BlackLine, Inc.

Good day. Thank you for standing by, and welcome to the Black Line First Quarter 2021 Earnings Conference Call. At this time, our participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded, and if you require any further assistance, please press star 0. I would like to hand the conference over to speaker today, Alex Geller, Vice President of Investor Relations. Please go ahead.

Good afternoon, and thank you for your participation today. With me on the call is Mark Huffman, Chief Executive Officer of Blackline, and Mark Parton, Chief Financial Officer. 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 Q2 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.blogline.com or on our form 8K filed with the SEC today. Now, I will turn the call over to Mark Wiegand.

Good afternoon, everyone, and thank you for joining us today. Our performance in Q1 represented a strong start to the year. We executed on our go-to-market strategy and made early progress on our 2021 initiatives. On a macro level, we saw yet another quarter of increasing momentum as demand improved globally across all facets of the business. As a result, we saw billings growth increase for a third consecutive quarter and grew first quarter revenue by 20%. These strong results were demand driven. We remained focused on execution and saw good progress from our key initiatives. Let's start with the initiatives that drove our results in Q1. There's a large embedded opportunity in our existing customer base. At our investor day conference in March, we sized it at an incremental $800 million in ARR for strategic products alone. To capitalize on that opportunity, we continue to invest in our account management team to lead our customers, help them realize value, and align with their business objectives. Our ability to expand the wallet share amongst our customers was a durable growth lever throughout the pandemic. And we saw that demand strengthened in Q1. As a result, we added to the growing list of customers spending a million dollars or more in ARR with Blackline and saw continued momentum as other large customers grew their Blackline footprint with acceleration of their global rollouts and product expansion. Strategic products in particular had an impressive quarter, accelerating to 23% of sales coming in above the high end of our anticipated range of 15% to 20%, with solid performances from all strategic products, including cash application. In Q1, we added a number of large quality new logos. These customers are prioritizing digital finance transformation and turning to Blackline to guide them on their journey. We closed deals with new customers and saw the return of some deals that stalled early last year. The quality and size of the new logos we are seeing in the quarter signals to us that budgets for finance transformation are opening back up and we feel good about the momentum through 2021 as CFOs gain more confidence in the macro environment. Another area of the business where demand is beginning to return is on the international front. Our sales performance in major European and Asia Pacific markets improved in Q1, driving international revenue to 27% of the total, up from 24% in the prior year. Our international success is largely tied to an improving demand environment, focused execution efforts with our global partners, and our expanded presence abroad from the Remilia acquisition. Our international performance is returning, but still trailing the levels we are seeing in the North American markets. Solex contributed to our international success and delivered a strong quarter, as measured by growth and new logos and continued expansion deals, resulting in SAP partnership revenue increasing to 25% of total revenue. Our Solex relationship continues to mature as we tighten sales alignment across our joint accounts. We're seeing progress across nearly all regions with improved engagement, strong demand generation, and large digital transformation wins. This is a great start to the year, and we believe SAP's new RISE initiative puts cloud front and center and positions Blackline very well. Another area of strong Q1 demand was in accounts receivable automation with a growing number of cash application deals for both new and existing customers. We now have two quarters under our belt since we entered the accounts receivable space, and we feel good about the momentum we're seeing for AR automation due to the urgent need surrounding cash optimization. Cash remains king in today's environment, and you can see further validation of that with the recent influx of investment dollars to the accounts receivable market. We are really excited to be innovating in this space and believe this will enhance our value proposition and drive greater stickiness of our platform. Throughout the pandemic, Our marketing campaigns and virtual events have been very successful in generating opportunities across a large audience. Now that we are one year in with virtual events, we have the proof points that these opportunities are converting and yielding positive results. As such, we plan to host all significant 2021 events virtually. Next, I'd like to speak to the progress we've made on our product strategy. As we outlined in our investor day, our vision is to become the most indispensable platform for the controller. As such, we are innovating for the controller in three ways. First is our existing product enhancements for the financial close. We are investing development resources to innovate and rapidly advance our platform functionality. Our new product throughout this year, Account Analysis, remains on track for general availability and will deliver synergies across our platform and help drive adoption of other modules. Second is product adjacencies. We are committed to expanding our solution to bring end-to-end optimization and automation to other areas that touch the controller. In Q1, we further extended our platform with the release of AR Intelligence, the latest product in our portfolio of accounts receivable automation solutions. AR Intelligence is a natural complement to Cache Application and helps our customers harness real-time data with powerful analytics. We're excited about this new product and the early feedback is positive. This product is one of several AR automation offerings to come as we continue to build our portfolio of accounts receivable solutions. And third is platform modernization. We remain on track with our public cloud migration efforts. Starting in Q1, new US-based customers are now being deployed in Google Cloud and we'll begin migrations of existing U.S. customers this month. Our migration to the public cloud is a multi-year journey to modernize our platform and provide scalability so we can stay ahead of our customers and their growing business needs. Last but certainly not least, I wanted to share some Q1 customer wins. One of our largest deals in the quarter was a new Fortune 50 company based in Southeast Asia. This company was looking to introduce automation to transform their manual processes around the financial close following a surge of online e-payment demand. Their CIO had strategically implemented Blackline at a former company and led the effort to engage Blackline in this deal. This company had already implemented S4 HANA and were able to leverage our SAP relationship as well as one of our global SIs who is advising the company's executive stakeholders around their business initiatives. We showcase Blackline's ability to load and match high transaction volumes with rapid timeframes up to 30 million transactions in an hour and identified synergies with S4 HANA. In Q1, this customer became our largest Solex win in APAC to date with the purchase of our full finance transformation solution, including our transaction matching engine, to automate nearly 1 billion reconciliations per month between their e-payment transactions and merchant statements. A Fortune 500 automotive distributor first became a Blackline customer in February 2020 to drive significant improvements in process and technology and support a move to shared services. Throughout 2020, they went live with our closed process management solution. Following successful implementation in Clear ROI, They added more users and transaction matching to automate complex bank statements in Q1. One year in, this customer has consistently expanded their Blackline footprint all four quarters since they became a customer, and they did this throughout the pandemic. They also have future plans to explore new products and additional rollouts across all of their 33 global markets. A Canadian professional services firm was challenged by significant manual accounting pain points, including decentralized multi-currency accounts, limited visibility into real-time data, and high staffing costs associated with frequent staff turnover. We identified a framework for a modern accounting transformation that included automating their accounting workflows, unlocking real-time visibility, and managing their business complexity. As part of their procurement process, they also looked at a point solution provider and determined that even though we were the premium price provider, there was better alignment across project goals, desired outcomes, and higher ROI. We were able to identify cost savings across many parts of their business, amounting to a total quantifiable ROI of more than 400% over a five-year period with an estimated payback period of less than eight months. We added this customer as a new logo in Q1 with the purchase of our finance transformation suite and transaction matching across a variety of use cases, including cash and bank management, intercompany processing, and complex vendor statement and reconciliation processes. Beyond these examples, we continue to see companies prioritize Blackline. The remote work environment is dominating many conversations with some companies fearful of the risks associated with closing remotely, while others want to modernize to be successful in a remote work environment. Other companies are focused on scaling effectively and moving away from manual processes. And, of course, many companies are looking to digital transformation to modernize their back office. Our partners are telling us that they are having the same conversations with their customers. These conversations are generating momentum and demand for our platform and driving growth in our business. As we look to the rest of 2021, the key to our success is continued improvement in the demand environment. Our performance in the first quarter gives us increasing confidence in our ability to execute, particularly as the market continues to recover and the pandemic drives a long overdue investment cycle into the back office. As the market leader in this space, we believe Blackline is well positioned to capitalize on these favorable market trends and drive long-term growth. And now, I'll turn it over to Mark Parton.