Company marks 28th consecutive quarter of YoY revenue growth
driven by a 37% increase in annual recurring revenue, with gross
profit up 40% YoY and net dollar retention of 130%
- Q1 revenue hit $26.3 million, up 25% year-over-year
- Annual Recurring Revenue (“ARR”)(1) increased 37%
year-over-year to $54.2 million
- Record Net Dollar Retention (“NDR”)(1) of 130% improved
year-over-year from 113%
- Gross profit increased 40% year-over-year to $14.6 million
- Gross margin of 55%, up from 49% in the prior year
- Adjusted EBITDA(1) loss of $3.2 million in Q1 2024 compared to
$6.2 million loss in Q1 2023, an improvement of 48%
- Net cash used in operating activities decreased 94% to $0.4
million from $7.6 million year-over-year
- Company in excellent position to produce another record year
and remains on track to generate positive quarterly Adjusted EBITDA
in the latter half of the fiscal year
Blackline Safety Corp. (“Blackline” or the “Company”) (TSX:
BLN), a global leader in connected safety technology, today
reported its fiscal first quarter financial results for the period
ended January 31, 2024.
Management Commentary
“In Q1, we delivered our 28th consecutive quarter of
year-over-year total revenue growth with a 25% increase compared to
the same quarter last year. Gross profit grew by 40% year-over-year
to $14.6 million, and we maintained our gross margin of 55% from
the particularly strong fourth quarter of fiscal 2023. Net dollar
retention was 130% in Q1, a record for the Company and a signal of
the powerful value proposition customers see in our connected
safety solutions. We also saw our ARR(1) grow 37% to $54.2 million
and we reduced our adjusted EBITDA loss by 48%,” said Cody Slater,
CEO and Chair, Blackline Safety Corp.
Blackline saw year-over-year revenue growth across all operating
regions, with Europe leading the way at 39% driven by new deals
across a range of verticals. The United States and Canada also grew
29% and 11% respectively, demonstrating that the investments the
Company has made in its Sales and Marketing engine are delivering
results.
The Company remains on track to achieve positive quarterly
Adjusted EBITDA in the seasonally stronger second half of the
fiscal year by leveraging the strength of its product and service
segments, margin enhancements, and expansion across the utilities,
energy and industrial sectors. A continued focus on disciplined
cost management will further contribute to Blackline’s path to
sustained profitability.
Mr. Slater continued: “We are particularly pleased we ended what
is traditionally our softest quarter with total cash and short-term
investments on hand of $15.9 million, the same as that on hand at
our October 31, 2023 year-end. We saw a significant improvement in
our cash flows from operating activities where we used $0.4 million
of cash compared to $7.6 million in the prior year’s quarter. We
also have total liquidity available through our cash, short-term
investments and availability on our credit facility of $26.2
million, all in addition to the availability on our lease
securitization facility of $52.9 million. Our cost optimization,
margin expansion and revenue growth will continue to improve our
cash burn, keeping us on the path to a sustainable free cash flow
generating business.”
Fiscal First Quarter 2024 and Recent Financial and
Operational Highlights
- Total revenue of $26.3 million, a 25% increase over the prior
year’s Q1
- Recurring software services revenue of $13.9 million, a 31%
increase over the prior year’s Q1
- ARR(1) growth of 37% year-over-year to $54.2 million
- Product revenue of $11.4 million, a 21% increase over the prior
year’s Q1
- European market growth of 39% over the prior year’s Q1
- United States growth continues to be strong with a 29% increase
over the prior year’s Q1
- Total Q1 expenses were $19.9 million, which increased 10%
year-over-year, however Q1 expenses as a percentage of revenue(1)
decreased 10% year-over year and were flat with Q4
- Significant improvement in net cash used in operating
activities to $0.4 million, a 94% decrease over the prior year’s
Q1
- Secured a $2.7 million contract with a major U.S. upstream
energy company to protect over 800 workers
- Joined the Amazon Web Services (AWS) Partner Network as an AWS
Public Sector Partner
Financial highlights
Three-months ended
January 31,
(CAD thousands, except per share and
percentage amounts)
2024
2023
% Change
Product revenue
11,435
9,424
21
Service revenue
14,890
11,622
28
Total Revenue
26,325
21,046
25
Gross profit
14,579
10,383
40
Gross margin percentage(1)
55 %
49 %
Total Expenses
19,916
18,164
10
Total Expenses as a percentage of
revenue(1)
76 %
86 %
Net loss
(5,791)
(7,692)
(25)
Loss per common share - Basic and
diluted
(0.08)
(0.11)
(27)
EBITDA(1)
(3,392)
(6,044)
44
EBITDA per common share(1) - Basic and
diluted
(0.05)
(0.08)
38
Adjusted EBITDA(1)
(3,234)
(6,231)
48
Adjusted EBITDA per common share(1) -
Basic and diluted
(0.04)
(0.09)
56
(1) This news release presents certain
non-GAAP and supplementary financial measures, as well as non-GAAP
ratios to assist readers in understanding the Company’s
performance. Further details on these measures and ratios are
included in the “Non-GAAP and Supplementary Financial Measures”
section of this press release.
Key Financial Information
Total revenue for the fiscal first quarter was $26.3 million, an
increase of 25% compared to $21.0 million in the prior year’s
quarter. Total revenue for each geographical market increased, with
the European markets leading the growth up 39% while other regions
also demonstrated strong growth with the United States up 29%,
Canada up 11% and Rest of World up 7%.
Service revenue during the fiscal first quarter was $14.9
million, an increase of 28% compared to $11.6 million in the prior
year’s quarter. Software services revenue increased 31% to $13.9
million. The increase in software services revenue was attributable
to new activations of devices sold over the past 12 months, as well
as net growth within our existing customer base of $2.8 million
which resulted in NDR of 130%.
Product revenue during the fiscal first quarter was $11.4
million, a 21% increase compared to $9.4 million in the prior
year’s quarter. The increase in the current year period reflects
the Company’s expanded sales network and past investments in our
global sales team through targeted demand generation and sales
development activities.
Overall, gross margin percentage(1) for the fiscal first quarter
was 55%, a 6% increase compared to the prior year’s quarter. The
increase in total gross margin percentage(1) was due to a
combination of higher sales volume, our enhanced pricing strategy,
continued cost optimization across our business and a shift in
revenue mix towards higher margin service revenue. Product revenue
comprised 43% of total revenue in the first quarter, compared to
45% in the prior year’s quarter, while service revenue made up 57%
of total revenue for the quarter, compared to 55% in the prior
year’s quarter.
Service gross margin percentage(1) increased to 76% compared to
the prior year’s quarter of 73%. This was primarily due to our
continued service revenue growth through additional value-added
features, enhanced pricing and our scale absorbing more fixed
costs.
Product gross margin percentage(1) for the fiscal first quarter
increased to 29% from 21% in the prior year’s quarter. The
improvement reflects the increased volume of product sales in the
current quarter compared to the prior year, as well as the
Company’s focus on manufacturing line efficiency and the impact of
our enhanced pricing strategy. The fiscal first quarter product
gross margin decreased by 3% compared to the seasonally stronger
fourth quarter of fiscal 2023 mainly due to the decrease in product
sales volume.
Total expenses for the fiscal first quarter were $19.9 million,
an increase of $1.8 million compared to the prior year’s quarter of
$18.2 million, due to increases in sales and marketing expenses and
general and administrative expenses, slightly offset by a decrease
in product research and development costs. However, Q1 expenses as
a percentage of revenue(1) decreased 10% year-over-year compared to
the prior year’s Q1.
Net loss for the fiscal first quarter was $5.8 million, or $0.08
per share, compared to $7.7 million or $0.11 per share in the prior
year’s quarter. Net loss decreased due to an increase in total
gross profit as well as decreases in product research and
development costs.
EBITDA(1) for the fiscal first quarter was $(3.4) million or
$(0.05) per share compared to $(6.0) million or $(0.08) in the
prior year’s quarter. The $2.7 million improvement in EBITDA(1) is
primarily due to the increase in total gross profit.
Adjusted EBITDA(1) for the fiscal first quarter was $(3.2)
million or $(0.04) per share compared to $(6.2) million or $(0.09)
per share in the prior year’s quarter. The $3.0 million improvement
in Adjusted EBITDA(1) is primarily due to the increase in total
gross profit.
At the end of the fiscal first quarter, Blackline had total cash
and short-term investments on hand of $15.9 million, $10.3 million
available on its senior secured operating facility and $52.9
million available on its lease securitization facility. Blackline
was able to maintain a similar cash position as at October 31, 2023
year end mainly due to reduced operating losses and cash inflows
from changes in non-cash working capital, which were offset by a
net cash inflow of $1.3 million during the quarter from the
Company’s operating credit facility and securitization
facility.
Blackline’s Interim Condensed Consolidated Financial Statements
and Management’s Discussion and Analysis on Financial Condition and
Results of Operations for the three-month period ended January 31,
2024, are available on SEDAR+ under the Company’s profile at
www.sedarplus.ca. All results are reported in Canadian dollars.
Conference Call
A conference call and live webcast have been scheduled for 11:00
am ET on Thursday, March 14, 2024. Participants should dial
1-800-319-4610 or +1-416-915-3239 at least 10 minutes prior to the
conference time. A live webcast will also be available at
https://www.gowebcasting.com/13181. Participants should join the
webcast at least 10 minutes prior to the start time to register and
install any necessary software. If you cannot make the live call, a
replay will be available within 24 hours by dialing 1-800-319-6413
and entering access code 0742.
About Blackline Safety Corp.
Blackline Safety is a technology leader driving innovation in
the industrial workforce through IoT (Internet of Things). With
connected safety devices and predictive analytics, Blackline
enables companies to drive towards zero safety incidents and
improved operational performance. Blackline provides wearable
devices, personal and area gas monitoring, cloud-connected software
and data analytics to meet demanding safety challenges and enhance
overall productivity for organizations with coverage in more than
100 countries. Armed with cellular and satellite connectivity,
Blackline provides a lifeline to tens of thousands of people,
having reported over 225 billion data-points and initiated over
seven million emergency alerts. For more information, visit
BlacklineSafety.com and connect with us on Facebook, X (formerly
Twitter), LinkedIn and Instagram.
Non-GAAP and Supplementary Financial Measures
This press release presents certain non-GAAP and supplementary
financial measures, including key performance indicators used by
management typically used by our competitors in the
software-as-a-service industry, as well as non-GAAP ratios to
assist readers in understanding the Company’s performance. These
measures do not have any standardized meaning and therefore are
unlikely to be comparable to similar measures presented by other
issuers and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
GAAP.
Management uses these non-GAAP and supplementary financial
measures, as well as non-GAAP ratios and key performance indicators
to analyze and evaluate operating performance. Blackline also
believes the non-GAAP and supplementary financial measures defined
below are commonly used by the investment community for valuation
purposes, and are useful complementary measures of profitability,
and provide metrics useful in Blackline’s industry.
Throughout this news release, the following terms are used,
which do not have a standardized meaning under GAAP.
Key Performance Indicators
Management uses a number of key performance indicators,
including those identified below, to measure the performance of the
business, identify and assess trends affecting the Company and to
make strategic decisions. These key performance indicators do not
have any standardized definitions prescribed by IFRS and cannot be
reconciled to a directly comparable IFRS measure. These key
performance indicators may be calculated in a manner different than
similar key performance indicators used by other companies.
- “Annual Recurring Revenue” is the total annualized value
of recurring service amounts (ultimately recognized as software
services revenue) of all service contracts at a point in time.
Annualized service amounts are determined solely by reference to
the underlying contracts, normalizing for the varying revenue
recognition treatments under IFRS 15 Revenue from Contracts with
Customers. It excludes one-time fees, such as for non-recurring
professional services, and assumes that customers will renew the
contractual commitments on a periodic basis as those commitments
come up for renewal, unless such renewal is known to be unlikely.
We believe that ARR provides visibility into future cash flows and
is a fair measure of the performance and growth of our service
contracts.
- “Net Dollar Retention” compares the aggregate service
revenue contractually committed for a full period under all
customer agreements of our total customer base as of the beginning
of the trailing twelve-month period to the total service revenue of
the same group at the end of the period. It includes the effect of
our service revenue that expands, renews, contracts or is declined,
but excludes the total service revenue from new activations during
the period. We believe that NDR provides a fair measure of the
strength of our recurring revenue streams and growth within our
existing customer base.
Non-GAAP Financial Measures
A non-GAAP financial measure: (a) depicts the historical or
expected future financial performance, financial position or cash
of the Company; (b) with respect to its composition, excludes an
amount that is included in, or includes an amount that is excluded
from, the composition of the most comparable financial measure
presented in the primary consolidated financial statements; (c) is
not presented in the primary financial statements of the Company;
and (d) is not a ratio.
Non-GAAP financial measures presented and discussed in this news
release are as follows:
“EBITDA” is useful to securities analysts, investors and
other interested parties in evaluating operating performance by
presenting the results of the Company which excludes the impact of
certain non-cash or non-operational items. EBITDA is calculated as
earnings before interest expense, interest income, income taxes,
depreciation and amortization.
“Adjusted EBITDA” is useful to securities analysts,
investors and other interested parties in evaluating operating
performance by presenting the results of the Company which excludes
the impact of certain non-operational items and certain non-cash
and non-recurring items, such as stock-based compensation expense.
Adjusted EBITDA is calculated as earnings before interest expense,
interest income, income taxes, depreciation and amortization,
stock-based compensation expense, foreign exchange loss (gain), and
non-recurring impact transactions, if any. The Company considers an
item to be non-recurring when a similar revenue, expense, loss or
gain is not reasonably likely to occur within the next two years or
has not occurred during the prior two years.
Reconciliation of non-GAAP financial measures
Three-months ended
January 31,
(CAD thousands)
2024
2023
% Change
Net loss
(5,791)
(7,692)
(25)
Depreciation and amortization
1,945
1,737
12
Finance expense (income), net
186
(279)
NM
Income taxes
268
190
41
EBITDA
(3,392)
(6,044)
44
Stock-based compensation expense(1)
352
539
(35)
Foreign exchange loss (gain)
(194)
(726)
(73)
Adjusted EBITDA
(3,234)
(6,231)
48
(1) Stock-based compensation expense
relates to the Company’s stock compensation plan and stock option
expense is extracted from cost of sales, general and administrative
expenses, sales and marketing expenses and product research and
development costs on the consolidated statements of loss and
comprehensive loss. NM – Not meaningful
Non-GAAP Ratios
A non-GAAP ratio is a financial measure presented in the form of
a ratio, fraction, percentage or similar representation and that
has a non-GAAP financial measure as one or more of its
components.
Non-GAAP ratios presented and discussed in this news release is
follows:
“EBITDA per common share” is useful to securities
analysts, investors and other interested parties in evaluating
operating and financial performance. EBITDA per common share is
calculated on the same basis as net income (loss) per common share,
utilizing the basic and diluted weighted average number of common
shares outstanding during the periods presented.
“Adjusted EBITDA per common share” is useful to
securities analysts, investors and other interested parties in
evaluating operating and financial performance. Adjusted EBITDA per
common share is calculated on the same basis as net income (loss)
per common share, utilizing the basic and diluted weighted average
number of common shares outstanding during the periods
presented.
Supplementary Financial Measures
A supplementary financial measure: (a) is, or is intended to be,
disclosed on a periodic basis to depict the historical or expected
future financial performance, financial position or cash flow of
the Company; (b) is not presented in the financial statements of
the Company; (c) is not a non-GAAP financial measure; and (d) is
not a non-GAAP ratio.
Supplementary financial measures presented and discussed in this
news release is as follows:
- “Gross margin percentage” represents gross profit as a
percentage of revenue
- “Annual Recurring Revenue” represents total annualized
value of recurring service amounts of all service contracts
- “Net Dollar Retention” represents the aggregate service
revenue contractually committed
- “Product gross margin percentage” represents product
gross profit as a percentage of product revenue
- “Service gross margin percentage” represents service
gross profit as a percentage of service revenue
- “Total expenses as a percentage of revenue” represents
total expenses as a percentage of total revenue
Note Regarding Forward-Looking Statements
This news release contains forward-looking statements and
forward-looking information (collectively “forward-looking
information”) within the meaning of applicable securities laws
relating to, among other things, Blackline’s expectation to deliver
top line growth and significant profitability in the long run;
Blackline’s expectation that we expect sales momentum and a strong
growth trajectory for the rest of the 2024 fiscal year to continue
in fiscal 2025 as we add sales of our G6 zero-maintenance wearable
to accompany our robust sales of G7 and G7 EXO; that the Company
expects to continue to drive strong growth in our high margin
service revenue as we continue to play our role in the
transformation of the industrial workplace into a connected one;
that the Company will continue to manage its capital structure and
liquidity risk in order to fund its product roadmap and strategic
additions to its global sales and distribution network in order to
execute our strategy to continue strong revenue and margin growth
while achieving our goal of positive Adjusted EBITDA and Free Cash
Flow as part of a successful sustainable financial business model.
Blackline provided such forward-looking statements in reliance on
certain expectations and assumptions that it believes are
reasonable at the time. The material assumptions on which the
forward-looking information in this news release are based, and the
material risks and uncertainties underlying such forward-looking
information, include: expectations and assumptions concerning
business prospects and opportunities, customer demands, the
availability and cost of financing, labor and services, that
Blackline will pursue growth strategies and opportunities in the
manner described herein, and that it will have sufficient resources
and opportunities for the same, that other strategies or
opportunities may be pursued in the future, and the impact of
increasing competition, business and market conditions; the
accuracy of outlooks and projections contained herein; that future
business, regulatory, and industry conditions will be within the
parameters expected by Blackline, including with respect to prices,
margins, demand, supply, product availability, supplier agreements,
availability, and cost of labour and interest, exchange, and
effective tax rates; projected capital investment levels, the
flexibility of capital spending plans, and associated sources of
funding; cash flows, cash balances on hand, and access to the
Company’s credit facility and lease securitization facility being
sufficient to fund capital investments; foreign exchange rates;
near-term pricing and continued volatility of the market;
accounting estimates and judgments; the ability to generate
sufficient cash flow to meet current and future obligations; the
Company’s ability to obtain and retain qualified staff and
equipment in a timely and cost-efficient manner; the Company’s
ability to carry out transactions on the desired terms and within
the expected timelines; forecast inflation, including on the
Company’s components for its products, the impacts of the military
conflict between Russia and Ukraine and between Israel and Hamas on
the global economy; and other assumptions, risks, and uncertainties
described from time to time in the filings made by Blackline with
securities regulatory authorities. Although Blackline believes that
the expectations and assumptions on which such forward-looking
information is based are reasonable, undue reliance should not be
placed on the forward-looking information because Blackline can
give no assurance that they will prove to be correct.
Forward-looking information addresses future events and conditions,
which by their very nature involve inherent risks and
uncertainties, including the risks set forth above and as discussed
in Blackline’s Management’s Discussion and Analysis and Annual
Information Form for the year ended October 31, 2023 and available
on SEDAR+ at www.sedarplus.ca. Blackline’s actual results,
performance or achievement could differ materially from those
expressed in, or implied by, the forward-looking information and,
accordingly, no assurance can be given that any of the events
anticipated by the forward-looking information will transpire or
occur, or if any of them do so, what benefits Blackline will derive
therefrom. Management has included the above summary of assumptions
and risks related to forward-looking information provided in this
press release in order to provide readers with a more complete
perspective on Blackline’s future operations and such information
may not be appropriate for other purposes. Readers are cautioned
that the foregoing lists of factors are not exhaustive. These
forward-looking statements are made as of the date of this press
release and Blackline disclaims any intent or obligation to update
publicly any forward-looking information, whether as a result of
new information, future events or results or otherwise, other than
as required by applicable securities laws.
(1)
This news release presents certain non-GAAP and supplementary
financial measures, including key performance indicators used by
management and typically used by companies in the
software-as-a-service industry, as well as non-GAAP ratios to
assist readers in understanding the Company’s performance. Further
details on these measures and ratios are included in the “Key
Performance Indicators,” and “Non-GAAP and Supplementary Financial
Measures” sections of this news release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240314117399/en/
INVESTOR/ANALYST CONTACT Shane Grennan, Chief Financial
Officer sgrennan@blacklinesafety.com +1 403-630-8400
MEDIA CONTACT Christine Gillies, Chief Product and
Marketing Officer cgillies@blacklinesafety.com +1 403-629-9434
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