Billion-Dollar Unicorns: BlackLine Continues To Grow Post IPO

| About: BlackLine (BL)

Summary

The company's strong product offering and a keen business sense have kept it in good stead.

It recently reported its fourth-quarter earnings, and the market was pleased with its performance.

BlackLine continues to improve its products to help market demand.

Last October, Los Angeles-based BlackLine (NASDAQ:BL), known for its SaaS financial reconciliation software, had gone public despite the weak IPO market. But the company's strong product offering and a keen business sense have kept it in good stead. It recently reported its fourth-quarter earnings, and the market was pleased with its performance.

BlackLine's Financials

For the fourth quarter, revenues grew 44% to $35.3 million and non-GAAP revenues grew 47% to $35.9 million. It ended the quarter with a GAAP net loss of $15.7 million, or $0.33 per share, and a non-GAAP net loss of $3.9 million, or $0.08 per share. The market was looking for revenues of $34.13 million.

By segment, subscription and support revenues grew 43% to $33.69 million, and professional services revenues grew 55% to $1.65 million. It ended the year with nearly 1,760 customers after adding 133 net new customers in the fourth quarter and 420 net new customers during the full year. Some of the new customers added to the portfolio in the quarter include names like Aptean, Rand McNally & Co. and Sargento Foods. BlackLine also expanded its user base by over 10,000 users in the fourth quarter, ending with a user base of just under 167,000 users.

For the year, BlackLine's revenues grew 47% to $123.1 million. It reported a net loss of $39.2 million, or $0.92 per share. In 2015, BlackLine's revenues came in at $83.6 million, and it recorded a net loss of $10.8 million.

BlackLine expects current quarter revenues to be in the range of $36.8-37.8 million with a net loss of $5-4 million, or $0.10-0.08 per share. It forecast the year's revenues at $166.5-169.5 million with a net loss of $18.3-16.3 million, or $0.35-0.31 per share. The Street had forecast revenues of $35.5 million for the quarter and $160.8 million for the year.

BlackLine's Product Enhancements

BlackLine continues to improve its products to help market demand. Recently, it announced several enhancements to BlackLine U and BlackLine Community. The new features will help optimize training experiences of its customers along with integrating learning with peer-to-peer interactions. BlackLine U is a learning portal that provides users with access to comprehensive training resources. BlackLine Community is an online portal for BlackLine customers that promotes best practice sharing.

As part of the enhancements, BlackLine U's education features now have interactive, virtual, instructor-led classes along with hands-on practice modules that are offered in a BlackLine training instance. The content has been developed to showcase best practices and provide tips and tricks from BlackLine experts. Courses are designed keeping in mind the user's role in BlackLine such as customized modules for business administrators or accountants. The application also comes with learning dashboards that are geared to track performance at both an individual and a team level.

For BlackLine Community, the social feature has been enhanced and now users can start a discussion using the portal by creating an "idea section" where they can showcase the usage of BlackLine's tools and voting buttons.

Besides the learning module, the basic BlackLine application also has seen some enhancements. The new features include an enhanced reporting framework that will allow BlackLine customers to access large amounts of data instantly and thus generate custom reports within seconds from within the BlackLine application screen instead of having to export the data to Excel to analyze it. There also is an enhanced navigation menu bar that integrates an intuitively organized menu with new system search capabilities to deliver graphical interface enhancements. Finally, the software now has an optimized connector for SAP ERP and transaction clearing that will now automatically clear open items in SAP ERP to deliver an end-to-end solution to automate analysis, reconciliation and clearing of open items.

For BlackLine, it has been a long road to being a listed company. I had first spoken with its founder Therese Tucker back in 2009 when the company was generating less than $10 million in revenues. She had first set up BlackLine as a wealth management software company before realizing that there was a market for a software that could track and complete balance sheet account reconciliations. It then graduated to offering a comprehensive cloud-based software platform that supports critical accounting processes including the financial close, account reconciliation, intercompany accounting and controls assurance and empowers organizations by improving the integrity of financial reporting and getting real-time visibility into operations.

Back in the day, BlackLine was bootstrapped by Therese. In 2013, it raised an undisclosed amount of private equity investment from Iconiq Capital and Silver Lake Partners at a valuation of over $200 million. Revenues in 2013 were just under $40 million. Last October, BlackLine went public and raised $146 million by selling 8.6 million shares at $17 each at a valuation of more than $1 billion. Today its stock is trading at $29.92 with a market capitalization of $1.53 billion. It had touched a high of $31.40 last week and has recovered from the low of $21.66 it had fallen to in November last year.

I met up with Therese again in 2015 for a roundtable. You can listen to the roundtable here:

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