BlackLine NASDAQ: BL reported second-quarter 2026 revenue growth of 9.2% as the financial automation software company cited strong profitability, cash generation and growing customer interest in its AI-enabled platform, while also noting that larger enterprise sales cycles have become more complex and extended.
Total revenue was $187.8 million, with subscription revenue up 9% and professional services revenue up 11%. Annual recurring revenue reached $719 million, up 6%, or about 7% excluding a roughly one-percentage-point foreign-exchange headwind. The company said professional services growth reflected go-live activity and early AI deployments with customers.
Non-GAAP operating margin expanded to 23.3% from 22.1% a year earlier. BlackLine generated $45 million in operating cash flow and $36.5 million in free cash flow during the quarter. Non-GAAP net income attributable to BlackLine was $42.9 million, or $0.61 per diluted share.
Large Deal Timing Weighs on Near-Term Growth
CEO Owen Ryan said AI-related evaluations have made enterprise transactions harder to predict, particularly among large customers assessing governance, data security, compliance and technology requirements alongside finance teams.
“Everything is simply taking longer,” Ryan said, adding that approximately $8 million in opportunities expected to close during the second quarter slipped into later periods. He said half of that amount had already closed by the time of the call, while the company continued to advance the remaining opportunities.
Ryan said enterprise sales cycles have traditionally run about nine months to a year and have lengthened by roughly 40 to 45 days on average. The delay is most concentrated in the mega-enterprise market, where customers are conducting more formal build-versus-buy reviews and involving more security, risk, compliance and IT personnel.
One example involved BlackLine’s first sovereign-cloud opportunity, a five-year, eight-figure transaction with a large European company. Ryan said BlackLine had won the competitive evaluation and completed legal, technical and security reviews but was still working through final details after the anticipated June 30 close date.
Chief Technology Officer Jeremy Ung described sovereign cloud as a deployment model intended to keep a customer’s data within a country’s borders. He said demand has increased amid geopolitical developments and is especially relevant in regulated industries.
RPO Growth Reflects Larger, Longer Commitments
Remaining performance obligations exceeded $1.1 billion, increasing 17% from a year earlier, while current RPO, representing revenue expected to be recognized over the next 12 months, rose 11%. CFO Patrick Villanova said those metrics were supported by larger transaction sizes and a higher mix of multiyear commitments.
- New deal sizes increased 24% year over year.
- Multiyear commitments represented 56% of the quarter’s renewal book, compared with 45% a year earlier.
- Nearly 90% of net new business was sold on platform pricing.
- Platform ARR exceeded 17% of eligible ARR, up from 13% in the prior quarter.
- Platform penetration in mega enterprise exceeded 21% of eligible ARR.
BlackLine’s platform model provides unlimited users, which Ryan said reduces the historical contribution from seat additions in the near term. The company said it is accepting that tradeoff as it seeks greater adoption of platform products and AI capabilities.
Dollar-based net revenue retention was 102.4%, or about 104% after normalizing for foreign exchange. Enterprise revenue renewal rate was 95%. Villanova said lower-mid-market customer churn continued to track according to the company’s expectations and should slow as BlackLine exits 2026.
AI Products and Governance Strategy
Ryan emphasized the company’s strategy of positioning Studio360 as a governance layer for AI used in finance and accounting. In June, BlackLine introduced Finance Control Console, which Ryan described as a control and governance plane designed to register AI agents, require certification before live use and maintain immutable audit trails.
The company said more than 90% of eligible customers, or roughly 3,500 customers, are AI-enabled, while about 3,000 customers are actively using AI in financial operations. Feature usage reached nearly 13 million actions during the quarter, up more than 220% sequentially.
Ryan said Verity Prepare has contributed to more than $20 million in platform annual contract value to date, while customer count for the product increased nearly fourfold sequentially. He said revenue from the offering is not yet material.
BlackLine also highlighted Verity Accruals, which it said has been adopted by customers including a multibillion-dollar U.S. hospital system, a global consumer technology company and a cybersecurity company. The company plans to add payroll and prepaid-accrual agents this year. It said early users have closed up to three days faster and spent 80% less time on accrual work.
Verity Match is in early-adopter testing and is expected to become generally available soon. Verity Remit is expected to become generally available in the third quarter, while Verity Collect is targeted for the fourth quarter. BlackLine expects AIUC-1 certification, an independent standard for AI-agent security and reliability, in September.
Outlook and Capital Returns
For the third quarter, BlackLine forecast total GAAP revenue of $193 million to $195 million, representing growth of 8.3% to 9.4%. It expects non-GAAP operating margin of 24.5% to 25.5% and non-GAAP diluted earnings per share of $0.62 to $0.65.
For full-year 2026, the company maintained its revenue outlook of $765 million to $769 million, representing growth of 9.2% to 9.8%. It forecast non-GAAP operating margin of 24.1% to 24.6% and non-GAAP EPS of $2.47 to $2.54.
Villanova said foreign exchange is now expected to create about $1 million of additional revenue pressure beyond the $1 million to $2 million headwind previously identified for the year. He said the company still expects to exit 2026 at a double-digit growth rate and expects platform conversion and agent adoption to provide at least two points of incremental revenue growth next year.
BlackLine ended the quarter with approximately $528 million in cash equivalents and marketable securities and $667 million in debt. The company repurchased 1.2 million shares for $38 million during the quarter. Its board authorized an additional $100 million for repurchases, bringing available capacity to about $280 million.
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.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
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