Financial automation software company BlackLine (NASDAQ: BL) met Wall Streets revenue expectations in Q3 CY2025, with sales up 7.5% year on year to $178.3 million. The company expects next quarter’s revenue to be around $183 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) Q3 CY2025 Highlights:
- Revenue: $178.3 million vs analyst estimates of $178.1 million (7.5% year-on-year growth, in line)
- Adjusted EPS: $0.51 vs analyst estimates of $0.51 (in line)
- Adjusted Operating Income: $38.14 million vs analyst estimates of $36.75 million (21.4% margin, 3.8% beat)
- Revenue Guidance for Q4 CY2025 is $183 million at the midpoint, roughly in line with what analysts were expecting
- Management lowered its full-year Adjusted EPS guidance to $2.11 at the midpoint, a 3.7% decrease
- Operating Margin: 4.3%, in line with the same quarter last year
- Free Cash Flow Margin: 35.8%, up from 14.8% in the previous quarter
- Customers: 4,424, down from 4,451 in the previous quarter
- Net Revenue Retention Rate: 103%, down from 105% in the previous quarter
- Billings: $161.7 million at quarter end, up 4.4% year on year
- Market Capitalization: $3.52 billion
“BlackLine’s third-quarter results, with increasing revenue growth, solid margins, and strong free cash flow, demonstrate that our focus on improved execution is taking hold,” said Owen Ryan, CEO of BlackLine.
Company Overview
Born from the vision to eliminate tedious manual spreadsheet work for accountants, BlackLine (NASDAQ: BL) provides cloud-based software that automates and streamlines financial close, intercompany accounting, and invoice-to-cash processes for accounting departments.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, BlackLine grew its sales at a 15.3% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell slightly short of our standards for the software sector, which enjoys a number of secular tailwinds.
We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. BlackLine’s recent performance shows its demand has slowed as its annualized revenue growth of 9.4% over the last two years was below its five-year trend. 
This quarter, BlackLine grew its revenue by 7.5% year on year, and its $178.3 million of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 8% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 8.6% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and indicates its newer products and services will not catalyze better top-line performance yet.
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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 $161.7 million in Q3, 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 Retention
One of the best parts about the software-as-a-service business model (and a reason why they trade at high valuation multiples) is that customers typically spend more on a company’s products and services over time.
BlackLine’s net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 103% in Q3. This means BlackLine would’ve grown its revenue by 3.3% even if it didn’t win any new customers over the last 12 months.
BlackLine has an adequate net retention rate, showing us that it generally keeps customers but lags behind the best SaaS businesses, which routinely post net retention rates of 120%+.
Key Takeaways from BlackLine’s Q3 Results
We struggled to find many positives in these results. Its EPS guidance for next quarter missed and its customer growth decelerated. Overall, this was a softer quarter. The stock remained flat at $56.76 immediately after reporting.
BlackLine’s earnings report left more to be desired. Let’s look forward to see if this quarter has created an opportunity to buy the stock. 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 for active Edge members.
