International Markets Garner Sales for BlackLine

Business from partnerships and international sales of its accounting software were highlights in the second quarter for BlackLine Inc.

Mark Partin, chief financial officer of the Woodland Hills software developer, said in a conference call with analysts about second quarter earnings that the company’s partners were responsible for more than 80 percent of the large deals received during the quarter.

“(That) is a great result and due to targeted efforts to increase engagement, build relationships and drive greater utilization among our partner network as well as improving market conditions,” Partin said during the call.

Marc Huffman, BlackLine’s chief executive, mentioned during the call that one lucrative partnership was with SAP SE in Walldorf, Germany and that business management software maker’s solution extension service, or SolEx.

“Solution extensions represent the top tier of SAP recognition and are only awarded to companies whose products extend native SAP products. The recognition means that BlackLine solutions are now sold as SAP offerings,” according to a blog post at the BlackLine website.

In his comments, Huffman said the SolEx partnership showed strong results during the second quarter across all geographies – North America, Europe, the Middle East, Africa and the Asia Pacific region.

“SolEx was particularly strong across the (Asia Pacific) region, generating large deals and expanding our small but growing business in Japan,” Huffman said during the call. “We believe we’re well positioned for continued momentum from SolEx throughout the year.”In the company’s international business, a continued macro recovery drove strong results, Huffman added.

In both Europe and the Asia Pacific region, the company is hearing that businesses are motivated to start using BlackLine software by digital transformation initiatives, standardizing of accounting operations and managing a remote close, he continued.

“This demand, combined with an increasing traction from our global partner ecosystem, drove strong wins abroad and grew our international revenue to 28 percent of the total, up from 25 percent the prior year,” Huffman said.

Back-office appealThe company reported on Aug. 5 adjusted net income of $9.6 million (15 cents a share) for the quarter ending June 30, compared with adjusted net income of $12 million (20 cents) in the same period a year earlier. Revenue increased by 23 percent to $102 million.BlackLine’s share price has increased by about 45 percent over the 52-week period. Shares closed at $111.89 on Aug. 11.

Rob Oliver, an analyst with Robert W. Baird & Co. Inc. who follows BlackLine, said in a research note from Aug. 6 that the company cited continued improvement in demand emerging from the pandemic, as well as the strength in the international markets and from SAP’s SolEx partnership.

“With back-office software ‘heating up’ after many years, and with the company’s market leadership in the accounting suite and strong management, we would expect to see improving growth in coming quarters,” Oliver said in the note.

Brian Schwartz, an analyst with Oppenheimer & Co. Inc., wrote in a research note that BlackLine continues to execute well across both the mid-market and enterprises as its management suggested spending priorities are beginning to shift toward back-office functions.

“While full-year guidance is likely to disappoint, we remain attracted to the strength in execution against improving demand,” Schwartz wrote.

The company’s full year guidance is for revenue in the range of $420 million to $423 million, with net income in the range of $28 million to $30 million, or 45 to 48 cents a share.During the call, Oliver specifically asked about the Asia Pacific region and if there was a need for additional investment there.

Partin responded that BlackLine is starting to see good traction in Japan after entering that market several years ago.

“The leadership and investment that we’ve been making there is paying off with our team and our partnerships,” Partin said. “So when we see demand, we typically invest in it.”Huffman in response mentioned again how beneficial SolEx has been to international growth.

“We have another customer example we cite there from Southeast Asia,” Huffman said. “That relationship was really critical. Now that said, we continue to succeed with most all, including Oracle (Corp.), major (enterprise resource planning software) players in … those international regions as well.”Both Oliver and Schwartz rated BlackLine shares as “outperform,” meaning the stock is expected to outperform the broader U.S. equity market in the next 12 to 18 months.