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Can BlackLine Continue the Run?

Posted on Tuesday, Feb 20th 2018

Since its public listing in 2016, BlackLine (NASDAQ: BL) has shown impressive performance and proven to be a sustainable Billion Dollar Unicorn. In its most recent results, it acheived non GAAP profitability and its market cap has now crossed $2 billion.

BlackLine’s Financials

For the fourth quarter, BlackLine’s revenues grew 42% to $50.2 million. It ended the quarter with a GAAP net loss of $5.8 million, or $0.11 per share and a non-GAAP net income of $1.8 million, or $0.03 per share. The market was looking for revenues of $47.7 million and loss of $0.09 per share.

By segment, subscription and support revenues grew 42% to $47.8 million and professional services revenues grew 50% to $2.4 million. It ended the year with nearly 2,208 customers after adding 117 net new customers in the fourth quarter and 448 net new customers during the full year.

Among the new customers to come on board during the fourth quarter were Atlas World Group (parent of Atlas Van Lines), Cirrus Logic, Inc., Krispy Kreme, and NVIDIA in North America. It added Cancer Research UK, Pernod Ricard, Randstad Groep, SAS and Thomas Cook in EMEA; and Axiata Digital, Lindt & Sprüngli, Scoot Tigerair, and Weir Minerals in APAC.

BlackLine also expanded its user base by nearly 30,000 users in the year, ending with a user base of 196,612 users across 2,200 companies in 150 countries.

For the year, BlackLine’s revenues grew 44% to $177 million. It reported a GAAP net loss of $38.1 million, or $0.73 per share. In 2016, BlackLine’s revenues came in at $123.1 million and it recorded a net loss of $39.2 million.

BlackLine expects current quarter revenues to be in the range of $49.5 million-$50.5 million with a net loss of $1.1 million, or $0.0-$0.02 per share. It forecast the year’s revenues at $219 million-$224 million with a net income of $1 million, or $0.0-$0.02 per share income of $18.3 million-$16.3 million, or $0.35-$0.31 per share. The Street had forecast loss of $0.02 to $0.04 per share for the first quarter.

BlackLine’s New Partnerships and Products

BlackLine has recently announced an alliance with Ernst & Young to to help companies across industries automate their formerly manual and spreadsheet-driven processes, and implement BlackLine. EY will be offering BlackLine’s Continuous Accounting solutions, its cloud platform, and services that use emerging robotic process automation tools and traditional enterprise resource planning systems. Its partner ecosystem now includes formal alliances with Deloitte and KPMG.

BlackLine plans to invest development time and effort on the Intercompany Hub, focusing on supporting performance as usage, scales up. During the fourth quarter, it saw good progress in sales of Smart Close and the Intercompany Hub, which was released about three years ago. It also plans to deliver advanced multicurrency functionality, greater automation around software maintenance and administration, enhancements to its task management and transaction matching products and strengthen its interconnectivity.

BlackLine also announced that Marc Huffman has joined it as the Chief Operating Officer. Prior to joining BlackLine, Huffman served as president of Worldwide Sales and Distribution at NetSuite.

In the automated accounting market, BlackLine direct competitors include smaller startups like FloQast, Tagetik, and Hubble as well as bigger cloud infrastructure players like Oracle and SAP.

Questions for BlackLine’s Board

BlackLine has had an impressive track record. I was one of the first writers to cover Therese Tucker’s entrepreneurial journey comprehensively and point out her achievements when no one paid attention to the company. As I have recently said in my post  SaaS Companies: You Have an Unprecedented Opportunity, the SaaS world is a hotbed of startups. How will BlackLine make use of this hyperactive ecosystem? Does BlackLine have a comprehensive corporate innovation agenda? Methodology? Framework? I love the company and believe in its potential. I love its culture of frugality. And I love Therese as a CEO.

So Therese, what next?

Blackline’s stock is trading at $30 with a market cap of $2.06 billion. It touched a 52-week high of $40.28 in July last year. It has recovered from the 52-week low of $26.72 it had fallen to in March last year.

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