BlackLine ((BL)) has held its Q3 earnings call. Read on for the main highlights of the call.
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BlackLine’s recent earnings call conveyed a cautiously optimistic sentiment, highlighting several positive developments such as revenue growth, successful new customer acquisitions, and significant partner wins. However, the company also faced challenges, including user attrition, impacts from strategic deemphasis, and delayed deals. Despite these hurdles, there is confidence in future growth and operational improvements.
Increased Revenue and Margin Expansion
BlackLine reported a revenue growth of 7.5%, showcasing its ability to expand its financial performance. The company achieved a non-GAAP operating margin of 21.4% and a free cash flow margin of 32%, indicating strong financial health and efficient operations.
New Customer Acquisition Success
The company experienced a significant boost in new customer bookings, which rose by 45%. The average new deal size more than doubled by 111%, and the median new deal size increased by approximately 50%, reflecting BlackLine’s successful strategies in attracting and securing new clients.
Significant Partner Wins
BlackLine closed notable deals with Coca-Cola Europe Pacific Partners and Boots U.K. Limited through the SolEx channel, underscoring the strength of its partnership with SAP. These wins demonstrate the company’s ability to leverage strategic alliances to drive growth.
Improved Implementation Efficiency
The company reported a nearly 70% year-over-year increase in the number of customer go-lives, with a 17% sequential growth. This improvement highlights BlackLine’s enhanced implementation processes and its ability to deliver solutions efficiently to its clients.
User Attrition Challenges
Higher levels of automation led to user attrition, with several large customers pausing user additions due to strategic discussions about platform pricing and AI offerings. This challenge underscores the need for BlackLine to balance automation advancements with customer retention strategies.
Impact of Strategic Deemphasis
BlackLine’s strategic deemphasis on the lower end of the market is nearing its conclusion, resulting in planned churn. This strategy created a slight headwind to net revenue retention, but it aligns with the company’s focus on more profitable segments.
Delayed Deals
The company experienced delays in a couple of million dollars worth of deals at the end of the third quarter due to interest in AI offerings. These delays impacted net new ARR, highlighting the challenges of aligning product offerings with market demand.
Positive Outlook for 2026
Looking ahead, BlackLine anticipates accelerating revenue growth and continued margin expansion in 2026, assuming a stable macro environment. The company is optimistic about its strong pipeline, platform pricing adoption, and operational improvements, which are expected to drive future success.
In summary, BlackLine’s earnings call reflected a cautiously optimistic outlook, with notable achievements in revenue growth, customer acquisition, and strategic partnerships. Despite facing challenges such as user attrition and delayed deals, the company remains confident in its future growth prospects and operational enhancements.