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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

☑ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| For the fiscal year ended December 31, 2024

or

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| For the transition period from to .

Commission file number: 000-50600

Blackbaud, Inc.
(Exact name of registrant as specified in its charter)

Delaware | 11-2617163
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)

65 Fairchild Street
Charleston, South Carolina 29492
(Address of principal executive offices, including zip code)
(843) 216-6200
(Registrant's telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on which Registered
Common Stock, $0.001 Par Value | BLKB | Nasdaq Global Select Market
Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☑ |  | Accelerated filer | ☐
Non-accelerated filer | ☐ |  | Smaller reporting company | ☐
|  |  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
The aggregate market value of the registrant's common stock held by non-affiliates of the registrant on June 28, 2024 (based on the closing sale price of $76.17 on that date) was approximately $2,269,744,966. Common stock held by each officer and director and by each person known to the registrant who owned 10% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.
The number of shares of the registrant’s common stock outstanding as of February 18, 2025 was 49,236,495.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive Proxy Statement for the 2025 Annual Meeting of Stockholders currently scheduled to be held June 11, 2025 are incorporated by reference into Part III hereof. Such definitive Proxy Statement will be filed with the U.S. Securities and Exchange Commission no later than 120 days after the conclusion of the registrant's fiscal year ended December 31, 2024.

TABLE OF CONTENTS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS | 2
PART I. | 3
Item 1. | Business | 3
Item 1A. | Risk factors | 17
Item 1B. | Unresolved staff comments | 31
Item 1C. | Cybersecurity | 31
Item 2. | Properties | 33
Item 3. | Legal proceedings | 33
Item 4. | Mine safety disclosures | 33
PART II. | 34
Item 5. | Market for registrant's common equity, related stockholder matters and issuer purchases of equity securities | 34
Item 6. | [Reserved] | 35
Item 7. | Management's discussion and analysis of financial condition and results of operations | 36
Item 7A. | Quantitative and qualitative disclosures about market risk | 64
Item 8. | Financial statements and supplementary data | 65
Item 9. | Changes in and disagreements with accountants on accounting and financial disclosure | 109
Item 9A. | Controls and procedures | 109
Item 9B. | Other information | 110
Item 9C. | Disclosure regarding foreign jurisdictions that prevent inspections | 110
PART III. | 111
Item 10. | Directors, executive officers and corporate governance | 111
Item 11. | Executive compensation | 111
Item 12. | Security ownership of certain beneficial owners and management and related stockholder matters | 111
Item 13. | Certain relationships and related transactions, and director independence | 111
Item 14. | Principal accountant fees and services | 111
PART IV. | 112
Item 15. | Exhibits and financial statement schedules | 112
Item 16. | Form 10-K Summary | 117
SIGNATURES | 118

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|  | CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K, including the documents incorporated herein by reference, contains forward-looking statements that anticipate results based on our estimates, assumptions and plans that are subject to uncertainty. These "forward-looking statements" are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements consist of, among other things, trend analyses, statements regarding future events, future financial performance, our anticipated growth, the effect of general economic and market conditions, our business strategy and our plan to build and grow our business, our operating results, our ability to successfully integrate developed and acquired businesses and technologies, including generative artificial intelligence ("AI"), the effect of our stock repurchase program, the effect of foreign currency exchange rate and interest rate fluctuations on our financial results, the impact of expensing stock-based compensation, the sufficiency of our capital resources, our ability to meet our ongoing debt and obligations as they become due, cybersecurity and data protection risks and related liabilities, and current or potential legal proceedings involving us, all of which are based on current expectations, estimates, and forecasts, and the beliefs and assumptions of our management. Words such as “believes,” “seeks,” “expects,” “may,” “might,” “should,” “intends,” “could,” “would,” “likely,” “will,” “targets,” “plans,” “anticipates,” “aims,” “projects,” “estimates,” or any variations of such words and similar expressions are also intended to identify such forward-looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions that are difficult to predict. Accordingly, they should not be viewed as assurances of future performance, and actual results may differ materially and adversely from those expressed in any forward-looking statements.
Important factors that could cause actual results to differ materially from our expectations expressed in forward-looking statements include, but are not limited to, those summarized under “Item 1A. Risk factors” and elsewhere in this report and in our other SEC filings. Forward-looking statements represent our management's beliefs and assumptions only as of the date of this Annual Report on Form 10-K. We undertake no obligation to update or revise any forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, whether as a result of new information, future events or otherwise.

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|  | PART I.

ITEM 1. BUSINESS

Description of Business

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. Blackbaud brings over four decades of leadership to this sector: since originally incorporating in New York in 1982 and later reincorporating as a South Carolina corporation in 1991 and as a Delaware corporation in 2004. Millions of people across more than 100 countries connect, give, learn and engage through Blackbaud platforms. During 2024, we had nearly 100,000 customers that paid Blackbaud through transactional fees and approximately 40,000 customers with contractual billing arrangements. We are deeply proud to play a part in our customers’ success in their missions to provide healthcare and cure diseases, advance education, preserve and share arts and culture, protect the environment, support those in need and much more.

Market Overview

The social impact market is significant, spanning far beyond philanthropy, and our addressable market is substantial
There are millions of organizations globally focused on social impact including nonprofits, foundations, education institutions and healthcare organizations. In the corporate sector, demonstrating positive social impact has become a business imperative. Countless individuals also engage in social impact by donating funds, volunteering their time, advocating for a cause, receiving services from or otherwise engaging with social impact organizations.
Traditional methods of fundraising and organizational management are often costly and inefficient
Many social impact organizations use manual methods or software applications not specifically designed for fundraising or nonprofit business operations. Such methods are often costly and inefficient because of the difficulties in effectively collecting, sharing and using donation-related information. Furthermore, general purpose software applications frequently have limited functionality for the unique needs of our customer base and do not efficiently integrate multiple databases. Some social impact organizations have developed proprietary software, but doing so is expensive, requiring on-site technical personnel for development, implementation and maintenance.
The nonprofit industry faces particular operational challenges
Nonprofit organizations — and any other entity that includes fundraising as a revenue source, including education institutions, healthcare organizations and houses of worship — must efficiently:
•Solicit funds and build relationships with major and institutional donors;
•Garner small cash contributions from numerous contributors;
•Manage and develop complex relationships with large numbers of constituents;
•Communicate their accomplishments and the importance of their mission online and offline;
•Comply with complex accounting, tax and reporting requirements that differ from those for for-profit businesses;
•Solicit cash and in-kind contributions from businesses to help raise money or deliver products and services;
•Provide a wide array of programs and services to individual constituents and beneficiaries; and
•Improve the data collection and information sharing capabilities of their employees, volunteers and donors by creating and providing distributed access to centralized databases.
Because of these challenges, we believe nonprofits, education institutions, healthcare organizations and houses of worship can benefit from software applications and services specifically designed to serve their particular needs and workflows to grow revenue, work effectively and accomplish their missions.

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Companies, grantmaking institutions and foundations also face unique challenges
Companies, grantmaking institutions and foundations, face their own unique challenges in their social impact efforts, including the need to:
•Quantify and improve the impact of their grants;
•Cultivate better relationships with grantees;
•Achieve better internal collaboration and alignment with board members, reviewers and other stakeholders;
•Illustrate the impact of their corporate philanthropy and education efforts to the communities they serve;
•Engage employees in meaningful volunteering, giving and other activities;
•Ensure that their philanthropic efforts align with their business initiatives;
•Manage all of a foundation's activities, including fundraising and accounting;
•Expand the reach of their fundraising efforts; and
•Cultivate new and existing donors.

Strategy

Our objective is to maintain and extend our position as the leading provider of cloud software and services essential for the core business operations unique to social impact organizations, teams, and schools. Our key strategies for achieving this objective are described below.
Execute on our 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
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.
We are delivering more innovation, evolving our products and ensuring our customers receive more value from our solutions.
2.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

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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.
3.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.
4.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, is expected to have an added benefit of higher retention which provides greater revenue assurance and predictability.
5.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.
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.

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Delight Our Customers
We intend to make our customers' experience with us effective, efficient and satisfying from their initial interest in our solutions and services through their decision to purchase, engage with customer support and implement and use our solutions. We continue to focus on initiatives aimed at improving the consistency and quality of user experience across our offerings. We also continue to evolve the way we package and sell our offerings to provide high quality and value combined with flexibility to meet the unique needs of our existing and prospective customers. In addition, we are continuing to integrate value-adding capabilities such as payment services, analytics and business intelligence into our suite of solutions to better address our customers' needs to raise more revenue with comprehensive offerings. We will continue to focus on providing the highest level of solution support, enhancing our existing solutions, extending our solutions through open APIs and developing new solutions and services designed to help our customers be more effective and achieve their missions. (See “Solutions and Services” below for additional information regarding the development and integration of AI into our solutions and services.)
Attract and Retain Top Talent and Actively Engage Employee Base
Our employees are energized by our opportunity to fuel social impact. Collaboration, innovation, authentic passion for the customers we serve and high standards are core to our culture and help to enable the great work we do. We strive to hire, develop and retain the best employees and provide a supportive and inclusive environment where their talents and potential are realized. In 2021, we formally rolled out a remote work strategy as a company, which supports Blackbaud's goal to attract top talent globally. For additional information, see “Human Capital Resources” below.
Drive Strength in Our Sector as an Industry Thought Leader
In our over 40 years of operation, we have gained significant insight into the overall market and industry segments in which we operate. We produce a wide range of thought leadership resources, including blogs, webinars and white papers, which provide insights and guidance to the social impact community. We also participate in and convene industry forums, where we exchange views and engage with industry and government leaders. Our annual user conference, bbcon®, serves in part as a forum to offer thought leadership to our customers, as do other market-specific user conferences, events and customer gatherings. The Blackbaud Institute is a research lab that leverages Blackbaud's unique data resources, along with original research, to drive insight that accelerates the impact of the social impact community. The research and reports the Blackbaud Institute produces serve to strengthen the social impact community as a whole. ENGAGE, our blog and podcast, provides free best practices resources that drive impact across the social impact community, as well.
The Blackbaud Social Good Startup Program is a year-long accelerator designed to support innovative startups with the potential to drive social impact. In alignment with our commitment to diversity in the tech community, we emphasize supporting founders from underrepresented backgrounds.

Solutions and Services

We build software for our customers' essential business operations to free them to focus on what matters most: delivering impact. With powerful data intelligence and expertise inside, and an ever-growing network of partners and developers outside, our software is the foundational infrastructure that expands what is possible for anyone dedicated to purpose-driven work.
We augment our software with a range of payment processing, analytic and business intelligence services, consulting, training and professional services, as well as maintenance and technical support. The Blackbaud portfolio is delivered primarily through cloud solutions tailored to the unique needs of nonprofits and foundations, educational institutions, individual change makers and corporate social impact programs. Our solutions are built specifically for fundraising and relationship management, marketing and engagement, financial management, grant and award management, education management, ticketing, social responsibility, payment services and analytics.
We are developing and implementing AI features in certain of our solutions and services as a key element of our strategy to delight our customers and remain a market leader in the social impact sector. For example, our “Intelligence for Good” program integrates several machine learning and AI capabilities that help our customers streamline workflows, enhance efficiency and achieve better outcomes. We have introduced generative AI features across multiple products, mainly for composing outreach communications, and will soon be offering the ability for our customers to provide contextual responses to question and answer actions. We are also leveraging AI to transform the way we work at Blackbaud and intend to continue

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to identify, experiment and scale a range of solutions across marketing, customer success and engineering through applied AI. We are committed to developing and using AI responsibly and in accordance with rapidly developing laws and regulations, including with regard to the processing of personal data. The technologies underpinning these features are in the early stages of commercial use, and we are mindful that the success of any enhancements or new products depends on many factors, including its relevance to our customers, timely implementation and market acceptance. In addition, we regularly monitor new regulatory developments in applicable jurisdictions in order to identify and mitigate ethical and legal issues presented by our use of AI. Furthermore, many of our AI features may rely on third-party service providers, which requires that we continuously evaluate the quality and legality of their products and operations, as well as copyright and intellectual property issues. Our commitment to new and emerging AI technologies requires that we invest in the development and maintenance of various models, approaches and processes, as well as the development of protections and safeguards for the use of AI technologies and requires that we hire persons with specialized expertise. As a result, we regularly monitor all aspects of our AI strategy to ensure that it is implemented in a manner consistent with our enterprise risk management processes and other company policies and procedures. (See “Risk Factors” below for more information regarding the risks associated with our use of AI and the description below of our current uses of AI in our solutions and services.)
Our specific solutions and services include:
Fundraising and Engagement
Blackbaud Raiser's Edge NXT® is our flagship fundraising and relationship management solution. Raiser's Edge NXT is the first and only cloud fundraising and relationship management solution that is all-inclusive, fully integrated with data health, predictive analytics, email marketing, donation forms, event management, payment processing and process automation to create tailored, user-specific experiences. We believe Raiser's Edge NXT is the most advanced technology available to nonprofits seeking to operate more efficiently and raise more support for their missions.
Blackbaud CRM™ is a comprehensive, configurable fundraising and relationship management solution. It is our lead offering for enterprise-level organizations seeking a powerful, yet adaptable solution for fundraising, marketing and program management across the engagement lifecycle, specializing in supporting sophisticated major giving, membership and high-volume direct marketing programs. Blackbaud CRM helps organizations build deeper and more personalized relationships with constituents, build their brands through online engagement and multichannel communication tools, and more effectively fundraise, leveraging campaign management, business intelligence and predictive analytics. Blackbaud CRM can be integrated with enterprise online solutions to enable multi-channel marketing, online engagement and event fundraising.
Blackbaud eTapestry® is a simple, cloud fundraising and donor management solution built specifically for smaller, developing nonprofits in need of a cloud solution to support basic fundraising needs. It offers nonprofit organizations a cost-effective way to manage donors, process gifts, create reports, accept online donations and communicate with constituents. This technology provides a system that is simple to maintain, efficient to operate and is intuitively easy to learn without extensive training.
Blackbaud Luminate Online®, delivered in the cloud, helps our customers better understand their online supporters, make the right ask at the right time and raise more money online. It includes tools to build online fundraising campaigns as part of an organization's existing website or as a stand-alone fundraising site. Donation forms, gift processing and tools for communicating through web pages and email give our customers the essentials for building sustainable donor relationships.
Blackbaud TeamRaiser® is the industry’s most comprehensive peer-to-peer fundraising event solution. Powering thousands of major events each year, TeamRaiser allows nonprofits’ supporters to create personal or team fundraising web pages and send email donation appeals in support of events such as walks, runs and rides.
JustGiving® from Blackbaud® is a world-class social fundraising platform for online peer-to-peer giving. JustGiving provides innovative tools enabling individuals to engage their own peer networks to raise donations directly for the causes they care most about. By making giving simpler and putting storytelling in the hands of fundraisers, JustGiving helps individuals reach more people to raise more money for charities of all sizes.
Blackbaud Fundraiser Performance Management™ is a multi-pronged solution that augments the capabilities of an organization’s primary database with flexible, detailed and transparent goal and action tracking. Built for higher education institutions, healthcare and large nonprofit organizations with structured gift officer teams, the solution combines a dedicated SaaS platform for gift officer tracking with a dedicated business consultant. Both fundraisers and leaders benefit from tailored consulting to address weaknesses and enhance strengths to comprehensively improve fundraising team performance.

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Blackbaud Altru® is a cloud solution that helps arts and cultural organizations consolidate admissions, membership, fundraising, merchandise, marketing and more, giving users a comprehensive view of their supporters. By helping general admissions arts and cultural organizations gain a clear, 360-degree view of their organization, it enables them to operate more efficiently, engage and cultivate patrons and supporters, streamline external and internal communication efforts, and reduce IT costs. Blackbaud Altru contains tools for constituent and membership management, program sales, retail sales and ticketing, volunteer management and events management. It also has sophisticated reporting functionality and tools to manage marketing, communications and fundraising.
Blackbaud Guided Fundraising™ and Blackbaud Volunteer Network Fundraising™ can work together with Fundraiser Performance Management or independently to help higher education institutions meet their advancement targets and development campaign goals. Blackbaud Guided Fundraising is used by institutions seeking to manage all the details behind the sophisticated, person-to-person solicitation strategies that drive fundraising results. Blackbaud Volunteer Network Fundraising helps institutions manage volunteer fundraising campaigns with tools for project management, communication and reporting.
Financial Management
Blackbaud Financial Edge NXT® is the market leading solution for fund and sub fund accounting to ensure stewardship for donated funds and compliance for government grants and contracts. Blackbaud Financial Edge NXT has powerful reporting tools to help finance teams drive transparency and open modern APIs to support data integrations or enhanced workflows. It seamlessly integrates with multiple Blackbaud products including Raiser's Edge NXT, Blackbaud Tuition Management, Blackbaud Billing Management and Blackbaud Grantmaking so nonprofit organizations can connect their business offices and workflows across the organization. Financial Edge NXT eliminates redundant tasks and manual processes across the organization and within the financial office itself through Payment Assistant, native functionality for automated bill pay and Expense Management, functionality for submission of expenses.
Blackbaud Purchase Cards provide an efficient and convenient alternative to traditional procurement methods and paper-based payables processes such as checks, purchase orders and invoices for travel and operational purchases. Organizations can also set spend controls for individual cardholders, track business expenses across the organization and ensure that policies are being enforced—all managed online and integrated with Blackbaud Financial Edge NXT.
Blackbaud Tuition Management™ benefits schools by giving administrators better access to financial data and payment services, and by giving parents more ways to remit tuition payments. The solution is fully integrated with Blackbaud Financial Edge NXT and helps ease the burden for administrative staff by offering invoicing, payment processing, customer service, enhanced communication with parents and later payer follow-up services.
Blackbaud Financial Aid Management™ offers schools the ability to accept online, customized applications for financial aid and to make better financial aid decisions with a proprietary Hobbies, Interest and Lifestyles ("HIL") profile. The HIL profile provides in-depth information on an applicant, delivering to the school a way to make more informed decisions on how they distribute financial aid awards.
Blackbaud Billing Management™ makes it easy for school administrators to manage tuition and billing processes and for parents to manage their payments to the school. It gives families flexible payment options, provides the school visibility into payments and billing with metrics for supporting cash flow, one view of financial performance, 24/7 bill access on all devices, and removes manual processes from admissions to finance and merchant services.
Grant and Award Management
Blackbaud Grantmaking™ is a modern cloud solution that supports the end-to-end grantmaking process from application through review and resolution. Blackbaud Grantmaking provides core functionality to efficiently disperse funds, maintain compliance with due diligence requirements and measure and demonstrate impact. The system has collaborative tools to help strengthen relationships with grantees and other community partners. Blackbaud Grantmaking supports collaboration between funders and nonprofits around intended outcomes to drive desired impact. Both the funder and the nonprofit can tell an impact story using ROI-focused results and a common outcomes measurement language.
Blackbaud Award Management™ is a comprehensive, integrated scholarship management platform for higher education and K-12 institutions and foundations, allowing students to apply for all awards using one intuitive and streamlined application

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process and eliminating many time-consuming administrative tasks. This leads to improved awarding, reporting, compliance, communication and stewardship.
Education Solutions
Blackbaud Student Information System™ makes it easy for schools to manage schedules, transcripts and GPAs. A new Student Information System that works directly with Blackbaud Learning Management System™, Blackbaud Student Information System simplifies the process of sharing student data and academic records securely.
Blackbaud Learning Management System™ is a learning management system that makes it easy to manage, connect, and share information with students, parents, and an entire school community. Developed with direct input from our customers, Blackbaud Learning Management System gives teachers the tools to meet the demands of a modern private school.
Blackbaud Enrollment Management System™ is an enrollment management system that simplifies a school’s admissions process. Blackbaud Enrollment Management System helps admissions teams and prospective families manage and track their progress, from inquiry and application through acceptance and enrollment.
Blackbaud School Website System™ is a content management system that gives schools the flexibility to build and edit webpages, with easy access to content types including photos, videos, downloads, text and more. It allows users to share material and contribute content across an entire school community.
Social Responsibility, Employee Giving and Volunteering
YourCause GrantsConnect® and YourCause CSRconnect® are cloud solutions for employee giving, volunteering, and grantmaking used to support corporate philanthropy by building meaningful connections between corporations, employees and nonprofits. After implementing YourCause solutions, customers typically show significant growth in volunteers, donations, engagement and more. These reported successes demonstrate a larger trend: overall ability to attract employees and customers alike by strengthening a company's reputation.
Blackbaud Impact Edge™ is an AI-powered solution designed for social impact reporting and storytelling, tailored for corporate social responsibility (CSR) and social impact teams of all sizes. This innovative technology utilizes responsible generative AI to help impact professionals create a compelling picture of their organization’s social impact. It seamlessly integrates data captured safely and securely from employee engagement programs, philanthropic initiatives, educational projects, and other trusted external sources.
Payment Services
Our solutions provide our customers payment processing capabilities that enable their donors to make donations and purchase goods and services using numerous payment options, including credit card and automated clearing house (“ACH”) checking transactions, through secure online transactions.
Blackbaud Merchant Services™ is a value-added service integrated with our solutions that makes credit card processing simple and secure. Customers are charged one rate for credit card transactions, making Blackbaud Merchant Services a competitive option. The service also provides customers with a payment card industry (“PCI”) compliant process and streamlined bank reconciliation. We also provide our K-12 private school customers with student tuition payment processing services.
Data Intelligence
Our data intelligence offerings provide solutions for data health, predictive insights and fundraising performance, enabling nonprofits to define effective campaign strategies and maximize fundraising results. These services either integrate with or are already integrated into our software solutions to give our customers a comprehensive view of their supporters and the market and provide information essential to making well-informed operating decisions.
Blackbaud’s Intelligence for Good® is our comprehensive strategy to deliver AI that is accessible, powerful and responsible. Our AI capabilities enable social impact organizations to transform data into insights and outcomes.
Blackbaud's data intelligence solutions and services use data science and AI to turn customer data into valuable insights that inform decision-making and help them achieve their goals efficiently. Blackbaud's data intelligence portfolio consists of three key outcome areas:

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Data Health solutions enhance and maintain constituent data so the customer is always working with accurate and up-to-date information. Examples of these solutions include: identifying outdated or invalid constituent addresses in the database and making corrections based on United States Postal Service data and using name and address matching to append additional contact or demographic data points to constituent records to support better segmentation and engagement.
Predictive Insights inform strategic decision-making and actions that increase efficiency and drive successful outcomes. Insights are extracted by combining customer data with licensed and proprietary data before leveraging advanced AI capabilities and expertise from Blackbaud’s dedicated team of data scientists. Examples of constituent insights include: predictive modeling that indicates the likelihood and capacity of a constituent making a gift, wealth screening software that uses publicly available records to build detailed wealth profiles of constituents and persona cluster segmentation that groups constituents based on shared traits with guidance for optimizing messaging to each group.
Fundraising Performance solutions help customers to assess their fundraising performance across donor segments, benchmark themselves against peer organizations and understand industry trends. These solutions provide a holistic view of donor performance that goes beyond standard campaign-based reporting, with key performance indicators related to acquisition, upgrading, retention and reactivation. Customers use our performance solutions to identify areas of weakness and opportunities for improvement, track the donor impact of strategic initiatives, understand and respond to industry trends, set realistic benchmarks and fundraising goals and maintain a consistent reporting methodology to assess growth over time.
Customer Success
Our Customer Success organization is responsible for ensuring our customers achieve their desired outcomes through Blackbaud solutions, starting at onboarding and continuing through the customer lifecycle. Our Customer Success team develops and fosters relationships within all levels of the customer organization to help ensure that customers get the most value out of our solutions and services, while helping them achieve their desired outcomes. Our customer success resources work to proactively communicate to drive overall satisfaction and retention of our customers' business. They work to collect and analyze actionable information, whether that is through direct customer relationships or through aggregated analytics that drive future one-to-one or one-to-many interactions. Their goal is to partner with customers to ensure that they are fully engaged and have an advocate within Blackbaud who works to meet their needs. Customer success resources bring industry knowledge and expertise to the customer relationship and strive to help our customers achieve positive growth and outcomes.
Customer Support
Customer Support provides assistance to customers using Blackbaud Solutions, helping them understand the capabilities of their subscription, including how to navigate their subscription and answering related questions for core concepts of features and functionality. Benefits, such as priority routing or additional support channels, are continuously enhanced. Customers enrolled in the programs enjoy fast, reliable customer support, receive regular software updates, stay up-to-date with regular communication and can leverage a unified customer portal for quick and easy access to these resources. Customers also are empowered with self-help resources such as Knowledgebase articles, user guides, Blackbaud Community, our on-demand library of enablement sessions and have around-the-clock access to support resources for mission-critical needs.
Professional and Managed Services
Our expert consultants, and those in our partner program, provide implementation, optimization, data conversion and customization services for our software solutions. These services include:
•System implementation;
•Data conversion, business process analysis and application customization;
•Database merging and enrichment;
•Secure credit card transaction processing;
•Database production activities;
•Website design services; and
•Outcome-based and prescriptive services.

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In addition, we, and our delivery partners, apply our industry knowledge and experience, combined with expert knowledge of our solutions, to evaluate an organization's needs and consult on how to improve a business process.
Training
Blackbaud University helps organizations unlock the full potential of their solutions. Our training emphasizes newly released features and real-world application, to help customers build confidence and optimize the use of Blackbaud solutions. Our array of learning modalities makes it easy for users to take training that fits their schedule, whether quickly upskilling new hires or expanding the knowledge and efficiency of existing staff. This expertly designed product training empowers users to learn fast and work smart!

Customers

Millions of people across more than 100 countries connect, give, learn and engage through Blackbaud platforms. During 2024, we had nearly 100,000 customers that paid Blackbaud through transactional fees and approximately 40,000 customers with contractual billing arrangements. Our largest single customer accounted for less than 1% of our 2024 consolidated revenue.

Sales and Marketing

Most of our solutions and related services are sold through our direct sales force. Our direct sales force is complemented by a team of sales development representatives responsible for sales lead generation and qualification. In addition, lead generation is supplemented by our customer success organization via employee-generated sales leads. Our partner program also includes optional engagements around referrals, technical integrations, and implementation services which also support and supplement our go-to-market efforts by promoting customer choice and facilitating extensible capabilities. These sales, partners and customer success professionals are primarily located throughout the United States, the U.K., Canada and Australia. As of December 31, 2024, we had approximately 210 direct sales employees.
Our marketing organization, which includes brand, digital, content, product, event and demand generation marketing and corporate communications, develops and launches multi-channel campaigns designed to create brand recognition and market awareness for our solutions and services.
Our digital demand generation motion focuses on targeted account-based marketing plays, as well as intent-based programs including paid search, retargeting, social and content syndication programs. We supplement the digital motion with our annual user conference, bbcon®, select participation at virtual and in-person third-party trade shows, technical conferences, and technology seminars. We also target publication of our thought leadership content and position our subject matter experts in industry journals and publications. We have a large base of loyal customers and strategic partners that provide references and recommendations often featured in our advertising and promotional activities.

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Competition

The market for software and related services targeting philanthropic-focused for-profit and nonprofit organizations is competitive and highly fragmented. For certain areas of the market, entry barriers are low, as general tools for small businesses can usually be configured to manage the most basic marketing, contact management, and accounting needs of social impact organizations. In parallel, as software development evolves from a highly-complex tradecraft with nuanced understanding of architectural patterns and discrete languages, to click-to-code and drag-and-drop development with natively cloud-based infrastructure, it becomes easier for competitors to quickly spin up basic applications to solve common problems. However, once basic needs are met, programs unique to social impact organizations like the stewardship of relationships and partnerships critical to major gift fundraising and community education; the cultivation and management of gifts and grants sponsorship; the intricacies of not-for-profit specific fund accounting; the multi-level networking required for peer-to-peer activism and employee engagement; and the sensitive data and reporting behind critical programs run by and for healthcare and education institutions ensure the ongoing need for highly specialized tools. These specialized applications have a higher barrier of entry as they require industry insight to accurately articulate the business workflow that generates the requirements for software products. Moreover, because social impact organizations rely heavily on relationships with and among their supporters, integration of systems drives value beyond mere efficiency. Hence, we believe our insight, the full spectrum of our current solutions and our ability to deliver future solutions make us a strong competitor. We expect to continue to see new entrants as focus on social investment solutions increases to satisfy Millennial and Gen Z donors, customers and employees, the barriers of entry continue to decline with natively cloud solutions and social impact organizations more readily require digital transformation of business processes and data-driven decision making.
Our competition falls into four primary categories:
•Niche products are usually developed as a solution for a single problem at an organization and are adopted by similar organizations to solve a specialized need. These are typically offered by vendors who may have deep industry expertise but may not have the resources to expand beyond a specialized area. We believe we compete against these solutions by offering a set of integrated solutions rather than a single point solution, which we believe improves the overall customer experience and reduces organizational risk. In addition, our open platform allows integration to specialized applications so the opportunity for disruption from these competitors is minimized.
•Vertical-specific solutions are offered by competitors seeking to meet the enterprise-wide needs of a specific sub-segment of the social impact community. Typically, these solutions are offered by vendors who may offer either a point solution or integrated suite of products used by a vertical. We believe we compete successfully against these competitors through a combination of our integrated suite of offerings and nationwide community networks within verticals where we compete, offering solutions with market leading robustness and reporting as well as the scale, reach, and reputation of our organization.
•General business software vendors, such as Microsoft, Oracle and Salesforce.com, compete with us in certain areas of our business. While there is a growing trend toward social investment that is prompting philanthropic solutions from these general business vendors, most do not have a complete nonprofit specific focus and, therefore, do not offer, or to our knowledge do not intend to offer, nonprofit-specific versions. However, there is a subset of general business software competitors who have introduced nonprofit-specific versions of their products. These products generally do not satisfy the needs of nonprofits from end-to-end as they were not designed to support the specific needs of nonprofits during the original architecture, design, and requirements elicitation phases; and several of the products introduced by general business software vendors have been subsequently pulled from market based on lack of adoption and customer satisfaction. We believe that the products that remain are not yet fully capable of meeting market needs without significant customization to transform general business products into nonprofit solutions often requiring the use of consultants to guide the implementation, without which, leave the adoption of general business software limited to very basic operations and simple needs. We believe our solutions compete successfully against general business software as a nonprofit’s needs grow more complex. As a result, we believe we can compete successfully to meet nonprofit-specific requirements, often integrating with general business platforms used for their more generalized operations.
•Consumer-oriented fundraising platforms, such as GoFundMe and Facebook compete with our business where consumers raise funds directly. To drive adoption of their platforms, these vendors rely on a combination of direct-to-consumer marketing, marketing to nonprofits who in turn market to their supporters, and marketing to intermediate entities such as an event sponsor who will market to participants. We believe we compete well in this market through a combination of positive brand recognition among all three of these groups and the combination of our consumer- and organization-oriented tools relative to those of the competition.

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Less frequently, we compete with providers of traditional, non-automated fundraising service providers, including parties providing services in support of traditional direct mail or email campaigns, special events fundraising, peer-to-peer, telemarketing and personal solicitations. We believe we compete successfully against these traditional fundraising service providers, primarily because our solutions and services are more automated, more robust, more tailored to the needs of nonprofit organizations and more efficient.

Technology and Architecture

Our technology strategy consists of several key building blocks including cloud operations, developer tools, data intelligence and core services. We leverage multiple clouds in our architectures (including AWS and Azure) and have both single and multi-tenant solutions. The best-in-class infrastructure enables rapid innovation with high levels of reliability, availability and security, and lets Blackbaud evolve services over time at independent paces as tech trends and tools emerge. Blackbaud also provides a toolset for customers, partners, and developers to extend the Blackbaud SKY ecosystem. SKY API enables developers to augment Blackbaud solutions with industry-standard REST APIs, standards-based authentication protocols, and a best-in-class developer experience. SKY UX allows developers to create applications with the same consistent, cohesive user interface as Blackbaud’s native solutions using an open-source framework that implements Blackbaud design patterns and provides guidelines and tooling for the entire application lifecycle. Our Intelligence for Good® strategy affirms our commitment to AI that is convenient, powerful and responsible.
The development strategy for all Blackbaud cloud solutions emphasizes:
•Flexibility: Customers and partners can extend our component-based architecture to accommodate changing demands without modifying source code.
•Adaptability: The architecture of our applications allows us to easily add functionality or integrate with third-party applications to adapt to customer needs and market demands.
•Scalability: Scalable architecture and the performance, capacity and load balancing of our customers' industry-standard web servers and databases ensure that applications can scale to meet the needs of large organizations.

Intellectual Property and Other Proprietary Rights

To protect our intellectual property, we rely on a combination of patent, trademark, copyright and trade secret laws in various jurisdictions, as well as employee and third-party nondisclosure agreements and confidentiality procedures. We maintain many trademarks, including, but not limited to “Blackbaud,” “Raiser's Edge NXT” and “Luminate.” We currently have one active patent on our technology and have one pending patent application.

Human Capital Resources

As of December 31, 2024, we had approximately 2,600 employees, none of whom are represented by unions or are covered by collective bargaining agreements. This number reflects the decrease in headcount following our disposition of our EVERFI business in December 2024. We are not involved in any material disputes with any of our employees, and we believe that relations with our employees are strong.
We benefit from an engaged and driven employee base motivated to join the Company by our work to support organizations and individuals driving social impact. Our purpose attracts and retains talented, competitive applicants, with approximately 90% of employees citing the fact that Blackbaud operates in a socially responsible manner is important to them. This differentiator not only builds strong employee engagement but also helps us provide a higher level of service to our customers. With over 76% of employees volunteering with nonprofits annually and one in seven serving on a nonprofit board or committee, our direct experience enables our teams to better serve our customer base.
Blackbaud also attracts and promotes talented employees through effective and targeted recruiting strategies. In 2021, we formally rolled out a remote work strategy which expanded our pool of qualified applicants for roles and internal career progression and enabled Blackbaud's goal to attract and develop talent globally. We continue to find top talent that want the flexibility of this work strategy, and it serves as a cornerstone of our culture focused on trust and productivity.
Employee engagement is a focus at Blackbaud, and we continually work to understand what matters and to make our workplace better to attract, develop, and retain talent. Every manager at Blackbaud is required to take a multi-course

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"Engagement Labs" training designed to equip them with the practical skills to ensure their teams are highly engaged. We assess and measure progress on engagement and growth opportunities at the individual level through quarterly check-ins focused on impact and learnings, as well as through a global career framework that guides employee progression on both management and individual contributor career paths. We also assess engagement on the team and company level through regular employee surveys as well as "Ask Anything" sessions with senior leaders and dedicated Q&A sessions during our global, company-wide Connect and Engage meetings. We enable employees to have opportunities for career development through on-demand and company-led trainings via our Learning Management System platform, DevelopU.
Our compensation framework is designed so that employees are compensated equitably and competitively, through base salary, variable pay, equity award opportunities and comprehensive benefit offerings. We also seek to support the whole person, through increased benefits and focus on overall well-being. Our employee population has embraced a digital first mindset, and we continue to enhance our offerings and education to drive employees to make consumer driven decisions to be proactive in their healthcare journey.
Ultimately, we believe that Blackbaud is an excellent place to work because we are energized by our opportunity to fuel social impact and committed to running our business in a way that amplifies the difference we make in the world. We govern our business ethically and contribute to causes and communities that matter to our employees through corporate philanthropy. We pursue sustainability, and we work every day to ensure our workplace is supportive, inclusive and engaging.
We offer an array of philanthropy programs aimed at engaging our employees in fueling social impact, including matching gifts, competitive grants that honor noteworthy examples of volunteerism, employee-led grant committees, skills-based volunteerism initiatives, as well as science, technology, engineering and mathematics (STEM) focused community programs.
Our commitment to inclusion and sustainability supports our efforts to attract, develop and retain a high-performing employee base. In 2023, we brought together the Talent Acquisition team with Inclusion and Corporate Social Responsibility teams under one leader within People and Culture. The company believes that it is essential to foster inclusion from the moment a candidate considers Blackbaud. This alignment continues our focus to amplify and accelerate the significant initiatives already in place at Blackbaud, including: a focus on allyship, mentoring and affinity groups. We have 11 employee-led affinity groups, including, but not limited to those that represent veterans, LGBTQ+, women in technology, women in sales, people of color, sustainability and/or those with a disability.
Blackbaud takes proactive measures to protect the environment, both in our internal sustainable business practices and our external engagements. As we did in 2021, 2022 and 2023, in 2024 we plan to achieve carbon neutrality across our business operations. We are committed to our continued efforts to reduce our emissions footprint and provide transparent annual social responsibility and sustainability reporting. Blackbaud was recognized by USA Today as one of America’s Climate Leaders in 2024.
Blackbaud was recognized by Newsweek as one of America's Most Responsible Companies 2024, Built In's Best Places to Work 2024, Time’s list of America’s Best Mid-size Companies 2024 and was distinguished as an OutLeadership Certified Supporter and 2024 Disability Employer by Disability Solutions. Our People and Culture Team was recognized by Phenom highlighting our talent experience with the 2024 award for Best Use of Talent Acquisition.
Additional information related to our human capital strategy can be found in our 2023 Fueling Impact Report which is available on the Corporate Social Responsibility section of our website. Information contained on or accessible through our websites is not incorporated into, and does not form a part of, this Annual Report or any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.

Seasonality

For a discussion of seasonal variations in our business, see “Management’s Discussion and Analysis of Financial Conditions and Results of Operations — Seasonality” in Item 7 in this report.

Working Capital

For a discussion of our working capital practices, see “Management’s Discussion and Analysis of Financial Conditions and Results of Operations — Liquidity and Capital Resources” in Item 7 in this report.

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Available Information

Our website address is www.blackbaud.com. We make available, free of charge through our website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC, but other information on our website is not incorporated into this report. The SEC maintains an Internet site that contains these reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.

Information About Our Executive Officers

The following table sets forth information concerning our executive officers as of February 15, 2025:

Name |  | Age |  | Title
Michael P. Gianoni |  | 64 |  |  | Chief Executive Officer, President and Vice Chairman of the Board
Anthony W. Boor |  | 62 |  |  | Executive Vice President and Chief Financial Officer
David J. Benjamin |  | 53 |  |  | Executive Vice President and Chief Commercial Officer
Kevin P. Gregoire |  | 57 |  |  | Executive Vice President and Chief Operating Officer
Kevin R. McDearis |  | 57 |  |  | Executive Vice President and Chief Technology Officer
Jon W. Olson |  | 61 |  |  | Senior Vice President and General Counsel

Michael P. Gianoni joined us as Chief Executive Officer and President in January 2014 and was appointed Vice Chairman of the Board in January 2024. Prior to joining us, he served as Executive Vice President and Group President, Financial Institutions at Fiserv, Inc., a global technology provider serving the financial services industry, from January 2010 to December 2013. He joined Fiserv as President of its Investment Services division in December 2007. Mr. Gianoni was Executive Vice President and General Manager of CheckFree Investment Services, which provided investment management solutions to financial services organizations, from June 2006 until December 2007 when CheckFree was acquired by Fiserv. From May 1994 to November 2005, he served as Senior Vice President of DST Systems Inc., a global provider of technology-based service solutions. Mr. Gianoni is a member of the Board of Directors of Teradata Corporation, a publicly traded global big data analytics company, and has been Chairman of the Board since February 2020. Mr. Gianoni has served on several nonprofit boards across several segments, including relief organizations, hospitals and higher education and he currently is a member of the President's Advisory Group at the Medical University of South Carolina. He holds an AS in electrical engineering from Waterbury State Technical College, a BS with a business concentration from Charter Oak State College, and an MBA and an honorary Doctorate from the University of New Haven.
Anthony W. Boor joined us as Executive Vice President and Chief Financial Officer in November 2011 and served as our interim President and Chief Executive Officer from August 2013 to January 2014. Prior to joining us, he served as an executive with Brightpoint, Inc., a global provider of device lifecycle services to the wireless industry, beginning in 1999, most recently as its Executive Vice President, Chief Financial Officer and Treasurer. He also served as the interim President of Europe, Middle East and Africa during Brightpoint's significant restructuring of that region. Mr. Boor served as Director of Business Operations for Brightpoint North America from August 1998 to July 1999. Prior to joining Brightpoint, Mr. Boor was employed in various financial positions with Macmillan Computer Publishing, Inc., a Viacom owned book publishing company specializing in computer hardware and software related topics, Day Dream Publishing, Inc., a publishing company specializing in calendars, posters and time management materials, Ernst & Young LLP, an accounting firm, Expo New Mexico, a state-owned fair and expo grounds and live pari-mutual horse racing venue, KPMG LLP, an accounting firm, and Ernst & Whinney LLP, an accounting firm. He holds a BS in Accounting from New Mexico State University.
David J. Benjamin has served as our Executive Vice President and Chief Commercial Officer since July 2022. He joined us as Executive Vice President and President, International Markets Group in April 2018. Prior to joining us, Mr. Benjamin was Senior Vice President and General Manager at Box, a cloud content management platform for businesses, from October 2016 to March 2018. Prior to that, he was Vice President of Global Services at British Telecom, a multinational telecommunications holding company, from October 2007 to September 2016. Prior to that, he was at Guardian Media Group, a mass media company owning various media operations company, where he served as Divisional Chief Operating Officer, among other leadership roles, from June 1995 to September 2007. He holds a BA in European Business from London Metropolitan University and an MBA from The Manchester Metropolitan University.

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Kevin P. Gregoire has served as our Executive Vice President and Chief Operating Officer since July 2022. Prior to that, he was the Executive Vice President and President of U.S. Markets since April 2021. He joined us as Executive Vice President and President, Enterprise Markets Group in April 2018. Prior to joining us, Mr. Gregoire was Group President of the Financial Institutions Group at Fiserv, a global technology provider serving the financial services industry, from March 2014 until February 2018. He joined Fiserv in December 2002 and served in other key leadership roles including Division President and Chief Operating Officer, Card Services, and Senior Vice President of Product and Network Strategy. Mr. Gregoire is also a veteran of the United States Army, where he served as Lieutenant in the Corps of Engineers and was awarded three Army Commendation Medals. He holds a BS from the United States Military Academy at West Point, and an MBA from the F.W. Olin School of Business at Babson College.
Kevin R. McDearis has served as our Executive Vice President and Chief Technology Officer since October 2016 and is responsible for the company’s global product and technology portfolio, including cybersecurity. He joined us in August 2014 as our Senior Vice President of Global Product Development. Prior to joining us, Mr. McDearis was the Chief Information Officer at Manhattan Associates, Inc., a technology leader in supply chain and omnichannel commerce, from August 2012 to July 2014. He was responsible for leading a global IT organization in strategy development, organization development, portfolio and project management, software and infrastructure engineering, service delivery and operations. Prior to that, Mr. McDearis served as Chief Technology Officer for the Enterprise Technology Group and other key leadership positions at Fiserv (formerly CheckFree), a global technology provider serving the financial services industry, from October 1996 to August 2012. Mr. McDearis serves on the Board of Directors for the USS Yorktown Foundation. He also served on the Board of Directors of the Technology Association of Georgia from 2011 to 2016 and as Vice Chairman of the Board in 2014. He holds a BS in Management from The Georgia Institute of Technology.
Jon W. Olson joined us as Senior Vice President and General Counsel in September 2008. Mr. Olson is responsible for Blackbaud's legal activities. Prior to joining us, he was an attorney with Alcatel-Lucent USA, the U.S. subsidiary of Alcatel-Lucent (now owned by Nokia Corporation) that designs, develops, and builds wireline, wireless, and converged communications networks, from July 1997 to September 2008. Prior to joining Alcatel-Lucent, Mr. Olson was employed in legal positions with MCI, Inc., a global business and residential communications company, from September 1996 to July 1997, and Unisys Corporation, a global information technology company, from July 1992 to September 1996. Mr. Olson is a member of the MUSC (Medical University of South Carolina) Hollings Cancer Center Advisory Board and is on the board of Charleston Jazz. He holds a BS from Georgetown University, a JD from Dickinson School of Law and an MBA from Seton Hall University.

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ITEM 1A. RISK FACTORS
Our business operations face a number of risks. These risks should be read and considered with other information provided in this report.

Strategic Risks

Our failure to compete successfully, including through technology innovations or new and improved solutions, could cause our revenue or market share to decline.
Our market is highly competitive and rapidly evolving, and there are limited barriers to entry for many segments of this market. The companies we compete with and other potential competitors may have greater financial, technical and marketing resources, generate greater revenue and have better name recognition than we do. Also, a large, diversified software enterprise could decide to enter the market directly, including through acquisitions. Competitive pressures can adversely impact our business by limiting the prices we can charge our customers and making the adoption and renewal of our solutions more difficult. Our competitors might also establish or strengthen cooperative relationships with resellers and third-party consulting firms or other parties with whom we have had relationships, thereby limiting our ability to promote our solutions. These competitive pressures could cause our revenue and market share to decline.
In addition, the introduction of solutions encompassing new technologies, such as AI, can render existing solutions obsolete and unmarketable. As a result, our future success will depend, in part, upon our ability to continue to enhance existing solutions and develop and introduce in a timely manner or acquire new solutions that keep pace with technological developments, satisfy increasingly sophisticated customer requirements and achieve market acceptance. If we are unable to develop or acquire on a timely and cost-effective basis new software solutions or enhancements to existing solutions or if such new solutions or enhancements do not achieve market acceptance, we may be unable to compete successfully and our business, results of operations and financial condition may be materially adversely affected.
Because competition for highly qualified personnel is intense, we might not be able to attract and retain key personnel needed to support our planned growth.
To meet our objectives successfully, we must attract and retain highly qualified personnel with specialized skill sets. If we are unable to attract and retain suitably qualified management, there could be a material adverse impact on our business.
Further, we use equity incentive programs and equity awards in lieu of cash as part of our overall employee compensation agreements to both attract and retain personnel. A decline in our stock price could negatively impact the effectiveness of these equity incentive and related compensation programs as retention and recruiting tools. We may need to create new or additional equity incentive programs and/or compensation packages to remain competitive, which could be dilutive to our existing stockholders and/or adversely affect our results of operations.
The market for software and services for the social impact community might not grow and the organizations in that community might not continue to adopt, or renew their subscriptions for, our solutions and services.
Many organizations in the social impact community, including nonprofits, foundations, companies, education institutions, and healthcare organizations, have not traditionally used integrated and comprehensive software and services for their specific needs. We cannot be certain that the market for such solutions and services will continue to develop and grow or that these organizations will elect to adopt our solutions and services rather than continue to use traditional, less automated methods, attempt to develop software internally, rely upon legacy software systems, or use software solutions not specifically designed for this market. Organizations that have already invested substantial resources in other fundraising methods or other non-integrated software solutions might be reluctant to adopt our solutions and services to supplement or replace their existing systems or methods. In addition, the implementation of one or more of our software solutions can involve significant capital commitments by our customers, which they may be unwilling or unable to make. If demand for and market acceptance of our solutions and services does not increase, we might not grow our business as we expect.
Furthermore, our subscription arrangements are generally for a term of three years at contract inception with three-year renewals thereafter. Our maintenance arrangement renewals are generally for a term of three years. As the end of the contract term approaches, we seek the renewal of the agreement with the customer. Historically, subscription and maintenance renewals have represented a significant portion of our total revenue. Because of this characteristic of our

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business, if our customers choose not to renew their subscriptions or maintenance arrangements with us on beneficial terms or at all, our business, operating results and financial condition could be harmed. Our customers' renewal rates may decline or fluctuate as a result of a number of factors, including their level of satisfaction with our solutions and services and their ability to continue their operations and spending levels due to general economic conditions, extraordinary business interruptions, client-specific financial issues or otherwise.
Changes in the US federal or state governmental grant, award or other funding programs could negatively impact the operations of our nonprofit customers, which could have a material adverse effect on our business, results of operations, financial condition and liquidity.
Many of our customers depend in significant part on the US federal and state governments for grants, awards and other funding to maintain their operations. Changes in, or uncertainty regarding, the availability, amount or conditions and restrictions related to such funding could negatively impact our customers’ willingness or ability to purchase our various software solutions due to resulting budgetary or investment capital concerns. Our customers and we must identify, assess and respond to new developments and trends in the legislative, regulatory and political environment while federal and state governments and agencies consider and implement potential funding changes that could materially impact various aspects of the nonprofits’ operations and financial health. We cannot predict the specific terms of any such proposals or changes, whether or when they will be implemented, or their effect on our operations. Certain proposals or changes could, if implemented, have an adverse, material impact on our business, results of operations, financial condition or liquidity.
We are incorporating generative AI technology into certain of our solutions and services. This technology is new and developing, and while we aim to adopt known best practices, it may result in operational, financial and reputational harm and other adverse consequences to our business.
We are implementing AI features in certain of our solutions and services. The technologies underpinning these features are in the early stages of commercial use and exist in an emerging regulatory environment, which presents regulatory, litigation, ethical, reputational, operational and financial risks. Many U.S. and international governmental bodies and regulators have adopted, or are in the process of developing, new regulations related to the use of AI and machine learning technologies. These have imposed, and may in the future further impose, obligations related to our development, offering and use of AI technologies and expose us to increased risk of regulatory enforcement and litigation. Many of our generative AI features include the processing of personal data and are, and may be further, subject to laws, policies, legal obligations and codes of conduct related to privacy and data protection. There is uncertainty about the extent to which privacy and data protection laws apply to AI technologies, and any delay in addressing privacy or data protection concerns relating to our AI features may result in liability or regulatory investigations and fines, as well as harm to our sales and reputation. In addition, issues relating to intellectual property rights in AI-generated content have not been fully addressed by the courts, laws or regulations. Accordingly, the implementation of generative AI technologies into our products and services may result in exposure to claims related to copyright infringement or other intellectual property misappropriation.
Furthermore, many of our AI features may rely on third-party service providers. As such, any improper processing of personal data by these service providers could harm our reputation, business or customers, or expose us to legal liability. Any disruption or failure in our AI systems or infrastructure could result in delays or errors in our operations, which could harm our business and financial results.
Our generative AI technology features may also generate output that is misleading, insecure, inaccurate, harmful or otherwise flawed, which may harm our reputation, business or customers, or expose us to legal liability. Also, some AI scenarios present ethical issues. If we enable or offer AI solutions that are controversial because of their purported or actual impact on human rights, privacy, employment or other social issues, we may experience reputational harm.
New and emerging AI technologies may require additional investment in the development and maintenance of various models, approaches and processes, as well as development of protections and safeguards for the use of AI technologies, which may be expensive and could impact our financial results if we decide to further expand generative AI into our products and services. Likewise, the use of AI involves significant technical complexity and requires specialized expertise. The success of any enhancement or new product depends on many factors, including its relevance to our customers, timely implementation and market acceptance. If our enhanced products and services do not achieve widespread market adoption or there is a reduction in demand due to a lack of customer acceptance, technology challenges, strengthening competition, weakening economic conditions, or security or privacy concerns, our business could be harmed and our financial results could be adversely affected.

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Although we aim to develop and use AI responsibly and attempt to identify and mitigate ethical and legal issues presented by its use, we may be unsuccessful in identifying or resolving issues before they arise.
If we do not successfully address the risks inherent in the expansion of our international operations, our business could suffer.
We currently have non-U.S. operations primarily in the U.K., Canada, Australia, Costa Rica and India, and we intend to expand further into international markets. Expansion of our international operations has required, and will continue to require, a significant amount of attention from our management and substantial financial resources and might require us to add qualified management in these markets. 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. Our direct sales model requires us to attract, retain and manage qualified sales personnel capable of selling into markets outside the United States. In some cases, our costs of sales might increase if our customers require us to sell through local distributors. If we are unable to grow our international operations in a cost-effective and timely manner, our business and operating results could be harmed.
Increases in our international revenues denominated in foreign currencies subject us to fluctuations in foreign currency exchange rates. The expansion of our international operations has increased, and is expected to continue to increase, our exposures to gains and losses on foreign currency transactions. (See Foreign Currency Exchange Rates on page 59 for more information regarding the impact of foreign currency exchange rates on our operations.)
Doing business internationally involves additional risks that could harm our operating results. Along with risks similar to those faced by our U.S. operations, our international operations are also subject to risks related to differing legal, political, social and regulatory requirements and economic conditions, including:
•the imposition of additional withholding taxes or other tax on our foreign income, tariffs or restrictions on foreign trade or investment, including currency exchange and capital expropriation controls;
•greater risk of a failure of our employees and partners to comply with both U.S. and foreign laws, including antitrust regulations, the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act of 2010, and any trade regulations ensuring fair trade practices;
•greater risk of failure to comply with foreign country employment or other human resources laws and regulations;
•the imposition of, or unexpected adverse changes in, foreign laws or regulatory requirements, including those pertaining to export restrictions, privacy and data protection, trade and employment restrictions and intellectual protections; and
•general business disruptions caused by geopolitical situations and developments.
Unfavorable media coverage related to peer-to-peer fundraising campaigns on our social platforms could negatively impact our business.
Our online social giving platforms receive a high degree of media coverage for particularly news-worthy or controversial fundraising campaigns, as well as for our fee-based business model. Although our terms of service provide express limitations on the platforms' user-initiated fundraising campaigns and reserve our right to remove content that violates our terms of service, it may not always be possible to remove such content prior to it receiving attention in the media. Negative publicity related to our online social giving platforms could have an adverse effect on the size, engagement and loyalty of our user base and could result in decreased revenue, which could adversely affect our business and financial results.
Acquisitions could be difficult to consummate and integrate into our operations, and they could disrupt our business, dilute stockholder value or impair our financial results.
As part of our business strategy, we, from time to time, seek to grow our business through acquisitions of new or complementary businesses, technologies or products that we believe can improve our ability to compete in our existing customer markets or allow us to enter new markets. The potential risks associated with acquisitions and investment transactions include, but are not limited to:
•failure to realize anticipated returns on investment, cost savings and synergies;
•difficulty in assimilating the operations, policies and personnel of the acquired company;
•unanticipated costs associated with acquisitions;

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•challenges in combining product offerings and entering into new markets in which we may not have experience;
•distraction of management’s attention from normal business operations;
•potential loss of key employees of the acquired company;
•difficulty implementing effective internal controls over financial reporting, disclosure controls and procedures and cybersecurity and data protection procedures;
•impairment of relationships with customers or suppliers; and
•issues not discovered in due diligence, which may include product quality issues or legal or other contingencies.
For example, following our acquisition of EVERFI, Inc ("EVERFI") in December 2021, we experienced the loss of certain employees and were unable to realize the anticipated returns on our investment prior to our disposition of the business in December 2024.
Acquisitions may also result in potentially dilutive issuances of equity securities, the incurrence of debt and contingent liabilities, the expenditure of available cash, and amortization expenses or write-downs related to intangible assets such as goodwill, any of which could have a material adverse effect on our operating results or financial condition. For example, in December 2024, we recorded a material noncash impairment charge related to EVERFI (See Note 3 to our consolidated financial statements in this report for more information).
We may experience risks relating to the challenges and costs of closing a business combination and the risk that an announced business combination may not close. There can be no assurance that we will be successful in making additional acquisitions in the future or in integrating or executing on our business plan for existing or future acquisitions.
A reduction in the growth or amount of charitable giving due to deteriorating general economic conditions, a recession or otherwise could adversely affect our operating results and financial condition.
A large percentage of our customers are nonprofits, foundations, education institutions, healthcare organizations and other members of the social impact community that fully or partially rely on charitable donations. If charitable giving, including online giving, does not continue to grow or declines, it could limit our current and potential customers' ability to use and pay for our solutions and services, which could adversely affect our operating results and financial condition.
In addition, we derive a significant portion of our revenue from transaction-based payment processing fees that we collect from our customers through our Blackbaud Merchant Services solution, which enables our customers' donors to make donations and purchase goods and services using various payment options. A reduction in the growth of, or a decline in, charitable giving to these customers, whether due to deteriorating general economic conditions, the impact of past or future changes to applicable tax laws, or otherwise, could negatively impact the volume and size of such payment processing transactions and thereby adversely affect our operating results and financial condition.
Our failure to obtain licenses for, or our use of, third-party technologies could harm our business.
We expect to continue licensing technologies from third parties, including applications used in our research and development activities, technologies that are integrated into our solutions and solutions that we resell. We believe that the loss of any third-party technologies currently integrated into our solutions could have a material adverse effect on our business. Our inability in the future to obtain any third-party licenses on commercially reasonable terms, or at all, could delay future solution development until equivalent technology can be identified, licensed or developed and integrated. This inability in turn could harm our business and operating results.
Our use of third-party technologies also exposes us to increased risks including, but not limited to, risks associated with the integration of new technology into our solutions, the diversion of our resources from development of our own proprietary technology and our inability to generate revenue from licensed technology sufficient to offset associated acquisition and maintenance costs.

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Operational Risks

Breaches of our software, our failure to securely collect, store and transmit customer information, or our failure to safeguard confidential donor data, including, for example, the Security Incident described below, exposes us to liability, litigation, government investigations, penalties and remedial costs and our reputation and business could suffer.
Fundamental to the use of our solutions is the secure collection, storage and transmission of confidential donor, customer and end user data, personally identifiable information and transaction data, including in our payment services. Despite the network, application and physical security procedures and internal control measures we employ to safeguard our systems, we have been, and in the future may be, vulnerable to a security breach, intrusion, loss or theft of confidential donor data and transaction data, which has in the past harmed and may in the future harm our business, reputation and future financial results. Furthermore, our reliance on remote access to information systems increases our exposure to potential cybersecurity incidents.
Like virtually all major businesses, we are, from time to time, a target of cyberattacks, such as the Security Incident (as described below and in Note 11 to our consolidated financial statements in this report), information systems interruptions, phishing, social engineering schemes and other systems disruptions. We expect these threats to continue, some of which have been, and in the future may be, successful to varying degrees. Because the numerous and evolving cybersecurity threats used to obtain unauthorized access, disable, degrade or sabotage systems have become increasingly more complex and sophisticated, it may be difficult to anticipate these acts or to detect them for periods of time, as with the Security Incident, and we may be unable to respond adequately or timely. As these threats continue to evolve and increase, we have already devoted and expect to continue to devote significant resources in order to modify and enhance our security controls and to identify and remediate any security vulnerabilities.
A compromise of our data security, such as the Security Incident, that results in customer or customer constituent personal or payment card data being obtained by unauthorized persons could adversely affect our reputation with our customers and others, as well as our operations, results of operations, financial condition and liquidity and has resulted in, and could in the future result in, litigation against us, government investigations or the imposition of fines and penalties. (See Note 11 to our consolidated financial statements in this report for information regarding litigation, government investigations, fines and penalties related to the Security Incident.) We have been, and in the future might be, required to expend significant additional capital and other resources to rectify problems caused by a security breach, including notification under data privacy laws and regulations, and incur expenses related to remediating our information security systems.
Even though we may carry cyber-technology insurance policies that provide insurance coverage under certain circumstances, we have in the past suffered losses and may in the future suffer losses as a result of a security breach that exceed the coverage available under our insurance policies or for which we do not have coverage. (See Note 11 to our consolidated financial statements in this report for expense and insurance coverage information related to the Security Incident.) Furthermore, in the future such insurance may not be available on commercially reasonable terms, or at all. A security breach and any efforts we make to address such breach could also result in a disruption of our operations, particularly our online sales operations.
The occurrence of actual cyber security events, such as the Security Incident, could magnify the severity of the adverse effects of future incidents on our business. The techniques used to obtain unauthorized access, disable or degrade service, or sabotage information systems can be difficult to detect for long periods of time and can involve difficult or prolonged assessment or remediation periods even once detected. We, therefore, cannot assure you that all potential causes of past significant incidents, including the Security Incident, have been fully identified and remediated. The steps we take may not be sufficient to prevent future significant incidents and, as a result, such incidents may occur again.
The Security Incident has had, and may continue to have, numerous adverse effects on our business, results of operations, financial condition and cash flows.
As previously disclosed, on July 16, 2020, we contacted certain customers to inform them about the Security Incident.
To date, we have received approximately 260 specific requests from customers for reimbursement of expenses incurred by them related to the Security Incident, all of which have been fully resolved and closed or are inactive and are considered by us to have been abandoned by the customers. We have also received approximately 400 reservations of the right to seek expense recovery in the future from customers or their attorneys in the U.S., U.K. and Canada related to the Security Incident,

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none of which resulted in claims submitted to us and are considered by us to have been abandoned by the customers. We have also received notices of proposed claims on behalf of a number of U.K. data subjects, which have been fully resolved and closed or are inactive and are considered by us to have been abandoned by the data subjects. In addition, insurance companies representing various customers’ interests through subrogation claims have contacted us, and certain insurance companies have filed subrogation claims in court, of which two cases remain active and unresolved. We also were a defendant in putative consumer class action cases in Canadian courts alleging harm from the Security Incident which have now been resolved. In addition, presently, we are a defendant in putative consumer class action cases in U.S. federal courts (most of which have been consolidated under multi district litigation to a single federal court) alleging harm from the Security Incident. The plaintiffs in these cases, who generally purport to represent various classes of individual constituents of our customers, generally claim to have been harmed by alleged actions and/or omissions by us in connection with the Security Incident and assert a variety of common law and statutory claims seeking monetary damages, injunctive relief, costs and attorneys’ fees, and other related relief. On May 14, 2024, the Court issued a memorandum opinion and order (1) denying the multi district litigation plaintiffs' motion for class certification, (2) granting our motion to exclude the multi district litigation plaintiffs' expert, (3) denying the multi district litigation plaintiffs' motion to exclude our expert and (4) denying all other pending motions. On July 30, 2024, the Fourth Circuit Court of Appeals denied the plaintiffs' petition for permission to appeal the Court's ruling. This litigation remains ongoing.
In addition,
•On March 9, 2023, the Company reached a settlement with the SEC that fully resolved the previously disclosed SEC investigation of the Security Incident;
•On October 5, 2023, the Company entered into separate, substantially similar Administrative Orders with each of 49 state Attorneys General and the District of Columbia that fully resolved the previously disclosed multi-state Civil Investigative Demand and the separate Civil Investigative Demand from the Office of the Indiana Attorney General relating to the Security Incident;
•On May 20, 2024, the U.S. Federal Trade Commission (the "FTC") finalized an Order (the “FTC Order”) evidencing its settlement with us in connection with the Security Incident;
•On June 13, 2024, we agreed to a Final Judgment and Permanent Injunction with the Attorney General of the State of California (the "California Judgment") relating to the Security Incident; and
•We previously received notices of governmental actions or investigations by the U.S. Department of Health and Human Services, the Office of the Australian Information Commissioner and the Office of the Privacy Commissioner of Canada, each of which we now believe are now longer active actions or investigations.
See Note 11 to our consolidated financial statements included in this report for a more detailed description of the Security Incident and related matters.
The terms of the California Judgment, FTC Order, the Attorneys General Administrative Orders and our settlement with the SEC require that we implement and maintain certain processes and programs and comply with certain legal requirements related to cybersecurity and data protection. Any future regulatory investigation or litigation settlements may also contain such requirements. Effectively implementing, monitoring and updating these requirements has been, and is expected to be over an extended period of time, expensive and time-consuming. Our failure to do so in accordance with the terms of our agreements with FTC, the Attorneys General and with the SEC, and possibly others, could expose us to additional material liability under the terms of the Administrative Orders, the SEC settlement, or otherwise.
We may be named as a party in additional lawsuits, other claims may be asserted by or on behalf of our customers or their constituents, and we may be subject to additional governmental inquiries, requests or investigations. Responding to and resolving these current and any future lawsuits, claims and/or investigations could result in material remedial and other expenses that will not be covered by insurance. 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. Certain governmental authorities have imposed, and others may in the future impose, undertakings, injunctive relief, consent decrees, or other civil or criminal penalties, which have materially increased our data security costs or otherwise required us to alter how we operate our business, and could further do so in the future. Although we intend to defend ourselves vigorously against the claims asserted against us, we cannot predict the potential outcomes, cost and expenses associated with current and any future claims, lawsuits, inquiries and investigations.

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In addition, any legislative or regulatory changes adopted in reaction to the Security Incident or other companies’ data breaches could require us to make modifications to the operation of our business that could have an adverse effect and/or increase or accelerate our compliance costs.
Significant management time and Company resources have been, and are expected to continue to be, devoted to the Security Incident. For example, for full year 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 and $6.8 million for settlements and recorded liabilities for loss contingencies. During 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). Although we carry insurance against certain losses related to the Security Incident, we exceeded the limit of that insurance coverage in the first quarter of 2022. As a result, we will be responsible for all expenses or other losses (including penalties, fines or other judgments) or all types of claims that may arise in connection with the Security Incident, which could materially and adversely affect our liquidity and results of operations. (See Note 11 to our consolidated financial statements included in this report.) If any such fines or penalties were great enough that we could not pay them through funds generated from operating activities and/or cause a default under the 2024 Credit Facilities, we may be forced to renegotiate or obtain a waiver under the 2024 Credit Facilities and/or seek additional debt or equity financing. Such renegotiation or financing may not be available on acceptable terms, or at all. In these circumstances, if we were unable to obtain sufficient financing, we may not be able to meet our obligations as they come due.
In addition, publicity or developments related to the Security Incident could in the future have a range of other adverse effects on our business or prospects, including causing or contributing to loss of customer confidence, reduced customer demand, reduced customer retention, strategic growth opportunities, and associated retention and recruiting difficulties, some or all of which could be material.
Climate change and other natural disasters, new regulations and standards and climate-related goals have impacted, and may in the future impact, our operations and financial performance.
The long-term effects of climate change on the global economy and our industry may impact our business operations and those of our suppliers, customers and partners. Climate change increases the severity and frequency of extreme weather events such as hurricanes, wildfires, floods, heat waves or power shortages, all of which could lead to business disruptions. The locations of our principal executive offices and our data centers are vulnerable to the effects of climate events and other natural disasters, including hurricanes, heat waves and earthquakes, which we have experienced in the past. In addition, the effects of climate change are harder to mitigate for our remote-first workforce, which exposes the Company to business disruption. Even though we carry business interruption insurance policies and typically have provisions in our commercial contracts that protect us in certain events, we might suffer losses as a result of business interruptions that exceed the coverage available under our insurance policies or for which we do not have coverage. Any natural disaster or catastrophic event affecting us could have a significant negative impact on our operations.
New regulations and standards relating to public disclosure, including proposed new rules related to climate change, could adversely impose significant costs on us to comply with such regulations.
Finally, a failure to meet our climate-related goals, such as our commitment and progress towards reduction of greenhouse gas emissions, could damage our reputation, affect our financial performance and impact our ability to attract and retain talent.
Defects, delays or interruptions in our cloud solutions and hosting services could diminish demand for these services and subject us to substantial liability.
We currently utilize data center hosting facilities to provide cloud solutions to a significant number of our subscription customers and hosting services to our on-premise license customers. Any damage to, or failure of, these data center systems generally could result in interruptions in service to our customers, notwithstanding any business continuity or disaster recovery agreements that may currently be in place at these facilities. As noted above, our executive offices and some of our data centers are located in areas that are vulnerable to the effects of climate change and could be subject to increased interruptions as a result of the severity and increased frequency of extreme weather events such as hurricanes, wildfires, floods, heat waves, or power shortages. Because our cloud solutions and hosting service offerings are complex and we have incorporated a variety of new computer hardware and software systems at our data centers, our services might have errors or defects that users identify after they begin using our services. This could result in unanticipated downtime for our customers and harm to our reputation and business results. Internet-based services sometimes contain undetected errors when first

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introduced or when new versions or enhancements are released. We have from time to time found defects in our web-based services and new errors might again be detected in the future. In addition, our customers might use our Internet-based offerings in unanticipated ways that cause a disruption in service for other customers attempting to access their data.
For example, on July 19, 2024, CrowdStrike Holdings, Inc. (“CrowdStrike”), which provides cybersecurity services to millions of Microsoft Windows systems worldwide, including to certain Windows systems operated by Blackbaud, implemented a software update to its Falcon sensor software that was flawed and caused Falcon to crash, thereby causing widespread crashes of Windows systems into which it was integrated, including certain Windows systems used by us and certain of our customers (the “CrowdStrike Event”). As a result, some of our customers were unable to access certain of our services and solutions, including our payments processing solutions. We evaluated the actual impact of the CrowdStrike Event on Blackbaud, both directly and indirectly due to the impact on our customers, and deemed it to be immaterial.
Because our customers use these services for important aspects of their businesses, any defects, delays or disruptions in service or other performance problems with our services, such as the CrowdStrike Event, could hurt our reputation and damage our customers' businesses. If that occurs, customers could elect to cancel their service, delay or withhold payment to us, not purchase from us in the future or make claims against us, which could result in an increase in our provision for credit losses, an increase in collection cycles for accounts receivable or the expense and risk of litigation. Any of these could harm our business and reputation.
Material defects or errors in the software we use to deliver our services could harm our reputation, result in significant costs to us and impair our ability to sell our services.
The software applications underlying our services are inherently complex and may contain material defects or errors, particularly when first introduced or when new versions or enhancements are released. We have from time to time found defects in our software, and new errors in our existing software may be detected in the future.
After the release of our software, defects or errors may also be identified from time to time by our internal team and our customers. The costs incurred in correcting any material defects or errors in our software may be substantial and could harm our operating results. Furthermore, our customers may use our software together with solutions from other companies. As a result, when problems occur, it might be difficult to identify the source of the problem. Even when our software does not cause these problems, the existence of these errors might cause us to incur significant costs, divert the attention of our technical personnel from our solution development efforts, impact our reputation and cause significant customer relations problems.
If we are unable, or our customers believe we may be unable, to detect and prevent unauthorized use of payment card or other private financial or personal information, or are otherwise unable to effectively manage our payment processing business, we could be subject to financial liability, our reputation could be harmed and customers may be reluctant to use our solutions and services.
Our solutions provide our customers payment processing capabilities that enable their constituents to make donations and purchase services using numerous payment options, including credit card and automated clearing house (“ACH”) checking transactions, through secure online transactions. The provision of convenient, trusted, fast and effective payment processing services to our customers and potential customers is critical to our business, and revenue from payments processing constitutes a significant percentage of our total revenue. Increases in payment processing fees, material changes in our payment processing systems, changes to rules or regulations concerning payments or disruptions or failures in our payment processing systems or payment products, including products we use to update payment information, could materially adversely impact our customer retention and results of operation. In addition, from time to time, we encounter fraudulent use of payment methods that could result in substantial additional costs or delay, preclude planned transactions, product launches or improvements, require significant and costly operational changes, impose restrictions, limitations, or additional requirements on our business, products and services, prevent or limit us from providing our products or services in a given market and adversely impact customer retention. Furthermore, we continue to undertake system upgrades designed to improve the availability, reliability, resiliency and speed of our payments systems. These efforts are costly and time-consuming, involve significant technical complexity and risk, may divert our resources from new features and products and may ultimately not be effective.
The rules of payment card associations in which we participate require that we comply with Payment Card Industry Data Security Standard ("PCI DSS") in order to preserve security of payment card data. Under PCI DSS, we are required to adopt and implement internal controls over the use, storage and security of payment card data to help prevent card fraud. Conforming

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our solutions and services to PCI DSS or other payment services related regulations or requirements imposed by payment networks or our customers or payment processing partners is expensive and time-consuming. However, failure to comply may subject us to fines, penalties, damages and civil liability, may impair the security of payment card data in our possession, and may harm our reputation and our business prospects, including by limiting our ability to process transactions. All Blackbaud products in scope for PCI DSS compliance meet applicable PCI DSS security requirements.
In addition, we routinely subject our various data protection processes and controls to voluntary third-party review, audit or reporting, including, for example, the American Institute of Certified Public Accountants’ System and Organization Controls reporting. Failure to conduct these voluntary data protection process and control reviews or to obtain and maintain audits or reports covering our data protection processes and controls may harm our reputation or our business prospects and our ability to market our solutions to our customers.

Financial Risks

Because a significant portion of our revenue is recognized over time on a ratable basis over the contract term, downturns in sales may not be immediately reflected in our revenue.
We generally recognize our subscription and maintenance revenue ratably over time over the contract term. Our subscription arrangements are generally for a term of three years at contract inception with three-year renewals thereafter. Our maintenance arrangement renewals are generally for a term of three years. As a result, much of the revenue we report in each quarter is attributable to arrangements entered into during previous quarters. Consequently, a decline in sales to new customers, renewals by existing customers or market acceptance of our solutions in any one quarter will not necessarily be fully reflected in the revenues in that quarter and could negatively affect our revenues and profitability in future quarters.
We significantly increased our leverage in connection with stock repurchases, and may increase our leverage in the future in connection with acquisitions, Security Incident costs or other business purposes, which could adversely impact our business and financial performance.
We incurred a substantial amount of indebtedness to fund the ASR Transaction (as defined on page 105) and other stock repurchases. As a result of this indebtedness and other borrowings, our interest payment obligations have increased. In addition, we have been named as a party in various lawsuits in connection with the Security Incident, claims have been asserted by or on behalf of our customers or their constituents, and we are subject to various governmental inquiries, requests or investigations. Responding to and resolving these current and any future lawsuits, claims and/or investigations has resulted, and may continue to result, in material remedial and other expenses. Although we have defended, and intend to continue to defend, ourselves vigorously against the claims asserted against us, we cannot predict the potential outcomes, cost and expenses associated with current and any future claims, lawsuits, inquiries and investigations, which could require that we incur additional indebtedness to fund. (See Note 11 to our consolidated financial statements in this report for additional information regarding the Security Incident.)
The degree to which we are leveraged could have adverse effects on our business, including the following:
•Requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, dividends, stock repurchases and other general corporate purposes;
•Increasing the amount of interest we pay, particularly if interest rates increase;
•Limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate;
•Restricting us from making additional strategic acquisitions or exploiting business opportunities;
•Placing us at a competitive disadvantage compared to our competitors that have less debt;
•Reducing our currently available borrowing capacity or limiting our ability to borrow additional funds; and
•Decreasing our ability to compete effectively or operate successfully under adverse economic and industry conditions.
If we incur additional debt, these risks may intensify. Our ability to meet our debt service obligations will depend upon our future performance, which will be subject to the financial, business and other factors affecting our operations, many of which are beyond our control.

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In addition, additional leverage could impact our ability to meet certain financial and other covenants contained in our 2024 Credit Facilities, which increased our total borrowing capacity from $1.1 billion to $1.5 billion. (See Note 9 to our consolidated financial statements included in this report for a more detailed description of our 2024 Credit Facilities.) There can be no assurance that we will be able to remain in compliance with the covenants to which we are now subject or may be subject in the future and, if we fail to do so, that we will be able to obtain waivers from our lenders or amend the covenants.
In the event of a default under our 2024 Credit Facilities, we could be required to immediately repay all outstanding borrowings, which we might not be able to do and which would materially negatively affect our business, operations and financial condition.
Our balance sheet includes significant amounts of goodwill and intangible assets. The impairment of a significant portion of these assets, such as the EVERFI impairment charges, could negatively affect our operating results.
As of December 31, 2024, we had $1.1 billion and $132.9 million of goodwill and intangible assets, respectively. On at least an annual basis, we assess whether there have been impairments in the carrying value of goodwill and intangible assets. If the carrying value of an asset is determined to be impaired, then it is written down to fair value by a noncash charge to operating earnings. Changes in circumstances that could indicate that the carrying value of goodwill or intangible assets may not be recoverable include declines in our stock price, market capitalization, cash flows and slower growth rates in our industry. We cannot accurately predict the likelihood or potential amount and timing of any impairment of goodwill or other intangible assets. An impairment of a significant portion of goodwill or intangible assets, such as the EVERFI impairment charges discussed in Note 4 to our consolidated financial statements in this report, could materially and negatively affect our results of operations and financial condition.
Restrictions in our credit facility limit certain of our activities, including dividend payments, stock repurchases and acquisitions.
Our credit facility contains restrictions, including covenants limiting our ability to incur additional debt, grant liens, make acquisitions and other investments, prepay specified debt, consolidate, merge or acquire other businesses, sell assets, pay dividends and other distributions, repurchase stock and enter into transactions with affiliates. There can be no assurance that we will be able to remain in compliance with the covenants to which we are subject in the future and, if we fail to do so, that we will be able to obtain waivers from our lenders or amend the covenants.
In the event of a default under our credit facility, we could be required to immediately repay all outstanding borrowings, which we might not be able to do. In addition, certain of our material domestic subsidiaries are required to guarantee amounts borrowed under the credit facility, and we have pledged the shares of certain of our subsidiaries as collateral for our obligations under the credit facility. Any such default could have a material adverse effect on our ability to operate, including allowing lenders under the credit facility to enforce guarantees of our subsidiaries, if any, or exercise their rights with respect to the shares pledged as collateral.
We cannot guarantee that our stock repurchase program will be fully consummated or that it will enhance long-term stockholder value. Stock repurchases could also increase the volatility of the trading price of our stock and will diminish our cash reserves and increase our debt.
Although our board of directors has authorized a stock repurchase program that does not have an expiration date, the program does not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares of our common stock. We have, from time to time, repurchased stock under this program and re-initiated repurchases under the program in the fourth quarter of 2023 after a two-year hiatus. We cannot guarantee that the program will be fully consummated or that it will enhance long-term stockholder value. The program could affect the trading price of our stock and increase volatility, and any announcement of a termination of this program may result in a decrease in the trading price of our stock. In addition, implementation of some or all of this program diminishes our cash reserves and/or increases our debt, which may impact our ability to finance future growth, to pursue possible future strategic opportunities and acquisitions and fund liabilities and expenses related to the Security Incident. (See Note 14 to our consolidated financial statements in this report for additional information related to our stock repurchase program, including authorization amount, shares purchased, amounts paid and shares remaining available for purchase.)

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We have recorded significant deferred tax assets, and we might never realize their full value, which would result in a charge against our earnings.
As of December 31, 2024, we had deferred tax assets of $162.3 million. Realization of our deferred tax assets is dependent upon our generating sufficient taxable income in future years to realize the tax benefit from those assets. Deferred tax assets are reviewed at least annually for realizability. A charge against our earnings would result if, based on the available evidence, it is more likely than not that some portion of the deferred tax asset will not be realized beyond our existing valuation allowance. This could be caused by, among other things, deterioration in performance, adverse market conditions, adverse changes in applicable laws or regulations, including changes that restrict the activities of or affect the solutions sold by our business and a variety of other facto rs. If a deferred tax asset net of our valuation allowance was determined to be not realizable in a future period, the charge to earnings would be recognized as an expense in our results of operations in the period the determination is made. Additionally, if we are unable to utilize our deferred tax assets, our cash flow available to fund operations could be adversely affected.
Depending on future circumstances, it is possible that we might never realize the full value of our deferred tax assets. Any future impairment charges related to a significant portion of our deferred tax assets would have an adverse effect on our financial condition and results of operations.

Legal and Compliance Risks

Privacy and data protection concerns, including evolving domestic and international government regulation in the area of consumer data privacy or data protection, could adversely affect our business and operating results.
The effectiveness of our software solutions relies on our customers' storage and use of data concerning their customers, including financial, personally identifying or other sensitive data. Our customers' collection and use of this data for donor profiling, data analytics or communications outreach might raise privacy and data protection concerns and negatively impact the demand for our solutions and services. For example, our custom modeling and analytical services rely heavily on processing and using data we gather from customers and various sources. Privacy and data protection laws could add restrictions or regulatory burdens, which could limit our ability to market and profit from those services.
Governments in some jurisdictions have enacted or are considering enacting consumer data privacy or data protection legislation, including laws and regulations applying to the solicitation, collection, transfer, processing and use of personal data. This legislation could reduce the demand for our software solutions if we fail to design or enhance our solutions to enable our customers to comply with the privacy and data protection measures required by the legislation. Moreover, we may be exposed to liability under existing or new consumer privacy or data protection legislation. For example, when providing our solutions to certain customers in the healthcare industry, we must comply with applicable provisions of the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), and might be subject to similar provisions of other legislation, including, without limitation, the Gramm-Leach-Bliley Act and related regulations, and the California Consumer Privacy Act of 2018, and may apply to some of our customers and areas of business. Even technical violations of these laws may result in penalties that are assessed for each non-compliant transaction.
We, and some of our customers, are subject to the E.U. General Data Protection Regulation (“GDPR”) and U.K. data protection law, known as the "U.K. GDPR." The law requires companies to meet requirements regarding the handling of personal data, including rights such as the portability of personal data. All solutions we sell to customers subject to GDPR must include GDPR features. The implementation of GDPR has affected our ability to offer some features and services to customers in the E.U. and U.K. Furthermore, actions and investigations by regulatory authorities related to data security incidents and privacy violations continue to increase, which have impacted us, and could in the future further impact us, through increased costs or restrictions on our business, and noncompliance could result in significant regulatory penalties and legal liability.
If our customers or we were found to be subject to and in violation of any privacy or data protection laws or regulations, our business may be materially and adversely impacted and we and/or our customers would likely have to change our business practices. In addition, these laws and regulations could impose significant costs on our customers and us and make it more difficult for donors to make online donations. (See Note 11 to our consolidated financial statements included in this report for a description of the Security Incident and related legal proceedings and regulatory matters.)

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We are in the information technology business, and our solutions and services store, retrieve, transfer, manipulate and manage our customers’ information and data. The effectiveness of our software solutions relies on our customers’ storage and use of data concerning their donors, including financial, personally identifying and other sensitive data and our business uses similar systems that require us to store and use data with respect to our customers and personnel. Our collection and our customers’ collection and use of this data might raise privacy and data protection concerns and negatively impact our business or the demand for our solutions and services. If a breach of data security, such as the Security Incident, were to occur, or other violation of privacy or data protection laws and regulations were to be alleged, our business may be materially and adversely impacted and solutions may be perceived as less desirable, which would negatively affect our business and operating results.
Claims that we or our technologies infringe upon the intellectual property or other proprietary rights of a third party may require us to incur significant costs, enter into royalty or licensing agreements or develop or license substitute technology.
We have been, and may in the future be, subject to claims that the technologies in our solutions and services infringe upon the intellectual property or other proprietary rights of a third party. In addition, the vendors providing us with technology that we use in our own solutions could become subject to similar infringement claims. Although we believe that our solutions and services do not infringe any intellectual property or other proprietary rights, we cannot be certain that our solutions and services do not, or that they will not in the future, infringe intellectual property or other proprietary rights held by others. Any claims of infringement could cause us to incur substantial costs to defend against the claim, even if the claim is without merit, and could distract our management from our business. Moreover, any settlement or adverse judgment resulting from the claim could require us to pay substantial amounts, or obtain a license to continue to use the technology and services that are the subject of the claim, and/or otherwise restrict or prohibit our use of the same. There can be no assurance that we would be able to obtain a license on commercially reasonable terms from the third party asserting any particular claim, or that we would be able to successfully develop alternative technology on a timely basis, or that we would be able to obtain a license from another provider of suitable alternative technology to permit us to continue offering, and our customers to continue using, the solutions and services. In addition, we generally provide in our customer arrangements for certain solutions and services that we will indemnify our customers against third-party infringement claims relating to technology we provide to those customers, which could obligate us to pay damages if the solutions and services were found to be infringing. Infringement claims asserted against us, our vendors or our customers may have a material adverse effect on our business, prospects, financial condition and results of operations.
Our solutions utilize open source software, which may subject us to litigation, require us to re-engineer our solutions, or otherwise divert resources away from our development efforts.
We use open source software in connection with certain of our solutions. Such open source software is generally licensed by its authors or other third parties under open source licenses, including, for example, the GNU General Public License, the GNU Lesser General Public License, “Apache-style” licenses, “BSD-style” licenses and other open source licenses. There is little legal precedent governing the interpretation of many of the terms of some of these licenses and, therefore, the potential impact of these terms on our business is currently unable to be determined and may result in unanticipated obligations regarding our solutions and technologies. From time to time, companies that incorporate open source software into their products have faced claims challenging the ownership of open source software and/or compliance with open source license terms. Therefore, we could be subject to litigation by parties claiming ownership of open source software or noncompliance with open source licensing terms. Some open source software licenses require users who distribute open source software as part of their own software to publicly disclose all or part of the source code to such software and/or make available any derivative works of the open source code on unfavorable terms or at no cost. While we monitor our use of open source software and try to ensure that none is used in a manner that would require us to disclose the source code or that would otherwise breach the terms of an open source agreement, such use could inadvertently occur and we may be required to release proprietary source code, pay damages for breach of contract, re-engineer our applications, discontinue sales in the event re-engineering cannot be accomplished on a timely basis, or take other remedial action that may divert resources away from our development efforts, any of which could adversely affect our business.
We rely upon trademark, copyright, patent and trade secret laws to protect our proprietary rights, which might not provide us with adequate protection.
Our success and ability to compete depends to a significant degree upon the protection of our proprietary technology rights. We might not be successful in protecting our proprietary technology and our proprietary rights might not provide us with a meaningful competitive advantage. To protect our core proprietary technology, we rely on a combination of patent,

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trademark, copyright and trade secret laws, as well as nondisclosure agreements, each of which affords only limited protection.
Changing domestic and international laws, government regulations and policies, laws limiting or restricting our ability to pass card charges on to customers and other similar laws and regulations, could adversely affect our business and operating results by increasing compliance costs, reducing customer demand for our solutions or damaging our reputation.
Certain of our solutions, in particular our financial management and payment services solutions, relate to activity heavily regulated by government agencies in the U.S., the U.K. and other countries in which we operate. The laws and regulations enforced by these agencies are proposed or enacted to deter fraud and other illicit financial transactions and to protect consumers and the financial system and are often revised or increased in scope. We have procedures and controls in place to monitor compliance with numerous federal, state and foreign laws and regulations. However, because these laws and regulations are complex, differ between jurisdictions, and are often subject to interpretation, or as a result of unintended errors, we may, from time to time, inadvertently violate these laws and regulations. Compliance with these laws and regulations is expensive and requires the time and attention of management. These costs divert capital and focus away from efforts intended to grow our business. If we do not successfully comply with laws, regulations, or policies, we could incur fines or penalties, be subject to litigation, lose existing or new customer contracts or other business, and suffer damage to our reputation.
Provisions in our organizational documents, certain officer compensation arrangements and Delaware law may delay or prevent an acquisition or change of control of our Company that could be deemed beneficial to our stockholders.
Certain provisions in our organizational documents, compensation arrangements with our officers and Delaware law (as summarized below) may have the effect of delaying, deferring, discouraging or preventing an acquisition or change in control of the Company or a change in our management. This includes tender offers for our common stock, proxy contests or other takeover attempts. These anti-takeover effects may discourage transactions that might result in the payment of a premium over the market price for shares of our common stock. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging takeover attempts in the future.
Certificate of Incorporation and Bylaw provisions. The Board of Directors is divided into three classes of directors, as nearly equal in number as possible, with each class serving a staggered term of three years. The classification of directors will have the effect of making it more difficult and time-consuming for stockholders to change the composition of the Board of Directors, could discourage a third-party from making a tender offer or otherwise attempting to obtain control of the Company and may maintain the incumbency of the Board of Directors.
Our Bylaws contain an advance notice procedure for stockholders proposals to be brought before a meeting of stockholders, including any proposed nominations of persons for election to the Board of Directors. The Bylaws may have the effect of precluding the conduct of business at a meeting if the proper procedures are not followed and may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to obtain control of the Company.
The Board of Directors has the authority to issue up to an aggregate of 20,000,000 shares of preferred stock in one or more classes or series and to determine, with respect to any such class or series, the designations, powers, preferences and rights of such class or series, and the qualifications, limitations and restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption (including sinking fund provisions), redemption prices, liquidation preferences, and the number of shares constituting any class or series or the designation of such class or series, without further vote or action by the stockholders. This preferred stock could have terms that may discourage a potential acquirer from making, without first negotiating with the Board of Directors, an acquisition attempt through which such acquirer may be able to change the composition of the Board of Directors, including a tender offer or other takeover attempt. See below for a discussion of our previously issued and subsequently cancelled Series A Preferred Stock.
The Board of Directors possesses the authority to call and hold emergency special meetings of the Board of Directors with less than forty-eight hours’ notice. This power to hold an emergency special meeting of the Board of Directors on short notice could discourage a potential acquirer from launching a bid to acquire majority ownership of the Company, a proxy solicitation in order to replace the current Board of Directors, or otherwise attempting to obtain control of the Company.

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Stockholder Rights Agreement (the "Rights Agreement"). On October 7, 2022, the Company declared a dividend of one preferred share purchase right for each of the Company’s issued and outstanding shares of Common Stock. The description and terms of these Rights are set forth in the Rights Agreement by and between the Company and American Stock Transfer & Trust Company, LLC. Each Right entitled the registered holder, subject to the terms of the Rights Agreement, to purchase from us one one-thousandth of a share of the Series A Junior Participating Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”) at a price of $313.00, subject to certain adjustments (as adjusted from time to time, the “Exercise Price”). Under the Rights Agreement, the Rights would have become exercisable if an entity, person or group acquires beneficial ownership of 20% or more of the outstanding Common Stock in a transaction not approved by the Board of Directors. In the event that the Rights became exercisable due to the ownership threshold being crossed, each Right would have entitled its holder (other than the person, entity or group triggering the Rights Plan, whose rights would have become void and not exercisable) to purchase additional shares of Common Stock having a then-current market value of twice the Exercise Price, which would have likely made any takeover or change of control attempt by such entity, person or group prohibitively expensive. Subject to the terms of the Rights Agreement, the Rights were scheduled to expire on October 2, 2023. On October 2, 2023, the Company amended the Rights Agreement to extend the final expiration date from October 2, 2023 to October 2, 2024. On January 26, 2024, the Company amended the Rights Agreement to substitute Broadridge Corporate Issuer Solutions, LLC as the new rights agent under the Rights Agreement. On March 18, 2024, the Company terminated the Rights Agreement and eliminated the Series A Preferred Stock as a series of stock under its Amended and Restated Certificate of Incorporation. At the time of the termination of the Rights Agreement, all of the Rights expired. Additional information regarding the Rights Agreement and its termination, is contained in the Company’s Current Reports on Form 8-K filed with the SEC on October 2, 2023, January 26, 2024 and March 18, 2024 and in the Company's Form 8-A/A filed with the SEC on March 18, 2024.
Officer Compensation Arrangements. We have entered into an employment agreement with our Chief Executive Officer and retention agreements with certain of our officers, which provide that, upon the occurrence of a change in control of us and either the termination of their employment without cause (as defined) or their resignation for good reason (as defined), such persons would be entitled to certain termination or severance payments made by us (which may include a lump sum payment equal to defined percentages of compensation and accelerated vesting of certain equity stock awards paid in accordance with the terms and conditions of the respective agreement). Such provisions could significantly increase the costs to a third-party acquirer and/or deter such third-party from acquiring us.
Delaware anti-takeover law. We are subject to Section 203 of the Delaware General Corporation Law, an anti-takeover law. In general, Section 203 prohibits a publicly held Delaware corporation, such as the Company, from engaging in a “business combination” with an “interested stockholder” for a period of three years following the date the person became an interested stockholder, unless certain criteria are met. Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns, or is an affiliate or associate of the corporation, and within three years prior to the determination of interested stockholder status did own, 15% or more of a corporation’s voting stock.
Changes in our effective tax rate and additional tax liabilities and global tax developments may impact our financial results.
We are subject to income taxes in the United States and various other jurisdictions. Significant judgment is often required in the determination of our worldwide provision for income taxes. Our effective tax rate could be impacted by changes in our earnings and losses in countries with differing statutory tax rates, changes in operations, changes in non-deductible expenses, changes in excess tax benefits of stock-based compensation, changes in the valuation of deferred tax assets and liabilities and our ability to utilize them, the applicability of withholding taxes, effects from acquisitions, and changes in accounting principles and tax laws. Any changes, ambiguity or uncertainty in taxing jurisdictions’ administrative interpretations, decisions, policies and positions could also materially impact our income tax liabilities.
We may also be subject to additional tax liabilities and penalties due to changes in non-income-based taxes resulting from changes in federal, state, local or international tax laws, changes in taxing jurisdictions’ administrative interpretations, decisions, policies and positions, results of tax examinations, settlements or judicial decisions, changes in accounting principles, or changes to our business operations, including as a result of acquisitions. For example, the U.S. Inflation Reduction Act of 2022 created an excise tax of 1% on the value of any stock repurchased by us after December 31, 2022. During 2024, we have been subject to this excise tax, but the amount will vary depending on various factors, including the amount and frequency of any stock repurchases and any permitted reductions or exceptions to the amount subject to the tax. Any resulting increase in our tax obligation or cash taxes paid could adversely affect our financial position and cash flows.

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We are also subject to tax examinations or engaged in alternative resolutions in multiple jurisdictions. While we regularly evaluate new information that may change our judgment resulting in recognition, derecognition or changes in measurement of a tax position taken, there can be no assurance that the final determination of any examinations will not have an adverse effect on our operating results or financial position.
As we utilize our tax credits and net operating loss carryforwards, we may be unable to mitigate our tax obligations to the same extent as in prior years, which could have a material impact to our future cash flows. In addition, changes to our operating structure, including changes related to acquisitions, may result in cash tax obligations.
Global tax developments applicable to multinational businesses may have a material impact to our business, cash flow from operating activities, or financial results. Such developments, for example, may include certain United States’ proposals as well as the Organization for Economic Co-operation and Development’s, the European Commission’s and certain major jurisdictions’ heightened interest in and taxation of companies participating in the digital economy.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY

Risk Management and Strategy

Overview of Processes for Assessing, Identifying and Managing Material Cyber Risks
Because technology, data and information security is a top priority at Blackbaud, we maintain and continuously assess and strengthen our cybersecurity program. Comprehensive cybersecurity risk management, including identification, analysis and response to risks affecting our business and its customers, provides the foundation for our program. Our cybersecurity program has been and will continue to be further enhanced by our compliance with the settlement of governmental investigations relating to the Security Incident. See Note 11 to the consolidated audited financial statements contained in this report for additional information regarding the Security Incident.
We utilize a four-prong strategy for assessing, identifying and managing material risks from cybersecurity threats:
1.Operational security: We leverage the industry standard CIA Triad Model in conjunction with comprehensive industry control frameworks, compliance regulations, privacy requirements and best practices, including: the National Institute of Standards and Technology ("NIST") Cybersecurity Framework, PCI DSS, System and Organization Controls ("SOC") 1, SOC 2, GDPR, HIPAA, the Trans-Atlantic Data Privacy Framework and Cloud Security Alliance.
2.Product security: Our development teams take part in regular training and use industry best practices to build security into our solutions.
3.Incident response: We monitor the threat landscape 24/7 in coordination with a third-party firm, routinely test our incident response capabilities and preparedness and maintain proactive relationships with law enforcement.
4.Ongoing landscape analysis: We continually evaluate upcoming and changing data privacy regulations and provide thought leadership for our customers on the operational impacts of these regulations and compliance requirements.
We believe that information and technology security is a shared responsibility and, therefore, incorporate data and privacy protection education into the customer experience through ongoing resources such as best practices content, one-on-one consultations with customer success managers and bbcon® sessions. We also participate in global communities and conference platforms to share information and present on best practices to improve the industry’s security awareness posture. In addition, Blackbaud employees are all engaged in on-going security and privacy awareness training campaigns to ensure they are empowered to protect both Blackbaud’s and our customers’ data.

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Integration into Overall Risk Management System or Processes
Consistent with our prioritization of information and technology protection, cybersecurity risk management has been and remains a key aspect of our overall business strategy, financial planning and capital allocation and a point of ongoing emphasis at all levels of our Company. Our enterprise risk management ("ERM") framework integrates our information technology and data management systems and related policies and practices into the larger framework to help guide and prioritize our cybersecurity and information technology-related investments, activities and risk management strategy. At least annually, we review cybersecurity risk as part of our ERM processes and integrate those findings into our overall strategy. Additionally, our cybersecurity program is further integrated with our overall risk management program through our Chief Information Security Officer's ("CISO") participation in such governance structures as our Risk Steering Committee and our Disclosure Committee, both of which are described in detail below.
Engagement of Third Parties
We regularly engage outside consultants and experts to assist us regarding our cybersecurity program. Engagements include an annual NIST Cybersecurity Framework assessment to ensure a reasonable cybersecurity program and retained leading external cybersecurity Incident Response (IR) experts.
Risks from Third-Party Service Providers and Others
Blackbaud also maintains a defined program and dedicated team that provides security oversight of its third-party service providers. This program assesses and manages risk at the onboarding phase of engagement with third-party vendors and partners as well as oversight throughout the lifecycle of the vendor relationship.
Risks from Cybersecurity Threats; Actual and Potential Material Impact
In addition, we continuously learn from and leverage experience gained from previous cybersecurity incidents that we, like many other companies, have experienced. As previously disclosed, we have been and remain subject to risks and uncertainties as a result of a ransomware attack against us in May 2020 in which a cybercriminal removed a copy of a subset of data from our self-hosted environment. As a result of the Security Incident, we are currently subject to certain legal proceedings and claims and could be the subject of additional legal proceedings, claims, inquiries and investigations in the future that might result in adverse judgments, settlements, fines, penalties or other resolution. See Note 11 to the consolidated audited financial statements contained in this report for additional information regarding the Security Incident and its past and potential impact on the Company.
Notwithstanding our strong commitment to cybersecurity, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us. See Item 1A. "Risk Factors" for a discussion of our cybersecurity risks.

Governance

Management's Assessment and Management of Cybersecurity Threats
Our multi-level cybersecurity governance and risk management structure begins with our Operational Risk Compliance and Security (“ORCAS”) Committee consisting of cross-functional management representatives throughout our Company. The ORCAS Committee receives detailed cybersecurity information from key security personnel and reports at least quarterly up through our Risk Steering Committee, which is made up of executives and senior management from various Blackbaud departments: Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief Technology Officer, General Counsel, Chief Privacy Officer and CISO, who has extensive information technology and program management experience. Our CISO has served in various roles of increasing responsibility in information technology and information security for more than 25 years, including serving in various cybersecurity leadership roles within public and private companies. He holds two undergraduate degrees—one in business administration and the other in computer information systems, a graduate degree in information systems and maintains two cybersecurity industry recognized certifications: Certified Information Systems Security Professional (CISSP) and Certified Cloud Security Professional (CCSP), both from the International Information System Security Certification Consortium. Cybersecurity leaders reporting to our CISO also have significant information technology and information security experience and industry recognized certifications.

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Additionally, our cybersecurity Incident Response plan timely informs our Cybersecurity Incident Subcommittee on active cybersecurity incidents that are potentially material. The Cybersecurity Subcommittee determines cybersecurity materiality and is made up of our General Counsel, CISO, Chief Accounting Officer and Director of SEC Reporting. Our Cybersecurity Incident Subcommittee is part of our Disclosure Committee, which is appointed by Chief Executive Officer and Chief Financial Officer to assist our executives in their responsibility for oversight of the accuracy and timeliness of the disclosures made by Blackbaud.
Board Oversight
The Risk Steering Committee reports to the Risk Oversight Committee of our Board of Directors at the regular quarterly meetings, or more frequently as needed. The Risk Oversight Committee's duties include, among other things, oversight of risks related to information technology security. The Risk Oversight Committee communicates as appropriate with the full Board of Directors, which is ultimately responsible for cybersecurity risk oversight.
ITEM 2. PROPERTIES
We own our LEED Gold certified global headquarters facility in Charleston, South Carolina, which consists of approximately 172,000 square feet. We believe that it is in good operating condition and adequately serves our current business operations. As a remote-first workforce company, we have leased a significant portion of the office space in our global headquarters facility. In October 2024, we signed a membership agreement for office space in Hyderabad, India to support our business operations in India. In February 2025, we were released from our lease for office space in Washington, DC (which was acquired as part of our acquisition of EVERFI in December 2021). For additional information, see Note 18 to our consolidated financial statements in this report.
ITEM 3. LEGAL PROCEEDINGS
For a discussion of our legal proceedings, see Note 11 to our consolidated financial statements in this report.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.

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|  | PART II.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is trading on the Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “BLKB.” According to the records of our transfer agent, as of February 18, 2025, there were approximately 101 stockholders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, this number is not representative of the total number of beneficial owners of our stock. On February 18, 2025, the closing price of our common stock was $70.96.

Stock Performance Graph

The following performance graph shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act except as shall be expressly set forth by specific reference in such filing. The performance graph compares the performance of our common stock to the Nasdaq Composite Index and the Nasdaq Computer Index. The graph covers the most recent five-year period ended December 31, 2024. The graph assumes that the value of the investment in our common stock and each index was $100.00 at December 31, 2019, and that all dividends are reinvested.

December 31, | 2019 |  | 2020 |  | 2021 |  | 2022 |  | 2023 |  | 2024
Blackbaud, Inc. | $100.00 |  | $72.44 |  | $99.39 |  | $74.07 |  | $109.11 |  | $93.03
Nasdaq Composite Index | 100.00 |  | 144.92 |  | 177.06 |  | 119.45 |  | 172.77 |  | 223.87
Nasdaq Computer Index | 100.00 |  | 157.33 |  | 199.80 |  | 129.82 |  | 212.86 |  | 284.38

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Issuer Purchases of Equity Securities

The following table provides information about shares of common stock acquired or repurchased during the three months ended December 31, 2024 under our stock repurchase program as then in effect, as well as common stock withheld by us to satisfy the minimum tax obligations of employees due upon vesting of restricted stock awards and units.

Period | Total number of shares purchased(1) |  | Average price paid per share |  | Total number of shares purchased as part of publicly announced plans or programs |  | Approximate dollar value of shares that may yet be purchased under the plans or programs (in thousands)(2)
Beginning balance, October 1, 2024 |  |  |  |  |  |  | $ | 737,188 |
October 1, 2024 through October 31, 2024 | 710,974 |  |  | $ | 25.74 |  | (3) | 710,974 |  |  | 718,886 |
November 1, 2024 through November 30, 2024 | 899,327 |  |  | 83.55 |  |  | 889,480 |  |  | 644,562 |
December 1, 2024 through December 31, 2024 | 762 |  |  | 78.13 |  |  | — |  |  | 644,562 |
Total | 1,611,063 |  |  | $ | 58.04 |  |  | 1,600,454 |  |  | $ | 644,562 |

(1)Includes 10,609 shares (9,847 in November and 762 in December) withheld by us to satisfy the minimum tax obligations of employees due upon vesting of restricted stock awards and units. The level of this acquisition activity varies from period to period based upon the timing of award grants and vesting.
(2)In July 2024, our Board of Directors reauthorized, expanded and replenished our stock repurchase program by raising the total capacity under the program from $500.0 million to $800.0 million available for repurchases. The program does not have an expiration date.
(3)Includes the settlement of the ASR in October 2024 in which no cash was exchanged (see discussion on page 56).

Dividends

We have not declared or paid any cash dividends on our common stock since the first quarter of 2020, and we do not presently plan to pay cash dividends on our common stock in the foreseeable future. Payment of future cash dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs, outstanding indebtedness, plans for expansion and restrictions imposed by our debt arrangements, if any.
ITEM 6. [RESERVED]

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with Item 1A Risk factors and our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. The following discussion and analysis presents financial information denominated in millions of dollars which can lead to differences from rounding when compared to similar information contained in the consolidated financial statements and related notes, which are primarily denominated in thousands of dollars.

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.
Our revenue is primarily generated from the following sources: (i) charging for the use of our software solutions in cloud and hosted environments; 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 |

1.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.

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We are delivering more innovation, evolving our products and ensuring our customers receive more value from our solutions.
2.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.
3.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.
4.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.
5.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.

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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.
Financial Summary

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; and
|  |  | 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; 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.
| - |  | 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).

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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.
| + |  | Decrease in Security Incident-related expenses of $39.7 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.

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.

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Gross dollar retention |  |

Our recurring subscription contracts are typically for a term of three years at contract inception with standard three year renewals thereafter. A key factor to our overall success is the renewal and expansion of our existing subscription agreements with our customers. Management uses gross dollar retention in analyzing our success at delighting our customers with innovative and cloud solutions. Gross dollar retention is defined as contracted annual recurring revenue ("CARR") divided by beginning CARR with a measurement period of twelve months. During 2024, our gross dollar retention was approximately 90%. 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.
Balance sheet and cash flow
At December 31, 2024, our cash and cash equivalents were $67.6 million. Under the 2024 Credit Facilities, the carrying amount of our debt was $1.0 billion and our net leverage ratio was 2.57 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.

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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.

Results of Operations

Reportable segment
We report our operating results and financial information in one operating and reportable segment. See Note 16 to our consolidated financial statements in this report for additional information.
Comparison of 2024 vs. 2023
For information regarding the comparison of 2023 to 2022, please refer to Part II Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 21, 2024.
Acquisition
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.

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Revenue and Cost of Revenue

Recurring |  |  |  |
Revenue ($M) |  | Cost of revenue ($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. 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.
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.

2024 vs. 2023

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; and
| + |  | 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.

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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
| + |  | Increase in transaction-based costs of $4.0 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.

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2024 vs. 2023

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.
Operating Expenses

Sales, marketing and customer success ($M) |  | Research and development ($M) |  | General and administrative ($M)
Percentages indicate expenses as a percentage of total revenue

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.

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2024 vs. 2023

Sales, marketing and customer success expenses decreased by $14.7 million, or 6.9%. 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

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.

2024 vs. 2023

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.

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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.

2024 vs. 2023

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:

| - |  | Decrease in Security Incident-related expenses of $39.7 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

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Interest Expense

Interest expense ($M) |  |
Percentages indicate expenses as a percentage of total revenue |  |

2024 vs. 2023

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. We currently expect interest expense for the full year 2025 to be approximately $65 million to $69 million although our interest expense in connection with the variable rate portion of our outstanding debt could increase in a rising interest rate environment. See Note 10 to our consolidated financial statements in this report for more information regarding our derivative instruments, which we use to manage our variable interest rate risk, and Item 7A. Quantitative and Qualitative Disclosures about Market Risk: Interest Rate Risk on page 64 for more information about our variable interest rate exposure and related risk.
Other Income

Other income ($M) |  |
Percentages indicate other income as a percentage of total revenue |  |

2024 vs. 2023

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

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Deferred Revenue
The table below compares the components of deferred revenue from our consolidated balance sheets:

(dollars in millions) | December 31, 2024 | December 31, 2023 | Change
Total deferred revenue(1) | 361.5 |  | 394.9 |  | (8.5) | %
Less: Long-term portion | 2.0 |  | 2.4 |  | (15.9) | %
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.
To the extent that our customers are billed for our solutions and services in advance of delivery, we record such amounts in deferred revenue. Our recurring revenue contracts are generally for a term of three years at contract inception with three-year renewals thereafter, billed annually in advance and non-cancelable. 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. Generally, our lowest balance of deferred revenue during the year is at the end of our first quarter.
Income Taxes

Income tax (benefit) provision ($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. 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. 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. 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. 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.

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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.

2024 vs. 2023

The decrease in our effective income tax rate for year ended December 31, 2024, when compared to the same period in 2023, was primarily attributable to the valuation allowance recorded in the current period. As of December 31, 2024, we recorded a valuation allowance against all of our U.S. deferred tax assets in excess of deferred tax liabilities due to the combination of our cumulative pretax loss position and net deferred tax asset position resulting from our divestiture of EVERFI. We intend to continue maintaining a full valuation allowance on our U.S. net deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. Furthermore, the effect of our various rate drivers is reversed by the Company’s 2024 loss position versus income in 2023.
Non-GAAP Financial Measures
The operating results analyzed below are presented on a non-GAAP basis. We use non-GAAP financial measures internally in analyzing our operational performance. Accordingly, we believe these non-GAAP measures are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. While we believe these non-GAAP measures provide useful supplemental information, non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be completely comparable to similarly titled measures of other companies due to potential differences in the exact method of calculation between companies.
The non-GAAP financial measures discussed below exclude the impact of certain transactions because we believe they are not directly related to our operating performance in any particular period, but are for our long-term benefit over multiple periods. We believe that these non-GAAP financial measures reflect our ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in our business.

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| Years ended December 31,
(dollars in millions, except per share amounts) | 2024 | 2023
GAAP Revenue | $ | 1,155.5 |  | $ | 1,105.4 |
GAAP gross profit | $ | 639.2 |  | $ | 603.2 |
GAAP gross margin | 55.3 | % | 54.6 | %
Non-GAAP adjustments: |  |
Add: Stock-based compensation expense | 14.1 |  | 16.7 |
Add: Amortization of intangibles from business combinations | 57.0 |  | 52.5 |
Add: Employee severance | — |  | 0.8 |
Subtotal(1) | 71.0 |  | 69.9 |
Non-GAAP gross profit(1) | $ | 710.3 |  | $ | 673.2 |
Non-GAAP gross margin | 61.5 | % | 60.9 | %
GAAP (loss) income from operations | $ | (270.5) |  | $ | 44.7 |
GAAP operating margin | (23.4) | % | 4.0 | %
Non-GAAP adjustments: |  |
Add: Stock-based compensation expense | 105.0 |  | 127.8 |
Add: Amortization of intangibles from business combinations | 60.5 |  | 55.6 |
Add: Employee severance | — |  | 5.1 |
Add: Acquisition and disposition-related costs(2) | 6.1 |  | 7.5 |
Add: Security Incident-related costs(3) | 13.7 |  | 53.4 |
Add: EVERFI impairment and disposition charges | 405.4 |  | — |
Subtotal(1) | 590.6 |  | 249.4 |
Non-GAAP income from operations(1) | $ | 320.1 |  | $ | 294.1 |
Non-GAAP operating margin | 27.7 | % | 26.6 | %
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 |
Non-GAAP adjustments: |  |
Add: GAAP income tax (benefit) provision | (28.4) |  | 15.8 |
Add: Total non-GAAP adjustments affecting income from operations | 590.6 |  | 249.4 |
Non-GAAP income before provision for income taxes | 279.0 |  | 267.0 |
Assumed non-GAAP income tax provision(4) | 68.4 |  | 53.4 |
Non-GAAP net income(1) | $ | 210.7 |  | $ | 213.6 |
Shares used in computing Non-GAAP diluted earnings per share | 51,750,308 |  | 53,721,342 |
Non-GAAP diluted earnings per share | $ | 4.07 |  | $ | 3.98 |

(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. 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. 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. 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.
(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%.

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Non-GAAP organic revenue growth
In addition, we use non-GAAP organic revenue growth, non-GAAP organic revenue growth on a constant currency basis, non-GAAP organic recurring revenue growth and non-GAAP organic recurring revenue growth on a constant currency basis in analyzing our operating performance. We believe that these non-GAAP measures are useful to investors, as a supplement to GAAP measures, for evaluating the periodic growth of our business on a consistent basis. Each of these measures of non-GAAP organic revenue growth excludes incremental acquisition-related revenue attributable to companies, if any, acquired in the current fiscal year. For companies, if any, acquired in the immediately preceding fiscal year, each of these non-GAAP organic revenue growth measures reflects presentation of full year incremental non-GAAP revenue derived from such companies as if they were combined throughout the prior period. In addition, each of these non-GAAP organic revenue growth measures excludes prior period revenue associated with divested businesses. The exclusion of the prior period revenue is to present the results of the divested businesses within the results of the combined company for the same period of time in both the prior and current periods. We believe this presentation provides a more comparable representation of our current business’ organic revenue growth and revenue run-rate.

| Years ended December 31,
(dollars in millions) | 2024 | 2023
GAAP revenue | $ | 1,155.5 |  | $ | 1,105.4 |
GAAP revenue growth | 4.5 | % |
Less: Non-GAAP revenue from divested businesses(1) | — |  | (7.4) |
Non-GAAP organic revenue(2) | $ | 1,155.5 |  | $ | 1,098.0 |
Non-GAAP organic revenue growth | 5.2 | % |
Non-GAAP organic revenue(2) | 1,155.5 |  | 1,098.0 |
Foreign currency impact on Non-GAAP organic revenue(3) | (3.0) |  | — |
Non-GAAP organic revenue on constant currency basis(3) | $ | 1,152.5 |  | $ | 1,098.0 |
Non-GAAP organic revenue growth on constant currency basis | 5.0 | % |
GAAP recurring revenue | $ | 1,129.1 |  | $ | 1,071.5 |
GAAP recurring revenue growth | 5.4 | % |
Less: Non-GAAP recurring revenue from divested businesses(1) | — |  | — |
Non-GAAP organic recurring revenue | $ | 1,129.1 |  | $ | 1,071.5 |
Non-GAAP organic recurring revenue growth | 5.4 | % |
Non-GAAP organic recurring revenue(2) | $ | 1,129.1 |  | $ | 1,071.5 |
Foreign currency impact on non-GAAP organic recurring revenue(3) | (2.9) |  | — |
Non-GAAP organic recurring revenue on constant currency basis(3) | $ | 1,126.2 |  | $ | 1,071.5 |
Non-GAAP organic recurring revenue growth on constant currency basis | 5.1 | % |

(1)Includes EVERFI revenue of $85.5 million and $106.9 million for the year ended December 31, 2024 and 2023, respectively.
(2)Non-GAAP revenue from divested businesses excludes revenue associated with divested businesses in the prior period. The exclusion of the prior period revenue is to present the results of the divested business with the results of the combined company for the same period of time in both the prior and current periods.
(3)Non-GAAP organic revenue and non-GAAP organic recurring revenue for the prior year periods presented herein may not agree to non-GAAP organic revenue and non-GAAP organic recurring revenue presented in the respective prior period quarterly financial information solely due to the manner in which non-GAAP organic revenue growth and non-GAAP organic recurring revenue growth are calculated.
(4)To determine non-GAAP organic revenue growth and non-GAAP organic recurring revenue growth on a constant currency basis, revenues from entities reporting in foreign currencies were translated to U.S. Dollars using the comparable prior period's quarterly weighted average foreign currency exchange rates. The primary foreign currencies creating the impact are the Australian Dollar, British Pound, Canadian Dollar and Euro.

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Rule of 40
We define Rule of 40 as non-GAAP organic revenue growth plus non-GAAP adjusted EBITDA margin. Non-GAAP adjusted EBITDA is defined as GAAP net income plus interest, net; income tax provision (benefit); depreciation; amortization of intangible assets from business combinations; amortization of software and content development costs; stock-based compensation; employee severance; acquisition and disposition-related costs; Security Incident-related costs; and impairment and disposition charges.

| Years ended December 31,
(dollars in millions) | 2024 | 2023
GAAP net (loss) income | $ | (283.2) |  | $ | 1.8 |
Non-GAAP adjustments: |  |
Add: Interest, net | 45.8 |  | 31.1 |
Add: GAAP income tax (benefit) provision | (28.4) |  | 15.8 |
Add: Depreciation | 12.8 |  | 13.0 |
Add: Amortization of intangibles from business combinations | 60.5 |  | 55.6 |
Add: Amortization of software and content development costs(1) | 51.2 |  | 45.3 |
Subtotal(2) | 141.9 |  | 160.9 |
Non-GAAP EBITDA(2) | $ | (141.2) |  | $ | 162.7 |
Non-GAAP EBITDA margin(3) | (12.2) | % |
Non-GAAP adjustments: |  |
Add: Stock-based compensation expense | 105.0 |  | 127.8 |
Add: Employee severance | — |  | 5.1 |
Add: Acquisition and disposition-related costs(4) | 6.1 |  | 7.5 |
Add: Security Incident-related costs(4) | 13.7 |  | 53.4 |
Add: EVERFI impairment and disposition charges | 405.4 |  | — |
Subtotal(2) | 530.1 |  | 193.8 |
Non-GAAP Adjusted EBITDA(2) | $ | 388.9 |  | $ | 356.5 |
Non-GAAP Adjusted EBITDA margin(5) | 33.7 | % |
Rule of 40(6) | 38.9 | % |
Non-GAAP adjusted EBITDA | 388.9 |  | 356.5 |
Foreign currency impact on Non-GAAP adjusted EBITDA | (1.6) |  | — |
Non-GAAP adjusted EBITDA on constant currency basis(7) | 387.3 |  | 356.5 |
Non-GAAP adjusted EBITDA margin on constant currency basis(7) | 33.6 | % |
Rule of 40 on constant currency basis(8) | 38.6 | % |

(1)Includes amortization expense related to software and content 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.
(3)Measured by GAAP revenue divided by non-GAAP EBITDA.
(4)See additional details in the reconciliation of GAAP to Non-GAAP operating income above.
(5)Measured by non-GAAP organic revenue divided by non-GAAP adjusted EBITDA.
(6)Measured by non-GAAP organic revenue growth plus non-GAAP adjusted EBITDA margin. See Non-GAAP organic revenue growth table above.
(7)To determine non-GAAP adjusted EBITDA on a constant currency basis, non-GAAP adjusted EBITDA from entities reporting in foreign currencies were translated to U.S. Dollars using the comparable prior period's quarterly weighted average foreign currency exchange rates. The primary foreign currencies creating the impact are the Australian Dollar, British Pound, Canadian Dollar and Euro.
(8)Measured by non-GAAP organic revenue growth on constant currency basis plus non-GAAP adjusted EBITDA margin on constant currency basis. See Non-GAAP organic revenue growth table above.

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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.
We believe non-GAAP free cash flow and non-GAAP adjusted free cash flow provides useful measures of the Company's operating performance. Non-GAAP adjusted free cash flow is not intended to represent and should not be viewed as the amount of residual cash flow available for discretionary expenditures.

| Years ended December 31, |  |
(dollars in millions) | 2024 |  | 2023 |  |
GAAP net cash provided by operating activities | $ | 296.0 |  |  | $ | 199.6 |  |  |
GAAP operating cash flow margin | 25.6 | % |  | 18.1 | % |  |
Non-GAAP adjustments: |  |  |  |  |
Less: purchase of property and equipment | (7.4) |  |  | (4.7) |  |  |
Less: capitalized software and content development costs | (59.8) |  |  | (59.4) |  |  |
Non-GAAP free cash flow(1) | $ | 228.8 |  |  | $ | 135.5 |  |  |
Non-GAAP free cash flow margin | 19.8 | % |  | 12.3 | % |  |
Non-GAAP adjustments: |  |  |  |  |
Add: Security Incident-related cash flows, net of insurance | 15.9 |  |  | 78.0 |  |  |
Non-GAAP adjusted free cash flow(1) | $ | 244.7 |  |  | $ | 213.5 |  |  |
Non-GAAP adjusted free cash flow margin | 21.2 | % |  | 19.3 | % |  |

(1)The individual amounts for each year may not sum to non-GAAP free cash flow or non-GAAP adjusted free cash flow due to rounding.
Seasonality
Our revenues normally fluctuate as a result of certain seasonal variations in our business. Our first quarter has historically been the seasonal low for bookings, with the second and fourth quarters historically being seasonally higher, and our bookings tend to be back-end loaded within individual quarters given our quarterly quota plans. Transactional revenue is non-contractual and less predictable given the susceptibility to certain drivers such as timing and number of events and marketing campaigns, as well as fluctuations in donation volumes and tuition payments. Our transactional revenue has historically been at its lowest in the first quarter due to the timing of customer fundraising initiatives and events. We have historically experienced seasonal highs during the fourth quarter due to year-end giving campaigns and during the second quarter when a large number of events are held. Our revenue from professional services has historically been lower in the first quarter when many of those services commence and in the fourth quarter due to the holiday season. As a result of these and other factors, our total revenue has historically been lower in the first quarter than in the remainder of our fiscal year, with the fourth quarter historically achieving the highest total revenue. 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. 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. Due to the timing of customer contract renewals and student enrollments, many of which take place at or near the beginning of our third quarter, our cash flow from operations has generally been lower in our second quarter as compared to our third and fourth quarters. 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. 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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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.

Liquidity and Capital Resources

The following table presents selected financial information about our financial position:

(dollars in millions) | December 31, 2024 | December 31, 2023 | Change
Cash and cash equivalents | $ | 67.6 |  | $ | 31.3 |  | 116.4 | %
Property and equipment, net | 91.9 |  | 98.7 |  | (6.9) | %
Software and content development costs, net | 148.3 |  | 160.2 |  | (7.4) | %
Total carrying value of debt | 1,075.0 |  | 779.7 |  | 37.9 | %
Working capital | (275.8) |  | (267.4) |  | (3.1) | %

The following table presents selected financial information about our cash flows:

| Years ended December 31, |  |  |
(dollars in millions) | 2024 |  | 2023 |  | Change |  |  |
Net cash provided by operating activities | $ | 296.0 |  | $ | 199.6 |  | 48.3 | % |  |  |
Net cash used in investing activities | (73.4) |  | (64.4) |  | 14.0 | % |  |  |
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. Our operating cash flow depends on continued customer renewal of our subscription and maintenance arrangements, market acceptance of our solutions and services, the volume and size of transactions for which we process payments and our customers' ability to pay. Based on current estimates of revenue and expenses, we believe that the currently available sources of funds and anticipated cash flows from operations will be adequate for at least the next twelve months to finance our operations, fund anticipated capital expenditures and meet our debt obligations. 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. In that context, we regularly evaluate opportunities to enhance our capital structure, including through potential debt or equity issuances.
As a well-known seasoned issuer, we filed an automatic shelf registration statement for an undetermined amount of debt and equity securities with the SEC on January 10, 2025. 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.
At December 31, 2024, our total cash and cash equivalents balance included approximately $13.9 million of cash that was held by operations outside the U.S. While these funds may not be needed to fund our U.S. operations for at least the next twelve months, if we need these funds, we may be required to accrue and pay taxes to repatriate the funds. We currently do not intend nor anticipate a need to repatriate our cash held outside the U.S.

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Operating Cash Flow
Throughout 2024 and 2023, 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; 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.

2024 vs. 2023

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.
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 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.
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.
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.

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Investing Cash Flow
During 2025, we expect our total capital expenditures, including estimated outlays for capitalized software development costs, to be between approximately $55.0 million and $65.0 million.

2024 vs. 2023

Net cash used in investing activities of $73.4 million increased by $9.0 million during 2024, when compared to 2023.
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.
Financing Cash Flow

2024 vs. 2023

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. 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. 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. This restricted cash due to customers is not available to us for operational purposes.
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. Under the stock repurchase program, we are authorized to repurchase shares from time to time in accordance with applicable laws both on the open market, including under trading plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, and in privately negotiated transactions. The timing and amount of repurchases depends on several factors, including market and business conditions, the trading price of our common stock and the nature of other investment opportunities. 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.

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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. During 2025, we intend to repurchase between 3% and 5% of our outstanding common stock as of December 31, 2024 under our existing stock repurchase program.
2024 Credit Facilities
Historically, we have drawn on our credit facility from time to time to help us meet financial needs primarily due to the seasonality of our cash flows from operations and financing for business acquisitions. At December 31, 2024, our available borrowing capacity under the 2024 Credit Facilities was $468.7 million. The 2024 Credit Facilities mature in April 2029.
At December 31, 2024, the carrying amount of our debt under the 2024 Credit Facilities was $1.0 billion. Our average daily borrowings were $929.5 million during 2024.
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.
The following is a summary of the financial covenants under the 2024 Credit Facilities:

Financial Covenant | Requirement | Ratio as of December 31, 2024
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

(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.
Under the 2024 Credit Facilities, we also have restrictions on our ability to declare and pay dividends and our ability to repurchase shares of our common stock. In order to pay any cash dividends and/or repurchase shares of stock: (i) no default or event of default shall have occurred and be continuing under the 2024 Credit Facilities, and (ii) our pro forma net leverage ratio, as set forth in the 2024 Credit Facilities, must be 0.25 less than the net leverage ratio requirement at the time of dividend declaration or stock repurchase. At December 31, 2024, 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.
Commitments and Contingencies
As of December 31, 2024, we had contractual obligations with future minimum commitments as follows:

| Payments due by period
(in millions) | Less than 1 year | More than 1 year | Total(1)
Recorded contractual obligations: |  |  |
Debt | $ | 23.9 |  | $ | 1,053.9 |  | $ | 1,077.8 |
Operating leases | 6.3 |  | 39.1 |  | 45.4 |
Unrecorded contractual obligations: |  |  |
Purchase obligations | 78.5 |  | 106.0 |  | 184.4 |
Interest payments on debt | 60.1 |  | 213.3 |  | 273.4 |
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.

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Debt
As of December 31, 2024, we had total remaining principal payments of $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. See Note 9 to our consolidated financial statements in this report for more information.
Interest payments on debt
In addition to principal payments, as of December 31, 2024, we expect to pay interest expense over the life of our debt obligations of approximately $273.4 million. 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, 2024, 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.
Operating leases
As of December 31, 2024, we had remaining operating lease payments of $45.4 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. 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. See Note 11 to our consolidated financial statements in this report for more information.
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.
Purchase obligations
As of December 31, 2024, we had remaining purchase obligations of $184.4 million. These purchase obligations are for third-party technology used in our solutions and for other services we purchase as part of our normal operations. In certain cases, these arrangements require a minimum annual purchase commitment by us. Our purchase obligations are not recorded as liabilities on our consolidated balance sheets as of December 31, 2024, as we had not received the related services. 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.

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Blackbaud, Inc.

Foreign Currency Exchange Rates

Approximately 14% of our total revenue for 2024 was generated from operations outside the U.S. We do not have significant operations in countries in which the economy is considered to be highly inflationary. Our consolidated financial statements are denominated in U.S. dollars and, accordingly, changes in the exchange rate between foreign currencies and the U.S. dollar will affect the translation of our subsidiaries’ financial results into U.S. dollars for purposes of reporting our consolidated financial results. The accumulated currency translation adjustment, recorded within accumulated other comprehensive loss as a component of stockholders’ equity, was a loss of $12.7 million as of December 31, 2024 and a loss of $9.8 million as of December 31, 2023. We have entered into foreign currency forward contracts to hedge a portion of the foreign currency exposure that arises on translation of our investments denominated in British Pounds into U.S. dollars.
The vast majority of our contracts are entered into by our U.S. or U.K. entities. The contracts entered into by the U.S. entity are almost always denominated in U.S. dollars or Canadian dollars, and contracts entered into by our U.K., Australian and Irish subsidiaries are generally denominated in British Pounds, Australian dollars and Euros, respectively. Historically, as the U.S. dollar weakened, foreign currency translation resulted in an increase in our revenues and expenses denominated in non-U.S. currencies. Conversely, as the U.S. dollar strengthened, foreign currency translation resulted in a decrease in our revenues and expenses denominated in non-U.S. currencies. During 2024, foreign translation resulted in increases in our revenues and expenses denominated in non-U.S. currencies. Though we have exposure to fluctuations in currency exchange rates, primarily those between the U.S. dollar and both the British Pound and Canadian dollar, the impact has generally not been material to our consolidated results of operations or financial position. During 2024, the fluctuation in foreign currency exchange rates increased our total revenue and our income from operations by $3.0 million and $1.1 million, respectively. We have entered into foreign currency forward contracts to hedge revenues denominated in the Canadian dollar against changes in the exchange rate with the U.S. dollar. We will continue monitoring such exposure and take action as appropriate. To determine the impacts on revenue (or income from operations) from fluctuations in currency exchange rates, current period revenues (or income from operations) from entities reporting in foreign currencies were translated into U.S. dollars using the comparable prior year period's weighted average foreign currency exchange rates. These impacts are non-GAAP financial information and are not in accordance with, or an alternative to, information prepared in accordance with GAAP.

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"). 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. On an ongoing basis, we reconsider and evaluate our estimates and assumptions.
We base our estimates on historical experience, current trends and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could materially differ from any of our estimates under different assumptions or conditions. Our significant accounting policies are discussed in Note 2 to our consolidated financial statements in this report. We believe the accounting estimates listed below are the most critical to aid in fully understanding and evaluating our reported financial results, and they require our most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain.

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Revenue Recognition
Description | Judgments and Uncertainties | Effect if Actual Results Differ From Assumptions
See Note 2 to our consolidated financial statements in this report for a complete discussion of our revenue recognition policies. Revenues are recognized when control of our services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. We determine revenue recognition through the following steps: (1) Identification of the contract, or contracts, with a customer; (2) Identification of the performance obligations in the contract; (3) Determination of the transaction price; (4) Allocation of the transaction price to the performance obligations in the contract; and (5) Recognition of revenue when, or as, we satisfy a performance obligation. We have not made any material changes in the accounting methodology we use to recognize revenue during the year ended December 31, 2024. | Our revenue recognition accounting methodology may contain uncertainties because it could require us to make significant estimates and assumptions, and to apply judgment for certain customer contracts. For example, for certain arrangements that have multiple performance obligations, we may need to exercise judgment and use estimates in order to (1) determine whether performance obligations are distinct and should be accounted for separately; (2) determine the standalone selling price of each performance obligation; (3) allocate the transaction price among the various performance obligations on a relative standalone selling price basis; and (4) determine whether revenue for each performance obligation should be recognized at a point in time or over time. | If we were to change any of these judgments or estimates, it could cause a material increase or decrease in the amount of revenue or deferred revenue that we report in a particular period.

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Blackbaud, Inc.

Business Combinations
Description | Judgments and Uncertainties | Effect if Actual Results Differ From Assumptions
We allocate the purchase price of an acquired business to its identifiable assets acquired and liabilities assumed at the acquisition date based upon their estimated fair values. The excess of the purchase price over the amount allocated to the identifiable assets acquired and liabilities assumed, if any, is recorded as goodwill. We use available information to estimate fair values. We typically engage outside appraisal firms to assist in the fair value determination of long-lived and identifiable intangible assets, and any other significant assets or liabilities. We adjust the preliminary purchase price allocation, as necessary, up to one year after the acquisition closing date as we obtain new information about facts and circumstances that existed as of the closing date. We have not made any material changes in the accounting methodology we use for business combinations during the year ended December 31, 2024. | Our purchase price allocation methodology contains uncertainties because it requires us to make significant estimates and assumptions, and to apply judgment to estimate the fair value of assets acquired and liabilities assumed, especially with respect to long-lived and intangible assets. 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. 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. Significant assumptions used in the valuation of certain developed technology assets include future revenue, proprietary technology obsolescence curve, royalty rate, and discount rate. Significant assumptions used in the valuation of marketing assets include assumptions about the period of time the brand will continue to be valuable, royalty rate, and discount rate. Significant assumptions used in the valuation of content intangible assets include cost-based assumptions. Our estimates of fair value are based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable, and unanticipated events and changes in circumstances may occur. | If actual results are materially different than the assumptions we used to determine fair value of the assets acquired and liabilities assumed through a business combination as well as the estimated useful lives of the acquired intangible assets, it is possible that adjustments to the carrying values of such assets and liabilities will have a material impact on our financial position and results of operations. See Note 3 to our consolidated financial statements in this report for information regarding our business acquisitions.

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Blackbaud, Inc.

Income Taxes
Description | Judgments and Uncertainties | Effect if Actual Results Differ From Assumptions
We make estimates and judgments in accounting for income taxes. Our income tax returns, like those of most companies, are periodically audited by domestic and foreign tax authorities. We measure and recognize uncertain tax positions. To recognize uncertain tax positions, we must first determine if it is more likely than not that the position will be sustained upon audit. We must then measure the benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. We make estimates in determining tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial reporting purposes. We record valuation allowances to reduce our deferred tax assets to the amount expected to be realized. We have not made any material changes in the accounting methodology we use to assess income tax during the year ended December 31, 2024. | The calculation of our income tax provision requires estimates due to transactions, credits and calculations where the ultimate tax determination is uncertain. 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. Significant judgment is required in the identification and measurement of uncertain tax positions. Our liability for unrecognized tax benefits contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures associated with our various filing positions. In assessing the adequacy of a recorded valuation allowance significant judgment is required. We consider all positive and negative evidence and a variety of factors including the scheduled reversal of deferred tax liabilities, historical and projected future taxable income, and prudent and feasible tax planning strategies. | Although we believe that the judgments and estimates discussed herein are reasonable, actual results could differ, and we may be exposed to losses or gains that could be material. To the extent actual results differ from estimated amounts recorded, such differences will impact the income tax provision in the period in which the determination is made. If we determine there is less than a 50% likelihood that we will be able to use a deferred tax asset in the future in excess of its net carrying value, then an adjustment to the deferred tax asset valuation allowance is made to increase income tax expense, thereby reducing net income in the period such determination was made.

Long-lived Assets and Intangible Assets Other Than Goodwill
Description | Judgments and Uncertainties | Effect if Actual Results Differ From Assumptions
We review our long-lived assets and intangible assets other than goodwill for impairment when events or changes in circumstances indicate the carrying amount may not be recoverable. If such events or changes in circumstances occur, we use the undiscounted cash flow method to determine whether our long-lived and intangible assets other than goodwill are impaired. To the extent that the carrying value of the asset or asset group exceeds the undiscounted cash flows over the estimated remaining life of the asset, we measure the impairment using discounted cash flows. We have not made any material changes in the accounting methodology we use to assess impairment loss during the year ended December 31, 2024. | In estimating future cash flows, assets are grouped at the lowest level for which there is identifiable cash flows that are largely independent of cash flows from other asset groups. 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. 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.

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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

For a discussion of the impact that recently issued accounting pronouncements are expected to have on our financial position and results of operations when adopted in the future, see Note 2 to our consolidated financial statements in this report.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have market rate sensitivity for interest rates and foreign currency exchange rates.

Interest Rate Risk

Our variable rate debt is our primary financial instrument with market risk exposure for changing interest rates. We manage our variable rate interest rate risk through a combination of short-term and long-term borrowings and the use of derivative instruments entered into for hedging purposes. Additionally, our interest income that we primarily earn on restricted cash due to customers for our payment processing solutions acts as a partial natural hedge against our interest rate risk. Our interest rate exposure includes SOFR rates. Due to the nature of our debt, the materiality of the fair values of the derivative instruments and the highly liquid, short-term nature and level of our cash and cash equivalents as of December 31, 2024, we believe that the risk of exposure to changing interest rates for those positions is immaterial. There were no significant changes in how we manage interest rate risk between December 31, 2023 and December 31, 2024.

Foreign Currency Risk

For a discussion of our exposure to foreign currency exchange rate fluctuations, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Foreign Currency Exchange Rates” in Item 7 of this report.

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Blackbaud, Inc.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
BLACKBAUD, INC.
Index to Consolidated Financial Statements

| Page No.
Reports of Independent Registered Public Accounting Firms (PCAOB ID 42) | 66
Consolidated Balance Sheets | 69
Consolidated Statements of Comprehensive Loss | 70
Consolidated Statements of Cash Flows | 71
Consolidated Statements of Stockholders’ Equity | 72
Notes to Consolidated Financial Statements | 73

2024 Form 10-K |  | 65

Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Blackbaud, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Blackbaud, Inc. (the Company) as of December 31, 2024 and 2023, the related consolidated statements of comprehensive loss, cash flows and stockholders’ equity for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 21, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

| Revenue Recognition - Payment Processing Services
Description of the Matter | The Company recorded transactional recurring revenues of $354 million for the year ended December 31, 2024. Included in transactional recurring revenues are revenues related to payment processing services. As discussed in Note 2 to the consolidated financial statements, the Company recognizes revenue for payment processing services over time based on the amount billable to the customer, since it has the right to invoice the customer in an amount that directly corresponds with the value to the customer for the Company’s performance to date. The processing of transactions and recording of revenues for these services involves a significant volume of transactions that are highly automated and are based on contractual terms with the customer and the Company’s third-party vendors.
| Auditing the revenues for these payment processing services is complex because the processes are highly automated and involve multiple IT systems with a significant volume of transactions and related underlying data. Further, auditing the revenues for these payment processing services required the involvement of data professionals to assist in validating the integrity of the underlying data and recalculating the revenues recorded during the period.

66 |  | 2024 Form 10-K

How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls over its payment processing services. We identified the relevant systems used in these payment processing services, including relevant third-party service organization systems, and evaluated the IT general controls over each of these systems. We also tested the relevant automated controls and other business processes controls.
| To test revenue recognized for payment processing services, our procedures included, among others, the involvement of data professionals to recalculate the revenue recognized. For a selection of payment processing transactions, we also agreed the amount of revenues recognized for processing fees retained by the Company to source documents and tested the mathematical accuracy of the recorded revenue. We also evaluated if the transactions were processed, and funds received, including sending confirmations directly to financial institutions.

/s/ Ernst & Young LLP
We have served as the Company's auditor since 2021.
Raleigh, North Carolina
February 21, 2025

2024 Form 10-K |  | 67

Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Blackbaud, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Blackbaud, Inc.’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the COSO criteria). In our opinion, Blackbaud, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, and the related consolidated statements of comprehensive loss, cash flows, and stockholders' equity for each of the three years in the period ended December 31, 2024, and the related notes and our report dated February 21, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Raleigh, North Carolina
February 21, 2025

68 |  | 2024 Form 10-K

Blackbaud, Inc.
Consolidated Balance Sheets

(dollars in thousands, except per share amounts) | December 31, 2024 | December 31, 2023
Assets |  |
Current assets: |  |
Cash and cash equivalents | $ | 67,628 |  | $ | 31,251 |
Restricted cash | 741,884 |  | 697,006 |
Accounts receivable, net of allowance of $5,228 and $6,907 at December 31, 2024 and December 31, 2023, respectively | 83,539 |  | 101,862 |
Customer funds receivable | 1,970 |  | 353 |
Prepaid expenses and other current assets | 81,287 |  | 99,285 |
Total current assets | 976,308 |  | 929,757 |
Property and equipment, net | 91,926 |  | 98,689 |
Operating lease right-of-use assets | 26,554 |  | 36,927 |
Software and content development costs, net | 148,319 |  | 160,194 |
Goodwill | 1,052,506 |  | 1,053,738 |
Intangible assets, net | 132,881 |  | 581,937 |
Other assets | 67,221 |  | 51,037 |
Total assets | $ | 2,495,715 |  | $ | 2,912,279 |
Liabilities and stockholders’ equity |  |
Current liabilities: |  |
Trade accounts payable | $ | 50,810 |  | $ | 25,184 |
Accrued expenses and other current liabilities | 75,543 |  | 64,322 |
Due to customers | 742,340 |  | 695,842 |
Debt, current portion | 23,875 |  | 19,259 |
Deferred revenue, current portion | 359,529 |  | 392,530 |
Total current liabilities | 1,252,097 |  | 1,197,137 |
Debt, net of current portion | 1,051,110 |  | 760,405 |
Deferred tax liability | 9,518 |  | 93,292 |
Deferred revenue, net of current portion | 2,015 |  | 2,397 |
Operating lease liabilities, net of current portion | 34,186 |  | 40,085 |
Other liabilities | 4,796 |  | 10,258 |
Total liabilities | 2,353,722 |  | 2,103,574 |
Commitments and contingencies (see Note 11) |  |
Stockholders’ equity: |  |
Preferred stock; 20,000,000 shares authorized; none outstanding | — |  | — |
Common stock, $0.001 par value; 180,000,000 shares authorized; 70,943,373 and 69,188,304 shares issued at December 31, 2024 and December 31, 2023, respectively; 49,245,588 and 53,625,440 shares outstanding at December 31, 2024 and December 31, 2023, respectively | 71 |  | 69 |
Additional paid-in capital | 1,291,442 |  | 1,203,012 |
Treasury stock, at cost; 21,697,785 and 15,562,864 shares at December 31, 2024 and December 31, 2023, respectively | (1,060,348) |  | (591,557) |
Accumulated other comprehensive loss | (4,869) |  | (1,688) |
(Accumulated deficit) retained earnings | (84,303) |  | 198,869 |
Total stockholders’ equity | 141,993 |  | 808,705 |
Total liabilities and stockholders’ equity | $ | 2,495,715 |  | $ | 2,912,279 |
The accompanying notes are an integral part of these consolidated financial statements.

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Blackbaud, Inc.
Consolidated Statements of Comprehensive Loss

(dollars in thousands, except per share amounts) | Years ended December 31,
2024 | 2023 | 2022
Revenue |  |  |
Recurring | $ | 1,129,114 |  | $ | 1,071,520 |  | $ | 1,011,733 |
One-time services and other | 26,381 |  | 33,912 |  | 46,372 |
Total revenue | 1,155,495 |  | 1,105,432 |  | 1,058,105 |
Cost of revenue |  |  |
Cost of recurring | 494,588 |  | 470,455 |  | 463,449 |
Cost of one-time services and other | 21,704 |  | 31,733 |  | 41,940 |
Total cost of revenue | 516,292 |  | 502,188 |  | 505,389 |
Gross profit | 639,203 |  | 603,244 |  | 552,716 |
Operating expenses |  |  |
Sales, marketing and customer success | 197,499 |  | 212,158 |  | 221,455 |
Research and development | 160,586 |  | 153,304 |  | 156,913 |
General and administrative | 142,723 |  | 189,938 |  | 199,908 |
Amortization | 3,541 |  | 3,139 |  | 2,925 |
EVERFI disposition | 405,360 |  | — |  | — |
Total operating expenses | 909,709 |  | 558,539 |  | 581,201 |
(Loss) income from operations | (270,506) |  | 44,705 |  | (28,485) |
Interest expense | (55,634) |  | (39,922) |  | (35,803) |
Other income, net | 14,549 |  | 12,861 |  | 8,713 |
(Loss) income before (benefit) provision for income taxes | (311,591) |  | 17,644 |  | (55,575) |
Income tax (benefit) provision | (28,419) |  | 15,824 |  | (10,168) |
Net (loss) income | $ | (283,172) |  | $ | 1,820 |  | $ | (45,407) |
(Loss) earnings per share |  |  |
Basic | $ | (5.60) |  | $ | 0.03 |  | $ | (0.88) |
Diluted | $ | (5.60) |  | $ | 0.03 |  | $ | (0.88) |
Common shares and equivalents outstanding |  |  |
Basic weighted average shares | 50,560,538 |  | 52,546,406 |  | 51,569,148 |
Diluted weighted average shares | 50,560,538 |  | 53,721,342 |  | 51,569,148 |
Other comprehensive (loss) income |  |  |
Foreign currency translation adjustment | $ | (2,822) |  | $ | 5,049 |  | $ | (16,160) |
Unrealized (loss) gain on derivative instruments, net of tax | (359) |  | (15,675) |  | 18,576 |
Total other comprehensive (loss) income | (3,181) |  | (10,626) |  | 2,416 |
Comprehensive loss | $ | (286,353) |  | $ | (8,806) |  | $ | (42,991) |
The accompanying notes are an integral part of these consolidated financial statements.

70 |  | 2024 Form 10-K

Blackbaud, Inc.
Consolidated Statements of Cash Flows

| Years ended December 31,
(dollars in thousands) | 2024 | 2023 | 2022
Cash flows from operating activities |  |  |
Net (loss) income | $ | (283,172) |  | $ | 1,820 |  | $ | (45,407) |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |  |  |
Depreciation and amortization | 121,665 |  | 109,487 |  | 102,369 |
Provision for credit losses and sales returns | 4,932 |  | 4,500 |  | 6,066 |
Stock-based compensation expense | 104,968 |  | 127,762 |  | 110,294 |
Deferred taxes | (85,011) |  | (24,368) |  | (26,644) |
Amortization of deferred financing costs and discount | 2,538 |  | 1,775 |  | 2,364 |
Loss on disposition of businesses | 16,847 |  | — |  | — |
EVERFI impairment charges | 390,204 |  | — |  | — |
Other non-cash adjustments | 2,462 |  | 5,023 |  | 5,676 |
Changes in operating assets and liabilities, net of acquisition and disposal of businesses: |  |  |
Accounts receivable | 4,729 |  | (3,237) |  | (7,340) |
Prepaid expenses and other assets | 3,339 |  | 16,851 |  | 26,235 |
Trade accounts payable | 28,336 |  | (18,576) |  | 21,607 |
Accrued expenses and other liabilities | (13,328) |  | (30,275) |  | (2,386) |
Deferred revenue | (2,541) |  | 8,872 |  | 11,059 |
Net cash provided by operating activities | 295,968 |  | 199,634 |  | 203,893 |
Cash flows from investing activities |  |  |
Purchase of property and equipment | (7,443) |  | (4,685) |  | (12,289) |
Capitalized software and content development costs | (59,757) |  | (59,443) |  | (58,774) |
Purchase of net assets of acquired companies, net of cash and restricted cash acquired | — |  | (13) |  | (20,912) |
Cash (used) received in disposition of business | (1,179) |  | — |  | 6,426 |
Other investing activities | (5,029) |  | (250) |  | — |
Net cash used in investing activities | (73,408) |  | (64,391) |  | (85,549) |
Cash flows from financing activities |  |  |
Proceeds from issuance of debt | 1,441,400 |  | 293,200 |  | 211,000 |
Payments on debt | (1,144,709) |  | (374,595) |  | (310,740) |
Debt issuance costs | (6,458) |  | — |  | — |
Stock issuance costs | — |  | — |  | (1,339) |
Employee taxes paid for withheld shares upon equity award settlement | (56,828) |  | (35,867) |  | (36,376) |
Change in due to customers | 46,957 |  | (6,812) |  | 111,386 |
Change in customer funds receivable | (1,679) |  | (60) |  | 380 |
Purchase of treasury stock | (418,034) |  | (18,831) |  | — |
Net cash used in financing activities | (139,351) |  | (142,965) |  | (25,689) |
Effect of exchange rate on cash, cash equivalents and restricted cash | (1,954) |  | 2,048 |  | (10,486) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 81,255 |  | (5,674) |  | 82,169 |
Cash, cash equivalents and restricted cash, beginning of year | 728,257 |  | 733,931 |  | 651,762 |
Cash, cash equivalents and restricted cash, end of year | $ | 809,512 |  | $ | 728,257 |  | $ | 733,931 |
Supplemental disclosure of cash flow information |  |  |
Cash paid for interest | $ | (51,881) |  | $ | (38,052) |  | $ | (33,371) |
Cash (paid) for taxes, net of refunds | (60,668) |  | (35,619) |  | (9,670) |
Non-cash investing and financing activities: |  |  |
Purchase of software and services by assuming directly related liabilities | (2,073) |  | (2,491) |  | (1,710) |
Purchase of equipment and other assets included in accounts payable | (31) |  | (837) |  | (158) |

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

(dollars in thousands) | December 31, 2024 | December 31, 2023
Cash and cash equivalents | $ | 67,628 |  | $ | 31,251 |
Restricted cash | 741,884 |  | 697,006 |
Total cash, cash equivalents and restricted cash in the statement of cash flows | $ | 809,512 |  | $ | 728,257 |
The accompanying notes are an integral part of these consolidated financial statements.

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Blackbaud, Inc.
Consolidated Statements of Stockholders' Equity

(dollars in thousands) | Common stock |  | Treasury stock |  | Additional paid-in capital | Accumulated other comprehensive (loss) income | (Accumulated deficit) retained earnings | Total stockholders' equity
Shares | Amount | Shares | Amount
Balance at December 31, 2021 | 66,165,666 |  | $ | 66 |  |  | (14,182,805) |  | $ | (500,911) |  |  | $ | 968,927 |  | $ | 6,522 |  | $ | 242,456 |  | $ | 717,060 |
Net loss | — |  | — |  |  | — |  | — |  |  | — |  | — |  | (45,407) |  | (45,407) |
Common stock issued in purchase of EVERFI | — |  | — |  |  | — |  | — |  |  | (1,352) |  | — |  | — |  | (1,352) |
Retirements of common stock(1) | (33,535) |  | — |  |  | — |  | — |  |  | (2,605) |  | — |  | — |  | (2,605) |
Vesting of restricted stock units | 1,015,304 |  | — |  |  | — |  | — |  |  | — |  | — |  | — |  | — |
Shares withheld to satisfy tax withholdings | — |  | — |  |  | (562,425) |  | (36,376) |  |  | — |  | — |  | — |  | (36,376) |
Stock-based compensation | — |  | — |  |  | — |  | — |  |  | 110,294 |  | — |  | — |  | 110,294 |
Restricted stock grants | 846,295 |  | 2 |  |  | — |  | — |  |  | — |  | — |  | — |  | 2 |
Restricted stock cancellations | (179,686) |  | — |  |  | — |  | — |  |  | — |  | — |  | — |  | — |
Other comprehensive income | — |  | — |  |  | — |  | — |  |  | — |  | 2,416 |  | — |  | 2,416 |
Balance at December 31, 2022 | 67,814,044 |  | $ | 68 |  |  | (14,745,230) |  | $ | (537,287) |  |  | $ | 1,075,264 |  | $ | 8,938 |  | $ | 197,049 |  | $ | 744,032 |
Net income | — |  | — |  |  | — |  | — |  |  | — |  | — |  | 1,820 |  | 1,820 |
Retirements of common stock(1) | (143) |  | — |  |  | — |  | — |  |  | (14) |  | — |  | — |  | (14) |
Purchase of treasury shares under stock repurchase program | — |  | — |  |  | (221,836) |  | (18,831) |  |  | — |  | — |  | — |  | (18,831) |
Vesting of restricted stock units | 1,007,921 |  | — |  |  | — |  | — |  |  | — |  | — |  | — |  | — |
Shares withheld to satisfy tax withholdings | — |  | — |  |  | (595,798) |  | (35,439) |  |  | — |  | — |  | — |  | (35,439) |
Stock-based compensation | — |  | — |  |  | — |  | — |  |  | 127,762 |  | — |  | — |  | 127,762 |
Restricted stock grants | 473,341 |  | 1 |  |  | — |  | — |  |  | — |  | — |  | — |  | 1 |
Restricted stock cancellations | (106,859) |  | — |  |  | — |  | — |  |  | — |  | — |  | — |  | — |
Other comprehensive loss | — |  | — |  |  | — |  | — |  |  | — |  | (10,626) |  | — |  | (10,626) |
Balance at December 31, 2023 | 69,188,304 |  | $ | 69 |  |  | (15,562,864) |  | $ | (591,557) |  |  | $ | 1,203,012 |  | $ | (1,688) |  | $ | 198,869 |  | $ | 808,705 |
Net loss | — |  | — |  |  | — |  | — |  |  | — |  | — |  | (283,172) |  | (283,172) |
Purchase of treasury shares under stock repurchase program, inclusive of excise tax | — |  | — |  |  | (5,362,439) |  | (411,963) |  |  | (9,246) |  | — |  | — |  | (421,209) |
Vesting of restricted stock units | 1,410,169 |  | — |  |  | — |  | — |  |  | — |  | — |  | — |  | — |
Shares withheld to satisfy tax withholdings | — |  | — |  |  | (772,482) |  | (56,828) |  |  | — |  | — |  | — |  | (56,828) |
Stock-based compensation | — |  | — |  |  | — |  | — |  |  | 97,676 |  | — |  | — |  | 97,676 |
Restricted stock grants | 422,685 |  | 2 |  |  | — |  | — |  |  | — |  | — |  | — |  | 2 |
Restricted stock cancellations | (77,785) |  | — |  |  | — |  | — |  |  | — |  | — |  | — |  | — |
Other comprehensive loss | — |  | — |  |  | — |  | — |  |  | — |  | (3,181) |  | — |  | (3,181) |
Balance at December 31, 2024 | 70,943,373 |  | $ | 71 |  |  | (21,697,785) |  | $ | (1,060,348) |  |  | $ | 1,291,442 |  | $ | (4,869) |  | $ | (84,303) |  | $ | 141,993 |

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

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

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Blackbaud, Inc.
Notes to Consolidated Financial Statements

1. Organization

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.

2. Basis of Presentation

Basis of presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).
Basis of consolidation
The consolidated financial statements include the accounts of Blackbaud, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. On an ongoing basis, we reconsider and evaluate our estimates and assumptions, including those that impact revenue recognition, long-lived and intangible assets, income taxes, business combinations, stock-based compensation, capitalization of software development costs, our allowances for credit losses and sales returns, costs of obtaining contracts, valuation of derivative instruments, loss contingencies and insurance recoveries, among others. Changes in the facts or circumstances underlying these estimates could result in material changes and actual results could materially differ from these estimates.
Recently adopted accounting pronouncements
In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). This update requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. We adopted ASU 2023-07 on December 31, 2024 and the adoption did not have a material impact on our condensed consolidated financial statements.
Recently issued accounting pronouncements
There are no recently issued accounting pronouncements that are expected to have a material impact on our financial position or results of operations when adopted in the future.
Summary of significant accounting policies
Revenue recognition
Our revenue is primarily generated from the following sources: (i) charging for the use of our software solutions in cloud and hosted environments; and (ii) providing payment and transaction services. Revenue is recognized when control of these services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.

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Blackbaud, Inc.
Notes to Consolidated Financial Statements
We determine revenue recognition through the following steps:
•Identification of the contract, or contracts, with a customer;
•Identification of the performance obligations in the contract;
•Determination of the transaction price;
•Allocation of the transaction price to the performance obligations in the contract; and
•Recognition of revenue when, or as, we satisfy a performance obligation.
Our recurring revenue includes two components: contractual recurring and transactional recurring.
Contractual recurring
Contractual recurring revenue is primarily comprised of fees for the use of our subscription-based software solutions, which includes providing access to cloud solutions, online training programs and subscription-based analytic services. Contractual recurring revenue also includes fees from maintenance services for our on-premises solutions.
Contractual recurring revenue represents stand-ready performance obligations in which we are making our solutions or services available to our customers continuously over time or the value of the contract renews. Therefore, contractual recurring revenue is generally recognized over time on a ratable basis over the contract term, beginning on the date that the solution or service is made available to the customer. Our contractual recurring revenue contracts are generally for a term of three years at contract inception with three-year renewals thereafter, billed annually in advance and non-cancelable.
Transactional recurring
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.
Our payment services are offered with the assistance of third-party vendors. In general, when we are the principal in a transaction based on the factors identified in ASC 606-10-55-36 through 55-40, we record the revenue and related costs on a gross basis. Otherwise, we net the cost of revenue associated with the service against the gross revenue (amount withheld for the transaction fees) and record the net amount as revenue. For payment and transaction services, we have the right to invoice the customer in an amount that directly corresponds with the value to the customer of our performance to date. Therefore, we recognize revenue for these services over time based on the amount we withhold for the transaction fees in accordance with the 'as invoiced' practical expedient in ASC 606-10-55-18.
One-time services and other
One-time services and other revenue is primarily 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.
We generally bill consulting services based on hourly rates plus reimbursable travel-related expenses. Fixed price consulting engagements are generally billed as milestones towards completion are reached. Revenue for one-time consulting services is generally recognized over time as the services are performed.
Fees for retained and managed services contracts are generally billed in advance and recognized over time on a ratable basis over the contract term, beginning on the date the service is made available to the customer.
Contracts with multiple performance obligations
Some of our contracts with customers contain multiple performance obligations. For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices of our solutions and services are typically estimated based on observable transactions when the solutions or services are sold on a standalone basis.

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Blackbaud, Inc.
Notes to Consolidated Financial Statements
Costs of obtaining contracts, contract assets and deferred revenue
We pay sales commissions at the time contracts with customers are signed or shortly thereafter, depending on the size and duration of the sales contract. Sales commissions and related fringe benefits earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized in a manner that aligns with the expected period of benefit, which we have determined to be six years. We determined the period of benefit by taking into consideration our customer contracts, including renewals, retention, our technology and other factors. We generally do not pay commissions for contract renewals that are commensurate with the commission paid on the initial contract. The related amortization expense is included in sales, marketing and customer success expense in our consolidated statements of comprehensive loss.
A contract asset is recorded when revenue is recognized in advance of our right to receive consideration (i.e., we must satisfy additional performance obligations in order to receive consideration). Amounts are recorded as receivables when our right to consideration is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Our contract assets are recorded within prepaid expenses and other current assets on our consolidated balance sheets. To the extent that our customers are billed for our solutions and services in advance of us satisfying the related performance obligations, we record such amounts in deferred revenue.
Sales taxes
We present sales taxes and other taxes collected from customers and remitted to governmental authorities on a net basis and, as such, exclude them from revenues.
Fair value measurements
We measure certain financial assets and liabilities at fair value on a recurring basis, including derivative instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. An active market is defined as a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. We use a three-tier fair value hierarchy to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows:
•Level 1 - Quoted prices for identical assets or liabilities in active markets;
•Level 2 - Quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and
•Level 3 - Valuations derived from valuation techniques in which one or more significant inputs are unobservable.
Our financial assets and liabilities are classified in their entirety within the hierarchy based on the lowest level of input that is significant to fair value measurement. Changes to a financial asset's or liability's level within the fair value hierarchy are determined as of the end of a reporting period. All methods of assessing fair value result in a general approximation of value, and such value may never actually be realized.
Derivative instruments
We generally use derivative instruments to manage interest rate and foreign currency exchange risk. We view derivative instruments as risk management tools and do not use them for trading or speculative purposes. Our policy requires that derivatives used for hedging purposes be designated and effective as a hedge of the identified risk exposure at the inception of the contract. Accordingly, changes in fair value of the derivative contract must be highly correlated with changes in the fair value of the underlying hedged item at inception of the hedge and over the life of the hedge contract.
We record all derivative instruments on our consolidated balance sheets at fair value as either an asset or liability. If the derivative is designated as a cash flow hedge, the effective portions of the changes in fair value of the derivative are recorded in other comprehensive loss and reclassified to earnings in a manner that matches the timing of the earnings impact of the hedged transactions. If the derivative is designated as a net investment hedge, the effective portions of the changes in fair value of the derivative are recorded to translation adjustment, a component of other comprehensive loss, and recognized in earnings only when the hedged investment is liquidated. Ineffective portions of the changes in the fair value of cash flow hedges are recognized currently in earnings. See Note 10 to these consolidated financial statements for further discussion of our derivative instruments.

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Blackbaud, Inc.
Notes to Consolidated Financial Statements
Cash and cash equivalents
We consider all highly liquid investments purchased with an original maturity of three months or less and cash items in transit to be cash equivalents.
Restricted cash due to customers; Customer funds receivable; Due to customers
Restricted cash due to customers consists of monies collected and held at banks, payment processors, or other financial institutions (or in transit) and payable to our customers, net of the associated transaction fees earned. Monies associated with amounts due to customers are segregated in separate bank accounts and used exclusively for the payment of amounts due to customers. This usage restriction is either legally or internally imposed and reflects our intention with regard to such deposits. Customer funds receivable consists of monies we expect to collect and remit to our customers.
Concentration of credit risk
Financial instruments that potentially subject us to concentrations of credit risk consist of cash and cash equivalents, restricted cash due to customers and accounts receivable. Our cash and cash equivalents and restricted cash due to customers are placed with high credit-quality financial institutions. Our accounts receivable is derived from sales to customers. With respect to accounts receivable, we perform ongoing evaluations of our customers and maintain an allowance for credit losses based on historical experience and our expectations of future credit losses. As of and for the years ended December 31, 2024, 2023 and 2022, there were no significant concentrations with respect to our consolidated revenues or accounts receivable.
Property and equipment
We record property and equipment assets at cost and depreciate them over their estimated useful lives using the straight-line method. Leasehold improvements are depreciated over the lesser of the term of the lease or the estimated useful life of the asset. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to earnings. Repair and maintenance costs are expensed as incurred.
Construction-in-progress primarily related to purchases of information technology assets which had not been placed in service at the respective balance sheet dates. We transfer these assets to the applicable property and equipment category on the date they are placed in service. There was no capitalized interest applicable to construction-in-progress for the years ended December 31, 2024 and 2023.
Business combinations
We include the operating results of acquired companies as well as the net assets acquired and liabilities assumed in our consolidated financial statements from the date of acquisition. We are required to allocate the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed at the acquisition date based upon their estimated fair values. Goodwill as of the acquisition date represents the excess of the purchase consideration of an acquired business over the fair value of the underlying net tangible and intangible assets acquired and liabilities assumed.
We apply significant judgement 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. Significant assumptions used in the valuation of certain developed technology assets include future revenue, proprietary technology obsolescence curve, royalty rate, and discount rate. Significant assumptions used in the valuation of marketing assets include assumptions about the period of time the brand will continue to be valuable, royalty rate, and discount rate. Significant assumptions used in the valuation of content intangible assets include cost-based assumptions. Our estimates of fair value are based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable, and unanticipated events and changes in circumstances may occur.
Goodwill
Goodwill represents the purchase price in excess of the net amount assigned to assets acquired and liabilities assumed by us in a business combination. Goodwill is not amortized, but tested annually for impairment on the first day of our fourth quarter, or more frequently if indicators of potential impairment arise.

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Blackbaud, Inc.
Notes to Consolidated Financial Statements
Accounting guidance permits entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis to determine whether it is necessary to perform the quantitative impairment test. Significant judgment is required in the assessment of qualitative factors, including but not limited to an evaluation of macroeconomic conditions as they relate to our business, industry and market trends, as well as the overall future financial performance of identified reporting units and future opportunities in the markets in which we operate.
The quantitative impairment test compares the fair values of identified reporting units with their respective carrying amounts. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. Based on our current internal reporting structure, we have one operating segment, one reportable segment, and one reporting unit. In each of 2024, 2023 and 2022, we performed the quantitative impairment test, which indicated that the estimated fair values of the identified reporting units significantly exceeded their respective carrying values. There were no impairments of goodwill during 2024, 2023 and 2022.
Intangible assets other than goodwill
We amortize finite-lived intangible assets over their estimated useful lives as follows.

| Basis of amortization | Amortization period (in years)
Customer relationships | Straight-line and Curve of Economic Benefit(1) | 10-17
Marketing assets | Straight-line and Curve of Economic Benefit(1) | 15
Developed technology | Straight-line and Curve of Economic Benefit(1) | 3-14

(1)Certain of the customer relationships, marketing assets and developed technology assets are amortized on a curve that represents the expected period of economic benefit.
We write off the gross carrying amount and accumulated amortization balances for all fully amortized intangible assets. We evaluate the estimated useful lives and the potential for impairment of finite and indefinite-lived intangible assets on an annual basis or more frequently if events or circumstances indicate revised estimates of useful lives may be appropriate or that the carrying amount may be impaired. If the carrying amount of a finite-lived intangible asset is no longer recoverable based upon the undiscounted cash flows of the asset, the amount of impairment is the difference between the carrying amount and the fair value of the asset. All of our intangible assets were acquired in business combinations. See Note 6 to these consolidated financial statements for a discussion of our impairment of certain intangible assets during 2024 and 2022. There were no impairments of acquired intangible assets during 2023.
Impairment of long-lived assets
We review long-lived assets for impairment when events change or circumstances indicate the carrying amount may not be recoverable. Events or changes in circumstances that indicate the carrying amount may not be recoverable include, but are not limited to, a significant decrease in the market value of the business or asset acquired, a significant adverse change in the extent or manner in which the business or asset acquired is used or significant adverse change in the business climate. If such events or changes in circumstances are present, the undiscounted cash flow method is used to determine whether the asset or asset group is impaired. See Note 6 to these consolidated financial statements for a discussion of our impairment of certain long-lived assets during 2024, 2023 and 2022.
Deferred financing costs and debt discount
Deferred financing costs included in other assets represent the direct third-party costs of entering into the revolving (line-of-credit) portion of our credit facility in April 2024 and portions of the unamortized deferred financing costs from prior facilities. These costs are amortized ratably over the term of the credit facility as interest expense.

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Blackbaud, Inc.
Notes to Consolidated Financial Statements
Other debt issuance costs, as well as the debt discount associated with the 2024 Credit Facilities (as defined below) and portions of the unamortized balances from prior facilities, are recorded as a direct deduction from debt. These costs are amortized over the term of the credit facility as interest expense.
Stock-based compensation
We measure stock-based compensation cost at the grant date based on the fair value of the award and recognize it as expense over the requisite service period, which is the vesting period.
We recognize the effect of awards for which the requisite service period is not rendered when the award is forfeited (that is, we recognize the effect of forfeitures in compensation cost when they occur). Previously recognized compensation cost for an award is reversed in the period that the award is forfeited. Income tax benefits resulting from the vesting and exercise of stock-based compensation awards are recognized in the period the unit or award is vested or option or right is exercised.
Income taxes
We make estimates and judgments in accounting for income taxes. The calculation of the income tax provision requires estimates due to transactions, credits and calculations where the ultimate tax determination is uncertain. 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. To the extent actual results differ from estimated amounts recorded, such differences will impact the income tax provision in the period in which the determination is made.
We make estimates in determining tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes. We record valuation allowances to reduce our deferred tax assets to the amount expected to be realized. In assessing the adequacy of a recorded valuation allowance significant judgment is required. We consider all positive and negative evidence and a variety of factors including the scheduled reversal of deferred tax liabilities, historical and projected future taxable income, and prudent and feasible tax planning strategies. If we determine there is less than a 50% likelihood that we will be able to use a deferred tax asset in the future in excess of its net carrying value, then an adjustment to the deferred tax asset valuation allowance is made to increase income tax expense, thereby reducing net income in the period such determination was made.
We measure and recognize uncertain tax positions. To recognize such positions, we must first determine if it is more likely than not that the position will be sustained upon audit. We must then measure the benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. Significant judgment is required in the identification and measurement of uncertain tax positions.
Foreign currency
Net assets recorded in a foreign currency are translated at the exchange rate on the balance sheet date. Revenue and expense items are translated using an average of monthly exchange rates. The resulting translation adjustments are recorded in accumulated other comprehensive income.
Gains and losses resulting from foreign currency transactions denominated in currency other than the functional currency are recorded at the approximate rate of exchange at the transaction date in other income, net. For the years ended December 31, 2024 and 2022, we recorded net foreign currency gains that were insignificant and $4.6 million, respectively. During the year ended December 31, 2023, we recorded a net foreign currency loss that was insignificant.
Research and development
Research and development costs are expensed as incurred except as noted below under Software and content development costs. These costs include compensation costs for engineering and product management personnel, third-party contractor expenses, software development tools and other expenses related to researching and developing new solutions or upgrading and enhancing existing solutions that do not qualify for capitalization, and allocated depreciation, facilities and IT support costs.
Software and content development costs
We incur certain costs associated with the development of internal-use software and content, which are primarily related to activities performed to develop our cloud solutions and the development of online education curriculum to be delivered on

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Notes to Consolidated Financial Statements
the Company's cloud platform. Internal and external costs incurred in the preliminary project stage of internal-use software development and content are expensed as incurred. Once the software or content being developed has reached the application development stage, qualifying internal costs including payroll and payroll-related costs of employees who are directly associated with and devote time to the software or content project as well as external direct costs of materials and services are capitalized. Capitalization ceases at the point at which the developed software or content is substantially complete and ready for its intended use, which is typically upon completion of all substantial testing. Qualifying costs capitalized during the application development stage include those related to specific upgrades and enhancements when it is probable that those costs incurred will result in additional functionality. Overhead costs, including general and administrative costs, as well as maintenance, training and all other costs associated with post-implementation stage activities are expensed as incurred. In addition, internal costs that cannot be reasonably separated between maintenance and relatively minor upgrades and enhancements are expensed as incurred. In certain circumstances, content development costs are considered deferred costs, when ownership of developed content belongs to the customer.
Qualifying capitalized software and content development costs are amortized on a straight-line basis over the software asset's estimated useful life, which is generally three to seven years. We evaluate the useful lives of these assets on an annual basis and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. See Note 6 to these consolidated financial statements for a discussion of our impairment of certain capitalized software and content development costs during 2024 and 2022. There were no impairments of capitalized software assets during 2023. We write off the gross carrying amount and accumulated amortization balances for all fully amortized capitalized software and content development cost assets.
Allowance for credit losses
Our accounts receivable consist of a single portfolio segment. Accounts receivable are recorded at original invoice amounts less an allowance for credit losses, an amount we estimate to be sufficient to provide adequate protection against lifetime expected losses resulting from extending credit to our customers. In judging the adequacy of the allowance for credit losses, we consider multiple factors including historical bad debt experience, the current aging of our receivables and current economic conditions that may affect our customers' ability to pay. A considerable amount of judgment is required in assessing these factors and if any receivables were to deteriorate, an additional provision for credit losses could be required. Accounts are written off after all means of collection are exhausted and recovery is considered remote. Provisions for credit losses are recorded in general and administrative expense.
Below is a summary of the changes in our allowance for credit losses.

Years ended December 31, (in thousands) | Balance at beginning of year | Provision/ adjustment | Write-off | Recovery | Balance at end of year
2024 | $ | 6,096 |  | $ | 3,010 |  | $ | (4,833) |  | $ | 215 |  | $ | 4,488 |
2023 | 6,022 |  | 2,012 |  | (2,539) |  | 601 |  | 6,096 |
2022 | 9,375 |  | 1,281 |  | (5,162) |  | 528 |  | 6,022 |

Allowance for sales returns
We maintain a reserve for returns and credits which is estimated based on several factors including historical experience, known credits yet to be issued, the aging of customer accounts and the nature of service level commitments. A considerable amount of judgment is required in assessing these factors. Provisions for sales returns and credits are charged against the related revenue items.
Below is a summary of the changes in our allowance for sales returns.

Years ended December 31, (in thousands) | Balance at beginning of year | Provision/ adjustment | Deduction | Balance at end of year
2024 | $ | 811 |  | $ | 2,966 |  | $ | (3,037) |  | $ | 740 |
2023 | 1,296 |  | 2,488 |  | (2,973) |  | 811 |
2022 | 1,780 |  | 4,785 |  | (5,269) |  | 1,296 |

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Notes to Consolidated Financial Statements
Advertising costs
We expense advertising costs as incurred, which were $16.0 million, $14.0 million and $16.5 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Restructuring costs
Restructuring costs include charges for the costs of exit or disposal activities. The liability for costs associated with exit or disposal activities is measured initially at fair value and only recognized when the liability is incurred.
Leases
We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ("ROU") assets, accrued expense and other current liabilities, and operating lease liabilities, net of current portion in our consolidated balance sheet as of December 31, 2024 and 2023.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate in determining the present value of lease payments. Our incremental borrowing rate is based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at the commencement date. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any initial direct costs and lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments related to our operating leases is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, which are generally accounted for separately. We do not recognize short-term leases (those that, at the commencement date, have a lease term of 12 months or less) on our consolidated balance sheets. Variable lease payments, which are primarily comprised of common-area maintenance, utilities and real estate taxes that are passed on from the lessor in proportion to the space leased by us, are recognized in operating expenses in the period in which the obligation for those payments is incurred.
Loss contingencies
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 these consolidated financial statements. We record an accrual for a loss contingency when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. 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. 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.
(Loss) earnings per share
We compute basic (loss) earnings per share by dividing net (loss) income attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income attributable to common stockholders by the weighted average number of common shares and dilutive potential common shares outstanding during the period. Diluted earnings per share reflects the assumed exercise, settlement and vesting of all dilutive securities using the “treasury stock method” except when the effect is anti-dilutive. Potentially dilutive securities consist of shares issuable upon the exercise of stock options and stock appreciation rights and vesting of restricted stock awards and units. In periods where there are net losses and the inclusion of potentially dilutive securities would be anti-dilutive, diluted loss per share is the same as basic loss per share.

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Notes to Consolidated Financial Statements

3. Business Combinations and Dispositions

2024 dispositions
EVERFI, LLC
On December 31, 2024, we disposed of our EVERFI business, formerly a wholly-owned subsidiary of Blackbaud, Inc, to a private investment firm that is unaffiliated with Blackbaud for nominal cash consideration. We incurred $14.0 million of costs associated with the disposition of this business, all of which were recorded as accrued expenses and other liabilities as of December 31, 2024. As a result of the disposition, we recorded a loss of $15.2 million, which included direct costs to sell the business. This loss on disposition together with EVERFI impairment charges are recorded within EVERFI disposition on our consolidated statements of comprehensive loss for the year ended December 31, 2024. See Note 4 to these consolidated financial statements for additional information about the EVERFI impairment charges.
EVERFI Limited
On March 2, 2024, we completed a transaction to divest our U.K.-based creative services business EVERFI Limited, formerly a wholly-owned subsidiary of EVERFI, Inc, which was a wholly-owned subsidiary of Blackbaud, Inc. EVERFI Limited's total revenue during 2023 was $8.4 million. We incurred an insignificant amount of legal costs associated with the disposition of this business. As a result of the disposition, we recorded a $1.6 million loss, which was recorded in general and administrative expense on our consolidated statements of comprehensive loss for the year ended December 31, 2024.
2022 disposition
Blackbaud FIMS™ and DonorCentral® NXT
On September 9, 2022, we sold our Foundation Information Management System ("FIMS") and DonorCentral NXT solutions to Fusion Laboratories, LLC for cash proceeds of approximately $6.4 million, net of closing adjustments. During the year ended December 31, 2022, we recognized a noncash impairment charge of $2.0 million against certain insignificant FIMS customer relationship intangible assets that were then held for sale. The impairment charge was recorded in general and administrative expense on our consolidated statements of comprehensive loss.
2022 acquisition
Kilter
On August 19, 2022, we acquired all of the outstanding stock of Kilter, Inc., a Delaware corporation, pursuant to an agreement and plan of merger, for approximately $2.9 million in cash, net of closing adjustments. In addition to the consideration paid at closing, the agreement and plan of merger included cash consideration payable, up to a maximum of $3.0 million, if during the two-year period commencing January 1, 2023 Kilter met certain application participation targets. These targets were not met and, therefore, no liability is recorded as of December 31, 2024. Fair values were also assigned to the other assets acquired and liabilities assumed, primarily consisting of goodwill and a finite-lived developed technology intangible asset, which will be amortized over an estimated useful life of three years. We finalized the purchase price allocation of Kilter, including the valuation of assets acquired and liabilities assumed, during the third quarter of 2023. Insignificant acquisition-related costs, which primarily consisted of legal services, were recorded as general and administrative expense during the year ended December 31, 2023.

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Notes to Consolidated Financial Statements

4. Goodwill and Other Intangible Assets

The change in goodwill during 2024 consisted of the following:

(dollars in thousands) | Total
Balance at December 31, 2023 | $ | 1,053,738 |
Effect of foreign currency translation | (1,232) |
Balance at December 31, 2024 | $ | 1,052,506 |

We have recorded intangible assets acquired in various business combinations based on their fair values at the date of acquisition. The table below sets forth the balances of each class of intangible asset and related amortization as of:

| December 31,
(dollars in thousands) | 2024 | 2023
Finite-lived gross carrying amount |  |
Customer relationships | $ | 243,203 |  | $ | 570,104 |
Marketing assets | 29,876 |  | 71,308 |
Developed technology | 110,606 |  | 182,956 |
Content | — |  | 17,900 |
Total finite-lived gross carrying amount | 383,685 |  | 842,268 |
Accumulated amortization |  |
Customer relationships | (173,720) |  | (174,982) |
Marketing assets | (11,660) |  | (11,985) |
Developed technology | (65,424) |  | (69,386) |
Content | — |  | (3,978) |
Total accumulated amortization | (250,804) |  | (260,331) |
Intangible assets, net | $ | 132,881 |  | $ | 581,937 |

During the year ended December 31, 2024, changes to the gross carrying amounts of intangible asset classes were primarily related to the EVERFI impairment charges and subsequent disposition discussed below, write-offs of fully amortized intangible assets and the effect of foreign currency translation.
EVERFI impairment charges
In July 2024, we hired a strategic advisor to assist us in considering a range of alternatives for EVERFI, one of which included a potential divestiture of the business. As part of evaluating alternatives for EVERFI, during the fourth quarter of 2024, we prepared a revised business forecast that included a new level of detail, including separately identifiable cash flows for EVERFI. The Company then reassessed its asset groupings under ASC 360-10 and determined there was a new asset group for EVERFI and evaluated this asset group for potential impairment. On December 9, 2024, the Company concluded that a material impairment charge was required related to its EVERFI asset group, which primarily included finite-lived intangible assets and capitalized software and content development costs. On December 29, 2024, we classified EVERFI's assets and liabilities as held for sale and we determined there would be an additional impairment charge to record the EVERFI disposal group at its estimated fair value less costs to sell resulting in total noncash impairment charges of $390.2 million. On December 31, 2024, we disposed of EVERFI for a nominal amount that resulted in a loss on disposition of $15.2 million, which together with the impairment charges, is recorded within EVERFI disposition on our consolidated statements of

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Notes to Consolidated Financial Statements
comprehensive loss. See Note 3 to these consolidated financial statements for additional information about the disposition of EVERFI.
Amortization expense
Amortization expense related to finite-lived intangible assets acquired in business combinations is allocated to cost of revenue on the consolidated statements of comprehensive income based on the revenue stream to which the asset contributes, except for marketing assets and non-compete agreements, for which the associated amortization expense is included in operating expenses.
The following table summarizes amortization expense of our finite-lived intangible assets:

| Years ended December 31,
(dollars in thousands) | 2024 | 2023 | 2022
Included in cost of revenue: |  |  |
Cost of recurring | $ | 55,659 |  | $ | 51,079 |  | $ | 47,085 |
Cost of one-time services and other | 1,298 |  | 1,384 |  | 1,407 |
Total included in cost of revenue | 56,957 |  | 52,463 |  | 48,492 |
Included in operating expenses | 3,541 |  | 3,139 |  | 2,925 |
Total amortization of intangibles from business combinations | $ | 60,498 |  | $ | 55,602 |  | $ | 51,417 |

The following table outlines the estimated future amortization expense for each of the next five years for our finite-lived intangible assets as of December 31, 2024:

Years ending December 31, (dollars in thousands) | Amortization expense
2025 | 29,498 |
2026 | 23,771 |
2027 | 20,518 |
2028 | 15,484 |
2029 | 14,061 |
Total | $ | 103,332 |

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Notes to Consolidated Financial Statements

5. (Loss) Earnings Per Share

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

| Years ended December 31,
(dollars in thousands, except per share amounts) | 2024 | 2023 | 2022
Numerator: |  |  |
Net (loss) income | $ | (283,172) |  | $ | 1,820 |  | $ | (45,407) |
Denominator: |  |  |
Weighted average common shares | 50,560,538 |  | 52,546,406 |  | 51,569,148 |
Add effect of dilutive securities: |  |  |
Restricted stock and units | — |  | 1,174,936 |  | — |
Weighted average common shares assuming dilution | 50,560,538 |  | 53,721,342 |  | 51,569,148 |
(Loss) earnings per share |  |  |
Basic | $ | (5.60) |  | $ | 0.03 |  | $ | (0.88) |
Diluted | $ | (5.60) |  | $ | 0.03 |  | $ | (0.88) |
Anti-dilutive shares excluded from calculations of diluted (loss) earnings per share | 54,236 |  | 45,614 |  | 1,046,307 |

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

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Notes to Consolidated Financial Statements

6. Fair Value Measurements

Recurring fair value measurements
Financial assets and liabilities that are measured at fair value on a recurring basis consisted of the following, as of the dates indicated below:

| Fair value measurement using |  |
(dollars in thousands) | Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total
Fair value as of December 31, 2024 |  |  |  |  |  |  |
Financial assets: |  |  |  |  |  |  |
Interest rate swaps | $ | — |  |  | $ | 9,262 |  |  | $ | — |  |  | $ | 9,262 |
Foreign currency forward contracts | — |  |  | 1,288 |  |  | — |  |  | 1,288 |
Total financial assets | $ | — |  |  | $ | 10,550 |  |  | $ | — |  |  | $ | 10,550 |
Fair value as of December 31, 2023 |  |  |  |  |  |  |
Financial assets: |  |  |  |  |  |  |
Interest rate swaps | $ | — |  |  | $ | 16,198 |  |  | $ | — |  |  | $ | 16,198 |
Total financial assets | $ | — |  |  | $ | 16,198 |  |  | $ | — |  |  | $ | 16,198 |
Fair value as of December 31, 2023 |  |  |  |  |  |  |
Financial liabilities: |  |  |  |  |  |  |
Interest rate swaps | $ | — |  |  | $ | 5,004 |  |  | $ | — |  |  | $ | 5,004 |
Foreign currency forward contracts | — |  |  | 536 |  |  | — |  |  | 536 |
Contingent consideration obligations | — |  |  | — |  |  | 1,403 |  |  | 1,403 |
Total financial liabilities | $ | — |  |  | $ | 5,540 |  |  | $ | 1,403 |  |  | $ | 6,943 |

Our derivative instruments within the scope of Accounting Standards Codification ("ASC") 815, Derivatives and Hedging, are required to be recorded at fair value. Our derivative instruments that are recorded at fair value include interest rate swaps and foreign currency forward contracts. See Note 10 to these consolidated financial statements for additional information about our derivative instruments.
The fair value of our interest rate swaps and foreign currency forward contracts are based on model-driven valuations using Secured Overnight Financing Rate ("SOFR") rates and foreign currency forward rates, respectively, which are observable at commonly quoted intervals. Accordingly, our interest rate swaps and foreign currency forward contracts are classified within Level 2 of the fair value hierarchy.
Contingent consideration obligations arise from business acquisitions. The fair values are based on discounted cash flow analyses reflecting a probability-weighted assessment approach derived from the likelihood of possible achievement of specified performance measures or events and captures the contractual nature of the contingencies, commercial risk, and the time value of money. As the fair value measurements for our contingent consideration obligations contain significant unobservable inputs, they are classified within Level 3 of the fair value hierarchy. See Note 3 to these consolidated financial statements for additional information about our contingent consideration obligations.
We believe the carrying amounts of our cash and cash equivalents, restricted cash, accounts receivable, trade accounts payable, accrued expenses and other current liabilities and due to customers approximate their fair values at December 31, 2024 and December 31, 2023, due to the immediate or short-term maturity of these instruments.

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Notes to Consolidated Financial Statements
We believe the carrying amount of our debt approximates its fair value at December 31, 2024 and December 31, 2023, as the debt bears interest rates that approximate market value. As SOFR rates are observable at commonly quoted intervals, our debt under the 2024 Credit Facilities (as defined below) is classified within Level 2 of the fair value hierarchy. The fair value of our fixed rate debt does not exceed the carrying amount.
We did not transfer any assets or liabilities among the levels within the fair value hierarchy during the years ended December 31, 2024, 2023 and 2022.
Non-recurring fair value measurements
Assets and liabilities that are measured at fair value on a non-recurring basis include long-lived assets, intangible assets, goodwill and operating lease ROU assets. These assets are recognized at fair value during the period in which an acquisition is completed or at lease commencement, from updated estimates and assumptions during the measurement period, or when they are considered to be impaired. These non-recurring fair value measurements, primarily for long-lived assets, intangible assets acquired and operating lease ROU assets, are based on Level 3 unobservable inputs. In the event of an impairment, we determine the fair value of these assets other than goodwill using a discounted cash flow approach, which contains significant unobservable inputs and, therefore, is considered a Level 3 fair value measurement. The unobservable inputs in the analysis generally include future cash flow projections and a discount rate. For goodwill impairment testing, we estimate fair value using market-based methods including the use of market capitalization and consideration of a control premium.
During the year ended December 31, 2024, we recorded noncash impairment charges of $367.5 million against certain intangible assets, noncash impairment charges of $22.6 million against certain previously capitalized software and content development costs, noncash impairment charges of $3.1 million against certain operating lease ROU assets and noncash impairment charges against certain property and equipment assets which were insignificant. See Notes 4, 7, and 11, respectively, to these consolidated financial statements for additional details.
During the year ended December 31, 2023, we recorded noncash impairment charges of $5.6 million against certain operating lease ROU assets and $1.1 million impairment charges against certain property and equipment assets. See Notes 11 and 7, respectively, to these consolidated financial statements for additional details.
During the year ended December 31, 2022, we recorded noncash impairment charges of $2.3 million against certain previously capitalized software development costs, $2.0 million against certain insignificant customer relationship intangible assets that were held for sale, $1.0 million against certain operating lease ROU assets and insignificant impairment charges against certain property and equipment assets. See Notes 11 and 7, respectively, to these consolidated financial statements for additional details.
There were no other non-recurring fair value adjustments during 2024, 2023 and 2022 except for certain business combination accounting adjustments to the initial fair value estimates of the assets acquired and liabilities assumed at the acquisition date from updated estimates and assumptions during the measurement period. See Note 3 to these consolidated financial statements for additional details.

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Notes to Consolidated Financial Statements

7. Property and Equipment and Software and Content Development Costs

Property and equipment
Property and equipment consisted of the following as of:

| Estimated useful life (years) | December 31,
(dollars in thousands) | 2024 | 2023
Land | — |  | $ | 9,548 |  | $ | 9,548 |
Building | 39 | 61,284 |  | 61,284 |
Building improvements | 4 - 20 | 12,112 |  | 11,720 |
Equipment | 1 - 5 | 2,448 |  | 2,646 |
Computer hardware | 1 - 5 | 36,632 |  | 50,064 |
Computer software | 1 - 5 | 20,455 |  | 21,982 |
Construction in progress | — |  | — |  | 1,611 |
Furniture and fixtures | 1 - 7 | 4,849 |  | 3,187 |
Leasehold improvements | Lesser of lease term or estimated useful life | 10,206 |  | 10,345 |
Total property and equipment |  | 157,534 |  | 172,387 |
Less: accumulated depreciation |  | (65,608) |  | (73,698) |
Property and equipment, net |  | $ | 91,926 |  | $ | 98,689 |

Depreciation expense was $12.8 million, $13.0 million and $14.1 million for the years ended December 31, 2024, 2023 and 2022, respectively.
During the years ended December 31, 2024 and 2022, we recorded insignificant noncash impairment charges against certain property and equipment assets. During the year ended December 31, 2023, we recorded noncash impairment charges of $1.1 million against certain property and equipment assets. Each of th ese impairment charges resulted from our entry into subleases for different portions of our Washington, DC office location, which we closed in February 2023 to align with our remote-first workforce strategy. These charges are included in general and administrative expense on our consolidated statements of comprehensive loss.
Software and content development costs
Software and content development costs consisted of the following as of:

| Estimated useful life (years) | December 31,
(dollars in thousands) | 2024 | 2023
Software development costs | 3 - 7 | $ | 268,510 |  | $ | 287,519 |
Content development costs | 5 | — |  | 6,945 |
Less: accumulated amortization |  | (120,191) |  | (134,270) |
Software and content development costs, net |  | $ | 148,319 |  | $ | 160,194 |

During the year ended December 31, 2024, we recorded noncash impairment charges of $22.6 million against certain previously capitalized software and content development costs. The impairment charges are includ ed in EVERFI impairment charges within EVERFI disposition on our consolidated statements of comprehensive loss. For additional information, see the discussion of the EVERFI impairment charges in Note 4 to these consolidated financial statements.

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Notes to Consolidated Financial Statements
During the year ended December 31, 2022, we recorded noncash impairment charges of $2.3 million against certain previously capitalized software development costs that reduced the carrying value of those assets to zero. The impairment charges were reflected in general and administrative expense on the statements of comprehensive loss. These impairment charges resulted primarily from our decision to accelerate the end of customer support for certain solutions.
Other changes to the gross carrying amount of software and content development costs were primarily related to qualifying costs associated with development activities that are required to be capitalized under the internal-use software accounting guidance such as those for our cloud solutions and online education curriculum, write-offs of fully amortized assets, and the effect of foreign currency translation.
Amortization expense related to software and content development costs was $48.3 million, $42.8 million and $36.8 million for the years ended December 31, 2024, 2023 and 2022, respectively, and is included primarily in cost of recurring.

8. Consolidated Financial Statement Details

Restricted cash

(dollars in thousands) | December 31, 2024 | December 31, 2023
Restricted cash due to customers | $ | 740,370 |  | $ | 695,489 |
Real estate escrow balances and other | 1,514 |  | 1,517 |
Total restricted cash | $ | 741,884 |  | $ | 697,006 |

Prepaid expenses and other assets

(dollars in thousands) | December 31, 2024 | December 31, 2023
Costs of obtaining contracts(1)(2) | $ | 57,911 |  | $ | 62,377 |
Prepaid software maintenance and subscriptions(3) | 36,277 |  | 35,169 |
Derivative instruments | 10,550 |  | 16,198 |
Implementation costs for cloud computing arrangements, net(4)(5) | 10,450 |  | 9,259 |
Unbilled accounts receivable | 7,067 |  | 5,615 |
Investment in equity securities(6) | 4,943 |  | — |
Taxes, prepaid and receivable | 4,257 |  | 3,418 |
Prepaid insurance | 3,027 |  | 3,940 |
Other assets | 14,026 |  | 14,346 |
Total prepaid expenses and other assets | 148,508 |  | 150,322 |
Less: Long-term portion | 67,221 |  | 51,037 |
Prepaid expenses and other current assets | $ | 81,287 |  | $ | 99,285 |

(1)Amortization expense from costs of obtaining contracts was $20.1 million, $31.9 million and $33.6 million for the years ended December 31, 2024, 2023 and 2022, respectively, and is included in sales, marketing and customer success expense in our consolidated statements of comprehensive loss.
(2)The current portion of costs of obtaining contracts as of December 31, 2024 and 2023 was $18.4 million and $25.3 million, respectively.
(3)The current portion of prepaid software maintenance and subscriptions as of December 31, 2024 and December 31, 2023 was $34.0 million and $32.4 million, respectively.
(4)These costs primarily relate to the multi-year implementations of our global enterprise resource planning and customer relationship management systems.
(5)Amortization expense from capitalized cloud computing implementation costs was $2.9 million, $2.5 million and $2.2 million for the years ended December 31, 2024, 2023 and 2022, respectively. Accumulated amortization for these costs was $10.6 million and $7.7 million as of December 31, 2024 and 2023, respectively.
(6)Represents a strategic investment that did not result in Blackbaud having significant influence over the investee.

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Notes to Consolidated Financial Statements
Accrued expenses and other liabilities

(dollars in thousands) | December 31, 2024 | December 31, 2023
Taxes payable | $ | 15,844 |  | $ | 21,282 |
Accrued costs to sell EVERFI(1) | 13,985 |  | — |
Customer credit balances | 8,779 |  | 10,238 |
Stock-based compensation liability(2) | 7,292 |  | — |
Operating lease liabilities, current portion | 4,489 |  | 6,701 |
Unrecognized tax benefit | 4,285 |  | 2,954 |
Accrued commissions and salaries | 4,012 |  | 4,413 |
Accrued transaction-based costs related to payments services | 3,903 |  | 4,323 |
Accrued health care costs | 3,151 |  | 3,865 |
Accrued legal costs(3) | 2,504 |  | 3,659 |
Accrued vacation costs | 2,060 |  | 2,452 |
Derivative instruments | — |  | 5,540 |
Contingent consideration liability | — |  | 1,403 |
Other liabilities | 10,035 |  | 7,750 |
Total accrued expenses and other liabilities | 80,339 |  | 74,580 |
Less: Long-term portion | 4,796 |  | 10,258 |
Accrued expenses and other current liabilities | $ | 75,543 |  | $ | 64,322 |

(1)See Note 3 for a discussion of our sale of EVERFI on December 31, 2024.
(2)This stock-based compensation liability will be settled during 2025 using shares of the Company’s common stock.
(3)All accrued legal costs are classified as current. See Note 11 to these consolidated financial statements for additional information about our loss contingency accruals and other legal expenses.
Other income, net

| Years ended December 31,
(dollars in thousands) | 2024 | 2023 | 2022
Interest income | $ | 9,846 |  | $ | 8,821 |  | $ | 1,746 |
Currency revaluation gains (losses) | 487 |  | (36) |  | 4,635 |
Other income, net | 4,216 |  | 4,076 |  | 2,332 |
Other income, net | $ | 14,549 |  | $ | 12,861 |  | $ | 8,713 |

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Notes to Consolidated Financial Statements

9. Debt

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

| Debt balance at |  | Weighted average effective interest rate at
(dollars in thousands) | December 31, 2024 | December 31, 2023 |  | December 31, 2024 | December 31, 2023
Credit facility: |  |  |  |  |
Revolving credit loans | $ | 229,900 |  | $ | 114,100 |  |  | 6.37 | % | 7.52 | %
Term loans | 790,000 |  | 607,500 |  |  | 5.59 | % | 3.51 | %
Real estate loans | 55,135 |  | 56,745 |  |  | 5.23 | % | 5.22 | %
Other debt | 2,783 |  | 2,800 |  |  | 8.77 | % | 8.42 | %
Total debt | 1,077,818 |  | 781,145 |  |  | 5.75 | % | 4.24 | %
Less: Unamortized discount and debt issuance costs | 2,833 |  | 1,481 |  |  |  |
Less: Debt, current portion | 23,875 |  | 19,259 |  |  | 6.21 | % | 7.02 | %
Debt, net of current portion | $ | 1,051,110 |  | $ | 760,405 |  |  | 5.73 | % | 4.17 | %

2024 refinancing
On April 30, 2024, we entered into the Third Amendment to Credit Agreement (the "Amendment"), by and among us, the lenders party thereto and Bank of America N.A., as administrative agent (the "Agent"). The Amendment amends the Amended and Restated Credit Agreement, dated as of October 30, 2020 (as previously amended, the "2020 Credit Agreement" and the 2020 Credit Agreement as amended by the Amendment, the “2024 Credit Agreement”), by and among us, the lenders from time-to-time party thereto and the Agent.
The Amendment amends the 2020 Credit Agreement to, among other things, (a) refinance the existing $1.1 billion credit facilities under the 2020 Credit Agreement to provide for new credit facilities in the aggregate principal amount of $1.5 billion consisting of (i) a $700.0 million revolving credit facility (the “2024 Revolving Facility”) and (ii) a $800.0 million term loan facility (the “2024 Term Facility” and together with the 2024 Revolving Facility, the “2024 Credit Facilities”), (b) extend the maturity date to April 30, 2029, (c) modify the definition of Applicable Margin (as defined below) and (iv) modify certain negative and financial covenants to provide additional operational flexibility. Upon closing, we borrowed $800.0 million pursuant to the 2024 Term Facility and $208.2 million pursuant to the 2024 Revolving Facility and used the proceeds to repay the outstanding principal balances of the term loans under the 2020 Credit Agreement (the "2020 Term Facilities"), and repay $196.6 million of outstanding revolving credit loans under the 2020 Credit Agreement (the "2020 Revolving Facility").
Certain lenders of the 2024 Term Facility participated in the 2020 Term Facilities and the change in present value of our future cash flows to these lenders under the 2020 Term Facilities and under the 2024 Term Facility was less than 10%. Accordingly, we accounted for the refinancing event for these lenders as a debt modification. Certain lenders of the 2020 Term Facilities did not participate in the 2024 Term Facility. Accordingly, we accounted for the refinancing event for these lenders as a debt extinguishment. Certain lenders of the 2020 Revolving Facility participated in the 2024 Revolving Facility and provided increased borrowing capacities. Accordingly, we accounted for the refinancing event for these lenders as a debt modification. Certain lenders of the 2020 Revolving Facility did not participate in the 2024 Revolving Facility. Accordingly, we accounted for the refinancing event for these lenders as a debt extinguishment.
We recorded an insignificant loss on debt extinguishment related to the write-off of debt discount and deferred financing costs for the portions of the 2020 Credit Agreement considered to be extinguished. This loss was recognized in the consolidated statements of comprehensive loss within other income, net.
In connection with our entry into the 2024 Credit Agreement, we paid $6.5 million in financing costs, of which $1.6 million were capitalized in other assets and, together with a portion of the unamortized deferred financing costs from the 2020 Credit Agreement and prior agreements, are being amortized into interest expense over the term of the new facility. As of December 31, 2024, deferred financing costs totaling $1.7 million were included in other assets on our consolidated balance sheets. We recorded aggregate financing costs of $3.6 million as a direct deduction from the carrying amount of our debt liability, which related to debt discount (fees paid to lenders) and debt issuance costs for the 2024 Term Facility.

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Blackbaud, Inc.
Notes to Consolidated Financial Statements
Summary of the 2024 Credit Facilities
The 2024 Revolving Facility includes (i) a $50.0 million letter of credit subfacility, (ii) a $50.0 million swingline subfacility and (iii) a $150.0 million sublimit available for multicurrency borrowings.
Under the 2024 Credit Facilities, dollar tranche revolving loans and term loans bear interest at a rate per annum equal to, at the option of the Company: (a) a base rate equal to the highest of (i) the Federal Funds Rate plus 0.50%, (ii) the prime rate announced by Bank of America, N.A., and (iii) Term SOFR plus 1.00% (the “Base Rate”), plus an applicable margin as specified in the 2024 Credit Agreement (the “Applicable Margin”); (b) Term SOFR plus the Applicable Margin; or (c) the Daily SOFR Rate plus the Applicable Margin. The Applicable Margin shall be adjusted quarterly, varies based on our net leverage ratio and varies based on whether the loan is a Base Rate Loan (0.375% to 1.500%), or a Term SOFR Loan/Daily SOFR Loan (1.375% to 2.500%). The 2024 Credit Agreement also provides for a commitment fee of between 0.250% and 0.500% of the unused commitment under the 2024 Revolving Facility depending on our net leverage ratio.
Under the 2024 Credit Facilities, designated currency tranche revolving loans bear interest at a rate per annum equal to, at the option of the Company: (a) the Designated Currency Daily Rate (as defined in the 2024 Credit Agreement) plus the Applicable Margin; or (b) the Designated Currency Term Rate (as defined in the 2024 Credit Agreement) plus the Applicable Margin. The Applicable Margin shall be adjusted quarterly and varies based on our net leverage ratio for both Designated Currency Daily Rate Loans and Designated Currency Term Rate Loans (1.375% to 2.500%).
We may prepay the 2024 Credit Agreement in whole or in part at any time without premium or penalty, other than customary breakage costs with respect to certain types of loans.
Under the terms of the 2024 Credit Agreement, we are entitled on one or more occasion, subject to the satisfaction of certain conditions, to request an increase in the commitments under the 2024 Revolving Facility and/or request additional incremental term loans in the aggregate principal amount of up to the sum of (i) the greater of (A) $360.0 million and (B) 100% of EBITDA (as defined in the 2024 Credit Agreement), plus (ii) at our option, up to an amount such that the net leverage ratio shall be no greater than 3.50 to 1.00. At December 31, 2024, our available borrowing capacity under the 2024 Credit Agreement was $468.7 million.
The 2024 Credit Agreement contains various representations, warranties and affirmative, negative and financial covenants customary for financings of this type. Financial covenants include a net leverage ratio and an interest coverage ratio. At December 31, 2024, we were in compliance with our debt covenants under the 2024 Credit Facilities.
Real estate loans
In August 2020, we completed the purchase of our global headquarters facility. As part of the purchase price, we assumed the Seller’s obligations under two senior secured notes with a then-aggregate outstanding principal amount of $61.1 million (collectively, the “Real Estate Loans”). The Real Estate Loans require periodic principal payments and the balance of the Real Estate Loans are due upon maturity in April 2038. At December 31, 2024, we were in compliance with our debt covenants under the Real Estate Loans.
Other debt
From time to time, we enter into third-party financing agreements for purchases of software and related services for our internal use. Generally, the agreements are non-interest-bearing notes requiring annual payments. Interest associated with the notes is imputed at the rate we would incur for amounts borrowed under our then-existing credit facility at the inception of the notes. Our assumption of these loans are noncash financing transactions and are reflected in our supplemental disclosure of cash flow information.

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Notes to Consolidated Financial Statements
The following table summarizes our currently effective financing agreements as of December 31, 2024:

(dollars in thousands) | Term in Months | Number of Annual Payments | First Annual Payment Due | Original Loan Value
Effective dates of agreements(1): |  |  |  |
December 2022 | 39 | 3 |  | January 2023 | $ | 1,710 |
January 2023 | 36 | 3 |  | April 2023 | 2,491 |
April 2024 | 36 | 3 |  | May 2024 | 2,073 |

(1)Represent noncash investing and financing transactions during the periods indicated as we purchased software and services by assuming directly related liabilities.
The changes in supplier financing obligations during the years ended December 31, 2024, consisted of the following:

(dollars in thousands) | Total
Balance at December 31, 2023 | $ | 2,800 |
Additions | 2,073 |
Payments | (2,090) |
Balance at December 31, 2024 | $ | 2,783 |

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

Years ending December 31, (dollars in thousands) | Annual maturities
2025 | $ | 23,875 |
2026 | 22,660 |
2027 | 22,166 |
2028 | 22,375 |
2029 | 942,496 |
Thereafter | 44,246 |
Total required maturities | $ | 1,077,818 |

10. Derivative Instruments

We generally use derivative instruments to manage our interest rate and foreign currency exchange risk. We currently have derivatives classified as cash flow hedges and net investment hedges. We do not enter into any derivatives for trading or speculative purposes.
All of our derivative instruments are governed by International Swap Dealers Association, Inc. master agreements with our counterparties. As of December 31, 2024 and December 31, 2023, we have presented the fair value of our derivative instruments at the gross amounts in the consolidated balance sheet as the gross fair values of our derivative instruments equaled their net fair values.
Cash flow hedges
We have entered into interest rate swap agreements, which effectively convert portions of our variable rate debt under the 2024 Credit Facilities to a fixed rate for the term of the swap agreements. We designated each of the interest rate swaps as cash flow hedges at the inception of the contracts. Our entry into the 2024 Credit Agreement in April 2024 did not affect our interest rate swap agreements, including their designation as cash flow hedges, as the 2024 Credit Agreement has substantially the same critical terms as the 2020 Credit Agreement. As of December 31, 2024 and December 31, 2023, the aggregate notional values of the interest rate swaps were $700.0 million and $935.0 million, respectively. All of the contracts have maturities on or before October 2028.

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Blackbaud, Inc.
Notes to Consolidated Financial Statements
We have entered into foreign currency forward contracts to hedge revenues denominated in the Canadian Dollar ("CAD") against changes in the exchange rate with the United States Dollar ("USD"). We designated each of these foreign currency forward contracts as cash flow hedges at the inception of the contracts. As of December 31, 2024 and December 31, 2023, the aggregate notional values of the foreign currency forward contracts designated as cash flow hedges that we held to buy USD in exchange for Canadian Dollars were $32.8 million CAD and $29.9 million CAD, respectively. All of the contracts have maturities of 12 months or less.
Net investment hedges
We have entered into foreign currency forward contracts to hedge a portion of the foreign currency exposure that arises on translation of our investments denominated in British Pounds ("GBP") into USD. We designated each of these foreign currency forward contracts as net investment hedges at the inception of the contracts. As of December 31, 2024 and December 31, 2023, the aggregate notional values of the foreign currency forward contracts designated as net investment hedges to reduce the volatility of the U.S. dollar value of a portion of our GBP-denominated investments was £12.9 million and £13.2 million, respectively.
The fair values of our derivative instruments were as follows as of:

|  | Asset derivatives |  |  | Liability Derivatives
(dollars in thousands) | Balance sheet location | December 31, 2024 | December 31, 2023 |  | Balance sheet location | December 31, 2024 | December 31, 2023
Derivative instruments designated as hedging instruments: |  |  |  |  |  |  |
Interest rate swaps, current portion | Prepaid expenses and other current assets | $ | — |  | $ | 16,198 |  |  | Accrued expenses and other current liabilities | $ | — |  | $ | — |
Foreign currency forward contracts, current portion | Prepaid expenses and other current assets | 1,288 |  | — |  |  | Accrued expenses and other current liabilities | — |  | 536 |
Interest rate swaps, long-term | Other assets | 9,262 |  | — |  |  | Other liabilities | — |  | 5,004 |
Total derivative instruments designated as hedging instruments |  | $ | 10,550 |  | $ | 16,198 |  |  |  | $ | — |  | $ | 5,540 |

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Notes to Consolidated Financial Statements
The effects of derivative instruments in cash flow and net investment hedging relationships were as follows:

| Gain recognized in accumulated other comprehensive loss as of | Location of gain reclassified from accumulated other comprehensive loss into (loss) income | Gain reclassified from accumulated other comprehensive loss into (loss) income
(dollars in thousands) | December 31, 2024 | Year ended December 31, 2024
Cash Flow Hedges |  |  |
Interest rate swaps | $ | 9,262 |  | Interest expense | $ | 19,134 |
Foreign currency forward contracts | $ | 937 |  | Revenue | $ | 479 |
Net Investment Hedge |  |  |
Foreign currency forward contracts | $ | 351 |  |  | $ | — |
| December 31, 2023 |  | Year ended December 31, 2023
Cash Flow Hedges |  |  |
Interest rate swaps | $ | 11,194 |  | Interest expense | $ | 20,418 |
Foreign currency forward contracts | $ | (235) |  | Revenue | $ | 388 |
Net Investment Hedges |  |  |
Foreign currency forward contracts | $ | (301) |  |  | $ | — |
| December 31, 2022 |  | Year ended December 31, 2022
Cash Flow Hedges |  |  |
Interest rate swaps | $ | 31,870 |  | Interest expense | $ | 5,520 |
Foreign currency forward contracts | $ | 247 |  | Revenue | $ | 165 |
Net Investment Hedges |  |  |
Foreign currency forward contracts | $ | (323) |  |  | $ | — |

Our policy requires that derivatives used for hedging purposes be designated and effective as a hedge of the identified risk exposure at the inception of the contract. Accumulated other comprehensive income (loss) includes unrealized gains or losses from the change in fair value measurement of our derivative instruments each reporting period and the related income tax expense or benefit. Excluding net investment hedges, changes in the fair value measurements of the derivative instruments and the related income tax expense or benefit are reflected as adjustments to accumulated other comprehensive income (loss) until the actual hedged expense is incurred or until the hedge is terminated at which point the unrealized gain (loss) and related tax effects are reclassified from accumulated other comprehensive income (loss) to current earnings. For net investment hedges, changes in the fair value measurements of the derivative instruments and the related income tax expense or benefit are reflected as adjustments to translation adjustment, a component of accumulated other comprehensive income (loss), and recognized in earnings only when the hedged GBP investment is liquidated. The estimated accumulated other comprehensive income as of December 31, 2024 that is expected to be reclassified into earnings within the next twelve months is $5.0 million. There were no ineffective portions of our interest rate swap or foreign currency forward derivatives during the years ended December 31, 2024, 2023 and 2022. See Note 14 to these consolidated financial statements for a summary of the changes in accumulated other comprehensive income (loss) by component. We classify cash flows related to derivative instruments as operating activities in the consolidated statements of cash flows.
We did not have any undesignated derivative instruments during 2024, 2023 and 2022.

11. Commitments and Contingencies

Leases
We have operating leases for corporate offices, subleased offices and certain equipment and furniture. As of December 31, 2024, we did not have any operating leases that had not yet commenced.

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Notes to Consolidated Financial Statements
The following table summarizes the components of our lease expense:

| Year ended December 31,
(dollars in thousands) | 2024 | 2023 | 2022
Operating lease cost(1) | $ | 6,430 |  | $ | 8,812 |  | $ | 9,501 |
Variable lease cost | 1,131 |  | 1,431 |  | 1,670 |
Sublease income | (3,400) |  | (3,356) |  | (2,763) |
Net lease cost | $ | 4,161 |  | $ | 6,887 |  | $ | 8,408 |

(1)Includes short-term lease costs, which were immaterial.
During the years ended December 31, 2024, 2023, and 2022, we recorded noncash impairment charges of $3.1 million, $5.6 million, and $1.0 million, respectively, against certain operating lease ROU assets. These impairment charges resulted from our entry into subleases for different portions of our Washington, DC office location, which we closed in February 2023 to align with our remote-first workforce strategy. These charges are reflected in general and administrative expense on the statements of comprehensive loss.
Maturities of our operating lease liabilities as of December 31, 2024 were as follows:

Years ending December 31, (dollars in thousands) | Operating leases
2025 | $ | 6,254 |
2026 | 6,106 |
2027 | 6,207 |
2028 | 6,101 |
2029 | 5,457 |
Thereafter | 15,232 |
Total lease payments | 45,357 |
Less: Amount representing interest | (6,682) |
Present value of future payments | $ | 38,675 |

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

(dollars in thousands) | December 31, 2024 | December 31, 2023
Operating leases |  |
Operating lease ROU assets | $ | 26,554 |  | $ | 36,927 |
Accrued expenses and other current liabilities | $ | 4,489 |  | $ | 6,701 |
Operating lease liabilities, net of current portion | 34,186 |  | 40,085 |
Total operating lease liabilities | $ | 38,675 |  | $ | 46,786 |

The weighted average remaining lease terms and discount rates were as follows:

(dollars in thousands) | December 31, 2024 | December 31, 2023 | December 31, 2022
Operating leases |  |  |
Weighted average remaining lease term (years) | 7.3 | 7.7 | 8.5
Weighted average discount rate | 4.53 | % | 4.70 | % | 4.63 | %

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Notes to Consolidated Financial Statements
Supplemental cash flow information related to leases was as follows:

| Year ended December 31,
(dollars in thousands) | 2024 | 2023 | 2022
Cash paid for amounts included in the measurement of lease liabilities: |  |  |
Operating cash flows from operating leases | $ | 7,511 |  | $ | 10,983 |  | $ | 11,439 |
Right-of-use assets obtained in exchange for lease obligations (non-cash): |  |  |
Operating leases | — |  | 2,765 |  | — |

Other commitments
The term loans under the 2024 Credit Facilities require periodic principal payments. The balance of the term loans and any amounts drawn on the revolving credit loans are due upon maturity of the 2024 Credit Facilities in April 2029. The Real Estate Loans also require periodic principal payments and the balance of the Real Estate Loans are due upon maturity in April 2038.
We have contractual obligations for third-party technology used in our solutions and for other services we purchase as part of our normal operations. In certain cases, these arrangements require a minimum annual purchase commitment by us. As of December 31, 2024, the remaining aggregate minimum purchase commitment under these arrangements was approximately $184.4 million through 2029.
Solution and service indemnifications
In the ordinary course of business, we provide certain indemnifications of varying scope to customers against claims of intellectual property infringement made by third parties arising from the use of our solutions or services. We have not identified any losses that might be covered by these indemnifications
Legal proceedings
We are subject to legal proceedings and claims that arise in the ordinary course of business, as well as certain other non-ordinary course proceedings, claims and investigations, as described below. 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 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. We recognize insurance recoveries, if any, when they are probable of receipt. All associated costs due to third-party service providers and consultants, including legal fees, are expensed as incurred.
Legal proceedings are inherently unpredictable. However, we believe that we have valid defenses with respect to the legal matters pending or threatened against us and intend to defend ourselves vigorously against all claims asserted. It is possible that our consolidated financial position, results of operations or cash flows could be materially negatively affected in any particular period by an unfavorable resolution of one or more of such legal proceedings.
Security incident
As previously disclosed, we are subject to risks and uncertainties as a result of a ransomware attack against us in May 2020 in which a cybercriminal removed a copy of a subset of data from our self-hosted environment (the "Security Incident"). Based on the nature of the Security Incident, our research and third party (including law enforcement) investigation, we do not believe that any data went beyond the cybercriminal, has been misused, or has been disseminated or otherwise made available publicly.
As a result of the Security Incident, we are currently subject to certain legal proceedings and claims, as discussed below, and could be the subject of additional legal proceedings, claims, inquiries and investigations in the future that might result in

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Notes to Consolidated Financial Statements
adverse judgments, settlements, fines, penalties or other resolution. To limit our exposure to losses related to claims against us, including data breaches such as the Security Incident, we maintain $50 million of insurance abo ve a $250 thousand deductible payable by us. As noted below, this coverage reduced our financial exposure related to the Security Incident in prior years.
We recorded expenses and offsetting insurance recoveries related to the Security Incident as follows:

| Years ended December 31,
(dollars in thousands) | 2024 | 2023 | 2022
Gross expense | $ | 13,700 |  | $ | 53,426 |  | $ | 57,614 |
Offsetting insurance recoveries | — |  | — |  | (1,891) |
Net expense | $ | 13,700 |  | $ | 53,426 |  | $ | 55,723 |

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

(dollars in thousands) | December 31, 2024 | December 31, 2023 | December 31, 2022
Cumulative gross expense | $ | 175,131 |  | $ | 161,431 |  | $ | 108,005 |
Cumulative offsetting insurance recoveries recognized | (50,000) |  | (50,000) |  | (50,000) |
Cumulative net expense | $ | 125,131 |  | $ | 111,431 |  | $ | 58,005 |
Cumulative offsetting insurance recoveries paid | $ | (50,000) |  | $ | (50,000) |  | $ | (50,000) |

Recorded expenses have consisted primarily of payments to third-party service providers and consultants, including legal fees, settlement of the previously disclosed SEC and multi-state Attorneys General investigation and Attorney General of the State of California investigation (discussed below), settlements of customer claims and accruals for certain loss contingencies. Not included in the expenses discussed above were costs associated with enhancements to our cybersecurity program. We present expenses and insurance recoveries related to the Security Incident in general and administrative expense on our consolidated statements of comprehensive loss and as operating activities on our consolidated statements of cash flows. Total costs related to the Security Incident exceeded the limit of our insurance coverage during the first quarter of 2022. We expect to continue to incur expenses related to our response to the Security Incident, resolution of legal proceedings, claims and investigations, including those discussed below, and our efforts to further enhance our cybersecurity measures. For the year ended December 31, 2024, we incurred net pre-tax expense of $13.7 million related to the Security Incident, which included $7.0 million for ongoing legal fees. It also includes a settlement of loss contingencies of $6.8 million. Also, for the year ended December 31, 2024, we had net cash outlays of $15.9 million related to the Security Incident, which included ongoing legal fees and the $6.8 million paid during the third quarter of 2024 related to our settlement with the Attorney General of the State of California (discussed below). In line with our policy, legal fees are expensed as incurred. For the year ended December 31, 2025, we currently expect net pre-tax expense of approximately $2.0 million to $3.0 million and net cash outlays of approximately $3.0 million to $4.0 million for ongoing legal fees related to the Security Incident.
As of December 31, 2024, we have recorded approximately $0.7 million in aggregate liabilities for loss contingencies based primarily on recent negotiations with certain customers related to the Security Incident that we believe we can reasonably estimate in accordance with our loss contingency procedures described above. Our liabilities for loss contingencies are recorded in accrued expenses and other current liabilities on our consolidated balance sheets. It is reasonably possible that our estimated or actual losses may change in the near term for those matters and be materially in excess of the amounts accrued, but we are unable at this time to reasonably estimate the possible additional loss.
There are other Security Incident-related matters 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.

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Notes to Consolidated Financial Statements
Customer claims. To date, we have received approximately 260 specific requests from customers for reimbursement of expenses incurred by them related to the Security Incident, all of which have been fully resolved and closed or are inactive and are considered by us to have been abandoned by the customers. We have also received approximately 400 reservations of the right to seek expense recovery in the future from customers or their attorneys in the U.S., U.K. and Canada related to the Security Incident, none of which resulted in claims submitted to us and are considered by us to have been abandoned by the customers. We have also received notices of proposed claims on behalf of a number of U.K. data subjects, which have been fully resolved and closed or are inactive and are considered by us to have been abandoned by the data subjects. In addition, insurance companies representing various customers’ interests through subrogation claims have contacted us, and certain insurance companies have filed subrogation claims in court, of which two cases remain active and unresolved.
Customer constituent class actions. Presently, we are a defendant in putative consumer class action cases in U.S. federal courts (which have been consolidated under multi district litigation to a single federal court) alleging harm from the Security Incident. The plaintiffs in these cases, who purport to represent various classes of individual constituents of our customers, generally claim to have been harmed by alleged actions and/or omissions by us in connection with the Security Incident and assert a variety of common law and statutory claims seeking monetary damages, injunctive relief, costs and attorneys’ fees and other related relief.
On May 14, 2024, the United States District Court for the District of South Carolina (the "Court") issued a memorandum opinion and order (1) denying the multi district litigation plaintiffs' motion for class certification because of the plaintiffs' failure to meet their burden of proof as to ascertainability, (2) granting our motion to exclude the multi district litigation plaintiffs' expert on the issue of ascertainability, and (3) denying the multi district litigation plaintiffs' motion to exclude our expert on the issue of ascertainability. Further, the Court denied as moot all other pending motions. On July 30, 2024, the Fourth Circuit Court of Appeals denied the plaintiffs' petition for permission to appeal the Court's ruling. This litigation remains ongoing.
In December 2024 and January 2025, judges in Ontario and British Columbia, respectively, approved a settlement between us and plaintiffs in putative consumer class actions cases in Canada. In January 2025, the insignificant settlement was paid to Canadian charities designated in the settlement agreement as cy pres recipients.
Governmental investigations. As previously disclosed, we were subject to an investigation by the U.S. Department of Health and Human Services. We also responded to inquiries from the Office of the Australian Information Commissioner in September 2020 and the Office of the Privacy Commissioner of Canada in October 2020. Although we have not received notices of the termination of any of these inquiries and investigations, we believe that they are no longer active.
On June 13, 2024, we agreed to a Final Judgment and Permanent Injunction with the Attorney General of the State of California (the "Final Judgment") relating to the Security Incident. This settlement fully resolved the last remaining U.S. state attorney general investigation into the Security Incident. Under the terms of the settlement, we agreed to comply with applicable laws; not to make misleading statements related to our data protection, privacy, security, confidentiality, integrity, breach notification requirements, and similar matters; and to implement and improve certain cybersecurity programs and tools. The terms of the settlement with California are generally consistent with those to which we agreed in settling with the other 49 state Attorneys General and the District of Columbia on October 5, 2023, as discussed below. As part of the settlement, we also paid a total of $6.8 million to the State of California. Nothing contained in the Final Judgment is intended to be, and shall not in any event be construed or deemed to be, an admission or concession or evidence of any liability or wrongdoing whatsoever on the part of Blackbaud or any fact or violation of law, rule, or regulation. For more information, see the Final Judgment and Permanent Injunction of the State of California, County of San Diego that was furnished as Exhibit 99.1 to our Current Report on Form 8-K filed with the SEC on June 14, 2024.
On May 20, 2024, the U.S. Federal Trade Commission (the "FTC") finalized an Order (the “FTC Order”) evidencing its settlement with us in connection with the Security Incident. As part of the FTC Order, we were not fined and were not otherwise required to make any payment. Furthermore, we agreed to the FTC Order without admitting or denying any of the FTC’s allegations, except as expressly stated otherwise in the FTC Order. The settlement described in the FTC Order fully resolved the FTC investigation. For more information, see the form of proposed order that was furnished as Exhibit 99.2 to our Current Report on Form 8-K filed with the SEC on February 2, 2024 and is identical in substance to the final FTC Order, and in Note 11 to our audited consolidated financial statements contained in our Annual Report on Form 10-K filed with the SEC on February 21, 2024.
On October 5, 2023, we entered into separate, substantially similar Administrative Orders with each of 49 state Attorneys General and the District of Columbia relating to the Security Incident which fully resolved the previously disclosed multi-state

98 |  | 2024 Form 10-K

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Blackbaud, Inc.
Notes to Consolidated Financial Statements
Civil Investigative Demand and the separate Civil Investigative Demand from the Office of the Indiana Attorney General relating to the Security Incident.
On March 9, 2023, we reached a settlement with the SEC in connection with the Security Incident that fully resolved the previously disclosed SEC investigation of the Security Incident.
On September 28, 2021, the Information Commissioner’s Office in the United Kingdom under the U.K. Data Protection Act 2018 notified us that it has closed its investigation of the Security Incident.
On September 24, 2021, we received notice from the Spanish Data Protection Authority that it has concluded its investigation of the Security Incident.
On January 15, 2021, we were notified by the Data Protection Commission of Ireland that it has concluded its investigation of the Security Incident.
For more information about these completed government investigations and related actions, see Note 11 to our audited consolidated financial statements contained in our Annual Report on Form 10-K filed with the SEC on February 21, 2024.

12. Income Taxes

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. We are generally subject to U.S. federal income tax examination for calendar tax years 2021 through 2024 as well as state and foreign income tax examinations for various years depending on statutes of limitations of those jurisdictions.
The following summarizes the components of income tax (benefit) expense:

| Years ended December 31,
(dollars in thousands) | 2024 |  | 2023 |  | 2022 |
Current taxes: |  |  |
U.S. Federal | $ | 36,367 |  | $ | 18,879 |  | $ | 3,485 |
U.S. State and local | 8,433 |  | 12,331 |  | 5,708 |
International | 11,792 |  | 8,982 |  | 7,283 |
Total current taxes | 56,592 |  | 40,192 |  | 16,476 |
Deferred taxes: |  |  |
U.S. Federal | (65,559) |  | (18,303) |  | (16,880) |
U.S. State and local | (18,472) |  | (5,895) |  | (9,319) |
International | (980) |  | (170) |  | (445) |
Total deferred taxes | (85,011) |  | (24,368) |  | (26,644) |
Total income tax (benefit) provision | $ | (28,419) |  | $ | 15,824 |  | $ | (10,168) |

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

| Years ended December 31,
(dollars in thousands) | 2024 |  | 2023 |  | 2022 |
U.S. | $ | (365,356) |  | $ | (22,074) |  | $ | (91,493) |
International | 53,765 |  | 39,718 |  | 35,918 |
(Loss) income before provision for income taxes | $ | (311,591) |  | $ | 17,644 |  | $ | (55,575) |

2024 Form 10-K |  | 99

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Blackbaud, Inc.
Notes to Consolidated Financial Statements
A reconciliation between the effect of applying the federal statutory rate and the effective income tax rate used to calculate our income tax provision is as follows:

| Years ended December 31,
| 2024 |  | 2023 |  | 2022 |
Federal statutory rate | 21.0 | % | 21.0 | % | 21.0 | %
Effect of: |  |  |
State income taxes, net of federal benefit | 2.2 |  | 20.0 |  | 1.5 |
Change in foreign income tax rate applied to deferred tax balances | — |  | — |  | 0.1 |
Change in state income tax rate applied to deferred tax balances | (0.1) |  | 7.1 |  | 1.8 |
Federal credits generated | 1.9 |  | (42.3) |  | 11.5 |
Stock-based compensation | 1.3 |  | 13.4 |  | (6.3) |
Sale of subsidiary | 1.0 |  | — |  | — |
FDII benefit | 0.6 |  | (10.2) |  | 2.3 |
State credits, net of federal benefit | 0.5 |  | (9.1) |  | 7.2 |
Return to accrual adjustment | (0.1) |  | (8.3) |  | 1.4 |
Nondeductible meals, entertainment and transportation | (0.2) |  | 4.4 |  | (0.7) |
GILTI inclusion | (0.4) |  | 9.3 |  | (2.6) |
Nondeductible security incident-related fines or penalties | (0.5) |  | 35.7 |  | (8.7) |
Foreign tax rate | (0.5) |  | 6.1 |  | 1.0 |
Unrecognized tax benefit | (0.7) |  | 0.7 |  | 0.5 |
Section 162(m) limitation | (1.7) |  | 30.1 |  | (6.4) |
Change in valuation reserve | (15.1) |  | 10.8 |  | (5.4) |
Other | (0.1) |  | 1.0 |  | 0.1 |
Income tax provision effective rate | 9.1 | % | 89.7 | % | 18.3 | %

The decrease in our effective income tax rate for year ended December 31, 2024, when compared to the same period in 2023, was primarily attributable to the valuation allowance recorded in the current period. As of December 31, 2024, we recorded a valuation allowance against all of our U.S. deferred tax assets in excess of deferred tax liabilities due to the combination of our cumulative pretax loss position and net deferred tax asset position resulting from our divestiture of EVERFI. We intend to continue maintaining a full valuation allowance on our U.S. net deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. Furthermore, the effect of our various rate drivers is reversed by the Company’s 2024 loss position versus income in 2023.

100 |  | 2024 Form 10-K

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Blackbaud, Inc.
Notes to Consolidated Financial Statements
The significant components of our deferred tax assets and liabilities were as follows:

| December 31,
(dollars in thousands) | 2024 |  | 2023 |
Deferred tax assets relating to: |  |
Capitalized R&D and software costs | $ | 78,809 |  | $ | 47,351 |
Federal, state and foreign tax credits | 31,495 |  | 39,260 |
Stock-based compensation | 17,176 |  | 24,717 |
Operating leases | 10,751 |  | 12,867 |
Deferred revenue | 7,633 |  | 5,992 |
Capital loss carryforward | 7,282 |  | — |
Federal and state and foreign net operating loss carryforwards | 4,825 |  | 7,061 |
Allowance for credit losses | 1,441 |  | 1,702 |
Intangible assets | 969 |  | 1,050 |
Accrued bonuses | 316 |  | 314 |
Other | 1,615 |  | 2,982 |
Total deferred tax assets | 162,312 |  | 143,296 |
Deferred tax liabilities relating to: |  |
Intangible assets | (50,530) |  | (160,172) |
Costs of obtaining contracts | (13,136) |  | (13,870) |
Operating leases | (7,338) |  | (9,865) |
Fixed assets | (4,716) |  | (5,833) |
Other | (9,010) |  | (8,342) |
Total deferred tax liabilities | (84,730) |  | (198,082) |
Valuation allowance | (86,672) |  | (37,862) |
Net deferred tax liability | $ | (9,090) |  | $ | (92,648) |

As of December 31, 2024, our federal, foreign and state net operating loss carryforwards for income tax purposes were approximately $11.8 million, $0.7 million and $42.7 million, respectively. Of our federal net operating loss carryforwards, $9.4 million are subject to expiration beginning in 2025 while the remainder have an unlimited carryforward period. The state net operating loss carryforwards are subject to various applicable state tax laws. If not utilized, the state net operating loss carryforwards will expire over various periods beginning in 2025. Our foreign net operating loss carryforwards have an unlimited carryforward period. Our state tax credit carryforwards for income tax purposes were approximately $31.3 million, net of federal benefit. If not utilized, the state tax credit carryforwards will begin to expire in 2025. We also have federal and state capital loss carryforwards of $30.2 million expiring in 2029. The foreign and state net operating loss carryforwards, capital loss carryforward and state credit carryforwards have a valuation reserve due to management's uncertainty regarding the future ability to use such carryforwards.
The following table illustrates the change in our deferred tax asset valuation allowance:

Years ended December 31, (dollars in thousands) | Balance at beginning of year |  | Charges to expense | Balance at end of year
2024 | $ | 37,862 |  |  | $ | 48,810 |  | $ | 86,672 |
2023 | 34,769 |  |  | 3,093 |  | 37,862 |
2022 | 31,974 |  |  | 2,795 |  | 34,769 |

2024 Form 10-K |  | 101

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Blackbaud, Inc.
Notes to Consolidated Financial Statements
The following table sets forth the change to our unrecognized tax benefit for the years ended December 31, 2024, 2023 and 2022:

| Years ended December 31,
(dollars in thousands) | 2024 |  | 2023 |  | 2022 |
Balance at beginning of year | $ | 3,240 |  | $ | 3,083 |  | $ | 3,651 |
Increases from prior period positions | 1,249 |  | 101 |  | 89 |
Increases from current period positions | 706 |  | 762 |  | 629 |
Decreases in prior year positions | — |  | (118) |  | (908) |
Settlements (payments) | — |  | (160) |  | — |
Lapse of statute of limitations | — |  | (428) |  | (378) |
Balance at end of year | $ | 5,195 |  | $ | 3,240 |  | $ | 3,083 |

The total amount of unrecognized tax benefit that, if recognized, would favorably affect the effective tax rate was $5.2 million at December 31, 2024. Certain prior period amounts relating to our 2014 acquisitions were covered under indemnification agreements and, therefore, had a corresponding indemnification asset. Due to lapse of statute of limitations, the indemnified unrecognized tax benefit was released in 2022 resulting in income tax benefit with offsetting expense included in pretax income from corresponding release of indemnification asset. We recognize accrued interest and penalties, if any, related to unrecognized tax benefits as a component of income tax expense. The total amount of accrued interest and penalties included in the consolidated balance sheet as of December 31, 2024 and December 31, 2023 was $0.9 million and insignificant, respectively. The total amount of interest and penalties included in the consolidated statements of comprehensive loss as an increase or decrease in income tax expense for 2024 was $0.8 million and for 2023 and 2022 was insignificant.
We have taken federal and state tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits might decrease within the next twelve months. This possible decrease could result from the expiration of statutes of limitations. The reasonably possible decrease at December 31, 2024 was insignificant.
For our undistributed earnings of foreign subsidiaries, we concluded that these earnings would be permanently reinvested in the local jurisdictions and not repatriated to the United States except to the extent that said earnings are of previously taxed income. Accordingly, we have not provided for U.S. income taxes and foreign withholding taxes on those undistributed earnings of our foreign subsidiaries.

13. Stock-based Compensation

Employee stock-based compensation plans
Under the 2016 Equity and Incentive Compensation Plan Amended and Restated as of June 12, 2024 (the "2016 Equity Plan"), we may grant incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units, other stock awards and cash incentive awards to employees, directors and consultants. Our Compensation Committee of the Board of Directors administers this plan and the stock-based awards are granted under terms determined by it.
The total number of authorized stock-based awards available under our plan was 3,823,058 as of December 31, 2024. We issue common stock from our pool of authorized stock upon exercise of stock options and stock appreciation rights, vesting of restricted stock units or upon granting of restricted stock.

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Blackbaud, Inc.
Notes to Consolidated Financial Statements
Recently, we have issued three types of awards under our plans: restricted stock awards, time-based restricted stock units, and performance-based restricted stock units. The following table sets forth the number of awards outstanding for each award type as of:

| Outstanding at December 31,
Award type | 2024 |  | 2023
Restricted stock awards | 814,336 |  | 1,101,702 |
Time-based restricted stock units | 616,035 |  | 607,100 |
Performance-based restricted stock units | 1,029,214 |  | 1,209,515 |

Awards granted to our executive officers and certain members of management are subject to accelerated vesting upon a change in control as defined in the employees’ employment agreement or retention agreement.
Expense recognition
We recognize compensation expense associated with stock options and awards with performance or market based vesting conditions on an accelerated basis over the requisite service period of the individual grantees, which generally equals the vesting period. We recognize compensation expense associated with restricted stock awards and SARs on a straight-line basis over the requisite service period of the individual grantees, which generally equals the vesting period. We recognize the effect of awards for which the requisite service period is not rendered when the award is forfeited (that is, we recognize the effect of forfeitures in compensation cost when they occur). Previously recognized compensation cost for an award is reversed in the period that the award is forfeited.
Stock-based compensation expense is allocated to cost of revenue and operating expenses on the consolidated statements of comprehensive loss based on where the associated employee’s compensation is recorded. The following table summarizes stock-based compensation expense:

| Years ended December 31,
(in thousands) | 2024 | 2023 | 2022
Included in cost of revenue: |  |  |
Cost of recurring | $ | 12,606 |  | $ | 14,052 |  | $ | 11,258 |
Cost of one-time services and other | 1,486 |  | 2,606 |  | 3,178 |
Total included in cost of revenue | 14,092 |  | 16,658 |  | 14,436 |
Included in operating expenses: |  |  |
Sales, marketing and customer success | 17,946 |  | 24,892 |  | 21,409 |
Research and development | 26,488 |  | 30,780 |  | 24,207 |
General and administrative | 46,442 |  | 55,432 |  | 50,242 |
Total included in operating expenses | 90,876 |  | 111,104 |  | 95,858 |
Total stock-based compensation expense | $ | 104,968 |  | $ | 127,762 |  | $ | 110,294 |

The total amount of compensation cost related to unvested awards not recognized was $67.6 million at December 31, 2024. It is expected that this amount will be recognized over a weighted average period of 1.2 years.

2024 Form 10-K |  | 103

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Notes to Consolidated Financial Statements
Restricted stock awards
We have granted shares of common stock subject to certain restrictions under the 2016 Equity Plan. Restricted stock awards granted to employees vest in equal annual installments generally over three years from the grant date subject to the recipient’s continued employment with us. Restricted stock awards granted to non-employee directors vest after one year from the date of grant or, if earlier, immediately prior to the next annual election of directors, provided the non-employee director is serving as a director at that time. The fair market value of the stock at the time of the grant is amortized on a straight-line basis to expense over the period of vesting. Recipients of restricted stock awards have the right to vote such shares and receive dividends, if declared.
The following table summarizes our unvested restricted stock awards as of December 31, 2024, and changes during the year then ended:

| Restricted stock awards | Weighted average grant-date fair value |  | Aggregate intrinsic value(1) (in thousands)
Unvested at January 1, 2024 | 1,101,702 |  | $ | 64.92 |  |  |
Granted | 422,685 |  | 69.86 |  |  |
Forfeited | (77,785) |  | 65.27 |  |  |
Vested | (632,266) |  | 67.47 |  |  |
Unvested at December 31, 2024 | 814,336 |  | 66.27 |  |  | $ | 60,196 |

(1)The intrinsic value is calculated as the market value as of the end of the fiscal period.
The total fair value of restricted stock awards that vested during the years ended December 31, 2024, 2023 and 2022 was $42.7 million, $42.7 million and $41.0 million, respectively. The weighted average grant-date fair value of restricted stock awards granted during the years ended December 31, 2023 and 2022 was $62.59 and $60.90, respectively.
Restricted stock units
We have also granted restricted stock units subject to certain restrictions under the 2016 Equity Plan. Restricted stock units granted to employees vest in equal annual installments generally over three years from the grant date subject to the recipient’s continued employment with us. We have also granted restricted stock units for which vesting is subject to meeting certain performance conditions. The fair market value of the stock at the time of the grant is amortized to expense on a straight-line basis over the period of vesting except for awards with performance conditions, which are amortized on an accelerated basis over the period of vesting.
The following table summarizes our unvested, time-based restricted stock units as of December 31, 2024, and changes during the year then ended:

| Time-based restricted stock units | Weighted average grant-date fair value |  | Aggregate intrinsic value(1) (in thousands)
Unvested at January 1, 2024 | 607,100 |  | $ | 64.01 |  |  |
Granted | 330,913 |  | 67.73 |  |  |
Forfeited | (30,834) |  | 70.03 |  |  |
Vested | (291,144) |  | 66.54 |  |  |
Unvested at December 31, 2024 | 616,035 |  | 65.08 |  |  | $ | 45,537 |

(1)The intrinsic value is calculated as the market value as of the end of the fiscal period.
The total fair value of time-based restricted stock units that vested during the years ended December 31, 2024, 2023 and 2022 was $19.4 million, $13.5 million and $9.3 million, respectively. The weighted average grant date fair value of time-based restricted stock units granted for the years ended December 31, 2023 and 2022 was $61.37 and $62.38, respectively.

104 |  | 2024 Form 10-K

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Blackbaud, Inc.
Notes to Consolidated Financial Statements
The following table summarizes our unvested, performance-based restricted stock units as of December 31, 2024, and changes during the year then ended:

| Performance-based restricted stock units | Weighted average grant-date fair value |  | Aggregate intrinsic value(1) (in thousands)
Unvested at January 1, 2024 | 1,209,515 |  | $ | 61.29 |  |  |
Granted | 778,467 |  | 67.90 |  |  |
Forfeited | (51,271) |  | 66.66 |  |  |
Vested(2) | (907,497) |  | 61.17 |  |  |
Unvested at December 31, 2024 | 1,029,214 |  | 66.92 |  |  | $ | 76,079 |

(1)The intrinsic value is calculated as the market value as of the end of the fiscal period.
(2)This amount represents the target number of shares that were eligible to be earned and vested. The number of shares earned and vested based on actual results when compared to the performance conditions was 1,119,025 and those shares had a weighted average grant date fair value of $61.17.
The total fair value of performance-based restricted stock units that vested during the years ended December 31, 2024, 2023 and 2022 was $55.5 million, $50.9 million, and $50.5 million, respectively. The weighted average grant date fair value of performance-based restricted stock units granted for the years ended December 31, 2023 and 2022 was $59.62 and $61.79, respectively.

14. Stockholders' Equity

Preferred stock
Our Board of Directors may fix the relative rights and preferences of each series of preferred stock in a resolution of the Board of Directors.
Stock repurchase program
Under our stock repurchase program, we are authorized to repurchase shares from time to time in accordance with applicable laws both on the open market, including under trading plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, and in privately negotiated transactions. The timing and amount of repurchases depends on several factors, including market and business conditions, the trading price of our common stock and the nature of other investment opportunities. The repurchase program does not have an expiration date and may be limited, suspended or discontinued at any time without prior notice. Under the 2024 Credit Agreement, we have restrictions on our ability to repurchase shares of our common stock, which are summarized on page 56 in this report.
We account for purchases of treasury stock under the cost method. On January 17, 2024, our Board of Directors reauthorized, expanded and replenished our stock repurchase program by expanding the total capacity under the program from $250.0 million to $500.0 million available for repurchases.
In March 2024, we entered into an issuer forward repurchase transaction with a large financial institution to repurchase an aggregate $200 million of shares of our common stock (the "ASR Transaction"). Pursuant to the terms of the ASR Transaction, we provided the financial institution with a prepayment of $200 million and received an initial delivery of 2.1 million shares of our common stock, representing approximately 70% of the total shares then-expected to be repurchased under the ASR Transaction. The final number of shares of common stock delivered to us under the ASR Transaction was based on the average of the daily volume-weighted average prices of the common stock during the term of the ASR Transaction, less a discount and subject to customary adjustments upon events affecting the common stock (e.g., dilutive or concentrative events, mergers and acquisitions, and market disruptions). We funded the ASR Transaction prepayment with borrowings pursuant to a revolving credit loan under the then effective 2020 Credit Agreement. On October 29, 2024, in connection with the settlement of the ASR Transaction, we received approximately 490,000 shares of our common stock, in addition to the 2.1 million shares received in March 2024. The difference of $9.2 million be tween the prepayment of $200 million and the value of the shares repurchased on the ASR Transaction is classified as a reduction to additional paid-in capital within our consolidated statement of stockholders' equity. No cash was exchanged as part of the settlement of the ASR Transaction.
On July 16, 2024, our Board of Directors reauthorized, expanded and replenished our stock repurchase program by expanding the total capacity under the program from $500.0 million to $800.0 million available for repurchases.

2024 Form 10-K |  | 105

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Notes to Consolidated Financial Statements
During the year ended December 31, 2024, we repurchased an aggregate of 5,362,439 shares for $418.0 million, including the shares repurchased pursuant to the ASR Transaction. The remaining amount available to purchase stock under the approved stock repurchase program was $644.6 million as of December 31, 2024.
Changes in accumulated other comprehensive (loss) income by component
The changes in accumulated other comprehensive (loss) income by component, consisted of the following:

| Years ended December 31,
(in thousands) | 2024 | 2023 | 2022
Accumulated other comprehensive (loss) income, beginning of period | $ | (1,688) |  | $ | 8,938 |  | $ | 6,522 |
By component: |  |  |
Gains and losses on cash flow hedges: |  |  |
Accumulated other comprehensive income balance, beginning of period | $ | 8,158 |  | $ | 23,833 |  | $ | 5,257 |
Other comprehensive income (loss) before reclassifications, net of tax effects of $(5,080), $201 and $(8,068) | 14,047 |  | (271) |  | 22,772 |
Amounts reclassified from accumulated other comprehensive income (loss) | (19,613) |  | (20,806) |  | (5,685) |
Tax expense included in provision for income taxes | 5,207 |  | 5,402 |  | 1,489 |
Total amounts reclassified from accumulated other comprehensive income (loss) | (14,406) |  | (15,404) |  | (4,196) |
Net current-period other comprehensive (loss) income | (359) |  | (15,675) |  | 18,576 |
Accumulated other comprehensive income balance, end of period | $ | 7,799 |  | $ | 8,158 |  | $ | 23,833 |
Foreign currency translation adjustment: |  |  |
Accumulated other comprehensive (loss) income balance, beginning of period | $ | (9,846) |  | $ | (14,895) |  | $ | 1,265 |
Translation adjustment | (2,822) |  | 5,049 |  | (16,160) |
Accumulated other comprehensive loss balance, end of period | (12,668) |  | (9,846) |  | (14,895) |
Accumulated other comprehensive (loss) income, end of period | $ | (4,869) |  | $ | (1,688) |  | $ | 8,938 |

15. Defined Contribution Plan

We have a defined contribution 401(k) plan (the "401K Plan") covering substantially all employees. Employees were able to contribute between 1% and 75% of their salaries in 2024, 2023 and 2022. We match 50% of qualified employees’ contributions up to 6% of their salary. The 401K Plan also provides for additional employer contributions to be made at our discretion. Total matching contributions to the 401K Plan for the years ended December 31, 2024, 2023 and 2022 were $8.2 million, $7.8 million and $9.3 million, respectively.
There were no discretionary contributions by us to the 401K Plan in 2024, 2023 and 2022.

16. Segment Information

We have one operating segment and one reportable segment. Our CODM is our chief executive officer ("CEO"), who reviews financial information presented on a consolidated basis, accompanied by disaggregated information about our revenue, for purposes of making decisions about assessing financial performance and allocating resources. Our CEO considers costs of revenue, sales, marketing and customer success, research and development, and general and administrative expense categories on our consolidated statements of comprehensive loss as significant. Our CEO uses consolidated operating margin and net income as the primary measures of profit or loss. These financial metrics are used by our CEO to make key operating decisions, such as the allocation of budget between costs of revenues and our different operating expense categories.
Our other segment items include amortization, interest expense, other income, net, and income tax (benefit) provision on our consolidated statements of comprehensive loss.

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Blackbaud, Inc.
Notes to Consolidated Financial Statements
The following table presents long-lived assets by geographic region based on the location of the assets. For purposes of this disclosure, long-lived assets includes property and equipment, net and operating lease ROU assets.

| Years ended December 31,
(dollars in thousands) | 2024 | 2023
United States | $ | 117,582 |  | $ | 134,316 |
Other countries | 898 |  | 1,300 |
Total long-lived assets | $ | 118,480 |  | $ | 135,616 |

See Note 17 to these consolidated financial statements for information about our revenues by geographic region.

17. Revenue Recognition

Transaction price allocated to the remaining performance obligations
As of December 31, 2024, approximately $1.2 billion of revenue is expected to be recognized from remaining performance obligations. We expect to recognize revenue on approximately 55% of these remaining performance obligations over the next 12 months, with the remainder recognized thereafter.
We applied the practical expedient in ASC 606-10-50-14 and have excluded the value of unsatisfied performance obligations for which we recognize revenue at the amount to which we have the right to invoice for services performed (transactional revenue).
Contract balances
Our contract assets as of December 31, 2024 and December 31, 2023 were insignificant. Our closing balances of deferred revenue were as follows:

(in thousands) | December 31, 2024 | December 31, 2023
Total deferred revenue | $ | 361,544 |  | $ | 394,927 |

The decrease in deferred revenue during 2024 was primarily due to our divestiture of EVERFI on December 31, 2024. Historically, due to the timing of customer budget cycles, we have an increase in customer contract renewals at or near the beginning of our third quarter. Generally, our lowest balance of deferred revenue during the year is at the end of our first quarter. The amount of revenue recognized during 2024 that was included in the deferred revenue balance at the beginning of the period was approximately $376 million. The amount of revenue recognized during 2024 from performance obligations satisfied in prior periods was insignificant.
Disaggregation of revenue
We sell our cloud solutions and related services in three primary geographical markets: to customers in the United States, to customers in the United Kingdom and to customers located in other countries. The following table presents our revenue by geographic area based on the location of our customers:

| Years ended December 31,
(dollars in thousands) | 2024 | 2023 | 2022
United States | $ | 988,536 |  | $ | 945,580 |  | $ | 896,116 |
United Kingdom | 104,028 |  | 100,833 |  | 101,026 |
Other countries | 62,931 |  | 59,019 |  | 60,963 |
Total revenue | $ | 1,155,495 |  | $ | 1,105,432 |  | $ | 1,058,105 |

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Notes to Consolidated Financial Statements
The Social Sector and Corporate Sector market groups comprised our go-to-market organizations as of December 31, 2024. The following is a description of each market group as of that date:
•The Social Sector market group focuses on sales to customers and prospects in the social sector, such as nonprofits, foundations, education institutions, healthcare organizations and other not-for-profit entities globally, and includes JustGiving; and
•The Corporate Sector market group focuses on sales to customers and prospects in the corporate sector globally, and included EVERFI and YourCause.
The following table presents our revenue by market group:

| Years ended December 31,
(dollars in thousands) | 2024 | 2023 | 2022
Social Sector | $ | 1,022,215 |  | $ | 954,845 |  | $ | 907,197 |
Corporate Sector | 133,280 |  | 150,587 |  | 150,908 |
Total revenue | $ | 1,155,495 |  | $ | 1,105,432 |  | $ | 1,058,105 |

The following table presents our recurring revenue by type:

| Years ended December 31,
(dollars in thousands) | 2024 | 2023 | 2022
Contractual recurring | $ | 775,075 |  | $ | 738,351 |  | $ | 709,097 |
Transactional recurring | 354,039 |  | 333,169 |  | 302,636 |
Total recurring revenue | $ | 1,129,114 |  | $ | 1,071,520 |  | $ | 1,011,733 |

18. Subsequent Events

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.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) are designed only to provide reasonable assurance that they will meet their objectives. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial and accounting officer), of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e)) pursuant to Exchange Act Rule 13a-15(b). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective to provide the reasonable assurance discussed above.

Changes in Internal Control Over Financial Reporting

No changes in internal control over financial reporting occurred during the most recent fiscal quarter ended December 31, 2024 with respect to our operations that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024, based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on this evaluation under the Internal Control - Integrated Framework, management concluded that our internal control over financial reporting was effective as of December 31, 2024.
The effectiveness of our internal control over financial reporting as of December 31, 2024, has been audited by our independent registered public accounting firm, as stated in their attestation report, which is included in Item 8 of this Annual Report on Form 10-K.

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ITEM 9B. OTHER INFORMATION

Trading Plans Adopted or Terminated

The following table provides information about trading arrangements adopted or terminated by certain of our officers and directors during the three months ended December 31, 2024.

|  |  |  |  |  | Trading arrangement(1) | Aggregate number of securities to be sold under plan |
Name and Title | Action | Date of Adoption | Plan effective date | Plan end date | Plan duration (months) | Rule 10b5-1 | Non-Rule 10b5-1
David J. Benjamin Executive Vice President and Chief Commercial Officer | Adoption | 11/28/24 | 3/07/25 | 10/31/25 | Eight | X |  | 17,478 |
Kevin R. McDearis Executive Vice President and Chief Technology Officer | Adoption | 11/30/24 | 3/17/25 | 10/31/25 | Eight | X |  | 31,557 |

(1)An SEC "Rule 10b5-1(c) trading arrangement" is a trading arrangement made by a person through entering into a binding contract, verbal instruction or adoption of a written plan prior to becoming aware of material non-public information. The contract, instruction or written plan must specify the amount, price and date of securities to be sold; include the means for determining the amount, price and date of the sale or sales; and not permit the person to have subsequent influence over the sale or sales. The compliant plan must be entered into and operated in good faith, include a specified cooling off period, be certified by an authorized officer and is restricted from having multiple or overlapping plans. A non-compliant trading arrangement, or a "non-Rule 10b5-1 trading arrangement," is a trading arrangement that has similar requirements to a Rule 10b5-1(c) trading arrangement except that it must be in written form and does not require a cooling off period or certification of an authorized officer and there is no restriction from having multiple or overlapping plans.
(2)Represents the target quantity of Performance Share Awards which may be subject to a performance multiplier; therefore, the aggregate number of shares to be sold may be equal to, greater than or less than the target quantity.
None of our officers or directors adopted or terminated a non-Rule 10b5-1 trading arrangement during the three months ended December 31, 2024.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.

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|  | PART III.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by Item 10 with respect to Directors and Executive Officers is incorporated by reference from the information under the captions “Election of Directors,” “Information Regarding Meetings of the Board and Committees,” “Delinquent Section 16(a) Reports,” “Code of Business Conduct and Ethics and Code of Ethics” and "Insider Trading Arrangements and Policies" contained in Blackbaud’s Proxy Statement for the 2025 Annual Meeting of Stockholders expected to be held on June 11, 2025, except for "Information About Our Executive Officers" which is set forth in Part I of this report.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated by reference from the information under the captions "Director Compensation," “Executive Compensation,” “Compensation Discussion and Analysis,” “2024 Summary Compensation Table,” "CEO Pay Ratio" and "Pay Versus Performance" contained in Blackbaud’s Proxy Statement for the 2025 Annual Meeting of Stockholders expected to be held on June 11, 2025.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by Item 12 is incorporated by reference from information under the captions “Stock Ownership” and "Equity Compensation Plan Information" contained in Blackbaud’s Proxy Statement for the 2025 Annual Meeting of Stockholders expected to be held on June 11, 2025.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by Item 13 is incorporated by reference from the information under the captions “Transactions with Related Persons,” and “Independence of Directors” contained in Blackbaud’s Proxy Statement for the 2025 Annual Meeting of Stockholders expected to be held on June 11, 2025.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by Item 14 is incorporated by reference from the information under the caption “Audit Committee Report,” contained in Blackbaud’s Proxy Statement for the 2025 Annual Meeting of Stockholders expected to be held on June 11, 2025.

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|  | PART IV.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following documents are included as part of the Annual Report on Form 10-K:
1. Financial statements
See the "Index to consolidated financial statements" in Part II Item 8 of this report.
There were no retrospective changes to the Consolidated Statement of Operations for any quarters in the two most recent fiscal years that would require disclosure under Item 302, as amended.
2.Financial statement schedules
Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements thereto.
3.Exhibits
The exhibits listed below are filed or incorporated by reference as part of this report:

|  |  |  | Filed In
Exhibit Number |  | Description of Document |  | Registrant’s Form |  | Dated |  | Exhibit Number |  | Filed Herewith
2.1 |  | Agreement and Plan of Merger and Reincorporation dated April 6, 2004 |  | S-1/A |  | 4/6/2004 |  | 2.1 |  |
2.2 |  | Purchase Agreement, dated August 30, 2014, by and among MicroEdge Holdings, LLC, Blackbaud, Inc, direct and indirect holders of all of the outstanding equity interests of MicroEdge Holdings, LLC, and VFF I AIV I, L.P., as Sellers’ Representative |  | 8-K |  | 10/2/2014 |  | 10.76 |  |
2.3 |  | Unit Purchase Agreement, dated as of August 10, 2015, by and between Smart Tuition Holdings, LLC and Blackbaud, Inc. |  | 8-K |  | 10/8/2015 |  | 10.78 |  |
2.4 |  | Amendment, Consent and Waiver, Agreement dated as of October 2, 2015, by and between Smart Tuition Holdings, LLC and Blackbaud, Inc. |  | 8-K |  | 10/8/2015 |  | 10.79 |  |
2.5 |  | Agreement and Plan of Merger, dated as of December 30, 2021, by and among Blackbaud, Inc., Project Montessori Acquisition, Inc., EverFi, Inc. and Eon Stockholder Representative, LLC |  | 8-K |  | 1/3/2022 |  | 2.1 |  |
3.1 |  | Amended and Restated Certificate of Incorporation of Blackbaud, Inc. |  | DEF 14A |  | 4/30/2009 |  |  |  |
3.1.1 |  | Amendment to the Amended and Restated Certificate of Incorporation of Blackbaud, Inc. |  | 10-Q |  | 7/31/2024 |  | 3.1.1 |  |
3.2 |  | Certificate of Designation of Series A Junior Participating Preferred Stock of Blackbaud, Inc. |  | 8-K |  | 10/11/2022 |  | 3.1 |  |
3.3 |  | Amended and Restated Bylaws of Blackbaud, Inc. dated December 7, 2023 |  | 8-K |  | 12/11/2023 |  | 3.1 |  |
3.4 |  | Certificate of Elimination of the Series A Junior Participating Preferred Stock of Blackbaud, Inc. |  | 8-A12B/A |  | 3/18/2024 |  | 3.1 |  |
4.1 |  | Description of Capital Stock |  |  |  |  |  |  |  | X

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|  |  |  | Filed In
Exhibit Number |  | Description of Document |  | Registrant’s Form |  | Dated |  | Exhibit Number |  | Filed Herewith
4.2 |  | Stockholder Rights Agreement, dated as of October 7, 2022, between Blackbaud, Inc. and American Stock Transfer & Trust Company, LLC, as Rights Agent. |  | 8-K |  | 10/11/2022 |  | 4.1 |  |
4.3 |  | Amendment to Stockholder Rights Agreement, dated as of October 2, 2023, between Blackbaud, Inc. and Equiniti Trust Company, LLC (f/k/a American Stock Transfer & Trust Company, LLC), as Rights Agent. |  | 8-K |  | 10/2/2023 |  | 4.2 |  |
4.4 |  | Second Amendment to Stockholder Rights Agreement, dated as of January 26, 2024, between Blackbaud, Inc. and Broadridge Corporate Issuer Solutions, LLC, as Rights Agent. |  | 8-K |  | 1/26/2024 |  | 4.3 |  |
4.5 |  | Third Amendment to Stockholder Rights Agreement, dated as of March 18, 2024, by and between Blackbaud, Inc. and Broadridge Corporate Issuer Solutions, LLC. |  | 8-K |  | 3/18/2024 |  | 4.4 |  |
10.1 | † | Form of Employment Agreement between Blackbaud, Inc. and each of Anthony W. Boor and Kevin W. Mooney |  | 10-K |  | 2/27/2013 |  | 10.65 |  |
10.2 | † | Form of Employment Agreement between Blackbaud, Inc. and Jon W. Olson |  | 10-K |  | 2/27/2013 |  | 10.65 |  |
10.3 |  | Lease Agreement dated May 16, 2016 between BBHQ1, LLC (a subsidiary of Blackbaud, Inc.) and HPBB1, LLC |  | 10-Q |  | 8/4/2016 |  | 10.84 |  |
10.4 |  | First Amendment to Lease Agreement, dated as of August 22, 2016, between HPBB1, LLC and BBHQ1, LLC (a subsidiary of Blackbaud, Inc.) |  | 10-Q |  | 11/4/2016 |  | 10.87 |  |
10.5 |  | Second Amendment to Lease Agreement, dated as of May 18, 2017, between HPBB1, LLC and BBHQ1, LLC (a subsidiary of Blackbaud, Inc.) |  | 10-K |  | 2/20/2018 |  | 10.93 |  |
10.6 |  | Third Amendment to Lease Agreement, dated as of December 11, 2017, between HPBB1, LLC and BBHQ1, LLC (a subsidiary of Blackbaud, Inc.) |  | 10-K |  | 2/20/2018 |  | 10.94 |  |
10.7 |  | Fourth Amendment to Lease Agreement, dated as of February 28, 2018, between HPBB1, LLC and BBHQ1, LLC (a subsidiary of Blackbaud, Inc.) |  | 10-Q |  | 5/4/2018 |  | 10.95 |  |
10.8 | † | Form of Employee Agreement between Blackbaud, Inc. and Kevin P. Gregoire |  | 10-Q |  | 5/3/2019 |  | 10.97 |  |
10.9 |  | Fifth Amendment to Lease Agreement, dated as of February 18, 2020, between HPBB1, LLC and BBHQ1, LLC (a subsidiary of Blackbaud, Inc.) |  | 10-Q |  | 8/4/2020 |  | 10.1 |  |
10.1 0 |  | Sixth Amendment to Lease Agreement, dated as of March 17, 2020, between HPBB1, LLC and BBHQ1, LLC (a subsidiary of Blackbaud, Inc.) |  | 10-Q |  | 8/4/2020 |  | 10.2 |  |
10.1 1 |  | Seventh Amendment to Lease Agreement, dated as of April 14, 2020, between HPBB1, LLC and BBHQ1, LLC (a subsidiary of Blackbaud, Inc.) |  | 10-Q |  | 8/4/2020 |  | 10.3 |  |

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|  |  |  | Filed In
Exhibit Number |  | Description of Document |  | Registrant’s Form |  | Dated |  | Exhibit Number |  | Filed Herewith
10.1 2 |  | Eighth Amendment to Lease Agreement, dated as of May 26, 2020, between HPBB1, LLC and BBHQ1, LLC (a subsidiary of Blackbaud, Inc.) |  | 10-Q |  | 8/4/2020 |  | 10.4 |  |
10.1 3 |  | Ninth Amendment to Lease Agreement, dated as of June 8, 2020, between HPBB1, LLC and BBHQ1, LLC (a subsidiary of Blackbaud, Inc.) |  | 10-Q |  | 8/4/2020 |  | 10.5 |  |
10.1 4 |  | Tenth Amendment to Lease Agreement, dated as of June 26, 2020, between HPBB1, LLC and BBHQ1, LLC (a subsidiary of Blackbaud, Inc.) |  | 10-Q |  | 8/4/2020 |  | 10.7 |  |
10.1 5 |  | Eleventh Amendment to Lease Agreement, dated as of August 13, 2020, between BBHQ1, LLC and BBHQ1, LLC (a subsidiary of Blackbaud, Inc.) |  | 10-Q |  | 11/3/2020 |  | 10.3 |  |
10.1 6 |  | Amended and Restated Credit Agreement, dated as of October 30, 2020, by and among Blackbaud, Inc., and certain of its subsidiaries, as Borrowers, the lenders referred to therein, Bank of America, N.A., as Administrative Agent, Swingline Lender and Issuing Lender, PNC Bank, National Association, as Syndication Agent, and Regions Bank, BBVA USA and Fifth Third Bank, National Association, as Co-Documentation Agents, with BofA Securities, Inc., PNC Bank, National Association, Regions Capital Markets, BBVA USA and Fifth Third Bank, National Association as Joint Lead Arrangers and Joint Bookrunners |  | 10-Q |  | 11/3/2020 |  | 10.4 |  |
10.1 7 |  | Amended and Restated Pledge Agreement, dated as of October 30, 2020, by Blackbaud, Inc. in favor of Bank of America, N.A., as Administrative Agent, for the ratable benefit of itself and the secured parties referred to therein |  | 10-Q |  | 11/3/2020 |  | 10.5 |  |
10.1 8 | † | Form of Employment Agreement between Blackbaud, Inc. and Kevin McDearis |  | 10-Q |  | 5/4/2021 |  | 10.1 |  |
10.19 |  | LIBOR Transition Amendment, dated as of September 20, 2021, between Blackbaud, Inc. and Bank of America, N.A. |  | 10-Q |  | 11/4/2021 |  | 10.1 |  |
10.2 0 |  | First Incremental Term Loan Agreement, dated as of December 31, 2021, by and among Blackbaud, Inc., the lenders party thereto and Bank of America N.A., as administrative agent |  | 8-K |  | 1/3/2022 |  | 10.1 |  |
10.2 1 |  | Registration Rights Agreement, dated as of December 31, 2021, by and among Blackbaud, Inc., EverFi, Inc., TPG Eon, L.P., each other shareholder party thereto and Eon Stockholder Representative, LLC |  | 8-K |  | 1/3/2022 |  | 10.2 |  |
10.2 2 |  | First Amendment to Credit Agreement, dated as of January 31, 2022, by and among Blackbaud, Inc., the lenders party thereto and Bank of America N.A., as administrative agent |  | 8-K |  | 2/3/2022 |  | 10.1 |  |

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|  |  |  | Filed In
Exhibit Number |  | Description of Document |  | Registrant’s Form |  | Dated |  | Exhibit Number |  | Filed Herewith
10.2 3 |  | LIBOR Transition Amendment, dated as of August 26, 2022, between Blackbaud, Inc. and Bank of America, N.A. |  | 10-Q |  | 3/1/2022 |  | 10.2 |  |
10.24 | † | Amended and Restated Employment and Noncompetition Agreement dated September 20, 2022 between Blackbaud, Inc. and Michael P. Gianoni |  | 8-K |  | 9/21/2022 |  | 10.1 |  |
10.2 5 |  | Consent Agreement, dated as of January 23, 2023, between Blackbaud, Inc. and Bank of America, N.A. |  | 10-K |  | 2/24/2023 |  | 10.30 |  |
10.26 |  | Form of Retention Agreement dated as of April 24, 2023 between Blackbaud, Inc. and each of Anthony W. Boor, David J. Benjamin, Kevin P. Gregoire, Kevin R. McDearis, Kevin W. Mooney and Jon W. Olson |  | 10-Q |  | 5/4/2023 |  | 10.1 |  |
10.2 7 |  | Relocation Agreement dated June 8, 2023 between Blackbaud, Inc. and David J. Benjamin. |  | 8-K |  | 6/12/2023 |  | 10.1 |  |
10.2 8 |  | Third Amendment to Credit Agreement, dated as of April 30, 2024, by and among Blackbaud, Inc., the lenders party thereto and Bank of America N.A., as administrative agent. |  | 10-Q |  | 5/1/2024 |  | 10.1 |  |
10.29 | † | Amended and Restated Blackbaud, Inc. 2016 Equity and Incentive Compensation Plan |  | DEF 14A |  | 4/23/2024 |  | Appendix B |  |
19.1 |  | Blackbaud, Inc. Insider Trading Policy and Guidelines for Certain Securities Transactions |  |  |  |  |  |  |  | X
21.1 |  | Subsidiaries of Blackbaud, Inc. |  |  |  |  |  |  |  | X
23.1 |  | Consent of Independent Registered Public Accounting Firm |  |  |  |  |  |  |  | X
23.3 |  | Consent of Sidley Austin LLP |  | 8-K |  | 4/1/2022 |  | 23.1 |  |
31.1 |  | Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |  |  |  |  |  |  |  | X
31.2 |  | Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |  |  |  |  |  |  |  | X
32.1 |  | Certification by the Chief Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |  |  |  |  |  |  |  | X
32.2 |  | Certification by the Chief Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |  |  |  |  |  |  |  | X
97.1 |  | Blackbaud, Inc. Executive Incentive Compensation Clawback Policy |  | 10-K |  | 2/21/2024 |  | 97.1 |  |

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|  |  |  | Filed In
Exhibit Number |  | Description of Document |  | Registrant’s Form |  | Dated |  | Exhibit Number |  | Filed Herewith
101.INS |  | Inline XBRL Instance Document - the Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL Document. |  |  |  |  |  |  |  | X
101.SCH |  | Inline XBRL Taxonomy Extension Schema Document |  |  |  |  |  |  |  | X
101.CAL |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document |  |  |  |  |  |  |  | X
101.DEF |  | Inline XBRL Taxonomy Extension Definition Linkbase Document |  |  |  |  |  |  |  | X
101.LAB |  | Inline XBRL Taxonomy Extension Label Linkbase Document |  |  |  |  |  |  |  | X
101.PRE |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document |  |  |  |  |  |  |  | X
104 |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |  |  |  |  |  |  |  | X

† | Indicates management contract or compensatory plan, contract or arrangement.

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ITEM 16. FORM 10-K SUMMARY
Not applicable.

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|  | SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

|  | Blackbaud, Inc.
Signed: | February 21, 2025 | /S/ MICHAEL P. GIANONI
|  | Chief Executive Officer, President and Vice Chairman of the Board
|  | (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this Form 10-K has been signed below by the following persons on behalf of the Registrant and on the dates indicated.

| /S/ | MICHAEL P. GIANONI |  | Chief Executive Officer, President and Vice Chairman of the Board (Principal Executive Officer) |  | Date: | February 21, 2025
|  |  | Michael P. Gianoni |  |  |  |
| /S/ | ANTHONY W. BOOR |  | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |  | Date: | February 21, 2025
|  |  | Anthony W. Boor |  |  |  |
| /S/ | ANDREW M. LEITCH |  | Chairman of the Board of Directors |  | Date: | February 21, 2025
|  |  | Andrew M. Leitch |  |  |  |
| /S/ | DENEEN DEFIORE |  | Director |  | Date: | February 21, 2025
|  |  | Deneen DeFiore |  |  |  |
| /S/ | YOGESH K. GUPTA |  | Director |  | Date: | February 21, 2025
|  |  | Yogesh K. Gupta |  |  |  |
| /S/ | RUPAL S. HOLLENBECK |  | Director |  | Date: | February 21, 2025
|  |  | Rupal S. Hollenbeck |  |  |  |
| /S/ | D. ROGER NANNEY |  | Director |  | Date: | February 21, 2025
|  |  | D. Roger Nanney |  |  |  |
| /S/ | SARAH E. NASH |  | Director |  | Date: | February 21, 2025
|  |  | Sarah E. Nash |  |  |  |
| /S/ | BRADLEY L. PYBURN |  | Director |  | Date: | February 21, 2025
|  |  | Bradley L. Pyburn |  |  |  |
| /S/ | KRISTIAN P. TALVITIE |  | Director |  | Date: | February 21, 2025
|  |  | Kristian P. Talvitie |  |  |  |

118 |  | 2024 Form 10-K