BlackLine, Inc. (NASDAQ:BL) Q4 2024 Earnings Call Transcript

BlackLine, Inc. (NASDAQ:BL) Q4 2024 Earnings Call Transcript February 11, 2025

BlackLine, Inc. misses on earnings expectations. Reported EPS is $0.47 EPS, expectations were $0.5.

Operator: Good day, and thank you for standing by. Welcome to the BlackLine Q4 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to turn the call over to Matthew Humphries. Please begin, sir.

Matthew Humphries: Good afternoon, and thank you for joining us today. With me on the call are Owen Ryan and Therese Tucker, Co-Chief Executive Officer of BlackLine; as well as Mark Partin, Chief Financial Officer; and Patrick Villanova, Chief Accounting Officer. Before we get started, I’d like to note that certain statements made during this conference call that are not historical facts including those regarding our future plans, objectives and expected performance, in particular, our guidance for Q1 and full year 2025 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 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 particularly 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 available in our earnings release, which may be found on our Investor Relations website at investors.blackline.com or in our Form 8-K filed with the SEC today. Now, I’ll 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 for joining us on today’s call. Like you, we have seen the devastating impacts the wildfires have had across Los Angeles. Our thoughts are with our employees, their families and all those affected in the L.A. community, including our industry peers, partners and stakeholders who all call this region home. While several of our team members have been impacted by the fires and evacuations, our operations remain unaffected, and we are delivering for our customers without disruption. We are providing direct support to our affected employees and are working with local relief organizations to assist the broader community. Now, turning to our fourth quarter performance.

BlackLine met/or exceeded our revenue and non-GAAP guidance despite notable currency headwinds due to a strong US dollar. We delivered 9% revenue growth in the fourth quarter with a non-GAAP operating margin of 18%. Patrick will provide a detailed breakdown of our performance and the specific impact of FX movements shortly. As we enter the year, our strategic evolution and momentum remains right on track following our successful BeyondTheBlack event. Our pipeline has seen healthy growth across multiple dimensions. We are seeing an increase in both volume and critically in opportunity size, driven in part through platform or multi-pillar opportunities. The quality of these opportunities has also improved, driven in part by our strategic channel partnerships.

The combination of higher volume, larger deals and enhanced opportunity quality reflects the growing market recognition of our platform’s comprehensive value proposition. That being said, we did see instances in the fourth quarter where deal velocity, especially in larger late-stage opportunities slowed. This caused some opportunities to extend into 2025. Some of these deals have closed in January, and most we expect to close in the coming months. We remain optimistic that the momentum that has been building will continue. Our new Chief Commercial Officer, Stuart Van Houten, started today and is expected to drive relentless execution across the business. His experience with enterprise customers and with our largest go-to-market partner, SAP, will only enhance and accelerate our strategy and ultimately, our results.

At Investor Day, we shared key strategic initiatives, and I am pleased to report substantial progress across these priorities. Our journey towards FedRAMP certification continues according to plan, positioning us to serve public sector organizations at a crucial time. Government agencies increasingly recognize their critical need for modern technology to fulfill their missions effectively, and we’re seeing promising opportunities emerge in this space. One word of caution is the changing environment in Washington, D.C. We are gaining momentum with state and local governments who are eager to not just adopt our technology but to partner deeply with BlackLine through their digital finance transformation. While our public sector initiative is early, I am very pleased with the early momentum we have seen and large greenfield opportunity ahead.

Our new packaging and pricing model recently launched has seen positive early traction. Interest began building during the BeyondTheBlack conference even before the formal launch. In Q4, we secured an unlimited pricing agreement with an existing customer, enabling them to expand our solutions beyond the typical accounting teams and into other areas in the office of the CFO as they move forward on their digital finance transformation. While we are a little over 1 month in, we are tracking to our initial targets and expect that this multiyear initiative will be accretive to our growth. On retention, we saw further improvement in our revenue renewal rate, which has been our priority at BlackLine. In the fourth quarter, our revenue renewal rate was 96% in what was a heavy renewals quarter.

Our enterprise performance was strong at 97%, coupled with a notable improvement in our mid-market business, which came in at 92%. These levels are much more in line with our expectations. At BeyondTheBlack, we formally launched our repositioned brand and market message, solidifying our position as the intelligent financial data platform that powers the modern office of the CFO. Two years ago, we set out to elevate our brand to the CFO. The launch of our Studio360 platform enables us to reach that goal. This enhanced positioning has also catalyzed deeper engagement with our key system integrators and SAP, who see expanded potential in our go-to-market strategy. Though, still in its early stages, we anticipate Studio360 will be a critical growth driver.

This strategic transformation extends beyond just messaging. It represents a comprehensive evolution encompassing our industry focus, platform capabilities, embedded artificial intelligence and modernized pricing and packaging. By delivering enhanced customer value and demonstrable ROI, we have strengthened our value proposition to both CFOs and CIOs, positioning us to pursue larger, more strategic opportunities. As mentioned, our evolution has driven deeper engagement with partners, and we continue to see major global systems integrators increasing their investments in BlackLine practices and aligning with our platform vision for the office of the CFO. We also are focused on increasing our reach to select new go-to-market partners, while enhancing existing partner relationships.

For example, we recently entered Workday’s partner program, to continue to elevate our message and reach to CFOs and CIOs globally. In my discussions with their senior leaders, we believe their global positioning and success in strategic industries and markets aligns well, with our competitive strength and strategy. We have also focused on deepening and enhancing our strategic relationship with SAP, our primary go-to-market partner. Given SAP’s significance to our future growth strategy, and the accelerating digital financial transformation trends, allow me to provide additional context about this partnership. Since November, we have had numerous meetings to discuss, how we can enhance this partnership going forward? The focus was on driving even more value to customers, as they move to the cloud and stronger results for our companies.

Let me outline just a few of the items we have committed to going forward. First, we have begun the premium qualification process for Studio360, as part of the SolEx program, with a formal launch scheduled in the second quarter. Coupling our powerful Studio360 platform together with SAP solutions to offer comprehensive orchestration and automation capabilities for SAP’s customers globally, will resonate in the market. Second, we have been included in SAP, EPM package as part of their RISE initiative, which is a recommended SAP package for customers planning to migrate from ECC to S/4HANA. As part of this package, BlackLine Studio360 and Financial Reporting Analytics solutions, will be included and offered to SAP customers. Next, we launched our SAP Catalysts group, which is a dedicated team of BlackLiners whose sole focus will be on making all aspects of the relationship work.

We are more tightly aligning our compensation structure to support our SolEx efforts, especially for those moving to the Public Cloud. Finally, we are jointly positioning Finance-First, as a strategic entry point for ERP modernization. This allows for BlackLine deployments before ERP migrations, delivering early ROI in customers’ digital transformation journeys. Early implementations show promise. And we expect this sequencing to drive growth in our SAP partnership, over the next several years. This was not intended to be an exhaustive update of our efforts, but the alignment is quite strong, particularly as we work through a year of significant transition in 2024. Turning to broader deal activity this quarter, in Europe, we expanded with BAE Systems, a large global aerospace and defense company.

Historically, we serve smaller subsidiaries, scattered around the globe. But given our performance and platform vision, we, along with our partners, we’re able to demonstrate, how we could enable their digital finance transformation journey in advance of their upcoming S/4HANA transformation. In North America, we were able to replace a mid-market competitor at Snowflake, new customer. This multi-pillar deal, including both financial close and Financial Reporting Analytics, was driven by their desire to have a partner that could support them as they grow in scale, something our competitors could not match. As they shared, they knew they had significant limitations with their existing vendor with a great deal of waste of time and lack of capabilities in advanced automation and consolidation.

BlackLine’s capabilities were a natural evolution for the customer as they continue to grow, a story we see regularly. We also saw further examples of success with both our platform and industry strategy, particularly in financial services. At Zopa, a fast-growing European fintech company, we won a competitive deal and replaced legacy solutions as they sought to remove many of the pain points and inefficiencies that had built over the years. With a view on scaling their business even further into the future, they recognized they needed to reengineer their financial and operational processes to enhance end-to-end orchestration, controls and visibility. This multi-pillar and platform deal includes financial close, financial reporting analytics and Studio360.

On the SolEx side, we saw solid performance in our international markets, a key focus area for BlackLine. Specifically, we signed a net new deal with Sandvik Coromant, a leading multinational engineering and manufacturing company based in the Nordics. Searching for enhanced insights and visibility as well as control across their global divisions, Sandvik recognized the complex challenges BlackLine can help solve especially when aligned with their SAP landscape. Also in Europe, we expanded with a leading consumer goods customer in the UK. The customer is looking for a modern alternative to an existing homegrown intercompany solution to solve the growing challenges by their finance, tax and treasury teams. Given our track record of delivering ROI previously, this company was keen to adopt IFM to streamline, automate and integrate their intercompany processes.

In Japan, we signed TANAKA Holdings to a net new deal, supporting their transformation and automation mandate. As part of this deal, which included core financial close functionality alongside more advanced capabilities like automated journals, we were able to demonstrate the power of a joint BlackLine and SAP offering to enable future success. We also expanded our Japanese market presence by signing a major automotive manufacturer. Building on our successful track record with their North American operations, we developed a comprehensive financial blueprint that addresses their end-to-end requirements through our partnership with SAP. This deal represents a notable breakthrough in the Japanese market, we have historically served subsidiaries but faced challenges penetrating parent companies.

These two wins demonstrate that our strategic efforts in Japan are gaining meaningful traction. With that, I would like to turn the call over to Therese. Therese?

Therese Tucker: Thank you, Owen. Innovation remains the cornerstone of our strategy and the primary catalyst for unlocking further market opportunities. Our commitment to technological advancement extends beyond individual product improvements. It represents our vision for digital finance transformation across the enterprise. Through our platform evolution, AI integration and enhanced automation capabilities, we’re not just meeting current market demands. We’re anticipating and shaping the future of financial operations in order to deliver value to our customers. To bring this to life, our Studio360 launch in November has generated significant market enthusiasm for its ability to orchestrate, connect and automate financial systems at scale.

Both customers and partners recognize its transformative potential for the office of the CFO, and we are accelerating innovation to establish our leadership in this modernization journey. Several large Fortune 100 companies are already implementing Studio360 and providing additional valuable feedback. The initial response has been compelling. Customers report saving material time and process administration through Studio360’s powerful automation and orchestration capabilities. Beyond the established benefits of our closed solutions, they’re achieving further acceleration of close timelines and creating additional team capacity through more efficient workflow automation. These low-code orchestration capabilities are specifically designed to get finance and accounting departments greater autonomy and reducing their dependence on internal IT resources.

A recent example was an early adopter illustrates this empowerment. After we demonstrated how to set up a single orchestrate workflow, their finance and accounting teams independently created additional templates within days to enhance their accounting processes. This exemplifies one of our goals, allowing customers to control their own transformation journey and ultimately driving faster time-to-value and enhanced ROI. Similarly, we have received great customer feedback on how Studio360’s visualize capabilities are able to greatly enhance and improve both visibility into and control of their financial operations in a more timely manner. For example, through Power BI and other visualization tools that are native to Studio360, we are eliminating the need for customers to export their data out of BlackLine.

They cannot only save time in their processes, but also reduce their reliance on third-party tools and generate the real-time insights that they demand. Our strategic partnership with Snowflake has become a key differentiator, particularly through the integration of their data share capabilities into Studio360. This resonates deeply within our customer base, many of whom are existing Snowflake users. The ability to extract insights and analytics from customers’ existing data infrastructure strengthens our position within the office of the CFO, while enabling expanded reporting and analytics capabilities. In the coming months, we will deploy these foundational platform features and as part of the Snowflake partner program expands our market reach.

Turning to our pillars. Financial close continues to be the primary entry point for digital finance transformation with Studio360 poised to amplify its impact. We’re enhancing this core pillar with advanced capabilities, particularly for our industry-focused initiatives by introducing big data matching and high-frequency reconciliations. Additionally, we’re expanding platform connectivity through new Oracle Fusion and Workday integrations, expanding Studio360’s ecosystem and providing customers more ways to leverage our platform and comprehensive suite of solutions. In our financial reporting analytics pillar, we’ve launched new AI-based executive insights, featuring real-time internal reporting capabilities, and comprehensive generative AI functionality.

We’ve also developed enterprise consolidation capabilities to strengthen our record-to-report offering, positioning us to capitalize on opportunities arising from legacy consolidation solution, end-of-life transitions and broader ERP migration initiatives. Financial reporting analytics has seen great success in North America, consistently ranking as one of our fastest-growing solutions. But the compelling value of an end-to-end close and consolidation package has also resonated well beyond the North American markets. Our recent wave of successful implementations across Japan and Europe underscores the universal demand for end-to-end close and consolidation capabilities, validating our solutions value proposition across diverse markets. We are seeing increasing demand for our intercompany solutions as organizations face increasingly complex cross-border transactions and regulatory requirements.

At BeyondTheBlack, customer discussions emphasize the pressing need for solutions that can adapt to evolving global regulations and manage their business. In response, we’re significantly enhancing our end-to-end intercompany solution with advanced capabilities and deeper integration across our platform, enabling customers to navigate these complex regulatory challenges effectively. Our strategic SAP partnership amplifies this opportunity providing a pathway to accelerate IFM adoption across our shared customer base. Our invoice to cash solutions market leadership was recently validated by IDC’s recognition of BlackLine as a leader. We’re strategically focused on deepening its integration with Studio360, which will both streamline implementations and deliver a comprehensive solution that addresses CFO’s end-to-end requirements.

The strength of our solution and strategic road map is attracting premier talent from competitors, further validating our market position and vision. Moreover, our partners are making significant investments in their practices, demonstrating their confidence in our solutions and creating additional momentum to accelerate our growth in this strategic market. As we look ahead, our innovation road map becomes even more ambitious. We’re not simply participating in digital finance transformation, we have a vision of what the future of finance and accounting should be. While we’re proud of our achievements thus far, they represent just the beginning of our journey. Our commitment to innovation is expected to drive our growth, enabling us to expand our market leadership and deliver real value to customers as they transform.

With that, I’ll turn it over to Patrick to cover our financials. Patrick?

Patrick Villanova: Thank you, Therese. As discussed previously, we are making meaningful progress on our core strategic initiatives, building on what we shared at our November Investor Day. While early, we expect that as we move ahead this year and into the next, the financial benefits from these initiatives will become more notable and begin to accelerate growth towards our updated financial targets. Also, our financial foundation remains very strong, characterized by healthy operating margin expansion and a robust balance sheet. This foundation enables us to maintain our commitment to innovation while delivering incremental value to our customers. Now turning to our fourth quarter results in more detail. Total revenue grew to $169 million, up 9%.

Subscription revenue growth was 9% and service revenue declined 1%, in line with our expectations. Annual recurring revenue, or ARR, was $641 million, up 6%. We saw an approximate two-point impact to ARR in the quarter, primarily due to FX-related revaluation at the end of period. Remaining performance obligations, or RPO, were up 4%. FX represented more than a one-point headwind to RPO growth. Current RPO was up 5%, with similar dynamics from FX. As Owen mentioned earlier, we also saw some slowing in deal velocity the quarter, which impacted both ARR and RPO. Calculated billings growth was 5% with trailing 12-month growth of 6%. FX impacted billings growth in the quarter by one point. Our customer count at the end of the quarter was 4,443 as we as we still see moderate impacts to customer count growth shift our strategic focus in the middle market.

Our revenue renewal rate in the fourth quarter was 96%, reflecting further improvement across both enterprise and mid-market. Net retention rate, or NRR, was 102% this quarter, which included about a two-point headwind from FX. We saw stability in price increases this quarter, but a number of opportunities moved into 2025 and many of which were multi-product expansion impacting NRR. Strategic products represented a record 33% of sales in the in the quarter. Invoice to cash had a record number of deals quarter. We also saw solid performance from Smart Close. Partners were involved in 80% of large deals this quarter with consistency across both new and existing opportunities. SolEx performance was below our expectations in Q4, primarily due to the deal dynamics mentioned previously.

In the fourth quarter, SAP partnership revenue represented 26% of total revenue. Now turning to margin. Our non-GAAP gross margin was nearly 80%, with non-GAAP subscription gross margin at 82%, in line with our expectations. Non-GAAP operating margin was 18% as reported. FX represented almost a three-point drag on our operating margin in the quarter. Non-GAAP net income attributable to BlackLine was $35 million, representing a 20% non-GAAP net income margin. We generated $44 million of operating cash flow and $37 million in free cash flow in the quarter, representing a free cash flow margin of 22%. And last, regarding our balance sheet and capital allocation, we have approximately $886 million in cash and cash equivalents versus $893 million in debt.

As planned, we expect to begin our previously announced share repurchase program in the first quarter. As we look to 2025, several items will shape our financial performance. Foreign exchange impacts, particularly from a stronger U.S. dollar are expected to create approximately a one point headwind to our full year total revenue growth rate, continuing the trends that we observed in Q4. This headwind is embedded in our full year guidance range. Additionally, our sustained profitability improvements over recent years will result in a higher effective tax rate for 2025, which is also embedded in our non-GAAP net income guidance. With these considerations in mind, allow me to outline our guidance for the year. For the first quarter of 2025, we expect total GAAP revenue to be in the range of $166 million to $168 million, representing approximately 5% to 7% revenue growth.

We expect non-GAAP operating margin to be in the range of 16.5% to 17.5%. And we expect non-GAAP net income attributable to BlackLine to be in the range of $28 million to $30 million, or $0.36 to $0.39 on a per share basis. Our share count is expected to be approximately 77.7 million diluted weighted average shares. And for the full year 2025, our guidance is as follows. We expect total GAAP revenue to be in the range of $699 million to $705 million, representing 7% to 8% growth. We expect non-GAAP operating margin to be in the range of 21% to 22%. And finally, we expect non-GAAP net income attributable to BlackLine to be in the range of $155 million to $165 million or $1.97 to $2.10 on a per share basis. Our share count is expected to be approximately 78.5 million diluted weighted average shares.

With that, I’ll now ask the operator to open the discussion to take your questions.

Q&A Session

Operator: Thank you. [Operator Instructions] Our first question for today will come from Chris Quintero of Morgan Stanley. Your line is open.

Chris Quintero: Hi, everyone. Thanks for taking our questions here. Maybe to start, I want to ask, Owen, for you, I know macro and deal velocity was a little bit lower this quarter. But just curious how execution came in versus your expectations? And how much you’re expecting this macro to continue throughout fiscal year 2025?

Owen Ryan: Yeah. I would say, Chris, first of all, good to hear your voice again. I was generally pretty pleased with the way we executed in the fourth quarter, some of the things that sort of gotten a way where more customer decisions around timing than it was our inability to close deals. And in fact, the first five weeks of this year have been pretty positive as we’ve closed a number of those deals. And so I wouldn’t say it was execution on our end at all really. There is certainly a little bit of uncertainty, a lot of changes going on in the US market, in particular, and where things are going to be, a lot of conversations around tariffs and things of that, that might have caused a little bit of pause, but I think those are more timing issues than they are permanent changes at any level.

I will say in some trips that both Therese and I just did overseas, the strength of the US dollar is having a little bit of an impact in places like Japan and Europe and the UK, where people are trying to figure out how to make economics work a little bit with some of our deals. But again, those are more issues that will work through. And in fact, what’s interesting is even though there’s been some concern about it, our pipeline internationally has been growing quite nicely.

Chris Quintero: Got it. That’s super helpful and great to hear. Maybe one for Patrick, on the gross margins, how should we think about the linearity there? I know you have the duplicative costs, but should we think about the phasing of gross margin throughout the year?

Patrick Villanova: Yeah. Thanks, Chris. I appreciate the question. So what you should expect from a gross margin standpoint is slight expansion throughout the year, but for the most part, fairly consistent. We are planning to, or on pace to decommission some of the older service centers or service centers later this year as part the GCP migration, and that will eliminate some of the redundancy. The other element at work there with gross margin is our FedRAMP investment. That is an investment that will be about a 0.5 point drag on gross margin this year, but serve as a significant revenue opportunity in the future.

Chris Quintero: Super helpful. Thanks again.

Operator: Thank you. One moment for the next question. Our next question will be coming from the line of Patrick Schulz of Baird.

Patrick Schulz: Good afternoon. Thanks for taking my question. Maybe just first on the SAP relationship. I appreciate all the color that you provided. I know Stuart’s coming in and having the background with SAP. And obviously, it’s a key strategic priority for you guys, and sounds like more collaboration from a go-to-market co-innovation standpoint. Just any color on how we should be thinking about the contribution from SAP in 2025. Are the right building blocks now in place for this relationship to really accelerate?

Owen Ryan: Yes. Great question, Patrick. Good to hear from you. I think, as I sort of said in the prepared remarks, next year is a little bit of a reset. As you know, there was a lot of changes within SAP. It took a while for those shares to settle down. But I think if you — if I think about the last three months, as Therese and I have been spending a lot of time with them, and our teams have been spending a lot of time together working. I mean, we’ve really been able to sort of get laser-focused on what we need to do in the marketplace. Some of the things that we’ve all been waiting to sort of see is the pipeline building with opportunities around the move to the cloud. And I think this concept of finance first that both SAP and BlackLine are pushing in the market together serves as well, because just doing an ERP migration is a lift and shift doesn’t necessarily deliver the value that customers want.

And so we’re really being able to show that in a few cases and now get that into the mine share, if you will, in those of the minds of our respective reps. And we just spent a lot of time in each other’s sales kickoffs and other things to sort of really drive that message home. I don’t want to tell you something else yet, but in May, we’ll have some more announcements on road maps and things that we think are really going to continue to accelerate what we’re trying to do. I think the other critical thing was just getting incentive plans aligned better so that we’re working more cohesively together. The support from the top has been nothing short of spectacular at this point in time. So we feel pretty confident that despite sort of not ending 2024 the way we would have liked it with SAP, all the building blocks are in the right place for 2025 and beyond.

Patrick Schulz: Okay. Helpful. And maybe one more for Patrick too, if I can. Just could you provide a little bit more color on some of the puts and takes embedded in the guidance for this year? I mean what type of demand environment and deal execution, does the guidance assume, and maybe you talk about how we should expect growth and net retention rates to trend throughout the year. Thanks guys.

Patrick Villanova: Thanks, Patrick. So as you think about the guidance, just looking at the sheer numbers, we’re guiding to 5% to 7% revenue growth in Q1 with a full year growth of 7% to 8%, which without FX, to be clear, would be $8 million to $9 million. So as you think about that, there’s an implicit inflection point in the guidance for the year in terms of how we expect to reaccelerate and exit 2025. So that’s the way I would think about it just overall mathematically. And then to a lot of the things that Owen spoke about and will speak about, a lot of the initiatives from a strategy perspective, they are taking root and taking traction, and that is part of the overall guidance strategy for this year.

Operator: Thank you. One moment for the next question. And our next question will be coming from the line of Koji Ikeda of Bank of America. Your line is open.

Koji Ikeda: Yeah. Hey, thanks so much for taking the question. I wanted to follow-up on that comment on the implicit inflection in the guide. And it sounds like you have a lot of confidence that, that’s going to be achievable this year because of the guidance. So maybe could you walk us through what is giving you the confidence and the visibility that the inflection is possible in 2025?

Owen Ryan: Yes. Hi, Koji, and thanks for question. I think what’s giving us the confidence is, if we sort of think about from September now through the beginning February, there’s just a number of things that are sort of different in the company. Remember, reason, I stepped into role, we talked about becoming more relevant to the office of the CFO. The way that’s beginning to manifest itself now is the quality of our pipeline is really quite strong. It’s growing rapidly. The mix of things that we want to see are much more in the mega enterprise and the enterprise space. There’s nice diversification from a geographic footprint perspective and the size of the deals are just larger. We’re sitting on for us what would be a record level of seven and eight figure deals that we feel optimistic about that we’re going to be able to bring into the organization.

And so when you start to think about those and these are much more transformative kind of opportunity where customers are looking at the broader platform, not just a piece of what we have to offer. And so we’re pretty — we feel pretty good about what’s going on there. I think the other things that just sort of matter is what we’re doing with our customers. You heard us talk about the strong revenue renewal, well, what’s driving that? Well, there’s a number of things, right? The go-live velocity is increasing. Our touch points for our customers, which is you know I’m all maniacal about trying to make sure we spend time with our customers that was up 72% of those customer touch points year-over-year. We’re seeing an improvement in the higher mix of well-adopted customers that we really want to have.

Our time to start a project from signing to kickoff is down by 40%. Our partners are leaning in, in ways that really are helping to get these deals moving and embraced. And even things like BlackLine University doubled the number of usage year-over-year. So when you start to look at all of that, that feels very good, then you get into the progress that we’re making in industry. So we had five industries we launched last year, really important to what we were trying to do. Improved our concept, our belief of the value of the industry. So we’ve just rolled out five more industries this year. That will put most of the company in sort of an industry vertical, which is important. The things we’re seeing — everybody is talking about DOGE in the FedRAMP space, and that’s certainly a huge opportunity, but maybe some have been focused on is the state level those efforts that are now beginning and things that are starting to show up in our pipeline and our conversations where local and state governments are starting to put much more pressure on, hey, what should we be doing to stamp out sort of inefficiency.

And so we’re seeing a nice pick up in those opportunities as well. So you start to look at all that and you put it together, the things we wanted to do, the things we said we would do on November 14, I think, it was when we were all together 19 we’re that much more bullish on February 11 because of what we’re seeing happening in the business.

Koji Ikeda: Thanks, Owen. And just a follow-up here, if I may. We definitely like what we heard at BeyondTheBlack from a tech strategy perspective and pricing and packaging and go-to market and so on and so forth. But hearing some of the commentary on the push deals, I’ve wondered, was too much introduced at one-time for the end market to really absorb. And is that driving some of the push deals as customers are just trying to figure out, what just — what did we just hear with BlackLine and how do we deal with all these changes from a positive perspective, we think. But how are they dealing with all that change?

Owen Ryan: Koji, I think that’s a great question, because it’s not only for our customers, it’s our own people’s ability to absorb everything that’s going on and our partners. And listen, Therese and the product and tech team have rolled out a lot of innovation in the last 12 to 15 months, which has been fantastic, but the ability for everybody to digest that has proven to be a little bit of a challenge. It’s just the reality that we’re at. And so we’re working very hard to go through what we would call commercialization process, from very beginning all the way to the end, if you will. And there’s some lessons learned and things that we need — there’s messaging we need to simplify and clarify. But you can, if you don’t innovate, you’re going to die.

And so we’ve chosen to sort of get the things we can into the marketplace. But there’s definitely lessons learned about, how best to bring that to the market. I will say the other thing, just from a timing perspective and once we get out of these BeyondTheBlack contracts, we won’t be doing in November, any longer. It’s just too late the year to have the conversations with customers to sort of get them acclimated. And I think that, that’s probably a lesson learned as well. If we really want to be able to have these conversations, share what we’re doing and then work through it with them with our partners, doing that earlier in the year is probably a positive thing for us to move towards.

Koji Ikeda: Thank you.

Operator: Thank you. One moment for the next question and our next question will be coming from the line of Steve Enders of Citi. Your line is open.

Steve Enders: Okay. Great. Thanks for taking me in and taking my questions here. I guess, I want to ask on the pricing and packaging changes that you’ve been starting to rollout to customers. I guess what’s, kind of the impact of those conversations so far? And maybe how are you kind of thinking about what that means for potential revenue impact or potential impact to the model as we think about how the year comes together?

Owen Ryan: Yeah. Well, I’ll take the — how it’s being received in the market, and Patrick, if you don’t mind just talking about some of the economics on it. So just as a reminder, we’re shifting to this model of changing pricing. And it’s based upon the concept of the number of transactions, the amount revenue the company has, the number of ERPs they work with, and the number of legal entities. And so clearly, it’s one of these things that the bigger your company generally seems to apply a little bit better. We officially launched in early January. The reaction has been positive. It certainly — it helps to standardize and simplify pricing and gives this unlimited pricing agreement for our customers, which they generally seem to like so far.

It gives us flexibility as we work with our customers to expand with them as they grow. But also importantly, as we’ve learned already, the ability to get into other parts of the organization beyond pure accounting matters — beyond pure the accounting team and so as we think about, again, becoming more relevant to the office of the CFO, we’re seeing this as a positive development. We do expect it to be accretive, as we move forward. Early adoption, again, we’re only five weeks into the year. We’re slightly ahead of where we thought we would be. The conversations, by and large, are pretty solid. I would say there’s always a little bit of confusion with our partners and our people making sure they’re exactly on message, but we’re working through some of those quick lessons that we’ve learned.

But this is really consistent with what we need to do strategically. Again, we talked about this at — BeyondTheblack and Investor Day. The priversity of our pricing model is the more efficient we make our customers the less users they need. We saw some of that attrition in the fourth quarter for some of our larger customers sort of downsized principally because they were using the technology so well. So I think that’s something that we’ve taken away and recognize we need to continue to accelerate moving to this new pricing model. But Patrick, could you maybe just talk about the economics of share?

Patrick Villanova: Yes. I think Owen covered most of it there. But one thing to highlight as part of this overall effort. We’ve been running a pilot for the last year to validate a lot of our assumptions about the success and validity of this model, which there were some good lessons learned that we’ve implemented that on a broader base. Something to keep in mind, though, I think there was a question earlier, is this too much too fast? Well, as it relates to pricing, this is a model we’re rolling out over the next three to four years in our investor base, and that is consistent with the message that we said at Investor Day. And we do expect to see a cumulative benefit of that as part of our overall account growth over that time. As we achieve our 13% to 16% target model. So that is something that is embedded within the model over the next three to four years, and we are rolling that out in Q1 of this year and then also introducing into new logos this year as well.

Steve Enders: Okay. Perfect. That’s helpful context there. And then I wanted to ask on some of the deal pushouts that happened here. I guess, is there a way to maybe frame the magnitude of impact that, that maybe had for 4Q from like an ARR or billings perspective? And I guess with yes,-secondarily with the deal the sales pushing out, like how do you kind of view the impact that would have from the year coming together from a new ARR perspective or the impact that would have on the pipeline development as we think about 2025.

Patrick Villanova: Well, I guess a couple of things there. To reiterate what I said earlier, our pipeline development has been strong for several — for quite some time now. So that’s a great indicator from an overall demand environment perspective. And we don’t believe that any of the slowdown in deal velocity at the end of the year was indicative of a slowing pipeline. In fact, the pipeline built even faster. So in that regard, I don’t think that’s an indicator of a broader demand matter. One thing to keep in mind when you’re — I believe it was out there, but when you’re thinking about DBNRR and ARR, the largest driving factor in the quarter was FX and it was a 2-point headwind on each one of those metrics. So that is something definitely to consider when you’re doing comparables period-over-period. And then the slipped deals were a subset or a smaller portion of that.

Steve Enders: Okay. Perfect. Appreciate the color. Thanks again for taking the questions.

Patrick Villanova: Thank you.

Operator: Thank you. One moment for the next question. And our next question will be coming from the line of Alex Sklar of Raymond James. Your line is open.

Alex Sklar: Great. Thank you. Owen, you brought a new Chief Commercial, Owen, Therese, I don’t know who want to take for you, but you brought a new commercial — Chief Commercial Officer to lead the go-to-market organization. Can you just talk about the process that landed on Stuart? And I know we’re just starting, but bigger picture, any changes at the start of the year, you said sales kickoff happened with the sales organization on plans or coverage, I think you mentioned something about tying some compensation to SolEx. So, I just want to see what was happening there as far as go-to-market year-over-year? Thanks.

Owen Ryan: Well, okay. So, from a process perspective, if anything, Theresa and I learned, and we’ve now changed over the whole leadership team other than our Chief Legal Officer from when we were in these roles two years ago. We looked for about a year to find the successor. We interviewed a lot of different candidates. We knew the incumbent wanted to retire. He was gracious in allowing us to work through that with him and our team. And so we were very, very selective, and we feel very, very fortunate to have Stuart join. By coincidence, we had here in New York today, a meeting of our go-to-market leadership of about 15 people across all different pieces of what we do. It probably couldn’t have been a better meeting in the sense of here’s where we’re at, here’s what we know we want to get done this year and here’s how we’re going to drive it.

I think just — when it’s into the meeting, it was pretty clear that Stuart was going to lean in, provide some really good interesting perspectives. And so I think that was very encouraging for what we need to do. Obviously, today, it was his first official day, but as you know, we announced this a little bit back. And in between, he was doing quite a bit of work with us in SAP trying to make sure that people are getting connected, helping to facilitate things in an appropriate way. And so that’s all been good. So, even though today was the first official day, it feels like he’s been on board with us now for five weeks, helping us try to move forward. But importantly, I think the team was really excited to have him here. I do expect, and I want him to be and told them, be disruptive in a positive way.

But we have to continue to grow and get better at what we do. And we think the experience that he brings from what he did with SAP in his prior life is going to serve all of us at BlackLine very, very well. So, we’re — we couldn’t be more excited to have him here and I think good things are on the horizon.

Alex Sklar: Okay, great. Just quickly. So, anything even before you join those as far as — I just want to clarify the point earlier about tying compensation of SolEx. Is that just for that select group or that was for the broader organization? And I have a follow-up.

Owen Ryan: Okay. So, we did make some changes to our comp models this year like everybody tweaks them every year, but we did form an SAP SolEx catalyst group. So, we have a team of people now that are dedicated on all aspects of what has to be done to work effectively with the SAP team. And we think that’s a good differentiator for us. We got a lot of positive feedback from the SAP team around that. Our own team is embracing it. And so we’re pretty encouraged about what we need to do there. As far as just getting SAP and BlackLine align. It’s all about cloud-based revenue. As you know, what their strategy is, what they’re trying to do. BlackLine fits well into that. There are some things that they’ve done by putting — and I think it was in Therese’s prepared remarks, putting us into their SAP EPM package.

So, you know that we already have all our core financial close capabilities in there and intercompany. But getting sort of that group reporting FRA into it, they call it FRO into their package was important. And then obviously, getting Studio360 feed to it. And again, well, the timing for that is as they go through their Sapphire Conference, I believe it’s in May or June, being able to officially launch that there as a fully integrated product. So those are the things we’re trying to do to drive behavior and pretty excited about it.

Operator: Thank you. One moment for the next question. And our next question will be coming from the line of Pinjalim Bora of JPMorgan. Your line is open.

Q – Unidentified Analyst: Great. This is Cheung Hun [ph] for Pinjalim. Thanks for taking the questions. Can you talk a bit about the assumptions around churn and retention to get to the 2025 guide? You mentioned the FX headwind in Q4, but any more color about the dynamics of both through 2025 would be great.

Owen Ryan: I’m trying to think about the things. So we’re continuing to work our way through the customer count churn at the lower end of the market. And I think that, that is something that still probably for a better part of 2025, we’ll feel that on the customer count side. Now these tend to not be very large dollars but that’s certainly something from a customer count, we’ll see. From a churn in the enterprise space, that’s not really the biggest issue for us, it is much more on the topic of attrition. I’d go back to the things that we talked about, right, earlier. Our ability to touch our customers with a greater frequency, whether it’s through our own account executives, our account management, our customer success people or our partners is having a very positive impact.

And we know if we sort of touch our customers, a certain number of times, for the year before it’s time to renew or anything like that to make sure that they’re on the right journey, and we can help them then we reduce the churn and attrition substantially. So a big piece of this is making sure that we’re in those conversations earlier with our customers and making sure that they’re on the right journey, which has been a big piece of what we’ve been working on over the last 18 months just making sure those customers understand the potential of BlackLine far beyond just pure financial close and all the other things that we can do to help them. And that’s probably the greatest indicator of what will drive down churn and attrition sort of from a year-over-year perspective, the percentages we would expect would probably come down a little bit.

But again, more of what we’ll look for is seeing that much more in 2026 than maybe even 2025.

Q – Unidentified Analyst: Got it. Okay. Thank you. And then last one, does Q1 reflect a change in guidance philosophy? And if so, how should we think about the magnitude of conservatism baked into the guide? Thank you.

Owen Ryan: Thank you for the question. I don’t know if conservatism is the word to apply, but I think this is the best way to capture the guidance philosophy for Q1 and for the year. We — I have set appropriate and achievable targets for this year. I will provide clarity on assumptions within the guide, some key risks that are out there. And I think the key word is probably some transparency on these risks and assumptions that could influence the numbers over the course of the year. And then, I guess, each quarter, we will continually reassess these targets and reassess some of these assumptions. And then to the extent necessary signal to the market if a change is warranted. But I would say, overall, like from a philosophy standpoint, that the key theme is transparency in the guide.

It’s both thoughtful and balanced. But if you look at what we’ve done here since our IPO eight, nine years ago, we built a lot of credibility within the markets. And my goal is to build upon that credibility as part of this philosophy.

Operator: Thank you. One moment for the next question. And the next question will be coming from the line of Daniel Jester of BMO Capital Markets. Your line is open.

Daniel Jester: Great. Thanks for taking my question this evening. It sounded like in the prepared remarks that invoice to cash was particularly strong in the quarter. Maybe can you just expand what’s resonating there? There were some product enhancements announced at — on the block, but anything more you can share around the momentum of that pillar would be great.

Owen Ryan: Yeah. I think there’s a couple of things, one is I think we’ve made improvements in the product. Two, we’ve upgraded the quality of the team. Three, we’ve been able to bring in people from competitors that that have decided that BlackLine is a better opportunity. And four, I think what we’re doing, so I was looking at sort of some Net Promoter Scores yesterday. And so for BlackLine, we’re a positive five who are archrival, if you will, in invoice to cash — negative 21. Our partners are really stepping up their activities because they like what BlackLine can bring. And so that’s been another critical piece of what we’re starting to see in invoice to cash. So that all comes together. We had a really nice quarter. We’re pretty optimistic about getting even more momentum as we head into 2025.

We will have some — maybe just sent to me as we were on the phone here, some interesting product updates, an invoice to cash by the time we’re talking to you in the second quarter. So all good stuff going on in that regard and we’re pleased, because it always takes longer to get it done than you’d like, but we’re on the move.

Daniel Jester: Great. Thank you. And then, Patrick, to you, I know you don’t guide on free cash flow, but there’s a lot of puts and takes with regards to FX and also I think cash taxes at 2025 progresses. So any color you can share about how we should be thinking about that going into this year? Thank you.

Patrick Villanova: Yeah. There’s probably two notable variables there on free cash flow. One, you hit the nail on the head. You probably saw it already in our release, but we did release a valuation allowance at the end of the year, which is an indication that not only are we profitable and have been profitable, but we intend to be for the foreseeable future. But with that comes a cash tax burden, which historically we did not have here at BlackLine. So I would think that if you’re estimating this or how to think about it, probably a cash tax rate in the low to mid-teens on a non-GAAP basis, on a prospective basis is about where a company with our profile would typically land. The other aspect to free cash flow, as you can see, we have a lower cash balance, which was intentional as part of our refinancing that we went through in May of 2024 and that’s coupled with a lower prevailing interest rate in the markets than last year.

Operator: Thank you. One moment for the next question. And our next question will be coming from the line of Adam Hotchkiss of Goldman Sachs. Your line is open.

Adam Hotchkiss: Thanks so much for taking the question. How is it going? On the pipeline, I wanted to ask, how much of that picking up is the work you’ve done in the partner network outside of SAP? I know they influence the vast majority of your large deals? Are you starting to see the fruit paying off there?

Owen Ryan: Yes. No, I would say, well, SAP’s always an important part of our pipeline, a couple of things. One is sort of what I would call self-generating, so our people are out there doing what we need them to do with more confidence about sort of the platform and what the art of the possible is with BlackLine. Theresa and I and our executives are in the field a lot more with those reps trying to help them engage those high-quality conversations. We’ve seen a nice upturn in opportunities with Workday, a partnership that we referenced in the prepared remarks. And so it’s pretty broad. So, yes, through SAP and what’s going on in the cloud migration, but equally important, what we’re generating on our own and then also through the strengthening relationship with Workday.

Adam Hotchkiss: Okay. That’s really helpful. And then the record strategic product quarter, just any additional color on the why now that’s picking up as a percent of the business? And then how you’re thinking about that into next year would be really helpful.

Owen Ryan: I’m glad you said why now. I’m like, why didn’t happen sooner. But appreciate. Yes, I think, look, it’s — listen, we went through a process last year where we put pillar leaders in charge of certain things. And so whether it’s invoice to cash intercompany, FRA, even there are some sub leaders underneath our Financial Close. When you get that additional focus, when you have sort of, I don’t want to say the single throat to choke. But if you have that person that’s waking up each and every day, trying to drive that success in the market eventually starts to come to bear. And so — it’s always a little bit lumpy. We’re pretty pleased with the progress that our pillar leaders have made in driving more success in the market.

Our reps have gotten more comfortable with the solution. So they’re more comfortable in introducing our pillar leaders and our pillar leaders are not shy at all to sort of go push their way into things to go have conversations plus our partners are much more comfortable and confident what we have. We spent a lot of time with our partner advisory board of what they like about the product, what we need to do and building their confidence in when they give the recommendation of BlackLine, whether it’s an invoice to cash or on an intercompany or consolidation that they can do that with no regrets, and that’s been important to them, and it’s helped us.

Operator: Thank you. One moment for the next question. And our next question will be coming from the line of Patrick Walravens of Citizens. Your line is open.

Patrick Walravens : Great. Thank you. So a lot of good information on this call. Owen, what do you think is the single most important thing for you to focus on in 2025?

Owen Ryan: Well, so yes, in a simple word, it would be execution. I would say, two things. One is really making sure and it goes back to Koji’s question, with all the innovation we’ve rolled out, how do we make sure our sales teams, our customer success teams, our pillar leaders, our partners can effectively communicate and bring that to bear in the marketplace. So that’s probably first and foremost. And then I think the second thing that I’m always worried about because I never want to lose a customer. I told you that, how do we make sure for those customers that feel like they stalled on their journey, and we see that we’re being much more proactive and engaging with them, how do we get those customers back on track, to take full advantage of what they’ve already purchased and then what the opportunities are for BlackLine to help them with down the road.

Now we keep saying we want to help inspire, power and guide digital finance transformation. That is not just one part of our pillar. That’s the whole platform that we’re trying to build — that we built out and are trying to execute against. And so Pat, that’s it. It’s nothing more execute, execute, execute on those two things.

Patrick Walravens: All right. If I could follow up, how do you do it on the second part for a customer who feels like they stalled on the journey? What’s the playbook?

Owen Ryan: Yes. Well, that’s it. I mean we’ve gone back, we look, we’ve taken the information about where we can see our customers either purchase stuff and they’re not using it well or not using it at all. What we’re doing is through the industry lens we’re saying, look, you’re a big airline, let’s say, use that as an example. You’re not using BlackLine anywhere near where your peer set is, how can we help you get back on that journey? And just using real information and real data, using our partner network, have those conversations to figure out because it’s sort of an, aha moment, when you can say, “Gee, I’m airline F and ABCDE are doing a whole lot better than I am. And so that’s what we’re trying to use. That’s why industry and the benchmarking data and information that we’re able to use with our customers has become increasingly important for us over this past year.

And we just came out of our own sales kickoffs over the last couple of weeks. I mean, our people are thirsting for more information around industries that they can go back to their customers and have these conversations. So we’re showing them the art of the possible, but also we’re showing them reality that says, you can do better, and we can help you get there.

Operator: Thank you. One moment for the next question. And the next question will be coming from the line of Jake Roberge of William Blair. Your line is open.

Jake Roberge: Yes. Thanks for taking my questions. Just wanted to follow-up on the push deals. It sounds like a lot of them have already closed in the new year, but just curious if you’re seeing or if there’s any potential for that slower deal velocity to continue in the new year with deals that you would have expected to close in Q1 or Q2? Or if you feel like that overhang has kind of cleared at this point?

Owen Ryan: That’s a really good question because I think what we’re seeing in some of these particularly larger deals is some extra eyes on these things at the company level. And so there’s a couple I could sort of walk through as examples. But needless to say, what our customers and prospects are doing is here doing a little bit more blueprinting and road mapping before they go live. So they’re sort of deferring start date. So even though we’ve been verbally told we’re going to win the work, we don’t have a signed contract and the start date gets pushed out as they’re trying to make sure their resources are aligned. One of the things we’re doing with our customers now is sort of what must be true for successful implementation is that’s what must be true from a customer perspective, a partner perspective and a BlackLine perspective.

And the more true boxes you can check, the higher the likelihood of success. And I think that’s a good thing for us to be doing with our customers because we want them to get up and running the right way. And I shared some stats before, how we’re sort of accelerating from contract signing to project kickoff is down 40%. The velocity of going live has increased. And so those things, while I think we’re going to be able to get deals executed more quickly, the signing of the contract may take just a little bit longer. I’ve got one that I sort of debated whether I tell you guys about this or not tonight. So we were awarded a very large contract at the end of January, which is an eight-figure deal. And it was our expectation that we would sign the paperwork probably the first or the second quarter.

And then start. And what the customers come back and asked is, well, we’re probably going to still going to sign [ph] the customer in the first three, four, five months of the year, but we’d like to defer the start date until end of the year, because they have things they want to do and get in place. And so again, this all sets up very nicely for 2026. It doesn’t do much for me in 2025. In fact, Patrick would tell there’d be no revenue recognition in 2025, the way we’re talking about the construct of the deal today. So I think the risk is that the customers may be a little bit more prudent and careful because of the size of the investment they’re now making with BlackLine. But I think eventually, that’s a better thing for us, because I think these customers are going to get off and running in the right way, with the right partner support, the right BlackLine support and the right commitment from their internal resources to improve the likelihood of success on ideal.

Jake Roberge: Okay. That’s really helpful. And then just on the retention front, good to hear the improvements in your revenue renewal rate. Do you feel like that mid-90s retention rate is the right way to think about things moving forward? And then now that churn seems to be stabilizing. Do you think we could start to see NRR re-expand as well?

Owen Ryan: That’s the goal. And I think that’s really what we’ve been driving towards because, again, if you think about our model, we have a certain number of customers that pay us over $1 million and some of them pay us close to $10 million. And what we just sort see is when you look at our customers by industry segment, as an example, why do we have some of them only spending a couple of hundred thousand versus $1 million. And what’s the opportunity to help them on that journey. And the more that they buy with us, it’s generally because we’ve made them more sticky, because we provided more value. And so that’s really what we’re trying to do is make sure that the customers use what they’ve already purchased and help expand into that relationship.

Do I think that the mid-90s on a combined 96% basis is about right? Yeah. I personally like it to even be higher, but that’s what we’re going to keep driving towards. I do feel like we had a little bit of a turning point as we got to the back half of 2024, it’s mattered who we’ve selected as customers in the mid-market. And I think what you’re seeing from our customer success team and others is when you pick the right customer that’s trying to do the right things, you see that go live velocity increasing and you see the time to get started decreasing. And so customer selection matters. And so I think we’ve gotten smart. It doesn’t mean we don’t have room to improve, but that will have a positive impact, particularly in the mid-market for us where sometimes you get more volatility with these customers that just can’t really absorb BlackLine the way we would like them to absorb BlackLine.

So we’re being smarter and more prudent about that.

Operator: Thank you. And the last question for today comes from the line of Terry Tillman of Truist Securities. Your line is open.

Dominique Manansala: This is Dominique Manansala on for Terry. Thanks for taking my question. So beyond FedRAMP certification, what other specific investments or go-to-market motions are you making to expand into the public sector? And I guess with potential shift in the new administration, you all mentioned, what’s the realistic time line for seeing meaningful revenue contribution from the segment?

Owen Ryan: Yeah. So one things we’ve been doing. So first of all, we’ve gotten some resellers signed up so that are now in the marketplace representing us. We’re looking to add some additional sales capacity internally. We’ve partnered up with a couple of the big SIs that have dominant federal space practices. So we’ve been spending a lot of time working with them about what agencies to target that are most right for the kind of things that we need to do. And then we’ve also been very fortunate in that some of these partners have really introduced us through their state and large city practices. And so that connective tissue has been something that’s very important for what we’re trying to do as well, because nobody is looking to sort of rate their budgets in this environment from a government perspective, so if they can drive more efficiency through the use of technology, we certainly see some real opportunities.

There’s a couple of decent sized ones we’re working already that started towards the back end of last year that are quite sizable. And so we’re pretty encouraged by what we’re seeing so far. Obviously, Patrick has talked about the level of investment that goes into that first being FedRAMP certified and then being at the highest level of FedRAMP certification will matter. But we do think that what’s going on in Washington to try to again improve efficiency, might create a little bit of short-term noise in the medium to long-term is positive. We don’t have a lot of revenue built into our plan for 2025 for FedRAMP, just out of an abundance of caution. But again, I think I don’t want to jinx it, but I think we’ll have more news to share when we get to our May call.

Operator: Thank you. And this does conclude today’s Q&A session. I would like to turn the call over to Owen for closing remarks. Please go ahead.

Owen Ryan: Guys, everyone, thank you for your questions. We really appreciate the thoughtfulness with which you asked. And we just want to thank you for your continued support and belief in what BlackLine is trying to do. And we feel like we’re on the right path and excited to take that journey with you. Have a good night, everybody. Talk soon.

Operator: Thank you for joining today’s conference call. You may all disconnect.