BlackLine, Inc.

Good day and thank you for standing by. Welcome to the Q1 2026 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 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 first speaker today, Matt Humphreys, SVP of Investor Relations. Please go ahead.

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 Young, 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 Q2 and full year 2026, are forward-looking statements within the meaning of the Private Security Litigation 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 this 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 report 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 today on the call relate to our 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 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. At our AI investor session in March, we shared our technology vision in detail and made our case for why Blackline is positioned to be the trusted governance and control layer for CFOs deploying AI across their financial operations. Today is about sharing with you the momentum we are building as we translate that vision into reality. Our Q1 results demonstrated that our strategy is working, delivering solid top line growth and profitability, revenue grew to 9.7% year over year, and non-GAAP operating margin improved to 21.6%. These results are underpinned by progress on our key strategic initiatives. The adoption of our platform, Studio 360, continues to build with the metric reaching 13% of eligible ARR up from 11% in Q4. More importantly, we are seeing this strategy translate into deeper customer commitments This is best reflected in our remaining performance obligations, or RPO, which grew 18%, driven by the longer contract terms that are inherent to our new platform strategy. Let me go deeper into our platform strategy and commercial model. Platform adoption maintained a healthy pace following Q4 seasonality, with 94% of eligible new bookings landing on platform pricing. a strong signal that our commercial model is becoming the standard for how customers buy Blackline. We also saw continued migration activity from existing customers in Q1. Our teams are actively engaged with customers preparing for platform conversion ahead of their upcoming renewals. This new model is also positively changing our deal economics. Average new deal size this quarter was up 85% to $162,000, driven by platform and strategic product sales. Our standard offering now includes a broader set of capabilities on Studio 360, which naturally increases the initial land. Our platform model allows us to sell units of financial productivity rather than seats, which over time we believe opens access to labor and operational budgets beyond traditional software spend. It also creates the natural expansion path for our Argentic AI offerings. The model works like this. As customers adopt our platform, they commit to a platform fee that provides access to the full breadth of our capabilities within a framework of governance, reliability, and control that they and their auditors already trust. As they then deploy Verity Agent and automate work that was previously manual, consumption-based pricing layers on top of that base similar to how we price capabilities like matching today. That alignment between how our customers drive efficiency and how we capture value, all within a trusted control environment, is fundamental to what we are building. When we look at the full picture, we believe that a platform that provides broad access, embedded AI driving deeper daily engagement, and agentic offerings layering consumption on top, meaningfully increases the lifetime value of a Blackline customer. This brings me to what I believe is the most important topic on today's call, AI in our Verity portfolio. Last month at our Beyond the Black conference in London, we introduced Agendic Financial Operations, a new operating model that defines how the office of the CFO harnesses AI safely, strategically, and at scale. The response from customers, partners, and the broader market has reinforced our conviction that we are addressing the right problem at the right time and with the right approach. The opportunity is straightforward. As an enterprise deploys AI agents across their business in procurement, sales operations, accounts payable, they are creating new uncontrolled financial touch points that need to be governed. Every one of those AI generated transactions eventually hits the general ledger. Everyone must be reconciled, validated, and audited. For a CFO who personally attests to the accuracy of financial statements, that is a responsibility that requires a trusted platform. Agenic Financial Operations is designed to close this governance and trust gap. Every action an AI agent takes within Blackline leaves a digital footprint identical to a human user. Full chain of thought, immutable audit trails, embedded controls. This is what CFOs demand, what audit committees rely upon, and what auditors require. The market reaction from customers and partners since our London launch has been encouraging. Customers are telling us they want to leverage what we are building and provide input on our roadmap rather than try to build these capabilities themselves. Their ROI framework is clear. Make their finance operations more durable and competitive and let a trusted partner handle the AI infrastructure so they can focus on running their business. Before I walk you through what Verity is delivering commercially, I want to spend a moment on how we build because the pace of our innovation is becoming a strength. We are using AI to fundamentally accelerate our own product development. Our engineering teams have adopted AI augmented coding practices across our development workflows, and the results are measurable. The time from idea to production has decreased 22% versus last year. Your shipping capabilities faster, with fewer resources and at a higher quality. This is a structural improvement in R&D productivity that we expect to compound over time. That increased velocity is translating directly into how we deliver value. Our customers have benefited from our foundational AI capability since last year. We are expanding further into our genetic AI. A year ago, Verity agents were a strategic vision. Today, we have multiple purpose-built agents in market, in preview, or launching in the near term. Combined with our new AI innovation hub and a fully integrated AI native acquisition, we are executing against our AI roadmap with clear, deliberate focus. Now let me share what this engine is producing for our customers. Over the past year, we have been building and refining our embedded Verity AI capabilities, like Verity Assist, Verity Narate and Verity Flag, in close collaboration with our customers, their auditors, and our partners. That feedback loop has been critical, allowing us to validate not just performance, but the trust and governance framework around them. Even before we brought in access, adoption among early users was doubling every quarter. In Q1, with that validation in hand, we made these capabilities standard across most of our customer base. Over two-thirds of our customers are now actively using these tools, a 285% increase in adoption quarter over quarter. In Q1 alone, unique users grew 68% and total usage grew 183%. What this tells us is that AI is moving beyond experimentation for our customers and into their day-to-day workflows. As they embed these capabilities into how they operate, it deepens their relationship with Blackline. Over time, we expect that to support both stronger retention and additional consumption under our platform pricing model. Verity Prepare, our AI-powered reconciliation agent, is now available to customers and is deployed with several mega enterprise customers. The validated outcomes customers are seeing are significant, over 90% reduction in reconciliation processing time. One customer that had been spending three hours manually executing certain reconciliations has seen that fall to 10 minutes and 95% time savings. Based on their experience, they are now ready to enable Verity Prepare broadly across their business. That progression from pilot to enterprise-wide rollout is exactly the adoption pattern we are building toward. Early usage data shows the cost to serve is efficient at current scale with clear paths to optimize further as adoption grows. Our multi-model architecture allows us to deliver meaningful customer value at margins consistent with our financial targets. Verity Match is now in its early adopter phase. Our existing matching solution is a powerful capability as it handles high volume, complex data sets across multiple ERPs and source systems, and delivers strong automation rates for our customers. VerdiMatch builds on that foundation by applying AI to the long tail of complex exceptions like combined vendor payments, transposed invoice numbers, missing remittance details. Rules-based systems have historically left these for accountants to resolve manually. In early customer testing, we see a 64% reduction in transactions requiring manual investigation. And by running our models on NVIDIA GPUs, We can process matches up to 25 times more cost efficiently and faster than on prior architectures, improving both the customer experience and unit economics as this scales. Verity Collect will launch this quarter, and the demand signal has been stronger than expected. We had to close our early adopter program because customer demand exceeded our planned capacity. The value proposition is direct. predicting payment delinquency before an invoice becomes past due and autonomously managing the collections outreach across voice, email, and digital channels. For CFOs, this translates directly to working capital improvement, which in the current macro environment is a top priority. While this is still early, we believe the initial proof points are compelling. In one early adopter scenario, our AI agent completed collections outreach activities in under 30 minutes, that would have taken a human team approximately 45 hours. That kind of efficiency gain, freeing collection teams to focus on high value accounts and complex disputes, is exactly what is driving the demand we are seeing. We expect Verity Collect to be a meaningful accelerant to our broader invoice to cash momentum as it scales. Verity Accruals is seeing a significant acceleration in customer interest and pipeline growth as its value proposition resonates in the market anchored by initial successes, including closed deals and proof of concepts with key targets in both the enterprise and mid-market. These are largely existing customers looking to expand their footprint, which validates the cross-sell motion we have been building. Customers land on Studio 360 and then adopt additional Verity agents as they see results. One advantage worth highlighting is that our customers do not need to build a new governance framework to deploy Verity. Blackline already is that framework. Rarity agents operate within the same SOX-compliant controls, audit trails, and approval workflows our customers have relied on for years. Customers can begin deploying AI within a controlled environment they and their auditors already trust, which we believe lowers the barrier to adoption and supports a faster path from pilot to broader rollout. Turning to how this strategy aligns with our Q1 execution, our platform and AI approach is showing consistent progress in the enterprise. This sustained focus is reflected in our metrics. First, we saw an increase in customers with over $1 million in ARR. We closed the first quarter with 86 customers at this level, an increase of 9% year over year, along 14% growth in our $250,000 plus customer cohort. Second, This strategy is driving deeper adoption and additional cross-sell across our portfolio. Our strategic products represented 37% of sales in Q1, up from 33% last quarter and 27% in the prior year. This proves that when we lead with value and outcomes, customers invest more deeply in Blackline, adopting more solutions with less friction. And third, you can see the strategy in action and key wins from the quarter. Within our existing customer base, we saw significant validation for our AI offerings, particularly Verity Accruals. We secured a major renewal and expansion with a leading billing company demonstrating their deep loyalty to Blackline and strong interest in our AI capabilities. We saw similar momentum with a leading global mobility and car sharing company, which also expanded its footprint with a strategic win for Verity Accruals. Our upmarket motion and governance thesis also continues to resonate strongly in highly regulated and complex environments. This quarter, we welcomed one of the nation's largest healthcare providers as a new logo, replacing an ERP competitor, which is a powerful validation of our trusted control framework and innovation. We also saw significant expansion within our enterprise base, including a premier global construction services company that added our invoice to cash solution. Additionally, we executed a major rip and replace at a leading FinTech provider, successfully displacing multiple competitors to consolidate their financial operations onto Blackline, adopting Studio 360, journals, reconciliations, and transaction matching. Last, we delivered highly strategic wins, particularly among companies at the forefront of the AI revolution. We secured a net new agreement with a global leader in memory and data storage for AI, successfully migrating their processes off an ERP competitor and onto Blackline. Through that same channel, we also expanded our footprint with one of the world's premier data and AI platform companies. The fact that organizations building the future of AI rely on Blackline for their own financial governance speaks to the strength and trust of our platform. We believe our customer base is healthier than our headline retention metrics suggest, and it is getting stronger. The lower mid-market churn we have discussed in prior quarters is running through a finite and shrinking pool of at-risk accounts. At the same time, the changes we have made, platform pricing that creates thicker customer relationships, a broader solution footprint per customer, increasing multi-year renewal commitments, and a redesigned customer success model are fundamentally improving the quality of our installed base. We expect the cumulative effect of these changes to become more visible in our retention metrics as we move throughout the year and into next. Finally, our partner ecosystem and our SAP relationship continue to be meaningful contributors to growth. Our integration with SAP's Advanced Financial Close is now generating pipeline as we were able to sell into SAP's installed base of AFC customers. Our Joule Verity proof of concept is also progressing toward a commercial framework, and we are actively working to launch platform pricing within Solex. We are also seeing acceleration in our public sector business through SAP with several active deals in the pipeline. We see our partner ecosystem as a force multiplier across demand generation, delivery, and customer success, and is critical to scaling our growth. In closing, our path forward is clear. AI is creating more financial activity across the enterprise, not less. All of it must be governed, reconciled, and audited. We are the system of record and control that makes this possible. Our customers are telling us they want to move fast with AI, but they also tell us that trust, reliability, and security are non-negotiables. This is exactly what 25 years of Blackline expertise delivers. With that, let me turn it over to Patrick for a detailed review of our financial results and our guidance.