Mike Gianoni: Yes, sure. So we have our – our sales teams are focused on new logos and cross-selling and those are different teams and there’s a lot of that happening in K-12. So there’s a lot of upside in just net new logos there. And because we have a big portfolio in the K-12 market, there is a lot of upside in the cross-sell, because we cover pretty much the whole IT spend of a school almost from running their financials to fundraising to tuition management to student enrollment and classroom scheduling and student information system. So we cover quite a bit there, have a pretty big footprint. It’s a fast-growing part of our business. We’ve got good leadership there, good innovation. We’ve got a lot of partners in that space, too, that sort of our gap fillers and services type relationships in that marketplace as well, big presence in the conferences there and a really good reputation in that private school K-12 space.
Matt VanVliet: All right. Very helpful. And then I guess, looking at with the extension or the expansion of the credit facility and the fact that you’ve already generated such strong free cash flow here, what’s an update on the M&A strategy going forward? This is the first time we’ve seen you sort of divest anything in a little while. So just curious on how you’re feeling about the current portfolio and maybe what areas might be targets for new M&A deals?
Mike Gianoni: Yes, sure. So there is still a lot of activity in our space in M&A. We get a lot of inbound inquiries just given our history of M&A and our footprint in the space. In our social sector, there are still gaps we could fill without going far field of where we currently play. So near adjacencies are out there. In a lot of cases, we don’t serve the smaller market. We’re pretty much in the mid-tier to enterprise market in the fundraising space. And so, there is still a lot of smaller cloud software companies out there that are typically founder-led private companies, probably VC-funded. So there is still a part of it out there that could represent opportunities. We’re not looking to do any large deals. We’re really focused on our stock buyback program as you know in returning capital to that way to shareholders.
But we’re still active in looking at opportunities in the space. And most of the things we look at, we walk away from, frankly, for lots of different reasons, but there is still plenty to do there.
Matt VanVliet: Great. Thank you.
Mike Gianoni: You’re welcome.
Operator: Thank you. Our next question is from the line of Parker Lane with Stifel. Please go ahead.
Parker Lane: Hi, guys. Thanks for taking the question this morning. Mike, as you guys have worked through the 2023 and 2024 cohorts of customers that are facing the new renewal pricing, has that limited the ability or willingness to cross-sell or up-sell on their behalf? Or are you seeing pretty normal trends relative to what you had before?
Mike Gianoni: Yes. No, it has not limited opportunities. It’s prevented – it’s provided, not prevented, provided a lot of opportunities for discussion around that with the contracts opening up. So it’s not really changed our ability to cross-sell. It’s created a lot of discussion opportunities to cross-sell and sort of represent our portfolio to our customer base. We have a big focus on cross-selling across all our markets, and we’ve got upside in the transaction side of the business to cross-sell those platforms, the tuition management and what we call BBMS into our existing base. There’s a lot of white space in our existing base to cross-sell those platforms. So, the contract renewals and the move to three-year contracts hasn’t – had an impact, a negative impact on that at all. I think it’s been a positive impact because we’re talking about longer-term contracts and looking at customer problems that we could solve with our portfolio.
Parker Lane: Got it. Understood. And then one maybe for you, Tony. Mike was talking about a lot of generative AI enhancements coming to the platform, particularly Copilot for Raiser’s Edge NXT. I don’t believe you guys said you’re looking to drive additional revenue with these solutions. So I was just wondering if there would be any impact to the cost structure from supporting these generative AI features in your core solutions.
Tony Boor: Yes, Parker, good question. Those costs of the development work that we’ve been doing are already in the numbers you’re seeing. And so we’ve been able to expand margins and cash flow pretty significantly inclusive of the investments. We started making those investments depending on the front, at least a couple of years ago, some last year as well, and those have been ramping. Our EBITDA and free cash flow performance is also very strong and consider we’ve got that incremental cyber spend that start ramping late last year continue to ramp through this year. Overall, the performance is just really strong. We feel really good about the free cash flow. We were able to hold the guide despite about a $14 million increase in interest expense for the year associated with the buyback.
So overall business, I think, is managing the cost structure side very well. The other side of this, keep in mind, well, many of these new enhancements will be included at no incremental charge within the product, as Mike said, so that we continue to drive value. There are some that are incremental. So when you think like the donation forms and the complete cover models and those things, those as we’ve spoken about before are win-wins for our customers and for us because it means incremental revenue for our customer and incremental revenue for Blackbaud as well without a price increase. So there’s going to be some interesting benefits as those take hold. The complete cover models are probably more so in 2025 and forward. We’re starting to roll those out, as you know now, but we’ll take a while to get those adopted across the customer set.
Parker Lane: Makes sense. Appreciate the feedback. Thanks guys.
Tony Boor: Thanks, Parker.
Operator: Thank you. Our next question is from the line of Kirk Materne with Evercore ISI. Please go ahead.
Kirk Materne: Yes, thanks. Congrats on a good start, guys. Mike, I was wondering if you could just talk about sort of the EVERFI. I know you have a corporate sort of an operational improvement plan. Is the demand environment something that you can control right now, or is it just corporate budgets for spending on services like EVERFI, or just tight and you’re sort of at the mercy of that? I am just trying to get a sense if we are getting closer to a bottom potentially in sort of the drag or how are you thinking about sort of the six-month to 12-month view from a growth perspective there?
