Form 8-K
0001666134 False 0001666134 2020-02-13 2020-02-13 iso4217:USD xbrli:shares iso4217:USD xbrli:shares
 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 8-K

_________________

CURRENT REPORT

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  February 13, 2020

_______________________________

BLACKLINE, INC.

(Exact name of registrant as specified in its charter)

_______________________________

Delaware001-3792446-3354276
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification No.)

21300 Victory Boulevard, 12th Floor

Woodland Hills, California 91367

(Address of Principal Executive Offices) (Zip Code)

(818) 223-9008

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

_______________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareBLNASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 
 
Item 2.02. Results of Operations and Financial Condition.

On February 13, 2020, the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits:

Exhibit Number Description
   
99.1 Press release issued on February 13, 2020
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 BLACKLINE, INC.
   
  
Date: February 13, 2020By: /s/ Mark Partin        
  Mark Partin
  Chief Financial Officer
  

 

EdgarFiling

EXHIBIT 99.1

BlackLine Announces Fourth Quarter and Full Year Financial Results

LOS ANGELES, Feb. 13, 2020 (GLOBE NEWSWIRE) -- BlackLine, Inc. (Nasdaq: BL), today announced financial results for the fourth quarter and full year ended December 31, 2019.

Therese Tucker, Founder and CEO, commented, “In the fourth quarter, we continued to see healthy global demand from companies investing in digital transformation resulting in a strong close to the year.  I am incredibly pleased with our consistent execution and with what we were able to accomplish in 2019 to drive growth, scale the business, and maintain a strong leadership position.  Looking ahead, we will remain focused on our customers’ success and executing on our multi-year strategy to drive sustainable growth.” 

Fourth Quarter 2019 Financial Highlights

Full Year 2019 Financial Highlights

Fourth Quarter Key Metrics and Recent Business Highlights

Financial Outlook

First Quarter 2020

Full Year 2020

Guidance for non-GAAP net income attributable to BlackLine and net income attributable to BlackLine per share does not include the impact of the provision for (benefit from) income taxes that we were able to recognize as a result of the deferred tax liabilities associated with the intangible assets established upon the acquisition in the fourth quarter of 2016 of Runbook B.V. (the “Runbook Acquisition”), amortization of acquired intangible assets resulting from the acquisition of the company by its principal stockholders in 2013 (the “2013 Acquisition”) and the Runbook Acquisition, stock-based compensation, the amortization of debt discount and issuance costs, legal settlement gains, the change in fair value of contingent consideration, costs incurred with our shelf offering, and the adjustment to the value of the redeemable non-controlling interest to the redemption amount.  Reconciliations of non-GAAP net income attributable to BlackLine and net income attributable to BlackLine per share guidance to the most directly comparable U.S. GAAP measures, or net income (loss) attributable to BlackLine and net income (loss) attributable to BlackLine per share, are not available on a forward-looking basis without unreasonable efforts due to the unpredictability and complexity of the charges excluded from non-GAAP net income attributable to BlackLine and net income  attributable to BlackLine per share. The company expects the variability of the above changes could have a significant, and potentially unpredictable, impact on its future GAAP net income (loss) attributable to BlackLine and net income (loss) attributable to BlackLine per share.

Quarterly Conference Call

BlackLine, Inc. will hold a conference call to discuss its fourth quarter and full year results at 2:00 p.m. Pacific time on Thursday, February 13, 2020. A live audio webcast will be accessible on BlackLine’s investor relations website at https://investors.blackline.com. The call can also be accessed domestically at (844) 229-7595 and internationally at (314) 888-4260, passcode 5677719. A telephonic replay will be available through Thursday, February 20, 2020 at (855) 859-2056 or (404) 537-3406, passcode 5677719. 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, Inc. (Nasdaq: BL) because their traditional manual accounting processes are not sustainable. BlackLine’s cloud-based solutions and market-leading 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 for financial close management, accounting automation, and intercompany governance, helping large enterprises and midsize companies across all industries do accounting work better, faster, and with more control.

More than 3,000 customers trust BlackLine to help them close faster with complete and accurate results. The company is the pioneer and recognized Leader in Gartner’s 2019 Magic Quadrant for Cloud Financial Close Solutions. Based in Los Angeles, BlackLine also has regional headquarters in London, 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 fiscal year 2020, our expectations for our business in 2020 and our ability to execute on our long-term plans and key initiatives, expectations regarding user count, free cash flow, revenue mix, gross margin, operating expenses, capital expenditures, and investments in teams and infrastructure, the impact of seasonality on the company’s financial results, expectations regarding our SAP relationship, quarterly fluctuations, market opportunity, competitive position, the demand for and benefits from the use of BlackLine’s current and future solutions, growth strategies including international expansion, customer growth, extension of distribution channels, sales strategy and product innovation, expansion of relationships with partners, customer service initiatives and expectations regarding deal size and increased focus on strategic products.

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 company’s ability to manage growth and scale effectively, including additional headcount and 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 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; 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 its enterprise and mid-market sales teams and effectively manage its sales forces 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 macro-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; 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, 2019 filed with the Securities and Exchange Commission on November 7, 2019. Additional information will also be set forth in our Annual Report on Form 10-K for the year ended December 31, 2019. 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 year-end financial reporting processes, reviews and audit. 

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, 2020 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, (iv) non-GAAP net income (loss) and non-GAAP net income (loss) per share, (v) and 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 the amortization of acquired developed technology resulting from the 2013 Acquisition and the Runbook Acquisition 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 margin is useful to investors as it eliminates the impact of certain non-cash expenses and allows a direct comparison of gross margin between periods.

Non-GAAP Subscription Gross Margin.  Non-GAAP subscription gross margin is defined as non-GAAP subscription gross profit divided by GAAP subscription revenues. BlackLine believes that presenting non-GAAP subscription gross margin is useful to investors as it eliminates the impact of certain non-cash expenses and allows a direct comparison of subscription gross margin 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 the amortization of acquired intangibles resulting from the 2013 Acquisition and the Runbook Acquisition and stock-based compensation.  Non-GAAP research and development expense is defined as GAAP research and development expense adjusted for stock-based compensation.  Non-GAAP general and administrative expense is defined as GAAP general and administrative expense as adjusted for the amortization of acquired intangibles resulting from the 2013 Acquisition and Runbook Acquisition, stock-based compensation, legal settlement gains, the change in fair value of contingent consideration, and costs incurred in connection with our shelf offering.  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. Non-GAAP income (loss) from operations is defined as GAAP income (loss) from operations adjusted for the amortization of acquired intangible assets resulting from the 2013 Acquisition and the Runbook Acquisition, stock-based compensation, legal settlement gains, the change in fair value of contingent consideration, and costs incurred in connection with our shelf offering. The company believes that presenting non-GAAP income (loss) from operations is useful to investors as it eliminates the impact of items that have been impacted by the 2013 Acquisition and the Runbook Acquisition and other related costs in order to allow a direct comparison of loss from operations between all periods presented.

Non-GAAP Net Income (Loss) attributable to BlackLine. Non-GAAP net income (loss) is defined as GAAP net income (loss) adjusted for the impact of the provision for (benefit from) income taxes that we were able to recognize as a result of the deferred tax liabilities associated with the intangible assets established upon the 2013 Acquisition and the Runbook Acquisition, amortization of acquired intangible assets resulting from the 2013 Acquisition and the Runbook Acquisition, stock-based compensation, the amortization of debt discount and issuance costs from our convertibles notes, legal settlement gains,  the change in the fair value of contingent consideration, costs incurred in connection with our shelf offering, and the adjustment to the value of the redeemable non-controlling interest to the redemption amount.  Non-GAAP diluted net income (loss) per common share includes the adjustment for shares resulting from the elimination of stock-based compensation.  The company believes that presenting non-GAAP net income (loss) is useful to investors as it eliminates the impact of items that have been impacted by the 2013 Acquisition and the Runbook Acquisition and other related costs in order to allow a direct comparison of net loss between all periods presented.

Free Cash Flow. Free cash flow is defined as cash flows provided by operating activities less cash flows used to purchase property and equipment and capitalized software development. 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, 2020 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 Runbook licensed customers and users as these customers did not have an active subscription agreement with BlackLine as of December 31, 2019.

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 an entity with an active subscription agreement 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:
BlackLine
Kimberly Uberti
Kimberly.uberti@blackline.com

Investor Relations Contact:
BlackLine
Alexandra Geller
Alex.geller@blackline.com

BlackLine, Inc.
Consolidated Balance Sheets
(in thousands)
(unaudited)
   
  December 31, 2019 December 31, 2018
ASSETS    
Cash and cash equivalents $120,232  $46,181 
Marketable securities  487,515   86,396 
Accounts receivable, net of allowance  102,829   74,902 
Prepaid expenses and other current assets  12,830   14,042 
Total current assets  723,406   221,521 
Capitalized software development costs, net  10,032   9,023 
Property and equipment, net  13,024   13,536 
Intangible assets, net  17,520   27,785 
Goodwill  185,138   185,138 
Operating lease right-of-use assets  12,549    
Other assets  52,883   36,478 
Total assets $1,014,552  $493,481 
     
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, AND STOCKHOLDERS' EQUITY 
Accounts payable $7,401  $3,442 
Accrued expenses and other current liabilities  30,098   24,479 
Deferred revenue  162,552   129,074 
Short-term portion of operating lease liabilities  4,938    
Short-term portion of contingent consideration  2,008   2,008 
Total current liabilities  206,997   159,003 
Operating lease liabilities  10,606    
Convertible senior notes, net  384,343    
Contingent consideration  4,354   4,308 
Deferred tax liabilities  4,571   3,257 
Deferred revenue, noncurrent  163   277 
Other long-term liabilities     2,982 
Total liabilities  611,034   169,827 
     
Redeemable non-controlling interest  4,905   4,387 
     
Stockholders' equity:    
Common stock  559   547 
Additional paid-in capital  561,275   451,571 
Accumulated other comprehensive income  377   45 
Accumulated deficit  (163,598)  (132,896)
Total stockholders' equity  398,613   319,267 
     
Total liabilities, redeemable non-controlling interest, and stockholders' equity$1,014,552  $493,481 
     



BlackLine, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
 
  Quarter Ended Year Ended
  December 31, December 31,
   2019   2018   2019   2018 
Revenues        
Subscription and support $74,796  $59,564  $272,447  $217,406 
Professional services  5,462   2,752   16,529   10,382 
Total revenues  80,258   62,316   288,976   227,788 
Cost of revenues        
Subscription and support  10,859   11,380   44,968   41,428 
Professional services  4,262   2,505   14,007   9,446 
Total cost of revenues  15,121   13,885   58,975   50,874 
Gross profit  65,137   48,431   230,001   176,914 
Operating expenses        
Sales and marketing  43,949   35,722   158,837   128,808 
Research and development  10,312   8,753   43,006   30,754 
General and administrative  15,613   12,380   56,057   47,188 
Total operating expenses  69,874   56,855   257,900   206,750 
Loss from operations  (4,737)  (8,424)  (27,899)  (29,836)
Other income (expense)        
Interest income  2,538   662   6,128   2,136 
Interest expense  (5,644)     (8,650)  (4)
Other income (expense), net  (3,106)  662   (2,522)  2,132 
Loss before income taxes  (7,843)  (7,762)  (30,421)  (27,704)
Provision for income taxes (a)  869   443   1,725   1,072 
Net loss  (8,712)  (8,205)  (32,146)  (28,776)
Net loss and adjustment attributable to redeemable non-controlling interest 474   (62)  389   (62)
Net loss attributable to BlackLine, Inc. $(9,186) $(8,143) $(32,535) $(28,714)
         
Basic net loss attributable to BlackLine, Inc. per share:        
Basic net loss attributable to BlackLine, Inc. per share $(0.16) $(0.15) $(0.59) $(0.53)
Shares used to calculate basic net loss per share  55,781   54,659   55,320   53,912 
Diluted net loss attributable to BlackLine, Inc. per share:        
Diluted net loss attributable to BlackLine, Inc. per share $(0.16) $(0.15) $(0.59) $(0.53)
Shares used to calculate diluted net loss per share  55,781   54,659   55,320   53,912 
         
(a) During the fourth quarter the Company identified prior period errors related to its provision for income taxes that were calculated in connection with the adoption of ASC 606, Revenue from Contracts and Customers. Although management has concluded that such errors were immaterial to the previously issued financial statements, the Company is revising its 2018 and 2017 annual financial statements, and related interim periods, as well as its 2019 unaudited quarterly financial statements. The 2018 consolidated financial information included herein has also been revised to reflect an increase in tax expense and a corresponding decrease in net income of $0.4 million and $0.9 million for the quarter and year ended December 31, 2018. In addition, the Company has revised its non-GAAP net income and earnings per share included herein for the quarter and year ended December 31, 2018. The consolidated financial information included herein for the year ended December 31, 2019 includes a $0.3 million increase in income tax expense and corresponding decrease in net income which was revised in the nine-month period ended September 30, 2019. Additional information will be included in the Company’s future filing of its 2019 Form 10-K.



BlackLine, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
         
  Quarter Ended Year Ended
  December 31, December 31,
   2019   2018   2019   2018 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net loss attributable to BlackLine, Inc. $(9,186) $(8,143) $(32,535) $(28,714)
Net loss and adjustment attributable to redeemable non-controlling interest  474   (62)  389   (62)
Net loss  (8,712)  (8,205)  (32,146)  (28,776)
Adjustments to reconcile net loss to net cash provided by operating activities:        
Depreciation and amortization  4,471   5,569   21,274   22,336 
Change in fair value of contingent consideration  (267)  163   46   450 
Amortization of debt discount and issuance costs  5,487      8,410    
Stock-based compensation  9,447   6,188   34,052   20,895 
Noncash lease expense  1,336      5,013    
Accretion of purchase discounts on marketable securities, net  (1,288)  (326)  (2,161)  (928)
Net foreign currency (gains) losses  (73)  86   65   420 
Deferred income taxes  577   157   1,314   213 
Provision for (benefit from) doubtful accounts receivable     (65)  157   (84)
Changes in operating assets and liabilities        
Accounts receivable  (20,507)  (11,472)  (27,962)  (13,207)
Prepaid expenses and other current assets  (1,905)  1,943   1,224   (449)
Other assets  (6,782)  (4,458)  (16,429)  (9,475)
Accounts payable  4,835   393   3,244   (4,008)
Accrued expenses and other current liabilities  4,745   4,249   5,789   4,191 
Deferred revenue  18,393   10,774   33,364   24,699 
Operating lease liabilities  (1,533)     (5,530)   
Other long-term liabilities     (173)     (137)
Net cash provided by operating activities  8,224   4,823   29,724   16,140 
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchases of marketable securities  (472,416)  (18,906)  (565,675)  (122,530)
Proceeds from maturities of marketable securities  54,500   19,554   149,638   111,394 
Proceeds from sales of marketable securities        17,279   7,118 
Capitalized software development costs  (1,309)  (1,035)  (5,060)  (5,675)
Purchases of property and equipment  (1,171)  (1,696)  (4,632)  (6,284)
Net cash used in investing activities  (420,396)  (2,083)  (408,450)  (15,977)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Investment from redeemable non-controlling interest     4,317      4,317 
Proceeds from issuance of convertible senior notes, net of issuance costs        487,163    
Purchase of capped calls related to convertible senior notes        (46,150)   
Proceeds from exercises of stock options  2,200   484   10,571   14,004 
Proceeds from employee stock purchase plan  2,743      5,295    
Acquisition of common stock for tax withholding obligations  (568)  (31)  (3,940)  (3,356)
Principal payments on capital lease obligations           (443)
Financed purchases of property and equipment  (113)     (427)   
Net cash provided by financing activities  4,262   4,770   452,512   14,522 
         
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash  (47)  266   261   266 
Net increase (decrease) in cash, cash equivalents, and restricted cash  (407,957)  7,776   74,047   14,951 
Cash, cash equivalents, and restricted cash, beginning of period  528,459   38,679   46,455   31,504 
Cash, cash equivalents, and restricted cash, end of period $120,502  $46,455  $120,502  $46,455 
         
Cash and cash equivalents at end of period $120,232  $46,181  $120,232  $46,181 
Restricted cash included within prepaid expenses and other current assets at end of period  20      20    
Restricted cash included within other assets at end of period  250   274   250   274 
Total cash, cash equivalents, and restricted cash at end of period shown in the consolidated statements of cash flows $120,502  $46,455  $120,502  $46,455 
         


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,
   2019   2018   2019   2018 
Non-GAAP Gross Profit        
Gross profit $65,137  $48,431  $230,001  $176,914 
Amortization of developed technology  175   1,719   4,797   6,863 
Stock-based compensation  1,336   876   4,814   3,265 
Total Non-GAAP Gross Profit $66,648  $51,026  $239,612  $187,042 
Gross margin  81.2%  77.7%  79.6%  77.7%
Non-GAAP gross margin  83.0%  81.9%  82.9%  82.1%
         
Non-GAAP Operating Income:        
Loss from operations $(4,737) $(8,424) $(27,899) $(29,836)
Amortization of intangible assets  1,543   3,083   10,265   13,023 
Stock-based compensation  9,447   6,188   34,052   20,895 
Change in fair value of contingent consideration  (267)  163   46   450 
Legal settlement gains        (380)   
Shelf offering costs        212   401 
Total non-GAAP operating income $5,986  $1,010  $16,296  $4,933 
         
Non-GAAP Net Income Attributable to BlackLine, Inc.        
Net loss attributable to BlackLine, Inc. $(9,186) $(8,143) $(32,535) $(28,714)
Provision for (benefit from) income taxes  55   (213)  90   (540)
Amortization of intangible assets  1,543   3,083   10,265   13,023 
Stock-based compensation  9,447   6,188   34,052   20,895 
Amortization of debt discount and issuance costs  5,487      8,410    
Change in fair value of contingent consideration  (267)  163   46   450 
Legal settlement gains        (380)   
Shelf offering costs        212   401 
Adjustment to redeemable non-controlling interest  940      1,833    
Total non-GAAP net income attributable to BlackLine, Inc. $8,019  $1,078  $21,993  $5,515 
Basic non-GAAP net income attributable to BlackLine, Inc. per share:      
Basic non-GAAP net income attributable to BlackLine, Inc. per share $0.14  $0.02  $0.40  $0.10 
Shares used to calculate basic non-GAAP net income per share  55,781   54,659   55,320   53,912 
Diluted non-GAAP net income attributable to BlackLine, Inc. per share:      
Diluted non-GAAP net income attributable to BlackLine, Inc. per share$0.14  $0.02  $0.37  $0.10 
Shares used to calculate diluted non-GAAP net income per share  59,153   57,840   58,739   57,423 
         
         
  Quarter Ended Year Ended
  December 31, December 31,
   2019   2018   2019   2018 
Non-GAAP Sales and Marketing Expense:        
Sales and marketing expense $43,949  $35,722  $158,837  $128,808 
Amortization of intangible assets  (968)  (965)  (3,872)  (3,887)
Stock-based compensation  (4,315)  (2,747)  (15,389)  (8,674)
Total non-GAAP sales and marketing expense $38,666  $32,010  $139,576  $116,247 
         
Non-GAAP Research and Development Expense:        
Research and development expense $10,312  $8,753  $43,006  $30,754 
Stock-based compensation  (1,098)  (815)  (4,729)  (2,570)
Total non-GAAP research and development expense $9,214  $7,938  $38,277  $28,184 
         
Non-GAAP General and Administrative Expense:        
General and administrative expense $15,613  $12,380  $56,057  $47,188 
Amortization of intangible assets  (400)  (399)  (1,596)  (2,273)
Stock-based compensation  (2,698)  (1,750)  (9,120)  (6,386)
Change in fair value of contingent consideration  267   (163)  (46)  (450)
Legal settlement gains        380    
Shelf offering costs        (212)  (401)
Total non-GAAP general and administrative expense $12,782  $10,068  $45,463  $37,678 
         
Total Non-GAAP Operating Expenses $60,662  $50,016  $223,316  $182,109 
         
Free Cash Flow        
Net cash provided by operating activities $8,224  $4,823  $29,724  $16,140 
Capitalized software development costs  (1,309)  (1,035)  (5,060)  (5,675)
Purchases of property and equipment  (1,171)  (1,696)  (4,632)  (6,284)
Financed purchases of property and equipment  (113)     (427)   
Free cash flow $5,631  $2,092  $19,605  $4,181