Oppenheimer Takes Wait-And-See Approach To BlackLine - BlackLine (NASDAQ:BL)

BlackLine Inc BL reported first-quarter revenue and EPS ahead of expectations Thursday and raised its full-year guidance.

Billings continued to underwhelm in the quarter due to few new customer wins, decelerating domestic growth and declining SAP channel contributions, indicating that the company’s go-to-market strategies are still ramping, according to Oppenheimer.

This implies risk to estimates, the sell-side firm said Friday.

The Analyst

Koji Ikeda maintained a Perform rating on BlackLine.

The Thesis

BlackLine reported first-quarter total revenue of $64.1 million, representing 25-percent year-on-year growth and beating the consensus estimate by about $800,000.

PF EPS came in at 2 cents, 3 cents higher than the consensus expectation, Ikeda said in the Friday note. (See his track record here.)

The company announced second-quarter total revenue guidance of $67.4-$68.4 million, the midpoint of which is marginally higher than the consensus estimate of $67.6 million.

BlackLine guided to PF EPS of breakeven to 3 cents against a consensus projection of 2 cents.

The company raised its 2019 total revenue and PF EPS guidance by $1 million to $276-$281 million and by 1 cent to 15-18 cents, respectively. The midpoint of both are marginally higher than the consensus expectations, the analyst said.

While BlackLine recorded strong international sales in the first quarter; inked a record win in the Europe and Middle East region; witnessed good strategic product attach rates; and accelerated non-SAP revenue growth to 20 percent, billings were disappointing, Ikeda said.

The company also indicated a potential rise in competition in the category, which could result in elongated sales cycles, according to Oppenheimer.

Price Action

BlackLine shares were down 6.15 percent at $50 at the time of publication Friday.

Oppenheimer Optimistic On BlackLine's Growth Strategy, Market Positioning

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