Welcome to the Blackline Safety first quarter results conference call. The conference is being recorded. I would now like to turn the conference over to Elisa Khuong, Vice President of Finance and Accounting, Corporate Controller. Please go ahead.
Welcome, and thank you for joining us. On this call today, we will be discussing our fiscal results for the first quarter ending January 31, 2025, which were released earlier this morning. With me today is Cody Slater, CEO and Chair of Blackline Safety, Blackline CFO Robin Kooyman, and Sean Stinson, President and Chief Growth Officer. I will turn the call over to Cody for an overview of our first quarter 2025 results, and Robin will then discuss the financial highlights. I'd like to remind everyone that an archive of this webcast will be made available on the investor section of our website. I would like to note that some of the information discussed in this call is based on information as of today and may contain forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those set forth in these statements.
For discussion of these risks and uncertainties, please review the forward-looking statement disclosures in the earnings news release as well as in the company SEDAR+ filings. During this call, there will be a discussion of IFRS results, non-GAAP financial measures, non-GAAP ratios, and supplementary financial measures. A reconciliation between IFRS results and non-GAAP financial measures is available in the company's earnings news release and MD&A, both of which can be found on our website, blacklinesafety.com, and on SEDAR+ . All dollar amounts are reported in Canadian dollars unless otherwise noted. With that, I will now hand the call over to Mr. Slater.
Thank you, Elisa. Good morning, everyone, and welcome to Blackline Safety's first quarter 2025 conference call. I'm pleased to update our progress as the momentum of our record-setting performance in 2024 has carried into 2025 with a very strong first quarter. First quarter revenue grew 43% year over year to CAD 37.7 million. This top-line figure represents a new quarterly record for Blackline, a rare instance when our Q1 revenue exceeded our Q4. This strength was also evident in our positive EBITDA figure for the first quarter, which was CAD 2.1 million. Our strong overall revenue growth of 43% in Q1, combined with our adjusted EBITDA margin of 4%, equates to a Rule of 40 score of 47, exceeding the gold standard for SaaS companies.
The strong revenue growth in the first quarter extends our streak to 32 consecutive quarters of year-over-year growth, which speaks to the strong market acceptance of our connected safety platform. Our Q1 EBITDA represents our third consecutive quarter of positive EBITDA. Product revenue increased by a notable 56% to CAD 17.8 million, and services revenue increased 33% from last year to CAD 19.9 million. Part of this strength is attributable to some business that shifted out of Q4 and landed in Q1. Product revenue growth also benefited from increasing market demand, targeted demand generation activities, and optimized pricing strategies. With net dollar retention reaching an impressive 128% for the quarter, our NDR has maintained a rate of greater than 125% for the seventh consecutive quarter, which speaks to the value customers see in the Blackline platform.
These results helped drive our annual recurring revenue up 31% from last year to CAD 70.9 million at the end of the quarter. Product gross margins were 40% in Q1, while service gross margins were 77%. Our overall gross margin on a rolling 12-month basis is currently 59%. In fact, on a rolling 12-month basis, Blackline has increased overall gross margin for 11 consecutive quarters. During the quarter, Blackline welcomed a new shareholder with strategic financing, the Lowy Family Group. LFG, alongside DAK Capital, our largest shareholder, invested CAD 27 million into the business. The Lowy Family's investment business has a long history of investing in world-class public and private software companies, including those that provide integrated hardware and software. Many of these companies have grown significantly since the Lowy Family's investment. This strategic financing positions Blackline for continued scalable growth in the coming years and further strengthens our balance sheet.
During the quarter, we are pleased to add another water and wastewater company in the U.K. as a customer. Of the 12 primary water and wastewater authorities in the United Kingdom, eight are now Blackline customers. In addition, Liberty Utilities, owned by Algonquin Power and Utilities Corp, operating in the U.S., Canada, Bermuda, and Philadelphia, adopted Blackline's G7c wearables, providing the connectivity and real-time information required to keep their workers safe. We also commenced shipments of our recently introduced EXO 8 area monitors, including the sale of over 100 EXO 8 units to Total Safety. We are proud of the unseasonably strong results we achieved in Q1. However, potential tariffs on goods heading into the U.S. may have a negative impact on the current business investment environment.
Given these elements, it is possible that our Q2 product revenue could be lower than Q1, and there could be impacts on product gross margins and earnings. However, I would note that none of these elements could affect our strong service margins, and we see these impacts as being short-term in nature. On a longer-term view, we remain confident in our growth outlook as we provide significant value to our customers around the globe, and we are dedicated to continually innovating our products and services as we consistently provide leading-edge technology to our growing list of customers. I would like to now turn the call over to our CFO, Robin Kooyman, to go over the financials for the quarterly results in more detail.
Thank you, Cody. Blackline Safety reported Q1 revenue of CAD 37.7 million, a new quarterly record, and an improvement of 43% from Q1 2024. Product revenue had a significant improvement as revenue from this segment grew 56% to CAD 17.8 million, which represents an all-time high for a single quarter. Services revenue grew 33% to CAD 19.9 million, as both software revenue and rental revenue were up 31% and 74%, respectively. The rental revenue of CAD 1.7 million reported in the first quarter was the largest Q1 on record, driven by increased market share captured by the rental business. Blackline's U.S. region reported strong growth as sales grew 49% year over year. European revenue rose by 40%, while the rest of the world market achieved a 67% increase supported by an expanded global sales growth. The Canadian region experienced steady growth of 27%.
Blackline enhanced its gross margin to 60%, up from 55% in the comparative period. Product gross margin rose to 40% from 29%, while service gross margin increased 77% from 76%, demonstrating Blackline's effective cost absorption and strategic pricing policy. Blackline's total expenses for the quarter were CAD 22.5 million, a 13% increase from Q1 last year, well below the 43% increase in top-line sales. General and administrative expenses fell as a percentage of revenue to 19% from 24%. Sales and marketing expenses fell to 31% from 35%, while product research and development costs dropped to 13% from 18%. Overall, operating expenses as a percentage of revenue declined 60% from 76% in the prior year, highlighting improved operational efficiency as Blackline continues to achieve greater scale. EBITDA for the quarter was CAD 2.1 million, a significant improvement from the CAD 3.4 million EBITDA lost in Q1 2024.
Adjusted EBITDA in the first quarter was CAD 1.5 million after adjusting for foreign exchange gains, stock-based compensations, and a non-recurring transaction. Q1 marks the third consecutive quarter of positive EBITDA for Blackline. For the three months ending January 31, 2025, Blackline's net loss decreased to CAD 1.1 million, a reduction of 80% from the same period last year. This improvement was driven by higher revenue, increased gross profits, lower operating costs as a percentage of revenue, and a greater foreign exchange gain. At the conclusion of the first quarter, we informed our securitization facility provider of our decision not to renew the facility, which is scheduled to expire on March 31, 2025. The facility has an outstanding balance of CAD 5.1 million, which will be paid off, and Blackline will self-finance customer leases for the foreseeable future.
As of January 31st, Blackline reported a record cash and short-term investment balance of CAD 64 million, reinforcing the company's strong financial position. The primary contributor to this increased cash position in the quarter was the CAD 27 million private placement by LFG and DAK Capital. The company will continue to maintain its senior secured operating facility, which had an available capacity of CAD 12.3 million, plus an additional CAD 5 million accordion feature at the end of the quarter for total available liquidity of over CAD 80 million. Also on the balance sheet, in the first quarter, inventory levels remained consistent with the prior year despite significantly higher sales. Inventory turnover has shown steady improvement over the past several years, resulting in an eight-year high for this metric as we continue to optimize our management of the business.
As an international company, Blackline holds inventory around the world in our global offices, including in our Houston locations, to rapidly fulfill customer orders. Considering the uncertain economic environment, we have increased inventory in our U.S. operations. We also plan to implement some product assembly in the U.S., which will have associated CapEx and expenses to set up. The combination of these two initiatives will serve to mitigate the potential impact of U.S. tariffs on product gross margins and earnings for 2025. With that, I will turn it back over to Cody to discuss our outlook and provide closing remarks.
Thank you, Robin. As we close out another record quarter, I want to reflect on the incredible progress Blackline has made. As we mark our 20th anniversary, it is clear that we have transformed our company into a market leader, redefining industrial safety with our connected solutions. This past quarter once again demonstrated the strength of our business model, with record revenue, expanding margins, and sustained EBITDA positivity. A key differentiator for Blackline is the vast data-rich environment we have built through our connected safety technology. Blackline is unique. With over 275 billion data points collected, we are unlocking new opportunities to leverage artificial intelligence and predictive analytics, further enhancing the value we provide to our customers. As AI continues to evolve, we see immense potential in transforming industrial safety through data-driven insights that improve worker protection and operational efficiency.
Looking to the remainder of the fiscal year, despite short-term headwinds, we remain on track to achieve EBITDA positive results in fiscal 2025, a significant milestone that underscores the strength and scalability of our business model. Our long-term goal remains firmly in place to operate as a Rule of 40 SaaS company, where the combination of our revenue growth and adjusted EBITDA margin meets or exceeds 40%. While this figure may fluctuate quarter by quarter, we do believe that the long-term outlook for a sustainable Rule of 40 metric is within our grasp. I want to extend my gratitude to our customers for their trust, our partners for their collaboration, and our employees for their relentless dedication. Together, we are shaping the future of industrial safety and driving long-term value for all our stakeholders. At Blackline, we remain committed to the disciplined execution of our established business strategy.
With a strong financial foundation, a dedicated team, and award-winning solutions, we are strategically positioned to leverage increasing market demand for our connected safety solutions as we continue on our path to become the dominant player in the multi-billion dollar gas detection and connected safety industry, providing real protection to more people in more industries around the globe than ever before. Thank you for your continued support. I'll now turn it over to the operator for questions.
We will now begin the analyst question- and- answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. The first question comes from Amr Ezzat with Ventum Capital. Please go ahead.
Good morning. Thanks for taking my questions and congrats on a very strong print. I've got a couple of questions on the product sales this quarter. Number one, have you seen any preemptive buying behavior from U.S. clients looking to get ahead of potential tariff-related price increases? As a follow-up, how much of the strong Q1 hardware performance was driven by slippage from Q4, if you guys can quantify maybe?
Hi, Amr. It's Sean Stinson here. You know, we're not seeing any preemptive buying right now in Q2, and I don't think we saw much of that in Q1 as well. It's possible that that had a kind of a very subtle effect on some of the mid-size orders in the pipeline, but it wasn't something that people were actively talking about, wasn't something that we became aware of. So it's not something that we really, you know, saw in the numbers or that we expect to see even going forward in Q2 here.
Fantastic.
It's Cody here, just touching on the movement from Q4 into Q1. None of the big significant orders we've talked about, you know, we're curious, we'd said before, they're all sort of coming later in the year. Probably, you know, you could probably attribute about $1 million to small mid-sized orders that, you know, we thought would close in Q4 that closed in Q1.
Understood. Still an impressive quarter if we adjust for that. I think we have to go back seven, eight years to see a Q1 that was stronger than Q4. Congrats on that. If we speak about, you know, like you guys spoke to, like evaluating U.S. assembly and increasing inventory south of the border, I'm wondering, are you guys in a position yet to speak to what a U.S. manufacturing shift might look like in terms of, number one, cost, number two, manufacturing capacity, and lastly, timing?
Sure. I'm with Cody here again. You know, as far as the timing, we're, you know, we're leveraging our Houston operation already. As we mentioned, we're moving inventory down to support, you know, the next this quarter and some of the next. We're beginning to set up, you know, assembly lines within there as well. This will be sort of product by product, so it's a bit evolutionary. It'll happen, you know, with one product range after another. You'll start seeing us manufacturing some actual, you know, finished goods product there in, you know, two, three months, and then sort of adding from that as we go along to reach a point. The intent is that we'll supply the majority of the U.S. market from that operation. Your question on costs, you know, we've shifted around a little bit. Now we're looking at this.
We're going to maintain our surface mount assembly here in our core facility in Calgary and ship what we call PCBAs or assembled printed circuit boards into our U.S. operation and then do the actual assembly portions down there. It's just a, this is a balancing act when you look at incoming tariffs into the U.S. versus tariffs from, you know, from China, et cetera, versus tariffs from the U.S. on Canadian products. It winds up being the best balance, and we think the best quality balance for us.
You know, the positives for us will be that, you know, this will be a more, you know, I would say from a customer standpoint, which is the way we always say, to take a look at these things. Aside from insulating our customers from those duties, we're also going to be able to provide, you know, I would say even a more, you know, rapid deployment of, you know, scale orders from that U.S. operation. From a cost standpoint, though, not really significant because we're no longer looking at moving the surface mount lines down there. Over term, you're probably talking about, you know, $1 million worth of cost over a few quarters.
Understood.
That's very helpful, but maybe as a follow-up, and maybe it's too early stage, but you guys have a ballpark estimate of the cost estimates between assembling or final assembly, I guess, in the U.S. versus Canada. I'm just wondering what shifting parts of manufacturing south of the border really mean for what has been an impressive run of product gross margins at 40%.
You know, I think any impacts on margin are really short-term in nature. You know, this is really an expansion of our operations. Think about it that respect. It's not shifting actually some of our manufacturing. We just, as we're, you know, you've seen the growth rate. You know, we're in the process. We need to be expanding our manufacturing lines.
The lines are pretty similar, you know, the setups and structures, you know, so when you put all the different moving elements into it, in the long term, I would see that operation not really, you know, making any impact onto the ability for us to achieve those kinds of gross margins you're seeing on the hardware. Short term, you're dealing with. No, no, no. I'm just going to say, yeah, short term, there's a lot of moving pieces, but long term, yeah, it'll be the same.
No, I appreciate that the short term is much harder to predict, but glad to see the long terms. You're still targeting that 40%. Then maybe one last one, and maybe I'm reading too much into it. Your new investor presentation now shows the average price per wearable device at CAD 800. I believe previously it was CAD 600.
Can you break down how much of this increase is due to actual price hikes versus maybe the assumptions behind that number? Is it a shift in product mix such as selling more G7s relative to G6s, or how do I sort of interpret that CAD 800 versus the CAD 600 previously?
Hey, Amr, it's Robin here. There's no change in that number versus what was up there last quarter. I think that's, you know, just an update generally of the number. I think what we're trying to get across there is just an illustrative example of if you purchased a certain device in a certain region with a certain service plan, what that might equate to in terms of hardware, software, and then the associated gross margin. I wouldn't read too much into that.
Understood. Just a general trend, and I guess you guys running a refresh as opposed to reading direct something directly into that. Thanks for taking my questions and congrats again.
Thanks.
The next question comes from David Kwan, TD Cowen. Please go ahead.
Yeah, good morning. Congrats on a great quarter. I was wondering if you could comment about the linearity of the sales in the quarter. How much of the product revenue in particular kind of came in in the second half of January? Just saw that there was obviously a strong revenue performance, but increase in the AR and the DSOs.
Yeah, David, Sean here. I think Blackline follows a pretty standard trend of sales throughout a quarter. Most companies will talk about how the sales that come in the quarter are pretty back-end weighted, and we're no different. In Q1, what we saw was a stronger November and December than we would typically see. We went into January with, you know, I'd say stronger results than we would normally see through the quarter. You know, we had a very strong finish. Q1 is typically challenging for us, and probably for a lot of companies that are trying to sell throughout December because U.S. Thanksgiving, you know, we tend to lose a week there. You tend to lose a few weeks of productive activity throughout Christmas and New Year's.
Really in our Q1, what we're really dealing with is sort of an eight-week quarter versus a 12 or 13-week quarter. That's typically where that seasonality comes from. You know, when we entered January, it was stronger than I expected. We had just an absolutely incredible last two weeks of January. That's really where we saw the results like exceed target, was really just in the last two weeks of January, is the time frame that we went over our own budget and our own goals.
That's helpful, Sean. It sounds like the increase in the AR and the DSOs was just related to that strong end to the quarter, it sounds like.
Hey, David, it's Robin here. Yes, that's absolutely correct. We're pleased with how the team performed from a collections perspective. The increase in the numbers just reflects the strength of sales in the quarter.
Perfect. Thanks, Robin. Can you also talk about the contribution from EXO 8, you flagged that in the press release. Obviously, you had a nice order, big order there and some other ones as well. Did you see a higher contribution coming in from EXO this quarter than you typically have seen over the last year?
No, not really. Actually, the product mix was pretty standard for us this quarter, you know, which is really positive when you look at that margin number as well, David, because it shows that the G7 was by far the core of the product mix and it's what's generating that margin. You know, we're super happy with the response we've seen in the market for the EXO 8. And as we start adding, you know, more capabilities to that with the Gamma device coming out this quarter, you know, shipping sort of end of this quarter, beginning of next, and some of the other high-end feature sets for some of that hazmat market, it's going to be a really, you know, the response from the market has been excellent and the future for that product looks great. It really wasn't the story in Q1.
It was just an overall strength of, you know, every aspect in every market from customer demand.
That's great. Thanks, Cody. Maybe one last question for me, just on the leasing side. Can you talk about the leasing activity this quarter, you know, how it's compared to recent quarters? There was a note, I guess, in the press thing about not renewing the lease facility. Are you planning to repay that, I guess, if you're not planning to renew it?
Hey, David, Robin again. In the quarter, leases were about 35% of product revenue. That is higher than it has been both sequentially and in the prior period. You can see that also in the increase in future contracting cash flows. Those are up to CAD 64 million for the quarter. As I look at how we are financing the company, you know, there are a couple of different things. We are always looking to have flexible capital that is cost competitive, you know, that lets us run the business. We have talked in previous quarters about how we felt that the lease facility was just slowing down the velocity of our ability to sell leases. We have decided not to renew that facility and we will be repaying it before it expires this month.
That's great. Thank you.
Thanks, Robin.
The next question comes from Frédéric Bastien with Raymond James. Please go ahead.
Good morning. I was wondering if you could speak to the new customer win that you secured in the U.K. water sector. This feels pretty promising. I had no idea you had eight of the 12 U.K. water utility companies as customers. Given the much increased budgets in the AMP8 program, you probably feel pretty good about this market.
Yeah, this has been a market that I'd say traditionally has been strong for Blackline. We've been strong in the water wastewater market in the U.K. for, say, five years now. It's been a really, you know, it's been a primary focus of the team that's over there. They understand that market. They've done a great job capturing customers. They've got good relationships. The product is just such a good fit for that market. It really is a case of, you know, a lot of knowledge sharing within that group. I think the customers in that space look to each other and follow each other. You know, we try to leverage that type of strategy in different vertical markets, getting tier one customers, you know, everywhere that we play, and then they tend to influence their peers around them. We've done that really well.
Now, this is, so far, it's just a small deployment with this new water company, but we, you know, over time, we'll expand and grow into that.
I don't want to read too much. Is it fair to say this didn't have that much of an impact on the underlying growth we experience in the U.K. or in Europe in general?
That would be fair to say. Yeah. You know, Europe had a very strong quarter, but it was not necessarily because of a particular customer, I mean, a particular vertical. It was just strong execution across the board.
Okay. Good to hear. That's all I have. Thank you.
Thanks.
The next question comes from John Shao with National Bank Financial. Please go ahead.
Hey, good morning. Thanks for taking my question. I know it's still a bit early, but given the situation at U.S., have there been any discussions internally about, you know, increasing your investments in the international market to potentially diversify your U.S. exposure?
I'll take that one, John. You know, we're always looking, we're always looking at that. We're always, you know, it's a key part of managing this business is to try to understand where does the next marginal dollar go? You know, where do we put that? I mean, inside the business, do we put that into sales or marketing or operations? From a sales and market expansion perspective, obviously, what market do we go into? I'd say that internationally, the Middle East is one of the fastest growing markets for us. You'll see some more investment throughout the year in the Middle East for us. That is a very strong market. There's a lot of business there. Our market share is low there and can be significantly higher. We're going to capitalize on that throughout the year.
I'd say that in other international markets, it'll be somewhat status quo. What we'll see is a lot of growth from just continued improvement and execution in a lot of different teams. Yeah, from an international perspective, the Middle East is where you'll see future investment from us.
Hey, thanks for the color. Just want to revisit the U.K. water market bit. Given the success there, could you maybe talk about unique market dynamics and maybe whether you can replicate the success elsewhere in the rest of the world because it seems like a huge market opportunity?
Yeah, you know, it's interesting in the U.K. because the water companies are very large, you know, having 12 water companies to serve, you know, an entire nation. What you see in North America and in other parts of the world is that those businesses are much more fragmented and they just don't have the same buying power that they do in the U.K. It is kind of a unique market over there. Now, we capitalize on the same strategy in different markets, but it's not a case where I can sort of like lift and replant, you know, the same scale of U.K. water success because those water authorities just aren't the same size in North America. What you see in North America is a very strong presence in gas and utilities midstream. That's the same kind of style of winning.
Now, once we get a client in, you know, let's say in that midstream business in North America, it tends to spread out that way. Hope that makes sense.
Okay. Thanks for the color. Maybe one last question from me. In a press release, you talk about optimized pricing strategy to grow your product revenue. Could you elaborate that point a bit more?
Sure. It's Cody here, John. We, you know, if you recall for years, we had a, as we established the G7 and the world of, you know, connected into the industrial marketplace, we held our pricing flat for a good number of years. In the last few years, it's really an annual price increase we put in place that takes place in June. You know, we're looking to, it's something where we look at every product and every SKU and look at what the market's doing and look at what inflation is, you know, and adjust the product pricing in that context. We will be doing that again this June. That will, you know, it is a standard thing within our industry. I guess I'd point out all of our competitors have a standard price increase usually once or twice per year.
We're really just, you know, duplicating what's a normal process in this industry.
Got it. Thanks again and pass the line.
Thanks.
The next question comes from Martin Toner with ATB Capital Markets. Please go ahead.
Thank you for taking my question. Good morning, folks. How much revenue is required to fill the channel for a new product like the EXO 7?
You know, a new product, how much revenue is used to fill the channel? As far as, I mean, when we look at it from our standpoint with a new product launch, you know, it's about the manufacturing, the inventory levels to make sure we're in a position to actually, you know, supply that. So there's a bit of a shift over as you're moving from one generation of product to another, like within the EXO 8. And then as far as, you know, a product that's an evolutionary product like the EXO 8 versus the EXO 7, you know, we already have an established channel. So it's not like we're trying to build a new channel to support the product. We're, you know, that product will generate new channels in new markets, but the core channel of the EXO will be the real support for the EXO 8 in its initial launch.
Great. That's fantastic. Thanks very much. Will you seek to, do you think like another securitization program might make sense? Are you comfortable with your ability to finance the business in totality, like networking capital needs, the, you know, the need to support leasing and rental programs here going forward with what you have and no securitization program going forward?
Hey, Martin, it's Robin. Thanks for the question. As we think about how to finance the business, you know, there's three legs to that stool. There's the cash we have on the balance sheet. There's our short-term investments. Now there will be just our senior secured operating facility. We feel like the combination of those three and our CAD 80 million of available liquidity offers us plenty of flexibility to finance the business in a, you know, cost-effective and flexible way. We'll continue to consider if there are other financing vehicles that might make sense for us, but I would think that's very much a long-term thing that we'll be looking at as opposed to anything you can expect to see us do in the short term.
Super. Thanks so much. Any thoughts to the achievability of revenue growth in 2025 similar to last year's levels?
Yeah, I mean, in short, Doug, for sure. You know, we're trending ahead of that at this point in time. Sorry, Martin. In short, Martin, yes, for sure. We're trending ahead of that at this point in time. You know, there's some headwinds with what's happening in the States, but, you know, nothing that makes us concerned about hitting similar kinds of growth numbers or, in fact, exceeding those.
Okay. Super t hank you very much. That's all for me.
We have a follow-up question from Doug Taylor with Canaccord Genuity. Please go ahead.
Good morning. Firuz here speaking for Doug. Congratulations on a very strong start to the year. Apologies if I missed this. I believe you mentioned some of the product deals in Q1 were attributable to Q4 delays. Is there much left to recapture from Q4?
I can take that one. There were a few, you know, really large orders that we were tracking in Q4. You know, when Q4 finished, we talked about how some of these had shifted to later in the year. None of the large, large orders that we were tracking in Q4 came into Q1. It was a bit of the, I'd say, orders in the sort of CAD 50,000-CAD 100,000 range that we saw move from Q4 into Q1. That had a bit of strength. We thought that the total there was maybe CAD 1 million of that category that had shifted from four into one. There are still some significant orders that we think will come in or that we're very confident will come in later in the year.
Thank you. That's very helpful. Another one is on the U.S. cost mix. Is a significant portion of your product input cost sourced from the U.S.? Do you expect those input costs to be subject to tariffs?
I can take that one. Approximately 80% of our cost of goods sold is in U.S. dollars, but it's not necessarily sourced from the U.S.. We have a, you know, wide and varied supply chain across the business. Probably quite difficult, as you could imagine, to guess about the implication of tariffs, I think, at this stage. I would say right now, you know, a large portion of our supply chain doesn't necessarily go through the U.S. or would be subject to those tariffs if they were in place. Certainly, this is something that's rapidly evolving and that we continue to monitor. To the extent there were tariffs in place, you know, we do believe that could have an impact on revenue and product growth margin.
That's very helpful. Thank you very much. I'll pass the line.
This concludes the question- and- answer session. I would like to turn the conference back over to Cody Slater for any closing remarks. Please go ahead.
Thank you, operator. I just want to thank everyone for their attention today, this morning. I wish you all a good rest of the day. We look forward to talking to you again next quarter and throughout fiscal 2025, you know, as Blackline continues to grow and continues to succeed. We will talk to you soon. Thanks very much.
This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.