• Revenue: $37.7 million, a 43% increase year over year.
• Product Revenue: Increased 56% to $17.8 million.
• Services Revenue: Grew 33% to $19.9 million.
• EBITDA: $2.1 million, marking the third consecutive quarter of positive EBITDA.
• Adjusted EBITDA Margin: 4%.
• Net Dollar Retention: 128% for the quarter.
• Annual Recurring Revenue: Increased 31% to $70.9 million.
• Product Gross Margin: 40% in Q1.
• Service Gross Margin: 77% in Q1.
• Overall Gross Margin: 59% on a rolling twelve-month basis.
• Total Expenses: $22.5 million, a 13% increase from the previous year.
• Net Loss: Decreased to $1.1 million, an 80% reduction from the previous year.
• Cash and Short-term Investments: $64 million.
• Available Liquidity: Over $80 million.

• Warning! GuruFocus has detected 4 Warning Signs with BLKLF.

Release Date: March 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Blackline Safety Corp (BLKLF) reported a record Q1 revenue of $37.7 million, marking a 43% year-over-year increase.
• The company achieved a positive EBITDA of $2.1 million, marking the third consecutive quarter of positive EBITDA.
• Product revenue increased by 56% to $17.8 million, while services revenue grew by 33% to $19.9 million.
• Net dollar retention reached 128%, maintaining above 125% for the seventh consecutive quarter, indicating strong customer value perception.
• The company secured strategic financing of $27 million from the Laue Family Group and DAK Capital, strengthening its balance sheet for future growth.

Negative Points

• Potential tariffs on goods entering the US may negatively impact product revenue and gross margins in the short term.
• Despite strong revenue growth, Blackline Safety Corp (BLKLF) reported a net loss of $1.1 million for the quarter.
• There is uncertainty regarding the impact of US tariffs on the company's supply chain and product costs.
• The company decided not to renew its securitization facility, which may affect its ability to finance customer leases.
• Q2 product revenue might be lower than Q1 due to potential economic headwinds and tariff impacts.

Q & A Highlights

Q: Have you seen any preemptive buying behavior from US clients looking to get ahead of potential tariff-related price increases? How much of the strong Q1 hardware performance was driven by slippage from Q4? A: Sean Spinson, President & Chief Growth Officer, stated that they are not seeing any preemptive buying due to tariffs. Cody Slater, CEO, added that about a million dollars in orders shifted from Q4 to Q1, but no significant orders were delayed.

Q: Can you provide details on the US manufacturing shift, including costs, capacity, and timing? A: Cody Slater, CEO, explained that they are leveraging their Houston operation for assembly, with plans to start manufacturing finished goods in 2-3 months. The shift is expected to cost around a million dollars over a few quarters, with no significant long-term impact on gross margins.

Q: What is the reason behind the increase in the average price per wearable device from $600 to $800? A: Robin Kooyman, CFO, clarified that there was no change in the number from the previous quarter. The figure is an illustrative example of pricing and gross margin, not a direct price hike.

Q: Can you comment on the linearity of sales in the quarter and the increase in AR and DSOs? A: Sean Spinson, President & Chief Growth Officer, noted that sales were stronger in November and December, with an exceptional finish in January. The increase in AR and DSOs reflects the strong sales performance.

Q: How did the XO8 product contribute to the quarter's results? A: Cody Slater, CEO, mentioned that the product mix was standard, with the G7 being the core contributor. The XO8 received positive market feedback, but it wasn't the main driver for Q1 results.

Q: Can you elaborate on the decision not to renew the lease facility and its impact on leasing activity? A: Robin Kooyman, CFO, explained that leases accounted for 35% of product revenue, higher than previous quarters. The decision not to renew the lease facility was made to improve sales velocity, and the facility will be repaid before expiration.

Q: What are the market dynamics in the UK water sector, and can this success be replicated elsewhere? A: Amir Azad, Analyst, highlighted that the UK water market is unique due to its large companies. While similar strategies are applied in other markets, the scale of success in the UK is not directly replicable elsewhere.

Q: Can you discuss the optimized pricing strategy mentioned in the press release? A: Cody Slater, CEO, stated that they implement annual price increases based on market conditions and inflation, aligning with industry standards.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.