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BlackLine Remains ERP Agnostic

Posted on Wednesday, Nov 7th 2018

According to a Transparency Market Research published earlier this year, the global accounting software market was estimated at $5.7 billion last year. It is expected to grow to $11.8 billion this year and to continue to grow at 9% annually over the next 8 years. Recently, cloud-based financial software provider, BlackLine (Nasaq: BL) announced better than expected third quarter results. But the present turmoil in the market hasn’t spared this stock either.

BlackLine’s Financials

Revenues for the third quarter grew 29% over the year to $58.7 million, compared with the Street’s estimate of $57.6 million. It ended the quarter with a net loss of $4.5 million. On an adjusted basis, EPS came in at $0.07 compared with the market’s forecast of a break even quarter.

By segment, subscription and support revenues grew 31% to $56.2 million and professional services revenues grew 7% to $2.56 million.

Among other metrics, it added 92 net new customers in the quarter to end with over 2,490 customers. Net user base for BlackLine grew to 214,747.

BlackLine forecast revenues of $61-$62 million with a Non GAAP breakeven for the current quarter. The market was looking for a break-even quarter as well with revenues of $61.7 million. BlackLine expects revenues of $226.5-$227.5 million for the year with an EPS of $0.08-$0.09. The market was looking for revenues of $227.2 million with an EPS of $0.09 for the year.

BlackLine’s Expansion Plans

BlackLine continues to grow its international footprint. Recently it entered into a joint venture relationship with Japan Cloud to expand its presence in the region. According to a Forrester report published earlier this year, . Japan Cloud already has joint ventures with companies like, Concur and Marketo to help them launch services in Japan. BlackLine has entered into a similar agreement and will bring its financial close automation solutions to the region.

BlackLine is also expanding its agreements with other tech giants to drive market growth. Recently it announced a reseller agreement with SAP that will allow SAP to resell BlackLine’s cloud-based finance and accounting solutions to businesses around the world. BlackLine’s cloud platform complements SAP ERP Financials solutions, including the SAP S/4HANA Finance solution to bring in enhanced control and automation to Finance & Accounting departments. Besides selling the solution, SAP will also provide customer support for BlackLine.

Additionally, BlackLine recently released a connector for Oracle E-Business Suite that is aimed at accelerating the implementation of its flagship cloud platform.  The new connector is designed to automatically integrate Oracle E-Business Suite financial data into BlackLine’s cloud financial close solution so that users can access Oracle data including GL balances, subledgers, GL transactional data and currency rates, by ledger, company, account, cost center and other segment types into BlackLine for account balance and/or transactional reconciliation.

BlackLine has remained focused on being ERP-agnostic. It provides integrations with more than 30 different leading source systems so that it can run automation engines and analytics on finance and accounting operational processes.

BlackLine is not the only cloud-based reconciliation software available. There are others like FloQast and Oracle. But BlackLine has been named the leader in the magic quadrant this year primarily on account of its exclusive cloud-based offering and for delivering a service that has received above-average scores for execution from its reference customers, its highest score being for customer experience.

I would like to know from the users of the service about the features that they like best in the service. What is it that sets BlackLine apart from the others?

Its stock is trading at $42.12 with a market capitalization of $2.3 billion. It touched a year high of $58.11 in September this year. It has recovered from the low of $31.53 it had fallen to in February this year.

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