BlackLine Sees AI Tailwind as Accountants Demand Accuracy Over Hype

Key Points

• BlackLine says AI adoption in accounting is cautious because finance teams prioritize accuracy, controls, and auditability over speed. Executives said forecasting use cases are easier than accounting, where even small errors can create restatement and legal risk.
• The company’s platform pricing model is gaining traction, especially with new customers, and it expects platform adoption to keep rising. BlackLine says the shift can deliver immediate ARR uplift, reduce churn, and create future revenue from AI agents.
• BlackLine sees long-term growth opportunities in AI, SAP, and federal markets. Management also said it is working with SAP on AI initiatives and expects federal government wins to build more meaningfully in 2027 as compliance approvals progress.

BlackLine NASDAQ: BL executives said finance and accounting departments are moving cautiously but steadily toward artificial intelligence, with demand centered on accuracy, controls and predictable economics rather than experimentation.

Speaking at the Baird Global Consumer, Technology & Services Conference, CEO Owen Ryan and CFO Patrick Villanova described an enterprise customer base that is interested in AI but reluctant to deploy tools that could introduce risk into financial reporting. Ryan said finance and accounting teams are trying to understand AI spending across their organizations, while many CFOs are questioning whether current AI investments are delivering real returns.

“In the accounting side, which is where we spend most of our efforts with our customers, we’re not seeing layoffs. We’re not seeing a lot of hiring,” Ryan said. He added that customers are asking BlackLine to help define “the art of the possible” for AI use cases and to co-develop capabilities that can be deployed responsibly.

Ryan said large companies are generally not looking to be on the “bleeding edge,” given the involvement of management teams, internal auditors, external auditors and regulators. He said BlackLine supports a significant portion of capital markets activity, stating that “$54 trillion of market cap runs through BlackLine every day.”

Accounting AI Adoption Remains Cautious

Villanova said AI use cases are currently more prevalent in finance than accounting because forecasting does not require perfect accuracy. Accounting, by contrast, demands exact results.

“If you’re 95% right in the accounting world, you’re 100% wrong,” Villanova said. “If you’re 5% off your financial statements, that’s a restatement. That’s a lawsuit. People lose their jobs.”

Villanova said that risk profile makes it difficult for companies to justify building accounting AI capabilities on their own simply to save money. He said BlackLine’s history and reputation give it an advantage with customers seeking guardrails, controls and human oversight.

Ryan said the slower pace of adoption could be a tailwind for BlackLine because its enterprise customers need solutions that can satisfy CIOs, legal teams, auditors and regulators. He said the company was criticized last year for not moving faster with AI, but argued that BlackLine’s customer base requires a more deliberate approach.

Platform Pricing and Studio 360 Drive Customer Conversations

Villanova said BlackLine’s platform pricing model, launched in January 2024, is gaining traction with new customers. He said more than 90% of new logos are choosing the platform model, which offers unlimited access and unlimited users.

For existing customers, adoption was initially slower, but Villanova said the launch of Studio 360 helped shift the discussion from user access to product value. He described Studio 360 as the “connective fiber” of BlackLine’s platform, providing one source of truth and one data set.

Villanova said BlackLine has reached 13% of eligible annual recurring revenue on platform pricing and reiterated that the company expects to reach at least 25% by the end of the year. He said achieving that target would mean more than 50% of customer ARR would be consumption-only, with no link to user counts.

Ryan said new customers have been highly receptive to platform pricing, but some of BlackLine’s most deeply adopted customers have been harder to convert because they want to see additional return on investment. He said AI has helped elevate conversations with customers to higher levels in the organization, including CFOs.

Executives Outline Monetization of AI Agents

Villanova said customers moving to the platform are producing a day-one ARR uplift of 10% to 40%. While that pulls some future user additions forward, he said BlackLine’s modeling shows the uplift more than offsets the user additions it would otherwise expect.

He described three expected economic benefits from the platform transition:

• A day-one ARR uplift when customers move to platform pricing;
• Reduced attrition tied to user-seat reductions;
• Additional revenue from increased consumption of AI agents over time.

Villanova said customers receive a limited number of agents initially so finance teams can test them, gain comfort from internal and external auditors, and run agent outputs alongside manual processes. He said public companies typically need two to three quarters of testing before applying agents more broadly.

Ryan and Villanova also emphasized that BlackLine is not selling tokens. Ryan said tokenization has become a concern for CFOs because costs can spiral without clear ROI. Villanova said BlackLine sells outcomes, such as automating financial transactions, rather than charging customers based on token usage.

“You’re not going to be able to sell to a person like me saying, ‘We have no idea how many tokens you’re going to use, and we’re going to charge you for it,’” Villanova said.

SAP Partnership, Churn and Capital Allocation

Ryan said BlackLine is in ongoing conversations with SAP about changing pricing for SAP Solution Extension, or SolEx, customers. He said some BlackLine AI capabilities on the agentic side are not currently available to SolEx customers and that those customers are likely to push for change.

Ryan also said BlackLine and SAP are working on AI initiatives involving SAP’s Joule capabilities and BlackLine’s Verity capabilities. He said the companies have a memorandum of understanding in progress and several working sessions planned over the next six to eight weeks.

Villanova addressed churn in BlackLine’s lower mid-market customer segment, saying the company sold during COVID to smaller customers with five to 10 accountants that were not scaling or adopting the product effectively. He said BlackLine decided in 2023 to stop selling to those customers and expects the related churn to improve in the second half of this year as three-year contracts from that cohort roll off.

On capital allocation, Villanova said BlackLine’s first priority is investing in its own product innovation. He said the company also continues to evaluate tuck-in acquisitions that could expand its platform and capabilities for the office of the CFO. Share repurchases remain a third use of capital, he said, with the company continuing to evaluate buybacks opportunistically.

Federal Opportunity Tied to Compliance Progress

Ryan said BlackLine sees an opportunity in aerospace, defense and federal government markets as it progresses through compliance requirements, including IL-2 and IL-4. He said BlackLine has historically been able to sell into the commercial side of aerospace and defense customers, but not the government side.

Ryan said the company has had “a couple smaller wins” and is building a pipeline in the federal government space. He said the third quarter is where BlackLine expects to begin seeing some success, though he added that the government market moves more slowly than commercial markets.

“Our real bet for this is in 2027,” Ryan said, adding that BlackLine aims to help government departments and agencies become auditable.

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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