According to a recent report by Research and Markets, the global account reconciliation software market is expected to reach $4.5 billion by 2026, growing at a CAGR of 17.6%. BlackLine (NASDAQ: BL) is a leading player in the market that recently reported a strong third quarter that surpassed all market expectations.
BlackLine’s third quarter revenues grew 21% to $90.53 million, ahead of the market’s estimate of $85.06 million. Net loss was $8.6 million, compared with a net loss of $9.2 million a year ago. On an adjusted basis, net income was $15.1 million, or $0.25 per share, compared with the market’s estimates of $0.11 per share.
Among key metrics, it added 88 net new customers to end with 3,226 customers at the end of the June quarter. It expanded its user base to 282,579 and reported a dollar-based net revenue retention rate of 107%.
For the fourth quarter, BlackLine expects revenues of $91-$92 million with an EPS of $0.06-$0.08. It expects to end the year with revenues of $347.4-$348.4 million with an EPS of $0.61-$0.63. The market was looking for revenues of $86.28 million for the quarter with an EPS of $0.06 and revenues of $337.23 million for the year with an EPS of $0.47.
BlackLine recently announced the acquisition of UK-based Rimilia, a provider of accounts receivable automation solutions, for $115 million. Founded by Steve Richardson in 2008, Rimilia uses AI technology to automate accounts receivable. It helps manage cash flow by making them more predictable and improve collection of payments by simplifying the order-to-cash process. Prior to the acquisition, Rimilia had raised $40 million in two rounds of funding from investors including Eight Roads Ventures, Kennet Partners, and Silicon Valley Bank.
BlackLine plans to leverage the acquisition to expand its core customer capabilities. The acquisition will help drive digital transformation for Finance & Accounting with intelligent automation. Its AR automation platform will allow organizations to make quicker and more accurate decisions. The ability to unlock working capital and manage liquidity is especially useful in the current times.
According to BlackLine’s estimates, the total addressable market for accounts receivable software is approximately $10 billion. BlackLine believes that the market is not only in its early stages of maturity, but it is also highly fragmented. It is largely unpenetrated with majority of companies still using legacy manual processes to manage their order-to-cash process. BlackLine is hopeful that the acquisition will help it enter this highly relevant market, increasing BlackLine’s combined TAM to more than $28 billion.
BlackLine’s stock is trading at a 52-week high of $122.9 with a market capitalization of $7.04 billion. It had hit a 52-week low of $38.32 in March this year.
This segment is a part in the series : Cloud Stocks