Blackbaud, Inc.

Good day, and welcome to Blackboard's third quarter 2023 earnings call. Today's conference is being recorded. I'll now turn the conference over to Kevin Mooney, Executive Vice President, Investor Relations. Please go ahead, sir.

Good morning, everyone. Thank you for joining us on Blackboard's third quarter 2023 earnings call. Joining me on the call today are Mike Giannone, Blackboard's President and CEO, and Tony Boer, Blackboard's Executive Vice President and CFO. Mike and Tony will make prepared comments, and then we'll open the lineup for your questions. Please note that our comments today contain certain forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from those projected. Please refer to our most recent Form 10-K and other SEC filings for more information on those risks. The discussion today will focus on non-GAAP results. Please refer to our press release and the investor materials posted to our website for the full details of our financial performance, including GAAP results, as well as full year guidance. We believe that a combination of both GAAP and non-GAAP measures are more representative of how we internally measure our business. Unless otherwise specified, we will refer only to non-GAAP financial measures on this call. Please note that non-GAAP financial measures should not be considered in isolation form. or as a substitute for GAAP measures. With that, I'll turn the call over to you, Mike.

Thank you for joining the call today. I'm pleased to share that Blackbaud produced very strong results in the third quarter. Our performance accelerated as we continued to execute on our five-point operating plan to improve product innovation, accelerate bookings growth, optimize transactional revenue, modernize contract pricing, and improve cost management. You may recall that on last quarter's call, I suggested that our plan would deliver a one-two punch. First, in improvement in profitability, and second, improved organic revenue growth. In the second quarter, the business delivered the first punch, much improved margins. This strong margin expansion continued in the third quarter, with total cost again being below last year's level. We're continuing to aggressively manage our cost and margin going forward. This quarter, we also delivered the second punch with improved organic revenue growth. For the quarter, total organic revenue grew 6.6 percent. That's more than twice the rate of growth in the second quarter and up almost five percentage points from a year ago. And our organic reoccurring revenue, which is our most strategic revenue line, comprising 97 percent of our total revenue, grew even faster at 8.3 percent. The combination of accelerating revenues and lower costs drove improved margins and excellent cash flow for the third quarter. As a result of our execution on both the top and bottom line, we delivered on our commitment to become a Rule of 40 company with a result of 41.6 percent. We attained this North Star goal a few years before our initial expectation and a full quarter ahead of recent expectations. And that score is up a remarkable 14 points from the third quarter of last year. Results like these take a coordinated effort across the entire company. I'd like to thank Blackbaud's employees for their strong execution and commitment to delivering for our customers. In the quarter, our team made continued progress across all five points of our plan. One aspect I'd like to discuss in greater detail on today's call are the many new capabilities we are driving through innovation. During the quarter, we continue to invest in new innovations that increase the value of our products and solve customer pain points. We're investing for the intermediate and longer term with several exciting opportunities. For example, during the quarter, we placed a new optimized donation form into an early adopter program with customers across charity, education, and arts and cultural organizations. Customers appreciated our investment in a system of engagement designed to attain higher conversion rates with fewer clicks and therefore drive customer revenue. So it's both more impactful and more efficient. We expect to make this generally available in the first half of next year. Also, we're hoping to solve a large customer pain point with the early introduction of a new product called Impact Edge, starting in the corporate sector. This newly developed solution aggregates EverFi's educational impact data with employee volunteering and giving data from our Your Cause platform. It provides a single view of a corporation's social impact program and replaces labor-intensive, manually produced reports into a standardized structure. With Impact Edge, human resources and DE&I leaders are able to track and analyze performance of their programs in real time. Current plans are to put this new solution into an early adopter program this year with a full rollout in the second half of 2024. And lastly, we continue to build on our intelligence for good strategy that we introduced last quarter that leverages the power of machine learning and artificial intelligence. For example, Recently, we introduced a new capability we call the story enhancer in JustGiving, our consumer giving platform. This generative AI capability resulted in more engagement among early adopters and is expected to have positive downstream impact on our payments revenue. We're enthusiastic about what these new features and products can do to make our customers more effective and efficient, increase the value of our offerings, and add to our growth going forward. To illustrate how our products impact our customers, I'd like to share a few examples of recent customer wins. The Sarcoma Foundation of America was a new logo win for Blackbaud in the third quarter. They came to us with the goal of increasing awareness around the disease and raising funds for researchers and their advocacy efforts. They chose to replace two competitive products with Blackbaud's Razor's Edge NXT donor management system and Team Razor for their peer-to-peer fundraising. Delaware County Christian School is a K-12 independent school in Pennsylvania. They were running several disparate systems, one for academics, a second for advancement, and a third for the business office. This was a real pain point. There was no 360 degree view of students. Revenue management was challenging, and communication was fragmented across departments. As part of their strategic plan, The school was looking for an innovative education technology partner while enhancing school communication and fellowship. Blackbaud is providing a total school solution to enable their strategic vision. On the corporate impact side of the business, EverFi welcomed Cisco as a new partner. Cisco Systems is partnering with EverFi to offer mental wellness and financial literacy education for K-12 students and adults across Selma, Alabama, as a part of their broader CSR program efforts in the region. Additionally, Everfire renewed and expanded their nine-year partnership with the National Hockey League and National Hockey League Players Association, who sponsored the Future Goals Hockey Scholar Education Course that leverages the game of hockey to teach STEM skills to students in grades four to seven. The third quarter was also a period of very active customer outreach. with several high-touch events. For example, the annual JustGiving Awards were held in London and received over 20,000 votes to celebrate 24 individuals that fundraised for causes on our peer-to-peer platform. In Charleston, several top nonprofit CIOs convened at our Digital Innovation Summit that covered topics ranging from AI to cybersecurity. And our Corporate Impact Team assembled some of its largest customers to its annual Impact Summit in Miami. There, leaders discuss why social impact is a business imperative and how to best drive impact to employee volunteering and giving. Finally, last week, we held BBCon in Denver with smaller pop-ups slated for Toronto, Sydney, and London. This is our largest customer conference, and this year, we held the conference in hybrid format of virtual and in-person attendees. This had a dual benefit in expanding the tent of attendees while also enabling the personal camaraderie and interaction that our customers enjoy. Through these events, we reached the full spectrum of our customers, from individuals to nonprofits to corporations. In addition to strengthening our robust brand, this program of outreach affirms our position as the leading software company singularly focused on a social impact movement. With that, I'll turn the call over to Tony for coverage of our financial results.