What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-21 compared with 2024-02-21 · 316 added, 389 removed, 1194 unchanged (37% of the section changed)

2 unchanged sentences

Index to Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firms (PCAOB IDs 42 and 238 )

Reports of Independent Registered Public Accounting Firms (PCAOB ID 42 )

Consolidated Balance Sheets

Consolidated Statements of Comprehensive (Loss) Income

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Cash Flows

6 unchanged sentences

We have audited the accompanying consolidated balance sheets of Blackbaud, Inc.

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of comprehensive loss, cash flows, and stockholders’ equity for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with U.S.

(the Company) as of December 31, 2024 and 2023, the related consolidated statements of comprehensive loss, cash flows and stockholders’ equity for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S.

generally accepted accounting principles.

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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The Company recorded transactional recurring revenues of $354 million for the year ended December 31, 2024.

Included in transactional recurring revenues are revenues related to payment processing services provided to customers that enable donations and the purchase of goods and services.

Included in transactional recurring revenues are revenues related to payment processing services.

As discussed in Note 2 to the consolidated financial statements, the Company recognizes revenue for payment processing services over time based on the amount billable to the customer, since it has the right to invoice the customer in an amount that directly corresponds with the value to the customer for the Company’s performance to date.

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Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls over its payment processing services provided to customers that enable donations and the purchase of goods and services.

We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls over its payment processing services.

We identified the relevant systems used in these payment processing services, including relevant third-party service organization systems, and evaluated the IT general controls over each of these systems.

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For a selection of payment processing transactions, we also agreed the amount of revenues recognized for processing fees retained by the Company to source documents and tested the mathematical accuracy of the recorded revenue.

We also evaluated if the transactions were processed, and funds received prior to December 31, 2023, including sending confirmations directly to financial institutions.

We also evaluated if the transactions were processed, and funds received, including sending confirmations directly to financial institutions.

/s/ Ernst & Young LLP

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(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, and the related consolidated statements of comprehensive loss, cash flows, and stockholders' equity for the two years in the period ended December 31, 2023, and the related notes and our report dated February 21, 2024 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, and the related consolidated statements of comprehensive loss, cash flows, and stockholders' equity for each of the three years in the period ended December 31, 2024, and the related notes and our report dated February 21, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

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2024 Form 10-K

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Blackbaud, Inc.

Opinion on the Financial Statements

We have audited the consolidated statements of comprehensive (loss) income, of stockholders' equity and of cash flows of Blackbaud, Inc.

and its subsidiaries (the “Company”) for the year ended December 31, 2021 including the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of the Company for the year ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Atlanta, Georgia

March 1, 2022

We served as the Company’s auditor from 2000 to 2022.

2023 Form 10-K

Blackbaud, Inc.

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( 1,060,348 ) ( 591,557 )

Accumulated other comprehensive (loss) income ( 1,688 ) 8,938

Retained earnings 198,869 197,049

Accumulated other comprehensive loss ( 4,869 ) ( 1,688 )

(Accumulated deficit) retained earnings ( 84,303 ) 198,869

Total stockholders’ equity 141,993 808,705

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Blackbaud, Inc.

Consolidated Statements of Comprehensive (Loss) Income

Consolidated Statements of Comprehensive Loss

(dollars in thousands, except per share amounts) Years ended December 31,

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Amortization 3,541 3,139 2,925

Restructuring — — 263

EVERFI disposition 405,360 — —

Total operating expenses 909,709 558,539 581,201

Income (loss) from operations 44,705 ( 28,485 ) 24,906

(Loss) income from operations ( 270,506 ) 44,705 ( 28,485 )

Interest expense ( 55,634 ) ( 39,922 ) ( 35,803 )

Other income, net 14,549 12,861 8,713

Income (loss) before provision for income taxes 17,644 ( 55,575 ) 7,083

Income tax provision (benefit) 15,824 ( 10,168 ) 1,385

Net income (loss) $ 1,820 $ ( 45,407 ) $ 5,698

Earnings (loss) per share

(Loss) income before (benefit) provision for income taxes ( 311,591 ) 17,644 ( 55,575 )

Income tax (benefit) provision ( 28,419 ) 15,824 ( 10,168 )

Net (loss) income $ ( 283,172 ) $ 1,820 $ ( 45,407 )

(Loss) earnings per share

Basic $ ( 5.60 ) $ 0.03 $ ( 0.88 )

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Total other comprehensive (loss) income ( 3,181 ) ( 10,626 ) 2,416

Comprehensive (loss) income $ ( 8,806 ) $ ( 42,991 ) $ 14,717

Comprehensive loss $ ( 286,353 ) $ ( 8,806 ) $ ( 42,991 )

The accompanying notes are an integral part of these consolidated financial statements.

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Cash flows from operating activities

Net income (loss) $ 1,820 $ ( 45,407 ) $ 5,698

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net (loss) income $ ( 283,172 ) $ 1,820 $ ( 45,407 )

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization 121,665 109,487 102,369

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Amortization of deferred financing costs and discount 2,538 1,775 2,364

Loss on disposition of businesses 16,847 — —

EVERFI impairment charges 390,204 — —

Other non-cash adjustments 2,462 5,023 5,676

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Purchase of net assets of acquired companies, net of cash and restricted cash acquired — ( 13 ) ( 20,912 )

Cash received in sale of business — 6,426 —

Cash (used) received in disposition of business ( 1,179 ) — 6,426

Other investing activities ( 5,029 ) ( 250 ) —

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Purchase of treasury stock ( 418,034 ) ( 18,831 ) —

Net cash (used in) provided by financing activities ( 142,965 ) ( 25,689 ) 264,108

Net cash used in financing activities ( 139,351 ) ( 142,965 ) ( 25,689 )

Effect of exchange rate on cash, cash equivalents and restricted cash ( 1,954 ) 2,048 ( 10,486 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 5,674 ) 82,169 6,793

Net increase (decrease) in cash, cash equivalents and restricted cash 81,255 ( 5,674 ) 82,169

Cash, cash equivalents and restricted cash, beginning of year 728,257 733,931 651,762

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Non-cash investing and financing activities:

Purchase of EVERFI through the issuance of stock (see Note 3) — — ( 303,633 )

Purchase of software and services by assuming directly related liabilities ( 2,073 ) ( 2,491 ) ( 1,710 )

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(loss) income

(Accumulated deficit) retained

earnings Total stockholders' equity

1 unchanged sentence

Balance at December 31, 2021 66,165,666 $ 66 ( 14,182,805 ) $ ( 500,911 ) $ 968,927 $ 6,522 $ 242,456 $ 717,060

Net income — — — — — — 5,698 5,698

Common stock issued in purchase of EVERFI (see Note 3) 3,844,423 4 — — 303,629 — — 303,633

Purchase of treasury shares under stock repurchase program — — ( 1,592,933 ) ( 108,416 ) — — — ( 108,416 )

Net loss — — — — — — ( 45,407 ) ( 45,407 )

Common stock issued in purchase of EVERFI — — — — ( 1,352 ) — — ( 1,352 )

Retirements of common stock (1)

( 33,535 ) — — — ( 2,605 ) — — ( 2,605 )

Vesting of restricted stock units 1,015,304 — — — — — — —

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Balance at December 31, 2022 67,814,044 $ 68 ( 14,745,230 ) $ ( 537,287 ) $ 1,075,264 $ 8,938 $ 197,049 $ 744,032

Net loss — — — — — — ( 45,407 ) ( 45,407 )

Stock issuance costs related to purchase of EVERFI (see Note 3)

— — — — ( 1,352 ) — — ( 1,352 )

Net income — — — — — — 1,820 1,820

Retirements of common stock (1)

( 143 ) — — — ( 14 ) — — ( 14 )

Purchase of treasury shares under stock repurchase program — — ( 221,836 ) ( 18,831 ) — — — ( 18,831 )

Vesting of restricted stock units 1,007,921 — — — — — — —

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Restricted stock cancellations ( 106,859 ) — — — — — — —

Other comprehensive income — — — — — 2,416 — 2,416

Other comprehensive loss — — — — — ( 10,626 ) — ( 10,626 )

Balance at December 31, 2023 69,188,304 $ 69 ( 15,562,864 ) $ ( 591,557 ) $ 1,203,012 $ ( 1,688 ) $ 198,869 $ 808,705

Net income — — — — — — 1,820 1,820

Retirements of common stock (1)

( 143 ) — — — ( 14 ) — — ( 14 )

Purchase of treasury shares under stock repurchase program — — ( 221,836 ) ( 18,831 ) — — — ( 18,831 )

Net loss — — — — — — ( 283,172 ) ( 283,172 )

Purchase of treasury shares under stock repurchase program, inclusive of excise tax — — ( 5,362,439 ) ( 411,963 ) ( 9,246 ) — — ( 421,209 )

Vesting of restricted stock units 1,410,169 — — — — — — —

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(1) Represents shares retired after determining certain EVERFI's selling shareholders would be paid in cash, rather than shares of our common stock.

See Note 3 for additional information regarding our acquisition of EVERFI.

The accompanying notes are an integral part of these consolidated financial statements.

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Serving the nonprofit and education sectors, companies committed to social responsibility and individual change makers, our essential software is built to accelerate impact in fundraising, nonprofit financial management, digital giving, grantmaking, corporate social responsibility and education management.

A remote-first company, we have operations in the United States, Australia, Canada, Costa Rica and the United Kingdom, supporting users in 100+ countries.

A remote-first company, we have operations in the United States, Australia, Canada, Costa Rica, India and the United Kingdom, supporting users in 100+ countries.

Basis of Presentation

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Recently adopted accounting pronouncements

In September 2022, the Financial Accounting Standards Board issued Accounting Standards Update 2022-04, Liabilities-Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations ("ASU 2022-04").

This update requires entities that use supplier finance programs in connection with the purchase of goods and services to disclose key terms of the programs and information about obligations outstanding at the end of the reporting period, including a rollforward of those obligations.

The guidance does not affect the recognition, measurement, or financial statement presentation of supplier finance programs.

We adopted ASU 2022-04 on January 1, 2023 and the adoption did not have a material impact on our condensed consolidated financial statements.

In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ("ASU 2023-07").

This update requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources.

We adopted ASU 2023-07 on December 31, 2024 and the adoption did not have a material impact on our condensed consolidated financial statements.

Recently issued accounting pronouncements

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(i) charging for the use of our software solutions in cloud and hosted environments;

(ii) providing payment and transaction services;

and (iii) providing Impact-as-a-Service ™ digital educational content.

and (ii) providing payment and transaction services.

Revenue is recognized when control of these services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.

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Contractual recurring

Contractual recurring revenue is primarily comprised of fees for the use of our subscription-based software solutions, which includes providing access to cloud solutions, Impact-as-a-Service™ digital educational content, online training programs and subscription-based analytic services.

Contractual recurring revenue is primarily comprised of fees for the use of our subscription-based software solutions, which includes providing access to cloud solutions, online training programs and subscription-based analytic services.

Contractual recurring revenue also includes fees from maintenance services for our on-premises solutions.

Contractual recurring revenue represents stand-ready performance obligations in which we are making our solutions or services available to our customers continuously over time or the value of the contract renews.

Therefore, recurring revenue is generally recognized over time on a ratable basis over the contract term, beginning on the date that the solution or service is made available to the customer.

Our recurring revenue contracts are generally for a term of three years at contract inception with three -year renewals thereafter, billed annually in advance and non-cancelable.

Therefore, contractual recurring revenue is generally recognized over time on a ratable basis over the contract term, beginning on the date that the solution or service is made available to the customer.

Our contractual recurring revenue contracts are generally for a term of three years at contract inception with three -year renewals thereafter, billed annually in advance and non-cancelable.

Transactional recurring

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Sales commissions and related fringe benefits earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer.

These costs are deferred and then amortized in a manner that aligns with the expected period of benefit, which we have historically determined to be five years .

These costs are deferred and then amortized in a manner that aligns with the expected period of benefit, which we have determined to be six years .

We determined the period of benefit by taking into consideration our customer contracts, including renewals, retention, our technology and other factors.

We generally do not pay commissions for contract renewals that are commensurate with the commission paid on the initial contract.

The related amortization expense is included in sales, marketing and customer success expense in our consolidated statements of comprehensive income.

The related amortization expense is included in sales, marketing and customer success expense in our consolidated statements of comprehensive loss.

A contract asset is recorded when revenue is recognized in advance of our right to receive consideration (i.e., we must satisfy additional performance obligations in order to receive consideration).

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We record all derivative instruments on our consolidated balance sheets at fair value as either an asset or liability.

If the derivative is designated as a cash flow hedge, the effective portions of the changes in fair value of the derivative are recorded in other comprehensive income and reclassified to earnings in a manner that matches the timing of the earnings impact of the hedged transactions.

If the derivative is designated as a net investment hedge, the effective portions of the changes in fair value of the derivative are recorded to translation adjustment, a component of other comprehensive income, and recognized in earnings only when the hedged investment is liquidated.

If the derivative is designated as a cash flow hedge, the effective portions of the changes in fair value of the derivative are recorded in other comprehensive loss and reclassified to earnings in a manner that matches the timing of the earnings impact of the hedged transactions.

If the derivative is designated as a net investment hedge, the effective portions of the changes in fair value of the derivative are recorded to translation adjustment, a component of other comprehensive loss, and recognized in earnings only when the hedged investment is liquidated.

Ineffective portions of the changes in the fair value of cash flow hedges are recognized currently in earnings.

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Due to customers

Restricted cash due to customers consists of monies collected by us (or in transit) and payable to our customers, net of the associated transaction fees earned.

Restricted cash due to customers consists of monies collected and held at banks, payment processors, or other financial institutions (or in transit) and payable to our customers, net of the associated transaction fees earned.

Monies associated with amounts due to customers are segregated in separate bank accounts and used exclusively for the payment of amounts due to customers.

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Developed technology Straight-line and Curve of Economic Benefit (1)

Content Straight-line

(1) Certain of the customer relationships, marketing assets and developed technology assets are amortized on a curve that represents the expected period of economic benefit.

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If the carrying amount of a finite-lived intangible asset is no longer recoverable based upon the undiscounted cash flows of the asset, the amount of impairment is the difference between the carrying amount and the fair value of the asset.

A ll of our intangible assets were acquired in business combinations.

See Note 6 to these consolidated financial statements for a discussion of our impairment of certain intangible assets during 2022.

There were no impairments of acquired intangible assets during 2023 and 2021.

All of our intangible assets were acquired in business combinations.

See Note 6 to these consolidated financial statements for a discussion of our impairment of certain intangible assets during 2024 and 2022.

There were no impairments of acquired intangible assets during 2023.

Impairment of long-lived assets

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Deferred financing costs and debt discount

Deferred financing costs included in other assets represent the direct third-party costs of entering into the revolving (line-of-credit) portion of our credit facility in October 2020 and portions of the unamortized deferred financing costs from prior facilities.

Deferred financing costs included in other assets represent the direct third-party costs of entering into the revolving (line-of-credit) portion of our credit facility in April 2024 and portions of the unamortized deferred financing costs from prior facilities.

These costs are amortized ratably over the term of the credit facility as interest expense.

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Notes to Consolidated Financial Statements

Other debt issuance costs, as well as the debt discount associated with our 2021 Incremental Term Loan (as defined below), 2020 Credit facility (as defined below) and portions of the unamortized balances from prior facilities, are recorded as a direct deduction from debt.

Other debt issuance costs, as well as the debt discount associated with the 2024 Credit Facilities (as defined below) and portions of the unamortized balances from prior facilities, are recorded as a direct deduction from debt.

These costs are amortized over the term of the credit facility as interest expense.

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Gains and losses resulting from foreign currency transactions denominated in currency other than the functional currency are recorded at the approximate rate of exchange at the transaction date in other income, net.

For the years ended December 31, 2023 and 2021, we recorded net foreign currency losses that were insignificant and $ 1.6 million, respectively.

During the year ended December 31, 2022, we recorded a net foreign currency gain of $ 4.6 million.

For the years ended December 31, 2024 and 2022, we recorded net foreign currency gains that were insignificant and $ 4.6 million, respectively.

During the year ended December 31, 2023, we recorded a net foreign currency loss that was insignificant.

Research and development

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We evaluate the useful lives of these assets on an annual basis and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

See Note 6 to these consolidated financial statements for a discussion of our impairment of certain capitalized software development costs during 2022.

There were no impairments of capitalized software assets during 2023 and 2021.

See Note 6 to these consolidated financial statements for a discussion of our impairment of certain capitalized software and content development costs during 2024 and 2022.

There were no impairments of capitalized software assets during 2023.

We write off the gross carrying amount and accumulated amortization balances for all fully amortized capitalized software and content development cost assets.

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9,375 1,281 ( 5,162 ) 528 6,022

The amount of write-offs during the year ended December 31, 2023 was lower than during the same periods in 2022 and 2021 as we experienced payment delays during those years related to the COVID-19 pandemic.

Allowance for sales returns

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Although we believe we have substantial defenses in these matters, we could incur judgments or enter into settlements of claims that could have a material adverse effect on our consolidated financial position, results of operations or cash flows in any particular period.

Earnings (loss) per share

We compute basic earnings (loss) per share by dividing net (loss) income attributable to common stockholders by the weighted average number of common shares outstanding during the period.

(Loss) earnings per share

We compute basic (loss) earnings per share by dividing net (loss) income attributable to common stockholders by the weighted average number of common shares outstanding during the period.

Diluted earnings per share is computed by dividing net income attributable to common stockholders by the weighted average number of common shares and dilutive potential common shares outstanding during the period.

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Business Combinations and Dispositions

2024 dispositions

On December 31, 2024, we disposed of our EVERFI business, formerly a wholly-owned subsidiary of Blackbaud, Inc, to a private investment firm that is unaffiliated with Blackbaud for nominal cash consideration.

We incurred $ 14.0 million of costs associated with the disposition of this business, all of which were recorded as accrued expenses and other liabilities as of December 31, 2024.

As a result of the disposition, we recorded a loss of $ 15.2 million, which included direct costs to sell the business.

This loss on disposition together with EVERFI impairment charges are recorded within EVERFI disposition on our consolidated statements of comprehensive loss for the year ended December 31, 2024.

See Note 4 to these consolidated financial statements for additional information about the EVERFI impairment charges.

EVERFI Limited

On March 2, 2024, we completed a transaction to divest our U.K.-based creative services business EVERFI Limited, formerly a wholly-owned subsidiary of EVERFI, Inc, which was a wholly-owned subsidiary of Blackbaud, Inc.

EVERFI Limited's total revenue during 2023 was $ 8.4 million.

We incurred an insignificant amount of legal costs associated with the disposition of this business.

As a result of the disposition, we recorded a $ 1.6 million loss, which was recorded in general and administrative expense on our consolidated statements of comprehensive loss for the year ended December 31, 2024.

2022 disposition

Blackbaud FIMS™ and DonorCentral® NXT

On September 9, 2022, we sold our Foundation Information Management System ("FIMS") and DonorCentral NXT solutions to Fusion Laboratories, LLC for cash proceeds of approximately $ 6.4 million, subject to closing adjustments.

During the year ended December 31, 2022, we recognized a noncash impairment charge of $ 2.0 million against certain insignificant FIMS customer relationship intangible assets that were then held for sale.

The impairment charge was recorded in general and administrative expense in our consolidated statements of comprehensive loss.

The impairment charge was recorded in general and administrative expense on our consolidated statements of comprehensive loss.

2022 acquisition

On August 19, 2022, we acquired all of the outstanding stock of Kilter, Inc., a Delaware corporation, pursuant to an agreement and plan of merger, for approximately $ 2.9 million in cash, net of closing adjustments.

In addition to the consideration paid at closing, we may be required to pay up to a maximum of $ 3.0 million in additional cash consideration if during the two-year period commencing January 1, 2023 Kilter meets certain application participation targets.

As of December 31, 2023, a liability for the contingent consideration is recorded at its current estimated fair value of $ 1.4 million in other liabilities in our consolidated balance sheet.

Any change in the fair value of the contingent liability, or any change upon final settlement, will be recognized in income from operations.

In addition to the consideration paid at closing, the agreement and plan of merger included cash consideration payable, up to a maximum of $ 3.0 million, if during the two-year period commencing January 1, 2023 Kilter met certain application participation targets.

These targets were not met and, therefore, no liability is recorded as of December 31, 2024.

Fair values were also assigned to the other assets acquired and liabilities assumed, primarily consisting of goodwill and a finite-lived developed technology intangible asset, which will be amortized over an estimated useful life of three years.

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Insignificant acquisition-related costs, which primarily consisted of legal services, were recorded as general and administrative expense during the year ended December 31, 2023.

2021 Acquisition

On December 31, 2021, we acquired all of the outstanding equity securities, including all voting equity interests, of EVERFI, Inc., a Delaware corporation, pursuant to an agreement and plan of merger.

We acquired the equity securities for approximately $ 441.8 million in cash consideration and 3,810,888 shares of our common stock, valued at approximately $ 301.0 million, for an aggregate purchase price of approximately $ 742.8 million, net of closing adjustments.

The cash consideration and related expenses were funded primarily through cash on hand and new borrowings under the 2020 Credit Facility (as defined below).

As a result of the acquisition, EVERFI became a wholly owned subsidiary of ours.

The operating results of EVERFI have been included in our consolidated financial statements from the date of acquisition.

During the year ended December 31, 2021, we incurred insignificant acquisition-related expenses associated with the acquisition, which were recorded in general and administrative expense.

In accordance with applicable accounting rules, we determined that the impact of this acquisition was not material to our consolidated financial statements;

therefore, revenue and earnings since the acquisition date and pro forma information are not required or presented.

We finalized the purchase price allocation of EVERFI, including the valuation of assets acquired and liabilities assumed, during the fourth quarter of 2022.

2024 Form 10-K

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Balance at December 31, 2023 $ 1,053,738

Adjustments related to prior year business combination (1)

Effect of foreign currency translation ( 1,232 )

Balance at December 31, 2024 $ 1,052,506

(1) Represents immaterial measurement period adjustments during the year ended December 31, 2023 to the fair value of the Kilter assets acquired and liabilities assumed.

We have recorded intangible assets acquired in various business combinations based on their fair values at the date of acquisition.

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Intangible assets, net $ 132,881 $ 581,937

During the year ended December 31, 2023, changes to the gross carrying amounts of intangible asset classes were primarily related to write-offs of fully amortized intangible assets and the effect of foreign currency translation.

Amortization expense

Amortization expense related to finite-lived intangible assets acquired in business combinations is allocated to cost of revenue on the consolidated statements of comprehensive income based on the revenue stream to which the asset contributes, except for marketing assets and non-compete agreements, for which the associated amortization expense is included in operating expenses.

During the year ended December 31, 2024, changes to the gross carrying amounts of intangible asset classes were primarily related to the EVERFI impairment charges and subsequent disposition discussed below, write-offs of fully amortized intangible assets and the effect of foreign currency translation.

EVERFI impairment charges

In July 2024, we hired a strategic advisor to assist us in considering a range of alternatives for EVERFI, one of which included a potential divestiture of the business.

As part of evaluating alternatives for EVERFI, during the fourth quarter of 2024, we prepared a revised business forecast that included a new level of detail, including separately identifiable cash flows for EVERFI.

The Company then reassessed its asset groupings under ASC 360-10 and determined there was a new asset group for EVERFI and evaluated this asset group for potential impairment.

On December 9, 2024, the Company concluded that a material impairment charge was required related to its EVERFI asset group, which primarily included finite-lived intangible assets and capitalized software and content development costs.

On December 29, 2024, we classified EVERFI's assets and liabilities as held for sale and we determined there would be an additional impairment charge to record the EVERFI disposal group at its estimated fair value less costs to sell resulting in total noncash impairment charges of $ 390.2 million.

On December 31, 2024, we disposed of EVERFI for a nominal amount that resulted in a loss on disposition of $ 15.2 million, which together with the impairment charges, is recorded within EVERFI disposition on our consolidated statements of

2024 Form 10-K

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Notes to Consolidated Financial Statements

comprehensive loss.

See Note 3 to these consolidated financial statements for additional information about the disposition of EVERFI.

Amortization expense

The following table summarizes amortization expense of our finite-lived intangible assets:

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Total $ 103,332

Earnings (Loss) Per Share

The following table sets forth the computation of basic and diluted earnings (loss) per share:

2024 Form 10-K

Blackbaud, Inc.

Notes to Consolidated Financial Statements

(Loss) Earnings Per Share

The following table sets forth the computation of basic and diluted (loss) earnings per share:

Years ended December 31,

(dollars in thousands, except per share amounts) 2024 2023 2022

Net income (loss) $ 1,820 $ ( 45,407 ) $ 5,698

Net (loss) income $ ( 283,172 ) $ 1,820 $ ( 45,407 )

Weighted average common shares 50,560,538 52,546,406 51,569,148

Add effect of dilutive securities:

Stock-based awards 1,174,936 — 818,132

Restricted stock and units — 1,174,936 —

Weighted average common shares assuming dilution 50,560,538 53,721,342 51,569,148

Earnings (loss) per share

(Loss) earnings per share

Basic $ ( 5.60 ) $ 0.03 $ ( 0.88 )

Diluted $ ( 5.60 ) $ 0.03 $ ( 0.88 )

Anti-dilutive shares excluded from calculations of diluted earnings (loss) per share 45,614 1,046,307 974,110

Diluted loss per share for the year ended December 31, 2022 was the same as basic loss per share as there was a net loss in the period and inclusion of potentially dilutive securities was anti-dilutive.

Anti-dilutive shares excluded from calculations of diluted (loss) earnings per share 54,236 45,614 1,046,307

Diluted loss per share for the years ended December 31, 2024 and 2022 was the same as basic loss per share as there were net losses in each period and inclusion of potentially dilutive securities was anti-dilutive.

2024 Form 10-K

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Interest rate swaps $ — $ 9,262 $ — $ 9,262

Total financial assets $ — $ 16,198 $ — $ 16,198

Fair value as of December 31, 2023

Financial liabilities:

Interest rate swaps $ — $ 5,004 $ — $ 5,004

Foreign currency forward contracts — 1,288 — 1,288

Contingent consideration obligations — — 1,403 1,403

Total financial liabilities $ — $ 5,540 $ 1,403 $ 6,943

Total financial assets $ — $ 10,550 $ — $ 10,550

Fair value as of December 31, 2023

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Interest rate swaps $ — $ 16,198 $ — $ 16,198

Foreign currency forward contracts — 247 — 247

Total financial assets $ — $ 16,198 $ — $ 16,198

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Financial liabilities:

Interest rate swaps $ — $ 5,004 $ — $ 5,004

Foreign currency forward contracts — 536 — 536

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Accordingly, our interest rate swaps and foreign currency forward contracts are classified within Level 2 of the fair value hierarchy.

Our financial contracts that were indexed to LIBOR were modified to reference SOFR during the three months ended September 30, 2022.

These modifications did not have a significant financial impact.

Contingent consideration obligations arise from business acquisitions.

The fair values are based on discounted cash flow analyses reflecting a probability-weighted assessment approach derived from the likelihood of possible achievement of specified performance measures or events and captures the contractual nature of the contingencies, commercial risk, and the

2023 Form 10-K

Blackbaud, Inc.

Notes to Consolidated Financial Statements

time value of money.

As the fair value measurements for our contingent consideration obligations contain significant unobservable inputs, they are classified within Level 3 of the fair value hierarchy.

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We believe the carrying amounts of our cash and cash equivalents, restricted cash, accounts receivable, trade accounts payable, accrued expenses and other current liabilities and due to customers approximate their fair values at December 31, 2024 and December 31, 2023, due to the immediate or short-term maturity of these instruments.

2024 Form 10-K

Blackbaud, Inc.

Notes to Consolidated Financial Statements

We believe the carrying amount of our debt approximates its fair value at December 31, 2024 and December 31, 2023, as the debt bears interest rates that approximate market value.

As SOFR rates are observable at commonly quoted intervals, our debt under the 2020 Credit Facility (as defined below) is classified within Level 2 of the fair value hierarchy.

As SOFR rates are observable at commonly quoted intervals, our debt under the 2024 Credit Facilities (as defined below) is classified within Level 2 of the fair value hierarchy.

The fair value of our fixed rate debt does not exceed the carrying amount.

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For goodwill impairment testing, we estimate fair value using market-based methods including the use of market capitalization and consideration of a control premium.

During the year ended December 31, 2024, we recorded noncash impairment charges of $ 367.5 million against certain intangible assets, noncash impairment charges of $ 22.6 million against certain previously capitalized software and content development costs, noncash impairment charges of $ 3.1 million against certain operating lease ROU assets and noncash impairment charges against certain property and equipment assets which were insignificant.

See Notes 4, 7, and 11, respectively, to these consolidated financial statements for additional details.

During the year ended December 31, 2023, we recorded noncash impairment charges of $ 5.6 million against certain operating lease ROU assets and $ 1.1 million impairment charges against certain property and equipment assets.

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See Notes 11 and 7, respectively, to these consolidated financial statements for additional details.

During the year ended December 31, 2021, we recorded noncash impairment charges of $ 3.6 million against certain operating lease ROU assets and $ 1.7 million against certain property and equipment assets.

See Notes 11 and 7, respectively, to these consolidated financial statements for additional details.

There were no other non-recurring fair value adjustments during 2024, 2023 and 2022 except for certain business combination accounting adjustments to the initial fair value estimates of the assets acquired and liabilities assumed at the acquisition date from updated estimates and assumptions during the measurement period.

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Depreciation expense was $ 12.8 million, $ 13.0 million and $ 14.1 million for the years ended December 31, 2024, 2023 and 2022, respectively.

During the year ended December 31, 2023, we recorded noncash impairment charges of $ 1.1 million against certain property and equipment assets .

These impairment charges resulted primarily from our entry into a sublease in July 2023 for a portion of our Washington, DC office location, which we previously closed in February 2023 to align with our remote-first workforce strategy and are reflected in general and administrative expense on the statements of comprehensive income.

During the year ended December 31, 2022, we recorded insignificant noncash impairment charges against certain property and equipment assets.

These impairment charges resulted primarily from our decision to cease using a portion of our leased office space and are reflected in general and administrative expense on the statements of comprehensive income.

During the years ended December 31, 2024 and 2022, we recorded insignificant noncash impairment charges against certain property and equipment assets.

During the year ended December 31, 2023, we recorded noncash impairment charges of $ 1.1 million against certain property and equipment assets.

These impairment charges resulted primarily from our decision to close our Austin office and are reflected in general and administrative expense on the statements of comprehensive income.

Each of th ese impairment charges resulted from our entry into subleases for different portions of our Washington, DC office location, which we closed in February 2023 to align with our remote-first workforce strategy.

These charges are included in general and administrative expense on our consolidated statements of comprehensive loss.

Software and content development costs

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$ 148,319 $ 160,194

During the year ended December 31, 2024, we recorded noncash impairment charges of $ 22.6 million against certain previously capitalized software and content development costs.

The impairment charges are includ ed in EVERFI impairment charges within EVERFI disposition on our consolidated statements of comprehensive loss.

For additional information, see the discussion of the EVERFI impairment charges in Note 4 to these consolidated financial statements .

2024 Form 10-K

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During the year ended December 31, 2022, we recorded noncash impairment charges of $ 2.3 million against certain previously capitalized software development costs that reduced the carrying value of those assets to zero.

The impairment charges were reflected in general and administrative expense and cost of recurring revenue, respectively, on the statements of comprehensive income.

The impairment charges were reflected in general and administrative expense on the statements of comprehensive loss.

These impairment charges resulted primarily from our decision to accelerate the end of customer support for certain solutions.

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Unbilled accounts receivable 7,067 5,615

Prepaid insurance 3,940 4,902

Investment in equity securities (6)

Taxes, prepaid and receivable 4,257 3,418

Deferred tax assets 644 1,153

Prepaid insurance 3,027 3,940

Other assets 14,026 14,346

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Prepaid expenses and other current assets $ 81,287 $ 99,285

(1) Amortization expense from costs of obtaining contracts was $ 31.9 million, $ 33.6 million and $ 35.5 million for the years ended December 31, 2023, 2022 and 2021, respectively, and is included in sales, marketing and customer success expense in our consolidated statements of comprehensive income.

(1) Amortization expense from costs of obtaining contracts was $ 20.1 million, $ 31.9 million and $ 33.6 million for the years ended December 31, 2024, 2023 and 2022, respectively, and is included in sales, marketing and customer success expense in our consolidated statements of comprehensive loss.

(2) The current portion of costs of obtaining contracts as of December 31, 2024 and 2023 was $ 18.4 million and $ 25.3 million, respectively.

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Accumulated amortization for these costs was $ 10.6 million and $ 7.7 million as of December 31, 2024 and 2023, respectively.

(6) Represents a strategic investment that did not result in Blackbaud having significant influence over the investee.

2024 Form 10-K

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Taxes payable $ 15,844 $ 21,282

Accrued costs to sell EVERFI (1)

Customer credit balances 8,779 10,238

Stock-based compensation liability (2)

Operating lease liabilities, current portion 4,489 6,701

Derivative instruments 5,540 323

Unrecognized tax benefit 4,285 2,954

Accrued commissions and salaries 4,012 4,413

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Accrued vacation costs 2,060 2,452

Derivative instruments — 5,540

Contingent consideration liability

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Accrued expenses and other current liabilities $ 75,543 $ 64,322

(1) See Note 3 for a discussion of our sale of EVERFI on December 31, 2024.

(2) This stock-based compensation liability will be settled during 2025 using shares of the Company’s common stock.

(3) All accrued legal costs are classified as current.

See Note 11 to these consolidated financial statements for additional information about our loss contingency accruals and other legal expenses.

Other income, net

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Interest income $ 9,846 $ 8,821 $ 1,746

Currency revaluation (losses) gains ( 36 ) 4,635 ( 1,644 )

Currency revaluation gains (losses) 487 ( 36 ) 4,635

Other income, net 4,216 4,076 2,332

Other income, net $ 14,549 $ 12,861 $ 8,713

2024 Form 10-K

Blackbaud, Inc.

Notes to Consolidated Financial Statements

The following table summarizes our debt balances and the related weighted average effective interest rates, which includes the effect of interest rate swap agreements.

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Debt, net of current portion $ 1,051,110 $ 760,405 5.73 % 4.17 %

2023 Form 10-K

Blackbaud, Inc.

Notes to Consolidated Financial Statements

2024 refinancing

In October 2020, we entered into a 5 -year $ 900.0 million Amended and Restated Credit Agreement (the “2020 Credit Facility”).

The 2020 Credit Facility matures in October 2025 and replaced our 5-year $700 million credit facility entered into during June 2017 (the "2017 Credit Facility") by amending and restating it to include a $ 500.0 million revolving credit facility (the “2020 Revolving Facility”) and a $ 400.0 million term loan facility (the “2020 Term Loan”).

Upon closing, we borrowed $ 400.0 million pursuant to the 2020 Term Loan and used the proceeds to repay the outstanding principal balance of the term loan under the 2017 Credit Facility, and repay $ 124.4 million of outstanding revolving credit loans under the 2017 Revolving Facility.

In connection with the amendment and restatement of the 2017 Credit Facility, the existing Pledge Agreement dated June 2, 2017, by us in favor of Bank of Am erica, N.A., as administrative agent, was likewise amended and restated.

Summary of the 2020 Credit Facility

The 2020 Revolving Facility includes (i) a $ 50.0 million sublimit available for the issuance of standby letters of credit, (ii) a $ 50.0 million sublimit available for swingline loans, and (iii) a $ 100.0 million sublimit available for multicurrency borrowings.

Our obligations under the 2020 Credit Facility are secured by the stock and limited liability company interests of certain of our direct subsidiaries and any of our material domestic subsidiaries, if any, and the proceeds therefrom pledged pursuant to an Amended and Restated Pledge Agreement dated as of October 30, 2020, by us in favor of Bank of America, N.A., as administrative agent, for the ratable benefit of itself and the secured parties referred to therein.

The term loan under the 2020 Credit Facility requires periodic principal payments.

The balance of the term loan and any amounts drawn on the revolving credit loans are due upon maturity of the 2020 Credit Facility in October 2025.

We evaluate the classification of our debt as current or non-current based on the required annual maturities of the 2020 Credit Facility.

We may prepay the 2020 Credit Facility in whole or in part at any time without premium or penalty, other than customary breakage costs with respect to certain types of loans.

The 2020 Credit Facility contains various representations, warranties and affirmative, negative and financial covenants customary for financings of this type.

Financial covenants include a net leverage ratio and an interest coverage ratio.

At December 31, 2023, we were in compliance with our debt covenants under the 2020 Credit Facility.

Under the terms of the 2020 Credit Facility, we are entitled on one or more occasions, subject to the satisfaction of certain conditions, to request an increase in the commitments under the Revolving Credit Facility and/or request additional incremental term loans in the aggregate principal amount of up to $ 250.0 million plus an amount, if any, such that the net leverage ratio shall be no greater than 3.25 to 1.00.

At December 31, 2023, our available borrowing capacity under the 2020 Credit Facility was $ 384.5 million.

First Amendment to 2020 Credit Facility

On January 31, 2022, we entered into the First Amendment to Credit Agreement (the “Amendment”).

The Amendment amended the 2020 Credit Facility to, among other things, (i) modify the definition of “Applicable Margin”, (ii) modify the net leverage ratio financial covenant to require a net leverage ratio of (A) 4.00 :1.00 or less for the fiscal quarter ended December 31, 2021 and for fiscal quarters ending thereafter through December 31, 2023 and (B) 3.75 :1.00 or less for the fiscal quarters ending March 31, 2024 and thereafter, (iii) reset the $ 250.0 million fixed dollar basket with respect to the accordion feature and (iv) modify certain negative covenants to provide additional operational flexibility.

LIBOR Transition Amendment

On August 26, 2022, we entered into a LIBOR Transition Amendment (the "LIBOR Amendment").

The LIBOR Amendment amended the 2020 Credit Facility, as previously amended, to change the interest rate benchmark from LIBOR to SOFR (as defined therein).

The LIBOR Amendment did not change any terms of the 2020 Credit Facility unrelated to reference rate reform.

After giving effect to both the First Amendment and the LIBOR Transition Amendment, dollar denominated loans under the 2020 Revolving Facility and the 2020 Term Loan bear interest based on, at our election, either (a) the Base Rate (as defined below) or (b) Term SOFR (as defined below), in each case, plus an applicable margin.

"Base Rate" is defined as a rate per annum equal to the highest of (i) the Federal Funds Rate plus 0.50 %, (ii) the prime rate announced by Bank of America, N.A.,

On April 30, 2024, we entered into the Third Amendment to Credit Agreement (the "Amendment"), by and among us, the lenders party thereto and Bank of America N.A., as administrative agent (the "Agent").

The Amendment amends the Amended and Restated Credit Agreement, dated as of October 30, 2020 (as previously amended, the "2020 Credit Agreement" and the 2020 Credit Agreement as amended by the Amendment, the “2024 Credit Agreement”), by and among us, the lenders from time-to-time party thereto and the Agent.

The Amendment amends the 2020 Credit Agreement to, among other things, (a) refinance the existing $ 1.1 billion credit facilities under the 2020 Credit Agreement to provide for new credit facilities in the aggregate principal amount of $ 1.5 billion consisting of (i) a $ 700.0 million revolving credit facility (the “2024 Revolving Facility”) and (ii) a $ 800.0 million term loan facility (the “2024 Term Facility” and together with the 2024 Revolving Facility, the “2024 Credit Facilities”), (b) extend the maturity date to April 30, 2029, (c) modify the definition of Applicable Margin (as defined below) and (iv) modify certain negative and financial covenants to provide additional operational flexibility.

Upon closing, we borrowed $ 800.0 million pursuant to the 2024 Term Facility and $ 208.2 million pursuant to the 2024 Revolving Facility and used the proceeds to repay the outstanding principal balances of the term loans under the 2020 Credit Agreement (the "2020 Term Facilities"), and repay $ 196.6 million of outstanding revolving credit loans under the 2020 Credit Agreement (the "2020 Revolving Facility").

Certain lenders of the 2024 Term Facility participated in the 2020 Term Facilities and the change in present value of our future cash flows to these lenders under the 2020 Term Facilities and under the 2024 Term Facility was less than 10%.

Accordingly, we accounted for the refinancing event for these lenders as a debt modification.

Certain lenders of the 2020 Term Facilities did not participate in the 2024 Term Facility.

Accordingly, we accounted for the refinancing event for these lenders as a debt extinguishment.

Certain lenders of the 2020 Revolving Facility participated in the 2024 Revolving Facility and provided increased borrowing capacities.

Accordingly, we accounted for the refinancing event for these lenders as a debt modification.

Certain lenders of the 2020 Revolving Facility did not participate in the 2024 Revolving Facility.

Accordingly, we accounted for the refinancing event for these lenders as a debt extinguishment.

We recorded an insignificant loss on debt extinguishment related to the write-off of debt discount and deferred financing costs for the portions of the 2020 Credit Agreement considered to be extinguished.

This loss was recognized in the consolidated statements of comprehensive loss within other income, net.

In connection with our entry into the 2024 Credit Agreement, we paid $ 6.5 million in financing costs, of which $ 1.6 million were capitalized in other assets and, together with a portion of the unamortized deferred financing costs from the 2020 Credit Agreement and prior agreements, are being amortized into interest expense over the term of the new facility.

As of December 31, 2024, deferred financing costs totaling $ 1.7 million were included in other assets on our consolidated balance sheets.

We recorded aggregate financing costs of $ 3.6 million as a direct deduction from the carrying amount of our debt liability, which related to debt discount (fees paid to lenders) and debt issuance costs for the 2024 Term Facility.

2024 Form 10-K

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Notes to Consolidated Financial Statements

and (iii) Term SOFR plus 1.00 %.

"Term SOFR" is defined as a rate per annum equal to the forward-looking term rate based on the secured overnight financing rate plus a credit sensitive adjustment of 0.11448 % for a one month tenor, 0.26161 % for a three month tenor or 0.42826 % for a six month tenor, as applicable, in each case, per annum.

The applicable margin is adjusted quarterly based on our net leverage ratio and ranges from 0.375 % to 1.50 % for Base Rate loans and 1.375 % to 2.50 % for Term SOFR loans, in each case, per annum.

Sterling denominated loans under the 2020 Revolving Facility bear interest based on SONIA plus an applicable margin.

"SONIA" is defined as a rate per annum equal to the Sterling Overnight Index Average Reference Rate published on the fifth Business Day preceding such date on the applicable Reuters screen page plus a credit sensitive adjustment of 0.0326 % per annum.

The applicable margin is adjusted quarterly based on our net leverage ratio and ranges from 1.375 % to 2.50 % per annum.

We also pay a quarterly commitment fee on the unused portion of the 2020 Revolving Facility from 0.250 % to 0.50 % per annum, depending on our net leverage ratio.

At December 31, 2023, the applicable margin for Term SOFR, SONIA and other Eurocurrency Rate loans under the 2020 Credit Facility was 1.625 % and the commitment fee applicable to the 2020 Revolving Facility was 0.250 %.

First Incremental Term Loan

On December 31, 2021, we entered into the First Incremental Term Loan Agreement (the "Incremental Amendment").

The Incremental Amendment amends the 2020 Credit Facility and, among other things, provides for a $ 250.0 million incremental term loan (the “2021 Incremental Term Loan”).

The 2021 Incremental Term Loan bears interest based on, at our election, either (a) the Base Rate (2021 Incremental) (as defined below), (b) Daily SOFR Rate (as defined below) or (c) Term SOFR (2021 Incremental) (as defined below), in each case, plus an applicable margin.

"Base Rate (2021 Incremental)" is defined as a rate per annum equal to the highest of (i) the Federal Funds Rate plus 0.50 %, (ii) the prime rate announced by Bank of America, N.A., and (iii) Daily SOFR Rate plus 1.00 %.

“Daily SOFR Rate” is defined as a rate per annum equal to secured overnight financing rate plus a credit sensitive adjustment of 0.10 %.

"Term SOFR (2021 Incremental)" is defined as a rate per annum equal to the forward-looking term rate based on the secured overnight financing rate plus a credit sensitive adjustment of 0.10 % for a one month tenor, 0.15 % for a three month tenor or 0.25 % for a six month tenor, as applicable, in each case, per annum.

The applicable margin is adjusted quarterly based on our net leverage ratio and ranges from 0.375 % to 1.50 % for Base Rate (2021 Incremental) loans and 1.375 % to 2.50 % for Daily SOFR Rate loans and Term SOFR (2021 Incremental) loans, in each case, per annum.

The 2021 Incremental Term Loan matures in October 2025, which is the maturity date of the existing term loan under the 2020 Credit Facility, and is otherwise subject to substantially the same terms and conditions as the existing term loan under the 2020 Credit Facility.

Financing costs

In connection with our entry into the 2020 Credit Facility, we paid $ 4.0 million in financing costs, of which $ 1.2 million were capitalized in other assets and, together with a portion of the unamortized deferred financing costs from the 2017 Credit Facility and prior facilities, are being amortized into interest expense over the term of the new facility.

We recorded aggregate financing costs of $ 2.0 million as a direct deduction from the carrying amount of our debt liability, which related to debt discount (fees paid to lenders) and debt issuance costs for the 2020 Term Loan.

In connection with our entry into the 2021 Incremental Term Loan, we paid $ 3.1 million in financing costs which were recorded as a direct deduction from the carrying amount of our debt liability.

As of December 31, 2023, deferred financing costs totaling $ 0.6 million were included in other assets on our consolidated balance sheets.

Summary of the 2024 Credit Facilities

The 2024 Revolving Facility includes (i) a $ 50.0 million letter of credit subfacility, (ii) a $ 50.0 million swingline subfacility and (iii) a $ 150.0 million sublimit available for multicurrency borrowings.

Under the 2024 Credit Facilities, dollar tranche revolving loans and term loans bear interest at a rate per annum equal to, at the option of the Company:

(a) a base rate equal to the highest of (i) the Federal Funds Rate plus 0.50 %, (ii) the prime rate announced by Bank of America, N.A., and (iii) Term SOFR plus 1.00 % (the “Base Rate”), plus an applicable margin as specified in the 2024 Credit Agreement (the “Applicable Margin”);

(b) Term SOFR plus the Applicable Margin;

or (c) the Daily SOFR Rate plus the Applicable Margin.

The Applicable Margin shall be adjusted quarterly, varies based on our net leverage ratio and varies based on whether the loan is a Base Rate Loan ( 0.375 % to 1.500 %), or a Term SOFR Loan/Daily SOFR Loan ( 1.375 % to 2.500 %).

The 2024 Credit Agreement also provides for a commitment fee of between 0.250 % and 0.500 % of the unused commitment under the 2024 Revolving Facility depending on our net leverage ratio.

Under the 2024 Credit Facilities, designated currency tranche revolving loans bear interest at a rate per annum equal to, at the option of the Company:

(a) the Designated Currency Daily Rate (as defined in the 2024 Credit Agreement) plus the Applicable Margin;

or (b) the Designated Currency Term Rate (as defined in the 2024 Credit Agreement) plus the Applicable Margin.

The Applicable Margin shall be adjusted quarterly and varies based on our net leverage ratio for both Designated Currency Daily Rate Loans and Designated Currency Term Rate Loans ( 1.375 % to 2.500 %).

We may prepay the 2024 Credit Agreement in whole or in part at any time without premium or penalty, other than customary breakage costs with respect to certain types of loans.

Under the terms of the 2024 Credit Agreement, we are entitled on one or more occasion, subject to the satisfaction of certain conditions, to request an increase in the commitments under the 2024 Revolving Facility and/or request additional incremental term loans in the aggregate principal amount of up to the sum of (i) the greater of (A) $ 360.0 million and (B) 100 % of EBITDA (as defined in the 2024 Credit Agreement), plus (ii) at our option, up to an amount such that the net leverage ratio shall be no greater than 3.50 to 1.00.

At December 31, 2024, our available borrowing capacity under the 2024 Credit Agreement was $ 468.7 million.

The 2024 Credit Agreement contains various representations, warranties and affirmative, negative and financial covenants customary for financings of this type.

Financial covenants include a net leverage ratio and an interest coverage ratio.

At December 31, 2024, we were in compliance with our debt covenants under the 2024 Credit Facilities.

Real estate loans

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At December 31, 2024, we were in compliance with our debt covenants under the Real Estate Loans.

2023 Form 10-K

Blackbaud, Inc.

Notes to Consolidated Financial Statements

From time to time, we enter into third-party financing agreements for purchases of software and related services for our internal use.

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Our assumption of these loans are noncash financing transactions and are reflected in our supplemental disclosure of cash flow information.

2024 Form 10-K

Blackbaud, Inc.

Notes to Consolidated Financial Statements

The following table summarizes our currently effective financing agreements as of December 31, 2024:

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January 2023 36 3 April 2023 2,491

April 2024 36 3 May 2024 2,073

(1) Represent noncash investing and financing transactions during the periods indicated as we purchased software and services by assuming directly related liabilities.

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Balance at December 31, 2024 $ 2,783

As of December 31, 2023, the required annual maturities related to the 2020 Credit Facility, the Real Estate Loans and our other debt were as follows:

As of December 31, 2024, the required annual maturities related to the 2024 Credit Facilities, the Real Estate Loans and our other debt were as follows:

Years ending December 31,

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Cash flow hedges

We have entered into interest rate swap agreements, which effectively convert portions of our variable rate debt under the 2020 Credit Facility to a fixed rate for the term of the swap agreements.

We have entered into interest rate swap agreements, which effectively convert portions of our variable rate debt under the 2024 Credit Facilities to a fixed rate for the term of the swap agreements.

We designated each of the interest rate swaps as cash flow hedges at the inception of the contracts.

As of December 31, 2023 and December 31, 2022, the aggregate notional

Our entry into the 2024 Credit Agreement in April 2024 did not affect our interest rate swap agreements, including their designation as cash flow hedges, as the 2024 Credit Agreement has substantially the same critical terms as the 2020 Credit Agreement.

As of December 31, 2024 and December 31, 2023, the aggregate notional values of the interest rate swaps were $ 700.0 million and $ 935.0 million, respectively.

All of the contracts have maturities on or before October 2028.

2024 Form 10-K

1 unchanged sentence

Notes to Consolidated Financial Statements

values of the interest rate swaps were $ 935.0 million and $ 435.0 million, respectively.

All of the contracts have maturities on or before October 2028.

We have entered into foreign currency forward contracts to hedge revenues denominated in the Canadian Dollar ("CAD") against changes in the exchange rate with the United States Dollar ("USD").

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comprehensive

(loss) income as of

reclassified from

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comprehensive

(loss) income into

income (loss)

Gain (loss) reclassified from

(loss) income

Gain reclassified from

accumulated other

comprehensive (loss) income

into income (loss)

comprehensive loss

into (loss) income

(dollars in thousands) December 31,

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Interest rate swaps $ 31,870 Interest expense $ 5,520

Foreign currency forward contracts $ 247 Revenue $ 165

Net Investment Hedges

Foreign currency forward contracts $ ( 323 ) $ —

Our policy requires that derivatives used for hedging purposes be designated and effective as a hedge of the identified risk exposure at the inception of the contract.

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(1) Includes short-term lease costs, which were immaterial.

During the year ended December 31, 2023, we recorded noncash impairment charges of $ 5.6 million against certain operating lease ROU assets.

During the year ended December 31, 2022, we recorded noncash impairment charges of $ 1.0 million against certain operating lease ROU assets resulting primarily from our decision to cease using a portion of our leased office space.

These charges are reflected in general and administrative expense on the statements of comprehensive income.

In October 2021, we made the decision to permanently close our fixed office locations (with the exception of our global headquarters facility in Charleston, South Carolina), effective in December 2021.

This change was intended to align our real estate footprint with our transition to a remote-first workforce.

We enter into arrangements for smaller more flexible workspaces where ne cessary.

As a result, during the twelve months ended December 31, 2021, we reduced the estimated useful lives of our operating lease ROU assets for certain of our office locations we expected to exit.

We recorded $ 5.3 million in incremental operating lease costs during 2021 related to this change in accounting estimate.

For these same office locations, we also reduced the estimated useful lives of certain facilities-related fixed assets, which resulted in incremental depreciation expense of $ 1.7 million during 2021 (see Note 7 to these consolidated financial statements).

During the twelve months ended December 31, 2021, we also recorded $ 3.6 million in impairments of op erating lease ROU assets associated with certain leased office spaces we have ceased using as a result of our adjusted workforce strategy.

These impairment charges are reflected in general and administrative expense.

During the years ended December 31, 2024, 2023, and 2022, we recorded noncash impairment charges of $ 3.1 million, $ 5.6 million, and $ 1.0 million, respectively, against certain operating lease ROU assets.

These impairment charges resulted from our entry into subleases for different portions of our Washington, DC office location, which we closed in February 2023 to align with our remote-first workforce strategy.

These charges are reflected in general and administrative expense on the statements of comprehensive loss.

Maturities of our operating lease liabilities as of December 31, 2024 were as follows:

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Present value of future payments $ 38,675

2023 Form 10-K

Blackbaud, Inc.

Notes to Consolidated Financial Statements

Our ROU assets and lease liabilities are included in the following line items in our consolidated balance sheet:

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Weighted average discount rate 4.53 % 4.70 % 4.63 %

2024 Form 10-K

Blackbaud, Inc.

Notes to Consolidated Financial Statements

Supplemental cash flow information related to leases was as follows:

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Other commitments

The term loans under the 2020 Credit Facility require periodic principal payments.

The balance of the term loans and any amounts drawn on the revolving credit loans are due upon maturity of the 2020 Credit Facility in October 2025.

The term loans under the 2024 Credit Facilities require periodic principal payments.

The balance of the term loans and any amounts drawn on the revolving credit loans are due upon maturity of the 2024 Credit Facilities in April 2029.

The Real Estate Loans also require periodic principal payments and the balance of the Real Estate Loans are due upon maturity in April 2038.

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if none of the estimates within that range is a better estimate than any other amount, we accrue the low end of the range.

For proceedings in which an unfavorable outcome is reasonably possible but not probable and an estimate of

2023 Form 10-K

Blackbaud, Inc.

Notes to Consolidated Financial Statements

the loss or range of losses arising from the proceeding can be made, we disclose such an estimate, if material.

For proceedings in which an unfavorable outcome is reasonably possible but not probable and an estimate of the loss or range of losses arising from the proceeding can be made, we disclose such an estimate, if material.

If such a loss or range of losses is not reasonably estimable, we disclose that fact.

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Based on the nature of the Security Incident, our research and third party (including law enforcement) investigation, we do not believe that any data went beyond the cybercriminal, has been misused, or has been disseminated or otherwise made available publicly.

Our investigation into the Security Incident remains ongoing.

As a result of the Security Incident, we are currently subject to certain legal proceedings, claims and investigations, as discussed below, and could be the subject of additional legal proceedings, claims, inquiries and investigations in the future that might result in adverse judgments, settlements, fines, penalties or other resolution.

As a result of the Security Incident, we are currently subject to certain legal proceedings and claims, as discussed below, and could be the subject of additional legal proceedings, claims, inquiries and investigations in the future that might result in

2024 Form 10-K

Blackbaud, Inc.

Notes to Consolidated Financial Statements

adverse judgments, settlements, fines, penalties or other resolution.

To limit our exposure to losses related to claims against us, including data breaches such as the Security Incident, we maintain $ 50 million of insurance abo ve a $ 250 thousand deductible payable by us.

As noted below, this coverage reduced our financial exposure related to the Security Incident in prior years.

We recorded expenses and offsetting probable insurance recoveries related to the Security Incident as follows:

We recorded expenses and offsetting insurance recoveries related to the Security Incident as follows:

Years ended December 31,

1 unchanged sentence

Gross expense $ 13,700 $ 53,426 $ 57,614

Offsetting probable insurance recoveries — ( 1,891 ) ( 38,745 )

Offsetting insurance recoveries — — ( 1,891 )

Net expense $ 13,700 $ 53,426 $ 55,723

7 unchanged sentences

Cumulative offsetting insurance recoveries paid $ ( 50,000 ) $ ( 50,000 ) $ ( 50,000 )

Recorded expenses have consisted primarily of payments to third-party service providers and consultants, including legal fees, settlement of the previously disclosed SEC and multi-state Attorneys General investigations (discussed below), settlements of customer claims and accruals for certain loss contingencies.

Recorded expenses have consisted primarily of payments to third-party service providers and consultants, including legal fees, settlement of the previously disclosed SEC and multi-state Attorneys General investigation and Attorney General of the State of California investigation (discussed below), settlements of customer claims and accruals for certain loss contingencies.

Not included in the expenses discussed above were costs associated with enhancements to our cybersecurity program.

We present expenses and insurance recoveries related to the Security Incident in general and administrative expense on our consolidated statements of comprehensive (loss) income and as operating activities on our consolidated statements of cash flows.

We present expenses and insurance recoveries related to the Security Incident in general and administrative expense on our consolidated statements of comprehensive loss and as operating activities on our consolidated statements of cash flows.

Total costs related to the Security Incident exceeded the limit of our insurance coverage during the first quarter of 2022.

We expect to continue to experience significant expenses related to our response to the Security Incident, resolution of legal proceedings, claims and investigations, including those discussed below, and our efforts to further enhance our cybersecurity measures.

For full year 2023, we incurred net pre-tax

2023 Form 10-K

Blackbaud, Inc.

Notes to Consolidated Financial Statements

expense of $ 53.4 million related to the Security Incident, which included $ 22.4 million for ongoing legal fees.

It also includes settlements and additional accruals for loss contingencies of $ 31.0 million.

Also, for full year 2023, we had net cash outlays of $ 78.0 million related to the Security Incident, which included ongoing legal fees, the $ 3.0 million civil penalty paid during the first quarter of 2023 related to the SEC settlement and the $ 49.5 million civil penalty paid during the fourth quarter of 2023 related to the multi-state Attorneys General settlement (discussed below).

We expect to continue to incur expenses related to our response to the Security Incident, resolution of legal proceedings, claims and investigations, including those discussed below, and our efforts to further enhance our cybersecurity measures.

For the year ended December 31, 2024, we incurred net pre-tax expense of $ 13.7 million related to the Security Incident, which included $ 7.0 million for ongoing legal fees.

It also includes a settlement of loss contingencies of $ 6.8 million.

Also, for the year ended December 31, 2024, we had net cash outlays of $ 15.9 million related to the Security Incident, which included ongoing legal fees and the $ 6.8 million paid during the third quarter of 2024 related to our settlement with the Attorney General of the State of California (discussed below).

In line with our policy, legal fees are expensed as incurred.

For full year 2024, we currently expect net pre-tax expense of approximately $ 5.0 million to $ 10.0 million and net cash outlays of approximately $ 8.0 million to $ 13.0 million for ongoing legal fees related to the Security Incident.

For the year ended December 31, 2025, we currently expect net pre-tax expense of approximately $ 2.0 million to $ 3.0 million and net cash outlays of approximately $ 3.0 million to $ 4.0 million for ongoing legal fees related to the Security Incident.

As of December 31, 2024, we have recorded approximately $ 0.7 million in aggregate liabilities for loss contingencies based primarily on recent negotiations with certain customers related to the Security Incident that we believe we can reasonably estimate in accordance with our loss contingency procedures described above.

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It is reasonably possible that our estimated or actual losses may change in the near term for those matters and be materially in excess of the amounts accrued, but we are unable at this time to reasonably estimate the possible additional loss.

There are other Security Incident-related matters, including customer claims, customer constituent class actions and governmental investigations, for which we have not recorded a liability for a loss contingency as of December 31, 2023 because we are unable at this time to reasonably estimate the possible loss or range of loss.

Each of these matters could, separately or in the aggregate, result in an adverse judgement, settlement, fine, penalty or other resolution, the amount, scope and timing of which we are currently unable to predict, but could have a material adverse impact on our results of operations, cash flows or financial condition.

There are other Security Incident-related matters for which we have not recorded a liability for a loss contingency as of December 31, 2024 because we are unable at this time to reasonably estimate the possible loss or range of loss.

Each of these matters could, separately or in the aggregate, result in an adverse judgment, settlement, fine, penalty or other resolution, the amount, scope and timing of which we are currently unable to predict, but could have a material adverse impact on our results of operations, cash flows or financial condition.

2024 Form 10-K

Blackbaud, Inc.

Notes to Consolidated Financial Statements

Customer claims.

To date, we have received approximately 260 specific requests for reimbursement of expenses, approximately 214 (or 82 %) of which have been fully resolved and closed and approximately 39 (or 15 %) are inactive and are considered by us to have been abandoned by the customers.

To date, we have received approximately 260 specific requests from customers for reimbursement of expenses incurred by them related to the Security Incident, all of which have been fully resolved and closed or are inactive and are considered by us to have been abandoned by the customers.

We have also received approximately 400 reservations of the right to seek expense recovery in the future from customers or their attorneys in the U.S., U.K.

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We have also received notices of proposed claims on behalf of a number of U.K.

data subjects, which we are reviewing.

In addition, insurance companies representing various customers’ interests through subrogation claims have contacted us, and certain insurance companies have filed subrogation claims in court, of which 3 cases remain active and unresolved.

Customer and insurer subrogation claims generally seek reimbursement of their costs and expenses associated with notifying their own customers of the Security Incident and taking steps to assure that personal information has not been compromised as a result of the Security Incident.

Our review of customer and subrogation claims includes analyzing individual customer contracts into which we have entered, the specific claims made and applicable law.

data subjects, which have been fully resolved and closed or are inactive and are considered by us to have been abandoned by the data subjects.

Customer constituent class actions .

Presently, we are a defendant in putative consumer class action cases in U.S.

federal courts (most of which have been consolidated under multi district litigation to a single federal court) and in Canadian courts alleging harm from the Security Incident.

federal courts (which have been consolidated under multi district litigation to a single federal court) alleging harm from the Security Incident.

The plaintiffs in these cases, who 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.

Lawsuits that are putative class actions require a plaintiff to satisfy a number of procedural requirements before proceeding to trial.

These requirements include, among others, demonstration to a court that the law proscribes in some manner our activities, the making of factual allegations sufficient to suggest that our activities exceeded the limits of the law and a determination by the court—known as class certification—that the law permits a group of individuals to pursue the case together as a class.

If these procedural requirements are not met, the lawsuit cannot proceed as a class action and the plaintiff may lose the financial incentive to proceed with the case.

We are currently engaged in court proceedings to determine whether this will proceed as a class action.

Frequently, a court’s determination as to these procedural requirements is subject to appeal to a higher court.

As a result of these uncertainties, we may be unable to determine the probability of loss until, or after, a court has finally determined that a plaintiff has satisfied the applicable class action procedural requirements.

2023 Form 10-K

Blackbaud, Inc.

Notes to Consolidated Financial Statements

Furthermore, for putative class actions, it is often not possible to reasonably estimate the possible loss or a range of loss amounts, even where we have determined that a loss is reasonably possible.

Generally, class actions involve a large number of people and raise complex legal and factual issues that result in uncertainty as to their outcome and, ultimately, making it difficult for us to estimate the amount of damages that a plaintiff might successfully prove.

This analysis is further complicated by the fact that the plaintiffs lack contractual privity with us.

On May 14, 2024, the United States District Court for the District of South Carolina (the "Court") issued a memorandum opinion and order (1) denying the multi district litigation plaintiffs' motion for class certification because of the plaintiffs' failure to meet their burden of proof as to ascertainability, (2) granting our motion to exclude the multi district litigation plaintiffs' expert on the issue of ascertainability, and (3) denying the multi district litigation plaintiffs' motion to exclude our expert on the issue of ascertainability.

Further, the Court denied as moot all other pending motions.

On July 30, 2024, the Fourth Circuit Court of Appeals denied the plaintiffs' petition for permission to appeal the Court's ruling.

This litigation remains ongoing.

In December 2024 and January 2025, judges in Ontario and British Columbia, respectively, approved a settlement between us and plaintiffs in putative consumer class actions cases in Canada.

In January 2025, the insignificant settlement was paid to Canadian charities designated in the settlement agreement as cy pres recipients.

Governmental investigations.

We have received a Civil Investigative Demand from the office of the California Attorney General relating to the Security Incident and are in discussions with the Attorney General about potential resolution of issues arising from this investigation.

Although we are hopeful that we can resolve this matter on acceptable terms, there is no assurance that we will be able to do so on terms acceptable to us and the State of California.

We also are subject to the following pending governmental actions:

• an investigation by the U.S.

Federal Trade Commission (the "FTC"), as further described below;

• an investigation by the U.S.

As previously disclosed, we were subject to an investigation by the U.S.

Department of Health and Human Services.

We also responded to inquiries from the Office of the Australian Information Commissioner in September 2020 and the Office of the Privacy Commissioner of Canada in October 2020.

As previously disclosed, on February 1, 2024, the FTC announced its approval of an Agreement Containing Consent Order (the “Proposed Order”) evidencing its settlement with the Company in connection with the Security Incident.

Pursuant to its rules, the FTC placed the Proposed Order and related draft complaint on the public record for a period of 30 days for the receipt of public comments after which the FTC will consider any comments received from interested persons prior to determining whether and in what form to finalize the Proposed Order.

The 30-day comment period is scheduled to expire on March 14, 2024.

As part of the FTC’s proposed order, the Company has not been fined and is not otherwise required to make any payment.

Furthermore, the Company has agreed to the FTC’s proposed order without admitting or denying any of the FTC’s allegations, except as expressly stated otherwise in the Proposed Order.

If finalized, the settlement described in the Proposed Order will fully resolve the FTC investigation.

Although we believe the Proposed Order will be finalized in substantially its current form, there can be no assurances as to whether that will occur or its timing.

Under the terms of the Proposed Order, we have agreed (i) to not misrepresent (a) the extent to which we maintain, use, delete or disclose certain customer information, (b) the extent to which we protect the privacy, security, availability, confidentiality or integrity of such information or (c) the extent of any security incident or unauthorized disclosure, misuse, loss, theft, alteration, destruction or other compromise of such information, and (ii) to delete certain data, adopt and make public certain record retention limits, establish, implement and maintain a specified information security program, obtain regular independent assessments of the mandated information security program, provide to the FTC specified certifications regarding our compliance with the Proposed Order, provide to the FTC reports of any future security incidents and create and maintain specified recordkeeping.

For more information, see the form of Proposed Order that was furnished as Exhibit 99.2 to the Company’s Current Report on Form 8-K filed with the SEC on February 2, 2024.

As previously disclosed, on October 5, 2023, we entered into separate, substantially similar Administrative Orders with each of 49 state Attorneys General and the District of Columbia relating to the previously announced 2020 Security Incident in which a cyber-criminal removed a copy of a subset of data from our self-housed environment.

This settlement fully resolves the previously disclosed multi-state Civil Investigative Demand and the separate Civil Investigative Demand from the Office of the Indiana Attorney General relating to the Security Incident (the “Multi-state Investigation”), which is further described in the substantially similar Administrative Orders filed in each of the 49 states and the District of Columbia.

Under the terms of the Administrative Orders, we have agreed:

(i) to comply with state consumer protection laws, data breach notification laws, and the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”);

(ii) not to make misleading misrepresentations to our customers or the individuals whose data is stored by us concerning (a) the extent to which we protect the privacy, security, confidentiality, or integrity of certain data, (b) the likelihood that data impacted by a security incident may be subject to unauthorized access, disclosure, or other misuse, or (c) the data breach notification requirements;

and (iii) to implement and improve certain cybersecurity programs and tools.

Although we have not received notices of the termination of any of these inquiries and investigations, we believe that they are no longer active.

On June 13, 2024, we agreed to a Final Judgment and Permanent Injunction with the Attorney General of the State of California (the "Final Judgment") relating to the Security Incident.

This settlement fully resolved the last remaining U.S.

state attorney general investigation into the Security Incident.

Under the terms of the settlement, we agreed to comply with applicable laws;

not to make misleading statements related to our data protection, privacy, security, confidentiality, integrity, breach notification requirements, and similar matters;

and to implement and improve certain cybersecurity programs and tools.

The terms of the settlement with California are generally consistent with those to which we agreed in settling with the other 49 state Attorneys General and the District of Columbia on October 5, 2023, as discussed below.

As part of the settlement, we also paid a total of $ 6.8 million to the State of California.

Nothing contained in the Final Judgment is intended to be, and shall not in any event be construed or deemed to be, an admission or concession or evidence of any liability or wrongdoing whatsoever on the part of Blackbaud or any fact or violation of law, rule, or regulation.

For more information, see the Final Judgment and Permanent Injunction of the State of California, County of San Diego that was furnished as Exhibit 99.1 to our Current Report on Form 8-K filed with the SEC on June 14, 2024.

On May 20, 2024, the U.S.

Federal Trade Commission (the "FTC") finalized an Order (the “FTC Order”) evidencing its settlement with us in connection with the Security Incident.

As part of the FTC Order, we were not fined and were not otherwise required to make any payment.

Furthermore, we agreed to the FTC Order without admitting or denying any of the FTC’s allegations, except as expressly stated otherwise in the FTC Order.

The settlement described in the FTC Order fully resolved the FTC investigation.

For more information, see the form of proposed order that was furnished as Exhibit 99.2 to our Current Report on Form 8-K filed with the SEC on February 2, 2024 and is identical in substance to the final FTC Order, and in Note 11 to our audited consolidated financial statements contained in our Annual Report on Form 10-K filed with the SEC on February 21, 2024.

On October 5, 2023, we entered into separate, substantially similar Administrative Orders with each of 49 state Attorneys General and the District of Columbia relating to the Security Incident which fully resolved the previously disclosed multi-state

2024 Form 10-K

1 unchanged sentence

Notes to Consolidated Financial Statements

As part of the Administrative Orders, we also agreed to pay, and have paid, a total of $ 49.5 million to the 49 states and District of Columbia.

We entered into the Administrative Orders without admitting fault or liability in connection with the matters subject to the Multi-state Investigation.

The form of Administrative Order was furnished as Exhibit 99.2 to our Current Report on Form 8-K filed with the SEC on October 5, 2023.

As previously disclosed, on March 9, 2023, we reached a settlement with the SEC in connection with the Security Incident.

This settlement fully resolves the previously disclosed SEC investigation of the Security Incident and is further described in an SEC cease-and-desist order (the “SEC Order”).

Under the terms of the SEC Order, we have agreed to cease-and-desist from committing or causing any violations or any future violations of Sections 17(a)(2) and (3) of the Securities Act of 1933, as amended (the “Securities Act”), and Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rules 12b-20, 13a-13 and 13a-15(a) thereunder.

No other violations of the securities laws are alleged in the SEC Order.

As part of the SEC Order, we also agreed to pay, and have paid, a civil penalty in the amount of $ 3.0 million.

We consented to the entry of the SEC Order without admitting or denying the findings of the SEC Order, other than with respect to the SEC’s jurisdiction over the Company and the subject matter of the SEC Order.

The SEC Order describing the settlement was furnished as Exhibit 99.1 and the SEC’s press release announcing this resolution was furnished as Exhibit 99.2 to our Current Report on Form 8-K filed with the SEC on March 9, 2023.

Civil Investigative Demand and the separate Civil Investigative Demand from the Office of the Indiana Attorney General relating to the Security Incident.

On March 9, 2023, we reached a settlement with the SEC in connection with the Security Incident that fully resolved the previously disclosed SEC investigation of the Security Incident.

On September 28, 2021, the Information Commissioner’s Office in the United Kingdom under the U.K.

Data Protection Act 2018 (the "ICO") notified us that it has closed its investigation of the Security Incident.

Based on its investigation and having considered our actions before, during and after the Security Incident, the ICO issued our European subsidiary a reprimand in accordance with Article 58(2)(b) of the U.K.

General Data Protection Regulation ("U.K.

GDPR") due to our non-compliance, in the ICO's view, with the requirements set out in Article 32 of the U.K.

GDPR regarding the processing of personal data.

The ICO did not impose a penalty related to the Security Incident, nor did it impose any requirements for further action by us.

On September 24, 2021, we received notice from the Spanish Data Protection Authority that it has concluded its investigation of the Security Incident, pursuant to which our European subsidiary paid a penalty of € 60,000 in relation to the alleged late notification of two Spanish data controllers regarding the Security Incident.

On January 15, 2021, we were notified by the Data Protection Commission of Ireland that it has concluded its investigation of the Security Incident without taking any action against us.

We continue to cooperate with all ongoing investigations, which include various requests for documents, policies, narratives and communications, as well as requests to interview or depose various Company-related personnel.

As noted above, each of these separate governmental investigations could result in adverse judgments, settlements, fines, penalties or other resolution, the amount, scope and timing of which we are currently unable to predict, but could have a material adverse impact on our results of operations, cash flows or financial condition.

2023 Form 10-K

Blackbaud, Inc.

Notes to Consolidated Financial Statements

Data Protection Act 2018 notified us that it has closed its investigation of the Security Incident.

On September 24, 2021, we received notice from the Spanish Data Protection Authority that it has concluded its investigation of the Security Incident.

On January 15, 2021, we were notified by the Data Protection Commission of Ireland that it has concluded its investigation of the Security Incident.

For more information about these completed government investigations and related actions, see Note 11 to our audited consolidated financial statements contained in our Annual Report on Form 10-K filed with the SEC on February 21, 2024.

We file income tax returns in the U.S.

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federal income tax examination for calendar tax years 2021 through 2024 as well as state and foreign income tax examinations for various years depending on statutes of limitations of those jurisdictions.

The following summarizes the components of income tax expense (benefit):

The following summarizes the components of income tax (benefit) expense:

Years ended December 31,

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Total deferred taxes ( 85,011 ) ( 24,368 ) ( 26,644 )

Total income tax provision (benefit) $ 15,824 $ ( 10,168 ) $ 1,385

The following summarizes the components of income (loss) before provision for income taxes:

Total income tax (benefit) provision $ ( 28,419 ) $ 15,824 $ ( 10,168 )

The following summarizes the components of (loss) income before provision for income taxes:

Years ended December 31,

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International 53,765 39,718 35,918

Income (loss) before provision for income taxes $ 17,644 $ ( 55,575 ) $ 7,083

(Loss) income before provision for income taxes $ ( 311,591 ) $ 17,644 $ ( 55,575 )

2024 Form 10-K

8 unchanged sentences

Change in state income tax rate applied to deferred tax balances ( 0.1 ) 7.1 1.8

Nondeductible security incident-related fines or penalties

35.7 ( 8.7 ) —

Section 162(m) limitation 30.1 ( 6.4 ) 75.0

Federal credits generated 1.9 ( 42.3 ) 11.5

Stock-based compensation 1.3 13.4 ( 6.3 )

Change in valuation reserve (primarily state credit reserves) 10.8 ( 5.4 ) 26.1

Sale of subsidiary

FDII benefit 0.6 ( 10.2 ) 2.3

State credits, net of federal benefit 0.5 ( 9.1 ) 7.2

Return to accrual adjustment ( 0.1 ) ( 8.3 ) 1.4

Nondeductible meals, entertainment and transportation ( 0.2 ) 4.4 ( 0.7 )

GILTI inclusion ( 0.4 ) 9.3 ( 2.6 )

Nondeductible security incident-related fines or penalties

( 0.5 ) 35.7 ( 8.7 )

Foreign tax rate ( 0.5 ) 6.1 1.0

Nondeductible meals, entertainment and transportation 4.4 ( 0.7 ) 1.1

Unrecognized tax benefit ( 0.7 ) 0.7 0.5

Acquisition costs — — 8.7

Return to accrual adjustment ( 8.3 ) 1.4 ( 4.2 )

State credits, net of federal benefit ( 9.1 ) 7.2 ( 32.6 )

FDII benefit ( 10.2 ) 2.3 —

Federal credits generated ( 42.3 ) 11.5 ( 54.5 )

Section 162(m) limitation ( 1.7 ) 30.1 ( 6.4 )

Change in valuation reserve

( 15.1 ) 10.8 ( 5.4 )

Other ( 0.1 ) 1.0 0.1

Income tax provision effective rate 9.1 % 89.7 % 18.3 %

The increase in our effective income tax rate for year ended December 31, 2023, when compared to the same period in 2022, was primarily attributable to higher 2023 non-deductible accruals for loss contingencies related to the Security Incident and other non-deductible expenses and tax rate changes, partially offset by increased tax credits.

Furthermore, our 2023 effective tax rate was negatively impacted by higher tax rates in foreign jurisdictions in which we operate which were predominantly due to UK tax rate increases.

The year-on-year comparison is further impacted by 2023 pre-tax income versus prior year pre-tax loss.

The decrease in our effective income tax rate for year ended December 31, 2024, when compared to the same period in 2023, was primarily attributable to the valuation allowance recorded in the current period.

As of December 31, 2024, we recorded a valuation allowance against all of our U.S.

deferred tax assets in excess of deferred tax liabilities due to the combination of our cumulative pretax loss position and net deferred tax asset position resulting from our divestiture of EVERFI.

We intend to continue maintaining a full valuation allowance on our U.S.

net deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances.

Furthermore, the effect of our various rate drivers is reversed by the Company’s 2024 loss position versus income in 2023.

2024 Form 10-K

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Operating leases 10,751 12,867

Federal and state and foreign net operating loss carryforwards 7,061 10,369

Deferred revenue 7,633 5,992

Capital loss carryforward

Federal and state and foreign net operating loss carryforwards 4,825 7,061

Allowance for credit losses 1,441 1,702

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If not utilized, the state tax credit carryforwards will begin to expire in 2025.

A portion of the foreign and state net operating loss carryforwards and state credit carryforwards have a valuation reserve due to management's uncertainty regarding the future ability to use such carryforwards.

We also have federal and state capital loss carryforwards of $ 30.2 million expiring in 2029.

The foreign and state net operating loss carryforwards, capital loss carryforward and state credit carryforwards have a valuation reserve due to management's uncertainty regarding the future ability to use such carryforwards.

The following table illustrates the change in our deferred tax asset valuation allowance:

1 unchanged sentence

(dollars in thousands) Balance

of year Acquisition-

change Charges to

of year Charges to

expense Balance at

9 unchanged sentences

Balance at beginning of year $ 3,240 $ 3,083 $ 3,651

Increases from current period positions 762 629 1,751

Increases from prior period positions 1,249 101 89

Increases from current period positions 706 762 629

Decreases in prior year positions — ( 118 ) ( 908 )

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We recognize accrued interest and penalties, if any, related to unrecognized tax benefits as a component of income tax expense.

The total amount of accrued interest and penalties included in the consolidated balance sheet as of December 31, 2023 and December 31, 2022 was insignificant.

The total amount of interest and penalties included in the consolidated statements of comprehensive income as an increase or decrease in income tax expense for 2023, 2022 and 2021 was insignificant.

The total amount of accrued interest and penalties included in the consolidated balance sheet as of December 31, 2024 and December 31, 2023 was $ 0.9 million and insignificant, respectively.

The total amount of interest and penalties included in the consolidated statements of comprehensive loss as an increase or decrease in income tax expense for 2024 was $ 0.8 million and for 2023 and 2022 was insignificant.

We have taken federal and state tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits might decrease within the next twelve months.

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Previously recognized compensation cost for an award is reversed in the period that the award is forfeited.

Stock-based compensation expense is allocated to cost of revenue and operating expenses on the consolidated statements of comprehensive income based on where the associated employee’s compensation is recorded.

Stock-based compensation expense is allocated to cost of revenue and operating expenses on the consolidated statements of comprehensive loss based on where the associated employee’s compensation is recorded.

The following table summarizes stock-based compensation expense:

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Forfeited ( 51,271 ) 66.66

Vested ( 789,569 ) 64.45

( 907,497 ) 61.17

Unvested at December 31, 2024 1,029,214 66.92 $ 76,079

(1) The intrinsic value is calculated as the market value as of the end of the fiscal period.

(2) This amount represents the target number of shares that were eligible to be earned and vested.

The number of shares earned and vested based on actual results when compared to the performance conditions was 1,119,025 and those shares had a weighted average grant date fair value of $ 61.17 .

The total fair value of performance-based restricted stock units that vested during the years ended December 31, 2024, 2023 and 2022 was $ 55.5 million, $ 50.9 million, and $ 50.5 million, respectively.

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The repurchase program does not have an expiration date and may be limited, suspended or discontinued at any time without prior notice.

Under the 2020 Credit Facility, we have restrictions on our ability to repurchase shares of our common stock, which are summarized on page 56 in this report.

Under the 2024 Credit Agreement, we have restrictions on our ability to repurchase shares of our common stock, which are summarized on page 56 in this report.

We account for purchases of treasury stock under the cost method.

During the year ended December 31, 2023, we repurchased 221,836 shares for $ 18.8 million.

The remaining amount available to purchase stock under the then approved stock repurchase program was $ 231.2 million as of December 31, 2023.

On January 17, 2024, our Board of Directors reauthorized, expanded and replenished our stock repurchase program by expanding the total capacity under the program from $ 250.0 million to $ 500.0 million available for purchase.

Between January 1, 2024 and January 17, 2024, we repurchased $ 22.3 million under the prior authorization.

Between January 18, 2024 and February 16, 2024, we repurchased an additional 7,114 shares for $ 0.6 million under the new authorization.

The remaining amount available to purchase stock under the stock repurchase program was $ 499.4 million as of February 16, 2024.

In March 2024, we entered into an issuer forward repurchase transaction with a large financial institution to repurchase an aggregate $ 200 million of shares of our common stock (the "ASR Transaction").

Pursuant to the terms of the ASR Transaction, we provided the financial institution with a prepayment of $ 200 million and received an initial delivery of 2.1 million shares of our common stock, representing approximately 70 % of the total shares then-expected to be repurchased under the ASR Transaction.

The final number of shares of common stock delivered to us under the ASR Transaction was based on the average of the daily volume-weighted average prices of the common stock during the term of the ASR Transaction, less a discount and subject to customary adjustments upon events affecting the common stock (e.g., dilutive or concentrative events, mergers and acquisitions, and market disruptions).

We funded the ASR Transaction prepayment with borrowings pursuant to a revolving credit loan under the then effective 2020 Credit Agreement.

On October 29, 2024, in connection with the settlement of the ASR Transaction, we received approximately 490,000 shares of our common stock, in addition to the 2.1 million shares received in March 2024.

The difference of $ 9.2 million be tween the prepayment of $ 200 million and the value of the shares repurchased on the ASR Transaction is classified as a reduction to additional paid-in capital within our consolidated statement of stockholders' equity.

No cash was exchanged as part of the settlement of the ASR Transaction.

On July 16, 2024, our Board of Directors reauthorized, expanded and replenished our stock repurchase program by expanding the total capacity under the program from $ 500.0 million to $ 800.0 million available for repurchases.

2024 Form 10-K

1 unchanged sentence

Notes to Consolidated Financial Statements

Changes in accumulated other comprehensive income (loss) by component

The changes in accumulated other comprehensive income (loss) by component, consisted of the following:

During the year ended December 31, 2024, we repurchased an aggregate of 5,362,439 shares for $ 418.0 million, including the shares repurchased pursuant to the ASR Transaction.

The remaining amount available to purchase stock under the approved stock repurchase program was $ 644.6 million as of December 31, 2024.

Changes in accumulated other comprehensive (loss) income by component

The changes in accumulated other comprehensive (loss) income by component, consisted of the following:

Years ended December 31,

(in thousands) 2024 2023 2022

Accumulated other comprehensive income (loss), beginning of period $ 8,938 $ 6,522 $ ( 2,497 )

Accumulated other comprehensive (loss) income, beginning of period $ ( 1,688 ) $ 8,938 $ 6,522

By component:

Gains and losses on cash flow hedges:

Accumulated other comprehensive income (loss) balance, beginning of period $ 23,833 $ 5,257 $ ( 3,101 )

Other comprehensive (loss) income before reclassifications, net of tax effects of $ 201 , $( 8,068 ) and $( 1,982 )

Accumulated other comprehensive income balance, beginning of period $ 8,158 $ 23,833 $ 5,257

Other comprehensive income (loss) before reclassifications, net of tax effects of $( 5,080 ), $ 201 and $( 8,068 )

14,047 ( 271 ) 22,772

Amounts reclassified from accumulated other comprehensive (loss) income ( 20,806 ) ( 5,685 ) 3,714

Tax expense (benefit) included in provision for income taxes 5,402 1,489 ( 973 )

Total amounts reclassified from accumulated other comprehensive (loss) income ( 15,404 ) ( 4,196 ) 2,741

Amounts reclassified from accumulated other comprehensive income (loss) ( 19,613 ) ( 20,806 ) ( 5,685 )

Tax expense included in provision for income taxes 5,207 5,402 1,489

Total amounts reclassified from accumulated other comprehensive income (loss) ( 14,406 ) ( 15,404 ) ( 4,196 )

Net current-period other comprehensive (loss) income ( 359 ) ( 15,675 ) 18,576

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Translation adjustment ( 2,822 ) 5,049 ( 16,160 )

Accumulated other comprehensive (loss) income balance, end of period ( 9,846 ) ( 14,895 ) 1,265

Accumulated other comprehensive loss balance, end of period ( 12,668 ) ( 9,846 ) ( 14,895 )

Accumulated other comprehensive (loss) income, end of period $ ( 4,869 ) $ ( 1,688 ) $ 8,938

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There were no discretionary contributions by us to the 401K Plan in 2024, 2023 and 2022.

Segment Information

We have one operating segment and one reportable segment.

Our CODM is our chief executive officer ("CEO"), who reviews financial information presented on a consolidated basis, accompanied by disaggregated information about our revenue, for purposes of making decisions about assessing financial performance and allocating resources.

Our CEO considers costs of revenue, sales, marketing and customer success, research and development, and general and administrative expense categories on our consolidated statements of comprehensive loss as significant.

Our CEO uses consolidated operating margin and net income as the primary measures of profit or loss.

These financial metrics are used by our CEO to make key operating decisions, such as the allocation of budget between costs of revenues and our different operating expense categories.

Our other segment items include amortization, interest expense, other income, net, and income tax (benefit) provision on our consolidated statements of comprehensive loss.

2024 Form 10-K

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Notes to Consolidated Financial Statements

Segment Information

Our chief operating decision maker is our chief executive officer ("CEO").

Our CEO uses consolidated financial information to make operating decisions, assess financial performance and allocate resources.

We have one operating segment and one reportable segment.

The following table presents long-lived assets by geographic region based on the location of the assets.

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We expect to recognize revenue on approximately 55 % of these remaining performance obligations over the next 12 months, with the remainder recognized thereafter.

We applied the practical expedient in ASC 606-10-50-14 and have excluded the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less (one-time services);

and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed (transactional revenue).

We also applied the practical expedient in ASC 606-10-65-1-(f)(3), whereby the transaction price allocated to the remaining performance obligations, or an explanation of when we expect to recognize that amount as revenue for all reporting periods presented before the date of the initial application, is not disclosed.

We applied the practical expedient in ASC 606-10-50-14 and have excluded the value of unsatisfied performance obligations for which we recognize revenue at the amount to which we have the right to invoice for services performed (transactional revenue).

Contract balances

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Total deferred revenue $ 361,544 $ 394,927

The increase in deferred revenue during 2023 was primarily due to new subscription sales of our cloud solutions and progress in initiatives to bring our pricing in line with the market.

The decrease in deferred revenue during 2024 was primarily due to our divestiture of EVERFI on December 31, 2024.

Historically, due to the timing of customer budget cycles, we have an increase in customer contract renewals at or near the beginning of our third quarter.

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The amount of revenue recognized during 2024 from performance obligations satisfied in prior periods was insignificant .

2023 Form 10-K

Blackbaud, Inc.

Notes to Consolidated Financial Statements

Disaggregation of revenue

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to customers in the United States, to customers in the United Kingdom and to customers located in other countries.

The following table presents our revenue by geographic area based on the address of our customers:

The following table presents our revenue by geographic area based on the location of our customers:

(dollars in thousands) 2024

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Total revenue $ 1,155,495 $ 1,105,432 $ 1,058,105

2024 Form 10-K

Blackbaud, Inc.

Notes to Consolidated Financial Statements

The Social Sector and Corporate Sector market groups comprised our go-to-market organizations as of December 31, 2024.

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• The Social Sector market group focuses on sales to customers and prospects in the social sector, such as nonprofits, foundations, education institutions, healthcare organizations and other not-for-profit entities globally, and includes JustGiving;

• The Corporate Sector market group focuses on sales to customers and prospects in the corporate sector globally, and includes EVERFI and YourCause.

• The Corporate Sector market group focuses on sales to customers and prospects in the corporate sector globally, and included EVERFI and YourCause.

The following table presents our revenue by market group:

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Total recurring revenue $ 1,129,114 $ 1,071,520 $ 1,011,733

2023 Form 10-K

Blackbaud, Inc.

Notes to Consolidated Financial Statements

Subsequent Events

Stock Repurchase Program

On January 17, 2024, our Board of Directors reauthorized, expanded and replenished our existing stock repurchase program.

The expansion raised the total capacity under the stock repurchase program from $ 250.0 million to $ 500.0 million available for repurchases.

The program does not have an expiration date.

During December 2023 and January 2024, prior to the replenishment on January 17, 2024, we repurchased $ 41.1 million of our common stock under the stock repurchase program.

Between January 18, 2024 and February 16, 2024, we repurchased $ 0.6 million.

As of February 16, 2024, the remaining amount available to purchase stock under our repurchase program was $ 499.4 million.

All of the Company's stock repurchases during the fourth quarter of 2023 and the first quarter of 2024 were made pursuant to an SEC Rule 10b5-1(c) trading arrangement.

Repurchases by the Company will be subject to available liquidity, general market and economic conditions, alternate uses for the capital and other factors.

Stock repurchases may be made from time to time in open market transactions, in private transactions or otherwise in accordance with applicable securities laws and regulations and other legal requirements, including compliance with the Company’s finance agreements.

There is no minimum number of shares that the Company is required to repurchase and the repurchase program may be suspended or discontinued at any time without prior notice.

All shares purchased will be held in the Company’s treasury for possible future use.

The Company anticipates funding any stock repurchases from its cash flow from operations.

Additional information regarding the stock repurchase program reauthorization is contained in the Company's Current Report on Form 8-K filed with the SEC on January 22, 2024.

FTC Settlement

On February 1, 2024, the FTC announced its approval of a Proposed Order evidencing its settlement with the Company, subject to public review and comment, relating to the Security Incident.

If finalized, this settlement will fully resolve the previously disclosed FTC investigation relating to the Security Incident, which is further described in the FTC’s Proposed Order.

Under the terms of the Proposed Order, the Company has agreed to certain conditions, which are reflected in their entirety in the Proposed Order.

As part of the Proposed Order, the Company has not been fined and is not otherwise required to make any payment.

The Company has agreed to the Proposed Order without admitting or denying any of the FTC's allegations, except as expressly stated otherwise in the Proposed Order.

For more information regarding this settlement or the Proposed Order, see Note 11 to these condensed consolidated financial statements.

See also the Proposed Order, which was furnished as Exhibit 99.2 to the Company’s Current Report on Form 8-K filed with the SEC on February 2, 2024.

Release from Washington, DC lease

In February 2025, we made a one-time cash release payment of $ 28 million to the lessor in connection with a release from our lease for office space in Washington, DC (which was acquired as part of our acquisition of EVERFI in December 2021).

Due to our remote-first workforce strategy, we had not used the office space since February 2023 and had subleased a portion of the space.

2024 Form 10-K

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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 8. Financial Statements and Supplementary Data