BlackLine, Inc. (BL) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance, with a 30% decrease in customer acquisition costs and a high enterprise customer revenue renewal rate of 95%. The positive sentiment is reinforced by the strategic shift to platform pricing and AI innovations, which are gaining traction. However, management's avoidance of directly addressing shareholder value questions slightly tempers the outlook. Considering the company's solid performance metrics and optimistic future guidance, a positive stock price reaction is expected, especially given the market cap's moderate size.
Key Financial Performance
Total Revenue $183 million, up 8% year-over-year. Growth driven by subscription revenue (8% growth) and services revenue (17% growth) due to accelerated customer go-lives and implementations.
Annual Recurring Revenue (ARR) $702 million, up nearly 10% year-over-year, with a 1.5 point benefit from FX. Growth attributed to platform adoption and multiyear renewals.
Remaining Performance Obligations (RPO) $1.1 billion, up 23% year-over-year. Growth driven by platform adoption and multiyear renewals.
Net Revenue Retention (NRR) 105%, reflecting strength from expansion with existing customers, particularly those moving to the platform. Enterprise customer NRR improved to 107%.
Non-GAAP Operating Margin 25%, reflecting better productivity across the business, especially within go-to-market teams, and lower customer acquisition costs.
Non-GAAP Net Income Margin 25%, driven by improved productivity and cost management.
Operating Cash Flow $27 million, reflecting variability in working capital.
Free Cash Flow $20 million, reflecting variability in working capital.
Customer Acquisition Costs Decreased by 30%, driven by improved sales productivity.
Platform Pricing ARR 11% of eligible ARR, up from 4% in the prior quarter, indicating market acceptance of the new commercial model.
Enterprise Customer Revenue Renewal Rate 95%, reflecting strong retention within the enterprise customer cohort.
Customer Count 4,394, with net customer growth in the enterprise segment despite a strategic shift upmarket.
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Operating Highlights
Studio360: Delivered strongest booking quarter and year in history, with full year bookings growth of 22%. Nearly 3/4 of all new bookings leveraged the platform.
Verity AI agents: Customers are investing in Verity AI agents, translating into predictability and visibility. Verity Prepare is in early access, Verity Collect planned for Q2, and Verity Accruals actively selling.
Intercompany and Invoice-to-Cash: Both had record quarters and years, representing 33% of sales.
Fortune 100 penetration: Serving approximately 70% of the Fortune 100, up from 50% in 2022.
Global expansion: Launched dedicated coverage in Saudi Arabia, signing first deals in the region.
SAP partnership: Secured full product qualification for Studio360 and expanded collaboration with SAP, including joint pipeline maturation and integration with SAP's Joule Copilot.
Customer acquisition costs: Decreased by 30% this quarter due to improved sales productivity.
Headcount efficiency: Revenue grew by 34% over three years with only a 2% increase in headcount.
Google Cloud migration: Completed migration, unlocking further margin potential and opportunities for strategic investments.
Shift to platform model: Transitioned to platform pricing, focusing on outcomes and value rather than seats, driving larger deal sizes and enhancing customer stickiness.
Enterprise focus: Average new enterprise deal sizes up 35%, with customers paying over $1 million in ARR up 20%.
AI-driven orchestration: Evolving platform from traditional automation to AI-driven orchestration, embedding intelligence into workflows for speed, accuracy, and continuous audibility.
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Risk or Challenges
Retention Challenges: The company experienced a peak in churn and attrition in Q4, particularly in the lower middle market segment, which impacted revenue renewal rates. Retention issues were also influenced by external M&A activities.
Lower Middle Market Headwinds: Strategic choices in the lower middle market have led to headwinds, including higher churn and attrition rates. This segment has been a source of challenges for the company.
Customer Acquisition Costs: Although customer acquisition costs decreased by 30%, the company faces ongoing challenges in maintaining efficient acquisition strategies while scaling operations.
Economic and Market Uncertainty: The company’s forward-looking statements acknowledge risks and uncertainties that could materially impact results, including economic conditions and market dynamics.
Dependence on Strategic Partnerships: The company’s reliance on partnerships, such as with SAP and other system integrators, poses risks if these partnerships do not yield expected results or if alignment weakens.
AI Adoption and Trust Gap: The adoption of AI in finance faces barriers, particularly the trust gap among CFOs regarding AI-generated financial statements. This could slow down the adoption of AI-driven solutions.
Supply Chain and Operational Complexity: The company highlighted challenges faced by customers in industries like oil and gas and technology, which involve complex global supply chains and financial operations.
Regulatory and Compliance Risks: The company’s AI solutions must meet strict regulatory and compliance standards, including auditability and transparency, which could pose challenges in product development and adoption.
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Guidance & Outlook
Revenue Growth: For Q1 2026, total GAAP revenue is expected to be in the range of $180 million to $182 million, representing approximately 8% to 9% growth. For the full year 2026, total GAAP revenue is projected to be in the range of $764 million to $768 million, representing approximately 9.1% to 9.6% growth.
Non-GAAP Operating Margin: For Q1 2026, non-GAAP operating margin is expected to be in the range of 18.5% to 19.5%. For the full year 2026, non-GAAP operating margin is projected to be in the range of 23.7% to 24.3%.
Non-GAAP Net Income: For Q1 2026, non-GAAP net income attributable to BlackLine is expected to be in the range of $31 million to $33 million or $0.44 to $0.46 per share. For the full year 2026, non-GAAP net income is projected to be $172 million to $180 million or $2.37 to $2.48 per share.
Free Cash Flow: For 2026, free cash flow growth is expected in the mid-teens, with free cash flow per share growth in the high teens.
Platform Adoption and AI Offerings: Momentum is expected to continue with platform adoption and the launch of Agentic AI offerings, with a steady ramp anticipated as these growth levers gain traction in the market.
Customer Retention and Expansion: Retention is expected to improve in 2026 as lower mid-market headwinds subside and structural initiatives take effect. Enterprise customer net revenue retention is projected to remain strong, supported by platform adoption and multiyear renewals.
Product and Market Strategy: In 2026, BlackLine plans to move towards a standard initial offering for new customers, including reconciliations, tasks, matching, journal risk analyzer, and consolidation underpinned by Studio360 and AI. This approach is expected to drive larger initial deal sizes, enhance customer stickiness, and create more opportunities for cross-selling and AI adoption.
SAP Partnership: The collaboration with SAP is expected to deepen, with initiatives like the integration of SAP's Joule Copilot with BlackLine's Verity agents and expansion into the public sector. This partnership is anticipated to drive momentum throughout 2026 and beyond.
AI Product Launches: Key AI products like Verity Prepare, Verity Collect, and Verity Accruals are planned for launch in 2026, targeting automation and efficiency in financial processes. These products are expected to drive adoption and ROI for customers.
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Shareholder Return Plan
Share Repurchase Program: In the quarter, we returned approximately $34 million to shareholders through the repurchase of 632,000 shares. This brings our full year 2025 total repurchases to over $235 million or 4.5 million shares and underscores our confidence in the long-term value of our business.
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Key Q&A
Q:What drove the inflection in RPO and customer adds above $250,000?
A:The multiyear renewal strategy and newer customers signing longer contracts contributed to the inflection. The company is focusing on digital finance transformation journeys, leading to increased average selling prices and longer-term contracts.
Q:What is the company's strategy regarding AI and its impact on accountants' time?
A:The company sees significant opportunities in automating mundane accounting tasks using AI. They are transitioning from Generative AI to Agentic AI and emphasize cost savings, accuracy, and timeliness. Customers are adopting AI cautiously, focusing on policies and controls.
Q:What are customers adopting in terms of AI, and what are the deal dynamics?
A:Customers are adopting tools like Journals Risk Analyser and Verity Flag, which involve human interaction for review. There is interest in Verity Prepare, but complexities arise due to involvement from CFOs, CIOs, and legal officers. Adoption is influenced by regulatory requirements.
Q:What are the margin dynamics for Q1 versus the rest of the year?
A:Q1 typically has the lowest operating margin due to payroll taxes, bonuses, and sales kickoff costs. However, the company expects to achieve a 24% operating margin for the year, with growth in the next three quarters.
Q:What is the status of AI budgets among enterprise customers?
A:There isn't a defined AI budget, but customers are willing to allocate funds if strong ROI is demonstrated. The company focuses on reliability, trust, accuracy, and security to capture these budgets.
Q:What percentage of customers are expected to adopt platform pricing by 2026?
A:The company expects 25%-35% of customers to adopt platform pricing by the end of 2023, with further growth anticipated by 2026. Adoption is not expected to be linear throughout the year.
Q:How does BlackLine address shareholder value and strategic options?
A:The Board takes fiduciary responsibilities seriously, focusing on performance to benefit shareholders. Management emphasizes delivering value through customer performance and does not comment further on strategic options.
Q:What characteristics help SaaS companies transition successfully to AI?
A:Mission-critical platforms, domain knowledge, trusted brands, secure systems, and proprietary data are key. BlackLine focuses on customer-centric solutions and has a strong partner network to thrive in this transition.
Q:How does BlackLine prioritize customer feedback for product development?
A:The company gathers feedback from leading companies, a customer advisory board, partners, and competitive intelligence. They focus on being fast followers to address gaps and optimize processes based on customer data.
Q:What is the significance of the WiseLayer acquisition?
A:WiseLayer brought high-quality people and technology that aligns with BlackLine's financial close capabilities. The acquisition accelerates innovation and provides rapid AI ROI for customers. The purchase price was under $25 million.
Q:What is the spending uplift from platform pricing?
A:Customers adopting platform pricing see an immediate uplift on day one, with future revenue growth through consumption of additional agents. The model is gaining traction, especially in the upper mid-market and enterprise space.
Q:What are the retention rate assumptions for 2026?
A:The company expects retention rates to improve throughout the year, returning to mid-90s overall. Enterprise retention rates are already at 95%, with some headwinds from M&A transactions.
Q:What is the revenue contribution from Agentic AI offerings in 2026?
A:The primary revenue contribution comes from the uplift in platform pricing. Consumption-based revenue from AI agents is expected to grow but is not a significant contributor in 2026.
Q:What is the expected bookings growth for 2026?
A:The company expects 20% bookings growth in 2026.
Q:What is the contribution of SAP to BlackLine's revenue?
A:SAP customers contribute about 25%-26% of revenue, a steady state expected to continue in 2026. The company is also seeing success with non-SAP customers.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the question about creating shareholder value and strategic options, providing only a general statement about the Board's fiduciary responsibilities and focusing on performance.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI adoption
AI agent
AI offering
BlackLine partner
BlackLine value
Brown
Energy
Google Cloud
National
Ryan
Studio AI
architecture
audit trail
chain thought
choice market
compensation
complexity
customer relationship
deal enterprise
deal leader
deal partner
delivery
digit
future AI
gap
head count
integration SAP
intelligence context
judgment
line target
market engine
partner ecosystem
pillar
platform approach
platform deal
seat booking
shift platform
success renewal
task
truth
usage AI
value seat
world organization
BL Transcript
BlackLine, Inc. (BL) Q4 2025 Earnings Call Transcript
Positive2-11
The earnings call highlights strong financial performance, with a 30% decrease in customer acquisition costs and a high enterprise customer revenue renewal rate of 95%. The positive sentiment is reinforced by the strategic shift to platform pricing and AI innovations, which are gaining traction. However, management's avoidance of directly addressing shareholder value questions slightly tempers the outlook. Considering the company's solid performance metrics and optimistic future guidance, a positive stock price reaction is expected, especially given the market cap's moderate size.
BlackLine, Inc. (BL) Q3 2025 Earnings Call Transcript
Positive11-7
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, Inc. (BL) Presents At Citi's 2025 Global Technology, Media And Telecommunications Conference Transcript
Neutral9-3
BlackLine, Inc. (BL) Q2 2025 Earnings Call Transcript
Positive8-6
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%).
BL Slides
BL Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
