BlackLine Delivers Strong Q3 Results, Demonstrates Platform Momentum
BlackLine, a leading provider of cloud-based financial close solutions, delivered strong third-quarter results and demonstrated continued momentum in platform adoption, according to CEO Owen Ryan on a recent conference call.
Ryan highlighted the company's strong profitability and cash flow performance, with revenue growing 8.5% year-over-year at the low end of guidance range. Non-GAAP operating margin reached 25.9%, up roughly 450 basis points from last year, and free cash flow generated $58 million, representing a 30% free cash flow margin.
The company's platform adoption continued to show strength, with Platform ARR reaching 23% of eligible ARR, up from 17% in the previous quarter. This puts BlackLine well on track to meet its full-year target of 25%. Customers are also signing larger and longer contracts, with RPO growing 14% to approximately $1.1 billion and current RPO increasing 10%, both ahead of revenue growth.
At the upper end of the market, where BlackLine leads, customers continue to choose the company's platform and commit more when they do. Average new customer deal size was up 37%, and the company continues to win multi-year, seven-figure relationships. Notable deals in the quarter include a sovereign cloud agreement with one of the six largest U.S. banks, as well as agreements with two leading academic health systems and a major logistic company.
One question BlackLine frequently receives from investors is whether AI will disintermediate its platform. Ryan was quick to address this concern, noting that if customers were replacing BlackLine, it would first show up in the largest accounts as churn, smaller contracts, and/or shorter commitments. Instead, the company has seen the opposite: larger deals, longer commitments, and strong enterprise renewals.
Regarding AI, Ryan noted that it is becoming part of everyday work across the company's base. About 3,400 customers have embedded generative AI enabled, representing roughly 90% of the active base. Additionally, nearly nine in 10 accounts using these capabilities have used them on a recurring basis.
Overall, BlackLine's Q3 results demonstrate continued momentum in platform adoption and strong financial performance. With its strong execution, leadership position in cloud-based financial close solutions, and increasing use of AI within its base, the company is well-positioned for future growth.
