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Cloud Stocks: BlackLine Remains Focused on SAP Integration

Posted on Friday, Feb 21st 2020

Cloud-based financial software provider BlackLine (Nasaq: BL) recently announced its fourth quarter results that continued to surpass market expectations on all counts. Its earnings outlook was, however, a bit disappointing. But that has not slowed down the stock’s growth.

BlackLine’s Financials

Revenues for the fourth quarter grew 29% over the year to $80.3 million, ahead of the Street’s estimate of $77.9 million. Net loss was $9.2 million, compared with a loss of $8.2 million reported a year ago. On an adjusted basis, EPS was $0.14 compared with the Street’s estimate of $0.13.

By segment, subscription and support revenues grew 26% to $74.8 million and professional services revenues grew 98% to $5.5 million.

Among other metrics, it added 153 net new customers in the quarter to end with 3,024 customers. The overall user base grew to 267,621 at the end of the year. It delivered a dollar-based net revenue retention rate of 110%.

BlackLine ended the year with revenues growing 27% to $289 million. Net loss grew from $28.8 million to $32.1 million. On an adjusted basis, net income was $0.59 per share for the year.

For the current quarter, BlackLine forecast revenues of $80-$81 million with a non-GAAP net income of $0.04-$0.06 per share. The market was looking for revenues of $78.94 million with an EPS of $0.09 per share for the quarter. BlackLine expects to end the year with revenues of $347-$352 million with an EPS of $0.45-$0.48. The market was looking for revenues of $346.7 million with an EPS of $0.49 for the year.

BlackLine’s Growing Alliances

BlackLine is counting on companies investing in the digital transformation of accounting practices. It continues to invest in growing its enterprise and mid-market customers globally. As part of this initiative, it has been actively integrating its solution with SAP. Recently, it announced three SAP-certified integrations with SAP S/4HANA.

BlackLine Connector for SAP Solutions will be useful for extracting data out of SAP and directly into BlackLine; BlackLine Web Services Connector for SAP Solutions will help send data from BlackLine into SAP; and BlackLine Smart Close 5.05 will help in the closing of books. These certifications are all compatible and certified for use with earlier versions of SAP software and will help organizations automate tasks. SAP resells BlackLine products as SAP Solution Extensions. The move further strengthens BlackLine’s integration with the SAP product roadmap.

While BlackLine’s platform is ERP agnostic, BlackLine has been working to become an active part of the SAP ecosystem. It is counting on this partnership to help expand its market reach globally. The integrated product offering delivers enhanced control, visibility, and standardization to SAP customers, helping them migrate to S/4HANA faster with fewer resources and with less risk. In the coming years, it expects to deliver a stronger presence at marquee SAP events. Through continued investment, it will drive more alignment across SAP’s global go to market teams. I think these close tie-ups also make BlackLine a potential acquisition target for SAP.

Its stock is trading at $68.74 with a market capitalization of $3.8 billion. It touched a 52-week high of $74.44 earlier last week post the result announcement. It hit a 52-week low of $42.23 nearly a year ago.

This segment is a part in the series : Cloud Stocks


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