BlackLine, Inc.

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the third quarter 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, you will need to press star 1-1 on your telephone keypad. As a reminder, this conference call is being recorded. At this time, I would like to turn the conference over to Mr. Matt Humphreys, Senior Vice President, Investor Relations. Sir, please begin.

Good afternoon, and thank you for joining us today. With me on the call are Owen Ryan, Chief Executive Officer of Blackline, as well as Patrick Villanova, Chief Financial Officer. In the Q&A portion of today's call, we'll also have Jeremy Ong, Blackline's Chief Technology Officer, join us. 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 Q4 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 of the date of this call. While we believe any forward-looking statements made during the call are reasonable, the 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 and presentations. 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'll turn the call over to Blackline's Chief Executive Officer, Owen Ryan. Owen?

Thank you, Matt. Good afternoon, everyone. Today, I will detail the changes we have made across our business that are beginning to deliver tangible results. Over the past two-plus years, we have methodically re-architected our leadership team, our go-to-market engine, and our technology and operational structures. That foundational work is now largely complete. These changes give us greater confidence that we can deliver accelerating revenue growth and margin expansion as we exit this year and move into 2026. But first, let's start with this quarter's performance. We delivered another solid quarter of improving execution. Revenue growth increased to 7.5%, We achieved a non-GAAP operating margin of 21.4% and a free cash flow margin of 32%. Patrick will provide a more detailed discussion on the financials shortly. The strength this quarter was from new customer acquisition. New customer bookings were up 45% and the quality of these wins is evident, with the average new deal size more than doubling by 111% and the median new deal size up by approximately 50%. New customer bookings mix accounted for 41% of overall bookings. This is not just about closing more deals. It is about winning larger, more strategic platform deals, often against our biggest competitors. Let me put this into perspective with some examples. Through our direct sales efforts, we secured our largest ever total contract value deal with a leading global commercial real estate services company. This deal took two years to close and was multifaceted. with Intercompany serving as the entry point and includes a multi-year expansion across our financial closed suite, leveraging Studio 360 and our new platform pricing. We directly landed another new logo with a Fortune 20 company who chose our entire financial closed suite, Studio 360, and our platform pricing model, replacing existing tools and solutions. This was a great example of perseverance and leveraging past success, as the CFO's previous experience with Blackline translated into a meaningful new win. And in the insurance industry, we won a multi-solution deal with Accelerant, a leading middle market specialty insurance exchange. Looking for a scalable platform across both invoice to cash and financial close, the customer moved forward with Blackline recognizing that a platform approach with Studio 360 was the optimal solution to support their future revenue growth versus remaining with multiple legacy vendors. On the partner side, our Solex channel performance is improving. We closed mega company deals this quarter with Coca-Cola Euro Pacific Partners and with Boots UK Limited, proving the strength of our golden architecture with SAP. A key driver in many of these wins was our new platform-based pricing model, which accounted for nearly three quarters of new customer bookings and is seeing solid international adoption after only two quarters. Our strategy is not just about winning in established markets, is also important to unlock new growth opportunities. We have continued to make progress within the public sector. Despite the federal government shutdown, our pipeline continues to grow and we successfully delivered the production instance for our sponsoring agency in October. We anticipate completing final testing by mid-December and are on track to receive final FedRAMP approval in early 2026. Now turning to our existing account base, the interest in our Studio 360 platform new pricing model, and our Verity AI offerings created some noise this quarter. We are seeing two dynamics play out as we see more customers evaluate or adopt platform pricing. First, as we succeed in delivering higher levels of automation, customers can achieve their outcomes with the need for fewer licenses, which is leading to user attrition. Second, we saw several large customers pause user ads to instead engage in deeper, more strategic discussions about moving to Studio 360 platform-based pricing, and our Verity AI offerings. Our platform pricing model is designed to decouple our growth from a simple seat count and align our revenue directly with the value we deliver. While this strategic transition will take time to work through our install base, we believe the outcome is clear, a more committed customer base providing more predictable, value-aligned revenue. Although these dynamics created a slight headwind to net revenue retention, we view it as a leading indicator of a positive transition. In fact, the most telling indicator of long-term customer confidence came from our renewal activity, along with our solid platform pricing adoption. Importantly, the mix of multi-year renewals is increased to represent over half of all renewal bookings this quarter, demonstrating that customers are buying into our long-term vision and locking in their partnership, which increases the predictability and durability of our revenue. Finally, the plan churn from our strategic de-emphasis of the lower end of the market is nearing its conclusion. We expect this headwind to be largely complete in the first half of next year. These outcomes are not an accident. They are the direct output of the foundational transformation I mentioned earlier. With much of this foundational work now complete, I want to detail the three pillars driving these outcomes. First is our go-to-market engine. Much of our success this quarter comes directly from the methodical work we have done to re-architect our go-to-market engine for scalable, efficient growth, focusing on three key areas. We have invested heavily in the tools and the processes our teams need to win. Our entire sales motion is now powered by modern billing, prospecting, contracting, and CRM systems that remove friction and provide better insights. For example, our experience with a new AI-powered prospecting tool has shown that a BDR can nearly triple their pipeline generation. All of our BDRs will now use this tool to more quickly create and qualify opportunities. We've also transformed our marketing efficiency. Our teams are leveraging new digital campaigns and tools to drive a significantly higher ROI on our spend. In fact, despite a decrease in aggregate marketing spend since 2023, We have seen strong growth in pipeline generation through the end of Q3, which is up approximately 50%. And while it's important to leverage new technologies and re-engineered processes, it comes down to people. With new leadership now established across the globe, we have actioned a more rigorous performance management program, elevating the bar and adding seasoned sales professionals. This focus is already paying off. Rep productivity is improving, and by the end of 2025, we expect it to improve by nearly 30% versus last year. These coordinated efforts are delivering clear results. As I mentioned, rep productivity is up, and importantly, our competitive win rates, especially in takeaways, improved again in Q3. We believe this is direct evidence that our Studio 360, platform pricing, and improving go-to-market execution are enabling us to win more in the market. The ultimate outcome is clear. We are building a more productive growth engine that costs less to operate. We expect these changes will drive a 10% improvement in our customer acquisition costs in 2025 and even greater improvements next year. Second is our progress in product and technology. We have modernized our technology stack to support a future of scale, efficiency, and AI-powered innovation. It starts with infrastructure. A critical milestone is the near completion of our multi-year GCP migration. I am pleased to report we only have a few customers remaining before we can fully decommission our private data centers. Finishing this project will unlock significant operating leverage and provide a modern, scalable foundation for our future innovation. This serves as the foundation for our Studio 360 platform. As the central nervous system for modern finance, its power begins with a unified data layer. Powered by our partnership with Snowflake, this layer is now leveraged by 90% of our customer base for advanced reporting in less than one year. This helped us achieve an approximately 80% cost reduction in data storage. The real game changer for Studio 360 is our progress in open connectivity. Our platform was architected from the ground up to be ERP agnostic, and our Studio 360 integrate capability extends this vision far beyond ERPs, through third-party financial systems. This ability to rapidly connect to any data source can allow customers to realize financial transformation much more quickly. We're also seeing good momentum with our ERP connectors. Our Oracle Fusion connector is already live with over 50 customers, and our Workday and D365 connectors are already being used by paying early adopter clients. This success is now unlocking the full potential of Studio 360 for our large portfolio of Oracle, Workday, and Microsoft customers. This powerful platform infrastructure is enhancing our entire solution portfolio from our newest technology to our most established products. The performance improvements are dramatic. For example, our new big data matching solution built on this modern stack delivers a 98% reduction in match times and handles nearly 30 times the data volume of our previous solution, which we see as tangible proof of our ability to deliver at any scale. We are also accelerating the delivery of new innovation. Our high-frequency reconciliation solution was adopted by 10 customers shortly after its general availability in Q3 and is already helping build a multimillion-dollar pipeline. And this just isn't about new products. We are also driving product-led growth within our core, For established solutions like journals, we've introduced new self-service capabilities for several common use cases, allowing customers to realize value faster and at a lower cost. And importantly, this unified trusted data ecosystem is the essential fuel for our agentic AI capabilities named Verity. Now I want to spend a moment on this because in a world of intense AI hype and uncertainty, it is critical to understand why we see AI as a significant opportunity that deepens our competitive advantage. Our moat is not built on a single attribute, but on a powerful combination of our proprietary data and our deep expertise in delivering trusted, auditable solutions to the Office of the CFO. First is our expertise in trust and auditability. In the Office of the CFO, black box AI is a non-starter. Trust, transparency, and auditability are paramount. Our entire platform was built from the ground up to be a system of record with a complete unbroken audit trail. Our approach is validated by our recent ISO 42001 certification for responsible AI, which formalizes our commitment to governance, risk management, and human oversight. In a world of increasing regulation, we view our deep culturally ingrained expertise in building auditable enterprise grade systems that finance leaders, and their auditor's trust is a massive competitive advantage. And second is data. AI models are only as good as the data they are trained on, and we believe our data is unique. It is not just that we have data from over 4,000 customers of all sizes across all industries and all geographies. It's that we have the historical, financial, and operational data set for our customers going back to the day they started with BlackLine. This proprietary data set represents the accumulated knowledge of what thousands of companies have done to close their books and manage their financial operations. We believe we are sitting on a wealth of process-specific data, which we are only at the early stages of utilizing. This can allow us to deliver unparalleled value. We can provide industry-specific benchmarking that shows a customer how their processes compare to their peers and where they can improve. We are able to train our AI models on the most intricate cases by industry in a secure, auditable way because we have the real world historical data to do so. This combination of proprietary data and our leadership in trusted, auditable systems is precisely why we believe we are positioned to win with AI in the office of the CFO. And this is just not a theoretical advantage. We are translating this directly into product reality. We began deploying Vera our conversational AI, to our customer base in October, just one month after its debut at Beyond the Black. With Vera as the supervisor of our Argentic workforce, we are launching a suite of powerful agents to execute high-value tasks. For example, Verity Prepare, our agent for account reconciliations, has shown it can deliver even higher levels of automation for customers in a trusted and auditable manner. Soon, we will deploy Verity Collect to deliver agenda capabilities to our invoice-to-cash customers, automating customer outreach and accelerating cash collection cycles. These initial agents are the first step in our broader strategy to address the full spectrum of financial operations. Future releases will target other complex areas across record-to-report and invoice-to-cash, including agents focused on high-volume transaction matching, variance analysis, remittance automation, and on-demand financial analysis. In parallel, we are executing a proof of concept with SAP to ensure the seamless technical and commercial integration of our AI-powered solutions into their ecosystem. This is a critical step in aligning our platforms and preparing to monetize our joint offerings for our shared customer base. And finally, our focus on innovation and AI also extends to the implementation process. Our efforts to reinvent the implementation process are already delivering significant results. In Q3, the number of customer goal lives increased by nearly 70% year over year and 17% sequentially. This is a powerful proof point of our team's improved execution and directly contributed to our services revenue this quarter. More importantly, it means our customers are realizing the value of their investments faster. We are also applying our AI strategy to go to the next level. we are preparing to launch implementation agents designed to automate and standardize the most common phases of deployment. We will begin piloting these agents with customers later this month before scaling them globally in the first quarter of 2026. Our focus on efficiency extends across the entire business and is organized around two key initiatives, creating a more efficient operational structure and leveraging AI to drive internal productivity. We have further adjusted our cost base for greater operating leverage. We have aggressively optimized our global footprint by moving headcount from high-cost to lower-cost locations. When I joined as co-CEO, our workforce was overly concentrated in high-cost locations. As we exit this year, approximately 25% of our Blackline professionals are delivering for customers in lower-cost geographies. This strategic shift provides a significant and durable structural advantage on margin as we move forward. In parallel, we closed offices in high cost areas while opening our expanding talent hubs in lower cost centers like India, Poland, Romania, and Mexico. Our confidence in AI comes from firsthand experience. We're not just selling this transformation, we are living it. Internally, We have aggressively created and deployed AI tools to become a more efficient and innovative company. Today, Blackliners are leveraging our internal AI platform or third-party AI tools in their daily work. The results in our product organization are promising. Nearly all of our engineers are leveraging AI tools today, and our most active developers are completing over 100% more pull requests than less active users. This is not just about coding faster, it is about delivering value to customers faster. Our innovation cycle time, the time from an initial idea to that feature being in a customer's hands, has improved by 23% year over year, with over 160 features and products being released this year. We have also created our own AI tools to drive efficiency, reduce costs, and better serve our customers globally. A recent example is our own internal AI translation services for our solutions that can rapidly create and provide documentation and training for customers in multiple languages, allowing us to not only reduce costs, but ensure we provide consistent and high quality experiences for our customers. This internal adoption is a powerful efficiency engine. We view it as an opportunity to bend the curve on future costs and accelerate revenue growth through innovation. In summary, while operational improvements are never done, we have made real strides in how we run the business. Our strategy is clear and our execution is showing tangible results. While I am pleased with this progress, our team remains intensely focused on the execution that lies ahead. The leading indicators we have seen this year all point to a business that is accelerating. These factors give us great confidence in our ability to deliver sustained profitable growth consistent with what we have previously shared at our past two investor days. With that, I will turn the call over to Patrick to provide more detail on the financials and our outlook.