BL Q4 2024: Guides 7-8% FY Growth Amid FX Headwinds, Deal Delays
- Robust Pipeline Momentum and Accelerated Deal Velocity: Executives highlighted that despite some delayed deal closures in Q4, the quality and growth of the pipeline remain strong, with accelerated contract-to-go-live timelines and a record level of large deals expected to drive future revenue.
- Strengthening Strategic Partnerships: The call emphasized enhanced collaboration with key partners such as SAP and Workday, with aligned incentive plans and integration initiatives that are expected to increase market penetration and support revenue growth throughout 2025.
- High Customer Retention and Expansion: The Q&A stressed a 96% revenue renewal rate and initiatives to drive customer engagement and faster project kickoffs. These efforts are likely to boost net retention and further expand existing customer relationships.
- Delayed revenue recognition risk: Some large deals, including an 8‑figure contract mentioned in the Q&A, are being deferred with start dates pushed to later periods (even into 2026), which could delay revenue realization in 2025.
- Foreign exchange (FX) headwinds: FX impacts have already resulted in a 2‑point headwind on key metrics like ARR and net retention, and continued FX volatility could further erode revenue and margin performance.
- Uncertainty from pricing and packaging changes: The transition to a new pricing model has led to some confusion among partners and internal teams, potentially slowing down market adoption and deal velocity in the near term.
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Guidance Outlook
Q: What drives 2025 guidance assumptions?
A: Management built the guidance with FX headwinds, delayed deal timing, and steady pipeline improvements in mind, aiming for 5-7% growth in Q1 and 7-8% for the full year, while also factoring in a higher cash tax burden. -
Inflection Confidence
Q: What assures a growth inflection in 2025?
A: They believe the combination of higher-quality, larger deals and robust customer engagement, along with improved international performance, will drive a turnaround later in the year despite near-term delays. -
Margin Outlook
Q: How are margins expected to trend?
A: Management expects a modest but steady expansion in gross margins—supported by operational efficiencies and decommissioning older service centers—with non-GAAP operating margins moving from 18% toward a 21-22% range in 2025. -
Pricing Changes
Q: What’s the impact of the new pricing model?
A: The new pricing and packaging strategy has received positive early feedback, promising flexibility and deeper customer penetration, and is expected to be accretive over a 3 to 4 year rollout. -
SAP Partnership
Q: How will the SAP relationship boost growth?
A: Renewed focus and tighter alignment with SAP, including joint product initiatives and enhanced incentive plans, are expected to drive cloud migration deals and strengthen the pipeline for 2025. -
Deal Pipeline
Q: How do deal pushouts affect revenue timing?
A: While some larger deals are being deferred—shifting revenue recognition towards 2026—the overall pipeline is healthy with improved velocity and quality, ensuring strong future earnings. -
Retention & Churn
Q: What are the key retention metrics?
A: Management noted a robust revenue renewal rate of 96% in the enterprise space, with stable customer engagement expected to gradually reduce mid-market churn over time. -
Public Sector Initiatives
Q: What’s driving public sector expansion?
A: Beyond the FedRAMP journey, steps such as adding resellers and partnering with top systems integrators are underway to tap into state and local government opportunities, though major revenue impact remains cautious for 2025. -
Free Cash Flow & Taxes
Q: How will FX and taxes impact free cash flow?
A: Despite FX-related headwinds and a new cash tax burden projected in the low to mid-teens, a strong balance sheet and efficient cash flow generation underpin the outlook for free cash flow. -
New CCO & Exec Changes
Q: What impact does the new CCO bring?
A: The appointment of Stuart Van Houten is expected to energize the go-to-market strategy—especially in leveraging the SAP partnership—helping drive better execution, even as compensation models adjust.