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Why Blackbaud Stock Is Skyrocketing Today
Key Points
Blackbaud's Q2 sales came in lower than expected, but the business posted an earnings beat.
The company reiterated its full-year guidance, but management expects performance along key metrics to come in at the upper end of its target ranges.
Blackbaud (NASDAQ: BLKB)) stock is seeing huge gains on Wednesday following the company's recent quarterly report. The software specialist's share price was up 20.5% as of 2:25 p.m. ET, even though the S&P 500 had fallen 0.5% and the Nasdaq Composite was down 0.3%.
Blackbaud released its second-quarter results before the market opened this morning, reporting stronger-than-expected earnings even though sales came in below expectations. While the company reiterated its previously issued guidance, commentary from management has investors betting that results for the year could wind up better than previously anticipated.
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Blackbaud stock surges despite Q2 sales miss
Blackbaud posted non-GAAP (adjusted) earnings of $1.33 on revenue of $290.6 million in the second quarter. While adjusted earnings per share topped the average analyst estimate by $0.05, sales for the period came in $1.76 million below the average target. With sales still rising 3.3% year over year and adjusted earnings improving by $0.11 per share compared to last year's quarter, investors put more weight on the profit improvement than the revenue shortfall. Free cash flow rising 46% year over year to roughly $75 million certainly didn't hurt either.
Investors see promise in Blackbaud's guidance
With its Q2 report, Blackbaud reiterated full-year guidance for adjusted earnings per share between $5.15 and $5.25. While the midpoint of that guidance range is just slightly ahead of the previous average target for per-share earnings of $5.19, investors are betting that profits will come in at the higher end of that guidance range.
On the company's earnings call, management actually said directly that it now expects to record full-year performance that is in the upper half of its guidance for earnings per share, revenue, and free cash flow. Along with some encouraging adoption indicators for the company's artificial intelligence software, it's not surprising that investors are feeling significantly more bullish about the stock.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.