BlackLine, Inc.

Good day, and thank you for standing by. Welcome to the Q2 2024 Blackline 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 1 1 on your telephone. You will then hear an automated message advising that 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 first speaker today, Matt Humphries, Vice President of Investor Relations. Please go ahead.

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 call that are not historical facts, including those regarding our future plan, objectives, and expected performance, in particular our guidance for Q3 and full year 2024, 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 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 statement, 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-GAAP. A discussion of these non-GAAP financial measures and information regarding reconciliations of our historical GAAP versus non-GAAP results is available in our earnings release, which may be found on our investor relations website at investors.blackline.com, or in our Form 8K filed with the SEC today. Now, I will turn the call over to Blackline's Co-Chief Executive Officer, Owen Ryan. Owen?

Thank you, Matt, and good afternoon, everyone. Thank you all for joining us today. Blackline's results this quarter were driven by improved execution as progress against our operating model continues at a steady pace. Specifically, we delivered $161 million in total revenue, non-GAAP operating margin of 20%, and $43 million in non-GAAP net income. Our strategic product portfolio had a solid quarter, and we also saw the number of customers with $1 million or more in annual recurring revenue increase to 68. Our go-to-market teams executed well this quarter, and we believe that the additional focus, rigor, and discipline across the business is supporting our results. We also have several strong and proven leaders that recently joined Blackline, and their early efforts are beginning to drive the types of outcomes we expect longer term. While there is even more work to do going forward, we believe early results are validating our efforts while further enhancing our differentiation in this large and growing market opportunity. Going deeper into execution this quarter, we saw improved close rates, larger deal sizes, and solid competitive win rates. Also, our enterprise business was a highlight this quarter, with notable performance in Europe and APAC. While total deal volume remains subdued and new business sales cycles remain extended, these results give us confidence that our efforts are driving improvements. We also saw solid results from our strategic products portfolio and note that our consolidation and financial analytics pillar saw some great wins and expansions. We recently began packaging our financial close and consolidation solutions together as a unified end-to-end offering for customers and prospects. While this initiative is still in its early stages, initial results are promising, and we look forward to expanding this offering more broadly in the months ahead. We also saw some improvement in pipeline creation, especially as we exited the quarter. One area supporting this improved pipeline is in our invoice-to-cash pillar, which has seen building interest from customers and prospects interested in electronics, invoicing, presentment, and payment, or EIPP. We acquired this capability last year as part of our data interconnect acquisition, and after a successful integration process, have started to position our offering in the market as a complete end-to-end invoice-to-cash solution. Further, this additional capability helps support our recent inclusion in the Gartner Magic Quadrant for invoice-to-cash. Next, we are making progress enhancing our marketing message and brand thanks to our refocused marketing efforts. We have become more disciplined in our customer targeting while driving a more comprehensive end-to-end message. We have also become more intentional on meeting customers where they are in their lifecycle, both pre- and post-purchase. To not only land new customers, but also enable quicker, more efficient expansion within existing accounts. While early, these efforts help support our strategic goal of elevating the conversation with our customers in the Office of the CFO. One area where I am pleased to see progress is in our continuing effort to ensure that the value of the black line promise remains steadfast and absolute. We focus on delivering a strong value proposition to our customers, emphasizing not only time to value, but also the ROI on their precious spend. This value-centric approach has become especially important in today's environment and has strengthened our position against competitors who often rely more on price as a differentiator. We believe our improving competitive win rates indicate that our focus on value is resonating well in a market increasingly attuned to value over cost. As many of you know, I regularly meet with customers and prospects to understand their needs and how Blackline can better help transform their accounting and finance organizations. This quarter, I've seen a clear trend reinforced, and that is digital finance transformation is still very much in focus. Customers still see this as a multi-year journey, and it is a core component of their long-term strategies. The key takeaway here is that while we may encounter short-term challenges related to budgets and the pace of transformation, the long-term opportunities and secular trends within the Office of the CFO remain strong and highly relevant. In addition to meeting with customers, I spend considerable time with our partners, aligning our goals and exploring joint opportunities to support our customers. We find that partner-led implementations, especially in the enterprise and upper end of the middle market, enhance our value proposition and supports our strategy of improving customer outcomes. Building on this, in quarter two, we made progress on enhancing our distribution efforts through our partner network. We've achieved better partner alignment, particularly in enterprise, resulting in a higher percentage of partner influence pipeline and an increased sharing of services and implementation work. Additionally, we are integrating our partners more deeply into all four of our pillars to drive further global opportunities. We have also seen notable increases in partner participation at our customer events, reinforcing and validating our progress. Our partnership with SAP shows solid performance this quarter from our Solex business, driven primarily by new customer wings. And we recently announced that SAP has included our financial reporting and analytics solution as part of the Solex partnership. We are optimistic about this joint offering with SAP, given recent success with this solution. Our renewal rate this quarter was in line with expectations, but below where we expect to be over the longer term. So how are we continuing to address this? First, we have been prioritizing an enhanced customer onboarding experience to ensure consistency and adoption. This approach directly supports our value proposition and accelerates time to value for customers. It also has the potential to accelerate expansion and renewal activity within our customer base. Next, we are quickly driving more digital self-service options for customers based on continued customer feedback. This shift aims to increase customer satisfaction while reducing our cost to serve. We have also begun building customer groups within key industries where users are sharing their experiences and success leveraging Blackline. Finally, our recent efforts to drive process optimization with customers has led to improved levels of customer satisfaction, better customer engagement, and increased usage. While we are pleased with these initiatives, we anticipate that it will take a few more quarters to fully realize these benefits and drive our renewal rate to our traditionally high level. As mentioned earlier, we saw terrific new customer wins this quarter with notable outperformance in Europe and APAC. Specifically, we won a competitive replacement with one of the top two UK-based pharmaceutical companies as part of our Solex partnership. The customer was looking for a partner to automate and transform their finance and accounting processes while also consolidating on a single trusted vendor from a collection of manual tools. This multi-solution deal, including financial close, automated journals, intercompany, and smart clothes positions the customer to drive real transformation across their accounting and finance organization. Next, in North America, we signed a well-known fast food chain to a multi-solution deal as part of a competitive replacement. The customer was initially looking to replace their financial clothes solutions with a more modern and end-to-end solution. They were also considering moving away from their current vendor to their native ERP partner. However, our efforts to position and sell both financial close and consolidation together, providing an end-to-end solution, exceeded their expectations and was a logical choice for their finance and accounting teams. In the mid-market, we signed a leading global law firm to a multi-solution deal as part of their digital finance transformation efforts. Their existing financial close and consolidation processes are manual, time-consuming, and lack appropriate visibility and automation. Our sales team, working hand-in-hand with our pillar leaders, were able to speak to the value of a modern end-to-end solution for their financial close and consolidation process to support their longer-term strategic goals. We also saw some large expansions with customers this quarter, with notable cross-selling of our strategic products. We signed our largest deal ever in Canada with an existing global insurance customer that needed a partner to help them consolidate their complex financial systems landscape enhance their compliance and controls, and drive automation as they continue to grow. Leveraging a partner, we were able to deliver a compelling value proposition that supports their multi-year digital finance transformation journey. In APAC, we expanded with Australia Post, an existing customer and one of Australia's largest government-owned entities. They were seeking a solution to improve and automate their invoice to cash processes. Working with their finance team, we demonstrated how our invoice to cash solution and partnership could serve to drive real automation, unlock working capital, and give them additional visibility and control as they look to reshape their business. With that, I'll hand it off to Therese to discuss how we continue to accelerate innovation for our customers.