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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________________
FORM 10-Q
______________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from     to     
Commission File Number: 001-37924
______________________________________________________________
BlackLine, Inc.
(Exact name of Registrant as specified in its charter)
______________________________________________________________
Delaware46-3354276
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
21300 Victory Boulevard, 12th Floor
Woodland Hills, CA 91367
(Address of principal executive offices, including zip code) 
(818) 223-9008
(Registrant’s telephone number, including area code)
______________________________________________________________
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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x    No  o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
   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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  x
The number of shares of the registrant’s common stock outstanding at October 30, 2020 was 57,254,972.




BlackLine, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended September 30, 2020
TABLE OF CONTENTS

2


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risk and uncertainties. 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. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to, statements regarding future financial and operational performance; statements concerning growth strategies including acquisitions, extension of distribution channels and strategic relationships, product innovation, international expansion, customer growth and expansion, customer service initiatives, expectations regarding our acquisitions, expectations regarding contract size and increased focus on strategic products, expectations for hiring new talent and expanding our sales organization; our ability to accurately forecast revenue and appropriately plan expenses and investments; the demand for and benefits from the use of our current and future solutions; market acceptance of our solutions; the impact of the COVID-19 pandemic and the related responses by governments and private industry on our business and financial condition, as well as that of our customers and partners; changes in the competitive environment in our industry and the markets in which we operate and our liquidity and capital resources. These statements are based upon our historical performance and our 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 uncertainty. 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. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainty, and assumptions that are difficult to predict, including those identified below, under “Part II-Other Information, Item 1A. Risk Factors” and elsewhere herein. 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. Furthermore, we undertake no obligation to revise or update any forward-looking statements for any reason, except as required by applicable law.
Unless the context otherwise requires, the terms “BlackLine, Inc.,” “the Company,” “we,” “us” and “our” in this Quarterly Report on Form 10-Q refer to the consolidated operations of BlackLine, Inc. and its consolidated subsidiaries as a whole.
3


Part 1 – Financial Information
Item 1.    Financial Statements
BLACKLINE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
September 30,
2020
December 31,
2019
ASSETS
Current assets:
Cash and cash equivalents$408,070 $120,232 
Marketable securities117,433 487,515 
Accounts receivable, net of allowances for credit losses of $4,983 and $3,533 at September 30, 2020 and December 31, 2019, respectively
91,137 102,829 
Prepaid expenses and other current assets137,357 12,830 
Total current assets753,997 723,406 
Capitalized software development costs, net13,925 10,032 
Property and equipment, net 10,787 13,024 
Intangible assets, net15,066 17,520 
Goodwill185,138 185,138 
Operating lease right-of-use assets9,274 12,549 
Other assets58,578 52,883 
Total assets$1,046,765 $1,014,552 
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$2,088 $7,401 
Accrued expenses and other current liabilities29,546 30,098 
Deferred revenue165,699 162,552 
Short-term portion of operating lease liabilities4,289 4,938 
Short-term portion of contingent consideration2,008 2,008 
Total current liabilities203,630 206,997 
Operating lease liabilities, noncurrent7,828 10,606 
Convertible senior notes, net401,217 384,343 
Contingent consideration4,206 4,354 
Deferred tax liabilities, net4,750 4,571 
Deferred revenue, noncurrent72 163 
Total liabilities621,703 611,034 
Commitments and contingencies (Note 7)
Redeemable non-controlling interest (Note 3)8,128 4,905 
Stockholders' equity:
Common stock573 559 
Additional paid-in capital605,078 561,275 
Accumulated other comprehensive income 568 377 
Accumulated deficit(189,285)(163,598)
Total stockholders' equity416,934 398,613 
Total liabilities, redeemable non-controlling interest, and stockholders' equity$1,046,765 $1,014,552 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4


BLACKLINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data) 
Quarter Ended September 30,Nine Months Ended September 30,
2020201920202019
Revenues
Subscription and support$83,875 $70,311 $238,777 $197,651 
Professional services6,282 4,614 17,250 11,067 
Total revenues90,157 74,925 256,027 208,718 
Cost of revenues
Subscription and support11,700 11,689 34,708 34,109 
Professional services5,282 3,603 15,082 9,745 
Total cost of revenues16,982 15,292 49,790 43,854 
Gross profit73,175 59,633 206,237 164,864 
Operating expenses
Sales and marketing42,588 41,848 129,199 114,888 
Research and development14,829 11,558 38,423 32,694 
General and administrative17,794 14,088 51,314 40,444 
Total operating expenses75,211 67,494 218,936 188,026 
Loss from operations(2,036)(7,861)(12,699)(23,162)
Other income (expense)
Interest income648 2,161 4,142 3,590 
Interest expense(5,914)(3,006)(17,340)(3,006)
Other income (expense), net(5,266)(845)(13,198)584 
Loss before income taxes(7,302)(8,706)(25,897)(22,578)
Provision for income taxes555 170 871 856 
Net loss(7,857)(8,876)(26,768)(23,434)
Net loss attributable to non-controlling interest (425)(509)(1,081)(978)
Adjustment attributable to non-controlling interest 1,319 839 4,239 893 
Net loss attributable to BlackLine, Inc.$(8,751)$(9,206)$(29,926)$(23,349)
Basic net loss per share attributable to BlackLine, Inc.$(0.15)$(0.17)$(0.53)$(0.42)
Shares used to calculate basic net loss per share57,063 55,480 56,619 55,164 
Diluted net loss per share attributable to BlackLine, Inc.$(0.15)$(0.17)$(0.53)$(0.42)
Shares used to calculate diluted net loss per share57,063 55,480 56,619 55,164 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5


BLACKLINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)
(in thousands)
Quarter Ended September 30,Nine Months Ended September 30,
2020201920202019
Net loss$(7,857)$(8,876)$(26,768)$(23,434)
Other comprehensive income (loss):
Net change in unrealized gains (losses) on marketable securities, net of tax of $0 for the quarters and nine months ended September 30, 2020 and 2019
(419)(23)126 213 
Foreign currency translation88 10 130 308 
Other comprehensive income (loss)(331)(13)256 521 
Comprehensive loss(8,188)(8,889)(26,512)(22,913)
Less comprehensive loss attributable to redeemable non-controlling interest:
Net loss attributable to redeemable non-controlling interest (425)(509)(1,081)(978)
Foreign currency translation attributable to redeemable non-controlling interest44 5 65 151 
Comprehensive loss attributable to redeemable non-controlling interest(381)(504)(1,016)(827)
Comprehensive loss attributable to BlackLine, Inc.$(7,807)$(8,385)$(25,496)$(22,086)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6


BLACKLINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
(in thousands)
Quarter Ended September 30, 2020
Common StockAdditional
Paid-in
Accumulated
Other
Comprehensive
Accumulated
SharesAmountCapitalIncome (Loss)DeficitTotal
Balance at June 30, 202056,855 $569 $590,119 $943 $(181,853)$409,778 
Stock option exercises296 3 3,867 — — 3,870 
Vesting of restricted stock units104 1 — — — 1 
Acquisition of common stock for tax withholding obligations— — (1,272)— — (1,272)
Stock-based compensation— — 13,683 — — 13,683 
Other comprehensive loss— — — (375)— (375)
Net loss attributable to BlackLine, Inc., including adjustment to redeemable non-controlling interest— — (1,319)— (7,432)(8,751)
Balance at September 30, 202057,255 $573 $605,078 $568 $(189,285)$416,934 

Nine Months Ended September 30, 2020
Common StockAdditional
Paid-in
Accumulated
Other
Comprehensive
Accumulated
SharesAmountCapitalIncomeDeficitTotal
Balance at December 31, 201955,931 $559 $561,275 $377 $(163,598)$398,613 
Stock option exercises789 9 14,274 — — 14,283 
Vesting of restricted stock units450 4 — — — 4 
Issuance of common stock through employee stock purchase plan85 1 3,607 — — 3,608 
Acquisition of common stock for tax withholding obligations— — (6,128)— — (6,128)
Stock-based compensation— — 36,289 — — 36,289 
Other comprehensive income— — — 191 — 191 
Net loss attributable to BlackLine, Inc., including adjustment to redeemable non-controlling interest— — (4,239)— (25,687)(29,926)
Balance at September 30, 202057,255 $573 $605,078 $568 $(189,285)$416,934 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7


BLACKLINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (cont.) (UNAUDITED)
(in thousands)
Quarter Ended September 30, 2019
Common StockAdditional
Paid-in
Accumulated
Other
Comprehensive
Accumulated
SharesAmountCapitalIncomeDeficitTotal
Balance at June 30, 201955,307 $553 $470,681 $299 $(146,985)$324,548 
Stock option exercises247 2 3,803 — — 3,805 
Vesting of restricted stock units77 1 — — — 1 
Acquisition of common stock for tax withholding obligations— — (784)— — (784)
Stock-based compensation— — 10,260 — — 10,260 
Other comprehensive income— — — 116 — 116 
Equity component of convertible senior notes, net of issuance costs— — 111,230 — — 111,230 
Purchase of capped calls— — (46,150)— — (46,150)
Net loss attributable to BlackLine, Inc., including adjustment to redeemable non-controlling interest— — (839)— (8,367)(9,206)
Balance at September 30, 201955,631 $556 $548,201 $415 $(155,352)$393,820 

Nine Months Ended September 30, 2019
Common StockAdditional
Paid-in
Accumulated
Other
Comprehensive
Accumulated
SharesAmountCapitalIncomeDeficitTotal
Balance at December 31, 201854,683 $547 $451,571 $45 $(132,896)$319,267 
Stock option exercises535 4 8,363 — — 8,367 
Vesting of restricted stock units339 4 — — — 4 
Issuance of common stock through employee stock purchase plan74 1 2,551 — — 2,552 
Acquisition of common stock for tax withholding obligations— — (3,372)— — (3,372)
Stock-based compensation— — 24,901 — — 24,901 
Other comprehensive income— — — 370 — 370 
Equity component of convertible senior notes, net of issuance costs— — 111,230 — — 111,230 
Purchase of capped calls— — (46,150)— — (46,150)
Net loss attributable to BlackLine, Inc., including adjustment to redeemable non-controlling interest— — (893)— (22,456)(23,349)
Balance at September 30, 201955,631 $556 $548,201 $415 $(155,352)$393,820 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8


BLACKLINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Nine Months Ended September 30,
20202019
Cash flows from operating activities
Net loss attributable to BlackLine, Inc.$(29,926)$(23,349)
Net loss and adjustment attributable to redeemable non-controlling interest (Note 3)3,158 (85)
Net loss(26,768)(23,434)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization14,615 16,803 
Change in fair value of contingent consideration(148)313 
Amortization of debt discount and issuance costs16,874 2,923 
Stock-based compensation35,398 24,605 
Noncash lease expense3,557 3,677 
Accretion of purchase discounts on marketable securities, net(333)(873)
Net foreign currency (gains) losses(275)138 
Deferred income taxes179 737 
Provision for doubtful accounts receivable373 157 
Changes in operating assets and liabilities:
Accounts receivable11,557 (7,455)
Prepaid expenses and other current assets(3,143)3,129 
Other assets(5,684)(9,647)
Accounts payable (4,569)(1,591)
Accrued expenses and other current liabilities(1,032)1,044 
Deferred revenue3,056 14,971 
Operating lease liabilities(3,734)(3,997)
Net cash provided by operating activities39,923 21,500 
Cash flows from investing activities
Purchases of marketable securities(116,400)(93,259)
Proceeds from maturities of marketable securities460,982 95,138 
Proceeds from sales of marketable securities25,959 17,279 
Capitalized software development costs(7,838)(3,751)
Purchases of property and equipment(2,515)(3,461)
Cash paid for pending acquisition(121,433) 
Purchases of intangible assets(2,333) 
Net cash provided by investing activities236,422 11,946 
Cash flows from financing activities
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 options14,287 8,371 
Proceeds from employee stock purchase plan3,608 2,552 
Acquisition of common stock for tax withholding obligations(6,128)(3,372)
Financed purchases of property and equipment(394)(314)
Net cash provided by financing activities11,373 448,250 
Effect of foreign currency exchange rate changes on cash, cash equivalents, and restricted cash130 308 
Net increase in cash, cash equivalents, and restricted cash287,848 482,004 
Cash, cash equivalents, and restricted cash, beginning of period120,502 46,455 
Cash, cash equivalents, and restricted cash, end of period$408,350 $528,459 
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets
Cash and cash equivalents at end of period$408,070 $528,197 
Restricted cash included within prepaid expenses and other current assets at end of period19 19 
Restricted cash included within other assets at end of period261 243 
Total cash, cash equivalents, and restricted cash at end of period shown in the consolidated statements of cash flows$408,350 $528,459 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
9


BLACKLINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SUPPLEMENTAL CASH FLOWS DISCLOSURE
(in thousands)
Nine Months Ended September 30,
20202019
Non-cash financing and investing activities
Stock-based compensation capitalized for software development$891 $296 
Capitalized software development costs included in accounts payable and accrued expenses and other current liabilities at end of period$461 $182 
Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities at end of period$808 $360 
Leased assets obtained in exchange for new operating lease liabilities $282 $2,195 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
10


BLACKLINE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Company Overview
BlackLine, Inc. and its subsidiaries (the “Company” or “BlackLine”) provide financial accounting close solutions delivered primarily as Software as a Service (“SaaS”). The Company’s solutions enable its customers to address various aspects of their financial close process including account reconciliations, variance analysis of account balances, journal entry capabilities, and certain types of data matching capabilities.
The Company is headquartered in Woodland Hills, California and has offices in the Netherlands, Canada, France, Singapore, the United Kingdom, Germany, Australia, Hong Kong, Romania, and Poland.
Note 2 – Basis of Presentation, Significant Accounting Policies and Recently-Issued Accounting Pronouncements
The accompanying condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the Securities and Exchange Commission (“SEC”) on February 27, 2020. The condensed consolidated financial statements are unaudited and have been prepared on a basis consistent with that used to prepare the audited annual consolidated financial statements and include, in the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair statement of the condensed consolidated financial statements. The condensed consolidated balance sheet at December 31, 2019 was derived from audited financial statements, but does not include all disclosures required by GAAP. The operating results for the quarter and nine months ended September 30, 2020 are not necessarily indicative of the results expected for the full year ending December 31, 2020.
Use of estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.
The extent to which COVID-19 impacts the Company’s business and financial results will depend on numerous continuously evolving factors including, but not limited to, the magnitude and duration of COVID-19, including resurgences; the impact on the Company’s employees; the extent to which it will impact worldwide macroeconomic conditions, including interest rates, employment rates, and health insurance coverage; the speed and degree of the anticipated recovery, as well as variability in such recovery across different geographies, industries, and markets; and governmental and business reactions to the pandemic. The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 at September 30, 2020 and through the date of this report. The accounting matters assessed included, but were not limited to, the Company’s allowance for doubtful accounts and credit losses, and the carrying value of goodwill and other long-lived assets. While there was not a material impact to the Company’s consolidated financial statements at and for the quarter and nine months ended September 30, 2020, the Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors could result in material impacts to the Company’s consolidated financial statements in future reporting periods.
Significant accounting policies
The Company’s significant accounting policies are detailed in “Note 2: Summary of Significant Accounting Policies" of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Except as noted below, there have been no material changes to the Company’s significant accounting policies.
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Investments in Marketable Securities
The Company periodically assesses its portfolio of marketable securities for impairment. For debt securities in an unrealized loss position, this assessment first takes into account the Company’s intent to sell, or whether it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of these criteria are met, the debt security’s amortized cost basis is written down to fair value through other income (expense), net.
For debt securities in an unrealized loss position that do not meet the aforementioned criteria, the Company assesses whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and any adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss may exist, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses will be recorded through other income (expense), net, limited by the amount that the fair value is less than the amortized cost basis. Any additional impairment not recorded through an allowance for credit losses is recognized in accumulated other comprehensive loss in the condensed consolidated statements of stockholders’ equity.
Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance when the Company believes the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met. The Company has not recorded any credit losses for the quarter and nine months ended September 30, 2020. The Company has not recorded any impairment charges for unrealized losses in the periods presented.
Accounts Receivable and Allowances
Accounts receivable are recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts. The Company makes estimates of expected credit losses for the allowance for doubtful accounts and allowance for cancellations and credits based upon its assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers. The estimated credit loss allowance for doubtful accounts is recorded as general and administrative expenses, while the estimated credit loss allowance for cancellations and credits is recorded as a reduction in revenue on the condensed consolidated statements of operations.
Revision of Previously-Issued Financial Statements
As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, in connection with the preparation of its 2019 annual financial statements, the Company identified an error in its historical provision for income taxes, which resulted in an understatement of its tax provision and deferred tax liabilities in its previously-issued financial statements. The error resulted from the recognition of a foreign deferred tax asset that should not have been recognized for the difference in international entity income for statutory purposes and international entity income included on the consolidated income tax provision. There was no corresponding domestic benefit of this incremental foreign tax expense due to the U.S. entity being subject to a full valuation allowance. Although the Company assessed the materiality of the errors and determined the amounts were not material to previously-issued financial statements, the Company did revise its previously-issued 2018 and 2017 annual financial statements to correct for such tax error, as well as certain prior period immaterial disclosure errors, in connection with the filing of its 2019 Annual Report on Form 10-K, and disclosed that it would be revising its 2019 consolidated interim financial statements in connection with the Company’s 2020 Form 10-Q filings. In connection with the filing of this Quarterly Report on Form 10-Q, the Company has revised the accompanying consolidated condensed interim financial statements for the quarter and nine months ended September 30, 2019 to correct for the impact of such errors, which originated in periods prior to 2019. The accompanying footnotes have also been corrected to reflect the impact of the revisions of the previously-filed consolidated interim financial statements.
12


The following tables present the effect of the revision for the financial statement line items adjusted in the affected periods.
Condensed Consolidated Statements of Operations
Quarter Ended September 30, 2019
As Previously ReportedAdjustmentsAs Revised
(in thousands, except per share data)
Provision for income taxes$206 $(36)$170 
Net loss$(8,912)$36 $(8,876)
Net loss attributable to BlackLine, Inc.$(9,242)$36 $(9,206)
Basic net loss per share attributable to BlackLine, Inc.$(0.17)$ $(0.17)
Diluted net loss per share attributable to BlackLine, Inc.$(0.17)$ $(0.17)
Nine Months Ended September 30, 2019
As Previously ReportedAdjustmentsAs Revised
(in thousands, except per share data)
Provision for income taxes$557 $299 $856 
Net loss$(23,135)$(299)$(23,434)
Net loss attributable to BlackLine, Inc.$(23,050)$(299)$(23,349)
Basic net loss per share attributable to BlackLine, Inc.$(0.42)$ $(0.42)
Diluted net loss per share attributable to BlackLine, Inc.$(0.42)$ $(0.42)
Condensed Consolidated Statements of Comprehensive Loss
Quarter Ended September 30, 2019
As Previously ReportedAdjustmentsAs Revised
(in thousands)
Net loss$(8,912)$36 $(8,876)
Comprehensive loss$(8,925)$36 $(8,889)
Comprehensive loss attributable to BlackLine, Inc.$(8,421)$36 $(8,385)
Nine Months Ended September 30, 2019
As Previously ReportedAdjustmentsAs Revised
(in thousands)
Net loss$(23,135)$(299)$(23,434)
Comprehensive loss$(22,614)$(299)$(22,913)
Comprehensive loss attributable to BlackLine, Inc.$(21,787)$(299)$(22,086)
Condensed Consolidated Statements of Stockholders' Equity
Quarter Ended September 30, 2019
As Previously ReportedAdjustmentsAs Revised
Accumulated Deficit(in thousands)
Balance at June 30, 2019$(144,348)$(2,637)$(146,985)
Net loss attributable to BlackLine, Inc., including adjustment to redeemable non-controlling interest$(8,403)$36 $(8,367)
Balance at September 30, 2019$(152,751)$(2,601)$(155,352)
Total Equity
Balance at June 30, 2019$327,185 $(2,637)$324,548 
Net loss attributable to BlackLine, Inc., including adjustment to redeemable non-controlling interest$(9,242)$36 $(9,206)
Balance at September 30, 2019$396,421 $(2,601)$393,820 

13


Nine Months Ended September 30, 2019
As Previously ReportedAdjustmentsAs Revised
Accumulated Deficit(in thousands)
Balance at December 31, 2018$(130,594)$(2,302)$(132,896)
Net loss attributable to BlackLine, Inc., including adjustment to redeemable non-controlling interest$(22,157)$(299)$(22,456)
Balance at September 30, 2019$(152,751)$(2,601)$(155,352)
Total Equity
Balance at December 31, 2018$321,569 $(2,302)$319,267 
Net loss attributable to BlackLine, Inc., including adjustment to redeemable non-controlling interest$(23,050)$(299)$(23,349)
Balance at September 30, 2019$396,421 $(2,601)$393,820 
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2019
As Previously ReportedAdjustmentsAs Revised
(in thousands)
Net loss attributable to BlackLine, Inc.$(23,050)$(299)$(23,349)
Net loss$(23,135)$(299)$(23,434)
Deferred income taxes$35 $702 $737 
Accrued expenses and other current liabilities$1,447 $(403)$1,044 
Recently-issued accounting pronouncements not yet adopted
In March 2020, the Financial Accounting Standards Board (“FASB”) issued guidance, which provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria are met. These transactions include contract modifications, hedging relationships, and sale or transfer of debt securities classified as held-to-maturity. Entities may apply the provisions of the new standard as of the beginning of the reporting period when the election is made (i.e., as early as the first quarter of 2020). Unlike other topics, the provisions of this update are only available until December 31, 2022, when the reference rate replacement activity is expected to be completed. The Company has not adopted the provisions of the new standard and does not expect it to have a material impact on the Company’s condensed consolidated financial statements.
In June 2020, the FASB issued ASU No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40). This standard eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. For public business entities, it is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years using the fully retrospective or modified retrospective method. Early adoption is permitted but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently evaluating the potential impact of this standard on its condensed consolidated financial statements.
Recently adopted accounting pronouncements
In May 2020, the Securities Exchange Commission (“SEC”) issued a final rule that amended the disclosure requirements applicable to acquisitions and dispositions of businesses. The changes include: updating the tests used to determine significance and expanding the use of pro forma financial information when measuring significance; conforming the significance threshold and tests for a disposed business to those used for an acquired business; permitting abbreviated financial statements for certain acquisitions of a component of an entity; revising the pro forma financial information requirements; reducing the maximum number of years for which financial statements under Regulation S-X Rule 3-05 are required to two years; and modifying the disclosure requirements
14


relating to the aggregate effect of acquisitions for which financial statements are not (or not yet) required. The amendments are intended to improve the financial information about acquired or disposed businesses provided to investors, facilitate more timely access to capital, and reduce the complexity and costs to prepare the disclosures. The Company early adopted this rule in the quarter ended June 30, 2020, and the adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.
In June 2016, the FASB issued Accounting Standard Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 replaced the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 requires use of a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. Adoption of the standard requires using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date to align existing credit loss methodology with the new standard. In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses. ASU 2019-11 requires entities that did not adopt the amendments in ASU 2016-13 as of November 2019 to adopt ASU 2019-11. This ASU contains the same effective dates and transition requirements as ASU 2016-13. The Company adopted this guidance effective January 1, 2020, and the adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.
In August 2018, the FASB issued guidance which modifies the disclosure requirements of fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements, including the consideration of costs and benefits. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company adopted this guidance effective January 1, 2020, and the adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.
Note 3 – Redeemable Non-Controlling Interest
In September 2018, the Company entered into an agreement with Japanese Cloud Computing and M30 LLC (the “Investors”) to engage in the investment, organization, management, and operation of a Japanese subsidiary (“BlackLine K.K.”) of the Company that is focused on the sale of the Company's products in Japan. In October 2018, the Company initially contributed approximately $4.5 million in cash in exchange for 51% of the outstanding common stock of BlackLine K.K. As the Company controls a majority stake in BlackLine K.K., the entity has been consolidated.
All of the common stock held by the Investors is callable by the Company or puttable by the Investors upon certain contingent events. Should the call or put option be exercised, the redemption value will be determined based upon a prescribed formula derived from the discrete revenues of BlackLine K.K. and the Company and may be settled, at the Company’s discretion, with Company stock or cash. As a result of the put right available to the Investors in the future, the redeemable non-controlling interest in BlackLine K.K. are classified outside of permanent equity in the Company’s condensed consolidated balance sheet, and the balance is reported at the greater of the initial carrying amount adjusted for the redeemable non-controlling interest’s share of earnings, or its estimated redemption value. The resulting changes in the estimated redemption amount are recorded within retained earnings or, in the absence of retained earnings, additional paid-in-capital.
15


The following table summarizes the activity in the redeemable non-controlling interest for the periods indicated below:
Quarter Ended September 30,Nine Months Ended September 30,
2020201920202019
Balance at beginning of period$7,190 $4,118 $4,905 $4,387 
Net loss attributable to redeemable non-controlling interest (excluding adjustment to non-controlling interest)(425)(509)(1,081)(978)
Foreign currency translation44 5 65 151 
Adjustment to redeemable non-controlling interest1,319 839 4,239 893 
Balance at end of period$8,128 $4,453 $8,128 $4,453 
During the third quarter of 2020, the Company identified that, commencing in 2019, it had incorrectly calculated its quarterly adjustment to the carrying value of its redeemable non-controlling interest, which resulted in an overstatement of the adjustment attributable to non-controlling interest in its consolidated statement of operations totaling $0.4 million for the quarter and nine months ended September 30, 2019; $0.5 million and $0.9 million for the quarter and year ended December 31, 2019; $1.2 million for the quarter ended March 31, 2020; and $0.6 million for the six months ended June 30, 2020, as well as an understatement of the adjustment attributable to non-controlling interest in its consolidated statement of operations totaling $0.6 million for the quarter ended June 30, 2020. At December 31, 2019, the carrying value of the redeemable non-controlling interest in the Company's consolidated balance sheet was overstated by $0.9 million. The Company corrected the $1.5 million cumulative prior-period error in the quarter ended September 30, 2020 to correctly state the carrying value of the redeemable non-controlling interest in its consolidated balance sheet.
Note 4 – Balance Sheet Components
Investments in Marketable Securities
Investments in marketable securities presented within current assets on the condensed consolidated balance sheet consisted of the following:
September 30, 2020
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
(in thousands)
Marketable securities
U.S. treasury securities$4,504 $6 $ $4,510 
Corporate bonds110,104 255 (24)110,335 
Commercial paper2,588   2,588 
$117,196 $261 $(24)$117,433 

December 31, 2019
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
(in thousands)
Marketable securities
U.S. treasury securities$382,269 $67 $(1)$382,335 
Corporate bonds77,009 63 (18)77,054 
Commercial paper28,126   28,126 
$487,404 $130 $(19)$487,515 
Net gains and losses related to maturities of marketable securities that were reclassified from accumulated other comprehensive loss to earnings, and included in general and administrative expenses, in the unaudited condensed consolidated statements of operations were $(0.3) million and $0.3 million for the quarter and nine
16


months ended September 30, 2020, respectively. Net gains and losses related to maturities of marketable securities that were reclassified from accumulated other comprehensive loss to earnings, and included in general and administrative expenses, in the unaudited condensed consolidated statements of operations were $0.1 million and $0.7 million for the quarter and nine months ended September 30, 2019, respectively. Net gains and losses are determined using the specific identification method. During the quarters ended September 30, 2020 and 2019, there were no material realized gains or losses related to sales of marketable securities recognized in the Company's unaudited condensed consolidated statements of operations. During the nine months ended September 30, 2020, there were $0.1 million of realized losses related to the sale of one marketable security recognized in the Company’s unaudited condensed consolidated statements of operations. During the nine months ended September 30, 2019, there were no material realized gains or losses related to sales of marketable securities recognized in the Company’s unaudited condensed consolidated statements of operations.
Marketable securities in a continuous loss position for less than 12 months had an estimated fair value of $17.0 million and an immaterial amount of unrealized losses at September 30, 2020, and an estimated fair value of $83.9 million and an immaterial amount of unrealized losses at December 31, 2019. At September 30, 2020, there were no marketable securities in a continuous loss position for greater than 12 months.
The Company’s marketable securities have a contractual maturity of less than one year. The amortized cost and fair values of marketable securities, by remaining contractual maturity, were as follows:
September 30, 2020
Amortized
Cost
Fair Value
(in thousands)
Maturing within 1 year$117,196 $117,433 
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
September 30,
2020
December 31,
2019
Cash paid for pending acquisition$121,433 $ 
Partner referral fees702 833 
Other prepaid expenses and other current assets15,222 11,997 
$137,357 $12,830 
Other Assets
Other assets consisted of the following (in thousands):
September 30,
2020
December 31,
2019
Deferred customer contract acquisition costs$54,791 $49,709 
Restricted cash261 250 
Capitalized software implementation costs2,002 1,237 
Other assets1,524 1,687 
$58,578 $52,883 
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities were comprised of the following (in thousands):
September 30,
2020
December 31,
2019
Accrued salaries and employee benefits$20,769 $20,775 
Accrued income and other taxes payable2,919 4,198 
Other accrued expenses and current liabilities5,858 5,125 
$29,546 $30,098 
17



Note 5 – Fair Value Measurements
The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis by level, within the fair value hierarchy. Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (in thousands):
September 30, 2020
Level 1Level 2Level 3Total
Cash equivalents
Money market funds$362,689 $ $ $362,689 
Marketable securities
U.S. treasury securities4,510   4,510 
Corporate bonds