10-Q 1 bl-20210930.htm 10-Q bl-20210930
false2021Q3000166613412-310.006015625.0000016661342021-01-012021-09-30xbrli:shares00016661342021-10-29iso4217:USD00016661342021-09-3000016661342020-12-310001666134us-gaap:SubscriptionAndCirculationMember2021-07-012021-09-300001666134us-gaap:SubscriptionAndCirculationMember2020-07-012020-09-300001666134us-gaap:SubscriptionAndCirculationMember2021-01-012021-09-300001666134us-gaap:SubscriptionAndCirculationMember2020-01-012020-09-300001666134us-gaap:TechnologyServiceMember2021-07-012021-09-300001666134us-gaap:TechnologyServiceMember2020-07-012020-09-300001666134us-gaap:TechnologyServiceMember2021-01-012021-09-300001666134us-gaap:TechnologyServiceMember2020-01-012020-09-3000016661342021-07-012021-09-3000016661342020-07-012020-09-3000016661342020-01-012020-09-30iso4217:USDxbrli:shares0001666134us-gaap:CommonStockMember2021-06-300001666134us-gaap:AdditionalPaidInCapitalMember2021-06-300001666134us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001666134us-gaap:RetainedEarningsMember2021-06-3000016661342021-06-300001666134us-gaap:CommonStockMember2021-07-012021-09-300001666134us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300001666134us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300001666134us-gaap:RetainedEarningsMember2021-07-012021-09-300001666134us-gaap:CommonStockMember2021-09-300001666134us-gaap:AdditionalPaidInCapitalMember2021-09-300001666134us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300001666134us-gaap:RetainedEarningsMember2021-09-300001666134us-gaap:CommonStockMember2020-12-310001666134us-gaap:AdditionalPaidInCapitalMember2020-12-310001666134us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001666134us-gaap:RetainedEarningsMember2020-12-310001666134us-gaap:CommonStockMember2021-01-012021-09-300001666134us-gaap:AdditionalPaidInCapitalMember2021-01-012021-09-300001666134us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-09-300001666134us-gaap:RetainedEarningsMember2021-01-012021-09-300001666134us-gaap:CommonStockMember2020-06-300001666134us-gaap:AdditionalPaidInCapitalMember2020-06-300001666134us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300001666134us-gaap:RetainedEarningsMember2020-06-3000016661342020-06-300001666134us-gaap:CommonStockMember2020-07-012020-09-300001666134us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300001666134us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300001666134us-gaap:RetainedEarningsMember2020-07-012020-09-300001666134us-gaap:CommonStockMember2020-09-300001666134us-gaap:AdditionalPaidInCapitalMember2020-09-300001666134us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300001666134us-gaap:RetainedEarningsMember2020-09-3000016661342020-09-300001666134us-gaap:CommonStockMember2019-12-310001666134us-gaap:AdditionalPaidInCapitalMember2019-12-310001666134us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001666134us-gaap:RetainedEarningsMember2019-12-3100016661342019-12-310001666134us-gaap:CommonStockMember2020-01-012020-09-300001666134us-gaap:AdditionalPaidInCapitalMember2020-01-012020-09-300001666134us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-09-300001666134us-gaap:RetainedEarningsMember2020-01-012020-09-300001666134bl:BlackLineKKMemberbl:BlackLineKKMember2018-10-012018-10-31xbrli:pure0001666134bl:BlackLineKKMemberbl:BlackLineKKMember2018-10-310001666134us-gaap:USTreasurySecuritiesMember2021-09-300001666134us-gaap:CorporateDebtSecuritiesMember2021-09-300001666134us-gaap:CommercialPaperMember2021-09-300001666134us-gaap:USTreasurySecuritiesMember2020-12-310001666134us-gaap:CorporateDebtSecuritiesMember2020-12-310001666134us-gaap:CommercialPaperMember2020-12-310001666134us-gaap:GeneralAndAdministrativeExpenseMember2021-07-012021-09-300001666134us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-09-300001666134us-gaap:GeneralAndAdministrativeExpenseMember2020-07-012020-09-300001666134us-gaap:GeneralAndAdministrativeExpenseMember2020-01-012020-09-30bl:marketableSecurity0001666134us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2021-09-300001666134us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2021-09-300001666134us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2021-09-300001666134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2021-09-300001666134us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001666134us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001666134us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001666134us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001666134us-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001666134us-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001666134us-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001666134us-gaap:CommercialPaperMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001666134us-gaap:FairValueInputsLevel1Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001666134us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001666134us-gaap:FairValueInputsLevel3Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001666134us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001666134us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001666134us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001666134us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001666134us-gaap:FairValueMeasurementsRecurringMember2021-09-300001666134us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2020-12-310001666134us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2020-12-310001666134us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2020-12-310001666134us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2020-12-310001666134us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001666134us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001666134us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001666134us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001666134us-gaap:FairValueInputsLevel1Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001666134us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001666134us-gaap:FairValueInputsLevel3Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001666134us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001666134us-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001666134us-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001666134us-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001666134us-gaap:CommercialPaperMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001666134us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001666134us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001666134us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001666134us-gaap:FairValueMeasurementsRecurringMember2020-12-310001666134bl:ContingentConsiderationMember2021-06-300001666134bl:ContingentConsiderationMember2020-06-300001666134bl:ContingentConsiderationMember2020-12-310001666134bl:ContingentConsiderationMember2019-12-310001666134bl:ContingentConsiderationMember2021-07-012021-09-300001666134bl:ContingentConsiderationMember2020-07-012020-09-300001666134bl:ContingentConsiderationMember2021-01-012021-09-300001666134bl:ContingentConsiderationMember2020-01-012020-09-300001666134bl:ContingentConsiderationMember2021-09-300001666134bl:ContingentConsiderationMember2020-09-300001666134bl:ZeroPointOneTwoFivePercentConvertibleSeniorNotesDueTwentyTwentyFourMember2019-08-130001666134bl:ZeroPointOneTwoFivePercentConvertibleSeniorNotesDueTwentyTwentyFourMember2019-08-132019-08-130001666134bl:ConvertibleSeniorNotesDue2026Member2021-03-012021-03-310001666134bl:ZeroPointOneTwoFivePercentConvertibleSeniorNotesDueTwentyTwentyFourMember2021-03-310001666134bl:ZeroPointOneTwoFivePercentConvertibleSeniorNotesDueTwentyTwentyFourMember2021-09-300001666134bl:ZeroPointOneTwoFivePercentConvertibleSeniorNotesDueTwentyTwentyFourMember2021-01-012021-03-310001666134bl:ZeroPointOneTwoFivePercentConvertibleSeniorNotesDueTwentyTwentyFourMember2020-12-310001666134us-gaap:FairValueInputsLevel2Memberbl:ZeroPointOneTwoFivePercentConvertibleSeniorNotesDueTwentyTwentyFourMember2021-09-300001666134bl:ZeroPointOneTwoFivePercentConvertibleSeniorNotesDueTwentyTwentyFourMember2021-07-012021-09-300001666134bl:ZeroPointOneTwoFivePercentConvertibleSeniorNotesDueTwentyTwentyFourMember2020-07-012020-09-300001666134bl:ZeroPointOneTwoFivePercentConvertibleSeniorNotesDueTwentyTwentyFourMember2021-01-012021-09-300001666134bl:ZeroPointOneTwoFivePercentConvertibleSeniorNotesDueTwentyTwentyFourMember2020-01-012020-09-300001666134bl:ConvertibleSeniorNotesDue2026Member2021-03-152021-03-150001666134bl:ConvertibleSeniorNotesDue2026Member2021-03-15utr:D0001666134bl:ConvertibleSeniorNotesDue2026Memberbl:ConditionOneMember2021-03-152021-03-150001666134srt:MinimumMemberbl:ConvertibleSeniorNotesDue2026Memberbl:ConditionOneMember2021-03-152021-03-150001666134bl:ConditionTwoMemberbl:ConvertibleSeniorNotesDue2026Member2021-03-152021-03-150001666134bl:ConditionTwoMembersrt:MaximumMemberbl:ConvertibleSeniorNotesDue2026Member2021-03-152021-03-150001666134srt:MinimumMemberbl:ConvertibleSeniorNotesDue2026Member2021-03-152021-03-150001666134bl:ConvertibleSeniorNotesDue2026Member2021-09-300001666134us-gaap:FairValueInputsLevel2Memberbl:ConvertibleSeniorNotesDue2026Member2021-09-300001666134bl:ConvertibleSeniorNotesDue2026Member2021-01-012021-09-300001666134bl:ConvertibleSeniorNotesDue2026Member2020-01-012020-09-300001666134bl:BlackLineSystemsIncMember2013-12-310001666134bl:BlackLineSystemsIncMember2021-09-300001666134bl:BlackLineSystemsIncMember2020-12-310001666134bl:RimiliaHoldingsLtdMember2021-09-300001666134bl:RimiliaHoldingsLtdMember2020-12-310001666134us-gaap:CostOfSalesMember2021-07-012021-09-300001666134us-gaap:CostOfSalesMember2020-07-012020-09-300001666134us-gaap:CostOfSalesMember2021-01-012021-09-300001666134us-gaap:CostOfSalesMember2020-01-012020-09-300001666134us-gaap:SellingAndMarketingExpenseMember2021-07-012021-09-300001666134us-gaap:SellingAndMarketingExpenseMember2020-07-012020-09-300001666134us-gaap:SellingAndMarketingExpenseMember2021-01-012021-09-300001666134us-gaap:SellingAndMarketingExpenseMember2020-01-012020-09-300001666134us-gaap:ResearchAndDevelopmentExpenseMember2021-07-012021-09-300001666134us-gaap:ResearchAndDevelopmentExpenseMember2020-07-012020-09-300001666134us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-09-300001666134us-gaap:ResearchAndDevelopmentExpenseMember2020-01-012020-09-300001666134us-gaap:RestrictedStockUnitsRSUMember2020-12-310001666134us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-09-300001666134us-gaap:RestrictedStockUnitsRSUMember2021-09-300001666134us-gaap:EmployeeStockOptionMembersrt:OfficerMember2016-10-012016-10-31bl:officer0001666134us-gaap:EmployeeStockOptionMember2016-10-310001666134us-gaap:EmployeeStockOptionMembersrt:OfficerMember2020-07-012020-07-010001666134us-gaap:EmployeeStockOptionMember2020-07-010001666134us-gaap:EmployeeStockOptionMembersrt:OfficerMember2021-01-012021-03-3100016661342021-10-012021-09-300001666134us-gaap:EmployeeStockOptionMember2021-01-012021-09-300001666134us-gaap:EmployeeStockOptionMember2020-01-012020-09-300001666134us-gaap:PerformanceSharesMember2021-01-012021-09-300001666134us-gaap:PerformanceSharesMember2020-01-012020-09-300001666134us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-09-300001666134us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-09-300001666134bl:ZeroPointOneTwoFivePercentConvertibleSeniorNotesDueTwentyTwentyFourMemberbl:ConvertibleNotesMember2021-01-012021-09-300001666134bl:ConvertibleNotesMemberbl:ConvertibleSeniorNotesDue2026Member2021-01-012021-09-300001666134bl:ZeroPointOneTwoFivePercentConvertibleSeniorNotesDueTwentyTwentyFourMemberbl:ConvertibleNotesMemberbl:CertainCorporateEventsOccurPriorToMaturityDateOrCompanyIssuesNoticeOfRedemptionMember2021-01-012021-09-300001666134bl:ConvertibleNotesMemberbl:ConvertibleSeniorNotesDue2026Memberbl:CertainCorporateEventsOccurPriorToMaturityDateOrCompanyIssuesNoticeOfRedemptionMember2021-01-012021-09-300001666134bl:ZeroPointOneTwoFivePercentConvertibleSeniorNotesDueTwentyTwentyFourMemberbl:ConvertibleNotesMember2021-09-300001666134bl:ConvertibleNotesMemberbl:ConvertibleSeniorNotesDue2026Member2021-09-300001666134country:US2021-07-012021-09-300001666134country:US2020-07-012020-09-300001666134country:US2021-01-012021-09-300001666134country:US2020-01-012020-09-300001666134us-gaap:NonUsMember2021-07-012021-09-300001666134us-gaap:NonUsMember2020-07-012020-09-300001666134us-gaap:NonUsMember2021-01-012021-09-300001666134us-gaap:NonUsMember2020-01-012020-09-300001666134us-gaap:SubsequentEventMemberbl:BoardOfDirectorsCompensationCommitteeMemberus-gaap:RestrictedStockUnitsRSUMember2021-11-022021-11-02

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 September 30, 2021
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 October 29, 2021 was 58,655,290.



BlackLine, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended September 30, 2021
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)
September 30,
2021		December 31,
2020
ASSETS
Current assets:
Cash and cash equivalents$378,977 $367,413 
Marketable securities (amortized cost of $799,073 and $175,211 at September 30, 2021 and December 31, 2020, respectively)
798,952 175,206 
Accounts receivable, net of allowances for credit losses of $2,978 and $3,737 at September 30, 2021 and December 31, 2020, respectively
105,042 111,270 
Prepaid expenses and other current assets18,462 20,226 
Total current assets1,301,433 674,115 
Capitalized software development costs, net22,077 15,690 
Property and equipment, net 13,167 13,239 
Intangible assets, net38,244 46,674 
Goodwill289,710 289,710 
Operating lease right-of-use assets6,798 8,708 
Other assets78,963 65,369 
Total assets$1,750,392 $1,113,505 
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$2,175 $3,150 
Accrued expenses and other current liabilities38,869 35,958 
Deferred revenue209,608 191,137 
Short-term portion of operating lease liabilities3,589 4,147 
Short-term portion of contingent consideration2,008 7,938 
Total current liabilities256,249 242,330 
Operating lease liabilities, noncurrent5,463 7,356 
Convertible senior notes, net1,097,973 407,032 
Contingent consideration18,056 15,552 
Deferred tax liabilities, net9,511 6,566 
Deferred revenue, noncurrent276 75 
Other long-term liabilities75 — 
Total liabilities1,387,603 678,911 
Commitments and contingencies (Note 7)
Redeemable non-controlling interest (Note 3)22,049 12,524 
Stockholders' equity:
Common stock586 577 
Additional paid-in capital609,433 622,768 
Accumulated other comprehensive income 157 376 
Accumulated deficit(269,436)(201,651)
Total stockholders' equity340,740 422,070 
Total liabilities, redeemable non-controlling interest, and stockholders' equity$1,750,392 $1,113,505 
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 September 30,Nine Months Ended September 30,
2021202020212020
Revenues
Subscription and support$102,924 $83,875 $289,749 $238,777 
Professional services6,478 6,282 20,631 17,250 
Total revenues109,402 90,157 310,380 256,027 
Cost of revenues
Subscription and support17,948 11,700 50,540 34,708 
Professional services6,489 5,282 19,359 15,082 
Total cost of revenues24,437 16,982 69,899 49,790 
Gross profit84,965 73,175 240,481 206,237 
Operating expenses
Sales and marketing48,799 42,588 146,410 129,199 
Research and development18,843 14,829 56,611 38,423 
General and administrative11,372 17,794 59,886 51,314 
Total operating expenses79,014 75,211 262,907 218,936 
Income (loss) from operations5,951 (2,036)(22,426)(12,699)
Other income (expense)
Interest income231 648 412 4,142 
Interest expense(16,110)(5,914)(46,582)(17,340)
Other expense, net(15,879)(5,266)(46,170)(13,198)
Loss before income taxes(9,928)(7,302)(68,596)(25,897)
Provision for (benefit from) income taxes(210)555 (78)871 
Net loss(9,718)(7,857)(68,518)(26,768)
Net loss attributable to non-controlling interest (252)(425)(733)(1,081)
Adjustment attributable to non-controlling interest 4,275 1,319 10,366 4,239 
Net loss attributable to BlackLine, Inc.$(13,741)$(8,751)$(78,151)$(29,926)
Basic net loss per share attributable to BlackLine, Inc.$(0.23)$(0.15)$(1.34)$(0.53)
Shares used to calculate basic net loss per share58,508 57,063 58,196 56,619 
Diluted net loss per share attributable to BlackLine, Inc.$(0.23)$(0.15)$(1.34)$(0.53)
Shares used to calculate diluted net loss per share58,508 57,063 58,196 56,619 
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 September 30,Nine Months Ended September 30,
2021202020212020
Net loss$(9,718)$(7,857)$(68,518)$(26,768)
Other comprehensive income (loss):
Net change in unrealized gains (losses) on marketable securities, net of tax of $0 for the quarters and nine months ended September 30, 2021 and 2020
(81)(419)(111)126 
Foreign currency translation5 88 (199)130 
Other comprehensive income (loss)(76)(331)(310)256 
Comprehensive loss(9,794)(8,188)(68,828)(26,512)
Less comprehensive loss attributable to redeemable non-controlling interest:
Net loss attributable to redeemable non-controlling interest (252)(425)(733)(1,081)
Foreign currency translation attributable to redeemable non-controlling interest11 44 (91)65 
Comprehensive loss attributable to redeemable non-controlling interest(241)(381)(824)(1,016)
Comprehensive loss attributable to BlackLine, Inc.$(9,553)$(7,807)$(68,004)$(25,496)
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 September 30, 2021
Common StockAdditional
Paid-in		Accumulated
Other
Comprehensive		Accumulated
SharesAmountCapitalIncome (Loss)DeficitTotal
Balance at June 30, 202158,402 $584 $596,183 $244 $(259,970)$337,041 
Stock option exercises96 1 2,627 — — 2,628 
Vesting of restricted stock units144 1 — — — 1 
Acquisition of common stock for tax withholding obligations— — (2,713)— — (2,713)
Stock-based compensation— — 17,372 — — 17,372 
Equity component of the 2026 convertible senior notes, net of issuance costs and tax— — 239 — — 239 
Other comprehensive loss— — — (87)— (87)
Net loss attributable to BlackLine, Inc., including adjustment to redeemable non-controlling interest— — (4,275)— (9,466)(13,741)
Balance at September 30, 202158,642 $586 $609,433 $157 $(269,436)$340,740 
Nine Months Ended September 30, 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 exercises291 3 7,671 — — 7,674 
Vesting of restricted stock units605 5 — — — 5 
Issuance of common stock through employee stock purchase plan64 1 5,196 — — 5,197 
Acquisition of common stock for tax withholding obligations— — (12,649)— — (12,649)
Stock-based compensation— — 50,123 — — 50,123 
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— — 268,324 — — 268,324 
Purchase of capped calls— — (102,350)— — (102,350)
Other comprehensive loss— — — (219)— (219)
Net loss attributable to BlackLine, Inc., including adjustment to redeemable non-controlling interest— — (10,366)— (67,785)(78,151)
Balance at September 30, 202158,642 $586 $609,433 $157 $(269,436)$340,740 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.




7


BLACKLINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (cont.) (UNAUDITED)
(in thousands)
Quarter Ended September 30, 2020
Common StockAdditional
Paid-in		Accumulated
Other
Comprehensive		Accumulated
SharesAmountCapitalIncome (Loss)DeficitTotal
Balance at June 30, 202056,855 $569 $590,119 $943 $(181,853)$409,778 
Stock option exercises296 3 3,867 — — 3,870 
Vesting of restricted stock units104 1 — — — 1 
Acquisition of common stock for tax withholding obligations— — (1,272)— — (1,272)
Stock-based compensation— — 13,683 — — 13,683 
Other comprehensive income— — — (375)— (375)
Net loss attributable to BlackLine, Inc., including adjustment to redeemable non-controlling interest— — (1,319)— (7,432)(8,751)
Balance at September 30, 202057,255 $573 $605,078 $568 $(189,285)$416,934 
Nine Months Ended September 30, 2020
Common StockAdditional
Paid-in		Accumulated
Other
Comprehensive		Accumulated
SharesAmountCapitalIncome (Loss)DeficitTotal
Balance at December 31, 201955,931 $559 $561,275 $377 $(163,598)$398,613 
Stock option exercises789 9 14,274 — — 14,283 
Vesting of restricted stock units450 4 — — — 4 
Issuance of common stock through employee stock purchase plan85 1 3,607 — — 3,608 
Acquisition of common stock for tax withholding obligations— — (6,128)— — (6,128)
Stock-based compensation— — 36,289 — — 36,289 
Other comprehensive income— — — 191 — 191 
Net loss attributable to BlackLine, Inc., including adjustment to redeemable non-controlling interest— — (4,239)— (25,687)(29,926)
Balance at September 30, 202057,255 $573 $605,078 $568 $(189,285)$416,934 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8

BLACKLINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Nine Months Ended September 30,
20212020
Cash flows from operating activities
Net loss attributable to BlackLine, Inc.$(78,151)$(29,926)
Net loss and adjustment attributable to redeemable non-controlling interest (Note 3)9,633 3,158 
Net loss(68,518)(26,768)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization20,175 14,615 
Change in fair value of contingent consideration(3,426)(148)
Amortization of debt discount and issuance costs39,272 16,874 
Stock-based compensation48,789 35,398 
Loss on extinguishment of convertible senior notes7,012 — 
Noncash lease expense3,387 3,557 
Accretion of purchase discounts on marketable securities, net(158)(333)
Net foreign currency (gains) losses478 (275)
Deferred income taxes40 179 
Provision for (benefit from) credit losses(55)373 
Changes in operating assets and liabilities:
Accounts receivable5,436 11,557 
Prepaid expenses and other current assets1,646 (3,143)
Other assets(13,609)(5,684)
Accounts payable (985)(4,569)
Accrued expenses and other current liabilities3,665 (1,032)
Deferred revenue18,672 3,056 
Operating lease liabilities(3,854)(3,734)
Net cash provided by operating activities57,967 39,923 
Cash flows from investing activities
Purchases of marketable securities(1,107,908)(116,400)
Proceeds from maturities of marketable securities484,209 460,982 
Proceeds from sales of marketable securities— 25,959 
Capitalized software development costs(11,240)(7,838)
Purchases of property and equipment(5,197)(2,515)
Cash paid for pending acquisition— (121,433)
Purchases of intangible assets— (2,333)
Net cash provided by (used in) investing activities(640,136)236,422 
Cash flows from financing activities
Proceeds from issuance of convertible senior notes, net of issuance costs1,128,794 — 
Partial repurchase of convertible senior notes(432,230)— 
Purchase of capped calls related to convertible senior notes(102,350)— 
Proceeds from exercises of stock options7,679 14,287 
Proceeds from employee stock purchase plan5,197 3,608 
Acquisition of common stock for tax withholding obligations(12,649)(6,128)
Financed purchases of property and equipment(549)(394)
Net cash provided by financing activities593,892 11,373 
Effect of foreign currency exchange rate changes on cash, cash equivalents, and restricted cash(201)130 
Net increase in cash, cash equivalents, and restricted cash11,522 287,848 
Cash, cash equivalents, and restricted cash, beginning of period367,913 120,502 
Cash, cash equivalents, and restricted cash, end of period$379,435 $408,350 
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets
Cash and cash equivalents at end of period$378,977 $408,070 
Restricted cash included within prepaid expenses and other current assets at end of period203 19 
Restricted cash included within other assets at end of period255 261 
Total cash, cash equivalents, and restricted cash at end of period shown in the consolidated statements of cash flows$379,435 $408,350 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
9

BLACKLINE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SUPPLEMENTAL CASH FLOWS DISCLOSURE
(in thousands)
Nine Months Ended September 30,
20212020
Non-cash financing and investing activities
Stock-based compensation capitalized for software development$1,409 $891 
Capitalized software development costs included in accounts payable and accrued expenses and other current liabilities at end of period$890 $461 
Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities at end of period$211 $808 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
10

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 entries, and certain types of data matching procedures.
The Company is a holding company and conducts its operations through its wholly-owned subsidiary, BlackLine Systems, Inc. (“BlackLine Systems”). BlackLine Systems funded its business with investments from its founder and cash flows from operations until September 3, 2013, when the Company acquired BlackLine Systems, and Silver Lake Sumeru and Iconiq acquired a controlling interest in the Company, which is referred to as the “2013 Acquisition.”
On October 2, 2020, the Company acquired Rimilia Holdings Ltd. (“Rimilia”), which is referred to as the “Rimilia Acquisition.”
The Company is headquartered in Woodland Hills, California and has offices 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, 2020, which was filed with the Securities and Exchange Commission (“SEC”) on February 25, 2021. 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, 2020 was derived from audited financial statements, but does not include all disclosures required by GAAP. The operating results for the quarter and nine months ended September 30, 2021 are not necessarily indicative of the results expected for the full year ending December 31, 2021.
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, including interest rates, employment rates, and health insurance coverage; the speed and degree of the anticipated economic recovery, 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 September 30, 2021 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 consolidated financial statements at and for the quarter and nine months ended September 30, 2021, the Company’s future assessment of the
11

magnitude and duration of COVID-19 and other factors could result in material impacts to the Company’s consolidated financial statements in future reporting periods.
Significant accounting policies
The Company’s significant accounting policies are detailed in “Note 2: Summary of Significant Accounting Policies" of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. There have been no material changes to the Company’s significant accounting policies.
Recently-issued accounting pronouncements not yet adopted
In August 2020, the FASB issued 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. 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. Early adoption is permitted but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is in the process of evaluating the impact of the adoption on its consolidated financial statements.

In January 2021, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2021-01, Reference Rate Reform (Topic 848), which refines the scope of ASC 848 and clarifies some of its guidance of global reference rate reform activities. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria are met. These transactions include contract modifications, hedging relationships, and sale or transfer of debt securities classified as held-to-maturity. Entities may apply the provisions of the new standard as of the beginning of the reporting period when the election is made (i.e., as early as the first quarter of 2020). The Company 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.
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 has not adopted the provisions of the new standard and will assess its impact on the Company’s consolidated financial statements upon adoption.
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 interest’s share of earnings, or its
12

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 September 30,Nine Months Ended September 30,
2021202020212020
Balance at beginning of period$18,032 $7,190 $12,524 $4,905 
Net loss attributable to redeemable non-controlling interest (excluding adjustment to non-controlling interest)(252)(425)(733)(1,081)
Foreign currency translation(6)44 (108)65 
Adjustment to redeemable non-controlling interest4,275 1,319 10,366 4,239 
Balance at end of period$22,049 $8,128 $22,049 $8,128 
During the third quarter of 2020, the Company identified that, commencing in 2019, it had incorrectly calculated its quarterly adjustment to the carrying value of its redeemable non-controlling interest, which resulted in an overstatement/(understatement) of the adjustment attributable to non-controlling interest in its unaudited condensed consolidated statement of operations. The Company corrected the $1.5 million cumulative prior-period error in the quarter ended September 30, 2020 to correctly state the carrying value of the redeemable non-controlling interest in its unaudited condensed consolidated balance sheet.
Note 4 – Balance Sheet Components
Investments in Marketable Securities
Investments in marketable securities presented within current assets on the condensed consolidated balance sheet consisted of the following:
September 30, 2021
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair Value
(in thousands)
Marketable securities
U.S. treasury securities$49,998 $— $(1)$49,997 
Corporate bonds71,495 17 (6)71,506 
Commercial paper677,580 — (131)677,449 
$799,073 $17 $(138)$798,952 

December 31, 2020
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair Value
(in thousands)
Marketable securities
U.S. treasury securities$149,991 $3 $— $149,994 
Corporate bonds22,621 — (8)22,613 
Commercial paper2,599 — — 2,599 
$175,211 $3 $(8)$175,206 
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 unaudited condensed consolidated statements of operations, were $0.1 million and $0.2 million for the quarter and nine months ended September 30, 2021, respectively. 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
13

administrative expenses in the unaudited condensed consolidated statements of operations, were $(0.3) million and $0.3 million for the quarter and nine months ended September 30, 2020, respectively.
Net gains and losses are determined using the specific identification method. During the quarter and nine months ended September 30, 2021, there were no realized gains or losses related to sales of marketable securities recognized in the Company's unaudited condensed consolidated statements of operations. During the nine months ended September 30, 2020, there were $0.1 million of realized losses related to the sale of one marketable security recognized in the Company’s unaudited condensed consolidated statements of operations.
Marketable securities in a continuous loss position for less than 12 months had an estimated fair value of $421.7 million and $12.6 million, and $0.1 million of unrealized losses at September 30, 2021 and an immaterial amount at December 31, 2020. At September 30, 2021, 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 September 30, 2021 or December 31, 2020.
The Company’s marketable securities have a contractual maturity of less than two years. The amortized cost and fair values of marketable securities, by remaining contractual maturity, were as follows:
September 30, 2021
Amortized CostFair Value
(in thousands)
Maturing within 1 year$779,497 $779,373 
Maturing between 1 and 2 years19,576 19,579 
$799,073 $798,952 
Other Assets
Other assets consisted of the following (in thousands):
September 30,
2021		December 31,
2020
Deferred customer contract acquisition costs$71,023 $58,980 
Restricted cash255 273 
Capitalized software implementation costs3,745 2,372 
Other assets3,940 3,744 
$78,963 $65,369 
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities were comprised of the following (in thousands):
September 30,
2021		December 31,
2020
Accrued salaries and employee benefits$25,682 $21,707 
Accrued income and other taxes payable4,758 5,496 
Other accrued expenses and current liabilities8,429 8,755 
$38,869 $35,958 

14

Note 5 – 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):
September 30, 2021
Level 1Level 2Level 3Total
Cash equivalents
Money market funds$235,418 $— $— $235,418 
U.S. treasury securities49,998 — — 49,998 
Commercial paper— 5,500 — 5,500 
Marketable securities
U.S. treasury securities49,997 — — 49,997 
    Corporate bonds— 71,506 — 71,506 
    Commercial paper— 677,449 — 677,449 
Total assets$335,413 $754,455 $— $1,089,868 
Liabilities
Contingent consideration$— $— $20,064 $20,064 
Total liabilities$— $— $20,064 $20,064 

December 31, 2020
Level 1Level 2Level 3Total
Cash equivalents
Money market funds$98,336 $— $— $98,336 
U.S. treasury securities199,984 — — 199,984 
Marketable securities
U.S. treasury securities149,994 — — 149,994 
Corporate bonds— 22,613 — 22,613 
Commercial paper— 2,599 — 2,599 
Total assets$448,314 $25,212 $— $473,526 
Liabilities
Contingent consideration$— $— $23,490 $23,490 
Total liabilities$— $— $23,490 $23,490 
The following table summarizes the changes in the contingent consideration liability (in thousands):
Quarter Ended September 30,Nine Months Ended September 30,
2021202020212020
Beginning fair value$30,410 $6,286 $23,490 $6,362 
Change in fair value(10,346)(72)(3,426)(148)
Ending fair value$20,064 $6,214 $20,064 $6,214 
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 earn-out 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
15

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, have significantly impacted the fair value of the contingent consideration liability in the quarter and nine months ended September 30, 2021.
Changes in the fair value of contingent consideration are recorded as general and administrative expenses in the unaudited condensed consolidated statements of operations.
Note 6 – Convertible Senior Notes
2024 Notes
On August 13, 2019, the Company issued 0.125% Convertible Senior Notes (the “2024 Notes”) due in 2024 for aggregate gross proceeds of $500.0 million, which includes the initial purchasers’ option of $65.0 million aggregate principal amount, in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The resale of the 2024 Notes by the initial purchasers to qualified institutional buyers was exempt from registration pursuant to Rule 144A under the Securities Act. The 2024 Notes were issued pursuant to an indenture between the Company and U.S. Bank National Association, as trustee.
In connection with the issuance of the 2026 Notes (as defined below) in March 2021, the Company used approximately $432.2 million of the net proceeds from the offering of the 2026 Notes to repurchase $250.0 million aggregate principal amount of the 2024 Notes. The Company determined the fair value of the liability portion being extinguished immediately prior to extinguishment. Based on market data available for publicly-traded, senior, unsecured corporate bonds issued by companies in the same industry and with similar maturity, the Company estimated the implied interest rate of its 2024 Notes to be approximately 4.94%. The fair value of the liability portion was then deducted from the amount of consideration transferred and allocated to the liability component. The difference between the fair value of the liability and its carrying value, inclusive of any unamortized debt issuance costs, was recognized as an extinguishment loss in the amount of $7.0 million in interest expense in the unaudited condensed consolidated statement of operations in the quarter ended March 31, 2021. The remaining consideration was allocated to the reacquisition of the equity component and recognized as a reduction of additional paid-in capital in the unaudited condensed consolidated balance sheet in the amount of $219.3 million. The equity component of the 2024 Notes will not be remeasured as long as it continues to meet the conditions for equity classification. The debt discount is amortized to interest expense over the term of the 2024 Notes using the effective interest method.
The 2024 Notes consisted of the following (in thousands):
September 30,
2021		December 31,
2020
Liability:
Principal$250,000 $500,000 
Unamortized debt discount and issuance costs(37,584)(92,968)
Net carrying amount$212,416 $407,032 
Carrying amount of the equity component$55,615 $111,230 
The Company carries the 2024 Notes at face value less unamortized discount and issuance costs on its unaudited condensed consolidated balance sheet and presents the fair value for disclosure purposes only. The estimated fair value of the 2024 Notes, based on a market approach at September 30, 2021 was approximately $418.7 million, which represents a Level 2 valuation. 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.
During the quarter ended September 30, 2021, the Company recognized $3.0 million of interest expense related to the amortization of debt discount and issuance costs and $0.1 million of coupon interest expense. During the quarter ended September 30, 2020, the Company recognized $5.8 million of interest expense related to the amortization of debt discount and issuance costs and $0.2 million of coupon interest expense. 
During the nine months ended September 30, 2021, the Company recognized $11.3 million of interest expense related to the amortization of debt discount and issuance costs and $0.3 million of coupon interest expense. During the nine months ended September 30, 2020, the Company recognized $16.9 million of interest
16

expense related to the amortization of debt discount and issuance costs and $0.5 million of coupon interest expense. 
At September 30, 2021, the remaining life of the 2024 Notes was approximately 34 months.
The 2024 Notes were convertible at September 30, 2021. As a result, holders have the option to convert their Notes at any time during the quarter ending December 31, 2021.
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. At September 30, 2021 and through the date of this filing, the Company has not received any conversion requests for the 2024 Notes.
2026 Notes
On March 15, 2021, the Company issued $1.15 billion aggregate gross proceeds, which includes the initial purchasers’ option of $150.0 million aggregate principal amount, of 0.00% Convertible Senior Notes due 2026 (the “2026 Notes” and, together with the 2024 Notes, the “Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The 2026 Notes were sold to the initial purchasers pursuant to an exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act. The 2026 Notes were issued pursuant to an indenture (the “Indenture”), by and between the Company and U.S. Bank National Association, as trustee (the “Trustee”).
The 2026 Notes do not bear regular interest, and the principal amount of the notes does not accrete. The 2026 Notes may bear special interest under specified circumstances related to the Company’s failure to comply with its reporting obligations under the Indenture or if the 2026 Notes are not freely tradeable as required by the Indenture. The 2026 Notes will mature on March 15, 2026, unless redeemed, repurchased, or converted prior to such date in accordance with their terms.
The initial conversion rate of the 2026 Notes is 6.0156 shares of common stock per $1,000 principal amount of the 2026 Notes, equivalent to an initial conversion price of approximately $166.23 per share of common stock.
The conversion rate is subject to adjustment for certain events. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election. 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.
Prior to the close of business on the business day immediately preceding December 15, 2025, the 2026 Notes will be convertible only under the following circumstances:
(1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021, and only during such calendar quarter, if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) in a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2026 Notes on each applicable trading day;
(2) during the five business-day period after any five consecutive trading-day period in which the trading price per $1,000 principal amount of 2026 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the common stock and the conversion rate on each such trading day;
(3) if the Company calls any or all of the 2026 Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or
(4) upon the occurrence of specified corporate events set forth in the Indenture.
If the Company undergoes a fundamental change, as described in the Indenture, prior to the maturity date, holders may require the Company to repurchase all or a portion of the 2026 Notes for cash at a price equal to 100%
17

of the principal amount of the 2026 Notes to be repurchased, plus any accrued and unpaid special interest, if any, to, but excluding, the fundamental change repurchase date.
The 2026 Notes are the Company’s senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2026 Notes; equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of current or future subsidiaries of the Company.
The Indenture contains customary events of default with respect to the Notes and provides that upon certain events of default occurring and continuing, the Trustee may, and the Trustee at the request of holders of at least 25% in principal amount of the Notes shall, declare all principal and accrued and unpaid interest, if any, of the Notes to be due and payable. In case of certain events of bankruptcy, insolvency or reorganization, involving the Company, all of the principal of, and accrued and unpaid interest on the Notes will automatically become due and payable.
In accounting for the issuance of the 2026 Notes, the Company separated the 2026 Notes into liability and equity components. The liability component was calculated by measuring the fair value of a similar liability that does not have an associated conversion feature. The equity component representing the conversion option was determined by deducting the fair value of the liability component from the principal amount of the 2026 Notes. The difference between the principal amount of the 2026 Notes and the equity component totaling $276.3 million was recorded as a debt discount. In addition, the Company incurred $21.2 million of transaction costs related to the 2026 Notes, of which $16.1 million and $5.1 million, respectively, was allocated to the liability and equity components of the 2026 Notes. Transaction costs allocated to the equity component were recorded as additional debt discount. The equity component of the 2026 Notes will not be remeasured as long as it continues to meet the conditions for equity classification. The debt discount is amortized to interest expense over the term of the 2026 Notes using the effective interest method. Additionally, the Company recorded, through equity, a deferred tax liability of $2.9 million, net of the related change in the valuation allowance, related to the issuance costs and debt discount on the 2026 Notes.
To estimate the fair value of a similar liability that does not have an associated conversion feature, the Company discounted the contractual cash flows of the 2026 Notes at an estimated interest rate for a comparable nonconvertible note. The Company applied judgment to determine the interest rate, which was estimated based on the credit spread implied by the 2026 Notes issuance. Significant inputs used in the model to determine the applicable interest rate include implied volatility over the term of the 2026 Notes.
The 2026 Notes consisted of the following (in thousands):
September 30, 2021
Liability:
Principal$1,150,000 
Unamortized debt discount and issuance costs(264,443)
Net carrying amount$885,557 
Carrying amount of the equity component1
$271,229 
1 The carrying amount of the equity component of $271.2 million differs from the equity component of the 2026 convertible senior notes, net of issuance costs and tax of $268.3 million per the Condensed Consolidated Statements of Stockholders' Equity due to a deferred tax liability of $