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The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited, condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. The following discussion and analysis presents financial information denominated in millions of dollars which can lead to differences from rounding when compared to similar information contained in the unaudited, condensed consolidated financial statements and related notes which are primarily denominated in thousands of dollars. Executive Summary We are the world's leading provider of AI-powered solutions for social impact. Serving nonprofits, educational institutions, companies committed to corporate social responsibility and individual change makers, we propel impact at scale with the sector’s most intelligent solutions for fundraising and engagement, education solutions, financial management and CSR and grantmaking. We have operations in the United States, Australia, Canada, Costa Rica, India and the United Kingdom, supporting users in 100+ countries. Our revenue is primarily generated from the following sources: (i) charging for the use of our software solutions in cloud and hosted environments; and (ii) providing payment and transaction services. Business Update We delivered another quarter of solid execution against our operating plan, with continued focus on operational efficiency and product innovation. AI initiatives remain an important area of emphasis—both in the capabilities we are delivering to customers and in the way we operate the business. During the first half of 2026, we expanded the availability of AI-enabled capabilities across our product portfolio and launched our first agentic AI solution, the Blackbaud fundraising development agent, into general availability. This solution is designed to assist fundraising teams by automating certain outreach and stewardship activities within existing workflows, using customer-permissioned data and operating under defined governance and user controls. The fundraising development agent is currently being offered under a subscription pricing model. While commercialization remains in the early stages, annual subscription pricing is generally in the tens of thousands of dollars, depending on customer size and use case. We expect this offering to be marketed both to existing customers as an incremental subscription and to prospective new customers as part of our broader product portfolio. During the second quarter, we continued to expand customer deployments and evaluate adoption trends, operational impacts and potential financial contributions as part of our ongoing planning and investment process. Recently, we also announced four additional Agents for Good solutions planned for future release, including the Data Health Agent, Admissions Agent, Digital Marketing Agent and Accounts Payable Agent. These solutions are intended to help customers automate administrative processes, improve productivity and make more informed decisions within existing workflows. Together, these planned offerings reflect our continued investment in agentic AI and a significant opportunity to deliver innovative capabilities across our portfolio, with the potential to help customers increase capacity, improve operational efficiency and advance their missions within the solutions they already use. Adoption of AI-enabled functionality continued across portions of our customer base during the quarter. More than half of our Raiser's Edge NXT customers utilize machine-learning-enabled donor prospecting capabilities, which leverage historical and behavioral data to support fundraising activities. These capabilities are supported by proprietary Blackbaud data, licensed datasets, benchmarking data and other philanthropic datasets, all subject to our cybersecurity and data governance framework. We also continued to apply AI internally to improve efficiency across engineering, sales and marketing, customer success and the back office. During the quarter, our engineering teams increased their use of approved generative AI development tools to accelerate software development and issue remediation, contributing to productivity improvements and faster delivery of enhancements. We are also applying AI to support lead qualification, sales development, customer support and other operational processes. Second Quarter 2026 Form 10-Q 21 Table of Contents Blackbaud, Inc. (Unaudited) In February 2026, we announced our intention to repurchase between 5% and 10% of our outstanding common stock as of December 31, 2025 during the course of 2026 under our stock repurchase program. During the three months ended June 30, 2026, we repurchased an aggregate of 797,795 shares for $28.0 million. During the six months ended June 30, 2026, we repurchased an aggregate of 2,398,852 shares for $110.1 million. Including net share settlement of employee stock compensation, these repurchases represent approximately 6.2% of our outstanding common stock as of December 31, 2025. As of June 30, 2026, $850.4 million remained available under our stock repurchase program. Over the long term, we expect stock repurchases to remain an important component of our capital allocation strategy, subject to market conditions, business performance, leverage considerations, and other factors. We anticipate utilizing at least 50% of our free cash flow from 2026 to 2030 for stock repurchases. See discussion of our Non‑GAAP Financial Measures below. Financial Summary Total revenue ($M) Income from operations ($M) YoY Growth (%) YoY Growth (%) Revenue increased by $8.6 million and $19.8 million, during the three and six months ended June 30, 2026, respectively, when compared to the same periods in 2025, driven largely by the following: + Increases in contractual recurring revenue of $6.2 million and $13.1 million, respectively, primarily related to the positive impact of our pricing initiatives and the demand of our cloud solutions + Increases in transactional recurring revenue of $2.8 million and $9.1 million, respectively, primarily due to increases in volume for our Blackbaud Integrated Payments and Blackbaud Tuition Management offerings and, to a lesser extent, positive results related to pricing initiatives; also contributing to the increases in transactional recurring revenue during the six months ended June 30, 2026 was an increase related to fluctuations in foreign currency exchange rates of $1.6 million - Decrease in one-time consulting revenue of $2.4 million, for the six months ended June 30, 2026, primarily due to fewer sales of implementation and customization services 22 Second Quarter 2026 Form 10-Q Table of Contents Blackbaud, Inc. (Unaudited) Income from operations increased by $4.7 million and $36.4 million, during the three and six months ended June 30, 2026, respectively, when compared to the same periods in 2025, driven largely by the following: + Decrease in acquisition and disposition-related costs within general and administrative expenses of $24.4 million, during the six months ended June 30, 2026, primarily related to our release from our lease for office space in Washington, DC, which occurred during February 2025 and did not reoccur in 2026 + Increases in total revenue, as described above + Decreases in third-party contractor costs of $4.7 million and $8.1 million, respectively, primarily due to transition of work to employees in our Global Capability Center ("GCC") in Hyderabad, India, decreased use of outside contractors and completion of prior year investments. For the six months ended June 30, 2026, the decrease was partially offset by an increase in investment in AI innovation. + Decreases in stock-based compensation expense of $4.5 million and $2.8 million, respectively, primarily due to estimated overall Company performance against 2026 goals at target levels compared to prior-year expectations above target. For the six months ended June 30, 2026, the decrease was partially offset by certain executive retirements in the first quarter. + Decrease in Security Incident-related expenses of $2.6 million, during the six months ended June 30, 2026, that occurred during 2025 that did not reoccur in 2026. For more information, see Note 11 to our audited consolidated financial statements contained in our Annual Report on Form 10-K filed with the SEC on February 18, 2026. - Increases in advertising costs of $2.1 million and $2.8 million, respectively, primarily due to increased digital marketing spend related to our consumer-facing fundraising platform, JustGiving, as well as increased marketing related to raising awareness for our new AI offerings - Increases in third-party software costs of $2.0 million and $4.4 million, respectively, related to internal solutions we use to run our business - Increases in compensation costs other than stock-based compensation of $1.6 million and $2.7 million, respectively, primarily due to transition of work previously performed by third-party contractors to employees in our GCC in Hyderabad, India (as discussed above), and prior year merit-based salary increases - Increases in hosting and data center costs of $1.4 million and $2.1 million, respectively, as we continue to migrate our cloud infrastructure to leading public cloud service providers and make investments in security - Increase of $2.4 million, during the six months ended June 30, 2026, due to the nonrecurrence of a first half 2025 contra expense for transition services associated with the EVERFI disposition in December 2024 We are continuing to make critical investments in the business in areas such as innovation, AI, cybersecurity, and our continued shift of cloud infrastructure to leading public cloud service providers. We continuously seek opportunities to optimize our portfolio of solutions to focus time and resources on innovation that will have the greatest impact for our customers and the markets we serve, and drive the highest return on investment. To that end, we will continue to simplify and rationalize our portfolio through product sunsets and divestitures of non-core businesses and technologies. Second Quarter 2026 Form 10-Q 23 Table of Contents Blackbaud, Inc. (Unaudited) Gross dollar retention Our recurring subscription contracts are typically for a term of three years at contract inception with standard three-year renewals thereafter. In recent periods, we have experienced an increase in longer‑term customer contracts. We now have approximately 90% of our contractual recurring revenue on 3-year or longer contracts and approximately 25% on 4-year or longer contracts. A key factor to our overall success is the renewal and expansion of our existing subscription agreements with our customers. Management uses gross dollar retention in analyzing our success at delighting our customers with innovative and cloud solutions. Gross dollar retention is defined as contracted annual recurring revenue ("CARR") divided by beginning CARR with a measurement period of twelve months. For the twelve months ended June 30, 2026, our gross dollar retention was approximately 91%. This gross dollar retention rate was lower than our rate for the twelve months ended December 31, 2025. Renewal performance can vary from year to year due to the size and composition of renewal cohorts. As previously disclosed, the contractual annual recurring revenue dollars up for renewal associated with the 2026 renewal cohort are approximately 40% higher than those up for renewal in 2025, reflecting the normal progression of our multi-year contract renewal cycle and the timing of customer renewals. As a result, we expect some temporary pressure on our gross dollar retention as a greater amount of recurring revenue contracts come up for renewal during 2026. We currently expect our gross dollar retention to improve as we move past this larger 2026 renewal cohort and ultimately return to levels more consistent with our recent historical performance by the end of 2027. Finally, we are continually investing in innovation, which we believe will support gross dollar retention over the long-term. Balance sheet and cash flow At June 30, 2026, our cash and cash equivalents were $34.4 million. Under the 2024 Credit Facilities, the carrying amount of our debt was $1.1 billion and our net leverage ratio was 2.58 to 1.00. During the six months ended June 30, 2026, we generated $142.5 million in cash from operations, had a net increase in borrowings of $28.6 million, returned $110.1 million to stockholders by way of share repurchases, and had aggregate cash outlays of $30.2 million for purchases of property and equipment and capitalized software development costs. On July 4, 2025, the United States enacted the OBBBA, which introduced significant changes to U.S. tax law. See Note 9 to our unaudited, condensed consolidated financial statements in this report for more information. OBBBA's restoration of 100% bonus depreciation and immediate expensing of domestic research and experimental expenditures, together with our utilization of net operating loss carryforwards, meaningfully reduced U.S. cash taxes in 2025 and 2026. U.S. state OBBBA conformity considerations (which continue to evolve as the states address the 2025 Federal tax legislation) and the phase-in of the OBBBA international tax provisions in 2026 are expected to, in part, offset these cash tax reductions in 2026 and 2027. We currently expect a material impact from future phases in fiscal years 2026 and 2027, but not beyond, before considering any impacts of any potential future valuation allowance release (described further in Note 9). 24 Second Quarter 2026 Form 10-Q Table of Contents Blackbaud, Inc. (Unaudited) Results of Operations Comparison of the three and six months ended June 30, 2026 and 2025 Revenue and Cost of Revenue Revenue ($M) Cost of revenue ($M) Gross profit ($M)and gross margin (%) YoY Growth (%) YoY Growth (%) Our revenue includes three components: contractual recurring, transactional recurring and one-time services and other. •Contractual recurring revenue is primarily comprised of fees for the use of our subscription-based software solutions, which includes providing access to cloud solutions, online training programs and subscription-based analytic services. Contractual recurring revenue also includes fees from maintenance services for our on-premises solutions. •Transactional recurring revenue is comprised of transaction fees associated with the use of our solutions, including donation processing, tuition management, consumer giving and event-based usage. •One-time services and other revenue is comprised of fees for one-time consulting, analytic and onsite training services, and fees for retained and managed services contracts that we do not expect to have a term consistent with our cloud solution contracts. Cost of revenue is primarily comprised of compensation costs for customer support, production IT, professional services and onsite training personnel, hosting and data center costs, third-party contractor expenses, third-party royalty and data expenses, allocated depreciation, facilities and IT support (including cybersecurity) costs, amortization of intangible assets from business combinations, amortization of software development costs, transaction-based costs related to payments services including remittances of amounts due to third-parties, data expense incurred to perform one-time analytic services and other costs incurred in providing support, recurring services and onsite customer training to our customers. Our customers continue to prefer cloud subscription offerings with integrated AI, analytics, training and payment services. We intend to continue focusing on innovation, quality and integration of our cloud solutions, which we believe will drive future revenue growth. Second Quarter 2026 Form 10-Q 25 Table of Contents Blackbaud, Inc. (Unaudited) Revenue increased by $8.6 million, or 3.0%, and $19.8 million, or 3.6%, during the three and six months ended June 30, 2026, respectively, when compared to the same periods in 2025. For a discussion of our changes in revenue, see "Revenue" above starting on page 22 in this report. Cost of revenue decreased by $1.2 million, or 1.1%, and $1.4 million, or 0.6%, during the three and six months ended June 30, 2026, respectively, when compared to the same periods in 2025, driven primarily by the following: - Decreases in amortization of intangible assets from business combinations of $1.6 million and $2.4 million, respectively - Decreases in third-party contractor costs of $1.4 million and $3.1 million, respectively, primarily related to transition of work to employees in our GCC, decreased use of outside contractors and completion of prior year investments - Decreases in compensation costs of $1.3 million and $2.7 million, respectively, primarily due to transition of work to employees in our GCC in Hyderabad, India, and a shift in resources from supporting cost of revenue to research and development + Increases in hosting and data center costs of $1.4 million and $2.1 million, respectively, as we continue to migrate our cloud infrastructure to leading public cloud service providers and make investments in security + Increase in amortization of software development costs of $1.2 million, for the six months ended June 30, 2026, due to our continued investments in the innovation and security of our solutions Gross margin increased by 160 basis points and 170 basis points for the three and six months ended June 30, 2026, respectively, when compared to the same periods in 2025, due to the increase in revenue combined with the decrease in cost of revenue. Operating Expenses Sales, marketing andcustomer success ($M) Research anddevelopment ($M) General andadministrative ($M) Percentages indicate expenses as a percentage of total revenue 26 Second Quarter 2026 Form 10-Q Table of Contents Blackbaud, Inc. (Unaudited) Sales, marketing and customer success Sales, marketing and customer success expense includes compensation costs, variable sales commissions, travel-related expenses, advertising and marketing materials, public relations costs, variable reseller commissions and allocated depreciation, facilities and IT support (including cybersecurity) costs. We see a large market opportunity in the long-term and will continue to make investments to drive sales effectiveness. We have also implemented software tools to enhance our digital footprint and drive lead generation. The enhancements we are making in our go-to-market approach are intended to reduce our average customer acquisition cost per customer as well as the related payback period while increasing sales velocity. Sales, marketing and customer success expense increased by $2.2 million, or 5.0%, and $4.9 million, or 5.5%, during the three and six months ended June 30, 2026, respectively, when compared to the same periods in 2025. The increases in dollars and as a percentage of revenue were primarily driven by the following: + Increases in advertising costs of $2.1 million and $2.8 million, respectively, primarily due to increased digital marketing spend related to our consumer-facing fundraising platform, JustGiving, as well as increased marketing related to raising awareness for our new AI offerings Research and development Research and development expense includes compensation costs for engineering and product management personnel, third-party contractor expenses, software development tools and other expenses related to developing new solutions or upgrading and enhancing existing solutions that do not qualify for capitalization, and allocated depreciation, facilities and IT support (including cybersecurity) costs. We continue to make investments intended to delight our customers with innovative and secure cloud solutions, including AI technology. Research and development expenses increased by $1.3 million, or 3.8%, and $4.6 million, or 6.9%, during the three and six months ended June 30, 2026, respectively, when compared to the same periods in 2025. The increases in dollars and as a percentage of revenue were primarily driven by the following: + Increases in compensation costs of $2.3 million and $5.9 million, respectively, primarily due to transition of work previously performed by third-party contractors to employees in our GCC in Hyderabad, India, and a shift in resources from supporting cost of revenue to research and development and prior year merit-based salary increases - Decreases in third-party contractor costs of $3.6 million and $5.5 million, respectively, primarily related to transition of work to employees in our GCC (as discussed above) and prior year investments ramping down, partially offset by an increase in investment in AI innovation + Decreases in software development costs that were capitalized of $1.4 million and $1.6 million, respectively Not included in research and development expense for the three months ended June 30, 2026 and 2025 were $13.0 million and $14.4 million, respectively, and for the six months ended June 30, 2026 and 2025 were $25.2 million and $26.8 million, respectively, of qualifying costs associated with software development activities that were capitalized, such as those for our cloud solutions. Qualifying capitalized development costs associated with our cloud solutions are subsequently amortized to cost of revenue over the related assets' estimated useful life, which generally range from two to seven years. We expect that the amount of software development costs capitalized will be relatively consistent in the near-term as we continue making investments in innovation, quality, security and the integration of our solutions, which we believe will drive long-term revenue growth. Second Quarter 2026 Form 10-Q 27 Table of Contents Blackbaud, Inc. (Unaudited) General and administrative General and administrative expense consists primarily of compensation costs for general corporate functions, including senior management, finance, accounting, legal, human resources and corporate development, Security Incident-related expenses (including legal fees, settlements and loss contingency accruals), third-party professional fees, insurance, allocated depreciation, facilities and IT support (including cybersecurity) costs, acquisition-related expenses and other administrative expenses. General and administrative expense increased by $1.6 million, or 4.8%, during the three months ended June 30, 2026, when compared to the same period in 2025. The increases in dollars and as a percentage of revenue were primarily driven by the following: + Increase in third-party software costs of $2.0 million primarily related to internal solutions we use to run our business + Increase in corporate costs of $1.7 million primarily related to an increase in bad debt expense and, to a lesser extent, legal fees - Decrease in stock-based compensation costs of $3.1 million primarily due to due to estimated overall Company performance against 2026 goals at target levels compared to prior-year expectations above target General and administrative expense decreased by $24.8 million, or 27.7%, during the six months ended June 30, 2026, when compared to the same period in 2025. The decreases in dollars and as a percentage of revenue were primarily driven by the following: - Decrease in acquisition and disposition-related costs of $24.4 million primarily related to our release from our lease for office space in Washington, DC, which occurred during February 2025 and did not reoccur in 2026. - Decrease in stock-based compensation costs of $2.8 million primarily due to estimated overall Company performance against 2026 goals at target levels compared to prior-year expectations above target. The decrease was partially offset by certain executive retirements in the first quarter. - Decrease in Security Incident-related expenses of $2.6 million that occurred during 2025 that did not reoccur in 2026. For more information, see Note 11 to our audited consolidated financial statements contained in our Annual Report on Form 10-K filed with the SEC on February 18, 2026. + Increase in third-party software costs of $3.7 million primarily related to internal solutions we use to run our business + Increase in corporate costs of $1.8 million primarily related to an increase in bad debt expense, legal fees and tax-related expense Interest Expense Interest expense ($M) Percentages indicate expenses as a percentage of total revenue The decreases in interest expense in dollars and as a percentage of total revenue during the three and six months ended June 30, 2026, when compared to the same periods in 2025, were primarily due to a decrease in portfolio effective interest rate on relatively flat average daily borrowing. We currently expect interest expense for the full year 2026 to be approximately $62 million to $66 million. Our interest expense in connection with the variable rate portion of our outstanding debt could increase in a rising interest rate environment. See Note 7 to our unaudited, condensed consolidated financial 28 Second Quarter 2026 Form 10-Q Table of Contents Blackbaud, Inc. (Unaudited) statements in this report for more information regarding our derivative instruments, which we use to manage our variable interest rate risk, and Item 3. Quantitative and Qualitative Disclosures about Market Risk: Interest Rate Risk (below) for more information about our variable interest rate exposure and related risk. Other Income, Net Other income, net ($M) Percentages indicate other income, net as a percentage of total revenue The increases in other income, net in dollars and as a percentage of total revenue during the three and six months ended June 30, 2026, respectively, when compared to the same periods in 2025, were primarily due to decreases in current year losses in currency revaluation compared to prior year losses. See Note 5 to our unaudited, condensed consolidated financial statements in this report for more information regarding our other income. Deferred Revenue The table below compares the components of deferred revenue from our unaudited, condensed consolidated balance sheets: (dollars in millions) June 30, 2026 December 31, 2025 Change Deferred revenue(1) $ 406.4 $ 371.8 9.3 % Less: Long-term portion 2.8 2.8 (0.2) % Current portion(1) $ 403.6 $ 369.0 9.4 % (1)The individual amounts for each year may not sum to deferred revenue or current portion of deferred revenue due to rounding. To the extent that our customers are billed for our solutions and services in advance of delivery, we record such amounts in deferred revenue. Our recurring revenue contracts are generally for a term of three years at contract inception with three-year renewals thereafter, billed annually in advance and non-cancelable. We now have approximately 90% of our contractual recurring revenue on 3-year or longer contracts and approximately 25% on 4-year or longer contracts. We generally invoice our customers with recurring revenue contracts in annual cycles 30 days prior to the end of each one-year period. The increase in deferred revenue during the six months ended June 30, 2026 was primarily due to a seasonal increase in customer contract billings. Historically, due to the timing of customer budget cycles, we have an increase in billings and customer contract renewals at or near the beginning of our third quarter. Generally, our lowest balance of deferred revenue during the year is at the end of our first quarter. Second Quarter 2026 Form 10-Q 29 Table of Contents Blackbaud, Inc. (Unaudited) Income Taxes Income tax provision ($M) Percentages indicate effective income tax rates The decreases in our effective income tax rate for the three and six months ended June 30, 2026 when compared to the same periods in 2025 were primarily due to a decrease in our valuation allowance and increased deductions from OBBBA implementation, partially offset by discrete tax expense recognized in 2026. See Note 9 to our unaudited, condensed consolidated financial statements in this report for more information. We currently expect a material impact from future phases in fiscal years 2026 and 2027, but not beyond, before considering any impacts of any potential future valuation allowance release (described further in Note 9). On July 4, 2025, the United States enacted the OBBBA, which introduced significant changes to U.S. tax law. See Note 9 to our unaudited, condensed consolidated financial statements in this report for more information. OBBBA's restoration of 100% bonus depreciation and immediate expensing of domestic research and experimental expenditures, together with our utilization of net operating loss carryforwards, meaningfully reduced U.S. cash taxes in 2025 and 2026. U.S. state OBBBA conformity considerations (which continue to evolve as the states address the 2025 Federal tax legislation) and the phase-in of the OBBBA international tax provisions in 2026 are expected to, in part, offset these cash tax reductions in 2026 and 2027. Non-GAAP Financial Measures The operating results analyzed below are presented on a non-GAAP basis. We use non-GAAP financial measures internally in analyzing our operational performance. Accordingly, we believe these non-GAAP measures are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. While we believe these non-GAAP measures provide useful supplemental information, non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. In addition, 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 non-GAAP financial measures discussed below exclude the impact of certain transactions because we believe they are not directly related to our operating performance in any particular period, but are for our long-term benefit over multiple periods. We believe that these non-GAAP financial measures reflect our ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in our business. 30 Second Quarter 2026 Form 10-Q Table of Contents Blackbaud, Inc. (Unaudited) Three months endedJune 30, Six months endedJune 30, (dollars in millions, except per share amounts) 2026 2025 2026 2025 GAAP Revenue $ 290.6 $ 282.0 $ 571.7 $ 552.0 GAAP gross profit $ 178.2 $ 168.4 $ 344.7 $ 323.5 GAAP gross margin 61.3 % 59.7 % 60.3 % 58.6 % Non-GAAP adjustments: Add: Stock-based compensation expense 2.7 3.3 5.8 5.9 Add: Amortization of intangibles from business combinations 5.4 7.0 11.7 14.1 Add: Employee severance — 0.3 — 0.3 Add: GCC workforce transition costs(1) 0.3 — 0.5 — Subtotal(2) 8.4 10.6 18.0 20.3 Non-GAAP gross profit(2) $ 186.5 $ 179.0 $ 362.7 $ 343.8 Non-GAAP gross margin 64.2 % 63.5 % 63.4 % 62.3 % GAAP income from operations $ 62.0 $ 57.3 $ 113.5 $ 77.0 GAAP operating margin 21.3 % 20.3 % 19.8 % 14.0 % Non-GAAP adjustments: Add: Stock-based compensation expense 22.7 27.3 46.6 49.4 Add: Amortization of intangibles from business combinations 6.0 7.6 12.8 15.2 Add: Employee severance — 2.1 — 2.1 Add: GCC workforce transition costs(1) 2.0 — 3.0 — Add: Acquisition and disposition-related costs(3) 0.9 0.3 1.0 25.4 Add: Security Incident-related costs — 0.4 — 2.6 Add: Impairment of capitalized software development costs 1.1 — 1.1 — Subtotal(2) 32.6 37.6 64.5 94.7 Non-GAAP income from operations(2) $ 94.6 $ 95.0 $ 178.0 $ 171.8 Non-GAAP operating margin 32.6 % 33.7 % 31.1 % 31.1 % GAAP income before provision for income taxes $ 46.4 $ 40.0 $ 84.2 $ 44.9 GAAP net income $ 35.4 $ 26.5 $ 66.5 $ 30.8 Shares used in computing GAAP diluted earnings per share 44,884,337 48,248,057 45,605,260 48,786,793 GAAP diluted earnings per share $ 0.79 $ 0.55 $ 1.46 $ 0.63 Non-GAAP adjustments: Add: GAAP income tax provision 11.1 13.6 17.7 14.1 Add: Total non-GAAP adjustments affecting income from operations 32.6 37.6 64.5 94.7 Non-GAAP income before provision for income taxes(2) 79.0 77.7 148.7 139.6 Assumed non-GAAP income tax provision(4) 19.4 19.0 36.4 34.2 Non-GAAP net income(2) $ 59.7 $ 58.7 $ 112.3 $ 105.4 Shares used in computing non-GAAP diluted earnings per share 44,884,337 48,248,057 45,605,260 48,786,793 Non-GAAP diluted earnings per share $ 1.33 $ 1.22 $ 2.46 $ 2.16 (1)GCC workforce transition costs represent severance and other costs incurred in connection with the transition of certain roles to our Global Capability Center in Hyderabad, India. (2)The individual amounts for each year may not sum to subtotal, non-GAAP gross profit, non-GAAP income from operations, non-GAAP income before provision for income taxes or non-GAAP net income due to rounding. (3)Includes charges of $24.3 million incurred during the six months ended June 30, 2025 related to the release from our lease for office space in Washington, DC. (4)We use a non-GAAP effective tax rate of 24.5% when calculating non-GAAP net income and non-GAAP diluted earnings per share. We base this rate on our estimated annual GAAP income tax rate, adjusted for items excluded from GAAP income when calculating non-GAAP income and for significant nonrecurring tax adjustments. We review this non-GAAP tax rate annually to determine whether it remains appropriate for evaluating our financial performance. In conducting this review, we consider our GAAP annual effective tax rate, changes in tax legislation, non-GAAP adjustments, and shifts in the geographic mix of revenues and expenses. We also evaluate other factors that we deem significant. Because the tax treatment of non-GAAP adjustments differs from GAAP and because of our methodology for estimating the annual tax rate, the non-GAAP tax rate may differ from the GAAP tax rate and from our actual tax liabilities. Second Quarter 2026 Form 10-Q 31 Table of Contents Blackbaud, Inc. (Unaudited) Non-GAAP organic revenue growth In addition, we use non-GAAP organic revenue growth, non-GAAP organic revenue growth on a constant currency basis, non-GAAP organic recurring revenue growth and non-GAAP organic recurring revenue growth on a constant currency basis in analyzing our operating performance. We believe that these non-GAAP measures are useful to investors, as a supplement to GAAP measures, for evaluating the periodic growth of our business on a consistent basis. Each of these measures of non-GAAP organic revenue growth excludes incremental acquisition-related revenue attributable to companies, if any, acquired in the current fiscal year. For companies, if any, acquired in the immediately preceding fiscal year, each of these non-GAAP organic revenue growth measures reflects presentation of full year incremental non-GAAP revenue derived from such companies as if they were combined throughout the prior period. In addition, each of these non-GAAP organic revenue growth measures excludes prior period revenue associated with divested businesses, if any. The exclusion of the prior period revenue is 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. We believe this presentation provides a more comparable representation of our current business’ organic revenue growth and revenue run-rate. (dollars in millions) Three months endedJune 30, Six months endedJune 30, 2026 2025 2026 2025 GAAP revenue $ 290.6 $ 282.0 $ 571.7 $ 552.0 GAAP revenue growth 3.0 % 3.6 % Less: Non-GAAP revenue from divested businesses(1) — — — — Non-GAAP organic revenue(2) $ 290.6 $ 282.0 $ 571.7 $ 552.0 Non-GAAP organic revenue growth 3.0 % 3.6 % Non-GAAP organic revenue(2) $ 290.6 $ 282.0 $ 571.7 $ 552.0 Foreign currency impact on Non-GAAP organic revenue(3) (0.7) — (2.9) — Non-GAAP organic revenue on constant currency basis(3) $ 289.9 $ 282.0 $ 568.8 $ 552.0 Non-GAAP organic revenue growth on constant currency basis 2.8 % 3.1 % GAAP recurring revenue $ 285.3 $ 276.3 $ 561.8 $ 539.6 GAAP recurring revenue growth 3.3 % 4.1 % Less: Non-GAAP recurring revenue from divested businesses(1) — — — — Non-GAAP organic recurring revenue(2) $ 285.3 $ 276.3 $ 561.8 $ 539.6 Non-GAAP organic recurring revenue growth 3.3 % 4.1 % Non-GAAP organic recurring revenue(2) $ 285.3 $ 276.3 $ 561.8 $ 539.6 Foreign currency impact on non-GAAP organic recurring revenue(3) (0.7) — (2.9) — Non-GAAP organic recurring revenue on constant currency basis(3) $ 284.6 $ 276.3 $ 558.9 $ 539.6 Non-GAAP organic recurring revenue growth on constant currency basis 3.0 % 3.6 % (1)Non-GAAP revenue from divested businesses excludes revenue associated with divested businesses in the prior period. The exclusion of the prior period revenue is to present the results of the divested business with the results of the combined company for the same period of time in both the prior and current periods. (2)Non-GAAP organic revenue and non-GAAP organic recurring revenue for the prior year periods presented herein may not agree to non-GAAP organic revenue and non-GAAP organic recurring revenue presented in the respective prior period quarterly financial information solely due to the manner in which non-GAAP organic revenue growth and non-GAAP organic recurring revenue growth are calculated. (3)To determine non-GAAP organic revenue growth and non-GAAP organic recurring revenue growth on a constant currency basis, revenues from entities reporting in foreign currencies were translated to U.S. Dollars using the comparable prior 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. 32 Second Quarter 2026 Form 10-Q Table of Contents Blackbaud, Inc. (Unaudited) Rule of 40 We define Rule of 40 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; stock-based compensation; employee severance; GCC workforce transition costs; acquisition and disposition-related costs; Security Incident-related costs; and impairment and disposition charges. Three months endedJune 30, Six months endedJune 30, (dollars in millions) 2026 2025 2026 2025 GAAP net income $ 35.4 $ 26.5 $ 66.5 $ 30.8 Non-GAAP adjustments: Add: Interest, net 15.7 16.4 30.0 31.7 Add: GAAP income tax provision 11.1 13.6 17.7 14.1 Add: Depreciation 2.8 2.7 5.1 5.6 Add: Amortization of intangibles from business combinations 6.0 7.6 12.8 15.2 Add: Amortization of software development costs(1) 12.8 12.3 25.2 24.2 Subtotal(2) 48.4 52.6 90.9 90.8 Non-GAAP EBITDA(2) $ 83.7 $ 79.0 $ 157.4 $ 121.6 Non-GAAP EBITDA margin(3) 28.8 % 27.5 % Non-GAAP adjustments: Add: Stock-based compensation expense $ 22.7 $ 27.3 $ 46.6 $ 49.4 Add: Employee severance — 2.1 — 2.1 Add: GCC workforce transition costs(4) 2.0 — 3.0 — Add: Acquisition and disposition-related costs(4) 0.9 0.3 1.0 25.4 Add: Security Incident-related costs(4) — 0.4 — 2.6 Add: Impairment of capitalized software development costs 1.1 — 1.1 — Subtotal(2) 26.6 30.1 51.7 79.5 Non-GAAP adjusted EBITDA(2) $ 110.3 $ 109.1 $ 209.0 $ 201.2 Non-GAAP adjusted EBITDA margin(5) 38.0 % 36.6 % Rule of 40(6) 41.0 % 40.2 % Non-GAAP adjusted EBITDA $ 110.3 $ 109.1 $ 209.0 $ 201.2 Foreign currency impact on Non-GAAP adjusted EBITDA(7) (0.2) (1.1) (1.2) (0.9) Non-GAAP adjusted EBITDA on constant currency basis(7) $ 110.2 $ 108.0 $ 207.8 $ 200.3 Non-GAAP adjusted EBITDA margin on constant currency basis 38.0 % 36.5 % Rule of 40 on constant currency basis(8) 40.8 % 39.6 % (1)Includes amortization expense related to software development costs and amortization expense from capitalized cloud computing implementation costs. (2)The individual amounts for each year may not sum to subtotal, non-GAAP EBITDA, non-GAAP adjusted EBITDA or non-GAAP adjusted EBITDA on a constant currency basis due to rounding. (3)Measured by GAAP revenue divided by non-GAAP EBITDA. (4)See additional details in the reconciliation of GAAP to Non-GAAP operating income above. (5)Measured by non-GAAP organic revenue divided by non-GAAP adjusted EBITDA. (6)Measured by non-GAAP organic revenue growth plus non-GAAP adjusted EBITDA margin. See Non-GAAP organic revenue growth table above. (7)To determine non-GAAP adjusted EBITDA on a constant currency basis, non-GAAP adjusted EBITDA from entities reporting in foreign currencies were translated to U.S. Dollars using the comparable prior 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. (8)Measured by non-GAAP organic revenue growth on constant currency basis plus non-GAAP adjusted EBITDA margin on constant currency basis. See Non-GAAP organic revenue growth table above. Second Quarter 2026 Form 10-Q 33 Table of Contents Blackbaud, Inc. (Unaudited) Non-GAAP free cash flow 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. We believe non-GAAP free cash flow provides a useful measure of the Company's operating performance. Six months endedJune 30, (dollars in millions) 2026 2025 GAAP net cash provided by operating activities $ 142.5 $ 68.3 GAAP operating cash flow margin 24.9 % 12.4 % Non-GAAP adjustments: Less: purchase of property and equipment (4.1) (1.3) Less: capitalized software development costs (26.1) (27.8) Non-GAAP free cash flow(1) $ 112.3 $ 39.2 Non-GAAP free cash flow margin 19.6 % 7.1 % (1)The individual amounts for each year may not sum to non-GAAP free cash flow due to rounding. Seasonality Our revenues normally fluctuate as a result of certain seasonal variations in our business. Our first quarter has historically been the seasonal low for bookings, with the second and fourth quarters historically being seasonally higher, and our bookings tend to be back-end loaded within individual quarters given our quarterly quota plans. Transactional revenue is non-contractual and less predictable given the susceptibility to certain drivers such as timing and number of events and marketing campaigns, as well as fluctuations in donation volumes and tuition payments. Our transactional revenue has historically been at its lowest in the first quarter due to the timing of customer fundraising initiatives and events. We have historically experienced seasonal highs during the fourth quarter due to year-end giving campaigns and during the second quarter when a large number of events are held. Our revenue from professional services has historically been lower in the first quarter when many of those services commence and in the fourth quarter due to the holiday season. As a result of these and other factors, our total revenue has historically been lower in the first quarter than in the remainder of our fiscal year, with the fourth quarter historically achieving the highest total revenue. Our expenses, other than transaction-based costs related to our payments services, do not vary significantly as a result of these factors, but do fluctuate on a quarterly basis due to varying timing of expenditures. Our cash flow from operations normally fluctuates quarterly due to the combination of the timing of customer contract billings and renewals, delivery of professional services and occurrence of customer events, as well as merit-based salary increases, among other factors. Historically, due to lower revenues in our first quarter, combined with the payment of certain annual vendor contracts, our cash flow from operations has been lowest in our first quarter. Due to the timing of customer contract renewals and student enrollments, many of which take place at or near the beginning of our third quarter, our cash flow from operations has generally been lower in our second quarter as compared to our third and fourth quarters. Partially offsetting these favorable drivers of cash flow from operations in our third and fourth quarters are base salary merit increases, which occur in December. In addition, deferred revenues can vary on a seasonal basis due to the timing of customer contract billings and renewals and student enrollments or significant acquisitions. Our cash flow from financing is negatively impacted in our first quarter when most of our equity awards vest, as we pay taxes on behalf of our employees related to the settlement or exercise of equity awards. These patterns may change as a result of the continued shift to online giving, growth in volume of transactions for which we process payments, large dollar customer bookings and contract renewals, fluctuations in the timing of vendor payments, or as a result of acquisitions, new market opportunities, new solution introductions or other factors. 34 Second Quarter 2026 Form 10-Q Table of Contents Blackbaud, Inc. (Unaudited) Liquidity and Capital Resources The following table presents selected financial information about our financial position: (dollars in millions) June 30, 2026 December 31, 2025 Change Cash and cash equivalents $ 34.4 $ 38.9 (11.6) % Property and equipment, net 85.5 85.1 0.5 % Software development costs, net 159.0 155.8 2.0 % Total carrying value of debt 1,150.0 1,109.7 3.6 % Working capital (232.2) (252.0) 7.9 % The following table presents selected financial information about our cash flows: Six months ended June 30, (dollars in millions) 2026 2025 Change Net cash provided by operating activities $ 142.5 $ 68.3 108.6 % Net cash used in investing activities (38.9) (41.3) (5.8) % Net cash provided by financing activities 19.1 68.1 (72.0) % Our principal sources of liquidity are our operating cash flow, funds available under the 2024 Credit Facilities and cash on hand. Our operating cash flow depends on continued customer renewal of our subscription and maintenance arrangements, market acceptance of our solutions and services, the volume and size of transactions for which we process payments and our customers' ability to pay. Based on current estimates of revenue and expenses, we believe that the currently available sources of funds and anticipated cash flows from operations will be adequate for at least the next twelve months to finance our operations, fund anticipated capital expenditures and meet our debt obligations. We also believe that we will be able to continue to meet our long-term cash requirements due to our anticipated cash flow from operations, solid financial position and ability to access capital from financial markets. To the extent we undertake future material acquisitions or investments or unanticipated capital or operating expenditures, we may require additional capital. In that context, we regularly evaluate opportunities to enhance our capital structure, including through potential debt or equity issuances. As a well-known seasoned issuer, we filed an automatic shelf registration statement for an undetermined amount of debt and equity securities with the SEC on January 10, 2025. Under this universal shelf registration statement we may offer and sell, from time to time, debt securities, common stock, preferred stock, depositary shares, warrants, stock purchase contracts and stock purchase units. Subject to certain conditions and pursuant to applicable SEC regulations, this registration statement is effective for three years from its date of filing with the SEC, or through January 9, 2028. At June 30, 2026, our total cash and cash equivalents balance included approximately $14.9 million of cash that was held by operations outside the U.S. While these funds may not be needed to fund our U.S. operations for at least the next twelve months, if we need these funds, we may be required to accrue and pay taxes to repatriate the funds. We currently do not intend nor anticipate a need to repatriate our cash held outside the U.S. Second Quarter 2026 Form 10-Q 35 Table of Contents Blackbaud, Inc. (Unaudited) Operating Cash Flow Our cash flows from operations are derived principally from: (i) our earnings from on-going operations prior to non-cash expenses such as depreciation, amortization, stock-based compensation, deferred taxes, amortization of deferred financing costs and debt discount and adjustments to our provision for credit losses and sales returns; and (ii) changes in our working capital. Working capital changes are composed of changes in accounts receivable, prepaid expenses and other assets, trade accounts payable, accrued expenses and other liabilities, and deferred revenue. Net cash provided by operating activities increased by $74.2 million during the six months ended June 30, 2026, when compared to the same period in 2025, primarily due to a $47.5 million increase in net income adjusted for non-cash expenses and a $26.6 million increase in cash flow from operations associated with working capital. The increase in cash flow from operations associated with working capital during the six months ended June 30, 2026, when compared to the same period in 2025, was primarily due to: •fluctuations in the timing of vendor payments; and •a smaller increase in prepaid income taxes and a modest increase in income taxes payable. On July 4, 2025, the United States enacted the OBBBA, which introduced significant changes to U.S. tax law. See Note 9 to our unaudited, condensed consolidated financial statements in this report for more information. OBBBA's restoration of 100% bonus depreciation and immediate expensing of domestic research and experimental expenditures, together with our utilization of net operating loss carryforwards, meaningfully reduced U.S. cash taxes in 2025 and 2026. U.S. state OBBBA conformity considerations (which continue to evolve as the states address the 2025 Federal tax legislation) and the phase-in of the OBBBA international tax provisions in 2026 are expected to, in part, offset these cash tax reductions in 2026 and 2027. Investing Cash Flow Net cash used in investing activities of $38.9 million decreased by $2.4 million during the six months ended June 30, 2026, when compared to the same period in 2025. During the six months ended June 30, 2026, we used cash of $26.1 million for software development costs, which was a decrease of $1.7 million when compared to the same period in 2025. We spent $4.1 million for purchases of property and equipment during the six months ended June 30, 2026, which was an increase of $2.8 million when compared to the same period in 2025. Also, we used $8.7 million for a minor investment in a business during the six months ended June 30, 2026. During the six months ended June 30, 2025, we used net cash of $12.2 million for the disposition of a business. Financing Cash Flow During the six months ended June 30, 2026, we had a net increase in borrowings of $28.6 million, primarily due to our stock repurchase program and to satisfy tax obligations of employees upon settlement of equity awards (see discussion below). We paid $25.3 million to satisfy tax obligations of employees upon settlement of equity awards during the six months ended June 30, 2026 compared to $38.7 million during the same period in 2025. The amount of taxes paid by us on behalf of employees related to the settlement of equity awards varies from period to period based upon the timing of grants and vesting, as well as the market price for shares of our common stock at the time of settlement. Most of our equity awards currently vest in our first quarter. During the six months ended June 30, 2026, cash flow from financing activities associated with changes in restricted cash due to customers increased $132.6 million, compared to an increase of $128.6 million during the same period in 2025. This line in the statement of cash flows represents the change in the amount of restricted cash held and payable by us to customers from one period to the next. This restricted cash due to customers is not available to us for operational purposes. 36 Second Quarter 2026 Form 10-Q Table of Contents Blackbaud, Inc. (Unaudited) Stock repurchase program On December 1, 2025, our Board of Directors reauthorized, expanded and replenished our stock repurchase program by expanding the total capacity under the program to $1.0 billion available for repurchases. The program does not have an expiration date. Under the stock repurchase program, we are authorized to repurchase shares from time to time in accordance with applicable laws both on the open market, including under trading plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, and in privately negotiated transactions. The timing and amount of repurchases depends on several factors, including market and business conditions, the trading price of our common stock and the nature of other investment opportunities. The repurchase program may be limited, suspended or discontinued at any time without prior notice. In February 2026, we announced our intention to repurchase between 5% and 10% of our outstanding common stock as of December 31, 2025 during the course of 2026 under our stock repurchase program. During the three months ended June 30, 2026, we repurchased an aggregate of 797,795 shares for $28.0 million. During the six months ended June 30, 2026, we repurchased an aggregate of 2,398,852 shares for $110.1 million. Including net share settlement of employee stock compensation, these repurchases represent approximately 6.2% of our outstanding common stock as of December 31, 2025. As of June 30, 2026, $850.4 million remained available under our stock repurchase program. Over the long term, we expect stock repurchases to remain an important component of our capital allocation strategy, subject to market conditions, business performance, leverage considerations, U.S. excise taxes and other factors. We anticipate utilizing at least 50% of our free cash flow from 2026 to 2030 for stock repurchases. See discussion of our Non‑GAAP Financial Measures above. 2024 Credit Facilities Historically, we have drawn on our credit facility from time to time to help us meet financial needs, primarily due to the seasonality of our cash flows from operations and financing for business acquisitions. At June 30, 2026, our available borrowing capacity under the 2024 Credit Facilities was $374.0 million. The 2024 Credit Facilities mature in April 2029. At June 30, 2026, the carrying amount of our debt under the 2024 Credit Facilities was $1.1 billion. Our average daily borrowings during the three and six months ended June 30, 2026 were $1.1 billion and $1.1 billion, respectively. The following is a summary of the financial covenants under the 2024 Credit Facilities: Financial covenant Requirement Ratio as of June 30, 2026 Net leverage ratio(1) ≤ 3.75 to 1.00 2.58 to 1.00 Interest coverage ratio ≥ 2.50 to 1.00 6.56 to 1.00 (1)Under the terms of the 2024 Credit Facilities, the Net Leverage Ratio requirement may be increased by up to 0.50 provided we satisfy certain requirements, including a permitted business acquisition, and provided that the maximum Net Leverage Ratio shall not exceed 4.25 to 1.00. Under the 2024 Credit Facilities, we also have restrictions on our ability to declare and pay dividends and our ability to repurchase shares of our common stock. In order to pay any cash dividends and/or repurchase shares of stock: (i) no default or event of default shall have occurred and be continuing under the 2024 Credit Facilities, and (ii) our pro forma net leverage ratio, as set forth in the 2024 Credit Facilities, must be 0.25 less than the net leverage ratio requirement at the time of dividend declaration or share repurchase. At June 30, 2026, we were in compliance with our debt covenants under the 2024 Credit Facilities. See Note 6 to our unaudited, condensed consolidated financial statements in this report for additional information regarding the 2024 Credit Facilities. Second Quarter 2026 Form 10-Q 37 Table of Contents Blackbaud, Inc. (Unaudited) Commitments and Contingencies As of June 30, 2026, we had contractual obligations with future minimum commitments as follows: Payments due by period (in millions) Less than 1 year More than 1 year Total(1) Recorded contractual obligations: Debt $ 23.4 $ 1,128.8 $ 1,152.2 Operating leases 2.6 6.1 8.6 Unrecorded contractual obligations: Purchase obligations 48.7 35.8 84.5 Interest payments on debt 64.0 130.7 194.7 Total contractual obligations(1) $ 138.7 $ 1,301.3 $ 1,440.0 (1)The individual amounts may not sum to the total due to rounding. Debt As of June 30, 2026, we had total remaining principal payments of approximately $1.2 billion. These payments represent principal payments only, under the following assumptions: (i) that the amounts outstanding under the 2024 Credit Facilities, our real estate loans and our other debt at June 30, 2026 will remain outstanding until maturity, with minimum payments occurring as currently scheduled, and (ii) that there are no assumed future borrowings on the revolving credit loans under the 2024 Revolving Facility for the purposes of determining minimum commitment amounts. See Note 6 to our unaudited, condensed consolidated financial statements in this report for more information. Interest payments on debt In addition to principal payments, as of June 30, 2026, we expect to pay interest expense over the life of our debt obligations of approximately $194.7 million. These payments represent our estimated future interest payments on debt using our debt balances and the related weighted average effective interest rates as of June 30, 2026, which includes the effect of interest rate swap agreements. The actual interest expense recognized in our unaudited, condensed consolidated statements of comprehensive income will depend on the amount of debt, the length of time the debt is outstanding and the interest rate, which could be different from our assumptions on our remaining principal payments described above. Operating leases As of June 30, 2026, we had remaining operating lease payments of $8.6 million. These payments have not been reduced by sublease income, incentive payments, reimbursement of leasehold improvements or the amount representing imputed interest. Our operating leases are generally for corporate offices, subleased offices and certain equipment and furniture. Given our remote-first workforce strategy and real estate footprint optimization efforts, we do not anticipate entering any new, material operating leases for offices for the foreseeable future. See Note 8 to our unaudited, condensed consolidated financial statements in this report for more information. Purchase obligations As of June 30, 2026, we had remaining purchase obligations of $84.5 million. These purchase obligations are for third-party technology used in our solutions and for other services we purchase as part of our normal operations. In certain cases, these arrangements require a minimum annual purchase commitment by us. Our purchase obligations are not recorded as liabilities on our unaudited, condensed consolidated balance sheets as of June 30, 2026, as we had not received the related services. See Note 8 to our unaudited, condensed consolidated financial statements in this report for more information. 38 Second Quarter 2026 Form 10-Q Table of Contents Blackbaud, Inc. (Unaudited) Other commitments In connection with the settlement of the multi-state Attorneys General investigation, the California Attorney General investigation and the FTC investigation relating to the Security Incident, as discussed in Note 11 to our audited consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, we have agreed to implement and improve certain of our cybersecurity programs and tools through May 2044. The currently anticipated costs in connection with these efforts are primarily expected to be expensed as incurred. Foreign Currency Exchange Rates Approximately 18% of our total revenue for the six months ended June 30, 2026 was generated from operations outside the U.S. We do not have significant operations in countries in which the economy is considered to be highly inflationary. Our consolidated financial statements are denominated in U.S. dollars and, accordingly, changes in the exchange rate between foreign currencies and the U.S. dollar will affect the translation of our subsidiaries’ financial results into U.S. dollars for purposes of reporting our consolidated financial results. The accumulated currency translation adjustment, recorded within accumulated other comprehensive loss as a component of stockholders’ equity, was a loss of $5.4 million as of June 30, 2026 and a loss of $3.8 million as of December 31, 2025. We have entered into foreign currency forward contracts to hedge a portion of the foreign currency exposure that arises on translation of our investments denominated in British Pounds into U.S. dollars. The vast majority of our contracts are entered into by our U.S. or U.K. entities. The contracts entered into by the U.S. entity are almost always denominated in U.S. dollars or Canadian dollars, and contracts entered into by our U.K., Australian and Irish subsidiaries are generally denominated in British Pounds, Australian dollars and Euros, respectively. Historically, as the U.S. dollar weakened, foreign currency translation resulted in an increase in our revenues and expenses denominated in non-U.S. currencies. Conversely, as the U.S. dollar strengthened, foreign currency translation resulted in a decrease in our revenues and expenses denominated in non-U.S. currencies. During the six months ended June 30, 2026, foreign translation resulted in increases in our revenues and expenses denominated in non-U.S. currencies. Though we have exposure to fluctuations in currency exchange rates, primarily those between the U.S. dollar and both the British Pound and Canadian dollar, the impact has generally not been material to our consolidated results of operations or financial position. For the six months ended June 30, 2026, the fluctuation in foreign currency exchange rates increased our total revenue and our income from operations by $2.9 million and $2.5 million, respectively. We have entered into foreign currency forward contracts to hedge revenues denominated in the Canadian dollar against changes in the exchange rate with the U.S. dollar. We will continue monitoring such exposure and take action as appropriate. To determine the impacts on revenue (or income from operations) from fluctuations in currency exchange rates, current period revenues (or income from operations) from entities reporting in foreign currencies were translated into U.S. dollars using the comparable prior year period's weighted average foreign currency exchange rates. These impacts are non-GAAP financial information and are not in accordance with, or an alternative to, information prepared in accordance with GAAP. Critical Accounting Policies and Estimates There have been no significant changes in our critical accounting policies and estimates during the six months ended June 30, 2026 as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Recently Issued Accounting Pronouncements For a discussion of the impact that recently issued accounting pronouncements are expected to have on our financial position and results of operations when adopted in the future, see Note 2 to our unaudited, condensed consolidated financial statements in this report. Second Quarter 2026 Form 10-Q 39 Table of Contents Blackbaud, Inc. (Unaudited)