Q4 2023 BlackLine Inc Earnings Call

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Operator: Good day, and thank you for standing by. Welcome to Blackline's fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automatic message advising your hand is raised.

Speaker Change: Good day, and thank you for standing by welcome to Black lines fourth quarter 2023 earnings conference call. At this time, all participants are in a listen only mode.

Speaker Change: After the Speakers' presentation there'll be a question and answer session to ask a question. During this session you will need to press star one one on your telephone.

You will down here in automatic message advising yohanan suites.

Operator: Please note that today's conference is being recorded. I will now hand the conference over to Matt Humphries, Vice President of Investor Relations. Please go ahead.

Speaker Change: Please note that today's conference is being recorded.

Speaker Change: I'll now hand, the conference over to Matt Humphries, Vice President of Investor Relations. Please go ahead.

Matt Humphries: Good afternoon, and thank you for joining us today. With me on the call are Owen Ryan and Therese Tucker, Co-Chief Executive Officers of Blackline, as well as Mark Partin, Chief Financial Officer. Before 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. Thank you all for joining us.

Matt Humphries: Good afternoon, and thank you for joining us today with me on the call or the one Ryan injuries Tucker co Chief Executive officers, a black line as long as Mark Partin, Chief Financial Officer.

Matt Humphries: Before 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 in particular, our guidance for Q1 and full year 2020 for our forward looking statements within the meaning of the private Securities Litigation Reform Act of 19, 9%.

Matt Humphries: These forward-looking statements represent our outlook only as of the date of this call. While we believe any forward-looking statements made during the call are reasonable, actual results could differ materially, as these statements are based on our current expectations as of today and are subject to risks and uncertainty. Including those stated in our periodic reports filed with the Securities and Exchange Commission, in particular our Form 10-K and Form 10-Q. We do not undertake and expressly disclaim any obligation to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. All comparisons we make on the call today relate to the corresponding period of last year, unless otherwise noted. Finally, unless otherwise stated, our financial measures disclosed on this call will be non-GAAP.

Matt Humphries: These forward looking statements represent our outlook only as of the date of this call.

While we believe any forward looking statements made during the call are reasonable actual results could differ materially. These statements are based on our current expectations as of today and are subject to risks and uncertainties.

Matt Humphries: Including those stated in our periodic reports filed with the Securities Exchange Commission in particular, our Form 10-K and Form 10-Q.

Matt Humphries: Do not undertake and expressly disclaim any obligation to update or alter our forward looking statements whether as a result of new information.

Matt Humphries: Future events or otherwise, except as required by applicable law.

Matt Humphries: All comparisons we make on the call today relate to the corresponding period of last year unless otherwise noted.

Matt Humphries: Finally, unless otherwise stated financial measures disclosed on this call will be non-GAAP.

Matt Humphries: Discussion of these non-GAAP financial measures and information regarding reconciliations of our historical GAAP versus non-GAAP results is currently available in our earnings release, which may be found on our investor relations website at investors.blackline.com or in our Form 8K filed with the SEC. Now I'll turn the call over to Blackline's Co-Chief Executive Officer, Owen Ryan.

Matt Humphries: These non-GAAP financial measures and information regarding reconciliations of our historical GAAP versus non-GAAP results is currently available in our earnings release.

May be found on our Investor Relations website at investors Aflac wine Dot Com Warner form 8-K filed with the SEC today.

Speaker Change: Now I'll turn the call over to Black line co Chief Executive Officer and Ryan.

Owen Ryan: Thank you, Matt. And good afternoon, everyone. Thank you all for joining us today. We exceeded revenue and profitability expectations in the fourth quarter, with $156 million in total revenue and $52 million in non-GAAP netting. Notably, we ended the year with $603 million in annual recurring revenue, or ARR. Our performance this quarter was driven by continued success with partners, including our Solex relationship.

Speaker Change: Sure.

Thank you, Matt and good afternoon, everyone.

Ryan Tucker: You all for joining us today.

Ryan Tucker: We exceeded revenue and profitability expectations in the fourth quarter with $156 million in total revenue and 52 million and non-GAAP net income.

Ryan Tucker: Notably we ended the year with $603 million in annual recurring revenue or <unk>.

Ryan Tucker: Our performance this quarter was driven by continued success with partners, including our select relationship.

Owen Ryan: Consistent sales performance from our bid market. We also saw higher close rates and improvement in Salesforce productivity this quarter. Last year, Therese and I took the reins at Blackline and embarked on a journey to refresh our long-term strategy and vision. Together, we spent a great deal of time working across the business. On the back of these efforts, we took action to implement a more disciplined and refined corporate strategy and activate a new operating model for 2021. Our go-forward strategy is simple.

Ryan Tucker: Consistent sales performance from our mid market teams.

Ryan Tucker: We also saw higher close rates and improvement in sales force productivity this quarter.

Speaker Change: Last year two recent I took the reins at Black Knight and embarked on a journey to refresh our long term strategy and vision.

Speaker Change: Together, we spent a great deal of time working across the business speaking with customers and re energizing relationships with our most trusted and strategic partners.

Speaker Change: On the back of these efforts, we took action to implement a more disciplined our refined corporate strategy and activate a new operating model for 2024.

Speaker Change: Our go forward strategy is simple we plan to lead with our solutions across our markets financial close.

Owen Ryan: We plan to lead with our solutions across our markets, financial close, FRA, and consolidation, Intercompany Accounting, and Invoice to Care. One note here.

Speaker Change: Bahrain consolidation.

Speaker Change: Intercompany accounting and invoice to cash.

One note here invoice the cash is the new name for our end to end solutions, which contains our electronic invoicing presentment and payment as well as accounts receivable automation solutions.

Owen Ryan: Invoice2Cash is the new name for our end-to-end solution. Over the longer term, we expect to either build or acquire additional capabilities that can deepen and extend our platform. Assist with the highest priorities within the office of the CFO. To support this, we are becoming a more partner-powered organization. Thank you for watching.

Speaker Change: Over the longer term, we expect to either build or acquire additional capabilities that can deepen and extend our platform.

Speaker Change: Consistent with the highest priorities within the office of the CFO.

Speaker Change: To support this we're becoming a more partner powered organization.

Speaker Change: Harnessing the deepen embedded relationships our partners have with key decision makers at our customers.

Owen Ryan: We are also prioritizing certain markets and geographies that have the highest long-term potential. As we move through this year and into next, we are implementing an industry equipped sales motion that leverages our deep domain, and Rand Permission within select industries and sub-industries. Capture Further Market Share. We also expect to be more disciplined in our customer targeting, especially in the mid-market, where today, we have a much greater understanding of what they what works and how to, We will focus on growth-oriented companies who can capitalize on black-line solutions, as they execute their digital finance. In the near term, we anticipate certain smaller customers, do not see the value in transforming their business potential, I choose to discontinue, Oh, I hate to lose customers. This is the best strategy for the long-term health and success of both our business and for our customers with different priorities. Valued Drivers.

Speaker Change: We are also prioritizing certain markets and geographies that have the highest walter potential for success.

Speaker Change: As we move through this year and into next we are implementing an industry equipped sales motion that leverages, our deep domain expertise and brand permission within select industries at sub industries to capture further market share.

Speaker Change: We also expect to be more disciplined in our customer targeting especially in the mid market, where today, we have a much greater understanding of what they need what works and how to help them.

Speaker Change: We will focus on growth oriented companies, who can capitalize our blackrock solutions as they execute their digital finance transformation.

Speaker Change: In the near term, we anticipate certain smaller customers, who do not see the value of transforming their business potential by chose to discontinue with us.

I hate to lose customers. This is the best strategy for the long term health and success of both our business and for our customers with different priority our value drivers.

Owen Ryan: To execute our refresh strategy, we implemented a new operating model. This model is solution-led and aligned to our typical buyer profiles within the Office of the CFPB. Each key solution pillar across financial close, consolidation, invoice-to-cash, and intercompany has a defined leader who is directly responsible and accountable for driving revenue growth while ensuring that the voice of the customer is prioritized in all aspects of innovation and product development. They are working in tight collaboration with our go-to-market organization to drive sales growth and guide our customers on their journeys with Blackline. Over time, additional accountability and rigor across our business is expected to support these results. Now let's review the fourth quarter, particularly the five key areas I continue to prioritize.

Speaker Change: To execute our refresh strategy, we implemented a new operating model. This model as solution led and aligned to our typical buyer profiles within the office of the CFO.

Speaker Change: Each solution pillar across financial close consolidation in voice to cash and intercompany as defined leader was directly responsible and accountable for driving revenue growth, while ensuring that the voice of the customers buy archive and all aspects of innovation and product development.

Speaker Change: They are working with high collaboration with our go to market organization to drive sales growth and guide our customers on their journeys with Black line.

Speaker Change: Over time, the additional accountability and rigor across our business is expected to support the results we demand.

Now, let's review the fourth quarter, particularly around the five key areas I continue to prioritize.

Owen Ryan: First, execute. Our go-to-markets team's performance was solid this quarter. We closed a number of large global enterprise deals giving us early indications that our partner-powered approach is building momentum. In fact, the number of Blackline customers with one million or more in ARR. We also saw consistent sales performance from our mid-market, landing some larger customers while experiencing further adoption of our FRA and consolidation, which is a true differentiator in the mid-market.

Speaker Change: First on execution, our go to market teams performance was solid this quarter.

Speaker Change: We signed a number of large global enterprise deals, giving us early indications that our partner powered approach is building momentum.

Speaker Change: In fact, the number of black line customers with $1 billion or more in a RR increased 33% to 64 customers.

Speaker Change: We also saw consistent sales performance from our mid market teams landing some larger customers, while experiencing further adoption of our FRE and consolidation solution.

Speaker Change: Which is a true differentiator in the mid market.

Owen Ryan: We also saw higher close rates and improvement in Salesforce productivity this quarter. Next, our market message and branding are beginning to amplify and surround our new operating model, led in part by our new chief marketing officer who recently joined. Our teams are beginning to drive a unified message that addresses not just the unique buyer profiles around each of our solution pillars but also elevates our platform to key decision makers both directly and via our partners. We will have several customer events this year, beginning with our Beyond the Black EMEA event in late March, which will give us additional opportunities to listen and engage with our customers and partners.

Speaker Change: We also saw higher close rates and improvement in sales force productivity this quarter.

Speaker Change: Next our market message of branding are beginning to amplify of surround our new operating model led in part by our New Chief Marketing Officer, who recently joined the company.

Speaker Change: Our teams are beginning to drive a unified message that addresses not just the unique buyer profiles around each of our solution pillars.

Speaker Change: But also elevates our platform to key decision makers, both directly and via our partner network.

Speaker Change: We will have several customer events this year, beginning with our beyond the black EMEA event in late March, which will give us additional opportunities to listen to and engage with our customers and partners.

Owen Ryan: Our focus in the fourth quarter and for 2024 is on ensuring our customers, and the value of the platform, maximizing both value and ROI. Our teams are working closely with key customers to drive further adoption of our platform via optimization and success. We are seeing promising early indicators that customers are reengaging, and we are progressing discussions towards additional use cases that can be leveraged for future cross-sell opportunities. At the same time, this close engagement enables us to gather detailed feedback on our solution and identify future use cases for our product roadmaps. Our distribution efforts and focus on partners are seeing early signs of success. We will cover examples of this shortly, but at a high level.

Speaker Change: Our focus in the fourth quarter and for 2024 is on ensuring our customers receive the value of the black line promise.

Speaker Change: <unk>, both value and ROI.

Speaker Change: Our teams are working closely with key customers to drive further adoption of our platform via optimization at success plans were.

Speaker Change: We are seeing promising early indicators that customers are re engaging with us and we are progressing discussions towards additional use cases that can be leveraged for future cross sell opportunities.

Speaker Change: At the same time this close engagement enables us to gather detailed feedback on our solutions and identify future use cases for our product roadmap.

Speaker Change: Our distribution efforts and focus on partners is seeing early signs of success as mentioned.

Speaker Change: We will cover are examples of this shortly but at a high level more consistent success here should be supportive of better close in competitive win rates and larger deal sizes.

Owen Ryan: More consistent success here should be supportive of better close and competitive win rates and larger deals. We also expect a more efficient sales cycle given the influence these large partners have on key decision makers within the office of the CFO. Finally, on retention, we saw consistency in our renewal rates versus the third quarter and experienced a slight improvement in net revenue retention, or NRR. While we are pleased with these outcomes, we are continuing to double down on our efforts to improve engagement, adoption, and satisfaction for our customers. In the year ahead, our teams will be focused on implementing process optimizations with existing customers and identifying those in our base that could benefit from deepening their use of existing solutions. Broadening the adoption of new ones to drive digital finance

We also expect a more efficient sales cycle given the inflow of these large partners have on key decision makers within the office of the CFO.

Speaker Change: Finally on retention, we saw consistency in our renewal rates versus the third quarter and experienced a slight improvement in net revenue attention or NR.

While we are pleased with these outcomes, we are continuing to double down on our efforts to improve engagement adoption and satisfaction for our customers.

Speaker Change: In the year ahead, our teams will be focused on implementing process optimizations with existing customers and identifying those in our base that could benefit from deepening their use of existing solutions and broadening the adoption of new ones to drive digital finance transformation.

Owen Ryan: Our operating model, which places an elevated level of accountability on customer success, is a core part of our go-forward efforts to improve outcomes for our customers and ultimately. Despite ongoing market uncertainty, which we expect to continue in 2024, we closed several large global deals, including numerous competitive takeaways in our enterprise portfolio. In North America, for example, we signed a leading defense and aerospace company via our SOLEX partnership while working hand-in-hand with a major partner.

Speaker Change: Our operating model, which places an elevated level of accountability on customer success.

Speaker Change: A core part of our go forward efforts to improve outcomes for our customers and ultimately for Black line.

Speaker Change: Despite ongoing market uncertainty, which we expect to continue with 2024, we closed several large global deals, including numerous competitive takeaways in our enterprise business.

Speaker Change: In North America for example, we signed a leading defense and Aerospace company via our solar partnership.

Working hand in hand, with a major partner.

Owen Ryan: This multi-solution deal, including our intercompany, was in advance of an S4 Hana conversion and will support their move as they transition over the... We also signed the world's largest retail and health insurance company as part of a competitive replacement. The customer is in the process of migrating a large acquisition from Oracle to SAP and needed a partner that could support them as they rapidly grow in size. Importantly, our partner in the deal was crucial in validating Blackline as a provider of choice, demonstrating not just why the customers but how it can be done successfully to deliver real value for the long term. In Germany, we signed a large multi-solution Solex deal with a leading global retailer and one of the world's largest private companies.

Speaker Change: This multi solution deal, including our intercompany solution with an advance of an S. Four Hana conversion and will support their move as they transition over the coming years.

Speaker Change: We also signed the world's largest retail and health insurance company as part of a competitive replacement.

The customers in the process of migrating a large acquisition from Oracle to SAP.

Speaker Change: And needed a partner that could support them as they rapidly grow in scale.

Speaker Change: Importantly, our partner in the deal is crucial and validating Black line is the provider of choice and demonstrated not just why the customer should change, but how it can be done successfully to deliver real value for the long term.

In Germany, we signed a large multi solution so let's deal with a leading global retailer and one of the world's largest private companies.

Owen Ryan: Working with a team of leading consulting firms to jointly showcase why Blackline was the only choice to meet the scale and connectivity needs of their global business while supporting their long-term transformation. In APAC, we expanded our relationship with a top three metals and mining customer via our Solex partner. As part of a shift from an outsourced shared services model to an insourced model, the company sought a long-term partner capable of helping them realize their vision of true digital finance. Leveraging our Blackline 9 optimization strategy, we were able to demonstrate not just why they should be modernizing their process. What happened?

Speaker Change: Working with a team of leading consulting firms, we jointly showcased white Black line was the only choice to meet the scale and connectivity needs of their global business, while supporting their long term transformation vision.

Speaker Change: In APAC, we expanded our relationship with a top III metals and mining customer via our select partnership.

Speaker Change: As part of a shift from an outsource shared services model to an in sourced model. The company saw a long term partner capable of helping them realize their vision of true digital finance transformation.

Speaker Change: Leveraging our black line nine optimization strategy, we were able to demonstrate not just why they should be modernizing their processes.

Owen Ryan: giving them a blueprint for success and a much better appreciation of the value and ROI they could achieve. A competitive deal from the start, Blackline's differentiation via deep automation across areas like journals was key to supporting the overall business. In the middle market, we saw a number of large deals close as we reshaped our focus in this fast-growing market. In Canada, we signed a leading Canadian financial services company to a multi-solution deal to address the growing complexity and lack of automation across their business processes. Additionally, we signed a leading healthcare-focused real estate firm to a multi-solution deal, leveraging our partners' insight and validation for another competitive replay. In addition, the company was looking beyond just their closed process and towards consolidation, which was another pain point.

Speaker Change: <unk>.

Speaker Change: Giving them a blueprint for success and a much better appreciation of the value and ROI they could achieve.

A competitive deal from the start black lines differentiation via deepwater nation across areas like journals with key to supporting the overall business case.

Speaker Change: In the middle market, we saw a number of large deals close as we reshape our focus in this fast growing market.

Speaker Change: In Canada, we signed a leading Canadian financial services company to a multi solution deal to address the growing complexity and lack of automation across their business processes.

Speaker Change: Additionally, we signed a leading health care focused real estate FERC to a multi solution deal leveraging our partners insight and validation to support another competitive replacement.

Speaker Change: In addition, the company was looking beyond just their close process and towards consolidation, which was another pain point.

Owen Ryan: They wanted real-time visibility on their financials, and our FRA and consolidation solution was the perfect complement and another powerful differentiator for Black. Finally, we had a great year in our invoice-to-cash business as customers recognized the need for improved control and visibility of working capital and cash management in a higher interest rate environment. Due to the changing regulatory landscape, we are beginning to see interest building in electronic invoicing from customers and prospects alike. From a deal perspective, we signed several deals this quarter, both with new and existing customers. In a highly competitive deal, we signed HH Global, a leading tech-enabled creative production and procurement firm based in Europe.

Speaker Change: They wanted real time visibility on their financials, and our FRE and consolidation solution was the perfect complement and another powerful differentiator for Blackrock.

Speaker Change: Finally, we had a great year from our invoice the cash business as customers recognize the need for improved control and visibility of working capital and cash management at a higher interest rate environment.

Speaker Change: Due to the changing regulatory landscape, we are beginning to see interest building in electronic invoicing from customers and prospects alike.

Speaker Change: From a deal perspective, we signed several deals this quarter, both with new and existing customers.

Speaker Change: In a highly competitive deal, we signed H H global a leading tech enable creative production and procurement firm based in Europe.

Therese Tucker: The company was looking to modernize their collections and dispute process, as well as their overall customer experience. They were also interested in a partner that had EIPT capabilities they could leverage to further advance their vision. Real Transformation Across Their Businesses. We look forward to a great future opportunity to continue expanding our partnership. With that, I will turn it over to Therese to discuss how we're driving innovation across our business this year. Thank you all and Blackline.

Speaker Change: The company was looking to modernize their collections in dispute processes as well as their overall customer experience.

Speaker Change: They were also interested in a partner that has E ICT capabilities, they could leverage to further advance their vision, a real transformation across their business.

Speaker Change: Great future opportunity to continue expanding our partnership.

Speaker Change: With that I will turn it over to series to discuss how we're driving innovation across our business. This year.

Series: Thank you Alan Black line has a proven history of innovation, which has been core to our culture, our strategy and our success since day one.

Therese Tucker: The Bulletproof Executive 2013, And our success since day one. In fact, in 2007, and the Financial Closed Market that exists today, paving the way for companies to rethink how accounting work gets done. Some of the biggest brands in the world have put their trust in Blackline to deliver real value, all while, Critical Accounting and Finance Process. We were the first to develop and offer Commercial Intercompany Accounting Solutions.

Series: In fact in 2007, we defined and created financial close market that exists today.

Series: The way for companies to rethink Hello County work gets done and since then thousands of customers. Some of the biggest brands in the world have put their trust in black line to deliver real value.

Series: While handling their most mission critical accounting and finance processes, where.

Series: We were the first company to develop and offer a commercial intercompany accounting solution. This again created another market, one which lacks modern solutions to address some of the most complex accounting problems that exist.

Therese Tucker: This, again, created another, one which lacks modern technology to address some of the most complex The Bulletproof Executive 2013, And more recently, we announced how we are addressing real-time consolidation. Alexandra, Supporting an analytical, Reshaping Another Market. Support real-time business operations.

Series: And more recently, we announced how we are addressing real time consolidation via our financial reporting and analytics solution.

Series: Reshaping another market to support real time business operations and as we look ahead to this year, we expect to formally announce the release of the Black line accounting studio a command and control orchestration layer for the thousands of finance and accounting processes occurring.

Therese Tucker: And as we look ahead to this, I expect to formally announce Transcripts of the Blackline Accounting Studio, a command-and-control orchestration layer for the thousands of finance and accounting processes occurring across a disjointed and multi-ear Filming on, The evolution of technology in recent years has allowed us to do things which weren't possible before. It has unlocked capabilities and tools that can propel our vision forward and deliver unprecedented value for our community. Customer Data Volumes are, Processes are growing more complex, additional regulations are being implemented, and talent shortages in accounting and finance are becoming even more so. Collectively, these factors create a convergence of challenges for customers. However, amidst these lies...

Series: Across a disjointed and multi ERP financial landscape.

Series: Building on.

Series: The evolution of technology in recent years has provided us the opportunity to do things, which weren't possible before it has unlocked capabilities and tools that can propel our vision forward and deliver unprecedented value for our customers simultaneously customer data.

Series: Our surging processes are growing more complex additional regulations are being implemented and talent shortages in accounting and finance are becoming even more acute.

Series: <unk> these factors create a convergence of challenges for customers.

Series: However, amidst space like a substantial opportunity for an industry leader like Black line to innovate and to lead and I am excited that our recently announced Chief information officer is here to support and accelerate our efforts.

Therese Tucker: So opportunities for industry leaders like Black Innovate Until We, And I am excited that our, https://www.fema.gov, This is a perfect example of this operation using AI in combination with the massive amounts of data that is stored on Blackline's SaaS platform. However, Think of this as a two-part strategy. We are embedding AI across.

Series: A perfect example of this opportunity is with AI in combination with the massive amounts of data that is stored on black clients SAS platform.

Series: How are we going to do this exactly we think of this as a two part strategy first we are embedding AI across our existing solution our solution.

Therese Tucker: Once embedded with AI, we'll enable our customers to be more productive and improve their jobs and their lives in our intercompany financial management solution. We're already using this, This is our predictive guidance tool that proactively informs a customer when transactional data will likely fail so that they can fix an identified issue early.

Series: Once embedded with AI will enable our customers to be more productive more efficient and.

Series: Make their jobs and their lives easier.

In our intercompany financial management solution, we're already working with customers on our predictive guidance tool that proactively and forums that customer when transactional data will likely fail.

Series: Customer can fix and identified issue early before it becomes a greater problem later.

Therese Tucker: Before it becomes a greater problem, this unique ability to operate comprehensive, AI-enabled, and to Financial Management Solutions and a market lacking these solutions is a powerful component of our long-term innovation strategy. Similarly... Invoice2Cash, we are embedding AI. Transcription by CastingWords. Before they lend money to their clients... or https://www.buffalo.edu.au, so much time and resources are wasted across the invoice-to-cash process, has, or have to write off. Negotiate terms after the fact.

Series: This unique ability to offer a comprehensive AI enabled end to end intercompany financial management solution and our market lacking maturity and competition is a powerful component of our long term innovation strategy.

Similarly in invoice to cash we are embedding AI to provide visibility and intelligence on customer payment trends before they learned their clients' money or offer them with trade credits.

Series: Then the insight upfront before creating future problems.

Series: So much time and resources are wasted across the invoice to cash process chasing down late paying customers or having to write off the couch and renegotiate terms. After the fact, our AI embedded solutions will have the ability to help prevent these things.

Therese Tucker: Our AI embedded will have the ability to help prevent fraud, and Theraphy, simply run better. It's why we know that embedding these tools across our platforms, Power. And in the financial close, we are planning to deliver generative AI, as part of the Account Reconciliation Process. This time, saving, can remove a large amount of process and allow them to focus on exceptions instead.

Series: From occurring beforehand, and thereby allowing our customers just simply run a better business. It's why we know that embedding these tools across our platform is important and powerful.

Series: And in the financial close we are planning to deliver generative AI documents summaries as part of the account reconciliation process. This time saving feature can remove a large amount of manual work from a user's process and allowed them to focus on exceptions instead.

Therese Tucker: Freeing users from the mundane transactional work and allowing them to be more strategic in their role. In the end, this can lead to a faster close. The Bulletproof Executive 2013, and can improve the overall performance of the Reconciliation Project. The second part of our is that we expect to offer new AI products for our customers. An example of this is our Journal, Risk Analyst. This solution will be able to review, analyze, and model....

Series: <unk> users from mundane from the mundane transactional work and allowing them to be more strategic in their roles.

In the end this can lead to a faster close a better user experience and can improve the overall accuracy of the reconciliation process.

The second part of our strategy is that we expect to offer new AI based solutions for our customers to leverage. An example of this is our plan journal risk analyzer.

Series: This solution will be able to review analyze and model millions of journal entries to proactively identify instances of audit risk areas of inaccurate data ingestion or anomalies that may be associated with suboptimal processes by giving <unk>.

Therese Tucker: , to proactively identify and audit suboptimal By giving customers the ability to identify these anomalies, they can address issues before they become more problematic. Results... The Bulletproof Executive 2013. All rights reserved.

Series: Customers the ability to identify these anomalies early they can address issues before they become more problematic, resulting in a simpler audit process with lower cost and a lower burden.

Therese Tucker: Lower Cross, And make no mistake, this is a pivotal year for Blackline when it comes to innovation. We expect to progress rapidly as we digest and, Thank you for your input and feedback from our customers. Blackline Accounting Studio put its release on PODWED.

Series: Make no mistake. This is a pivotal year for black line. When it comes to innovation, we expect to progress rapidly as we Digest and act on the input and feedback from our customer base black.

Series: Black Knight accounting studio is a great example of this we put its release on pause last year. We spent additional time working hand in hand, with our early adopters and partners understanding what worked and what didn't we.

Therese Tucker: Thank you for your time working hand-in-hand with our early adopters and partners. The Bulletproof Executive 2013, We took that feedback, and reimagined the solution into something even more powerful. And we believe that when launched, Blackline Accounting Studio will be a real differentiator in the office of the CFO and an important part of our. Similarly, we are rapidly integrating our EI, https://www.buffalo.edu RECENT DEVELOPMENT, and EIPPF, given the tailwind in e-invoicing adoption driven primarily by. We take pride in our proactive. Early in the morning

Series: We took that feedback and the co creation opportunity to re imagine the solution into something even more powerful.

Series: And we believe that when launched Black line accounting studio will be a real differentiator in the office of the CFO and an important part of our platform.

Series: Similarly, we are rapidly integrating our ERP solution with our comprehensive suite of accounts receivable automation solutions.

Series: Some developments in the market showcase a heightened interest in IPP assets, given the tailwind in E invoicing adoption driven primarily by regulatory changes.

Series: We take pride in our proactive approach recognizing these trends early on unexpected through our vision innovation and strategy, we will be able to capitalize on these market dynamics.

Therese Tucker: 2013 University of Georgia College of Agricultural and Environmental Sciences UGA Extension Office of Communications and Creative Services. We will be able to capitalize on these, the agenda at Blackline. Everything begins and ends with the cut. Blackline is the partner that gives them Blueprints and The Confidence to Transform Their Process, and ultimately... Last year we dedicated Huey Ball to our team. Transcribed by https://otter.ai Now, in 2024, the focus shifts. With that, I'd like to turn it over to Mark Partin to review our financial results and provide color in our. Mark.

Series: To close innovation is the agenda at Black line everything begins and ends.

Series: With the customer and Black line is the partner that gives them the tools the blueprint and the confidence to transform their processes and ultimately their businesses last year, we dedicated significant effort to evolve and refine our teams and our innovation strategy.

Series: In 2024, the focus shifts to execution with that I'd like to turn it over to Mark <unk>, who will review our financial results and provide some additional color on our guidance Mark.

Mark W. Partin: Thank you, Therese. Our results this past quarter demonstrate that despite a market environment such as this, the predictability and leverage inherent in our model can support continued profitable growth. As we look ahead, accelerating innovation and operational execution are the priorities of Blackline, and those initiatives will be driven by our refreshed strategy and operating model. Now, let's review the financial results for the fourth quarter in a bit more detail. Total revenue grew to $156 million, up 11%, with subscription revenue growing 12%. Services revenue declined 5% as we continue to align to a more efficient service.

Mark W. Partin: Thank you Terry.

Mark W. Partin: Our results this past quarter demonstrate that despite the market environment such as this the predictability and leverage inherent in our model can support continued profitable growth.

Mark W. Partin: As we look ahead accelerated innovation and operational execution are the priorities of Black line and those initiatives will be driven by our refreshed strategy and operating model.

Mark W. Partin: Now, let's review the financial results for the fourth quarter a bit more detail.

Mark W. Partin: Total revenue grew to $156 million up 11% with subscription revenue growing 12%.

Mark W. Partin: Services revenue declined 5% as we continued to align to a more efficient servicing model.

Mark W. Partin: Calculated billings growth was 14%, with trailing 12 month billings growth of 13%. Remaining Performance Obligations, or RPO, was up 9%, with current RPO growing 13%. We closed the quarter with total annual recurring revenue, or ARR, of $603,000,000, up 13%. We added 30 new customers in the quarter, bringing our total customer count at the end of the year to 4,390.

Mark W. Partin: Calculated billings growth was 14% with trailing 12 month billings growth of 13%.

Mark W. Partin: Remaining performance obligations or <unk> was up 9% with current RPI growing 13%.

Mark W. Partin: We closed the quarter with total annual recurring revenue or <unk>.

Mark W. Partin: <unk> of $603 million up 13%.

Mark W. Partin: We added 30 net new customers in the quarter, bringing our total customer count at the end of the year to 4398.

Mark W. Partin: While we saw healthy growth in customer ads, we also experienced a higher volume of churn from smaller customers. In our go forward strategy, which Owen spoke to earlier, it is reasonable to assume some additional churn of these smaller customers as we move through 2020. Our revenue renewal rate was 94%, consistent with the prior quarter, and our net retention rate, or NRR, was 160.

Mark W. Partin: While we saw healthy gross customer ads, we also experienced a higher volume of churn from smaller customers.

Mark W. Partin: And our go forward strategy, which Owen spoke to earlier it is reasonable to assume some additional churn of these smaller customers as we move through 2024.

Mark W. Partin: Our revenue renewal rate was 94% consistent with prior quarter and net retention rate or <unk>.

Mark W. Partin: <unk> was 106%.

Mark W. Partin: Strategic product performance represented 24% of sales driven by transaction matching, account receivable automation, and FRA and consolidation. Partners were involved in 73% of large new and expansion deals this quarter. SOLEX performance continues to grow well ahead of our total revenue growth rate and had a solid showing this quarter. In Q4, SAP partnership revenue represented 25% of total revenue.

Strategic product performance represented 24% of sales driven by transaction matching account receivable automation and FRE and consolidation.

Mark W. Partin: Partners were involved and 73% of large new and expansion deals this quarter.

Mark W. Partin: <unk> performance continues to grow well ahead of our total revenue growth rate and had a solid showing this quarter and Q4 SAP partnership revenue represented 25% of total revenue.

Mark W. Partin: Turning to margin, our non-GAAP gross margin was 80%, with non-GAAP subscription gross margin of 83%. We remain disciplined on expense optimization and Denart Cloud. Non-GAAP operating margin was 25% driven by a combination of gross margin performance, sales force efficiency, and proactive expense management. Non-GAAP net income attributable to Blackline was $52 million, representing a 33% non-GAAP net income.

Mark W. Partin: Turning to margins our non-GAAP gross margin was 80% with non-GAAP subscription gross margin of 83% as we remain disciplined on expense optimization within our cloud teams.

Mark W. Partin: non-GAAP operating margin was 25% driven by a combination of gross margin performance salesforce asset efficiency and proactive expense management.

Mark W. Partin: non-GAAP net income attributable to Black line was $52 million, representing a 33% non-GAAP net income margin.

Mark W. Partin: Our Operating Income Outperformance and Net Interest Income Drove, on the bottom. We generated $42 million in operating cash flow and $35 million in free cash flow in the quarter with a free cash flow margin of 23%. Finally, we ended the quarter with over $1.2 billion in cash, cash equivalents, and marketable securities. As we contemplate our guidance for 2024, we are not expecting a material improvement in the market environment. While we are cautiously optimistic that a higher level of visibility and clarity will emerge later this year, we've not embedded that into our guidance. Combined with the implementation of our new operating model this year, we are approaching 2024 with an appropriately pragmatic view and outcome. We are also introducing non-GAAP operating margin as an additional guidance metric this year, primarily to align our guidance to our internal metrics and provide shareholders with an extra layer of visibility.

Mark W. Partin: Our operating income outperformance in net interest income drove strength on the Bottomline we.

Mark W. Partin: We generated $42 million in operating cash flow and $35 million in free cash flow in the quarter with a free cash flow margin of 23%.

Mark W. Partin: Finally, we ended the quarter with over $1 $2 billion in cash cash equivalence and marketable securities.

Mark W. Partin: As we contemplate our guidance for 2024, we are not expecting a material improvement in the market environment.

Mark W. Partin: While we are cautiously optimistic that a higher level of visibility and clarity will emerge later this year, we've not embedded that into our guide.

Mark W. Partin: Combined with the implementation of our new operating model. This year, we are approaching 2024 with an appropriately pragmatic view and outlook.

Mark W. Partin: We are also introducing non-GAAP operating margin as an additional guidance metric this year, primarily to align our guidance to our internal metrics and provides shareholders with an extra layer of visibility.

Mark W. Partin: We also believe the addition of non-GAAP operating margin will provide more clarity around the progress we are making on our profitable growth. Lastly, I want to make a brief comment on our revenue guidance. We are moving forward with a more partner-powered approach via our operating model, with the expectation that partners will take on an incremental implementation and professional service. The result is that in 2024, we expect to see a one point headwind to total revenue growth, with services revenue growth flat to down mid-single digits versus 2020. The services revenue headwind is expected to become more acute as we move through the year. Conversely, we expect to see subscription revenue growth generally above the midpoint of our total revenue guidance in each quarter and for the full year.

Mark W. Partin: We also believe the addition of non-GAAP operating margin will provide more clarity around the progress we are making on our profitable growth.

Mark W. Partin: Lastly, I want to make a brief comment on our revenue guidance as discussed we are moving forward with a more partner powered approach via our operating model with the expectation that partners will take on an incremental implementation and professional services projects.

Mark W. Partin: The net result is that in 2024, we expect to see a one point headwind to total revenue growth with services revenue growth flat to down mid single digits versus 2023.

Mark W. Partin: The services revenue headwind is expected to become more acute as we move through the year.

Mark W. Partin: Firstly, we expect to see subscription revenue growth trend generally above the midpoint of our total revenue guidance in each quarter and for the full year.

Mark W. Partin: With that being said, for the first quarter of 2024, we expect total GAAP revenue to be in the range of $154 to $156 million, representing approximately 11 to 12. We expect to report a non-GAAP operating margin of 15-16%, and we expect to report non-GAAP net income attributable to Blackline in the range of $34-36 million, or $0.25-0.48 on a per share basis. Our share count is expected to be approximately $75.8 million diluted weekly.

Mark W. Partin: But that being said for the first quarter of 2024, we expect total GAAP revenue to be in the range of $154 million to $156 million representing.

Representing approximately 11% to 12% growth, we expect to report a non-GAAP operating margin of 15% to 16% and we expect to report non-GAAP net income attributable to black line in the range of $34 million to $36 million or 25% to 48 on a per share basis.

Mark W. Partin: Our share count is expected to be approximately $75 8 million diluted weighted average shares.

Mark W. Partin: For the full year 2024, we expect total GAAP revenue to be in the range of $637.5 to $649.5 million, representing 8% to 10% growth. We expect to report a non-GAAP operating margin of 17 to 18%. We expect to report a non-GAAP net income attributable to Blackline of $153 to $163 million, or $2.01 to $2.14 on a per share basis. Our share count is expected to be approximately 76 million diluted weighted average. With that, I'll now ask the operator to open the discussion. Ladies and gentlemen, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced.

Mark W. Partin: For the full year 2024, we expect total GAAP revenue to be in the range of 637, five to $649 5 million.

Mark W. Partin: Representing 8% to 10% growth.

Mark W. Partin: We expect to report non-GAAP operating margin of 17% to 18%.

Mark W. Partin: We expect to report non-GAAP net income attributable to black line, a $153 million to $163 million.

For $2 <unk> to do up to $2 14.

Mark W. Partin: On a per share basis our.

Our share count is expected to be approximately 76 million diluted weighted average shares.

Speaker Change: With that I'll now ask the operator to open the discussion to take your questions.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen to ask a question you wanted to star one on your telephone and wait for your name to be announced to enjoy a question you May press star one again and the consideration of time. Please limit yourself to one question only please standby, while we compile the Q&A roster.

Operator: To withdraw your question, you may press star 1-1 again. In consideration of time, please limit yourself to one question only. Please stand by while we compile the Q&A. And our first question comes from the line of Rob Oliver with Bear Gale on his sofa. Great. Thank you. Good afternoon, Blackline team.

Speaker Change: And our first question coming from the line of Rob Oliver with Baird. Your line is open.

Rob Oliver: Great. Thank you and good afternoon, and thanks for taking my question.

Owen Ryan: Thanks for taking my question. For Owen or Therese, the questions for you, you know, you guys have now been, you know, back in charge here for almost a year. And I know, you know, Owen, talking with you, there were a handful of key strategic initiatives you had, you know, kind of going after that SI channel, SI relationships, SAP, the sales reorg. I think what we're hearing from you is that you've made real progress on all three of those. Can you maybe rank order where you're seeing the most traction with those? And, you know, where we expect to first see that kind of manifest in a turn in revenue growth? And I had a quick follow-up, but if I'm limited to one, I'll hop back in the queue.

Rob Oliver: For one or two questions for you.

Rob Oliver: You guys have now.

Ken.

Rob Oliver: Back in charge here, almost a year and I know Owen talk with you there were a handful of key strategic.

Rob Oliver: The initiatives you have.

Rob Oliver: Re going after that Si channel Sci.

Rob Oliver: Si relationships.

Rob Oliver: The sales re org.

Owen: I think what we're hearing from you is you've made real progress on all three of those can you maybe rank order, where you're seeing the most traction with those.

Owen: <unk>.

Owen: We expect to first see that kind of manifest.

Turn in the revenue growth.

Speaker Change: I had a quick follow up but if I'm limited to one and I'll hop back in the queue. Thanks.

Owen Ryan: Thanks. Thanks, thanks, Rob. And first, I would say, while we're very proud of the progress we've made, we're not satisfied with the progress we've made. There's still much more for us to do as an organization. I think of the three things that you've highlighted here, from our progress with systems integrators, the sales reorganization, and SAP, I think we feel like we've made progress amongst and between all three of them at this particular point in time. I think for us, we're starting to see some real progress internally with the focus and discipline from our BDRs to our sales teams, to account management, to the customer service teams, all working And we're very, very encouraged by that. Obviously, you know, we started the press conference, the call with a comment about our strength with SAP.

Speaker Change: Okay.

Speaker Change: Thanks, Thanks Robyn.

Speaker Change: First I would say, while we're very proud of the progress. We've made we're not satisfied with the progress. We've made there is still much more for us to do as an organization I think of the three things that you've highlighted there from our progress with systems integrators.

Speaker Change: Sales reorganization in SAP.

Speaker Change: I think we feel like we've made progress amongst and between all three of them at this particular point in time I think for us.

Speaker Change: We're starting to see some real progress internally with the focus and discipline from our <unk> to our sales teams to the account management to the customer service teams all working much more closely together and we're very very encouraged by that obviously, we started the press.

Speaker Change: The call with.

Speaker Change: The comment about the strength with SAP.

Owen Ryan: This past quarter, we cited a number of examples; we usually don't just use those, but they were very powerful and very important given what's taken place. And so we're very encouraged by what's going on there. And recently, SAP, I believe, identified a new leader in their office, the CFO program, and we're very excited about working more closely with that team. And then on the systems integrators, you know, we're spending a lot of time with them. I think we're very, we feel very bullish about their commitment. We've got good joint account plans that we worked our way through covering everything from how we'll go to market together, how to make sure our customers are better implemented and adopted. There's a number of those folks that are working closely with Therese, providing feedback on the products as well as what we could potentially be doing in our industry vertical. So it's hard for me to rank all of them from a prioritization perspective. It's like, you know, naming your favorite child.

Speaker Change: This past quarter, we cited a number of examples where you should I'll just use those but they were very powerful and very important given.

Speaker Change: Whats taken place and so we're very encouraged by what's going on there.

Recently SAP side.

Speaker Change: Well I believe identified a new leader of their office of the CFO program, which we're very excited about working more closely with that team and then on the systems integrators.

We're spending a lot of time with them I think we're very we feel very bullish about their commitment. We've got good joint account plans that we worked our way through from covering everything off of of how we go to market together, how do we make sure our customers are better implemented and adopted there is a number of those folks that are working closely with <unk> providing feedback.

Speaker Change: Around the products as well as what we could potentially be doing.

Speaker Change: Our industry verticals, so that hard for me to rank all of them from a prioritization perspective, it's like <unk>.

Therese Tucker: But then, I think we feel pretty good about the progress we're making in all of those areas. And if I might just quickly just, you know, just on the Invoice2Cash side, it sounds like you guys are taking this opportunity to think strategically about, you know, how to package and price your products potentially differently. And while I don't expect you to, you know, disclose anything new here today, if it's in the works, is that right? And how should we be thinking about the way something like Invoice2Cash or other products, if they're packaged or priced differently, could start to impact, you know, maybe ARR per customer? Thank you. Thanks, Rob. I'll jump in on this one.

Speaker Change: Maybe your favorite child, but that I think we feel pretty good about the progress, we're making along all of those areas.

Speaker Change: Okay.

Speaker Change: If I might just quickly just.

Just on the.

Speaker Change: It was the cost side. It sounds like you guys are taking this opportunity to to think.

Speaker Change: Strategically about how to package and price your products potentially differently and while I don't expect Q2.

Disclose anything new here today, if it's in the works is that right and how should we be thinking about kind of the way something like invoice to cash or other products. If they are packaged or price differently could start to impact maybe RMR per customer. Thank you.

Speaker Change: Thanks, Rob I'll jump in on this one I think pricing is one of those things that's always an ongoing sort of experiment because ultimately what you want to do is you want to be able to.

Therese Tucker: I think you know, pricing is one of those things; it's always an ongoing sort of experiment. Because ultimately, what you want to do is you want to be able to share in the value that you're delivering to your customers.

Speaker Change: Sure in the value that you're delivering to your customers.

Operator: And I think we all know that, you know, user-based pricing: if you're doing a good job, you're basically phasing out more users. So in terms of our strategic products, we are definitely looking at other ways of doing pricing. You know, we've got our matching rate plans and other types of pricing that are related to the complexity and the value that we deliver to our customers. So, yes, we are looking at how to handle this invoice to cash a little bit differently, but we have nothing to announce today. And our next question, coming from the line of Alexander Sklar with Raymond James, your line is open. Great, thank you.

Speaker Change: And I think we all know the user based pricing if you're doing a good job you're basically phasing out more users. So in terms of our strategic products. We are definitely looking at other ways of doing pricing.

Speaker Change: We've got our matching rate plans and others sort of.

Speaker Change: Uh huh.

Speaker Change: Types of pricing that are related to the complexity and the value that we deliver to our customers. So yes. We are looking at how to handle this invoice to cash a little bit differently, and but nothing to announce today.

Speaker Change: Thank you and our next question coming from the line of Alexander Sklar with Raymond James Your line is open.

Owen Ryan: Oh, and starting with your comments around partner success and improved win rates, and better close rates. Is there any way you can frame how much of that was from stabilizing or improving macro that you saw in the fourth quarter versus the early benefits from the strategic initiatives that you just spoke to in your answer to Rob? Yeah, you know, I think it's a really good question. I don't know that we're sitting here today saying, "Wow, we've gotten any kind of tailwind yet from the macro." In fact, I would say it still feels a little bit more like a headwind than a tailwind.

Alexander Sklar: Great. Thank you.

Alexander Sklar: Just starting with your comments around the partner's success and improve win rates better close rates is there any way you can frame how much of that was from stabilizing or improving macro that you saw in the fourth quarter versus the early benefits from the strategic initiatives that you just spoke to in your answer to Rob's question.

Alexander Sklar: Yes.

I think that's a really good question I don't know that we're sitting here today, saying well with guidance any kind of tailwind yet from from.

Alexander Sklar: The macro in fact, I would say it still feels a little bit more of a headwind than a tailwind I think the thing that I'm. Most proud of and we are proud of is the execution of our team. So we feel good about our close rate for opportunities both in the.

Owen Ryan: I think the thing that I'm most proud of, and we're proud of, is the execution of our team. So we feel good about our close rate for opportunities both in the enterprise space as well as the mid-market, where our team's executed. We feel quite well, particularly those customers that we chose to pursue in the mid-market. So I would say not really a lot of... support yet out of the macro, but we like the fact that our win rate feels pretty good for what we're trying to accomplish. Okay, great color there.

Alexander Sklar: In the enterprise space as well as the mid market, where our teams executed we feel quite well, particularly on those customers we chose to pursue.

Alexander Sklar: The mid market, so I would say not really a lot of.

Alexander Sklar: Support yet out of the macro but we like the fact that our win rate feels pretty good for what we're trying to accomplish.

Speaker Change: Okay, Great color there and then Mark just following up on the sales and marketing intensity, it's kind of been operating a bit below your medium and long term targets from 15 months ago I realize it's a long time in this macro but how are you thinking about hiring from here.

Mark W. Partin: And then Mark, just following up on the sales and marketing intensity, it's kind of been operating a bit below your medium and long-term targets from 15 months ago. I realize it's a long time in this macro, but how are you thinking about hiring from here for your go-to-market team? And what's factored into the 2024 outlook in terms of sales and, Yeah, thanks, Alex. Like we started this year with sufficient capacity to expand and meet the market and additional demand if and when it comes. We're operating very efficiently in that part of the organization, part of it, the leadership, but most of it just related to the intensity around the operating model changes and sort of some of the key aspects of driving greater sales rep productivity.

Speaker Change: Your go to market team and what's factored into the 2024 outlook in terms of sales and marketing.

Yes, Thanks, Alex like we started this year with.

Mark W. Partin: Sufficient capacity too.

Mark W. Partin: Expand and meet the market and additional demand if and when it comes.

Mark W. Partin: We're operating very efficiently in that part of the organization part of it the leadership.

Speaker Change: But most of it is just related to the intensity around the operating model changes and sort of some of the key aspects of driving greater.

Mark W. Partin: So our plan for increasing capacity at a stage, most likely after 2024, is to make sure that we have the best salespeople in the right place, focused on, you know, customer demand if and when we see it come on board. So just to make sure we're clear on that, so those medium-term targets still are relevant after 24, as you see it just in this interim period, still focused on kind of getting those operating model changes. That's right.

Speaker Change: Sales rep productivity.

Speaker Change: Our plan for increasing capacity.

Speaker Change: At a stage most likely after 2024 to make sure that we have the best salespeople at the right place focused on the customer demand.

Speaker Change: As we see it come onboard.

Speaker Change: Got it so just to just to make sure you're clear on that so those medium term targets still are relevant after 24 as you see it just in this interim period.

We're still focused on kind of getting those operating model changes in place.

Mark W. Partin: Our sales and marketing is below the midterm target model, which is your point. At this level of demand, we think it's at the right optimum level. Okay, thank you very much.

Speaker Change: That's right are our sales and marketing is below the mid term target model, which is your point.

Speaker Change: At this level of demand, we think it's at the right optimum level.

Speaker Change: Alright, Thank you very much.

Speaker Change: Thank you.

Owen Ryan: And our next question, coming from the line out. Matthew VanVliet with BTIG Yolanda Sulfan, Good afternoon. Thanks for taking the question. I guess when you're looking at the new refresh strategy laid out, curious in terms of what kind of timing you're expecting that to sort of play out. How much of that is going to encompass, you know, some meaningful sort of price increases or at least ASP increases with the additional functionality you're talking about? And, and then lastly, how much of the 24 guide or how much churn from the lower end customers is contemplated within that 24 guide? So I think Therese and I can maybe tag team a little bit on the answer to this question.

Speaker Change: And our next question coming from the line of.

Speaker Change: Matthew been quick with <unk>. Your line is now open.

Hey, good afternoon, thanks for taking the question.

Speaker Change: When youre looking at the new refresh strategy laid out.

Matthew: In terms of what kind of timing youre expecting that to sort of play out.

Matthew: How much of that is going to encompass.

Matthew: Meaningful sort of price increases or at least ASP increases with with the additional functionality you are talking about them and then lastly.

Matthew: How much of the 24 guide or how much churn from the lower end customers is contemplated within that 24 guide. Thanks.

Speaker Change: So I think Theresa may tag team, a little bit on the answer to this question. So so I think just from a strategic perspective.

Owen Ryan: So, from a strategic perspective, what we're trying to do on pricing, Therese already gave a little bit of a hint, but we're taking a very hard look at the way we price the value that we deliver for our customers. And that's probably the biggest thing we're trying to make sure is that we deliver values that our customers feel like they're getting an appropriate return on where they're spending their money with us. There's obviously, Therese intimated a little bit about, you know, this is sort of the year of innovation for Blackline again. I'm certainly really excited about some of the things she and the team are driving, and we can't wait to share more of that over the course of the year.

But we're trying to do on pricing $3 already gave a little bit of a hit too, but we're taking a very hard look at the way we price the value that we deliver for our customers and that's probably the biggest thing we're trying to make sure is that we deliver value to their customers feel like they're getting an appropriate return on where they are.

Speaker Change: Spending their money with us.

Speaker Change: Obviously, the recent demand a little bit about this as sort of a year of innovation for Black line again.

Certainly really excited about some of the things she and the team are driving and we can't wait to share more of that over the course.

Owen Ryan: And we're working through how to begin to sort of price that additional value that our customers will be achieving. I think the thing just on the turn, if you will, for the smaller customers that were asked, you know, what you'll recognize is sort of there are a number of customers that we've been much more proactive in engaging with, trying to figure out where they want to go on this journey and if Blackline can really help them succeed with what they're looking to do. I think what we expect is we'll have some conversations with customers that may opt out, if you will, or we'll help them opt out, because if they're not going to do the things that are necessary to drive the kind of transformation that we think is appropriate, they're not going to take advantage of the value that we have to offer them than, you know, better off just sort of going our separate ways.

Speaker Change: Of the year and we're working through how to begin to sort of for price that additional value that our customers will will be achieving I think the thing just on the the churn if you will for the smaller customers that was asked.

Speaker Change: You recognize as sort of there are a number of customers that we've been much more proactive in engaging with trying to figure out.

Speaker Change: Where they want to go on this journey and if black client can really help them succeed with what they're looking to do I think what we expect is we will have some conversations with customers that.

Speaker Change: They may opt out if you will or we will help them opt out because if they're not going to do the things that are necessary to drive the kind of transformation that we think is appropriate theyre not going to sort of really take advantage of the value that we have to offer them then better off just sort of going our separate ways.

Owen Ryan: Mark will probably give a little more guidance as to what that might mean from a churn and attrition perspective. But remember, these tend to be much smaller accounts, and so as a percentage of ACV, not particularly significant, but obviously from a customer account perspective, it sticks out a little bit more. Okay, great. Thanks. And our next question comes from the line-up, Dan Jester with BMO Capital Markets. Your line is open.

Speaker Change: Mark will probably give a little more guidance as to what that might mean from.

Speaker Change: From a churn and attrition perspective, but remember these tend to be much smaller accounts and so as a percentage of HCV not particularly.

Speaker Change: Significant, but obviously from a customer count perspective, it sticks out a little bit more.

Speaker Change: Okay.

Speaker Change: Okay, great. Thank you.

Speaker Change: Thank you.

Speaker Change: And our next question coming from the line of Dan Jester with BMO capital markets. Your line is open.

Great. Thanks.

Owen Ryan: Great question. Maybe just to build off that last train of thought. You spent a few minutes talking about... The decision to expand into different verticals is again about optimizing the ROI for the customers. As you think about that, keep pushing into verticals. Is this going to affect how you go to market in 2024, or is this sort of a longer-term initiative that we should expect to play out over time? I love that question.

Dan Jester: Thanks for taking the question.

Dan Jester: Maybe just to build off that last train of thought.

Can you spend a few minutes talking about the decision to expand in different verticals as this again about.

Optimizing.

ROI for the customers.

Dan Jester: Do you think about that sort of.

Dan Jester: Keith a question to verticals is this going to affect.

How you go to market in 'twenty four or is this sort of a longer term initiative that.

We should expect to play out.

Owen Ryan: So thank you, because it's near and dear to, I think, what we're trying to accomplish here at Blackline. I think one of the on tap, the crown jewels we had in this organization were our customer base, and what we're being smarter about now is understanding, you know, who our customers are in certain industries and then sub-industries, and then where might the white space be for companies that we don't yet serve, and that's pretty obvious about where you might want to go next. I think the real thing that I'm excited to watch our team working with Therese and our partners and others on is the fact that we have companies in the same industry who are using our product for very different reasons, and sort of being able to compare what company A is doing with company B versus company C, and then taking that insight and then being able to work with our partners and our product team and our sales teams and account management to go back to the customers and And I think what it drives is much more value for our customers. It makes us much more efficient in what we're trying to do to help our customers be successful. It should make us more efficient, if you will.

Speaker Change: Over time, thank you.

Keith: I Love that question. So so thank you because it's near and Dear to me I think what we're trying to accomplish our black I think one of the untapped Crown jewels, we had in this organization with our with our customer base and.

Keith: What we're being smarter about now is understanding.

Keith: Who our customers are in certain industries, and then sub industries, and then where it might the white space be for companies that we don't yet serve and that's obvious that's pretty obvious of where you might want to go next.

Keith: The real thing that I'm excited to watch our team working with the reach of our partners and others on is the fact that we have companies in the same industry, who are using our product for very different reasons and sort of being able to compare what what's the company doing with company B versus company C. And then taking that insight and then being able to work with our partners.

Keith: And our product team and our sales teams and account management to go back to the customers like curious where you can find more value because your peer companies are also doing things very similar to this and I think what it drives is much more value for our customer it makes us much more efficient in what we're trying to do to help our customers be successful.

Keith: It should make us more efficient if you will there is no more Johnny Appleseed approach to going after the marketplace. It's much more targeted around what we're trying to do and early indications are very very positive Mark and I were on a call with one of our Asia Pacific teams yesterday, and they have a very large pursuit theyre looking at and we.

Owen Ryan: There's no more Johnny Appleseed approach to going after the marketplace. It's much more targeted around what we're trying to do, and early indications are very, very positive. Mark and I were on a call with one of our Asia Pacific teams yesterday, and they have a very large project they're looking at, and we were just sharing the similar kind of customers that we have, both in Europe and North America, that we could bring to this team over in Asia Pacific. And I think that's going to wind up in the win column in the not-too-distant future because of being able to, again, leverage what we have internally that no one else has, to my knowledge, that we could bring to our customers.

Keith: We're just sharing with the similar kind of customers that we had both in Europe and North America that we could bring to this team over in Asia, Pac and and I think thats going to wind up in the win column in the not too distant future because of being able to again <unk>.

Leverage what we have internally that no one else has a mark to my knowledge that we could bring to our customers and I think thats a real.

Keith: Could it be a real boon for our customers over the over the coming years very started it in 2024. So we have five industries that are already in development and we will keep driving that as quickly as we can throughout the course of the year.

Owen Ryan: And I think that's going to be a real boon for our customers over the coming years. We've already started it in 2024, so we have five industries that are already in development, and we'll be driving that as quickly as we can throughout the course of the year. And our next question, coming from the line-up. Pat Walravens with Citizens Jam, P.L.N.

Speaker Change: Thank you.

Speaker Change: And our next question coming from the line.

Speaker Change: Adam Waldman switch citizens JMP. Your line is now open.

Oh, great. Thank you Hey, Teresa can we talk more about the solution pillars. So do you mind just going through.

Adam Waldman: What they are again and.

Adam Waldman: How the role of the person who is in charge is going to work in particular.

Therese Tucker: is open. Oh, great. Thank you. Hey, Therese, can we talk more about the solution pillars? So do you mind just going through what they are again, and The Bulletproof Executive 2013, how the role of the person who's in charge is going to work, in particular. The Bulletproof Executive 2013, Hey, I love it.

Adam Waldman: Are they on the hook for hitting the number how does that work.

Adam Waldman: Okay.

Speaker Change: Love It.

Speaker Change: So the solution pillars, there are four today and obviously the first one is our financial close which is typically been our bread and butter over the years.

Speaker Change: The second is intercompany financial management.

Speaker Change: The third is invoice to cash and the fourth is financial reporting and analytics and consolidation. Okay. One of our newer products now the four solution pillar leaders are basically veterans in each of their respective areas and they have deep deep <unk>.

Therese Tucker: So the solution pillars there are four today, and obviously, the first one is our financial close, which has typically been our bread and butter over the years. The second is intercompany financial management. The third is invoice to cash.

Therese Tucker: And the fourth is financial reporting analytics and consolidation. OK, one of our newer products. Now, the four solution pillar leaders are basically veterans in each of their respective areas, and they have deep, deep market and product expertise.

Speaker Change: Market and product expertise.

And yes. They are indeed, Pat responsible for a number for their particular product line. They are also.

Therese Tucker: And yes, they are indeed, Pat, responsible for a number of things in their particular product line. They are also motivated in their comp packages to collaborate with one another. And so we've seen where that's a very powerful combination, where the combination of certain products is much more effective in terms of win rates in certain segments of the market. So they have the role of basically bringing the voice of the customer into our product and tech organization because they spend a lot of time with the go-to-market team to really understand directionally where the market's going, what our customers and our prospects are looking for. So they get to be on the boat at the tip of the spear, as well as bringing that knowledge back to the product and tech group, where they have great influence on the roadmap. And yes, to put, you know, teeth behind it, they all have their own numbers as well. Does that help?

Speaker Change: Motivated in their comp packages to collaborate with one another and so we've seen where that's a very powerful combination where the combination of certain products are much more effective in terms of win rates in certain segments of the market.

Speaker Change: So they have the role of basically bringing the voice of the customer into our product and Tech organization.

Speaker Change: Because they are spending a lot of time with the go to market team to really understand directionally, where the market's going what our customers and our prospects are looking for so they get to be on the both at the tip of the sphere as well as bringing that knowledge back to the product and Tech group, where they are.

Speaker Change: Have great influence on the road maps.

Speaker Change: And yes to put.

Speaker Change: Teeth behind it they all have their own numbers as well.

Speaker Change: Does that help.

Operator: Thank you. Our next question in queue is coming from the line of Koji Ikeda with Bank of America. Your line is open.

Thank you and next question in queue coming from the line of Koji Kenneth <unk> with Bank of America. Your line is open.

Operator: Thank you guys. Thanks so much for taking the question. I wanted to, you know, kind of revisit The Bulletproof Executive, 2013, 20 to 25. You could maybe help us understand, you know, just thinking about net revenue. I'd like to be stable. 100.

Koji Ikeda: Hey, guys. Thanks, so much for taking the question.

Koji Ikeda: I wanted to kind of revisit the medium term growth targets for 2021% to 25% revenue growth targets could.

Koji Ikeda: Could you maybe help us understand just thinking about with net revenue retention, what looks like to be stabilizing here.

Operator: And that's it. Thank you. Bye.

Koji Ikeda: 6%.

Koji Ikeda: What are the components.

Operator: What are the... You know, how to think about them... to get to that. Thanks, Koji. I think I'll start with the original algorithm for the midterm targets. And that begins with account expansion. We laid out a billion-dollar plus resident market opportunity for our existing customers, both large enterprise and mid-market. Based on the tools that we've either acquired, built, and are putting together, we've got a real opportunity through digital transformation to drive a greater share of wallet inside the office of the CFO. We're reaching higher and wider with our products, as well as with our solutions and messaging. So the big opportunity for us is focusing on account ownership and customer success. We laid it out earlier in our comments to really expand inside and use those trusted relationships that we have with over 4000 customers. The second, and this, in addition, will drive our retention rate higher, our renewal rate higher, and we believe that's a big focus of our algorithm. Now, the components of that include the strategic product upsell, of course, and then some of the things that we've talked to you about over the last year. The second component is a new logo acquisition.

Koji Ikeda: Think about the components, there between new and expand and upsell and cross sell that to get to that $20 to 25% growth target.

Speaker Change: Thanks, Koji I think I'll start with the original algorithm for the mid term targets and that begins with account expansion, we laid out a $1 billion plus.

Resident marking up market opportunity and our existing customers, both large enterprise and mid market based on the tools that we've either acquired or built.

And theyre, putting together, we've got a real opportunity through digital transformation to drive greater share of wallet inside the office of the CFO, we're reaching higher and wider with our products and with our solutions and messaging.

Speaker Change: So the big opportunity for US is our focus on the account ownership in the customer success, we laid out earlier in our comments to really expand inside and use those trusted relationships, we have with over 4000 customers.

Speaker Change: The second and in addition, we will drive our retention rate.

Speaker Change: Higher our renewal rates higher and we believe that's a big focus of our algorithm now the components of that include the strategic product upsell of course, and then some of the things that we've talked to you about over the last year.

Speaker Change: Second component is the.

Speaker Change: Our new logo acquisition, we still firmly believe that this is.

Mark W. Partin: We still firmly believe that this is, in most of the markets where we operate today, still untapped market potential. Whether it's in Europe or in Japan or even here in North America, there are, we believe, the financial close and I2C invoice to cash and intercompany are still emerging opportunities with potential. And so the return to 20 to 25 percent is built on account expansion and continued market share growth and competing in the market to get new logos in new markets and territories. That's where the strategy and the operating model are built to attack that algorithm.

Speaker Change: And most of the markets, where we operate today.

Speaker Change: Still an untapped market potential whether it's in Europe or in Japan, or even here in North America there are.

Speaker Change: We believe that the financial close and ITC invoice to cash and intercompany are still emerging opportunities with potential and so the return to 20% to 25% is built on account expansion and continued market share growth and.

Speaker Change: And competing in the market to get new logos, and the new markets and territories, that's where the strategy and the operating model are built to attack that algorithm.

Mark W. Partin: Thank you. Thank you for watching. See you next time.

Speaker Change: Thanks, So much Mark I appreciate it thank you.

Speaker Change: Thank you.

Operator: And our next question, coming from the line of Pinjalim Bora with JP Morgan, your line is open. Oh, great. Thank you for taking the questions. Mark, I just wanted to ask you about retention. Can unpack, it seems like the. The Bulletproof Executive 2013, Is it possible to unpack the groceries?

Speaker Change: Thank you.

Speaker Change: Our next question coming from the line of Jillian borrow with Jpmorgan. Your line is open.

Jillian Borrow: Oh, great. Thank you for taking the questions.

Jillian Borrow: Mark I just wanted to ask you about the retention rates, maybe if you can unpack it seems like the gross retention is stabilizing a bit.

Jillian Borrow: Is it possible to unpack unpack the gross retention between mid market and enterprise and trying to understand what needs to be done to kind of move that retention back to where it was.

Operator: Enterprise, and trying to understand what's done. That's. How are you?

Jillian Borrow: What are you how are you thinking that trajectory to be is that going to be.

Mark W. Partin: Over the next 12 months, sorry. Yeah, thanks for the question. I think that the beginning for us really is the renewal rate and really focusing on keeping and optimizing the customers we have. It's down at 94%. You're right, it has sort of settled at that rate. That's the high 80s in the mid market, and that's the mid 90s in the enterprise.

Jillian Borrow: Over the next 12 months or is it going to take time.

Jillian Borrow: Yes.

Speaker Change: Thanks for the question because I think the beginning.

For us really is the renewal rate and really focusing on keeping and optimizing the customers. We have it is down at 94% Youre right. It has sort of settled at that rate that's high <unk> in the mid market and Thats mid nineties, and the enterprise and we are accustomed to see in those.

Mark W. Partin: And we're accustomed to seeing those rates a lot higher. We believe not only is this a period issue but that so much of our attention is now focused on driving that number higher. We spend a lot of time, money, and attention to get customers. We think we've got the best solution in the market. So we believe it's a lot about execution through some of these macro headwinds and some of the noise that's in the market today. That's the beginning of driving retention rates. The second component of it is digital transformation.

Speaker Change: It's a lot higher we believe that not only is this a period issue, but so much of our attention is now focused on driving that number higher we spend a lot of time money and attention to get customers. We've got the best solution in the market. So we believe it's a lot about execution through some of these macro headwind.

Speaker Change: So some of the noise that's in the market today, that's the beginning of.

Speaker Change: Driving the retention rate the second component of it is digital transformation, we inspire that that's part of our strategic objective digital transformation means that.

Mark W. Partin: We inspire that as part of our strategic objective. Digital transformation means that we can, as we have, landed with our financial closed solutions and then built out from there with our strategic product solutions. We've been and are comfortable at 110 to 111. We're down to 105, 106.

Speaker Change: We can as we have landed with our financial closed solutions and then build out from there.

Speaker Change: With our strategic product solutions, we have been and are comfortable at 110 to 111 were down to 105 106. Much of this is the macro headwinds that some of these renewal rate issues that we've highlighted and we think that through a more targeted.

Mark W. Partin: Much of this is due to macro headwinds and some of these renewal rate issues that we've highlighted. And we think that through a more targeted account upsell program for our strategic portfolio through these dedicated pillar solution leaders, we can get that retention rate higher, particularly in the enterprise account. So that's where our strategy and 2024 plan is for 2024 and beyond. And our next question, coming from the lineup: Adam Hutkus with Goldman Sachs. The line is open.

Speaker Change: Account upsell program for our strategic portfolio through these.

Speaker Change: Sort of dedicated pillar solution leaders that we can get that retention rate higher, particularly in the enterprise accounts.

Speaker Change: So that's where our sort of strategy in 2024 plan.

Speaker Change: Yeah.

Speaker Change: For 2024 and beyond.

Speaker Change: Understood. Thank you.

Speaker Change: Thank you.

And our next question coming from the line of.

Speaker Change: Adam <unk> with Goldman Sachs. Your line is open.

Operator: Great, thanks for taking the question. I just wanted to touch quickly on FRA. I think you called it out on that, www.youtube.com.uk We have seen some very good success in the mid-market. It is a differentiator for us. Most mid-market sized companies that are out there now end up doing their financial reporting inside of Excel.

Adam Waldman: Great. Thanks for taking the question I just wanted to touch quickly on <unk> I think you called out that that was a key part of some of the wins this quarter.

Adam Waldman: Just curious if you see that opening up your market opportunity in the mid market a bit more than you might have expected and how do you marry some success there with some of your comments around being more targeted.

We have seen some very good success in the mid market. It is a differentiator for us.

Mid market sized companies that are out there now end up doing their financial reporting inside of excel.

Therese Tucker: And so offering them a tool that gives them sort of control and end-to-end visibility has been a very powerful motivator and differentiator in that market. I'm sorry, what was the second part of your question? Yeah, I got all excited because you asked about FRA. No worries.

Adam Waldman: Offering them a tool that gives them sort of the control and the end to end visibility has been a very powerful.

Adam Waldman: Motivator and differentiator in that market.

Speaker Change: I'm sorry, what was the second part of your question.

Speaker Change: Yes, I got all excited because you asked about that foray.

Therese Tucker: I was just curious how you marry some of that commentary around the success in the mid market with being more targeted. It just seems like it's that successful. It seems like that might be opening up your market opportunity there a bit more than you might have expected. So just curious how you pull those two comments together.

Speaker Change: No worries I was just curious how you marry some of the commentary around the success in the mid market with being more targeted it just seems like it's being successful and it seems like that might be opening up your market opportunity. They are a bit more than you might have expected. So just just curious how you pull those two comments together.

Owen Ryan: I think, Adam, the important piece of this, again, is all about customer client selection. And so I think the thing that we're trying to do is make sure we have these very thoughtful conversations with the prospective customer through the sales cycle about what their vision is, what are they trying to accomplish as an organization, where are they going?

Speaker Change: I think Adam the important piece of this again is it's all about customer client selection and so I think the thing that we're trying to do is make sure. We have these very thoughtful conversations with prospective customers through the sales cycle about whats their vision what are they trying to accomplish as an organization where are they going.

Owen Ryan: Are they all in on sort of, you know, thinking about the blueprints and success plans that we can help them to create to drive what they're looking to do? And what you find is the mid-market is a very wide marketplace, right? And so this is all about finding those customers that best fit what we believe is an ideal customer profile for what we're trying to drive versus just chasing every organization that's out there. And so again, I just can't applaud my BDR team enough and what the sales and AMO teams are doing right now for really being very thoughtful, very strategic in the conversations that they're having, because ultimately, what you want to do, what we want to do And again, part of that upfront is knowing that we're right for them and they're right for us as we move forward. And so I don't think that those statements are in conflict with one another.

Speaker Change: Are they all in on sort of thinking about the blueprints and success plans that we can help them to create to drive what they are looking to do and what you find is the mid market is a very wide marketplace right and so this is all about finding those customers that best fit what we believe is an ideal customer profile for what we're trying to drive.

Speaker Change: First is just chasing every organization thats out there and so again I just I can't employ it might be Dr team enough and what the sales and ammo team. They are doing right now for really being very thoughtful very strategic in the conversations that they're having because ultimately what you want to do what we want to do is drive success for our customers and again part of that upfront.

Speaker Change: Ron is knowing that were right for them and they are right for us as we move forward and so I don't think that those.

Speaker Change: <unk> are in conflict with one another in fact I think they are perfectly aligned again with helping us be more effective efficient and successful in helping our customers.

Operator: In fact, I think they're perfectly aligned again with helping us be more effective, efficient, and successful in helping our customers. Our next question, coming from the line-up, is from Brent Bracelin with Piper Sandler and Yolanda Soto. Good afternoon.

Speaker Change: Thank you.

Speaker Change: Our next question coming from the line up.

Speaker Change: Brent <unk> with Piper Sandler Your line is now open.

Brent: Good afternoon, Thanks for taking the question here.

Operator: Thanks for taking the question here. One of the big questions that we have across the broader software group, where we've seen growth slow for the last couple of years, is trying to assess when growth rates start to trough. And if I think about your business, our PO here has slowed for two years. It's at 9%, I think in Q4 here. Mark, what's your best guess? When will we start to trough

Brent: One of the big questions that we have across the broader software group, where we've seen growth slow for the last couple of years is trying to assess when growth rates start to trough and if I think about your business Rfps out here has slowed for two years.

Brent: Is that 9% I think in Q4 here.

Brent: Mark What's your best guess when we start to trough is there any sort of.

Mark W. Partin: Is there any sort of silver lining in the pipeline that might suggest a bigger pipeline? Again, close rates have been the big issue. But walk us through your best guess on when RPO growth could start to bottom out here after a couple years of slowdown across the broader group. Thanks, Brent. Yeah, that's quite a question to get me opinioned on a trough for the entire SAS group. I might not answer it directly. Don't be surprised.

Brent: Silver lining in the pipeline that might suggest a bigger pipeline again close rates have been the big issue, but.

Brent: Walk us through your best guess on when our peer growth could start to bottom here. After a couple of years, that's not slowdown across the broader group.

Mark W. Partin: Thanks Brent.

Speaker Change: A question.

Speaker Change: Opine on a trough for the entire SaaS grew if I may.

Speaker Change: I might not answer it directly don't be surprised I would say, though all kidding aside.

Mark W. Partin: I would say, though, all kidding aside, that some of the green shoots, you know, we've talked about our execution, which certainly makes things feel a little better in a macro headwind. But we saw some green shoots in Q4 at the higher end of the funnel, larger deals that we were able to pull across, particularly in account growth. That was a lot of extra heavy lifting and effort from the team.

Speaker Change: Some of the Green shoots we've talked about our execution, which certainly makes things feel a little better than a macro headwind.

Speaker Change: But we saw some green shoots in the in Q4 at the higher end of the funnel larger deals that we were able to pull across particularly in the account growth that was a lot of extra heavy lifting and effort from the team. So seeing those things start to emerge are certainly positive signs, but we can't.

Mark W. Partin: So seeing those things start to emerge is certainly positive sign, but we can't, you know, call that that's a new and sustainable motion that we see, especially so early in the year for us, where a lot of our larger deals and digital transformations are tied to either SAP or to Solex or to longer sales cycles. So for us, look, we try to show up for our customers and execute first. And we think that'll start to close the gap in any macro environment. And, you know, here we have many crosswinds, whether it's the version of SAS ROI and accountability. And we think we hold up pretty well in the long term for that.

Speaker Change: On the call.

Speaker Change: Our new and sustainable motion that we see.

Speaker Change: Especially so early in the year for us where a lot of our larger deal and digital transformations that are tied to.

Speaker Change: Either SAP, so lax or two longer sales cycles. So.

Speaker Change: For US look we try to show up.

Speaker Change: For our customers and execute first and we think that will start to close the gap in any macro environment and here, we have many cross wins, whether it's the.

Speaker Change: Yes.

Speaker Change: The.

Speaker Change: <unk> SaaS ROI and accountability, and we think we hold up pretty well in the long term for that if customers are looking around for vendor consolidation and expense rationalization.

Mark W. Partin: If customers are looking around for vendor consolidation and expense rationalization, our business case is very solid, especially when you are buying and using more than an application or financial close. So our growth profile is in a very important high ROI automation part of the office of the CFO. And when that happens, you know, from quarter to quarter, it's tough to call. But we know that it's a problem that hasn't gone away. It's only gotten bigger through this sort of downturn, if you will.

Speaker Change: Our business cases, very solid, especially especially when you are buying and using more than an application or a financial close so our growth profile is.

Speaker Change: <unk>.

Speaker Change: Very important high ROI automation part of the office of the CFO and when that happens.

Speaker Change: From quarter to quarter, it's tough to call, but we know that it's a problem that hasn't gone away. It has only gotten bigger through this sort of downturn, if you will Bryan.

Mark W. Partin: Brent, that's the best I can do for calling a trough, but when it's in the rearview mirror, I'll tell you. Thank you for the question, Brent. And our next question, coming from the lineup, Steve Enders with City. He'll end his selfie.

Bryan: That's the best I can do for for calling a trough but.

Bryan: When it's in the rearview mirror I will tell you.

Speaker Change: Thank you for the question Brent.

Speaker Change: Thank you.

Speaker Change: Next question coming from the lineup, Steve Enders with Citi. Your line is now open.

Operator: Okay, great. Thanks for taking the time to answer the question here. I appreciate all the innovation you talked about that's coming down the pike this year. I guess, maybe to start, what's been the early feedback as you're kind of showing the data to customers? And I guess on the other side of it, how do you get the go-to-market right to capture that potential there? And, in particular, where does the budget opportunity come from as you go into and target those accounts?

Steve Enders: Okay, great. Thanks for thanks for taking the question here.

Steve Enders: Yeah I appreciate all the innovation we talked about.

Steve Enders: And in that arena.

Steve Enders: This year.

Steve Enders: I guess, maybe to start I mean, what's been the early feedback here kind of showing the beta customers.

Steve Enders: I guess on the other side of it how do you get that.

Steve Enders: Again, our marketing right to capture.

Steve Enders: That potential there.

Steve Enders: Where does the budget opportunity come from as you go.

Steve Enders: <unk> and targeted accounts.

Therese Tucker: Well, starting with feedback from customers, it's been pretty enthusiastic, but realize that I'm a big believer in co-development with our customers over time. We have been vetting ideas against them, then we vetting prototypes, then we vetting products. So when we finally get to the point where we launch, we expect to have nothing but very enthusiastic feedback. And frankly, that's how you don't waste money on development.

Speaker Change: Well starting with.

Speaker Change: Feedback from customers, it's been pretty enthusiastic, but realize that I'm, a big believer in co development with our customers over time.

Speaker Change: We have been vetting ideas against them then we've got prototypes then leave that products. So when we finally get to the point, where we launch we expect to have nothing but very enthusiastic feedback and frankly, that's how you don't waste money on development. Okay. So.

Therese Tucker: Okay, so that's very good feedback today, so far, and I'm super pleased. Now, and likewise, you know, we also work a lot with our partners in terms of what they're seeing in the market. A lot of times, they have a much broader purview than we might.

Speaker Change: That's.

Speaker Change: Very good feedback today, so far and I'm Super pleased now and likewise.

Speaker Change: Also work a lot with our partners in terms of what they're seeing in the market a lot of times. They have a much broader purview then we might so lots and lots of feedback from idea inception of idea all the way through to launching a product now when we start launching a product that.

Therese Tucker: So lots and lots of feedback from the idea, the inception of the idea, all the way through to launching a product. Now, when we start launching a product, that typically is a process where we will roll it out for some period of months with early adopters. Again, this is, you know, much more in depth, now that you're actually using it. And a lot of times, the feedback there will be slightly different because when they start to use it, they find out if it's easy or not.

Speaker Change: Typically as a process, where we will roll it out for some period of months with early adopters again. This is a much more in depth now you're actually using it and a lot of times the feedback there will be slightly different because when they start to use it they find out if it's easy or not okay.

Therese Tucker: Okay, then we will typically launch into an internal pricing discussion on how to get things, you know, what the value seems to be, a lot of times our customers will take part in that, what are they willing to pay for it. And then finally, we really start to get the marketing teams involved and the go-to-market enablement teams so that as we roll things out to our actual customer base, our go-to-market teams are ready to work with our customers and our prospects. That's kind of a quick overview.

Speaker Change: Then we will typically launch into a internal pricing discussion on how to get things you know what the value seems to be a lot of times, our customers will take part in that what are you willing to pay for it and then finally, we really start to get the marketing teams involved in the go to market enablement teams.

Speaker Change: That as we roll things out to our actual customer base. Our go to market teams are ready to.

Speaker Change: Work with our customers and our prospects.

Speaker Change: It's kind of a quick overview I hope that answers your question.

Therese Tucker: I hope that answers your question. Great, thank you for taking the question. Thank you. And our next question coming from the line out. Chris Quintero, Morgan Stanley, Yolanda Soltis, Hey, everyone. Thanks for taking the questions here. I think this one's for Mark.

Great. Thanks for taking the question.

Speaker Change: And our next question coming from the line of <unk>.

Chris <unk> with Morgan Stanley Your line is open.

Chris: Hey, everyone. Thanks for taking the questions here I think this one is for Mark.

Mark W. Partin: One that's around the fiscal year 24 revenue guide, given the Q1 guide implies 11.5% growth, that would imply further deceleration into the rest of the year to get to your four-year guide of 9%. So do you expect growth to further slow, or are you embedding some more conservatism into that guide, maybe, compared to previous years? Okay, I...

Chris: I wanted to ask around the.

Chris: Fiscal year 'twenty revenue guide given the Q1 guide implies 11, 5% growth that would imply a further deceleration into the rest of the year to get to your full year guide of 9%. So.

Mark W. Partin: Do you expect growth to further slow or are you embedding some more conservatism into that guide maybe compared to previous years.

Mark W. Partin: Okay.

Speaker Change: I'm I'm, a pragmatic and I think in this case Conservative guide for the year and some of that is is the market, but also a number of the operating model changes.

Mark W. Partin: I'm a pragmatic, and I think in this case, a conservative guide for the year. And some of that is the market, but also a number of the operating model changes that we believe there's real opportunity for uplift with these changes. The timing for that is the thing that I think draws the most questions. So the guide is adequately conservative and pragmatic for the year.

We believe there is real opportunity for uplift with these changes the timing for that.

Is that is the thing that I think drives the most question. So the guide is adequately conservative and pragmatic for the year Youre right. We in Q4, we saw some good upticks in a few leading indicators that's positive whether its momentum we're not going into this year, we're going to look for that visibility.

Operator: You're right; in Q4, we saw some good upticks and a few leading indicators. That's positive. Whether it's momentum or not, going into this year, we're going to look for that visibility. And I think that gives us an opportunity to execute and have very high confidence in not only the top level guidance but in the ability to generate improving operating leverage in the business during this year. Thank you for that question. Excellent. I'll keep it to one question. And our next question comes from the line of Terry Tillman with Lewis. Your line is open. Yeah, hi, can you hear me?

Speaker Change: And I think that gives us an opportunity to execute and have very high confidence in not only the top level guide, but and the ability to generate.

Speaker Change: Improving operating leverage in the business during this year.

Speaker Change: Thank you for that question.

Speaker Change: I'll keep it to one question. Thanks.

Speaker Change: Thank you.

Speaker Change: And our next question coming from the line of Terry Tillman with Lewis Your line is open.

Speaker Change: Okay.

Terry Tillman: Yes, Hi can you hear me.

Operator: Yeah. Hi, Terry. I thought they said Tris, but it cut out.

Terry Tillman: Yes, Hi, Terry.

Terry Tillman: I thought I said tourists, but it cut out.

Operator: Thanks for fitting me in. So, it is a single question. It may be multiple parts, unfortunately, though.

Terry Tillman: Thanks for fitting me in.

Terry Tillman: So it is a single question and maybe multiple parts. Unfortunately, though on the SAP relationship it's great to see the solar it's great hearing about customer specific customers. So that was great and <unk>, what I'm curious about as we look to 'twenty four how.

Owen Ryan: On the SAP relationship, it's great to see Solex, you know; it's great hearing about customers, specific customers. So, that was great, and I look forward to talking to you. What I'm curious about as we look at the 24, is how you think about the percentage of revenue from SAP, and where do you see, potentially, if there are going to be upside drivers from SAP, what are some of the more interesting incremental opportunities, maybe product-wise? And what about their perspective on your all AI journey, and are they signed up, and are they going to be pushing that as well? I think, Therese, you and I are going to have to tag team on this because you can maybe handle the AI piece of it. And, you know, I would expect that we'll see a significant shift in what percentage of our revenue comes from SAP over 2024.

Terry Tillman: How are you thinking about percentage of revenue from our SAP and where do you see potentially if theres going to be upside drivers for me what are some of the more interesting incremental opportunities maybe product wise.

Terry Tillman: And what about their perspective on your All's AI journey and are they signed up and are they going to be pushing that as well. Thank you.

Speaker Change: I think <unk>, you're not going to have to tag team on this because you can maybe handle aip's of it.

Speaker Change: I would expect I don't know that we'll see a significant shift in what percentage of our revenue comes from S&P over 2024, I do think that the collaboration and communication and the teaming has gotten better across all aspects of what we're trying to do obviously, we're going to continue to have resources dedicated both domestically and internationally.

Owen Ryan: I do think that the collaboration and communication and the teaming has gotten better across all aspects of what we're trying to do. Obviously, we're going to continue to have resources dedicated both domestically and internationally to work in the local markets where they are, because all this business is done at a local level. I think that there are elements of what we're trying to do together in the marketplace, which seems to be going quite well again from at least the feedback from my team, my teammates here at Blackline, and then some of the senior executive meetings we're having between ourselves and SAP at this point in time. So all that, I think, you know, bodes well for what we're trying to do.

Speaker Change: Work in the local markets, where they are.

Speaker Change: Does all of this business is done at a local level.

Speaker Change: I think that there is elements of of what we're trying to do together in the marketplace, which seem to be going quite well again from at least the feedback from from Mitek.

Speaker Change: My teammates here at Black client and then some of the the.

Speaker Change: The senior executive meetings, we're having between ourselves and NSA pay at this point in time, so all of that I think bodes well for what we're trying to do obviously very critical partner, but we also have another big part of our business. The other 75% that we're going to keep driving as.

Owen Ryan: Obviously, they're a critical partner, but we also have another big part of our business, the other 75 percent that we're going to keep driving as well. And I think we feel pretty good about that overall. And then on the AI side, Theresa, I think SAP has a couple of things that are important SAP coming up this year. The Office of the CFO is certainly one which is important for us. And secondly, their commitment to AI as well.

Speaker Change: As well and I think we feel pretty good about that overall and then on the AI side curious I wanted to talk I think youll see Theres a couple of things about that are important as SAP peek coming up in this year. The office of the CFO is certainly one which is.

Speaker Change: It's important for us.

Speaker Change: And secondly, their commitment to AI as well the beautiful thing about both.

Speaker Change: And Black line is that we both have a great deal of data.

Therese Tucker: The beautiful thing about both SAP and Blackline is that we both have a great deal of data, which makes the use of AI models much more effective. And so we're seeing that, you know, everybody's, not just SAP, but really everybody's trying to figure out how to best deliver the benefits that we know are tangible to our customers. So we see that within SAP.

Speaker Change: Which makes the usage of AI models much more effective and so we're seeing that.

Speaker Change: Everybody is in fact, not just us, but really everybody is trying to figure out how to best deliver the benefits that we know are tangible to our customers. So we see that with NSA.

Therese Tucker: We have discussions on that, and that's certainly a high priority for Blackline this year. So, operator, I know we've run a little bit over, so I just wanted to sort of close the meeting. I want to thank everybody for their participation today. I really appreciate it. I look forward to the follow-up conversations that I'm sure we'll have, and appreciate your interest in Blackline. And thank you, everybody. Have a great rest of the day. Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect. Like and subscribe for more videos!

We have discussions on that and that's certainly a high priority for Black line is here.

Speaker Change: So operator, I know, we've run a little bit over so I just wanted to sort of close up the meeting went to thank everybody for their participation today really appreciate it look forward to the follow up conversations I'm sure. We will have and I. Appreciate your interest in Black line and thank you everybody have a great rest of the day take care.

Speaker Change: Ladies and gentlemen that does conclude the conference for today. Thank you for your participation you may now disconnect.

Speaker Change: Okay.

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