BlackLine's (NASDAQ:BL) Q4: Beats On Revenue But Full-Year Guidance Underwhelms

Radek Strnad /
2024/02/13 4:14 pm EST

Accounting automation software maker Blackline (NASDAQ:BL) reported Q4 FY2023 results topping analysts' expectations, with revenue up 11.3% year on year to $155.7 million. The company expects next quarter's revenue to be around $155 million, in line with analysts' estimates. It made a non-GAAP profit of $0.69 per share, improving from its profit of $0.35 per share in the same quarter last year.

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BlackLine (BL) Q4 FY2023 Highlights:

  • Revenue: $155.7 million vs analyst estimates of $154 million (1.1% beat)
  • EPS (non-GAAP): $0.69 vs analyst estimates of $0.55 (25.7% beat)
  • Revenue Guidance for Q1 2024 is $155 million at the midpoint, roughly in line with what analysts were expecting
  • Management's revenue guidance for the upcoming financial year 2024 is $643.5 million at the midpoint, missing analyst estimates by 2% and implying 9.1% growth (vs 12.9% in FY2023)
  • Free Cash Flow of $35.34 million, up 12.5% from the previous quarter
  • Net Revenue Retention Rate: 106%, in line with the previous quarter
  • Customers: 4,398, up from 4,368 in the previous quarter
  • Gross Margin (GAAP): 75.8%, in line with the same quarter last year
  • Market Capitalization: $3.73 billion

"BlackLine closed the year with solid results, surpassing our expectations for both revenue and profitability, highlighting the powerful operating leverage embedded in our 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 mediocre over the last two years, growing from $115.3 million in Q4 FY2021 to $155.7 million this quarter.

BlackLine Total Revenue

This quarter, BlackLine's quarterly revenue was once again up 11.3% year on year. However, its growth did slow down a little compared to last quarter as the company increased revenue by $5.02 million in Q4 compared to $6.13 million in Q3 2023. 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 11.5% year on year to $155 million, slowing down from the 15.6% year-on-year increase it recorded in the same quarter last year. For the upcoming financial year, management expects revenue to be $643.5 million at the midpoint, growing 9.1% year on year compared to the 12.8% increase in FY2023.

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Customer Growth

BlackLine reported 4,398 customers at the end of the quarter, an increase of 30 from the previous quarter. That's a little slower customer growth than what we've observed in past quarters, suggesting that the company's customer acquisition momentum is slowing.

BlackLine Customers

Key Takeaways from BlackLine's Q4 Results

We were also happy its revenue narrowly outperformed Wall Street's estimates. On the other hand, its full-year revenue guidance was below expectations and its customer growth decelerated. Overall, the results could have been better. The stock is flat after reporting and currently trades at $58.45 per share.

So should you invest in BlackLine 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.