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Accounting software solution provider BlackLine (Nasdaq: BL) recently announced its first-quarter results that outpaced market expectations. BlackLine continued to add innovative AI-based capabilities to its offerings.

BlackLine’s Financials

BlackLine’s first quarter revenues grew 13% to $157.46 million, ahead of the market’s estimate by 1.56%. Adjusted net income of $0.54 per share was also ahead of the Street’s estimated $0.47 per share and grew from $0.34 a year ago.

Among key metrics, it added 13 net new customers to end with a total of 4,411 customers. It expanded its user base to 387,050 users and achieved a dollar-based net revenue retention rate of 105%.

Revenues from subscription and support services came in at $149.5 million compared with $130.4 million a year ago. Professional services revenues dropped from $8.6 million to $8 million.

For the second quarter, BlackLine expects revenues of $157-$159 million and an EPS of $0.49-$0.51. The market was looking for revenues of $158.37 million and an EPS of $0.50.

The company expects to end the year with revenues of $641.5-$649.5 million and an EPS of $2.12-$2.26. The market was looking for revenues of $644.52 million and an EPS of $2.06.

BlackLine’s AI Upgrades

BlackLine continued to add to its AI portfolio and recently announced the launch of Journals Risk Analyser, an AI-powered solution that will help the accounting teams across its client base. The product has been developed in partnership with customers and uses generative AI to provide key trends, insights, and anomaly detection within journal entries. The solution is expected to empower Finance and Accounting leaders to ensure compliance with company policies while simultaneously making audits more efficient.

The Journals Risk Analyser captures, understands, and evaluates journal entries across multiple ERPs and systems to provide the accounting team with access to a dynamic, user-friendly dashboard that can transcribe important metrics. The functionality enables actionable visibility into journal entries and process to provide for dynamic KPI trending. AI-generated insights can help identify potential errors, fraud, and compliance risk, thus helping improve the overall financial book closure process for its customers.

Like in every other space, AI is making its presence felt in the accounting space as well. Oracle’s NetSuite ERP has added AI capabilities throughout its financial products. One such product called NetSuite Text Enhance is used across HR, finance, supply chain, and sales and promises the ability to generate content for any text area based on a few starter words that describe intent. The solution is expected to help finance and accounting teams improve productivity by leveraging AI to produce content that can be quickly and easily reviewed, edited, and approved.

Some analysts say that AI is not foolproof as yet for accounting. Data bias, hallucinations, and unreliable content will need to be ironed out before accounting teams can trust AI blindly. Early tests on AI’s capabilities found that the technology still lacks in the ability to deal with tax, financial, and managerial assessment problems. 

My sense is that accounting is a relatively logical domain, and the models can be trained to be pretty accurate. I don’t think hallucination is going to be such a big issue in this domain. As such, these early experiments by Blackline, Netsuite, Intuit, etc. should rapidly mature.

BlackLine’s stock is trading at $49.64 with a market capitalization of $3.06 billion. It hit a 52-week high of $69.31 in April this year and a 52-week low of $47.26 in November last year.

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