UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________________

FORM 10-Q

______________________________________________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from     to     

Commission File Number: 001-37924

______________________________________________________________

BlackLine, Inc.

(Exact name of Registrant as specified in its charter)

______________________________________________________________

Delaware	46-3354276
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

21300 Victory Boulevard, 12th Floor

Woodland Hills, CA 91367

(Address of principal executive offices, including zip code) 

(818) 223-9008

(Registrant’s telephone number, including area code)

______________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	BL	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒    No  o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

The number of shares of the registrant’s common stock outstanding at August 2, 2024 was 62,175,084.

BlackLine, Inc.

Quarterly Report on Form 10-Q

For the Quarterly Period Ended June 30, 2024

TABLE OF CONTENTS

	Part I. Financial Information
Item 1.	Unaudited Condensed Consolidated Financial Statements	4
	Unaudited Condensed Consolidated Balance Sheets at June 30, 2024 and December 31, 2023	4
	Unaudited Condensed Consolidated Statements of Operations for the Quarters and Six Months Ended June 30, 2024 and 2023	5
	Unaudited Condensed Consolidated Statements of Comprehensive Income for the Quarters and Six Months Ended June 30, 2024 and 2023	6
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Quarters and Six Months Ended June 30, 2024 and 2023	7
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023	9
	Notes to Unaudited Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	38
Part II. Other Information
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	65
Item 5.	Other Information	65
Item 6.	Exhibits	65

2

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risk and uncertainties. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “would,” “continue,” “ongoing” or the negative of these terms or other comparable terminology. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to, statements regarding future financial and operational performance; statements concerning growth strategies including acquisitions, extension of distribution channels and strategic relationships, product innovation, international expansion, customer growth and expansion, customer service initiatives, expectations regarding our acquisitions, expectations regarding contract size and increased focus on strategic products, expectations for hiring new talent; our ability to accurately forecast revenue and appropriately plan expenses and investments; the demand for and benefits from the use of our current and future solutions; market acceptance of our solutions; the impact of the macroeconomic environment on our business; and changes in the competitive environment in our industry and the markets in which we operate and our liquidity and capital resources. These statements are based upon our historical performance and our current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith beliefs and assumptions as of that time with respect to future events and are subject to risks and uncertainty. If any of these risks or uncertainties materialize or if any assumptions prove incorrect, actual performance or results may differ materially from those expressed in or suggested by the forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainty, and assumptions that are difficult to predict, including those identified below, under “Part II-Other Information, Item 1A. Risk Factors” and elsewhere herein. Forward-looking statements should not be read as a guarantee of future performance or results, and you should not place undue reliance on such statements. Furthermore, we undertake no obligation to revise or update any forward-looking statements for any reason, except as required by applicable law.

Unless the context otherwise requires, the terms “BlackLine, Inc.,” “BlackLine,” “the Company,” “we,” “us,” and “our” in this Quarterly Report on Form 10-Q refer to the consolidated operations of BlackLine, Inc. and its consolidated subsidiaries as a whole.

3

Part I. Financial Information

Item 1.    Financial Statements

BLACKLINE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except shares and par values) 

	June 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	616,629	$	271,117
Marketable securities (amortized cost of $428,617 and $932,850 at June 30, 2024 and December 31, 2023, respectively)	428,461		933,355
Accounts receivable, net of allowances of $3,459 and $5,064 at June 30, 2024 and December 31, 2023, respectively	137,439		171,608
Prepaid expenses and other current assets	27,677		31,244
Total current assets	1,210,206		1,407,324
Capitalized software development costs, net	40,873		37,828
Property and equipment, net	11,791		14,867
Intangible assets, net	68,665		79,056
Goodwill	448,965		448,965
Operating lease right-of-use assets	18,245		19,173
Other assets	91,937		93,552
Total assets	$	1,890,682	$	2,100,765
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	2,083	$	8,623
Accrued expenses and other current liabilities	51,924		59,690
Deferred revenue, current	311,256		320,133
Finance lease liabilities, current	469		778
Operating lease liabilities, current	4,035		4,108
Convertible senior notes, net, current	249,888		249,233
Total current liabilities	619,655		642,565
Finance lease liabilities, noncurrent	—		4
Operating lease liabilities, noncurrent	14,426		15,738
Convertible senior notes, net, noncurrent	890,979		1,140,608
Deferred tax liabilities, net	5,017		6,394
Deferred revenue, noncurrent	1,979		904
Other long-term liabilities	795		3,608
Total liabilities	1,532,851		1,809,821
Commitments and contingencies (Note 12)
Redeemable non-controlling interest (Note 3)	32,068		30,063
Stockholders' equity:
Common stock, $0.01 par value, 500,000,000 shares authorized, 62,171,009 and 61,515,105 issued and outstanding at June 30, 2024 and December 31, 2023, respectively	622		615
Additional paid-in capital	451,737		474,863
Accumulated other comprehensive income (loss)	(561)		205
Accumulated deficit	(126,035)		(214,802)
Total stockholders' equity	325,763		260,881
Total liabilities, redeemable non-controlling interest, and stockholders' equity	$	1,890,682	$	2,100,765

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

BLACKLINE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share data) 

	Quarter Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenues
Subscription and support	$	151,787	$	135,881	$	301,288	$	266,307
Professional services	8,719		8,693		16,679		17,251
Total revenues	160,506		144,574		317,967		283,558
Cost of revenues
Subscription and support	33,756		30,630		65,808		59,142
Professional services	6,592		6,486		13,637		13,245
Total cost of revenues	40,348		37,116		79,445		72,387
Gross profit	120,158		107,458		238,522		211,171
Operating expenses
Sales and marketing	60,248		62,749		121,359		124,680
Research and development	25,721		26,802		50,736		53,907
General and administrative	31,053		(148)		61,099		28,828
Restructuring costs	928		135		1,372		1,149
Total operating expenses	117,950		89,538		234,566		208,564
Income from operations	2,208		17,920		3,956		2,607
Other income (expense)
Interest income	14,065		12,542		29,425		23,207
Interest expense	(2,089)		(1,470)		(3,558)		(2,925)
Gain on extinguishment of convertible senior notes	65,112		—		65,112		—
Other income, net	77,088		11,072		90,979		20,282
Income before income taxes	79,296		28,992		94,935		22,889
Provision for income taxes	4,337		926		5,206		1,554
Net income	74,959		28,066		89,729		21,335
Net income attributable to redeemable non-controlling interest	524		320		962		405
Adjustment attributable to redeemable non-controlling interest	(2,255)		(3,103)		1,248		2,089
Net income attributable to BlackLine, Inc.	$	76,690	$	30,849	$	87,519	$	18,841
Basic net income per share attributable to BlackLine, Inc.	$	1.24	$	0.51	$	1.42	$	0.31
Shares used to calculate basic net income per share	61,979		60,700		61,811		60,445
Diluted net income per share attributable to BlackLine, Inc.	$	0.22	$	0.45	$	0.39	$	0.30
Shares used to calculate diluted net income per share	72,522		71,801		72,708		71,801

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

BLACKLINE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)

	Quarter Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income	$	74,959	$	28,066	$	89,729	$	21,335
Other comprehensive loss:
Net change in unrealized gains (losses) on marketable securities, net of tax benefit of $— and $123, for the quarter and six months ended June 30, 2024, respectively, and $— for the quarter and six months ended June 30, 2023.	44		(1,200)		(538)		66
Foreign currency translation	(217)		(179)		(433)		(224)
Other comprehensive loss	(173)		(1,379)		(971)		(158)
Comprehensive income	74,786		26,687		88,758		21,177
Less comprehensive income attributable to redeemable non-controlling interest:
Net income attributable to redeemable non-controlling interest	524		320		962		405
Foreign currency translation attributable to redeemable non-controlling interest	(101)		(81)		(205)		(101)
Comprehensive income attributable to redeemable non-controlling interest	423		239		757		304
Comprehensive income attributable to BlackLine, Inc.	$	74,363	$	26,448	$	88,001	$	20,873

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

BLACKLINE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(in thousands)

	Quarter Ended June 30, 2024
	Common Stock			Additional Paid-in		Accumulated Other Comprehensive		Accumulated
	Shares	Amount		Capital		Loss		Deficit		Total
Balance at March 31, 2024	61,803	$	618	$	480,175	$	(489)	$	(200,470)	$	279,834
Stock option exercises	94	1		2,321		—		—		2,322
Vesting of restricted stock units	179	2		—		—		—		2
Issuance of common stock through employee stock purchase plan	95	1		4,248		—		—		4,249
Acquisition of common stock for tax withholding obligations	—	—		(1,403)		—		—		(1,403)
Stock-based compensation	—	—		23,879		—		—		23,879
Purchase of capped calls	—	—		(59,738)		—		—		(59,738)
Other comprehensive loss	—	—		—		(72)		—		(72)
Net income attributable to BlackLine, Inc., including adjustment to redeemable non-controlling interest	—	—		2,255		—		74,435		76,690
Balance at June 30, 2024	62,171	$	622	$	451,737	$	(561)	$	(126,035)	$	325,763

	Six Months Ended June 30, 2024
	Common Stock			Additional Paid-in		Accumulated Other Comprehensive		Accumulated
	Shares	Amount		Capital		Income (Loss)		Deficit		Total
Balance at December 31, 2023	61,515	$	615	$	474,863	$	205	$	(214,802)	$	260,881
Stock option exercises	122	1		2,632		—		—		2,633
Vesting of restricted stock units	439	5		—		—		—		5
Issuance of common stock through employee stock purchase plan	95	1		4,248		—		—		4,249
Acquisition of common stock for tax withholding obligations	—	—		(12,384)		—		—		(12,384)
Stock-based compensation	—	—		43,364		—		—		43,364
Purchase of capped calls	—	—		(59,738)		—		—		(59,738)
Other comprehensive loss	—	—		—		(766)		—		(766)
Net income attributable to BlackLine, Inc., including adjustment to redeemable non-controlling interest	—	—		(1,248)		—		88,767		87,519
Balance at June 30, 2024	62,171	$	622	$	451,737	$	(561)	$	(126,035)	$	325,763

7

	Quarter Ended June 30, 2023
	Common Stock			Additional Paid-in		Accumulated Other Comprehensive		Accumulated
	Shares	Amount		Capital		Income (Loss)		Deficit		Total
Balance at March 31, 2023	60,478	$	605	$	396,403	$	(231)	$	(279,785)	$	116,992
Stock option exercises	150	2		4,691		—		—		4,693
Vesting of restricted stock units	203	2		—		—		—		2
Issuance of common stock through employee stock purchase plan	116	1		5,290		—		—		5,291
Acquisition of common stock for tax withholding obligations	—	—		(1,019)		—		—		(1,019)
Stock-based compensation	—	—		20,852		—		—		20,852
Other comprehensive loss	—	—		—		(1,298)		—		(1,298)
Net income attributable to BlackLine, Inc., including adjustment to redeemable non-controlling interest	—	—		3,103		—		27,746		30,849
Balance at June 30, 2023	60,947	$	610	$	429,320	$	(1,529)	$	(252,039)	$	176,362

	Six Months Ended June 30, 2023
	Common Stock			Additional Paid-in		Accumulated Other Comprehensive		Accumulated
	Shares	Amount		Capital		Income (Loss)		Deficit		Total
Balance at December 31, 2022	60,017	$	600	$	385,709	$	(1,472)	$	(272,969)	$	111,868
Stock option exercises	359	4		11,911		—		—		11,915
Vesting of restricted stock units	455	5		—		—		—		5
Issuance of common stock through employee stock purchase plan	116	1		5,290		—		—		5,291
Acquisition of common stock for tax withholding obligations	—	—		(13,422)		—		—		(13,422)
Stock-based compensation	—	—		41,921		—		—		41,921
Other comprehensive loss	—	—		—		(57)		—		(57)
Net income attributable to BlackLine, Inc., including adjustment to redeemable non-controlling interest	—	—		(2,089)		—		20,930		18,841
Balance at June 30, 2023	60,947	$	610	$	429,320	$	(1,529)	$	(252,039)	$	176,362

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

8

BLACKLINE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities
Net income attributable to BlackLine, Inc.	$	87,519	$	18,841
Net income and adjustment attributable to redeemable non-controlling interest (Note 3)	2,210		2,494
Net income	89,729		21,335
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	25,300		24,350
Change in fair value of contingent consideration	—		(22,429)
Amortization of debt issuance costs	2,679		2,741
Stock-based compensation	41,288		40,386
Gain on extinguishment of convertible senior notes	(65,112)		—
Noncash lease expense	3,110		3,192
Accretion of purchase discounts on marketable securities, net	(15,261)		(15,768)
Net foreign currency (gains) losses	(157)		902
Deferred income taxes	(1,255)		(52)
Provision for (benefit from) credit losses	7		(19)
Changes in operating assets and liabilities:
Accounts receivable	33,995		20,701
Prepaid expenses and other current assets	3,524		(3,956)
Other assets	1,609		395
Accounts payable	(6,543)		(6,082)
Accrued expenses and other current liabilities	(10,896)		(13,227)
Deferred revenue	(7,802)		1,025
Operating lease liabilities	(3,241)		(3,512)
Lease incentive receipts	—		240
Other long-term liabilities	149		(2,804)
Net cash provided by operating activities	91,123		47,418
Cash flows from investing activities
Purchases of marketable securities	(396,104)		(725,120)
Proceeds from maturities of marketable securities	591,500		693,300
Proceeds from sales of marketable securities	324,098		—
Capitalized software development costs	(12,087)		(12,318)
Purchases of property and equipment	(976)		(2,829)
Net cash provided by (used in) investing activities	506,431		(46,967)
Cash flows from financing activities
Proceeds from issuance of convertible senior notes, net of issuance costs	662,641		—
Partial repurchase of convertible senior notes	(848,519)		—
Purchase of capped calls related to convertible senior notes	(59,738)		—
Principal payments under finance lease obligations	(516)		(485)
Proceeds from exercises of stock options	2,638		11,920
Proceeds from employee stock purchase plan	4,249		5,291
Acquisition of common stock for tax withholding obligations	(12,384)		(13,422)
Net cash provided by (used in) financing activities	(251,629)		3,304
Effect of foreign currency exchange rate changes on cash, cash equivalents, and restricted cash	(421)		(207)
Net increase in cash, cash equivalents, and restricted cash	345,504		3,548
Cash, cash equivalents, and restricted cash, beginning of period	271,363		201,207
Cash, cash equivalents, and restricted cash, end of period	$	616,867	$	204,755
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets
Cash and cash equivalents at end of period	$	616,629	$	204,514
Restricted cash included within other assets at end of period	238		241
Total cash, cash equivalents, and restricted cash at end of period shown in the consolidated statements of cash flows	$	616,867	$	204,755

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

9

BLACKLINE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

SUPPLEMENTAL CASH FLOWS DISCLOSURE

(in thousands)

	Six Months Ended June 30,
	2024		2023
Non-cash financing and investing activities
Stock-based compensation capitalized for software development	$	2,079	$	1,818
Capitalized software development costs included in accounts payable and accrued expenses and other current liabilities at end of period	$	1,166	$	927
Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities at end of period	$	140	$	108
Leasehold improvements paid directly by landlord	$	—	$	271
Debt issuance costs included in accounts payable and accrued expenses at end of period	$	663	$	—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

10

BLACKLINE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – The Company

BlackLine, Inc. and its subsidiaries (the “Company” or “BlackLine”) provide financial accounting close solutions delivered primarily as Software as a Service (“SaaS”). The Company’s solutions enable its customers to address various aspects of their critical processes, including financial close, intercompany, invoice-to-cash, and consolidation.

The Company is a holding company and conducts its operations through its wholly-owned subsidiary, BlackLine Systems, Inc. (“BlackLine Systems”). BlackLine Systems funded its business with investments from its founder and cash flows from operations until September 3, 2013, when the Company acquired BlackLine Systems, and Silver Lake Sumeru and Iconiq acquired a controlling interest in the Company, which is referred to as the “2013 Acquisition.”

The Company is headquartered in Woodland Hills, California. The Company has other local offices in Pleasanton, California; New York, New York; and Westport, Connecticut, as well as international office locations in Australia, Canada, France, Germany, India, Japan, the Netherlands, Poland, Romania, Singapore, and the United Kingdom.

Note 2 – Basis of Presentation, Significant Accounting Policies and Recently-Issued Accounting Pronouncements

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the Securities and Exchange Commission (“SEC”) on February 23, 2024. The unaudited condensed consolidated financial statements are unaudited and have been prepared on a basis consistent with that used to prepare the audited annual consolidated financial statements and include, in the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair statement of the condensed consolidated financial statements. The unaudited condensed consolidated balance sheet at December 31, 2023 was derived from audited financial statements, but does not include all disclosures required by GAAP. The operating results for the quarter and six months ended June 30, 2024 are not necessarily indicative of the results expected for the full year ending December 31, 2024.

Use of estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.

On an ongoing basis, management evaluates its estimates, primarily those related to determining the stand-alone selling price for separate deliverables in the Company’s subscription revenue arrangements, allowance for doubtful accounts, cancellations and credits, fair value of assets and liabilities assumed in a business combination, recoverability of goodwill and long-lived assets, useful lives associated with long-lived assets and right-of-use assets, income taxes, contingencies, fair value of contingent consideration, fair value of the 0.125% Convertible Senior Notes due in 2024, 0.00% Convertible Senior Notes due in 2026, and 1.00% Convertible Senior Notes due in 2029, redemption value of redeemable non-controlling interest, and the valuation and assumptions underlying stock-based compensation. These estimates are based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances. Actual results could differ from those estimates.

The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company at June 30, 2024 and through the date of this report. The accounting matters assessed included, but were not limited to, the Company’s valuation of contingent consideration, the allowance for credit losses, and the carrying value of goodwill and other long-lived assets. While there was not a material impact to the Company’s condensed consolidated financial statements for

11

the quarter and six months ended June 30, 2024, the Company’s future assessment of these accounting matters and other factors could result in material impacts to the Company’s consolidated financial statements in future reporting periods.

Significant accounting policies

The Company’s significant accounting policies are detailed in “Note 2 - Significant Accounting Policies” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes to the Company’s significant accounting policies.

Recently-adopted accounting pronouncements

There have been no recently adopted accounting pronouncements since the filing of the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

Recently-issued accounting pronouncements

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures. This standard expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. For public business entities, it is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact that the updated standard will have on our disclosures within our consolidated financial statements. The Company does not intend to early adopt.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures, which requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. For public business entities, it is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact that the updated standard will have on our disclosures within our consolidated financial statements. The Company does not intend to early adopt.

Note 3 – Redeemable Non-Controlling Interest

In September 2018, the Company entered into an agreement with Japanese Cloud Computing and M30 LLC (the “Investors”) to engage in the investment, organization, management, and operation of BlackLine K.K. that is focused on the sale of the Company's products in Japan. The Company initially contributed approximately $4.5 million in cash in exchange for 51% of the outstanding common stock of BlackLine K.K. and subsequently invested a further $2.3 million, maintaining the Company's majority ownership of 51%. As the Company continues to control a majority stake in BlackLine K.K., the entity has been consolidated.

All of the common stock held by the Investors is callable by the Company or puttable by the Investors upon certain contingent events. Should the call or put option be exercised, the redemption value will be determined based upon a prescribed formula derived from the discrete revenues of BlackLine K.K. and the Company, and may be settled, at the Company’s discretion, with Company stock or cash. As a result of the put right available to the Investors in the future, the redeemable non-controlling interest in BlackLine K.K. is classified outside of permanent equity in the Company’s consolidated balance sheets, and the balance is reported at the greater of the initial carrying amount adjusted for the redeemable non-controlling interest's share of earnings, or its estimated redemption value. The resulting changes in the estimated redemption amount are recorded within retained earnings or, in the absence of retained earnings, additional paid-in capital.

Activity in the redeemable non-controlling interest was as follows (in thousands):

	Quarter Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Balance at beginning of period	$	33,900	$	29,152	$	30,063	$	23,895
Net income attributable to redeemable non-controlling interest (excluding adjustment to non-controlling interest)	524		320		962		405
Foreign currency translation	(101)		(81)		(205)		(101)
Adjustment to redeemable non-controlling interest	(2,255)		(3,103)		1,248		2,089
Balance at end of period	$	32,068	$	26,288	$	32,068	$	26,288

12

Note 4 – Intangible Assets and Goodwill

The carrying value of intangible assets was as follows (in thousands):

	June 30, 2024
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trade name	$	15,977	$	(15,977)	$	—
Developed technology	137,368		(73,667)		63,701
Customer relationships	26,779		(22,808)		3,971
Defensive patent	2,333		(1,340)		993
	$	182,457	$	(113,792)	$	68,665

	December 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trade name	$	15,977	$	(15,977)	$	—
Developed technology	137,368		(66,900)		70,468
Customer relationships	26,779		(19,342)		7,437
Defensive patent	2,333		(1,182)		1,151
	$	182,457	$	(103,401)	$	79,056

The following table represents the changes in goodwill (in thousands):

Balance at December 31, 2023	$	448,965
Additions from acquisitions	—
Balance at June 30, 2024	$	448,965

Note 5 – Balance Sheet Components

Investments in Marketable Securities

Investments in marketable securities presented within current assets on the condensed consolidated balance sheets consisted of the following (in thousands):

	June 30, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Marketable securities
U.S. treasury securities	$	275,644	$	—	$	(109)	$	275,535
Commercial paper	110,178		—		(2)		110,176
U.S. government agencies	42,795		—		(45)		42,750
	$	428,617	$	—	$	(156)	$	428,461

	December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Marketable securities
U.S. treasury securities	$	523,344	$	737	$	(107)	$	523,974
Commercial paper	241,428		1		—		241,429
U.S. government agencies	168,078		2		(128)		167,952
	$	932,850	$	740	$	(235)	$	933,355

13

The Company’s marketable securities as of June 30, 2024 have a contractual maturity of less than two years. All of our available-for-sale securities are available for use in our current operations and are categorized as current assets even though the stated maturity of some individual securities may be one year or more beyond the balance sheet date.

The fair values of available-for-sale securities, by remaining contractual maturity, were as follows (in thousands):

	June 30, 2024
	Amortized Cost		Fair Value
Maturing within 1 year	$	416,618	$	416,475
Maturing between 1 and 2 years	11,999		11,986
	$	428,617	$	428,461

Refer to “Note 6 - Fair Value Measurements” for additional information.

The Company recognized accretion on its marketable securities in interest income, and also recognized net gains and losses related to maturities of marketable securities that were reclassified from accumulated other comprehensive loss in interest income, which totaled $6.7 million and $15.3 million for the quarter and six months ended June 30, 2024, and $8.3 million and $15.8 million for the quarter and six months ended June 30, 2023, respectively.

Net gains and losses are determined using the specific identification method. During the quarters and six months ended June 30, 2024 and 2023, there were nominal realized gains and losses related to sales of marketable securities recognized in the Company's accompanying condensed consolidated statements of operations.

Marketable securities in a continuous loss position for less than 12 months had an estimated fair value of $308.7 million and $286.6 million, and unrealized losses of $0.2 million and $0.2 million, at June 30, 2024 and December 31, 2023, respectively. There were no marketable securities in a continuous loss position for greater than 12 months at June 30, 2024 and December 31, 2023, respectively.

The Company's marketable securities are considered to be of high credit quality and accordingly, there was no allowance for credit losses related to marketable securities as of June 30, 2024 or December 31, 2023.

Other Assets

Deferred customer contract acquisition costs are included in other assets in the accompanying condensed consolidated balance sheets and totaled $87.1 million and $89.9 million at June 30, 2024 and December 31, 2023, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities were comprised of the following (in thousands):

	June 30, 2024		December 31, 2023
Accrued salaries and employee benefits	$	27,468	$	33,344
Accrued income and other taxes payable	9,942		9,408
Accrued restructuring costs	796		1,569
Other accrued expenses and current liabilities	13,718		15,369
	$	51,924	$	59,690

Note 6 – Fair Value Measurements

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis by level, within the fair value hierarchy. Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (in thousands):

14

	June 30, 2024
	Level 1		Level 2		Level 3		Total
Cash equivalents
U.S. treasury securities	$	105,687	$	—	$	—	$	105,687
Money market funds	437,369		—		—		437,369
Commercial paper	—		—		—		—
Marketable securities
U.S. treasury securities	275,535		—		—		275,535
Commercial paper	—		110,176		—		110,176
U.S. government agencies	—		42,750		—		42,750
Total assets	$	818,591	$	152,926	$	—	$	971,517
Liabilities
Contingent consideration	$	—	$	—	$	—	$	—
Total liabilities	$	—	$	—	$	—	$	—

	December 31, 2023
	Level 1		Level 2		Level 3		Total
Cash equivalents
Money market funds	$	148,298	$	—	$	—	$	148,298
Commercial paper	—		38,926		—		38,926
U.S. government agencies	—		19,987		—		19,987
Marketable securities
U.S. treasury securities	523,974		—		—		523,974
Commercial paper	—		241,429		—		241,429
U.S. government agencies	—		167,952		—		167,952
Total assets	$	672,272	$	468,294	$	—	$	1,140,566
Liabilities
Contingent consideration	$	—	$	—	$	—	$	—
Total liabilities	$	—	$	—	$	—	$	—

The following table summarizes the changes in the contingent consideration liability (in thousands):

	Quarter Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Beginning fair value	$	—	$	44,655	$	—	$	41,549
Additions in the period	—		—		—		—
Change in fair value	—		(25,535)		—		(22,429)
Ending fair value	$	—	$	19,120	$	—	$	19,120

The Company classified the marketable debt securities as available-for-sale debt securities at the time of purchase and reevaluated such classification as of each balance sheet date. The valuation techniques used to measure the fair values of our instruments that were classified as Level 1 were derived from quoted market prices for identical instruments in active markets. The valuation techniques used to measure the fair values of Level 2 instruments were derived from broker reports that utilized quoted market prices for similar instruments.

As a condition of the acquisition of FourQ Systems, Inc. (“FourQ”) that occurred on January 26, 2022, the Company agreed to pay additional cash consideration if FourQ realized certain firm-specific targets, including the amount and timing of new and incremental combined bookings from FourQ and BlackLine, and revenues from a specified FourQ customer over a three-year period subsequent to the acquisition date. The maximum cash consideration to be distributed is $73.2 million. Changes in the significant inputs used in the fair value measurement, specifically a change in new and incremental actual and forecasted combined bookings from FourQ and the Company, can significantly impact the fair value of the contingent consideration liability. At June 30, 2024, the related liability for the FourQ Acquisition was zero.

15

Increases and decreases in the fair value of contingent consideration are recorded as expense or reversals of expense, respectively, within general and administrative expenses in the unaudited condensed consolidated statements of operations.

Note 7 – Convertible Senior Notes

2024 Notes

As of June 30, 2024, the Company had $250.0 million aggregate principal amount of our 0.125% Convertible Senior Notes due in 2024 (the “2024 Notes”) outstanding. On August 1, 2024, the scheduled maturity date of the 2024 Notes, the Company repaid the total outstanding $250.0 million aggregate principal amount of the 2024 Notes with cash on hand. Refer to Note 15 - “Subsequent Events,” for further discussion on the repayment. As of June 30, 2024, the 2024 Notes consisted of the following (in thousands):

	June 30, 2024		December 31, 2023
Liability:
Principal	$	250,000	$	250,000
Unamortized debt issuance costs	(112)		(767)
Net carrying amount(1)	$	249,888	$	249,233

(1) Net carrying amount as of June 30, 2024 presented within total current liabilities on the condensed consolidated balance sheet.

The effective interest rate of the 2024 Notes, excluding the conversion option, was 0.65%.

The Company carried the 2024 Notes at face value less unamortized debt issuance costs on the accompanying condensed consolidated balance sheets and presents the fair value for disclosure purposes only. The estimated fair value was determined based on the actual bids and offers of the 2024 Notes in an over-the-counter market on the last trading day of the period. The estimated fair value of the 2024 Notes, based on a market approach at June 30, 2024, was approximately $226.9 million, which represents a Level 2 valuation.

During the quarter ended June 30, 2024, the Company recognized $0.3 million of interest expense related to the amortization of debt issuance costs and $0.1 million of coupon interest expense. During the quarter ended June 30, 2023, the Company recognized $0.3 million of interest expense related to the amortization of debt issuance costs and $0.1 million of coupon interest expense.

During the six months ended June 30, 2024, the Company recognized $0.7 million of interest expense related to the amortization of debt issuance costs and $0.2 million of coupon interest expense. During the six months ended June 30, 2023, the Company recognized $0.6 million of interest expense related to the amortization of debt issuance costs and $0.2 million of coupon interest expense. 

The 2024 Notes were convertible at June 30, 2024 and remained convertible until the close of business on the second scheduled trading day immediately preceding the maturity date.

In connection with the offering of the 2024 Notes, the Company entered into privately negotiated capped call transactions (the “2024 Capped Calls”). There have been no changes to the condition of the 2024 Capped Calls since December 31, 2023, and the 2024 Capped Calls were still outstanding as of June 30, 2024.

2026 Notes

In connection with the issuance of the 2029 convertible senior notes in May 2024 (see “2029 Notes” below), the Company used approximately $662.6 million of the net proceeds from the offering of the 2029 Notes, as well as liquid investments on hand of $185.9 million to repurchase $919.8 million aggregate principal amount of the outstanding 2026 Notes (the “2026 Notes”). The difference between the consideration paid and the carrying value of the repurchased 2026 Notes, inclusive of any unamortized debt issuance costs, was recognized as a gain on extinguishment of $65.1 million in other income in the unaudited condensed consolidated statement of operations for the quarter and six months ended June 30, 2024.

As of June 30, 2024, the Company had $230.2 million aggregate principal amount of our 0.00% 2026 Notes outstanding. The 2026 Notes consisted of the following (in thousands):

16

	June 30, 2024		December 31, 2023
Liability:
Principal	$	230,196	$	1,150,000
Unamortized debt issuance costs	(1,457)		(9,392)
Net carrying amount	$	228,739	$	1,140,608

The effective interest rate of the 2026 Notes, excluding the conversion option, was 0.37%.

The Company carries the 2026 Notes at face value less unamortized debt issuance costs on the accompanying condensed consolidated balance sheets and presents the fair value for disclosure purposes only. The estimated fair value was determined based on the actual bids and offers of the 2026 Notes in an over-the-counter market on the last trading day of the period. The estimated fair value of the 2026 Notes, based on a market approach at June 30, 2024, was approximately $210.8 million, which represents a Level 2 valuation.

During the quarter and six months ended June 30, 2024 the Company recognized interest expense related to the amortization of debt issuance costs of $0.7 million and $1.8 million, respectively. During the quarter and six months ended June 30, 2023, the Company recognized interest expense related to the amortization of debt issuance costs of $1.1 million and $2.1 million, respectively.

The 2026 Notes were not convertible at June 30, 2024. It is the Company’s current intent to settle conversions of the 2026 Notes through “combination settlement”, which involves repayment of the principal portion in cash and any excess of the conversion value over the principal amount in shares, cash, or a combination for any further value.

In connection with the offering of the 2026 Notes, the Company entered into privately negotiated capped call transactions (the “2026 Capped Calls”). Apart from the partial extinguishment, there have been no changes to the condition of the 2026 Notes since December 31, 2023, and the 2026 Capped Calls were unchanged and still outstanding as of June 30, 2024.

2029 Notes

On May 24, 2024 and June 5, 2024, the Company issued $600.0 million aggregate principal amount, and additional aggregate principal amount in connection with the initial purchasers’ option of $75.0 million, respectively, of 1.00% Convertible Senior Notes due 2029 (the “2029 Notes” and, together with the 2024 Notes and the 2026 Notes, the “Notes”), in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933 (the “Securities Act”). The 2029 Notes were sold to the initial purchasers pursuant to an exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act. The 2029 Notes were issued pursuant to an indenture (the “2029 Indenture”), by and between the Company and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).

Interest on the 2029 Notes is payable semi-annually in cash at a rate of 1.00% per annum on June 1 and December 1 of each year, beginning on December 1, 2024. The 2029 Notes will mature on June 1, 2029, unless redeemed, repurchased, or converted prior to such date in accordance with their terms.

The initial conversion rate of the 2029 Notes is 14.6047 shares of common stock per $1,000 principal amount of the 2029 Notes, equivalent to an initial conversion price of approximately $68.47 per share of common stock.

The conversion rate is subject to adjustment for certain events. Upon conversion, the Company will pay, or deliver, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election. It is the Company’s current intent to settle conversions of the 2029 Notes through “combination settlement”, which involves repayment of the principal portion in cash and any excess of the conversion value over the principal amount in shares, cash, or a combination for any further value.

Prior to the close of business on the business day immediately preceding March 1, 2029, the 2029 Notes will be convertible only under the following circumstances:

(1)    during any calendar quarter commencing after the calendar quarter ending on September 30, 2024, and only during such calendar quarter, if the last reported sale price of the Common Stock for at least 20 trading days (whether or not consecutive) in a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2029 Notes on each applicable trading day;

17

(2)    during the five business-day period after any five consecutive trading-day period in which the trading price per $1,000 principal amount of 2029 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Common Stock and the conversion rate on each such trading day;

(3)    if the Company calls any or all of the 2029 Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or

(4)    upon the occurrence of specified corporate events set forth in the 2029 Indenture.

If the Company undergoes a fundamental change, as described in the 2029 Indenture, prior to the maturity date, holders may require the Company to repurchase all or a portion of the 2029 Notes for cash at a price equal to 100% of the principal amount of the 2029 Notes to be repurchased, plus any accrued and unpaid special interest, if any, to, but excluding, the fundamental change repurchase date.

The 2029 Notes are the Company’s senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2029 Notes; equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of current or future subsidiaries of the Company.

The 2029 Indenture contains customary events of default with respect to the 2029 Notes and provides that upon certain events of default occurring and continuing, the Trustee may, and the Trustee at the request of holders of at least 25% in principal amount of the 2029 Notes shall, declare all principal and accrued and unpaid interest, if any, of the 2029 Notes to be due and payable. In case of certain events of bankruptcy, insolvency or reorganization, involving the Company, all of the principal of, and accrued and unpaid interest on the 2029 Notes will automatically become due and payable.

The 2029 Notes consisted of the following (in thousands):

	June 30, 2024		December 31, 2023
Liability:
Principal	$	675,000	$	—
Unamortized debt issuance costs	(12,760)		—
Net carrying amount	$	662,240	$	—

The effective interest rate of the 2029 Notes, excluding the conversion option, was 1.40%.

The Company carries the 2029 Notes at face value less unamortized debt issuance costs on the accompanying condensed consolidated balance sheets and presents the fair value for disclosure purposes only. The estimated fair value was determined based on the actual bids and offers of the 2029 Notes in an over-the-counter market on the last trading day of the period. The estimated fair value of the 2029 Notes, based on a market approach at June 30, 2024, was approximately $653.2 million, which represents a Level 2 valuation.

During the quarter and six months ended June 30, 2024 the Company recognized $0.3 million and $0.7 million of coupon interest expense related to the amortization of debt issuance costs.

The 2029 Notes were not convertible at June 30, 2024.

In connection with the offering of the 2029 Notes, the Company entered into capped call transactions (the “2029 Capped Calls” and together with the 2024 and 2026 Capped Calls, the “Capped Calls”) with certain counterparties at a cost of approximately $59.7 million, which was recorded as a reduction of the Company’s additional paid-in capital in the accompanying unaudited condensed consolidated financial statements.

Under the 2029 Capped Calls, the Company purchased capped call options that initially cover in the aggregate the total number of shares of the Company’s common stock that initially underlie the 2029 Notes, with an exercise price equal to the initial conversion price of the 2029 Notes, and a cap price of $92.17 per share of common stock, subject to certain adjustments under the terms of the 2029 Capped Calls.

By entering into the 2029 Capped Calls, the Company expects to reduce the potential dilution to its common stock upon any conversion of the 2029 Notes (or, in the event a conversion of the 2029 Notes is settled in cash, to reduce its cash payment obligation) in the event that at the time of conversion of the 2029 Notes, the market value

18

per share of its common stock exceeds the conversion price of the 2029 Notes, with such reduction subject to the cap price.

The cost of the 2029 Capped Calls is not expected to be tax deductible as the Company did not elect to integrate the 2029 Capped Calls into the 2029 Notes for tax purposes.

Note 8 – Restructuring Costs

The liability for the fiscal 2023 and 2022 restructuring programs was included in accrued expenses and other current liabilities in the condensed consolidated balance sheet, and the following tables summarize the related activity for the respective plans for the quarter and six months ended June 30, 2024 (in thousands):

	Quarter Ended June 30, 2024
	Restructuring Program
	Fiscal 2023		Fiscal 2022		Total
Accrual balance as of March 31, 2024	$	624	$	3	$	627
Restructuring charges	928		—		928
Cash payments and adjustments	(756)		(3)		(759)
Accrual balance as of June 30, 2024	$	796	$	—	$	796

	Six Months Ended June 30, 2024
	Restructuring Program
	Fiscal 2023		Fiscal 2022		Total
Accrual balance as of December, 31, 2023	$	1,562	$	7	$	1,569
Restructuring charges	1,372		—		1,372
Cash payments and adjustments	(2,138)		(7)		(2,145)
Accrual balance as of June 30, 2024	$	796	$	—	$	796

All plan adjustments were changes in estimates whereby increases and decreases in charges were generally recorded to operating expenses in the periods of adjustments.

As of June 30, 2024, the Company incurred cumulative costs of $11.2 million and $5.0 million related to the fiscal 2023 restructuring program and fiscal 2022 restructuring program, respectively. The Company does not anticipate incurring material additional expenses.

Note 9 – Equity Awards

Stock-based compensation expense

Stock-based compensation expense was as follows (in thousands):

	Quarter Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Cost of revenues	$	2,973	$	2,770	$	4,935	$	5,122
Sales and marketing	6,629		6,182		12,423		12,665
Research and development	3,499		3,708		6,350		7,532
General and administrative	9,625		7,288		17,580		15,067
	$	22,726	$	19,948	$	41,288	$	40,386

For the quarters ended June 30, 2024 and 2023, stock-based compensation capitalized as an asset was $1.2 million and $1.0 million, respectively.

For the six months ended June 30, 2024 and 2023, stock-based compensation capitalized as an asset was $2.1 million and $1.8 million, respectively.

Stock options - service-only vesting conditions

The following table summarizes activity for awards that contain service-only vesting conditions (in thousands):

19

Outstanding at December 31, 2023	1,693
Granted	—
Exercised	(131)
Forfeited/canceled	(60)
Outstanding at June 30, 2024	1,502

Restricted stock units - service-only vesting conditions

The following table summarizes activity for restricted stock units that contain service-only vesting conditions (in thousands):

Nonvested at December 31, 2023	2,208
Granted	1,603
Vested	(597)
Forfeited/canceled	(207)
Nonvested at June 30, 2024	3,007

Restricted stock units - performance and service conditions

The following table summarizes activity for restricted stock units with performance and service vesting conditions with grant dates established (in thousands):

Nonvested at December 31, 2023	113
Granted	206
Performance adjustment	(62)
Vested	(51)
Forfeited/canceled	(8)
Nonvested at June 30, 2024	198

The following table summarizes activity for restricted stock units with performance and service vesting conditions with no grant dates established (in thousands):

Nonvested at December 31, 2023	235
Granted	147
Accounting grant dates established	(133)
Vested	—
Forfeited/canceled	(5)
Nonvested at June 30, 2024	244

Restricted stock units - market and service conditions

The following table summarizes activity for restricted stock units with market and service-based conditions (in thousands):

Nonvested at December 31, 2023	—
Granted	202
Vested	—
Forfeited/canceled	—
Nonvested at June 30, 2024	202

Note 10 – Income Taxes

In determining quarterly provisions for income taxes, the Company uses the annual estimated effective tax rate applied to the actual year-to-date income (loss), adjusted for discrete items arising in that quarter. The Company’s annual estimated effective tax rate differs from the U.S. federal statutory rate of 21% primarily as a result of state taxes, foreign taxes, and changes in the Company’s valuation allowance for income taxes.

20

For the quarters ended June 30, 2024 and 2023, the Company recorded $4.3 million and $0.9 million in income tax expense, respectively. For the six months ended June 30, 2024 and 2023, the Company recorded $5.2 million and $1.6 million in income tax expense, respectively. The increase in income tax expense for both the quarter and six months ended June 30, 2024 compared to the quarter and six months ended June 30, 2023, resulted primarily from $3.0 million tax expense associated with the gain on the partial extinguishment of the 2026 Notes, along with changes in the mix of profitable foreign jurisdictions.

For purposes of calculating its income tax attributed to continuing operations, the Company continued to maintain a full valuation allowance on its U.S. federal and state net deferred tax assets as it was more likely than not that those deferred tax assets will not be realized. However, given the Company's recent earnings, the Company believes that there is a reasonable possibility that, in the near term, sufficient positive evidence may become available that supports the release of a portion of the Company's valuation allowance, which would result in the recognition of certain U.S. deferred tax assets and a decrease to income tax expense for the period in which the release is recorded. The exact timing and amount of the valuation allowance release would be subject to change based on the level of profitability that the Company can achieve.

Note 11 – Net Income per Share

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share amounts):

	Quarter Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Basic net income per share
Numerator:
Net income attributable to BlackLine, Inc.	$	76,690	$	30,849	$	87,519	$	18,841
Denominator:
Weighted average shares	61,979		60,700		61,811		60,445
Basic net income per share attributable to BlackLine, Inc.	$	1.24	$	0.51	$	1.42	$	0.31
Diluted net income per share
Numerator:
Net income attributable to BlackLine, Inc.	$	76,690	$	30,849	$	87,519	$	18,841
Interest expense, net of taxes	1,707		1,458		3,101		2,897
Gain on extinguishment of convertible senior notes, net of taxes	(62,147)		—		(62,147)		—
Net income attributable to BlackLine, Inc. for diluted calculation	$	16,250	$	32,307	$	28,473	$	21,738
Denominator:
Weighted average shares	61,979		60,700		61,811		60,445
Dilutive effect of securities	635		777		781		1,032
Dilutive effect of convertible senior notes	9,908		10,324		10,116		10,324
Shares used to calculate diluted net income per share	72,522		71,801		72,708		71,801
Diluted net income per share attributable to BlackLine, Inc.	$	0.22	$	0.45	$	0.39	$	0.30

21

The weighted average impact of potentially dilutive securities that were excluded from the diluted per share calculations because they were anti-dilutive were as follows (in thousands):

	Quarter Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Stock options - service-only vesting conditions	511	695	350	1,532
Restricted stock units - service-only vesting conditions	2,478	2,330	1,926	2,335
Restricted stock units - performance and service conditions	64	—	36	32
Restricted stock units - market and service conditions	181	—	103	—
Restricted stock units - performance, market, and service conditions	—	139	—	147
Total shares excluded from net income per share	3,234	3,164	2,415	4,046

For the quarter and six months ended June 30, 2024, the Capped Calls impact the number of shares that may be issued, up to approximately 4.7 million shares, 2.0 million shares, and 12.8 million for the 2024 Notes, 2026 Notes, and 2029 Notes, respectively, if certain corporate events occur prior to the maturity dates or if the Company issues a notice of redemption.

For the quarter and six months ended June 30, 2023, the Capped Calls impact the number of shares that may be issued, up to approximately 4.7 million shares and 9.9 million shares for the 2024 Notes and 2026 Notes, respectively, if certain corporate events occur prior to the maturity dates or if the Company issues a notice of redemption.

Note 12 – Commitments and Contingencies

Litigation—From time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. The Company is not currently a party to any legal proceedings, nor is it aware of any pending or threatened litigation that would have a material adverse effect on the Company’s business, operating results, cash flows, or financial condition should such litigation be resolved unfavorably.

Indemnification—In the ordinary course of business, the Company may provide indemnification of varying scope and terms to customers, vendors, investors, directors, and officers with respect to certain matters, including, but not limited to, losses arising out of its breach of such agreements, services to be provided by the Company, or from intellectual property infringement claims made by third parties. These indemnification provisions may survive termination of the underlying agreement and the maximum potential amount of future payments the Company could be required to make under these indemnification provisions may not be subject to maximum loss clauses. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is indeterminable. The Company has never paid a material claim, nor has it been sued in connection with these indemnification arrangements. At June 30, 2024 and December 31, 2023, the Company has not accrued a liability for these indemnification arrangements because the likelihood of incurring a payment obligation, if any, in connection with these indemnification arrangements was not probable or reasonably estimable.

Note 13 – Unearned Revenue and Performance Obligations

Revenue totaling $217.5 million and $195.2 million was recognized during the six months ended June 30, 2024 and 2023, respectively, that was previously included in the deferred revenue balance at December 31, 2023 and 2022, respectively.

Contracted but unrecognized revenue was $847.8 million at June 30, 2024, of which the Company expects to recognize approximately 57% over the next 12 months and the remainder thereafter.

Note 14 – Geographic Information

The Company disaggregates its revenue from contracts with customers by geographic location, as it believes it best depicts how the nature, amount, timing, and uncertainty of its revenues and cash flows are affected by economic factors.

The following table sets forth the Company’s revenues by geographic region (in thousands):

22

	Quarter Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
United States	$	112,836	$	104,052	$	224,243	$	204,064
International	47,670		40,522		93,724		79,494
	$	160,506	$	144,574	$	317,967	$	283,558

Note 15 – Subsequent Events

On August 1, 2024, the Company repaid the total outstanding $250.0 million aggregate principal amount and related $0.2 million of accrued interest pursuant to the terms of the 2024 Notes with existing cash on hand. Upon repayment, the 2024 Capped Calls expired.

23

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with the financial statements and related notes that are included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 23, 2024 (“Annual Report on Form 10-K”). This discussion contains forward-looking statements based upon current plans, expectations and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, those discussed in the section entitled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.

Overview

We have created comprehensive cloud-based solutions designed to transform and modernize accounting and finance operations for midsize and enterprise organizations in all industries globally. Our secure, scalable solutions transform critical processes, including financial close, intercompany, invoice-to-cash, and consolidation. By introducing software that unifies critical data and enables process orchestration and automation, we empower accounting and finance professionals to improve the integrity of their financial reporting, reduce time spent on manual work, accelerate cash flows, and redeploy resources to focus on analysis and business partnership.

At June 30, 2024, we had 396,366 individual users across 4,435 customers. Additionally, we continue to build strategic relationships with technology vendors, professional services firms, business process outsourcers, and resellers.

We are a holding company and conduct our operations through our wholly-owned subsidiary, BlackLine Systems, Inc. (“BlackLine Systems”). On September 3, 2013, we acquired BlackLine Systems, and outside investors acquired a controlling interest in us, which we refer to as the “2013 Acquisition.” The 2013 Acquisition was accounted for as a business combination under GAAP and resulted in a change in accounting basis as of the date of the 2013 Acquisition.

Our cloud-based solutions include Account Reconciliations, Transaction Matching, Task Management, Financial Reporting Analytics, Journal Entry, Variance Analysis, Compliance, Smart Close for SAP, BlackLine Cash Application, Credit & Risk Management, Collections Management, Disputes & Deductions Management, Team & Task Management, AR Intelligence, Electronic Invoicing & Payments, Intercompany Create, Intercompany Balance and Resolve, and Intercompany Net and Settle. These solutions are offered to customers as scalable solutions that support critical record-to-report and invoice-to-cash processes.

We derived approximately 95% of our revenue from subscriptions to our cloud-based software platform and approximately 5% from professional services for the six months ended June 30, 2024. Our subscription contracts have initial non-cancellable terms of one year to three years with renewal options. The majority of new contracts in 2023 and during the six months ended June 30, 2024 had an initial term of three years. We price our subscriptions based on a number of factors, primarily the number of users having access to the products and the number of products purchased by the customer. We typically invoice customers annually in advance for subscriptions, which is initially recorded as deferred revenue and recognized ratably over the term of the customer contract. The first year of subscription fees are typically payable within 30 days after execution of a contract, and thereafter upon renewal.

Professional services consist primarily of implementation and consulting services. With the exception of our intercompany accounting solutions acquired from FourQ, our product offerings are available for immediate use on our platform after granting access to a new customer. We typically help customers implement our solutions, and we also provide consulting services to help customers optimize the use of our products. We invoice customers for our consulting services on a time-and-materials basis and recognize that revenue as services are performed. A limited number of our customers are provided professional services for a fixed fee which we invoice in advance and is initially recorded as deferred revenue and recognized on a proportional-performance basis as the services are rendered.

We sell our solutions primarily through our direct sales force, which leverages our relationships with technology vendors, professional services firms and business process outsourcers. In particular, our solution integrates with SAP’s enterprise resource planning (“ERP”) solutions, and SAP is part of the reseller channel that we use in the ordinary course of business. SAP has the ability to resell our solutions as SAP solution-extensions (“SolEx”), for which we receive a percentage of the revenues. We also have an agreement with Google Cloud in which we collaborate with them on joint selling and go-to-market activities and bring enhanced automation solutions for finance and accounting to new and existing customers.

24

Our ability to maximize the lifetime value of our customer relationships will depend, in part, on the willingness of customers to purchase additional user licenses and products from us. We rely on our sales and customer success teams to support and grow our existing customers by maintaining high customer satisfaction and educating customers on the value all our products provide.

The length of our sales cycle depends on the size of a potential customer and contract, as well as the type of solution or product being purchased. The sales cycle for our global enterprise customers is generally longer than that of our midsize customers. In addition, the length of the sales cycle tends to increase for larger contracts and for more complex, strategic products like Intercompany Financial Management. As we continue to focus on increasing our average contract size and selling more strategic products, we expect our sales cycle to lengthen and become less predictable, which could cause variability in our results for any particular period.

We have historically signed a high percentage of agreements with new customers, as well as renewal agreements with existing customers, in the fourth quarter of each year and usually during the last month of the quarter. This can be attributed to buying patterns typical in the software industry. As the terms of most of our customer agreements are measured in full year increments, agreements initially entered into during the fourth quarter or last month of any quarter will generally come up for renewal at that same time in subsequent years. This seasonality is reflected in our revenues, though the impact to overall annual or quarterly revenues is minimal due to the fact that we recognize subscription revenue ratably over the term of the customer contract.

For the quarters ended June 30, 2024 and 2023, we had revenues totaling $160.5 million and $144.6 million, respectively. We generated net income attributable to BlackLine, Inc. of $76.7 million and $30.8 million for the quarters ended June 30, 2024 and 2023, respectively.

For the six months ended June 30, 2024 and 2023, we had revenues totaling $318.0 million and $283.6 million, respectively. We generated net income attributable to BlackLine, Inc. of $87.5 million and $18.8 million for the six months ended June 30, 2024 and 2023, respectively.

Global Macroeconomic Factors

Our operating results may vary based on the impact of changes in our industry or the global economy on us or our customers. General macroeconomic conditions, such as a recession, inflation or rising interest rates, an economic downturn in the United States (“U.S.”) or internationally, adverse business conditions and liquidity concerns, or bank failures or instability in the financial services sector, has and could continue to adversely affect demand for our products and make it difficult to accurately forecast and plan our future business activities. In recent quarters, as a result of economic uncertainty, we have seen customers delay and defer purchasing decisions, which has adversely impacted our near-term demand.

Key Metrics

We regularly review a number of metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections, and make strategic decisions.

	Jun. 30, 2023		Sep. 30, 2023		Dec 31, 2023		Mar. 31, 2024		Jun. 30, 2024
Dollar-based net revenue retention rate	106	%	105	%	106	%	105	%	104	%
Number of customers	4,279		4,368		4,398		4,411		4,435
Number of users	377,585		381,892		386,814		387,050		396,366

Dollar-based net revenue retention rate. We believe that dollar-based net revenue retention rate is an important metric to measure the long-term value of customer agreements and our ability to retain and grow our relationships with existing customers over time. We calculate dollar-based net revenue retention rate as the implied monthly subscription and support revenue at the end of a period for the base set of customers from which we generated subscription revenue in the year prior to the calculation, divided by the implied monthly subscription and support revenue one year prior to the date of calculation for that same customer base. This calculation does not reflect implied monthly subscription and support revenue for new customers added during the one-year period but does include the effect of customers who terminated during the period. We define implied monthly subscription and support revenue as the total amount of minimum subscription and support revenue contractually committed to, under each of our customer agreements over the entire term of the agreement, divided by the number of months in the term of the agreement. At June 30, 2024, our dollar-based net revenue retention rate marginally declined from the quarter ended March 31, 2024 due to attrition. Our ability to maximize the lifetime value of our customer

25

relationships will depend, in part, on the willingness of the customer to purchase additional user licenses and products from us. We rely on our customer success and sales teams to support and grow our existing customers by maintaining high customer satisfaction and educating the customer on the value all our products provide.

Number of customers. We believe that our ability to expand our customer base is an indicator of our market penetration and the growth of our business. We define a customer as a company that contributes to our subscription and support revenue as of the measurement date. In situations where an organization has multiple subsidiaries or divisions, each entity that is invoiced as a separate entity is treated as a separate customer. However, where an existing customer requests its invoice be divided for the sole purpose of restructuring its internal billing arrangement without any incremental increase in revenue, such customer continues to be treated as a single customer. For the quarters and six months ended June 30, 2024 and 2023, no single customer accounted for more than 10% of our total revenues.

Number of users. Since our customers generally pay fees based on the number of users of our platform within their organization, we believe the total number of users is an indicator of the growth of our business. While the fees for the majority of the products we sell are user-based, we are seeing an increasing volume of transactions for our non-user based strategic products, such as eInvoicing & Payments, Transaction Matching, Intercompany, and BlackLine Cash Application.

Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we believe the non-GAAP measures below are useful to us and our investors in evaluating our business. These non-GAAP financial measures are useful because they provide consistency and comparability with our past performance, facilitate period-to-period comparisons of operations and facilitate comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.

	Quarter Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in thousands, except percentages)
GAAP gross profit	$	120,158	$	107,458	$	238,522	$	211,171
GAAP gross margin