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Investor Presentation Third Quarter 2025 November 6th, 2025 Safe Harbor This presentation contains forward-looking statements. These statements may relate to, but are not limited to, expectations of future operating results or financial performance of BlackLine, Inc. ("BlackLine" or the "Company"), the calculation of certain key financial and operating metrics, capital expenditures, introduction of new solutions or products, expansion into new markets, plans for growth and future operations, technological c ...

Core Insights - BlackLine met Wall Street's revenue expectations for Q3 CY2025, reporting a 7.5% year-on-year sales increase to $178.3 million, with a forecast of approximately $183 million for the next quarter, aligning with analyst estimates [1][6] - The company's non-GAAP profit of $0.51 per share matched analysts' consensus [1][6] - CEO Owen Ryan highlighted the company's focus on improved execution, reflected in increasing revenue growth, solid margins, and strong free cash flow [3] Company Overview - BlackLine provides cloud-based software aimed at automating and streamlining financial processes for accounting departments, eliminating tedious manual spreadsheet work [4] Revenue Growth - Over the past five years, BlackLine achieved a compounded annual growth rate of 15.3% in sales, although this growth is slightly below the standards for the software sector [5][7] - The annualized revenue growth over the last two years was 9.4%, indicating a slowdown in demand compared to the five-year trend [7] Financial Performance - Q3 CY2025 revenue was $178.3 million, slightly above analyst estimates of $178.1 million, with an adjusted EPS of $0.51 also in line with expectations [6] - Adjusted operating income was $38.14 million, representing a 21.4% margin, exceeding analyst estimates [6] - Free cash flow margin improved to 35.8%, up from 14.8% in the previous quarter [6] - The company reported a net revenue retention rate of 103%, down from 105% in the previous quarter, and a decrease in customers from 4,451 to 4,424 [6]

Financial Performance - Total GAAP revenues for Q3 2025 were $178.3 million, a 7.5% increase compared to Q3 2024[6] - GAAP net income attributable to BlackLine was $5.3 million, or $0.09 per diluted share, down from $17.2 million, or $0.27 per diluted share in Q3 2024[6] - Non-GAAP net income attributable to BlackLine was $37.6 million, or $0.51 per diluted share, compared to $44.4 million, or $0.60 per diluted share in Q3 2024[6] - Net income for Q3 2025 was $8.61 million, compared to $14.57 million in Q3 2024, showing a decrease of 41%[32] - Basic net income per share attributable to BlackLine, Inc. for Q3 2025 was $0.09, down from $0.28 in Q3 2024[32] - Net income attributable to BlackLine, Inc. for Q3 2025 was $5,285, compared to $17,238 in Q3 2024, reflecting a decrease of 69%[35] Revenue and Growth Metrics - Billings reached $161.6 million, a 4.4% increase compared to Q3 2024, impacted by a higher mix of customers on quarterly billings[6] - Remaining performance obligation was $964.1 million, reflecting a 12.4% increase compared to Q3 2024[6] - Subscription and support revenue for Q3 2025 was $168.21 million, up from $157.01 million in Q3 2024, reflecting a growth of 7.7%[31] - The company achieved a dollar-based net revenue retention rate of 103% as of September 30, 2025[6] - Total revenues for Q3 2025 reached $178.29 million, an increase of 7% compared to $165.91 million in Q3 2024[31] Cash Flow and Assets - Operating cash flow was $63.8 million, up from $55.9 million in Q3 2024[6] - Free cash flow increased to $57.0 million, compared to $49.4 million in Q3 2024[6] - Total current assets decreased to $983.82 million as of September 30, 2025, from $1.09 billion at the end of 2024[28] - Cash and cash equivalents decreased to $419.90 million as of September 30, 2025, from $885.92 million at the end of 2024[28] - Total cash provided by operating activities for the nine months ended September 30, 2025, was $142,887, compared to $147,042 for the same period in 2024, a decrease of 2.3%[35] - Cash, cash equivalents, and restricted cash at the end of Q3 2025 totaled $419,900, down from $725,515 at the end of Q3 2024, a decline of 42.2%[36] Expenses and Liabilities - Operating expenses for Q3 2025 totaled $126.29 million, an increase from $116.44 million in Q3 2024[31] - Total liabilities as of September 30, 2025, were $1.34 billion, slightly down from $1.34 billion at the end of 2024[29] - Stock-based compensation for the nine months ended September 30, 2025, was $66,625, compared to $63,911 for the same period in 2024, an increase of 4.0%[35] - General and administrative expense was $85,684 million, down from $89,315 million, indicating a decrease of 4.0%[40] Operational Metrics - BlackLine had 4,424 customers and 385,336 users as of September 30, 2025, indicating continued customer migrations to the platform pricing model[6] - The number of customers as of September 30, 2025, is a critical indicator of market penetration and business growth[25] Non-GAAP Metrics - Non-GAAP gross profit for Q3 2025 was $141,526, up from $131,736 in Q3 2024, representing an increase of 7.0%[38] - Non-GAAP gross margin for Q3 2025 was 79.4%, consistent with Q3 2024[38] - Total non-GAAP operating income increased to $111,095 million, up from $96,155 million year-over-year, reflecting a growth of 15.5%[39] - Non-GAAP operating margin was 21.5%, compared to 19.9% in the previous year, indicating an improvement of 1.6 percentage points[39] - Basic non-GAAP net income per share attributable to BlackLine, Inc. was $1.80, down from $2.06, a decrease of 12.6%[39] Future Guidance - Full year 2025 guidance includes total GAAP revenue expected in the range of $699 million to $701 million[12]

Core Insights - BlackLine, Inc. reported strong financial results for the third quarter of 2025, highlighting increased revenue growth, solid margins, and robust free cash flow, indicating effective execution of strategic changes [2][6]. Financial Performance - Total GAAP revenues reached $178.3 million, marking a 7.5% increase compared to the third quarter of 2024 [6]. - GAAP operating margin was 4.3%, down from 5.0% in the same quarter last year [6]. - Non-GAAP operating margin was 21.4%, compared to 22.7% in the third quarter of 2024, primarily affected by the timing of the BeyondTheBlack customer event [6]. - GAAP net income attributable to BlackLine was $5.3 million, or $0.09 per diluted share, a decrease from $17.2 million, or $0.27 per diluted share, in the third quarter of 2024 [6]. - Non-GAAP net income attributable to BlackLine was $37.6 million, or $0.51 per diluted share, down from $44.4 million, or $0.60 per diluted share, in the same quarter last year [6]. - Billings totaled $161.6 million, a 4.4% increase year-over-year, influenced by a higher mix of customers on quarterly billings [6]. - Remaining performance obligation increased by 12.4% to $964.1 million compared to the third quarter of 2024 [6]. - Operating cash flow was $63.8 million, up from $55.9 million in the third quarter of 2024 [6]. - Free cash flow reached $57.0 million, compared to $49.4 million in the same period last year [6]. Customer Metrics - BlackLine had a total of 4,424 customers as of September 30, 2025 [6]. - The number of users reached 385,336, reflecting ongoing customer migrations to the platform pricing model [6]. - The dollar-based net revenue retention rate was 103%, including a one-point headwind from foreign exchange [6]. Product and Innovation - The company launched Verity, an AI-powered solution tailored for the Office of the CFO [6]. - BlackLine achieved ISO 42001 certification for its AI management system [6]. - The company received an Exemplary rating in the ISG Buyer's Guides for Record to Report, Financial Close & Financial Consolidation [6]. - BlackLine was awarded the SAP Global Finance and Spend Management Partner Excellence Award for 2025 [6]. Financial Outlook - For the fourth quarter of 2025, total GAAP revenue is expected to be between $182 million and $184 million [7]. - Non-GAAP operating margin is projected to be in the range of 24.0% to 25.0% [7]. - Non-GAAP net income attributable to BlackLine is anticipated to be between $42 million and $44 million, or $0.58 to $0.61 per share [7]. Summary of Financial Position - As of September 30, 2025, total assets were $1.703 billion, down from $1.825 billion at the end of 2024 [28]. - Total liabilities were $1.337 billion, slightly decreased from $1.342 billion at the end of 2024 [29]. - Stockholders' equity was $328.3 million, down from $446.7 million at the end of 2024 [29].

Core Viewpoint - The market anticipates BlackLine (BL) will report a year-over-year decline in earnings despite an increase in revenues for the quarter ending September 2025, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - BlackLine is expected to post quarterly earnings of $0.51 per share, reflecting a year-over-year decrease of 15% [3]. - Revenue projections stand at $178.01 million, indicating a 7.3% increase from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the past 30 days, suggesting stability in analyst expectations [4]. - The Most Accurate Estimate aligns with the Zacks Consensus Estimate, resulting in an Earnings ESP of 0%, indicating no recent differing analyst views [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive or negative reading can predict deviations from consensus estimates, but its predictive power is stronger for positive readings [9][10]. - BlackLine's current Zacks Rank is 3, making it challenging to predict an earnings beat conclusively [12]. Historical Performance - In the last reported quarter, BlackLine exceeded the expected earnings of $0.50 per share, achieving $0.51, resulting in a surprise of +2.00% [13]. - Over the past four quarters, BlackLine has surpassed consensus EPS estimates three times [14]. Market Sentiment - An earnings beat or miss alone may not dictate stock price movement, as other factors can influence investor sentiment [15]. - While BlackLine does not appear to be a strong candidate for an earnings beat, other considerations should be evaluated before making investment decisions [17].

Core Viewpoint - Engaged Capital urges BlackLine, Inc. to explore strategic alternatives, particularly in light of renewed acquisition interest from SAP SE, believing that a sale would be the best outcome for stockholders due to BlackLine's inability to generate sustainable value in the public market [1][5]. Summary by Sections Engagement with BlackLine - Engaged Capital is a significant stockholder of BlackLine and has faced challenges in meaningful engagement with the company's management, which has been unresponsive and difficult to schedule meetings with [2][3]. - Despite these challenges, Engaged Capital continues to hold shares, believing in BlackLine's strategic value, which has been trading at a substantial discount to its fair value [2][3]. Acquisition Interest - Reports indicate that SAP SE made a formal offer to acquire BlackLine earlier this year, which was rejected by BlackLine's Board of Directors [3]. - Engaged Capital expresses disappointment over the rejection, especially given BlackLine's poor performance in creating stockholder value and its underperformance compared to relevant software indices [3][4]. Stock Performance - BlackLine's total stockholder return has been negative over various time frames: -8% over 1 year, 0% over 3 years, and -47% over 5 years, contrasting sharply with the positive returns of the IGV Software Index and S&P Software & Services Select Industry Index [4][5]. - The company has significantly underperformed relative to these indices, with a relative performance of -35% over 1 year against the IGV Software Index [4]. Call to Action - Engaged Capital calls for the Board to act urgently and engage financial advisors to run a strategic alternatives process to maximize stockholder value [5]. - The firm emphasizes that the Board's fiduciary duties are to all stockholders, not just management, and expresses readiness to hold the Board accountable if necessary [6].

Core Viewpoint - SAP, Europe's largest software supplier, proposed a nearly $4.5 billion acquisition of accounting software company BlackLine in June, which was rejected, and is now considering whether to pursue the acquisition again [1] Group 1: Acquisition Details - SAP is collaborating with JPMorgan on the potential acquisition of BlackLine [1] - The initial offer for BlackLine was approximately $4.5 billion [1] Group 2: Shareholder Information - Clearlake Capital holds nearly 9% of BlackLine's shares and will have a say in any potential sale [1] - Vanguard Group and BlackRock are also significant shareholders in BlackLine [1]

Group 1: European AI Infrastructure Investment - Nvidia (NVDA) and Deutsche Telekom (DTE) are investing €1 billion in a new data center in Munich, Germany, aimed at enhancing Europe's AI infrastructure [2][7] - The project will deploy approximately 10,000 GPUs, reflecting Europe's efforts to close the AI infrastructure gap with the United States [2][7] - SAP SE (SAP) is expected to be a primary customer of the new facility, indicating a rising demand for advanced AI computing power across various industries [2][7] Group 2: SAP's Acquisition Attempt - SAP SE (SAP) made a takeover offer for BlackLine Inc. (BL) earlier this year, valuing the company in the high $60s per share, but the offer was rejected [3][7] - The proposed acquisition indicates SAP's strategic interest in expanding its portfolio of CFO-focused software solutions [3][7] - BlackLine's stock reacted positively to the news of the takeover interest, despite the rejection [3][7] Group 3: Oil Market Dynamics - Oil prices have stabilized near $61, with market focus shifting from U.S.-China trade talks to the implications of recent U.S. sanctions on Russian oil producers [4][7] - The International Energy Agency (IEA) projects that oil prices will likely moderate in the coming weeks due to an anticipated surplus in global oil supply [4][7] - Sanctions on major Russian oil producers, Rosneft and Lukoil, have influenced market dynamics, although profit-taking and oversupply concerns have limited price gains [4][7] Group 4: Russia and Venezuela Strategic Partnership - Russia and Venezuela have established a strategic partnership to enhance cooperation in energy, mining, transport, and security sectors [5][7] - The agreement emphasizes mutual opposition to external pressures and aims to ensure international stability [5][7]

Core Viewpoint - SAP, Europe's largest software provider, attempted to acquire BlackLine, an accounting software firm, for nearly $4.5 billion in June but was rejected and is now contemplating a renewed pursuit of the company [1] Company Summary - SAP's initial offer to acquire BlackLine was approximately $4.5 billion [1] - The acquisition attempt was rebuffed, indicating potential challenges in the negotiation process [1] - SAP is considering whether to pursue BlackLine again, suggesting ongoing interest in expanding its software portfolio [1]