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BlackLine Continues to Soar Driven by Strong Leadership

Posted on Thursday, Jun 29th 2017

If there is one company that has made the process of a successful listing on the stock exchange look easy, it is Los Angeles-based BlackLine (Nasdaq: BL). BlackLine went public last October despite the weak IPO market and has sailed smoothly ever since. It shows how the market still values a good business model coupled with good finance governance. BlackLine was recently awarded the IPO of the Year Award by ACG LA.

BlackLine’s Financials

BlackLine recently reported its first quarter results. Revenues for the quarter grew 45% to $38.6 million. It ended the quarter with a GAAP net loss of $9 million, compared with a net loss of $9.3 million reported a year ago. Adjusted net loss came in at $0.06 per share for the quarter. The market was looking for revenues of $37.3 million and a net loss of $0.09 per share for the quarter.

By segment, subscription and support revenues grew 46% to $37.05 million and professional services revenues grew 28% to $1.58 million.

Among other metrics, the company added 92 net new customers in the quarter, thus ending with a total of 1,850 customers at the end of the quarter. It expanded its user base to more than 171,420 users at the end of March 2017. It also recorded a dollar-based net revenue retention rate of 117% during the quarter.

BlackLine has been focusing on international expansion. During the recently reported quarter, overseas revenues grew 19% over the year compared with 15% growth reported a quarter ago. To continue to drive international adoption, the company also announced a worldwide tour, where it will reach out to potential customers in more than 50 cities globally.

BlackLine expects its robust performance to continue in the current quarter. It forecasts revenues to be in the range of $40.8 million-$41.8 million with a non GAAP net loss of $4.9-$5.9 million or $0.09-$0.11 per share. It raised the year’s forecast for revenues to $170-$173 million from $166.5-$169.5 million expected a quarter ago. It also reduced its net loss forecast from $18.3-$16.3 million to $14-$16 million. That translates to a loss per share of $0.27-$0.30 for the year.

BlackLine’s Strategic Partnership

BlackLine has been expanding its market presence through tie-ups with other reputed firms in the industry. Recently, it expanded its partner network with the announcement of a strategic alliance with Deloitte & Touche LLP. The move will help BlackLine access Deloitte’s customer base, which includes more than 80% of the Fortune 500 companies. Having Deloitte as a strategic partner will help it grow within the mid-market and the enterprise segment. Deloitte also benefits from the partnership as it pushes its Digital Controllership offering that helps organizations govern and automate financial accounting processes. Deloitte believes that the alliance will help corporate controllers and finance organizations reduce inefficiencies and errors and positively impact business performance and strategy.

BlackLine’s Product Enhancements

Besides partnerships, BlackLine is staying ahead of the curve by catering to its customer’s demands. It believes that at any given point, each customer is looking to automate some part of its accounting process as it looks to break up large period-end batch processes into smaller daily pieces that are automated wherever possible. It hopes to address those requirements through continuous platform improvements. It has been driving the integration of its Smart Close product, enhanced reporting and dashboarding, making the variance analysis of every client’s close seamless, and building additional connectors to other ERPs. It is also listening to the customer’s voice by paying close attention to the enhancement requests on its community board.

The company has also recently received several awards for its leadership. Its CFO Mark Partin was named ‘CFO of the Year’ by the San Fernando Valley Business Journal (SFVBJ), and its CEO Therese Tucker was awarded the ‘CEO of the Year’ award by the San Fernando Valley Business Journal. I am not surprised. I have been tracking BlackLine for a while. I first met with Therese in 2009 when the company was generating less than $10 million in revenues. She had bootstrapped BlackLine and then raised an undisclosed amount of private equity investment from Iconiq Capital and Silver Lake Partners at a valuation of over $200 million. At the time of the fund raise in 2013, revenues were just under $40 million. I met up with Therese again in 2015 for a roundtable. You can listen to the roundtable here

 

Today its stock is trading at $37.02 with a market capitalization of $1.9 billion. It touched a high of $38.83 earlier this week and has recovered from the low of $21.66 it had fallen to in November last year. The share has done well since its October listing price of $17 each when it raised $146 million through the listing.

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