Digital finance transformation leader expands leadership team, adding former Dell Technologies senior marketing leader to drive global marketing strategy LOS ANGELES, Jan. 3, 2024 /PRNewswire/ -- BlackLine, Inc. (Nasdaq: BL) announced today that technology industry veteran Emily Campbell has joined the company as chief marketing officer (CMO), effective Jan. 2nd. As CMO, Campbell is responsible for driving BlackLine's global marketing strategy as the digital finance transformation leader seeks to capitalize ...

Financial Data and Key Metrics Changes - Total revenue for the quarter reached $151 million, representing a 12% increase year-over-year, with subscription revenue growing by 13% [43] - Non-GAAP net income was $38 million, reflecting a 25% net income margin, and operating cash flow was $37 million with a free cash flow margin of 21% [68] - The company ended the quarter with $1.2 billion in cash, cash equivalents, and marketable securities [45] Business Line Data and Key Metrics Changes - The number of customers with annual recurring revenue (ARR) of $1 million or more increased to 55, indicating strong performance in the enterprise segment [24] - The company added 89 net new customers, bringing the total customer count to 4,368 [82] - Strategic product performance accounted for 24% of sales, driven by strong accounts receivable sales and solid performance from financial reconciliation automation (FRA) [83] Market Data and Key Metrics Changes - The company reported a revenue renewal rate of 94%, which was below expectations due to some customers opting not to renew amid cost-cutting measures [82] - The SAP partnership represented 25% of total revenue, highlighting the importance of strategic partnerships in driving sales [67] Company Strategy and Development Direction - The company is focused on enhancing its product offerings to support digital finance transformation, particularly through the integration of AI and data-driven tools [58] - There is an emphasis on deepening relationships with partners and expanding distribution efforts, particularly in the mid-market segment [31][88] - The acquisition of Data Interconnect aims to complete the end-to-end accounts receivable automation solution, enhancing the company's competitive position [63][125] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth in the mid-market segment, indicating a balanced focus on both mid-market and enterprise customers [78] - The company acknowledged challenges in customer retention and is implementing initiatives to improve customer engagement and satisfaction [91] - There is a recognition of the need to adapt to changing macroeconomic conditions, particularly regarding working capital management [125] Other Important Information - The company is narrowing its full-year total revenue guidance to reflect current market conditions, expecting total GAAP revenue between $587.5 million and $589.5 million [46] - The non-GAAP net income guidance for the full year has been raised to between $133 million and $137 million [84] Q&A Session Summary Question: What is driving the growth in customer accounts greater than $1 million? - Management indicated that the growth is a result of both improved brand awareness and strategic changes in channel partner engagement [14] Question: Can you elaborate on the billing growth and future expectations? - Management noted that billing growth of 12% in the quarter is an acceleration from the previous quarter, but remaining performance obligations (RPO) showed a deceleration [18] Question: What are the key areas of focus for improvement? - Management highlighted that distribution network improvements, particularly with partners, have been a significant area of progress, while customer retention remains a critical focus [88][91] Question: How is the company addressing the renewal rate decline? - Management is actively working with customers to ensure they are fully utilizing the products and achieving the expected value, which is essential for improving renewal rates [91][92] Question: What is the outlook for the accounts receivable automation product? - Management expressed confidence in the growing importance of accounts receivable automation, especially in the current economic environment where cash management is critical [125]

Part I. Financial Information [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents BlackLine, Inc.'s unaudited condensed consolidated financial statements as of September 30, 2023, and related notes Condensed Consolidated Statements of Operations Highlights (Unaudited) | Indicator | Quarter Ended Sep 30, 2023 (in thousands) | Quarter Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2023 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $150,708 | $134,268 | $434,266 | $382,981 | | **Gross Profit** | $113,914 | $101,842 | $325,085 | $286,959 | | **Income (Loss) from Operations** | $(1,074) | $(21,419) | $1,533 | $(59,476) | | **Net Income (Loss) Attributable to BlackLine, Inc.** | $11,923 | $(20,019) | $30,764 | $(40,695) | | **Diluted Net Income (Loss) Per Share** | $0.19 | $(0.34) | $0.49 | $(0.68) | Condensed Consolidated Balance Sheets Highlights (Unaudited) | Indicator | September 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $1,319,140 | $1,249,567 | | **Total Assets** | $2,016,135 | $1,943,656 | | **Total Current Liabilities** | $605,857 | $367,821 | | **Total Liabilities** | $1,772,598 | $1,807,893 | | **Total Stockholders' Equity** | $215,731 | $111,868 | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Indicator | Nine Months Ended Sep 30, 2023 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $84,444 | $30,259 | | **Net cash used in investing activities** | $(58,296) | $(378,490) | | **Net cash provided by (used in) financing activities** | $9,399 | $(195) | [Note 1 – The Company](index=13&type=section&id=Note%201%20%E2%80%93%20The%20Company) BlackLine provides SaaS-based financial accounting close solutions, recently expanding through acquisitions like Data Interconnect to enhance accounts receivable automation - On September 12, 2023, the Company acquired Data Interconnect (DI), a cloud-based Invoice-to-Cash automation vendor, to enhance its existing accounts receivable automation solution[50](index=50&type=chunk) - The company provides financial accounting close solutions primarily as Software as a Service (SaaS), enabling customers to manage processes like account reconciliations, variance analysis, and data matching[50](index=50&type=chunk) [Note 4 – Business Combinations](index=16&type=section&id=Note%204%20%E2%80%93%20Business%20Combinations) BlackLine acquired Data Interconnect (DI) for **$11.4 million** cash, recognizing **$5.1 million** in goodwill and allocating the purchase price to enhance accounts receivable automation Data Interconnect Acquisition Purchase Consideration (in thousands) | Item | Amount | | :--- | :--- | | Total cash purchase consideration | $11,394 | | Intangible assets, net | $8,800 | | Goodwill | $5,126 | | Deferred tax liabilities, net | $(2,159) | - The goodwill from the DI acquisition is primarily attributed to increased customer offerings and opportunities for growth and innovation, and it is not tax deductible[114](index=114&type=chunk) [Note 8 – Convertible Senior Notes](index=21&type=section&id=Note%208%20%E2%80%93%20Convertible%20Senior%20Notes) As of September 30, 2023, BlackLine has **$250.0 million** of 0.125% convertible notes due 2024 and **$1.15 billion** of 0.00% notes due 2026 outstanding, neither of which was convertible Convertible Senior Notes Outstanding (as of Sep 30, 2023, in thousands) | Note Series | Principal | Net Carrying Amount | | :--- | :--- | :--- | | **2024 Notes (0.125%)** | $250,000 | $248,904 | | **2026 Notes (0.00%)** | $1,150,000 | $1,139,539 | - The company intends to settle conversions of both the 2024 and 2026 notes through a "combination settlement," repaying the principal in cash and any excess value in common stock[160](index=160&type=chunk)[161](index=161&type=chunk) [Note 9 – Restructuring Costs](index=23&type=section&id=Note%209%20%E2%80%93%20Restructuring%20Costs) BlackLine initiated two restructuring programs, including an August 2023 plan to reduce its workforce by **9%**, incurring **$8.7 million** in Q3 2023 termination benefits and resulting in a **$6.3 million** total liability - On August 23, 2023, the company announced a plan to reduce its global workforce by approximately **9%**, or **166 positions**, to support growth, scale, and profitability objectives[162](index=162&type=chunk) Restructuring Charges (Nine Months Ended Sep 30, 2023, in thousands) | Program | Restructuring Charges | Cash Payments & Adjustments | Accrual Balance (Sep 30, 2023) | | :--- | :--- | :--- | :--- | | **Fiscal 2023 Program** | $8,664 | $(2,386) | $6,278 | | **Fiscal 2022 Program** | $1,149 | $(2,831) | $55 | | **Total** | **$9,813** | **$(5,217)** | **$6,333** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, including revenue growth, key metrics, operating results, liquidity, and the impact of macroeconomic uncertainty and restructuring programs [Overview](index=31&type=section&id=Overview) BlackLine provides cloud-based finance and accounting software, serving **4,368 customers** and **381,892 users** as of September 30, 2023, with **94%** of revenue from subscriptions - As of September 30, 2023, BlackLine had **4,368 customers** and **381,892 individual users**[190](index=190&type=chunk) - For the nine months ended September 30, 2023, approximately **94%** of revenue came from subscriptions to its cloud-based software and **6%** from professional services[190](index=190&type=chunk) - The company notes that due to economic uncertainty, it has seen customers delay and defer purchasing decisions, which has adversely impacted near-term demand[197](index=197&type=chunk) [Key Metrics](index=33&type=section&id=Key%20Metrics) Key metrics include a **105%** dollar-based net revenue retention rate, **4,368 customers**, and **381,892 users** as of September 30, 2023, with increasing transaction volume for strategic products Key Performance Metrics Trend | Metric | Sep. 30, 2022 | Dec. 31, 2022 | Mar. 31, 2023 | Jun. 30, 2023 | Sep. 30, 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Dollar-based net revenue retention rate** | 109% | 107% | 106% | 106% | 105% | | **Number of customers** | 4,060 | 4,188 | 4,236 | 4,279 | 4,368 | | **Number of users** | 354,924 | 366,522 | 369,493 | 377,585 | 381,892 | [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Q3 2023 total revenues grew **12%** to **$150.7 million**, with gross margin at **75.6%**, and reduced operating expenses leading to a **$1.1 million** operating loss and **$11.9 million** net income Revenue Performance (Quarter Ended Sep 30) | Revenue Type | 2023 (in thousands) | 2022 (in thousands) | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Subscription and support** | $142,054 | $126,081 | $15,973 | 13% | | **Professional services** | $8,654 | $8,187 | $467 | 6% | | **Total revenues** | **$150,708** | **$134,268** | **$16,440** | **12%** | - The decrease in sales and marketing expenses in Q3 2023 was primarily due to a **$5.3 million** decrease in salaries, benefits, and stock-based compensation from lower headcount[219](index=219&type=chunk) - General and administrative expenses for Q3 2023 decreased by **$13.0 million** (**42%**) year-over-year, mainly due to a **$12.9 million** decrease in the fair value of contingent consideration related to the FourQ acquisition[229](index=229&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2023, BlackLine had **$1.2 billion** in liquidity and **$1.4 billion** in convertible notes outstanding, with **$84.4 million** net cash from operations for the first nine months of 2023 - At September 30, 2023, principal sources of liquidity totaled **$1.2 billion** in cash, cash equivalents, and marketable securities[237](index=237&type=chunk) - The company has **$1.4 billion** in aggregate principal of Notes outstanding, with **$250 million** of the 2024 Notes expected to become due within the next 12 months[237](index=237&type=chunk) Summary of Cash Flows (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $84,444 | $30,259 | | **Net cash used in investing activities** | $(58,296) | $(378,490) | | **Net cash provided by (used in) financing activities** | $9,399 | $(195) | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate, foreign currency, and inflation risks, with **$1.4 billion** in fixed-rate convertible notes and potential **$2.9 million** impact from currency fluctuations - The company's **$1.4 billion** in convertible notes have fixed interest rates, so there is no economic interest rate exposure, but their fair value is subject to market interest rate changes[262](index=262&type=chunk) - Foreign currency risk exists due to international operations; a hypothetical **10%** change in foreign currency exchange rates would impact cash balances by approximately **$2.9 million** as of September 30, 2023[263](index=263&type=chunk) - The company does not believe inflation has had a material effect on its business but acknowledges that significant inflationary pressures could harm results if costs cannot be offset by price increases[266](index=266&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of September 30, 2023, the company's principal executive and financial officers concluded that disclosure controls and procedures were effective at a reasonable assurance level[267](index=267&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls[268](index=268&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) The company states that it is not currently a party to any legal proceedings that would be reasonably expected to have a material adverse effect on its business, financial condition, or results of operations - As of the report date, BlackLine is not a party to any litigation that is expected to have a material adverse effect on the company[271](index=271&type=chunk) [Item 1A. Risk Factors](index=48&type=page&id=Item%201A.%20Risk%20Factors) This section details significant investment risks, including dependence on customer acquisition, economic uncertainty, historical losses, intense competition, security breaches, and risks related to convertible notes [Risks Related to Business and Industry](index=50&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) Business risks include dependence on customer acquisition and retention, economic uncertainty, security breaches, intense market competition, reliance on key personnel, and challenges in managing growth - Growth depends on attracting new customers and expanding sales to existing ones, but macroeconomic trends have resulted in increased price sensitivity and delayed purchasing decisions[276](index=276&type=chunk)[279](index=279&type=chunk) - The business is at risk for security breaches and incidents, which could lead to loss of business, reputational damage, and significant liabilities; the company is increasingly dependent on third-party cloud infrastructure like Google Cloud Platform[285](index=285&type=chunk)[287](index=287&type=chunk) - The market for accounting and financial software is highly competitive and rapidly evolving, with competitors that may have greater name recognition, resources, and ability to respond to market changes[1](index=1&type=chunk)[3](index=3&type=chunk) [Risks Related to Financial Performance](index=61&type=section&id=Risks%20Related%20to%20Our%20Financial%20Performance%20or%20Results) Financial risks include a history of net losses, fluctuating quarterly results due to long sales cycles and seasonality, foreign currency exposure, and potential impairment charges for goodwill and intangible assets - The company has a history of losses, with an accumulated deficit of **$238.8 million** at September 30, 2023, and expects costs to increase in areas like R&D, sales and marketing, and international expansion[27](index=27&type=chunk) - The sales cycle generally varies from four to nine months and is lengthening as the company focuses on larger contracts and more strategic products, which could cause variability in operating results[31](index=31&type=chunk) - As of September 30, 2023, the company had goodwill and intangible assets with a net book value of **$533.3 million**, which are at risk of impairment if market conditions change adversely[37](index=37&type=chunk) [Risks Related to Dependence on Third Parties](index=66&type=section&id=Risks%20Related%20to%20Our%20Dependence%20on%20Third%20Parties) The company relies on strategic relationships with technology vendors like SAP and public cloud providers such as GCP, Azure, and AWS, exposing it to service disruption and contract termination risks - The company depends on strategic relationships, particularly its reseller arrangement with SAP, which can be terminated by either party with six months' notice[39](index=39&type=chunk) - The company relies on Google Cloud Platform (GCP), Microsoft Azure, and Amazon Web Services (AWS) to deliver its solutions; any disruption from these public cloud providers could negatively impact operations[41](index=41&type=chunk) - The business also relies on SaaS applications from third parties for critical functions like billing, ERP, and financial accounting; interruptions in these services could adversely affect operations[44](index=44&type=chunk) [Risks Related to Legal and Regulatory Environment](index=68&type=section&id=Risks%20Related%20to%20Our%20Legal%20and%20Regulatory%20Environment) Legal and regulatory risks include compliance with foreign laws, tax complexities, evolving global privacy and data protection regulations, U.S. export controls, and changes in internet-related laws - International sales accounted for approximately **28%** of revenues in the first nine months of 2023, exposing the company to risks associated with foreign laws, taxes, and economic climates[150](index=150&type=chunk) - The company faces risks from a complex and evolving global regulatory landscape for privacy and data protection, including GDPR in Europe and CCPA/CPRA in California, with non-compliance potentially leading to significant fines[10](index=10&type=chunk)[11](index=11&type=chunk) - Changes in laws related to the internet, such as net neutrality, could decrease demand for the company's products or increase operating costs[13](index=13&type=chunk) [Risks Related to Intellectual Property](index=74&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) Intellectual property risks involve protecting its limited patents, defending against infringement claims, and potential obligations from open-source software usage - The company has two patents and primarily relies on copyright, trade secret, and trademark laws to protect its intellectual property, which may be inadequate[15](index=15&type=chunk) - The company may face lawsuits from third parties for alleged infringement of their proprietary rights, which could be costly and time-consuming, even if the claims are unsuccessful[17](index=17&type=chunk) - Use of open-source software in products could subject the company to litigation or, under certain licenses, require the release of proprietary source code[18](index=18&type=chunk) [Risks Related to Ownership of Common Stock](index=75&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) Risks related to common stock ownership include market price volatility, anti-takeover provisions, the absence of cash dividends, and exclusive forum provisions for stockholder disputes - The market price of the company's common stock is subject to wide fluctuations due to various factors, including operating results, analyst projections, and overall market volatility[19](index=19&type=chunk)[126](index=126&type=chunk) - Anti-takeover provisions in the company's charter and bylaws, such as a classified board and supermajority voting requirements, could discourage or prevent a change in control[127](index=127&type=chunk) - The company has never paid cash dividends and does not anticipate doing so in the foreseeable future, limiting stockholder returns to potential stock price increases[129](index=129&type=chunk) [Risks Related to Outstanding Convertible Notes](index=78&type=section&id=Risks%20Related%20to%20Our%20Outstanding%20Convertible%20Notes) Risks from outstanding convertible notes include significant cash requirements for servicing and repayment, potential liquidity impact from conditional conversion, and counterparty risk on capped call transactions - As of September 30, 2023, the company had **$250.0 million** of 2024 Notes and **$1.150 billion** of 2026 Notes outstanding[131](index=131&type=chunk) - The company may not have enough available cash to repurchase the Notes upon a fundamental change or to repay them in cash at maturity, which would constitute a default[133](index=133&type=chunk) - The company is subject to counterparty risk on its capped call transactions; a default by a counterparty could result in more dilution than anticipated[137](index=137&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=84&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) During the reporting period, the company had no unregistered sales of equity securities, no use of proceeds from such sales, and no issuer purchases of equity securities - There were no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities during the period[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) [Item 5. Other Information](index=84&type=section&id=Item%205.%20Other%20Information) Chief Revenue Officer Mark Woodhams adopted a Rule 10b5-1 trading plan on September 14, 2023, for the potential sale of up to **25,554** shares of common stock - On September 14, 2023, Chief Revenue Officer Mark Woodhams adopted a Rule 10b5-1 trading plan for the sale of up to **25,554** shares of common stock[64](index=64&type=chunk) [Item 6. Exhibits](index=84&type=section&id=Item%206.%20Exhibits) This section lists the documents filed as exhibits with this Quarterly Report on Form 10-Q, including certifications from the CEO and CFO pursuant to the Sarbanes-Oxley Act of 2002 and Inline XBRL documents - The Exhibit Index lists all documents filed with or incorporated by reference into the Form 10-Q, in accordance with Item 601 of Regulation S-K[58](index=58&type=chunk)[60](index=60&type=chunk)

BlackLine, Inc. (NASDAQ:BL) Q2 2023 Earnings Conference Call August 8, 2023 5:00 PM ET Corporate Participants Matt Humphries - Vice President of Investor Relations Therese Tucker - Founder and Co-Chief Executive Officer Owen Ryan - Chairman and Co-Chief Executive Officer Mark Partin - Chief Financial Officer Conference Call Participants Rob Oliver - Baird Alex Sklar - Raymond James Steve Enders - Citi Pinjalim Bora - JPMorgan Koji Ikeda - Bank of America Matt VanVliet - BTIG Andrew DeGasperi - Berenberg Mat ...

6 7 | --- | --- | --- | --- | --- | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------|---------------------|-------|-------------------| | | | Six Months \n2023 | Ended | June 30, \n2022 | | Cash flows from operating activities | | | | | | Net income (loss) attributable to BlackLine, Inc. | $ | 18,841 | $ | (20,676) | | Net income (loss) and adjustment attributable to re ...

Financial Data and Key Metrics Changes - Total revenue grew to $139 million, up 16% year-over-year, slightly ahead of expectations [67][78] - Non-GAAP operating margin was 11%, with non-GAAP net income margin over 18% [96] - Annual recurring revenue (ARR) reached $550 million, up 14% [79] - Non-GAAP overall gross margin was 79%, with subscription gross margin at 82% [59] Business Line Data and Key Metrics Changes - Strategic product performance represented 26% of sales, driven by demand for high automation solutions [7] - The renewal rate was 95%, within the historical range of 95% to 98% [19] - Net revenue retention rate (NRR) was 106%, reflecting customer expansion activity [58] Market Data and Key Metrics Changes - The Japan business showed notable growth, penetrating nearly 14% of Japan-based Forbes 2000 companies [68] - The enterprise business remained steady, while the middle market experienced subdued deal activity [34] Company Strategy and Development Direction - The company is focused on enhancing customer success and operational execution, with a strong emphasis on automation and process improvement [29][51] - There is a commitment to building a robust distribution network and improving market messaging [30][47] - The company aims to leverage its strategic product portfolio through direct and partner channels [47] Management's Comments on Operating Environment and Future Outlook - Management expects macroeconomic uncertainty to continue impacting year-over-year revenue growth [15] - There is a recognition of the need for agility and quick solutions to meet customer demands in a changing environment [31] - The company anticipates a gradual recovery in demand signals, with a focus on capturing opportunities as they arise [117] Other Important Information - The company generated $22.9 million in operating cash flow and $14.3 million in free cash flow during the quarter [60] - The company ended the quarter with $1.1 billion in cash and marketable securities, providing flexibility for investments [60] Q&A Session Summary Question: Can you discuss the linearity of sales cycles and bookings in Q1? - Management noted that sales cycles have been elongated, with purchasing decisions being delayed [88] Question: What are the expectations for interest income underlying the guidance? - Interest income is expected to continue contributing between $8 million to $9 million per quarter [126] Question: How has the competitive landscape changed recently? - The competitive environment remains consistent, with a focus on driving innovation to maintain market leadership [105] Question: What specific efforts are being made to improve customer retention? - The company is enhancing customer success teams and implementation support to drive engagement and adoption [65] Question: How does the company view the impact of AI in accounting? - Management acknowledges the potential of AI but emphasizes the need for governance and risk management in its application [130]

Financial Performance - The net loss attributable to BlackLine, Inc. for the quarter ended March 31, 2023, was $12,008 thousand, compared to a net loss of $6,816 thousand for the same period in 2022, indicating a year-over-year increase in loss[36]. - For the quarter ended March 31, 2023, the company reported revenues of $139.0 million, an increase from $120.2 million in the same quarter of 2022, while incurring a net loss of $12.0 million compared to a net loss of $10.0 million in the prior year[114]. - The net loss attributable to BlackLine, Inc. for Q1 2023 was $12.01 million, compared to a net loss of $10.01 million in Q1 2022, reflecting a worsening of approximately 20%[137]. - The company recorded a tax expense of $0.6 million in Q1 2023, a significant decrease from a $12.9 million tax benefit in Q1 2022, primarily due to changes in valuation allowance[136]. Assets and Liabilities - Total current liabilities decreased from $367,821 thousand as of December 31, 2022, to $363,548 thousand as of March 31, 2023, representing a reduction of approximately 0.6%[34]. - The total liabilities decreased from $1,807,893 thousand as of December 31, 2022, to $1,786,510 thousand as of March 31, 2023, indicating a decline of about 1.2%[34]. - Stockholders' equity increased from $111,868 thousand as of December 31, 2022, to $116,992 thousand as of March 31, 2023, reflecting an increase of approximately 4.0%[34]. - Total assets were reported at $1,033.078 million as of March 31, 2023, with total liabilities of $44.655 million[74]. Cash Flow and Investments - Cash provided by operating activities was $22,867,000 for the quarter ended March 31, 2023, a significant increase from $176,000 in the same quarter of 2022[59]. - The company had total cash, cash equivalents, and restricted cash of $222,799,000 at the end of the period, down from $365,769,000 a year earlier[59]. - The company experienced a net increase in cash of $21,592,000 for the quarter ended March 31, 2023, compared to a net decrease of $174,222,000 in the same quarter of 2022[59]. - Investments in marketable securities totaled $875,456,000 with a fair value of $874,083,000 as of December 31, 2022[50]. Market Presence and Operations - The company has international office locations in 12 countries, including Australia, Canada, and the United Kingdom, indicating a broad market presence[41]. - As of March 31, 2023, the company had 369,493 individual users across 4,236 customers, with approximately 94% of revenue derived from subscriptions to its cloud-based software platform[113]. - The company completed the acquisition of FourQ Systems, Inc. on January 26, 2022, aimed at enhancing intercompany accounting automation capabilities[41]. Revenue and Customer Metrics - Total revenue for Q1 2023 was $138.98 million, up from $120.24 million in Q1 2022, representing a year-over-year growth of approximately 15.5%[141]. - Contracted but unrecognized revenue stood at $773.3 million as of March 31, 2023, with an expectation to recognize about 56% over the next 12 months[140]. - The dollar-based net revenue retention rate slightly declined at the end of Q1 2023 compared to Q4 2022, indicating challenges in maximizing customer lifetime value[118]. Expenses and Cost Management - The increase in total cost of revenues for Q1 2023 was primarily driven by a $1.5 million rise in amortization of developed technology and a $1.4 million increase in cloud hosting expenses[128]. - Research and development expenses increased by $4.3 million in Q1 2023 compared to Q1 2022, largely due to higher salaries and benefits from increased headcount[130]. - Sales and marketing expenses rose by $1.2 million in Q1 2023, driven by higher bonuses and commissions, as well as increased trade show expenses[129]. Stock-Based Compensation - Stock-based compensation expense was $20,438,000 for the quarter ended March 31, 2023, up from $15,902,000 in the prior year[59]. - Stock-based compensation expense for the quarter ended March 31, 2023, was $20.438 million, an increase from $15.902 million in the same quarter of 2022[83]. Risks and Challenges - The company’s cash flow management and operational performance are subject to risks and uncertainties, including market acceptance of its solutions and the impact of the COVID-19 pandemic[31]. - The company has seen customers delay purchasing decisions due to economic uncertainty, impacting near-term demand[115]. - The company's ability to maximize the lifetime value of customer relationships is influenced by customers' willingness to purchase additional user licenses and products[119].

• lack of familiarity and burdens of complying with foreign laws, legal standards, regulatory requirements, tariffs and other barriers; • difficulties in managing and staffing international operations and differing employer/employee relationships; • the impact of natural disasters, climate change, war, including the war in Ukraine, and public health pandemics, such as COVID-19, on employees, customers, partners, third-party contractors, travel and the global economy; and Privacy and cybersecurity concerns a ...

Financial Data and Key Metrics Changes - The company reported Q4 total revenue of $140 million, representing a 21% increase year-over-year, and full-year revenue of $523 million, up 23% [17] - Non-GAAP net income for Q4 was $25.5 million, with a non-GAAP net income margin of 18%, showing significant improvement compared to the previous year and Q3 [14] - The company ended the year with $1.1 billion in cash, cash equivalents, and marketable securities, providing strong financial flexibility for 2023 and beyond [15] Business Line Data and Key Metrics Changes - The company experienced solid top-line growth and margin expansion driven by operational efficiencies and disciplined expense management [12] - Strategic products accounted for 27% of bookings, with notable performance in accounts receivable (AR) and intercompany financial management (IFM) [39] - The company reported strong user expansion in Q4, particularly in the AR segment, indicating effective land-and-expand strategies within existing accounts [42] Market Data and Key Metrics Changes - The Asia-Pacific (APAC) region performed strongly, achieving record sales, particularly in Japan, while North America remained stable with new customer acquisitions [8] - The EMEA region continued to face challenges due to macroeconomic and geopolitical factors, resulting in softer business activity [8] - The company noted strong wins with airline customers, including Alaska Airlines and Qantas, highlighting its competitive position in the market [9] Company Strategy and Development Direction - The company is focused on becoming the platform company for the office of the CFO, with ongoing innovations planned for the next few years [6] - Changes to the go-to-market strategy were implemented to align sales incentives with product offerings and market opportunities, aiming to improve sales efficiency [7] - The company continues to develop its global partner network to enhance reach and capabilities [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing market uncertainty affecting customer buying behavior, leading to elongated deal cycles and delayed decision-making [5] - Despite the challenges, management expressed confidence in the long-term demand signals and competitive win rates [5] - The guidance for 2023 reflects a cautious outlook, considering the macroeconomic environment and its impact on bookings and revenue [31] Other Important Information - The company is tracking towards general availability for BlackLine Accounting Studio, with early adopter customers already signed [6] - A write-off of $5 million was recorded for cloud computing implementation costs due to a shift in focus from a lengthy third-party project [59] Q&A Session Summary Question: Can you discuss the geographic performance in Q4 and guidance for 2023? - Management noted strength in APAC, particularly Japan, while EMEA faced softness. North America showed stability with new business opportunities [19][20] Question: How are sales changes impacting strategic products? - Strategic products are performing well, with significant wins in IFM and AR, although macro uncertainty continues to affect deal cycles [25] Question: What is the impact of macroeconomic conditions on bookings and guidance? - Management indicated that lower-than-expected bookings in Q4 were influenced by macro conditions, and guidance reflects a cautious approach to potential further deterioration [31][56] Question: How is the company addressing the shortage of accountants? - Management acknowledged a shortage of accountants and emphasized the importance of their solutions in driving efficiency and automation in finance operations [125] Question: What are the expectations for new customer growth and product demand? - New customer growth is expected to continue, with a focus on financial close solutions as a starting point for many clients [87][99]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________________________________ FORM 10-Q ______________________________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 0 ...