BlackLine joined. How many years in a row has BlackLine done this? You guys have been really good.
I don't know, but I started this three years ago with you.
Yeah
... people were surprised I showed up.
It's been really good. It's been really good. What will we talk about? Well, first of all, Patrick is the CFO on the far left, and Owen is the CEO. Owen, how long has it been that you've been in this role?
It'll be three years this week.
Coming up on three years.
On March 6th.
You were on the board for how long before that?
Four and a half years before that.
Four and a half years before that. Patrick, how long is it you've been CFO?
I've been at BlackLine 10 years, CFO one year.
How's it going so far?
It's been great.
Yeah. Good. Good, good. All right. Let's start at the top. How's business? What would you say?
Business is pretty good. We ended the year very strongly, which we had sort of been anticipating based upon what we're seeing happening in the business. You know, it's still early in the quarter for us, but the momentum has continued. We're always a little bit odd in the sense that most of our customers don't wanna talk to us till March 1st because they have to all get their 10-Ks filed.
Mm
... through February 28th. A little bit more quiet than maybe some other companies are. We expect that, you know, the conversations to continue. Pipeline's still building. We feel like we've got some good momentum as we head into 2026.
Yeah. What's the big deal pipeline look like?
Big deal pipeline is good and strong around the world. I think, as you know, that's been a focus of ours to continue to try to move upstream into even more of the larger enterprises, the mega enterprises. The ability for us to offer a more fulsome platform of, and getting away from, you know, point solutions the last couple of years has certainly changed the outlook for the size of the deals that we're seeing. I think the other thing that's been very encouraging is we have really focused on the ideal customer selection from our end.
Yeah.
Those customers that really wanna go on a journey. You see that in not only the size of the ACV, but also the TCV, because of the length of the contracts that customers are willing to enter into because we're having those good upfront conversations about are you really looking to do a finance transformation effort? If the answer is yes, BlackLine's a great partner for you. If you're looking to automate one or two things, you know, there's other alternatives that maybe you could pursue out in the market.
Yeah. product market fit's so important, right?
Right. It really is.
It's so important. Has BlackLine consistently gotten their product market fit right over the last, five years?
No.
No.
No.
Where was the mismatch?
I think a few years ago when COVID hit, and we were just trying to sell software to anybody and everybody that wanted something, we went too far down in the lower middle market. That was something that we changed three years ago, and then that has been some of the challenges we've seen in the churn and attrition for the last couple of years, is those accounts winding themselves off, and we'll see the end of that sometime this year. you know, starting back in, well, three years ago, two and a half years ago, actually, was when we really started changing the guidelines of what was the right kinda customer that could come to BlackLine.
We've become much more selective, and I think that's worked out well for us as we, as we move forward.
Yeah. I think so too. Often in our checks, often they just never even got it. Just the implementation process for some of these small businesses was just more the... like, they came to the renewal. It wasn't that they were unhappy with the software. They never got it up and running, right?
Yeah.
Yeah.
I think that's why we spent so much time in the last 18 months really figuring out how to drive time to value for our customers, how much more they could do themselves without necessarily having to rely on a BlackLine or a partner. Because ultimately, and I know Wall Street evaluates us based on the software we sell, but the reality is, it's the outcomes we drive for our customers is what keeps them sticky and growing with us. That's what we really have fixated on. And some of the things we've just released recently with AI solutions to help further accelerate time to value has been really critical for us in the marketplace.
Yeah. We'll get to the AI stuff in a second. Patrick, if you look at last quarter, growth was 8% flat with the quarter before, but the RPO number was through the roof, right? The RPO was up 23%. How do we look at that? Is that just 'cause the contracts were longer? What does that 23% mean?
No. Well, that's a major component. To reiterate, the fourth quarter of last year was 2025, was our highest bookings quarter ever. Last year overall was our highest bookings year ever. It was a record year for the quarter, as well as for the full year. Now, that culminates in, you know, in RPO by the end of the year. More importantly, what we saw happen in the fourth quarter was that we were landing larger deals that were longer term on our platform. When you combine those three things, it drives up the overall term of the deal, it drives up the ACV or ARR, and it drives up the TCV, which shows up in overall RPO. That was a really positive message, really positive story, and that will appear in revenue over the next several years.
There's a great story there in terms of what's driving RPO. To a lesser extent, but also important, we are working diligently with our existing customer base to move them to three-year renewals.
Mm-hmm.
A majority, an overwhelming majority of our customer base just one year ago were on one-year renewals. That's kinda counter to finance transformation. That's counter to stickiness. That's driving up our RPO number overall and driving down-
Mm
... the risk of churn and attrition.
The majority was one-year renewals?
Mm-hmm.
Yes.
That's crazy. Not dollar-weighted, but like the, based on the number of customers.
Both.
Really?
Both.
Wow.
Yeah.
That's surprising. Then with the mid-market part, I get it. I get why in the mid-market that would happen.
Yeah.
With your enterprise customers, that's pretty surprising. How did that happen?
Was policy that was in place, and we've changed it.
No one really thought about it.
I did.
Yeah. Good for you. Yeah, that seems like a good one. Okay. Can we talk about SAP?
Sure.
First of all, what's the health of that relationship like? Last quarter was 26% of revenue, was it?
Yeah.
26% of revenue came from SAP. What's going on with your SAP relationship?
Couldn't be stronger.
Mm.
I think we're really starting to hit on all cylinders on the product side. A lot of things that we're working through with them. We did get, as we announced at the end of the year, Studio 360 approved to be part of their platform, which was a big deal for us. We continue to do a lot of work with them where
When was that recent? When was this?
December 29th.
Okay.
December 30th. Right at the end of the year, we got that approved. So that was a big deal for us. And it allowed, you know, Studio 360 to be sold through all their customers through the SolEx relationship.
Mm-hmm.
We continue to do a lot of work with them on the AI front. I think the things that we've been able to start to get into the market.
Mm-hmm
... the things that we've been sort of sharing with them have generated a lot of enthusiasm on the partnership of what we can do together there. Very encouraged by that. On the go-to-market side, continuing to make really good progress, both on the sales side for net new, but also in the existing account expansion, and then very importantly, on the customer success side, to make sure that BlackLine is fully implemented and value is really achieved for the customers in that front.
Yeah.
Sort of the top to top relationships, continue to, we think, you know, grow and prosper and we don't expect that to slow down. As SAP is want to do every year, they do sort of some reorganization this time of the year. Last year was pretty significant and had a, you know, an impact on us. This year, they've, you know, again, made some announcements with some leadership on the product as well as on the go-to-market side. I think we're in a really good position to make sure we don't lose any momentum as we head into the second quarter, which is their second busiest quarter of the year.
Oh.
Very encouraged by that rollout.
Yeah. As I was coming in, someone told me that there was some news of SAP, like a couple weeks ago. What did I miss? Did I miss something?
Well, they've announced some changes in their product and tech leadership, someone that we work very closely with. The good news is we've got very deep relationships from where we were 18 months ago and throughout the product and tech organization.
Mm-hmm.
That individual is planning to leave in 2027. That has been announced. Then they put a lot of the go-to-market under one leader, a gentleman that we work very closely with. From us, I think it'll be a non-event for us, but obviously whenever there's changes, there's always new things that come out of that.
Yeah. Yeah. Is Christian still super responsive? I remember.
Yes.
... before you were like, "It's amazing. He responds with a...
Yeah. I... Listen, I wish I had the energy of that guy and, you know, but I think it feels to me like he works 20 hours a day.
You know who else does it? I just don't know how he does it. Bill McDermott is the most incredibly responsive person, and I don't know how he does it, you know? Okay. That's good. You know, to the extent that you can comment on it 'cause obviously there's issues there. When is the stockholders meeting? Do we have a date yet?
It's not set-
Okay
... but it's typically in May for us.
Okay.
We would anticipate it shouldn't change by much.
Yeah. We have a stockholders meeting coming up in May, and, there's sort of a proxy battle right here. I don't know. What sort of principles govern the way board management approaches this, and how do we think about what is the best way to drive, you know, long-term shareholder value?
Yeah. It's not really a management issue.
Yeah
... as you all know, we have a strategic committee that handles that.
Yeah.
David Henshall, who's our lead independent director, and the committee handle all the interactions and things of that nature. We've done a pretty good job, I think, of keeping the management team out of that from the day-to-day 'cause our job as management is just to.
Yeah
... go focus on running the business. That's what we'll continue to do. You know, again, from a what are we trying to do as an organization, feel like the management team has very strong support for the strategic plan, how we're progressing against that. That's what, you know, we're focused on. The board will listen to, you know, outside shareholders as they should do.
Yeah
... as part of good governance.
Yeah. Okay. Let's talk AI. So, I guess, first of all, lay the groundwork for us in terms of the application of agents in AI in accounting in general, and then let's talk about what you guys are working on.
Okay. we should take our team.
Mm-hmm
... on this just a little bit. You know, I think the question we get, and I'm gonna reframe your question just a little bit.
Okay. Yeah, yeah
... if you don't mind. Right? You know, the death of software is greatly exaggerated or whatever, is the statement that's out there.
Eh.
You know, well, some.
We'll see. Last time, 65%... Have you seen this data I put together? If you look at the top 20 software companies from the year 2000, 65% of them didn't make it. Nobody went bankrupt, right? You know, number one was Microsoft. They did just fine. Number two, everyone forgets. Sun Microsystems had something called Solaris, which every Global 2000 company, right, used to run on SPARC servers.
Mm-hmm.
Right? Sun Microsystems limped along for the next 10 years and then got bought by Oracle for 0.6x revenue, right? There's, you know, Anyways, last time 65% of them didn't really make it through. It's tough. Transitions are tough.
Yeah. Look, I think, you know, I tell people I, in my prior life, I served the Berkshire Hathaway account from when I was with Deloitte, and there's a couple things you remember from that, and you all would have heard these, right? One is when the tide goes out, you figure out who's wearing a bathing suit and who's not.
Mm-hmm.
I can assure you, we are well-clad-
That's funny.
...to handle things as they move forward. Got a couple chuckles in the audience from that.
Yeah, that's funny.
Two, and this is really for the people in the room here, Berkshire Hathaway would make all their money from my vantage point in times of uncertainty.
Yeah
...and turmoil. I think for everybody that's sitting in this room or listening in, there are gonna be, to your point, very clear winners and clear losers in this marketplace. We actually believe, wholeheartedly that we're going to be winners, and it's because of the unique role that we play in the office of the CFO. I know people get tired of hearing about moats and this and that. I think.
No, no, we don't. We like hearing it
I just look at.
That's like the number one thing we wanna hear about. Let's go.
From our vantage point.
Yeah
...like we sit here and we say, all right, first of all, we are a mission-critical system for the office of the CFO. You can't close your books and records without BlackLine. I don't know the exact number because the markets are going down a bit today, as I understand it. There's about $60 trillion of market cap that runs through BlackLine every day. Not a insignificant number.
60 with a T?
T.
Wow.
Okay? We're a system of record. More importantly, we're a system of control. We've got 25 years. It's our 25th anniversary. I was curious when you were using the 25-year date.
Today.
This year.
Okay. Okay.
June 2nd, I think is our 25th anniversary. Of information and data that we use very specifically that's proprietary to us to help our customers, you know, close their books and records and create their financial statements. You know, again, another thing people get, you know, bothered by deterministic versus probabilistic.
Yeah.
I'll use the word precision is what matters in the financial close, and that's what we deliver for our customers. liability. A CEO, CFO, controller sign a representation letter every quarter where they take on substantial personal liability-
Mm-hmm
...for the accuracy of their financial statements from that highly regulated environment. We make sure that they have peace of mind when they're going through things. The Studio 360 truly is a platform that has tremendous interconnectedness throughout various systems throughout the office of CFO, and that just keeps growing as we move forward. The auditing profession, you know, relies and trusts BlackLine. What you may not know, Pat, is many of our customers have given licenses to their auditors while they do the audit. Are you okay?
Yeah, I'm just.
Being blinded by.
Yeah, it's intense.
blinding. Yeah.
Okay, good.
Sorry about that.
Yeah. Yeah.
Look, most of our innovation comes from the voice of our customers, the BPOs we work with, the system integrators, and the auditors. We're doing things that they want, that they're comfortable with, at the pace that they're looking to do things. You know, Patrick talks about the pull of our AI into our customers. We've been embedding AI into our platform for some time. When Theresa and I sat here with you the first time, she talked about three years ago that if a company had 20,000 accountants, our job was to eliminate 18,000 of them.
Mm.
We've seen that in the way that we've moved forward with the automation we're able to deliver with our customers now even being further empowered by or powered by AI. You know, when you look at us and we went from having 50% of the Fortune 100 three years ago to now serving 70%, those are all rips and replace for people that are coming out to the BlackLine platform for.
It's the Fortune 100 or Fortune 500?
Fortune 100. 70%.
Wow.
So.
You added 20 Fortune 100 companies.
Yes.
Wow.
You just get into the cost of maintenance, the auditor cost of trying to do this yourself or rely on some native, you know, startup. We're seeing it already where some of these AI companies are coming to BlackLine because they can't sell their product into these companies because they have no brand permission. They don't understand the security. They don't understand how it all works. They understand a piece of a financial close, but truly don't understand all of how it fits together. Those are all the things that we're seeing that give us confidence that collectively, when you put all that together, and there's more, that no one comes even close to rivaling what we're doing. That's why we're seeing the successes we're seeing.
Yeah
Particularly with publicly traded companies all around the world.
Mm-hmm.
Right? 'Cause they just don't want that risk.
They're not publicly traded yet, but do any of the big AI labs use you guys?
We'll talk a little bit more about that coming up at the end of the first quarter. We'll just keep going. We're working closely with a lot of the big organizations that we're very proud to be associated with.
I gotta write that down. That was really interesting.
Yeah.
Okay.
Just realized you're a lefty.
I am a lefty. I'm a southpaw.
Me too.
Yeah. I'm a lefty. You had a quote that I loved. You said, "We are not in the business of selling software.
Yeah.
Right? "We are not in the business of selling software. We are in the business of delivering outcomes.
Yes.
Let's talk more about that because other people are saying something slightly different. You know, like we had Sierra up here yesterday, and they're trying to price on outcomes, right? Tell me more about that, about that quote?
Yeah.
We're not in the business of selling software. We are in the business of delivering outcomes.
Look, this comes from really my consulting background more than anything else. If you don't delight your customer, they don't stay.
Yeah.
You know, earlier we talked about, you know, some of the customers we sold software to in the mid-market that never got the value out of it. From my vantage point, listen, we can sell software. We're proving that. We showed the strength of what we had last year, and what we're expecting to see this year. Ultimately, that renewal, that three-year commitment that Patrick's talking about, these customers.
Mm-hmm.
They wanna know that we're helping them achieve the value. The business case that gets put together when we start working with our customers, and You know our sales cycle is very long, right? That ability to deliver the promise to the office of the CFO and to the board and others that are looking at it, that's all the outcome.
Yeah.
That's our measure of success, and we don't get to expand that relationship if we don't deliver. That's the mindset and mentality that we have driven into the organization the last few years that our customer success becomes our success.
Yeah.
It can't be mutually exclusive. It's just the mantra that we're living by, and we think it's the right thing to do. You know, we've talked about this in our numbers, right? We thought we hit peak churn and attrition at the end of last year because of the progress we're making in driving better outcomes from our customers, whether we're doing it or our partners are doing it, or we're doing it together with them.
Yeah. Okay, cool. Let's take a couple questions from our audience. Yes, sir.
Just a clarification of something you said. You were talking about.
Oh, hold on. There's a mic coming. We won't have to repeat the question. Yeah.
Yeah. You were talking about the AI companies coming. They don't know anything about how this all comes together, which I do believe, it does kinda raise the question, are you showing them how it works, or they have intentions to make it work? Could you clarify what you meant by that comment?
Well, what I'm talking about is there's a lot of smaller AI companies that will come in and say they can do a prepaid analysis or a payroll analysis or an accrual analysis or a revenue recognition, and they're trying to build a business around that. What's missing in all of that is, okay, you can get to some kind of probabilistic outcome by using, you know, some large language model that is not based on the underlying information and data and think that that's close enough and good enough, then what you have to be able to do is also understand completely how the control environment works, right?
The way audits get conducted is through, you know, not just for the quantitative testing, but it's also the control testing to make sure that things are gonna work the right way. Many of them don't really have an appreciation of the complexity of that and how it all fits together, and that's what BlackLine's been doing for 25 years now and honing that day after day after day with our customers, the BPO partners, and importantly, the auditing firms to make sure that we can withstand the scrutiny that goes along with that work that gets done so you can publish your 10-Q or your 10-K. Hopefully that's responsive to your question. You should answer, you know, any more to that given you, what you do.
Yeah. I mean, Owen had a, you know, pretty good list here of all the reasons why, you know, we're gonna be one of those 35% winners-
Mm.
-to, to use that statistic you used earlier. But maybe another way to articulate this as a, you know, current and former accountant, some of these up-and-coming AI companies, they don't have context. Many don't have subject matter expertise. They don't have the data, the architecture, the infrastructure, and so without that, if you let AI loose into an environment without guardrails, without that architecture, without that system of control, that AI is gonna return an answer that may be close. I'm gonna use my quote that Owen uses more than me, but in the accounting world, the financial close world, the office of CFO, if you're 95% accurate, you're 100% wrong. That's a known number. That's an SEC number. If you're 5% off.
Mm-mm.
That's a restatement, that's a material weakness, that's the end of your career. Somebody like me or a controller or a CAO, when they're out there making buying decisions, are you gonna look at this up-and-coming AI company without guardrails, without history, without a system of control, without context to the market and try to save a little bit of money and put your career, your market cap, and your company in jeopardy? That is really what defines and separates us. We have that in place now, and we're prudently injecting AI because I'm willing to bet also, Pat, there's 35% of companies that emerged over that time, they're doing exactly what we did. They knew their market, they invested, they leaned into innovation, and they embraced technology.
That's everything that we're doing right now, and that's what's separating us from maybe our competition as well as new competition.
Awesome. All right. Well, why don't we stop there?
Yeah.
You guys, thank you, Patrick and Owen. Thank you so much for joining us.
Thank you.
This was really great to have you here. We appreciate it.
Have me back next year.
Yeah, I hope so.
Mm-hmm.
I hope so.
Okay. Thank you.