Blackbaud (BLKB) 23 Feb 222021 Q4 Earnings call transcript

Good day, and welcome to Blackbaud's Fourth Quarter 2021 Earnings Call. Today's conference is being recorded. I'll now turn the conference over to Steve Hufford. Please go ahead, sir.

Good morning, everyone. on Quarter us XXXX Full joining Call. Earnings for Blackbaud's and Fourth Year Thanks

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

hosted quarter, our the in be I'll we March that call Mike, the briefly virtual by first turn Raymond X, on participating the attend and I Before will Stifel will mention over in X. to investor Conference meetings the at to on team Investors over connecting call turn if Institutional Please these you, interested you're in and Mike. Orlando Annual out With events. I'll to XXrd that, ir@blackbaud.com reach X March during James

Blackbaud today. call market on very strong and customers was you backdrop. much The everyone, was our a for and for the Steve. joining finish thank Welcome, a to year fourth on Thanks, a us what quarter successful improved

Our organic reoccurring revenue X%. grew

generated best over year estimate. years but margin Our also cash year XX% million, We XX.X%. marks the margin was was adjusted $XX finished QX roughly flow, And our million total which EBITDA ever. points free the XXXX. upside was exceeding which nearly revenue flow of up and cash million, best the EBITDA heading our of flow just basis with original Adjusted not XXX estimate best $XXX into cash scenario. was full year, And our $XXX XX.X% free above our for free of one we original

We laid of Rule ago, for Just what's full Rule XXXX expectations. on excited over on the ahead really what XX, higher our a out me of year ended pacing our a journey road X own and at XX% percentage horizon. we at near-term But map is expectations. XX has of to a basis already currency, than we're our the achieving constant points

long-term in XX which aspirational Rule to and X roughly improvement percentage of Combined is to out improvement a basis currency. that equates on acceleration nearly a should with approximately inclusive XX%, a have goals. our to of on strong guidance The X%; our of since financial organic year XX, growth XX midpoint points We acquisition constant total of on expectations in laying relative year be XXXX X for year-over-year this of recent our into our XXX acceleration XX% point just roughly growth approximately further for XXXX, Rule a visibility of performance, another what years calls solid of Rule revenue of in EVERFI; revenue in basis. ranges significant our

also we're of EVERFI acquisition last our year, Given time to long-term our aspirational line strong performance our our goals. the of pulling and forward at achieve end

which midterm big We this original achieve organic goal and revenue XXXX, in year to growth schedule. ahead our acceleration mid-single-digit a several in years is of of expect revenue growth

that and to annually is expectations heightened XX original continue of XXXX high aspirational confidence a Additionally, have in to into XX Rule of on reach. revenue and Rule XX% a we growth for our organic of future ability going mid- growth, for line top goal EBITDA to single-digit improve within sight With line the roughly we on our accelerated now have guidance of adjusted forward. our well

pandemic, growth the current we by are market labor in certainly monitor, our outlook more and in we to of inflation Tony detail the will shortly. the and XXXX front financials While cover long-term opportunities near-term continue encouraged and very are topics us. that our

Our the direct at of full margin year XXXX. in and growth drivers against our out result March is execution successful performance for laid the our session of quarter the and a investor we

started As expected, pricing we're improving year-over-year, our and in-person half initiatives is beginning return. our with revenue to hold, growth the near-term drivers to as And take this momentum accelerated sustainable. events performance in of second bookings confident underway XXXX

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example, and by customers. the shift well of deliver of begin enhancing multiyear to And our journey toward our solutions stable, second cloud centers. on some to operating providers. underway This affordable ability data we our half we're shift exiting this expect For year, colo our reduces costs a while to infrastructure third-party for secure, modernize

way the Another We in big expanding December XX. closed with a is the of core component market. out acquisition of our on year EVERFI our strategy addressable X-point

a in reoccurring available responsibility the that revenue rapidly the now on As Davidson, transcript EVERFI doubles half addressable leader and opportunity and X transaction EVERFI's as as $XX platform, call model corporate overview billion to billion. where in culture, acquisition ESG service short, checked hosted impact and Also total and TAM, over roughly adds a spaces significant, Tom high-quality in advances on large is of EVERFI's January Founder we covered our addressable Investor all a look in accompanying opportunity This the The an position and social Relations presentation we In which reminder, for our industry-leading $XX shared CEO, and evolving team, our acquisition. we world-class high-growth a of that sector. mission-driven corporate boxes market our are market call with the of cloud addressable website. a details.

profile product Blackbaud meaningful a invest leading will margin us social forward for in now combined work Rule back I'm cross-selling pull future volunteering, aggressively also to programs with year them believe give years. our actively joined in be the company ESG technology-enabled Blackbaud's of companies now We market, complementary large and to revenue for improved our be organic impact from also as across a we long-term substantial areas their ESG together, and We're offerings partner program outlook, of tremendous up-selling, to to was of more This being goals pursue a out should UN XXXX form value pull given continue revenue the to span community education our recent years and our going to and to to what for ESG in EVERFI drive As help potential upside combination synergies to integration throughout mid- allows a program, to the there EVERFI significant and customers in of this and to significantly XXXX, in the solutions our line large formalized post communities, be XXXX. months means growth and that grant will making philanthropy. forward sustainable closer our accretive growth, and an the to to is overlap. be margin a revenue. double-digit rapidly and few and will revenue Compact, we of Blackbaud expect accretive They're profile updated profitable, and a be million attractive financial accelerate carbon growth to acquisition, EVERFI's beginning voluntary And time is well. forward. also of a of efforts own reporting, we're create single-digit high XXXX performance coming and complete just XX advanced couple with immediately XX% adding Global our our pursuing our year we neutrality. financial The our highly growing very to customer conservatively big achieving in our confident value to a internal goal for our EVERFI growth, long-term $XXX that year revenue adds with shareholders. YourCause going and very our close. combination minimal sub-X% as EBITDA this estimated which

be good list Companies been for a look corporate social Blackbaud and generate company, as the XXXX, and big in we as talent, our of XX and years high sustainable played to was more America's Employers attract and since EVERFI. ESG Our which a XX critical Forbes mission-aligned, focus America's provide on the few on not exceptional built Chamber in a leader, and on over a achieving staying products, we a world. growth top just top next such is a value towards environment. successful role have included our DNA shareholder employees, Rule is We're has single-digit that into company driving market plan Responsible our of the engine in unique of By organic responsibility business just layered was ago. of progress of that lot a external I advances it's Best revenue midsized ESG and carrying but culture possible turning do in by winning social and recognition, believe Foundation's to to In tremendous initiatives years our meaningful acquisition issues an and to today's every accelerate XXXX advantage we Commerce Citizen mid- a U.S. and as kind. for our model the Most for Newsweek's on And believe retain a even company. expansion is innovation founded We're momentum point America's thrilled shareholders. with balancing companies. and summary, list Award I Blackbaud in it's margin combination companies to showing

in we level, teams I'll Tony I'm capture open that, the for to Our before we're to up opportunities confident positioned over With call it well and a at of executing Q&A. high turn us. Tony? the are front

drove release growth long-term everyone. for sales our rep, the full overall The drive helped of recurring in to Thanks, our our QX investor has and refer year strong Mike, in website for recurring and and and QX to financial continued Today, XXXX, our details per We've performance for ARR performance. QX year-over-year revenue another productivity yesterday's contractual X%. materials financial XXXX our full targets. increase of acceleration improvement press cover morning, and bookings. transactional an revenue posted XXXX seen good growth and strong full the of Please which revenue I'll updated outlook year results

this services, XXX on and We our to in in services plan also in renewal starting minimal year have that of our and drag was of to revenue we're year early bottom growth. a for other see impact. This roughly our Overall, some positive meaningful strong revenue is away and exceeded trends continued total full initiatives rates basis pricing on onetime revenue After full our to the growth 'XX, investor indication XX QX point organic with of revenue shifting out growth. we as year. execute X.X%, against achievable continue the great very growth drivers drag for forward to our full onetime out basis, was last our recurring we guiding what's years impact a strategically full a On session laid year going a expect year performance revenue and and pleased total several XXXX 'XX. from we're in

into carry not an only deliver, half, that We're expected and to second expectations. momentum excited the in did exceeded they XXXX. but results We acceleration our

Moving to earnings.

due We user Our XX.X% tends diluted EBITDA recall of includes fourth seasonal of given be which EBITDA typically execution million, of of and Please spend. to free full fourth original best timing QX considerable $XX and ahead we adjusted customers; again bbcon, our low adjusted to quarter points margin dilutive XX.X%. And a generally margin expansion per the XXX strong our an margin for adjusted gross is our our basis of EBITDA for it $X.XX. foundation margin. seasonal conference, This the year year adjusted forward. we're offered high which the revenue, of Overall, margin generated gross share margin estimate EBITDA of total payments laying the for representing full had an for for margin was earnings and we to combination gross our planned to for quarter was is roughly going XXXX, that our XX.X%.

As we top call, success talent market. continue we to mentioned our labor good on competitive last have a in attracting

in a and on-demand 'XX. to for transitioned will office going successfully we workforce team space. flexible forward, more also We remote-first opt And

resulted addition, as offices. of and balance gatherings statement restructuring office of real the headquarters brings building. employee million in quarter we for flow for the in This estate and South other In Carolina meetings, team That remaining use shuttered our me the and to most approximately Charleston, we'll sheet. customer cash $XX charges our

year-on-year flow fourth million Our a representing of $X was XX%. XX%, free cash $XX quarter, flow increase the margin million for or of free cash approximately a

a beginning floor by increase quarter, of For also XXX free another the well I'll we cash shares the our completed XX.X%, bringing ended repurchases million in repurchases million December, strong a full share at flow, borrowing EVERFI. $XXX we million $XXX XXXX and of availability year, with of was share cash internal executing repurchased following the set $XX repurchase net margin was of that adequate the operating market $XXX capital. approximately we $XXX million of when an continue additional plan of are our during to original In of of performance our points basis largely result Board our to the the Directors amount year-on-year. We to And the and $XXX total opportunistically year. million. opportunistic reauthorized with capacity with our that determine estimates acquisition This $XXX and we free flow shares of note above the debt, share generated quarter of million. company's million on of an have program we the undervalued in replenished

at ratio Our previous delever Consistent capital we of QX, XXXX. we to X.Xx. plan the a less stood and strategy acquisitions, in rapidly with debt-to-EBITDA X.Xx, than at for of calls end

We also opportunities. remain future acquisition evaluating active in

XXXX. Now let's turn to

our roughly XXX XX in Blackbaud an currency includes our press Rule to midpoint we underlying XX% basis basis, margin EVERFI, cover growth yesterday's adjusted of in the Also margin is total release our the of points which growth estimating of points guidance, for of resulting approximately available million is at our nearly included guidance roughly to cash of are XX.X%. of stand-alone constant revenue, and an excluding guidance financial revenue will expected XX inclusive roughly anticipated XXXX on and acceleration adding of To $XXX EVERFI flow mid-single-digit a improvement revenue organic rate. points free high assumptions EBITDA and adjusted year year-on-year EVERFI. our full acquisition in in Our that is XX%, of generate

organic our basis. as we're will closed our EVERFI of XXXX, EBITDA should our expect other XX, upside is similar we basis EBITDA, complete and much, we're and a perspective, well included both contractual roughly with our though drive guidance if from remain them revenue margin to approximately anticipating definition revenue cost drag continued year anticipate revenue. strength XXXX year onetime We inclusive acquisition growth to a is the XX%. of We organic our the From Consistent constant And in a for in growth, organic our of and dilutive revenue estimate revenue drive calls we from our our and growth revenue to recurring efficiencies of likely in roughly we which substantial by revenues, off note XXXX From XXX flow our XXXX, not on total we're We and midpoint to of the owned be year. and growth, expansion expectations. material efforts And acquisition with our margin of our onetime points, organic products full EVERFI growth in incremental we 'XX. our EVERFI an to revenue combined organic of historical revenue interest million integration million services go-to-market with work in of million forma services adjusted tax underway X% add $XX full to debt in accelerated December X rate and infrastructure, entire had $XX rate and in if transactional will in positioned and calculation will come anticipate cash our for I'll EVERFI. $XX our XXXX as as pursue majority our results growth in approximately beyond leveling at XXXX constitutes point and revenue profitability perspective, revenue on expense, recurring growth and other organic synergies. currency. roughly the pro there scalability associated well be of non-GAAP any, consistent margin therefore, additional

Coming on growth year tremendous additional flow. off we're flow in to cash a free in cash 'XX, 'XX. expecting our in Moving adjusted

to Our related $XX of insurance estimate to our cash be for for security net the to free our be flow million. cash Please litigation combined expected capital excludes spent ongoing million guidance note to of adjusted is expenditures previously disclosed incident. $XX

limits for the to associated to exceed of currently provides financial related continue in current potential in We financial from $XX $XX performance. the incurred. free XXXX expect to cash the operating expensed first incident, the not given year-end and our coverage million of security incident of ongoing With could But with line loss cash said, quarter legal impacts. we policy, to recorded In legal 'XX year as Also, contingency of will our and a unpredictability we disclosures also that security they're of relating we insurance a our transparent outlay related security net incident. to be the result measure that the flow adjusted the to obligations the fees for timing believe full our incident. and have million anticipate roughly magnitude of in security fees a the as we useful XXXX,

and margin through has returning we the this than for originally shareholders, well And option for to repurchases. a our including us positioned has XXXX to our the including continue We're accomplish we capital which additional summary, the efficiently excited. executing business sooner to sheet calls combined of adequate capital rigorous plan against us oversight excess investments accelerating in with for also expansion even year goal share management, Lastly, and access levels growth, In 'XX acquisitions, achieve to and Blackbaud, to executing strong will was initiatives, balance capital deployment our strategy, business, identifying against anticipated. more a of of ensuring as company. our strategic Rule a grow XX

deployment strategy I'd to remain a shareholders. up your like line We open questions. to committed and our in execute our way that maximizes value With for allocating the to that, continue capital for capital

[Operator Instructions].

line James. Our of Peterson Brian Raymond the with first question comes from

gentlemen. Congrats,

to So thinking comment your as heard off, pricing, expectations, was inflection a what's you I'm your targets those Mike, and is clear. referenced curious, as long-term forward start loud because how on the I wanted and that? point prior productivity. really about that pulling you're pretty mid- some changed But sales little bit well. versus We of much about market-driven Blackbaud-driven But I'd be it curious of maybe versus

a looking little unpack to just So bit. that

this efforts last back year, fruition. still colo my our Sure, of toward I From executing that finally, quarters. going coming of mentioned prepared close ago had different coming. kind of talked a operating and they improvements are a standpoint, Thanks a couple coverage just end long-range bit. the targets a that the out is multiple up with we're some for events market quite of are data productivity to which well several. into the Brian. centers, of translating about initiatives. It's good remarks, And able We've helps in about year question. sales And pipeline We've that and as it's while. that got talked Thanks. several now, coming almost is opening into in The back. been there paced are we've happening, into they're for price Increase also things. types production. XXXX. our We We've to forward being a pull those combination

a Day executed quite coming well. fruition, So anticipated it's into those out the little an laid combination the finished things at the things stronger over acquisition Investor ago We company 'XX. addition of but has coming top bookings, faster. then line the And QX, got EVERFI year we in the of and great like to that that of driving which a including than year we've in, translates all really a

quite executing things coming those of all well it's been we've together. on So that

positively. lot is solutions. renewal and value Brian, us customer a some Tony. stream many our real very And gives continued well revenue a very, those have obviously, our And We've of we've trend opportunity and seen couple. out there, rates. some into to increase success Online as And focus this significant on I'd customers seen renewal positive we've as put of have getting in on giving, add this trends revenue continued And that well year I then is as prepared cases, we another top of we those cost there's EVERFI. And is well and we it. this have thing said running synergies yet a as think really my with the built to the into plan. of ahead do last already I on quite not work bit which through comments, associated planning and good on get in for expect as upside of some material synergies still rates

Yes.

hear. Understood. just a maybe That's And good follow-up. to

TAM balance revenue growth? in half the your confirm. that the that's wanted is market. growth opportunities portfolio the is like the for look versus be incremental just half assuming existing to the over mentioned of I corporate now I'd your investments today? you curious, but And I'm in and X? corporate now above, or kind last You How's guys it's year what that opportunity the how TAM do you

EVERFI been Yes, fast corporate accretive. strong sector, in grower in for is has sure. It's platform. The We've that, well. to us. grant and in addition resources a is very YourCause which YourCause performed more and invested acquisition really our

grower. a big as our so solutions, half is it's that that responsibility It's the now, fast up well. It's social corporate TAM. a TAM corporate our ESG company makes and marketplace, very which marketplace, and And accretive to

of in we've We're well years. strong investments. several products an got to for There's been a our that. for balance broad a the EVERFI's additive performed really XX to core product continue we and it's And -- pretty And us, EVERFI. So it's company market portfolio. outside

Parker next the with question Our Lane line comes Stifel. of from

Is It's revenue do achieving and Yes. a there quickly base, situation? but Maybe And together the we looking sales some see were EVERFI fairly joint on just those obviously base? to start on teams go-to-market question the what follow efforts customer between talking conversations customer are Brian's of work-in-progress look today? those those to YourCause like What a up you like respective coming EVERFI. the Tony? new this about, start how just deal, should synergies initial

that take We've a talking year. including It's the on been for opportunities sure. last due Parker. synergy That's of Yes, working diligence that, while, I'll one us. about for Mike.

start good really a of areas. One had EVERFI we've the post coordination couple a in go-to-market. close So of is with

that in EVERFI them customers so EVERFI. that. after and there. come the both are customers. also ourselves going models really office corporate There's culture got opportunity integration We've as lot and synergy faster we've the in really EVERFI there's well. We've buyers We've going a cross-selling systems that YourCause solid larger then it's in as and got organized integrating corporate to really really And go-to-market. buyers help functions, corporate a operating of quickly all a Our scale And experience to is little clear and of going upscale overlap, going just then customer that's sitting quite that, well. too, gate together is and we're of IT And the of great integrating There's really EVERFI them, the is set our back the a to well. We're out one company. same between Blackbaud. right cross-sell to operationally sort and go YourCause the

target on do gate, operating we're thought I'd of out so an right of and right standpoint. plan what positive we would we from say And super the

really EVERFI that improvement look Mike, XXXX cross-sell mostly it. there? the in when it in improvement, EBITDA the the of sales of you of the operational referenced form I or heightened simply anticipated Or Got efficiency because changes in does business anticipated that those levels at is of just that the in And come adjusted opportunities?

say EBITDA, from this their that, month. Yes. view I'd a achieved year last that that. improvement about to and basically The that, it took to we

scale So EVERFI of it's EBITDA that we with a you, I tell offer because days as would well for opportunity also with that lot early business.

couple office, that, there's areas, And that even other few think short upside the so covered: sales, And back I I a coming it's areas. term. from a frankly, to already of in ones

Evercore ISI. with Materne Kirk of line the from comes question next Our

I about year or during wondering -- prepared is sort Mike, in focus your this of in that sales couple couple what the a remarks, on the productivity. Yes. mentioned front. of you just in a on of points times for was And

that Just great. add are you there would Just basis any be could changes? on anything

keep year Yes, is We acquisition costs from improving up that have coming doing nicely in lot as year. go this digital There's year. tools a you no opportunity gone have sales lead just doubt. productivity. it bigger market, And automation, there, more to to better investment Customer we will. sure. improve generation of way last A mean, we I digital our well. having plan that on and a this plan to if again and

there well. EVERFI think integration side also opportunity of the We there's as sort on

to conservative there are all EVERFI, I And are obviously Okay. Or you approach to just Is this about to that understood start? sort accelerate fairly on that growth, if of correctly. year? of you to to opportunity guys for take forecasting invest that a more you XX% sort trying potentially

plan accelerate to anticipate Yes. I'd XX%. opportunity now their that That's at that a forward. I a of last QX. have as think there yes, above part why say approach. well there's Blackbaud in did We to They grower we XX% it's it really year, in well. be conservative But

So conservative. it's fairly

comes Rob Our with next Oliver from the line of Baird. question

have what But how initiatives. pricing get the the just of One, two you for it be year. had could some rolling that follow-up. some in we throughout a expectations then 'XX? contributes on could guide the product like I it And how event? throughout across your expect it through Will increase? to those initiatives, already those guys of I revenue And year if this we me. lines product to in Is that begun pricing terms wondering organic was onetime color just on roll set sounds are a the

Rob. too. Sure, this, to start, I'll maybe Tony will add and

So there's one year in initiatives. we put summer first place. the last Frankly, the into started multiple pricing of

So we'll that basically get of full year. year this effect

Another one that's up. ramping started in QX-ish time and frame,

and that of this year back the we'll year So of most in get half. effect full the

So it's X of them.

a It's and multiyear here is a one. ramp the to that one pricing launched in and a coming time. another It's that longer-term Complete product Another that's that's called one that's quite across is And out a product on which well going the a new offering, in we've and longer JustGiving up. goes underway, model we've Cover, portfolio, U.S. take with over proven

underway. ones So there's multiple

be full couple fully All get end this will but effect least them year, at of year, a year place in will the by of this QX. of in starting

Yes.

Rob, from of from modeling year. a key just ones So one last of perspective, full you'll get impact annualized those

areas. on of almost will And multi-years. over other get some of one the sort come the stuff You'll YourCause like annualized impact in and full of

that next acceleration over be high So that get to contributing will towards the growth this helps single-digit years. us several the in

Okay. color. one. a Mike, done getting top service great. for towards of I to been a or could And And job be think guys you line growth line nice Tony, mentioned think growth remarks, have organization. will direct like a I helpful historically But That's think your Great. prepared headwind which And then is really be I just you you've this that for down. cease year, that on you or that Tony, either

Just as or wanted to -- on broader the have services get about, corporate, would business becomes within a TAM now that side, assume important. XX% of for-profit assume, ask a broader being I the organizations, I you to

effort? that, are readiness Maybe external kind guys the to how of for we like next help that, reliant as us year that? the services, of for you hey, you're what's on external where ready this services So more much period, enter going be couple understand

take Rob, that. Yes. I'll

driving halfway a been And general, So the He's a lot. growing through a Success and In network ecosystem that. I couple of the effect Head we would new Blackbaud year say has the it's of last Global hired year. that areas. Customer

growing which one lot. a that's your and services So directly at is question, is partners,

prepared apps. over one talked I our which are one Blackbaud to over Another super Blackbaud and year. code that the I X,XXX got to third-party in think, that's have that integrating building remarks And apps developers customers That is additive the grew, Blackbaud. we've solutions. about is marketplace, to third access important, of my XX% Thousands last solutions outside of

and developers effect of ecosystem of outside another this building. example we're this Blackbaud, X,XXX growing So network sort of in

a Just was side, back that if that X you developer hundred. few years, go maybe

partners, and service adding the making going booking so of Blackbaud well. on the outside there's stickier products to from a that's Blackbaud between our question, standpoint capabilities lot your and Marketplace, that, sales a new as And

from our it hopefully, just QX, will XX year saying, And only on we're in modeling that about drag. services And a others, basis Rob, be a was and to X drag onetime for growth, on overall the perspective XXXX, point XXX about the drag. basis point but

X and 'XX X.X by in improvement growth between on us that not pulling probably just that's points So versus 'XX. backwards

Our question from VanVliet comes BTIG. next Matt the of with line

terms perspective 'XX have from sight upside into of on One, normal throughout that Yes. how sort customers and year I the look quarter maybe guess, interactions you look the a or as and sort and much the wanted you of of, I in-person heading upside overall of sort guess from the fronts. percentage back versus additive events you at throughout the it of an do the of line then to the in And in setting? were how standpoint strength year, virtual with about payments X both in what your to beyond? displaced think at virtual

Thanks. Yes, Mike. Matt. It's

there. virtual on customer how few market things It institution So And revenue to on either type, for quite kind the the a bit. year, depends years, generation. over including institution they their taken grown last things a for have the last couple they've events our of or In additive. goes have depending or of been

first year. accurate. and mix. us have It we'd said year, been last better is half full the the it's of fact that as into be your question, at for this of out 'XX, proved we'll a a to have thing effect second. year, beginning to year that the The more of we going Last big So a year a slow

to Some of we have will year. a is that. is And we components. effect events more But last full much couple of a some this year didn't events that related of and of year, so

change this full year compared So think biggest that's last. to more year-over-year. I It's a of the effect year

what then, both understand and at kind was of margin, particularly payments Okay. gross year as quarter through decent certainly was as larger given still this look we versus was a a sequentially better fourth up Wanted but recurring had growth the this the year headwind And quarter pretty last well. margin it impacting year, maybe Tony, year. to the

the 'XX? into just we EVERFI gross 'XX? what margins we How takes And as and really pieces just of are maybe think look about there? at kind that are So what of puts should layers moving the as some impacting ahead in

several gross a it QX had The margins factors Matt. bit the negative. Yes, to impacting

of with And on the is frankly about over business, as had of on has years. that cost talked that of the we've drag to up trying times tough shrunk One time growth. And several services revenue know, that the significantly onetime keep base we a overall line side you things. the last

and were year-on-year, And I XXXX, that or in or 'XX. so XX% I margin, I the gross negative margin, think, in for at XX% somewhere gross think think, we something, we were XX%

And that's pressure margins. on so gross some put

situation. on that are We focused correcting

by revenue longer much will growth gross either. time to at on a a position lower the expect head margins And so would no that overall number, I related drag we be and we'll in it better into 'XX, be onetime on

improve. impact several few perspective. will margins. be business. margins of will kind higher, to And the you think typically still of business seasonal the QX other transactions, our the on transactions, Growth a And you actually and those, standard stated, dilutive quarter as So is are biggest double transaction and a positive from of when then about payments today a gross

that And will so margins being gross with down. mix up, be

and margins next initiatives and the payment the that on on rolling should Now side. transaction very pricing have year side a out some new over this we're gross positive impact of

heavy continued see U.K. the markets. and to gross of security all we to roll to in cloud, these So make new we've third-party successful so well it, that's in old impact out we mitigates JustGiving move our but security And some pretty investments out lastly, to as has that expect some then margin also pricing components that get margins. which dilution some been to as centers. And these have colo opportunities data hitting gross

I've on positive pressure is, that in impact to trend that's are and those put years, since to time gross of been The lot be for those 'XX, a and start positive and got 'XX. duplicative impact, several first good on going margins, margins. but we've will starting we see data 'XX we ramp, we in continue centers costs, to here. So closing news that the positive won't see And will start in over a all

And should to build for some for you impact forward. so see in models we 'XX nice your

from line America. with comes the Bank Koji question next Ikeda of Our of

A of me. questions couple from

linearity add about pandemic is thinking there perspective, from should of dissipating? First of revenue that the thinking should and about be seasonality headwinds given we a be how I just these addition we mean, sort dynamics? any given the the net of year one, EVERFI sequential growth this

events. not see Koji, I think spikes I in today. will that you seasonality typical an our But that EVERFI. change kind seasonality. QX certainly we to have I see will can't with some to, impact giving that as certainly give seasonality adding our It's on in something result guiding to so we're of QX and and it still would expect of transactional-related a

million kind we're out I will for the of seasonal -- on little seasonality of a it guiding EVERFI think impact some the the hold. still overall to bit. flatten have that addition said, those $XXX That trends So should

at We're going to big right? X%, change big growth to growth, I the last midpoint was over midpoint acceleration going thing of for that the the key grow XX% year. us year-over-year say, total is and of the organic at macro in

noticed in began events. Got return it. deck, 'XX, That to in then I the expect in-person XXXX. And really the about in talking you're and continue to it

about that the thinking front-end in-person or loaded? hearing events? the about think you the What from back-end that of are how for incorporating pipeline guidance? customers from your loaded guide, we out you guys to do the Just events within in-person mean, return there Is the I pace are

the and in April. one's that I'm Yes. for Those Ball are spread year, Chair Koji, Heart of Charleston, helping throughout the there. the still

in-person You've got with with already marathons being fundraising run associated them.

throughout will that as organizations the spread year fundraising events. their various be So do

Got it. Got it.

from too. the about last are also ones from just a kind you growth most meaningful I there. of think which potentially X a growth Okay. them guess, then with me, longer-term near-term XX that There's that from in driver And then thinking the bucket? And of do one potential, slide drivers. perspective

it. on most pricing would are are impact fairly those I in place, revenue. positive framework have put immediate fairly is once say the impact place would new which rates Several We've have first put because replace initiatives having significant. be the and and an the immediate impact, around others -- discounting, some quick to going that obviously, the be very controls on positive. to are an renewal The in to losing efforts impactful revenue in they'll not

those year, revenue on of continuing positive I that And already the plan to last then very year immediate impact and are think pretty very against saw renewal so that think I be of trends we positive half start numbers. we seeing into this second start some

short get the and most those revenue all to are payback and nice spoke CAC there The is of Obviously, front of and in the that and sales, quick. those events productivity to ongoing things longer coming giving, all improvement a all the online increase of little them the thing think impact. tail. Mike term efforts in fairly are fairly on I improvements to on positive are back

of little much to But finish costs rid gain efficiencies of the a think a the That cost I and get side and automate improvement longer. standardize opportunities and take revenue the most exiting centers. some third-party will will those a to are business be duplicative in and term. cloud moving simplify shorter to continuing to like margin things of multiyear data little take longer, project the and and

are ESG that, revenue YourCause well. Yes. as to add EVERFI and sector with I'll CSR accelerators our just short-term and

our session. final to gentlemen, Mr. floor for concludes that back and Gianoni Ladies any comments. turn question-and-answer I'll the

our years and what high achieving Thank believe Rule half strong of a shareholders. XX to is was over meaningful by point momentum XX for We're expansion our margin growth turning a including of the I acquisition up you, a Blackbaud winning XXXX, reiterating plan the mid- carry EVERFI. lot 'XX, combination company. markets and progress operator. into and in few quarter, by I'll and accelerating next of the to fourth including the of just close was balancing of second our I a our for end sustainable Rule strong towards revenue single-digit organic a believe

opportunities teams of I'm level, capture we're well Our positioned front everyone. Thanks, the a us. in at executing and confident are to high

today's concludes This you. Thank conference.

this may for Thank your you participation. at You your disconnect lines time.