Title

Presentation

Blackbaud, Inc. beats earnings expectations. Reported EPS is $0.96, expectations were $0.9.

Operator: Greetings and welcome to the Blackbaud’s First Quarter 2025 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tom Barth, Head of Investor Relations. Thank you, sir. You may begin.

Tom Barth: Good morning everyone. Thank you for joining us on Blackbaud’s first quarter 2025 earnings call. Joining me on the call today will be Mike Gianoni, Blackbaud’s CEO, President and Vice Chairman; Tony Boor, Blackbaud’s Executive Vice President and CFO; and Chad Anderson, Blackbaud’s Chief Accounting Officer. Mike, Tony and Chad will make prepared comments, and then we will open up the line for your questions. Please note that our comments today contain forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from those projected. Please refer to our most recent Form 10-K and other SEC filings for more information on those risks. The discussion today will focus on non-GAAP results.

Please refer to our press release and the investor materials posted on our website for the full details on our financial performance, including GAAP results, as well as full year guidance. We believe that a combination of both GAAP and non-GAAP measures are more representative of how we internally measure our business. Unless otherwise specified, we will refer to non-GAAP financial measures on this call. Please note that non-GAAP financial measures should not be considered in isolation from or as a substitute GAAP measures. And with that, I’ll turn the call over to you, Mike.

Mike Gianoni: Thank you, Tom and good morning, everyone. Last quarter, I spent some time discussing the strong financial progress Blackbaud has made over the past 5 years across both our top and bottom lines. We continue to extend our position as the market leader and provide the most comprehensive suite of purpose-built and mission critical software and services to the social impact sector. Our solutions allow customers to spend more time focusing on what matters to them. Their vital social impact work at hospitals, private schools, universities, nonprofits, companies and through individual acts of generosity. We remain the premier software partner across the social impact space. Our solid first quarter and Rule of 40 attainment give me confidence that Blackbaud is well positioned on our journey to the Rule of 45 by 2030.

In the first quarter, Blackbaud generated revenue of $271 million, which is 5.8% organic growth a non-GAAP adjusted EBITDA margin of 34.3%, non-GAAP diluted earnings per share of $0.96 and a Rule of 40 score of 40.1%. These results are a testament to the resilience of our business in challenging times. The social impact market has been a consistent grower for many decades through recessions, business upturns and downturns, and even through the COVID-19 global pandemic. I know there are concerns about federal grant funding and how it impacts our customers. But much like in COVID, this uncertainty only makes our software more critical to our customers’ operations, enabling them to improve fundraising outcomes and to undertake or sharpen their own cost management initiatives.

To be clear, our solutions are not in the funds flow from federal agencies, but are used for fundraising from individual donors, which is even more critical now. We are proud to play a vital role in supporting our customers’ operations as they navigate change. Blackbaud has also undertaken a number of operational initiatives that set us up to perform well even in a challenging market . In 2023, we began transitioning our contractual revenue contracts from primarily one-year to primarily three-year renewal terms. This modernized approach to contract terms provides increased visibility and consistency for nearly two-thirds of our revenue base and provides better predictability for our customers. Over the past several years, we have transitioned the majority of our products and customers to the third-party cloud while shutting down many of our private data at colos with only two of our own data centers remaining.

We continue to innovate through the use of AI to not only empower our customers, but also improve our own internal productivity. And lastly, we have rightsized our operations by further rationalizing office leases and renegotiating significant vendor contracts. And despite a strong focus on reducing expenses, we continue to invest aggressively in innovation, in our extensive developer network to help our customers raise more money, while enhancing and streamlining their operations. Our innovation and end-to-end workflows continue to be a competitive differentiator and drive sales. We are supporting this innovation through enhancements in sales and marketing programs, and we continue to identify, experiment and scale a range of successful solutions across marketing, customer success and engineering to be an active innovator through applied AI.

We saw the positive market reaction to our focus here earlier this month at our Corporate Social Impact Summit in Dallas. The summit brought together hundreds of executives from leading companies across the U.S. to share insights and drive meaningful change. Attendees received an exclusive preview of product innovations, including how we are integrating our YourCause portfolio with our payments and fundraising solutions, expanding the use of AI to transform the grant-making process, helping companies unleash generosity globally and revolutionizing corporate social impact reporting through our partnership with True Impact. YourCause has made significant strides in innovation particularly with our announcement of Expedited Giving. Expedited Giving will transform the way employee donations and eligible match funding are processed, ensuring that non-profits receive corporate donations directly and faster than ever before which is especially critical during disaster response efforts.

This initiative will soon begin testing with a select group of pilot corporations and nonprofits, expediting employee donation securities that have Blackbaud integrated payments customers. The key value proposition here for customers is to reduce the time lag of an employee donation to a nonprofit to just a day or two. In addition to investing in our innovation, we plan to use our cash flow to repurchase Blackbaud shares. As you recall, in 2024, the company bought back 10% of the common stock outstanding. And when you include the net share settlement on employee stock comp, the figure rises to 11%. In the first quarter of 2025, we repurchased approximately 4%, well within our plans of buying between 3% to 5% of our outstanding shares in 2025.

Before I close, I also want to take this opportunity to say a special thank you to Tony Boor. Tony is transitioning his CFO duties to Chad Anderson later today. Tony has been a great CFO, and I’m very grateful to him for his many contributions to Blackbaud’s growth and success. Over the last 14 years, Tony has developed an outstanding finance organization, and he’s instilled a strong operational and financial discipline across the company. I look forward to continuing to work with Tony in his new role as EVP of Corporate Development and Strategy, to help ensure a smooth transition and continue to drive our success and operational excellence. One of his key focus areas will be to help lead our charge to be a Rule of 45 company. I’m delighted about Chad’s promotion as CFO.

Chad is a highly accomplished global finance executive, and 12-year veteran of Blackbaud with a deep knowledge of our business, our customers and the industry. Chad has successfully led many key and impactful projects to mature, modernize and improve the efficiency and accuracy of the company’s financial systems, processes and organizations. Having worked closely with Chad for over a decade, I’m looking forward to benefiting from his experience and knowledge in the role of CFO as we work to deliver profitable growth for our shareholders in 2025 and beyond. There will be a formal press release and 8-K at the end of the day today. Let me conclude with why Blackbaud continues to be a sound investment choice that we believe should create substantial shareholder value, and our performance in Q1 reinforces that belief.

Regarding organic revenue, you can expect mid-single-digit plus organic revenue growth driven by visible and full reoccurring revenue streams targeting both new logos and expansion of our installed base empowered by innovation. You can continue to expect a strong focus on cost and employee productivity to improve EBITDA. Additionally, our strong free cash flow will drive a purposeful capital allocation strategy in 2025 and beyond, with a plan to buy back of up to 5% of common stock outstanding in 2025. We look forward to our continued journey in offering our shareholders increasing value in the coming years, as we make progress against our Rule of 45 ambition by 2030. With that, let me turn the call over to Tony.

Tony Boor: Thanks for the kind words, Mike, and good morning everyone. I believe Blackbaud is positioned for long-term success, delivering consistent growth and industry leading profitability. I’m very pleased to be turning the reins over to Chad Anderson whom I’ve worked with for more than 20 years, most recently as my Chief Accounting Officer. And I look forward to helping Chad, Mike and the team in the near term, focused on the corporate development strategy role. I’m confident that this transition will be seamless. With that, let me dive into the details of our Q1 financial results. As Mike outlined Blackbaud performed well in the first quarter, kicking-off a good start to the year. We remain committed to providing investors an attractive financial model balance between growth in revenues, earnings and cash flows, along with a prudent and purposeful capital allocation strategy.

Mike walked through the high-level Q1 results which tell a strong story of improving top-line growth and dramatically improved profitability. But to reiterate, Q1 organic revenues were up 5.8% to $271 million. Non-GAAP adjusted EBITDA of $93 million was up approximately $4 million with a 250 basis point improvement to margin. As you know, we previously only reported stand-alone revenue for EVERFI because it was not a separate reportable segment for us. But we estimate that EVERFI’s contribution to our 2024 EBITDA was approximately $10 million to $15 million. The mid-single-digit organic revenue growth and improved EBITDA margin speaks to the power of our 5-point operating plan, which positively impacted earnings per share. Non-GAAP EPS increased to $0.96 compared to $0.93 last year.

Adjusted free cash flow was negative $11 million in the quarter. As a reminder, Q1 tends to be our lowest quarter for free cash flow generation in the first quarter of 2025 included the one-time cash release payment associated with the Washington, D.C. office lease that we discussed on last quarter’s call, increased interest expense related to our share repurchase program and fluctuations in the timing of vendor payments also negatively impacted free cash flow in the quarter. However, our expected free cash flow for the year gives us confidence to continue investment in a number of critical areas like product innovation and stock repurchases. In Q1, we bought back approximately 4% of our outstanding shares and continue to demonstrate a strong commitment to our belief in the value of Blackbaud.

It was a strong first quarter and start to the year. Before I move on to guidance for the remainder of 2025, there are several housekeeping items I want to highlight that may influence our numbers and help you to set your models for both the year and quarters appropriately. Thinking about revenue seasonality. Recall that the fourth quarter is typically our highest revenue quarter, while the first quarter is our lowest due to timing of charitable giving and events throughout the year. Q1 tends to be our lowest quarter from a profitability standpoint due to timing and expenses related to employee benefits and employee stock or investing. Our annual merit increases for employee compensation go into effect on July 1 every year. So Q3 tends to have higher compensation-related costs compared to Q2.

Moving now to guidance for the remainder of 2025. Our guidance for the year remains unchanged and assumes no material changes good or bad in the current macroeconomic landscape related to the markets we serve. So for the year, we are projecting revenue in the range of $115 million to $1.125 billion, representing organic growth of 4.2% to 5.1% or 4.5% to 5.4% on a constant currency basis. Shifting to profitability. We will continue to focus on margin expansion opportunities, while at the same time, making investments in the business and areas of innovation, artificial intelligence, product road maps and cybersecurity. Therefore we anticipate EBITDA margins of approximately 34.9% to 35.9%. This does take into account what I mentioned earlier that Everfi’s contribution to our 2024 EBITDA was approximately $10 million to $15 million.

And with the overall revenue and spend configuration I just outlined, we expect 2025 non-GAAP EPS in the range of $4.16 to $4.35 per share or up 2% to 7% year-over-year. The combination of consistent organic revenue growth and improved margin is expected to result in a rule of 40 at constant currency of 40.4% at the midpoint of guidance for the full year, more than 150 basis point improvement year-over-year. We continue to have a sharp focus on driving adjusted free cash flow and returning capital to our shareholders. For the year, we are guiding to adjusted free cash flow of $185 million to $195 million. This guidance range is inclusive of several onetime investments that will provide long-term benefits to the company and shareholders, including the buyout of the Washington, D.C. office lease, which was a $28 million cash expenditure in Q1, that would have been $42 million if we kept the lease for full term and will provide a benefit to adjusted EBITDA moving forward.

Also a new office location in India that will provide access to high quality tech talent. Additionally, we expect to incur approximately $11 million of incremental interest expense year-over-year, comprised of roughly $30 million in interest for our 2024 and planned 2025 stock repurchases offset by the pay down of debt using discretionary cash. And finally, we expect an approximately $15 million decline year-over-year to other factors, including timing of certain working capital items and divestiture related costs. You can find more details on Slide 24 of our Investor Day. Looking to the future, we believe adjusted free cash flow will continue to grow and anticipated a minimum, repurchasing shares to offset dilution from share-based compensation.

Beyond that, the company has tremendous optionality to dynamically allocate capital to its highest use based on market conditions, including additional stock repurchases, synergistic M&A or repayment of debt. The performance of our stock, the interest rate environment and the availability of acquisitions will help inform our capital allocation decisions going forward. We have a lot to be proud of and a lot more to look forward to through 2025 and beyond with a goal of becoming a Rule of 45 company by 2030. As such, we remain focused on providing enhanced value to our customers and to our shareholders. Before we jump to Q&A, let me introduce Chad, and again, congratulate him on a well-deserved promotion. Chad?

Chad Anderson: Thanks, Tony, and you, Mike, for the kind words. It’s been a pleasure working closely with you both over the past decade, and I look forward to following your example of professionalism and business leadership in the years ahead. Operator, let’s open up the line for questions.

Operator: Thank you. [Operator Instructions] Our first question comes from Brian Peterson with Raymond James. Please proceed with your question.

Brian Peterson : Hey, everyone. Thanks for taking my question and congrats to Chad. And Tony, it’s truly been a pleasure. I hope you won’t be a stranger in the new role. Mike, I just wanted to follow-up on some of your prepared remarks on the DOGE impact, very much understand how you can help customers through that and the mission and criticality of your software but also curious, have you seen any changes on the gross retention side or the bookings environment in light of this, understanding that a lot of this is outside of your control.

Mike Gianoni : Yes. Brian, good question. First of all, our solutions are not in the fund flow of federal grants. I think that’s important. Some of our customers are getting impacted by this. It frankly makes our donation platforms more important. Our platforms are pointed toward individual donors and alumni and things. So we become more important from a revenue source standpoint for customers. We’ve seen no impact on sales bookings, no impact on building sales pipeline, no impact on existing customers or retention. The biggest test of the health of our end markets was COVID because we had customers that closed their doors, performing art centers and K-12 schools and others. And we lost new customers, and we didn’t have any go out of business even then. And that was the biggest test of the health of the end-market. So it might cause some difficulty for some of our larger customers, but we don’t see an impact on our business anywhere.

Brian Peterson : Got it. And Tony, maybe one follow-up for you. Just as we are thinking about the transactional business, how did that perform relative to your expectations in the first quarter? And as we’re thinking about that mid-single-digit organic growth outlook, how do we think about transactional impacting that?

Tony Boor : Yes, Brian the transactions was the biggest driver of overperformance in the quarter. We did well across the board. So as Mike said retention held up fine, bookings were actually pretty darn good for the quarter as well and have been through April. And as you know, we had a good Q4. So from a recurring revenue, we’re well on track for the year at this point transactions, our guide included a little bit of incremental transaction revenue related to L.A. wildfires, but that was in the original guide. And then as we’ve stated, when we’re providing our longer-term outlook of that mid-single-digit typically is going to relate to the transaction. I think we came in at just about 9% or a little over 9% growth in Q1 transactions about $2 million in incremental revenue.

For the quarter, which pushed us up to that kind of 5.8% or 5.9% on constant currency. Really hard, as you know to predict the volatility in some of the transactional revenue. We’ve not built in those viral giving events this year into the guide. And so if we do see more of those like we have with the wildfires, we’d have some incremental upside on the year.

Brian Peterson : Excellent.

Operator: Our next question comes from Rob Oliver with Baird. Please proceed with your question.

Rob Oliver : Great. Thank you, good morning guys. Appreciate it. Tony, I’ll echo what Brian said, I wish you the best of luck and it’s been a pleasure working with you. My question is for you. Just I guess another way to attack the macro. Clearly, you guys don’t have direct exposure to federal. And I know you said you haven’t seen any change in the behavior of your customers, but it does seem like there is a painful residual effect happening with some of the customers in your market who are exposed to grants or muddy flows that are coming from federal agencies. So in light of that, you guys maintain guide, obviously, off of a good Q1, driven by transactions. But just wanted to get a sense for you as you thought about the guidance for this year, is what sort of macro was contemplated in that guidance?

And then secondly, just around the mid-single-digit plus comment, it does seem like a little bit of an uptick from the optionality comment you guys had previously made about the option, kind of for upside for mid-single digits. I wanted to understand if I’m reading that right and what that increased confidence might be and what the time frame is for that.

Mike Gianoni : Hi, Rob, it’s Mike. I’ll start here and then Tony can kick in. Most of our customers don’t get federal grids. So many of our larger nonprofits do, but you think about the vertical markets we’re in K-12, is a big space for us, performing art centers is a big space for us. Your cost is in the corporation’s marketplace. We have a lot of faith based customers, churches and synagogues. We have the JustGiving platform in the U.K. you walk across the company’s vertical markets we serve, and you walk across the basically 17 platforms that create all of our revenue, there is very, very little impact on the end customers in the main globally that get federal grants. So the noise is a lot in the world. But related to Blackbaud, it is not a big part of the customer’s funding per se.

We have a lot of customers that are regional food banks and other types of customers. So we are pretty spread out in all the vertical markets that 501(c)3 or education institutions are in. And it is just not a lot of impact. We haven’t seen it, like I said, in bookings, retention or the build of our sales pipeline for this quarter and the rest of the year. So we don’t see it on us as a big impact. And for some of our customers that are not getting funding. We are working with them to integrate our AI capabilities and predictive analytics that drive more revenue from individual donors, and it is becoming more of a stickier and an important product for them to drive their revenue. So it is not a big impact, and we don’t see it. When we set the original guidance for the year, we used wordings around no material changes in the macro.

I think when we said that back a couple of months ago, and we are sticking with that because we don’t really see it. Related to growth, yes. We gave guidance at mid-single digits plus. We just saw some plus in Q1. We are not changing the guide for the year right now. We’re two months away from closing out Q2. So we’ll have a view of that, obviously when we report on Q2 in the summertime but we’ve had a really great start to the year. We don’t see the macro having a negative impact on us. So we’re feeling very optimistic for the go forward for the rest of this year.

Rob Oliver: Great. Very helpful. Thank you guys.

Tony Boor: You’re welcome.

Operator: Our next question comes from Parker Lane with Stifel. Please proceed with your question.

Matthew Kikkert : Hi, this is Matthew Kikkert on for Parker. Thank you for taking my questions. Congratulations to both Tony and Chad both on the long tenure and the promotion. The last quarter, we talked a lot — we talked a lot about the net new emphasis for 2025. Just curious how — what you saw from that subsegment in 1Q and what the net new pipeline looks like for the rest of the year?

Mike Gianoni : Yes. We talked about a big focus on new logos and we’ve made that pivot successfully and that pivot is behind us. It was just a small part of our bookings were conversions from legacy product to cloud product that’s largely behind us now. And the focus on new bookings has materialized really quite well. New bookings were up substantially in the first quarter this year. The pipeline looks good. So we’re excited about new bookings across the vertical markets that we serve.

Matthew Kikkert : Okay. That’s great to hear. And then my second question was on the global market. So part of the business, Just giving is over in the U.K. and you have some exposure to international markets. I guess, what are you seeing in international markets versus the opportunity here domestically?

Mike Gianoni : Yes, we are doing pretty well in our Asia Pac area, good sales bookings, good customer retention, and across Europe as well. JustGiving is doing really well. That continues to perform well. It’s great brand recognition in the U.K. and in many other parts of Europe on JustGiving. It’s used in a lot of major events like London Marathon and other large events, and it’s doing really well. It is all donor driven, personal campaign type stuff for fundraising for nonprofits, and continues to perform really well for us. We also see a lot of upside in the future in our YourCause platform for corporations. I mentioned in my prepared remarks, we just had a small customer event in Dallas. We had over 100 customers a lot of them from Fortune 500 companies, and there is a big interest in YourCause and employee engagement, and YourCause is a leading platform in the world in that space.

And so we have high hopes around the future for that and continuing to drive that platform as well. So new product sales, new logos going really well.

Matthew Kikkert : Perfect. Thank you.

Operator: Our next question comes from Koji Ikeda with Bank of America. Please proceed with your question.

Koji Ikeda : Yeah, good morning. Hi, guys. Thanks so much for taking the questions and I echo the statements on congrats to Chad, and thank you, Tony. It’s been a pleasure. Maybe taking a big step back here and asking a big picture question on your end-market. And so I’m hearing a lot of confidence in the prepared remarks and in the answers to the Q&A about your confidence in the end market demand environment. So maybe that is the question here. What is it about your end market that is giving you the competency in the resiliency for this year?

Mike Gianoni : Yes, sure. So the end markets are pretty healthy, like I said already in the call and the amount of innovation that we’ve come out with is really resonating with customers and new prospects. Back in the fall at our annual conference called BBCon in Seattle, we announced what we call 6 ways of innovation, and we’ve been delivering on that. There’s a lot of AI capabilities in our products now. There’s much better integration across the products. So our ability to cross-sell, and the innovation is driving some really good results in new logos and cross selling as well. So we’ve got a healthy market in all the verticals that we serve to my earlier comments. Our engineering and product teams are doing a great job in driving innovation with some new solutions and just some more advanced solutions, better UI, user experience, better integration, embedded predictive analytics, embedded AI is resonating with customers.

Koji Ikeda : Got it. Thank you. And maybe a follow-up here kind of digging in a little bit more specifically on the contract renewals for this year. I know you guys got about 25% of the mix coming up for renewal. And so, how are those conversations going specifically? And maybe remind us, is there any sort of seasonality in the contract renewal cycle this year that we should be aware of? Is it more front-end weighted? Or is it more back half weighted this year? Thank you.

Mike Gianoni : Yes, sure. It is going well. Our customer retention remains really high. That hasn’t changed even since we started this program. The customer retention numbers are high. It’s going well, customers — this is just a normal course of business now. It is not new anymore because it’s been a couple of years. We notify customers 5, 6 months ahead of time, so there’s plenty of time for any discussions. If needed, many of our smaller and mid-tier customers are on auto renewals. We’ve standardized on 3-year contracts. Some larger customers prefer longer-term, four-year, 5-year contracts. We’re not the only software supplier, our customers buy software from other vendors, including us at the same time. And so this is normal for them to see this across multiple vendors, not just Blackbaud.

So this tradition is really just normal course of business happens every day, going well, retentions still in the 92, 93 percentile. It is just normal course of business. It’s not new anymore. And I really think that given all the innovation, we’ve kind of really proven to be a long-term partner for our customers, and they see what’s coming down the road. And we’re informing them more on what’s coming in the future from an innovation standpoint. We have these customer updates, these webinars where thousands and thousands of customers participate and we talk to them about the road maps and what’s been delivered and what’s coming. And across our portfolio, we have new innovation and new features that just show up every day, every week, every month.

So it is continuous innovation. We don’t do large 1 or 2 drops a year, it’s continuous across the portfolio and customers appreciate that.

Tony Boor : And Koji, on the seasonality, that is still going to be higher in the Q2. First part of Q3 is when we have the bigger surge in the renewals that really probably shouldn’t change much even with all the new contracting that we are going through.

Koji Ikeda : Got it. Thank you so much. And maybe if I could squeeze in one more here. I think you guys already repurchased 3% of your common stock target mix of the 5% already for 2025. If you guys hit that target early the 5%, would there be any thought process of potentially increasing the share buyback program? Thank you guys, so much.

Tony Boor : Thanks for that question. We hit about 4.2% is where we are through the end of Q1. We had net share settles for all the normal vesting that we’d have in the first quarter, and then we bought back $100 million worth of stock. It puts us at about 15%. We’ve now purchased back just in the last year. So we’ve done a great job, I think on that from a capital allocation perspective. Debt is up a little bit, as you saw and interest expense is up a bit. We will — as we do every quarter and every year, we’ll continue to look at that capital allocation strategy. We’ll evaluate what’s going on in the market with share price, we will look at our debt levels, we got interest rate, et cetera. So we will continue to reevaluate that, but we’re well on our way at about a little over 4% towards our 3% to 5% for the full year. But we’ll continue to evaluate that and let you guys know if we decide to change our position on that front.

Koji Ikeda: Thank you so much.

Operator: Our next question comes from Kirk Materne with Evercore ISI. Please proceed with your question.

Kirk Materne : Yeah, thanks very much and good morning, and congrats to Tony and Chad on the new roles. Mike, I was wondering can you just remind us a little bit about the thought process on the monetization of some of your AI technologies? Just how are you thinking about that rolling through either contracts with your existing, or how you are thinking about monetizing with some of your net new clients?

Mike Gianoni : Kirk, thanks for the question. Like I said, we’ve done a lot in the last 18 months with embedded AI and predictive analytics in our solutions including generative AI, which are — which is available. We are launching a technical preview of Blackbaud Copilot, which is going to come out some of our products in the next several months. That’s going to be a really interesting add to our solutions. Our customers will be able to interact with our products and their data asking natural-language questions, which is really impactful in uniquely, we have all this data in our systems given we’ve been at this a long time. That’s a differentiated position for us. AI requires to have a lot of data, and we happen to. So that Blackbaud Copilot will be rolling out in the next couple of months, and we are doing some tech reviews.

Also on the further agenda, but not too long, is Agentic AI. And Agentic AI solutions embedded. So far all of these capabilities, we have not separately charged for any of these separate capabilities. We felt we had to drive a lot of innovation, including some of this given the three-year contract renewals, we started with some price increases to make sure our customers are getting a lot of value from us and they are. Agentic AIs are a little different. We are looking at monetization models for Agentic AI in the future. We are looking at what other firms are doing and what we think is appropriate. So that will be coming down the road. But to date again, all of the embedded predictive analytics and AI are just included with the contractual pricing.

Kirk Materne : Okay. That’s super helpful. And then Tony, I know you guys think about the world correctly in constant currency terms. But obviously the dollars pulled back a lot here. We’re just thinking about sort of our models on a reported basis. I’m guessing if the dollar stays where it is today, that would be a bit of a tailwind for you all if we look out over the remainder of the year? Just any rough thoughts on that? I know it is a bit of a guessing game.

Tony Boor : Yes, Kirk, you are right on the money. The currency has been moving a ton. It’s a bit more favorable right now when I look at that forward curve versus where we were when we put guide together. So it’d be a bit of a tailwind for us at this point as it holds with expectations.

Kirk Materne: Okay, thanks very much, appreciate it guys.

Tom Barth: Thank you, Kirk, and thank you, everyone, for joining us today. We will be attending a number of investor events in May and June to include several conferences which are listed on our Events page on our Investor Relations site. We hope to see you then and also to speaking with you very soon. Thank you, and have a nice day.

Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.