BlackLine NASDAQ: BL reported first-quarter 2026 results that executives said showed progress in the company’s shift toward platform pricing and a broader push to embed AI across finance workflows with its Verity portfolio.
On the call, Chief Executive Officer Owen Ryan said the company is positioning itself as “the trusted governance and control layer for CFOs deploying AI across their financial operations,” and pointed to both revenue growth and expanding profitability as evidence the strategy is gaining traction.
Q1 financial results and operating leverage
Chief Financial Officer Patrick Villanova said total revenue was $183 million, up 10% year-over-year, including subscription revenue growth of 10% and services revenue growth of 11%. Villanova attributed the services acceleration to “faster implementation timelines and go live activity” driven through the company’s delivery engine.
BlackLine ended the quarter with ARR of $712 million, up 9%. Villanova highlighted remaining performance obligations (RPO) of $1.1 billion, up 18%, which he said was fueled by larger deal sizes and longer contract terms tied to the platform model. He added that current RPO grew 12%.
Profitability improved as well. Villanova reported:
- Non-GAAP subscription gross margin: 83%
- Non-GAAP gross margin: 80.2%
- Non-GAAP operating margin: 21.6%
- Non-GAAP net income attributable to BlackLine: $40 million (22% margin)
- Adjusted EPS: $0.56, up 14%
- Operating cash flow: $46 million
- Free cash flow: $36 million (20% margin)
Villanova said BlackLine paid off its 2026 convertible notes in March and ended the quarter with approximately $525 million in cash, cash equivalents and marketable securities versus $667 million in debt. The company also repurchased 1.2 million shares for about $47 million during the quarter.
Platform pricing adoption and deal metrics
Ryan said adoption of BlackLine’s Studio360 platform model continued to build, reaching 13% of eligible ARR, up from 11% in Q4. He also said 94% of eligible new bookings in the quarter landed on platform pricing.
According to Ryan, the commercial shift is changing deal economics. He said average new deal size rose 85% to $162,000, driven by platform and strategic product sales. Strategic products represented 37% of sales in Q1, up from 33% in Q4 and 27% a year ago, which he described as proof that customers are adopting more of the portfolio when BlackLine “lead[s] with value and outcomes.”
Villanova told analysts the ramp in platform adoption is expected to be uneven, noting that BlackLine’s “largest renewal cohorts are in Q2 and Q4” and Q1 is “by far the lightest.” He said the company remains “very confident” it will reach 25%+ of eligible ARR on the platform model by year-end.
Verity AI portfolio: adoption, customer outcomes, and commercialization
Ryan spent much of the prepared remarks discussing AI strategy and the company’s “Agentic Financial Operations” framework, which BlackLine introduced at its BeyondTheBlack event in London. Ryan argued that as enterprises deploy AI agents across business functions, CFOs will need a governance layer to reconcile, validate, and audit AI-generated activity. “Every action an AI agent takes within BlackLine leaves a digital footprint identical to a human user,” Ryan said, citing audit trails and embedded controls.
Ryan said embedded Verity AI capabilities—such as Verity Assist, Verity Narrate, and Verity Flag—were made standard across most of the customer base in Q1. He reported that over two-thirds of customers are actively using these tools, a 285% increase quarter-over-quarter. Ryan added that in Q1, unique users increased 68% and total usage increased 183%.
On specific agents:
- Verity Prepare: Ryan said it is now available and deployed with “several mega enterprise customers,” with validated outcomes including “over 90% reduction in reconciliation processing time.” He cited one customer reducing certain reconciliations from three hours to 10 minutes.
- Verity Match: In early adopter phase, Ryan said testing shows a 64% reduction in transactions requiring manual investigation. He also said running models on NVIDIA GPUs enables matching to be processed “up to 25 times more cost efficiently and faster than on prior architectures.”
- Verity Collect: Expected to launch this quarter, Ryan said demand exceeded planned capacity and the early adopter program was closed. He described it as predicting delinquency and autonomously managing collections outreach; in one early adopter scenario, the agent completed outreach in under 30 minutes versus about 45 hours for a human team.
- Verity Accruals: Ryan said customer interest and pipeline are accelerating, including closed deals and proofs of concept, largely driven by existing customers expanding their footprint.
Responding to a question on how Verity is being used, Chief Technology Officer Jeremy Ung said the company is seeing “repeat engagement” among customers using Verity, and described value delivered through time savings and repeat use for “risk analysis” and “narration capabilities.” Ung also said BlackLine has been “fairly hands-on” with early adopters of agentic capabilities and is prepared to expand a forward-deployed engineering style motion based on how it already supports customers.
Villanova told analysts that there is only a “nominal amount” of consumption revenue embedded in the 2026 outlook. He said consumption should show up first in leading indicators and is expected to “materialize in revenue in 2027.” He also said the company could “reassert that at least 50% of our ARR exiting 2026 will be non-seat based.”
Customer trends, SAP partnership, and outlook
BlackLine reported net revenue retention of 105%, which Villanova said included an approximately 1-point FX headwind. Revenue renewal rate was 93%, with enterprise renewal rates at 96%. Executives reiterated that churn in the lower mid-market continues to weigh on overall renewal metrics, but described the remaining at-risk pool as “finite and shrinking,” with an expectation that the drag diminishes through the year.
Ryan and Villanova also highlighted momentum in larger customers. Ryan said BlackLine ended Q1 with 86 customers with over $1 million in ARR, up 9% year-over-year, alongside 14% growth in the $250,000-plus cohort.
On partnerships, Villanova said the SolEx channel delivered one of its strongest new bookings quarters, and that SAP customers account for over 26% of total revenue. Ryan said BlackLine’s integration with SAP’s Advanced Financial Close is generating pipeline and that a “Joule Verity proof of concept” is progressing toward a commercial framework.
Ryan also discussed public sector opportunity, citing BlackLine’s move to become IL2 compliant and then IL4, and said the company is seeing a “nice growing pipeline” with federal agencies. He called DOGE “a bit of a tailwind” in terms of government modernization efforts.
For guidance, Villanova said BlackLine raised its full-year outlook. For Q2, the company expects GAAP revenue of $186 million to $188 million (8.1% to 9.3% growth), non-GAAP operating margin of 21.5% to 22.5%, and non-GAAP EPS of $0.57 to $0.59. For full-year 2026, BlackLine expects GAAP revenue of $765 million to $769 million (9.2% to 9.8% growth) and non-GAAP operating margin of 24% to 24.5%, with non-GAAP EPS of $2.42 to $2.53.
Villanova noted Q1 revenue included about a $1 million non-recurring benefit tied to the timing of customer deployments and delivery, while the company expects a $1 million to $2 million FX-related headwind over the balance of the year.
About BlackLine NASDAQ: BL
BlackLine, Inc is a leading provider of cloud-based software solutions designed to automate and modernize the finance and accounting function. The company's flagship offering, the BlackLine Finance Controls and Automation Platform, enables organizations to streamline critical processes such as account reconciliations, journal entry management, intercompany accounting, and transaction matching. By delivering a centralized, real-time view of financial data, BlackLine helps companies improve operational efficiency, enhance compliance and strengthen internal controls.
Key products and services within the BlackLine platform include Account Reconciliation, Task Management, Transaction Matching, Journal Entry, and Intercompany Hub.
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