Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2021 BlackLine earnings call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one on your telephone. If you require any further assistance, please press star zero. I would now like to turn the call over to your host, Barry Hutton, Investor Relations with The Blueshirt Group. You may begin.
Good afternoon and thank you for your participation today. With me on the call is Marc Huffman, Chief Executive Officer of BlackLine, and Mark Partin, Chief Financial Officer. Before we get started, I would like to note that certain statements made during this conference call that are not historical facts, including those regarding our future plans, objectives, and expected performance, in particular, our guidance for Q4 and the full year, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent our outlook only as of the date of this call.
While we believe any forward-looking statements we may make are reasonable, actual results could differ materially because the statements are based on our current expectations as of today and are subject to risks and uncertainties, including those stated in our periodic reports filed with the Securities and Exchange Commission, in particular our Form 10-K and Form 10-Q. We do not undertake and expressly disclaim any obligation to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. Also, unless otherwise stated, all financial measures disclosed on this call will be non-GAAP.
A discussion of why we use non-GAAP financial measures and information regarding reconciliations of our GAAP versus non-GAAP results is currently available in our press release, which may be found on our investor relations website at investors.blackline.com or on our Form 8-K filed with the SEC today. Now I will turn the call over to Mark to begin.
Good afternoon, everyone, and thank you for joining us today. Q3 marked another strong quarter as demand for digital transformation within the CFO's office continued to increase. We've seen improving demand over five consecutive quarters, and it now exceeds the pre-pandemic levels of 2019. Companies are emerging from the pandemic with a greater sense of urgency to upgrade outdated back-office systems, and we believe this is the beginning of a long-term investment cycle to modernize financial and accounting systems. Within this environment, our team delivered another great quarter of execution as we helped our customers modernize their back office to thrive in an increasingly challenging work environment. Let me describe our ability to meet the customer demands and needs across key segments and geographies. To serve our current customers, we're continuing to innovate on our platform and invest in our customer-facing teams.
We are driving greater customer engagement and further expanding the capabilities of our market-leading platform. As a result, we're seeing accelerated expansion from our install base of over 3,700 global customers. In Q3, our net dollar retention rate ticked up to 108% compared to 107% a year ago. Our successful land and expandability is demonstrated in our experience with a Fortune 100 food and beverage company headquartered in North America that first became a BlackLine customer in 2016. At that time, they began their journey with Account Reconciliations. Their foundational step was to simply leverage Reconciliations without some of the other platform capabilities that drive greater efficiencies. Four years later, they embarked on a corporate-wide initiative for finance and accounting transformation, which included close acceleration.
The customer valued BlackLine's investment in customer success and sought our guidance to drive greater efficiency in calculating and booking journal entries, as well as managing the close. As such, they determined BlackLine to be a critical part of their strategic plan and purchased automated journals and task management to drive efficiency and unify processes across their close. The team has now identified more use cases to leverage automated journals. There are ongoing discussions with this customer for future expansion across the rest of our platform, including Intercompany Hub, as their controller deemed that to be a resolution to a key issue. Our success landing large global enterprise customers continued in the third quarter. Large companies around the world are embracing digital finance transformation to increase capacity, improve visibility, and remove risk from their financial close.
Our message is really resonating with companies who are looking to adopt lean, modern accounting. In Q3, with the help of our partner ecosystem, we added a record number of new, large, high-quality logos. Our ability to serve the largest and most complex organizations around the world continues to serve as both a competitive differentiator and a durable growth lever for BlackLine. Our experience with a large North American pharmaceutical company illustrates our ability to resolve challenges within the enterprise market. This new customer was seeking to improve efficiency and accuracy across the record-to-report processes and had been delayed by numerous acquisitions and evaluations of their existing ERP ecosystem. Their desire was to replace their existing technology with a solution that would integrate seamlessly with any ERP without interrupting the close process.
The controller selected our platform because of our best-in-class feature set, ongoing platform evolution, business relationship building, strategic planning efforts, and educational resources. We were able to inspire confidence in the controller, shared services, and IT organizations as a trusted solution for their finance and accounting teams. The pharmaceutical company is focused on automated reconciliation, unified task management, configurable dashboards, and our SAP Connector. Mid-market companies continue to have a healthy demand for finance and accounting automation. Our Modern Accounting Playbook, or MAP, program produced another strong quarter for mid-market new logos and expansion deals. Our MAP program outlines financial transformation paths for mid-sized companies so BlackLine can deliver purpose-built solutions based on leading practices to unify processes, automate work, and drive visibility. The solutions for the mid-market are starting to resonate outside of North America, with increasing traction in certain key markets in EMEA.
The addition of AR automation helps to further differentiate our offerings, and the combined value proposition is driving more competitive wins. Overall, we are experiencing increased mid-market sales activity. Another exciting AR automation win in the mid-market was a contract catering services company based in the U.K. that was challenged by highly manual accounts receivable and financial close functions that hindered their productivity and greatly impacted overall visibility. Given this company is in the hospitality space, they were severely impacted by the pandemic. As they forecasted a return to pre-COVID demand, they became acutely aware that their current manual processes would not scale. In Q2, this company became a BlackLine customer by purchasing our Modern Accounting Playbook with Cash Application to resolve these time-sensitive challenges by the start of Q4 2021 and to future-proof their business.
This initial purchase will generate immediate results, including a reduction in manual AR processes by 85%, reduction in day sales outstanding by 5-10 days, and reduction in their days to close to five days or fewer. Presented as one solution, our combined financial close and AR automation offering is a critical solution to the office of the controller and another key differentiator of our value proposition. As such, this win represented our largest mid-market land thus far. In key international markets, our momentum continued in the third quarter. Both the European and Asia Pacific regions delivered strong growth and a healthy mix of new logos and expansions. As a result, our international revenue grew 41% in Q3 and is now 28% of our total revenue, up from 25% in the prior year.
Our success in Europe is exemplified by our long-term and growing relationship with a multinational engineering company, which first became a BlackLine customer in 2018 with the purchase of our Close Process Management solution. In 2020, they initiated efforts to centralize, standardize, and leverage automation across their finance and accounting processes. This prompted the next phase of their BlackLine journey as their controller needed help governing and automating the standardized processes and reducing risks across their close. The controller's primary focus was on their journals process. As our customer success teams worked with them, it became clear that they needed greater automation and controls for their intercompany journal entries. In Q3, the company expanded their BlackLine footprint with the purchase of our journals product and our intercompany balancing solution to standardize, simplify, and optimize their close processes.
We are in discussions to roll out journals for other business processes and embark on a full intercompany relationship with BlackLine over time. We continue to leverage our partner ecosystem to meet the digital transformation imperative for the back office. The increased partner engagement is evident as our partners were involved in 82% of large deals in the quarter, up from 69% a year ago. The customer's planned investment in back-office systems has driven an improving demand environment. These customer win stories and our results are strong proof points that we are in the early innings of a long-term growth opportunity fueled by the digital transformation tailwinds. We believe that demand will continue to support long-term growth for BlackLine. As we look to capitalize on these favorable market conditions, we are accelerating our investments in three key levers for growth.
First, we are investing to increase customer engagement and customer success. For BlackLine, customer engagement is a core tenet of our culture. Our customer engagement team includes over 100 experts specialized in training and educating our customers to better leverage our platform. We believe each of our 3,700+ customers is, in one way or another, on a journey to transform and improve their financial and accounting processes. While some customers will move faster than others, we're committed to helping each of them achieve success in their businesses. Our leadership position and know-how around foundational accounting use cases help customers define and identify success using BlackLine. We are always working to improve the customer experience, increase the value of our solutions, and help companies modernize their accounting back office.
We will continue to innovate in this area of our business to drive greater engagement and adoption of the BlackLine platform. Second, we will continue to innovate and expand our platform. We have a clear vision to be the most indispensable platform for the controller, and we have been investing in development resources to advance our platform functionality. We plan to introduce new products in the financial close and accounts receivable automation markets at our BeyondTheBlack event later this month. We remain on track for our cloud migration, and as we modernize the product stack, we will be able to take advantage of increased agility and scalability as we move into the Google Cloud. We are very excited about our expanding product portfolio, both from an organic and potential corporate development standpoint. Our third area of investment is to expand in our international presence.
In each of the last three quarters, we've accelerated our international revenue growth rate. Yet there is still significant upside available abroad. As it currently stands, our international presence is predominantly in EMEA, with a small but growing presence in APAC. Over the last few quarters, we've seen large strategic deals in key regions in EMEA and APAC, and we believe those success stories will cultivate additional large wins for the region. Our traction in the international markets is also benefiting from our partner ecosystem, specifically our SolEx relationship, where we have our products on SAP's price list with their global distribution channel. We've recently enhanced our APAC leadership by hiring a new general manager. We will continue to invest in our teams abroad and leverage our direct and indirect channels to capitalize on the significant international opportunity. These are pillars of our long-term strategy.
We've seen early success in these strategic areas, such as enhanced customer value proposition, extended market leadership, and expanded global presence. Our performance throughout the year gives us increasing confidence in these multi-year growth levers and our ability to execute on them. Before I close, I wanna note that last week marked the five-year anniversary of BlackLine's IPO. We are proud of what we've achieved, and I wanna thank our employees, our customers, our partners, and our investors for their roles in contributing to our success. I'll now turn it over to Mark Partin to discuss our financial performance in more detail.
Thank you, Marc, and good afternoon, everyone. As Marc mentioned, Q3 was another strong quarter of execution and continued improvement in the global demand environment, as reflected in our Q3 revenue, profitability, and cash flow results. Total revenue grew 21% year-over-year, led by our subscription and support revenue, which increased by 23%. Moving to our key performance metrics for the quarter, we had another quarter of strong new logo adds, with 106 net new customers in the quarter, bringing the total to 3,704 customers. Our strength in the enterprise market generated a record number of new large deals in Q3 as we benefited from digital transformation, our SolEx partnership, and continued adoption of our strategic products.
Our dollar-based net revenue retention rate improved to 108%, and that's indicative of strong account growth as customers grew their BlackLine footprint with more products and a record number of additional users. Strategic products represented 15% of sales for the quarter, with over 30% growth year-over-year. Partners were involved in 80% of large deals in the quarter, validating the effectiveness of this go-to-market channel and our partner ecosystem. Revenue from our SAP partnership totaled 24% of revenue, up from 23% in the prior year. Non-GAAP gross margins remained at 80% within our target range, despite the ramping costs that are associated with the planned Google Cloud migration and the integration of the Rimilia acquisition. In Q3, we generated non-GAAP net income attributable to BlackLine of $15.1 million.
We generated $17.1 million in operating cash flow and $9.8 million in free cash flow, reflecting higher than expected profitability and strong cash collection. We ended the quarter with approximately $1.2 billion in cash equivalents, and marketable securities. Now I will provide guidance within the context of Mark's earlier discussion. Specifically, I echo Mark's statement that we've enjoyed a 5-quarter resurgence in market demand, and we expect this to continue into 2022. In response to this demand, we are investing to further prioritize the areas of customer engagement and success, platform innovation, and international growth as part of our forward planning. For the fourth quarter of 2021, total GAAP revenue is expected to be in the range of $113 million-$114 million.
On the bottom line, we expect to report non-GAAP net income attributable to BlackLine in the range of $5.5 million-$7.5 million or 9-12 cents on a per share basis. Our share count will be approximately 62.4 million diluted weighted average shares. For the full year 2021, total GAAP revenue is expected to be in the range of $423.5 million-$424.5 million. On the bottom line, we expect to report non-GAAP net income attributable to BlackLine in the range of $37 million-$39 million or 59-62 cents on a per share basis. Our share count will be approximately 62.5 million diluted weighted average shares.
In summary, we are very pleased with the strong execution we delivered in Q3 and the improving demand environment for finance transformation. We are in the early innings of a significant market opportunity, and we believe this market will accrue to the leader over the long term. As we maintain our focus on customer success and continue to invest in our long-term initiatives, we firmly believe that BlackLine is well positioned to capitalize on this trend of accelerated digital transformation and capture the tremendous opportunity ahead of us. Now we'll take your questions.
Our first question comes from Rob Oliver with Baird.
Great. Thank you guys very much. Appreciate it. I had one for Marc Huffman and then a follow-up for Mark Partin. Marc Huffman, just I wanted to drill down into both your comments and Mark P.'s comments about the large enterprise deals and the record number of new large deals this quarter. Can you talk about what drove those? I think your commentary, you suggested that we are now through the COVID impact entirely. I just wanted to make sure I understood that properly. You know, looking at the user adds, it would strike me that maybe some of those deals had strategic attach as well. Maybe talk about what the components of those large deals were and what the drivers were.
I had a quick follow-up. Thanks.
Sure. Thanks, Rob. A lot of this is demand related and we had what I believe is a great quarter, and it's widespread. Some of that enterprise work is good execution coupled with demand environment. Our message, our experience, our brand strength, our customer success focus, being leveraged in creating demand in those environments. Then from a demand side, it appears that we're in the midst of a wave of investment and arguably the first in I don't know how long, where money is actually flowing into the accounting department. We think that that's the backdrop for some investments we wanna make in the future. We think that this five-quarter trend is gonna continue, and we're positioned really well to capitalize on it.
Got it. Thank you. That's great. Mark Partin, just with one for you. You know, nice net revenue retention starting to flow through nicely, you know, up year. I expect, you know, that would continue if, you know, as you guys are seeing this expansion within your accounts. Gross retention was down just a tad sequentially. I just wanted to see if there was anything to call out there, you know, M&A or churn or anything around that. Thank you, guys.
You know, Rob, you broke up on me for a second. Net, so I'll answer what I think you asked on the net dollar retention rate ticked up to 108 from 106 in the previous quarter. What is driving that was a record user expansion count in the quarter, and that's a big lever for digital transformation and some of these large deals that we were closing. We have been investing in customer success and account management, and I believe that what we're seeing in the retention rate is the value of that investment through expansion in our largest customers.
Great. Thanks. Sorry about the connectivity. Appreciate it, guys.
Okay. Thanks, Rob.
Our next question comes from Matt Stotler with William Blair.
Hey, everybody. Thanks for taking the questions. Maybe one kinda high level on you know, the AR portfolio and then a quick follow-up. So obviously it's been a key area of investment and a focus for you guys since the Rimilia acquisition. You know, first you had the Cash Application, you released AR Intelligence in March, and recently announced kind of unified platform there. So I guess, you know, the first part there would be, you know, can you just talk about, you know, the initial traction. You mentioned some large deals, but maybe more broadly, the traction and how that, you know, addition and combination is resonating with your customer base more broadly. And then I have a quick follow-up after that.
Yeah. Thanks, Matt. You know, obviously, you follow us and we announced that acquisition about this time last year, and we were very bullish on that acquisition, the space, plus, you know, some things that we alluded to in terms of the product pipeline. The traction in Cash Application was good. The demand was strong. We were able to highlight that with our existing customers. We had some nice wins in new customers and found in some segments that the combination of AR plus BlackLine was really very competitive. As we look into the investment, they had some things underway that were innovative, that were completing the platform. We added to that and really focused on it this past year.
We go from having Cash Application, as you mentioned, with some success to that spring release of AR Intelligence, which has a great attach rate right now, to having the release that we just issued, which will be one of the highlighted product sections of our upcoming user conference in November, to having six modules unified on one AR platform that spans Cash Application, Credit & Risk Management, Collections Management, Disputes & Deductions, Team & Task Management, all brought together by AR Intelligence. We're really excited about it.
Great. Yeah. Can't wait to hear more about that at BeyondTheBlack. Just one quick follow-up. You know, obviously, the uptick in net dollar retention was great to see. You know, early on in the pandemic, one of the things that kinda initially impacted you know, kind of the performance and the key metrics was some of the relief that you've been providing customers, and it was very much with the mindset that you know, at some point in the future, there would be some expansion opportunities within that base, and you've spoken to those customers about that. As those deals are coming up for renewal, I mean, is that something that you're seeing you know, over the past couple of quarters?
Is that, you know, part of what's driving the net dollar retention and some of the kind of positive trends that we're seeing? Any comments that you can make on that, kinda cohort of customers?
I can, yeah. Thank you. You know, you're right that over that past year, we were discounting, providing both cash billing and contract relief to customers that needed it in order for them to continue operating on the platform, but to also maintain them as a customer, and we did that. To some great degree of success, I'd like to say, because many of our customers that were in impacted industries were able to continue on. We have now just recently stopped giving that relief. We've not had to do that any longer, and those customers are now starting to lap. It began in Q2 and in earnest in Q3 last year, and we're starting to see those come back to us, and those customers will continue to build.
They have stayed with us, and that's been a very positive impact on the net retention rate because, as you recall, it's a trailing metric. To the extent that you're discounting and giving relief, that was impacting that rate. We're very pleased with it, and we believe that our customers and the goodwill that we accrued there will stay with us for some time.
Absolutely. All right. Thanks again.
Thank you.
Our next question comes from Koji Ikeda with Bank of America.
Hey, Marc Huffman and Mr. Partin, nice quarter, and congrats on the five years of public company, Mark. I actually think that in today's software market, you know, that makes BlackLine a public market dinosaur. Congrats on that on the five years. Couple questions from me here. Number one, great job on the new deal count, the net new deal count, and more so I think on the size of the new deals that's driving that growth that we see in the model. You know, I guess thinking about the future, is Q3 a good example of how we should be thinking about deal volumes and overall size from here?
Yeah. I can start with that because that's where we're really investing to get that kind of a profile. We've, for the majority of our history, been solving the biggest problems for the biggest companies, and now we continue to build out the platform to be able to give our customers the opportunity to build and stay on our platform and grow into very large customers for a very long period of time. The Q3, despite being a typically seasonal quarter for us, was indicative of strong demand at the very high end of the enterprise, where our ecosystem, including the consultants, SAP, were able to help us bring on very large customers that are going through digital transformation.
The key to expansion is in our ability to help customers go on a journey of transformation at the high end. That will drive that retention rate expansion on that retention rate, and it will help us bring in large logos.
Got it. Thank you. Maybe one follow-up for Mr. Huffman. You know, the commentary on the partner influence ticked up again here to 82%. I guess what is the right percentage or maybe mix there, you know, in the future for partner influence on these deals? I mean, is the goal 100%, or is what we're seeing today kind of considered fully optimized here from the partner network? Thank you.
I don't know if it's fully optimized or not. I think 80% is on the strong side of healthy. I think there'll always be a population of people who prefer to deal directly with the vendor without any third party influence or have some investments already internally that are more strategic transformation agents. We've seen some really great customers who have already invested in that internal capability, and oftentimes that's the capabilities that these big partners bring this sort of really transformative approach to envision to what people should be designing over the long term. I like us, you know, at 80%. I think it's a combination of that really strong demand environment and great execution.
You know, if I just sort of add to that, Koji, in SolEx, we keep track of SolEx wins in this concept we have of the power of three, us, SAP and these big partners. 90% of our big SolEx deals were using us plus SAP plus a partner, which I think is really at the high end and optimized as well.
Got it. Thanks so much for the color, guys. Appreciate it. Thank you.
Thank you.
Thank you.
Our next question comes from Ryan MacDonald with Needham.
Hi, guys. Thanks for taking my questions too, if I could. Just the first one on AR automation. Can you talk a little bit about how far along you are in the process of maybe getting partners certified to implement the solution at this point?
Yeah, I'd say, thank you for that. I'd say we're early innings still. We have some legacy partners that were from the Rimilia company as an independent organization that has nicely spilled over into those practices, building expertise on BlackLine's close process automation suite as well. We have early signs of practice building all the typical activities you would see at the onset, enablement, education, awareness, skill building, et cetera, with our mainstream partners in the various practices that focus on operational and record-to-report areas like AR.
That's helpful. Maybe just to follow up, I just wanted to ask a little bit about some of the recent customer success initiatives you've put in place, specifically extending the MAP program, with, I believe, the Collaborative Accounting Experience and Optimization Academy. What sort of impact has that had on either sales cycles, larger deals, implementation times, or anything else that we should be thinking about?
You know, it's too early to have specific metrics on that, though there are signs that is having a meaningful impact on a variety of things, customer satisfaction, usage of strategic products, some really nice volume, like large scale volume consumption now being driven in some customers across the real strategic products. It's still fairly early in terms of the time that it takes for these things to impact the practitioners and our customers, them to plan, fund, and take initiative. That academy that you mentioned, we're just nearing the end of an 18-week curriculum where we're trying to build transformation practitioners within our customer base, which as I mentioned, we're seeing impact on it.
I believe that's part of the reason why our customer expansion is happening at the rate it is. Hopefully, that'll be the sort of gift that keeps on giving in the future as we get force multiplication with creating more transformation practitioners in our customer base.
Yep. That makes sense. Thanks for taking the questions.
Thank you.
Our next question comes from Matt VanVliet with BTIG.
Hey, guys. Thanks for taking the question. Nice job on the quarter here. Looking at the SolEx agreement mix, you know, it ticked up higher by about percentage, and would indicate somewhere in kind of the mid-20% growth range on a year-over-year basis. Any reason to think that that can accelerate further, or is there a certain kind of tempo, and deal cycle involved with using that many partners, Mark, as you mentioned, 90% involving a third partner there, and that's just a nice steady kind of mid-20% growth business for some time?
Well, I'll answer that in two ways. Like, we have an aspirational view that their installed base of over 9,000 billion-dollar-plus customers, most of which are not yet our customers, is a great installed base for them when they're activated to be able to sell. They're operating in many global markets, some of which we support and assist, and some where we don't. When we originally signed this deal several years ago, we knew it would take some time out of the gate to launch and get ramped and build the kind of momentum within a very large partner like that that it would take to get acceleration.
We're starting to see that over the last three quarters, where we operated in Q3 is a great profile for us to move forward, but the opportunity to expand that is there. Nevertheless, the other answer for that is it's very difficult to move a company like that, in terms of getting our product and the priority, at the front of the stack. We see some great initiatives from them. We're very active. We've had an incredible engagement model over the last several quarters. We're going to be cautiously optimistic that SAP will continue to be a growth engine, to bring us up and start to accelerate our growth rate as well. All right. Very helpful there.
On the strategic part, product side, you know, as you continue to get a larger and larger customer base, you know, should we expect that to continue to see the cross-sell opportunities, really kind of accelerate like they did this quarter? You know, are you putting programs in place to really highlight and stress the value of those? Or does it really still come down to the individual salespeople, you know, really highlighting those benefits to each individual situation?
No, it's one of our key strategies towards this indispensable platform that we're working to build to support our customers in their modernization. There's the Collaborative Accounting Experience that we operate is just that. It's leading practices proven methods, pre-built workflows in the software that take people through the automation that is led by those strategic products. They're introduced at the right stages at the right time based on our experience with clients' journeys. It's a great example of some of the initiatives. You know, we'll continue to invest in those things because we believe the depth and breadth of our capabilities plus our experience is really what's indispensable to people.
Of course, on a given quarter, and especially in a quarter like we just had, where the demand environment was so strong, there's widespread performance and execution in our business. You know, percentage of strategic products is gonna bounce around, but it will be, for the foreseeable future, one of those things that we're really attentive to and focused on executing.
All right. Wonderful. Thank you.
Thank you.
Our next question comes from Pinjalim Bora with JP Morgan.
Oh, hey, thank you so much for taking the questions, and congrats on the quarter. Mark, I wanted to ask you about RPA. How do you view it? I mean, whenever we talk to RPA vendors, they highlight a bunch of finance transformation use case. They're probably pretty concentrated in some of these finance transformation use cases. I wanna ask you, how do you view it with respect to BlackLine, right? Is that complementary side by side, essentially, for you? Do you see it as a competition at times? Do you envision building RPA capabilities in-house or mainly partner?
There's a lot there, so I'll try my best to get to it all. My first reaction to that is the way you described it in terms of transformation. I think the RPA vendors are trying to take some liberty with the word transformation and what they're doing. Some of what they're doing is quite complementary to what we're doing. They're taking a repetitive task, and they're trying to drive it with machines versus human beings. So they're removing the burden of manual work that goes on, and a lot of it still goes on in a lot of accounting departments. We're doing the same thing, but from a very process-specific means, purpose-built means, meaning that it's done inside our application in the platform.
As environments change over time, that everything just sort of seamlessly works, and you don't have to go back and reprogram those things. As to your question to, you know, the future, are we gonna build in RPA? No. We're headed towards this environment where we manage the operations in finance and accounting through a centralized place, much like an RPA vendor would or a workflow vendor, but it's specifically closely coupled to manage the close, manage the AR work that we're doing with clients, manage the intercompany work that we're doing with clients, and giving controllers and chief accounting officers and their workforce the chance to control other parts of finance and accounting using workflow and RPA-like capabilities, but purpose-built.
Right. Understood. One quick follow-up for Mark Partin. You have kind of talked about demand coming back. I think you said it exceeds the pre-pandemic level at this point in time. Help us understand how should we think of billings going for Q4. I think your revenue guidance is somewhere in the high teens. Directionally, should billings outpace that revenue growth in Q4?
Well, on a quarter-to-quarter basis, it's gonna vary. That's just the nature of the business and deal flow. I would never put any stock into any one specific quarter. You wanna look at a trailing twelve months to get a better view of go forward growth and the business. Having said that, Q4 is also a quarter where we'll start to lap the Rimilia acquisition that landed at the beginning of the quarter. Tougher comps from last year, where we started initially Q3, Q4 last year, started to see improvement in that demand environment. That's gonna impact a single quarter billing.
However, going forward, the level of investment is to maintain and to drive billing in ranges where we've seen the last several quarters because we do expect the demand at the very high end, especially, to be there. When you are at the high end and you are working with large customers and large deals, that'll have a single quarter impact, but over the long term, it'll start to flow and drive growth.
Understood. Very helpful. Thank you.
Thank you.
Our next question comes from Terry Tillman with Truist Securities.
Hey guys, this is Connor on for Terry. Thanks for taking the question, and congrats on the quarter. Just one for me. Trying to touch on international performance. In terms of your international performance, it's really great to hear about the success here. I'm just curious as to what you're hearing from customers abroad and maybe what emerging trends you're seeing in terms of adoption from specific regions. Thanks, guys.
Yeah. Our success internationally was, I would say fairly widespread, and it's represented by an increasing growth rate in international and making up more of our overall revenue profile. So I can't point to a red-hot region or one that's lagging. It's fairly widespread, which is assuring, and it just appears to me that the international business will follow patterns that we saw in the North American business. They're just, you know, North American business was a little earlier on the adoption curve in uptake, in modernizing their accounting. We're now seeing some of the same trends we saw develop in North America hit the international businesses and enhance our our commentary about that being one of the areas we're gonna invest going forward. We see tremendous opportunity in international.
We see this demand environment sprinkling and crossing into all buckets internationally, and we are prepared to capitalize on it.
Great color. Thank you.
The next question comes from Brent Bracelin with Piper Sandler.
Hi, this is Mari on for Brent. Thanks for taking our questions. One thing, you know, that stands out here is the continued strength in subscription, and it looks like another quarter of acceleration there. Could you help us understand where the biggest drivers for that segment are coming from? Then maybe your thoughts on how we should think about that going forward. Then I'll have one follow-up.
Yeah. Yeah, great. You're right, subscription revenue has grown every quarter for the last three or four quarters, and that is specifically coming out of the pandemic, demand driven. You've seen it first in the billings, and as we've built over this last several quarters, we've seen that acceleration in subscription revenue. What is driving that, not just in Q3, but in previous quarters are large deals coming from digital transformation projects that are picking up, strategic products on a year to date at around 18% of sales. It's record user expansion in those same customers in the last two quarters, which is driving that retention rate up two points from 106 to 108 coming out of the pandemic.
It is, honestly, we had a very sorta healthy, robust growth across all aspects of the business, international, mid-market and enterprise. It was a very, exciting quarter for us, and that's what will drive that subscription revenue up.
Great. Got it. Secondly, jobs data that we look at points to some large enterprises like Apple that might be looking to transform their global finance functions. It'd be great to get some color on what the pipeline for enterprise customers looks like. When it comes to these larger Fortune 100 companies, who would be the primary competitors that you see there? Thank you.
Well, we have a great share of the Fortune 100, really strong share. In terms of companies that have not yet standardized on a platform, oftentimes we're in their sole source. Many of those organizations are large, distributed in ERP environments, and so they don't generally turn to their ERP provider looking for solutions. They rather turn to third parties. There's BlackLine with the most experience, the most customers, et cetera. We do have a legacy competitor that we see in those places, but we, as evidenced by the share that we have in those customers, continue to succeed, be the primary platform of choice for them, and continue to take customers from that particular private competitor.
Thank you. Our next question comes from Alex Sklar with Raymond James.
Hi. Thanks for taking the question. This is John on for Alex. Marc, I had a quick question here. You know, we've seen a lot and we have a lot of customers, private company customers here. But I'm curious if the pickup in IPOs and SPAC activity has driven higher demands in terms of companies that are preparing to go public, you know, wanting to drive a more rigorous financial close process. Any color there?
Sure. There's obviously a lot of trigger events and catalysts for demand. There's broad macro environmental demand that we're seeing. There's receptivity that we see with our experience in our Modern Accounting Playbook, the methods, the well-worn path that we have for clients, lower risk, greater time or reduced time to value, that is resonating. I believe that, you know, we get our fair share of well-funded, fast-growing companies that are grooming themselves or organizing themselves in a way, for more scrutiny like the public markets or other investment. That's clearly a driver for us as well.
Perfect. Thank you very much.
Thank you.
Our next question comes from Pat Walravens with JMP.
Oh, great. Thank you. Okay, as you guys get ready for 2022, what are the top two or three priorities that Mark Woodhams has to get done in the sales org?
Well, specifically, the three biggest thing that I'm focused on. I'm sorry to take liberties with your question, Pat.
No, that's all right, either way.
They were in my prepared remarks, but we're, you know, investing in our business. We think the macro environment is just right for investment and growth and capitalizing on our leadership position. We're focused on customer success, innovation on our platform and international. If I were to take it down to Mark Woodhams, he's adding capacity. He's adding distribution capacity to capitalize on that, specifically to leverage a couple things. We believe we've got a great opportunity in strategic products, specifically the AR products, combined with the rest of our platform. He's making some nice investments in there, making sure that we capitalize on those things. He's also heavily invested in international growth.
On the AR side, does it require a different skill set, a different type of rep or, you know, what does it require?
We have people in our organization who are clearly capable of selling the AR solution. We have augmented our distribution organization by having product expertise both from a hire from competitors, taking people who have sold in that environment into our environment. On top of that, you know, part of the secret sauce in BlackLine is having professionals who actively has transacted and worked in the environments that we are sort of modernizing. Much like we have a bunch of expertise in our pre-sales organization or distribution organization that have closed the books or worked for an auditor or something, we have started to acquire accounts receivable transaction-related expertise, so people can sort of show people what it's like to move from manual to modern.
Great. Thank you.
Thank you.
I'm not showing any further questions at this time. I'd like to turn the call back over to Mr. Marc Huffman, CEO, for closing remarks.
Thank you. First of all, I'd like to thank our employees. We had a great quarter in Q3, and we've had several quarters of great execution. They've stayed focused on one another, and they've stayed focused on our customers, and we're all very appreciative of the work that they do for us. I wanna remind everyone that we'll host our 2021 digital version of BeyondTheBlack event on November sixteenth through the eighteenth. It's a three-day event. We'll include keynote, breakout sessions consisting of more than 50 hours of content to help users resolve some of the challenges of digital finance transformation. Although the event is primarily for our customers and prospects, there are certain sessions that will be particularly interesting to the financial community.
We appreciate everyone's ongoing support of BlackLine, and as established by our founder, Therese, I'd ask that to remind you all to refer your portfolio companies or companies that you come in contact with who are looking to modernize their environments to send them to BlackLine. We're excited about the future opportunities of our business and accounting transformation, and we look forward to talking with you later on. Thank you.
Ladies and gentlemen, this concludes today's presentation. You may now disconnect and have a wonderful day.