Blackbaud Announces Reauthorized, Expanded and Replenished $800 Million Stock Repurchase Program

Rhea-AI Summary

Blackbaud (NASDAQ: BLKB), a leading software provider for social impact, has announced a significant expansion of its stock repurchase program. The board of directors has increased the total capacity from $500 million to $800 million for repurchasing the company's common stock. CEO Mike Gianoni emphasized that repurchasing shares at the current valuation is the best use of capital to enhance shareholder value.

In the first half of 2024, Blackbaud repurchased 2,954,211 shares for $262.6 million, representing about 5.5% of outstanding common stock as of December 31, 2023. The company's strong profitability, improving cash flows, and available debt capacity support this expanded repurchase strategy, which is expected to continue for the foreseeable future.

Positive

• Increased stock repurchase program capacity from $500 million to $800 million
• Repurchased 2,954,211 shares (5.5% of outstanding stock) for $262.6 million in H1 2024
• Strong and improving profitability and cash flows supporting the repurchase strategy
• Available capacity under new debt facility to support repurchases

Negative

• Significant cash outlay for stock repurchases may limit funds for other investments or growth initiatives

Insights

Financial Analyst

Blackbaud's decision to increase its stock repurchase program from $500 million to $800 million is a significant indicator of the company's current financial health and its outlook on future performance. When a company opts to buy back its own shares, it often means it believes its stock is undervalued or that it has excess cash that it feels can be better used to return value to shareholders rather than sitting idle or being invested elsewhere.

Share repurchases reduce the number of outstanding shares, which can lead to an increase in earnings per share (EPS) and often support the stock price. For retail investors, this move is generally a positive sign, as it suggests the company has confidence in its long-term prospects and is actively working to enhance shareholder value. One thing to watch, however, is the long-term impact on Blackbaud's balance sheet, especially with the new debt facility mentioned. Increased debt can pose risks if not managed properly.

To understand the potential impact, it's also worth noting the company's recent repurchase activity: repurchasing 5.5% of its outstanding shares for $262.6 million in the first half of 2024. This shows a proactive approach and a significant investment in its own equity, which may be appealing to investors looking for a company that is committed to driving shareholder value.

Market Research Analyst

The expanded stock repurchase program by Blackbaud underscores a broader trend in the tech sector where companies leverage stock buybacks as a strategy to return value to shareholders. This can be particularly meaningful for a company like Blackbaud, which operates in the niche market of software for social impact. Buybacks can signal to the market that management believes the current valuation does not reflect the company’s intrinsic value, encouraging investor confidence.

However, retail investors should consider the potential opportunity costs of such a move. Money spent on share buybacks is capital that is not being invested in other growth opportunities like research and development, market expansion, or acquisitions. Given Blackbaud's focus on the social impact sector, which is rapidly evolving and often requires continuous innovation, there might be a balance to strike between returning cash to shareholders and investing in future growth.

Moreover, while the buyback program might provide short-term stock price support and improve financial metrics like EPS, it does not necessarily equate to long-term value creation if the underlying business does not continue to perform well. Investors should balance this buyback news with a thorough examination of Blackbaud’s operational performance and market positioning.

CHARLESTON, S.C., July 18, 2024 /PRNewswire/ -- Blackbaud (NASDAQ: BLKB), the leading provider of software for powering social impact, today announced its board of directors has reauthorized, expanded and replenished the company's existing stock repurchase program, raising the total capacity from $500 million to $800 million available for repurchases of the company's common stock.

"We believe there is no better use of capital at this time than repurchasing shares at this valuation to improve shareholder value," said Mike Gianoni, president, CEO and vice chairman of the board of directors, Blackbaud. "This new authorization, empowered by our strong and improving profitability and cash flows and coupled with available capacity under our new debt facility, demonstrates our commitment to this strategy which will continue for the foreseeable future."

Under the program, the company may repurchase shares of its common stock in the open market, through private transactions, or otherwise. During the first half of 2024, prior to the replenishment on July 16, 2024, the company repurchased 2,954,211 shares of its stock for $262.6 million under the stock repurchase program, representing approximately 5.5% of the company's common stock outstanding as of December 31, 2023. As of July 16, 2024, the remaining amount available to purchase stock under the company's repurchase program was $800 million.

Additional details can be found in Blackbaud's Form 8-K filed today with the Securities and Exchange Commission.

About Blackbaud
Blackbaud (NASDAQ: BLKB) is 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, Blackbaud's essential software is built to accelerate impact in fundraising, nonprofit financial management, digital giving, grantmaking, corporate social responsibility and education management. With millions of users and over $100 billion raised, granted or managed through Blackbaud platforms every year, Blackbaud's solutions are unleashing the potential of the people and organizations who change the world. Blackbaud has been named to Newsweek's list of America's Most Responsible Companies, Quartz's list of Best Companies for Remote Workers, and Forbes' list of America's Best Employers. A remote-first company, Blackbaud has operations in the United States, Australia, Canada, Costa Rica and the United Kingdom, supporting users in 100+ countries. Learn more at www.blackbaud.com or follow us on X/Twitter, LinkedIn, Instagram and Facebook.

Media Inquiries
media@blackbaud.com 

Forward-looking Statements
Except for historical information, all of the statements, expectations and assumptions contained in this news release are forward-looking statements that involve a number of risks and uncertainties, including statements regarding expected benefits of products and product features. Although Blackbaud attempts to be accurate in making these forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based. In addition, other important factors that could cause results to differ materially include the following: general economic risks; uncertainty regarding increased business and renewals from existing customers; continued success in sales growth; management of integration of acquired companies and other risks associated with acquisitions; risks associated with successful implementation of multiple integrated software products; the ability to attract and retain key personnel; risks associated with management of growth; lengthy sales and implementation cycles; technological changes that make our products and services less competitive; and the other risk factors set forth from time to time in the SEC filings for Blackbaud, copies of which are available free of charge at the SEC's website at www.sec.gov or upon request from Blackbaud's investor relations department. All Blackbaud product names appearing herein are trademarks or registered trademarks of Blackbaud, Inc.

 

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SOURCE Blackbaud

FAQ

What is the new capacity of Blackbaud's stock repurchase program?

Blackbaud (BLKB) has expanded its stock repurchase program capacity from $500 million to $800 million.

How many shares did Blackbaud repurchase in the first half of 2024?

Blackbaud (BLKB) repurchased 2,954,211 shares for $262.6 million in the first half of 2024, representing about 5.5% of outstanding common stock as of December 31, 2023.

Why is Blackbaud expanding its stock repurchase program?

Blackbaud (BLKB) believes repurchasing shares at the current valuation is the best use of capital to improve shareholder value, supported by strong profitability and cash flows.

When did Blackbaud announce the expansion of its stock repurchase program?

Blackbaud (BLKB) announced the expansion of its stock repurchase program on July 18, 2024.