Early “Rule of 40” Achievement
Earnings and Margins Expand
Profitability metrics showed substantial improvement during the quarter:
GAAP net income reached $36.7 million, resulting in a diluted earnings per share of $0.76, a sharp swing from the loss reported in the same period last year.
Non-GAAP diluted EPS grew 11% year-over-year to $1.19.
Non-GAAP adjusted EBITDA margin expanded by 160 basis points to 35.4%, driven by what the company described as a “keen focus on margin expansion opportunities” and investments in AI and cybersecurity.
2026 Outlook and Capital Strategy
Looking ahead, Blackbaud issued full-year 2026 guidance that projects GAAP revenue between $1.173 billion and $1.179 billion. The company expects non-GAAP diluted EPS to rise to a range of $5.15 to $5.25, representing an implied growth of 17% at the midpoint.
The company also emphasized its commitment to returning value to shareholders through an aggressive stock repurchase program. As of December 31, 2025, Blackbaud had $961 million remaining under its reauthorized $1 billion repurchase authorization. Management expects to repurchase between 5% and 10% of its outstanding common stock during 2026.
The combination of top-line growth and margin expansion positions the company to deliver an “attractive financial model” over the next five years. The 2026 outlook factors in a 40% increase in the volume of contracts up for renewal, which the company anticipates will result in higher churn dollars but remain in line with historical renewal rates.