블랙보드(BLKB) 2026년 3분기 실적 발표 컨퍼런스 콜: 매출 성장, AI 로드맵 및 가이던스

핵심 요약

• 2026년 3분기 매출은 블랙보드(Blackbaud)의 미션 크리티컬 솔루션에 대한 지속적인 수요와 거래 매출 성장에 힘입어 4.1% 증가한 2억 9,300만 달러를 기록했습니다.
• 조정 EBITDA는 1억 1,100만 달러를 기록해 38%의 마진을 나타냈습니다. 비GAAP EPS는 24% 상승한 1.36달러를 기록했으며, 잉여현금흐름은 총 1억 2,600만 달러를 기록했습니다.
• 경영진은 연간 가이던스를 재확인했으며, 매출과 조정 EBITDA가 각각 제시된 범위의 상단부에 위치할 것으로 예상했습니다. EPS와 잉여현금흐름은 가이던스 상단 이상을 기록할 것으로 전망됩니다.
• 블랙보드는 데이터브릭스(Databricks)와 공동 개발한 모금 특화 언어 모델인 렌턴(Lantern)과 '플랫폼 포 구드(Platform for Good)'를 발표했습니다. 렌턴 기반의 첫 기능은 2027년에 출시될 예정입니다.
• 회사는 2026년 첫 9개월 동안 2025년 말 발행 주식수의 7%를 소폭 상회하는 자사주를 매입했습니다. 발행 주식수는 2023년 4분기 이후 약 16% 감소했습니다.
• 2026년의 늘어난 계약 갱신 대상 고객층으로 인해 계약상 반복 매출 성장이 둔화되고 있으나, 경영진은 2027년 갱신 대상 규모가 줄어들어 내년 하반기 정상화를 뒷받침할 것으로 예상하고 있습니다.

핵심 재무 데이터

비즈니스 및 영업 성과

블랙보드의 제품 전략은 기존의 모금, 재무 관리, 교육 및 결제 제품에 데이터와 AI 기능을 내장하는 데 중점을 두고 있습니다.

플랫폼 포 구드는 데이터 코어, 소셜 임팩트 시그널 그래프(Social Impact Signal Graph) 기반의 인텔리전스 계층, 어시스턴트·에이전트·워크플로로 구성된 실행 계층 등 3개 계층을 통해 회사의 제품, 데이터, AI, 분야별 전문성을 연결할 예정입니다. 기존 고객은 신규 기능이 출시될 때 해당 기능을 이용하기 위해 플랫폼을 재구축할 필요가 없습니다.

데이터브릭스와의 전략적 협력을 통해 개발된 렌턴은 자선 활동 및 모금 활동에 특화되어 설계되었습니다. 특정 고객 데이터가 아닌 블랙보드의 소셜 임팩트 시그널 그래프를 모델로 한 합성 시나리오를 통해 학습됩니다. 경영진은 렌턴이 2027년부터 일부 레이저스 에지 NXT(Raiser’s Edge NXT) 및 에이전트 포 구드(Agents for Good) 기능에 적용되기 시작할 것으로 예상하고 있습니다.

디벨롭먼트 에이전트(Development Agent)는 약 7개월간 제공되었으며 고객의 관심과 신규 계약을 유치하고 있습니다. 블랙보드는 또한 데이터 헬스 에이전트(Data Health Agent) 및 신규 AI 마케팅 플랫폼의 얼리 어답터를 모집 중이며, 2027년 초 정식 출시될 예정입니다.

블랙보드는 AI 이외의 제품 투자도 강조했습니다. 레이저스 에지 NXT는 인텔리전스와 자동화가 내장된 네이티브 클라우드 플랫폼으로 재구축되고 있습니다. 또한 블랙보드 마케팅(Blackbaud Marketing), BILL과 공동 개발한 차세대 페이먼트 어시스트(Payment Assist), 디포짓 커넥트(Deposit Connect), 고등교육용 커넥티드 캠퍼스(Connected Campus) 솔루션 등을 새로 출시했습니다.

계약상 반복 매출의 약 90%는 최소 3년 이상의 계약에 묶여 있습니다. 현재 약 25%가 4년 이상의 장기 계약 상태이며, 이는 2026년 초의 20%에서 상승한 수치입니다.

주요 고객 수주 사례로는 글로벌 CRM을 대체하기 위해 레이저스 에지 NXT를 선택한 캘리포니아 주립대학교 치코 캠퍼스(Cal State University, Chico), 미국 및 캐나다 전역의 영업을 아우르는 인터내셔널 스쿨 파트너십(International Schools Partnership)과의 백만 달러대(7자리 수) 수년 만기 엔터프라이즈 계약 등이 포함됩니다.

경영진 가이던스

블랙보드는 2026년 연간 가이던스 범위를 재확인했습니다. 경영진은 매출과 조정 EBITDA가 각각의 제시 범위 상단부에서 마감할 것으로 예상하며, EPS와 잉여현금흐름은 가이던스 상단 이상을 기록할 것으로 전망합니다.

2026년 전망에는 신규 AI 제품이나 바이럴 기부 이벤트로 인한 의미 있는 매출이 반영되지 않았습니다. 경영진은 에이전트 포 구드 및 렌턴의 향후 상업화를 현재 가이던스에 반영된 요소가 아닌 잠재적 추가 상승 요인(업사이드)으로 보고 있습니다.

2026년부터 2030년까지 블랙보드가 목표로 하는 수치는 다음과 같습니다.

• 연간 자체(organic) 매출 성장률 4%~6%
• 연간 조정 EBITDA 성장률 6%~8%
• 40%를 상회하는 조정 EBITDA 마진
• 연간 두 자릿수 EPS 성장
• 누적 잉여현금흐름의 최소 50%를 자사주 매입에 투입

회사는 2026년 말까지 직접 운영하는 마지막 2개의 코로케이션 데이터 센터를 폐쇄할 계획입니다. 경영진은 이와 관련된 비용 절감 효과가 2027년부터 시작되어 시간이 지남에 따라 누적될 것으로 보고 있습니다.

리스크 및 주목할 점

블랙보드의 2026년 계약상 반복 매출 갱신 대상 규모는 2025년 대비 약 40% 더 큽니다. 경영진은 이것이 2026년 4분기 및 2027년 상반기까지 계약상 반복 매출 성장을 계속 둔화시킬 것이라고 말했습니다.

2027년 갱신 대상 규모는 2026년 대비 거의 25% 작아질 것으로 예상됩니다. 경영진은 이로 인해 이탈 압력이 줄어들고, 2027년 말까지 총달러 유지율(gross dollar retention)이 과거 평균 범위인 91%~92%로 회복하는 데 도움이 될 것으로 기대하고 있습니다.

거래 매출은 분기별로 변동될 수 있으며 기부금 수입, 등록금 및 학교 납입금, 저스트기빙(JustGiving) 활동 수준에 따라 달라집니다. 회사의 가이던스는 과거 거래 패턴을 가정한 것이며 바이럴 기부 이벤트는 제외되어 있습니다.

연간 인력 전환 비용은 기존 예상치인 600만~800만 달러에서 증가한 약 800만~1,000만 달러에 달할 것으로 예상됩니다. 희망퇴직 프로그램에 따른 현금 지출 영향은 대부분 2026년 4분기에 발생할 것으로 보이며, 전환 관련 활동은 2027년까지 이어질 예정입니다.

애널리스트 Q&A 주요 내용

AI 수익화: 경영진은 디벨롭먼트 에이전트(Development Agent)가 계약을 창출하고 있으며, 고객이 이를 사용하려면 레이저스 에지 NXT(Raiser’s Edge NXT)가 필요하기 때문에 주력 제품 판매도 지원할 수 있다고 밝혔습니다. 데이터 헬스 에이전트(Data Health Agent)와 신규 AI 마케팅 플랫폼의 얼리 어답터 모집이 진행 중이지만, AI는 여전히 상업화 초기 단계에 있습니다.

거래 매출: 3분기에 도입된 플랫폼 수수료는 이번 분기 동안 소폭 기여했습니다. 경영진은 이 수수료가 2027년 상반기까지 거래 매출 성장을 뒷받침할 것으로 예상하고 있습니다. 블랙보드는 3분기에 주요 바이럴 기부 이벤트가 없었다고 보고했습니다.

갱신 및 고객 유지율: 경영진은 2026년의 늘어난 갱신 대상 고객층 작업이 계획대로 진행되고 있다고 밝혔습니다. 신규 AI 제품이 교차 판매 기회를 창출하기 시작하고 있으며, 2027년의 줄어든 갱신 대상 규모는 내년 하반기 반복 매출 흐름을 개선할 것으로 예상됩니다.

인프라 효율성: 남은 코로케이션 데이터 센터를 폐쇄함에 따라 블랙보드는 2027년 1월부터 마이크로소프트 애저(Microsoft Azure) 및 AWS를 중심으로 주 운영 체제를 전환할 예정입니다. 경영진은 재무적 이점이 즉각 나타나기보다는 시간에 따라 실적에 단계적으로 반영될 것으로 보고 있습니다.

실적 발표 컨퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good day, and welcome to Blackbaud's Q3 2026 Earnings Call. Today's conference is being recorded. I will now turn the conference over to Tom Barth, Head of Investor Relations. Please go ahead, sir.

Tom Barth

Good morning, everyone. Thank you for joining us on Blackbaud's Third Quarter 2026 Earnings Call. Joining me on the call today are Mike Gianoni, Blackbaud's Chief Executive Officer, President and Vice Chairman; and Chad Anderson, Blackbaud's Executive Vice President and Chief Financial Officer.

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.

Today's discussion will focus on non-GAAP results. Please refer to our press release and investor materials posted to our website for full details on our financial performance, including GAAP results, full year guidance and long-term aspirational goals. We believe that a combination of GAAP and non-GAAP measures provides a more representative view on how we measure our business. Unless otherwise specified, we will refer only 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 for GAAP measures.

We've also provided a slide presentation with supplemental data and additional highlights and financial metrics. The earnings release, supplemental tables and presentation are available in the Investor Relations section of our website on blackbaud.com.

And with that, let me turn the call over to you, Mike.

Michael Gianoni

Thank you, Tom. Good morning, everyone. We appreciate you joining us today. We delivered another quarter of solid execution against our operating plan with earnings per share and cash flow coming in better than expected as we continue to focus on a balanced financial profile driven by productivity efficiencies and a rapidly accelerating pace of product innovation. These results reflect the leadership position Blackbaud holds at the intersection of innovation and community.

We understand the organizations we serve, the people who do the work and the communities that depend on them. We are equally committed to the technology and the transformation they need and proud of how we lead in both. We convene the sector, we share what we learn and we build the products it runs on. This foundation took 4 decades to build. And as AI changes how social impact organizations operate for the years to come here and abroad, this intersection of innovation and community is becoming more urgent and more indispensable.

Our customers want human ingenuity combined with the best of innovation from a partner they trust. And as such, what we do and what we offer has never been more important. This has never been more evident in our pace of innovation over the past year.

Last year, we talked about moving our products from systems of record to systems of intelligent action, and we continue to improve on that vision. In fact, at bbcon 2026, we announced Platform for Good, our unified operating system for social impact and introduced Lantern, the first domain-specific language model purpose-built for fundraising. I want to spend most of my time on those announcements on how we are continuing to invest in the core products our customers rely on every day and on what we are hearing from customers. Platform for Good is the next step, a single connected operating system in which our products, data, AI and expertise work together, learning from every interaction and getting smarter with every product that runs on it.

It is built on 3 layers. The data core brings together our differentiated data assets, including the Blackbaud Philanthropic dataset, research and industry data from the Blackbaud Institute and Blackbaud Giving Search. The intelligence layer is powered by our Social Impact Signal Graph, which connects signals across the social impact ecosystem to surface patterns, relationships and context. And the action layer is where our AI moves from intelligence to execution through assistants, agents and workflows with appropriate human oversight and control.

Importantly, Platform for Good requires no action from existing customers. It unites our products under the surface and customers adopt new capabilities as they become available while continuing to work in the Blackbaud solutions and workflows they use today. That matters in a sector where many organizations have limited IT resources and face turnover and staffing shortages.

We also introduced Lantern. Lantern is the newest part of our intelligence layer. Our research shows that 85% of social impact professionals use AI in their daily work, yet only about 10% of organizations are seeing returns. General purpose models learn from the Internet. Lantern learns from philanthropy. Developed through a strategic collaboration with Databricks, Lantern combines leading open-weight models on the Databricks data and AI platform with more than 40 years of Blackbaud's fundraising experience. It is posttrained on synthetic scenarios modeled on our Social Impact Signal Graph, so it understands giving behavior rather than buying behavior, including retention, upgrade paths and lifetime relationships, which are central to fundraising, but not native to general purpose AI.

Just as importantly, it is developed under our responsible AI principles with privacy, transparency and sector-appropriate governance at its core and with input from customers, including Boston University, Hess House and YMCA of the North. On timing, Lantern will begin powering featured Raiser's Edge NXT and Agents for Good capabilities in 2027 with broader availability across Platform for Good to follow.

Our Agents for Good family continues to grow. The Development Agent, our first agentic product, which became available earlier this year, is helping fundraising teams identify and engage donors who are not in a major gift officers portfolio under human supervision. At bbcon, we announced new advancements to Development Agent and introduced the Data Health Agent, a continuous data steward that detects and addresses data issues through review and approved workflows. We also previewed agentic experiences for finance and education, including our vision for an accounts payable agent in Financial Edge NXT that reviews invoice details, prepares cash-aware payment runs and stages recommendations for human approval.

I want to be clear about something. Our AI investment is in addition to, not instead of our investments in the core products our customers depend on every day. Our use of AI in engineering has expanded our capacity and increased our velocity such that we are announcing more new solutions than we ever have and at the same time, significantly advancing our core solutions. Those core products are the systems of record, the workflows and the trust that make our AI valuable, and we continue to invest in them aggressively.

The clearest example of enhancement was improvements within Raiser's Edge NXT. At bbcon, we unveiled its next chapter, rebuilt from the ground up as a native cloud AI-powered platform with embedded intelligence, automation and connected data. The new more powerful Raiser's Edge NXT enhancements were planned for customer use in 2027, but were accelerated and pulled forward by more than a year and include purpose-built AI that services high potential prospects and giving signals. These enhancements also include Strategy Assistant, which delivers benchmarks and recommendations directly in the flow of work, drawing on more than $1 trillion in giving history tracked through Raiser's Edge NXT.

We also introduced Blackbaud Marketing embedded within Raiser's Edge NXT to help teams plan campaigns, identify audiences and coordinate engagement across channels.

In financial management and payments, we announced our next-generation Payment Assist through a strategic partnership with BILL in Deposit Connect, which brings gift, fee and disbursement data together across Raiser's Edge NXT, Blackbaud Integrated Payments and Financial Edge NXT.

In education, we unveiled the higher education Connected Campus solution built with our partner, Student First, which brings the student life cycle together with advancement, finance, awarding and payments, and we continue to invest in our total school solution for K-12.

Together, these investments reflect our strategy, modernize the products customers already trust, then add embedded intelligence and new AI solutions so customers get value from AI without replatforming or adding bolt-on tools. That approach is reflected in contract terms and customer satisfaction with approximately 90% of our contractual reoccurring revenue on contracts of 3 years or longer and approximately 25% on 4 years or longer, up from 20% earlier in the year.

Our approach to the established parts of the portfolio is deliberate. We continue to fund modernization, performance, security and compliance work across our fundraising, financial management, education and corporate social responsibility and grant-making solutions because customers judge us first on whether the products they use every day are reliable, intuitive and getting better. We also see the 2 new efforts reinforcing each other. Every improvement to a core product such as cleaner data, tighter integrations and faster workflows makes the intelligence layer more accurate and more useful. And every agent and model we ship is embedded in a solution customers already trust, which reduces the data gaps and security risks created by bolt-on tools. That is a large part of why we believe our differentiation is clear and widening.

Turning to customers. This quarter, we again saw a healthy mix of new customer logo wins and cross-sales of additional solutions to our existing customers across all verticals. Within our Higher Education vertical, we replaced a well-known global CRM at Cal State University, Chico, with Raiser's Edge NXT. Like many of our new logos, they want to modernize their advancement operations, streamline fundraising and reporting processes and provide their team with a scalable cloud platform to support future growth and donor engagement.

Also in the third quarter, we had a new logo win that signed up for Raiser's Edge NXT and our AI development agent solution for the first time. Additionally, we closed a 7-figure multiyear enterprise agreement with International Schools Partnership, a global organization operating over 100 schools worldwide. This win expanded Blackbaud's presence in the multi-school enterprise segment through a portfolio-wide technology standardization initiative across the U.S. and Canada. They chose us as they seek to leverage Blackbaud's integrated platform, data strategy and implementation expertise.

These wins reflect the strength of purpose-built connected solutions over fragmented generic alternatives and the value of our solutions in meeting our customers' ambitious goals. Trust is critical to new and existing organizations, allowing intelligent systems to act on their behalf. Our customers trust in us as their partner, in the solutions they are used to, in the data and in our security, which are advantages for both our customers and for Blackbaud. The gap between AI adoption and effective use is exactly what we are working to close by delivering trusted AI inside the tools our customers already use and through the AI Coalition for Social Impact, which we convened in 2025. The Coalition's free product-agnostic AI for social impact certification program opened in July, and its second course on responsible AI principles and regulations is planned for later this year.

And now turning to how we use AI internally. We continue to identify, experiment and scale solutions across engineering, sales and marketing, customer success and the back office to improve speed and operational efficiency. Our engineering teams continue to use leading generative AI tools such as Microsoft GitHub Copilot, Anthropic Claude and other approved solutions to accelerate development, reduce time to remediate software issues and increase throughput on new product delivery.

Looking ahead, our priorities are straightforward; first, deliver the capabilities we announced at bbcon on the time lines we have described, including the Raiser's Edge NXT enhancements, the Agents for Good road map and the first Lantern-powered capabilities in 2027; second, keep investing in the reliability, security and usability of the products our customers run their organizations on; and third, keep translating advances in AI into practical outcomes customers can trust.

Our 2026 full year guidance does not include any meaningful revenue contribution from our new AI products. We view commercialization for Agents for Good and Lantern as potential upside over time, and we will continue to make guidance and investment decisions accordingly. As a reminder, from 2026 through 2030, we are targeting double-digit annual EPS growth driven by total organic revenue growth of 4% to 6% annually with potential upside from viral events and new product launches such as our Agents for Good catalog, and adjusted EBITDA growth of 6% to 8% annually while expanding our adjusted EBITDA margin to 40% plus.

We expect to translate that into strong free cash flow growth and plan to deploy 50% or more of our cumulative free cash flow generated between 2026 and 2030 towards stock repurchases, leaving us with optionality for potential tuck-in acquisitions.

Since the fourth quarter of 2023, we have reduced common stock outstanding by approximately 16%.

Regarding our expectations for the remainder of this year, we are again pointing investors to the upper half of our 2026 guide across revenue and adjusted EBITDA. And for EPS and free cash flow, we expect results to be at or above the high end of the guidance ranges. Chad will provide more detail and color in a minute.

To conclude, we believe Blackbaud is a compelling investment with multiple opportunities for strong shareholder returns. From an operating, financial and strategic perspective, we are pleased to be carrying real momentum into the fourth quarter and the years ahead with Platform for Good, Lantern and Agents for Good embedded within the core products our customers trust. We look forward to our continued journey. And I would also like to thank the entire Blackbaud team for their continued strong efforts and job well done.

I'd now like to turn it over to Chad to walk through our third quarter results.

Chad Anderson

Thanks, Mike, and good morning, everyone. In the third quarter, we continued to balance cost management with growth opportunities, AI capabilities and investments in innovation. We're focused on durable subscription-led performance, prudent expectations around transactional revenue and steady improvements in profitability and cash flow.

Our Q3 performance reflected continued demand for our mission-critical solutions, along with growth in transaction revenue. As always, transactional revenue can vary from quarter-to-quarter, and our guidance philosophy assumes performance consistent with historical patterns and does not include any assumption for viral giving events.

Q3 revenue grew 4.1% to $293 million. Non-GAAP adjusted EBITDA was $111 million, representing an adjusted EBITDA margin of 38%, and non-GAAP EPS continues to be strong and increased 24% to $1.36 in the quarter, and we had a very strong free cash flow quarter of $126 million.

During the first 9 months of 2026, including the net share settlement of employee stock compensation, we repurchased just over 7% of our outstanding common stock as of December 31, 2025. Since the fourth quarter of 2023, we have fully offset dilution from stock-based compensation and also reduced common shares outstanding by approximately 16%.

Additionally, we used our strong free cash flow and existing cash position to reduce our debt leverage levels from 2.7x at the end of Q1 to just under 2.3x in Q3.

Before discussing our outlook, I'd like to highlight several housekeeping items that are already contemplated in our financial guidance and may be helpful as you think about modeling the business through the balance of 2026 and into 2027.

First, as we've discussed previously, our 2026 contractual recurring revenue renewal cohort is approximately 40% larger than last year. As expected, this is affecting reported gross dollar retention and will continue to moderate contractual recurring revenue growth in the fourth quarter and through the first half of 2027.

As we move beyond this larger renewal cohort, we're planning for a material reduction in churn revenue as our recurring revenue renewal cohort in 2027 will be nearly 25% smaller than 2026. We expect this smaller renewal cohort to provide a tailwind to contractual recurring revenue growth, which should begin to normalize in the second half of 2027 with gross dollar retention returning to its historical norm of 91% to 92% by the end of 2027.

Second, as discussed last quarter, we introduced a platform fee within our transactional revenue that began in the third quarter. The expected contribution is included in our 2026 guide, and we expect the rollout to support transactional revenue growth through the first half of 2027.

Turning to margins. We're on track to close our last 2 company-operated colo data centers by year-end. This is the culmination of a multiyear infrastructure modernization effort and example of the productivity initiatives embedded in our operating model. Because the final closures occur late in 2026, we expect the related financial benefits to be realized starting in 2027.

Finally, regarding free cash flow, we continue to make steady progress on our workforce strategy, including the build-out of our global capability center in India, which expands our access to talent and supports greater cost efficiency over time.

During the third quarter, we announced and executed a voluntary separation program. We expect the cash impact of that program to occur primarily in the fourth quarter. We now expect full year global workforce transition costs of approximately $8 million to $10 million, modestly above our prior estimate of $6 million to $8 million, and expect global workforce transition activity to continue through 2027. These actions support our longer-term operating model while resulting in near-term cash outflows. Despite this, we expect our free cash flow will be at the upper end or above our 2026 guidance range.

Based on our year-to-date performance and our current view of the operating environment, we are reaffirming our full year guidance ranges and expect to finish in the upper half of the range across revenue and adjusted EBITDA. And for EPS and free cash flow, we expect results to be at or above the high end of the guidance ranges.

Looking ahead, we anticipate deploying at least 50% of cumulative free cash flow through 2030 towards share repurchases. Beyond that commitment, the company has tremendous optionality for dynamically allocating capital to its highest and best use based on market conditions, including additional share repurchases, debt reduction and also plan to continue to look opportunistically at strategic tuck-in acquisitions.

We have a lot to be proud of, executing well over the last several years and throughout 2026 and continuing our commitment to providing meaningful solutions to our customers and strong execution of our operating plan. We remain committed to providing investors with an attractive financial model, balanced between growth of revenues, earnings and cash flows, along with a prudent and purposeful capital allocation strategy. And as always, we remain focused on providing enhanced value to our customers and our shareholders.

Thank you all. Mike and I would be happy to take your questions. Operator?

Operator

[Operator Instructions] We will now take our first question from Brian Peterson at Raymond James.

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Brian Peterson

So maybe just starting on AI. We were at a bbcon, and I think it was very clear that the pace of innovation is accelerating. Mike, I know you referenced that in your prepared comments. But as we're looking at this as an investment opportunity, I think we're kind of thinking about what is that AI monetization path. So Mike, is there anything that you can kind of point us towards? I know we're early days, but in terms of thinking about that revenue opportunity for Blackbaud, like what would you point us to there?

Michael Gianoni

Yes, Brian, thanks. Yes, pace of innovation has picked up a lot. We've announced more products this year than we ever have. We have one in the market. As you know, the Development Agent is in the market about 7 months, getting very well received. We're closing deals all the time. We've announced several other products. We're signing up customers for what we call our early adopter program for the new AI marketing platform, for the data health agent. So those customers are being signed every day, every week right now to build the EAP platform. Those will go into general availability sometime early next year.

And so we've got new revenue lines being built by these new solutions. What's also interesting is we're getting a lot of interest on these new solutions, which then pulls in our core products as well. I mentioned that we closed not more than one, but a Raiser's Edge NXT deal because the customer was interested in the Development Agent, and you have to get Raiser's Edge NXT to get the Dev Agent. And so we're selling bundles with the new solutions now as well.

So yes, it's early days, Brian. There's a lot of receptivity. We do webinars with customers and get hundreds and hundreds of customers on those webinars post bbcon because they want to learn about these new solutions. So I'd say it's early days, but building a ton of interest.

Brian Peterson

That's good to hear. Maybe just a follow-up on the transactional revenue. I know you guys mentioned kind of the platform fee coming in this quarter. Was there any viral giving in the third quarter that kind of helped that number? And maybe as we're thinking about longer term, how should we be thinking about that transactional growth rate relative to some of the longer-term targets for the corporate average?

Michael Gianoni

Yes. That new platform fee came in, in Q3 a little bit, and then obviously, it's go forward, right? So we'll have it this quarter and then the first half of next year we'll have that platform fee. And it really was a catch-up because pretty much everyone else has a platform fee. So we feel good about that. That's fully in place. And we feel good about our transaction businesses. They're a little different, right? One of them is based on donations and volume, another one is tuitions and schools. And then there's JustGiving, which is predominantly over in the U.K. So they're all a little bit different.

I think the key thing for us is the fact that we've got our core system of record platforms integrated with transaction solutions, which makes the core platforms stickier. And then we're integrating all those together in our platform for a good announcement, which is basically the integration of our financial platform, fundraising, transactions and the new AI solutions all in a common platform, getting access to that data within the systems of record. So that's kind of a long-winded answer to say the transaction systems, we feel good about them and the fact that they're embedded with everything else is a really good position for us. And you could see in the fact that our customers, they're either on a 3-year contract, but 25% of them are now on 4-year or longer contracts. And that 25% number has really ticked up a lot in the last 18 months.

Operator

We will now take our next question from Parker Lane at Stifel.

J. Lane

Mike, you talked about Lantern and the introduction of more domain-specific models over time. Can you talk about why that's so important to the industry you play in? And what the time line do you expect those to come out by? I know you mentioned '27. Is that an event that we should expect in the first half of the year or in the second half of the year?

Michael Gianoni

Yes, you bet. So it's important for a lot of reasons. Number one, Lantern is embedded within our platforms, and it has access to things like our Signal Graph, which is sort of the workflows within our systems, the history of workflows, what makes our systems from a data and a workflow perspective important for our customers. And so our customers can use Lantern to learn how to improve their business. So that's important. And Lantern is trained only on philanthropy and fundraising. So it's very specific to that and tuned to that. And we have developed that in a collaboration with Databricks as well, which we announced at bbcon.

So it's not a general purpose tool. It's embedded within our solutions. It's only for philanthropy and fundraising. It uses data from our Blackbaud Search, our Blackbaud Giving Institute. It understands what we call the Signal Graph, which is sort of patterns of success that our customers can learn from. It doesn't use any customer-specific data. It uses synthetically created data that mimics customer data. So that's important. It's also inside of our cyber stack. It's inside of our trusted and governed solutions. And we have a lot of conversations with our customers around AI and AI trust. So that's really important as well.

J. Lane

Thanks, Mike. And Chad, one for you. Good to see the colo data centers closing by year-end. How should we think about the timing and magnitude of the financial impact there? I know you mentioned the benefits to be realized in '27. Is this going to be a situation where you see an immediate benefit from the switch to public cloud? Or will this flow into the model over time?

Chad Anderson

Thanks for the call-in. It's a good question. I would expect that it's going to moderate over time. We're pleased. This is just another example of Blackbaud executing. So we'll be closing both of the remaining colos by end of the year and feel really good about it from a modeling perspective. I would assume that, that kind of blends in kind of over time starting in '27. And then from a margin perspective, I'd also just remind you, we're continuing to execute very well relative to the build-out of the global capability center in India as well. So in the prepared remarks, you would have heard me talk about the -- kind of the transition-related costs. Those will step up a little bit in Q4, and we'll see the benefit related to that from an efficiency -- cost efficiency perspective next year, but really pleased with the progress. And then we do have a number of other levers that we're continuing to execute. We've got an overview of those that we provide in the investor materials as well.

Michael Gianoni

I'll also add, it's nice to get that project behind us, too. We started to consolidate and close these colo data centers years ago. It takes a while because it's complex. There's a lot of communication technology. It's not just our solutions, right? It's all the data center infrastructure. But the company now is pretty much running on Azure and AWS. So we don't have -- or we won't have any colo data centers starting in January, which is a big deal from an operational standpoint. It just really simplifies our operations, and we don't have to manage colo data centers anymore. So it's a big accomplishment for us operationally.

Operator

[Operator Instructions] We will now take our next question from Peter Burkly at Evercore ISI.

Peter Burkly

Maybe just first one, organic growth stepped up a little above 4% this quarter, up about 1 point versus last quarter. And I think the updated guide towards the upper half of the range implies another 1.5 points or so step-up. So just curious if you could help us bridge that step-up across different elements, whether that be the platform fee, normal holiday giving seasonality, renewal timing, sort of anything else that might be coming into play there? And then I guess, how much of the 4Q exit rate would you treat as a durable starting point for 2027 as opposed to just a quarterly timing element?

Michael Gianoni

Yes. So a couple of things in there, Peter. First, we didn't have much from a holiday giving, right? That usually happens in the back half of Q4. And we see that typically in the transaction systems that we have. So that's one point. We don't have much of that in Q3. It didn't really have any viral events on transactions in Q3 either. In fact, the growth in Q3, we're happy with the growth, but it's a bit moderated because of a large cohort of renewals we have this year, right? We've got 40% more renewals this year, and we talked about this a bunch in the past than we've had last year. And so that moderates it a little bit, frankly. But we're pretty much by all those.

We start to talk to customers on their renewals about 5 months ahead. So we're working renewals in Q1 right now. So that big cohort is -- the work of that is kind of behind us. And so we had a really solid quarter. It met our expectations. We're happy with where we're looking at for the year. Chad mentioned looking at revenue to be in the upper half of our guide and adjusted EBITDA in the upper half of our guide. As you know, we guide annually, right, not quarterly. And then EPS and free cash flow right at the top or maybe above the guide for the year. So good strong finish for the year. We're happy with Q3. And I think we're in good shape to finish the year and have a good setup for '27.

Peter Burkly

Great. And maybe if I can just double-click actually on that renewal cohort and what you're seeing there. So I'm just curious sort of against your plan initially, how have renewal rates, price increases at renewal, some new product attach, how has that sort of tracked versus maybe what your initial plan was? And then what are you seeing that sort of supports that path back to that 91%, 92% gross retention next year?

Michael Gianoni

Yes, you bet. I mean a couple of things there. So the fact that we're saying we're going to be toward the upper half of the revenue guide is a clue to how that's going. It's going as planned. It's just a high volume this year, that's all. So it's kind of a mathematical thing, right? So it's going as planned. We are starting to attach some of the new solutions. So we talk to our customers now about things like the Development Agent at renewal. We will be talking to customers about the Data Health Agent at renewal, but we're just going into EAP, right now.

So we'll have a lot more opportunities for more attachments because of all the new solutions that we announced. A ton of interest in the Data Health product that we announced. All of our customers either have a full-time person doing data health or they have a percentage of a team's time doing data health. So I think that product is going to resonate really well, and we've seen a huge response to that at our bbcon conference. And then our brand-new marketing platform, a big response to that, and we've already signed up a bunch of customers for EAP there.

So the attachment opportunities are just going to go up because of all the new solutions that we announced. But back to the renewal question you had, it's going as planned. And we're looking at the upper half of our guide for revenue this year. So...

Tom Barth

Thank you, Peter, and everyone, for joining us today. We will be attending a number of investor events in the fourth quarter, including several investor conferences, which are listed on our IR website. We hope to see you and/or speak with you very soon, and we wish you continued success and have a wonderful day.

Operator

Ladies and gentlemen, thank you for your participation. This concludes today's teleconference. Please disconnect your lines, and have a wonderful day.