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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________________
FORM 10-Q
______________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from     to     
Commission File Number: 001-37924
______________________________________________________________
BlackLine, Inc.
(Exact name of Registrant as specified in its charter)
______________________________________________________________
Delaware46-3354276
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
21300 Victory Boulevard, 12th Floor
Woodland Hills, CA 91367
(Address of principal executive offices, including zip code) 
(818) 223-9008
(Registrant’s telephone number, including area code)
______________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per shareBLNASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes     No  o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
   Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  ☒
The number of shares of the registrant’s common stock outstanding at April 29, 2022 was 59,312,163.




BlackLine, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended March 31, 2022
TABLE OF CONTENTS

2


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risk and uncertainties. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “would,” “continue,” “ongoing” or the negative of these terms or other comparable terminology. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to, statements regarding future financial and operational performance; statements concerning growth strategies including acquisitions, extension of distribution channels and strategic relationships, product innovation, international expansion, customer growth and expansion, customer service initiatives, expectations regarding our acquisitions, expectations regarding contract size and increased focus on strategic products, expectations for hiring new talent and expanding our sales organization; our ability to accurately forecast revenue and appropriately plan expenses and investments; the demand for and benefits from the use of our current and future solutions; market acceptance of our solutions; the impact of the COVID-19 pandemic and the related responses by governments and private industry on our business and financial condition, as well as that of our customers and partners; changes in the competitive environment in our industry and the markets in which we operate and our liquidity and capital resources. These statements are based upon our historical performance and our current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith beliefs and assumptions as of that time with respect to future events and are subject to risks and uncertainty. If any of these risks or uncertainties materialize or if any assumptions prove incorrect, actual performance or results may differ materially from those expressed in or suggested by the forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainty, and assumptions that are difficult to predict, including those identified below, under “Part II-Other Information, Item 1A. Risk Factors” and elsewhere herein. Forward-looking statements should not be read as a guarantee of future performance or results, and you should not place undue reliance on such statements. Furthermore, we undertake no obligation to revise or update any forward-looking statements for any reason, except as required by applicable law.
Unless the context otherwise requires, the terms “BlackLine, Inc.,” “the Company,” “we,” “us” and “our” in this Quarterly Report on Form 10-Q refer to the consolidated operations of BlackLine, Inc. and its consolidated subsidiaries as a whole.
3


Part 1 – Financial Information
Item 1.    Financial Statements
BLACKLINE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
March 31,
2022
December 31,
2021
ASSETS
Current assets:
Cash and cash equivalents$365,522 $539,739 
Marketable securities (amortized cost of $666,091 and $658,886 at March 31, 2022 and December 31, 2021, respectively)
666,122 658,964 
Accounts receivable, net of allowances for credit losses of $3,013 and $2,923 at March 31, 2022 and December 31, 2021, respectively
117,554 125,130 
Prepaid expenses and other current assets22,278 23,855 
Total current assets1,171,476 1,347,688 
Capitalized software development costs, net25,489 23,547 
Property and equipment, net 15,977 16,321 
Intangible assets, net106,433 36,195 
Goodwill443,861 289,710 
Operating lease right-of-use assets16,906 16,264 
Other assets90,088 87,853 
Total assets$1,870,230 $1,817,578 
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$16,285 $7,471 
Accrued expenses and other current liabilities38,401 50,930 
Deferred revenue242,300 242,429 
Finance lease liabilities, current399 373 
Operating lease liabilities, current5,231 4,936 
Contingent consideration, current36,878 16,438 
Total current liabilities339,494 322,577 
Finance lease liabilities, noncurrent724 824 
Operating lease liabilities, noncurrent13,338 13,248 
Convertible senior notes, net1,380,152 1,114,239 
Contingent consideration, noncurrent37,985 4,294 
Deferred tax liabilities, net5,809 8,175 
Deferred revenue, noncurrent262 362 
Other long-term liabilities1,187 124 
Total liabilities1,778,951 1,463,843 
Commitments and contingencies (Note 12)
Redeemable non-controlling interest (Note 3)25,151 28,699 
Stockholders' equity:
Common stock593 590 
Additional paid-in capital318,297 625,883 
Accumulated other comprehensive income 113 298 
Accumulated deficit(252,875)(301,735)
Total stockholders' equity66,128 325,036 
Total liabilities, redeemable non-controlling interest, and stockholders' equity$1,870,230 $1,817,578 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4


BLACKLINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data) 
Quarter Ended March 31,
20222021
Revenues
Subscription and support$113,525 $91,655 
Professional services6,7117,201
Total revenues120,23698,856
Cost of revenues
Subscription and support24,156 15,425 
Professional services6,5176,465
Total cost of revenues30,673 21,890 
Gross profit89,563 76,966 
Operating expenses
Sales and marketing60,027 48,429 
Research and development25,24818,973
General and administrative29,652 28,269 
Total operating expenses114,927 95,671 
Loss from operations(25,364)(18,705)
Other income (expense)
Interest income518 94 
Interest expense(1,447)(14,804)
Other expense, net(929)(14,710)
Loss before income taxes(26,293)(33,415)
Benefit from income taxes(12,862)(191)
Net loss(13,431)(33,224)
Net loss attributable to non-controlling interest (3)(197)
Adjustment attributable to non-controlling interest (3,417)5,937 
Net loss attributable to BlackLine, Inc.$(10,011)$(38,964)
Basic net loss per share attributable to BlackLine, Inc.$(0.17)$(0.67)
Shares used to calculate basic net loss per share59,12357,860
Diluted net loss per share attributable to BlackLine, Inc.$(0.17)$(0.67)
Shares used to calculate diluted net loss per share59,12357,860
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5


BLACKLINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)
(in thousands)
Quarter Ended March 31,
20222021
Net loss$(13,431)$(33,224)
Other comprehensive income (loss):
Net change in unrealized gains (losses) on marketable securities, net of tax of $0 for the quarters ended March 31, 2022 and 2021
(47)24 
Foreign currency translation(266)(210)
Other comprehensive loss(313)(186)
Comprehensive loss(13,744)(33,410)
Less comprehensive loss attributable to redeemable non-controlling interest:
Net loss attributable to redeemable non-controlling interest (3)(197)
Foreign currency translation attributable to redeemable non-controlling interest(128)(105)
Comprehensive loss attributable to redeemable non-controlling interest(131)(302)
Comprehensive loss attributable to BlackLine, Inc.$(13,613)$(33,108)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6



BLACKLINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
(in thousands)
Quarter Ended March 31, 2022
Common StockAdditional
Paid-in
Accumulated
Other
Comprehensive
Accumulated
SharesAmountCapitalIncome (Loss)DeficitTotal
Balance at December 31, 202158,984 $590 $625,883 $298 $(301,735)$325,036 
Cumulative-effect adjustment related to adoption of ASU 2020-06, net of tax— — (324,418)— 62,288 (262,130)
Balance at January 1, 202258,984590 301,465 298 (239,447)62,906 
Stock option exercises711 1,386 —  1,387 
Vesting of restricted stock units2382  — — 2 
Acquisition of common stock for tax withholding obligations— — (4,187)—  (4,187)
Stock-based compensation— — 16,216 —  16,216 
Other comprehensive loss— — — (185)— (185)
Net loss attributable to BlackLine, Inc., including adjustment to redeemable non-controlling interest— — 3,417 — (13,428)(10,011)
Balance at March 31, 202259,293 $593 $318,297 $113 $(252,875)$66,128 
Quarter Ended March 31, 2021
Common StockAdditional
Paid-in
Accumulated
Other
Comprehensive
Accumulated
SharesAmountCapitalIncome (Loss)DeficitTotal
Balance at December 31, 202057,682$577 $622,768 $376 $(201,651)$422,070 
Stock option exercises9812,1482,149
Vesting of restricted stock units25822
Acquisition of common stock for tax withholding obligations(5,134)(5,134)
Stock-based compensation15,20315,203
Other comprehensive income(81)(81)
Equity component of partial repurchase of 2024 convertible senior notes(219,284)— — (219,284)
Equity component of the 2026 convertible senior notes, net of issuance costs and tax— — 266,017 — — 266,017 
Purchase of capped calls(102,350)(102,350)
Net loss attributable to BlackLine, Inc., including adjustment to redeemable non-controlling interest(5,937)(33,027)(38,964)
Balance at March 31, 202158,038$580 $573,431 $295 $(234,678)$339,628 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7


BLACKLINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Quarter Ended March 31,
20222021
Cash flows from operating activities
Net loss attributable to BlackLine, Inc.$(10,011)$(38,964)
Net loss and adjustment attributable to redeemable non-controlling interest (Note 3)(3,420)5,740 
Net loss(13,431)(33,224)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization9,147 6,542 
Change in fair value of contingent consideration(1,816)7,702 
Amortization of debt discount and issuance costs1,357 7,651 
Stock-based compensation15,902 14,794 
Loss on extinguishment of convertible senior notes 7,012 
Noncash lease expense1,445 1,025 
Amortization (accretion) of purchase discounts on marketable securities, net95 (33)
Net foreign currency (gains) losses(182)333 
Deferred income taxes(14,156)7 
Provision for (benefit from) credit losses28 (8)
Changes in operating assets and liabilities:
Accounts receivable9,459 20,980 
Prepaid expenses and other current assets2,576 (672)
Other assets(2,094)(3,456)
Accounts payable 6,555 652 
Accrued expenses and other current liabilities(13,815)(2,075)
Deferred revenue(460)2,333 
Operating lease liabilities(1,440)(1,058)
Other long-term liabilities1,006  
Net cash provided by operating activities176 28,505 
Cash flows from investing activities
Purchases of marketable securities(335,550)(308,937)
Proceeds from maturities of marketable securities328,250 175,209 
Capitalized software development costs(4,657)(4,021)
Purchases of property and equipment(1,528)(1,096)
Acquisition, net of cash acquired(157,738) 
Net cash used in investing activities(171,223)(138,845)
Cash flows from financing activities
Proceeds from issuance of convertible senior notes, net of issuance costs 1,129,106 
Partial repurchase of convertible senior notes (432,230)
Purchase of capped calls related to convertible senior notes (102,350)
Principal payments under finance lease obligations(106) 
Proceeds from exercises of stock options1,389 2,151 
Acquisition of common stock for tax withholding obligations(4,187)(5,134)
Financed purchases of property and equipment (169)
Net cash provided by (used in) financing activities(2,904)591,374 
Effect of foreign currency exchange rate changes on cash, cash equivalents, and restricted cash(271)(210)
Net increase (decrease) in cash, cash equivalents, and restricted cash(174,222)480,824 
Cash, cash equivalents, and restricted cash, beginning of period539,991 367,913 
Cash, cash equivalents, and restricted cash, end of period$365,769 $848,737 
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets
Cash and cash equivalents at end of period$365,522 $848,268 
Restricted cash included within prepaid expenses and other current assets at end of period 208 
Restricted cash included within other assets at end of period247 261 
Total cash, cash equivalents, and restricted cash at end of period shown in the consolidated statements of cash flows$365,769 $848,737 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8


BLACKLINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SUPPLEMENTAL CASH FLOWS DISCLOSURE
(in thousands)
Quarter Ended March 31,
20222021
Non-cash financing and investing activities
Adjustment for adoption of ASU 2020-06$262,130 $ 
Estimated fair value of contingent consideration$55,947 $ 
Stock-based compensation capitalized for software development$382 $409 
Capitalized software development costs included in accounts payable and accrued expenses and other current liabilities at end of period$995 $365 
Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities at end of period$454 $451 
Debt issuance costs included in accrued expenses and additional paid-in capital at end of period$ $312 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
9


BLACKLINE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Company Overview
BlackLine, Inc. and its subsidiaries (the “Company” or “BlackLine”) provide financial accounting close solutions delivered primarily as Software as a Service (“SaaS”). The Company’s solutions enable its customers to address various aspects of their financial close process including account reconciliations, variance analysis of account balances, journal entry capabilities, and certain types of data matching capabilities.
On January 26, 2022, the Company acquired FourQ Systems, Inc. (“FourQ”), hereinafter referred to as the “FourQ Acquisition.” The primary purpose of the FourQ Acquisition was to enhance our existing intercompany accounting automation capabilities by driving end-to-end automation of traditionally manual intercompany accounting processes.
The Company is headquartered in Woodland Hills, California and has offices in Pleasanton, California, as well as in Australia, Canada, France, Germany, Japan, the Netherlands, Poland, Romania, Singapore, and the United Kingdom.
Note 2 – Basis of Presentation, Significant Accounting Policies and Recently-Issued Accounting Pronouncements
The accompanying unaudited condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which was filed with the Securities and Exchange Commission (“SEC”) on February 25, 2022 and as amended in the Annual Report on Form 10-K/A filed on March 24, 2022. The unaudited condensed consolidated financial statements are unaudited and have been prepared on a basis consistent with that used to prepare the audited annual consolidated financial statements and include, in the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair statement of the condensed consolidated financial statements. The unaudited condensed consolidated balance sheet at December 31, 2021 was derived from audited financial statements, but does not include all disclosures required by GAAP. The operating results for the quarter ended March 31, 2022 are not necessarily indicative of the results expected for the full year ending December 31, 2022.
Use of estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.
The extent to which COVID-19 impacts the Company’s business and financial results will depend on numerous continuously evolving factors including, but not limited to, the magnitude and duration of COVID-19, including resurgences; the impact on the Company’s employees; the extent to which it will impact worldwide macroeconomic conditions, as well as variability in such recovery across different geographies, industries, and markets; and governmental and business reactions to the pandemic. The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 at March 31, 2022 and through the date of this report. The accounting matters assessed included, but were not limited to, the Company’s allowance for credit losses and doubtful accounts, and the carrying value of goodwill and other long-lived assets. While there was not a material impact to the Company’s condensed consolidated financial statements at and for the quarter ended March 31, 2022, the Company’s future assessment of the magnitude and duration of COVID-19 and other factors could result in material impacts to the Company’s condensed consolidated financial statements in future reporting periods.
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Significant accounting policies
The Company’s significant accounting policies are detailed in “Note 2 - Significant Accounting Policies" of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. There have been no material changes to the Company’s significant accounting policies except for the adoption of ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, as discussed below and the accounting for acquired deferred tax liabilities in a business combination as discussed in Note 10.
Recently-adopted accounting pronouncements
In August 2020, the FASB issued ASU No. 2020-06. This standard eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. For public business entities, it is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years using the fully retrospective or modified retrospective method. The Company adopted the provisions of the new standard effective January 1, 2022 using the modified retrospective method, which resulted in an adjustment of $324.4 million, net of tax of $2.4 million to reclassify the remaining balance of the conversion feature recorded in additional paid in capital to convertible debt for $262.1 million and retained earnings for $62.3 million. Accordingly, the Company no longer carries an equity component of the convertible notes.
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This standard addresses diversity in practice and inconsistency related to recognition of an acquired contract liability, and payment terms and their effect on subsequent revenue recognized by the acquirer. For public business entities, it is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Entities should apply the provisions of the new standard prospectively to business combinations occurring on or after the effective date of the standard. Early adoption is permitted, including adoption in an interim period. The Company adopted the provisions of the new standard effective January 1, 2022. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.
Recently-issued accounting pronouncements not yet adopted
In January 2022, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2022-01, Derivatives and Hedging, which expands the scope of the portfolio layer method to include non-prepayable financial assets, and provides additional guidance on the accounting for and disclosure of hedge basis adjustments that are applicable to the portfolio layer method. For public business entities, it is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The Company has not used derivative instruments to mitigate the impact of our market risk exposures, has not adopted the provisions of the new standard and does not expect it to have a material impact on the Company’s consolidated financial statements.
Note 3 – Redeemable Non-Controlling Interest
In September 2018, the Company entered into an agreement with Japanese Cloud Computing and M30 LLC (the “Investors”) to engage in the investment, organization, management, and operation of a Japanese subsidiary (“BlackLine K.K.”) of the Company that is focused on the sale of the Company's products in Japan. In October 2018, the Company initially contributed approximately $4.5 million in cash in exchange for 51% of the outstanding common stock of BlackLine K.K. As the Company controls a majority stake in BlackLine K.K., the entity has been consolidated.
All of the common stock held by the Investors is callable by the Company or puttable by the Investors upon certain contingent events. Should the call or put option be exercised, the redemption value will be determined based upon a prescribed formula derived from the discrete revenues of BlackLine K.K. and the Company and may be settled, at the Company’s discretion, with Company stock or cash. As a result of the put right available to the Investors in the future, the redeemable non-controlling interest in BlackLine K.K. is classified outside of permanent equity in the Company’s unaudited condensed consolidated balance sheets, and the balance is reported at the greater of the initial carrying amount adjusted for the redeemable non-controlling interests share of earnings, or its
11


estimated redemption value. The resulting changes in the estimated redemption amount are recorded within retained earnings or, in the absence of retained earnings, additional paid-in-capital.
The following table summarizes the activity in the redeemable non-controlling interest for the periods indicated below:
Quarter Ended March 31,
20222021
Balance at beginning of period$28,699 $12,524 
Net loss attributable to redeemable non-controlling interest (excluding adjustment to non-controlling interest)(3)(197)
Foreign currency translation(128)(105)
Adjustment to redeemable non-controlling interest(3,417)5,937 
Balance at end of period$25,151 $18,159 

Note 4 — Business Combinations
Acquisition of FourQ
On January 26, 2022 the Company completed the FourQ acquisition for cash consideration of $160.2 million payable at the closing of the acquisition with additional cash payments of up to $73.2 million payable upon certain earnout conditions being met. The FourQ Acquisition enhances the Company's existing intercompany accounting automation capabilities by driving end-to-end automation of traditionally manual intercompany accounting processes. Transaction-related costs, which include, but are not limited to, accounting, legal, and advisory fees related to the transaction, incurred by the Company totaling approximately $3.1 million were expensed as incurred during the quarter ended March 31, 2022.
The contingent consideration was classified as a liability and included in contingent consideration on the accompanying condensed consolidated balance sheet at March 31, 2022. It will be remeasured on a recurring basis at fair value. To estimate the fair value of the contingent consideration liability, management utilized a Monte Carlo simulation model to value the earnout based on the likelihood of reaching firm-specific targets. Significant inputs used in the fair value measurement of contingent consideration are the amount and timing of new and incremental combined bookings from FourQ and BlackLine, and revenues from a specified FourQ customer over a three-year period subsequent to the acquisition date, as well as the discount rate. At March 31, 2022, the fair value of the contingent consideration liability was $55.9 million.
The Company accounted for the transaction as a business combination using the acquisition method of accounting. The total purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective estimated fair values on the acquisition date. The purchase price allocation is preliminary.
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The purchase consideration and major classes of assets and liabilities to which the Company allocated the total fair value of purchase consideration of $214.2 million were as follows (in thousands):

Cash consideration$160,224 
Post-acquisition working capital adjustment(635)
Contingent consideration55,947 
Less: One-time expense related to accelerated vesting(1,322)
Purchase consideration$214,214 
Cash and cash equivalents$1,164 
Accounts receivable, net1,853 
Prepaid expenses and other current assets410 
Other assets143 
Property and equipment659 
Intangible assets 74,400 
Goodwill154,151 
Accounts payable(1,537)
Accrued liabilities(2,585)
Deferred revenue(231)
Deferred tax liabilities, net(14,213)
Total consideration$214,214 
The Company believes the amount of goodwill resulting from the acquisition is primarily attributable to increased offerings to customers, and enhanced opportunities for growth and innovation. The goodwill resulting from the acquisition is not tax deductible.
To determine the estimated fair value of intangible assets acquired, the Company engaged a third-party valuation specialist to assist management. All estimates, key assumptions, and forecasts were either provided by, or reviewed by the Company. While the Company chose to utilize a third-party valuation specialist for assistance, the fair value analysis and related valuations reflect the conclusions of the Company and not those of any third party. The fair value measurements of the intangible assets were based primarily on significant unobservable inputs and thus represent a Level 3 measurement as defined in ASC 820. The acquired intangible asset categories, fair value, and amortization periods, were as follows:
Amortization
Period
Fair Value
(in thousands)
Developed technology7$64,900 
Customer relationships39,500 
$74,400 
The weighted average lives of intangible assets at the acquisition date was 6.5 years.
The identified intangible assets, developed technology and customer relationships, were valued as follows:
Developed technology – The Company valued the finite-lived developed technology using the multi-period excess earnings model ("MPEEM") under the income approach. This method estimates an intangible asset’s value based on the present value of the incremental after-tax cash flows attributable to the intangible asset. The Company applied judgment which involves the use of significant assumptions with respect to the discount rate, obsolescence rate, revenue forecasts, research and development for future technology, and EBITDA forecasts.
Customer relationships – The Company valued the finite-lived customer relationships using the differential cash flow (with-and-without) model. This method assumes that the value of the intangible asset is equal to the difference between the present value of the prospective cash flows with the intangible asset in place and the
13


present value of the prospective cash flows without the intangible asset. The Company applied judgment, which involved the use of significant assumptions with respect to the discount rate and the customer ramp-up rate.

The revenue and earnings of the acquired business were included in the Company’s results since the acquisition date and are not material to the Company’s consolidated financial results for the quarter ended March 31, 2022. Pro forma revenues and results of operations for this acquisition have not been presented as the impact on the Company’s consolidated financial statements would be immaterial.
Note 5—Intangible Assets and Goodwill
The carrying value of intangible assets was as follows (in thousands):
March 31, 2022
Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
Trade name$15,977 $(13,716)$2,261 
Developed technology129,258 (45,484)83,774 
Customer relationships26,089 (7,395)18,694 
Defensive patent2,333 (629)1,704 
$173,657 $(67,224)$106,433 
December 31, 2021
Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
Trade name$15,977 $(13,317)$2,660 
Developed technology64,358 (43,148)21,210 
Customer relationships16,589 (6,046)10,543 
Defensive patent2,333 (551)1,782 
$99,257 $(63,062)$36,195 
The following table represents the changes in goodwill (in thousands):
Balance at December 31, 2021$289,710 
Additions from acquisitions154,151 
Balance at March 31, 2022$443,861 
Note 6 – Balance Sheet Components
Investments in Marketable Securities
Investments in marketable securities presented within current assets on the condensed consolidated balance sheets consisted of the following:
March 31, 2022
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
(in thousands)
Marketable securities
U.S. treasury securities$164,845 $4 $(209)$164,640 
Corporate bonds75,694 528 (18)76,204 
Commercial paper425,552  (274)425,278 
$666,091 $532 $(501)$666,122 

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December 31, 2021
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
(in thousands)
Marketable securities
Corporate bonds$74,144 346 (10)$74,480 
Commercial paper584,742  (258)584,484 
$658,886 $346 $(268)$658,964 
Net gains and losses related to maturities of marketable securities that were reclassified from accumulated other comprehensive loss to earnings, and included in general and administrative expenses in the accompanying condensed consolidated statements of operations, were immaterial for the quarters ended March 31, 2022 and 2021.
Net gains and losses are determined using the specific identification method. During the quarter ended March 31, 2022 and 2021, there were no realized gains or losses related to sales of marketable securities recognized in the Company's accompanying condensed consolidated statements of operations.
Marketable securities in a continuous loss position for less than 12 months had an estimated fair value of $406.1 million and $379.7 million, and $0.5 million and $0.3 million of unrealized losses at March 31, 2022 and December 31, 2021, respectively. At March 31, 2022, there were no marketable securities in a continuous loss position for greater than 12 months.
The Company's marketable securities are considered to be of high credit quality and accordingly, there was no allowance for credit losses related to marketable securities as of March 31, 2022 or December 31, 2021.
The Company’s marketable securities as of March 31, 2022 have a contractual maturity of less than 1 year.
Other Assets
Other assets consisted of the following (in thousands):
March 31,
2022
December 31,
2021
Deferred customer contract acquisition costs$81,880 $79,961 
Restricted cash247 252 
Capitalized software implementation costs4,257 7,023 
Other assets3,704 617 
$90,088 $87,853 
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities were comprised of the following (in thousands):
March 31,
2022
December 31,
2021
Accrued salaries and employee benefits$23,242 $32,156 
Accrued income and other taxes payable8,288 9,770 
Other accrued expenses and current liabilities6,871 9,004 
$38,401 $50,930 

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Note 7 – Fair Value Measurements
The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis by level, within the fair value hierarchy. Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (in thousands):
March 31, 2022
Level 1Level 2Level 3Total
Cash equivalents
Money market funds$110,937 $ $ $110,937 
U.S. treasury securities10,497   10,497 
U.S. government agencies14,98514,985
Commercial paper 90,437  90,437 
Marketable securities
U.S. treasury securities164,641   164,641 
    Corporate bonds 76,203  76,203 
    Commercial paper 425,278  425,278 
Total assets$286,075 $606,903 $ $892,978 
Liabilities
Contingent consideration$ $ $74,863 $74,863 
Total liabilities$ $ $74,863 $74,863 

December 31, 2021
Level 1Level 2Level 3Total
Cash equivalents
Money market funds$432,110 $ $ $432,110 
Marketable securities
Corporate bonds 74,480  74,480 
Commercial paper 584,484  584,484 
Total assets$432,110 $658,964 $ $1,091,074 
Liabilities
Contingent consideration$ $ $20,732 $20,732 
Total liabilities$ $ $20,732 $20,732 
The following table summarizes the changes in the contingent consideration liability (in thousands):
Quarter Ended March 31,
20222021
Beginning fair value$20,732 $23,490 
Additions in the period55,947  
Change in fair value(1,816)7,702 
Ending fair value$74,863 $31,192 
The fair value of the contingent consideration related to the 2013 Acquisition is determined by discounting estimated future taxable income. The significant inputs used in the fair value measurement of the contingent consideration are the timing and amount of taxable income in any given period and determining an appropriate discount rate, which are not based on observable market data and consider the risks associated with the forecasted taxable income. Significant changes in the estimated future taxable income and the periods in which they are generated would significantly impact the fair value of the contingent consideration liability.
To determine the fair value of the contingent consideration related to the Rimilia Acquisition, management utilized a Monte Carlo simulation model to value the earnout based on the likelihood of reaching firm-specific targets. Significant inputs used in the fair value measurement of the contingent consideration are the amount and timing of Rimilia Annual Recurring Revenue ("ARR") in each year over a two-year period subsequent to the
16


acquisition, as well as the appropriate discount rate, which considers the risk associated with the forecasted Rimilia ARR. Changes in the significant inputs used in the fair value measurement, specifically a change to Rimilia ARR can significantly impact the fair value of the contingent consideration liability. At March 31, 2022, the fair value of the contingent consideration liability was $12.5 million.
To determine the fair value of the contingent consideration related to the FourQ Acquisition, management utilized a Monte Carlo simulation model to value the earnout based on the likelihood of reaching firm-specific targets. Significant inputs used in the fair value measurement of contingent consideration are the amount and timing of new and incremental combined bookings from FourQ and BlackLine, and revenues from a specified FourQ customer over a three-year period subsequent to the acquisition date, as well as the discount rate. At March 31, 2022, the fair value of the contingent consideration liability was $55.9 million.
Changes in the fair value of contingent consideration are recorded as general and administrative expenses in the unaudited condensed consolidated statements of operations.
Note 8 – Convertible Senior Notes
2024 Notes
The 2024 Notes consisted of the following (in thousands):
March 31,
2022
December 31,
2021
Liability:
Principal$250,000 $250,000 
Unamortized debt discount (31,562)
Unamortized debt issuance costs(3,044)(2,938)
Net carrying amount$246,956 $215,500 
Carrying amount of the equity component$ $55,615 
The Company carries the 2024 Notes at face value less unamortized issuance costs on the accompanying condensed consolidated balance sheets and presents the fair value for disclosure purposes only. The estimated fair value was determined based on the actual bids and offers of the 2024 Notes in an over-the-counter market on the last trading day of the period. The estimated fair value of the 2024 Notes, based on a market approach at March 31, 2022, was approximately $307.5 million, which represents a Level 2 valuation.
During the quarter ended March 31, 2022, the Company recognized $0.3 million of interest expense related to the amortization of issuance costs and $0.1 million of coupon interest expense. During the quarter ended March 31, 2021, the Company recognized $5.3 million of interest expense related to the amortization of debt discount and issuance costs and $0.1 million of coupon interest expense. 
At March 31, 2022, the remaining life of the 2024 Notes was approximately 28 months.

The 2024 Notes were convertible at December 31, 2021. As a result, holders had the option to convert their Notes at any time during the quarter ended March 31, 2022. The Company did not receive any conversion requests for the 2024 Notes through March 31, 2022. It is the Company’s current intent to settle conversions of the Notes through “combination settlement”, which involves repayment of the principal portion in cash and any excess of the conversion value over the principal amount in shares of its common stock.

There have been no changes to the condition of the 2024 Capped Calls since December 31, 2021, and the Capped Calls are still outstanding as of March 31, 2022.
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2026 Notes
The 2026 Notes consisted of the following (in thousands):
March 31,
2022
December 31,
2021
Liability:
Principal$1,150,000 $1,150,000 
Unamortized debt discount (237,096)
Unamortized debt issuance costs(16,804)(14,165)
Net carrying amount$1,133,196 $898,739 
Carrying amount of the equity component$ $271,229 
The Company carries the 2026 Notes at face value less unamortized issuance costs on the accompanying condensed consolidated balance sheets and presents the fair value for disclosure purposes only. The estimated fair value was determined based on the actual bids and offers of the 2026 Notes in an over-the-counter market on the last trading day of the period. The estimated fair value of the 2026 Notes, based on a market approach at March 31, 2022, was approximately $975.3 million, which represents a Level 2 valuation.
During the quarter ended March 31, 2022, the Company recognized $1.0 million of interest expense related to the amortization of issuance costs.
At March 31, 2022, the remaining life of the 2026 Notes was approximately 48 months.
The 2026 Notes were not convertible at March 31, 2022. It is the Company’s current intent to settle conversions of the Notes through “combination settlement”, which involves repayment of the principal portion in cash and any excess of the conversion value over the principal amount in shares of its common stock.
There have been no changes to the condition of the 2026 Capped Calls since December 31, 2021, and the Capped Calls are still outstanding as of March 31, 2022.
Note 9 – Equity Awards
Stock-based compensation expense
Stock-based compensation expense was as follows (in thousands):
Quarter Ended March 31,
20222021
Cost of revenues$1,714 $1,750 
Sales and marketing5,924 5,251 
Research and development2,897 2,611 
General and administrative5,367 5,182 
$15,902 $14,794 
For the quarters ended March 31, 2022 and 2021, stock-based compensation capitalized as an asset was $0.4 million and $0.4 million, respectively.
Stock options
The following table summarizes activity for awards that contain service-only vesting conditions (in thousands):
Outstanding at December 31, 20212,739 
Granted 
Exercised(74)
Forfeited/canceled(8)
Nonvested at March 31, 20222,657 
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Restricted stock units
The following table summarizes activity for restricted stock units (in thousands):
Nonvested at December 31, 20211,503 
Granted114 
Vested(292)
Forfeited/canceled(54)
Outstanding at March 31, 20221,271 
Note 10 – Income Taxes

In determining quarterly provisions for income taxes, the Company uses the annual estimated effective tax rate applied to the actual year-to-date loss, adjusted for discrete items arising in that quarter. The Company’s annual estimated effective tax rate differs from the U.S. federal statutory rate of 21% primarily as a result of state taxes, foreign taxes, and changes in the Company’s valuation allowance for domestic income taxes. For the quarters ended March 31, 2022 and 2021, the Company recorded $12.9 million and $0.2 million in income tax benefit, respectively. The increase in income tax benefit for the quarter ended March 31, 2022, compared to the quarter ended March 31, 2021, resulted primarily from a partial release of $14.0 million of existing valuation allowance as net deferred tax liabilities acquired from FourQ are a source of taxable income to support recognition of existing BlackLine deferred tax assets. The increase was partially offset by the non-recognition of 2022 tax benefits associated with certain UK operations and changes in the mix of profitable foreign jurisdictions. For the quarters ended March 31, 2022 and 2021, the Company continued to maintain a full valuation allowance on its U.S. federal and state net deferred tax assets as it was more likely than not that those deferred tax assets will not be realized.

The Company acquired FourQ deferred tax liabilities of $17.7 million, which are a source of taxable income to support recognition of acquired FourQ deferred tax assets and existing BlackLine deferred tax assets. BlackLine elected to consider the recoverability of the acquired deferred tax assets before considering the recoverability of existing BlackLine deferred tax assets. The acquired net deferred tax liabilities resulted in a release of BlackLine’s existing valuation allowance through earnings of $14.0 million during the quarter ended March 31, 2022.
Note 11 – Net Loss per Share
The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share amounts):
Quarter Ended March 31,
20222021
Numerator:
Net loss attributable to BlackLine, Inc.$(10,011)$(38,964)
Denominator:
Weighted average shares59,123 57,860 
  Add: Dilutive effect of securities  
Shares used to calculate diluted net loss per share59,123 57,860 
Basic net loss per share attributable to BlackLine, Inc.$(0.17)$(0.67)
Diluted net loss per share attributable to BlackLine, Inc.$(0.17)$(0.67)
The following potentially dilutive shares were excluded from the calculation of diluted net loss per share attributable to common stockholders because they were anti-dilutive (in thousands):
Quarter Ended March 31,
20222021
Stock options with service-only vesting conditions2,657 3,021 
Restricted stock units1,271 2,107 
Total shares excluded from net loss per share3,928 5,128 
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Additionally, approximately 3.4 million and 6.9 million weighted average shares underlying the conversion option in the 2024 Notes and the 2026 Notes, respectively, are not considered in the calculation of diluted net loss per share as the effect would be anti-dilutive. The shares are subject to adjustment, up to approximately 4.7 million shares and 9.9 million shares for the 2024 Notes and the 2026 Notes, respectively, if certain corporate events occur prior to the maturity dates or if the Company issues a notice of redemption.
Note 12 – Commitments and Contingencies
Litigation—From time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. The Company is not currently a party to any legal proceedings, nor is it aware of any pending or threatened litigation that would have a material adverse effect on the Company’s business, operating results, cash flows, or financial condition should such litigation be resolved unfavorably.
Indemnification—In the ordinary course of business, the Company may provide indemnification of varying scope and terms to customers, vendors, investors, directors, and officers with respect to certain matters, including, but not limited to, losses arising out of its breach of such agreements, services to be provided by the Company, or from intellectual property infringement claims made by third parties. These indemnification provisions may survive termination of the underlying agreement and the maximum potential amount of future payments the Company could be required to make under these indemnification provisions may not be subject to maximum loss clauses. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is indeterminable. The Company has never paid a material claim, nor has it been sued in connection with these indemnification arrangements. At March 31, 2022 and December 31, 2021, the Company has not accrued a liability for these indemnification arrangements because the likelihood of incurring a payment obligation, if any, in connection with these indemnification arrangements was not probable or reasonably estimable.
Note 13 – Unearned Revenue and Performance Obligations
Revenue totaling $98.3 million and $79.4 million was recognized during the quarters ended March 31, 2022 and 2021, respectively, that was previously included in the deferred revenue balance at December 31, 2021 and 2020, respectively.
Contracted not recognized revenue was $661.3 million at March 31, 2022, of which the Company expects to recognize approximately 56% over the next 12 months and the remainder thereafter.
Note 14 – Geographic Information
The Company disaggregates its revenue from contracts with customers by geographic location, as it believes it best depicts how the nature, amount, timing, and uncertainty of its revenues and cash flows are affected by economic factors.
The following table sets forth the Company’s revenues by geographic region (in thousands):
Quarter Ended March 31,
20222021
United States$85,682 $72,041 
International34,554 26,815 
$120,236 $98,856 
Note 15 – Subsequent Events
On April 4, 2022, the Compensation Committee of the Board of Directors of BlackLine, Inc. approved restricted stock unit grants totaling 0.9 million shares. Each restricted stock unit entitles the recipient to receive one share of common stock upon vesting of the award. The majority of the restricted stock units will vest as to one-fourth of the total number of units awarded on the first anniversary of February 20, 2022 and quarterly thereafter for 12 consecutive quarters.

On April 4, 2022, the Compensation Committee of the Board of Directors of BlackLine, Inc. also approved performance stock unit grants totaling 0.2 million shares at target. Once specified performance metrics are met, each performance stock unit entitles the recipient to receive one share of common stock upon vesting of the award.
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The performance stock units will vest as to one-third of the total number of units awarded equally over the next three fiscal years.
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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with the financial statements and related notes that are included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 25, 2022 (“Annual Report on Form 10-K”), and as amended in the Annual Report on Form 10-K/A filed on March 24, 2022. This discussion contains forward-looking statements based upon current plans, expectations and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, those discussed in the section entitled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.
Overview
We have created a comprehensive cloud-based software platform designed to transform and modernize accounting and finance operations for organizations of all types and sizes. Our secure, scalable platform supports critical accounting processes such as the financial close, account reconciliations, intercompany accounting, and controls assurance. By introducing software to automate these processes and to enable them to function continuously, we empower our customers to improve the integrity of their financial reporting, increase efficiency in their accounting and finance processes and enhance real-time visibility into their operations.
At March 31, 2022, we had 337,939 individual users across 3,897 customers. Additionally, we continue to build strategic relationships with technology vendors, professional services firms, business process outsourcers, and resellers.
Our cloud-based products include Account Reconciliations, Transaction Matching, Task Management, Journal Entry, Variance Analysis, Consolidation Integrity Manager, Compliance, Cash Application, Credit & Risk Management, Collections Management, Disputes & Deductions, Team & Task Management, AR Intelligence, Intercompany Workflow, Intercompany Processing, and Netting and Settlement. These products are offered to customers as scalable solutions that support critical accounting processes, such as the financial close, account reconciliations, cash application, intercompany accounting, and compliance.
We derive approximately 94% of our revenue from subscriptions to our cloud-based software platform and approximately 6% from professional services for the quarter ended March 31, 2022. The majority of subscriptions are sold through one-year non-cancellable contracts, with a growing percentage of subscriptions sold through three-year contracts. We price our subscriptions based on a number of factors, primarily the number of users having access to the products and the number of products purchased by the customer. Subscription revenue is recognized ratably over the term of the customer contract. The first year of subscription fees are typically payable within 30 days after execution of a contract, and thereafter upon renewal.
Professional services consist of implementation and consulting services. Although our platform is ready to use immediately after a new customer has access to it, we typically help customers implement our solutions. We also provide consulting services to help customers optimize the use of our products. We charge customers for our consulting services on a time-and-materials basis and we recognize that revenue as services are performed. A limited number of our customers are provided professional services for a fixed fee, which is initially recorded as deferred revenue and recognized on a proportional-performance basis as the services are performed.
We typically invoice customers annually in advance for subscriptions. We also invoice fixed fee implementations in advance and professional services on a time-and-materials basis. We record amounts invoiced for portions of annual subscription periods that have not occurred or services that have not been performed as deferred revenue on our consolidated balance sheet.
We sell our solutions primarily through our direct sales force, which leverages our relationships with technology vendors, professional services firms and business process outsourcers. In particular, our solution integrates with SAP’s enterprise resource planning (“ERP”) solutions, and SAP is part of the reseller channel that we use in the ordinary course of business. SAP has the ability to resell our solutions, as an SAP solution-extension (“SolEx”), for which we receive a percentage of the revenues. In the first quarter of 2022, we entered into an agreement with Google Cloud in which the two companies will collaborate on joint selling and go-to-market activities and bring enhanced automation solutions for finance and accounting to new and existing customers.
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Our ability to maximize the lifetime value of our customer relationships will depend, in part, on the willingness of customers to purchase additional user licenses and products from us. We rely on our sales and customer success teams to support and grow our existing customers by maintaining high customer satisfaction and educating customers on the value all our products provide.
The length of our sales cycle depends on the size of a potential customer and contract, as well as the type of solution or product being purchased. The sales cycle for our global enterprise customers is generally longer than that of our mid-market customers. In addition, the length of the sales cycle tends to increase for larger contracts and for more complex, strategic products like Intercompany Hub. As we continue to focus on increasing our average contract size and selling more strategic products, we expect our sales cycle to lengthen and become less predictable, which could cause variability in our results for any particular period.
We have historically signed a high percentage of agreements with new customers, as well as renewal agreements with existing customers, in the fourth quarter of each year and usually during the last month of the quarter. This can be attributed to buying patterns typical in the software industry. As the terms of most of our customer agreements are measured in full year increments, agreements initially entered into during the fourth quarter or last month of any quarter will generally come up for renewal at that same time in subsequent years. This seasonality is reflected in our revenues, though the impact to overall annual or quarterly revenues is minimal due to the fact that we recognize subscription revenue ratably over the term of the customer contract.
On January 26, 2022, we acquired FourQ Systems, Inc. (“FourQ”), which we refer to as the “FourQ Acquisition.” The primary purpose of the FourQ Acquisition was to enhance our existing intercompany accounting automation capabilities by driving end-to-end automation of traditionally manual intercompany accounting processes.
For the quarters ended March 31, 2022 and 2021, we had revenues totaling $120.2 million and $98.9 million, respectively, and we incurred net losses attributable to BlackLine, Inc. of $10.0 million and $39.0 million, respectively.
COVID-19 Update
In response to the COVID-19 pandemic, we have taken precautionary measures in accordance with guidance provided by government agencies in order to minimize the risk of the virus to our employees, customers and communities in which we operate, as well as assisted our customers with ongoing challenges associated with the pandemic. Specifically, we responded with COVID-19 customer-relief programs to help our community of global accounting and finance professionals. For a time, we offered free access to our entire training library and offered existing customers six months of complimentary access to the Task Management and Reporting modules to enable a more effective remote close. In addition, we announced complimentary coaching sessions with our existing customers. We have been recognized by The Stevie International Business Awards and the CEO World Awards for our commitment to helping ensure business continuity and fostering well-being for both customers and employees in response to, and throughout the COVID-19 pandemic.
The broader implications of the COVID-19 pandemic on our business, operating results, and overall financial performance remain uncertain and depend on certain developments, including the pandemic's duration and geographic spread, the distribution and efficacy of vaccines, impact on our customers and our sales cycles, impact on our partners and employees, and impact on the economic environment and financial markets, all of which are uncertain and cannot be predicted. We are conducting business as usual with certain limitations to employee travel, employee work locations, and marketing events, among other modifications, and we continue to adjust our practices and policies to respond to evolving restrictions and recommendations in the jurisdictions where we conduct business. The risk of a cybersecurity incident occurring has increased as more companies and individuals are working remotely and through less secure network connections. As a result, we have increased our investments in network security to help mitigate against such an incident. We cannot provide assurances that our preventative efforts will be successful. We are and will continue to actively monitor the situation and may take further actions that alter our business operations, as may be required by federal, state, or local authorities, or that we determine are in the best interests of our employees, customers, partners, suppliers, and stockholders.

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Key Metrics
We regularly review a number of metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections, and make strategic decisions.
Mar 31, 2021Jun 30, 2021Sep 30, 2021Dec 31, 2021Mar 31, 2022
Dollar-based net revenue retention rate106 %106 %108 %109 %110 %
Number of customers3,4823,5983,7043,8253,897
Number of users297,060304,224315,144328,389337,939
Dollar-based net revenue retention rate. We believe that dollar-based net revenue retention rate is an important metric to measure the long-term value of customer agreements and our ability to retain and grow our relationships with existing customers over time. We calculate dollar-based net revenue retention rate as the implied monthly subscription and support revenue at the end of a period for the base set of customers from which we generated subscription revenue in the year prior to the calculation, divided by the implied monthly subscription and support revenue one year prior to the date of calculation for that same customer base. This calculation does not reflect implied monthly subscription and support revenue for new customers added during the one-year period but does include the effect of customers who terminated during the period. We define implied monthly subscription and support revenue as the total amount of minimum subscription and support revenue contractually committed to, under each of our customer agreements over the entire term of the agreement, divided by the number of months in the term of the agreement. At March 31, 2022, our dollar-based net revenue retention rate increased primarily due to higher net growth in customer accounts. Our ability to maximize the lifetime value of our customer relationships will depend, in part, on the willingness of the customer to purchase additional user licenses and products from us. We rely on our customer success and sales teams to support and grow our existing customers by maintaining high customer satisfaction and educating the customer on the value all our products provide.
Number of customers. We believe that our ability to expand our customer base is an indicator of our market penetration and the growth of our business. We define a customer as an entity with an active subscription agreement as of the measurement date. In situations where an organization has multiple subsidiaries or divisions, each entity that is invoiced as a separate entity is treated as a separate customer. However, where an existing customer requests its invoice be divided for the sole purpose of restructuring its internal billing arrangement without any incremental increase in revenue, such customer continues to be treated as a single customer. For the quarters ended March 31, 2022 and 2021, no single customer accounted for more than 10% of our total revenues.
Number of users. Since our customers generally pay fees based on the number of users of our platform within their organization, we believe the total number of users is an indicator of the growth of our business. While the fees for the majority of the products we sell are user-based, we are selling an increasing volume of transactions for our non-user based strategic products, such as Transaction Matching, Intercompany, and Cash Application.
Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP, we believe the non-GAAP measures below are useful to us and our investors in evaluating our business. These non-GAAP financial measures are useful because they provide consistency and comparability with our past performance, facilitate period-to-period comparisons of operations and facilitate comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.
Quarter Ended March 31,
20222021
(in thousands, except percentages)
GAAP gross profit$89,563 $76,966 
GAAP gross margin74.5 %77.9 %
GAAP net loss attributable to BlackLine, Inc.$(10,011)$(38,964)

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Quarter Ended March 31,
20222021
(in thousands, except percentages)
Non-GAAP gross profit$93,886$79,381
Non-GAAP gross margin78.1 %80.3 %
Non-GAAP net income attributable to BlackLine, Inc.$702$7,099

Non-GAAP Gross Profit and Non-GAAP Gross Margin. Non-GAAP gross profit is defined as GAAP revenues less GAAP cost of revenue adjusted for the amortization of acquired developed technology, transaction-related costs (including, but not limited to, accounting, legal, and advisory fees related to the transaction, as well as transaction-related retention bonuses) and stock-based compensation. Non-GAAP gross margin is defined as non-GAAP gross profit divided by GAAP revenues. BlackLine believes that presenting non-GAAP gross margin is useful to investors as it eliminates the impact of certain non-cash expenses and allows a direct comparison of gross margin between periods.

Non-GAAP Net Income (loss) attributable to BlackLine and Diluted Non-GAAP Net Income (loss) attributable to BlackLine, Inc. per share. Non-GAAP net income (loss) attributable to BlackLine is defined as GAAP net loss attributable to BlackLine adjusted for the impact of the provision for (benefit from) income taxes related to acquisitions, amortization of intangible assets, stock-based compensation, the amortization of debt discount and issuance costs from our convertible notes, the change in the fair value of contingent consideration, transaction-related-related costs, legal settlement gains, adjustment to the value of the redeemable non-controlling interest to the redemption amount, and loss on extinguishment of convertible senior notes. Diluted non-GAAP net income attributable to BlackLine, Inc. per share includes the adjustment for shares resulting from the elimination of stock-based compensation. The Company believes that presenting non-GAAP net income (loss) attributable to BlackLine is useful to investors as it eliminates the impact of items that have been impacted by the company’s acquisitions and other related costs in order to allow a direct comparison of net loss between all periods presented.
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Reconciliation of Non-GAAP Financial Measures
The following table presents a reconciliation of gross profit, gross margin and net loss, the most comparable GAAP measures, to non-GAAP gross profit, non-GAAP gross margin and non-GAAP net income:
Quarter Ended March 31,
20222021
(in thousands, except percentages)
Non-GAAP Gross Profit:
Gross profit$89,563 $76,966 
Amortization of acquired developed technology2,337 665 
Stock-based compensation expense1,714 1,750 
Transaction-related costs272 — 
Total non-GAAP gross profit$93,886 $79,381 
Gross margin74.5 %77.9 %
Non-GAAP gross margin