Blackline, Inc. · NASDAQ:BL
Blackline — Investor Day (November 2017)
71 slides from Blackline's investor day presentation, Nov 15, 2017
Slide 1: Analyst & Investor Day
01 / Introduction Analyst & Investor Day November 15, 2017 Modernizing the Way Accounting & Finance Work
Slide 2: Introduction
01 / Introduction Mark Partin, Chief Financial Officer Trust is in the Balance™ 2
Slide 3: 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 certai n key financial and operating metr
Slide 4: Agenda
AGENDA 12:00 PM – 12:30 PM Registration and Lunch 12:30 PM – 12:35 PM Introduction | Mark Partin, Chief Financial Officer 12:35 PM – 1:15 PM Strategy, Product, Execution | Therese Tucker, Founder & CEO 1:15 PM – 1:45 PM Customer Success | Karen Flathers, Chief Customer Officer 1:45 PM – 2:15 PM Go-t
Slide 5: Strategy, Product, Execution
02 / Strategy, Product, Execution Therese Tucker, Founder & CEO Trust is in the Balance™ 5
Slide 6: Key Themes
KEY THEMES 1. Seismic Shifts for the Future of Finance 2. Our Vision 3. Expanding on Our Opportunity 4. Product Roadmap 5. Key Initiatives Trust is in the Balance™ 6
Slide 7: Seismic Shifts
SEISMIC SHIFTS Coming to Finance & Accounting 1 2 3 4 5 Repetitive Record-to- Office of F&A shifts General Ledger accounting report shifts Finance shifts to business grows to automation to real time to analytics partnering Distributed Ledger with ML & AI • Rule-based systems • In-memory and cloud- •
Slide 8: When will this happen?
When will this happen? Trust is in the Balance™ 8
Slide 9: The Future
THE FUTURE AI Automated Analytics Real Time 30-50% of traditional shared By 2020, insights-driven 60% of the world's top 1,000 services roles, including those businesses will steal $1.2 companies will be using cloud in finance, will disappear over trillion per annum from their financial corporate pe
Slide 10: We help our customers ensure integrity in their financials
We help our customers ensure integrity in their financials. Trust is in the Balance™ 10
Slide 11: Ensuring Integrity
ENSURING INTEGRITY Trust is in the Balance 1 Empower finance to provide strategic value and better guide business 2 Facilitate process standardization, technical automation, and continuous operations with real-time intelligence analysis 3 Break the rigid accounting calendar of legacy processes to me
Slide 12: Continuous Accounting
CONTINUOUS ACCOUNTING Account Reconciliations Sandbox Task Environment Management ERP FINANCIAL INTEGRITY Insights Transaction & Benchmarks Matching INTELLIGENT PROCESS SUBLEDGER AUTOMATION RULES & ANALYSIS BUSINESS & REPORTS LOGIC GLOBAL, UNIFIED CLOSE F&A DATABASE PROCESS FINANCE PERFORMANCE BANKS
Slide 13: Our Opportunity
OUR OPPORTUNITY Augmenting Freeing Embedding the ERP Accountants Data Integrity BlackLine is a system BlackLine removes the BlackLine embeds of interaction that simplifies need for humans to integrity in financial F&A by augmenting the manually complete high data and every finance system of record v
Slide 14: Large & Growing Market Opportunity
LARGE & GROWING MARKET OPPORTUNITY 165,000 Target Customers $18.5B* All Customers, Core Products 2,000+ Current Customers Current Customers Current Customers Whitespace * Source: Frost and Sullivan/ 2018 TAM for Core Products Trust is in the Balance™ 14
Slide 15: Strategic Expansion Opportunities
STRATEGIC EXPANSION OPPORTUNITIES Robotic Process Automation Close & Compliance Enhancements ERP Automation Intercompany Accounting Cloud FCPM Trust is in the Balance™ 15
Slide 16: Market Leadership
MARKET LEADERSHIP Leading Cloud Domain Expertise: 2,000+ Customers FCPM Vendor* Close, Reconciliation, Across the World and Intercompany * Source: Gartner Trust is in the Balance™ 16
Slide 17: Key Product Initiatives
KEY PRODUCT INITIATIVES 1. Intercompany Accounting 2. Visualizing Intelligence for Finance 3. Reconciliation, Close & Compliance Trust is in the Balance™ 17
Slide 18: Key Product Initiatives: Intercompany Accounting
KEY PRODUCT INITIATIVES Intercompany Accounting New Advanced Enhanced User Multilateral Dashboards Invoicing Transfer Pricing Interface Netting & & Reporting & Tax Support Redesign Settlement Trust is in the Balance™ 18
Slide 19: Key Product Initiatives
KEY PRODUCT INITIATIVES 1. Intercompany Accounting 2. Visualizing Intelligence for Finance 3. Reconciliation, Close & Compliance Trust is in the Balance™ 19
Slide 20: Reporting: Open Item Aging
BLACKLINE Reporting SUM OF ITEM AMOUNT ACCOUNT ITEM AGE CAT. ENTITY Atlanta ‘Auckland BlackLine Chicago London Paris Sydney United States 1.0-10 (2) Filters Applied — Item ID (1), 1.0-10 ‘ABS(ITEM AM. (137,759,660. 300,000.00 16,273,870.77 (12,000.00) (108,681.93) 137,986,776.00 (801.92) (2,117.74)
Slide 21: Reporting: Timeliness
BLACKLINE Reporting COUNT OF AC 200 ENTITY Atlanta Atlanta Atlanta Atlanta Atlanta Atlanta Atlanta Atlanta Auckland Australia Berlin BlackLine ITB17 - Timeliness @ Black, Pat @ Unassigned © Brady, Pamela @ Wilson, Kim @ Buac, James @ Wolfe, Ken @ Wong, Kay ‘Auto Late (1) Filter Applied — Active Stat
Slide 22: Reporting: Completeness of Tasks
BLACKLINE Reporting / 1TB17 - Completeness of Tasks Preview Data @ So ENTITY @ AccountManaged @ NotPrepared @ Prepared @ Reviewed * Grid Visualize Global Filters Current Period v Pivot Columns 1 @ Active Certification Status Row Groups 1 @ Entity o 50 100 150 200 Sorting 0 @ COUNT OF TASKS v ¥ Field
Slide 23: Reporting: Assignment Workload
BLACKLINE Reporting ITB17 - Assignment Workload Control Preview Data @ PREPARER NAME = @ Key @ Non-Key Black, Pat (UN Brady, Pamela US Buac, James TT Miller, Chris (0) nan lili vison, Kir iii Wot, Ken nnn or, Ky SS ill 0 v PREPARER NAME APPROVER N. Black, Pat Block, Patty Black, Pat Wilson, Kim Brad
Slide 24: Reporting: Rejections and Reasons
BLACKLINE Reporting / 1TB17 - Rejections and Reasons Preview Data @ > Run Report So COUNT OF ACCOUNT ID @ Black, Pat © Miller, Chris @ Wilson, Kim @ Wolfe,Ken @ Wong, Kay 2 Grid Visualize 16 14 12 10 Global Filters 8 é Reconciliations Only v 3 |_| Current Period ~ 0 — — Accounting Policy Not. Insuff
Slide 25: Key Product Initiatives
KEY PRODUCT INITIATIVES 1. Intercompany Accounting 2. Visualizing Intelligence for Finance 3. Reconciliation, Close & Compliance Trust is in the Balance™ 25
Slide 26: Programs
BLACKLINE Programs v vy 2017 SOX Audit - Interim Testing 2017 SOX Audit - Roll Forward Global Inte Internal Controls - SG 1 Internal Controls - Texas 2016 SOX Audit - Interim Testing 302 HR Sub Certificatio 2: iness Continuity an ontrols - SOX 2017 Disaster Recovery Accounts Receivable Self Assessme
Slide 27: Sub Certification
BLACKLINE Programs | 302 Sub Certification Actionsy << > OVERVIEW %37OGS January 1, 2017 December 31, 2017 33 0 Description stow More 302 Sub Certification Controls 33 Actions ~ Add Controls Tv ¥ 1D NAME ISSUES REMEDIATIONS ENTITY OWNER TEMPLATE WORKFLOW AP 15-1 Vendor Bank Validation-1 0 0 APAC Kay
Slide 28: Reconciliation
BLACKLINE Reconciliation Atlanta-1009 Adions¥ <> = | SUMMARY ITE Summary USD v ~ Auto-Certification Settings GL Balance 1,900,560.11 Unidentified Difference 0.00 Subtotal 3,200.34 Auto-Certify Exemp! Auto-Certification Threshold Amount Recurring Auto-Certification Limit Override Global Auto Certific
Slide 29: Key Initiatives
KEY INITIATIVES 1 2 3 4 Strengthen Increase Extend Expand our position of leadership adoption, advanced our leadership in the strategic value to our in the reconciliations/close usage, and upsell broader financial software customers through enhanced space and capitalize on the revenue for additional
Slide 30: Our customers' success is our success
Our customers’ success is our success. Trust is in the Balance™ 30
Slide 31: Customer Success
03 / Customer Success Karen Flathers, Chief Customer Officer Trust is in the Balance™ 31
Slide 32: Be the model for superlative customer service in SaaS
Be the model for superlative customer service in the SaaS industry. Trust is in the Balance™ 32
Slide 33: Balancing Customer Centricity and Scale
BALANCING CUSTOMER CENTRICITY AND SCALE Knowledgeable Technology Accessible Efficiency Personal Self-service CUSTOMER CENTRICITY SCALING Trust is in the Balance™ 33
Slide 34: Organized Around the Customer Journey
ORGANIZED AROUND THE CUSTOMER JOURNEY Solutions Embark Consultants Customer Extend Success Professional Implement 1. The customer journey is non-linear Services Management 2. Roles and processes are fluid and evolving Customer 3. Customer touch points are optimized Support Training Enable Trust is i
Slide 35: Customer Service Groups & Metrics
CUSTOMER SERVICE GROUPS & METRICS Team Key Metrics Success Metrics • 67% in North America, 33% International • Win rate Solutions Consultants • 800 demos per quarter • ARR $ • NPS • 81% in North America, 19% International Professional Services • % Utilization • 275 projects per quarter • Project suc
Slide 36: Evolving the Customer Experience
EVOLVING THE CUSTOMER EXPERIENCE PAST PRESENT FUTURE Embark Product Use Case Value Engineering Implement Assisting Guiding Best Practices Enable Reactive Proactive Multi Channel Support Generalist Specialist Technology Enabled Extend Responding Initiating Data Driven Engagement Trust is in the Balan
Slide 37: Go-to-Market
04 / Go-to-Market Chris Murphy, Chief Revenue Officer Trust is in the Balance™ 37
Slide 38: Strength Across Geographies, Sectors & Sizes
STRENGTH ACROSS GEOGRAPHIES, SECTORS & SIZES 186,000+ Finance End-Users 2,000+ Global Customers 130+ Countries Reached Trust is in the Balance™ 38
Slide 39: Global Sales Deployment
GLOBAL SALES DEPLOYMENT AMERICAS EMEA APAC >US$500M Los Angeles London Sydney Enterprise Market Atlanta Paris Melbourne DIRECT – FIELD SALES New York Frankfurt Singapore Vancouver Netherlands Kuala Lumpur South Africa US$50M - $500M Mid-Market DIRECT – INSIDE SALES Solution
Slide 40: BlackLine Ecosystem
BLACKLINE ECOSYSTEM BPO SERVICES CONSULTING FIRMS DIRECT SALES Enterprise Market Mid-Market >US$500M US$50M - $500M ERP PROVIDERS CHANNEL PARTNERS Trust is in the Balance™ 40
Slide 41: QCR Headcount
QCR HEADCOUNT Investing to Capture a Large Market Opportunity 100% +33% 50% 46% 56% 65% 27% 25% 27% 20% 15% 21% 10% 10% 7% 10% 6% 5% 2014 2015 2016 2017 YTD 2014 2015 2016 2017 YTD Trust is in the Balance™ NA Enterprise NA Mid-Market EMEA APAC 41
Slide 42: Global Revenue Mix
GLOBAL REVENUE MIX 2014 2017 YTD 89% US 80% US 11% International 20% International Trust is in the Balance™ 42
Slide 43: Accelerating Growth in Customers with Large Deal Sizes
ACCELERATING GROWTH IN CUSTOMERS WITH LARGE DEAL SIZES 2014 – 2017 YTD # Customers Growth 2,091 1,758 ~3.0x 1,338 987 ~2.5x ~2.0x 2014 2015 2016 2017 YTD Deal Size Trust is in the Balance™ >$100K $50 - $100K <$50K 43 2017 YTD – For 9 months ending September 30, 2017
Slide 44: Enterprise – Land & Expand
ENTERPRISE – LAND & EXPAND Customer Examples (ARR in $000s) Healthcare Company Industrial Company $1,522 $901 $1,139 $511 +170% $625 +72% $364 $476 $500 $197 $120 $54 $23 $42 $19 APR DEC DEC DEC DEC SEP DEC DEC DEC DEC DEC DEC DEC SEP 2013 2013 2014 2015 2016 2017 2010 2011 2012 2013 2014 2015 2016
Slide 45: Mid-Market – Land & Expand
MID-MARKET – LAND & EXPAND Customer Examples (ARR in $000s) Financial Company Technology Company $166 $163 $133 +51% $122 +70% $47 $52 $57 $33 $39 $17 $17 AUG DEC DEC DEC SEP JUN DEC DEC DEC DEC SEP 2014 2014 2015 2016 2017 2013 2013 2014 2015 2016 2017 Trust is in the Balance™ 45
Slide 46: Competition
COMPETITION FCPM Focused ERP Niche Why We Win BlackLine Competitor Competitor Competitor Cloud Platform, Security & Delivery Model Transaction Processing, Account Reconciliation, Balance Sheet Substantiation Global Close Process Management Data Connectivity & Reporting Customer Satisfaction Trust is
Slide 47: Key Takeaways
KEY TAKEAWAYS 1. Significant Market Opportunity 2. Structured for Growth and Scalability 3. Strong Momentum Across Markets 4. Market Leader Trust is in the Balance™ 47
Slide 48: Customer Panel
05 / Customer Panel Mario Spanicciati, Chief Marketing Officer Trust is in the Balance™ 48
Slide 49: Customer Panel
CUSTOMER PANEL Jenna Stengert Molly Boyle Wendy Shapiro Trust is in the Balance™ 49
Slide 50: Finance Transformation Using BlackLine
06 / Finance Transformation Using BlackLine Tammy Coley, Chief Strategy Officer Trust is in the Balance™ 50
Slide 51: Continuous Improvement: Accounting Transformation Journey
CONTINUOUS IMPROVEMENT Accounting Transformation Journey Reconciliations Variance Analysis Companywide, 18 Field Locations JANUARY 2012 NOVEMBER 2006 – JUNE 2007 Internal Controls Journal Entries Journal Entries Governance Tasks Document Repository Workflow GL and AP Analysis 2013 - 2014 JULY 2006 N
Slide 52: Continuous Improvement: Results
CONTINUOUS IMPROVEMENT Results 80% 93% 75% 90% of 4,000 recs reduction in manual of journals of journals (20,000 accounts) journals from 3,000 recorded pre-close automated auto-certified to <200 per month Trust is in the Balance™ 52
Slide 53: Post Transformation
POST TRANSFORMATION Visibility, Integrity & Efficiency Heightened emphasis on the accuracy of the accounting Significantly enhanced internal controls Fewer resources required Shortened month-end close to 3 to 4 days Trust is in the Balance™ 53
Slide 54: Post Transformation
POST TRANSFORMATION Value-Adding Business Partner 1 Greater focus on non-routine accounting and analysis in partnership with the business 2 Frequent discussions with business partners embedded in accounting process 3 Reliance on accounting for contributions to key decision-making 4 Ongoing process r
Slide 55: 7 Foundational Elements of Finance Transformation
7 FOUNDATIONAL ELEMENTS OF FINANCE TRANSFORMATION Evolution of mindset – continuous improvement Establish and track metrics Eliminate unnecessary tasks / activities Stop Chasing pennies and implement materiality thresholds Automate the calculation and posting of routine journal entries and preparati
Slide 56: Making the journey accessible and achievable for all customers
Making the journey accessible and achievable for all customers. Trust is in the Balance™ 56
Slide 57: Financial Review
07 / Financial Review Mark Partin, Chief Financial Officer Trust is in the Balance™ 57
Slide 58: Financial Highlights
FINANCIAL HIGHLIGHTS Strong Compelling High Revenue Expansion Gross Growth Model Margins 42% 113% 81% Demonstrated Operating Q3 FY2017 REVENUE GROWTH DOLLAR-BASED NET REVENUE Q3 FY2017 GROSS MARGIN (vs. Q3 FY2016) RETENTION AT 9/30/2017 (NON-GAAP) Leverage Strong secular tailwinds, High predictabili
Slide 59: Consistent Revenue Growth & Strong Subscription Revenue
CONSISTENT REVENUE GROWTH & STRONG SUBSCRIPTION REVENUE Annual Quarterly (Non-GAAP) $M $163 (Non-GAAP) $M SERVICES SUBSCRIPTION $46 $124 $42 $39 $36 $32 $84 $29 $27 $24 $57 $22 $18 $19 FY 2014 FY 2015 FY 2016 LTM* Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 201
Slide 60: Strong Global Customer & User Growth
STRONG GLOBAL CUSTOMER & USER GROWTH 1,978 2,091 1,758 1,850 Customers 1,523 1,625 1,338 1,411 1,145 1,219 1,067 28% CAGR Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 171 179 186 Users 157 167 147 000’s 120 129 137 103 111 24% CAGR Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q
Slide 61: Increasing Average Revenue Per Customer
INCREASING AVERAGE REVENUE PER CUSTOMER Average Revenue Per Customer - Enterprise1,2 (Non-GAAP) $000s Average Revenue Per Customer - Total1,2 (Non-GAAP) $000s $111 $98 $83 $74 $78 $70 $62 2014 2015 2016 LTM3 $57 Average Revenue Per Customer – Mid-Market1,2 (Non-GAAP) $000s $30 $27 $21 $17 2014 2015
Slide 62: Compelling Land and Expand Model
COMPELLING LAND AND EXPAND MODEL Annualized Revenue By Customer Cohort1 Growth Year Multiple2 2017 1.1x 2016 1.4x 2015 1.5x 2014 1.9x 2013 2.5x 2012 3.5x 2012 2013 2014 2015 2016 YTD 2017 1 Reflects annualized subscription and support revenue for the group of customers that became our customers in e
Slide 63: Consistently High Gross Margin & Operating Leverage
CONSISTENTLY HIGH GROSS MARGIN & HIGH DEGREE OF OPERATING LEVERAGE 82.0% 80.7% 81.3% 80.7% Gross Margin (Non-GAAP) 2014 2015 2016 YTD 2017 61% 21% 20% 58% 55% 17% 17% 16% 48% 17% 16% 14% 2014 2015 2016 YTD 2017 2014 2015 2016 YTD 2017 2014 2015 2016 YTD 2017 Sales & Marketing Expense Research & Deve
Slide 64: Operating Leverage Driving Path to Profitability
OPERATING LEVERAGE DRIVING PATH TO PROFITABILITY 11% 1% -0% -1% -1% -4% -8% -10% -8% -8% -21% -14% 2014 2015 2016 Q1 Q2 Q3 2014 2015 2016 Q1 Q2 Q3 2017 2017 2017 2017 2017 2017 Operating Loss1 Margin Free Cash Flow2 Margin (% of Non-GAAP Revenue) (% of Non-GAAP Revenue) 1 Non-GAAP operating income/(
Slide 65: Long-Term Target Operating Model
LONG-TERM TARGET OPERATING MODEL % of Non-GAAP Revenue 2014 2015 2016 Q1 Q2 Q3 LT Target 2017 2017 2017 Model Gross Margin1 82% 81% 81% 81% 80% 81% ~80% S&M2 48% 61% 58% 57% 55% 54% 40% - 45% R&D3 17% 21% 16% 15% 14% 12% 10% - 12% G&A4 17% 20% 17% 17% 15% 16% 7% - 9% Operating Margin5 0% -21% -10% -
Slide 66: ASC 606
ASC 606 We will adopt the new standard using the full retrospective approach at the beginning of Q1 FY2018 Current Standard ASC 605 New Standard ASC 606 Subscription / SaaS Ratable Ratable Professional Services Percentage of completion or over time as hours are incurred Over time as hours are incurr
Slide 67: Question & Answer
Question & Answer Trust is in the Balance™ 67
Slide 68: Appendix
Appendix Trust is in the Balance™ 68
Slide 69: 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 ($ IN 000’S) Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 2013 2014 2015 2016 N o n- G A A P R e v e nue s G A A P R e v e nue s $ 18 ,0 4 7 $ 19 ,4 2 5 $ 2
Slide 70: Non-GAAP Operating Loss and Net Loss
NON-GAAP RECONCILIATIONS NON-GAAP OPERATING LOSS AND NON-GAAP NET LOSS ($ IN 000’S) Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 2013 2014 2015 2016 N o n- G A A P Inc o m e ( Lo s s ) f ro m O pe ra t io ns G A A P Lo s s f ro m O pe ra t io ns ( $ 5 ,9 3
Slide 71: Non-GAAP S&M, R&D, G&A
NON-GAAP RECONCILIATIONS NON-GAAP S&M, NON-GAAP R&D, NON-GAAP G&A ($ IN 000’S) Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 2013 2014 2015 2016 G A A P S a le s a nd M a rk e t ing E xpe ns e $ 11,6 5 7 $ 13 ,2 9 7 $ 14 ,7 4 0 $ 16 ,8 5 2 $ 18 ,16 9 $ 19 ,0