Blackbaud Inc

ITEM 1A. RISK FACTORS

Our operations and finanWe are supplementing Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the Securities and Exchange Commission on February 21, 2025 (the Annual Report). The following risk factors should be read in conjunction with the risk factors set forth in that Annual Report.

We are incial results are subject to various risks and uncertaintiereasingly incorporating AI technology into many of our solutions and services. Because this technology is new and developing, technically complex and investment-intensive and the legal and regulatory issues are unsettled, our AI strategy may result in operational, financial and reputational harm and other adverse consequences to our business.

We are implementing AI features, including generative, predictive, interactive and agentic AI technologies, includin many of our solutions and services. The technologies underpinning those described ese features are in the early stages of commercial use, are evolving rapidly and exist in an emerging regulatory environment, which presents regulatory, litigation, ethical, reputational, operational and financial risks, some of which are still unknown.

Many U.S. federal, U.S. state and international governmental bodies and regulators have adopted, or are in Part I, Item 1A, "Risk factors" in our Annual Report on Form 10-K for the year ended December 31, 2024 (the "Annual Report"), which could adversely affect othe process of developing, new laws and regulations related to the use of AI and machine learning technologies. These have imposed, and may in the future further impose, obligations related to our development, offering and use of AI technologies and expose us to increased risk of regulatory enforcement and litigation. Many of our AI features include the processing of personal data and are, and may be further, subject to laws, policies, legal obligations and codes of conduct related to privacy and data protection. There is uncertainty about the extent to which privacy and data protection laws apply to AI technologies, and any delay in addressing privacy or data protection concerns relating to our AI features may result in liability or regulatory investigations and fines, as well as harm to our sales and reputation. In addition, issues relating to intellectual property rights in AI-generated content have not been fully addressed by the courts, laws or regulations. Accordingly, the implementation of AI technologies into our products and services may result in exposure to claims related to copyright infringement or other intellectual property misappropriation.

Our use of AI technology may also present additional security risks due to embedded security vulnerabilities. Furthermore, many of our AI features may rely on third-party developers and other service providers, and any improper processing of personal data by these service providers could harm our reputation, business or customers, or expose us to legal liability. Also, our sensitive information could be leaked, disclosed or revealed as a result of or in connection with company or vendor use of these technologies generally. Any disruption or failure in our AI systems or infrastructure could result in delays or errors in our operations, which could harm our business,  and financial condition, results of operaresults. See also Item 1A. Risk Factors. Operational Risks related to breaches of our software and failure to safeguard confidential data in our Annual Report on Form 10-K filed with the SEC on February 21, 2025.

Blackbaud is in the early stages of leveraging agentic AI in the AI features of our solutions and deploying agentic AI for our internal business purposes. Agentic AI differs from traditions, cash flowal AI technologies by making decisions and pursuing business goals autonomously without prompting by humans, asometimes across multiple steps and the trading price of our stocover time, which may require deployers to give agentic AI access to systems for the purpose of taking such initiative. This presents additional risks, including the possibility of opaque decision making, unique security concerns due to agent permissioning, challenges with monitoring actions and assigning and enforcing accountability.

Our AI technology features may also generate output that is misleading, inaccurate, harmful or otherwise flawed, which may harm our reputation, business or customers, or expose us to legal liability. Also, some AI scenarios present ethical issues. If we

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enable or offer AI solutions that are controversial because of their purported or actual impact on human rights, privacy, employment or other social issues, we may experience reputational harm and legal liability.

New and emerging AI technologies require substantial additional investment in the development and maintenance of various models, approaches and processes, as well as development of protections and safeguards for the use of AI technologies, which is expensive and could negatively impact our financial results as we further expand AI technology into our risk factors since our Annual Report was filed with the Securitiproducts and services. Likewise, the use of AI technology involves significant technical complexity and requires specialized expertise, which is expected to require increased investment in infrastructure and headcount.

The success of any enhancement or new product depends on many factors, including its relevance to our customers, timely implementation and market acceptance. If our AI-enhanced products and services do not achieve widespread market adoption or there is a reduction in demand due to a lack of customer acceptance, technology challenges, strengthening competition, weakening economic conditions, or security or privacy concerns, our business could be harmed and our financial results could be adversely affected.

We face significant competition from other companies that are developing their own AI-enhanced products and services. Such AI features and Exchange Commission on February 21, 2025technologies may be similar or superior to ours and may be more cost-effective. Furthermore, other parties could have proprietary rights that would interfere with our ability to implement our own AI features. Our AI features also may require access to specific third-party equipment or infrastructure, which availability or pricing we may not be able to control.

It is not possible to predict all of the risks related to the use of AI technology. Although we aim to develop and use AI responsibly and attempt to identify and mitigate ethical and legal issues presented by its use, we may be unsuccessful in identifying or resolving issues before they arise, which may affect our ability to develop and use AI or subject us to legal liability.