#1blackbaud Blackbaud Investor Presentation TICKER: BLKB November 3, 2021#2Forward-Looking Statements This presentation contains forward-looking statements within the meaning of 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 in this presentation consist of, among other things, statements regarding future operating results, all of which are based on current expectations, estimates, and forecasts, and the beliefs and assumptions of the Company's management. Words such as "expects," "anticipates," "aims," "projects," "intends," "plans," "likely," "will," "should," "believes," "estimates," "seeks," variations of such words, and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors that could cause actual results to differ materially from the Company's expectations expressed in this presentation include: expectations for continuing to successfully execute the Company's growth and operational improvement strategies; expectations of future growth in the social good software solutions market, segments within that market and the Company's total addressable market; expectations that achieving the Company's goals will extend its competitive advantage and provide improved product quality and innovative solutions for its customers; expectations that centers of excellence and use of best-of-breed platforms will drive increasing operating efficiency and contribute to margin improvement; expectations that the Company's financial position provides flexibility to fuel future growth through acquisitions or other opportunities; expectations that past acquisitions have expanded the Company's customer and market opportunities; risks associated with unfavorable media coverage; risks associated with acquisitions; risks inherent in the expansion of our international operations; risks related to the United Kingdom's departure from the European Union; the possibility of reduced growth or amount of charitable giving; uncertainty regarding increased business and renewals from existing customers; risks associated with implementation of software products; the ability to attract and retain key personnel; risks related to the Company's leverage, credit facility and share repurchase program; lengthy sales and implementation cycles; technological changes that make the Company's products and services less competitive; risk related to the adequacy of our data security procedures and cybersecurity and data protection risks and related liabilities; the implementation of our new global enterprise resource planning system; uncertainty regarding the COVID-19 disruption and potential legal proceedings involving us and uncertainty regarding existing legal proceedings and the other risk factors set forth from time to time in the Company's SEC filings. Factors that could cause or contribute to such differences include, but are not limited to, those summarized under Risk Factors in the Company's most recent annual report on Form 10-K, and any quarterly reports on Forms 10-Q thereafter, copies of which are available free of charge at the SEC's website at www.sec.gov or upon request from the Company's investor relations department. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent the Company's beliefs and assumptions only as of the date of this presentation. Except as required by law, the Company does not intend, and undertakes no obligation, to revise or update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Trademark Usage All Blackbaud product names appearing herein are trademarks or registered trademarks of Blackbaud, Inc. This presentation contains trade names, trademarks and service marks of other companies. The Company does not intend its use or display of other parties' trade names, trademarks and service marks to imply a relationship with, or endorsement or sponsorship of, these other parties. blackbaud 2#3Historical Financials and Non-GAAP Financial Measures Use of Non-GAAP Financial Measures: The Company has provided in this presentation financial information that has not been prepared in accordance with GAAP. The Company uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating the Company's ongoing operational performance. The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial results from period to period with other companies in the Company's industry, many of which present similar non-GAAP financial measures to investors. 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 Company believes that these non-GAAP financial measures reflect the Company's ongoing business in a manner that allows for meaningful period-to-period comparison and analysis of trends in the Company's business. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliations of these non-GAAP measures to their most directly comparable GAAP financial measures. Blackbaud discusses non-GAAP organic revenue growth measures, including non-GAAP organic revenue growth, non-GAAP organic revenue growth on a constant currency basis and non-GAAP organic recurring revenue growth, which Blackbaud believes provide useful information for evaluating the periodic growth of its business as well as growth on a consistent basis. Each measure of non-GAAP organic revenue growth excludes incremental acquisition-related revenue attributable to companies acquired in the current fiscal year. For companies acquired in the immediately preceding fiscal year, if any, each measure of non-GAAP organic revenue growth reflects presentation of full year incremental non-GAAP revenue derived from such companies as if they were combined throughout the prior period, and it includes the current period non-GAAP revenue attributable to those companies, as if there were no acquisition- related write-downs of acquired deferred revenue to fair value as required by GAAP. In addition, each measure of non-GAAP organic revenue growth excludes prior period revenue associated with divested businesses. The exclusion of the prior period revenue is intended 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. Blackbaud believes this presentation provides a more comparable representation of our current business' organic revenue growth and revenue run-rate. In these materials, Blackbaud is presenting the following unaudited information: historical recurring and total revenue for the three and nine month periods ended September 30, 2021, for the fiscal year ended December 31, 2020 and the interim periods therein; calculations for recurring revenue growth and total revenue growth for the nine month period ended September 30, 2021 and the interim periods therein; and calculations of non-GAAP organic recurring revenue growth, non-GAAP organic revenue growth and non-GAAP organic revenue growth on a constant currency basis for the same periods. Rule of 40 is defined 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 development costs; acquisition-related deferred revenue write-down; stock-based compensation; acquisition-related integration costs; acquisition-related expenses; employee severance; restructuring and other real estate activities; and costs, net of insurance, related to the previously disclosed security incident discovered in May 2020 (the "Security Incident"). Non-GAAP free cash flow is defined as operating cash flow less capital expenditures, including costs required to be capitalized for software development, and capital expenditures for property and equipment. Historical Financial Statements Being Presented: In these materials, Blackbaud is presenting the following unaudited historical financial information: historical consolidated balance sheets as of the fiscal year ended December 31, 2020 and interim consolidated balance sheets for each of the quarters within fiscal 2021 and 2020; historical consolidated statements of comprehensive income for the fiscal year ended December 31, 2020 and interim consolidated statements of comprehensive income for each of the quarters within fiscal 2021 and 2020; historical consolidated statements of cash flows for the fiscal year ended December 31, 2020 and interim consolidated statements of cash flows for each of the interim year-to-date periods within fiscal 2021 and 2020; and historical non-GAAP financial information for the fiscal year ended December 31, 2020 and for each of the quarters within fiscal 2021 and 2020 as well as reconciliations of the non-GAAP measures to their most directly comparable GAAP measures and related non-GAAP adjustments. Blackbaud is providing this unaudited financial information to allow investors and analysts to more easily access and review the Company's historical consolidated financial data by including such information in one document. Reconciliation of GAAP to Non-GAAP Financial Measures: Reconciliations of the most directly comparable GAAP measures to non-GAAP financial measures and related adjustments, as well as details of Blackbaud's methodology for calculating non-GAAP organic revenue growth, non-GAAP organic revenue growth on a constant currency basis, non-GAAP organic recurring revenue growth and Rule of 40 can be found in the Appendix to these materials and on the "Investor Relations" page of the Company's website. Blackbaud has not reconciled forward-looking non-GAAP financial measures contained in this investor material to their most directly comparable GAAP measures. Such reconciliations would require unreasonable efforts at this time to estimate and quantify with a reasonable degree of certainty various necessary GAAP components, including for example those related to compensation, acquisition transactions and integration, tax items or others that may arise. These components and other factors could materially impact the amount of the future directly comparable GAAP measures, which may differ significantly from their non-GAAP counterparts. blackbaud 3#4Key Messages 1 Leader in a large, resilient, and growing global market 2 Multiple levers exist to accelerate revenue growth 3 Revenue growth and scalability drive margin expansion 4 Rapidly innovating for our customers and positioned to capture digital shift blackbaud Driving toward our long-term aspirational goal to achieve: Mid to High Single-Digit organic revenue growth 40%+ using a Rule of 40 framework 4#5blackbaud 01 02 Our Markets Key Differentiators ARITY 100 1034 AUNVID 050-008 Strategy for Growth 1021 04 CHARITY 1067 MARATHON Financial Strategy 1010 1034 5#6Social good is a resilient, significant global sector ARTS AND CULTURAL ORGANIZATIONS COMPANIES FAITH COMMUNITIES FOUNDATIONS HEALTHCARE ORGANIZATIONS HIGHER EDUCATION INSTITUTIONS INDIVIDUAL CHANGE AGENTS K-12 SCHOOLS NONPROFITS + + blackbaud 6#7Blackbaud is the world's leading cloud software company powering social good $100B+ raised, granted, and invested in their programming by our customers each year¹ 30 of 32 largest nonprofit hospitals4 Millions of users across 100+ countries¹ 93% of higher education institutions with billion-dollar campaigns5 80% of the most influential nonprofits² 25 of the largest Catholic Dioceses in the US¹ 1 out of 3 Fortune 500 companies³ 150+ experts dedicated to arts and cultural organizations¹ Fast Company 100 Best Workplaces for Innovators, 2020 ANITA /19 B.ORG TOP COMPANIES FOR WOMEN TECHNOLOGISTS 2019 LEADER Forbes 2020 THE BEST EMPLOYERS for WOMEN POWERED BY STATISTA Forbes 2019 AMERICA'S BEST MIDSIZE EMPLOYERS Powered by statista ✓ Forbes 2019 THE BEST EMPLOYERS for DIVERSITY POWERED BY STATISTA IR BEST CUSTOMER SUPPORT 2021 1st Place: Blackbaud Education Management Solutions BRONZE 2020 STEVIE WINNER FOR SALES & CUSTOMER SERVICE TR TrustRadius TOP RATED 2019 TR TrustRadius TOP RATED 2018 Nonprofit CRM Solution Nonprofit Financial Accounting Solution Source: (1) Internal Statistics, (2) Top 50 listed by The Street.com featured by MSN, (3) Fortune 500, (4) Becker's Hospital Review, (5) Council for Advancement and Support of Education blackbaud 7#8Driving significant value for our customers $450K Canadian dollars raised through Peer-to-Peer Fundraising, powered by JustGiving, during "The World Needs More Nerds" campaign BROWN SCIENCE WARLD UNITED AIRLINES b➤ SCHOOLS $150K raised by Garnet Health Foundation in the first six weeks using peer-to-peer fundraising ACERO CHICAGO Garnet Health FOUNDATION San Diego Humane SOCIETY INSPIRE COMPASSION- $3.5M raised by Brown University in 24 hours, a 63% increase in year over year fundraising on #GivingTuesday 300K meals packed by employees for Rise Against Hunger using YourCause's CSR Connect 2 weeks saved off month-end close process for Acero Schools in Chicago +513% growth in sustaining donor program for San Diego Humane Society Sourced from Blackbaud customer stories blackbaud 8#9Blackbaud's addressable opportunity has doubled in a large and growing market through innovation and winning M&A strategy 2021 Total Market $20B+ 2013 Total Market $14-$15B Total Addressable Market ~$4.5B Blackbaud $0.5B Total Addressable Market $10B+ Blackbaud $0.9B Sources: FY 2013 and 2020 Blackbaud Revenue. Global TAM based on IRS data, Canadian Revenue Agency, Private School Universe, IPEDS, Dun & Bradstreet, HIMSS, GuideStar, Blackbaud internal data. Third-party market study. blackbaud 6#10Substantial TAM with significant penetration opportunity $10B+ 2021 TAM <10% Revenue Penetration Fundraising, Relationship Management and Engagement Payment Services Financial Management, Grant and Award Management Organizational and Program. Management Social Responsibility $3B+ $3B+ $1.5B+ $1.5B+ <20% Penetrated <10% Penetrated <10% Penetrated <10% Penetrated Sources: FY 2020 Blackbaud Revenue. Global TAM based on IRS data, Canadian Revenue Agency, Private School Universe, IPEDS, Dun & Bradstreet, HIMSS, Guidestar, Blackbaud internal data blackbaud $1.0B <5% Penetrated 10#11Opportunity for growth extends across vertical markets $10B+ 2021 TAM <10% Revenue Penetration Revenue Penetration by Vertical $3.5B+ TAM Each vertical represents $1.5B+ TAM Each vertical represents $0.5B- $1B TAM Nonprofits <10% Faith- based <5% Companies & Foundations <5% K-12 Schools <20% Healthcare <15% Sources: FY 2020 Blackbaud Revenue. Global TAM based on IRS data, Canadian Revenue Agency, Private School Universe, IPEDS, Dun & Bradstreet, HIMSS, Guidestar, Blackbaud internal data blackbaud Higher Education <25% Arts & Cultural <10% 11#12Digital transformation accelerating in the social good sector SOCIAL GOOD TRENDS Organizations and institutions are more likely to increase rather than decrease their software investment to help address the challenges brought on, or magnified, by the pandemic.¹ PROVEN LEADER Blackbaud is well positioned as the industry leader to capitalize on the macro level trends in the social good industry accelerated by COVID increase in percent of total giving done >40% online in 2020, up to 13% from under 10% for the past two decades² of U.S. private workforce employed by >10% nonprofits and forced to adapt to a more virtual environment³ Industry-leading innovation Purpose-built, scalable, modern cloud software solutions 1Third Market Study 2Blackbaud Charitable Giving Report 2020. 3U.S. Bureau of Labor Statistics blackbaud Unmatched industry expertise 12 22#13blackbaud 01 02 Our Markets Key Differentiators 03 Strategy for Growth 04 Financial Strategy 13#14The market's most comprehensive solutions for social good Blackbaud is the largest cloud software vendor focused blackbaud exclusively on the social good community¹ Fundraising & Organizational Relationship Marketing & Engagement Financial Management Only Blackbaud offers a full Management & Program Management Payment Services Analytics portfolio of purpose-built, integrated solutions Highly fragmented competition offers single-point solutions Large customer base with 93% customer retention Strong balance sheet and cash flows to support strategic acquisitions and internal product development blackbaud OUR COMPETITORS² dp donorperfect Constant Contact Intacct. FOUNDANT technologies salsa ignite action fuel change salesforce.org (and partners) N NEON ONE bloomerang frontstream Classy Network for Good... N NETSUITE abila. INTUIT mailchimp ab quickbooks FACTS Business Solutions for Education welnet compey ellucian. PayPal IATSⓇ We WEALTHENGINE payments Authorize.Net DONOR SEARCH Ministry Brands iwave VANCO benevity 1 IDC Top 40 largest cloud software provider worldwide, 2020 2 Informed by internal competitive intelligence and analysis 14#15Built on industry leading cloud technology blackbaud S ° 000 Blackbaud SKY Our platform powering social good innovation Core Building Blocks SKY Services AND PERFORMANCE SKY AI SKY Analytics™ SKY Reporting™ Unrivaled Data Assets SKY Intelligence SKY API SKY Add-Ins SKY UX" SKY Developer CHOICE AND FLEXIBILITY End-to-End Management of Modern Cloud Solutions SECURITY AND RELIABILITY Cloud Operations INNOVATION VELOCITY UNMATCHED INSIGHT Power of the Platform Common shared components Continuous innovation and feature deployment Accelerated time to market Integrated capabilities Enables a network effect 15#16We make it simple with one accountable partner blackbaud Expertise With nearly four decades of experience, we are undisputed industry experts on technology for social good. Cloud Software We build, integrate, and implement vertical-specific solutions purpose-built for the unique needs of our customers. b Services We drive impact through dedicated customer support and training, along with strategic and managed services tailored to our customers. Data Intelligence Using exclusive data, analytics, and expertise, we deliver unparalleled insight and intelligence to the customers we serve. 16#17A culture built on unmatched commitment to social good 1 We work as one. We bring heart. We invent possibilities. We expect the best. We give back. 9 out of 10 employees volunteer logging over 100,000 hours annually 500+ employees worked previously for social good organizations 1 out of 4 employees serve on nonprofit boards 9 out of 10 employees say Blackbaud's mission was important to their decision to join the company 600+ engineers; largest R&D investment in the sector 1 out of 3 employees belong to an employee-led affinity group 30% of open job postings filled by existing employees through promotion and growth opportunities 1.2x employee participation in our matching gift program vs global average Note: Internal Statistics blackbaud 17#18blackbaud 01 02 Our Markets Key Differentiators 03 Strategy for Growth 04 Financial Strategy 18#19Growth driven by a four-point strategy 1 Expand total addressable market Acquiring, building, and partnering into near adjacent markets and expanding existing ones blackbaud 3 Delight customers with innovative cloud solutions Comprehensive, purpose-built cloud solutions - backed by service to deliver differentiated value 2 Lead with world class teams and operations Executing a world-class operating model on a journey to improve company performance as measured by 'Rule of 40' 4 Focus on employees, ELEVATED culture, and ESG initiatives Continue to evolve our focus on people, culture, and corporate initiatives 19#202014 Expand total addressable market Acquiring, building, and partnering into near adjacent markets MicroEdge WhippleHill blackbaud $4B+ in TAM added through acquisitions and new solution builds Blackbaud Education Management Portfolio Blackbaud Church Management™ JustGiving SMART TUITION™ ✓ Attentive.ly ◇ academicworks Reeher 2015 2016 2017 2018 STRATEGY 1 Your Cause 2019 20#21Lead with world class teams and operations ARTS & CULTURAL ORGANIZATIONS Vertical Go-to-Market Global Centers of Excellence (COEs) NONPROFITS Vertical Go-to-market focus on customer needs and solution selling Centers of Excellence support functions with common systems, metrics, and measurement Productivity Improvement continuous improvement across all functions of the organization blackbaud SALES OPERATIONS COMPANIES Centralized STRATEGY 2 GLOBAL MARKETING K-12 SCHOOLS CUSTOMER SUCCESS Back Office CUSTOMER OPERATIONS FAITH COMMUNITIES RESEARCH, DELIVERY & OPERATIONS DATA INTELLIGENCE HIGHER EDUCATION INSTITUTIONS FOUNDATIONS HEALTHCARE ORGANIZATIONS 21#22Delight customers with innovative cloud solutions blackbaud The Cloud Solution for Faith Communities The Cloud Solution for Companies The Cloud Solution for Arts and Cultural Organizations The Cloud Solution for Foundations b➤ Financial Management 000 Analytics Fundraising and Relationship Management Grant and Award Management Marketing and Engagement Blackbaud SKY Our platform powering social good innovation The Cloud Solution for Healthcare Organizations Organizational and Program Management The Cloud Solution for Higher Education Institutions Payment Services STRATEGY 3 The Cloud Solution for K-12 Schools Social Responsibility The Cloud Solution for Nonprofits 22 22#23STRATEGY 4 Focus on employees, culture and ESG initiatives 99.7%+ Supporting Customers uptime delivered by our cloud solutions 118% increase in completion of Blackbaud University eLearning resources 100+ free insight-packed COVID-19 resources to support the community ~25,000 registrants worldwide for annual bbcon - virtual and free to attendees in 2021 Investing in our People Remote-first workforce strategy Attract and retain top talent regardless of location Focus on well-being Robust resources and support for emotional, social, financial and physical wellness Creating an inclusive culture Building more diverse teams where everyone can be their authentic selves Continuous learning Proactive education for all employees through dedicated learning and development team and LinkedIn Learning® Advancing ESG Initiatives UN global compact Joined as a participant in 2021 ESG steering committee Cross functional and employee-led with CEO sponsorship and board oversight Voluntary reporting disclosures For ESG reporting disclosures, please see our latest Corporate Social Responsibility Report Impact teams Created to involve employees across the company on specific ESG workstreams blackbaud 23#24blackbaud 01 Our Markets 02 Key 366 Differentiators 03 Strategy for Growth 04 86 2430 758 189 10687 5450 Financial Strategy 24#25Strong Q3 2021 Revenue Performance as Pandemic-related Variability Begins to Subside Change in Non-GAAP Revenue Year over Year¹ Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 ■Contractual Recurring Other Transactional 1 Non-GAAP Revenue through 09/30/2021 blackbaud Payments ་ One-time Services & Other ($2M) Contractual Recurring Revenue Strong customer retention of 93% Continued strength in renewals and bookings trends with year-over-year improvement in sales productivity per rep Payments Revenue Benefited from return of larger in-person events and higher percentage of giving being done online Other Transactional Revenue Usage-based transactional revenue continues to recover with the return of in-person attendance and events One-time Services & Other Revenue Declined ~15% vs. Q3 2020, consistent with prior years and in line with strategy 25#26Proven history of double-digit revenue growth inclusive of M&A 11% CAGR FY11 FY20 Total Revenue 15% CAGR FY11 - FY20 Recurring Revenue $371M $913M Recurring 93% of total revenue in 2020 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Recurring One-time Services & Other Non-GAAP Revenue. 2016, 2017, 2018, 2019 and 2020 reflect adoption of ASC 606. blackbaud History of double-digit growth despite one-time services drag Execution of successful M&A strategy grows the revenue base and accelerates growth Multiple levers to drive meaningful growth going forward 26#27Acquisitions grow the revenue base and accelerate growth Acquisition Strategy: SMART TUITION™ JustGiving™ ◇ academicworks Reeher Your Cause ~$175M Expand TAM into recurring revenue contribution from recent acquisitions near adjacencies Accelerate shift to the cloud Accelerate revenue growth Accretive to operating margins 2016 2017 2018 2019 2020 Non-GAAP recurring revenue from acquisitions of Smart Tuition, AcademicWorks, JustGiving, Reeher, and YourCause; acquisition criteria calls for investments to be accretive to operating margins over time. blackbaud 27#28Revenue growth and scalability drive margin expansion Operating Margin 21.1% 20.5% 20.0% 18.8% 17.8% 16.8% 21.3% Operating Margin Leverage opportunities for future expansion: Go-to-Market Efficiency Focusing on digital first lead generation, market coverage and sales effectiveness Engineering and Innovation Invest in innovative cloud solutions Migration to Public Cloud Infrastructure Enhanced scalability and security Operational Scale and Efficiency Continuous simplification, automation and efficiency gains 2014 2015 2016 2017 2018 2019 2020 Non-GAAP operating margin. 2016, 2017, 2018, 2019 and 2020 reflect adoption of ASC 606 blackbaud 28#29Leverage opportunities exist within gross and operating margin Dilutive TOTAL COMPANY GROSS MARGIN One-time Services & Other Payments Dilutive One-time Services & Other 2020 Non-GAAP gross margin and operating margin. blackbaud Accretive Contractual Recurring Other Transactional TOTAL COMPANY OPERATING MARGIN Accretive Payments Contractual Recurring Other Transactional 29 29#30Strategic cash investments to generate future savings Free Cash Flow Margin 17.5% 14.9% 15.0% 17.5% 13.8% 8.3% 2015 2016 2017 2018 2019 2020 Capital Investments $34M $44M $39M $52M $58M $72M Investments in go-to-market, innovation, cloud infrastructure and real estate optimization Free Cash Flow Highlights Free cash flow margins inclusive of investments: • Focused on go-to-market model Innovation and new solution builds Cloud infrastructure . Global workplace strategy Non-GAAP free cash flow is defined as operating cash flow less capital expenditures, including costs required to be capitalized for software development, and capital expenditures for property and equipment. blackbaud 30#31Capital strategy increases shareholder value 1 Maintain liquidity and access to capital . Oct 2020 amended, extended and expanded credit facility to $900M • Targeted max leverage: 3.5x Increasing ROIC Share repurchases 2 Strategic Acquisitions Organic growth and margin expansion Maintain cash on balance sheet Current covenant for leverage ratio is less than or equal to 4.0x through Q3 2022, then drops to 3.75x through maturity. blackbaud Accelerate performance in rule of 40 framework Capital investments consistent with solution roadmap and strategy Invest in operational efficiencies • Drives future cash generation 3 Return capital to shareholders • Nov 2020 expanded share repurchase authorization from $50M to $250M 31#32Leverage Ratio Proven history of deleveraging 3.50x convio 30 3.00x MOVE PEOPLE™ 2.50x 2.00x 1.50x 1.00x 0.50x 0.00x SMART TUITION™ MicroEdge WhippleHill Targeted Max Leverage 3.5x ● Your Cause Reeher academicworks JustGiving™ Optimal Leverage 1.8x ~1.7x Q3'21 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2012 2013 2014 2015 2016 2017 Note: Current covenant for leverage ratio is less than or equal to 4.0x. Calculation of debt over TTM EBITDA is based on credit agreement in place at the end of the respective reporting quarter. blackbaud 2018 2019 2020 2021 32#33Generating strong returns on invested capital 17% 2019 *See appendix for detailed ROIC calculation blackbaud 19% 19% 2013-2020 avg ROIC Driving shareholder value through strong ROIC... 13% ...on a significantly larger invested capital base... 8% WACC 2013-2020 CAGR 2020 Return on Invested Capital (ROIC) ...with potential for increased returns driven by Rule of 40 performance. 33#34Executing an opportunistic share repurchase program-New ~$111M $250M ~$139M Total Authorization ■ Value of Shares Repurchased Remaining Authorization Opportunistic share repurchases Pursue share repurchases when internal estimates determine the company's shares are undervalued by the market Offset dilution Opportunistic share repurchases offset dilution related to our equity compensation program Dividend discontinued in Q2 2020 The removal of a fixed dividend allows Blackbaud to focus its capital on higher ROIC opportunities Effective Apr 6, 2020 our Board of Directors eliminated the payment of future quarterly cash dividends beginning with the second quarter of 2020. Shares repurchased through 9/30/2021. Details on our share repurchases can be found in our most recent SEC filings. blackbaud 34#35• Anticipating solid financial performance in 2021 TOTAL NON-GAAP REVENUE $920M+ Original best estimate: $900M+ ADJUSTED EBITDA MARGIN 26%+ Original best estimate: 25%+ FREE CASH FLOW $150M+ Original floor: $100M+ Contractual recurring revenue benefitting from solid trends in renewals and year over year improvement in sales productivity Q4 transactional revenue could drive variability tied to year-end seasonal giving Benefiting from the return of larger in- person events and a higher percentage of online giving Inclusive of actions taken in response to the pandemic that will not repeat in 2021 Heightened fourth quarter investments in innovation, customer success, and security and cloud infrastructure are progressing well, with some likely to push into early 2022 Stronger than anticipated performance year-to-date with free cash flow of $132M Potential variability through year-end dependent on Q4 transactional revenue Less capital expenditures expected in 2021 given purchase of HQ in Q3 2020 Capitalized software development costs roughly flat to 2020 Reduction of one-time services and other revenue of $15M-$20M Non-GAAP Revenue, non-GAAP adjusted EBITDA margin and non-GAAP free cash flow. Non-GAAP Revenue estimates shown on constant currency basis. 2021 estimates provided on 2/9/2021 and updated as of 11/3/2021. blackbaud 35#36Executing balanced strategy within Rule of 40 framework Near-Term FY 2019 FY 2020 FY 2021 Mid-Term 3-4 Years Post-Pandemic Long-Term Aspirational Goal Non-GAAP Organic Revenue Growth 3.1% 1.2% Variable Mid Single-Digit Annually Mid to High Single-Digit Annually Rule of 401 24.5% 27.7% 25%+ 35%+ 40%+ ¹Rule of 40 measured by non-GAAP organic revenue growth + non-GAAP Adjusted EBITDA margin. Financial goals represent full year targets. Non-GAAP adjusted EBITDA is defined as GAAP net income plus interest, net; income tax provision; depreciation; amortization of intangible assets from business combinations; amortization of software development costs; acquisition-related deferred revenue write-down; stock-based compensation; acquisition-related integration costs; acquisition-related expenses; employee severance; and restructuring and other real estate activities. Please refer to the appendix of this presentation. blackbaud 36#37Multiple organic growth drivers going forward Mid to High Single-Digit Organic Growth 1. Bookings return to pre-pandemic levels Near-term 2. Return of in-person events expected in second half 2021 and first half of 2022 Growth Drivers 3. Capitalize on accelerated shift to online payments - mix of online giving increased ~40% in 2020¹ 4. Drag from one-time services bottoms in 2022 - ~200bps drag on 2020 total revenue growth Capture 5. Bring proven international pricing innovation to the U.S. New Pricing Opportunities 6. Pricing in line with market – two programs underway - 7. Accelerate bookings performance through increased sales velocity and productivity Execute Current 8. Capture land and expand opportunity created by growing product portfolio Growth Initiatives 9. Maximize value from partner program 10. Improve on already strong retention rates 1Blackbaud Charitable Giving Report 2020 blackbaud 37#38Revenue growth and scalability drive margin expansion Go-To-Market 1. Reduce customer acquisition cost and improve payback period Efficiency 2. Increase sales velocity Innovation and 3. Innovation in the cloud drives lower cost operating structure Infrastructure 4. Shift to third-party cloud infrastructure Operational Scale and Efficiency 5. Flexible workplace model drives real estate savings 6. Pricing optimization 7. Continuous simplification, automation, and efficiency gains blackbaud Rule of 40 38#39Maximizing shareholder value blackbaud Large, resilient and growing global markets allow for multiple levers to accelerate revenue growth Committed to a clear strategy focused on achieving "Rule of 40" Rapidly innovating for our customers and positioned to capture digital shift in our markets Executing a proven capital allocation strategy to increase shareholder value 39#40blackbaud Appendix 40 40#41Return on Invested Capital (ROIC) Calculation (dollars in millions) blackbaud Total Assets Less: Restricted cash and customer funds receivable Less: Non-interest bearing current liabilities Add: Accumulated depreciation Add: Accumulated amortization of software development Add: Accumulated amortization of ROU assets¹ Add: Accumulated amortization of intangibles Less: Purchase price of 2020 acquisition² Add: Research & development (excluding stock-based compensation) 3Y Expense³ Invested Capital Income from Operations Add: Rent/Lease expense Add: Depreciation Add: Amortization of software development Add: Amortization of intangibles EBITDA4 Add: Stock-based compensation Add: R&D Exp (excl SBC) Adjusted EBITDA4 Less: Implied taxes (assumes 20% tax rate) Adjusted NOPAT4 Return on invested capital (ROIC) (1) With adoption of ASC842 and subsequent addition of right-of-use assets on the balance sheet, value of leased assets is replaced (2) No acquisition completed in 2020 (3) Sum of previous three years R&D expense excluding any stock-based compensation (4) Non-GAAP EBITDA, Adjusted EBITDA, Adjusted NOPAT 2020 $2,045 (610) (392) 70 53 24 277 0 266 $1,732 37 42 32232 19 42 173 87 82 342 (7) $335 19.3% 41#42Historical Reconciliations of GAAP and Non-GAAP Organic Revenue Growth (Unaudited) (dollars in thousands) GAAP revenue GAAP revenue growth Nine months ended Three months ended Year ended Three months ended 09/30/2021 09/30/2020 09/30/2021 06/30/2021 03/31/2021 12/31/2020 12/31/2020 09/30/2020 06/30/2020 03/31/2020 $ 679,849 $ 670,613 $ 231,218 $ 229,440 $ 219,191 $ 913,219 $ 242,606 $ 215,001 $ 231,991 $ 223,621 1.4 % 7.5% (1.1)% (2.0)% Add: Non-GAAP acquisition-related revenue (1) Non-GAAP organic revenue(2) $ 679,849 $ 670,613 $ 231,218 Non-GAAP organic revenue growth Non-GAAP organic revenue(2) Foreign currency impact on NoRGAAP organic revenue (3) 1.4 % 7.5 % $ 229,440 $ (1.1)% 219,191 $ 913,219 $ 242,606 $ 215,001 $ 231,991 $ 223,621 (2.0)% $ 679,849 $ 670,613 $ 231,218 $ 229,440 $ 219,191 913,219 $ 242,606 $ 215,001 $ 231,991 $ 223,621 (8,392) (2,049) (4,390) (1,953) Non-GAAP organic revenue on constant currency basis³) $ 671,457 $ 670,613 $ 229,169 $ 225,050 $ 217,238 $ 913,219 $ 242,606 $ 215,001 $ 231,991 $ 223,621 Non-GAAP organic revenue growth on constant currency basis 0.1 % 6.6 % (3.0)% (2.9)% GAAP recurring revenue GAAP recurring revenue growth Add: Non-GAAP acquisition-related recurring revenue¹) Non-GAAP organic recurring revenue Non-GAAP organic recurring revenue growth 642,266 621,229 218,530 216,986 206,750 850,745 229,516 200,102 216,260 204,867 3.4 % 9.2% 0.3% 0.9% $ 642,266 $ 3.4 % 621,229 $ 218,530 9.2% $ 216,986 $ 0.3 % 206,750 $ 850,745 $ 229,516 $ 200,102 $ 216,260 $ 204,867 0.9% (1) Non-GAAP acquisition-related revenue excludes incremental acquisition-related revenue calculated in accordance with GAAP that is attributable to companies acquired in the current fiscal year. For companies acquired in the immediately preceding fiscal year, non-GAAP acquisition-related revenue reflects presentation of full-year incremental non-GAAP revenue derived from such companies, as if they were combined throughout the prior period, and it includes the non -GAAP revenue from the acquisition-related deferred revenue write -down attributable to those companies. (2) Non-GAAP organic revenue for the prior year periods presented herein may not agree to non-GAAP organic revenue presented in the respective prior period quarterly financial information solely due to the manner in which non-GAAP organic revenue growth is calculated. (3) To determine non -GAAP organic revenue growth on a constant currency basis, revenues from entities reporting in foreign currencies were translated to U.S. Dollars using the comparable 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. blackbaud 42 42#43Three months ended 09/30/2021 09/30/2020 09/30/2021 09/30/2020 $ 6,188 $ 4,876 $ 12,755 $ 21,338 Reconciliations of Non-GAAP Organic Revenue Growth and Rule of 40 (Unaudited) (dollars in thousands) Nine months ended blackbaud GAAP net income Non-GAAP adjustments: Add: Interest, net Add: GAAP income tax provision Add: Depreciation Add: Amortization of intangibles from business combinations Add: Amortization of software development costs) Subtotal Non-GAAP EBITDA Non-GAAP EBITDA Margin Non-GAAP adjustments: Add: Stockbased compensation expense Add: Employee severance Add: Acquisition-related integration costs Add: Acquisition-related expenses Add: Restructuring and other real estate activities Add: Security Incident-related costs, net of insurance²) Subtotal Non-GAAP Adjusted EBITDA Non-GAAP Adjusted EBITDA Margin Rule of 40(3) 3,921 3,230 13,860 10,650 2,517 1,756 4,946 6,948 3,135 3,722 9,486 10,858 9,153 9,968 28,277 32,054 7,986 7,789 24,068 24,828 26,712 26,465 80,637 85,338 $ 32,900 $ 31,341 $ 93,392 $ 106,676 14.2 % 13.7 % 28,926 20,843 89,480 54,556 898 68 232 1,510 4,593 (17) (15) (115) (118) 67 64 196 288 (420) 6,943 (413) 7,017 851 1,321 29,475 28,067 91,979 66,336 $ 62,375 $ 59,408 $ 27.0 % 34.5 % 185,371 27.3 % 28.7 % $ 173,012 (1) Includes amortization expense related to software development costs and amortization expense from capitalized cloud compu ting implementation costs. (2) Includes Security Incident -related costs incurred, net of probable insurance recoveries. Recorded expenses consisted primarily of payments to third settlements of customer claims. Not included in this adjustment were costs associated with enhancements to our cybersecurity program. (3) Measured by non-GAAP organic revenue growth plus non -GAAP adjusted EBITDA margin. See Non-GAAP organic revenue growth table on prior slide. -party service providers and consultants, including legal fees, as well as 43 43#44Reconciliation of GAAP to Non-GAAP Consolidated Statements of Operations (Unaudited) (in thousands, except per share amounts) Revenue Recurring One-time services and other Total revenue GAAP $ 218,530 $ 12,688 231,218 Three Months Ended September 30, 2021 Amortization of Stock-based Compensation Expense Intangibles from Business Combinations Employee Severance $ $ Cost of revenue Cost of recurring 95,823 (2,997) (8,209) | Cost of one-time services and other 11,858 (1,266) (386) (14) Total cost of revenue 107,681 (4,263) (8,595) (14) Acquisition-related Integration Costs Acquisition-related Expenses $ $ Restructuring and Other Real Estate Activities $ Security Incident- related costs, net of insurance (1) Non-GAAP Adjustments Subtotal $ Non-GAAP $ 218,530 12,688 231,218 (11,206) 84,617 (1,666) 10,192 (12,872) 94,809 Gross profit 123,537 4,263 8,595 14 12,872 136,409 Recurring gross margin 56.2% One-time services and other gross margin 6.5 % Total gross margin 53.4 % 5.1 % 61.3 % 13.2% 19.7 % 5.6% 59.0 % Operating expenses Sales, marketing and customer success 44,703 (4,942) Research and development 31,566 (6,110) General and administrative 34,733 (13,611) | | | (36) Amortization Restructuring Total operating expenses 558 (558) 131 111,691 (24,663) (558) 13 (18) (54) TIETE (4,942) 39,761 17 (67) 17 ཕྱེ|| | ཕྱེ| | (6,146) 25,420 551 (851) (13,979) 20,754 (558) (131) (131) (67) 420 (851) (25,756) 85,935 11,846 28,926 9,153 68 (17) 67 (420) 851 38,628 50,474 Income from operations Total operating margin 5.1 % 16.7 % 21.8% Net Income $ Shares used in computing diluted earnings per share Diluted earnings per share $ 6,188 48,274 0.13 $ 37,866 48,274 $ 0.78 (1) Includes Security Incident -related costs incurred, net of probable insurance recoveries. Recorded expenses consisted primarily of payments to third-party service providers and consultants, including legal fees, as well as settlements of customer claims. Not included in this adjustment were costs associated with enhancements to our cybersecurity program. blackbaud 44#45Reconciliation of GAAP to Non-GAAP Consolidated Statements of Operations (Unaudited) (in thousands, except per share amounts) Revenue Recurring One-time services and other Total revenue Nine Months Ended September 30, 2021 Amortization of GAAP Stock-based Compensation Expense Intangibles from Business Combinations Employee Severance Acquisition-related Integration Costs Acquisition-related Expenses $ 642,266 $ $ $ $ 37,583 679,849 $ Restructuring and Other Real Estate Activities $ Security Incident- related costs, net of insurance (1) Non-GAAP Adjustments Subtotal $ Non-GAAP $ 642,266 37,583 679,849 Cost of revenue Cost of recurring 279,123 (8,900) (25,309) | Cost of one-time services and other 40,013 (5,958) (1,294) (29) Total cost of revenue 319,136 (14,858) (26,603) (29) Gross profit 360,713 14,858 26,603 29 41,490 (34,209) 244,914 (7,281) 32,732 (41,490) 277,646 402,203 Recurring gross margin 56.5% One-time services and other gross margin (6.5)% Total Gross Margin 53.1 % 5.4% 61.9% 19.4 % 12.9% 6.1 % 59.2 % Operating expenses Sales, marketing and customer success 138,948 (15,048) Research and development 90,967 (19,725) General and administrative 97,328 (39,849) | | | (1,342) (36) (103) 115 (196) 676 । । Amortization Restructuring Total operating expenses 1,674 (1,674) 263 329,180 (74,622) (1,674) (1,481) 115 (196) དྨེ8 |3|| (16,390) 122,558 (19,761) 71,206 (1,321) (40,678) 56,650 (1,674) (263) (263) (1,321) (78,766) 250,414 31,533 89,480 28,277 1,510 (115) 196 (413) 1,321 120,256 151,789 Income from operations Total Operating Margin 4.6 % Net Income $ Shares used in computing diluted earnings per share Diluted earnings per share $ 12,755 48,260 0.26 17.7 % 22.3 % $ 110,365 48,260 $ 2.29 (1) Includes Security Incident -related costs incurred, net of probable insurance recoveries. Recorded expenses consisted primarily of payments to third-party service providers and consultants, including legal fees, as well as settlements of customer claims. Not included in this adjustment were costs associated with enhancements to our cybersecurity program. blackbaud 45#46Reconciliation of GAAP to Non-GAAP Consolidated Statements of Operations (Unaudited) Three Months Ended September 30, 2020 blackbaud Amortization of Stock-based Compensation Expense Intangibles from Business Combinations Employee Severance 200,102 $ $ 14,899 215,001 (in thousands, except per share amounts) GAAP Revenue Recurring One-time services and other Total revenue Cost of revenue Cost of recurring 84,251 (1,608) (7,732) Cost of one-time services and other 14,434 (2,080) (1,487) Total cost of revenue 98,685 (3,688) (9,219) Acquisition-related Integration Costs $ Acquisition-related Expenses Restructuring and Other Real Estate Activities Gross profit 116,316 3,688 9,219 Recurring gross margin 57.9 % One-time services and other gross margin 3.1% Total Gross Margin 54.1 % Operating expenses Sales, marketing and customer success 48,460 (4,004) (127) Research and development 22,783 (4,098) (29) General and administrative 34,132 (9,053) (76) 15 Amortization Restructuring Total operating expenses 749 (749) 105 106,229 (17,155) (749) (232) 15 Income from operations 10,087 Total Operating Margin 4.7 % Net Income $ 4,876 Shares used in computing diluted earnings per share 48,860 Diluted earnings per share $ 0.10 $ Non-GAAP Adjustments Subtotal Non-GAAP $ 200,102 14,899 215,001 (9,340) 74,911 (3,567) 10,867 (12,907) 85,778 12,907 129,223 4.7 % 62.6 % 24.0% 27.1 % 6.0% 60.1 % । । छ । । दु (4,131) 44,329 (4,127) 18,656 (64) (6,838) (16,016) 18,116 (749) (105) (105) (64) (6,943) (25,128) 81,101 20,843 9,968 232 (15) 64 6,943 38,035 48,122 17.7 % 22.4 % $ 35,734 48,860 $ 0.73 46 46#47Reconciliation of GAAP to Non-GAAP Consolidated Statements of Operations (Unaudited) Nine Months Ended September 30, 2020 blackbaud Amortization of (in thousands, except per share amounts) GAAP Stock-based Compensation Expense Intangibles from Business Combinations Employee Severance Revenue Recurring $ 621,229 $ $ One-time services and other 49,384 Total revenue 670,613 Cost of revenue Cost of recurring 265,172 (3,229) (27,289) (350) Cost of one-time services and other 43,317 (3,894) (2,546) (463) Total cost of revenue 308,489 (7,123) (29,835) (813) 7,123 29,835 813 Acquisition-related Integration Costs Acquisition-related Expenses Restructuring and Other Real Estate Activities Non-GAAP Adjustments Subtotal Non-GAAP $ 621,229 49,384 670,613 (30,868) 234,304 (6,903) 36,414 (37,771) 270,718 37,771 399,895 Gross profit 362,124 Recurring gross margin 57.3% One-time services and other gross margin 12.3 % 5.0 % 62.3 % 14.0 % 26.3% 5.6 % 59.6 % Total Gross Margin 54.0% Operating expenses Sales, marketing and customer success 159,149 (10,085) Research and development 72,655 (11,245) General and administrative 89,829 (26,103) | | | (1,901) (11,986) 147,163 (687) (11,932) 60,723 (1,192) 118 (288) (6,838) (34,303) 55,526 Amortization Restructuring Total operating expenses 2,219 (2,219) (2,219) 179 (179) (179) 324,031 (47,433) (2,219) (3,780) 118 (288) (7,017) (60,619) 263,412 Income from operations Total Operating Margin 38,093 54,556 32,054 4,593 (118) 288 7,017 98,390 136,483 14.7 % 20.4% 5.7 % Net Income $ 21,338 Shares used in computing diluted earnings per share 48,582 Diluted earnings per share $ 0.44 $ 101,341 48,582 $ 2.09 47#48Historical Consolidated Balance Sheets (Unaudited) (in thousands) Assets Current assets: Cash and cash equivalents Restricted cash due to customers Accounts receivable, net of allowance Customer funds receivable Prepaid expenses and other current assets Total current assets Property and equipment, net Operating lease right-of-use assets Software development costs, net Goodwill Intangible assets, net Other assets Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 $ 24,972 $ 232,250 30,531 $ 421,915 30,563 $ 203,660 35,750 $ 609,219 27,753 $ 255,158 28,288 $ 434,567 27,591 216,122 89,191 129,675 96.830 95,404 83,333 119,270 105,873 1,205 1,284 4,901 321 945 5,390 6,076 81,004 83,699 76,761 78,366 98,095 103,493 102,319 428,622 667,104 412,715 819,060 465,284 691,008 457,981 35,661 36,539 109,469 105,177 105,124 104,914 103,346 100,568 95,575 30,218 22,671 20,055 22,630 19,652 105,594 106,044 108,891 111,827 113,624 116,562 118,860 631,033 630,687 632,840 635,854 637,113 637,510 635,912 303,097 292,187 284,414 277,506 269,118 260,072 249,494 66,346 68,673 72,617 72,639 74,022 70,666 69,699 $ 1,670,921 $ 1,896,809 $ 1,651,164 $ 2,044,734 $ 1,684,340 $ 1,903,362 $ 1,654,944 Total assets Liabilities and stockholders' equity Current liabilities: Trade accounts payable $ 44,510 $ Accrued expenses and other current liabilities 45,781 41,029 $ 52,893 31,775 $ 48,380 27,836 $ 52,228 35,274 $ 53,013 30,605 $ 38,388 55,808 58,579 Due to customers 233,455 423,199 207,356 608,264 254,947 438,633 220,785 Debt, current portion 10,351 9,194 10,305 12,840 12,875 12,911 12,948 Deferred revenue, current portion 288,682 332,570 322,452 312,236 290,025 339,670 329,426 Total current liabilities 622,779 858,885 620,268 1,013,404 646,134 877,627 660,126 Debt, net of current portion 520,576 478,919 497,953 518,193 537,924 531,973 514,418 Deferred tax liability 43,286 45,108 46,989 54,086 54,444 56,227 56,144 Deferred revenue, net of current portion 1,715 4,626 5,803 4,678 4,495 5,749 4,528 Operating lease liabilities, net of current portion 91,235 86,586 25,706 17,357 15,744 17,173 13,470 Other liabilities 10,937 11,883 12,610 10,866 9,439 9,339 9,421 Total liabilities 1,290,528 1,486,007 1,209,329 1,618,584 1,268,180 1,498,088 1,258,107 Commitments and contingencies blackbaud Stockholders' equity: Preferred stock Common stock, $0.001 par value Additional paid-in capital Treasury stock, at cost Accumulated other comprehensive loss Retained earnings 61 471,344 61 491,450 61 512,269 61 544,963 62 574,958 62 605,486 62 634,406 (310,447) (311,661) (311,951) (353,091) (399,583) (449,877) (490,456) (14,140) (14,476) (8,872) (2,497) 4,163 6,291 3,319 233,575 245,428 250,328 236,714 236,560 243,312 249,506 Total stockholders' equity 380,393 410,802 441,835 426,150 416,160 405,274 396,837 Total liabilities and stockholders' equity $ 1,670,921 $ 1,896,809 $ 1,651,164 $ 2,044,734 $ 1,684,340 $ 1,903,362 $ 1,654,944 88 48#49Historical Consolidated Statements of Comprehensive Income (Unaudited) (in thousands, except share and per share amounts) Revenue Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY 2020 Q1 2021 Q2 2021 Q3 2021 Recurring One-time services and other Total revenue Cost of revenue $ 204,867 $ 216,260 $ 18,754 15,731 200,102 $ 14,899 229,516 $ 13,090 850,745 $ 62,474 206,750 $ 12,441 216,986 $ 218,530 12,454 12,688 223,621 231,991 215,001 242,606 913,219 219,191 229,440 231,218 Cost of recurring 89,551 91,370 84,251 104,509 369,681 88,865 94,435 95,823 Cost of one-time services and other 15,314 13,569 14,434 15,067 58,384 14,520 13,635 11,858 Total cost of revenue 104,865 104,939 98,685 119,576 428,065 103,385 108,070 107,681 Gross profit 118,756 127,052 116,316 123,030 485,154 115,806 121,370 123,537 Operating expenses Sales, marketing and customer success 58,735 51,954 48,460 50,613 209,762 48,793 45,452 44,703 Research and development 24,977 24,895 22,783 27,491 100,146 29,179 30,222 31,566 General and administrative 25,855 29,842 34,132 45,023 134,852 30,587 32,008 34,733 Amortization Restructuring Total operating expenses Income (loss) from operations Interest expense 741 729 749 696 2,915 549 567 558 24 50 105 57 236 54 78 131 110,332 107,470 106,229 123,880 447,911 109,162 108,327 111,691 8,424 19,582 10,087 (850) 37,243 6,644 13,043 11,846 (4,159) (3,893) (3,997) (5,238) (17,287) (5,114) (5,054) (4,003) 1,070 630 5,335 16,319 696 4,496 $ 4,639 $ 11,823 $ $ 0.10 $ 0.25 $ 0.10 $ 0.24 $ 48,036,300 48,455,751 48,239,928 48,418,378 Other income (expense), net Income before provision for income taxes Income tax provision Net income (loss) Earnings (loss) per share Basic Diluted Common shares and equivalents outstanding Basic weighted average shares Diluted weighted average shares Other comprehensive (loss) income Foreign currency translation adjustment (5,728) (887) 4,661 6,525 4,571 2,511 1,783 (3,234) Unrealized (loss) gain on derivative instruments, net of tax (3,122) 551 943 (150) (1,778) 4,149 345 262 Total other comprehensive (loss) income Comprehensive (loss) income (8,850) (336) 5.604 6,375 2,793 6,660 2,128 (2,972) $ (4,211) $ 11,487 $ 10,480 $ (7,246) $ 10,510 $ 6,496 $ 8,859 $ 3,216 542 (584) 1,658 (1,010) 487 862 6,632 (6,672) 21,614 520 8,476 8,705 1,756 6,949 13,897 684 1,745 2,517 4,876 $ (13,621) $ 7,717 $ (164) $ 6,731 $ 6,188 0.10 $ (0.28) $ 0.16 $ $ 0.14 $ 0.13 0.10 $ (0.28) $ 0.16 $ $ 0.14 $ 0.13 48,271,139 48,859,707 48,190,388 48,190,388 48,184,714 48,696,341 47,363,197 47,363,197 47,756,326 48,444,874 47,542,746 48,274,072 Note 1: The individual amounts for each quarter may not sum to full year totals due to rounding. blackbaud 49#503 months ended 03/31/2020 6 months ended 06/30/2020 9 months ended 09/30/2020 12 months ended 12/31/2020 3 months ended 03/31/2021 6 months ended 06/30/2021 9 months ended 09/30/2021 4,639 $ 16,462 $ 21,338 $ 7,717 $ (164) $ 6,567 $ 12,755 Historical Consolidated Statements of Cash Flows (Unaudited) (in thousands) Cash flows from operating activities Net income (loss) $ Adjustments to reconcile net income (loss) to net cash (used in) provided by operatin activities: Depreciation and amortization Provision for doubtful accounts and sales returns Stock-based compensation expense Deferred taxes 21,804 46,088 68,755 92,735 20,461 40,742 60,484 2,488 6,677 10,156 13,230 2,141 4,418 7,992 13,580 33,713 54,556 87,257 30,005 60,554 89,480 954 1,945 1,879 8,837 (1,142) 276 400 Amortization of deferred financing costs and discount 188 376 569 781 506 879 1,234 Other non-cash adjustments 102 477 2,203 2,958 (32) 155 (527) Changes in operating assets and liabilities, net of acquisition of businesses: Accounts receivable (3,876) (48,167) (18,319) (18,414) 10,407 (27,134) (18,779) Prepaid expenses and other assets (5,303) (7,068) 4,292 22,568 (17,426) (18,162) (14,169) Trade accounts payable (4,021) (8,984) (17,203) (19,997) 7,550 2,356 10,728 Accrued expenses and other liabilities (31,694) (26,520) (31,595) (49,232) 549 1,443 2,790 Deferred revenue (23,364) 22,489 12,534 (485) (22,752) 27,828 17,400 Net cash (used in) provided by operating activities (24,503) 37,488 109,165 147,955 30,103 99,922 169,788 Cash flows from investing activities Purchase of property and equipment (2,867) (5,887) (25,836) (29,690) (3,470) (6,128) (8,332) Capitalized software development costs (10,937) (21,679) (32,028) (42,157) (9,302) (19,862) (29,661) Net cash used in investing activities (13,804) (27,566) (57,864) (71,847) (12,772) (25,990) (37,993) Cash flows from financing activities Proceeds from issuance of debt 144,700 202,100 267,400 748,500 80,700 128,300 128,300 Payments on debt (86,075) (185,250) (290,999) (747,563) (59,667) (113,477) (131,272) Debt issuance costs Employee taxes paid for withheld shares upon equity award settlement (19,782) (20,996) (593) (21,286) (4,586) (21,425) (18,426) (38,712) (39,012) Proceeds from exercise of stock options 1 4 4 4 Change in due to customers Change in customer funds receivable (311,095) (733) (121,612) (828) (337,821) 61,214 (353,597) (170,061) (386,973) (4,495) 138 (563) (5,014) (5,838) Purchase of treasury stock Dividend payments to stockholders Net cash used in financing activities (41,001) (28,066) (58,074) (98,353) (5,960) (5,960) (5,960) (5,960) (278,944) (132,542) (393,750) (10,679) (379,619) (257,038) (533,148) Effect of exchange rate on cash, cash equivalents, and restricted cash Net (decrease) increase in cash, cash equivalents, and restricted cash Cash, cash equivalents, and restricted cash, beginning of period Cash, cash equivalents, and restricted cash, end of period (2,822) (2,229) (623) 2,245 (320,073) (124,849) (343,072) 67,674 230 (362,058) 992 97 (182,114) 577,295 577,295 577,295 577,295 $ 257,222 $ 452,446 $ 234,223 $ 644,969 $ 644,969 282,911 $ 644,969 (401,256) 644,969 462,855 $ 243,713 Note 1: The individual amounts for each quarter may not sum to full year totals due to rounding. blackbaud 50 50#51Historical Reconciliations of GAAP to Non-GAAP Financial Measures (Unaudited) blackbaud (in thousands, except share and per share amounts) GAAP Revenue GAAP gross profit GAAP gross margin Non-GAAP adjustments: Add: Stock-based compensation expense Add: Amortization of intangibles from business combinations Add: Employee severance Subtotal Non-GAAP gross profit Non-GAAP gross margin $ Q1 2020 223,621 Q2 2020 Q3 2020 Q4 2020 FY 2020 $ 231,991 $ 215,001 $ 242,606 $ 913,219 $ Q1 2021 219,191 Q2 2021 Q3 2021 $ 229,440 $ 231,218 $ 118,756 $ 127,052 $ 116,316 $ 123,030 $ 485,154 $ 115,806 $ 121,370 $ 123,537 53.1 % 54.8 % 54.1 % 50.7 % 53.1% 52.8 % 52.9 % 53.4 % 865 2,570 3,688 6,251 13,374 5,358 5,237 4,263 10,930 9,686 9,219 9,133 38,968 9,128 8,880 8,595 32 781 94 907 15 14 11,827 13,037 12,907 15,478 53,249 14,486 14,132 12,872 $ 130,583 $ 58.4 % 140,089 60.4 % $ 129,223 $ 138,508 $ 60.1 % 57.1 % 538.403 $ 59.0 % 130,292 $ 135,502 $ 136,409 59.4 % 59.1 % 59.0 % 8,424 $ 19,582 $ 10,087 $ (850) $ 37,243 $ 6,644 $ 13,043 $ 11,846 3.8 % 8.4 % 4.7 % (0.4)% 4.1 % 3.0 % 5.7 % 5.1 % GAAP income (loss) from operations GAAP operating margin Non-GAAP adjustments: Add: Stock-based compensation expense Add: Amortization of intangibles from business combinations Add: Employee severance Add: Acquisition -related integration costs Add: Acquisition -related expenses 13,580 20,133 20,843 32,701 87,257 30,005 30,549 28,926 11,671 10,415 9,968 9,829 41,883 9,677 9,447 9,153 97 4,264 232 282 4,875 991 451 (32) (71) (15) (16) (134) (98) 139 85 64 65 353 65 Add: Restructuring and other real estate activities 24 50 6,943 16,273 23,290 (111) Subtotal Add: Security Incident -related costs, net of insurance (2) Non-GAAP income from operations Non-GAAP operating margin 25,479 34,876 38,035 59,134 157,524 40,529 41,099 Ş | ༄ ༄ g|g 68 (17) 67 (420) 470 851 38,628 $ 33,903 $ 54,458 $ 48,122 $ 15.2 % 23.5% 22.4 % 58,284 24.0 % $ 194,767 $ 47,173 $ 54,142 $ 50,474 21.3 % 21.5 % 23.6 % 21.8 % GAAP income (loss) before provision for income taxes $ 5,335 $ 16,319 $ 6,632 $ GAAP net income (loss) $ 4,639 $ 11,823 $ 4,876 $ Shares used in computing GAAP diluted earnings (loss) per share GAAP diluted earnings (loss) per share 48,455,751 48,418,378 48,859,707 $ 0.10 $ 0.24 $ 0.10 $ (6,672) $ (13,621) $ 48,190,388 (0.28) $ 21,614 $ 520 $ 8,476 $ 8,705 7,717 $ (164) $ 6,731 $ 6,188 48,696,341 47,363,197 48,444,874 48,274,072 0.16 $ $ 0.14 $ 0.13 Non-GAAP adjustments: Add: GAAP income tax provision Add: Total Non-GAAP adjustments affecting income from operations Non-GAAP income before provision for income taxes Assumed non-GAAP income tax provision (3) Non-GAAP net income Shares used in computing Non-GAAP diluted earnings per share Non-GAAP diluted earnings per share Note 1: The individual amounts for each quarter may not sum to full year totals due to rounding. 696 4,496 1,756 6,949 13,897 684 1,745 2,517 25,479 34,876 38,035 59,134 157,524 40,529 41,099 38,628 30,814 51,195 44,667 52,462 179,138 41,049 49,575 47,333 6,163 10,239 8,933 10,492 $ 24,651.2 $ 40,956 $ 35,734 $ 41,970 $ 48,455,751 48,418,378 48,859,707 49,097,084 35,827 143,311 48,696,341 $ 8,210 32,839 9,915 9,467 $ 39,660 $ 37,866 48,387,042 48,444,874 48,274,072 $ 0.51 $ 0.85 $ 0.73 $ 0.85 $ 2.94 $ 0.68 $ 0.82 $ 0.78 Note 2: Includes Security Incident -related costs incurred, net of probable insurance recoveries. Recorded expenses consisted primarily of payments to third-party service providers and consultants, including legal fees, as well as settlements of customer claims. Not included in this adjustment were costs associated with enhancements to our cybersecurity program. Note 3: We apply a non-GAAP effective tax rate of 20.0% when calculating non-GAAP net income and non-GAAP diluted earnings per share. 51#52Historical Reconciliations of GAAP to Non-GAAP Financial Measures (Unaudited) (in thousands) GAAP net cash (used in) provided by operating activities Less: purchase of property and equipment Less: capitalized software development costs Non-GAAP free cash flow blackbaud 3 months ended 3/31/2020 (24,503) 6 months ended 6/30/2020 9 months ended 9/30/2020 12 months ended 12/31/2020 3 months ended 3/31/2021 6 months ended 6/30/2021 9 months ended 9/30/2021 37,488 109,165 147,955 30,103 99,922 (2,867) (5,887) (25,836) (29,690) (3,470) (6,128) 169,788 (8,332) (10,937) (21,679) (32,028) (42,157) (9,302) (19,862) (29,661) (38,307) $ 9,922 $ 51,301 $ 76,108 $ 17,331 $ 73,932 $ 131,795 52 62