BlackLine at Morgan Stanley Conference: Strategic Shifts and Growth Plans

On Wednesday, March 5, 2025, BlackLine (NASDAQ: BL) presented at the Morgan Stanley Technology, Media & Telecom Conference, revealing significant strategic initiatives and future growth plans. The company outlined a shift in its pricing model, a focus on partnerships, and a reduction in headcount. While these changes aim to drive long-term growth, BlackLine also faces challenges such as foreign exchange headwinds and long sales cycles.

Key Takeaways

• BlackLine is transitioning from a seat-based pricing model to a platform-based model, aligning pricing with customer revenue and consumption.
• The company has implemented a 7% headcount reduction to reinvest in strategic areas like FedRAMP compliance and international expansion.
• BlackLine aims for a 13% to 16% revenue growth in the coming years, driven by product innovation and strategic partnerships, particularly with SAP.
• The fiscal year 2025 revenue growth is guided at 7% to 8%, with FX headwinds considered.
• A new platform, Studio three sixty, has been launched to enhance customer engagement and align with the new pricing strategy.

Financial Results

• Revenue Growth: BlackLine projects a 7% to 8% growth for fiscal year 2025, potentially reaching 8% to 9% without FX impacts. The Q1 2025 growth is expected at 5% to 7%.
• Pricing Strategy: The new pricing model, introduced in January, is expected to impact bookings in the latter half of the year, with revenue recognition anticipated in 2026 and beyond.
• Initiatives Impact: Investments in FedRAMP compliance and product innovation are expected to yield benefits starting in 2026.

Operational Updates

• Headcount Reduction: A 7% reduction was made, mainly affecting go-to-market roles. Savings will be reinvested in compliance, expansion, and innovation.
• SAP Partnership: Efforts include aligning compensation systems and enhancing data sharing, with a goal to increase SAP-driven revenue to 30% or more.

Future Outlook

• Growth Drivers: Key areas include FedRAMP compliance, the new pricing model, product innovation, and expansion into federal and international markets.
• SAP Partnership: BlackLine expects significant contributions from SAP customers, with several large deals anticipated in the second half of the year.

Q&A Highlights

• Headcount Reduction: Cuts were broad, focusing on sales and customer success roles, with a push for a stronger performance culture.
• Pricing Model: The shift to a revenue-based model aims to align BlackLine’s success with that of its customers, attracting interest from larger enterprises.
• SAP Partnership: Initiatives are underway to strengthen ties with SAP, although long sales cycles mean benefits will take time to realize.

For more details, readers are encouraged to refer to the full transcript.

Full transcript - Morgan Stanley Technology, Media & Telecom Conference:

Chris Quintero, Software Analyst, Morgan Stanley: Awesome. Thank you everyone for joining us here at the Morgan Stanley T and T Conference. My name is Chris Quintero. I’m a software analyst on the equity research team covering all things back office, office of the CFO. And I’m really pleased to be joined today by the BlackLine team, Owen Ryan, Co CEO Therese Tucker, Co CEO and Founder and Patrick Villanova, CFO.

Thank you all for joining.

Owen Ryan, Co-CEO, BlackLine: Thank you.

Chris Quintero, Software Analyst, Morgan Stanley: Thank you. For a quick disclosure statement, for important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Awesome. So it seems like you guys are always putting out some big announcements anytime you come out to the conference here.

So definitely wanted to start with the announcement.

Owen Ryan, Co-CEO, BlackLine: Like we showed up

Therese Tucker, Co-CEO and Founder, BlackLine: two years ago.

Chris Quintero, Software Analyst, Morgan Stanley: Yes. So that one was bigger for sure. But let’s start with the announcement you all made yesterday, 7% headcount reduction, Bill Wagner leaving the board. Unpack that a bit more, kind of why are you announcing that today and where are you

Owen Ryan, Co-CEO, BlackLine: making those cuts and any areas of reinvestment you’re putting back into the business? So there’s three pieces to this. So start with Bill Wagner first. Bill was selected to be the CEO of another public company and there was only so much time he could spend on board. So he respectfully stepped down and his resignation letter is pretty self explanatory about his belief in BlackLine.

The reduction in force and there’s really two pieces to it. So there’s a reduction in force that we’ve been working on since last year. One of the things that Therese and I’ve been trying to do is raise the performance culture within BlackLine. And we’ve been telling people, if you want a job, BlackLine is not the place for you. If you want a career, BlackLine is the place where you want to be.

And we have been very clear with our folks that BlackLine is going to be a place that it’s hard to get hired into, hard to stay and hard to get promoted. So last year, we started with hard to get hired and so we raised the bar on the kind of people that were coming in the organization and then we’ve just executed on the hard to stay and we had a brand new leadership team, almost the whole leadership team changed over. One of the things we started talking with them about in the late summer, early fall as we were going through zero based budgeting as well as thinking about performance management is look at your team and make an assessment of who can get us to where we’re going, not where we are. And we wanted to make sure that we then had those conversations about what it was going to take. We weren’t grading on a curve.

We weren’t looking to hold on to people that couldn’t deliver for what we were trying to do. So then that was the next piece where we then sort of communicated those messages to those individuals yesterday. The cuts are across the board with which you would expect. The biggest impacted area was go to market and all aspects of go to market from BDRs to quota carrying reps to customer success, professional services. And basically they were the people that were not meeting the expectations of what it means to be a black liner.

And so we’ve done that. The reason that we were announcing it yesterday was a couple of things. One is we had to go through our normal performance cycle, which you want to follow all the rules and regulations around that, if you will. Second, the last piece of this was we hired our new Chief Commercial Officer who started in early February, wanted to make sure he had the opportunity to weigh in as to what he heard from his leaders. And so that was another piece of it.

And then the reason we want to get out yesterday, we didn’t want to leave the conferences and not tell you what we were doing. So we really tried to make sure that you we could get that out and you guys could ask us questions about that at any level. The other piece of the announcement, which hasn’t gotten the same level of attention, but it’s important is we’ve also said to our people, if you don’t think BlackLine is the place for you, even though we didn’t ask you to leave now, put your hand up and we’ll have a conversation about you leaving the organization because we only want people that want to be here. And one of the things that we’re very proud of is, we don’t put it out in an eight ks, but we promoted 10% of our people as part of the annual cycle. These are people that are making a real difference, a real contribution in trying to raise the bar of black line.

And the other thing that we just share is our regrettable turnover, our top performers is de minimis. So we’ve really done a good job of keeping the people that want to drive the organization forward. They’re committed to what BlackLine is trying to achieve. The words I would say, we’re not looking to be competitive. We don’t want to just win.

We don’t want to just win a championship. We want to build a dynasty. And those are the messages and the people that are excited about it. And there are some people that are scared to death about it. And for those that don’t want to have the courage to do it, we understand that, respect it and that’s okay.

Let’s part ways and move forward with those that do want to win. So that’s it.

Chris Quintero, Software Analyst, Morgan Stanley: Yes. Two follow ups on the headcount reduction piece. Like, is there an element of also reinvesting that back into the business? I know you mentioned go to market services areas where, part of the areas that were affected, but what other areas are you investing in from these savings? And does it say anything about what you see on the demand environment perspective?

Owen Ryan, Co-CEO, BlackLine: So, it doesn’t impact what we’re seeing on the demand environment. The encouraging thing is, again, our new marketing team has really started to generate a much higher quality of pipeline starting in September. We continue to see that moving its way through to today. Big investment for us is going into the federal government space to become FedRAMP compliant. It’s not a cheap endeavor.

It takes a lot of investment. So that’s where a good portion of the money will go. We’re also building a data center for Saudi Arabia given the work we’re doing with SAP, where there’s some real interest in that part of the world, opening up a new Bangalore office last week. We went from 20 people in India Two Years ago to Therese now it’s two twenty people today and we have room to expand up to 500 people there as well as continuing to invest offshore in Eastern Europe. As far as back selling people, we do expect that we’ll go out and raise the bar on people that could be quota carrying reps or customer success managers or other parts of the operation, but it’s not we don’t feel the need to have to go and do a one for one replacement.

In fact, our top performers, when we talked to them about what we were going to do, when we said, look, your quota is going to go up, but you’re also going to have a number more opportunities to go pursue and they’re willing to make that trade off. So it wasn’t like, okay, we’re going to cut the bottom and nobody’s picking up the bag. We’ve got people that were excited to go ahead and take that on and that’s the way we’ve executed that.

Chris Quintero, Software Analyst, Morgan Stanley: Yes. And Patrick, this headcount reduction is already included in the current fiscal year 2025 guide, correct?

Patrick Villanova, CFO, BlackLine: Correct. Yes. The headcount reduction will not have a material effect of what we’ve already disclosed.

Chris Quintero, Software Analyst, Morgan Stanley: Got it. I wanted to move on to the Investor Day you all recently held. So first one is as co CEOs. So you’re looking for 13% to 16% total revenue growth, operating margins 26% to 30%. Let’s start on the revenue side.

What are the building blocks and drivers to get you there from the current growth rate of about 7% where you’re guiding for 25% to that 13%, sixteen %?

Patrick Villanova, CFO, BlackLine: Yes. So, of course, we still stand very confidently behind what we communicated in Investor Day. And our guide this year is 7% to 8%. You take out the FX effect, it’s about 8% to 9%. So you start normalizing that and plotting a path from 8% to 9% to 13% to 16%, which is what we discussed in November.

And it’s a lot of the building blocks that Owen just mentioned. FedRAMP, for example, we’re investing this year and the benefits of that will be realized in 2026 and beyond. And let me level set, all the ideas that we present at Investor Day all don’t just kick in on the same day. Some of the investments are going to take time, some of them are being realized now. So you talk about FedRAMP, innovation, which I’m sure Theresa is going to want to talk about.

We’ve got our innovation mojo back, Studio three sixty, Journal Entry Analyzer, right down the line in terms of a lot of things we’re doing. We’ve invested in intercompany and I2C, two of our acquisitions over the last four years. So there’s an innovation story there. There’s an investment story with FedRAMP, with The Kingdom Of Saudi Arabia as well. And then you start plotting that out, then you layer on pricing, a new pricing strategy.

So all in all, without regurgitating everything we talked about, there’s probably eight to 10 major initiatives that we’re doing right now, both in terms of product and GTM strategy. And to be clear, it’s not like one of those initiatives represents 90% of the opportunity. We’re not overweighted or we’re not putting our money in one area. We’re making these investments, we’re measuring them, and each one is going to contribute to incremental success of this company. And it’s not going to require 10 grand slams, but it’s going to require a lot of successes along the way.

And that’s why we feel very confident coupled with what Owen said earlier, we’re seeing demand in our pipeline, not just total pipeline, but current pipeline. You put all this together and the path to 13% to 16% as part of our target model three to five years out, it’s quite clear.

Chris Quintero, Software Analyst, Morgan Stanley: Yes. So it’s really a collection of all those different investments that you’re making together, each one contributing a little bit to get into that growth rate. And you also mentioned that some of them are near term impacts, some are a bit more longer. Can you go into a bit more detail, which ones are near term, which ones are long term and the linearity of how you get

Patrick Villanova, CFO, BlackLine: to that thirteen, sixteen as well? Yes. So, I would say FedRAMP is 2026 and beyond. That’s going to take about a year to build the infrastructure, but we’re very excited about that. Pricing, I brought that up earlier.

So we have rolled out a new pricing strategy starting in January. And just for a little background there, we’ve been looking at this for well over a year. And just having an open conversation about why we’re doing it, it’s for several reasons. One, based upon what we do here, what we do at BlackLine, we kind of have this like paradox where the better a customer gets and the more adopted customer gets, the less users they need. So migrating away from a user based strategy only makes sense as our technology advances and with AI upon us now, but on the horizon at multiple generations past.

So, the pricing strategy, we’re rolling it out now. Most of our renewals occur in the second half of this year and we’re rolling it out to our entire renewal space. That’s going to take three to four years. We’re also introducing it to our new logos and people within or customers within our pipeline. Most of those bookings, we’ll call that, the benefits of that pricing strategy will be realized throughout this year weighted towards the second half with more revenue in ’26 and beyond.

So if we’re looking at it, pricing, FedRAMP is ’26 and beyond, innovation is upon us right now.

Chris Quintero, Software Analyst, Morgan Stanley: Yes, I definitely want to dig into the pricing and packaging changes you guys have made here, going from a seat based model to more platform based. So can you go into a bit more detail what are the specifics behind that change?

Owen Ryan, Co-CEO, BlackLine: Yes. I think sort of the short end of that before we just answer that, the other thing that we are seeing, I think Theresa and I are very pleased about is the impact of industry. As we built those verticals very quickly, our ability to show use cases to our customers in specific sectors that speak their language and deal with the very unique issues that our customers confront every day. So whether it’s in the media industry and you’re thinking about how to account for film production costs or in oil and gas and how you think about downstream versus midstream versus upstream or the things that we do in banking, they all really resonate well. And then our ability to connect our customers who work in those same industries has a very positive impact on what we’re seeing today.

As far as pricing the short version of this is, we sell in part efficiency for our customers and the more they use our product, the more efficient they become. In some ways it’s perverse and that they need fewer seats to do things. So we recognized probably like most software companies if we didn’t change our pricing model to do something different every time we help our customer be more efficient, we go to raise the price, they try to figure out ways that they can cut back the seats. And so we asked Patrick and the team to come up with a model. So Patrick, I’ll turn it over to you please.

Patrick Villanova, CFO, BlackLine: Yes. Very high level. It’s a great setup. We started this project well over a year ago. We saw this on the horizon and developed a thesis statement in terms of what would the level of customer engagement be on a new pricing model?

How much would they embrace it? And to be clear, we’re rational about it. We did not assume that 100% of all of our customers would embrace this new model. And what we saw during our pilot last year, we ran a couple of pilots, small sample size, was proving this thesis out. And the thesis was that, okay, lower mid market customers, a market that we’ve been kind of walking away from strategically and intentionally over the last year, they didn’t have maybe as much of an appetite and that was in line with expectations.

When you think about it, a customer with five to 10 users, starting a conversation with them about unlimited user pricing really doesn’t move the needle much. But what we did see, which is more important, when you look at the upper mid market and enterprise, customers that have hundreds of users, if not thousands of users, and then they have an office of the CFO that can be 5,000, 10 thousand, 20 thousand people, and you approach them and you say, I can offer you unlimited user pricing. And we never have to talk about adding users through the portal or negotiating new per user pricing or each renewal talking about how many users you want to add or reduce. It’s unlimited. And this wasn’t done in a vacuum, and that’s something that’s important to point out.

We just didn’t launch pricing. What was key as part of this was also launching a platform. We are no longer just offering financial close, we have Studio three sixty. So now you’re having a conversation with the CFO or CIO and you’re saying, we are going to deliver you a platform for the entire office of the CFO and everyone can log in to that platform within your group or within the entire organization to benefit from that. And now you’re having a transformation conversation.

The fee for that platform is based upon the company’s revenue. If their revenue goes up, their price goes up. If they succeed, we succeed. It’s a great conversation to have rather than counting how many accountants are in their org. So you look at the pricing placemat, that’s what I’m calling it.

It’s very simple, very digestible, very easy to understand. You have your platform fee over here among some revenue bands, and then over here you have consumption. And these are all the products and solutions that Therese and the company has talked about. It’s automated journals matching, it’s our intercompany solution and the total volume going through that, it’s automatic cash application through ITC. Basically all the automation we can bring to a company.

So now you’re in this conversation, you say, hey, the more you consume, the higher your price goes, but your per unit price goes down. So now you’re in an RO a clean, crisp ROI conversation with a CFO and a CAO, something that’s strategic, something that’s not incremental. You have a platform and then you consume more and more, your ROI goes up. So we’re really excited about this because once you implement this, once you drive more consumption, that’s ultimately what’s going to drive the benefits of this pricing strategy.

Chris Quintero, Software Analyst, Morgan Stanley: Got it. So essentially revenue bands combining that with consumption and usage based pricing. So should the expect what should the expectation be on what the net effect of this pricing impact will be to the model here?

Patrick Villanova, CFO, BlackLine: It’s one of the eight to 10 initiatives that we’re rolling out. And most of the benefit is we’re going to start to see accruing in our bookings in the second half of this year. We’re going to land at a price point and renew to a price point well above our standard inflationary increases. And then that’ll manifest itself in terms of revenue recognition in 2026 and beyond. It’s going to take three to four years to roll this to the renewal space.

So you’re going to see that benefit recurring up through the duration of the target model. Got it.

Chris Quintero, Software Analyst, Morgan Stanley: I want to shift gears a little bit, Therese, bring you in on the conversation here. I think there was a lot of excitement from customers at the Beyond the Black Conference at the end of last year. At least that was my takeaway. There’s a lot of product innovation coming out from you all. I think the really big announcement that people are really excited about was with Studio three sixty.

So can you unpack a bit more what is Studio three sixty? How you think about how customers are going to garner value from that product?

Therese Tucker, Co-CEO and Founder, BlackLine: Great. Thank you, Chris. Studio three sixty is really BlackLine’s comprehensive platform. And we think that this is defining a new gold standard for what a platform should actually be. It has five components to it, all right.

Integrate. Well, wait, before we start with the five components, something else that’s very important. In today’s world, data volumes are growing exponentially. And the ability to have a modern data architecture that allows very easy sharing of data with your customers, but still has top notch security is very important. For that reason, we partnered with Snowflake to basically present a new data architecture.

The five Studio three sixty components that are built on top of that are integrate. You’ve got to be able to get data in and out of different systems. You have to be able to cleanse and transform data as part of that process. Number two is orchestrate, all right? This is something that nobody else is really tackling in the same way that BlackLine is.

The ability to use setup workflows within BlackLine, use APIs to communicate with all other systems and basically visually define and then automate all the different workflows that are happening across all different ERPs and systems in finance and accounting. That’s something that one of our customers at Beyond the Black called the holy grail of accounting. And this is the orchestrate piece. Number three is visualize, where we’ve incorporated Power BI, so that our customers do not have to export data out of BlackLine, but they can get all of the real time dashboards and analytics that they need. Number four is control.

And this is around keeping a lot of the metadata. And we’re offering this for free to our customers, things like yearly chart of accounts review and your SOX library of controls and some other information. The reason that we are building this in for free is because if you go back to data is the new currency and proper implementation of AI down the road requires a certain level of metadata to really do it well, okay? So we’re sort of helping them while helping ourselves. That’s the control aspect.

And then finally, Blueprint, which is where our marketplace is for our partners who have done many transformative cool things for our customers can actually store the body of their work so that other people can see it and then reach out to them to get their help on their particular projects. So five components, it’s very comprehensive. What was so invigorating about the user conference is that our customers immediately saw ways to extend what we’re already doing. They had additional ideas of how they could receive a ticket from another system and kick off a journal being automatically created within BlackLine or how they could use it around some of the requirements for regulatory reporting. They immediately saw the power of this and started thinking of additional creative ways to use it.

Chris Quintero, Software Analyst, Morgan Stanley: Yes. No, that’s certainly a really interesting product. And I’m also curious like what is the pricing and packaging look like for that? If the customer adopts $3.60, what kind of uplift on ACVs could that potentially be?

Therese Tucker, Co-CEO and Founder, BlackLine: Well, first off, we are exposing certain parts of the platform to our customers right now for free. The control aspect, some of the cool Power BI dashboards, because we want it to be tantalizing for them. Then if they want their own Power BI dashboards or additional event driven processes or more APIs to other systems, then they have to actually purchase the platform. The platform itself is going to be based on again the size of the company revenue bands. Anything to add to that, Patrick?

Patrick Villanova, CFO, BlackLine: No, I think that is perfect. It’s a 6 figure, maybe 7 figure investment for the very largest customers and that’s for the platform. But what it also enables goes back to where I was talking about pricing. It allows us to take our four pillars that we have and connect them all into one. So it almost facilitates further cross sell and up sell in addition to having the base fee.

Chris Quintero, Software Analyst, Morgan Stanley: Yes. I wanted to shift gears onto kind of broader industry trends. We’ve been pretty bullish around this whole ERP migration cycle. So I’m curious, are we being too bullish there? Are you also seeing customers wanting to move from on premise ERP systems to the cloud?

And then how does BlackLine benefit from that? I think want is a strong word for some

Owen Ryan, Co-CEO, BlackLine: of these companies. It’s just the reality of what they’re going to have to do. And so, yes, we’re starting to see a bit more of that. But I also would say for us in particular, and you and we’ve talked with you, Chris, a little bit about this. I mean, last year was a reset year with us for us with SAP because of all the changes they went through at the beginning of last year and then the middle of last year.

And we feel a lot better about heading into 2025 about how the pipeline is starting to build their focus on finance first, which again is a good thing for BlackLine and our work with them. So I think we’re cautiously optimistic again when we see what’s beginning to happen in our pipeline. We’re encouraged by that. And if we can get continue to make progress that we’ve made with SAP over the last five, six months, sort of lead with finance, get the compensation systems aligned, give credit for that to them for cloud revenue, which matters very much to the SAP organization, that all bodes well. If we wind up with finance last or at the end, then you’re sitting there and we’re waiting twenty four, thirty six months before BlackLine gets in.

And that’s a little bit of some of the things we saw at the end of the year. There was a couple of big deals where the deals closed for SAP, but they didn’t necessarily close yet for BlackLine. And that’s because the incentives weren’t the right way and everything else that you sort of need to get financed first. We’re driving towards that really hard right now with them as a team.

Chris Quintero, Software Analyst, Morgan Stanley: Yes. I’m glad you brought up the SAP partnership because I’ve always found that super interesting. They’ve got about, call it, 23,000 on premise customers and clearly they’re moving people to the cloud. But frankly, the percent of revenue has kind of stayed in this 24% to 25% of total revenue. So, what hasn’t worked so well and I know you’ve been making some real good progress and good conversations with SAP recently.

So, what are some of the changes or the conversations with them like today that make you feel better about that opportunity going forward? So listen, we tried to make lemonade out of

Owen Ryan, Co-CEO, BlackLine: the lemons last year. So when they had their reduction in force, which was quite large, and then our executive sponsor left, Teresa and I picked up the phone, we called Christian Klein, their CEO, who is very receptive and we’ve had an ongoing dialogue over the last seven, eight months. The big things that we can tell you to take away, one is, we have agreed a common architecture. So now when we go in and talk to customers, you can see a picture of both BlackLine and SAP together. Well, here’s BlackLine and here’s SAP.

That’s very important to get to. We’ve been very clear about how do we accelerate the premium qualification of BlackLine solutions. So for example, Studio three sixty, which in some ways if it was just for SAP, it looks like their AFC product. But because of what’s recent the team built, it covers and interfaces with all the ERP systems out there, the big ones. And so that’s a differentiator for both SAP and for BlackLine as we go into the market.

We had to get compensation systems aligned and agreed better. Last year when SAP had its reduction, if you were an SAPer, you’re just focused on delivering SAP revenue, because you’re trying to protect your own role. And so now, they are quota carrying reps, our quota carrying reps, they get credit for that joint effort and then they get sort of an additional credit at SAP because it’s cloud based revenue. That was a big deal. The messaging of finance first was a big deal, right?

So that comes right out of Christian’s voice to all the organization. They reestablished their office of the CFO, which was a big deal for us because they had disbanded it. On the last year, they’ve hired about 600 or so people who are focused on the office of CFO. We were saying earlier that we’ve got a team in Atlanta meeting with their team this week, trying to figure out how do we drive more of that together. One of the things that Theresa and I really were talking with Christian about is how do we measure progress?

We can’t just periodically meet for a cup of coffee like what are we going to do together every quarter to measure the things we said we would get done and are we making progress and if we are great and if not how do we correct all that. We had to put into place for us an SAP catalyst group because there’s a certain way to work with them and we had sort of dispersed all of our knowledge and we brought that together and a team that works much more seamlessly with them. We just started launch for the first time ever where data can come back and forth between BlackLine and SAP, so we could see how a customer is using BlackLine and are there issues that our CSM and their CSM should work together to get more optimization out of what we’re trying to do. So there’s just a whole host of things. I’m sure I missed two, three, four of them, but it’s like it’s really a lot of good things that we needed to do because there’s no reason we shouldn’t be able to drive this number up in the coming years to 30% or higher as a percentage of our revenue.

And that’s what we’re trying to get to.

Chris Quintero, Software Analyst, Morgan Stanley: Yes. A lot of really interesting initiatives going on there. You mentioned the compensation alignment, the new Catalyst group you’ve launched. I guess, are you seeing any of these benefits yet? How is the SAP pipeline looking like?

Is this more kind of a back half of the year kind of improvement?

Owen Ryan, Co-CEO, BlackLine: Yes. I think we started to see some progress broadly in September. And when we look over the last six months now, our pipeline is going in the It’ll take time. SAP sales are not short. And so you can have to think nine to twelve to eighteen months.

But again, that’s sort of why Patrick and our team, when we’re looking at the build out of our model, we’re focused a bit more on the back half of the year versus the first half of the year. Nobody could decide they’re doing SAP in three to six months. Trust me, that’s I wish they would, but that’s not reality.

Chris Quintero, Software Analyst, Morgan Stanley: Wanted to move on to the fiscal twenty twenty five guide for top line, 7% to 8%. There’s a lot of factors going into that, right? The macro that you called out in Q4, FX headwinds. So maybe, Patrick, can you unpack some of the assumptions you’re making in that guide? And I think there is based on the Q1 guide, it does seem like there’s an acceleration into the rest of the year.

So what gives you confidence in that improving growth rate throughout the year?

Patrick Villanova, CFO, BlackLine: Yes. Good call out, Chris. Our guide for the year is 7% to 8% without the FX impact post election last year, it would be 8% to 9%. And most companies are experiencing that same phenomenon. Our Q1 guide is 5% to 7%.

So with the full year being above that, there’s a certain implication there that you could impute that we’re expecting to exit 2025 much stronger than we came into 2025. It’s It’s a lot of the initiatives that I’ve highlighted, Teresa’s highlighted and Owen’s highlighted that we’re seeing them manifest in pipeline and with close rates for smaller companies of six months, larger companies twelve to eighteen months, that’s what is incorporated into the second half of the guide. So overall, you can infer or impute that there’s an inflection point in our growth rate during 2025. Yes.

Chris Quintero, Software Analyst, Morgan Stanley: Before I open it up to the audience here, just last one for me. You all called out a record level of 7 to 8 figure deals that you’re seeing in the pipeline. Curious, what kind of deals are these? Are these multi product deals? And are you expecting these to close sometime within fiscal year twenty twenty five?

Owen Ryan, Co-CEO, BlackLine: Yes. So, they tend to be broader sales at bigger companies. So it’s a little bit of the size of the opportunity as well as the breadth of the opportunity, which is what we’ve been trying to do. When Theresa and I came in, we said we wanted to elevate our story to the office of the CFO, because if you looked at our portfolio of what we had and what we were building, and we’re trying to literally help to drive digital finance transformation, then you should be able to articulate and win at a higher level. And so again, those are the things we started to see that have continued to build.

And so, yes, we’re looking to expect a number of those deals to close in the second half of this year. Obviously, they take a little bit of a different skill set from our own team. It really does require us to have close relationships with our partners who are going to be driving a lot of the implementation. That’s why we’ve really narrowed the number of partners we choose to work with down. We have we call it the CEO dozen, so there’s 13 of

Patrick Villanova, CFO, BlackLine: them for those of you

Owen Ryan, Co-CEO, BlackLine: who buy bagels. And that’s what we’re trying to focus on is like that small group that has real brand permission access. They walk the halls of the C Suite every day. And we’re really all in on that and so are they and we expect good things to come out of it.

Chris Quintero, Software Analyst, Morgan Stanley: I think we can take one audience question if anyone has any.

Patrick Villanova, CFO, BlackLine: All right.

Chris Quintero, Software Analyst, Morgan Stanley: I think we can end it there.

Owen Ryan, Co-CEO, BlackLine: Thank you all. Thank you so much. Great seeing you guys.

Chris Quintero, Software Analyst, Morgan Stanley: Yes, likewise.

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