BlackLine, Inc.
Q4 2019 Earnings Call Transcript

Published: 13 Feb 2020

[Operator:]

Ladies and gentlemen, thank you for standing by and welcome to the Fourth Quarter 2019 BlackLine Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Alexandra Geller, Vice President of Investor Relations. Please go ahead, madam.

[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 Mark Partin, Chief Financial Officer. Before we get started, I would like to note that certain statements made during this conference call that are not historical facts, including those regarding our future plans, objectives and expected performance, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent our outlook only as of the date of this call. While we believe any forward-looking statements, we have made are reasonable, actual results could differ materially because the statements are based on our current expectations and are subject to risks and uncertainties. We do not undertake and expressly disclaim any obligation to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. Also, unless otherwise stated, all financial measures discussed on this call will be non-GAAP. A discussion of why we use non-GAAP financial measures and information regarding reconciliations of our GAAP versus non-GAAP results is currently available in our press release, which may be found on our Investor Relations website at investors.blackline.com or on our Form 8-K filed with the SEC today. Now, I will turn the call over to Therese to begin.

[Therese Tucker:]

Good afternoon everyone and thank you for joining us today. I am so pleased with our performance in Q4, which represented a strong close to a year of consistent execution. We were able to accomplish much of what we set out to do in the year to drive growth, scale the business and maintain a strong leadership position. On a macro level we continue to see healthy demand across our global markets from companies investing in digital transformation. This trend remains strong in the fourth quarter and drove acceleration in many areas of our business. I'm happy to report we were able to grow fourth quarter revenue by 29%, with continued improvement in profitability and free cash flow. A few other highlights from our quarter include our renewal rate finished the year at 98%. And our net dollar retention rate ticked up again to 110%, slightly above our expected range. This improvement is driven by our investments in customer success and execution of our go-to-market initiative. In Q4, we added the largest number of new logos in the company's history, bringing our customer count to more than 3000 enterprise and mid-market customers around the world. We achieved this goal with the help of our healthy partner ecosystem, great success in the mid-market and several large competitive takeaways. We saw a healthy global demand for our products and our message is really resonating. Our user count spiked in the quarter by a record 23,000 users representing 200% growth in user adds.

[Mark Partin:]

Thank you, Therese and good afternoon everyone. As a quick reminder, unless otherwise noted, all numbers mentioned during my remarks today are non-GAAP. As Therese mentioned, we are very pleased with how we finished the year. 2019 was the year of solid execution and we feel good about our jumping off point for 2020. For the full year 2019, total revenue grew 27% to $289 million. Gross margin was 83%. We achieved 8% net income margin and generated $29.7 million in cash from operations. Total fourth quarter revenue grew 29% year-over-year to reach $80.3 million. Higher revenue in the quarter was driven by a strong retention rate, broad and healthy sales performance, accelerated deal timing and higher services revenue. A few other notes on revenue include, continued strength in our international business represented 24% of total revenue in Q4, up from 22% in the prior year. We are seeing strong performance in our major markets in Europe and Asia-Pac. Revenue from our SAP partnership increased to 25% of total revenue in Q4, which was up from 24% last year, despite a slow start to the year for the SOLEX partnership. This metric is within the range that we expected for the year and was primarily driven by strong expansion in our existing SAP accounts. Services revenue was strong at $5.5 million or 7% of total revenue. This represents 98% growth over the year, and we are pleased with this result. Services remain a small part of our overall revenue, but an integral part of our customer experience. More of our customers are engaged in digital finance transformation projects, and we are seeing more engagements with strategic products and strategic partners. We view this as a strong indicator of our success in our business with broader deployments of our product. More than 70% of our large deals in the quarter included a partner, which is within our expected range. We continue to see traction with the adoption of transaction matching intercompany hub and Smart Close our strategic products representing 22% of sales for the quarter. Moving on to our key performance metrics for the quarter, we added a record 153 net new customers in the quarter for a total of 3,024 total customers. Strong net adds benefited from our new mid-market initiative, our healthy partner ecosystem and included accelerated deal volume from the SOLEX partnership. Driven by strong account expansion and a healthy renewal rate of 98%, our dollar based net revenue retention rate saw improvement for a second consecutive quarter to 110%. Gross Margin for the quarter was 83% with subscription gross margins at 87%. In Q4, we generated net income attributable to BlackLine of $8 million. For the full year we generated net income attributable to BlackLine of $22 million, which includes a $300,000 non-cash income tax adjustment, as we have outlined in today's earnings release. These results exceeded our expectations and came in at the high end of our guidance range. We generated 8.2 million in operating cash flow, and $5.6 million in free cash flow for the quarter. We finished the year with approximately 608 million in cash, cash equivalents and marketable securities. Over the past several years, we've seen consistent improvement and net income driven predominantly by operating leverage. In 2019, we accelerated above trend to an 8% net income margin, primarily due to the fact that we executed well during the year and generated revenue above our expectations which dropped to the bottom line. In 2020, we will once again see profitability improvement, but it won't be at the same pace as 2019 as we intend to make targeted investments in our public cloud infrastructure and build out our services and support team for our evolving customer and product mix. These expenses will ramp through the year and we expect the impact on overall gross margin will be two to three points in the near term. Additionally, operating expenses vary on a quarterly basis, with a step up in the first quarter driven by annual salary increases, payroll tax reset and annual kickoff events. For the full year, we expect to generate operating leverage and additional margin as we execute on the top line throughout the year. We remain on track to achieve our long-term target model. Now let's move on to our first quarter and full year 2020 outlook. For the first quarter of 2020, total GAAP revenue is expected to be in the range of $80 million to $81 million. On the bottom line, we expect to report net income attributable to BlackLine in the range of $2.5 million to $3.5 million or $0.04 to $0.06 on a per share basis. Our share count will be approximately 59.8 million diluted weighted average shares. For the full year 2020, total GAAP revenue is expected to be in the range of $347 million to $352 million. Net income attributable to BlackLine in 2020 is expected to be in the range of $27 million to $29 million. Utilizing diluted weighted average shares of 60.6 million, we expect net income per share between $0.45 and $0.48. Lastly, we plan to attend several upcoming investor conferences this quarter, including the JMP Technology Conference, the Morgan Stanley TMT conference, and the SunTrust Technology Internet and Services conference. Please reach out to our Investor Relations team if you would like to participate in any of these events. And Therese and I will now take your questions.

[Operator:]

Thank you. And our first question is from Bhavan Suri with William Blair. Please go ahead.

[Bhavan Suri:]

Hey, guys.

[Therese Tucker:]

Hi, Bhavan.

[Bhavan Suri:]

Hi, Therese and Mark. Hey, congrats with a great quarter, great Billings, great numbers. I want to touch first a little bit on the competitive environment. You had touched a little bit on the low end of the markets. I want to touch on the enterprise. Obviously, the SAP move is starting to play out; you're starting to SAP bundle you into these large solutions. I guess the first question is like, as you think about SAP and this is a thesis, right? There's a year ago, the thesis was, hey, SAP is going to put you into these big deals and BlackLine is 100, 200 grand of a $10 million deal. And it makes sense. How often is that playing out? How often are you seeing SAP come in now and it feels like SOLEX is working, but play out where you're a small part of something so much more strategic, that you're winning against the TrinetX of the world, the Oracles of the world et cetera or today's it's still heavily reliant on your sales force doing that. And I guess maybe a quick follow up to that. I have a real question. But like, is there a leverage point there on sales and marketing?

[Therese Tucker:]

Here's the thing, we are – even though we are a year into our SOLEX partnership, it is still because of the size and the complexity and the ongoing reorganization of that very large company. It still feels like early days. Now, one of my goals – we've had customers come to us over the last quarter and volunteer how they were so able to have successful S/4HANA implementations, because of how they utilize BlackLine in that process. So it's my goal over this coming year to be included far more often on those S/4 upgrades than we are now. I would love to see it become standard, but that could take years and years. But I think that's where we're going.

[Mark Partin:]

Bhavan to your point on leverage, that's precisely what we expect to happen with this partnership, is our investment thesis is that the SAP sales force in the markets where we are today and even in the markets where we are not currently, that their sales will be able to help us reach our target model. And that includes getting efficiency in the sales model.

[Bhavan Suri:]

Okay, fair enough. And then a quick follow up intercompany hub. I know we used to talk about us years ago. We stopped talking about it. And then we talk about a little bit now, intercompany hub is such an interesting product from a strategic perspective. I'd love to understand how much color – as much color as you can give about sort of what you're seeing with growth there and interest there. It's such a transformative product. Not the core isn't, but the sort of, are you seeing customers actually starting to get to understand the value of this or is still evangelical? It was a tough sale for a while and you had partners UHG and others trying to help sell it, but it was still small. Has it changed at all or is it still an early evangelical type sale?

[Therese Tucker:]

I would say if I had to lean in one direction or the other, I would still lean to the early evangelical. And it's just a newer market. Now the customers that are adopting it are getting great value out of it. We're building case studies. It's a slow build and I was pleased with the results of this quarter. But when I think about the fact that I think all of our enterprise customers could get value from it. Then I've got to go with the early evangelical lean.

[Bhavan Suri:]

I want to push back and I am taking up too much time, so we'll do it offline. But it feels like after three years, it should be as much, if you want to color that. Thank you for taking my questions.

[Therese Tucker:]

Okay, Bhavan.

[Operator:]

Our next question is from Koji Ikeda with Oppenheimer.

[Koji Ikeda:]

Hey, thanks for taking my questions. But first off, Therese, congrats on that Stevie for Women in Business Entrepreneur of the Year award. Really, really great news, I saw that in the press release, so congrats on that. First question for Mark, just real quick what was the RPO in the quarter? I might have missed that, but just want to make sure I got that.

[Mark Partin:]

That's okay. Yeah. So the RPO contract not recognized revenue was 366.9 million and 60% of that is current.

[Koji Ikeda:]

Okay, great. Thanks for that Mark. And just kind of digging in a little bit more on that SAP SOLEX partnership, it sounds like it's ramping really, really well. And I believe you described the ramping process is kind of a two-step process with SAP, just curious on how that is all working out right now and how we should think about the cadence of investment into the SAP partnership this year.

[Therese Tucker:]

We were pleased with the momentum that we had in Q4, but it's still – I'll be really frank, it's still not where I would like to see it, okay. It's still a slow build. So pleased with the momentum, I think it's worth an ongoing investment in enablement and education. We like the potential, but – and I think it's a great long-term, but there's not going to be some kind of hockey stick.

[Mark Partin:]

Yeah and the jump off point for 2020, we have visibility into the pipeline. Our sales leadership feels like the partnering and with SAP reps is as good as it's been in the year since we've been operating. So we feel like we're moving into a year where we can execute on that partnership and that we made a lot of progress just in the last several months and saw the results in Q4.

[Koji Ikeda:]

Got it and then I saw in the press release, you got three SAP certifications for S/4HANA, I guess I should know better about what that means, but could you explain to us the importance of these integrations and what that could mean for the SOLEX partnership and I guess, the sap pipeline too? Thanks for taking my questions.

[Therese Tucker:]

Yeah. Really, that's kind of table stakes, in order to have all of those different certifications on our integration platform, because the reality is when you've got a really smooth integration then it lowers any kind of project risk. The certification piece is that SAP verifies that you do indeed work with all of the different versions of their products, and that you don't drag their system performance down or do anything terrible to their databases. So they're very careful about their certification process. And it's just to verify that the integration between our two systems is very smooth. I think that's table stakes for having a great partnership with SAP.

[Koji Ikeda:]

Got it, thank you for taking my questions.

[Therese Tucker:]

Thanks Koji.

[Operator:]

Thank you. And our next question is from Mark Murphy with JP Morgan.

[Matt Coss:]

Hi, good afternoon. This is Matt Coss on behalf of Mark Murphy. Congratulations on the nice 2019. Therese, you mentioned that companies are increasingly coming to you after being unsuccessful with their RPA vendors just because of certain limitations. Do you think that RPA is accelerating sales cycles for you as they sort of fail in some areas with RPA and then maybe see any opportunity?

[Therese Tucker:]

I don't think they're accelerating sales cycles. And here's why. Nobody ever likes to have a failed software implementation. I mean, the reality is that when you actually give up, that is a difficult place to be. So we're comfortable that sort of maybe the initial hominess of the RPA landscape is starting to perhaps die down a little bit, we think it still has a lot of value. I mean, it can really automate some granular gaps between systems and processes. But it's not an overall approach to process improvement. And that's sort of what we've embedded – we've embedded automation at the core of what we do. It is part of a business process. And that is what helps customers transform their businesses, not just sort of the automation of a task. So it's a really different – fundamentally different approach. And I think there's room in the market for both of us, you just have to apply it in the right way.

[Matt Coss:]

So that's very helpful. And have you been able to track or observe any changes in your net promoter score as a result of some of these customer workshops and other customer success initiatives that have been put into place in the past year?

[Therese Tucker:]

We track our net promoter score typically for our implementation projects, for any support calls that come through customer success. So we really kind of track it more on a case-by-case basis. And our net promoter scores have remained consistently very, very high. We have enviable net promoter scores.

[Matt Coss:]

Got it and then last ones for me. Is there anything that we should think about or know or consider as you're moving your infrastructure to GCP this year, maybe costs that we're not thinking about or could come up or benefits you might realize that we need to be thinking about?

[Mark Partin:]

Yeah, yeah, of course, earlier I said in our comments that we believe that this migration of our customer base will be done very thoughtfully and over a multiyear process. It's a one to one and a half point impact in the gross margin and we'll see that ramp during this year. Now, over the long-term our view is that as we get through the migration, we can get the efficiencies, but here going into 2020, that's how we have guided and would like you to think about the model in that way.

[Matt Coss:]

Alright, thanks very much.

[Mark Partin:]

Sure.

[Operator:]

Thank you. And our next question is from Rob Oliver with Baird.

[Rob Oliver:]

Great, good evening, guys. Thanks for taking my questions. I'm surprised that this one's still out there, but I did want to ask about the monster user edition of 23,000 your stellar number. There's been a bit of a cross curve because as you guys have run strategic products, those don't necessarily add users to the user account. Therese, you said something in your prepared remarks that you're seeing larger initial user populations among your customers. So I really wanted to probe into that, as it sounds pretty exciting. And then I had a quick follow up.

[Mark Partin:]

Thanks Rob. Yeah, that's absolutely right. The trends over the last couple years as we sell more strategic products, those products don't carry a user base with it. However, in the last year, in the last two quarters of the year, especially, we saw a significant ramp in user, so we were very pleased in Q4. And it came from both landing very large new deals, who – some were competitive takeaway. They came on board with a large user expansion out of the gate and then also growth within our existing customers. And it doesn't happen overnight. This has been an investment in our existing customers around the product engagement, around customer success and, and digital transformation. And so we feel like the results we saw in Q4 were really the benefit of customers expanding and landing with more users for the core products. And then when Therese mentioned this strategic product, high end of the range, that that did not bring users, that's the benefit of having multiple growth levers.

[Rob Oliver:]

That's helpful Mark. And then you actually touched on my follow up already, but maybe probe a little bit more on that. I mean, you guys purposely set out to increase service revenue and park the right people at the right account. And so is this something that we can expect to be a trend because it does sound like that service investment is paying off? I mean, obviously, you're not investing in services to drive more service revenue, you're investing in services to drive more software revenue, it seems like that's happening with the user base. And just wondering if we could extrapolate out that that's something we should continue to expect. Thanks, guys.

[Mark Partin:]

Yeah, thanks, Rob, I think you said it really well is that our investment over the last couple of years in that part of the business has been for the overall healthy balance, as we have more digitally transforming large customers and also strategic products. So we were very pleased. Those are exceptional results we got in Q3 and Q4 on services. And so as we move forward, we think that healthy balance is in that range, we think that's a consistent near term healthy balance for us. So we've been really pleased with that. And that does, you're right, that does help drive the strategic products. It does help drive user expansion. Thanks for the question.

[Rob Oliver:]

Thanks again.

[Therese Tucker:]

Thanks Rob.

[Operator:]

Thank you. Our next question is from Brian Peterson with Raymond James.

[Brian Peterson:]

Hi, first off congrats on the really strong fourth quarter numbers, very well done. So first question for me, Therese, you mentioned some competitive takeaways in your commentary, both of the enterprise and the mid-market. I've always thought of this is mostly a greenfield opportunity for you. I'm curious, has that dynamic changed or shifted at all? I'm just kind of curious if we think about that the customers added this year, what is the mix of kind of displacements or greenfield opportunities?

[Therese Tucker:]

No, the replacements are a pretty small number. I just happen to really like them. So I like to talk about them.

[Mark Partin:]

This is absolutely a greenfield advantage. I agree with the way you characterize that and that is the primary driver of new logo acquisitions. And I think now for maybe 18 months, two years, we've been calling out some competitive takeaways. And there are certain reasons or importance why that has happened in each of those quarters. But generally speaking, the vast majority of our new logos come from the greenfield new market.

[Brian Peterson:]

Thanks for the color there guys. And maybe if I could follow up Therese, just on the big user add this quarter, is there any way I could double click on that? Just trying to understand how many of those may have come from SAP oriented users or non-SAP oriented users, any way to kind of bifurcate that?

[Mark Partin:]

Yes, we – it's a really good balance between land and expand the acquisition of the users and growth of the users, so they came from existing customers and new. And we saw a – over the last couple of quarters, we've seen a good healthy balance in our account expansion, in our investments in driving existing customers that way. So I would – I think probably we're prepared to say its balance between all parts of the business without going much further into what specific customers or partnerships is coming from.

[Therese Tucker:]

No one sector way out performed another, balanced.

[Brian Peterson:]

Understood, thanks guys.

[Therese Tucker:]

Thank you.

[Operator:]

Thank you. Our next question comes from Pat Walravens with JMP Securities.

[Unidentified Analyst:]

Hi, this Mark for Pat. Thank you so much for taking my question. I was wondering in terms of overall competition in the past maybe four to five years, how has that changed and maybe give us a more competitive pressure from the large enterprise player.

[Therese Tucker:]

It's remarkable how little the competitive landscape has changed over the last five years. What we see in the market, not necessarily what we hear from our investors, but what we see in the market is that there is a point solution that we compete with pretty regularly at the enterprise level. There is an ERP solution that we compete with when the IT runs the deal. We have seen the addition of the low end mid-market player, that is a new one. But other than that it's been remarkably similar.

[Unidentified Analyst:]

Great, thank you so much.

[Mark Partin:]

Thank you.

[Operator:]

Thank you. Our next question comes from Terry Kiwala with First Analysis.

[Terry Kiwala:]

Hey, good afternoon and congratulations on the great quarter. I have a question about the customer success and transformation teams. Just wondering if you can give us additional commentary on whether – I assume that most of the impact has been with your large enterprise clients, wondering if there's any regional nuances to that team success. And then help us understand like future period investments in that team, where – are you going to be focused more downstream – on downstream clients and are you going to expand geographic focus with that team?

[Therese Tucker:]

Well, now, on the high end – on the transformation teams, those are as you suspected, more directional at the enterprise size clients, absolutely. And that's an expensive team to deploy. And they are really focused on enabling a very pragmatic digital transformation, which requires very deep accounting knowledge. Now, that team is based in the States. So I would say that much of their work is really focused in the US, but other teams like the customer success teams, alright, we – and the account management teams, we have them sort of deployed globally. Now, for the low end of the market and if I don't hit all of your questions, make sure you catch me. But on the mid-market and smaller size enterprises, we actually – I talked about my remarks today, sort of what we're doing around sort of internalizing the best practices that we already know, and delivering that to mid-market customers in a much more expedited fashion. And that's resulting in much higher satisfaction. So we're trying to bring the same level of knowledge that we have, from our 1,400 mid-market customers, we're trying to package that in a way that our customers get the most value add up. Okay, so I mid-market enterprise and geographic regions. Did I catch all your questions?

[Terry Kiwala:]

You did. Thank you so much, Therese.

[Therese Tucker:]

Okay, good, all right.

[Operator:]

Thank you. Our next question comes from Brent Bracelin with Piper Sandler.

[Brent Bracelin:]

Good afternoon and thanks for taking the question here. Therese obviously, very encouraging to see kind of the year-over-year growth here for SAP kind of accelerate for the first time in six quarters. I wanted to take it a little bit of a different direction. What have you learned from the opportunity with partners since you announced the SAP relationship? Are there things and opportunities to expand the footprint outside of SAP? Has that relationship, maybe hurt some of those relationships outside of SAP in the last year? Just love to get your view as you think about this great opportunity within SAPs installed base, but obviously you can address more and so I'd love to get just an update on what your strategy and thought and what you've learned the last year round outside of SAP?

[Therese Tucker:]

Brent, one of the great things about BlackLine and our software is that we are ERP agnostic, okay. And most larger companies actually don't run on any one particular ERP. I mean, that is that is the truth of the very complex financial systems landscape that lives out there. So I think that the SAP partnership is a great long-term global opportunity, but you'll notice that our performance in our non-SAP segments of the market did very well this quarter and overall this year. So it's – we are – how do I say that? We're not betting the farm on SAP. We are an EPR agnostic software and that is a great value to our customers.

[Brent Bracelin:]

Great, helpful there and then Mark, I wanted to follow up on pro services. We saw that the third quarter of accelerating growth and a material step up in pro services revenue this quarter. My question is that tied to some of these larger SOLEX deals? Is that kind of a leading indicator or a lagging indicator tied to more implementations, like help us understand that inflection that's happening and pro services here? And should we think about that as a leading or kind of more of a lagging indicator tied to more implementation versus priming existing customers to expand?

[Mark Partin:]

Yeah, thanks. So that's coming from implementation of really large customers that are doing digital transformation. That's where you get the billable hours and the acceleration. That's where you get the time and attention from large budgets and investments from customers that are bringing in us and partners and really focusing on the upfront experience and implementation of the product. So that's one place we're getting it. And yes, that does come through SAP as well as through other projects. And then secondly, it's coming from a higher mix of strategic products. So the ICH and Smart Close and transaction matching that we've been selling alongside our core product for the last year, we're implementing those projects and over the last six months have really seen the acceleration in those two areas. So what it is, is a great indicator that our large customers are digitally transforming and that those hours and that revenue is really coming from us getting them the experience up front and getting them deployed on the product.

[Brent Bracelin:]

Got it, super helpful color. And thanks for everything. Thank you.

[Therese Tucker:]

Thanks Brent.

[Mark Partin:]

Yeah, thanks Brent.

[Operator:]

Thank you. Our next question is from Chris Merwin with Goldman Sachs.

[Chris Merwin:]

Hi, thanks very much for taking my question. Just wanted to ask about billings and RPO, looks like a very strong quarter for both of those metrics. If I get the numbers, right, billings were up whatever 30% and RPO was up in the high 20s. The revenue guidance, I think would imply growth more like low 20s. So just, how can you help us reconcile those metrics given the strong momentum that you saw in Q4 and then – and that potentially flowing through to revenue in fiscal '20? Thanks.

[Mark Partin:]

Yeah, great, thanks, Chris. Yeah, we were super pleased with the results in the fourth quarter and in fact in all of 2019. Our guide as we move into 2020 is really built around a consistent philosophy that we've had over the years, which is to really focus on what we can see and what we're confident on that we can execute to. So as we move into this year, we feel good, as we said about our jumping off point. And we feel strong and confident about the range of guidance that we've given at the top end.

[Chris Merwin:]

Great, thank you very much.

[Mark Partin:]

Thank you.

[Operator:]

Thank you. And our last question is from Terry Tillman with SunTrust.

[Terry Tillman:]

Hey, Therese, Mark and Alex.

[Therese Tucker:]

Hey, Terry.

[Mark Partin:]

Hi, Terry.

[Terry Tillman:]

Congrats on the quarter and I'm going to let it rest on SOLEX and RPA. None of those questions for me. Okay, you've had enough from the audience. So I'll go in a different direction. On the mid-market strength, maybe Therese, how excited should we be about mid-market strength and then maybe any kind of commentary on deal sizes and just mix of business into '20 on the mid-market side. And then I had a follow up for Mark. Thanks.

[Therese Tucker:]

We view it as one of our levers of growth, Terry, I mean, it's not the only, it's not enterprise, but we've got a great set of customers in that segment with more than 1,400. So it's important, but not wildly out of range of anything else.

[Mark Partin:]

Yeah, we finished Q4 with 19% of the revenue in mid-market which is up from 17% a year earlier. As we move into this next year, we like all of the engines, we expect to continue investing there and seeing in traction. So we are excited about our mid-market partners business.

[Therese Tucker:]

And a lot of these great mid-market companies, guess what, they grow up to be bigger companies.

[Terry Tillman:]

Yeah, understood and I guess just the final question for me is just on the accelerated deal timing. I think Mark you did say maybe some accelerated deal timing. I don't know if you could give any more color if there was a couple of larger deals that you didn't actually forecast for 4Q and is more 1Q, just a little bit more color on the benefit of the accelerated deal timing. Thank you.

[Mark Partin:]

Yeah, of course, so when I talk about revenue over performance due to accelerated deal timing, I'm talking about linearity within the quarter. And the traditional software model is wait to the end of the quarter, it's back end loaded. Our leadership team and sales team really focuses on selling through the quarter. And there's a lot of reasons for that. But what it does for us is it gives us revenue faster than what our sort of traditional model or even the traditional software model does. So when we see that last year, we're excited about it because it really shows the discipline in the sales team and the rigor that they go through to forecast and deliver and sell customers throughout the quarter. Thank you for the question.

[Operator:]

Thank you. And this concludes our Q&A session. I would like to turn the call to Therese Tucker, Founder and CEO for her final remarks.

[Therese Tucker:]

I want to thank all of you for joining BlackLine on our journey and today. Your ongoing support in evangelism means so much to us. Thank you.

[Operator:]

And with that ladies and gentlemen, we thank you for participating in today's conference. You may now disconnect.