BLKB earnings analysis
What we found in BLKB's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Blackbaud delivered Q2 revenue of $290.6 million, up 3.0% year over year, alongside stronger GAAP profitability: gross margin expanded to 61.3%, operating margin reached 21.3%, and GAAP EPS rose to $0.79 from $0.55. First-half cash generation improved materially, with $142.5 million of operating cash flow and $112.3 million of free cash flow, supporting $110.1 million of share repurchases. Offsetting these strengths, management flagged temporary retention pressure from a 2026 renewal cohort with approximately 40% more recurring revenue up for renewal and ended the quarter with $1.15 billion of debt.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue and recurring revenue grew
- Q2 revenue was $290.6 million, up $8.6 million (3.0%) year over year. Recurring revenue reached $285.3 million, up 3.3%, representing the principal source of growth.
- GAAP margins expanded
- GAAP gross margin expanded 160 basis points year over year to 61.3% as cost of revenue declined $1.2 million (1.1%) despite higher revenue. GAAP operating margin rose 100 basis points to 21.3%, with operating income up $4.7 million to $62.0 million.
- Earnings increased year over year
- GAAP diluted EPS increased to $0.79 from $0.55 a year earlier, while non-GAAP diluted EPS increased to $1.33 from $1.22. Net income rose $8.9 million to $35.4 million.
- Cash conversion improved sharply
- First-half operating cash flow more than doubled to $142.5 million from $68.3 million, and non-GAAP free cash flow rose to $112.3 million from $39.2 million. The 19.6% free-cash-flow margin was 12.5 percentage points above the prior-year 7.1%.
- Substantial capital return
- The company repurchased $110.1 million of stock in the first six months, or 2,398,852 shares; including net settlement of employee equity compensation, activity represented about 6.2% of shares outstanding at December 31, 2025. Authorization remaining was $850.4 million at June 30.
- AI commercialization and adoption advancing
- Management continues to invest in AI: the fundraising development agent entered general availability, with annual subscription pricing generally in the tens of thousands of dollars, and more than half of Raiser's Edge NXT customers use machine-learning-enabled donor prospecting capabilities.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Larger renewal cohort pressures retention
- Gross dollar retention was approximately 91% for the 12 months ended June 30, 2026, below the December 31, 2025 trailing-12-month rate. Management expects temporary pressure because the 2026 renewal cohort has roughly 40% more CARR coming due than the 2025 cohort.
- Leverage increased alongside buybacks
- Debt carrying value increased $40.3 million, or 3.6%, from $1.1097 billion at December 31, 2025 to $1.1500 billion at June 30, 2026, following a $28.6 million net increase in borrowings. FY2026 interest expense is expected at $62 million to $66 million.
- Tax and liquidity headwinds remain
- Management expects evolving state conformity with OBBBA and phase-in of international provisions to partly offset cash-tax reductions in 2026 and 2027, and expects a material impact in both fiscal years. Cash declined $4.5 million to $34.4 million while working capital remained negative at $(232.2) million.
- Investment spending can constrain margins
- Sales, marketing and customer-success expense rose $2.2 million (5.0%) year over year, including a $2.1 million increase in advertising for JustGiving and AI-offering awareness. Research and development expense also increased $1.3 million (3.8%) amid continued AI, security, and cloud investments.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $0.79
- Gross margin
- 61.3%
- Operating margin
- 21.3%
- Segment
- Contractual recurring revenue increased $6.2 million year over year in Q2 2026, primarily from pricing initiatives and cloud-solution demand.
- Segment
- Transactional recurring revenue increased $2.8 million year over year in Q2 2026, primarily from higher Blackbaud Integrated Payments and Blackbaud Tuition Management volumes.
What they said about what is next.
The 10-Q does not provide company-wide revenue or EPS guidance. Management quantified expected FY2026 interest expense at approximately $62 million to $66 million, expects gross-dollar retention to improve after the larger 2026 renewal cohort and return toward historical levels by the end of 2027, and expects capitalized software-development spending to remain relatively consistent in the near term.
The filing reads about the same as the one before it.
What came before.
- 10-Q · April 29, 2026
- Blackbaud, Inc. reported solid revenue growth of 4.2% in Q1 2026, reaching $281.4 million, driven primarily by increases in contractual and transactional recurring revenues. The company also showed notable improvements…
- 10-K · February 18, 2026
- Blackbaud positions itself as the leading provider of AI-powered cloud software for social impact, emphasizing AI integration (Intelligence for Good®, Blackbaud AI Chat, Agents for Good™) and a “land and expand”…
- 10-Q · April 30, 2025
- Blackbaud reported revenue of $270.661M for the quarter ended March 31, 2025, down versus prior-year Q1 revenue of $279.250M but with improved gross profit and operating income margins. Gross profit rose to $155.846M…
- 10-Q · July 31, 2024
- Blackbaud reported Q2 revenue of $287,286 (dollars in thousands) and recurring revenue of $281,376 (thousands), up vs. prior-year revenue of $271,042 (thousands). Profitability improved materially: gross profit rose to…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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