BlackLine, Inc.

Good day and thank you for standing by. Welcome to the Q1 2025 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 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 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, SVP 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 Patrick Villanova, 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 plans, objectives, and expected performance, in particular our guidance for Q2 and full year 2025, 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 day 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-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 at the SEC today. Now I'm going to 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 on today's call. Overall, We are pleased with our performance in the first quarter as many of our operational priorities showed solid progress. We delivered 6% revenue growth in the first quarter with a non-GAAP operating margin of 21%. Booking's performance was solid with average deal sizes increasing both on a net new and average basis. And importantly, the number of customers generating over 1 million or more in ARR increased to 79 this quarter up from 71 in the fourth quarter, as we deepened and broadened relationships. Further, we saw momentum build through the adoption of Studio 360, where we signed several deals with companies like Tractor Supply. Our new pricing model is tracking slightly ahead of our expectations. We saw several wins with customers, such as USAA, who value the flexibility and predictability this new pricing model provides. Our go-to-market execution in the first quarter showed meaningful improvement across all geographies, driven in part by our new chief commercial officer's leadership, as well as our new leaders in Europe and Asia Pacific. We continue to see solid growth in our pipeline and within our SOLEX partnership. We have implemented more rigorous deal qualification processes and strengthened coordination between our account management and customer support teams. These improvements are expected to help drive expansion while reducing future churn and attrition. Our digital-first marketing approach is enhancing our commercial effectiveness as we introduce new features, functionality, and AI capabilities to our users and prospects. These operational improvements give us confidence in our ability to create a more effective, efficient, and predictable sales motion. Our Solex partnership outperformed in the first quarter and remains a strategic growth driver. we are leveraging improved organizational alignment to accelerate joint sales efforts. This includes expanding our offerings to SAP users, especially with Studio 360, to deliver value as customers transition from on-premise to cloud ERP environments. Our industry-focused approach is delivering results by combining our finance expertise and solutions with industry-specific knowledge. Many Q1 wins directly resulted from our industry expertise, And as Teresa will share, we plan to launch additional industry-specific solutions to build upon this early momentum. In public sector, we saw solid progress despite uncertainty. Our U.S. teams have developed a strong pipeline across federal, state, and local governments while working closely with key partners. The public sector is a key investment area this year as we see this as a long-term opportunity. We are applying the same disciplined approach to marketing that we have implemented in sales. which has improved both the volume and quality of opportunities, supporting aggregate pipeline growth. In fact, we have seen material improvements in website visits, demo requests, and lead generation through our dot com and digital marketing efforts, which is driving top of funnel activity. We continue to position ourselves as the autonomous finance platform for the Office of the CFO. This leverages our established credibility and brand permission in record to report and invoice to cash processes while emphasizing how our platform and products are becoming increasingly critical to our customers' operations. We are reinforcing this positioning with a refreshed AI-focused strategy that highlights our technological capabilities and roadmap. Customers continue to prioritize rapid results and measurable returns on their investments. Our ability to deliver value quickly has become a critical competitive advantage. Customers need solutions that work immediately, not in one or two years, especially as technology investments may face increased scrutiny this year. A number of our wins this quarter related to customers restarting or accelerating their digital finance transformation journeys and using even more of the Blackline suite. We have made significant progress in accelerating our implementation timelines for customers. In Q1, go live volume increased by 20% compared to the same period last year. Also, our implementation times have been substantially reduced for our financial reporting analytics and invoice to cash solutions. And we are currently focused on more rapid time to value for our intercompany solutions. As mentioned, our SAP partnership continues to accelerate. We have implemented several key changes we announced last quarter. We have aligned our account executives, pre-sales, and customer success managers with SAP's market units. We have also succeeded in adding Blackline solutions to SAP's channel price list, including our public sector strategy, Google Cloud Marketplace, Cloud Choice Flex, and value-added reseller channels, which will be commercialized this quarter. As SAP and Blackline further align our unique finance transformation capabilities, we have achieved an important solutioning alignment step, which allows the prepackaged bundling of both SAP-authored solutions and Blackline-authored solutions into a single SAP SKU bundle that supports global finance transformation ERP offerings. Blackline is also now included as part of default SAP solution offerings and sales motions to add value to SAP Cloud ERP customers. We believe this small but critical change can increase our attach rate and position our solutions earlier in ERP migrations. This is a key part of our combined goals to deliver higher ROI and value for customers going through digital transformation. We are SAP's first ever Solex partner to be included in a SKU package bundle with SAP-authored solutions. This is expected to deliver greater value to customers that need powerful financial consolidation solutions. Looking ahead, We have a solid roadmap for launching additional products eligible for the SOLEX program, especially Studio 360. We also are exploring opportunities to develop AI and agentic AI-specific SKUs as part of this partnership as we continue to align our go-to-market vision. Our revenue renewal rate was 94% this quarter. While we could see some pressure on customer retention due to ongoing economic conditions, We have implemented several strategies to counteract and mitigate churn and attrition, which should serve to deepen our importance with customers. First, our new platform pricing model helps protect against user-based attrition, which has been a headwind to NRR and revenue growth. Second, we are strategically shifting customers from annual to multi-year contracts as they renew. In Q1, the percentage of customers choosing multi-year renewals increased by 14 percentage points. This approach aligns with our strategy of guiding customers through transformation journeys while reducing churn and attrition and ultimately driving more consistent, predictable revenue growth. Our RPO performance this quarter reflects some of our initial progress. Turning to key deal activity this quarter, in North America, we expanded with Marathon Petroleum. As a traditional financial closed customer, Marathon was looking for additional automation across their invoice to cash processes to drive efficiency, and improve their working capital cycle. Our invoice-to-cash offering provided demonstrable ROI, especially when used in conjunction with our financial closed solutions to give end-to-end connectivity and visibility across multiple teams and processes. Also in North America, we won a competitive enterprise rip and replace with a leading cybersecurity company for our suite of financial closed solutions, leveraging our unlimited user pricing model. While initial conversations were focused on enhancing efficiency, control, and visibility at one division, our unlimited user model allowed the company to think bigger about global transformation and broaden their scope across the entire enterprise. The result is a classic win-win for both the customer and for Blackline. On the Solix side, we saw solid performance in our international markets, a key focus area for Blackline. Specifically, we signed a net new deal with Rexel, a leading electrical distributor based in France for our financial close solutions. Additionally, we signed Japan Tobacco to a net new financial close deal. Further, we signed Mitsubishi Electric and Irimetsu Kusan, again with core financial close capabilities marking continued success in our partnership in Japan. We also saw several Studio 360 deals this quarter with companies like AGL, a leading Australian electric company, who took advantage of not just our Studio 360 platform, but also our unlimited user pricing to drive real transformation across their business. We signed Hitachi Energy Holdings, who chose to leverage the powerful capabilities that Studio 360 offers to elevate their existing financial clothes usage and drive even more efficiency and automation across their business. Now, balancing our enthusiasm for our first quarter progress are the realities of the current macro environment. recent policy announcements have made it difficult for companies to plan long-term investments with confidence. These policies could affect Blackline as they may force customers in certain industries and geographies to postpone or reallocate investments until they gain more clarity about the future business environment. While we have not seen any impact across our pipeline, renewals base, or implementations thus far, we are clear-eyed that conditions may develop that influence our go-forward results These potential risks are captured in our updated revenue guidance, which Patrick will speak to shortly. We believe that Blackline is better positioned than ever to help customers adapt to today's environment. We offer practical, reliable, and trusted solutions. Our intercompany and invoice to cash solutions directly help customers offset potentially higher operating costs by minimizing taxes, helping ensure compliance with trade policies, enhancing efficiency, and improving working capital. Combining these with our new Studio 360 platform, our pricing strategy, our enhanced partnership with SAP, our industry and public sector initiatives, and our budding relationship with Workday strengthens our importance to the office of the CFO. This gives us the confidence to navigate the near term while remaining focused on delivering against our long-term goals. With that, I would like to turn the call over to Therese.