What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2021-02-23 compared with 2020-02-20 · 125 added, 59 removed, 227 unchanged (45% of the section changed)

4 unchanged sentences

Our market is highly competitive and rapidly evolving, and there are limited barriers to entry for many segments of this market.

2019 Form 10-K

Blackbaud, Inc.

The companies we compete with and other potential competitors may have greater financial, technical and marketing resources and generate greater revenue and better name recognition than we do.

5 unchanged sentences

To meet our objectives successfully, we must attract and retain highly qualified personnel with specialized skill sets.

If we are unable to attract suitably qualified management, there could be a material adverse impact on our business.

Further, in the past, we have used equity incentive programs as part of our overall employee compensation agreements to both attract and retain personnel.

If we are unable to attract and retain suitably qualified management, there could be a material adverse impact on our business.

Further, we use equity incentive programs and equity awards in lieu of cash as part of our overall employee compensation agreements to both attract and retain personnel.

A decline in our stock price could negatively impact the value of these equity incentive and related compensation programs as retention and recruiting tools.

4 unchanged sentences

This strategic shift to migrate our existing customers and sell new customers our cloud subscription solutions results in a decrease in our one-time services contracts and revenue.

Although our business model seeks to anticipate the rate of migration and resulting negative impact on our total revenue growth, more rapid than expected success in implementing this strategic shift could negatively impact our total revenue growth and financial performance.

Although our business model seeks to anticipate the rate of migration and resulting negative impact on our total revenue growth, more rapid than

2020 Form 10-K

Blackbaud, Inc.

expected success in implementing this strategic shift could negatively impact our total revenue growth and financial performance.

The market for software and services for the social good community might not grow and the organizations in that community might not continue to adopt our solutions and services.

2 unchanged sentences

Organizations that have already invested substantial resources in other fundraising methods or other non-integrated software solutions might be reluctant to adopt our solutions and services to supplement or replace their existing systems or methods.

In addition, the implementation of one or more of our software solutions can involve significant capital commitments by our customers, which they may be unwilling or unable to make.

In addition, the implementation of one or more of our software solutions can involve significant capital commitments by our customers, which they may be unwilling or unable to make, especially due to disruption in the social good community due to COVID-19.

If demand for and market acceptance of our solutions and services does not increase, we might not grow our business as we expect.

2 unchanged sentences

As a result, our future success will depend, in part, upon our ability to continue to enhance existing solutions and develop and introduce in a timely manner or acquire new solutions that keep pace with technological developments, satisfy increasingly sophisticated customer requirements and achieve market acceptance.

If we are unable to develop or acquire on a timely and cost-effective basis new software solutions or enhancements to existing solutions or if such new solutions

2019 Form 10-K

Blackbaud, Inc.

or enhancements do not achieve market acceptance, our business, results of operations and financial condition may be materially adversely affected.

If we are unable to develop or acquire on a timely and cost-effective basis new software solutions or enhancements to existing solutions or if such new solutions or enhancements do not achieve market acceptance, our business, results of operations and financial condition may be materially adversely affected.

If we do not successfully address the risks inherent in the expansion of our international operations, our business could suffer.

16 unchanged sentences

• the imposition of, or unexpected adverse changes in, foreign laws or regulatory requirements, including those pertaining to export restrictions, privacy and data protection, trade and employment restrictions and intellectual protections.

2020 Form 10-K

Blackbaud, Inc.

Unfavorable media coverage related to peer-to-peer fundraising campaigns on our social platforms could negatively impact our business.

11 unchanged sentences

• potential loss of key employees of the acquired company;

2019 Form 10-K

Blackbaud, Inc.

• difficulty implementing effective internal controls over financial reporting and disclosure controls and procedures;

9 unchanged sentences

A reduction in the growth of, or a decline in, charitable giving to these customers, whether due to deteriorating general economic conditions, the impact of recent or future changes to applicable tax laws, or otherwise, could negatively impact the volume and size of such payment processing transactions and thereby adversely affect our operating results and financial condition.

2020 Form 10-K

Blackbaud, Inc.

Our failure to obtain licenses for, or our use of, third-party technologies could harm our business.

4 unchanged sentences

Our use of third-party technologies also exposes us to increased risks including, but not limited to, risks associated with the integration of new technology into our solutions, the diversion of our resources from development of our own proprietary technology and our inability to generate revenue from licensed technology sufficient to offset associated acquisition and maintenance costs.

The U.K.'s departure from the European Union ("EU") could adversely affect us.

The U.K.'s departure from the European Union ("E.U.") could adversely affect us.

held a referendum on June 23, 2016 on its membership in the E.U., in which a majority of U.K.

2 unchanged sentences

Thereafter, the E.U.

engaged in extensive negotiations designed to reach agreement regarding the future terms of the U.K.'s relationship with the E.U., including the terms of trade between the U.K.

and a transition period during which the agreed relationship would be implemented in stages to facilitate a gradual and orderly Brexit.

engaged in extensive negotiations designed to reach agreement regarding the future terms of the U.K.'s relationship with the E.U.

Effective January 31, 2020, the U.K.

is no longer a member of the E.U., and the transition period is currently set to expire on December 31, 2020, during which time the U.K.

will continue to negotiate an agreement.

There can be no assurance that they will be successful in doing so.

is no longer a member of the E.U., and an agreed post-Brexit transition period expired on December 31, 2020.

Effective January 1, 2021, the relationship between the U.K.

is governed primarily by the new Trade and Cooperation Agreement (the “TCA”), which sets forth, among other things, terms regarding the trade of goods and services, workers’ rights and social and environmental matters.

Separate negotiations are expected to continue regarding, among other things, data sharing, data privacy and financial services, and certain terms of the TCA contain agreed expiration dates.

Because we currently conduct business in the U.K.

and in Europe, the U.K.’s exit from the E.U.

under such circumstances creates uncertainty and could disrupt our business.

For example, Brexit could affect the business of and/or our relationships with our customers and partners, including with regard to data privacy, as well as alter the relationship among tariffs and currencies, including the value of the British Pound and the Euro relative to the US dollar.

under such circumstances creates uncertainty and could affect the business of and/or our relationships with our customers and partners as well as the value of the British Pound and the Euro relative to the U.S.

The ultimate effects of Brexit on us, including those mentioned above and others we cannot now anticipate, are difficult to predict and could adversely affect our business, business opportunities, results of operations or financial condition in both the short-term and thereafter.

Operational Risks

The COVID-19 pandemic has disrupted, and is expected to continue to disrupt, our business, which is likely to adversely affect our operations and financial performance.

The outbreak of COVID-19 in countries across the globe, including each country in which we currently operate, has adversely impacted the U.S.

and global economies.

We have experienced disruptions to our business thus far from COVID-19, and the pandemic continues to impact each of our markets.

Governmental authorities have taken, and continue to take, countermeasures to slow the outbreak, including shelter-in-place and business closure orders and large-scale restrictions on travel.

Furthermore, because the pandemic is a rapidly evolving situation, we cannot anticipate with certainty the length, scope or severity of such restrictions in the jurisdictions in which we operate.

Certain vertical markets we serve are especially vulnerable to the ongoing global business disruption.

• Many arts and cultural organizations, including museums, zoos, performing arts centers and theaters, among others, have had to cancel events or have seen a significant decline in attendance due to COVID-19.

Many of these organizations have also suspended their operations temporarily.

• We believe that a number of K-12 private schools, that would have ordinarily considered purchasing our cloud solutions for the 2020-2021 academic school year, have delayed their expenditure decisions due to the uncertainty of COVID-19.

• A number of our nonprofit customers have also been negatively impacted by the postponement or cancellation of mass-participation events, such as marathons and other endurance sporting events, galas, auctions and other fundraisers.

2020 Form 10-K

Blackbaud, Inc.

Operational Risks

We believe that COVID-19 has impacted and will continue to impact all of our vertical markets across all of our geographies to some degree, but the significance and duration of the impact on our business cannot be determined at this time due to numerous uncertainties, including the duration of the outbreak, travel restrictions and business closures, the effectiveness of vaccination programs and other actions taken to contain the disease and other unforeseeable consequences.

This impact could include:

• further declines in customer demand and our ability to build pipeline of new customer contracts;

• continued elongated sales cycles;

• our relationship with, and the financial and operational capacities of, our service providers, suppliers and business partners, including their ability to fulfill their obligations to us;

• further declines in our customers' ability to pay for our solutions and services;

• reduced workforce availability and productivity due to working remotely using different technologies and potential health effects and concerns;

• risks associated with our indebtedness (including available borrowing capacity, compliance with financial covenants and ability to refinance or repay indebtedness on favorable terms);

• the adequacy of our cash flows and earnings and other conditions that may affect our liquidity;

• disruptions to our technology network and other critical systems;

• impairment charges against our goodwill and other intangible assets, operating lease right-of-use assets and other long-lived assets.

We believe that business disruption relating to COVID-19 will continue to negatively impact the U.S.

and global economies and may continue to materially adversely impact our business, financial condition and results of operations.

Defects, delays or interruptions in our cloud solutions and hosting services could diminish demand for these services and subject us to substantial liability.

7 unchanged sentences

Because our customers use these services for important aspects of their businesses, any defects, delays or disruptions in service or other performance problems with our services could hurt our reputation and damage our customers' businesses.

If that occurs, customers could elect to cancel their service, delay or withhold payment to us, not purchase from us in the future or make claims against us, which could result in an increase in our provision for doubtful accounts, an increase in collection cycles for accounts receivable or the expense and risk of litigation.

If that occurs, customers could elect to cancel their service, delay or withhold payment to us, not purchase from us in the future or make claims against us, which could result in an increase in our provision for credit losses, an increase in collection cycles for accounts receivable or the expense and risk of litigation.

Any of these could harm our business and reputation.

2 unchanged sentences

We have from time to time found defects in our software, and new errors in our existing software may be detected in the future.

2020 Form 10-K

Blackbaud, Inc.

After the release of our software, defects or errors may also be identified from time to time by our internal team and our customers.

3 unchanged sentences

Even when our software does not cause these problems, the existence of these errors might cause us to incur significant costs, divert the attention of our technical personnel from our solution development efforts, impact our reputation and cause significant customer relations problems.

If we are unable, or our customers believe we are unable, to detect and prevent unauthorized use of payment card information, we could be subject to financial liability, our reputation could be harmed and customers may be reluctant to use our solutions and services.

If we are unable, or our customers believe we may be unable, to detect and prevent unauthorized use of payment card or other private financial or personal information, we could be subject to financial liability, our reputation could be harmed and customers may be reluctant to use our solutions and services.

The rules of payment card associations in which we participate require that we comply with Payment Card Industry Data Security Standard ("PCI DSS") in order to preserve security of payment card data.

2 unchanged sentences

However, failure to comply may subject us to fines, penalties, damages and civil liability, may impair the security of payment card data in our possession, and may harm our reputation and our business prospects, including by limiting our ability to process transactions.

Currently some of our solutions are not fully compliant with PCI DSS, primarily due to the lag time required for integrating acquired businesses.

2019 Form 10-K

Blackbaud, Inc.

All Blackbaud products in scope for PCI DSS compliance meet applicable PCI DSS security requirements.

In addition, we routinely subject our various data protection processes and controls to voluntary third-party review, audit or reporting, including, for example, the American Institute of Certified Public Accountants’ System and Organization Controls (“SOC”) reporting.

Failure to conduct these voluntary data protection process and control reviews or to obtain and maintain unqualified audits or reports covering our data protection processes and controls may harm our reputation or our business prospects and our ability to market our solutions to our customers.

If the security of our software is breached, we fail to securely collect, store and transmit customer information, or we fail to safeguard confidential donor data, we could be exposed to liability, litigation, penalties and remedial costs and our reputation and business could suffer.

Fundamental to the use of our solutions is the secure collection, storage and transmission of confidential donor and end user data and transaction data, including in our payment services.

Despite the network and application security, internal control measures, and physical security procedures we employ to safeguard our systems, we may still be vulnerable to a security breach, intrusion, loss or theft of confidential donor data and transaction data, which may harm our business, reputation and future financial results.

Like many major businesses, we are, from time to time, a target of cyber-attacks and phishing schemes, and we expect these threats to continue.

Because of the numerous and evolving cybersecurity threats, including advanced and persistent cyber-attacks, phishing and social engineering schemes, used to obtain unauthorized access, disable or degrade systems have become increasingly more complex and sophisticated and may be difficult to detect for periods of time, we may not anticipate these acts or respond adequately or timely.

Despite the network, application and physical security procedures and internal control measures we employ to safeguard our systems, we may still be vulnerable to a security breach, intrusion, loss or theft of confidential donor data and transaction data, which may harm our business, reputation and future financial results.

Furthermore, our increased reliance on remote access to information systems and global disruptions in response to COVID-19, as described above, increase our exposure to potential cybersecurity incidents.

Like many major businesses, we are, from time to time, a target of cyberattacks, phishing and social engineering schemes, such as the Security Incident (as described in Note 11 to our consolidated financial statements in this report), and we expect these threats to continue, some of which may be successful to varying degrees.

Because the numerous and evolving cybersecurity threats used to obtain unauthorized access, disable, degrade or sabotage systems have become increasingly more complex and sophisticated, it may be difficult to anticipate these acts or to detect them for periods of time, as with the Security Incident, and we may be unable to respond adequately or timely.

As these threats continue to evolve and increase, we may be required to devote significant additional resources in order to modify and enhance our security controls and to identify and remediate any security vulnerabilities.

A compromise of our data security that results in customer or donor personal or payment card data being obtained by unauthorized persons could adversely affect our reputation with our customers and others, as well as our operations, results of operations, financial condition and liquidity and could result in litigation against us or the imposition of penalties.

We might be required to expend significant capital and other resources to further protect against security breaches or to rectify problems caused by any security breach, including notification under data privacy laws and regulations and expenses related to remediating our information security systems.

Even though we carry cyber-technology insurance policies that may provide insurance coverage under certain circumstances, we might suffer losses as a result of a security breach that exceed the coverage available under our insurance policies or for which we do not have coverage.

A compromise of our data security, such as the Security Incident, that results in customer or customer constituent personal or payment card data being obtained by unauthorized persons could adversely affect our reputation with our customers and others, as well as our operations, results of operations, financial condition and liquidity and could result in litigation against us or the imposition of fines and penalties.

We might be required to expend significant additional capital and other resources to rectify problems caused by a security breach, including notification under data privacy laws and regulations, and incur expenses related to remediating our information security systems.

(See Note 11 to our consolidated financial statements in this report for such information related to the Security Incident.) Even though we carry cyber-technology insurance policies that may provide insurance coverage under certain circumstances, we might

2020 Form 10-K

Blackbaud, Inc.

suffer losses as a result of a security breach that exceed the coverage available under our insurance policies or for which we do not have coverage.

A security breach and any efforts we make to address such breach could also result in a disruption of our operations, particularly our online sales operations.

Further, the existence of vulnerabilities, even if they do not result in a security breach, may harm client confidence and require substantial resources to address, and we may not be able to discover or remedy such security vulnerabilities before they are exploited, which may harm our business, reputation and future financial results.

The occurrence of actual cyber security events, such as the Security Incident, could magnify the severity of the adverse effects of future incidents on our business.

The techniques used to obtain unauthorized access, disable or degrade service, or sabotage information systems can be difficult to detect for long periods of time and can involve difficult or prolonged assessment or remediation periods even once detected.

We, therefore, cannot assure you that all potential causes of past significant incidents, including the Security Incident, have been fully identified and remediated.

The steps we take may not be sufficient to prevent future significant incidents and, as a result, such incidents may occur again.

The Security Incident could have numerous adverse effects on our business.

As previously disclosed, on July 16, 2020, we first contacted certain customers to inform them about the Security Incident, including that in May 2020 we discovered and stopped a ransomware attack.

Prior to our successfully preventing the cybercriminal from blocking our system access and fully encrypting files, and ultimately expelling them from our system with no significant disruption to our operations, the cybercriminal removed a copy of a subset of data from our self-hosted environment.

Although the nature of the incident, our research and third party (including law enforcement) investigation have provided no reason to believe that any data went beyond the cybercriminal, was or will be misused, or will be disseminated or otherwise made available publicly, our investigation into the Security Incident remains ongoing and may provide additional information.

To date, we have received approximately 570 claims for reimbursement of expenses from customers or their attorneys related to the Security Incident (none of which have as yet been filed in court or in arbitration) and are in the process of assessing what, if any, liability may exist pursuant to such claims.

Possible exposure could result from our customers’ costs and expenses associated with notifying their own constituents of the Security Incident and taking steps to assure that personal information has not been compromised as a result of the Security Incident.

In addition, presently, we are a defendant in 30 putative consumer class action cases [27 in U.S.

federal courts (some of which have been consolidated under multi district litigation to a single federal court), 1 in a U.S.

state court and 2 in Canadian courts] alleging harm from the Security Incident.

The plaintiffs in these cases, who generally purport to represent various classes of individual constituents of our customers, generally claim to have been harmed by alleged actions and/or omissions by us in connection with the Security Incident and assert a variety of common law and statutory claims seeking monetary damages, injunctive relief, costs and attorneys’ fees, and other related relief.

To date, we also have received a consolidated, multi-state Civil Investigative Demand issued on behalf of 44 state Attorneys General and the District of Columbia relating to the Security Incident.

In addition, we have received communications, inquires and requests from the U.S.

Federal Trade Commission, the U.S.

Department of Health and Human Services, the U.S.

Securities and Exchange Commission, the Information Commissioner’s Office in the United Kingdom (the “ICO”) under the U.K.

Data Protection Act 2018, the Office of the Australian Information Commissioner and the Office of the Privacy Commissioner of Canada.

(See Note 11 to our consolidated financial statements included in this report for a more detailed description of the Security Incident and related matters.)

We may be named as a party in additional lawsuits, other claims may be asserted by or on behalf of our customers or their constituents, and we may be subject to additional governmental inquires, requests or investigations.

Responding to and resolving these current and any future lawsuits, claims and/or investigations could result in material remedial and other expenses that may not be covered by insurance.

Governmental authorities also may seek to impose undertakings, injunctive relief, consent decrees, or other civil or criminal penalties, which could, among other things, materially increase our data security costs or otherwise require us to alter how we operate our business.

Although we intend to defend ourselves vigorously against the claims asserted against us, we cannot predict the potential outcomes, cost and expenses associated with current and any future claims, lawsuits, inquiries and investigations.

Significant management time and Company resources have been, and are expected to continue to be, devoted to the Security Incident.

(See Note 11 to our consolidated financial statements included in this report.) Although we carry cyber-technology insurance designed to protect us against certain losses related to cybersecurity events, that insurance coverage may not be sufficient to cover all expenses or other losses (including fines) or all types of claims that may arise in connection with cyberattacks, security compromises and other related incidents.

Furthermore, in the future such insurance may not be available on commercially reasonable terms, or at all.

2020 Form 10-K

Blackbaud, Inc.

Future publicity or developments related to the Security Incident could have a range of other adverse effects on our business or prospects, including causing or contributing to loss of customer confidence, reduced customer demand, reduced customer retention, strategic growth opportunities, and associated retention and recruiting difficulties.

Our operations might be affected by the occurrence of a natural disaster or other catastrophic event.

12 unchanged sentences

Additionally, if we do not effectively implement the ERP system as planned or the ERP system does not operate as intended, the effectiveness of our internal control over financial reporting could be negatively affected.

2019 Form 10-K

Blackbaud, Inc.

Financial Risks

11 unchanged sentences

Because of this characteristic of our business, if our customers choose not to renew their subscriptions or maintenance and support arrangements with us on beneficial terms or at all, our business, operating results and financial condition could be harmed.

Our customers' renewal rates may decline or fluctuate as a result of a number of factors, including their level of satisfaction with our solutions and services and their ability to continue their operations and spending levels.

2020 Form 10-K

Blackbaud, Inc.

We significantly increased our leverage in connection with acquisitions.

We incurred a substantial amount of indebtedness in connection with recent acquisitions.

We incurred a substantial amount of indebtedness in connection with acquisitions and the purchase of our Global Headquarters Facility.

As a result of this indebtedness, our interest payment obligations have increased.

The degree to which we are leveraged could have adverse effects on our business, including the following:

Requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, dividends and other general corporate purposes;

• Requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, dividends, share repurchases and other general corporate purposes;

• Limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate;

10 unchanged sentences

If the carrying value of an asset is determined to be impaired, then it is written down to fair value by a non-cash charge to operating earnings.

Changes in circumstances that could indicate that the carrying value of goodwill or intangible assets may not be recoverable include declines in our stock price, market capitalization, cash flows and slower growth

2019 Form 10-K

Blackbaud, Inc.

rates in our industry.

We cannot accurately predict the likelihood or potential amount and timing of any impairment of goodwill or other intangible assets.

6 unchanged sentences

Any such default could have a material adverse effect on our ability to operate, including allowing lenders under the credit facility to enforce guarantees of our subsidiaries, if any, or exercise their rights with respect to the shares pledged as collateral.

2020 Form 10-K

Blackbaud, Inc.

We cannot guarantee that our stock repurchase program will be fully consummated or that it will enhance long-term stockholder value.

Share repurchases could also increase the volatility of the trading price of our stock and will diminish our cash reserves.

Although our board of directors has authorized a stock repurchase program that does not have an expiration date, the program does not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares of our common stock.

We cannot guarantee that the program will be fully consummated or that it will enhance long-term stockholder value.

The program could affect the trading price of our stock and increase volatility, and any announcement of a termination of this program may result in a decrease in the trading price of our stock.

In addition, this program will diminish our cash reserves, which may impact our ability to finance future growth and to pursue possible future strategic opportunities and acquisitions.

(See Note 14 to our consolidated financial statements in this report for additional information related to our stock repurchase program.)

We have recorded significant deferred tax assets, and we might never realize their full value, which would result in a charge against our earnings.

4 unchanged sentences

This could be caused by, among other things, deterioration in performance, adverse market conditions, adverse changes in applicable laws or regulations, including changes that restrict the activities of or affect the solutions sold by our business and a variety of other factors.

If a deferred tax asset net of our valuation allowance was determined to be not realizable in a future period, the charge to earnings would be recognized as an expense in our results of operations in the period the determination is made.

For example, during 2020, we recorded an increase in our valuation allowance attributable to state tax credit carryforwards for which we do not expect to realize benefit.

(See Note 12 to our consolidated financial statements in this report for additional details.) If a deferred tax asset net of our valuation allowance was determined to be not realizable in a future period, the charge to earnings would be recognized as an expense in our results of operations in the period the determination is made.

Additionally, if we are unable to utilize our deferred tax assets, our cash flow available to fund operations could be adversely affected.

10 unchanged sentences

Moreover, we may be exposed to liability under existing or new consumer privacy or data protection legislation.

For example, when

For example, when providing our solutions to certain customers in the healthcare industry, we must comply with applicable provisions of the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), and might be subject to similar provisions of other legislation, including, without limitation, the Gramm-Leach-Bliley Act and related regulations, and

2020 Form 10-K

Blackbaud, Inc.

providing our solutions to certain customers in the healthcare industry, we must comply with applicable provisions of the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), and might be subject to similar provisions of other legislation, including, without limitation, the Gramm-Leach-Bliley Act and related regulations, and the California Consumer Privacy Act of 2018, which became effective January 1, 2020, and may apply to some of our customers and areas of business.

the California Consumer Privacy Act of 2018, which became effective January 1, 2020, and may apply to some of our customers and areas of business.

Even technical violations of these laws may result in penalties that are assessed for each non-compliant transaction.

Recently, the E.U.

General Data Protection Regulation (“GDPR”), which became effective in May 2018, extended the scope of the E.U.

data protection law to many companies processing data of E.U.

residents, regardless of the company’s location.

The law requires companies to meet new requirements regarding the handling of personal data, including new rights such as the portability of personal data.

Blackbaud, and some of our customers, may be subject to the E.U.

General Data Protection Regulation (“GDPR”), which became effective in the E.U.

in May 2018 and its provisions continue to apply in the U.K.

after Brexit by virtue of legislation incorporating the GDPR into U.K.

data protection law, known as the "UK GDPR." The law requires companies to meet requirements regarding the handling of personal data, including rights such as the portability of personal data.

We completed an extensive program of product and operational changes to address GDPR requirements and all future solutions sold to customers subject to GDPR must include GDPR features.

3 unchanged sentences

In addition, these laws and regulations could impose significant costs on our customers and us and make it more difficult for donors to make online donations.

(See Note 11 to our consolidated financial statements included in this report for a description of the Security Incident and related legal proceedings and regulatory matters.)

We are in the information technology business, and our solutions and services store, retrieve, transfer, manipulate and manage our customers’ information and data.

1 unchanged sentence

Our collection and our customers’ collection and use of this data might raise privacy and data protection concerns and negatively impact our business or the demand for our solutions and services.

If a breach of data security were to occur, or other violation of privacy or data protection laws and regulations were to be alleged, our business may be materially and adversely impacted and solutions may be perceived as less desirable, which would negatively affect our business and operating results.

If a breach of data security, such as the Security Incident, were to occur, or other violation of privacy or data protection laws and regulations were to be alleged, our business may be materially and adversely impacted and solutions may be perceived as less desirable, which would negatively affect our business and operating results.

Claims that we or our technologies infringe upon the intellectual property or other proprietary rights of a third party may require us to incur significant costs, enter into royalty or licensing agreements or develop or license substitute technology.

7 unchanged sentences

Infringement claims asserted against us, our vendors or our customers may have a material adverse effect on our business, prospects, financial condition and results of operations.

Our solutions utilize open source software, which may subject us to litigation, require us to re-engineer our solutions, or otherwise divert resources away from our development efforts.

We use open source software in connection with certain of our solutions.

Such open source software is generally licensed by its authors or other third parties under open source licenses, including, for example, the GNU General Public License,

2020 Form 10-K

Blackbaud, Inc.

the GNU Lesser General Public License, “Apache-style” licenses, “BSD-style” licenses and other open source licenses.

Our solutions utilize open source software, which may subject us to litigation, require us to re-engineer our solutions, or otherwise divert resources away from our development efforts.

We use open source software in connection with certain of our solutions.

Such open source software is generally licensed by its authors or other third parties under open source licenses, including, for example, the GNU General Public License, the GNU Lesser General Public License, “Apache-style” licenses, “BSD-style” licenses and other open source licenses.

There is little legal precedent governing the interpretation of many of the terms of some of these licenses and, therefore, the potential impact of these terms on our business is currently unable to be determined and may result in unanticipated obligations regarding our solutions and technologies.

20 unchanged sentences

Our certificate of incorporation authorizes “blank check” preferred stock, which could be issued by the board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock.

Stockholder approval is not necessary to issue preferred stock in this manner.

Stockholder approval is not necessary to issue preferred stock in this

2020 Form 10-K

Blackbaud, Inc.

Issuance of these shares of preferred stock could have the effect of making it more difficult and more expensive for a person or group to acquire control of us, and could effectively be used as an anti-takeover device.

1 unchanged sentence

Our bylaws provide for an advance notice procedure for stockholders to nominate director candidates for election or to bring business before an annual meeting of stockholders, including proposed nominations of persons for election to our board of directors, and limit the persons who may call special meetings of stockholders.

The anti-takeover provisions of Delaware law and provisions in our organizational documents may prevent our stockholders from receiving the benefit from any premium to the market price of our common stock offered by a bidder in a takeover

2019 Form 10-K

Blackbaud, Inc.

Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging takeover attempts in the future.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors