Accounting automation software maker Blackline (NASDAQ: BL) announced better-than-expected revenue in Q2 CY2025, with sales up 7.2% year on year to $172 million. The company expects next quarter’s revenue to be around $178 million, close to analysts’ estimates. Its non-GAAP profit of $0.51 per share was in line with analysts’ consensus estimates.
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BlackLine (BL) Q2 CY2025 Highlights:
- Revenue: $172 million vs analyst estimates of $170.8 million (7.2% year-on-year growth, 0.7% beat)
- Adjusted EPS: $0.51 vs analyst estimates of $0.51 (in line)
- Adjusted Operating Income: $38.01 million vs analyst estimates of $35.93 million (22.1% margin, 5.8% beat)
- The company slightly lifted its revenue guidance for the full year to $700.5 million at the midpoint from $698.5 million
- Management slightly raised its full-year Adjusted EPS guidance to $2.19 at the midpoint
- Operating Margin: 4.4%, up from 1.4% in the same quarter last year
- Free Cash Flow Margin: 14.8%, down from 19.5% in the previous quarter
- Customers: 4,451, down from 4,455 in the previous quarter
- Net Revenue Retention Rate: 105%
- Billings: $182.3 million at quarter end, up 10.8% year on year
- Market Capitalization: $3.33 billion
“Our strong second quarter results demonstrate BlackLine's growing success, which is a direct outcome of our disciplined go-to-market execution and significant progress on the strategic initiatives we outlined last fall,” said Owen Ryan, Co-CEO of BlackLine.
Company Overview
Started in 2001 by software engineer Therese Tucker, one of the very few women founders who took their companies public, BlackLine (NASDAQ: BL) provides software for organizations to automate accounting and finance tasks.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last three years, BlackLine grew its sales at a 12.5% annual rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the software sector, which enjoys a number of secular tailwinds.
This quarter, BlackLine reported year-on-year revenue growth of 7.2%, and its $172 million of revenue exceeded Wall Street’s estimates by 0.7%. Company management is currently guiding for a 7.3% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 7.8% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and indicates its products and services will face some demand challenges.
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Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
BlackLine’s billings came in at $182.3 million in Q2, and over the last four quarters, its growth was underwhelming as it averaged 7.2% year-on-year increases. This performance mirrored its total sales and suggests that increasing competition is causing challenges in acquiring/retaining customers. 
Customer Base
BlackLine reported 4,451 customers at the end of the quarter, a sequential decrease of 4. That’s worse than what we’ve observed previously, and we’ve no doubt shareholders would like to see the company accelerate its sales momentum.
Key Takeaways from BlackLine’s Q2 Results
We were impressed by how significantly BlackLine blew past analysts’ billings expectations this quarter. We were also glad its full-year EPS guidance exceeded Wall Street’s estimates. On the other hand, its EPS guidance for next quarter missed and its customer growth decelerated. Overall, this was a mixed quarter. The stock remained flat at $54.70 immediately after reporting.
Should you buy the stock or not? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
