Blackbaud (BLKB), a leading provider of software for social impact, on Tuesday reported fourth-quarter results that highlighted a significant shift toward profitability and organic growth, even as total revenue dipped following a major divestiture.
The company reported GAAP total revenue of $295.3 million for the quarter ended December 31, 2025, a 2.3% decrease from the prior year. Management attributed this decline to the divestiture of its EVERFI business. However, non-GAAP organic revenue rose 4.3%, signaling underlying strength in its core operations.
Early “Rule of 40” Achievement
A key highlight of the report was Blackbaud’s achievement of the “Rule of 40” a performance metric where the sum of revenue growth and profit margin exceeds 40% two years ahead of its original schedule. For the full year of 2025, the company posted a Rule of 40 score of 41.4%, while the fourth quarter alone saw a score of 39.7%.
2025 was another clear example of Blackbaud’s multi-year trajectory of extending our market leadership position and delivering strong financial results. The company enters 2026 with “tremendous optimism” fueled by its AI-empowered solutions.
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.