What changed in this filing

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Item 1. Financial Statements

2025-04-30 compared with 2024-10-30 · 200 added, 406 removed, 452 unchanged (57% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

(dollars in thousands, except per share amounts) September 30,

(dollars in thousands, except per share amounts) March 31,

2025 December 31,

2 unchanged sentences

Restricted cash 419,400 741,884

Accounts receivable, net of allowance of $ 6,307 and $ 6,907 at September 30, 2024 and December 31, 2023, respectively

Accounts receivable, net of allowance of $ 5,660 and $ 5,228 at March 31, 2025 and December 31, 2024, respectively

78,105 83,539

4 unchanged sentences

Operating lease right-of-use assets 1,725 26,554

Software and content development costs, net 169,507 160,194

Software development costs, net 150,113 148,319

Goodwill 1,054,290 1,052,506

21 unchanged sentences

Common stock, $ 0.001 par value;

180,000,000 shares authorized, 70,955,940 and 69,188,304 shares issued at September 30, 2024 and December 31, 2023, respectively;

50,869,218 and 53,625,440 shares outstanding at September 30, 2024 and December 31, 2023, respectively

180,000,000 shares authorized, 72,258,301 and 70,943,373 shares issued at March 31, 2025 and December 31, 2024, respectively;

48,515,315 and 49,245,588 shares outstanding at March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital 1,319,562 1,291,442

Treasury stock, at cost;

20,086,722 and 15,562,864 shares at September 30, 2024 and December 31, 2023, respectively

23,742,986 and 21,697,785 shares at March 31, 2025 and December 31, 2024, respectively

( 1,198,721 ) ( 1,060,348 )

Accumulated other comprehensive loss ( 8,302 ) ( 4,869 )

Retained earnings 246,461 198,869

Accumulated deficit ( 79,436 ) ( 84,303 )

Total stockholders’ equity 33,175 141,993

1 unchanged sentence

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

Third Quarter 2024 Form 10-Q

First Quarter 2025 Form 10-Q

Blackbaud, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

Condensed Consolidated Statements of Comprehensive Income

Three months ended

September 30, Nine months ended

September 30,

(dollars in thousands, except per share amounts) 2025 2024

Recurring $ 280,018 $ 269,001 $ 832,912 $ 784,139

One-time services and other 6,709 8,625 20,351 26,282

Total revenue 286,727 277,626 853,263 810,421

Revenue $ 270,661 $ 279,250

Cost of revenue 114,815 126,206

Cost of recurring 122,646 114,132 361,644 342,558

Cost of one-time services and other 4,871 7,634 16,779 23,795

Total cost of revenue 127,517 121,766 378,423 366,353

Gross profit 155,846 153,044

3 unchanged sentences

General and administrative 56,679 47,754

Amortization 918 793 2,724 2,355

Amortization of intangible assets 534 904

Total operating expenses 135,416 142,325

2 unchanged sentences

Other income, net 2,105 3,347

Income (loss) before provision (benefit) for income taxes 32,682 18,086 66,159 ( 8,611 )

Income before provision (benefit) for income taxes 5,590 3,790

Income tax provision (benefit) 723 ( 1,456 )

Net income (loss) $ 20,542 $ 9,017 $ 47,592 $ ( 3,579 )

Earnings (loss) per share

Net income $ 4,867 $ 5,246

Earnings per share

Basic $ 0.10 $ 0.10

3 unchanged sentences

Diluted weighted average shares 49,445,079 53,414,495

Other comprehensive loss

Other comprehensive (loss) income

Foreign currency translation adjustment $ 3,259 $ ( 1,185 )

Unrealized (loss) gain on derivative instruments, net of tax ( 6,692 ) 4,095

Total other comprehensive loss ( 7,062 ) ( 701 ) ( 5,199 ) ( 797 )

Comprehensive income (loss) $ 13,480 $ 8,316 $ 42,393 $ ( 4,376 )

Total other comprehensive (loss) income ( 3,433 ) 2,910

Comprehensive income $ 1,434 $ 8,156

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

Third Quarter 2024 Form 10-Q

First Quarter 2025 Form 10-Q

Blackbaud, Inc.

Condensed Consolidated Statements of Cash Flows

Nine months ended

September 30,

Three months ended

(dollars in thousands) 2025 2024

Cash flows from operating activities

Net income (loss) $ 47,592 $ ( 3,579 )

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

Net income $ 4,867 $ 5,246

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 21,647 30,095

3 unchanged sentences

Amortization of deferred financing costs and discount 699 349

Loss on disposition of business 1,561 —

Loss on disposition of businesses — 1,561

Other non-cash adjustments ( 5,384 ) —

8 unchanged sentences

Purchase of property and equipment ( 688 ) ( 261 )

Capitalized software and content development costs ( 42,882 ) ( 44,664 )

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

Net cash used in disposition of business ( 1,179 ) —

Other investing activities ( 5,029 ) ( 250 )

Capitalized software development costs ( 12,970 ) ( 13,070 )

Cash used in disposition of business ( 12,235 ) ( 1,179 )

Net cash used in investing activities ( 25,893 ) ( 14,510 )

2 unchanged sentences

Payments on debt ( 85,523 ) ( 79,343 )

Debt issuance costs ( 6,458 ) —

Employee taxes paid for withheld shares upon equity award settlement ( 37,948 ) ( 52,723 )

8 unchanged sentences

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown above in the condensed consolidated statements of cash flows:

(dollars in thousands) September 30,

(dollars in thousands) March 31,

2025 December 31,

3 unchanged sentences

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

Third Quarter 2024 Form 10-Q

First Quarter 2025 Form 10-Q

Blackbaud, Inc.

3 unchanged sentences

comprehensive

(loss) income

earnings Total

Accumulated deficit Total

stockholders'

8 unchanged sentences

Restricted stock cancellations ( 8,166 ) — — — — — — —

Other comprehensive income — — — — — 2,910 — 2,910

Balance at March 31, 2024 70,861,507 $ 71 ( 19,237,264 ) $ ( 855,692 ) $ 1,184,338 $ 1,222 $ 204,115 $ 534,054

Net income — — — — — — 21,804 21,804

Vesting of restricted stock units 10,719 — — — — — — —

Shares withheld to satisfy tax withholdings — — ( 22,273 ) ( 1,760 ) — — — ( 1,760 )

Stock-based compensation — — — — 24,286 — — 24,286

Restricted stock grants 21,164 — — — — — — —

Restricted stock cancellations ( 9,902 ) — — — — — — —

Other comprehensive loss — — — — — ( 3,433 ) — ( 3,433 )

Balance at June 30, 2024 70,883,488 $ 71 ( 19,259,537 ) $ ( 857,452 ) $ 1,208,624 $ 175 $ 225,919 $ 577,337

Net income — — — — — — 20,542 20,542

Purchase of treasury shares under stock repurchase program, inclusive of excise tax — — ( 807,774 ) ( 63,597 ) — — — ( 63,597 )

Vesting of restricted stock units 20,659 — — — — — — —

Shares withheld to satisfy tax withholdings — — ( 19,411 ) ( 1,467 ) — — — ( 1,467 )

Stock-based compensation — — — — 18,574 — — 18,574

Restricted stock grants 62,998 — — — — — — —

Restricted stock cancellations ( 11,205 ) — — — — — — —

Other comprehensive loss — — — — — ( 7,062 ) — ( 7,062 )

Balance at September 30, 2024 70,955,940 $ 71 ( 20,086,722 ) $ ( 922,516 ) $ 1,227,198 $ ( 6,887 ) $ 246,461 $ 544,327

Third Quarter 2024 Form 10-Q

Blackbaud, Inc.

Condensed Consolidated Statements of Stockholders' Equity (continued)

Balance at March 31, 2025 72,258,301 $ 72 ( 23,742,986 ) $ ( 1,198,721 ) $ 1,319,562 $ ( 8,302 ) $ ( 79,436 ) $ 33,175

(dollars in thousands) Common stock Treasury stock Additional

1 unchanged sentence

comprehensive

earnings Total

(loss) income

Retained earnings Total

stockholders'

1 unchanged sentence

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

Net loss — — — — — — ( 14,701 ) ( 14,701 )

Vesting of restricted stock units 954,147 — — — — — — —

Shares withheld to satisfy tax withholdings — — ( 533,597 ) ( 30,990 ) — — — ( 30,990 )

Stock-based compensation — — — — 29,925 — — 29,925

Restricted stock grants 427,941 1 — — — — — 1

Restricted stock cancellations ( 41,269 ) — — — — — — —

Other comprehensive loss — — — — — ( 8,534 ) — ( 8,534 )

Balance at March 31, 2023 69,154,863 $ 69 ( 15,278,827 ) $ ( 568,277 ) $ 1,105,189 $ 404 $ 182,348 $ 719,733

Net income — — — — — — 5,246 5,246

Purchase of treasury shares under stock repurchase program — — ( 2,954,211 ) ( 211,412 ) ( 52,244 ) — — ( 263,656 )

Vesting of restricted stock units 1,357,125 — — — — — — —

4 unchanged sentences

Other comprehensive income — — — — — 2,910 — 2,910

Balance at June 30, 2023 69,164,244 $ 69 ( 15,311,367 ) $ ( 570,547 ) $ 1,138,553 $ 8,842 $ 184,453 $ 761,370

Net income — — — — — — 9,017 9,017

Retirements of common stock (1)

( 143 ) — — — ( 13 ) — — ( 13 )

Vesting of restricted stock units 26,662 — — — — — — —

Shares withheld to satisfy tax withholdings — — ( 25,710 ) ( 1,881 ) — — — ( 1,881 )

Stock-based compensation — — — — 32,379 — — 32,379

Restricted stock grants 27,913 — — — — — — —

Restricted stock cancellations ( 30,909 ) — — — — — — —

Other comprehensive loss — — — — — ( 701 ) — ( 701 )

Balance at September 30, 2023 69,187,767 $ 69 $ ( 15,337,077 ) $ ( 572,428 ) $ 1,170,919 $ 8,141 $ 193,470 $ 800,171

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

Balance at March 31, 2024 70,861,507 $ 71 ( 19,237,264 ) $ ( 855,692 ) $ 1,184,338 $ 1,222 $ 204,115 $ 534,054

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

Third Quarter 2024 Form 10-Q

First Quarter 2025 Form 10-Q

Blackbaud, Inc.

8 unchanged sentences

The condensed consolidated balance sheet at December 31, 2024 has been derived from the audited consolidated financial statements at that date.

Operating results and cash flows for the three and/or nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2024, or any other future period.

Operating results and cash flows for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2025, or any other future period.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted in accordance with the rules and regulations for interim reporting of the SEC.

These unaudited, condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024, and other forms filed with the SEC from time to time.

Reclassifications

Our revenue from "recurring" and "one-time services and other" have been combined within "revenue" beginning in 2025 due to the immateriality of our one-time services and other revenue.

In order to provide comparability between periods presented, our “recurring“ and “one-time services and other" revenue lines have been combined within “revenue" in the previously reported consolidated statements of comprehensive income to conform to the presentation of the current period.

Similarly, "cost of recurring" and "cost of one-time services and other" have been combined within "cost of revenue" in the previously reported consolidated statements of comprehensive income to conform to the presentation of the current period.

Basis of consolidation

2 unchanged sentences

All intercompany balances and transactions have been eliminated in consolidation.

Reportable segment

We report our operating results and financial information in one operating and reportable segment.

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

Our chief operating decision maker is our chief executive officer.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods.

On an ongoing basis, we reconsider and evaluate our estimates and assumptions, including those that impact revenue recognition, long-lived and intangible assets, income taxes, business combinations, stock-based compensation, capitalization of software and content development costs, our allowances for credit losses and sales returns, costs of obtaining contracts, valuation of derivative instruments, loss contingencies and insurance recoveries, among others.

On an ongoing basis, we reconsider and evaluate our estimates and assumptions, including those that impact revenue recognition, long-lived and intangible assets, income taxes, business combinations, stock-based compensation, capitalization of software development costs, our allowances for credit losses and sales returns, costs of obtaining contracts, valuation of derivative instruments, loss contingencies and insurance recoveries, among others.

Changes in the facts or circumstances underlying these estimates could result in material changes and actual results could materially differ from these estimates.

Third Quarter 2024 Form 10-Q

First Quarter 2025 Form 10-Q

Blackbaud, Inc.

4 unchanged sentences

There have been no material changes to our significant accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 21, 2025.

Business Combinations and Dispositions

2024 disposition

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 is 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 in the unaudited, condensed consolidated statement of comprehensive income for the nine months ended September 30, 2024.

Earnings (Loss) Per Share

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

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

Diluted earnings (loss) per share reflects the assumed exercise, settlement and vesting of all dilutive securities using the “treasury stock method,” except when the effect is anti-dilutive.

Earnings Per Share

We compute basic earnings per share by dividing net income available 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 by the weighted average number of common shares and dilutive potential common shares outstanding during the period.

Diluted earnings per share reflects the assumed exercise, settlement and vesting of all dilutive securities using the “treasury stock method,” except when the effect is anti-dilutive.

Potentially dilutive securities consist of shares issuable upon vesting of restricted stock awards and units.

Diluted loss per share for the nine months ended September 30, 2023 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.

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

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

Three months ended

September 30,

Nine months ended

September 30,

(dollars in thousands, except per share amounts) 2025

Net income (loss) $ 20,542 $ 9,017 $ 47,592 $ ( 3,579 )

Net income $ 4,867 $ 5,246

Weighted average common shares 48,429,061 52,052,370

2 unchanged sentences

Weighted average common shares assuming dilution 49,445,079 53,414,495

Earnings (loss) per share

Earnings per share

Basic $ 0.10 $ 0.10

Diluted $ 0.10 $ 0.10

Anti-dilutive shares excluded from calculations of diluted earnings (loss) per share 47,210 21,660 380,392 474,150

Third Quarter 2024 Form 10-Q

Anti-dilutive shares excluded from calculations of diluted earnings per share 633,805 622,902

First Quarter 2025 Form 10-Q

Blackbaud, Inc.

13 unchanged sentences

(Level 3) Total

Fair value as of September 30, 2024

Fair value as of March 31, 2025

Financial assets:

2 unchanged sentences

Total financial assets $ — $ 3,517 $ — $ 3,517

Fair value as of September 30, 2024

Fair value as of March 31, 2025

Financial liabilities:

Interest rate swaps $ — $ 5,490 $ — $ 5,490

Foreign currency forward contracts $ — $ 264 $ — $ 264

3 unchanged sentences

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

Our derivative instruments within the scope of Accounting Standards Codification ("ASC") 815, Derivatives and Hedging , are required to be recorded at fair value.

1 unchanged sentence

See Note 7 to these unaudited, condensed consolidated financial statements for additional information about our derivative instruments.

Third Quarter 2024 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

The fair value of our interest rate swaps and foreign currency forward contracts are based on model-driven valuations using Secured Overnight Financing Rate ("SOFR") rates and foreign currency forward rates, respectively, which are observable at commonly quoted intervals.

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

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 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.

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 September 30, 2024 and December 31, 2023, due to the immediate or short-term maturity of these instruments.

We believe the carrying amount of our debt approximates its fair value at September 30, 2024 and December 31, 2023, as the debt bears interest rates that approximate market value.

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 March 31, 2025 and December 31, 2024, due to the immediate or short-term maturity of these instruments.

First Quarter 2025 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

We believe the carrying amount of our debt approximates its fair value at March 31, 2025 and December 31, 2024, as the debt bears interest rates that approximate market value.

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.

We did not transfer any assets or liabilities among the levels within the fair value hierarchy during the nine months ended September 30, 2024.

We did not transfer any assets or liabilities among the levels within the fair value hierarchy during the three months ended March 31, 2025.

Non-recurring fair value measurements

5 unchanged sentences

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

In June 2024, we entered into a sublease for an additional portion of our Washington, DC office location, which we previously closed for our own use in February 2023 to align with our remote-first workforce strategy.

We considered our entry into the sublease an impairment indicator.

As a result, during the nine months ended September 30, 2024, we recorded 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.

We present these impairment charges in general and administrative expense on our unaudited, condensed consolidated statements of comprehensive income (loss) and as other non-cash adjustments within operating activities on our unaudited condensed consolidated statements of cash flows.

There were no other significant non-recurring fair value adjustments to our long-lived assets, intangible assets, goodwill or operating lease ROU assets during the nine months ended September 30, 2024.

There were no significant non-recurring fair value adjustments to our long-lived assets, intangible assets, goodwill or operating lease ROU assets during the three months ended March 31, 2025.

Consolidated Financial Statement Details

Restricted cash

(dollars in thousands) September 30,

(dollars in thousands) March 31,

2025 December 31,

2 unchanged sentences

Total restricted cash $ 419,400 $ 741,884

Third Quarter 2024 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

Prepaid expenses and other assets

(dollars in thousands) September 30,

(dollars in thousands) March 31,

2025 December 31,

4 unchanged sentences

Implementation costs for cloud computing arrangements, net (4)(5)

Taxes, prepaid and receivable 7,376 3,418

10,321 10,450

Unbilled accounts receivable 8,699 7,067

Investment in equity securities (6)

Prepaid insurance 5,754 3,027

Taxes, prepaid and receivable 5,434 4,257

Investment in equity securities (6)

Derivative instruments 3,517 10,550

3 unchanged sentences

Prepaid expenses and other current assets $ 88,182 $ 81,287

(1) Amortization expense from costs of obtaining contracts was $ 5.1 million and $ 14.8 million for the three and nine months ended September 30, 2024, respectively, and $ 7.9 million and $ 24.3 million for the three and nine months ended September 30, 2023, respectively.

(2) The current portion of costs of obtaining contracts as of September 30, 2024 and December 31, 2023 was $ 19.8 million and $ 25.3 million, respectively.

(3) The current portion of prepaid software maintenance and subscriptions as of September 30, 2024 and December 31, 2023 was $ 31.8 million and $ 32.4 million, respectively.

(4) These costs primarily relate to the multi-year implementations of our new global enterprise resource planning, customer relationship management systems and other cloud-based systems.

(5) Amortization expense from capitalized cloud computing implementation costs was $ 0.8 million and insignificant for the three months ended September 30, 2024 and 2023, respectively, and $ 2.1 million and $ 1.8 million for the nine months ended September 30, 2024 and 2023, respectively.

Accumulated amortization for these costs was $ 9.8 million and $ 7.7 million as of September 30, 2024 and December 31, 2023, respectively.

(1) Amortization expense from costs of obtaining contracts was $ 5.0 million and $ 4.8 million for the three months ended March 31, 2025 and 2024, respectively.

(2) The current portion of costs of obtaining contracts as of March 31, 2025 and December 31, 2024 was $ 18.4 million and $ 18.4 million, respectively.

(3) The current portion of prepaid software maintenance and subscriptions as of March 31, 2025 and December 31, 2024 was $ 34.7 million and $ 34.0 million, respectively.

First Quarter 2025 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

(4) These costs primarily relate to the multi-year implementations of our global enterprise resource planning, customer relationship management systems and other cloud-based systems.

(5) Amortization expense from capitalized cloud computing implementation costs was insignificant for the three months ended March 31, 2025 and 2024.

Accumulated amortization for these costs was $ 11.4 million and $ 10.6 million as of March 31, 2025 and December 31, 2024, respectively.

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

Accrued expenses and other liabilities

(dollars in thousands) September 30,

(dollars in thousands) March 31,

2025 December 31,

3 unchanged sentences

Unrecognized tax benefit 4,348 4,285

Derivative instruments 5,994 5,540

Operating lease liabilities, current portion 4,707 6,701

Accrued commissions and salaries 3,086 4,413

Accrued legal costs (1)

Accrued health care costs 2,670 3,151

Accrued commissions and salaries 2,558 4,012

Accrued vacation costs 2,360 2,060

Accrued transaction-based costs related to payments services 1,652 3,903

Accrued legal costs (1)

Contingent consideration liability

Stock-based compensation liability 1,344 7,292

Operating lease liabilities, current portion 1,073 4,489

Accrued costs to sell EVERFI

Other liabilities 6,585 10,035

4 unchanged sentences

See Note 8 to these unaudited, condensed consolidated financial statements for additional information about our loss contingency accruals and other legal expenses.

Third Quarter 2024 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

Other income, net

Three months ended

September 30,

Nine months ended

September 30,

(dollars in thousands) 2025

3 unchanged sentences

Other income, net $ 2,105 $ 3,347

First Quarter 2025 Form 10-Q

Blackbaud, Inc.

Notes to Condensed 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.

1 unchanged sentence

effective interest rate at

(dollars in thousands) September 30,

(dollars in thousands) March 31,

2025 December 31,

2023 September 30,

2024 March 31,

2025 December 31,

8 unchanged sentences

Debt, net of current portion $ 1,182,343 $ 1,051,110 5.76 % 5.73 %

2024 refinancing

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.

Third Quarter 2024 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

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 income 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 September 30, 2024, deferred financing costs totaling $ 1.8 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.

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.

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 September 30, 2024, we were in compliance with our debt covenants under the 2024 Credit Facilities.

2024 Credit Facilities

In April 2024, we entered into a five-year $ 1.5 billion senior credit facility (the "2024 Credit Facilities").

At March 31, 2025, we were in compliance with our debt covenants under the 2024 Credit Facilities.

Real estate loans

2 unchanged sentences

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

At September 30, 2024, we were in compliance with our debt covenants under the Real Estate Loans.

At March 31, 2025, we were in compliance with our debt covenants under the Real Estate Loans.

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

1 unchanged sentence

Interest associated with the notes is imputed at the rate we would incur for amounts borrowed under our then-existing credit facility at the inception of the notes.

Third Quarter 2024 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

The following table summarizes our currently effective supplier financing agreements as of September 30, 2024:

The following table summarizes our currently effective supplier financing agreements as of March 31, 2025:

(dollars in thousands) Term

7 unchanged sentences

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

The changes in supplier financing obligations during the nine months ended September 30, 2024, consisted of the following:

First Quarter 2025 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

The changes in supplier financing obligations during the three months ended March 31, 2025, consisted of the following:

(dollars in thousands) Total

Balance at December 31, 2024 $ 2,783

Balance at September 30, 2024 $ 2,782

As of September 30, 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,

(dollars in thousands) Annual

2024 - remaining $ 5,417

Thereafter 907,842

Total required maturities $ 1,004,335

Balance at March 31, 2025 $ 2,213

Derivative Instruments

4 unchanged sentences

master agreements with our counterparties.

As of September 30, 2024 and December 31, 2023, we have presented the fair value of our derivative instruments at the gross amounts in the condensed consolidated balance sheets as the gross fair values of our derivative instruments equaled their net fair values.

As of March 31, 2025 and December 31, 2024, we have presented the fair value of our derivative instruments at the gross amounts in the condensed consolidated balance sheets as the gross fair values of our derivative instruments equaled their net fair values.

Cash flow hedges

1 unchanged sentence

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

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 the 2020 Credit Agreement.

In September 2024, we entered into two additional forward-starting interest rate swap agreements each with a notional value of $ 100.0 million with effective dates beginning in March 2025 through September 2026 and March 2027 (the "September 2024 Swap Agreements").

We designated the September 2024 Swap Agreements as cash flow hedges at the inception of the contracts.

Third Quarter 2024 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

As of September 30, 2024 and December 31, 2023, the aggregate notional values of the interest rate swaps were $ 1.1 billion and $ 935.0 million, respectively.

As of March 31, 2025 and December 31, 2024, the aggregate notional values of the interest rate swaps were $ 700.0 million and $ 700.0 million, respectively.

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

The aggregate notional value as of September 30, 2024 includes the two additional forward-starting interest rate swap agreements discussed above.

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").

We designated each of these foreign currency forward contracts as cash flow hedges at the inception of the contracts.

As of September 30, 2024 and December 31, 2023, the aggregate notional values of the foreign currency forward contracts designated as cash flow hedges that we held to buy USD in exchange for Canadian Dollars were $ 32.5 million CAD and $ 29.9 million CAD, respectively.

As of March 31, 2025 and December 31, 2024, the aggregate notional values of the foreign currency forward contracts designated as cash flow hedges that we held to buy USD in exchange for Canadian Dollars were $ 35.8 million CAD and $ 32.8 million CAD, respectively.

All of the contracts have maturities of 12 months or less.

First Quarter 2025 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

Net investment hedges

1 unchanged sentence

We designated each of these foreign currency forward contracts as net investment hedges at the inception of the contracts.

As of September 30, 2024 and December 31, 2023, the aggregate notional values of the foreign currency forward contracts designated as net investment hedges to reduce the volatility of the U.S.

As of March 31, 2025 and December 31, 2024, the aggregate notional values of the foreign currency forward contracts designated as net investment hedges to reduce the volatility of the U.S.

dollar value of a portion of our GBP-denominated investments was £ 16.3 million and £ 12.9 million, respectively.

1 unchanged sentence

Asset derivatives Liability derivatives

(dollars in thousands) Balance sheet location September 30,

(dollars in thousands) Balance sheet location March 31,

2025 December 31,

2023 Balance sheet location September 30,

2024 Balance sheet location March 31,

2025 December 31,

Derivative instruments designated as hedging instruments:

Interest rate swaps, current portion Prepaid expenses

and other current assets $ 1,672 $ 16,198 Accrued expenses

and other current liabilities $ — $ —

Foreign currency forward contracts, current portion

6 unchanged sentences

Total derivative instruments designated as hedging instruments $ 3,517 $ 10,550 $ 264 $ —

Third Quarter 2024 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

The effects of derivative instruments in cash flow and net investment hedging relationships were as follows:

(Loss) gain recognized

Gain (loss) recognized

in accumulated other

comprehensive

of (loss) gain

of gain (loss)

reclassified from

1 unchanged sentence

comprehensive

income (loss)

Gain reclassified from accumulated

other comprehensive loss into income (loss)

(dollars in thousands) September 30,

other comprehensive loss into income

(dollars in thousands) March 31,

2025 Three months ended

September 30, 2024

Nine months ended

September 30, 2024

March 31, 2025

Cash Flow Hedges

3 unchanged sentences

Foreign currency forward contracts $ ( 160 ) $ —

September 30,

2024 Three months ended

September 30, 2023

Nine months ended

September 30, 2023

March 31, 2024

Cash Flow Hedges

3 unchanged sentences

Foreign currency forward contracts $ ( 92 ) $ —

First Quarter 2025 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

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.

2 unchanged sentences

For net investment hedges, changes in the fair value measurements of the derivative instruments and the related income tax expense or benefit are reflected as adjustments to translation adjustment, a component of accumulated other comprehensive income (loss), and recognized in earnings only when the hedged GBP investment is liquidated.

The estimated accumulated other comprehensive income as of September 30, 2024 that is expected to be reclassified into earnings within the next twelve months is $ 2.7 million.

There were no ineffective portions of our interest rate swap or foreign currency forward derivatives during the nine months ended September 30, 2024 and 2023.

The estimated accumulated other comprehensive income as of March 31, 2025 that is expected to be reclassified into earnings within the next twelve months is $ 4.2 million.

There were no ineffective portions of our interest rate swap or foreign currency forward derivatives during the three months ended March 31, 2025 and 2024.

See Note 10 to these unaudited, condensed consolidated financial statements for a summary of the changes in accumulated other comprehensive income (loss) by component.

1 unchanged sentence

Commitments and Contingencies

We have operating leases for corporate offices, subleased offices and certain equipment and furniture.

As of September 30, 2024, we did not have any operating leases that had not yet commenced.

Third Quarter 2024 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

We have operating leases for corporate offices and subleased offices.

As of March 31, 2025, we did not have any operating leases that had not yet commenced.

Release from Washington, DC lease

In February 2025, we made a one-time cash release payment of $ 28.0 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.

During the three months ended March 31, 2025, we recorded a loss on lease termination of $ 24.3 million in general and administrative expense.

The following table summarizes the components of our lease expense:

Three months ended

September 30,

Nine months ended

September 30,

(dollars in thousands) 2025

5 unchanged sentences

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

Maturities of our operating lease liabilities as of September 30, 2024 were as follows:

First Quarter 2025 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

Maturities of our operating lease liabilities as of March 31, 2025 were as follows:

Years ending December 31,

1 unchanged sentence

2025 - remaining $ 901

Thereafter 20,689

Total lease payments 3,729

7 unchanged sentences

In certain cases, these arrangements require a minimum annual purchase commitment by us.

As of September 30, 2024, the remaining aggregate minimum purchase commitment under these arrangements was approximately $ 206.8 million through 2029.

As of March 31, 2025, the remaining aggregate minimum purchase commitment under these arrangements was approximately $ 194.7 million through 2029.

Solution and service indemnifications

1 unchanged sentence

We have not identified any losses that might be covered by these indemnifications.

Third Quarter 2024 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

Legal proceedings

11 unchanged sentences

It is possible that our consolidated financial position, results of operations or cash flows could be materially negatively affected in any particular period by an unfavorable resolution of one or more of such legal proceedings.

First Quarter 2025 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

Security incident

3 unchanged sentences

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 above a $ 250 thousand deductible payable by us.

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

This coverage reduced our fina ncial exposure related to the Security Incident in prior years.

See our Annual Report on Form 10-K filed with the SEC on February 21, 2025 for more information regarding the Security Incident.

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

Three months ended

September 30,

Nine months ended

September 30,

(dollars in thousands) 2025

2 unchanged sentences

Net expense $ 2,180 $ 10,323

The following summarizes our cumulative expenses, insurance recoveries recognized and insurance recoveries paid as of:

(dollars in thousands) September 30,

The following summarizes our cumulative expenses, insurance recoveries recognized and insurance recoveries received as of:

(dollars in thousands) March 31,

2025 December 31,

2 unchanged sentences

Cumulative net expense $ 127,311 $ 125,131

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

Third Quarter 2024 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

Recorded expenses have consisted primarily of payments to third-party service providers and consultants, including legal fees, settlement of the previously disclosed SEC investigation, 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.

Cumulative offsetting insurance recoveries received $ ( 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 investigation, multi-state Attorneys General investigation and Attorney General of the State of California investigation, 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 unaudited, condensed consolidated statements of comprehensive income (loss) and as operating activities on our unaudited, condensed consolidated statements of cash flows.

We present expenses and insurance recoveries related to the Security Incident in general and administrative expense on our unaudited, condensed consolidated statements of comprehensive income and as operating activities on our unaudited, condensed 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 the three months ended September 30, 2024, we incurred net pre-tax expenses which were insignificant.

For the nine months ended September 30, 2024, we incurred net pre-tax expenses of $ 12.8 million related to the Security Incident, which included $ 6.0 million for ongoing legal fees and a settlement of loss contingencies of $ 6.8 million.

During the nine months ended September 30, 2024, we had net cash outlays of $ 15.1 million related to the Security Incident for 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.

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 three months ended March 31, 2025, we incurred net pre-tax expenses of $ 2.2 million related to the Security Incident, which included $ 1.1 million for ongoing legal fees and additional accruals of loss contingencies of $ 1.1 million.

During the three months ended March 31, 2025, we had net cash outlays which were insignificant related to the Security Incident for ongoing legal fees and the settlement of putative consumer class actions cases in Canada discussed below.

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

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

Not included in these ranges are our previous settlements or current accruals for loss contingencies related to the matters discussed below.

As of September 30, 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 believed we could reasonably estimate in accordance with our loss contingency procedures described above.

As of March 31, 2025, we have recorded approximately $ 1.6 million in aggregate liabilities for loss contingencies based primarily on recent negotiations with certain plaintiffs and customers related to the Security Incident that we believed we could reasonably estimate in accordance with our loss contingency procedures described above.

Our liabilities for loss contingencies are recorded in accrued expenses and other current liabilities on our unaudited, condensed consolidated balance sheets.

It is reasonably possible that our estimated 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 September 30, 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.

Customer claims.

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.

and Canada related to the Security Incident, none of which resulted in claims submitted to us and are considered by us to have been abandoned by the customers.

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 two cases remain active and unresolved.

Customer constituent class actions.

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

federal courts (which have been consolidated under multi district litigation to a single federal court) and in Canadian courts 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

Third Quarter 2024 Form 10-Q

It is reasonably possible that our estimated actual losses may change in the near term for those matters, but

First Quarter 2025 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

determine whether this will proceed as a class action, as described below.

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.

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 May 28, 2024, the plaintiffs filed a petition for permission to appeal under Rule 23(f) of the Federal Rules of Civil Procedure with the Fourth Circuit Court of Appeals (the “Fourth Circuit”), and we subsequently filed an opposition to such petition.

On July 30, 2024, the Fourth Circuit denied the plaintiffs' petition.

This litigation remains ongoing.

we believe that they are not reasonably likely, either separately or in the aggregate, to have a material adverse impact on our results of operations, cash flows or financial condition.

There may be other Security Incident-related matters, which 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.

Customer claims.

We believe that substantially all specific requests from customers for reimbursement of expenses incurred by them related to the Security Incident, have been fully resolved and closed or are inactive and have been abandoned by the customers.

We also believe that substantially all reservations of the right to seek expense recovery in the future that we received from customers or their attorneys in the U.S., U.K.

and Canada related to the Security Incident, none of which resulted in claims submitted to us, have been abandoned by the customers and that all claims or proposed claims on behalf of a number of U.K.

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

In addition, insurance companies representing various customers’ interests through subrogation claims contacted us, and certain insurance companies filed subrogation claims in court, all of which are now considered by us to be resolved or inactive and abandoned by the insurance companies.

Customer constituent class actions.

Presently, we are a defendant in cases in U.S.

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 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.

On May 14, 2024, the United States District Court for the District of South Carolina issued a memorandum opinion and order that, among other things, denied the multi district litigation plaintiffs' motion for class certification.

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

While this litigation remains ongoing, we believe that it is not reasonably likely to have a material adverse impact on our results of operations, cash flows or financial condition.

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.

2 unchanged sentences

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.

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 agreed to pay a total of $ 6.8 million to the State of California.

This amount was fully accrued as a contingent liability in the Company's financial statements as of March 31, 2024 and June 30, 2024, and subsequently paid in the third quarter of 2024.

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 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 notified us that it has closed its investigation of the Security Incident.

Third Quarter 2024 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

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 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.

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

For more information about the 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, 2025.

Our income tax provision (benefit) and effective income tax rates, including the effects of period-specific events, were:

Three months ended

September 30,

Nine months ended

September 30,

(dollars in thousands) 2025

1 unchanged sentence

Effective income tax rate 12.9 % ( 38.4 ) %

The changes in our effective income tax rates for the three and nine months ended September 30, 2024, when compared to the same periods in 2023 were primarily attributable the negative impact in 2023 of non-deductible accruals related to the Security Incident that did not recur in 2024 to the same extent.

Additionally, there were favorable impacts of benefits attributable to stock-based compensation.

Partially offsetting these items were unfavorable impacts of our United Kingdom liability for uncertain tax positions.

The increase in our effective income tax rate for the three months ended March 31, 2025 when compared to the same period in 2024 was primarily due to the impact of reduced current year stock-based compensation benefit.

Additionally, the current year effective tax rate was unfavorably impacted by a valuation allowance against our net U.S.

deferred tax assets.

First Quarter 2025 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

Stockholders' Equity

5 unchanged sentences

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

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 repurchases.

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 will be 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).

At settlement, the financial institution may be required to deliver additional shares of our common stock to us or, under certain circumstances, we may be required to deliver a cash payment

Third Quarter 2024 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

or shares of our common stock to the financial institution, with the method of settlement at our election.

See Note 13 to these unaudited, condensed consolidated financial statements for additional information about the final settlement of the ASR Transaction which occurred in October 2024.

The difference of $ 52.2 million between the prepayment of $ 200 million and the value of the shares repurchased on the ASR Transaction date represents an unsettled prepaid forward contract indexed to our common stock and met all of the applicable criteria for equity classification;

therefore, it was not accounted for as a derivative instrument as of September 30, 2024.

Because of our ability to settle in shares, the $ 52.2 million prepaid forward contract was classified as a reduction to additional paid-in capital within our unaudited, condensed consolidated statement of stockholders' equity.

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

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.

During the three months ended September 30, 2024, we repurchased 807,774 shares for $ 62.8 million.

During the nine months ended September 30, 2024, we repurchased an aggregate of 3,761,985 shares for $ 325.4 million, including the initial delivery of shares repurchased pursuant to the ASR Transaction.

The remaining amount available to purchase stock under the approved stock repurchase program was $ 737.2 million as of September 30, 2024.

Changes in accumulated other comprehensive income (loss) by component

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

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

During the three months ended March 31, 2025, we repurchased an aggregate of 1,513,022 shares for $ 100.0 million.

The remaining amount available to purchase stock under the approved stock repurchase program was $ 544.5 million as of March 31, 2025.

Changes in accumulated other comprehensive (loss) income by component

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

Three months ended

September 30,

Nine months ended

September 30,

(in thousands) 2025

Accumulated other comprehensive income (loss), beginning of period $ 175 $ 8,842 $ ( 1,688 ) $ 8,938

Accumulated other comprehensive loss, beginning of period $ ( 4,869 ) $ ( 1,688 )

By component:

4 unchanged sentences

Amounts reclassified from accumulated other comprehensive (loss) income ( 1,215 ) ( 5,507 )

Tax expense included in provision for income taxes 1,509 1,425 4,458 3,990

Tax (benefit) expense included in provision for income taxes ( 2,763 ) 1,481

Total amounts reclassified from accumulated other comprehensive (loss) income ( 3,978 ) ( 4,026 )

Net current-period other comprehensive (loss) income ( 6,692 ) 4,095

Accumulated other comprehensive (loss) income balance, end of period $ ( 2,658 ) $ 22,617 $ ( 2,658 ) $ 22,617

Accumulated other comprehensive income balance, end of period $ 1,107 $ 12,253

Foreign currency translation adjustment:

3 unchanged sentences

Accumulated other comprehensive (loss) income, end of period $ ( 8,302 ) $ 1,222

Segment Information

We have one operating segment and one reportable segment.

Our chief operating decision maker 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 income as significant.

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

These financial metrics are

First Quarter 2025 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

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 provision (benefit) on our consolidated statements of comprehensive income.

Revenue Recognition

Transaction price allocated to the remaining performance obligations

As of September 30, 2024, approximately $ 1.2 billion of revenue under contract is expected to be recognized from remaining performance obligations.

As of March 31, 2025, approximately $ 1.2 billion of revenue under contract is expected to be recognized from remaining performance obligations.

We expect to recognize revenue on approximately 50 % of these remaining performance obligations over the next 12 months, with the remainder recognized thereafter.

Third Quarter 2024 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

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

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

Our contract assets as of September 30, 2024 and December 31, 2023 were insignificant.

Our contract assets as of March 31, 2025 and December 31, 2024 were insignificant.

Our closing balances of deferred revenue were as follows:

(in thousands) September 30,

(in thousands) March 31,

2025 December 31,

Total deferred revenue $ 332,242 $ 361,544

The increase in deferred revenue during the nine months ended September 30, 2024 was primarily due to the impact of our contract pricing initiatives within the Social Sector, as well as a seasonal increase in customer contract billings and renewals.

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.

The decrease in deferred revenue during the three months ended March 31, 2025 was primarily due to a seasonal decrease in customer contract billings.

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

Generally, our lowest balance of deferred revenue during the year is at the end of our first quarter.

The amount of revenue recognized during the nine months ended September 30, 2024 that was included in the deferred reven ue balance at the beginning of the period was approximately $ 321 million.

The amount of revenue recognized during the nine months ended September 30, 2024 from performance obligations satisfied in prior periods was insignificant .

The amount of revenue recognized during the three months ended March 31, 2025 that was included in the deferred reven ue balance at the beginning of the period was approximately $ 159 million.

The amount of revenue recognized during the three months ended March 31, 2025 from performance obligations satisfied in prior periods was insignificant .

Disaggregation of revenue

1 unchanged sentence

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:

Three months ended

September 30,

Nine months ended

September 30,

(dollars in thousands) 2025

3 unchanged sentences

Total revenue $ 270,661 $ 279,250

The Social Sector and Corporate Sector market groups comprised our go-to-market organizations as of September 30, 2024.

The following is a description of each market group as of that date:

• 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.

Third Quarter 2024 Form 10-Q

First Quarter 2025 Form 10-Q

Blackbaud, Inc.

Notes to Condensed Consolidated Financial Statements

The following table presents our revenue by market group:

Three months ended

September 30,

Nine months ended

September 30,

(dollars in thousands) 2024

Social Sector $ 255,210 $ 239,512 $ 751,818 $ 696,790

Corporate Sector

31,517 38,114 101,445 113,631

Total revenue $ 286,727 $ 277,626 $ 853,263 $ 810,421

The following table presents our recurring revenue by type:

The following table presents our revenue by type:

Three months ended

September 30,

Nine months ended

September 30,

(dollars in thousands) 2025

2 unchanged sentences

Total recurring revenue $ 264,050 $ 271,518

Subsequent Events

ASR Transaction Settlement

On October 29, 2024, we settled the previously announced ASR Transaction described in Note 11.

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.

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

Third Quarter 2024 Form 10-Q

One-time services and other 6,611 7,732

Total revenue $ 270,661 $ 279,250

First Quarter 2025 Form 10-Q

Blackbaud, Inc.

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-Q

Item 1. Financial Statements