Blackbaud, Inc. (BLKB): what the price assumes

In the published model solve dated 2026-Q2, anchored at $48.62, Blackbaud, Inc. (BLKB) is priced for -2.8% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/BLKB

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 7.7% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.5%); the inversion above states its own rate.

Per-Model Detail (n=16)

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• Nonprofits stay: gross dollar retention ran about 92% in 2025 on subscription contracts the 10-K describes as typically for a term of three years at contract inception with standard three-year renewals thereafter, which is what makes roughly 64% of revenue behave like an annuity.
• The other third does not behave like an annuity at all, because transactional recurring revenue is about 34% of the total and donation processing is roughly 55% of that, so a third of the top line rises and falls with how much money charities actually raise.
• Leverage, not valuation, is the live risk: operating profit covers interest only about 2.7 times, net borrowings sit at 6.3 times operating profit, and second-quarter results arrive on July 29, 2026.

Bull Case

The earnings trajectory turned in the most recent quarter, and it turned sharply. Net income for the three months to March 31, 2026 came in at 31.1 million dollars, against 4.3 million dollars in the same quarter of 2025. A trailing operating margin of 16.4% on 1.14 billion dollars of revenue is the steady-state picture; the quarterly move says the cost base has stopped absorbing the growth it used to.

Underneath that sits an unusually durable revenue base, and the durability is contractual rather than aspirational. Blackbaud's subscription agreements run, in the filing's words, typically for a term of three years at contract inception with standard three-year renewals thereafter, and the company reports that During 2025, our gross dollar retention was approximately 92%, a rate that improved on the prior year. Three-year terms with embedded annual price escalators mean a customer who signs today is still paying, at a slightly higher rate, through two more budget cycles. Nonprofits also carry a switching cost that has nothing to do with software quality: donor histories, gift records and grant workflows accumulated over decades do not move house easily.

The transactional third of the business is the part most investors treat as a weakness, and it is also the part with the most leverage to a good year. The filing describes transactional recurring revenue as diversified across multiple activity types with donation processing at roughly 55% of it, tied to Blackbaud's payment rails. When giving volumes rise, that revenue arrives with almost no incremental cost attached. It is a royalty on charitable generosity, and the company owns the toll booth rather than the cause.

Cash conversion is the strongest single fact here. The business generated 306.9 million dollars of free cash flow on 1.14 billion dollars of revenue, against a market value near 1.5 billion dollars. That is not a valuation argument so much as an observation about what the enterprise throws off relative to what it costs, and management has been spending it on itself: diluted shares averaged 46.4 million in the first quarter of 2026 against 49.4 million a year earlier, and on December 1, 2025 the board reauthorized, expanded and replenished our stock repurchase program by raising the total capacity under the program from $800.0 million to $1.0 billion available for repurchases.

Profitability holds its own in the cohort. TYL earns about a 15.5% operating margin on 2.38 billion dollars of revenue and EVCM about 9.7%, both at or below what this business earns. The gap to the best in the group is real but it is a growth gap, not an efficiency gap, and the price already assumes the growth never comes.

Bear Case

Software companies that stop growing rarely re-rate once and settle. They spend years proving the earnings are sustainable rather than being harvested, and the market withholds a multiple the whole time. Blackbaud sits squarely in that position. Full-year 2026 revenue guidance of $1.173 billion to $1.179 billion implies low single-digit growth against a trailing base, and the company's own stated ambition, printed in the 10-K next to its revenue discussion, is Targeting Mid-Single-Digit Revenue Growth. That is the ceiling, not the floor. TDC, the closest cautionary comparison in the group, is running revenue growth of about negative 0.8% with an operating margin of 6.1%, which is what a stalled enterprise software franchise looks like three years into the stall.

Retention cuts both ways, and the arithmetic is less comforting than the headline. Gross dollar retention of approximately 92% means roughly eight cents of every contracted recurring dollar walks out each year and has to be replaced before a single cent of growth is recorded. On a base where contractual recurring revenue is about 64% of the total, that is a substantial annual hole to refill from new bookings in a customer segment, the nonprofit sector, whose budgets are neither growing quickly nor unusually discretionary.

The demand cycle underneath the transactional third is genuinely cyclical. Roughly 34% of revenue moves with fundraising activity, and the 10-K is candid about the rhythm: transactional revenue has historically been at its lowest in the first quarter due to the timing of customer fundraising initiatives and events, with highs in the fourth quarter from year-end giving and the second quarter from events. Charitable giving is discretionary spending by donors and by institutions. A recession does not close nonprofits, but it thins the gift flow that a third of this revenue is a percentage of.

The balance sheet is where the market's discount actually comes from, and it is not subtle. Operating profit covers interest about 2.7 times. Net borrowings sit at 6.3 times operating profit against liquid assets of only 34.1 million dollars, and the credit agreement prices its margin off the company's own net leverage ratio, so the cost of that debt rises exactly when profitability falls. The security package is unusually tight for a software company: the 10-K notes that certain of our material domestic subsidiaries are required to guarantee amounts borrowed under the credit facility, and we have pledged the shares of certain of our subsidiaries as collateral. Years of buying back stock have also left almost no book equity behind the debt, which means the lenders, not the shareholders, hold the cushion.

There is a reflexive risk sitting on top of all of it. The 10-K lists among the triggers for testing goodwill and intangibles declines in our stock price, market capitalization, cash flows and slower growth. A weaker share price is itself an input to a writedown that would further weaken the equity. None of this says the business is unsound. It says a company with thin coverage, no book cushion and a growth ceiling in the mid single digits is a company the market is entitled to price cautiously, whatever the standard frames say it is worth.

Valuation

Today's price does not require this company to grow. It allows for shrinkage. Discount the business at a cost of capital of 7.2% and today's level still sits under what a company declining at 5% a year would warrant. That is a bound rather than a forecast, and it is the most useful single sentence available here: the market is not asking for a turnaround. It is asking whether what exists today holds together. For scale, the whole enterprise changes hands for roughly 15 years of the operating profit it currently produces.

Every family of method lands above the price, which is a rare configuration and changes what the analytical question is. Peer multiples land furthest above, reflecting a software sector that trades at multiples this business does not command. The earnings-power methods, which capitalise the current cash stream at the cost of equity and assume no growth whatsoever, also land above it. The cash-flow methods land above it too. When nothing in the standard toolkit says the price is high, the interesting question stops being whether the shares are cheap and becomes why they are allowed to stay that way.

The answer sits in the capital structure and the growth ceiling, and both are visible in the filings. Interest is covered about 2.7 times by operating profit, and net borrowings run at 6.3 times operating profit against liquid assets of 34.1 million dollars. The credit agreement's interest margin floats with the company's own net leverage ratio, in a range the 10-K puts at 1.375 % to 2.500 %, which links the cost of the debt to the performance of the business in the unhelpful direction. Meanwhile the revenue mix is fixed in a way that limits how fast the profit stream can compound: contractual recurring revenue is around 64% of the total and transactional recurring around 34%, and the company reports gross dollar retention of approximately 92%, so new bookings have to cover attrition before they add anything.

Against the cohort the shape is clear. MANH generates roughly the same revenue, about 1.10 billion dollars, at an operating margin near 25.6% and revenue growth around 4.8%; this business earns 16.4% at the operating line on 1.14 billion dollars and grows more slowly. SSNC, much larger, earns about 23.1%. The discount is not mysterious once those numbers are side by side.

What bounds the downside is the cash generation itself rather than the balance sheet. The business produced 306.9 million dollars of free cash flow on a trailing basis, and a meaningful share of it has gone into retiring stock: diluted shares averaged 46.4 million in the first quarter of 2026 against 49.4 million a year earlier. As long as that conversion holds, the debt amortises and the share count keeps shrinking. If revenue turns negative rather than merely slow, the same leverage that looks manageable at 2.7 times coverage becomes the whole story.

Catalysts

The next scheduled event is close. Blackbaud reports second-quarter results on July 29, 2026, before markets open. Two things in that release carry more weight than the headline: the transactional line, which the 10-K notes is seasonally lifted in the second quarter when a large number of events are held, and any change to the full-year revenue frame.

That frame currently runs from $1.173 billion to $1.179 billion of revenue for 2026. Management has flagged that the guidance excludes viral giving episodes and that the first and second quarters face tougher transactional comparisons against unusually strong prior-year periods. A miss on transactional revenue driven by that comparison is a different signal from a miss on contracted subscriptions, and the two should not be read the same way.

Capital deployment is the other thing worth tracking, because it is where the free cash flow decision gets made each quarter. The board expanded repurchase capacity to $1.0 billion on December 1, 2025, and the diluted share count has been falling. Watching whether repurchases continue at pace, or whether cash is redirected to paying down the term loans, is the clearest available read on how management itself weighs the leverage against the discount in the share price.

Peer Cohorts (Per Segment, With Filing Citations)

Blackbaud (cloud software) (reported)

• PCTY (PAYLOCITY HOLDING CORPORATION)
• FY2025 10-K: …product suite that helps businesses streamline and automate HR, payroll and spend management processes, attract and retain talent, and build culture and connection with their employees. We are expanding the spend management capabilities of our platform beyond expense management to include accounts payable automation,…
• FY2025 10-K: …providers. In turn, these third-party providers supply data to us, which allows us to deliver comprehensive HR and benefit management services to our clients. We believe our partnerships with these third parties are an important part of their service offerings. We have also developed our solutions to integrate with a…
• VERX (Vertex, Inc.)
• FY2025 10-K: …and metals and mining industries. As our customers expand geographically and pursue omnichannel business models, their tax determination and compliance requirements increase and become more complex, providing sustainable organic growth opportunities for our business. Our flexible, tiered transaction-based pricing…
• FY2025 10-K: …business outcomes. Services Solutions Implementation Services. Due to the ubiquitous nature of our software in our customers' technology environments, we also offer implementation services to enable our customers to realize the full benefit of our solution at initial deployment. These software implementation services…
• SPSC (SPS COMMERCE, INC.)
• FY2025 10-K: …with trading partners; • the reputation of the cloud-service vendor in the supply chain management industry; • price; • specialization in a customer market segment; • speed and quality with which the cloud-service vendor can integrate its customers to their trading partners; • functionality of the cloud-service…
• FY2025 10-K: …supply chain management products include: • our ability to maintain high levels of customer satisfaction; • our ability to maintain continuity of service for all users of our cloud-based products; • the price, performance, and availability of competing products, both new and existing; and • our ability to address…
• MANH (MANHATTAN ASSOCIATES, INC.)
• FY2025 10-K: …and not included in RPO. RPO provides insight into our contracted backlog of future business. As of December 31, 2025, our RPO was approximately $2.2 billion, an increase of 25% over December 31, 2024 on strong demand. Revenue Cloud Subscriptions and Software License revenue: In the full year ended December 31, 2025,…
• FY2025 10-K: …over the contract period as the service is provided. 52 Our services revenue consists of fees generated from implementation, training and application managed services, including reimbursements of out-of-pocket expenses in connection with our implementation services. Implementation services include system planning,…
• TDC (TERADATA CORP /DE/)
• FY2025 10-K: …our customers to focus on managing, securing, and providing trustworthy data for AI and analytics across hybrid and multi-cloud environments. Basis of Presentation. The financial statements are presented on a consolidated basis and include the accounts of the Company and its wholly-owned subsidiaries in accordance…
• FY2025 10-K: …security risks by increasing our joint responsibility with customers and third-party cloud providers for protecting sensitive information processed through these platforms, preventing any unauthorized access to or use of such platforms, preventing data breaches, and addressing vulnerabilities in customer-managed…
• TYL (TYLER TECHNOLOGIES, INC.)
• FY2025 10-K: …within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of this guidance on the Company's financial statements. In November 2024, the FASB issued ASU 2024-03 - Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic…
• FY2025 10-K: …We design, develop, market, and support a broad range of software solutions to serve mission-critical "back-office" functions of the public sector. Many of our back-office software applications integrate with our transformative platform solutions, such as our unified payments platform, data and insights platform, and…
• EVCM (EverCommerce Inc.)
• FY2025 10-K: …flow reporting and analytics. These value-add features help small- and medium-sized businesses ("SMBs") to ensure more timely billing and payments collection and provide improved cash flow visibility. • Customer Experience Solutions: Our Customer Experience Solutions modernize how businesses engage and interact with…
• FY2025 10-K: …and first solution adopted by a customer. Our software, designed to meet the day-to-day workflow needs of businesses in specific vertical end markets, streamlines front and back-office processes and provides polished customer-facing experiences. Using these offerings, service SMBs can deliver their services,…
• SSNC (SS&C TECHNOLOGIES HOLDINGS, INC.)
• FY2025 10-K: …WorkHQ, AI Gateway and our AI Agent Solutions. • Banking and Lending Solutions o EVOLV - EVOLV is a comprehensive, cloud-based, end-to-end accounting solution for financial institutions that integrates and automates all risk and finance processes relating to a loan portfolio, from data capture to back-end reporting…
• FY2025 10-K: …services, strengthening our overall operating margins and providing a competitive advantage. Because we primarily use our proprietary software to execute our software-enabled services and generally own and control our products' source code, we can quickly enable continuous updates in a highly scalable, reliable and…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.