What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-18 compared with 2025-02-21 · 283 added, 345 removed, 463 unchanged (58% of the section changed)

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Executive Summary

We are the leading software provider exclusively dedicated to powering social impact.

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, India and the United Kingdom, supporting users in 100+ countries.

We are the world's leading provider of AI-powered solutions for social impact.

Serving nonprofits, educational institutions, companies committed to corporate social responsibility and individual change makers, we propel impact at scale with the sector’s most intelligent solutions for fundraising and engagement, education solutions, financial management and CSR and grantmaking.

We have operations in the United States, Australia, Canada, Costa Rica, India and the United Kingdom, supporting users in 100+ countries.

Our revenue is primarily generated from the following sources:

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and (ii) providing payment and transaction services.

Update on Five Key Operational Initiatives

In early 2023, we outlined five key operational initiatives targeted to drive innovation, bookings growth, revenue expansion and lower costs.

During 2024, we continued to execute on these key initiatives.

1 Product Innovation and Delivery

2 Bookings Growth and Acceleration

3 Transactional Revenue Optimization and Expansion

4 Modernized Approach to Pricing and Multi-Year Customer Contracts

5 Keen Attention to Cost Management

Operating Initiatives Supporting Long-Term Growth and Margin Improvement

• Product Innovation and Delivery

To maintain our market leadership position, we are accelerating the pace of innovation and new feature delivery to our customers.

Our focus has been on two areas, artificial intelligence (AI) and enhancements that continue to improve the connectivity of our suite of solutions.

These enhancements are aimed at improving fundraising outcomes while reducing the administrative burden of our end users.

Some examples include:

• We have released a number of AI capabilities in our solutions, including generative AI functionality for our JustGiving platform.

During 2024, we released generative AI capabilities for Raiser’s Edge NXT®, and we expect that Blackbaud Copilot will be available to our Raiser's Edge NXT customers soon.

Using Blackbaud Copilot, users can ask ad hoc questions such as “How can I improve my average donation size?” and the tool will provide intelligent responses as well as recommended actions intended to drive that outcome.

• During 2024, our Online Giving and Prospect Insights capabilities were natively integrated into Raiser's Edge NXT.

With these integrations, fundraising administrators can now drive a giving campaign, keep records of each donor interaction, identify new donation opportunities, and provide personalized messaging, all in one integrated experience.

• During 2024, we released our new optimized donation forms for Raiser's Edge NXT, Blackbaud CRM and Blackbaud Altru that fully integrate with our payment processing and CRM software.

We expect these forms to drive higher revenue for our customers and for Blackbaud.

A central element of our long‑term strategy is the disciplined integration of AI across our products, platform and internal operations, which management views as foundational to driving operating leverage, enhancing customer outcomes and supporting sustainable growth over time.

Our product innovation efforts have focused on two primary areas:

(i) advancing AI across the portfolio, and (ii) enhancing product connectivity and interoperability to streamline customer workflows.

These enhancements are designed to help customers improve fundraising outcomes while reducing administrative burden.

Through our multi-year Intelligence for Good® initiative, we continue to integrate machine learning and AI-driven capabilities into our products to improve efficiency and support better outcomes for our customers.

Our machine learning features for prospect identification have been adopted by more than half of Raiser's Edge NXT® customers.

We have also introduced generative AI features across multiple products, primarily supporting the composition of donor and constituent communications.

In late 2025, we released Blackbaud AI Chat, which provides contextual responses within our solutions and assists users in completing tasks more efficiently.

At bbcon®, our annual user conference in October 2025, we launched Agents for Good™, our agentic AI suite, designed to augment customer teams with virtual AI-driven assistants capable of autonomously executing complex workflows across fundraising, finance and corporate impact functions.

These innovations expand the ways customers can use our solutions and are expected to contribute to future bookings, product adoption and customer retention.

• Targeting Mid-Single-Digit Revenue Growth

Contractual Recurring Revenue (~64% of total revenue)

Contractual recurring revenue is driven by new‑customer bookings, cross‑sell and upsell activity within our existing customer base and the retention of existing customer revenue.

Our sales organization includes teams focused on both new logo acquisition and expansion within existing customers.

In addition to these motions, our new product opportunities (such as Agents for Good discussed above) provide our customer account teams with incremental solutions

2025 Form 10-K

Blackbaud, Inc.

We are delivering more innovation, evolving our products and ensuring our customers receive more value from our solutions.

Bookings Growth and Acceleration

We maintain a keen focus on accelerating bookings growth by signing new logos as well as upselling and cross-selling our existing customer base.

Our sales team is split between prospect account executives dedicated to prospecting for new clients and customer account executives who focus on selling additional products to current customers.

Given the breadth of our product portfolio, this “land and expand” model has proven successful for us over time.

As previously disclosed, there can be volatility quarter-to-quarter on bookings.

Transactional Revenue Optimization and Expansion

Transactional revenue, which is about one-third of total revenue, is comprised of four primary components:

donation processing (~55% of total transactional revenue);

consumer giving (~20%);

tuition management (~20%);

and event-based usage (~5%).

The diversity of the underlying transaction volumes from these four sources has resulted in consistent transactional recurring revenue growth in the mid-to-high single digits over the past several years.

We continue to see strong momentum in consumer giving and tuition management, we have implemented rate increases across select areas of our payments portfolio, and we continue to implement additional payments solutions optimization to drive enhanced donor experience.

Modernized Approach to Pricing and Multi-Year Contracts

In the summer of 2022, we put in place an updated pricing policy primarily for our social sector customers that directly reflects the value we provide to them, is in-line with the broader market and reflects the inflationary pressures that all businesses are facing.

This program is designed to deliver sustained revenue growth beyond the initial three-year renewal cycle and will provide us with improved revenue visibility.

As previously disclosed, this new approach has three main components:

offering 3-year contract renewal terms as our standard, which the vast majority of customers are adopting;

embedded annual price increases within the 3-year renewal term, which we have not had previously and are beginning to take effect;

and a larger first year price increase to bring our pricing in-line with the broader market.

The first two components, as well as a portion of the third, will continue on beyond the initial renewal cycle, creating what we believe will be a sustainable source of revenue growth.

We have now completed the 2023 and 2024 renewal cohorts, which represented approximately 65% of the total contractual revenue eligible for this program.

Approximately another 25% of the renewable base is up for renewal in 2025, and the remaining 10% in the beginning of 2026.

The close day-to-day management of renewals, the mix of 3-year and 1-year contracts, and the impact of pricing are progressing well.

Additionally, the adoption of 3-year renewals as a standard, with more customers opting for this option than we originally expected, are expected to have an added benefit of higher retention which provides greater revenue assurance and predictability.

Keen Attention to Cost Management

Cost management initiatives already completed drove a significant improvement in profitability during 2023.

These initiatives included:

• A reduction in headcount from approximately 3,600 in the third quarter of 2022 to approximately 3,000 as of December 31, 2023

• Continued IT consolidation as we migrate customers from legacy private data centers to leading public cloud service providers.

We closed four legacy data centers during 2022 and two in 2023.

• Renegotiated key vendor contracts including Microsoft Azure and AWS

• Reduced our real estate footprint as part of the shift to a remote-first workforce

During 2024, we continued to run the business at about the same headcount level, while continuing to drive efficiencies in other areas of the business.

After the divestiture of EVERFI on December 31, 2024, we had approximately 2,600 employees.

to sell into existing customers.

These three motions—new logo, cross-sell/upsell, and new product—support our multi-year “land and expand” strategy.

Most of our software customers now operate on standard three‑year contract terms with mid-to-high single-digit price increases at renewal and embedded annual price increases.

These terms provide improved revenue visibility and are expected to contribute to stability in retention rates.

Revenue from these arrangements is generally recognized ratably over the contract term.

While our contract renewal program is designed around three‑year terms, more than 20% of renewing customers have elected to enter into four‑year or longer contracts.

Accordingly, our customer base is primarily composed of three‑year contracts, with over 20% of customers committed under extended‑term arrangements, which contributes to revenue visibility while extending the duration over which renewals occur.

Because revenue from these contractual arrangements is recognized ratably over the contract term, changes in contract duration affect the period over which revenue is recognized but do not change the pattern of revenue recognition within the contract.

To the extent contracts include embedded annual price escalators, the total fees attributable to the subscription-based software solutions are recognized on a straight-line basis over the term of the arrangement, resulting in a more even pattern of revenue recognition over longer periods.

Accordingly, period‑over‑period revenue growth continues to be driven primarily by the retention of existing customer revenue, combined with new bookings, expansion activity and contractual renewals with price increases and embedded annual price escalators over the contractual term.

Extended‑term arrangements contribute to improved visibility into future revenue and cash flows.

Renewal performance can vary from year to year due to the size and composition of renewal cohorts.

Approximately 40% of our existing customer contracts are due for renewal in 2026, compared to approximately 30% in 2027 and approximately 30% in 2028.

The contractual annual recurring revenue dollars up for renewal associated with the 2026 renewal cohort are approximately 40% higher than those up for renewal in 2025, reflecting the normal progression of our multi-year contract renewal cycle and the timing of customer renewals.

Because the 2026 cohort is meaningfully larger, we may experience higher churn dollars in that year relative to prior years.

These cohort dynamics are a normal part of our renewal cycle and can influence year-over-year revenue trends, even when underlying customer retention patterns remain stable.

Transactional Recurring Revenue (~34% of total revenue)

Transactional recurring revenue is diversified across multiple activity types.

The primary components of this revenue stream—and their associated products—include:

◦ Donation Processing (~55%) - support by Blackbaud Integrated Payments , which powers donation activity across our fundraising and CRM solutions.

◦ Consumer Giving (~20%) - driven by JustGiving , which facilitates individual, peer-to-peer and community-driven giving.

◦ Tuition Management (~20%) - generated through Blackbaud Tuition Management , which processes tuition, fees and related financial transactions for K-12 private schools.

◦ Event‑based Usage (~5%) - derived from usage-based transactions across certain registration, ticketing and event-related workflows within our product suite.

The diversity of these underlying transaction types has contributed to consistent high-single-digit growth in transactional recurring revenue in recent years.

In certain periods, transactional recurring revenue may benefit from temporary increases in charitable giving related to isolated events, which can contribute to short‑term variability in transaction volumes.

Future growth in this category will depend on volume (e.g., donation activity, giving behavior, tuition payments), same‑store volume trends, the shift toward donor online giving, customer adoption of our payments capabilities and pricing optimization initiatives.

Certain components of transactional revenue—as with the broader social good sector—are influenced by external factors such as giving patterns, macroeconomic conditions and seasonal activity.

We have experienced continued growth in donation processing, consumer giving and tuition management, have implemented targeted rate increases across select areas of our payments portfolio, and are executing additional

2025 Form 10-K

Blackbaud, Inc.

As a remote-first workforce company, we can be strategic about selecting the appropriate geographic region for various functions in order to reduce costs without negatively impacting the quality of our products and services.

For example, we are currently expanding our operations in India, which we expect will give us greater access to talent, and increase the number of our employees, including management, in India.

We have rented office space in India to accommodate those new operations, although we do not currently expect to generate revenue in India in the foreseeable future.

There are two remaining legacy data centers that we are currently working towards closing in the future.

optimization initiatives intended to enhance the donor experience and support long-term transactional revenue expansion.

• Operating Efficiency and Margin Improvement

We are focused on improving operating efficiency and enhancing profitability over time.

This includes actions to optimize our workforce, improve productivity, modernize our technology platform and simplify our cost structure.

Consistent with this focus, we are applying AI across our internal operations as a tool to support productivity, scalability and operational effectiveness over time.

We have taken several steps to improve efficiency in recent years, including reductions in headcount, optimization of our real estate footprint, renegotiation of key vendor contracts, continued migration of our product infrastructure to public cloud environments and planned closure of our two remaining legacy private data centers.

We are also deploying AI-enabled tools across our internal operations, including research and development, customer operations and general and administrative functions, to automate routine activities, accelerate workflows and support internal productivity, while maintaining appropriate controls and governance.

As part of our multi-year global workforce strategy, we are expanding our global footprint through the continued build-out of our Global Capability Center ("GCC") in Hyderabad, India.

This expansion enhances our access to talent, enables labor arbitrage while maintaining a high quality of work, and supports a follow-the-sun operating model.

Our adoption of AI complements this strategy by informing how we assess roles, skill requirements and productivity opportunities as our operating model evolves.

Beginning in 2024, we have relied on a combination of (i) insourcing certain roles previously performed by third parties into the GCC, (ii) evaluating roles and required skill sets, including opportunities created through our adoption of AI, to determine whether positions that become vacant through attrition should be backfilled within the GCC, and (iii) opportunistically transitioning additional roles to the GCC.

We expect to continue this approach as we execute the next phase our global workforce strategy through 2027.

In connection with these efforts, we currently expect to incur pre‑tax GCC workforce transition costs of $6 million to $8 million in 2026, consisting primarily of severance and other employee transition‑related expenses.

These costs will be recognized as incurred as impacted employees are notified and related services are received.

Because planning for later phases of this multiyear initiative remains ongoing, our current estimates relate only to expected costs in 2026.

We expect to provide updates as planning progresses.

We expect the actions taken in 2026, together with later phases of the initiative, to begin generating operating cost efficiencies starting in 2027, although the timing and magnitude of these benefits will depend on the pace of execution, role transitions, technology adoption and other operational factors.

• Stock repurchase program

On December 1, 2025, our Board of Directors reauthorized, expanded and replenished our stock repurchase program by raising the total capacity under the program from $800.0 million to $1.0 billion available for repurchases.

The program does not have an expiration date and authorizes the repurchase of shares from time to time in accordance with applicable laws, including through open market transactions, transactions under Rule 10b5-1 trading plans, and privately negotiated transactions.

The timing and amount of repurchases are determined based on a variety of factors, including market and business conditions, the trading price of our common stock and alternative uses of capital, and the program may be limited, suspended or discontinued at any time without prior notice.

2025 Form 10-K

Blackbaud, Inc.

On December 2, 2025, we announced an increase in our expected fiscal year 2025 stock repurchase range to between 7.0% and 8.5% of our outstanding common stock as of December 31, 2024.

During the year ended December 31, 2025, we repurchased 3,337,844 shares for $214.0 million.

Including net share settlement of employee stock compensation, these repurchases represented approximately 7.9% of our outstanding common stock as of December 31, 2024.

As of December 31, 2025, $960.6 million remained available for repurchases under the program.

During 2026, we intend to repurchase between 5.0% and 10.0% of our outstanding common stock as of December 31, 2025 under our existing stock repurchase program.

Over the long term, we expect stock repurchases to remain an important component of our capital allocation strategy, subject to market conditions, business performance, leverage considerations, and other factors.

We anticipate utilizing at least 50% of our free cash flow from 2026 to 2030 for stock repurchases.

See discussion of our Non‑GAAP Financial Measures below.

Financial Summary

Total Revenue ($M) Income (loss) from Operations ($M)

Total revenue ($M)

Income (loss) from operations ($M)

YoY Growth (%) YoY Growth (%)

Total revenue increased by $50.1 million during 2024, driven largely by the following:

+ Growth in recurring revenue primarily driven by:

l an increase in contractual revenue of $36.7 million largely due to the impact of our 3-year contract renewal initiative and pricing within the Social Sector as well as the performance of our cloud solutions, partially offset by decrease in revenue from EVERFI and maintenance revenue;

l an increase in transactional recurring revenue of $20.9 million primarily due to positive results related to pricing initiatives we have implemented in the past twelve months and increases in volume for our Blackbaud Tuition Management and JustGiving solutions;

Total revenue decreased by $26.3 million during 2025, driven largely by the following:

Decrease in contractual recurring revenue of $52.7 million, primarily related to our sale of EVERFI which represented $82.6 million;

partially offset by growth of $29.8 million due to the positive impact of our pricing initiatives and new subscription sales of our cloud solutions.

Decrease in one-time consulting revenue of $4.2 million primarily due to our sale of EVERFI Limited in March 2024 and, to a lesser extent, fewer sales of implementation services.

Increase in transactional recurring revenue of $30.6 million primarily due to increases in volume for our Blackbaud Integrated Payments and Blackbaud Tuition Management and, to a lesser extent, positive results related to pricing initiatives;

also contributing to the increase in transactional recurring revenue during the year ended December 31, 2025 was an increase related to fluctuations in foreign currency exchange rates of $2.8 million.

- Decrease in one-time services and other revenue primarily related to:

l decrease in one-time consulting revenue of $7.5 million primarily due to a decrease of $7.4 million resulting from our sale of EVERFI Limited as discussed in Note 3 to our consolidated financial statements in this report

For information on the impact of foreign currency fluctuations on our financial results, see Foreign Currency Exchange Rates below on page 59 .

We have a number of multi-year pricing initiatives underway, some to bring our pricing in line with the market while others are model changes that are expected to drive greater revenue for both us and our customers.

Our Social Sector revenue (which represents approximately 88% of our total full year revenue) increased $67.4 million, or 7.1%, during 2024, when compared to the same period in 2023, driven primarily by the increases in contractual recurring revenue and transactional recurring revenue discussed above.

The Social Sector has proven to be very resilient as demonstrated through the last several economic downturns and the COVID-19 pandemic, and we have great confidence in the long-term trajectory of this portion of our business.

Our Corporate Sector revenue (which represents approximately 12% of our total full year revenue) decreased $17.3 million, or 11.5%, during 2024, when compared to the same period in 2023, driven primarily by the underperformance of EVERFI and our disposition of EVERFI Limited in March 2024 (see Note 3 to our consolidated financial statements in this report for more information).

2025 Form 10-K

Blackbaud, Inc.

As previously disclosed, our EVERFI business faced a number of external challenges and even with the decisive actions we took during 2024, including changes to our Corporate Sector leadership and the disposition of a non-recurring revenue component (EVERFI Limited discussed above), EVERFI continued to be a drag on our overall performance, and we expected that to continue.

As a result, we took further actions to right-size EVERFI's business to better align costs to its lower revenues, and 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.

This work resulted in the sale of EVERFI in December 2024 in exchange for nominal cash consideration (see page 40 below and Note 3 to our consolidated financial statements in this report for more information).

Income from operations decreased by $315.2 million during 2024, driven largely by the following:

- Pre-tax loss on disposition EVERFI of $405.4 million, including noncash impairment charges of $390.2 million.

See "EVERFI disposition charges" below on page 41 .

+ Increase in total revenue, as described above

- Increase in third-party contractor costs of $7.6 million largely related to enhancements to our cybersecurity program

- Increase in compensation costs other than stock-based compensation of $7.6 million primarily due to an increase in resources dedicated to our cybersecurity program

- Increase in hosting and data center costs of $5.0 million as we continue to migrate our cloud infrastructure to leading public cloud service providers and make investments in security;

currently, we expect our cloud infrastructure migration efforts and increased level of cybersecurity investments to continue for the foreseeable future

- Increase in amortization of intangible assets from business combinations of $4.9 million due to our acquisition of EVERFI

- Increase in marketing costs of $4.6 million primarily due to increased digital marketing spend related to JustGiving and, to a lesser extent, increased marketing related to EVERFI while we explored strategic options for the business

- Increase in transaction-based costs of $4.2 million related to the increase in the volume of transactions for which we process payments and, to a lesser extent, increases in vendor rates

- Increase in amortization of capitalized software and content development costs of $2.5 million due to our continued investments in the innovation and security of our solutions

- Increase in corporate costs of $2.5 million primarily related to an increase in bad debt expense.

The increase in bad debt expense was driven by an increase in write-offs.

Income from operations increased by $462.1 million during 2025, driven largely by the following:

Pre-tax loss on disposition of EVERFI, during the year ended December 31, 2024, of $405.4 million, including noncash impairment charges of $390.2 million, which did not reoccur during 2025.

See Note 4 to our consolidated financial statements in this report for additional details.

Decrease in compensation costs other than stock-based compensation of $42.0 million primarily due to our sale of EVERFI

Decrease in amortization of intangible assets from business combinations of $30.6 million largely due to the previously disclosed impairment charge related to our EVERFI asset group in December 2024, which primarily included finite-lived intangible assets

Decrease in Security Incident-related expenses of $10.6 million largely related to decreases in loss contingency accruals.

See "Security Incident update" below on page 40 .

+ Decrease in stock-based compensation expense of $22.8 million primarily due overall Company performance against 2024 goals and a decrease in the grant date fair value of equity award grants

+ Decrease in commission expense of $11.7 million primarily due to a prospective increase in the period of benefit over which we amortized costs of obtaining contracts with customers from 5 to 6 years beginning in the year ending December 31, 2024.

Also contributing to the decrease in commissions expense was a decrease in commissionable bookings primarily due to EVERFI and fewer sales headcount.

+ Decrease in employee severance of $5.1 million related to our prior period targeted workforce reductions

+ Decrease in acquisition and disposition-related costs of $1.4 million primarily related to less noncash impairment charges against certain operating lease right-of-use assets and property and equipment assets resulting from the subleases of our Washington, DC office location, partially offset by costs associated with the disposition of EVERFI Limited;

see Note 6 and Note 3 to our consolidated financial statements in this report for more information.

See Note 11 to our consolidated financial statements in this report for our discussion of the Security Incident.

Decrease in third-party contractor costs of $10.6 million primarily due to our sale of EVERFI, partially offset by increased spending for AI features embedded in our solutions

Decrease in advertising costs of $4.4 million primarily due to our sale of EVERFI

Decrease in stock-based compensation expense of $12.1 million primarily due to a decrease in the grant date fair value of equity award grants, and to a lesser extent, our sale of EVERFI;

partially offset by an increase primarily due to estimated overall Company performance against 2025 goals

Decrease in rent expense of $3.9 million primarily related to our release from our lease for office space in Washington, DC in February 2025

Decrease in total revenue, as described above

Increase in acquisition and disposition-related costs within general and administrative expenses of $19.8 million primarily related to our release from our lease for office space in Washington, DC in February 2025

Decrease of $7.5 million in software development costs that were required to be capitalized under generally accepted accounting principles ("GAAP"), primarily due to our sale of EVERFI

Increase in transaction-based costs of $5.4 million related to the increase in the volume of transactions for which we process payments and, to a lesser extent, increases in vendor rates

Increase in third-party software costs of $3.3 million primarily related to investments in our internal cybersecurity program

We are continuing to make investments in the business in areas such as innovation, AI, cybersecurity and our continued shift of cloud infrastructure to leading public cloud service providers.

Our profitability during 2024 reflects some of these incremental investments.

We continuously seek opportunities to optimize our portfolio of solutions to focus time and resources on innovation that will have the greatest impact for our customers and the markets we serve, and drive the highest return on investment.

To that end, we will continue to simplify and rationalize our portfolio through product sunsets and divestitures of non-core businesses and technologies.

Gross dollar retention

2025 Form 10-K

Blackbaud, Inc.

Gross dollar retention

Our recurring subscription contracts are typically for a term of three years at contract inception with standard three-year renewals thereafter.

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During 2025, our gross dollar retention was approximately 92%.

This gross dollar retention rate was consistent with our rate for the full year ended December 31, 2023.

Excluding EVERFI, our gross dollar retention during the twelve months ended December 31, 2024 was approximately 92%.

We are continually investing in innovation, which we believe will increase gross dollar retention over the long-term.

This gross dollar retention rate increased over our rate for the full year ended December 31, 2024 primarily due to our sale of EVERFI.

Changes in the amount of contractual annual recurring revenue up for renewal in a given period may impact absolute churn dollars even when customer renewal rates remain relatively consistent from year to year.

We are continually investing in innovation, which we believe will support gross dollar retention over the long-term.

Balance sheet and cash flow

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Under the 2024 Credit Facilities, the carrying amount of our debt was $1.1 billion and our net leverage ratio was 2.52 to 1.00.

During 2024, we generated $296.0 million in cash flow from operations, had a net increase in borrowings of $296.7 million, returned $418.0 million to stockholders by way of share repurchases and had aggregate cash outlays of $67.2 million for purchases of property and equipment and capitalized software and content development costs.

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.

Security Incident update

As discussed in Note 11 to our consolidated financial statements included in this report, total costs related to the Security Incident exceeded the limit of our insurance coverage in the first quarter of 2022.

Accordingly, the Security Incident has negatively impacted, and we expect it to continue for the foreseeable future to negatively impact, our GAAP profitability and GAAP cash flow (see discussion regarding non-GAAP free cash flow and non-GAAP adjusted free cash flow on page 53 ).

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

It also includes settlements and recorded liabilities for 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 (as discussed in Note 11).

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

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 in Note 11.

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.

2024 Form 10-K

Blackbaud, Inc.

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.

EVERFI disposition

On December 9, 2024, the Company concluded that a material impairment charge of up to $415 million was required related to its EVERFI asset group, which primarily included finite-lived intangible assets and capitalized software and content development costs.

The total pre-tax noncash charges were subsequently determined to be $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 comprehensive loss for the year ended December 31, 2024.

See Note 4 to our consolidated financial statements in this report for additional details.

During 2025, we generated $265.6 million in cash flow from operations, had a net increase in borrowings of $34.7 million, returned $214.0 million to stockholders by way of share repurchases and had aggregate cash outlays of $62.0 million for purchases of property and equipment and capitalized software development costs.

On July 4, 2025, the United States enacted the OBBBA, which introduced significant changes to U.S.

See Note 12 to our consolidated financial statements in this report for more information.

OBBBA impacts meaningfully contributed to reducing U.S.

cash taxes in 2025.

We expect to continue to see meaningful reductions to cash taxes through 2027.

state OBBBA conformity considerations (which continue to evolve as the states address the new Federal tax legislation) and the phase-in of the OBBBA international tax provisions in 2026 may continue to affect this cash reduction.

Results of Operations

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For information regarding the comparison of 2024 to 2023, please refer to Part II Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 21, 2025.

On August 19, 2022, we acquired Kilter, Inc.

("Kilter") in order to provide us with strategic opportunities to expand our total addressable market and share of the philanthropic giving market through the integration of complementary solutions and services to serve the changing needs of our customers.

We have included the results of operations of the acquired company in our consolidated results of operations from the date of acquisition.

In accordance with applicable accounting rules, we determined that the Kilter 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.

See Note 3 to our consolidated financial statements in this report for a summary of this acquisition.

As previously disclosed, 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.

The results of operations of EVERFI are not included in our consolidated results of operations subsequent to the date of disposition.

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.

Revision of Prior Period Financial Statements

During the third quarter of 2025, we identified a prior period noncash error related to the previously recorded valuation allowance in accounting for income taxes.

We have revised previously issued financial statements to correct this error, along with other immaterial prior period errors.

None of the revisions were considered material to the prior periods impacted, as disclosed in Note 13 to our unaudited, condensed consolidated financial statements contained in our Quarterly Report on Form 10-Q filed with the SEC on November 3, 2025.

All amounts in Item 2 of this filing are provided as revised.

2025 Form 10-K

1 unchanged sentence

Revenue and Cost of Revenue

Revenue ($M) Cost of revenue ($M) Gross profit ($M)

Cost of revenue ($M)

Gross profit ($M)

and gross margin (%)

YoY Growth (%) YoY Growth (%)

Recurring revenue includes two components:

contractual recurring and transactional 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, online training programs and subscription-based analytic services.

YoY Growth (%)

Our revenue includes three components:

contractual recurring, transactional recurring and one-time services and other.

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

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

Transactional recurring revenue is comprised of transaction fees associated with the use of our solutions, including donation processing, tuition management, consumer giving and event-based usage.

Cost of recurring revenue is primarily comprised of compensation costs for customer support and production IT personnel, hosting and data center costs, third-party contractor expenses, third-party royalty and data expenses, allocated depreciation, facilities and IT support costs, amortization of intangible assets from business combinations, amortization of software development costs, transaction-based costs related to payments services including remittances of amounts due to third-parties and other costs incurred in providing support and recurring services to our customers.

• Transactional recurring revenue is comprised of fees and voluntary donor contributions (to offset processing fees) associated with the use of our solutions, including donation processing, tuition management, consumer giving and event-based usage.

• One-time services and other revenue is comprised of fees for one-time consulting, analytic and onsite training services, and fees for retained and managed services contracts that we do not expect to have a term consistent with our cloud solution contracts.

Cost of revenue is primarily comprised of compensation costs for customer support, production IT, professional services and onsite training personnel, hosting and data center costs, third-party contractor expenses, third-party royalty and data expenses, allocated depreciation, facilities and IT support (including cybersecurity) costs, amortization of intangible assets from business combinations, amortization of software development costs, transaction-based costs related to payments services including remittances of amounts due to third-parties, data expense incurred to perform one-time analytic services and other costs incurred in providing support, recurring services and onsite customer training to our customers.

Our customers continue to prefer cloud subscription offerings with integrated analytics, training and payment services.

We intend to continue focusing on innovation, quality and integration of our cloud solutions, which we believe will drive future revenue growth.

Recurring revenue increased by $57.6 million, or 5.4%, driven primarily by the following:

+ Increase in contractual recurring revenue of $36.7 million largely due to the impact of our 3-year contract renewal initiative and pricing within the Social Sector as well as the performance of our cloud solutions;

partially offset by decreases in revenue from EVERFI (as discussed above) and maintenance revenue;

+ Increase in transactional recurring revenue of $20.9 million primarily due to positive results related to pricing initiatives we have implemented in the past twelve months and increases in volume for our Blackbaud Tuition Management and JustGiving solutions;

also contributing to the increase in transactional recurring revenue during the year ended December 31, 2024 was an increase related to fluctuations in foreign currency exchange rates of $2.2 million.

2025 Form 10-K

Blackbaud, Inc.

For additional information on the impact of foreign currency fluctuations on our financial results, see Foreign Currency Exchange Rates below on page 59 .

Cost of recurring revenue increased by $24.1 million, or 5.1%, driven primarily by the following:

+ Increase in hosting and data center costs of $5.1 million as we continue to migrate our cloud infrastructure to leading public cloud service providers and make investments in security;

currently, we expect our cloud infrastructure migration efforts and increased level of cybersecurity investments to continue for the foreseeable future

+ Increase in amortization of intangible assets from business combinations of $4.6 million as most of the intangible assets we acquired with EVERFI in December 2021 were amortized on a curve that represented the expected period of economic benefit

Revenue decreased by $26.3 million, or 2.3%.

For a discussion of our changes in revenue, see "Revenue" above starting on page 41 in this report.

Cost of revenue decreased by $58.1 million, or 11.1%, driven primarily by the following:

Decrease in amortization of intangible assets from business combinations of $29.3 million largely due to the previously disclosed impairment charge related to our EVERFI asset group in December 2024, which primarily included finite-lived intangible assets

Decrease in compensation costs of $21.4 million primarily due to our sale of EVERFI

Decrease in allocated overhead costs of $6.3 million primarily related to the decreased headcount from our sale of EVERFI

Decrease in third-party contractor costs of $4.5 million related to our sale of EVERFI and decreased use of outside contractors

Increase in transaction-based costs of $5.2 million related to the increase in the volume of transactions for which we process payments and, to a lesser extent, increases in vendor rates

+ Increase in third-party contractor costs of $3.8 million largely related to enhancements to our cybersecurity program

+ Increase in third-party software costs of $2.9 million primarily due to the number of licenses needed and also price increases for the software being used

+ Increase in amortization of capitalized software and content development costs of $2.8 million due to our continued investments in the innovation and security of our solutions

- Decrease in stock-based compensation costs of $1.4 million primarily due to overall Company performance against 2024 goals and a decrease in the grant date fair value of equity award grants

Recurring gross margin increased by 10 basis points primarily due to the increase in recurring revenue outpacing the increase in cost of recurring revenue.

One-time services and other

Revenue ($M) Cost of revenue ($M) Gross profit ($M)

and gross margin (%)

YoY Growth (%) YoY Growth (%)

One-time services and other revenue is comprised of fees for one-time consulting, analytic and onsite training services, and fees for retained and managed services contracts that we do not expect to have a term consistent with our cloud solution contracts.

Cost of one-time services and other is primarily comprised of compensation costs for professional services and onsite training personnel, other costs incurred in providing onsite customer training, third-party contractor expenses, data expense incurred to perform one-time analytic services, third-party software royalties, allocated depreciation, facilities and IT support costs and amortization of intangible assets from business combinations.

2024 Form 10-K

Blackbaud, Inc.

One-time services and other revenue decreased by $7.5 million, or 22.2%, driven primarily by the following:

- Decrease in one-time consulting revenue of $7.5 million primarily due to a decrease of $7.4 million resulting from our sale of EVERFI Limited as discussed in Note 3 to our consolidated financial statements in this report.

Cost of one-time services and other decreased $10.0 million or 31.6%, primarily driven by the following:

- Decrease in compensation costs of $5.9 million primarily related to our sale of EVERFI Limited as discussed above and a continued shift in resources historically supporting one-time services and other towards recurring revenue

- Decrease in direct costs of revenue of $2.7 million primarily due to our sale of EVERFI Limited as discussed above

One-time services and other gross margin increased by 1,130 basis points primarily due to the decrease in cost of one-time services and other revenue outpacing the decrease in one-time services and other revenue.

Gross margin increased by 410 basis points primarily due to the decrease in cost of revenue outpacing the decrease in revenue.

Operating Expenses

Sales, marketing and

customer success ($M) Research and

development ($M) General and

customer success ($M)

development ($M)

administrative ($M)

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Sales, marketing and customer success

Sales, marketing and customer success expense includes compensation costs, variable sales commissions, travel-related expenses, advertising and marketing materials, public relations costs, variable reseller commissions and allocated depreciation, facilities and IT support costs.

We see a large market opportunity in the long-term and will continue to make investments to drive sales effectiveness.

We have also implemented software tools to enhance our digital footprint and drive lead generation.

The enhancements we are making in our go-to-market approach are expected to reduce our average customer acquisition cost per customer as well as the related payback period while increasing sales velocity.

These investments include enhancements to our go‑to‑market approach and the use of software tools, including AI‑enabled sales development capabilities, to enhance our digital footprint, support lead generation and improve sales execution efficiency.

For example, we utilize AI to increase sales development representative engagement and customer conversations, supporting pipeline generation.

The enhancements we are making in our go-to-market approach are expected to reduce our average customer acquisition cost per customer and related payback period while increasing sales velocity.

2025 Form 10-K

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The decreases in dollars and as a percentage of total revenue were primarily driven by the following:

- Decrease in commissions expense of $12.0 million primarily due to a prospective increase in the period of benefit over which we amortized costs of obtaining contracts with customers from 5 to 6 years beginning in the year ending December 31, 2024.

Also contributing to the decrease in commissions expense were a decrease in commissionable bookings primarily due to EVERFI and fewer sales headcount.

- Decrease in stock-based compensation costs of $6.9 million primarily due overall Company performance against 2024 goals and a decrease in the grant date fair value of equity award grants

- Decrease in severance costs of $2.2 million related to our prior period targeted workforce reductions

+ Increase in advertising costs of $4.6 million primarily due to increased digital marketing spend related to JustGiving and, to a lesser extent, increased marketing related to EVERFI while we explored strategic options for the business

Decrease in compensation costs of $11.7 million primarily related to our sale of EVERFI

Decrease in advertising costs of $4.4 million primarily related to our sale of EVERFI

Decrease in commissions expense of $1.7 million primarily due to our sale of EVERFI

Research and development

Research and development expense includes compensation costs for engineering and product management personnel, third-party contractor expenses, software development tools and other expenses related to developing new solutions or upgrading and enhancing existing solutions that do not qualify for capitalization, and allocated depreciation, facilities and IT support costs.

We continue to make investments to delight our customers with innovative cloud solutions.

We also continue to invest heavily in the security of our solutions.

Research and development expense increased by $7.3 million, or 4.8%.

The increases in dollars and as a percentage of total revenue were primarily driven by the following:

+ Increase in compensation costs other than stock-based compensation of $6.6 million primarily related to an increase in resources dedicated to the security-related compliance of our solutions

+ Increase in third-party contractor costs of $3.4 million largely related to enhancements to our cybersecurity program

+ Increase in allocated overhead costs of $2.7 million primarily related to increased headcount discussed above

- Decrease in stock-based compensation of $4.3 million primarily due overall Company performance against 2024 goals and a decrease in the grant date fair value of equity award grants

- Decrease in employee severance costs of $1.1 million primarily due to our prior period targeted workforce reductions discussed above

Not included in research and development expense for 2024 and 2023 were $60.8 million and $60.7 million, respectively, of qualifying costs associated with software and content development activities that are required to be capitalized under GAAP, such as those for our cloud solutions, as well as development costs associated with acquired companies.

Qualifying capitalized software and content development costs associated with our cloud solutions and online educational courses are subsequently amortized to cost of recurring revenue over the related asset's estimated useful life, which generally range from three to seven years.

We expect that the amount of software development costs capitalized will modestly decrease in the near-term due to the disposition of EVERFI.

We continue to prioritize making investments in innovation, quality, security and the integration of our solutions, which we believe will drive long-term revenue growth.

We continue to make investments intended to delight our customers with innovative and secure cloud solutions, including AI technology.

Research and development expense decreased by $15.6 million, or 10.1%.

The decreases in dollars and as a percentage of total revenue were primarily driven by the following:

Decrease in compensation costs of $13.9 million primarily related to our sale of EVERFI

Decrease in third-party contractor costs of $7.3 million primarily related to our sale of EVERFI, partially offset by increased spending for AI features embedded in our solutions

Decrease in allocated overhead costs of $3.1 million primarily related to our sale of EVERFI and decreased headcount

Decrease in software development costs of $8.3 million that were required to be capitalized under GAAP, primarily related to our sale of EVERFI

Not included in research and development expense for 2025 and 2024 were $52.5 million and $60.8 million, respectively, of qualifying costs associated with software development activities that are required to be capitalized under GAAP, such as those for our cloud solutions.

Qualifying capitalized development costs associated with our cloud solutions are subsequently amortized to cost of revenue over the related assets' estimated useful life, which generally range from three to seven years.

We expect that the amount of software development costs capitalized will be relatively consistent in the near-term as we continue making investments in innovation, quality, security and the integration of our solutions, which we believe will drive long-term revenue growth.

2025 Form 10-K

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General and administrative

General and administrative expense consists primarily of compensation costs for general corporate functions, including senior management, finance, accounting, legal, human resources and corporate development, Security Incident-related expenses (including legal fees, settlements and loss contingency accruals), third-party professional fees, insurance, allocated depreciation, facilities and IT support costs, acquisition-related expenses and other administrative expenses.

General and administrative expenses decreased by $47.2 million, or 24.9%.

The decreases in dollars and as a percentage of total revenue were primarily driven by the following:

General and administrative expense consists primarily of compensation costs for general corporate functions, including senior management, finance, accounting, legal, human resources and corporate development, Security Incident-related expenses (including legal fees, settlements and loss contingency accruals), third-party professional fees, insurance, allocated depreciation, facilities and IT support (including cybersecurity) costs, acquisition-related expenses and other administrative expenses.

General and administrative expenses increased by $11.9 million, or 8.3%.

The increases in dollars and as a percentage of total revenue were primarily driven by the following:

Increase in acquisition and disposition-related costs of $19.8 million primarily related to our release from our lease for office space in Washington, DC in February 2025

Decrease in total costs allocated from general and administrative expense of $11.4 million primarily related to a reductions in IT support and facilities costs, and the decreased headcount from our sale of EVERFI.

Depreciation, facilities and IT support (including cybersecurity) costs are pooled and recorded to general and administrative expense and allocated to other lines of our statements of comprehensive income based on headcount.

Increase in third-party software costs of $3.6 million primarily related to investments in our internal cybersecurity program

Decrease in Security Incident-related expenses of $10.6 million largely related to decreases in loss contingency accruals.

See "Security Incident update" above on page 40

- Decrease in stock-based compensation costs of $9.0 million primarily due to overall Company performance against 2024 goals and a decrease in the grant date fair value of equity award grants

- Increase in total costs allocated from general and administrative expense of $4.4 million primarily related to investments in security tools.

Depreciation, facilities and IT support costs are pooled and recorded to general and administrative expense and allocated to other lines of our statements of comprehensive loss based on headcount.

- Decrease in acquisition and disposition-related costs of $1.4 million primarily related to less noncash impairment charges against certain operating lease right-of-use assets and property and equipment assets resulting from the subleases of our Washington, DC office location, partially offset by costs associated with the disposition of EVERFI Limited;

see Note 6 and Note 3 to our consolidated financial statements in this report for more information.

- Decrease in severance costs of $1.0 million due to our prior period targeted workforce reductions discussed above

+ Increase in compensation costs other than stock-based compensation of $5.0 million primarily due to an increase in resources dedicated to our cybersecurity program

+ Increase in corporate costs of $2.4 million primarily related to an increase in bad debt expense.

The increase in bad debt expense was driven by an increase in write-offs.

+ Increase in third-party software costs of $1.5 million due to primarily due to the number of licenses needed and also price increases for the software being used

See Note 11 to our consolidated financial statements in this report for our discussion of the Security Incident.

Decrease in stock-based compensation costs of $5.4 million primarily due to a decrease in the grant date fair value of equity award grants, and to a lesser extent, our sale of EVERFI;

partially offset by an increase primarily due to estimated overall Company performance against 2025 goals

Decrease in rent expense of $3.5 million primarily related to our release from our lease for office space in Washington, DC in February 2025

Decrease in corporate costs of $2.3 million primarily related to a decrease in insurance premiums

Decrease in compensation costs other than stock-based compensation of $1.6 million primarily due to our sale of EVERFI

2025 Form 10-K

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Percentages indicate expenses as a percentage of total revenue

Interest expense increased in dollars and as a percentage of total revenue during 2024 when compared to 2023, primarily due to our incremental borrowings to fund our ASR Transaction (as defined on page 105 ) and other stock repurchases.

Interest expense increased in dollars and as a percentage of total revenue during 2025 when compared to 2024, primarily due to our incremental borrowings to fund stock repurchases during 2024 and 2025 and the expiration of favorable interest rate swaps in October 2024.

We currently expect interest expense for the full year 2026 to be approximately $62 million to $66 million although our interest expense in connection with the variable rate portion of our outstanding debt could increase in a rising interest rate environment.

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Interest Rate Risk on page 63 for more information about our variable interest rate exposure and related risk.

Other income ($M)

Percentages indicate other income as a percentage of total revenue

Other income increased in dollars and as a percentage of total revenue during 2024 when compared to 2023, primarily due to an increase in interest income.

Interest income increased primarily due to higher interest earned on restricted cash due to customers for our payment processing solutions.

Other Income, Net

Other income, net ($M)

Percentages indicate other income, net as a percentage of total revenue

The decrease in other income, net in dollars and as a percentage of total revenue during 2025, when compared to 2024, was primarily due to a current year currency revaluation loss compared to a gain in the prior year and, to a lesser extent, by a decrease in interest income largely driven by lower year-over-year U.S.

federal interest rates.

See Note 8 to our consolidated financial statements in this report for more information regarding our other income.

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2025 December 31,

Total deferred revenue (1)

361.5 394.9 (8.5) %

Deferred revenue (1)

Long-term portion

Current portion (1)

$ 359.5 $ 392.5 (8.4) %

(1) The individual amounts for each year may not sum to total deferred revenue or current portion of deferred revenue due to rounding.

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We generally invoice our customers with recurring revenue contracts in annual cycles 30 days prior to the end each one-year period.

The decrease in deferred revenue during the year ended December 31, 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.

Revenue from these arrangements is generally recognized ratably over the contract term.

The increase in deferred revenue during the year ended December 31, 2025 was primarily due to billings related to contract renewals and new subscription sales of our cloud solutions.

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.

Income tax (benefit) provision ($M)

Income tax provision (benefit) ($M)

Percentages indicate effective income tax rates

Our effective income tax rate may fluctuate quarterly and annually as a result of factors, including changes in tax law in jurisdictions where we conduct business, transactions entered into, changes in the geographic distribution of our earnings or losses, and our assessment of certain tax contingencies and valuation allowances.

We have deferred tax assets for federal, state, and international net operating loss carryforwards, a federal and state capital loss carryforward and tax credits.

We have deferred tax assets for U.S.

federal, U.S.

state, and international net operating loss carryforwards, federal and state capital loss carryforwards and tax credits.

The federal and state net operating loss and capital loss carryforwards are subject to various Internal Revenue Code limitations and applicable state tax laws.

The foreign net operating loss carryforwards have a valuation reserve due to the uncertainty of realizing such carryforwards in the future.

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

The foreign net operating loss carryforwards have a valuation allowance due to the uncertainty of realizing such carryforwards in the future.

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 combination of our cumulative pretax loss position and net deferred tax asset position resulting from divestiture of EVERFI.

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

consolidated group remains in a three‑year cumulative pretax book loss position.

As such, we intend to continue maintaining a 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.

We file income tax returns in the U.S.

for federal and various state jurisdictions as well as in foreign jurisdictions including Canada, the U.K., Australia, Ireland and Costa Rica.

for federal and various state jurisdictions as well as in foreign jurisdictions including Canada, the U.K., Australia, Ireland, Costa Rica and India.

We are generally subject to U.S.

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

federal income tax examinations for

2025 Form 10-K

Blackbaud, Inc.

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

The possible decrease could result from the expiration of statutes of limitations.

The reasonably possible decrease at December 31, 2024 was insignificant.

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

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.

calendar tax years ending 2022 through 2025, as well as state and foreign income tax examinations for various years depending on statutes of limitations and net operating loss and/or tax credit utilization in those jurisdictions.

The increase in our effective income tax rate for year ended December 31, 2025, when compared to the same period in 2024, was primarily attributable to normalization of several non-recurring events in 2024, in which we had recorded the 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.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into U.S.

federal income tax law.

OBBBA permanently extends immediate expensing of research and development (“R&D”) expenditures under Internal Revenue Code Section 174 and provides transition rules for previously capitalized R&D costs.

Under ASC 740, these changes modify the measurement of certain deferred tax assets (“DTAs”), particularly those arising from capitalized Section 174 expenditures.

Additionally, in 2025, the valuation allowance decreased primarily due to the pre-tax income recorded during the current year as well as the enactment of the OBBBA, which resulted in the realizability of certain U.S.

deferred tax assets.

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.

Management continues to evaluate the impact of future phases of OBBBA that will become effective beginning in 2026, including changes to international tax provisions and interest limitation rules;

however, for 2025, no further material impact beyond the valuation allowance‑driven effects is expected.

Non-GAAP Financial Measures

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Non-GAAP gross margin 62.3 % 60.8 %

GAAP (loss) income from operations $ (270.5) $ 44.7

GAAP income (loss) from operations $ 190.8 $ (271.4)

GAAP operating margin 16.9 % (23.5) %

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Non-GAAP operating margin 30.5 % 27.6 %

GAAP (loss) income before (benefit) provision for income taxes $ (311.6) $ 17.6

GAAP net (loss) income $ (283.2) $ 1.8

Shares used in computing GAAP diluted (loss) earnings per share 50,560,538 53,721,342

GAAP diluted (loss) earnings per share $ (5.60) $ 0.03

GAAP income (loss) before provision (benefit) for income taxes $ 131.8 $ (312.5)

GAAP net income (loss) $ 115.0 $ (299.5)

Shares used in computing GAAP diluted earnings (loss) per share 48,469,961 50,560,538

GAAP diluted earnings (loss) per share $ 2.37 $ (5.92)

Non-GAAP adjustments:

GAAP income tax (benefit) provision (28.4) 15.8

GAAP income tax provision (benefit) 16.8 (12.9)

Total non-GAAP adjustments affecting income from operations 153.7 590.6

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(1) The individual amounts for each year may not sum to subtotal, non-GAAP gross profit, non-GAAP income from operations, non-GAAP income before provision for income taxes or non-GAAP net income due to rounding.

(2) Includes noncash impairment charges incurred during the twelve months ended December 31, 2024 and 2023 related to the subleases of our Washington, DC office location the lease of which was acquired during the EVERFI acquisition.

(3) Includes Security Incident-related costs incurred during the twelve months ended December 31, 2024 of $13.7 million, which included approximately $6.8 million in recorded liabilities for loss contingencies, and during the twelve months ended December 31, 2023 of $53.4 million, which included approximately $31.0 million in recorded liabilities for loss contingencies.

(2) Includes charges of $24.3 million incurred during the twelve months ended December 31, 2025 related to the release from our lease for office space in Washington, DC (which was acquired as part of our acquisition of EVERFI in December 2021) and noncash impairment charges incurred during the twelve months ended December 31, 2024 related to the sublease of our Washington, DC office location prior to the EVERFI disposition.

(3) Includes Security Incident-related costs incurred during the twelve months ended December 31, 2025 and 2024 of $3.1 million and $13.7 million, respectively, which included approximately $1.1 million and $6.8 million, respectively, in recorded accruals for loss contingencies.

Recorded expenses consisted primarily of payments to third-party service providers and consultants, including legal fees, as well as settlements of customer claims, negotiated settlements and accruals for certain loss contingencies.

Not included in this adjustment were costs associated with enhancements to our cybersecurity program.

For full year 2025, we currently expect pre-tax expenses of approximately $2 million to $3 million and cash outlays of approximately $3 million to $4 million for ongoing legal fees related to the Security Incident.

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

(4) Beginning in 2024, we now apply a non-GAAP effective tax rate of 24.5% when calculating non-GAAP net income and non-GAAP diluted earnings per share.

For the twelve months ended December 31, 2023, the tax impact related to non-GAAP adjustments is calculated under our historical non-GAAP effective tax rate of 20.0%.

As of December 31, 2025, we do not have any recorded liabilities for loss contingencies related to the Security Incident.

(4) We use a non-GAAP effective tax rate of 24.5% when calculating non-GAAP net income and non-GAAP diluted earnings per share.

We base this rate on our estimated annual GAAP income tax rate, adjusted for items excluded from GAAP income when calculating non-GAAP income and for significant nonrecurring tax adjustments.

We review this non-GAAP tax rate annually to determine whether it remains appropriate for evaluating our financial performance.

In conducting this review, we consider our GAAP annual effective tax rate, changes in tax legislation, non-GAAP adjustments, and shifts in the geographic mix of revenues and expenses.

We also evaluate other factors that we deem significant.

Because the tax treatment of non-GAAP adjustments differs from GAAP and because of our methodology for estimating the annual tax rate, the non-GAAP tax rate may differ from the GAAP tax rate and from our actual tax liabilities.

2025 Form 10-K

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Non-GAAP organic recurring revenue growth on constant currency basis 5.4 %

(1) Includes EVERFI revenue of $85.5 million and $106.9 million for the year ended December 31, 2024 and 2023, respectively.

(1) Non-GAAP revenue from divested businesses excludes revenue associated with divested businesses in the prior period.

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amortization of intangible assets from business combinations;

amortization of software and content development costs;

amortization of software development costs;

stock-based compensation;

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(dollars in millions) 2025 2024

GAAP net (loss) income $ (283.2) $ 1.8

GAAP net income (loss) $ 115.0 $ (299.5)

Non-GAAP adjustments:

Interest, net 60.1 45.8

GAAP income tax (benefit) provision

GAAP income tax provision (benefit)

Amortization of intangibles from business combinations 29.9 60.5

Amortization of software and content development costs (1)

Amortization of software development costs (1)

Non-GAAP EBITDA (2)

3 unchanged sentences

Stock-based compensation expense

$ 92.9 $ 105.0

Employee severance

9 unchanged sentences

Non-GAAP adjusted EBITDA on constant currency basis (7)

$ 403.5 $ 386.4

Non-GAAP adjusted EBITDA margin on constant currency basis (7)

Rule of 40 on constant currency basis (8)

(1) Includes amortization expense related to software and content development costs and amortization expense from capitalized cloud computing implementation costs.

(1) Includes amortization expense related to software development costs and amortization expense from capitalized cloud computing implementation costs.

(2) The individual amounts for each year may not sum to subtotal, non-GAAP EBITDA, non-GAAP adjusted EBITDA or non-GAAP adjusted EBITDA on a constant currency basis due to rounding.

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Non-GAAP free cash flow and non-GAAP adjusted free cash flow

Non-GAAP free cash flow is defined as operating cash flow less capital expenditures, including costs required to be capitalized for software and content development, and capital expenditures for property and equipment.

Non-GAAP adjusted free cash flow is defined as operating cash flow less capital expenditures, including costs required to be capitalized for software and content development and capital expenditures for property and equipment, plus cash outflows, net of insurance, related to the Security Incident.

Non-GAAP free cash flow is defined as operating cash flow less capital expenditures, including costs required to be capitalized for software development, and capital expenditures for property and equipment.

Non-GAAP adjusted free cash flow is defined as operating cash flow less capital expenditures, including costs required to be capitalized for software development and capital expenditures for property and equipment, plus cash outflows related to the Security Incident.

We believe non-GAAP free cash flow and non-GAAP adjusted free cash flow provides useful measures of the Company's operating performance.

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purchase of property and equipment (7.8) (7.4)

capitalized software and content development costs (59.8) (59.4)

capitalized software development costs (54.2) (59.8)

Non-GAAP free cash flow (1)

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Our expenses, other than transaction-based costs related to our payments services, do not vary significantly as a result of these factors, but do fluctuate on a quarterly basis due to varying timing of expenditures.

Our cash flow from operations normally fluctuates quarterly due to the combination of the timing of customer contract renewals, delivery of professional services and occurrence of customer events, as well as merit-based salary increases, among other factors.

Our cash flow from operations normally fluctuates quarterly due to the combination of the timing of customer contract billings and renewals, delivery of professional services and occurrence of customer events, as well as merit-based salary increases, among other factors.

Historically, due to lower revenues in our first quarter, combined with the payment of certain annual vendor contracts, our cash flow from operations has been lowest in our first quarter.

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Partially offsetting these favorable drivers of cash flow from operations in our third and fourth quarters are base salary merit increases, which occur in July.

In addition, deferred revenues can vary on a seasonal basis due to the timing of customer contract renewals and student enrollments or significant acquisitions.

In addition, deferred revenues can vary on a seasonal basis due to the timing of customer contract billings and renewals and student enrollments or significant acquisitions.

Our cash flow from financing is negatively impacted in our first quarter when most of our equity awards vest, as we pay taxes on behalf of our employees related to the settlement or exercise of equity awards.

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Blackbaud, Inc.

These patterns may change as a result of the continued shift to online giving, growth in volume of transactions for which we process payments, large dollar customer bookings and contract renewals, fluctuations in the timing of vendor payments or as a result of acquisitions, dispositions, such as our sale of EVERFI on December 31, 2024, new market opportunities, new solution introductions or other factors.

These patterns may change as a result of the continued shift to online giving, growth in volume of transactions for which we process payments, large dollar customer bookings and contract renewals, fluctuations in the timing of vendor payments, or as a result of acquisitions, new market opportunities, new solution introductions or other factors.

Liquidity and Capital Resources

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Property and equipment, net

Software and content development costs, net 148.3 160.2 (7.4) %

Software development costs, net

Total carrying value of debt

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Net cash used in financing activities

(139.4) (143.0) (2.5) %

Our principal sources of liquidity are our operating cash flow, funds available under the 2024 Credit Facilities and cash on hand.

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We also believe that we will be able to continue to meet our long-term cash requirements due to our anticipated cash flow from operations, solid financial position and ability to access capital from financial markets.

To the extent we undertake future material acquisitions, investments or unanticipated capital or operating expenditures, including in connection with the Security Incident, we may require additional capital.

To the extent we undertake future material acquisitions, investments or unanticipated capital or operating expenditures, we may require additional capital.

In that context, we regularly evaluate opportunities to enhance our capital structure, including through potential debt or equity issuances.

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Under this universal shelf registration statement we may offer and sell, from time to time, debt securities, common stock, preferred stock, depositary shares, warrants, stock purchase contracts and stock purchase units.

Subject to certain conditions, this registration statement will be effective through January 9, 2028.

Subject to certain conditions and pursuant to applicable SEC regulations, this registration statement is effective for three years from its date of filing with the SEC, or through January 9, 2028.

At December 31, 2025, our total cash and cash equivalents balance included approximately $13.4 million of cash that was held by operations outside the U.S.

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We currently do not intend nor anticipate a need to repatriate our cash held outside the U.S.

2024 Form 10-K

Blackbaud, Inc.

Operating Cash Flow

Throughout 2025 and 2024, our cash flows from operations were derived principally from:

(i) our earnings from on-going operations prior to non-cash expenses such as depreciation, amortization, stock-based compensation, deferred income taxes, amortization of deferred financing costs and debt discount, adjustments to our provision for credit losses and sales returns, the EVERFI impairment charges, loss on disposition of business;

(i) our earnings from on-going operations prior to non-cash expenses such as depreciation, amortization, stock-based compensation, deferred taxes, amortization of deferred financing costs and debt discount and adjustments to our net provision for credit losses and sales returns, the EVERFI impairment charges, loss on disposition of business;

and (ii) changes in our working capital.

Working capital changes are comprised of changes in accounts receivable, prepaid expenses and other assets, trade accounts payable, accrued expenses and other liabilities and deferred revenue.

Net cash provided by operating activities increased by $96.3 million during the year ended December 31, 2024, when compared to the same period in 2023, primarily due to a $49.4 million increase in net income adjusted for non-cash expenses and a $46.9 million increase in cash flow from operations associated with working capital.

The increase in cash flow from operations associated with working capital during 2024, when compared to 2023, was primarily due to:

• fluctuations in the timing of vendor payments;

• a decrease in accrued expenses related to the Security Incident;

partially offset by

• an increase in cash taxes paid.

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.

Security Incident update

For full year 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.

For full year 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.

2025 Form 10-K

Blackbaud, Inc.

Net cash provided by operating activities decreased by $30.4 million during the year ended December 31, 2025, when compared to the same period in 2024, primarily due to a $51.5 million decrease in cash flow from operations associated with working capital, partially offset by a $21.0 million increase in net income adjusted for non-cash expenses.

The decrease in cash flow from operations associated with working capital during 2025, when compared to 2024, was primarily due to fluctuations in the timing of vendor payments.

On July 4, 2025, the United States enacted the OBBBA, which introduced significant changes to U.S.

See Note 12 to our consolidated financial statements in this report for more information.

OBBBA impacts meaningfully contributed to reducing U.S.

cash taxes in 2025.

We expect to continue to see meaningful reductions to cash taxes through 2027.

Investing Cash Flow

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Net cash used in investing activities of $74.9 million increased by $1.5 million during 2025, when compared to 2024.

During 2024, we used $59.8 million for software and content development costs, which was up $0.3 million from cash spent during 2023.

We also spent $7.4 million of cash for purchases of property and equipment during 2024, which was an increase of $2.8 million from cash spent in 2023.

In addition, we used net cash of $1.2 million in the disposition of a business and $5.0 million for a minority investment in a business during 2024.

During 2025, we used $54.2 million for software development costs, which was a decrease of $5.5 million from cash spent during 2024.

We spent $7.8 million of cash for purchases of property and equipment during 2025, which was relatively in line with cash spent in 2024.

In addition, during 2025, we used net cash of $12.2 million for the disposition of a business compared to $1.2 million for the disposition of a business and $5.0 million for a minority investment in a business during 2024.

Financing Cash Flow

During 2024, we had a net increase in borrowings of $296.7 million, primarily due to our stock repurchase program, including our ASR Transaction (as defined on page 105 ) in March 2024.

During 2024, we repurchased $418.0 million of our common stock compared to $18.8 million during 2023 (see additional details below regarding our stock repurchase program).

We also paid $6.5 million in debt issuance costs in conjunction with our April 2024 refinancing.

We paid $56.8 million to satisfy tax obligations of employees upon settlement or exercise of equity awards during 2024 compared to $35.9 million during 2023.

The amount of taxes paid by us on behalf of employees related to the settlement or exercise of equity awards varies from period to period based upon the timing of grants and vesting, as well as the market price for shares of our common stock at the time of settlement.

During 2025, we had a net increase in borrowings of $34.7 million, primarily due to our stock repurchase program and to satisfy tax obligations of employees upon settlement of equity awards (see discussion below).

During 2025, we repurchased $217.2 million of our common stock (including excise tax) compared to $418.0 million during 2024 .

We paid $40.4 million to satisfy tax obligations of employees upon settlement of equity awards during 2025 compared to $56.8 million during 2024.

The amount of taxes paid by us on behalf of employees related to the settlement of equity awards varies from period to period based upon the timing of grants and vesting, as well as the market price for shares of our common stock at the time of settlement.

Most of our equity awards currently vest in our first quarter.

During 2024 , cash flow from financing activities associated with changes in restricted cash due to customers increased $47.0 million , compared to a decrease of $6.8 million during 2023 .

During 2025 , cash flow from financing activities associated with changes in restricted cash due to customers decreased $25.6 million , compared to an increase of $47.0 million during 2024 .

This line in the statement of cash flows represents the change in the amount of restricted cash held and payable by us to customers from one period to the next.

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Stock repurchase program

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

The program does not have an expiration date.

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The repurchase program may be limited, suspended or discontinued at any time without prior notice.

In March 2024, we announced that we intended to repurchase during 2024 between 7% and 10% of our outstanding common stock as of December 31, 2023 under our repurchase program.

Consistent with that commitment, in March 2024, we entered into the ASR Transaction to repurchase an aggregate $200 million of shares of our common stock.

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.

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

2025 Form 10-K

Blackbaud, Inc.

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 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 and representing approximately 10.0% of the Company's common stock outstanding as of December 31, 2023.

When including the net share settlement on employee stock-based compensation, this figure increases to approximately 11%.

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

On December 2, 2025, we announced an increase in our expected fiscal year 2025 stock repurchase range to between 7.0% and 8.5% of our outstanding common stock as of December 31, 2024.

During the year ended December 31, 2025, we repurchased 3,337,844 shares for $214.0 million.

Including net share settlement of employee stock compensation, these repurchases represented approximately 7.9% of our outstanding common stock as of December 31, 2024.

As of December 31, 2025, $960.6 million remained available for repurchases under the program.

During 2026, we intend to repurchase between 5.0% and 10.0% of our outstanding common stock as of December 31, 2025 under our existing stock repurchase program.

Over the long term, we expect stock repurchases to remain an important component of our capital allocation strategy, subject to market conditions, business performance, leverage considerations, U.S.

excise taxes and other factors.

We anticipate utilizing at least 50% of our free cash flow from 2026 to 2030 for stock repurchases.

See discussion of our Non‑GAAP Financial Measures above.

2024 Credit Facilities

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At December 31, 2025, the carrying amount of our debt under the 2024 Credit Facilities was $1.1 billion.

Our average daily borrowings were $929.5 million during 2024.

Our average daily borrowings were $1.1 billion during 2025.

The term loans under the 2024 Credit Facilities and our other debt 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.

Certain real estate loans (as described in Note 9 to our audited consolidated financial statements included in this report) also require periodic principal payments and the balances of the real estate loans are due upon maturity in April 2038.

Certain real estate loans (as described in Note 9 to our audited consolidated financial statements in this report) also require periodic principal payments and the balances of the real estate loans are due upon maturity in April 2038.

The following is a summary of the financial covenants under the 2024 Credit Facilities:

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Net Leverage Ratio (1)

≤ 3.75 to 1.00 2.57 to 1.00

Interest Coverage Ratio ≥ 2.50 to 1.00 7.13 to 1.00

≤ 3.75 to 1.00

Interest Coverage Ratio

≥ 2.50 to 1.00

(1) Under the terms of the 2024 Credit Facilities, the Net Leverage Ratio requirement may be increased by up to 0.50 provided we satisfy certain requirements, including a permitted business acquisition, and provided that the maximum Net Leverage Ratio shall not exceed 4.25 to 1.00.

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

See Note 9 to our consolidated financial statements included in this report for additional information regarding the 2024 Credit Facilities.

See Note 9 to our consolidated financial statements in this report for additional information regarding the 2024 Credit Facilities.

2025 Form 10-K

Blackbaud, Inc.

Commitments and Contingencies

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Recorded contractual obligations:

Debt $ 23.9 $ 1,053.9 $ 1,077.8

Operating leases

Interest payments on debt

Unrecorded contractual obligations:

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Total contractual obligations (1)

$ 168.7 $ 1,412.3 $ 1,581.0

(1) The individual amounts may not sum to the total due to rounding.

2024 Form 10-K

Blackbaud, Inc.

As of December 31, 2024, we had total remaining principal payments of $1.1 billion.

As of December 31, 2025, we had total remaining principal payments of approximately $1.1 billion.

These payments represent principal payments only, under the following assumptions:

(i) that the amounts outstanding under the 2024 Credit Facilities, our real estate loans and our other debt at December 31, 2024 will remain outstanding until maturity, with minimum payments occurring as currently scheduled, and (ii) that there are no assumed future borrowings on the 2024 Revolving Facility for the purposes of determining minimum commitment amounts.

(i) that the amounts outstanding under the 2024 Credit Facilities, our real estate loans and our other debt at December 31, 2025 will remain outstanding until maturity, with minimum payments occurring as currently scheduled, and (ii) that there are no assumed future borrowings on the revolving credit loans under the 2024 Revolving Facility for the purposes of determining minimum commitment amounts.

See Note 9 to our consolidated financial statements in this report for more information.

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These payments represent our estimated future interest payments on debt using our debt balances and the related weighted average effective interest rates as of December 31, 2025, which includes the effect of interest rate swap agreements.

The actual interest expense recognized in our consolidated statements of comprehensive loss will depend on the amount of debt, the length of time the debt is outstanding and the interest rate, which could be different from our assumptions on our remaining principal payments described above.

The actual interest expense recognized in our consolidated statements of comprehensive income (loss) will depend on the amount of debt, the length of time the debt is outstanding and the interest rate, which could be different from our assumptions on our remaining principal payments described above.

Operating leases

As of December 31, 2025, we had remaining operating lease payments of $7.0 million.

These payments have not been reduced by sublease income, incentive payments, reimbursement of leasehold improvements or the amount representing imputed interest of $6.7 million.

These payments have not been reduced by sublease income, incentive payments, reimbursement of leasehold improvements or the amount representing imputed interest.

Our operating leases are generally for corporate offices, subleased offices and certain equipment and furniture.

Given our remote-first workforce strategy and real estate footprint optimization efforts, as discussed above, we do not anticipate entering any new, material operating leases for offices for the foreseeable future.

Given our Remote-Flexible workforce strategy and real estate footprint optimization efforts, we do not anticipate entering any new, material operating leases for offices for the foreseeable future.

See Note 11 to our consolidated financial statements in this report for more information.

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.

Purchase obligations

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See Note 11 to our consolidated financial statements in this report for more information.

The total liability for uncertain tax positions as of December 31, 2024 was $5.2 million.

Our accrued interest and penalties related to tax positions taken on our tax returns was $0.9 million as of December 31, 2024.

In connection with the settlement of the multi-state Attorneys General investigation, the California Attorney General investigation and the FTC investigation relating to the Security Incident, as discussed in Note 11 to our consolidated financial statements in this report, we have agreed to implement and improve certain of our cybersecurity programs and tools through May 2044.

The currently anticipated costs in connection with these efforts are expected to be expensed as incurred.

2025 Form 10-K

Blackbaud, Inc.

Other commitments

In connection with the settlement of the multi-state Attorneys General investigation, the California Attorney General investigation and the FTC investigation relating to the Security Incident, as discussed in Note 11 to our consolidated financial statements in this report, we agreed to implement certain improvements to of our cybersecurity programs and tools through May 2044.

We have completed the required program improvements, and our remaining obligations primarily relate to ongoing maintenance and updates.

The currently anticipated costs to comply with these ongoing obligations are primarily expected to be expensed as incurred.

Foreign Currency Exchange Rates

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Critical Accounting Estimates

Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP").

Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP.

The preparation of these financial statements requires us 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.

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Management estimates the fair value of assets acquired and liabilities assumed based on quoted market prices, the carrying value of the acquired assets and widely accepted valuation techniques, including discounted cash flows, market multiple analyses and replacement cost.

We apply significant judgement in estimating the fair value of intangible assets acquired, which involves the use of significant assumptions.

We apply significant judgment in estimating the fair value of intangible assets acquired, which involves the use of significant assumptions.

Significant assumptions used in the valuation of customer relationships include future revenue and operating expenses, customer attrition rates, contributory asset charges, tax amortization benefit, and discount rates.

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Uncertainties arise as a consequence of the actual source of taxable income between domestic and foreign locations, the outcome of tax audits and the ultimate utilization of tax credits.

Our effective income tax rate is also affected by changes in the geographic distribution of our earnings or losses, changes in tax law in jurisdictions where we conduct business.

Our effective income tax rate is also affected by changes in the geographic distribution of our earnings or losses, changes in tax law in jurisdictions where we conduct business, changes in tax laws and policies in jurisdictions where we conduct business, tax effects of nondeductible or nontaxable items and changes in valuation allowances.

Significant judgment is required in the identification and measurement of uncertain tax positions.

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When measuring impairment of an asset or asset group using discounted cash flows, we make assumptions and apply judgment in estimating future cash flows and asset or asset group fair values, including annual revenue growth rates, a terminal year growth rate and selecting a discount rate that reflects the risk inherent in future cash flows.

During 2024, we recorded material noncash impairment charges against our EVERFI asset group, which primarily included finite-lived intangible assets and capitalized software and content development costs.

For additional information, see Note 4 to our consolidated financial statements in this report.

During 2025, there were no significant non-recurring fair value adjustments to our long-lived assets, intangible assets, goodwill or operating lease ROU assets.

We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to assess impairment losses.

However, if actual results are not consistent with our estimates or assumptions, we may be exposed to an impairment charge that could materially adversely impact our consolidated financial position and results of operations.

2024 Form 10-K

Blackbaud, Inc.

Loss Contingencies

Description Judgments and Uncertainties Effect if Actual Results Differ

From Assumptions

We are subject to the possibility of various loss contingencies, including legal proceedings and claims, that arise in the normal course of business, as well as certain other non-ordinary course proceedings, claims and investigations, as described in Note 11 to the consolidated financial statements in this report.

We record an accrual for a loss contingency when it is both probable that a material liability has been incurred and the amount of the loss can be reasonably estimated.

If only a range of estimated losses can be determined, we accrue an amount within the range that, in our judgment, reflects the most likely outcome;

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 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.

We have not made any material changes in the accounting methodology we use to assess loss contingencies during the year ended December 31, 2024.

We review any such loss contingency accruals at least quarterly and adjust them to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case.

Often these issues are subject to substantial uncertainties and, therefore, the probability of loss and the estimation of damages are difficult to ascertain.

These assessments can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions that have been deemed reasonable by us.

With the exception of the 2020 Security Incident, we do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to determine loss contingencies.

However, if facts and circumstances change in the future that change our belief regarding assumptions used to determine our estimates, we may be exposed to losses that could be material.

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.

For additional information, see Note 11 to our consolidated financial statements in this report.

Recently Issued Accounting Pronouncements

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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 7. Management’s Discussion and Analysis