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01/11 04:06
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
BlackLine's earnings call highlights strong financial performance, strategic partnerships, and positive guidance. The Q&A reveals optimism about growth, AI adoption, and pricing model changes, despite some large deal delays. The raised guidance and share repurchases indicate confidence, while the SAP partnership and AI integration are promising long-term. Market cap suggests moderate stock reaction, thus predicting a positive price movement (2% to 8%).
Revenue Total revenue grew to $172 million, slightly above 7% year-over-year. Subscription revenue grew 7% and service revenue grew 3%. The growth was driven by accelerated bookings and multiyear renewals.
Annual Recurring Revenue (ARR) ARR was $677 million, up over 9% year-over-year. This growth was ahead of revenue growth due to accelerated bookings and FX tailwinds.
Remaining Performance Obligations (RPO) RPO increased over 11% year-over-year, with current RPO increasing by 9%. This was driven by solid sales performance and multiyear renewals.
Calculated Billings Calculated billings growth was 11% year-over-year, inclusive of about 0.5 point of FX benefit. Trailing 12-month billings growth was 7%.
Customer Count Customer count at the end of the quarter was 4,451, up slightly from the previous year but down from Q1. This reflects strategic choices to focus on larger mid-market and enterprise customers.
Revenue Renewal Rate The revenue renewal rate was 91%, with mid-90s for enterprise customers and in the 80s for mid-market customers. The planned churn from lower mid-market customers was expected.
Net Retention Rate (NRR) NRR was 105%, driven by healthy customer expansion, particularly in enterprise, and some benefit from FX.
Strategic Products Strategic products represented 30% of sales, up from 28% last year. Growth was driven by cross-sell opportunities and the new pricing model.
Non-GAAP Gross Margin Non-GAAP gross margin was approximately 80%, with subscription gross margin at 83%. This was in line with expectations as the cloud migration nears completion.
Non-GAAP Operating Margin Non-GAAP operating margin was 22%, driven by gross margin performance and improved team productivity.
Non-GAAP Net Income Non-GAAP net income attributable to BlackLine was $38 million, representing a 22% non-GAAP net income margin.
Operating Cash Flow Operating cash flow was $32 million, while free cash flow was $25 million. Lower free cash flow was due to restructuring payments, lower interest income, and higher taxes.
Share Repurchase Approximately 796,000 shares were repurchased for $43 million in the quarter, bringing the year-to-date total to nearly $89 million.
Studio360: Enhanced to address challenges in the office of the CFO, including data orchestration and automation. Powered by Snowflake, it supports over 1,100 customers and enables new use cases like big data matching and AI-driven analytics.
Agentic AI: Introduced summarization and natural language querying features to enhance productivity and decision-making. Internal adoption by employees has been high, driving efficiency.
Financial Close Enhancements: Released high-frequency reconciliations and nonmonetary reconciliation solutions for specific industries like oil and gas.
Intercompany Solutions: Integrated with Studio360 to automate transactions as part of financial close, enhancing end-to-end automation.
Invoice-to-Cash: Enhanced with new payment gateways and tax integration, positioned as a key solution within the broader platform.
Public Sector Expansion: Secured first federal agency customer and observed growing demand from other federal agencies and states.
APAC Growth: Signed largest-ever deal in APAC with a top 3 Australian bank and a new deal with a top 3 Japanese bank.
Mid-Market Strategy: Focused on larger mid-market customers, resulting in 55% growth in new deal sizes year-over-year.
Revenue Growth: Achieved 7% revenue growth and 22% non-GAAP operating margin in Q2 2025.
Pipeline Growth: Creative pipeline grew 70% year-over-year, driven by refined platform messaging and strategy.
Partner Network: Partner-sourced bookings exceeded expectations, with record performance and increased enablement trends.
Leadership Transition: Therese Tucker transitioned to focus on customer engagement and European growth, while Owen Ryan became sole CEO.
Pricing Model: New pricing model adopted by about half of eligible new customers in Q2, driving higher deal sizes and adoption.
Platform Strategy: Shifted focus to a platform-centric approach, targeting larger accounts and deprioritizing smaller ones for long-term profitability.
Strategic Shift to Larger Mid-Market Customers: The company is moving away from smaller, less complex accounts to focus on larger mid-market customers. This shift may result in short-term impacts on customer count and revenue renewal rates, as smaller accounts are deprioritized.
Renewal Rates and Customer Churn: The Q2 renewal rate was 91%, with mid-market renewal rates in the 80s. This reflects planned churn from lower mid-market customers, which could impact overall revenue stability.
Public Sector Expansion: While the company has secured its first public sector win, this market is still in its early stages and may require significant investment and time to yield substantial returns.
Cloud Migration Costs: The ongoing migration to Google Cloud Platform (GCP) involves duplicative hosting costs, which could temporarily impact margins.
Economic and Market Conditions: The company’s performance is subject to risks from broader economic uncertainties and market conditions, which could affect customer spending and deal sizes.
Partner Network Dependency: The company’s growth strategy heavily relies on its partner network, including SAP and other system integrators. Any disruptions or underperformance in these partnerships could impact growth.
Innovation and Product Development: The company is investing heavily in innovation, such as Studio360 and AI capabilities. Delays or failures in these initiatives could hinder competitive positioning and customer adoption.
Geopolitical Risks: The expansion into regions like Saudi Arabia introduces geopolitical risks that could affect operations and growth.
Regulatory Compliance: Efforts to expand in the public sector and other regions may face regulatory hurdles, including FedRAMP compliance, which could delay market entry or increase costs.
Q3 2025 Revenue Guidance: Total GAAP revenue is expected to be in the range of $177 million to $179 million, representing approximately 7% to 8% growth.
Q3 2025 Non-GAAP Operating Margin: Expected to be in the range of 20% to 21%, including approximately 2 points of operating margin headwind due to the BeyondTheBlack conference.
Q3 2025 Non-GAAP Net Income: Expected to be in the range of $36 million to $38 million, or $0.48 to $0.51 on a per share basis.
Full Year 2025 Revenue Guidance: Total GAAP revenue is expected to be in the range of $696 million to $705 million, representing 6.5% to 8% growth.
Full Year 2025 Non-GAAP Operating Margin: Expected to be in the range of 21.5% to 22.5%.
Full Year 2025 Non-GAAP Net Income: Expected to be in the range of $159 million to $167 million, or $2.13 to $2.24 on a per share basis.
Share Repurchase Program: BlackLine repurchased approximately 796,000 shares for approximately $43 million in the quarter, bringing the year-to-date total to nearly $89 million. The share repurchase program remains a key part of the company's capital allocation framework going forward.
The earnings call indicates strong financial performance with high gross margins and cash flow. The Q&A highlights successful new pricing models, increased bookings, and strategic partnerships, particularly with SAP, which are expected to drive growth. While there are concerns about delayed deals and unclear EPS guidance, the overall sentiment is positive due to expected revenue growth, improved competitive positioning, and strategic initiatives. Given the market cap, a positive stock price movement of 2% to 8% is likely over the next two weeks.
BlackLine's earnings call highlights strong financial performance, strategic partnerships, and positive guidance. The Q&A reveals optimism about growth, AI adoption, and pricing model changes, despite some large deal delays. The raised guidance and share repurchases indicate confidence, while the SAP partnership and AI integration are promising long-term. Market cap suggests moderate stock reaction, thus predicting a positive price movement (2% to 8%).
The earnings call highlights strong financial performance with revenue growth, high retention rates, and a positive outlook on pipeline and partnerships, particularly with SAP. The Q&A section supports this with confidence in margins and growth strategies. Despite some management evasiveness, the share repurchase program and robust financial metrics, including a high non-GAAP operating margin and positive cash flow, indicate a favorable market reaction. Given the company's market cap, the stock price is likely to experience a positive movement, though not extreme, over the next two weeks.
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