BlackLine (NASDAQ:BL) Q3: Beats On Revenue

Jabin Bastian /
2021/11/04 4:40 pm EDT
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Accounting automation software maker Blackline (NASDAQ:BL) reported Q3 FY2021 results beating Wall St's expectations, with revenue up 20.8% year on year to $109.4 million. On the other hand, guidance for the next quarter was roughly inline with analyst expectations with revenues guided to $113.5 million. BlackLine made a GAAP loss of $9.71 million, down on its loss of $7.72 million, in the same quarter last year.

Is now the time to buy BlackLine? Access our full analysis of the earnings results here, it's free.

BlackLine (BL) Q3 FY2021 Highlights:

  • Revenue: $109.4 million vs analyst estimates of $107 million (2.18% beat)
  • EPS (non-GAAP): $0.24 vs analyst estimates of $0.11 ($0.13 beat)
  • Revenue guidance for Q4 2021 is $113.5 million at the midpoint, roughly in line with what analysts were expecting
  • Free cash flow of $9.79 million, up 22.9% from previous quarter
  • Net Revenue Retention Rate: 108%, in line with previous quarter
  • Customers: 3,704, up from 3,598 in previous quarter
  • Gross Margin (GAAP): 77.6%, down from 81.2% same quarter last year

Marc Huffman, CEO, commented, “Our momentum continued in the third quarter driven by broad-based demand for our solutions and strong execution, resulting in another quarter of solid financial performance. Companies are emerging from the pandemic with a greater sense of urgency to upgrade outdated back-office systems and to improve their financial processes. We believe this is the beginning of the next large and enduring investment cycle in financial and accounting systems.”

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.

Given the difficulty working with existing accounting tools such as spreadsheets and the growing volume of finance data across enterprise applications, more organizations are expected to adopt cloud-based finance software platforms which make it more efficient and transparent to manage accounting operations.

Sales Growth

As you can see below, BlackLine's revenue growth has been strong over the last year, growing from quarterly revenue of $90.5 million, to $109.4 million.

BlackLine Total Revenue

This quarter, BlackLine's quarterly revenue was once again up a very solid 20.8% year on year. On top of that, revenue increased $7.28 million quarter on quarter, a very strong improvement on the $3.26 million increase in Q2 2021, which shows re-acceleration of growth, and is great to see.

Analysts covering the company are expecting the revenues to grow 19.8% over the next twelve months, although estimates are likely to change post earnings.

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Product Success

One of the best things about software as a service businesses (and a reason why they trade at such high multiples) is that customers tend to spend more with the company over time.

BlackLine Net Revenue Retention Rate

BlackLine's net revenue retention rate, an important measure of how much customers from a year ago were spending at the end of the quarter, was at 108% in Q3. That means even if they didn't win any new customers, BlackLine would have grown its revenue 8% year on year. Significantly up from the last quarter, this a decent retention rate and it shows us that not only BlackLine's customers stick around but at least some of them get increasing value from its software over time.

Key Takeaways from BlackLine's Q3 Results

With a market capitalization of $7.42 billion BlackLine is a relatively smaller company, but its more than $1.17 billion in cash and positive free cash flow over the last twelve months put it in a very strong position to invest in growth.

It was good to see BlackLine improve their net revenue retention rate this quarter. And we were also excited to see that it outperformed analysts' revenue expectations. Zooming out, we think this was a decent quarter, showing the company is staying on target. The company is flat on the results and currently trades at $129 per share.

Should you invest in BlackLine right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.