Blackline Safety Corp.

Good day and welcome to the Black Line Safety's third quarter results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Jason Zandberg, Director, Investor Relations. Please go ahead. Welcome, and thank you for joining us. On this call, we will be discussing our fiscal results for the third quarter ending July 31st, 2024, which were released earlier this morning. With me is Cody Slater, CEO and Chair of Blackline Safety Corp, as well as Blackline's new CFO, Robin Coyman, and Blackline's VP, Finance and Accounting Corporate Controller, Alisa Kwong. I will turn the call over to Cody for an overview of our third quarter and introduction to Robin. Following that, Alisa will discuss the financial highlights of the quarter in greater detail. Cody will close with our outlook and some additional commentary before we take questions. I would like to remind everybody that the archive of this webcast will be available on the investor section of our website. I would like to note that some of the information discussed in this call is based on information as of today and contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those set forth in these statements. For discussion of those risks and uncertainties, please review the forward-looking statements disclosure in the earnings news release, as well as the company's CDER Plus filings. During this call, there will be a discussion of IFRS results, non-GAAP financial measures, non-GAAP ratios, and supplementary financial measures. A reconciliation between IFRS results and non-GAAP financial measures is available in the company's earnings news release and MD&A, both of which can be found on our website, blacklinesafety.com, and on CDAR+. All dollar amounts are reported in Canadian dollars unless otherwise noted. With that, I will now hand over the call to Mr. Slater.

Thank you, Jason. Good morning, everyone, and welcome to Black Line Safety's third quarter 2024 conference call. I'm pleased to share with you today an update on our progress as we just released our Q3 numbers. Black Line Safety achieved another record quarter for revenue, reaching $33.7 million, an increase of 36% from last year. Since the G7 was launched in 2017, we have achieved top line growth every quarter, a streak that now sits at 30 consecutive quarters. The strong market acceptance of our connected worker solutions is apparent in the fact that we generated more revenue this quarter than we did in the entirety of fiscal 2019. Our top-line growth has always been consistent at Blackline, and this quarter I am very pleased to announce that we also achieved positive EBITDA. This milestone signals we are reaching scale as a business with significant growth opportunities still ahead of us. Both standard EBITDA and adjusted EBITDA were profitable this quarter. EBITDA crossed into positivity from a negative 4.8 million only a year ago. Adjusted EBITDA reached 0.8 million, an improvement of 4.6 million from a loss of 3.8 million last year. Ghost profit was 19.9 million, up an impressive 48% from the prior year. Ghost profit for the first nine months was 52.5 million, which is nearly equal to our gross profit for the entirety of last year, with our strongest quarter still to come. This quarter, we reached a record annual recurring revenue of $62 million, up from $47 million last year, a 32% increase, a testament to the strength of the hardware-enabled SaaS business we have built. Net dollar retention was 128% during Q3, as our clients continue to see value and expand their business with Blackline. Our growth margin set a new record at 59%, up from 54% last year. We are proud to report our highest product growth margin ever at 38%, normalized for COVID relief programs. This was over double what we achieved just two years ago, when it stood at 17%. Software service revenue growth was 34% year-over-year to 18.2 million. Not only has service revenue reported strong year-over-year growth, but the quarterly growth also accelerated as service revenue grew 9% relative to Q2, surpassing the 5% growth reported between Q1 and Q2, as well as the 5% growth between Q4 to Q1. This acceleration was driven by a number of significant customers coming online. Service gross margins maintained their record level of 77% established last quarter. Our largest geographic market, the U.S., reported strong growth of 34% compared to last year, and our European revenue grew 29%. The rest of world revenue was up an impressive 212%. I would highlight that our quarterly revenue from rest of world was 40% higher than the full year 2021 revenue in this segment. a testament to our expanding global reach. While top-line growth remains crucial, the cost discipline demonstrated by our entire company is commendable. Operating costs as a percentage of revenue have decreased from 126% in Q3 2022 to just 67% this quarter. This improvement is evidence of our ongoing efforts to optimize costs while maintaining growth. We saw every expense category reduced as a percentage of revenue. General administrative expenses decreased from 23% to 22%, sales and marketing from 38% to 31%, and R&D from 17% to 15%. The disciplined approach positions us well for continued success in the quarters to come. In terms of net cash used, we have seen a dramatic improvement with only 0.9 million used for operations this quarter compared to 5.5 million in the same period last year. In fact, for the first nine months of the year, net cash used for operations has improved from 20.1 million in the prior year period to just 2.9 million in 2024 to date, a reduction of over 85%. As this trend continues, We will see the company reach another milestone and achieve cash flow positivity in the near future. At the end of the quarter, Blockline had $40.8 million in cash and cash equivalents and short-term investments. The company also had $14.8 million available on its senior secured operating facility. With $55.6 million in liquidity and nearing cash flow break-even, our balance sheet has never been stronger. Net loss has also significantly decreased, now at 2.5 million compared to 6.8 million a year ago, representing a 64% reduction. In Q3 2024, Blackline demonstrated strength in all aspects of the business, reaching the milestone of positive adjusted EBITDA, advancing us on our path to a Rule 40 company, the gold standard for SaaS businesses. Only two years ago, we were at negative 16, according to this metric. This quarter, we reached 38, with our seasonally strongest quarter still ahead of us. Finally, I wanted to take this opportunity to welcome our new CFO, Robin Koyman. Robin's 15 years of global experience in finance, capital markets, and strategic leadership, having held prominent positions with Whitfield Corporation, TV Securities, and RBC Capital Markets in Canada, the U.S., and the U.K., I and the entire team look forward to working together with Robin as we build the world's largest connected safety company.

Thank you, Cody. I am excited to be part of such a successful team. I look forward to presenting the financial highlights in the quarters to come. For this quarter, I would ask Elisa, the person who has carried the load as interim CFO, to present the financials to our shareholders today.