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BLACKLINE, INC. (BL)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered steady execution: Revenue $178.3M (+7.5% YoY), non-GAAP operating margin 21.4%, GAAP diluted EPS $0.09 and non-GAAP diluted EPS $0.51; free cash flow reached $57.0M, a quarterly record .
  • Results were slightly above Wall Street consensus: Revenue $178.29M vs $178.11M*, and non-GAAP EPS $0.51 vs $0.505*; estimates compiled from 13–14 analysts* [GetEstimates Q3 2025].
  • Guidance updated: FY 2025 revenue narrowed to $699–$701M (maintained), non-GAAP op margin raised to 22.0–22.5%, while non-GAAP EPS lowered to $2.08–$2.13 and non-GAAP NI to $153–$157M; Q4 2025 introduced at revenue $182–$184M, non-GAAP op margin 24–25%, non-GAAP EPS $0.58–$0.61 .
  • Strategic catalysts: strong new logo momentum (new customer bookings +45% YoY; larger, platform deals), ongoing buybacks ($113M repurchased in Q3; $198.2M capacity remaining), Trusted AI (ISO 42001) rollout, and activist pressure calling for strategic alternatives (renewed SAP interest) .

What Went Well and What Went Wrong

What Went Well

  • New logo strength and deal quality: “New customer bookings were up 45%... average new deal size more than doubling by 111%” and multi-year, platform pricing wins across marquee customers (including Fortune 20 and major European brands) .
  • Cash generation and margin discipline: record operating cash flow ($63.8M) and free cash flow ($57.0M), with non-GAAP operating margin of 21.4% despite event costs .
  • Trusted AI and platform progress: ISO 42001 certification for AI governance and Verity agent rollout; management emphasized auditability, unique proprietary data, and ERP-agnostic integration (Oracle, Workday, D365 connectors) .

What Went Wrong

  • GAAP profitability pressure: GAAP net income fell to $5.3M ($0.09 diluted EPS) vs $17.2M ($0.27) a year ago; GAAP operating margin slid to 4.3% (5.0% prior-year), impacted by timing of the BeyondTheBlack event .
  • Net revenue retention and users: DBNRR eased to 103% (FX headwind ~1 pt) as seat attrition and pauses in user adds ahead of platform pricing and AI evaluation reduced net user growth .
  • Billings timing headwind and deal slippage: Calculated billings +4% with ~4-pt timing headwind (quarterly billing mix); management cited “a couple of million dollars” of deals slipping into Q4 due to AI-related interest post-Verity launch .

Financial Results

Headline P&L and Margins vs Prior Periods and Estimates

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$166.931 $172.025 $178.290
Revenue YoY Growth (%)6.0% 7.0% 7.5%
Revenue Consensus Mean ($USD Millions)*$166.715*$170.857*$178.107*
GAAP Diluted EPS ($)$0.10 $0.13 $0.09
Non-GAAP Diluted EPS ($)$0.49 $0.51 $0.51
Primary EPS Consensus Mean ($)*$0.383*$0.510*$0.505*
GAAP Operating Margin (%)2.1% 4.4% 4.3%
Non-GAAP Operating Margin (%)20.9% 22.1% 21.4%
GAAP Gross Margin (%)75.5% 75.2% 75.1%
Non-GAAP Gross Margin (%)79.6% 79.7% 79.4%

Estimates marked with * are from S&P Global.

Revenue Breakdown (Segments)

MetricQ1 2025Q2 2025Q3 2025
Subscription & Support Revenue ($USD Millions)$158.462 $163.027 $168.210
Professional Services Revenue ($USD Millions)$8.469 $8.998 $10.080
Total Revenues ($USD Millions)$166.931 $172.025 $178.290

KPIs and Cash Generation

MetricQ1 2025Q2 2025Q3 2025
Customers (Count)4,455 4,451 4,424
Users (Count)393,892 389,559 385,336
Dollar-Based Net Revenue Retention (%)104% 105% 103%
Remaining Performance Obligation ($USD Millions)$913.2 $944.3 $964.1
Calculated Billings ($USD Millions)$159.0 $182.3 $161.6
Annual Recurring Revenue ($USD Millions)—$677 $685
Operating Cash Flow ($USD Millions)$46.742 $32.345 $63.800
Free Cash Flow ($USD Millions)$32.624 $25.385 $57.007

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total GAAP Revenue ($USD Millions)Q4 2025—$182–$184 New
Non-GAAP Operating Margin (%)Q4 2025—24.0–25.0 New
Non-GAAP Net Income ($USD Millions)Q4 2025—$42–$44 New
Non-GAAP EPS ($)Q4 2025—$0.58–$0.61 New
Total GAAP Revenue ($USD Millions)FY 2025$696–$705 $699–$701 Maintained (narrowed)
Non-GAAP Operating Margin (%)FY 202521.5–22.5 22.0–22.5 Raised (lower bound)
Non-GAAP Net Income ($USD Millions)FY 2025$159–$167 $153–$157 Lowered
Non-GAAP EPS ($)FY 2025$2.13–$2.24 $2.08–$2.13 Lowered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Platform pricing transitionAdoption building; value-based selling; larger deal sizes; introduced in Q1 (NA) and Q2 (EMEA) 3/4 of new customer bookings on platform pricing; some customers paused user adds to evaluate Studio360 and Verity Adoption expanding; transition causing near-term seat attrition
AI/Trusted AIAgentic AI plan; data and auditability emphasis; roadmap for Verity ISO 42001 certification; Vera conversational AI and Verity agents deploying; auditability as moat Accelerating commercialization and validation
SAP/SOLEX channelSolid pipeline build; Q4-weighted; enablement ramp Seasonally steady (26% revenue); strong Q4 pipeline; joint AI POC with SAP Pipeline strengthening; monetization steps progressing
Public sector/FedRAMPFirst federal agency won; secure instance build-out Production instance delivered; final testing mid-Dec; FedRAMP approval targeted early 2026 Early traction; scaling in 2026
Bookings/win ratesCreated pipeline up 70% YoY; stronger close rates New customer bookings +45%; competitive win rates up; bookings growth targeted ~20% in 2026 Improving quality and velocity
Implementation efficiencyTime-to-value improvements; connector adoption Go-lives +70% YoY; 17% sequential; implementation agents piloting Faster deployments; AI-driven delivery

Management Commentary

  • “Revenue growth increased to 7.5%. We achieved a non-GAAP operating margin of 21.4% and a free cash flow margin of 32%.” – Owen Ryan, CEO .
  • “New customer bookings were up 45%… average new deal size more than doubling by 111%… largest ever total contract value deal… platform pricing model accounted for nearly three quarters of new customer bookings.” – Owen Ryan .
  • “Our moat… is our proprietary data and leadership in trusted, auditable systems… ISO 42001 certification for responsible AI… Verity agents deploying.” – Owen Ryan .
  • “We returned approximately $113M to shareholders through the repurchase of 2.1M shares.” – Patrick Villanova, CFO .
  • “In 2026, you will see at least a Rule 33… and acceleration of the framework in 2027.” – Management during Q&A .

Q&A Highlights

  • Deal slippage and AI evaluation: “Verity announcement… interest in AI… cost us probably a couple of million dollars… now in the fourth quarter.” – on Q3 end-of-quarter dynamics .
  • Seat attrition vs platform model: Success-based attrition from automation drives lower seats; platform pricing decouples growth from seat count; working through under-adoption with multiyear renewals and customer success .
  • FY EPS guide lower drivers: Lower interest income (due to buybacks) and non-GAAP tax provision dynamics (“big beautiful bill” benefits cash, not provision) .
  • SAP/SOLEX and public sector: Solid Q4 pipeline, joint AI POC; public sector production instance delivered, FedRAMP target early 2026 .
  • Implementation: Significant reduction in time-to-live; implementation agents to automate common phases, scaling in 2026 .

Estimates Context

  • Q3 2025 results vs consensus: Revenue $178.29M vs $178.11M*, non-GAAP EPS $0.51 vs $0.505*; 13–14 estimates contributed*. Prior quarters: Q2 Revenue $172.03M vs $170.86M*, non-GAAP EPS $0.51 vs $0.510*; Q1 Revenue $166.93M vs $166.72M*, non-GAAP EPS $0.49 vs $0.383* [GetEstimates Q1–Q3 2025].
  • Implications: Modest beats amid improving execution support consensus stability; FY EPS guide was lowered due to interest/tax factors, prompting potential downward EPS revisions, while margin and revenue guidance support upward revisions to non-GAAP operating margin.

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Platform transition is working: larger, multi-solution platform deals (+45% new bookings; bigger average sizes) support a mix shift toward strategic products, but expect near-term seat attrition and occasional deal timing impacts .
  • Cash flow durability: Record free cash flow ($57.0M) and continued buybacks ($113M in Q3; ~$198M capacity remaining) add a floor to equity value and flexibility for capital deployment .
  • Trusted AI as a competitive moat: ISO 42001 certification, Verity agents and ERP-agnostic integrations strengthen credibility with CFOs and auditors; expect commercialization to be gradual but accretive .
  • FY guide mix: Revenue maintained/narrowed, non-GAAP margin raised, EPS lowered—watch for consensus EPS revisions and Q4 delivery vs new guidance ranges .
  • Execution levers into 2026: management targets at least “Rule 33” in 2026, citing bookings growth (~20%), lower churn, and operating leverage from process and AI productivity .
  • External pressure and strategic optionality: Activist call for exploration of strategic alternatives amid reported SAP interest could catalyze stock if a process is initiated .
  • Near-term focus: Q4 SOLEX pipeline conversion, public sector FedRAMP, and implementation agent pilots are key proof points for revenue acceleration and margin expansion .