Q4 2019 Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the fourth quarter 2019 Black line.
<unk> earnings Conference call.
This time, all participants are going to listen only mode. After the speakers presentation, there will be a question and answer session.
To west the question doing that session you would need to press star one on your telephone. Please be advised to today's conference is being recorded if you required any further assistance. Please press star in cereal I will now have the conference over to your speaker today like Central Keller VP of IR.
Good afternoon, and thank you for your participation today with me on the call injuries, Tucker founder and Chief Executive Officer of Black line, and Mark Parton, Chief Financial Officer.
Well, we get started I would like to note that certain statements made during this conference call that are not historical facts, including those regarding our future plans objectives and expected performance are forward looking statement with into meaning the private Securities Litigation Reform Act of 1995.
These forward looking statements represent our outlook only as of the Pete on this call.
Well, we believe any forward looking statements, we make a reasonable actual results could differ materially because these statements are based on our current expectations as of today and are subject to risks and uncertainties.
We do not undertake and expressly disclaim any obligation to update where alter our forward looking statements whether as a result of new information future event or otherwise, except as required by applicable law.
Oh, so unless otherwise stated all financial measures disclosed on this call will be non gap discussion of why we use non-GAAP financial measures and information regarding reconciliations in our GAAP versus non-GAAP result is currently available in our press release, which may be found on our Investor Relations website.
Now I'd investors DAPL lack line dotcom more on our form 8-K filed with the FCC today.
Now I will turn the call over to treat to begin.
Good afternoon, everyone and thank you for joining us today I am so pleased with our performance in Q4, which represented a strong close to a year of consistent execution, we were able to accomplish much of what we set out to do when the year to drive growth scaled the business and maintain.
His strong leadership position.
On a macro level, we continued to see healthy demand across our global markets from companies investing in digital transformation.
This trend remains strong in the fourth quarter and drove acceleration in many areas of our business I'm happy to report, we were able to grow fourth quarter revenue by 29% with continued improvement in profitability and free cash flow.
A few other highlights from our quarter include our renewal rate finished the year at 98% and our net dollar retention rate ticked up again to 110% slightly above our expected range. This improvement is driven by our investments in customer success and execution of our go to more.
Good initiative.
In Q4, we added the largest number of new logos in the company's history, bringing our customer count to more than 3000 enterprise and midmarket customers around the world. We achieved this goal with the help of our healthy partner ecosystem, great success in the Midmarket and several large.
Competitive takeaways.
We saw healthy global demand for our products in our message is really resonating.
Our user count spiked in the quarter by a record 23000 users representing 200% growth in user ads, we believe our investments in user engagement and training have resulted in our existing customers expanding their base at a faster pace.
We're also seeing larger initial use their populations among new customers combined our 2019 user count came in at the high end of our expectation.
Our goal to be a strategic partner to our customers is further unlocking black line value proposition and driving demand for our solution. In Q4, we continued our trend of lit up land the larger initial deals and growing our largest account we closed the quarter with a record number of law.
Arch deals, which we define as 100 care above in a our which continues to drive growth in both new A.R.R. per customer and total a our per customer.
Our strategic products finished at 22% of sales for the quarter, which was once again above our expected range. We believe the balanced approach that we have taken towards go to market planning has increased the momentum of new an add on sales of intercompany hub smart close and transaction matching.
Last but certainly not least following a record revenue contribution from our European team. Our international business grew at an accelerated pace of 42% revenue growth and ended the year nearly three times larger than the full year 2016.
As you can imagine we're very pleased with the quarter the full year and the consistent execution from our leadership team and employees.
Looking to 2020, we remain focused on executing the same multiyear multi prong strategy to accelerate and drive long term sustainable growth.
I'd now like to take the opportunity to look back at the full year and recap our progress towards our 2019 initiative.
Our mission is to deliver value to our customers and make them successful over the last several years Black line has become the go to strategic partner to lead companies of all shapes and sizes on their finance transformation journey over.
Over the years, we have invested millions of dollars in customer success by first growing our support account management and digital transformation team.
Second enhancing its education through optimization workshops, and training outreach and third increasing customer engagement with the in the black events best practices summit and strategic client forums around the world as a result, we continue to build and strengthen the long life.
Same relationships that we have with our existing customers.
These investments in customer success also drove a record year of Upsells and user AD for our account management team in Q4 some of the largest expansion accounts include.
A fortune 200, food distribution company, but it's been a black line customers since 2012.
Since that time, they have expanded their black line footprint as they have grown through acquisition deploying our account Brags journal entries and task management products as the initial software implemented into all new acquisitions for mission critical financial information management.
Following two very large acquisitions in 2019, the company nearly doubled their revenue and had significantly increase challenges associated with their intercompany accounting, including spending more than 800 man hours per month to reconcile out of balance intercompany transactions in.
Q4, they purchased intercompany hub to address their full scope of intercompany accounting transaction and expect to see those 800 hours per month shrink to fewer than 80.
With the intercompany hub the Black line solution gives this company the flexibility to operate in a multi ERP environment to remain acquisitive without adding headcount and to have greater competence in their financial statements.
Today This company abuse Black line as a key part of their socks and audit controls and is a true.
Strategic partner for accounting and I T.
A German multinational conglomerate first became a black lung customer in 2016 as part of the run book acquisition. They are Black line footprint remains limited for the next couple of years since they were already using any point solution to manage their financial close for the.
Eric and shared services organization.
It became increasingly important for this company to find a superior solution. They could integrate with run book and support their long term relationship with that's a P and.
In Q4. This company made the switched to black line with the purchase of account Rex.
Tasks and journals across their north American shared services organization. They also purchase transaction matching for integrated matching capabilities and the F.C.P. connector to embed directly with us they Pete.
This company chose Black line as their platform of choice due to their positive experience with Brian book enhanced functionality and most importantly, the ability to centralize and standardize on a single unified platform to automate county processes across their global shared services.
Organization.
One of the worlds largest food and beverage manufactures has been a black line customers. Since 2016. Since then they have purchased much of the black lung platform, but decided to postpone. The addition of intercompany hub and smart close until after their S. Four Honda upgrade.
We'd like many prospects they were under the impression that moving forward with Black line represented a competing initiative to their larger ERP upgrade.
Following our I TB event in L.A. This last September this customer that was subject matter experts in partners and realize that black line strategic products were critical to implement during their S sport on a transition.
This approach optimizes their ERP migration and helps them arrive at their desired ongoing and state.
In Q4, this customer accelerated their purchasing timeline and added the intercompany hub and smart close products as well as more users and additional rate plans for transaction matching by incorporating black line into the planning and design phase of their four Honda migration. This customer was eight.
People to gain enhanced visibility and control reduce manual work and free up full time headcount to dedicate more resources to their S. Four Honda migration.
Another 2019 priority was the ramping up our reseller partnership with us They P.
Throughout the year, we saw improvement in each subsequent quarter with Q4, marking our strongest solex performance yet the results were driven by acceleration in the volume of new logos with more than 20 Solex wins. This quarter. These wensberg global spanning North America, Europe and Asia Pacific.
And included our first so like steels in Germany, Spain, Switzerland, Denmark, Japan and Singapore.
Throughout the year, we participated in many joint Sep events around the world to build awareness of the black line value proposition and engage a larger population of the global Sep sales force, including executive management.
As a result of these touch points, we've seen improvement in the positioning of the Black line offering alongside FC piece Finance solutions, including powerful New case studies around how black line creates value for Sep customers.
Many of these case studies focus on Black line as an integral part of the S. Four Honda migration with multiple benefits driven by enhance control visibility and standardization Sep customers can move to S. Four Honda faster with fewer resources and.
With less risk by using Black line. We saw this use case drive multiple Q4 wins, including one of Japan's largest ecommerce companies.
This company had an aggressive timeline to transition to S. Four Honda in early 2020, but they did not have enough resources to do their monthly close and support the S. Four Honda migration in Q4. This company turned to black line to shorten their days to close and free up the needed.
Resources to ease their S. Four Honda transition.
This company views Black line as the key to lead their accounting team through digital transformation, while also enabling the future roadmap for Sep and their migration to as for Hannah given the expedited timeframe. This deal closed in under four month.
Driven by our investments made throughout the year joint enablement, we have grown our pipeline of future solex opportunities and seen improvement in partnering between Black line and Sep. It is still early and we had a lot of work to do but we're pleased with the acceleration we saw in Q.
For looking to 2020, we anticipate a stronger presence at Marquis C.P. events and continued investment in this growing enablement effort to drive alignment across Ecpm global go to market team.
We believe that this partnership remains a large global opportunity over the long term.
We were also really pleased with the growth in our non Sep market segment.
Mclean's products, our ERP agnostic and applicable to companies of all sizes across all verticals. New additions include one of the world's largest utilities companies, who initially went down the path of using our P. Eight to automate more than 3000 monthly reconciliations they were.
Able to automate nearly one third of those reconciliations, but realize that the process was not scalable after multiple bots broke down and they decided to pursue a full RFP to address their automation needs.
The RFP included multiple vendors, but we were able to prove our value with the right functionality and references including former competitive takeaways and most importantly, we were able to address their automation needs with improved controls in enhanced visibility.
It also didn't hurt that their assistant controller was a former black line user.
In Q4, this company became a black lung customer and purchased account reconciliations transaction matching and B or C. P connector increasingly customers are coming to us after they have been unsuccessful within our P.A. vendor. These customers quickly realize that automation I'm going to.
<unk> work flow is not a scalable endeavor they turned to black line for deep functionality that manages an entire business work flow from end to end to transform their business processes.
A leading provider of automotive aftermarket parts had made a large investment to migrate from there on Prem ERP to a newer cloud version.
As part of that migration they were given the earpiece cloud financial close solution for free and had executive sponsorship from their CFO and CTO to continue down that path.
Theres CIO, however was a former black line user when he was a controller at another company and he's state his reputation I'm, bringing black line to this new company with the health of the CIO champion and our digital transformation specialists, we were able to identify the limitations of.
The solution offered by their ERP vendor and showcase the superiority of Black line.
This company became a black line customer in Q4 with the purchase of our full finance transformation solution and the deal close rapidly in three months.
This example of a former black line user, bringing black line to their new company is becoming increasingly more common as we grow our customer base. We're finding that these individuals believed that traditional manual accounting processes are not sustainable they've experienced the benefits of modern accounting with black line.
First hand, and they want to replicate that success at their new company.
The mid market remains a part of our growth strategy and as seen a lot of success increasing to nearly 1400 midmarket customers earlier. This year, we launched an initiative to streamline our midmarket offerings. This initiative isn't improved fails and implementation approach.
Built around proven leading practices to reduce time to value for new customers that are looking for accounting expertise of fixed implementation price and a speedy implementation time, we sell increasing market demand for guided approach that leverages, our tenured experience and fell.
That we could tailoring solutions, specifically for those needs.
This new approach includes template did best practices Preconfigured dashboards connectors to streamline integration Premier Native ERP built in dependencies, and alerts and purpose built reports to best address the challenges associated with the financial close.
We launched this initiative in the North American Midmarket in Q3, and our Midmarket team had a record revenue performance in Q4, including a pleasing number of competitive wins against low cath.
Following its launch we've had better success targeting the midmarket, resulting in more wins at an improved close rate and and fewer days to close. We believe this approach is particularly compelling for most companies in the mid market because it simplifies the process of realizing sucks.
Yes with Black line, we're pleased with the early traction we have seen with this approach and believe it will help us continue to win share in the mid market.
Another priority in 2019 was building a healthy partner ecosystem in the past year, we more than doubled the size of our alliances team expanded our international coverage and invested in it can't support and enablement for partner resources, both Deloitte and E.
Why have made significant investments in growing their global Black line practices.
We have strengthened our regional solution and BPL partnerships.
Correspondingly the number of joint partner engagements for large deals grew by nearly 30% in 2019 on average deals with a partner are more than twice the size and tend to grow more within their first year, then deals without a partner.
We will continue to focus on enhancing our partner ecosystem to unlock value for our customers.
As I look back on the year I am very pleased with the progress we made on our strategic initiatives as well as the momentum we have created for 2020 and beyond we have a huge opportunity ahead of us to penetrate a largely greenfield market and as the leader in this space. We believe that this is.
Our market to lose.
As we move into 2020, our focus will be to continue to serve our customers grow and scale. The business. We will remain focused on executing our multiyear strategy to drive long term sustainable growth and advanced black lines position as a global market leader.
And with that I'll turn the call over to Mark.
Thank you to reef and good afternoon, everyone. As a quick reminder, unless otherwise noted on the numbers mentioned during my remarks today are non-GAAP.
As to Reece mentioned, we are very pleased with how we finished the year 2019 was a year of solid execution and we feel good about our jumping off point for 2020.
For the full year 2019, total revenue grew 27% $289 million gross margin was 83%, we achieved 8% net income margin and generated $29.7 million in cash from operations.
Total fourth quarter revenue grew 29% year over year to reach $80.3 million.
Higher revenue in the quarter was driven by a strong retention rate broaden healthy sales performance accelerated deal timing and higher services revenue.
A few other nodes on Robin do include.
Continued strengthen our international business represented 24% of total revenue in Q4 up from 22% in the prior year, we're seeing strong performance in our major markets in Europe and Asia Pac.
Revenue from our Sep partnership increased 25% of total revenue in Q4, which was up from 24% last year.
Despite a slow start to the year for the Solex partnership.
This metric is within the range that we expected for the year and was primarily driven by strong expansion in our existing Sep accounts.
Services revenue was strong at $5.5 million or 7% of total revenue.
This represents 98% growth over the year and we're pleased with this result.
Services remain a small part of our overall revenue, but an integral part of our customer experience more of our customers are engaged in digital trade finance transformation projects, and we're seeing more engagements with strategic products and strategic partners.
We view this as a strong indicator of our success in our business with broader deployments of our product.
More than 70% of our large deals in the quarter included a partner, which is within our expected range.
We continue to see traction with the adoption of transaction matching intercompany hub and smart close with our strategic products, representing 22% of sales for the quarter.
Moving onto our key performance metrics for the quarter.
We added a record 153 net new customers in the quarter for a total of 3024 total customers.
Strong net adds benefited from our new Midmarket initiative are healthy partner ecosystem and included accelerated deal volume from the Solex partnership.
Driven by strong account expansion and a healthy renewal rate of 98% or dollar base net revenue retention rate saw improvement for a second consecutive quarter to 110%.
Gross margin for the quarter was 83% with subscription gross margin at 87%.
In Q4, we generated net income attributable to black line of $8 million.
For the full year, we generated net income attributable to black line of $22 million, which includes a 300000 dollar noncash income tax adjustment as we have outlined in todays earnings release.
These results exceeded our expectations and came in at the high end our guidance range.
We generated $8.2 million, an operating cash flow and $5.6 million and free cash flow for the quarter.
We finished the year with approximately 608 million in cash cash equivalents and marketable securities.
Over the past several years, we've seen consistent improvement in net income driven predominantly by operating leverage.
In 2019, we accelerate above trend to an 8% net income margin primarily due to the fact that we executed well during the year and generated revenue above our expectations, which dropped to the bottom line.
In 2020, we will once again see profitability improvement, but it won't be at the same pace is 2019, as we intend to make targeted investments in our public cloud infrastructure and build out our services and support team for evolving customer and product mix.
These expenses will ramp through the here and we expect the impact on overall gross margin will be two to three points in the near term.
Additionally, operating expenses vary on a quarterly basis with a step up in the first quarter driven by annual salary increases payroll tax reset annual kickoff events.
For the full year, we expect to generate operating leverage and additional margin as we execute on the topline throughout the year.
We remain on track to achieve our long term target model.
Now, let's move onto our first quarter and full year 2020 outlook.
For the first quarter of 2020 total GAAP revenue is expected to be in the range of $80 million to $81 million on the bottom line. We expect to report net income attributable to Black line in the range of two and a half to three and a half million dollars or four to six cents on a per share basis.
Our share count will be approximately 59.8 million diluted weighted average shares.
For the full year 2020, total GAAP revenue is expected to be in the range of $347 million to $352 million.
Net income attributable to Black line and 2020 is expected to be in the range of $27 million to $29 million.
Utilizing diluted weighted average shares of 60.6 million, we expect net income per share between 45 and 48 cents.
Lastly, we plan to attend several upcoming investor conferences, this quarter, including the JMP Technology Conference. The Morgan Stanley TMT Conference and the Suntrust Technology Internet Services Conference.
Please reach out to our Investor Relations team, if you would like to participate in any of these events and Teresa and I will now take your questions.
Thank you NSR reminder, ladies and gentlemen to ask a question you need to press star one on your telephone to withdraw your question press the pound key.
Please standby well, we compile Dick you in a roster.
And our first question is from above on surgery with William Blair. Please go ahead.
Okay.
Hi, Jerry.
The market everybody here.
Okay rats.
Great quarter, Great billings, great numbers I wanted to touch first a little bit of a competitive environment. You know you guys touched a little bit below one of the markets.
Well when personally enterprise obviously, the S&P move is starting to play out just obviously Sep bundled you went to these large solution I guess the first question is is like as you think about safety dozens of thesis right. As you know a year ago. All the pieces was hey, actually if he's going to put you into these big deal and Black line is 100 200 Grand.
$10 million deal and it makes up how often is that how often do you see I should be coming in now and it feels like solar is working but play out where youre a small part of what makes so much more strategic that you're winning against you know the traditional world.
All of the world et cetera, or today's it's still heavily reliant on your salesforce doing that and I guess, maybe a quick follow up that I have a real question, but like is there is or leverage point there until the market.
You know here's the thing we are even though we are a year in two hours. So likes partnership it is still because of the size and the complexity and the ongoing reorganization of that very large company. It's still feels like early days now.
One of my goals, we've had customers come to us over the last quarter and volunteer how they were so able to have successful S. Four Honda implementations because of how they utilize black line in that process. So it's my goal over this coming year to.
To be included far more often on those S. Four upgrades than we are now I would love to see it become standard but that could take using years, but I think that's where we're going live on to your point on on leverage that's that's precisely what we expect to happen with this partnership is our investment thesis is that the.
On the S.A.P. sales force in the markets, where we are today and even in the markets, where we are not currently that their sales will be able to help us reach our target model and that includes getting efficiency in the sales.
In the sales model.
Okay Fair enough and then a quick follow up in our company called I know when you talk about his years ago.
We stopped talking about it [laughter], we talk about a little bit now <unk> is such an interesting products from a strategic perspective, I love to understand how much color as much called you can give about sort of what you're seeing with growth their interests. There, it's such a transformative product.
Not the core but sort of.
Are you seeing customers actually starting to get to understand the value of this was still evangelical it was a tough sale for Awhile partners. You know you would see and others trying to help solid but but it was still small hasn't changed at all or is it still.
The early evangelical type sale.
I would say if I had to lean in one direction or the other I would still lean to the early evangelical and it's just a newer market now the customers that are adopting it are getting great value out of it. We're building case studies, it's a slow build.
You know and and I was pleased with the results of this quarter, but when I don't think about the fact that I think all of our enterprise customers could get value from it then I've got to go with the early Evangelical lean.
I want to push back.
<unk>.
But I feel like after three years it should be that's much if you want a color there thanks for taking my questions.
Okay, but on.
Our next question is from core Gee I kept up with Oppenheimer.
Oh, Hey, thanks for taking my questions, but first off lotteries, congrats on that Stevie for women and business entrepreneur of the year [laughter] really really great news I saw that in the press release. So congrats on that first question for Mark just real quick what was the RPL in the quarter I might've missed that but just wanted to make sure.
Oh, that's okay. Yeah. So the ARPU contract not recognize revenue was 366.9 million.
And 60% of that is current.
Okay, great. Thanks for that Mark and just kind of digging in a little bit more on that actually if you saw its partnership it sounds like it's ramping really really well and I believe you described the ramping process, it's kind of a two step process with us. If you just curious on how that is all working out right now and how we should think about the cadence of investment into the Sep partnership.
Sure.
You know we were pleased with the momentum that we had in Q4, but it's still I'd be really Frank it's still not where I would like to see it. Okay. It's still a slow build so pleased with the momentum I think it's you know worth an ongoing investment in enablement and education we.
Like the potential, but and I think it's a great long term, but there's not going to be some kind of hockey stick.
Yeah, and the jump off point for 2020, we we have visibility into the pipeline.
Our sales leadership feels like the partner in and with S&P reps is as good as it's been in the year since we've been operating so we feel like we're moving into a year, where we can execute on that partnership and that we made a lot of progress just in the last.
Several months and saw the results in Q4.
Got it and then it's all in the press release, you've got three Sep certifications for as for Hannah I guess I should know better about what that means but could you explain towards the importance of these integrations and what that could mean for the Solex partnership and I guess, the S&P pipeline to Ah. Thanks for taking my question.
You know really that's kinda table Stakes a in order to have all of those different certifications on our integration platform because the reality is when you've got a really smooth integration and then it it lowers any kind of project risk. This certification piece is that Sep verifies that you do.
Indeed work with all of the different versions of their products and that you don't you know drag their system performance down or do anything you know terrible to their databases. So they're very careful about their certification process and it's just to verify that the integration between our two systems is very soon.
Mood.
I think that's table stakes for having a great partnership with S&P.
Got it thank you for taking my questions. Thanks Cody.
Thank you and our next question is from Mark Murphy with JP Morgan.
Hi, Good afternoon. This is Matt costs on behalf of Mark Murphy Congratulations on the a nice 2019.
Trees, you mentioned that companies are.
Our increasingly coming to you after being unsuccessful with their RPD vendors, just because a certain limitations.
I think our P.A. is accelerating sales cycles for you and station fail in some areas with our PVA and then maybe seeing new opportunity.
I don't think they're accelerating sales cycles, and here's why nobody ever likes to have a failed software implementation I mean, the reality is that you know when you actually give up that is a difficult place to be so we're we're comfortable that sort of maybe the initial phoniness.
Of the RPK landscape is you know starting to perhaps died down a little bit we think it still has a lot of value I mean, it can really automate some you know granular gaps between systems and processes, but it's not an overall approach to process improvements.
And that sort of what we've embedded you know we've embedded automation at the core of what we do.
It's as part of a business process and that is what helps customers transform their businesses not just sort of the automation of a task. So it's a really different fundamentally different approach and I think theres room in the market for both of US you just have to apply it in the right way.
Got it that's very helpful and have you been able to track or observe any changes in your net promoter score as result of some of these customer workshops. Another customer success initiatives that have been put into place in the past year.
You know we track our net promoter score typically for our implementation project for any support calls they come through customer success. So we don't so we really kind of tracking more on a case by case.
Basis, and our net promoter scores have remained consistently very very high we have enviable net promoter scores.
Got it and then lot loved ones for me is there anything that we should think about or network you sit or is your moving your infrastructure to GCP. This year, maybe cost that were not thinking about or could come up for benefits you might realize.
But we need to be thinking about.
Yeah, Yeah of course.
Earlier, you know I said in our comments that we believed that this.
Migration of our customer base will be done you know very thoughtfully and over a multiyear process. It's a one to one and a half point impact and the gross margin.
And we'll see that ramp during this year now over the long term our view is that as we get through the migration, we can get efficiencies.
But here going into 2020, that's how we have guided and would like you to think about the model in that way.
Oh, thanks very much.
Sure.
Thank you and our next question is from Roth, all lever with Baird.
Great. Good evening guys. Thanks for taking my question.
<unk>.
I'm surprised that this one still out there, but I did want to ask about the Monster user addition of 23000 you.
Stellar number.
There's been a a bit about cross currency because as you guys have ramp strategic products.
Those don't necessarily users to the user count to race, you said something in your prepared remarks that.
You are seeing larger industrial use or user populations. Among your customers <unk> really wanna get pulled into that as it sounds pretty exciting and then I had a quick follow up.
Thanks, Rob Yeah, that's that's absolutely right the trend over the last couple of years as we sell more strategic products those products don't carry a user base with it however in the last year in the last two quarters of the year, especially we saw significant ramp end users. So we were very pleased in Q4 and it came.
From both landing very large.
New deals who are some were competitive takeaways that came onboard with a large user expansion out of the gate and then also growth within our existing customers and it doesn't happen overnight. This has been an investment in our existing customers around the product engagement around customer sticks.
Yes, and and digital transformation and so we feel like the you know the results. We saw in Q4 really the benefit of customers expanding in Atlanta and with more users for the core products and then went to reach mentioned the strategic products high end of the range that that did not bring users that's.
The benefit of having multiple growth lovers.
That's helpful. Mark and then you'd be actually touched on my follow up already but maybe talk a little bit more on that I mean, you guys purposely set out to increase service revenue in part the right people at the right accounts and so is this something that we can expect to be a trend because it does sound like that service investment.
It is paying off I mean, obviously, you're not investing in services to drive more service revenue year investors are described more software revenue. It seems like that's happening with the user base and just wondering you know if we could extrapolate out that that's something we should continue to expect thanks guys.
Yes, Thanks, Rob I think you said it really well is that our investment over the last couple of years in that part of the business has been for the overall healthy balance.
As we have more digitally transforming large customers and also strategic products. So we were very pleased.
The those were exceptional results we got in Q3 in Q4 on services and so as we move forward. We think the healthy balance is you know in that range. We think that's a consistent you know near term healthy balance for us.
So we've been really pleased with that.
That does you're right that does help drive the strategic products. It does help drive user expansion.
Thanks for that question.
So again.
Thanks Frank.
Thank you and ladies and gentlemen, as a reminder to ask a cash a question you will need to press star one on your telephone to withdraw your question you will need to press the pound key.
Our next question is from Brian Peterson with Raymond James.
Oh, Hi, first off congrats on the on the really strong fourth quarter numbers I'm very well done. So so first question for me Teresa you mentioned some competitive takeaways in your commentary, but those are the enterprise in the mid market. You know I've always thought of this is mostly a greenfield opportunity for you I'm curious has that dynamic changed.
Shifted at all I'm, just kind of curious if we think about just the customers added. This year what is the mix, it's kind of just placements or or greenfield opportunities.
No you know the the replacements or a pretty small number I just happened to really liked them.
So I like to talk about them.
This is absolutely a greenfield advantage I agree with the way you characterize that in.
And that is the primary driver of new logo acquisition and I think now for maybe 18 months two years, we've been calling out some competitive takeaways and you know that there are certain reasons or importance why that has happened in each of those quarters, but generally speaking the vast majority.
Our new logos come from a from from the Greenfield new market.
I've got it thanks.
Thanks for the color there guys and it maybe if I if I could follow up three <unk> just on the big user out this quarter is there anywhere I could double click on that just just trying to understand how many of those may have come from actually p. oriented users or non us they pay oriented users anyway to kind of bifurcate that.
Oh, Yes, we you know, it's a really good balance between land and expand.
The acquisition of the users and growth of the user so they came from existing customers and new and we saw a.
Over the last couple quarters, we've seen a good healthy balance in our account expansion you know in our investments in driving existing customers that way so I.
I would I think probably we're prepared to say it's balanced between all parts of the business without going much further into what specific customers or partnership is coming from no one sector way out <unk> performed another.
Balanced.
Understood. Thanks, guys.
Q.
Thank you.
Our next question comes from Pat Walravens with JMP Securities.
Hi, this moffat pad venue so much for taking my question I was wondering and himself the overall competition.
Hi.
Yes that how does that change and maybe if you I see more.
Competitive pressure from the large enterprise.
The it's remarkable how little the competitive landscape has changed over the last five years.
We it what we see in the market not necessarily what we hear from our investors, but what we see in the market is that there is a point solution that we compete with pretty regularly at the enterprise level. There is an ERP solution that we compete with when you know.
The I.T. runs the deal Oh, we have seen. The addition of the low end Midmarket player that is a new one but other than that it's been remarkably similar.
Great. Thank you so much.
Thank you.
Thank you. Our next question comes from Terry <unk> with first analysis.
Hey, good afternoon, and congratulations on the great quarter I have a question about the the customer success and transformation teams I'm. Just wondering if you give us additional commentary on weather.
I assume that most of the impact has been with your large enterprise clients wondering if there's any any regional nuances to that team's success and then you don't help us understand like future period investments in that team.
Where are you going out we focus more downstream on downstream clients and are you going to expand geographic focus with that team.
Well now on the on the high end on the transformation teams those are as you suspect it more directional at the enterprise sized clients absolutely.
And and that's an expensive team to deploy and they are really focused on enabling a very pragmatic digital transformation, which requires very deep accounting knowledge now that team is based in the state So I would say.
Say that much of their work is really focused in the U.S., but other teams like the customer success teams alright, we end the account management teams, we have them sort of deployed globally now for the low end to the market and if I don't hit all of your questions make sure you catch me, but on the.
Midmarket and smaller sized enterprises, we actually I talked about my remarks today sort of what we're doing around sort of internalizing. The best practices that we already know and delivering that two midmarket customers in a much more expedited fashion.
And that's resulting in a much higher satisfaction.
So we're trying to bring the same level of knowledge that we have from our 1400 midmarket customers were trying to package that in a way that our customers get the most value add up.
Okay. So <unk> mid market enterprise and geographic regions did I catch all your cloud you did you didn't thank you so much reset.
Right.
Thank you.
Our next question comes from Brent Bracelin with Piper Sandler.
Good afternoon, and thanks for taking my question here.
Treece, obviously very encouraging to see kind of the year over year growth year for fresh shape, he kind of accelerate for the first time in six quarters.
Wanted to take a little bit of a different direction. What did you learned you know from the opportunity with partners. Since you announced the U.S.J.P. relationship are there things and opportunities to two to expand the footprint outside of US a pea has that relationship.
Maybe hurt some of those relationships outside of the C.P. in the last year, just love to get your view as you think about Oh. This great opportunity you know within Sep is.
Installed base.
But obviously you can address more and so I'd love to get just an update on on what your strategy and thought and what you've learned to last year around outside of Sep.
You know front one of this great things about Black line and our software isn't we aren't ERP agnostic.
Okay, and most larger companies actually don't run on any one particular ERP I mean that is that as the truth of the very complex financial systems landscape that lives out there. So I I think that the Sep partnership is a great long.
Term global opportunity, but you'll notice that our performance in our non sep segments of the market did very well this quarter and overall this year. So it's it's we are not you know.
How do I say that we're not betting the farm on Sep, we are an ERP agnostic software and that is a great value to our customers.
Helpful. There and then Mark I wanted to follow up on pro services.
We saw the third quarter of accelerating growth in a in a material step up in pro services revenue. This quarter. My question is is that tied to some of these larger solex deals is that kind of a leading indicator a lagging indicator tied to more implementations.
Help us understand that inflection the tapping in pro service this year in and should we think about that as a leading or or kind of more of a lagging indicator tied to more implementation versus you know priming existing customers to expand.
Yeah. Thanks, So that's coming from implementation of really large customers that are doing digital transformation, that's where you get the billable hours in the acceleration, that's where you get the time and attention from large budgets and investments from customers that are bringing in us and partners.
And really focusing on the upfront experience and implementation of the products. So that's one place we're getting a and yes that does come through S&P as well as through other.
Projects and then secondly, it's coming from a higher mix of strategic products. So the IC age and smart close and transaction matching that we've been selling alongside our core product for the last year, we're implementing those projects and over the last six months have really seen them.
Celleration in those two areas. So what it is is a great indicator that our large customers are digitally transform and and that that those hours in that revenue is really coming from us getting them the experience upfront.
And getting them deployed on the product.
Got it Super helpful color and thanks for Thanksgiving. Thank you. Thanks, Matt Thanks, Brent.
Thank you. Our next question is from Chris Merwin with Goldman Sachs.
Hi, Thanks, very much for taking my question.
Just wanted to ask about.
Billings and RPL looks like there's a very strong quarter for for both of those metrics. If it's got the numbers right billings for up well over 30% and and RPL was up in the high Twentys. The revenue guidance I think would imply gross well like low 20, so just.
How can you help us reconcile those metrics given the strong whether that you saw in Q4 and that potentially flowing through to revenue in fiscal 2000. Thanks.
Great. Thanks, Chris Yes, we were Super pleased with the results in the fourth quarter and in fact in all of 2019, our guide as we move into 2020 is really built around a consistent philosophy that we've had over the years, which is to really focus on what we can see and what were.
Confident on that we can execute too so as we move into this year, we feel good as we said about our jumping off point and we feel strong and confident about the range of guidance that we've given at the top end.
Great. Thank you very much.
Thank you.
Thank you and our last question is from Terry Tillman with Suntrust.
Hey, trace Morgan Alex.
Thank you.
Congrats on the quarter and I'm going to let it rests on Solex and Rps none of those questions for me, Okay, you've had enough from the audience, So oh I'd want to different direction.
On the Midmarket strength, maybe three talks I just should we be about mid market strength.
And then maybe any kind of commentary on deal sizes, and just mix of business into 20 on the mid market, but not a follow up remark.
You know we view it as one of our levers of growth Terry I mean, it's not the only it's not enterprise.
But we've got a great set of customers in that segment with more than 1400, so it's important but not not wildly out of range of anything else. Yeah. We finished Q4 with 19% of the revenue in that market, which is up from 17% a year earlier as we move into.
This next year, we like all of the engines, we expect to continue investing there and seeing traction. So we are excited about our our midmarket part of the business and you know a lot of these great mid market companies guess, what they grow up to be bigger companies.
Yep Yep understood and I guess it just to the final question for me as its on the accelerated you'll probably I think Mark you did say, maybe some accelerated deal timing I don't know if you could give any more color. If there was a couple of larger deal that you know you didn't actually forecast for Fourq. It has more once you've just got a little bit more color on the benefit of accelerated you'll find me. Thank you.
Yeah of course, so when I talk about revenue over performance due to accelerated deal timing I'm talking about linearity within the quarter and you know the traditional software model is wait till the end of the quarter. Its backend loaded our leadership team and sales team really focuses on selling through.
The quarter and there's a lot of reasons for that but what it does for US is it gives us.
Revenue faster than what our sort of traditional model or even the traditional software model does so when we when we see that last year, we're excited about it because.
It it really shows the discipline in the sales team and the rigor that they go through to forecast and deliver on cell customers you know throughout the quarter.
Thank you for the question.
Thank you.
And this concludes our Q in a session I would like to turn to calls to to restock or founder and CEO for her final remarks.
I want to thank all of you for joining black line on our journey and today your ongoing support and evangelism evangelism means so much to us. Thank you.
And with that ladies and gentlemen, thank you for participating in today's conference you may now disconnect.
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