BlackLine, Inc. (NASDAQ:BL) Q1 2024 Earnings Call Transcript

BlackLine, Inc. (NASDAQ:BL) Q1 2024 Earnings Call Transcript May 7, 2024

BlackLine, Inc. misses on earnings expectations. Reported EPS is $0.1486 EPS, expectations were $0.47. BlackLine, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Matt Humphries: Good afternoon, and thank you for joining us today. With me on the call are Owen Ryan and Therese Tucker, Co-Chief Executive Officers of BlackLine as well as Mark Partin, Chief Financial Officer. Before we get started, I would like to note that certain statements made during this conference call that are not historical facts, including those regarding our future plans, objectives and expected performance, in particular, our guidance for Q2 and full year 2024 and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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, and 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 statements whether as a result of new information, future events or otherwise, except as required by applicable law. All comparisons we make on the call today relate to the corresponding period of last year, unless otherwise noted. Finally, unless otherwise stated, our financial measures disclosed on this call will be non-GAAP. 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 on our Form 8-K filed with the SEC today. Now, I will turn the call over to BlackLine’s Co-Chief Executive Officer, Owen Ryan.

Owen?

Owen Ryan: Thank you, Matt, and good afternoon, everyone. 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 net income. While we are still in the early stages of implementing our new operating model, we are pleased with the progress we are seeing. I will review this progress, 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 up-tick in activity at the top end of our sales plan. While the volume of deal 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 pushed out. 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 evidenced during our recent BeyondTheBlack event in London, where innovation in AI dominated discussions among attendees.

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 resonating strongly with our customers, partners and prospects, who see 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. 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. 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 invoice to cash, partners are expressing interest in expanding their practices and collaborating with BlackLine, particularly in light of competitors shifting strategies or unmet promises.

Also, we are seeing a building interest among our partners with our electronic invoicing presentment and payment offering. Partners are also actively seeking out leaders in the AI space to align for mutual growth opportunities. We are confident in 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. 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. Our key focus on customer adoption underscores its significance as one of my top priorities. As testaments to our commitment here, we recently appointed industry veteran, Jimmy Duan 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 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.

In one example, we signed a federally owned electric utility company that was burdened by too many manual processes and an outdated ERP, 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 multiyear transformation.

As part of a phased approach, this deal provides us 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 has leveraged Excel as their primary tool to support their accounting and finance processes, which have become unsustainable and lack of 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. 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 they chose to expand even further, and add our complete invoice to cash offering to additional geographies and business lines. We expect that over time, our relationship with this customer will continue to grow. 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?

Therese Tucker: Thank you, Owen. As the 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. 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 life, 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.

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 insights and anomaly detection related to manual journal entries. This solution efficiently captures and assesses journal entries from various ERPs and subledger systems, providing dynamic actionable insights for customers to proactively address potential areas of fraud and policy violations. 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.

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 to our customers’ workflows and processes. This feature streamlines repetitive tasks involved in account reconciliations and during consolidation 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 close, while strengthening their controls and potentially mitigating audit risk. 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 a top behavior at a consolidated level and conduct comparisons across different time periods. Additionally, it will facilitate the creation of financial statement footnotes to imitate 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 offer automated explanations for accounting and finance teams to quickly identify and explain drivers of financial performance. Lastly, within our invoiced 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. 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 of the companies be unfamiliar, especially when it comes to integrating AI into core financial operations.

Recognizing this, we are committed to a deliberate and responsible deployment of this technology. 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 balanced approach that aligns with our customers’ willingness and ability to adopt AI. Shifting to broader platform innovation, we’re excited to announce the long-awaited release of the BlackLine accounting Studio. 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, the BlackLine accounting Studio is a user-friendly solution that helps visualize and orchestrate processes efficiently.

Ensuring that dependencies are captured and control and the processes move forward at the right time and in the right order. 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 the 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. 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 configurable nature of our software, we are highlighting customer-specific use cases that can benefit others in the industries, 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 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 Ung, 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. One of the benefits of hiring a like-minded 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 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?

Mark Partin: Thank you, Therese. Our financial results this quarter highlight our disciplined approach as we navigate both the current market environment as well as our ongoing business transition. Despite this, we expect to continue to invest into strategic parts of our business to support our long-term growth drivers, especially innovation. 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 in a bit more detail. 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 billings growth was 6%, with trailing 12-month billings growth of 11%. 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. 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.

Net retention rate, or NRR, was 105%, and in line with our expectations, driven primarily by modest account growth and user ads this quarter. 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 with 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 slippage. 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 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. 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, with a free cash flow margin of 28%.

Record cash collections this quarter was a key driver of our better-than-expected cash flow performance. 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 maturities. On this point, we expect to retire our 2024 convertible notes in cash when they mature on August 1st of this year. 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 ranges.

Finally, we continue to expect that services revenue will be an approximate one point headwind to our full year revenue growth rate. 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 9% to 10% growth. We expect non-GAAP operating margin 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 million 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. And for the full year 2024 our updated guidance is as follows. We expect total GAAP revenue to be in the range of $641.5 million to $649.5 million, representing 9% to 10% growth.

We expect non-GAAP operating margin to be in the range of 17.5% to 18.5%. And we expect non-GAAP net income attributable to BlackLine to be in the range of $158 million 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 shares. With that, I’ll now ask the operator to open the discussion and take your questions.

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Q&A Session

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

Rob Oliver: Yes, great. Hi. Thanks guys. Thanks for taking my question. Mark my first one is for you. Just on the deal slippage in the quarter. Can you talk a little bit about — I mean Q1 is never traditionally the strongest quarter for you guys. So I was wondering if you could to give us a little bit deeper insight into how much of this is just general macro and confidence that deals are going to close versus 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.

Mark Partin: Remainder of the year and staying focused on them. The fact that they’re 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 your question is that those deals continue to move through the pipeline today.

Rob Oliver: Great. Thanks. I’m not sure if it was me because I missed the first part of your answer. Could have been me. And then Owen just want to step back a little bit as we anniversary now your arrival. 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 and some of the work you’re doing with the SIs and stuff. Where do you feel, you’ve made the most progress and where we could see that manifest in activity as we move through this year versus where you still have maybe even more work to do? Thank you.

Owen Ryan: Sure. Thanks Rob. A couple of things. I think one is 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 we have the partners that we’re working with are really all in. I’ll share a story from the scrip 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 working on the BlackLine solution versus a competitor. That will take time for itself to work its way through this the 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’d say that’s probably been the area where I feel like we’ve made really the greatest amount of successful for. I think second would be the progress we continue to make with SAP. The relationship continues to grow in the marketplace around the product road map, the opportunities to really improve our win rates together, which is just terrific. And then the last thing would be industry and Therese touched on it a little bit Mark touched on it. We knew we had something in the 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 — sorry I keep telling stories. I’ll give you another one. So you may all — I’m sure you all know that most big firms companies when they’re going out for an RFP they hire a third-party to write the RFP for typically.

And so not too long ago Therese and I were overseas and we were meeting with one of these consulting firms who was writing the RFP for a major company probably top 50 global enterprise. And we spent probably an hour going through the industry and helping this service provider sort of 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. As I sit here today I have a very high degree of confidence 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 could help a customer through all aspects of what it a company needs to do in 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.

Rob Oliver: Really helpful. Appreciate the stories. Thanks.

Owen Ryan: Okay.

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

Chris Quintero: Hey, everyone. Thanks for taking questions here. 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 then I’ve got a follow-up.

Owen Ryan: Yes. 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 is 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 and price and do work with them. So that’s a lot of what we have been focused on trying to drive. 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.

And so we’ll get that rolled out again very, very soon. Obviously change management with these things are important. And we’re also doing it in an environment where we still have to 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 charge more for the product that you’re — they’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 upon the feedback from our customers. So we’ll make sure we get that done.

Chris Quintero: Got it. That’s really helpful. And maybe for Mark, really great to see the free cash flow margin of 28%. Is there anything onetime in nature impacting that number? And how should we think about free cash flow conversion for the rest of the year?

Mark Partin: Yes. I think the team did an excellent job in Q1 collecting AR that was really a great effort from everyone. 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 will come down here through the remainder of the year.

Chris Quintero: Excellent. Thank you so much.

Operator: One moment for our next question. The next question comes from the line of Pinjalim Bora from JPMorgan. Pinjalim, please go ahead.

Jaydeep Patel: Great. Thanks for taking the question. This is Jaydeep Patel on for Pinjalim. ARR came in a little bit below expectations. You mentioned that there was large deals that got pushed out. Is there any way to quantify those deals? And of those do you think there’s a certain percentage that will close in Q2? Thanks.

Mark Partin: Thanks, Pinjalim. With — 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. 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 with our new operating model has strengthened as we move through the year on our new operating model. So quantifying it I think would be difficult at the moment. So thanks.

Jaydeep Patel: Great. Thanks for the question.

Operator: [Operator Instructions] Our next question comes from the line of Adam Hotchkiss of Goldman Sachs. Adam, please go ahead.

Adam Hotchkiss: Great. Thanks for taking the question. 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 that’s 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 sort 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.

Therese Tucker: Thanks Adam. We have spent a lot of time in the last year making sure that our entire organization is 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 a number of recurring webinars on new features to make sure that our customers know what the road map 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. And then there’s also the BlackLine Academy with its corresponding consulting events where we actually will take different accounting practices — processes and help them transform them.

because when people really use BlackLine well the result is digital finance transformation. And so these are hands-on workshops that our customers can attempt 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.

Adam Hotchkiss: 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 seat or usage-based pricing within the context of the productivity improvements that AI might bring your customers how do you ensure that you’re going to be extracting the value you think some of these investments have been worth?

Therese Tucker: Well, 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. And that’s really for the places where we are embedding AI. I think it was Rob Kugel of Ventana who said productivity by 1,000 cuts. Loved it right? 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 Journal’s Risk Analyzer. 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.

Adam Hotchkiss: Okay, that’s really helpful color. Thanks Therese.

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

Brent Bracelin: Thank you. Good afternoon all. Mark I wanted to start with you around the pipeline build today versus three months ago, I get there are some deals that slipped not uncommon in Q1. But can you just characterize visibility in the pipeline and how much build you saw in the last three months?

Mark 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 and 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 multiproduct 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, 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 in to 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 Bracelin: Helpful color. And then maybe Therese for you. If I go back a couple of years ago the pandemic clearly drove a higher spend priority around from these finance transformation projects. Obviously, in the last a year and a half, we’ve seen the priority go down as people focused on kind of economic macro headwinds. We are now looking at S/4HANA end of life in 2027. 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? 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 maybe that as a potential catalyst or not for increasing priority around these finance transformation projects.

Therese Tucker : Well, we do certainly see the potential that the SAP partnership could bring us, especially with the migrations to S/4HANA. But Brent, you raised a really interesting point, and it’s one that we wrestle with as well. Companies, CFOs in particular, have been very focused on 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 is how can we actually deliver that kind of value in a way that makes people want to continue that journey with BlackLine and invest more. So I think that 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 a result that disappoints.