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Blackbaud Inc BLKB

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Blackbaud's Results Are Good, but Return to Normal Will Be Drawn Out; FVE Down to $77

Dan Romanoff, CPA Equity Analyst

Analyst Note

| Dan Romanoff, CPA |

Wide-moat Blackbaud reported solid second-quarter results, exceeding FactSet consensus expectations for revenue and adjusted EPS. Management’s outlook for the second half of 2021 focused on the high end of its prior guidance of $910 million-$920 million in revenue, though expectations still reflect a gradual recovery. Trends toward digital transformation of the business, including adoption of cloud solutions and reliance on online giving, have been accelerated by the pandemic in the last year. The resurgence of in-person events and visits to arts and cultural centers advances the opportunity in the payment space, with Payment Terminal Solution, which allows for secure, contactless payment processing through Blackbaud Merchant Services, launched in the quarter. With the international expansion efforts made in JustGiving and YourCause, the renewed interest in M&A with a continued focus on the Rule of 40, and improving sales and marketing efficiency, we view management’s positive 2021 outlook as appropriate. Still, we are lowering our fair value estimate to $77 per share from $81 based mainly on a higher tax rate assumption. We view the shares, currently trading around $70, as modestly undervalued for patient, value-oriented investors.

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Company Profile

Business Description

Founded in 1981, Blackbaud provides a suite of software solutions targeted at the “social good” community, including nonprofits, foundations, corporations, education institutions, healthcare institutions, and individual activists. Through mergers, acquisitions, and organic product development, the company has also moved into related areas outside of core fundraising, notably into K-12 schools. Blackbaud enables more than $100 billion in donations annually across a customer base in excess of 40,000 customers in at least 50 countries.

Contact
65 Fairchild Street
Charleston, SC, 29492
T +1 843 216-6200
Sector Technology
Industry Software - Application
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Distressed
Employees 3,100

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