BlackLine, Inc. (Nasdaq: BL), today announced financial results for
the third quarter ended September 30, 2023.
“This was a busy quarter for BlackLine marked by
solid financial results and progress against key initiatives,” said
Owen Ryan, co-CEO of BlackLine. “While our work is far from
complete, we are confident that the steps we are taking will drive
a higher level of execution across the organization and deepen our
relationships with customers and partners across the globe.”
“BlackLine is uniquely positioned to inspire, power
and guide digital finance transformation,” said Therese Tucker,
co-CEO of BlackLine. “We firmly believe that our relentless focus
on customer success combined with innovative and automated
solutions, positions us as the ideal partner for the Office of the
CFO.”
Third Quarter 2023
Financial Highlights
- Total GAAP revenues
of $150.7 million, an increase of 12% compared to the third quarter
of 2022.
- GAAP net income
attributable to BlackLine of $11.9 million, or $0.19 per diluted
share compared to GAAP net loss attributable to BlackLine of $20.0
million or $(0.34) per diluted share in the third quarter of
2022.
- Non-GAAP net income
attributable to BlackLine of $37.9 million or $0.51 per diluted
share compared to non-GAAP net income attributable to BlackLine of
$15.1 million or $0.21 per diluted share in the third quarter of
2022.
- Operating cash flow
of $37.0 million, compared to $24.2 million in the third quarter of
2022.
- Free cash flow of
$31.4 million, compared to $16.6 million in the third quarter of
2022.
Third Quarter Key
Metrics and Recent Business
Highlights
- Added 89 net new
customers in the third quarter for a total of 4,368 customers at
September 30, 2023.
- Expanded the
company’s user base to 381,892 users at September 30,
2023.
- Achieved a
dollar-based net revenue retention rate of 105% at
September 30, 2023.
- Received Tech Cares
Award from Trust Radius for the fourth consecutive year.
- Hosted BlackLine's
annual customer conference, BeyondTheBlack, unveiling new
innovations including: Consolidation, Electronic Invoicing
Presentment and Payments (EIPP) for Accounts Receivable Automation,
and AI-Enabled Intercompany Predictive Guidance.
- Announced expanded
connectivity and unification with Microsoft's Ecosystem through an
enhanced D365 connector and Teams integration.
The financial results included in this press
release are preliminary and pending final review. Financial results
will not be final until BlackLine files its Quarterly Report on
Form 10-Q for the period. Information about BlackLine’s use of
non-GAAP financial measures is provided below under “Use of
Non-GAAP Financial Measures.”
Financial Outlook
Fourth Quarter 2023
- Total GAAP revenue
is expected to be in the range of $153 million to $155
million.
- Non-GAAP net income
attributable to BlackLine is expected to be in the range of $39
million to $43 million, or $0.52 to $0.58 per share on 74.6 million
diluted weighted average shares outstanding.
Full Year 2023
- Total GAAP revenue
is expected to be in the range of $587.5 million to $589.5
million.
- Non-GAAP net income
attributable to BlackLine is expected to be in the range of $133
million to $137 million, or $1.79 to $1.84 per share on 74.4
million diluted weighted average shares outstanding.
Guidance for non-GAAP net income attributable to
BlackLine and non-GAAP net income attributable to BlackLine per
share does not include the impact of the provision for (benefit
from) income taxes related to acquisitions, amortization of
acquired intangible assets, stock-based compensation, the
amortization of debt issuance costs, the change in fair value of
contingent consideration, transaction-related costs, and the
adjustment to the value of the redeemable non-controlling interest
to the redemption amount. Reconciliations of non-GAAP net income
attributable to BlackLine and non-GAAP net income attributable to
BlackLine per share guidance to the most directly comparable U.S.
GAAP measures, or net income (loss) attributable to BlackLine and
net income (loss) attributable to BlackLine per share, are not
available on a forward-looking basis without unreasonable efforts
due to the unpredictability and complexity of the charges excluded
from non-GAAP net income attributable to BlackLine and non-GAAP net
income attributable to BlackLine per share. The company expects the
variability of the above changes could have a significant, and
potentially unpredictable, impact on its future GAAP net income
(loss) attributable to BlackLine and net income (loss) attributable
to BlackLine per share.
Quarterly Conference Call
BlackLine will hold a conference call to discuss
its third quarter results at 2:00 p.m. Pacific time on Thursday,
November 2, 2023. A live audio webcast will be accessible on
BlackLine’s investor relations website at
https://investors.blackline.com. Participants can pre-register for
the conference call. A replay of the webcast will be available at
https://investors.blackline.com for 12 months. BlackLine has used,
and intends to continue to use, its Investor Relations website as a
means of disclosing material non-public information and for
complying with its disclosure obligations under Regulation FD.
About BlackLine Companies come
to BlackLine (Nasdaq: BL) because their traditional manual
accounting and finance processes are not sustainable. BlackLine’s
market-leading cloud platform and customer service help companies
move to modern accounting by unifying their data and processes,
automating repetitive work, and driving accountability through
visibility. BlackLine provides solutions to manage and automate
financial close and consolidation, accounts receivable, and
intercompany accounting processes – inspiring, powering, and
guiding large enterprises and midsize businesses on their digital
finance transformation journeys.
More than 4,300 customers trust BlackLine to
help them close faster with complete and accurate results. The
company is the pioneer of the cloud financial close market and is
recognized as the leader by customers at leading end-user review
sites including G2 and TrustRadius. BlackLine is a global company
with operations in major business centers including Los Angeles,
New York, the San Francisco Bay area, London, Paris, Frankfurt,
Tokyo, Singapore, and Sydney.
For more information, please visit
blackline.com.
Forward-looking Statements
This release and the conference call referenced
above contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. In some cases,
you can identify forward-looking statements by terminology such as
“may,” “will,” “should,” “could,” “expect,” “plan,” anticipate,”
“believe,” “estimate,” “predict,” “intend,” “potential,” “would,”
“continue,” “ongoing” or the negative of these terms or other
comparable terminology. Forward-looking statements in this release
and quarterly conference call include, but are not limited to,
statements regarding BlackLine’s future financial and operational
performance, including, without limitation, GAAP and non-GAAP
guidance for the fourth quarter and full year of 2023, the impact
of progress against certain key initiatives, our expectations for
our business, including the demand environment, BlackLine’s
addressable market, market position and pipeline, our international
growth, and our relationships with our customers and partners,
including opportunities to expand those relationships.
Any forward-looking statements contained in this
press release or the quarterly conference call are based upon
BlackLine’s historical performance and its current plans, estimates
and expectations and are not a representation that such plans,
estimates, or expectations will be achieved. Forward-looking
statements are based on information available at the time those
statements are made and/or management’s good faith beliefs and
assumptions as of that time with respect to future events, and are
subject to risks and uncertainties. If any of these risks or
uncertainties materialize or if any assumptions prove incorrect,
actual performance or results may differ materially from those
expressed in or suggested by the forward-looking statements. These
risks and uncertainties include, but are not limited to risks
related to the company’s ability to attract new customers and
expand sales to existing customers; the extent to which customers
renew their subscription agreements or increase the number of
users; the impact of current and future economic uncertainty and
other unfavorable conditions in the company's industry or the
global economy, the company’s ability to manage growth and scale
effectively, including entry into new geographies; the company’s
ability to provide successful enhancements, new features and
modifications to its software solutions; the company’s ability to
develop new products and software solutions and the success of any
new product and service introductions; the company's ability to
effectively incorporate artificial intelligence and machine
learning technologies (AI/ML) into its platform and business and
the potential reputational harm or legal liability that may result
from the use of AI/ML solutions and features; the success of the
company’s strategic relationships with technology vendors and
business process outsourcers, channel partners and alliance
partners; any breaches of the company’s security measures; a
disruption in the company’s hosting network infrastructure; costs
and reputational harm that could result from defects in the
company’s solution; the loss of any key employees; continued strong
demand for the company’s software in the United States, Europe,
Asia Pacific and Latin America; the company’s ability to compete as
the financial close management provider for organizations of all
sizes; the timing and success of solutions offered by competitors;
including competitors' ability to incorporate AI/ML into products
and offerings more quickly or successfully; changes in the
proportion of the company’s customer base that is comprised of
enterprise or mid-sized organizations; the company’s ability to
expand its enterprise and mid-market sales teams and effectively
manage its sales forces and their performance and productivity;
fluctuations in our financial results due to long and increasingly
variable sales cycles, failure to protect the company’s
intellectual property; the company’s ability to integrate acquired
businesses and technologies successfully or achieve the expected
benefits of such transactions; unpredictable and uncertain macro
and regional economic conditions; seasonality; changes in current
tax or accounting rules; cyber attacks and the risk that the
company’s security measures may not be sufficient to secure its
customer or confidential data adequately; acts of terrorism or
other vandalism, war or natural disasters including the effects of
climate change; the impact of any determination of deficiencies or
weaknesses in our internal controls and processes; and other risks
and uncertainties described in the other filings we make with the
Securities and Exchange Commission from time to time, including the
risks described under the heading “Risk Factors” in our Annual
Report on Form 10-K for the year ended December 31, 2022 filed with
the Securities and Exchange Commission on February 23, 2023, and
our subsequent Quarterly Reports on Form 10-Q. Additional
information will also be set forth in our Quarterly Report on Form
10-Q for the quarter ended September 30, 2023. Forward-looking
statements should not be read as a guarantee of future performance
or results, and you should not place undue reliance on such
statements. Except as required by law, we do not undertake any
obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future
developments or otherwise. All of the information in this press
release is subject to completion of our quarterly review
process.
Use of Non-GAAP Financial
Measures
To supplement its consolidated financial
statements, which are prepared and presented in accordance with
U.S. generally accepted accounting principles, or GAAP, BlackLine
has provided in this release and the quarterly conference call held
on November 2, 2023 certain financial measures that have not
been prepared in accordance with GAAP defined as “non-GAAP
financial measures,” which include (i) non-GAAP gross profit and
non-GAAP gross margin, (ii) non-GAAP operating expenses, (iii)
non-GAAP income (loss) from operations, (iv) non-GAAP net income
(loss) attributable to BlackLine, Inc. (v) diluted non-GAAP net
income (loss) attributable to BlackLine, Inc. per share, and (v)
free cash flow.
BlackLine’s management uses these non-GAAP
financial measures internally in analyzing its financial results
and believes they are useful to investors, as a supplement to the
corresponding GAAP measures, in evaluating BlackLine’s ongoing
operational performance and trends and in comparing its financial
measures with other companies in the same industry, many of which
present similar non-GAAP financial measures to help investors
understand the operational performance of their businesses.
However, it is important to note that the particular items
BlackLine excludes from, or includes in, its non-GAAP financial
measures may differ from the items excluded from, or included in,
similar non-GAAP financial measures used by other companies in the
same industry. Non-GAAP financial measures should not be considered
in isolation from, or as a substitute for, financial information
prepared in accordance with GAAP. Investors are encouraged to
review the reconciliation of these non-GAAP measures to their most
directly comparable GAAP financial measures. A reconciliation of
the non-GAAP financial measures to such GAAP measures has been
provided in the tables included as part of this press release.
Non-GAAP Gross Profit and Non-GAAP Gross
Margin. Non-GAAP gross profit is defined as GAAP revenues less
GAAP cost of revenue adjusted for the amortization of acquired
developed technology, transaction-related costs (including, but not
limited to, accounting, legal, and advisory fees related to the
transaction, as well as transaction-related retention bonuses), and
stock-based compensation. Non-GAAP gross margin is defined as
non-GAAP gross profit divided by GAAP revenues. BlackLine believes
that presenting non-GAAP gross margin is useful to investors as it
eliminates the impact of certain non-cash expenses and allows a
direct comparison of gross margin between periods.
Non-GAAP Operating Expenses. Non-GAAP operating
expenses include (a) non-GAAP sales and marketing expense, (b)
non-GAAP research and development expense and (c) non-GAAP general
and administrative expense. Non-GAAP sales and marketing expense is
defined as GAAP sales and marketing expense adjusted for the
amortization of intangible assets, stock-based compensation,
transaction-related costs and impairment of cloud computing
implementation costs. Non-GAAP research and development expense is
defined as GAAP research and development expense adjusted for
stock-based compensation and transaction-related costs. Non-GAAP
general and administrative expense is defined as GAAP general and
administrative expense as adjusted for the amortization of
intangible assets, stock-based compensation, the change in fair
value of contingent consideration, transaction-related costs, legal
settlement gains or costs and impairment of cloud computing
implementation costs. BlackLine believes that presenting each of
the non-GAAP operating expenses is useful to investors as it
eliminates the impact of certain cash and non-cash expenses and
allows a direct comparison of operating expenses between
periods.
Non-GAAP Income (Loss) from Operations. Non-GAAP
income (loss) from operations is defined as GAAP income (loss) from
operations adjusted for the amortization of intangible assets,
stock-based compensation, the change in fair value of contingent
consideration, transaction-related costs, legal settlement gains or
costs, impairment of cloud computing implementation costs and
restructuring costs. The company believes that presenting non-GAAP
income (loss) from operations is useful to investors as it
eliminates the impact of items that have been impacted by the
company’s acquisitions and other related costs in order to allow a
direct comparison of loss from operations between all periods
presented.
Non-GAAP Net Income (Loss) Attributable to
BlackLine and Diluted Non-GAAP Net Income (Loss) Attributable to
BlackLine, Inc. Per Share. Non-GAAP net income (loss) attributable
to BlackLine is defined as GAAP net income (loss) attributable to
BlackLine adjusted for the impact of the provision for (benefit
from) income taxes related to acquisitions, amortization of
intangible assets, stock-based compensation, the amortization of
debt issuance costs from our convertible notes, the change in the
fair value of contingent consideration, transaction-related costs,
legal settlement gains or costs, impairment of cloud computing
implementation costs, restructuring costs, the adjustment to the
value of the redeemable non-controlling interest to the redemption
amount, and loss on extinguishment of convertible senior notes.
Diluted non-GAAP net income attributable to BlackLine, Inc. per
share includes the adjustment for shares resulting from the
elimination of stock-based compensation. The Company believes that
presenting non-GAAP net income (loss) attributable to BlackLine is
useful to investors as it eliminates the impact of items that have
been impacted by the company’s acquisitions and other related costs
in order to allow a direct comparison of net loss between all
periods presented.
Free Cash Flow. Free cash flow is defined as
cash flows provided by (used in) operating activities less cash
flows used to purchase property and equipment, financed and
otherwise, capitalized software development, and intangible assets.
BlackLine believes that presenting free cash flow is useful to
investors as it provides a measure of the company’s liquidity used
by management to evaluate the amount of cash generated by the
company’s business including the impact of purchases of property
and equipment and cost of capitalized software development.
Use of Operating Metrics
BlackLine has provided in this release and the
quarterly conference call held on November 2, 2023 certain
operating metrics, including (i) number of customers, (ii) number
of users and (iii) dollar-based net revenue retention rate, which
BlackLine uses to evaluate its business, measure its performance,
identify trends affecting its business, formulate financial
projections and make strategic decisions. These operating metrics
exclude the impact of certain Runbook licensed customers and users
who are on perpetual license agreements and did not have an active
subscription agreement with BlackLine as of September 30,
2023.
Dollar-based Net Revenue Retention Rate.
Dollar-based net revenue retention rate is calculated as the
implied monthly subscription and support revenue at the end of a
period for the base set of customers from which the company
generated subscription revenue in the year prior to the
calculation, divided by the implied monthly subscription and
support revenue one year prior to the date of calculation for that
same customer base. This calculation does not reflect implied
monthly subscription and support revenue for new customers added
during the one-year period but does include the effect of customers
who terminated during the period. Implied monthly subscription and
support revenue is defined as the total amount of minimum
subscription and support revenue contractually committed to, under
each of BlackLine’s customer agreements over the entire term of the
agreement, divided by the number of months in the term of the
agreement. BlackLine believes that dollar-based net revenue
retention rate is an important metric to measure the long-term
value of customer agreements and the company’s ability to retain
and grow its relationships with existing customers over time.
Number of Customers. A customer is defined as a
company that contributes to our subscription and support revenue as
of the measurement date. In situations where an organization has
multiple subsidiaries or divisions, each entity that is invoiced as
a separate entity is treated as a separate customer. In an instance
where an existing customer requests its invoice be divided for the
sole purpose of restructuring its internal billing arrangement
without any incremental increase in revenue, such customer
continues to be treated as a single customer. BlackLine believes
that its ability to expand its customer base is an indicator of the
company’s market penetration and the growth of its business.
Number of Users. Historically, BlackLine’s
products were priced based on the number of users of its platform.
Over time, the company has begun to sell an increasing number of
non-user based products with fixed or transaction-based pricing.
For this reason, we believe the growth in the number of total users
is less correlated to the growth of the business overall.
Media Contact:Kimberly
Ubertikimberly.uberti@blackline.com
Investor Relations Contact:Matt
Humphries, CFAmatt.humphries@blackline.com
BlackLine, Inc. |
Condensed Consolidated Balance Sheets |
(in thousands) |
(unaudited) |
|
September 30, 2023 |
|
December 31, 2022 |
ASSETS |
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
236,248 |
|
|
$ |
200,968 |
|
Marketable securities |
|
925,721 |
|
|
|
874,083 |
|
Accounts receivable, net of allowances |
|
130,477 |
|
|
|
150,858 |
|
Prepaid expenses and other current assets |
|
26,694 |
|
|
|
23,658 |
|
Total current assets |
|
1,319,140 |
|
|
|
1,249,567 |
|
Capitalized software development costs, net |
|
36,899 |
|
|
|
32,070 |
|
Property and equipment, net |
|
15,289 |
|
|
|
19,811 |
|
Intangible assets, net |
|
84,305 |
|
|
|
90,864 |
|
Goodwill |
|
448,987 |
|
|
|
443,861 |
|
Operating lease right-of-use assets |
|
19,937 |
|
|
|
14,708 |
|
Other assets |
|
91,578 |
|
|
|
92,775 |
|
Total assets |
$ |
2,016,135 |
|
|
$ |
1,943,656 |
|
|
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, AND
STOCKHOLDERS' EQUITY |
Current liabilities: |
|
|
|
Accounts payable |
$ |
4,802 |
|
|
$ |
14,964 |
|
Accrued expenses and other current liabilities |
|
61,352 |
|
|
|
58,600 |
|
Deferred revenue, current |
|
277,804 |
|
|
|
279,325 |
|
Finance lease liabilities, current |
|
930 |
|
|
|
989 |
|
Operating lease liabilities, current |
|
4,065 |
|
|
|
5,943 |
|
Convertible senior notes, net, current |
|
248,904 |
|
|
|
— |
|
Contingent consideration, current |
|
8,000 |
|
|
|
8,000 |
|
Total current liabilities |
|
605,857 |
|
|
|
367,821 |
|
Finance lease liabilities, noncurrent |
|
109 |
|
|
|
785 |
|
Operating lease liabilities, noncurrent |
|
16,399 |
|
|
|
9,292 |
|
Convertible senior notes, net, noncurrent |
|
1,139,539 |
|
|
|
1,384,306 |
|
Contingent consideration, noncurrent |
|
— |
|
|
|
33,549 |
|
Deferred tax liabilities, net |
|
6,022 |
|
|
|
5,568 |
|
Deferred revenue, noncurrent |
|
697 |
|
|
|
343 |
|
Other long-term liabilities |
|
3,975 |
|
|
|
6,229 |
|
Total liabilities |
|
1,772,598 |
|
|
|
1,807,893 |
|
Commitments and contingencies |
|
|
|
Redeemable non-controlling interest |
|
27,806 |
|
|
|
23,895 |
|
Stockholders' equity: |
|
|
|
Common stock |
|
613 |
|
|
|
600 |
|
Additional paid-in capital |
|
455,038 |
|
|
|
385,709 |
|
Accumulated other comprehensive loss |
|
(1,159 |
) |
|
|
(1,472 |
) |
Accumulated deficit |
|
(238,761 |
) |
|
|
(272,969 |
) |
Total stockholders' equity |
|
215,731 |
|
|
|
111,868 |
|
Total liabilities, redeemable non-controlling interest, and
stockholders' equity |
$ |
2,016,135 |
|
|
$ |
1,943,656 |
|
BlackLine, Inc. |
Condensed Consolidated Statements of
Operations |
(in thousands, except per share data) |
(unaudited) |
|
Quarter Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenues |
|
|
|
|
|
|
|
Subscription and support |
$ |
142,054 |
|
|
$ |
126,081 |
|
|
$ |
408,361 |
|
|
$ |
360,289 |
|
Professional services |
|
8,654 |
|
|
|
8,187 |
|
|
|
25,905 |
|
|
|
22,692 |
|
Total revenues |
|
150,708 |
|
|
|
134,268 |
|
|
|
434,266 |
|
|
|
382,981 |
|
Cost of revenues |
|
|
|
|
|
|
|
Subscription and support |
|
30,793 |
|
|
|
25,544 |
|
|
|
89,935 |
|
|
|
75,495 |
|
Professional services |
|
6,001 |
|
|
|
6,882 |
|
|
|
19,246 |
|
|
|
20,527 |
|
Total cost of revenues |
|
36,794 |
|
|
|
32,426 |
|
|
|
109,181 |
|
|
|
96,022 |
|
Gross profit |
|
113,914 |
|
|
|
101,842 |
|
|
|
325,085 |
|
|
|
286,959 |
|
Operating expenses |
|
|
|
|
|
|
|
Sales and marketing |
|
61,576 |
|
|
|
64,540 |
|
|
|
186,256 |
|
|
|
190,567 |
|
Research and development |
|
26,722 |
|
|
|
27,721 |
|
|
|
80,629 |
|
|
|
80,871 |
|
General and administrative |
|
18,026 |
|
|
|
31,000 |
|
|
|
46,854 |
|
|
|
74,997 |
|
Restructuring costs |
|
8,664 |
|
|
|
— |
|
|
|
9,813 |
|
|
|
— |
|
Total operating expenses |
|
114,988 |
|
|
|
123,261 |
|
|
|
323,552 |
|
|
|
346,435 |
|
Income (loss) from operations |
|
(1,074 |
) |
|
|
(21,419 |
) |
|
|
1,533 |
|
|
|
(59,476 |
) |
Other income (expense) |
|
|
|
|
|
|
|
Interest income |
|
14,030 |
|
|
|
4,387 |
|
|
|
37,237 |
|
|
|
6,620 |
|
Interest expense |
|
(1,489 |
) |
|
|
(1,482 |
) |
|
|
(4,414 |
) |
|
|
(4,386 |
) |
Other income, net |
|
12,541 |
|
|
|
2,905 |
|
|
|
32,823 |
|
|
|
2,234 |
|
Income (loss) before income taxes |
|
11,467 |
|
|
|
(18,514 |
) |
|
|
34,356 |
|
|
|
(57,242 |
) |
Provision for (benefit from) income taxes |
|
(2,005 |
) |
|
|
474 |
|
|
|
(451 |
) |
|
|
(12,852 |
) |
Net income (loss) |
|
13,472 |
|
|
|
(18,988 |
) |
|
|
34,807 |
|
|
|
(44,390 |
) |
Net income (loss) attributable to redeemable non-controlling
interest |
|
194 |
|
|
|
(344 |
) |
|
|
599 |
|
|
|
(468 |
) |
Adjustment attributable to redeemable non-controlling interest |
|
1,355 |
|
|
|
1,375 |
|
|
|
3,444 |
|
|
|
(3,227 |
) |
Net income (loss) attributable to BlackLine, Inc. |
$ |
11,923 |
|
|
$ |
(20,019 |
) |
|
$ |
30,764 |
|
|
$ |
(40,695 |
) |
Basic net income (loss) per share attributable to BlackLine,
Inc. |
$ |
0.20 |
|
|
$ |
(0.34 |
) |
|
$ |
0.51 |
|
|
$ |
(0.68 |
) |
Shares used to calculate basic net income (loss) per share |
|
61,101 |
|
|
|
59,695 |
|
|
|
60,666 |
|
|
|
59,422 |
|
Diluted net income (loss) per share attributable to BlackLine,
Inc. |
$ |
0.19 |
|
|
$ |
(0.34 |
) |
|
$ |
0.49 |
|
|
$ |
(0.68 |
) |
Shares used to calculate diluted net income (loss) per share |
|
72,102 |
|
|
|
59,695 |
|
|
|
71,902 |
|
|
|
59,422 |
|
BlackLine, Inc. |
Condensed Consolidated Statements of Cash
Flows |
(in thousands) |
(unaudited) |
|
Quarter Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
Net income (loss) attributable to BlackLine, Inc. |
$ |
11,923 |
|
|
$ |
(20,019 |
) |
|
$ |
30,764 |
|
|
$ |
(40,695 |
) |
Net income (loss) and adjustment attributable to redeemable
non-controlling interest |
|
1,549 |
|
|
|
1,031 |
|
|
|
4,043 |
|
|
|
(3,695 |
) |
Net income (loss) |
|
13,472 |
|
|
|
(18,988 |
) |
|
|
34,807 |
|
|
|
(44,390 |
) |
Adjustments to reconcile net loss to net cash provided by operating
activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
12,924 |
|
|
|
11,180 |
|
|
|
37,274 |
|
|
|
30,986 |
|
Change in fair value of contingent consideration |
|
(11,120 |
) |
|
|
1,745 |
|
|
|
(33,549 |
) |
|
|
(14,113 |
) |
Amortization of debt issuance costs |
|
1,396 |
|
|
|
1,389 |
|
|
|
4,137 |
|
|
|
4,119 |
|
Stock-based compensation |
|
20,079 |
|
|
|
20,899 |
|
|
|
60,465 |
|
|
|
57,410 |
|
Noncash lease expense |
|
1,533 |
|
|
|
1,325 |
|
|
|
4,725 |
|
|
|
4,186 |
|
Accretion of purchase discounts on marketable securities, net |
|
(9,231 |
) |
|
|
(2,762 |
) |
|
|
(24,999 |
) |
|
|
(3,326 |
) |
Net foreign currency (gains) losses |
|
(20 |
) |
|
|
(637 |
) |
|
|
882 |
|
|
|
(1,463 |
) |
Deferred income taxes |
|
(1,754 |
) |
|
|
(266 |
) |
|
|
(1,806 |
) |
|
|
(14,695 |
) |
Provision for (benefit from) credit losses |
|
2 |
|
|
|
4 |
|
|
|
(17 |
) |
|
|
85 |
|
Changes in operating assets and liabilities, net of impact of
acquisition: |
|
|
|
|
|
|
|
Accounts receivable |
|
(256 |
) |
|
|
12,152 |
|
|
|
20,445 |
|
|
|
18,321 |
|
Prepaid expenses and other current assets |
|
1,806 |
|
|
|
(1,271 |
) |
|
|
(2,150 |
) |
|
|
2,239 |
|
Other assets |
|
957 |
|
|
|
(1,157 |
) |
|
|
1,352 |
|
|
|
(6,355 |
) |
Accounts payable |
|
(3,363 |
) |
|
|
(8,698 |
) |
|
|
(9,445 |
) |
|
|
(4,571 |
) |
Accrued expenses and other current liabilities |
|
14,414 |
|
|
|
10,773 |
|
|
|
1,187 |
|
|
|
(612 |
) |
Deferred revenue |
|
(2,290 |
) |
|
|
(1,658 |
) |
|
|
(1,265 |
) |
|
|
2,548 |
|
Operating lease liabilities |
|
(1,723 |
) |
|
|
(1,223 |
) |
|
|
(5,235 |
) |
|
|
(5,329 |
) |
Lease incentive receipts |
|
— |
|
|
|
162 |
|
|
|
240 |
|
|
|
653 |
|
Other long-term liabilities |
|
200 |
|
|
|
1,207 |
|
|
|
(2,604 |
) |
|
|
4,566 |
|
Net cash provided by operating activities |
|
37,026 |
|
|
|
24,176 |
|
|
|
84,444 |
|
|
|
30,259 |
|
Cash flows from investing activities |
|
|
|
|
|
|
|
Purchases of marketable securities |
|
(257,345 |
) |
|
|
(372,059 |
) |
|
|
(982,465 |
) |
|
|
(1,171,808 |
) |
Proceeds from maturities of marketable securities |
|
263,000 |
|
|
|
338,500 |
|
|
|
956,300 |
|
|
|
975,750 |
|
Capitalized software development costs |
|
(4,519 |
) |
|
|
(5,186 |
) |
|
|
(16,837 |
) |
|
|
(14,952 |
) |
Purchases of property and equipment |
|
(1,098 |
) |
|
|
(2,439 |
) |
|
|
(3,927 |
) |
|
|
(9,742 |
) |
Acquisition, net of cash acquired |
|
(11,367 |
) |
|
|
— |
|
|
|
(11,367 |
) |
|
|
(157,738 |
) |
Net cash used in investing activities |
|
(11,329 |
) |
|
|
(41,184 |
) |
|
|
(58,296 |
) |
|
|
(378,490 |
) |
Cash flows from financing activities |
|
|
|
|
|
|
|
Principal payments under finance lease obligations |
|
(250 |
) |
|
|
(185 |
) |
|
|
(735 |
) |
|
|
(380 |
) |
Proceeds from exercises of stock options |
|
7,067 |
|
|
|
1,249 |
|
|
|
18,987 |
|
|
|
3,669 |
|
Proceeds from employee stock purchase plan |
|
— |
|
|
|
— |
|
|
|
5,291 |
|
|
|
4,466 |
|
Acquisition of common stock for tax withholding obligations |
|
(722 |
) |
|
|
(1,864 |
) |
|
|
(14,144 |
) |
|
|
(7,866 |
) |
Financed purchases of property and equipment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(84 |
) |
Net cash provided by (used in) financing activities |
|
6,095 |
|
|
|
(800 |
) |
|
|
9,399 |
|
|
|
(195 |
) |
Effect of foreign currency exchange rate changes on cash, cash
equivalents, and restricted cash |
|
(64 |
) |
|
|
(146 |
) |
|
|
(271 |
) |
|
|
(833 |
) |
Net increase (decrease) in cash, cash equivalents, and restricted
cash |
|
31,728 |
|
|
|
(17,954 |
) |
|
|
35,276 |
|
|
|
(349,259 |
) |
Cash, cash equivalents, and restricted cash, beginning of
period |
|
204,755 |
|
|
|
208,686 |
|
|
|
201,207 |
|
|
|
539,991 |
|
Cash, cash equivalents, and restricted cash, end of period |
$ |
236,483 |
|
|
$ |
190,732 |
|
|
$ |
236,483 |
|
|
$ |
190,732 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of cash, cash equivalents, and restricted cash to
the consolidated balance sheets |
|
|
|
|
|
Cash and cash equivalents at end of period |
$ |
236,248 |
|
|
$ |
190,514 |
|
|
$ |
236,248 |
|
|
$ |
190,514 |
|
Restricted cash included within other assets at end of period |
|
235 |
|
|
|
218 |
|
|
|
235 |
|
|
|
218 |
|
Total cash, cash equivalents, and restricted cash at end of period
shown in the consolidated statements of cash flows |
$ |
236,483 |
|
|
$ |
190,732 |
|
|
$ |
236,483 |
|
|
$ |
190,732 |
|
BlackLine, Inc. |
Reconciliations of Non-GAAP Financial
Measures |
(in thousands, except percentages and per share
data) |
(unaudited) |
|
|
Quarter Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Non-GAAP Gross Profit: |
|
|
|
|
|
|
|
|
Gross profit |
|
$ |
113,914 |
|
|
$ |
101,842 |
|
|
$ |
325,085 |
|
|
$ |
286,959 |
|
Amortization of acquired developed technology |
|
|
3,090 |
|
|
|
3,011 |
|
|
|
9,019 |
|
|
|
8,305 |
|
Stock-based compensation(1) |
|
|
3,249 |
|
|
|
2,346 |
|
|
|
9,319 |
|
|
|
6,309 |
|
Transaction-related costs |
|
|
(41 |
) |
|
|
352 |
|
|
|
346 |
|
|
|
998 |
|
Total non-GAAP gross profit |
|
$ |
120,212 |
|
|
$ |
107,551 |
|
|
$ |
343,769 |
|
|
$ |
302,571 |
|
Gross margin |
|
|
75.6 |
% |
|
|
75.8 |
% |
|
|
74.9 |
% |
|
|
74.9 |
% |
Non-GAAP gross margin |
|
|
79.8 |
% |
|
|
80.1 |
% |
|
|
79.2 |
% |
|
|
79.0 |
% |
|
|
|
|
|
|
|
|
|
Non-GAAP Operating Income: |
|
|
|
|
|
|
|
|
Operating income (loss) |
|
$ |
(1,074 |
) |
|
$ |
(21,419 |
) |
|
$ |
1,533 |
|
|
$ |
(59,476 |
) |
Amortization of intangible assets |
|
|
5,140 |
|
|
|
5,182 |
|
|
|
15,359 |
|
|
|
14,550 |
|
Stock-based compensation(1) |
|
|
20,633 |
|
|
|
20,899 |
|
|
|
61,967 |
|
|
|
57,410 |
|
Change in fair value of contingent consideration |
|
|
(11,120 |
) |
|
|
1,745 |
|
|
|
(33,549 |
) |
|
|
(14,113 |
) |
Transaction-related costs |
|
|
1,823 |
|
|
|
3,272 |
|
|
|
3,832 |
|
|
|
13,981 |
|
Legal settlement costs |
|
|
— |
|
|
|
1,019 |
|
|
|
— |
|
|
|
1,709 |
|
Restructuring costs |
|
|
8,664 |
|
|
|
— |
|
|
|
9,813 |
|
|
|
— |
|
Total non-GAAP operating income |
|
$ |
24,066 |
|
|
$ |
10,698 |
|
|
$ |
58,955 |
|
|
$ |
14,061 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net Income Attributable to BlackLine,
Inc.: |
|
|
|
|
|
|
|
|
Net income (loss) attributable to BlackLine, Inc. |
|
$ |
11,923 |
|
|
$ |
(20,019 |
) |
|
$ |
30,764 |
|
|
$ |
(40,695 |
) |
Provision for (benefit from) income taxes |
|
|
(1,827 |
) |
|
|
299 |
|
|
|
(1,722 |
) |
|
|
(12,692 |
) |
Amortization of intangible assets |
|
|
5,140 |
|
|
|
5,182 |
|
|
|
15,359 |
|
|
|
14,550 |
|
Stock-based compensation(1) |
|
|
20,503 |
|
|
|
20,802 |
|
|
|
61,607 |
|
|
|
57,159 |
|
Amortization of debt issuance costs |
|
|
1,396 |
|
|
|
1,389 |
|
|
|
4,137 |
|
|
|
4,119 |
|
Change in fair value of contingent consideration |
|
|
(11,120 |
) |
|
|
1,745 |
|
|
|
(33,549 |
) |
|
|
(14,113 |
) |
Transaction-related costs |
|
|
1,823 |
|
|
|
3,272 |
|
|
|
3,832 |
|
|
|
13,981 |
|
Legal settlement costs |
|
|
— |
|
|
|
1,019 |
|
|
|
— |
|
|
|
1,709 |
|
Restructuring costs |
|
|
8,664 |
|
|
|
— |
|
|
|
9,813 |
|
|
|
— |
|
Adjustment to redeemable non-controlling interest |
|
|
1,355 |
|
|
|
1,375 |
|
|
|
3,444 |
|
|
|
(3,227 |
) |
Total non-GAAP net income attributable to BlackLine,
Inc. |
|
$ |
37,857 |
|
|
$ |
15,064 |
|
|
$ |
93,685 |
|
|
$ |
20,791 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic non-GAAP net income attributable to BlackLine, Inc.
per share: |
|
|
|
|
|
|
|
|
Basic non-GAAP net income attributable to BlackLine, Inc. per
share |
|
$ |
0.62 |
|
|
$ |
0.25 |
|
|
$ |
1.54 |
|
|
$ |
0.35 |
|
Shares used to calculate basic non-GAAP net income per share |
|
|
61,101 |
|
|
|
59,695 |
|
|
|
60,666 |
|
|
|
59,422 |
|
|
|
|
|
|
|
|
|
|
Diluted non-GAAP net income attributable to BlackLine,
Inc. |
|
|
|
|
|
|
|
|
Diluted non-GAAP net income attributable to BlackLine, Inc. per
share |
|
$ |
0.51 |
|
|
$ |
0.21 |
|
|
$ |
1.26 |
|
|
$ |
0.29 |
|
Shares used to calculate diluted non-GAAP net income per share |
|
|
74,562 |
|
|
|
73,312 |
|
|
|
74,307 |
|
|
|
72,872 |
|
|
|
|
|
|
|
|
|
|
(1) Beginning in 2023, includes amortization related to stock-based
compensation that was capitalized in capitalized software
development costs in previous periods and totaled $0.6 million and
$1.5 million for the quarter ended and nine months ended September
30, 2023, respectively. |
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Non-GAAP Sales and Marketing Expense: |
|
|
|
|
|
|
|
|
Sales and marketing expense |
|
$ |
61,576 |
|
|
$ |
64,540 |
|
|
$ |
186,256 |
|
|
$ |
190,567 |
|
Amortization of intangible assets |
|
|
(1,705 |
) |
|
|
(1,694 |
) |
|
|
(5,040 |
) |
|
|
(4,812 |
) |
Stock-based compensation |
|
|
(6,123 |
) |
|
|
(7,257 |
) |
|
|
(18,788 |
) |
|
|
(20,619 |
) |
Transaction-related costs |
|
|
(96 |
) |
|
|
(714 |
) |
|
|
(287 |
) |
|
|
(2,159 |
) |
Total non-GAAP sales and marketing expense |
|
$ |
53,652 |
|
|
$ |
54,875 |
|
|
$ |
162,141 |
|
|
$ |
162,977 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP Research and Development Expense: |
|
|
|
|
|
|
|
|
Research and development expense |
|
$ |
26,722 |
|
|
$ |
27,721 |
|
|
$ |
80,629 |
|
|
$ |
80,871 |
|
Stock-based compensation |
|
|
(3,750 |
) |
|
|
(3,847 |
) |
|
|
(11,282 |
) |
|
|
(10,554 |
) |
Transaction-related costs |
|
|
(746 |
) |
|
|
(2,057 |
) |
|
|
(2,024 |
) |
|
|
(5,718 |
) |
Total non-GAAP research and development
expense |
|
$ |
22,226 |
|
|
$ |
21,817 |
|
|
$ |
67,323 |
|
|
$ |
64,599 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP General and Administrative Expense: |
|
|
|
|
|
|
|
|
General and administrative expense |
|
$ |
18,026 |
|
|
$ |
31,000 |
|
|
$ |
46,854 |
|
|
$ |
74,997 |
|
Amortization of intangible assets |
|
|
(345 |
) |
|
|
(477 |
) |
|
|
(1,300 |
) |
|
|
(1,433 |
) |
Stock-based compensation |
|
|
(7,511 |
) |
|
|
(7,449 |
) |
|
|
(22,578 |
) |
|
|
(19,928 |
) |
Change in fair value of contingent consideration |
|
|
11,120 |
|
|
|
(1,745 |
) |
|
|
33,549 |
|
|
|
14,113 |
|
Transaction-related costs |
|
|
(1,022 |
) |
|
|
(149 |
) |
|
|
(1,175 |
) |
|
|
(5,106 |
) |
Legal settlement costs |
|
|
— |
|
|
|
(1,019 |
) |
|
|
— |
|
|
|
(1,709 |
) |
Total non-GAAP general and administrative
expense |
|
$ |
20,268 |
|
|
$ |
20,161 |
|
|
$ |
55,350 |
|
|
$ |
60,934 |
|
|
|
|
|
|
|
|
|
|
Total Non-GAAP Operating Expenses |
|
$ |
96,146 |
|
|
$ |
96,853 |
|
|
$ |
284,814 |
|
|
$ |
288,510 |
|
|
|
|
|
|
|
|
|
|
Free Cash Flow |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
$ |
37,026 |
|
|
$ |
24,176 |
|
|
$ |
84,444 |
|
|
$ |
30,259 |
|
Capitalized software development costs |
|
|
(4,519 |
) |
|
|
(5,186 |
) |
|
|
(16,837 |
) |
|
|
(14,952 |
) |
Purchases of property and equipment |
|
|
(1,098 |
) |
|
|
(2,439 |
) |
|
|
(3,927 |
) |
|
|
(9,742 |
) |
Financed purchases of property and equipment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(84 |
) |
Free cash flow |
|
$ |
31,409 |
|
|
$ |
16,551 |
|
|
$ |
63,680 |
|
|
$ |
5,481 |
|
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