BlackLine, Inc.
Q3 2020 Earnings Call Transcript

Published: 30 Oct 2020

[Operator:]

Ladies and gentlemen, thank you for standing by, and welcome to the BlackLine Third Quarter 2020 Earnings Conference Call. At this time all participants are in a listen only mode. After the speakers presentation there will be a question-and-answer session I would now like to hand the conference over to Alexandra Geller, Vice President of Investor Relations. Thank you, and please go ahead, ma'am.

[Alexandra Geller:]

Good afternoon, and thank you for your participation today. With me on the call is Therese Tucker, Founder and Chief Executive Officer of BlackLine; and Marc Huffman, President and Chief Operating Officer; and Mark Partin, Chief Financial Officer.

[Therese Tucker:]

Good afternoon, everyone, and thank you for joining us today. I am pleased to report that the demand environment has steadily improved, and we have seen increasing activity and momentum throughout the third quarter driving another quarter of solid results. The momentum we have experienced is validation that finance transformation is mission-critical and climbing to the top of the CFO's priority list. We believe BlackLine is well positioned to capitalize on this demand environment. As the leader in this space, we have and we'll continue to invest in our market to support our growth initiatives and best serve our customers. At the start of the pandemic, we made a strategic decision to stay the course with investments in key areas, such as organizational leadership, R&D, customer success and our partner ecosystem. We believe our strong results validate these investments. Earlier this month, we announced the acquisition of Rimilia, a leading provider of accounts receivable automation solutions. We got to know the Rimilia team over the last year, and I am thrilled to welcome them into the BlackLine family. Their culture and values are very much aligned with ours, and we look forward to a successful combination of our two companies.

[Marc Huffman:]

Thank you, Therese, and good afternoon, everyone. As Therese mentioned, we've seen continued improvement in the demand environment with each month stronger than the one before. As a result, Q3 performance came in ahead of our expectations with solid execution across the business. These results highlight the progress we are making on our multiyear growth initiatives. For instance, a large deal momentum, we experienced in Q2 continued in Q3, and we now have more than 20 customers with $1 million or more in annual recurring revenue. The conversations we are having with these customers are very positive. The companies who have invested in digital transformation are moving forward with their existing projects, and we feel good about the pipeline for future quarters.

[Mark Partin:]

Thank you, Marc, and Therese, and good afternoon, everyone. We are pleased to report better-than-expected Q3 results in revenue, profitability and cash flow.

[Operator:]

Our first question comes from the line of Rob Oliver with Baird. Your line is open.

[Rob Oliver:]

Great. Good afternoon everybody. Thank you very much for taking my question. I had one for Marc Huffman and then a quick follow-up for you, Therese, if that's okay. Marc, your comments were quite sanguine on the outlook for Q4. And I think you mentioned SOLEX as well. So, I was just wondering, given the recent negative pre-announcement from SAP. I know you guys have, to a certain extent, somewhat limited visibility into that channel, but you did sound quite optimistic relative to the seasonality in Q4. So, I was wondering if you could maybe reconcile those and talk a little bit about that.

[Marc Huffman:]

Yes. So -- thanks Rob. I think this somewhat proves that SAP performance is not a great proxy for BlackLine's performance. It's an incredibly important partnership to us. We've got some great joint customers and success together. As evidenced by our performance and the remarks we've made about a strong quarter, twice as many new logos as the prior year. You can see its working and its building. But SAP as a part of our entire customer base from which ERP system they use is only a portion of our business. And so we have a fairly diverse portfolio of companies with different ERP systems. We serve all of them, and we serve all them really, really well.

[Rob Oliver:]

Great, that's helpful. Thanks Marc. And then Therese, one for you. I know you're getting towards the end here. And you made a comment in your prepared remarks about how accounting and suite transformation is rising to a CFO priority. And I know going back to the IPO and prior, that was always kind of a Holy Grail. And I know you guys have been getting there, but that comment struck me, and I was wondering if -- that must be gratifying to you. I was wondering if you could talk a little bit about what makes you say that, what you're seeing, where this is now rising to a kind of CFO-level priority? Thank you.

[Therese Tucker:]

Absolutely. And Rob, I'm actually hopeful that I'm not coming to the end. Let's just -- I'm transitioning to a different role, which I'm super excited about, but still very supportive of BlackLine and supportive of Mr. Huffman here. So, I'm not at the end. Don't write me off yet. But regarding the CFO, I think that this has been a trend, you're right. It is very gratifying. We've really been witnessing over the last year or so. Even with the pandemic, the companies are really embracing. CFOs are really embracing the concept of digital transformation and they actually really believe in the benefits that they are going to realize. And it's one of the reasons that we spoke about the ROI award that our customer Red Wing got. And so we are seeing this focus on digital transformation is at the level of the CFO, both because it has incredible impact on their operations. And secondly, because it's typically a high-dollar spend. So, both of those things, the potential impact for how to modernize and actually do things a lot better, plus the fact that they're going to invest in it is really getting their attention.

[Rob Oliver:]

Great. Thanks very much. Appreciate it.

[Therese Tucker:]

Thanks Rob.

[Marc Huffman:]

Thanks Rob.

[Operator:]

Thank you. Our next question comes from the line of Koji Ikeda with Oppenheimer. Your line is open.

[Chad Schoening:]

Hi, guys. This is Chad Schoening on for Koji. Thanks for taking my questions. Actually, I have a question here on the competitive environment and what you guys are seeing out there in terms of competitive bids for new deals. You did mention strong win rates in the quarter. I'm just wondering if that activity in terms of competition has picked up at all over the last six to nine months. And on that topic as well, are there any new players in the space that seem to be popping up as you guys are competing for new deals? Thanks.

[Marc Huffman:]

Well, thank you, Chad. What's picking up is, I would say, the demand environment. And so just like our performance and the visibility that we have -- every month since we entered pandemic time, we've got a little smarter and a little more efficient, and our business has become even more performing. And so that sort of tide of things also probably applies to the demand environment, meaning that everybody is seeing a little more activity, and maybe that tide is rising underneath a lot of boats. In terms of new competitors, not really a difference in the competitive makeup. The biggest competitive scenario that continues to exist for us is inertia people stuck in legacy manual, unsustainable accounting processes and the reticence to invest in finance digital finance transformation. I can tell you that we feel like we are seeing improved win rates and increased deal velocity, specifically around where is where we've got our modern accounting playbook. At play, it's really well received, specifically mid-market CFOS, very tight time to value, quick ROI. So we feel like we're still in a battle against inertia and pretty happy with our competitive positioning right now.

[Chad Schoening:]

Super helpful. Thank you.

[Operator:]

Thank you. And our next question comes from the line of Matt VanVliet with BTIG. Your line is open.

[Matt VanVliet:]

Hi. Thanks for taking my question. Nice job in the quarter. I guess as you look at -- you've added to the portfolio here with the Rimilia acquisition, and you're really covering a lot more of the office of finance and accounting here. Has it changed kind of the overall sales process? Maybe who your initial contact is? Are you making your way up sort of up the org chart a little bit more? Maybe just help us think about kind of as you broaden your capabilities here, how much that's impacting the sales pipeline?

[Marc Huffman:]

Matt, I'm sorry to do this to you. Could you rephrase the question for us or summarize? We just had a quick blip in our phone.

[Matt VanVliet:]

Yes. No worries. Yes, I guess just as the product portfolio has expanded, given both acquisition and some internal development, are you moving up sort of who your initial point of contact is? Has the buyer changed and maybe what the whole sales process has evolved over the last several months or year?

[Marc Huffman:]

Got it. Thank you. So not substantially. We have been laser-focused on the controller. Specific to the category or the place that we pioneered and created and we're the leader in that automation of the closed process. The addition of Rimilia gives us additional area where we have incredible value that we can bring to that same buyer persona, the controller. And I think what we're seeing play out here is a good realization of our strategy, a multiyear growth initiative we put in place two years ago, where we really focused on account management. Making sure we had the fully funded and developed set of offerings through account management and other expertise that we have in our service and customer teams so that we can help people identify where they can get good ROI and make sort of more strategic uses of our software that is growing the footprint. And I think contributing to the fact that we have so many clients paying us such a large ticket now.

[Matt VanVliet:]

And then just following up on sort of the overall deal momentum you're seeing throughout the year here. But I wonder if the conversation sort of early on in the COVID send everyone home environment was, let's not rock the boat. Let's try to make what we have here as useful as possible. And now as the prospect of getting into a year-end close and starting a new year is happening. Has there been an acceleration in sort of conversations with customers saying, we need something in place because this is going to be sustained longer and more difficult than we thought. We're anticipating being back in our offices by now, and it's just not happening.

[Marc Huffman:]

There's a lot of variability to the answer for that. Some of it comes through experiences that our sales team and services teams have relayed. And then, our own personal interactions with various CFOs and controllers, it really depends on their environment, what industry they're in, the shape of their business. And so, some people who had finance transformation strategies underway. They took a breath. And they've returned to funding those, as they've sort of become more comfortable and understood that this is going to be a longer, more sustained impact, they should continue and fund those things. You've got other areas where people have had to substantially remediate these really manual processes that they were in a quite a blind spot, if you will, earlier in the pandemic, and they needed to get base use cases put in, and we've seen some of that drive some of the adoption for us. So, I would say, it's sort of all over the map, depending on each individual businesses impact to the pandemic in their environment.

[Matt VanVliet:]

All right. Great. Thank you.

[Operator:]

Thank you. And our next question comes from the line of Matt Stotler with William Blair. Your line is open.

[Matt Stotler:]

Hey. Thank you for taking my questions. I guess, just first on the Rimilia acquisition. So you've obviously spoken, especially Therese, with the move that you're making, spoken about expanding BlackLine’s value in the ops of the comptroller, makes a ton of sense. But there are a lot of accounts receivable automation players in the market. So would love to understand the differentiation of the asset or what rationale lead you to pick Rimilia? And then what was the reason for going this direction in the context of that larger goal?

[Marc Huffman:]

Well, so obviously, it's pretty compelling for us to be able to expand our TAM by $10 billion. And you could see that this is a growth strategy for us. We think that this is so adjacent to the buyer, and there's a lot of potential with the way that they use their artificial intelligence to provide intelligent matching around that, that we think will apply to our entire tech stack eventually. We think there's a lot of synergies in the data models themselves. But, realistically, if we just get back to the purity of our mission, serving that controller, this is such a good space to be. There's an enduring nature of cash. There is so much of it that sits unallocated and can't really be realized and operationalized that we can help with. We've got -- I just love the brands and the size and shape of the customers that we have, and we've got this great distribution organization, which if you look at one of the rationales for why this particular company and the asset, they've got good tech. In Europe, they've got great brand and customers. They don't have much in terms of distribution in North America, and we happen to have a great distribution organization here. So those are some of the real important reasons why we were with Rimilia.

[Mark Partin:]

Yes. A couple of other things, too, is that we met them a year ago, and it was really important that they serve the enterprise market, their product scale to very large companies. And that culturally, we think it's a good fit. It's a good complementary culture and value-based company. And we spoke about that earlier, but you can't -- they're a strong competitor in this market and in large measure, not just the tech, it's the people, too.

[Therese Tucker:]

So you can see these guys already feel strongly about it. I don't think I have anything to add to that, Matt.

[Matt Stotler:]

All right. No, that's very helpful. I appreciate the color. And then as a follow-up, just on the strategic products front. So we'd like to get just an update in terms of what you're seeing in the pipeline there. Last quarter, you talked about some strong demand for transaction matching and ICH specifically. But we saw kind of a step down in terms of the overall revenue contribution, understand things can be lumpy. So we'd love to just kind of better understand the trends in that market -- in those products in the pipeline and what drove that contribution in the quarter? Thank you.

[Mark Partin:]

Yes, of course. Look, the pipeline for strategic products has been robust over the last six, nine months. And what had been driving that pre-COVID was large digital transformation projects. And we saw those freeze earlier in the year. And as we continue to see momentum in larger deals, we see that pick up. Year-to-date, our strategic product contribution to our sales has been about 20% and record in Q2 and within our range in Q3. So we will see that attached to these large deals, and we're seeing that momentum. And it's across all three products. It includes ICH, smart close and transaction matching. And moving forward, we'll have Rimilia as part of our strategic portfolio as well. So we're excited about that part of the business.

[Matt Stotler:]

Great. Thanks, again.

[Therese Tucker:]

Yes, you bet.

[Alexandra Geller:]

Thank you.

[Operator:]

Thank you. Our next question comes from the line of Brian Peterson with Raymond James. Your line is open.

[Brian Peterson:]

Hi, everyone. Thanks for taking the questions. So maybe one for Mark Partin. Just on the margins, they've been much better-than-expected over the course of the year. Just curious, is there anything in terms of efficiencies that you guys have gained this year? And I'm looking to hone in on the go to market. I know we've seen some strength in the mid-market. But just curious, what's driving the margin expansion?

[Mark Partin:]

Yes. That's right. Thanks, Brian. Interestingly, Q3 was the strongest gross margin quarter we've ever had in both subscriptions and services. And we are undergoing a public cloud transition with Google, with GCP, and that will begin in earnest as we move forward and going into next year. And so we've been talking about that potential drag on the gross margin. So I should throw that out there. But what we see in the last two quarters is that we've really benefited from a lot of the work from home. We are not spending as much on T&E in rent. And so that's dropping directly to the bottom line. We have some, I would call it, just really well-managed efficiency in the sales and marketing where we have maintained the same level that we came into this pandemic with, which has given us some margin opportunity there. We have continued to actually increase our R&D investment, which has been an increase in R&D as a percentage of revenue. And then, of course, in G&A, we're seeing some real sort of operating leverage as we scale and get bigger. So the margin is really benefiting over the last couple of quarters from work from home. And as long as that lasts, we believe we're going to take some value from that to the bottom line.

[Brian Peterson:]

Got it. Thanks, Mark. And maybe a follow-up. Just on the idea of build versus buy, obviously, Rimilia is getting added to the fold. I'm curious, how are you thinking about adding to the product portfolio organically or through M&A? Thanks, guys.

[Marc Huffman:]

Well, so we're looking at the categories and places that we want to play. And again, there's -- back to our purity of mission. We think the opportunity for us, given our experience is in digital finance transformation. It's the processes that come and go at an ordinary time when you're in the office, all of those things are people walking in and out of their controller's office. And so we're going to maintain a laser-like focus on that. We're going to serve our customers across close automation. We're going to serve our customers now across cash application and accounts receivable automation. And where we find great opportunities to continue to automate other processes that are really nearby there, and those people are walking in and out of the door, the controller, be it build it or buy it, we're going to play there.

[Brian Peterson:]

Great. Thank, Marc.

[Operator:]

Our next question comes from the line of Josh Beck with KeyBanc Capital. Your line is open.

[Josh Beck:]

Thank you all for taking the question. I wanted to also ask about the acquisition. I don't know if there's any other color you can provide on revenue model works between subscription and transactional or maybe how to compare their ARR versus yours or ACV? I'm not sure if there's anything you can share with the mechanics of the model.

[Mark Partin:]

Yes. I'll give you a shot at it. Rimilia is about a $10 million business, when we bought it. And the business model is very similar to ours in terms of very high renewal rates, particularly in the enterprise segment, which dominates most of their customer base, high 90s. They have a greater than 100%, something close to hours in terms of retention rate. So it's a super sticky product. They land and then expand. The vast majority is subscription revenue. They have a small amount of services, something similar to our revenue mix. And so look, it's a growing business, which is one of the things that really excited us. And we think with our distribution, it can continue to grow. It will be, as I mentioned, from a business model, it will be dilutive. To our business model in the fourth quarter and moving forward for a short time. And that's in large measure because we're investing in their products and in go to market.

[Josh Beck:]

Very helpful. And I think you had mentioned something like 100 customers. It certainly sounds like they have a little bit of an enterprise and European player to them. Do you find most of those customers came from perhaps they were using a module that was hanging off of an ERP, and it just really didn't meet their standards? Or do you find that maybe they had tried other kind of modern solutions around the idea of invoice automation. Just any context you can share on where those customers have come from for them?

[Marc Huffman:]

Not surprisingly, a lot of these companies are still applying cash very manually. This is another area that you just -- there's a treasure trove, I guess, you would say, of these kinds of processes that exist with spreadsheets, labor, who it's stuck in just a different time frame that we feel like we can continue to help the companies automate, and this is just another example of them. Big teams of people, taking data files and trying to find -- split a second, looking for a needle in the haystack trying to apply a payment that has no other identification to it to some other place that you can apply and then make use of that cash. They do a really good job of using our artificial intelligence to learn about how to match those things and make those agents even more and more effective. And honestly, a lot of businesses still do this very, very manual.

[Mark Partin:]

Yes. And to the ERP, they have a good set of ERPS, including SAP. They sold in something similar to our customer installed base with SAP as a percentage. We also have some overlap. We were able to do some research on our own and their customers really love their product, and there's a little bit of complementary overlap. So they have an installed base that we think will be very complementary to our ability to work with our customers.

[Josh Beck:]

Okay. That makes a tough sense. And if I could just maybe sneak in one more, with some of the commentary around the relief programs, it certainly sounds like there's really a lot of health in the customer base. And just when I think about the net revenue dollar retention, I mean, does that mean that we're maybe approaching a trough here? Just any context or maybe you can talk about how it perhaps exited the quarter? Just any color you can share there.

[Mark Partin:]

Yes. Well, look, the customer relief program, we were really geared up to offer a lot more than ultimately was needed or requested. And so there was a decreasing impact on our financial results in Q3, and we think it will be even lower in Q4 based on where we see and stand today. The dollar-based net retention rate is a couple of things. Not only is it that is it that relief, which impacts it and weighs on it. But it's also just the overall demand environment. While it is improving, it has come down, and that's a 12-month rate. And so I don't -- I wouldn't say Q3 is a trough on that rate, because it does respond to a 12-month formula. So as demand improves, that rate can in the future start to pick back up. But it's -- again, the stickiness of the customer was solid. The relief was less than we thought. It's really about getting the demand environment to continue improving.

[Josh Beck:]

Really helpful. Thanks, everyone.

[Mark Partin:]

Thank you.

[Operator:]

Our next question comes from the line of Chris Merwin with Goldman Sachs. Your line is open.

[Chris Merwin:]

Okay. Thanks so much for taking my question. I wanted to ask about Rimilia as well. Yes, it sounds like the product today, it's already being sold to enterprise. I mean are there any other investments you feel like you need to make? Or is this sort of ready to go in terms of your ability to start selling this into your larger enterprise customers? And then separately, how should we think about the period of ramp-up of getting the sales force to start initiating dialogues on this and maybe when we might start to see some impact in net retention as you make progress on the new products? Thank you.

[Mark Partin:]

Yes. Great. Thanks, Chris. Look, our intention is to invest pretty heavily in this market and in this company for a number of reasons. It is a large market opportunity. They have a wonderful time and moment given the prioritization of cash management and the ability to drive that demand, starting with our customer event in the fourth quarter and moving into next year as we solidify our go to market. So our investment will be in their -- in maturing their product portfolio, they have other products that we'll continue to invest in and bring them along as well. We think that the -- what they have today scales to the largest organization. So with respect to that, it will be sort of instantly ready to go into our market. But we want to invest in the people and the space and the product over the course of the next year. So we intend to do that.

[Marc Huffman:]

Yes. And I think the timing is really good for us. We're coming to the end of our fiscal year. And so what we're doing in Q4 for us is sort of trying to get our team just laser-focused on executing against the opportunity in front of them. They had their existing sales team, albeit smaller than ours, who has a robust pipeline. Those people are realizing the benefit of investing in those opportunities where we have them really focused on those things. We've got behind the scenes, integration teams focused on -- coming into January, really humming on a plan that we think we can execute and meet our financial goals on the products that are on the price list right now with them. We have some other areas. Mark mentioned that we are investing in that business to bring some additional capabilities that can be even further realized in terms of our growth initiatives. And then lastly, we're really, really excited to be able to highlight this new capability to the entire universe around BlackLine and are beyond the Black conference, which is being produced right now and delivered in November here very closely.

[Chris Merwin:]

Thanks so much.

[Mark Partin:]

Thanks Chris.

[Operator:]

Thank you. Our next question comes from the line of Mark Murphy with JPMorgan. Your line is open.

[Matt Coss:]

Hi, good afternoon. This is Matt Coss on behalf of Mark Murphy. Can you talk about your hiring trends for the rest of the year? Over the last sort of 5 to 6 quarters, it's been pretty steady at about 20-ish to 25% year-over-year growth rate in head count. Has that changed at all in Q3? And do you expect a change in that in Q4?

[Mark Partin:]

Yes, hi Matt. You're right. It has been pretty steady across the board, primarily around 20%, a little higher than that, over 30% in the tech and R&D organization for obvious reasons. And then with the addition of 100 employees from Rimilia, that adds to the overall employee population. As we head into this end of this year and going into next year, our view is that, that will remain relatively steady. We started the year with 2 record quarters of hiring, slightly lower in Q3, just given that's typical and seasonal, and that's usually what happens in Q4 as well. And then it ramps back up starting again at the beginning of next year. That's our typical sort of rhythm with a normal company anyway.

[Matt Coss:]

That's helpful. And I read the press release that mentioned Domino's, getting the Domino's business in the Ireland and the U.K., and I'm pretty sure they're already U.S.-based customer. As you think about sort of that win and the number of global customers that you have, is that something that you -- well, it's been something that you've done elsewhere, but do you look at your customer base and seeing sort of the large opportunity for those global expansion, something you're…

[Marc Huffman:]

Yes. So it's clearly one of our multiyear growth initiatives, fully invested in account management. So our sales leadership brought a playbook into play here that fully invest in account management, fully funds the customer teams around process experts and other things that allow these multi-national companies to understand how to operate in these environments at scale, distributed across the world. And now increasingly, in a world where you don't get to come and see each other in the office. And so you'll continue to see, I think, these large distributed organizations continue to roll out and succeed with BlackLine.

[Matt Coss:]

Thanks very much.

[Marc Huffman:]

Thank you.

[Mark Partin:]

Thanks, Matt.

[Operator:]

Our next question comes from the line of Terrell Tillman with Truist Securities. Your line is open.

[Unidentified Analyst:]

Hi, guys. This is actually Nick on for Terry. Thanks for taking our question. So kind of related to the large deal momentum. You guys have talked about large deal momentum continuing in 3Q and now having more than 20 customers with one million plus in ARR. I guess our question would be, are you seeing a common identifiable pattern of adoption and expansion with these larger customers that you can continue to repeat moving forward? Or does it really vary on a case-by-case basis? And I guess a majority of these customers initially sourced through partners? Just trying to understand the adoption and expansion pace with these customers.

[Marc Huffman:]

Well, the attribution, I'll leave to Mark Partin. But in terms of the pattern, yes, you start to see these patterns identify partly, because we've been fairly purposeful in how we're doing that. So we're trying to land these customers on a set of well-known best use cases. So think of those as our leading practices. If you were going to start and you're going to move from manual and unsustainable into modern accounting, you would do these three or four things really, really well. And we get those ironed out, and then we sort of build momentum with them. And then on a case-by-case basis, largely depending on their needs and priorities as well as their industry, we start to introduce additional use cases that leverage the experience we have with nearly 3,200 companies who do something like that, and they can benefit from that experience that we have. And so that's sort of this accounting journey that we take them on, and over time, that they gain momentum with that. And I think that's what's really driving a lot of strategic product add on, high amount of use cases around our matching engine. And like I said previously, I think that's how we have so many companies now paying quite a bit for BlackLine, getting great value for it.

[Mark Partin:]

Yes. And this has really been an exciting part of our business. And one of the big differences is that when we went public in 2016, we had two customers over $1 million, and those customers were five years old. It took them five years to get there. Today, customers can get to that point much faster. They can land there. And that's in large measure due to the capability of the account management team that Marc mentioned. The ecosystem and partners that we've now engaged that become part of that solution, overall solution that's being delivered and the SAP partnership, which can and does bring large strategic deals to BlackLine. So large transactions for us, the average has been in a little over 100,000 in the enterprise. So seeing companies that can and do scale to over $1 million footprint is very exciting.

[Unidentified Analyst:]

Got it. That's very helpful. Thanks guys.

[Operator:]

And our last question will come from the line of Brent Bracelin with Piper Sandler. Your line is open.

[Unidentified Analyst:]

Hello. It's Claude Jeffries on for Brent. First question on MAP. Good to hear that another record number of mid-market logos, even after the implementation and promotion, and -- is there a plan for success or go-to-market choice that you're making that's specifically resonating with these mid-market CFOs.

[Marc Huffman:]

I think that the -- well, I'm going to say the term, and it doesn't sound that appealing, but it's actually very appealing for CFOs and controllers. We provide people a well-worn path towards this digital finance transformation. Our expertise sort of bundled and packaged together with our software and delivered really efficiently. That's getting people live and very quickly and getting them ROI very quickly. And that seems to really, really resonate.

[Unidentified Analyst:]

Great. And I apologize for getting the competitive landscape question again, but it has come up. You have a cloud-based ERP provider that released a major accounting upgrade today, and I've had some customers talking about a virtual close last quarter. Is this really just an indication the market has grown overnight? Or how should we be thinking about this?

[Marc Huffman:]

A cloud-based ERP provider, the ERP companies are primarily interested in selling ERP. And this -- they've continued to play on the margins of this space, but there is a significant difference in what we deliver in terms of value for clients across the entire close process and other accounting processes that we're able to automate for people, then being able to deliver and manage sort of controls in the checklist that you can apply to close your books on. There's a big, big, big gap between those two things. And we're really focused on the latter. And I think the market is sort of more interested in the more comprehensive solution to that.

[Unidentified Analyst:]

Great. Thank you.

[Operator:]

Thank you. And I'll now turn the call back over to Therese for closing remarks.

[Therese Tucker:]

Thank you, everyone, for joining us today. And thank you for your continued support, your referrals, please keep them coming. It's helping us grow. Thank you.

[Operator:]

Ladies and gentlemen, this does conclude the program. Thank you for participating, and have a great day.