So, we are just delighted to have BlackLine joining us at the Citizens JMP Technology Conference here in San Francisco. To my right is our founder and Co-CEO Therese Tucker. To my left is Owen Ryan, also Co-CEO. And then, one over from Owen is Mark Partin, the CFO. And, probably to Therese and Mark's relief, I think we're gonna focus a lot of our attention on Owen today. So, also just as a little aside, at this time last year, Therese and Owen announced that they were the new Co-CEOs and that the old CEO was leaving. And that announcement was, was it?
At this conference?
At this day. That morning, right?
Yes.
It was that morning. And then they were on stage here to explain it to everyone. So we really appreciated that. Okay. So, I'm gonna start out just with how's business. Who wants to take that one?
I'll start.
Okay.
So, I think, as we said, we had some decent, you know, start of, some green shoots earlier in or in the fourth quarter of, of the end of last year, which was sort of I think we felt like we were getting a little bit better out throughout the course of the year but still, still somewhat, you know, unclear as to where it's all heading. And then what's unusual about this business for us is for the first 60 days of our year, our clients go into lockdown mode because they gotta get their 10-Ks out and everything else. So it was really hard for us to get some feel for, for how the first 60 days are or so. But, we're continuing to work very hard on the changes we've made around our operating model.
Our people are in the field, working with our partners and our customers. You know, I think over the next few months, we'll have a better feel for how things are starting to shape up.
Okay. Is it fair to say that Owen is kind of, not to say that you're like this in general, but when it comes to this, to the execution, that your expectations are generally quite high?
coming out of.
Is that a fair assessment?
Coming out of a firm that it was all about execution, yes.
Yeah. Okay. Good. Well, I kinda like that.
Well, the good thing is each of the three of us understand the value of a dollar. And so we're all pretty good about making sure we're using our shareholders' money wisely.
Let's talk a little bit more about coming out of a firm where, you know, so why, why do you have high, high expectations for execution?
Well, two things. So one is my former firm, which was Deloitte for many, many years, was incredibly well run. But we made a lot of money helping companies be really well run. And so we learned.
That's fair.
All the lessons of what to do and what not to do.
Yeah. Okay. So let's talk about so you joined Deloitte in the 1980s, right? I know. I know. I know. But we love experience in our mid-1980s.
Do I look do I look like that?
No, definitely not. And then you were there until 2016?
Yes.
All right. So give us the quick arc of your career at Deloitte and where you ended up.
Started in an audit practice way back when, although back then they didn't even call it an audit practice. You just did whatever you needed to do throughout the course of the year. Wound up going through various consulting practices within the organization. The firm was nice enough to send me off to Columbia for a couple of years to go get an MBA, sent me over to Paris to live for a few years to work throughout Western Europe, came back to the U.S., started to run their U.S. and global insurance businesses and their regulatory and capital markets businesses, their M&A business, and then eventually took over as the CEO of what we would call Deloitte Advisory, which is one of their two consulting arms.
Yeah. Okay. And how big was Deloitte Advisory?
Oh, God.
Ballpark. Just ballpark.
I think I had 32,000 people working with me and maybe $6 billion of revenue roughly thereabouts.
Okay. Yeah. So just for context, that's a big business.
Yeah.
Geographically, you started out here.
on the East Coast.
You started out on the East Coast. You live in New York now, right?
I do.
Okay. Geographically, you started out on the East Coast and then.
Have lived at Newark Airport for most of my life.
Yeah. But at Deloitte, they had you in France, Belgium, and whatnot.
All over all over Europe. So in any given week, I'd be in four or five different countries. I had responsibility for their, their M&A services throughout Western Europe.
Awesome. Did they ever send you to Asia? It was.
I spent a lot of time in Asia, yes.
Oh, you did?
Yes.
And when was that? What was that for?
That was mostly trips for two, three, four weeks at a time. So, a lot to go see customers that we had that had international operations. Either, you know, say, for example, Japanese companies with large U.S. subsidiaries or with U.S. companies looking to go into business in Japan.
Oh.
As an example.
Yeah. Okay. So it's pretty interesting, right? So you have someone who was the CEO of a $6 billion, 32,000-employee consulting firm, right, now parachuting into a much smaller company with pretty high expectations, presumably, for how companies are supposed to operate. What kind of consulting were you doing at Deloitte Advisory?
So for me, I spent, God, it was different things. So I spent seven years working on M&A transactions, predominantly for some of the most premier private equity firms that you would all recognize their names, then spent several years doing regulatory consulting, then spent a few years doing restructuring work and working in the office of the CFO helping them transform their operations.
Okay. So I think the first three ones, we all understand, but probably the Office of the CFO part, that part, I probably not.
Yeah. Helping them to rethink their whole control environment, process, technology, and how that all came together.
This was office of the CFO for Deloitte Advisory?
At Deloitte Advisory working for customers, yes.
Okay.
You weren't kidding. You were gonna ask me all the questions.
No. You know, it's super relevant. It's so the you guys go to some of these conferences. Everyone goes to some of these conferences. It's actually rare to have the opportunity to our clients to really understand the backgrounds of the management teams. So, yeah. Sometimes I worry that I'm spending too much time on it. But then I'll walk off and someone'll come up and say, "You know what? I've seen that guy present 30 times and I had no idea that he ran 32,000 employees at Deloitte.
Yeah.
Right? Or whatever it is. Okay. So when did you first encounter BlackLine?
You want the true story or the?
Yeah. No, the true story.
Clean version?
Yeah. Yeah. No.
The clean version, sort of semi-clean, is so one of the things I oversaw was strategic alliances. One of my partners walked into my office and said, "Hey, we've got this new thing, new opportunity with some accounting software company that's focused on the office of the controllership. And can I have $250,000?" And my answer, without the profanity, was something to the effect, "Here's $50,000 and get out of my office." And that's how we first got exposed to BlackLine. I should have put a lot more money into it way back then with the benefit of hindsight. And then, this was 2013.
2013.
How big was BlackLine 2013?
I think $25 million in revenue.
Yeah. It was really small.
25 or 37.
Yeah.
No, it was 25. $25 million in revenue.
How did it even come across your radar at?
One of the things that Deloitte, as a firm, does really well is it's got a great com. I told you I was gonna write.
That's so funny. Jay, can you do me a huge favor? It's Jason Luce's phone. My guess is he's out in the hallway.
Yeah.
Thank you so much.
That's better than the fire alarm, I guess, right? So.
Yeah.
And so one of the things that Deloitte does really well is it's got its antennas everywhere trying to figure out from a competitive intelligence perspective what's emerging, what are the opportunities out there. And it was very willing to experiment with companies like BlackLine to see if there was an opportunity to get there. And so that's how we got that first exposure and started working with them.
And then, a few years later actually, more than a few years later. When did you join the board?
I think it was 2017.
Okay. Yeah. So a few years later.
So it was about a year after the IPO, roughly.
Yeah. So you got a call. How did you get connected with the board?
a recruiter.
Yeah. And what was your first impression, Therese?
I loved Owen.
Really? Why?
because he understood our business.
Mm-hmm.
He understood the challenges. He was from a partner that I valued. He had gotten the experience there. And I knew that we weren't leveraging our partners well. He was rational. He was calm. I'm not always calm. And, no, I, I loved him. I, I invited him on the spot to be on the board. And as he said a minute ago, before we got started, our independent board member at the time said, "You can't do that." And I'm like, "Yeah, I know. But I want him on the board. He's awesome.
Yeah. No, you have to vote, right?
Yeah.
I raised my vote in that moment.
Yeah. That's funny. Okay. So, and so then you joined. You know, this is a $600 million business.
Mm-hmm.
Roughly, growth had decelerated. Wasn't that profitable? What was your initial reaction?
Well, look, I think,
'cause you knew it from the outside. But now you get to see from the inside, right?
Yeah. Look, I think, the thing that you can never forget about BlackLine, it has a who's who customer base.
Yeah.
And when I think about my experiences at Deloitte and the companies we wanted to work with, seeing that BlackLine was working with the same kind of companies was very, very compelling. Then you get to meet people like Mark and Therese and others of the leadership team. And you have a very high degree of confidence about the capabilities and skills and purpose and values and vision of the organization. And so that resonated really well. And then you could see the things that, what's great about consulting is you see all these things that companies do really well and sometimes things that they don't do well and then the opportunity to sort of bring that in and have those conversations with our leadership team about, you know, what got us here. If we wanna get there, we can maybe do some additional things.
And the receptivity and openness to sort of ideas and working through opportunities to make the company even better was very, very compelling.
Yeah. So that's what I think is fun about this conversation. So if you put a consultant, a management consultant, on your board and then you make him co-CEO, presumably, he's gonna launch a massive consulting project, right? So I'm guessing you did. When did you do that?
Yes. But we did it all by ourselves. We didn't hire anybody because you overpay for that service.
Yeah.
So, when did, how, what was your process?
So,
When did it start? What was your process?
So our process went something like this. So Therese and I, literally so it was a year ago, yesterday. We were signing contracts, agreeing to come to, to here. Got on a plane to fly to San Francisco. The board said, "Okay. Figure out what's what we like about the company and what, what concerns we have." So we spent from March 6th through our May 7th, May 8th board meeting really trying to get a lay of the land from the inside. Because as much as you think you know being a board member, you don't know nearly as much until you get in there. And so I think we, we learned quite a bit. Went back to the board in May, said, "Look, we like what we have. But we really need to refresh the strategy for where we're trying to go.
All right. I wanna slow it down a little bit.
Okay.
So you had a discovery a couple-month discovery process.
Couple. Yep. Absolutely.
How did you do the discovery? Like, what did you do to discover?
it was.
Did you interview your own employees? Did you interview your partner?
Yeah.
Yeah.
It was interviews of our people, sort of trying to cross-reference things with somebody would tell you, then trying to fact-check that somewhere else, digging into information and data that Mark had available, looking at what our sales teams had. There was lots of good information in the company that sort of you could begin to digest. Talking to our partners was really important and then talking to customers, and then candidly talking to bankers and others that had some perspectives about the organization as well.
Okay. And so, a long time ago, I worked for a very small consulting firm. But even our projects, there's no way I could do it by myself. We had a team.
Mm-hmm.
So you, you did all this by yourself?
No, not by ourselves. But we did this in that we,
But did you assemble into an internal?
We did. Yes. Yeah.
Okay. Who did you work on?
We deputized.
Who did you put on that internal team?
Well, some people from Mark's organization, some people from the sales organization, some people from the product organization. And so we tried to cherry-pick some of the people that had the best reputations in the company.
Yeah.
But also one of the things that you guys may or may not appreciate about Therese is that when she was the CEO previously, had a really good open-door policy. And when she came back into the company, sometimes you gotta pull stuff out of people. Our folks came just the opposite way. It was like.
Oh, okay.
Let's go let's tell you everything you need to know.
Yeah.
That we previously and so that was a like a wealth of information that we were lucky to get access to. We hired a few people from the outside, so including we hired a woman.
Couple of us from Deloitte.
Well, that's what I would have done.
It was cheaper to hire them than.
I would have paid for it.
It's cheaper to hire them internally than it is to pay them as consultants. Again, some free pearls of wisdom here for you guys. So we brought those folks in, particularly one woman who had a very strong background in understanding how to transform organizations.
Yeah.
And so that was a key piece of what we did. And we did that, again, for the first 60-70 days, delivered a report to the board of what we thought. And then we were off from there.
Did she write a report? Just PowerPoint or was it PowerPoint?
PowerPoint. Yeah.
She put together a deck with the findings.
Yeah. I might have had a little bit of influence on that with Therese as well.
Yeah.
Yeah.
We spent a lot of hours working on it.
Great. What was the, can you show it to us? You're done.
No.
What did it say? What was the result of your study that you then presented to the board?
I think it talked about the good things were, the customer base, the stickiness of the customers.
Like, what was the very first slide?
The first slide?
Yeah.
It was a disclaimer slide, if I remember correctly.
Yeah.
The first, like.
No. So every deck I always do, so it sort of starts out with, context is the opening paragraph.
Yeah.
Then content, and then objectives.
Okay.
So if you ever look at any deck within BlackLine, every, every slide starts with that so that everybody knows what's to come. And then everything flows from, from thereafter. So we laid out the context for where we were, the content which was provided, which covered all the major functional areas of the organization, and also then began to highlight what seemed to be the strengths of the organization as well as the opportunities that we had. And by the way, Therese would say that's consulting-speak when I say the opportunities we have.
Yeah. Yeah. I would have just said we could.
the things that weren't working as well.
All right. What were the opportunities?
I think one, and I'll, I'll just go through the organization. One is I think our, product and tech team had gotten way too layered.
Mm-hmm.
So we were not nearly as nimble and fast. You figured that out pretty quickly when we got in there. two, that, that our sales team was probably hunting like Johnny Appleseed versus really being very strategic about where it was trying to go, what information it was or wasn't using, how we were competing, quite frankly. And I, I've used this analogy. And I apologize if it offends anybody. But I felt like BlackLine competed like it was the British Army during the Revolutionary War. We were wearing our red jackets, banging the drum.
Yeah.
Walking with a flute saying, "We're BlackLine," and getting picked off, you know, in certain parts of the area in the competitive landscape. So we had to sharpen our game for competition. We weren't really using much around our industry capabilities. We have so much information and data that was available for us to use. There was, you know, geographic opportunities where we had sort of gone into markets but didn't really follow the company playbook to the extent that we should have. And so we were not operating in certain markets nearly as efficiently as we could have. We have this massive relationship with SAP. I remember working on the slide with Therese. They got 13,000 companies that have $1 billion or more of revenue. Where are they around the world? Where's BlackLine? Where's the whole? How do we go after it? Things like that.
You know, pretty simple, straightforward things that you would go ahead and begin to do and execute as an organization.
Okay. So that was delivered in May.
May.
It's been eight months.
Yep.
Yeah. And what was the, you know, then the.
Then the board said you, you two could stay.
The challenge yeah, go ahead.
They said, "You could stay. Now, let's figure out what the strategy is.
Yeah.
We did a 90-day sprint to do a complete refresh of the strategy, which we use the word is called the where.
Play to Win.
Play to Win framework, which asks you basically five questions. What's your mission? Where are you gonna play? How are you gonna win? What capabilities do you need? And what and what are the measures that really matter? And so we did that. You know, some from a where-to-play perspective, we thought about, customer segmentation. We thought about industries. We thought about geographies. We thought about ERP systems. And we thought about the product platform, where we wanted to be, and answered questions for each of those five areas. Once we had the answers to those, we then said, "How are we gonna do it?" And we sort of said, "Here's what we will do. Here's what we're not gonna do." 'Cause we had to eliminate things. Like many growing companies, everybody wants to do everything and started to put real rigor and discipline in around no means no.
So we're not gonna do certain things. Then we created a capabilities gap between what we said we needed to win, how we would do it, versus what we really had, and trying to be very open and realistic about that. Created that gap and began to fill in the gap as we moved over the course of the year, including starting to change a number of the leaders. And then we've, you know, refined what we're measuring to make sure we're focusing on those things that truly move the needle for the organization.
I mean, it sounds great.
It's pretty straightforward.
Is it working?
So, we did that from up through August. And then the next big thing we had to do, Pat, was one of the things that BlackLine didn't quite adjust to was when we went from really being a Financial Close solution to then adding Intercompany in a much bigger way, adding Invoice-to-Cash and then recently adding Consolidation and Financial Reporting and Analytics; we hadn't adjusted our operating model. So we needed to make a pretty significant shift. We put in place four pillar leaders for each of those businesses, if you will, if you wanna use that term, to have them really driving what we're trying to do and then sort of overlaying, you know, how the salesforce industry geography comes together. Mark's been driving a lot of reorganization of our back office, go-to-market support. And so we rolled all that out.
We created all that, excuse me, from August through October. November, we got it approved by the board. We did a soft launch, November, December. And then we just went live in January with what we're trying to do now operating as, as a business. And, you know, 70 days into the new year, people feel good about what we're trying to do. We know there's gonna be some kinks in the road that will have to work out in due course. But, we feel pretty good about, about it. We just finished our sales kickoff and BlackLine kickoff in, in, the end of January, I guess it is. We just finished. It's 5 weeks ago already. But people are very enthusiastic about the changes. One of the really important things and we've talked a lot about process.
But candidly, the heart and soul of BlackLine, I believe, always has been innovation and its commitment to customers. And two things that Therese has really helped to reinstill in the organization. One is we've got our innovative juices flowing again, which is just terrific. And the second thing is everybody understands the most important thing we do is to make our customers successful. And if you do that, a lot of other things follow, follow along.
All right. Next year, March 2025, when you're hopefully sitting here.
Thank you.
What, what, what.
I had my annual physical last week.
What I meant by that was.
My bill.
You're willing to come to our conference.
Yes.
Right? That's what I meant. What metrics should we see that would suggest that this worked?
Oh, boy. Look, I think you'll see, you know, ARR continuing to grow, net retention continuing to improve, that we've had more success with our partners. We'll be able to sort of share that, that the SAP relationship continues to grow and is profitable, that our cost of, of revenue per employee continues to improve, that we make progress on the on the Rule of 40 for where we'd like to be. I mean, those are just some of the things that just jump right out.
Great.
Yeah.
Okay. Any questions?
It's go ahead.
Just pulling up your investor presentation. You guys break out Financial Close, invoice-to-cash, Intercompany financial management. You just brought up consolidation.
It's part of its Consolidation and Financial Reporting and Analytics is the new pillar.
What's the question around that? That is the new-newest pillar. It's still pretty small. It's doing well in the market.
Where did that come from? Where did where.
Oh, we built that.
We built it.
She built it.
Yeah.
That was built in-house.
It's a planning product?
No.
No.
Financial reporting, analytics, and consolidation.
Oh, so it's more like OneStream's.
Yeah. It would compete with OneStream.
Yeah. Yeah.
But it's, right now, it's intended to be a consolidation offering for the mid-market because most of the mid-market does not have a consolidation. They do their financial reporting, not as spreadsheets. And then at the enterprise level, we are using it as a pre-consolidation validation tool to centralize a validation process that all big companies go through to verify that their numbers are right before they start a big batch consolidation process. It includes things like flux analysis at various line item levels in your financial reports. It includes the ability to sign off by, like, an entity. So you might have the country controller sign off for each of your divisions. And it allows drill-down visibility down to the most granular level.
Other questions?
So I guess in that same kind of consolidation segment, what are the challenges there? I mean, it's largely dominated by Oracle. You also have some, I guess, OneStream, Hyperion. Are there some challenges with Oracle, like heavily discounting it or essentially throwing it in for free? So how do you how do you address that? What's the value challenge?
Actually, there's at the mid-market level, there's not a great price alternative to BlackLine for consolidation. That one's fine. The challenge at the enterprise level is that people are terrified to switch out their consolidation system, even if it's wrong. Okay? We had a customer, big Oracle shop. And using Hyperion to consolidate, they could not get their balance sheet in BlackLine to tie out to their Hyperion balance sheet. What they realized and this customer shall remain nameless, right? What they realized after several weeks of research is that they were still reporting out of Hyperion on an entity that they had divested of a year earlier. Okay? That's terrifying for them. So the hindrance to replacing more enterprise consolidation systems is a customer's fear of change. Even if the numbers are wrong, it's still consistency quarter-over-quarter in the market that is important to them.
Okay. Mark, for one, you have 19 seconds. So you guided Q1 in line, but you guided the year down.
Yeah.
You know, why and what's your level of confidence in the guidance?
Well, confidence in guidance is high. Our philosophy is we wanna give ourselves some elbow room to run the business, but have a no apologies, philosophy. And then I think the way we approached the year was all the changes that you've just heard about, creates opportunity for us but also some near-term risks.
Mm-hmm.
Appropriately measured and pragmatic guidance.
Oh, perfect. All right. You guys, thank you so much. It's really great to hear you.