BlackLine(US:BL)2024-05-08 20:07Part I. Financial Information Item 1. Financial Statements For the quarter ended March 31, 2024, BlackLine, Inc. reported total revenues of $157.5 million, a 13% increase year-over-year, achieving net income of $10.8 million from a prior year net loss Condensed Consolidated Statements of Operations (Unaudited) | Financial Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | | :--- | :--- | :--- | | Total Revenues | $157,461 | $138,984 | | Gross Profit | $118,364 | $103,713 | | Income (Loss) from Operations | $1,748 | $(15,313) | | Net Income (Loss) Attributable to BlackLine, Inc. | $10,829 | $(12,008) | | Diluted Net Income (Loss) per Share | $0.17 | $(0.20) | Condensed Consolidated Balance Sheets Highlights (Unaudited) | Balance Sheet Item | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $331,401 | $271,117 | | Marketable securities | $913,453 | $933,355 | | Total Assets | $2,088,885 | $2,100,765 | | Convertible senior notes, net | $1,391,226 | $1,389,841 | | Total Liabilities | $1,775,151 | $1,809,821 | | Total Stockholders' Equity | $279,834 | $260,881 | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Q1 2024 (in thousands) | Q1 2023 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $50,425 | $22,867 | | Net cash provided by investing activities | $20,990 | $8,999 | | Net cash used in financing activities | $(10,925) | $(10,233) | | Net increase in cash, cash equivalents, and restricted cash | $60,278 | $21,592 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported a 13% year-over-year revenue increase to $157.5 million for Q1 2024, driven by a 4% rise in customers and a 5% increase in users, achieving GAAP operating income of $1.7 million while maintaining a strong liquidity position despite economic uncertainty - Revenue growth was primarily driven by an increase in the number of customers and users, with totals reaching 4,411 and 387,050, respectively, at the end of Q1 2024154181 Key Business Metrics | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Dollar-based net revenue retention rate | 105% | 106% | | Number of customers | 4,411 | 4,236 | | Number of users | 387,050 | 369,493 | - The company has observed customers delaying and deferring purchasing decisions due to economic uncertainty, which has adversely impacted near-term demand40146 - The company's principal sources of liquidity as of March 31, 2024, were an aggregate of $1.2 billion in cash, cash equivalents, and marketable securities190 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks primarily from interest rates, foreign currency fluctuations, and inflation, affecting its $1.4 billion in convertible senior notes and international operations, without current hedging strategies - The company has $1.4 billion in aggregate principal of convertible senior notes with fixed interest rates, but their fair value is exposed to interest rate risk and fluctuations in the company's stock price190202 - The company transacts in multiple foreign currencies and is exposed to foreign currency risk. A hypothetical 10% change in foreign currency exchange rates would have impacted cash balances by approximately $3.4 million as of March 31, 2024229 - The company does not currently use derivative instruments to hedge against interest rate or foreign currency risks229247 Item 4. Controls and Procedures Based on an evaluation as of March 31, 2024, the company's principal executive and financial officers concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management, including the principal executive and financial officers, evaluated the effectiveness of disclosure controls and procedures and concluded they were effective as of March 31, 2024250 - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, internal controls252 Part II. Other Information Item 1. Legal Proceedings As of the report date, BlackLine is not a party to any litigation that is reasonably expected to have a material adverse effect on its financial condition or results of operations - The company is not currently party to any litigation that would be reasonably expected to have a material adverse effect on its business, financial position, or brand42 Item 1A. Risk Factors The company identifies significant risks to its business, including intense competition, dependence on customer acquisition and renewals, and potential impacts from economic uncertainty, alongside operational, financial, and regulatory challenges - The market for accounting and financial software is highly competitive, with competitors that may have greater name recognition, resources, and ability to respond to market changes1 - Business growth is substantially dependent on customers renewing their subscription agreements, which can be negatively affected by economic conditions, competition, and customer satisfaction49 - A security breach or unauthorized access to confidential customer data could lead to loss of customers, reputational damage, and significant liabilities. The increased use of AI/ML may introduce additional cybersecurity risks1820 - The company relies on third-party public cloud providers (GCP, Azure, AWS) to deliver its solutions, and any disruption from these providers could negatively impact operations and harm the business257 - The company has a history of losses, with fiscal year 2023 being its first profitable full year, and may not achieve or maintain profitability in the future due to expected cost increases in R&D, sales, and international expansion34 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities, no use of proceeds from registered securities, and no issuer purchases of equity securities during the period - There were no unregistered sales of equity securities or issuer purchases of equity securities during the quarter331 Item 5. Other Information During the quarter, Chief Financial Officer Mark Partin and Chief Legal and Administrative Officer Karole Morgan-Prager each adopted a Rule 10b5-1 trading arrangement for the sale of company common stock, while Lead Independent Director Thomas Unterman adopted and subsequently terminated a similar plan - CFO Mark Partin and CLO Karole Morgan-Prager adopted Rule 10b5-1 trading arrangements in March 2024 for the potential sale of up to 140,956 and 117,260 shares, respectively315 Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including CEO and CFO certifications and Inline XBRL documents, as required by SEC regulations - The report includes an index of exhibits filed, such as officer certifications pursuant to the Sarbanes-Oxley Act and interactive data files in Inline XBRL format316318