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BlackLine: It's Another Small Beat

Nov. 03, 2017 10:28 AM ETBlackLine, Inc. (BL)1 Comment
Gary Alexander profile picture
Gary Alexander


  • BlackLine posted another modest beat to analyst consensus, with revenue of $45.9 million exceeding consensus by $1.8 million.
  • The company is dealing with the onset of revenue deceleration, with growth decelerating to 42% y/y from 46% in the prior quarter.
  • BlackLine recently passed its one-year IPO anniversary and have doubled from the launch price of $17. Shares appear fully valued with little upside opportunity left, especially at ~8x EV/FTM revenues.

Well, at least this earnings quarter didn't knock BlackLine (NASDAQ: BL) completely off course. It's a strange reminder of how fickle the markets are, however: BlackLine's revenue growth accelerated to 46% y/y (up from 45%) in Q2, and the stock market responded by sending shares crashing ~20% in its first real "correction" since its red-hot IPO, as I covered in a prior article.

This quarter, BlackLine made its first foray into the realm of revenue deceleration. Revenue deceleration isn't abnormal, of course: no company can expect to keep growing at ~50% forever. With BlackLine approaching the ~$200 million revenue run rate, it really can't be considered a startup anymore (though CEO Therese Tucker does sport a hip flamingo-colored hairstyle!)

Like most software companies, BlackLine carefully manages its earnings expectations (indeed, as a provider of accounting software, it probably knows more about this topic than most tech companies) to deliver well-timed, formulaically crafted beat-and-raise quarters. The snapshot below, taken from Seeking Alpha, presents a good history of BlackLine's earnings releases since going public - a string of consecutive beats.

Figure 1. BlackLine earnings historyThis quarter was no exception, though the beat margin of $1.80 million was certainly wider than last quarter's $0.85 million. This doesn't fully explain, however, why investors chose to dump BlackLine over a ~1% beat differential last quarter.

There was virtually no reaction to BlackLine's earnings this quarter - though, this is standard fare for a small-cap company with ~200k in daily trading volume - that's about 1% of Microsoft's (NASDAQ: MSFT) average daily volume. BlackLine shares were basically flat on the day leading up to earnings and showed no change in postmarket trading.

ChartBL data by YCharts

BlackLine's stock has recovered from its post-Q2 sell-off, rising nearly 20% in the past three months. One could be forgiven for thinking that

This article was written by

Gary Alexander profile picture
With combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has been quoted in many web publications and his articles are syndicated to company pages in popular trading apps like Robinhood.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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