Blackline, Inc. · NASDAQ:BL
Blackline — Investor Presentation (May 2019)
34 slides from Blackline's investor presentation, May 2, 2019
Slide 1: Modernizing the Way Accounting & Finance Work
MODERNIZING THE WAY ACCOUNTING & FINANCE WORK As of May 2, 2019 1
Slide 2: 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 3: BlackLine Highlights
BLACKLINE HIGHLIGHTS • Modernizing Accounting and Finance with 100% SaaS-Based Platform • Award Winning Solutions with Strong Culture of Innovation • Global, Diverse Customer Base with Demonstrated Expansion Opportunities 25% 108% ~$18B Q12019 REVENUE DOLLAR-BASED NET TOTAL CORE GROWTH1 REVENUE RETE
Slide 4: What We Do
WHAT WE DO The Financial Close is a recurring process that transforms raw data into the audited financials that investors and senior management review. Today these functions are typically performed in widely dispersed disconnected spreadsheets. BlackLine’s cloud platform gives accountants Deep Stron
Slide 5: Accelerating Challenges for Key Business Functions
ACCELERATING CHALLENGES FOR KEY BUSINESS FUNCTIONS Increasing Regulatory Scrutiny SOX Compliance | COSO Framework | BEPS | IRS Section 385 Rising Business Complexity M&A | Globalization | Transfer Pricing Agreements | Disparate IT Investments Expectation of Accuracy & Real-Time Data Automation | Rob
Slide 6: Current Methods Are Inefficient and Error Prone
CURRENT METHODS ARE INEFFICIENT AND ERROR PRONE FX, TAX & HISTORICAL BANK DATA TRANSFER PRICING ERPs TRANSACTIONAL SYSTEMS RECORDS & SUPPORT CONTROLLERS CFOs & ACCOUNTANTS AUDITORS & MANAGERS SENIOR EXECS 6
Slide 7: BlackLine Transforms the Financial Close
BLACKLINE TRANSFORMS THE FINANCIAL CLOSE FX, TAX & HISTORICAL BANK DATA TRANSFER PRICING ERPs TRANSACTIONAL SYSTEMS RECORDS & SUPPORT AUTOMATED INTERFACING BETWEEN DATA SOURCES & BLACKLINE PRODUCTS CONTROLLERS CFOs & ACCOUNTANTS AUDITORS & MANAGERS SENIOR EXECS 7
Slide 8: The Future Is Continuous Accounting
THE FUTURE IS CONTINUOUS ACCOUNTING 8
Slide 9: Continuous Accounting Journey
CONTINUOUS ACCOUNTING JOURNEY TRANSFORMATION 4 Intercompany Hub Smart Close ADVANCED RECORD–TO–REPORT 3 Transaction Matching Journal Entry INTERNAL CONTROLS 2 Variance Analysis Compliance MODERNIZED RECORD–TO–REPORT 1 Account Reconciliations Task Management PLATFORM ELEMENTS APIs & Connectivity Plat
Slide 10: Significant Market Opportunity
SIGNIFICANT MARKET OPPORTUNITY 165K GLOBAL TARGET 13M GLOBAL F&A ~$18B CORE GLOBAL MARKET COMPANIES1 PROFESSIONALS1 BY 20181 2,700+ 227,000 ~$241M2 BLACKLINE BLACKLINE BLACKLINE CUSTOMERS USERS REVENUE (at 3/31/19) (at 3/31/19) (TTM) 1 Source: Frost and Sullivan/ 2018 TAM for Core Products 2 Non-GAA
Slide 11: Strength Across Geographies, Sectors & Sizes
STRENGTH ACROSS GEOGRAPHIES, SECTORS & SIZES 227,000 2,700+ Finance End-Users Global Customers Note: As of 3/31/2019 11
Slide 12: Appeal Across the Entire Organization
APPEAL ACROSS THE ENTIRE ORGANIZATION CFOs & SENIOR EXECS • Greater confidence and visibility CONTROLLERS in financial reporting & MANAGERS • Increased compliance with • Lives with manual close processes regulations such as Sarbanes-Oxley • Directly responsible for quality • Reduced head counts and
Slide 13: Go to Market Approach
GO TO MARKET APPROACH Direct Sales Force ~$18B GLOBAL MARKET2 Partner Ecosystem Enterprise: >$500M 13M Finance & Accounting • Consulting Firms Professionals1 Mid-Market1: $50M – $500M • ERP Providers • BPO Services • Channel Partners 1Mid-Market is defined as customers that generally have $500 milli
Slide 14: Proven Land & Expand
PROVEN LAND & EXPAND Customer Adoption Example • Purchased Full Suite of Products • Continued Automation of Finance Function ANNUAL RECURRING • 30 users grew to 690+ REVENUE • Expanded Globally to All Entities YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 + Account Reconciliations + Transaction Matching + Glob
Slide 15: Competitive Landscape
COMPETITIVE LANDSCAPE STATUS QUO Market Pioneer 100% SaaS-based platform POINT ERP agnostic Trintech SOLUTIONS Highly scalable and configurable ERPs SolEx (Solution Extension) OTHER ERP VENDORS NO CORE OFFERING 15
Slide 16: ERPs Provide a Lot of Functionality
ERPs PROVIDE A LOT OF FUNCTIONALITY 16
Slide 17: Best of Breed Provide Superior Solutions
“BEST OF BREED” PROVIDE SUPERIOR SOLUTIONS 17
Slide 18: BlackLine Financials
BLACKLINE FINANCIALS 18
Slide 19: Financial Highlights
FINANCIAL HIGHLIGHTS High Growth Compelling High DEMONSTRATED Subscription Expansion Gross OPERATING Model Model Margins LEVERAGE 25% 108% 83% 1% Q1’19 REVENUE GROWTH1 DOLLAR-BASED NET REVENUE Q1’19 GROSS MARGIN Q1’19 OPERATING MARGIN RETENTION AT 3/31/2019 (NON-GAAP) (NON-GAAP) Strong secular tailw
Slide 20: Consistent Subscription Revenue Growth
CONSISTENT SUBSCRIPTION REVENUE GROWTH Annual Quarterly (Non-GAAP) $M $228 (Non-GAAP) $M Subscription Services $64 $62 $176 $59 $55 $50 $51 $45 $124 $42 $38 $36 $32 $84 $27 $29 $24 $57 $19 $22 $18 2014 2015 2016 2017 2018 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18
Slide 21: Strong Global Customer & User Growth
STRONG GLOBAL CUSTOMER & USER GROWTH 2,631 2,707 2,402 2,494 2,208 2,297 2,091 1,978 1,758 1,850 1,625 Customers 1,338 1,411 1,523 1,145 1,219 1,067 26% CAGR Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 223 227 210 215 197 202 186 171 179 167
Slide 22: Increasing Average Revenue Per Customer
INCREASING AVERAGE REVENUE PER CUSTOMER Average Revenue Per Customer - Total (Non-GAAP) $000’s $87 $80 $70 $62 $57 2014 2015 2016 2017 2018 Revenue per customer calculated as the non-GAAP revenue in a given period divided by the number of customers at the end of the period. See Appendix for GAAP fin
Slide 23: Compelling Land and Expand Model
COMPELLING LAND AND EXPAND MODEL Annualized Revenue By Customer Cohort1 2018 CAGR: 2017 45% 2016 22% 2015 15% 2014 19% 2013 24% 2012 24% 2012 2013 2014 2015 2016 2017 2018 1 Reflects annualized subscription and support revenue for the group of customers that became our customers in each respective c
Slide 24: Opportunities to Expand Relationships with Customers
OPPORTUNITIES TO EXPAND RELATIONSHIPS WITH CUSTOMERS Opportunities to Expand Trusted Relationship with Customers Initial Current Opportunity Core Product Opportunity User expansion; Higher adoption of core product suite; Value pricing $6M 3.7x $6M $22M 3x - 5x $6M $22M Strategic Products Opportunity
Slide 25: Strong Gross Margin & Demonstrated Operating Leverage
STRONG GROSS MARGIN & DEMONSTRATED OPERATING LEVERAGE 81% 81% 81% 82% 83% Gross Margin (Non-GAAP) 2015 2016 2017 2018 Q1'19 61% 58% 21% 20% 51% 51% 50% 17% 17% 18% 16% 16% 15% 13% 12% 2015 2016 2017 2018 Q1'19 2015 2016 2017 2018 Q1'19 2015 2016 2017 2018 Q1'19 Sales & Marketing Expense Research & D
Slide 26: Demonstrated Operating Leverage Driving Profitability
DEMONSTRATED OPERATING LEVERAGE DRIVING PROFITABILITY 2% 2% 1% 1% 1% -1% -8% -10% -14% -21% 2015 2016 2017 2018 Q1'19 2015 2016 2017 2018 Q1'19 Operating Income/(Loss) Margin Free Cash Flow Margin (% of Non-GAAP Revenue) (% of Non-GAAP Revenue) 2017, 2018 under ASC 606 standard/ Prior periods are un
Slide 27: Long-Term Target Operating Model
LONG-TERMLONG-TERM TARGET OPERATING MODEL TARGET MODEL % of Non-GAAP FY14 FY15 FY16 FY17 FY18 LT Target Revenue Model Gross Margin 82% 81% 81% 81% 82% ~80% S&M 48% 61% 58% 51% 51% 40% - 45% R&D 17% 21% 16% 13% 12% 10% - 12% G&A 17% 20% 17% 16% 17% 7% - 9% Operating Margin 0% -21% -10% 1% 2% 20%+ 201
Slide 28: Growth Strategy
GROWTH STRATEGY 5 4 INNOVATE CONTINUOUSLY EXTEND OUR 3 Build new products ECOSYSTEM to automate accounting 2 FOCUS ON Build new ERP, BPO, everywhere MID-MARKET Channel, and Consulting partnerships 1 LAND & Deliver finance EXPAND automation to this INTERNATIONAL Add new solutions, large, underserved,
Slide 29: Building for the Future
BUILDING FOR THE FUTURE 2019 2018 • Be the model for CX • Maintain our people and 2017 • • Be the model for CX Execute an effective and customer centric culture • Whole Product Offering united GTM strategy 2016 • • Enhance the customer journey Tailor S&M initiatives • Maintain our people and custome
Slide 30: BlackLine Highlights
BLACKLINE HIGHLIGHTS • Modernizing Accounting and Finance with 100% SaaS-Based Platform • Award Winning Solutions with Strong Culture of Innovation • Global, Diverse Customer Base with Demonstrated Expansion Opportunities 25% 108% ~$18B Q12019 REVENUE DOLLAR-BASED NET TOTAL CORE GROWTH1 REVENUE RETE
Slide 31: Appendix Materials
APPENDIX MATERIALS 31
Slide 32: Non-GAAP Reconciliations and Definitions
NON-GAAP RECONCILIATIONS AND DEFINITIONS NON-GAAP REVENUE, NON-GAAP GROSS PROFIT, AND FREE CASH FLOW ($ IN 000’S) Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 2014 2015 2016 2017 2018 Non-GAAP Revenues GAAP Revenues $26,561 $29,026 $32,196 $
Slide 33: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS NON-GAAP OPERATING INCOME (LOSS) AND NON-GAAP NET INCOME (LOSS) ($ IN 000’S) Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 2014 2015 2016 2017 2018 Non-GAAP Income (Loss) from Operations GAAP Loss from Operations ($9,
Slide 34: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS NON-GAAP S&M, NON-GAAP R&D, NON-GAAP G&A ($ IN 000’S) Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 2014 2015 2016 2017 2018 GAAP Sales and Marketing Expense $18,169 $19,073 $19,037 $21,531 $ 21,820 $ 23,992 $ 32,048