BlackLine, Inc. (BL) Q3 2016 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen, and welcome to the BlackLine Third Quarter 2016 Earnings Call. [Operator Instructions] And as a reminder, this conference is being recorded. I would now like to introduce Christine Greany of The Blueshirt Group.

Good afternoon, and thank you for your participation today, everyone. With me on the call is Therese Tucker, Founder and 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 conference call that are not historical facts, including those regarding our future plans, objectives and expected performance 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 conference call. While we believe any forward-looking statements we have made are reasonable, actual results could differ materially, because the statements are based on our current expectations and are subject to risks and uncertainties. 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, during the course of today's call, we will refer to certain non-GAAP financial measures. A discussion of why we use non-GAAP financial measures and a reconciliation schedule showing 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'd like to turn the call over to Therese to begin.

Good afternoon, everyone, and thank you so much for joining us today. Mark and I enjoyed meeting many of you during our IPO roadshow last month, and we greatly appreciate all of the interest we received from investors. Now for those of you that we met with, I'd like to remind you that you should be asking your portfolio companies if they closed their books with BlackLine. Accurate financial reporting doesn't just happen magically. We're very pleased to be reporting our first quarter as a public company, which was marked by record revenue and a number of additional financial and operating achievements. There are several highlights I'd like to share from the quarter, but first since many of you are just getting to know BlackLine, we thought it would be helpful to provide you with some perspective on the factors behind our strong track record of growth, the substantial market opportunity in front of us and our strategies to continue driving the business forward. BlackLine is still in the early innings of developing what we believe is a very large greenfield market opportunity. We continue to see success, because the financial accounting processes for both public and private companies are still batch oriented, manually intensive and they need to be radically improved. Our cloud-based platform addresses the 3 major issues surrounding these processes: inefficiency, cost and risk. Macro tailwinds like regulatory scrutiny, rising business complexity and the need for accurate real-time data are driving adoption. 2 weeks ago, we had our annual user conference and the theme of that conference was Blueprint for Continuous Accounting. As a concept, continuous accounting embeds typical month-end tasks into daily workflow, automating wherever possible and effectively eliminating the big bubble of work that occurs in the month-, quarter- and year-end closes. This approach minimizes manual labor, maximizes visibility and moves organizations towards accessing real-time information that allows them to run their businesses better. However, our customers are looking for more than just concepts. They want a blueprint for how to radically improve operations, and our focus is giving them a clear path to accomplish these goals. It's exciting, because we think that we have an opportunity to shift how the entire industry of accounting and finance works. This is both at a macro organizational level as well as at the individual level. When a person is freed up from repetitive work, they have the bandwidth to become a value-added partner to the business, which true insights and analyses that are forward-looking. Our customer base is wildly enthusiastic about these changes. We believe that virtually every company of scale in any industry and geography is a prospect. Our internal estimates, which have been validated by independent research firm, Frost & Sullivan, point to a TAM of approximately $17 billion. We're targeting enterprise businesses with over $500 million in revenue and mid-market businesses that have between $50 million and $500 million in revenue. There are more than 165,000 corporate organizations worldwide who fit that profile. Within these target companies, there are over 13 million finance and accounting professionals who can benefit from the BlackLine platform. For perspective, we currently have approximately 1,600 customers and 156,000 users. So this market is incredibly underpenetrated. We have multiple growth drivers to help us develop and continue to lead this market. We are executing against 5 key strategies. The first is international expansion. We have already proven our ability to enter new markets and succeed, and we're continuing to aggressively expand our global reach. Today, we serve customers in over 120 countries. Our plans call for international expansion, primarily in major markets within Europe and Asia. The second area is land and expand. This strategy is enabling us to consistently drive strong growth within our existing customer base by adding more users, selling new products and cross-selling interrelated entities. The power of this model is evidenced by a strong net revenue retention rate, which is consistently been in the range of 118% to 120% for several quarters now. Our third area of focus is the continued expansion of our sales force. We have been rapidly expanding our mid-market sales team. Our scalable cloud platform makes our solutions quick to implement and widely appealing to companies of all sizes. Next, we are continuing to extend our reach to our robust network of partners, including our consulting, BPO, ERP and channel partnerships. These partners often provide complementary services that are not a part of BlackLine's core offerings, and this results in a winning combination for both our partners and clients. The fifth strategy is continuous product innovation. Our customers trust us and they are quite vocal about the opportunities for new solutions in adjacent areas. Oftentimes, they use our configurable platform to create their own solutions to problems. Because accounting and finance organizations have been typically conservative and slow to adopt new technologies, the opportunities for automation and optimization are broad. The BlackLine Intercompany Hub and Insights products are perfect examples of solutions that were created and driven by customer needs. Now, let's talk about our strong third quarter performance. Mark will go through the numbers, but first, I'd like to highlight some of our accomplishments. Total revenue increased 49% to $32 million, reflecting strong momentum across all aspects of the business. We added 122 new customers across mid-market and enterprise segments and across all geographies. In fact, we signed our largest initial deal in company history this quarter. Major wins include First Data Corp., GoPro and British Polythene Industries. In the third quarter, our user base increased to more than 156,000 users. That's up 31% from a year ago and also reflects strong sequential growth throughout 2016. Next, we expanded our European operations with the opening of an office in Frankfurt. The market opportunity in Europe along with the adoption by many large European companies already made this a logical next step. As we drive growth and build scale, we expect to selectively add new talent to the organization. Most recently, we created the position of Chief Customer Officer and brought in Karen Flathers, who has exceptional experience in both enterprise and SaaS software. Karen is responsible for solution consulting, customer success, implementations, training and support. In fact, she owns the entire customer experience from beginning into perpetuity. After just 6 weeks on board, it's obvious that she holds the same passionate commitment to customer happiness that has driven our success to date. Finally, we completed the acquisition of Runbook, a highly respected provider of financial close automation software to the SAP market. Runbook brings a great deal to the equation: complementary products, formidable talent and capabilities and a portfolio of marquee customers. We invited the U.S.-based Runbook customers to our user conference, and across the board, we saw excitement about the combined BlackLine-Runbook integration path that we laid out. This is a strategic investment for us and a key part of our plan to have closer integration with a number of different ERP systems. Looking ahead, we are excited about the growth we're seeing and the opportunity in front of us. We have a fantastic team across the entire organization. We work hard and we love what we do. We appreciate your interest in BlackLine and look forward to reporting to you on our progress as a public company. Now I'll turn the call over to Mark to review our third quarter financial results and discuss our outlook for the remainder of the year.

Thank you, Therese, and good afternoon, everyone. I'd like to echo Therese's sentiment about how pleased we are with the level of interest we received from our analysts and investors. We're looking forward to getting to know you in the quarters ahead and keeping you updated on our performance. Before I get into the results, please note that during my remarks, unless I specify otherwise, all numbers are non-GAAP. I'm pleased to report that in Q3, we continued to see record revenue growth, solid gross margins and improving cash flow. As Therese mentioned, Q3 2016 was a strong top line quarter for us. Total revenue in the third quarter increased 49% to $32 million, as we executed on our plan to acquire new customers and retain and expand the existing customers. Our 122 new logos added in the quarter were a good balance of both enterprise and mid-market customers. Expansions within our existing accounts, including more users, more products, and price uplift drove our net revenue retention rate to another strong quarter of 118%. Global demand for BlackLine's platform remained strong with more than 16% of our revenue coming from international markets this quarter. Finally, our revenue mix remained relatively constant at 96% subscription revenue and 4% professional services. Third quarter gross margin improved to 82% from 80% a year ago. The improvement is primarily attributable to efficiencies around hosting and data center costs as we gain leverage from a larger customer base and higher utilization of our existing hosting infrastructure. Going forward, we expect gross margins to trend closer to our long-term target model of 80% as our revenue mix changes slightly to include more services. Turning now to operating expenses. Total OpEx in the third quarter of 2016 was $27.6 million or 85% of revenue versus $22.6 million in the third quarter of last year or 104% of revenue. While we are seeing leverage in many areas, including R&D and G&A, the P&L item I would like to focus on where we are seeing significant scale benefits is sales and marketing. As you can see from Therese's opening remarks, we continued to build our sales capacity to meet the demand we see in the market and sustain our growth. In Q3 2016, sales and marketing increased to $17.6 million from $13.3 million a year ago. However, as a percentage of revenue, sales and marketing declined to 54% in Q3 from 61% a year ago. The change reflects increasing productivity from the investments we have made in our sales force and ecosystem and leverage gained on scaling our global sales infrastructure. Going forward, we will continue to invest in our sales capacity to drive top line growth with the anticipation that we will see improving operating leverage on an annual basis. Even with the investments necessary to operate as a public company, third quarter operating loss came in at $1 million. That compares favorably to a loss of $5 million in the third quarter of last year and reflects operating leverage in the business. We have a proven history of disciplined investment and remain committed to maintaining a strong balance between generating top line growth and driving profitability. Going forward, we plan to make continued progress towards breakeven and beyond, but it may not be in a linear fashion. Non-GAAP net loss was $2.2 million or $0.05 per share, which compares to non-GAAP net loss of $5.9 million or $0.15 per share last year. The weighted average common shares used to calculate third quarter EPS was 40.8 million shares in 2016 and 40.7 million shares in the 2015 period. Turning now to the balance sheet. We ended Q3 with $20 million of cash and cash equivalent. Subsequent to the close of the quarter, we received net proceeds of $152 million from the IPO, which allowed us to repay our term loan in full earlier this month. Cash flow from operations in Q3 of 2016 was a positive $4 million and year-to-date was a positive $1 million. As is typical with software businesses like ours, we do experience quarterly fluctuations in cash flows and expect to see some lumpiness in our cash flows over the next several quarters. On an annual basis, however, we do expect to trend positively and be operating cash flow positive by Q4 of 2017. Turning briefly to the acquisition of Runbook, which Therese mentioned, the transaction closed at the end of August. From a financial perspective, the Runbook business contributed a minimal amount to revenue and expenses for the third quarter. The guidance we are providing today includes a nominal amount of revenue expense for the fourth quarter. Beginning next year, we will be transitioning Runbook from an on-prem provider to BlackLine's subscription revenue model. We believe the addition of Runbook will contribute to sustaining our long-term growth. Now, I'll discuss our guidance for the fourth quarter and full year 2016. For Q4, total non-GAAP revenue is expected to be in the range of $33.5 million to $34.5 million, reflecting a year-over-year growth rate of 37% to 41%. We anticipate that non-GAAP net loss will be in the range of $5 million to $6 million. Utilizing weighted average shares of 47.6 million, we expect non-GAAP net loss per share of $0.11 to $0.13. For full year 2016, we expect total non-GAAP revenues to be in the range of $121.5 million to $122.5 million, reflecting a growth rate of 45% to 46%. Non-GAAP net loss in 2016 is expected to be between $18 million and $19 million. Utilizing weighted average shares of 42.4 million, we expect non-GAAP net loss per share to be in the range of $0.42 to $0.45. We are pleased with the solid results we're reporting today and believe we have the capacity and the resources to continue driving the business forward over the long term. We're excited about BlackLine's new face as a public company, and we appreciate your interest and support. Now, Therese and I will be happy to take your questions.

[Operator Instructions] Our first question for today comes from the line of Mark Murphy of JPMorgan.

So I wanted to ask you, just given the extreme FX volatility that we've seen this year post Brexit and now with the global trade agreements, some of which are being called into question after the U.S. election cycle, could you possibly update us on the traction of your Intercompany Hub product and just how that's coming together in terms of customer demands?

This is Therese. We just had our user conference 2 weeks ago here in Los Angeles. And with the BEPS initiative that's happening with -- as you said, the volatility in the FX and with some of the IRS code changes around intercompany loan accounting and that becoming more stringent, we saw terrific interest in the Intercompany Hub at our user conference. Further, we saw a number of companies that mentioned that they actually have fines that they pay every year in substantial numbers, because they don't do intercompany properly. So just came off of that user conference, so I feel I'm pretty good about that. And of course, the sales cycle is always a little longer for larger projects, but I'm pretty optimistic about where we're going with the Intercompany Hub.

Great. And as a follow-up, you had mentioned the rapid expansion of your mid-market sales teams. And I heard the comment about good balance in terms of the new bookings. But I am just wondering if you compare it year-to-year or maybe to where you were 6 months ago, has that expansion of the sales team resulted in any kind of higher mix for mid-market organizations within your list of new logos for Q3?

No, not really, because they're both still growing, right? They're both still growing very nicely. And so there's really -- it's very much the same mix.

Do you anticipate that mix shifting at all over time going forward?

Mark, look, we are investing in all aspects of that. So the velocity in our mid-market that we've seen over the last number of quarters is really encouraging. So our goal is to have a diversified growth strategy, both domestically and international and mid to enterprise. And as long as we see the strong returns we get, we plan to keep putting our foot on those pedals -- both pedals.

Both pedals.

Okay, good. That's great. I had one last question, if I may. You did announce pretty significant enhancements to your platform earlier this month at the user conference. And I guess, I'm curious, it seemed to be in the areas of reporting, navigation, SAP connectors and maybe a few other areas. Could you help us understand, which of those -- how the best customer reception might have the most kind of mainstream appeal or maybe the most impact for your financial results going forward?

I'm thinking about that. That's a good question, Mark. I would say that probably the sort of interesting approach that we took to embedding the reporting in every grid was incredibly well received. But that's only because that's something that every single customer uses. Certainly, our SAP customers were delighted with some of the changes to the SAP connector and the availability of the Smart Close product, right? So I would only rank that one a little lower, simply because it only appeals to about 1/3 of our customer base. But most of our enhancements that we released at the user conference were things that have been in process for a while, based on customer suggestions. So kind of hard to really call one out more than the others.

And our next question comes from the line of Steve Ashley from Robert W. Baird.

Can I -- I'd like to maybe ask about the international opportunity. You just opened in Frankfurt. Can you remind us what major markets do you have a physical presence in today with offices? And what are some of the near-term opportunities you might see internationally?

It's Therese. Let's see, we currently have our European headquarters in London. We also have offices in France, obviously Frankfurt. With the acquisition of Runbook, we now have offices in Ada, which is outside of Amsterdam. Okay? We also have offices in Australia that are in Melbourne and Sydney. We also have an office in Malaysia and one in Singapore, so that's -- and Vancouver, sorry. There's so many now that I forget them sometimes. But in terms of additional sort of areas, we see further expansion into the dock region, right, into the Nordics. We see that certainly there's been some demand -- quite a bit of demand from moving either even farther east, if I could speak, it would help. All right, and we've also been looking at some partnerships down in South America. In all of these places, Steve, we've already got users. We've already got people logging into the application, typically a lot of the times using it in languages other than English. And so where we look -- when we decide to move into a new region, we look at where we've already got a good customer base.

Perfect. Then I'd just like to ask about this largest initial deal you win and if you could give us a little color. I don't know if you want to disclose the size, but in terms of number of SKUs or maybe how long that contract might have been, some color on that would be great.

Mark and I were conferring here. That was a deal that was over $500k, and it did include the Intercompany Hub as well as some of the components of the Financial Close Suite. Now just to be clear, that was really an initial deal size that was not -- some of our longer-term customers pay us more than twice that. But it's good that we're getting the momentum and the reputation in the marketplace that allows us to do those sizes of deals.

And our next question comes from the line of Bhavan Suri from William Blair.

I just want to touch on a couple of quick things. But first, you sort of talked about the net expansion rate and then sort of the growth. Could you just maybe give a little more color, Therese and Mark, just on the split between whether it was sort of ARPU-driven more or if it was sort of seat expansion for the core offering? How should we think about that split and the expansion rates?

Bhavan, thanks. Think about our net dollar revenue retention rate with 3 drivers. The first and the biggest has historically been user expansion through globalization and use case growth within the accounts. Second is product. And then third is price uplift. And the price uplift we get on an annual basis is in the 3% to 5%. Now, I'll add that we are very optimistic about the level of product that we have today to be able to sell into accounts. And so over the long term, we think that, that could become a bigger part of the retention rate.

Got it, got it. And then obviously the Intercompany Hub -- and I know we -- the three of us have certainly discussed this ad nauseaum, to me seems very compelling. When you are in the early sales cycles for this, and obviously, a large deal speaks to it. But how receptive are customers to the new offering? Do they get it, or there's still a little bit of an evangelical sale with Intercompany Hub? And so is that sort of taking a little longer. How should we think about that vis-à-vis expectations, and also the sales cycle for that particular offering?

Bhavan, it's Therese. Nice to hear from you. Intercompany is a slightly longer sales cycle. And here is why. Because rather than sort of replacing Excel worksheet, it's more of a transformational project. Companies have to change how they're doing their business. They also have to get a number of different departments coordinated. Okay? So the tax, the legal, the treasury, everybody ends up getting involved. And by that very definition, that's going to draw out the sales cycle. Now however, what's interesting about this, very unlike when we came to market with an account reconciliation product, this is -- people get the need right off the bat. Nobody says, we are awesome at intercompany. They say, "Oh my God, this area is such a mess." And the thing that's drawing it out is the size of the mess, not that they don't get the need. So I have found that to be very encouraging. The receptivity to a solution like BlackLine's Intercompany Hub has been extraordinarily high. But again, the complexity is going to draw out the sales cycle.

Got it, got it. One last one if I could squeeze in. With Runbook, you've got sort of this agent-based approach to capturing data in almost real-time from SAP systems. But given these companies have sort of a variety of mishmash of general ledgers and systems, whether it's Oracle or otherwise, is there a thought process of getting an agent into the Oracle world to capture that data at real-time? Or is that a capability that you guys are thinking of building, buying? How should we think about that?

Yes -- No, thanks, Bhavan. First off, with the connectors and a lot of the work that we're already doing, we are getting real-time data from a number of different ERPs. Okay? So I just want to draw that distinction there. With the Smart agent -- Smart Close agent for SAP, sort of the thought on that is that it actually can control what's happening inside of the ERP in terms of various jobs being scheduled and the results causing certain dependencies and other things to happen in feeding those results into other places. And by its nature, that piece is embedded inside the ERP. Now you ask if we had plans to extend that to other ERPs, and the answer is absolutely yes. It's a concept that we've talked to a number of our customers about who are non-SAP, ERP-based, and that has gotten a very favorable reaction from them. So now that is not a short-term product enhancement. Okay? So that's -- I'm not making a product announcement here, just saying.

And our next question comes from the line of Jesse Hulsing from Goldman Sachs.

The first question is for Mark. The leverage on the sales and marketing line quarter-over-quarter is pretty impressive. You mentioned sales productivity being a big driver of that. I'm wondering where you're seeing the most productivity out of your sales force? Is in the mid-market? Is it the enterprise? Is it the account teams? Or is it broad-based?

Jesse, thanks for the question. It's broad-based. The acceleration in sales and marketing in 2015 that gave us the broad sort of diversified go-to-markets and multiple engines really started to pay dividends that we saw in Q3. So it's broad-based.

Got you. And your guidance implies on the bottom line reinvestment. Is the bulk of the reinvestment going to be in sales and marketing headcounts? Or do you have product investments that you're also planning to make?

Yes, a good question. I think it's a couple of things that I can clarify. First is Q4, Therese mentioned the user conference that we do. That's an investment for us in our customers and in sales and marketing, and it's a big one. And second is the acquisition of Runbook occurred in the last month of the quarter in Q3. And in Q4, we have the full 3 months of the company. So in some regards, it's related to those 2 things.

Got you. And a question for Therese. Therese, the Runbook acquisition was a big one for you relative to your size. Can you walk us through, I guess, the strategic and technology rationale behind the Runbook acquisition?

Absolutely. One of the things that we found back to, I guess, it was Steve's question, or maybe Bhavan on the Intercompany Hub. We found that the actual implementation projects for the Intercompany Hub were not going quite as quickly as I would've liked this last year. Now what that was caused by is we found that we really needed a deeper level of SAP expertise. Okay? And it's a surprisingly difficult skill set. Everybody claims it, very few people seem to have it. Okay? And what we found inside the Runbook team is a fairly large group of people with decades of experience interfacing with -- integrating with optimizing SAP interactions. And I found that particular sort of talent pool very, very appealing. Next, when we look at their products, we thought there were some things that they did really, really well. In fact, when we looked at the Smart Close product, which is not something that there is absolutely 0 overlap with BlackLine, we found that nobody else in their market did it nearly as well. And when you think about BlackLine being a financial automation and control set of products, right, being able to actually control the jobs that are happening inside of an ERP is kind of a fundamental piece to automating the close. So I thought that they had skills that we didn't. I saw that they had products that we didn't. Okay? I saw that they had many customers that we didn't have that were quite big names. I saw that they were based in an area of the world where we did not have a huge presence. And I also saw that -- well, we learned that they were actually in a process. And so we met with the founders of Runbook, and we found that even with -- even if all of those things had been true and we didn't think that we could work with the founders, I don't think we would have done it. But the founders were exceptionally passionate about 2 things. They take care of their customers like nobody else. Okay? And one of the things to note, in our particular market, we have replaced systems against every competitor in that market with the exception of Runbook. Okay? They are the only ones that we've never been able to displace. So that told me right there that they have a commitment to customers and that they have really great products. Okay, so that was one. And then the other thing that the founders are passionate about was the opportunity that lies ahead in this market. They were just like they've really wanted to stick around and see sort of our destinies be filled, and they wanted to do that with us. And so it was really that it was -- I guess, it was an emotional decision at the end of the day, because they were passionate about the same things we are.

And our next question comes from the line of Terry Tillman from Raymond James.

I've got 7 questions. No, I'm kidding. I just have a few questions. The first question relates to SAP. I mean, that's been a really fruitful relationship for you guys. But I'm curious like as the years progress, first quarter, second quarter and third quarter, how has that business been trending? And is there's still a lot of low-hanging fruit in productivity gains to be had out of that relationship? Are you kind of now on the kind of the right run rate going forward in that business?

Terry, we -- it's a commercial arrangement with SAP, and we have really appreciated and enjoyed our partnership with them. We do find that even though our share of business in terms of SAP versus other ERPs sort of mirrors the overall market very closely, we have seen our SAP sort of share of business start to grow. So that being said, we hope that we're partners in one form or other with SAP for a long time.

Okay. And it was nice to hear about the largest initial transaction in your history. But what I'm curious about, and I know you probably don't want to get into too many details, but if we think about just kind of the color around your late-stage pipeline activity now versus maybe 6 months ago, do you -- does that seem like an anomaly? Or are you actually seeing your pipeline populated with more initial deal sizes that are of that size or larger?

Well, Terry, as we start seeing more intercompany projects come into the pipeline, we are seeing that those in particular are quite a bit bigger. Now, I do want to say this, though, right, one of the beautiful things about SaaS software is that you can sort of grow as you go, prove it out, add additional users, add additional products. We like that model, because we know that our customers are going to find that our software works. And so if somebody starts small, it just wants to grow over time, that's frankly to me just as appealing as somebody who starts big.

Yes, yes. And Mark, I don't want you to be lonely here I want to give you a question if possible, and then I'll end it here versus the 7 that I initially -- or 6 or 7 I initially mentioned. But if we think about billings in the fourth quarter, is there anything to appreciate in terms of tougher comparability year-over-year? Or is there anything seasonal-wise we should think about as what's making our assumptions for billing?

Thanks, Terry. So I'm happy to answer all 7 questions if you want. But on this one, look, it's one of the reasons we don't report on it to this group. Billings can be seasonal on a quarterly basis, and that's the same for us. So the metrics that we are really focused are dollar retention rates, customers and users on a quarterly basis. And as you think about Q3 and Q4, I think it's absolutely right to say that we have fluctuation from quarter-to-quarter. So we need to be careful about that metric.

And Terry, I'm actually disappointed that you don't 4 more questions. I'm surprised in you.

Well, okay. I've got one more question, and it's going to irritate everybody else on this call, and I apologize in advance. Therese, congrats on the new executive hire. On the customer success side -- and I will stop after that, I promise. But on the customer success side, what can she do that could either drive revenue retention higher? Or how do we think about potential metrics or objectives that she could accomplish and how we could see it as financial analysts?

Well, one of the things that I love about Karen is that she is very metrics-driven. And in the old days when we were really small, we had this philosophy of do anything to keep the customer happy. And sometimes, you'd have everybody in the company running to one side of the boat, right? What Karen is doing is really organizing that and making sure that we don't have to run from one side of the boat to the other, right? She's organizing it based on types of customers, strategic products, how does the customer success team improve the adoption of what people buy, right, which will certainly drive up retention over time; how does she bring down the length of time that an implementation takes; how do we just make a lot of things more efficient, but also get a much better customer experience. And she's got a whole series of metrics that she's tracking right now. And I have to say, I am absolutely delighted in her. Was that enough detail, Terry? I could go on for a while. Maybe we shouldn't.

[Operator Instructions] Our next question comes from the line of Brent Bracelin from Pacific Crest.

This is Trevor Upton for Brent. I was wondering if you could give more color on the international expansion and if any countries stood out this quarter?

Thanks for joining the call. Our international expansion was very consistent from previous quarters. 15% -- a little over 15% -- it's in the 16% actually from outside the U.S. And the demand we see and demand that we have in our experience really is in all the markets that Therese mentioned. That's where we are putting physical presence and partners and people to go after that demand.

That's helpful. And curious what the response from SAP has been regarding your Runbook acquisition that's actually a big SAP shop?

Well, I think it's very positive. They view it as our commitment to making our SAP customers successful.

Okay. And then was there any change in the competitive environment in the quarter you'd want to highlight?

No. I think that's a great question. And no, we -- our competitive landscape in Q3 was very consistent. The win/loss rate is very consistent. So no change.

And that concludes our question-and-answer session for today. I would like to turn the conference back over to BlackLine management for any closing comments.

Well, thank you for all of your sweet congratulations and your questions today. We so appreciate your interest. We look forward to speaking with you next quarter. Thanks so much.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may now disconnect. Everyone, have a great day.