BL BlackLine Inc

BlackLine, Inc. (Nasdaq: BL), today announced financial results for the fourth quarter and full year ended December 31, 2023.

"BlackLine closed the year with solid results, surpassing our expectations for both revenue and profitability, highlighting the powerful operating leverage embedded in our model," said Owen Ryan, co-CEO of BlackLine. "Further, we aligned to a new operating model that directly supports our strategy of leading with solutions and harnessing the power of our partner ecosystem to solve real business problems for our customers."

"Customer-centric innovation has consistently been at the core of our culture, our strategy, and our success at BlackLine. It serves as the catalyst for inspiring, powering, and guiding digital finance transformation for our customers," said Therese Tucker, co-CEO of BlackLine. "As we look ahead, our teams are committed to executing and showcasing why BlackLine stands as a market leader and the ideal partner for the Office of the CFO."

Fourth Quarter 2023 Financial Highlights

• Total GAAP revenues of $155.7 million, an increase of 11% compared to the fourth quarter of 2022.
• GAAP operating margin of 8.2%, compared to 2.3% in the fourth quarter of 2022.
• Non-GAAP operating margin of 24.8%, compared to 12.8% in the fourth quarter of 2022.
• GAAP net income attributable to BlackLine of $22.1 million, or $0.32 per diluted share, compared to GAAP net income attributable to BlackLine of $11.3 million, or $0.18 per diluted share, in the fourth quarter of 2022.
• Non-GAAP net income attributable to BlackLine of $51.5 million, or $0.69 per diluted share, compared to non-GAAP net income attributable to BlackLine of $25.5 million, or $0.35 per diluted share, in the fourth quarter of 2022.
• Operating cash flow of $42.2 million, compared to $25.8 million in the fourth quarter of 2022.
• Free cash flow of $35.3 million, compared to $20.3 million in the fourth quarter of 2022.

Full Year 2023 Financial Highlights

• Total GAAP revenues of $590.0 million, an increase of 13% from 2022.
• GAAP operating margin of 2.4%, compared to (10.7)% in 2022.
• Non-GAAP operating margin of 16.5%, compared to 6.1% in 2022.
• GAAP net income attributable to BlackLine of $52.8 million, or $0.81 per diluted share, compared to GAAP net loss attributable to BlackLine of $29.4 million, or $(0.49) per diluted share, in 2022.
• Non-GAAP net income attributable to BlackLine of $145.2 million, or $1.96 per diluted share, compared to non-GAAP net income attributable to BlackLine of $46.2 million, or $0.64 per diluted share, in 2022.
• Operating cash flow of $126.6 million, compared to $56.0 million from 2022.
• Free cash flow of $99.0 million, compared to $25.7 million from 2022.

Fourth Quarter Key Metrics and Recent Business Highlights

• Added 30 net new customers in the fourth quarter for a total of 4,398 customers at December 31, 2023.
• Expanded the Company’s user base to 386,814 users at December 31, 2023.
• Achieved a dollar-based net revenue retention rate of 106% at December 31, 2023.
• Announced new Trade Management capabilities for Intercompany Financial Management.
• Announced the hiring of a new Chief Marketing Officer and Chief Information Officer.

The financial results included in this press release are preliminary and subject to final review. Financial results will not be final until BlackLine files its Annual Report on Form 10-K for the period. Information about BlackLine’s use of non-GAAP financial measures is provided below under “Use of Non-GAAP Financial Measures.”

Financial Outlook

First Quarter 2024

• Total GAAP revenue is expected to be in the range of $154 million to $156 million.
• Non-GAAP operating margin is expected to be in the range of 15% to 16%.
• Non-GAAP net income attributable to BlackLine is expected to be in the range of $34 million to $36 million, or $0.45 to $0.48 per share, on 75.8 million diluted weighted average shares outstanding.

Full Year 2024

• Total GAAP revenue is expected to be in the range of $637.5 million to $649.5 million.
• Non-GAAP operating margin is expected to be in the range of 17% to 18%.
• Non-GAAP net income attributable to BlackLine is expected to be in the range of $153 million to $163 million, or $2.01 to $2.14 per share, on 76.0 million diluted weighted average shares outstanding.

Guidance for non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss) attributable to BlackLine, and non-GAAP net income (loss) attributable to BlackLine per share excludes specified items from the corresponding GAAP financial measures including the impact of the provision for (benefit from) income taxes related to acquisitions, amortization of acquired intangible assets, stock-based compensation, amortization of debt issuance costs, change in fair value of contingent consideration, transaction-related costs, and the adjustment to the redeemable non-controlling interest to the redemption amount as detailed in the reconciliations of non-GAAP measures for historical periods. Reconciliations of non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss) attributable to BlackLine, and non-GAAP net income (loss) attributable to BlackLine per share guidance to the most directly comparable U.S. GAAP measures are not available on a forward-looking basis without unreasonable efforts due to the unpredictability and complexity of the charges excluded from these non-GAAP financial measures. The Company expects the variability of the above items could have a significant, and potentially unpredictable, impact on its future GAAP operating income (loss), operating margin, net income (loss) attributable to BlackLine, and net income (loss) attributable to BlackLine per share.

Quarterly Conference Call

BlackLine will hold a conference call to discuss its fourth quarter and full year 2023 results at 2:00 p.m. Pacific time on Tuesday, February 13, 2024. A live audio webcast will be accessible on BlackLine’s investor relations website at https://investors.blackline.com. Participants can pre-register for the conference call. A replay of the webcast will be available at https://investors.blackline.com for 12 months. BlackLine has used, and intends to continue to use, its Investor Relations website as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

About BlackLine

Companies come to BlackLine (Nasdaq: BL) because their traditional manual accounting and finance processes are not sustainable. BlackLine’s market-leading cloud platform and customer service help companies move to modern accounting by unifying their data and processes, automating repetitive work, and driving accountability through visibility. BlackLine provides solutions to manage and automate financial close, intercompany accounting, invoice-to-cash, and consolidation processes, inspiring, powering, and guiding large enterprises and midsize businesses on their digital finance transformation journeys.

More than 4,300 customers trust BlackLine to help them close faster with complete and accurate results. The Company is the pioneer of the cloud financial close market and is recognized as the leader by customers at leading end-user review sites including G2 and TrustRadius. BlackLine is a global company with operations in major business centers including Los Angeles, New York, the San Francisco Bay area, London, Paris, Frankfurt, Tokyo, Singapore, and Sydney. For more information, please visit blackline.com.

Forward-looking Statements

This release and the conference call referenced above contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “would,” “continue,” “ongoing” or the negative of these terms or other comparable terminology. Forward-looking statements in this release and quarterly conference call include, but are not limited to, statements regarding BlackLine’s future financial and operational performance, including, without limitation, GAAP and non-GAAP guidance for the first quarter and full year of 2024, the impact of progress against certain key initiatives, our expectations for our business, including the demand environment, BlackLine’s addressable market, market position and pipeline, our international growth, and our relationships with our customers and partners, including opportunities to expand those relationships.

Any forward-looking statements contained in this press release or the quarterly conference call are based upon BlackLine’s historical performance and its current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith beliefs and assumptions as of that time with respect to future events, and are subject to risks and uncertainties. If any of these risks or uncertainties materialize or if any assumptions prove incorrect, actual performance or results may differ materially from those expressed in or suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to risks related to the Company’s ability to attract new customers and expand sales to existing customers; the extent to which customers renew their subscription agreements or increase the number of users; the impact of current and future economic uncertainty and other unfavorable conditions in the Company's industry or the global economy, the Company’s ability to manage growth and scale effectively, including entry into new geographies; the Company’s ability to provide successful enhancements, new features and modifications to its software solutions; the Company’s ability to develop new products and software solutions and the success of any new product and service introductions; the Company's ability to effectively incorporate artificial intelligence and machine learning technologies (AI/ML) into its platform and business and the potential reputational harm or legal liability that may result from the use of AI/ML solutions and features; the success of the Company’s strategic relationships with technology vendors and business process outsourcers, channel partners and alliance partners; any breaches of the Company’s security measures; a disruption in the Company’s hosting network infrastructure; costs and reputational harm that could result from defects in the Company’s solution; the loss of any key employees; continued strong demand for the Company’s software in the United States, Europe, Asia Pacific and Latin America; the Company’s ability to compete as the financial close management provider for organizations of all sizes; the timing and success of solutions offered by competitors; including competitors' ability to incorporate AI/ML into products and offerings more quickly or successfully; changes in the proportion of the Company’s customer base that is comprised of enterprise or mid-sized organizations; the Company’s ability to expand and effectively manage its sales teams and their performance and productivity; fluctuations in our financial results due to long and increasingly variable sales cycles, failure to protect the Company’s intellectual property; the Company’s ability to integrate acquired businesses and technologies successfully or achieve the expected benefits of such transactions; unpredictable and uncertain macro and regional economic conditions; seasonality; changes in current tax or accounting rules; cyber attacks and the risk that the Company’s security measures may not be sufficient to secure its customer or confidential data adequately; acts of terrorism or other vandalism, war or natural disasters including the effects of climate change; the impact of any determination of deficiencies or weaknesses in our internal controls and processes; and other risks and uncertainties described in the other filings we make with the Securities and Exchange Commission from time to time, including the risks described under the heading “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 filed with the Securities and Exchange Commission on November 3, 2023. Additional information will also be set forth in our Annual Report on Form 10-K for the year ended December 31, 2023. Forward-looking statements should not be read as a guarantee of future performance or results, and you should not place undue reliance on such statements. Except as required by law, we do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. All of the information in this press release is subject to completion of our quarterly review process.

Use of Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles, or GAAP, BlackLine has provided in this release and the quarterly conference call held on February 13, 2024, certain financial measures that have not been prepared in accordance with GAAP defined as “non-GAAP financial measures,” which include (i) non-GAAP gross profit and non-GAAP gross margin, (ii) non-GAAP operating expenses, (iii) non-GAAP income (loss) from operations and non-GAAP operating margin, (iv) non-GAAP net income (loss) attributable to BlackLine, Inc. (v) diluted non-GAAP net income (loss) attributable to BlackLine, Inc. per share, and (v) free cash flow.

BlackLine’s management uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to the corresponding GAAP measures, in evaluating BlackLine’s ongoing operational performance and trends and in comparing its financial measures with other companies in the same industry, many of which present similar non-GAAP financial measures to help investors understand the operational performance of their businesses. However, it is important to note that the particular items BlackLine excludes from, or includes in, its non-GAAP financial measures may differ from the items excluded from, or included in, similar non-GAAP financial measures used by other companies in the same industry. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of the non-GAAP financial measures to such GAAP measures has been provided in the tables included as part of this press release.

Non-GAAP Gross Profit and Non-GAAP Gross Margin. Non-GAAP gross profit is defined as GAAP revenues less GAAP cost of revenue adjusted for amortization of acquired developed technology, transaction-related costs (including, but not limited to, accounting, legal, and advisory fees related to the transaction, as well as transaction-related retention bonuses), and stock-based compensation. Non-GAAP gross margin is defined as non-GAAP gross profit divided by GAAP revenues. BlackLine believes that presenting non-GAAP gross profit and non-GAAP gross margin is useful to investors as it eliminates the impact of certain non-cash expenses and allows a direct comparison between periods.

Non-GAAP Operating Expenses. Non-GAAP operating expenses include (a) non-GAAP sales and marketing expense, (b) non-GAAP research and development expense and (c) non-GAAP general and administrative expense. Non-GAAP sales and marketing expense is defined as GAAP sales and marketing expense adjusted for amortization of intangible assets, stock-based compensation, transaction-related costs and impairment of cloud computing implementation costs. Non-GAAP research and development expense is defined as GAAP research and development expense adjusted for stock-based compensation and transaction-related costs. Non-GAAP general and administrative expense is defined as GAAP general and administrative expense adjusted for amortization of intangible assets, stock-based compensation, change in fair value of contingent consideration, transaction-related costs, legal settlement gains or costs and impairment of cloud computing implementation costs. BlackLine believes that presenting each of the non-GAAP operating expenses is useful to investors as it eliminates the impact of certain cash and non-cash expenses and allows a direct comparison of operating expenses between periods.

Non-GAAP Income (Loss) from Operations and Non-GAAP Operating Margin. Non-GAAP income (loss) from operations is defined as GAAP income (loss) from operations adjusted for amortization of intangible assets, stock-based compensation, change in fair value of contingent consideration, transaction-related costs, legal settlement gains or costs, impairment of cloud computing implementation costs and restructuring costs. Non-GAAP operating margin is defined as non-GAAP income from operations divided by GAAP revenues. The Company believes that presenting non-GAAP income (loss) from operations and non-GAAP operating margin is useful to investors as it eliminates the impact of items that have been impacted by the Company’s acquisitions and other related costs in order to allow a direct comparison of income (loss) from operations between all periods presented.

Non-GAAP Net Income (Loss) Attributable to BlackLine and Diluted Non-GAAP Net Income (Loss) Attributable to BlackLine, Inc. Per Share. Non-GAAP net income (loss) attributable to BlackLine is defined as GAAP net income (loss) attributable to BlackLine adjusted for the impact of the provision for (benefit from) income taxes related to acquisitions, amortization of intangible assets, stock-based compensation, amortization of debt issuance costs from our convertible notes, change in fair value of contingent consideration, transaction-related costs, legal settlement gains or costs, impairment of cloud computing implementation costs, restructuring costs, and the adjustment to the redeemable non-controlling interest to the redemption amount. Diluted non-GAAP net income attributable to BlackLine, Inc. per share includes the adjustment for shares resulting from the elimination of stock-based compensation. The Company believes that presenting non-GAAP net income (loss) attributable to BlackLine is useful to investors as it eliminates the impact of items that have been impacted by the Company’s acquisitions and other related costs to allow a direct comparison of net income (loss) between all periods presented.

Free Cash Flow. Free cash flow is defined as cash flows provided by (used in) operating activities less cash flows used to purchase property and equipment, financed and otherwise, capitalized software development, and intangible assets. BlackLine believes that presenting free cash flow is useful to investors as it provides a measure of the Company’s liquidity used by management to evaluate the amount of cash generated by the Company’s business including the impact of purchases of property and equipment and cost of capitalized software development.

Use of Operating Metrics

BlackLine has provided in this release and the quarterly conference call held on February 13, 2024 certain operating metrics, including (i) number of customers, (ii) number of users and (iii) dollar-based net revenue retention rate, which BlackLine uses to evaluate its business, measure its performance, identify trends affecting its business, formulate financial projections and make strategic decisions. These operating metrics exclude the impact of certain Runbook licensed customers and users who are on perpetual license agreements and did not have an active subscription agreement with BlackLine as of December 31, 2023.

Dollar-based Net Revenue Retention Rate. Dollar-based net revenue retention rate is calculated as the implied monthly subscription and support revenue at the end of a period for the base set of customers from which the Company generated subscription revenue in the year prior to the calculation, divided by the implied monthly subscription and support revenue one year prior to the date of calculation for that same customer base. This calculation does not reflect implied monthly subscription and support revenue for new customers added during the one-year period but does include the effect of customers who terminated during the period. Implied monthly subscription and support revenue is defined as the total amount of minimum subscription and support revenue contractually committed to, under each of BlackLine’s customer agreements over the entire term of the agreement, divided by the number of months in the term of the agreement. BlackLine believes that dollar-based net revenue retention rate is an important metric to measure the long-term value of customer agreements and the Company’s ability to retain and grow its relationships with existing customers over time.

Number of Customers. A customer is defined as a company that contributes to our subscription and support revenue as of the measurement date. In situations where an organization has multiple subsidiaries or divisions, each entity that is invoiced as a separate entity is treated as a separate customer. In an instance where an existing customer requests its invoice be divided for the sole purpose of restructuring its internal billing arrangement without any incremental increase in revenue, such customer continues to be treated as a single customer. BlackLine believes that its ability to expand its customer base is an indicator of the Company’s market penetration and the growth of its business.

Number of Users. Historically, BlackLine’s products were priced based on the number of users of its platform. Over time, the Company has begun to sell an increasing number of non-user based products with fixed or transaction-based pricing. For this reason, we believe the growth in the number of total users is less correlated to the growth of the business overall.

Media Contact:Kimberly Ubertikimberly.uberti@blackline.com

Investor Relations Contact:Matt Humphries, CFAmatt.humphries@blackline.com

BlackLine, Inc.
Consolidated Balance Sheets
(in thousands)
(unaudited)
	December 31,2023				December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	271,117			$	200,968
Marketable securities		933,355				874,083
Accounts receivable, net of allowances		171,608				150,858
Prepaid expenses and other current assets		31,244				23,658
Total current assets		1,407,324				1,249,567
Capitalized software development costs, net		37,828				32,070
Property and equipment, net		14,867				19,811
Intangible assets, net		79,056				90,864
Goodwill		448,965				443,861
Operating lease right-of-use assets		19,173				14,708
Other assets		93,552				92,775
Total assets	$	2,100,765			$	1,943,656
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	8,623			$	14,964
Accrued expenses and other current liabilities		59,690				58,600
Deferred revenue, current		320,133				279,325
Finance lease liabilities, current		778				989
Operating lease liabilities, current		4,108				5,943
Convertible senior notes, net, current		249,233				—
Contingent consideration, current		—				8,000
Total current liabilities		642,565				367,821
Finance lease liabilities, noncurrent		4				785
Operating lease liabilities, noncurrent		15,738				9,292
Convertible senior notes, net, noncurrent		1,140,608				1,384,306
Contingent consideration, noncurrent		—				33,549
Deferred tax liabilities, net		6,394				5,568
Deferred revenue, noncurrent		904				343
Other long-term liabilities		3,608				6,229
Total liabilities		1,809,821				1,807,893
Commitments and contingencies
Redeemable non-controlling interest		30,063				23,895
Stockholders' equity:
Common stock		615				600
Additional paid-in capital		474,863				385,709
Accumulated other comprehensive income (loss)		205				(1,472	)
Accumulated deficit		(214,802	)			(272,969	)
Total stockholders' equity		260,881				111,868
Total liabilities, redeemable non-controlling interest, and stockholders' equity	$	2,100,765			$	1,943,656

BlackLine, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
	Quarter Ended								Year Ended
	December 31,								December 31,
		2023				2022				2023				2022
Revenues
Subscription and support	$	147,155			$	130,898			$	555,516			$	491,187
Professional services		8,575				9,059				34,480				31,751
Total revenues		155,730				139,957				589,996				522,938
Cost of revenues
Subscription and support		31,373				26,637				121,308				102,132
Professional services		6,239				6,726				25,485				27,253
Total cost of revenues		37,612				33,363				146,793				129,385
Gross profit		118,118				106,594				443,203				393,553
Operating expenses
Sales and marketing		56,898				66,295				243,154				256,862
Research and development		22,578				28,022				103,207				108,893
General and administrative		24,676				5,158				71,530				80,155
Restructuring costs		1,151				3,841				10,964				3,841
Total operating expenses		105,303				103,316				428,855				449,751
Income (loss) from operations		12,815				3,278				14,348				(56,198	)
Other income (expense)
Interest income		14,822				8,017				52,059				14,637
Interest expense		(1,484	)			(1,464	)			(5,898	)			(5,850	)
Other income, net		13,338				6,553				46,161				8,787
Income (loss) before income taxes		26,153				9,831				60,509				(47,411	)
Provision for (benefit from) income taxes		1,901				(668	)			1,450				(13,520	)
Net income (loss)		24,252				10,499				59,059				(33,891	)
Net income (loss) attributable to redeemable non-controlling interest		293				99				892				(369	)
Adjustment attributable to redeemable non-controlling interest		1,890				(904	)			5,334				(4,131	)
Net income (loss) attributable to BlackLine, Inc.	$	22,069			$	11,304			$	52,833			$	(29,391	)
Basic net income (loss) per share attributable to BlackLine, Inc.	$	0.36			$	0.19			$	0.87			$	(0.49	)
Shares used to calculate basic net income (loss) per share		61,391				59,888				60,849				59,539
Diluted net income (loss) per share attributable to BlackLine, Inc.	$	0.32			$	0.18			$	0.81			$	(0.49	)
Shares used to calculate diluted net income (loss) per share		72,470				71,283				72,045				59,539

BlackLine, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
	Quarter Ended								Year Ended
	December 31,								December 31,
		2023				2022				2023				2022
Cash flows from operating activities
Net income (loss) attributable to BlackLine, Inc.	$	22,069			$	11,304			$	52,833			$	(29,391	)
Net income (loss) and adjustment attributable to redeemable non-controlling interest		2,183				(805	)			6,226				(4,500	)
Net income (loss)		24,252				10,499				59,059				(33,891	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		12,825				11,830				50,099				42,816
Change in fair value of contingent consideration		—				(21,017	)			(33,549	)			(35,130	)
Amortization of debt issuance costs		1,398				1,392				5,535				5,511
Stock-based compensation		17,505				18,474				77,970				75,884
Noncash lease expense		1,728				1,407				6,453				5,593
Accretion of purchase discounts on marketable securities, net		(8,885	)			(5,548	)			(33,884	)			(8,874	)
Net foreign currency (gains) losses		(29	)			(7	)			853				(1,470	)
Deferred income taxes		281				291				(1,525	)			(14,404	)
Provision for (benefit from) credit losses		(1	)			30				(18	)			115
Impairment of cloud computing implementation costs		—				5,330				—				5,330
Changes in operating assets and liabilities, net of impact of acquisition:
Accounts receivable		(41,300	)			(41,354	)			(20,855	)			(23,033	)
Prepaid expenses and other current assets		(4,449	)			(1,180	)			(6,599	)			1,059
Other assets		(1,947	)			(3,757	)			(595	)			(10,112	)
Accounts payable		4,341				8,947				(5,104	)			4,376
Accrued expenses and other current liabilities		(2,111	)			6,505				(924	)			5,893
Deferred revenue		42,536				34,098				41,271				36,646
Contingent consideration paid in excess of original estimates		(2,393	)			—				(2,393	)			—
Operating lease liabilities		(1,936	)			(1,620	)			(7,171	)			(6,949	)
Lease incentive receipts		—				159				240				812
Other long-term liabilities		354				1,275				(2,250	)			5,841
Net cash provided by operating activities		42,169				25,754				126,613				56,013
Cash flows from investing activities
Purchases of marketable securities		(360,866	)			(428,137	)			(1,343,331	)			(1,599,945	)
Proceeds from maturities of marketable securities		363,521				416,500				1,319,821				1,392,250
Capitalized software development costs		(4,807	)			(4,256	)			(21,644	)			(19,208	)
Purchases of property and equipment		(2,026	)			(1,232	)			(5,953	)			(10,974	)
Acquisition, net of cash acquired		(9	)			—				(11,376	)			(157,738	)
Net cash used in investing activities		(4,187	)			(17,125	)			(62,483	)			(395,615	)
Cash flows from financing activities
Principal payments under finance lease obligations		(255	)			(239	)			(990	)			(619	)
Proceeds from exercises of stock options		775				1,018				19,762				4,687
Proceeds from employee stock purchase plan		2,719				2,530				8,010				6,996
Acquisition of common stock for tax withholding obligations		(885	)			(1,678	)			(15,029	)			(9,544	)
Financed purchases of property and equipment		—				—				—				(84	)
Payment of contingent consideration		(5,607	)			—				(5,607	)			—
Net cash provided by (used in) financing activities		(3,253	)			1,631				6,146				1,436
Effect of foreign currency exchange rate changes on cash, cash equivalents, and restricted cash		151				215				(120	)			(618	)
Net increase (decrease) in cash, cash equivalents, and restricted cash		34,880				10,475				70,156				(338,784	)
Cash, cash equivalents, and restricted cash, beginning of period		236,483				190,732				201,207				539,991
Cash, cash equivalents, and restricted cash, end of period	$	271,363			$	201,207			$	271,363			$	201,207
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets
Cash and cash equivalents at end of period	$	271,117			$	200,968			$	271,117			$	200,968
Restricted cash included within other assets at end of period		246				239				246				239
Total cash, cash equivalents, and restricted cash at end of period shown in the consolidated statements of cash flows	$	271,363			$	201,207			$	271,363			$	201,207

BlackLine, Inc.
Reconciliations of Non-GAAP Financial Measures
(in thousands, except percentages and per share data)
(unaudited)
		Quarter Ended								Year Ended
		December 31,								December 31,
			2023				2022				2023				2022
Non-GAAP Gross Profit:
Gross profit		$	118,118			$	106,594			$	443,203			$	393,553
Amortization of acquired developed technology			3,419				3,010				12,438				11,315
Stock-based compensation(1)			3,121				2,286				12,440				8,595
Transaction-related costs			132				357				478				1,355
Total non-GAAP gross profit		$	124,790			$	112,247			$	468,559			$	414,818
Gross margin			75.8	%			76.2	%			75.1	%			75.3	%
Non-GAAP gross margin			80.1	%			80.2	%			79.4	%			79.3	%
Non-GAAP Operating Income:
Operating income (loss)		$	12,815			$	3,278			$	14,348			$	(56,198	)
Amortization of intangible assets			5,249				5,181				20,608				19,731
Stock-based compensation(1)			18,101				18,474				80,068				75,884
Change in fair value of contingent consideration			—				(21,017	)			(33,549	)			(35,130	)
Transaction-related costs			1,246				2,850				5,078				16,831
Legal settlement costs			—				—				—				1,709
Impairment of cloud computing implementation costs			—				5,330				—				5,330
Restructuring costs			1,151				3,841				10,964				3,841
Total non-GAAP operating income		$	38,562			$	17,937			$	97,517			$	31,998
GAAP operating margin			8.2	%			2.3	%			2.4	%			(10.7	%)
Non-GAAP operating margin			24.8	%			12.8	%			16.5	%			6.1	%
Non-GAAP Net Income Attributable to BlackLine, Inc.:
Net income (loss) attributable to BlackLine, Inc.		$	22,069			$	11,304			$	52,833			$	(29,391	)
Provision for (benefit from) income taxes			526				(942	)			(1,196	)			(13,634	)
Amortization of intangible assets			5,249				5,181				20,608				19,731
Stock-based compensation(1)			17,981				18,417				79,588				75,576
Amortization of debt issuance costs			1,398				1,392				5,535				5,511
Change in fair value of contingent consideration			—				(21,017	)			(33,549	)			(35,130	)
Transaction-related costs			1,246				2,850				5,078				16,831
Legal settlement costs			—				—				—				1,709
Impairment of cloud computing implementation costs			—				5,330				—				5,330
Restructuring costs			1,151				3,841				10,964				3,841
Adjustment to redeemable non-controlling interest			1,890				(904	)			5,334				(4,131	)
Total non-GAAP net income attributable to BlackLine, Inc.		$	51,510			$	25,452			$	145,195			$	46,243
Basic non-GAAP net income attributable to BlackLine, Inc. per share:
Basic non-GAAP net income attributable to BlackLine, Inc. per share		$	0.84			$	0.42			$	2.39			$	0.78
Shares used to calculate basic non-GAAP net income per share			61,391				59,888				60,849				59,539
Diluted non-GAAP net income attributable to BlackLine, Inc.
Diluted non-GAAP net income attributable to BlackLine, Inc. per share		$	0.69			$	0.35			$	1.96			$	0.64
Shares used to calculate diluted non-GAAP net income per share			74,603				73,277				74,382				72,974
(1) Beginning in 2023, includes amortization related to stock-based compensation that was capitalized in capitalized software development costs in previous periods and totaled $0.6 million and $2.1 million for the quarter and year ended December 31, 2023, respectively.
		Quarter Ended								Year Ended
		December 31,								December 31,
			2023				2022				2023				2022
Non-GAAP Sales and Marketing Expense:
Sales and marketing expense		$	56,898			$	66,295			$	243,154			$	256,862
Amortization of intangible assets			(1,751	)			(1,693	)			(6,791	)			(6,505	)
Stock-based compensation			(5,364	)			(5,691	)			(24,152	)			(26,310	)
Transaction-related costs			(110	)			(240	)			(397	)			(2,399	)
Impairment of cloud computing implementation costs			—				(3,361	)			—				(3,361	)
Total non-GAAP sales and marketing expense		$	49,673			$	55,310			$	211,814			$	218,287
Non-GAAP Research and Development Expense:
Research and development expense		$	22,578			$	28,022			$	103,207			$	108,893
Stock-based compensation			(1,813	)			(3,828	)			(13,095	)			(14,382	)
Transaction-related costs			(833	)			(2,079	)			(2,857	)			(7,797	)
Total non-GAAP research and development expense		$	19,932			$	22,115			$	87,255			$	86,714
Non-GAAP General and Administrative Expense:
General and administrative expense		$	24,676			$	5,158			$	71,530			$	80,155
Amortization of intangible assets			(79	)			(478	)			(1,379	)			(1,911	)
Stock-based compensation			(7,803	)			(6,669	)			(30,381	)			(26,597	)
Change in fair value of contingent consideration			—				21,017				33,549				35,130
Transaction-related costs			(171	)			(174	)			(1,346	)			(5,280	)
Legal settlement costs			—				—				—				(1,709	)
Impairment of cloud computing implementation costs			—				(1,969	)			—				(1,969	)
Total non-GAAP general and administrative expense		$	16,623			$	16,885			$	71,973			$	77,819
Total Non-GAAP Operating Expenses		$	86,228			$	94,310			$	371,042			$	382,820
Free Cash Flow
Net cash provided by operating activities		$	42,169			$	25,754			$	126,613			$	56,013
Capitalized software development costs			(4,807	)			(4,256	)			(21,644	)			(19,208	)
Purchases of property and equipment			(2,026	)			(1,232	)			(5,953	)			(10,974	)
Financed purchases of property and equipment			—				—				—				(84	)
Free cash flow		$	35,336			$	20,266			$	99,016			$	25,747