It has been about a month since the last earnings report for Blackbaud (BLKB Quick QuoteBLKB - Free Report) . Shares have added about 21.2% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Blackbaud due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers.

BLKB Q2 Earnings Beat on Gross Margin Gain, Revenues Miss

Blackbaud reported non-GAAP earnings for the second quarter of 2026 of $1.33 per share, up 9.0% year over year. The figure beat the Zacks Consensus Estimate of $1.32 by 0.76%, aided by a higher non-GAAP gross margin and a lower diluted share count.

Revenues of $290.6 million rose 3.0% but missed the consensus mark of $292 million by 0.54%. Contractual and transactional recurring revenues increased, while one-time services declined. Recurring revenues grew 3.3% to $285.3 million and represented 98.2% of total revenues.

BLKB's Recurring Streams Drive Growth

Contractual recurring revenues increased $6.2 million to $186.4 million. Pricing initiatives and demand for cloud solutions supported the increase. Transactional recurring revenues advanced $2.8 million to $98.9 million, helped by higher volumes for Blackbaud Integrated Payments and Blackbaud Tuition Management.

One-time services and other revenues fell to $5.3 million from $5.8 million. Geographically, U.S. revenues reached $234.0 million, while revenues from the United Kingdom and other countries were $37.0 million and $19.6 million, respectively.

Blackbaud's Gross Margin Expands

GAAP cost of revenues declined 1.1% to $112.4 million. The GAAP gross margin expanded 160 basis points to 61.3%, reflecting higher revenues, lower contractor costs and reduced amortization of acquisition-related intangibles, partly offset by increased hosting and data-center costs.

The non-GAAP gross margin improved 70 basis points to 64.2%. However, non-GAAP operating income slipped to $94.6 million from $95.0 million, while the related margin contracted 110 basis points to 32.6% as spending on marketing, research and internal software increased.

BLKB's AI Pipeline Deepens

The fundraising Development Agent reached general availability ahead of schedule. Blackbaud also announced four additional Agents for Good offerings covering data health, admissions, digital marketing and accounts payable. The company said these products are not expected to make a meaningful revenue contribution in 2026.

More than half of Raiser’s Edge NXT customers use machine-learning-enabled donor prospecting, generating tens of billions of predictions annually. Management also cited competitive wins and returning customers as evidence that product innovation is supporting bookings and win rates.

Blackbaud's Cash Flow Backs Buybacks

Second-quarter operating cash flow increased $24.1 million to $91.1 million. Non-GAAP free cash flow rose $23.8 million to $75.3 million, with the free cash flow margin improving 760 basis points to 25.9%.

During the first half, BLKB repurchased 2.4 million shares for $110.1 million. Including net share settlement of employee awards, repurchase activity represented 6.2% of the shares outstanding on Dec. 31, 2025. Weighted average diluted shares fell 7.0% year over year to 44.9 million.

BLKB Reaffirms 2026 Outlook

Blackbaud reaffirmed 2026 revenue guidance of $1.173-$1.179 billion, adjusted EBITDA of $430-$438 million, non-GAAP earnings of $5.15-$5.25 per share and free cash flow of $280-$290 million. Management expects results in the upper half of all four ranges, with earnings and free cash flow at or above the high end.

Performance is expected to be weighted toward the second half, particularly the fourth quarter. A new platform fee should contribute to that weighting. The roughly 40% larger contractual renewal cohort is expected to reduce 2026 revenue growth by 0.5-0.75 percentage points.

Blackbaud's Contract Base Adds Visibility

Gross dollar retention was approximately 91% for the 12 months ended June 30. Roughly 90% of contractual recurring revenues are tied to contracts of three years or longer, while 25% are associated with terms of at least four years.

Deferred revenues increased 9.3% from year-end to $406.4 million. Remaining performance obligations totaled about $1.6 billion, with approximately 45% expected to be recognized over the next 12 months. Blackbaud ended the quarter with $34.4 million in cash, $1.15 billion in debt and a net leverage ratio of 2.58.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a flat trend in fresh estimates.

VGM Scores

At this time, Blackbaud has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for value investors.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Blackbaud has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Blackbaud is part of the Zacks Computer - Software industry. Over the past month, Commvault Systems (CVLT Quick QuoteCVLT - Free Report) , a stock from the same industry, has gained 20.6%. The company reported its results for the quarter ended June 2026 more than a month ago.

Commvault reported revenues of $314.13 million in the last reported quarter, representing a year-over-year change of +11.4%. EPS of $1.42 for the same period compares with $1.01 a year ago.

For the current quarter, Commvault is expected to post earnings of $1.25 per share, indicating a change of +37.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.5% over the last 30 days.

Commvault has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.