BlackLine, Inc.

Good day and thank you for standing by. Welcome to the Q2 2023 Black Line Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Matt Humphreys, Vice President of Investor Relations. Please go ahead.

Matt Humphreys Good afternoon and thank you for joining us today. With me on the call are Owen Ryan and Therese Tucker, Co-Chief Executive Officers of Blackline, as well as Mark Parton, Chief Financial Officer. Before we get started, I'd like to note that certain statements made during this conference that are not historical facts, including those regarding our future plans, objectives, and expected performance in particular. Our guidance for Q3 and full year 2023 are forward-looking statements within the meaning of the private securities litigation format of 1995. These forward-looking statements represent our outlook only as of the date of this call. While we believe any forward-looking statements made during the call are reasonable, actual results could differ materially as these 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. All comparisons we make on the call today relate to the corresponding period of last year, unless otherwise noted. Finally, unless otherwise stated, our financial measures disclosed on this call will be non-gassed. the discussion of these non-GAAP financial measures and information regarding reconciliations of our historical GAAP versus non-GAAP results is currently available in our earnings release, which may be found on our investor relations website at investors.blackline.com or in our form AP file of the SEC today. Now I'll turn the call over to Blackline's Co-Chief Executive Officer, Owen Ryan. Owen?

Thank you, Matt, and good afternoon. Thank you for joining us today. This was a solid quarter for Blackline. even as the market environment for enterprise software remains uncertain. We were able to exceed our revenue and non-GAAP net income targets this quarter and took some key steps as we look to strengthen and expand our market leadership and competitive positioning. Specifically, we delivered total revenue of $145 million and non-GAAP net income of $31 million. Approximately 70% of sales this quarter came from existing customers, underscoring our commitment to expand and go deeper with our customer base. As part of this, the number of customers with one million or more in annual recurring revenue increased to 53 this quarter, up 23%. If you recall, there are five key areas that I am focused on in my role. These are, one, relentless execution across our business operations, two, Blackline's market message and brand. Three, ensuring customers receive the value of the Blackline promise. Four, building and optimizing our distribution network. And five, customer retention. Given these, I will walk through each area and provide some insights on how we are addressing each while driving even higher operating efficiency going forward. On execution, We delivered against our revenue and non-GAAP net income targets this quarter despite market uncertainty. While living up to these promises is of great importance, there is more work to be done to generate even more consistent, effective, and efficient execution across Blackline. Specifically, we are thoroughly analyzing and refining the structure of our organization to ensure we have the right people in the right roles and working to ensure that accountability and ownership align with our strategic goals. For example, we recently moved our business development teams from marketing to sales. This change is important as demand generation and the seamless creation of quality pipeline is vital to our continued success. By integrating our business development teams into sales, and more importantly, under the same leadership, we can ensure that alignment and ownership drive our desired outcomes while avoiding inefficient activities. Additionally, we are beginning to leverage our deep industry expertise and transition from an industry-agnostic go-to-market model to a more industry-equipped approach. With a long history and a strong presence in key sectors like manufacturing, retail, and financial services, We believe that the combination of domain expertise in accounting and financial automation, along with industry experience, can accelerate our growth and provide our customers with additional value. As the premier brand and clear leader in finance and accounting automation for the Office of the CFO, having a consistent market message and brand promise is critical. we are actively working to better align our global messaging to speak to our customers in one voice. This quarter, we hosted numerous events across the world, including our Beyond the Black event in Australia and numerous local events. And it has become clear that our customers' challenges and priorities are very similar across markets. By optimizing and aligning our message globally, we will speak to the customer with one voice and make it easier for them to understand the value Blackline delivers. This has the added benefit of creating a better customer experience and in turn, makes it easier and more efficient to do business with Blackline. The Blackline promise we offer to customer holds immense value and we expect to deliver even greater time to value while extending our market leadership and competitive positioning. As part of these efforts, we announced a new five-day implementation program specifically tailored for mid-market customers. This program is designed to be the starting point of a customer's long-term journey with Blackline. It allows customers to accelerate their time to value by leveraging our core financial close solutions, such as account reconciliations, task management, and transaction matching. We already have a number of customers that have successfully completed the five-day implementation program. Some even did so right before they moved into a monthly or quarter-end close. Innovative offerings like this are important to our customers as implementation challenges are one of the top drivers of customer dissatisfaction, which can ultimately lead to churn and attrition, an outcome we are driven to eliminate. Moving to distribution, we see opportunity in reshaping and optimizing our global partner network to deliver more consistent performance and further profitable growth. We are working to drive greater accountability and alignment across our partners and clearly defining what we expect from them and what they can expect from Blackline in return. Importantly, we are accelerating the transition of partners from enablement to commercialization. As part of these efforts, we recently entered into a reseller agreement with a blue chip global consulting firm and current partner. This partnership holds great potential for both parties as it provides an appropriate framework for new customer acquisition and expansion via cross-sell and up-sell of our strategic product portfolio to our existing customers. As you are aware, it is all about the customer black line. We take great pride in how we enable our customers and support them as they grow. We only succeed if they succeed. One of the key metrics we use to track this is renewal rates. While they are very strong relative to our broader software peer group, we are not satisfied with current levels. As such, we plan to place a more disciplined focus on our existing customers. For example, we are moving quickly to standardize our processes internally, removing friction and realigning resources to deliver seamless customer experience from sales to onboarding to implementation and through renewal. We plan to introduce new engagement programs that prioritize digital transformation for customers. Leveraging best practices backed by years of Blackline customer data, these programs are designed to accelerate our customer success and time to value. And as new customers come to Blackline, We expect to co-create customer blueprints to drive digital transformation in their business, along with milestones and touch points to ensure adoption and satisfaction remains high. Despite market uncertainty, we are seeing greater customer wins and competitive takeaways across both the enterprise and the middle market. At the enterprise level, we signed a competitive expansion deal with a leading software and workflow company. who also has an existing partnership with one of our direct enterprise competitors. Despite this, the customer recognized their existing set of homegrown solutions and what their partner offered were not sufficient to support the growth they envisioned. Further, they recognized that the ability to seamlessly leverage key data from their ERP to Blackline Viya connectors was vital to deliver the level of automation they demanded. We also signed a leading financial services technology and payments company in a direct compete with a known consolidation provider. The customer recognized the power of accounting automation and the benefits that can accrue from removing inefficient and manual work. Further, the expected ROI, time to value, and focus on governance and security resonated strongly, and we believe far exceeds anything else in the market. Additionally, we signed a number of intercompany deals this quarter with customers like Shift4, a leading integrated payment provider, and NOV, a provider of equipment, technology, and services to the global energy industry. We also signed our largest middle market deal on record, driven by the need for modern innovative solutions for complex intercompany processes. Finally, Solex deal activity remained healthy this quarter with a number of new customer wins globally. For example, companies like Restar Holdings in Japan and Anglo American in Europe are just beginning their black line journey. We remain excited about the long-term opportunity with SAP and our senior leadership team will drive the broadening and deepening of this partnership. With that, I will turn it over to our founder and my fellow CEO, Therese, to discuss her thoughts.