Ladies and gentlemen, thank you for standing by, and welcome to the Second Quarter 2021 BlackLine Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session.

[Operator Instructions] I would now like to hand the conference over to your speaker host Alexandra Geller, Vice President of Investor Relations at BlackLine. Please go ahead..

Good afternoon and thank you for your participation today. With me on the call is Marc Huffman, Chief Executive Officer of BlackLine; and Mark Partin, Chief Financial Officer.

Before we get started, I would like to note that certain statements made during this call that are not historical facts, including those regarding our future plans, objectives and expected performance, in particular, our guidance for Q3 and the full year are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements represent our outlook only as of the date of this call.

While we believe any forward-looking statements we make are reasonable, actual results could differ materially because the statements are based on our current expectations as of today and are subject to risks and uncertainties, including those stated in our periodic reports filed with the Securities and Exchange Commission, in particular, our Form 10-K and Form 10-Q.

We do not undertake and expressly disclaim any obligation to update or alter our forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. Also, unless otherwise stated, all financial measures disclosed on this call will be non-GAAP.

A discussion of why we use non-GAAP financial measures and information regarding reconciliations of our GAAP versus non-GAAP results is currently available in our press release, which may be found on our Investor Relations website at investors.blackline.com or on our Form 8-K filed with the SEC today. Now I will turn the call over to Marc to begin..

Good afternoon, everyone, and thank you for joining us today. We delivered an outstanding second quarter. Building on last quarter's strong performance, we accelerated both billings and revenue growth.

Our Q2 performance demonstrates the value we're bringing to the market is resonating now more than ever as more companies prioritize digital finance transformation. Underpinning this momentum is improving global demand.

And with budgets for financial close management opening up, our sales team delivered another quarter of great execution across all areas of the business. Now let's dive into the highlights of the quarter.

We continue to see an increasing trend of large digital transformation deals as budgets for finance transformation open back up and companies prioritize digital transformation. This large deal trend was consistent for both new business and account growth.

And in Q2, we added a record number of large quality new logos with the help of our partner ecosystem.

Among our existing customers, we saw continued expansion of wallet share as our large customers grew larger still with upsells, cross-sells and the addition of strategic products, specifically with uptake from transaction matching and our AR automation products.

Our ability to serve the largest organizations has been a durable growth lever for us throughout the pandemic, and we saw that demand strengthen in Q2.

We believe the depth and breadth of our offering puts us at a competitive advantage to lead the most complex and sophisticated organizations around the world to evolve their business and accounting processes.

Another highlight for the quarter was SolEx, which delivered its strongest quarter yet, showcasing the partnership's ability to drive strategic deals and international growth. Our SolEx deals were large and strategic, with broad geographic reach spanning APAC, EMEA and North America.

SolEx was particularly strong across the APAC region, generating large deals and expanding our small but growing business in Japan. We are reaching the end of our third year with SolEx, and we continue to expand the SolEx accounts that we've captured through this partnership.

We are seeing a lot of positive trends with SolEx as we drive more enablement, expand our industry-specific collateral and leverage SAP's Rise initiative. We believe we're well positioned for continued momentum from SolEx throughout the year. In Q2, we added a number of quality new logos as a result of strong global execution from the sales team.

Our partner ecosystem was heavily involved upmarket with large SIs, experiencing an uptick in the number of customers coming forward to discuss finance transformation projects or restart initiatives that were put on hold in 2020.

In the mid-market, we continue to drive new wins with our Modern Accounting Playbook offering, particularly now that financial close management is becoming an approved budgetary item for mid-market companies. Abroad, a continued macro recovery in certain key markets drove strong results for our international business.

In both Europe and the Asia Pacific regions, we're hearing that companies are motivated by digital transformation initiatives, standardization of accounting operations and managing a remote close.

This demand, combined with an increasing traction from our global partner ecosystem, drove strong wins abroad and grew our international revenue to 28% of the total, up from 25% the prior year. Demand for accounts receivable automation was strong with continued momentum for our AR automation offering.

We increased the capabilities of our platform with the recent introduction of AR Intelligence in March. And although it's very early, we're pleased to see initial traction with this product. We are on track to further deepen our AR automation offering with plans to release our next AR product in Q4 of this year.

And of course, we continue to drive success for our customers. Our Customer Success team is hard at work, helping our customers optimize their BlackLine instance with adoption and utilization workshops, self-service trainings, product support and a vibrant BlackLine community, resulting in happy, referenceable and engaged customers.

And with our growing strategic product portfolio, we continue to differentiate our offering and grow the potential for expansion uplift. We believe this momentum validates the mission-critical nature of finance transformation and BlackLine's value proposition.

We're hearing from our customers and our partner that demand for finance transformation is stronger than ever before. As the market leader, we believe there is a tremendous opportunity for us to capture that demand and stay ahead of it. So how are we going to do that? You've long heard us talk about our commitment to Customer Success.

Over the years, we have invested millions of dollars in Customer Success by growing our success teams, driving education through workshops and training outreach and increasing customer engagement with BeyondTheBlack, our modern accounting summits and strategic client forums.

As the market leader, we believe it's incumbent upon us to lead our customers to deploy more efficient and strategic accounting and finance processes. And we have found that companies around the world need our leadership now more than ever.

With today's companies facing an acute talent shortage, executives are being asked to do more with the same or even fewer resources. This is where BlackLine can really make the difference. We automate time-consuming and manual tasks to free up valuable finance and accounting resources.

And even BlackLine customers have considerable room to optimize their BlackLine instances and drive greater automation and resource capacity. As such, the next stage of our investment in Customer Success is the recently introduced BlackLine Optimization Academy.

This is a culmination of the learnings we have uncovered from working with our largest and most complex customers. We have found what makes our customers most successful and distill that information into training sessions that focus on 9 foundational accounting processes to drive greater efficiency in automation with BlackLine.

These 9 key accounting processes involve accruals, calculations, items, intercompany, amortization, clearing and suspense, subledgers, roll forward and cash and are highly manual, time-consuming and error-proned.

While other vendors focus on one specific accounting process, leaving the rest in the manual world, BlackLine's platform brings all of these discrete, yet interrelated processes together to offer a complete solution with maximum integration and automation.

The academy will help us scale and reach a broader customer audience as well as differentiate based on the completeness and depth of our integrated offering. Our goal is to help our customers get full value out of BlackLine while proactively engaging them earlier in their transformation journey rather than reactively when they encounter an issue.

With more than 20 years of experience in our market, this commitment to Customer Success is a core tenet of our differentiation. We believe we are unique in our ability to take our customers on this journey from adoption to education and optimization.

We've seen this model generate incredibly strong relationships with our customers, driving increased engagement and usage of our platform. And as customers gain value from BlackLine, we see greater adoption and platform expansion as customers progress towards their long-term goals of digital finance transformation.

Our ability to drive Customer Success and solve for resource capacity is resonating with companies of all sizes, but particularly for those at the highest end of the market. In Q2, we saw some of the largest companies around the world embark on transformation projects with BlackLine.

To name a few, a Fortune 200 technology company based in Hong Kong has a company-wide digital transformation mandate.

Limited by Excel, manual processes and in-house solutions, their Chief Digital Transformation Officer set up a task force to drive efficiency across their global finance team, increased transparency and visibility across shared services and focus on strategic projects, such as their S/4HANA migration.

We were able to leverage our SAP relationship, and one of our global SIs who is advising the company's executive stakeholders around their digital transformation road map to create a world-class solution that consists of 15 other finance initiatives and aligns with their corporate objectives to achieve lean, modern accounting.

In Q2, this customer became our largest deal of the quarter, with the purchase of our finance transformation solution and our transaction matching engine to automate high volumes of reconciliations for accruals and other receivable accounts.

Given the prioritization of finance transformation and the support of our partner network, the deal closed in a rapid 5 months.

Although our relationship is just getting started, there are extensive plans to deploy across their global shared services organization and add additional products as they look to BlackLine as the backbone of their finance transformation journey.

A Fortune 20 retailer based in North America became a BlackLine customer in 2017 with the purchase of our finance transformation solution and transaction matching. Over time, they rolled out to more users across their global accounting organization.

In 2020, this company brought on a new Chief Accounting Officer, a former BlackLine user at several prior companies who recognize that they were not using BlackLine to their full capability and made it his mission to turn their finance and accounting organization into a highly developed automated team with optimized business processes.

Working with our Customer Success team, they identified 137 different use cases that could be automated with our matching and journals functionality on their first pass, such as cash depositary, negative cash reclassification, tax reconciliation and have since identified more opportunities for optimization.

In the 1.5 years since this executive joined, they have significantly increased usage of our solution, resulting in exponential value for their organization. Next on the CEO's agenda was solving for the manual challenges around large and growing volumes of intercompany transaction.

In Q2, they purchased our intercompany hub to establish and drive policy across their full scope of intercompany accounting transactions and drive reporting at a legal entity level. With this purchase, the retailer joins our growing list of customers, spending $1 million or more in ARR with BlackLine.

A Fortune 400 pharmaceutical company headquartered in London first became a BlackLine customer in 2019 with the purchase of our finance transformation solution. Over the past year, with strong partnering from EY, we were able to demonstrate significant ROI around efficiency, governance and control.

As a result, this company firmly declared that BlackLine was indisputably at the heart of their future transformation. And in Q2, they expanded their BlackLine footprint with additional users as they embark on a global rollout of BlackLine across their global accounting and shared services organization.

There are ongoing discussions for future expansion across the rest of our platform. As you can see, the depth of our engagement with our new and existing logos has generated significant value for our customers and yielded strong financial results for the quarter. And now I'll turn it over to Mark Partin to discuss in more detail..

Thank you, Marc, and good afternoon, everyone. Our strength in the quarter came from continued improvement in the global demand environment and solid sales execution. Our performance was strong across all areas of the business and drove a fourth consecutive quarter of acceleration in billings growth as well as acceleration in revenue growth to 23%.

As a result, Q2 results came in ahead of expectation for revenue, profitability and cash flow. Moving to our key performance for the quarter. We added 116 net new customers in the quarter for a total of 3,598 customers.

Our strength upmarket generated a record number of new large deals for Q2 as defined by $100,000 or more in ARR, with growth in average deal size benefiting from our SolEx partnership, digital transformation and continued adoption of our strategic products.

Strategic products represented 18% of sales for the quarter, validating the strength of our platform and meeting our anticipated range of 15% to 20%. Our renewal rate was strong at a blended rate of 98% and even higher for the enterprise business at 99%. As we anticipated, our dollar-based net revenue retention rate remained flat at 106%.

Partners were involved in more than 80% of large deals in the quarter, which is a great result and due to targeted efforts to increase engagement, build relationships and drive greater utilization among our partner network as well as improving market conditions.

We are seeing healthy growth across the board as our top partners continue to grow their BlackLine practices to capitalize on the strong demand for our value proposition. Revenue from our SAP partnership totaled 25% of revenue, up from 24% in the prior year.

Gross margin remained at 80% within our target range and reflecting ramping costs associated with the planned Google Cloud migration and the integration of the Rimilia acquisition. In Q2, we generated net income attributable to BlackLine of $10 million.

We generated $12 million in operating cash flow and $8 million in free cash flow due to higher-than-expected profitability and cash collection. We ended the quarter with approximately $1.17 billion in cash, cash equivalents and marketable securities. Turning now to guidance.

For the third quarter of 2021, total GAAP revenue is expected to be in the range of $106.5 million to $107.5 million. On the bottom line, we expect to report net income attributable to BlackLine in the range of $7 million to $8 million or $0.11 to $0.13 on a per share basis.

Our share count will be approximately 62.5 million diluted weighted average shares. For the full year 2021, total GAAP revenue is expected to be in the range of $420 million to $423 million. On the bottom line, we expect to report net income attributable to BlackLine in the range of $28 million to $30 million or $0.45 to $0.48 on a per share basis.

Our share count will be approximately 62.5 million diluted weighted average shares. In summary, we are very pleased to see another quarter of strong execution as demand for finance transformation gains momentum.

Our performance throughout the first half of the year gives us increasing confidence in our growth initiatives and our ability to execute on them. We remain focused on capitalizing on the long-term opportunities for accounting transformation and driving further momentum in our business.

As the market continues to recover, we feel good about BlackLine's leadership position and our ability to capture the tremendous opportunities ahead of us. And now we'll take your questions..

[Operator Instructions]. And our first question coming from the line of Rob Oliver with Baird..

First one is, it was nice to see the new customer growth picking up in the quarter. So solid there. Wanted to get a little bit more color on that, Marc Huffman, relative to -- I know you mentioned a very strong quarter for large enterprises, and it seems like you guys kind of recovered a little bit of the MAP side from last quarter.

So I wanted to touch on that. I also wanted to just ask about the net revenue retention, obviously, in line with what you guys had expected, but there's been a lot of investments in getting to customers for upsell and cross-sell.

And just curious how you guys are seeing that? Sounds like it's poised to be better in the second half, but how we should think about? I know that's a backward-looking indicator. And how is the virtual selling motion going for you guys this year? And then I had a quick follow-up..

All right. Thanks, Rob. I'll handle maybe the first and third and let Mark talk about the net revenue retention. So I'd say fairly broad based performance. We're very, very pleased with new logo performance, and that's both mid-market and enterprise. Obviously, the mid-market, we're really focused on the Modern Accounting Playbook.

That's really going well for us. We had strength in enterprise, new customer acquisition. And then some nice size, new customer lands there. And then there are several other dynamics that gave us what I thought was a really strong quarter.

In terms of -- so I'd say it's our initiatives, which we continue to focus on Modern Accounting Playbook, SolEx, customer expansion initiatives, combined with a strong continued demand strengthening around us.

Mark, do you want to comment on that revenue retention?.

I do. Yes. Rob, thanks. Our net revenue retention rate, where it is today is a function of last year, as you mentioned. Prior to the pandemic, we had moved the retention rate up, close to the 1 10, 1 11 number from approximately where it was today. We expect to see something similar to that trend, and it takes time.

It doesn't all move in a quarter, but it moves over this 12-, 13-month demand curve increase. So that number will continue to move up related to our investments and expanding within our existing accounts the product portfolio upsell that we're starting to see demand come back for.

It will take a little bit of time as we work through last year's pandemic..

And then lastly, Rob, I think you'd asked about the remote sales motion. And I would say there has been really no material impact to us. Demand generation, remote selling, even remote delivery that we've continued to focus continued to focus and execute on our initiatives there.

And as we mentioned, we feel quite good about the performance we had in all dimensions in Q2..

That's great. And I'm getting a little greedy here, I realize, because I squeeze a couple in. But Mark Partin, on the -- you guys on second quarter in a row of really strong activity in APAC. And clearly, you guys -- your products are resonating over there.

And I'm just curious, I know a lot of that's been partner-led, but is there going to be a need for any additional investment over there just to kind of go after that as you think about the cost going forward?.

Yes. Rob, you're right. It was a record quarter for us in APAC. We are seeing good traction in Japan with our entry there several years ago and starting to get traction. The leadership and investment that we've been making there is paying off with our team and our partnerships. So when we see demand, we typically invest in it.

So we're doing that in our geography. So to be able to step up to 28% international revenue mix, we think that's right on course with where we'd expect it to be today..

And then, Rob, what I would say in terms of the international growth, SolEx has been really beneficial for us there. We have another customer example we cite there from Southeast Asia. That's -- that relationship was really critical.

Now that said, we continue to succeed with most all, including Oracle, major ERP players in that -- those international regions as well..

Our next question coming from the line of Matt Stotler with William Blair..

And maybe just start with -- maybe wanted to -- at a high level. I mean it clearly seems like from your commentary, everything that's going on with SolEx and partners that, as you said, this prioritization of finance transformation is clearly increasing.

But as you think about the overall demand environment, and especially the things that have been paused because of COVID, I mean, are we at pre-COVID levels at this point in terms of spending and demand that you're seeing outside of the kind of acceleration and prioritization of these initiatives? Or do we still have some ways to go on that front?.

Yes. I'll start. Just effectively, a quarter -- second quarter a year ago was our lowest point during the pandemic. So clearly, we're getting the benefit of an increasing demand off of that low point. The first half of this year hasn't yet gotten to where we would think of as kind of a prepandemic level. It's faster in the first half.

We've been more pleased and more successful with the demand environment. And we're still looking to sort of getting back to a more normalized curve as we move through to the end of the year..

The only thing I would add to that is there's really no notion in our business now of impacted industries per se. We're seeing a good return of demand across the board. And the industry, perhaps a year ago, we would have labeled as under watch or potentially impacted, and we had programs to try to help those customers. That's behind us now.

And so that's no longer a factor..

Got it. Got it. That's helpful. And then maybe one on the Kyriba partnership here. It was interesting to see that announcement, I guess it was earlier this week or last week. And then probably a little early to ask how it's going since it was just announced.

But maybe from a higher level, when you think about the various functions and the opposite of the CFO, the treasury and controllership, and Mark Partin have talked about this a little bit in the past, but especially in the large enterprise segment of the market, those 2 roles have historically been somewhat separated.

But they're increasingly kind of becoming intertwined as back-office integration, collaboration becomes increasingly necessary in the current environment.

So I guess how do you think the relationship between those functions evolves over time? And what does that mean for BlackLine and for your overall market opportunity going forward?.

Yes. Thanks for asking about that. We did announce that Kyriba partnership last week. It's one of the most recent partnerships where we've announced and are focused on. It's really a customer-focused partnership. There's more value for our customers.

And I think that what you were speaking to there in the question is the complexity in these finance and accounting technology landscapes. And the better the technology works together across departments or across those functions and those continuous flow of information is what we are trying to achieve with this.

If you think about bank connectivity as an example, really critical and important for large-scale organizations that do large-scale bank reconciliation functions. And even more valuable to those customers when you consider the work we do with them in AR automation. So between us and Kyriba, we have many, many joint customers.

This one is more about customer value than about something that we should be considering the monetization of..

Our next question coming from the line of Matt VanVliet with BTIG..

Great job on the quarter. I guess wanted to dig in a little bit, Marc, you mentioned that a number of deals that maybe we were put on pause last year were starting to come back into the market.

And I just wanted to see if you could just elaborate on that a little bit in terms of how much of -- or I guess how much of the pause last year are you starting to reconnect with? Are you seeing back in the market? And then looking forward, how much is left? How many opportunities do you think you can still sort of retrace for the back half of the year?.

Well, I don't know that we want to get that specific in how many and how much pipeline out could be re-traded. There’s certainly a pent-up notion to what we've seen over -- and I would describe this as starting maybe in Q4, expanding into Q1 and Q2, as demand environment expands, you see these people returning to the -- to prioritizing these things.

So certainly, some of the experience that we had in a strong quarter in Q2 was based on that. Some of it was on the back of these big, more transformative things that would take some time and some of those things were things that were paused.

Equally as much, there was a pipeline that was created during the pandemic that we were executing on and executed quite well on. And there's continued focus. I think this trend being at the early innings of a sustained investment cycle and accounting and finance automation with digital transformation is what's at play here..

Great. Very helpful.

And then I guess as you think about greater demand for projects in the finance and accounting department, but how much of the budget is growing? And maybe thinking about it in the context of are you landing a little bit larger than you have in the past or at least relative to last year, are you getting greater attach rates of various modules upfront? Or are you still seeing sort of a smaller landing with the intention of expansion as they sort of work into it and things reopen a little bit more?.

Yes. That's a great question because I'm going to -- I'll take it in 2 ways. First, in the enterprise, it's a bit of all of that, Matt. There's -- we've been seeing accelerated growth in our strategic product portfolio now over these last 3, 4, 5 quarters as we've come out of the pandemic.

Those attach rates are driven by our efforts and investment in digital transformation leadership, right? Our customer teams and our sales teams really helping our existing customers with that expansion and helping new customers with larger deals, working with SAP and the SolEx partnership to land with a real finance transformation solution that can be implemented and effective very quickly.

Time to value -- and shortening that time to value is really important to us on the success of the customer and their ability to grow. So in the enterprise, accelerated growth rates in our product portfolio is coming from both existing customers attach and also larger landing. We've had significant ARPU and deal size in our enterprise.

Our average deal size in our enterprise today is 170,000, which is significantly higher over this last year or 2 related to our investments there. In the mid-market, we've begun the Modern Accounting Playbook a number of quarters and maybe almost 2 years ago.

And the investment in that leadership is allowing attach rates in more products in the mid-market and that we've seen also great acceleration not just expansion once we land, but also upfront with, for example, transaction matching.

And that's given us a lot of confidence that digital transformation and that investment and our customers' growth is paying off..

[Operator Instructions]. Our next question coming from the line of Alex Sklar with Raymond James..

Marc, I wanted to ask about the SAP channel success. I know there's been a lot of investment there in terms of enablement of SAP reps. I think you talked about more vertical packaging through that channel. I'm sure there's even more that's kind of gone into.

But can you just give a little bit more color on what's kind of been working there? It sounds like demand has been great.

But in terms of kind of the SAP selling motion and the enablement side from BlackLine, can you just give a little bit more color on where you've had some success?.

Yes. Thank you, Alex. We -- that's an area we've been investing for some time. And at some point, it's like pushing a rock up the hill at the early side. And at some point, you start to build momentum from it, and you get really good at it. And I feel like we're near that point.

It was our strongest quarter yet, strong logo adds, continued benefiting from the expansion opportunities, the customers that we have landed. And then on the same sort of path that we take customers that are direct BlackLine customers, we benefited from the expansion there.

It's increasingly bringing us some more strategic deals, bigger international wins than we would previously have. We've had, I think, 2 quarters in a row where some of the customers that we focus on in the stories, and our remarks have been SolEx wins internationally.

We're also seeing us as the beneficiary of their Rise initiative, keeping in mind that Rise initiative is where they've taken and tried to package up their leadership on how to get people to the cloud and they're really getting good at -- pitching that with BlackLine as sort of a prerequisite towards -- moving towards the cloud.

And all of this culminating a great quarter for us, and they recognize that. They awarded us their Pinnacle Award SolEx Partner of the Year recently..

No, that's great. Good color. So the other thing, in the prepared remarks, a lot of color about the Optimization Academy, Customer Success. And so kind of sticking with that theme, I wanted to ask about -- I saw the launch of your first catalyst that I know you talked about at the user conference last year around bank reconciliation.

So can you just remind us on the strategy there, I think, following on the success of MAP? And what's been the early feedback or adoption?.

Sure. So this is a great question. There's a lot to it, so bear with me. What we're trying to do here is really differentiate BlackLine based on our depth and our breadth and our customer centricity. We feel like those 3 things are the things that make us different from all others.

We're the leader in the category with more experience than anybody else, and it's deep. The Optimization Academy is just one way, we're sort of capitalizing on that. Again, more experience than anyone else, very customer-centric brand. So we've launched our first one, very pleased. We had 15 customers participate, 60 actual participants.

These are a range to help people understand that depth and breadth across those 9 core accounting processes and how BlackLine can further expand their journey and take them from where they are, which many of those customers are very happy BlackLine customers, but to complete that view of those 9 accounting processes on BlackLine and modernizing those things.

We just feel like that really highlights the depth, breadth and customer centricity of BlackLine..

And our next question coming from the line of Andrew DeGasperi with Berenberg..

I had a follow-up in terms of the net retention rate. I know you mentioned it's a 12-month metric.

But I was curious for this year, if we wanted to exclude, let's say, the worst 2 quarters, I mean, would you say, generally, that metric is already above this level, and that's why you're confident it's going to tick up?.

Yes. In the last 2 quarters, the demand that we've seen returning and also less pandemic risk within the accounts that we saw at the height of the pandemic last year. Both of those things are yielding higher growth return within our own account base in the last 2 quarters. So we can shed, as we move forward, some of the last year's impact on that.

We're already starting to see -- it's a blended metric in mid-market and enterprise. We're already starting to see lift in the enterprise base alone. The important thing about this metric is that it moves slower.

And as we move over the next year or 2, we're really excited about the tools that we have to drive it, more strategic products and interest and accelerated growth there than ever before, and that we have investments in Customer Success teams and optimization teams that help companies get that and utilize our products and engage better and grow and expand faster.

So the opportunity to really move that metric over the longer-term with the demand returning, we think we'll start to see that within that 12- to 18-month time frame..

That's helpful.

And then secondly on your accounts receivable product, just wondering if you can maybe share with us some -- how has that asset been growing since you acquired them, particularly in the last quarter or so? And then secondly, what -- should we expect that growth to accelerate once you release the product in Q4, and that's why you have your -- your IM 2022? Or are you holding back? Is there a reason you might be holding back a little bit in terms of deploying it to your channel?.

Great question. And I'll start with just the nature of that company when we acquired it was not going to be material to this year's revenue. It's a $10 million to $15 million annual run rate business, a great group of customers and employees. But given the nature of purchase accounting, we won't see a material impact in this year.

So that's why we talked about 2022. As we get through a full year cycle, we can begin to bill and revenue this on a normalized basis. So we'll see more growth from it next year than we are this year, which is not that material.

On the the integration of the business and our ability to up and cross-sell that, we're out of the gate much stronger than we expected to be. As we've used our sales team and our distribution channel to really take this great product and put it around the globe, it's taken a little bit of time to get to where we want to be.

And that's why we thought it would be sort of a year or 2 before we can really hit our stride. But again, in the last 3 quarters that we've been operating with it, it's out faster than we expected, but still yet immaterial to the overall operations for the quarterly performance..

Our next question coming from the line of Matt Coss with JPMorgan..

Marc Huffman, with the work that you talked about, your Customer Success team is doing, do you have any metrics you can share, like the growth in referenceable customers or NPS scores or at least talk about how these are trending and how you see them -- how you see the trajectory going forward?.

Well, I don't -- none of these -- it's a great question. Thank you, Matt. The end result eventually will end up in net revenue retention metrics. The rest of the sort of categories you described there are not categories we disclosed. I think we're pleased with our efforts there. We see benefits in NPS, customer stat.

We see benefits in the volume of transactions being pushed through some areas that we look in there in terms of matching journal entries, process. Amount of cash that moves through the AR collection engine as sort of outputs from some of those efforts as well.

So trends, generally speaking, positive across the dimensions you would consider there, nothing more descriptive that we're prepared to share with you..

That's helpful. And then one for Mark Partin. So billings, obviously, very strong this quarter. The Fortune 200 deal, I don't know how much that influences billings.

But to the extent that you can describe or share, were there any deal pull forwards or something that closed earlier than expected? And then perhaps if you could provide some guardrails on billings growth going forward?.

Yes. Thank you. Great question. I'll qualify my answer first by saying we still and always do expect to see variability quarter-to-quarter on the billings metric. We will see seasonality in Q3 oftentimes. And so we have a very pragmatic view of why -- what that looks like from quarter-to-quarter. In the trailing 12 months, we stepped it up to 24%.

If you go back and look, when we were prepandemic, we were seeing high 20s in the calculated billings on a quarterly basis given us somewhere in the high 20s for trailing 12 months. So we really asked to focus more on a little bit of a trend. As we look at Q2, it was -- there was no one customer or event pull forward lag over from previous quarters.

It was just a true and honest, demand-driven, incredibly well-executed quarter. We've had strong Q2s in the past, prepandemic through our partnership ecosystems and some of the buying behavior. So we were thrilled to see the demand and the execution come together so well in Q2, and no anomalies exist in that number..

And the last question will come from Brent Bracelin with Piper Sandler..

This is Clarke Jeffries on for Brent. I wanted to touch on the announcement during the quarter to expand the partner program. Just wondering if there was a specific catalyst for that decision.

And maybe talk to us, is there a specific area in the partner network that you're most excited to see develop over the next year?.

I would say that was a momentum release that we were talking about. We're bringing together many things. Some of them had been previously announced under the introduction of Mel Zeledon as an additional leader to that channel. So the fact that we put that out there shouldn't be something that's eye-catching in itself.

It captured a number of areas where we continue to focus. I would say SolEx is a real primary focus area. As I mentioned earlier, strong quarter for us, strongest. And yet, we still think there's plenty of room to expand and succeed there.

The SI ecosystem, as we talked about, those partners were engaged in 80% of our large sales, clearly, something we're really focused on.

And then the continued technology partnerships like these customer relationship partnerships that we highlighted with the announcement of the Kyriba partnership that we're focused on real great value and how BlackLine and the partner fit into this complex landscape that these large organizations manage on their accounting and their financial architecture..

Great. And then I was wondering maybe if we could get an update on product innovation. I mean, obviously, a highlight during the Analyst Day, talking about accelerating investment in R&D, release schedules and taking the processing power of the platform to $100 billion scale.

So are there some targets on the product side that we should be looking for over the next year? And is there anything you can update us on the pace of GCP migration?.

Sure. And GCP would be a great example of that. So I'll start there. Pleased with the progress that we have in our GCP migration. Phase I, we started by taking new customers live in the Google Cloud on our systems. That's been successful for us. Phase 2, we have 200 organizations who have migrated -- we've migrated to the Google Cloud successfully.

Phase 3 includes our EMEA build-out, which is on track. And we believe that -- and I think it's important to keep in mind the nature of what we do, the importance of what we do and our customer centricity means that this is a real contemplated move that will take place throughout the rest of the year and into 2022 for us to complete that.

That frees up a lot of product innovation and acceleration for us with access to more service-oriented things that we get from the Google Cloud. In addition to that, we've had a lot of innovation in the AR side of our business.

We announced the AR Intelligence Solution, which uses the real-time data, powerful analytics and give some of our customers just a better understanding of the risk that they're exposed to, payment behaviors to help them manage that risk and cash flow.

We have another release coming up in the AR world here in Q4 that we're really excited about, which we believe will put us in a position of having the most complete platform for AR automation. Very soon in the future. And then we continue to invest in the other 2 parts of our product focus, the core closed process, automation that we've category lead.

We'll have a much more detailed discussion about this as we get into our conference.

But the full release of account analysis, which drives a lot of value in the specificity at the transaction level that I think that is really a differentiator for us as well as our focus on intercompany and the leadership that we're taking in intercompany governance and transactions..

I'm not showing any further questions. I would now like to turn the call back over to Mr. Marc Huffman, CEO, for closing remarks..

Thank you all for tuning in and joining us today. We always appreciate your ongoing support of BlackLine and are focused on our customers. We always want to continue the tradition established by our Founder, Therese, reminding all of you in the financial world to continue to refer your portfolio companies to BlackLine.

We'll do a great job of helping them modernize their accounting processes. Again, thank you very much, and we'll chat with you all later..

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect..