BlackLine (NASDAQ:BL) Posts Better-Than-Expected Sales In Q1 But Customer Growth Slows Down

Anthony Lee /
2024/05/07 4:35 pm EDT

Accounting automation software maker Blackline (NASDAQ:BL) reported Q1 CY2024 results beating Wall Street analysts' expectations, with revenue up 13.3% year on year to $157.5 million. The company expects next quarter's revenue to be around $158 million, in line with analysts' estimates. It made a non-GAAP profit of $0.54 per share, improving from its profit of $0.34 per share in the same quarter last year.

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BlackLine (BL) Q1 CY2024 Highlights:

  • Revenue: $157.5 million vs analyst estimates of $155.1 million (1.5% beat)
  • EPS (non-GAAP): $0.54 vs analyst estimates of $0.47 (15% beat)
  • Revenue Guidance for Q2 CY2024 is $158 million at the midpoint, roughly in line with what analysts were expecting
  • The company reconfirmed its revenue guidance for the full year of $645.5 million at the midpoint
  • Gross Margin (GAAP): 75.2%, in line with the same quarter last year
  • Free Cash Flow of $43.68 million, up 23.6% from the previous quarter
  • Net Revenue Retention Rate: 105%, in line with the previous quarter
  • Customers: 4,411, up from 4,398 in the previous quarter
  • Market Capitalization: $3.75 billion

"BlackLine’s financial results this quarter exceeded our revenue and profitability expectations, demonstrating our ability to deliver profitable growth as we relentlessly drive our refreshed strategy and new operating model,” said Owen Ryan, co-CEO of BlackLine.

Started in 2001 by software engineer Therese Tucker, one of the very few women founders who took their companies public, BlackLine (NASDAQ:BL) provides software for organizations to automate accounting and finance tasks.

Tax Software

The demand for easy to use, integrated cloud based finance software that integrates tax and accounting operations continues to rise in tandem with the difficulty workers find trying to use existing accounting tools like spreadsheets given the growing volume of finance data littered across a multitude of enterprise applications. A related demand driver is the secular increase of e-commerce and rising adoption of modern point of sales and payments platforms which easily integrate with backend financial software.

Sales Growth

As you can see below, BlackLine's revenue growth has been solid over the last three years, growing from $98.86 million in Q1 2021 to $157.5 million this quarter.

BlackLine Total Revenue

This quarter, BlackLine's quarterly revenue was once again up 13.3% year on year. However, its growth did slow down compared to last quarter as the company's revenue increased by just $1.73 million in Q1 compared to $5.02 million in Q4 CY2023. While we'd like to see revenue increase by a greater amount each quarter, a one-off fluctuation is usually not concerning.

Next quarter's guidance suggests that BlackLine is expecting revenue to grow 9.3% year on year to $158 million, slowing down from the 12.5% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 8.3% over the next 12 months before the earnings results announcement.

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Customer Growth

BlackLine reported 4,411 customers at the end of the quarter, an increase of 13 from the previous quarter, suggesting that the company's customer acquisition momentum is slowing.

BlackLine Customers

Key Takeaways from BlackLine's Q1 Results

It was encouraging to see BlackLine narrowly top analysts' revenue expectations this quarter while also growing free cash. On the other hand, its customer growth slowed and its billings missed Wall Street's estimates. Overall, this was a mixed quarter for BlackLine. The company is down 4.1% on the results and currently trades at $58 per share.

BlackLine may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.