BLKB - Embedded Expectations Analysis - 2021 02 04
Blackbaud, Inc. (BLKB:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 25.6x Uniform P/E. At these levels, the market has somewhat bullish expectations for the firm, but management may have concerns about their retention rates, meeting profitable growth targets, and their partnerships with Salesforce and MicrosoftSpecifically, management may lack confidence in their ability to sustain transactional business revenue, maintain their high retention rates, and execute their Rule of 40 growth targets. Furthermore, they may have concerns about weakness in bookings during the pandemic, and they may be exaggerating the potential of the Salesforce platform integration and the advantages of their partnership with Microsoft Azure. Management may also lack confidence in their ability to apply a digital-first mindset to their business operations, continue to provide resources to the market at no cost, and shift towards a more collaborative working environment at their offices
Blackbaud is a cloud software company. The company is engaged in providing software solutions in cloud and hosted environments, providing payment and transaction services, providing software maintenance and support services, and providing services, including implementation, consulting, training, analytic and other services. The company's portfolio provides fundraising and relationship management, marketing and engagement, financial management, grant and award management, organizational and program management (such as education management, church management and ticketing), social responsibility, payment services and analytics.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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