Q1 2024 BlackLine Inc Earnings Call

Operator: 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 plans, objectives, and expected performance, in particular our guidance for Q2 and full year 2024, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Good afternoon, and thank you for joining us today with me on the call our own Ryan Kris Tucker co Chief Executive officers, a black line.

Operator: And our partner Chief Financial Officer.

Operator: Before we get started I would like to note that certain statements made during this conference call that are not historical fact incur.

Operator: Including those regarding our future plans objectives and expected performance in particular, our guidance for Q2 and full year 2024 are forward looking statements within the meaning of the private Securities Litigation Reform Act of 90 95.

Operator: 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 uncertainties, 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 statement, whether as a result of new information, future events, or otherwise, except as required by applicable law.

Operator: Before looking statements represent our outlook only as of the date of this call.

Operator: 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.

Operator: Including the estimated in our periodic reports filed with the Securities and Exchange Commission in particular, our Form 10-K and Form 10-Q.

Operator: We do not undertake and expressly disclaim any obligation to update or alter our forward looking statement whether.

Operator: As a result of new information future events or otherwise, except as required by applicable law.

Operator: 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. A 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 today. Now, I will turn the call over to Blackline's co-chief executive officer, Owen Ryan. Owen?

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

Operator: Finally, unless otherwise stated our financial measures disclosed in this call will be non-GAAP.

Operator: 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 <unk> com.

Operator: In our form 8-K filed with the SEC today.

Owen M. Ryan: Now I will turn the call over to Black lines co Chief Executive Officer Owen right away.

Owen M. Ryan: Thank you, Matt. And good afternoon, everyone.

Owen M. Ryan: Thank you, Matt and good afternoon, everyone.

Speaker Change: Thank you all for joining us today.

Owen M. Ryan: Thank you all for joining us today. Blackline exceeded revenue and profitability expectations in the first quarter with $157 million in total revenue, a 17% non-GAAP operating margin, and $40 million in non-GAAP netting. By the way, we are still in the early stages of implementing our new operating model, but we are pleased with the progress we are seeing. I will discuss this progress.

Owen M. Ryan: Black line exceeded revenue and profitability expectations in the first quarter.

Owen M. Ryan: With $157 million in total revs.

Owen M. Ryan: Yes.

Owen M. Ryan: A 17% non-GAAP operating margin.

Owen M. Ryan: $40 million and non-GAAP net income.

Owen M. Ryan: While we are still in the early stages of implementing our new operating model.

Owen M. Ryan: We are pleased with the progress we are seeing.

Owen M. Ryan: Highlighting areas of early success and identifying those areas that require a bit more time to achieve operational maturity. Regarding execution, we are seeing an uptick in activity at the top end of our sales funnel. While the volume of deals is still lower than we want, this improvement in activity gives us some early indications of demand stabilization. In the first quarter specifically, we encountered several instances where larger multi-solution deals were pushed out.

Owen M. Ryan: I will review this progress highlighting areas of early success and identify those areas that require a bit more time to achieve operational maturity.

Owen M. Ryan: Regarding execution, we are seeing an uptick in activity at the top end of our sales funnel.

Owen M. Ryan: While the volume of deals is still lower than we want.

Owen M. Ryan: This improvement in activity gives us some early indications of demand stabilization.

Owen M. Ryan: In the first quarter specifically.

Owen M. Ryan: Countered several instances where larger multi solution deals pushed out.

Owen M. Ryan: As part of this, we still see customers and prospects maintaining their prudent and thoughtful purchasing behavior. Going forward, we expect to aggressively pursue these opportunities either directly or jointly with our partners. Next, efforts around elevating our market message and brand are progressing well. We are receiving positive feedback from both customers and partners, indicating that our message, particularly around artificial intelligence and our industry-focused strategy, is generating favorable interest. On AI, this was evident during our recent Beyond the Black event in London, where innovation and AI dominated discussions among attendees.

Owen M. Ryan: As part of this we still see customers and prospects, maintaining a prudent and thoughtful purchasing behavior.

Owen M. Ryan: Going forward, we expect to aggressively pursue these opportunities either directly or jointly with our partners.

Owen M. Ryan: Next efforts around elevating our market message and brand are progressing well.

Owen M. Ryan: We are receiving positive feedback from both customers and partners, indicating that our message, particularly around artificial intelligence and our industry focused strategy is generating favorable interest.

Owen M. Ryan: On AI. This was evident during our recent beyond the black event in London.

Owen M. Ryan: Where innovation AI dominated discussions among attendees.

Owen M. Ryan: We believe that our innovation here, which Therese will detail shortly, is beginning to stand as a meaningful differentiator, with the opportunity to drive and accelerate even deeper accounting and finance automation for our customers. We are also seeing signs that our industry approach is responding strongly with our customers, partners, and prospects, who have seen numerous opportunities to address their industry-specific challenges. In fact, because our approach has garnered such positive reception, we are accelerating and broadening our deployment schedule. Our commitment to delivering on the Blackline promise remains steadfast, with progress being made.

Owen M. Ryan: We believe that our innovation here.

Therese: Which teresa will detail shortly.

Owen M. Ryan: Is beginning to stand as a meaningful differentiator.

Owen M. Ryan: The opportunity to drive and accelerate even deeper accounting and finance automation for our customers.

Owen M. Ryan: We are also seeing signs that our industry approach is resonating strongly with our customers partners and prospects, we see numerous opportunities to address their industry specific challenges.

Owen M. Ryan: In fact, because our approach has garnered such positive reception.

Owen M. Ryan: We are accelerating and broadening our deployment schedule.

Owen M. Ryan: Our commitment to delivering on the Black Knight promise remains steadfast with progress being made.

Owen M. Ryan: While external metrics reflecting these efforts are still evolving, we see progress across our customer base, particularly in areas like adoption and engagement, but also with respect to customer experience. With additional innovation being embedded within our solutions, along with a refined and streamlined approach to pricing, which we expect to move forward with later this year, we see opportunities to enhance the value and ROI that customers receive, while simultaneously making it easier to do business with Blackline.

Owen M. Ryan: While external metrics, reflecting these efforts are still evolving we see progress across our customer base.

Owen M. Ryan: Particularly in areas like adoption and engagement.

Owen M. Ryan: But also with respect to customer experience.

Owen M. Ryan: With additional innovation being embedded within our solutions, along with a refined and streamlined approach to pricing, which.

Owen M. Ryan: Which we expect to move forward with later this year we.

Owen M. Ryan: We see opportunities to enhance the value and ROI that customers receive.

Owen M. Ryan: Simultaneously, making it easier to do business with blackley.

Owen M. Ryan: Next, we are seeing notable progress in our distribution efforts as we transition towards a more partner-powered model. Globally, we are experiencing more comprehensive engagement with our partners, especially within our solution pillars. For instance, within Invoice2Cash, partners are expressing interest in expanding their practices and collaborating with Blackline, particularly in light of competitive shift strategies or unmet promises. Also, we are seeing a building interest among our partners with our electronic invoicing receivment and payment offerings.

Owen M. Ryan: Next we are seeing notable progress in our distribution efforts as we transition towards a more partner powered model.

Owen M. Ryan: Globally, we are experiencing more comprehensive engagement with our partners, especially within our solutions pillars for.

Owen M. Ryan: For instance, within Invoiced to cash partners are expressing interest in expanding their practices and collaborating with black line.

Owen M. Ryan: Particularly in light of competitor shifting strategies or unmet promises.

Owen M. Ryan: Also we are seeing a building interest among our partners with our electronic invoicing presentment and payment offerings.

Owen M. Ryan: Partners are also actively seeking out leaders in the AI space to align for mutual growth opportunities. We are confident our focus on innovating for the office of the CFO will not only align with our collective objectives but also stand to support our differentiation and market leadership. On retention, we are advancing various programmatic initiatives aimed at enhancing customer adoption and stickiness. These initiatives gained momentum late last year and have further accelerated with the implementation of our new operating model.

Owen M. Ryan: Partners are also actively seeking out leaders in the AI space to align our mutual growth opportunities.

Owen M. Ryan: We are confident that our focus on innovating for the opposite the CFO.

Owen M. Ryan: Well not only align with our collective objectives, but also stand to support our differentiation and market leadership.

Owen M. Ryan: On retention, we are advancing various programmatic initiatives aimed at enhancing customer adoption and stickiness.

Owen M. Ryan: These initiatives gain momentum late last year and have further accelerated with the implementation of our new operating model.

Owen M. Ryan: As an example, we know that there are significant benefits from partner engagement at the start of a customer journey, including better adoption and elevated value delivery. As such, we have taken steps to more closely integrate our partners and customers at the outset of that process. While our first quarter retention rates fell slightly below expectations, we believe there is tangible progress being made.

Owen M. Ryan: As an example, we know that there are significant benefits from partner engagement at the start of a customer journey <unk>.

Owen M. Ryan: Including better adoption and elevated value delivery.

Owen M. Ryan: As such we have taken steps to more closely integrate our partners and customers at the outset of that process.

Owen M. Ryan: While our first quarter retention rates fell slightly below expectations. We believe there is tangible progress being made.

Owen M. Ryan: Our key focus on customer adoption underscores its significance as one of my top priorities. As testament to our commitment here, we recently appointed industry veteran Jimmy Dewan as our new chief customer officer to spearhead these efforts and ensure that additional focus, scrutiny, and partner engagement remain paramount across our company. Turning to deal activity in the first quarter, while our net customer additions are not where we would like them to be, mostly due to changes to our lower middle market targeting, we were pleased to see that many of our new logos were influenced or driven by partners, including SAP. For example, we signed a federally owned electric utility company that was burdened by too many manual processes and an outdated ERP.

Owen M. Ryan: Our key focus on customer adoption underscores its significance is one of my top priorities.

Owen M. Ryan: As Testament to our commitment here, we recently appointed industry veteran Jimmy you want as our new Chief customer officer to spearhead these efforts and ensure that additional focus.

Owen M. Ryan: Neat and partner engagement remained paramount across our company.

Owen M. Ryan: Turning to deal activity in the first quarter.

Owen M. Ryan: Our net customer additions are not where we would like mostly due to changes to our lower middle market targeting we were pleased to see that many of our new logos were influenced are driven by partners, including S. P.

Owen M. Ryan: And one example, we signed a federally owned electric utility company that was burdened by too many manual processes and an outdated ERP.

Therese Tucker: Through the combination of Blackline, SAP, and a key partner, we were able to offer a better way forward, one that offered modern technology, robust automation, and trusted partners to support their transformation journey. Notably, this is our second customer within the federal government space. In Europe, we signed a competitive multi-solution deal, again leveraging our Solex partnership with a global biotechnology company. As part of an ERP replacement, Blackline was selected to standardize, automate, and govern their critical finance and accounting processes, serving as a key partner during a multi-year transformation.

Owen M. Ryan: There's a combination of black line as AP and a key partner.

Therese Tucker: Able to offer a better way forward when that offered modern technology robust automation and trusted partners to support their transformation journey.

Therese Tucker: Notably this is our second customer within the federal government space.

Therese Tucker: In Europe, we signed a competitive multi solution deal again, leveraging our select partnership with a global Biotechnology company.

Therese Tucker: As part of an ERP replacement Black line was selected to standardize automate and govern their critical finance and accounting processes.

Therese Tucker: Serving as a key partner during a multiyear transformation.

Therese Tucker: As part of a phased approach, this deal provides those additional opportunities to support their needs as they grow. Also, in Europe, we signed a net new deal with a leading chemical manufacturer as part of an ERP migration. Historically, the customer leveraged Excel as their primary tool to support their accounting and finance processes, which had become unsustainable and lacked a proper global controls framework. Further, the customer understood that there were real benefits to both attracting and retaining talent by modernizing their financial technology landscape, in effect alleviating many executive level concerns by choosing to partner with Blackline.

Therese Tucker: As part of a phased approach this deal provides us additional opportunities to support their needs as they grow.

Therese Tucker: Also in Europe, we signed a net new deal with a leading chemical manufacturer as part of an ERP migration.

Therese Tucker: Historically, the customer has leveraged excel as their primary tool to support their accounting and finance processes.

Therese Tucker: Which had become unsustainable and lack of proper global controls framework.

Therese Tucker: Further the customer understood that there were real benefits to both attracting and retaining talent by modernizing their financial technology landscape and.

Therese Tucker: In effect alleviated, many executive level concerns by choosing to partner with Blackrock.

Therese Tucker: In Invoice to Cash, which remains a very topical set of solutions in today's interest rate environment, we saw some solid wins and customer expansions as well. Specifically, we expanded with an existing customer, a multinational food products company, who saw such success with their initial purchase that they chose to expand even further and add our complete invoice-to-cash offering to additional geographies and businesses. We expect that over time, our relationship with this customer will continue to grow.

Therese Tucker: In Invoiced to cash, which remains a very topical set of solutions in todays interest rate environment, we saw some solid wins and customer expansions as well.

Therese Tucker: Specifically, we expanded with an existing customer a multinational food products company. We saw such success with their initial purchase they chose to expand even further and add our complete invoice the cash offering to additional geographies and business lines.

Therese Tucker: Expect that overtime our relationship with this customer will continue to grow.

Therese Tucker: In the middle market, we saw a number of competitive replacements driven by an interest in a more modern approach to both their close and consolidation processes. In one instance, a North American financial institution sought to replace an incumbent vendor due to a poor experience with a lack of real transformation in the office of the CFO. Blackline's close and consolidation solutions were exactly what the customer was looking for and gave the customer the confidence to partner with a trusted leader. With that, I will turn it over to Therese to discuss how we are continuing to drive and deliver meaningful innovation for our customers.

Therese Tucker: In the middle market, we saw a number of competitive replacements, driven by and interested in a more modern approach to both their clothes and consolidation processes.

Therese Tucker: In one instance, a north American financial institution sought to replace an incumbent vendor due to a poor experience with a lack of real transformation and the office of the CFO.

Therese Tucker: Black Knight closed the consolidation solution for exactly what the customers looking for and gave the customer the competency partnered with a trusted leader.

Therese Tucker: With that I will turn it over to Teresa to discuss how we are beginning to drive and deliver meaningful innovation for our customers.

Therese Tucker: Thank you Owen.

Therese Tucker: Thank you, Owen. As demands and challenges within the office of the CFO continue to evolve, there is a critical need for innovative solutions that deliver tangible results and drive business outcomes. We firmly believe that artificial intelligence will be pivotal in meeting these needs and will rapidly become integral to modern finance and accounting operations. As leaders in the market who are committed to providing an AI-driven platform for the Office of the CFO, we are moving swiftly to fulfill our promises and execute on our strategy.

Therese Tucker: Also demands and challenges within the office of the CFO continue to evolve there's a critical need for innovative solutions that deliver tangible results and drive business outcomes. We firmly believe that artificial intelligence will be pivotal in meeting these needs and will rapidly become integral to.

Therese Tucker: Modern finance and accounting operations as leaders in the market, who are committed to providing an AI driven platform for the office of the CFO. We are moving swiftly to fulfill our promises and execute on our strategy. This entails not only integrating AI into our platform.

Therese Tucker: This entails not only integrating AI into our platform but also introducing new AI-powered solutions to better serve our customers. To bring this to light, I want to outline how we are doing this today and what we plan to release over the coming quarters to support our customers and greatly enhance the value that they receive from Blackline.

Therese Tucker: But also introducing new AI powered solutions to better serve our customers.

Therese Tucker: It brings to light I want to outline how we are doing this today and what we plan to release over the coming quarters to support our customers and greatly enhance the value that they receive from black line.

Therese Tucker: In our financial closed pillar, we've recently introduced a new solution aimed at identifying and mitigating risks within the journal entry process. Our journal risk analyzer utilizes generative AI to visually present accounting teams with key trends, insights, and anomaly detection related to manual journal entry. This solution efficiently captures and assesses journal entries from various ERPs and subledgers, providing dynamic, actionable insights for customers to proactively address potential areas of fraud and policy violations.

Therese Tucker: In our financial close pillar, we've recently introduced a new solution aimed at identifying and mitigating risks within the journal entry process, Our journal risk analyzer utilizes generative AI to visually present accounting teams with key trends in.

Therese Tucker: Sites and anomaly detection related to manual journal entries this solution efficient Recaptures and assesses journal entries from various Erp's and sub ledger systems, providing dynamic actionable insights for customers to proactively address potential areas of fraud.

Therese Tucker: Rod and policy violations.

Therese Tucker: Given the large volumes of data spread across our customers' technology landscape, generative AI serves as an invaluable tool to empower informed decision-making and minimize compliance and audit risk. Currently available to early adopters, we anticipate making this solution generally available later this year.

Therese Tucker: Given the large volumes of data spread across our customers' technology landscape generative AI serves as an invaluable tool to empower informed decision, making and minimize compliance and audit risk currently available to early adopters, we anticipate making this solution <unk>.

Therese Tucker: I'll be available later this year.

Therese Tucker: Next, within both our Financial Close and Consolidation and Financial Analytics pillars, we are launching Blackline's Document Description Summarizer. Integrated seamlessly into our current solutions, this represents a productivity enhancement for our customers' workflows and processes. This feature streamlines repetitive tasks involved in account reconciliations and during consolidations by autonomously scanning supporting documentation of any type and generating concise summaries of their content. As a result, our customers can significantly cut down on preparation time for their clothes while strengthening their controls and potentially mitigating audit risk.

Therese Tucker: Next within both our financial close and consolidation and financial analytics pillars, we are launching black lines document description summarized there.

Therese Tucker: Integrated seamlessly into our current solutions. This represents a productivity enhancement to our customers' workflows and processes.

Therese Tucker: This feature streamlines repetitive tasks involved in account reconciliations and during consolidations by autonomously scanning supporting documentation of any type and generating concise summaries of their content as a result, our customers can significantly cut down on preparation.

Therese Tucker: Time for their clothes, while strengthening their controls and potentially mitigating audit risks.

Therese Tucker: Furthermore, within our consolidation and financial analytics pillar, we're developing a comprehensive and cohesive suite of AI-powered enhancements aimed at delivering even more value to our customers. Initially, we plan to unveil a financial statement summarizer and footnote generator capable of automatically summarizing financial statement data and providing key insights. This empowers customers to proactively analyze account behavior at a consolidated level and conduct comparisons across different time periods. Additionally, it will facilitate the creation of financial statement footnotes to annotate material items.

Therese Tucker: Furthermore, within our consolidation and financial analytics pillar, we're developing a comprehensive and cohesive suite of AI powered enhancements aimed at delivering even more value to our customers. Initially we plan to unveil a financial statement summarizing and footnote generator.

Therese Tucker: Capable of automatically summarizing financial statements data and providing key insights. This empowers customers to proactively analyze account behavior at a consolidated level and conduct comparisons across different time periods.

Therese Tucker: Additionally, it will facilitate the creation of financial statement footnotes to annotate material items looking forward, we plan to introduce a variance automation feature in the latter half of the year. This feature will identify account fluctuations utilize these AI generated footnotes and <unk>.

Therese Tucker: Looking forward, we plan to introduce a variance automation feature in the latter half of the year. This feature will identify account fluctuations, utilize these AI-generated footnotes, and offer automated explanations for accounting and finance teams to quickly identify and explain drivers of financial performance. Lastly, within our invoice to cash pillar, we're gearing up to unveil an upgraded AI-powered payment forecasting tool for our customers. The Enhanced Payment Forecasting Tool empowers customers to convert accounts receivable data into actionable insights, significantly enhancing collection forecast accuracy by up to 40% compared to our previous version.

Therese Tucker: <unk> automated explanations for accounting and finance teams to quickly identify and explain drivers of financial performance.

Therese Tucker: Lastly, within our invoice to cash pillar, we're gearing up to unveil an upgraded AI powered payment forecasting tool for our customers.

Therese Tucker: Against payment forecasting tool empowers customers to convert accounts receivable data into actionable insights significantly enhancing collection forecast accuracy.

Therese Tucker: By up to 40% compared to our previous version.

Therese Tucker: Further, we are also working to release a predictive guidance tool that features natural language processing to produce visual responses for our accounting and finance teams based on natural language queries. The ability to transform data into insights and drive business decisions is a powerful and real use case for modern technologies like AI. Undoubtedly, AI stands as a powerful enabler capable of accelerating automation and delivering additional efficiency within any organizational framework. However, it's equally undeniable that apprehension often accompanies the unfamiliar, especially when it comes to integrating AI into core financial operations.

Therese Tucker: Further we are also working to release a predictive guidance tool that features natural language processing to produce visual responses for our accounting and finance teams based on natural language queries.

Therese Tucker: The ability to transform data into insights and drive business decisions is a powerful and real use case for modern technologies like AI.

Therese Tucker: Undoubtedly AI stands as a powerful enabler capable of accelerating automation and delivering additional efficiency within any organizational framework. However, it's equally undeniable that apprehension often accompanies the unfamiliar, especially when it comes to.

Therese Tucker: Integrating AI Intercorp financial operations, recognizing this we are committed to a deliberate and responsible deployment of this technology.

Therese Tucker: Recognizing this, we are committed to a deliberate and responsible deployment of this technology. Our strategy aims not only to instill confidence but also foster familiarity, and most importantly, cultivates deeper trust with our customers. Through this, we seek to bridge the gap between technological advancement and human adoption, ensuring a balanced approach that aligns with our customers' willingness and ability to adopt AI. Moving to broader platform innovation, we're excited to announce the long-awaited release of Blackline Accounting Studio.

Therese Tucker: Our strategy aims not only to instill confidence, but also fosters familiarity and most importantly, cultivate deeper trust with our customers through this we seek to bridge the gap between technological advancement and human adoption, ensuring a balance.

Therese Tucker: Approach that aligns with our customers' willingness and ability to adopt AI.

Therese Tucker: Shifting to broader platform innovation, we're excited to announce the long awaited release of the Black client accounting studio. This updated solution has been enhanced to offer unparalleled visibility control and orchestration for finance and accounting processes.

Therese Tucker: This updated solution has been enhanced to offer unparalleled visibility, control, and orchestration for finance and accounting processes that span disparate ERP and third-party systems. At its core, Blackline Accounting Studio is a user-friendly solution that helps visualize and orchestrate processes efficiently, ensuring that dependencies are captured and controlled and that processes move forward at the right time and in the right order.

Therese Tucker: That spans disparate ERP and third party systems at its core the Black line accounting studio is a user friendly solution that helps visualize and orchestrate processes efficiently ensuring that dependencies are captured and control in that process.

Therese Tucker: <unk> move forward at the right time and in the right order.

Therese Tucker: One of its key strengths is its versatility in integrating with various systems, both within Blackline and externally, leveraging our integration platform and extensive API library. This gives customers the unique ability to visualize and control their workflows across their entire financial technology landscape, something that doesn't exist in the market today. With this solution, we can become an indispensable partner for the office of the CFO and one that supports customers through every stage of their transformation journey, regardless of how their technology, teams, or strategy evolves.

Therese Tucker: One of its key strengths is its versatility in integrating with various systems, both within black line and externally leveraging our integration platform and extensive API library. This gives customers the unique ability to visualize and control there.

Therese Tucker: Our workflows across their entire financial technology landscape something that doesn't exist in the market today.

Therese Tucker: With this solution, we can become the indispensable partner for the office of the CFO Anne one that supports customers through every stage of their transformation journey, regardless of how their technology teams or strategy evolves.

Therese Tucker: As Owen mentioned earlier, we are moving rapidly to deploy our industry-focused go-to-market strategy. To support this from an innovation perspective, we have three initiatives in flight. First, we are building a community of users within industries to identify current challenges and opportunities that are unique. Second, leveraging the customizable nature of our software, we are highlighting customer-specific use cases that can benefit others in the industry, maximizing our software's utility and value. And third, we plan to deliver new solutions and enhancements that are of high value to these industries.

Therese Tucker: As Owen mentioned earlier, we are moving rapidly to deploy our industry focused go to market strategy to support this from an innovation perspective, we have three initiatives in flight.

Therese Tucker: First we are building a community of users within industries to identify current challenges and opportunities that are unique.

Therese Tucker: Second leveraging the Configurable nature of our software we are highlighting customer specific use cases that can benefit others in the industries.

Therese Tucker: Maximizing our software's utility and value and third we plan to deliver new solutions and enhancements that are high value to these industries. For example, we are developing a high frequency account reconciliation solution tailored specifically for the financial services.

Therese Tucker: For example, we are developing a high-frequency account reconciliation solution tailored specifically for the financial services and retail industries. This targeted approach demonstrates our commitment to addressing the unique needs of these industries while also strengthening our broader go-to-market efforts. And last but certainly not least, we recently announced that we hired a new chief technology officer, Jeremy Ong, who is charged with leading and supporting many of these efforts. Jeremy and I will partner closely to drive our innovation agenda faster and further than before.

Therese Tucker: And retail industries. This targeted approach demonstrates our commitment to addressing the unique needs of these industries, while also strengthening our broader go to market efforts and.

Therese Tucker: And last but certainly not least we recently announced that we hired a new chief Technology Officer Jeremy.

Therese Tucker: Who is charged with leading and supporting many of these efforts.

Therese Tucker: <unk> and I will partner closely to drive our innovation agenda faster and further than before.

Therese Tucker: One of the benefits of hiring a like-minded leader is that I can spend more time on customer-centric innovation, helping customers progress with adopting and using technology like AI, exploring further use cases for the Blackline Accounting Studio, and on our industry-specific innovation. Before I close, I would like to say that I am immensely proud of our team's achievements thus far, and I'm even more excited about the opportunities that we have ahead to reshape how accounting and finance work gets done. With that, I'd like to turn it over to Mark Partin, who will review our financial results and updated financial guidance. Mark?

Therese Tucker: One of the benefits of hiring a likeminded leader is that I can spend more time on customer centric innovation, helping customers progress on adopting and using technology like AI on exploring further use cases for the black line accounting studio and on our industry.

Mark W. Partin: Three specific innovation.

Mark W. Partin: Before I close I would like to say that I am immensely proud of our team's achievements, thus far and uneven more excited about the opportunities that we have ahead to reshape how accounting and finance work gets done.

Mark W. Partin: With that I'd like to turn it over to Mark <unk>, who will review our financial results and updated financial guidance Mark.

Mark W. Partin: Our financial results this quarter highlight our disciplined approach as we navigate both the current market environment, as well as our ongoing business trends. Despite this, we expect to continue to invest in strategic parts of our business. We support our long-term growth drivers, especially innovation.

Mark W. Partin: Thank you to read.

Mark W. Partin: Our financial results this quarter highlight our disciplined approach as we navigate both the current market environment as well as our ongoing business transition.

Mark W. Partin: Despite this we expect to continue to invest into strategic parts of our business to support our long term growth drivers, especially innovation.

Mark W. Partin: Further, we remain committed to aggressively pursuing opportunities to drive even higher levels of efficiency and productivity across the business. With that in mind, let's review the financial results for the first quarter a bit more. Total revenue grew to $157 million, up 13%, with subscription revenue growing 15%. Services revenue declined 7% primarily due to progress on our partner-driven services delivery model. Calculated buildings growth was 6%, trailing 12-month buildings growth of 11.

Mark W. Partin: Further we remain committed to aggressively pursuing opportunities to drive even higher levels of efficiency and productivity across the business.

Mark W. Partin: With that in mind, let's review the financial results for the first quarter and a bit more detail.

Mark W. Partin: Total revenue grew to $157 million up 13% with subscription revenue growing 15%.

Mark W. Partin: Services revenue declined 7%, primarily due to progress.

Mark W. Partin: On our partner driven services delivery model.

Mark W. Partin: Calculated billings growth was 6% with trailing 12 month billings growth of 11%.

Mark W. Partin: As Owen mentioned, we experienced a number of larger deals slip this quarter, which was a driver of the lower-than-expected billings performance. Remaining Performance Obligations, or RPO, was up 7%, with current RPO growing 10%. We closed the quarter with total annual recurring revenue, or ARR, of $605 million, up 10%. Net new customers increased by 13 in the quarter, bringing our total customer count to 4,411.

Mark W. Partin: As Owen mentioned, we experienced a number of larger deals slip this quarter, which was a driver of the lower than expected billings performance.

Mark W. Partin: Remaining performance obligations or Rps was up 7% with current RPI growing 10%.

Mark W. Partin: We closed the quarter with total annual recurring revenue or <unk> of $605 million up 10%.

Mark W. Partin: Net new customers increased by 13 in the quarter, bringing our total customer count to 4411 as.

Mark W. Partin: As discussed previously, our strategy to become more targeted in the middle market is expected to influence this metric in the near term. Our revenue renewal rate in the first quarter was 93%. We are still seeing recurring themes here, such as vendor consolidation and cost discipline from customers, especially within the enterprise.

Mark W. Partin: As discussed previously our strategy to become more targeted in the middle market is expected to influence this metric in the near term.

Mark W. Partin: Our revenue renewal rate in the first quarter was 93% we are still seeing recurring themes here, such as vendor consolidation and cost discipline from customers, especially within the enterprise.

Mark W. Partin: The net retention rate or NRR was 105% and was in line with our expectations, driven primarily by modest account growth and user ads. Strategic product performance represented 20% of sales and came in below our target range of 25 to 30%. This was influenced by large deal slippage this quarter, as many of these were multi-solution deals. Strategic Products Attached, particularly intercompany. Partners were involved in 75% of large new and expansion deals this quarter, with a higher mix of partner involvement in new deals, giving us some early but positive indications that our partner-powered approach is gaining traction. Solex performance was below expectations, driven primarily by deal flipping.

Mark W. Partin: Net retention rate or <unk> was 105% and in line with our expectations driven primarily by modest account growth and user adds this quarter.

Mark W. Partin: Strategic product performance represented 20% of sales and came in below our target range of 25% to 30%.

Mark W. Partin: This was influenced by large deals slip into this quarter as many of these were multi solution deals with strategic products attached, particularly intercompany.

Mark W. Partin: Partners were involved in 75% of large new and expansion deals this quarter with a higher mix of partner involvement and new deal, giving us some early but positive indications that our partner powered approach is gaining traction.

Mark W. Partin: <unk> performance was below expectations, driven primarily by deal slippage in Q1.

Mark W. Partin: In Q1, SAP partnership revenue represented 26% of total revenue, a slight increase versus last year. Turning to margin, our non-GAAP gross margin was 79%, with a non-GAAP subscription gross margin of 82%, benefiting from leverage on cloud spend this quarter. Non-GAAP operating margin was 17% due to better than expected revenue performance, along with efficiency and productivity gains, especially within our product and technology teams who continue to drive agility across the organization. Non-GAAP net income attributable to Blackline was $40 million, representing a 25% non-GAAP net income margin.

Mark W. Partin: Partnership revenue represented 26% of total revenue a slight increase versus last year.

Mark W. Partin: Turning to margin our non-GAAP gross margin was 79% with non-GAAP subscription gross margin of 82% benefiting from leverage on cloud spend this quarter.

Mark W. Partin: non-GAAP operating margin was 17% due to better than expected revenue performance, along with efficiency and productivity gains, especially within our product and technology teams, who continue to drive agility across the organization.

Mark W. Partin: non-GAAP net income attributable to Black line was $40 million, representing a 25% non-GAAP net income margin.

Mark W. Partin: Operating income outperformance combined with favorable net interest income drove bottom-line strength yet again. We generated $50 million in operating cash flow and $44 million in free cash flow in the quarter. The Free Cash Flow Margin of 28%, record cash collections this quarter, was a key driver of our better than expected cash flow. Finally, we ended the quarter with $1.2 billion in cash, cash equivalents, and marketable securities. Our strong financial position affords us the ability to invest strategically while also addressing our near-term convertible maturity. At this point, we expect to retire our 2024 convertible notes in cash when they mature on August 1st of this year.

Mark W. Partin: Operating income outperformance combined with favorable net interest income drove bottom line strength yet again.

Mark W. Partin: We generated $50 million in operating cash flow and $44 million in free cash flow in the quarter for the free cash flow margin of 28%.

Mark W. Partin: Record cash collections. This quarter was a key driver of our better than expected cash flow performance.

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

Mark W. Partin: Our strong financial position affords us the ability to invest strategically while also addressing our near term convertible maturities.

Mark W. Partin: On this point, we expect to retire our 2024 convertible notes in cash when they mature on August one of this year.

Mark W. Partin: Now, on guidance, I want to remind everyone that we continue to take a disciplined and thoughtful approach considering the recent rollout of our operating model, broader economic factors, and our performance in the first quarter. As such, we are raising the midpoint of our full-year revenue guidance while also raising our full-year non-GAAP operating margin and non-GAAP net income. Finally, we continue to expect that services revenue will be an approximate one point headwind to our full year revenue growth.

Speaker Change: Now on guidance I want to remind everyone that we continue to take a disciplined and thoughtful approach considering the recent rollout of our operating model broader economic factors and our performance in the first quarter.

Mark W. Partin: As such we are raising the midpoint of our full year revenue guidance, while also raising our full year non-GAAP operating margin and non-GAAP net income ranges.

Mark W. Partin: We continue to expect that services revenue will be an approximate one point headwind to our full year revenue growth rate.

Operator: Now, for the second quarter of 2024, we expect total GAAP revenue to be in the range of $157 to $159 million, representing approximately 9 to 10 percent growth. We expect non-GAAP operating margins to be in a range of 16.5% to 17.5%. And we expect non-GAAP net income attributable to Blackline to be in a range of $37 to $39 million, or $0.49 to $0.51 on a per share basis. Our share count is expected to be approximately 76 million diluted weighted average shares.

Mark W. Partin: Now for the second quarter of 2024, we expect total GAAP revenue to be in the range of $157 million to $159 million, representing approximately 90% to 10% growth.

Operator: We expect non-GAAP operating margin to be in a range of 16 five to 17, 5%.

Operator: And we expect non-GAAP net income attributable to black line to be in a range of 37% to $39 million or <unk> 49 to 51 cents on a per share basis.

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

Operator: And for the full year 2024, our updated guidance is as follows. We expect total GAAP revenue to be in a range of $641.5 to $649.5 million, representing 9% to 10% growth. We expect the non-GAAP operating margin to be in a range of 17.5% to 18.5%, and we expect the non-GAAP net income attributable to Blackline to be in a range of $158 to $168 million, or $2.12 to $2.26 on a per share basis. Our share count is expected to be approximately 74.5 million diluted weighted average. With that, I'll now ask the operator to open the discussion and take your questions. Thank you.

Operator: And for the full year 2020 for our updated guidance is as follows we.

Operator: We expect total GAAP revenue to be in a range of 641 five to $649 $5 million.

Operator: Representing 9% to 10% growth.

Operator: We expect non-GAAP operating margin to be in a range of 17 five to 18, 5%.

Operator: And we expect non-GAAP net income attributable to black line to be in a range of $158 million to $168 million or $2 12 to $2 26 on a per share basis.

Operator: Our share count is expected to be approximately $74 5 million diluted weighted average shares.

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

Operator: Thank you. One moment while we compile the Q&A roster. The first question comes from the line of Rob Oliver of Baird.

Speaker Change: Thank you one moment, while we compile the Q&A roster.

Operator: Yeah.

Operator: Okay.

Operator: The first question comes from the line of Rob Oliver of Baird. Rob. Please go ahead.

Robert Cooney Oliver: Rob, please go ahead. Yeah, great. Hi, guys. Thanks for taking my question. Mark, my first one's for you. Just on the field slippers in the quarter. Can you talk a little bit about, I mean, Q1's never traditionally the

Robert Cooney Oliver: Yeah, great. Hi, thanks guys. Thanks for taking my question. Mark, my first one's for you, just on field slippage in the quarter. Can you talk a little bit about, I mean, Q1's never traditionally the strongest quarter for you guys, so I was wondering if you could give us a little bit deeper insight into how much of this is just sort of general macro and confidence that deals are going to close versus, you know, incremental weakness and or less spending from some of your customers or less partner pull through, say, from SAP. And then I had a quick follow-up.

Robert Cooney Oliver: Great Hi, Thanks, guys. Thanks for taking my question.

Mark: My first one for you.

Robert Cooney Oliver: On the deal slippage in the quarter.

Robert Cooney Oliver: Can you talk a little bit about I mean Q1 is never.

Robert Cooney Oliver: Traditionally the strongest quarter for you guys. So I was wondering if you could.

Speaker Change: Good luck.

Robert Cooney Oliver: Give us a little bit deeper insight into how much of this is just sort of general macro and confidence that deals are going to close versus incremental weakness and or less spending from some of your customers are less partner pull through say from S. P.

Robert Cooney Oliver: And then I had a quick follow up.

Mark W. Partin: The fact that they're in the pipeline, we are actively working with our customers and our sales team to drive those deals. That's where we are now. So the answer to your question is that those deals continue to move through the pipeline.

Robert Cooney Oliver: Okay.

Robert Cooney Oliver: The remainder of the year and staying focused on the fact that they are that they are in the pipeline. We are actively working with our customers and our sales team on driving those deals that's where we are now so for for your question is that those deals continue to move through the pipeline today.

Robert Cooney Oliver: Great. Thanks.

Speaker Change: Great. Thanks, Hi, I'm not sure if it was me I apologize I missed the first part of your answer.

Robert Cooney Oliver: I'm not sure if it was me. I apologize. I missed the first part of your answer. Could have been me. And then, Owen, just want to step back a little bit, um you know as we move anniversary now you know your arrival and and I wanted for you know and I wanted to just talk a little bit about some of your strategic initiatives when you look at the kind of the things that you laid out whether it be you know go to market and revamping sales you know the SAP partnership and um some of the work you're doing with the SIs and stuff where do you feel you you've made the most progress and where we could see that manifest in you know in in activity you know as we move through this year versus where you still have you know maybe more work to do. Thank you.

Speaker Change: There have been me and then I'll just step back a little bit.

Robert Cooney Oliver: Okay.

Robert Cooney Oliver: As we've Anniversaried now your arrival and I wanted to FERC and I wanted to just talk a little bit about some of your strategic initiatives. When you look at kind of the things that you laid out whether it be go to market and revamping sales the SAP partnership in <unk>.

Robert Cooney Oliver: Some of the work Youre doing with the size of stuff, where do you feel you've made the most progress and where we could see that manifest in.

Robert Cooney Oliver: In activity as we move through this year versus where you still have more work to do thank you.

Owen M. Ryan: Sure. Thanks, Rob.

Owen: Sure. Thanks, Rob.

Owen: A couple of things I think one is we feel like we've made a tremendous amount of progress with our partners over the last year as I think we've shared with you. We've rationalized the number that we have the partners that we're working with are really all in I'll share a story.

Owen M. Ryan: A couple of things. I think one is that we feel like we made a tremendous amount of progress with our partners over the last year. As I think we've shared with you, we've rationalized the number that we have. The partners that we're working with are really all in. I'll share a story from the script. One of our partners, who we have not done as much work with in one of our strategic products, has basically taken 50 of its offshore resources recently and redeployed them to work on the Blackline solution versus a competitor. That will take time for it to work its way through the system.

Owen M. Ryan: From the Scripps one of our partners, who we have not done as much work within one of our strategic products has basically taken 50 of its offshore shore resources recently and redeploy them to working on the Black line solution versus a competitor that will take time for itself to work its way through this.

Owen M. Ryan: System, but again I think it's a good indication of our partners being really committed and focused to what we're trying to do so I would say that's probably been the area, where I feel like we've made really the greatest amount of success. So far I think second would be the progress we continue to make with S&P.

Owen M. Ryan: The relationship continues to grow.

Owen M. Ryan: In the marketplace around the product road map the opportunities too.

Owen M. Ryan: Really.

Owen M. Ryan: Improve our win rates together, which is which is just terrific and then the last thing would be industry injuries touched on it a little bit mark touched on it.

Owen M. Ryan: We knew we had something in industry. When we really started to dive in and look at our customer portfolio and recognize that we have a very compelling story and again, maybe haven't sorry could tell stories I will give you. Another one so you may all I'm sure you all know that most big firms.

Owen M. Ryan: Companies, when they're going out for an RFP they hire a third party to write the RFP for typically.

Owen M. Ryan: Not too long ago, Therese and I were overseas, and we were meeting with one of these consulting firms who were writing the RFP for a major company, probably a top 50 global enterprise. We spent probably an hour going through the industry and helping this service provider prepare to write the RFP and telling the story about how BlackLine helps its customers in this particular industry in a way that was, I think, eye-opening for this consulting firm.

Owen M. Ryan: And so not too long ago, <unk> III XI Rover overseas and we were meeting with one of these consulting firms who is writing the RFP for a major major company, probably top top 50 global enterprise.

Owen M. Ryan: And we spent probably an hour going through.

Owen M. Ryan: The industry and in helping this service providers or prepare to write the RFP and telling the story about how black line helps its customers in this particular industry.

Owen M. Ryan: In a way that was I think eye opening for.

Owen M. Ryan: As I sit here today, I have a very high degree of confidence that when the RFP comes out and the winner gets selected, whether it's in the fourth quarter of this year or the first two quarters of next year, the way that we were able to articulate for this firm how Blackline can help a customer through all aspects of what a company needs to do when it's a particular industry is going to be a differentiator. We're starting to speak; we are speaking the language of our customers in their industry language, which is making a big difference for what we're trying to accomplish.

Owen M. Ryan: This consulting firm.

Owen M. Ryan: As I sit here today I have a very high degree of confidence when the RFP comes out and the winter gets selected whether it's in the fourth quarter this year or the first two quarters of next year.

Owen M. Ryan: Way that we were able to articulate for this firm.

Owen M. Ryan: How black line can help a customer through all aspects of what.

Owen M. Ryan: A company needs to do and it's a particular industry is going to be a differentiator. We are starting to speak. They are speaking the language of our customers in their industry language, which is making a big difference for for what we're trying to accomplish.

Robert Cooney Oliver: Really helpful. I appreciate the stories. Thanks. Okay.

Owen M. Ryan: Yeah.

Speaker Change: Really helpful. I appreciate the story thanks.

Operator: One moment for your next question. The next question comes from the line of Chris Quintero of Morgan Stanley. Chris, please go ahead.

Robert Cooney Oliver: Okay.

Speaker Change: One moment for your next question.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Christopher Quintero: The next question comes from the line of Chris <unk> of Morgan Stanley Chris. Please go ahead.

Christopher Quintero: Hey, everyone. Thanks for taking our questions here.

Christopher Quintero: Owen you mentioned, you're taking a more streamlined approach to pricing that will go live later this year do I have that right and if so what changes are you, making and what do you expect the impact of these changes to be and I've got a follow up.

Christopher Quintero: Yeah, a couple of things. So... We've completed most of the pricing study work at this particular point in time. We'll be rolling that out over the course of this year and as renewals come up over the succeeding years. I think a couple of things that were important for us to sort of step back and think about are, you know, with our fuller platform of what we offer; some of them are more sort of user-based, and some are more usage-based.

Christopher Quintero: Yes, a couple of things so.

Christopher Quintero: We've completed most of the pricing study work at this particular point in time, we'll be rolling that out over the course of this year and as renewals come up over the succeeding years I think a couple of things that were important for us to sort of step back and think about is.

Christopher Quintero: With our Fuller platform of what we offer some of them are more sort of user based some are more usage based and we had gotten feedback from our customers asking for us to make it but easier and simpler for us to go ahead.

Christopher Quintero: And we have gotten feedback from our customers asking for us to make it a bit easier and simpler for us to go ahead and price and do work with them. So that's a lot of what we have been focused on trying to do. I think overall, we feel pretty good about the results of that work. We've tested it with several hundred customers and prospects to sort of validate what we were seeing and experiencing.

Christopher Quintero: And in price and do work with them. So that's a lot of what we have been focused on trying to drive.

Christopher Quintero: I think overall, we feel pretty good about.

Christopher Quintero: The results of that work, we've tested with several hundred customers and prospects to sort of validate what.

Christopher Quintero: And so, you know, we'll get that rolled out again very, very soon. Obviously, change management with these things is important. And we're also doing it in an environment where we still have to, you know, compete against certain companies as we go up against them in the marketplace. But overall, we like the work that's been done. We feel good about the outcome. And ultimately, you do this so you can, you know, charge more for the product that you're delivering, and that's ultimately what we expect to be able to do. I think we've learned a lot about how to articulate our value to our customers, and that's based on feedback from our customers. So we'll make sure we get that right. I got it.

Christopher Quintero: What we were seeing and experiencing and so we will get that rolled out again very very soon obviously change management with these things are are an important.

Christopher Quintero: And we're also doing it in an environment, where we still have to compete against certain companies as we go up against them.

Christopher Quintero: The marketplace, but overall, we like the work that's been done we feel good about the outcome and ultimately you do this or you can.

Christopher Quintero: Charge more for the product that you're delivering and Thats ultimately, we expect to be able to do I think we've learned a lot about how to articulate our value to our customers.

Christopher Quintero: And Thats based upon the feedback from our customers. So we'll make sure we get that done.

Speaker Change: Got it that's very helpful.

Christopher Quintero: Mark Great to see the free cash flow margin of 28% is there anything onetime in nature impacted that number and how should we think about free cash flow conversion for the rest of the year.

Owen M. Ryan: Yeah, I think the team did an excellent job in Q1, collecting AR. That was really a great effort from everyone.

Speaker Change: Yes, I think the team did an excellent job in Q1, collecting a or that was really.

Owen M. Ryan: A great effort from everyone as we move through the year I think we'll see.

Owen M. Ryan: Free cash flow margin at or around our operating margin rate.

Owen M. Ryan: So I don't expect art.

Owen M. Ryan: Cash generation from <unk> to continue like that so it will.

Owen M. Ryan: It'll come down here through the remainder of the year.

Mark W. Partin: As we move through the year, I think we'll see free cash flow margin at or around our operating margin rate. So I don't expect our cash generation from AR to continue like that. So it'll, it'll calm down here for the remainder of the year. Excellent, thank you so much.

Speaker Change: Excellent. Thank you so much.

Operator: One moment for our next question. The next question comes from the line of Pinjalim Bora from J.P. Morgan. Pinjalim, please go ahead. Great. Thanks for taking the question. This is Jayden Patel.

Speaker Change: One moment for our next question.

Operator: Sure.

Operator: Okay.

Pinjalim Bora: Thanks, Pinjalim. Yes, we will close some of those deals and already have in Q2. Yes, we'll continue to work them through the remainder of the year. It's not uncommon to have slip deals from quarter to quarter. We saw more in Q1 around the large deals. And in some ways, I think, in our earlier remarks, we talked about those related to being macro, as well as our ability to get our arms around them with our new operating model has strengthened as we move through the year on our new operating model. So, quantifying it would be difficult at the moment. Thanks.

Pinjalim Bora: The next question comes from the line of pendulum Bora from J P. Morgan pendulum. Please go ahead.

Pinjalim Bora: Great. Thanks for taking the question. This is J D with how long the pendulum.

Pinjalim Bora: <unk>.

Pinjalim Bora: <unk> came in a little bit a little bit below expectations. You mentioned that there was large deals that got pushed out is there any way to quantify those deals.

Pinjalim Bora: No.

Speaker Change: Of those do you think there is a certain percentage that will close in Q2.

Speaker Change: Thanks, Patrick.

Pinjalim Bora: With.

Pinjalim Bora: Yes, we will close some of those deals and already have in Q2, yes, we'll continue to work them through the remainder of the year, it's not uncommon to have slipped deals from quarter to quarter. We saw more in Q1 around the large deals.

Pinjalim Bora: And in some ways I think in.

Pinjalim Bora: Our earlier remarks, we talked about those related to be in macro as well as our ability to get our arms around them with our new operating model has strengthened as we move through the year.

Pinjalim Bora: On a new operating model.

Pinjalim Bora: No.

Pinjalim Bora: Quantifying it I think it would be difficult at the moment.

Pinjalim Bora: So.

Pinjalim Bora: Thanks.

Speaker Change: Great. Thanks for the question.

Pinjalim Bora: Yes.

Speaker Change: One moment for our next question.

Pinjalim Bora: Yes.

Pinjalim Bora: Okay.

Pinjalim Bora: Okay.

Mark W. Partin: One moment for our next question. Our next question comes from the line of Adam Hotchkiss of Goldman Sachs. Adam, please go ahead.

Pinjalim Bora: Our next question comes from the line of Adam Hotchkiss of Goldman Sachs. Adam. Please go ahead.

Adam R. Hotchkiss: Great. Thanks for taking the questions. And I guess to start, could you just give us an update on the product education aspect of your customer success efforts? I know this has been a focus for you in the past, in particular around cross-sell opportunities and platform usage within your existing base, but I'm just curious how you think about that within the context of some of the things you're doing with AI and AI being such a focus for folks in the Office of the CFO. Does that allow you to get your foot in the door around continuing to educate customers and drive more usage of the platform? Thanks.

Adam R. Hotchkiss: Great. Thanks for taking the questions I guess to start could you just give us an update on the product education aspect of your customer success efforts I know this is something thats been a focus for you in the past.

Adam R. Hotchkiss: In particular around cross sell opportunities and platform usage.

Adam R. Hotchkiss: Within your existing base, but I'm just curious how you think about that within the context of some of the things you're doing with AI and AI being such a focus for folks in the office of the CFO satellite you to get your foot in the door around.

Adam R. Hotchkiss: Continuing to educate customers and drive more usage of the platform. Thanks.

Therese Tucker: Thanks, Adam. You know, we have spent a lot of time in the last year making sure that our entire organization is extremely customer-centric and focused on the value that Blackline can actually deliver. As a result of that, we've got a number of different training programs that are really being extremely well received by our customers. They include, you know, a number of recurring webinars on new features to make sure that our customers know what the roadmap is entailing, as well as bottom line events that have been going on in person where we get both prospects and customers together. And there's a fair amount of education that happens during those trips.

Speaker Change: Thanks, Adam.

Therese Tucker: We have spent a lot of time in the last year, making sure that our entire organization is extremely customer centric and focused on the value that black line can actually deliver as a result of that we've got a number of different training programs that are really being extremely well run.

Therese Tucker: <unk> by our customers. They include a number of recurring <unk>.

Therese Tucker: <unk> on new features to make sure that our customers know what the roadmap is an tailing as well is.

Therese Tucker: Bottom line events that have been going on in person, where we get both prospects and customers together and Theres a fair amount of education that happens during those and then there's also the black claim academy with its corresponding consulting events, where we actually will take different okay.

Therese Tucker: And then there's also the Blackline Academy with its corresponding consulting events where we actually will take, you know, different accounting practices and processes, and help them transform them. Because when people really use Blackline well, the result is a digital finance transformation. And so these are hands-on workshops that our customers can attend to really get deep knowledge on how to use Blackline to transform their organizations. So it has been a big push of ours over the last year, and it's been very well received by our customers.

Therese Tucker: Owning practicies processes and help them transform them because when people really use black line well. The result is digital finance transformation and so these are hands on workshops that our customers can attend to really get deep knowledge on how to use black line to transform their.

Therese Tucker: Organizations. So it has been a big push of ours over the last year and it's been very well received by our customers.

Therese Tucker: Okay, great. That's really helpful, Therese. Thank you. And then, within that context, how are you broadly thinking about monetizing some of these AI investments, particularly as you think about, you know, seat or usage-based pricing within the context of the productivity improvements that AI might bring your customers, you know, how do you ensure that you're going to be extracting the value you think some of these investments have been worth?

Speaker Change: Okay, Great. That's really helpful. Thank you and then within that context context, how are you broadly thinking about monetizing some of these eight AI investments, particularly if you think about seat or usage based pricing within within the context of the productivity improvements that AI might bring your customers, how you're how you ensure that youre going to be X.

Therese Tucker: Tracking the value you think some of these investments have been work.

Therese Tucker: Well, you know, one of the best things about including productivity enhancements is that the software becomes more sticky. People cannot imagine giving it up for something that's free, okay? So I love the stickiness factor, and for me, that's worth more than sort of extracting another dollar out of somebody.

Therese Tucker: Well one of the best things about including productivity enhancements is it the software becomes more sticky.

Therese Tucker: People cannot imagine, giving it up for something Thats free Okay. So I love the stickiness factor and for me that's worth more than sort of extracting another dollar out of somebody and Thats really for the play.

Therese Tucker: And that that's really for the places where we are embedding AI. You know, I think it was Rob Kugel of Antana who said, productivity by a thousand cuts. Loved it, right?

Therese Tucker: Places, where we are embedding AI.

Therese Tucker: I think it was Rob Qubilah, Ventana, who said productivity by 1000 cuts loved it right just like everywhere, where people are doing things manually where can you introduce the AI to really make their jobs go faster and be more accurate. So in the embedding part I think it just becomes part of the fabric of what we.

Therese Tucker: Just like everywhere where people are doing things manually, where can you introduce AI to really make their jobs go faster and be more accurate? So in the embedding part, I think it just becomes part of the fabric of what we offer to our customers and makes them delighted. In terms of new products, we're still sort of learning our way here. We just came out with the journals risk analyzer, and we've already got more than 20 early adopters signed up for that, and we're going to use them to help us determine what the value that they are receiving is, and that will help us determine how to price it.

Therese Tucker: We offered to our customers and makes them delighted.

Therese Tucker: In terms of new products, we're still sort of learning our way here, we just came out with the journals risk analyzer.

Therese Tucker: And that we've already got more than 20 early adopters signed up for that and we're going to use them to help us determine what the value that they are receiving is and that will help us determine how to price it.

Operator: Okay, that's really helpful, Caller. Thanks, Therese. One moment.

Speaker Change: Okay. That's really helpful color. Thanks trace.

Operator: One moment for your next question. The next question comes from the line of Brent Bracelin from Piper Sandler. Brent, please go ahead.

Operator: Yeah.

Operator: One moment for your next question.

Operator: Okay.

Brent Alan Bracelin: The next question comes from the line of Brent <unk> of Piper Sandler Brent. Please go ahead.

Brent Alan Bracelin: Thank you. Good afternoon, all. Mark, I wanted to start with you on the pipeline build. Today versus three months ago, I understand there were some deals that slipped, not uncommon in Q1, but can you just characterize the visibility in the pipeline and how much build you saw in the last three months?

Operator: Yeah.

Brent Alan Bracelin: Thank you good afternoon, all Mark wanted to start with you.

Brent Alan Bracelin: Around the pipeline build.

Brent Alan Bracelin: Day versus three months ago, I guess, there are some deals that slipped not uncommon in Q1, but can you just characterize.

Brent Alan Bracelin: Visibility in our pipeline and how much build you saw in last three months.

Mark W. Partin: I can. Thank you, Brent. We've got a handful of new great leaders in the company. One of them is running marketing and has been instrumental in already beginning to accelerate our pipeline coming out of Q1 and into Q2. So what I would say about the pipeline is that in Q1, we talked about the top end of the funnel being strong, big deals, multi-product, having really good influence with partners. However, our ability to close those deals in Q1 was challenged.

Mark: I can thank you Brent.

Mark W. Partin: We've got.

Mark W. Partin: A handful of new great leaders in the company one of them is running marketing and has been instrumental and already beginning to accelerate our pipeline coming out of Q1 and into Q2. So.

Mark W. Partin: What I would say about the pipeline is that in Q1, we talked about the top end of the funnel being strong big deals multi product, having really good influence with partners our ability to close those deals in Q1 was challenged as we move into Q2, our ability to hold on to those <unk>.

Mark W. Partin: As we move into Q2, our ability to hold on to those, nurture them, and get them over the finish line is part of where we're spending a lot of time. And then creating new accounts, new logos, new customers, and expanding our customer base across the globe is a concerted effort now with Emily and the rest of the sales team. And that has actually picked up quite nicely heading here into the sort of middle to the end of Q2.

Mark W. Partin: Archer them and get them over the finish line is part of where we're spending a lot of time, and then creating new accounts, new logos, new customers and expanding in.

Mark W. Partin: So our customer base across the globe is a concerted effort now with Emily and the rest of the sales team and that has actually picked up quite nicely heading here into the sort of middle to the end of Q2.

Brent Alan Bracelin: And then maybe, Therese, for you, if I go back a couple of years ago, the pandemic clearly drove a higher spend priority around some of these finance transformation projects. You know, obviously, in the last year and a half, we've seen the priority go down as people focused on kind of, you know, economic macro headwinds. We are now looking at S4HANA end of life in 2027.

Mark W. Partin: Helpful Color and then maybe <unk> for you.

Brent Alan Bracelin: If I go back a couple of years ago.

Brent Alan Bracelin: Debit clear.

Brent Alan Bracelin: Clearly drove a higher spend priority around from these finance transformation projects.

Brent Alan Bracelin: Obviously in the last year and a half we've seen a priority go down.

Brent Alan Bracelin: As people focused on kind of.

Brent Alan Bracelin: Economic macro headwinds, we are now looking at as for Hana and.

Brent Alan Bracelin: End of life in 'twenty, and 'twenty, a Saturday and I know sap's starting to get a little more excited about some some migrations to the cloud.

Therese Tucker: I know SAP is starting to get a little more excited about some migrations to the cloud. Do you think that could be the next catalyst that could drive, maybe, an increased priority around finance transformation? I'm just trying to think through the tailwind you saw in the pandemic, some of the headwinds you've been challenged with on the macro side, and just thinking through whether that is a potential catalyst or not for increasing priority around these finance transformation projects.

Therese Tucker: Zero state that could be the next catalyst that could drive <unk>.

Therese Tucker: An increased priority around finance transformation, just trying to think through that.

Therese Tucker: The tailwind you saw in the pandemic some of the headwinds you've been challenged with on the macro side and just thinking through maybe that as a potential catalyst or not.

Therese Tucker: We're increasing our priority around these finance transformation projects.

Therese Tucker: Well, you know, we do certainly see the potential that the SAP partnership could bring us, especially with the migrations to S4 HANA. But, you know, Brent, you raised a really interesting point, and it's one that we wrestle with as well.

Speaker Change: Well you know, we do certainly see the potential that the SAP <unk> partnership.

Therese Tucker: Could bring us, especially with the migrations to as for Hana, but Brent E rate you raised a really interesting point and it's one that we wrestle with as well.

Therese Tucker: Companies, and CFOs in particular, have been very focused on the digital finance transformation, but at the same time, they've not always gotten sort of the results that they had hoped for. And it's really been one of our focuses to figure out how can we actually deliver that kind of value in a way that, you know, makes people want to continue that journey with Blackline and invest more. So I think that part of it is how we communicate better with our customers and with our prospects about how to have an effective digital finance transformation as opposed to, you know, a result that disappoints.

Therese Tucker: He is the CFO in particular have been very focused on digital finance transformation.

Therese Tucker: But at the same time, they have not always gotten sort of the results that they had hoped for and it's really been one of our focuses is how can we actually deliver that kind of value in a way that.

Therese Tucker: Makes people want to continue that journey with black line and invest more so I think that.

Therese Tucker: Part of it is how do we communicate better with our customers and with our prospects on how to have effective digital finance transformation as opposed to.

Therese Tucker: A result that disappoints. So we have been internally thinking about that a lot and that's really driving a lot of the work that we're doing around case studies around the academy around different trainings.

Therese Tucker: So we have been internally thinking about that a lot, and that's really driving a lot of the work that we're doing around case studies, around the Academy, around different trainings. You know, even the product roadmap itself is about how do we deliver digital finance transformation in a way that's going to keep people engaged and keep them on that journey. So I think we're hoping for the macro to get better. That's disappointing in and of itself.

Therese Tucker: Even the product roadmap itself is how do we deliver digital finance transformation in a way that's.

Therese Tucker: We're going to keep people engaged and keep them on that journey.

Therese Tucker: So I think.

Therese Tucker: We're hoping for the macro to get better that's disappointing in and of itself.

Therese Tucker: We certainly do appreciate the partnership with SAP. It always has great potential, especially as people move to S4 HANA. And then I think there's work that we ourselves can do to better prove out the value proposition to our customers.

Therese Tucker: We certainly do appreciate the partnership with us.

Therese Tucker: It always has great potential, especially as people move to as for Hana and then I think there's work that we ourselves can do to better prove out the value proposition to our customers.

Brent Alan Bracelin: I'm Paul Keller. Thanks for the update. Thank you. One moment.

Speaker Change: Helpful color thanks for the update.

Speaker Change: Thank you.

Operator: One moment for our next question. The next question comes from the line of Koji Ikeda of Bank of America. Koji, please go ahead.

Brent Alan Bracelin: One moment for our next question.

Operator: Okay.

Operator: Okay.

Operator: Okay.

Operator: The next question comes from the line of Koji Ikeda of Bank of America <unk>. Please go ahead.

Koji Ikeda: Yeah, hey, everyone. Thanks for taking the questions. I got two. So the first one is a big picture question on Accounting Studio. You know, congrats on the long-awaited release there. I know that's quite a milestone. So the question is, you know, is the platform such a meaningful change from what Blackline has offered in the past that it could require your partners and the buyers out there to really digest all the new innovation that I assume is packed into this new Accounting Studio before they're really ready to buy?

Koji Ikeda: Yes, hey, everyone. Thanks for taking the questions I got too.

Koji Ikeda: So the first one big picture question on accounting studio Congrats on the long weighted released there I know that's quite a milestone.

Koji Ikeda: So the question is around is the platforms such a meaningful change to what black line is offered in the past.

Koji Ikeda: That it could require your partners and the buyers out there to really digest all the new innovation.

Koji Ikeda: That I assume is packed into this new accounting studio before they're really ready to buy it.

Therese Tucker: You know, we've been working with partners as part of the process of getting a really cool product out there, Koji, and so I don't know that they're going to need a ton of time for digestion. I think with the accounting studio, one of our plans for it is that our partners who are experts in process transformation will have the opportunity to embed their very specific intellectual property into a library of potential templates.

Speaker Change: You know we've been working with partners as part of the process of getting a really cool product out there Koji and so I don't know that there is going to need a ton of time for digestion I think what the accounting studio.

Therese Tucker: One of our plants for it is that our partners who are experts at process transformation.

Therese Tucker: We will have the opportunity to embed their.

Therese Tucker: Very specific intellectual property into a library of potential templates. Okay. Now in order to turn that on and actually utilize that of course, they would have to work with the partner.

Therese Tucker: Okay, now in order to turn that on and actually utilize it, of course, they would have to work with the part. And so the idea of the accounting studio is to really give our partners a forum for bringing their expertise to a lot of customers very quickly. Now, that may take some planning and some work on their part to actually detail out the steps and the various APIs necessary. But I think overall, you know, we've been keeping them informed as we go.

Therese Tucker: And so it's really.

Therese Tucker: The idea of the accounting studio as to really give our partners a forum for bringing their expertise to a lot of customers very quickly.

Therese Tucker: Now that that May take some planning and some work on their part to actually detail out the steps.

Therese Tucker: And the various Apis necessary, but I think overall, we've been we've been keeping them informed as we go.

Koji Ikeda: Got it, got it. And maybe another question for you, Therese, or Owen, or Mark, is really around, you know, how ready the end market is for generative AI. I've found over the years that your end market and really the accountants out there that I've spoken with can be very loyal to their software vendors but can also be very resistant to change at the same time. And it does sound like some of the demand can be pinned to how ready the end market is ready to adopt generative AI. So just curious about your thoughts on the overall acceptance of generative AI out there. Thank you.

Speaker Change: Got it got it and maybe another question for you trees or Owen.

Koji Ikeda: Mark is really around how ready the end market is for generative AI.

Koji Ikeda: I found over the years that your year end market and really kind of the accountants out there that I've spoken with it can be very loyal to their software vendors, but also can be very resistant to change at the same time.

Koji Ikeda: And it does sound like some of the demand can be 10 to how ready the end market is ready to adopt generative AI. So just curious on your thoughts on the overall OEM acceptance of generative AI out there. Thank you.

Therese Tucker: Boy, I am so familiar with our market and our buyers, and they don't love change. That is 100% true. It's why we're taking the approach that we are with the embedding of different features that are just incredibly useful. And by the way, they all have flags that allow you to turn them off.

Therese Tucker: I am so familiar with our marketing our buyers and they don't love change that is 100% true. It's why we're taking the approach that we are with the embedding of different features that are just incredibly useful and by the way. They all have flagged that allow you to turn them off.

Therese Tucker: We're going to use that as a way of building trust in generative AI with our customer base. In other words, we're taking them on that journey. We're a little here, a little there, a little more. Build the trust, make them familiar, and then, you know, over time, we can increase their productivity by embedding it more and more and more. So, I would say that you're correct. People do change slowly, but if you take them on a journey with you and show them the benefits as they go, they'll be much more apt to change overall. I think Therese is just adding to that. I mean, if you...

Therese Tucker: We're going to use that as a way of building trust and generative AI with our customer base. So in other words, we're taking them on that journey, we're a little here a little there a little more build the trust make them familiar and then.

Therese Tucker: Over time, we can increase their productivity by embedding it more and more and more so I would say that you are correct people do change slowly, but if you take them on a journey with you and show them the benefits as they go there'll be much more apt to adopt overall.

Owen M. Ryan: Yeah, I think, Therese, just adding to that. If you think about, you know, we rolled out an executive-sponsored program at the end of last year, and we talked about our top 100 customers, so a number of us as executives were out meeting with the CFOs and the corporate controllers of our largest customers, and I think there's a couple things that come out of that. One is that they're under pressure to use AI in some way, shape, or form, trying to figure it out.

Therese Tucker: I think just adding to that if you think about.

Owen M. Ryan: We rolled out an executive sponsor program at the end of last year, and so talking about our top 100 customers. So a number of ours as executives are out meeting with the CFO and the corporate controllers of our largest customers and I think theres a couple of things that come out at it one is they're under pressure to use AI in some way shape or form trying to.

Owen M. Ryan: There's a budget set aside for it, but not sure exactly where and how to use it, and I think it's the conversations that we're engaging with them and would sort of help us pinpoint the places where they'll be most comfortable, most comfortable where their auditors will be as well, because they have to sign off, and so that's what we're trying to drive, and I think it, as we look at it, and, you know, there was a question to Mark a couple moments ago, one of the encouraging things that we've seen, at least I've seen in the first couple of months of the year, particularly March and April, now that I think about it, is going out and talking with customers about their roadmap, and they've got a black line roadmap that goes out, you know, 24 to 30 months of the different products that they're sort of thinking about when they would bring them in, to start working with them. And I think we've shared in the past that the way buyers behave today is different.

Owen M. Ryan: Figure it out they've got some budget set aside for it.

Owen M. Ryan: But not sure exactly where and how to use it and I think as the conversations that we're engaging with them.

Owen M. Ryan: Help us pinpoint the places where there'll be most comfortable most comfortable where their auditors will be as well because they have to sign off.

Owen M. Ryan: And so that's what we're trying to drive and I think.

Owen M. Ryan: As we look at it and there was a question to Mark a couple of months ago, one of the encouraging things that we've seen at least I've seen in the first couple of months of the year, particularly in March and April now I think about it as going out and talking with customers about their roadmap and they've got a black line roadmap that goes out 24 to 30 months of the different.

Owen M. Ryan: Alex that there are sort of thinking about when they would bring them in.

Owen M. Ryan: To start working with them and I think we've shared in the past that the way buyers behaved today is different the big Bang projects that tended to have a much higher likelihood of failure or not the way customers are doing it any longer.

Owen M. Ryan: These big bang projects that tended to have a much higher likelihood of failure are not the way customers are doing it anymore. They're chunking it off piece by piece, making sure it works, can demonstrate value to others in the organization, and then they go on to the next piece. And so the good news for us is the horizon looks very nice because of these opportunities and where we sit on their roadmaps. The challenge is always that you wish it all would happen sooner, but that's just not the way the world is gonna operate for the foreseeable future from our vantage point. Thank you very much.

Owen M. Ryan: They are chunking it all piece by piece, making sure. It works can demonstrate value to others in the organization and then they go on to the next piece and so the good news for US is the horizon look very nice because of these opportunities and where we sit on their roadmaps. The challenge always as you wish it all what happened happened sooner, but that's just not the way the.

Owen M. Ryan: The world is going to operate for the foreseeable future from our vantage point.

Owen M. Ryan: Thank you very much.

Speaker Change: One moment for our next question.

Owen M. Ryan: Yes.

Owen M. Ryan: Okay.

Owen M. Ryan: Yes.

Operator: One moment for our next question. The next question comes from the line of George Kurosawa from Citi. George, please go ahead.

Owen M. Ryan: The next question comes from the line of George <unk> from Citi. George. Please go ahead.

George Kurosawa: Hi, thanks for taking the questions. I'm on behalf of Steve Enders.

Owen M. Ryan: Owen wanted to ask about the changes to the go-to-market organization. Sounds like those are playing out, you know, well so far. If you could talk about, you know, what seems to be working and what changes there are

George Kurosawa: Alright, Thanks for taking my questions Im on for Steve vendors.

Owen M. Ryan: Wanted to ask about kind of the changes to the go to market organization. It sounds like those are playing out.

Owen M. Ryan: Well, so far maybe you could talk about what seems to be working.

Owen: What changes are left to be made.

Owen M. Ryan: Yeah, it's funny. I had a meeting with some of our top producers this morning about what else we need to be doing in the marketplace. And it was a really great session on ideation of things that we could do together, how we continue to tell our story in the marketplace. You know, the short version of this is we feel very good about the changes to the marketing leadership team. You might have seen yesterday; we announced the new chief customer officer. I mean, we knew he was going to be great.

Speaker Change: Yes, it's financed.

Owen M. Ryan: Meeting with.

Owen M. Ryan: Top.

Owen M. Ryan: Some of our top producers this morning about what else we need to be doing in the marketplace and it was a really great session on aviation are things that we could we could do together, how we continue to tell our story.

Owen M. Ryan: And in the marketplace.

Owen M. Ryan: The short version of this is we feel very good about the changes into the marketing leadership team you might have all seen yesterday, we announced a new chief customer officer.

Owen M. Ryan: I've been following all the plaudits he's been getting on LinkedIn. He's clearly, you know, an executive Jimmy Duan that is going to bring a lot of value to our customers. We're making much more progress in helping ensure that our customers get both well implemented, as well as adopted, and that handoff is going more smoothly than maybe sometimes in the past that has occurred. I think we're getting better at our collateral and differentiating, you know, the things that matter to buyers are not just the product, but everything else that also goes along with it.

Owen M. Ryan: We knew he was going to be great I've been following all the plaudits he's been getting on Linkedin is clearly.

Owen M. Ryan: Jimmy to one that is going to bring a lot of value to our customers, where we're making much more progress in helping ensure that our customers get both well implemented as well as is adopted and that handoff.

Owen M. Ryan: Is going more smooth.

Owen M. Ryan: Slowly than some maybe some times in the past it has occurred.

Owen M. Ryan: I think we're getting better around our collateral and differentiating the things that matter to buyers are not just the product, but it's everything else that also goes along with it is that customer experience, it's their confidence with security.

Owen M. Ryan: It's that customer experience, it's their confidence in security. It's when you think about it, you know, Blackline, I think it's five of the top seven accounting firms in the world. Not only do they sell Blackline as a provider, they use it in their own firms.

Owen M. Ryan: When you think about it you know black line I think it's five of the top seven accounting firms in the world not only do they sell black Knight's or is it provider they use it in their own firms, that's a pretty damn compelling story when you sort of want to think about things like that and so we're trying to make sure that when we're going out there we're continuing to tell the story not just about the great.

Owen M. Ryan: That's a pretty damn compelling story when you when you sort of want to think about things like that. And so we're trying to make sure that we go out there, we continue to tell the story, not just about the great product we have and all the innovation we have, but also the other things that may make a difference. And I think the one thing that's still, you know, it's still early, but there's a huge opportunity for us is to accelerate that story of what we can do for customers around the industry.

Owen M. Ryan: We have and all the innovation, we have but also the other things that may make a difference and I think the one thing that's still.

Owen M. Ryan: And the use cases, and connecting those people to each other, those customers to each other, as well as prospects, because that is proving to be a significant differentiator for us so far. There's a lot to do. There's still a great way

Owen M. Ryan: It is still early but there's a huge opportunity for us is to accelerate that story of what we can do for customers around the industry.

Owen M. Ryan: The use cases of connecting those people to each other those customers to each other as well as prospects.

Owen M. Ryan: Because that is proving to be.

Owen M. Ryan: A significant differentiator for us so far.

Owen M. Ryan: Okay.

Owen M. Ryan: There is still about right yes.

Owen M. Ryan: I was going to say, we're going to continue to, you know, try to make ours easier to do business with, and we're going to just keep driving real hard.

Speaker Change: No go ahead. Please go ahead.

Owen M. Ryan: So we're going to continue to try to make ours easier to do business with and we're going to just keep driving real hard.

George Kurosawa: That's great, Keller. And one quick follow-up, if I may, you know, the new user metric came in a little below what we'd penciled in. Maybe you could just double-click on kind of the trends you're seeing underneath the hood. And, you know, with kind of the shifts to the pricing strategy, you know, to what extent are you guys even managing the business to see counts? Thank you.

Speaker Change: That's great color.

Speaker Change: One quick follow up if I may.

George Kurosawa: New user metric came in a little below what we had penciled in maybe if you could just double click on kind of the trends you're seeing underneath the hood and.

George Kurosawa: Kind of the shifts to the pricing strategy to.

George Kurosawa: To what extent are you have you been managing the business to to see counts. Thank you.

Mark W. Partin: Yeah, seat counts are a proxy for one aspect of the growth of our business, and it did not do well in Q1. We do expect that to pick back up in the coming years. But recall that a lot of our pricing, particularly in the strategic products and some of the big ticket items, is not seat-priced. So, you're right about your Q1 number. And it still, again, is a great opportunity for us to expand in the financial close and the core platform, which we tend to do moving forward.

Speaker Change: Yes see counters.

Mark W. Partin: As a proxy for one aspect of growth of our business and it did not do well in Q1, we do expect that to pick back up in the coming years, but recall that a lot of our price and particularly in the street strategic products and some of the big ticket items are not seat priced so so you're right about your Q1.

Mark W. Partin: One number.

Mark W. Partin: And it's still again is a great opportunity for us to expand in the financial close in the core platform, which we intend to do moving forward.

George Kurosawa: Great, thanks for taking the questions. One moment.

Speaker Change: Great. Thanks for taking the questions.

Operator: One moment for our next question. The next question comes from the line of Pat Walravens of Citizens JMP. Pat, please go ahead.

George Kurosawa: Okay.

George Kurosawa: One moment for our next question.

Operator: Okay.

Operator: Okay.

Patrick D. Walravens: The next question comes from the line of Pat Ball Ravens of citizens JMP Pat. Please go ahead.

Patrick D. Walravens: Okay, great. Thank you. So, let me apologize in advance because it's a tough question, but I think it's important to ask.

Operator: Okay.

Patrick D. Walravens: Okay, great. Thank you.

Patrick D. Walravens: So let me apologize advantage because of the tough question, but I think it's important to ask so I mean.

Patrick D. Walravens: On April 11th, OneStream put out a press release saying that they're at 450 in ARR, and they grew 34% in Q1. And they also say they target the Office of the CFO. So why is there this divergence in... The results? Is it the part of the Office of the CFO you're targeting, or is it something else?

Patrick D. Walravens: On April 11th one stream put out a press release, saying that they are at $4 50 in <unk>.

Patrick D. Walravens: And they grew 34% in Q1 and they also say they target the office of the CFO. So what why is there this divergence in.

Patrick D. Walravens: The results is it the part of the office of the CFO your.

Patrick D. Walravens: Targeting or is it is it something else what would you say.

Owen M. Ryan: What would you say?

Speaker Change: Yes, Pat I think you just know that it's we're in the office of the CFO.

Owen M. Ryan: The opportunities are and so theres been a lot of spend as you might see if that just with.

Owen M. Ryan: With one stream, but also some of the other players in the CPM space have had pretty good first quarters. If you look at where the priorities seem to be based upon.

Owen M. Ryan: The office of the CFO and CPM is right now number one it doesn't mean that finance transformation, where we are in the financial close and intercompany and consolidation invoice the cash doesn't matter. It's just that particular space right now is a bit hotter and that's where a little bit more of the spend is going and we see it and we know it.

Patrick D. Walravens: Yeah, Pat, I think you just nailed it. It's where in the office of the CFO the opportunities are. And so there's been a lot of spend, as you might see, and it's not just with OneStream, but also some of the other players in the CPM space have had pretty good first quarters. You look at where the priorities seem to be based on the office of the CFO, and CPM is right now number one.

Owen M. Ryan: But that's where it really what it is we're in the office of the CFO priorities are.

Patrick D. Walravens: Okay.

Patrick D. Walravens: It doesn't mean that finance transformation, where we are in the financial close and intercompany and consolidation and invoice to cash, doesn't matter. It's just that particular space right now is a bit hotter, and that's where a little bit more of the spend is going. And we see it and we know it, but that's really what it is. It's where in the office the CFO priorities are.

Speaker Change: Okay. Great. Thanks is there any plan on your part to two.

Patrick D. Walravens: To get more exposure there.

Patrick D. Walravens: We're always looking at our platform, and that will never stop. And, you know, we always talk with our customers about what they want, where they need it. So last week, Therese, Mark, and I hosted a customer advisory board. It was a phenomenal day of a lot of insight and the things that they would like us to continue to focus on and build out. So just stay tuned as we continue to evolve the platform. Thank you.

Owen M. Ryan: OK, great. Is there any plan on your part to get more exposure there? that we're always looking for?

Patrick D. Walravens: We're always looking at our platform and that will never stop and.

Owen M. Ryan: We were we always are talking with our customers what they want where they need to last week <unk>, Marc and I hosted a customer advisory board. It was a phenomenal day of a lot of insight and the things that they.

Owen M. Ryan: They would like us to continue to focus on and build out and so just stay tuned as we continue to evolve the platform.

Speaker Change: Okay, great. Thank you.

Operator: One moment for your next question. The next question comes from the line of Alex Sklar from Raymond James. Alex, please go ahead.

Owen M. Ryan: One moment for your next question.

Operator: Yeah.

Operator: Yes.

Operator: The next question comes from the line of Alex Sklar from Raymond James Alex. Please go ahead.

Operator: Hi, Thanks for taking the question. This is Jonathan on for Alex I wanted to start with product innovation.

Alexander James Sklar: You have several big product roadmap launches in 2024 accounting studio or the financial closed Central command. The journal risk analyzer just name a few so two part question here of the new products, you're rolling out, which do you think has the most potential to play the biggest swing factor to drive more near term adoption and if the answer is different which are you.

Operator: Most excited for long term.

Alexander James Sklar: Okay, well, there's actually, yeah, you're right about the innovation roadmap. It's really been a focus of mine over the last year.

Alexander James Sklar: Oh, Okay, well Theres actually yes, you are right about the innovation roadmap.

Alexander James Sklar: <unk> really been a focus of mine over the last year and it's not just the accounting studio or the journals risk analyzer. It's also the new combined version of the intercompany financial management product.

Alexander James Sklar: And Theres a lot of other things that we're doing as well in terms of Bahrain consolidation. So it's sort of like asking me, which one is my favorite child John.

Therese Tucker: And it's not just the accounting studio or the journals risk analyzer. It's also the new combined version of the intercompany financial management product. And, and there's a lot of other things that we're doing as well in terms of FRA and consolidation. So it's sort of like asking me, "Which is my favorite child, John?".

Therese Tucker: I think probably the one that I'm most excited about right now, so it could change next week, is probably the accounting studio. Okay, the ability to visually orchestrate all of the different processes that are going on inside of the office of the CFO is pretty exciting. And the visibility that you get into where the roadblocks are or how ridiculously complicated sometimes people make things is pretty game changing. Okay, expanding that so it includes our library of process transformations so that people can get real transformation in a very, very tangible results-driven way is pretty cool. Because I'm very much about, you know, showing the value.

Therese Tucker: I think probably the one that I'm the most excited about right.

Therese Tucker: Right now so it could change next week.

Therese Tucker: Is.

Therese Tucker: Probably the accounting studio.

Therese Tucker: Okay.

Therese Tucker: <unk> ability to visually orchestrate all of the different processes that are going on inside of our of the office of the CFO is pretty exciting.

Therese Tucker: And the visibility that you get into where the roadblocks are or how ridiculously complicated sometimes people make things is pretty.

Therese Tucker: Game changing okay.

Therese Tucker: Expanding that so it includes our library of process transformations. So that people can get a real transformation in a very very.

Therese Tucker: Tangible results driven way is pretty cool because I'm very much about let's show the value and so I think that one probably has the most show the value.

Therese Tucker: And so I think that one probably has the most value factor to it. Although the journals risk analyzer is also pretty cool, because today auditors are asking for a full set of manual journals in order to run analytics on those and being able to get ahead of that game and know ahead of time where the anomalies are, where the key trends are, where the out-of-policy violations are. That's also a level of visibility that people don't have today. So those are my top two, but if you give me another 10 minutes, I can extol the virtues of the others. I've got a lot of great people coming in to collect your cash.

Therese Tucker: Factor to it although the journals risk analyzer is also pretty cool because.

Therese Tucker: Today auditors are asking for a full set of manual journals in order to run analytics on those and being able to get ahead of that game and know ahead of time, where the anomalies are where the key trends are where the out of policy violations are that's also a level of visibility that people don't have.

Therese Tucker: So those are probably my top two but if you give me another 10 minutes I can extol the virtues of the others.

Therese Tucker: And I've got a lot of great I appreciate the need for cash.

Alexander James Sklar: Thank you, I appreciate the caller there. Just a quick moment, if I can.

Therese Tucker: [laughter].

Speaker Change: Thank you I appreciate the color there.

Operator: Just a quick follow-up if I can. Go ahead. The next question comes from the line of Ryan Krieger from Wolf Research. Ryan, please go ahead.

Speaker Change: I will just ask one follow up.

Operator: Okay.

Operator: Okay.

Operator: Yes.

Operator: Yes.

Ryan Scott Krieger: Go ahead go ahead.

Operator: Next question comes from the line of Ryan Krieger from Wolfe Research Ryan. Please go ahead.

Ryan Scott Krieger: Hey guys, thanks for sneaking me in at the end. Just two quick ones for me. On the customer side, if we look at the $1 million cohort, it's a little surprising to see that number actually go down this quarter, so anything to call out there? And then on the gross retention side, can you just break down how gross retention shook out from an enterprise versus mid-market perspective and maybe how that compared to last quarter or the last couple quarters?

Ryan Scott Krieger: Hey, guys. Thanks for sneaking me in here at the end just two quick ones for me on the customer side. If we look at the 1 million dollar cohort, it's a little surprising to see that number actually go down this quarter, so anything to call out there and then on the gross retention side can you just breakdown how gross retention shook out from it.

Ryan Scott Krieger: Enterprise versus mid market perspective, and maybe how that compared to last quarter or the last couple of quarters. Thanks.

Mark W. Partin: Yes, thank you. On that number that you mentioned, we had a fairly material impact on ARR in Q1 related to the FX impact. And so as a result, you see a number of the over $1 million customers slide back as a result of that FX calculation. Otherwise, it was flat on a year-over-year basis.

Speaker Change: Yes. Thank you on that number that you mentioned.

Mark W. Partin: We had a fairly material impact on <unk> in Q1 related to FX impact and so as a result, you see a number of the over $1 million customers slide back as a result of that FX calculation otherwise it was flat on a year over year basis on your second question.

Operator: On your second question, you might need to repeat that for us. We're having some technical difficulties, it looks like, on both sides. Yeah, go ahead. Sorry, it's just better off if we repeat it.

Operator: You might need to repeat that for us we've had and we're having some technical difficulties it looks like on both sides, whereas yes go ahead, sorry, just better off being repeated.

Ryan Scott Krieger: Yeah, just on the gross retention side, if we look at the number, how did it break down on an enterprise versus mid-market basis, and how did that compare to the last quarter, the last couple quarters? Thank you.

Speaker Change: Just on the gross retention side, if we look at the number how did it breaks down on an enterprise versus mid market basis, and how did that compare to the last quarter of the last couple of quarters.

Mark W. Partin: Yeah, mid markets hanging in in the low 90s, and that's pretty typical for us. It even ticked up a little bit in Q1. Where we saw a bit of a step back is on the enterprise side in Q1, and we've talked a little bit about that in the prepared remarks that that hit us in both Q4 and Q1. Thank you.

Speaker Change: Thank you, yes mid market is hanging in in the low nineties and Thats pretty typical for us at even ticked up a little bit in Q1, where we saw a bit of a step back is on the enterprise side in Q1, and we've talked a little bit about those.

Mark W. Partin: Our prepared remarks that.

Mark W. Partin: That had hit us in Q, both Q4 and Q1.

Mark W. Partin: Yes.

Mark W. Partin: Okay.

Speaker Change: Thank you.

Operator: One moment for our final question. The last question comes from the line of Matt VanVliet from VTIG. Matt, please go ahead. Yeah, thanks for taking the question here.

Speaker Change: One moment for final question.

Operator: Yeah.

Operator: Okay.

Matthew David VanVliet: Thank you. Yeah

Matthew David VanVliet: The last question comes from the line of Matt then Felipe from BT IAG, Matt. Please go ahead.

Matthew David VanVliet: Yes, Thanks for taking my question here.

Matthew David VanVliet: Just really quick I guess as Youre looking at the head count.

Matthew David VanVliet: Over the next year plus here now that you've backfill a lot of the open senior positions.

Matthew David VanVliet: What is the general head count and how should we think about your opportunities and go to market.

Matthew David VanVliet: Either add head count or add sort of sales support to improve efficiency and productivity there.

Mark W. Partin: You know, where we are today, we feel we've got really strong and adequate sales capacity for not just where the market demand is today and coming out of the first part of this year but well into the second half. So we don't expect to have to hire or build a lot of QCR capacity. In fact, we have one of the most tenured and ramped rep forces we've ever had, and we find that to be a competitive and differentiated strategy as we are in the market with some of these great new innovative projects.

Matthew David VanVliet: Thank you.

Mark W. Partin: Where we are today, we feel we've got really strong and adequate sales capacity for not just where the market demand is today and coming out of the first part of this year, but well into the second half. So we don't expect to have to hire or build a lot of TCR capacity. In fact, we have one of the most tenured and ramped.

Mark W. Partin: Rep forces, we've ever had and we find that to be.

Mark W. Partin: A competitive and differentiated strategy as we are in the market.

Mark W. Partin: So we're really proud of that team and expect to see productivity as we move through this year. With the remainder of the company, our goal, at least in the near term, and to hit our midterm target models, is to continue to grow different areas of the company, keep our pedal on the metal, or metal on the pedal, in R&D as we invest in some of the initiatives that Therese is talking about, and you see that already in the numbers, and then as we move forward, we'll work to drive continued operating leverage in other aspects of the And we've talked about where some of those are, including not just our cloud and our data centers but in G&A as well.

Mark W. Partin: With some of these great new innovative projects that we're really proud of that team and expect to get productivity as we move through this year with.

Mark W. Partin: With the remainder of the company our goal at least in the near term and to hit our midterm target models is to continue to grow different areas of the company keep our pedal off the metal or metal on the pedal and the R&D as we invest in some of the initiatives that Teresa is talking about and you see that already in the numbers and then.

Mark W. Partin: As we move forward, we'll work to drive continued operating leverage and other aspects of the business and we've talked about where some of those are including not just our cloud and our data centers, but in G&A as well.

Speaker Change: Alright, great. Thank you.

Owen M. Ryan: That does conclude the Q&A portion. I would now like to hand the call back over to Owen Ryan. Thank you all.

Speaker Change: That does conclude the.

Owen M. Ryan: For the Q&A portion I would now like to hand, the call back over to Alan Brian.

Owen M. Ryan: Thank you, operator, and thank you everyone for joining the call today. We appreciate your questions and following us as a company, and we look forward to talking to you soon.

Owen M. Ryan: Thank you operator, and thank you everyone for joining the call today. We appreciate your questions and following us as a company. We look forward to talking to you soon have a great rest of the day take care. Thank you bye bye.

Operator: Have a great rest of the day. Take care. Thank you. Bye-bye.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Operator: Yeah.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Operator: Okay.

Operator: Okay.

Operator: Yeah.

Operator: [music].

Operator: Yes.

Operator: Okay.