera, done has additional you the comp of around structure, sales been a maybe that are And think focus for kind big in expect how with know just commentary

the and several spend XX% IT year Tony year, those the the headcount, cloud and changes mostly we a folks those selling to just mentioned, create last verticals. Sure. several engine, in this the of in us. of years changes start yes, are few as announcements of of sales TAM one in changes our to We Yes, new around last in most number up will. quite hired we’ve of lot a months, a global made And, you if made couple behind really addressable that just expanded

the know, if we’re are over those time markets. hunters have several plan most We from had plans fully changes us. a teams, have now but But, And might focused the are coming comp you vertical base the in multiple recurring now farmers, years. will. done. in been driving sales really And solely revenue. and it’s as back last time. changes They long yes, the world separated for company to So, to logo, are and first on ever, structurally for of behind focused We new consolidate into our you and one

Now and execution new in There’s that’s driving new lots management. continued place, hires. it’s of productivity. Playbook whole a just

So structurally, and productivity continuing we’re continuing add just now about headcount. to drive to done, it’s

implied organic guidance Okay, then, is around And growth question you. XXXX. my helpful. Tony, second for Thank the

and So in recurring growth quarter. the X.X% revenue was in XXXX organically X.X% fourth

revenue XXXX math around like the recurring the on XXXX, seems X% year or guide based around is contribution So what better. YourCause gave doing you full the us I’m declines services and one-time it organic

the wrong X.X% over I’m if that’s me the correct but in fourth there, quarter. So acceleration an

the organic So just curious, fourth growth sort from acceleration confidence that what of you quarter? in implied gives

end just assuming, on. info your roughly to and XX because line, early end I of having in math to in XX we gave guidance is on Yes, some then we YourCause the the up the that decline for one-time kind of lower where potential think of cannibalization

confidence, to think budgeting fronts. and did took different this process a We year forecasting the on we couple a of approach different – the one-time. a I

and really that’s lot to area us of been a tough As hard for know, parts you get a there. right. moving just There’s

cloud, need As we less the to more we implementation. move

less We’re certainly doing customization.

our of less moves As to solution more with third-party cloud, integration the as doing well. they’re sets base other

lot that started front services. pieces to more a and on of So we’ve there’s embed

the also were of to We be one-time in changing recurring. offers that the lot a are past

training and right learn-type RENXT, cetera. to started we’ve with et in FENXT, products, a along So subscription, on a sell stuff of lot the

moving And out so that’s things of one-time to recurring.

affecting take that services So and handle on lot got guide revenue out more took the lot a that approach forecasting good different on recurring of predictable. one-time feel this revenue the on things a that, it a lot the it’s of variability number. are really of that better completely we’ve a Then will a year We to that our side, front.

we place have of difficulties side the been any think had the on the really I transactional business. –

as done approach. and is feel one And the We’ve so The of the investments. process really lot that got right work good. by a I growth our driven well. right taking

good. we’re feel this we the So create. might Mike noise transition through stage Like that said, all and all

based can what and how really productivity, and did ramp headcount monitor ability we we that so very good about our feel closely. quickly those We train do we and how QX good adding And now it’s about improving QX. sales feel in about We we upon headcount. folks add keep to

should productivity, new the processes help I to is all those things going think growth. drive our

investments we new we’re intent counted and the clarification our and upon bottom TAM, XXXX. not added sure those a now the into for to made should based of Microsoft products years for everybody’s make and the things partnership, all be just point launch the growth start organic lead XX and at aware, one year where then plan. YourCause and investments will is year, last faith so to, And this gotten ed have planned acceleration seeing our largely in And going higher

XXXX growth but that growth our in it in get our of is planned for included not organic benefit a there, have will XXXX higher we profile when we in policy. So

Thank you.

take ahead. next Furby Please go question now William & Blair Justin our will from of Co. We

Hey just going back start guys, to migration. off, thanks for the NXT, to the question. Maybe the

play X.Xx think said Xx a ago out maintenance. you us, that. over What the does more Can you recently follow-up a you to bit just I year of for to few and on next of you’re few recently then I’ve like that about through assume a that on years YourCause. And half Tony, that you got to for this lift how and XX% quick little Mike the talked look sort just way remind years?

Hi, Justin.

we growth won’t than more so obviously, through level basis, and We halfway support see from the are growth a of forward. comparative to going

them where of that seeing bell of top over, migrations curve those the Now we’re the and truly The on we’re from uplift. we’re on past still selling still those moving good the side base things. uplift

of the starting programs backside the and to on evaluate now We’re curve focused. more

this talked over. retention I run long about for more converted on focused think and we’ve them getting before, the

getting the if And some on makes potential so versus we XX platform, programs begin on started keep new that them the more to sense; it’s merely years where to to can the versus next focused are move sales, the focused sale migration uplift them we for on more side. that intent so

through on we’re that saw as move I think focused retention. we backside curve of uplift so few the that these with average bell towards start And we do now first decline years, the to we’ll more

migration I programs that think we’ll aggressive more cetera. the see et help with

that a now growth from forward, do organic I perspective we’re compare back that of tougher an think side the So curve. it going creates on

That’s with acquire one company of incremental then, Mike, number this know competitors I in missed thought years Can Okay. YourCause a helpful. the you I the I sort primary YourCause just ago, into the space. you of that And the to acquisition. in TAM. thing just MicroEdge all to one be of the of back

on well? MicroEdge this So in do as of the you platform for what’s invest and terms continue to acquisition Thanks. the you incremental on

its a is billion. that was one Yes. TAM was a The in entirety. against small with And the MicroEdge, incremental product there to TAM MicroEdge It billion. not direct $X.X $X.X was YourCause, competitor expansion

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

guidance. Tony, also taking appreciate that, growth Thanks I something on granularity recurring for the X% so some my to guys. circle to to questions. I the wanted back X% of getting in organic neighborhood next Hey, year.

not past is at I’m the in that this mistaken. market X%, said you if growing Now,

our recurring market? a organic of there. growth or a then subscription follow-up. that are why help still your being kind just got of function converting maintenance factors slower me than dragged And rates Is and I’ve understand, other So there the to maintenance

that on to Yes. play of several of Mike years Rishi, there board. rolled the executing kind lot gives came when we finish is things strategy we’ve a out,

have pieces the platforms of we’re sunsetting business you put to market provided old in and FENXT of trying in more your certainly heightened churn like on the etcetera. against be customers of years. the typically to products, new early the transactional still doing the legacy those that products, to Some and are them will lift the move migration The you’re when because going growth those pull are the RENXT

penetrated got has services, that so replace elsewhere. one-time of gotten base be the a as I you’ve earlier, that got decline from one-time has as off total to growth of bigger expecting the Certainly part more to think was our and Tom’s services question decline. seen a dramatically we’ve And a XX% two answered with strategy, each XX% it, I base, growth that years has we’ve growth year it accelerate prior that we’ve dropped rate in we’re rates,

for base key lot the we number gotten that well stuck to of same the sales has us and a kind headcount. had bigger as as of I think

the that we I the this we late in a So other sales here just XXXX. were think our and piece in strategy last marketing was to investment really in have trying implement lot of begun key of pieces

productivity so sales, once or of strategy. we TAM well doing of growth year think final the the the things, ramp should for we’re get those the of increased I bode last And sales, that and implementation future two all these to of expansion

a think going – spend and player cloud the we’re thing we’ve the new in lot IT – and for product announced in pretty the more than to is enterprise in which The significant, departmental did about to platforms if from covering you before while. because covers those solutions, becoming that products expansion other a we we’re verticals TAM verticals, an a

XX,XXX several me, So a quite the vertical. ago logos. Wish announced customers We’ve was prepared bit. remarks, new our focused the is that just base it our you now customer years team in new expanded have go significant grown case. a over of excuse and got on not also it the not part that sales We we back within verticals, we’ve

company driving new expanded the is then headcount, sales and footprints for bit. quite on logos new the productivity, fairly So focus a launching combo new

Rishi, folks a lot is, so two of things branding the making one a other we’ve bit we’re it’s and these have we effectively stood so with startups, about talked two businesses that up of investments faith new to when until that about doesn’t product this but substantially, a sales although team having channel, out build team expanding you think we launch the second there, our for solved half. we’re sales

higher, wise, product And we get until year. got we’ve get later and to to rec got the the team the rev doesn’t I’m field, the then product in to so new we space launch for got the start trying get, new momentum in to building in

see a just startup. start what expect XXXX in and to we’ll year Hopefully certainly seeing XXXX. But so benefits. And businesses. with going like contribution any not for XXXX huge Much you’d those in exiting you’re the real startup and

thing. add Yes. And one I also would

proof is we little faith-based, talked months market the had a in to have for that prepared we’re announced about think, of schools, doing us prepared what bit my we’ve market hundred of in from in is very just the significant market. point commitment. a ago. my a indication that churches It now big one But said of really, proof what hundreds really growing over the customer a large – I’ll been on As I and come is allowing contractually, – faith-based good institution that cloud a is just a several in solution there permit, in what remarks about K-XX remarks, wins and we success point I

go-to-market sense launch developed quickly you later it NRM year, is share a That’s Microsoft? know I’m And really mistaken, it. but between just like if for guys. jointly – Thanks. potential Got this not then look can Microsoft. helpful to give on and and you the to starts what I us just revenue with solutions

It’s Yes. the jointly developed to and market. jointly brought

they we selling it, will be be, be and together. will we’ll So

initiatives starting we just it to go-to-market supply one one lot have think We that space the be basically management where you markets. education – in now, codeveloping Microsoft, with global going them for the a But with if are to chain higher nonprofit product, about and happens other the we’re large market is profits. ed, product of off

go-to-market both So on Blackbaud, their complementary are model it’s including very like for consumptions. still very Azure Microsoft teams things – is partners, new small companies compensated for us, a their together. to where

an share us when a model, because as Azure, with great to workforce it’s field is model that there it our go-to-market And so consumption complementary is continue a them. for for which And Azure compensation shift and they use. is we revenue we

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

this Thanks you much. your taking two bigger up, expecting terms mentioned, ramp in months as opportunities, meaning these of question. businesses new TAM had Mike. Are build pipeline. – for very Hi, sales of a they standing XX getting of them new had nine sort sort for got given the around out up, Tony what’s sales time? to the ramped is thanks payback as

You to customers. obviously new yourself introduce have to

a you’re on sort get trying fully of they being sense how thinking when to get productive. about to Just

less jobs and phone nine sales ramp the pretty if time wide you as between is ramp. all than gap together. at average, enterprise look It’s Sure. field far months sales a On aggregated as the

don’t ramp revenue two these go they that of of until back solutions, for this The year. live is cloud other half the side even new

take but customers will the while, early platform a and closing we we’re now. now So adopter revenue using speak we deals as ramp

course your for think revenue better assume numbers. and you quick guys took understanding the that we to recurring organic last that. want Tony, the referred just Thanks. on? a time instill last just that of bring one anything And to transactional I – assumptions – I talked one the of the really of of And pause decelerated. year, Okay. I further growth a just confidence that, obviously that. down for Tony. business want on are I new re-cut I then else next get want territories your that revenue some time there some understanding in over to year. Is rate have the be to growth recurring guess you you might helped going because better and guys, sales in there just

to that through we absolutely Yes, sales management there’s – on the been There’s had correct. and some change been marketing work front. certainly

alluded, quite As about really We’ve approach. base went out a process were reps prospect bit We’ll been up years into the largely that to Charleston. changed for changed years. been through back field last of hunter-farmer customer success. the we’d to management process, three that that we’ve working We three or offset over move I the Mike we’ve change in We’ve and territories. on worked that model. whole There’s roles, stood the changed one now. a

opportunity real to improve out in I the start of still XXX there productivity to our the think the We stability, well. be of base. heads ramping this we’re the so point year we and finally be going there’s of additional to as XXXX, more lot seeing existing focus of will think a existing plus reps getting productivity base

that hopes growth more coming So to we there. years have help drive make improvements the high for we over as

mix a tax obviously into a going transaction the any hard of the and fluency, market from but we We of outside patterns. And our side economy, on talked QX. parents growth. other thing as had and these you saw It’s business pulled management gen about not about carried the of overall, tuition, individually, of smart working didn’t had just consumer We on shut are last building three to to we other a Brexit, customers through one-time spoke the we compare year put platforms. obviously in deal next impacts side a market We different direction parody to decisions and of we year, with, all on had and when XXXX, have We put the some year the things positive year in talked on programs make as migrations change those point the we’re we some events. things through other giving number the over UK actually last we reform. transaction a many that those change next The bit a expect here of We to from as lose the still sunsets. lost certainly them year tougher was we’ve just in recurring one to elections that retention perspective over about, you that to back shift are And is and going retention do those. two years. impactful. feature off, when customers. products And we get last and bottom And that’s we the all migrations down as out a see the revenue tough,

And certainly so a as favorable a be growth that’s that’ll implemented also. well. the four as strategy drag we’ve or been on last this three impact years on us over But

from now Co. of you. We’ll ahead. Thank question take Please Needham MacDonald go next and our Ryan

XXXX top of of question it Yes. around sort a that for obviously Good bit mentioned is Mike there number a year and like morning, rough of a of sort Tony. was business My of on and reasons. transactions you

for in transactions U.S. assumptions just expectations business with can with about what As the particularly in U.S. XXXX, when the of XXXX sort that live and business and you’re be how help what the of the looking sort talk – in what and that to the in down building now, maybe should transactions you’re you can giving XXXX going in are

Tony. Yes. Ryan, is this

hand we’ve has consumer giving. trending I on last incidents lower the think what spikes of all driven this and saw. that, the spoke been adding, was the customers, can the hard that of much customers drives And less even donation number and that, average we’ve value from we fact about behavior to update assumption trend one-time perspective that big drive put by had really year an we a that of be of it’s number added platform high of It kind to with in your large the of number customers, guide, the positively. major customers been just part processes, size payments that as we

level some And some so those seasonal trends we’ve and levels. forecasting got tools a at that customer that we and detailed use pretty product

go we so new the out penetration customers all current we’re that rates based of donation the that to time build live of rates And adding and seeing average kind and the and trends and size. upon

obviously we market. and There’s it transactional comes that depending where like sentiment feel good perspective. we good in So the just UK year consumer have things this year volatility in side predict. about from really on more that We just can’t a could

good. feel accurately on – acquisition I as market. We’ve as just for plan things U.S. they’re part was one, possibly this as that a assumed happen giving that year. that So And big will now of we always based can launch, the

of well. launch contribution partnership. team along in to but really some just faith growth the on won’t So in but is good growth rate that with one of and progressing well see hold very in help XXXX of XXXX recurring and a XXXX, that that that provide cloud as growth that huge another timing it expect it’s should and education revenue things then it have up, those front Again certainly time, XXXX, Microsoft ramp areas on would front XXXX,

U.S. point, U.S. in launch we year, the is in to revenue much expected But Tony’s see this launch that’s this JustGiving QX, won’t but QX. the

it. Got follow-up on quick just one And on, Tony margins. gross

you As migration talk process? we partnership continue see there. Should to and recurring as with you about Azure go-to-market with additional margin gross continue side expect to that that this on Microsoft the some consumption leverage

of today, When to you will potential spoke margin gross gross the earlier pieces improvement. drive that guide our margin I to some

our which are moving because and from be little of pressure capitalizing, coming cloud of will positive perspective, we mix. required to capitalize us, gross a really bit day, drag cloud impact So a a getting continue it we so have amortization little on that build, benefited to we’ve data innovation double-play more that the today to out still the margins. of got centers, would comes R&D that our But on an put down the spend to

business, said to revenue of we year, that a XX%. margin our So has actually is lowest our one-time expect – XX% increase dropping, as this to services been that from deceleration we one-time

platform. help So our straight payments of that’s of the on revenue just the depending dependent margins and should or the on JustGiving business lower mix gross type that or payments that transaction whether large payments, prop-up margin has which,

So at do to that don’t come good continue the couple gross we for that able more typically we years of we’ll so holding that the we’ve to foreseeable last a anything else mix than improving margins. pretty but job been and level, future. I’d guide slightly in of could hope and

Yes.

provide jump your And to us. are some just here question go-to-market question related to me gross in margin. with – type was around Microsoft your those because things two Let clarification, and not

not We give we don’t together market Microsoft. pricing pay because standard We go-to-market with It’s have Microsoft team to pay additional additional going We our the I on earlier or in run to reason no that’s our Azure. cost The provide field to mentioned complimentary, discounts. standard gets discounting. discounting. quoted do solutions don’t and Yes have very fees. because credit

connected. not are those So

really we’ll in we’re of Azure, to that anymore business, have turn centers reach into to improve of in moving the time our that leverage have our and back Microsoft’s they less end our future. which us we profitability, market because leverage a it’s market from regard The and reach. over go can today our in great costs and model cost duplicate we doesn’t data So will

you. Thank

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

for you Hi, my thank taking question.

quick couple So YourCause was just profitable? here. of ones Tony, a

than break in out the the guide other don’t XX We to YourCause that anything expectations XX. on

We’ll and as longer good We comments. bit will we that prepared expect and very cost the little a term, business. integrated really In cannibalization front. potentially get on I margins the see flow, I the it be synergies side. dilutive free there’s But the think quickly said some the XXXX, structure that revenue on revenue to cash in both of into

long-term opportunity so see but cash we is margins there, dilutive free our in flow And really and good we’ll to expectation be XXXX.

a not growth it’s an It’s year, counted organic this nicely but growing accretive fast business. growth inorganic standpoint, from

Okay, thank you.

conference back the comments. I like turn any would to for to over closing Mike

innovation made we look Great. finished in expansion. the on I excited call. that in Thanks And saying you with well. on I’m just We and I’m Thanks, progress I’ll everyone close with the TAM XXXX. for initiatives very participation. year forward operator. our objectives next against to pleased updating Tony our our your by progress

call. today’s participation. your concludes This Thank you for

You may disconnect. now