BL - Earnings call transcript Q3 2017

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Operator

Good day, ladies and gentlemen and thank you for standing by. Welcome to the Third Quarter 2017 BlackLine Earnings Conference Call. At this time all participants are in a listen-only mode, to prevent background noise. [Operator Instructions].

As a reminder, this conference is being recorded.

to Investor turn Relations. like Maria call would with Riley I welcome the and to Now

Maria Riley

Tucker, Executive Good participation Partin, on Therese today. and Chief With and afternoon thank me the you Financial Officer. call and of BlackLine; Officer for your Founder Mark Chief is

within Before started, plans, are including conference facts, those outlook call. like our future I meaning date to statements the performance, that certain the historical we during are of this Private as only These statements Reform not and the get objectives forward-looking expected of made this of Act our conference forward-looking would Securities note call of that regarding represent statements Litigation XXXX.

in we be otherwise A measures discussed will all with discussion today. the versus financial or reconciliation SEC on investors.blackline.com unless expressly do could at press this as non-GAAP measures our call of current as differ statements, on because X-K whether GAAP found exception are revenue, on and believe release, with alter is not based obligation events and undertake We Investor currently otherwise, and or statements financial of future the stated, Relations website expectations materially and to we law. forward-looking update Also, our on forward-looking have by of information, use our results available applicable or any which made why results our result While the disclaim our a subject we may be filed Form uncertainties. a any showing statements non-GAAP new to required non-GAAP. are risks schedule are except actual reasonable,

turn Therese over to to will begin. I call the Now

Therese Tucker

revenue and quarter and customers, us We thanking new of delivered third want and you results, us referrals strong the XX% evangelism thank begin support BlackLine, and please for you today. bottom outperforming line. Good up. growth keep on by I your continues which bring achieving joining ongoing everyone to afternoon all of to for it

expected. I customers Our focused progress to industries new team that remained tell I that you XXX has the on net against we and dynamics we we new service discussed seeing had The our that the unfolded from thrilled customer we serve customers that’s We quarter multiple initiatives XXXX am please plan to quarter. midmarket last in am milestone and executing globally BlackLine. and a enterprise as now for geographies. over X,XXX and added report are

key globally. to see geographies. particular we In European unseasonal were We strong strength continue demand in pleased with

in Hong Close our to the where continue secured expand for region. our customer signed business APAC first we in Smart our We Kong and win first

included I tell to new Now and highest and competitive enjoy remain you customers. takeaways. I high you our rates this competition I know quarter that of love number that am win our getting happy

And continue sizes a conversion also improve our larger saw customer growing strength deal We pipeline after customers lastly, that several has changes attention and meeting to the have is demand. been approach our and We you heard before, improvements with experience more have to needs BlackLine Overall customer sales implemented is to recourses of we strategic months as recent streamline adopted very We constantly and driven on refocused area of feedback between so far strategic our to tailored better. our and BlackLine. supportive. we to and sales get see and productivity customer. and we enhance where by focus we to to This core say the products in due an have success striving products can in our from core rates products. me necessary and ensure meet rebalanced are

make Close. to Smart Smart executing area. this with the Matching pleased key our We XXXX to we together Transaction how products, Throughout team quarters and make in come continue for specifically date strong progress against saw strategic Close initiatives. We progress with of demand with solid one the our has to strongest are quarter our

for not hub quarter. did close remains pipeline deals we in this company ICH inter the any strong, While

the work However, early we made ecosystem, for opportunity. our It partner and which large growth strategy. on our market, develop have this and solid a to we evolving honing skills is progress lot towards building pricing still this capitalize internal days means of ahead,

BlackLine continuing with projects. can to recognize transformation are bring We finance closely who partners to value work the

fact, our quarter notable you recent that the to new were are ten that believe a and with really signed stand I conjunction customers would in like few of seven wins third largest all share out. partner. customer In in deals with a

annual adding switch provider deep BlackLine SAP. BlackLine realizes a that becoming rest leading accountants and products with selected our closing their only controls counters. unified our was for of $X value for reconciliations, global to partnership revenue but of use was company and process. competitive a of digital part as to structure, platform for billion being to of banking account of business their more This entire than They is Ease key strategic cloud major factor not be provide vision. this that to the committed First, partner with a are need and

of days with drastically process. leverage flexibility was BlackLine modernize BlackLine’s that the to their rollout. global customer $XX A our factor and annual reduce selected them capabilities Second, in efficiency brand global This to to decision improve accounting in over excited their close. billion is give the publically key and entire automate would pharmaceutical auto-certification the traded BlackLine revenue managing to

remains BlackLine strategic particular financial by $XX They of were selected technology competing you a time a improve real solution. XXX to in of their share visibility financial like a Europe and replace The to overall time that part key annual I with I six seeing them on adoption And continues got experience in of spend tremendous into processes. thought vision to they The gone customer their at event products and strong CFOs looking roadmap. finally, to is leaders. was had in would me only invited for overall core because jazzed were accounting some efficiency, BlackLine’s from a environment provide offices. ways and to They are with partners I Fortune BlackLine billion demand live met Third, our and services their weeks. among for enthusiasm marketing revenue customers, a with we Close Smart personally. and with both provider they

building expertise As our organization. business, we Most and to brining a Officer. new we scale appointed to we are continue Strategy team new Chief the recently the

their BlackLine an potential Coley she our from extensive continuous us our Tammy many joint instrumental that long Tammy advocate time and has full with for In years Tammy’s be journey. will thrilled accounting of are their new customers a customer. products. experience has helping on has We been in achieve role,

a We and have brings scaling broad expertise Kevin in SolarWinds. valuable the business. our also addition expanded Kevin with insight of CEO of the cloud Thompson,

tap We to able be experience. are delighted into to his

approach of Conference that appreciate in year we have you As to support our XXXX our upcoming at progresses we made end, your forward in far we our and recent on we with pleased believe achievements interest newer weeks. many good User thus and We months. seeing look in two and company our in are initiatives

Mark the the Now, to I’ll financials. over to call discuss turn

Mark Partin

and Therese, everyone. afternoon good Thanks

less based remarks total, Smart we That reminder, the higher XX% total quarter solutions. was added to quarter with the levers September which and than third XXX as attrition issues a year-over-year. non-GAAP. business, to entirely reach rate performance our globally deals highlights Total identified our of we was Hub. of a solid timing with million, top of quarter. pleased and XX% net to customer a XX% growth today revenue in results. the impacted grew to year-over-year. customer growth This Intercompany other better XXX% revenue from quarter. of contributed global this last Transaction both revenue approximately brings We in XX% are new to exception and bottom growth Matching, at non-user level expected Strong net strategic is our including total products quarter, growth to line impacted for becoming third all representing during XXX% customers increasingly International BlackLine not number financial user also results. Key total growth following: continued than international by users by rate This important of XXXX As and quick user better XX, the achieving XXX,XXX, XX% Close we up my believe over which strong our are focus the XXXX. across retention delivered mentioned related to year-over-year revenue, QX, We last $XX like said, to line enterprise numbers the driven drive representing of We continued our grow dollar compared expected out count mid-market. representing growth include growth demand in of The

of the margin to improved strong. P&L, XX% Total revenue. Now gross XX% operating returning to remains of expenses

continue we benefits scale and see demand gen and software our operating investments and leverage engagement to as platforms customer even increased We of the global reach, in initiatives.

as expect of we projects fluctuate leverage continue R&D basis name events to expansion, overall an basis, the to quarter-to-quarter on on timing operating While such gain certain office to marketing a we investments as can and a few scale. annual

approximately $X.X cash our flow invested share us of growth, marketable compares million for million loss line This We cash negative solid office or using third expanded approximately $X.XX quarter $X.X basis of using per XX.X million shares. $XXX We Our generated $X little $X.XX QX our XX.X to under $X.X top-line year. a our allowed included This ended last to of CapEx, over a narrowed from exceed per and the build operating in million a the leverage and million We out corporate which margin net with million to We improved $X.X and bottom third strong cash of million. space. to cash million for net on free in our gross shares the or in expectation. equivalence securities. loss brings quarter share a million quarter $X.X operations.

with be year to GAAP fourth guidance compared million Total of to of the in to $XX turn This range to expected I’ll XX% and XXXX fourth XXXX. the quarter of million. growth QX. quarter XX% is Now revenue to a our rate for $XX year-over-year the full reflects starting

EPS. approximately net and On non-GAAP the bottom breakeven both be we income line, for to expect

our if please million purposes, note negative. report it we versus XX XX.X will million positive basic that is fully diluted income, net shares count modeling share For be slightly shares

expected turn on with $XXX expectation to million our full cash remain to than reflects last rate approximately raising Utilizing to be better year. are Total approximately $XXX loss of we million. GAAP net count quarter expected XX% expected share XX.X in per outlook $X growth share we QX. is million. This be the average over weighted we to Additionally, in a of results, flow track for positive net XX% to is XXXX basic to be in Non-GAAP non-GAAP year. loss our free a million, revenue range $X.XX. expected our third the With of

Now your Therese and questions. to happy be would take I

Operator

first from you. with is our Bhavan Thank question Blair. Instructions]. Suri [Operator And William

line Your is open.

Bhavan Suri

can you guys, okay? hear Hey me

Mark Partin

hi Bhavan. yeah, Oh

Bhavan Suri

Mark. accounting two job efficiency the Hey areas, because Congrats, shifting per obviously, you one want to was the per Therese count, away on nice touch obviously I reasons to bring fact pricing a started host seed you and basis there. for of from you seed department. the in know

say think more that of years of one the mix revenue? a how And it? that’s progressing the in percentage as end QX? quickly What Just you sales follow-up. to heading, where percentage color then was a on next overall two then up And three as on do over little

Mark Partin

Sure, thanks Bhavan.

terms amount we in user saw we quarter strategic one was again It QX highest product. the on strategic that once the the products, don’t mentioned in the ones progress dollar of yet were on quarters in pleased a know we our as You the sell you base. with of

growth we’re So is the good least of getting uptake, and then at user good increase just deal price those toggles. increasing and getting in one the we’re momentum or size that in

those It user just as said, So growth. one we metric of important we levers. think becomes less a the as becomes of

Bhavan Suri

the for know for the (b) deals. expected impact long Hub. you. force okay, products maintaining us then I to mix. that (a) pipeline of giving how as the larger of of changes, you focus sales of I Got sort the the in off service sales of while you sell you and some you larger look you obviously being on is it, how then And quarter guess you the at customers, also let but got every Intercompany some to sort that the We’ll deals, some not issues said played sort sales to, hook some the some want Thank out has you it. know where addressed of you talked Therese, addressed, term turning about especially

Therese Tucker

quarter say getting of you to Wow! That at far, the organization still was would bigger sales I handling deals alright. the okay. want deals, ongoing, our better share and get larger know again six a our think but it pipeline and is Large of make approach want am that – within to more results like I continue me, so processes am to the deals questions this but that strategic anything. I rarely with happy Bhavan. yet, I the changing improvement pleased some we’re up I better. I I with those

ICH the to on we strong see Now a very pipeline. continue

position. still partners. with demand think We we’re continue in a terrific build to We

our we way price can strategies it in such and that value evolving done. maximize have order in sure further, get to people both make a that We structured it are

improvements not I know again, all I you So with think yet. happy in anything good areas. am

Bhavan Suri

That job. guys. good was it. Thanks a Therese, I appreciate thanks

Therese Tucker

Bhavan. Thanks

Mark Partin

Thank you.

Operator

Thank you. Brent question the Bracelin of line next from And of Capital. comes KeyBanc our

Your open. line is

Elise Testa

for Elise today. on Hi, Brent this is

what’s the understand things some to initiatives of competitive is know what’s your you with number partnerships was said that or driving it of of One going takeaways. about kind or talk something Can of your highest there? me it the help do you that? on interesting recent Is was you

Therese Tucker

really a good That’s Elise. question

played BlackLine believe in a nature I shifts. that platform strategic those know of You part big the has the

unique that doing leadership, was and they like that spoke is they automation our ability, our really, very customers sophisticated we’re of about accounting key continuous actually different our as take and I of is and one in I that incorporate anything finance where the it a point can what very The in and and a that partnership I we accounting into what term the I ability customer departments thought we so and so that long think mean seen for number is thing vision their they a it. see they’ve regard I customer than bought other offer that engines else. example more auto the particular certification of,

Elise Testa

Close. Great, and kind of similar Smart question on the

Smart You know Transaction Matching product? ICH. kind highlighting inflection Close obviously of you’ve and in driving it that’s was the What been guess the I

Therese Tucker

off Process about of is to talking going know ERP I am of here RPA, much Smart the You by because inside has lately. about probably CFO it’s been my an product, really about the too I ERP. Close automation quiet Robotic am really get hyped Automation cut but inside automation and

Smart we So gives and concrete utilize see automation exactly to the what ways looking customers actually a board sense in very Close that’s for them. across

Mark Partin

things very market, acquisition to Yeah, and Close were that. those the date of was to We It’s one of starting from this We Smart to sales are our beginning alongside demand. to platform product the about together. and of now pipeline. We’ve add and some year the close there we’re the in the of motion, it partnering, go-to also excited those the able deals. building put training, seen I’d come all knew the being

Elise Testa

Great, thank you guys.

Mark Partin

Yeah.

Operator

you. And question line Peterson James. Thank the from next with of is our Brian Raymond

line is Your open.

Brian Peterson

Hi thanks taking guys, for questions. the

wanted to I dynamic. from a It may on competitive stance. So the different be follow-up

is just situations? from you’re competitive displacing taking product that actually referenced or you clearly pure Just of ERP deals. Is a kind me-too takeaways the share in plays? of what more what I lot from am in your curious, a curious displacing? some So those the

Therese Tucker

very are happy the have the a the I not about name and we to switches situation. competitor of any But never in from try badmouthing am given switches. who know policy we You so

Brian Peterson

Okay, for maybe a And you. one quick Therese. Mark, thanks

would the the about Just going the some a a have just on might offsets Thanks. to there Conference we’re all there are thought associated quarter. side of expense be that that the in User I think I to should hit weeks. But or with expenses few forward any how fourth in looking

Mark Partin

thank question, you. great Yeah,

of through we our confident we still marketing that did significant and even the so manage QX we’re can know of target year, as our is You breakeven that. most one

Our Head is have we and is listening. is of up that great in that’s doing coming a Marketing making sure he couple of a He sponsorship job weeks. good

be breakeven. remain of that’s we think and might to you I for our you again attending know some QX – target

Brian Peterson

Thanks Got it. Mark.

Operator

And you. Thank our Baird. question from line next the Oliver is of with Rob

Your line is open.

Rob Oliver

Hi guys, thanks question. taking my for

impact kind quarter First a that I had and follow-up had just sort the wanted of then what the very on about to SAP what partnership of ICH. that driver I a was quick and Thanks. and on ask

Mark Partin

the our yeah. in approximately again up partnership in to of that with through SAP point It with XX% Yeah, were happy our partnership very picked revenue one market. QX we and

Rob Oliver

then some sales to about on did those Therese, know And just response Okay. time call that. in spent you I job the question ICH and on you changes talking on good last Bhavan’s a

the Just possible of do maturation wondering, deals in or guys force Thank ICH, the dynamic. terms – has sales the just ICH of you much. after towards reset there the natural know how to kind I’m strategic and more products of is very of the towards more absence turned being with it to it that last much just is you trying market understand quarter. less

Therese Tucker

question. great a That’s

to think and You a general that of I’ve to sort know so of like, reality. its because I and lumpy it’s would predictable new than that come be process I with going its in market grips a that less

to for do both line. a to is that on in now that both and our for right us. right, the longer so sure products sell actually where so platform ICH we have enormous deals, Now answer and rebalancing, an have we partners it are that collaborating resources all and made people ducks allow on core do we but TAM our we the internal all had experts force proper but we right sales so approach, did we get sales of take still all with the the consultative, can right because its the that’s also We that

Rob Oliver

again. Thank

Operator

with And is the next question of Tillman from SunTrust. you. Terry our Thank line

pen. is line Your

Terry Tillman

hi Therese there I Hey, and to something. Therese, want Mark. you tell

Therese Tucker

Yeah.

Terry Tillman

If you’re I okay. am never actually happy, happy, not

I to competitive and be something Therese. I’ll do ask yet two It two-part getting that less a suppose guys am greenfield sales person interesting and now nothing Does with is is to off the I future my the enterprise an start ask cycle my it and to it to off you’re takeaways. to sticky, And I questions. like has these say about going like? and just because chest about it dynamic see you’ll is to in replace. first it’s software the more rip either. secondly, you want competitive So fourth this going get be takeaways, because does question opportunities what have taking end longer? up be relates the to

Therese Tucker

That’s interesting.

do that. taking I not regular, cycles on off, alright; are I seen longer, competitive sales First that okay. have versus I not believe the switches

what a client a different be a you issue, at we cycle sales know involved might happens before okay. get internally Now in

them they potential terms BlackLine. of right now a opportunity, BlackLine, so somebody greenfield tool up like the very to has that tool easy but Now when say potential in a and not to what step I and they want this the the that see it do for should full greenfield of will makes is lessened, like

Terry Tillman

to you Okay, great, and this. leave of out not Mark,

of helped. that about timing You did your in interesting prepared say deals remarks something

didn’t greater deals would this deals, you last close early got benefit and had a because of job. some maybe some you this was nice maybe if again suggest in better linearity Thanks that that that than so, quarter. of quarter, an number from So and normal

Mark Partin

and Terry as answered. asked usual Yeah, you

us, exactly quarter, with a us the results the we better gist that. the of linearity I got for We quarter slightly saw the got in what you So for happy jumpstart of close which The generated good that. quarter. the think a was We deals. on some benefit was were to early so

Terry Tillman

thanks. Alright,

Therese Tucker

Thanks Terry.

Operator

Thank you.

line Mark comes of Our Morgan. next the from with Murphy question JP

is line Your open.

Matt Costa

implementing your nice the vision. enthusiasm a Maybe what’s on mentioned are here adoption anecdotal Murphy. when for of of afternoon. really sort it How Mark your Congratulations aligned their and is accounting this should what vision the on if tremendous This they good adopting Therese of Hi, evidence and accounting vision? buyers. seeing continuous just quarter refresher, they for Matt continuous of you examples of sort Is what of able are know to Costa it? for be or any you are customers earlier your of resonating maybe with asking sort with ROI

Therese Tucker

That’s thanks almost question. soft great That’s Matt. like a pitch, a

for the that are accounting of and but so out them the market overtime, about closed company taking to to need go which our People knows make mess, produce to in financial results, of the immediately manual are results, faster horrible the every they Okay, them BlackLine, a really integrity and the their that seen tool degree that and is applying alright. their is they wrote better is all process the alright. work the essentially really things that like continuous recognize BlackLine spreadsheets, is degree that there to things in using connect make we’ve which they one

closing to their words, the necessarily financial yeah, results, material So in a unrelated they is weakness, integrity don’t go need. think ‘oh that see they if that.’ of books the then we need company their other has had If they a

like it’s books, forward, customers our a does results. of what the month these be all one, in helps it continuous timing. processing to to you number of close. it to would bringing their accounting a have talk feed much process data it’s able so story and have that start When in them have as can when point things Then fact processes to exceptions it ultimately so that you they the throughout it’s And that becomes that that close done financial about you time to connect at is can time be real set a that available, smaller time in and look the and ultimately into

achievable near Now, but there, term, the term the goal. out systems necessarily that’s of longer it’s the some not if in antiquated

stop I there Now, should Mark.

Mark Partin

makes It to no. No, yeah. me, sense

Therese Tucker

this, to use to time when Okay, so that’s continuous ability about really about. software available what is accounting, in think alright, real anything you that we’re automate

an also seeing customers just some our from our and prospects, adoption this of idea an and of and partners. We’re understanding of framework, sort not but

materials. continuous talk You are to accounting. about starting marketing may have seen They some of SAP’s

framework So I’m for this operations becoming as idea, moving your that. a it’s the into century, really of and excited about go-to sort

Matt Costa

It’s thank you, following for And that. Great, up bit. thank helpful. just little you a very then

SAT Runbook So it one been to some additional also or the benefit just more your of you you to you the of a smart out gave of new expertise. interest R&D or was you that or from reasons either was me wining acquired get– Help has it what good how technical over efforts was acquisition, those sort in contributing. guys Are a expertise good and BlackLine it there are deals seeing fit clients,

Therese Tucker

the I that’s Close like that, Smart good. smart guys,

need have inner software they specific the an ERP on when expertise. you expertise and development right automates the know you actually deep that SAP have environment working in very ERP, You

And so that there. with BlackLine both different of does SAP that’s Close product us, been very but for Smart platform that the the versions the interfacing core are with out also the good for

then of inner software along and projects any makes quickly, go better because project reduces live always it faster more is in and it connectivity your makes things course that risk. So customers good move

Matt Costa

thanks appreciate I Very answers. the it. for good,

Mark Partin

Oh yeah.

Operator

Goldman Hulsing with Jesse Thank is you. the next of Sachs. And line our question from

is Your line open.

Unidentified Participant

Kevin for question. for is taking Jesse, my this thanks on Hi,

of user see ads growth forward? like What’s level your below going You the user that expectations. you to being about talked would

Mark Partin

core that products becoming don’t and those strategic to are I and what’s give important for Well, clients number to footprint, want of I obvious the that on growth I don’t having users But are want bigger guide strategic for more important. our the reasons; us will size, drivers it. say in to deal all you a

I just a you rather and would not one it’s So number. lever forward give

Therese Tucker

is world accountant. would I everybody like But in an who the

Mark Partin

wants she million them. Yeah, XX.X of

Therese Tucker

Yep.

Unidentified Participant

progressing How your that can you with about Got it, relationship that is sense. your expectations? Deloitte. versus bit makes talk And recent more a

Mark Partin

Well you out of remarks if deals our quarter, XX partners largest noticed this worked you earnings actually know that actually, in seven last we on with of okay. our

across So partnerships. the all that’s essentially

to we specifically, help and success with lot with their were finance Now transformation day right going did a controllership company and them, BlackLine they we one them. Deloitte New was how problems in companies something and York Deloitte digital in that have all really the initiatives can really market of for good their We interested see seminar some recently a received. that being well had that digital and solving have buzz and right; creating help called very in

we with continue go-to-market Deloitte. So to

We of all we appreciate our continue build pipelines to and partners.

Unidentified Participant

you. Great. Thank

Mark Partin

you. Thank

Operator

last you. question the line Thank And our is Patrick from of JMP Securities. Walravens with

line is open. Your

Natasha Asar

Hi, this M&A? you Could for you about tell how Pat. bit little on Natasha is about actually thinking a are us

Therese Tucker

Oh yeah.

Mark Partin

Yeah, can. I

and we the It good Runbook but XXXX. We love plans M&A, So we technology to acquisition in people. no pretty the in were the up a and are always. found have opportunistic be moment was this for for vocal about the know particularly the we we cultural At past, the that picked fit IPO. W us. in you

Therese Tucker

evaluate. We

Mark Partin

yeah. evaluate, We

Natasha Asar

identified customer I scaling sales last gaps that on took a service little were force, about one Great, thanks. more that? then? the you Actually you hit. What question, more since us tell your quarter the when progress a have Can

Therese Tucker

understands We sure, at Yeah one from make are to I not is all around something, some their across happy, new of of sell terrific of built tailored alright. has think more know it from deep lifespan customer, for we doesn’t the is account transaction Number then the the we with one. the doing made successes we order to the in three, have rules. where one those to And asked relationship make alright. so meet the sort and the a that they exec customer approach the it person that them transitioning the you has that and mark, to of to number company, support softened in and entire better sure we relationship changes sort brought have give the if we had and the strategic we that sure procurement learn customer to make you know and customer is both to a to do questions managers that that here technology number day we’ve our situation idea somebody person’s the products some we year have gets with the process, area department that a And somebody understands called rules right. account all into two customers. over, soften are would specialization that be is away accounts, of needs within that an it involved different actually sense used it – of roadmap, their overall it’s Number of experts job to that nice

Natasha Asar

Great, thank much. so you

Mark Partin

Thank you.

Operator

And gentlemen turn ladies final and back the call would for to you. Therese like Tucker to I her remarks. Thank

Therese Tucker

partners Well, you thank them. send that you follow you. us us hope We continue Thank and want everyone for joining and we us referrals, us, be with to invest and today. in all please your us

Operator

our this And and conference. gentlemen, concludes ladies

Have You a evening. wonderful all disconnect. may

BlackLine (BL) 2 Nov 172017 Q3 Earnings call transcript