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What changed in BLACKLINE, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of BLACKLINE, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+281 added−420 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-23)

Top changes in BLACKLINE, INC.'s 2023 10-K

281 paragraphs added · 420 removed · 212 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

67 edited+36 added−30 removed12 unchanged
Biggest changeWe pursue a land-and-expand sales model and believe there is significant opportunity to increase sales of our solutions within our existing customer base. Our pricing model is designed to allow us to capture additional revenue as our customers’ usage of our platform grows, providing us with an opportunity to increase the lifetime value of our customer relationships.
Biggest changeOur pricing model is designed to allow us to capture additional revenue as our customers’ usage of our platform grows, providing us with an opportunity to increase the lifetime value of our customer relationships. • Geography: We believe that we have a significant opportunity to expand the use of our cloud-based solutions outside the United States (“U.S.”).
Customers gain real-time clarity into what actions and collection strategies are working at each stage of the collection process and can use this information to collect payments more efficiently, leading to reduced days sales outstanding and improved customer relationships. • Disputes & Deductions helps our customers track payment disputes to drive prompt response and resolution.
Customers gain real-time clarity into what actions and collection strategies are working at each stage of the collection process and can use this information to collect payments more efficiently, leading to reduced days sales outstanding and improved customer relationships. • Disputes & Deductions Management helps our customers track payment disputes to drive prompt response and resolution.
Unresolved disputes lead to uncollected revenue and can threaten profitability. Disputes & 7 Deductions logs, monitors, and analyzes invoice disputes and provides our customers automated workflows to accelerate dispute resolution and protect their customer relationships. • Team & Task Management automates accounts receivable teams’ tasks while ensuring timely execution by using data to drive priority of actions.
Unresolved disputes lead to uncollected revenue and can threaten profitability. Disputes & Deductions logs, monitors, and analyzes invoice disputes and provides our customers automated workflows to accelerate dispute resolution and protect their customer relationships. • Team & Task Management automates accounts receivable teams’ tasks while ensuring timely execution by using data to drive priority of actions.
Team & Task Management provides full visibility into the accounts receivable process, monitors critical actions against the volume of work, and allocates resources based on team capacity to prioritize risk management and cash collection. • AR Intelligence automatically processes, analyzes, and surfaces critical information such as sales and payment performance data, customer payment trends, and days sales outstanding.
Team & Task Management provides full visibility into the accounts receivable process, monitors critical actions against the volume of work, and allocates resources based on team capacity to prioritize risk management and cash collection. 8 • AR Intelligence automatically processes, analyzes, and surfaces critical information, such as sales and payment performance data, customer payment trends, and days sales outstanding.
Financial Close Management The collection of processes by which organizations reconcile, consolidate, and report their financial information at the end of each period is referred to as the financial close. For organizations of any size, the traditional way of closing the books is held together by manual processes and error-prone spreadsheets, increasing risk and threatening the accuracy of financial reporting.
Financial Close Management The collection of processes by which organizations reconcile, consolidate, and report their financial information at the end of each period is referred to as record-to-report. For organizations of any size, the traditional way of closing the books is held together by manual processes and error-prone spreadsheets, increasing risk and threatening the accuracy of financial reporting.
Our solutions support complex corporate structures, provide integration across core financial systems, manage multiple currencies and languages, and scale to support high transaction volumes. 5 Embedded controls and workflow Our solutions are designed for the complex global regulatory environment.
Our solutions support complex corporate structures, provide integration across core financial systems, manage multiple currencies and languages, and scale to support high transaction volumes. Embedded controls and workflow Our solutions are designed for the complex global regulatory environment.
We primarily rely on copyright, trade secret and trademark laws, trade secret protection, and confidentiality or 9 license agreements with our employees, customers, partners, and others to protect our intellectual property rights.
We primarily rely on copyright, trade secret and trademark laws, trade secret protection, and confidentiality or license agreements with our employees, customers, partners, and others to protect our intellectual property rights.
Despite our efforts to preserve and protect our intellectual property and proprietary rights, unauthorized third parties may attempt to copy, reverse engineer or otherwise obtain portions of our software. Competitors may attempt to develop similar products that could compete in the same market as our products. Unauthorized disclosure of our confidential information by our employees or third parties could occur.
Despite our efforts to preserve and protect our intellectual property and proprietary rights, unauthorized third parties may attempt to copy, reverse engineer, or otherwise obtain portions of our software. Competitors may attempt to develop similar solutions that could compete in the same market as our solutions. Unauthorized disclosure of our confidential information by our employees or third parties could occur.
We believe the principal competitive factors in our market include the following: • level of customer satisfaction; • ease of deployment and use of applications; • ability to integrate with multiple legacy enterprise infrastructures and third-party applications; • domain expertise on accounting best practices; • ability to innovate and respond to customer needs rapidly; • capability for configurability, integration and scalability of applications; • cloud-based delivery model; • advanced security and reliability features; • brand recognition and historical operating performance; and • price and total cost of ownership.
We believe the principal competitive factors in our market include the following: • depth and breadth of solutions; • level of customer satisfaction; • ease of deployment and use of applications; • ability to integrate with multiple legacy enterprise infrastructures and third-party applications; • domain expertise on accounting best practices; • ability to innovate and respond to customer needs rapidly; • capability for configurability, integration, and scalability of applications; • cloud-based delivery model; • advanced security and reliability features; • brand recognition and historical operating performance; and • price and total cost of ownership.
Our solutions embed key controls within standardized, repeatable and well-documented workflows, which are designed to result in substantially reduced risk of non-compliance or negative audit findings, greater tolerance for regulatory complexity and increased confidence in financial reports. Real-time visibility We provide users with real-time visibility into the status, progress and quality of their accounting processes.
Our solutions embed controls within standardized, repeatable, and well-documented workflows, which are designed to result in substantially 5 reduced risk of non-compliance or negative audit findings, greater tolerance for regulatory complexity, and increased confidence in financial reports. Real-time visibility We provide users with real-time visibility into the status, progress, and quality of their accounting and finance processes.
It also enhances internal controls by facilitating the appropriate segregation of duties, simplifying reconciliation audits and adding transparency and visibility to the reconciliation process. • Transaction Matching analyzes and reconciles high volumes of individual transactions from different sources of data based upon user-configured logic. Our rules engine automatically identifies exceptions, 6 errors, missing data, and variances within massive data sets.
It also enhances internal controls by facilitating the appropriate segregation of duties, simplifying reconciliation audits and adding transparency and visibility to the reconciliation process. • Transaction Matching analyzes and reconciles high volumes of individual transactions from different sources of data based upon user-configured logic. Our rules engine automatically identifies exceptions, errors, missing data, and variances within large data sets.
Competition The market for accounting and financial software and services is competitive, rapidly evolving and requires a deep understanding of the industry standards, accounting rules and global financial regulations. We compete with vendors of financial automation software and with certain ERP software.
Competition The market for accounting and financial software and services is competitive, rapidly evolving and requires a deep understanding of the industry standards, accounting rules, and global financial regulations. We compete with vendors of financial automation software and with software offered by certain ERP vendors.
We have further extended our brand awareness through sponsorships with leading industry organizations such as the American Institute of Certified Public Accountants, or AICPA, the Institute of Management Accountants, or IMA, the Financial Executives International, or FEI, the Institute of Chartered Accountants in England and Wales, or ICAEW, and the Association of Chartered Certified Accountants, or ACCA.
We further extend our brand awareness through sponsorships with leading industry organizations such as the American Institute of Certified Public Accountants, or AICPA, the Institute of Management Accountants, or IMA, the Financial Executives International, or FEI, the Institute of Chartered Accountants in England and Wales, or ICAEW, and the Association of Chartered Certified Accountants, or ACCA.
Since 2018, we have partnered with SAP, incorporating them into the reseller channel that we use in the ordinary course of business. SAP has the ability to resell our solutions, as an SAP solution-extension (“SolEx”), for which we receive a percentage of the revenues. Solex allows us to provide the highest level integration with SAP ERP solutions.
Since 2018, we have partnered with SAP, incorporating them into the reseller channel that we use in the ordinary course of business. SAP has the ability to resell our solutions, as SolEx, for which we receive a percentage of the revenues. SolEx allows us to provide the highest level integration with SAP ERP solutions.
Traditional enterprise resource planning ("ERP") systems do not generally provide effective solutions for processes handled outside of an organization’s general ledger, such as balance sheet substantiation, cash application, and intercompany transaction accounting. Many organizations also use multiple ERPs and other financial systems without a platform to efficiently integrate them.
Traditional enterprise resource planning (“ERP”) systems do not generally provide effective solutions for processes handled outside of an organization’s general ledger, such as balance sheet substantiation, cash application, and intercompany transaction accounting. Many organizations also use multiple ERPs and other financial systems without a platform to efficiently integrate their data and processes.
Our direct sales force leverages our relationships with technology vendors such as SAP and Microsoft Dynamics, professional services firms such as Deloitte and Ernst & Young and business process outsourcers such as Cognizant, Genpact and IBM, to influence and drive customer growth.
Our direct sales force leverages our relationships with technology vendors such as SAP and Microsoft, professional services firms such as Deloitte and Ernst & Young and business process outsourcers, such as Accenture and Genpact, to influence and drive customer growth.
We have established strong relationships with technology vendors such as SAP and Microsoft Dynamics, professional services firms such as Deloitte and Ernst & Young, and business process outsourcers such as Cognizant, Genpact, and IBM.
We have established strong relationships with technology vendors such as SAP and Microsoft, professional services firms such as Deloitte and Ernst & Young, and business process outsourcers, such as Accenture and GenPact.
With configurable dashboards, user-defined reporting and the ability to drill down to individual reconciliations, journals and tasks, users can track open items, identify bottlenecks within a process or intervene to prevent mistakes.
With configurable dashboards, user-defined reporting, and the ability to drill down to individual reconciliations, journal entries, and other tasks, users can track open activities, identify bottlenecks within a process, or intervene to prevent mistakes.
In addition, for companies with multiple systems and complex needs, we can connect with any number of general ledger systems simultaneously, resolving many of the issues associated with consolidating data across systems. Independence Our solutions are not dependent on any single operating system and work with most major ERP systems our customers may use.
In addition, for companies with multiple systems and complex needs, we can connect with any number of general ledger systems simultaneously, resolving many of the issues associated with consolidating data across systems. Independence Our solutions are flexible and not dependent on any single operating system.
Our unified suite of Accounts Receivable Automation solutions “AR Solutions,” helps customers collect cash, provide credit, and better understand cash flow. • BlackLine Cash Application transforms the order-to-cash cycle by significantly reducing the time it takes to apply cash receipts to open invoices, resulting in significant reductions in unapplied cash.
Our unified suite helps customers collect cash, provide credit, and better understand cash flow. • Cash Application transforms the order-to-cash cycle by significantly reducing the time it takes to apply cash receipts to open invoices, resulting in significant reductions in unapplied cash.
Laws of other jurisdictions may not protect our intellectual property and proprietary rights from unauthorized use or disclosure in the same manner as the United States. The risk of unauthorized use of our proprietary and intellectual property rights may increase as our company continues to expand outside of the United States.
Laws of other jurisdictions may not protect our intellectual property and proprietary rights from unauthorized use or disclosure in the same manner as the U.S. The risk of unauthorized use of our proprietary and intellectual property rights may increase as we continue to expand outside of the U.S.
Item 1. Business Overview We have created comprehensive cloud-based solutions designed to transform and modernize accounting and finance operations for mid-market and enterprise organizations in all industries globally. Our secure, scalable solutions support critical financial close, accounts receivable and intercompany accounting processes.
Item 1. Business Overview We have created comprehensive cloud-based solutions designed to transform and modernize accounting and finance operations for midsize and enterprise organizations in all industries globally. Our secure, scalable solutions transform critical processes, including financial close, intercompany accounting, invoice-to-cash, and consolidation.
This product automates the tie-out process, aggregating balances from dozens or hundreds of different systems and allowing users to identify exceptions and create adjustments quickly. • Compliance is an integrated solution that facilitates compliance-related initiatives, consolidates project management, and provides visibility over control self-assessments and testing.
This product automates the tie-out process, aggregating balances from dozens or hundreds of different systems and allowing users to identify exceptions and create adjustments quickly. • Compliance is an integrated solution that facilitates compliance-related initiatives, consolidates project management, and provides visibility over control self-assessments and testing. • Smart Close for SAP is a fully embedded, purpose-built solution to streamline and automate the close directly in SAP.
Available Information Our website is located at www.blackline.com, and our investor relations website is located at http://investors.blackline.com. We have used, and intend to continue to use, our Investor Relations website as a means of disclosing material public information and for complying with our disclosure obligations under Regulation FD.
We have used, and intend to continue to use, our Investor Relations website as a means of disclosing material public information and for complying with our disclosure obligations under Regulation FD.
Because these systems contain and produce information that changes continually and requires constant adjustments, a final tie-out that is typically handled manually in a spreadsheet is necessary prior to publishing results.
Companies with multiple ERPs utilize a consolidation system to produce their consolidated financial results. Because these systems contain and produce information that changes continually and requires constant adjustments, a final tie-out that is typically handled manually in a spreadsheet is necessary prior to publishing results.
We offer the following services for our customers: • Implementation - With a focus on configuration over customization, our implementation approach favors rapid and efficient deployments led by accounting experts, rather than technical resources.
Services Customer service is essential to our customers' success. We offer the following services: • Professional - With a focus on configuration over customization, our implementation approach favors rapid and efficient deployments led by accounting experts, rather than technical resources.
Third-party infringement claims are also possible in our industry, especially as software functionality and features expand, evolve and overlap with other industry segments. Human Capital BlackLine's approximately 1,814 employees worldwide contribute their unique talents, experience and backgrounds to help our customers move to modern accounting.
Third-party infringement claims are also possible in our industry, especially as software functionality and features expand, evolve and overlap with other industry segments. Human Capital BlackLine's approximately 1,750 employees worldwide contribute their unique talents, experience, and backgrounds to inspire, power, and guide digital finance transformation.
(“FourQ”), which we refer to as the “FourQ Acquisition.” The primary purpose of the FourQ Acquisition was to enhance our existing intercompany accounting automation capabilities by driving end-to-end automation of traditionally manual intercompany accounting processes.
(“FourQ”), which we refer to as the “FourQ Acquisition.” The primary purpose of the FourQ Acquisition was to enhance our existing intercompany accounting automation capabilities by driving end-to-end automation of traditionally manual intercompany accounting processes. On October 2, 2020, we acquired Rimilia Holdings Ltd. (“Rimilia”), which we refer to as the “Rimilia Acquisition”.
The matching engine processes millions of records per minute, can be used with any type of data and allows customers to reconcile transactions in real-time. • Task Management enables users to create and manage processes and task lists. The product provides automatic and recurring task scheduling, includes configurable workflow and provides a management console for accounting and finance projects.
The matching engine processes millions of 6 records per minute, can be used with any type of data, and allows customers to reconcile transactions in real time. • Task Management enables users to create and manage processes and task lists.
The application stores permissions and business logic exceptions by entity, service, and transaction type, ensuring that both the seller and the buyer of the intercompany transaction are authorized to conduct business, while billing in a manner that optimizes process efficiency and minimizes tax leakage. • Intercompany Processing records an organization’s intercompany transactions once they reach an appropriate completion level and posts them to the appropriate systems from a single source.
The application stores permissions and business logic exceptions by entity, service, and transaction type, ensuring that both the seller and the buyer of the intercompany transaction are authorized to conduct business, while billing in a manner that optimizes process efficiency and 7 minimizes tax leakage.
However, where an existing customer requests its invoice be divided for the sole purpose of restructuring its internal billing arrangement without any incremental increase in revenue, such customer continues to be treated as a single customer. Products and Services Our cloud-based solutions for modern accounting are designed to be the primary system of interaction for accountants every day.
However, where an existing customer requests its invoice be divided for the sole purpose of restructuring its internal billing arrangement without any incremental increase in revenue, such customer continues to be treated as a single customer.
The key elements of our solutions include: Comprehensive Platform We offer integrated suites of applications that deliver a broad range of capabilities to support critical accounting operations such as the financial close, accounts receivable, and intercompany accounting processes.
The key elements of our solutions include: Comprehensive Platform We offer integrated suites of applications that deliver a broad range of capabilities to support critical accounting processes such as financial close, intercompany accounting, invoice-to-cash, and consolidation. The technology underpinning our software includes a comprehensive base of accounting and finance-specific business logic and rules engines.
Key Benefits Our platform is designed to provide the following benefits to our customers: Flexibility and scalability Our cloud solutions are designed for modern business environments and have broad applicability across enterprise and mid-market organizations in almost any industry.
We continue to focus on providing advanced solutions to other time and labor-intensive accounting and finance challenges. Key Benefits Our platform is designed to provide the following benefits to our customers: Flexibility and scalability Our solutions are designed for modern business environments and have broad applicability across enterprise and midsize organizations in almost any industry.
At December 31, 2022, we had 366,522 individual users across 4,188 customers exclusive of on-premise software. We define a customer as an entity with an active subscription agreement as of the measurement date. In situations where an organization has multiple subsidiaries or divisions, each entity that is invoiced as a separate entity is treated as a separate customer.
We define a customer as an entity with an active subscription agreement as of the measurement date. In situations where an organization has multiple subsidiaries or divisions, each entity that is invoiced as a separate entity is treated as a separate customer.
Our cloud-based products include Account Reconciliations, Transaction Matching, Task Management, Journal Entry, Variance Analysis, Consolidation Integrity Manager, Compliance, BlackLine Cash Application, Credit & Risk Management, Collections Management, Disputes & Deductions, Team & Task Management, AR Intelligence, Intercompany Create Functionality, Intercompany Processing, and Netting and Settlement.
Our cloud-based solutions include Account Reconciliations, Transaction Matching, Task Management, Financial Reporting Analytics, Journal Entry, Variance Analysis, Consolidation Integrity Manager, Compliance, Smart Close for SAP, BlackLine Cash Application, Credit & Risk Management, Collections Management, Disputes & Deductions Management, Team & Task Management, AR Intelligence, Electronic Invoicing & Compliance, Intercompany Create, Intercompany Balance and Resolve, and Intercompany Net and Settle.
Our intercompany solutions manage the entire intercompany transaction lifecycle within our platform, from the initial creation of a transaction through the settlement. We believe it is the only widely available automated end-to-end intercompany solution maintained in a single platform.
Often manual, time-consuming, and resource-intensive processes, intercompany transactions can have material impacts on costs if not managed properly. Our intercompany solutions manage the entire intercompany transaction lifecycle within our platform, from the initial creation of a transaction through the settlement. We believe it is the only widely-available, automated end-to-end intercompany solution maintained in a single platform.
Accounts Receivable Automation Cash is vital to every business, and accounts receivable automation is central to improving cash flow. Managing accounts receivable well means maximizing working capital by collecting cash and minimizing credit losses. This critical process is often highly manual.
This feature facilitates the process of netting transactions and helps users make informed, strategic decisions, while managing cash reporting and forecasting. Invoice-to-Cash Cash is vital to every business, and invoice-to-cash is central to improving cash flow. Managing invoice-to-cash well means maximizing working capital by collecting cash and minimizing credit losses. This critical process is often highly manual.
Once an account in flux is identified, users are automatically alerted so they can research and determine the source of the fluctuation. • Consolidation Integrity Manager manages the automated system-to-system tie-out process that occurs during the consolidation phase of the financial close. Companies with multiple ERPs utilize a consolidation system to produce their consolidated financial results.
Once an item needing investigation is identified, users are automatically alerted so they can research and determine the source of the fluctuation. Users can then document and sign off on explanations, enabling stronger control. • Consolidation Integrity Manager manages the automated system-to-system tie-out process that occurs during the consolidation phase of the financial close.
Enterprise Integration We provide simple, secure and automated tools and integrations to transfer data to and from a range of enterprise-wide processes and systems, including ERPs, financial systems and in-house databases, and other custom applications and data. Our solutions integrate with over 30 ERP systems, including Microsoft Dynamics, Oracle, and SAP.
Integration We provide simple, secure, and automated tools and integrations to transfer data to and from a range of enterprise-wide processes and systems, including ERPs, as well as many other sources of financial data from in-house applications and third-party providers.
We believe we have a leading position in the enhanced financial controls and automation market with both enterprise and mid-market companies. We intend to leverage our brand, history of innovation, and customer focus to maintain and grow our leadership position with enterprise market businesses.
We intend to focus on customer expansion, geography, and industry to maintain and grow our leadership position. • Customer Expansion: We believe we have a leading position in the market with both enterprise and select midsize companies.
Our Financial Close Management solutions allow customers to standardize and automate key steps across the close process to ensure accuracy, control, and timeliness. • Account Reconciliations provides a centralized workspace from which users can collaborate to complete account reconciliations. Features include standardized templates, workflows for review and approval, linkage to policies and procedures, and integrated storage of supporting documentation.
Our Financial Close Management solutions allow customers to standardize and automate key steps across the record-to-report process to ensure accuracy, control, and timeliness. • Account Reconciliations provides a centralized workspace from which users can collaborate to substantiate their balance sheet by completing account reconciliations.
We believe our customers benefit from cost savings through improvements in process efficiency, accuracy, and staff productivity, in addition to maximizing working capital and driving a faster financial close. 3 Our mission is to transform how accounting and finance departments operate, by delivering an indispensable platform to the controller.
We believe our customers benefit from cost savings through improvements in process efficiency, accuracy, and staff productivity, in addition to maximizing cash flows and driving a faster record-to-report process. 3 Our mission is to inspire, power, and guide digital finance transformation by delivering a platform of solutions for the office of the Chief Financial Officer.
As a result, this automation allows users to focus on value-added activities instead of process management. Continuous processing Our solutions help organizations embed quality control, compliance and financial integrity into their day-to-day processes rather than rely on the traditional process of validating financial information at the end of each period.
Continuous processing Our solutions help organizations embed quality control, compliance, and financial integrity into their day-to-day processes rather than rely on the traditional process of validating financial information at the end of each period. Activities such as account reconciliation and variance analysis can be performed in real-time, thus reducing the risk of errors and creating a more agile accounting environment.
Customers can use the Journal Entry product to pass information to hundreds of different ERPs and subsystems in a configurable, easily consumable format. • Variance Analysis provides “always-on” monitoring and automatically identifies anomalous fluctuations in balance sheet and income statement account balances.
Validation and approval checkpoints help ensure the integrity of information passed to other financial applications, including hundreds of ERPs and subsystems, in a configurable, standardized format. • Variance Analysis automatically calculates, identifies, and provides anomalous fluctuations in balance sheet and income statement account balances with “always-on” monitoring.
Training and Development We continually invest in our employees’ career growth and provide employees with a wide range of development opportunities, self-directed learning, and support for continuing education through professional development and reimbursement programs. In 2022, we advanced our career path framework and introduced a global individual development program.
We invest in our employees’ career growth and provide a wide range of development opportunities, self-directed learning, and support for continuing education through access to professional development and reimbursement programs. BlackLine employees are also offered robust training related to BlackLine products and formal and informal on-the-job training.
Though most commonly used with the financial close, users can create task lists and projects for hundreds of different use cases ranging from external audits to environmental impact surveys. • Journal Entry allows users to manually or automatically generate, review and post manual journal entries.
The solution provides automatic and recurring task scheduling, includes configurable workflow, and provides a management console for accounting and finance activities. Though most commonly used with the financial close, users can create task lists and projects for hundreds of different use cases ranging from external audits to environmental impact surveys.
Intercompany Accounting Intercompany transactions occur when entities within a corporate parent organization transact with each other. These transactions are some of the most complex and frequent sources of uncertainty and process inefficiency for the accounting function. It is a manual, time-consuming, and resource-intensive process that can have material impacts on costs if not managed properly.
Intercompany Financial Management Intercompany transactions occur when entities within a corporate parent organization transact with each other. These transactions are some of the most complex and frequent sources of uncertainty and process inefficiency for the controller organization, frequently causing imbalances that must be resolved.
The names “BlackLine,” “BlackLine Systems,” “BlackLine Cash Application,” and our logo are our trademarks. This Annual Report on Form 10-K also contains trademarks and trade names of other businesses that are the property of their respective holders. We have omitted the ® and ™ designations, as applicable, for the trademarks we name in this Annual Report on Form 10-K.
Our principal executive offices are located at 21300 Victory Blvd, 12th Floor, Woodland Hills, California 91367, and our telephone number is (818) 223-9008. The names “BlackLine,” “BlackLine Systems,” “BlackLine Cash Application,” and our logo are our trademarks. This Annual Report on Form 10-K also contains trademarks and trade names of other businesses that are the property of their respective holders.
This solution unifies the data across BlackLine’s AR Solutions suite to provide data typically difficult to obtain in real time. Customers using this solution gain insights into customer behavior, as well as the ability to measure the impact of extended payment terms to cash collections and cash flow, and understand the predictability of customer payments when building cash flow forecasts.
Customers using this solution gain insights into customer behavior, as well as the ability to measure the impact of extended payment terms to cash collections and cash flow, and understand the predictability of customer payments when building cash flow forecasts. • Electronic Invoicing & Compliance helps our customers generate, send, and monitor invoices in diverse e-invoice formats through a multitude of delivery channels.
On October 2, 2020, we acquired Rimilia Holdings Ltd. (“Rimilia”), which we refer to as the “Rimilia Acquisition". The primary purpose of the Rimilia Acquisition was to extend the Company’s capabilities into an adjacent area, adding accounts receivable automation to financial close automation. On January 26, 2022, we acquired FourQ Systems, Inc.
The primary purpose of the Rimilia Acquisition was to extend our capabilities into an adjacent area, adding accounts receivable automation to financial close automation.
We believe that we are creating a new category of powerful cloud-based software that is capable of automating and streamlining accounting and finance operations, in a manner that complements and supports traditional ERP systems.
We are offering next-generation cloud-based solutions that address even more challenges for accounting and finance professionals by automating and streamlining accounting and finance operations in a manner that complements and supports traditional ERP systems.
We are committed to driving a culture of inclusion and innovation through our programs designed to attract, develop, retain, and engage exceptional talent as part of our Think, Create, Serve ethos.
We are committed to driving a culture of inclusion and innovation through our programs designed to attract, develop, retain, and engage exceptional talent aligned with our values of Think, Create, Serve, and Deliver. 10 Through a focus on diversity, equity and inclusion, health and safety, comprehensive compensation and benefits, employee engagement, and training and development, we strive to cultivate a culture where employees thrive.
Automation and efficiency Our solutions can ingest data from a variety of sources, including ERP systems and other data repositories, and apply powerful, rules-driven automation to reconciliations, journals and transactions. This streamlines accounting processes, minimizes manual data entry and improves individual productivity to help ensure that accounting processes are timely completed.
Automation and efficiency Our solutions can ingest data from a variety of sources, including ERP systems and other data repositories, and apply powerful automation to financial close, intercompany accounting, invoice-to-cash, and consolidation processes.
Ease of Use Our solutions are designed by accountants, for accountants, to be intuitive and easy to use. We strive to enable any user to rapidly implement our software to manage their accounting and finance activities, from the simplest to the most sophisticated tasks.
We strive to enable any user to rapidly implement our software to manage their accounting and finance activities, from the simplest to the most sophisticated tasks. Our user interface includes role-based dashboards and reports, provides clear visualization of accounting and finance data, enables user collaboration, and streamlines business processes.
These products are offered to customers as scalable solutions that support critical accounting processes, such as the financial close, account reconciliations, cash application, intercompany accounting, and compliance. Our Growth Strategy Our principal growth strategies include the following: Continue to Innovate and Expand our Platform.
These solutions are offered to customers as scalable solutions that support critical record-to-report and invoice-to-cash processes. Our Growth Strategy Our principal growth strategies include the following: Continue to Innovate and Expand our Solutions. Our ability to internally develop or make strategic acquisitions of new, market-leading applications and functionalities is integral to our success.
We leverage online and offline marketing channels on a global basis and organize customer roundtables and user conferences and release white papers, case studies, blogs, and digital programs and seminars to promote our innovative and comprehensive offerings.
We generate demand primarily through word-of-mouth, search engine marketing, campaigns and events, and our network of business process outsourcers, business services organizations and resellers. We leverage online and offline marketing channels on a global basis, organize customer roundtables and user conferences, and release white papers, case studies, blogs, and other 9 resources.
We believe the need for our software has been driven by growing business and information technology complexities, transaction volumes and expanding regulatory requirements. Our software integrates with, and obtains data from, more than 30 different ERP systems, including Microsoft Dynamics, Oracle, and SAP, as well as many other financial systems and applications such as bank accounts, sub-ledgers and in-house databases.
Our software integrates with, and obtains data from, more than 30 different ERP systems, including SAP, Oracle, Microsoft Dynamics, Sage Intacct, and Jack Henry, as well as many other sources of financial data, such as banks, credit card providers, point-of-sale systems, sub-ledgers, and in-house applications. BlackLine was founded in 2001.
The product automates otherwise manual activities in the reconciliation process, significantly reducing time and effort and increasing productivity.
Features include standardized templates, workflows for review and approval, linkage to policies and procedures, and integrated storage of supporting documentation. The product automates otherwise manual activities in the substantiation process, significantly reducing time and effort and increasing productivity.
Through a history and culture of thought leadership, we have created a new category of powerful software that automates and streamlines antiquated, manual accounting processes to better meet our clients’ diverse and rapidly changing needs, and we continue to focus on providing advanced solutions to time and labor-intensive accounting practices.
Innovation Our ability to develop innovative solutions has been a key driver of our success and organic growth. Through a history and culture of thought leadership, we created the next-generation of powerful software solutions that automate and streamline antiquated, manual accounting and finance processes to better meet our customers’ diverse and rapidly changing needs.
Our approach modernizes accounting and finance operations by unifying accounting systems, data and processes; automating manual, repetitive activities; and enabling more real-time delivery of critical accounting information, a process we refer to as “continuous accounting.” Our solutions help customers unify, orchestrate, and automate accounting processes while achieving greater accuracy, control, and transparency.
Our approach modernizes accounting and finance operations by unifying accounting systems, data, and processes; automating manual, repetitive activities; enhancing transparency and control; and enabling more real-time delivery of critical accounting information. We believe the need for our software has been driven by growing business and information technology complexities, transaction volumes, and expanding regulatory requirements.
This solution includes the following features: • Intercompany Create Functionality replaces informal, ad hoc intercompany requests and approvals with a simple process that uses billing routes to facilitate the flow of a transaction and the appropriate tax and transfer pricing mark-ups.
These solutions include: • Intercompany Create increases visibility into transaction-level data by originating transactions directly within our software. Intercompany transactions are configured and executed with a simple process that uses billing routes to facilitate the flow of a transaction and the appropriate tax and transfer pricing mark-ups.
Activities such as account reconciliation and variance analysis can be performed in real-time, thus reducing the risk of errors and creating a more agile accounting environment. Customers Our customers include multinational corporations, large enterprises and mid-market companies across a broad array of industries. These businesses include publicly-listed entities and privately-owned enterprises, as well as non-profit entities.
Customers Our customers include multinational corporations, large enterprises, and midsize companies across a broad array of industries. These businesses include publicly-listed entities and privately-owned enterprises, as well as non-profit entities. At December 31, 2023, we had 386,814 individual users across 4,398 customers, exclusive of on-premise software.
All customers have access to support resources by phone, email or through our portal, free of charge. • Customer Success - Our customer success managers, many of whom are former users, provide customers with best practices and help create a roadmap for expanded usage of our solutions.
Courses cover solutions functionality, as well as the underlying concepts and demonstrate the power of our platform like financial close, intercompany accounting, invoice-to-cash, and consolidations. • Customer Success - Our customer success managers, many of whom are former users, provide customers with best practices and create a success plan for expanded usage of our platform for process optimization.
We benchmark and set compensation based on our compensation philosophy, and market data, as well as each employee’s role, experience, location, and performance. We also review our compensation practices, both in terms of our overall workforce and individual employees, to ensure our pay practices are fair and equitable.
Career growth and development opportunities are available to all employees, including internal promotions and transfers. Retain To retain our workforce, we strive to offer competitive compensation and comprehensive benefits programs. We review our compensation practices, both in terms of our overall workforce and individual employees, to ensure our pay practices are fair and equitable.
We are a holding company and conduct our operations through our wholly-owned subsidiary, BlackLine Systems, Inc. (“BlackLine Systems”).
We are a holding company and conduct our operations through our wholly-owned subsidiary, BlackLine Systems, Inc. (“BlackLine Systems”) and its subsidiaries. On September 12, 2023, we acquired Data Interconnect (“DI”), hereinafter referred to as the “DI Acquisition”. DI is a cloud-based invoice-to-cash automation vendor within the electronic invoice presentment and payment (“EIPP”) market.
Our solutions unify systems and data and work to drive accuracy, collaboration, and accountability through visibility. By unifying and automating activity, we enable accounting departments to execute their work continuously, empowering real-time reporting and business partnership. These products are offered to our customers as scalable solutions for critical accounting processes, including financial close management, accounts receivable, and intercompany accounting.
Our solutions enable accounting and finance professionals to execute their work continuously, empowering real-time insights and business partnership. Our solution offerings are comprised of multiple products and capabilities, including financial close, intercompany accounting, and invoice-to-cash. We also provide resources and services for implementation.
Our ability to internally develop or make strategic acquisitions of new, market-leading applications and functionalities is integral to our success, and we intend to continue extending the functionality and range of our applications to bring new solutions to accounting and finance. Enhance Our Leadership Position with Enterprise Market and Mid-Market Companies.
We intend to deepen our existing capabilities and extend the functionality and range of our applications to bring new solutions to the office of the CFO. Enhance our Leadership Position within the Marketplace.
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By introducing software to automate these processes and to enable them to function continuously, we empower our customers to improve the integrity of their financial reporting, increase efficiency in their accounting and finance processes and enhance real-time visibility into their results and operations. Critical accounting and finance processes underlie the integrity of an organization’s financial reports.
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By introducing software that unifies critical data and enables process orchestration and automation, we empower accounting and finance professionals to improve the integrity of their financial reporting, reduce time spent on manual work, accelerate cash flows, and redeploy resources to focus on analysis and business partnership.
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The lack of effective accounting and finance tools can result in inefficient and cumbersome processes and, in some cases, accounting errors, restatements and write-offs, as well as material weaknesses and significant deficiencies.
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With the recent acceleration of AI innovation and applications in the broader economy, we expect to further explore and possibly leverage such new and innovative technologies for optimized workflow, efficiencies, and value creation for our customers.
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As a result, to manage these tasks, organizations rely on spreadsheets and other error-prone and labor-intensive processes. These traditional manual accounting processes require significant time, increase the risk of error, and are unsuited for the increasing regulatory complexity and transaction volumes encountered by many modern businesses.
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The integrity of an organization’s financial reports are rooted in critical accounting and finance processes that are often manual, inefficient and cumbersome and which may result in accounting errors and restatements, as well as significant deficiencies and material weaknesses. In addition, these manual accounting processes are unsuited for the increasing regulatory complexity and transaction volumes encountered by many businesses today.
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On September 3, 2013, our company, BlackLine, Inc., a Delaware C-corporation, acquired BlackLine Systems, a California S-corporation, and outside investors acquired a controlling interest in us, which we refer to as the “2013 Acquisition.” The 2013 Acquisition was accounted for as a business combination under accounting principles generally accepted in the United States of America (“GAAP”) and resulted in a change in accounting basis as of the date of the 2013 Acquisition.
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The primary purpose of the DI Acquisition was to complete our existing accounts receivable automation solution by adding EIPP capabilities to our platform. In doing so, we now offer a complete end-to-end invoice-to-cash process within the platform. On January 26, 2022, we acquired FourQ Systems, Inc.
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In addition, we believe that mid-market businesses are particularly underserved and that our platform can help these businesses modernize their accounting and finance processes efficiently and effectively. Increase Existing Customer Spend through Expanded Usage and Adoption of Additional Products.
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We intend to leverage our brand recognition, history of innovation, and customer focus to maintain and grow our leadership position with enterprise market businesses. We pursue a land-and-expand sales model and believe there is significant opportunity to increase sales of our solutions within our existing customer base.
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Expand Our International Operations and Customer Footprint. We believe that we have a significant opportunity to expand the use of our cloud-based products outside the United States.
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We intend to invest in further expanding our global footprint through organic growth activities and strategic acquisitions. • Industry: We intend to leverage our customer scale to innovate with industry-specific product extensions, specifically for industries where we have large total addressable market opportunities and strong brand permission with customers and partners. Extend Our Relationships with Partners.
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We have an established presence in Australia, Canada, France, Germany, India, Japan, the Netherlands, Poland, Romania, Singapore, and the United Kingdom, and we intend to invest in further expanding our footprint in these and other regions through organic growth activities and strategic acquisitions. Extend Our Customer Relationships and Distribution Channels.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe principal factors and uncertainties that make investing in our Company risky include, among others: • If we are unable to attract new customers and expand sales to existing customers, our growth could be slower than we expect and our business may be harmed. • Our business and growth depend substantially on customers renewing their subscription agreements with us, and any decline in our customer renewals could adversely affect our operating results. • Current and future economic uncertainty and other unfavorable conditions in our industry or the global economy could limit our ability to grow our business and negatively affect our operating results. • We have a history of losses and we may not be able to generate sufficient revenue to achieve or sustain profitability. • We continue to experience rapid growth and organizational change and if we fail to manage our growth effectively, we may be unable to execute our business plan. 11 • Our quarterly results may fluctuate, and if we fail to meet the expectations of analysts or investors, our stock price and the value of your investment could decline substantially. • If we are not able to provide successful enhancements, new features or modifications to our software solutions, our business could be adversely affected. • We derive substantially all of our revenues from a limited number of software solutions, and our growth is dependent on their success. • If our relationships with technology vendors and business process outsourcers are not successful, our business and growth may be harmed. • If our security controls are breached or if unauthorized, or inadvertent access to customer, employee or other confidential data is otherwise obtained, our software solutions may be perceived as insecure, we may lose existing customers or fail to attract new customers, our business may be harmed and we may incur significant liabilities. • Interruptions or performance problems associated with our software solutions, platform and technology may adversely affect our business and operating results. • If our software contains serious errors or defects, we may lose revenue and market acceptance and may incur costs to defend or settle product liability claims. • The COVID-19 pandemic is having a material adverse impact on the operations and financial performance of certain of our customers and industries that we serve, which could harm our business and operating results. • The market in which we participate is intensely competitive, and if we do not compete effectively, our business and operating results could be harmed. • The market price of our common stock may be volatile, and you could lose all or part of your investment.
Biggest changeThe principal factors and uncertainties that make investing in BlackLine risky include, among others: • If we are unable to attract new customers and expand sales to existing customers, our growth could be slower than we expect and our business may be harmed. • Our business and growth depend substantially on customers renewing their subscription agreements with us, and any decline in our customer renewals could adversely affect our operating results. • Current and future economic uncertainty and other unfavorable conditions in our industry or the global economy could limit our ability to grow our business and negatively affect our operating results. • We have a history of losses and we may not be able to generate sufficient revenue to achieve or sustain profitability. • We continue to experience growth and organizational change and if we fail to manage our growth effectively, we may be unable to execute our business plan. • Our quarterly results may fluctuate, and if we fail to meet the expectations of analysts or investors, our stock price and the value of your investment could decline substantially. • If we are not able to provide successful enhancements, new features or modifications to our software solutions, our business could be adversely affected. • We derive substantially all of our revenues from a limited number of software solutions, and our growth is dependent on their success. • If our relationships with technology vendors and business process outsourcers are not successful, our business and growth may be harmed. • If our security controls are breached or if unauthorized, or inadvertent access to customer, employee or other confidential data is otherwise obtained, our software solutions may be perceived as insecure, we may lose existing customers or fail to attract new customers, our business may be harmed and we may incur significant liabilities. • Our increased focus on the development and use of generative artificial intelligence and machine learning technologies (“AI/ML”) in our platform and our business, as well as our potential failure to effectively implement, use, and market these technologies, may result in reputational harm or liability, or could otherwise adversely affect our business. • Interruptions or performance problems associated with our software solutions, platform and technology may adversely affect our business and operating results. • If our software contains serious errors or defects, we may lose revenue and market acceptance and may incur costs to defend or settle product liability claims. • The market in which we participate is intensely competitive, and if we do not compete effectively, our business and operating results could be harmed. • The market price of our common stock may be volatile, and you could lose all or part of your investment.
Among other things: • we have authorized but unissued shares of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include supermajority voting, special approval, dividend, or other rights or preferences superior to the rights of stockholders; • we have a classified board of directors with staggered three-year terms; • stockholder action by written consent is prohibited; • any amendment, alteration, rescission or repeal of our amended and restated bylaws or of certain provisions of our amended and restated certificate of incorporation by our stockholders requires the affirmative vote of the holders of at least 75% of the voting power of our stock entitled to vote thereon, voting together as a single class outstanding; and • stockholders are required to comply with advance notice requirements for nominations for elections to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.
Among other things: • we have authorized but unissued shares of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include supermajority voting, special approval, dividend, or other rights or preferences superior to the rights of stockholders; • we have a classified our Board with staggered three-year terms; • stockholder action by written consent is prohibited; • any amendment, alteration, rescission or repeal of our amended and restated bylaws or of certain provisions of our amended and restated certificate of incorporation by our stockholders requires the affirmative vote of the holders of at least 75% of the voting power of our stock entitled to vote thereon, voting together as a single class outstanding; and • stockholders are required to comply with advance notice requirements for nominations for elections to our Board or for proposing matters that can be acted upon by stockholders at stockholder meetings.
If we are unable to assert that our internal control over financial reporting is effective, or when required in the future, if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could be adversely affected, and we could become subject to stockholder lawsuits, litigation or investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources, and cause 34 investor perceptions to be adversely affected and potentially resulting in restatement of our financial statements for prior periods and a decline in the market price of our stock.
If we are unable to assert that our internal control over financial reporting is effective, or when required in the future, if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could be adversely affected, and we could become subject to stockholder lawsuits, litigation or investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources, and cause investor perceptions to be adversely affected and potentially resulting in restatement of our financial statements for prior periods and a decline in the market price of our stock.
For example, it could: • make it more difficult for us to satisfy our debt obligations, including the Notes; • increase our vulnerability to general adverse economic and industry conditions; • require us to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness, thereby reducing the availability of our cash flows to fund working capital and other general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • restrict us from exploiting business opportunities; • place us at a competitive disadvantage compared to our competitors that have less indebtedness; and 32 • limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy or other general purposes.
For example, it could: • make it more difficult for us to satisfy our debt obligations, including the Notes; • increase our vulnerability to general adverse economic and industry conditions; • require us to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness, thereby reducing the availability of our cash flows to fund working capital and other general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • restrict us from exploiting business opportunities; • place us at a competitive disadvantage compared to our competitors that have less indebtedness; and • limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy or other general purposes.
We also expect our costs to increase in future periods as we continue to expend substantial financial and other resources on: • development of our cloud-based platform, including investments in research and development, product innovation to expand the features and functionality of our software solutions and improvements to the scalability and security of our platform; • sales and marketing, including expansion of our direct sales force and our relationships with technology vendors, professional services firms, business process outsourcers and resellers; • additional international expansion in an effort to increase our customer base and sales; and • general administration, including legal, accounting and other expenses related to being a public company.
We expect our costs to increase in future periods as we continue to expend substantial financial and other resources on: • development of our cloud-based platform, including investments in research and development, product innovation to expand the features and functionality of our software solutions and improvements to the scalability and security of our platform; • sales and marketing, including expansion of our direct sales force and our relationships with technology vendors, professional services firms, business process outsourcers and resellers; • additional international expansion in an effort to increase our customer base and sales; and • general administration, including legal, accounting and other expenses related to being a public company.
Security breaches or incidents impacting our platform or our internal systems could also result in significant costs incurred in order to remediate or otherwise respond to a breach or incident, which may include liability for stolen assets or information and repair of system damage that may have been caused, incentives offered to customers or other business partners in an effort to maintain business relationships after a breach, and other costs, expenses and liabilities.
Security breaches or incidents impacting our platform or our internal systems could also result in significant costs incurred in order to remediate or otherwise respond to a breach or incident, which may include liability for stolen assets or information and repair of system damage that may have been caused, incentives offered to customers or other business partners in an effort to maintain business relationships after a 15 breach, and other costs, expenses and liabilities.
In connection with a strategic transaction, we may: • issue additional equity or convertible debt securities that would dilute our existing stockholders; • use cash that we may need in the future to operate our business; • incur large charges or substantial liabilities; • incur debt on terms unfavorable to us or that we are unable to repay; or • become subject to adverse tax consequences, substantial depreciation, and amortization, or deferred compensation charges.
In connection with a strategic transaction, we may: • issue additional equity or convertible debt securities that would dilute our existing stockholders; • use cash that we may need in the future to operate our business; 19 • incur large charges or substantial liabilities; • incur debt on terms unfavorable to us or that we are unable to repay; or • become subject to adverse tax consequences, substantial depreciation, and amortization, or deferred compensation charges.
Regulatory developments in these countries may require us to modify our policies, procedures, and data processing measures in order to address requirements under these or other applicable privacy, data protection, or cybersecurity regimes, and we may face claims, 26 litigation, investigations, or other proceedings regarding them, initiated by private parties and governmental authorities, and may incur related liabilities, expenses, costs, and operational losses.
Regulatory developments in these countries may require us to modify our policies, procedures, and data processing measures in order to address requirements under these or other applicable privacy, data protection, or cybersecurity regimes, and we may face claims, litigation, investigations, or other proceedings regarding them, initiated by private parties and governmental authorities, and may incur related liabilities, expenses, costs, and operational losses.
We believe that our financial statements reflect adequate reserves to cover such a contingency, but there can be no assurances in that regard. The enactment of legislation implementing changes in the U.S. taxation of international business activities or the adoption of other tax reform policies could materially impact our financial position and results of operations.
We believe that our financial statements reflect adequate reserves to cover such a contingency, but there can be no assurances in that regard. The enactment of legislation implementing changes in the U.S. and global taxation of international business activities or the adoption of other tax reform policies could materially impact our financial position and results of operations.
As a result, 14 the continued growth in market demand for this solution is critical to our continued success. We cannot be certain that any new software solutions or products we introduce will generate significant revenues. Accordingly, our business and financial results have been and will be substantially dependent on a limited number of solutions.
As a result, the continued growth in market demand for this solution is critical to our continued success. We cannot be certain that any new software solutions or products we introduce will generate significant revenues. Accordingly, our business and financial results have been and will be substantially dependent on a limited number of solutions.
Accordingly, the loss of one or more of our executive officers or key employees could have an adverse effect on our business. In addition, to execute our growth plan, we must attract and retain highly-qualified personnel. Competition for personnel is intense, especially for engineers experienced in designing and developing software applications, and experienced sales professionals.
Accordingly, the loss of one or more of our executive officers or key employees could have an adverse effect on our business. 17 In addition, to execute our growth plan, we must attract and retain highly-qualified personnel. Competition for personnel is intense, especially for engineers experienced in designing and developing software applications, and experienced sales professionals.
You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, before making a decision to invest in our common stock.
You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our 11 consolidated financial statements and related notes, before making a decision to invest in our common stock.
We may also need to divert resources away from other important business operations, which could 23 harm our business and growth. Additionally, if the costs to migrate to GCP are greater than we expect or take significantly more time than we anticipate, our business could be harmed. We do not control the operation of our public cloud providers.
We may also need to divert resources away from other important business operations, which could harm our business and growth. Additionally, if the costs to migrate to GCP are greater than we expect or take significantly more time than we anticipate, our business could be harmed. We do not control the operation of our public cloud providers.
An adverse change in market conditions, particularly if such change has the effect of changing one of our critical assumptions or estimates, could result in a change to the estimation of fair value that 22 could result in an impairment charge to our goodwill or intangible assets. Any such charges may have a material negative impact on our operating results.
An adverse change in market conditions, particularly if such change has the effect of changing one of our critical assumptions or estimates, could result in a change to the estimation of fair value that could result in an impairment charge to our goodwill or intangible assets. Any such charges may have a material negative impact on our operating results.
In addition, in September 2018, California enacted the California Internet Consumer Protection and Net Neutrality Act of 2018, making California the fourth state to enact a state-level net neutrality law since the FCC repealed its nationwide regulations. This act mandated that all broadband services in California be provided in accordance with California's net neutrality requirements. The U.S.
In addition, in September 2018, California enacted the California Internet Consumer Protection and Net Neutrality Act of 2018, making California the fourth state to enact a state-level net neutrality law since the FCC repealed its nationwide regulations. This act mandated that all broadband services in California be 28 provided in accordance with California's net neutrality requirements. The U.S.
In addition, 27 government agencies or private organizations have imposed and may impose additional taxes, fees, or other charges for accessing the internet or commerce conducted via the internet. These laws or charges could limit the growth of internet-related commerce or communications generally, or result in reductions in the demand for internet-based solutions and services such as ours.
In addition, government agencies or private organizations have imposed and may impose additional taxes, fees, or other charges for accessing the internet or commerce conducted via the internet. These laws or charges could limit the growth of internet-related commerce or communications generally, or result in reductions in the demand for internet-based solutions and services such as ours.
Also, as we continue to expand our customer base, any failure by us to properly provide these services will likely result in lost opportunities for additional subscriptions to our platform. 19 Any failure to offer high-quality product support may adversely affect our relationships with our customers and our financial results.
Also, as we continue to expand our customer base, any failure by us to properly provide these services will likely result in lost opportunities for additional subscriptions to our platform. Any failure to offer high-quality product support may adversely affect our relationships with our customers and our financial results.
The majority of our research and development activities, corporate headquarters, information technology systems and other critical business operations are located in California, which has experienced, and is projected to continue to experience, major earthquakes, droughts, heat waves, wildfires, and power shutoffs associated with wildfire prevention.
The majority of our research and development activities, corporate headquarters, information technology systems and other critical business operations are located in California, which has experienced, and is projected to continue to experience, major earthquakes, floods, droughts, heat waves, wildfires, and power shutoffs associated with wildfire prevention.
If we inappropriately use open source software, we may be required to re-engineer our products, discontinue the sale of our products or take other remedial actions. 29 Risks Related to Ownership of Our Common Stock The market price of our common stock may be volatile, and you could lose all or part of your investment.
If we inappropriately use open source software, we may be required to re-engineer our products, discontinue the sale of our products or take other remedial actions. Risks Related to Ownership of Our Common Stock The market price of our common stock may be volatile, and you could lose all or part of your investment.
We may have difficulty attracting potential customers that rely on tools such as Excel, or that have already invested substantial personnel and financial resources to integrate on-premise or other software into their businesses, as such organizations may be reluctant or unwilling to invest in a new product.
We may have difficulty attracting potential customers that rely on tools such as Excel, or that have 12 already invested substantial personnel and financial resources to integrate on-premise or other software into their businesses, as such organizations may be reluctant or unwilling to invest in a new product.
In addition, 18 independent industry analysts provide reviews of our platform, as well as products and services offered by our competitors, and perception of our platform in the marketplace may be significantly influenced by these reviews. If these reviews are negative, or less positive as compared to those of our competitors’ products and services, our brand may be adversely affected.
In addition, independent industry analysts provide reviews of our platform, as well as products and services offered by our competitors, and perception of our platform in the marketplace may be significantly influenced by these reviews. If these reviews are negative, or less positive as compared to those of our competitors’ products and services, our brand may be adversely affected.
Despite precautions taken during such processes and procedures, any unsuccessful data transfers may impair the delivery of our service, and we may experience costs or downtime in connection with the transfer of data to other facilities which may lead to, among other things, customer dissatisfaction and non-renewals.
Despite precautions taken during such processes and 24 procedures, any unsuccessful data transfers may impair the delivery of our service, and we may experience costs or downtime in connection with the transfer of data to other facilities which may lead to, among other things, customer dissatisfaction and non-renewals.
As such, we believe that quarter-to-quarter comparisons of our revenue, operating results and cash flows may not be meaningful and should not be relied upon as an indication of future performance. We typically add fewer customers in the first quarter of the year than other quarters.
As such, we believe that quarter-to-quarter comparisons of our revenue, operating results and cash flows may not be meaningful and should not be relied upon as an indication of future performance. 21 We typically add fewer customers in the first quarter of the year than other quarters.
We have established strong relationships with technology vendors such as SAP and Microsoft Dynamics to market our solutions to users of their ERP solutions, and professional services firms such as Deloitte and Ernst & Young, and business process outsourcers such as Cognizant, Genpact and IBM to supplement delivery and implementation of our applications.
We have established strong relationships with technology vendors such as SAP and Microsoft Dynamics to market our solutions to users of their ERP solutions, and professional services firms such as 23 Deloitte and Ernst & Young, and business process outsourcers such as Cognizant, Genpact and IBM to supplement delivery and implementation of our applications.
Litigation brought to protect and enforce our intellectual property rights could be costly, time-consuming, and distracting to management, and could result in the impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights.
Litigation brought to protect and enforce our intellectual property rights could be costly, time-consuming, and distracting to management, and could result in the impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of 29 our intellectual property rights.
If we are not able to provide successful enhancements, new features or modifications to our software solutions, our business could be adversely affected. If we are unable to provide enhancements and new features for our existing solutions or new solutions that achieve market acceptance or that keep pace with rapid technological developments, our business could be adversely affected.
If we are not able to provide successful enhancements, new features or modifications to our software solutions, our business could be adversely affected. If we are unable to provide enhancements and new features for our existing solutions or new solutions that achieve market acceptance or that keep pace with rapid technological developments, our business could be 14 adversely affected.
Other countries such as Russia, China, and India have also passed or are considering passing laws imposing varying degrees of restrictive data residency requirements, which have created additional costs and complexity, and any new requirements may result in additional costs and complexity.
Other countries such as Russia, China, and India have passed or are considering passing laws imposing varying degrees of restrictive data residency requirements, which have created additional costs and complexity, and any new requirements may result in additional costs and complexity.
We have never declared or paid any cash dividends on our common stock. We currently anticipate that we will retain future earnings for the development, operation, and expansion of our business, and do not anticipate declaring or paying any cash dividends for the foreseeable future.
We have never declared or paid any cash dividends on our common stock. We currently anticipate that we will retain future earnings for the development, operation, and expansion of our business, and do not anticipate 31 declaring or paying any cash dividends for the foreseeable future.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline. The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline. 34 The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us.
Further, other established software vendors not currently 17 focused on accounting and finance software and services, including some of our partners, resellers, and other parties with which we have relationships, may expand their services to compete with us.
Further, other established software vendors not currently focused on accounting and finance software and services, including some of our partners, resellers, and other parties with which we have relationships, may expand their services to compete with us.
These risks include: • localization of our solutions, including translation into foreign languages and adaptation for local practices and regulatory requirements; • lack of familiarity and burdens of complying with foreign laws, legal standards, regulatory requirements, tariffs and other barriers; • unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties or other trade restrictions, such as sanctions against Russia in response to the war in Ukraine; • differing technology standards; • longer accounts receivable payment cycles and difficulties in collecting accounts receivable; • difficulties in managing and staffing international operations and differing employer/employee relationships; • fluctuations in exchange rates that may increase the volatility of our foreign-based revenue; • potentially adverse tax consequences, including the complexities of foreign value-added tax (or other tax) systems and restrictions on the repatriation of earnings; • uncertain political and economic climates, including the significant volatility in the global financial markets and increasing inflation; • the impact of natural disasters, climate change, war, including the war in Ukraine, and public health pandemics, such as COVID-19, on employees, customers, partners, third-party contractors, travel and the global economy; and • reduced or varied protection for intellectual property rights in some countries.
These risks include: • localization of our solutions, including translation into foreign languages and adaptation for local practices and regulatory requirements; 25 • lack of familiarity and burdens of complying with foreign laws, legal standards, regulatory requirements, tariffs and other barriers; • changes in legal and regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties or other trade restrictions, such as sanctions against Russia in response to the war in Ukraine; • differing technology standards; • longer accounts receivable payment cycles and difficulties in collecting accounts receivable; • difficulties in managing and staffing international operations and differing employer/employee relationships; • fluctuations in exchange rates that may increase the volatility of our foreign-based revenue; • potentially adverse tax consequences, including the complexities of foreign value-added tax (or other tax) systems and restrictions on the repatriation of earnings; • uncertain political and economic climates, including the significant volatility in the global financial markets and increasing inflation; • the impact of natural disasters, climate change, war, including the war in Ukraine, and public health pandemics, on employees, customers, partners, third-party contractors, travel and the global economy; and • reduced or varied protection for intellectual property rights in some countries.
In addition, larger 21 organizations may demand more features and integration services and have increased purchasing power and leverage in negotiating contractual arrangements with us, which may contain restrictive terms favorable to the larger organization.
In addition, larger organizations may demand more features and integration services and have increased purchasing power and leverage in negotiating contractual arrangements with us, which may contain restrictive terms favorable to the larger organization.
Consequently, a decline in new or renewed subscriptions in any single quarter may have a small impact on our revenue results for that quarter. However, such a decline will negatively affect our revenue in future quarters.
Consequently, a decline in new or renewed subscriptions in any single quarter may have a small impact on our revenue results for that quarter. However, such a decline will 22 negatively affect our revenue in future quarters.
Our solutions are subject to export controls, including the Commerce Department’s Export Administration Regulations and various economic and trade sanctions regulations established by the Treasury Department’s Office of Foreign Assets Control.
Our solutions are subject to export controls, including the Commerce Department’s Export Administration Regulations and various economic and trade sanctions regulations established by the Treasury Department’s Office 27 of Foreign Assets Control.
Our growth has placed, and may continue to place, a significant strain on our managerial, administrative, operational, financial and other resources, particularly as we focus on cost discipline and efficiency. We anticipate that additional investments in our infrastructure will be necessary to support the growth of our operations both domestically and internationally.
Growth in our customer base and operations has placed, and may continue to place, a significant strain on our managerial, administrative, operational, financial and other resources, particularly as we focus on cost discipline and efficiency. We anticipate that additional investments in our infrastructure will be necessary to support the growth of our operations both domestically and internationally.
If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and growth prospects could be adversely affected.
Further, if we fail to attract new personnel or fail to retain and motivate our current personnel, our business and growth prospects could be adversely affected.
The aftermath of Brexit also continues to cause significant political and economic uncertainty in both the UK and the European Union ("EU"). As a result, the level of economic activity generally in this region could be adversely impacted, negatively affecting customer demand for our products and our operating results.
The aftermath of Brexit also continues to cause significant political and economic uncertainty in both the UK and the European Union (“EU”). As a result, the level of economic activity generally in this region could be adversely impacted, negatively affecting customer demand for our products and our operating results.
If our revenue does not increase for any of these reasons, or any other reason, our business, financial condition and operating results may be materially adversely affected. The market in which we participate is intensely competitive, and if we do not compete effectively, our operating results could be harmed.
If our sales and revenue do not increase for any of these reasons, or any other reason, our business, financial condition and operating results may be materially adversely affected. The market in which we participate is intensely competitive, and if we do not compete effectively, our operating results could be harmed.
In the event the conditional conversion feature of either series of Notes is triggered, holders of the Notes of such series will be entitled under the applicable indenture governing the Notes to convert such Notes at any time during the specified periods at their option. As of December 31, 2022, the conditional conversion features of the Notes were not triggered.
In the event the conditional conversion feature of either series of Notes is triggered, holders of the Notes of such series will be entitled under the applicable indenture governing the Notes to convert such Notes at any time during the specified periods at their option. As of December 31, 2023, the conditional conversion features of the Notes were not triggered.
As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), the Dodd-Frank Wall 33 Street Reform and Consumer Protection Act of 2010, the listing requirements of Nasdaq, and other applicable securities rules and regulations.
As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the listing requirements of Nasdaq, and other applicable securities rules and regulations.
Renewal rates may decline or fluctuate as a result of a variety of factors, including satisfaction or dissatisfaction with our software or professional services, our pricing or pricing structure, the pricing or capabilities of products or services offered by our competitors, the effects of economic conditions, or reductions in our customers’ spending levels.
Renewal rates may decline or fluctuate as a result of a variety of factors, including satisfaction or dissatisfaction with our software or professional services, our pricing or pricing structure, the pricing or capabilities of products or services offered by our competitors, the effects of economic conditions, or reductions in our customers’ budgets and spending levels.
These anti-takeover provisions and other provisions under Delaware law could discourage, delay or prevent a transaction involving a change in control of the company, including actions that our stockholders may deem advantageous, or negatively affect the trading price of our common stock.
These anti-takeover provisions and other provisions under Delaware law could discourage, delay or prevent a transaction involving a change in control of BlackLine, including actions that our stockholders may deem advantageous, or negatively affect the trading price of our common stock.
On December 14, 2017, the Federal Communications Commission voted to repeal Open Internet rules generally providing for internet neutrality with respect to fixed and mobile broadband internet service regulations and return to a “light-touch” regulatory framework known as the “Restoring Internet Freedom Order.” The FCC’s new rules, which took effect on June 11, 2018, repealed the neutrality obligations imposed by the 2015 rules and granted providers of broadband internet access services greater freedom to make changes to their services, including, potentially, changes that may discriminate against or otherwise harm our business.
On December 14, 2017, the FCC voted to repeal Open Internet rules generally providing for internet neutrality with respect to fixed and mobile broadband internet service regulations and return to a “light-touch” regulatory framework known as the “Restoring Internet Freedom Order.” The FCC’s new rules, which took effect on June 11, 2018, repealed the neutrality obligations imposed by the 2015 rules and granted providers of broadband internet access services greater freedom to make changes to their services, including, potentially, changes that may discriminate against or otherwise harm our business.
Natural disasters, climate change, and other events beyond our control could harm our business. Natural disasters, climate change, or other catastrophic events may cause damage or disruption to our operations, international commerce, and the global economy, and thus could have a strong negative effect on us.
Natural disasters, climate change, and other events beyond our control could harm our business. Natural disasters, climate change, political instability, or other catastrophic events may cause damage or disruption to our operations, international commerce, and the global economy, and thus could have a strong negative effect on us.
Changes in our executive management team resulting from the hiring or departure of executives could disrupt our business, and could impact our ability to preserve our culture, which could negatively affect our ability to recruit and retain personnel.
Changes in our executive management team resulting from the hiring or departure of executives, or our leadership structure, could disrupt our business, and could impact our ability to preserve our culture, which could negatively affect our ability to recruit and retain personnel.
Our business operations are subject to interruption by natural disasters, climate-related events, pandemics, such as COVID-19, terrorism, political unrest, geopolitical instability, war, such as the war in Ukraine, and other events beyond our control.
Our business operations are subject to interruption by natural disasters, climate-related events, pandemics, terrorism, political unrest, geopolitical instability, war, such as the war in Ukraine, and other events beyond our control.
Any future acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures.
Any acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures.
We may be unable to integrate acquired businesses and technologies successfully, or achieve the expected benefits of these transactions and other strategic transactions. We regularly evaluate and consider potential strategic transactions, including acquisitions of, or investments in, businesses, technologies, services, products, and other assets. For example, most recently we completed the FourQ Acquisition.
We may be unable to integrate acquired businesses and technologies successfully, or achieve the expected benefits of these transactions and other strategic transactions. We regularly evaluate and consider potential strategic transactions, including acquisitions of, or investments in, businesses, technologies, services, products, and other assets. For example, we recently completed the acquisition of DI.
Summary Risk Factors Our business is subject to numerous risks and uncertainties that you should consider before investing in our Company, as fully described below.
Summary Risk Factors Our business is subject to numerous risks and uncertainties that you should consider before investing in BlackLine, as fully described below.
We believe that continued growth in our business is dependent upon identifying, developing, and maintaining strategic relationships with companies that resell our solutions. We plan to expand our growing network of resellers and to add new resellers, in particular to help grow our mid-market business globally.
We believe that continued growth in our business is dependent upon identifying, developing, and maintaining strategic relationships with companies that resell our solutions. We plan to expand our growing network of resellers and to add new resellers, in particular to help grow our midsize business globally.
Our public cloud providers are also vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires, war, public health crises, such as COVID-19, terrorist attacks, power losses, hardware failures, systems failures, telecommunications failures and similar events. We may have limited remedies against third-party providers in the event of any service disruptions.
Our public cloud providers are also vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires, war, public health crises, terrorist attacks, power losses, hardware failures, systems failures, telecommunications failures and similar events. We may have limited remedies against third-party providers in the event of any service disruptions.
The sales cycle for our global enterprise customers is generally longer than that of our mid-market customers. In addition, the length of the sales cycle tends to increase for larger contracts and for more complex, strategic products like Intercompany Financial Management.
The sales cycle for our global enterprise customers is generally longer than that of our midsize customers. In addition, the length of the sales cycle tends to increase for larger contracts and for more complex, strategic products like Intercompany Financial Management.
Factors that could cause fluctuations in the market price of our common stock include the following: • actual or anticipated fluctuations in our operating results; • the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors; • ratings changes by any securities analysts who follow our company; • announcements by us or our competitors of significant technical innovations, acquisitions, strategic relationships, joint ventures, or capital commitments; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; • price and volume fluctuations in the overall stock market from time to time, including as a result of trends in the economy as a whole; • changes in accounting standards, policies, guidelines, interpretations or principles; • actual or perceived privacy, security, data protection, or cybersecurity incidents; • actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally; • developments or disputes concerning our intellectual property, or our products or third-party proprietary rights; • announced or completed acquisitions of businesses or technologies by us or our competitors; • new laws or regulations, or new interpretations of existing laws or regulations applicable to our business; • any major change in our board of directors or management; • sales of shares of our common stock by us or our stockholders; • issuances of shares of our common stock, including in connection with an acquisition or upon conversion of some or all of our outstanding Notes; • lawsuits threatened or filed against us; and • other events or factors, including those resulting from war, such as Russia's invasion of Ukraine, incidents of terrorism, outbreaks of pandemic diseases, such as COVID-19, presidential elections, civil unrest, or responses to these events.
Factors that could cause fluctuations in the market price of our common stock include the following: • actual or anticipated fluctuations in our operating results; • the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of BlackLine, changes in financial estimates by any securities analysts who follow BlackLine or our failure to meet these estimates or the expectations of investors; • ratings changes by any securities analysts who follow BlackLine; • announcements by us or our competitors of significant technical innovations, acquisitions, strategic relationships, joint ventures, or capital commitments; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; • price and volume fluctuations in the overall stock market from time to time, including as a result of trends in the economy as a whole; • changes in accounting standards, policies, guidelines, interpretations or principles; • actual or perceived privacy, security, data protection, or cybersecurity incidents; 30 • actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally; • developments or disputes concerning our intellectual property, or our products or third-party proprietary rights; • announced or completed acquisitions of businesses or technologies by us or our competitors; • new laws or regulations, or new interpretations of existing laws or regulations applicable to our business; • any major change in our Board of Directors (the “Board”) or management; • sales of shares of our common stock by us or our stockholders; • issuances of shares of our common stock, including in connection with an acquisition or upon conversion of some or all of our outstanding Notes (as defined below); • lawsuits threatened or filed against us; and • other events or factors, including instability in the banking and financial services sector, geopolitical events such as Russia's invasion of Ukraine, incidents of terrorism, outbreaks of pandemic diseases, presidential elections, civil unrest, or responses to these events.
In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products, personnel or operations of the acquired companies, particularly if the key personnel of the acquired company choose not to work for us, their software is not easily adapted to work with our platform, or we have difficulty retaining the customers of any acquired business due to changes in ownership, management or otherwise.
In particular, we may encounter difficulties and incur significant costs assimilating or integrating the businesses, technologies, products, policies, personnel or operations of the acquired companies, particularly if the key personnel of the acquired company choose not to work for us, their software is not easily adapted to work with our platform, or we have difficulty retaining the customers of any acquired business due to changes in ownership, management or otherwise.
See Risks Related to Our Dependence on Third Parties. We continue to experience rapid growth and organizational change and if we fail to manage our growth effectively, we may be unable to execute our business plan. We continue to experience growth in our customer base and operations.
See Risks Related to Our Dependence on Third Parties. We continue to experience growth in our operations, and organizational change, and if we fail to manage our growth effectively, we may be unable to execute our business plan.
To the extent unfavorable conditions in the national and global economy persist, or worsen, our business could be harmed as current and potential customers may reduce or postpone spending or choose not to purchase or renew subscriptions to our products, which they may consider discretionary.
To the extent unfavorable conditions in the national and global economy persist or worsen, our business could be harmed as current and potential customers may reduce accounting, finance, and technology budgets and spending, or postpone or choose not to purchase or renew subscriptions to our products, which they may consider discretionary.
Accordingly, we may need to engage in equity or debt financings to secure additional funds, or we may opportunistically decide to raise capital.
Accordingly, we may need to engage in equity or debt financing to secure additional funds, or we may opportunistically decide to raise capital.
We manage our software solutions and serve most of our customers using a cloud-based infrastructure that has historically been operated in a limited number of third-party data center facilities in North America and Europe. We are developing plans to migrate some of our third-party data centers to GCP, increasing our reliance on this cloud provider.
We manage our software solutions and serve most of our customers using a cloud-based infrastructure that has historically been operated in a limited number of third-party data center facilities in North America and Europe. We are currently migrating some of our third-party data centers to GCP, increasing our reliance on this cloud provider.
Risks Related to Our Legal and Regulatory Environment Our long-term success depends, in part, on our ability to expand the sales of our solutions to customers located outside of the United States, and thus our business is susceptible to risks associated with international sales and operations.
Risks Related to Our Legal and Regulatory Environment Our long-term success depends, in part, on our ability to expand the sales of our solutions to customers located outside of the U.S., and thus our business is susceptible to risks associated with international sales and operations.
We rely on Google Cloud Platform (GCP), Microsoft Azure (Azure), Amazon Web Services (AWS) and third-party data centers (collectively, “public cloud providers”) to deliver our cloud-based software solutions, and any disruption of our use of public cloud providers could negatively impact our operations and harm our business.
We rely on Google Cloud Platform (“GCP”), Microsoft Azure (“Azure”), Amazon Web Services (“AWS”) and third-party data centers (collectively, “public cloud providers”) to deliver our cloud-based software solutions, and any disruption of our use of public cloud providers could negatively impact our operations and harm our business.
The current legislative and regulatory landscape regarding the regulation of the internet and, in particular, internet neutrality, in the United States is subject to uncertainty. The Federal Communications Commission had previously passed Open Internet rules in February 2015, which generally provided for internet neutrality with respect to fixed and mobile broadband internet service.
The current legislative and regulatory landscape regarding the regulation of the internet and, in particular, internet neutrality, in the U.S. is subject to uncertainty. The Federal Communications Commission (“FCC”) had previously passed Open Internet rules in February 2015, which generally provided for internet neutrality with respect to fixed and mobile broadband internet service.
However, while the Delaware Supreme Court ruled in March 2020 that federal forum selection provisions purporting to require claims under the Securities Act be brought in federal court are "facially valid" under Delaware law, there is uncertainty as to whether other courts will enforce our federal forum 31 provision.
However, while the Delaware Supreme Court ruled in March 2020 that federal forum selection provisions purporting to require claims under the Securities Act be brought in federal court are “facially valid” under Delaware law, there is uncertainty as to whether other courts will enforce our federal forum provision.
The occurrence of a natural disaster or global public health crisis such as the COVID-19 pandemic or geopolitical uncertainty or war, could cause, and has caused customers to request concessions, including extended payment terms, free modules or better pricing. 13 In addition, our customers may be affected by changes in trade policies, treaties, government regulations and tariffs, as well as geopolitical volatility.
The occurrence of a natural disaster, global public health crisis, geopolitical uncertainty or war has caused, and in the future may cause, customers to request concessions, including extended payment terms, free modules or better pricing. In addition, our customers may be affected by changes in trade policies, treaties, government regulations and tariffs, as well as geopolitical volatility.
Prolonged economic uncertainties relating to macroeconomic trends or COVID-19 could limit our ability to grow our business and negatively affect our operating results.
Prolonged economic uncertainties relating to macroeconomic trends could limit our ability to grow our business and negatively affect our operating results.
Failure to effectively organize or expand our sales resources could harm our ability to increase our customer base. Increasing our customer base and sales will depend, to a significant extent, on our ability to effectively organize and expand our sales and marketing operations and activities.
Failure to effectively organize and motivate our sales resources could harm our ability to increase our customer base. Increasing our customer base and sales will depend, to a significant extent, on our ability to effectively organize and drive our sales and marketing operations and activities.
Numerous other states, including Virginia, Colorado, Utah, and Connecticut have also enacted or are in the process of enacting or considering comprehensive state-level data privacy and security laws, rules and regulations. Furthermore, the U.S. Congress is considering privacy legislation, and the U.S.
Numerous other states have also enacted or are in the process of enacting or considering comprehensive state-level data privacy and security laws, rules and regulations. Furthermore, the U.S. Congress is considering privacy legislation, and the U.S.
Some of the important factors that may cause our revenue, operating results and cash flows to fluctuate from quarter to quarter include: • our ability to attract new customers and retain and increase sales to existing customers; • the number of new employees added; • the rate of expansion and productivity of our sales force; • long sales cycles and the timing of large contracts; • changes in our or our competitors’ pricing policies; 20 • the amount and timing of operating costs and capital expenditures related to the operations and expansion of our business; • new products, features or functionalities introduced by us and our competitors; • significant security breaches, technical difficulties or interruptions to our platform; • the timing of customer payments and payment defaults by customers; • general economic conditions that may adversely affect either our customers’ ability or willingness to purchase additional products or services, delay a prospective customer’s purchasing decision or affect customer retention, including the economic effects of COVID-19, inflation, increased interest rates or the war in Ukraine; • changes in foreign currency exchange rates; • the impact of new accounting pronouncements; • the impact and timing of taxes or changes in tax law; • the timing and the amount of grants or vesting of equity awards to employees; • seasonality of our business; and • changes in customer buying patterns.
Some of the important factors that may cause our revenue, operating results and cash flows to fluctuate from quarter to quarter include: • our ability to attract new customers and retain and increase sales to existing customers; • the number of new employees added; • the rate of expansion and productivity of our sales force; • long sales cycles and the timing of large contracts; • changes in our or our competitors’ pricing policies; • the amount and timing of operating costs and capital expenditures related to the operations and expansion of our business; • new products, features or functionalities introduced by us and our competitors; • significant security breaches, technical difficulties or interruptions to our platform; • the timing of customer payments and payment defaults by customers; • general economic conditions that may adversely affect either our customers’ ability or willingness to purchase additional products or services, delay a prospective customer’s purchasing decision or affect customer retention, including the macroeconomic environment, uncertainty in the financial services market, inflation, rising interest rates or geopolitical events such as the war in Ukraine; • the impact and timing of expenses related to restructuring actions; • changes in foreign currency exchange rates; • the impact of new accounting pronouncements; • the impact and timing of taxes or changes in tax law; • the timing and the amount of grants or vesting of equity awards to employees; • seasonality of our business; and • changes in customer budgets and buying patterns.
We have from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications, and this difficulty may be heightened by labor shortages, higher employee turnover and slower hiring rates associated with the COVID-19 pandemic and hybrid or remote work.
We have from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications, and this difficulty may be heightened by labor shortages, higher employee turnover and slower hiring rates associated with hybrid work.
These additional investments will increase our costs, with no assurance that our business or revenue will grow sufficiently to cover these additional costs. Labor shortages and increased employee mobility may make it more difficult to hire and retain a sufficient number of employees to support our growth.
These additional investments will increase our costs, with no assurance that our business or revenue will grow sufficiently to cover these additional costs. Labor shortages and increased employee mobility may make it more difficult to hire and retain certain types of employees.
These threats continue to evolve in sophistication and volume and are difficult to detect and predict due to advances in electronic warfare techniques, new discoveries in the field of cryptography and new and sophisticated methods used by criminals including phishing, social engineering or other illicit acts.
These threats continue to evolve in sophistication and volume and are difficult to detect and predict due to advances in electronic warfare techniques, advances in cryptography and other technologies including AI/ML, and new and sophisticated methods used by criminals including phishing, social engineering or other illicit acts.
In addition, conducting international operations in new markets subjects us to new risks that we have not generally faced in the United States.
In addition, conducting international operations in new markets subjects us to new risks that we have not generally faced in the U.S.
There can be no assurance that our efforts will result in increased sales to existing customers or additional revenues. Our sales and marketing efforts may be impacted by geopolitical developments and other events beyond our control, such as the COVID-19 pandemic, market price volatility, and macroeconomic trends.
There can be no assurance that our efforts will result in increased sales to existing customers or additional revenues. Our sales and marketing efforts have been and may continue to be impacted by geopolitical developments and other events beyond our control, including market price volatility and macroeconomic trends.
SAP has the ability to resell our solutions as an SAP solution-extension (“SolEx”), for which we receive a percentage of the revenues.
SAP has the ability to resell our solutions as SAP SolEx, for which we receive a percentage of the revenues.
Any loss of the right to use any of this hardware or software could result in delaying or preventing our ability to provide our software solutions until equivalent technology is either developed by us or, if available, identified, obtained and integrated.
This hardware and software may not continue to be available on commercially reasonable terms, if at all. Any loss of the right to use any of this hardware or software could result in delaying or preventing our ability to provide our software solutions until equivalent technology is either developed by us or, if available, identified, obtained and integrated.
At December 31, 2022, we had goodwill and intangible assets with a net book value of $534.7 million primarily related to acquisitions.
At December 31, 2023, we had goodwill and intangible assets with a net book value of $528.0 million primarily related to acquisitions.
If these services become unavailable due to extended outages, interruptions, or because they are no longer available on commercially reasonable terms, our expenses could increase, our ability to manage finances could be interrupted and our processes for managing sales of our solutions and supporting our customers could be impaired until equivalent services, if available, are identified, obtained, and implemented, all of which could adversely affect our business. 24 We rely on third-party computer hardware and software that may be difficult to replace or which could cause errors or failures of our software solutions.
If these services become unavailable due to extended outages, interruptions, or because they are no longer available on commercially reasonable terms, our expenses could increase, our ability to manage finances could be interrupted and our processes for managing sales of our solutions and supporting our customers could be impaired until equivalent services, if available, are identified, obtained, and implemented, all of which could adversely affect our business.
Because data security is a critical competitive factor in our industry, we make numerous statements in our privacy policy and customer agreements, through our certifications to standards and in our marketing materials, providing assurances about the security of our platform including detailed descriptions of security measures we employ.
We make numerous statements in our privacy policy and customer agreements, through our certifications to standards and in our marketing materials, providing assurances about the security of our platform, including descriptions of security measures we employ.
In addition, we may be unable to manage our expenses effectively in the future, which may negatively impact our gross margins or operating expenses and cause us to realign resources in order to improve operational efficiency, which may include a slowdown in hiring or reduction in force, such as the reduction in force announced in the fourth quarter of 2022.
In addition, we may be unable to manage our expenses effectively in the future, which may negatively impact our gross margins or operating expenses and cause us to realign resources in order to improve operational efficiency, which may include a slowdown in hiring or reduction in force, such as the workforce reduction initiated in December 2022, and the more recent reduction in force announced as part of a broader restructuring plan in August 2023.
Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies and stock prices generally dropped significantly in the fourth quarter of 2021 and first half of 2022. In the past, stockholders have instituted securities class action litigation following periods of market volatility.
Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have instituted securities class action litigation following periods of market volatility.
Our ability to use our net operating losses to offset future taxable income may be subject to limitations. As of December 31, 2022, we had federal and state net operating loss carryforwards (“NOLs”) of $269.1 million and $148.6 million, respectively.
Our ability to use our net operating losses to offset future taxable income may be subject to limitations. As of December 31, 2023, we had federal and state net operating loss carryforwards (“NOLs”) of $177.2 million and $127.9 million, respectively.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our principal executive offices are located in Woodland Hills, California where we occupy approximately 89,000 square feet of space under a lease that expires in January 2024. We have additional U.S. lease offices in Pleasanton, California; New York, New York; and Westport, Connecticut.
Biggest changeItem 2. Properties Our principal executive offices are located in Woodland Hills, California where we occupy approximately 89,000 square feet of space under a lease that was extended for five years and now expires in January 2029. We have additional U.S. lease offices in Pleasanton, California; New York, New York; and Westport, Connecticut.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings From time to time, we may be subject to legal proceedings arising in the ordinary course of business. In addition, from time to time, third parties may assert intellectual property infringement claims against us in the form of letters and other forms of communication.
Biggest changeItem 3. Legal Proceedings From time to time, we may be subject to legal proceedings, including claims, litigation, investigations, and inquiries arising in the ordinary course of business. In addition, from time to time, third parties may assert intellectual property infringement claims against us in the form of letters and other forms of communication.
As of the date of this Annual Report on Form 10-K for the year ended December 31, 2022, we are not a party to any litigation the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our results of operations, prospects, cash flows, financial position or brand.
As of the date of this Annual Report on Form 10-K for the year ended December 31, 2023, we are not a party to any litigation the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our results of operations, prospects, cash flows, financial position or brand.
Item 4. Mine Safety Disclosures Not applicable. 35 PART II
Item 4. Mine Safety Disclosures Not applicable. 37 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph also includes the comparison to the Nasdaq Computer Index (IXCO), which was the selected line-of-business index in the prior year. The graph uses the closing market price on December 31, 2017 of $32.80 per share as the initial value of our common stock.
Biggest changeThe graph uses the closing market price on December 31, 2018 of $40.95 per share as the initial value of our common stock.
Any future determination as to the declaration and payment of dividends will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects, and other factors our board of directors may deem relevant.
Any future determination as to the declaration and payment of dividends will be at the discretion of our Board and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects, and other factors our Board may deem relevant.
As discussed above, we have never declared or paid a cash dividend on our common stock and do not anticipate declaring or paying a cash dividend in the foreseeable future. 36 COMPARISON OF CUMULATIVE TOTAL RETURN* *Returns are based on historical results and are not necessarily indicative of future performance. See the disclosure in Part I, Item 1A.
As discussed above, we have never declared or paid a cash dividend on our common stock and do not anticipate declaring or paying a cash dividend in the foreseeable future. 38 COMPARISON OF CUMULATIVE TOTAL RETURN* *Returns are based on historical results and are not necessarily indicative of future performance. See the disclosure in Part I, Item 1A.
The following graph compares (i) the cumulative total stockholder return on our common stock with (ii) the cumulative total return of the S&P 500 Index and (iii) the cumulative total return of the S&P Software & Services Select Industry Index (SPSISS), all over the period from December 31, 2017 through December 31, 2022, assuming the investment of $100 in our common stock and in both of the other indices on December 31, 2017 and the reinvestment of dividends.
The following graph compares (i) the cumulative total stockholder return on our common stock with (ii) the cumulative total return of the S&P 500 Index and (iii) the cumulative total return of the S&P Software & Services Select Industry Index (SPSISS), all over the period from December 31, 2018 through December 31, 2023, assuming the investment of $100 in our common stock and in both of the other indices on December 31, 2018 and the reinvestment of dividends.
Holders of Record At February 15, 2023, there were 4 shareholders of record. The number of record holders does not include beneficial holders who hold their shares in “street name,” meaning that the shares are held for their accounts by a broker or other nominee.
Holders of Record At February 15, 2024, there were 3 shareholders of record. The number of record holders does not include beneficial holders who hold their shares in “street name,” meaning that the shares are held for their accounts by a broker or other nominee.
“Risk Factors.” Unregistered Sales of Equity Securities None. Use of Proceeds None. Issuer Purchases of Equity Securities None.
“Risk Factors.” Unregistered Sales of Equity Securities None. Use of Proceeds None. Issuer Purchases of Equity Securities None. Item 6. [Reserved]
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The S&P Software & Services Select Industry Index is newly selected for comparison to align with the index used for a recent equity award, which includes the measurement of BlackLine’s total shareholder return as compared to the S&P Software & Services Select Industry Index.
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Item 6 [Reserved] Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion of our financial condition and results of operations should be read together with the financial statements and the related notes set forth in Item 8, “Financial Statements and Supplementary Data.” The following discussion also contains forward-looking statements that involve a number of risks and uncertainties.
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See Part I, “Special Note Regarding Forward-Looking Statements” for a discussion of the forward-looking statements contained below and Part I, Item 1A, “Risk Factors” for a discussion of certain risks that could cause our actual results to differ materially from the results anticipated in such forward-looking statements.
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This discussion and analysis deals with comparisons of material changes in the consolidated financial statements for fiscal 2022 and fiscal 2021.
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For the comparison of fiscal 2021 and fiscal 2020, see the Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2021 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 25, 2022 and as amended in the Annual Report on Form 10-K/A filed on March 24, 2022. 37 Overview We have created a comprehensive cloud-based software platform designed to transform and modernize accounting and finance operations for organizations of all types and sizes.
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Our secure, scalable platform supports critical accounting processes, such as intercompany accounting, certain types of data matching, the financial close, account reconciliations, and controls assurance.
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By introducing software to automate these processes and to enable them to function continuously, we empower our customers to improve the integrity of their financial reporting, increase efficiency in their accounting and finance processes and enhance real-time visibility into their operations. At December 31, 2022, we had 366,522 individual users across 4,188 customers.
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Additionally, we continue to build strategic relationships with technology vendors, professional services firms, business process outsourcers, and resellers. We are a holding company and conduct our operations through our wholly-owned subsidiary, BlackLine Systems, Inc. (“BlackLine Systems”).
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On September 3, 2013, we acquired BlackLine Systems, and outside investors acquired a controlling interest in us, which we refer to as the “2013 Acquisition.” The 2013 Acquisition was accounted for as a business combination under GAAP and resulted in a change in accounting basis as of the date of the 2013 Acquisition.
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Our cloud-based products include Account Reconciliations, Transaction Matching, Task Management, Journal Entry, Variance Analysis, Consolidation Integrity Manager, Compliance, BlackLine Cash Application, Credit & Risk Management, Collections Management, Disputes & Deductions, Team & Task Management, AR Intelligence, Intercompany Create Functionality, Intercompany Processing, and Netting and Settlement.
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These products are offered to customers as scalable solutions that support critical accounting processes, such as the financial close, account reconciliations, cash application, intercompany accounting, and compliance. We derived approximately 94% of our revenue primarily from subscriptions to our cloud-based software platform and approximately 6% from professional services for the year ended December 31, 2022.
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Our subscription contracts have initial non-cancellable terms of one year to three years with renewal options. Approximately two-thirds of new contracts in 2022 had an initial term of three years. We price our subscriptions based on a number of factors, primarily the number of users having access to the products and the number of products purchased by the customer.
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Subscription revenue is recognized ratably over the term of the customer contract. The first year of subscription fees are typically payable within 30 days after execution of a contract, and thereafter upon renewal. Professional services consist of implementation and consulting services.
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Although our platform is ready to use immediately after a new customer has access to it, we typically help customers implement our solutions. We also provide consulting services to help customers optimize the use of our products. We charge customers for our consulting services on a time-and-materials basis and we recognize that revenue as services are performed.
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A limited number of our customers are provided professional services for a fixed fee, which is initially recorded as deferred revenue and recognized on a proportional-performance basis as the services are performed. We typically invoice customers annually in advance for subscriptions. We also invoice fixed fee implementations in advance and professional services on a time-and-materials basis.
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We record amounts invoiced for portions of annual subscription periods that have not occurred or services that have not been performed as deferred revenue on our consolidated balance sheet. We sell our solutions primarily through our direct sales force, which leverages our relationships with technology vendors, professional services firms and business process outsourcers.
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In particular, our solution integrates with SAP’s enterprise resource planning (“ERP”) solutions, and SAP is part of the reseller channel that we use in the ordinary course of business. SAP has the ability to resell our solutions, as an SAP solution-extension (“SolEx”), for which we receive a percentage of the revenues.
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In the first quarter of 2022, we entered into an agreement with Google Cloud in which the two companies will collaborate on joint selling and go-to-market activities and bring enhanced automation solutions for finance and accounting to new and existing customers.
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Our ability to maximize the lifetime value of our customer relationships will depend, in part, on the willingness of customers to purchase additional user licenses and products from us. We rely on our sales and customer success teams to support and grow our existing customers by maintaining high customer satisfaction and educating customers on the value all our products provide.
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The length of our sales cycle depends on the size of a potential customer and contract, as well as the type of solution or product being purchased. The sales cycle for our global enterprise customers is generally longer than that of our mid-market customers.
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In addition, the length of the sales cycle tends to increase for larger contracts and for more complex, strategic products like Intercompany Financial Management.
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As we continue to focus on increasing our average contract size and selling more strategic products, we expect our sales cycle to lengthen and become less predictable, which could cause variability in our results for any particular period. 38 We have historically signed a high percentage of agreements with new customers, as well as renewal agreements with existing customers, in the fourth quarter of each year and usually during the last month of the quarter.
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This can be attributed to buying patterns typical in the software industry. As the terms of most of our customer agreements are measured in full year increments, agreements initially entered into during the fourth quarter or last month of any quarter will generally come up for renewal at that same time in subsequent years.
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This seasonality is reflected in our revenues, though the impact to overall annual or quarterly revenues is minimal due to the fact that we recognize subscription revenue ratably over the term of the customer contract.
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For the years ended December 31, 2022, 2021, and 2020, we had revenues totaling $522.9 million, $425.7 million, and $351.7 million, respectively, and we incurred net losses attributable to BlackLine, Inc. of $29.4 million, $115.2 million, and $46.9 million, respectively.
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Global Macroeconomic Factors Our operating results may vary based on the impact of changes in our industry or the global economy on us or our customers.
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General macroeconomic conditions, such as a recession or rising inflation rates or an economic downturn in the United States or internationally, could adversely affect demand for our products and make it difficult to accurately forecast and plan our future business activities.
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In recent quarters, as a result of economic uncertainty, we have seen customers delay purchasing decisions, which has adversely impacted our near term demand.
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In addition, any further impact of the COVID-19 pandemic on our business, operating results, and overall financial performance remains uncertain and depends on certain developments, including the pandemic's duration and geographic spread, and the distribution and efficacy of vaccines, among others.
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We are and will continue to actively monitor the situation and may take further actions that alter our business operations, as may be required by federal, state, or local authorities, or that we determine are in the best interests of our employees, customers, partners, suppliers, and stockholders.
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Acquisition of Rimilia On October 2, 2020, we completed the acquisition (the “Rimilia Acquisition”) of Rimilia Holdings Ltd. (“Rimilia”) for consideration of $120.0 million payable at the closing of the acquisition with additional cash payments of up to $30.0 million payable upon certain earnout conditions being met.
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We funded the Rimilia Acquisition on September 30, 2020 with existing cash on-hand, in advance of the closing. The acquisition extends our capabilities into accounts receivable automation through enabling cash application and collection solutions, and accelerating our larger, long-term plan for transforming and modernizing finance and accounting. This acquisition was not a significant acquisition under Regulation S-X.
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During the year ended December 31, 2022, Rimilia did not meet specified annual recurring revenue thresholds, which relieved the Company of its obligation to pay the contingent consideration, and accordingly, the related liability for the Rimilia Acquisition was reduced to zero. Acquisition of FourQ On January 26, 2022, we completed the acquisition (the "FourQ Acquisition") of FourQ Systems, Inc.
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("FourQ") for cash consideration of $160.2 million payable at the closing of the acquisition. In addition, there are contingent cash consideration payments of up to $73.2 million payable upon certain earnout conditions being met. We funded the FourQ Acquisition with existing cash on-hand.
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With the FourQ Acquisition, we seek to enhance our existing intercompany accounting automation capabilities by driving end-to-end automation of traditionally manual intercompany accounting processes and further accelerating our larger, long-term plan for transforming and modernizing finance and accounting. This acquisition was not a significant acquisition under Regulation S-X.
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Key Metrics We regularly review a number of metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections, and make strategic decisions.
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Year Ended December 31, 2022 2021 2020 Dollar-based net revenue retention rate 107 % 109 % 106 % Number of customers 4,188 3,825 3,433 Number of users 366,522 328,389 291,873 39 Dollar-based net revenue retention rate.
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We believe that dollar-based net revenue retention rate is an important metric to measure the long-term value of customer agreements and our ability to retain and grow our relationships with existing customers over time.
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We calculate dollar-based net revenue retention rate as the implied monthly subscription and support revenue at the end of a period for the base set of customers from which we generated subscription revenue in the year prior to the calculation, divided by the implied monthly subscription and support revenue one year prior to the date of calculation for that same customer base.
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This calculation does not reflect implied monthly subscription and support revenue for new customers added during the one-year period but does include the effect of customers who terminated during the period.
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We define implied monthly subscription and support revenue as the total amount of minimum subscription and support revenue contractually committed to, under each of our customer agreements over the entire term of the agreement, divided by the number of months in the term of the agreement.
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At December 31, 2022, our dollar-based net revenue retention rate decreased primarily due to foreign currency headwinds and slower net growth in existing customer accounts. Our ability to maximize the lifetime value of our customer relationships will depend, in part, on the willingness of the customer to purchase additional user licenses and products from us.
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We rely on our customer success and sales teams to support and grow our existing customers by maintaining high customer satisfaction and educating the customer on the value all our products provide. Number of customers. We believe that our ability to expand our customer base is an indicator of our market penetration and the growth of our business.
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We define a customer as a company that contributes to our subscription and support revenue as of the measurement date. In situations where an organization has multiple subsidiaries or divisions, each entity that is invoiced as a separate entity is treated as a separate customer.
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However, where an existing customer requests its invoice be divided for the sole purpose of restructuring its internal billing arrangement without any incremental increase in revenue, such customer continues to be treated as a single customer. For the years ended December 31, 2022, 2021 and 2020, no single customer accounted for more than 10% of our total revenues.
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Number of users. Since our customers generally pay fees based on the number of users of our platform within their organization, we believe the total number of users is an indicator of the growth of our business.
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While the fees for the majority of the products we sell are user-based, we are seeing an increasing volume of transactions for our non-user based strategic products, such as Transaction Matching, Intercompany, and BlackLine Cash Application. Key Components of our Results of Operations Revenues Subscription and support.
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Our subscription contracts have initial non-cancellable terms of one year to three years with renewal options. Approximately two-thirds of new contracts in 2022 had an initial term of three years. Fees are based on a number of factors, including the solutions subscribed to by the customer and the number of users having access to the solutions.
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The first year of subscription fees are typically payable within 30 days after execution of a contract, and thereafter upon renewal. We initially record the subscription fees as deferred revenue and recognize revenue ratably over the term of the contract. At any time during the subscription period, customers may increase their number of users and add products.
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Additional fees are payable for the remainder of the initial or renewed contract term. Customers may only reduce their number of users or subscription to products upon renewal of their arrangement. Revenues from subscriptions to our cloud-based software platform composed approximately 94% of our revenues for the year ended December 31, 2022.
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Subscription and support revenues also include revenues associated with sales of on-premise software licenses and related support, but we no longer develop any new applications or functionality for our legacy on-premise software, and anticipate that this component of our revenues will continue to decline relative to total revenue. Professional services. We offer our customers implementation and consulting services.
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Although our platform is ready to use immediately after a new customer has access to it, we typically help customers implement our solutions. We also provide consulting and training services to help customers optimize the use of our products. These services are considered distinct performance obligations. Professional services do not result in significant customization of the subscription service.
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We apply the practical expedient to recognize professional services revenue when we have the right to invoice based on time and materials incurred. A limited number of our customers are provided professional services for a fixed fee, which is initially recorded as deferred revenue and recognized on a proportional-performance basis as the services are performed.
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Professional services revenues composed approximately 6% of our revenues for the year ended December 31, 2022. For a description of our revenue accounting policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates.” 40 Cost of Revenues Subscription and support cost of revenues.
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Subscription and support cost of revenues primarily consists of amortization of acquired developed technology costs, salaries, benefits and stock-based compensation associated with our hosting operations and support personnel, amortization of capitalized internal-use software costs, and data center costs related to hosting our cloud-based software. We also allocate a portion of overhead to subscription and support cost of revenues.
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Professional services costs of revenues. Costs associated with providing professional services primarily consist of salaries, benefits and stock-based compensation associated with our implementation personnel. These costs are expensed as incurred when the services are performed. We also allocate a portion of overhead to professional services cost of revenues. Operating Expenses Sales and marketing.
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Sales and marketing expenses consist primarily of compensation and employee benefits, including stock-based compensation of sales and marketing personnel and related sales support teams, sales and partner commissions, marketing events, advertising costs, computer software-related costs, travel, trade shows, other marketing materials, transaction-related costs, and allocated overhead.
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Sales and marketing expenses also include amortization of customer relationship intangible assets and impairment of cloud computing implementation costs. We defer sales and partner commissions and amortize them over an estimated period of benefit of five years.
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We expect the annual trend in sales and marketing expenses to continue to increase as we expand our direct sales teams and increase sales through our strategic relationships and resellers. Research and development. Research and development expenses are comprised primarily of salaries, benefits and stock-based compensation associated with our engineering, product and quality assurance personnel, and transaction-related costs.
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Research and development expenses also include third-party contractors and supplies, computer software-related costs and allocated overhead. Other than software development costs that qualify for capitalization, as discussed above, research and development costs are expensed as incurred. We expect research and development costs to increase as we develop new solutions and make improvements to our existing platform. General and administrative.
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General and administrative expenses consist primarily of personnel costs associated with our executive, finance, legal, human resources, compliance, and other administrative personnel, as well as accounting and legal professional fees, other corporate-related expenses and allocated overhead.
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General and administrative expenses also include amortization of covenant not to compete and trade name intangible assets, the change in the fair value of contingent consideration, transaction-related costs, and impairment of cloud computing implementation costs. Restructuring Costs . Restructuring costs consist of one-time termination benefits. Refer to "Note 12 - Restructuring Costs" for additional information on these costs. Interest Income.
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Interest income primarily consists of earnings on our cash and cash equivalents and our marketable securities. Interest Expense. Interest expense consists primarily of interest expense associated with our Convertible Senior Notes (the “Notes”) issued in August 2019 and March 2021. Provision for (Benefit from) Income Taxes.
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We are subject to federal and state income taxes in the United States and taxes in foreign jurisdictions. We use the liability method of accounting for income taxes.
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Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities, using tax rates expected to be in effect during the years in which the bases differences are expected to reverse.
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We record a valuation allowance against our deferred tax assets to the extent that realization of the deferred tax assets, including consideration of our deferred tax liabilities, is not more likely than not.
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For the year ended December 31, 2022, for both federal and state income taxes, we have recorded a valuation allowance against our deferred tax assets because of our cumulative operating losses since inception, as we believe that the realization of the deferred tax assets is currently not more likely than not.
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We have also recorded a valuation allowance against certain foreign deferred tax assets. Non-GAAP Financial Measures In addition to our results determined in accordance with GAAP, we believe the non-GAAP measures below are useful to us and our investors in evaluating our business.
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These non-GAAP financial measures are useful because they provide consistency and comparability with our past performance, facilitate period-to-period comparisons of 41 operations and facilitate comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.
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Year Ended December 31, 2022 2021 (in thousands, except percentages) GAAP gross profit $ 393,553 $ 327,835 GAAP gross margin 75.3 % 77.0 % GAAP net loss attributable to BlackLine, Inc. $ (29,391) $ (115,161) Year Ended December 31, 2022 2021 (in thousands, except percentages) Non-GAAP gross profit $ 414,818 $ 338,930 Non-GAAP gross margin 79.3 % 79.6 % Non-GAAP net income attributable to BlackLine, Inc. $ 46,243 $ 36,535 Non-GAAP Gross Profit and Non-GAAP Gross Margin .
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Non-GAAP gross profit is defined as GAAP revenues less GAAP cost of revenue adjusted for the amortization of acquired developed technology, transaction-related costs (including, but not limited to, accounting, legal, and advisory fees related to the transaction, as well as transaction-related retention bonuses) and stock-based compensation. Non-GAAP gross margin is defined as non-GAAP gross profit divided by GAAP revenues.
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We believe that presenting non-GAAP gross margin is useful to investors as it eliminates the impact of certain non-cash expenses and allows a direct comparison of gross margin between periods. Non-GAAP Net Income (loss) attributable to BlackLine and Diluted Non-GAAP Net Income (loss) attributable to BlackLine, Inc. per share.
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Non-GAAP net income (loss) attributable to BlackLine is defined as GAAP net income (loss) attributable to BlackLine adjusted for the impact of the provision for (benefit from) income taxes related to acquisitions, amortization of intangible assets, stock-based compensation, the amortization of debt discount and issuance costs from our convertible notes, the change in the fair value of contingent consideration, transaction-related costs, legal settlement gains or costs, impairment of cloud computing implementation costs, restructuring costs, adjustment to the value of the redeemable non-controlling interest to the redemption amount, and loss on extinguishment of convertible senior notes.
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Diluted non-GAAP net income attributable to BlackLine, Inc. per share includes the adjustment for shares resulting from the elimination of stock-based compensation.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDollar can result in fluctuations in our total assets, liabilities, revenue, operating expenses, and cash flows. The effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have had a material impact on our cash and marketable securities at December 31, 2022.
Biggest changeDollar can result in fluctuations in our total assets, liabilities, revenue, operating expenses, and cash flows. The effect of a hypothetical 10% increase or decrease in foreign currency exchange rates applicable to our business would have reduced by $3.9 million or increased by $3.9 million, respectively, our cash balances at December 31, 2023.
In 52 addition, we maintain significant amounts of cash and cash equivalents at one or more financial institutions that are in excess of federally insured limits. We cannot be assured that we will not experience losses on these deposits. Foreign Currency Risk While we primarily transact with customers in the U.S.
In addition, we maintain significant amounts of cash and cash equivalents at one or more financial institutions that are in excess of federally insured limits. We cannot be assured that we will not experience losses on these deposits. Foreign Currency Risk While we primarily transact with customers in the U.S.
These risks primarily include interest rate, foreign exchange and inflation risks, as well as risks relating to changes in the general economic conditions in the countries where we conduct business. To reduce these risks, we monitor the financial condition of our customers and limit credit exposure by collecting in advance and setting credit limits as we deem appropriate.
These risks primarily include interest rate, foreign exchange, and inflation risks, as well as risks relating to changes in the general economic conditions in the countries where we conduct business. To reduce these risks, we monitor the financial condition of our customers and limit credit exposure by collecting in 54 advance and setting credit limits as we deem appropriate.
Our international subsidiaries maintain certain asset and liability balances that are denominated in currencies other than the functional currencies of these subsidiaries, which is the U.S. Dollar for all international subsidiaries, with the exception of the Company's Japanese subsidiary, for which the Japanese Yen is the functional currency. Changes in the value of foreign currencies relative to the U.S.
Our international subsidiaries maintain certain asset and liability balances that are denominated in currencies other than the functional currencies of these subsidiaries, which is the U.S. Dollar for all international subsidiaries, with the exception of our Japanese subsidiary, for which the Japanese Yen is the functional currency. Changes in the value of foreign currencies relative to the U.S.
The 2024 Notes have a fixed annual interest rate of 0.125%; therefore, we do not have economic interest rate exposure with respect to the 2024 Notes. In March 2021, we issued $1.15 billion aggregate principal amount of the 2026 Notes.
The 2024 Notes have a fixed annual interest rate of 0.125%; therefore, we do not have economic interest rate exposure with respect to the 2024 Notes. In March 2021, we issued $1.150 billion aggregate principal amount of the 2026 Notes.
Dollar, we also transact in foreign currencies, including the Australian Dollar, British Pound, Canadian Dollar, Euro, Japanese Yen, Polish Zloty, Romanian Leu, and Singapore Dollar due to foreign operations and customer sales. We expect to continue to grow our foreign operations and customer sales.
Dollar, we also transact in foreign currencies, including the Australian Dollar, British Pound, Canadian Dollar, Euro, Japanese Yen, Romanian Leu, and Singapore Dollar due to foreign operations and customer sales. We expect to continue to grow our foreign operations and customer sales.
Additionally, we carry the Notes at face value less unamortized issuance costs on our consolidated balance sheet, and we present the fair value for required disclosure purposes only. We had cash and cash equivalents and marketable securities of $1.1 billion at December 31, 2022.
Additionally, we carry the Notes at face value less unamortized issuance costs on our consolidated balance sheet, and we present the fair value for required disclosure purposes only. We had cash and cash equivalents and marketable securities of $1.2 billion at December 31, 2023.
Our inability or failure to do so could harm our business, financial condition and results of operations. 53
Our inability or failure to do so could harm our business, financial condition and results of operations. 55
Item 7A. Quantitative and Qualitative Disclosures About Market Risks We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course of our business.
Item 7A. Quantitative and Qualitative Disclosures About Market Risks We have operations both within the U.S. and internationally, and we are exposed to market risks in the ordinary course of our business.
To date, we have not entered into any foreign currency hedging contracts, since exchange rate fluctuations have not had a material impact on our operating results and cash flows. Based on our current international structure, we do not plan on engaging in hedging activities in the near future.
To date, we have not entered into any foreign currency hedging contracts, since exchange rate fluctuations have not had a material impact on our operating results and cash flows. Based on the current level of foreign operations and customer sales, we do not plan on engaging in hedging activities in the near future.
In addition, our investment strategy has historically been to invest in financial instruments that are highly liquid and readily convertible into cash and that mature within three months from the date of purchase. To date, we have not used derivative instruments to mitigate the impact of our market risk exposures.
In addition, our investment strategy has historically been to invest in financial instruments that are highly liquid and readily convertible into cash for use in our operations. To date, we have not used derivative instruments to mitigate the impact of our market risk exposures.
Our cash equivalents and marketable securities consist of highly liquid, investment-grade commercial paper, corporate bonds, and U.S. treasury bonds. The carrying amount of our cash equivalents and marketable securities reasonably approximates fair value due to the highly liquid nature of these instruments.
Our cash equivalents and marketable securities consist of highly liquid, money market mutual funds, commercial paper, U.S. treasury securities, corporate bonds, and U.S. government agencies. The carrying amount of our cash equivalents and marketable securities reasonably approximates fair value due to the highly liquid nature of these instruments.

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