BlackLine, Inc. (BL) Earnings Call Transcript & Summary

All right. Thanks, everybody, for coming today. Appreciate you coming and taking time out of your day. I know it's a busy week with a lot of different events going on. So having you here, we appreciate you joining us. Just to give you a quick summary of what you'll see today in our investor session. A lot of similar themes that we talked about earlier on the main stage. You're going to have Owen up here for a few minutes. But really, the core of the discussion is going to be around product and tech with Jeremy as well as our Head of Product, Charlie, and then go-to-market with Stuart, who I know some of you have seen, but maybe not met before. So a really good opportunity to see and listen to his story. And then as we kind of finish up the day, we're going to have Patrick Villanova on stage to give a quick financial update. We'll take a quick break. We're going to reset the stage. We're also going to play our Verity prepare video as well. I know a lot of you saw that already today. But for those listening at home, they may not have had the opportunity. So we'll play that, and then we'll do a short Q&A panel at the end, and then we'll conclude the day, and then we can go next door and chat a little bit more. So that's what we're doing today. As most investor sessions, investor days go, this is our safe harbor. We may be making some forward-looking statements today. Risk factors are found in our filings with the SEC, the Form 10-Ks or 10-Qs. If you have any questions, please take a look at those. Otherwise, I'm going to turn it over to Owen Ryan, our CEO, who's going to kick us off. Owen?

Thank you for being here. And listen, for the investors and the analysts, we do really appreciate the interest that you have in BlackLine following us and supporting us, giving us feedback. It's just been terrific. I'd like to listen to all sources of input to try to figure out how we should be thinking about the organization. And so we certainly appreciate that, all of the things that you do for us. What I really wanted to try to do is just give a short update from where we were in November to where we are today. As we mentioned, BlackLine was really going into what we called our platform era as we move to Studio 360. And then a lot of our focus really has been around execution. If you think about the last 2 years, a little over 2 years now with Therese and myself, we spent a lot of time trying to figure out the strategic direction of the company, how we would operate the company, building the leadership team and then really focusing on the execution of that. And so we are really in the throes of execution at this particular point in time. And then obviously, we're going to sort of end my piece with AI as we turn it over to Jeremy and talk about how we see that as an opportunity. For those of you who have gotten to know me pretty well at this particular point in time, I take a lot of pride in what BlackLine has accomplished, but I'm actually never satisfied. And we tried to build that into the team here, which is, look, we should feel good about the things we're getting done, but there's no resting. In fact, we recognize that we got to keep working harder and faster for what we're trying to do. We talked over last November about the things we started to need to do within the go-to-market model. Obviously, bringing in Stuart was a big piece of that. But what we're starting to see and driving is -- are the things we would say -- said we would do, landing much larger deals, much more strategic companies. The pipeline is growing exponentially. But more importantly, it's a real pipeline. It's not pipeline that just gets created and throw something and hope something sticks. We're being very selective about what we pursue and how we figure out where we're going in the marketplace. We rolled out the pricing initiative, still early stages, but a lot of good progress that's coming out of that. And obviously, things like we said we would do in public sector, had our first big win. Any second now, we should be on the federal marketplace. We keep wondering why it's not up there, but it's coming. A really big thing that we have focused on as an organization in the last couple of years is being partner powered. There's no way a company of our size, scale can cover the globe without having really the best partners in the world. If you'll forgive me, I am a DieHard Yankees fan. My Board member is a diehard L.A. Dodger fan, so I'm still not past last year's world series. But the important thing is we tried to build a partner roster that looks like the 1927 Murderers' Row. So the who's who, best baseball players of all time, in my view, that really can help drive and help BlackLine punch above its weight. And you saw that in some of the wins that we've announced, some of the things that we have shared that they're doing with us. They are helping influence and shape our direction as an organization, and that's really mattered a lot. We've talked a lot over the last couple of years about SAP. And you would have seen that if you were in the audience this morning around again, how that relationship keep getting stronger as we move forward. And that's not going to stop. Once we got to that golden architecture and being able to be in the market together, that was a really critical next step in the evolution of that relationship. And we know that, that's not going to end anytime soon. From an innovation perspective, I won't get into all of it because Jeremy is going to cover a lot of it. But what we understand is that we have to innovate based upon what our customers want. And all the things that Therese should be particularly proud of over the last 2 years is getting this company's focus back on innovation and innovation that mattered in the marketplace. What did our customers want? We just hosted a a luncheon for our Executive Advisory Board. So a bunch of Chief Accounting Officers, some CFOs, and they talked a lot in that session about how we're listening better. In fact, in the audience was an executive from Exxon, who talked about the operational reconciliation tool that we've got in the marketplace. That was their idea co-created with BlackLine. So you're seeing good things like that, continuing to drive through industry and then operational excellence. Obviously, we need to keep driving top line and bottom line performance. Some people say you can only have one or the other. I actually think we can drive both on behalf of our shareholders, and we certainly are looking to do that. Things that we said we would get done, the cloud migration, any second now, that should be done, driving quicker time to value, ultimately, I say it all the time, we're not in the business of selling software. I know that's what you guys evaluate us on. But we're in the business of delivering outcomes for our customers and driving that quicker time to value. If you heard Therese's remarks this morning, she talked about finance being the shoemakers kids. And so what we recognized in the world is if we don't figure out a way to get shoes on the shoemakers kids, we're not going to be successful. And so that's really what we've been trying to figure out, how do we drive quicker, more meaningful ROI for our customers so that, that business case is so compelling. There's no way you would ever want to defer it. So those are the things that we said we would do. We promised you we do those. We're continuing to try to drive that. You won't see any let up in that at all. Relentless execution, maniacal execution is really critical for any business. And I think that, that's a big part of the way BlackLine is operating today. every CEO you guys probably listen to tells you about how great the opportunity of AI is. And in some ways, they're probably really worried about the disruptive force that's there. What we believe is that actually when you think about the position we play in the office of the CFO, that the ability to combine our platform with the infrastructure that protects the data of our customers, that ability to continue to innovate. And then when you combine domain expertise with industry expertise, that really does make a difference for our customers. But importantly, if you listen this morning and you'll listen now, it's not just that we have all that. We do this through the eyes and the ears and the feedback of the biggest accounting and auditing firms in the world, right? They have to rely on things that BlackLine doesn't. So how do we go through that together on our behalf -- not on our behalf, but they talk to the regulators, what's going to work, what's not in this world, right? So everybody is worried somebody is going to create an agent and it's going to be able to reconcile something, it's probably true. But who's going to rely on it if you're in a management team and sign off on it, who from your auditing firm is going to sign off on that? And then what regulator, whether it's the PCOB or the SEC or the International Auditing Standards Board is going to accept that kind of work without understanding what it is. If you let everybody running all over the place creating agents and things of that nature, imagine what your audit costs are going to be if you don't have that through one platform and one controlled environment and things that truly matter. So we look at this as we've moved forward, and thought about AI, we just thought about it in the sense of AI had to be embedded into this Studio 360 platform. It had to be embedded into our solutions because AI on its own isn't the product. If you remember, if you're old enough, the BASF commercials, they didn't make the product, they made the product better. The way we thought about AI is, in fact, through the idea of how do we make the BlackLine platform and solutions better, more reliable, more trustworthy for our customers. Because if you're sitting there and you're a CFO, you could talk about zero tolerance. Patrick will get up here in a few minutes. He likes to say, 95% right doesn't do you any good, right? There's 100% wrong. So you can have no mistakes because you don't want to wind up with -- if you're a CFO, you don't want to have journal entries that need to be booked that are found by the auditors. You don't want to have a material weakness. You want to have a significant deficiency. Our God worse, you get a restatement. Those are the things that they can have. They know they have to have complete auditability, right? The fact that when somebody comes in and says you need to sign this rep letter that says the financial statements have been prepared in a certain way, the internal control structure worked in a certain way, you need to have that. And then you think about protecting the capital markets. One of the things I'd love to sort of brag about is I think as of this year, there's roughly $40 trillion of market cap that runs on BlackLine every day. That's a pretty important role in the capital markets, at least from my vantage point. Most people wouldn't think of us that way, but that reliability and helping to sort of protect the integrity of the capital markets is something that we take very seriously with our customers. Again, I've talked about our AI framework already, really trying to get the best and leading brands from the leading firms about what will and won't be accepted when you think about financial close, consolidation, reporting, things of that nature, it had to be there. And they've told us over and over again, you could not do this in a black box. It will not work. The management teams won't sign off. We as the auditors won't sign off and certainly, the regulators won't sign off. So you think about that. And so we've gone through all that, and we built our whole platform around the concept of data integrity. And Jeremy has talked about that a lot. Therese has talked about that. Data is the new currency. I think we really understood that and embrace that in everything we've done. Obviously, the release of Verity is now out there. But again, I think the things that I remember when I met Therese the first time and BlackLine slogan was trust is in the balance. And as long as I've known her and as long as this company has been around, it's always about trust. And that is the role that BlackLine plays in the office of the CFO. It's the reason we named Verity what we did because we knew we needed to be trustworthy. We needed -- we knew everything needed to be auditable, and we knew it needed to be accurate. And so that's sort of the genesis of how we got to where we got to. And with that, I'd really like to bring up Jeremy Young, our Chief Technology Officer, to take you through much more of this. So thank you very much for your attention.

Thank you, Owen. It's bright up here. Thank you, Owen, for the introduction, Chief Technology Officer at BlackLine. I spent a lot of time thinking about how to make our technology serve the office of the CFO. And to really reiterate -- what are we doing here? Our goal is to be the platform for the office of the CFO. And I think to really cement this opportunity, we're utilizing data. And we're continuously moving our ability to bring in data from upstream, not just ERPs, but all other systems, source systems as well as unstructured data. And our view is that this is going to create a hub or a platform to allow automation, particularly AI to become increasingly powerful, but also trustworthy, as Owen mentioned, in the CFO office. So Studio 360 was our big announcement last year, and we've continued to build on this platform in the last 9 months since release -- 6, 9 months since release. There's been a lot of validation of this strategy. And I think to go back and just lay the foundation for this, we have to answer why. Why was data. Data is a new currency. Data is critical for automation and AI. We leveraged our partnership with Snowflake to create a scalable data platform. I think what's critical here is what I mentioned, it's not just bringing in data from ERPs. It's about bringing all data. And I think what becomes critical here is when you can bring in things like contracts, supporting documents, it's going to help feed AI to continue to automate activities that are traditionally manual tasks today. And that's why we built an expansive and scalable data platform. Snowflake also allows us to natively scale in the cloud as a scalable data layer. And it's also AI-enabled, playing nicely with large language models and other AI technology from across all cloud hyperscalers and other vendors. In terms of what we've been able to do so far since launch 6 months ago, we have roughly 110 customers on Studio 360. These are split roughly 80%, 20% between our mega enterprise and mid-market customers. So we're seeing some customer pockets indicative of our traditional customer base. The interest is clear that there's a lot of opportunity to automate activities in the office of the CFO through Studio. A great example is we have a customer with over 4,500 manual tasks spread across 103 different entities that they've been able to automate in Studio today. This saved hours or days off their financial close time on top of the savings they are already getting from BlackLine. In fact, across people who have adopted Studio, we're seeing up to 16% reduction in average total financial cycle close time. That's hundreds of hours saved. So the question is, what's next for our platform? And this scalable platform has been foundational in helping us drive greater efficiency. The scalable platform, we have over 75% of our customers running on Snowflake to date. They've actually seen improvements not just in performance and reliability, lower latency and serving up data. But to BlackLine, we've actually been able to reduce our spend, 80% for serving up these reporting use cases for customers on Snowflake. So we're getting increased scale at a reduced cost. And I think that's an exciting thing for us to continue to build on. The other piece, this modern data architecture we've created allows us to do is scale to be more event-driven. In a lot of the conversations I've been having with customers, especially as this conversation extends to the office of the CIO, they are looking to power a digital transformation. And they realize that it's not just about having the right enterprise systems or software, but it's about being able to effectively connect the workflows in a real-time or event-driven manner. We see this a lot in some of the retail use cases or financial services use cases where they're looking to do transaction matching in real time at greater and greater volumes. The rearchitecture of our matching engine on Snowflake has allowed us to scale from 200 million transactions per month to 200 million per day, and that's a fairly conservative estimation in my mind already, and that's roughly already a 3,000% increase in the volumes we've been able to handle. But not just the volumes, our new platform is now able to match more quickly. There's been a 98% reduction in matching times going from 4 hours to 4 minutes for comparable volumes. This is only going to continue to get better as we further optimize and build out this platform. So we have a scalable data layer and event-driven architecture that can harness this and are moving to more real-time use cases. The next piece is how do we make it easier for people to connect data to BlackLine. I talked about the importance of bringing that data in. This is where our ecosystem of connectors comes in. We've partnered with SAP traditionally to build best-of-breed SAP connectors and our Workday connector. They're in early access right now, and we have over 80 customers eager to adopt these connectors. These connectors are not just a connection to a source system like an ERP, but they actually rapidly accelerate time to value. They serve as a templatized implementation standard so that you can connect to the ERP, understand the metadata coming out of them, normalize them to the BlackLine standard. And then once it's normalized, we can utilize this against our standard machine learning models and artificial intelligence to power automation rapidly. That's the power of the platform we've been building. Now I mentioned the CIO office. And I think why it's become increasingly important is the transformation initiative has become co-owned between the CFO and the CIO. And so we've also extended support to the systems that the CIO traditionally works in. With broad API support, we're now able to connect to systems like ServiceNow, Pega, SharePoint and others. Anything with an API, you can now connect to BlackLine. You're not going to necessarily get the same benefit as the bespoke connectors that accelerate time to value, but you get the flexibility of bringing in any data you need. So we're seeing IT organizations look to orchestrate workflows that start -- that are end-to-end. So whether they're triggered from a system like Pega or ServiceNow, BlackLine can respond automatically to process data, whether it's transaction matching use cases or feeding another enterprise system. We are now critical in those workflows for customers that are adopting these studio capabilities. This takes it from a manual task to end-to-end automation, and it's resonating with people looking to digitally transform their workflows. Owen mentioned our cloud migration. And so what's powering our increased speed of innovation, Cloud migration is a key part of this. We're aiming to be complete our cloud migrations by end of the year. We're actually over 95% done our cloud migration to date. And this has allowed us to more rapidly embrace the new technologies of the cloud. This includes AI and machine learning models, but also things like elastic compute services so that we're able to be more effective to scale up, but also -- and scale down when these resources are not needed. This elasticity gives us flexibility and also allows us to now expand to new markets and regions with greater efficiency. A great example of this expansion is with our FedRAMP moderate build-out. We were able to complete the infrastructure build-out in 9 months. And without the cloud technologies, this would have taken longer. And what we've actually been able to do is set the stage for IL4 as well. As part of our FedRAMP moderate build-out, we completed 323 controls roughly 90% of the total required to satisfy both FedRAMP moderate and 90% of the controls required for IL-4. So we're well on our way to satisfying the technical requirements for that market. It's also allowed us to target new markets like KSA at a lower cost. So this cloud infrastructure allows us to expand our reach into new markets and new regulated markets, in particular, at a lower cost and with greater speed. But a lot of focus has been on AI. And so I do want to talk about our foundation and our AI strategy. We are here to deliver future-ready financial operations through Agentic AI. Our aim is to go beyond just automation and to help our customers act -- anticipate, act and decide faster. And so this approach is really an extension of our core philosophy. It's what we've spent a lot of time on our main stage here BeyondTheBlack, talking to our users and our customers about. But it's really foundational that we talk about the foundational application and control layer. Therese and Owen have talked about trust. And we're utilizing BlackLine's existing application and control layer to create a trustworthy framework for AI to operate in. We're already trusted by auditors and regulators in what we're able to do today and the automation that we're able to serve. And so our AI automation and expertise carries through to that. Our AI solutions utilize this application and control layer to be auditable, trustworthy and ultimately indispensable for our customers. I spent some time on stage today talking about how generic AI is dangerous. And what I really mean by this is that ultimately, the blackbox of large language models isn't auditable. You don't understand what data has fed these machine learning models. They're proprietary for the different vendors. And that black box can lead to uncertainty. And so our role is to provide the tools or the framework to make these large language models auditable, deterministic and domain-specific in how they understand finance. This leverages the data we have in BlackLine, the application and control layer that we've built over 20 years and proven with over 50% of the Fortune 100 is trustable and auditable and uses AI and gives it the tools to leverage this to accelerate automation workflows and activities. I think the best example I've given to our users and customers is around new hires. Hiring a new accountant, maybe a college grad, you can't drop them into your business without any context of how your business operates. They need tools, they need governance, they need process, they need supervision. BlackLine acts as that supervision, that control, that framework so that these new hires or AI in this case can be effective in the office of the CFO. So we're able to make large language models like GPT-5, Gemini and others more powerful through the framework we have here at BlackLine. Today, we unveiled Verity Beyond the Black. Verity represents BlackLine's capabilities. It's rooted in the Aladdin word for truth. It's woven throughout all of our products, and it's a core part of BlackLine's platform. And it's our commitment to ensure that we are making trustworthy AI available to the office of the CFO and creating a future where humans and AI workers can be together working as a single team and ultimately elevating the role of finance teams to be more strategic. We also know it's important to not just be AI for AI's sake. So here's our AI in action. Here are the 4 key areas where Verity is delivering value for our customers. First is intelligent insights. Verity transforms raw financial data into strategic, actionable intelligence. This helps teams be more forward-looking and risk aware. A great example of this is when I talked about our insights capabilities with natural language. Verity can help find data easily without needing a BI analyst, an expert in Tableau. Verity helps our users find that information right away. The second area is content generation. Generative AI, that's the name sake, but we excel at using large language models to generate content on behalf of our customers, and it's accelerating their ability to do work. A great example is our financial narratives that we're able to generate using AI. We can distill information down from key documents, supporting evidence and the data to create balance sheet and summary reports. We can draft the narrative summaries for financial statements. We can create footnotes. We can explain variances using the data in BlackLine, all using AI. 50% of our financial reporting and analytics customers already use these capabilities today. Another area that I'm particularly happy about and proud of is Verity Summarize. With Verity Summarize, we're able to turn drafts using AI summaries to generate drafts and descriptions from supporting documents. So any supporting evidence that's in BlackLine, we can summarize for you. We have roughly a 65% acceptance rate of these summaries today. This means that 65% of the drafts and summaries generated by our Verity summarized capability are accepted without human intervention. I think for all of us, we're roughly familiar with code generation tools as being the benchmark for where large language models excel. With code generation, I think industry acceptance rates are roughly 20% to 30%. So we're 2 to 3x the acceptance rate of code generation tools. And so this is only going to continue to improve as advancements in large language models and how we harness them improve our ability to do this work. The next piece is process automation. BlackLine, we've excelled at process automation, whether it's in the matching space or automated journals definitions. We're continuously automating work in the office of the CFO. But we're now layering through Verity new AI capabilities here. Verity Match is our AI-based transaction matching solution. Using AI, we're now able to suggest pass rules on behalf of users to tackle unmatched transactions automatically. This gives teams the ability to scale and handle more complex scenarios without as many people. We also have Agentic experiences that we'll be talking about. Verity goes beyond just simple automation and is also AI agents that can manage complex end-to-end workflows. We're thinking about this as a new digital workforce for finance and accounting. So this is really the future of finance. It's not just automation as a point solution, but it's end-to-end workflows, these agentic experiences. And we've started first with our Verity Prepare and Verity Collect agents. These are agents that our users can customize and control and they can create multiple agents. But to manage this team, we've also been giving our users a new tool, meet Vera. Vera is BlackLine's Agentic supervisor. So what this is, is an agent of agents. So BlackLine's Vera can distribute work to teams of agents, can understand which agent to target for the right task, especially since our agents can span geographies. So for example, if you're a team in Japan or a team in the U.K. or the team in Australia, you can customize and create agents that use your language, locale, preferences, but also the controls that your organization has in terms of access control, data privileges and things like that, all the security controls that a traditional user has. So Vera can navigate that for you. Vera takes away the complexity of having to find the right agent to talk to and distribute the work for our users. To make these agents come to life, we partnered with Google Cloud. We're leveraging the Gemini platform to power our agents using the agent development kit. This agent development kit gives our agents key capabilities, especially agent-to-agent communication. So these aren't just point solution agents that handle a singular task. These agents can work together singular or multiple agents as a team. And so this agge-to-agent protocol allows them to pass on work to the right agent to get the task done. So whether it's summarization, preparation, document collection or other activities, the agents can actually coordinate work through this framework and protocol. And this is powerful if we think about how we're going to build this ecosystem of work in BlackLine. I think there's also further opportunities to extend these agent protocols to partners in the future as well. And we're going to talk about how this work looks like. And so this is an ecosystem of collaboration we're creating in BlackLine through these agents and agentic protocols. And this happens without human intervention. I think part of this story to tie together as well is that our move to the cloud has allowed us to adopt these technologies, whether it's Google Cloud and Gemini, whether it's Anthropic and Claude, whether it's OpenAI and GPT-5, we're always evaluating best-of-breed large language models. and we have a framework to ensure that we can continuously evaluate and leverage them in BlackLine's framework so that whether the best-of-breed models continue to be Gemini or move to a different provider, our system of controls, our framework that we're creating to allow these agents to operate on top of the data we have allows us to benefit from any advancements that we're seeing in the field. This is the view of what the new digital workforce looks like powered by BlackLine. At BeyondTheBlack today, we gave our users and customers a view of a world where finance teams work together with AI agents. And you can see here that we're trying to fill out the different roles within the office of the CFO with agentic capabilities. The differentiator here, though, is that the work is auditable. Each of these agents that does agentic work will be a user in BlackLine. So they have the permissions, the controls and the visibility and auditability that auditors and others will rely on. Here's a peek at Verity Prepare. For those of you who didn't see the video or joining through the webcast, Verity Prepare is our agentic preparation capability. Verity Prepare can pick the accounts to reconcile and can automate the preparation of manual account recs so that our users only need to focus on what's high risk. I think the pieces that are most important here are that we highlight and elevate chain of thought. What this means is our agents document and describe what they're thinking and how they're arriving at their conclusion. They show this to users in the user interface, but they're also using BlackLine's comments audit trail to document and leave an auditable record of work. so any changes are documented, they're reviewable. And so reviewers, supervisors or audit firms will all have a view on what the agents are doing and can trace and trust that work. With Verity Collect, we demoed our capabilities around an AI collection agent and how we're looking to take a low-yield activity and time-consuming task of calling customers around outstanding invoices. We're now putting that work on AI's plate. Our AI agent is able to understand sentiment. It's not just placing the call, but we're also handling how does the user feel? Is the customer responsive? What's their propensity to pay? Are they committing to pay? We're able to follow up with e-mails and craft detailed e-mails and follow-up. And so we're also able to handle a lot of the workflow without a human being involved. But we've also accounted for when a human does need to be involved and handle those exceptions. This allows teams to scale without adding more headcount or capacity. And I think this is critical is that these are the first 2 of our Agentic experiences that we're targeting. As I showed the org chart earlier, we are looking to build and flesh out teams of agents within the office of the CFO, and we're targeting just these 2 to start, but looking for more to come. I think the other key concept we talked about today is our command and control center, which we built in Studio 360. This command and control center is really targeted for CFOs. I think ultimately, we are trying to up-level this conversation to be around the business KPIs. We're helping CFOs to understand where AI agents are able to help them get work done, but also what opportunity remains? How do they further optimize their organization and get more value from BlackLine. We're giving them the tools to see where there are further opportunities to adopt BlackLine capabilities to get greater ROI from our products and increase scale from their teams. I think this is really setting up the stage for our product-led growth motion. We think it's critical that we continue to highlight the capabilities of AI, get our users and executive teams comfortable with these technologies and allow them to adopt this technology in a way that's trustworthy, but can continue to scale. And I think this is really critical in that we're able to now create a world where our finance teams work together with AI, get the comfort around that, but also have the trust that this work is going to be auditable and defensible and trustworthy. And now we're going to have Charlie Gaulke, our Head of Product, come talk more about what we're doing in our road map.

It is bright. Okay. All right. So thank you, Jeremy. So how do Verity and Studio 360 combine together to solidify our vision as the platform for the office of the CFO. In my view, it's actually by becoming the intelligent platform for the office of the CFO. To understand how we will deliver on this mission, I will walk you through our product strategy and our key investment opportunities. What's important is this just isn't a road map of features. This is a blueprint for how we are building the future of finance and accounting. It is a strategy designed for long-term growth. It's designed to solve our customers' biggest challenges, create a competitive moat and drive sustainable long-term growth for our company. It means expanding beyond our leadership of just financial close to become the most critical platform for a modern finance organization. It's about empowering our customers to move beyond historical recordkeeping and into strategic business partners. And it's a vision that solidifies our position as the foundation for intelligent financial operations. So let me walk you through our investment priorities. First, with Studio 360, we are expanding our footprint across the office of the CFO, enabling seamless integrated experiences throughout our platform. Second, we are building differentiated AI at scale to augment our customers' workforce and empower their teams to deliver more value with more efficiency. Next, we are continuing to reinforce our position as best-in-breed in record to report while broadening our capabilities in invoice to cash. And finally, we are ensuring extensibility and frictionless adoption of our entire platform. So let me break down for you what each of these means to our customers and our business. First, our vision requires a platform that can handle the full spectrum of financial operations. That platform is Studio 360. As Jeremy mentioned, it is our engine for expansion across the office of the CFO. We are enabling complex workflow orchestration, allowing our customers to design, automate and manage processes that span the entire finance function. And a key part of this is that it can be owned by the business, not the IT department, which is a critical differentiator compared to other companies in this space. And at the foundation of this is data flexibility. Through our partnership with Snowflake, we are delivering unified self-service dashboards and reporting, giving the customers to unlock deep AI-powered intelligence from their own data. This, combined with our investment in Agentic analytics means happened, it will tell our customers why it happened and what they should do next. Now on to AI. AI is the single most powerful force shaping enterprise software. And our strategy here is what differentiates us apart. We aren't just sprinkling AI features across our platform, we are building differentiated monetizable Agentic AI. Like Jeremy said, we are creating a digital workforce. Our investment in Agentic AI allows us to automate entire end-to-end processes, not just discrete tasks. These are AI agents that can reason, plan and execute complex finance and accounting work. And to manage this, we are building a command and control center, giving CFOs visibility and governance over their human and digital teams. And through these investments in an agent-to-agent ecosystem, we are creating a network effect where our customers and our partners can build on top of the BlackLine platform to truly harness the power of AI. This isn't where we're just making our products better. This is about creating entirely new high-value services that we can monetize, driving new revenue streams. And while we expand, we will not sacrifice our core. We are the leader in record to report, and we are accelerating our investment to stay #1. We are deepening our expertise with a focus on vertical use cases and industry specialization, creating tailored solutions that solve unique challenges of industries like banking, insurance and energy. And our investment in enhanced financial consolidation and reporting ensures we are the only choice for large global enterprises with complex multi-entity structures. And we're continuing to innovate at the core with products like our new AI-powered accruals engine to improve accuracy and reduce manual efforts across the accruals process. These innovations fuel a product-led growth motion, making it easier for our customers to adopt and realize enhanced value from our platform while increasing stickiness across all of BlackLine's products. Invoice to cash represents a large adjacent market opportunity for BlackLine, and we are attacking it with an AI-first strategy. Our first key investment is in AI-powered collection management with an upgraded user experience. We are streamlining workflows and automating one of the most labor-intensive and error-prone processes within the AR cycle. By deploying specialized agents like Verity Collect for voice, e-mail and data analytics, we will transform the collections process, moving from manual intervention to proactive action. This will free up our customer teams to focus on value-added activities and most importantly, accelerate their cash flow. And also, we are engineering a direct path for growth with the expansion of cross-sell into our Record-to-reort installed base. This makes adopting the invoice-to-cash solution a natural next step for the thousands of our existing customers. It's a targeted strategy that turns our installed base into another growth engine. And finally, our investment in robust and comprehensive APIs and task libraries allows our platform to be the central orchestrator for any financial task regardless of what ERP or system it touches. We are building a true ecosystem, a marketplace of blueprints and connectors, making it seamless for customers and partners to build on and integrate with BlackLine. But maybe even most importantly, we are focused on self-service capabilities and accelerating faster time to value. We are building brand-new implementation and optimization agents, which will streamline the onboarding process, reducing implementation times and costs. This frictionless adoption will further accelerate customer acquisition and market penetration. So to bring it all together, our 5 investment priorities form a cohesive mutually reinforcing strategy. They build on our core strengths, extend us into new markets and cement our leadership position within the office of the CFO. We are building a company that is not just a market leader but a true platform for transformation. And we are confident this is the right strategy to deliver exceptional value to our customers. So with that, I will hand it over to Stuart. He is going to show us how we are amplifying our commercial excellence at BlackLine.

Thank you, Charlie. Good afternoon. Waiting for the slides to change, but perhaps that's on me. Yes, it is. So again, Stuart Van Houten, Chief Commercial Officer here at BlackLine. As I was thinking about this presentation as I'm the newest executive in, I thought I'd spend a few minutes at the beginning of the presentation, giving you a sense for why I made the decision to leave SAP and come to BlackLine and what was the mental gymnastics I went through in terms of making that decision. And I'm going to tell you the end of the movie first, and then we'll go back and work through the sequences of the movie that got us to the end. And that end perception was that this is a company that had a solid foundation with immense potential in terms of accelerating growth. I did deep due diligence in terms of leaving SAP because I didn't take that lightly after being there 10 years, and it was a really good 10-year run. And so that deep due diligence was about -- is there a set of competitors I don't think we can compete with? Is there not the right white space or TAM? Is there a product market fit issue? And in all cases, I found the right answers that gave me a ton of confidence that BlackLine was the right place to be. It's not a product market issue -- product market fit issue. It's not lack of TAM. Our brand recognition and brand equity in terms of winning in the market is tremendous. I always have healthy respect for competitors, but I would much rather be going to market with our set of cards than theirs, frankly, much better. And so I just looked around at the strategic moats that this company has built and is building. And when I combine that with what I see as my core skill set and that is optimizing go-to-market teams for Lyft, I was super confident that we could drive growth here. The other point I want to make here because it's super important for me, and I think it says a lot about this environment of AI is, look, you guys know better than I do, AI is causing a ton of choppiness for enterprise SaaS software companies, unwarranted in my opinion, or at least way premature in my opinion. But the reality is we've got this metamorphosis that's taken place over the last couple of years with enterprise customers where they had to be doing AI POCs because you looked tone-def and you look like you lacked situational awareness if you weren't. And that is now morphed into real money being spent on real AI projects. But the reality of those events is most of them are not providing a return today. And so that is going to create headwinds. for some enterprise SaaS companies and certainly for some native AI companies. But from my perspective, this is a huge tailwind for BlackLine because when I was getting ready to leave SAP, I was named CRO of the Americas for what is a newly formed organization called Finance and spend. It was the combination of my old intelligent spend management organization and the new OCFO technologies. And so I spent a ton of time with CAOs and CFOs there and continue to do so in my first 7 months here. And what is absolutely clear is that CAOs, CFOs want to take advantage of the intelligent -- these AI technologies, but they're certainly not going to do so as a constituent where you can't provide auditability, traceability, transparency and trust. And if nothing else, those are the foundations of the AI that BlackLine is building. So the way I'm wired, there's never a shortage of things that keep me awake at night, but 7 months in, I could not be happier with my choice to join BlackLine nor could I be happier with the early returns in terms of some of the management systems I've put in place to overhaul this go-to-market motion, and we'll talk more about that in a moment. I'm not going to spend a ton of time here. I've actually been running go-to-market teams outside of SaaS for close to 3.5 decades. It makes -- it really pains me to say it's been that long because it just means I'm bloody old. But I've been involved in enterprise SaaS for almost 20 years. The last 10 of those at SAP, again, running what was the largest cloud division outside of ERP called Intelligent Spend Management. And the team I built there doubled revenue in my time in that space. So this is how I see my core skill set, taking under-optimized go-to-market teams, whether it's people, process, culture, and I'll talk more about that in a moment, and getting those things fixed to allow you to start to scale effectiveness in terms of your go-to-market motions. Look, growth is never easy at any time, anywhere, except for today, perhaps a handful of native AI companies. But when I looked at the strategy that was presented last November here in relation to platform amplification, partnership amplification and combine that with what I do, I was really, really positive that we could drive growth. So many that have come before me have spent time waxing poetic about the studio strategy, and I'm not going to spend time doing that. What I am going to spend time doing is speaking to the cultural shift that has been created both in terms of our product strategy, but also my own assessment of needs within the company in terms of how we showed up differently in the markets with our customers. And what that means is, yes, we've got a Studio 360 platform. Yes, we've got AI nicely coupled with that. We've also got a set of really nice software solution assets, the full financial close platform, intercompany, IDC, FRA that I didn't feel like we had enough heat light intensity on, and I talk about all of those from the sales organization. And I talk about all of those things as sort of our end-to-end positioning in the market. We are enabling the hell out of the sales organization. to position our end-to-end capabilities across all the things that I just mentioned because what I know is after having been here for 7 months, it's compelling, it's differentiating and it's value laden. And so what that changes for us is reactions in the markets that are really, really powerful for us. It changes the dynamic of our sales teams walking into a CFO office and saying, "I'm here to help you figure out how to solve that point problem with a point solution." And don't get me wrong, for many, many years, we've done that exceptionally well. But now it allows us to walk in and have a strategic conversation about what end-to-end capabilities really means. That's not always easy. I want to be super clear and any of you that have spent a lot of time in this space, you know that's not easy. Sometimes customers want to solve a point problem. Transformation is hard. But when you have the assets to enable transformation as we do, and you combine that with the right right value framework from presales, the right messaging framework from all sales organizations, the right quantifiable ROI built on of getting to transformation with your customers. So now we get to what is the holy grail in my opinion, when you do all those things, you're entering into long-term road maps with your customers that sequences the value takeout along that road map because you've established that. It's not easy to do. We did it forever at SAP. I know how to do it. We will get there. As Owen said, we're pleased but not satisfied in terms of our progress. This is going to be a huge differentiator in terms of how we show up in the market. And we're already seeing early results. We're seeing rise in our pipeline around average ACV. We're seeing rise in our deals around average ACV. So we can see the green shoots in terms of positioning a bigger bill of materials, a bigger transformation effort. So let's talk about some of the things I'm doing and focused on from a go-to-market perspective. I want to be really clear when I came in with the team, complete overhaul in terms of what I call a management operating rhythm, which I'm happy to talk at nauseam about because I'm a go-to-market nerd, but a management operating rhythm that we layered across our global organizations. On top of that, we established a sales methodology. If you pay any attention to this stuff, think of it as Med pick, but it's my own sales methodology program. But this is a complete refresh for this organization. And ultimately, well-run go-to-market organizations are about accountability, management, measurement, rigor, relentlessness and culture. And what we are accomplishing is all of those things. And it leads to pipe generation is our cultural North Star. I'm super impressed with the amount of pipe we've created through the first half of this year and frankly, through summer months in July and August, which my experience at SAP never happens. Pipe in enterprise SaaS software companies usually goes up to half 1 and then down as people try to close out their fiscal year. We continue to go up. So pipe is the culturally defining North Star for us. But then equally as important and training our leadership to drive rigor around this is pipe maturation. How effectively are we moving that pipe that we've worked so hard to create through our cycles. This stuff wasn't happening before. And so measuring pipe, but not measuring pipe maturation is akin to investing in analytics, being given insights and doing nothing and taking no action with those insights. It's the same thing. The third leg of that stool then is the value equation, and I'm going to talk about what I've done with the presales organization here in a moment. But a value advisory presale solution consulting, whatever you want to call it, it's called many things, that is committed to being value first, delivering creative and passionate demos, but most importantly, being committed to world-class discovery. And again, I'll talk about this in a moment, is a really powerful tool in helping sales enable their activities. So it's about pipe, it's about pipe maturation. It's about value. It's about being able to quantify that value and scale and keep doing it over and over and over again. The second thing I want to speak to on this slide is AI-enabled sales teams. We are using technology to drive greater efficacy in terms of how we operate our markets. The first is conversational intelligence because now we're spending so much time enabling all of our sales organization on the things we want them to change and how they message our strengths and our value, we can now seek for it with AI technologies, especially early with BDRs when it's critical to start setting that impression of the broad-based capabilities of Blackline. But then on the other end of that spectrum is you're hopefully getting closer to an executed project are the AEs and AEMs delivering on the value that we've created. And so what I know, when you do this correctly, when you create a rigorous, relentless science-based go-to-market motion with heavy management and measurement and accountability, it's as, in my opinion, it's as differentiating a competitive asset as any company has. Now I'm a commercial guy. I'm sure Jeremy and Charlie would say it's product that is the differentiating aspect, and we would both be right, frankly. And that's what we're building, and that's what's driving some of our early wins in terms of KPIs. Again, please not satisfied. So now I want to talk about talent, organization of talent. So when I -- again, I've probably said 3x, presales. There's 2 organizational boxes I care about more than any other in an enterprise selling organization and absolutely committed to having rock stars in those 2 organizational boxes. One is pre-sales and the other is first-line sales managers. Why? Because when we set the value agenda, our rockstar presales are the people that bring that to life every single day and never allow us to sell products but sell outcomes that are associated with ROI and value. On the other hand, the first-line sales managers are the people that bring the rigor to make sure they never take their foot off the pedal in terms of implementing my management operating rhythm. Go to market. Most people think of go-to-market as being largely art and everybody understands it because it's not that complicated. It's not rocket science. The skill is never relenting in terms of the expectations driven down into the entire organization. on managing monthly pipe, on managing that pipe's maturation on managing a value articulation and framework. If you never stop, it becomes self-reinforcing. So I got off base there a little bit. presales. When I joined presale sat in every 1 of my regional sales organizations, my presales leaders reported my senior VPs that roll up to me. So one, a presales team in AsiaPAC, 1 in EMEA, 1 in North America, so on and so forth. And what I know from having done this so long and built presales organizations is you lose the culture of best practices you lose the comradery of passionate and creative demos. You certainly lose a standardization around the processes around world-class discovery. So I hired a gentleman that was with me at SAP performing the same function. Global presales head, absolute rock star. We have consolidated all of those presales activities and are doing all those things. He's flying around the world, providing boot camps, talking about what is value selling look like. selling outcomes, what does that look like? World-class discovery, what does that look like. And this is going to pay huge evidence, no matter how good I am, how good Owen is, anybody else, if we don't have rock stars in presales and first-line sales managers, we won't be successful. And so we are starting to upgrade where we need to, and we will continue to do that. But those are some of the early focus areas in terms of go-to-market. So let's talk about some growth vectors. We've got 3 of them for the most part. One is industry. and then markets and then how we're sort of bringing it all together across technology, partnerships and ecosystems. So there are some redundancies in terms of the benefit that an industry-focused sales team brings to some of the things I've already mentioned, but it just puts it on steroids in my estimation. I come from a heavy industry-focused background at SAP. I haven't worked for a Salesforce. I haven't worked for an Oracle, but I was -- I've been in a lot of other places. I am as impressed with the industry focus that SAP has of any company I've worked for. And we're going to get there. We're not there today. But the industry focus allows you to do a bunch of the things I spoke of earlier. When you do it right with the right industry principles and sales organizations and presales is a tip of the spear on this as well, you're creating stickier use cases. You're more adequately differentiating yourself from your competitors. You're able to maintain pricing power more because the ROI is so great and you're able to control deals better because the opportunity cost did not move when you've created a real clear return is in your favor versus allowing the customer to control the quarterly outcome. Super excited about industry, and we already -- I don't know how many different verticals we have like the top 5, 6 7 already, incredible blue-chip customers, but excited about expanding this even further. Markets, entering a new one and expanding in another one, I'll start with public sector. We got our first win in public sector. DOJ, huge event for us. because we've not been in this market all that long. But if you've spent time staring at the federal space, you know that this is a massive durable market that allows real staying power if you do it correctly, right? And I think our right to win is tremendous here because every agency is under so much pressure to demonstrate fiscal transparency, improve accountability and eliminate waste. So I do think our right to win here is huge. And frankly, a shout out to the P&T team, how quickly they got our technology to FedRAMP Moderate. If you know this stuff in terms of the certs to be able to sell cloud products in the federal government, FedRAMP Moderate is huge. You can sell to all the civilian agencies. Is it high, Jeremy? I think it's FedRAMP High, that allows you to sell to the big defense and intelligence agencies, which we will get there. This is going to be a huge driver of growth for us. I don't even think I can conceptualize yet how big it's going to be. It's going to take a couple of years, but we are super excited about the opportunity for public sector. International markets in terms of expansion. I'll start with EMEA, and Owen already mentioned some of this. Look, we're going to grow nicely, 24 to 25 in EMEA. New leader there that we brought in from Salesforce. He is also a rock star we are getting on a better glide path. But we still think the TAM in EMEA is huge. We're barely cracking the Germany market. It doesn't make any sense in terms of our relationship with SAP, we'll get that right. We're investing in KSA and we're rapidly moving towards a POC with a very large company in KSA, tremendous developments there. And then in Asia Pac and Japan in terms of driving nice growth in '25. We will springboard off that growth with all the things that I've spoken about to date in terms of the right end-to-end messaging the right commitment to value the right people doing the right things. And then finally, Japan. Look, Japan is also going to grow in '25 from '24, but we need it to be orders of magnitude larger and moving more quickly. And we think we're starting to figure out what are the impediments to allow us to do that. And then finally, look, I've got 1 more slide after this, I'll sort of bring it all together. But moving left to right, look, AI really impressed with the AI we've announced. I'm anxious to get with customers tonight and hear their views as well. It's the newest sharpest tip of our spear in terms of our go-to-market teams. But again, I want to be super clear well before Studio and AI. We have been training the teams to sell the end-to-end set of solutions, full financial close platform, intercompany IDC FRA, we have some really nice assets there. For the second quarter in a row, Q2, Q3, our largest deal by a long shot will be intercompany. We are going to rapidly grow around intercompany. SAP, man, I could not be more excited about SAP. Having come from there, I know the amount of organizational change they were going through at the beginning of this year because I was involved with a lot of that planning for the Americas for finance and spend. My view is they've been somewhat distracted through the first half of this year. And still in that environment, we saw really nice pipe uptick in terms of Solex opportunities. We saw a lot of things that really matter in the market in terms of the golden standard architecture that everyone in SAP understands. More importantly, is the auto attach of SKUs into finance packages for both private cloud and public cloud [indiscernible]. That is huge. Prior AEs had the right to pull those SKUs out of those bundles and now they've got to get a special exception to do so. But even independent of that, I speak to people that used to work for me and they're like, man, I've been measuring it in February of this year when we took over the OCFO BlackLine Technologies. We had 20 opportunities amongst the sales force of 125. They're now like 170 in terms of total opportunities a short few months later. I really feel like we're going to drive a nice Q4 and see acceleration in 2026. And then partners. Look, every time I enter an organization -- newly entering an organization, I'm looking for effective scale and all the levers that I want to pull to drive and optimize go-to-market motion. That's what partners should represent for us. And there's a lot of work we still have to do in terms of getting them fully enabled on our new messaging and our new thinking in terms of how we go to market, but we're making a ton of progress there. So I think in general, we think there's a real force multiplier effect across these 3 dimensions is our last point on our growth vectors. And then I'm going to just close it up and tell you what I've already told you sort of told you the end of the movie, told you how I got through the movie, and we're back to the end of the movie. I just think there's tremendous opportunity here. We've built really nice technologies that are the best in the record to report space. I think we haven't been as focused on driving transformational deals in the past as we will be going forward. But then you start to combine that with studio and AI and intercompany we're going to have a really nice opportunity for growth. And so start to lay on that management operating framework with the new sales methodologies we've deployed in combination with our new solutions and our new adherence to end-to-end messaging, we really feel like the opportunity to really grow through '26, '27 and '28 is very, very doable, Super excited about it. So now I think I'm turning it over to Patrick Villanova.

Thanks, Stuart, and good afternoon, everyone. So you heard from Owen today about our powerful AI vision for the future and the present. You heard from Charlie and Jeremy about all the innovation that's going on as it relates to Studio 360, as it relates to Verity and it relates to several other aspects to our solution and our platform. You just heard from Stuart about the world-class GTM engine that he's built in conjunction with his team and more importantly, how he's going to take all this innovation, all this AI to market. So my role today, my job is to link this strategy, to link this innovation to the numbers. I'm here to provide financial proof points that demonstrate not only is our strategy working, but we have reached a clear inflection point. where years of deliberate investment are now culminating in a reacceleration of growth and a clear path to sustained expanding margins. So as a brief refresher, I presented this chart back in November at our last Investor Day. And we laid out these targets, and we continue to execute towards them with confidence. back in November was that 2025 would be an inflection year where we begin to see signs of progress across our leading indicators and in our revenue growth and our path to achieving these targets over the next several years. Well, so I'm here today to say we're no longer talking about a future event. We're no longer talking about 3 to 5 years out. The reacceleration is visible in our results today. Our key forward-looking indicators are demonstrating our momentum. ARR, CRPO, RPO, growing in the range of 9% to 11% through the first half of this year on a year-over-year basis. It gives us great visibility, stronger visibility into the future revenue that we will recognize and it's reflective of the GTM motion and pricing strategy that we've implemented this year. And so when you look at our full year guidance for 2025, it implies a certain performance for Q4. And the message is clear. We are absolutely confident that we will grow more in the fourth quarter than we did in the first quarter. We will exit this year growing faster and as a stronger company than we did entering this year. And I want to be very clear, this is not a temporary spike. This is a new foundation from which we will build upon for 2026 and over the next several years. And I can say that with confidence because of all the powerful growth levers that we've been investing in and will invest in. So as a quick recap on those growth levers, these were presented as well. Obviously, platform and packaging has been a great tailwind to this year. Studio 360, you saw a slide earlier in terms of the uptake from our customer base and how that's driving more bookings and revenue growth. And then, of course, partners. We've had a lot of large partner-led deals even outside of SAP this year, and we'll continue to. Those are investments that are paying off in 2025 and contributing to the leading indicators that you saw earlier. Now for 2026 and beyond, we've made an investment this year in the public sector. We've closed one deal already, and we see building pipeline in that area. And that was part of the plan, invest this year in FedRAMP in the public sector to see growth in '26 and beyond. You heard Jeremy and Charlie talk about all the Agentic AI that they're building and how that's going to stimulate growth in the fourth quarter and beyond, '26 and beyond. And then lastly, you heard Stuart talk about his relationship with SAP and our relationship with SAP and how we continue to invest there, continue to go to market stronger, better, and that is an opportunity for us in 2026 as well to turn the pipe that he referred to into bookings and then eventually revenue. And so what's important here is that there's no big bet up here. None of these levers represent 90% of our future growth. Each one of these levers have a stand-alone ROI model that would -- that is going to yield about 0.5 point to 1.5 points of growth compounding upon itself over the next several years. And that's what continues to contribute to our confidence in executing on our model. So let's look at some deeper metrics here and first half results that demonstrate that the strategy is working. If you look to the upper right, our average new deal size is up 39% year-over-year. This is a testament that we're landing with a platform and that we're landing with multiple pillars within that platform. You can see on the upper left, when we have 2 pillars or 3 pillars within that platform that the ACV goes up exponentially for that customer and the net NRR also increases. As a result of this, we now see strategic products contributing to 29% of our sales, and that will continue to increase. We've had a 24% growth in our number of $1 million customers in just 1 year. And then more importantly, in the second quarter, over half of our new logos are taking up our new platform pricing model. It's being well received in the market. It makes sense. The value is obvious. So these are indicators that our strategy is working, and it continues to strengthen our confidence and that what we're doing from an investment standpoint has taken root and proven to be successful in 2025. So let's talk a little bit more about our pricing model. It was primarily designed to do 2 things. One was to unlock the power of our Studio 360 platform and the value that it brings to our customers. And then two, it was meant to be a commercial vehicle to monetize the powerful AI that once again, you heard about this morning in the keynote and earlier in this meeting and how we're going to go about monetizing that. I want to reiterate, we are ahead of our plan as it relates to our pricing strategy. We had a multiyear plan of adoption for our existing base of customers as well as assumptions around the number of new logos we would land under this model. We are ahead of that plan, and it continues to be successful and well received in the market. And so what this leads to is a foundation to set the stage for our AI monetization strategy. the value of our AI agents, the digital workforce, the virtual accountant or finance professional will be captured through a consumption-based model that links directly into our platform technology and platform pricing framework. Our AI agents are capable of doing much more work much more efficiently than a human being. And with that comes ROI to our customers. And the higher the ROI to our customers, the more revenue it generates for us. And I'd like to use examples that will resonate with, hopefully, everybody in the room. Right now, on our traditional user-based pricing model, if you're an accountant or a finance professional using that platform, you can perform reconciliation a month or 1,000 reconciliations a month. the price doesn't change. That means our revenue doesn't change. However, in order to get access to the agents that Jeremy was talking about, the Agentic AI, we will require our customers to move to our platform pricing model. That is an immediate uplift over the user and seat-based pricing that we have in place today. That is a day 1 uplift upon adoption. In addition to this, because of the ROI provided by or generated by these agents, we will begin charging for the number of reconciliations that are being performed by one of these agents. So just looking at a singular agent, a single example, we have 2 opportunities within one agent to monetize, to migrate to the platform model and begin charging for something that we've never charged for before, performing reconciliations almost completely independently of an accountant. So moving from growth to expanding margins. Not only are we selling AI, as Stuart talked about earlier, but we're using AI internally. And you can see this story pervasively throughout our P&L. As Jeremy noted earlier, we will be done with our GCP migration before the end of this year. Well, that unlocks potential, more than just eliminating redundancy of server costs. It allows us to use AI to optimize our entire data set for all of our customers. That helps us plot a path to mid-80s gross margin that we've been talking about since last year. From a sales and marketing perspective, Stuart highlighted several things we're doing in presales, and pipeline generation and go-to-market motion, all AI-enabled that is generating more productivity for a lower cost. Product and technology. We've been moving individuals or placing individuals in lower-cost locations, engineers, and that's provided a benefit. But just as importantly, we've enabled those engineers with AI tooling. And those engineers are producing more output, more code, more innovation than they ever have before without compromising quality. And if you want evidence of it because it's all about proof is in the numbers, well, just look at our P&L. All the innovation we've been talking about over the last year or 2, Studio 360, Agentic AI, it goes on and on that Jeremy and Charlie talked about. We've been able to do all that with P&T costs as a percent of revenue not changing. And that's a proof point to the efficiency that we're generating in that area. And then finally, G&A. Our own back office, our own backyard, we will continue not only to use our own product, but to use IT and AI to continue to generate economies of scale to enable better scalability so that our G&A costs do not grow in proportion to revenue. All of this leads to a clear path, a clear path to expanding margins and a clear path to our target model. So the combination of accelerating growth as well as expanding margin puts us on a clear path to the Rule of 40. If you remember back in November, we talked about reaching our target model of 13% to 16% growth in 3 to 5 years and 26% to 30% operating margin. Well, today, I can sit here confidently and provide even more transparency in terms of that time line and how we're going to achieve our Rule of 40. Our guide this year is 29% to 30%. There's a clear path to 33% next year, 38% in '27 and then by 2028, achieving a Rule of 40 of 40% or better through a combination of the growth levers and strategy, coupled with expanding margin. And so that financial model obviously is going to generate more cash flows than we're generating today. So it's very important to understand what is our capital allocation strategy. Well, I think you might have heard it in the keynote this morning and a Warren Buffett quote, but there's no better person to invest in than yourself. So our #1 use of capital is to invest in this company, to invest in our own innovation. That will always be our North Star, our guiding light because there's no better ROI than innovation and investing in your company. Number two, we will continue to look at opportunities for tuck-in M&A that helps us build out the office of the CFO -- and then three, our third use of capital. I'm happy to announce this today, but our Board has authorized a $200 million expansion of our share buyback program. Similar to before, we will continue to be opportunistic in terms of how we buy those shares back, but more importantly, have the mindset of returning capital to our shareholders. And then lastly, as it's just a few months out, our 2026 convertible notes, the remaining $230 million becomes due in March of next year, and we intend to pay that down and continue to deleverage our balance sheet. So to bring the formal portion of the day to a close, I want to leave you with this. Everything you've heard today from the strategic vision to our product innovation to the GTM engine and execution that Stuart is implementing as well as the financial framework that I just took you through points to one clear conclusion. BlackLine has -- BlackLine's position in the office of the CFO has never been stronger. Our Studio 360 platform supercharged by Verity gives us a durable and defensible competitive moat. Our GTM engine is executing with precision and our financial discipline ensures that we can translate this strategy into long-term growth with expanding margins. Thank you. I do want to say if we could just have a few minutes to get set up for Q&A, but I don't know, Matt, if there's anything else there. But yes, so just give us a few minutes to get set up, and we'll start the Q&A session. Thanks. [Break]

All right. So we're going to replay the video you saw or maybe you didn't see earlier today about Verity Prepare. We know a lot of the viewers at home did not get a chance to see this. But before we dive right into the Q&A. We're going to play out one more time for you. [Presentation]

On each side. If you have a question, please raise your hand. State your name and firm and then go for it.

All right. Thanks for having us. Matt VanVliet from Cantor. It seems like now the products or at least a couple of them are very much ready for customers to start using. And you talked quite a bit about AI monetization. But what are the impediments today, whether they're out of your control or within your customers' deployments today to be ready to really utilize these and start driving revenue growth from that? And maybe more importantly, there is how do you overcome some of those impediments? Is it just a go-to-market execution element? Is there an education of your customers of how and why to make these moves and sort of get to the Studio360 approach?

Do you want to start Jeremy or Stuart?

So I think when I talked about Studio 360 earlier, it was really about laying the foundation of data. And across our customer base, that data is present. I think the impediments to AI we typically see are around control and governance. That's one of the big ones that comes up. I think increasingly over the last year that -- sorry, that has decreased over the last year. We see that in less requests to have clauses and contracts that talk about data specificity or around AI specifically. So it is now about showing the possibility that AI is going to bring and the ROI there. And I think that's where as we begin to up-level the conversation, CIOs and CFOs have a charter to adopt AI or to transform their businesses, and this gives us the capability to do that now.

Stuart, do you want to touch on that go to market.

Well, I just want to make sure I'm not answering a question that wasn't asked. The question is, do we have certain embedded base technologies in our customers that make it more difficult to adopt AI. I'm trying to make sure I don't miss the...

If that is an impediment, I mean, if you're sort of past that now with where you're at, it's just a matter of getting that in the next deal conversation, the next renewal or the next new deal scope, like where do you focus most on monetizing today?

I'm not worried about embedding AI in customer environments that may be well adopted or not well adopted. So where I start from that perspective is I do think there's portions of our financial close platform that are not well adopted. And so that creates -- they solve a very specific problem, and they did it very, very well, but it's sort of lost the vision of the CFO, right? And so we've got -- and we talked about our ecosystem as being a great enabler of this in terms of how we message this jointly. There's lost value wedges and not more fully buying into and investing in the financial close, and it's incumbent upon close products. It's incumbent upon us to be able to tell those stories and wrap the right sort of commercial and services packages around that. I don't think those impediments today are going to slow down studio AI, but that's yet to be determined at scale.

Chris?

Chris Quintero from Morgan Stanley. I want to ask kind of on a similar topic here on AI and Verity. It's a really interesting approach and framework that you all are laying out and makes a lot of sense given who your customers and users are. But how do you think about the medium, longer-term kind of AI adoption curve within the office of the CFO, given you have, on the one hand, those kind of more risk-averse buyers and users. But on the flip side, you also have clearly a lot of ROIs to be had within the office of the CFO. So kind of how do you think about those 2 dynamics with adoption?

Jeremy, do you want to take that?

Yes. Sure. I think this is -- again, to anchor on the strategy around Studio360, what we're creating is a platform for the office of the CFO. And so I think while we excel at our differentiated capabilities in financial close, record report and invoice to cash like in that collective, what Studio 360 opens up is our ability to expand to automate more activities that happen, right? Like in just conversations with Patrick's team, there's a lot of work that happens that isn't automated today. It isn't captured by existing solutions, but we're connected to those source systems already. We started that journey with Studio360 Orchestrate to begin orchestrating some of those activities. And this is why I brought up earlier why we're extending to other repositories. You saw on the video, SharePoint, other things that are unstructured data because we can then take AI, which is great at interpreting that unstructured data marry that with our normalized data models that when I talked about connectors and how they really rapidly extract normalized data, combining those 2 allow you to automate that in a meaningful manner. And that's where I think we can extend that conversation in the office of the CFO to orchestrate and automate more of that activity.

Next. I can't see. George?

George Kurosawa from Citi. Thanks for this event. Kind of a 2-parter on the platform pricing, Patrick, I think you alluded to being ahead of plan. Maybe just more details on how that's going. And then the idea that you have to take on platform pricing in order to adopt the AI products, I think it's interesting. I wonder if could that serve as another potential impediment to AI adoption.

Yes. So to address the first question there, we had a multiyear model in terms of how our pricing strategy will be taken up. And without going into the excruciating details, we broke our existing customer base into cohorts with certain expectations in terms of when certain customers would adopt it from a renewal strategy. Then we had a separate model on new logo. And what we're seeing is, notably with new logo, we are way ahead of where we thought we would be in terms of how it's being adopted. And you might have heard Owen and others talk about some of the large 8-figure deals we won. And our pricing model was core to winning that, not stand-alone, but it was a major driver. And when you're sitting down with a CFO or a CIO that has 10,000 employees within their office, in multiple countries. The last thing you want to do is start counting how many seats you need. It just takes away from the strategic aspect to the conversation. You take that off the table, you deliver a platform with a platform fee, and then you start talking about automation and transformation. And that impediment -- the more impediments you can remove from the sales process, I'm not a GTM expert, but I'm pretty darn sure that's a good thing. Take as many obstacles out of this as you can. That's why we're really seeing the uptake with new logo. And then yes, there are certain customers within our renewal base. It is a 3-year plan because that's our average contract length. But we're pulling as much of that forward as we can, identifying customers that are ripe for that and then working through that renewal space. So that's ultimately why we're ahead. I don't -- the second part of that, there's a financial answer to your question, and then there's a technological answer to your question. I'm going to answer it through the lens of a practitioner. And as somebody that has used BlackLine as well as other tools out there and platforms out there, solutions, I guess, is a better word, to bring more automation to my team, if you can go out there and prove the ROI, which we can, and you can do the business value assessment and show how it's going to change the lives of everybody within your team and unlock the potential of your team, when you do that successfully as a vendor and I want that technology, I'm going to uplift. to that technology. I mean, because you have the brand permission as BlackLine. You have the CIO and CFO permission. You have to have an AI strategy. So if you have a proven technology that's going to speed up your close even more and speed up your overall office of the CFO, you're absolutely going to pay a little bit more to move on to that platform. It's a no-brainer.

Yes. I just want to add to that because I spent a lot of time talking to executives, and I was on the phone with the CFO of a $15 billion revenue company last week. His cost of finance is 2%. He needs to get it to 1.5% based upon what the private equity owners wanted to drive it down to. And the whole conversation we were having was being on our platform pricing, but seeing the return that can drive that cost down. And in that conversation was how many people can I eliminate by using what BlackLine has, right, from an AI perspective. And so people don't originally love the idea of maybe being platform pricing versus user-based if you have an old model, but it's just where the world is going. And then if you talk to executives at larger companies, you talk to people around here, the customers today, the CFOs are all under immense pressure to use AI somehow in their organization. And the ability to sort of work with BlackLine where you know you can trust it, it rely upon it is so important to them. It's so important. And so yes, there will be probably some resistance, but I think it's not going to be that great of a wall of resistance, particularly as more and more companies get comfortable with platform pricing and moving away from a user-based model.

John Messina, Raymond James. Just maybe for Owen or Stuart, I just wanted to ask, given the success stories you guys now have on Studio360 with 110 customers on that with spread across mid-market and enterprise, how do you envision that adoption curve looking? How do you expect that segmentation will look as far as adoption with mid-market versus enterprise? And then is that coming on renewal? Or is it intracontract? And then maybe for Patrick, sorry for the multiparter here. But for Patrick, can you remind us what the uplifts look like on Studio360?

You want to start?

Yes. And I want to make sure I don't miss all of the 3 pieces of that question. Look, do I think that studio acceleration happens in enterprise versus mid-market? My sense right now is it happens in enterprise. I don't -- I still think we have a tremendous opportunity in upper mid-market, but I think it absolutely happens more rapidly in enterprise. And I apologize, I forgot the second part of the question.

There's 3 parts.

Just on the adoption curve more broadly. And then also on just when are the conversations happening? Are they happening more at renewal? Or are they intercontract, just any color there?

So look, I think the adoption curve would have already been more up and to the right. based on some lack of execution issues in terms of being really committed to telling the end-to-end story. I think you're going to see that through Q4, and I think you're going to see that in 2026. Sorry, it's been a long day. The third question was -- it's going to Patrick.

I guess the way to think through the uplift, we've never put a number out there, and there's a rationale for that. So I have a 2-part answer to this one to the one-part question. For one, there is a base fee for Studio360 dependent upon the size and complexity of your organization. It's not one single flat fee. So that right there, right out of the gates, you land bigger. What really drives the uplift, though, long term is the fact that Studio360 connects our 4 pillars or 4 solutions together. And you saw the slide that I presented earlier that showed when you have 2 pillars versus 3-plus pillars, how exponentially your ACV goes up as an organization and you become so sticky, your NRR is notably higher than the rest of the base. And so the connectivity of data that Studio360 provides, that is the bigger of the 2 value propositions. Historically, years ago, we had 4 pillars, 4 solutions, 4 silos. They didn't talk to each other as well as we would have liked them to. Now they do. And when you remove that encumbrance, when you have that flow of data, that's yet another obstacle that you remove from the selling motion. And you say, okay, you only have this one pillar. Now you have Studio360, you can link these other 3 in seamlessly. And when you can say that, not just to a CFO where data is king, but to a CIO, now you got both of them working in tandem in your favor, and that's where the true uplift occurs.

I think one of the things I've learned in this business is it takes some time to get your own people trained on what the messaging is. And I think Studio 360 isn't that intuitive right out of the box. It takes a bit of learning and understanding. And because Studio 360 in some ways is -- it's like the universe, it's going to ever expand. I think it's taken our team some time to catch up and really digest it. And then what I love what Stuart has done with Riaz, who's coming in and running presales is they've really stepped back and thought about the value proposition and how this all fits together and then getting that back out into all the professionals that touch our customers, whether it's a sales team, our account management or customer success and professional services or our partners, there's been an immense amount of investment in learning and education for Home people this year to get there. And I think that it just takes some time to work its way through, but we like the progress we've seen, particularly because we didn't get to put all the big logos that were up there. There were some big logos that have already gone to Studio360. We just don't have the permission to use that brand, but they're more comfortable talking to other customers about the possibility, and that's probably the greatest sales team we have in the sense of when one can talk to another.

The other question I think you asked that I now remember and we did not answer is the renewal cycle. I don't think there's a tight alignment of studio deals to renewals. I think it's more about when you're beginning that cycle based on what's going on in that customer environment that drives the timing of that studio transaction. It can be a time of renewal, but I see that a lot of other points throughout the renewals as well and then perhaps you're bringing those contracts together concurrently. So I don't think it's only at a renewal cycle.

Time for one more. We're running a little late. So Austin, you're up.

Yes, quick for Stuart. This is Austin Cole, Citizens. On SAP specifically, just given your background, I'm wondering kind of how you view that relationship today, where you see it going? You mentioned doing more in EMEA and in Germany in particular. Where do you see kind of the biggest opportunities to go further with that channel?

Look, I think it still exists in every one of our markets. I don't at all think that we've tapped North America. I think EMEA, we will see a real acceleration. As I said before, I think we're -- the TAM there, both direct and through SolEx is tremendous. Germany, we got to figure out. I think this is more about an execution people issue than it is about the opportunity. And then, look, I think Asia Pac will be a little slower. Japan, we're seeing real uptick in terms of SolEx activity. So across the board -- so if I then pivot back from the question to talk about the environment that leads to the question, I mean, a lot of the things I spoke of -- we're the only SolEx partner that is in -- as an attached SKU to a finance, public and private cloud environment. Nobody else has that. It's significant. You don't see them releasing the golden standard architecture to provide real clarity in the market on how all our solutions play together. These are all foundational things that have taken a while to manifest through 2025. I think we're going to see it in the back half of Q4 in terms of Lyft and certainly through '26 in Lyft as well.

I just want to add one thing about Europe. Please don't forget, we've asked Therese to spend a lot more time over there because of what the market opportunity is and that would be another accelerator the things that we're trying to do over there, and she's got great relationships with the SAP executives as well. So that really should be a positive development for us.

Well, that concludes the formal event for today. Thank you again, everybody, for coming. In a few minutes, you can walk next door to Joshua [indiscernible] and have some further conversations with everybody on stage today. So again, rather you listening at home. Thank you for joining us. And we'll talk soon.

Thank you.