Blackline, Inc. · NASDAQ:BL
Blackline — Investor Day (September 2019)
104 slides from Blackline's investor day presentation, Sep 17, 2019
Slide 1: Investor Day
Investor Day SEPTEMBER 17, 2019
Slide 2: Agenda
Introduction Alexandra Geller, VP of IR Welcome Therese Tucker, Founder & CEO Tech Overview Agenda Pete Hirsch, CTO BREAK Go-to-Market Overview Marc Huffman, COO Financial Summary Mark Partin, CFO
Slide 3: Agenda: Q&A Panel
Q&A Panel Therese Tucker, Founder & CEO Pete Hirsch, CTO Marc Huffman, COO Mark Partin, CFO Tammy Coley, Chief Transformation Officer Karen Flathers, Chief Customer Officer Agenda Mark Woodhams, SVP of Global Sales
Slide 4: Safe Harbor
Safe Harbor This presentation contains forward-looking statements. These statements may relate to, but are not limited to, expectations of future operating results or financial performance of BlackLine, Inc. (“BlackLine” or the “Company”), the calculation of certain key financial and operating metri
Slide 5: Therese Tucker
. wil Therese Tucker FOUNDER & CEO
Slide 6: BlackLine Today
BlackLine Today 2,800+ 230K+ 130 15 Customers BlackLine Users Countries Languages 36% 54% 925+ 14 Fortune 500 Fortune 50 Employees Offices As of June 30, 2019
Slide 7: Scaling to Drive Sustainable Revenue Growth
OUR FOCUS: Scaling to Drive Sustainable Revenue Growth
Slide 8: Purpose Built Thought Leader Trusted
Purpose Thought Trusted Built Leader 8
Slide 9: The Finance Buyer is Uniquely Risk-Averse
The Finance Buyer is Uniquely Risk-Averse Reactive TRANSFORMATION OF THE FINANCIAL CLOSE Proactive Skeptical of change Customers who Customers looking to Finance & Accounting to existing manual experienced a material improve their acting as a strategic processes weakness or processes around the part
Slide 10: Vision: Lead Finance & Accounting Operations Through Transformation
VISION To Lead Finance & Accounting Operations Worldwide Through Strategic Finance Transformation 10
Slide 11: Ventana Research quote on Office of Finance
“After more than a decade of same-old-same-old, we’re seeing signs of improvement in the Office of Finance… It means that what was once an ‘average’ level of performance is now substandard.” Ventana Research Office of Finance Benchmark Research, July 2019 11
Slide 12: 81% of organizations finance function not strategic
81% 81% of organizations believe their finance function is not operating at a level necessary to transform into a strategic role within their corporation. Source: Ventana Research, July 2019 12
Slide 13: 51% of finance leaders feel stretched
51% 51% of finance leaders feel increased operational responsibilities are stretching their role. Source: EY Survey of Finance Leaders, 2016 13
Slide 14: 1/3 of accounting teams on low-value tasks
1/3 1/3 of accounting teams spend a majority of their time on repetitive low-value tasks. Source: IMA, 2016 14
Slide 15: The Financial Close is Chaos. On a Deadline.
The Financial Close is Chaos. On a Deadline. Controller CFO Finance Tax Marketing Statement of Cash Flows External Audit Sales Internal Audit SEC Reporting Income Statement CEO Accounts Receivable Investors People Accounts Payable Equity Balance Sheet Multiple ERPs Reporting Source Systems HRIS Phon
Slide 16: The Financial Close is Chaos. On a Deadline.
The Financial Close is Chaos. On a Deadline. Controller CFO Finance Tax Marketing Statement of Cash Flows External Audit Sales Internal Audit SEC Reporting Income Statement CEO Accounts Receivable Investors People Accounts Payable Equity Balance Sheet Multiple ERPs Reporting Source Systems HRIS Phon
Slide 17: …And It's Becoming Increasingly Challenging
…And It’s Becoming Increasingly Challenging Rising Business Global Regulatory Exponentially Growing Expectation of Accuracy Complexity Landscape Data Volume & Real-Time Data M&A SOX Compliance Unstructured Information Automation Globalization COSO Framework System Interoperability Robotics Transfer
Slide 18: Automation
Automation of the financial close process is the first step towards enabling strategic finance transformation
Slide 19: The Benefits of Financial Close Optimization
The Benefits of Financial Close Optimization Control Transparency Efficiency Confidence Accountability, Accuracy, Governance Visibility & Clarity Quantifiable ROI Confident Financials Efficient, Clean Audits Real-Time Access Automation Agile Decision-Making Strong Governance More informed, Quality D
Slide 20: BlackLine's Accounting Platform Enables Strategic Finance
BlackLine’s Accounting Platform Enables Strategic Finance Account Transaction Task Reconciliation Matching Management Compliance Accurate and effective account Match and reconcile millions of Visibility and control for any Elevated Control in the Cloud reconciliation process transactions in minutes
Slide 21: How We Continue to Win
How We Continue to Win BlackLine ensures financial integrity and makes it easier for accountants to do their job • Customer centricity • End-to-end accounting automation technology • Strong partner ecosystem • Happy, referenceable customers • Highly scalable and configurable • ERP agnostic • Deep ac
Slide 22: Strong & Passionate Management Team
Strong & Passionate Management Team Therese Tucker Mark Partin Marc Huffman Founder and Chief Chief Financial Officer Chief Operating Officer Executive Officer Pete Hirsch Mario Spanicciati Tammy Coley Chief Technology Officer Chief Strategy Officer Chief Transformation Officer Max Solonski Karen Fl
Slide 23: The Modern Accounting Platform
The Modern Accounting Platform PETE HIRSCH Chief Technology Officer
Slide 24: A look under the hood
A look under the hood Current Observations Future Opportunities • Great product • Accelerating innovation • Early adoption of AI • Becoming the hub of the ecosystem • Scalable to global customers • Widespread Artificial Intelligence • Supports complex customer environments • Openness We have the fou
Slide 25: Today's Foundation
Today’s Foundation
Slide 26: Pure SaaS Architecture
Security, Scalability, Reliability & Control • Cloud-based n-tier architecture with Single Sign On and configurable customization to meet business needs Pure SaaS • Blend of tenancy models for maximizing both data security and application scalability Architecture • Same version of software for all c
Slide 27: Scalability
• 2,800 customers with over 230,000 users • Over 25 customers with 1,000+ users each • Largest customer has 4,000+ users Scalability • • 50m monthly page views 10m-20m daily web requests • Scales both horizontally and vertically As of June 30, 2019
Slide 28: Industry Leading Security
The only ISO27001 certified Financial Close Platform Data Privacy Compliance Industry GDPR / CCPA / EU-US Privacy Shield Framework Leading Data Encryption AES-256 Encryption In-Transit + At-Rest Security Independent Assurance ISO27001 Certification SOC1/2/3 Reports External Pen Test
Slide 29: Purpose-Built for Accountants
Rich business services at the heart • Substantiate balance sheet accounts Purpose- • Automate high-volume reconciliations • Monitor financial close workflows Built for • • Standardize financial close processes Enhance control and accountability Accountants • Reduce audit headaches • Automate and man
Slide 30: …and why that's important
…and why that’s important Completeness Controls Connectivity
Slide 31: Sample Customer Deployments
Sample Customer Deployments
Slide 32: Sample Mid-Market Customer
Sample Mid-Market Customer 1 3 29 Global Region # of ERPs Data Sources 3M at 100% automation Matched Transactions/mo. 32
Slide 33: Sample Enterprise Customer
Sample Enterprise Customer 5 14 Global Regions # of ERPs 82 Data Sources 13M at 99.99% automation Matched Transactions/mo. 33
Slide 34: Trust in the numbers
BlackLine customers are able to manage the complexity of their business landscape with confidence and Trust in the numbers
Slide 35: Future Opportunities
Future Opportunities
Slide 36: Accelerating Innovation
Accelerating Innovation Organization Public Cloud Platform Architecture Data Integration • Investments in experienced leadership • Selection of Google Cloud Platform • Decomposition into core microservices • Self-service connectivity • New SF Bay Area presence • Simplification, plus new services • S
Slide 37: Becoming the Global Nexus of the Interconnected Accounting Landscape
Becoming the Global Nexus of the Interconnected Accounting Landscape 161 101M Unique ERPs Journal Lines 800M 2,800+ Matching records/mo. Customers 37 As of June 30, 2019
Slide 38: Widespread Artificial Intelligence
Widespread Artificial Intelligence Automated Deployed AI API-Driven RPA
Slide 39: Open Platform
Open Platform APIs ERPs Custom Applications Payment Systems Integrations Financial Planning Point of Sale Banks Procurement Alerts & Events Realtime Data RPA
Slide 40: Takeaways
• BlackLine provides the complete platform for modern accounting • Strong foundation in place today proven to scale to the world’s largest and most Takeaways • complex enterprises Opportunity to be the global nexus of the interconnected accounting landscape
Slide 41: BREAK
BREAK
Slide 42: Go To Market
Go To Market MARC HUFFMAN Chief Operating Officer
Slide 43: Where We Are Today
Where We Are Today
Slide 44: Growth
Corporate Fitness GTM Alignment Focused Execution Growth
Slide 45: Our Go To Market & Customer Strategy
Our Go To Market & Customer Strategy ENTERPRISE MID-MARKET ACCOUNT EXPANSION >$750M ANNUAL REVENUE $50M-750M ANNUAL REVENUE ~1 YEAR AFTER INITIAL SALE BlackLine Direct Sales BlackLine Account Management Global Sales SAP Reseller through SolEx Deployment Partner Ecosystem (Channel, SIs, BPOs, ERP, Co
Slide 46: Large & Underpenetrated Addressable Market
Large & Underpenetrated Addressable Market 165,000 Target Customers $18.5B* All Customers, Core Products 2,800+ Current Customers1 Current Customers Current Customers Whitespace 46Source: Frost and Sullivan/2018 TAM for Core Products $255M 1As of June 30, 2019 BLACKLINE LTM REVENUE
Slide 47: Driving Sustainable Growth
Driving Sustainable Growth
Slide 48: Growth Levers
• Strategic Partner to the CFO Growth • SAP SolEx Levers • • Customer Expansion Partner Ecosystem • International Expansion
Slide 49: Strategic Partner to the CFO
Strategic Partner to the CFO
Slide 50: Finance Transformation Journeys
Our goal is to be a strategic partner who leads our customers on their Finance Transformation Journeys.
Slide 51: Our experience has prepared us for this journey
Our experience has prepared us for this journey.
Slide 52: Manual
Manual Inefficient & Inconsistent Reactive Proactive Closing Partnering Risk Strategy
Slide 53: Controlled
Controlled Standardization & Accuracy Reactive Proactive Closing Partnering Risk Strategy
Slide 54: Optimized
Optimized Integration & Visibility Reactive Proactive Closing Partnering Risk Strategy
Slide 55: Advanced
Advanced Scale & Efficiency Reactive Proactive Closing Partnering Risk Strategy
Slide 56: Transformed
Transformed Reactive Proactive Closing Partnering Risk Strategy
Slide 57: Strategic Partner
Strategic Partner Integrated into Business Process STRATEGIC Ideas on How to Improve COLLABORATIVE Best Product PREFERRED Reasonably Priced TRANSACTIONAL
Slide 58: Strategic Partner: Global Customer Team
Strategic Partner Global Customer Team Integrated into Business Process STRATEGIC Value Professional Architects Services Ideas on How to Improve COLLABORATIVE Digital Best Product Customer Success Transformation Management Specialists (AIT) PREFERRED Reasonably Priced TRANSACTIONAL Support Community
Slide 59: AIT Customer Testimonial
“We are very appreciative of [AIT] efforts in helping us to better utilize BlackLine and to become more efficient and effective in our finance and accounting functions. They have been so amazing to work with and I can not adequately thank you enough.” Leading Hotel Management Company AIT Customer Te
Slide 60: Global Healthcare Company >$1M ACV: First Instance
Global Healthcare Company >$1M ACV First Instance One instance of Account Reconciliations across <0.1% of their employee population ACV FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Q2'19 60
Slide 61: Global Healthcare Company >$1M ACV: Scaled Users
Global Healthcare Company >$1M ACV Scaled Users Over Time Added users across various entities for global standardization of processes across a disparate set of ERPs ACV FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Q2'19 61
Slide 62: Global Healthcare Company >$1M ACV: Digital Transformation
Global Healthcare Company >$1M ACV Digital Transformation Deployed additional products including Journal Entries, Tasks, ICH & Transaction Matching, as well as additional users ACV FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Q2'19 62
Slide 63: Global Healthcare Company >$1M ACV: Continued Value Add
Global Healthcare Company >$1M ACV Continued Value Add Added incremental users for improved controls, enhanced internal capacity and better finance analytics across the business ACV FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Q2'19 63
Slide 64: Global Healthcare Company >$1M ACV: Room for Growth
Global Healthcare Company >$1M ACV Room for Growth ACV FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Q2'19 64
Slide 65: Driving Growth in Large Customers
Driving Growth in Large Customers 240 customers with an ACV of $250K+ 9 7 41%+ 6 2 231 203 CAGR in customers 1 162 spending $250K or more 112 72 2015 2016 2017 2018 Q2'2019 $250K or more $1M or more 65 ACV refers to annual subscription and support revenue. Q219 as of June 30, 2019.
Slide 66: SAP SolEx
SAP SolEx SAP” Solution Extension
Slide 67: Evolution Validation
Evolution Validation of an existing relationship of our leadership position 67
Slide 68: BlackLine's SAP TAM
BlackLine’s SAP TAM ~3,000 EMEA ~1,300 North America ~700 APJ ~9,000 ~4,000 Rest of World SAP Customers > $1B 68
Slide 69: BlackLine use case for SAP cloud
BlackLine use case for SAP cloud Enables a More Successful S/4HANA Upgrade • Clear Open Items (in SAP OIM) to prevent a technical failure on upgrade transition • • Reduce business complexity Maintain integrity and standardization throughout transition Clear benefits to adding BL before • Recognize i
Slide 70: Executing on the SAP Partnership
Executing on the SAP Partnership 400 Revenue from SAP Partnerships SolEx Pipeline Build % of Total From Beginning of Partnership 350 24% 300 23% 19% 250 16% 200 ACV 11% 150 100 50 0 2015 2016 2017 2018 YTD'19 70 Revenue from SAP Partnerships inclusive of EBS and SolEx. YTD’19 is for the 6 months end
Slide 71: SolEx Partnership Today
SolEx Partnership Today • SolEx Partnership less than one year in • Our focus is on continued joint enablement 71
Slide 72: Customer Expansion
Customer Expansion
Slide 73: Customer & User Growth
Customer & User Growth 54% of the Fortune 50 300,000 3,000 36% of the Fortune 500 250,000 2,500 200,000 2,000 CUSTOMERS USERS 150,000 1,500 100,000 1,000 50,000 500 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q2'19 Customers Users 73 2017 – Q2’19 includes adoption of strateg
Slide 74: Customer Expansion in Action
Customer Expansion in Action Mid-Market Customer Enterprise Customer Financial Services Company Current ACV of ~$130K Global Industrials Company Current ACV of ~$800K 140 $140,000 900 $900,000 800 $800,000 120 $120,000 700 $700,000 100 $100,000 600 $600,000 USERS USERS 80 $80,000 500 $500,000 60 $60
Slide 75: Strategic Product Installed Base Opportunity
Strategic Product Installed Base Opportunity TRANSACTION SMART INTERCOMPANY MATCHING CLOSE HUB Customers who are target candidates to add 2,800+ ~800 1,600+ Portion of this opportunity currently captured 21% 4% 1% Based on number of customers who have purchased these products as of June 30, 2019.
Slide 76: Partner Ecosystem
Partner Ecosystem
Slide 77: Partner Ecosystem
Partner Ecosystem RESELLER PARTNERS GLOBAL ALLIANCES REGIONAL PARTNERS SOLUTION PARTNERS BPO PARTNERS 77
Slide 78: International Expansion
International Expansion
Slide 79: Continued Global Expansion
Continued Global Expansion Looking Ahead North America Los Angeles New York Vancouver Chicago EMEA Dallas London Paris Frankfurt Netherlands Spain South Africa APJ Sydney FOCUS: Melbourne • Continue to penetrate existing markets Singapore • Add distribution to top markets by Hong Kong leveraging par
Slide 80: Competitive Advantage
Competitive Advantage
Slide 81: BlackLine's Superior Functionality
BlackLine’s Superior Functionality Market Leader Creating Lifelong Advocates COMPETITORS FCPM Focused ERP Niche Purpose Built for Accounting Track Record of Trust with Accountants Close Automation Unified Customer Experience Strategic Partner to the CFO 81
Slide 82: Mark Partin
Mark Partin CHIEF FINANCIAL OFFICER
Slide 83: The Strategic Finance Perspective from a CFO
The Strategic Finance Perspective from a CFO
Slide 84: How the CFO Role Has Evolved
Catalyst of How the Action CFO Role Performance Operator of Has Evolved Leader with Financial Efficiency Strategy in Mind Expert Over Time Steward of Control 84
Slide 85: CFO quote on spreadsheets
”As they bring their quintessential ‘spreadsheet’ to life, CFOs are playing a far more significant part in company decisions in an effort to achieve a more optimal, high performing business,” Shane Berry former senior vice president of AmEx’s global corporate payments division 85
Slide 86: 56% of CFOs cannot focus on strategic priorities
56% 56% of CFOs feel they cannot focus on strategic priorities because they have to spend a majority of their time on compliance, control and costs Source: E&Y, 2016
Slide 87: Automating the Financial Close is an Important First Step
Automating the Financial Close is an Important First Step Legacy Financial Close Strategic Initiatives Legacy Financial Close
Slide 88: Automating the Financial Close is an Important First Step
Automating the Financial Close is an Important First Step Automated Financial Close Strategic Initiatives Automated Financial Close …strategic finance is so much more than that 88
Slide 89: Strategic Finance Creates Value For the Entire Organization
Strategic Finance Creates Value For the Entire Organization STATUS QUO OPTIMIZED Gatekeepers of Finance Influential Strategic Players Manage Risk Analyze for Actionable Insight Monitor Investments Drive Investment Strategy Cast a Vote in an Executive Meeting Interact and Inspire Executives STRATEGIC
Slide 90: Key Metrics & Financials
Key Metrics & Financials
Slide 91: Financial Highlights
Financial Highlights 26% Q2’19 Revenue Growth1 108% Q2’19 Dollar-Based Net Revenue Retention Rate 83% Q2’19 Non-GAAP Gross Margin 8% Q2’19 Non-GAAP Operating Margin High Growth Compelling High Gross Demonstrated Subscription Model Expansion Model Margins Operating Leverage Strong secular tailwinds,
Slide 92: Highly Visible Subscription Growth Model
Highly Visible Subscription Growth Model Total Revenue Subscription & Support Revenue $255 $243 $M $M $217 26% 26% Y/Y Y/Y $228 Growth $167 Growth $118 $80 $176 2015 2016 2017 2018 LTM'19 Services Revenue $M $12 $124 $10 $9 20% Y/Y Growth $6 $4 $84 2015 2016 2017 2018 LTM'19 2015 2016 2017 2018 LTM'
Slide 93: Consistent Customer and User Growth
Consistent Customer and User Growth Customers Users ‘000s 2,813 237 2,631 223 197 2,208 167 1,758 1,338 129 2015 2016 2017 2018 Q2'19 2015 2016 2017 2018 Q2'19 93
Slide 94: Strong Renewal Rate Driving Overall Retention Rate
Strong Renewal Rate Driving Overall Retention Rate… Dollar-Based Revenue Renewal Rate Dollar-Based Net Revenue Retention Rate 120% 116% 112% 108% 108% 98% 98% 97% 97% 97% 2015 2016 2017 2018 Q2'19 2015 2016 2017 2018 Q2'19 Dollar-based revenue renewal rate for each period is calculated by dividing (
Slide 95: Across Both Market Segments
Across Both Market Segments Dollar-Based Revenue Renewal Rate Dollar-Based Net Revenue Retention Rate 121% 117% 113% 108% 109% 109% 109% 104% 106% 99% 99% 103% 98% 98% 98% 94% 92% 93% 92% 91% 2015 2016 2017 2018 Q2'19 2015 2016 2017 2018 Q2'19 Enterprise Mid-Market Enterprise Mid-Market 95 See footn
Slide 96: High Gross Margins and Expanding Operating Leverage
High Gross Margins and Expanding Operating Leverage Non-GAAP Gross Margin Non-GAAP Operating Expenses as % of Revenue 101% 20% 91% 84% 84% 84% 85% 86% 17% 80% 80% 78% 81% 81% 81% 82% 83% 21% 16% 17% 16% 16% 13% 12% 14% 61% 58% 51% 51% 48% 2015 2016 2017 2018 YTD'19 2015 2016 2017 2018 YTD'19 Subscri
Slide 97: Accelerated Investments in Growth Initiatives
Accelerated Investments in Growth Initiatives Non-GAAP Non-GAAP Investment Areas Gross Margin Operating Expenses as % of Revenue • SolEx • New Leadership • Professional Services • International Markets • Strategic Products • Customer Success Management • Digital Transformation Specialists (AIT) • Pr
Slide 98: Demonstrated Improvement in Profitability & Cash Flow
Demonstrated Improvement in Profitability & Cash Flow Non-GAAP Net Income Margin1 Free Cash Flow Margin 9% 9% 3% 2% 1% -1% -8% -13% -14% -24% 2015 2016 2017 2018 Q2'19 2015 2016 2017 2018 Q2'19 98 YTD’19 is for the 6 months ending June 30, 2019. 2017-18 & YTD’19 are under ASC 606. All prior periods
Slide 99: Target Operating Model
Target Operating Model % of Revenue FY14 FY15 FY16 FY17 FY18 YTD’19 Target Model Services Revenue 5% 4% 4% 5% 5% 5% 5% - 10% Gross Margin1 82% 81% 81% 81% 82% 83% ~80% S&M1 48% 61% 58% 51% 51% 48% 40% - 45% R&D1 17% 21% 16% 13% 12% 14% 10% - 12% G&A1 17% 20% 17% 16% 17% 16% 7% - 9% Operating Margin1
Slide 100: Q&A Panel
Q&A Panel Therese Tucker Pete Hirsch Marc Huffman Mark Partin Tammy Coley Karen Flathers Mark Woodhams Founder and Chief Chief Technology Chief Operating Chief Financial Chief Chief Customer SVP Global Sales Executive Officer Officer Officer Officer Transformation Officer Officer
Slide 101: Appendix
Appendix
Slide 102: Non-GAAP Revenue, Gross Profit, and Free Cash Flow
NON-GAAP RECONCILIATIONS AND DEFINITIONS NON-GAAP REVENUE, NON-GAAP GROSS PROFIT, AND FREE CASH FLOW ($000’S) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 2014 2015 2016 2017 2018 Non-GAAP Revenues GAAP Revenues $38,181 $41,981 $45,424 $50,017 $51,284 $55,454 $58,7
Slide 103: Non-GAAP Operating Income and Net Income
NON-GAAP RECONCILIATIONS NON-GAAP OPERATING INCOME (LOSS) AND NON-GAAP NET INCOME (LOSS) ($000’S) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 2014 2015 2016 2017 2018 Non-GAAP Income (Loss) from Operations GAAP Loss from Operations $ (7,050) $ (6,843) $ (12,298) $
Slide 104: Non-GAAP S&M, R&D, G&A
NON-GAAP RECONCILIATIONS NON-GAAP S&M, NON-GAAP R&D, NON-GAAP G&A ($000’S) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 2014 2015 2016 2017 2018 GAAP Sales and Marketing Expense $ 21,820 $ 23,992 $ 32,048 $ 26,107 $ 29,227 $ 32,150 $ 31,709 $ 35,722 $ 35,848 $ 37,1