BlackLine outlines 20% bookings growth target for 2026 as platform pricing accelerates adoption

Earnings Call Insights: BlackLine (BL) Q3 2025

MANAGEMENT VIEW

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Owen Ryan, Chairman & CEO, highlighted the completion of a two-year transformation involving leadership, go-to-market, and technology changes, stating these efforts are “beginning to deliver tangible results.” He noted, “Revenue growth increased to 7.5%. We achieved a non-GAAP operating margin of 21.4% and a free cash flow margin of 32%.”

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Ryan emphasized new customer acquisition strength, with “new customer bookings… up 45% and the quality of these wins is evident with the average new deal size more than doubling by 111%.” He cited significant wins, including the company’s largest-ever total contract value deal and new platform pricing adoption accounting for nearly three-quarters of new customer bookings.

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Strategic emphasis was placed on platform-based pricing and Studio360, with Ryan stating, “Our platform pricing model is designed to decouple our growth from a simple seat count and align our revenue directly with the value we deliver.” He also discussed AI innovation, mentioning the launch of Vera, the conversational AI, and progress with Verity AI agents.

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Patrick Villanova, Chief Financial Officer, reported, “Total revenue grew to over $178 million, up 7.5%. Subscription revenue grew 7%, with services revenue growth of 13%.” He highlighted a record quarter for cash flow, with “operating cash flow… $64 million and free cash flow… $57 million.”

OUTLOOK

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Villanova projected Q4 revenue “to be in the range of $182 million to $184 million, representing approximately 7.4% to 8.6% growth.” Non-GAAP operating margin is expected “in the range of 24% to 25%,” with non-GAAP net income between $42 million and $44 million or $0.58 to $0.61 per share.

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Full-year 2025 guidance was updated: “We expect total GAAP revenue to be in the range of $699 million to $701 million, representing approximately 7% to 7.3% growth.” Non-GAAP operating margin is forecasted at “22% to 22.5%,” and non-GAAP net income attributable to BlackLine projected at $153 million to $157 million or $2.08 to $2.13 per share.

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Ryan stated, “Based on our strong pipeline, the adoption of our platform pricing model and operational improvements, we expect to deliver a combination of accelerating revenue growth and continued margin expansion next year, assuming a stable macro environment.” Management specifically referenced “gross bookings growth… about 20% next year.”

FINANCIAL RESULTS

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Villanova reported annual recurring revenue of $685 million, up 7.3%, and total RPO growth of 12.4%. The average contract length was 27 months, with “new customer contract length… up nearly 10 months versus the prior year.”

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Calculated billings grew 4% in the quarter, with trailing 12-month billings growth at 7%.

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Strategic products accounted for 36% of sales, up from 32% last year. SolEx contributed 26% of total revenue.

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Non-GAAP subscription gross margin was 82%, aggregate non-GAAP gross margin was approximately 79%, and non-GAAP operating margin was 21.4%. Non-GAAP net income attributable to BlackLine was $38 million.

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The company reported repurchasing approximately 2.1 million shares for $113 million during the quarter.

Q&A

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John O'Neill, Wolfe Research: Asked about large customers pausing user adds as they consider Studio360 and AI offerings, and whether this impacted net new ARR. Villanova responded, “We did see some deals slip at the end of the quarter… probably a couple of million dollars of delayed deals… now in the fourth quarter.”

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Robert Oliver, Baird: Probed on automation’s impact on seat count and logo churn. Ryan explained, “Our performance this year is showing the ability to land larger, more transformational deals… new customer bookings… up over 40% this quarter, and our net average deal sizes have doubled since last year.” He detailed two types of attrition: success-based (fewer licenses needed due to automation) and underadoption.

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Christopher Quintero, Morgan Stanley: Asked about drivers of expected 20% bookings growth. Ryan attributed it to “changing the conversations… at higher levels in organizations,” deepened partner relationships, and product-led growth. Quintero also asked about competitive takeaways, with Ryan stating, “We are seeing a nice uptick in competitive wins.”

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Alexander Sklar, Raymond James: Sought specifics on the SAP partnership and macro factors. Ryan noted a “solid” SAP relationship and cited global engagement. Villanova said the 2026 growth outlook assumes “the environment that we’re in today.”

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Koji Ikeda, BofA Securities: Inquired about shareholder value strategies. Ryan reiterated focus on “reaccelerating growth… driving bottom line performance, returning cash to shareholders.”

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Adam Hotchkiss, Goldman Sachs: Asked about automating implementation to lower sales cycles. Ryan described leadership changes and plans to launch AI-driven implementation agents, with expectations for “an insignificant cutoff of time” to go-live in 2026.

SENTIMENT ANALYSIS

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Analysts pressed management on the impact of automation and seat attrition, delayed deals, and the ability to deliver on growth targets, indicating a slightly cautious but constructive tone.

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Management maintained a confident tone in both prepared remarks and Q&A, repeatedly referencing strategic wins, improved execution, and “great confidence” in meeting or exceeding stated targets. Ryan stated, “These factors give us great confidence in our ability to deliver sustained profitable growth.”

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Compared to last quarter, analyst tone remained probing but focused more on the sustainability of recent improvements and clarity on guidance. Management’s tone shifted from disciplined optimism to increased confidence and assertiveness about strategic direction and future performance.

QUARTER-OVER-QUARTER COMPARISON

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Q3 guidance for revenue and net income was in line with Q2’s upward revisions, but Q4 guidance and preliminary 2026 outlook explicitly call for accelerating growth and margin expansion.

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Strategic focus continues shifting from smaller customers to larger, more transformational deals, with a higher mix of platform pricing and multiyear renewals.

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Management’s tone is more assertive about margin expansion and decoupling growth from seat count, compared to the previous quarter’s emphasis on foundational transformation.

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Analyst focus shifted from leadership changes and early pricing adoption to the drivers and risks of delivering on the new bookings and margin targets.

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The company now highlights increased productivity, operational leverage, and AI-driven automation as key levers, while the previous quarter emphasized foundational platform and go-to-market enhancements.

RISKS AND CONCERNS

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Management acknowledged a slight headwind to net revenue retention from the transition to platform pricing and automation, as some customers require fewer licenses.

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The strategic deemphasis of lower-end customers is nearing completion, with expected headwinds to subside by mid-2026.

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Villanova noted, “net user adds slow in advance of customers adopting our platform pricing model and evaluating our AI road map.”

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Delayed deals and customer pauses related to major product transitions and AI offerings were cited as near-term risks, though management described these as transitory.

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Ongoing focus on expense management, operational efficiency, and customer adoption are cited as mitigation strategies.

FINAL TAKEAWAY

BlackLine management emphasized the successful completion of foundational changes, the strong adoption of platform pricing, and significant progress in AI-enabled innovation as key drivers for anticipated accelerating growth and margin expansion into 2026. Confidence in achieving a 20% bookings growth rate and delivering sustained profitable growth was underscored by robust new customer wins, larger contract values, and increasing operational leverage, with management reiterating a focus on shareholder value and consistent execution.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/bl/earnings/transcripts]

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