BlackLine at BMO 2025: Strategic Realignment and Growth Prospects

On Tuesday, 10 June 2025, BlackLine (NASDAQ:BL) presented at the BMO 2025 Virtual Software Conference, highlighting its strategic realignment and growth initiatives. The company discussed its re-engineering efforts, leadership changes, and partnerships, particularly with SAP, which are beginning to show positive results. Despite challenges, BlackLine expressed optimism about its future growth, particularly with its new pricing strategy and AI innovations.

Key Takeaways

• BlackLine is targeting a revenue growth of 13-16% over the next three to five years.
• The company is focusing on expanding within the SAP ecosystem and other ERP systems like Oracle and Workday.
• AI and GCP migration are expected to enhance gross margins and operational efficiency.
• A new platform pricing model aligns BlackLine’s success with customer revenue growth.
• Leadership changes and strategic realignment aim to boost growth and operating margins.

Financial Results

• BlackLine aims for a 13-16% revenue growth over the next three to five years.
• An inflection point in key metrics such as billings and ARR is anticipated in the second half of 2025.
• Gross margin is expected to increase from 80% to 85% due to efficiencies from AI and GCP migration.
• SAP contributes approximately 25% of BlackLine’s revenue, with strategic products set to dominate revenue streams in the future.

Operational Updates

• The company has undergone significant re-engineering, focusing on industries, geographic presence, and pricing strategies.
• A new leadership team has been installed to accelerate growth and improve operating margins.
• BlackLine is adopting a partner-powered approach, strengthening ties with SAP and other ERP providers.

Future Outlook

• BlackLine is investing in innovation, technology, and partnerships, with a focus on the upper mid-market and enterprise segments.
• The company plans to align its pricing strategy with SAP’s SOLEX.
• A streamlined partner ecosystem is in place, with strong demand and active hiring to support growth.

Q&A Highlights

• BlackLine sees significant opportunity with SAP, especially during the S/4HANA migration cycle.
• The new pricing strategy aligns with AI innovations, expected to drive adoption and ensure accuracy.
• The company anticipates an inflection point in the pipeline in the second half of the year, with demand translating into bookings.

For a detailed understanding, please refer to the full transcript below.

Full transcript - BMO 2025 Virtual Software Conference:

Dan Jester, BMO Software Research, BMO: Alright. Well, good afternoon and good morning, everybody. Thanks again for joining the next session at our virtual software event. Dan Jester, BMO Software Research here again, and happy to have BlackLine with us today. So we have Owen Ryan, who’s the chairman and co chief executive.

We have Patrick Villanova, who is the CFO, and Matt Humphries, who I’m sure everyone on this line knows, who runs investor relations. So thank you to the three of you for joining today. I really appreciate it. So in terms of logistics, if you’re on the line and you wanna ask a question, send me an email, or you can use the feature in the web browser to hit and send me a question, and I’ll do my best to get those answered. So with that, Ryan, I think it would be a great place to start the conversation kinda stepping back and, you know, helping people understand where we are with with BlackLine today.

You and Therese came into the business a few years ago and have done a lot of work reengineering what BlackLine is. And so maybe just we could start there. You know, what what have you done that’s been most impactful? And and maybe just start there.

Owen Ryan, Chairman and Co-Chief Executive, BlackLine: Sure, Dan. And it’s good to be with you again, and thank you everybody for joining to listen today to Patrick, Matt, and myself. Couple things. Like, so, you know, Dan just hinted at it. Theresa and I have been in our roles, so it’s a little bit over two years at this particular point in time.

And and, really, what we focused on in the year was taking a very hard look at our strategy. We made a lot of hard choices about things that we would do and things we would stop doing, so choices in and choices out. And then we also took a very hard look at our operating model and how we would run the business and where we run run the business from. And, you know, that was a critical piece of work that we did throughout ’23. We went live sort of with that model in 2024.

And then also beginning in late twenty four throughout, or excuse me, early twenty four and throughout ’25 so far, we replaced basically everyone on the leadership team except for the chief administrative and chief legal officer. She is still in that role and then even sort of the level one down. And the reason we had to do that is because I think we recognized all the people that we had. We really appreciated. They had gotten the company to a certain point, but as you if you’ve been around long enough, you know what got you here doesn’t get you there.

And and so we had to really take a fresh look at the team, the people, the processes, the technologies that would allow us to reaccelerate the growth and drive up the operating margin of the business as as we move forward. We made really, you know, hard choices, but good choices around the industries we were playing in, where our geographic footprint would be, how we would price for our product. Would we go into the public sector markets? What we would do around the platform and innovation, where we would double down and sort of record to report invoice to cash space, how we would deal with ERPs. We made this decision, which we think was very, important for us about being partner powered with the big SIs, as well as with certain SAP player or ERP players and things of that nature.

And so all those choices, really, we put together, began to work through them in ’24, and we’re beginning to see the fruits of that labor now. As we’ve gotten into 2025, we feel pretty bullish about the plan that we shared with, Wall Street back in November of last year. I’m looking forward to share more of that as as, we move forward throughout this year.

Dan Jester, BMO Software Research, BMO: That’s that’s a really good overview. And I think one of the things that’s underappreciated, at least when I talk to investors, about the change management that you’ve done in terms of bringing new leaders and a fresh set of eyes. And so is there any common themes in terms of what you were looking for to bring in, folks to surround you and Therese and Patrick to sort of get the company to the next level?

Owen Ryan, Chairman and Co-Chief Executive, BlackLine: I I no one’s asked me that question before, Dan. So I really actually appreciate it. And, you know, it’s what we call internee internally, like, lunchbox leadership. And and so we wanted people that would show up with a lunchbox wearing overalls with a pitchfork, a shovel, and ready to work. And so we were not looking for people that could sit up in a tower and and sort of tell people how to do things.

We wanted people that would get in the trenches, and really lead by example. And and I think that is what we’ve, what we’ve built. We’ve coalesced. It’s a really great team. They work very, very well together.

They’re not afraid to challenge one another, push one another, but by the same token, they understand, you know, our success is driven by the success we help our customers with. And that’s ultimately the outcome. It’s not selling them software. It’s helping our customers get the most out of the software they buy from BlackLine, and, that’s been refreshing. And I think one of the things that that Theresa and I take a great deal of pride in is the culture that we’re creating.

And, by the way, it’s not for everybody. Right? So we’ve been very clear very, very clear. If you want a job, BlackLine is probably not a place for you. If you want a career, BlackLine is a great place to be.

And one of the things that we track very closely is our voluntary turnover of our our top performers, and that’s almost nonexistent. So that tells us we’ve got the right people wanting to do the right things for the right customers at the right time.

Dan Jester, BMO Software Research, BMO: Okay. So one of the new new people joined is you have a new chief revenue officer. And so, you know, when you, you know, go back couple years ago, you made some changes that you thought in terms of to go to market and kinda where you’re playing and how you’re playing. Can you give us an update now that we have a new senior leader on your revenue operations? How what kind of changes is he sort of embarking on, or what should we be thinking about potential changes in the future?

Owen Ryan, Chairman and Co-Chief Executive, BlackLine: Well, it’s it’s only four months in, but the changes have been extraordinary. And, you know, I’ll go back to sort of what we were saying about the kind of leader we wanted. So Stuart Van Halen joined us from SAP. And what he’s really brought to, the organization is a rigor and a discipline and a reporting cadence that has got the team really on their toes and moving. You know, he drives harder than anyone I’ve ever come across of how to get deals closed.

I I really appreciate the way that he goes about that. I think that, you know, the reporting that we’re beginning to see and how we sort of figure out, you know, discovery for our customers, one of things I’ve been very impressed with him is how he’s teaching our people to listen even better. You know, I’ve been out on enough sales calls for are people who are very much wanna start talking about what BlackLine does versus listening to what is your customer’s problem and how, like, might we be able to help solve that with software being part of the solution, but then not the only part of the solution. And I think just watching him with the team and then some of the people that he’s brought in, we have really great new leaders both in Europe and Asia Pac. I don’t think we could be any more confident in the kind of people that we now have helping to drive success in the marketplace.

So it’s it’s rigor, it’s discipline, it’s passion, it’s reporting, it’s accountability, and and all the things that, you know, would wanted to see, and and now we have them.

Dan Jester, BMO Software Research, BMO: Okay. That’s that’s fantastic. So maybe we can spend a little bit of time on the different parts of your business. And and, I guess, starting with SAP, which comes up, I suspect, very frequently in your conversations with investors. And so can you give us an update in terms of what you’re seeing today or now in terms of the transformation that’s happening in SAP and what specifically BlackLine is doing to capitalize on on all the things that are happening in the customers in that ecosystem.

Owen Ryan, Chairman and Co-Chief Executive, BlackLine: Yeah. And and I if you don’t mind, Dan, I’m just gonna give a little bit of context because it Of course. Right? So, you know, we’ve had this what we call SOLEX relationships with since 2018, which gave us really preferred status with inside the SAP walls. And it’s not that we weren’t doing business with SAP prior to that, but it was sort of the changed relationship.

And and it’s been a good relationship overall. Last year in 2024 was a tough year for us, though. So SAP announced a a major layoff, reorganization beginning of last year. 8,000 people left that organization, many of which we worked with in the marketplace. And then about six months later, our executive sponsor left.

And and so you could either, you know, pout over that or you can make lemonade out of out of those lemons. And and what Theresa and I did was we sort of reached out to Christian Klein, who’s the CEO of of SAP, and said, let’s let’s take a step back and figure out where this relationship’s going and how do we really maximize value, for each other and, ultimately, for our customers more than anything else. Coincidentally, at the time, ExxonMobil was going through a major SAP upgrade. And, Kristen happened to be the executive sponsor for, the SAP side. I was the executive sponsor for the BlackLine side.

And the SIs had recommended, and which is something we’ve been saying for a while, if you start with finance you can create much more value for your customers. It’s not just a lift and shift, but there’s a whole bunch of value. And, you know, Patrick can walk through all the details of how that that creates value for customers versus just doing a lift and shift. And and I think, you know, that was a seminal moment in the relationship. And then there were things that we just knew we needed to do around getting the one you know, we now call it golden architecture.

So you could see BlackLine and SAP on one piece of paper. Before, you couldn’t really tell how did it all fit together, changing the incentive and the compensation system so that they were better aligned, that you have to sort of opt out of BlackLine versus opt in. So we used to be, like, the last item potentially on the build materials. Now we’re like, now it’s like you you you’re gonna use BlackLine because it’s so powerful to getting you on your journey, trainings. There’s just a whole governance.

There’s a whole bunch of things that we’ve done. And, so then where does it show up? Right? So, because it’s nice to say things out of Waldorf and their headquarters or LA and ours, but the reality is on the front lines where it really matters. And I think for us, we started to see some good progress at the end of last year, And then the first quarter really picked up nice, and when Stewart joined, that was an accelerator.

But SAP just had their, Sapphire conferences both in, The US and then in Europe. And if I told you last year, maybe the year couple years before, it felt like we were, like, banging our shoulder to try to get the door open. This time, the door was wide open, and I and I joke, but it’s it’s somewhat true. Our booth was overrun by SAP reps and SAP customers with their reps who are listening to the Exxon story. They’re listening to the Delta story.

They know all the other things that are in progress that are working. And so, you know, that you’re starting to see a very nice uptick in pipeline. You’re seeing people using the golden architecture now in conversations with customers, the so so called power three of SAP BlackLine and a a system integrator. They’re using that in the marketplace. So I couldn’t be more pleased with the progress we’re making other than I always want it faster.

But that’s you know, from that perspective, we feel really good about what’s going on. And I and I do think that, you know, SAP is recognizing it’s hard to convince a customer to go spend 50,000,000, a $100,000,000 on a on an s four upgrade if you’re not gonna get anything else different out of it. And I think that’s where BlackLine had really begun to show its value and unsolicited you know, if you listen to the ExxonMobil earnings call last month, the CFO talked about the power of BlackLine and what it has done for them. And, again, I don’t know if we we got better commercial advertisement than that. We didn’t pay for it.

We were just as stunned as everybody else when when she said it, but, it’s it’s great acknowledgment of what when when done the right way, the power that BlackLine and SAP can deliver for customers. Long as and I sound private. No.

Dan Jester, BMO Software Research, BMO: It’s really important of what we do. Great. Great context. And, and so to unpack that, you have both. There’s the opportunity with current BlackLine customers who are going through the migration, and then you have the opportunity to win new BlackLine customers as they go through this migration.

Yeah. So can you help us think about the parallel streams there? Sure. The pipeline that you’re creating, is it more existing? Is it more new?

Should we think about those pieces?

Owen Ryan, Chairman and Co-Chief Executive, BlackLine: Well, just to give you order of magnitude. So let’s just for round numbers, say BlackLine has about a thousand customers run SAP, some version of it, whether it’s the old ECC or they’re in their version of of s four HANA. That’s out of 30,000 SAP customer that would sort of fit our ideal customer profile. So you could say we’ve got 3% penetration. But then even within that 3% penetration, there’s many of these customer.

When you look at how they use us, we have customers that will spend 5 or $6,000,000 with BlackLine, and then their pure customer will also run BlackLine spending 5 or 600,000. So a lot of what we’re trying to do now is show how the power of BlackLine can can can help these customers achieve so much more if they use other parts of our solution, working with a partner, working with SAP to really drive and create value. So the the opportunity is is quite large in front of us. There’s markets like Germany where SAP is incredibly dominant, where, you know, we’re just still scratching the surface of that. And so when we look at what’s going on in the pipeline, it’s it’s certainly expansion within our thousand plus customers that we already have running SAP.

But what we’re really beginning to see is also more of these net new where these reps are going, hey. You know, we’ve got opportunities. BlackLine’s not in there yet. S4HANA is a good solution, but it doesn’t solve for all the things that that that BlackLine can do. And, certainly, compared to the legacy on prem solution, BlackLine is, like, light years ahead.

And so, you’re you’re seeing just much more uptick. And I think the challenge for us is just gonna be figuring out how to pursue all these things because they are a much larger organization than we are, and we’re gonna have to pick our spots appropriately.

Dan Jester, BMO Software Research, BMO: Okay. And so just to clarify, do you think that when you look at some of these new customer opportunities, do you think that these are gonna be big bangs where you’re gonna be able to sell a lot of the suite because they’re doing a lot of the transformation all at once, or is this gonna help them as part of the transformation, and then you can come back and then you can sell them in the future intercompany or invoice to cash or something like that?

Owen Ryan, Chairman and Co-Chief Executive, BlackLine: Yeah. Look. I and and, Patrick, please keep me honest here. I I I think what we’re seeing in the pipeline and it’s always listen. I hate to equivocate.

Right? Because I like, you you want a black and white answer, and I and I’m gonna say it depends. But I think the reality is we’re starting to see bigger opportunities that are earlier in the process because of the value proposition. And, again, when you get to this golden architecture and you know that you can capture much more value on on the upfront, we we expect to land earlier and bigger than we have historically. And then I think the other piece of this is, you know, there’s a lot of advice you give to to, companies that are going on a a a a a finance transformation.

It doesn’t happen in six six months. Right? It’s it’s a multiyear journey. And so that part of this, Suraj, is how best can we advise them based upon their own capabilities, own pain points, what SAP and what the SI are trying to to help to to fix. So I wish I could say it’s one size fits all, but, definitely, I believe we’re gonna be landing bigger and earlier because that matters.

And, Patrick, I don’t know if wanna add anything to that for for Dan to give him, you know, more specifics and less generalities of what I just said.

Patrick Villanova, CFO, BlackLine: Yeah. I mean, Dan, the way I would view it, you know, as a practitioner, somebody has done ERP migrations in in a previous life, I would say landing with financial closes table stakes the entire suite. That’s a that’s a no brainer. And I would say, for the most part, landing within our company early, concurrently makes sense if you’re a multinational organization. So which you look at these 30,000 customers, at least 10,000 of them are enterprise class.

That’s typically an indicator that they’re multinational, probably public. And if you’re doing that, then you should land with our financial close and our intercompany solution concurrently. Okay.

Dan Jester, BMO Software Research, BMO: So maybe we can contextualize how important the SAP opportunity is to the broader company. Right? Like, you know, you’ve given guidance for this year, and maybe we’ll talk a little more about it. But, you know, aspiration certainly is over multiple years to reaccelerate the business. So, how important is SAP in that reacceleration journey?

And then we can talk about maybe the other factors we should be considering as we think about the multiyear the trend here.

Owen Ryan, Chairman and Co-Chief Executive, BlackLine: And if you don’t mind, Patrick, I’ll probably tail tag you a little bit. I mean, you know, just starting so SAP is about 25% of our revenue. Maybe they have a of the market. So we see that there’s upside there. But we also you know, we have a a big footprint with Oracle customer, big footprint with Workday customer, big footprint with some Microsoft Dynamics customers.

So and we’re we’ve always been ERP agnostic, and we take advantage of that. And we’re we have this, what I would call, a a blossoming relationship with with Workday. And we’d say that seems to have been driven more by their people in the field who were trying to pitch Workday with who was their preferred provider, and they weren’t winning as much because BlackLine is a superior solution. So we’re seeing more uptake from that. Oracle’s always a little bit tricky.

They’re you know, they sort of say they can do it all. Reality is in the financial close space, it’s it’s a different model, and and we think we’ve got something that’s very, very distinct from what what they have. And so, you know, we’ll continue to, we believe, have success there. It’s interesting. We, you know, sort of lost a couple in the last few years that are now deep into the throes of coming back, because, you know, the auditors can’t trace what, you know, Oracle’s doing in their systems.

Like, they it’s it just doesn’t work as well as as what a black line did. And so, so we’re seeing real real progress in that front. But, Patrick, do wanna pick it up from there?

Patrick Villanova, CFO, BlackLine: Yeah, Dan. If if you’re, know, driving towards more towards, you know, target model and and how we’re gonna get to where we are and the inflection point that we signaled for the half of this year, I think one key takeaway here is while this SAP super cycle, as they’re calling it over the next five years, these 30,000 customers represent a a a pretty huge opportunity for us as a company. When we built our target model and went out and messaged it, during Investor Day last November, we built it in a way that was 100% within our own control. So we targeted over the next three to five years to get to 13 to 16% revenue growth with that inflection from where we are today being signaled in the half of this year. And when I say signaled, I’m saying leading indicators such as billings, CRPO, ARR growth, and then revenue will follow in 2026 and beyond.

And so when we build that, though, we want to say we wanna control our own destiny. We wanna be 100% in control of what we’re signaling to the marketplace. So the path to 13% is, you know, what you know, basically, from a partner perspective, reflects the 25, 30% mix that we’re seeing from SAP today. It does not contemplate above and beyond this 30,000 ERP migration opportunity. And so as that gains momentum, which SAP will lead that.

Right? They lead that conversation, but they’re with us now side by side with this joint architecture with a much stronger message that can push our growth rate above and beyond 13% up towards 16% and beyond. It’s a it’s a tailwind to our overall model. But right now and this might open the door to, you know, more conversation or more questions, but good questions. You know, our investments are in our pricing strategy.

It’s in our innovation and technology. It is in our partners. It’s in our location. It’s NGOs. It’s in our industry.

So these are things that we control. These are investments that we control that are growth levers that build upon themselves over the next three to five years to get back to that mid teens double digit growth.

Dan Jester, BMO Software Research, BMO: Okay. That’s that’s really helpful context. On the pricing strategy, very new, so very early days. But, as we think about sort of that contribution to 2025, are we on track with regards to your expectations? And how should we be thinking about this sort of on a on a longer perspective?

Patrick Villanova, CFO, BlackLine: Yeah. So just to hit the nail on the head there and then maybe unwind it a little bit in terms of how it’s going, we are slightly ahead of our own expectations on the pricing strategy. And I think it’s important. Like, context is very important when we talk about this. We went through a very robust analysis in 2024, reaching out to all of our customers.

We even reached out to former customers just to understand, you know, how our pricing is viewed, how it’s digested, where the value proposition is. And the working thesis coming out of that analysis where we use a party expert as well was that a overwhelming majority of our customers would embrace a platform pricing structure and to get away from these seat licenses and and user licenses. Just to be clear, and, you know, the the one market segment that we saw or one cohort that we did not see that strong majority, that would potentially embrace was lower mid market. And we’ve signaled over the last several quarters that lower mid market is a place that we’re we’re, you know, not overly investing in. We’ve seen some churn there.

These are very small customers, five users, things of that nature. And, you know, if they were to stay at BlackLine, great. If they have IPO potential, we’ll work with them. But our bread and butter, where we’re investing, is the upper mid market and enterprise, and that’s where the pricing strategy gained a lot of momentum. So in the first quarter, we launched the strategy in North America.

And in this quarter, second quarter, we’ve launched it in the rest of the world. And then eventually, Solex will follow as we align this platform pricing with SAP. And what we’ve seen so far is exactly what the thesis said or the analysis said over a year ago, that CFOs and CAOs and controllers are embracing this approach. And there’s strength in simplicity when you’re talking to an accountant like myself. And what’s great about this pricing model is it’s it’s a placement.

It’s a one pager. And on the left side, there’s a platform fee. And that platform fee, there’s about twenty, twenty five levels or tiers, and that fee is based upon your revenue as a company. So your platform fee only goes up if your revenue goes up. So your revenue goes up, our revenue goes up.

It’s a great handshake in out in the marketplace. You succeed, we succeed. And then on the right side of this placemat, this pricing placemat, are all of our consumption based products, journals, matching, intercompany, I two c, high frequency racks, then eventually, off to the far right, we’re building out AgenTik AI and how to how to build out the the consumption based modeling for that. And so on these consumption based products, the more you use, your per unit price goes down. So that’s more revenue for us, but your ROI as a customer goes up because your per unit cost is going down the more you consume.

So it went from a conversation, you know, that at times was a bit awkward, like, many accountants do you have? Many people in your GL team? How can we over rationalize how many seat licenses you have? To something more transformative, where we’re approaching senior leadership now and saying, look. We’re delivering you a platform powered by Studio three sixty with four solutions connected.

And we want you within the office of the CFO. We want everyone logging in to our platform. We want this transformation to be your entire office, not just pockets of accountants throughout your org around the world. And so now you have everybody on the platform. You have everybody using it, which drives more consumption, drives more adoption.

So it’s a strategy that not only resonates with the buyer from a value and ROI perspective, but it also pairs very well with where we’re going with our product and where we’re going with our solution. So, look, it is early. We’re five months in, five plus months in. But so far, we are slightly exceeding our expectations. It’s gonna take about three years to get through our entire renewal space, but we are pulling that forward to the extent possible if there’s interest.

And all new logos, all new customers, they they see the new pricing pricing strategy.

Dan Jester, BMO Software Research, BMO: Is you know, maybe this is a a related but somewhat different topic about the amount of AI innovation that has been launched by the company over the last six months. And, you know, a lot of that is probably still to come as well. Does that offer an opportunity for customers to accelerate their adoption of the the new pricing strategy? If they’re interested in AI, you can use that as a carrot to sort of make the transition as well or parallel streams?

Patrick Villanova, CFO, BlackLine: Yeah. So that’s part product question, part pricing. So it’s absolutely an opportunity. Right? And now it is early from our AI journey.

We don’t have a lot built into the 2025 plan, but it is obviously part of our future, and and that’s intentional as we roll out this this new technology. So the way I would characterize AI, everybody dives right into AI. And the thing you have to do, though, from an AI perspective is set the foundation. Because if you’re a company that has 15 ERPs and they’re all siloed and you release AI, you’re gonna get 15 different answers every time you run it. And so the key the baseline key or foundational element to AI is uniform data or data throughout your entire platform, throughout your entire ERP and your financial ecosystem.

You gotta have a single source of truth. So the thing we did, you know, over a year ago, two years ago, was start building that platform that enabled that. And that’s Studio three sixty, which connects our four solutions together to make sure that data over here and I to see is identical to data over here financial close. That’s key. That’s step one.

That’s foundational. And there’s very few other companies that do we do that that have that. Actually, none that I can think of. And so now you have this foundational element of a unified platform with unified data and a single source of truth. Now you can release your AI technology, your AI agents into this environment, and they’re looking at data that is uniform across the entire platform.

That’s the that’s the selling point to our customers. That’s what builds confidence that it’s gonna work. And then you get to, okay. You used to use this product over here that was high levels of automation but required some manual intervention. You had to click this, do this, you know, and it was 98% automated.

What if we take the hands completely off the wheel? What if we, you know, allow agentic AI to do that, but it will do that prudently. It will do it with an audit trail. It’ll do it in a way where you have complete visibility, not just for you and your own confidence as an accountant or a finance person because we have to see it. Right?

It’s it’s in our DNA, but for our auditors, for our regulators. And so that’s what we’re doing. We’re building product and technology that is allowing for the highest levels of automation through AgenTeq AI, but we’re doing it very prudently in a way that practitioners and regulators will embrace because it will have that audit trail and have that assurance. And it’s something I joke about my team, with my coworkers. When you’re an accountant, 99% accurate is 100% failure.

It’s not good enough. You have to be a 100% accurate, and we are keeping that in mind when we design all of this technology.

Dan Jester, BMO Software Research, BMO: That’s fantastic. And and it’s a great overview. And as a practitioner, I suspect that you have at least some insight into how all of these are gonna get adopted. And so as you put on maybe your customer lens, Patrick, having done this as your chief accounting officer before this, now CFO, where how do you see that adoption journey evolving? Like, what’s the one or two once you have the single source of truth, what’s sort of the next stage in terms of where you see opportunity for your customers?

Patrick Villanova, CFO, BlackLine: I I I like telling this story. It comes down to proving it.

Owen Ryan, Chairman and Co-Chief Executive, BlackLine: You you

Patrick Villanova, CFO, BlackLine: gotta I mean, it seems the statement of the obvious. But Mhmm. Right now, AgenTik AI, I’m personally saying, is the generation of technology within accounting and finance. When I started my career twenty five years ago, there were some more senior partners, you know, at PwC, And they joked about that when Excel came out in the early eighties, there’s reluctance to use Excel. People didn’t trust the floppy disk.

They didn’t trust it on the computer. They wanted their 10 key and their green ledger paper. I’m dating myself here. But that’s crazy when you think about it because Excel is such an embedded part of our lives. And then you fast forward to the early two thousands, and you had the advent of the black lines of the world where you start letting systems and technology to do the processing for you, and that took time.

Right? But the key in generation one and generation two and now eventually AgenTek AI, there is one uniform thread throughout these last fifty years of innovation. Is that once you prove that technology works, once you get a comfort level with practitioners, once regulators you know, they’re always a little behind, but once they follow and get on board, you’re that flywheel is gonna become exponential. The rate of adoption will become exponential because we all wanna do things faster and more efficiently, but with accuracy. And once you prove you have something out there that works, that’s where we’re gonna get to.

And and that’s where we are. We’re in this. We’re releasing it. We’re proving that it works, and we’re building that momentum.

Dan Jester, BMO Software Research, BMO: So we have a few minutes left, and I wanna get through a couple of quick hitters that have been emailed in. So

Owen Ryan, Chairman and Co-Chief Executive, BlackLine: The speed round.

Dan Jester, BMO Software Research, BMO: Speed round. So, GCP migration, what’s the latest, and, what should we be thinking about with regards to gross margin opportunity once that’s beyond us?

Patrick Villanova, CFO, BlackLine: Yep. So GCP migration, we are almost through the entire migration. It should be completed early twenty six. It is going well, and that is one of the core components to the expanding gross margin that we signaled back in Investor Day, gains from our current 80% to 85%, that is a that is a core component because that the finalization of that migration not only will remove redundant costs, but will allow for greater optimization of the cloud itself. So it’s two parts in that.

And then the other element yeah. And the the other element of gross margin, of course, is AI, internal use of AI and bringing more efficiency to our support and the and our support systems and how we interact with our customers.

Dan Jester, BMO Software Research, BMO: Okay. quick hitter on partners. This is for you, Owen. You’ve streamlined the partner ecosystem. It sounds like you’ve been very positive on it.

Any updates in terms of what you’re hearing in terms of their hiring within the BlackLine ecosystem to support your future growth aspirations?

Owen Ryan, Chairman and Co-Chief Executive, BlackLine: Yeah. I focused on what I would call our baker’s dozen, so it’s 13 of them. At least 12 of the 13 seem to be sold out from a resource perspective because we were trying to subcontract some of their people to us, and we can’t get anybody that’s available at this point in time. So they all seem pretty bullish. They’re they’re they’re busy.

They’re looking to hire. They seem to be hiring out of companies and from each other. So they’re trying to think people that have, you know, real BlackLine experience. So that is one of the interesting things. You know?

We talked about we have 400,000 users of BlackLine. There’s probably double that many that over the years have worked on BlackLine and maybe got a different company or whatever that you can still pull pull those resources in. But demand from our partners, has never been stronger. Now a lot of that is because of the way we’re sharing information and accounts and everything else. And I think 2024 was a little you know, we announced partner powered at the end of twenty three.

’24 was a year ago. Let’s see what they really do with this, like, if they’re gonna really walk the talk. And we did that throughout ’24, and so they’re seeing that at ’25. So our partners are really leaning in the right way.

Dan Jester, BMO Software Research, BMO: Ah, okay. And then thank you. Strategic products. So if you go back maybe a year ago, this was growing or this was maybe, like, 25% of sales in a given quarter. And the last couple quarters were in the high twenties and sometimes north of 30.

Have we reached sort of a new sort of threshold in terms of the mix given the proportion, the momentum of the underlying business? I know there’s several products there, but just high level. How do you feel about this improvement?

Patrick Villanova, CFO, BlackLine: Owen, if you want me to take that one. So You go ahead because

Owen Ryan, Chairman and Co-Chief Executive, BlackLine: I’m waiting to hear what you’re gonna say because then I’m gonna answer the half and and but go ahead.

Patrick Villanova, CFO, BlackLine: Yeah. So I I would say maybe I’ll tackle the financial side of this. So, Dan, I would say that number is gonna continue to grow. You know, going back to the answer or the conversation we had earlier around pricing and pricing strategy, that right side of the placement, those are all strategic products. They’re all consumption based.

And I would expect or we are expecting that over the duration of our target model, the next three to five years, it’ll be the majority of our revenue by the by the time we reach that target. And that’s intentional because, consumption based products drive the ROI, drive the value proposition, more so than anything that we offer, and we expect that to continue to grow over time.

Owen Ryan, Chairman and Co-Chief Executive, BlackLine: So I think, I don’t disagree with what Patrick has said. But when I look back at how our pipeline has been building in the last six months, there’s, like, been a resurgence in the core financial close. And so, you know, some of that is more user base versus consumption based, but, that’s been an encouraging sign. I think that’s a lot of credit to our team that’s really out there. It’s a credit to our partners who are going into our customers and saying, look.

You’re using BlackLine like this. This is how much more you get out of it, and so there are those opportunities to expand. And so, I don’t know what the percentages will be, but I think, it’s gonna be interesting because, the core of the business is picking back up in a way that is very encouraging and what we’re strategically trying to accomplish. Okay.

Dan Jester, BMO Software Research, BMO: And that actually leads to the last, rapid fire round question, which is around the seasonality of the year. And so, I mean, you’ve clearly, several times in this conversation, indicated that forward looking indicators of the business are primed to improve this year. As we think about the the cadence, anything that we’d be thinking about in terms of seasonality or when more precisely that we think that you should start to see these leading indicators show up in the results?

Owen Ryan, Chairman and Co-Chief Executive, BlackLine: Alright, Patrick. How about?

Patrick Villanova, CFO, BlackLine: Yeah. I mean, I I wouldn’t pinpoint a a specific date or time, but, you know, everything that we’re seeing right now, in terms of our pipeline build, in terms of our demand generation is following the model and following the expectations that we set in February. And so when you look at our pipeline build that has been very strong and and above plan for over three quarters now or three quarters, that converts into bookings. You know, smaller opportunities are within our base in six months. Bigger, 7 figure opportunities may, you know, may take twelve months.

But the fact of the matter remains is the demand is there, the excitement’s there, and then that will start converting in the half of this year. So you will see that inflection point in the half of the year, but not gonna pinpoint an exact date, but every leading part of our business, indicates that we’re, about six months out.

Dan Jester, BMO Software Research, BMO: We have to try. Alright, Owen. Patrick, Matt, really appreciate, your time this morning and this afternoon. It was great talking to you, so thank you so much. Yeah.

Owen Ryan, Chairman and Co-Chief Executive, BlackLine: Great. Thank you.

Dan Jester, BMO Software Research, BMO: Follow ups, please let me know, I’ll be happy to pass them along to the team.

Owen Ryan, Chairman and Co-Chief Executive, BlackLine: Okay. Great. Thank you. Thank you, everybody, for listening. Have a great day.

Thank you. Thanks, Stefan.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.