BlackLine, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the fourth quarter 2020 Black Line Earnings Conference Call. At this time, all participants are now listening online. After the speaker's presentation, there will be a question and answer session. To participate on that portion of the call, simply press star 1 on your telephone. If you require any further assistance, please press star then 0. I will now hand the conference over to your speaker today. Alex Keller, Vice President of Investor Relations.

Good afternoon, and thank you for your participation today. With me on the call is Mark Huffman, Chief Executive Officer of Blackline, Mark Parton, Chief Financial Officer, and Therese Tucker, Founder and Executive Chair. Before we get started, I would like to note that certain statements made during this conference call that are not historical facts, including those regarding our future plans, objectives, and expected performance, in particular, our guidance for Q1 and the full year, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent our outlook only as of the date of this call. While we believe any forward-looking statements we may make are reasonable, actual results could differ materially because the statements are based on our current expectations as of today and are subject to risks and uncertainties, including those stated in our periodic reports filed with the Securities and Exchange Commission, in particular, our Form 10-K and Form 10-Q. We do not undertake and expressly disclaim Any obligation to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. Also, unless otherwise stated, all financial measures disclosed on this call will be non-GAAP. A discussion of why we use non-GAAP financial measures and information regarding reconciliations of our GAAP versus non-GAAP results is currently available in our press release, which may be found on our investor relations website at investors.blackline.com or on our form 8K filed with the SEC today. Now I will turn the call over to Mark to begin.

Good afternoon, everyone, and thank you for joining us today. As I look back on 2020, what began as a year of such promise quickly shifted to a year that tested our resilience and our ability to adapt. I'm incredibly proud of what Blackline was able to accomplish in 2020 as we continued to drive growth, scale the business, and maintain a strong leadership position, all while leading with compassion towards our colleagues, our partners, and, of course, our customers. I'd now like to take an opportunity to highlight the initiatives that enabled our success throughout the pandemic and many more. We have received multiple accolades for these efforts, but the greatest reward comes from our customer testimonials and hearing how Blackline enabled a seamless month-end close in the face of an unprecedented pandemic. In these difficult times, we remained true to our founding principles to serve our customers, which has strengthened our relationships and driven expansion of existing accounts. I'm very proud of our efforts to serve our customers and our commitment to their success and I believe this compassion will continue to differentiate Blackline. Second, we invested in key areas such as talent, product, customer success and M&A to make our organization stronger. In 2020, we increased our pace of hiring, adding senior leaders across the organization in strategy, alliances, product, technology and R&D. We accelerated our investment in R&D and product innovation, resulting in new products, new functionality, and an aggressive product roadmap to maintain our leadership position. We retained our capacity in services and sales and added headcount to our customer success teams, driving strong results in customer account growth. And last, but certainly not least, we made a strategic investment in our long-term vision to best serve the controller with our largest acquisition ever. The acquisition of Remilia marked our entry into the adjacent market of accounts receivables automation and grew our total addressable market to more than $28 billion. History has shown that companies who invest in a downturn are often better equipped to respond to demand when the economy recovers. We believe these investments have made Blackline stronger and well positioned to capitalize on an improving macroeconomy in 2021. Third, we continue to use our expertise to bring value to the market. When you engage with a customer or prospect around their corporate goals, the conversation changes to a strategic discussion of proven use cases, processes that scale, and real value creation. Our Modern Accounting Playbook, or MAP, offering is one example of how Blackline uses its expertise and leadership to sell value and has been a strong growth lever for us in the mid-market. At our Beyond the Black event in November, we extended this initiative with the introduction of our collaborative accounting experience as a framework to guide customers and prospects along every step of their modern accounting journey. We have turned the insights and learnings from nearly 300,000 accountants across more than 3,400 customers into leading practices that accelerate time to value and create great customer experiences. Our ability to lead our customers has continued to generate returns as we land new accounts, expand our footprint with existing customers, generate goodwill and further strengthen our competitive position. And fourth, we came up with new and innovative ways to virtually engage with and connect to the finance and accounting community. From webinars to finance transformation series to best practice summits and strategic client forums, we continue to host educational and world-class events that focus on urgent topics such as the remote close and cash optimization. Our Beyond the Black event was our largest virtual event yet, and it was a huge success. Beyond the Black attracted 12 times as many attendees as and more than 700 new prospects. This event is about bringing our community of accounting and finance leaders together to educate them on how modern accounting can support their organizational goals. Nearly 4,000 attendees participated in the SAP track to learn how to enable financial close excellence within their SAP instance. We had more than 2,000 attendees tune into our newly introduced Blackline Cash Application Breakout Session, formerly known as Remilia Cash. We received hundreds of positive reviews from customers in G2, Trust Radius, and Gartner Peer Insights, as well as A best-in-class virtual event net promoter score of 62 for the event. And, of course, the event generated new opportunities and interest from both new and existing customers. These touchpoints have enabled us to reach a broader audience in 2020 than we could have in prior years. We believe this degree of engagement and awareness will continue to enhance our brand recognition and drive future opportunities. These initiatives, combined with a continued improvement in the demand environment, drove another quarter of strong results. We saw momentum across all facets of the business, resulting in better-than-expected performance for the quarter. For instance, we continued to see an increasing trend of large deals, both new and expansion, suggesting companies are committing to large digital transformation projects. Our existing customers continued to progress consistently, on their finance transformation journeys with upsells, cross-sells, and the addition of strategic products. Following three consecutive quarters of large deal momentum, we feel good about the pipeline for large transformational deals in 2021. Our MAP offering continues to gain strong traction in the mid-market. MAP generated a record number of new logos in Q4, eclipsing the earlier record and commanding a higher average sales price. From a sheer volume perspective, nearly half of our new logo volume in 2020 came from map logos alone. As mentioned earlier, our map offering is aligned with our value approach to selling, which is making it easier for customers to buy and creating greater consistency for our mid-market sales engine. Solex was another strong performer, resulting in its largest quarter to date. As our Solex partnership has matured, It continues to drive more revenue and a greater volume of new logo ads. In 2020, Solex added nearly twice as many new logos when compared to 2019. What's more, now that this partnership is two years in, we also started to see account expansion with the Solex add-on business throughout the year. We have a very strong land and expand model, and although the primary goal of the Solex partnership is to generate new logo ads, We expect Solex customers will experience account growth similar to that of our direct customers. Given the continued progress with this relationship, we believe we have a good setup for growth in 2021. Our new cash application product has generated a significant amount of interest among existing customers. We signed our first few joint deals in the quarter as extensions to existing contracts, which allowed for accelerated sales cycles. We also captured a small number of new cash applications logos due to the urgent needs surrounding cash optimization. Cash application has only been available for a short time, but early indicators are strong, and we like what we're seeing in the market. And of course, our partner ecosystem continues to drive new logos and account expansion, and we saw that trend continue in the fourth quarter. Our partners tell us that their customers urgently need help with their remote close and cash optimization. We believe our partner ecosystem will continue to validate our value proposition and influence key decision makers in 2021. Throughout 2020, we've seen continual improvement and Q4 marked yet another quarter of increasing activity and momentum, albeit not at the same level we experienced pre-COVID. With that said, We exceeded expectations in the current macro environment and delivered strong Q4 2020 results that we're really pleased with. Looking to 2021, in January we held our company-wide kickoff event where I shared with our employees around the globe how committed we are to them, to our customers, and to their future success. Just as importantly, we laid out our strategy for the upcoming year. Let me share with you now what I shared with them. Our strategy for 2021 is to continue to invest and to build on our long-term initiatives to fuel accelerated growth. From a product perspective, our vision is to improve and automate finance and accounting processes to be the most indispensable platform for the controllership. In 2020, we introduced new functionality, new products such as Cash App and Account Analysis, and we discussed our vision for the Touchless Close. In 2021, we will sustain and extend investments in our existing products and assess the market for adjacent opportunities to deepen our product offering and drive adoption of our platform. As the pioneer and leader in our space, we take that role very seriously. As such, we will continue to focus on strengthening our competitive advantages. We believe our ability to serve our customers and our commitment to customer success is a huge differentiator for BlackLine. In 2021, we will continue to leverage our partner ecosystem, invest in our customer success teams, and use our expertise through offerings such as MAP and the Customer Journey Framework to help more companies make the move to modern accounting, accelerate their time to value, and ensure great customer experiences. And of course, we will continue to drive our organization and build a more inclusive, equitable, and diverse workplace. We enter 2021 stronger than we were a year ago, and we believe we are well positioned to capitalize on the huge market opportunity ahead of us. The key to success in this upcoming year is continued improvement in the demand environment. Throughout 2020, we saw this increase, and as we move into 2021, we are confident that CFOs and controllers are wrestling with these same challenges more than ever before. Timing in this macro environment will affect everything. Our expectation is to continually come up the curve throughout the year. We look forward to sharing more about our 2021 and long-term strategy at our analyst day on March 9th. Before we discuss financial performance, I wanted to thank and congratulate Therese on building such a strong and unique company. Therese started this journey that became Blackline nearly 20 years ago. The position we have in our space, our brand, reputation, market-leading products, and customer loyalty are all a reflection of the past 20 years of her life's work. When I woke up on January 1st, my inaugural day as CEO at Blackline, Therese was the first person to reach out with an encouraging and supportive message. I'm grateful to be in a position to grow this company and incredibly excited to have a front row seat for the opportunity ahead. And now, I'll turn it over to Therese.