Shares of (NASDAQ: BLKB) rallied nearly 9% on Wednesday after the social impact software specialist announced strong quarterly results.

For its third quarter of 2023, Blackbaud's revenue grew 6.2% year over year to $277.6 million, translating to non-GAAP (adjusted) net income of $60.5 million, or $1.12 per share. Analysts, on average, were looking for earnings of $0.96 per share on revenue of $275.5 million.

Blackbaud CFO Tony Boor called the quarter an "inflection point for revenue growth," noting that organic recurring revenue accelerated to 8.3%. Generally accepted accounting principles (GAAP) recurring revenue also now represents around 97% of Blackbaud's total. With adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin expanding by 940 basis points year over year to 35% of revenue, the company managed to exceed the "Rule of 40" one quarter earlier than expected. The Rule of 40 is a calculation based on organic revenue growth and adjusted EBITDA margin that can be helpful for investors to determine whether to invest in software-as-a-service (SaaS) companies before they become profitable.

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Source Fool.com