Blackbaud (BLKB) 9 May 202020 Q1 Earnings call transcript

Good day, and welcome to Blackbaud's First Quarter 2020 Earnings Conference Call. Today's conference is being recorded. I will now turn the call over to Mark Furlong. Please go ahead, sir.

Good morning, everyone. on Quarter us Earnings joining for Blackbaud's XXXX First Call. Thanks

and are on Boor, Blackbaud's President will Tony open the then me for comments Mike make Blackbaud's Mike prepared will call Vice the Tony Joining we and today Gianoni, and and CEO President Executive questions. line CFO. and

non-GAAP Form refer and our from of detailed contain results call. that recent to on night from measures forward-looking SEC that of Web only non-GAAP non-GAAP financial other actual or results last how is a more those measures and financial the GAAP Please those cause business. for site. more risks. our is could We not on Please XX-K substitution we that our to measures. subject and to our to will issued be note Please in this of filings materially statements comments today differ should in projected. non-GAAP available available refer uncertainties Investor information risk A both presentation and Unless as specified, in for a believe Relations considered representative reconciliation otherwise we measure that measures combination internally and GAAP are most on isolation note we GAAP our press more schedule supplemental release a

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

I'll Technology call Media Cross Services team to Stifel our turn Baird's Conference quarter, second virtually that, Consumer the over Conference. Technology the be & With the Sector Mike. Conference, During attending Needham XXXX Global will and and

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

friends our members know the spouses, partners, to of response. have the or us many turning of are I lines front on family COVID-XX results, who Before

community is critical serve to leadership current take in this minute market environment. decades, nearly the been has serving thank to especially social in want the role I So we Blackbaud for you. good four say a and the

continue around determination while resilience, by be to and times. innovation good social on remaining organizations world to continuity the these own measures focused inspired critically challenging and employees We customers, business our taken shareholders. the during ensure demonstrated by We've

share our as in to We taken This we Tony against related turn continue execute our priorities XXXX the of I'll a actions the initiatives our more and and it against detail. outline the to will plan. then to COVID-XX in financials strong I over morning, long-term success financial start to cover company. ensure had our strategic

being quickly our our for pandemic enact to COVID-XX to our a be with the evolve, customers. immediate began continuing plans of moved employees partner we As strong priority the and to welfare

a March, to effort. our and offices no worldwide In closed global made we shift remote workforce extra with the

changes made that the with global a You've about heard we've has the that me crisis, and a talk haven't business, we transformational scalable a created beat been operating this missed and operationally. tested model lot in has

home us support every high the as virtual continue and organization come continued didn't immediately all of from global employees and notice as just level over difference structure day. to of last our have Our if to allowed into internal years several IT a perform. Customers go a office working the changes they to

to efficient the services continue had mobile It's customer satisfaction high engagements largely scores implementation immediately our fully teams XXs. equipped to in an teams support remote achieve model a into pre-COVID our impressive uptick and an shifted Our customer uninterrupted. already to became call with center. are I implementation been reaching

fact, XX% In project have hours scheduled far. than been of less thus delayed

centralized of enterprise labor-intensive South a implementation to business our teams paying And with of global complex is office, it's back clear with the last portfolio. in spent reorganizing our University now changes of of years off. And offering CRM just month, those several on We and the the are a completed virtual consisting we focus which last excellence. Carolina, successful centers Blackbaud most go-to-market vertical

enhancements in their from both chance of customers hands moved events and person changing to tools fundraising teams range Many needs. fitness postpone expediting virtual planned Examples had pivoting engineering product and new fundraising customers. in respond events live have individuals. been and their our the our to to agile have quickly putting to support We've of to to to these stream organizations reprioritizing

sales footprint efforts, part digital marketing opportunity go-to-market market better in to as efficiency. to enhance software In our been tools we've terms large this we've and address implemented and drive of our our of investing effort,

including made we've to to adapt quickly investments competitive enable The conditions, us opportunities. changing market

ability to leveraging the for on solutions and for pivot a customers and our ensure offer moved continuity new customers' business our changing quickly by our scale differentiator to Blackbaud, capitalize become to opportunities Our these of we've go-to-market has to early capabilities. needs performance enhanced

push to in we the While QX the good well positioned we've able caused some in this showcase very caused social this XXXX, has a remain of half long-term out the to ourselves disruption as as by And second organizations. best deal been for to market. pipeline partner virus leader

good for help our the measures, short-term we've I'm incredibly put how our sales. professionally of and success. our and risen to cost customers control a including remain our company company, of have freeze long-term employees to plan committed Blackbaud challenge across are strong the part proud to personally, the to we as on As hiring teams socially and in

will industry virus. I services recent significant, The even crisis funding, be this pivot cloud need to more for and pivoting of how you of in our releases, for role minimize press Turning and the is to associate for solutions. and models, our Blackbaud move plays We've even combating their the run posed mode. organizations to rely is support into seen they customers catalyst faster solutions purpose-built and organizations example, good technology operations. a at COVID-XX to thrown the to activate I crisis are supporters have good some the to by challenges impacting to Many operations. work our resources on cloud encourage and social customers. look their disruptions their been believe to

While near-term of for schools increased they've to matching Blackbaud the to doors. virtual efforts several forced programs, online half disruption employees weeks crisis establish create funds and options creatively as in an forefront, person March, gift moved and starting virtual galvanized came grant COVID-XX in fundraisers, since switched lobbying K-XX the of classes their events been array volunteering shut the customers to in back for the opportunities. legislation and swiftly occurred

some more food online organizations, fundraising. to attendance provided and over enjoy as coordinating while revenue in lost Zoos, processed XXXX% funding seen pivoting all online content the to narrow have to in-person events offerings. gap need donations Religious increased look support the demand. organizations to they aquariums from online for online have have banks We've resources meet required for given in while drive other provided cultural and increase which surges for

As to have and demand financial work has weeks. leader, financial be for This been continues cloud Financial recent been staff are that accelerated NXT. in undergoing forced Edge industry there the a our from solution, which we home, in global has transformation to digital

has to to Our has standard. for modern, solutions, be at required crisis scalable highlighted cloud markets secure purpose-built as how move several this systems the over the important, are and proved cloud years right strategy last not vertical

customers digital Blackbaud In is to to helping a more adapt virtual and a quickly environment. our critical component and mobilize technology many cases,

using For been productive school, K-XX Oaks parents to Window High teachers example, have our and students, private Louisville schools, becoming move River virtual Open School to Baptist School, keeping like and quickly school able a solutions.

flexibility Baptist After our the making Blackbaud times, transition school technology institute to experience. classroom the Head which quote, simplifying team of said, needed made. preparing River we distance give I decision and from only relied on our the we to so only Oaks it the learning, the online, our Schools best decision As families to use School or solutions during their Not challenging these transition are key. recommendation to transition, the and does It's but of we've is synchronous ever a the

well seeing which In more beyond fact, to the classroom, pandemic. in the technology we're this will use extend opportunities

of compared are last with essential services more some vertical markets architecture, and the of conferencing of used Management being Blackbaud features our to EdTech Learning integrated support solutions continues to Because and moved distance have usage impact serve. virus as year ways System increased drastically schools open our with video we technology different learning. the The times business across to in that XX Blackbaud to nearly manifest itself has

our travel as customers correlated in giving We U.S. which has the the to to Giving the continue close GDP of online I'll remind toward follow decades, continues they market of and crucial to for you trends, to shift look been closely for funding closely many be gaps. donations. can U.S. growth mix including in Giving,

and number XXXX registered in billion $XXX $XXX grown then, again before to approximately was giving X% charitable has time total of XXXX. grew reference, in XXXX same historical annually. Since billion For in Also, period. the the during it declined over nonprofits growing

Moving our back decline this year, had and canceled. processed as trends to by a customers in donations be showed to early postponed events

the since events, in we creatively crisis virtual have many see data. began, weeks and the to in in the However, pivoted this fundraising

of appeals For related tens millions example, combating this campaigns dollars of sharp to causes a seen COVID-XX with support crisis. our JustGiving on raising focused increase platform in has

million the with pounds U.K. is of the and them an the campaign staff support XX% supporters Service in patients volunteers world. to across for caring COVID-XX in for well raised Health goal over Among over million more countries National has the a of rate GBPX,XXX GBPXX than the campaign for one original

this platforms scalable happen. to Our allow events like

and up and to so of the This resilient of examples is market make need. just one philanthropist, good step corporations that support others this communities, this as time social celebrities, many organizations

included Luminate background and Direct our Blackbaud Raiser's to robust and philanthropic high-volume fundraisers. for direct is is ensuring of historic we're and example relief donations grateful scalable. and to Blackbaud Partnerships that Another VP Philanthropy technology Blackbaud deeply Edge told and NXT efforts us, during Online celebrity Relief, on peak for rely

solutions keep Blackbaud's of times. Long trends help remains cloud significantly of we the from individuals accelerate Overall, impact committed help our our highly put toward the and extraordinary modern company commitment entire and who that customers, the economy these generosity those secular help market. institutions to existing Blackbaud healthcare believe to during to safe worker of is will our to the others. challenging social immediately term, COVID-XX in use success the ensures adoption

remote their X supported we've efforts. operation to strategic our webinars own global employees enable to more with capabilities. transitioned with aggressively to a helping quickly business operations quickly to customers, continue of our customers and disruption, as We've digital thousands move of had workforce they and them thousands We pivot

high very new back on and service gifts, our social boards of needs that given through launched teams maintained innovation in standard to community more, resources, to and commitments arose. including We've good the we've philanthropic free entire hundreds to customers Our response a service support. pandemic-specific of and

This market. this and software crisis need put to move We're a on the in spotlight to provider a with like the a critical has partner hearing cloud to Blackbaud.

Lastly, acted With our the we take and I'll to flexibility value ensure the that deliver up have we customers, for call of to shareholders. to necessary our over quickly supporting to liquidity welfare protect it open increased the continue measures Tony and Q&A. to employees we've turn financial that, before Tony?

going to everyone. briefly Thanks, the COVID-XX shift first quarter your our related and before I'm actions questions. our for to up Mike. opening to key then the highlights, line early Good observations cover morning,

the to performance. for detail release of refer press website QX the investor to yesterday's our and our can materials posted full You

of outlining liquidity, first X, and free as These profitability ahead. Please borrowing our will flow bolster quarter, press April we to capacity minimal on on issued note, redeploy reduce the capital cash actions related date and our impacts look but actions benefit materially taken also as we load. debt a had increase that the release to

Turning to our results.

revenue on X.X% increased revenue quarter and basis. recurring of First grew XXXX an organic over QX X%

February, mentioned, We to the to manifest Mike mid-March. the overachieving as know, all and COVID-XX through year, revenue a you had planned in to began start impacts the related good as though,

revenue nature minimal. recurring our the the revenue, QX our to Given were the pandemic of impact of

that would services have been recurring we onetime million revenue in the to and $X other During presented quarter, revenue. historically reclassified

change. performance the services introduced that revenue evaluate offerings typical upon or the to renewal these internally length newly approximately and XXXX our for reclassification XXX process in nature, portfolio, based the process and more basis determination that rate review points the onetime growth of rates. recurring after continual by a normalizing contract related have our are We drove basis organic points XXX This reduced

Moving to profitability.

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

incurred cloud our to effort we we on margins multiyear gross by As the a in necessary shift. service enhance migrating costs you know, our make and continued scalability to leading as way providers, infrastructure we're cloud to the under anticipate pressure public

also support focus model the quarter first and growth Our balance That cloud go-to-market reflect driving operating the statement optimizing our a investments sheet. and the of future to brings our me with margins on heightened business. cash innovation to flow

QX the cash we I'll Our seasonality and remind negative business. free given million, you flow in a are net $XX was quarter typically the our first borrower of that

discussed the call, quarter, QX flow. the in primary on outperformed financial we in was accrual in paid XXXX, and we a during the the higher that year-over-year was this free our plan of driver out bonus As cash decline first resulting

infrastructure $X CapEx making investments amounting million innovation $XX for in software necessary million development. continued support to also and and We operations to cloud our capitalized

capital will carefully measures, control cost evaluating future expenditures. planned our of part we As be

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

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

With We ahead the of array we our economy in company. to now market, our our quickly us, ensure flexibility sheet terms wide will financial acted may is of first preserve manage result uncertainty of this this outcomes from disruption to strong quarter balance the a COVID-XX impact how that great behind deal and pandemic. the have a needed and there

create actions annualized million outlined additional borrowing of over capacity. We taken, $XXX which

quarter beginning XXXX. dividends Board of the future second has cash stock our common eliminated of Blackbaud's First, of with the Directors payment quarterly on

year. our in several measures. operating XXX-K on We until restricted implemented the put foreseeable put of company-funded temporary other the for we freeze with he paycheck future. place will Mike the employee match reductions. his the Second, travel cost-reduction We We efforts. end a suspended cost hiring and nonessential announced forgo

these all for with to equal also base onetime a form of than with And that relief performance with grant. compensation providing XXXX to stock cash awards. restricted as finally, certain onetime a additional we $X,XXX. actions, support in and cash plans have converted XXXX part replaced of we of an increases we a We financial bonus replaced onetime cash rent, the employees Third, announced measure equity-based a merit bonus employee employees worldwide or less $XX,XXX salary stock

addition actions In we've initial should to to we evaluate further taken the they become date, necessary. to actions will continue

we impacts providing of at accurately with not XXXX to financial time. associated is duration guidance inability revenue our and from the Given particularly predict Predictability this for magnitude the potential XX, a COVID are challenging standpoint.

to revenue As with we there areas closely. monitor related are continue business three primary that drivers

revenue, The first is roughly is total contractual X/X of our recurring revenue. which company

school quarter, renewals up of for our and driven third half As we've from falling with successfully revenue a comes contracted billed years and renewal and our recurring term largely is seasonal multiyear year. customer away timing renewals contracts. midyear in onto moving upfront, the base typical them subscription the year-end fiscal high XXXX in for annually the three started our by collections renewal reminder, shifting and Approximately of contract annual

trending far. renewal pre-COVID no ahead To we're and concerns is monitoring and are of which debt very accounts aging bad our rates expectations, receivable and with positive, date, trends our thus

payments. second and well is transactional in us donation revenue, predictable, and non-contractual of is as The number the of campaigns less to marketing category volumes and timing certain as events which drivers, tuition our and such accessibility fluctuations as giving

in by highs disruptions a of quarter of year-end and are QX number approximately in early see represented COVID-XX an QX we've drove sign in encouraging in declines campaigns, close to caused nice weeks, revenue for revenue Though campaigns Transactional as we funding look in volume events held. our gaps. XXXX, typically events to a seen of ways innovative and large is and in form the initial seasonal total The getting which customers online rebound tied transactional volumes. when sharp recent

term. over hyper-focused are teams successfully we this helping online accelerate campaigns our events, around secular mentioned, the stand Mike and giving and up trends long As on think customers could virtual

The third category is bookings.

the than periods, XXXX as in have well impact any and of implementation greater performance Given the recognition we model revenues XXXX. declines expect our revenue bookings much in a as XXXX rule XX ratable will

bookings to onetime would XXXX smallest the to Of categories, revenue tied have services more on three immediate revenue. bookings potential recurring in although impact and impact represent a the

The to seasonally second with fourth being typically bookings for quota bookings quarter low within the be plans. and back-end first quarters is tend the higher our seasonal quarters the and loaded quarterly our given

and pipeline expecting which we fell The this significant point, on Looking the impacted the are second year. build. in March, crisis. off At sharply by current of a slowdown in we've in currently will depth magnitude the versus bookings seen of a duration shortfall be this half heavily and of plan

enabled financial with customers and offer relief measures burden to ahead, term prospects for near liquidities. the teams Looking ease our to we've help our

of For example, turns impact on that in on delay basis, largely we financing limited on new QX. partnered X% a options XX-day to be have extension sales, the also for sales case-by-case collections will to a for a allowed, offer We've which payment offset new expect basis. cash we

of We've of wide predicting tools. array the and the pandemic been business. modeling a The is scenarios on its impact our challenge ultimate obvious utilizing the duration magnitude possible simulation of

as the are take We with available. our on becomes focus continuing refining to more assumptions information a scenarios

last base revenue revenue that We our mix recurring greatly the durability. years, several diversified over and have company toward reinvented customer shifting improves our expect the our significantly

ensure response while on summary, the acted to have In have health quickly and employees. stability the our in focused critically a economic global and flexibility current of of remaining we and liquidity market had financial and conditions our customers to we success solid hopefully needed QX the

success term With short that, continue to of line as viability behalf your ensure necessary to questions. like the plan implement the the up I'd we will for to all shareholders. long-term open for of We our on in our measures

coming Stifel. today first is question Instructions] Tom [Operator Roderick from Our from

Your now line is live.

for well thanks my and there. appreciate questions. team you staying taking your Glad are that. hear and Tony, I to down healthy

of be your sort business just events seems relative components the of for of customers your to turned thinking business, like in and Mike, would your right some about necessity comments, it question, away. be by and First one particular, structural the the off that to had

bit how can the the alternative from some a out, as with going events? model when ask I'll pieces of get So then start And signs any or impact of how your customers can those methodologies little to and a that? that, I'll of break particularly talk follow-on. about those you they they do in

are seen really walks scenarios are pretty it's things Yes, We've as interesting to happening that physical though, of events In happening broad. what we've a like events, specifically seen obviously some question, rescheduled, we've flip now. and because virtual galas events in and well. not having customers and of lot are not have systems things canceled runs many with our QX. to like the success the that and had In the been your using main, or area events

on We've been the Blackbaud put it's calls. same customer everyone's has has for had playing it been when what's field everyone other platform as sort on amount events. And about from customers the use significant, first Luminate or interaction of have COVID-XX home, pretty our this The in virtual of like customers, number platforms JustGiving our home of working because from going inbound working interesting started. is campaigns meaning talking

and virtual them do to had, how of teach webinars webinars on thousands we've to events. had thousands Some customers we've

and A off are bunch the virtual say them mean, our parts for things of summer are are touch like well. doing QX. basically a events also lot spent of for There off of just on They're cultural In and virtual that as sort closed event if rescheduled now. events I can I physical A that, in right bunch fall. institutions been events some are for So other QX. of of ongoing. the arts have market, physical space, I'd

So we're the we're things given all happening. in, different different of kinds very submarkets seeing

you've to put just under temporarily. way question the freeze hire follow-on that A relative

free mark question you higher had markets. growth that margins just sort hit to of have withdrawn about directional about and about that think and enthusiasm And does But ed think some we offer behind business. to perhaps your initiatives how we I in hiring guidance You the love particularly then context guess as lot be, new of XXXX. what hear the a faith-based. our getting those into in would for the as interest to markets, of guys in Would Tony, when evidence could ought we for obviously, building the to low you've models, some water thoughts

bit back, comes so the hits next you plays ripple wise you whammy Obviously, Would might through being But guiding this there be directional margins you're year, of kind reinvesting year, start next be a XXXX probably about not little asking on revenues, the As little growth the reasonably year to of be bookings it year? want where just as protected model I'm to could reinvest, but of sort effects and lower? a this again. not think lower out some from how great. this double market thoughts a margins for be year, would in

a our teams, as is did hiring In not to last business the up From financial we markets, just we an some COVID-XX ramped to So is about shored related but Some freeze feel have bookings of of good issue talk years, Tony can couple existing in bookings. up, hiring to pretty standpoint, impacting make and COVID-XX and impact. less liquid is headcount, right? we free just big you of related that about that. markets, sure a standpoint, bookings, lot a know, of of the all those, So from sort things we've it's

from and there. financial success and bookings even right? Like arts a the like that advance other So a they're cultural, NXT, Financial markets, a In that move a interest because had from not of to some really and booking for there's cloud our lot platform, challenge platform, it's standpoint. we Edge open, standpoint

We're through struggle we some not are to So this anyway add we revisit sales going to or COVID-XX. as where on hiring put in freeze prudent of next. our it and of quarter was get a to bunch that going a obviously because headcount felt teams of

do to thought it prudent we was So that.

impact bookings impact the quarter the the So next to less an or the in issue much hiring out play that's COVID-XX-related and is of than how going freeze. two,

Tom, And part that. the catch of I'll second

For driven so in business, we've and in is the going to an impact which falling transaction the have seen XXXX, in by already revenue the the more some on in recurring half QX be impact, that transactional off even shortfalls of revenue second will much immediate with March. business

more is other big other revenue and that we've front business, The side onetime weighted much will it's is a hit bookings, toward seen but is in on which great services bad shortfall than news sooner. our recurring subscription The that news.

I for we've of percent that in in so And of have shortfalls is good onetime been the seeing the on Those so It think to margin decline we're several things impact those plan. will The XXXX those business, north pieces onetime XXXX, our of that will least two the on profitability. accelerate think probably are I lowest in bookings they'll as in to long for which shortfalls bookings, for revenues. of both years, positive the seeing last the impact term. both XXXX those XXXX, of amount XX-plus

last actions We've about regardless ensuring that quarters announced don't a one this whether we perspective. from a concern quarter, we year, two set That three were don't later quarters the issue. or in that have we debt a the of have any saw really we and took covenant debt target you

business. can our dollar is the control side. allocate targeting cost the what in XXXX we of and We're on things plan revenue we in we EBITDA of to do the regardless focused generate the very done side what how And an are on of happens had to equal so we've capital

is very we've as shakeout cost of in year. We're new happens. And will rebound our how monitor base to bookings, to what said, transactions effectively, to have Mike our in bit can before XXXX. we what know. cost as going XXXX control But we going whatever adjust through is wildcard. the later that norm structure proven you see we're We'll a

difficult long grow XXXX. lasts be going very in it's if to for pandemic very to this us think I significantly

best flow our profitability to So, I have in for returns cost because think bigger that's and business control, what's and focus side on the the we'll the a cash best the think XXXX shareholders. in least generate at of possible I we ensure side way,

today Raymond is coming from James. next Peterson Brian Our question from

Your phone now is mute please on line perhaps is live. pickup Brian your handset. your

we're starting the just in curious, appreciate if that about of about Mike, working cloud this I But your your solutions products, able solutions? on older current to the terms packaging with modern with thinking more have solutions? customers thoughts some been Any on getting So I you, more to that? fare modern customers that have on versus of customers environment, environment maybe migrating to of with if some all are upgraded better or color. thoughts they I'm creative in some some your in think Any

for synchronous moved that asynchronous that kids to or lessons We've example, be or goodness, case. you they're meaning have talked the with going choosing and market, said, either asynchronous basically, K-XX effort, virtual. little in we had All of platforms." effort that, meaning and our us they're live. your our that's having way synchronous to the school, no And went to interact they're customers that virtual absolutely bet Yes, prerecording customers K-XX "Thank

And we're Zooms integrated all and the and with of the platforms, WebEx all that.

Financial so were And basically make the same with our where our a mobile. to the grading, stories opposite We've the Edge had and management scheduling of leverage schools And the learning our not with decided system, couple same if all home, were were because they we've in in. And heard I coming of they're able the platforms, the they're we've and had, schools kids the also running those. change use to schools a same staying of same just kids they wish NXT stories able did platform. like know where to

physical earlier higher the about a with this this that pandemic a it's to cloud are the to the go drive and integrate going because our from across I've and and I a for there And the it's event interest go much they be that to serve is verticals markets catalyst for we operate scenario charities And believe needed a that to be all to charities mobile-first the in of virtual event. cloud And eventually, cloud-first earlier talked and to question need board, flipping and in this they proven and this that all know that. able to for scenario.

that the the to to cloud, purpose-built systems it. I more going and drive more So we're online Giving in it's to drive go seeing think desire

reclass know like terms what help Tony, revenue impacted clarification potentially just would various that million in from Or had XXXX? for have XXXX that And to Any I we one of on the $X maybe you. was what the from recurring looking components? onetime. in

I have given don't circle publicly that anything Brian. that I've can that. handy, back got So know on We we we've

we stated. I that QX on though, state, that, think is did basis XXX points versus was about XXXX, the as QX XXXX impact what

Brian, QX were to down about lot in If variance basis things that created points. those you about normalize brought were mention, talking late XXXX market. well, as A we're that it services to XXXX to and just XXX lot and yes, took of those retained a the of

right we're well. It's grew So of now smaller, one much were those throughout actually the decline volumes as areas and of big a XXXX in seeing bookings XXXX. the early currently

impact on big a not recurring. So

Okay.

Correct, yes.

question from Rob today from Baird. is next Our Oliver coming

now line is live. Your

then put changes to some R&D, that, had not, I been on products, past obviously guys any R&D currently a the you the spend. R&D I wanted years of made in reprioritization have release was the adding to any think initiatives guys don't if was focused new business. And when just guys the of keenly to about and question, the adding first internally, curious that. over and And of And few the you relative new just talking follow-up mentioned So impacted. I out related touch you have if of platformizing if some there functionality, you

did So we've what home, we really customers things many production, in so from an much R&D pivot customers been given and has to during for in in the things of and And vertical nothing's to interaction R&D is working a has of see. COVID-XX except pandemic, changed. themselves, which the the that being what standpoint, the changed our changed specifically measure all at is like of new main, place features lot things all has really high, What that. though of that also released is like find interesting frequency and great enough, with put But productivity in the into not markets. we higher this interaction recently, at

some added we've some We've things put example, So things for for schools. production a group, bit for management, for K-XX different remote small into churches. little

our that into given we've lot working added so find and gone asked themselves of platforms. in many production lot world our things of and across we've quite a across of a And a virtual little put those many platforms, fast they customers for quickly of

being proactive in across So run a reactive a is and platforms needs, some that's to been short things from biggest help the lot functionality customers. of standpoint really the our different adding change to

as have And the related you year. earlier, question per this And higher outlined, you I two you that explicit going faith-based, that longer-term they pretty are sort guys outlined then weren't on and ed contributors to to of that, think meaningful Tom's guys were drivers. areas be growth those the guys have

wanted get specifically, context, And understanding and think what that? to areas, then sense seeing. hearing you're a how of kind commitment to just for more continued that about So might we those your

and faith-based is for ed be. may of now the in right would I remote-izing, maybe to remote-izing, time seems be mean a think be would I now. higher world pain it uncertainty Conversely

events, some your that relying And brand so these And use curious physical as business, reliant think, your of some to you on events, just are drive also some new build in events areas. guys, about physical I that. guys customers on industry I were know your you of

how thinking to about wanted those just you're understand areas. So

related we the been have us that outside of bunch going for of a things ROI. there's studies is to One

I think a really releases in operating press of one over driving of costs ROI and ed higher a platform. our reducing we earlier their talked year, getting revenue this institution our post-implementation and XXX% about

Blackbaud, got Professional So that. and in of while have really are case we've been effective. there's a lot ahead Services it with the good And really also we Rob, remotely foundation a higher payback enough, and our teams for for interesting studies working around ed moving a side,

customers live been we've CRM enterprise bring even our to And able with platform.

help Services implementation. impact ability didn't our drive pandemic COVID Professional really have our to this So teams

really brand So I got ROI. presence think a good related a good and we've there really to

got mobile faith and think And helps happen so meetings a related that in events marketplace, that we've operate we I functionality Over church virtual new that, as well. some mentioned just new platform yes, the that continue. for them implementations mobile. in will the made I to virtual new market

more ROI. long-term still the in In on-prem faith legacy the platforms. to I of I is that able there's and to think those current think to given earlier I market, And as answered to really the good the is are a seeing on-site, there be as institutions there's well. that move to for and So cloud going opportunity be accelerate think a is going I both situation. cloud-first, ton us mobile-first Those of important, that need be

question Materne is Kirk next from Our Evercore. from coming

is line Your live. now

of how just of of does in perspective going Is just months. perspective? clients that know to platform how I customers all. guess, that that is Or you sort of trying I I to I trying for sales product impact But to your all, you're from that from feature one just Obviously, new are does don't would this. help already? first How for anything a or just with the a guess, to something they're become work the in part Mike. going that it guess it of shift opportunity? the your works parcel direction? you a that's for any understand and you, norm, is if paying next that I'm that a terms is they're virtual around the just really events sort nine monetize I six to for say, just

existing virtual Yes, platform it's because both, Kirk, our events. support

and it So, already like with platform, look integrated platforms payments you our events. at Luminate virtual supports

So, for utilize can existing to them they lately, utilize we've added some just features can that. but help they customers, just and that,

a that's have able For get existing have a to to that, being that are events. platform create either virtual to customers, way folks or it's don't prospective that a scalable to platform

don't So, it's that their the platform those which events virtual platforms. on of side and drive move and customers for can transaction our events, to have customers is business can usage prospective and a business Existing it both. use virtual

that have different also individuals it's that's different, a just like campaign-based JustGiving event as but So it's platforms well, is is available event other but type for we peer-to-peer globally. another than which Luminate,

We the amount a something XX% had from this people U.K. big world campaign in run and of like And that on folks went and particular in it it volume significant campaign, usage and donations recently was transaction it U.K. the a of for countries donated this over all in and viral. the got charity drove the to virtual

platforms it basically and the drive customers can either that virtual virtual So platforms or who happen customers or events that go that existing for just can to activity that fact are customers. existing have had virtual they more for existing have them. events for prospective customers there to physical have for seen these go And the

going bucket seem any you revenue come around a this now you just look what recurring Tony, be more type would the in activity? do going had rates on a unfortunately, on sense of just feel down what's that, then that over coming to revenue to there's to that sense that comfortable depending because trying to that I'm down of And give could services on rates through is lot there like year? lap have keep not of if be that renewal services any of feel comfortable reclassified. this you get Can renewal it on do we're that kind us that, might

So is the re-class prospective.

deferreds revenue any services be out line coming there will going associated were that onetime with revenue forward. through So in any a

the, contracts of nature other moving we're and perspective. Most bill them, any they six give So, there from just are term won't of you that to an that monthly. be of re-classes idea the to XX-month

looks a expect different analytics contract. rates recurring or because look direction. on on the That's you'd services very low they renewal we nature tend more service, typical of software to move than education of lot determined a a the So, why and part onetime-type And also to of a that or they those what like bit have kind them. them been like

because will think, low, I not underlying just that nature rates on offer. it's the They're be So very down the the already renewal of coming of these.

D.A. Our next question Jaluria Rishi Davidson. is coming from from

Your line now live. is

a, go I been had you customers year concerns? options, from liquidity then any duration mentioned remarks saying, terms have sort First, ask, just side a to of shorter-term the financing deals. ongoing customers I've deals on to to in want Then well, Tony, to got wanted any that now in with extension from there Wanted this to are environment given payment where the about of discounting? this understand, move and about that to you move, you talked are multiyear you've b, we single And prepared has seeing changes follow-up.

X-year structured. built The multiyear upfront typically price deals increases the in they're have typically will entire discount how for because a the is

and typical if that's So you're in space. software the

if typically make a discount, lower it give would renewal, you're going of present you each your those offset impact. X-year in increase value years. contract so upfront, sign going which of what annual net discount increase And an we're that be slight for to will than a some helps to from which had you a if a three to that We get price cost

win multiyear one selling terms. of those terms that. the product us. billing are Most year think So new we're an a I again a a in maintenance. typically seen a license we're at advance. for three it's and with toward year win overall, renewal three initial time typically We've and customer our contracts for Historically, good annual year And contracts shift

And renewal years. older to those so we three migrate to and one any year are try from of working contracts

product with or activities time And folks, those be positive, aging less to That the which give of renegotiate will Extension for new dollars multiyear is year, increase to is, for we'll terms. material have renewal us any given up that will they'll either will get we've not and any Thus what and their terms. in seen to customers some be any take ultimately, renewal move think, that for or us. them would set receivable accounts not to us migrate I alarm. will payment in we effect a paying customers far,

at a bad any think be when year. have we Most we'll bad will this increased some that that we was the debt that really receivable opened have debt anticipate accounts do We for expect we that a lower is it, a eye see, churn. What is went into rate, renew why we're pandemic. we keeping i.e., which the may would may more close people on

Although to post. rates we pre expected, better retention than been date, our and actually have

interesting, right doing compared plan. are to And so now, renewal it's even very well, rates

keeping we're so And a on close that. eye

with school I seasonality, months time four a the all portion of end of QX, how renewal and because over front years, on think we've the those things other next early the at us to comes business, of we around and built renewal real timing the the years business. just the is the critical the QX three have for over for large up

at on be we going be so this sense will and a impacted quarter will we'll And really be negative the renewal a keeping if the really close how all end with point here QX. into eye really next the do of good of to rates have at how the pandemic. That and

base, systems customer record. our to sell we of that products are The they

not They discretionary So their platforms. run they're core operations.

have that's they just a So key right? choose point. can't a system to So like this, not

customers. platforms systems record of our All of are our for

recurring right, margins on here. I you've margins Azure is naturally front, the know Tony, mentioned, weighing to on then, migration gross the And

at of and Just and an at margins. we benefit out, factors in But what of gross one start kind migrating see recurring and to factor know there's start I to the uptick does see gross of from that point a terms number in what timing, plateau point other of margins? recurring in

three there's is recurring, one I big the gross largest impacts kind mix. on within think margin of of

transactional will piece to always an impact things business there one. and than on ongoing the that have of we'll so be keep So software the lower-margin the structure, obviously, things, eye of has mix an on of side

we big to new our colo costs data we third-party to and those just drivers, and two cloud between mix you like cost move the the a big centers the our platforms if assume other the constant, all then duplicate have is mentioned of then move over. and Azure So migrate and stays one,

amortization. other software forget one, to don't we want the then is about, And

innovation higher that out faith, ed, And with and we is the getting capitalizing, to now we're and to quite we're the verticals of there's with average, five couple plateaued to now these it's spoke a amortization gets so That years on take building innovation amortization we've over as another innovation. typically. new and out. ramping the of the fact done that bit then earlier, amortized going on all capitalized, two incremental we've that for and that flatten amount of is of of amount The years kind seven kind about

So as cost that's an increasing well.

plateau two that start and years. of increase those in over things, to that flatten amortization think I will the couple out next

So pandemic. going other margin we I business think then multiyear cloud direction, this through from assuming move a is And transition. start the perspective, the to compression back helps continue third-party that getting the a to grow

networks when turn in But and Although, old incremental and live be we several will migrate gear next gear either off the the cloud, product off or new in year start we to years. populations see It stair-step won't entire turn over as each the to improvements overnight. legacy costs those think the the infrastructure data the you the RE and and can that FE the some of old of for out about some for and products, applications legacy will those, centers within supporting maintenance turn get costs of old off licensing networks the and products, the etc. and products

years improvements through several as you'll what is COGS the migrate next stair-step over So see incremental we coming in this.

Our McDonald Needham next Ryan question from from Company. is coming and

live. now is line Your

as my schools higher incentives I'm got that the any tax that as as as pockets just a Tony. you're And Mike. some Obviously, questions. additional Tony. impact ed sort passed, the out to well Obviously, at all, giving follow-up you're but then CARES for first environment morning, some stability good a perspective. of curious see taking around Act. saw that? of you, Thanks, Mike, was and what Mike, for of from I've from a is there, K-XX seeing, and we Thanks seeing funding if for for charitable result an one for tough

that connection. we that hard how are taking that is anything know make sort to I so customers to our advantage see of of translates that, No, that

way before. So, been But we've to done to that I the don't a in know that there's any connection outreaching that. never really to customers Blackbaud related we've

it's has unique I markets. which that to related customers. But outreach what's a to far know I last different exciting question so been us, lot I of to in across of about that, different six this, is advantage had creates a we've level the and that going that different opportunity I of don't of related answered interesting for brand on incredible, we've pretty customers the tens your of as weeks, but had And think forward. of have taken think as a that thousands And footprint a bit quite CARES, not which CARES, be

Tony. And is Ryan, this

they're customer sure make they I think, financial that Act difficulties. the getting two sure to about we things. One, we're at inform for look if our into CARES opportunities making base go

the So, of make that's making opportunity. sure pieces we do, about the one sure they're we're informed

deferral personally Second, of social we the employee the are advantage security something or of. that taxes taking is

So, that will create some incremental cash flow us for this year.

doing. to back is we're pay XXXX something that that's how have and So, And going impact. 'XX that's we'll over to

when giving you tell. tax talk the for on about to think the folks, early too breaks I side, it's

see later we'll something that's think year. in I the

and up, so I unemployment this with year. to uncertainty think market Giving really etc., in what overall the hard is see will it's happen there's much

dividend, years. a about quick the you a available whether but you share a execute number of to of follow-up pulling $XX viewpoint how for just of the Obviously, or Tony, understand choose you dividend Does change million capital of authorization that? execute pulling then terms the you've in on And I for on allocation. repurchase the your had

now of be whatever and we any now, we're really capital. doesn't available reduce as the so The need have that flexibility use that, to we the be uncertainties what's optimal capital possible much dividend And to that to the would on right focus as increase do debt Yes, with, do. of have right impact best our would our Ryan. liquidity the on dealing of our really all use because

do. structure earlier, going we side will XXXX, with most our is and flexibility be do the is capital as strategy into more how can That's capital going when the important of companies the it's of business into spoke become focus And we very of I you norm allocation thing similar XXXX, major in structure the and for adjust so run that's to what different these and lived Mike about crises, our new XXXX the on to I whatever XXXX. our that cost one to

focus now. that's kind our So of right

today question VanVliet from BTIG. Next Matt is from coming

Your live. line is now

you and not certain events the contractual a hard, in open? And are taking that about their arts on where offer in they're the have the more asked. help reduce quite a digging other the a while anything of some of some guess customers I might targeted online. But fees is been Or guess little questions approach door's sort not current that contracts, more guess, as in I areas target outreach, specifically, of might of are manage doors there to are crisis? things giving a recurring their certain to regain way you it's I you half you've from the based deferral conjunction and Obviously, can certain element to that the some question that same guys standpoint, that, subscription of back offering already as talked subscription O on in deeper completely verticals? trying in But shift cultural, the it's shuttered. with a activities virtual occurring, not like them

are not proactively doing we No, that.

do and a combination have usage. of contracted and transaction platform arts cultural we So is and SaaS

is low usage, quite transaction the now. obviously, right So

And things basis. that is on dealing virtual on, with but we're contracted some the there's Although, going same. the a case-by-case

working we're some scenarios customers different our But a in we to help point. all it's various in basis customers cases, yes, So through case-by-case that. at with our this find because them

or the our reached for like floor you. to comments. of I'd back over question-and-answer Thank to session. We Mike any further end closing turn

our the financial react impacts necessary initial to great you our have the to Thanks, our to Tony very on proud to operator. for that I'll COVID-XX and your our continue potential our measures just today. close we to and and standard next updating value employees, dedication and participation deliver protect by business, everyone, welfare assess quickly their on ensure Thanks, customers. increased support on for I'm and high at took flexibility incredibly We customers look of to saying acted our shareholders. our call. and to we've the a earnings I forward employees progress of of serving liquidity

you, this concludes and Thank today's teleconference.

and have disconnect may your a wonderful You lines day.