Analyst Note| Dan Romanoff, CPA |
Wide-moat Blackbaud reported solid first-quarter results for revenue and adjusted EPS, exceeding FactSet consensus expectations. Management’s updated outlook for 2021 focused on the high end of its prior guidance of $910 million-$920 million in revenue. Pandemic-induced shifts to online giving and virtual events have created a significant opportunity in the payments space, one that Blackbaud is poised to capitalize on even as lockdowns end and life returns to normal. The confluence of a strong quarter of bookings, continuous cost-optimizing initiatives, and an impending rebound of in-person events as vaccine rollouts progress gives us confidence in the positive outlook that management issued for the remainder of 2021. Still, short-term revenue pressures lead us to maintain our fair value estimate of $81 per share. The share price fell about 6% to around $70 after the earnings report, but with the trough and subsequent inflection point in revenue growth expected in 2022, we view the shares as attractive for patient investors.