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What changed in BLACKLINE, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of BLACKLINE, INC.'s 2023 and 2024 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 2024 report.

+400 added−400 removedSource: 10-K (2025-02-21) vs 10-K (2024-02-23)

Top changes in BLACKLINE, INC.'s 2024 10-K

400 paragraphs added · 400 removed · 322 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

48 edited+24 added−30 removed37 unchanged
Biggest changeFinancial 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.
Biggest changeProducts and Services Our products are comprised of financial close & consolidation, intercompany accounting, and invoice-to-cash. We also provide resources and services for implementation. Financial Close & Consolidation 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.
Automated or workflow-based resolution actions and adjustments bring the balance back into line for settlement-ready balances. • Intercompany Net and Settle enables real-time visibility into open intercompany transactions that integrate with treasury systems to facilitate and streamline netting, settlement, and clearing to optimize working capital.
Automated or workflow-based resolution actions and adjustments bring the balance back into line for settlement-ready balances; and • Intercompany Net and Settle enables real-time visibility into open intercompany transactions that integrate with treasury systems to facilitate and streamline netting, settlement, and clearing to optimize working capital.
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.
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 and finance 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.
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.
It also enhances internal controls by facilitating the appropriate segregation of duties, simplifying reconciliation audits and adding transparency and visibility to the reconciliation process; 5 • 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.
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.
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.
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.
We intend to invest in further expanding our global footprint through organic growth activities and strategic acquisitions. • Industry: We continue 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.
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 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 resources.
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.
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 competitive.
We intend to deepen our relationships with our current partners, 4 foster a thriving ecosystem of partnerships and partner with resellers who are well versed in the BlackLine suite and select software firms. ERP Connectivity.
We intend to deepen our relationships with our current partners, foster a thriving ecosystem of partnerships and partner with resellers who are well versed in the BlackLine suite and select software firms. ERP Connectivity.
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.
Courses cover solutions functionality, as well as the underlying concepts and demonstrate the power of our platform like financial close & consolidation, intercompany accounting, and invoice-to-cash; • 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.
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.
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 1,830 employees worldwide contribute their unique talents, experience, and backgrounds to inspire, power, and guide digital finance transformation.
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.
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 SAP solutions-extensions (“SolEx”), for which we receive a percentage of the revenues. SolEx allows us to provide the highest level integration with SAP ERP solutions.
Our compensation program is built on a pay-for-performance foundation that is designed to attract, motivate, reward, and retain talented individuals who possess the skills and domain expertise necessary to support our business, contribute to our strategic goals, and create long-term value for our shareholders.
Our compensation program is built on a pay-for-performance foundation that is designed to attract, motivate, reward, and retain talented individuals who possess the skills and domain expertise necessary to support our business, contribute to our strategic goals, and create long-term value for our stockholders.
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.
Intercompany 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.
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.
Our direct sales force leverages our relationships with technology vendors such as SAP and Microsoft, professional services firms such as Accenture, Deloitte, and Ernst & Young and business process outsourcers, such as CapGemini, Genpact, and RSM, to influence and drive customer growth.
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.
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. Through a focus on inclusion, health and safety, comprehensive compensation and benefits, employee engagement, and training and development, we strive to cultivate a culture where employees thrive.
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.
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 mid-size companies.
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.
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. Transactions are booked via Journals directly into the ledger.
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 cloud-based applications, increasingly powered by our BlackLine Studio360 Platform, include Account Reconciliations, Transaction Matching, Task Management, Financial Reporting Analytics, Journal Entry, Variance Analysis, Compliance, Smart Close for SAP, Cash Application, Credit & Risk Management, Collections Management, Disputes & Deductions Management, Team & Task Management, AR Intelligence, Electronic Invoicing & Payments, Intercompany Create, Intercompany Balance & Resolve, and Intercompany Net & Settle.
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.
This solution unifies the data across BlackLine’s Invoice-to-Cash suite to provide data typically difficult to obtain in real-time; 7 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; and • Electronic Invoicing & Payments helps our customers generate, send, and monitor invoices in diverse e-invoice formats through a multitude of delivery channels.
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.
Competition The market for accounting and financial software and services is competitive, rapidly evolving and requires a deep understanding of the industry standards, financial operations processes, accounting rules, and global financial regulations. 9 We compete with vendors of financial operations, financial automation, record-to-report, and invoice-to-cash software, including software offered by certain ERP vendors.
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.
Services Customer service is essential to our customers' success and we are focused on driving long-term partnership and value by offering the following services: • Implementation: With a focus on configuration over customization, our implementation approach favors rapid and efficient deployments led by accounting experts, rather than technical resources.
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.
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. Sales and Marketing We sell our solutions through our direct sales force.
Over the past year, we have expanded our investment and partnerships with underrepresented groups and organizations to increase our reach to diverse candidates. Develop We believe that one of the primary reasons candidates join BlackLine is for career development opportunities, and we have several programs and resources to help our employees explore, develop, and achieve their career goals.
Develop We believe that one of the primary reasons candidates join BlackLine is for career development opportunities, and we have several programs and resources to help our employees explore, develop, and achieve their career goals.
(“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”.
On January 26, 2022, we acquired FourQ Systems, Inc. (“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.
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.
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.
Solutions and Services Our cloud-based solutions for the Office of the Chief Financial Officer are designed to be the primary system of interaction for accounting and finance professionals. Our solutions unify systems and data and work to drive accuracy, collaboration, efficiency, and control.
Solutions Our cloud-based solutions for the Office of the CFO are designed to be the primary system of interaction for accounting and finance professionals. Our solutions unify systems and data and work to drive accuracy, collaboration, efficiency, and control. Our solutions enable accounting and finance professionals to execute their work continuously, empowering real-time insights and business partnership.
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.
Our ability to internally develop or make strategic acquisitions of new, market-leading applications and functionalities is integral to our success. 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.
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.
DI is a cloud-based invoice-to-cash automation vendor within the electronic invoice presentment and payment (“EIPP”) market. 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.
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.
At December 31, 2024, we had 397,477 individual users across 4,443 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.
All customers have access to essential support through our support and community portal, included as part of their subscription. In 2023, we rolled out two additional tiers of support that customers can purchase based on their needs. Sales and Marketing We sell our solutions through our direct sales force.
All customers have access to essential support through our support and community portal, included as part of their subscription. In 2023, we rolled out two additional tiers of support that customers can purchase based on their needs. Across our platform, products and services, BlackLine stands out through its integration, scalability and flexibility, ease of use, and commitment to innovation.
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 latest innovation, the BlackLine Studio360 Platform, uniquely addresses the increasing complexity of data, systems, and processes. BlackLine was founded in 2001. 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”.
Invoices are automatically generated for each respective jurisdiction and e-invoicing capabilities can send intercompany data to country-specific portals. • Intercompany Balance & Resolve centralizes, streamlines, and automates intercompany reconciliation complexity and dispute management by capturing all intercompany transactions within the virtual subledger and providing resolution actions to reconcile.
Workflow capabilities exist for ad hoc transactions as well as non-invoiceable transactions; 6 • Intercompany Balance & Resolve centralizes, streamlines, and automates intercompany reconciliation complexity and dispute management by capturing all intercompany transactions within the virtual subledger and providing resolution actions to reconcile.
For customers that elect to work with a partner or business process outsourcer for implementation services, BlackLine provides partner training and certification, as well as support for partner-led projects. • Training & Education - We offer a variety of live and web-based training options through BlackLine University.
For customers that elect to work with a partner or business process outsourcer for implementation services, BlackLine provides partner training and certification, as well as support for partner-led projects; • Optimization: Our transformation team assists with optimization strategies for transformation projects through the BlackLine Optimization Academy where we teach accountants how to optimize their accounting and reporting processes.
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.
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; and • Compliance is an integrated solution that facilitates compliance-related initiatives, consolidates project management, and provides visibility over control self-assessments and testing.
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.
We have established strong relationships with technology vendors such as SAP and Microsoft, Google LLC (“Google”), and Snowflake, Inc. (“Snowflake”), professional services firms such as Accenture plc (“Accenture”), Deloitte Touche Tohmatsu Limited (“Deloitte”), and Ernst & Young Global Limited (“Ernst & Young”), and business process outsourcers, such as CapGemini SE (“CapGemini”), GenPact Ltd (“GenPact”), and RSM US LLP (“RSM”).
Smart Close complements our cloud financial close management solutions to achieve end-to-end automation. Purpose-built automation allows customers to automate task and job scheduling, verify the correctness of closing transactions, and take action, like raising alerts, making corrections, or pushing the closing process to the next step with job scheduling.
Purpose-built automation allows customers to automate task and job scheduling, verify the correctness of closing transactions, and take action, like raising alerts, making corrections, or pushing the closing process to the next step with job scheduling; • Financial Reporting Analytics is a modern solution that enables analysis and validation of group level or consolidated financial data with direct, real-time visibility into the local or underlying details.
In addition, we believe that fostering an equitable and inclusive environment that brings together diverse teams better positions us to unlock innovation. We focus on building an inclusive culture and diverse workforce through a variety of company initiatives, beginning with our hiring practices and our commitment to continually build diversity into our recruiting pipeline.
We focus on building an inclusive culture through a variety of company initiatives, beginning with our hiring practices and our commitment to continually attract candidates from a broad range of backgrounds into our recruiting pipeline.
Attract Our core values of Think, Create, Serve, and Deliver, and our embedded approach to diversity, equity, and inclusion, are the underpinnings of our culture. We embrace the unique value of each person’s life experiences and seek candidates from a wide range of backgrounds and experiences to join our team.
Attract Our core values of Think, Create, Serve, and Deliver, and our embedded approach to inclusion, are the underpinnings of our culture.
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.
The product automates otherwise manual activities in the substantiation process, significantly reducing time and effort and increasing productivity.
The solution provides a centralized workspace with end-to-end transparency and automates ledger-to-ledger, statutory-to-GAAP, tax-to-GAAP, and system-to-system reconciliation to ensure the completeness and accuracy of consolidated fluctuation results. • Journal Entry allows users to generate, review, and post manual journal entries. Many postings can be fully automated and calculated based on complex, customer-defined logic or automatically allocated across multiple business units.
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; • Journal Entry allows users to generate, review, and post manual journal entries. Many postings can be fully automated and calculated based on complex, customer-defined logic or automatically allocated across multiple business units.
Customers learn what processes can benefit from optimization and can choose to undertake the optimization process themselves or choose our consulting services or strategic customer advisory services to continue their journey . • Global Support - From our offices in Australia, Canada, England, Japan, Mexico, the Netherlands, Poland, Romania, and the U.S., we provide tiered customer support, ranging from support provided during business hours to 24/7/365 support.
A success plan is central to increased customer value and customer adoption. This approach positively impacts our retention and upsell efforts; and • Global Support: From our offices in Australia, Canada, England, India, Japan, Mexico, the Netherlands, Poland, Romania, and the U.S., we provide tiered customer support, ranging from support provided during business hours to 24/7/365 support.
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.
The solution provides a centralized workspace with end-to-end transparency and automates ledger-to-ledger, statutory-to-GAAP, tax-to-GAAP, and system-to-system reconciliation to ensure the completeness and accuracy of consolidated fluctuation results; • Variance Analysis automatically calculates, identifies, and provides anomalous fluctuations in balance sheet and income statement account balances with “always-on” monitoring.
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.
Our future-ready platform enables financial operations excellence and empowers the Office of the CFO to deliver strategic value to their organizations. Customers Our customers include multinational corporations, large enterprises, and mid-size companies across a broad array of industries. These businesses include publicly-listed entities and privately-owned enterprises, as well as non-profit entities.
We intend to broaden our partnership with SAP through the SAP solution-extension ( “ SolEx”) program, extend our technology integration capabilities with large ERP players, and maintain connectivity to other ERPs and third-party data sources. BlackLine Solutions We provide powerful cloud-based solutions designed to unify, automate, and streamline accounting and finance operations.
We intend to leverage our BlackLine Studio360 Platform to further extend our technology integration capabilities with large ERP players, and maintain connectivity to other ERPs and third-party data sources. 4 Cloud Marketplaces. We have established the ability to buy BlackLine solutions via Cloud Marketplaces by Google Cloud Platform (“GCP”), Microsoft Azure (“Azure”), and Amazon AWS (“AWS”).
The solution can be used as a cloud-based, controlled checklist that includes reporting and alerts to drive greater collaboration, accountability, and visibility. • Financial Reporting Analytics is a modern solution that enables analysis and validation of group level or consolidated financial data with direct, real-time visibility into the local or underlying details.
The solution can be used as a cloud-based, controlled checklist that includes reporting and alerts to drive greater collaboration, accountability, and visibility; • Smart Close for SAP is a fully embedded, purpose-built solution to streamline and automate the close directly in SAP. Smart Close complements our cloud financial close management solutions to achieve end-to-end automation.
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.
These applications address many use cases across our customers’ financial operations and include comprehensive and flexible solutions that deliver best practices for end-to-end 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 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.
Our products include: • Account Reconciliations provides a centralized workspace from which users can collaborate to substantiate their balance sheet by completing account reconciliations. Features include standardized templates, workflows for review and approval, linkage to policies and procedures, and integrated storage of supporting documentation.
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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.
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Item 1. Business Overview The Office of the Chief Financial Officer (“CFO”) is relied upon to deliver timely and accurate financial reporting and business insights. Yet finance and accounting teams are facing unprecedented system and process complexity, growing data volumes, and evolving regulatory requirements, coupled with expanding roles and responsibilities.
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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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As a result, digital transformation has become a top priority for CFOs, as they require powerful technology to meet these demands. At BlackLine, our mission is to inspire, power, and guide digital finance transformation for the Office of the CFO.
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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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Our secure, flexible, and scalable cloud-based platform empowers finance and accounting teams to achieve future-ready financial operations, modernizing processes for mid-size and enterprise organizations across all industries.
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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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For many organizations, enterprise resource planning (“ERP”) systems manage general ledger activities but do not address end-to-end processes performed across other systems and outside those systems in spreadsheets, impeding organizations’ ability to provide reliable data and insights. Our platform connects data and processes at their origin, enhancing financial reporting integrity, streamlining activities, and delivering faster insights.
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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.
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This approach drives immediate impact and sustained value, maximizing cash flows, and accelerating the record-to-report and invoice-to-cash cycles. BlackLine integrates with over 30 leading ERP systems, including SAP SE (“SAP”), Oracle Corporation, Microsoft Dynamics 365 (“Microsoft Dynamics”), an application offered by Microsoft Corporation (“Microsoft”), Sage Intacct, Inc., and NetSuite, Inc.
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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.
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It also connects with diverse financial data sources, such as banks, point-of-sale, treasury, payroll, procurement, and other systems, bringing data into unified workflows.
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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.
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This deep connectivity provides finance and accounting teams with accurate, actionable insights, reducing errors, improving compliance, and freeing time for strategic analysis. 3 For over 20 years, BlackLine has pioneered customer-centric innovation in financial software, optimizing mission-critical processes for the Office of the CFO.
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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.
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This enables our customers to leverage their committed spend with those cloud providers for a software purchase with BlackLine. BlackLine Platform, Products, and Capabilities We provide a unified, scalable, and flexible platform tailored to the evolving needs of the Office of the CFO and deliver purpose-built applications that address critical processes, including financial close & consolidation, intercompany accounting, and invoice-to-cash.
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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.
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Our software and services provide the critical technology and industry-leading practices that deliver accurate, efficient, and intelligent financial operations. BlackLine Studio360 Platform In today’s dynamic business environment, the Office of the CFO faces unprecedented challenges: managing complex systems, siloed data, and demands for real-time, accurate insights to enable strategic decision-making.
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The primary purpose of the Rimilia Acquisition was to extend our capabilities into an adjacent area, adding accounts receivable automation to financial close automation.
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Traditional, fragmented solutions cannot keep up with the increasing complexity of data, systems, and processes. The need for a unified, comprehensive, flexible, and scalable platform has never been greater.
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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.
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BlackLine’s recently launched Studio360 Platform addresses these challenges by providing an infrastructure and capabilities to further unify our products and services that includes: • Studio360 Integrate: Powerful and flexible capabilities for unifying, cleansing, and transforming data through pre-built connectors and APIs, ensuring a single source of truth for finance and accounting teams; • Studio360 Orchestrate: The industry’s most extensive capabilities to map, optimize, and automate workflows across BlackLine applications, ERPs, and other applications like procurement, payroll, revenue, treasury, fixed assets, and more, with real-time progress tracking and event-based scheduling; • Studio360 Visualize: Real-time, AI-powered insights, anomaly detection, exception handling, and KPI monitoring through customizable dashboards and reports, enabling CFOs to make fast, data-driven decisions; • Studio360 Blueprint: An extensive library of proven process design templates grounded in customer-informed industry best practices, enabling rapid deployment and achievable transformation outcomes.
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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.
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BlackLine and its world’s-leading partners continuously contribute to and expand this library, ensuring it remains up-to-date and adaptable to evolving customer needs; and • Studio360 Control: A centralized hub for administering and enforcing financial data hierarchies, policies, and certifications to strengthen governance and risk management.
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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.
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For organizations of any size, traditional processes are heavily manual and rely upon error-prone spreadsheets, increasing risk and threatening the accuracy of financial reporting. Our Financial Close & Consolidation solutions allow customers to standardize and automate key steps across the record-to-report process to ensure accuracy and control.
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They work with and complement most ERPs and other relevant financial systems our customers may use, enabling agility as organizations evolve and grow, whether organically or inorganically. Our independence from other systems also means we are able to focus on and innovate for the needs of our customers irrespective of updates or changes in our customers’ businesses and other systems.
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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; • Task Management enables users to create and manage processes and task lists. The solution provides automatic and recurring task scheduling, includes configurable workflow, and provides a management console for accounting and finance activities.
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We believe this differentiates our solutions in the industry and reduces risk for customers. Ease of Use Our solutions are designed by accounting and finance professionals whose domain expertise and understanding of our customers’ challenges contributes to our software’s ease of use and customer experience.
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Invoices are automatically generated for each respective jurisdiction and e-invoicing capabilities can send intercompany data to country-specific portals.
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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.
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Customers learn what processes can benefit from optimization and can choose to undertake the optimization process themselves or choose our consulting services or strategic customer advisory services to continue their journey; • Training & Education: We offer a variety of live and web-based training options through BlackLine University.

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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 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.
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. • 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. • If we fail to manage growth in our operations and organizational change effectively, we may be unable to execute our business plan. • 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. • We depend and rely upon Software as a Service (“SaaS”) applications from third parties to operate our business and provide our software solutions, and interruptions, outages, or performance problems with these technologies may adversely affect our business and operating results. • 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. • 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. • We have a history of losses and we may not be able to generate sufficient revenue to achieve or sustain profitability. • 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 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.
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 or for proposing matters that can be acted upon by stockholders at stockholder meetings.
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.
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; 33 • 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.
If the conditional conversion feature of either series of Notes is triggered and one or more holders of a series elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation in cash, which could adversely affect our liquidity.
If the conditional conversion feature of any series of Notes is triggered and one or more holders of a series elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation in cash, which could adversely affect our liquidity.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated bylaws also provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.
To 32 prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated bylaws also provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.
There have been and may continue to be significant attacks on certain third-party providers, and we cannot guarantee that our or our third-party providers' systems and networks have not been breached or otherwise compromised, or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our systems and networks or the systems and networks of third parties that support us and our platform.
There have been and may continue to be significant attacks on certain third-party service providers, and we cannot guarantee that our or our third-party service providers' systems and networks have not been breached or otherwise compromised, or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our systems and networks or the systems and networks of third parties that support us and our platform.
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.
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.
We also may enter into relationships with other businesses to expand our products and services, which could involve preferred or exclusive licenses, additional channels of distributions or discount pricing. Negotiating these transactions can be time-consuming, difficult, and expensive, and our ability to complete these transactions may be subject to approvals that are beyond our control.
We also may enter into relationships with other businesses to expand our products and services, which could involve preferred or exclusive licenses, additional channels of distributions or discount pricing. Negotiating these transactions can be time-consuming, difficult, and expensive, and our ability to complete these transactions may be subject to approvals and conditions that are beyond our control.
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.
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 23 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.
If any of the events or circumstances described in the following risk factors actually occurs, our business, operating results, financial condition, cash flows, and prospects could be materially and adversely affected. In that event, the market price of our common stock could decline, and you could lose part or all of your investment.
If any of the events or circumstances described in the following risk factors actually occurs, our business, operating results, 11 financial condition, cash flows, and prospects could be materially and adversely affected. In that event, the market price of our common stock could decline, and you could lose part or all of your investment.
Risks Related to Our Outstanding Convertible Notes Servicing our Notes may require a significant amount of cash and we may not have sufficient cash to settle conversions of the Notes in cash, to repurchase the Notes upon a fundamental change, or to repay the principal amount of the Notes in cash at their maturity, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Notes.
Risks Related to Our Outstanding Convertible Senior Notes Servicing our Notes may require a significant amount of cash and we may not have sufficient cash to settle conversions of the Notes in cash, to repurchase the Notes upon a fundamental change, or to repay the principal amount of the Notes in cash at their maturity, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Notes.
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.
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. 20 Any failure to offer high-quality product support may adversely affect our relationships with our customers and our financial results.
We must continue to meet changing expectations and requirements of our customers and, because our platform is designed to operate on a variety of systems, we will need to continuously modify and enhance our solutions to keep pace with changes in internet-related hardware and other software, communication, browser and database technologies.
We must continue to meet changing expectations and requirements of our customers and, because our platform is designed to operate on a variety of systems, we need to continuously modify and enhance our solutions to keep pace with changes in internet-related hardware and other software, communication, browser and database technologies.
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.
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. 30 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.
In addition, to the extent that fluctuations in currency exchange rates cause our results of operations to differ from our expectations or the expectations of our investors, the trading price of our common stock could be adversely affected. We do not currently maintain a program to hedge transactional exposures in foreign currencies.
In addition, to the extent that fluctuations in currency exchange rates cause our results of operations to differ from our expectations or the expectations of our investors, the trading price of our common stock could be adversely affected. We do not currently maintain a program to hedge exposures in foreign currencies.
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.
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.
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.
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.
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.
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.
Our increased focus on the development and use of generative artificial intelligence and machine learning technologies 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.
Our increased focus on the development and use of generative artificial intelligence and machine learning technologies in our platform and our business, as well as our potential failure to effectively implement, use, 16 and market these technologies, may result in reputational harm or liability, or could otherwise adversely affect our business.
If we do not successfully maintain and enhance our brand, our business may not grow, we may have reduced pricing power relative to competitors, and we could lose customers or fail to attract potential customers, all of which would adversely affect our business, results of operations and financial condition.
If we do not successfully maintain and enhance our brand, our business may not 19 grow, we may have reduced pricing power relative to competitors, and we could lose customers or fail to attract potential customers, all of which would adversely affect our business, results of operations and financial condition.
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.
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.
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.
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 raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity or convertible debt securities we issue could have rights, preferences and privileges superior to those of holders of our common stock.
If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity or convertible debt securities we issue could have rights, preferences 34 and privileges superior to those of holders of our common stock.
We depend on our executive officers and other key employees and the loss of one or more of these employees or an inability to attract and retain highly-skilled employees could adversely affect our business. Our success depends largely upon the continued services of our executive officers and other key employees.
We depend on our executive officers and other key employees and the loss of one or more of these employees or an inability to attract and retain highly-skilled employees could adversely affect our business. 17 Our success depends largely upon the continued services of our executive officers and other key employees.
Market acceptance of our products may also be affected by customer confusion associated with the introduction of new and emerging technologies by us and our competitors, or changes in technological trends, such 18 as the increase in the use of AI/ML.
Market acceptance of our products may also be affected by customer confusion associated with the introduction of new and emerging technologies by us and our competitors, or changes in technological trends, such as the increase in the use of AI/ML.
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.
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.
Changes in our solutions or changes in export and import regulations may create delays in the introduction and sale of our solutions in international markets, prevent our customers with international operations from accessing our solutions or, in some cases, prevent the export or import of our solutions to some countries, governments or persons altogether.
Changes in our solutions or changes in export and import regulations may create delays in the introduction and sale of our solutions in 28 international markets, prevent our customers with international operations from accessing our solutions or, in some cases, prevent the export or import of our solutions to some countries, governments or persons altogether.
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.
In addition, larger 22 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.
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.
Numerous other states have also enacted or are in the process of enacting or considering state-level data privacy and security laws, rules and regulations. Furthermore, the U.S. Congress is considering privacy legislation, and the U.S.
Additionally, our AI/ML solutions and features may expose us to additional claims, demands, and 16 proceedings by private parties and regulatory authorities and subject us to legal liability as well as brand and reputational harm.
Additionally, our AI/ML solutions and features may expose us to additional claims, demands, and proceedings by private parties and regulatory authorities and subject us to legal liability as well as brand and reputational harm.
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.
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.
More generally, uncertainty may continue about the legal requirements for transferring customer personal data to and from the EEA, UK, and other regions, an integral process of our business.
More generally, uncertainty may continue about the legal requirements for transferring customer personal data to and from the EEA, UK, Switzerland, and other regions, an integral process of our business.
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 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.
The counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions at any time prior to the respective maturity of the Notes (and are likely to do so on each exercise date of the Capped Call).
The counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions at any time prior to the respective maturity of the Notes (and are likely to do so on each exercise date of the Capped Calls).
We often compete with other vendors of financial automation software, and we also compete with large, well-established, enterprise application software vendors whose software contains components that compete with our platform.
We often compete 18 with other vendors of financial automation software, and we also compete with large, well-established, enterprise application software vendors whose software contains components that compete with our platform.
Holders of either series of the Notes will have the right to require us to repurchase all or a portion of such Notes upon the occurrence of a fundamental change before the applicable maturity date at a repurchase price equal to 100% of the principal amount of such Notes to be repurchased, plus accrued and unpaid interest or special interest, if any, as described in the applicable indenture governing such Notes.
Holders of each series of the Notes will have the right to require us to repurchase all or a portion of such Notes upon the occurrence of a fundamental change before the applicable maturity date at a repurchase price equal to 100% of the principal amount of such Notes to be repurchased, plus accrued and unpaid interest or special interest, if any, as described in the applicable indenture governing such Notes.
Our ability to monitor our third-party service providers' data security is limited, and in any event, attackers may be able to circumvent our third-party service providers' data security measures.
Our ability to monitor our third-party service providers' security measures is limited, and in any event, attackers may be able to circumvent our third-party service providers' security measures.
For example, the California Consumer Privacy Act (“CCPA”), as amended by the California Privacy Rights Act (“CPRA”), gives California consumers, including employees, certain rights similar to those provided by the GDPR, and also provides for statutory damages or fines on a per violation basis that could be very large depending on the severity of the violation.
For example, the California Consumer Privacy Act, as amended by the California Privacy Rights Act, gives California consumers, including employees, certain rights similar to those provided by the GDPR, and also provides for statutory damages or fines on a per violation basis that could be very large depending on the severity of the violation.
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.
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 or changes in pricing structures, 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.
Our competitors may have greater name recognition, longer operating histories, more established customer and marketing relationships, larger marketing budgets and significantly greater resources than we do. They may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards, or customer requirements.
Some of our competitors have greater name recognition, longer operating histories, more established customer and marketing relationships, larger marketing budgets and significantly greater resources than we do. They may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards, or customer requirements.
The success of enhancements, new products and solutions depends on several factors, including timely completion, introduction and market acceptance.
The success of enhancements, new products and 14 solutions depends on several factors, including timely completion, introduction and market acceptance.
Trade protection measures, retaliatory actions, tariffs and increased barriers, policies favoring domestic industries, or increased import or export licensing requirements or restrictions, such as trade sanctions against Russia in response to the war in Ukraine, could have a negative effect on the overall macro economy and our customers, which could have an adverse impact on our operating results.
Trade protection measures, retaliatory actions, tariffs and increased barriers, policies favoring domestic industries, or increased import or export licensing requirements or restrictions, such as trade sanctions against Russia in response to the war in Ukraine, could have a negative effect on the overall macro economy and our customers, and our ability to sell to certain customers, which could have an adverse impact on our operating results.
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.
As a result, the continued growth in market demand for these solutions 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.
Any of the foregoing could have a material adverse effect on our business, results of operations or financial condition. The conditional conversion feature of each series of the Notes, if triggered, may adversely affect our financial condition and operating results.
Any of the foregoing could have a material adverse effect on our business, results of operations or financial condition. The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results.
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.
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; • 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, geopolitical events and political uncertainty, including war and political and social upheaval in certain regions in the world, 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.
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.
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; • changes in estimates by any securities analysts who follow BlackLine or our failure to meet the estimates or expectations of analysts and investors; • ratings changes by any securities analysts who follow BlackLine or failure of such analysts to initiate or maintain coverage of 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; • 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; • actual or rumored stockholder activism; and • other events or factors, including instability in the banking and financial services sector, geopolitical events and political uncertainty, including war and political and social upheaval, incidents of terrorism, outbreaks of pandemic diseases, presidential elections, civil unrest, or responses to these events.
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.
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 economic volatility and macroeconomic trends.
Any changes in third-party service levels or any disruptions or delays from errors, defects, hacking incidents, security breaches, computer viruses, DDoS attacks, bad acts or performance problems could harm our reputation, damage our customers’ businesses, and adversely affect our business and operating results.
Any changes in third-party service levels or any disruptions or delays from errors, defects, hacking incidents, security breaches, computer viruses, denial of service attacks, bad acts or performance problems could harm our reputation, damage our customers’ businesses, and adversely affect our business and operating results.
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.
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-size business globally.
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.
The sales cycle for our global enterprise customers is generally longer than that of our mid-size 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.
Following the EU’s passage of the General Data Protection Regulation (“GDPR”), which became effective in May 2018, the global regulatory landscape relating to privacy, data protection, and cybersecurity has grown increasingly complex and fragmented and is rapidly evolving.
Following the European Union’s passage of the General Data Protection Regulation (“GDPR”), which became effective in May 2018, the global regulatory landscape relating to privacy, data protection, and cybersecurity has grown increasingly complex and fragmented and is rapidly evolving.
Periodically, we experience cyber security events including “phishing” attacks targeting our employees, web application and infrastructure attacks, and other information technology incidents.
Periodically, we experience cyber security events including phishing attacks targeting our employees, web application and infrastructure attacks, and other information technology incidents.
Our platform is at risk for security breaches and incidents as a result of third-party action, employee, vendor or contractor error, cyberattacks (including from nation states and affiliated actors) and other forms of hacking, malfeasance, ransomware and other malicious software, or other factors.
Our platform is at risk for security breaches and incidents as a result of third-party action, employee, vendor or contractor error or malfeasance, cyberattacks (including from nation states and affiliated actors) and other forms of hacking, denial of service attacks, malfeasance, ransomware, viruses and other malicious software, or other factors.
In addition, changing laws, regulations, and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time-consuming.
Furthermore, changing laws, regulations, and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time-consuming.
Additionally, we rely on Azure to serve Rimilia customers, and we rely on AWS to serve FourQ customers. As we implement the transition to GCP, there could be occasional planned or unplanned downtime for our cloud-based software solutions and potential service delays, all of which will impact our customers’ ability to use our solutions.
Additionally, we rely on Azure to serve Invoice-to-Cash customers, and we rely on AWS to serve our intercompany customers. As we implement the transition to GCP, there could be occasional planned or unplanned downtime for our cloud-based software solutions and potential service delays, all of which will impact our customers’ ability to use our solutions.
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. We rely on computer hardware purchased or leased and software licensed from third parties, including third-party SaaS applications, in order to deliver our software solutions.
We rely on third-party computer hardware and software that may cause errors or failure of our software solutions, or may be difficult to replace. We rely on computer hardware purchased or leased and software licensed from third parties, including third-party SaaS applications, in order to deliver our software solutions.
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.
We may have difficulty attracting potential customers that rely on inexpensive tools such as Excel, or that have already invested substantial personnel and financial resources to integrate internally-developed or other 12 software solutions into their businesses, as such organizations may be reluctant or unwilling to invest in a new product.
This ruling from the CJEU and recent rulings from various EU member state data protection authorities have created complexity and uncertainty regarding processing and transfers of personal data from the EEA to the U.S. and certain other countries outside the EEA.
This ruling from the CJEU and recent rulings from various European Union (“EU”) member state data protection authorities have created complexity and uncertainty regarding processing and transfers of personal data from the EEA to the U.S. and certain other countries outside the EEA.
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.
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, including AI/ML technologies, 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 enabling the selling of a wider breadth of specialized products 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.
Additionally, while we continue to build relationships with a variety of third party partners, to the extent that our partnership with SAP continues to expand, this partnership may be a deterrent to other potential partners. Identifying, negotiating and documenting relationships with other companies require significant time and resources.
Additionally, while we continue to build relationships with a variety of third-party partners and will continue to support all ERP solutions, to the extent that our partnership with SAP continues to expand, this partnership may be a deterrent to other potential partners. Identifying, negotiating and documenting relationships with other companies require significant time and resources.
Our amended and restated certificate of incorporation and amended and restated bylaws and the Delaware General Corporation Law (the “DGCL”) contain provisions that could make it more difficult for a third-party to acquire us, even if doing so might be beneficial to our stockholders.
Our amended and restated certificate of incorporation and amended and restated bylaws and the Delaware General Corporation Law (the “DGCL”) contain provisions that could make it more difficult for a third-party to acquire us or preventing a change in our management, even if doing so might be beneficial to our stockholders.
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.
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 amount and timing of operating costs and capital expenditures; • the number of new employees added; • the rate of expansion and productivity of our sales force; • the length of sales cycles and the timing of large contracts; • changes in our or our competitors’ pricing policies; 21 • 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, fluctuating interest rates or geopolitical events; • the impact and timing of expenses related to restructuring actions or other employee terminations that may result in severance expense; • 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.
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.
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; • become subject to new or conflicting laws, regulations or legal requirements; or • become subject to adverse tax consequences, substantial depreciation, and amortization, or deferred compensation charges.
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.
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 all Financial Close & Consolidation clients from our third-party data centers to GCP, increasing our reliance on this cloud provider.
If any unauthorized or inadvertent access to, or a security breach or incident impacting our platform or other systems or networks used in our business occurs, such event could result in the loss, alteration, or unavailability of data, unauthorized access to, or use or disclosure of data, and any such event, or the belief or perception that it has occurred, could result in a loss of business, severe reputational damage adversely affecting customer or investor confidence, regulatory investigations and orders, litigation, indemnity obligations, and damages for contract breach or penalties for violation of applicable laws or regulations.
If any unauthorized or inadvertent access to, or a security breach or incident impacting our platform or other systems or networks used in our business occurs, such event could result in significant interruptions or other disruptions to our software solutions, platform and technology, the loss, alteration, or unavailability of data, unauthorized access to, or use, disclosure, or unauthorized processing of data, including proprietary, personal, or confidential data, and any such event, or the belief or perception that it has occurred, could result in a loss of business, severe reputational damage adversely affecting customer or investor confidence, regulatory investigations and orders, litigation, indemnity obligations, and damages for contract breach or penalties for violation of applicable laws or regulations.
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.
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.
We believe these relationships enable us to effectively market our solutions by offering a complementary suite of services. In particular, our solution integrates with SAP’s ERP solutions. SAP is part of the reseller channel that we use in the ordinary course of business.
We believe these relationships enable us to effectively market our solutions by offering a complementary suite of services. In particular, our solution integrates with SAP’s ERP solutions. SAP is part of the reseller channel that we use in the ordinary course of business, and accounts for a material portion of our total revenue.
Our ability to achieve significant growth in revenues will depend, in large part, upon the effectiveness of our sales and marketing efforts, both domestically and internationally.
Our ability to increase our revenues will depend, in large part, upon the effectiveness of our sales and marketing efforts, both domestically and internationally.
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.
Our business operations are subject to interruption by natural disasters, climate-related events, pandemics, terrorism, political unrest, geopolitical instability, war, and other events beyond our control.
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.
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 workforce reductions we initiated in December 2022 and August 2023.
For example, macroeconomic trends have impacted and may continue to impact our renewal rate.
For example, macroeconomic trends and changing customer preferences have impacted and may continue to impact our renewal rate.
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.
Security breaches or incidents impacting our platform or our internal systems could create significant interruptions or other disruptions of our software solutions, platform and technology, and may 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, 15 repair of system damage, incentives offered to customers or other business partners in an effort to maintain business relationships after a breach, and other costs, expenses and liabilities.
If a high profile security breach or incident occurs with respect to another Software as a Service (“SaaS”) provider or other technology companies, our current and potential customers may lose trust in the security of our platform or in the SaaS business model generally, which could adversely impact our ability to retain existing customers or attract new ones.
If a publicized security breach or incident occurs with respect to another SaaS provider or other technology company, our current and potential customers may lose trust in the security of our platform or in the SaaS business model generally, which could adversely impact our ability to retain existing customers or attract new ones.
Additionally, increasing incremental sales to our current customer base may require additional sales efforts that are targeted at senior management, which efforts are often associated with complex customer requirements and additional time to evaluate and test our products, and can lead to long and unpredictable sales cycles, particularly in the current macroeconomic environment.
Additionally, increasing incremental sales to our current customer base may require additional sales efforts that are targeted at senior management of such customers, which efforts are often associated with complex customer requirements and additional time to evaluate and test our products, and can lead to long and unpredictable sales cycles.
(the “UK DPF Extension”), are available 26 for companies to make use of to legitimize personal data transfers to the U.S. from the EEA and UK. We have certified to the U.S. Department of Commerce that we adhere to the DPF and UK DPF Extension.
(the “UK DPF Extension”) and the Swiss-U.S. Data Privacy Framework (“Swiss-U.S. DPF”), are available for companies to make use of to legitimize personal data transfers to the U.S. from the EEA, Switzerland, and UK. We have certified to the U.S. Department of Commerce that we adhere to the DPF, UK DPF Extension, and Swiss-U.S. DPF.
If the payment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay such indebtedness and repurchase such series of Notes or pay cash with respect to such series of Notes being converted or at maturity of such series of Notes.
If the payment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay such indebtedness and repurchase such series of Notes or pay cash with respect to such series of Notes being converted or at maturity of such series of Notes, which could harm our business, results of operations, or financial conditions.
We derive substantially all of our revenues from a limited number of software solutions, and our growth is dependent on their success. We currently derive a significant portion of our revenue from our Close Process Management solution, and expect to continue to derive a majority of our revenues from our Close Process Management solution.
We derive substantially all of our revenues from a limited number of software solutions, and our growth is dependent on their success. We currently derive, and expect to continue to derive, a majority of our revenue from our Financial Close & Consolidation solutions.
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.
In the event the conditional conversion feature of any 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.
Further deterioration in general economic conditions in the U.S. or worldwide, including as a result of continued uncertainty in the financial markets, increased inflation or interest rates, or uncertainty in the financial services markets associated with bank failures, or geopolitical events such as the war in Ukraine, may also cause our customers to reduce their overall information technology spending, and such reductions may disproportionately affect software solutions like ours to the extent customers view our solutions as discretionary.
In addition, deterioration in general economic conditions in the U.S. or worldwide, including as a result of uncertainty in the financial markets, fluctuating inflation or interest rates, or uncertainty in the financial services markets associated with geopolitical events and political uncertainty, such as war and political and social upheaval in certain regions of the world, may also cause our customers to reduce their overall information technology spending, and such reductions may disproportionately affect software solutions like ours to the extent customers view our solutions as discretionary.
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.
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. 25 If we are unable to develop and maintain successful relationships with resellers, our business, operating results and financial condition could be adversely affected.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAs of the date of this report, cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected BlackLine, including its business strategy, results of operations or financial condition.
Biggest changeAs of the date of this report, and based on facts currently known, the risks from previously occurring cybersecurity threats have not materially affected, nor do we believe that they are reasonably likely to materially affect BlackLine, including its business strategy, results of operations or financial condition.
We also provide periodic cybersecurity newsletters and updates to all employees, and have a phishing awareness program that includes monthly simulations, and we periodically host tabletop exercises with management and other employees to practice rapid cyber incident response. • Incident Response Planning: We have established and maintain an incident response plan that addresses our response to suspected cybersecurity incidents and is tested periodically. • Communication and Coordination: We utilize a cross-functional approach to addressing the risk from cybersecurity threats, involving management personnel from the information security, technology, operations, legal, risk management, internal audit, and other key business functions, as well as members of our Board and the Audit Committee of the Board (the “Audit Committee”) and Technology and Cybersecurity Committee of the Board (the “Technology and Cybersecurity Committee”) regarding cybersecurity threats and incidents. • Governance: The Board’s oversight of cybersecurity risk management is supported by the Audit Committee, which regularly interacts with our risk management function and Chief Information Security Officer (“CISO”).
We also provide periodic cybersecurity newsletters and updates to all employees, have a phishing awareness program that includes monthly simulations, and periodically host tabletop exercises with management and other employees to practice rapid cyber incident response. • Incident Response Planning: We have established and maintain an incident response plan that addresses our response to suspected cybersecurity incidents and is tested periodically. • Communication and Coordination: We utilize a cross-functional approach to addressing the risk from cybersecurity threats, involving management personnel from the information security, technology, operations, legal, risk management, internal audit, and other key business functions, as well as members of our Board and the Audit Committee of the Board (the “Audit Committee”) and Technology and Cybersecurity Committee of the Board (the “Technology and Cybersecurity Committee”) regarding cybersecurity threats and incidents. • Governance: The Board’s oversight of cybersecurity risk management is supported by the Audit Committee, which regularly interacts with our risk management function and Chief Information Security Officer (“CISO”).
Our cybersecurity program includes: • Vigilance: We maintain a global cybersecurity threat operation that endeavors to detect, contain, and respond to cybersecurity threats and incidents in a prompt and effective manner with the goal of minimizing disruptions to the business. • Collaboration: We have established collaboration mechanisms with public and private entities, including intelligence and enforcement agencies, industry groups, and third-party service providers to identify and assess cybersecurity risks. • Systems Safeguards: We deploy technical safeguards that are designed to protect our information systems from cybersecurity threats, including firewalls, intrusion detection systems, anti-malware functionality, access controls, and ongoing vulnerability assessments. • Third-Party Management: We maintain a risk-based approach to identifying and overseeing cybersecurity risks with respect to third parties, including third parties who provide solutions we rely upon for our security measures.
Our cybersecurity program includes: • Vigilance: We maintain a global cybersecurity threat operation that endeavors to detect, contain, and respond to cybersecurity threats and incidents in a prompt and effective manner with the goal of minimizing disruptions to the business. 36 • Collaboration: We have established collaboration mechanisms with public and private entities, including intelligence and enforcement agencies, industry groups, and third-party service providers to identify and assess cybersecurity risks. • Systems Safeguards: We deploy technical safeguards that are designed to protect our information systems from cybersecurity threats, including firewalls, intrusion detection systems, anti-malware functionality, access controls, and ongoing vulnerability assessments. • Third-Party Management: We maintain a risk-based approach to identifying and overseeing cybersecurity risks with respect to third parties, including third parties who provide solutions we rely upon for our security measures.
Our cybersecurity policies and practices are designed with the cybersecurity framework of the National Institute of Standards and Technology and certain other applicable industry standards in mind, and 35 BlackLine maintains an information security management system, which is certified against certain international standards, such as ISO 27001 and ISO 27017.
Our cybersecurity policies and practices are designed with the cybersecurity framework of the National Institute of Standards and Technology and certain other applicable industry standards in mind, and BlackLine maintains an information security management system, which is certified against certain international standards, such as ISO 27001 and ISO 27017.
The Board and the Audit Committee regularly receive (and the newly formed Technology and Cybersecurity Committee will receive) presentations and reports on cybersecurity risks from the CISO, which address a wide range of topics including, for example, recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, the threat environment, technological trends, and cybersecurity considerations arising with respect to our peers and vendors.
The Board, the Audit Committee, and the Technology and Cybersecurity Committee regularly receive presentations and reports on cybersecurity risks from the CISO, which address a wide range of topics including, for example, recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, the threat environment, technological trends, and cybersecurity considerations arising with respect to our peers and vendors.
She leads a team of information security professionals, and works in coordination with the Chief Information Officer, the Chief Legal and Administrative Officer, the Senior Vice President, Cloud Engineering and Operations, and other members of management.
She leads a team of 37 information security professionals, and works in coordination with the Chief Information Officer, the Chief Legal and Administrative Officer, the Chief Technology Officer, the Senior Vice President, Cloud Engineering and Operations, and other members of management.
Our Technology and Cybersecurity Committee will receive regular reports from our CISO as part of its assessment of our cybersecurity threat landscape, and the quality and effectiveness of our information security programs. Our CISO is the member of our management who is principally responsible for overseeing our cybersecurity risk management program, in partnership with other business leaders across BlackLine.
Our Technology and Cybersecurity Committee receives regular reports from our CISO as part of its assessment of our cybersecurity threat landscape, and the quality and effectiveness of our information security programs. Our CISO is the member of our management who is principally responsible for overseeing our cybersecurity risk management program, in partnership with other business leaders across BlackLine.
Our incident response process includes escalation of potentially material cybersecurity incidents to relevant members of our executive management team. The Board, the Audit Committee, and the newly formed Technology and Cybersecurity Committee, are updated as appropriate. 36 Periodically, the Audit Committee discusses our approach to cybersecurity risk management with our CISO.
Our incident response process includes escalation of potentially material cybersecurity incidents to relevant members of our executive management team. The Board, the Audit Committee, and the Technology and Cybersecurity Committee are updated as appropriate. Periodically, the Audit Committee discusses our approach to cybersecurity risk management with our CISO.
The results of such assessments and reviews are reported to the Board, the Audit Committee, and the newly formed Technology and Cybersecurity Committee, and we make adjustments to our cybersecurity processes and practices as necessary based on the information provided by the third-party assessments and reviews.
The results of such assessments and reviews are reported to the Board, the Audit Committee, and the Technology and Cybersecurity Committee, and we make adjustments to our cybersecurity processes and practices as necessary based on the information provided by the third-party assessments and reviews. The Audit Committee and the Technology and Cybersecurity Committee are responsible for oversight relating to cybersecurity.
Removed
The Audit Committee and the Technology and Cybersecurity Committee are responsible for oversight relating to cybersecurity.

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 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.
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 2029. We have additional U.S. leased 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 changeAs 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.
Biggest changeAs of the date of this Annual Report on Form 10-K for the year ended December 31, 2024, 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. 37 PART II
Item 4. Mine Safety Disclosures Not applicable. 38 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders 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.
Biggest changeThe 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. Accordingly, we believe that the total number of beneficial holders is higher than the number of our stockholders of record.
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.
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. 39 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, 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.
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, 2019 through December 31, 2024, assuming the investment of $100 in our common stock and in both of the other indices on December 31, 2019 and the reinvestment of dividends.
The graph uses the closing market price on December 31, 2018 of $40.95 per share as the initial value of our common stock.
The graph uses the closing market price on December 31, 2019 of $51.56 per share as the initial value of our common stock.
We currently intend to retain all of our future earnings, if any, to finance our operations and do not anticipate paying any cash dividends on our common stock in the foreseeable future.
Dividend Policy We have never declared or paid any cash dividends on our common stock. We currently intend to retain our future earnings, if any, primarily to finance our operations and effect share repurchases and do not anticipate paying any cash dividends on our common stock in the foreseeable future.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for Our Common Stock and Related Stockholder Matters Our common stock trades on the Nasdaq Global Select Market under the symbol “BL” since October 28, 2016. Prior to that time, there was no public market for our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for Our Common Stock and Related Stockholder Matters Our common stock trades on the Nasdaq Global Select Market under the symbol “BL”. Holders of Record At February 14, 2025, there were 3 stockholders of record.
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Accordingly, we believe that the total number of beneficial holders is higher than the number of our shareholders of record. Dividend Policy We have never declared or paid any cash dividends on our common stock.
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“Risk Factors.” Unregistered Sales of Equity Securities None. Use of Proceeds None. Issuer Purchases of Equity Securities On November 17, 2024, our Board of Directors authorized the repurchase of up to $200.0 million of our common stock. The authorization will expire at the end of the first quarter of fiscal year 2027.
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“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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Repurchases may be made from time to time through open market repurchases or through privately-negotiated transactions subject to market conditions, applicable legal requirements and other relevant factors. Open market repurchases may be structured to occur in accordance with the requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended.
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We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of its shares under this authorization. The repurchase program does not obligate us to acquire any particular amount of our common stock, and it may be suspended at any time in our discretion.
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The timing and actual number of shares repurchased may depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities. As of December 31, 2024, we have not repurchased any shares under the repurchase program. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeSales and marketing Year Ended December 31, Change 2023 2022 $ % (in thousands, except percentages) Sales and marketing $ 243,154 $ 256,862 $ (13,708) (5) % Percentage of total revenues 41.2 % 49.1 % The decrease in sales and marketing expenses for the year ended December 31, 2023, compared to the year ended December 31, 2022, was primarily due to the following: • $13.6 million decrease in salaries, benefits, and stock-based compensation; • $3.4 million decrease from impairment of cloud computing implementation costs that were incurred in the prior year comparable period; • $2.0 million decrease in transaction-related costs related to the FourQ Acquisition; and • $1.0 million decrease in professional fees; partially offset by • $5.7 million increase in marketing expenses due to an increase in-person events, as well as costs related to digital marketing, our BeyondTheBlack events, and other user conferences; and • $1.0 million increase in travel and entertainment due to an increase in-person events. 47 Research and development Year Ended December 31, Change 2023 2022 $ % (in thousands, except percentages) Research and development, gross $ 124,546 $ 128,514 $ (3,968) (3) % Capitalized internally developed software costs (21,339) (19,621) (1,718) 9 % Research and development, net $ 103,207 $ 108,893 $ (5,686) (5) % Percentage of total revenues 17.5 % 20.8 % The decrease in research and development expenses for the year ended December 31, 2023, compared to the year ended December 31, 2022, was primarily due to the following: • $4.9 million decrease in transaction-related costs related to the FourQ Acquisition; • $1.8 million decrease in professional fees; and • $1.7 million increase in capitalized software costs due to new significant and enhanced functionality of our solutions, as well as increased capitalized costs due to higher headcount.
Biggest changeResearch and development Year Ended December 31, Change 2024 2023 $ % (in thousands, except percentages) Research and development, gross $ 126,643 $ 124,546 $ 2,097 2 % Capitalized internally-developed software costs (25,670) (21,339) (4,331) 20 % Research and development, net $ 100,973 $ 103,207 $ (2,234) (2 %) Percentage of total revenues 15.5 % 17.5 % The decrease in research and development expenses for the year ended December 31, 2024, compared to the year ended December 31, 2023, was primarily due to the following: 49 • $4.3 million increase in capitalized software costs due to a focus on the development of new solution offerings and initiatives, cloud-based solutions, and enhancements to the overall platform user experience.
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.
Number of users. Since our customers generally pay fees based on the number of users on our platform within their organization, we believe the total number of users is an indicator of the growth of our business.
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.
General and administrative. 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.
Non-GAAP gross profit is defined as GAAP revenues less GAAP cost of revenue adjusted for 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.
Non-GAAP gross profit is defined as GAAP revenues less GAAP cost of revenue adjusted for amortization of acquired developed technology, stock-based compensation, and transaction-related costs (including, but not limited to, accounting, legal, and advisory fees related to the transaction, as well as transaction-related retention bonuses). Non-GAAP gross margin is defined as non-GAAP gross profit divided by GAAP revenues.
The $4.4 million net cash outflow from changes in our operating assets and liabilities reflected the following: • $20.9 million increase in accounts receivable due to increased sales, partially offset by customer payments; • $7.2 million decrease in operating lease liabilities; 51 • $6.6 million increase in prepaid expenses and other current assets primarily due to increased insurance and software subscriptions, higher accrued interest, and increased capitalized commissions, partially offset by amortization of prepaid balances and interest received; • $5.1 million decrease in accounts payable due to timing of payments; • $2.4 million paid for the 2013 Acquisition contingent consideration in excess of the acquisition date fair value (refer to “Note 16 - Contingent Consideration” for additional information); • $2.3 million decrease in other long-term liabilities primarily related to the FourQ Acquisition; and • $0.6 million increase in other assets due to increased prepaid commissions, partially offset by related amortization.
The $4.4 million net cash outflow from changes in our operating assets and liabilities reflected the following: • $20.9 million increase in accounts receivable due to increased sales, partially offset by customer payments; • $7.2 million decrease in operating lease liabilities; • $6.6 million increase in prepaid expenses and other current assets primarily due to increased insurance and software subscriptions, higher accrued interest, and increased capitalized commissions, partially offset by amortization of prepaid balances and interest received; • $5.1 million decrease in accounts payable due to timing of payments; • $2.4 million paid for the 2013 Acquisition contingent consideration in excess of the acquisition date fair value (refer to “Note 16 - Contingent Consideration” for additional information); • $2.3 million decrease in other long-term liabilities primarily related to the FourQ Acquisition; and • $0.6 million increase in other assets due to increased prepaid commissions, partially offset by related amortization.
General macroeconomic conditions, such as a recession or rising inflation rates, an economic downturn in the U.S. or internationally, adverse business conditions and liquidity concerns, or bank failures or instability in the financial services sector, has and could continue to adversely affect demand for our products and make it difficult to accurately forecast and plan our future business activities.
General macroeconomic conditions, such as a recession, inflation or rising interest rates, an economic downturn in the U.S. or internationally, adverse business conditions and liquidity concerns, or bank failures or instability in the financial services sector, has and could continue to adversely affect demand for our products and make it difficult to accurately forecast and plan our future business activities.
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. 42 Professional services. We offer our customers implementation and consulting services.
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.
For the year ended December 31, 2023, cash used in investing activities was $62.5 million as a result of the following: • $23.5 million of purchases of marketable securities, net of proceeds from maturities; • $21.6 million in capitalized software development costs; • $11.4 million paid for the DI Acquisition, net of cash acquired; and • $6.0 million in purchases of property and equipment.
For the year ended December 31, 2023, cash used in investing activities was $62.5 million as a result of the following: • $23.5 million of purchases of marketable securities, net of proceeds from maturities; 54 • $21.6 million in capitalized software development costs; • $11.4 million paid for the DI Acquisition, net of cash acquired; and • $6.0 million in purchases of property and equipment.
Capitalized Software Costs We account for the costs of computer software obtained or developed for internal use in accordance with Accounting Standards Codification 350 , Intangibles—Goodwill and Other . We capitalize certain implementation 53 costs incurred in a hosting arrangement that is a service contract. These capitalized costs exclude training costs, project management costs, and data migration costs.
Capitalized Software Costs We account for the costs of computer software obtained or developed for internal use in accordance with Accounting Standards Codification 350 , Intangibles—Goodwill and Other . We capitalize certain implementation costs incurred in a hosting arrangement that is a service contract. These capitalized costs exclude training costs, project management costs, and data migration costs.
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, which are based upon current plans, expectations, and beliefs.
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, which are based upon current plans, expectations, 40 and beliefs.
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 40 quarter. This can be attributed to buying patterns typical in the software industry.
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. This can be attributed to buying patterns typical in the software industry.
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.
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 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.
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.
As we continue to focus on 41 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.
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, 2023, 2022, and 2021, no single customer accounted for more than 10% of our total revenues.
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, 2024, 2023, and 2022, no single customer accounted for more than 10% of our total revenues.
Diluted non-GAAP net income per share attributable to BlackLine, Inc. includes the adjustment for shares resulting from the elimination of stock-based compensation.
Diluted non-GAAP net income (loss) per share attributable to BlackLine, Inc. includes the adjustment for shares resulting from the elimination of stock-based compensation.
Our subscription contracts have initial non-cancellable terms of one year to three years with renewal options. The majority of new contracts in 2023 and 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.
Our subscription contracts have initial non-cancellable terms of one year to three years with renewal options. The majority of new contracts in 2024 and 2023 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.
Restructuring costs consist of one-time termination benefits. Refer to “Note 12 - Restructuring Costs” for additional information. Interest income. 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 Notes issued in August 2019 and March 2021.
Restructuring costs consist of one-time termination benefits. Refer to “Note 12 - Restructuring Costs” for additional information. Interest income. 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 Notes issued in May 2024, March 2021, and August 2019.
We have never paid a material claim, nor have we been sued in connection with these indemnification arrangements. At December 31, 2023, we have not accrued a liability for these indemnification arrangements because the likelihood of incurring a payment obligation, if any, in connection with these indemnification arrangements is not probable or reasonably estimable.
We have never paid a material claim, nor have we been sued in connection with these indemnification arrangements. At December 31, 2024, we have not accrued a liability for these indemnification arrangements because the likelihood of incurring a payment obligation, if any, in connection with these indemnification arrangements is not probable or reasonably estimable.
BlackLine accounted for the transaction as a business combination using the acquisition method of accounting. The total purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective estimated fair values on the acquisition date.
BlackLine accounted for the transaction as a business combination using the acquisition method of accounting. The total purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective estimated fair values on the acquisition date and the purchase price allocation was final.
Net Cash Provided By Financing Activities For the year ended December 31, 2023, cash provided by financing activities was $6.1 million primarily as a result of the following: • $19.8 million of proceeds from exercises of stock options; and 52 • $8.0 million of proceeds from the employee stock purchase plan.
For the year ended December 31, 2023, cash provided by financing activities was $6.1 million, primarily as a result of the following: • $19.8 million of proceeds from exercises of stock options; and • $8.0 million of proceeds from the employee stock purchase plan.
Under the liability method, deferred taxes are determined 43 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.
Under the liability method, deferred taxes are determined 44 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.
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 midsize customers.
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-size customers.
The 2026 Capped Calls have an initial strike price of $166.23 per share - subject to certain adjustments, which corresponds to the initial conversion price of the 2026 Notes - and an initial cap price of $233.31 per share, subject to certain adjustments. As of December 31, 2023, all of the 2026 Capped Calls remained outstanding.
The 2026 Capped Calls have an initial strike price of $166.23 per share subject to certain adjustments, which corresponds to the initial conversion price of the 2026 Notes and an initial cap price of $233.31 per share, subject to certain adjustments. As of December 31, 2024, all of the 2026 Capped Calls remained outstanding.
In connection with the offering of the 2026 Notes, we entered into privately-negotiated capped call transactions (the “2026 Capped Calls”) with certain counterparties covering, subject to anti-dilution adjustments, approximately 6.9 million shares of our common stock and are generally expected to offset the potential economic dilution of our common stock up to the initial cap price.
In connection with the offering of the 2026 Notes, we entered into privately-negotiated capped call transactions (the “2026 Capped Calls”) with certain counterparties covering, subject to anti-dilution adjustments, approximately 6.9 million shares of our common stock, and are generally expected to offset the potential economic dilution of our common stock upon any conversions of the 2026 Notes up to the initial cap price.
In recent quarters, as a result of economic uncertainty, we have seen customers delay and defer purchasing decisions, which has adversely impacted our near-term demand. Acquisition of Data Interconnect On September 12, 2023, we completed the DI Acquisition for cash consideration of $11.4 million, which was paid at the closing of the acquisition.
As a result of economic uncertainty, we have seen customers delay and defer purchasing decisions, which has adversely impacted our near-term demand. Acquisition of Data Interconnect On September 12, 2023, we completed the DI Acquisition for cash consideration of $11.4 million, which was paid at the closing of the acquisition.
We believe that presenting non-GAAP income (loss) from operations and non-GAAP operating margin is useful to investors as it eliminates the impact of items that have been impacted by BlackLine’s acquisitions and other related costs in order to allow a direct comparison of income (loss) from operations between all periods presented.
We believe that presenting non-GAAP income (loss) from operations and non-GAAP operating margin is useful to investors as it eliminates the impact of items that have been impacted by 45 our acquisitions and other related costs in order to allow a direct comparison of income (loss) from operations between all periods presented.
With the exception of our intercompany accounting solutions acquired from the FourQ Acquisition, our product offerings are available for immediate use on our platform after granting access to a new customer. We typically help customers implement our solutions, and we also provide consulting services to help customers optimize the use of our products.
With the exception of our intercompany accounting solutions acquired as part of our acquisition of FourQ, our product offerings are available for immediate use on our platform after granting access to a new customer. We typically help customers implement our solutions, and we also provide consulting services to help customers optimize the use of our products.
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 EIPP, Transaction Matching, Intercompany, and BlackLine Cash Application. Key Components of our Results of Operations Revenues Subscription and support.
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 eInvoicing & Payments, Transaction Matching, Intercompany, and BlackLine Cash Application. Key Components of our Results of Operations Revenues Subscription and support.
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, 2023.
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 95% of our revenues for the year ended December 31, 2024.
Non-GAAP income (loss) from operations is defined as GAAP income (loss) from operations adjusted for amortization of intangible assets, stock-based compensation, change in fair value of contingent consideration, transaction-related costs, legal settlement gains or costs, impairment of cloud computing implementation costs and restructuring costs. Non-GAAP operating margin is defined as non-GAAP income from operations divided by GAAP revenues.
Non-GAAP income (loss) from operations is defined as GAAP income (loss) from operations adjusted for amortization of intangible assets, stock-based compensation, change in fair value of contingent consideration, transaction-related costs, legal settlement gains or costs, and restructuring costs. Non-GAAP operating margin is defined as non-GAAP income (loss) from operations divided by GAAP revenues.
This discussion and analysis deals with comparisons of material changes in the consolidated financial statements for fiscal 2023 and fiscal 2022.
This discussion and analysis deals with comparisons of material changes in the consolidated financial statements for fiscal 2024 and fiscal 2023 .
Net Cash Used In Investing Activities Our investing activities consist primarily of investments in and maturities of marketable securities, capitalized software development costs, acquisitions of business entities, and capital expenditures for property and equipment.
Net Cash Provided By (Used In) Investing Activities Our investing activities consist primarily of investments in, and maturities and sales of marketable securities, capitalized software development costs, acquisitions of business entities, and capital expenditures for property and equipment.
Future Capital Requirements Our future capital requirements will depend on many factors, including our growth rate, strategic relationships and international operations, the timing and extent of spending to support research and development efforts, future merger and acquisition activity, repurchase or refinancing of our existing indebtedness, and the continuing market acceptance of our solutions.
Future Capital Requirements Our future capital requirements will depend on many factors, including our growth rate, strategic relationships and international operations, the timing and extent of spending to support research and development efforts, future merger and acquisition activities, repurchase or refinancing of our existing indebtedness, repurchases of our common stock, and the continuing market acceptance of our solutions.
Lease Liabilities As of December 31, 2023, we have obligations totaling $20.6 million related to existing property and equipment leases. Purchase Obligations Purchase obligations represent our most significant contractual obligations in the ordinary course of business for which we have not received the related goods or services, in whole or in part.
Lease Liabilities As of December 31, 2024, we have obligations totaling $23.9 million related to existing property and equipment leases. Purchase Obligations Purchase obligations represent our most significant contractual obligations in the ordinary course of business for which we have not received the related goods or services, in whole or in part.
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.
We also allocate a portion of overhead to subscription and support cost of revenues. 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.
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. For the years ended December 31, 2023, 2022, and 2021, we had revenues totaling $590.0 million, $522.9 million, and $425.7 million, respectively.
This seasonality is reflected in our revenues, though the impact to overall annual or quarterly revenues is nominal due to the fact that we recognize subscription revenue ratably over the term of the customer contract. For the years ended December 31, 2024, 2023, and 2022, we had revenues totaling $653.3 million, $590.0 million, and $522.9 million, respectively.
For the years ended December 31, 2023 and 2022, we recorded $1.5 million in income tax expense and $13.5 million in income tax benefit, respectively.
For the years ended December 31, 2024 and 2023, we recorded $43.1 million in income tax benefit and $1.5 million in income tax expense, respectively.
Cash Flows The following table sets forth a summary of our cash flows for the periods indicated: Year Ended December 31, 2023 2022 (in thousands) Net cash provided by operating activities $ 126,613 $ 56,013 Net cash used in investing activities $ (62,483) $ (395,615) Net cash provided by financing activities $ 6,146 $ 1,436 Net Cash Provided By Operating Activities Our cash flows provided by operating activities are primarily influenced by our net income, as applicable, and cash generated from collections in accordance with our subscription-based revenue model wherein billings occur in advance of revenue recognition, as well as the substantial amount of non-cash charges that we incur.
Cash Flows The following table sets forth a summary of our cash flows for the periods indicated: Year Ended December 31, 2024 2023 (in thousands) Net cash provided by operating activities $ 190,836 $ 126,613 Net cash provided by (used in) investing activities $ 924,440 $ (62,483) Net cash provided by (used in) financing activities $ (500,145) $ 6,146 Net Cash Provided By Operating Activities Our cash flows provided by operating activities are primarily influenced by our net income, as applicable, and cash generated from collections in accordance with our subscription-based revenue model wherein billings occur in advance of revenue recognition, as well as the substantial amount of non-cash charges that we incur.
Refer to “Note 2 - Summary of Significant Accounting Policies” of the accompanying notes to our consolidated financial statements for additional information. Deferred Customer Acquisition Costs We recognize an asset for the incremental and recoverable costs of obtaining a contract with a customer if we expect the benefit of those costs to be one year or longer.
Refer to “Note 2 - Basis of Presentation, Significant Accounting Policies, and Recently-Issued Accounting Pronouncements” of the accompanying notes to our consolidated financial statements for additional information. 55 Deferred Customer Acquisition Costs We recognize an asset for the incremental and recoverable costs of obtaining a contract with a customer if we expect the benefit of those costs to be one year or longer.
As part of the restructuring, we reduced our global workforce by approximately 9.0%, or 166 total employee positions. Restructuring costs related to the August 2023 restructuring consisted of one-time termination benefits that were primarily incurred in the third quarter of fiscal 2023. Refer to “Note 12 - Restructuring Costs” for additional information.
As part of the restructuring, we reduced our global workforce by approximately 9.0%, or 166 total employee positions. Restructuring costs related to the August 2023 restructuring consisted of one-time termination benefits. Refer to “Note 12 - Restructuring Costs” for additional information.
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.
Subscription and support cost of revenues primarily consist 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, cloud hosting costs, and data center costs related to hosting our cloud-based software.
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 cloud-based applications, increasingly powered by our BlackLine Studio360 Platform, include Account Reconciliations, Transaction Matching, Task Management, Financial Reporting Analytics, Journal Entry, Variance Analysis, Compliance, Smart Close for SAP, Cash Application, Credit & Risk Management, Collections Management, Disputes & Deductions Management, Team & Task Management, AR Intelligence, Electronic Invoicing & Payments, Intercompany Create, Intercompany Balance & Resolve, and Intercompany Net & Settle.
We generated net income attributable to BlackLine, Inc. of $52.8 million and incurred net losses attributable to BlackLine, Inc. of $29.4 million, and $115.2 million, for the years ended December 31, 2023, 2022, and 2021, respectively.
We generated net income attributable to BlackLine, Inc. of $161.2 million and $52.8 million and incurred a net loss attributable to BlackLine, Inc. of $29.4 million for the years ended December 31, 2024, 2023, and 2022, respectively.
Letters of Credit Commitments under letters of credit at December 31, 2023 were scheduled to expire as follows (in thousands): Total Less than 1 Year 1-3 Years 3-5 Years Thereafter Letters of credit $ 461 $ — $ 34 $ 427 $ — Letters of credit are maintained pursuant to certain of our lease arrangements.
Letters of Credit Commitments under letters of credit at December 31, 2024 were scheduled to expire as follows (in thousands): Total Less than 1 Year 1-3 Years 3-5 Years Thereafter Letters of credit $ 603 $ 32 $ 403 $ 168 $ — Letters of credit are maintained pursuant to certain of our lease arrangements.
At December 31, 2023, we have $46.4 million of contractual obligations related to nine commitments, with $22.8 million payable within 12 months, and have additional contractual obligations with other vendors that are individually immaterial and which we can readily settle given our liquidity position and capital resources.
At December 31, 2024, we have $216 million of contractual obligations related to eleven commitments, with $60 million payable within 12 months, and have additional contractual obligations with other vendors that are individually immaterial and which we can readily settle given our liquidity position and capital resources.
Refer to “Note 16 - Contingent Consideration” for additional information. Unrecognized Tax Liabilities At December 31, 2023, while we have liabilities for unrecognized tax benefits of $7.1 million, due to their nature, there is a high degree of uncertainty regarding the timing of future cash outflows and other events that extinguish these liabilities.
Unrecognized Tax Liabilities At December 31, 2024, while we have liabilities for unrecognized tax benefits of $18.7 million, due to their nature, there is a high degree of uncertainty regarding the timing of future cash outflows and other events that extinguish these liabilities.
The letters of credit remain in effect at varying levels through the terms of the related agreements. 50 Off-Balance Sheet Arrangements As part of our ongoing business, we do not have any relationships with other entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities that have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Off-Balance Sheet Arrangements As part of our ongoing business, we do not have any relationships with other entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities that have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
The 2024 Capped Calls have an initial strike price of $73.40 per share - subject to certain adjustments, which corresponds to the initial conversion price of the 2024 Notes - and an initial cap price of $106.76 per share, subject to certain adjustments. As of December 31, 2023, all of the 2024 Capped Calls remained outstanding.
The 2029 Capped Calls have an initial strike price of $68.47 per share subject to certain adjustments, which corresponds to the initial conversion price of the 2029 Notes and an initial cap price of $92.17 per share, subject to certain adjustments. As of December 31, 2024, all of the 2029 Capped Calls remained outstanding.
General and administrative expenses also include amortization of trade name intangible assets, the change in the fair value of contingent consideration, transaction-related costs, and impairment of cloud computing implementation costs. We expect general and administrative costs to increase in 2024 for strategic initiatives and for investments primarily in corporate IT to support scale and automation activities. Restructuring costs .
General and administrative expenses also include amortization of trade name intangible assets, the change in the fair value of contingent consideration, transaction-related costs, and impairment of cloud computing implementation costs. We expect general and administrative costs to remain consistent in 2025, with targeted investments in corporate IT to support innovation and automation initiatives. Restructuring costs .
For the year ended December 31, 2023, our annual estimated effective tax rate differed from the U.S. federal statutory rate of 21% primarily as a result of state taxes, foreign taxes, and changes in our valuation allowance for domestic and foreign income taxes.
For the year ended December 31, 2024, our annual estimated effective tax rate differed from the U.S. federal statutory rate of 21% primarily as a result of the $89.1 million release of our U.S. valuation allowance, along with state and foreign taxes.
On August 23, 2023 and December 7, 2022, respectively, we announced our decision to commit to restructuring plans designed to focus on key growth priorities. Refer to “Note 12 - Restructuring Costs” for additional information on these events.
On August 23, 2023 and December 7, 2022, respectively, we announced our decision to commit to restructuring plans designed to focus on key growth priorities.
Non-cash activities primarily include depreciation and amortization, stock-based compensation, changes in fair value of contingent consideration, non-cash lease expense, amortization of debt issuance costs, accretion of premiums on marketable securities, and deferred taxes.
Non-cash activities primarily include stock-based compensation, a gain on extinguishment from the partial repurchase of our 2026 Notes, deferred taxes, depreciation and amortization, accretion of discounts on marketable securities, changes in fair value of contingent consideration, non-cash lease expense, and amortization of debt issuance costs.
We do not expect interest expense to fluctuate significantly over the next 12 months as the interest rates on our Notes are fixed.
Refer to “Note 11 - Convertible Senior Notes” for additional information. We do not expect interest expense to fluctuate significantly over the next 12 months as the interest rates on our Notes are fixed.
Contractual Obligations and Commitments Notes Payable In connection with the offering of the 2024 Notes, we entered into privately-negotiated capped call transactions (the “2024 Capped Calls”) with certain counterparties covering, subject to anti-dilution adjustments, approximately 3.4 million shares of our common stock and are generally expected to offset the potential economic dilution of our common stock up to the initial cap price.
In connection with the offering of the 2029 Notes, we entered into privately-negotiated capped call transactions (the “2029 Capped Calls” and together with the 2026 Capped Calls, the “Capped Calls”) with certain counterparties covering, subject to anti-dilution adjustments, approximately 9.9 million shares of our common stock and are generally expected to offset the potential economic dilution of our common stock upon any conversions of the 2029 Notes up to the initial cap price.
For a description of our revenue accounting policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates.” Cost of Revenues Subscription and support cost of revenues.
Professional services revenues composed approximately 5% of our revenues for the year ended December 31, 2024. For a description of our revenue accounting policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates.” Cost of Revenues Subscription and support cost of revenues.
With the exception of our intercompany accounting solutions acquired from the FourQ Acquisition, our product offerings are available for immediate use on our platform after granting access to a new customer. We typically help customers implement our solutions, and we also provide consulting and training services to help customers optimize the use of our products.
With the exception of our intercompany accounting solutions acquired from the FourQ Acquisition, our product offerings are available for immediate use on our platform after granting access to a new customer.
Non-GAAP net income (loss) attributable to BlackLine is defined as GAAP net income 44 (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, amortization of debt issuance costs from our convertible notes, change in fair value of contingent consideration, transaction-related costs, legal settlement gains or costs, impairment of cloud computing implementation costs, restructuring costs, and the adjustment to the redeemable non-controlling interest to the redemption amount.
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, amortization of debt issuance costs from our 0.125% Convertible Senior Notes paid in 2024 (the “2024 Notes”), 0.00% Convertible Senior Notes due in 2026 (the “2026 Notes”), and 1.00% Convertible Senior Notes due in 2029 (the “2029 Notes” and, together with the 2024 and 2026 Notes, the “Notes” or “convertible senior notes”), change in fair value of contingent consideration, transaction-related costs, legal settlement gains or costs, restructuring costs, adjustment to the redeemable non-controlling interest to the redemption amount, and gain on extinguishment of convertible senior notes.
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”).
We are a holding company and conduct our operations through our wholly-owned subsidiary, BlackLine Systems. At December 31, 2024, we had 397,477 individual users across 4,443 customers. Additionally, we continue to build strategic relationships with technology vendors, professional services firms, business process outsourcers, and resellers.
Fiscal 2022 Restructuring Program On December 7, 2022, we announced our decision to commit to a restructuring plan that was designed to focus on key growth priorities. Restructuring costs related to the December 2022 restructuring consisted of one-time termination benefits that were primarily incurred in the fourth quarter of fiscal 2022 and the first quarter of fiscal 2023.
Fiscal 2022 Restructuring Program On December 7, 2022, we announced our decision to commit to a restructuring plan that was designed to focus on key growth priorities. Restructuring costs related to the December 2022 restructuring consisted of one-time termination benefits. Refer to “Note 12 - Restructuring Costs” for additional information.
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.
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. During the quarter ended December 31, 2024, we determined that a U.S. valuation allowance was no longer required.
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.
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 remain consistent in 2025 as we execute our product roadmap and invest in strategic initiatives, including AI.
These changes in our operating assets and liabilities were partially offset by the following: • $23.0 million increase in accounts receivable; • $10.1 million increase in other assets due to increased prepaid commissions, partially offset by related amortization; and • $6.9 million decrease in operating lease liabilities.
These changes in our operating assets and liabilities were partially offset by the following: • $7.6 million increase in accounts receivable primarily due to increased sales, partially offset by customer payments; • $6.0 million decrease in operating lease liabilities; and • $1.1 million decrease in accounts payable due to timing of payments.
Recent Accounting Pronouncements Refer to “Note 2 - Summary of Significant Accounting Policies” contained in the “Notes to Consolidated Financial Statements” in Part II, Item 8 of this Annual Report on Form 10-K for a full description of the recent accounting pronouncements, and our expectation of their impact, if any, on our financial position and results of operations.
Transaction-related costs incurred by us are expensed as incurred and are included in general and administrative expenses in our consolidated statements of operations. 56 Recent Accounting Pronouncements Refer to “Note 2 - Basis of Presentation, Significant Accounting Policies, and Recently-Issued Accounting Pronouncements” contained in the “Notes to Consolidated Financial Statements” in Part II, Item 8 of this Annual Report on Form 10-K for a full description of the recent accounting pronouncements, and our expectation of their impact, if any, on our results of operations and financial condition.
Restructuring costs Year Ended December 31, Change 2023 2022 $ % (in thousands, except percentages) Restructuring costs $ 10,964 $ 3,841 $ 7,123 185 % The increase in restructuring costs during the year ended December 31, 2023, compared to the year ended December 31, 2022, was due to one-time termination benefits related to the fiscal 2023 and fiscal 2022 restructuring programs.
Restructuring costs Year Ended December 31, Change 2024 2023 $ % (in thousands, except percentages) Restructuring costs $ 1,720 $ 10,964 $ (9,244) (84 %) The decrease in restructuring costs during the year ended December 31, 2024, compared to the year ended December 31, 2023, was primarily due to lower additional one-time termination benefits for the fiscal 2023 and fiscal 2022 restructuring programs.
For the comparison of fiscal 2022 and fiscal 2021, see Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2022 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 23, 2023. 39 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.
For the comparison of fiscal 2023 and fiscal 2022 , see Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2023 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 23, 2024.
We expect sales and marketing expenses to increase in 2024 primarily due to investments in strategic initiatives to support sales enablement, product, and partner initiatives. 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.
We expect a decline in sales and marketing expenses as a percentage of revenue in 2025 as we leverage efficiencies in sales support and further improve productivity. 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.
Reconciliation of Non-GAAP Financial Measures The following table presents a reconciliation of gross profit, gross margin, and net income (loss), the most comparable GAAP measures, to non-GAAP gross profit, non-GAAP gross margin, and non-GAAP net income: Year Ended December 31, 2023 2022 (in thousands, except percentages) Non-GAAP Gross Profit: Gross profit $ 443,203 $ 393,553 Amortization of acquired developed technology 12,438 11,315 Stock-based compensation (1) 12,440 8,595 Transaction-related costs 478 1,355 Total non-GAAP gross profit $ 468,559 $ 414,818 Gross margin 75.1 % 75.3 % Non-GAAP gross margin 79.4 % 79.3 % Non-GAAP Operating Income: Operating income (loss) $ 14,348 $ (56,198) Amortization of intangible assets 20,608 19,731 Stock-based compensation (1) 80,068 75,884 Change in fair value of contingent consideration (33,549) (35,130) Transaction-related costs 5,078 16,831 Legal settlement costs — 1,709 Impairment of cloud computing implementation costs — 5,330 Restructuring costs 10,964 3,841 Total non-GAAP operating income $ 97,517 $ 31,998 GAAP operating margin 2.4 % (10.7 %) Non-GAAP operating margin 16.5 % 6.1 % Non-GAAP Net Income Attributable to BlackLine, Inc.: Net income (loss) attributable to BlackLine, Inc. $ 52,833 $ (29,391) Benefit from income taxes (1,196) (13,634) Amortization of intangible assets 20,608 19,731 Stock-based compensation (1) 79,588 75,576 Amortization of debt issuance costs 5,535 5,511 Change in fair value of contingent consideration (33,549) (35,130) Transaction-related costs 5,078 16,831 Legal settlement costs — 1,709 Impairment of cloud computing implementation costs — 5,330 Restructuring costs 10,964 3,841 Adjustment to redeemable non-controlling interest 5,334 (4,131) Total non-GAAP net income attributable to BlackLine, Inc. $ 145,195 $ 46,243 (1) Beginning in 2023, includes amortization related to stock-based compensation that was capitalized in capitalized software development costs in previous periods and totaled $2.1 million for the year ended December 31, 2023. 45 Results of Operations The following tables set forth selected historical consolidated statements of operations data, which should be read in conjunction with Critical Accounting Estimates, Liquidity and Capital Resources, and Contractual Obligations and Commitments included in this Item 7, as well as Quantitative and Qualitative Disclosures About Market Risk and the Consolidated Financial Statements and Notes thereto included elsewhere in this Annual Report on Form 10-K.
We believe that presenting non-GAAP net income (loss) attributable to BlackLine is useful to investors as it eliminates the impact of items that have been impacted by our acquisitions and other related costs to allow a direct comparison of net income (loss) between all periods presented. 46 Reconciliation of Non-GAAP Financial Measures The following table presents a reconciliation of gross profit, gross margin, operating income, operating margin, and net income, the most comparable GAAP measures, to non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, and non-GAAP net income: Year Ended December 31, 2024 2023 (in thousands, except percentages) Non-GAAP Gross Profit: Gross profit $ 491,371 $ 443,203 Amortization of acquired developed technology 13,370 12,438 Stock-based compensation 13,347 12,440 Transaction-related costs 151 478 Total non-GAAP gross profit $ 518,239 $ 468,559 Gross margin 75.2 % 75.1 % Non-GAAP gross margin 79.3 % 79.4 % Non-GAAP Operating Income: Operating income $ 18,536 $ 14,348 Amortization of intangible assets 19,886 20,608 Stock-based compensation 86,097 80,068 Change in fair value of contingent consideration — (33,549) Transaction-related costs 568 5,078 Restructuring costs 1,720 10,964 Total non-GAAP operating income $ 126,807 $ 97,517 GAAP operating margin 2.8 % 2.4 % Non-GAAP operating margin 19.4 % 16.5 % Non-GAAP Net Income Attributable to BlackLine, Inc.: Net income attributable to BlackLine, Inc. $ 161,174 $ 52,833 Benefit from income taxes (50,948) (1,196) Amortization of intangible assets 19,886 20,608 Stock-based compensation 85,654 79,588 Amortization of debt issuance costs 4,486 5,535 Change in fair value of contingent consideration — (33,549) Transaction-related costs 568 5,078 Restructuring costs 1,720 10,964 Adjustment to redeemable non-controlling interest 4,639 5,334 Gain on extinguishment of convertible senior notes (65,112) — Total non-GAAP net income attributable to BlackLine, Inc. $ 162,067 $ 145,195 Results of Operations The following tables set forth selected historical consolidated statements of operations data, which should be read in conjunction with Critical Accounting Estimates, Liquidity and Capital Resources, and Contractual Obligations and Commitments included in this Item 7, as well as Quantitative and Qualitative Disclosures About Market Risk and the Consolidated Financial Statements and Notes thereto included elsewhere in this Annual Report on Form 10-K.
Contingent Consideration We are potentially obligated to pay a maximum of $73.2 million of contingent consideration between January 2022 and January 2025 related to our FourQ Acquisition if certain financial performance milestones are met.
Contingent Consideration As a condition of the FourQ Acquisition, we agreed to pay a maximum of $73.2 million of contingent consideration between January 2022 and January 2025 if certain financial performance milestones were met. At December 31, 2024, the related liability for the FourQ Acquisition was zero.
Provision for (benefit from) income taxes Year Ended December 31, Change 2023 2022 $ % (in thousands, except percentages) Provision for (benefit from) income taxes $ 1,450 $ (13,520) $ 14,970 (111) % We are subject to federal and state income taxes in the U.S. and taxes in foreign jurisdictions.
Refer to “Note 11 - Convertible Senior Notes” for additional information. Provision for (benefit from) income taxes Year Ended December 31, Change 2024 2023 $ % (in thousands, except percentages) Provision for (benefit from) income taxes $ (43,067) $ 1,450 $ (44,517) N/M We are subject to federal and state income taxes in the U.S. and taxes in foreign jurisdictions.
Year Ended December 31, 2023 2022 (in thousands, except percentages) GAAP gross profit $ 443,203 $ 393,553 GAAP gross margin 75.1 % 75.3 % GAAP operating income (loss) $ 14,348 $ (56,198) GAAP operating margin 2.4 % (10.7 %) GAAP net income (loss) attributable to BlackLine, Inc. $ 52,833 $ (29,391) Diluted net income (loss) per share attributable to BlackLine, Inc. $ 0.81 $ (0.49) Year Ended December 31, 2023 2022 (in thousands, except percentages) Non-GAAP gross profit $ 468,559 $ 414,818 Non-GAAP gross margin 79.4 % 79.3 % Non-GAAP operating income $ 97,517 $ 31,998 Non-GAAP operating margin 16.5 % 6.1 % Non-GAAP net income attributable to BlackLine, Inc. $ 145,195 $ 46,243 Diluted non-GAAP net income per share attributable to BlackLine, Inc. $ 1.96 $ 0.64 Non-GAAP Gross Profit and Non-GAAP Gross Margin .
Year Ended December 31, 2024 2023 (in thousands, except percentages) GAAP gross profit $ 491,371 $ 443,203 GAAP gross margin 75.2 % 75.1 % GAAP operating income $ 18,536 $ 14,348 GAAP operating margin 2.8 % 2.4 % GAAP net income attributable to BlackLine, Inc. $ 161,174 $ 52,833 Diluted net income per share attributable to BlackLine, Inc. $ 1.45 $ 0.81 Year Ended December 31, 2024 2023 (in thousands, except percentages) Non-GAAP gross profit $ 518,239 $ 468,559 Non-GAAP gross margin 79.3 % 79.4 % Non-GAAP operating income $ 126,807 $ 97,517 Non-GAAP operating margin 19.4 % 16.5 % Non-GAAP net income attributable to BlackLine, Inc. $ 162,067 $ 145,195 Diluted non-GAAP net income per share attributable to BlackLine, Inc. $ 2.18 $ 1.96 Non-GAAP Gross Profit and Non-GAAP Gross Margin .
Interest income Year Ended December 31, Change 2023 2022 $ % (in thousands, except percentages) Interest income $ 52,059 $ 14,637 $ 37,422 NM The increase in interest income during the year ended December 31, 2023, compared to the year ended December 31, 2022, was primarily due to increased average interest rates on our investments and cash balances.
Interest income Year Ended December 31, Change 2024 2023 $ % (in thousands, except percentages) Interest income $ 49,808 $ 52,059 $ (2,251) (4 %) 50 The decrease in interest income during the year ended December 31, 2024, compared to the year ended December 31, 2023, was due to a decrease in average balances, partially offset by an increase in average interest rates on our investments and cash balances.
We typically invoice customers annually in advance for subscriptions, which is initially recorded as deferred revenue and 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 primarily of implementation and consulting services.
The first year of subscription fees are typically payable within 30 days after execution of a contract, and thereafter upon renewal. Professional services consist primarily of implementation and consulting services.
For the year ended December 31, 2022, cash used in investing activities was $395.6 million as a result of the following: • $207.7 million of purchases of marketable securities, net of proceeds from maturities; • $157.7 million, net of cash acquired, paid for the acquisition of FourQ; • $19.2 million in capitalized software development costs; and • $11.0 million in purchases of property and equipment.
For the year ended December 31, 2024, cash provided by investing activities was $924.4 million, primarily as a result of the following: • $951.3 million of proceeds from maturities and sales, net of purchases of marketable securities; partially offset by • $24.7 million for capitalized software development costs; and • $2.1 million in purchases of property and equipment.
For the year ended December 31, 2022, cash provided by operating activities was $56.0 million, resulting from net non-cash expenses of $75.4 million and net cash flow provided by changes in operating assets and liabilities of $14.5 million, partially offset by our net loss of $33.9 million.
For the year ended December 31, 2024, cash provided by operating activities was $190.8 million, resulting from net income of $167.8 million, net cash flow provided by changes in our operating assets and liabilities of $16.8 53 million, and net non-cash expenses of $6.3 million.
The significant inputs used in the fair value measurement of contingent consideration were as follows: • the likelihood that we would realize a tax benefit from the use of net operating losses generated from the stock option exercises concurrent with the 2013 Acquisition; • the amount and timing of Rimilia ARR in the second year subsequent to the acquisition; • the amount and timing of new and incremental combined bookings from FourQ and BlackLine, and revenues from a specified FourQ customer over a three-year period subsequent to the acquisition date.
The significant inputs used in the fair value measurement of contingent consideration was the amount and timing of new and incremental combined bookings from FourQ and BlackLine, and revenues from a specified FourQ customer over a three-year period subsequent to the acquisition.
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 rendered. Professional services revenues composed approximately 6% of our revenues for the year ended December 31, 2023.
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 rendered.
For multi-year agreements, it is common to invoice an initial amount at contract signing followed by subsequent annual invoices. Backlog represents remaining revenue to be recognized under a non-cancelable contract with customers. At December 31, 2023 and 2022, we had backlog of approximately $842.7 million and $772.9 million, respectively.
Backlog represents remaining revenue to be recognized under a non-cancelable contract with customers. At December 31, 2024 and 2023, we had backlog of approximately $879.4 million and $842.7 million, respectively.
Liquidity and Capital Resources At December 31, 2023, our principal sources of liquidity were an aggregate of $1.2 billion of cash and cash equivalents and marketable securities, which primarily consist of short-term, money market mutual funds, commercial paper, U.S. treasury securities, corporate bonds, and U.S. government agencies.
Liquidity and Capital Resources At December 31, 2024, our principal sources of liquidity were an aggregate of $885.9 million of cash and cash equivalents. Our cash equivalents consist of short-term, money market mutual funds.
At December 31, 2023, our dollar-based net revenue retention rate declined marginally from the year ended December 31, 2022 due to a more moderate pace of acquiring 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.
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.
Cost of revenues Year Ended December 31, Change 2023 2022 $ % (in thousands, except percentages) Subscription and support $ 121,308 $ 102,132 $ 19,176 19 % Professional services 25,485 27,253 (1,768) (6) % Total cost of revenues $ 146,793 $ 129,385 $ 17,408 13 % Gross margin 75.1 % 75.3 % The increase in cost of revenues for the year ended December 31, 2023, compared to the year ended December 31, 2022, was primarily due to the following: • $10.6 million net increase in computer software-related costs and data center expenses primarily due to higher spend on cloud hosting services related to the migration of new and existing customers to the Google Cloud Platform, as well as an increase in cloud hosting services; • $5.5 million increase in amortization of developed technology due to net additions to software placed into service; • $1.4 million increase in depreciation and amortization primarily due to the addition of developed technology from the FourQ Acquisition and DI Acquisition; • $0.6 million increase in salaries, benefits, and stock-based compensation; and • $0.4 million increase in travel and entertainment; partially offset by • $0.9 million decrease in transaction-related costs related to the FourQ Acquisition; and • $0.3 million decrease in professional fees.
The total number of customers and users increased by 1% and 3%, respectively, as compared to December 31, 2023. 48 Cost of revenues Year Ended December 31, Change 2024 2023 $ % (in thousands, except percentages) Subscription and support $ 135,308 $ 121,308 $ 14,000 12 % Professional services 26,657 25,485 1,172 5 % Total cost of revenues $ 161,965 $ 146,793 $ 15,172 10 % Gross margin 75.2 % 75.1 % The increase in total cost of revenues for the year ended December 31, 2024, compared to the year ended December 31, 2023, was primarily due to the following: • $10.8 million increase in computer software expenses due to higher spend on cloud hosting services as customers continue to migrate to GCP, as well as upgrades to support business growth; • $3.5 million increase in amortization of developed technology due to net additions of software placed into service; and • $2.0 million increase in employee compensation and benefits driven primarily by an increase in average compensation per employee, partially offset by a decrease in average headcount; partially offset by • $1.0 million decrease in depreciation and amortization due to certain assets being fully amortized; and • $0.8 million decrease in professional fees.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+2 added−3 removed7 unchanged
Biggest changeWe do not believe our cash equivalents and marketable securities have significant risk of default or illiquidity. While we believe our cash equivalents and marketable securities do not contain excessive risk, we cannot provide absolute assurance that in the future, our investments will not be subject to adverse changes in market value.
Biggest changeWhile we believe our cash equivalents do not contain excessive risk, we cannot provide absolute assurance that in the future, our investments will not be subject to adverse changes in market value. 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.
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.
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.
Our inability or failure to do so could harm our business, financial condition and results of operations. 55
Our inability or failure to do so could harm our business, financial condition and results of operations. 58
The 2026 Notes have a fixed annual interest rate of 0.0%; therefore, we do not have economic interest rate exposure with respect to the 2026 Notes. However, the fair value of the Notes is exposed to interest rate risk. Generally, the fair market value of the Notes will increase as interest rates fall and decrease as interest rates rise.
The 2029 Notes have a fixed annual interest rate of 1.00%; therefore, we do not have economic interest rate exposure with respect to the 2029 Notes. However, the fair value of the 2029 Notes is exposed to interest rate risk. Generally, the fair market value of the Notes will increase as interest rates fall and decrease as interest rates rise.
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.
We expect to continue to grow our foreign operations and customer sales. 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.
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.
At December 31, 2024, we had no marketable securities, which prior to maturity, consisted of money market mutual funds, commercial paper, U.S. treasury securities, and U.S. government agencies. The carrying amount of our cash equivalents reasonably approximates fair value due to the highly liquid nature of these instruments.
We have also not used, nor do we intend to use, derivatives for trading or speculative purposes. Interest Rate Risk We are exposed to market risk related to changes in interest rates. In August 2019, we issued $500.0 million aggregate principal amount of the 2024 Notes.
We have also not used, nor do we intend to use, derivatives for trading or speculative purposes. Interest Rate Risk We are exposed to market risk related to changes in interest rates. In March 2021, we issued $1.150 billion aggregate principal amount of the 2026 Notes and partially repurchased $919.8 million aggregate principal amount in May 2024.
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.
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 of $885.9 million at December 31, 2024. Our cash equivalents consist of highly liquid money market mutual funds.
Dollar 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.
The effect of a hypothetical 10% increase 57 or decrease in foreign currency exchange rates applicable to our business would have reduced by approximately $3.8 million or increased by approximately $3.8 million, respectively, our cash balances at December 31, 2024.
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.
The 2026 Notes have a fixed annual interest rate of 0.0%; therefore, we do not have economic interest rate exposure with respect to the 2026 Notes. However, the fair value of the 2026 Notes is exposed to interest rate risk. In May 2024, we issued $675.0 million aggregate principal amount of the 2029 Notes.
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.
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. Dollar, we also transact in foreign currencies, including the Australian Dollar, British Pound, Canadian Dollar, Euro, Indian Rupee, Japanese Yen, Mexican Peso, Romanian Leu, and Singapore Dollar due to foreign operations and customer sales.
Removed
Our investments are exposed to market risk due to fluctuations in interest rates, which may affect our interest income and the fair market value of our investments.
Added
Given the liquidity of our cash equivalents at December 31, 2024, we do not believe we have exposure to material risks due to changes in market interest rates. When we invest our excess cash in marketable securities in the future, our interest rate risk may increase. We do not believe our cash equivalents have significant risk of default or illiquidity.
Removed
Due to the short-term nature of our investment portfolio, however, we do not believe an immediate 10% increase or decrease in interest rates would have a material effect on the fair market value of our portfolio. We therefore do not expect our operating results or cash flows to be materially affected by a sudden change in market interest rates.
Added
Changes in the value of foreign currencies relative to the U.S. Dollar can result in fluctuations in our total assets, liabilities, revenue, operating expenses, and cash flows.
Removed
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.

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