Cloud-based financial software provider BlackLine (Nasaq: BL) recently announced its first quarter results that surpassed market expectations on all counts. The COVID-19 situation has affected its customer adds in the recent quarter but the company is taking it in its stride by focusing on a long-term growth.

BlackLine’s Financials

For the first quarter, BlackLine’s revenues grew 29% to $82.6 million. GAAP net loss was $12.8 million, or $0.23 per share and a non-GAAP net income of $6 million, or $0.10 per share. The market was looking for revenues of $79.3 million and EPS of $0.05.

By segment, subscription and support revenues grew 26% to $77 million and professional services revenues grew 95% to $5.6 million. BlackLine expanded its user base to 271,957 users. It ended the quarter with 3,056 customers after adding a disappointing 32 net new customers in the first quarter. There was drop-off in new customers for the month of March, which typically represents two-thirds of new customer additions in the quarter.

Historically, half of BlackLine’s growth comes from customer expansion and the other half from new logo acquisition. In Q1, there was resiliency in customer expansion with a strong renewal rate of 97%, and dollar-based net revenue retention rate remained steady at 110%.

Among the new customers in Q1 were Accruent, Aecom Management Services, Bank of Montreal, The Motley Fool, Pernod Ricard USA, Wabtec, and The Walsh Group in North America. In EMEA, new customers included Borr Drilling Management, Inchcape Retail, Fuller, Smith & Turner and The Unite Group. In ASIAPAC, it added Chubu Electric Power, Lion and Nippon Express.

It ended the quarter with approximately $614 million in cash, cash equivalents and marketable securities.

BlackLine expects second quarter revenues to be in the range of $80-$82 million with a net income of $5-$8 million, or $0.08-$0.13 per share. With the uncertainty surrounding the ongoing impact of COVID-19, the company withdrew its full year 2020 outlook. The Street had forecast earnings of $0.10 per share on revenue of $81.36 million.

BlackLine’s Partnerships

BlackLine has a strong partnership with SAP. Its Solution Extension (SOLEX) partnership in 2019 made SAP a reseller for BlackLine. For the SOLEX partnership, BlackLine has created a marketing and sales campaign to better position SAP for success in a virtual world with remote deployments and faster time to value using BlackLine. SAP has included BlackLine Solutions as part of its COVID-19 response to its customers to help with quick wins and continued progress toward S/4HANA transformation.

Revenue from its SAP partnership was 24% of total revenue in Q1, compared to 25% in the prior year. More than 75% of the large deals in the quarter included a partner and strategic products represented 20% of sales for the quarter. SOLEX performance was strong at the start of the quarter but deals got postponed in March.

During the quarter, BlackLine grew its partner ecosystem by adding Capgemini as a new global alliance partner. It has also strengthened its relationships with Deloitte, EY, KPMG and RSM by hosting more partner-enablement sessions, additional certifications, and virtual sales engagement.

Early this month, BlackLine launched a remote audit package designed for customers preparing for audits during COVID-19 lockdowns. The solution and services package, known as BlackLine Remote Audit, is based on leading practices and focuses on ensuring accuracy and integrity with the numbers, as well as security around internal financial controls. Coupled with the BlackLine unified platform for all accounting close information, customers and their auditors (both internal and external) can perform all audit work remotely, dramatically reducing the manual effort involved in preparation time and chasing down details.

BlackLine intends to manage the company for the long-term while navigating through the COVID situation. It plans to do that by maintaining its goodwill and loyalty with employees and customers; strengthening its brand as the category leader for customer advocacy; investing in product innovation and modernizing its technology infrastructure; and evaluating the broader market for opportunities.

Its stock is trading at $64.27 with a market capitalization of $3.6 billion. It touched a 52-week high of $74.44 in February this year. It hit a 52-week low of $43.91 in July last year.