Awesome. Thank you, everyone, for joining us here at the Morgan Stanley TMT Conference. My name is Chris Quintero. I'm a software analyst on the Equity Research team, covering all things back office, Office of the CFO. And I'm really pleased to be joined today by the BlackLine team, Owen Ryan, Co-CEO, Therese Tucker, Co-CEO and founder, and Patrick Villanova, CFO. Thank you all for joining. Thank you. Pleasure. Thank you. For a quick disclosure statement, for important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Awesome, so it seems like you guys are always putting out some big announcements anytime you come out to the conference here, so definitely wanted to start with the announcement. Like the shout-out two years ago. Yeah. That one was bigger, for sure. But let's start with the announcement you all made yesterday: 7% headcount reduction, Bill Wagner leaving the board. Unpack that a bit more. Kind of why are you announcing that today, and where are you making those cuts, and any areas of reinvestment you're putting back into the business? So there's three pieces to this. So start with Bill Wagner first. Bill was selected to be the CEO of another public company, and there was only so much time he could spend on board. So he respectfully stepped down, and his resignation letter is pretty self-explanatory about his belief in BlackLine. The reduction in force, and there's really two pieces to it. So there's a reduction in force that we've been working on since last year. One of the things that Therese and I have been trying to do is raise the performance culture within BlackLine, and we've been telling people, if you want a job, BlackLine is not the place for you. If you want a career, BlackLine is the place where you want to be. We have been very clear with our folks that BlackLine is going to be a place that it's hard to get hired into, hard to stay, and hard to get promoted. Last year, we started with hard to get hired, and we raised the bar on the kind of people that were coming in the organization. Then we've just executed on the hard to stay. We had a brand new leadership team. Almost the whole leadership team changed over. One of the things we started talking with them about in the late summer, early fall, as we were going through Zero-Based Budgeting as well as thinking about performance management, is look at your team and make an assessment of who can get us to where we're going, not where we are. We wanted to make sure that we then had those conversations about what it was going to take. We weren't grading on a curve. We weren't looking to hold on to people that couldn't deliver for what we were trying to do. Then that was the next piece where we then sort of communicated those messages to those individuals yesterday. The cuts are across the board with what you would expect. The biggest impacted area was go-to-market and all aspects of go-to-market, from BDRs to quota- carrying reps to customer success, professional services. Basically, they were the people that were not meeting the expectations of what it means to be a BlackLiner. So we've done that. The reason that we were announcing it yesterday was a couple of things. One is we had to go through our normal performance cycle, which you want to follow all the rules and regulations around that, if you will. Second, the last piece of this was we hired our new Chief Commercial Officer, who started in early February, wanted to make sure he had the opportunity to weigh in as to what he heard from his leaders. And so that was another piece of it. And then the reason we wanted to get it out yesterday, we didn't want to leave conferences and not tell you what we were doing. So we really tried to make sure that we could get that out and you guys could ask us questions about that at any level. The other piece of the announcement, which hasn't gotten the same level of attention, but it's important, is we've also said to our people, if you don't think BlackLine's the place for you, even though we didn't ask you to leave now, put your hand up and we'll have a conversation about you leaving the organization. Because we only want people that want to be here. One of the things that we're very proud of is we don't put it out in an 8-K, but we promoted 10% of our people as part of the annual cycle. These are people that are making a real difference, a real contribution, and trying to raise the bar of BlackLine. The other thing that we just share is our regrettable turnover, our top performers, is de minimis. So we've really done a good job of keeping the people that want to drive the organization forward. They're committed to what BlackLine's trying to achieve. The words I would say, we're not looking to be competitive. We don't want to just win. We don't want to just win a championship. We want to build a dynasty. And those are the messages and the people that are excited about it. And there are some people that are scared to death about it. And for those that don't want to have the courage to do it, we understand that, respect it, and that's okay. Let's part ways and move forward with those that do want to win. So that's it. Yeah. Two follow-ups on the headcount reduction piece. Is there an element of also reinvesting that back into the business? I know you mentioned go-to-market, services, areas where part of the areas that were affected. But what other areas are you investing in from these savings? And does it say anything about what you see on the demand environment perspective? So it doesn't impact what we're seeing on the demand environment. The encouraging thing is, again, our new marketing team has really started to generate a much higher quality of pipeline starting in September. We continue to see that moving its way through to today. Big investment for us is going into the federal government space to become FedRAMP compliant. It's not a cheap endeavor. It takes a lot of investment. So that's where a good portion of the money will go. We're also building a data center for Saudi Arabia, given the work we're doing with SAP, where there's some real interest in that part of the world. Opening up a new Bangalore office last week. We went from 20 people in India two years ago to Therese now, it's 220 people today. We have room to expand up to 500 people there, as well as continuing to invest offshore in Eastern Europe. As far as backfilling people, we do expect that we'll go out and raise the bar on people that could be quota carrying reps or customer success managers or other parts of the operation. We don't feel the need to have to go and do a one-for-one replacement. In fact, our top performers, when we talked to them about what we were going to do, when we said, "Look, your quota is going to go up, but you're also going to have a number more opportunities to go pursue." They're willing to make that trade-off. It wasn't like, "Okay, we're going to cut the bottom and nobody's picking up the bag." We have people that were excited to go ahead and take that on. That's the way we've executed that. Yeah. And Patrick, this headcount reduction is already included in the current fiscal year 2025 guide, correct? Correct. Yeah. The headcount reduction will not have a material effect of what we've already disclosed. Got it. I wanted to move on to the investor day you all recently held. So first one as co-CEOs. So you're looking for 13% and 16% total revenue growth. Operating margins 26%-30%. Let's start on the revenue side. What are the building blocks and drivers to get you there from the current growth rate of about 7%, what you're guiding for 25%, to that 13% and 16%? Yeah. So of course, we still stand very confidently behind what we communicated in Investor Day. And our guide this year is 7%-8%. You take out the FX effect, it's about 8%-9%. So you start normalizing that and plotting a path from 8%-9% to 13%-16%, which is what we discussed in November. And it's a lot of the building blocks that Owen just mentioned. FedRAMP, for example, we're investing this year, and the benefits of that will be realized in 2026 and beyond. And let me level set. All the ideas that we present at Investor Day all don't just kick in on the same day. Some of the investments are going to take time. Some of them are being realized now. So you talk about FedRAMP, innovation, which I'm sure Therese is going to want to talk about. We've got our innovation mojo back, Studio 360, Journal Entry Analyzer, right down the line in terms of a lot of things we're doing. We've invested in Intercompany and I2C, two of our acquisitions over the last four years. So there's an innovation story there. There's an investment story with FedRAMP, with the Kingdom of Saudi Arabia as well. And then you start plotting that out, then you layer on pricing, a new pricing strategy. So all in all, without regurgitating everything we talked about, there's probably 8%-10% major initiatives that we're doing right now, both in terms of product and GTM strategy. And to be clear, it's not like one of those initiatives represents 90% of the opportunity. We're not overweighted or we're not putting our money in one area. We're making these investments. We're measuring them. Each one is going to contribute to incremental success to this company. It's not going to require 10 grand slams, but it's going to require a lot of successes along the way. That's why we feel very confident, coupled with what Owen said earlier, we're seeing demand in our pipeline, not just total pipeline, but current pipeline. You put all this together, and the path to 13%-16% as part of our target model three to five years out, it's quite clear. Yeah. So it's really a collection of all those different investments that you're making together, each one contributing a little bit to getting to that growth rate. And you also mentioned that some of them are near-term impacts, some are a bit more longer. Can you go into a bit more detail which ones are near-term, which ones are long-term, and the linearity of how you get to that 13% and 16% as well? Yeah. So I would say FedRAMP is 2026 and beyond. That's going to take about a year to build the infrastructure, but we're very excited about that. Pricing, I brought that up earlier. So we have rolled out a new pricing strategy starting in January. And just for a little background there, we've been looking at this for well over a year. And just having an open conversation about why we're doing it, it's for several reasons. One, based upon what we do here, what we do at BlackLine, we kind of have this paradox where the better a customer gets and the more adopted a customer gets, the less users they need. So migrating away from a user-based strategy only makes sense as our technology advances and with AI, well, upon us now, but on the horizon at multiple generations past. The pricing strategy, we're rolling it out now. Most of our renewals occur in the second half of this year, and we're rolling it out to our entire renewal space. That's going to take three to four years. We're also introducing it to our new logos and people within our customers within our pipeline. Most of those bookings, we'll call that, the benefits of that pricing strategy will be realized throughout this year, weighted towards the second half with more revenue in 2026 and beyond. If we're looking at it, pricing, FedRAMP is 2026 and beyond. Innovation is upon us right now. I definitely want to dig into the pricing and packaging changes you guys have made here, going from a seat-based model to more platform-based. Can you go into a bit more detail? What are the specifics behind that change? Yeah. I think sort of the short end of that, and before we just answer that, the other thing that we're seeing that I think Therese and I are very pleased about is the impact of industry. As we've built those verticals, very quickly, our ability to show use cases to our customers in specific sectors that speak their language and deal with the very unique issues that our customers confront every day. So whether it's in the media industry and you're thinking about how to account for film production costs or in oil and gas and how you think about downstream versus midstream versus upstream or the things that we do in banking, they all really resonate well. And then our ability to connect our customers who work in those same industries has a very positive impact on what we're seeing today. As far as pricing, the short version of this is we sell in part efficiency for our customers. And the more they use our product, the more efficient they become. In some ways, it's perverse in that they need fewer seats to do things. So we recognized, probably like most software companies, if we didn't change our pricing model to something different, every time we help our customer be more efficient, we go to raise the price, they try to figure out ways that they can cut back the seats. And so we asked Patrick and the team to come up with a model. And so Patrick, I'll turn it over to you, please. Yeah. Very high level. It's a great setup. We started this project well over a year ago. We saw this on the horizon and developed a thesis statement in terms of what would the level of customer engagement be on a new pricing model? How much would they embrace it? And to be clear, we're rational about it. We did not assume that 100% of all of our customers would embrace this new model. And what we saw during our pilot last year, we ran a couple of pilots, small sample size, was proving this thesis out. And the thesis was that, okay, lower mid-market customers, a market that we've been kind of walking away from strategically and intentionally over the last year, they didn't have maybe as much of an appetite. And that was in line with expectations. When you think about it, a customer with 5%-10% users, starting a conversation with them about unlimited user pricing really doesn't move the needle much, but what we did see, which is more important, when you look at the upper mid-market and enterprise customers that have hundreds of users, if not thousands of users, and then they have an Office of the CFO that can be five, 10, 20,000 people, and you approach them and you say, "I can offer you unlimited user pricing," and we never have to talk about adding users through the portal or negotiating new per-user pricing or each renewal talking about how many users you want to add or reduce. It's unlimited, and this wasn't done in a vacuum, and that's something that's important to point out. We just didn't launch pricing. What was key as part of this was also launching a platform. We are no longer just offering financial close. We have Studio 360. So now you're having a conversation with a CFO or CIO, and you're saying, "We're going to deliver you a platform for the entire Office of the CFO." And everyone can log into that platform within your group or within the entire organization to benefit from that. And now you're having a transformation conversation. The fee for that platform is based upon the company's revenue. If their revenue goes up, their price goes up. If they succeed, we succeed. It's a great conversation to have rather than counting how many accountants are in their org. So you look at the pricing placemat. That's what I'm calling it. It's very simple, very digestible, very easy to understand. You have your platform fee over here amongst some revenue bands. And then over here, you have consumption. And these are all the products and solutions that Therese and the company has talked about. It's automated journals, matching. It's our intercompany solution and the total volume going through that. It's automatic cash application through I2C. Basically, all the automation we can bring to a company. So now you're in this conversation. You say, "Hey, the more you consume, the higher your price goes, but your per-unit price goes down." So now you're in a clean, crisp ROI conversation with a CFO and a CIO, something that's strategic, something that's not incremental. You have a platform, and then you consume more and more, your ROI goes up. So we're really excited about this because once you implement this, once you drive more consumption, that's ultimately what's going to drive the benefits of this pricing strategy. Got it. So essentially, revenue bands, combining that with consumption and usage-based pricing. So what should the expectation be on what the net effect of this pricing impact will be to the model here? It's one of the 8%-10% initiatives that we're rolling out, and most of the benefit is we're going to start to see accruing in our bookings in the second half of this year. We're going to land at a price point and renew it at a price point well above our standard inflationary increases, and then that'll manifest itself in terms of revenue recognition in 2026 and beyond. It's going to take three to four years to roll this to the renewal space, so you're going to see that benefit recurring up through the duration of the target model. Got it. I want to shift gears a little bit. Therese, bring you in on the conversation here. I think there was a lot of excitement from customers at the Beyond the Black Conference at the end of last year. At least that was my takeaway. There's a lot of product innovation coming out from you all. I think the really big announcement that people are really excited about was Studio 360. So can you unpack a bit more? What is Studio 360? How do you think about how customers are going to garner value from that product? Great. Thank you, Chris. Studio 360 is really BlackLine's comprehensive platform, and we think that this is defining a new gold standard for what a platform should actually be. It has five components to it, all right? Integrate. Well, wait, before we start with the five components, something else that's very important. In today's world, data volumes are growing exponentially, and the ability to have a modern data architecture that allows very easy sharing of data with your customers but still has top-notch security is very important. For that reason, we partnered with Snowflake to basically present a new data architecture. The five Studio 360 components that are built on top of that are Integrate. You've got to be able to get data in and out of different systems. You have to be able to cleanse and transform data as part of that process. Number two is Orchestrate. All right? This is something that nobody else is really tackling in the same way that BlackLine is. The ability to use setup workflows within BlackLine, use APIs to communicate with all other systems, and basically visually define and then automate all the different workflows that are happening across all different ERPs and systems in finance and accounting. That's something that one of our customers at Bed Bath & Beyond called the Holy Grail of accounting. And this is the Orchestrate piece. Number three is Visualize, where we've incorporated Power BI so that our customers do not have to export data out of BlackLine, but they can get all of the real-time dashboards and analytics that they need. Number four is Control. And this is around keeping a lot of the metadata. We're offering this for free to our customers, things like yearly chart of accounts review and your SOX library of controls and some other information. The reason that we are building this in for free is because if you go back to data is the new currency, and proper implementation of AI down the road requires a certain level of metadata to really do it well. Okay? We're sort of helping them while helping ourselves. That's the control aspect. Finally, Blueprint, which is where our marketplace is for our partners who have done many transformative, cool things for our customers, can actually store the body of their work so that other people can see it and then reach out to them to get their help on their particular projects. Five components. It's very comprehensive. What was so invigorating about the user conference is that our customers immediately saw ways to extend what we're already doing. They had additional ideas of how they could receive a ticket from another system and kick off a journal being automatically created within BlackLine, or how they could use it around some of the requirements for regulatory reporting. They immediately saw the power of this and started thinking of additional creative ways to use it. Yeah. No, that's certainly a really interesting product. And I'm also curious, what does the pricing and packaging look like for that? If a customer adopts Studio 360, what kind of uplift on ACVs could that potentially be? First off, we are exposing certain parts of the platform to our customers right now for free: the control aspect, some of the cool Power BI dashboards, because we want it to be channelizing for them. Then if they want their own Power BI dashboards or additional event-driven processes or more APIs to other systems, then they have to actually purchase the platform. The platform itself is going to be based on, again, the size of the company, revenue bands. Anything to add to that, Patrick? No. I think that was perfect. It's a six-figure, maybe seven-figure investment for the very largest customers, and that's for the platform. But what it also enables goes back to where I was talking about pricing. It allows us to take our four pillars that we have and connect them all into one. So it almost facilitates further cross-sell and upsell in addition to having the base fee. Yeah. I wanted to shift gears onto kind of broader industry trends. We've been pretty bullish around this whole ERP migration cycle, so I'm curious, are we being too bullish there? Are you also seeing customers wanting to move from on-premise ERP systems to the cloud, and then how does BlackLine benefit from that? I think "want" is a strong word for some of these companies. It's just the reality of what they're going to have to do. And so yes, we're starting to see a bit more of that. But I also would say for us in particular, and we've talked with you, Chris, a little bit about this. I mean, last year was a reset year for us with SAP because of all the changes they went through at the beginning of last year and then the middle of last year. And we feel a lot better about heading into 2025, about how the pipeline is starting to build, their focus on finance first, which again is a good thing for BlackLine and our work with them. So I think we're cautiously optimistic again when we see what's beginning to happen in our pipeline. We're encouraged by that. If we can continue to make progress that we've made with SAP over the last five, six months to sort of lead with finance, get the compensation systems aligned, give credit to them for cloud revenue, which matters very much to the SAP organization, that all bodes well. If we wind up with finance last or at the end, then you're sitting there and we're waiting 24, 36 months before BlackLine gets in. And that's a little bit of some of the things we saw at the end of the year. There was a couple of big deals where the deals closed for SAP, but they didn't necessarily close yet for BlackLine. And that's because the incentives weren't the right way and everything else that you sort of need to get finance first. So we're driving towards that really hard right now with them as a team. Yeah. I'm glad you brought up the SAP partnership because I've always found that super interesting. They've got about, call it 23,000 on-premise customers, and clearly they're moving people to the cloud. But frankly, the percent of revenue has kind of stayed in this 24%-25% of total revenue. So what hasn't worked so well? And I know you've been making some real good progress and good conversations with SAP recently. So what are some of the changes or the conversations with them like today that make you feel better about that opportunity going forward? So listen, we tried to make lemonade out of the lemons last year. So when they had their reduction in force, which was quite large, and then our executive sponsor left, Therese and I picked up the phone. We called Christian Klein, their CEO. He was very receptive. And we've had an ongoing dialogue over the last seven, eight months. The big things that we can tell you to take away, one is we have agreed a common architecture. So now when we go in and talk to customers, you can see a picture of both BlackLine and SAP together. Well, here's BlackLine and here's SAP. That was very important to get to. We've been very clear about how do we accelerate the premium qualification of BlackLine solutions. So for example, Studio 360, which in some ways, if it was just for SAP, it looks like their AFC product. But because of what Therese and the team built, it covers and interfaces with all the ERP systems out there, the big ones. And so that's a differentiator for both SAP and for BlackLine as we go into the market. We had to get compensation systems aligned and agreed better. Last year, when SAP had its reduction, if you were an SAPer, you're just focused on delivering SAP revenue because you're trying to protect your own role. And so now their quota-carrying reps, our quota-carrying reps, they get credit for that joint effort. And then they get sort of an additional credit at SAP because it's cloud-based revenue. That was a big deal. The messaging of finance first was a big deal, right? So that comes right out of Christian's voice to all the organization. They reestablished their Office of the CFO, which was a big deal for us because they had disbanded it. In the last year, they've hired about 600 or so people who are focused on the Office of the CFO. We were saying earlier that we've got a team in Atlanta meeting with their team this week trying to figure out how do we drive more of that together. One of the things that Therese and I really were talking with Christian about is how do we measure progress? We can't just periodically meet for a cup of coffee. What are we going to do together every quarter to measure the things we said we would get done? And are we making progress? And if we are, great. And if not, how do we correct all that? We had to put into place for us an SAP Catalyst Group because there's a certain way to work with them. And we had sort of dispersed all of our knowledge. And we brought that together in a team that works much more seamlessly with them. We've just launched for the first time ever where data can come back and forth between BlackLine and SAP so we can see how a customer is using BlackLine and are there issues that our CSM and their CSM should work together to get more optimization out of what we're trying to do. So there's just a whole host of things. I'm sure I missed two, three, four of them. But it's like it's really a lot of good things that we needed to do because there's no reason we shouldn't be able to drive this number up in the coming years to 30% or higher as a percentage of our revenue. And that's what we're trying to get to. Yeah. A lot of really interesting initiatives going on there. You mentioned the compensation alignment, the new Catalyst group you've launched. I guess, are you seeing any of these benefits yet? How's the SAP pipeline looking like? Is this more kind of a back half of the year kind of improvement? I think we started to see some progress broadly in September, and when we look over the last six months now, our pipeline is going in the right direction. We feel good about that, both SAP and non-SAP. It'll take time. SAP sales are not short, and so you have to think nine to 12 to 18 months, but again, that's sort of why Patrick and our team, when we're looking at the build-out of our model, we're focused a bit more on the back half of the year versus the first half of the year. Nobody decides they're doing SAP in three to six months. Trust me. I mean, I wish they would, but that's not reality. Wanted to move on to the fiscal 2025 guide for top line, 7%-8%. There's a lot of factors going into that, right? The macro that you called out in Q4, FX headwinds. So maybe, Patrick, can you unpack some of the assumptions you're making in that guide? And I think based on the Q1 guide, it does seem like there's an acceleration into the rest of the year. So what gives you confidence in that improving growth rate throughout the year? Yeah. Good call out, Chris. Our guide for the year is 7%-8% without the FX impact. Post-election last year, it would be 8%-9%, and most companies are experiencing that same phenomenon. Our Q1 guide is 5%-7%, so with the full year being above that, there's a certain implication there that you could impute that we're expecting to exit 2025 much stronger than we came into 2025. It's a lot of the initiatives that I've highlighted, Therese has highlighted, and Owen's highlighted that we're seeing them manifest in pipeline, and with closed rates for smaller companies of six months, larger companies 12-18 months, that's what is incorporated into the second half of the guide, so overall, you can infer or impute that there's an inflection point in our growth rate during 2025. Yeah. Before I open it up to the audience here, just last one for me. You all called out a record level of seven- to eight-figure deals that you're seeing in the pipeline. Curious, what kind of deals are these? Are these multi-product deals, and are you expecting these to close sometime within fiscal year 2025? Yeah, so they tend to be broader sales at bigger companies, so it's a little bit of the size of the opportunity as well as the breadth of the opportunity, which is what we've been trying to do. When Therese and I came in, we said we wanted to elevate our story to the Office of the CFO because if you looked at our portfolio, what we had, and what we were building, and we're trying to literally help to drive digital finance transformation, then you should be able to articulate and win at a higher level, and so again, those are the things we've started to see that have continued to build, and so yeah, we're looking to expect a number of those deals to close in the second half of this year. Obviously, they take a little bit of a different skill set from our own team. It really does require us to have close relationships with our partners who are going to be driving a lot of the implementation. That's why we've really narrowed the number of partners we choose to work with down. We call it the CEO Dozen. So there's 13 of them, for those of you who buy bagels. And that's what we're trying to focus on is that small group that has real brand permission access. They walk the halls of the C-suite every day. And we're really all in on that. And so are they. And we expect good things to come out of it. Awesome. I think we can take one audience question if anyone has any. All right. I think we can end it there. Thank you all. Thank you so much. Great seeing you again. Yeah. Likewise. Yeah. Likewise.