BlackLine, Inc. Q2 FY2025 earnings call

• Owen Ryan discussed the strategic evolution, with Therese Tucker now focusing more on customer success, and Owen becoming sole CEO. BlackLine's strategic shift to a platform company serving the office of the CFO is driving success, with 7% revenue growth and 22% non-GAAP operating margin. - Therese Tucker talked about Studio360 enhancements, powered by Snowflake, with over 1,100 customers using it, and progress on connectors like Snowflake data sharing, Oracle Fusion, Workday, and enhanced D365 connectors. - Patrick Villanova covered financial highlights, including total revenue of $172 million, ARR growth, RPO increase, margin details, cash flow, and capital allocation, with share repurchases and balance sheet details.

BlackLine delivered 7% revenue growth and a 22% non-GAAP operating margin. Subscription revenue grew 7% with service revenue growing 3%. Annual recurring revenue (ARR) was $677 million, up over 9%. Remaining performance obligations (RPO) increased over 11%. Strategic products represented 30% of sales, up from 28% last year. SAP as a percentage of total revenue was 26%. Non-GAAP gross margin was approximately 80%, non-GAAP operating margin was 22%, and non-GAAP net income attributable to BlackLine was $38 million.

• For Q3 2025, total GAAP revenue is expected to be in the range of $177 million to $179 million, representing approximately 7% to 8% growth. Non-GAAP operating margin is expected to be in the range of 20% to 21%. - For full year 2025, total GAAP revenue is expected to be in the range of $696 million to $705 million, representing 6.5% to 8% growth. Non-GAAP operating margin is expected to be in the range of 21.5% to 22.5%.

Q: Christopher Quintero asks about how much of the strength in large deals came from slipped deals closing versus new deals coming to fruition in the quarter and stack ranking drivers for growth rate.

A: Owen Ryan responds that pipeline started growing in September last year, with a 9-12 month cycle, and it's a combination of slipped deals from end of last year and new deals maturing this year, driven by broader solution capability conversations and partner network.

Q: Robert Cooney Oliver asks about the attractiveness of the new pricing model to customers and learnings from those who didn't choose it.

A: Patrick Villanova states they are ahead of plan, the pricing model enables transformative conversations rather than license count focus, and some non-platform model customers were from past quarters.

Q: Koji Ikeda asks about what's changing with the CEO announcement, and Therese Tucker responds it's a change in focus, stepping back from operational things to focus on customer success.

Q: Alexander James Sklar asks about context on strong big deal activity and if deals hit billings/RPO this quarter.

A: Owen Ryan mentions adding a Chief Commercial Officer bringing discipline, and Patrick Villanova says some deals will be tailwinds to RPO and billings in future quarters.

Q: Patrick D. Walravens asks about Studio360 and the 8-figure deal.

A: Therese Tucker explains Studio360's components and how customers utilize its capabilities, and Owen Ryan talks about the 8-figure deal being partner-powered over a year-long process.

Q: Steven Lester Enders asks about macro perspective on large deal delays and path of enterprise vs mid-market.

A: Owen Ryan says team is executing better, and Patrick Villanova talks about net new wins being larger than churning customers and long-term growth plans.

Q: Kyle Aberasturi asks about impact of new R&D tax credit policy on cash flows.

A: Patrick Villanova responds the BBB bill will have a beneficial impact of about $10 million in free cash flow in the second half of 2025 and more in 2026 and beyond.

Q: Adam Hotchkiss asks about added value of new connectors like Snowflake, Oracle Fusion, etc.

A: Therese Tucker says connectors get data in more quickly, reliably, and up and running faster.

Q: Jacob Roberge asks about learnings from first federal agency deal and public sector pipeline.

A: Owen M. Ryan and Matt Humphries say there are lessons applied from commercial business, leveraging partners, and pipeline is building with federal, state, and local agencies showing interest.