BLKB · Research
Blackbaud's 11.61x EBITDA Skips $52.58M of Capitalized Software While Debt Helps Fund the Buyback
Blackbaud repurchased $111.64M of stock in the first half on $65.68M of owner cash, and the 10-Q ties the gap to net borrowings. Capitalized software sits outside EBITDA and is 83.26% of capex.
- EV / GAAP EBITDA
- 11.61x
- Capitalized software
- $52.58M 83.26% of capex
- First-half buyback
- $111.64M 1.70x first-half owner cash
- Owner cash
- $186.51M after stock pay and capex
| Scorecard | Read | Filing |
|---|---|---|
| Key multiple | 11.61x EV / GAAP EBITDA on $311.34M (operating income $227.18M plus D&A $84.16M); EV $3.62B | 10-K, 10-Q cash flow |
| Thesis | EBITDA leaves out the cash cost of building the product, and the buyback outruns the cash left after stock pay | 10-Q cash flow, MD&A |
| What proves it wrong | Repurchases are funded from owner cash alone, with net borrowings at or below zero | 10-Q cash flow |
| Second test | Revenue growth rises above the 3.04% of Q2 with capitalized software flat, so the spend earns a return | 10-Q income statement |
| Next catalyst | Third quarter results on Oct 28, 8:00 a.m. ET, before the open | Company press release |
| Debt | $1.15B at carrying value (revolver $326.00M, term loans $760.00M, real estate loans $52.40M, other $13.80M); net leverage 2.58x against a 3.75x limit | 10-Q Note 6, MD&A |
| Cash | $34.39M of cash and equivalents; $846.62M of restricted cash excluded, held for customers | 10-Q balance sheet |
| Owner-cash staircase, TTM to Jun 30, 2026 | $M | EV / amount |
|---|---|---|
| GAAP EBITDA (operating income $227.18M plus D&A $84.16M) | 311.34 | 11.61x |
| Operating cash flow | 339.73 | 10.64x |
| Less stock pay of $90.07M | 249.66 | 14.48x |
| Less capex of $63.15M: owner cash | 186.51 | 19.38x |
What EBITDA leaves out
Blackbaud sells software to nonprofits and schools. Subscription contracts generally run three years at inception, with three-year renewals [4].
Gross margin is 59.62% and GAAP operating margin is 19.79% [1][4].
EBITDA adds back all D&A. D&A includes the amortization of software that Blackbaud builds and capitalizes, and the cash for that building sits in capex.
Capitalized software was $52.58M over the last twelve months, 83.26% of capex of $63.15M [1][4].
Take that spend out of EBITDA and the multiple is 13.97x on $258.76M (derived). The same lines nearly match inside the filing: the first half carried $25.20M of software amortization in non-GAAP EBITDA [5] and $26.13M of cash capitalized [1].
The spend recurs.
Stock pay adds to the gap. It is $90.07M, 26.51% of operating cash flow and 7.85% of revenue, and it brings owner cash down to $186.51M, a multiple of 19.38x [1][4].
The buyback and the debt
In the first half, operating cash flow was $142.51M, stock pay was $46.59M, and capex with capitalized software was $30.24M. Owner cash was $65.68M [1].
Repurchases cost $111.64M, which is 1.70x that figure. Another $25.32M went to taxes on vested employee shares, so cash uses reach $136.96M, or 2.09x [1].
The 10-Q names borrowing as the bridge. Net borrowings were $28.64M ($209.50M raised less $180.86M repaid), and the company attributes the increase mainly to the repurchase program and employee tax payments [2][1].
Debt principal moved from $1.11B at Dec 31, 2025 to $1.15B, and the weighted average rate from 5.29% to 5.60% [1].
Pace slowed in Q2. Repurchases were $28.00M in the quarter against about $82.10M in Q1 (derived) [2]. The company said in February it intends to repurchase 5% to 10% of its shares outstanding at Dec 31, 2025 during 2026, and $850.40M of the $1.00B authorization remains [2].
Net leverage under the 2024 Credit Facilities is 2.58x against a 3.75x limit, up from 2.52x at Dec 31, 2025. A repurchase needs a pro forma ratio 0.25 below the limit, or 3.50x. Interest coverage is 6.56x against a 2.50x floor
Peers and what we watch
| Company | EV / GAAP EBITDA | EV / operating cash flow | EV / owner cash | Latest quarter revenue growth | Stock pay, % of revenue |
|---|---|---|---|---|---|
| Blackbaud (BLKB) | 11.61x | 10.64x | 19.38x | 3% | 7.9% |
| Guidewire (GWRE) | 86.54x | 39.49x | 87.01x | 26.9% | 12.3% |
| Paylocity (PCTY) | 18.42x | 17.20x | 31.72x | 10.5% | 7.8% |
| Flywire (FLYW) | 29.94x | 12.31x | 21.69x | 27.2% | 9.9% |
| ADP (ADP) | 17.76x | 22.12x | 26.55x | 7% | 1.1% |
Blackbaud has the lowest multiple of the five on all three measures and the slowest revenue growth, 3.04% against 6.95% at ADP. Its stock pay of 7.85% of revenue is close to Paylocity at 7.83%.
- Oct 28: the repurchase pace against $28.00M in Q2, and net borrowings against $28.64M in the first half [10][2].
- Net leverage against 2.58x and the 3.50x level that gates repurchases.
- Capitalized software against $25.20M of half-year amortization.
- Employee tax payments, which concentrate in Q1 when most awards vest, and add to cash uses.
Figures are derived from filed statements. Nothing here is a price view.
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