• Revenue: $35.7 million in Q4; $127.3 million for fiscal 2024.
• Service Revenue: Increased 31% to $69.5 million for the year.
• Product Revenue: Grew 23% to $57.8 million for the year.
• EBITDA: Record $2.5 million in Q4, compared to a loss of $1.5 million in Q4 2023.
• Net Loss: Decreased to $68,000 in Q4 from $4.5 million in Q4 2023.
• Annual Recurring Revenue (ARR): $66.4 million, a 30% increase from last year.
• Net Dollar Retention (NDR): 127% in Q4.
• Product Gross Margin: Record 41% in Q4.
• Service Gross Margin: Maintained at 77%.
• Cash and Short-term Investments: $43.1 million, up from $40.8 million in Q3.
• Free Cash Flow: $3 million in Q4.
• Total Available Liquidity: $66.6 million as of November 1st.
• Gross Margins for Fiscal 2024: 58%, up from 53% last year.
• Gross Profit: $74.2 million, a 41% increase from the prior year.
• Total Expenses as a Percentage of Revenue: Decreased from 92% in Q4 2022 to 60% in Q4 2024.
• Operating Cash Flow: $4.8 million in Q4.

• Warning! GuruFocus has detected 6 Warning Signs with BLKLF.

Release Date: January 16, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Blackline Safety Corp (BLKLF) achieved record revenue of $35.7 million in Q4 and $127.3 million for fiscal 2024, marking a significant growth milestone.
• Service revenue increased by 31% to $69.5 million, while product revenue grew by 23% to $57.8 million, showcasing strong performance across both segments.
• The company reported a record EBITDA of $2.5 million in Q4, a substantial improvement from a loss of $1.5 million in the same quarter last year.
• Blackline Safety Corp (BLKLF) achieved a record annual recurring revenue of $66.4 million, a 30% increase from the previous year, indicating strong customer retention and expansion.
• The company reported its highest product gross margin ever at 41% in Q4, surpassing the previous record of 38% in Q3, demonstrating improved operational efficiency.

Negative Points

• Some delays in deals were experienced, moving expected revenue from Q4 into fiscal 2025, attributed to geopolitical uncertainty and M&A activities among larger US customers.
• Despite strong financial performance, the company noted that quarter-by-quarter fluctuations are likely to occur, indicating potential volatility in future results.
• The Canadian market showed signs of saturation, with limited growth opportunities compared to other regions, impacting overall growth potential.
• The company anticipates potential impacts from tariffs, which could affect manufacturing costs and necessitate strategic adjustments in production locations.
• Blackline Safety Corp (BLKLF) faces timing risks in finalizing large contracts in the Middle East, which could delay expected revenue contributions from this region.

Q & A Highlights

Q: Can you elaborate on the slippage in hardware sales due to client M&A and geopolitical uncertainty? Are these contracts expected to shift to Q1? A: Cody Slater, CEO: The contracts in question are primarily U.S.-based, with revenue expected to move towards the latter part of the year. One contract was a lease that was extended for a year, pushing it out further. These are individual elements and should not impact Q1 significantly.

Q: How do you view the potential impact of tariffs on your manufacturing strategy? A: Cody Slater, CEO: We anticipate tariffs being implemented, but as we control our manufacturing, we are considering expanding our surface mount lines. Depending on tariff outcomes, this expansion might occur in the U.S. to mitigate tariff impacts. However, we are currently evaluating options and waiting to see how the situation unfolds.

Q: What has been the response to the new X8 product, and how does it compare to the G7 launch? A: Sean Stinson, President and Chief Growth Officer: The response has been strong, especially for the Gamma X8 variant, which is popular in the refining space. We have received preorders, and the marketing team has done an excellent job with prelaunch materials. The product will start shipping in Q2.

Q: How do you see the geopolitical environment and new U.S. administration affecting your business? A: Cody Slater, CEO: The uncertainty was more about the election lead-up. The new administration's policies on safety regulations, which are core to our business, are not expected to change. The focus on additional manufacturing in the U.S. is a longer-term element and not seen as a substantial impact.

Q: Can you discuss the sustainability of the high product gross margins achieved this quarter? A: Cody Slater, CEO: The margin expansion is driven by manufacturing efficiencies, supply chain management, and better control on discounting. These factors will continue into next year. While there might be slight fluctuations due to investments, the 40% margin range is expected to be maintained.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.