BlackLine, Inc.

good day and thank you for standing by welcome to the black line fourth quarter 2025 earnings conference call at this time all participants are in a listen-only mode please be advised that today's conference is being recorded after the speaker's presentation there will be a question and answer session to ask a question please press star 1 1 on your telephone and wait for your name to be announced to withdraw your question please press star 1 1 again i would not like to hand the conference over to your speaker today SVP of Investor Relations, Matt Humphreys.

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. For 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 Q on the full year 2026, our forward-looking statements within the meaning of the Private Security Litigations 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 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. 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 presentation, which may be found on our investor relations website at investors.blackline.com or in our Form 8K file 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. Over two years ago, we committed to a fundamental transformation of Blackline. We have been executing a methodical multi-year plan to reposition this company to drive revenue growth back into the double digits while expanding operating margins in line with our multi-year financial targets. It began in the fall of 2023 when we laid out a new strategic vision to evolve from a suite of solutions for the controller into a unified intelligent platform for the CFO. By early 2024, we implemented a new operating model to support this vision. We modernized our go-to-market engine, introduced industry-specific sales motions, We focused our efforts on larger mid-market enterprise and mega enterprise customers where our value is most differentiated and shifted to a partner-first approach with the world's leading system integrators and SAP. Throughout 2024 and into early 2025, we completed the build out of our new leadership team to drive this strategy forward. As we enter 2026, our 25th anniversary, We believe the business is structurally stronger than it has ever been. Supported by a healthy, growing pipeline, a disciplined and cohesive team, an amazing partner network, and our most comprehensive product portfolio to date, we are well positioned to execute our strategy and extend our market leadership. Today, we are pleased to report that those intentional choices are translating into tangible results. we have established Blackline as a critical partner for the world's most complex organizations, now serving approximately 70% of the Fortune 100, up from 50% in 2022. This validation supports our strategic goal of elevating our conversation within the office of the CFO. We saw broad-based success in the fourth quarter, driven by our platform strategy and strategic products. By combining the innovation of Studio 360 With a commercial model aligned to value and not seats, we delivered our strongest booking quarter and year in our history, with full year bookings growth of 22%. We believe this performance validates the investments we made to grow our pipeline, modernize our go-to-market engine, and accelerate innovation. We finished the year with higher close rates and solid demand, confirming that our execution is gaining traction. We saw notable strength within our install base with nearly three quarters of our bookings coming from existing customers. Blackline customers are realizing immediate value from our platform, which allows them to fully leverage our latest innovations without user constraints. They are also investing in the future, specifically our Verity AI agents. This is translating directly into predictability and visibility. Remaining performance obligations or RPO grew 23% driven by platform adoption and continued success driving multi-year renewals. Simply put, customers are making long-term contractual commitments to Blackline as their strategic partner in the office of the CFO. While our expansion motion shows solid progress, we remain clear-eyed on retention. We believe Q4 was the peak of our churn and attrition cycle, driven largely by the expected impact from our strategic choices in the lower middle market. However, our underlying business remains healthy. To underscore the strength of our core, our enterprise customer cohort maintained a revenue renewal rate of 95% and also delivered a net revenue retention rate of 107% this quarter. We are actively bending the arc on retention through deliberate structural changes. First, our shift to a platform model and success with multi-year renewals is fundamentally changing the nature of our customer relationships. We are moving away from transactional subscriptions based on seats towards long-term strategic partnerships anchored on business value. Second, we have optimized our customer success model, leveraging technology and aligning compensation internally and with key partners to ensure the ecosystem is financially incentivized to drive adoption. As we move through the first half of 2026, we expect the lower mid-market headwinds to subside, Combined with these structural initiatives, we have high confidence in improving retention profile in 2026. We are also proving that trust, partnership, and innovation command a premium, with new customer deal sizes up 35%, driven largely by enterprise wins. We're seeing solid growth in the number of customers paying over $1 million in ARR, up 20% to 85%, and notably, customers paying over $250,000 were up 14%. This confirms that when we focus on transformational outcomes rather than features, customers invest more deeply in Blackline. We continue to balance this acceleration with discipline. Even as revenue growth accelerated to 8% in the quarter, we delivered a 25% non-GAAP operating margin along with a 25% non-GAAP net income margin. This efficiency is by design. Over the last three years, we have grown revenue by approximately 34% while our total headcount has grown by only just 2%, adding 40 net new roles. We believe we have effectively broken the linear relationship between headcount and revenue growth, establishing a model that allows us to scale more efficiently. Importantly, sales productivity continues to improve, driving a notable 30% decrease in customer acquisition costs this quarter. Additionally, with our Google Cloud migration now complete, we are beginning to stand down legacy data centers, unlocking further margin potential and opportunities for strategic investments. While the team and I are pleased with this progress, we are far from satisfied. We expect to continue to drive revenue growth back into the double digits along with further operating margin expansion in line with our multi-year financial targets. Let's dig deeper into how we are winning. First, platform strategy. We have aligned our commercial model with our platform vision, Our shift to platform pricing is the mechanism that unlocks the value of Studio 360. It aligns with how CFOs want to buy, focusing on outcomes and value, not seats. In Q4, nearly three quarters of all new bookings leveraged our platform, with existing customers also accelerating their migrations. This platform-first approach changes the customer relationship. Once customers standardize on Blackline as their financial operating system, it becomes the natural foundation for broader transformation. This is helping to drive demand for our strategic product, which represented 33% of sales. Intercompany and Invoice2Cash each had record quarters and years as customers trust us to deliver end-to-end outcomes. A prime example is Brown and Brown, a longstanding customer who expanded their financial close relationship with us by adopting our full Invoice2Cash suite. In 2026, we are moving towards a standard initial offering for all new customers that includes reconciliations, tasks, matching, general risk analyzer, and consolidation, underpinned by Studio 360 and AI, all on platform pricing. We expect this approach will drive larger initial deal sizes, enhance customer stickiness, and create more opportunities to cross-sell and drive AI adoption. Second, enterprise momentum. We are winning deals with complex global enterprises by speaking their language. Our focus on industry-specific outcomes is delivering results, allowing us to demonstrate unique operational and domain expertise that differentiates Blackline in the market. In the fourth quarter, we signed multiple large platform deals, driving average new enterprise deal sizes up 41%. Nearly every one of these deals focused on how customers can leverage our Verity AI offerings. Let's look at a few notable examples. In the consumer sector, we signed a seven-figure ACV deal with a global leader in food services. Operating in an industry defined by massive transaction volumes and decentralized operations, they needed to centralize visibility across thousands of locations. They leveraged our full financial closed solutions with Studio 360 and platform pricing to drive that efficiency. In the oil and gas industry, we secured a large enterprise win with National Oil Well Barco, where our deep industry expertise and platform approach were critical to drive their digital finance transformation. In technology, we also signed a platform deal with a global leader in memory and data storage. Facing the financial complexity inherent in global manufacturing and supply chains, they chose Blackline because they wanted to see value today, but also have a framework to adopt AI going forward. This initial win validates our core value proposition, and we are already engaged in strategic discussions to expand their footprint with our intercompany solutions and Verity AI. And in financial services, we re-signed Invesco, a former Blackline customer who had moved to a lower cost ERP competitor. They recognize the need for automation, scale, and auditor trust that Blackline provides. Third, partners. Our partner ecosystem is a critical differentiator driving demand and extending our global reach. In 2025, every single deal over $500,000 was won with a partner, and our two largest deals of the year were direct partner referrals. These firms are now evangelizing Studio 360, our Verity AI offerings, and our strategic products, helping us secure major wins at companies like Raytheon and National Australia Bank. Fourth, Our golden architecture strategy is beginning to deliver results. Solex Booking's performance was strong, highlighted by new wins with Siemens Energy and Caterpillar, and a large expansion with Hitachi Energy, proving that our joint pipeline is maturing into significant commercial value. Coming into 2026, I believe our alignment with SAP has never been stronger. We secured full product qualification for Studio 360, unlocking the ability to sell directly into SAP's install base of advanced financial closed customers through our AFC integration. We are currently engaged with SAP leaders to explore integrations for SAP's Joule co-pilot with Blackline's Verity agents to create a single, unified digital workforce for finance. The objective is to create a seamless user experience while establishing a commercial framework to directly sell and monetize our Verity agents to a strategic proof of concept. Our shared goal is to define the future of the AI-powered autonomous clothes. Critically, we have aligned Blackline's KPIs as one of the measures of the compensation plan for both Blackline and SAP customer success managers, ensuring our post-sales teams are financially incentivized to drive joint customer success. We are also deepening our channel strategy in the public sector by partnering with SAP and a leading public sector reseller to accelerate growth and adoption in this large market. And last, we have expanded globally, launching dedicated coverage in the Kingdom of Saudi Arabia with a combination of SAP, our local team, and our new local Google Cloud instance has already helped us sign our first deals in the region. We expect our deepening and broadening collaboration with SAP to continue to drive momentum throughout 2026 and beyond. We are seeing the early stages of an important evolution in the office of the CFO, as leaders look to move beyond simple automation toward intelligent, AI-driven orchestration. The requirements for success are clear. AI in finance and accounting must be accurate, transparent, auditable, and secure. We believe Blackline is uniquely positioned to lead because we have built our platform on three essential pillars, data, context, and agency. Together, these form a proprietary intelligence layer that allows Blackline to build on its reputation and expand its market leadership. The foundation of our AI strategies are data and connectivity. For over 20 years, Blackline has served as the centralized hub where the world's most complex organizations turn raw data into financial truth. The scale of this continues to grow. Last year, we processed tens of billions of transactions across our platforms. We ingest data from thousands of disparate ERPs, sub-ledgers, and third-party financial systems. We cleanse it, sanitize it, and normalize it, creating a unified financial data set that acts as a single source of truth. To extend this further, we continue to expand connectivity via APIs and connectors. We have launched new connectors for Microsoft Dynamics 365, Oracle Fusion, and Workday, and are leveraging deeper integrations with Snowflake and upcoming integrations with Databricks. This allows us to harness data from across the enterprise, creating the high quality fuel required for trusted AI. We supplement this with intelligence and context. A generic model can summarize a document, but it lacks the specific human-enriched processing data needed to reconcile a balance sheet or manage industry-specific accounting challenges. Blackline has two decades of operational context from thousands of customers, including historical reconciliation decisions, justification narratives, and review and approval actions, along with successful and failed transaction matches and historical exception handling and auditor interactions. This proprietary intelligence allows us to deliver context-aware predictions and automation, providing the necessary context to turn generative text into financial truth. And importantly, our AI operates within a framework of proven governance with embedded controls, audit trails, segregation of duties, and institutional experience that gives us the brand permission to be the trusted choice in the market. We offer a managed digital workforce via our Verity agents, which are prepackaged, pre-trained, and fully auditable with clear chain of thought. We've architected our platform so that every action the AI takes leaves a digital footprint identical to a human user. This directly addresses the single biggest barrier to AI adoption in finance, the trust gap. CFOs cannot sign off on financial statements generated by a black box. By ensuring every AI agent leaves a standard, immutable audit trail, providing the clear chain of thought that auditors require, we transform AI from an unacceptable risk into a compliant asset. This allows our customers to pursue productivity gains without compromising their controls environment. We are leveraging these three pillars to evolve our platform from traditional automation to agentic workflow orchestration. By embedding intelligence directly into workflows, we deliver the outcomes customers prioritize, speed, accuracy, and continuous audibility. We're seeing the impact in the field. Nearly every deal in Q4 involved discussions around Verity and our innovation roadmap. Customers are focused on how we are developing AI for them and how it naturally fits into their unique processes to deliver ROI quickly and safely. We are also seeing growing adoption of our AI. With customer usage of our AI capabilities more than doubling quarter over quarter, with nearly 20% of all customers now using at least some form of our AI features. We have an accelerating product cycle this year, with an emphasis on launching and monetizing our Verity AI agents, a key part of our platform strategy. First is Verity Prepare. This is our AI-powered reconciliation agent that we previewed in Q4 and is now in early access for our platform customers. Several large enterprise customers are already using it, with even more planning to adopt this in Q1. Customers can elevate their users from preparers to reviewers, offloading repetitive work and freeing accountants to focus on high judgment analysis. This helps to bridge the talent gap and allows customers to handle growing complexity without adding headcount. Next is Verity Collect. Planned for Q2, this agent automates many of the manual tasks of the collections process. like predicting payment behaviors and autonomous dunning. The excitement from our partner ecosystem is notable as this targets high volume, repetitive work where agents thrive, directly impacting working capital. And finally, Verity Accruals. This agent targets high judgment areas within the accruals process. Unlike standard rules-based automation, this agent interprets context to manage complex estimates. We are actively selling this today and it pairs perfectly with our existing journal solution to drive automation into the last mile of the close. We look forward to sharing a deeper dive into these capabilities at a virtual investor session in March. Beyond commercial products, we are using AI to transform our own delivery. We have released a new category of implementation agents for our partners and professional services team. These agents standardize the engagement process from qualification architecture and testing, rapidly accelerating time to value and ROI for customers. Internal usage of AI is also allowing our engineering teams to accelerate product delivery and further enhance and expand our existing solutions across financial close, intercompany, and invoice to cash. This transformation goes beyond our products. By modernizing both our technology and our delivery models, we are building a significantly more agile and efficient company. We are increasingly excited and confident in our ability to win in this rapidly shifting market, and I want to thank our partners and my fellow Blackliners for their extraordinary efforts. With that, I'll turn it over to Patrick to discuss the financial results and outlook in more detail. Patrick? Thank you, Owen.