Blackbaud reported third-quarter 2026 revenue growth of 4.1%, alongside higher operating margins, earnings and adjusted EBITDA. The software provider for social-impact organizations also emphasized AI product innovation showcased at its September bbcon conference.
The quarter’s results showed recurring revenue remained the overwhelming source of sales. Blackbaud also reported continued share repurchases and a lower leverage ratio than at the start of the year.
Key details
- Revenue: Total revenue was $292.6 million, up 4.1% from the third quarter of 2025. The company said non-GAAP organic revenue also grew 4.1%.
- Recurring sales: Recurring revenue increased 4.1% to $287 million, accounting for 98.1% of total revenue. Non-GAAP organic recurring revenue rose at the same rate.
- Operating profitability: GAAP operating income was $60 million, with a 20.5% operating margin, up 1.1 percentage points year over year. On a non-GAAP basis, operating income was $94.6 million and the margin was 32.3%, up 2.4 percentage points.
- Net income and per-share earnings: GAAP net income was $46.1 million, and diluted earnings per share were $1.02, an increase of 4 cents. Non-GAAP net income was $61.2 million, with diluted earnings per share of $1.36, up 26 cents.
- Adjusted EBITDA: Non-GAAP adjusted EBITDA rose $11.4 million to $111.1 million. Its margin increased 2.6 percentage points to 38.0%. Blackbaud reported a Rule of 40 score of 42.1%.
- Cash generation: Cash from operating activities was $141.7 million, up $2.5 million, while its margin declined 1.1 percentage points to 48.4%. Non-GAAP free cash flow increased $2.8 million to $126 million; its margin fell 0.7 percentage points to 43.1%.
- Share repurchases and leverage: Blackbaud’s CFO said the company had repurchased more than 7% of its common shares outstanding since the end of 2025. The company’s leverage ratio declined from 2.7 times in the first quarter to 2.3 times in the third quarter.
- AI innovation: Blackbaud highlighted multiple AI-related innovations presented at bbcon, describing its investments as tools to help customers strengthen constituent relationships, raise funds and operate more efficiently.
Plain-English implications
Recurring revenue’s 98.1% share of sales underscores how much of Blackbaud’s business comes from ongoing customer payments. The company paired that revenue growth with wider operating margins, substantial cash generation, share repurchases and a lower reported leverage ratio.